<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MORLEY CAPITAL
ACCUMULATION FUND
SEMI-ANNUAL REPORT
APRIL 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
MORLEY CAPITAL ACCUMULATION FUND
SEMI-ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<S> <C>
Statement of Investments.................................... 1
Statement of Assets and Liabilities......................... 2
Statement of Operations..................................... 3
Statement of Changes in Net Assets.......................... 4
Financial Highlights........................................ 5
Notes to Financial Statements............................... 6
</TABLE>
<PAGE> 3
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
STATEMENT OF INVESTMENTS -- APRIL 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
FEDERAL AGENCY (93.8%)
$1,284,646 FHLMC MBS Pool E00616, 6.00%,
01/01/01 $1,275,691
1,268,163 FNMA MBS Pool 252318, 6.00%,
02/01/09 1,270,850
2,210,738 FNMA REMIC Series 1998-24, Class
BA, 6.00%, 11/18/23 2,185,514
----------
TOTAL FEDERAL AGENCY 4,732,055
==========
(cost $4,790,996)
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ---------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT (5.1%)
$ 258,000 Fifth Third Bank, 4.70%, 05/03/99,
Collateralized by $261,000, FNMA
Pool 323020, 6.50%, 02/01/13,
market value $263,854 (cost
$258,000) $ 258,000
----------
TOTAL INVESTMENTS $4,990,055
==========
(cost $5,048,996)
</TABLE>
- --------------------------------------------------------------------------------
The abbreviations in the above statement stand for the following:
<TABLE>
<S> <C>
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
MBS Mortgage Backed Securities
Wrapper agreements Each Wrapper agreement obligates the wrapper provider to
maintain the book value of a portion of the Fund's assets
upon the occurrence of certain specified events. Valuation
presented represents amounts due to the Fund of each
provider's portion of the Fund's unrealized depreciation.
</TABLE>
<TABLE>
<S> <C>
VALUE OF WRAPPER AGREEMENTS:
Wrapper agreement #1 Bank of America NT&SA $19,647
Wrapper agreement #2 Deutsche Bank America 19,647
Wrapper agreement #3 Transamerica Life Insurance Company 19,647
-------
TOTAL WRAPPER AGREEMENTS $58,941
=======
</TABLE>
- ------------------------------------------------------
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statement.
MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT 1
<PAGE> 4
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value (cost $4,790,996) $ 4,790,996
Repurchase agreements (cost $258,000) 258,000
Cash 807
Receivable for investment securities sold 258,000
Receivable from Adviser 15,272
Accrued interest and dividends receivable 20,962
-----------
Total assets 5,344,037
-----------
LIABILITIES
Payable for investment securities purchased 258,000
Accrued management fees 1,037
Accrued fund administration fees 290
Accrued transfer agent fees, ISC Shares 8
Accrued transfer agent fees, IC Shares 25
Accrued transfer agent fees, IRA Shares 8
Accrued distribution fees, ISC Shares 207
Accrued distribution fees, IRA Shares 208
Accrued administrative services fees, ISC Shares 124
Accrued administrative services fees, IRA Shares 125
Accrued wrapper fees, ISC Shares 146
Accrued wrapper fees, IC Shares 438
Accrued wrapper fees, IRA Shares 248
Other accrued expenses 18,084
-----------
Total liabilities 278,948
-----------
NET ASSETS $ 5,065,089
===========
NET ASSETS REPRESENTED BY:
Capital $ 5,065,089
Net unrealized depreciation on investments (58,941)
Net unrealized appreciation on wrapper 58,941
-----------
NET ASSETS $ 5,065,089
===========
NET ASSETS:
ISC Shares $ 1,011,623
IC Shares 3,037,817
IRA Shares 1,015,649
-----------
Total $ 5,065,089
===========
SHARES OUTSTANDING (unlimited number of shares authorized)
ISC Shares 101,162
IC Shares 303,782
IRA Shares 101,565
-----------
Total 506,509
===========
NET ASSET VALUE AND OFFERING PRICE PER SHARE:*
ISC Shares $ 10.00
IC Shares $ 10.00
IRA Shares $ 10.00
</TABLE>
- ------------------------------------------------------
* None of the share classes are subject to a sales charge.
See accompanying notes to financial statements.
2 MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT
<PAGE> 5
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM FEBRUARY 1, 1999 TO APRIL 30, 1999 (a)
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Interest $ 72,710
Crediting rate interest (2,923)
---------
Total income 69,787
---------
EXPENSES:
Investment management fees 4,287
Distribution fees, ISC Shares 612
Distribution fees, IRA Shares 613
Fund administration fees 857
Transfer agent fees, ISC Shares 25
Transfer agent fees, IC Shares 74
Transfer agent fees, IRA Shares 25
Administrative services fees, ISC Shares 367
Administrative services fees, IRA Shares 368
Wrapper fees, ISC Shares 318
Wrapper fees, IC Shares 955
Wrapper fees, IRA Shares 540
Shareholders' reports 4,798
Registration fees 5,486
Professional services 3,932
Custodian fees 1,187
Trustees' fees and expenses 164
Other 2,596
---------
Total expenses before waived or reimbursed expenses 27,204
Total waived or reimbursed expenses (18,506)
---------
Net expenses 8,698
---------
NET INVESTMENT INCOME $ 61,089
=========
NET REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS AND
WRAPPER:
Net change in unrealized depreciation of investments $ (58,941)
Net change in unrealized appreciation of wrapper 58,941
---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
WRAPPER --
---------
NET INCREASE IN ASSETS
RESULTING FROM OPERATIONS $ 61,089
=========
</TABLE>
(a) Fund commenced operations on February 1, 1999.
See accompanying notes to financial statements.
MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT 3
<PAGE> 6
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM FEBRUARY 1, 1999 TO APRIL 30, 1999 (a)
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 61,089
Net change in unrealized depreciation of investments (58,941)
Net change in unrealized appreciation of wrapper 58,941
-----------
Net increase in net assets resulting from operations 61,089
-----------
DISTRIBUTIONS TO ISC SHAREHOLDERS FROM:
Net investment income (11,623)
-----------
DISTRIBUTIONS TO IC SHAREHOLDERS FROM:
Net investment income (37,817)
-----------
DISTRIBUTIONS TO IRA SHAREHOLDERS FROM:
Net investment income (11,649)
-----------
DECREASE IN NET ASSETS FROM SHAREHOLDER DISTRIBUTIONS (61,089)
-----------
CAPITAL SHARE TRANSACTIONS:*
Net proceeds from sale of shares 5,004,007
Net asset value of shares issued to shareholders from
reinvestment of dividends 61,089
Cost of shares redeemed (7)
-----------
Increase in net assets derived from capital share
transactions 5,065,089
-----------
NET INCREASE IN NET ASSETS 5,065,089
NET ASSETS -- BEGINNING OF PERIOD --
-----------
NET ASSETS -- END OF PERIOD $ 5,065,089
===========
Undistributed net realized gain (loss) on investments
included in net assets at end of period $ --
===========
Undistributed (distributions in excess of) net investment
income included in net assets at end of period $ --
===========
SHARE ACTIVITY:*
Shares sold 500,401
Reinvestment of dividends 6,109
Shares redeemed (1)
-----------
Net increase in number of shares 506,509
===========
</TABLE>
- ------------------------------------------------------
* Both the Capital Transactions and Share Activity sections represent ISC, IC,
and IRA Shares collectively.
(a) Fund commenced operations on February 1, 1999.
See accompanying notes to financial statements.
4 MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT
<PAGE> 7
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ISC SHARES IC SHARES IRA SHARES
----------------- ----------------- -----------------
PERIOD FROM PERIOD FROM PERIOD FROM
FEBRUARY 1, 1998 FEBRUARY 1, 1998 FEBRUARY 1, 1998
TO APRIL 30, 1999 TO APRIL 30, 1999 TO APRIL 30, 1999
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------------- ----------------- -----------------
<S> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00
Net investment income 0.12 0.13 0.12
Dividends from net investment income (0.12) (0.13) (0.12)
------- ------- -------
NET ASSET VALUE -- END OF PERIOD $ 10.00 $ 10.00 $ 10.00
======= ======= =======
Total Return 1.16%(a) 1.26%(a) 1.16%(a)
Net Assets, End of Period (000) $ 1,012 $ 3,038 $ 1,016
Ratio of expenses to average net assets 0.95%(b) 0.55%(b) 0.95%(b)
Ratio of expenses to average net assets* 2.34%(b) 1.94%(b) 2.43%(b)
Ratio of net investment income to average net
assets 4.75%(b) 5.15%(b) 4.75%(b)
Ratio of net investment income to average net
assets* 3.36%(b) 3.75%(b) 3.26%(b)
Portfolio turnover 0.00%(a) 0.00%(a) 0.00%(a)
</TABLE>
- ------------------------------------------------------
* Ratios calculated as if no expenses were waived or reimbursed.
(a) Not annualized.
(b) Annualized.
See accompanying notes to the financial statements.
MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT 5
<PAGE> 8
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nationwide Mutual Funds ("NMF" or the "Trust"), formerly known as Nationwide
Investing Foundation III, is an open-end management investment company. NMF was
created under the laws of Ohio as an Ohio business trust pursuant to a
Declaration of Trust dated as of October 30, 1997, as amended as of March 1,
1999, and is registered under the Investment Company Act of 1940, as amended.
The Trust offers shares in fifteen separate series, or mutual funds, each with
its own investment objectives. The accompanying financial statements and
financial highlights relate to the Morley Capital Accumulation Fund (the
"Fund"), a diversified portfolio.
The Fund currently offers three classes of shares: Institutional Service Class
("ISC Shares"), Institutional Class ("IC Shares"), and IRA Class ("IRA Shares").
ISC and IRA Shares are both subject to a 0.25% 12b-1 fee and a 0.15% service
fee, while IC Shares are not subject to either.
(A) SECURITY VALUATION
1. U.S. Government securities are valued at the last quoted bid price
as provided by an independent pricing agent. All other debt securities are
valued by a combination of daily quotes and matrix evaluations.
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.
3. The aggregate value of the Fund's Wrap agreements (see note 1(g) &
4) will typically equal the difference between the Fund's book value
(purchase price of the underlying assets minus sale price of the underlying
assets liquidated to fund share redemptions, plus interest accrued at the
crediting rate) and market value (plus accrued interest). The Wrap
agreements will be an asset on the balance sheet if the book value is
greater than market value or a liability on the balance sheet if the book
value is less than market value. The Trust's Board of Trustees has approved
a fair valuation methodology to value the Wrap agreements and considers the
ability of each Wrap Provider to fulfill its contractual obligations when
making such determinations.
4. 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 Trust's Board of Trustees.
(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 intends to qualify as a regulated investment company under the Internal
Revenue Code for the fiscal period ending October 31, 1999 and distribute all
taxable income to shareholders. Therefore no provision was made for federal
income taxes. To the extent net realized gains are offset through the
application of a capital loss
6 MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT
<PAGE> 9
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
carryover, they will not be distributed to shareholders but will be retained by
the Fund. Withholding taxes have been paid or provided for in accordance with
the applicable tax rates and rules.
(D) DIVIDENDS TO SHAREHOLDERS
1. Dividend income is declared and recorded daily and paid monthly.
2. Distributable net realized capital gains, if applicable, are
declared and distributed at least annually.
3. 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 Series of the
Trust or to any class of shares, are allocated to the series based upon each
series relative average net assets or another appropriate basis, as approved by
the Trust's Board of Trustees. Once these expenses are allocated to the Fund,
they are sub-allocated to the classes based on total settled shares outstanding
for each class.
Direct expenses of the Fund are paid by the Fund and sub-allocated to the
classes as described above.
Direct expenses of a class are allocated to that class unless otherwise directed
by the Trust's Board of Trustees. Distribution fees, service fees, transfer
agent fees and wrap premiums are borne by the specific class of shares to which
they apply.
(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.
(G) WRAP AGREEMENT VALUATION
In order for the Fund to achieve its investment objective of maintaining a
stable net asset value per share, the Fund has entered into book value
maintenance ("Wrap agreement") with the following institutions: Bank of America
NT&SA, Deutsche Bank America and Transamerica Life Insurance Co. (collectively
the "Wrap Providers"). The Wrap agreements obligate the Wrap Providers to make
payments in specified circumstances to the Fund, and allow the Fund under most
circumstances to maintain a net asset value at $10.00 per share.
MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT 7
<PAGE> 10
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
(H) CAPITAL SHARE TRANSACTIONS
Transactions in class level shares of the Funds were as follows:
<TABLE>
<CAPTION>
SHARE TRANSACTIONS
--------------------
FOR THE PERIOD FROM
FEBRUARY 1, 1999 TO
APRIL 30, 1999
--------------------
<S> <C>
ISC SHARES:
Proceeds from shares
issued................... $1,000,000
Dividends reinvested....... 11,623
Cost of shares redeemed.... (7)
----------
Change in net assets..... $1,011,623
==========
IC SHARES:
Proceeds from shares
issued................... $3,000,000
Dividends reinvested....... 37,817
Cost of shares redeemed....
----------
Change in net assets..... $3,037,817
==========
IRA SHARES:
Proceeds from shares
issued................... $1,004,000
Dividends reinvested....... 11,649
Cost of shares redeemed....
----------
Change in net assets... $1,015,649
==========
</TABLE>
<TABLE>
<CAPTION>
SHARE TRANSACTIONS
--------------------
FOR THE PERIOD FROM
FEBRUARY 1, 1999 TO
APRIL 30, 1999
--------------------
<S> <C>
ISC SHARES:
Issued..................... 100,000
Reinvested................. 1,162
Redeemed................... (1)
----------
Change in shares......... 101,162
==========
IC SHARES:
Issued..................... 300,000
Reinvested................. 3,782
Redeemed...................
----------
Change in shares......... 303,782
==========
IC SHARES:
Issued..................... 100,400
Reinvested................. 1,165
Redeemed...................
----------
Change in shares......... 101,565
==========
</TABLE>
2. TRANSACTIONS WITH AFFILIATES
Union Bond & Trust Company ("UBT") provides investment advisory services to the
Fund pursuant to an Investment Advisory Agreement. UBT is a wholly owned
subsidiary of Morley Financial Services, Inc., a wholly owned subsidiary of
Villanova Capital, Inc., which is a wholly owned subsidiary of Nationwide
Financial Services, Inc. ("NFS"). Under the terms of the Investment Advisory
Agreement, UBT is entitled to an Advisory Fee of 0.35% of the Fund's average
daily net assets. UBT has voluntarily agreed to waive 0.10% of the fee until
further written notice to the shareholders. Other fees may be voluntarily waived
or reimbursed to the Fund in order to maintain expense ratios at or below stated
expense caps. For the period ended April 30, 1999, Fund expenses were limited to
0.95% for ISC Shares, 0.55% for IC Shares, and 0.95% for IRA Shares. During the
period ended April 30, 1999, UBT voluntarily reduced expenses for the Fund in
the amount of $19,731. Each waiver or reimbursement of expenses by UBT is
subject to possible reimbursement by the Fund. UBT is entitled to such
reimbursements, in whole or in part, if in any fiscal year during which the
total Fund assets are greater than $50,000,000, and expenses are below the
stated caps. Such reimbursements to UBT are subject to quarterly approval by the
Trust's Board of Trustee. UBT would only be entitled to recover reimbursements
for three fiscal years from inception only if such reimbursement could be done
under stated expense caps.
For the period ended April 30, 1999, investment advisory fees for UBT were
$4,287, of which $1,225 was waived voluntarily.
Nationwide Advisory Services, Inc. ("NAS"), a subsidiary of NFS, is the
Distributor of the Fund and may receive fees for distribution and/or shareholder
services pursuant to a Rule 12b-1 Distribution Plan approved by the Trust's
Board of Trustees. These fees are based on average daily net assets of the
respective class of the Fund at an annual rate of 0.25% for ISC Shares and 0.25%
for IRA Shares. During the period ended April 30, 1999, the Fund paid
distribution fees of $612 and $613 for Class ISC and IRA Shares, respectively.
8 MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT
<PAGE> 11
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
NAS, through its affiliate, Nationwide Investors Services, Inc. (NISI), serves
as Transfer and Dividend Disbursing Agent for the Funds. For these services, NAS
receives fees at an annual rate of 0.01% based on average daily net assets of
each class.
Under a Fund Administration Agreement, NAS receives fees from the Fund
calculated daily and paid monthly. This fee is based on average daily net assets
of the Fund at an annual rate of 0.07% on the first $250 million, 0.05% on the
next $750 million, and 0.04% on $1 billion and more. The Fund Administration fee
is subject to a minimum of $50,000 per year. This minimum is currently being
waived by NAS.
NFS may receive fees under the terms of an Administrative Services Plan for
providing administrative support services including but not limited to the
following: establishing and maintaining shareholder accounts, processing
purchase and redemption transactions, arranging bank wires, performing
shareholder sub-accounting, answering inquires regarding the Funds, and other
such services. These fees are based on an annual rate of up to 0.15% of the
average daily net assets of the ISC and IRA Shares. For the period ended April
30, 1999, NFS was paid $367 and $368 from the ISC and IRA Shares respectively.
A redemption fee of 2.0% may be incurred (on the amount redeemed) by a
shareholder if the shareholder redeems shares when the yield of the Fund
(computed before subtraction of expenses) has fallen, and remains, below the
Dealer Commercial Paper 90-day Index. The redemption fee will be retained by the
Fund to help minimize the impact such redemptions may have on Fund performance
and to support administrative costs associated with redemptions from the Fund.
Additionally, the fee may discourage market timing by those shareholders
initiating redemptions to take advantage of short-term movements in interest
rates. During the period ended April 30, 1999, the events that would trigger the
imposition of a redemption fee did not occur, and the Fund did not collect any
redemption fees.
3. BANK LOANS
NMF has an unsecured bank line 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. The Fund had no borrowings during the period
ended April 30, 1999.
4. INVESTMENT TRANSACTIONS
For the period ended April 30, 1999, purchases and sales of securities
(excluding U.S. Government and short-term securities) and purchases and sales of
U.S. Government Securities were as follows:
<TABLE>
<CAPTION>
NON U.S. GOVERNMENT U.S. GOVERNMENT
SECURITIES SECURITIES
----------------------------------- -----------------------------------
PURCHASES SALES PURCHASES SALES
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
$4,904,661 $ -- $ -- $ --
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized appreciation, based on cost for federal income tax
purposes, at April 30, 1999, are the following components:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION (DEPRECIATION) (DEPRECIATION)
- ------------ -------------- --------------
<S> <C> <C>
$ -- $ (58,941) $ (58,941)
</TABLE>
MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT 9
<PAGE> 12
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
NOTES TO THE FINANCIAL STATEMENTS -- CONTINUED
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
All of the net unrealized depreciation for the period ended April 30, 1999, was
offset through the various Wrap agreements.
5. YEAR 2000
NAS has developed and implemented a plan to address issues related to the Year
2000. The problem relates to many existing computer systems using only two
digits to identify a year in a date field. These systems were designed and
developed without considering the impact of the upcoming change in the century.
If not corrected, many computer systems could fail or create erroneous results
when processing information dated after December 31, 1999. NAS has completed an
inventory and assessment of all computer systems and has implemented a plan to
renovate or replace all applications that were identified as not Year-2000
compliant. NAS has also tested each application for its Year-2000 compliance.
Systems supporting NAS' infrastructure, such as telecommunications, voice and
networks, have also been tested, renovated or replaced, and are compliant. NAS'
assessment of Year-2000 issues has also included non-information technology
systems with embedded computer chips. NAS building systems such as fire,
security, elevators and escalators supporting facilities in Columbus, Ohio, have
been tested and are Year-2000 compliant.
In addition to resolving internal Year-2000 readiness issues, NAS is surveying
significant external organizations (business partners) to assess if they will be
Year-2000 compliant and be in a position to do business in the Year 2000 and
beyond. NAS continues its efforts to identify external risk factors and is in
the process of developing contingency plans as part of its ongoing
risk-management strategy.
10 MORLEY CAPITAL ACCUMULATION FUND SEMI-ANNUAL REPORT
