<PAGE> 1
NATIONWIDE(R) MUTUAL FUNDS
- Gartmore Emerging Markets Fund
- Gartmore International Growth Fund
- Gartmore Global Leaders Fund
- Gartmore European Growth Fund
- Gartmore Global Small Companies Fund
September 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these Funds' shares or determined whether this
prospectus is complete or accurate. To state otherwise is a crime.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
FUND SUMMARIES............. ............. 2
Gartmore Emerging Markets Fund..... ..... 3
Gartmore International Growth Fund... ... 6
Gartmore Global Leaders Fund...... ...... 9
Gartmore European Growth Fund..... ...... 12
Gartmore Global Small Companies
Fund................. ................. 15
MORE ABOUT THE FUNDS.......... .......... 18
Principal Investments and
Techniques.............. .............. 18
Principal Risks............ ............. 19
MANAGEMENT............... ............... 21
Investment Adviser........... ........... 21
Subadviser............... ............... 21
Portfolio Management Teams....... ....... 21
BUYING, SELLING AND EXCHANGING FUND
SHARES................ ................ 22
Choosing a Share Class......... ......... 22
Buying Shares............. .............. 23
Selling Shares............. ............. 26
Distribution Plan........... ............ 28
Exchanging Shares........... ............ 29
DISTRIBUTIONS AND TAXES........ ......... 30
Distributions of Income Dividends... .... 30
Distributions of Capital Gains..... ..... 30
Reinvesting Distributions....... ........ 30
State and Local Taxes......... .......... 30
Selling Fund Shares.......... ........... 30
Exchanging Fund Shares......... ......... 30
ADDITIONAL INFORMATION................... BACK COVER
</TABLE>
1
<PAGE> 3
FUND SUMMARIES
This prospectus provides information about the Gartmore Emerging Markets Fund,
Gartmore International Growth Fund, Gartmore Global Leaders Fund, Gartmore
European Growth Fund, and Gartmore Global Small Companies Fund (together the
Funds). "You" and "your" refer to potential investors and current shareholders
of one or more of the Funds.
A QUICK NOTE ABOUT SHARE CLASSES
Each Fund has three different share classes -- Class A, Class B and
Institutional Service Class. The fees, sales charges and expenses for each share
class are different, but each share class of a particular Fund represents an
investment in the same assets of that Fund. Having different share classes
simply lets you choose the cost structure that's right for you.
The fees and expenses for each Fund are set forth in the Fund Summaries. For
more information about which share class is right for you, see "Buying, Selling
and Exchanging Fund Shares -- Choosing a Share Class" beginning on page 22.
2
<PAGE> 4
FUND SUMMARIES -- GARTMORE EMERGING MARKETS FUND
This section summarizes key information about the Funds. Use these summaries to
compare the Funds with other mutual funds. More detailed information about the
risks and investment techniques of each Fund can be found in "More About the
Funds" beginning on page 18.
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks long term capital growth by investing primarily in equity
securities of companies located in emerging market countries. The Fund's
investment objective may be changed without shareholder approval.
Villanova Global Asset Management Trust (VGAMT), the Fund's investment adviser,
has chosen Gartmore Global Partners (Gartmore) as a subadviser to manage the
Fund's portfolio on a day-to-day basis. To achieve its objective, the Fund
normally invests at least 65% of its assets in companies located in emerging
markets or developing countries. The Fund intends to invest in securities of
companies in at least three of these countries at any one time. The investment
managers select regions or countries and companies they believe have the
potential to deliver unexpected earnings growth.
The Fund invests primarily in common stocks, preferred stocks, convertible
securities, equity interests in foreign investment funds or trusts, and
depositary receipts.
Emerging market countries are countries that
- have been defined as emerging market countries by the International Finance
Corporation.
- have a low-to-middle income economy according to the World Bank, or
- are listed as developing countries in World Bank publications.
There are over 25 countries that currently qualify as emerging market countries,
including Argentina, Brazil, Chile, China, the Czech Republic, Colombia,
Ecuador, Greece, Hong Kong, Indonesia, India, Malaysia, Mexico, the Philippines,
Poland, Portugal, Peru, Russia, Singapore, South Africa, Thailand, Taiwan and
Turkey. [Inset Box]
The subadviser looks for emerging markets that are believed to have the
potential for strong economic growth, and tries to avoid emerging markets that
it believes might be politically or economically risky.
The subadviser is a growth stock investor and its investment philosophy rests on
two fundamental principles:
- Growth investing produces superior returns over the longer term, but consensus
growth (or the market's expectations for earnings forecasts) produces average
returns. Therefore, the subadviser focuses on identifying companies with
unexpected earnings growth potential.
- The subadviser looks to sell companies where there is significant risk that
earnings growth will disappoint against expectations.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases. The value of shares will also be
impacted in part by the subadviser's ability to assess economic conditions and
investment opportunities.
FOREIGN RISK. The Fund invests primarily in equity securities of companies in
emerging market countries, including securities denominated in foreign
currencies. Those investments involve special risks and are generally riskier
than domestic investments and other kinds of foreign investments, particularly
because emerging market countries may be less stable from a political and
economic standpoint than other countries. These risks include political and
economic risks, currency fluctuations, higher transaction costs, and delayed
settlement. It may also be more difficult to buy and sell securities in emerging
market countries. Foreign securities may also be less liquid and harder to value
than U.S. securities. In addition, the securities in which the Fund invests are
subject to significant changes in value due to exchange rate fluctuations.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
markets in which it trades go down. Individual stocks and the overall stock
markets may experience short-term volatility as well as extended periods of
decline or little growth. Individual stocks are affected by factors such as
corporate earnings, production, management and sales. Individual stocks may also
be affected by the demand for a particular type of stock, such as growth stocks
or the stocks of companies with a particular market capitalization. Stock
markets are affected by numerous factors, including interest rates, the outlook
for corporate profits, the health of the national and world economies, national
and world social and political events, and the fluctuations of other stock
markets around the world.
3
<PAGE> 5
Fund Summaries -- Gartmore Emerging Markets Fund
RISKS RELATED TO INVESTING FOR GROWTH. Different types of stocks tend to shift
into and out of favor with stock market investors depending on market and
economic conditions. Because the Fund focuses on growth-style stocks, the Fund's
performance may at times be better or worse than the performance of stock funds
that focus on other types of stocks, or that have a broader investment style.
MARKET TRENDS RISK. Market trends pose special risks in that from time to time
the stock market may not favor growth-oriented stocks. Rather, the market could
favor value securities or may not favor equities at all.
RISK OF HOLDING A SMALL NUMBER OF SECURITIES. Because the Fund typically holds
fewer securities than other stock funds, the price fluctuations of any security
will have a greater impact on the Fund.
For more detailed information about the Fund's investments and risks, see "More
About the Funds" beginning on page 18.
PERFORMANCE
No performance information is provided because the Fund will not begin
operations until on or about September 1, 2000.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the Emerging Markets Fund.
<TABLE>
<CAPTION>
Institutional
Service
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
upon purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Service
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
-----------------------------------------------------------------
<S> <C> <C> <C>
Management Fees(5) 1.15% 1.15% 1.15%
.................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.................................................................
Other Expenses(6) 1.06% 0.91% 0.98%
-----------------------------------------------------------------
TOTAL ANNUAL FUND 2.46% 3.06% 2.13%
OPERATING EXPENSES(7)
</TABLE>
---------------
(1) If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" on page 23.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A contingent deferred sales charge (CDSC) ranging from 5% to 1% is charged
when you sell Class B shares within the first six years of purchase. Class B
shares are converted to Class A shares after you have held them for seven
years. See "Buying, Selling and Exchanging Fund Shares -- Selling
Shares -- Contingent deferred sales charge (CDSC) on Class A and Class B
shares" on page 27.
(5) The Fund will commence operations on September 1, 2000. As a result, the
management fee represents the fee which is payable to VGAMT under its
contract with the Fund.
(6) As a new fund these are estimates for the current fiscal year ending in
October 31, 2000. These estimates do not take into account the expense
limitation agreement between the Fund and VGAMT.
(7) For the fiscal year ending October 31, 2000, VGAMT has agreed to waive
management fees and, if necessary, to reimburse the Fund for the cost of
"Other Expenses" so that Total Annual Fund Operating Expenses will not
exceed 2.15% for Class A shares, 2.75% for Class B shares and 1.82% for
Institutional Service Class shares. The Fund is authorized to reimburse
VGAMT for management fees previously waived and/or for the cost of Other
Expenses paid by the VGAMT provided that any such reimbursement will not
cause the Fund to exceed the expense limitations
4
<PAGE> 6
Fund Summaries -- Gartmore Emerging Markets Fund
noted above. The Fund's ability to reimburse VGAMT in this manner only
applies to fees paid or reimbursements made by VGAMT at some time within the
first five years from the time the Fund commenced operations.
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses and does not take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $810 $1,297
............................................................
Class B Shares $809 $1,245
............................................................
Institutional Service Class Shares $216 $ 667
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $810 $1,297
............................................................
Class B Shares $309 $ 945
............................................................
Institutional Service Class Shares $216 $ 667
</TABLE>
5
<PAGE> 7
FUND SUMMARIES -- GARTMORE INTERNATIONAL GROWTH FUND
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks long term capital growth by investing primarily in equity
securities of companies in Europe, Australia, the Far East and other regions,
including developing countries. The Fund's investment objective may be changed
without shareholder approval.
VGAMT, the Fund's investment adviser, has chosen Gartmore as a subadviser to
manage the Fund's portfolio on a day-to-day basis. To achieve its objective, the
Fund invests at least 65% of its assets in established companies located in at
least three countries other than the United States. The investment managers
select regions or countries, and companies they believe have the potential for
unexpected growth.
The Fund primarily invests in equity securities which may include common stocks,
preferred stocks, equity interests in foreign investment funds or trusts,
convertible securities, real estate investment trust securities and depositary
receipts.
The Fund may also invest in securities that are not part of its principal
investment strategies as described above, but it will not hold more than 10% of
its assets in any one type of these securities.
The subadviser is a growth stock investor and its investment philosophy rests on
two fundamental principles:
- Growth investing produces superior returns over the longer term, but consensus
growth (or the market's expectations for earnings forecasts) produces average
returns. Therefore, the subadviser focuses on identifying unexpected earnings
growth.
- The subadviser looks to sell companies where there is significant risk that
earnings growth will disappoint against expectations.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases. The value of shares will also be
impacted in part by the subadviser's ability to assess economic conditions and
investment opportunities.
FOREIGN RISK. Investments in foreign securities involve special risks which are
not associated with domestic investments. These risks include political and
economic risks, currency fluctuations, higher transaction costs, and delayed
settlement. To the extent that the Fund invests in countries with emerging
markets, the foreign securities risks are magnified since these countries may
have unstable governments, more volatile currencies and less established
markets.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
markets in which it trades go down. Individual stocks and the overall stock
markets may experience short-term volatility as well as extended periods of
decline or little growth. Individual stocks are affected by factors such as
corporate earnings, production, management and sales. Individual stocks may also
be affected by the demand for a particular type of stock, such as growth stocks
or the stocks of companies with a particular market capitalization. Stock
markets are affected by numerous factors, including interest rates, the outlook
for corporate profits, the health of the national and world economies, national
and world social and political events, and the fluctuations of other stock
markets around the world.
MARKET TRENDS RISK. Market trends pose special risks in that from time to time
the stock market may not favor growth-oriented stocks. Rather, the market could
favor value securities or may not favor equities at all.
RISKS RELATED TO INVESTING FOR GROWTH. Different types of stocks tend to shift
into and out of favor with stock market investors depending on market and
economic conditions. Because the Fund focuses on growth-style stocks, the Fund's
performance may at times be better or worse than the performance of stock funds
that focus on other types of stocks, or that have a broader investment style.
For more detailed information about the Fund's investments and risks, see "More
About the Funds" beginning on page 18.
6
<PAGE> 8
Fund Summaries -- Gartmore International Growth Fund
PERFORMANCE
No performance information is provided because the Fund will not begin
operations until on or about September 1, 2000.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the International Growth Fund.
<TABLE>
<CAPTION>
Institutional
Service
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
upon purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Service
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
-----------------------------------------------------------------
<S> <C> <C> <C>
Management Fees(5) 1.00% 1.00% 1.00%
.................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.................................................................
Other Expenses(6) 1.06% 0.91% 0.98%
-----------------------------------------------------------------
TOTAL ANNUAL FUND 2.31% 2.91% 1.98%
OPERATING EXPENSES(7)
</TABLE>
---------------
(1 )If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" on page 23.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A contingent deferred sales charge (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 B Class
shares" on page 27.
(5) The Fund will commence operations on September 1, 2000. As a result, the
management fee represents the fee which is payable to VGAMT under its
contract with the Fund.
(6) As a new fund these are estimates for the current fiscal year ending in
October 31, 2000. These estimates do not take into account the expense
limitation agreement between the Fund and VGAMT.
(7) For the fiscal year ending October 31, 2000, VGAMT has agreed to waive
management fees and, if necessary, to reimburse the Fund for the cost of
"Other Expenses" so that Total Annual Fund Operating Expenses will not
exceed 1.85% for Class A shares, 2.45% for Class B shares and 1.52% for
Institutional Service Class shares. The Fund is authorized to reimburse
VGAMT for management fees previously waived and/or for the cost of Other
Expenses paid by the VGAMT provided that any such reimbursement will not
cause the Fund to exceed the expense limitations noted above. The Fund's
ability to reimburse VGAMT in this manner only applies to fees paid or
reimbursements made by VGAMT at some time within the first five years from
the time the Fund commenced operations.
7
<PAGE> 9
Fund Summaries -- Gartmore International Growth Fund
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses and does not take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
............................................................
Class B Shares $794 $1,201
............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
............................................................
Class B Shares $294 $ 901
............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
8
<PAGE> 10
FUND SUMMARIES -- GARTMORE GLOBAL LEADERS FUND
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks long term capital growth by investing primarily in equity
securities of global leaders. A global leader is defined as a company with a
strong and improving franchise that is well positioned to take advantage of
growth opportunities in its industry. The Fund's investment objective may be
changed without shareholder approval.
VGAMT, the Fund's investment adviser, has chosen Gartmore as a subadviser to
manage the Fund's portfolio on a day-to-day basis. To achieve its objective, the
Fund invests at least 65% of its assets in equity securities of companies from
at least three countries, including the U.S. The rationale for investing in
global leaders arises from the increasing globalization of many industries
coupled with the increasing importance of multinational strategies in leading
corporations. Global leaders may be domiciled anywhere globally while adopting
winning multinational strategies within their industries.
The subadviser adopts a sector approach and looks to identify those companies
within industries with a strong and improving competitive advantage in key
growth segments. The portfolio management team then identifies which of these
companies have earnings growth potential greater than that expected by the stock
market.
The Fund primarily invests in equity securities which may include equity
interests in investment funds or trusts, convertible securities, common stocks,
preferred stocks, warrants, real estate investment trust securities and
depositary receipts.
The Fund may also invest in securities that are not part of its principal
investment strategies as described above, but it will not hold more than 10% of
its assets in any one type of these securities.
The subadviser is a growth stock investor and its investment philosophy rests on
two fundamental principles:
- Growth investing produces superior returns over the longer term, but consensus
growth (or the market's expectations for earnings forecasts) produces average
returns. Therefore, the subadviser focuses on identifying unexpected earnings
growth.
- The subadviser looks to sell companies where there is significant risk that
earnings growth will disappoint against expectations.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases. The value of shares will also be
impacted in part by the portfolio management team's ability to assess economic
conditions and investment opportunities.
FOREIGN RISK. Investments in foreign securities involve special risks which are
not associated with domestic investments. These risks include political and
economic risks, currency fluctuations, higher transaction costs, and delayed
settlement. To the extent that the Fund invests in countries with emerging
markets, the foreign securities risks are magnified since these countries may
have unstable governments, more volatile currencies and less established
markets.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
markets in which it trades go down. Individual stocks and the overall stock
market may experience short-term volatility as well as extended periods of
decline or little growth. Individual stocks are affected by factors such as
corporate earnings, production, management and sales. Individual stocks may also
be affected by the demand for a particular type of stock, such as growth stocks
or the stocks of companies with a particular market capitalization. The stock
market is affected by numerous factors, including interest rates, the outlook
for corporate profits, the health of the national and world economies, national
and world social and political events, and the fluctuations of other stock
markets around the world.
RISKS RELATED TO INVESTING FOR GROWTH. Different types of stocks tend to shift
into and out of favor with stock market investors depending on market and
economic conditions. Because the Fund focuses on growth-style stocks, the Fund's
performance may at times be better or worse than the performance of stock funds
that focus on other types of stocks, or that have a broader investment style.
MARKET TRENDS RISK. Market trends pose special risks in that from time to time
the stock market may not favor growth-oriented stocks. Rather, the market could
favor value securities or may not favor equities at all.
For more detailed information about the Fund's investments and risks, see "More
About the Funds" beginning on page 18.
9
<PAGE> 11
Fund Summaries -- Gartmore Global Leaders Fund
PERFORMANCE
No performance information is provided because the Fund will not begin
operations until on or about September 1, 2000.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the Global Leaders Fund.
<TABLE>
<CAPTION>
Institutional
Service
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
upon purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Service
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
-----------------------------------------------------------------
<S> <C> <C> <C>
Management Fees(5) 1.00% 1.00% 1.00%
.................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.................................................................
Other Expenses(6) 1.06% 0.91% 0.98%
-----------------------------------------------------------------
TOTAL ANNUAL FUND 2.31% 2.91% 1.98%
OPERATING EXPENSES(7)
</TABLE>
---------------
(1) If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" on page 23.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A contingent deferred sales charge (CDSC) ranging from 5% to 1% is charged
when you sell Class B shares within the first six years of purchase. Class B
shares are converted to Class A shares after you have held them for seven
years. See "Buying, Selling and Exchanging Fund Shares -- Selling
Shares -- Contingent deferred sales charge (CDSC) on Class A and Class B
shares" on page 27.
(5) The Fund will commence operations on September 1, 2000. As a result, the
management fee represents the fee which is payable to VGAMT under its
contract with the Fund.
(6) As a new fund these are estimates for the current fiscal year ending in
October 31, 2000. These estimates do not take into account the expense
limitation agreement between the Fund and VGAMT.
(7) For the fiscal year ending October 31, 2000, VGAMT has agreed to waive
management fees and, if necessary, to reimburse the Fund for the cost of
"Other Expenses" so that Total Annual Fund Operating Expenses will not
exceed 1.75% for Class A shares, 2.35% for Class B shares and 1.42% for
Institutional Service Class shares. The Fund is authorized to reimburse
VGAMT for management fees previously waived and/or for the cost of Other
Expenses paid by the VGAMT provided that any such reimbursement will not
cause the Fund to exceed the expense limitations noted above. The Fund's
ability to reimburse VGAMT in this manner only applies to fees paid or
reimbursements made by VGAMT at some time within the first five years from
the time the Fund commenced operations.
10
<PAGE> 12
Fund Summaries -- Gartmore Global Leaders Fund
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses and does not take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
-------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
.............................................................
Class B Shares $794 $1,201
.............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
............................................................
Class B Shares $294 $ 901
............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
11
<PAGE> 13
FUND SUMMARIES -- GARTMORE EUROPEAN GROWTH FUND
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks long term capital growth by investing primarily in equity
securities of companies in Europe. The Fund's investment objective may be
changed without shareholder approval.
VGAMT, the Fund's investment adviser, has chosen Gartmore as a subadviser to
manage the Fund's portfolio on a day-to-day basis. To achieve its objective, the
Fund normally invests at least 65% of its assets in established companies
located in at least three countries in Europe. The investment managers select
companies they believe have the potential to deliver unexpected earnings growth.
The Fund primarily invests in equity securities which may include equity
interests in foreign investment funds or trusts, convertible securities, common
stock, preferred stock, real estate investment trust securities and depositary
receipts.
The Fund may also invest in securities that are not part of its principal
investment strategies, but it will not hold more than 10% of its assets in any
one type of these securities.
The subadviser is a growth stock investor and its investment philosophy rests on
two fundamental principles:
- Growth investing produces superior returns over the longer term, but
consensus growth (or the market's expectations for earnings forecasts)
produces average returns. Therefore, the subadviser focuses on identifying
companies with unexpected earnings growth potential.
- The subadviser looks to sell companies where there is significant risk that
earnings growth will disappoint against expectations.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases. The value of shares will also be
impacted in part by the subadviser's team's ability to assess economic
conditions and investment opportunities.
FOREIGN RISK. Investments in foreign securities involve special risks which are
not associated with domestic investments. These risks include political and
economic risks, currency fluctuations, higher transaction costs, and delayed
settlement. To the extent that the Fund invests in countries with emerging
markets, the foreign securities risks are magnified since these countries may
have unstable governments, more volatile currencies and less established
markets.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
markets in which it trades go down. Individual stocks and the overall stock
market may experience short-term volatility as well as extended periods of
decline or little growth. Individual stocks are affected by factors such as
corporate earnings, production, management and sales. Individual stocks may also
be affected by the demand for a particular type of stock, such as growth stocks
or the stocks of companies with a particular market capitalization. Stock
markets are affected by numerous factors, including interest rates, the outlook
for corporate profits, the health of the national and world economies, national
and world social and political events, and the fluctuations of other stock
markets around the world.
MARKET TRENDS RISK. Market trends pose special risks in that from time to time
the stock market may not favor growth-oriented stocks. Rather, the market could
favor value securities or may not favor equities at all.
RISKS RELATED TO INVESTING FOR GROWTH. Different types of stocks tend to shift
into and out of favor with stock market investors depending on market and
economic conditions. Because the Fund focuses on growth-style stocks, the Fund's
performance may at times be better or worse than the performance of stock funds
that focus on other types of stocks, or that have a broader investment style.
EURO RISK. The Fund may be adversely affected by the conversion of certain
European currencies into the Euro. This conversion which is under way, is
scheduled to be completed in the year 2002. However, problems with the
conversion process and delays could increase volatility in world capital markets
and affect European capital markets in particular.
For more detailed information about the Fund's investments and risks, see "More
About the Funds" beginning on page 18.
12
<PAGE> 14
Fund Summaries -- Gartmore European Growth Fund
PERFORMANCE
No performance information is provided because the Fund will not begin
operations until on or about September 1, 2000.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the European Growth Fund.
<TABLE>
<CAPTION>
Institutional
Service
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
upon purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Service
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
-----------------------------------------------------------------
<S> <C> <C> <C>
Management Fees(5) 1.00% 1.00% 1.00%
.................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.................................................................
Other Expenses(6) 1.06% 0.91% 0.98%
-----------------------------------------------------------------
TOTAL ANNUAL FUND 2.31% 2.91% 1.98%
OPERATING EXPENSES(7)
</TABLE>
---------------
(1) If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" on page 23.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A contingent deferred sales charge (CDSC) ranging from 5% to 1% is charged
when you sell Class B shares within the first six years of purchase. Class B
shares are converted to Class A shares after you have held them for seven
years. See "Buying, Selling and Exchanging Fund Shares -- Selling
Shares -- Contingent deferred sales charge (CDSC) on Class A and Class B
shares" on page 27.
(5) The Fund will commence operations on September 1, 2000. As a result, the
management fee represents the fee which is payable to VGAMT under its
contract with the Fund.
(6) As a new fund these are estimates for the current fiscal year ending in
October 31, 2000. These estimates do not take into account the expense
limitation agreement between the Fund and VGAMT.
(7) For the fiscal year ending October 31, 2000, VGAMT has agreed to waive
management fees and, if necessary, to reimburse the Fund for the cost of
"Other Expenses" so that Total Annual Fund Operating Expenses will not
exceed 1.80% for Class A shares, 2.40% for Class B shares and 1.47% for
Institutional Service Class shares. The Fund is authorized to reimburse
VGAMT for management fees previously waived and/or for the cost of Other
Expenses paid by the VGAMT provided that any such reimbursement will not
cause the Fund to exceed the expense limitations noted above. The Fund's
ability to reimburse VGAMT in this manner only applies to fees paid or
reimbursements made by VGAMT at some time within the first five years from
the time the Fund commenced operations.
13
<PAGE> 15
Fund Summaries -- Gartmore European Growth Fund
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses and does not take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
-------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
.............................................................
Class B Shares $794 $1,201
.............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
............................................................
Class B Shares $294 $ 901
............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
14
<PAGE> 16
FUND SUMMARIES -- GARTMORE GLOBAL SMALL COMPANIES FUND
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks long term capital growth by investing primarily in equity
securities of small U.S. and foreign companies. The Fund looks to invest in
small companies with a strong and improving franchise that are well positioned
to take advantage of growth opportunities in their industries. The Fund's
investment objective may be changed without shareholder approval.
VGAMT, the Fund's investment adviser, has chosen Gartmore as a subadviser to
manage the Fund's portfolio on a day-to-day basis. To achieve its objective, the
investment managers select regions or countries, and small companies they
believe have the potential for unexpected growth.
Under normal market conditions, the Fund will invest at least 65% of assets in
equity securities of small companies from at least three countries, including
the U.S. The Fund considers a "small" company to be one whose market
capitalization normally does not exceed $3 billion, at time of purchase. Though
considered small by this definition, some companies in which the Fund invests
may be among the largest within their respective countries.
Some companies may outgrow the definition of a small company after the Fund has
purchased their securities. These companies continue to be considered small for
purposes of the Fund's minimum 65% allocation to global small company equity
securities.
The Fund primarily invests in equity securities of U.S. and foreign small
companies which may include equity interests in investment funds or trusts,
convertible securities, common and preferred stocks, rights and warrants, real
estate investment trust securities and depositary receipts.
The Fund may also invest in securities that are not part of its principal
investment strategies, but it will not hold more than 10% of its assets in any
one type of these securities.
The subadviser is a growth stock investor and its investment philosophy rests on
two fundamental principles:
- Growth investing produces superior returns over the longer term, but consensus
growth (or the market's expectations for earnings forecasts) produces average
returns. Therefore, the subadviser focuses on identifying unexpected earnings
growth.
- The subadviser looks to sell companies where there is significant risk that
earnings growth will disappoint against expectations.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases. The value of shares will also be
impacted in part by the portfolio management team's ability to assess economic
conditions and investment opportunities.
FOREIGN RISK. Investments in foreign securities involve special risks which are
not associated with domestic investments. These risks include political and
economic risks, currency fluctuations, higher transaction costs, and delayed
settlement. To the extent that the Fund invests in countries with emerging
markets, the foreign securities risks are magnified since these countries may
have unstable governments, more volatile currencies and less established
markets.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
markets in which it trades go down. Individual stocks and the overall stock
market may experience short-term volatility as well as extended periods of
decline or little growth. Individual stocks are affected by factors such as
corporate earnings, production, management and sales. Individual stocks may also
be affected by the demand for a particular type of stock, such as growth stocks
or the stocks of companies with a particular market capitalization. Stock
markets are affected by numerous factors, including interest rates, the outlook
for corporate profits, the health of the national and world economies, national
and world social and political events, and the fluctuations of other stock
markets around the world.
SMALL CAP RISK. The Fund's investments in smaller, newer companies may be
riskier than investments in larger, more established companies. The stocks of
small capitalization companies are usually less stable in price and less liquid
than the stocks of larger companies.
RISKS RELATED TO INVESTING FOR GROWTH. Different types of stocks tend to shift
into and out of favor with stock market investors depending on market and
economic conditions. Because the Fund focuses on growth-style stocks, the Fund's
performance may at times be better or worse than the performance of stock funds
that focus on other types of stocks, or that have a broader investment style.
15
<PAGE> 17
Fund Summaries -- Gartmore Global Small Companies Fund
MARKET TRENDS RISK. Market trends pose special risks in that from time to time
the stock market may not favor growth-oriented stocks. Rather, the market could
favor value securities or may not favor equities at all.
For more detailed information about the Fund's investments and risks, see "More
About the Funds" beginning on page 18.
PERFORMANCE
No performance information is provided because the Fund will not begin
operations until on or about September 1, 2000.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the Global Small Companies Fund.
<TABLE>
<CAPTION>
Institutional
Service
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
upon purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Service
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
-----------------------------------------------------------------
<S> <C> <C> <C>
Management Fees(5) 1.15% 1.15% 1.15%
.................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.................................................................
Other Expenses(6) 0.50% 0.35% 0.42%
-----------------------------------------------------------------
TOTAL ANNUAL FUND 2.15% 2.91% 1.98%
OPERATING EXPENSES(7)
</TABLE>
---------------
(1) If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" on page 23.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A contingent deferred sales charge (CDSC) ranging from 5% to 1% is charged
when you sell Class B shares within the first six years of purchase. Class B
shares are converted to Class A shares after you have held them for seven
years. See "Buying, Selling and Exchanging Fund Shares -- Selling
Shares -- Contingent deferred sales charge (CDSC) on Class A and Class B
shares" on page 27.
(5) The Fund will commence operations on September 1, 2000. As a result, the
management fee represents the fee which is payable to VGAMT under its
contract with the Fund.
(6) As a new fund these are estimates for the current fiscal year ending in
October 31, 2000. These estimates do not take into account the expense
limitation agreement between the Fund and VGAMT.
(7) For the fiscal year ending October 31, 2000, VGAMT has agreed to waive
management fees and, if necessary, to reimburse the Fund for the cost of
"Other Expenses" so that Total Annual Fund Operating Expenses will not
exceed 2.15% for Class A shares, 2.75% for Class B shares and 1.82% for
Institutional Service Class shares. The Fund is authorized to reimburse
VGAMT for management fees previously waived and/or for the cost of Other
Expenses paid by the VGAMT provided that any such reimbursement will not
cause the Fund to exceed the expense limitations noted above. The Fund's
ability to reimburse VGAMT in this manner only applies to fees paid or
reimbursements made by VGAMT at some time within the first five years from
the time the Fund commenced operations.
16
<PAGE> 18
Fund Summaries -- Gartmore Global Small Companies Fund
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses and does not take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
-------------------------------------------------------------
<S> <C> <C>
Class A Shares $781 $1,209
.............................................................
Class B Shares $794 $1,201
.............................................................
Institutional Service Class Shares $201 $ 901
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $781 $1,209
............................................................
Class B Shares $294 $ 901
............................................................
Institutional Service Class Shares $201 $ 901
</TABLE>
17
<PAGE> 19
MORE ABOUT THE FUNDS
This section contains a summary discussion of the general risks of investing in
a Fund. As with any mutual fund, there can be no guarantee that a Fund will meet
its goals or that its performance will be positive for any period of time.
PRINCIPAL INVESTMENTS AND TECHNIQUES
The Funds may use the principal investment techniques described below to
increase returns, protect assets or diversify investments. These techniques
involve certain risks. For more information about the Funds' investment
strategies and techniques, please refer to the Statement of Additional
Information (SAI).
PREFERRED STOCK. Holders of preferred stocks normally have the right to receive
dividends at a fixed rate but do not participate in other amounts available for
distribution by the issuer. Dividends on preferred stock may be cumulative, and
cumulative dividends must be paid before common shareholders receive any
dividends. Because preferred stock dividends usually must be paid before common
stock dividends, preferred stocks generally entail less risk than common stocks.
Upon liquidation, preferred stocks are entitled to a specified liquidation
preference, which is generally the same as the par or stated value, and are
senior in right of payment to common stock. Preferred stocks do not represent a
liability of the issuer and, therefore, do not offer as great a degree of
protection of capital or assurance of continued income as investments in
corporate debt securities. In addition, preferred stocks are subordinated in
right of payment to all debt obligations and creditors of the issuer, and
convertible securities may be subordinated to other preferred stock of the same
issuer.
CONVERTIBLE SECURITIES. Convertible securities -- also known as convertibles --
include bonds, debentures, notes, preferred stocks, and other securities.
Convertibles are a hybrid security that have characteristics of both bonds and
stocks. Like bonds, they pay interest. Because they can be converted into common
stock within a set period of time, at a specified price or formula, convertibles
also offer the chance for capital appreciation, like common stocks.
Convertibles tend to be more stable in price than the underlying common stock,
although price changes in the underlying common stock can affect the
convertible's market value. For example, as an underlying common stock loses
value, convertibles present less opportunity for capital appreciation, and may
also lose value. Convertibles, however, may sustain their value better than the
common stock because they pay income, which tends to be higher than common stock
dividend yields.
Because of this fixed-income feature, convertibles may compete with bonds as a
good source of dependable income. Therefore, if interest rates increase and
"newer," better-paying bonds become more attractive, the value of convertibles
may decrease. Conversely, if interest rates decline, convertibles could increase
in value.
Convertibles tend to be more secure than common stock (companies must generally
pay holders of convertibles before they pay holders of common stock), but they
are typically less secure than similar non-convertible securities such as bonds
(bondholders must generally be paid before holders of convertibles and common
stock). Because convertibles are usually subordinate to bonds in terms of
payment priority, convertibles typically are rated below investment grade by a
nationally recognized rating agency, or they are not rated at all.
WARRANTS. A warrant is a security that gives the holder of the warrant the
right to buy common stock at a specified price for a specified period of time.
Warrants are considered speculative and have no value if they are not exercised
before their expiration date.
DERIVATIVES. A derivative is a contract whose value is based on the performance
of an underlying financial asset, index or other investment. For example, an
option is a derivative because its value changes in relation to the performance
of an underlying stock. The value of an option on a futures contract varies with
the value of the underlying futures contract, which in turn varies with the
value of the underlying commodity or security. Derivatives are available based
on the performance of assets, interest rates, currency exchange rates, and
various domestic foreign indexes. Derivatives afford leverage and can also be
used in hedging portfolios.
REITS. The Fund may invest in real estate investment trusts (REITs). REITs are
pooled investment vehicles which invest primarily in income producing real
estate or real estate related loans or interests. REITs are generally classified
as equity REITs, mortgage REITs or hybrid REITs. Equity REITs invest the
majority of their assets directly in real property and derive income primarily
from the collection of rents. Equity REITs can also realize capital gains by
selling properties that have appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive income from the
collection of interest payments. Hybrid REITs combine the investment strategies
of Equity REITs and Mortgage REITs.
18
<PAGE> 20
REITs involve certain risks that are associated with direct ownership of real
estate and with the real estate industry in general. These risks include, among
others, possible declines in the value of real estate, possible lack of
availability of mortgage funds, and extended vacancies of properties.
DEPOSITARY RECEIPTS. The Fund may invest indirectly in securities of foreign
issuers through sponsored or unsponsored American Depositary Receipts (ADRs),
Global Depositary Receipts (GDRs) and International Depositary Receipts (IDRs)
(collectively, depositary receipts). Depositary receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. In addition, the issuers of the stock of unsponsored
depositary receipts are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the depositary receipts. ADRs are typically
issued by a U.S. bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. GDRs, IDRs, and other types of
depositary receipts are typically issued by foreign banks or trust companies and
evidence ownership of underlying securities issued by either a foreign or United
States corporation. Depositary receipts which are not denominated in U.S.
dollars will be subject to foreign currency exchange rate risks. Certain
depositary receipts may not be listed on an exchange and therefore may be
considered illiquid securities.
PRINCIPAL RISKS
FOREIGN RISK -- Foreign security investment involves special risks not present
in U.S. investments that can increase the chances that the Fund will lose money.
- COUNTRY -- General securities market movements in any country in which the
Fund has investments, are likely to affect the value of the Fund's
securities that trade in the country. These movements will affect a Fund's
share price and the Fund's performance. The political, economic and social
structures of some countries in which the Fund invests may be less stable
and more volatile than those in the U.S. The risk of investing in these
countries include the possibility of the imposition of exchange controls,
currency devaluation, foreign ownership limitations, expropriation,
restrictions on removal of currency or other assets, nationalization of
assets, punitive taxes and certain custody and settlement risks.
- FOREIGN MARKETS -- A Fund is subject to the risk that because there are
generally fewer investors in foreign markets and a smaller number of
securities traded each day, it may make it difficult for the Fund to buy
and sell certain securities. In addition, prices of foreign securities may
go up and down more than prices of securities traded in the U.S. Also,
brokerage commissions and other costs of buying and selling securities
often are higher in foreign countries than they are in the United States.
This reduces the amount the Fund can earn on its investments.
- GOVERNMENTAL SUPERVISION AND REGULATION/ACCOUNTING STANDARDS -- Foreign
companies are not subject to the same disclosure, accounting, auditing and
financial reporting standards and practices as U.S. companies. A Fund may
have greater difficulty voting proxies, exercising shareholder rights,
pursuing legal remedies and obtaining judgments with respect to foreign
investments in foreign courts than with respect to U.S. companies in U.S.
courts. Many foreign governments supervise and regulate stock exchanges,
brokers and the sale of securities less than the U.S. does. Other countries
may not have laws to protect investors the way that the U.S. securities
laws do. Accounting standards in other countries are not necessarily the
same as in the U.S. If the accounting standards in another country do not
require as much detail as U.S. accounting standards, it may be harder for
the Fund's portfolio manager to completely and accurately determine a
company's financial condition.
- CURRENCY -- A significant portion of a Fund's investments will generally be
denominated in foreign currencies. Changes in foreign currency exchange
rates will affect the value of what the Fund owns and the Fund's share
price. Generally, when the U.S. dollar rises in value against a foreign
currency, an investment in that country loses value because that currency
is worth fewer U.S. dollars. Devaluation of currency by a country's
government or banking authority also has a significant impact on the value
of any securities denominated in that currency.
- EUROPEAN ECONOMIC AND MONETARY UNION (EMU) -- A number of European
countries have entered into EMU in an effort to reduce trade barriers
between themselves and eliminate fluctuations in their currencies. EMU has
established a single European currency (the euro),
19
<PAGE> 21
More About the Funds
which was introduced in January 1, 1999 and is expected to replace the
existing national currencies of all initial EMU participants by July 1,
2002. Certain securities (beginning with government and corporate bonds)
were redenominated in the euro. These securities trade and make dividend
and other payments only in euros. Like other investment companies and
business organizations, including the companies in which the Funds invest,
the Fund could be adversely affected:
- If the transition to euro, or EMU as a whole, does not proceed as
planned.
- If a participating country withdraws from EMU.
- If the computing, accounting and trading systems used by the Fund's
service providers, or by other entities with which the Fund or its
service providers do business, are not capable of recognizing the
euro as a distinct currency.
SMALL CAP RISK. Historically, the securities of small companies have been more
volatile in price than larger company securities, especially over the short
term. Among the reasons for the greater price volatility are the less certain
growth prospects of small companies, the lower degree of liquidity in the
markets for such securities, the greater impact caused by changes in investor
perception of value, and the greater sensitivity of small cap companies to
changing economic conditions. In addition, small cap companies may:
- lack depth of management
- lack a proven track record
- be unable to generate funds necessary for growth or development
- be developing or marketing new products or services for which markets are
not yet established and may never become established
- market products or services which may become quickly obsolete.
TEMPORARY DEFENSIVE POSITIONS
In response to economic, political or unusual market conditions, each Fund may
invest up to 100% of its assets in cash or money market obligations. Should this
occur, a Fund may not meet its investment objectives and may miss potential
market upswings.
20
<PAGE> 22
MANAGEMENT
INVESTMENT ADVISER
Villanova Global Asset Management Trust (VGAMT), 1200 River Road, Conshohocken,
Pennsylvania 19428, manages the investment of the assets and supervises the
daily business affairs of each of the Funds. VGAMT was organized in July 2000,
and advises mutual funds and other institutional separate accounts.
Each Fund pays VGAMT a management fee, which is based on the Funds' average
daily net assets.
<TABLE>
<CAPTION>
Fund Fee
--------------------------------
<S> <C>
Emerging Markets 1.15%
................................
International Growth 1.00%
................................
Global Leaders 1.00%
................................
European Growth 1.00%
................................
Global Small Companies 1.15%
</TABLE>
SUBADVISER
Subject to the supervision of VGAMT and the Trustees, Gartmore will manage each
Fund's assets in accordance with a Fund's investment objective and strategies.
Gartmore makes investment decisions for each Fund and, in connection with such
investment decisions, places purchase and sell orders for securities.
Gartmore is a global asset manager dedicated to serving the needs of U.S. based
investors. Gartmore was formed in 1995 as a registered investment adviser and
manages more than $1 billion in assets.
Gartmore takes a team approach to portfolio construction, allowing investors to
benefit from the skills of all the members of the team not just one investment
manager.
PORTFOLIO MANAGEMENT TEAM -- GARTMORE EMERGING MARKETS FUND
Christopher Palmer and Philip Ehrmann of the Pacific and Emerging Markets Equity
Team are the portfolio managers for the Gartmore Emerging Markets Fund. In that
capacity, they are responsible for the day-to-day management of the Fund,
including the selection of the Fund's investments.
Mr. Palmer joined Gartmore as an investment manager on the Pacific and Emerging
Markets Equity Team in 1995. In 1999, he became responsible for managing U.S.
portfolios for Gartmore.
Mr. Ehrmann joined Gartmore as Head of the Emerging Markets Equity team in 1995.
Phillip has also managed U.S. portfolios for Gartmore since 1995.
PORTFOLIO MANAGEMENT TEAM -- GARTMORE INTERNATIONAL GROWTH FUND
Stephen Watson, leader of the International Equities Team, is primarily
responsible for the investment management of the Gartmore International Growth
Fund.
Mr. Watson joined Gartmore in 1993 as a global fund manager. He is currently the
Chief Investment Officer for Gartmore and a member of Gartmore's Global Policy
Group.
PORTFOLIO MANAGEMENT TEAM -- GARTMORE GLOBAL LEADERS FUND
Gary Smith, Brian O'Neill and Neil Rogan, Gartmore's global specialists, are
responsible for managing the Gartmore Global Leaders Fund.
Gary Smith joined Gartmore as Head of the Investment Risk Consultancy Team in
1990. He provides full quantitative research support for Gartmore's active
investment managers. He also advises clients in the area of long-term strategy
and issues related to benchmarks and risk controls. Mr. Smith became responsible
for managing U.S. portfolios for Gartmore in 2000.
Brian O'Neill joined Gartmore in 1981 and became responsible for managing U.S.
portfolios for Gartmore in 1997.
Neil Rogan joined Gartmore as Head of the Asia Pacific Team in September of
1997. In 2000, he became responsible for managing U.S. portfolios for Gartmore
and is currently head of the International Equities Team. Prior to joining
Gartmore, Mr. Rogan served as a Director and senior fund manager for Jardine
Fleming Investment Management in Hong Kong from 1992 to 1997.
PORTFOLIO MANAGEMENT TEAM -- GARTMORE EUROPEAN GROWTH FUND
The European Equity Team is responsible for the investment management of the
Gartmore European Growth Fund.
PORTFOLIO MANAGEMENT TEAM -- GARTMORE GLOBAL SMALL COMPANIES FUND
The Global Small Companies Team is responsible for the investment management of
the Global Small Companies Fund.
21
<PAGE> 23
BUYING, SELLING AND EXCHANGING FUND SHARES
CHOOSING A SHARE CLASS
As noted in the Fund Summaries, the Funds offer three different share classes to
give investors different price and cost options. Class A and Class B shares of
the Funds are available to all investors; Institutional Service Class shares are
available to a limited group of investors.
With Class A shares, you pay a sales charge (known as a front-end sales charge)
when you purchase the shares; and with Class B shares, you pay a sales charge
(known as a contingent deferred sales charge or CDSC) if you sell your shares
within six years after purchase. Sales charges are paid to Nationwide Advisory
Services, Inc. (NAS), the Funds' principal distributor, which either retains
them or pays a selling representative. There is no such charge on Institutional
Service Class shares.
Class A and Class B shares both pay distribution and/or service fees under a
Distribution Plan. These fees are retained by NAS or paid by NAS to brokers for
distribution and shareholder services. Class A and Institutional Service Class
shares may pay administrative service fees. These fees are paid to brokers and
other entities who provide administrative support services to the beneficial
owners of the shares.
If you want lower annual fund expenses, Class A shares may be right for you,
particularly if you qualify for a reduction or waiver of sales charges. If you
do not want to pay an up-front sales charge, and you anticipate holding your
shares for the long term, Class B shares may be more appropriate.
As the Fund's principal distributor, NAS reserves the right to reject an order
in excess of $100,000 for Class B shares and an order for Class B shares for
Individual Retirement Accounts (IRA accounts) for shareholders 70 1/2 years old
and older.
When choosing a share class, consider the following:
<TABLE>
<CAPTION>
Class A shares Class B shares
----------------------------------------------------------
<S> <C>
Front-end sales charge means No front-end sales charge,
that a portion of your so your full investment
initial investment goes immediately goes toward
toward the sales charge, and buying shares
is not invested
..........................................................
Reductions and waivers of No reductions of the CDSC
the sales charges available available, but waivers
available
..........................................................
Lower expenses than Class B Higher distribution and
shares means higher service fees than Class A
dividends per share shares mean lower dividends
per share
</TABLE>
<TABLE>
<CAPTION>
Class A shares Class B shares
----------------------------------------------------------
<S> <C>
Conversion features are not After seven years, Class B
applicable shares convert into Class A
shares, which reduces your
future Fund expenses
..........................................................
No sales charges when shares CDSC if shares are sold
are sold back to the Fund(1) within six years: 5% in the
first year, 4% in the
second, 3% in the third and
fourth years, 2% in the
fifth, and 1% in the sixth
year
</TABLE>
---------------
(1) A CDSC of up to 1% may be charged on certain redemptions of Class A shares
purchased without a sales charge.
For investors who are eligible to purchase Institutional Service Class shares,
the purchase of Institutional Service Class shares will be preferable to
purchasing Class A or Class B Shares.
WHO CAN BUY INSTITUTIONAL SERVICE CLASS SHARES
The Institutional Service Class shares are available for purchase only by the
following:
- retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
roll-over individual retirement accounts from such plans
- tax-exempt employee benefit plans for which third party administrators
provide recordkeeping services and are compensated by the Fund for such
services
- a bank, trust company or similar financial institution investing for its
own account or for the account of its trust customers for whom such
financial institution is exercising investment discretion in purchasing
Institutional Service Class shares, where the investment is part of a
program that collects an administrative service fee
- registered investment advisers investing on behalf of institutions and
high net-worth individuals where the adviser is compensated by the Fund
for services it provides
- life insurance separate accounts to fund the benefits of variable annuity
contracts issued to governmental entities as an investment option under
their deferred compensation plans as defined under Section 457 of the
Internal Revenue Code (the Code) or qualified plans adopted pursuant to
Section 401(a) of the Code.
22
<PAGE> 24
BUYING SHARES
PURCHASE PRICE. The purchase or "offering" price of one share of a Fund is its
"net asset value" (NAV) next determined after the order is received, plus any
applicable sales charge. A separate NAV is calculated for each class of a Fund.
Generally, the NAV is based on the market value of the securities owned by the
Fund less its liabilities. The NAV for a class is determined by dividing the
total market value of the securities owned by a Fund, allocable to such class,
less liabilities allocable to such class, by the total number of that class'
outstanding shares. NAV is determined at the earlier of the close of regular
trading on the New York Stock Exchange (usually 4 p.m. Eastern Time) on each day
the Exchange is open for trading.
MINIMUM INVESTMENTS --
CLASS A AND CLASS B SHARES
To open an account (per Fund) $1,000
................................................................................
Through the Automatic Asset
Accumulation plan per transaction $25
................................................................................
Additional investments (per Fund) $100
................................................................................
MINIMUM INVESTMENT --
INSTITUTIONAL CLASS SHARES
To open an account (per Fund) $50,000
................................................................................
Additional investments (per Fund) $5,000
-------------------------------------
If you purchase Class A or Class B shares through an account at a broker (other
than NAS), different minimum account requirements may apply. These minimum
investment requirements for Class A shares do not apply to certain retirement
plans. Call 1-800-848-0920 for more information.
The Funds do not calculate NAV on the following days:
- Christmas Day
- New Year's Day
- Martin Luther King, Jr. Day
- Presidents' Day
- Good Friday
- Memorial Day
- Independence Day
- Labor Day
- Thanksgiving Day
- Other days when the New York Stock Exchange is not open.
Each Fund reserves the right not to determine an NAV when:
- It has not received any orders to purchase, sell or exchange shares
- Changes in the value of a Fund's portfolio do not affect the NAV.
If current prices are not available for a security, or if Villanova SA Capital
Trust (VSA), as the Fund's administrator, or its agent, determines a price does
not represent fair value, a Fund's investments may be valued at fair value in
accordance with procedures adopted by the Board of Trustees. To the extent that
a Fund's investments are traded in markets that are open when the New York Stock
Exchange is closed, the value of the Fund's investments may change on days when
shares cannot be purchased or redeemed.
IN-KIND PURCHASES. The Funds reserve the right to accept payment for shares in
the form of securities that are permissible investments for the Funds.
CLASS A SALES CHARGES
The chart below shows the Class A sales charges, which decrease as the amount of
your investment increases.
<TABLE>
<CAPTION>
Sales charge
Sales charge as % of
as % of amount
Amount of purchase offering price invested
------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5.75% 6.10%
..................................................................
$50,000 to $99,999 4.50 4.71
..................................................................
$100,000 to $249,999 3.50 3.63
..................................................................
$250,000 to $499,999 2.50 2.56
..................................................................
$500,000 to $999,999 2.00 2.04
..................................................................
$1 million to $24,999,999 0.50 0.50
..................................................................
$25 million or more 0.25 0.25
</TABLE>
CLASS A FINDERS' FEES
For certain sales of Class A shares at net asset value to employer sponsored
retirement plans (other than those investing in the Funds through a variable
insurance product), NAS will pay a finder's fee to the dealer when the Fund
shares are purchased. For the dealer to be eligible for the finder's fee, the
following requirements apply:
- The purchase of shares must be made by one employer sponsored retirement
plan within a twelve month period from the purchase of any Nationwide Family
of Funds (Nationwide Funds) Class A shares;
- The purchase can be made in any combination of Nationwide Funds; and
- The employer sponsored plan will be subject to a contingent deferred sales
charge for shares redeemed in any employer initiated redemption within the
first three
23
<PAGE> 25
Buying, Selling and Exchanging Fund Shares
years of purchase (the applicable contingent deferred sales charge will be
charged as described below).
If these conditions are met, a finder's fee will be paid on the purchase at the
following rates:
1.00% for sales of the Nationwide Funds of $1 million and more but less
than $3 million
0.50% for sales of the Nationwide Funds of $3 million and more but less
than $50 million
0.25% for sales of the Nationwide Funds of $50 million or more
REDUCTION AND WAIVER OF CLASS A SALES CHARGES
Shareholders can reduce or eliminate Class A shares' initial sales charge
through one or more of the discounts described below:
- Increase the amount of your investment. The table above shows how the sales
charge decreases as the amount of your investment increases.
- Family Member Discount. Members of your family who live at the same address
can combine investments, possibly reducing the sales charge.
- Lifetime Additional Discount. You can add the value of any of the
Nationwide Mutual Funds Class A shares you already own No Class A for Money
Market with the value of the shares you are purchasing, which may reduce the
applicable sales charge.
- Insurance Proceeds or Benefits Discount Privilege. If you use the proceeds
of an insurance policy issued by any member of Nationwide Insurance to
purchase Class A shares, you will pay one-half of the published sales charge
if you make your investment 60 days after receiving the proceeds.
- No sales charge on a repurchase. If you sell shares from your Nationwide
account, we allow you a one-time privilege to reinvest some or all of the
proceeds in shares of the same class. You will not pay a sales charge on
Class A shares that you buy within 30 days of selling Class A shares of an
equal or lesser amount if you have already paid a sales charge. Remember, if
you realize a gain or a loss on your sale of shares, the transaction is
taxable and reinvestment will not affect the amount of capital gains tax
that is due. If you realize a loss on your sale and your reinvest, some or
all of the loss may not be allowed as a tax deduction depending on the
amount you reinvest.
- Letter of Intent Discount. State in writing that during a 13-month period
you or a group of family members who live at the same address will purchase
or hold at least $50,000 in Class A shares and your sales charge will be
based on the total amount you intend to invest. The letter may be backdated
up to 90 days to include previous purchases for determining your sales
charge. Your Letter of Intent is not a binding obligation to buy shares of a
Fund; it is merely a statement of intent. Call 1-800-848-0920 for more
information.
WAIVER OF CLASS A SALES CHARGES
The Class A sales charges will be waived for purchases made by the following:
- Any person purchasing through an account with an unaffiliated brokerage firm
that has an agreement with NAS to waive sales charges for those persons;
- Directors, officers, full-time employees, sales representatives and their
employees or any investment advisory clients of a broker-dealer having a
dealer/selling agreement with NAS;
- Any person who pays for the shares with the proceeds of a sale of mutual
fund shares. To qualify, you must have paid an initial sales charge or CDSC
on the shares sold. You must purchase the Class A shares within 60 days of
the sale, and you must request the waiver when you purchase the Class A
shares (NAS may require evidence that you qualify for this waiver);
- Employer-sponsored retirement plans, including pension, profit sharing or
deferred compensation plans which are qualified under sections 401(a),
403(b) or 457 of the Internal Revenue Code;
- Trustees and retired Trustees of Nationwide Mutual Funds (including its
predecessor Trusts);
- Directors, officers, full-time employees, sales representatives and their
employees, and retired directors, officers, employees, and sales
representatives, their spouses, children or immediate relatives (including
mother, father, brothers, sisters, grandparents and grandchildren) and
immediate relatives of deceased employees of any member of Nationwide
Insurance and Nationwide Financial companies, or any investment advisory
clients of VGAMT, VSA, NAS and their affiliates; and
- Directors, officers, full-time employees, their spouses, children or
immediate relatives and immediate relatives of deceased employees of any
sponsor group which may be affiliated with the Nationwide Insurance and
24
<PAGE> 26
Nationwide Financial companies from time to time, (including but not limited
to, Farmland Insurance Industries, Inc., Maryland Farm Bureau, Inc., Ohio
Farm Bureau Federation, Inc., Pennsylvania Farmers' Association, Ruralite
Services, Inc., and Southern States Cooperative).
Additional investors eligible for sales charge waivers may be found in the SAI.
CONVERSION OF CLASS B SHARES
After you have held your Class B shares for seven years, we will automatically
convert them into Class A shares (without charge), which carry the lower 12b-1
fee. We will also convert any Class B shares that you purchased with reinvested
dividends and other distributions for those shares at that time. Remember,
because the NAV of Class A shares is usually higher than the NAV of Class B
shares, you may receive fewer Class A shares than the number of Class B shares
converted, but the total dollar value will be the same. We do the conversion on
the first business day of the month following the seventh anniversary of the
date of your purchase.
25
<PAGE> 27
Buying, Selling and Exchanging Fund Shares
HOW TO PLACE YOUR PURCHASE ORDER
If you wish to purchase Class A or Class B shares, you may purchase the shares
using one of the methods described below. Eligible entities wishing to purchase
Institutional Service Class shares should contact NAS at 1-800-848-0920 for
information regarding such purchases.
BY MAIL -- Complete and mail the application with a check or money order made
payable to; Nationwide Advisory Services, Inc., P.O. Box 1492, Columbus, Ohio
43216-1492. Payment must be made in U.S. dollars only and drawn on a U.S. bank.
NAS will not accept third-party checks.
BY WIRE -- You can request that your bank transmit funds (federal funds) by wire
to the Funds' custodian bank. In order to use this method, you must call NAS by
4 p.m. Eastern Time, and the wire must be received by the custodian bank by the
close of business on the day you placed your order or your order will be
cancelled. You may be liable for any loss to a Fund resulting from the
cancellation. Please note that your bank may charge a fee to wire funds. If you
choose this method to open your account, you must call our toll-free number
before you wire your investment, and you must then complete and fax the
application.
BY TELEPHONE (NATIONWIDE FUNDS NOW) -- Call 1-800-637-0012, our automated
voice-response system, 24 hours a day, seven days a week, for easy access to
mutual fund information. You can choose from a menu of choices to conduct
transactions and hear Fund price information, mailing and wiring instructions
and other mutual fund information. You must complete the appropriate section of
the application to use Nationwide Funds NOW to make purchases.
THROUGH AN AUTHORIZED BROKER -- NAS has relationships with certain brokers and
other financial intermediaries who are authorized to accept, or designate
intermediaries to accept, purchase and redemption orders for the Funds. If you
purchase through such a broker, your order will be priced at the NAV next
determined after your broker or its designated intermediary accepts it. Contact
your broker to determine whether it has an established relationship with NAS.
BY ON-LINE ACCESS -- Log on to our website www.nationwidefunds.com 24 hours a
day, seven days a week, for easy access to your mutual fund accounts. Once you
have reached the website, you will be instructed on how to select a password and
perform transactions. You can choose to receive information on all transactions,
such as purchases, redemptions and exchanges. A Fund may terminate the ability
to buy Fund shares on this website at any time, in which case you may continue
to buy shares by mail, wire, telephone or through an authorized broker as
described in this Prospectus.
ADDITIONAL SHAREHOLDER SERVICES
Shareholders are entitled to a wide variety of services by contacting:
NATIONWIDE FUNDS NOW 1-800-637-0012
Our customized voice-response system, available 24 hours a day, seven days a
week
CUSTOMER SERVICE 1-800-848-0920
Representatives are available to answer questions between 8 a.m. and 5 p.m.
Eastern Time. (Monday through Friday, except Thursday, in which case
representatives are available between 9:30 a.m. and 5 p.m. Eastern Time.)
For additional information on buying shares and shareholder services, call our
customer service number listed above or contact your sales representative.
SELLING SHARES
You can sell -- also known as redeeming -- your shares of the Funds at any time,
subject to certain restrictions described below. The price you will receive when
you sell your shares will be the NAV (less any applicable sales charges) next
determined after NAS receives your properly completed order to sell in its
offices in Columbus, Ohio. Of course, the value of the shares you sell may be
more or less than you paid for the shares depending upon the market value of a
Fund's investments at the time of the sale.
Properly completed orders contain all necessary paperwork to authorize and
complete the transaction. NAS may require all account holder signatures, updated
account registration and bank account information and, depending on
circumstances, a signature guarantee.
Your order to sell shares can be made in writing or by telephone (if you
authorized telephone transactions on your application) or by on-line access.
Generally, we will pay you for the shares that you sell within three days after
receiving your order to sell. Payment for shares you recently purchased by check
may be delayed until the check clears,
26
<PAGE> 28
which may take up to 10 business days from the date of your purchase.
RESTRICTIONS ON SALES
You may not be able to sell your shares of a Fund or a Fund may delay paying you
the proceeds from a redemption when the New York Stock Exchange is closed (other
than customary weekend and holiday closings) or if trading is restricted or if
an emergency exists.
SIGNATURE GUARANTEE -- CLASS A AND CLASS B SHARES
A signature guarantee is required under the following circumstances:
- if a redemption is over $100,000,
- if your account registration has changed within the last 30 days,
- if the redemption check is made payable to anyone other than the registered
shareholder,
- if the proceeds are sent to a bank account not previously designated or
changed within the past 30 days, or
- if the proceeds are mailed to an address other than the address of record.
NAS reserves the right to require a signature guarantee in other circumstances,
without notice.
CONTINGENT DEFERRED SALES CHARGE (CDSC) ON CLASS A AND CLASS B SHARES
You must pay a CDSC if you sell Class B shares within six years of purchase,
unless you are entitled to a waiver. The sales charge applies if your sale
causes the value of Class B shares in your account to fall below the total
amount of all purchases of Class B shares you made during the preceding six
years. The sales charge is applied to your original purchase price, or the
current market value of the shares being sold, whichever is less. The amount of
the sales charge will decrease as illustrated in the following chart:
<TABLE>
<CAPTION>
1 2 3 4 5 6 7
Sale within year years years years years years years or more
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales charge 5% 4% 3% 3% 2% 1% 0%
</TABLE>
All purchases during the month are grouped together and will be treated as if
made on the last day of the preceding month.
We do not impose a CDSC on Class B shares purchased through reinvested dividends
and distributions. If you sell your Class B shares and reinvest the proceeds in
Class B shares within 30 days, NAS will deposit an amount equal to any CDSC you
paid into your account. Also, we will waive the CDSC if you sell shares
following the death or disability of a shareholder, provided the sale occurs
within one year of the shareholder's death or a determination of disability and
for mandatory withdrawals from IRA accounts after age 70 1/2 years. For more
information, see the SAI.
Under certain circumstances, employer-sponsored retirement plans investing in
Class A shares without a sales charge (other than those investing in the Fund
through variable insurance products) may be charged a CDSC if shares are
redeemed within three years after purchase. The CDSC will be 1% for the first
year, 0.50% for the second year and 0.25% for the third year.
HOW TO PLACE YOUR SALE ORDER
You can request the sale of your Class A or Class B shares in any of the ways
described below. A signature guarantee may be required under certain
circumstances. Please refer to the section above entitled "Signature
guarantee -- Class A and Class B shares". Eligible entities wishing to sell
Institutional Service Class shares should contact NAS at 1-800-848-0920 for
information regarding such sales.
BY TELEPHONE (NATIONWIDE FUNDS NOW) -- Calling 1-800-637-0012 connects you to
our automated voice-response system, available 24 hours a day, seven days a
week, for easy access to mutual fund information. You can sell shares and have
the check mailed to your address of record, unless you declined this option on
your application. Only the following types of accounts can use Nationwide Funds
NOW to sell shares: Individual, Joint, Transfer on Death, Trust, and Uniform
Gift/Transfer to Minor accounts. You can call 1-800-637-0012 after 7 p.m.
Eastern Time to learn the day's closing share price.
CAPITAL GAINS TAXES
If you sell Fund shares for more than you paid for them, you may have capital
gains, which are subject to federal (and in some cases, state) income tax. For
more information, see "Distributions and Taxes -- Selling Fund Shares" on page
30.
CUSTOMER SERVICE LINE -- Unless you declined the telephone redemption privilege
on your application, you can call and request that a check payable to the
shareholder of record be mailed to the address of record. You can sell shares of
your IRA by telephone if we receive the proper forms. The
27
<PAGE> 29
Buying, Selling and Exchanging Fund Shares
distribution from an IRA will be subject to a mandatory 10% federal withholding
tax, unless you inform us in writing not to withhold taxes. For additional
information or to request the forms, please call the customer service line at
1-800-848-0920. The Funds will use procedures to confirm that telephone
instructions are genuine. If the Funds act on instructions they reasonably
believed were genuine, they will not be liable for any loss, injury, damage or
expense that occurs as a result, and the Funds will be held harmless for any
loss, claims or liability arising from their compliance with the instructions.
NAS may record telephone instructions to sell shares. The Funds reserve the
right to revoke this privilege at any time, without notice to shareholders, and
to request the sale in writing, signed by all shareholders on the account.
BY BANK WIRE -- NAS can wire the funds directly to your account at a commercial
bank (a voided check must be attached to your application) unless you declined
telephone privileges on your application. (This authorization will remain in
effect until you give NAS written notice of its termination.) Your funds will be
wired to your bank on the next business day after your order to sell shares has
been processed. We will deduct a $20 fee from the proceeds of your sale for this
service. Your financial institution may also charge you a fee for receiving the
wire. Funds sent outside the U.S. may be subject to a higher fee.
BY AUTOMATED CLEARING HOUSE (ACH) -- Your funds can be sent to your bank via ACH
on the second business day after your order to sell has been received by NAS.
Funds sent through ACH should reach your bank in two business days. There is no
fee for this service. (This authorization will remain in effect until you give
NAS written notice of its termination.)
BY MAIL OR FAX -- Write a letter to Nationwide Advisory Services, Inc., P.O. Box
1492, Columbus, Ohio 43216-1492 or fax it to 614-249-8705. Please be sure your
letter is signed by all account owners. Be sure to include your account number
and the Fund from which you wish to make a redemption. For a distribution from
an IRA, you must include your date of birth and indicate whether or not you want
NAS to withhold federal income tax from your proceeds. Your sale of shares will
be processed on the date NAS receives your signed letter or fax. If your fax is
received after 4 p.m. Eastern Time, it will be processed the next business day.
NAS reserves the right to require the original document if you fax your letter.
THROUGH AN AUTHORIZED BROKER -- NAS has relationships with certain brokers and
other financial intermediaries who are authorized to accept, or designate
intermediaries to accept, purchase and redemption orders for the Funds. If you
have an account with such a broker, your redemption order will be priced at the
NAV next determined after your order has been accepted by your broker or its
designated intermediary. Your broker or financial intermediary may charge a fee
for this service.
BY ON-LINE ACCESS -- Log on to our website www.nationwidefunds.com 24 hours a
day, seven days a week, for easy access to your mutual fund accounts. Once you
have reached the website, you will be instructed on how to select a password and
perform transactions. You can choose to receive information on all of our funds
as well as your own personal accounts. You may also perform transactions, such
as purchases, redemptions and exchanges. A Fund may terminate the ability to
sell Fund shares on this website at any time, in which case you may continue to
sell shares by mail, wire, telephone or through an authorized broker as
described in this Prospectus.
ACCOUNTS WITH LOW BALANCES -- CLASS A AND B SHARES
We may sell the rest of your shares and close your account if you make a sale
that reduces the value of your account to less than $250. Before the account is
closed, we will give you notice and allow you 90 days to purchase additional
shares to avoid this action. We do this because of the high cost of maintaining
small accounts. This does not apply to Automatic Asset Accumulation accounts.
For additional information on selling your shares, call our customer service
line at 1-800-848-0920 or contact your sales representative.
DISTRIBUTION PLAN
In addition to the sales charges which you may pay for Class A and Class B
shares, the Trust has adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act, which permits the Class A and Class B shares of the
Funds to compensate NAS -- as distributor -- for expenses associated with
distributing their shares and providing shareholder services.
DISTRIBUTION AND SERVICE FEES
Under the Distribution Plan, Class A and Class B shares of a Fund pays NAS
compensation accrued daily and paid
28
<PAGE> 30
monthly. Each Fund shall pay amounts not exceeding an annual amount of:
<TABLE>
<CAPTION>
CLASS AS A % OF DAILY NET ASSETS
----------------------------------------------------------------
<S> <C>
Class A shares 0.25% (distribution or service fee)
................................................................
Class B shares 1.00% (0.25% service fee)
</TABLE>
Because these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
EXCHANGING SHARES
You can exchange the shares you own for shares of another fund within Nationwide
Mutual Funds (except the Morley Capital Accumulation Fund) so long as they are
the same class of shares, both accounts have the same owner, and your first
purchase in the new fund meets the fund's minimum investment requirement. For
example, you can exchange Class A shares of one fund for Class A shares of
another, but you can not exchange Class A shares for Class B shares or
Institutional Service Class shares.
CAPITAL GAINS TAXES
Exchanging shares is considered a sale and purchase of shares for federal and
state income tax purposes. Therefore, if the shares you exchange are worth more
than you paid for them, you may have to pay federal and/or state income taxes.
For more information, see "Distributions and Taxes -- Exchanging Fund Shares" on
page 30.
There is no sales charge for exchanges of Class B shares or Institutional
Service Class shares. However, if your exchange involves certain Class A shares,
you may have to pay the difference between the sales charge if a higher sales
charge applies. If you exchange Prime Shares of the Nationwide Money Market Fund
into another fund, you must pay the applicable sales charge, unless it has
already been paid. If you exchange Class B shares for Prime Shares of the
Nationwide Money Market Fund, the time you hold the shares in the Nationwide
Money Market Fund will not be counted for purposes of calculating any CDSC. If
you then sell your Prime Shares of the Nationwide Money Market Fund, you will
pay the sales charge that would have been charged if the shares had been sold at
the time they were exchanged into the Nationwide Money Market Fund. If you
exchange your Prime Shares of the Nationwide Money Market Fund back into Class B
shares, the time you hold Class B shares prior to the exchange will be counted
for purposes of calculating the CDSC.
HOW TO PLACE YOUR EXCHANGE ORDER
You can request an exchange of shares in writing, by fax or by phone or by
on-line access (see "Buying Shares -- How to place your purchase order" on page
26 or the back cover for contact information). If you make your request in
writing, please be sure all account owners sign the letter. Your exchange will
be processed on the date NAS receives your signed letter or fax. If your fax is
received after 4 p.m. Eastern Time, it will be processed the next day. If you
fax your request, we reserve the right to ask for the original. You can
automatically request an exchange 24 hours a day, seven days a week, by calling
Nationwide Funds NOW, our automated voice-response system or by logging on to
our website. You will have automatic exchange privileges unless you request not
to on your application. The Trust reserves the right to amend or discontinue
these exchange privileges upon 60 days written notice to shareholders.
EXCESSIVE TRADING
The Trust reserves the right to reject any exchange request it believes will
increase transaction costs, or otherwise adversely affect other shareholders.
Specifically, exchange activity may be limited to 12 exchanges within a one year
period or 1% of the Fund's NAV. A Fund may delay forwarding redemption proceeds
for up to seven days if the investor redeeming shares is engaged in excessive
trading, or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management, or would adversely affect the
Fund.
29
<PAGE> 31
DISTRIBUTIONS AND TAXES
The following information is provided to help you understand the income and
capital gains you can earn from owning Fund shares, as well as the federal taxes
you may have to pay on this income. For tax advice regarding your personal tax
situation, please speak with your tax adviser.
DISTRIBUTIONS OF INCOME DIVIDENDS
Each quarter, each Fund distributes any available income dividends to
shareholders. Income dividends are taxable to you as ordinary income for federal
income tax purposes, even if reinvested in the Fund, unless you hold your shares
in a qualified tax-deferred plan or account, or are otherwise not subject to
federal income tax. The amount of income dividends distributed to you will be
reported in a Form 1099, which we will send to you during the tax season each
year (unless you hold your shares in a qualified tax-deferred plan or account or
are otherwise not subject to federal income tax). For corporate shareholders, a
portion of each year's distributions may be eligible for the corporate dividend-
received deduction.
DISTRIBUTIONS OF CAPITAL GAINS
If a Fund has net realized capital gains at the end of the calendar year
(meaning the gains from sales of securities exceed any losses from sales), it
will distribute this capital gain to shareholders annually. You must pay federal
income taxes on any capital gains distributed to you, unless you hold your
shares in a qualified tax-deferred plan or account or are otherwise not subject
to federal income tax. On Form 1099, we will report the amount of net short-term
capital gains and net long-term capital gains distributed to you during the
year. Currently, for individuals, long-term capital gains are taxed at a maximum
rate of 20%; short-term capital gains are taxed as ordinary income, such as
interest or dividends. For more information regarding capital gains tax rates,
speak with your tax adviser.
REINVESTING DISTRIBUTIONS
All income and capital gains distributions will be reinvested in shares of the
applicable Fund. You may request a payment in cash in writing if distributions
are in excess of $5. You may be subject to tax on reinvested distributions. If
distribution checks (1) are returned and marked as "undeliverable" or (2) remain
uncashed for six months, your account will be changed automatically so that all
future distributions are reinvested in your account. Checks that remain uncashed
for six months will be canceled and the money reinvested in the Fund as of the
cancellation date. No interest is paid during the time the check is outstanding.
CHANGING YOUR DISTRIBUTION OPTION
If you want to change your distribution option, you must notify us by the record
date for a dividend or distribution in order for it to be effective for that
dividend or distribution.
You may be subject to federal backup withholding at a rate of 31% of each
distribution unless you certify that the taxpayer identification number you gave
us is correct, and that you are not subject to withholding. (We will, however,
withhold taxes if the Internal Revenue Service notifies us that such
certifications are not accurate, or as may otherwise be required under the
Internal Revenue Code.)
STATE AND LOCAL TAXES
Distributions may be subject to state and local taxes, even if not subject to
federal income taxes. State and local tax laws vary; please consult your tax
adviser.
SELLING FUND SHARES
Selling Fund shares for more than you paid for them gives you a capital gain,
which is subject to federal income tax. The amount of tax depends on how long
you held your shares. For individuals, long-term capital gains are currently
taxed at a maximum rate of 20%; and short-term capital gains are taxed as
ordinary income, such as interest or dividends. Capital gains from your sale of
Fund shares is not reported on Form 1099; you or your tax adviser should keep
track of your purchases, sales, and any resulting gain or loss. If you do sell
Fund shares for a loss, you may be able to use this capital loss to offset
certain capital gains you may have.
EXCHANGING FUND SHARES
Exchanging your shares of a Fund is considered a sale for income tax purposes.
Therefore, if the shares you exchange are worth more than you paid for them, you
may have capital gains, which are subject to the federal income taxes described
above. If you exchange Fund shares for a loss, you may be able to use this
capital loss to offset certain capital gains you may have.
30
<PAGE> 32
INFORMATION FROM NATIONWIDE
Please read this Prospectus before you invest, and keep it with your records.
The following documents contains additional information about the Funds. To
obtain a document free of charge, contact us at the address or number listed
below.
- SAI (incorporated by reference into this Prospectus)
- Annual Report (which contains a discussion of the market conditions and
investment strategies that significantly affect each Fund's performance) (as
available)
- Semi-Annual Report (as available)
FOR ADDITIONAL INFORMATION CONTACT:
Nationwide Advisory Services, Inc.
P.O. Box 1492
Columbus, OH 43216-1492
(614) 249-8705 (fax)
[Nationwide Logo]
FOR INFORMATION, ASSISTANCE AND WIRE ORDERS:
1-800-848-0920 (toll free, 8 a.m. - 5 p.m. Eastern Time (Monday through Friday,
except Thursday, in which case representatives are available between 9:30 a.m.
and 5 p.m. Eastern Time)).
FOR 24-HOUR ACCOUNT ACCESS:
1-800-637-0012 (toll free)
Also, visit the Nationwide Family of Funds' website at www.nationwidefunds.com
INFORMATION FROM THE SECURITIES AND EXCHANGE COMMISSION (SEC)
You can obtain copies of Fund documents from the SEC as follows:
IN PERSON:
Public Reference Room in Washington, D.C. (For their hours of operation, call
1-202-942-8090.)
BY MAIL:
Securities and Exchange Commission
Public Reference Section
Washington, D.C. 20549-0102
(The SEC charges a fee to copy any documents.)
ON THE EDGAR DATABASE VIA THE INTERNET:
www.sec.gov
BY ELECTRONIC REQUEST:
[email protected]
INVESTMENT COMPANY ACT FILE NO. 811-08495
NATIONWIDE FAMILY OF FUNDS
P.O. BOX 1492
COLUMBUS, OHIO 43216-1492
<PAGE> 33
[NATIONWIDE LOGO] FAMILY OF FUNDS
GARTMORE EMERGING MARKETS FUND
GARTMORE INTERNATIONAL GROWTH FUND
GARTMORE GLOBAL LEADERS FUND
PROSPECTUS
SEPTEMBER 1, 2000
2000
As with all mutual funds,
the Securities and
Exchange Commission has
not approved or
disapproved these Funds'
shares or determined
whether this prospectus
is complete or accurate.
To state otherwise is a
crime.
[NATIONWIDE(R) FAMILY OF FUNDS LOGO]
<PAGE> 34
TABLE OF CONTENTS
FUND SUMMARIES................................................................ 2
Gartmore Emerging Markets
Fund.......................................................................... 3
Gartmore International Growth
Fund.......................................................................... 6
Gartmore Global Leaders
Fund.......................................................................... 9
MORE ABOUT THE FUNDS..........................................................12
Principal Investments and
Techniques....................................................................12
Principal Risks...............................................................13
MANAGEMENT....................................................................15
Investment
Adviser.......................................................................15
Subadviser....................................................................15
Portfolio Management
Teams.........................................................................15
BUYING, SELLING AND EXCHANGING FUND SHARES....................................16
Choosing a Share
Class.........................................................................16
Buying Shares.................................................................17
Selling Shares................................................................20
Distribution
Plan..........................................................................22
Exchanging
Shares........................................................................23
DISTRIBUTIONS AND TAXES.......................................................24
Distributions of Income
Dividends.....................................................................24
Distributions of Capital
Gains.........................................................................24
Reinvesting
Distributions.................................................................24
State and Local
Taxes.........................................................................24
Selling Fund
Shares........................................................................24
Exchanging Fund
Shares........................................................................24
ADDITIONAL INFORMATION................................................BACK COVER
1
<PAGE> 35
FUND SUMMARIES
This prospectus provides information about the Gartmore Emerging Markets Fund,
Gartmore International Growth Fund and Gartmore Global Leaders Fund (together
the Funds). "You" and "your" refer to potential investors and current
shareholders of one or more of the Funds.
A QUICK NOTE ABOUT SHARE CLASSES
Each Fund has three different share classes -- Class A, Class B and
Institutional Service Class. The fees, sales charges and expenses for each share
class are different, but each share class of a particular Fund represents an
investment in the same assets of that Fund. Having different share classes
simply lets you choose the cost structure that's right for you.
The fees and expenses for each Fund are set forth in the Fund Summaries. For
more information about which share class is right for you, see "Buying, Selling
and Exchanging Fund Shares -- Choosing a Share Class" beginning on page 16.
2
<PAGE> 36
FUND SUMMARIES -- GARTMORE EMERGING MARKETS FUND
This section summarizes key information about the Funds. Use these summaries to
compare the Funds with other mutual funds. More detailed information about the
risks and investment techniques of each Fund can be found in "More About the
Funds" beginning on page 12.
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks long term capital growth by investing primarily in equity
securities of companies located in emerging market countries. The Fund's
investment objective may be changed without shareholder approval.
Villanova Global Asset Management Trust (VGAMT), the Fund's investment adviser,
has chosen Gartmore Global Partners (Gartmore) as a subadviser to manage the
Fund's portfolio on a day-to-day basis. To achieve its objective, the Fund
normally invests at least 65% of its assets in companies located in emerging
markets or developing countries. The Fund intends to invest in securities of
companies in at least three of these countries at any one time. The investment
managers select regions or countries and companies they believe have the
potential to deliver unexpected earnings growth.
The Fund invests primarily in common stocks, preferred stocks, convertible
securities, equity interests in foreign investment funds or trusts, and
depositary receipts.
Emerging market countries are countries that
- have been defined as emerging market countries by the International Finance
Corporation.
- have a low-to-middle income economy according to the World Bank, or
- are listed as developing countries in World Bank publications.
There are over 25 countries that currently qualify as emerging market countries,
including Argentina, Brazil, Chile, China, the Czech Republic, Columbia,
Ecuador, Greece, Hong Kong, Indonesia, India, Malaysia, Mexico, the Philippines,
Poland, Portugal, Peru, Russia, Singapore, South Africa, Thailand, Taiwan and
Turkey. [Inset Box]
The subadviser looks for emerging markets that are believed to have the
potential for strong economic growth, and tries to avoid emerging markets that
it believes might be politically or economically risky.
The subadviser is a growth stock investor and its investment philosophy rests on
two fundamental principles:
- Growth investing produces superior returns over the longer term, but consensus
growth (or the market's expectations for earnings forecasts) produces average
returns. Therefore, the subadviser focuses on identifying companies with
unexpected earnings growth potential.
- The subadviser looks to sell companies where there is significant risk that
earnings growth will disappoint against expectations.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases. The value of shares will also be
impacted in part by the subadviser's ability to assess economic conditions and
investment opportunities.
FOREIGN RISK. The Fund invests primarily in equity securities of companies in
emerging market countries, including securities denominated in foreign
currencies. Those investments involve special risks and are generally riskier
than domestic investments and other kinds of foreign investments, particularly
because emerging market countries may be less stable from a political and
economic standpoint than other countries. These risks include political and
economic risks, currency fluctuations, higher transaction costs, and delayed
settlement. It may also be more difficult to buy and sell securities in emerging
market countries. Foreign securities may also be less liquid and harder to value
than U.S. securities. In addition, the securities in which the Fund invests are
subject to significant changes in value due to exchange rate fluctuations.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
markets in which it trades go down. Individual stocks and the overall stock
markets may experience short-term volatility as well as extended periods of
decline or little growth. Individual stocks are affected by factors such as
corporate earnings, production, management and sales. Individual stocks may also
be affected by the demand for a particular type of stock, such as growth stocks
or the stocks of companies with a particular market capitalization. Stock
markets are affected by numerous factors, including interest rates, the outlook
for corporate profits, the health of the national and world economies, national
and world social and political events, and the fluctuations of other stock
markets around the world.
3
<PAGE> 37
Fund Summaries -- Gartmore Emerging Markets Fund
RISKS RELATED TO INVESTING FOR GROWTH. Different types of stocks tend to shift
into and out of favor with stock market investors depending on market and
economic conditions. Because the Fund focuses on growth-style stocks, the Fund's
performance may at times be better or worse than the performance of stock funds
that focus on other types of stocks, or that have a broader investment style.
MARKET TRENDS RISK. Market trends pose special risks in that from time to time
the stock market may not favor growth-oriented stocks. Rather, the market could
favor value securities or may not favor equities at all.
RISK OF HOLDING A SMALL NUMBER OF SECURITIES. Because the Fund typically holds
fewer securities than other stock funds, the price fluctuations of any security
will have a greater impact on the Fund.
For more detailed information about the Fund's investments and risks, see "More
About the Funds" beginning on page 12.
PERFORMANCE
No performance information is provided because the Fund will not begin
operations until on or about September 1, 2000.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the Emerging Markets Fund.
<TABLE>
<CAPTION>
Institutional
Service
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
upon purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Service
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
-----------------------------------------------------------------
<S> <C> <C> <C>
Management Fees(5) 1.15% 1.15% 1.15%
.................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.................................................................
Other Expenses(6) 1.06% 0.91% 0.98%
-----------------------------------------------------------------
TOTAL ANNUAL FUND 2.46% 3.06% 2.13%
OPERATING EXPENSES(7)
</TABLE>
---------------
(1) If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" on page 17.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A contingent deferred sales charge (CDSC) ranging from 5% to 1% is charged
when you sell Class B shares within the first six years of purchase. Class B
shares are converted to Class A shares after you have held them for seven
years. See "Buying, Selling and Exchanging Fund Shares -- Selling
Shares -- Contingent deferred sales charge (CDSC) on Class A and Class B
shares" on page 21.
(5) The Fund will commence operations on September 1, 2000. As a result, the
management fee represents the fee which is payable to VGAMT under its
contract with the Fund.
(6) As a new fund these are estimates for the current fiscal year ending in
October 31, 2000. These estimates do not take into account the expense
limitation agreement between the Fund and VGAMT.
(7) For the fiscal year ending October 31, 2000, VGAMT has agreed to waive
management fees and, if necessary, to reimburse the Fund for the cost of
"Other Expenses" so that Total Annual Fund Operating Expenses will not
exceed 2.15% for Class A shares, 2.75% for Class B shares and 1.82% for
Institutional Service Class shares. The Fund is authorized to reimburse
VGAMT for management fees previously waived and/or for the cost of Other
Expenses paid by the VGAMT provided that any such reimbursement will not
cause the Fund to exceed the expense limitations
4
<PAGE> 38
Fund Summaries -- Gartmore Emerging Markets Fund
noted above. The Fund's ability to reimburse VGAMT in this manner only
applies to fees paid or reimbursements made by VGAMT at some time within the
first five years from the time the Fund commenced operations.
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses and does not take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $810 $1,297
............................................................
Class B Shares $809 $1,245
............................................................
Institutional Service Class Shares $216 $ 667
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $810 $1,297
............................................................
Class B Shares $309 $ 945
............................................................
Institutional Service Class Shares $216 $ 667
</TABLE>
5
<PAGE> 39
FUND SUMMARIES -- GARTMORE INTERNATIONAL GROWTH FUND
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks long term capital growth by investing primarily in equity
securities of companies in Europe, Australia, the Far East and other regions,
including developing countries. The Fund's investment objective may be changed
without shareholder approval.
VGAMT, the Fund's investment adviser, has chosen Gartmore as a subadviser to
manage the Fund's portfolio on a day-to-day basis. To achieve its objective, the
Fund invests at least 65% of its assets in established companies located in at
least three countries other than the United States. The investment managers
select regions or countries, and companies they believe have the potential for
unexpected growth.
The Fund primarily invests in equity securities which may include common stocks,
preferred stocks, equity interests in foreign investment funds or trusts,
convertible securities, real estate investment trust securities and depositary
receipts.
The Fund may also invest in securities that are not part of its principal
investment strategies as described above, but it will not hold more than 10% of
its assets in any one type of these securities.
The subadviser is a growth stock investor and its investment philosophy rests on
two fundamental principles:
- Growth investing produces superior returns over the longer term, but consensus
growth (or the market's expectations for earnings forecasts) produces average
returns. Therefore, the subadviser focuses on identifying unexpected earnings
growth.
- The subadviser looks to sell companies where there is significant risk that
earnings growth will disappoint against expectations.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases. The value of shares will also be
impacted in part by the subadviser's ability to assess economic conditions and
investment opportunities.
FOREIGN RISK. Investments in foreign securities involve special risks which are
not associated with domestic investments. These risks include political and
economic risks, currency fluctuations, higher transaction costs, and delayed
settlement. To the extent that the Fund invests in countries with emerging
markets, the foreign securities risks are magnified since these countries may
have unstable governments, more volatile currencies and less established
markets.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
markets in which it trades go down. Individual stocks and the overall stock
markets may experience short-term volatility as well as extended periods of
decline or little growth. Individual stocks are affected by factors such as
corporate earnings, production, management and sales. Individual stocks may also
be affected by the demand for a particular type of stock, such as growth stocks
or the stocks of companies with a particular market capitalization. Stock
markets are affected by numerous factors, including interest rates, the outlook
for corporate profits, the health of the national and world economies, national
and world social and political events, and the fluctuations of other stock
markets around the world.
MARKET TRENDS RISK. Market trends pose special risks in that from time to time
the stock market may not favor growth-oriented stocks. Rather, the market could
favor value securities or may not favor equities at all.
RISKS RELATED TO INVESTING FOR GROWTH. Different types of stocks tend to shift
into and out of favor with stock market investors depending on market and
economic conditions. Because the Fund focuses on growth-style stocks, the Fund's
performance may at times be better or worse than the performance of stock funds
that focus on other types of stocks, or that have a broader investment style.
For more detailed information about the Fund's investments and risks, see "More
About the Funds" beginning on page 12.
6
<PAGE> 40
Fund Summaries -- Gartmore International Growth Fund
PERFORMANCE
No performance information is provided because the Fund will not begin
operations until on or about September 1, 2000.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the International Growth Fund.
<TABLE>
<CAPTION>
Institutional
Service
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
upon purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Service
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
-----------------------------------------------------------------
<S> <C> <C> <C>
Management Fees(5) 1.00% 1.00% 1.00%
.................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.................................................................
Other Expenses(6) 1.06% 0.91% 0.98%
-----------------------------------------------------------------
TOTAL ANNUAL FUND 2.31% 2.91% 1.98%
OPERATING EXPENSES(7)
</TABLE>
---------------
(1) If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" on page 17.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A contingent deferred sales charge (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 B Class
shares" on page 21.
(5) The Fund will commence operations on September 1, 2000. As a result, the
management fee represents the fee which is payable to VGAMT under its
contract with the Fund.
(6) As a new fund these are estimates for the current fiscal year ending in
October 31, 2000. These estimates do not take into account the expense
limitation agreement between the Fund and VGAMT.
(7) For the fiscal year ending October 31, 2000, VGAMT has agreed to waive
management fees and, if necessary, to reimburse the Fund for the cost of
"Other Expenses" so that Total Annual Fund Operating Expenses will not
exceed 1.85% for Class A shares, 2.45% for Class B shares and 1.52% for
Institutional Service Class shares. The Fund is authorized to reimburse
VGAMT for management fees previously waived and/or for the cost of Other
Expenses paid by the VGAMT provided that any such reimbursement will not
cause the Fund to exceed the expense limitations noted above. The Fund's
ability to reimburse VGAMT in this manner only applies to fees paid or
reimbursements made by VGAMT at some time within the first five years from
the time the Fund commenced operations.
7
<PAGE> 41
Fund Summaries -- Gartmore International Growth Fund
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses and does not take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
............................................................
Class B Shares $794 $1,201
............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
............................................................
Class B Shares $294 $ 901
............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
8
<PAGE> 42
FUND SUMMARIES -- GARTMORE GLOBAL LEADERS FUND
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks long term capital growth by investing primarily in equity
securities of global leaders. A global leader is defined as a company with a
strong and improving franchise that is well positioned to take advantage of
growth opportunities in its industry. The Fund's investment objective may be
changed without shareholder approval.
VGAMT, the Fund's investment adviser, has chosen Gartmore as a subadviser to
manage the Fund's portfolio on a day-to-day basis. To achieve its objective, the
Fund invests at least 65% of its assets in equity securities of companies from
at least three countries, including the U.S. The rationale for investing in
global leaders arises from the increasing globalization of many industries
coupled with the increasing importance of multinational strategies in leading
corporations. Global leaders may be domiciled anywhere globally while adopting
winning multinational strategies within their industries.
The subadviser adopts a sector approach and looks to identify those companies
within industries with a strong and improving competitive advantage in key
growth segments. The portfolio management team then identifies which of these
companies have earnings growth potential greater than that expected by the stock
market.
The Fund primarily invests in equity securities which may include equity
interests in investment funds or trusts, convertible securities, common stocks,
preferred stocks, warrants, real estate investment trust securities and
depositary receipts.
The Fund may also invest in securities that are not part of its principal
investment strategies as described above, but it will not hold more than 10% of
its assets in any one type of these securities.
The subadviser is a growth stock investor and its investment philosophy rests on
two fundamental principles:
- Growth investing produces superior returns over the longer term, but consensus
growth (or the market's expectations for earnings forecasts) produces average
returns. Therefore, the subadviser focuses on identifying unexpected earnings
growth.
- The subadviser looks to sell companies where there is significant risk that
earnings growth will disappoint against expectations.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases. The value of shares will also be
impacted in part by the portfolio management team's ability to assess economic
conditions and investment opportunities.
FOREIGN RISK. Investments in foreign securities involve special risks which are
not associated with domestic investments. These risks include political and
economic risks, currency fluctuations, higher transaction costs, and delayed
settlement. To the extent that the Fund invests in countries with emerging
markets, the foreign securities risks are magnified since these countries may
have unstable governments, more volatile currencies and less established
markets.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
markets in which it trades go down. Individual stocks and the overall stock
market may experience short-term volatility as well as extended periods of
decline or little growth. Individual stocks are affected by factors such as
corporate earnings, production, management and sales. Individual stocks may also
be affected by the demand for a particular type of stock, such as growth stocks
or the stocks of companies with a particular market capitalization. The stock
market is affected by numerous factors, including interest rates, the outlook
for corporate profits, the health of the national and world economies, national
and world social and political events, and the fluctuations of other stock
markets around the world.
RISKS RELATED TO INVESTING FOR GROWTH. Different types of stocks tend to shift
into and out of favor with stock market investors depending on market and
economic conditions. Because the Fund focuses on growth-style stocks, the Fund's
performance may at times be better or worse than the performance of stock funds
that focus on other types of stocks, or that have a broader investment style.
MARKET TRENDS RISK. Market trends pose special risks in that from time to time
the stock market may not favor growth-oriented stocks. Rather, the market could
favor value securities or may not favor equities at all.
For more detailed information about the Fund's investments and risks, see "More
About the Funds" beginning on page 12.
9
<PAGE> 43
Fund Summaries -- Gartmore Global Leaders Fund
PERFORMANCE
No performance information is provided because the Fund will not begin
operations until on or about September 1, 2000.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the Global Leaders Fund.
<TABLE>
<CAPTION>
Institutional
Service
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
upon purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Service
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
-----------------------------------------------------------------
<S> <C> <C> <C>
Management Fees(5) 1.00% 1.00% 1.00%
.................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.................................................................
Other Expenses(6) 1.06% 0.91% 0.98%
-----------------------------------------------------------------
TOTAL ANNUAL FUND 2.31% 2.91% 1.98%
OPERATING EXPENSES(7)
</TABLE>
---------------
(1) If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" on page 17.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A contingent deferred sales charge (CDSC) ranging from 5% to 1% is charged
when you sell Class B shares within the first six years of purchase. Class B
shares are converted to Class A shares after you have held them for seven
years. See "Buying, Selling and Exchanging Fund Shares -- Selling
Shares -- Contingent deferred sales charge (CDSC) on Class A and Class B
shares" on page 21.
(5) The Fund will commence operations on September 1, 2000. As a result, the
management fee represents the fee which is payable to VGAMT under its
contract with the Fund.
(6) As a new fund these are estimates for the current fiscal year ending in
October 31, 2000. These estimates do not take into account the expense
limitation agreement between the Fund and VGAMT.
(7) For the fiscal year ending October 31, 2000, VGAMT has agreed to waive
management fees and, if necessary, to reimburse the Fund for the cost of
"Other Expenses" so that Total Annual Fund Operating Expenses will not
exceed 1.75% for Class A shares, 2.35% for Class B shares and 1.42% for
Institutional Service Class shares. The Fund is authorized to reimburse
VGAMT for management fees previously waived and/or for the cost of Other
Expenses paid by the VGAMT provided that any such reimbursement will not
cause the Fund to exceed the expense limitations noted above. The Fund's
ability to reimburse VGAMT in this manner only applies to fees paid or
reimbursements made by VGAMT at some time within the first five years from
the time the Fund commenced operations.
10
<PAGE> 44
Fund Summaries -- Gartmore Global Leaders Fund
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses and does not take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
-------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
.............................................................
Class B Shares $794 $1,201
.............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $796 $1,255
............................................................
Class B Shares $294 $ 901
............................................................
Institutional Service Class Shares $201 $ 621
</TABLE>
11
<PAGE> 45
MORE ABOUT THE FUNDS
This section contains a summary discussion of the general risks of investing in
a Fund. As with any mutual fund, there can be no guarantee that a Fund will meet
its goals or that its performance will be positive for any period of time.
PRINCIPAL INVESTMENTS AND TECHNIQUES
The Funds may use the principal investment techniques described below to
increase returns, protect assets or diversify investments. These techniques
involve certain risks. For more information about the Funds' investment
strategies and techniques, please refer to the Statement of Additional
Information (SAI).
PREFERRED STOCK. Holders of preferred stocks normally have the right to receive
dividends at a fixed rate but do not participate in other amounts available for
distribution by the issuer. Dividends on preferred stock may be cumulative, and
cumulative dividends must be paid before common shareholders receive any
dividends. Because preferred stock dividends usually must be paid before common
stock dividends, preferred stocks generally entail less risk than common stocks.
Upon liquidation, preferred stocks are entitled to a specified liquidation
preference, which is generally the same as the par or stated value, and are
senior in right of payment to common stock. Preferred stocks do not represent a
liability of the issuer and, therefore, do not offer as great a degree of
protection of capital or assurance of continued income as investments in
corporate debt securities. In addition, preferred stocks are subordinated in
right of payment to all debt obligations and creditors of the issuer, and
convertible securities may be subordinated to other preferred stock of the same
issuer.
CONVERTIBLE SECURITIES. Convertible securities -- also known as convertibles --
include bonds, debentures, notes, preferred stocks, and other securities.
Convertibles are a hybrid security that have characteristics of both bonds and
stocks. Like bonds, they pay interest. Because they can be converted into common
stock within a set period of time, at a specified price or formula, convertibles
also offer the chance for capital appreciation, like common stocks.
Convertibles tend to be more stable in price than the underlying common stock,
although price changes in the underlying common stock can affect the
convertible's market value. For example, as an underlying common stock loses
value, convertibles present less opportunity for capital appreciation, and may
also lose value. Convertibles, however, may sustain their value better than the
common stock because they pay income, which tends to be higher than common stock
dividend yields.
Because of this fixed-income feature, convertibles may compete with bonds as a
good source of dependable income. Therefore, if interest rates increase and
"newer," better-paying bonds become more attractive, the value of convertibles
may decrease. Conversely, if interest rates decline, convertibles could increase
in value.
Convertibles tend to be more secure than common stock (companies must generally
pay holders of convertibles before they pay holders of common stock), but they
are typically less secure than similar non-convertible securities such as bonds
(bondholders must generally be paid before holders of convertibles and common
stock). Because convertibles are usually subordinate to bonds in terms of
payment priority, convertibles typically are rated below investment grade by a
nationally recognized rating agency, or they are not rated at all.
WARRANTS. A warrant is a security that gives the holder of the warrant the
right to buy common stock at a specified price for a specified period of time.
Warrants are considered speculative and have no value if they are not exercised
before their expiration date.
DERIVATIVES. A derivative is a contract whose value is based on the performance
of an underlying financial asset, index or other investment. For example, an
option is a derivative because its value changes in relation to the performance
of an underlying stock. The value of an option on a futures contract varies with
the value of the underlying futures contract, which in turn varies with the
value of the underlying commodity or security. Derivatives are available based
on the performance of assets, interest rates, currency exchange rates, and
various domestic foreign indexes. Derivatives afford leverage and can also be
used in hedging portfolios.
REITS. The Fund may invest in real estate investment trusts (REITs). REITs are
pooled investment vehicles which invest primarily in income producing real
estate or real estate related loans or interests. REITs are generally classified
as equity REITs, mortgage REITs or hybrid REITs. Equity REITs invest the
majority of their assets directly in real property and derive income primarily
from the collection of rents. Equity REITs can also realize capital gains by
selling properties that have appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive income from the
collection of interest payments. Hybrid REITs combine the investment strategies
of Equity REITs and Mortgage REITs.
12
<PAGE> 46
REITs involve certain risks that are associated with direct ownership of real
estate and with the real estate industry in general. These risks include, among
others, possible declines in the value of real estate, possible lack of
availability of mortgage funds, and extended vacancies of properties.
DEPOSITARY RECEIPTS. The Fund may invest indirectly in securities of foreign
issuers through sponsored or unsponsored American Depositary Receipts (ADRs),
Global Depositary Receipts (GDRs) and International Depositary Receipts (IDRs)
(collectively, depositary receipts). Depositary receipts may not necessarily be
denominated in the same currency as the underlying securities into which they
may be converted. In addition, the issuers of the stock of unsponsored
depositary receipts are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of the depositary receipts. ADRs are typically
issued by a U.S. bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. GDRs, IDRs, and other types of
depositary receipts are typically issued by foreign banks or trust companies and
evidence ownership of underlying securities issued by either a foreign or United
States corporation. Depositary receipts which are not denominated in U.S.
dollars will be subject to foreign currency exchange rate risks. Certain
depositary receipts may not be listed on an exchange and therefore may be
considered illiquid securities.
PRINCIPAL RISKS
FOREIGN RISK -- Foreign security investment involves special risks not present
in U.S. investments that can increase the chances that the Fund will lose money.
- COUNTRY -- General securities market movements in any country in which the
Fund has investments, are likely to affect the value of the Fund's
securities that trade in the country. These movements will affect a Fund's
share price and the Fund's performance. The political, economic and social
structures of some countries in which the Fund invests may be less stable
and more volatile than those in the U.S. The risk of investing in these
countries include the possibility of the imposition of exchange controls,
currency devaluation, foreign ownership limitations, expropriation,
restrictions on removal of currency or other assets, nationalization of
assets, punitive taxes and certain custody and settlement risks.
- FOREIGN MARKETS -- A Fund is subject to the risk that because there are
generally fewer investors in foreign markets and a smaller number of
securities traded each day, it may make it difficult for the Fund to buy
and sell certain securities. In addition, prices of foreign securities may
go up and down more than prices of securities traded in the U.S. Also,
brokerage commissions and other costs of buying and selling securities
often are higher in foreign countries than they are in the United States.
This reduces the amount the Fund can earn on its investments.
- GOVERNMENTAL SUPERVISION AND REGULATION/ACCOUNTING STANDARDS -- Foreign
companies are not subject to the same disclosure, accounting, auditing and
financial reporting standards and practices as U.S. companies. A Fund may
have greater difficulty voting proxies, exercising shareholder rights,
pursuing legal remedies and obtaining judgments with respect to foreign
investments in foreign courts than with respect to U.S. companies in U.S.
courts. Many foreign governments supervise and regulate stock exchanges,
brokers and the sale of securities less than the U.S. does. Other countries
may not have laws to protect investors the way that the U.S. securities
laws do. Accounting standards in other countries are not necessarily the
same as in the U.S. If the accounting standards in another country do not
require as much detail as U.S. accounting standards, it may be harder for
the Fund's portfolio manager to completely and accurately determine a
company's financial condition.
- CURRENCY -- A significant portion of a Fund's investments will generally be
denominated in foreign currencies. Changes in foreign currency exchange
rates will affect the value of what the Fund owns and the Fund's share
price. Generally, when the U.S. dollar rises in value against a foreign
currency, an investment in that country loses value because that currency
is worth fewer U.S. dollars. Devaluation of currency by a country's
government or banking authority also has a significant impact on the value
of any securities denominated in that currency.
- EUROPEAN ECONOMIC AND MONETARY UNION (EMU) -- A number of European
countries have entered into EMU in an effort to reduce trade barriers
between themselves and eliminate fluctuations in their currencies. EMU has
established a single European currency (the euro),
13
<PAGE> 47
More About the Funds
which was introduced in January 1, 1999 and is expected to replace the
existing national currencies of all initial EMU participants by July 1,
2002. Certain securities (beginning with government and corporate bonds)
were redenominated in the euro. These securities trade and make dividend
and other payments only in euros. Like other investment companies and
business organizations, including the companies in which the Funds invest,
the Fund could be adversely affected:
- If the transition to euro, or EMU as a whole, does not proceed as
planned.
- If a participating country withdraws from EMU.
- If the computing, accounting and trading systems used by the Fund's
service providers, or by other entities with which the Fund or its
service providers do business, are not capable of recognizing the
euro as a distinct currency.
SMALL CAP RISK. Historically, the securities of small companies have been more
volatile in price than larger company securities, especially over the short
term. Among the reasons for the greater price volatility are the less certain
growth prospects of small companies, the lower degree of liquidity in the
markets for such securities, the greater impact caused by changes in investor
perception of value, and the greater sensitivity of small cap companies to
changing economic conditions. In addition, small cap companies may:
- lack depth of management
- lack a proven track record
- be unable to generate funds necessary for growth or development
- be developing or marketing new products or services for which markets are
not yet established and may never become established
- market products or services which may become quickly obsolete.
TEMPORARY DEFENSIVE POSITIONS
In response to economic, political or unusual market conditions, each Fund may
invest up to 100% of its assets in cash or money market obligations. Should this
occur, a Fund may not meet its investment objectives and may miss potential
market upswings.
14
<PAGE> 48
MANAGEMENT
INVESTMENT ADVISER
Villanova Global Asset Management Trust (VGAMT), 1200 River Road, Conshohocken,
Pennsylvania 19428, manages the investment of the assets and supervises the
daily business affairs of each of the Funds. VGAMT was organized in July 2000,
and advises mutual funds and other institutional separate accounts.
Each Fund pays VGAMT a management fee, which is based on the Funds' average
daily net assets.
<TABLE>
<CAPTION>
Fund Fee
-----------------------------------------------------
<S> <C>
Gartmore Emerging Markets 1.15%
.....................................................
Gartmore International Growth 1.00%
.....................................................
Gartmore Global Leaders 1.00%
</TABLE>
SUBADVISER
Subject to the supervision of VGAMT and the Trustees, Gartmore will manage each
Fund's assets in accordance with a Fund's investment objective and strategies.
Gartmore makes investment decisions for each Fund and, in connection with such
investment decisions, places purchase and sell orders for securities.
Gartmore is a global asset manager dedicated to serving the needs of U.S. based
investors. Gartmore was formed in 1995 as a registered investment adviser and
manages more than $1 billion in assets.
Gartmore takes a team approach to portfolio construction, allowing investors to
benefit from the skills of all the members of the team not just one investment
manager.
PORTFOLIO MANAGEMENT TEAM -- GARTMORE EMERGING MARKETS FUND
Christopher Palmer and Philip Ehrmann of the Pacific and Emerging Markets Equity
Team are the portfolio managers for the Gartmore Emerging Markets Fund. In that
capacity, they are responsible for the day-to-day management of the Fund,
including the selection of the Fund's investments.
Mr. Palmer joined Gartmore as an investment manager on the Pacific and Emerging
Markets Equity Team in 1995. In 1999, he became responsible for managing U.S.
portfolios for Gartmore.
Mr. Ehrmann joined Gartmore as Head of the Emerging Markets Equity team in 1995.
Phillip has also managed U.S. portfolios for Gartmore since 1995.
PORTFOLIO MANAGEMENT TEAM -- GARTMORE INTERNATIONAL GROWTH FUND
Stephen Watson, leader of the International Equities Team, is primarily
responsible for the investment management of the Gartmore International Growth
Fund.
Mr. Watson joined Gartmore in 1993 as a global fund manager. He is currently the
Chief Investment Officer for Gartmore and a member of Gartmore's Global Policy
Group.
PORTFOLIO MANAGEMENT TEAM -- GARTMORE GLOBAL LEADERS FUND
Gary Smith, Brian O'Neill and Neil Rogan, Gartmore's global specialists, are
responsible for managing the Gartmore Global Leaders Fund.
Gary Smith joined Gartmore as Head of the Investment Risk Consultancy Team in
1990. He provides full quantitative research support for Gartmore's active
investment managers. He also advises clients in the area of long-term strategy
and issues related to benchmarks and risk controls. Mr. Smith became responsible
for managing U.S. portfolios for Gartmore in 2000.
Brian O'Neill joined Gartmore in 1981 and became responsible for managing U.S.
portfolios for Gartmore in 1997.
Neil Rogan joined Gartmore as Head of the Asia Pacific Team in September of
1997. In 2000, he became responsible for managing U.S. portfolios for Gartmore
and is currently the Head of the International Equities Team. Prior to joining
Gartmore, Mr. Rogan served as a Director and senior fund manager for Jardine
Fleming Investment Management in Hong Kong from 1992 to 1997.
15
<PAGE> 49
BUYING, SELLING AND EXCHANGING FUND SHARES
CHOOSING A SHARE CLASS
As noted in the Fund Summaries, the Funds offer three different share classes to
give investors different price and cost options. Class A and Class B shares of
the Funds are available to all investors; Institutional Service Class shares are
available to a limited group of investors.
With Class A shares, you pay a sales charge (known as a front-end sales charge)
when you purchase the shares; and with Class B shares, you pay a sales charge
(known as a contingent deferred sales charge or CDSC) if you sell your shares
within six years after purchase. Sales charges are paid to Nationwide Advisory
Services, Inc. (NAS), the Funds' principal distributor, which either retains
them or pays a selling representative. There is no such charge on Institutional
Service Class shares.
Class A and Class B shares both pay distribution and/or service fees under a
Distribution Plan. These fees are retained by NAS or paid by NAS to brokers for
distribution and shareholder services. Class A and Institutional Service Class
shares may pay administrative service fees. These fees are paid to brokers and
other entities who provide administrative support services to the beneficial
owners of the shares.
If you want lower annual fund expenses, Class A shares may be right for you,
particularly if you qualify for a reduction or waiver of sales charges. If you
do not want to pay an up-front sales charge, and you anticipate holding your
shares for the long term, Class B shares may be more appropriate.
As the Fund's principal distributor, NAS reserves the right to reject an order
in excess of $100,000 for Class B shares and an order for Class B shares for
Individual Retirement Accounts (IRA accounts) for shareholders 70 1/2 years old
and older.
When choosing a share class, consider the following:
<TABLE>
<CAPTION>
Class A shares Class B shares
----------------------------------------------------------
<S> <C>
Front-end sales charge means No front-end sales charge,
that a portion of your so your full investment
initial investment goes immediately goes toward
toward the sales charge, and buying shares
is not invested
..........................................................
Reductions and waivers of No reductions of the CDSC
the sales charges available available, but waivers
available
..........................................................
Lower expenses than Class B Higher distribution and
shares means higher service fees than Class A
dividends per share shares mean lower dividends
per share
</TABLE>
<TABLE>
<CAPTION>
Class A shares Class B shares
----------------------------------------------------------
<S> <C>
Conversion features are not After seven years, Class B
applicable shares convert into Class A
shares, which reduces your
future Fund expenses
..........................................................
No sales charges when shares CDSC if shares are sold
are sold back to the Fund(1) within six years: 5% in the
first year, 4% in the
second, 3% in the third and
fourth years, 2% in the
fifth, and 1% in the sixth
year
</TABLE>
---------------
(1) A CDSC of up to 1% may be charged on certain redemptions of Class A shares
purchased without a sales charge.
For investors who are eligible to purchase Institutional Service Class shares,
the purchase of Institutional Service Class shares will be preferable to
purchasing Class A or Class B Shares.
WHO CAN BUY INSTITUTIONAL SERVICE CLASS SHARES
The Institutional Service Class shares are available for purchase only by the
following:
- retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
roll-over individual retirement accounts from such plans
- tax-exempt employee benefit plans for which third party administrators
provide recordkeeping services and are compensated by the Fund for such
services
- a bank, trust company or similar financial institution investing for its
own account or for the account of its trust customers for whom such
financial institution is exercising investment discretion in purchasing
Institutional Service Class shares, where the investment is part of a
program that collects an administrative service fee
- registered investment advisers investing on behalf of institutions and
high net-worth individuals where the adviser is compensated by the Fund
for services it provides
- life insurance separate accounts to fund the benefits of variable annuity
contracts issued to governmental entities as an investment option under
their deferred compensation plans as defined under Section 457 of the
Internal Revenue Code (the Code) or qualified plans adopted pursuant to
Section 401(a) of the Code.
16
<PAGE> 50
BUYING SHARES
PURCHASE PRICE. The purchase or "offering" price of one share of a Fund is its
"net asset value" (NAV) next determined after the order is received, plus any
applicable sales charge. A separate NAV is calculated for each class of a Fund.
Generally, the NAV is based on the market value of the securities owned by the
Fund less its liabilities. The NAV for a class is determined by dividing the
total market value of the securities owned by a Fund, allocable to such class,
less liabilities allocable to such class, by the total number of that class'
outstanding shares. NAV is determined at the earlier of the close of regular
trading on the New York Stock Exchange (usually 4 p.m. Eastern Time) on each day
the Exchange is open for trading.
MINIMUM INVESTMENTS --
CLASS A AND CLASS B SHARES
To open an account (per Fund) $1,000
................................................................................
Through the Automatic Asset
Accumulation plan per transaction $25
................................................................................
Additional investments (per Fund) $100
................................................................................
MINIMUM INVESTMENT --
INSTITUTIONAL CLASS SHARES
To open an account (per Fund) $50,000
................................................................................
Additional investments (per Fund) $5,000
-------------------------------------
If you purchase Class A or Class B shares through an account at a broker (other
than NAS), different minimum account requirements may apply. These minimum
investment requirements for Class A shares do not apply to certain retirement
plans. Call 1-800-848-0920 for more information.
The Funds do not calculate NAV on the following days:
- Christmas Day
- New Year's Day
- Martin Luther King, Jr. Day
- Presidents' Day
- Good Friday
- Memorial Day
- Independence Day
- Labor Day
- Thanksgiving Day
- Other days when the New York Stock Exchange is not open.
Each Fund reserves the right not to determine an NAV when:
- It has not received any orders to purchase, sell or exchange shares
- Changes in the value of a Fund's portfolio do not affect the NAV.
If current prices are not available for a security, or if Villanova SA Capital
Trust (VSA), as the Fund's administrator, or its agent, determines a price does
not represent fair value, a Fund's investments may be valued at fair value in
accordance with procedures adopted by the Board of Trustees. To the extent that
a Fund's investments are traded in markets that are open when the New York Stock
Exchange is closed, the value of the Fund's investments may change on days when
shares cannot be purchased or redeemed.
IN-KIND PURCHASES. The Funds reserve the right to accept payment for shares in
the form of securities that are permissible investments for the Funds.
CLASS A SALES CHARGES
The chart below shows the Class A sales charges, which decrease as the amount of
your investment increases.
<TABLE>
<CAPTION>
Sales charge
Sales charge as % of
as % of amount
Amount of purchase offering price invested
------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5.75% 6.10%
..................................................................
$50,000 to $99,999 4.50 4.71
..................................................................
$100,000 to $249,999 3.50 3.63
..................................................................
$250,000 to $499,999 2.50 2.56
..................................................................
$500,000 to $999,999 2.00 2.04
..................................................................
$1 million to $24,999,999 0.50 0.50
..................................................................
$25 million or more 0.25 0.25
</TABLE>
CLASS A FINDERS' FEES
For certain sales of Class A shares at net asset value to employer sponsored
retirement plans (other than those investing in the Funds through a variable
insurance product), NAS will pay a finder's fee to the dealer when the Fund
shares are purchased. For the dealer to be eligible for the finder's fee, the
following requirements apply:
- The purchase of shares must be made by one employer sponsored retirement
plan within a twelve month period from the purchase of any Nationwide Family
of Funds (Nationwide Funds) Class A shares;
- The purchase can be made in any combination of Nationwide Funds; and
- The employer sponsored plan will be subject to a contingent deferred sales
charge for shares redeemed in any employer initiated redemption within the
first three years of purchase (the applicable contingent deferred sales
charge will be charged as described below).
17
<PAGE> 51
Buying, Selling and Exchanging Fund Shares
If these conditions are met, a finder's fee will be paid on the purchase at the
following rates:
1.00% for sales of the Nationwide Funds of $1 million and more but less
than $3 million
0.50% for sales of the Nationwide Funds of $3 million and more but less
than $50 million
0.25% for sales of the Nationwide Funds of $50 million or more
REDUCTION AND WAIVER OF CLASS A SALES CHARGES
Shareholders can reduce or eliminate Class A shares' initial sales charge
through one or more of the discounts described below:
- INCREASE THE AMOUNT OF YOUR INVESTMENT. The table above shows how the sales
charge decreases as the amount of your investment increases.
- FAMILY MEMBER DISCOUNT. Members of your family who live at the same address
can combine investments, possibly reducing the sales charge.
- LIFETIME ADDITIONAL DISCOUNT. You can add the value of any of the
Nationwide Mutual Funds Class A shares you already own No Class A for Money
Market with the value of the shares you are purchasing, which may reduce the
applicable sales charge.
- INSURANCE PROCEEDS OR BENEFITS DISCOUNT PRIVILEGE. If you use the proceeds
of an insurance policy issued by any member of Nationwide Insurance to
purchase Class A shares, you will pay one-half of the published sales charge
if you make your investment 60 days after receiving the proceeds.
- NO SALES CHARGE ON A REPURCHASE. If you sell shares from your Nationwide
account, we allow you a one-time privilege to reinvest some or all of the
proceeds in shares of the same class. You will not pay a sales charge on
Class A shares that you buy within 30 days of selling Class A shares of an
equal or lesser amount if you have already paid a sales charge. Remember, if
you realize a gain or a loss on your sale of shares, the transaction is
taxable and reinvestment will not affect the amount of capital gains tax
that is due. If you realize a loss on your sale and your reinvest, some or
all of the loss may not be allowed as a tax deduction depending on the
amount you reinvest.
- LETTER OF INTENT DISCOUNT. State in writing that during a 13-month period
you or a group of family members who live at the same address will purchase
or hold at least $50,000 in Class A shares and your sales charge will be
based on the total amount you intend to invest. The letter may be backdated
up to 90 days to include previous purchases for determining your sales
charge. Your Letter of Intent is not a binding obligation to buy shares of a
Fund; it is merely a statement of intent. Call 1-800-848-0920 for more
information.
WAIVER OF CLASS A SALES CHARGES
The Class A sales charges will be waived for purchases made by the following:
- Any person purchasing through an account with an unaffiliated brokerage firm
that has an agreement with NAS to waive sales charges for those persons;
- Directors, officers, full-time employees, sales representatives and their
employees or any investment advisory clients of a broker-dealer having a
dealer/selling agreement with NAS;
- Any person who pays for the shares with the proceeds of a sale of mutual
fund shares. To qualify, you must have paid an initial sales charge or CDSC
on the shares sold. You must purchase the Class A shares within 60 days of
the sale, and you must request the waiver when you purchase the Class A
shares (NAS may require evidence that you qualify for this waiver);
- Employer-sponsored retirement plans, including pension, profit sharing or
deferred compensation plans which are qualified under sections 401(a),
403(b) or 457 of the Internal Revenue Code;
- Trustees and retired Trustees of Nationwide Mutual Funds (including its
predecessor Trusts);
- Directors, officers, full-time employees, sales representatives and their
employees, and retired directors, officers, employees, and sales
representatives, their spouses, children or immediate relatives (including
mother, father, brothers, sisters, grandparents and grandchildren) and
immediate relatives of deceased employees of any member of Nationwide
Insurance and Nationwide Financial companies, or any investment advisory
clients of VGAMT, VSA, NAS and their affiliates; and
- Directors, officers, full-time employees, their spouses, children or
immediate relatives and immediate relatives of deceased employees of any
sponsor group which may be affiliated with the Nationwide Insurance and
Nationwide Financial companies from time to time, (including but not limited
to, Farmland Insurance Industries, Inc., Maryland Farm Bureau, Inc., Ohio
Farm Bureau Federa-
18
<PAGE> 52
tion, Inc., Pennsylvania Farmers' Association, Ruralite Services, Inc., and
Southern States Cooperative).
Additional investors eligible for sales charge waivers may be found in the SAI.
CONVERSION OF CLASS B SHARES
After you have held your Class B shares for seven years, we will automatically
convert them into Class A shares (without charge), which carry the lower 12b-1
fee. We will also convert any Class B shares that you purchased with reinvested
dividends and other distributions for those shares at that time. Remember,
because the NAV of Class A shares is usually higher than the NAV of Class B
shares, you may receive fewer Class A shares than the number of Class B shares
converted, but the total dollar value will be the same. We do the conversion on
the first business day of the month following the seventh anniversary of the
date of your purchase.
19
<PAGE> 53
Buying, Selling and Exchanging Fund Shares
HOW TO PLACE YOUR PURCHASE ORDER
If you wish to purchase Class A or Class B shares, you may purchase the shares
using one of the methods described below. Eligible entities wishing to purchase
Institutional Service Class shares should contact NAS at 1-800-848-0920 for
information regarding such purchases.
BY MAIL -- Complete and mail the application with a check or money order made
payable to; Nationwide Advisory Services, Inc., P.O. Box 1492, Columbus, Ohio
43216-1492. Payment must be made in U.S. dollars only and drawn on a U.S. bank.
NAS will not accept third-party checks.
BY WIRE -- You can request that your bank transmit funds (federal funds) by wire
to the Funds' custodian bank. In order to use this method, you must call NAS by
4 p.m. Eastern Time, and the wire must be received by the custodian bank by the
close of business on the day you placed your order or your order will be
cancelled. You may be liable for any loss to a Fund resulting from the
cancellation. Please note that your bank may charge a fee to wire funds. If you
choose this method to open your account, you must call our toll-free number
before you wire your investment, and you must then complete and fax the
application.
BY TELEPHONE (NATIONWIDE FUNDS NOW) -- Call 1-800-637-0012, our automated
voice-response system, 24 hours a day, seven days a week, for easy access to
mutual fund information. You can choose from a menu of choices to conduct
transactions and hear Fund price information, mailing and wiring instructions
and other mutual fund information. You must complete the appropriate section of
the application to use Nationwide Funds NOW to make purchases.
THROUGH AN AUTHORIZED BROKER -- NAS has relationships with certain brokers and
other financial intermediaries who are authorized to accept, or designate
intermediaries to accept, purchase and redemption orders for the Funds. If you
purchase through such a broker, your order will be priced at the NAV next
determined after your broker or its designated intermediary accepts it. Contact
your broker to determine whether it has an established relationship with NAS.
BY ON-LINE ACCESS -- Log on to our website www.nationwidefunds.com 24 hours a
day, seven days a week, for easy access to your mutual fund accounts. Once you
have reached the website, you will be instructed on how to select a password and
perform transactions. You can choose to receive information on all transactions,
such as purchases, redemptions and exchanges. A Fund may terminate the ability
to buy Fund shares on this website at any time, in which case you may continue
to buy shares by mail, wire, telephone or through an authorized broker as
described in this Prospectus.
ADDITIONAL SHAREHOLDER SERVICES
Shareholders are entitled to a wide variety of services by contacting:
NATIONWIDE FUNDS NOW 1-800-637-0012
Our customized voice-response system, available 24 hours a day, seven days a
week
CUSTOMER SERVICE 1-800-848-0920
Representatives are available to answer questions between 8 a.m. and 5 p.m.
Eastern Time. (Monday through Friday, except Thursday, in which case
representatives are available between 9:30 a.m. and 5 p.m. Eastern Time.)
For additional information on buying shares and shareholder services, call our
customer service number listed above or contact your sales representative.
SELLING SHARES
You can sell -- also known as redeeming -- your shares of the Funds at any time,
subject to certain restrictions described below. The price you will receive when
you sell your shares will be the NAV (less any applicable sales charges) next
determined after NAS receives your properly completed order to sell in its
offices in Columbus, Ohio. Of course, the value of the shares you sell may be
more or less than you paid for the shares depending upon the market value of a
Fund's investments at the time of the sale.
Properly completed orders contain all necessary paperwork to authorize and
complete the transaction. NAS may require all account holder signatures, updated
account registration and bank account information and, depending on
circumstances, a signature guarantee.
Your order to sell shares can be made in writing or by telephone (if you
authorized telephone transactions on your application) or by on-line access.
Generally, we will pay you for the shares that you sell within three days after
receiving your order to sell. Payment for shares you recently purchased by check
may be delayed until the check clears,
20
<PAGE> 54
which may take up to 10 business days from the date of your purchase.
RESTRICTIONS ON SALES
You may not be able to sell your shares of a Fund or a Fund may delay paying you
the proceeds from a redemption when the New York Stock Exchange is closed (other
than customary weekend and holiday closings) or if trading is restricted or if
an emergency exists.
SIGNATURE GUARANTEE -- CLASS A AND CLASS B SHARES
A signature guarantee is required under the following circumstances:
- if a redemption is over $100,000,
- if your account registration has changed within the last 30 days,
- if the redemption check is made payable to anyone other than the registered
shareholder,
- if the proceeds are sent to a bank account not previously designated or
changed within the past 30 days, or
- if the proceeds are mailed to an address other than the address of record.
NAS reserves the right to require a signature guarantee in other circumstances,
without notice.
CONTINGENT DEFERRED SALES CHARGE (CDSC) ON CLASS A AND CLASS B SHARES
You must pay a CDSC if you sell Class B shares within six years of purchase,
unless you are entitled to a waiver. The sales charge applies if your sale
causes the value of Class B shares in your account to fall below the total
amount of all purchases of Class B shares you made during the preceding six
years. The sales charge is applied to your original purchase price, or the
current market value of the shares being sold, whichever is less. The amount of
the sales charge will decrease as illustrated in the following chart:
<TABLE>
<CAPTION>
1 2 3 4 5 6 7
Sale within year years years years years years years or more
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales charge 5% 4% 3% 3% 2% 1% 0%
</TABLE>
All purchases during the month are grouped together and will be treated as if
made on the last day of the preceding month.
We do not impose a CDSC on Class B shares purchased through reinvested dividends
and distributions. If you sell your Class B shares and reinvest the proceeds in
Class B shares within 30 days, NAS will deposit an amount equal to any CDSC you
paid into your account. Also, we will waive the CDSC if you sell shares
following the death or disability of a shareholder, provided the sale occurs
within one year of the shareholder's death or a determination of disability and
for mandatory withdrawals from IRA accounts after age 70 1/2 years. For more
information, see the SAI.
Under certain circumstances, employer-sponsored retirement plans investing in
Class A shares without a sales charge (other than those investing in the Fund
through variable insurance products) may be charged a CDSC if shares are
redeemed within three years after purchase. The CDSC will be 1% for the first
year, 0.50% for the second year and 0.25% for the third year.
HOW TO PLACE YOUR SALE ORDER
You can request the sale of your Class A or Class B shares in any of the ways
described below. A signature guarantee may be required under certain
circumstances. Please refer to the section above entitled "Signature
guarantee -- Class A and Class B shares". Eligible entities wishing to sell
Institutional Service Class shares should contact NAS at 1-800-848-0920 for
information regarding such sales.
BY TELEPHONE (NATIONWIDE FUNDS NOW) -- Calling 1-800-637-0012 connects you to
our automated voice-response system, available 24 hours a day, seven days a
week, for easy access to mutual fund information. You can sell shares and have
the check mailed to your address of record, unless you declined this option on
your application. Only the following types of accounts can use Nationwide Funds
NOW to sell shares: Individual, Joint, Transfer on Death, Trust, and Uniform
Gift/Transfer to Minor accounts. You can call 1-800-637-0012 after 7 p.m.
Eastern Time to learn the day's closing share price.
CAPITAL GAINS TAXES
If you sell Fund shares for more than you paid for them, you may have capital
gains, which are subject to federal (and in some cases, state) income tax. For
more information, see "Distributions and Taxes -- Selling Fund Shares" on page
24.
CUSTOMER SERVICE LINE -- Unless you declined the telephone redemption privilege
on your application, you can call and request that a check payable to the
shareholder of record be mailed to the address of record. You can sell shares of
your IRA by telephone if we receive the proper forms. The
21
<PAGE> 55
Buying, Selling and Exchanging Fund Shares
distribution from an IRA will be subject to a mandatory 10% federal withholding
tax, unless you inform us in writing not to withhold taxes. For additional
information or to request the forms, please call the customer service line at
1-800-848-0920. The Funds will use procedures to confirm that telephone
instructions are genuine. If the Funds act on instructions they reasonably
believed were genuine, they will not be liable for any loss, injury, damage or
expense that occurs as a result, and the Funds will be held harmless for any
loss, claims or liability arising from their compliance with the instructions.
NAS may record telephone instructions to sell shares. The Funds reserve the
right to revoke this privilege at any time, without notice to shareholders, and
to request the sale in writing, signed by all shareholders on the account.
BY BANK WIRE -- NAS can wire the funds directly to your account at a commercial
bank (a voided check must be attached to your application) unless you declined
telephone privileges on your application. (This authorization will remain in
effect until you give NAS written notice of its termination.) Your funds will be
wired to your bank on the next business day after your order to sell shares has
been processed. We will deduct a $20 fee from the proceeds of your sale for this
service. Your financial institution may also charge you a fee for receiving the
wire. Funds sent outside the U.S. may be subject to a higher fee.
BY AUTOMATED CLEARING HOUSE (ACH) -- Your funds can be sent to your bank via ACH
on the second business day after your order to sell has been received by NAS.
Funds sent through ACH should reach your bank in two business days. There is no
fee for this service. (This authorization will remain in effect until you give
NAS written notice of its termination.)
BY MAIL OR FAX -- Write a letter to Nationwide Advisory Services, Inc., P.O. Box
1492, Columbus, Ohio 43216-1492 or fax it to 614-249-8705. Please be sure your
letter is signed by all account owners. Be sure to include your account number
and the Fund from which you wish to make a redemption. For a distribution from
an IRA, you must include your date of birth and indicate whether or not you want
NAS to withhold federal income tax from your proceeds. Your sale of shares will
be processed on the date NAS receives your signed letter or fax. If your fax is
received after 4 p.m. Eastern Time, it will be processed the next business day.
NAS reserves the right to require the original document if you fax your letter.
THROUGH AN AUTHORIZED BROKER -- NAS has relationships with certain brokers and
other financial intermediaries who are authorized to accept, or designate
intermediaries to accept, purchase and redemption orders for the Funds. If you
have an account with such a broker, your redemption order will be priced at the
NAV next determined after your order has been accepted by your broker or its
designated intermediary. Your broker or financial intermediary may charge a fee
for this service.
BY ON-LINE ACCESS -- Log on to our website www.nationwidefunds.com 24 hours a
day, seven days a week, for easy access to your mutual fund accounts. Once you
have reached the website, you will be instructed on how to select a password and
perform transactions. You can choose to receive information on all of our funds
as well as your own personal accounts. You may also perform transactions, such
as purchases, redemptions and exchanges. A Fund may terminate the ability to
sell Fund shares on this website at any time, in which case you may continue to
sell shares by mail, wire, telephone or through an authorized broker as
described in this Prospectus.
ACCOUNTS WITH LOW BALANCES -- CLASS A AND B SHARES
We may sell the rest of your shares and close your account if you make a sale
that reduces the value of your account to less than $250. Before the account is
closed, we will give you notice and allow you 90 days to purchase additional
shares to avoid this action. We do this because of the high cost of maintaining
small accounts. This does not apply to Automatic Asset Accumulation accounts.
For additional information on selling your shares, call our customer service
line at 1-800-848-0920 or contact your sales representative.
DISTRIBUTION PLAN
In addition to the sales charges which you may pay for Class A and Class B
shares, the Trust has adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act, which permits the Class A and Class B shares of the
Funds to compensate NAS -- as distributor -- for expenses associated with
distributing their shares and providing shareholder services.
DISTRIBUTION AND SERVICE FEES
Under the Distribution Plan, Class A and Class B shares of a Fund pays NAS
compensation accrued daily and paid
22
<PAGE> 56
monthly. Each Fund shall pay amounts not exceeding an annual amount of:
<TABLE>
<CAPTION>
CLASS AS A % OF DAILY NET ASSETS
----------------------------------------------------------------
<S> <C>
Class A shares 0.25% (distribution or service fee)
................................................................
Class B shares 1.00% (0.25% service fee)
</TABLE>
Because these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
EXCHANGING SHARES
You can exchange the shares you own for shares of another fund within Nationwide
Mutual Funds (except the Morley Capital Accumulation Fund) so long as they are
the same class of shares, both accounts have the same owner, and your first
purchase in the new fund meets the fund's minimum investment requirement. For
example, you can exchange Class A shares of one fund for Class A shares of
another, but you can not exchange Class A shares for Class B shares or
Institutional Service Class shares.
CAPITAL GAINS TAXES
Exchanging shares is considered a sale and purchase of shares for federal and
state income tax purposes. Therefore, if the shares you exchange are worth more
than you paid for them, you may have to pay federal and/or state income taxes.
For more information, see "Distributions and Taxes -- Exchanging Fund Shares" on
page 24.
There is no sales charge for exchanges of Class B shares or Institutional
Service Class shares. However, if your exchange involves certain Class A shares,
you may have to pay the difference between the sales charge if a higher sales
charge applies. If you exchange Prime Shares of the Nationwide Money Market Fund
into another fund, you must pay the applicable sales charge, unless it has
already been paid. If you exchange Class B shares for Prime Shares of the
Nationwide Money Market Fund, the time you hold the shares in the Nationwide
Money Market Fund will not be counted for purposes of calculating any CDSC. If
you then sell your Prime Shares of the Nationwide Money Market Fund, you will
pay the sales charge that would have been charged if the shares had been sold at
the time they were exchanged into the Nationwide Money Market Fund. If you
exchange your Prime Shares of the Nationwide Money Market Fund back into Class B
shares, the time you hold Class B shares prior to the exchange will be counted
for purposes of calculating the CDSC.
HOW TO PLACE YOUR EXCHANGE ORDER
You can request an exchange of shares in writing, by fax or by phone or by
on-line access (see "Buying Shares -- How to place your purchase order" on page
20 or the back cover for contact information). If you make your request in
writing, please be sure all account owners sign the letter. Your exchange will
be processed on the date NAS receives your signed letter or fax. If your fax is
received after 4 p.m. Eastern Time, it will be processed the next day. If you
fax your request, we reserve the right to ask for the original. You can
automatically request an exchange 24 hours a day, seven days a week, by calling
Nationwide Funds NOW, our automated voice-response system or by logging on to
our website. You will have automatic exchange privileges unless you request not
to on your application. The Trust reserves the right to amend or discontinue
these exchange privileges upon 60 days written notice to shareholders.
EXCESSIVE TRADING
The Trust reserves the right to reject any exchange request it believes will
increase transaction costs, or otherwise adversely affect other shareholders.
Specifically, exchange activity may be limited to 12 exchanges within a one year
period or 1% of the Fund's NAV. A Fund may delay forwarding redemption proceeds
for up to seven days if the investor redeeming shares is engaged in excessive
trading, or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management, or would adversely affect the
Fund.
23
<PAGE> 57
DISTRIBUTIONS AND TAXES
The following information is provided to help you understand the income and
capital gains you can earn from owning Fund shares, as well as the federal taxes
you may have to pay on this income. For tax advice regarding your personal tax
situation, please speak with your tax adviser.
DISTRIBUTIONS OF INCOME DIVIDENDS
Each quarter, each Fund distributes any available income dividends to
shareholders. Income dividends are taxable to you as ordinary income for federal
income tax purposes, even if reinvested in the Fund, unless you hold your shares
in a qualified tax-deferred plan or account, or are otherwise not subject to
federal income tax. The amount of income dividends distributed to you will be
reported in a Form 1099, which we will send to you during the tax season each
year (unless you hold your shares in a qualified tax-deferred plan or account or
are otherwise not subject to federal income tax). For corporate shareholders, a
portion of each year's distributions may be eligible for the corporate dividend-
received deduction.
DISTRIBUTIONS OF CAPITAL GAINS
If a Fund has net realized capital gains at the end of the calendar year
(meaning the gains from sales of securities exceed any losses from sales), it
will distribute this capital gain to shareholders annually. You must pay federal
income taxes on any capital gains distributed to you, unless you hold your
shares in a qualified tax-deferred plan or account or are otherwise not subject
to federal income tax. On Form 1099, we will report the amount of net short-term
capital gains and net long-term capital gains distributed to you during the
year. Currently, for individuals, long-term capital gains are taxed at a maximum
rate of 20%; short-term capital gains are taxed as ordinary income, such as
interest or dividends. For more information regarding capital gains tax rates,
speak with your tax adviser.
REINVESTING DISTRIBUTIONS
All income and capital gains distributions will be reinvested in shares of the
applicable Fund. You may request a payment in cash in writing if distributions
are in excess of $5. You may be subject to tax on reinvested distributions. If
distribution checks (1) are returned and marked as "undeliverable" or (2) remain
uncashed for six months, your account will be changed automatically so that all
future distributions are reinvested in your account. Checks that remain uncashed
for six months will be canceled and the money reinvested in the Fund as of the
cancellation date. No interest is paid during the time the check is outstanding.
CHANGING YOUR DISTRIBUTION OPTION
If you want to change your distribution option, you must notify us by the record
date for a dividend or distribution in order for it to be effective for that
dividend or distribution.
You may be subject to federal backup withholding at a rate of 31% of each
distribution unless you certify that the taxpayer identification number you gave
us is correct, and that you are not subject to withholding. (We will, however,
withhold taxes if the Internal Revenue Service notifies us that such
certifications are not accurate, or as may otherwise be required under the
Internal Revenue Code.)
STATE AND LOCAL TAXES
Distributions may be subject to state and local taxes, even if not subject to
federal income taxes. State and local tax laws vary; please consult your tax
adviser.
SELLING FUND SHARES
Selling Fund shares for more than you paid for them gives you a capital gain,
which is subject to federal income tax. The amount of tax depends on how long
you held your shares. For individuals, long-term capital gains are currently
taxed at a maximum rate of 20%; and short-term capital gains are taxed as
ordinary income, such as interest or dividends. Capital gains from your sale of
Fund shares is not reported on Form 1099; you or your tax adviser should keep
track of your purchases, sales, and any resulting gain or loss. If you do sell
Fund shares for a loss, you may be able to use this capital loss to offset
certain capital gains you may have.
EXCHANGING FUND SHARES
Exchanging your shares of a Fund is considered a sale for income tax purposes.
Therefore, if the shares you exchange are worth more than you paid for them, you
may have capital gains, which are subject to the federal income taxes described
above. If you exchange Fund shares for a loss, you may be able to use this
capital loss to offset certain capital gains you may have.
24
<PAGE> 58
INFORMATION FROM NATIONWIDE
Please read this Prospectus before you invest, and keep it with your records.
The following documents contains additional information about the Funds. To
obtain a document free of charge, contact us at the address or number listed
below.
- SAI (incorporated by reference into this Prospectus)
- Annual Report (which contains a discussion of the market conditions and
investment strategies that significantly affect the Fund's performance) (as
available)
- Semi-Annual Report (as available)
FOR ADDITIONAL INFORMATION CONTACT:
Nationwide Advisory Services, Inc.
P.O. Box 1492
Columbus, OH 43216-1492
(614) 249-8705 (fax)
{Nationwide Logo}
FOR INFORMATION, ASSISTANCE AND WIRE ORDERS:
1-800-848-0920 (toll free, 8 a.m. - 5 p.m. Eastern Time (Monday through Friday,
except Thursday, in which case representatives are available between 9:30 a.m.
and 5 p.m. Eastern Time)).
FOR 24-HOUR ACCOUNT ACCESS:
1-800-637-0012 (toll free)
Also, visit the Nationwide Family of Funds' website at www.nationwidefunds.com
INFORMATION FROM THE SECURITIES AND EXCHANGE COMMISSION (SEC)
You can obtain copies of Fund documents from the SEC as follows:
IN PERSON:
Public Reference Room in Washington, D.C. (For their hours of operation, call
1-202-942-8090.)
BY MAIL:
Securities and Exchange Commission
Public Reference Section
Washington, D.C. 20549-0102
(The SEC charges a fee to copy any documents.)
ON THE EDGAR DATABASE VIA THE INTERNET:
www.sec.gov
BY ELECTRONIC REQUEST:
[email protected]
INVESTMENT COMPANY ACT FILE NO. 811-08495
NATIONWIDE FAMILY OF FUNDS
P.O. BOX 1492
COLUMBUS, OHIO 43216-1492
HS-1292
[Nationwide logo]
<PAGE> 59
[NATIONWIDE LOGO] FAMILY OF FUNDS
GARTMORE GLOBAL TECHNOLOGY AND
COMMUNICATIONS FUND
PROSPECTUS
SEPTEMBER 1, 2000
2000
As with all mutual funds,
the Securities and
Exchange Commission has
not approved or
disapproved this Fund's
shares or determined
whether this prospectus
is complete or accurate.
To state otherwise is a
crime.
[NATIONWIDE(R) FAMILY OF FUNDS LOGO]
<PAGE> 60
TABLE OF CONTENTS
FUND SUMMARY.................................................................. 2
MORE ABOUT THE FUND............................................................6
Principal Risks and Investment Techniques......................................6
Principal Risks................................................................6
Other Investment Techniques....................................................7
MANAGEMENT.....................................................................9
Investment Adviser.............................................................9
Portfolio Manager..............................................................9
BUYING, SELLING AND EXCHANGING FUND SHARES....................................10
Choosing a Share Class........................................................10
Buying Shares.................................................................11
Selling Shares................................................................14
Distribution Plan.............................................................16
Exchanging Shares.............................................................17
DISTRIBUTIONS AND TAXES.......................................................18
Distributions of Income Dividends.............................................18
Distributions of Capital Gains................................................18
Reinvesting Distributions.....................................................18
State and Local Taxes.........................................................18
Selling Fund Shares...........................................................18
Exchanging Fund Shares........................................................18
ADDITIONAL INFORMATION................................................BACK COVER
1
<PAGE> 61
FUND SUMMARY
This Prospectus provides information about the Gartmore Global Technology and
Communications Fund (the Fund). "You" and "your" refer to potential investors
and current shareholders of the Fund.
A QUICK NOTE ABOUT SHARE CLASSES
The Fund has three different share classes -- Class A, Class B and Institutional
Service Class. The fees, sales charges and expenses for each share class are
different, but each share class of the Fund represents an investment in the same
assets of the Fund. Having different share classes simply lets you choose the
cost structure that's right for you.
The fees and expenses for the Fund are set forth in the Fund Summary. For more
information about which share class is right for you, see "Buying, Selling and
Exchanging Fund Shares -- Choosing a Share Class" beginning on page ten.
2
<PAGE> 62
OBJECTIVE AND PRINCIPAL STRATEGIES
The Fund seeks long term capital appreciation. The Fund's investment objective
may be changed without shareholder approval.
To achieve its objective, the Fund invests at least 65% of its total assets in
equity securities issued by U.S. and foreign companies with business operations
in technology and communications and/or technology and communications related
industries. These companies may include, for example, companies that develop,
produce and distribute products or services in the computer, semi-conductor,
electronics, communications, health care, and biotechnology sectors. A security
will generally be considered appropriate if (as determined by the investment
adviser) at least 50% of the issuer's assets, revenues, or net income is related
to, or derived from, the industry or industries designated for the Fund.
TECHNOLOGY:
The use of science to create new products and services. The industry comprises
information technology and communications as well as medical, environmental and
biotechnology.
The Fund may invest in companies domiciled in any country and allocates its
assets among securities that are expected to provide the best opportunities for
meeting its investment objective. However, normally at least 65% of its total
assets will be invested in companies in at least three different countries, one
of which may be the U.S. If the portfolio manager thinks that advantageous
investment opportunities exist in countries with emerging securities markets,
the Fund will invest in those countries.
The Fund may invest in companies of any size. The Fund may invest in securities
of large companies that are well established in the world technology market
because they can be expected to grow with the market. The Fund may also invest
in securities of small to mid-size companies to the extent that they provide
strong prospects for future growth.
In analyzing specific companies for possible investment, the Fund's portfolio
manager ordinarily looks for several of the following characteristics:
- Above-average per share earnings growth
- High return on invested capital
- A healthy balance sheet
- Sound financial and accounting policies and overall financial strength
- Strong competitive advantages
- Effective research and product development and marketing
- Development of new technologies
- Efficient service
- Pricing flexibility
- Strong management
- General operating characteristics that will enable the company to compete
successfully in its respective markets
The portfolio manager considers whether to sell a particular security when any
of those factors materially changes.
The Fund may also lend portfolio securities on a short-term or long-term basis
up to 30% of its total assets. The investment adviser expects a high portfolio
turnover rate of 300% or more.
PRINCIPAL RISKS
Because the value of an investment will fluctuate, there is the risk that a
shareholder will lose money. A shareholder's investment will decline in value if
the value of the Fund's investments decreases. The value of shares will also be
impacted in part by the portfolio manager's ability to assess economic
conditions and investment opportunities.
STOCK MARKET RISK. Stock market risk is the risk that the Fund could lose value
if the individual stocks in which the Fund has invested or the overall stock
market goes down. Individual stocks and the overall stock market may experience
short-term volatility as well as extended periods of decline or little growth.
Individual stocks are affected by factors such as corporate earnings,
production, management and sales. Individual stocks may also be affected by the
demand for a particular type of stock, such as growth stocks or the stocks of
companies with a particular market capitalization. Stock markets are affected by
numerous factors, including interest rates, the outlook for corporate profits,
the health of the national and world economies, national and world social and
political events, and the fluctuations of other stock markets around the world.
3
<PAGE> 63
Fund Summary
RISKS RELATED TO INVESTING FOR GROWTH. Different types of stocks tend to shift
into and out of favor with stock market investors depending on market and
economic conditions. Because the Fund focuses on growth-style stocks, the Fund's
performance may at times be better or worse than the performance of stock funds
that focus on other types of stocks, or that have a broader investment style.
SMALL CAP RISK. The Fund's investments in smaller, newer companies may be
riskier than investments in larger, more established companies. The stocks of
smaller companies are usually less stable in price and less liquid than the
stocks of larger companies.
FOREIGN RISK. Investments in foreign securities involve risks in addition to
those of U.S. investments. These risks include political and economic risks,
currency fluctuations, higher transaction costs, and delayed settlement. To the
extent that the Fund invests in countries with emerging markets, the foreign
securities risks are magnified since these countries may have unstable
governments and less established markets.
SECTOR RISK. The Fund may be susceptible to factors affecting technology and
communications and technology-and communications-related industries and
therefore the value of the Fund's investments may be more volatile than other
funds that invest in a broader range of securities across different industries.
PORTFOLIO TURNOVER RISK. The Fund will attempt to buy securities with the intent
of holding them for investment, but the adviser may engage in active and
frequent trading of securities if doing so is in the best interest of the Fund.
A higher portfolio turnover rate may result in higher transaction costs for the
Fund and increase the volatility of the Fund.
For more detailed information about the Fund's investments and risks, see "More
About the Fund" beginning on page six.
PERFORMANCE
No performance information is provided because the Fund did not begin operations
until on or about June 30, 2000.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay when buying and
holding shares of the Global Technology and Communications Fund.
<TABLE>
<CAPTION>
Institutional
Service
Shareholder Fees(1) Class A Class B Class
(paid directly from your investment) shares shares shares
-----------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) imposed 5.75%(2) None None
upon purchases (as a percentage of
offering price)
.......................................................................
Maximum Deferred Sales Charge (Load) None(3) 5.00%(4) None
imposed on redemptions (as a
percentage of original purchase
price or sale proceeds, as
applicable)
</TABLE>
<TABLE>
<CAPTION>
Institutional
Service
Annual Fund Operating Expenses Class A Class B Class
(deducted from Fund assets) shares shares shares
-----------------------------------------------------------------
<S> <C> <C> <C>
Management Fees(5) 0.98% 0.98% 0.98%
.................................................................
Distribution and/or Service 0.25% 1.00% None
(12b-1) Fees
.................................................................
Other Expenses(6) 0.91% 0.76% 0.83%
-----------------------------------------------------------------
TOTAL ANNUAL FUND 2.14% 2.74% 1.81%
OPERATING EXPENSES(7)
</TABLE>
---------------
(1) If you buy and sell shares through a broker or other financial intermediary,
they may also charge you a transaction fee.
(2) As the amount of your investment increases, the sales charge imposed on the
purchase of Class A shares decreases. For more information, see "Buying,
Selling and Exchanging Fund Shares -- Buying Shares -- Class A sales
charges" on page 11.
(3) A contingent deferred sales charge (CDSC) of up to 1% may be imposed on
certain redemptions of Class A shares purchased without a sales charge.
(4) A contingent deferred sales charge (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 B Class
shares" on page 15.
4
<PAGE> 64
(5) The Fund commenced operations on June 30, 2000. As a result, the management
fee represents the fee which is payable to the adviser under its contract
with the Fund.
(6) As a new fund these are estimates for the current fiscal year ending in
October 31, 2000. These estimates do not take into account the expense
limitation agreement between the Fund and the adviser.
(7) For the fiscal year ending October 31, 2000, the adviser has agreed to waive
management fees and, if necessary, to reimburse the Fund for the cost of
"Other Expenses" so that Total Annual Fund Operating Expenses will not
exceed 1.73% for Class A shares, 2.33% for Class B shares and 1.40% for
Institutional Service Class shares. The Fund is authorized to reimburse the
adviser for management fees previously waived and/or for the cost of Other
Expenses paid by the adviser provided that any such reimbursement will not
cause the Fund to exceed the expense limitations noted above. The Fund's
ability to reimburse the adviser in this manner only applies to fees paid or
reimbursements made by the adviser at some time within the first five years
from the time the Fund commenced operations.
EXAMPLE
This example shows what you could pay in expenses over time. You can also use
this example to compare the costs of this Fund with other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then sell all of your shares at the end of those periods. It
assumes a 5% return each year and no changes in expenses and does not take into
account the fee waiver/expense reimbursement provisions currently in place for
the Fund. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
------------------------------------------------------------
<S> <C> <C>
Class A Shares $780 $1,206
............................................................
Class B Shares $777 $1,150
............................................................
Institutional Service Class Shares $184 $ 569
</TABLE>
You would pay the following expenses on the same investment if you did not sell
your shares:
<TABLE>
<CAPTION>
1 year 3 years
-----------------------------------------------------------
<S> <C> <C>
Class A Shares $ 780 $1,206
Class B Shares $ 277 $ 850
Institutional Service Class Shares $ 184 $ 569
</TABLE>
5
<PAGE> 65
MORE ABOUT THE FUND
This section contains a summary discussion of the general risks of investing in
the Fund. As with any mutual fund, there can be no guarantee that the Fund will
meet its goals or that the Fund's performance will be positive for any period of
time.
PRINCIPAL RISKS AND INVESTMENT TECHNIQUES
The Fund may use the principal investment techniques to increase returns,
protect assets or diversify investments. These techniques involve certain risks.
For more information about the Fund's investment strategies and techniques,
please refer to the Statement of Additional Information (SAI).
PRINCIPAL RISKS
SMALL CAP RISK -- Historically, the securities of small cap companies have been
more volatile in price than larger company securities, especially over the short
term. Among the reasons for the greater price volatility are the less certain
growth prospects of small companies, the lower degree of liquidity in the
markets for such securities, the greater impact caused by changes in investor
perception of value, and the greater sensitivity of small cap companies to
changing economic conditions. In addition, small cap companies may:
- lack depth of management
- lack a proven track record
- be unable to generate funds necessary for growth or development
- be developing or marketing new products or services for which markets are
not yet established and may never become established
- market products or services which may become quickly obsolete
Certain small cap companies which the Funds invest in may be in the technology
and biotechnology industries. Small cap companies in these industries may be
subject to more abrupt or erratic price movements than small cap stocks in other
industries. Therefore, while small cap companies may offer greater opportunities
for capital growth than larger, more established companies, they also involve
greater risks and should be considered speculative.
FOREIGN RISK -- Foreign security investment involves special risks not present
in U.S. investments that can increase the chances that the Fund will lose money.
- COUNTRY -- General securities market movements in any country in which the
Fund has investments, are likely to affect the value of the Fund's
securities that trade in the country. These movements will affect the
Fund's share price and performance. The political, economic and social
structures of some countries in which the Fund invests may be less stable
and more volatile than those in the U.S. The risk of investing in these
countries include the possibility of the imposition of exchange controls,
currency devaluation, foreign ownership limitations, expropriation,
restrictions on removal of currency or other assets, nationalization of
assets, punitive taxes and certain custody and settlement risks.
- COMPANY -- Foreign companies are not subject to the same disclosure,
accounting, auditing and financial reporting standards and practices as
U.S. companies and their securities may not be as liquid as securities of
similar U.S. companies. Foreign stock exchanges, trading systems, brokers
and companies generally have less government supervision and regulation
than in the U.S. A Fund may have greater difficulty voting proxies,
exercising shareholder rights, pursuing legal remedies and obtaining
judgments with respect to foreign investments in foreign courts than with
respect to U.S. companies in U.S. courts.
- FOREIGN MARKETS -- The Fund is subject to the risk that because there are
generally fewer investors in foreign markets and a smaller number of
securities traded each day, it may make it difficult for the Fund to buy
and sell certain securities. In addition, prices of foreign securities may
go up and down more than prices of securities traded in the U.S. Also,
brokerage commissions and other costs of buying and selling securities
often are higher in foreign countries than they are in the United States.
This reduces the amount the Fund can earn on its investments.
- GOVERNMENTAL SUPERVISION AND REGULATION/ACCOUNTING STANDARDS -- Foreign
companies are not subject to the same disclosure, accounting, auditing and
financial reporting standards and practices as U.S. companies. The Fund may
have greater difficulty voting proxies, exercising shareholder rights,
pursuing legal remedies and obtaining judgments with respect to foreign
investments in foreign courts than with respect to U.S. companies in U.S.
courts. Many foreign governments supervise and regulate stock exchanges,
brokers and the sale of securities less than the U.S. does. Other countries
may not have laws to protect investors the way that the U.S. securities
laws do. Accounting standards in other countries are not necessarily the
same as in the U.S. If the accounting standards in
6
<PAGE> 66
another country do not require as much detail as U.S. accounting standards,
it may be harder for a Fund's portfolio manager to completely and
accurately determine a company's financial condition.
- CURRENCY -- Some of the Fund's investments may be denominated in foreign
currencies. Changes in foreign currency exchange rates will affect the
value of what a Fund owns and the Fund's share price. Generally, when the
U.S. dollar rises in value against a foreign currency, an investment in
that country loses value because that currency is worth fewer U.S. dollars.
Devaluation of currency by a country's government or banking authority also
has a significant impact on the value of any securities denominated in that
currency. In addition, if the currency in which the Fund receives
dividends, interest or other payments declines in value against the U.S.
dollar before such income is distributed as dividends to shareholders or
converted to U.S. dollars, the Fund may have to sell portfolio securities
to obtain sufficient cash to pay such dividends.
- EUROPEAN ECONOMIC AND MONETARY UNION (EMU) -- A number of European
countries have entered into EMU in an effort to reduce trade barriers
between themselves and eliminate fluctuations in their currencies. EMU has
established a single European currency (the Euro), which was introduced in
January 1, 1999 and is expected to replace the existing national currencies
of all initial EMU participants by July 1, 2002. Certain securities
(beginning with government and corporate bonds) were redenominated in the
euro. These securities trade and make dividend and other payments only in
euros. Like other investment companies and business organizations,
including the companies in which the Fund invests, the Fund could be
adversely affected:
- If the transition to euro, or EMU as a whole, does not proceed as
planned.
- If a participating country withdraws from EMU.
- If the computing, accounting and trading systems used by the Fund's
service providers, or by other entities with which the Fund or its
service providers do business, are not capable of recognizing the
euro as a distinct currency.
OTHER INVESTMENT TECHNIQUES
PREFERRED STOCK. Holders of preferred stocks normally have the right to receive
dividends at a fixed rate but do not participate in other amounts available for
distribution by the issuer. Dividends on preferred stock may be cumulative, and
cumulative dividends must be paid before common shareholders receive any
dividends. Because preferred stock dividends usually must be paid before common
stock dividends, preferred stocks generally entail less risk than common stocks.
Upon liquidation, preferred stocks are entitled to a specified liquidation
preference, which is generally the same as the par or stated value, and are
senior in right of payment to common stock. Preferred stocks do not represent a
liability of the issuer and, therefore, do not offer as great a degree of
protection of capital or assurance of continued income as investments in
corporate debt securities. In addition, preferred stocks are subordinated in
right of payment to all debt obligations and creditors of the issuer, and
convertible securities may be subordinated to other preferred stock of the same
issuer.
CONVERTIBLE SECURITIES. Convertible securities -- also known as convertibles --
include bonds, debentures, notes, preferred stocks, and other securities.
Convertibles are a hybrid security that have characteristics of both bonds and
stocks. Like bonds, they pay interest. Because they can be converted into common
stock within a set period of time, at a specified price or formula, convertibles
also offer the chance for capital appreciation, like common stocks.
Convertibles tend to be more stable in price than the underlying common stock,
although price changes in the underlying common stock can affect the
convertible's market value. For example, as an underlying common stock loses
value, convertibles present less opportunity for capital appreciation, and may
also lose value. Convertibles, however, may sustain their value better than the
common stock because they pay income, which tends to be higher than common stock
dividend yields.
Because of this fixed-income feature, convertibles may compete with bonds as a
good source of dependable income. Therefore, if interest rates increase and
"newer," better-paying bonds become more attractive, the value of convertibles
may decrease. Conversely, if interest rates decline, convertibles could increase
in value.
Convertibles tend to be more secure than common stock (companies must generally
pay holders of convertibles before
7
<PAGE> 67
More About the Fund
they pay holders of common stock), but they are typically less secure than
similar non-convertible securities such as bonds (bondholders must generally be
paid before holders of convertibles and common stock). Because convertibles are
usually subordinate to bonds in terms of payment priority, convertibles
typically are rated below investment grade by a nationally recognized rating
agency, or they are not rated at all.
WARRANTS. A warrant is a security that gives the holder of the warrant the
right to buy common stock at a specified price for a specified period of time.
Warrants are considered speculative and have no value if they are not exercised
before their expiration date.
DERIVATIVES. A derivative is a contract whose value is based on the performance
of an underlying financial asset, index or other investment. For example, an
option is a derivative because its value changes in relation to the performance
of an underlying stock. The value of an option on a futures contract varies with
the value of the underlying futures contract, which in turn varies with the
value of the underlying commodity or security. Derivatives are available based
on the performance of assets, interest rates, currency exchange rates, and
various domestic foreign indexes. Derivatives afford leverage and can also be
used in hedging portfolios.
TEMPORARY DEFENSIVE POSITIONS
In response to economic, political or unusual market conditions, the Fund may
invest up to 100% of its assets in cash or money market obligations. Should this
occur, the Fund may not meet its investment objectives and may miss potential
market upswings.
8
<PAGE> 68
MANAGEMENT
INVESTMENT ADVISER
Villanova Mutual Fund Capital Trust (VMF), Three Nationwide Plaza, Columbus,
Ohio 43215, manages the investment of the assets and supervises the daily
business affairs of the Funds. VMF was organized in 1999, and advises mutual
funds. As of December 31, 1999, VMF and its affiliates had approximately $22.5
billion in assets under management.
The Fund pays VMF a management fee, which is based on the Fund's average daily
net assets.
<TABLE>
<CAPTION>
Fund Fee
--------------------------------
<S> <C>
Global Technology and 0.98%
Communications Fund
</TABLE>
PORTFOLIO MANAGER --
GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND
Aaron Harris is the portfolio manager for the Global Technology and
Communications Fund. Prior to joining VMF in April 2000, Mr. Harris was
portfolio manager for the Nicholas-Applegate Global Technology Fund from 1998 -
March, 2000 and was an investment analyst in Global Research at
Nicholas-Applegate from 1995 - 1997.
9
<PAGE> 69
BUYING, SELLING AND EXCHANGING FUND SHARES
CHOOSING A SHARE CLASS
As noted in the Fund Summary, the Fund offers three different share classes to
give investors different price and cost options. Class A and Class B shares of
the Funds are available to all investors; Institutional Service Class shares are
available to a limited group of investors.
With Class A shares, you pay a sales charge (known as a front-end sales charge)
when you purchase the shares; and with Class B shares, you pay a sales charge
(known as a contingent deferred sales charge or CDSC) if you sell your shares
within six years after purchase. Sales charges are paid to Nationwide Advisory
Services, Inc. (NAS), the Fund's principal distributor, which either retains
them or pays a selling representative. There is no such charge on Institutional
Service Class shares.
Class A and Class B shares both pay distribution and/or service fees under a
Distribution Plan. These fees are retained by NAS or paid by NAS to brokers for
distribution and shareholder services. Class A and Institutional Service Class
shares may pay administrative service fees. These fees are paid to brokers and
other entities who provide administrative support services to the beneficial
owners of the shares.
If you want lower annual fund expenses, Class A shares may be right for you,
particularly if you qualify for a reduction or waiver of sales charges. If you
do not want to pay an up-front sales charge, and you anticipate holding your
shares for the long term, Class B shares may be more appropriate.
As the Fund's principal distributor, NAS reserves the right to reject an order
in excess of $100,000 for Class B shares and an order for Class B shares for
Individual Retirement Accounts (IRA accounts) for shareholders 70 1/2 years old
and older.
When choosing a share class, consider the following:
<TABLE>
<CAPTION>
Class A shares Class B shares
----------------------------------------------------------
<S> <C>
Front-end sales charge means No front-end sales charge,
that a portion of your so your full investment
initial investment goes immediately goes toward
toward the sales charge, and buying shares
is not invested
..........................................................
Reductions and waivers of No reductions of the CDSC
the sales charges available available, but waivers
available
..........................................................
Lower expenses than Class B Higher distribution and
shares means higher service fees than Class A
dividends per share shares mean lower dividends
per share
</TABLE>
<TABLE>
<CAPTION>
Class A shares Class B shares
----------------------------------------------------------
<S> <C>
Conversion features are not After seven years, Class B
applicable shares convert into Class A
shares, which reduces your
future Fund expenses
..........................................................
No sales charges when shares CDSC if shares are sold
are sold back to the Fund* within six years: 5% in the
first year, 4% in the
second, 3% in the third and
fourth years, 2% in the
fifth, and 1% in the sixth
year
</TABLE>
---------------
* A CDSC of up to 1% may be charged on certain redemptions of Class A shares
purchased without a sales charge.
For investors who are eligible to purchase Institutional Service Class shares,
the purchase of Institutional Service Class shares will be preferable to
purchasing Class A or Class B Shares.
WHO CAN BUY INSTITUTIONAL SERVICE CLASS SHARES
The Institutional Service Class shares are available for purchase only by the
following:
- retirement plans introduced by persons not associated with brokers or
dealers that are primarily engaged in the retail securities business and
roll-over individual retirement accounts from such plans
- tax-exempt employee benefit plans for which third party administrators
provide recordkeeping services and are compensated by the Fund for such
services
- a bank, trust company or similar financial institution investing for its
own account or for the account of its trust customers for whom such
financial institution is exercising investment discretion in purchasing
Institutional Service Class shares, where the investment is part of a
program that collects an administrative service fee
- registered investment advisers investing on behalf of institutions and
high net-worth individuals where the adviser is compensated by the Fund
for services it provides
- life insurance separate accounts to fund the benefits of variable annuity
contracts issued to governmental entities as an investment option under
their deferred compensation plans as defined under Section 457 of the
Internal Revenue Code (the Code) or qualified plans adopted pursuant to
Section 401(a) of the Code.
10
<PAGE> 70
BUYING SHARES
PURCHASE PRICE. The purchase or "offering" price of one share of a Fund is its
"net asset value" (NAV) determined after the order is received, plus any
applicable sales charge. A separate NAV is calculated for each class of the
Fund. Generally, the NAV is based on the market value of the securities owned by
the Fund less its liabilities. The NAV for a class is determined by dividing the
total market value of the securities owned by the Fund, allocable to such class,
less liabilities allocable to such class, by the total number of that class'
outstanding shares. NAV is determined at the earlier of the close of regular
trading on the New York Stock Exchange (usually 4 p.m. Eastern Time) on each day
the Exchange is open for trading.
MINIMUM INVESTMENTS --
CLASS A AND CLASS B SHARES
To open an account (per Fund) $1,000
................................................................................
Through the Automatic Asset
Accumulation plan (per transaction) $25
................................................................................
Additional investments (per Fund) $100
................................................................................
MINIMUM INVESTMENT --
INSTITUTIONAL CLASS SHARES
To open an account (per Fund) $50,000
................................................................................
Additional investments (per Fund) $5,000
-------------------------------------
If you purchase Class A or Class B shares through an account at a broker (other
than NAS), different minimum account requirements may apply. These minimum
investment requirements for Class A shares do not apply to certain retirement
plans. Call 1-800-848-0920 for more information.
The Fund does not calculate NAV on the following days:
- Christmas Day
- New Year's Day
- Martin Luther King, Jr. Day
- Presidents' Day
- Good Friday
- Memorial Day
- Independence Day
- Labor Day
- Thanksgiving Day
- Other days when the New York Stock Exchange is not open.
The Fund reserves the right not to determine an NAV when:
- It has not received any orders to purchase, sell or exchange shares
- Changes in the value of the Fund's portfolio do not affect the NAV.
If current prices are not available, or if Villanova SA Capital Trust (VSA), as
the Fund's administrator, or its agent, determines a price does not represent
fair value, the Fund's investments may be valued at fair value in accordance
with procedures adopted by the Board of Trustees. To the extent that the Fund's
investments are traded in markets that are open when the New York Stock Exchange
is closed, the value of the Fund's investments may change on days when shares
cannot be purchased or redeemed.
IN-KIND PURCHASES. The Fund reserves the right to accept payment for shares in
the form of securities that are permissible investments for the Fund.
CLASS A SALES CHARGES
The chart below shows the Class A sales charges, which decrease as the amount of
your investment increases.
<TABLE>
<CAPTION>
Sales charge
Sales charge as % of
as % of amount
Amount of purchase offering price invested
------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 5.75% 6.10%
..................................................................
$50,000 to $99,999 4.50 4.71
..................................................................
$100,000 to $249,999 3.50 3.63
..................................................................
$250,000 to $499,999 2.50 2.56
..................................................................
$500,000 to $999,999 2.00 2.04
..................................................................
$1 million to $24,999,999 0.50 0.50
..................................................................
$25 million or more 0.25 0.25
</TABLE>
CLASS A FINDERS' FEES
For certain sales of Class A shares at net asset value to employer sponsored
retirement plans (other than those investing in the Funds through a variable
insurance product), NAS will pay a finder's fee to the dealer when the Fund
shares are purchased. For the dealer to be eligible for the finder's fee, the
following requirements apply:
- The purchase of shares must be made by one employer sponsored retirement
plan within a twelve month period from the purchase of any Nationwide Family
of Funds (Nationwide Funds) Class A shares;
- The purchase can be made in any combination of Nationwide Funds; and
11
<PAGE> 71
Buying, Selling and Exchanging Fund Shares
- The employer sponsored plan will be subject to a contingent deferred sales
charge for shares redeemed in any employer initiated redemption within the
first three years of purchase (the applicable contingent deferred sales
charge will be charged as described below).
If these conditions are met, a finder's fee will be paid on the purchase at the
following rates:
1.00% for sales of the Nationwide Funds of $1 million and more but less
than $3 million
0.50% for sales of the Nationwide Funds of $3 million and more but less
than $50 million
0.25% for sales of the Nationwide Funds of $50 million or more
REDUCTION AND WAIVER OF CLASS A SALES CHARGES
Shareholders can reduce or eliminate Class A shares' initial sales charge
through one or more of the discounts described below:
- INCREASE THE AMOUNT OF YOUR INVESTMENT. The table above shows how the sales
charge decreases as the amount of your investment increases.
- FAMILY MEMBER DISCOUNT. Members of your family who live at the same address
can combine investments, possibly reducing the sales charge.
- LIFETIME ADDITIONAL DISCOUNT. You can add the value of any of the
Nationwide Mutual Funds Class A shares you already own No Class A for Money
Market with the value of the shares you are purchasing, which may reduce the
applicable sales charge.
- INSURANCE PROCEEDS OR BENEFITS DISCOUNT PRIVILEGE. If you use the proceeds
of an insurance policy issued by any member of Nationwide Insurance to
purchase Class A shares, you will pay one-half of the published sales charge
if you make your investment 60 days after receiving the proceeds.
- NO SALES CHARGE ON A REPURCHASE. If you sell shares from your Nationwide
account, we allow you a one-time privilege to reinvest some or all of the
proceeds in shares of the same class. You will not pay a sales charge on
Class A shares that you buy within 30 days of selling Class A shares of an
equal or lesser amount if you have already paid a sales charge. Remember, if
you realize a gain or a loss on your sale of shares, the transaction is
taxable and reinvestment will not affect the amount of capital gains tax
that is due. If you realize a loss on your sale and your reinvest, some or
all of the loss may not be allowed as a tax deduction depending on the
amount you reinvest.
- LETTER OF INTENT DISCOUNT. State in writing that during a 13-month period
you or a group of family members who live at the same address will purchase
or hold at least $50,000 in Class A shares and your sales charge will be
based on the total amount you intend to invest. The letter may be backdated
up to 90 days to include previous purchases for determining your sales
charge. Your Letter of Intent is not a binding obligation to buy shares of a
Fund; it is merely a statement of intent. Call 1-800-848-0920 for more
information.
WAIVER OF CLASS A SALES CHARGES
The Class A sales charges will be waived for purchases made by the following:
- Any person purchasing through an account with an unaffiliated brokerage firm
that has an agreement with NAS to waive sales charges for those persons;
- Directors, officers, full-time employees, sales representatives and their
employees or any investment advisory clients of a broker-dealer having a
dealer/selling agreement with NAS;
- Any person who pays for the shares with the proceeds of a sale of mutual
fund shares. To qualify, you must have paid an initial sales charge or CDSC
on the shares sold. You must purchase the Class A shares within 60 days of
the sale, and you must request the waiver when you purchase the Class A
shares (NAS may require evidence that you qualify for this waiver);
- Employer-sponsored retirement plans, including pension, profit sharing or
deferred compensation plans which are qualified under sections 401(a),
403(b) or 457 of the Code;
- Trustees and retired Trustees of Nationwide Mutual Funds (including its
predecessor Trusts);
- Directors, officers, full-time employees, sales representatives and their
employees, and retired directors, officers, employees, and sales
representatives, their spouses, children or immediate relatives (including
mother, father, brothers, sisters, grandparents and grandchildren) and
immediate relatives of deceased employees of any member of Nationwide
Insurance and Nationwide Financial companies, or any investment advisory
clients of VMF, VSA, NAS and their affiliates; and
12
<PAGE> 72
- Directors, officers, full-time employees, their spouses, children or
immediate relatives and immediate relatives of deceased employees of any
sponsor group which may be affiliated with the Nationwide Insurance and
Nationwide Financial companies from time to time, (including but not limited
to, Farmland Insurance Industries, Inc., Maryland Farm Bureau, Inc., Ohio
Farm Bureau Federation, Inc., Pennsylvania Farmers' Association, Ruralite
Services, Inc., and Southern States Cooperative).
Additional investors eligible for sales charge waivers may be found in the SAI.
CONVERSION OF CLASS B SHARES
After you have held your Class B shares for seven years, we will automatically
convert them into Class A shares (without charge), which carry the lower 12b-1
fee. We will also convert any Class B shares that you purchased with reinvested
dividends and other distributions for those shares at that time. Remember,
because the NAV of Class A shares is usually higher than the NAV of Class B
shares, you may receive fewer Class A shares than the number of Class B shares
converted, but the total dollar value will be the same. We do the conversion on
the first business day of the month following the seventh anniversary of the
date of your purchase.
13
<PAGE> 73
Buying, Selling and Exchanging Fund Shares
HOW TO PLACE YOUR PURCHASE ORDER
If you wish to purchase Class A or Class B shares, you may purchase the shares
using one of the methods described below. Eligible entities wishing to purchase
Institutional Service Class shares should contact NAS at 1-800-848-0920 for
information regarding such purchases.
BY MAIL -- Complete and mail the application with a check or money order made
payable to; Nationwide Advisory Services, Inc., P.O. Box 1492, Columbus, Ohio
43216-1492. Payment must be made in U.S. dollars only and drawn on a U.S. bank.
NAS will not accept third-party checks.
BY WIRE -- You can request that your bank transmit funds (federal funds) by wire
to the Fund's custodian bank. In order to use this method, you must call NAS by
4 p.m. Eastern Time, and the wire must be received by the custodian bank by the
close of business on the day you placed your order or your order will be
cancelled. You may be liable for any loss to the Fund resulting from the
cancellation. Please note that your bank may charge a fee to wire funds. If you
choose this method to open your account, you must call our toll-free number
before you wire your investment, and you must then complete and fax the
application.
BY TELEPHONE (NATIONWIDE FUNDS NOW) -- Call 1-800-637-0012, our automated
voice-response system, 24 hours a day, seven days a week, for easy access to
mutual fund information. You can choose from a menu of choices to conduct
transactions and hear Fund price information, mailing and wiring instructions
and other mutual fund information. You must complete the appropriate section of
the application to use Nationwide Funds NOW to make purchases.
THROUGH AN AUTHORIZED BROKER -- NAS has relationships with certain brokers and
other financial intermediaries who are authorized to accept, or designate
intermediaries to accept, purchase and redemption orders for the Fund. If you
purchase through such a broker, your order will be priced at the NAV next
determined after your broker or its designated intermediary accepts it. Contact
your broker to determine whether it has an established relationship with NAS.
BY ON-LINE ACCESS -- Log on to our website www.nationwidefunds.com 24 hours a
day, seven days a week, for easy access to your mutual fund accounts. Once you
have reached the website, you will be instructed on how to select a password and
perform transactions. You can choose to receive information on all transactions,
such as purchases, redemptions and exchanges. The Fund may terminate the ability
to buy Fund shares on this website at any time, in which case you may continue
to buy shares by mail, wire, telephone or through an authorized broker as
described in this Prospectus.
ADDITIONAL SHAREHOLDER SERVICES
Shareholders are entitled to a wide variety of services by contacting:
NATIONWIDE FUNDS NOW 1-800-637-0012
Our customized voice-response system, available 24 hours a day, seven days a
week
CUSTOMER SERVICE 1-800-848-0920
Representatives are available to answer questions between 8 a.m. and 5 p.m.
Eastern Time. (Monday through Friday, except Thursday, in which case
representatives are available between 9:30 a.m. and 5 p.m. Eastern Time.)
For additional information on buying shares and shareholder services, call our
customer service number listed above or contact your sales representative.
SELLING SHARES
You can sell -- also known as redeeming -- your shares of the Fund at any time,
subject to certain restrictions described below. The price you will receive when
you sell your shares will be the NAV (less any applicable sales charges) next
determined after NAS receives your properly completed order to sell in its
offices in Columbus, Ohio. Of course, the value of the shares you sell may be
more or less than you paid for the shares depending upon the market value of the
Fund's investments at the time of the sale.
Properly completed orders contain all necessary paperwork to authorize and
complete the transaction. NAS may require all account holder signatures, updated
account registration and bank account information and, depending on
circumstances, a signature guarantee.
Your order to sell shares can be made in writing or by telephone (if you
authorized telephone transactions on your application) or by on-line access.
Generally, we will pay you for the shares that you sell within three days after
receiving your order to sell. Payment for shares you recently purchased by check
may be delayed until the check clears,
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which may take up to 10 business days from the date of your purchase.
RESTRICTIONS ON SALES
You may not be able to sell your shares of the Fund or the Fund may delay paying
you the proceeds from a sale when the New York Stock Exchange is closed (other
than customary weekend and holiday closings) or if trading is restricted or if
an emergency exists.
SIGNATURE GUARANTEE -- CLASS A AND CLASS B SHARES
A signature guarantee is required under the following circumstances:
- if a redemption is over $100,000,
- if your account registration has changed within the last 30 days,
- if the redemption check is made payable to anyone other than the registered
shareholder,
- if the proceeds are sent to a bank account not previously designated or
changed within the past 30 days, or
- if the proceeds are mailed to an address other than the address of record.
NAS reserves the right to require a signature guarantee in other circumstances,
without notice.
CONTINGENT DEFERRED SALES CHARGE (CDSC) ON CLASS A AND CLASS B SHARES
You must pay a CDSC if you sell Class B shares within six years of purchase,
unless you are entitled to a waiver. The sales charge applies if your sale
causes the value of Class B shares in your account to fall below the total
amount of all purchases of Class B shares you made during the preceding six
years. The sales charge is applied to your original purchase price, or the
current market value of the shares being sold, whichever is less. The amount of
the sales charge will decrease as illustrated in the following chart:
<TABLE>
<CAPTION>
1 2 3 4 5 6 7
Sale within year years years years years years years or more
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales charge 5% 4% 3% 3% 2% 1% 0%
</TABLE>
All purchases during the month are grouped together and will be treated as if
made on the last day of the preceding month.
We do not impose a CDSC on Class B shares purchased through reinvested dividends
and distributions. If you sell your Class B shares and reinvest the proceeds in
Class B shares within 30 days, NAS will deposit an amount equal to any CDSC you
paid into your account. Also, we will waive the CDSC if you sell shares
following the death or disability of a shareholder, provided the sale occurs
within one year of the shareholder's death or a determination of disability and
for mandatory withdrawals from IRA accounts after age 70 1/2 years. For more
information, see the SAI.
Under certain circumstances, employer-sponsored retirement plans investing in
Class A shares without a sales charge (other than those investing in the Fund
through variable insurance products) may be charged a CDSC if shares are
redeemed within three years after purchase. The CDSC will be 1% for the first
year, 0.50% for the second year and 0.25% for the third year.
HOW TO PLACE YOUR SALE ORDER
You can request the sale of your Class A or Class B shares in any of the ways
described below. A signature guarantee may be required under certain
circumstances. Please refer to the section above entitled "Signature
guarantee -- Class A and Class B shares". Eligible entities wishing to sell
Institutional Service Class shares should contact NAS at 1-800-848-0920 for
information regarding such sales.
BY TELEPHONE (NATIONWIDE FUNDS NOW) -- Calling 1-800-637-0012 connects you to
our automated voice-response system, available 24 hours a day, seven days a
week, for easy access to mutual fund information. You can sell shares and have
the check mailed to your address of record, unless you declined this option on
your application. Only the following types of accounts can use
Nationwide Funds NOW to sell shares: Individual, Joint, Transfer on Death,
Trust, and Uniform Gift/Transfer to Minor accounts. You can call 1-800-637-0012
after 7 p.m. Eastern Time to learn the day's closing share price.
CAPITAL GAINS TAXES
If you sell Fund shares for more than you paid for them, you may have capital
gains, which are subject to federal (and in some cases, state) income tax. For
more information, see "Distributions and Taxes -- Selling Fund Shares" on page
18.
CUSTOMER SERVICE LINE -- Unless you declined the telephone redemption privilege
on your application, you can call and request that a check payable to the
shareholder of record can be mailed to the address of record. You can sell
shares of your IRA by telephone if we receive the proper forms. The
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<PAGE> 75
Buying, Selling and Exchanging Fund Shares
distribution from an IRA will be subject to a mandatory 10% federal withholding
tax, unless you inform us in writing not to withhold taxes. For additional
information or to request the forms, please call the customer service line at
1-800-848-0920. The Funds will use procedures to confirm that telephone
instructions are genuine. If the Funds act on instructions they reasonably
believed were genuine, they will not be liable for any loss, injury, damage or
expense that occurs as a result, and the Funds will be held harmless for any
loss, claims or liability arising from their compliance with the instructions.
NAS may record telephone instructions to sell shares. The Funds reserve the
right to revoke this privilege at any time, without notice to shareholders, and
to request the sale in writing, signed by all shareholders on the account.
BY BANK WIRE -- NAS can wire the funds directly to your account at a commercial
bank (a voided check must be attached to your application) unless you declined
telephone privileges on your application. (This authorization will remain in
effect until you give NAS written notice of its termination.) Your funds will be
wired to your bank on the next business day after your order to sell shares has
been processed. We will deduct a $20 fee from the proceeds of your sale for this
service. Your financial institution may also charge you a fee for receiving the
wire. Funds sent outside the U.S. may be subject to a higher fee.
BY AUTOMATED CLEARING HOUSE (ACH) -- Your funds can be sent to your bank via ACH
on the second business day after your order to sell has been received by NAS.
Funds sent through ACH should reach your bank in two business days. There is no
fee for this service. (This authorization will remain in effect until you give
NAS written notice of its termination.)
BY MAIL OR FAX -- Write a letter to Nationwide Advisory Services, Inc., P.O. Box
1492, Columbus, Ohio 43216-1492 or fax it to 614-249-8705. Please be sure your
letter is signed by all account owners. Be sure to include your account number
and the Fund from which you wish to make a redemption. For a distribution from
an IRA, you must include your date of birth and indicate whether or not you want
NAS to withhold federal income tax from your proceeds. Your sale of shares will
be processed on the date NAS receives your signed letter or fax. If your fax is
received after 4 p.m. Eastern Time, it will be processed the next business day.
NAS reserves the right to require the original document if you fax your letter.
THROUGH AN AUTHORIZED BROKER -- NAS has relationships with certain brokers and
other financial intermediaries who are authorized to accept, or designate
intermediaries to accept, purchase and redemption orders for the Fund. If you
have an account with such a broker, your redemption order will be priced at the
NAV next determined after your order has been accepted by your broker or its
designated intermediary. Your broker or financial intermediary may charge a fee
for this service.
BY ON-LINE ACCESS -- Log on to our website www.nationwidefunds.com 24 hours a
day, seven days a week, for easy access to your mutual fund accounts. Once you
have reached the website, you will be instructed on how to select a password and
perform transactions. You can choose to receive information on all of our funds
as well as your own personal accounts. You may also perform transactions, such
as purchases, redemptions and exchanges. The Fund may terminate the ability to
sell Fund shares on this website at any time, in which case you may continue to
sell shares by mail, wire, telephone or through an authorized broker as
described in this Prospectus.
ACCOUNTS WITH LOW BALANCES -- CLASS A AND B SHARES
We may sell the rest of your shares and close your account if you make a sale
that reduces the value of your account to less than $250. Before the account is
closed, we will give you notice and allow you 90 days to purchase additional
shares to avoid this action. We do this because of the high cost of maintaining
small accounts. This does not apply to Automatic Asset Accumulation accounts.
For additional information on selling your shares, call our customer service
line at 1-800-848-0920 or contact your sales representative.
DISTRIBUTION PLAN
In addition to the sales charges which you may pay for Class A and Class B
shares, the Trust has adopted a Distribution Plan under Rule 12b-1 of the
Investment Company Act, which permits the Class A and Class B shares of the
Funds to compensate NAS -- as distributor -- for expenses associated with
distributing their shares and providing shareholder services.
DISTRIBUTION AND SERVICE FEES
Under the Distribution Plan, Class A and Class B shares of the Fund pays NAS
compensation accrued daily and paid
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<PAGE> 76
monthly. The Fund shall pay amounts not exceeding an annual amount of:
<TABLE>
<CAPTION>
CLASS AS A % OF DAILY NET ASSETS
----------------------------------------------------------------
<S> <C>
Class A shares 0.25% (distribution or service fee)
................................................................
Class B shares 1.00% (0.25% service fee)
</TABLE>
Because these fees are paid out of the Fund's assets on an ongoing basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
EXCHANGING SHARES
You can exchange the shares you own for shares of another fund within Nationwide
Mutual Funds (except the Morley Capital Accumulation Fund) so long as they are
the same class of shares, both accounts have the same owner, and your first
purchase in the new fund meets the fund's minimum investment requirement. For
example, you can exchange Class A shares of one fund for Class A shares of
another, but you can not exchange Class A shares for Class B shares or
Institutional Service Class shares.
CAPITAL GAINS TAXES
Exchanging shares is considered a sale and purchase of shares for federal and
state income tax purposes. Therefore, if the shares you exchange are worth more
than you paid for them, you may have to pay federal and/or state income taxes.
For more information, see "Distributions and Taxes -- Exchanging Fund Shares" on
page 18.
There is no sales charge for exchanges of Class B shares or Institutional
Service Class shares. However, if your exchange involves certain Class A shares,
you may have to pay the difference between the sales charge if a higher sales
charge applies. If you exchange Prime Shares of the Nationwide Money Market Fund
into another fund, you must pay the applicable sales charge, unless it has
already been paid. If you exchange Class B shares for Prime Shares of the
Nationwide Money Market Fund, the time you hold the shares in the Nationwide
Money Market Fund will not be counted for purposes of calculating any CDSC. If
you then sell your Prime Shares of the Nationwide Money Market Fund, you will
pay the sales charge that would have been charged if the shares had been sold at
the time they were exchanged into the Nationwide Money Market Fund. If you
exchange your Prime Shares of the Nationwide Money Market Fund back into Class B
shares, the time you hold Class B shares prior to the exchange will be counted
for purposes of calculating the CDSC.
HOW TO PLACE YOUR EXCHANGE ORDER
You can request an exchange of shares in writing, by fax or by phone or by
on-line access (see "Buying Shares -- How to place your purchase order" on page
14 or the back cover for contact information). If you make your request in
writing, please be sure all account owners sign the letter. Your exchange will
be processed on the date NAS receives your signed letter or fax. If your fax is
received after 4 p.m. Eastern Time, it will be processed the next day. If you
fax your request, we reserve the right to ask for the original. You can
automatically request an exchange 24 hours a day, seven days a week, by calling
Nationwide Funds NOW, our automated voice-response system or by logging on to
our website. You will have automatic exchange privileges unless you request not
to on your application. The Trust reserves the right to amend or discontinue
these exchange privileges upon 60 days written notice to shareholders.
EXCESSIVE TRADING
The Trust reserves the right to reject any exchange request it believes will
increase transaction costs, or otherwise adversely affect other shareholders.
Specifically, exchange activity may be limited to 12 exchanges within a one year
period or 1% of the Fund's NAV. The Fund may delay forwarding redemption
proceeds for up to seven days if the investor redeeming shares is engaged in
excessive trading, or if the amount of the redemption request otherwise would be
disruptive to efficient portfolio management, or would adversely affect the
Fund.
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<PAGE> 77
DISTRIBUTIONS AND TAXES
The following information is provided to help you understand the income and
capital gains you can earn from owning Fund shares, as well as the federal taxes
you may have to pay on this income. For tax advice regarding your personal tax
situation, please speak with your tax adviser.
DISTRIBUTIONS OF INCOME DIVIDENDS
Each quarter, the Fund distributes any available income dividends to
shareholders. Income dividends are taxable to you as ordinary income for federal
income tax purposes, unless you hold your shares in a qualified tax-deferred
plan or account, or are otherwise not subject to federal income tax. The amount
of income dividends distributed to you will be reported in a Form 1099, which we
will send to you during the tax season each year (unless you hold your shares in
a qualified tax-deferred plan or account or are otherwise not subject to federal
income tax). For corporate shareholders, a portion of each year's distributions
may be eligible for the corporate dividend-received deduction.
DISTRIBUTIONS OF CAPITAL GAINS
If the Fund has net realized capital gains at the end of the calendar year
(meaning the gains from sales of securities exceed any losses from sales), it
will distribute this capital gain to shareholders annually. You must pay federal
income taxes on any capital gains distributed to you, unless you hold your
shares in a qualified tax-deferred plan or account or are otherwise not subject
to federal income tax. On Form 1099, we will report the amount of net short-term
capital gains and net long-term capital gains distributed to you during the
year. Currently, for individuals, long-term capital gains are taxed at a maximum
rate of 20%; short-term capital gains are taxed as ordinary income, such as
interest or dividends. For more information regarding capital gains tax rates,
speak with your tax adviser.
REINVESTING DISTRIBUTIONS
All income and capital gains distributions will be reinvested in shares of the
Fund. You may request a payment in cash in writing if distributions are in
excess of $5. You may be subject to tax on reinvested distributions. If
distribution checks (1) are returned and marked as "undeliverable" or (2) remain
uncashed for six months, your account will be changed automatically so that all
future distributions are reinvested in your account. Checks that remain uncashed
for six months will be canceled and the money reinvested in the Fund as of the
cancellation date. No interest is paid during the time the check is outstanding.
CHANGING YOUR DISTRIBUTION OPTION
If you want to change your distribution option, you must notify us by the record
date for a dividend or distribution in order for it to be effective for that
dividend or distribution.
You may be subject to federal backup withholding at a rate of 31% of each
distribution unless you certify that the taxpayer identification number you gave
us is correct, and that you are not subject to withholding. (We will, however,
withhold taxes if the Internal Revenue Service notifies us that such
certifications are not accurate, or as may otherwise be required under the
Code.)
STATE AND LOCAL TAXES
Distributions may be subject to state and local taxes, even if not subject to
federal income taxes. State and local tax laws vary; please consult your tax
adviser.
SELLING FUND SHARES
Selling Fund shares for more than you paid for them give you a capital gain,
which is subject to federal income tax. The amount of tax depends on how long
you held your shares. For individuals, long-term capital gains are currently
taxed at a maximum rate of 20%; and short-term capital gains are taxed as
ordinary income, such as interest or dividends. Capital gains from your sale of
Fund shares is not reported on Form 1099; you or your tax adviser should keep
track of your purchases, sales, and any resulting gain or loss. If you do sell
Fund shares for a loss, you may be able to sue this capital loss to offset any
capital gains you have.
EXCHANGING FUND SHARES
Exchanging your shares of the Fund is considered a sale for income tax purposes.
Therefore, if the shares you exchange are worth more than you paid for them, you
have capital gains, which are subject to the federal income taxes described
above. If you exchange Fund shares for a loss, you may be able to use this
capital loss to offset any capital gains you have.
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<PAGE> 78
INFORMATION FROM NATIONWIDE
Please read this Prospectus before you invest, and keep it with your records.
The following documents contains additional information about the Funds. To
obtain a document free of charge, contact us at the address or number listed
below.
- SAI (incorporated by reference into this Prospectus)
- Annual Report (which contains a discussion of the market conditions and
investment strategies that significantly affect the Fund's performance) (as
available)
- Semi-Annual Report (as available)
FOR ADDITIONAL INFORMATION CONTACT:
Nationwide Advisory Services, Inc.
P.O. Box 1492
Columbus, OH 43216-1492
(614) 249-8705 (fax)
[Nationwide Logo]
FOR INFORMATION, ASSISTANCE AND WIRE ORDERS:
1-800-848-0920 (toll free, 8 a.m. - 5 p.m. Eastern Time (Monday through Friday,
except Thursday, in which case representatives are available between 9:30 a.m.
and 5 p.m. Eastern Time)).
FOR 24-HOUR ACCOUNT ACCESS:
1-800-637-0012 (toll free)
Also, visit the Nationwide Family of Funds' website at www.nationwidefunds.com
INFORMATION FROM THE SECURITIES AND EXCHANGE COMMISSION (SEC)
You can obtain copies of Fund documents from the SEC as follows:
IN PERSON:
Public Reference Room in Washington, D.C. (For their hours of operation, call
1-202-942-8090.)
BY MAIL:
Securities and Exchange Commission
Public Reference Section
Washington, D.C. 20549-0102
(The SEC charges a fee to copy any documents.)
ON THE EDGAR DATABASE VIA THE INTERNET:
www.sec.gov
BY ELECTRONIC REQUEST:
[email protected]
INVESTMENT COMPANY ACT FILE NO. 811-08495
NATIONWIDE FAMILY OF FUNDS
P.O. BOX 1492
COLUMBUS, OHIO 43216-1492
HS-1291
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