<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NATIONWIDE(R) S&P 500 INDEX FUND
LOCAL FUND SHARES
ANNUAL REPORT
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
NATIONWIDE(R) S&P 500 INDEX FUND
LOCAL FUND SHARES
ANNUAL REPORT
OCTOBER 31, 1998
TABLE OF CONTENTS
<TABLE>
<S> <C>
Independent Auditors' Report................................ 1
Statement of Investments.................................... 2
Statement of Assets and Liabilities......................... 9
Statement of Operations..................................... 10
Statement of Changes in Net Assets.......................... 11
Financial Highlights........................................ 12
Notes to Financial Statements............................... 13
</TABLE>
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of
Nationwide Investing Foundation III:
We have audited the accompanying statement of assets and liabilities of the
Nationwide Investing Foundation III -- Nationwide S&P 500 Index Fund (the Fund),
including the statement of investments, as of October 31, 1998, and the related
statement of operations, statement of changes in net assets and the financial
highlights for the period from July 24, 1998 (commencement of operations)
through October 31, 1998. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included verification of securities owned as of October 31, 1998, by
confirmation with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Nationwide Investing Foundation III -- Nationwide S&P 500 Index Fund at October
31, 1998, and the results of its operations, the changes in its net assets and
the financial highlights for the period from July 24, 1998 (commencement of
operations) through October 31, 1998, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
November 20, 1998
NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT 1
<PAGE> 4
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF INVESTMENTS -- OCTOBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCK -- AFFILIATED (0.2%)
FINANCIAL -- BANKS
700 Mellon Bank Corp. $ 42,087
==========
TOTAL COMMON STOCK -- AFFILIATED
(cost $42,875)
COMMON STOCK -- UNAFFILIATED (99.5%)
AEROSPACE (1.1%)
100 Aeroquip-Vickers, Inc. 3,150
2,600 Boeing Co. (The) 97,500
300 General Dynamics Corp. 17,756
200 Goodrich (B.F.) Co. 7,200
500 Lockheed Martin Corp. 55,687
600 United Technologies Corp. 57,150
----------
238,443
----------
AIRLINES (0.5%)
500 AMR Corp.* 33,500
200 Delta Air Lines, Inc. 21,112
400 Federal Express Corp.* 21,025
750 Southwest Airlines 15,891
200 U.S. Airways Group, Inc.* 11,312
----------
102,840
----------
ALUMINUM (0.3%)
500 Alcan Aluminum Ltd. 12,656
500 Aluminum Co. of America 39,625
200 Reynolds Metals Co. 11,987
----------
64,268
----------
APPAREL (0.2%)
200 Fruit of the Loom, Inc.* 3,050
100 Liz Claiborne, Inc. 2,937
700 Nike, Inc. Class B 30,581
100 Reebok International Ltd.* 1,662
100 Russell Corp. 2,456
300 V F Corp. 12,544
----------
53,230
----------
BEVERAGES (2.6%)
6,200 Coca-Cola Co. 419,275
1,000 Coca-Cola Enterprises, Inc. 36,062
3,700 PepsiCo, Inc. 124,875
----------
580,212
----------
BEVERAGES -- OTHER (0.6%)
100 Adolph Coors Co. Class B 5,000
1,200 Anheuser-Busch Cos., Inc. 71,325
200 Brown-Forman Corp. Class B 13,587
400 Fortune Brands, Inc. 13,225
900 Seagram Co. Ltd. 29,587
----------
132,724
----------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
BUSINESS MACHINERY (6.4%)
1,100 3COM Corp.* $ 39,669
300 Apple Computer, Inc.* 11,137
300 Cabletron System, Inc.* 3,412
3,850 Cisco Systems, Inc.* 242,550
4,100 Compaq Computer Corp.* 129,662
100 Data General Corp.* 1,700
3,200 Dell Computer Corp.* 209,600
1,200 EMC Corp.* 77,250
400 Gateway 2000, Inc.* 22,325
2,600 Hewlett-Packard Co.* 156,487
300 IKON Office Solutions, Inc. 2,831
2,300 International Business Machines
Corp. 341,406
700 Pitney Bowes, Inc. 38,544
500 Seagate Technology* 13,187
400 Silicon Graphics, Inc.* 4,500
900 Sun Microsystems, Inc.* 52,425
800 Xerox Corp. 77,500
----------
1,424,185
----------
CAPITAL GOODS (5.7%)
800 Applied Materials, Inc.* 27,750
100 Briggs & Stratton 4,700
200 Case Corp. 4,400
900 Caterpillar, Inc. 40,500
150 Crane Co. 4,322
100 Cummins Engine, Inc. 3,412
800 Deere & Co. 28,300
500 Dover Corp. 15,875
200 Eaton Corp. 13,537
1,100 Emerson Electric Co. 72,600
8,100 General Electric Co. 708,750
400 Genuine Parts Co. 12,600
200 Grainger (W.W.), Inc. 9,212
100 Harnischfeger Industries, Inc. 944
600 Illinois Tool Works, Inc. 38,475
400 Ingersoll-Rand Co. 20,200
300 ITT Industries, Inc. 10,725
100 McDermott International, Inc. 2,931
100 Milacron, Inc. 1,937
100 Millipore Corp. 2,462
1,000 Minnesota Mining & Manufacturing
Co. 80,000
300 Pall Corp. 7,575
300 Parker-Hannifin Corp. 10,725
100 Perkin-Elmer Corp. (The) 8,431
100 Snap-on, Inc. 3,544
200 Stanley Works (The) 6,000
400 Textron, Inc. 29,750
300 Thermo Electron Corp.* 5,981
100 Timken Co. (The) 1,781
1,652 Tyco International Ltd. 102,321
----------
1,279,740
----------
CHEMICALS (2.0%)
600 Air Products & Chemicals, Inc. 22,650
1,500 Allied-Signal, Inc. 58,406
300 Avery Dennison Corp. 12,431
</TABLE>
2 NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT
<PAGE> 5
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF INVESTMENTS -- OCTOBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
CHEMICALS (CONTINUED)
600 Dow Chemical Co. $ 56,175
2,800 Du Pont (E.I.) De Nemours & Co. 161,000
200 Eastman Chemical Co. 11,750
300 Engelhard Corp. 6,300
100 FMC Corp.* 5,106
100 Great Lakes Chemical Corp. 4,163
200 Hercules, Inc. 6,663
300 Morton International, Inc. 7,463
100 Nalco Chemical Co. 3,094
800 Occidental Petroleum Corp. 15,900
400 PPG Industries, Inc. 22,875
400 Praxair, Inc. 16,100
600 Rohm & Haas Co. 20,250
200 Sigma-Aldrich Corp. 6,181
300 Union Carbide Corp. 11,550
200 W.R. Grace & Co.* 3,475
----------
451,532
----------
CONSTRUCTION & BUILDING PRODUCTS (0.3%)
100 Armstrong World Industries, Inc. 6,200
100 Centex Corp. 3,350
200 Fluor Corp. 7,762
100 Foster Wheeler Corp. 1,587
100 Kaufman & Broad Home Corp. 2,856
1,000 Masco Corp. 28,187
100 Owens Corning 3,631
400 Sherwin Williams Co. 10,075
----------
63,648
----------
CONSUMER DURABLE (0.1%)
200 Black & Decker Corp. 10,337
200 Maytag Corp. 9,887
200 Whirlpool Corp. 10,250
----------
30,474
----------
CONSUMER -- NON CYCLICAL (3.1%)
700 Avon Products, Inc. 27,781
300 Clorox Co. 32,775
700 Colgate-Palmolive Co. 61,862
300 Ecolab, Inc. 8,962
2,800 Gillette Co. (The) 125,825
300 International Flavor and
Fragrances 11,231
1,500 Kimberly Clark Corp. 72,375
100 National Service Industries, Inc. 3,587
400 Newell Co. 17,600
3,400 Procter & Gamble Co. 302,175
700 Ralston-Ralston Purina Group 23,362
300 Rubbermaid, Inc. 9,956
100 Tupperware Corp. 1,556
----------
699,047
----------
CONTAINERS (0.3%)
100 Ball Corp. 4,219
100 Bemis, Inc. 3,712
300 Crown Cork & Seal Co., Inc. 9,562
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
CONTAINERS (CONTINUED)
400 Owens-Illinois, Inc.* $ 12,225
200 Sealed Air Corp.* 7,087
200 Stone Container Corp.* 1,912
100 Temple-Inland, Inc. 4,856
400 Tenneco, Inc. 12,150
----------
55,723
----------
DRUGS (11.1%)
3,900 Abbott Laboratories 183,056
200 Allergan, Inc. 12,487
200 Alza Corp.* 9,575
3,300 American Home Products Corp. 160,875
600 Amgen, Inc. 47,137
2,500 Bristol-Meyers Squibb Co. 276,406
400 Cardinal Health, Inc. 37,825
2,800 Eli Lilly & Co. 226,625
3,400 Johnson & Johnson Co. 277,100
3,000 Merck & Co., Inc. 405,750
1,600 Monsanto Co. 65,000
3,300 Pfizer, Inc. 354,131
1,300 Pharmacia & Upjohn, Inc. 68,819
1,800 Schering-Plough Corp. 185,175
2,000 Warner-Lambert Co. 156,750
----------
2,466,711
----------
ELECTRONICS (3.7%)
300 Advanced Micro Devices, Inc.* 6,769
500 AMP, Inc. 20,531
200 Andrew Corp.* 3,275
300 Cooper Industries, Inc. 13,237
200 Harris Corp. 7,012
300 Honeywell, Inc. 23,962
4,200 Intel Corp. 374,587
200 KLA Instruments Corp.* 7,375
300 LSI Logic Corp.* 4,537
500 Micron Technolgy, Inc.* 19,000
1,600 Motorola, Inc. 83,200
400 National Semiconductor* 5,075
1,700 Northern Telecom Ltd. 72,781
200 Northrop Grumman Corp. 15,950
200 Raychem Corp. 6,112
800 Raytheon Co. Class B 46,450
500 Rockwell International Corp. 20,531
200 Scientific-Atlanta, Inc. 2,987
100 Tektronix, Inc. 1,787
500 Tellabs, Inc.* 27,500
1,000 Texas Instruments, Inc. 63,937
100 Thomas & Betts Corp. 4,469
----------
831,064
----------
FINANCIAL -- BANKS (6.7%)
2,934 Banc One Corp. 143,399
1,800 Bank of New York Co., Inc. 56,812
4,323 BankAmerica Corp. 248,302
700 BankBoston Corp. 25,769
</TABLE>
NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT 3
<PAGE> 6
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF INVESTMENTS -- OCTOBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
FINANCIAL -- BANKS (CONTINUED)
200 Bankers Trust Corp. $ 12,562
700 BB&T Corp. 24,981
2,100 Chase Manhattan Corp. 119,306
400 Comerica, Inc. 25,800
700 Fifth Third Bancorp 46,375
2,500 First Union Corp. 145,000
1,400 Fleet Financial Group, Inc. 55,912
500 Huntington Bancshares, Inc. 14,375
1,300 Keycorp 39,406
400 Mercantile Bancorp, Inc. 18,275
800 National City Corp. 51,450
300 Northern Trust Corp. 22,125
1,900 Norwest Corp. 70,656
800 PNC Bank Corp. 40,000
600 Regions Financial Corp. 22,200
300 Republic New York Corp. 12,544
400 State Street Corp. 24,950
400 Summit Bancorp 15,175
500 Suntrust Banks, Inc. 34,844
600 Synovus Financial Corp. 13,913
300 Union Planters Corp. 13,931
1,900 US Bancorp Class A 69,350
500 Wachovia Corp. 45,437
200 Wells Fargo & Co. 74,000
----------
1,486,849
----------
FINANCIAL -- MISCELLANEOUS (4.4%)
1,100 American Express Co. 97,212
900 Associates First Capital Corp. 63,450
300 Bear Stearns Cos., Inc. 10,706
200 Capital One Financial Corp. 20,350
700 Charles Schwab Corp. (The) 33,556
5,750 Citigroup, Inc. 270,609
600 Franklin Resources, Inc. 22,688
100 Golden West Financial Corp. 9,069
1,200 Household International 43,875
300 Lehman Brothers Holding 11,381
1,850 MBNA Corp. 42,203
900 Merrill Lynch & Co., Inc. 53,325
400 Morgan (J. P.) & Co., Inc. 37,700
1,500 Morgan Stanley Dean Witter,
Discover, & Co. 97,125
900 S&P 500 Depository Receipt* 99,113
400 Student Loan Market Association 16,025
1,504 Washington Mutual, Inc. 56,306
----------
984,693
----------
FOOD (2.5%)
1,575 Archer-Daniels-Midland Co. 26,283
700 BestFoods 38,150
1,100 Campbell Soup Co. 58,644
1,100 ConAgra, Inc. 33,481
400 General Mills 29,400
900 Heinz (H.J.) Co. 52,313
400 Hershey Foods Corp. 27,125
1,000 Kellogg Co. 33,000
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
FOOD (CONTINUED)
500 Pioneer Hi Bred International,
Inc. $ 14,000
300 Quaker Oats Co. 17,719
800 RJR Nabisco Holding Corp. 22,850
1,200 Sara Lee Corp. 71,625
1,600 Unilever N.V. 120,400
300 Wrigley (Wm.) Jr. Co. 24,281
----------
569,271
----------
FOOD -- RETAIL (0.6%)
600 Albertson's, Inc. 33,338
600 American Stores Co. 19,538
100 Great Atlantic & Pacific Tea Co.,
Inc. (The) 2,350
600 Kroger Co.* 33,300
500 Supervalu, Inc. 12,000
1,000 Sysco Corp. 26,938
400 Winn-Dixie Stores, Inc. 13,575
----------
141,039
----------
GOLD (0.2%)
800 Barrick Gold Corp. 17,100
500 Battle Mountain Gold Co. 2,719
400 Freeport-McMoran Copper & Gold,
Inc. 4,925
500 Homestake Mining 5,938
300 Newmont Mining Corp. 6,375
500 Placer Dome, Inc. 7,875
----------
44,932
----------
HEALTHCARE (1.5%)
100 Bard (C.R.), Inc. 4,269
100 Bausch & Lomb, Inc. 4,169
700 Baxter International, Inc. 41,956
600 Becton, Dickinson and Co. 25,275
300 Biomet, Inc. 10,181
500 Boston Scientific, Inc.* 27,219
1,700 Columbia/HCA Healthcare Corp. 35,700
400 Guidant Corp. 30,600
300 HCR Manor Care, Inc. 9,750
1,100 HealthSouth Corp.* 13,338
400 Humana, Inc.* 7,575
200 Mallinckrodt, Inc. 5,700
1,200 Medtronic, Inc. 78,000
200 St. Jude Medical, Inc.* 5,650
700 Tenet Healthcare Corp.* 19,556
500 United HealthCare Corp. 21,781
----------
340,719
----------
HOTELS -- RESTAURANTS (0.8%)
300 Darden Restaurants, Inc. 4,950
200 Harrah's Entertainment*, Inc. 2,825
700 Hilton Hotels Corp. 14,044
600 Marriott International, Inc.
Class A 16,125
1,700 McDonald's Corp. Class A 113,688
400 Mirage Resorts, Inc.* 6,775
</TABLE>
4 NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT
<PAGE> 7
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF INVESTMENTS -- OCTOBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
HOTELS -- RESTAURANTS (CONTINUED)
400 Tricon Global Restaurants, Inc.* $ 17,400
300 Wendy's International, Inc. 6,300
----------
182,107
----------
INSURANCE (2.7%)
2,100 Allstate Corp. 90,431
2,650 American International Group,
Inc. 225,913
400 AON Corp. 24,800
400 Chubb Corp. 24,600
400 Cincinnati Financial Corp. 14,925
200 General Re Corp. 43,938
600 Hartford Financial Services Group 31,875
300 Loews Corp. 28,181
200 MBIA, Inc. 12,225
300 MGIC Investment Corp. 11,700
200 Progressive Corp. 29,450
400 Provident Cos., Inc. 11,625
400 SAFECO Corp. 17,325
600 St. Paul Cos., Inc. 19,875
300 UNUM Corp. 13,331
----------
600,194
----------
INSURANCE -- LIFE (1.2%)
400 Aetna, Inc. 29,850
600 American General Corp. 41,100
500 CIGNA Corp. 36,469
800 Conseco, Inc. 27,750
300 Jefferson-Pilot Corp. 18,225
300 Lincoln National Corp. 22,763
200 Providian Corp. 15,875
500 SunAmerica, Inc. 35,250
400 Torchmark Corp. 17,500
200 Transamerica Corp. 20,800
----------
265,582
----------
LEISURE PRODUCTS (0.2%)
200 Brunswick Corp. 3,888
300 Hasbro, Inc. 10,519
900 Mattel, Inc. 32,288
----------
46,695
----------
MEDIA (2.7%)
1,900 CBS Corp. 53,081
600 Clear Channel Communications,
Inc.* 27,338
900 Comcast Corp. Class A 44,438
300 General Instrument Corp.* 7,706
200 King World Productions, Inc.* 5,250
1,600 MediaOne Group, Inc. 67,700
1,300 Tele-Communications, Inc. Class
A* 54,763
1,500 Time Warner, Inc. 139,219
300 Tribune Co. 17,288
900 Viacom, Inc. Class B* 53,888
5,000 Walt Disney Co. (The) 134,688
----------
605,359
----------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
METALS (0.1%)
100 Asarco, Inc. $ 2,144
200 Cyprus Amax Minerals Co. 2,488
400 Inco Ltd. 4,275
100 Phelps Dodge Corp. 5,763
----------
14,670
----------
MORTGAGE -- ASSET BACKED OBLIGATIONS (1.3%)
300 Countrywide Credit Industries,
Inc. 12,956
2,600 Fannie Mae 184,113
1,700 Federal Home Loan Mortgage Corp. 97,750
----------
294,819
----------
MOTOR VEHICLES (1.8%)
1,700 Chrysler Corp. 81,813
400 Dana Corp. 16,725
100 Fleetwood Enterprises, Inc. 3,225
3,000 Ford Motor Co. 162,750
1,600 General Motors Corp. 100,900
200 Johnson Controls, Inc. 11,250
200 Navistar International Corp.* 4,175
200 PACCAR, Inc. 8,725
300 TRW, Inc. 17,081
----------
406,644
----------
NATURAL GAS (0.6%)
200 Columbia Energy Group 11,575
200 Consolidated Natural Gas Co. 10,563
100 Eastern Enterprises 4,106
800 Enron Corp. 42,200
100 NICOR, Inc. 4,238
100 ONEOK, Inc. 3,425
100 People's Energy Corp. 3,688
500 Sempra Energy 13,000
1,100 Williams Cos. (The) 30,181
----------
122,976
----------
OIL -- DOMESTIC (0.6%)
300 Anadarko Petroleum Corp. 10,163
200 Apache Corp. 5,663
800 Atlantic Richfield Co. 55,100
400 Burlington Resources, Inc. 16,475
100 Kerr-Mcgee Corp. 3,988
100 Pennzoil Co. 3,588
600 Phillips Petroleum Co. 25,950
200 Sonat, Inc. 6,063
500 Union Pacific Resources Group,
Inc. 6,500
----------
133,490
----------
OIL -- INTERNATIONAL (3.7%)
1,600 Chevron Corp. 130,400
6,100 Exxon Corp. 434,625
2,000 Mobil Corp. 151,375
200 ORYX Energy Co.* 2,800
</TABLE>
NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT 5
<PAGE> 8
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF INVESTMENTS -- OCTOBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
OIL -- INTERNATIONAL (CONTINUED)
1,300 Texaco, Inc. $ 77,106
600 Unocal Corp. 20,363
----------
816,669
----------
OIL -- RESEARCH & DEVELOPMENT (2.1%)
200 Amerada Hess Corp. 11,050
2,400 Amoco Corp. 134,700
200 Ashland, Inc. 9,625
500 Coastal Corp. (The) 17,625
5,400 Royal Dutch Petroleum Co. 265,950
200 Sun Co., Inc. 6,863
700 USX -- Marathon Group 22,881
----------
468,694
----------
OIL -- SERVICES (0.6%)
670 Baker Hughes, Inc. 14,782
1,100 Halliburton Co. 39,531
100 Helmerich & Payne 2,381
200 Rowan Cos.* 2,913
1,400 Schlumberger Ltd. 73,500
----------
133,107
----------
PAPER & FOREST PRODUCTS (0.6%)
100 Boise Cascade Corp. 2,800
200 Champion International Corp. 6,388
600 Fort James Corp. 24,188
200 Georgia Pacific Corp. 10,350
800 International Paper Co. 37,150
200 Louisiana-Pacific Corp. 3,550
300 Mead Corp. 9,488
100 Potlatch Corp. 3,650
200 Union Camp Corp. 8,600
200 Westvaco Corp. 4,925
500 Weyerhauser Co. 23,406
200 Willamette Industries, Inc. 6,200
----------
140,695
----------
PHOTOGRAPHIC (0.3%)
800 Eastman Kodak Co. 62,000
100 Polaroid Corp. 2,656
----------
64,656
----------
POLLUTION CONTROL (0.4%)
400 Browning Ferris Industries 14,175
1,400 Waste Management, Inc. 63,175
----------
77,350
----------
PRINTING & PUBLISHING (0.7%)
200 American Greetings Corp. Class A 8,025
200 Dow Jones & Co., Inc. 9,163
700 Gannett Co., Inc. 43,313
200 Harcourt General, Inc. 9,738
100 Jostens, Inc. 2,256
200 Knight-Ridder, Inc. 10,188
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
PRINTING & PUBLISHING (CONTINUED)
300 McGraw-Hill Cos., Inc. $ 26,981
100 Meredith Corp. 3,700
200 Moore Corp. Ltd. 2,263
400 New York Times Co. Class A 11,300
300 R. R. Donnelley & Sons Co. 12,938
200 Times Mirror Co. (The) 11,088
----------
150,953
----------
RAILROADS (0.6%)
1,200 Burlington Northern Santa Fe
Corp. 37,050
500 CSX Corp. 19,625
1,000 Laidlaw, Inc. 9,438
1,100 Norfolk Southern Corp. 36,231
600 Union Pacific Corp. 28,575
----------
130,919
----------
REAL ESTATE (0.0%)
100 Pulte Corp. 2,575
----------
RETAIL (5.2%)
300 Autozone, Inc.* 7,894
300 Circuit City Stores -- Circuit
City Group 10,856
200 Consolidated Stores Corp.* 3,288
500 Costco Cos., Inc.* 28,375
1,100 CVS Corp. 50,256
1,100 Dayton Hudson Corp. 46,613
300 Dillard's, Inc. 9,319
375 Dollar General Corp.* 8,953
500 Federated Department Stores,
Inc.* 19,219
400 Fred Meyer, Inc.* 21,325
1,000 Gap, Inc. 60,125
3,700 Home Depot, Inc. 160,950
600 J. C. Penney Co., Inc. 28,500
1,100 Kmart Corp.* 15,538
400 Kohls Corp.* 19,125
500 Limited, Inc. (The) 12,813
100 Longs Drug Stores Corp. 3,906
900 Lowe's Cos. 30,319
600 May Department Stores Co. 36,600
300 Nordstrom, Inc. 8,194
100 Pep Boys -- Manny, Moe & Jack
(The) 1,563
600 Rite Aid Corp. 23,813
1,000 Sears Roebuck & Co. 44,938
700 Staples, Inc.* 22,838
300 Tandy Corp. 14,869
700 TJX Cos., Inc. 13,256
900 Toys 'R' Us, Inc.* 17,606
300 Venator Group, Inc.* 2,531
5,600 Wal-Mart Stores, Inc. 386,400
1,200 Walgreen Co. 58,425
----------
1,168,407
----------
</TABLE>
6 NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT
<PAGE> 9
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF INVESTMENTS -- OCTOBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
SERVICES (5.8%)
200 Adobe Systems, Inc. $ 7,425
100 Autodesk, Inc. 3,119
800 Automatic Data Processing, Inc. 62,250
500 BMC Software, Inc.* 24,031
2,200 Cendant Corp.* 25,163
200 Ceridian Corp.* 11,475
1,500 Computer Associates
International, Inc. 59,063
400 Computer Science Corp.* 21,100
200 Deluxe Corp. 6,475
400 Dun & Bradstreet Corp. 11,350
100 EG&G, Inc. 2,513
1,300 Electronic Data Systems Corp. 52,894
400 Equifax, Inc. 15,475
1,000 First Data Corp. 26,500
300 H&R Block, Inc. 13,444
1,100 HBO & Co. 28,875
400 IMS Health, Inc. 26,600
300 Interpublic Group Cos., Inc. 17,550
600 Marsh & McLennan Cos., Inc. 33,300
6,200 Microsoft Corp.* 656,425
800 Novell, Inc.* 11,900
400 Omnicom Group 19,775
2,500 Oracle Corp.* 73,906
600 Parametric Technology* 9,975
400 Paychex, Inc. 19,900
500 Peoplesoft, Inc.* 10,594
200 Ryder System, Inc. 4,925
600 Service Corp. International 21,375
100 Shared Medical Systems Corp. 4,988
600 Unisys Corp.* 15,975
----------
1,298,340
----------
STEEL (0.1%)
400 Allegheny Teledyne, Inc. 8,225
200 Armco, Inc.* 950
300 Bethlehem Steel Corp.* 2,700
200 Nucor Corp. 9,063
200 USX-U.S. Steel Group, Inc. 4,650
200 Worthington Industries, Inc. 2,713
----------
28,301
----------
TELECOMMUNICATIONS (9.2%)
1,400 Airtouch Communications Class A 78,400
700 Alltel Corp. 32,769
2,800 Ameritech Corp. 151,025
500 Ascend Communications, Inc.* 24,125
4,500 AT&T Corp. 280,125
3,900 Bell Atlantic Co. 207,188
2,500 Bellsouth Corp. 199,531
600 Corning, Inc. 21,788
400 Frontier Corp. 12,025
2,400 GTE Corp. 140,850
3,300 Lucent Technologies, Inc. 264,619
4,563 MCI WorldCom, Inc.* 252,128
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES SECURITY VALUE
- ------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS (CONTINUED)
600 Nextel Communication* $ 10,875
4,900 SBC Communications, Inc. 226,931
1,100 Sprint Corp. 84,425
1,300 U S West Communications Group 74,588
----------
2,061,392
----------
TIRE & RUBBER (0.1%)
200 Cooper Tire & Rubber Co. 3,325
400 Goodyear Tire & Rubber Co. 21,550
----------
24,875
----------
TOBACCO (1.5%)
6,100 Philip Morris Cos., Inc. 311,863
400 UST, Inc. 13,600
----------
325,463
----------
UTILITIES -- ELECTRIC (2.7%)
400 AES Corp.* 16,375
300 Ameren Corp. 11,981
500 American Electric Power Co., Inc. 24,469
400 Baltimore Gas and Electric Co. 12,550
400 Carolina Power & Light Co. 18,350
500 Central & Southwest Corp. 13,906
400 Cinergy Corp. 13,800
800 Consolidated Edison, Inc. 40,100
500 Dominion Resources, Inc. 23,094
400 DTE Energy Corp. 17,050
900 Duke Power Co. 58,219
800 Edison International 21,100
500 Entergy Corp. 14,375
500 FirstEnergy Corp. 15,000
500 FPL Group, Inc. 31,281
300 GPU, Inc. 12,938
900 Houston Industries, Inc. 27,956
400 Niagara Mohawk Power Corp.* 5,850
300 Northern States Power Co. 8,100
900 PacificCorp 17,156
600 PECO Energy Co. 23,212
1,100 PG&E Corp. 33,481
400 PP&L Resources, Inc. 10,850
600 Public Service Enterprise Group,
Inc. 22,800
1,800 Southern Co. 50,737
700 Texas Utilities Co. 30,625
500 Unicom Corp. 18,844
----------
594,199
----------
TOTAL COMMON STOCK --UNAFFILIATED 22,200,475
(cost $22,914,171) ==========
PREFERRED STOCK (0.0%)
CONSUMER NON DURABLE (0.0%)
100 Alberto Culver Co. Class B
(cost $2,833) 2,656
----------
</TABLE>
NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT 7
<PAGE> 10
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF INVESTMENTS -- OCTOBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- -------------------------------------------------------
PRINCIPAL SECURITY VALUE
- -------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (0.2%)
$51,000 Fifth Third Bank, 5.30%,
11/02/98, Collateralized by
$53,000 FNMA, Pool #406608,
6.75%, 07/01/24, market value
$53,000 (cost $51,000) $ 51,000
-----------
TOTAL INVESTMENTS $22,296,218
(cost $23,015,214) ===========
</TABLE>
- --------------------------------------------------------------------------------
Cost for federal income tax purposes: $23,018,053.
The abbreviation in the above statement stands for the following:
FNMA Federal National Mortgage Association
* Denotes a non-income producing security.
Portfolio holdings represent market value as a percentage of net assets.
See accompanying notes to the financial statements.
8 NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT
<PAGE> 11
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, affiliated, at value (cost
$42,875) $ 42,087
Investments in securities, unaffiliated, at value (cost
$22,921,339) 22,203,131
Repurchase agreement (cost $51,000) 51,000
Cash 519
Receivable from advisor 16,272
Accrued interest and dividends receivable 22,218
Prepaid assets 10,890
Withholding tax reclaim receivable 368
-----------
Total assets 22,346,485
-----------
LIABILITIES
Accrued investment management fees 4,616
Accrued administrative fees 2,814
Accrued transfer agent fees 563
Accrued distribution fees 3,939
Other accrued expenses 9,168
-----------
Total liabilities 21,100
-----------
NET ASSETS $22,325,385
===========
NET ASSETS REPRESENTED BY:
Capital $23,034,706
Net unrealized appreciation (depreciation) (718,996)
Accumulated undistributed net realized gain (loss) (8,935)
Accumulated undistributed (distributions in excess of) net
investment income 18,610
-----------
NET ASSETS $22,325,385
===========
Shares outstanding (unlimited number of shares
authorized)(a) 2,311,331
===========
NET ASSET VALUE, offering and redemption price per share(a) $ 9.66
===========
</TABLE>
- ------------------------------------------------------
(a) Local Fund Shares
See accompanying notes to financial statements.
NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT 9
<PAGE> 12
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF OPERATIONS
PERIOD FROM JULY 24, 1998 TO OCTOBER 31, 1998 (a)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends $ 87,596
Interest 19,312
---------
Total income 106,908
---------
EXPENSES:
Investment management fees 7,315
Distribution fees 3,939
Administrative fees 2,814
Transfer agent fees 563
Shareholders' reports 3,288
Professional services 3,713
Custodian fees 5,277
Trustees' fees and expenses 50
Other 9,178
---------
Total expenses before reimbursed expenses 36,137
Total reimbursed expenses (16,272)
---------
Net expenses 19,865
---------
NET INVESTMENT INCOME $ 87,043
=========
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments $ (8,935)
Net change in unrealized appreciation (depreciation) (718,996)
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (727,931)
---------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $(640,888)
=========
</TABLE>
- ------------------------------------------------------
(a) For the period from July 24, 1998 (commencement of operations) through
October 31, 1998.
See accompanying notes to financial statements.
10 NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT
<PAGE> 13
NATIONWIDE(R) S&P 500 INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM JULY 24, 1998 TO OCTOBER 31, 1998(a)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 87,043
Net realized gain (loss) on investments (8,935)
Net change in unrealized appreciation (depreciation) of
investments (718,996)
-----------
Net decrease in net assets resulting from operations (640,888)
-----------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS OF NET INVESTMENT
INCOME TO SHAREHOLDERS(b) (68,433)
-----------
CAPITAL SHARE TRANSACTIONS:(b)
Net proceeds from sale of shares 23,141,368
Net asset value of shares issued to shareholders from
reinvestment of dividends 68,425
Cost of shares redeemed (275,087)
-----------
Increase (decrease) in net assets derived from
capital share transactions 22,934,706
-----------
NET INCREASE (DECREASE) IN NET ASSETS 22,225,385
NET ASSETS -- BEGINNING OF PERIOD 100,000
-----------
NET ASSETS -- END OF PERIOD $22,325,385
===========
Undistributed net realized gain (loss) on investments
included in net assets at end of period $ (8,935)
===========
Undistributed (distributions in excess of) net investment
income included in net assets at end of period $ 18,610
===========
SHARE ACTIVITY:(b)
Shares sold 2,324,247
Reinvestment of dividends 7,654
Shares redeemed (30,570)
-----------
Net increase (decrease) in number of shares 2,301,331
===========
</TABLE>
- ------------------------------------------------------
(a) For the period from July 24, 1998 (commencement of operations) through
October 31, 1998.
(b) Local Fund Shares.
See accompanying notes to financial statements.
NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT 11
<PAGE> 14
NATIONWIDE(R) S&P 500 INDEX FUND
FINANCIAL HIGHLIGHTS
PERIOD FROM JULY 24, 1998 TO OCTOBER 31, 1998(a)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOCAL
FUND SHARES
-----------
<S> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 10.00
Net investment income 0.04
Net realized gain (loss) and unrealized appreciation
(depreciation) (0.35)
-------
Total from investment operations (0.31)
Dividends from net investment income (0.03)
-------
Net increase (decrease) in net asset value (0.34)
-------
NET ASSET VALUE -- END OF PERIOD $ 9.66
=======
Total Return(c) (3.08)%
Net Assets, End of Period (000) $22,325
Ratio of expenses to average net assets(b) 0.35%
Ratio of expenses to average net assets*(b) 0.64%
Ratio of net investment income to average net assets(b) 1.55%
Ratio of net investment income to average net assets*(b) 1.26%
Portfolio turnover(c) 3.07%
</TABLE>
- ------------------------------------------------------
* Ratios calculated as if no expenses were reimbursed
(a) For the period from July 24, 1998 (commencement of operations) through
October 31, 1998.
(b) Annualized
(c) Not annualized
See accompanying notes to financial statements.
12 NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT
<PAGE> 15
NATIONWIDE(R) S&P 500 INDEX FUND
LOCAL FUND SHARES
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nationwide Investing Foundation III ("NIF III" or the "Trust") is an open-end
management investment company. NIF III was created under the laws of the State
of Ohio, by a Declaration of Trust dated October 30, 1997, and is registered
under the Investment Company Act of 1940, as amended. The Trust currently has
shares registered in fourteen separate portfolios or series, each with its own
investment objectives. The accompanying financial statements and financial
highlights relate only to the Nationwide S&P 500 Index Fund Local Fund Shares
(the "Fund"), a non-diversified portfolio. On December 23, 1997, the Fund was
capitalized through a sale of 10,000 Local Fund Shares to Nationwide Advisory
Services, Inc. in the amount of $100,000. The Fund commenced operations on July
24, 1998. On November 2, 1998, the Fund began to offer two additional classes of
shares, Class R and Class Y.
(a) SECURITY VALUATION
(1) Securities traded on a national securities exchange are valued at
the last quoted sale price as provided by an independent pricing agent.
Securities traded in the over-the-counter (OTC) market are valued at the
last quoted sale price, or if no sale price, the quoted bid price as
provided by an independent pricing agent. Securities for which reliable
market quotations are not available or for which an independent pricing
agent does not provide a value or provides a value that does not represent
fair value in the judgement of the Fund's investment adviser, are valued in
accordance with procedures authorized by the Board of Trustees.
(2) The value of a repurchase agreement generally equals the purchase
price paid by the Fund (cost) plus the interest accrued to date. The
seller, under the repurchase agreement, is required to maintain the market
value of the underlying collateral at not less than the value of the
repurchase agreement. Securities subject to repurchase agreements are held
by the Federal Reserve/Treasury book-entry system or by the Fund's
custodian or an approved sub-custodian.
(b) SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date; interest income is recorded on an accrual
basis and includes, where applicable, the pro rata amortization of premium or
discount.
(c) FEDERAL INCOME TAXES
The Fund qualified as a regulated investment company under the Internal Revenue
Code during the period covered by the accompanying statements. No provision has
been made for federal income taxes as it is the intention to continue such
qualification and to distribute all taxable income to shareholders. To the
extent net realized gains are offset through the application of a capital loss
carryover, they will not be distributed to shareholders but will be retained by
the Fund. As of October 31, 1998, the Fund had a net capital loss carryover in
the amount of $6,096, which will expire within 8 years. Withholding taxes have
been paid or provided for in accordance with the applicable tax rates and rules.
(d) DIVIDENDS TO SHAREHOLDERS
Dividends are paid quarterly and are recorded on the ex-dividend date.
Distributable net realized capital gains are declared and distributed at least
annually.
NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT 13
<PAGE> 16
NATIONWIDE(R) S&P 500 INDEX FUND
LOCAL FUND SHARES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Dividends and distributions to shareholders are determined in accordance with
federal income tax regulations which may differ from generally accepted
accounting principles. These "book/tax" differences are considered either
permanent or temporary in nature. In accordance with AICPA (American Institute
of Certified Public Accountants) Statement of Position 93-2, permanent
differences are reclassified within the capital accounts based on their nature
for federal income tax purposes; temporary differences do not require
reclassification. Dividends and distributions that exceed net investment income
and net realized gains for financial reporting purposes but not for tax purposes
are reported as dividends in excess of net investment income and net realized
gains. To the extent distributions exceed current and accumulated earnings and
profits for federal income tax purposes, they are reported as distributions of
paid-in- capital. These reclassifications have no effect upon the net asset
value of the Fund.
(e) EXPENSES
General expenses of the Trust, not directly attributable to a specific fund, are
allocated to the funds based upon each fund's relative average net assets or an
other appropriate basis, as approved by the Board of Trustees. Direct expenses
of the Fund are paid by the Fund.
(f) USE OF 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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
2. TRANSACTIONS WITH AFFILIATES
Investment advisory services are provided to the Fund by Nationwide Advisory
Services, Inc. (NAS), an affiliated company. NAS has selected The Dreyfus
Corporation (a wholly-owned subsidiary of Mellon Bank Corporation) to be the
subadvisor of the Fund. Under the terms of the investment advisory agreement,
NAS earns an annual management fee based on a percentage of the average daily
net assets of the Fund. From such fees, and pursuant to the sub-investment
advisory agreement, NAS pays subadvisory fees to the subadvisor.
Additional information regarding investment advisory fees for NAS and the
subadvisor is as follows for the period ended October 31, 1998:
<TABLE>
<CAPTION>
TOTAL
AVERAGE DAILY ADVISORY SUBADVISORY ADVISORY NAS SUBADVISOR
NET ASSETS FEE FEE FEES FEES FEES
- ------------------- -------- ----------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
$3,376 $3,939
Up to $250 million 0.06% 0.07% 0.13%
Next $250 million 0.07% 0.06% 0.13%
Next $500 million 0.08% 0.05% 0.13%
$1 billion and more 0.09% 0.04% 0.13%
</TABLE>
NAS has voluntarily agreed to reimburse expenses of the Fund in order to limit
the Fund's operating expenses to no more than 0.35% of the average daily net
assets. During the period ended October 31, 1998, NAS voluntarily reimbursed
expenses in the amount of $16,272.
14 NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT
<PAGE> 17
NATIONWIDE(R) S&P 500 INDEX FUND
LOCAL FUND SHARES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
OCTOBER 31, 1998
- --------------------------------------------------------------------------------
NAS or an affiliated broker dealer may also receive fees on the Fund for
distribution services pursuant to a Rule 12b-1 Distribution Plan approved by the
Board of Trustees. These fees are based on average daily net assets of the Fund
at an annual rate of 0.07%. During the period ended October 31, 1998, the Fund
paid distribution fees of $3,939.
A subsidiary of NAS, Nationwide Investors Services, Inc. ("NISI"), acts as
Transfer and Dividend Disbursing Agent for the Fund and receives a fee for such
services. This fee is based on average daily net assets of the Fund at an annual
rate of 0.01%. During the period ended October 31, 1998, the Fund paid transfer
agent fees of $563.
Pursuant to the Fund Administration Agreement, NAS also receives fees from the
Fund for administrative services, calculated daily and paid monthly according to
the following schedule:
<TABLE>
<CAPTION>
ADMINISTRATION
AVERAGE DAILY NET ASSETS FEE FEES
------------------------ ---- --------------
<S> <C> <C>
Up to $1 billion...................................... 0.05% $2,814
Next $1 billion....................................... 0.04%
</TABLE>
3. BANK LOANS
The NIF III Trust has unsecured bank lines of credit of $50,000,000. Borrowings
under these arrangements bear interest at the Federal Funds rate plus .50%.
These interest costs are included in custodian fees in the Statements of
Operations. No compensating balances are required. No borrowings were made
during the period.
4. INVESTMENT TRANSACTIONS
Purchases and sales of securities for the Fund (excluding U.S. Government and
short-term securities) for the period ended October 31, 1998, are summarized
below. There were no purchases or sales of U.S. Government Obligations.
<TABLE>
<CAPTION>
SECURITIES
- -------------------------------
PURCHASES SALES
- ----------- --------
<S> <C>
$23,584,877 $620,662
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized depreciation at October 31, 1998, based on cost for
federal income tax purposes, are the following components:
<TABLE>
<CAPTION>
GROSS GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
- ------------ -------------- --------------
<S> <C> <C>
$868,212 $(1,590,047) $(721,835)
</TABLE>
NATIONWIDE(R) S&P 500 INDEX FUND ANNUAL REPORT 15
