<PAGE> 1
[PHOTOGRAPH]
SEMI-ANNUAL REPORT 2000
NATIONWIDE VALUE OPPORTUNITIES FUND
NATIONWIDE HIGH YIELD BOND FUND
MORLEY ENHANCED INCOME FUND
MORLEY CAPITAL ACCUMULATION FUND
NATIONWIDE(R)
Family of Funds APRIL 30, 2000
<PAGE> 2
[PHOTOGRAPH]
MESSAGE TO SHAREHOLDERS APRIL 30, 2000
At fiscal year-end 1999, we introduced you to Villanova Capital, the new
asset management arm of Nationwide Financial. At that time, our theme was that
of future growth--in our investment management capabilities, in our product
offerings, and in the tools that we provide to our investors and their advisors.
Today, just six months later, we have taken several giant steps toward achieving
that growth.
- In March 2000, Nationwide agreed to acquire Gartmore Investment Management,
plc, a London-based investment management services company with more than
$85 billion in assets under management (as of March 31, 2000). Villanova
Capital will work in partnership with Gartmore to bring international
investment capabilities to our U.S. clients.
- Over the past six months, we have successfully expanded Villanova Capital's
investment capabilities in the U.S. with the hiring of several key
portfolio managers, the introduction of new investment offerings, and,
where appropriate, the realignment of portfolio management
responsibilities.
Each step reflects Villanova Capital's firm commitment to providing
investors with a broad range of innovative, high-value products managed by
seasoned investment professionals.
EXPANDED INVESTMENT
MANAGEMENT CAPABILITIES
We start the second half of our fiscal year with significantly expanded
investment capabilities. Since December 1999, Villanova has hired three highly
regarded portfolio managers: Christopher Baggini, former manager of the ARK
Capital Growth Fund; Curtiss Barrows, former co-manager of the Morgan Grenfell
High-Yield Bond Fund; and Aaron Harris, former lead manager of the
Nicholas-Applegate Global Technology Fund.
In addition, Villanova formed a strategic venture in January 2000 with
NorthPointe Capital, a management firm specializing in small-cap value
investments. NorthPointe portfolio managers Jeffrey Petherick and Mary Champagne
were formerly with Loomis, Sayles & Company.
This new managerial talent, combined with our stable value team at Morley
Financial Services (a wholly owned subsidiary of Villanova) and well-respected
"veterans" like the Nationwide Fund's Chuck Bath, have broadened our investment
capabilities and enabled Villanova to introduce new funds to the Nationwide
Family.
NEW INVESTMENT OFFERINGS
The Nationwide Family of Funds now features five new mutual fund
investments, including the NATIONWIDE VALUE OPPORTUNITIES FUND, a small-cap
value equity fund managed by NorthPointe Capital; the NATIONWIDE HIGH YIELD BOND
FUND, managed by Curtiss Barrows; and the MORLEY ENHANCED INCOME FUND, a
short-term fixed income fund managed by Morley Financial Services. In addition,
two index funds are available: the NATIONWIDE S&P 500 INDEX FUND and the
NATIONWIDE INTERNATIONAL INDEX FUND.
We will continue to expand our U.S.-based investment capabilities and
product offerings in the months ahead. In addition, Villanova's partnership with
U.K.-based Gartmore will help provide the foundation we need to develop a robust
international product line.
CHANGES IN PORTFOLIO MANAGEMENT
As we build added momentum in our investment management capabilities, we
continually evaluate how to match manager skills and expertise with existing
product offerings. Villanova Capital recently announced two portfolio management
changes:
- Chris Baggini, who is fully dedicated to managing Villanova's large-cap
growth portfolios, was named manager of the NATIONWIDE GROWTH FUND,
effective in March 2000.
- Aaron Harris, who leads Villanova's development of investment capabilities
in the technology sector, was appointed manager of the NATIONWIDE MID CAP
GROWTH FUND, effective in April 2000.
These changes are designed to best align our products with the strengths of
individual members of our portfolio management team. At the same time, we will
continue to emphasize the importance of staying true to each fund's stated
objective and strategy and delivering what we promise to investors.
THE PERIOD IN REVIEW
The stock market during the period November 1999 through April 2000
experienced two divergent phases--one marked by the continued strength in the
technology sector, the other by a rotation into value stocks.
The Nationwide Value Opportunities Fund performed well in both market
phases, posting a gain of 19.5% for the period from December 29, 1999 (the
Fund's inception date), through April 30, 2000; it easily outpaced its
benchmark, the unmanaged Russell
<PAGE> 3
2000 Index, which gained 4.9%. The Fund benefited from the stellar performance
of technology stocks early in the period, as well as from the broadening of the
market in March and April, when investors turned to more value-oriented stocks.
The Morley Capital Accumulation Fund, a fund that attempts to maintain a
stable net asset value, also outperformed its benchmark, despite steadily
climbing interest rates during the six-month period. The Fed raised rates three
times during the period in an attempt to slow the U.S. economy, and further rate
hikes remain a possibility. The Morley Enhanced Income Fund, a short-term bond
fund, trailed its benchmark by a small margin.
In the high-yield bond market, a concentration in certain underperforming
areas of the communications sector negatively impacted the Nationwide High Yield
Bond Fund. While communications issues, as well as Internet service providers,
performed poorly, Fund management remains convinced of the value of these areas
of the market.
THE PERIOD AHEAD
As we look ahead to the second half of the fiscal year, we realize that the
markets' recent roller-coaster ride has shaken many investors who, for more than
a decade, enjoyed a fairly comfortable rise. Now more than ever, investors--and
those who serve them--need to feel comfortable that the firm to which they
entrust their assets has a clear vision, a solid long-term plan, and the
determination to follow both.
We are committed to continuing to help our shareholders achieve their goals
through a broad array of investment offerings and high-quality services, backed
by the professionalism they have come to expect from Villanova Capital.
/s/ PAUL J. HONDROS
--------------------------
PAUL J. HONDROS
PRESIDENT
CHIEF EXECUTIVE OFFICER
VILLANOVA CAPITAL
CONTENTS [PHOTOGRAPH]
-- -- --
1 Message to 13 Statements of Assets 33 Trustees and
Shareholders and Liabilities Officers
-- --
2 Nationwide Value 16 Statements of
Opportunities Fund Operations
-- --
6 Nationwide High Yield 19 Statements of Changes
Bond Fund in Net Assets
-- --
9 Morley Enhanced 22 Financial Highlights
Income Fund
-- --
11 Morley Capital 24 Notes to Financial
Accumulation Fund Statements
<PAGE> 4
NATIONWIDE(R) MUTUAL FUNDS
VALUE OPPORTUNITIES FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the period beginning December 29, 1999, the Fund's inception date,
through April 30, 2000, the Nationwide Value Opportunities Fund (Institutional
Service Class shares) returned 19.48%(*) vs. a return of 4.94% for the Russell
2000 Index, the benchmark index.
It seems as if we now get full market cycles all in one quarter. The first
quarter of the new millennium was a wild one; after a strong start for the
"growth" stocks in the Russell 2000, the month of March brought a selloff in the
high-tech areas and a resurgence of "value" stocks. Many of the strong leaders
in technology and biotechnology reversed and headed down sharply, while the
stocks termed "old economy" bounced off their lows. It remains to be seen
whether this was just another rebound, only to fail, or if the move represents a
change in investor sentiment. The "new economy" bulls staunchly believe in the
tech stocks, while the value players are cautiously optimistic that a change is,
indeed, at hand. Time will tell, however, and until new trends are established,
volatility will remain with us.
While it has been somewhat of a schizophrenic market, we are pleased to
report that the Fund performed quite well. We have been expecting that the
market would broaden out to include more than just a handful of "crazy" stocks,
and we have felt that when that happened that the Fund was well positioned to
participate. While the first quarter in particular could be segmented into the
"growth" days of January and February vs. the "value" days of March, we are
pleased to say that the Fund performed well in both markets.
We continue to expect that the market will broaden out and that investors
will come back to buy real companies again. Overall it seems that investor
interest in small stocks is returning. Given that earnings growth for the
Russell 2000 companies looks to be stronger than the S&P 500 companies for this
year and next, it looks as though shifting some assets from large to small will
finally reward investors. We believe this will continue throughout the year.
Furthermore, we believe that growth investors will begin to broaden their
holdings beyond the stocks that trade at ridiculous valuations and for which
they had little justification for holding other than price momentum. Now that
they may not be going up, investors will have to look elsewhere for earnings
growth, which should be abundant in many areas. Again, we believe that the Fund
is well positioned for this type of environment.
MARY C. CHAMPAGNE, CFA, AND
JEFFREY C. PETHERICK, CFA - PORTFOLIO MANAGERS
(*) PERFORMANCE WITHOUT SALES CHARGE AND ASSUMING ALL DISTRIBUTIONS
REINVESTED.
FUND VALUE $2,125,362
PORTFOLIO COMPOSITION
(Subject to Change)
Repurchase Agreement 5.6%
Common Stock 93.4%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Period Ended April 30, 2000)
INSTITUTIONAL
CLASS A CLASS B SERVICE CLASS
YEARS W/O SC(**) W/SC(1) W/O SC(**) W/SC(2) W/O SC(**)(3)
Life(*) 19.31% 12.45% 19.11% 14.11% 19.48%
ALL FIGURES SHOWING THE EFFECT OF A SALES CHARGE REFLECT THE MAXIMUM CHARGE
POSSIBLE, BECAUSE IT HAS THE MOST DRAMATIC EFFECT ON PERFORMANCE DATA.
(*) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
(**) THESE RETURNS DO NOT REFLECT THE EFFECTS OF A SALES CHARGE.
1 A 5.75% FRONT-END SALES CHARGE WAS DEDUCTED.
2 A 5.00% CONTINGENT DEFERRED SALES CHARGE (CDSC) WAS DEDUCTED. THE CDSC
DECLINES TO 0% AFTER 6 YEARS.
3 NOT SUBJECT TO ANY SALES CHARGES.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
2 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 5
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
STATEMENT OF INVESTMENTS NATIONWIDE(R) VALUE OPPORTUNITIES FUND
--------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
SHARES SECURITY VALUE
COMMON STOCK (93.4%)
--------------------------------------------------------------------------------
AEROSPACE (1.9%)
300 Allian Techsystems Inc.(*) $ 20,888
600 Goodrich (B.F.) Co. 19,125
----------
40,013
----------
--------------------------------------------------------------------------------
CHEMICALS (3.8%)
1,100 Catalytica, Inc.(*) 12,238
600 Cytec Industries, Inc.(*) 18,075
1,300 Engelhard Corp. 22,831
1,000 Olin Corp. 17,750
200 OM Group, Inc. 9,200
----------
80,094
----------
--------------------------------------------------------------------------------
COMMUNICATION (0.6%)
400 Harris Corp. 12,925
----------
--------------------------------------------------------------------------------
COMPUTER EQUIPMENT (0.6%)
1,000 Maxtor Corp.(*) 11,938
----------
--------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (5.2%)
300 Axent Technologies, Inc.(*) 6,038
600 Complete Business Solutions(*) 13,725
600 Hyperion Solutions Corp.(*) 18,196
900 Informix Corp.(*) 9,900
500 JDA Software Group, Inc.(*) 9,313
400 Seagate Technology, Inc.(*) 20,324
600 Sungard Data Systems(*) 20,737
300 Synopsys, Inc.(*) 12,600
----------
110,833
----------
--------------------------------------------------------------------------------
CONSTRUCTION & BUILDING MATERIALS (2.0%)
400 Elcor Corp. 12,725
400 Jacobs Engineering Group, Inc.(*) 12,525
400 Vulcan Materials Co. 17,525
----------
42,775
----------
--------------------------------------------------------------------------------
CONSUMER PRODUCTS (1.0%)
900 Alberto-Culver Co. Class A 20,363
----------
--------------------------------------------------------------------------------
ELECTRONIC PARTS & EQUIPMENT (3.6%)
400 Cuno, Inc.(*) 10,850
300 Harman International Industries, Inc. 19,613
500 Litton Industries, Inc.(*) 21,718
400 Photronics, Inc.(*) 13,325
500 Primex Technologies, Inc. 11,000
----------
76,506
----------
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
ELECTRONICS (3.5%)
300 CTS Corp. $ 18,919
900 Sensormatic Electronics Corp.(*) 15,019
200 Teradyne, Inc.(*) 21,999
600 Thomas & Betts Corp. 18,488
----------
74,425
----------
--------------------------------------------------------------------------------
FERTILIZERS (0.2%)
100 The Scotts Co.(*) 3,613
----------
--------------------------------------------------------------------------------
FINANCIAL/BANKS (5.1%)
900 BancWest Corp. 16,481
700 Bank United Corp. 23,231
900 City National Corp. 33,131
300 Commerce Bancorp, Inc. 11,906
200 Greater Bay Bancorp 8,503
700 Hudson United Bancorp 15,794
----------
109,046
----------
--------------------------------------------------------------------------------
FINANCIAL/MISCELLANEOUS (3.3%)
300 Affiliated Managers Group, Inc.(*) 12,038
600 Americredit Corp.(*) 11,213
400 Federated Investors, Inc. 11,300
700 Heller Financial, Inc. 13,606
200 Investment Technology Group(*) 7,500
400 Metris Cos., Inc.(*) 14,999
----------
70,656
----------
--------------------------------------------------------------------------------
GOLD (0.9%)
800 Newmont Mining Corp. 18,750
----------
--------------------------------------------------------------------------------
HEALTH CARE (6.8%)
1,200 Amerisource Health Corp. Class A(*) 23,999
1,100 Apria Healthcare Group, Inc.(*) 15,331
300 Beckman Coulter, Inc. 19,444
600 Cooper Co., Inc. 20,175
500 First Health Group Corp.(*) 15,219
1,400 Health Mgmt Associates Inc.(*) 22,312
800 Hooper Holmes, Inc. 13,900
500 Sybron International Corp.-Wisconsin(*) 15,563
----------
145,943
----------
--------------------------------------------------------------------------------
INSURANCE (4.5%)
1,100 Annuity And Life Re Ltd. 23,788
600 Arthur J. Gallagher & Co. 22,350
1,200 Everest Re Group Ltd. 35,099
500 Stancorp Financial Group 14,563
----------
95,800
----------
N A T I O N W I D E M U T U A L F U N D S 3
S E M I - A N N U A L R E P O R T
<PAGE> 6
STATEMENT OF INVESTMENTS NATIONWIDE(R) VALUE OPPORTUNITIES FUND CONTINUED
--------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
MACHINERY (1.6%)
600 Astec Industries, Inc.(*) $ 15,075
1,300 Flowserve Corp. 18,363
----------
33,438
----------
--------------------------------------------------------------------------------
MANUFACTURING/DIVERSIFIED (0.6%)
400 Gentex Corp.(*) 12,900
----------
--------------------------------------------------------------------------------
Oil & Gas (4.7%)
1,600 Key Energy Group, Inc.(*) 15,600
200 Lone Star Technologies, Inc.(*) 9,225
800 Newfield Exploration Co.(*) 32,500
800 Santa Fe International Corp. 27,500
500 Valero Energy Corp. 14,500
----------
99,325
----------
--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (1.5%)
400 Bowater, Inc. 22,000
200 Temple-Inland, Inc. 10,025
----------
32,025
----------
--------------------------------------------------------------------------------
PHARMACEUTICALS (1.1%)
500 Idexx Laboratories, Inc.(*) 13,125
200 QLT Phototherapeutics, Inc.(*) 11,113
----------
24,238
----------
--------------------------------------------------------------------------------
PRINTING & PUBLISHING (2.9%)
400 Houghton Mifflin Co. 16,625
1,200 R. H. Donnelley Corp.(*) 24,000
600 Valassis Communications, Inc.(*) 20,438
----------
61,063
----------
--------------------------------------------------------------------------------
REAL ESTATE (1.4%)
600 Jones Lang Lasalle, Inc.(*) 9,563
700 Storage USA, Inc. 20,475
----------
30,038
----------
--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (4.3%)
600 Avalon Bay Communities, Inc. 23,475
800 Liberty Property Trust, Inc. 19,800
1,000 Pacific Gulf Properties-Pag Inc. 21,500
1,100 Prentiss Properties Trust 26,125
----------
90,900
----------
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
RESTAURANTS (3.0%)
800 CEC Entertainment, Inc. $ 24,000
660 Morrison Management Specialists, Inc. 18,274
1,000 Wendy's International, Inc. 22,375
----------
64,649
----------
--------------------------------------------------------------------------------
RETAIL (5.5%)
3,000 Charming Shoppes(*) 20,250
800 Family Dollar Stores 15,250
700 Footstar, Inc.(*) 26,030
700 Jones Apparel Group, Inc.(*) 20,781
600 Men's Wearhouse(*) 12,863
1,900 Venator Group, Inc.(*) 22,563
----------
117,737
----------
--------------------------------------------------------------------------------
RETAIL/FOOD & DRUG (1.0%)
1,000 Supervalu, Inc. 20,688
----------
--------------------------------------------------------------------------------
SEMICONDUCTORS (2.1%)
400 Actel Corp.(*) 14,724
1,000 S3, Inc.(*) 14,063
100 Varian Semiconductor Equipment
Associates, Inc.(*) 6,725
100 Vishay Intertechnology, Inc.(*) 8,388
----------
43,900
----------
--------------------------------------------------------------------------------
SERVICES (4.2%)
300 American Management Systems, Inc.(*) 11,100
1,200 Burns International Services(*) 13,050
500 Ceridian Corp.(*) 10,844
500 Manpower, Inc. 17,656
300 Modis Professional Services(*) 13,125
600 Nova Corp.(*) 18,975
100 S1 Corp.(*) 5,431
----------
90,181
----------
--------------------------------------------------------------------------------
STEEL (1.2%)
600 Harsco Corp. 17,813
300 Stillwater Mining Co.(*) 8,400
----------
26,213
----------
--------------------------------------------------------------------------------
TELECOMMUNICATIONS (1.5%)
200 ITC DeltaCom, Inc.(*) 6,575
600 P-Com, Inc.(*) 6,488
800 Tetra Technology, Inc.(*) 18,850
----------
31,913
----------
4 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 7
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
STATEMENT OF INVESTMENTS NATIONWIDE(R) VALUE OPPORTUNITIES FUND CONTINUED
--------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
TEXTILES (2.4%)
1,300 Russell Corp. $ 25,512
600 Springs Industries, Inc. Class A 24,638
----------
50,150
----------
--------------------------------------------------------------------------------
TRANSPORTATION (5.5%)
900 Atlas Air, Inc.(*) 31,443
1,200 Kirby Corp.(*) 24,825
400 Oshkosh Truck Corp. 12,600
700 Tidewater Inc. 20,825
600 USFreightways Corp. 27,975
----------
117,668
----------
--------------------------------------------------------------------------------
UTILITIES (5.9%)
400 American States Water Co. 12,050
900 Idacorp, Inc. 33,187
500 New Jersey Resources Corp. 20,125
1,000 NSTAR 44,062
600 Washington Gas Light Co. 15,375
----------
124,799
----------
TOTAL COMMON STOCK (COST $1,846,365) $1,985,505
----------
PRINCIPAL SECURITY VALUE
REPURCHASE AGREEMENT (5.6%)
--------------------------------------------------------------------------------
$118,000 Fifth Third Bank 5.78%, 05/01/00,
Collateralized by $845,256 FNMA Pool
#303741, 7.00%, 02/01/11 and $999,000
FNMA Pool #4060067, 6.50%, 08/01/24,
market value $1,723,000 (cost $1,723,000) $ 118,000
----------
TOTAL REPURCHASE AGREEMENT (COST $118,000) 118,000
----------
TOTAL INVESTMENTS (COST $1,964,365) $2,103,505
==========
-----------------------------------------------------------------
THE ABBREVIATION IN THE ABOVE STATEMENT STANDS FOR THE FOLLOWING:
FNMA FEDERAL NATIONAL MORTGAGE ASSOCIATION
(*) DENOTES A NON-INCOME PRODUCING SECURITY.
PORTFOLIO HOLDING PERCENTAGES REPRESENT MARKET VALUE AS A PERCENTAGE
OF NET ASSETS.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
N A T I O N W I D E M U T U A L F U N D S 5
S E M I - A N N U A L R E P O R T
<PAGE> 8
NATIONWIDE(R) MUTUAL FUNDS
HIGH YIELD BOND FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the period beginning December 29, 1999, the Fund's inception date,
through April 30, 2000, the Nationwide High Yield Bond Fund (Institutional
Service Class shares) returned -3.2%(*) vs. -1.4% for the CS First Boston High
Yield Index, the benchmark index (for the period January 1, 2000 - April 30,
2000).
Underperformance of the Fund during the period was due to two factors:
the start up transaction costs of the Fund in January, as well as sector
underperformance in March. Transaction costs in the high yield market are
between one and one-half point per transaction, and as we are priced on the bid
side, asset values are reduced by this amount on a Net Asset Value basis. In
March, the high yield market traded off and was further quoted down in response
to the sharp volatility on Nasdaq. Market makers quoted sharply lower prices of
the more liquid issues and new-issue supply, combined with cash outflows,
contributed to the market decline. The Fund was impacted more than the overall
market due to our concentration in communications sectors - Fixed, Mobile, and
Internet Service Provider.
While the communications sectors underperformed during the first
quarter, we believe those areas continue to offer value. We have concentrated on
larger credits with adequate funding for build out. In fixed communications,
larger holdings include Netia, located in Poland. In mobile communications,
holdings include AT&T affiliate TeleCorp PCS, as well as Airgate PCS (a Sprint
affiliate), and Global Crossing, which has domestic and international focus. Our
greatest overweight is with the Internet Service Providers. Positions include
PSINet, Exodus, and Rhythms Netconnections. Our focus on this sector favors
companies that provide software, services, communications technology, and
delivery for the Internet. We anticipate that we will increase our exposure to
those companies that will help facilitate the Web's overall growth.
CURTISS O. BARROWS, CHFC - PORTFOLIO MANAGER
(*) PERFORMANCE WITHOUT SALES CHARGE AND ASSUMING ALL DISTRIBUTIONS REINVESTED.
FUND VALUE $100,763,995
PORTFOLIO COMPOSITION
(Subject to Change)
<TABLE>
<S> <C>
Warrants 0.2%
Preferred Stock 0.7%
Bonds 99.1%
</TABLE>
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Period Ended April 30, 2000)
<TABLE>
<CAPTION>
CLASS A CLASS B INSTITUTIONAL
YEARS W/O SC(**) W/SC(1) W/O SC(**) W/SC(2) SERVICE CLASS(**)(3)
<S> <C> <C> <C> <C> <C>
Life(*) -3.88% -8.19% -4.13% -8.79% -3.20%
</TABLE>
ALL FIGURES SHOWING THE EFFECT OF A SALES CHARGE REFLECT THE MAXIMUM CHARGE
POSSIBLE, BECAUSE IT HAS THE MOST DRAMATIC EFFECT ON PERFORMANCE DATA.
(*) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
(**) THESE RETURNS DO NOT REFLECT THE EFFECTS OF A SALES CHARGE.
1 A 4.50% FRONT-END SALES CHARGE WAS DEDUCTED.
2 A 5.00% CONTINGENT DEFERRED SALES CHARGE (CDSC) WAS DEDUCTED. THE CDSC
DECLINES TO 0% AFTER 6 YEARS.
3 NOT SUBJECT TO ANY SALES CHARGES.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
6 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 9
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
STATEMENT OF INVESTMENTS NATIONWIDE(R) HIGH YIELD BOND FUND
--------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
PRINCIPAL SECURITY VALUE
CONVERTIBLE BONDS (1.4%)
--------------------------------------------------------------------------------
TECHNOLOGY (1.4%)
$ 750,000 Juniper Networks, 4.75%, 03/15/07 $ 687,188
1,000,000 Orckit Communications, 5.75%,
04/01/05 761,250
-----------
TOTAL CONVERTIBLE BONDS (cost $1,592,375) 1,448,438
-----------
U. S. CORPORATE BONDS (61.1%)
--------------------------------------------------------------------------------
CABLE (3.5%)
3,000,000 Adelphia Communications, Inc.,
7.875%, 05/01/09 2,561,250
1,750,000 Charter Communications Holdings
LLC, 11.75%, 01/15/10 962,500
-----------
3,523,750
-----------
--------------------------------------------------------------------------------
CHEMICALS (3.9%)
4,000,000 Lyondell Chemical Co., 9.625%, 05/01/07 3,945,000
-----------
--------------------------------------------------------------------------------
COMMUNICATION/FIXED (7.8%)
4,000,000 Global Crossing Holding Ltd., 9.50%,
11/15/09 3,900,000
2,000,000 Maxcom Telecomunications, 13.75%,
04/01/07 1,980,000
2,000,000 Williams Communications Group, Inc.,
10.875%, 10/01/09 2,010,000
-----------
7,890,000
-----------
--------------------------------------------------------------------------------
COMMUNICATION/ISP (15.4%)
2,000,000 Exodus Communications, Inc., 10.75%,
12/15/09 1,995,000
4,000,000 Metricom, Inc., 13.00%, 02/15/10 3,285,000
3,000,000 Mpower Communications, Inc., 13.00%,
04/01/10 2,760,000
1,000,000 PSINet, Inc., 10.50%, 12/01/06 877,500
3,500,000 PSINet, Inc., 10.00%, 02/15/05 3,097,500
1,500,000 Rhythms Netconnections, 12.75%, 04/15/09 1,267,500
2,500,000 Rhythms Netconnections, 14.0%, 02/15/10 2,212,500
-----------
15,495,000
-----------
--------------------------------------------------------------------------------
COMMUNICATION/MOBILE (5.1%)
2,000,000 Airgate Pcs, Inc., 13.50%, 10/01/09 1,165,000
4,000,000 Telecorp PCS, Inc., 11.625%, 04/15/09 2,620,000
2,500,000 US Unwired, Inc., 0.00%, 11/01/09 1,400,000
-----------
5,185,000
-----------
--------------------------------------------------------------------------------
ENERGY (2.0%)
2,000,000 Eott Energy Partners, 11.00%, 10/01/09 2,005,000
-----------
--------------------------------------------------------------------------------
HEALTH CARE (1.7%)
2,000,000 Insight Health Services, 9.625%, 06/15/08 1,720,000
-----------
--------------------------------------------------------------------------------
GAMING (1.6%)
2,000,000 Circus, Circus, 7.625%, 07/15/13 1,590,000
-----------
--------------------------------------------------------------------------------
MEDIA (2.4%)
4,000,000 Fox Family Worldwide, Inc.,
10.25%, 11/01/07 2,440,000
-----------
PRINCIPAL SECURITY VALUE
U. S. CORPORATE BONDS (CONTINUED)
--------------------------------------------------------------------------------
METALS & MINING (0.6%)
$ 680,000 Asarco, Inc. 8.50%, 05/01/25 $ 567,007
-----------
--------------------------------------------------------------------------------
SERVICES (4.0%)
2,500,000 American Plumbing & Mechanic, 11.625%,
10/15/08 2,206,250
2,000,000 United Rentals, Inc., 9.25%, 01/15/09 1,805,000
-----------
4,011,250
-----------
--------------------------------------------------------------------------------
SUPERMARKET (2.0%)
2,000,000 Stater Brothers Holdings, 10.75%, 08/15/06 1,985,000
-----------
--------------------------------------------------------------------------------
TECHNOLOGY (7.5%)
4,000,000 Globix Corp., 12.50%, 02/01/10 3,520,000
2,500,000 Verio, Inc., 10.625%, 11/15/09 2,393,750
3,000,000 Wam!Net, Inc., 0/13.25%, 03/01/05 1,650,000
7,563,750
-----------
--------------------------------------------------------------------------------
TRANSPORTATION (1.6%)
2,000,000 American Commercial Lines, 10.25%,
06/30/08 1,660,000
-----------
--------------------------------------------------------------------------------
UTILITIES (2.0%)
2,000,000 Orion Power Holdings, 12.00%, 05/01/10 2,005,000
-----------
TOTAL CORPORATE BONDS (cost $65,602,854) 61,585,757
-----------
FOREIGN BOND (36.6%)
--------------------------------------------------------------------------------
CABLE (9.2%)
2,000,000 Cablevision SA, 13.75%, 05/01/09 1,915,000
2,000,000 Jazztel PLC, 14.00%, 04/01/09 2,050,000
3,500,000 Telewest Communications, 11.375%,
02/01/10 1,960,000
5,000,000 United Pan-Europe Communications,
13.75%, 02/01/10 2,400,000
1,000,000 United Pan Europe, 11.25%, 02/01/10 930,000
-----------
9,255,000
-----------
--------------------------------------------------------------------------------
COMMUNICATION/FIXED (9.6%)
2,000,000 Bestel, 12.75%, 05/15/05 1,520,000
5,000,000 Netia Holdings, 10.25%, 11/01/07 4,212,500
2,000,000 Tele1 Europe, 13.00%, 05/15/09 2,050,000
2,000,000 Viatel, Inc., 11.25%, 04/15/08 1,820,000
-----------
9,602,500
-----------
--------------------------------------------------------------------------------
COMMUNICATION/MOBILE (7.2%)
3,000,000 CTI Holdings SA, 11.50%, 04/15/08 1,860,000
2,000,000 Nuevo Grupo Iusacell, 14.25%, 12/01/06 2,090,000
3,000,000 Occidente Y Caribe Celullar SA,
14.00%, 03/15/04 1,860,000
2,000,000 PTC International Finance, 10.75%,
07/01/07, Poland 1,420,000
-----------
7,230,000
-----------
N A T I O N W I D E M U T U A L F U N D S 7
S E M I - A N N U A L R E P O R T
<PAGE> 10
STATEMENT OF INVESTMENTS NATIONWIDE(R) HIGH YIELD BOND FUND CONTINUED
--------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
PRINCIPAL SECURITY VALUE
FOREIGN BOND (CONTINUED)
--------------------------------------------------------------------------------
FINANCIAL/BANKS (1.9%)
$2,000,000 Cho Hung Bank, 11.50%, 04/01/10 $ 1,960,000
------------
--------------------------------------------------------------------------------
METALS & MINING (2.6%)
3,000,000 Hylsa Sa De Cv, 9.25%, 9/15/07,
Callable 9/15/02 @ 104.62,
9/15/03 @ 103.08 2,617,500
------------
--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (4.0%)
4,000,000 Kappa Beheer, 10.625%, 07/15/09 4,080,000
------------
--------------------------------------------------------------------------------
TRANSPORTATION (2.1%)
2,500,000 Cenargo International, 9.75%, 06/15/08 2,100,000
------------
TOTAL FOREIGN BOND (cost $37,795,002) 36,845,000
------------
PRINCIPAL SECURITY VALUE
PREFERRED STOCK (0.7%)
--------------------------------------------------------------------------------
COMMUNICATION/ISP (0.7%)
$ 10,000 Rhythms Netconnections $ 655,000
------------
TOTAL PREFERRED STOCK 655,000
------------
WARRANT (0.2%)
--------------------------------------------------------------------------------
COMMUNICATION/ISP (0.1%)
4,000 Metricom, Inc. 80,000
------------
--------------------------------------------------------------------------------
TECHNOLOGY (0.1%)
9,000 Wam!Net, Inc. 104,625
------------
TOTAL WARRANT (cost $97,500) 184,625
------------
TOTAL INVESTMENT (cost $106,025,231) $100,718,820
============
--------------------------------------------------------------------------------
The abbreviations in the above statement stand for the following:
Cv Inc./Corp.
ISP Internet Service Provider
SA Societa Anonyme
PORTFOLIO HOLDING PERCENTAGES REPRESENT MARKET VALUE AS A PERCENTAGE OF NET
ASSETS.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 11
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
NATIONWIDE MUTUAL FUNDS
MORLEY ENHANCED INCOME FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
From its commencement of operations on December 29, 1999, through April
30, 2000, the Morley Enhanced Income Fund (Institutional Service Class shares)
returned 1.29%(*) vs. 1.76% during the same period for the Lipper Ultra-Short
Fund Index, the Fund's benchmark index.
During this period, interest rates increased steadily and substantially
as the Federal Reserve acted to moderate the pace of economic growth. The U.S.
Treasury's announcement of government debt buybacks has caused the government
securities, which the Fund sells in order to hedge its market-value risk, to
perform better on a relative basis than the securities that the Fund buys to
produce extra yield for shareholders. This erosion of the Fund's hedge basis has
led to a decrease in per-share net asset value from $10.00 at the Fund's
inception to $9.94 at the end of the period. It has also caused the net
underperformance of the Fund vs. its benchmark during the period, even though
the Fund has substantially outperformed its benchmark in two of the four months
since inception. The Fund has also substantially outperformed unhedged
intermediate-term bond funds and indices comprised of securities comparable to
those held by the Fund. Overall, the Fund's hedging program has enabled it to
avoid the more substantial damage that this year's increase in interest rates
would otherwise have caused to market its value. It has also maintained the
effective duration of the Fund (and, therefore, its price sensitivity to adverse
changes in interest rates) at very modest levels.
The Fund held seasoned and relatively short-duration mortgage-backed
securities to resist adverse market movements during the period. The Fund's
securities, issued primarily by Federal National Mortgage Association, combine
high credit quality with stable cash flows and steady duration. By contrast, the
Fund's holdings of callable securities issued by Federal Home Loan Bank, another
government agency, and other high-quality corporate issues were somewhat more
vulnerable to the rise in rates and the wider spreads that marked the period.
During the period that is the subject of this report to shareholders,
the Fund has endeavored to capitalize on generally high interest rates by
purchasing agency-issued mortgage securities offering stable duration and cash
flow characteristics.
THOMAS F. MITCHELL AND TAYLOR E. DRAKE - PORTFOLIO MANAGERS
(*) PERFORMANCE WITHOUT SALES CHARGE AND ASSUMING ALL DISTRIBUTIONS
REINVESTED.
FUND VALUE $11,151,652
PORTFOLIO COMPOSITION
(Subject to Change)
Commercial Paper 2.7%
Corporate Bonds 4.6%
Repurchase Agreement 6.5%
U.S. Government Obligations 86.2%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Period Ended April 30, 2000)
CLASS A INSTITUTIONAL INSTITUTIONAL
YEARS w/o SC(**) w/SC(1) SERVICE CLASS(2) CLASS(2)
--------------------------------------------------------------------------------
Life(*) 1.14% -3.40% 1.29% 1.40%
--------------------------------------------------------------------------------
ALL FIGURES SHOWING THE EFFECTS OF A SALES CHARGE REFLECT THE MAXIMUM CHARGE
POSSIBLE, BECAUSE IT HAS THE MOST DRAMATIC EFFECT ON PERFORMANCE DATA.
(*) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
(**) THESE RETURNS DO NOT REFLECT THE EFFECTS OF A SALES CHARGE.
1 A 4.50% FRONT-END SALES CHARGE WAS DEDUCTED.
2 NOT SUBJECT TO ANY SALES CHARGES.
INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. PAST PERFORMANCE IS NO GUARANTEE
OF FUTURE RESULTS.
N A T I O N W I D E M U T U A L F U N D S 9
S E M I - A N N U A L R E P O R T
<PAGE> 12
STATEMENT OF INVESTMENTS MORLEY ENHANCED INCOME FUND
--------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
PRINCIPAL SECURITY VALUE
COMMERCIAL PAPER (2.7%)
--------------------------------------------------------------------------------
$300,000 Ford Motor Credit Co., 6.00%,
05/12/00 (cost $299,457) $ 299,408
-----------
CORPORATE BONDS (4.6%)
--------------------------------------------------------------------------------
500,000 Bank of America, 8.125%,
02/01/02 (cost $506,797) 504,423
-----------
U.S. GOVERNMENT SPONSORED
AND AGENCY OBLIGATIONS (86.2%)
--------------------------------------------------------------------------------
GOVERNMENT AGENCY (59.7%)
1,000,000 FHLB, 7.00%, 01/29/03 989,510
1,000,000 FHLB, 7.05%, 02/11/03 991,891
825,000 FNMA, 5.89%, 04/06/04 785,016
-----------
TOTAL GOVERNMENT AGENCY (cost $2,788,396) 2,766,417
-----------
GOVERNMENT SPONSORED AND AGENCY-COLLATERALIZED MORTGAGE
OBLIGATIONS (26.5%)
--------------------------------------------------------------------------------
2,000,000 FHLMC REMIC, Series 2198-PA,
6.75%, 08/15/16 1,971,460
1,000,000 FNMA REMIC, Series 92-011J,
7.00%, 12/25/06 994,592
1,022,332 FNMA 15 Year, Pool 253106,
7.00%, 02/01/07 1,004,708
1,875,115 FNMA 15 Year, Pool 190255,
6.50%, 02/01/09 1,816,825
984,314 FNMA 15 Year, Pool 436784,
6.50%, 11/01/09 955,178
-----------
TOTAL U.S. GOVERNMENT SPONSORED AND AGENCY-
COLLATERALIZED MORTGAGE OBLIGATIONS (COST $6,786,649) 6,742,763
-----------
TOTAL U.S. GOVERNMENT SPONSORED AND
AGENCY OBLIGATIONS 9,509,180
-----------
PRINCIPAL SECURITY VALUE
REPURCHASE AGREEMENT (6.5%)
--------------------------------------------------------------------------------
$712,000 Fifth Third Bank 5.78%, 05/01/00,
Collateralized by $733,828 FNMA
Pool #528595, 7.50%, 01/15/30,
market value $733,828 (cost $712,000) $ 712,000
-----------
TOTAL INVESTMENTS (cost $11,093,299) $11,025,011
===========
--------------------------------------------------------------------------------
The abbreviations in the above statement stand for the following:
FHLB Federal Home Loan Bank System
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
At April 30, 2000 the Fund's open futures contracts were as follows:
UNREALIZED
MARKET VALUE APPRECIATION
NUMBER OF COVERED BY (DEPRECIATION)
CONTRACTS CONTRACT TYPE(**) EXPIRATION CONTRACTS AT 04/30/00
--------------------------------------------------------------------------------
36 US Treasury 06/21/00 $7,100,438 $7,515
2 Year Note
29 US Treasury 06/21/00 2,829,766 (9,680)
5 Year Note
PORTFOLIO HOLDING PERCENTAGES REPRESENT MARKET VALUE AS A PERCENT OF NET ASSETS.
(**)CASH PLEDGED AS COLLATERAL.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 13
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
NATIONWIDE(R) MUTUAL FUNDS
MORLEY CAPITAL ACCUMULATION FUND
MANAGEMENT DISCUSSION OF PERFORMANCE
For the six-month period ended April 30, 2000, the Morley Capital
Accumulation Fund (Institutional Class shares) returned 2.77%(*) vs. 2.68% for
the Lipper Money Fund Index, the benchmark index. The Fund experienced no
fluctuation of its $10.00 per share net asset value during the period.
During the six-month period, the Fund outperformed its benchmark index
despite a steady and substantial increase in interest rates as the Federal
Reserve acted to moderate the pace of economic growth. Also during this period,
the U.S. Treasury's announcement of government debt buybacks has prompted a
rally in longer government bonds. The combination of these two factors has
created an inverted yield curve for government securities, with the peak in
rates occurring in the two to five year sector. The Fund's target duration range
is two to three and a half years, so the Fund has been operating in the least
favorable area of the yield curve. Despite these factors, which have limited the
Fund's performance relative to more favored sectors of the market, the Fund has
posted the positive returns noted above thanks to the book value maintenance
("wrap") contracts to which the Fund is a party. The Fund has also comfortably
outperformed non-stable value bond funds and indices comprised of securities of
comparable credit quality and duration.
The Fund's holdings of seasoned and relatively short-duration
mortgage-backed securities proved most resistant to adverse market movements
during the period. These securities, issued by Federal National Mortgage
Association and Federal Home Loan Mortgage Corp., combine high credit quality
with stable cash flows and steady duration, and they comprise the Fund's largest
group of holdings. By contrast, the Fund's holdings of corporate securities were
more affected by the rise in rates and the wider spreads that marked the period.
The Fund experienced growth in net assets of almost 90% during the
period. Acting to capitalize on generally higher interest rates, the Fund
continued to invest primarily in agency-issued mortgage-backed securities
offering stable duration and cash flow characteristics. The Fund also sold its
callable agency securities in favor of corporate issues offering greater yields
and wider spreads.
THOMAS F. MITCHELL AND TAYLOR E. DRAKE - PORTFOLIO MANAGERS
(*) PERFORMANCE WITHOUT SALES CHARGE AND ASSUMING ALL DISTRIBUTIONS
REINVESTED.
FUND SHARE $15,051,571
PORTFOLIO COMPOSITION
(Subject to Change)
Wrapper Contracts 2.5%
Commercial Paper 3.3%
Repurchase Agreement 4.9%
Corporate Bonds 15.5%
U.S. Government Obligations 73.8%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Period Ended April 30, 2000)
INSTITUTIONAL
YEARS SERVICE CLASS(1) CLASS IRA SHARES
--------------------------------------------------------------------------------
1 5.04% 5.45% 5.03%
--------------------------------------------------------------------------------
Life(*) 5.01% 5.43% 5.01%
--------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. THERE ARE NO SALES CHARGES
ON THE SHARES OF THE MORLEY CAPITAL ACCUMULATION FUND.
(*) FUND COMMENCED OPERATIONS ON FEBRUARY 1, 1999.
1 THE SERVICE CLASS WAS FORMERLY KNOWN AS THE INSTITUTIONAL SERVICE
CLASS.
N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T 11
<PAGE> 14
STATEMENT OF INVESTMENTS MORLEY CAPITAL ACCUMULATION FUND
--------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
PRINCIPAL SECURITY VALUE
COMMERCIAL PAPER (3.3%)
--------------------------------------------------------------------------------
$ 500,000 American Express Credit Corp., 6.00%,
5/4/00 (cost $499,756) $ 499,675
-----------
CORPORATE BONDS (15.5%)
--------------------------------------------------------------------------------
600,000 Associates Corp., 6.69%,
04/01/03 585,659
625,000 Bank of America, 5.75%,
03/01/04 583,106
600,000 Norwest Financial, 5.375%,
09/30/03 559,663
600,000 Wachovia Corp., 6.70%, 06/21/04 582,997
-----------
TOTAL CORPORATE BONDS (cost $2,331,185) 2,311,425
-----------
U.S. GOVERNMENT SPONSORED AND AGENCY-
COLLATERALIZED MORTGAGE OBLIGATIONS (73.8%)
--------------------------------------------------------------------------------
677,918 FHLMC 15 Year, Pool E74820,
6.00%, 01/01/09 646,203
1,457,389 FHLMC 15 Year, Pool G10665,
7.00%, 03/01/12 1,425,908
969,952 FHLMC 15 Year, Pool E00241,
6.00%, 10/01/08 924,574
1,167,071 FHLMC 15 Year, Pool E00616,
6.00%, 01/01/14 1,095,261
972,062 FNMA 15 Year, Pool 496705,
6.50%, 08/01/06 944,051
1,101,860 FNMA 10 Year, Pool 252318,
6.00%, 02/01/09 1,046,436
1,086,672 FNMA 15 Year, Pool 303880,
7.00%, 05/01/11 1,063,457
1,052,444 FNMA 15 Year, Pool 313409,
6.50%, 03/01/12 1,013,473
1,903,018 FNMA REMIC, Series 24-BA,
6.00%, 11/18/23 1,820,475
1,123,464 GNMA REMIC, Series 18-B,
6.25%, 07/16/26 1,052,416
-----------
TOTAL U.S. GOVERNMENT SPONSORED AND AGENCY-
COLLATERALIZED MORTGAGE OBLIGATIONS (cost $11,383,311) 11,032,254
-----------
PRINCIPAL SECURITY VALUE
REPURCHASE AGREEMENT (4.9%)
--------------------------------------------------------------------------------
$ 735,000 Fifth Third Bank 5.78%,
05/01/00, Collateralized by $750,240
FNMA Pool #303741, 7.00%,
02/01/11, market value $750,240
(cost $735,000) $ 735,000
-----------
TOTAL INVESTMENTS (cost $14,949,252) $14,578,354
===========
--------------------------------------------------------------------------------
The abbreviations in the above statement stand for the following:
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
VALUE OF WRAP CONTRACTS:
Wrap contract with Bank of America NT&SA $ 126,240
Wrap contract with Deutsche Bank America 126,240
Wrap contract with Transamerica Life Insurance Company 126,240
-----------
TOTAL WRAPPER CONTRACTS $ 378,720
===========
WRAP CONTRACTS: EACH WRAP CONTRACT OBLIGATES THE WRAPPER PROVIDER TO MAINTAIN
THE BOOK VALUE OF A PORTION OF THE FUND'S ASSETS UPON THE OCCURRENCE OF CERTAIN
SPECIFIED EVENTS. VALUE OF WRAP CONTRACTS IS THE FAIR VALUE AS DETERMINED UNDER
VALUATION PROCEDURES APPROVED BY THE TRUST'S BOARD OF TRUSTEES.
PORTFOLIO HOLDING PERCENTAGES REPRESENT MARKET VALUE AS A PERCENTAGE OF NET
ASSETS.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 15
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
<TABLE>
<CAPTION>
VALUE HIGH YIELD
OPPORTUNITIES BOND
FUND (a) FUND (a)
------------- ------------
<S> <C> <C>
ASSETS:
Investments in securities, unaffiliated, at value (cost $1,846,365, $106,025,231) $1,985,505 $100,718,820
Repurchase Agreements, at value (cost $118,000) 118,000 --
Cash 552 --
Receivable for investment securities sold 24,864 --
Receivable from Adviser 13,417 400
Interest and dividends receivable 708 2,518,788
Prepaid and other assets 16,843 36,582
---------- ------------
Total Assets 2,159,889 103,274,590
---------- ------------
LIABILITIES:
Cash overdrafts -- 2,433,701
Payable for investment securities purchased 5,816 --
Accrued expenses and other payables:
Investment management fees 1,133 45,158
Fund administration fees 6,148 6,148
Transfer agent fees 16 762
Distribution fees 497 485
Other 20,917 24,341
---------- ------------
Total Liabilities 34,527 2,510,595
---------- ------------
NET ASSETS $2,125,362 $100,763,995
========== ============
NET ASSETS:
Capital 1,887,948 105,392,038
Undistributed net investment income 1,008 --
Net unrealized appreciation (depreciation) from investments 139,140 (5,306,411)
Accumulated undistributed net realized gains from investment transactions 97,266 678,367
---------- ------------
NET ASSETS $2,125,362 $100,763,995
---------- ------------
NET ASSETS:
Class A $ 798,951 $ 2,469,192
Class B 468,561 9,732
Institutional Service 857,850 98,285,071
---------- ------------
Total $2,125,362 $100,763,995
========== ============
SHARES OUTSTANDING (unlimited number of shares authorized):
Class A 67,074 264,636
Class B 39,340 1,043
Institutional Service 71,969 10,472,870
---------- ------------
Total 178,383 10,738,549
========== ============
NET ASSET VALUE PER SHARE:
Class A $ 11.91 $ 9.33
Class B $ 11.91 $ 9.33
Institutional Service $ 11.92 $ 9.38
OFFERING PRICE (100%/(100%-Maximum Sales Charge)
of net asset value adjusted to nearest cent per share):
Class A(*) $ 12.64 $ 9.77
Class B(**) $ 11.91 $ 9.33
Institutional Service(***) $ 11.92 $ 9.38
---------- ------------
Maximum sales charge - Class A 5.75% 4.50%
========== ============
</TABLE>
(*) CLASS A SHARES INCLUDE A FRONT-END SALES CHARGE.
(**) FOR CLASS B SHARES, THE REDEMPTION PRICE PER SHARE VARIES BY LENGTH OF
TIME SHARES ARE HELD.
(***) INSTITUTIONAL SERVICE CLASS SHARES ARE NOT SUBJECT TO ANY SALES CHARGE.
(A) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
N A T I O N W I D E M U T U A L F U N D S 13
S E M I - A N N U A L R E P O R T
<PAGE> 16
STATEMENTS OF ASSETS AND LIABILITIES CONTINUED
-------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
<TABLE>
<CAPTION>
MORLEY
ENHANCED
INCOME
FUND (a)
-----------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities, unaffiliated, at value (cost $10,081,841) $10,013,603
Investments in short-term securities, at value (cost $299,458) 299,408
Repurchase Agreements, at value (cost $712,000) 712,000
Cash 37,399
Receivable from adviser 8,823
Interest and dividends receivable 87,044
Prepaid and other assets 19,766
-----------
Total Assets 11,178,043
-----------
LIABILITIES:
Accrued expenses and other payables:
Investment management fees 3,326
Fund administration fees 6,148
Transfer agent fees 121
Distribution fees 18
Other 16,778
-----------
Total Liabilities 26,391
-----------
NET ASSETS $11,151,652
===========
NET ASSETS:
Capital $11,229,201
Undistributed net investment income --
Net unrealized (depreciation) from investments and futures (70,451)
Accumulated (distributions in excess of) net realized
gains (losses) from investment transactions and futures (7,098)
-----------
NET ASSETS $11,151,652
===========
NET ASSETS:
Class A $ 109,048
Institutional Service 11,018,849
Institutional 23,755
-----------
Total $11,151,652
===========
SHARES OUTSTANDING (unlimited number of shares authorized):
Class A 10,978
Institutional Service 1,108,973
Institutional 2,391
-----------
Total 1,122,342
===========
NET ASSET VALUE PER SHARE:
Class A $ 9.93
Institutional Service $ 9.94
Institutional $ 9.94
OFFERING PRICE (100%/(100%-Maximum Sales Charge) of
net asset value adjusted to nearest cent per share):
Class A(*) $ 10.40
Institutional Service(**) $ 9.94
Institutional(**) $ 9.94
-----------
Maximum sales charge - Class A 4.50%
===========
-----------------------------------------------------------------------------------------------
</TABLE>
(*) CLASS A SHARES INCLUDE A FRONT-END SALES CHARGE.
(**) INSTITUTIONAL SERVICE AND INSTITUTIONAL CLASS SHARES ARE NOT SUBJECT TO A
FRONT END SALES CHARGE.
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 17
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
STATEMENTS OF ASSETS AND LIABILITIES
-------------------------------------------------------------------------------
(UNAUDITED) APRIL 30, 2000
<TABLE>
<CAPTION>
MORLEY
CAPITAL
ACCUMULATION
FUND
-----------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities, unaffiliated, at value (cost $13,714,496) $13,343,679
Investments in short-term securities, at value (cost $499,756) 499,675
Repurchase Agreements, at value (cost $735,000) 735,000
Wrap contracts, at value 378,720
Cash 731
Interest and dividends receivable 84,720
Prepaid and other assets 32,574
-----------
Total Assets 15,075,099
-----------
LIABILITIES:
Payable for Fund shares redeemed 27
Accrued expenses and other payables:
Investment management fees 8,263
Fund administration fees 2,740
Transfer agent fees 117
Distribution fees 1,761
Administrative servicing fees 388
Wrap contract premiums 3,025
Other 7,207
-----------
Total Liabilities 23,528
-----------
NET ASSETS $15,051,571
===========
NET ASSETS:
Capital $15,051,601
Undistributed net investment income 1,783
Net unrealized appreciation from investments and wrap contracts 7,822
Accumulated (distributions in excess) net realized gains (losses) from
investment transactions (9,635)
-----------
NET ASSETS $15,051,571
===========
NET ASSETS:
Service Class(*) $ 5,868,582
Institutional Class 7,341,184
IRA Class 1,841,805
-----------
Total $15,051,571
===========
SHARES OUTSTANDING (unlimited number of shares authorized):
Service Class(*) 586,853
Institutional Class 734,130
IRA Class 184,182
-----------
Total 1,505,165
===========
NET ASSET VALUE PER SHARE:
Service Class(*) $ 10.00
Institutional Class $ 10.00
IRA Class $ 10.00
OFFERING PRICE (100%/(100%-Maximum Sales Charge) of
net asset value adjusted to nearest cent per share):(**)
Service Class(*) $ 10.00
Institutional Class $ 10.00
IRA Class $ 10.00
-----------------------------------------------------------------------------------------------------
</TABLE>
(*) FORMERLY KNOWN AS INSTITUTIONAL SERVICE CLASS.
(**) NONE OF THE SHARE CLASSES ARE SUBJECT TO A FRONT-END SALES CHARGE.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
N A T I O N W I D E M U T U A L F U N D S 15
S E M I - A N N U A L R E P O R T
<PAGE> 18
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE PERIOD FROM DECEMBER 29, 1999, TO APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
OPPORTUNITIES HIGH YIELD
FUND (a) BOND FUND (a)
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 6,131 $ 3,056,305
Dividend income 4,397 --
---------- -----------
Total income 10,528 3,056,305
---------- -----------
----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment management fees 3,459 169,380
Fund administration fees 25,410 25,410
Custodian fees 807 807
Distribution fees 1,667 784
Professional fees 7,270 7,271
Trustees' fees and expenses 71 100
Transfer agent fees 109 5,108
Registration and filing fees 10,097 11,368
Shareholders' reports 8,079 8,079
Other 5,838 10,293
---------- -----------
Total expenses before waived or reimbursed expenses 62,807 238,600
Expenses waived or reimbursed (56,084) (20,747)
---------- -----------
Net expenses 6,723 217,853
---------- -----------
NET INVESTMENT INCOME $ 3,805 $ 2,838,452
========== ===========
----------------------------------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains from investment transactions $ 97,266 $ 678,367
Net change in unrealized appreciation (depreciation) from investments 139,140 (5,306,411)
---------- -----------
Net realized/unrealized gains (losses) from investments 236,406 (4,628,044)
---------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 240,211 $(1,789,592)
========== ===========
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 19
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
STATEMENTS OF OPERATIONS CONTINUED
-------------------------------------------------------------------------------
FOR THE PERIOD FROM DECEMBER 29, 1999, TO APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MORLEY
ENHANCED
INCOME
FUND (a)
---------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest income $ 246,777
Dividend income 26
---------
Total income 246,803
---------
---------------------------------------------------------------------------------------------
EXPENSES:
Investment management fees 13,254
Fund administration fees 25,410
Custodian fees 804
Distribution fees 27
Professional fees 7,246
Trustees' fees and expenses 48
Transfer agent fees 468
Registration and filing fees 9,135
Shareholders' reports 6,039
Other 4,204
---------
Total expenses before waived or reimbursed expenses 66,635
Expenses waived or reimbursed (39,911)
---------
Net expenses 26,724
---------
NET INVESTMENT INCOME $ 220,079
=========
---------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized (losses) from investment transactions and futures $ (7,098)
Net change in unrealized (depreciation) from investments and futures (70,451)
---------
Net realized/unrealized gains (losses) from investments and futures (77,549)
---------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 142,530
=========
---------------------------------------------------------------------------------------------
</TABLE>
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
See ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
N A T I O N W I D E M U T U A L F U N D S 17
S E M I - A N N U A L R E P O R T
<PAGE> 20
STATEMENTS OF OPERATIONS CONTINUED
--------------------------------------------------------------------------------
FOR THE PERIOD FROM DECEMBER 29, 1999, TO APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MORLEY
CAPITAL
ACCUMULATION
FUND
----------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest income $ 320,469
---------
----------------------------------------------------------------------------------------------
EXPENSES:
Investment management fees 18,464
Fund administration fees 23,427
Custodian fees 472
Distribution fees 6,643
Administrative servicing fees 1,331
Professional fees 13,578
Trustees' fees and expenses 52
Transfer agent fees 601
Wrap contract premiums 7,681
Registration and filing fees 8,937
Shareholders' reports 7,450
Insurance 7
Other 218
---------
Total expenses before waived or reimbursed expenses 88,861
Expenses waived or reimbursed (49,221)
---------
Net expenses 39,640
---------
NET INVESTMENT INCOME $ 280,829
=========
----------------------------------------------------------------------------------------------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS AND WRAP CONTRACTS:
Net realized (losses) from investment transactions $ (7,822)
Net change in unrealized appreciation from investments 7,814
---------
Net realized/unrealized gains (losses) from investments (8)
---------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 280,821
=========
----------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 21
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
FOR THE PERIOD FROM DECEMBER 29, 1999, TO APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
OPPORTUNITIES HIGH YIELD
FUND (a) BOND FUND (a)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 3,805 $ 2,838,452
Net realized gains from investment transactions 97,266 678,367
Net change in unrealized appreciation (depreciation) from investments 139,140 (5,306,411)
------------ ------------
Change in net assets resulting from operations 240,211 (1,789,592)
------------ ------------
---------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS FROM:
Net investment income (809) (29,795)
------------ ------------
DISTRIBUTIONS TO CLASS B SHAREHOLDERS FROM:
Net investment income (28) (369)
------------ ------------
DISTRIBUTIONS TO INSTITUTIONAL SERVICE CLASS SHAREHOLDERS FROM:
Net investment income (1,960) (2,808,288)
------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DISTRIBUTIONS (2,797) (2,838,452)
------------ ------------
---------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:(*)
Proceeds from shares issued 1,958,851 102,572,642
Dividends reinvested 2,785 2,847,416
Cost of shares redeemed (73,688) (28,020)
------------ ------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 1,887,948 105,392,038
------------ ------------
CHANGE IN NET ASSETS 2,125,362 100,763,995
NET ASSETS:
BEGINNING OF PERIOD -- --
------------ ------------
END OF PERIOD $ 2,125,362 $100,763,995
============ ============
Undistributed net realized gain on
investments included in net assets at end of period $ 97,266 $ 678,367
============ ============
Undistributed net investment income
included in net assets at end of period $ 1,008 $ --
============ ============
SHARE TRANSACTIONS:(*)
Sold 184,604 10,440,908
Reinvested 240 297,583
Redeemed (6,461) (2,942)
------------ ------------
Change in shares 178,383 10,735,549
============ ============
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) BOTH THE CAPITAL TRANSACTIONS AND SHARE TRANSACTIONS SECTIONS REPRESENT
COMBINED DATA FOR ALL THE CLASSES.
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
N A T I O N W I D E M U T U A L F U N D S 19
S E M I - A N N U A L R E P O R T
<PAGE> 22
STATEMENTS OF CHANGES IN NET ASSETS CONTINUED
-------------------------------------------------------------------------------
FOR THE PERIOD FROM DECEMBER 29, 1999, TO APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MORLEY
ENHANCED
INCOME
FUND (a)
----------------------------------------------------------------------------------------------
<S> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 220,079
Net realized (losses) from investment transactions and futures (7,098)
Net change in unrealized (depreciation) from investments and futures (70,451)
-----------
Change in net assets resulting from operations 142,530
-----------
----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS FROM:
Net investment income (626)
-----------
DISTRIBUTIONS TO INSTITUTIONAL SERVICE CLASS SHAREHOLDERS FROM:
Net investment income (219,181)
-----------
DISTRIBUTIONS TO INSTITUTIONAL CLASS SHAREHOLDERS FROM:
Net investment income (272)
-----------
CHANGE IN NET ASSETS FROM SHAREHOLDER DISTRIBUTIONS (220,079)
-----------
----------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:(*)
Proceeds from shares issued 14,734,902
Dividends reinvested 228,174
Cost of shares redeemed (3,733,875)
-----------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 11,229,201
-----------
CHANGE IN NET ASSETS 11,151,652
NET ASSETS:
BEGINNING OF PERIOD --
-----------
END OF PERIOD $11,151,652
===========
(Distributions in excess of) net realized gain (loss) on
investments and futures included in net assets at end of period $ (7,098)
===========
Undistributed (distributions in excess of) net investment income
included in net assets at end of period $ --
===========
SHARE TRANSACTIONS:(*)
Sold 1,475,154
Reinvested 22,240
Redeemed (375,052)
-----------
Change in shares 1,122,342
===========
</TABLE>
(*) BOTH THE CAPITAL TRANSACTIONS AND SHARE TRANSACTIONS SECTIONS REPRESENT
COMBINED DATA FOR ALL CLASSES.
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 23
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
STATEMENTS OF CHANGES IN NET ASSETS CONTINUED
--------------------------------------------------------------------------------
FOR PERIOD FROM DECEMBER 29, 1999, TO APRIL 30, 2000
<TABLE>
<CAPTION>
MORLEY CAPITAL ACCUMULATION FUND
-------------------------------------
SIX MONTHS YEAR
ENDED APRIL 30, 2000 ENDED
(UNAUDITED) OCTOBER 31, 1999
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 280,829 $ 207,909
Net realized (losses) from investment transactions (7,822) (178,390)
Net change in unrealized appreciation from investments 7,814 178,390
----------- -----------
Change in net assets resulting from operations 280,821 207,909
----------- -----------
------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SERVICE CLASS SHAREHOLDERS FROM: (A)
Net investment income (89,897) (36,651)
----------- -----------
DISTRIBUTION TO INSTITUTIONAL CLASS SHAREHOLDERS FROM:
Net investment income (144,252) (130,488)
----------- -----------
DISTRIBUTION TO IRA CLASS FUND SHAREHOLDERS FROM:
Net investment income (46,680) (40,794)
----------- -----------
CHANGE IN NET ASSETS FROM SHAREHOLDERS DISTRIBUTIONS (280,829) (207,933)
----------- -----------
------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:(*)
Proceeds from shares issued 11,496,040 9,324,720
Dividends reinvested 278,547 207,718
Cost of shares redeemed (4,733,103) (1,522,321)
----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS 7,041,484 8,010,117
----------- -----------
CHANGE IN NET ASSETS 7,041,476 8,010,093
NET ASSETS:
BEGINNING OF PERIOD 8,010,095 --
----------- -----------
END OF PERIOD $15,051,571 $ 8,010,095
=========== ===========
Undistributed (distributions in excess of) net realized gain (loss) on
investments included in net assets at end of period $ (273) $ (7,549)
=========== ===========
Undistributed (distributions in excess of) net investment income
included in net assets at end of period $ (1,813) $ (1,813)
=========== ===========
SHARE TRANSACTIONS:(*)
Sold 1,149,603 932,471
Reinvested 27,855 20,773
Redeemed (473,305) (152,232)
----------- -----------
Change in shares 704,153 801,012
=========== ===========
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) BOTH THE CAPITAL TRANSACTIONS AND SHARE TRANSACTIONS SECTIONS REPRESENT
COMBINED DATA FOR ALL CLASSES.
(a) FORMERLY KNOWN AS INSTITUTIONAL SERVICE CLASS.
See accompanying notes to financial statements.
N A T I O N W I D E M U T U A L F U N D S 21
S E M I - A N N U A L R E P O R T
<PAGE> 24
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING (UNAUDITED)
<TABLE>
<CAPTION>
NATIONWIDE(R) VALUE OPPORTUNITIES FUND
CLASS A CLASS B INSTITUTIONAL
PERIOD FROM DECEMBER 29, 1999 TO APRIL 30, 2000 SHARES (a) SHARES (a) SERVICE CLASS (a)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00
-------- -------- --------
INVESTMENT ACTIVITIES:
Net investment income 0.03 0.01 0.03
Net realized and unrealized gain 1.90 1.90 1.92
-------- -------- --------
Total investment activities 1.93 1.91 1.95
-------- -------- --------
DISTRIBUTIONS:
Net investment income (0.02) -- (0.03)
Total distributions (0.02) -- (0.03)
-------- -------- --------
NET ASSET VALUE--END OF PERIOD $ 11.91 $ 11.91 $ 11.92
======== ======== ========
Total Return (excluding sales charge) 19.31% 19.11% 19.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 799 $ 469 $ 858
Ratio of expenses to average net assets (b) 1.35% 1.95% 1.00%
Ratio of net investment income to average net assets (b) 0.79% 0.33% 1.02%
Ratio of expenses to average net assets(*) (b) 12.69% 13.76% 12.20%
Ratio of net investment income to average net assets(*) (b) (10.56%) (11.48%) (10.18%)
Portfolio turnover rate (c) 60.39% 60.39% 60.39%
---------------------------------------------------------------------------------------------------------------------------
NATIONWIDE(R) HIGH YIELD BOND FUND
CLASS A CLASS B INSTITUTIONAL
PERIOD FROM DECEMBER 29, 1999 TO APRIL 30, 2000 SHARES (a) SHARES (a) SERVICE CLASS (a)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00
------- -------- -------
INVESTMENT ACTIVITIES:
Net investment income 0.38 0.36 0.29
Net realized and unrealized gain (0.67) (0.67) (0.62)
------- -------- -------
Total investment activities (0.29) (0.31) (0.33)
DISTRIBUTIONS:
Net investment income (0.38) (0.36) (0.29)
------- -------- -------
Total distributions (0.38) (0.36) (0.29)
------- -------- -------
NET ASSET VALUE--END OF PERIOD $ 9.33 $ 9.33 $ 9.38
======= ======== =======
Total Return (excluding sales charge) (3.88%) (4.13%) (3.20%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 2,469 $ 10 $98,285
Ratio of expenses to average net assets (b) 0.95% 1.70% 0.70%
Ratio of net investment income to average net assets (b) 9.85% 10.89% 9.14%
Ratio of expenses to average net assets(*) (b) 1.34% 31.36% 0.76%
Ratio of net investment income to average net assets(*) (b) 9.45% (18.77%) 9.08%
Portfolio turnover rate (c) 44.76% 44.76% 44.76%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
(b) ANNUALIZED.
(c) PORTFOLIO TURNOVER IS CALCULATED ON THE BASIS OF THE FUND AS A WHOLE
WITHOUT DISTINGUISHING AMONG THE CLASSES OF SHARES.
(*) DURING THE PERIOD CERTAIN FEES WERE REIMBURSED AND VOLUNTARILY REDUCED.
IF SUCH REIMBURSEMENTS AND VOLUNTARY FEE REDUCTIONS HAD NOT OCCURRED, THE
RATIOS WOULD HAVE BEEN AS INDICATED.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 25
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
FINANCIAL HIGHLIGHTS CONTINUED
-------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING (UNAUDITED)
<TABLE>
<CAPTION>
NATIONWIDE(R) MORLEY ENHANCED INCOME FUND
PERIOD FROM DECEMBER 29, 1999 TO APRIL 30, 2000 CLASS A INSTITUTIONAL INSTITUTIONAL
(UNAUDITED) SHARES (a) SERVICE CLASS (a) CLASS (a)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00
------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income 0.18 0.19 0.20
Net realized and unrealized gain (loss) (0.07) (0.06) (0.06)
------- ------- -------
Total from investment activities 0.11 0.13 0.14
------- ------- -------
DISTRIBUTIONS:
Net investment income (0.18) (0.19) (0.20)
------- ------- -------
Total distributions (0.18) (0.19) (0.20)
------- ------- -------
NET ASSET VALUE--END OF PERIOD $ 9.93 $ 9.94 $ 9.94
======= ======= =======
Total Return (Class A shares does not reflect sales load) 1.14% 1.29% 1.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 109 $11,019 $ 24
Ratio of expenses to average net assets (b) 0.90% 0.70% 0.45%
Ratio of net investment income to average net assets (b) 5.87% 5.76% 6.01%
Ratio of expenses to average net assets(*) (b) 5.93% 1.73% 10.21%
Ratio of net investment income to average net assets(*) (b) 0.83% 4.73% (3.75%)
Portfolio turnover rate (c) 1.61% 1.61% 1.61%
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SERVICE CLASS (d) INSTITUTIONAL CLASS IRA CLASS
NATIONWIDE(R) MORLEY CAPITAL -------------------------------------------------------------------------------------------
ACCUMULATION FUND PERIOD FROM PERIOD FROM PERIOD FROM
SIX MONTHS FEBRUARY 1, SIX MONTHS FEBRUARY 1, SIX MONTHS FEBRUARY 1,
ENDED 1999 TO ENDED 1999 TO ENDED 1999 TO
PERIOD FROM DECEMBER 29, 1999 APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31, APRIL 30, 2000 OCTOBER 31,
TO APRIL 30, 2000 (UNAUDITED) 1999 (a) (UNAUDITED) 1999 (a) (UNAUDITED) 1999 (a)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
--------- ------- -------- ------- --------- -------
INVESTMENT ACTIVITIES:
Net investment income 0.26 0.35 0.27 0.38 0.25 0.35
Net realized and unrealized gain -- -- -- -- -- --
--------- ------- -------- ------- --------- -------
Total from investment activities 0.26 0.35 0.27 0.38 0.25 0.35
--------- ------- -------- ------- --------- -------
DISTRIBUTIONS:
Net investment income (0.26) (0.35) (0.27) (0.35) (0.25) (0.35)
--------- ------- -------- ------- --------- -------
Total distributions (0.26) (0.35) (0.27) (0.35) (0.25) (0.35)
--------- ------- -------- ------- --------- -------
NET ASSET VALUE--END OF PERIOD $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
========= ======= ======== ======= ========= =======
Total Return 2.57% (e) 3.60% 2.77% (e) 3.91% 2.56% (e) 3.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 5,869 $ 1,051 $ 7,341 $ 5,131 $ 1,842 $ 1,829
Ratio of expenses to average
net assets (b) 0.95% 0.95% 0.55% 0.55% 0.95% 0.95%
Ratio of net investment income to
average net assets (b) 6.11% 4.74% 6.07% 5.17% 6.05% 4.77%
Ratio of expenses to
average net assets(*) (b) 1.78% 6.10% 1.55% 4.18% 1.89% 4.65%
Ratio of net investment income to
average net assets(*) (b) 5.28% (0.41%) 5.07% 1.54% 5.11% 1.07%
Portfolio turnover rate (c) 27.01% (e) 8.20% 27.01% (e) 8.20% 27.01% (e) 8.20%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) COMMENCED OPERATION ON FEBRUARY 1, 1999.
(b) ANNUALIZED.
(c) PORTFOLIO TURNOVER IS CALCULATED ON THE BASIS OF THE FUND AS A WHOLE
WITHOUT DISTINGUISHING AMONG THE CLASSES OF SHARES.
(d) FORMERLY KNOWN AS INSTITUTIONAL SERVICE CLASS.
(e) NOT ANNUALIZED.
(*) DURING THE PERIOD CERTAIN FEES WERE REIMBURSED AND VOLUNTARILY REDUCED.
IF SUCH REIMBURSEMENTS AND VOLUNTARY FEE REDUCTIONS HAD NOT OCCURRED, THE
RATIOS WOULD HAVE BEEN AS INDICATED.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
N A T I O N W I D E M U T U A L F U N D S 23
S E M I - A N N U A L R E P O R T
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
APRIL 30, 2000 (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 31, 1997, as subsequently amended, and
is registered under the Investment Company Act of 1940, as amended. The Trust
offers shares in twenty-eight separate series, or mutual funds (the "Funds"),
each with its own investment objectives. The accompanying financial statements
and financial highlights relate to the four funds listed below.
- Nationwide Value Opportunities Fund
- Nationwide High Yield Bond Fund
- Morley Enhanced Income Fund
- Morley Capital Accumulation Fund
The Value Opportunities and High Yield Bond Funds commenced operations on
December 29, 1999, and each such Fund currently offers three classes of shares:
Class A, Class B and Institutional Service Class of shares. Class A and Class B
shares are available to all investors. Class A shares of these two Funds are
purchased with a maximum front-end sales load of 5.75% and 4.50%, respectively.
The Class B shares are subject to 5.00% maximum deferred sales charge (known as
a contingent deferred sales charge or CDSC) if you sell your shares within six
years of purchase and contain a conversion feature to Class A shares after you
have held them for seven years. The Institutional Service Class is available to
a limited group of investors and has no sales charges. Sales charges are paid to
the Funds' distributor, Nationwide Advisory Services, Inc. (NAS) which either
retains them or pays a selling representative.
The Morley Enhanced Income Fund commenced operations on December 29, 1999, and
currently offers three classes of shares: Class A, Institutional Service Class,
and Institutional Class. Class A shares are available to all investors and are
purchased with a maximum 4.50% front-end sales load. The other two classes are
available to a limited group of investors and have no sales charges. Sales
charges are paid to NAS which either retains them or pays a selling
representative.
The Morley Capital Accumulation Fund currently offers three classes of shares:
Service Class (formerly known as Institutional Service Class), Institutional
Class, and IRA Class. Each class is available to a limited group of investors.
The classes have no front-end sales charges or deferred sales charges (known as
a contingent deferred sales charge or CDSC) but can charge a 2.00% redemption
fee from the proceeds of shares redeemed under certain conditions. These fees
would be retained by the Fund.
The Class A, Service Class and IRA Class shares of each fund (as applicable) pay
distribution and/or service (12b-1) fees under a Distribution Plan of 0.25%. The
Class B shares pay a 1.00% 12b-1 fee. These fees are either retained or paid by
NAS to brokers for distribution and shareholders services. The Class A and
Institutional Service Class shares of the Value Opportunities Fund, High Yield
Bond Fund and Morley Enhanced Income Fund pay administrative service fees of up
to 0.25%. The Service Class and IRA Class of shares of the Morley Capital
Accumulation Fund pay administrative service fees of up to 0.15%. These fees are
paid to brokers and other entities that provide administrative support services
to the beneficial owners of the applicable shares.
(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 there is no sale price, the last
quoted bid price as provided by an independent pricing agent.
(2) U.S. Government securities are valued at the last quoted bid price as
provided by an independent pricing agent. All of the debt securities
are valued by a combination of daily quotes and matrix evaluations as
provided by an independent pricing agent.
(3) 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 either by the Federal Reserve/Treasury book-entry system, the
Fund's custodian, or an approved sub-custodian.
(4) Morley Enhanced Income Fund can enter into wrap contracts but as of
April 30, 2000, they have not been utilized. The aggregate value of the
Morley Capital Accumulation Fund's wrap contracts (see note 1. (g))
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 contracts 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 contracts. The Fund's investment adviser considers the ability
of each wrap provider to fulfill its contractual obligations when
making such determinations.
(5) 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 administrator or sub-administrator, are valued in accordance
with procedures authorized by the Trust's Board of Trustees.
24 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 27
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
APRIL 30, 2000 (UNAUDITED)
(6) The Trustees have approved amortized cost procedures for short-term
money market obligations that have 60 days or less to maturity which
are purchased by a non-money market fund.
(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
Each Funds policy is to qualify as a regulated investment company under the
Internal Revenue Code, and to distribute all taxable income, if any, to its
shareholders. Therefore no provision has been made for federal income taxes as
it is the intention of the Funds to continue such qualification. To the extent
net realized gains are offset through the application of a capital loss
carryover, they will not be distributed to shareholders and will be retained by
the applicable Fund. Withholding taxes have been paid or provided for in
accordance with the applicable tax rates and rules.
As of the fiscal year ended October 31, 1999, the Morley Capital Accumulation
Fund had a net capital loss carry forward of $1,813. If unused it will expire in
8 years.
(d) DIVIDENDS TO SHAREHOLDERS
(1) Value Opportunities Fund:
Dividend income, if any, is declared and paid quarterly and is recorded
on the ex-dividend date.
(2) High Yield Bond, Morley Enhanced Income, Morley Capital
Accumulation Funds:
Dividend income is declared and recorded daily and paid
monthly.
(3) All Funds:
Distributable net realized capital gains, if any, are declared and
distributed at least annually.
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 pur-
poses 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.
For the fiscal year ended October 31, 1999, a $5,760 reclassification for the
Morley Capital Accumulation Fund was made to increase net unrealized
depreciation on investments and wrap contracts. In addition, a $1,813
reclassification was made to increase accumulated net investment income and
accumulated net realized loss from investments.
(e) EXPENSES
General expenses of the Trust, not directly attributable to a Fund or to any
class of shares, are allocated to the Funds based upon each Fund's relative
average net assets or some other appropriate basis, as approved by the Trust's
Board of Trustees. Once these expenses are allocated to a Fund, they are
sub-allocated to the classes based on total settled shares outstanding of each
class for the High Yield Bond Fund, Morley Enhanced Income Fund, and Morley
Capital Accumulation Fund, and total shares outstanding of each class for the
Value Opportunities Fund.
Direct expenses of a Fund are applied to that Fund and sub-allocated to the
classes in the methods mentioned above.
Direct expenses of a class are allocated to that class unless otherwise directed
by the Trust's Board of Trustees. For example, distribution and administrative
servicing fees 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.
These can 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 CONTRACTS - MORLEY CAPITAL ACCUMULATION FUND
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 contracts") with the following institutions: Bank of America
NT&SA, Deutsche Bank America and Transamerica Life Insurance Co. (collectively
the "wrap providers"). The wrap contracts obligate the wrap providers to make
payments in specified circumstances, and allow the Fund under most circumstances
to maintain net asset value at $10.00 per share. Morley Enhanced Income Fund can
enter into wrap contracts, but as of April 30, 2000, they have not been
utilized.
N A T I O N W I D E M U T U A L F U N D S 25
S E M I - A N N U A L R E P O R T
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
APRIL 30, 2000 (UNAUDITED)
(h) CAPITAL SHARE TRANSACTIONS
Transactions in class level shares of the Funds were as follows:
<TABLE>
<CAPTION>
VALUE OPPORTUNITIES HIGH YIELD BOND
---------------------------------------------------
PERIOD FROM PERIOD FROM
DECEMBER 29, 1999 DECEMBER 29, 1999
CAPITAL TRANSACTIONS: TO APRIL 30, 2000 (a) TO APRIL 30, 2000 (a)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES:
Proceeds from shares issued $785,389 $ 2,538,770
Dividends reinvested 797 29,005
Cost of shares redeemed (57,932) (24,202)
-------- ------------
Change in net assets $728,254 $ 2,543,573
======== ============
CLASS B SHARES:
Proceeds from shares issued $418,883 $ 3,872
Dividends reinvested 28 362
Cost of shares redeemed (15,756) (3,818)
-------- ------------
Change in net assets $403,155 $ 416
======== ============
INSTITUTIONAL SERVICE CLASS:
Proceeds from shares issued $754,579 $100,000,000
Dividends reinvested 1,960 2,818,049
Cost of shares redeemed -- --
-------- ------------
Change in net assets $756,539 $102,818,049
======== ============
-------------------------------------------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
DECEMBER 29, 1999 DECEMBER 29, 1999
SHARE TRANSACTIONS: TO APRIL 30, 2000 (a) TO APRIL 30, 2000 (a)
-------------------------------------------------------------------------------------------------------------
CLASS A SHARES:
Issued 72,109 263,050
Reinvested 69 3,120
Redeemed (5,104) (2,534)
-------- ------------
Change in shares 67,074 263,636
======== ============
CLASS B SHARES:
Issued 40,695 413
Reinvested 2 38
Redeemed (1,357) (408)
-------- ------------
Change in shares 39,340 43
======== ============
INSTITUTIONAL SERVICE CLASS:
Issued 71,800 10,177,445
Reinvested 169 294,425
Redeemed -- --
-------- ------------
Change in shares 71,969 10,471,880
======== ============
-------------------------------------------------------------------------------------------------------------
</TABLE>
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
26 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 29
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MORLEY ENHANCED INCOME
----------------------
PERIOD FROM
DECEMBER 29, 1999
CAPITAL TRANSACTIONS: TO APRIL 30, 2000 (a)
------------------------------------------------------------------------------------
<S> <C>
CLASS A SHARES:
Proceeds from shares issued $ 101,288
Dividends reinvested 7,637
Cost of shares redeemed --
------------
Change in net assets $ 108,925
============
INSTITUTIONAL SERVICE CLASS:
Proceeds from shares issued $ 14,610,114
Dividends reinvested 220,266
Cost of shares redeemed (3,733,875)
------------
Change in net assets $ 11,096,505
============
INSTITUTIONAL CLASS:
Proceeds from shares issued $ 23,500
Dividends reinvested 271
Cost of shares redeemed --
------------
Change in net assets $ 23,771
============
------------------------------------------------------------------------------------
PERIOD FROM
DECEMBER 29, 1999
SHARE TRANSACTIONS: TO APRIL 30, 2000 (a)
------------------------------------------------------------------------------------
CLASS A SHARES:
Issued 10,915
Reinvested 63
Redeemed --
------------
Change in shares 10,978
============
INSTITUTIONAL SERVICE CLASS:
Issued 1,461,875
Reinvested 22,150
Redeemed (375,052)
------------
Change in shares 1,108,973
============
INSTITUTIONAL CLASS:
Issued 2,364
Reinvested 27
Redeemed --
------------
Change in shares 2,391
============
------------------------------------------------------------------------------------
</TABLE>
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
N A T I O N W I D E M U T U A L F U N D S 27
S E M I - A N N U A L R E P O R T
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
APRIL 30, 2000
<TABLE>
<CAPTION>
MORLEY CAPITAL ACCUMULATION
-----------------------------------
SIX MONTHS
ENDED PERIOD FROM
APRIL 30, 2000 FEBRUARY 1, 1999 TO
CAPITAL TRANSACTIONS: (UNAUDITED) OCTOBER 31, 1999 (a)
----------------------------------------------------------------------------------------------
<S> <C> <C>
SERVICE CLASS (b):
Proceeds from shares issued $ 9,405,777 $ 2,536,393
Dividends reinvested 87,665 36,448
Cost of shares redeemed (4,675,460) (1,522,286)
----------- -----------
Change in net assets $ 4,817,982 $ 1,050,555
=========== ===========
INSTITUTIONAL CLASS:
Proceeds from shares issued $ 2,090,263 $ 5,000,556
Dividends reinvested 125,755 130,476
Cost of shares redeemed (5,806) --
----------- -----------
Change in net assets $ 2,210,212 $(5,131,032)
=========== ===========
IRA CLASS:
Proceeds from shares issued $ -- $ 1,787,771
Dividends reinvested 65,127 40,794
Cost of shares redeemed (51,837) (35)
----------- -----------
Change in net assets $ 13,290 $ 1,828,530
=========== ===========
----------------------------------------------------------------------------------------------
SIX MONTHS
ENDED PERIOD FROM
APRIL 30, 2000 FEBRUARY 1, 1999 TO
SHARE TRANSACTIONS: (UNAUDITED) OCTOBER 31, 1999 (a)
----------------------------------------------------------------------------------------------
SERVICE CLASS (b):
Issued 940,578 253,639
Reinvested 8,766 3,645
Redeemed (467,546) (152,228)
----------- -----------
Change in shares 481,798 105,556
=========== ===========
INSTITUTIONAL CLASS:
Issued 209,026 500,055
Reinvested 12,576 13,048
Redeemed (575) --
----------- -----------
Change in shares 221,027 513,103
=========== ===========
IRA CLASS:
Issued -- 178,777
Reinvested 6,513 4,080
Redeemed (5,184) (4)
----------- -----------
Change in shares 1,329 182,853
=========== ===========
----------------------------------------------------------------------------------------------
</TABLE>
(a) FUND COMMENCED OPERATIONS ON FEBRUARY 1, 1999.
(b) FORMERLY KNOWN AS INSTITUTIONAL SERVICE CLASS.
28 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 31
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
APRIL 30, 2000 (UNAUDITED)
2. TRANSACTION WITH AFFILIATES
Under the terms of its investment advisory agreement, Villanova Mutual Fund
Capital Trust ("VMF") manages the investment of the assets and supervises the
daily business affairs of the Value Opportunities Fund and the High Yield Bond
Fund. VMF also provides investment management evaluation services in initially
selecting and monitoring on an ongoing basis the performance of the subadviser
for the Value Opportunities Fund. NorthPointe Capital, LLC ("NorthPointe"),
subadviser for the Value Opportunities Fund, manages the Fund's investments and
has the responsibility for making all investment decisions for that Fund.
NorthPointe is a majority owned subsidiary of Villanova Capital, Inc., which is
also the parent of VMF.
Under the terms of its investment advisory agreement, Union Bond & Trust Company
("UBT") manages the investment of the assets and supervises the daily business
affairs of the Morley Capital Accumulation Fund and the Morley Enhanced Income
Fund. UBT is a majority owned subsidiary of Morley Financial Services, Inc., a
wholly owned subsidiary of Villanova Capital, Inc.
Under the terms of the investment advisory agreements, the Funds pays their
respective investment adviser management fees based on each Fund's average daily
net assets. From such fees, pursuant to the sub-advisory agreement, VMF pays fee
to NorthPointe with respect to Value Opportunities Fund fees. Additional
information regarding investment advisory fees and subadvisory fees is as
follows for the six month period ended April 30, 2000:
<TABLE>
<CAPTION>
TOTAL ADVISORY ADVISORY FEES SUBADVISORY FEE TOTAL FEES PAID TO
FUND FEES RETAINED FEES PAID SCHEDULE FEES RETAINED SUBADVISOR
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Value Opportunities $ 3,459 -- $ 3,459 Up to $250 million 0.70% -- 0.70%
On the next $750 million 0.675% -- 0.675%
On the next $1 billion 0.65% -- 0.65%
On the next $3 billion 0.625% -- 0.625%
$5 billion or more 0.60% -- 0.60%
-----------------------------------------------------------------------------------------------------------------------------------
High Yield Bond $169,380 $169,380 NA Up to $250 million 0.55% 0.55% NA
On the next $750 million 0.525% 0.525% --
On the next $1 billion 0.50% 0.50% --
On the next $3 billion 0.475% 0.475% --
$5 billion or more 0.45% 0.45% --
-----------------------------------------------------------------------------------------------------------------------------------
Morley Enhanced Income $ 13,254 $ 13,254 NA All assets 0.35% 0.35% NA
-----------------------------------------------------------------------------------------------------------------------------------
Morley Capital Accumulation(*) $ 5,275 $ 5,275 NA All assets 0.35% 0.35% NA
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) UBT has agreed voluntarily to waive 0.10% of the management fee until
further written notice to the shareholders.
Each Adviser has voluntarily agreed to waive advisory fees, and if necessary,
reimburse expenses (except for Rule 12b-1 and Administrative Service Fees) of
certain Funds in order to limit annual Fund operating expenses at or below
stated expense caps. The following table illustrates the expense caps for each
class of share for the period ended April 30, 2000:
<TABLE>
<CAPTION>
EXPENSE CAPS
------------------------------------------------------------------
INSTITUTIONAL
FUND CLASS A SHARES CLASS B SHARES SERVICE CLASS
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value Opportunities 1.35% 1.95% 1.00%
High Yield Bond 0.95% 1.70% 0.70%
INSTITUTIONAL INSTITUTIONAL
FUND CLASS A SHARES SERVICE CLASS CLASS
-----------------------------------------------------------------------------------------------------------------
Morley Enhanced Income 0.90% 0.70% 0.45%
</TABLE>
N A T I O N W I D E M U T U A L F U N D S 29
S E M I - A N N U A L R E P O R T
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS CONTINUED
-------------------------------------------------------------------------------
APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
INSTITUTIONAL IRA
FUND SERVICE CLASS CLASS CLASS
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Morley Capital Accumulation 0.95% 0.55% 0.95%
</TABLE>
During the period ended April 30, 2000, each adviser reduced expenses for the
Funds as follows:
<TABLE>
<CAPTION>
TOTAL FEES
TOTAL FUND FEES OTHER FEES WAIVED/ NET FUND
FUND EXPENSES WAIVED REIMBURSED REIMBURSED EXPENSES
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Value Opportunities $ 62,807 $28,977 $27,107 $56,084 $ 6,723
High Yield Bond 238,600 20,747 - 20,747 217,853
Morley Enhanced Income 66,635 36,013 3,898 39,911 26,724
Morley Capital Accumulation 83,586 29,230 14,715 43,946 39,640
</TABLE>
Each waiver of advisory fees and/or assumption of other expenses by the adviser
for a Fund is subject to a possible reimbursement by that Fund at a later date
when the Fund has reached a sufficient asset size if such reimbursement can be
achieved within the foregoing annual expense limitations.
Under the terms of a Distribution Plan under Rule 12b-1 of the 1940 Act, NAS,
the Funds' Distributor, is compensated by the Funds for expenses associated with
the distribution of shares of the Funds. These fees, based on average daily net
assets of the respective class, are not to exceed an annual rate for Class A,
Service Class and IRA Class of 0.25%, and for Class B shares of 1.00%.
Additional information regarding distribution fees paid or payable to NAS is as
follows for the period ended April 30, 2000:
<TABLE>
<CAPTION>
DISTRIBUTION FEES
-----------------------------------------------------
FUND CLASS A CLASS B
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Value Opportunities $ 386 $1,281
High Yield Bond 750 34
FUND CLASS A
------------------------------------------------------------------------------------------------------------
Morley Enhanced Income $ 27
SERVICE IRA
FUND CLASS CLASS
------------------------------------------------------------------------------------------------------------
Morley Capital Accumulation $4,353 $2,290
</TABLE>
30 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 33
[PICTURE OF SMALL AREA
OF U.S. CURRENCY]
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
APRIL 30, 2000 (UNAUDITED)
Under the terms of a Fund Administration Agreement, Villanova SA Capital Trust
("VSA") receives fees from the Funds for providing various administrative and
accounting services. These fees are calculated daily based on the Funds' average
daily net assets and paid monthly. During the six month period ended April 30,
2000, the Funds paid fund administration fees according to the following
schedule:
<TABLE>
<CAPTION>
FUND ADMINISTRATION FUND ADMINISTRATION
FUND FEE(*) FEE SCHEDULE
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value Opportunities $25,410 Up to $250 million 0.07%
High Yield Bond 25,410 On the next $750 million 0.05%
Morley Enhanced Income 25,410 $1 billion and more 0.04%
Morley Capital Accumulation(*) 23,427
</TABLE>
(*)The Fund Administration fee is subject to a minimum of $50,000 per year for
the Morley Capital Accumulation Fund and a minimum of $75,000 per year for
the other Funds.
Nationwide Investors Services, Inc. ("NISI"), a subsidiary of VSA, serves as
Transfer and Dividend Disbursing Agent for the Funds. For these services, NISI
receives fees at $18 per account for Class A and Class B shares and 0.01% of the
average daily net assets of the other classes of shares.
VSA has entered into agreements with BISYS Fund Services Ohio, Inc., to provide
sub-administration and sub-transfer agent services to the Fund.
Under the terms of an Administrative Services Plan, the Funds pays fees to
servicing organizations, such as broker-dealers and financial institutions,
which agree to provide administrative support services. These services include,
but are 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 Fund,
and other such services. These fees are based on an annual rate of up to 0.25%
of the average daily net assets of the Class A and Institutional Service Class
of shares of Value Opportunities and Morley Enhanced Income Funds and up to
0.15% of the Service and IRA Class shares of the Morley Capital Accumulation
Fund.
<TABLE>
<CAPTION>
ADMINISTRATIVE SERVICING FEES (a)
-----------------------------------------------
FUND CLASS A IRA CLASS
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Value Opportunities $ -- $--
High Yield Bond -- --
Morley Enhanced Income -- --
Morley Capital Accumulation $1,331 --
</TABLE>
(a) Classes of funds without administrative servicing fees do not currently have
an active agreement to incur an expense.
For the Morley Capital Accumulation Fund 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 (CP) 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 Funds. Additionally, the fee may discourage
market timing by those shareholders using redemptions to take advantage of
short-term movements in interest rates. During the period ended April 30, 2000,
the events that would trigger the imposition of a redemption fee did not occur
and the Fund did not collect any redemption fees.
N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T 31
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS CONTINUED
--------------------------------------------------------------------------------
APRIL 30, 2000 (UNAUDITED)
3. BANK LOANS
NMF currently 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.
4. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding U.S. Government and short-term
securities) and purchases and sales of U.S. Government securities for the period
ended April 30, 2000, are summarized as follows:
<TABLE>
<CAPTION>
NON U.S. GOVERNMENT U.S. GOVERNMENT
SECURITIES SECURITIES
------------------------------------------------------------------------------
PURCHASES SALES PURCHASES SALES
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Value Opportunities $ 2,607,082 $ 805,783 -- --
High Yield Bond 144,273,063 35,321,235 -- --
Morley Enhanced Income 507,215 -- 26,742,695 17,220,582
Morley Capital Accumulation 2,329,369 -- 8,199,624 4,385,745
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized appreciation at April 30, 2000, the following:
<TABLE>
<CAPTION>
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
APPRECIATION (DEPRECIATION) (DEPRECIATION)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value Opportunities $ 188,377 $ (49,237) $ 139,140
High Yield Bond 529,245 (5,835,656) (5,306,411)
Morley Enhanced Income 7,516 (77,967) (70,451)
Morley Capital Accumulation -- (370,898) (370,898)
--------------------------------------------------------------------------------------------
</TABLE>
32 N A T I O N W I D E M U T U A L F U N D S
S E M I - A N N U A L R E P O R T
<PAGE> 35
--------------------------------------------------------------------------------
TRUSTEES
Dimon R. McFerson Sue A. Doody Douglas F. Kridler
Chairman Columbus, Ohio Columbus, Ohio
Columbus, Ohio
Robert M. Duncan Arden L. Shisler
Dr. John C. Bryant Columbus, Ohio Dublin, Ohio
Cincinnati, Ohio
Dr. Thomas J. Kerr, IV David C. Wetmore
Dr. C. Brent DeVore Westerville, Ohio Reston, Virginia
Westerville, Ohio
--------------------------------------------------------------------------------
OFFICERS
James F. Laird, Jr. - Treasurer LEGAL COUNSEL
Elizabeth A. Davin - Secretary Dietrich, Reynolds & Koogler
Alaina V. Metz - Assistant Secretary One Nationwide Plaza
Patricia J. Smith - Assistant Secretary Columbus, Ohio 43215-2220
Charles S. Bath - Assistant Treasurer
Taylor E. Drake - Assistant Treasurer INDEPENDENT AUDITORS
Laurice A. Frysinger - Assistant Treasurer KPMG Peat Marwick LLP
Edwin P. McCausland, Jr. - Assistant Treasurer Two Nationwide Plaza
Karen R. Tackett - Assistant Treasurer Columbus, Ohio 43215-2537
Nancy A. Wiser - Assistant Treasurer
DISTRIBUTOR
TRANSFER AGENT Nationwide Advisory Services,
Nationwide Investors Services, Inc. Inc.
P.O. Box 1492 Three Nationwide Plaza
Columbus, Ohio 43216-1492 Columbus, Ohio 43215-2220
CUSTODIAN
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263-0001 [PEOPLE PHOTO]
--------------------------------------------------------------------------------
This report is for the information of shareholders of the Nationwide(R) Family
of Funds. It may be used as sales literature only when preceded or accompanied
by a current prospectus, which gives further details about the funds.
Nationwide(R) is a registered Federal Service mark of Nationwide Mutual
Insurance Company.
<PAGE> 36
[COVER PHOTO]
NATIONWIDE(R)
FAMILY OF FUNDS
offered by Villanova Capital through Nationwide(R) Advisory Services
Three Nationwide Plaza
Columbus, OH 43215-2220
Toll-Free Telephone Assistance - General Account Service and Exchanges:
1-800-848-0920
NAS NOW - Fund Information Available 24 Hours a Day, Seven Days a Week:
1-800-637-0012
Internet Site - www.nationwidefunds.com
NATIONWIDE FAMILY OF FUNDS
THREE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215-2220
APRIL 2000
SEMI-ANNUAL REPORT
HS-1281
(C)2000, VILLANOVA CAPITAL
