<PAGE> 1
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NATIONWIDE ASSET ALLOCATION TRUST
ANNUAL REPORT
DECEMBER 31, 1998
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<PAGE> 2
NATIONWIDE ASSET ALLOCATION TRUST
ANNUAL REPORT
DECEMBER 31, 1998
TABLE OF CONTENTS
<TABLE>
<S> <C>
Report of Independent Accountants........................... 1
Statements of Investments:
Aggressive Portfolio................................... 2
Moderately Aggressive Portfolio........................ 3
Moderate Portfolio..................................... 4
Moderately Conservative Portfolio...................... 5
Conservative Portfolio................................. 6
Statements of Assets and Liabilities........................ 7
Statements of Operations.................................... 8
Statements of Changes in Net Assets......................... 9
Financial Highlights........................................ 11
Notes to Financial Statements............................... 13
</TABLE>
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of the
Nationwide Asset Allocation Trust
In our opinion, the accompanying statements of assets and liabilities, including
the statements of investments and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Aggressive Portfolio, the
Moderately Aggressive Portfolio, the Moderate Portfolio, the Moderately
Conservative Portfolio, and the Conservative Portfolio (constituting Nationwide
Asset Allocation Trust, hereafter referred to as the "Trust"), at December 31,
1998, and the results of each of their operations, the changes in each of their
net assets and the financial highlights for the period January 20, 1998
(commencement of operations) through December 31, 1998, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the mutual funds in which the Trust invests, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Columbus, Ohio
February 17, 1999
NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT 1
<PAGE> 4
NATIONWIDE ASSET ALLOCATION TRUST
AGGRESSIVE PORTFOLIO
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
MUTUAL FUNDS (100.0%)
AGGRESSIVE GROWTH (40.6%)
87,265 Nationwide Separate Account
Trust -- Nationwide Small Company
Fund $1,397,117
16,990 Oppenheimer Capital Appreciation
Fund Class A 683,157
15,554 Oppenheimer Discovery Fund Class A 708,630
----------
2,788,904
----------
GROWTH (39.7%)
14,961 American Century Equity Growth Fund 339,765
8,007 Dreyfus Appreciation Fund, Inc. 336,835
7,431 Federated Stock Trust 273,700
14,825 MAS Equity Portfolio Adviser Class 274,710
36,005 Nationwide Separate Account
Trust -- Capital Appreciation Fund 957,364
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
GROWTH (CONTINUED)
4,681 Strong Schafer Value Fund $ 277,540
12,455 Warburg Pincus Capital Appreciation
Fund 273,512
----------
2,733,426
----------
GROWTH & INCOME (19.7%)
8,375 Nationwide Fund Class D 271,445
100,209 Nationwide S&P 500 Index Fund
Local Fund Shares 1,082,253
----------
1,353,698
----------
TOTAL INVESTMENTS $6,876,028
==========
(cost $6,666,659)
</TABLE>
- --------------------------------------------------------------------------------
Cost for federal income tax purposes: $6,688,253.
Portfolio holding percentages represent market value as a percentage of net
assets at December 31, 1998.
See accompanying notes to financial statements.
2 NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT
<PAGE> 5
NATIONWIDE ASSET ALLOCATION TRUST
MODERATELY AGGRESSIVE PORTFOLIO
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
MUTUAL FUNDS (90.1%)
AGGRESSIVE GROWTH (30.5%)
43,721 Nationwide Separate Account
Trust -- Nationwide Small
Company Fund $ 699,973
8,194 Oppenheimer Capital Appreciation
Fund Class A 329,492
8,353 Oppenheimer Discovery Fund
Class A 380,585
-----------
1,410,050
-----------
GROWTH (29.9%)
8,221 American Century Equity Growth
Fund 186,706
4,424 Dreyfus Appreciation Fund, Inc. 186,114
4,987 Federated Stock Trust 183,674
7,369 MAS Equity Portfolio Adviser
Class 136,541
17,460 Nationwide Separate Account
Trust -- Capital Appreciation
Fund 464,248
1,511 Strong Schafer Value Fund 89,598
6,315 Warburg Pincus Capital
Appreciation
Fund 138,675
-----------
1,385,556
-----------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
GROWTH & INCOME (19.8%)
5,630 Nationwide Fund Class D $ 182,473
67,921 Nationwide S&P 500 Index Fund
Local Fund Shares 733,551
-----------
916,024
-----------
INCOME (9.9%)
44,948 Nationwide Separate Account
Trust -- Nationwide Income Fund 460,713
-----------
TOTAL MUTUAL FUNDS 4,172,343
-----------
(cost $3,999,425)
- ---------
PRINCIPAL
- ---------
FIXED INCOME (9.9%)
$ 457,771 Nationwide Fixed Contract, 5.70% 457,771
-----------
(cost $457,771)
TOTAL INVESTMENTS $ 4,630,114
===========
(cost $4,457,196)
</TABLE>
- --------------------------------------------------------------------------------
Cost for federal income tax purposes: $4,486,417.
Portfolio holding percentages represent market value as a percentage of net
assets at December 31, 1998.
The Nationwide Fixed Contract rate changes quarterly.
See accompanying notes to financial statements.
NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT 3
<PAGE> 6
NATIONWIDE ASSET ALLOCATION TRUST
MODERATE PORTFOLIO
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------
<C> <S> <C>
MUTUAL FUNDS (90.2%)
AGGRESSIVE GROWTH (20.4%)
27,684 Nationwide Separate Account
Trust --Nationwide Small
Company Fund $ 443,217
5,433 Oppenheimer Capital
Appreciation Fund Class A 218,461
4,943 Oppenheimer Discovery Fund
Class A 225,216
-----------
886,894
-----------
GROWTH (20.0%)
5,947 American Century Equity Growth
Fund 135,055
2,049 Dreyfus Appreciation Fund,
Inc. 86,195
2,355 Federated Stock Trust 86,750
4,644 MAS Equity Portfolio Adviser
Class 86,057
11,518 Nationwide Separate Account
Trust -- Capital Appreciation
Fund 306,251
1,401 Strong Schafer Value Fund 83,047
4,064 Warburg Pincus Capital
Appreciation Fund 89,236
-----------
872,591
-----------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------
<C> <S> <C>
GROWTH & INCOME (29.8%)
8,000 Nationwide Fund Class D $ 259,296
95,748 Nationwide S&P 500 Index Fund
Local Fund Shares 1,034,074
-----------
1,293,370
-----------
INCOME (20.0%)
84,746 Nationwide Separate Account
Trust -- Nationwide Income
Fund 868,643
-----------
TOTAL MUTUAL FUNDS 3,921,498
-----------
(cost $3,701,614)
- ----------
PRINCIPAL
- ----------
FIXED INCOME (9.8%)
$ 427,696 Nationwide Fixed Contract,
5.70% 427,696
-----------
(cost $427,696)
TOTAL INVESTMENTS $ 4,349,194
===========
(cost $4,129,310)
</TABLE>
- --------------------------------------------------------------------------------
Cost for federal income tax purposes: $4,158,911.
Portfolio holding percentages represent market value as a percentage of net
assets at December 31, 1998.
The Nationwide Fixed Contract rate changes quarterly.
See accompanying notes to financial statements.
4 NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT
<PAGE> 7
NATIONWIDE ASSET ALLOCATION TRUST
MODERATELY CONSERVATIVE PORTFOLIO
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
MUTUAL FUNDS (80.1%)
AGGRESSIVE GROWTH (10.2%)
6,170 Nationwide Separate Account
Trust -- Nationwide Small
Company Fund $ 98,785
951 Oppenheimer Capital Appreciation
Fund Class A 38,225
1,297 Oppenheimer Discovery Fund Class
A 59,081
-----------
196,091
-----------
GROWTH (10.0%)
1,811 American Century Equity Growth
Fund 41,119
461 Dreyfus Appreciation Fund, Inc. 19,387
470 Federated Stock Trust 17,310
1,011 MAS Equity Portfolio Adviser
Class 18,739
3,598 Nationwide Separate Account
Trust -- Capital Appreciation
Fund 95,664
-----------
192,219
-----------
GROWTH & INCOME (29.8%)
3,556 Nationwide Fund Class D 115,263
42,503 Nationwide S&P 500 Index Fund
Local Fund Shares 459,037
-----------
574,300
-----------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
INCOME (30.1%)
56,520 Nationwide Separate Account
Trust -- Nationwide Income Fund $ 579,329
-----------
TOTAL MUTUAL FUNDS 1,541,939
-----------
(cost $1,457,572)
- ---------
PRINCIPAL
- ---------
FIXED INCOME (19.9%)
$ 382,683 Nationwide Fixed Contract, 5.70% 382,683
-----------
(cost $382,683)
TOTAL INVESTMENTS $ 1,924,622
===========
(cost $1,840,255)
</TABLE>
- --------------------------------------------------------------------------------
Cost for federal income tax purposes: $1,860,525.
Portfolio holding percentages represent market value as a percentage of net
assets at December 31, 1998.
The Nationwide Fixed Contract rate changes quarterly.
See accompanying notes to financial statements.
NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT 5
<PAGE> 8
NATIONWIDE ASSET ALLOCATION TRUST
CONSERVATIVE PORTFOLIO
STATEMENT OF INVESTMENTS -- DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
MUTUAL FUNDS (75.3%)
GROWTH (10.2%)
799 American Century Equity Growth
Fund $ 18,144
434 Dreyfus Appreciation Fund, Inc. 18,246
534 Federated Stock Trust 19,671
1,001 MAS Equity Portfolio Adviser
Class 18,550
3,437 Nationwide Separate Account
Trust -- Capital Appreciation
Fund 91,399
311 Strong Schafer Value Fund 18,410
-----------
184,420
-----------
GROWTH & INCOME (20.0%)
2,251 Nationwide Fund Class D 72,952
26,772 Nationwide S&P 500 Index Fund
Local Fund Shares 289,142
-----------
362,094
-----------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES SECURITY VALUE
- ----------------------------------------------------------
<C> <S> <C>
INCOME (45.1%)
79,930 Nationwide Separate Account
Trust -- Nationwide Income Fund $ 819,283
-----------
TOTAL MUTUAL FUNDS
(cost $1,312,629) 1,365,797
-----------
- ---------
PRINCIPAL
- ---------
FIXED INCOME (24.7%)
$ 449,102 Nationwide Fixed Contract, 5.70% 449,102
-----------
(cost $449,102)
TOTAL INVESTMENTS $ 1,814,899
===========
(cost $1,761,731)
</TABLE>
- --------------------------------------------------------------------------------
Cost for federal income tax purposes: $1,770,969.
Portfolio holding percentages represent market value as a percentage of net
assets at December 31, 1998.
The Nationwide Fixed Contract rate changes quarterly.
See accompanying notes to financial statements.
6 NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT
<PAGE> 9
NATIONWIDE ASSET ALLOCATION TRUST
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MODERATELY MODERATELY
AGGRESSIVE AGGRESSIVE MODERATE CONSERVATIVE CONSERVATIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $6,666,659, $4,457,196,
$4,129,310, $1,840,255, and
$1,761,731, respectively) $6,876,028 $4,630,114 $4,349,194 $1,924,622 $1,814,899
Interest and dividends receivable -- 72 67 60 71
---------- ---------- ---------- ---------- ----------
Total assets 6,876,028 4,630,186 4,349,261 1,924,682 1,814,970
---------- ---------- ---------- ---------- ----------
LIABILITIES
Cash Overdraft 120 53 65 -- --
Management fee payable 2,729 1,880 1,715 771 721
---------- ---------- ---------- ---------- ----------
Total liabilities 2,849 1,933 1,780 771 721
---------- ---------- ---------- ---------- ----------
NET ASSETS $6,873,179 $4,628,253 $4,347,481 $1,923,911 $1,814,249
========== ========== ========== ========== ==========
REPRESENTED BY:
Capital $6,397,333 $4,317,010 $4,049,304 $1,815,883 $1,729,492
Net unrealized appreciation on
investments 209,369 172,918 219,884 84,367 53,168
Accumulated undistributed realized gain
on investments 261,426 126,151 63,600 13,352 18,612
Accumulated undistributed net
investment income 5,051 12,174 14,693 10,309 12,977
---------- ---------- ---------- ---------- ----------
NET ASSETS $6,873,179 $4,628,253 $4,347,481 $1,923,911 $1,814,249
========== ========== ========== ========== ==========
Shares of beneficial interest
outstanding, (unlimited number of
shares authorized) 583,392 399,466 376,118 169,829 164,865
========== ========== ========== ========== ==========
NET ASSET VALUE, offering and redemption
price per share $ 11.78 $ 11.59 $ 11.56 $ 11.33 $ 11.00
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT 7
<PAGE> 10
NATIONWIDE ASSET ALLOCATION TRUST
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1998(1)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MODERATELY MODERATELY
AGGRESSIVE AGGRESSIVE MODERATE CONSERVATIVE CONSERVATIVE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Interest $ 20 $ 13,517 $ 9,528 $ 9,567 $ 9,579
Dividends 24,354 25,532 29,233 17,921 17,926
-------- -------- -------- -------- -------
Total income 24,374 39,049 38,761 27,488 27,505
-------- -------- -------- -------- -------
EXPENSES:
Management Fee 18,470 11,805 8,325 4,191 3,353
-------- -------- -------- -------- -------
NET INVESTMENT INCOME $ 5,904 $ 27,244 $ 30,436 $ 23,297 $24,152
-------- -------- -------- -------- -------
NET REALIZED AND UNREALIZED
GAIN:
Net realized gain on
investments $261,426 $126,151 $ 63,600 $ 13,352 $18,612
Net change in unrealized
appreciation on
investments 209,369 172,918 219,884 84,367 53,168
-------- -------- -------- -------- -------
NET REALIZED AND UNREALIZED
GAIN 470,795 299,069 283,484 97,719 71,780
-------- -------- -------- -------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $476,699 $326,313 $313,920 $121,016 $95,932
======== ======== ======== ======== =======
</TABLE>
- ---------------
(1) For the period January 20, 1998 (commencement of operations) through
December 31, 1998.
See accompanying notes to financial statements.
8 NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT
<PAGE> 11
NATIONWIDE ASSET ALLOCATION TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MODERATELY AGGRESSIVE
AGGRESSIVE PORTFOLIO PORTFOLIO MODERATE PORTFOLIO
--------------------- --------------------- ---------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, 1998(1) DECEMBER 31, 1998(1) DECEMBER 31, 1998(1)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 5,904 $ 27,244 $ 30,436
Net realized gain on investments 261,426 126,151 63,600
Net change in unrealized
appreciation of investments 209,369 172,918 219,884
---------- ---------- ----------
Net increase in net assets
resulting from operations 476,699 326,313 313,920
---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (853) (15,070) (15,743)
---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 6,869,107 4,969,052 4,516,176
Net asset value of shares issued
to shareholders from
reinvestment of distributions 853 15,070 15,743
Cost of shares redeemed (472,627) (667,112) (482,615)
---------- ---------- ----------
Increase in net assets from
capital share transactions 6,397,333 4,317,010 4,049,304
---------- ---------- ----------
NET INCREASE IN NET ASSETS 6,873,179 4,628,253 4,347,481
NET ASSETS-BEGINNING OF PERIOD -- -- --
---------- ---------- ----------
NET ASSETS-END OF PERIOD $6,873,179 $4,628,253 $4,347,481
========== ========== ==========
Undistributed net realized gain on
investments $ 261,426 $ 126,151 $ 63,600
========== ========== ==========
Undistributed net investment income $ 5,051 $ 12,174 $ 14,693
========== ========== ==========
SHARE ACTIVITY:
Shares sold 627,533 461,292 420,709
Reinvestment of distributions 75 1,444 1,530
Shares redeemed (44,216) (63,270) (46,121)
---------- ---------- ----------
Net increase in number of shares 583,392 399,466 376,118
========== ========== ==========
</TABLE>
- ---------------
(1) For the period January 20, 1998 (commencement of operations) through
December 31, 1998.
See accompanying notes to financial statements.
NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT 9
<PAGE> 12
NATIONWIDE ASSET ALLOCATION TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MODERATELY
CONSERVATIVE CONSERVATIVE
PORTFOLIO PORTFOLIO
--------------------- ---------------------
PERIOD ENDED PERIOD ENDED
DECEMBER 31, 1998(1) DECEMBER 31, 1998(1)
--------------------- ---------------------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income $ 23,297 $ 24,152
Net realized gain on investments 13,352 18,612
Net change in unrealized appreciation of investments 84,367 53,168
---------- ----------
Net increase in net assets resulting from
operations 121,016 95,932
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME (12,988) (11,175)
---------- ----------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 2,404,492 2,821,049
Net asset value of shares issued to shareholders from
reinvestment of distributions 12,988 11,175
Cost of shares redeemed (601,597) (1,102,732)
---------- ----------
Increase in net assets from capital share
transactions 1,815,883 1,729,492
---------- ----------
NET INCREASE IN NET ASSETS 1,923,911 1,814,249
NET ASSETS-BEGINNING OF PERIOD -- --
---------- ----------
NET ASSETS-END OF PERIOD $1,923,911 $1,814,249
========== ==========
Undistributed net realized gain on investments $ 13,352 $ 18,612
========== ==========
Undistributed net investment income $ 10,309 $ 12,977
========== ==========
SHARE ACTIVITY:
Shares sold 225,532 268,867
Reinvestment of distributions 1,251 1,072
Shares redeemed (56,954) (105,074)
---------- ----------
Net increase in number of shares 169,829 164,865
========== ==========
</TABLE>
- ---------------
(1) For the period January 20, 1998 (commencement of operations) through
December 31, 1998.
See accompanying notes to financial statements.
10 NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT
<PAGE> 13
NATIONWIDE ASSET ALLOCATION TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE
OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MODERATELY
AGGRESSIVE AGGRESSIVE
PORTFOLIO PORTFOLIO
---------------------- ----------------------
PERIOD ENDED PERIOD ENDED
DECEMBER 31, 1998 (1) DECEMBER 31, 1998 (1)
---------------------- ----------------------
<S> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $10.00 $10.00
------ ------
Net investment income 0.01 0.10
Net realized and unrealized appreciation 1.78 1.56
------ ------
Total from investment operations 1.79 1.66
------ ------
Distributions from net investment income (0.01) (0.07)
------ ------
Net increase in net asset value 1.78 1.59
------ ------
NET ASSET VALUE -- END OF PERIOD $11.78 $11.59
====== ======
Total return* 17.85% 16.61%
Ratios and supplemental data:
Net assets, end of period (000's) $6,873 $4,628
Ratio of expense to average net assets* 0.50% 0.50%
Ratio of net investment income to average
net assets* 0.16% 1.16%
Portfolio Turnover* 38.42% 52.63%
</TABLE>
- ------------------------------------------------------
* Ratios are annualized for periods of less than one year. Total return and
portfolio turnover are not annualized.
(1) For the period January 20, 1998 (commencement of operations) through
December 31, 1998.
See accompanying notes to financial statements.
NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT 11
<PAGE> 14
NATIONWIDE ASSET ALLOCATION TRUST
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE
OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MODERATELY
MODERATE CONSERVATIVE CONSERVATIVE
PORTFOLIO PORTFOLIO PORTFOLIO
--------------------- --------------------- ---------------------
PERIOD ENDED PERIOD ENDED PERIOD ENDED
DECEMBER 31, 1998 (1) DECEMBER 31, 1998 (1) DECEMBER 31, 1998 (1)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
NET ASSET VALUE --
BEGINNING OF PERIOD $10.00 $10.00 $10.00
------ ------ ------
Net investment income 0.14 0.22 0.30
Net realized and unrealized
appreciation 1.53 1.27 0.92
------ ------ ------
Total from investment
operations 1.67 1.49 1.22
------ ------ ------
Distributions from net investment
income (0.11) (0.16) (0.22)
------ ------ ------
Net increase in net asset
value 1.56 1.33 1.00
------ ------ ------
NET ASSET VALUE -- END OF PERIOD $11.56 $11.33 $11.00
====== ====== ======
Total return* 16.74% 14.97% 12.33%
Ratios and supplemental data:
Net assets, end of period (000's) $4,347 $1,924 $1,814
Ratio of expense to average net
assets* 0.50% 0.50% 0.50%
Ratio of net investment income to
average net assets * 1.83% 2.79% 3.60%
Portfolio Turnover* 55.92% 104.85% 165.15%
</TABLE>
- ------------------------------------------------------
* Ratios are annualized for periods of less than one year. Total return and
portfolio turnover are not annualized.
(1) For the period January 20, 1998 (commencement of operations) through
December 31, 1998.
See accompanying notes to financial statements.
12 NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT
<PAGE> 15
NATIONWIDE ASSET ALLOCATION TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
NOTE 1 -- ORGANIZATION
Nationwide Asset Allocation Trust (the "Trust") is an open-end management
investment company organized under the laws of the State of Ohio by a
Declaration of Trust dated September 9, 1997. The Trust currently offers shares
in five separate nondiversified funds (each known as a "Nationwide
Professionally Managed Portfolio" or a "Portfolio"), each of which is a
separately managed portfolio with its own investment objectives and policies.
These Portfolios are the Aggressive Portfolio, the Moderately Aggressive
Portfolio, the Moderate Portfolio, the Moderately Conservative Portfolio, and
the Conservative Portfolio. The Trust was capitalized on January 6, 1998, when
The Nationwide Life Company purchased the initial shares of each Portfolio at
$10.00 per share, and operations commenced on January 20, 1998. The shares of
each Portfolio are sold only to life insurance company separate accounts to fund
the benefits of variable annuity contracts or life insurance policies.
Each Portfolio is constructed as a "fund of funds" which means that it pursues
its investment objective primarily by allocating its investments among other
mutual funds (the "Underlying Funds") offered by Nationwide Advisory Services,
Inc. ("NAS"), the investment advisor to the trust, and other leading mutual fund
providers.
Percentages of the Portfolios' investments in Underlying Funds advised by
Nationwide are summarized as follows:
<TABLE>
<S> <C>
Aggressive Portfolio........................................ 54.0%
Moderately Aggressive Portfolio............................. 54.9%
Moderate Portfolio.......................................... 67.0%
Moderately Conservative Portfolio........................... 70.1%
Conservative Portfolio...................................... 70.2%
</TABLE>
Percentages represent market value as a percentage of net assets at December 31,
1998.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Trust's significant accounting policies:
a) SECURITIES VALUATION -- Shares of Underlying Funds in which the Portfolios
invest, are valued at their respective net asset values as determined under
the Investment Company Act of 1940. The securities in the Underlying Funds
are valued as of the close of business of the regular session of trading on
the New York Stock Exchange (currently 4:00 p.m., Eastern time). Underlying
Funds value securities in their portfolios for which market quotations are
readily available at their current market value (generally the last reported
sale price) and all other securities and assets at fair value pursuant to
methods established in good faith by the Board of Trustees or Directors of
the Underlying Fund. The Nationwide Fixed Contract is valued at par value
each day. The par value is calculated each day by the summation of the
following factors: prior day's par value, prior day's interest accrued (par
multiplied by guaranteed fixed rate), and current day net purchase or
redemption.
b) SHARE VALUATION -- The net asset value per share of each Portfolio is
calculated daily by dividing the total value of the Portfolio's assets, less
liabilities, by the number of shares outstanding, rounded to the nearest
cent. The offering and redemption price per share of each Portfolio are equal
to the net asset value per share.
c) SECURITY TRANSACTIONS -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis. Dividend
and capital gain income is recorded on the ex-dividend date. Interest income
for the Fixed Contract is accrued daily and reinvested the following day.
NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT 13
<PAGE> 16
NATIONWIDE ASSET ALLOCATION TRUST
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
d) FEDERAL INCOME TAXES -- Each Portfolio's policy is to comply with the
requirements of the Internal Revenue Code that are applicable to regulated
investment companies and to distribute all its taxable income to its
shareholders. Therefore, no federal income tax provision is required. Each
Portfolio is treated as a separate taxable entity.
e) INVESTMENT INCOME -- Dividend income is recorded on the ex-dividend date. For
financial reporting purposes, the Portfolios record distributions of
short-term and long-term capital gains made by mutual funds in which the
Portfolios invest as realized gains.
f) DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders arising from
each Portfolio's net investment income and net realized capital gains if any,
are distributed at least once each year. Income distributions and capital
gain distributions are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
g) ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 3 -- RELATED PARTY TRANSACTIONS
NAS, a subsidiary of the Nationwide Life Insurance Company, serves as the
Portfolios' investment advisor. Under the terms of the Investment Advisory
Agreement, NAS oversees the investment of the assets for the Portfolios and
supervises its daily business affairs. Each of the Portfolios incurs a
management fee of 0.50% of its average daily net assets. Under the Investment
Advisory Agreement with each Portfolio, NAS will bear all expenses of each
Portfolio, other than the management fee and any extraordinary expenses.
Nationwide Investors Services, Inc. ("NIS") acts as transfer and dividend
disbursing agent for the Portfolios. NIS is a wholly owned subsidiary of NAS and
is compensated by NAS under the agreement noted above.
Nationwide Life Insurance Company is the underwriter of the Nationwide Fixed
Contract.
The following interest earned, dividend income, and capital gain distributions
are for the period January 20, 1998 (commencement of operations) through
December 31, 1998. Dividend income and capital gain distributions are from
Nationwide Funds as well as Nationwide Separate Account Trust Funds.
<TABLE>
<CAPTION>
CAPITAL GAIN
INTEREST DIVIDEND DISTRIBUTIONS
EARNED ON THE INCOME FROM FROM
NATIONWIDE NATIONWIDE NATIONWIDE
FIXED CONTRACT FUNDS FUNDS
-------------- ----------- -------------
<S> <C> <C> <C>
Aggressive Portfolio....................... $ -- $11,161 $35,713
Moderately Aggressive Portfolio............ 13,517 18,581 20,039
Moderate Portfolio......................... 9,523 25,043 17,606
Moderately Conservative Portfolio.......... 9,567 16,678 7,201
Conservative Portfolio..................... 9,579 17,093 7,197
</TABLE>
NOTE 4 -- BANK LOANS
The Trust has an unsecured bank line of credit of $10 million. Borrowing under
this arrangement bears interest at the Federal Funds rate plus 0.50%. No
compensating balances are required.
14 NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT
<PAGE> 17
NATIONWIDE ASSET ALLOCATION TRUST
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
NOTE 5 -- INVESTMENT TRANSACTIONS
Purchases and sales of registered investment companies for the period ended
December 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
---------- ----------
<S> <C> <C>
Aggressive Portfolio................................... $8,136,066 $1,528,729
Moderately Aggressive Portfolio........................ 5,189,637 1,207,240
Moderate Portfolio..................................... 4,638,180 930,048
Moderately Conservative Portfolio...................... 2,232,980 770,720
Conservative Portfolio................................. 2,242,287 935,438
</TABLE>
Net unrealized appreciation (depreciation) on investments at December 31, 1998,
based on cost for federal income tax purposes, was as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
APPRECIATION (DEPRECIATION) APPRECIATION
------------ -------------- --------------
<S> <C> <C> <C>
Aggressive Portfolio..................... $301,432 $(113,657) $187,775
Moderately Aggressive Portfolio.......... 187,327 (43,630) 143,697
Moderate Portfolio....................... 205,758 (15,475) 190,283
Moderately Conservative Portfolio........ 67,955 (3,858) 64,097
Conservative Portfolio................... 49,006 (5,076) 43,930
</TABLE>
NOTE 6 -- SHARES HELD BY AFFILIATES
As of December 31, 1998, the Nationwide Life Company beneficially owned shares
of the Portfolios with the following net asset values:
<TABLE>
<S> <C>
Aggressive Portfolio........................................ $23,570
Moderately Aggressive Portfolio............................. 23,321
Moderate Portfolio.......................................... 23,349
Moderately Conservative Portfolio........................... 22,994
Conservative Portfolio...................................... 22,466
</TABLE>
NATIONWIDE ASSET ALLOCATION TRUST ANNUAL REPORT 15
