<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE
ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant []
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
NATIONWIDE MUTUAL FUNDS
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
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(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
PRELIMINARY
NATIONWIDE MUTUAL FUNDS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of Prestige Large Cap Value Fund of
Nationwide Mutual Funds:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the Prestige Large Cap Value Fund (the "Fund"), one portfolio or
series of Nationwide Mutual Funds, an Ohio business trust (the "Trust"), will be
held on Thursday, February 22, 2001, at 10:00 a.m., E.S.T., at Jeffers
Auditorium, One Nationwide Plaza, Columbus, Ohio 43215. The purpose of the
Meeting is to consider and act on the following matters:
1. To approve an amendment to the subadvisory agreement with
NorthPointe Capital LLC, which will replace Brinson Partners, Inc. as
the Fund's subadviser; and
2. To consider and act upon any matters incidental to the foregoing and
to transact such other business as may properly come before the Meeting
and any adjournment or adjournments thereof.
Shares of the Fund may be purchased by separate accounts of Nationwide
Life Insurance Company or Nationwide Life and Annuity Insurance Company
(collectively, "Nationwide") to fund benefits payable under certain variable
annuity contracts and variable life insurance policies ("variable contracts").
With respect to such separate accounts, Nationwide hereby solicits and agrees to
vote at the Meeting the shares of the Fund which are held by separate accounts
in accordance with timely instructions received from owners of the variable
contracts. With respect to other shareholders, the Trustees of the Trust are
soliciting your votes.
If you are a shareholder of record at the close of business on December
18, 2000, you have the right to direct the persons listed on the enclosed proxy
card on how your shares in the Fund should be voted. If you are a variable
contract owner of record at the close of business on December 18, 2000, you have
the right to instruct Nationwide as to the manner in which the Fund shares
attributable to your variable contract should be voted. To assist you, a proxy
card or a proxy card/voting instruction form is enclosed. In addition, a Proxy
Statement is attached to this Notice and describes the matters to be voted on at
the Meeting or any adjournment(s) thereof.
By Order of the Trustees,
[signature block here]
January __, 2001 Kevin S. Crossett, Secretary
<PAGE> 3
YOUR VOTE IS IMPORTANT
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF A SECOND SOLICITATION, WE URGE YOU
TO COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY CARD OR PROXY
CARD/VOTING INSTRUCTION FORM. FOR YOUR CONVENIENCE, THE ENCLOSED ADDRESSED
ENVELOPE REQUIRES NO POSTAGE.
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<PAGE> 4
PRELIMINARY
PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS OF
PRESTIGE LARGE CAP VALUE FUND
ONE PORTFOLIO OF
NATIONWIDE MUTUAL FUNDS
TO BE HELD FEBRUARY 22, 2001
GENERAL VOTING INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Trustees of Nationwide Mutual Funds, an Ohio business trust
(the "Trust"), to be voted at a Special Meeting of Shareholders (the "Meeting")
of the Prestige Large Cap Value Fund (the "Fund"), one portfolio or series of
the Trust. The Meeting will be held at 10:00 a.m., E.S.T., on Thursday, February
22, 2001, at Jeffers Auditorium, One Nationwide Plaza, Columbus, Ohio 43215. The
principal executive offices of the Trust are located at 1200 River Road,
Conshohocken, Pennsylvania, 19428. The Trustees have fixed the close of business
on December 18, 2000, as the record date (the "Record Date") for the
determination of shareholders of the Fund entitled to notice of and to vote at
the Meeting.
This Proxy Statement is being furnished in connection with the
solicitation of proxies from shareholders of record on the Record Date and of
voting instructions by Nationwide Life Insurance Company and Nationwide Life and
Annuity Insurance Company (collectively, "Nationwide") from owners of certain
variable annuity contracts and variable insurance policies (collectively,
"variable contracts") having contract values on the Record Date allocated to a
subaccount of a Nationwide separate account invested in shares of the Fund. This
Proxy Statement and forms of proxy card or proxy card/voting instructions will
be sent to shareholders of the Fund on or about January __, 2001.
Shareholders of record on the Record Date are entitled to one vote for
each share they own and a proportionate fractional vote for any fraction of a
share they own as to each issue on which such shareholders are entitled to vote.
As of the Record Date, the Fund had 2,957,497 shares of beneficial interest (the
"Shares") that were outstanding and are therefore entitled to vote at the
Meeting.
<PAGE> 5
Only shareholders of record at the close of business on the Record Date
will be entitled to notice of and to vote at the Meeting. The persons named as
proxies on the enclosed proxy card(s) will vote the Shares of the Fund at the
Meeting in accordance with the timely instructions received from shareholders.
If a duly executed and dated proxy card is received that does not specify a
choice (for, against or abstain), the persons named as proxies will consider its
timely receipt as an instruction to vote "FOR" the proposal. Shareholders may
revoke previously submitted proxy cards at any time prior to the Meeting by: (i)
submitting to the Trust a subsequently dated proxy card, (ii) delivering to the
Trust a written notice of revocation or (iii) otherwise giving notice of
revocation at the Meeting. In all cases, any action to revoke a proxy must be
taken before the authority granted in the proxy card is exercised. If Shares are
held in an account at a brokerage firm or bank, the shareholder should contact
such brokerage firm or bank to change his or her vote.
With respect to the Nationwide separate accounts, Nationwide will vote
the Shares of the Fund at the Meeting in accordance with the timely instructions
received from persons entitled to give voting instructions under the variable
contracts. Nationwide will vote Shares attributable to variable contracts as to
which no voting instructions are received in proportion (for, against or
abstain) to those for which timely instructions are received. If a duly executed
and dated proxy card/voting instruction form is received that does not specify a
choice (for, against or abstain), Nationwide will consider its timely receipt as
an instruction to vote "FOR" the proposal. Variable contract owners may revoke
previously submitted voting instructions given to Nationwide at any time prior
to the Meeting by: (i) submitting to Nationwide subsequently dated voting
instructions, (ii) delivering to Nationwide a written notice of revocation or
(iii) otherwise giving notice of revocation at the Meeting. In all cases, any
action to revoke voting instructions must be taken before the authority granted
in the proxy card/voting instruction form is exercised.
THE TRUST WILL FURNISH, WITHOUT CHARGE, A COPY OF THE FUND'S MOST
RECENT ANNUAL REPORT TO SHAREHOLDERS AND SEMI-ANNUAL REPORT TO SHAREHOLDERS,
UPON REQUEST, WHICH REQUEST MAY BE MADE EITHER BY WRITING TO THE TRUST AT 1200
RIVER ROAD, CONSHOHOCKEN, PENNSYLVANIA 19428, OR BY CALLING TOLL-FREE (800)
848-0920. THE ANNUAL REPORT AND SEMI-ANNUAL REPORT WILL BE MAILED TO YOU BY
FIRST-CLASS MAIL WITHIN THREE BUSINESS DAYS OF RECEIPT OF YOUR REQUEST.
The Trust knows of no business other than that mentioned in the
Proposal 1, as described above (the "Proposal"), which will be presented for
consideration at the Meeting. If any other matters are properly presented, it is
the intention of the persons named on the enclosed proxy card to vote proxies in
accordance with their best judgment. If a quorum is not present at the Meeting
for the Proposal or if a quorum is present, but sufficient votes to approve the
Proposal are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies for the
Proposal, provided they determine that such an adjournment and additional
solicitation is reasonable and in the best interests of shareholders.
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PROPOSAL - TO APPROVE AN AMENDMENT TO THE
SUBADVISORY AGREEMENT
WITH NORTHPOINTE CAPITAL LLC,
WHICH WILL REPLACE BRINSON PARNTERS, INC.
AS THE FUND'S SUBADVISER
INTRODUCTION
The current subadviser for the Fund is Brinson Partners, Inc.
("Brinson"). Brinson began serving as subadviser on November 2, 1998. At its
quarterly Meeting held on December 15, 2000, the Board of Trustees of the Trust,
based upon the recommendation of Villanova Mutual Funds Capital Trust, as the
Fund's investment adviser (the "Adviser"), voted to (1) terminate the
subadvisory agreement with Brinson and (2) approve the proposed amendment to the
Subadvisory Agreement with NorthPointe Capital LLC ("NorthPointe") so that
NorthPointe will replace Brinson as subadviser, subject to the approval of such
matters by the Fund's shareholders. The decision by the Board of Trustees to
recommend that Brinson be replaced with NorthPointe, as well as other important
information, is described in more detail below.
BACKGROUND INFORMATION
The Fund is one separate investment portfolio or series of the Trust.
The Trust, on behalf of the Fund, initially entered into an Investment Advisory
Agreement with Nationwide Advisory Services, Inc. ("NAS") on November 2, 1998;
on September 1, 1999, the investment advisory services being performed by NAS
for the Fund were transferred to the Adviser, an entity under common control
with NAS. Shareholder approval was not required in order to transfer the
investment advisory services from NAS to the Adviser because such transfer did
not result in a change in the actual control or management of the Fund's
investment adviser. Pursuant to the Investment Advisory Agreement, the Adviser
selects the subadvisers for and/or manages the investments of the Fund and
supervises the Fund's daily business affairs, subject to the supervision and
direction of the Board of Trustees. The Adviser selects subadvisers it believes
will provide the Fund with high quality investment services consistent with the
Fund's investment objectives. The Adviser is responsible for the overall
monitoring of the Fund's subadviser(s).
As part of the Adviser's duties to select and supervise the Fund's
subadvisers, the Adviser is responsible for communicating performance
expectations and evaluations to the subadvisers and recommending to the Board of
Trustees whether a subadviser's contract with the Trust should be renewed,
modified or terminated. The Adviser regularly provides written reports to the
Board of Trustees describing the results of its evaluation and monitoring
functions. Prior to the transfer of the Investment Advisory Agreement, NAS
provided these services to the Fund.
The Trust and the Adviser have received an exemption order from the
U.S. Securities and Exchange Commission (the "SEC") that permits the Trustees of
the Trust generally to approve a change in the Fund's subadvisers, upon the
recommendation of the Adviser, without shareholder approval (the "Order"). The
Order grants such authority to the Trust's Trustees only with respect
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<PAGE> 7
to subadvisers that are not affiliated with the Adviser. However, since
NorthPointe is controlled by Villanova Capital, Inc., which also controls the
Adviser, NorthPointe is considered to be affiliated with the Adviser. Therefore,
shareholder approval of the proposed amendment to the Subadvisory Agreement,
which is described more fully below, and the compensation payable under that
agreement is required.
RECOMMENDATION TO REPLACE THE SUBADVISER
As part of its monitoring function, the Adviser reported to the Board
at its December 15, 2000 Meeting that since November 1998, Brinson has undergone
several significant changes in its management, including the retirement of Gary
Brinson as of December 31, 2000. These matters prompted the Adviser to review
more closely the performance of the Fund and its management by Brinson. This
review was undertaken as part of the responsibility of the Adviser to recommend
to the Board of Trustees whether a subadvisory agreement should be terminated.
The Adviser decided to recommend that the subadvisory agreement with Brinson be
terminated because the Adviser believes that such management changes raise
concerns and uncertainty about Brinson's ability to manage the Fund. The Adviser
also based its recommendation to replace Brinson on the fact that the Fund has
consistently under-performed its benchmark and peer group since its inception.
As a result, the Adviser raised concerns about the future growth prospects for
the Fund, noting specifically the net loss incurred to date by the Adviser.
Finally, as a part of its review, the Adviser evaluated whether the
Fund's poor performance was also a result of the active management of the Fund.
The Adviser concluded that a more quantitative portfolio management process
(which would result in less active management of the Fund) may result in better
performance for the Fund. The Adviser believes that the quantitative process has
been successful in connection with management of other funds of the Trust.
Upon completion of its analysis, the Adviser decided to recommend that
NorthPointe replace Brinson. The Adviser based its decision to recommend
NorthPointe on a number of factors, including: NorthPointe's well-disciplined
quantitative investment management philosophy, which the Adviser believes will
produce better fund performance and which will compliment the similar
quantitative strategy employed for the Prestige Large Cap Growth Fund;
NorthPointe's personnel, particularly the experience in managing assets within a
"value discipline" of the portfolio managers who would be responsible for the
day-to-day management of the Fund; and NorthPointe's quantitative model, which
would be used in managing the Fund and which the Adviser believes will result in
less risk for the Fund and potentially better returns. The Adviser also had
difficulty identifying other subadvisers interested in managing the Fund at the
current subadvisory fee level, particularly because of the Fund's small size.
BOARD OF TRUSTEES' CONSIDERATIONS
At a regular meeting of the Board of Trustees on December 15, 2000, the
Board of Trustees reviewed the Adviser's recommendations to hire NorthPointe as
subadviser and to terminate the subadvisory agreement with Brinson. The Board of
Trustees reviewed a report that
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<PAGE> 8
described in detail the basis for such recommendations and also reviewed the
proposed subadvisory agreement with NorthPointe, including the fees to be paid
to NorthPointe which are the same as are currently paid to Brinson.
Having carefully considered the Adviser's recommendations and the
reasons for them, the Board of Trustees, including a majority of the Trustees
who were not interested persons of the Adviser, Brinson or NorthPointe, approved
the termination of the subadvisory agreement with Brinson and the appointment of
NorthPointe to serve as a new subadviser to the Fund. The Board, in approving
such termination, determined that the Fund and its shareholders would benefit
from the change in subadvisers. Specifically, the Board determined that because
the Fund under Brinson's management had underperformed, compared to both its
benchmark and its peers, and because there had been a number of changes in the
Brinson organization causing uncertainty and further concern about its
management ability, a change needed to be made. In deciding to approve
NorthPointe as the Fund's subadviser, the Board particularly determined that,
based upon the Adviser's report and experience, a change from active portfolio
management to the disciplined quantitative investment approach and model
employed by North Pointe should benefit the Fund and its shareholders and
improve performance. The Board also considered NorthPointe's current position as
a subadviser to two other funds within the Trust, Nationwide Value Opportunities
Fund and NorthPointe Small Cap Value Fund, and the Board's familiarity with
NorthPointe as an affiliate of the Adviser.
The Board of Trustees also approved an amendment to the Subadvisory
Agreement among the Adviser, the Trust and NorthPointe to add the Fund. A copy
of such Subadvisory Agreement, as proposed to be amended, is attached to this
Proxy Statement as Appendix A. In doing so, the Board of Trustees found that the
compensation payable under the Subadvisory Agreement with NorthPointe with
respect to the Fund was fair and reasonable in light of the services to be
provided and the expenses to be assumed by NorthPointe under such agreement.
If approved by shareholders of the Fund, the termination of the
subadvisory agreement with Brinson and the appointment of NorthPointe as a
subadviser will take effect on March 1, 2001.
Approval of the amendment to the Subadvisory Agreement with NorthPointe
for the Fund requires the affirmative vote of a majority of the outstanding
Shares of the Fund, defined as the lesser of (a) 67% or more of the outstanding
Shares of the Fund present at such meeting, if holders of more than 50% of the
Shares are present or represented by proxy, or (b) more than 50% of the Shares
of the Fund. If the proposed subadvisory agreement for the Fund is not approved,
the current subadviser will continue to manage the Fund as it does currently,
and the Trustees and the Adviser will need to consider other alternatives for
the Fund.
THE TRUSTEES RECOMMEND THAT YOU VOTE "FOR" THE PROPOSAL.
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<PAGE> 9
COMPARISON OF SUBADVISORY AGREEMENTS
The Subadvisory Agreement with NorthPointe as proposed to be amended
(the "Proposed Agreement") is the same in all material respects as the
Subadvisory Agreement with Brinson (the "Current Agreement"). The Current
Agreement took effect on November 2, 1998, and was approved by the Fund's
initial shareholder on October __, 1998. The Current Agreement has not been
submitted for shareholder approval since then. The Current Agreement was
reapproved by the Board of Trustees on August 8, 2000.
The Current Agreement had an initial two-year term and continues
automatically for successive one-year terms provided that its continuance is
approved annually by the Board of Trustees. The Proposed Agreement is the same
except that it took effect on December 1, 1999 (with respect to Nationwide Value
Opportunities Fund) and its two year initial term will end on December 1, 2001,
and thereafter will continue automatically in the same manner as the Current
Agreement. Each Agreement can be terminated on 60 days' notice and both
terminate automatically if they are assigned.
The Adviser's responsibilities under the Current Agreement and the
Proposed Agreement are the same. Under each Agreement, the Adviser is
responsible for assigning a portion of the Fund's assets to the subadviser and
for overseeing the review of the performance of the subadviser. The duties of
NorthPointe under the Proposed Agreement are the same as the duties of Brinson
under the Current Agreement. NorthPointe will be required to manage the portion
of the Fund's portfolio allocated to it (which will constitute all of the Fund's
portfolio as of March 1, 2001) in accordance with the Fund's investment
objective and policies, subject to the supervision and control of the Adviser
and the Board of Trustees.
The brokerage provisions of the Current Agreement and the Proposed
Agreement are the same in all material respects. Under the Current Agreement,
Brinson is authorized to purchase and sell securities on behalf of the Fund
through brokers or dealers and to negotiate commissions to be paid on such
transactions. In doing so, Brinson is required to use reasonable efforts to
obtain the most favorable price and execution available but is permitted,
subject to certain limitations, to pay brokerage commissions that are higher
than what another broker might have charged in return for brokerage and research
services. The Proposed Agreement contains provisions that are the same in all
material respects.
The provisions of the Current Agreement and the Proposed Agreement
relating to indemnification by and the liability of the subadviser are
substantially the same. Under the Current Agreement, Brinson and its affiliates
and controlling persons can not be held liable for any error of judgment or
mistake of law to the Adviser, the Trust, the Fund or the Fund's shareholders in
the absence of willful misfeasance, bad faith or gross negligence on the part of
Brinson or a reckless disregard of its duties under the Current Agreement. The
Current Agreement provides that nothing in such Agreement, however, relieves
Brinson from any of its obligations under federal and state securities laws and
other applicable law. The Proposed Agreement contains provisions that are
substantially the same.
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<PAGE> 10
Brinson is required under the Current Agreement to indemnify the
Adviser, the Trust and their respective affiliates and controlling persons for
any liability or expenses sustained by them as a result of Brinson's willful
misfeasance, bad faith, gross negligence, reckless disregard of its duties or
violation of applicable law. The Proposed Agreement contains provisions that are
substantially the same. Each of the Current Agreement and the Proposed Agreement
contains provisions pursuant to which the Adviser is required to indemnify the
subadviser in certain circumstances.
The foregoing description of the Current Agreement and the Proposed
Agreement is only a summary and is qualified in its entirety by reference to the
text of the full agreements. A copy of the Current Agreement is on file with the
SEC. Copies of the Current Agreement are available 1) in person at the SEC's
Public Reference Room in Washington, DC; 2) by mail at the Securities and
Exchange Commission, Public Reference Section, Washington, DC 20549-6009 or 3)
at the SEC's website - http:// www.sec.gov.
OTHER INFORMATION ABOUT NORTHPOINTE
NorthPointe's principal place of business is located at 101 West Big
Beaver Road, Suite 1125, Troy, Michigan 48084. Northpointe, a Delaware limited
liability company, was organized on November 12, 1999, through a joint venture
with Villanova Capital, Inc. and is a value equity institutional management
firm. As of December 31, 2000, NorthPointe had approximately [$300] million in
assets under management.
Villanova Capital, Inc. is the holder of a majority of the outstanding
ownership interests in NorthPointe. The following table sets forth the name,
address and principal occupation of NorthPointe's principal executive officer,
managing director and other owners.
<TABLE>
<CAPTION>
--------------------- --------------------------------------------- ----------------------------------------
NAME TITLE WITH NORTHPOINTE PRINCIPAL OCCUPATION AND ADDRESS*
--------------------- --------------------------------------------- ----------------------------------------
<S> <C> <C>
Paul J. Hondros Chief Executive Officer, President and President and Chief Executive Officer
Member of the Investment Committee of Villanova Mutual Fund Capital Trust,
Villanova SA Capital Trust, and
Villanova Capital, Inc.
1200 River Road
Conshohocken, PA 19428
--------------------- --------------------------------------------- ----------------------------------------
Michael P. Hayden Managing Director and owner of 20% of the Managing Director, NorthPointe
Class B ownership interests of NorthPointe
--------------------- --------------------------------------------- ----------------------------------------
Jeffrey C. Petherick Portfolio Manager, Member of the Investment Portfolio Manager, NorthPointe
Committee and owner of 30% of the Class B
ownership interests of NorthPointe
--------------------- --------------------------------------------- ----------------------------------------
</TABLE>
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<PAGE> 11
<TABLE>
<S> <C> <C>
--------------------- --------------------------------------------- ----------------------------------------
Mary C. Champagne Portfolio Manager, Member of the Investment Portfolio Manager, NorthPointe
Committee and owner of 30% of the Class B
ownership interests of NorthPointe
--------------------- --------------------------------------------- ----------------------------------------
Peter J. Cahill Portfolio Manager, Research Analyst, Member Portfolio Manager and Research
of the Investment Committee and owner of Analyst, NorthPointe
20% of the Class B ownership interests of
NorthPointe
--------------------- --------------------------------------------- ----------------------------------------
</TABLE>
* Unless otherwise indicated, all of the above individuals can be contacted at
Columbia Center One, 10th Floor, Suite 1000, 201 West Big Beaver Road, Troy,
Michigan, 48084.
NorthPointe currently serves as investment adviser to one separate
account that has investment objectives and strategies similar to those of the
Fund.
MORE ABOUT FEES AND EXPENSES
The Fund pays the Adviser an investment advisory fee at the annual rate
of 0.75% of the Fund's average daily net assets up to $100 million and 0.70% of
the Fund's average daily net assets of $100 million or more. The Adviser has
agreed to voluntarily waive all or part of its fees and reimburse Fund expenses
in order to limit the Fund's total operating expenses on an annual basis, as a
percentage of the Fund's average daily net assets, to not more than 1.15% of the
Fund's Class A shares, 1.90% of the Fund's Class B shares and 1.00% of the
Fund's Institutional Service Class shares. During the fiscal year ended October
31, 2000, the Adviser was entitled to receive from the Fund advisory fees in the
amount of $221,990, of which $186,562 was waived or reimbursed. This fee waiver
is voluntary and may be terminated in the future. Without waivers or
reimbursements, total Fund expenses for the year ended October 31, 2000, as a
percentage of average daily net assets, would have been 1.77% for Class A
shares, 3.56% for Class B shares, and 1.64% for Institutional Service Class
shares.
Under the Current Agreement, Brinson manages all of the Fund's assets
in accordance with the Fund's investment objective and policies. Brinson makes
investment decisions for the Fund and purchases and sells securities for the
Fund. For the investment management services it provides to the Fund, Brinson
receives a fee from the Adviser in an amount equal to 0.35% on assets up to $100
million, and 0.30% on assets of $100 million or more. During the year ended
October 31, 2000, the Adviser paid Brinson a total of $103,595. If NorthPointe
had been the subadviser for the Fund for the year ended October 31, 2000, it
would have earned the same amount of fees as Brinson.
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FURTHER INFORMATION REGARDING THE ADVISER
AND OTHER SERVICE PROVIDERS
The Adviser, 1200 Conshohocken Road, Conshohocken, Pennsylvania 19428,
is a wholly owned subsidiary of Villanova Capital, Inc. ("VCI"), 97% of whose
outstanding common stock is owned by Nationwide Financial Services, Inc., a
holding company ("NFS"). NFS has two classes of common stock outstanding with
different voting rights enabling Nationwide Corporation (the holder of all of
the outstanding Class B Common Stock) to control NFS. All of the common stock of
Nationwide Corporation is held by Nationwide Mutual Insurance Company (95.3%)
and Nationwide Mutual Fire Insurance Company (4.7%), each of which is a mutual
company owned by its policy holders. The address for each of these entities is
One Nationwide Plaza, Columbus, Ohio 43215. Joseph J. Gasper and Arden L.
Shisler, each of whom is a Trustee and/or an officer of the Trust and the
Adviser, own less than 1% of the outstanding Class A common stock of NFS. Paul
G. Hondros, a trustee of the Trust and President and Chief Executive Officer of
the Adviser, currently owns approximately 3% of the outstanding common stock of
VCI which he received as part of VCI's organization in 1999 and in connection
with his annual compensation. Mr. Hondros is also entitled to receive certain
additional shares of VCI common stock in December 2001 contingent upon VCI's
achieving certain performance objectives and has been granted options to
purchase shares which vest according to a five year schedule. Assuming Mr.
Hondros achieves such objectives and exercises such options, his aggregate share
ownership of VCI would equal approximately 5.1%.
Certain affiliates of the Adviser provide services to the Fund and are
compensated for such services. Under the terms of a Fund Administration
Agreement, Villanova SA Capital Trust ("VSA"), 1200 Conshohocken Road,
Conshohocken, Pennsylvania 19428, a wholly owned subsidiary of VCI, provides
various administrative and accounting services to the Fund, including daily
valuation of the Fund's Shares and preparation of financial statements, tax
returns and regulatory reports. For these services, the Fund pays VSA the
following annual fee which is based on the Fund's average daily net assets:
0.10% on assets up to $250 million, 0.06% on assets of $250 million up to $1
billion, and 0.04% on assets of $1 billion and more.
For the fiscal year ended October 31, 2000, the Fund paid VSA a total
of $75,000 under the Fund Administration Agreement for its services.
NAS, a wholly owned subsidiary of NFS, One Nationwide Plaza, Columbus,
Ohio 43215, serves as the Fund's principal underwriter. In its capacity as
principal underwriter, NAS is available to receive purchase orders and
redemption requests relating to Shares of the Fund. As such, NAS is entitled to
any front-end sales charges or contingent deferred sales charge imposed on
purchases or sales of Shares of the Fund. NAS also receives fees from the Fund
under a Plan of Distribution adopted under Rule 12b-1 of the 1940 Act in
connection with the sale and distribution of the Fund's Class A and Class B
Shares. For the fiscal year ended October 31, 2000, NAS received from the Fund a
total of $19,069 in front-end and back-end sales charges and fees under the Plan
of Distribution.
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<PAGE> 13
In addition, Nationwide Investors Services, Inc. ("NISI"), a wholly
owned subsidiary of VSA, 1200 Conshohocken Road, Conshohocken, Pennsylvania
19428, serves as transfer agent and dividend disbursing agent for the Fund. For
these services, NISI receives an annual fee from the Fund of $20 per account for
Class A and Class B shares and 0.01% of average daily net assets of the
Institutional Service Class shares. For the fiscal year ended October 31, 2000,
NISI received $7,866 from the Fund for its services.
PRINCIPAL SHAREHOLDERS
As of December 18, 2000, to the Trust's knowledge, the following are
the only persons who had or shared voting or investment power over more than 5%
of the outstanding shares of any class of the Fund:
<TABLE>
<CAPTION>
--------------------------- ------------------------------ -------------------- ------------------
Name and Address Number of Shares Percentage of
Class of Shareholder Beneficially Owned Fund Owned
--------------------------- ------------------------------ -------------------- ------------------
<S> <C> <C> <C>
Nationwide Pensions Managed
Personal Portfolio #5
One Nationwide Plaza
Columbus, Ohio 43215
--------------------------- ------------------------------ -------------------- ------------------
Nationwide Pensions Managed
Personal Portfolio #4
One Nationwide Plaza
Columbus, Ohio 43215
--------------------------- ------------------------------ -------------------- ------------------
Nationwide Pensions Managed
Personal Portfolio #6
One Nationwide Plaza
Columbus, Ohio 43215
--------------------------- ------------------------------ -------------------- ------------------
Nationwide Pensions Managed
Personal Portfolio #3
One Nationwide Plaza
Columbus, Ohio 43215
--------------------------- ------------------------------ -------------------- ------------------
</TABLE>
[(1) As described above, Nationwide will vote these Shares in
accordance with voting instructions it receives in a timely manner from owners
of variable contracts.]
As of December 18, 2000, the Trustees and executive officers of the
Trust held no Shares of the Fund.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at any future Meeting
of Shareholders must be received by the Trust at its principal executive offices
a reasonable time before the Trust begins to print and mail its proxy materials
for such meeting in order for such proposal to be considered for inclusion in
the Trust's Proxy Statement and form or forms of Proxy relating to
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<PAGE> 14
such meeting. Proposals received thereafter will be considered untimely and will
not be considered for inclusion in such proxy materials.
ADDITIONAL INFORMATION
With respect to the actions to be taken by the shareholders of the Fund
on the matters described in this Proxy Statement, the presence in person or by
proxy of shareholders entitled to vote a majority of the Shares of the Fund at
the Meeting shall constitute a quorum for purposes of voting upon the Proposal
at the Meeting; provided, however, that no action required by law or the Trust's
Declaration of Trust to be taken by the holders of a designated proportion of
Shares may be authorized or taken by a lesser proportion. Abstentions shall be
treated as votes present for purposes of determining whether a quorum exists.
Broker non-votes, as described below, will not be treated as votes present for
purposes of determining whether a quorum exists.
For purposes of determining whether the Proposal has been approved,
abstentions and broker non-votes will be counted as "against" the Proposal;
except, that where the Proposal is approved based upon a percentage of the
Shares present at the Meeting, broker non-votes will have no affect.
As used above, broker non-votes are Shares for which a broker holding
such Shares for a beneficial owner has not received instructions from the
beneficial owner and may not exercise discretionary voting power with respect
thereto, although such broker may have been able to vote such Shares on other
matters at the Meeting for which it has discretionary authority or instructions
from the beneficial owner.
The Adviser will bear all costs in connection with the solicitation of
proxies from shareholders of the Fund. It is not currently expected that there
will be any solicitation other than by mail.
By Order of the Trustees
[signature block]
January __, 2001 Kevin S. Crossett, Secretary
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<PAGE> 15
APPENDIX A
SUBADVISORY AGREEMENT
---------------------
THIS AGREEMENT is made and entered into on this 1st day of December,
1999, among Nationwide Mutual Funds, an Ohio business trust (the "Trust"),
Villanova Mutual Fund Capital Trust (the "Adviser"), a Delaware business trust
registered under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and NorthPointe Capital LLC, a Delaware limited liability company (the
"Subadviser"), also registered under the Advisers Act.
W I T N E S S E T H :
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Adviser has, pursuant to an Advisory Agreement with the
Trust dated as of May 9, 1998 (the "Advisory Agreement") as subsequently
amended, been retained to act as investment adviser for certain of the series of
the Trust which are listed on Exhibit A to this Agreement (each, a "Fund");
WHEREAS, the Advisory Agreement permits the Adviser to delegate certain
of its duties under the Advisory Agreement to other investment advisers, subject
to the requirements of the 1940 Act; and
WHEREAS, the Adviser desires to retain Subadviser to assist it in the
provision of a continuous investment program for that portion of the Trust's
assets which the Adviser will assign to the Subadviser (the "Subadviser
Assets"), and Subadviser is willing to render such services subject to the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, the parties do mutually agree and promise as follows:
1. Appointment as Subadviser. The Adviser hereby retains the Subadviser
to act as investment adviser for and to manage the Subadviser Assets subject to
the supervision of the Adviser and the Board of Trustees of the Trust and
subject to the terms of this Agreement; and the Subadviser hereby accepts such
employment. In such capacity, the Subadviser shall be responsible for the
investment management of the Subadviser Assets. It is recognized that the
Subadviser and certain of its affiliates now act, and that from time to time
hereafter may act, as investment adviser to one or more other investment
companies and to fiduciary or other managed accounts and that the Adviser and
the Trust have no objection to such activities.
2. Duties of Subadviser.
(a) Investments. The Subadviser is hereby authorized and
directed and hereby agrees, subject to the stated investment policies
and restrictions of the Fund as set forth in the Fund's prospectus and
statement of additional information as currently in
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effect and as supplemented or amended from time to time (collectively
referred to hereinafter as the "Prospectus") and subject to the
directions of the Adviser and the Trust's Board of Trustees, to
purchase, hold and sell investments for the Subadviser Assets and to
monitor on a continuous basis the performance of the Subadviser Assets.
In providing these services, the Subadviser will conduct a continual
program of investment, evaluation and, if appropriate, sale and
reinvestment of the Subadviser Assets. The Adviser agrees to provide
the Subadviser with such assistance as may be reasonably requested by
the Subadviser in connection with the Subadviser's activities under
this Agreement, including, without limitation, information concerning a
Fund, their funds available, or to become available, for investment and
generally as to the conditions of a Fund's or Trust's affairs.
(b) Compliance with Applicable Laws and Governing Documents.
In the performance of its duties and obligations under this Agreement,
the Subadviser shall act in conformity with the Trust's Declaration of
Trust and By-Laws and the Prospectus and with the instructions and
directions received in writing from the Adviser or the Trustees of the
Trust and will conform to and comply with the requirements of the 1940
Act, the Internal Revenue Code of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations.
Notwithstanding the foregoing, the Adviser shall remain responsible for
ensuring each Fund's overall compliance with the 1940 Act and the Code
and the Subadviser is only obligated to comply with this subsection (b)
with respect to the Subadviser Assets. The Adviser will provide the
Subadviser with a copy of the minutes of the meetings of the Board of
Trustees of the Trust to the extent they may affect a Fund or the
duties of the Subadviser, and with copies of any financial statements
or reports made by the Fund to its shareholders, and any further
materials or information which the Subadviser may reasonably request to
enable it to perform its functions under this Agreement.
The Adviser will also provide the Subadviser with reasonable
advance notice of any change in a Fund's investment objectives,
policies and restrictions as stated in the Prospectus, and the
Subadviser shall, in the performance of its duties and obligations
under this Agreement, manage the Subadviser Assets consistent with such
changes, provided the Subadviser has received prompt notice of the
effectiveness of such changes from the Trust or the Adviser. In
addition to such notice, the Adviser shall provide to the Subadviser a
copy of a modified Prospectus reflecting such changes. The Adviser
acknowledges and agrees that the Prospectus will at all times be in
compliance with all disclosure requirements under all applicable
federal and state laws and regulations relating to the Trust or the
Fund, including, without limitation, the 1940 Act, and the rules and
regulations thereunder, and that the Subadviser shall have no liability
in connection therewith, except as to the accuracy of material
information furnished by the Subadviser to the Trust or to the Adviser
specifically for inclusion in the Prospectus. The Subadviser hereby
agrees to provide to the Adviser in a timely manner such information
relating to the Subadviser and its relationship to, and actions for,
the Trust as may be required to be contained in the Prospectus or in
the Trust's Registration Statement on Form N-1A.
(c) Voting of Proxies. The Subadviser shall have the power to
vote, either in person or by proxy, all securities in which the
Subadviser Assets may be invested from
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<PAGE> 17
time to time, and shall not be required to seek or take instructions
from, the Adviser, the Fund or the Trust or take any action with
respect thereto. If both the Subadviser and another entity managing
assets of a Fund have invested in the same security, the Subadviser and
such other entity will each have the power to vote its pro rata share
of the security.
(d) Agent. Subject to any other written instructions of the
Adviser or the Trust, the Subadviser is hereby appointed the Adviser's
and the Trust's agent and attorney-in-fact for the limited purposes of
executing account documentation, agreements, contracts and other
documents as the Subadviser shall be requested by brokers, dealers,
counterparties and other persons in connection with its management of
the Subadviser Assets. The Subadviser agrees to provide the Adviser and
the Trust with copies of any such agreements executed on behalf of the
Adviser or the Trust.
(e) Brokerage. The Subadviser is authorized, subject to the
supervision of the Adviser and the Trust's Board of Trustees, to
establish and maintain accounts on behalf of the Fund with, and place
orders for the purchase and sale of the Subadviser Assets with or
through, such persons, brokers (including, to the extent permitted by
applicable law, any broker affiliated with the Subadviser) or dealers
("brokers") as the Subadviser may elect and negotiate commissions to be
paid on such transactions. The Subadviser, however, is not required to
obtain the consent of the Adviser or the Trust's Board of Trustees
prior to establishing any such brokerage account. The Subadviser shall
place all orders for the purchase and sale of portfolio investments for
a Fund's account with brokers selected by the Subadviser. In the
selection of such brokers and the placing of such orders, the
Subadviser shall seek to obtain for the Fund the most favorable price
and execution available, except to the extent it may be permitted to
pay higher brokerage commissions for brokerage and research services,
as provided below. In using its reasonable efforts to obtain for the
Fund the most favorable price and execution available, the Subadviser,
bearing in mind the best interests of each Fund at all times, shall
consider all factors it deems relevant, including price, the size of
the transaction, the breadth and nature of the market for the security,
the difficulty of the execution, the amount of the commission, if any,
the timing of the transaction, market prices and trends, the
reputation, experience and financial stability of the broker involved,
and the quality of service rendered by the broker in other
transactions. Subject to such policies as the Trustees may determine,
or as may be mutually agreed to by the Adviser and the Subadviser, the
Subadviser shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by
reason of its having caused a Fund to pay a broker that provides
brokerage and research services (within the meaning of Section 28(e) of
the Securities Exchange Act of 1934) to the Subadviser an amount of
commission for effecting a Fund investment transaction that is in
excess of the amount of commission that another broker would have
charged for effecting that transaction if, but only if, the Subadviser
determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer viewed in terms of either that particular
transaction or the overall responsibility of the Subadviser with
respect to the accounts as to which it exercises investment discretion.
It is recognized that the services provided by such brokers
may be useful to the Subadviser in connection with the Subadviser's
services to other clients. On occasions
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<PAGE> 18
when the Subadviser deems the purchase or sale of a security to be in
the best interests of a Fund as well as other clients of the
Subadviser, the Subadviser, to the extent permitted by applicable laws
and regulations, may, but shall be under no obligation to, aggregate
the securities to be sold or purchased. In such event, allocation of
securities so sold or purchased, as well as the expenses incurred in
the transaction, will be made by the Subadviser in the manner the
Subadviser considers to be the most equitable and consistent with its
fiduciary obligations to each Fund and to such other clients. It is
recognized that in some cases, this procedure may adversely affect the
price paid or received by the Fund or the size of the position
obtainable for, or disposed of by, the Fund.
(f) Securities Transactions. The Subadviser and any affiliated
person of the Subadviser will not purchase securities or other
instruments from or sell securities or other instruments to a Fund;
provided, however, the Subadviser and any affiliated person of the
Subadviser may purchase securities or other instruments from or sell
securities or other instruments to a Fund if such transaction is
permissible under applicable laws and regulations, including, without
limitation, the 1940 Act and the Advisers Act and the rules and
regulations promulgated thereunder.
The Subadviser, including its Access Persons (as defined in
subsection (e) of Rule 17j-1 under the 1940 Act), agrees to observe and
comply with Rule 17j-1 and the Trust's Code of Ethics (which shall
comply in all material respects with Rule 17j-1), as the same may be
amended from time to time. On a quarterly basis, the Subadviser will
either (i) certify to the Adviser that the Subadviser and its Access
Persons have complied with the Trust's Code of Ethics with respect to
the Subadviser Assets or (ii) identify any violations which have
occurred with respect to the Subadviser Assets.
(g) Books and Records. The Subadviser shall maintain separate
detailed records of all matters pertaining to the Subadviser Assets
(the "Fund's Records"), including, without limitation, brokerage and
other records of all securities transactions. The Subadviser
acknowledges that the Fund's Records are property of the Trust. The
Fund's Records (relating to the Subadviser Assets) shall be available
to the Adviser at any time upon reasonable request during normal
business hours and shall be available for telecopying without delay to
the Adviser during any day that the Fund is open for business.
(h) Information Concerning Subadviser Assets and Subadviser.
From time to time as the Adviser or the Trust may request, the
Subadviser will furnish the requesting party reports on portfolio
transactions and reports on Subadviser Assets held in the portfolio,
all in such detail as the Adviser or the Trust may reasonably request.
The Subadviser will also inform the Adviser in a timely manner of
material changes in portfolio managers responsible for Subadviser
Assets, any changes in the ownership or management of the Subadviser,
or of material changes in the control of the Subadviser. Upon
reasonable request, the Subadviser will make available its officers and
employees to meet with the Trust's Board of Trustees to review the
Subadviser Assets.
The Subadviser will also provide such information or perform
such additional acts as are customarily performed by a subadviser and
may be required for the Trust or the
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<PAGE> 19
Adviser to comply with their respective obligations under applicable
laws, including without limitation, the Code, the 1940 Act, the
Advisers Act, and the Securities Act of 1933, as amended (the
"Securities Act"), and any rule or regulation thereunder.
(i) Custody Arrangements. The Subadviser shall on each
business day provide the Adviser and the Trust's custodian such
information as the Adviser and the Trust's custodian may reasonably
request relating to all transactions concerning the Fund Investments.
(j) Historical Performance Information. To the extent
agreed upon by the parties, the Subadviser will provide the Trust with
historical performance information on similarly managed investment
companies or for other accounts to be included in the Prospectus or for
any other uses permitted by applicable law.
3. Independent Contractor. In the performance of its duties hereunder,
the Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Fund, the Trust or the Adviser in any way
or otherwise be deemed an agent of the Fund, the Trust or the Adviser.
4. Expenses. During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, if any) purchased for a
Fund. The Subadviser shall, at its sole expense, employ or associate itself with
such persons as it believes to be particularly fitted to assist it in the
execution of its duties under this Agreement. The Subadviser shall not be
responsible for the Trust's, the Fund's or Adviser's expenses, which shall
include, but not be limited to, organizational and offering expenses (which
include out-of-pocket expenses, but not overhead or employee costs of the
Subadviser); expenses for legal, accounting and auditing services; taxes and
governmental fees; dues and expenses incurred in connection with membership in
investment company organizations; costs of printing and distributing shareholder
reports, proxy materials, prospectuses, stock certificates and distribution of
dividends; charges of the Fund's custodians and sub-custodians, administrators
and sub-administrators, registrars, transfer agents, dividend disbursing agents
and dividend reinvestment plan agents; payment for portfolio pricing services to
a pricing agent, if any; registration and filing fees of the Securities and
Exchange Commission (the "SEC"); expenses of registering or qualifying
securities of the Fund for sale in the various states; freight and other charges
in connection with the shipment of the Fund's portfolio securities; fees and
expenses of non-interested Trustees; salaries of shareholder relations
personnel; costs of shareholders meetings; insurance; interest; brokerage costs;
and litigation and other extraordinary or non-recurring expenses. The Trust or
the Adviser, as the case may be, shall reimburse the Subadviser for any expenses
of the Funds or the Adviser as may be reasonably incurred by such Subadviser on
behalf of the Funds or the Adviser. The Subadviser shall keep and supply to the
Trust and the Adviser reasonable records of all such expenses.
5. Compensation. For the services provided and the expenses assumed
with respect to a Fund and the Subadviser Assets pursuant to this Agreement, the
Subadviser will be entitled to the fee listed for each Fund on Exhibit A. Such
fees will be computed daily and payable no
A-5
<PAGE> 20
later than the seventh (7th) business day following the end of each month, from
the Adviser or the Trust, calculated at an annual rate based on the Subadviser
Assets' average daily net assets.
The method of determining net assets of a Fund for purposes hereof
shall be the same as the method of determining net assets for purposes of
establishing the offering and redemption price of the shares of that Fund as
described in a Fund's Prospectus. If this Agreement shall be effective for only
a portion of a month, the aforesaid fee shall be prorated for the portion of
such month during which this Agreement is in effect.
6. Representations and Warranties of Subadviser. The Subadviser
represents and warrants to the Adviser and the Trust as follows:
(a) The Subadviser is registered as an investment adviser
under the Advisers Act;
(b) The Subadviser has filed a notice of exemption pursuant to
Section 4.14 under the Commodity Exchange Act (the "CEA") with the
Commodity Futures Trading Commission (the "CFTC") and the National
Futures Association ("NFA"), or is not required to file such exemption;
(c) The Subadviser is a limited liability company duly
organized and validly existing under the laws of the State of Delaware
with the power to own and possess its assets and carry on its business
as it is now being conducted;
(d) The execution, delivery and performance by the Subadviser
of this Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action by the Subadvisers board of
directors or shareholders and no action by or in respect of, or filing
with, any governmental body, agency or official is required on the part
of the Subadviser for the execution, delivery and performance by the
Subadviser of this Agreement, and the execution, delivery and
performance by the Subadviser of this Agreement do not contravene or
constitute a default under (i) any provision of applicable law, rule or
regulation, (ii) the Subadviser's governing instruments, or (iii) any
agreement, judgment, injunction, order, decree or other instrument
binding upon the Subadviser;
(e) The Form ADV of the Subadviser previously provided to the
Adviser is a true and complete copy of the form as currently filed with
the SEC and the information contained therein is accurate and complete
in all material respects and does not omit to state any material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
7. Representations and Warranties of Adviser. The Adviser represents
and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under
the Advisers Act;
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<PAGE> 21
(b) The Adviser has filed a notice of exemption pursuant to
Section 4.14 under the CEA with the CFTC and the National Futures
Association or is exempt from doing so;
(c) The Adviser is a business trust duly organized and validly
existing under the laws of the State of Delaware with the power to own
and possess its assets and carry on its business as it is now being
conducted;
(d) The execution, delivery and performance by the Adviser of
this Agreement are within the Adviser's powers and have been duly
authorized by all necessary action on the part of its shareholders or
managing unitholder, and no action by or in respect of, or filing with,
any governmental body, agency or official is required on the part of
the Adviser for the execution, delivery and performance by the Adviser
of this Agreement, and the execution, delivery and performance by the
Adviser of this Agreement do not contravene or constitute a default
under (i) any provision of applicable law, rule or regulation, (ii) the
Adviser's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Adviser;
(e) The Form ADV of the Adviser previously provided to the
Subadviser is a true and complete copy of the form filed with the SEC
and the information contained therein is accurate and complete in all
material respects and does not omit to state any material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading;
(f) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement; and
(g) The Adviser and the Trust have duly entered into the
Advisory Agreement pursuant to which the Trust authorized the Adviser
to enter into this Agreement.
8. Representations and Warranties of the Trust. The Trust represents
and warrants to the Adviser and the Subadviser as follows:
(a) The Trust is a business trust duly organized and validly
existing under the laws of the State of Ohio with the power to own and
possess its assets and carry on its business as it is now being
conducted;
(b) The Trust is registered as an investment company under the
1940 Act and the Fund's shares are registered under the Securities Act;
and
(c) The execution, delivery and performance by the Trust of
this Agreement are within the Trust's powers and have been duly
authorized by all necessary action on the part of the Trust and its
Board of Trustees, and no action by or in respect of, or filing with,
any governmental body, agency or official is required on the part of
the Trust for the execution, delivery and performance by the Adviser of
this Agreement, and the execution, delivery and performance by the
Trust of this Agreement do not contravene or constitute a default under
(i) any provision of applicable law, rule or regulation, (ii) the
A-7
<PAGE> 22
Trust's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Trust.
9. Survival of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the Subadviser, the
Adviser and the Trust pursuant to Sections 6, 7 and 8, respectively, shall
survive for the duration of this Agreement and the parties hereto shall promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
10. Liability and Indemnification.
(a) Liability. The Subadviser shall exercise its best judgment
in rendering the services in accordance with the terms of this
Agreement. In the absence of wilful misfeasance, bad faith or gross
negligence on the part of the Subadviser or a reckless disregard of its
duties hereunder, the Subadviser, each of its affiliates and all
respective partners, officers, directors and employees ("Affiliates")
and each person, if any, who within the meaning of the Securities Act
controls the Subadviser ("Controlling Persons") shall not be liable for
any error of judgment or mistake of law and shall not be subject to any
expenses or liability to the Adviser, the Trust or a Fund or any of a
Fund's shareholders, in connection with the matters to which this
Agreement relates. In the absence of wilful misfeasance, bad faith or
gross negligence on the part of the Adviser or a reckless disregard of
its duties hereunder, the Adviser, any of its Affiliates and each of
the Adviser's Controlling Persons, if any, shall not be subject to any
liability to the Subadviser, for any act or omission in the case of, or
connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of Subadviser Assets;
provided, however, that nothing herein shall relieve the Adviser and
the Subadviser from any of their obligations under applicable law,
including, without limitation, the federal and state securities laws
and the CEA.
(b) Indemnification. The Subadviser shall indemnify the
Adviser, the Trust and the Fund, and their respective Affiliates and
Controlling Persons for any liability and expenses, including
reasonable attorneys' fees, which the Adviser, the Trust and the Fund
and their respective Affiliates and Controlling Persons may sustain as
a result of the Subadviser's wilful misfeasance, bad faith, gross
negligence, reckless disregard of its duties hereunder or violation of
applicable law, including, without limitation, the federal and state
securities laws or the CEA. Notwithstanding any other provision in this
Agreement, the Subadviser will indemnify the Adviser, the Trust and the
Fund, and their respective Affiliates and Controlling Persons for any
liability and expenses, including reasonable attorneys' fees, to which
they may be subjected as a result of their reliance upon and use of the
historical performance calculations provided by the Subadviser
concerning the Subadviser's composite account data or historical
performance information on similarly managed investment companies or
accounts, except that the Adviser, the Trust and the Fund, and their
respective Affiliates and Controlling Persons shall not be indemnified
for a loss or expense resulting from their negligence, willful
misconduct or the violation of the 1940 Act or federal or state
securities laws in using such numbers, or for their failure to conduct
reasonable due diligence with respect to such information.
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<PAGE> 23
The Adviser shall indemnify the Subadviser, its Affiliates and
its Controlling Persons, for any liability and expenses, including
reasonable attorneys' fees, which may be sustained as a result of the
Adviser's wilful misfeasance, bad faith, gross negligence, reckless
disregard of its duties hereunder or violation of applicable law,
including, without limitation, the federal and state securities laws or
the CEA, or as a result of any negligence, willful misconduct or the
violation of the 1940 Act or federal or state securities laws on the
part of the Adviser in the reliance upon and/or use of any historical
performance calculations provided by the Subadviser concerning the
Subadviser's composite account data or historical performance
information or similarly managed investment companies.
11. Duration and Termination.
(a) Duration. Unless sooner terminated, this Agreement shall
continue until December 1st, 2001, with respect to any Fund covered by
the Agreement initially and for an initial two-year period for any Fund
subsequently added to the Agreement, and thereafter shall continue
automatically for successive annual periods, provided such continuance
is specifically approved at least annually by the Trust's Board of
Trustees or vote of the lesser of (a) 67% of the shares of the Funds
represented at a meeting if holders of more than 50% of the outstanding
shares of the Funds are present in person or by proxy or (b) more than
50% of the outstanding shares of the Funds; provided that in either
event its continuance also is approved by a majority of the Trust's
Trustees who are not "interested persons" (as defined in the 1940 Act)
of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval.
(b) Termination. Notwithstanding whatever may be provided
herein to the contrary, this Agreement may be terminated at any time,
without payment of any penalty:
(i) By vote of a majority of the Trust's Board of
Trustees, or by vote of a majority of the outstanding voting
securities of the Fund, or by the Adviser, in each case, upon
at least 60 days' written notice to the Subadviser;
(ii) By any party hereto immediately upon written
notice to the other parties in the event of a breach of any
provision of this Agreement by either of the other parties; or
(iii) By the Subadviser upon at least 60 days'
written notice to the Adviser and the Trust.
This Agreement shall not be assigned (as such term is defined in the
1940 Act) and shall terminate automatically in the event of its
assignment or upon the termination of the Advisory Agreement. Upon
termination of this Agreement, the Trust will immediately discontinue
the use of the historical performance information provided by the
Subadviser provided under Section 2(j) hereof.
12. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Trust pursuant to the
Advisory Agreement and shall oversee and review the Subadviser's performance of
its duties under this Agreement. Nothing contained in
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<PAGE> 24
this Agreement shall obligate the Adviser to provide any funding or other
support for the purpose of directly or indirectly promoting investments in the
Trust.
13. Reference to Subadviser. Neither the Adviser nor any Affiliate or
agent of it shall make reference to or use the name of Subadviser or any of its
Affiliates, or any of their clients, except references concerning the identity
of and services provided by the Subadviser to the Fund, which references shall
not differ in substance from those included in the Prospectus and this
Agreement, in any advertising or promotional materials without the prior
approval of Subadviser, which approval shall not be unreasonably withheld or
delayed. The Adviser hereby agrees to make all reasonable efforts to cause the
Fund and any Affiliate thereof to satisfy the foregoing obligation.
14. Amendment. This Agreement may be amended by mutual consent of the
parties, provided that the terms of any material amendment shall be approved by:
a) the Trust's Board of Trustees or by a vote of a majority of the outstanding
voting securities of the Funds (as required by the 1940 Act) and b) the vote of
a majority of those Trustees of the Trust who are not "interested persons" of
any party to this Agreement cast in person at a meeting called for the purpose
of voting on such approval, if such approval is required by applicable law.
15. Confidentiality. Subject to the duties of the Adviser, the Trust
and the Subadviser to comply with the terms of this Agreement and applicable
law, including any demand of any regulatory or taxing authority having
jurisdiction, the parties hereto shall treat as confidential all information
pertaining to the Fund and the actions of the Subadviser, the Adviser and the
Fund in respect thereof.
16. Notice. Any notice that is required to be given by the parties to
each other under the terms of this Agreement shall be in writing, delivered, or
mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
NorthPointe Capital LLC
Attention:
Facsimile:
(b) If to the Adviser:
Villanova Mutual Fund Capital Trust
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
A-10
<PAGE> 25
(c) If to the Trust:
Nationwide Mutual Funds
Three Nationwide Plaza, 26th Floor
Columbus, OH 43215
Attention: James F. Laird, Jr.
Facsimile: (614) 249-7424
16. Jurisdiction. This Agreement shall be governed by and construed to
be consistent with the Advisory Agreement and in accordance with substantive
laws of the State of Ohio without reference to choice of law principles thereof
and in accordance with the 1940 Act. In the case of any conflict, the 1940 Act
shall control.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which shall
together constitute one and the same instrument.
18. Certain Definitions. For the purposes of this Agreement and except
as otherwise provided herein, "interested person," "affiliated person," and
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC.
19. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
20. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force and
effect.
21. Trust and its Trustees. The Trust is a business trust organized
under Chapter 1746, Ohio Revised Code and under a Declaration of Trust dated as
of October 30, 1997, to which reference is hereby made and a copy of which is on
file at the office of the Secretary of State of Ohio, and to any and all
amendments thereto so filed or hereafter filed. The obligations of the Trust
entered into in the name or on behalf thereof by any of Nationwide Investing
Foundation III Trustees, officers, employees or agents are not made
individually, but only in their capacities with respect to the Trust. Such
obligations are not binding upon any of the Trustees, shareholders, officers, or
employees of the Trust personally, but bind only the assets of the Trust, as set
forth in Section 1746.13(A), Ohio Revised Code. All persons dealing with any
series of Shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the Trust.
A-11
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
TRUST
Nationwide Mutual Funds
By: /s/ Karen R. Tackett
-----------------------------------
Name: Karen R. Tackett
Title: Assistant Treasurer
ADVISER
Villanova Mutual Fund Capital Trust
By: /s/ James F. Laird, Jr.
-----------------------------------
Name: James F. Laird, Jr.
Title:
SUBADVISER
NorthPointe Capital LLC
By: /s/ Kevin S. Crossett
-----------------------------------
Name: Kevin S. Crossett
Title: VP & Associate General Counsel
A-12
<PAGE> 27
AMENDED EXHIBIT A
SUBADVISORY AGREEMENT
BETWEEN
NATIONWIDE MUTUAL FUNDS,
VILLANOVA MUTUAL FUND CAPITAL TRUST
AND
NORTHPOINTE CAPITAL, LLC
(FORMERLY "VILLANOVA VALUE INVESTORS, LLC")
<TABLE>
<CAPTION>
Funds of the Trust Advisory Fees Effective Date
------------------ ------------- --------------
<S> <C> <C>
Gartmore Value Opportunities Fund 0.70% on Subadviser Assets up to $250 million December 1, 1999
(formerly "Nationwide Value 0.675% on Subadviser Assets of $250 million and
Opportunities Fund") more but less than $1 billion
0.65% on Subadviser Assets of $1 billion and
more but less than $2 billion
0.625% on Subadviser Assets of $2 billion and
more but less than $5 billion
0.60% for Subadviser Assets of $5 billion or more
NorthPointe Small Cap Value Fund 0.85% of the Fund's average daily net assets July 26, 2000
Prestige Large Cap Value Fund 0.35% on Subadviser Assets up to $100 million
0.30% for Subadviser Assets of $100 million or more March 1, 2001
</TABLE>
TRUST:
NATIONWIDE MUTUAL FUNDS
By:
--------------------------------------
Name:
Title:
ADVISER:
VILLANOVA MUTUAL FUND CAPITAL TRUST
By:
--------------------------------------
Name:
Title:
SUBADVISER:
NORTHPOINTE CAPITAL, LLC
By:
--------------------------------------
Name:
Title:
A-13
<PAGE> 28
NATIONWIDE MUTUAL FUNDS
Vote this proxy card TODAY! Your prompt response will save your Fund the expense
of additional mailings.
PLEASE FOLD AND DETACH AT PERFORATION BEFORE MAILING.
--------------------------------------------------------------------------------
NATIONWIDE MUTUAL FUNDS
SPECIAL MEETING OF SHAREHOLDERS
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) William Baltrus
and Bryan Haft, or either one of them, attorneys, with full power of
substitution, to vote all shares of the Prestige Large Cap Value Fund of the
Nationwide Mutual Funds ("Trust") which the undersigned is entitled to vote at
the Special Meeting of Shareholders of the Trust to be held at Jeffers
Auditorium, One Nationwide Plaza, Columbus, Ohio 43215, on Thursday, February
22, 2001 at 10:00 a.m., E.S.T., and at any adjournments thereof. All powers may
be exercised by two or more of said proxy holders or substitutes voting or
acting or, if only one votes and acts, then by that one. This Proxy shall be
voted on the proposals described in the Proxy Statement as specified on the
reverse side.
Receipt of the Notice of the Meeting and the accompanying Proxy Statement is
hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Proxy. When the shares
are held by joint tenants, both should sign. When signing in a fiduciary
capacity, such as executor, administrator, trustee, attorney, guardian, etc.,
please so indicate. Corporate and partnership proxies should be signed by an
authorized person indicating the person's title.
Date:
-------------------------------------
------------------------------------------------
------------------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
<PAGE> 29
Please refer to the Proxy Statement discussion of the Proposal.
IF NO SPECIFICATION IS MADE AND THIS PROXY CARD IS SIGNED AND RETURNED, THE
PROXY SHALL BE VOTED FOR THE PROPOSAL.
As to any other matter, said proxy holders shall vote in accordance with their
best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
PLEASE FOLD AND DETACH AT PERFORATION BEFORE MAILING.
--------------------------------------------------------------------------------
1. With respect to the Prestige Large Cap Value FOR [ ] AGAINST [ ] ABSTAIN [ ]
Fund, to approve a new sub-investment advisory
agreement with NorthPointe Capital LLC, which
will replace Brinson Partners, Inc. as such
Fund's subadviser.
-2-
<PAGE> 30
NATIONWIDE MUTUAL FUNDS
Vote this Voting Instruction Form TODAY! Your prompt response will save your
Fund the expense of additional mailings.
PLEASE FOLD AND DETACH AT PERFORATION BEFORE MAILING.
--------------------------------------------------------------------------------
NATIONWIDE MUTUAL FUNDS
SPECIAL MEETING OF SHAREHOLDERS
The undersigned contract owner of a variable annuity or variable life insurance
contract, revoking previous voting instructions, hereby instructs Nationwide
Life Insurance Company or Nationwide Life and Annuity Insurance Company to vote
all shares of the Prestige Large Cap Value Fund of the Nationwide Mutual Funds
("Trust") attributable to his or her variable annuity or variable life insurance
contact as of December 15, 2000, at the Special Meeting of Shareholders of the
Trust to be held at Jeffers Auditorium, One Nationwide Plaza, Columbus, Ohio
43215, on Thursday, February 22, 2001 at 10:00 a.m., E.S.T., and at any
adjournments thereof. These voting instructions will be used to vote on the
proposal described in the Proxy Statement as specified on the reverse side.
Receipt of the Notice of the Meeting and the accompanying Proxy Statement is
hereby acknowledged.
NOTE: Please sign exactly as your name appears on this Voting Instruction Form.
When the variable annuity or variable life insurance contract is held by joint
tenants, both should sign. When signing in a fiduciary capacity, such as
executor, administrator, trustee, attorney, guardian, etc., please so indicate.
Corporate and partnership voting instructions should be signed by an authorized
person indicating the person's title.
Date:
-----------------------------
------------------------------------------------
------------------------------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
<PAGE> 31
Please refer to the Proxy Statement discussion of the Proposal.
IF NO SPECIFICATION IS MADE AND THIS VOTING INSTRUCTION FORM IS SIGNED AND
RETURNED, THE VOTING INSTRUCTION FORM SHALL BE VOTED FOR THE PROPOSAL.
As to any other matter, proxy holders shall vote in accordance with their best
judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
PLEASE FOLD AND DETACH AT PERFORATION BEFORE MAILING.
--------------------------------------------------------------------------------
1. With respect to the Prestige Large Cap Value FOR [ ] AGAINST [ ] ABSTAIN [ ]
Fund, to approve a new sub-investment advisory
agreement with NorthPointe Capital LLC, which
will replace Brinson Partners, Inc. as such Fund's
subadviser.
-2-
