<PAGE> 1
[PICTURE]
Prestige Large Cap Value Fund
Prestige Large Cap Growth Fund
Prestige Balanced Fund
Prestige Small Cap Fund
Prestige International Fund
Nationwide Value Opportunities Fund
Nationwide High Yield Bond Fund
Morley Enhanced Income Fund
NATIONWIDE Family of Funds Annual Report 2000
[LOGO] NATIONWIDE
Family of Funds
<PAGE> 2
[PICTURE]
Message to Shareholders
October 31, 2000
Paul J. Hondros
President, Chief Executive Officer
Villanova Capitalo
In our fiscal 1999 report, we made a commitment to Nationwide Family of
Funds shareholders to deliver expanded investment capabilities and a more robust
product line. Moreover, we raised the bar for our existing portfolios in terms
of both performance and adherence to objective and policy. Today, at the close
of fiscal 2000, we have made significant progress in meeting that commitment.
- We have added several talented individuals to our investment management
team.
- We have enhanced our research capabilities while implementing a rigorous
review process to ensure that our funds adhere to their mandates.
- Our focus on performance was evident during the last three months, with our
three largest equity funds outpacing their benchmarks despite significant
market turbulence.
- And, we have expanded the range of investment solutions we provide to our
shareholders.
At the same time, we have extended our reach globally through our
partnership with our new affiliate, London-based Gartmore Investment Management
plc, a leading international investment management firm. We are work-ing with
our colleagues at Gartmore to provide investors around the world with investment
solutions designed to help them meet their financial goals (see below).
We have achieved these results over a relatively short period by focusing
our investments in three key areas: people, product and process.
OUR INVESTMENT IN PEOPLE
In the U.S., our investment capabilities have been strengthened by several
additions to our portfolio management team.
- CURTISS BARROWS, who oversees our U.S. and global high-yield bond programs,
joined us from Deutsche Asset Management in January.
- JEFFREY PETHERICK and MARY CHAMPAGNE, formerly of Loomis, Sayles, head up a
team of value investment specialists. This group joined us in January.
- CHRISTOPHER BAGGINI left Allied Investment Advisors, Inc., in March to head
up our large-cap growth equity programs.
- AARON HARRIS, former lead manager of the Nicholas-Applegate Global
Technology Fund, came aboard in April to lead the development of our
investment capabilities in the technology sector.
- PANK AGRRAWAL moved from Putnam Investments to Villanova Capital in April
to head our quantitative research group.
In addition, we can draw on the considerable international resources
available to us through our affiliation with Gartmore.
To support our portfolio management team, we have increased our investment
in our research area, adding several talented analysts. Our investment team
relies heavily on research--rigorous, bottom-up research on companies,
industries and countries, augmented by sophisticated quantitative analysis. This
value-added research, we believe, allows us to offer competitive, risk-adjusted
results for our shareholders.
THE GARTMORE ADVANTAGE
With more than $80 billion in assets under management as of October 31,
2000, Gartmore Investment Management plc, offers comprehensive investment
management services covering the world's major equity, bond, and currency
markets. Gartmore ranks as the fifth largest institutional manager and the
seventh largest retail manager in the United Kingdom.
Gartmore was acquired by Nationwide Mutual in May 2000. Since then,
Nationwide Family of Funds and Gartmore Global Partners (the SEC-registered,
wholly owned subsidiary of Gartmore Investment Management plc) have partnered to
provide our shareholders with new global product solutions, including several
mutual funds introduced in October.
[PICTURE]
<PAGE> 3
OUR INVESTMENT IN PRODUCT OFFERINGS AND PROCESS
The additions to our investment team have enabled us to expand the lineup
of investment solutions available through the Nationwide Family of Funds. Today,
our shareholders can choose from more than 20 retail mutual funds, representing
a broad range of objectives, styles, and strategies, including global technology
and concentrated growth, international and emerging markets, and small-cap
value.
In addition to introducing new products, we implemented a process to
rigorously review and continually evaluate our existing portfolios to ensure
that they are managed in a manner consistent with their objectives, as stated in
our prospectuses. And, as we grow our investment capabilities, we want to ensure
that the appropriate level of resources is assigned to each of our portfolios.
As a result, we made changes in the management of three of our funds.
- In March, CHRIS BAGGINI became manager of the NATIONWIDE GROWTH FUND.
- One month later, AARON HARRIS took the helm of the GARTMORE MILLENNIUM
GROWTH FUND (formerly the Nationwide Mid Cap Growth Fund).
- In September, WILLIAM MILLER, our Chief Investment Officer, joined CHARLES
BATH as co-manager of the NATIONWIDE FUND, our largest fund. Bill is
responsible for the technology and telecommunications portions of the Fund,
while Chuck, who has successfully served Nationwide Fund shareholders for
more than 15 years, will continue to manage all other sectors of the Fund.
We will continue to evaluate our portfolios to ensure that our seasoned
managers are allowed to focus on their strengths and provide shareholders with
competitive results.
THE YEAR IN REVIEW
Our efforts in the investment and research areas are beginning to show
promise. Three of the equity funds in this report outperformed their benchmarks
for their fiscal years. In fact, since its inception on December 29, 1999, the
Nationwide Value Opportunities Fund significantly outpaced its benchmark, the
unmanaged Russell 2000 Index (22.18%* versus -0.47%), for the period ended
October 31.
Our bond and income funds turned in mixed results, due in part to
overweightings in corporate bonds, which suffered from earning pressure and
signs of economic weakening, and underweightings in Treasuries, the year's top
performer.
BUILDING FOR THE FUTURE
Each of the investments we have made--in people, products, and process--is
designed with a single goal in mind: to provide our fund shareholders with
competitive returns on a risk-adjusted basis across a broad range of investment
solutions.
We look forward to continuing to help our shareholders meet their financial
goals in the months and years ahead.
/s/ Paul J. Hondros
Paul J. Hondros*
--------------------------------------------------------------------------------
* Performance does not reflect sales charge and assumes reinvestment of
dividends. For more complete information, including net performance and
specific risks associated with the fund, please refer to pages 34-47 and
67-76.
CONTENTS
PRESTIGE ADVISOR SERIES
1 Message to Shareholders
2 Fund Highlights
5 Prestige Large Cap Value Fund
8 Prestige Large Cap Growth Fund
12 Prestige Balanced Fund
19 Prestige Small Cap Fund
24 Prestige International Fund
28 Statements of Assets and Liabilities
30 Statements of Operations
32 Statements of Changes in Net Assets
34 Financial Highlights
37 Notes to Financial Statements
48 Independent Auditors' Report
49 Annual Report for:
Nationwide Value Opportunities Fund
Nationwide High Yield Bond Fund
Morley Enhanced Income Fund
78 Shareholder Meeting
81 Officers and Trustees
<PAGE> 4
PRESTIGE ADVISOR SERIES(SM) FUND HIGHLIGHTS
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PRESTIGE LARGE CAP VALUE FUND
INVESTMENT STRATEGY
The Fund seeks to maximize total return, consisting of both capital
appreciation and current income. The Fund invests primarily in U.S. equity
securities that the Portfolio managers believe are currently undervalued.
PORTFOLIO MANAGERS
A team from Brinson Partners, Inc., subadviser to the Fund, that includes
Jeffrey J. Diermeier, CFA; Robert C. Moore, CFA; and John C. Leonard, CFA.
TOP TEN HOLDINGS
(Composition Subject to Change)
AS OF OCTOBER 31, 2000 % OF NET ASSETS
================================================================================
Exxon Mobil Corp. 3.51%
Energy Sources
--------------------------------------------------------------------------------
Emerson Electric Co. 3.41%
Capital Goods/Electrical
--------------------------------------------------------------------------------
Fedex Corp. 3.33%
Airlines
--------------------------------------------------------------------------------
Wells Fargo Co. 3.21%
Financial/Banks
--------------------------------------------------------------------------------
Southdown, Inc. 2.98%
Construction & Building Materials
--------------------------------------------------------------------------------
Verizon Communications 2.84%
Telecommunications
--------------------------------------------------------------------------------
American Electric Power Co., Inc. 2.82%
Utilities
--------------------------------------------------------------------------------
Electronic Data Systems Corp. 2.61%
Computer Software & Services
--------------------------------------------------------------------------------
PNC Bank Corp. 2.57%
Financial/Banks
--------------------------------------------------------------------------------
C P & L Energy, Inc. 2.55%
Utilities
--------------------------------------------------------------------------------
PRESTIGE LARGE CAP GROWTH FUND
INVESTMENT STRATEGY
The Fund seeks long-term capital appreciation through a diversified portfolio
of equity securities of large-capitalization U.S. companies that are expected to
have better prospects for earnings growth than the growth rate of general
domestic economy. Dividend income is a secondary consideration in choosing
securities.
PORTFOLIO MANAGERS
Robert C. Jones, CFA; Victor H. Pinter; and Melissa Brown, from Goldman Sachs
Asset Management, subadviser to the Fund.
TOP TEN HOLDINGS*
(Composition Subject to Change)
AS OF OCTOBER 31, 2000 % OF NET ASSETS
================================================================================
General Electric Co. 6.44%
Capital Goods
--------------------------------------------------------------------------------
Cisco Systems, Inc. 5.36%
Computer Software & Services
--------------------------------------------------------------------------------
Intel Corp. 4.13%
Computer Equipment
--------------------------------------------------------------------------------
Pfizer, Inc. 3.72%
Drugs
--------------------------------------------------------------------------------
Microsoft Corp. 3.36%
Computer Software & Services
--------------------------------------------------------------------------------
EMC Corp. 2.73%
Computer Equipment
--------------------------------------------------------------------------------
Sun Microsystems, Inc. 2.66%
Computer Equipment
--------------------------------------------------------------------------------
Merck & Co., Inc. 2.41%
Drugs
--------------------------------------------------------------------------------
Oracle Corp. 2.10%
Services
--------------------------------------------------------------------------------
America Online, Inc. 1.70%
Services
--------------------------------------------------------------------------------
* Excludes short-term investments, cash, and cash equivalents.
2 NATIONWIDE
<PAGE> 5
PRESTIGE ADVISOR SERIES(SM) FUND HIGHLIGHTS
--------------------------------------------------------------------------------
PRESTIGE BALANCED FUND
INVESTMENT STRATEGY
The Fund seeks a high total return from a diversified portfolio of equity and
fixed-income securities. Under normal circumstances, the Fund invests
approximately 60% of its assets in equity securities and 40% of its assets in
fixed-income securities.
PORTFOLIO MANAGERS
Patrik Jacobson and Kathryn Jonas of J.P. Morgan Investment Management, Inc.,
subadviser to the Fund.
TOP TEN HOLDINGS*
(Composition Subject to Change)
AS OF OCTOBER 31, 2000 % OF NET ASSETS
--------------------------------------------------------------------------------
FNMA, 6.50%, 11/1/30 6.27%
--------------------------------------------------------------------------------
FNMA, 7.00%, 11/1/30 4.12%
--------------------------------------------------------------------------------
U.S. Treasury Bond, 5.25%, 2/15/29 2.93%
--------------------------------------------------------------------------------
General Electric Co. 2.44%
Capital Goods
--------------------------------------------------------------------------------
Microsoft Corp. 2.11%
Computer Software & Services
--------------------------------------------------------------------------------
Cisco Systems, Inc. 1.97%
Computer Software & Services
--------------------------------------------------------------------------------
FNMA, 7.125%, 6/15/10 1.74%
--------------------------------------------------------------------------------
Exxon Mobil Corp. 1.68%
Oil/International
--------------------------------------------------------------------------------
FNMA, 7.00%, 11/18/14 1.61%
--------------------------------------------------------------------------------
First Omni, 6.65%, 9/15/03 1.43%
--------------------------------------------------------------------------------
INVESTMENT STRATEGY
The Fund seeks long-term capital appreciation. Under normal circumstances,
the Fund invests primarily in equity securities issued by companies that have
small market capitalizations.
PORTFOLIO MANAGERS
A team including Robert Slotpole and Donna Murphy of INVESCO, Inc.,
subadviser to the Fund.
PRESTIGE SMALL CAP FUND TOP TEN HOLDINGS*
(Composition Subject to Change)
AS OF OCTOBER 31, 2000 % OF NET ASSETS
================================================================================
Stewart & Stevenson Services, Inc. 1.25%
Machinery
--------------------------------------------------------------------------------
Pulte Corp. 1.10%
Construction & Building Materials
--------------------------------------------------------------------------------
Public Service Co. of New Mexico 1.09%
Utilities
--------------------------------------------------------------------------------
Essex Property Trust, Inc. 0.99%
Real Estate
--------------------------------------------------------------------------------
Bindley Western Industries, Inc. 0.88%
Drugs
--------------------------------------------------------------------------------
Downey Financial Corp. 0.88%
Financial/Banks
--------------------------------------------------------------------------------
First Health Group Corp. 0.81%
Healthcare
--------------------------------------------------------------------------------
Greater Bay Bancorp 0.77%
Financial/Banks
--------------------------------------------------------------------------------
Imperial Bancorp 0.76%
Financial/Banks
--------------------------------------------------------------------------------
Cerner Corp. 0.75%
Computer Software & Services
--------------------------------------------------------------------------------
* Excludes repurchase agreement, cash, and cash equivalents.
NATIONWIDE 3
<PAGE> 6
PRESTIGE ADVISOR SERIES(SM) FUND HIGHLIGHTS
--------------------------------------------------------------------------------
PRESTIGE INTERNATIONAL FUND
INVESTMENT STRATEGY
The Fund seeks long-term capital appreciation by investing primarily in
equity securities of relatively large non-U.S. companies. The Fund will choose
investments so that market capitalizations, industry weightings and other
fundamental characteristics of the Fund's investments are similar to the Morgan
Stanley Capital International Europe, Australasia and Far East Index (MSCI
EAFE).
PORTFOLIO MANAGERS
A team from Lazard Asset Management, subadviser to the Fund, under the guidance
of Herbert Gullquist. The team includes Michael Powers; John Reinsberg; Michael
Bennett, CPA; Margaret Moore; and Nina Saglimbeni.
TOP TEN HOLDINGS*
(Composition Subject to Change)
AS OF OCTOBER 31, 2000 % OF NET ASSETS
================================================================================
Nissan Motors Co. Ltd. 3.00%
Japan
--------------------------------------------------------------------------------
Total Fina SA 2.39%
France
--------------------------------------------------------------------------------
ING Groep NV 2.36%
Netherlands
--------------------------------------------------------------------------------
Smithkline Beecham PLC 2.35%
Great Britain (UK)
--------------------------------------------------------------------------------
Akzo Nobel NV 2.20%
Netherlands
--------------------------------------------------------------------------------
Allianz AG 2.17%
Germany
--------------------------------------------------------------------------------
HypoVereinsbank AG 2.07%
Germany
--------------------------------------------------------------------------------
British Telecommunications PLC 2.06%
Great Britain (UK)
--------------------------------------------------------------------------------
Vodafone Airtouch PLC 1.94%
Great Britian (UK)
--------------------------------------------------------------------------------
United Overseas Bank Ltd. 1.90%
Singapore
--------------------------------------------------------------------------------
* Excludes repurchase agreement, cash, and cash equivalents.
4 NATIONWIDE
<PAGE> 7
PRESTIGE ADVISOR SERIES (SM)
--------------------------------------------------------------------------------
PRESTIGE LARGE CAP VALUE FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended October 31, 2000, the Prestige Large Cap
Value Fund returned 8.09%(a) versus 5.52% for the Russell 1000 Value Index, the
Fund's benchmark index.
During the fiscal year, strong stock selection and sophisticated risk
management techniques were the primary contributors to overall outperformance
compared to the index. Specifically, the Fund was underweighted in "mega-cap"
stocks, which added significant value. We have felt for some time that the
largest companies (by capitalization) were among the most overvalued in the
marketplace, and therefore, were strategically underweighted in the Fund's
portfolio. While this strategy hurt during much of 1999, it paid off well in
2000 - adding 390 basis points to relative performance during the past 12
months. Furthermore, the Fund's overweighted position in stocks with low
price/earnings (P/E) and low price/book (P/B) ratios contributed positively to
overall performance. An overweighting in electric utilities benefited
performance during the past year, as well. Partially offsetting these gains were
industry strategies that underweighted energy stocks and non-bank financials.
Stocks that added significant value to the Fund's portfolio during the past
year include Fort James, Unitedhealth, Southdown, Emerson Electric, US West, and
Advanced Micro Devices. Stocks that detracted from performance included Amsouth
Bancorp., Newell Rubbermaid, Raytheon, CMS Energy, Lafarge, and Consolidated
Stores.
We think the Fund's portfolio is well-positioned to benefit from an
inevitable change in market dynamics - a rotation away from the very narrow,
momentum-driven market of most of the past 12 months toward a broader,
fundamentals-driven market of most of the past 12 months toward a broader,
fundamentals-driven market. The largest cap stocks, in general, and technology
issues, in particular, are correcting from lofty valuations. We believe reality
may be setting in and investors who once regarded technology stocks as the
ultimate high-growers will realize that most of those stocks are cyclical growth
firms with low long-term predictability.
Our key portfolio underweights can be found in the media industry, which is
now dominated by cable and Internet services stocks, as well as in the energy
and telecommunications services areas. We think that many of the largest stocks
in the tech/telecom sector are still "priced for perfection" and assume that
high earnings growth rates will be sustainable for an unrealistically long time
frame. The Fund's current industry overweights continue to include basic
materials, Information Technology services, transportation, and electric
utilities. In the recent past, these industries have largely been ignored,
despite posting very impressive earnings growth.
BRINSON PARTNERS, INC.-SUBADVISER
(a) Performance of Class A shares without sales charge and assuming all
distributors are reinvested.
PORTFOLIO MARKET VALUE $32,677,764
October 31, 2000
PORTFOLIO COMPOSITION
(Subject to Change)
[GRAPH]
Repurchase Agreement 2.0%
Common Stock 98.0%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Periods Ended October 31, 2000)
Institutional
Class A Class B Service
Years w/o SC* w/SC(1) w/o SC* w/SC(2) Class(3)
================================================================================
1 8.09% 1.87% 7.42% 2.42% 8.20%
--------------------------------------------------------------------------------
Life(4) 5.97% 2.87% 4.95% 3.02% 6.12%
--------------------------------------------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
* These returns do not reflect the effects of a sales charge (SC).
(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) Institutional Service Class Shares are not subject to any sales charges.
(4) Fund commenced operations on 11/02/98.
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.
FUND PERFORMANCE
[GRAPH]
Class A Class B Inst Serv Russell 1000 Value CPI
11/98 9425 10000 10000 10000 10000
10/99 9789 9750 10405 11653 10256
10/00 10581 10611 11259 12295 10625
Comparative performance of $10,000 invested in the Large Cap Value Fund, the
Russell 1000 Value Index (Russell 1000 Value)(b) and the Consumer Price Index
(CPI)(c) from Fund inception (11/02/98) to 10/31/00. Unlike our Fund, these
indices do not reflect any fees, expenses or sales charges. The Class A Shares
include a front-end sales charge.
(b) The Russell 1000 Value is comprised of the 1,000 largest U.S. companies,
based upon total market capitalization, whose stocks have a greater than
average value orientation.
(c) The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
NATIONWIDE 5
<PAGE> 8
STATEMENT OF INVESTMENTS PRESTIGE LARGE CAP VALUE FUND
================================================================================
October 31, 2000
SHARES SECURITY VALUE
Common Stock (97.7%)
--------------------------------------------------------------------------------
AIRLINES (3.3%)
23,300 FedEx Corp.* $ 1,091,838
---------
--------------------------------------------------------------------------------
APPLIANCE & HOUSEHOLD DURABLE (2.2%)
22,300 Newell Rubbermaid, Inc. 427,881
10,800 York International Corp. 293,625
---------
721,506
---------
--------------------------------------------------------------------------------
BROADCAST MEDIA / CABLE TELEVISION (0.9%)
4,700 Clear Channel Communications, Inc.* 282,294
---------
--------------------------------------------------------------------------------
CAPITAL GOODS (2.1%)
6,600 Illinois Tool Works, Inc. 366,712
11,000 Pentair, Inc. 327,938
---------
694,650
---------
--------------------------------------------------------------------------------
CAPITAL GOODS: ELECTRICAL (3.4%)
15,200 Emerson Electric Co. 1,116,250
---------
--------------------------------------------------------------------------------
CHEMICALS (1.8%)
19,700 Dow Chemical Co. 603,313
---------
--------------------------------------------------------------------------------
COMMUNICATION EQUIPMENT (1.8%)
12,000 CommScope, Inc.* 303,750
11,300 Motorola, Inc. 281,794
---------
585,544
---------
--------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (4.0%)
18,200 Electronic Data Systems Corp. 854,263
9,200 First Data Corp. 461,150
---------
1,315,413
---------
--------------------------------------------------------------------------------
CONSTRUCTION & BUILDING MATERIALS (3.0%)
13,800 Southdown, Inc. 978,075
---------
--------------------------------------------------------------------------------
CONSTRUCTION & HOUSING (1.5%)
27,000 Masco Corp. 504,563
---------
--------------------------------------------------------------------------------
CONSUMER CYCLICAL / LEISURE (1.9%)
48,700 Mattel, Inc. 630,056
---------
--------------------------------------------------------------------------------
ENERGY SOURCES (7.4%)
5,600 Chevron Corp. 459,900
18,300 Conoco, Inc. 497,531
12,900 Exxon Mobil Corp. 1,150,518
24,900 IMC Global, Inc. 322,144
---------
2,430,093
---------
--------------------------------------------------------------------------------
FINANCIAL / BANKS (9.0%)
10,000 Bank of America Corp. 480,625
15,100 Fleet Boston Corp. 573,800
12,600 PNC Bank Corp. 842,625
22,700 Wells Fargo Co. 1,051,293
---------
2,948,343
---------
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
FINANCIAL/MISCELLANEOUS (8.0%)
13,500 Associates First Capital Corp. $ 501,188
11,400 Freddie Mac 684,000
22,400 GreenPoint Financial Corp. 666,400
15,300 Household International, Inc. 769,780
---------
2,621,368
---------
--------------------------------------------------------------------------------
FOOD & BEVERAGE (1.2%)
9,300 General Mills, Inc. 388,275
---------
--------------------------------------------------------------------------------
HEALTH & PERSONAL CARE (1.2%)
6,400 American Home Products Corp. 406,400
---------
--------------------------------------------------------------------------------
HEALTH CARE (8.9%)
11,000 Abbott Laboratories 580,938
7,600 Baxter International, Inc. 624,625
4,000 Johnson & Johnson Co. 368,500
12,400 St. Jude Medical, Inc.* 681,999
6,000 UnitedHealth Group, Inc. 656,250
---------
2,912,312
---------
--------------------------------------------------------------------------------
INSURANCE (2.6%)
4,350 American International Group, Inc. 426,300
3,400 CIGNA Corp. 414,630
---------
840,930
---------
--------------------------------------------------------------------------------
INSURANCE / LIFE (3.3%)
9,500 American General Corp. 764,750
6,800 Lincoln National Corp. 328,950
---------
1,093,700
---------
--------------------------------------------------------------------------------
MOTOR VEHICLES (2.9%)
7,300 Johnson Controls, Inc. 435,263
18,300 Lear Corp.* 498,675
--------
933,938
--------
--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (1.4%)
13,600 Fort James Corp. 447,950
--------
--------------------------------------------------------------------------------
PRINTING & PUBLISHING (1.7%)
14,700 New York Times Co. (The) Class A 540,225
--------
--------------------------------------------------------------------------------
RAILROADS (3.1%)
28,500 Burlington Northern Santa Fe Corp. 757,031
18,400 Norfolk Southern Corp. 259,900
---------
1,016,931
---------
--------------------------------------------------------------------------------
RETAIL (1.2%)
12,200 Federated Department Stores, Inc.* 397,263
---------
--------------------------------------------------------------------------------
RETAILING (1.9%)
29,500 Sara Lee Corp. 636,094
---------
--------------------------------------------------------------------------------
RETAILING / SPECIALTY (1.0%)
9,700 Grainger (W.W.), Inc. 309,794
---------
continued
6 NATIONWIDE
<PAGE> 9
STATEMENT OF INVESTMENTS PRESTIGE LARGE CAP VALUE FUND CONTINUED
================================================================================
October 31, 2000
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
SEMICONDUCTORS (2.3%)
32,600 Advanced Micro Devices, Inc.* $ 737,575
----------
--------------------------------------------------------------------------------
TELECOMMUNICATIONS (8.0%)
11,900 AT&T Corp. 275,931
12,800 Nextel Communications, Inc.* 492,000
12,000 SBC Communications, Inc. 692,250
9,700 Sprint Corp. (FON Group) 247,350
16,100 Verizon Communications 930,781
----------
2,638,312
----------
--------------------------------------------------------------------------------
UTILITIES (6.7%)
22,260 American Electric Power Co., Inc. 923,790
16,500 CMS Energy Corp. 445,500
20,700 C P & L Energy, Inc. 834,469
----------
2,203,759
----------
--------------------------------------------------------------------------------
TOTAL COMMON STOCK (COST $29,354,548) 32,026,764
----------
--------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
Repurchase Agreement (2.0%)
--------------------------------------------------------------------------------
$651,000 Fifth Third Bank, 6.35% 10/31/00,
matures 11/01/00, Collateralized by
$665,230 FHARM Pool #785445, 7.03%,
10/01/25, market value $664,020 651,000
--------
TOTAL REPURCHASE AGREEMENTS (cost $651,000) 651,000
--------
TOTAL INVESTMENTS (COST $30,005,548) $ 32,677,764
==========
--------------------------------------------------------------------------------
The abbreviation in the above statement stands for the following:
FHARM Federal Home Adjusted Rate Mortgage (Federal Housing Administration)
* DENOTES A NON-INCOME PRODUCING SECURITY.
COST FOR FEDERAL INCOME TAX PURPOSES: $30,368,631.
PORTFOLIO HOLDING PERCENTAGES BASED ON NET ASSETS OF $32,779,025.
At October 31, 2000, the Fund's open long futures contracts were as follows:
MARKET VALUE UNREALIZED
NUMBER OF COVERED BY DEPRECIATION AT
CONTRACTS LONG CONTRACT** EXPIRATION CONTRACTS 10/31/2000
================================================================================
2 Standard 12/14/00 $720,100 ($27,389)
& Poor's 500
** CASH PLEDGED AS COLLATERAL.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 7
<PAGE> 10
PRESTIGE ADVISOR SERIES (SM)
PRESTIGE LARGE CAP GROWTH FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended October 31, 2000, the Prestige Large Cap
Growth Fund returned 7.26%(a) versus 9.33% for the Russell 1000 Growth Index,
the benchmark index.
When managing the Fund, we do not take size or sector bets. Rather, we
expect performance to be attributed to holdings that reflect our four investment
themes--Value, Growth/Momentum, Stability and Research. Our quantitative process
seeks out stocks with good momentum that also appear to be good values. We
prefer stocks favored by fundamental research analysts and less volatile stocks
with lower-than-average probability of reporting disappointing earnings. Our
Multifactor Model forecasts returns for individual securities, which we use to
create an optimized portfolio.
The volatile nature of the market over the last 12 months was evident in
the varied nature of the CORE(SM)(b) (Computer-Optimized, Research-Enhanced)
theme performance, as there were unusually large swings in the returns to each
of our four themes throughout the period. Overall, the best performing CORE
investment theme was Momentum, which easily outpaced the returns of the other
themes. Returns attributable to our Value theme produced slightly
higher-than-average returns, while stocks with lower risk and those favored by
fundamental research analysts produced returns contrary to what we would expect.
On a sector basis, the Fund's selections in the technology sector did much
better than those in the Index as a whole. Stock selection in the financial and
consumer non-cyclicals sectors also helped returns, but to a lesser degree. The
Fund's holdings in the consumer services, telecommunications, and energy sectors
lagged their peers, and were the main contributors to the Fund's
underperformance relative to the Index.
The top contributors to the Fund's performance included EMC Corp. (2.7% of
the Fund's total assets at 10/31/00), Sun Microsystems, Inc. (2.7%), and Cisco
Systems Inc. (5.4%). Lucent Technologies (0.6%), Microsoft Corp. (3.4%), and
Procter & Gamble (0%, sold in July) detracted the most from the Fund's overall
performance.
No significant changes to the Fund's investment strategy occurred during
the reporting period. However, we continually evaluate the effectiveness of the
CORE process. The CORE Equity Team anticipates implementing "New Return
Forecasting" themes and an "Improved Risk" model into the CORE process over the
next few months. We view the changes to the return forecast as enhancements and
part of the natural evolution of the CORE process. We believe the CORE risk
model should be able to react to changes in market risk more quickly, and better
reflect the risk associated specifically with the CORE process.
GOLDMAN SACHS ASSET MANAGEMENT-SUBADVISER
(a) Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
(b) CORESM is a service mark of Goldman, Sachs & Co.
PORTFOLIO MARKET VALUE $53,444,162
October 31, 2000
PORTFOLIO COMPOSITION
(Subject to Change)
[GRAPH]
Repurchase Agreement 8.0%
Common Stock 92.0%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Periods Ended October 31, 2000)
INSTITUTIONAL
CLASS A CLASS B SERVICE
YEARS W/O SC* W/SC(1) W/O SC* W/SC(2) CLASS(3)
--------------------------------------------------------------------------------
1 7.26% 1.08% 6.48% 1.48% 7.40%
--------------------------------------------------------------------------------
Life(4) 20.75% 17.22% 19.96% 18.27% 20.92%
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
* These returns do not reflect the effects of a sales charge (SC).
(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) Institutional Service Class Shares are not subject to any sales
charges.
(4) Fund commenced operations on 11/02/98.
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.
FUND PERFORMANCE
[GRAPH]
Class A Class B Inst Serv Russell 1000 Growth CPI
11/98 9425 10000 10000 10000 10000
10/98 12799 13000 13600 13425 10258
10/00 13729 13975 14608 14678 10625
Comparative performance of $10,000 invested in the Large Cap
Growth Fund, the Russell 1000 Growth Index (Russell 1000 Growth)(c) and the
Consumer Price Index (CPI)(d) from Fund inception (11/02/98) to 10/31/00. Unlike
our Fund, these indices do not reflect any fees, expenses or sales charges. The
Class A Shares include a front-end sales charge.
(c) The Russell 1000 Growth is comprised of the 1,000 largest U.S. companies,
based upon total market capitalization, whose stocks have a greater than
average growth orientation.
(d) The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
8 NATIONWIDE
<PAGE> 11
STATEMENT OF INVESTMENTS PRESTIGE LARGE CAP GROWTH FUND
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
Common Stock (91.4%)
--------------------------------------------------------------------------------
ADVERTISING SERVICES (0.1%)
1,200 Interpublic Group of Cos., Inc.* $ 51,525
---------
--------------------------------------------------------------------------------
AEROSPACE / DEFENSE (0.5%)
3,800 Boeing Co.* 257,688
---------
--------------------------------------------------------------------------------
APPAREL (0.5%)
2,800 Nike, Inc. 111,825
1,900 Talbots, Inc. 150,219
---------
262,044
---------
--------------------------------------------------------------------------------
BATTERIES (0.0%)
1 Energizer Holdings, Inc.* 20
---------
--------------------------------------------------------------------------------
BEVERAGES/SOFT DRINK (1.4%)
3,600 Coca-Cola Co.* 217,350
7,300 Pepsi Bottling Group, Inc. 252,763
5,700 PepsiCo, Inc. 276,093
---------
746,206
---------
--------------------------------------------------------------------------------
BIOTECHNOLOGY (0.5%)
2,300 Chiron Corp.* 99,619
1,800 Medarex, Inc.* 110,025
600 PE Corp.- PE Biosystems Group 70,200
---------
279,844
---------
--------------------------------------------------------------------------------
BROADCAST MEDIA / CABLE TELEVISION (1.3%)
6,200 Infinity Broadcasting Corp.* 206,150
6,800 Time Warner, Inc. 516,188
---------
722,338
---------
--------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES (0.6%)
2,200 3COM Corp.* 39,050
900 eBay, Inc.* 46,350
1,400 NCR Corp.* 60,375
200 Priceline.com, Inc.* 1,150
2,700 TeleTech Holdings, Inc.* 74,925
2,000 Yahoo!, Inc.* 117,250
-------
339,100
-------
--------------------------------------------------------------------------------
CAPITAL GOODS (6.6%)
63,200 General Electric Co. 3,464,149
1,689 Tyco International Ltd. 95,745
-------
3,559,894
---------
--------------------------------------------------------------------------------
CHEMICALS (0.5%)
7,100 Dow Chemical Co. 217,438
1,900 Praxair, Inc.* 70,775
---------
288,213
---------
--------------------------------------------------------------------------------
COMMUNICATION EQUIPMENT (0.2%)
900 Comverse Technology, Inc.* 100,575
---------
--------------------------------------------------------------------------------
COMPUTER EQUIPMENT (14.4%)
3,500 Apple Computer, Inc.* 68,469
1,083 Avaya, Inc.* 14,557
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
COMPUTER EQUIPMENT (CONTINUED)
100 CacheFlow, Inc.* $ 10,800
7,100 Dell Computer Corp.* 209,450
100 Efficient Networks, Inc.* 4,195
16,500 EMC Corp.* 1,469,531
400 Extreme Networks, Inc.* 33,175
8,400 Hewlett-Packard Co. 390,075
49,400 Intel Corp. 2,222,999
7,000 International Business Machines Corp.*689,500
4,000 Network Appliance, Inc.* 476,000
900 Redback Networks, Inc.* 95,794
12,900 Sun Microsystems, Inc.* 1,430,288
4,600 VERITAS Software Corp.* 648,672
---------
7,763,505
---------
--------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (14.7%)
1,600 Adobe Systems, Inc. 121,700
100 Agile Software Corp.* 7,538
200 Akamai Technologies Inc.* 10,200
500 Art Technology Group, Inc.* 31,375
400 At Home Corp.* 4,125
2,800 Automatic Data Processing, Inc. 182,875
3,000 BEA Systems, Inc.* 215,249
900 Brocade Communications Systems* 204,638
200 CheckFree Corp.* 9,950
53,500 Cisco Systems, Inc.* 2,882,312
1,300 CMGI, Inc.* 21,938
100 CNET Networks, Inc.* 3,150
2,100 Comdisco, Inc. 25,856
1,500 Commerce One, Inc.* 96,281
2,200 Computer Sciences Corp.* 138,600
200 Critical Path, Inc.* 9,713
700 DoubleClick, Inc.* 11,375
2,600 DST Systems, Inc.* 160,225
300 E.piphany, Inc.* 27,038
100 Entrust Technologies, Inc.* 3,069
3,100 Exodus Communications, Inc.* 104,044
800 i2 Technologies, Inc.* 136,000
1,200 InfoSpace, Inc.* 24,150
600 Inktomi Corp.* 38,063
300 Internet Security, Inc.* 26,475
1,100 Intuit, Inc.* 67,581
1,600 Juniper Networks, Inc.* 311,999
800 Kana Communications, Inc.* 18,800
100 Liberate Technologies* 1,906
300 Macromedia, Inc.* 23,119
800 Mercury Interactive Corp.* 88,800
26,200 Microsoft Corp.* 1,804,524
600 Network Associates, Inc.* 11,550
700 NVIDIA Corp.* 43,498
600 PSINet, Inc.* 3,994
800 Quest Software, Inc.* 34,950
1,600 Rational Software Corp.* 95,500
400 RealNetworks, Inc.* 8,244
300 Red Hat, Inc.* 3,750
300 RSA Security, Inc.* 17,400
1,100 SanDisk Corp.* 59,108
700 Sapient Corp.* 24,894
2,700 Siebel Systems, Inc.* 283,330
2,400 Symantec Corp.* 93,750
CONTINUED
NATIONWIDE 9
<PAGE> 12
STATEMENT OF INVESTMENTS PRESTIGE LARGE CAP GROWTH FUND CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (CONTINUED)
2,000 Tech Data Corp.* $ 83,250
1,000 TIBCO Software, Inc.* 63,000
1,515 VeriSign, Inc.* 199,980
1,400 Vignette Corp.* 41,738
600 Vitria Technology, Inc.* 16,125
100 webMethods, Inc.* 8,888
---------
7,905,617
---------
--------------------------------------------------------------------------------
DRUGS (11.0%)
4,200 Allergan, Inc. 353,063
8,200 Amgen, Inc.* 475,088
900 Bristol-Myers Squibb Co. 54,844
1,200 Celgene Corp.* 77,250
6,600 Eli Lilly & Co. 589,875
2,200 Forest Labs* 291,500
4,400 IVAX Corp.* 191,400
1,000 MedImmune, Inc.* 65,375
14,400 Merck & Co., Inc. 1,295,099
2,400 Millenium Pharmaceuticals, Inc.* 174,150
46,375 Pfizer, Inc.* 2,002,819
3,100 Pharmacia & Upjohn, Inc. 170,500
2,900 Schering-Plough Corp.* 149,894
---------
5,890,857
---------
--------------------------------------------------------------------------------
ELECTRONICS (7.5%)
1,707 Agilent Technologies, Inc.* 79,055
2,000 Altera Corp.* 81,875
3,600 Analog Devices, Inc.* 234,000
4,600 Applied Materials, Inc.* 244,375
2,600 Applied Micro Circuits Corp.* 198,575
1,500 Arrow Electronics, Inc.* 48,000
1,800 Avnet, Inc. 48,375
5,000 AVX Corp. 143,125
1,200 Broadcom Corp.* 266,850
2,700 Credence Systems Corp.* 50,625
500 Cree, Inc.* 49,625
900 Integrated Device Technology, Inc.* 50,681
6,400 KEMET Corp.* 178,400
1,300 KLA-Tencor Corp.* 43,956
2,600 Maxim Integrated Products, Inc.* 172,413
4,950 Molex, Inc. 267,300
5,700 Motorola, Inc. 142,144
4,269 Palm, Inc.* 228,658
1,400 PMC-Sierra, Inc.* 237,300
600 QLogic Corp.* 58,050
700 Sanmina Corp.* 80,019
600 Sycamore Networks, Inc.* 37,950
1,700 Teradyne, Inc.* 53,125
11,100 Texas Instruments, Inc. 544,593
1,000 TriQuint Semiconductor, Inc.* 38,313
7,950 Vishay Intertechnology, Inc.* 238,500
900 Waters Corp.* 65,306
2,400 Xilinx, Inc.* 173,850
---------
4,055,038
---------
--------------------------------------------------------------------------------
ENTERTAINMENT (0.7%)
9,800 Walt Disney Co. (The) 350,963
---------
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
FINANCIAL / MISCELLANEOUS (1.6%)
4,200 A.G. Edwards, Inc. $ 213,150
200 Ameritrade Holding Corp.* 2,925
5,600 Lehman Brothers Holdings, Inc.* 361,200
8,200 Schwab (Charles) Corp. 288,025
---------
865,300
---------
--------------------------------------------------------------------------------
FOOD & RELATED (1.3%)
13,000 ConAgra, Inc. 277,875
3,400 Hormel Foods Corp. 57,163
11,600 IBP, Inc.* 238,525
5,100 Ralston Purina Group* 123,675
---------
697,238
---------
--------------------------------------------------------------------------------
HEALTH CARE (3.5%)
8,200 Abbott Laboratories 433,062
4,700 Cardinal Health, Inc.* 445,324
4,700 Johnson & Johnson Co.* 432,988
1,575 King Pharmaceuticals, Inc*. 70,580
4,800 Medtronic, Inc. 260,700
900 PacifiCare Health Systems, Inc.* 9,394
1,600 Quest Diagnostics, Inc.* 154,000
900 Sepracor, Inc.* 61,313
---------
1,867,361
---------
--------------------------------------------------------------------------------
INTERNET (0.7%)
1,300 Ariba, Inc.* 164,287
1,700 Broadvision, Inc.* 50,574
200 HomeStore.com, Inc.* 6,800
400 Internap Network Services* 6,400
200 Phone.com, Inc.* 18,513
800 Portal Software, Inc.* 28,150
300 Software.com, Inc.* 44,700
1,290 Terra Networks SA, ADR 31,202
800 VerticalNet, Inc.* 22,313
-------
372,939
-------
--------------------------------------------------------------------------------
INVESTMENT MANAGEMENT (0.5%)
3,000 Merrill Lynch & Co., Inc. 210,000
1,000 Morgan Stanley Dean Witter & Co. 80,313
---------
290,313
---------
--------------------------------------------------------------------------------
MANUFACTURING (0.1%)
800 Power-One, Inc.* 56,750
---------
--------------------------------------------------------------------------------
MEDICAL (0.6%)
3,600 Genentech, Inc.* 297,000
500 WebMD Corp.* 5,688
---------
302,688
---------
--------------------------------------------------------------------------------
MOTOR VEHICLES (0.2%)
2,800 Hertz Corp.* 92,050
---------
--------------------------------------------------------------------------------
OIL & GAS (1.4%)
4,000 Apache Corp.* 221,250
900 BJ Services Co.* 47,194
2,000 Dynegy, Inc. 92,625
CONTINUED
10 NATIONWIDE
<PAGE> 13
STATEMENT OF INVESTMENTS PRESTIGE LARGE CAP GROWTH FUND CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
OIL & GAS (CONTINUED)
1,500 EOG Resources, Inc. $ 59,063
4,400 Kerr-Mcgee Corp. 287,374
1,200 Noble Drilling Corp.* 49,875
--------
757,381
---------
--------------------------------------------------------------------------------
RETAIL (5.2%)
1,300 Amazon.com, Inc.* 47,613
1,200 Best Buy Co., Inc.* 60,225
900 CDW Computer Centers, Inc.* 57,994
3,600 Harcourt General, Inc. 201,780
14,500 Home Depot, Inc. 623,499
2,800 Intimate Brands, Inc. 66,850
900 Kohl's Corp.* 48,769
13,200 Limited, Inc. 333,300
1,100 Lowe's Cos., Inc. 50,256
2,000 Nieman Marcus Group, Inc.* 74,250
12,000 Sears, Roebuck & Co.* 356,760
2,400 Target Corp. 66,300
4,700 Tiffany & Co. 200,631
13,300 Wal-Mart Stores, Inc. 603,488
900 Zale Corp.* 30,488
---------
2,822,203
---------
--------------------------------------------------------------------------------
RETAIL / FOOD & DRUG (0.3%)
3,000 SYSCO Corp.* 156,563
---------
--------------------------------------------------------------------------------
SEMICONDUCTORS (0.9%)
7,400 Advanced Micro Devices, Inc.* 167,425
300 GlobeSpan, Inc.* 23,081
5,600 Micron Technology, Inc.* 194,601
1,300 National Semiconductor Corp. * 33,800
1,100 Novellus Systems, Inc.* 45,031
---------
463,938
---------
--------------------------------------------------------------------------------
SERVICES (4.6%)
18,100 America Online, Inc.* 912,783
900 E*TRADE Group, Inc.* 13,106
2,500 Electronic Data Systems Corp. 117,344
1,000 Omnicom Group 92,250
34,200 Oracle Corp.* 1,128,600
5,400 Robert Half International, Inc.* 164,700
600 TMP Worldwide, Inc.* 41,766
---------
2,470,549
---------
--------------------------------------------------------------------------------
SHIPPING / TRANSPORTATION (0.2%)
1,800 United Parcel Service 109,350
---------
--------------------------------------------------------------------------------
TELECOMMUNICATIONS (9.5%)
9,800 ADC Telecommunications, Inc.* 209,475
1,400 Advanced Fibre Communications, Inc.* 45,588
1,850 AT&T Corp. 42,897
11,400 AT&T Wireless Group* 284,288
6,800 BCE, Inc. 184,025
3,800 Bellsouth Corp. 183,588
3,100 CIENA Corp.* 325,887
200 Copper Mountain Networks, Inc.* 2,288
10,500 Corning, Inc. 803,249
100 Digex, Inc. * 3,925
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
1,000 Ditech Communications Corp.* $ 34,438
8,600 General Motors Corp.* 278,640
200 Harmonic, Inc.* 2,900
9,540 JDS Uniphase Corp.* 776,317
1,600 Level 3 Communications, Inc.* 76,300
13,000 Lucent Technologies, Inc. 303,062
4,500 Metromedia Fiber Network* 85,500
6,393 Nortel Networks Corp., ADR 290,881
2,100 QUALCOMM, Inc.* 136,730
700 RF Micro Devices, Inc.* 13,956
1,100 SBC Communications, Inc. 63,456
3,600 Scientific-Atlanta, Inc. 246,375
1,100 SDL, Inc.* 285,175
500 Telephone & Data Systems, Inc. 52,750
3,200 US Cellular Corp.* 204,800
4,700 Worldcom, Inc.* 111,625
1,400 XO Communications, Inc.* 47,228
----------
5,095,343
----------
--------------------------------------------------------------------------------
UTILITIES (0.3%)
1,600 Calpine Corp.* 126,300
1,500 Entergy Corp. 57,469
----------
183,769
----------
Total Common Stock (cost $46,254,106) 49,177,162
----------
PRINCIPAL SECURITY VALUE
REPURCHASE AGREEMENT (7.9%)
--------------------------------------------------------------------------------
$4,267,000 Fifth Third Bank 6.35%,10/31/00
matures 11/01/00, Collateralized by
$4,468,139 FHLMC 6.50%, 05/01/19
market value $4,352,340 4,267,000
----------
TOTAL REPURCHASE AGREEMENT (COST $4,267,000) 4,267,000
----------
TOTAL INVESTMENTS (COST $50,521,106) $53,444,162
==========
-----------------------------------------------------------------
The abbreviations in the above statement stand for the following:
ADR American Depository Receipts
FHLMC Federal Home Loan Mortgage Corp.
SA Sociedad Anonima (Spanish corporation)
* DENOTES A NON-INCOME PRODUCING SECURITY.
COST FOR FEDERAL INCOME TAX PURPOSES: $50,568,558.
PORTFOLIO HOLDING PERCENTAGES BASED ON NET ASSETS OF $53,781,079.
At October 31, 2000, the Fund's open long futures contracts were as follows:
Unrealized
Market Value Appreciation
Number of Covered By (Depreciation) at
Contracts Long Contract** Expiration Contracts 10/31/00
-------------------------------------------------------------------------------
12 Standard 12/14/00 $4,320,600 $175,831
& Poor's 500
** CASH PLEDGED AS COLLATERAL.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 11
<PAGE> 14
PRESTIGE ADVISOR SERIES(SM)
--------------------------------------------------------------------------------
PRESTIGE BALANCED FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended October 31, 2000, the Prestige Balanced Fund
returned 4.86%(a) compared to the Fund's benchmarks of 6.09% for the S&P 500
Stock Index, 7.30% for the Lehman Brothers Aggregate Bond Index, and 6.85% for a
combination of 60% S&P 500 Stock and 40% Lehman Brothers Aggregate Bond Indices.
In the equity portion of the portfolio, advancement in the drugs,
chemicals, and health services sectors contributed positively to overall Fund
performance, while the technology, utilities, and retail sectors detracted from
performance. Specifically, in the drugs sector, Forest Labs (+177%) and Alza
Corp (+76%) contributed to performance.
The securities with the greatest positive impact on the portfolio were: Sun
Microsystems (contributed +0.73% to the Fund's overall return), Forest Labs
(+0.38%), Philip Morris (+0.38%), and Cisco Systems (+0.36%). The securities
with the most negative impact on the portfolio were: Oracle Systems (-1.02%),
Corning (-0.49%), Worldcom (-0.33%), and Network Appliance (-0.31%). The top
five equity holdings had a mixed impact on the total performance: General
Electric (0.0%), Microsoft (-0.19%), Cisco (+0.36%), Exxon Mobil (+0.01%), and
Sun Microsystems (+0.73%). Going forward, we will continue to hold stocks that
we believe are undervalued relative to their longer-term earnings potential.
In the fixed income portion of the Fund, we will continue to manage
duration tactically, with an inclination to sell strength and buy weakness.
Currently, yield spreads are wide historically and we believe they will remain
attractive, particularly if the yield curve continues to move steeper and if the
economy has a "soft landing." If we add to positions in the near future, our
focus will be in the high quality, liquid sectors.
J.P. MORGAN INVESTMENT MANAGEMENT-SUBADVISER
(a) Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
Portfolio Market Value $11,419,715
October 31, 2000
PORTFOLIO COMPOSITION
(Subject to Change)
[PIEGRAPH]
Common Stock 53.8%
U.S. Government Obligations 16.9%
Repurchase Agreement 12%
Corporate Bonds 7.7%
Asset-Back Securities 7.2%
Mortgage-Backed Securities 2.4%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Periods Ended October 31, 2000)
INSTITUTIONAL
CLASS A CLASS B SERVICE
YEARS W/O SC* W/SC(1) W/O SC* W/SC(2) CLASS(3)
--------------------------------------------------------------------------------
1 4.86% -1.18% 4.16% -0.84% 5.09%
--------------------------------------------------------------------------------
Life(4) 9.11% 5.92% 8.29% 6.42% 9.30%
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance date.
* These returns do not reflect the effects of a sales charge (SC).
(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) Institutional Service Class Shares are not subject to any sale
charges.
(4) Fund commenced operations on 11/02/98.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more than original cost. Past performance is no guarantee of future
results.
FUND PERFORMANCE
[LINEGRAPH]
Class A Class B Inst. Serv LBAB S&P 500 CPI
11/98 9425 10000 10000 10000 10000 10000
10/99 10695 10754 11362 10053 12567 10256
10/00 11215 11322 11941 10786 13333 10625
Comparative performance of $10,000 (gross) invested in the Balanced Fund,
S&P 500 Stock Index (S&P 500)(b) and the Lehman Brothers Aggregate Bond Index
(LBAB)(c) from Fund inception (11/02/98) to 10/31/00. Unlike our Fund, these
indices do not reflect any fees, expenses or sales charges. The Class A Shares
include a front-end sales charge.
(b) The S&P 500 is a market-weighted, unmanaged index of 500 stocks in a
variety of industry sectors designed to measure performance of the broad
domestic economy.
(c) The LBAB an unmanaged index comprised of the Lehman Brothers
Government/Corporate Bond Index and two Lehman Brothers asset-backed
securities indices.
(d) The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
12 NATIONWIDE
<PAGE> 15
STATEMENT OF INVESTMENTS PRESTIGE BALANCED FUND
--------------------------------------------------------------------------------
October 31, 2000
PRINCIPAL SECURITY VALUE
Asset Backed Securities (8.1%)
--------------------------------------------------------------------------------
FINANCIAL/MISCELLANEOUS (8.1%)
$ 20,000 Chase Credit Account Master Trust,
6.00%, 08/15/05 $ 19,707
85,000 CS First Boston Mortgage Securites
Corp., 6.52%, 07/17/07 83,388
29,236 Greentree Financial Corp., 7.20%,
04/15/19 29,269
120,000 LB Commerical Conduit Mortgage Trust,
6.48%, 01/18/08 115,120
120,000 LB Commercial Conduit Mortgage Trust,
7.33%, 09/15/09 121,932
60,130 Morgan Stanley Capital I, 6.25%,
07/15/07 59,196
67,762 Morgan Stanley Capital I, 6.34%,
11/15/07 66,655
100,000 Morgan Stanley Capital I, 6.17%,
10/03/08 94,054
50,000 Providian Master Trust, 6.60%,
04/16/07 49,869
85,000 Residential Asset Securities Corp.
7.36%, 01/25/26 85,229
100,000 Sears Credit Account Master Trust,
5.65%, 03/17/09 96,854
--------
TOTAL ASSET BACKED SECURITIES (cost $810,417) 821,273
--------
SHARES SECURITY VALUE
Common Stock (60.8%)
--------------------------------------------------------------------------------
AEROSPACE (0.2%)
205 Boeing Co. 13,902
140 Goodrich (B.F.) Co. 5,731
--------
19,633
--------
--------------------------------------------------------------------------------
AIRLINES (0.2%)
290 AMR Corp.* 9,498
100 Delta Air Lines, Inc. 4,725
100 Northwest Airlines Corp.* 2,850
120 Southwest Airlines Co. 3,420
--------
20,493
--------
--------------------------------------------------------------------------------
ALUMINUM (0.3%)
1,000 Alcoa, Inc. 28,688
--------
--------------------------------------------------------------------------------
BEVERAGES/ALCOHOLIC (0.0%)
65 Seagram Co. Ltd. 3,713
--------
--------------------------------------------------------------------------------
BEVERAGES / SOFT DRINK (0.3%)
400 Coca-Cola Co. 24,150
200 PepsiCo, Inc. 9,688
--------
33,838
--------
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
BROADCAST MEDIA / CABLE TELEVISION (1.5%)
1,032 AT&T Corp. - Liberty Media Group* $ 18,576
900 Comcast Corp. 36,675
900 Time Warner, Inc. 68,319
400 Viacom, Inc.* 22,750
--------
146,320
--------
--------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES (0.1%)
100 NCR Corp.* 4,313
100 Yahoo!, Inc.* 5,862
--------
10,175
--------
--------------------------------------------------------------------------------
CAPITAL GOODS (3.9%)
700 Caterpillar, Inc. 24,544
100 Dover Corp. 4,244
190 Eaton Corp. 12,932
100 Emerson Electric Co. 7,344
4,500 General Electric Co. 246,655
300 Ingersoll-Rand Co. 11,325
112 ITT Industries, Inc. 3,647
200 Parker-Hannifin Corp. 8,275
1,322 Tyco International Ltd. 74,940
--------
393,906
--------
--------------------------------------------------------------------------------
CHEMICALS (0.7%)
680 Air Products & Chemicals, Inc. 25,372
500 Dow Chemical Co. 15,313
300 Praxair, Inc. 11,175
444 Rohm & Haas Co. 13,348
--------
65,208
--------
--------------------------------------------------------------------------------
COMPUTER EQUIPMENT (5.9%)
200 Apple Computer, Inc.* 3,913
1,200 Compaq Computer Corp. 36,492
1,500 Dell Computer Corp.* 44,250
900 EMC Corp.* 80,156
400 Hewlett-Packard Co. 18,575
3,100 Intel Corp. 139,499
902 International Business Machines Corp. 88,847
100 Network Appliance, Inc.* 11,900
100 Quantum Corp. - DLT & Storage Systems* 1,500
1,200 Sun Microsystems, Inc.* 133,049
300 VERITAS Software Corp.* 42,305
--------
600,486
--------
--------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (4.9%)
200 Adobe Systems, Inc. 15,213
300 Automatic Data Processing, Inc. 19,594
65 Avaya, Inc.* 873
200 BEA Systems, Inc.* 14,350
3,700 Cisco Systems, Inc.* 199,337
100 DoubleClick, Inc.* 1,625
3,100 Microsoft Corp.* 213,512
100 Network Associates, Inc.* 1,925
CONTINUED
NATIONWIDE 13
<PAGE> 16
STATEMENT OF INVESTMENTS PRESTIGE BALANCED FUND CONTINUED
-------------------------------------------------------------------------------
October 31,2000
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (CONTINUED)
100 Parametric Technology Corp. $ 1,231
138 Seagate Technology, Inc.* 9,643
100 Siebel Systems, Inc.* 10,494
100 Symantec Corp.* 3,906
100 TIBCO Software, Inc.* 6,300
--------
498,003
--------
--------------------------------------------------------------------------------
CONSUMER NON-CYCLICAL (1.4%)
300 Clorox Co. (The) 13,388
100 Estee Lauder Co., Inc. 4,644
1,400 Gillette Co. 48,825
200 Kimberly-Clark Corp. 13,200
829 Procter & Gamble Co. 59,221
--------
139,278
--------
--------------------------------------------------------------------------------
CONTAINERS (0.1%)
300 Smurfit-Stone Container Corp.* 4,050
66 Temple-Inland, Inc. 2,954
--------
7,004
--------
--------------------------------------------------------------------------------
DRUGS (5.5%)
304 ALZA Corp.* 24,605
590 American Home Products Corp. 37,465
300 Amgen, Inc.* 17,381
900 Bristol-Myers Squibb Co. 54,844
560 Eli Lilly & Co. 50,050
80 Forest Labs, Inc.* 10,600
72 Genzyme Corp.* 5,112
1,200 Merck & Co., Inc. 107,925
3,250 Pfizer, Inc. 140,358
1,184 Pharmacia & Upjohn, Inc. 65,120
900 Schering-Plough Corp. 46,519
--------
559,979
--------
--------------------------------------------------------------------------------
ELECTRONICS (2.2%)
100 Agilent Technologies 4,631
200 Analog Devices, Inc.* 13,000
700 Applied Materials, Inc.* 37,187
226 Cooper Industries, Inc. 8,645
200 Grainger (W.W.), Inc. 6,388
100 Lattice Semiconductor Corp.* 2,919
200 Linear Technology Corp. 12,913
500 Micron Technology, Inc.* 17,375
700 Motorola, Inc. 17,456
200 National Semiconductor Corp. * 5,200
100 Rockwell International Corp. 3,931
400 Tellabs, Inc.* 19,975
1,240 Texas Instruments, Inc. 60,837
200 Xilinx, Inc.* 14,488
--------
224,945
--------
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
ENTERTAINMENT (0.1%)
200 Walt Disney Co. $ 7,163
--------
--------------------------------------------------------------------------------
FINANCIAL / BANKS (1.8%)
110 Ambac Financial Group, Inc. 8,779
300 AmSouth Bancorp 4,181
1,100 Bank One Corp. 40,149
100 Banknorth Group, Inc. 1,813
200 Dime Bancorp, Inc. 4,888
100 First Tennessee National Corp. 2,300
800 First Union Corp. 24,250
106 Hibernia Corp. 1,265
400 Keycorp 9,875
200 National Commerce Bancorp 4,250
300 PNC Financial Services Group 20,063
200 Regions Financial Corp. 4,713
200 SouthTrust Corp. 6,475
94 Sovereign Bancorp, Inc. 781
200 Summit Bancorp 7,500
64 TCF Financial Corp. 2,588
1,400 U.S. Bancorp 33,863
--------
177,733
--------
--------------------------------------------------------------------------------
FINANCIAL / MISCELLANEOUS (4.8%)
100 A.G. Edwards, Inc. 5,075
700 Associates First Capital Corp. 25,988
100 Bear Stearns Cos., Inc. 6,063
300 Capital One Financial Corp. 18,938
200 CIT Group, Inc. 3,488
2,600 Citigroup, Inc. 136,824
200 Countrywide Credit Industries, Inc. 7,488
300 Franklin Resources, Inc. 12,852
14 Golden West Financial Corp. 785
500 Goldman Sachs Group, Inc. 49,905
100 GreenPoint Financial Corp. 2,975
100 Household International, Inc. 5,031
600 John Hancock Financial Services, Inc.* 18,975
200 Lehman Brothers Holdings, Inc. 12,900
800 Merrill Lynch & Co., Inc. 55,999
400 Morgan Stanley Dean Witter & Co. 32,125
300 Providian Financial Corp. 31,200
350 Schwab (Charles) Corp. 12,294
400 TD Waterhouse Group, Inc.* 6,625
800 Washington Mutual, Inc. 35,200
--------
480,730
--------
--------------------------------------------------------------------------------
FOOD & RELATED (1.9%)
420 Heinz (H.J.) Co. 17,614
500 Kellogg Co. 12,688
2,988 Philip Morris Cos., Inc. 109,435
200 Quaker Oats Co. 16,313
676 Unilever NV, ADR 34,349
--------
190,399
--------
CONTINUED
14 NATIONWIDE
<PAGE> 17
STATEMENT OF INVESTMENTS PRESTIGE BALANCED FUND CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
HEALTH CARE (1.7%)
200 Abbott Laboratories $ 10,563
100 Bard (C.R.), Inc. 4,188
300 Becton Dickinson & Co. 10,050
600 Boston Scientific Corp.* 9,563
200 Guidant Corp.* 10,588
800 HCA-The Healthcare Company 31,949
500 Johnson & Johnson Co. 46,062
100 Medtronic, Inc. 5,431
200 St. Jude Medical, Inc.* 11,000
700 Tenet Healthcare Corp. 27,519
--------
166,913
--------
--------------------------------------------------------------------------------
HOTELS / MOTELS (0.3%)
200 Hilton Hotels Corp. 1,900
180 International Game Technology* 6,593
200 Marriott International, Inc. 8,100
290 Starwood Hotels & Resorts Worldwide,
Inc. 8,591
--------
25,184
--------
--------------------------------------------------------------------------------
INSURANCE (1.3%)
900 Allstate Corp. 36,225
500 American International Group, Inc. 49,001
300 AON Corp. 12,431
20 AXA Financial, Inc. 1,081
260 Hartford Financial Services Group 19,354
162 MBIA, Inc. 11,775
--------
129,867
--------
--------------------------------------------------------------------------------
INSURANCE / LIFE (0.9%)
116 Aetna, Inc. 6,706
200 AFLAC, Inc. 14,613
200 CIGNA Corp. 24,390
200 Lincoln National Corp. 9,675
1,100 MetLife, Inc.* 30,387
200 Torchmark Corp. 6,663
--------
92,434
--------
--------------------------------------------------------------------------------
LEISURE PRODUCTS (0.1%)
200 Hasbro, Inc. 2,150
480 Mattel, Inc. 6,210
--------
8,360
--------
--------------------------------------------------------------------------------
MACHINERY AND ENGINEERING (0.1%)
200 Illinois Tool Works, Inc. 11,113
--------
--------------------------------------------------------------------------------
MANUFACTURING / DIVERSIFIED (0.7%)
1,000 Honeywell International, Inc. 53,812
300 PPG Industries, Inc. 13,388
--------
67,200
--------
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
MORTGAGE / ASSET BACKED OBLIGATIONS (1.1%)
841 Fannie Mae $ 64,757
700 Freddie Mac 42,000
--------
106,757
--------
--------------------------------------------------------------------------------
MOTOR VEHICLES (1.1%)
300 Dana Corp. 6,656
600 Delphi Automotive Systems Corp. 9,413
1,797 Ford Motor Co. 46,946
600 General Motors Corp. 37,275
100 Johnson Controls, Inc. 5,963
100 PACCAR, Inc. 4,206
157 Visteon Corp. 2,777
--------
113,236
--------
--------------------------------------------------------------------------------
NATURAL GAS (0.2%)
66 Columbia Energy Group 4,748
100 El Paso Energy Corp. 6,269
300 Williams Cos., Inc. (The) 12,543
--------
23,560
--------
--------------------------------------------------------------------------------
OIL & GAS (0.9%)
100 Apache Corp. 5,531
106 Conoco, Inc. 2,882
100 Devon Energy Corp. 5,040
1,288 Royal Dutch Petroleum Co. 76,475
--------
89,928
--------
--------------------------------------------------------------------------------
OIL / INTERNATIONAL (2.5%)
700 Chevron Corp. 57,488
1,900 Exxon Mobil Corp. 169,456
500 Texaco, Inc. 29,531
--------
256,475
--------
--------------------------------------------------------------------------------
OIL EQUIPMENT & SERVICES (0.5%)
500 Baker Hughes, Inc. 17,188
100 Cooper Cameron Corp.* 5,450
200 Dynegy, Inc. 9,263
700 Global Marine, Inc.* 18,549
100 Halliburton Co. 3,706
--------
54,156
--------
--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.0%)
100 Georgia Pacific Corp. 2,688
--------
--------------------------------------------------------------------------------
PHOTOGRAPHIC (0.0%)
94 Eastman Kodak Co. 4,218
--------
CONTINUED
NATIONWIDE 15
<PAGE> 18
STATEMENT OF INVESTMENTS PRESTIGE BALANCE FUND CONTINUED
--------------------------------------------------------------------------------
October 31,2000
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
POLLUTION CONTROL (0.0%)
100 Waste Management, Inc. $ 2,000
-------
--------------------------------------------------------------------------------
PRINTING & PUBLISHING (0.3%)
370 Gannett Co., Inc. 21,460
100 Knight-Ridder, Inc. 5,025
100 New York Times Co. 3,675
--------
30,160
--------
--------------------------------------------------------------------------------
RAILROADS (0.3%)
500 Burlington Northern Santa Fe Corp. 13,282
400 Norfolk Southern Corp. 5,650
238 Union Pacific Corp. 11,156
--------
30,088
--------
--------------------------------------------------------------------------------
RESTAURANTS (0.0%)
100 McDonald's Corp. 3,100
--------
--------------------------------------------------------------------------------
RETAIL (2.8%)
100 Abercrombie & Fitch Co.* 2,356
400 Best Buy Co., Inc.* 20,075
208 Federated Department Stores, Inc.* 6,773
1,000 Gap, Inc. 25,813
1,100 Home Depot, Inc. 47,300
200 Jones Apparel Group, Inc.* 5,563
400 Limited, Inc. (The) 10,100
300 Lowe's Cos., Inc. 13,706
380 May Department Stores Co. 9,975
300 Nike, Inc. 11,981
52 Penney (J.C), Co., Inc. 608
1,000 Target Corp. 27,625
500 TJX Cos., Inc. 13,625
1,924 Wal-Mart Stores, Inc. 87,301
--------
282,801
--------
--------------------------------------------------------------------------------
RETAIL / FOOD & DRUG (0.4%)
100 Albertson's, Inc. 2,369
906 Kroger Co. 20,442
400 Safeway, Inc.* 21,874
--------
44,685
--------
--------------------------------------------------------------------------------
SEMICONDUCTORS (0.2%)
100 Advanced Micro Devices, Inc.* 2,263
400 Altera Corp.* 16,374
100 Cypress Semiconductor Corp.* 3,744
--------
22,381
--------------------------------------------------------------------------------
SERVICES (1.8%)
1,200 America Online, Inc.* 60,516
1,200 Cendant Corp.* 14,400
300 E*TRADE Group, Inc.* 4,369
170 Electronic Data Systems Corp. 7,979
300 Gemstar-TV Guide International, Inc.* 20,569
2,300 Oracle Corp.* 75,900
--------
183,733
--------
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
STEEL (0.0%)
114 Allegheny Technologies, Inc. $ 2,309
--------
--------------------------------------------------------------------------------
TELECOMMUNICATIONS (6.3%)
1,127 AT&T Corp. 26,132
400 Bellsouth Corp. 19,325
200 Broadwing, Inc.* 5,650
500 Corning, Inc. 38,250
600 Global Crossing Ltd.* 14,175
700 JDS Uniphase Corp.* 57,006
300 Level 3 Communications, Inc.* 14,306
1,200 Lucent Technologies, Inc. 27,975
700 Nextel Communications, Inc.* 26,906
2,100 Nortel Networks Corp., ADR 95,549
300 QUALCOMM, Inc.* 19,533
1,372 Qwest Communications International,
Inc.* 66,714
1,600 SBC Communications, Inc. 92,300
700 Sprint Corp. (PCS Group)* 26,688
1,029 Verizon Communications 59,489
400 Williams Communications Group, Inc.* 7,325
1,561 Worldcom, Inc.* 37,074
--------
634,397
--------
--------------------------------------------------------------------------------
TELEVISION BROADCASTING (0.0%)
200 Fox Entertainment Group, Inc.* 4,300
--------
--------------------------------------------------------------------------------
TRANSPORTATION SERVICES (0.1%)
100 C.H. Robinson Worldwide, Inc. 5,469
100 FedEx Corp.* 4,686
--------
10,155
--------
--------------------------------------------------------------------------------
UTILITIES (1.4%)
100 Ameren Corp. 3,975
100 American Electric Power Co., Inc. 4,150
200 Cinergy Corp. 6,125
108 CMS Energy Corp. 2,916
200 Consolidated Edison, Inc. 7,038
400 CP&L Energy Inc. 16,125
200 DTE Energy Co. 7,225
200 Edison International 4,775
500 Entergy Corp. 19,155
200 Florida Power & Light, Inc. 13,200
110 GPU, Inc. 3,637
110 NiSource, Inc. 2,743
400 PG&E Corp. 10,775
100 Pinnacle West Capital Corp. 4,344
100 PP&L Resources, Inc. 4,119
200 Public Service Enterprise Group, Inc. 8,300
300 TXU Corp. 11,119
106 Wisconsin Energy Corp. 1,994
300 Xcel Energy, Inc. 7,669
--------
139,384
--------
TOTAL COMMON STOCK (COST $5,628,899) 6,149,276
--------
CONTINUED
16 NATIONWIDE
<PAGE> 19
STATEMENT OF INVESTMENTS PRESTIGE BALANCED FUND CONTINUED
-------------------------------------------------------------------------------
October 31, 2000
PRINCIPAL SECURITY VALUE
Corporate Bonds (8.7%)
--------------------------------------------------------------------------------
BANKS (0.5%)
$ 55,000 Bank of America Corp., 6.63%,
06/15/04 $ 54,153
--------
--------------------------------------------------------------------------------
BROADCAST MEDIA/CABLE TELEVISION (0.7%)
70,000 Tci Communications, Inc., 7.88%,
02/15/26 65,091
-------
--------------------------------------------------------------------------------
ELECTRIC SERVICES (0.5%)
20,000 Calenergy Co., Inc., 7.63%,
10/15/07 20,019
25,000 Constellation Energy, 7.88%,
04/01/05 25,287
--------
45,306
--------
--------------------------------------------------------------------------------
ELECTRIC UTILITIES (0.5%)
50,000 FPL Group Capital Inc., 7.38%,
06/01/09 49,417
--------
--------------------------------------------------------------------------------
ENTERTAINMENT (0.3%)
30,000 Time Warner, Inc., 7.98%, 08/15/04 30,687
--------
--------------------------------------------------------------------------------
FINANCIAL/BANKS (0.7%)
40,000 First Union Corp., 6.95%, 11/01/04 39,406
35,000 Northern Trust Co., 6.65%, 11/09/04 34,561
--------
73,967
--------
--------------------------------------------------------------------------------
FINANCIAL/MISCELLANEOUS (4.7%)
110,000 Carco Auto Loan Master Trust, Ser.
1999-1, Class A2, 5.78%, 03/15/04 108,514
145,000 First Omni Credit Card Master Trust,
Series 1996-A, Class A, 6.65%,
09/15/03 144,933
75,000 Ford Motor Credit Co., 7.38%,
10/28/09 73,106
145,000 Honda Auto Lease Trust, 6.45%,
09/16/02 144,624
--------
471,177
--------
--------------------------------------------------------------------------------
TELECOMMUNICATIONS (0.8%)
30,000 Tele-Communications, Inc., 7.88%,
08/01/13 30,003
25,000 Telefonica Europe Bv, 7.75%, 09/15/10 25,115
30,000 U.S. West Communications, 7.20%,
11/01/04 29,892
85,010
--------
Total Corporate Bonds (cost $880,614) 874,808
--------
PRINCIPAL SECURITY VALUE
Mortgage-Backed Securities (2.7%)
--------------------------------------------------------------------------------
FINANCIAL/MISCELLANEOUS (2.7%)
$ 60,000 First Union National Bank Commercial
Mortgage, 7.84%, 03/15/10, Series
2000-C1 $ 62,607
56,922 GMAC Commercial Mortgage Securities,
6.15%, 11/15/07, Series 1998-C2 55,244
95,000 Merrill Lynch Mortgage Investor, Inc.,
6.39%, 02/15/30, Series 1998-C2 91,486
66,746 Mortgage Capitol Funding, Inc.,
6.00%, 11/18/31, Series 1998-MC 64,337
--------
Total Mortgage-Backed Securities (cost
$263,854) 273,674
-------
U.S. Government Sponsored and Agency Obligations (19.0%)
--------------------------------------------------------------------------------
GOVERNMENT/MORTGAGE-BACKED OBLIGATIONS (15.7%)
23,000 FNMA, 7.00%, 07/15/05 23,417
171,000 FNMA, 7.13%, 06/15/10 176,300
166,000 FNMA, 7.00%, 11/18/14 162,680
50,000 FNMA, 7.13%, 01/15/30 52,006
50,000 FNMA, 7.25%, 05/15/30 52,847
660,000 FNMA, 6.50%, 11/01/30 634,218
425,000 FNMA, 7.00%, 11/01/30 416,500
25,000 FNMA, 7.50%, 12/01/30 24,930
51,092 GNMA, 6.50%, 12/15/28, Pool #781096 49,386
--------
1,592,284
--------
--------------------------------------------------------------------------------
GOVERNMENT / TREASURY (3.3%)
15,000 U.S. Treasury Bond, 8.88%, 02/15/19 19,721
15,000 U.S. Treasury Bond, 6.75%, 08/15/26 16,509
325,000 U.S. Treasury Bond, 5.25%, 02/15/29 296,170
332,400
-------
Total U.S. Government Sponsored and Agency Obligations
(cost $1,901,509) 1,924,684
---------
CONTINUED
NATIONWIDE 17
<PAGE> 20
STATEMENT OF INVESTMENTS PRESTIGE BALANCED FUND CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
PRINCIPAL SECURITY VALUE
Repurchase Agreement (13.6%)
--------------------------------------------------------------------------------
$1,376,000 Fifth Third Bank 6.35%,10/31/00,
matures 11/01/00, Collateralized by
$1,442,000 FHAR Pool #786905,
6.64%, 10/01/29 Market value
$1,403,520 $ 1,376,000
---------
TOTAL REPURCHASE AGREEMENT (cost $1,376,000) 1,376,000
---------
TOTAL INVESTMENTS (COST $10,861,293) $11,419,715
========
--------------------------------------------------------------------------------
The abbreviations in the above statement stand for the following:
ADR American Depository Receipts
FHAR Federal Home Adjustable Rate
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
NV Naamloze Vennootschap (Dutch corporation)
* DENOTES A NON-INCOME PRODUCING SECURITY.
COST FOR FEDERAL INCOME TAX PURPOSES: $10,888,801.
PORTFOLIO HOLDING PERCENTAGES BASED ON NET ASSETS OF $10,110,778.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
18 NATIONWIDE
<PAGE> 21
PRESTIGE ADVISOR SERIES(SM)
--------------------------------------------------------------------------------
PRESTIGE SMALL CAP FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended October 31, 2000, the Prestige Small Cap Fund
returned 18.25%(a) versus 17.41% for the Russell 2000 Small Stock Index, the
benchmark index.
The Fund is broadly diversified. Our bottom-up process focuses on adding
value through stock selection, while carefully controlling exposure to other
risk factors such as sector and industry allocations. The Fund's volatility and
average market capitalization are close to that of the benchmark index.
The Fund invests in small cap stocks that are highly ranked based on four
investment factors-earnings momentum, relative value, management action and
price trend. With the market's frequent shifts between growth and value, there
has been considerable variability in the performance of these factors from month
to month, but for the 12-month period the model has worked well.
In late 1999 and early 2000, when performance was concentrated in a narrow
group of technology-oriented growth stocks, exposure to companies with low
price/earnings ratios and to companies repurchasing their own stock hurt the
Fund's performance. More recently, those factors have been positive contributors
to return along with stocks exhibiting improving earnings estimates and those
with significant institutional interest.
The biggest contributors to the Fund's return over the last 12 months were
Aspect Development, which was acquired by i2 Technologies earlier this year, and
Elantec Semiconductor, one of the small cap market's best performers during the
period. Stillwater Mining, Professional Detailing, and Terayon Communications
(which we sold in June) also added value.
Holdings that had the biggest negative impact on the Fund's relative return
were W.R. Grace and Lason, Inc. Despite strong fundamentals, Grace suffered from
concerns about potential asbestos liability, while Lason reported disappointing
earnings. Holdings in Macromedia, Applied Science & Technology, and Micros
Systems (sold in July) also detracted from the Fund's overall performance.
During the past 12 months, there were two notable changes in the Fund's
composition, both related to our guidelines for risk control. First, market
volatility made it necessary to increase the number of securities in the Fund
from 204 to 276 to achieve our risk control targets. Second, the Russell 2000's
rebalancing made it necessary to adjust our technology weighting. The
rebalancing caused a decline in the benchmark's technology exposure, as many
companies in the sector outgrew their small cap status. We adjusted our sector
allocation accordingly.
INVESCO Inc.-Subadviser
(a) Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $28,901,686
October 31, 2000
PORTFOLIO COMPOSITION
(Subject to Change)
[PIEGRAPH]
Repurchase Agreement 1.2%
Common Stock 98.8%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Periods Ended October 31, 2000)
INSTITUTIONAL
CLASS A CLASS B SERVICE
YEARS W/O SC* W/SC(1) W/O SC* W/SC(2) CLASS(3)
------------------------------------------------------------
1 18.25% 11.48% 17.56% 12.56% 18.44%
------------------------------------------------------------
Life(4) 15.22% 11.85% 14.64% 12.87% 15.40%
------------------------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
* These returns do not reflect the effects of a sales charge (SC).
(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) Institutional Service Class Shares are not subject to any sales
charges.
(4) Fund commenced operations on 11/02/98.
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.
FUND PERFORMANCE
[LINEGRAPH]
<TABLE>
<CAPTION>
Class A Class B Institutional Service Class Russell 2000 CPI
<C> <C> <C> <C> <C> <C>
11/98 9,425 10,000 10,000 10,000 10,000
10/99 10,573 10,670 11,236 11,487 10,256
10/00 12,503 12,732 13,307 13,486 10,625
</TABLE>
Comparative performance of $10,000 invested in the Small Cap Fund, Russell 2000
Small Stock Index (Russell 2000)(b) and the Consumer Price Index (CPI)(c) from
Fund inception (11/02/98) to 10/31/00. Unlike our Fund, these indices do not
reflect any fees, expenses or sales charges. The Class A Shares include a
front-end sales charge.
(b) The Russell 2000 is comprised of approximately 2000 companies with small
market capitalizations relative to the market capitalizations of other U.S.
companies.
(c) The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
NATIONWIDE 19
<PAGE> 22
STATEMENT OF INVESTMENTS Prestige Small Cap Fund
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
COMMON STOCK (98.9%)
--------------------------------------------------------------------------------
AEROSPACE (0.5%)
1,700 Alliant Techsystems, Inc.* $ 152,894
-----------
--------------------------------------------------------------------------------
AIRLINES (0.9%)
9,200 America West Holdings Corp.* 91,425
3,600 SkyWest, Inc. 181,800
-----------
273,225
-----------
--------------------------------------------------------------------------------
APPLIANCES (0.5%)
6,500 Salton, Inc.* 148,688
-----------
--------------------------------------------------------------------------------
BIOTECHNOLOGY (0.4%)
1,400 Invitrogen Corp.* 106,488
-----------
--------------------------------------------------------------------------------
BROADCASTING & TELEVISION (0.2%)
2,300 XM Satellite Radio Holdings, Inc.* 66,700
-----------
--------------------------------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES (1.3%)
1,100 Administaff, Inc.* 39,050
3,400 On Assignment, Inc.* 85,638
1,400 Professional Detailing, Inc.* 124,074
2,800 TeleTech Holdings, Inc.* 77,700
1,400 Zebra Technologies Corp. 61,338
-----------
387,800
-----------
--------------------------------------------------------------------------------
CAPITAL GOODS (2.4%)
5,000 Briggs & Stratton Corp. 178,437
1,700 C&D Technologies, Inc. 100,513
2,600 Kent Electronics Corp.* 48,425
8,900 Milacron, Inc. 141,844
2,600 Precision Castparts Corp. 98,150
1,000 Technitrol, Inc. 110,875
-----------
678,244
-----------
--------------------------------------------------------------------------------
CHEMICALS (2.5%)
2,900 Albemarle Corp. 67,244
3,200 Cambrex Corp. 127,800
1,800 Cytec Industries, Inc.* 62,325
9,800 Georgia Gulf Corp. 131,075
11,000 Millennium Chemicals, Inc. 177,375
8,700 Olin Corp. 154,425
-----------
720,244
-----------
--------------------------------------------------------------------------------
COMMUNICATION EQUIPMENT (0.3%)
4,400 LodgeNet Entertainment Corp.* 77,275
-----------
--------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (10.5%)
3,600 Actuate Corp.* 101,475
1,300 Advent Software, Inc.* 77,756
2,600 Aspen Technologies, Inc.* 107,413
1,800 Avocent Corp.* 127,688
1,600 Barra, Inc.* 97,800
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
COMPUTER SOFTWARE & SERVICES (CONTINUED)
1,100 Black Box Corp.* $ 72,463
3,600 Broadbase Software, Inc.* 38,700
3,500 Cerner Corp.* 216,780
1,500 Clarent Corp.* 46,594
1,200 Cognizant Technology Solutions Corp.* 49,200
3,000 Filenet Corp.* 79,500
3,600 Infocus Corp.* 159,074
1,500 Informatica Corp.* 141,750
1,400 Interactive Intelligence, Inc. 51,100
1,600 Interwoven, Inc.* 161,199
2,400 IntraNet Solutions, Inc.* 111,600
1,600 Keynote Systems, Inc.* 38,400
3,200 Kronos, Inc.* 116,600
2,100 Manhattan Associates, Inc.* 134,433
1,100 Manugistics Group, Inc.* 125,331
3,300 MapInfo Corp.* 107,869
5,000 Mentor Graphics Corp.* 117,188
3,300 Mercury Computer Systems, Inc.* 102,300
1,700 NetIQ Corp.* 146,412
400 Nuance Communications, Inc.* 34,500
3,500 Progress Software Corp.* 55,344
1,300 PurchasePro.com, Inc.* 35,100
3,200 Rainbow Technologies, Inc.* 79,600
1,000 Scan Source, Inc.* 47,750
1,400 SERENA Software, Inc.* 71,225
4,100 Verity, Inc.* 96,350
1,800 WebTrends Corp.* 57,853
-----------
3,006,347
-----------
--------------------------------------------------------------------------------
CONSTRUCTION & BUILDING MATERIALS (4.5%)
1,400 Carlisle Companies, Inc. 58,275
2,500 Granite Construction, Inc. 57,031
5,600 Insituform Technologies, Inc.* 199,850
3,900 Kaufman & Broad Home Corp. 116,025
1,400 NVR, Inc.* 144,760
9,500 Pulte Corp. 316,469
2,100 Rayonier, Inc. 73,894
3,900 Ryland Group, Inc. 125,775
10,400 Standard Pacific Corp. 195,000
-----------
1,287,079
-----------
--------------------------------------------------------------------------------
CONSULTING SERVICES (0.4%)
1,700 Caminus Corp.* 53,550
1,500 Diamond Technology Partners, Inc.* 66,938
-----------
120,488
-----------
--------------------------------------------------------------------------------
CONSUMER DURABLE (0.2%)
5,500 Fossil, Inc.* 71,844
-----------
--------------------------------------------------------------------------------
CONSUMER NON-CYCLICAL (0.3%)
5,800 Tupperware Corp. 99,325
-----------
20 NATIONWIDE CONTINUED
<PAGE> 23
STATEMENT OF INVESTMENTS PRESTIGE SMALL CAP FUND CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
DISTRIBUTION (0.7%)
3,200 Advanced Marketing Services, Inc. $ 57,600
4,900 United Stationers, Inc.* 147,306
---------
204,906
---------
--------------------------------------------------------------------------------
DRUGS (3.6%)
5,000 Alpharma, Inc. 194,063
7,066 Bindley Western Industries, Inc. 253,933
3,200 Biosite Diagnostics* 70,400
2,400 K-V Pharmaceutical Co.* 93,450
1,400 Neurocrine Biosciences, Inc.* 54,250
2,700 Noven Pharmaceuticals* 120,319
600 OSI Pharmaceuticals* 43,200
1,400 Priority Healthcare Corp.* 75,250
5,700 Syncor International Corp.* 146,419
---------
1,051,284
---------
--------------------------------------------------------------------------------
ELECTRONICS (6.4%)
4,500 Anixter International, Inc.* 109,125
2,500 Belden, Inc. 64,844
1,800 Elantec Semiconductor, Inc.* 200,249
3,500 Electro Scientific Industries, Inc.* 122,281
2,600 Exar Corp.* 116,188
2,600 Harman International Industries, Inc. 124,800
2,800 Helix Technology Corp. 78,050
900 Keithley Instruments, Inc. 48,150
2,300 Littlefuse, Inc.* 66,700
2,100 Measurement Specialties, Inc.* 55,781
1,950 Merix Corp, Inc.* 91,071
1,600 Microsemi Corp.* 64,000
1,500 MIPS Technologies, Inc.* 60,188
1,100 Park Electrochemical Corp. 72,669
10,500 Pioneer-Standard Electronics, Inc. 145,687
4,000 Richardson Electronics 54,750
2,200 Rogers Corp.* 78,650
3,600 Sensormatic Electronics Corp.* 64,800
6,600 Ultratech Stepper, Inc.* 155,099
4,500 Universal Electronics, Inc.* 82,688
---------
1,855,770
---------
--------------------------------------------------------------------------------
ENTERTAINMENT (0.9%)
4,300 Argosy Gaming Co.* 69,875
8,100 Station Casinos, Inc.* 130,613
6,400 Topps Co., Inc.* 57,800
---------
258,288
---------
--------------------------------------------------------------------------------
FINANCIAL / BANKS (7.1%)
5,300 Downey Financial Corp. 253,074
11,400 East West Bancorp, Inc. 215,888
6,400 GBC Bancorp 204,000
6,800 Greater Bay Bancorp 221,425
8,964 Imperial Bancorp* 217,937
5,200 Richmond County Financial Corp. 122,200
5,500 Southwest Bancorp of Texas, Inc.* 200,750
9,600 Sterling Bancshares, Inc. 165,000
1,600 UCBH Holdings, Inc. 58,200
8,900 Washington Federal, Inc. 198,581
5,000 West America Bank Corp. 179,688
---------
2,036,743
---------
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
FINANCIAL / MISCELLANEOUS (4.4%)
2,000 Affiliated Managers Group, Inc.* $ 120,250
6,700 Americredit Corp.* 180,062
2,100 CompuCredit Corp.* 64,838
2,400 Eaton Vance Corp. 119,550
3,300 FirstFed Financial Corp.* 84,150
1,700 Investment Technology Group* 61,200
3,300 Metris Cos., Inc. 106,838
2,000 Radian Group, Inc. 141,750
3,700 Silicon Valley Bancshares* 171,125
3,685 Southwest Securities Group, Inc. 104,101
3,600 Triad Guaranty, Inc.* 104,625
---------
1,258,489
---------
--------------------------------------------------------------------------------
FOOD & RELATED (2.5%)
3,000 Constellation Brands, Inc.* 146,250
2,600 Corn Products International, Inc. 65,325
2,300 Dean Foods Co. 73,600
4,500 Dole Food Co.* 54,281
3,000 Dreyer's Grand Ice Cream, Inc. 73,875
7,500 Michael Foods, Inc. 202,032
2,100 Suiza Foods Corp.* 97,256
---------
712,619
---------
--------------------------------------------------------------------------------
HEALTH CARE (4.9%)
3,800 Amerisource Health Corp.* 165,063
4,200 Apria Healthcare Group, Inc.* 84,000
800 Cephalon, Inc.* 42,900
3,400 Cooper Co., Inc. 121,550
1,900 Cytyc Corp.* 112,813
3,300 Datascope Corp. 114,263
6,000 First Health Group Corp.* 233,999
3,500 Foundation Health Systems, Inc.* 70,656
2,600 Mentor Corp. 45,825
1,800 PolyMedica, Corp.* 103,500
800 United Therapeutics Corp.* 42,800
2,200 Universal Health Services* 184,524
1,900 Zoll Medical Corp.* 94,169
---------
1,416,062
---------
--------------------------------------------------------------------------------
HOTELS / MOTELS (1.3%)
9,700 Aztar Corp.* 146,713
7,600 Felcor Lodging Trust, Inc. 166,725
2,000 Hotel Reservations Network, Inc.* 70,000
---------
383,438
---------
--------------------------------------------------------------------------------
INSURANCE (0.8%)
3,200 Everest Re Group Ltd. 187,600
1,300 Stancorp Financial Group 52,975
---------
240,575
---------
--------------------------------------------------------------------------------
LEISURE PRODUCTS (0.7%)
3,700 Callaway Golf Co. 59,200
3,000 Direct Focus* 133,500
---------
192,700
---------
CONTINUED NATIONWIDE 21
<PAGE> 24
STATEMENT OF INVESTMENTS PRESTIGE SMALL CAP FUND CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
MACHINERY (3.7%)
1,900 Cognex Corp.* $ 63,650
2,200 Cymer, Inc.* 55,000
4,400 Graco, Inc. 158,125
2,700 Imation Corp.* 53,494
5,200 Kulicke & Soffa Industries, Inc.* 76,375
1,800 Manitowoc Co., Inc. 48,938
15,000 Stewart & Stevenson Services, Inc. 359,999
1,800 Tecumseh Products Co. 71,775
4,800 Toro Co.* 168,000
-----------
1,055,356
-----------
--------------------------------------------------------------------------------
MANUFACTURING (0.9%)
3,600 Asyst Technologies, Inc.* 54,000
1,200 Cabot Microelectronics Corp.* 53,025
1,900 Cyberoptics Corp. * 44,650
2,200 Lear Corp.* 59,950
2,000 Varian, Inc.* 61,625
-----------
273,250
-----------
--------------------------------------------------------------------------------
MEDICAL (2.0%)
2,000 Albany Molecular Research, Inc.* 116,250
1,000 Aurora Biosciences Corp.* 60,938
800 Barr Laboratories, Inc.* 50,500
2,800 Edwards Lifesciences Corp.* 37,625
1,900 Genzyme Transgenics, Inc.* 40,731
600 Laboratory Corp. of America Holdings* 80,925
400 Myriad Genetics, Inc.* 48,000
2,000 Neose Technologies, Inc.* 72,375
1,600 Varian Medical Systems, Inc.* 78,200
-----------
585,544
-----------
--------------------------------------------------------------------------------
METALS (0.8%)
5,800 Century Aluminum Co. 50,750
2,900 Cleveland Cliffs, Inc. 59,813
2,900 Coorstek, Inc.* 84,825
4,500 Ryerson Tull, Inc. 33,750
-----------
229,138
-----------
--------------------------------------------------------------------------------
OIL & GAS (4.4%)
5,100 Energen Corp. 145,988
3,600 Equitable Resources, Inc. 208,799
4,300 Patina Oil & Gas Corp. 75,519
2,600 Patterson Energy, Inc.* 73,125
2,100 People's Energy Corp. 72,188
3,600 St. Mary Land & Exploration Co. 84,375
2,700 Stone Energy Corp.* 138,240
8,400 UGI Corp. 194,774
2,800 UTI Energy Corp.* 56,175
4,000 Valero Energy Corp. 132,250
4,100 Vintage Petroleum, Inc. 86,613
-----------
1,268,046
-----------
--------------------------------------------------------------------------------
OIL / INTERNATIONAL (0.5%)
4,900 HS Resources, Inc.* 152,513
-----------
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
OIL EQUIPMENT & SERVICES (0.5%)
2,200 Helmerich & Payne, Inc. $ 69,163
2,600 Marine Drilling Cos., Inc.* 62,075
-----------
131,238
-----------
--------------------------------------------------------------------------------
PACKAGING (0.3%)
2,400 Ball Corp. 84,300
-----------
--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS (0.5%)
2,700 Buckeye Technologies, Inc.* 46,238
5,500 Pope & Talbot, Inc. 85,593
-----------
131,831
-----------
--------------------------------------------------------------------------------
PRINTING & PUBLISHING (0.3%)
2,600 McClatchy Co. 98,800
-----------
--------------------------------------------------------------------------------
REAL ESTATE (5.4%)
3,900 Bedford Property Investors, Inc. 76,781
2,900 Camden Property Trust 83,013
8,700 Capital Automotive REIT 112,148
5,500 Essex Property Trust, Inc. 285,999
4,300 Gables Residential Trust 109,650
2,600 Highwood Properties, Inc.* 56,225
14,500 JDN Realty Corp. 158,594
3,900 Kilroy Realty Corp. 101,644
3,600 LNR Property Corp. 77,850
6,100 Shurgard Storage Centers, Inc. 138,394
5,300 SL Green Realty Corp. 142,106
3,600 Smith Charles E Residential Realty 158,400
3,200 Sovran Self Storage, Inc. 60,400
---------
1,561,204
---------
--------------------------------------------------------------------------------
RESTAURANTS (2.1%)
1,900 Applebee's International, Inc.* 57,386
5,700 CBRL Group, Inc. 101,888
3,200 CEC Entertainment, Inc.* 102,000
6,700 Jack in the Box, Inc.* 164,150
4,500 P.F. Chang's China Bistro, Inc.* 184,499
---------
609,923
---------
--------------------------------------------------------------------------------
RETAIL (3.1%)
3,100 Barnes & Noble, Inc.* 58,513
5,100 Cato Corp. 61,200
4,600 Copart, Inc.* 69,288
4,700 Footstar, Inc.* 168,612
4,100 Genesco, Inc.* 72,775
1,800 Linen `n Things, Inc.* 55,350
2,300 Payless Shoesource, Inc.* 133,256
1,000 Scholastic Corp.* 80,000
4,700 Whitehall Jewellers, Inc.* 37,600
4,900 Zale Corp.* 165,987
---------
902,581
---------
--------------------------------------------------------------------------------
SEMICONDUCTORS (1.4%)
1,100 Actel Corp.* 40,288
3,300 Alliance Semiconductor Corp.* 66,000
900 DuPont Photomask, Inc.* 50,513
3,100 Electroglas, Inc.* 43,594
22 NATIONWIDE CONTINUED
<PAGE> 25
STATEMENT OF INVESTMENTS PRESTIGE SMALL CAP FUND CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
SEMICONDUCTORS (CONTINUED)
2,700 FEI Co.* $ 63,956
2,000 Oak Technology, Inc.* 56,125
1 Three-Five Systems, Inc.* 35
3,200 Varian Semiconductor Equipment
Associates., Inc.* 73,599
---------
394,110
---------
--------------------------------------------------------------------------------
SERVICES (5.4%)
5,100 ADVO, Inc.* 187,743
2,100 American Management Systems, Inc.* 45,413
1,500 BlackRock, Inc.* 63,938
1,800 Chemed Corp. 59,175
1,400 Corporate Executive Board* 64,575
1,100 CSG Systems International, Inc.* 51,081
1,500 Documentum, Inc.* 127,500
1,200 Forrester Research, Inc.* 49,275
1,000 Heidrick & Struggles International, Inc.* 61,813
4,600 Jefferies Group, Inc. 125,350
2,900 Modis Professional Services* 213,512
1,350 Netegrity, Inc.* 105,300
1,900 Plexus Corp.* 119,819
3,200 Pre-Paid Legal Services, Inc.* 140,399
4,100 Sybase, Inc.* 85,844
1,500 True North Communications, Inc. 56,531
-----------
1,557,268
-----------
--------------------------------------------------------------------------------
STEEL (0.8%)
2,600 Maverick Tube Corp.* 40,463
1,700 Shaw Group, Inc.* 138,550
6,500 Worthington Industries, Inc. 62,156
-----------
241,169
-----------
--------------------------------------------------------------------------------
TELECOMMUNICATIONS (2.7%)
3,800 Adaptive Broadband Corp.* 61,038
1,900 AirGate PCS, Inc.* 73,863
600 Anaren Microwave, Inc.* 62,400
2,700 Boston Communications Group* 63,788
1,600 DSP Group, Inc.* 45,400
1,000 Leap Wireless International, Inc.* 49,750
3,500 Lightbridge, Inc.* 37,406
2,000 Natural MicroSystems Corp.* 90,375
2,400 Plantronics, Inc.* 109,499
1,600 Sirius Satellite Radio, Inc.* 80,400
500 Tollgrade Communications, Inc.* 47,875
1,300 Tut Systems, Inc.* 43,225
-----------
765,019
-----------
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
TEXTILES (0.4%)
4,500 Springs Industries, Inc. Class A $ 106,031
-----------
--------------------------------------------------------------------------------
Tobacco (0.6%)
6,400 Universal Corp. 179,200
-----------
--------------------------------------------------------------------------------
Transportation (2.0%)
7,000 Dollar Thrifty Automotive Group, Inc. * 107,625
3,200 Landstar System, Inc.* 151,199
2,700 Oshkosh Truck Corp. 111,038
1,400 Rent-A-Center, Inc.* 40,863
2,100 Roadway Express 43,181
1,700 USFreightways Corp. 43,775
4,800 Yellow Corp.* 86,400
-----------
584,081
-----------
--------------------------------------------------------------------------------
UTILITIES (2.9%)
7,300 AGL Resources 148,738
6,400 Allete Com 138,000
3,000 Cleco Corp. 142,688
2,700 Hawaiian Electric Industries, Inc. 88,931
11,400 Public Service Co. of New Mexico 314,212
-----------
832,569
-----------
TOTAL COMMON STOCK (cost $26,373,676) 28,550,686
-----------
PRINCIPAL SECURITY VALUE
REPURCHASE AGREEMENT (1.2%)
--------------------------------------------------------------------------------
$351,000 Fifth Third Bank 6.35%,10/31/00
matures 11/01/00,Collateralized
by $358,020 FNMB, 7.50%,
06/01/19, market value $354,857 351,000
-----------
TOTAL REPURCHASE AGREEMENT (cost $351,000) 351,000
-----------
TOTAL INVESTMENT (cost $26,724,676) $28,901,686
===========
--------------------------------------------------------------------------------
The abbreviations in the above statement stand for the following:
FNMB Federal National Mortgage Bank
REIT Real Estate Investment Trust
* DENOTES A NON-INCOME PRODUCING SECURITY
COST FOR FEDERAL INCOME TAX PURPOSES: $26,827,426.
PORTFOLIO HOLDING PERCENTAGES BASED ON NET ASSETS OF $28,860,993.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 23
<PAGE> 26
PRESTIGE ADVISOR SERIES(SM)
--------------------------------------------------------------------------------
PRESTIGE INTERNATIONAL FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 12-month period ended October 31, 2000, the Prestige International
Fund returned -4.36%(a) versus -2.66% for the Morgan Stanley Capital
International Europe, Australasia, and Far East Index (MSCI EAFE), the benchmark
index.
The future of international markets in the new millennium appeared bright,
as global equity markets ended 1999 on an upswing. Investing in companies
outside the U.S. paid off in 1999-- international equities outperformed the S&P
500 for the first time since 1994. However, the first six months of the year
2000 were volatile for equity markets around the world.
The Prestige International Fund was affected by the monetary policy
tightening decision from the European Central Bank. Additionally, concerns over
global economic growth triggered a correction in the most highly valued
technology, media, and telecom stocks. The portfolio outperformed the MSCI EAFE
Index during the second quarter of 2000 as global equity markets experienced a
dramatic rotation to value after an extended period of growth dominance.
The Fund continued to perform well during the third quarter and in October
2000, as investors shifted their focus from short-term price momentum to
long-term individual company fundamentals. Expensive TMT (technology, media and
telecom) stocks, which dominated market returns in 1999 and early 2000, fell
dramatically, while traditional value sectors such as finance and utilities
generated robust gains.
Our investment team continues to find value opportunities in the
international arena. Several strategic purchases were made over the last few
months, including Fujitsu, which at the time of purchase was trading at a
discount to its fundamental value. Bayerische Hypo Vereinsbank, the leading
retail banking network in Germany, was also added to the portfolio during the
first quarter of 2000, and has been a strong performer. Market volatility dented
the prospects of many Internet start-up hopefuls and software companies.
Invensys, the UK maker of factory controls, acquired the Dutch software maker
Baan, whose stock had fallen 90% over the past two years. Heading into the
fourth quarter, Nissan Motors announced that profits for this year would
quadruple, underlining the dramatic change since CEO Ghosn introduced a revival
plan for the company last year.
We intend to take advantage of the weakness in telecommunication, media,
and technology stocks to obtain financially productive companies at attractive
prices. An urge to reduce taxes in Europe in order to maintain national
competitiveness is indicative of the substantial changes that have occurred as a
result of the introduction of the Euro. We expect this will continue to benefit
companies doing business in Europe.
Overall, we believe the portfolio is well-positioned to gain from the
ongoing rotation in markets towards fundamental factors and away from
momentum-driven strategies.
LAZARD ASSET MANAGEMENT-SUBADVISER
(a) Performance of Class A shares without sales charge and assuming all
distributions are reinvested.
PORTFOLIO MARKET VALUE $17,365,996
OCTOBER 31, 2000
PORTFOLIO COMPOSITION
(Subject to Change)
[PIEGRAPH]
Repurchase Agreement 5.7%
Common Stock 94.3%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Periods Ended October 31, 2000)
Institutional
Class A Class B Service
Years w/o SC* w/SC(1) w/o SC* w/SC(2) Class(3)
--------------------------------------------------------------------------------
1 -4.36% -9.85% -4.57% -9.28% -4.31%
--------------------------------------------------------------------------------
Life(4) 5.95% 2.85% 6.89% 4.99% 6.08%
--------------------------------------------------------------------------------
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
* These returns do not reflect the effects of a sales charge (SC).
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 Institutional Service Class Shares are not subject to any sales
charges.
4 Fund commenced operations on 11/02/98.
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.
FUND PERFORMANCE
[LINEGRAPH]
<TABLE>
<CAPTION>
Class A Class B Institutional Service Class MSCI/EAFE CPI
<C> <C> <C> <C> <C> <C>
11/98 9,425 10,000 10,000 10,000 10,000
10/99 11,059 11,467 11,757 12,337 10,258
10/00 10,577 11,021 11,250 12,008 10,625
</TABLE>
Comparative performance of $10,000 invested in the International
Fund, Morgan Stanley Capital International - Europe, Australasia, and Far East
Index (MSCI/EAFE)(b) and the Consumer Price Index (CPI)(c) from Fund inception
(11/02/98) to 10/31/00. Unlike our Fund, these indices do not reflect any fees,
expenses or sales charges. The Class A Shares include a front-end sales charge.
(b) The MSCI/EAFE is an unmanaged index generally representative of the
performance of international stock markets.
(c) The CPI represents changes in prices of a basket of goods and services
purchased for consumption by urban households.
24 NATIONWIDE
<PAGE> 27
STATEMENT OF INVESTMENTS PRESTIGE INTERNATIONAL FUND
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
COMMON STOCK (94.2%)
--------------------------------------------------------------------------------
AUSTRALIA (1.2%)
METALS (1.2%)
21,400 BHP Ltd. $ 207,359
-----------
STEEL (0.0%)
5,050 Onesteel Ltd.* 2,407
-----------
TOTAL AUSTRALIA 209,766
-----------
--------------------------------------------------------------------------------
DENMARK (0.9%)
TELECOMMUNICATIONS (0.9%)
3,400 Tele Danmark AS 160,693
-----------
--------------------------------------------------------------------------------
FINLAND (1.0%)
PAPER & FOREST PRODUCTS (1.0%)
6,200 UPM-Kymmene OYJ 175,268
-----------
--------------------------------------------------------------------------------
FRANCE (11.5%)
COMMUNICATIONS & MEDIA (0.9%)
2,740 Lagardere Group 155,378
-----------
CONSTRUCTION & BUILDING MATERIALS (2.1%)
1,200 Compagnie de Saint Gobain 158,577
1,370 Suez Lyonnaise des Eaux 208,797
-----------
367,374
-----------
DRUGS (1.9%)
4,498 Aventis SA 324,080
-----------
FINANCIAL / BANKS (1.1%)
2,220 BNP Paribas 191,188
-----------
INSURANCE (1.1%)
1,460 Axa 193,060
-----------
OIL / INTERNATIONAL (2.4%)
2,907 Total Fina SA 415,449
-----------
SERVICES (1.1%)
2,787 Vivendi 200,094
-----------
TELECOMMUNICATIONS (0.9%)
2,570 Alcatel Alsthom 156,630
-----------
TOTAL FRANCE 2,003,253
-----------
--------------------------------------------------------------------------------
GERMANY (7.3%)
AIRLINES (0.6%)
5,800 Deutsche Lufthansa AG 113,076
-----------
FINANCIAL / BANKS (2.1%)
6,550 HypoVereinsbank AG 359,497
-----------
INSURANCE (2.2%)
1,117 Allianz AG 378,301
-----------
MANUFACTURING & CONSUMER GOODS (0.7%)
8,100 Thyssen Krupp AG 115,348
-----------
TELECOMMUNICATIONS (0.2%)
700 Deutsche Telekom AG 26,256
-----------
UTILITIES / ELECTRIC (1.5%)
5,280 E. on AG NPV 267,997
-----------
TOTAL GERMANY 1,260,475
-----------
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
ITALY (2.7%)
FINANCIAL / BANKS (1.2%)
12,700 San Paolo - IMI SpA $ 205,614
-----------
INSURANCE (0.4%)
5,185 Alleanza Assicurazioni SpA 68,694
-----------
OIL / INTERNATIONAL (1.1%)
34,600 ENI SpA 187,116
-----------
TOTAL ITALY 461,424
-----------
--------------------------------------------------------------------------------
JAPAN (21.8%)
BUSINESS EQUIPMENT & SERVICES (1.1%)
5,000 Canon, Inc. 198,285
----------
CONSUMER NON-CYCLICAL (1.4%)
8,000 KAO Corp.* 239,591
----------
DRUGS (0.9%)
7,000 Sankyo Co. 154,186
----------
ELECTRONICS (4.1%)
15,000 Hitachi Ltd.* 160,734
3,800 Sony Corp. 303,482
2,400 TDK Corp. ADR 243,600
----------
707,816
----------
FINANCE (0.9%)
18,000 Nikko Securities Co. Ltd. 155,294
----------
FINANCIAL / BANKS (4.4%)
39 Mizuho Holdings Inc 299,680
39,000 Sakura Bank Ltd.* 283,964
26,000 Sumitomo Trust & Banking Co. Ltd.* 200,025
----------
783,669
----------
FINANCIAL / MISCELLANEOUS (1.2%)
2,000 Orix Corp. 209,733
----------
MOTOR VEHICLES (3.0%)
76,000 Nissan Motors Co. Ltd. 521,348
----------
RETAIL (0.5%)
1,000 Acom Co. Ltd.* 80,871
----------
TELECOMMUNICATIONS (3.4%)
9,000 Fujitsu Ltd.* 160,240
26 Nippon Telegraph & Telephone Corp. 236,459
8 NTT Docomo, Inc.* 197,094
----------
593,793
-----------
UTILITIES / ELECTRIC (0.9%)
8,000 Sumitomo Electric Industries 147,638
-----------
TOTAL JAPAN 3,792,224
-----------
--------------------------------------------------------------------------------
NETHERLANDS (8.3%)
BEVERAGES / ALCOHOLIC (1.4%)
4,400 Heineken NV 238,697
-----------
CHEMICALS (2.2%)
8,400 Akzo Nobel NV 382,000
-----------
ELECTRONICS (1.0%)
4,440 Philips Electronics NV 174,288
-----------
CONTINUED NATIONWIDE 25
<PAGE> 28
STATEMENT OF INVESTMENTS PRESTIGE INTERNATIONAL FUND CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
--------------------------------------------------------------------------------
NETHERLANDS (CONTINUED)
FINANCIAL / BANKS (2.4%)
5,980 ING Groep NV $ 410,177
-----------
INTERNET SERVICES / SOFTWARE (0.8%)
13,300 Getronics NV 149,376
-----------
PRINTING & PUBLISHING (0.5%)
4,200 Wolters Kluwer NV 94,414
-----------
TOTAL NETHERLANDS 1,448,952
-----------
--------------------------------------------------------------------------------
PORTUGAL (1.5%)
ELECTRONICS (0.2%)
11,400 Electricidade de Portugal SA 30,922
-----------
TELECOMMUNICATIONS (1.3%)
26,700 Portugal Telecom SA 237,637
-----------
TOTAL PORTUGAL 268,559
-----------
--------------------------------------------------------------------------------
SINGAPORE (3.3%)
FINANCIAL / BANKS (3.3%)
36,450 Overseas Chinese Banking Corp. Ltd. 232,555
45,176 United Overseas Bank Ltd. 334,550
-----------
TOTAL SINGAPORE 567,105
-----------
--------------------------------------------------------------------------------
SPAIN (2.5%)
TELECOMMUNICATIONS (1.0%)
9,136 Telefonica SA* 174,010
-----------
UTILITIES / ELECTRIC (1.5%)
15,900 Endesa SA* 258,769
-----------
TOTAL SPAIN 432,779
-----------
--------------------------------------------------------------------------------
SWEDEN (3.5%)
CONSUMER DURABLES (0.7%)
9,600 Electroloux AB 120,722
-----------
FINANCIAL / BANKS (1.1%)
12,700 Svenska Handelsbanken AB 198,998
-----------
INVESTMENT COMPANY (1.7%)
22,200 Investor AB 292,464
-----------
TOTAL SWEDEN 612,184
-----------
--------------------------------------------------------------------------------
SWITZERLAND (3.7%)
DRUGS (1.3%)
24 Roche Holding AG 219,167
-----------
FINANCIAL / BANKS (1.5%)
554 Zurich Financial Services AG 268,051
-----------
MANUFACTURING & CONSUMER GOODS (0.9%)
1,691 ABB Ltd. 150,236
-----------
TOTAL SWITZERLAND 637,454
-----------
SHARES SECURITY VALUE
Common Stock (continued)
--------------------------------------------------------------------------------
UNITED KINGDOM (25.0%)
AEROSPACE (1.2%)
36,500 BAE Systems $ 208,297
-----------
AUTO & AUTO PARTS (0.7%)
9,600 GKN PLC 1,394
11,200 GKN PLC 129,458
-----------
130,852
-----------
BANKING/INSURANCE (1.8%)
21,700 HSBC Holdings PLC 310,064
-----------
BEVERAGES / ALCOHOLIC (1.6%)
28,600 Diageo PLC 270,569
-----------
DRUGS (3.8%)
5,742 AstraZeneca Group PLC 270,067
31,600 Smithkline Beecham PLC 408,847
-----------
678,914
-----------
ELECTRONICS (1.1%)
21,500 National Grid Group PLC 186,541
-----------
FINANCIAL / BANKS (0.9%):
19,500 Halifax Group PLC 153,614
-----------
FOOD & RELATED (1.3%):
37,100 Cadbury Schweppes PLC 229,634
-----------
INSURANCE (0.9%):
11,700 Prudential Corp. PLC 157,918
-----------
MANUFACTURING & CONSUMER GOODS (1.3%):
94,400 Invensys PLC 225,151
-----------
OIL / INTERNATIONAL (1.8%):
36,100 BP Amoco PLC 306,400
-----------
PRINTING & PUBLISHING (1.5%):
27,900 Reed International PLC 258,072
-----------
RETAIL (3.1%):
30,400 Great Universal Stores PLC 210,125
86,400 Tesco PLC 329,964
-----------
540,089
-----------
TELECOMMUNICATIONS (4.0%):
30,500 British Telecommunications PLC 358,298
80,900 Vodafone Airtouch PLC 337,447
-----------
695,745
-----------
TOTAL UNITED KINGDOM 4,351,860
-----------
TOTAL COMMON STOCK (cost $17,302,929) 16,381,996
-----------
26 NATIONWIDE CONTINUED
6
<PAGE> 29
STATEMENT OF INVESTMENTS PRESTIGE INTERNATIONAL FUND CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
PRINCIPAL SECURITY VALUE
United States
Repurchase Agreement (5.7%)
--------------------------------------------------------------------------------
$984,000 Fifth Third Bank 6.35%, 10/31/00,
matures11/01/00,Collateralized by
$998,317 FNMB Pool #303741, 7.00%
Market Value $1,003,680 $ 984,000
-----------
Total Repurchase Agreement (cost $984,000) 984,000
-----------
Total Investments (cost $18,286,929) $17,365,996
===========
--------------------------------------------------------------------------------
The abbreviations in the above statement stand for the following:
AB Aktiebolag (Swedish stock exchange)
ADR American Depositary Receipt
AG Aktiengesellschaft (German, or Swiss Stock Cos.)
AS Limited (Denmark)
FNMB Federal National Mortgage Bank
NPV No Par Value
NV Naamloze Vennootschap (Dutch Corp.)
OYJ Limited (Finland)
PLC Public Limited Company (British, Finnish, or Irish)
SA Societe Anonyme (French, Spanish
or Portuguese Corp.)
SpA Societa per Anioni (Italian Corp.)
* DENOTES A NON-INCOME PRODUCING SECURITY.
COST FOR FEDERAL INCOME TAX PURPOSES: $18,448,233.
SECURITIES DENOMINATED IN FOREIGN CURRENCIES ARE SHOWN AT THE U.S. DOLLAR COST
AND VALUE.
PORTFOLIO HOLDING PERCENTAGES BASED ON NET ASSETS OF $17,388,948.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 27
<PAGE> 30
STATEMENTS OF ASSET AND LIABILITIES
--------------------------------------------------------------------------------
October 31, 2000
<TABLE>
<CAPTION>
PRESTIGE PRESTIGE PRESTIGE
LARGE CAP LARGE CAP BALANCED
VALUE FUND GROWTH FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value (cost $29,354,548,
$46,254,106, $9,485,293, respectively) $ 32,026,764 $ 49,177,162 $ 10,043,715
Repurchase Agreements, at value (cost $651,000, $4,267,000,
$1,376,000, respectively) 651,000 4,267,000 1,376,000
Cash 755 700 976
Receivable for investment securities sold 184,362 -- 397,778
Receivable for futures variation margin 14,500 84,000 --
Receivable from adviser 33,670 84,457 18,252
Interest and dividends receivable 39,901 8,030 24,652
Restricted cash for initial margin on futures 75,000 270,000 --
Prepaid and other assets 4,396 1,277 3,409
------------ ------------ ------------
Total Assets 33,030,348 53,892,626 11,864,782
------------ ------------ ------------
LIABILITIES:
Payable for investment securities purchased 183,662 -- 1,713,165
Accrued expenses and other payables:
Investment advisory fees 19,607 35,553 6,272
Fund administration fees 6,371 6,371 6,371
Transfer agent fees 947 5,848 748
Distribution fees 6,467 11,095 2,741
Administrative servicing fees 3,945 6,435 567
Other 30,324 46,245 24,140
------------ ------------ ------------
Total Liabilities 251,323 111,547 1,754,004
------------ ------------ ------------
NET ASSETS $ 32,779,025 $ 53,781,079 $ 10,110,778
============ ============ ============
NET ASSETS:
Capital 31,035,465 48,917,315 9,441,113
Accumulated net investment income 24,787 -- 21,451
Net unrealized appreciation (depreciation) from investments and futures 2,644,827 3,098,887 558,422
Accumulated (distributions in excess of) net realized gains (losses)
from investments and futures (926,054) 1,764,877 89,792
------------ ------------ ------------
NET ASSETS $ 32,779,025 $ 53,781,079 $ 10,110,778
============ ============ ============
NET ASSETS:
Class A Shares 30,726,055 40,643,245 3,566,223
Class B Shares 408,167 3,233,635 2,408,195
Institutional Service Class Shares 1,644,803 9,904,199 4,136,360
------------ ------------ ------------
Total $ 32,779,025 $ 53,781,079 $ 10,110,778
============ ============ ============
SHARES OUTSTANDING (unlimited number of shares authorized):
Class A Shares 2,804,061 2,828,885 318,305
Class B Shares 37,665 228,080 213,528
Institutional Service Class Shares 149,797 687,364 368,923
------------ ------------ ------------
Total 2,991,523 3,744,329 900,756
============ ============ ============
NET ASSET VALUE PER SHARE:
Class A Shares $ 10.96 $ 14.37 $ 11.20
Class B Shares $ 10.84 $ 14.18 $ 11.28
Institutional Service Class Shares $ 10.98 $ 14.41 $ 11.21
Maximum offering price (100%/(100%-Maximum Sales Charge) of net asset
value adjusted to nearest cent) per share:
Class A Shares* $ 11.63 $ 15.25 $ 11.88
Class B Shares** $ 10.84 $ 14.18 $ 11.28
Institutional Service Class Shares*** $ 10.98 $ 14.41 $ 11.21
------------ ------------ ------------
Maximum sales charge - Class A Shares 5.75% 5.75% 5.75%
============ ============ ============
<FN>
* 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 AND ARE NOT SUBJECT TO A FRONT-END SALES CHARGE.
*** INSTITUTIONAL SERVICE CLASS (FORMERLY KNOWN AS CLASS Y) DOES NOT HAVE ANY SALES
CHARGE.
</TABLE>
28 NATIONWIDE CONTINUED
<PAGE> 31
STATEMENTS OF ASSET AND LIABILITIES CONTINUED [PHOTO]
--------------------------------------------------------------------------------
October 31, 2000
<TABLE>
<CAPTION>
PRESTIGE PRESTIGE
SMALL CAP INTERNATIONAL
FUND FUND
------------ ------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $26,373,676, $17,302,929, respectively) $ 28,550,686 $ 16,381,996
Repurchase Agreements, at value (cost $351,000, $984,000, respectively) 351,000 984,000
Foreign Currency, at value -- 40,348
Cash 843 --
Receivable for investment securities sold -- 21,351
Receivable from adviser 24,773 42,844
Interest and dividends receivable 8,358 19,838
Withholding tax reclaim receivable -- 17,225
Prepaid and other assets 3,129 2,661
------------ ------------
Total Assets 28,938,789 17,510,263
------------ ------------
LIABILITIES:
Cash overdrafts -- 17,904
Payable for investment securities purchased -- 40,607
Accrued expenses and other payables:
Investment advisory fees 22,356 11,906
Fund administration fees 6,371 6,371
Transfer agent fees 1,477 657
Distribution fees 5,481 3,378
Administrative servicing fees 3,666 2,145
Other 38,445 38,347
------------ ------------
Total Liabilities 77,796 121,315
------------ ------------
NET ASSETS $ 28,860,993 $ 17,388,948
============ ============
NET ASSETS:
Capital 24,335,860 17,566,983
Accumulated (distributions in excess of) net investment income 6,076 (3,710)
Net unrealized appreciation (depreciation) from investments and translation
of assets and liabilities in foreign currencies 2,177,010 (922,314)
Accumulated net realized gains from investments and
foreign currency transactions 2,342,047 747,989
------------ ------------
NET ASSETS $ 28,860,993 $ 17,388,948
============ ============
NET ASSETS:
Class A Shares 23,921,538 15,404,737
Class B Shares 747,780 179,242
Institutional Service Class Shares 4,191,675 1,804,969
------------ ------------
Total $ 28,860,993 $ 17,388,948
============ ============
SHARES OUTSTANDING (unlimited number of shares authorized):
Class A Shares 1,822,707 1,402,039
Class B Shares 57,435 15,884
Institutional Service Class Shares 318,686 163,999
------------ ------------
Total 2,198,828 1,581,922
============ ============
NET ASSET VALUE PER SHARE:
Class A Shares $ 13.12 $ 10.99
Class B Shares $ 13.02 $ 11.28
Institutional Service Class Shares $ 13.15 $ 11.01
MAXIMUM OFFERING PRICE (100%/(100%-Maximum Sales Charge) of net asset value
adjusted to nearest cent) per share:
Class A Shares * $ 13.92 $ 11.66
Class B Shares ** $ 13.02 $ 11.28
Institutional Service Class Shares *** $ 13.15 $ 11.01
------------ ------------
Maximum sales charge - Class A Shares 5.75% 5.75%
============ ============
<FN>
* 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 AND ARE NOT SUBJECT TO A FRONT-END SALES CHARGE.
*** INSTITUTIONAL SERVICE CLASS (FORMERLY KNOWN AS CLASS Y) DOES NOT HAVE ANY SALES
CHARGE.
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 29
<PAGE> 32
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, 2000
<TABLE>
<CAPTION>
PRESTIGE PRESTIGE PRESTIGE
LARGE CAP LARGE CAP BALANCED
VALUE FUND GROWTH FUND FUND
----------- ----------- -----------
INVESTMENT INCOME:
<S> <C> <C> <C>
Interest income $ 66,214 $ 74,977 $ 250,902
Dividend income 708,792 352,040 71,849
Withholding tax -- (391) --
----------- ----------- -----------
Total Income 775,006 426,626 322,751
----------- ----------- -----------
EXPENSES:
Investment management fees 221,990 391,962 69,054
Fund administration fees 75,000 75,000 75,000
Custodian fees 14,881 19,766 13,517
Distribution fees 73,207 122,021 30,902
Administrative servicing fees 44,577 71,322 5,179
Professional fees 18,390 16,801 16,854
Trustees' fees and expenses 395 859 87
Transfer agent fees 7,866 51,260 6,166
Registration and filing fees 23,619 53,065 20,900
Shareholders' reports 39,899 60,245 14,747
Other 7,402 16,064 14,505
----------- ----------- -----------
Total expenses before waived or reimbursed expenses 527,226 878,365 266,911
Expenses waived or reimbursed (186,562) (282,534) (153,733)
----------- ----------- -----------
Net expenses 340,664 595,831 113,178
----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) $ 434,342 $ (169,205) $ 209,573
=========== =========== ===========
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) on investments
and futures $ (715,035) $ 2,152,104 $ 93,780
Net change in unrealized appreciation on investments
and futures 3,368,452 614,277 100,818
----------- ----------- -----------
Net realized/unrealized gains on investments
and futures 2,653,417 2,766,381 194,598
----------- ----------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,087,759 $ 2,597,176 $ 404,171
=========== =========== ===========
</TABLE>
30 NATIONWDIE CONTINUED
<PAGE> 33
STATEMENTS OF OPERATIONS CONTINUED [PHOTO]
--------------------------------------------------------------------------------
For the year ended October 31, 2000
<TABLE>
<CAPTION>
PRESTIGE PRESTIGE
SMALL CAP INTERNATIONAL
FUND FUND
----------- -----------
INVESTMENT INCOME:
<S> <C> <C>
Interest income $ 33,749 $ 36,066
Dividend income 275,624 300,703
Withholding tax -- (37,196)
----------- -----------
Total Income 309,373 299,573
----------- -----------
EXPENSES:
Investment management fees 247,305 137,111
Fund administration fees 75,000 75,000
Custodian fees 11,473 71,564
Distribution fees 60,742 38,971
Administrative servicing fees 40,207 24,659
Professional fees 18,380 18,533
Trustees' fees and expenses 404 209
Transfer agent fees 12,415 4,243
Registration and filing fees 33,278 20,879
Shareholders' reports 37,097 25,530
Other 13,580 10,998
----------- -----------
Total expenses before waived or reimbursed expenses 549,881 427,697
Expenses waived or reimbursed (199,813) (217,417)
----------- -----------
Net expenses 350,068 210,280
----------- -----------
NET INVESTMENT INCOME (LOSS) $ (40,695) $ 89,293
=========== ===========
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains on investments and foreign
currency transactions $ 2,404,176 $ 751,799
Net change in unrealized appreciation (depreciation) on investments
and translation of assets and liabilities in foreign currencies 1,776,087 (1,526,304)
----------- -----------
Net realized/unrealized gains (losses) on investments and
foreign currencies 4,180,263 (774,505)
----------- -----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,139,568 $ (685,212)
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 31
<PAGE> 34
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
October 31, 2000
<TABLE>
<CAPTION>
PRESTIGE LARGE CAP PRESTIGE LARGE CAP
VALUE FUND GROWTH FUND
PERIOD FROM PERIOD FROM
NOVEMBER 2, NOVEMBER 2,
YEAR ENDED 1998 TO YEAR ENDED 1998 TO
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
2000 1999 (a) 2000 1999 (a)
------------ ------------ ------------ ------------
FROM INVESTMENT ACTIVITIES:
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $ 434,342 $ 57,732 $ (169,205) $ (33,926)
Net realized gains (losses) on investments and futures (715,035) (101,097) 2,152,104 388,494
Net change in unrealized appreciation (depreciation)
on investments and futures 3,368,452 (723,625) 614,277 2,484,610
------------ ------------ ------------ ------------
Change in net assets resulting from operations 3,087,759 (766,990) 2,597,176 2,839,178
------------ ------------ ------------ ------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS FROM:
Net investment income (387,356) (47,051) -- --
Net realized gains from investment transactions -- -- (473,445) --
In excess of net realized gains from investment
transactions (106,016) -- -- --
------------ ------------ ------------ ------------
DISTRIBUTIONS TO CLASS B SHAREHOLDERS FROM:
Net investment income (3,544) (1,352) -- --
Net realized gains from investment transactions -- -- (21,460) --
In excess of net realized gains from investment
transactions (760) -- -- --
------------ ------------ ------------ ------------
DISTRIBUTIONS TO INSTITUTIONAL SERVICE CLASS
SHAREHOLDERS FROM: (b)
Net investment income (19,424) (8,560) -- --
Net realized gains from investment transactions -- -- (77,685) --
In excess of net realized gains from investment
transactions (3,146) -- -- --
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DISTRIBUTIONS (520,246) (56,963) (572,590) --
------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS: (c)
Proceeds from shares issued 27,715,985 34,485,142 38,589,006 48,565,205
Dividends reinvested 520,112 56,963 572,101 --
Cost of shares redeemed (24,817,641) (6,925,096) (26,587,929) (12,221,068)
------------ ------------ ------------ ------------
Change in net assets from capital transactions 3,418,456 27,617,009 12,573,178 36,344,137
------------ ------------ ------------ ------------
Change in net assets 5,985,969 26,793,056 14,597,764 39,183,315
NET ASSETS:
Beginning of period 26,793,056 -- 39,183,315 --
------------ ------------ ------------ ------------
End of period $ 32,779,025 $ 26,793,056 $ 53,781,079 $ 39,183,315
============ ============ ============ ============
SHARE TRANSACTION: (c)
Sold 2,838,392 3,241,641 2,553,073 3,828,192
Reinvested 52,674 5,617 38,839 --
Redeemed (2,496,125) (650,676) (1,733,785) (941,990)
------------ ------------ ------------ ------------
Change in shares 394,941 2,596,582 858,127 2,886,202
============ ============ ============ ============
<CAPTION>
PRESTIGE
BALANCED FUND
PERIOD FROM
NOVEMBER 2, NOVEMBER 2,
YEAR ENDED 1998 TO
OCTOBER 31, OCTOBER 31,
2000 1999 (a)
------------ ------------
FROM INVESTMENT ACTIVITIES:
Operations:
<S> <C> <C>
Net investment income (loss) $ 209,573 $ 118,974
Net realized gains (losses) on investments and futures 93,780 139,859
Net change in unrealized appreciation (depreciation)
on investments and futures 100,818 457,604
------------ ------------
Change in net assets resulting from operations 404,171 716,437
------------ ------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS FROM:
Net investment income (74,871) (40,667)
Net realized gains from investment transactions (48,435) --
In excess of net realized gains from investment
transactions -- --
------------ ------------
DISTRIBUTIONS TO CLASS B SHAREHOLDERS FROM:
Net investment income (36,891) (8,769)
Net realized gains from investment transactions (38,058) --
In excess of net realized gains from investment
transactions -- --
------------ ------------
DISTRIBUTIONS TO INSTITUTIONAL SERVICE CLASS
SHAREHOLDERS FROM: (b)
Net investment income (92,491) (53,407)
Net realized gains from investment transactions (57,354) --
In excess of net realized gains from investment
transactions -- --
------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DISTRIBUTIONS (348,100) (102,843)
------------ ------------
CAPITAL TRANSACTIONS: (c)
Proceeds from shares issued 3,740,161 7,357,732
Dividends reinvested 348,002 102,843
Cost of shares redeemed (1,752,182) (355,443)
------------ ------------
Change in net assets from capital transactions 2,335,981 7,105,132
------------ ------------
Change in net assets 2,392,052 7,718,726
NET ASSETS:
Beginning of period 7,718,726 --
------------ ------------
End of period $ 10,110,778 $ 7,718,726
============ ============
SHARE TRANSACTION: (c)
Sold 334,359 714,777
Reinvested 31,209 9,526
Redeemed (157,139) (31,976)
------------ ------------
Change in shares 208,429 692,327
============ ============
<FN>
(a) FIRST OFFERED TO THE PUBLIC ON NOVEMBER 2, 1998.
(b) FORMERLY KNOWN AS CLASS Y SHARES.
(c) BOTH THE CAPITAL SHARE TRANSACTIONS AND SHARE TRANSACTION SECTIONS REPRESENT
COMBINED DATA FOR ALL CLASSES.
</TABLE>
32 NATIONWIDE CONTINUED
<PAGE> 35
STATEMENTS OF CHANGES IN NET ASSETS CONTINUED
--------------------------------------------------------------------------------
October 31, 2000
<TABLE>
<CAPTION>
Prestige Prestige
Small Cap Fund International Fund
Period from Period from
November 2, November 2,
Year Ended 1998 to Year Ended 1998 to
October 31, October 31, October 31, October 31,
2000 1999 (a) 2000 1999 (a)
------------ ------------ ------------ ------------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income (loss) $ (40,695) $ 14,711 $ 89,293 $ 41,221
Net realized gains on investments and foreign currency transactions 2,404,176 179,087 751,799 96,323
Net change in unrealized appreciation (depreciation) on investments
and translation of assets and liabilities in foreign currencies 1,776,087 400,923 (1,526,304) 603,990
------------ ------------ ------------ ------------
Change in net assets resulting from operations 4,139,568 594,721 (685,212) 741,534
------------ ------------ ------------ ------------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS FROM:
Net investment income (15) (9,191) (72,587) (7,780)
Net realized gains from investment transactions (174,519) -- (129,356) --
------------ ------------ ------------ ------------
DISTRIBUTIONS TO CLASS B SHAREHOLDERS FROM:
Net investment income -- -- (583) (653)
Net realized gains from investment transactions (2,311) -- (597) --
------------ ------------ ------------ ------------
DISTRIBUTIONS TO INSTITUTIONAL SERVICE CLASS
SHAREHOLDERS FROM: (b)
Net investment income (368) (5,006) (5,620) (10,375)
Net realized gains from investment transactions (17,615) -- (6,806) --
------------ ------------ ------------ ------------
CHANGE IN NET ASSETS FROM SHAREHOLDER DISTRIBUTIONS (194,828) (14,197) (215,549) (18,808)
------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS: (c)
Proceeds from shares issued 21,110,516 26,363,039 38,706,744 20,167,857
Dividends reinvested 194,800 14,212 215,525 18,805
Cost of shares redeemed (18,193,339) (5,153,499) (35,221,985) (6,319,963)
------------ ------------ ------------ ------------
Change in net assets from capital transactions 3,111,977 21,223,752 3,700,284 13,866,699
------------ ------------ ------------ ------------
Change in net assets 7,056,717 21,804,276 2,799,523 14,589,425
NET ASSETS:
Beginning of period 21,804,276 -- 14,589,425 --
------------ ------------ ------------ ------------
End of period $ 28,860,993 $ 21,804,276 $ 17,388,948 $ 14,589,425
============ ============ ============ ============
SHARE TRANSACTION: (c)
Sold 1,613,946 2,410,464 3,293,085 1,801,109
Reinvested 16,605 1,349 18,028 1,754
Redeemed (1,380,672) (462,864) (2,981,282) (550,772)
------------ ------------ ------------ ------------
Change in shares 249,879 1,948,949 329,831 1,252,091
============ ============ ============ ============
<FN>
(a) FIRST OFFERED TO THE PUBLIC ON NOVEMBER 2, 1998.
(b) FORMERLY KNOWN AS CLASS Y SHARES.
(c) BOTH THE CAPITAL SHARE TRANSACTIONS AND SHARE TRANSACTION SECTIONS REPRESENT
COMBINED DATA FOR ALL CLASSES.
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 33
<PAGE> 36
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING
<TABLE>
<CAPTION>
PRESTIGE LARGE CAP VALUE FUND CLASS A SHARES CLASS B SHARES
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998 OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999 2000 TO OCTOBER 31, 1999
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.32 $ 10.00 $ 10.24 $ 10.00
--------- --------- -------- ---------
INVESTMENT ACTIVITIES:
Net investment income 0.15 0.07 0.07 (0.02)
Net realized and unrealized gain 0.67 0.32 0.68 0.27
--------- --------- -------- ---------
Total investment activities 0.82 0.39 0.75 0.25
DISTRIBUTIONS:
Net investment income (0.14) (0.07) (0.11) (0.01)
In excess of net realized gains (0.04) -- (0.04) --
--------- --------- -------- ---------
Total distributions (0.18) (0.07) (0.15) (0.01)
--------- --------- -------- ---------
Net increase (decrease) in net asset value 0.64 0.32 0.60 0.24
--------- --------- -------- ---------
NET ASSET VALUE--END OF PERIOD $ 10.96 $ 10.32 $ 10.84 $ 10.24
========= ========= ======== =========
Total Return (excluding sales charges) 8.09% 3.86%(d) 7.42% 2.50%(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 30,726 $ 25,883 $ 408 $ 155
Ratio of expenses to average net assets 1.15% 1.15%(a) 1.90% 1.90%(a)
Ratio of net investment income to
average net assets 1.47% 0.85%(a) 0.70% 0.13%(a)
Ratio of expenses to average net assets* 1.77% 1.87%(a) 3.56% 5.34%(a)
Portfolio turnover rate (b) 88.41% 120.94%(d) 88.41% 120.94%(d)
<CAPTION>
INSTITUTIONAL SERVICE
PRESTIGE LARGE CAP VALUE FUND CLASS SHARES (c)
YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999
--------- ---------
<S> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.35 $ 10.00
--------- ---------
INVESTMENT ACTIVITIES:
Net investment income 0.16@ 0.08
Net realized and unrealized gain 0.67@ 0.33
--------- ---------
Total investment activities 0.83 0.41
DISTRIBUTIONS:
Net investment income (0.16) (0.06)
In excess of net realized gains (0.04) --
--------- ---------
Total distributions (0.20) (0.06)
--------- ---------
Net increase (decrease) in net asset value 0.63 0.35
--------- ---------
NET ASSET VALUE--END OF PERIOD $ 10.98 $ 10.35
========= =========
Total Return (excluding sales charges) 8.20% 4.05%(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 1,645 $ 755
Ratio of expenses to average net assets 1.00% 1.00%(a)
Ratio of net investment income to
average net assets 1.56% 0.77%(a)
Ratio of expenses to average net assets* 1.64% 4.21%(a)
Portfolio turnover rate (b) 88.41% 120.94%(d)
</TABLE>
<TABLE>
<CAPTION>
PRESTIGE LARGE CAP GROWTH FUND CLASS A SHARES CLASS B SHARES
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998 OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999 2000 TO OCTOBER 31, 1999
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 13.58 $ 10.00 $ 13.50 $ 10.00
--------- --------- -------- ---------
INVESTMENT ACTIVITIES:
Net investment income (0.04) (0.04) (0.06) (0.12)
Net realized and unrealized gain 1.03 3.62 0.94 3.62
--------- --------- -------- ---------
Total investment activities 0.99 3.58 0.88 3.50
DISTRIBUTIONS:
Net realized gains (0.20) -- (0.20) --
--------- --------- -------- ---------
Total distributions (0.20) -- (0.20) --
--------- --------- -------- ---------
Net increase (decrease) in net asset value 0.79 3.58 0.68 3.50
--------- --------- -------- ---------
NET ASSET VALUE--END OF PERIOD $ 14.37 $ 13.58 $ 14.18 $ 13.50
========= ========= ======== =========
Total Return (excluding sales charges) 7.26% 35.80%(d) 6.48% 35.00%(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 40,643 $ 33,410 $ 3,234 $ 1,179
Ratio of expenses to average net assets 1.20% 1.20%(a) 1.95% 1.95%(a)
Ratio of net investment income to
average net assets (0.33%) (0.27%)(a) (1.06%) (.97%)(a)
Ratio of expenses to average net assets* 1.74% 1.69%(a) 3.33% 5.26%(a)
Portfolio turnover rate (b) 86.68% 65.27%(d) 86.68% 65.27%(d)
<CAPTION>
INSTITUTIONAL SERVICE
PRESTIGE LARGE CAP GROWTH FUND CLASS SHARES (c)
YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999
--------- ---------
<S> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 13.60 $ 10.00
--------- ---------
INVESTMENT ACTIVITIES:
Net investment income (0.03) (0.01)
Net realized and unrealized gain 1.04 3.61
--------- ---------
Total investment activities 1.01 3.60
DISTRIBUTIONS:
Net realized gains (0.20) --
--------- ---------
Total distributions (0.20) --
--------- ---------
Net increase (decrease) in net asset value 0.81 3.60
--------- ---------
NET ASSET VALUE--END OF PERIOD $ 14.41 $ 13.60
========= =========
Total Return (excluding sales charges) 7.40% 36.00%(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 9,904 $ 4,594
Ratio of expenses to average net assets 1.05% 1.05%(a)
Ratio of net investment income to
average net assets (0.17%) (0.09%)(a)
Ratio of expenses to average net assets* 1.54% 3.46%(a)
Portfolio turnover rate (b) 86.68% 65.27%(d)
<FN>
* RATIOS CALCULATED AS IF NO EXPENSES WERE WAIVED AND/OR REIMBURSED.
@ CALCULATED USING THE AVERAGE DAILY SHARES OUTSTANDING FOR THE PERIOD.
(A) ANNUALIZED.
(B) PORTFOLIO TURNOVER IS CALCULATED ON THE BASIS OF THE FUND AS WHOLE WITHOUT DISTINGUISHING AMONG THE CLASSES OF SHARES.
(C) FORMERLY KNOWN AS CLASS Y.
(D) NOT ANNUALIZED.
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
34 NATIONWIDE
<PAGE> 37
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING
<TABLE>
<CAPTION>
PRESTIGE BALANCED FUND CLASS A SHARES CLASS B SHARES
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998 OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999 2000 TO OCTOBER 31, 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 11.13 $ 10.00 $ 11.20 $ 10.00
--------- --------- --------- ---------
INVESTMENT ACTIVITIES:
Net investment income 0.27 0.22 0.17 0.13
Net realized and unrealized gain 0.26 1.12 0.29 1.12
--------- --------- --------- ---------
Total investment activities 0.53 1.34 0.46 1.25
DISTRIBUTIONS:
Net investment income (0.26) (0.21) (0.18) (0.05)
Net realized gains (0.20) -- (0.20) --
--------- --------- --------- ---------
Total distributions (0.46) (0.21) (0.38) (0.05)
--------- --------- --------- ---------
Net increase (decrease) in net asset value 0.07 1.13 0.08 1.20
--------- --------- --------- ---------
NET ASSET VALUE--END OF PERIOD $ 11.20 $ 11.13 $ 11.28 $ 11.20
========= ========= ========= =========
Total Return (excluding sales charges) 4.86% 13.47%(d) 4.16% 12.54%(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 3,566 $ 2,532 $ 2,408 $ 2,107
Ratio of expenses to average net assets 1.10% 1.10%(a) 1.85% 1.85%(a)
Ratio of net investment income to
average net assets 2.40% 2.02%(a) 1.63% 1.25%(a)
Ratio of expenses to average net assets* 2.82% 3.44%(a) 3.53% 4.25%(a)
Portfolio turnover rate (b) 284.35% 205.14%(d) 284.35% 205.14%(d)
<CAPTION>
INSTITUTIONAL SERVICE
PRESTIGE BALANCED FUND CLASS C SHARES
YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999
--------- ---------
<S> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 11.13 $ 10.00
--------- ---------
INVESTMENT ACTIVITIES:
Net investment income 0.29 0.22
Net realized and unrealized gain 0.27 1.13
--------- ---------
Total investment activities 0.56 1.35
DISTRIBUTIONS:
Net investment income (0.28) (0.22)
Net realized gains (0.20) --
--------- ---------
Total distributions (0.48) (0.22)
--------- ---------
Net increase (decrease) in net asset value 0.08 1.13
--------- ---------
NET ASSET VALUE--END OF PERIOD $ 11.21 $ 11.13
========= =========
Total Return (excluding sales charges) 5.09% 13.62%(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 4,136 $ 3,080
Ratio of expenses to average net assets 0.95% 0.95%(a)
Ratio of net investment income to
average net assets 2.56% 2.17%(a)
Ratio of expenses to average net assets* 2.56% 3.30%(a)
Portfolio turnover rate (b) 284.35% 205.14%(d)
</TABLE>
<TABLE>
<CAPTION>
PRESTIGE SMALL CAP FUND CLASS A SHARES CLASS B SHARES
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998 OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999 2000 TO OCTOBER 31, 1999
------------ ------------------- --------- -------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 11.19 $ 10.00 $ 11.17 $ 10.00
---------- ---------- ------- -------
Investment activities:
Net investment income (0.02) 0.03 (0.08) (0.05)
Net realized and unrealized gain 2.05 1.19 2.03 1.22
---------- ---------- ------- -------
Total investment activities 2.03 1.22 1.95 1.17
Distributions:
Net investment income -- (0.03) -- --
Net realized gains (0.10) -- (0.10) --
---------- ---------- ------- -------
Total distributions (0.10) (0.03) (0.10) --
---------- ---------- ------- -------
Net increase (decrease) in net asset value 1.93 1.19 1.85 1.17
---------- ---------- ------- -------
NET ASSET VALUE--END OF PERIOD $ 13.12 $ 11.19 $ 13.02 $ 11.17
========== ========== ======= =======
Total Return (excluding sales charges) 18.25% 12.18%(d) 17.56% 11.70%(d)
Ratios/supplemental data:
Net assets, at end of period (000) $ 23,922 $ 19,830 $ 748 $ 215
Ratio of expenses to average net assets 1.35% 1.35%(a) 2.10% 2.10%(a)
Ratio of net investment income to
average net assets (0.16%) 0.29%(a) (0.90%) (0.46%)(a)
Ratio of expenses to average net assets* 2.10% 2.24%(a) 3.82% 6.57%(a)
Portfolio turnover rate (b) 139.27% 81.24%(d) 139.27% 81.24%(d)
<CAPTION>
INSTITUTIONAL SERVICE
PRESTIGE BALANCED FUND CLASS C SHARES
YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999
<S> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 11.20 $ 10.00
--------- ---------
Investment activities:
Net investment income (0.01) 0.04
Net realized and unrealized gain 2.06 1.19
--------- ---------
Total investment activities 2.05 1.23
Distributions:
Net investment income -- (0.03)
Net realized gains (0.10) --
--------- ---------
Total distributions (0.10) (0.03)
--------- ---------
Net increase (decrease) in net asset value 1.95 1.20
--------- ---------
NET ASSET VALUE--END OF PERIOD $ 13.15 $ 11.20
========= =========
Total Return (excluding sales charges) 18.44% 12.36%(d)
Ratios/supplemental data:
Net assets, at end of period (000) $ 4,192 $ 1,759
Ratio of expenses to average net assets 1.20% 1.20%(a)
Ratio of net investment income to
average net assets (0.01%) 0.39%(a)
Ratio of expenses to average net assets* 1.92% 4.87%(a)
Portfolio turnover rate (b) 139.27% 81.24%(d)
<FN>
* RATIOS CALCULATED AS IF NO EXPENSES WERE WAIVED OR REIMBURSED.
(a) ANNUALIZED.
(b) PORTFOLIO TURNOVER IS CALCULATED ON THE BASIS OF THE FUND AS WHOLE WITHOUT DISTINGUISHING AMONG THE CLASSES OF SHARES.
(c) FORMERLY KNOWN AS CLASS Y.
(d) NOT ANNUALIZED.
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 35
<PAGE> 38
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING
<TABLE>
<CAPTION>
PRESTIGE INTERNATIONAL FUND CLASS A SHARES CLASS B SHARES
YEAR ENDED PERIOD FROM YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998 OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999 2000 TO OCTOBER 31, 1999
--------- ------------------- --------- -------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 11.65 $ 10.00 $ 11.96 $10.00
---------- ---------- ------- ------
INVESTMENT ACTIVITIES:
Net investment income (loss) 0.05 0.11 (0.05) 0.07
Net realized and unrealized gain (0.54) 1.62 (0.48) 1.90
---------- ---------- ------- ------
Total investment activities (0.49) 1.73 (0.53) 1.97
DISTRIBUTIONS:
Net investment income (0.06) (0.08) -- (0.01)
In excess of net investment income -- -- (0.04) --
Net realized gains (0.11) -- (0.11) --
---------- ---------- ------- ------
Total distributions (0.17) (0.08) (0.15) (0.01)
---------- ---------- ------- ------
Net increase (decrease) in net asset value (0.66) 1.65 (0.68) 1.96
---------- ---------- ------- ------
NET ASSET VALUE--END OF PERIOD $ 10.99 $ 11.65 $ 11.28 $11.96
========== ========== ======= ======
Total Return (excluding sales charges) (4.36%) 17.33%(d) (4.57%) 16.58%(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 15,405 $ 13,862 $ 179 $ 59
Ratio of expenses to average net assets 1.30% 1.30%(a) 2.05% 2.05%(a)
Ratio of net investment income to
average net assets 0.55% 0.59%(a) (0.04%) 0.62%(a)
Ratio of expenses to average net assets* 2.64% 2.87%(a) 4.50% 7.59%(a)
Portfolio turnover rate (b) 69.01% 27.72%(d) 69.01% 27.72%(d)
<CAPTION>
INSTITUTIONAL SERVICE
PRESTIGE INTERNATIONAL FUND CLASS C SHARES
YEAR ENDED PERIOD FROM
OCTOBER 31, NOVEMBER 2, 1998
2000 TO OCTOBER 31, 1999
--------- ---------
<S> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 11.67 $ 10.00
--------- -------
INVESTMENT ACTIVITIES:
Net investment income (loss) 0.06 0.14
Net realized and unrealized gain (0.55) 1.61
--------- -------
Total investment activities (0.49) 1.75
DISTRIBUTIONS:
Net investment income (0.06) (0.08)
In excess of net investment income -- --
Net realized gains (0.11) --
--------- -------
Total distributions (0.17) (0.08)
--------- -------
Net increase (decrease) in net asset value (0.66) 1.67
--------- -------
NET ASSET VALUE--END OF PERIOD $ 11.01 $ 11.67
========= =======
Total Return (excluding sales charges) (4.31%) 17.57%(d)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 1,805 $ 669
Ratio of expenses to average net assets 1.25% 1.25%(a)
Ratio of net investment income to
average net assets 0.64% 1.40%(a)
Ratio of expenses to average net assets* 2.54% 6.30%(a)
Portfolio turnover rate (b) 69.01% 27.72%(d)
<FN>
* RATIOS CALCULATED AS IF NO EXPENSES WERE WAIVED AND/OR REIMBURSED.
(a) ANNUALIZED.
(b) PORTFOLIO TURNOVER IS CALCULATED ON THE BASIS OF THE FUND AS WHOLE WITHOUT DISTINGUISHING AMONG THE CLASSES OF SHARES.
(c) FORMERLY KNOWN AS CLASS Y.
(d) NOT ANNUALIZED
</TABLE>
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
36 NATIONWIDE
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS [PHOTO]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
1. ORGANIZATION
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 thirty-three separate series, or mutual funds, each with its
own investment objectives and strategies. This report contains the financial
statements and financial highlights of the five funds listed below which
comprise the Prestige Advisor Series (individually, the "Fund", and
collectively, the "Funds"). The Funds in the Prestige Advisor Series commenced
operations on November 2, 1998:
- Prestige Large Cap Value Fund (Large Cap Value)
- Prestige Large Cap Growth Fund (Large Cap Growth)
- Prestige Balanced Fund (Balanced)
- Prestige Small Cap Fund (Small Cap)
- Prestige International Fund (International)
The Funds currently offer Class A, Class B, and Institutional Service Class
(formerly known as Class Y) shares. Class A and B shares of the Fund are
available to all investors. The Class A shares are purchased with a maximum
5.75% front-end sales load. The Class B shares contain a 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. Sales charges are paid
to the Funds' distributor, Nationwide Advisory Services, Inc. (NAS) which either
retains them or pays a selling representative. The Institutional Service Class
shares have no sales charges and are available to a limited group of investors,
such as insurance company separate accounts and tax-exempt employee benefit
plans.
Class A and Class B shares pay distribution and/or service (12b-1) fees under a
Distribution Plan of 0.25% and 1.00%, respectively. These fees are either
retained by NAS or paid by NAS to brokers for distribution and shareholders
services.
Class A and Institutional Service Class shares also pay administrative service
fees of up to 0.25%. These fees are paid to brokers and other entities that
provide administrative support services to the beneficial owners of the shares.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America. The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
(a) SECURITIES 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) Each Fund may enter into repurchase agreements with member banks of
the Federal Deposit Insurance Corporation and with registered
broker/dealers that the applicable investment adviser deems
creditworthy under guidelines approved by the Board of Trustees,
subject to the seller's agreement to repurchase such securities at a
mutually agreed-upon date and price. The repurchase price generally
equals the price paid by the Fund plus interest negotiated on the
basis of current short-term rates, which may be more or less than the
rate on the underlying portfolio securities. The seller, under a
repurchase agreement, is required to maintain the value of collateral
held pursuant to the agreement at not less than the repurchase price
(including accrued interest). Securities subject to repurchase
agreements are held by the Funds' custodian, another qualified
custodian or in the Federal Reserve/Treasury book-entry system. In the
event of counterparty default, the Fund has the right to use the
collateral to offset losses incurred. There is potential for loss to
the Fund in the event the Fund is delayed or prevented from exercising
its rights to dispose of the collateral securities, including the risk
of a possible decline in the value of the underlying securities during
the period while the Fund seeks to assert its rights.
(4) Foreign Currency Transactions. Fluctuations in the value of
investments resulting from changes in foreign exchange rates are
included with net realized and unrealized gain or loss from
investments.
NATIONWIDE 37
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
Net realized gains or losses arise from sales of foreign currencies,
security transactions, and the difference between the amounts of
purchases and sales of securities, income receipts and expense
payments recorded on the Fund's books in the U.S. dollar equivalent of
amounts actually received or paid. Net unrealized gains or losses
arise from accounting records denominated in foreign currencies and
then translated into U.S. dollars.
(5) Forward Foreign Currency Contracts. The Funds may enter into forward
foreign currency exchange contracts (forward exchange contracts),
which are obligations to purchase or sell a foreign currency at a
specified rate on a certain date in the future. A net realized gain or
loss would be incurred if the value of the contract increases or
decreases between the date the contract is opened and the date it is
closed. Forward exchange contracts are marked to market daily and this
change in value is reflected in the Statement of Assets and
Liabilities as a net receivable/payable for foreign currency contracts
sold/purchased.
At or before the closing of a forward exchange contract, a Fund may
either sell a portfolio security and make delivery of the currency, or
retain the security and fully or partially offset its contractual
obligation to deliver the currency by purchasing a second contract. If
the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund, at the time of execution of the offsetting
transaction, will incur a gain or loss to the extent that movement has
occurred in forward contract prices.
Forward exchange contracts can be used to hedge the risks associated
with commitments to purchase securities denominated in foreign
currencies for agreed amounts. The precise matching of forward
exchange contract amounts and the value of the securities involved
generally will not be possible because the value of such securities,
measured in the foreign currency, will change after the forward
exchange contract has been established. Thus, the Fund may need to
purchase or sell foreign currencies in the spot (cash) market to the
extent such foreign currencies are not covered by forward exchange
contracts. The Fund could be exposed to risk if a counter party is
unable to meet the terms of a forward exchange contract or if the
value of the currency changes unfavorably. The projection of
short-term currency market movements is difficult, and the successful
execution of a short-term hedging strategy is highly uncertain.
(6) Risks Associated with Foreign Securities and Currencies. Investments
in securities of foreign issuers carry certain risks not ordinarily
associated with investments in securities of domestic issuers. Such
risks include future political and economic developments, and the
possible imposition of exchange controls or other foreign governmental
laws and restrictions. In addition, with respect to certain countries,
there is the possibility of expropriation of assets, confiscatory
taxation, political or social instability or diplomatic developments
which could adversely affect investments in those countries.
Certain countries may also impose substantial restrictions on
investments in their capital markets by foreign entities, including
restrictions on investments in issuers of industries deemed sensitive
to relevant national interests. These factors may limit the investment
opportunities available in the Prestige International Fund and result
in a lack of liquidity and a high price volatility with respect to
securities of issuers from developing countries.
(7) Futures contracts and options traded on a commodities exchange or
board of trade are valued the last sales price at the close of
trading, or if there was no sale, the quoted bid price at the close of
trading. Futures are used for purposes other than hedging.
(8) Securities for which reliable market quotations are not available, or
for which an independent pricing agent does not provide a value or
provides a value that does not represent fair value in the judgement
of the Fund's Investment Adviser are valued in accordance with
procedures authorized by the Trust's Board of Trustees.
(b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME
Securities transactions are recorded on the trade date. Dividend income is
recognized on the ex-dividend date. Interest income is recognized on an accrual
basis and includes, where applicable, the pro rata amortization/accretion of
premium or discount.
(c) FEDERAL INCOME TAXES
Each Fund's policy is to qualify or continue to qualify as a regulated
investment company under the Internal Revenue Code, and to distribute
substantially 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, 2000, the Large Cap Value Fund had a net
capital loss carry forward of $590,360, If unused it will expire in 8 years. It
is the intent of the Funds to use this carryforward to offset future capital
gains.
(d) DISTRIBUTIONS TO SHAREHOLDERS
(1) Net investment income, if any, is paid quarterly and is recorded on
the ex-dividend date.
(2) Distributable net realized capital gains, if any, are declared and
distributed at least annually.
38 NATIONWIDE
<PAGE> 41
NOTES TO FINANCIAL STATEMENTS [PHOTO]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
(3) Dividends and distributions to shareholders are determined in
accordance with federal income tax regulations which may differ from
accounting principles generally accepted in the United States of
America. 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 (i.e. reclass of market discounts, gain/loss, pay downs,
and distributions) are reclassified within the capital accounts based
on their nature for federal income tax purposes; temporary differences
do not require reclassification. Dividends and distributions that
exceed net investment income and net realized gains for financial
reporting purposes but not for tax purposes are reported as dividends
in excess of net investment income and net realized gains. To the
extent distributions exceed current and accumulated earnings and
profits for federal income tax purposes, they are reported as
distributions of paid-in-capital. These reclassifications have no
effect upon the net asset value of the respective Funds. For the
fiscal year ended October 31, 2000, the following reclasses were
necessary:
CAPITAL PAID UNDISTRIBUTED UNDISTRIBUTED
IN EXCESS OF NET INVESTMENT CAPITAL
FUND PAR VALUE INCOME GAIN
--------------------------------------------------------------
Large Cap Growth $ - $169,205 $(169,205)
Small Cap Growth 131 46,640 (46,771)
International - (13,626) 13,626
(e) EXPENSES
General expenses of the Trust not directly attributable to a Fund or to any
class of shares are charged to all 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 allocated to the
classes based on total shares outstanding of each class.
Direct expenses of a Fund are charged to that Fund and then allocated to the
classes in the methods mentioned above.
Direct expenses of a class are charged to that class unless otherwise directed
by the Trust's Board of Trustees. For example, distribution fees and
administrative servicing fees are borne by the specific class of shares to which
they apply.
NATIONWIDE 39
<PAGE> 42
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
(f) CAPITAL SHARE TRANSACTIONS
Transactions in class level shares of the Funds were as follows:
<TABLE>
<CAPTION>
LARGE CAP VALUE LARGE CAP GROWTH
PERIOD FROM PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998 YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
CAPITAL TRANSACTIONS: 2000 1999(a) 2000 199(a)
----------------------------------------- ----------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares issued $ 22,508,527 $ 30,294,612 $ 28,691,919 $ 40,634,346
Distributions reinvested 493,283 47,051 473,156 --
Cost of shares redeemed (20,520,516) (3,441,343) (24,037,150) (9,077,683)
------------ ------------ ------------ ------------
Change in capital $ 2,481,294 $ 26,900,320 $ 5,127,925 $ 31,556,663
============ ============ ============ ============
CLASS B SHARES:
Proceeds from shares issued $ 418,274 $ 1,487,920 $ 2,646,612 $ 2,128,414
Distributions reinvested 4,257 1,352 21,263 --
Cost of shares redeemed (203,337) (1,438,785) (553,414) (1,288,432)
------------ ------------ ------------ ------------
Change in capital $ 219,194 $ 50,487 $ 2,114,461 $ 839,982
============ ============ ============ ============
PERIOD FROM PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998 YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
INSTITUTIONAL SERVICE CLASS SHARES (b): 2000 1999(a) 2000 199(a)
----------------------------------------- ----------- ----------------- ------------- -----------------
Proceeds from shares issued $ 4,789,184 $ 2,702,610 $ 7,250,475 $ 5,802,445
Distributions reinvested 22,572 8,560 77,682 --
Cost of shares redeemed (4,093,788) (2,044,968) (1,997,365) (1,854,953)
------------ ------------ ------------ ------------
Change in capital $ 717,968 $ 666,202 $ 5,330,792 $ 3,947,492
============ ============ ============ ============
PERIOD FROM PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998 YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
SHARE TRANSACTIONS: 2000 1999(a) 2000 199(a)
----------------------------------------- ------------ ------------------- ------------- -----------------
CLASS A SHARES:
Issued 2,315,254 2,833,811 1,903,169 3,157,580
Reinvested 49,967 4,668 32,119 --
Redeemed (2,069,626) (330,013) (1,567,278) (696,705)
------------ ------------ ------------ ------------
Change in shares 295,595 2,508,466 368,010 2,460,875
============ ============ ============ ============
CLASS B SHARES:
Issued 42,263 148,515 175,668 187,850
Reinvested 431 135 1,455 --
Redeemed (20,211) (133,468) (36,405) (100,488)
------------ ------------ ------------ ------------
Change in shares 22,483 15,182 140,718 87,362
============ ============ ============ ============
PERIOD FROM PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998 YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
2000 1999(a) 2000 199(a)
----------------------------------------- ------------ ------------------- ------------- -----------------
INSTITUTIONAL SERVICE CLASS SHARES (b):
Issued 480,875 259,315 474,236 482,762
Reinvested 2,276 814 5,265 --
Redeemed (406,288) (187,195) (130,102) (144,797)
------------ ------------ ------------ ------------
Change in shares 76,863 72,934 349,399 337,965
============ ============ ============ ============
<CAPTION>
BALANCED
PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31,
CAPITAL TRANSACTIONS: 2000 1999(a)
----------------------------------------- ------------ -------------------
<S> <C> <C>
CLASS A SHARES:
Proceeds from shares issued $ 1,274,974 $ 2,460,604
Distributions reinvested 123,295 40,667
Cost of shares redeemed (381,845) (162,529)
------------ ------------
Change in capital $ 1,016,424 $ 2,338,742
============ ============
CLASS B SHARES:
Proceeds from shares issued $ 268,034 $ 1,896,555
Distributions reinvested 74,877 8,769
Cost of shares redeemed (58,123) (1,201)
------------ ------------
Change in capital $ 284,788 $ 1,904,123
============ ============
PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
----------------------------------------- --------------- --------------------
INSTITUTIONAL SERVICE CLASS SHARES (b):
Proceeds from shares issued $ 2,197,153 $ 3,000,573
Distributions reinvested 149,830 53,407
Cost of shares redeemed (1,312,214) (191,713)
------------ ------------
Change in capital $ 1,034,769 $ 2,862,267
============ ============
PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
----------------------------------------- --------------- --------------------
SHARE TRANSACTIONS:
CLASS A SHARES:
Issued 113,610 238,374
Reinvested 11,072 3,764
Redeemed (33,924) (14,591)
------------ ------------
Change in shares 90,758 227,547
============ ============
CLASS B SHARES:
Issued 23,865 187,391
Reinvested 6,684 820
Redeemed (5,126) (106)
------------ ------------
Change in shares 25,423 188,105
============ ============
PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31,
2000 1999(a)
----------------------------------------- --------------- --------------------
INSTITUTIONAL SERVICE CLASS SHARES (b):
Issued 196,884 289,012
Reinvested 13,453 4,942
Redeemed (118,089) (17,279)
------------ ------------
Change in shares 92,248 276,675
============ ============
<FN>
(a) COMMENCED OPERATIONS ON NOVEMBER 2, 1998.
(b) FORMERLY KNOWN AS CLASS Y SHARES.
</TABLE>
40 NATIONWIDE
<PAGE> 43
NOTES TO FINANCIAL STATEMENTS [PICTURE]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL
PERIOD FROM PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998 YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
CAPITAL TRANSACTIONS: 2000 1999 (a) 2000 1999 (a)
-------------------------------------- ------------ ---------------- ------------ -------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares issued $ 15,979,604 $ 21,511,277 $ 35,564,843 $ 16,120,547
Distributions reinvested 174,508 9,206 201,928 7,779
Cost of shares redeemed (15,606,611) (1,967,495) (33,396,020) (2,635,325)
------------ ------------ ------------ ------------
Change in capital $ 547,501 $ 19,552,988 $ 2,370,751 $ 13,493,001
============ ============ ============ ============
CLASS B SHARES:
Proceeds from shares issued $ 594,953 $ 1,209,089 $ 218,927 $ 1,056,059
Distributions reinvested 2,311 -- 1,177 653
Cost of shares redeemed (106,434) (1,120,100) (85,788) (1,152,949)
------------ ------------ ------------ ------------
Change in capital $ 490,830 $ 88,989 $ 134,316 $ (96,237)
============ ============ ============ ============
PERIOD FROM PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998 YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
2000 1999 (a) 2000 1999 (a)
-------------------------------------- ------------ ---------------- ------------ -------------------
INSTITUTIONAL SERVICE CLASS SHARES (b):
Proceeds from shares issued $ 4,535,959 $ 3,642,673 $ 2,922,974 $ 2,991,251
Distributions reinvested 17,981 5,006 12,420 10,373
Cost of shares redeemed (2,480,294) (2,065,904) (1,740,177) (2,531,690)
------------ ------------ ------------ ------------
Change in capital $ 2,073,646 $ 1,581,775 $ 1,195,217 $ 469,934
============ ============ ============ ============
PERIOD FROM PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998 YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
SHARE TRANSACTIONS: 2000 1999 (a) 2000 1999 (a)
-------------------------------------- ------------ ---------------- ------------ -------------------
CLASS A SHARES:
Issued 1,225,221 1,948,238 3,021,681 1,418,382
Reinvested 14,877 860 16,892 725
Redeemed (1,190,017) (176,472) (2,826,390) (229,251)
------------ ------------ ------------ ------------
Change in shares 50,081 1,772,626 212,183 1,189,856
============ ============ ============ ============
CLASS B SHARES:
Issued 46,073 119,232 18,047 104,928
Reinvested 197 -- 96 63
Redeemed (8,058) (100,009) (7,166) (100,084)
------------ ------------ ------------ ------------
Change in shares 38,212 19,223 10,977 4,907
============ ============ ============ ============
PERIOD FROM PERIOD FROM
YEAR ENDED NOVEMBER 2, 1998 YEAR ENDED NOVEMBER 2, 1998
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
2000 1999 (a) 2000 1999 (a)
-------------------------------------- ------------ ---------------- ------------ -------------------
INSTITUTIONAL SERVICE CLASS SHARES (b):
Issued 342,652 342,994 253,357 277,799
Reinvested 1,531 489 1,040 966
Redeemed (182,597) (186,383) (147,726) (221,437)
------------ ------------ ------------ ------------
Change in shares 161,586 157,100 106,671 57,328
============ ============ ============ ============
</TABLE>
(a) COMMENCED OPERATIONS ON NOVEMBER 2, 1998.
(b) FORMERLY KNOWN AS CLASS Y SHARES.
NATIONWIDE 41
<PAGE> 44
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
(3) TRANSACTION WITH AFFILIATES
Under the terms of the Investment Advisory Agreement, Villanova Mutual Fund
Capital Trust ("VMF") manages the investment of the assets and supervises the
daily business affairs of the Funds. VMF also provides investment management
evaluation services in initially selecting and monitoring on an ongoing basis
the performance of the subadvisers. The subadvisers manage the Funds'
investments and have the responsibility for making all investment decisions for
the applicable Funds. Under the terms of the investment advisory agreement, each
Funds pays VMF a management fee based on the Fund's average daily net assets.
From such fees, pursuant to the subadvisory agreements, VMF pays fees to the
applicable subadviser.
Additional information regarding investment advisory fees for VMF and the
subadvisory fees is as follows for the period ended October 31, 2000:
<TABLE>
<CAPTION>
FUND/ TOTAL ADVISORY ADVISORY FEES SUB-ADVISORY FEE TOTAL FEES PAID TO
(SUBADVISER) FEES* RETAINED* FEES PAID SCHEDULE FEES RETAINED SUBADVISER
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Large Cap Value $221,990 $118,395 $103,595 Up to $100 million 0.75% 0.40% 0.35%
(Brinson Partners, Inc.) $100 million or more 0.70% 0.40% 0.30%
--------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth $391,962 $195,981 $195,981 Up to $150 million 0.80% 0.40% 0.40%
(Goldman Sachs Asset $150 million or more 0.70% 0.40% 0.30%
Management)
--------------------------------------------------------------------------------------------------------------------------------
Balanced $ 69,054 $ 36,829 $ 32,225 Up to $100 million 0.75% 0.40% 0.35%
(J.P. Morgan Investment $100 million or more 0.70% 0.40% 0.30%
Management, Inc.
--------------------------------------------------------------------------------------------------------------------------------
Small Cap $247,305 $104,129 $143,176 Up to $100 million 0.95% 0.40% 0.55%
(INVESCO Management & $100 million or more 0.80% 0.40% 0.40%
Research, Inc.)
-------------------------------------------------------------------------------------------------------------------------------
International $137,111 $ 64,523 $ 72,588 Up to $200 million 0.85% 0.40% 0.45%
(Lazard Asset Management) $200 million or more 0.80% 0.40% 0.40%
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Before waiver.
VMF has entered into an Expense Limitation Agreement with the Trust on behalf of
the Funds. Pursuant to the Expense Limitation Agreement, VMF has agreed to waive
fees or otherwise reimburse expenses (except for Rule 12b-1 and Administrative
Service Fees) of each Fund in order to limit annual Fund operating expenses at
or below stated expense caps. The following table illustrates the stated expense
caps for each class of share for the period ended October 31, 2000:
<TABLE>
<CAPTION>
EXPENSE CAPS
---------------------------------------------------------------------------
FUND CLASS A SHARES CLASS B SHARES INSTITUTIONAL SERVICE CLASS
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Large Cap Value 1.15% 1.90% 1.00%
Large Cap Growth 1.20% 1.95% 1.05%
Balanced 1.10% 1.85% 0.95%
Small Cap 1.35% 2.10% 1.20%
International 1.30% 2.05% 1.25%
</TABLE>
42 NATIONWIDE
<PAGE> 45
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
During the period ended October 31, 2000, VMF reduced expenses for each Fund as
follows:
<TABLE>
<CAPTION>
TOTAL FEES/
OTHER FEES/ EXPENSES
TOTAL FUND FEES EXPENSES WAIVED/ NET FUND
FUND EXPENSES WAIVED* REIMBURSED REIMBURSED EXPENSES
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Large Cap Value $527,226 $186,562 $ -- $186,562 $340,664
Large Cap Growth 878,365 282,534 -- 282,534 595,831
Balanced 266,911 150,224 3,509 153,733 113,178
Small Cap 549,881 199,813 -- 199,813 350,068
International 427,697 216,354 1,063 217,417 210,280
</TABLE>
* Includes advisory, transfer agent and fund administration fees.
VMF may request and receive reimbursement from a Fund of the advisory fees
waived or limited and other expenses reimbursed by VMF pursuant to the Expense
Limitation Agreement at a later date not to exceed five fiscal years from
commencement of operations if the Fund has reached a sufficient asset size to
permit reimbursemet to be made without causing the total annual operating
expense ratio of the Fund to exceed the limits set forth above. No reimbursement
will be made unless: (i) the Fund's assets exceed $100 million; (ii) the total
annual expense ratio of the Class making such reimbursement is less than the
limit set forth above; and (iii) the payment of such reimbursement is approved
by the Board of Trustees on a quarterly basis. Except as provided for in the
Expense Limitation Agreement, reimbursement of amounts previously waived or
assumed by VMF is not permitted. As of fiscal year ended October 31, 2000, the
cumulative reimbursements were $318,427, $426,446, $305,168, $340,439, and
$377,954 for the Large Cap Value, Large Cap Growth, Balanced, Small Cap, and
International Funds, respectively.
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 Class A and Class B shares of the Funds. These fees are
based on average daily net assets of the respective class of the Funds at an
annual rate not to exceed 0.25% for Class A shares and 1.00% for Class B shares.
For the period ended October 31, 2000, the Funds incurred distribution fees as
follows:
<TABLE>
<CAPTION>
FUND CLASS A SHARES CLASS B SHARES
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Large Cap Value $70,122 $ 3,085
Large Cap Growth 94,012 28,009
Balanced 7,896 23,006
Small Cap 55,500 5,242
International 37,409 1,562
</TABLE>
Pursuant to an Underwriting Agreement, NAS serves as principal underwriter of
the Funds in the continuous distribution of their shares and receives
commissions in the form of a front-end sales charge on the Class A shares. Such
fees are deducted from and are not included in proceeds from sales of Class A
shares. From such fees, NAS pays sales commissions, salaries, and other expenses
in connection with generating new sales of Class A shares of the Fund. For the
year ended October 31, 2000, the commissions were collected as follows:
FUND CLASS A SHARES
-------------------------------------------------------------------------------
Large Cap Value $11,974
Large Cap Growth 76,645
Balanced 11,600
Small Cap 23,970
International 5,089
NATIONWIDE 43
<PAGE> 46
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
NAS also receives fees for services as principal underwriter for Class B shares
of the Funds. Such fees are contingent deferred sales charges (CDSCs) ranging
from 1% to 5% imposed on redemptions of Class B shares which may cause the
current value of a shareholder's account to fall below the total purchase
payments; the CDSC, if applicable, will be imposed on redemptions made within 6
years of the purchase. CDSCs collected for the year ended October 31, 2000, on
redemptions of Class B Shares were as follows:
<TABLE>
<CAPTION>
FUND CLASS B SHARES
-------------------------------------------------------------------------------
<S> <C>
Large Cap Value $ 7,095
Large Cap Growth 64,036
Balanced 6,513
Small Cap 13,483
International 4,891
</TABLE>
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 year ended October 31, 2000, the
Funds incurred fund administration fees according to the following schedule:
<TABLE>
<CAPTION>
FUND ADMINISTRATION FUND ADMINISTRATION
FUND FEE* FEE SCHEDULE
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Large Cap Value $75,000 Up to $250 million 0.10%
Large Cap Growth 75,000 Next $750 million 0.06%
Balanced 75,000 On $1 billion and more 0.04%
Small Cap 75,000
International 75,000
</TABLE>
* The Fund Administration fee is subject to a minimum of $75,000 per Fund per
year.
VSA has entered into an agreement with BISYS Fund Services to provide
subadministration services to the Funds.
Nationwide Investors Services, Inc. ("NISI"), a subsidiary of VSA, serves as
Transfer and Dividend Disbursing Agent for the Funds. For these services, NISI
received fees at $18 per account for Class A and Class B shares (effective
October 1, 2000, per account fees were increased to $20), and 0.01% of the
average daily net assets of the Institutional Service Class shares. During the
year ended October 31, 2000, the Funds incurred the following transfer agent
fees:
<TABLE>
<CAPTION>
FUND CLASS A SHARES CLASS B SHARES INSTITUTIONAL SERVICE CLASS SHARES
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Large Cap Value $ 4,230 $ 3,512 $124
Large Cap Growth 22,529 27,872 859
Balanced 3,101 2,689 376
Small Cap 6,174 5,910 331
International 2,185 1,957 101
</TABLE>
44 NATIONWIDE
<PAGE> 47
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
NISI has entered into an agreement with BISYS Fund Services Ohio, Inc., to
provide sub-transfer agency services to the Funds.
Under the terms of an Administrative Services Plan, the Funds pay fees to
servicing organizations, such as broker-dealers and financial institutions,
which agree to provide administrative support services to those shareholders.
These servicing organizations may include Nationwide Financial Services, Inc.
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 inquiries regarding the Funds, 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. For the year ended October
31, 2000, the Funds incurred the following administrative services fees:
<TABLE>
<CAPTION>
FUND CLASS A SHARES INSTITUTIONAL SERVICE CLASS SHARES
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Large Cap Value $41,586 $ 2,991
Large Cap Growth 52,565 18,757
Balanced 848 4,331
Small Cap 32,416 7,791
International 22,231 2,428
</TABLE>
Affiliate NFS received payments (which are included in the total administrative
fees) as follows:
<TABLE>
<CAPTION>
FUND CLASS A SHARES INSTITUTIONAL SERVICE CLASS SHARES
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Large Cap Value $40,966 $ 2,507
Large Cap Growth 51,642 16,318
Balanced 796 3,650
Small Cap 9,413 6,544
International 21,895 2,083
</TABLE>
NATIONWIDE 45
<PAGE> 48
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
4. BANK LOANS
NMF currently has an unsecured bank line of credit of $50,000,000. Borrowings
under this arrangement bear interest at the Federal Funds rate plus 0.50%. These
interest costs are included in custodian fees in the Statements of Operations.
No compensating balances are required under the terms of this arrangement.
The average borrowings outstanding during the year (ended October 31, 2000) as
follows:
<TABLE>
<CAPTION>
AVERAGE BORROWINGS AVERAGE INTEREST
OUTSTANDING RATE
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Large Cap Value 22,756 6.58%
Large Cap Growth 75,684 6.40%
Balanced 397 7.08%
Small Cap 22,594 6.63%
International 25,458 6.78%
</TABLE>
5. 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 year
ended October 31, 2000, are summarized as follows:
<TABLE>
<CAPTION>
NON-U.S. GOVERNMENT U.S. GOVERNMENT
SECURITIES SECURITIES
FUND PURCHASES SALES PURCHASES SALES
---- ------------ ----- --------- -----
<S> <C> <C> <C> <C>
Large Cap Value $28,263,700 $25,035,578 $ -- $ --
Large Cap Growth 48,988,067 40,880,625 -- --
Balanced 6,600,472 3,772,712 21,137,984 21,744,105
Small Cap 38,979,042 35,572,562 -- --
International 13,827,019 10,688,692 -- --
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis
unless otherwise specified by VMF or the applicable subadviser. Cost for
financial reporting purposes differs from cost basis for federal income tax
purposes by the amount of losses recognized for financial reporting in excess of
federal income tax reporting of $363,083, $47,452, $27,508, $102,750, and
$161,304 for Large Cap Value, Large Cap Growth, Balanced, Small Cap, and
International, respectively. Cost for federal income tax purposes differs from
market value by net unrealized appreciation (depreciation) of securities as
follows:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED APPRECIATION
FUND APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
<S> <C> <C> <C>
Large Cap Value $ 4,426,533 $(2,117,400) $ 2,309,133
Large Cap Growth 8,156,469 (5,280,865) 2,875,604
Balanced 979,931 (449,017) 530,914
Small Cap 4,760,913 (2,686,653) 2,074,260
International 894,838 (1,977,075) (1,082,237)
</TABLE>
The Large Cap Growth, Large Cap Value, and Balanced Fund may engage in trading
financial futures contracts. Each of these Funds is exposed to market risks in
excess of the amounts recognized in the statement of assets and liabilities as a
result of changes in the value of the underlying financial instruments.
Investments in financial futures require the Fund to "mark to market" such
futures on a daily basis to reflect the changes in the market value of the
contract at the close of each day's trading. Typically, variation margin
payments are made or received to reflect daily unrealized gains or losses. When
the contracts are closed, the Fund recognizes a realized gain or loss. Realized
gains and losses have been computed on the specific identification method.
A stock index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of any amount of cash equal to a
specified dollar amount times the difference between the stock index value at
the close of trading on the contracts and the price at which the futures
contract was originally struck. The Fund's purpose in entering into futures
contracts is to remain fully invested and reduce transaction costs.
Restricted cash represents collateral for the Funds' investments in futures
trading.
46 NATIONWIDE
<PAGE> 49
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
6. FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For corporate shareholders. 84.53% of the Large Cap Value Fund, 5.30% of the
Large Cap Growth Fund, 26.29% of the Balanced Fund and 21.10% of the Small Cap
Fund income dividends and short-term capital gain distributions in the fiscal
year ended October 31, 2000, qualify for the dividend received deductions
available to certain corporate shareholders.
During the year ended October 31, 2000, the Large Cap Growth Fund declared
long-term capital distributions of $41.
7. SUBSEQUENT EVENT
At a regular quarterly meeting of the Board of Trustees on December 14 and 15,
2000, the Board the considered and approved the following transactions:
(a) Approved the change in the principal underwriter of Nationwide Mutual Funds
from Nationwide Advisory Services, Inc. to Villanova Distribution Services, Inc.
This change will occur as soon as practicable after all necessary regulatory
approvals are received.
(b) Approved a change in the subadviser for the Prestige Large Cap Value Fund
subject to shareholder approval at a special meeting of shareholders which is
expected to be held in the first quarter of 2001. If the change is approved by
shareholders, NorthPointe Capital LLC, an affiliate of VMF, will replace Brinson
Partners, Inc. as the Fund's subadviser.
(c) Approved a Plan of Dissolution, Liquidation and Termination for the Prestige
Balanced and Prestige International Funds subject to a shareholder approval at a
special meeting of shareholder which is expected to be held in the first quarter
of 2001. It is expected that if the Plan of Dissolution, Liquidation and
Termination is approved by shareholders of a Fund, that Fund will be liquidated
shortly thereafter.
(d) Approved the addition of Class C shares for each of the Funds except the
Prestige Balanced and Prestige International Funds. These shares will be
available for sale no earlier than March 1, 2001.
NATIONWIDE 47
<PAGE> 50
INDEPENDENT AUDITORS' REPORT
THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
NATIONWIDE MUTUAL FUNDS
We have audited the accompanying statements of assets and liabilities of
Nationwide Mutual Funds - Prestige Large Cap Value Fund, Prestige Large Cap
Growth Fund, Prestige Balanced Fund, Prestige Small Cap Fund and Prestige
International Fund (the Funds), including the statements of investments, as of
October 31, 2000, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000, by confirmation with the custodian,
correspondence with brokers and other appropriate audit procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned Funds as of October 31, 2000, the results of their
operations, the changes in their net assets and the financial highlights for
each of the periods indicated herein, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
COLUMBUS, OHIO
DECEMBER 18, 2000
48 NATIONWIDE
<PAGE> 51
[PICTURE]
Nationwide Value Opportunities Fund
Nationwide High Yield Bond Fund
Morley Enhanced Income Fund
NATIONWIDE Family of Funds Annual Report 2000
CONTENTS
NATIONWIDE FAMILY OF FUNDS
50 Fund Highlights
52 Nationwide Value Opportunities Fund
56 Nationwide High Yield Bond Fund
59 Morley Enhanced Income Fund
61 Statements of Assets and Liabilities
63 Statements of Operations
65 Statements of Changes in Net Assets
67 Financial Highlights
69 Notes to Financial
77 Independent Auditors' Report
<PAGE> 52
NATIONWIDE(R) MUTUAL FUNDS HIGHLIGHTS
--------------------------------------------------------------------------------
VALUE OPPORTUNITIES FUND
INVESTMENT STRATEGY
The Fund seeks long-term capital appreciation by investing primarily in
small-capitalization stocks that the portfolio managers consider value
companies. The Fund focuses on smaller companies with strong earnings-growth
potential, which have been undervalued by the market.
PORTFOLIO MANAGERS
Mary C. Champagne, CFA and Jeffrey C. Petherick, CFA, CIC of
NorthPointe Capital, Subadviser to the Fund
TOP TEN HOLDINGS*
(Composition Subject to Change)
AS OF OCTOBER 31, 2000 % OF NET ASSETS
Cullen/Frost Bankers, Inc. 1.78%
Banks
Engelhard Corp. 1.50%
Manufacturing/Diversified
BancWest Corp. 1.47%
Banks
Venator Group, Inc. 1.42%
Retail
Wisconsin Energy Corp. 1.38%
Utilities-Electric
Apria Healthcare Group, Inc. 1.36%
Health & Personal Care
Health Management Associates, Inc. 1.35%
Health Care Facilities
Sungard Data Systems, Inc. 1.27%
Financial Data Processing Services
Stewart & Stevenson Services, Inc. 1.25%
Machinery: Construction & Handling
Flowserve Corp. 1.24%
Identification Control & Filter Devices
HIGH YIELD BOND FUND
INVESTMENT STRATEGY
The Fund seeks high current income, with capital appreciation as a secondary
objective. The Fund invests primarily in U.S. dollar-denominated high-yield
bonds of domestic and foreign issuers that are below investment grade. Under
normal market conditions, at least 65% of the Fund's portfolio will be invested
in such securities.
PORTFOLIO MANAGER
Curtiss O. Barrows, ChFC
TOP TEN HOLDINGS BY ISSUER*
(Composition Subject to Change)
AS OF OCTOBER 31, 2000 % OF NET ASSETS
Kappa Beheer 4.40%
Paper & Forest Products
Lyondell Chemical Co. 4.23%
Chemicals
Global Crossing Holding Ltd. 4.17%
Communication/Fixed
Netia Holdings 4.04%
Communication/Fixed
Exodus Communications 2.98%
Communication/ISP
United Pan Europe 2.85%
Cable
Telecorp PCS, Inc. 2.82%
Communication/Mobile
American Plumbing & Mechanic 2.66%
Services
Strater Brothers Holdings 2.62%
Supermarket
Fox Family World Fox Kids 2.61%
Media
*Excludes repurchase agreement, cash and cash equivalents.
50 NATIONWIDE
<PAGE> 53
NATIONWIDE(R) MUTUAL FUNDS HIGHLIGHTS
--------------------------------------------------------------------------------
MORLEY ENHANCED INCOME FUND
INVESTMENT STRATEGY
The Fund seeks to provide a high level of current income while preserving
capital and minimizing market fluctuations in its net asset value. Under normal
conditions, the Fund invests primarily in high-grade debt securities issued by
the U.S. Government and its agencies, as well as by corporations. The Fund also
purchases mortgage-backed and asset-backed securities.
PORTFOLIO MANAGER
Thomas Mitchell
TOP HOLDINGS BY ISSUER*
(Composition Subject to Change)
AS OF OCTOBER 31, 2000 % OF NET ASSETS
Federal National Mortgage Association 42.61%
Federal Home Loan Bank 16.05%
Federal Home Loan Mortgage Corporation 15.99%
Morgan Stanley Dean Witter 4.82%
Merrill Lynch & Co., Inc. 4.32%
Bank of America 4.06%
Student Loan Marketing Association 4.01%
*Excludes repurchase agreement, cash and cash equivalents.
NATIONWIDE 51
<PAGE> 54
NATIONWIDE(R) MUTUAL FUNDS
--------------------------------------------------------------------------------
VALUE OPPORTUNITIES FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 10-month period ended October 31, 2000, the Nationwide Value
Opportunities Fund returned 24.38%(a) versus -0.47% for the Russell 2000 Small
Stock Index, the benchmark index. The Fund commenced operations on December 29,
1999.
At the start of the new millennium, the equity markets reverted back to "old"
standards. Market participants stopped chasing stocks simply because prices were
going up. Investors came back to the notion that "valuation does matter." This
shift in market sentiment was not only good for our investment style, but
healthy for the market as a whole.
In nearly every economic sector of the portfolio, good stock selection has
been the main reason we have outperformed the benchmark. In particular, stocks
in the consumer discretionary, finance, and health care sectors have performed
well. Our technology holdings have been the weakest performers, consistent with
the overall market. Given the fact that we focus on fundamental stock picking
and that we limit our sector exposures, sector selection had very little impact
on the portfolio.
The Fund's ten largest holdings for the year accounted for 14% of the
portfolio and were up, on average, 42% for the year. Everest Re, a reinsurance
company in the financial service sector; Health Management Associates, a
hospital management company in the health care sector; and Venator, a retailer
in the consumer discretionary sector, were up more than 90% combined in the
period and have added significantly to the portfolio's return. These positive
contributions were each offset slightly by the poor performance of our
technology holdings; for example, Symantec and Genesis Microchip were both down
more than 30% in the year-to-date period.
We believe the portfolio is well-positioned for what we see as a more
balanced, broader market going forward. The portfolio remains diversified across
all economic sectors in stocks that we believe show strong forward earnings
prospects at valuations substantially below what we consider fair value.
NORTHPOINTE CAPITAL-SUBADVISER
(a) PERFORMANCE OF CLASS A SHARES WITHOUT SALES CHARGE AND ASSUMING ALL
DISTRIBUTIONS ARE REINVESTED. THE PERFORMANCE INCLUDES A TIME WHEN THE FUND HAD
INVESTED IN RUSSELL 2000 FUTURES CONTRACTS FOR A BRIEF PERIOD OF TIME DURING THE
FIRST QUARTER. THE CONTRACTS COMPRISED A SIGNIFICANT PORTION OF THE FUND'S
PORTFOLOI DURING THAT TIME. THE FUND'S RELATIVELY SMALL ASSET SIZE AND THE
HIGHLY FAVORABLE MARKET CONDITIONS FOR THE RUSSELL 2000 FUTURES CONTRACTS HELD
DURING THIS PERIOD HAD A POSITIVE MATERIAL IMPACT ON THE FUND, AND THEREFORE
PERFORMANCE.
PORTFOLIO MARKET VALUE $7,685,485
October 31, 2000
PORTFOLIO COMPOSITION
(Subject to Change)
Common Stock Repurchase Agreement
91.3% 8.7%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Period Ended October 31, 2000)(4)
INSTITUTIONAL
CLASS A CLASS B SERVICE
YEARS W/O SC* W/SC(1) W/O SC* W/SC(2) CLASS(3)
Life(4) 24.38% 17.23% 23.79% 18.79% 24.72%
All figures showing the effect of a sales charge reflect the maximum charge
possible, because it has the most dramatic effect on performance data.
* These returns do not reflect the effects of a sales charge (SC).
(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.
(4) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
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.
FUND PERFORMANCE
CLASS A CLASS B INST SERV RUSSELL 2000 CPI
12/99 9,425 10,000 10,000 10,000 10,000
2000 11,723 11,879 12,472 9,953 10,354
COMPARATIVE PERFORMANCE OF $10,000 INVESTED IN NATIONWIDE VALUE OPORTUNITIES
FUND, RUSSELL 2000 SMALL STOCK INDEX (RUSSELL 2000)(b), AND THE CONSUMER PRICE
INDEX (CPI)(c) OVER A 10-MONTH PERIOD ENDED 10/31/00. UNLIKE OUR FUND, THESE
INDICES DO NOT REFLECT ANY FEES, EXPENSES OR SALES CHARGES.
(b) THE RUSSELL 2000 IS COMPRISED OF APPROXIMATELY 2000 COMPANIES WITH SMALL
MARKET CAPITALIZATIONS RELATIVE TO THE MARKET CAPITALIZATIONS OF OTHER U.S.
COMPANIES.
(c) THE CPI REPRESENTS CHANGES IN PRICES OF A BASKET OF GOODS AND SERVICES
PURCHASED FOR CONSUMPTION BY URBAN HOUSEHOLDS.
52 NATIONWIDE
<PAGE> 55
STATEMENT OF INVESTMENTS NATIONWIDE(R) VALUE OPPORTUNITIES FUND
--------------------------------------------------------------------------------
OCTOBER 31, 2000
SHARES SECURITY VALUE
COMMON STOCK (91.7%)
ADVERTISING AGENCIES (1.0%)
3,300 R. H. Donnelley Corp.* $ 74,663
-------
AEROSPACE (2.2%)
1,000 Alliant Techsystems, Inc.* 89,938
1,900 Goodrich (B.F.) Co. 77,781
-------
167,719
-------
AIR TRANSPORT (0.8%)
1,600 Atlas Air, Inc.* 58,000
-------
APPLIANCES & HOUSEHOLD DURABLES (0.6%)
1,600 York International Corp. 43,500
-------
AUTO PARTS & EQUIPMENT (0.7%)
3,000 Visteon Corp. 53,063
-------
AUTO PARTS: AFTER MARKET (0.9%)
2,000 Superior Industries International,
Inc. 68,125
-------
AUTO TRUCKS & PARTS (0.9%)
1,600 Oshkosh Truck Corp. 65,800
-------
BANKS: OUTSIDE NEW YORK CITY (4.9%)
5,500 BancWest Corp. 112,406
1,000 City National Corp. 34,375
800 Commerce Bancorp, Inc. 48,450
4,100 Cullen/Frost Bankers, Inc. 136,580
2,100 Hudson United Bancorp 46,988
-------
378,799
-------
BEVERAGES / SOFT DRINK (0.6%)
3,700 Whitman Corp. 48,100
-------
BIOTECHNOLOGICAL RESEARCH & PRODUCTION (2.0%)
2,300 Edwards Lifesciences Corp.* 30,906
3,700 Idexx Laboratories, Inc.* 88,800
400 Invitrogen Corp.* 30,425
-------
150,131
-------
BUILDING MATERIALS (0.4%)
800 Vulcan Materials Co. 33,600
-------
BUILDING / CEMENT (0.4%)
400 Southdown, Inc. 28,350
-------
CASINOS & GAMBLING (0.5%)
2,200 Station Casinos, Inc.* 35,475
-------
CHEMICALS (0.6%)
1,300 Cytec Industries, Inc.* 45,013
-------
COMPUTER SOFTWARE & SERVICES (1.8%)
3,100 Ceridian Corp.* 77,500
1,500 Symantec Corp.* 58,594
-------
136,094
-------
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
CONSUMER ELECTRONICS (0.7%)
1,000 Electronic Arts, Inc.* $ 50,000
-------
COSMETICS (1.2%)
3,300 Alberto-Culver Co. 91,575
-------
DIVERSIFIED FINANCE (0.5%)
1,400 Heller Financial, Inc. 40,950
-------
DRUGS (0.7%)
1,600 Dura Pharmaceuticals, Inc.* 55,100
-------
DRUGS & PHARMACEUTICALS (1.6%)
800 Medicis Pharmaceutical Corp.* 58,900
2,200 Mylan Laboratories, Inc. 61,600
-------
120,500
-------
EATING PLACES (1.2%)
2,400 Brinker International, Inc.* 94,200
-------
ELECTRONIC EQUIPMENT & COMPONENTS (0.0%)
100 AMETEK, Inc. 2,175
-------
ELECTRONICS / SEMICONDUCTORS (1.9%)
1,700 Advanced Micro Devices, Inc.* 38,463
1,500 Cirrus Logic, Inc.* 64,687
3,000 Genesis Microchip Inc.* 42,750
-------
145,900
-------
ELECTRONICS / TECHNOLOGY (1.8%)
1,400 Litton Industries, Inc.* 72,713
3,800 Sensormatic Electronics Corp* 68,400
-------
141,113
-------
ENGINEERING & CONTRACTING SERVICES (0.8%)
1,400 Jacobs Engineering Group, Inc.* 57,925
-------
FINANCE COMPANIES (0.9%)
3,000 American Capital Strategies 66,188
-------
FINANCE / SMALL LOAN (1.1%)
3,000 Americredit Corp.* 80,625
-------
FINANCIAL / MISCELLANEOUS (1.9%)
2,300 Metris Cos., Inc. 74,463
1,000 Radian Group, Inc. 70,875
-------
145,338
-------
FINANCIAL DATA PROCESSING SERVICES (1.5%)
1,300 Nova Corp.* 20,394
1,900 Sungard Data Systems* 97,137
-------
117,531
-------
CONTINUED
NATIONWIDE 53
<PAGE> 56
STATEMENT OF INVESTMENTS NATIONWIDE(R) VALUE OPPORTUNITIES FUND CONTINUED
--------------------------------------------------------------------------------
OCTOBER 31, 2000
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
FINANCIAL INFORMATION SERVICES (0.3%)
1,500 Multex.Com, Inc.* $ 19,406
FOODS (2.3%)
4,800 Hormel Foods Corp. 80,700
2,100 Interstate Bakeries Corp. 29,400
3,300 Universal Foods Corp.* 65,175
-------
175,275
-------
HEALTH & PERSONAL CARE (1.4%)
5,200 Apria Healthcare Group, Inc.* 104,000
-------
HEALTH CARE FACILITIES (2.2%)
5,200 Health Management Associates, Inc. 103,025
2,100 Pharmaceutical Product Development,
Inc.* 65,756
-------
168,781
-------
HOME BUILDING (1.0%)
1,300 Centex Corp. 48,100
800 Pulte Corp. 26,650
-------
74,750
-------
HOTELS / MOTELS (0.6%)
5,000 Hilton Hotels Corp. 47,500
-------
HOUSEHOLD FURNISHING & APPLIANCES (0.3%)
1,000 Springs Industries, Inc. 23,563
-------
IDENTIFICATION CONTROL & FILTER DEVICES (1.6%)
1,000 CUNO, Inc.* 25,375
4,700 Flowserve Corp. 94,588
-------
119,963
-------
INSURANCE / LIFE (0.9%)
2,700 Amerus Group Co. 71,213
-------
Insurance / Multi-Line (2.0%)
2,500 Old Republic International Corp. 65,000
2,200 Stancorp Financial Group 89,650
-------
154,650
-------
INSURANCE & PROPERTY & CASUALTY (1.1%)
1,500 Everest Re Group Ltd. 87,938
-------
INVESTMENT MANAGEMENT COMPANIES (0.9%)
1,200 Affiliated Managers Group, Inc.* 72,150
-------
MACHINERY / CONSTRUCTION & HANDLING (1.3%)
4,000 Stewart & Stevenson Services, Inc. 96,000
-------
MACHINERY / OIL WELL EQUIP & SERV (2.5%)
5,300 Key Energy Group, Inc.* 47,700
1,600 Nabors Industries, Inc.* 81,439
2,200 National-Oilwell, Inc.* 64,350
-------
193,489
-------
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
MANUFACTURING / DIVERSIFIED (2.5%)
5,500 Engelhard Corp. $ 114,812
4,500 Olin Corp. 79,875
-------
194,687
-------
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES (2.3%)
1,500 Cooper Co., Inc. 53,625
4,900 Owens & Minor, Inc. 74,112
900 PolyMedica, Corp.* 51,750
-------
179,487
-------
METAL FABRICATION (0.6%)
3,000 Maverick Tube Corp.* 46,688
-------
MULTI-SECTOR COMPANIES (0.8%)
1,800 ITT Industries, Inc. 58,613
-------
NETWORKING PRODUCTS (0.7%)
6,500 Accord Networkd Ltd.* 56,063
-------
OFFSHORE DRILLING (0.4%)
800 Santa Fe International Corp. 29,200
-------
OIL & GAS (0.7%)
1,400 Newfield Exploration Co.* 52,850
-------
OIL / CRUDE PRODUCERS (0.7%)
1,500 Noble Affiliates, Inc.* 55,031
-------
PAPER (0.7%)
1,000 Bowater, Inc. 54,125
-------
PRODUCTION TECHNOLOGY EQUIPMENT (0.5%)
2,000 Lam Research Corp.* 38,750
-------
PUBLISHING / MISCELLANEOUS (0.9%)
3,100 Donnelley (R.R.) & Sons Co. 66,650
-------
REAL ESTATE (0.7%)
4,100 Jones Lang Lasalle, Inc.* 52,275
-------
REAL ESTATE INVESTMENT TRUSTS (5.8%)
1,400 Camden Property Trust 40,075
6,600 Host Marriott Corp. 70,125
2,100 Liberty Property Trust, Inc. 55,519
3,100 MACK-CALI Realty Corp. 84,088
3,200 Pacific Gulf Properties-Pag Inc. 84,999
3,400 Prentiss Properties Trust 86,274
1,400 Simon Property Group, Inc. 31,238
-------
452,318
-------
RENTAL & LEASING SERVICES: COMMERCIAL (1.2%)
4,300 United Rentals, Inc.* 92,450
-------
CONTINUED
54 NATIONWIDE
<PAGE> 57
STATEMENT OF INVESTMENTS NATIONWIDE(R) VALUE OPPORTUNITIES FUND CONTINUED
--------------------------------------------------------------------------------
OCTOBER 31, 2000
SHARES SECURITY VALUE
COMMON STOCK (CONTINUED)
RETAIL (4.2%)
4,900 Charming Shoppes* $ 30,013
4,200 Family Dollar Stores, Inc. 81,638
2,400 Footstar, Inc.* 86,099
400 Harcourt General, Inc. 22,420
7,700 Venator Group, Inc.* 108,762
-------
328,932
-------
SAVINGS & LOAN (2.7%)
2,200 Dime Bancorp, Inc. 53,763
2,900 Golden State Bancorp, Inc.* 75,762
2,500 GreenPoint Financial Corp. 74,374
-------
203,899
-------
SECURITIES BROKERAGE & SERVICES (1.4%)
1,100 Knight Trading Group, Inc.* 32,931
1,400 Legg Mason, Inc. 72,713
-------
105,644
-------
SHOES (1.2%)
4,200 Reebok International Ltd.* 90,563
-------
STEEL (1.5%)
2,500 Carpenter Technology Corp. 77,500
1,800 Harsco Corp. 36,338
-------
113,838
-------
TEXTILES / APPAREL MANUFACTURING (1.3%)
2,600 Russell Corp. 41,600
2,000 V.F. Corp. 54,625
-------
96,225
-------
TRANSPORTATION (1.6%)
2,000 Kirby Corp.* 36,875
1,900 Tidewater, Inc. 87,756
-------
124,631
-------
UTILITIES / ELECTRIC (3.6%)
1,600 Idacorp, Inc. 78,900
3,500 Scana Corp. 92,750
5,600 Wisconsin Energy Corp. 105,349
-------
276,999
-------
UTILITIES / GAS DISTRIBUTORS (2.4%)
1,400 New Jersey Resources Corp. 55,912
3,000 Questar Corp. 81,187
1,800 Washington Gas Light Co. 45,900
-------
182,999
-------
UTILITIES / TELECOMMUNICATIONS (0.3%)
900 Intermedia Communications, Inc.* 19,913
-------
UTILITIES / WATER (0.5%)
1,200 American States Water Co. 37,425
-------
TOTAL COMMON STOCK (cost $6,443,725) 7,014,485
---------
PRINCIPAL SECURITY VALUE
REPURCHASE AGREEMENT (8.8%)
$671,000 Fifth Third Bank 6.35%, 10/31/00,
Matures 11/01/00 Collateralized
by 683,750 FNMA Pool #535006,
7.00%, 11/01/14, Market Value
$684,420 $ 671,000
-------
TOTAL REPURCHASE AGREEMENT (cost $671,000) 671,000
-------
TOTAL INVESTMENTS (cost $7,114,725) $ 7,685,485
=========
THE ABBREVIATION IN THE ABOVE STATEMENT STANDS FOR THE FOLLOWING:
FNMA FEDERAL NATIONAL MORTGAGE ASSOCIATION
* DENOTES AN INCOME PRODUCING SECURITY.
COST FOR FEDERAL INCOME TAX PURPOSES: $7,120,096
PORTFOLIO HOLDING PERCENTAGES BASED ON NET ASSETS OF $7,652,649.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 55
<PAGE> 58
NATIONWIDE(R) MUTUAL FUNDS
--------------------------------------------------------------------------------
HIGH YIELD BOND FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 10-month period ending October 31, 2000, the Nationwide High Yield Bond
Fund returned -12.48%(a) versus -3.27% for the CS First Boston Global High Yield
Bond Index, the benchmark index. The Fund commenced operations on December 29,
1999.
The Fund's portfolio suffered primarily because of three factors: the Fund's
start-up transaction costs; sector underperformance; and rising default rates.
First, as issues are priced on the bid side, asset values are reduced by this
amount on an NAV basis. Startup transaction costs, which are between 1 and 1 1/2
points per transaction in the high yield market, had a particularly significant
impact in the first quarter when the Fund was initially funded.
Second, the portfolio maintained a high concentration in the communications
sector, which turned in weak total return performance versus the overall market.
Although the Fund's individual holdings within the communications sector were
concentrated in larger issuers with adequate funding, other individual
bankruptcies and funding issues within the group contributed to the sector's
weak tone.
Lastly, the Fund was modestly underweighted in higher quality BB issuers
versus the benchmark. As default rates rose, higher quality issues benefited
from a flight to quality and posted stronger returns than did the lower quality
B rated issues in which the Fund was overweighted versus the benchmark.
The Fund's largest credit exposures in the communications sector included
Global Crossings, Netia Holdings B.V. and Telecorp PCS-large, adequately funded
companies whose returns were negatively impacted by overall weakness in the
group. The Fund's largest sector overweight position in Internet Service
Providers (ISP) included Exodus Communications, PSINet and Rhythms
Netconnections, which all contributed to the Fund's underperformance during the
period. Rhythms Netconnections missed quarterly estimates and PSINet reported
disastrous quarterly results leading to poor individual performance for both
issuers. On the positive side, large holdings in Kappa Beheer B.V., Lyondell
Chemical, and American Plumbing and Manufacturing provided strong returns as
these companies exceeded growth estimates and financial expectations.
Looking forward, we believe the high yield market represents attractive value
at current spread levels. We expect economic activity to moderate without any
meaningful increase in the overall level of inflation or interest rates. We have
reduced our communications exposure but will continue to invest in larger
companies with ample liquidity and adequate funding to build out. We intend to
maintain our strategy and focus on selecting issuers with above-average credit
fundamentals within the high yield universe.
LEAD PORTFOLIO MANAGER: CURTISS BARROWS, CHFC
(a) PERFORMANCE OF CLASS A SHARES WITHOUT SALES CHARGE AND ASSUMING ALL
DISTRIBUTIONS ARE REINVESTED.
PORTFOLIO MARKET VALUE $90,180,023
OCTOBER 31, 2000
[PIE CHART]
PORTFOLIO COMPOSITION
(Subject to Change)
Warrants 0.2%
Preferred Stock 0.2%
Repurchase Agreement 5.6%
Bonds 94.0%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Period Ended October 31, 2000)
INSTITUTIONAL
CLASS A CLASS B SERVICE
YEARS w/o SC* w/SC(1) w/o SC* W/SC(2) CLASS(3)
================================================================================
Life(4) -12.48% -16.41% -13.02% -17.00% -11.80%
--------------------------------------------------------------------------------
ALL FIGURES SHOWING THE EFFECT OF A SALES CHARGE REFLECT THE MAXIMUM CHARGE
POSSIBLE, BECAUSE IT HAS THE MOST DRAMATIC EFFECT ON PERFORMANCE DATA.
* THESE RETURNS DO NOT REFLECT THE EFFECTS OF A SALES CHARGE (SC).
(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.
(4) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
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.
FUND PERFORMANCE
CS FIRST BOSTON
CLASS A CLASS B INST SERV GLOBAL HIGH YIELD CPI
12/99 9550 10000 10000 10000 10000
2000 8359 8300 8820 9673 10354
COMPARATIVE PERFORMANCE OF $10,000 INVESTED IN NATIONWIDE HIGH YIELD BOND FUND,
CS FIRST BOSTON GLOBAL HIGH YIELD BOND INDEX(b), AND THE CONSUMER PRICE INDEX
(CPI)(c) OVER A 10-MONTH PERIOD ENDED 10/31/00. UNLIKE OUR FUND, THESE INDICES
DO NOT REFLECT ANY FEES, EXPENSES OR SALES CHARGES.
(b) THE CS FIRST BOSTON GLOBAL HIGH YIELD BOND INDEX IS A U.S. DOLLAR-
DENOMINATED INDEX THAT IS COMPRISED OF HIGH YIELD PUBLIC DEBT.
(c) THE CPI REPRESENTS CHANGES IN PRICES OF A BASKET OF GOODS AND SERVICES
PURCHASED FOR CONSUMPTION BY URBAN HOUSEHOLDS.
56 NATIONWIDE
<PAGE> 59
STATEMENT OF INVESTMENTS NATIONWIDE(R) HIGH YIELD BOND FUND
----------------------------------------------------------------
OCTOBER 31, 2000
PRINCIPAL SECURITY VALUE
CORPORATE BONDS (62.3%)
----------------------------------------------------------------
CABLE (1.7%)
$2,000,000 Adelphia Communications, Inc., 7.88%,
05/01/09 $1,570,000
---------
----------------------------------------------------------------
CHEMICALS (4.2%)
4,000,000 Lyondell Chemical Co., 9.63%, 05/01/07 3,880,000
---------
----------------------------------------------------------------
COMMUNICATION / FIXED (9.1%)
4,000,000 Global Crossing Holding Ltd., 9.50%,
11/15/09 3,820,000
2,000,000 Maxcom Telecommunications, 13.75%,
04/01/07*,** 900,000
2,000,000 Mcleod USA, Inc., 8.13%, 02/15/09 1,735,000
2,000,000 Viatel, Inc., 11.25%, 04/15/08 1,000,000
1,000,000 Williams Communication Group, Inc.,
11.88%, 8/1/10* 887,500
---------
8,342,500
---------
----------------------------------------------------------------
COMMUNICATION / ISP (10.2%)
2,000,000 Exodus Communications,
10.75%, 12/15/09* 1,810,000
1,000,000 Exodus Communications, Inc.,
11.63%, 07/15/10* 925,000
3,000,000 Metricom, Inc., 13.00%, 02/15/10* 1,800,000
2,500,000 PSINet, Inc., 10.00%, 02/15/05 1,193,750
1,000,000 PSINet, Inc., 10.50%, 12/01/06 477,500
1,500,000 Rhythms Netconnections,
12.75%, 04/15/09 697,500
2,500,000 Rhythms Netconnections,
14.00%, 02/15/10 1,200,000
3,000,000 Wam!Net, Inc., 18.88%, 03/01/05** 1,350,000
---------
9,453,750
---------
----------------------------------------------------------------
COMMUNICATION / MOBILE (7.5%)
2,000,000 Airgate Pcs, Inc., 12.76%, 10/01/09** 1,145,000
1,000,000 Crown Castle International Corp.,
10.75%, 08/01/11* 1,025,000
1,000,000 Nextlink Communications, Inc.,
10.75%, 06/01/09 877,500
4,000,000 Telecorp PCS, Inc., 11.32%, 04/15/09** 2,580,000
2,500,000 U.S. Unwired, Inc., 12.22%, 11/01/09** 1,218,750
---------
6,846,250
---------
----------------------------------------------------------------
CONTAINERS (1.6%)
1,500,000 U.S. Can Corp., 12.38%, 10/01/10* 1,473,750
---------
----------------------------------------------------------------
ENERGY (3.4%)
1,000,000 CMS Energy, 9.88%, 10/15/07 1,009,215
2,000,000 Eott Energy Partners, 11.00%, 10/01/09 2,100,000
---------
3,109,215
---------
----------------------------------------------------------------
GAMING (2.2%)
1,000,000 Anchor Gaming, 9.88%, 10/15/08* 1,011,250
1,000,000 Autotote Corp., 12.50%, 08/15/10* 985,000
---------
1,996,250
---------
PRINCIPAL SECURITY VALUE
CORPORATE BONDS (CONTINUED)
----------------------------------------------------------------
HEALTH CARE (2.0%)
$2,000,000 Insight Health Services, 9.63%, $1,800,000
06/15/08 ---------
----------------------------------------------------------------
INDUSTRIALS (1.9%)
2,500,000 Browning-Ferris, 7.40%, 09/15/35 1,721,373
---------
----------------------------------------------------------------
MEDIA (2.6%)
1,000,000 Fox Family World Fox Kids, 9.25%,
11/01/07** 947,500
2,000,000 Fox Family Worldwide, Inc., 12.46%,
11/01/07** 1,440,000
---------
2,387,500
---------
----------------------------------------------------------------
METALS & MINING (2.7%)
680,000 Grupo Mexico SA, 8.50%, 05/01/25 494,946
2,000,000 P&L Coal Holdings, 8.88%, 05/15/08 1,980,000
---------
2,474,946
---------
----------------------------------------------------------------
SERVICES (4.4%)
2,500,000 American Plumbing & Mechanic,
11.63%, 10/15/08 2,437,500
2,000,000 United Rentals, Inc., 9.25%, 01/15/09 1,640,000
---------
4,077,500
---------
----------------------------------------------------------------
SUPERMARKET (2.6%)
3,000,000 Stater Brothers Holdings, 10.75%,
08/15/06 2,400,000
---------
----------------------------------------------------------------
TRANSPORTATION (1.8%)
2,000,000 Vectura Group Inc., 10.25%,
06/30/08 1,620,000
---------
----------------------------------------------------------------
UTILITIES (4.4%)
2,000,000 Calpine Corp., 7.88%, 04/01/08 1,902,648
2,000,000 Orion Power Holdings, 12.00%, 05/01/10* 2,120,000
---------
4,022,648
---------
TOTAL CORPORATE BONDS (cost $67,386,133) 57,175,682
----------
FOREIGN BOND (29.6%)
----------------------------------------------------------------
CABLE (4.5%)
3,500,000 Telewest Communications,
11.30%, 02/01/10** 1,522,500
1,000,000 United Pan Europe,
11.25%, 02/01/10** 760,000
5,000,000 United Pan Europe,
13.48%, 02/01/10** 1,850,000
---------
4,132,500
---------
COMMUNICATION / FIXED (7.5%)
2,000,000 Jazztel PLC, 14.00%, 04/01/09 1,460,000
5,000,000 Netia Holdings, 10.25%, 11/01/07 3,700,000
2,000,000 TELE1 Europe, 13.00%, 05/15/09 1,680,000
---------
6,840,000
---------
CONTINUED NATIONWIDE 57
<PAGE> 60
STATEMENT OF INVESTMENTS NATIONWIDE(R) HIGH YIELD BOND FUND CONTINUED
---------------------------------------------------------------------
OCTOBER 31, 2000
PRINCIPAL SECURITY VALUE
FOREIGN BOND (CONTINUED)
----------------------------------------------------------------
COMMUNICATION / MOBILE (7.4%)
$3,000,000 CTI Holdings SA, 12.58%, 04/15/08** $1,290,000
2,000,000 Grupo Iusacell SA, 14.25%, 12/01/06 2,015,000
3,000,000 Occidente Y Caribe Celullar SA,
24.73%, 03/15/04 ** 2,100,000
2,000,000 PTC International Finance, 13.23%,
07/01/07, Poland, (PLZ)** 1,340,000
---------
6,745,000
---------
----------------------------------------------------------------
ENERGY (1.1%)
1,000,000 AES Drax Energy Ltd., 11.50%, 08/30/10* 1,050,000
---------
----------------------------------------------------------------
METALS & MINING (2.6%)
3,000,000 Hylsa Sa de CV, 9.25%, 09/15/07 2,341,716
---------
----------------------------------------------------------------
PAPER & FOREST PRODUCTS (4.4%)
4,000,000 Kappa Beheer, 10.63%, 07/15/09 4,030,000
---------
----------------------------------------------------------------
TRANSPORTATION (2.1%)
2,500,000 Cenargo International, 9.75%, 06/15/08 1,950,000
---------
----------------------------------------------------------------
TOTAL FOREIGN BONDS (cost $32,154,235) 27,089,216
----------
CONVERTIBLE BONDS (0.6%)
----------------------------------------------------------------
TECHNOLOGY (0.6%):
1,000,000 Orckit Communications, 5.75%, 04/01/05* 531,250
---------
TOTAL CONVERTIBLE BONDS (cost $1,000,000) 531,250
---------
SHARES SECURITY VALUE
PREFERRED STOCK (0.2%)
----------------------------------------------------------------
COMMUNICATION / ISP (0.2%)
10,000 Rhythms Netconnections* (cost $937,500) 156,250
---------
WARRANT (0.2%)
----------------------------------------------------------------
COMMUNICATION / FIXED (0.0%)
2,000 Maxcom Telecommunications* 0
---------
----------------------------------------------------------------
COMMUNICATION / ISP (0.2%)
4,000 Metricom, Inc. 41,000
9,000 Wam!Net, Inc.* 104,625
---------
TOTAL WARRANT (cost $97,500) 145,625
---------
PRINCIPAL SECURITY VALUE
REPURCHASE AGREEMENT (5.5%)
----------------------------------------------------------------
$5,082,000 Fifth Third Bank 6.35%, 10/31/00,
Matures 11/01/00, Collateralized by
$5,155,926 FNMB Pool #535117, 7.50%,
01/01/03, Market Value $5,183,640 $ 5,082,000
------------
TOTAL REPURCHASE AGREEMENT (cost $5,082,000) 5,082,000
------------
TOTAL INVESTMENTS (cost $106,657,368) $ 90,180,023
============
----------------------------------------------------------------
The abbreviations in the above statement stand for the following:
CV Inc./Corp
FNMB Federal National Mortgage Bank
ISP Internet Service Provider
PLC Public Limited Company
SA Societe Anonyme (French Corporation)
* RESTRICTED SECURITIES ISSUED PURSUANT TO SECTION 4(2) OF THE SECURITIES ACT
OF 1933. THESE SECURITIES WERE DEEMED LIQUID PURSUANT TO PROCEDURES APPROVED
BY THE BOARD OF TRUSTEES.
** STEP BONDS
COST FOR FEDERAL INCOME TAX PURPOSES: $106,657,368.
SECURITIES DENOMINATED IN FOREIGN CURRENCIES ARE SHOWN AT THE U.S. DOLLAR COST
AND VALUE.
PORTFOLIO HOLDING PERCENTAGES BASED ON NET ASSETS OF $91,631,062.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
58 NATIONWIDE
<PAGE> 61
NATIONWIDE(R) MUTUAL FUNDS [PICTURE]
--------------------------------------------------------------------------------
MORLEY ENHANCED INCOME FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the 10-month period ended October 31, 2000, the Morley Enhanced Income
Fund returned 3.86%(a) versus 5.40% for the Lipper Ultra-Short Fund Index, the
benchmark index. The Fund commenced operations on December 29, 1999.
The Fund's net assets remained relatively stable throughout the period,
ending at $12.48 million. The Fund initially purchased, and then retained,
investments in seasoned U.S. Government Agency-issued mortgage-backed
securities, which offer stable duration and cash flow characteristics. The Fund
also purchased high-grade Corporate notes at attractive spreads and an
adjustable rate note issued by a U.S. Government Agency. The Agency note has a
particularly attractive minimum rate, or "floor," which will serve the Fund well
if short-term interest rates decline in response to new economic data.
During the period, interest rates generally rose (and bond prices fell)
through May, before reversing course as data suggested a possible slowing of
economic activity and the prospect of an end to the current interest rate cycle.
The Fund is positioned around the two-year sector of the yield curve (the
duration of securities holdings was 1.97 years at period-end) to capitalize on
relatively high yields, while retaining its hedge position to provide relative
stability of net asset value per share. The Fund's hedging activities were
successful in limiting per share price volatility. Per share price has averaged
$9.90 over the past six months, within a range of $9.89 to $9.92. Because the
Fund hedges to limit per share price volatility, the Fund's share price has
neither increased during market rallies nor decreased in market sell-offs, such
as we saw in March and May. The Fund's yield experience remains strong, with
7-day and 30-day SEC yields on Institutional Service Class shares at 6.23% and
6.16%, respectively, at period-end.
Looking forward, we don't anticipate any material near-term change in
investment style or strategy. The Fund's investments are concentrated in Federal
Agency debt, which combines top-notch credit quality with steady cash flows and
stable duration. The price of these assets should improve relative to U.S.
Treasury securities if the interest rate environment remains benign.
PORTFOLIO MANAGER: TOM MITCHELL
(a) PERFORMANCE OF CLASS A SHARES WITHOUT SALES CHARGE AND ASSUMING ALL
DISTRIBUTIONS ARE REINVESTED.
PORTFOLIO MARKET VALUE $12,427,722
OCTOBER 31, 2000
[PIE CHART]
PORTFOLIO COMPOSITION
(Subject to Change)
Repurchase Agreement 7.8%
Corporate Bonds 13.2%
U.S. Government Obligations 79.0%
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
(For Period Ended October 31, 2000)
INSTITUTIONAL
CLASS A SERVICE INSTITUTIONAL
YEARS w/o SC* w/SC(1) CLASS(2) CLASS(2)
================================================================================
Life(3) 3.86% -0.80% 4.02% 4.16%
--------------------------------------------------------------------------------
ALL FIGURES SHOWING THE EFFECTS OF A SALES CHARGE REFLECT THE MAXIMUM CHARGE
POSSIBLE, BECAUSE IT HAS THE MOST DRAMATIC EFFECT ON PERFORMANCE DATA.
* THESE RETURNS DO NOT REFLECT THE EFFECTS OF A SALES CHARGE (SC).
(1) A 4.50% FRONT-END SALES CHARGE WAS DEDUCTED.
(2) NOT SUBJECT TO ANY SALES CHARGES.
(3) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
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.
[GRAPH]
FUND PERFORMANCE
LIPPER ULTRA
CLASS A INSTITUTIONAL SERVICE INSTITUTIONAL SHORT FUND INDEX CPI
12/99 9550 10,000 10,000 10,000 10,000
2000 9920 10,402 10,416 10,540 10,354
COMPARATIVE PERFORMANCE OF $10,000 INVESTED IN MORLEY ENHANCED INCOME FUND,
LIPPER ULTRA SHORT FUND INDEX(b), AND THE CONSUMER PRICE INDEX (CPI)(c) OVER A
10-MONTH PERIOD ENDED 10/31/00. UNLIKE OUR FUND, THESE INDICES DO NOT REFLECT
ANY FEES, EXPENSES, OR SALES CHARGES.
(b) THE LIPPER ULTRA SHORT FUND INDEX CONSISTS OF FUNDS WITH AT LEAST 65% OF
THEIR ASSETS IN INVESTMENT GRADE DEBT INSTRUMENTS AND MAINTAINS A PORTFOLIO
WITH AVERAGE MATURITY BETWEEN 91 DAYS AND 365 DAYS.
(c) THE CPI REPRESENTS CHANGES IN PRICES OF A BASKET OF GOODS AND SERVICES
PURCHASED FOR CONSUMPTION BY URBAN HOUSEHOLDS.
NATIONWIDE 59
<PAGE> 62
STATEMENT OF INVESTMENTS MORLEY ENHANCED INCOME FUND
-----------------------------------------------------------
OCTOBER 31, 2000
PRINCIPAL SECURITY VALUE
U.S. GOVERNMENT SPONSORED AND AGENCY
OBLIGATIONS (78.6%)
-----------------------------------------------------------
GOVERNMENT - AGENCY (26.5%)
$1,000,000 FHLB, 7.00%, 01/29/03 $ 998,254
1,000,000 FHLB, 7.05%, 02/11/03 1,003,993
825,000 FNMA, 5.69%, 04/06/04 806,037
500,000 SLMA, 6.78%, 07/02/01* 500,021
----------
3,308,305
----------
-----------------------------------------------------------
GOVERNMENT-SPONSORED MORTGAGE-BACKED OBLIGATIONS (52.1%)
(26.5)
2,000,000 FHLMC REMIC Series 2198-PA,
6.75%, 08/15/16 1,995,060
976,735 FNMA 15 Year, Pool # 253106,
7.00%, 02/01/07 974,461
1,692,842 FNMA 15 Year, Pool # 190255,
6.50%, 02/01/09 1,674,166
874,816 FNMA 15 Year, Pool # 436784,
6.50%, 11/01/09 867,686
1,000,000 FNMA REMIC, Series 92-110 J,
7.00%, 12/25/06 995,467
----------
6,506,840
----------
TOTAL U.S. GOVERNMENT SPONSORED AND AGENCY
OBLIGATIONS (cost $9,752,587) $9,815,145
----------
CORPORATE BONDS (13.2%)
-----------------------------------------------------------
FINANCIAL SERVICES (13.2%)
500,000 Bank of America, 8.13%, 02/01/02 506,079
550,000 Merrill Lynch & Co., Inc.,
6.00%, 2/12/03 539,183
600,000 Morgan Stanley Dean Witter,
7.13%, 08/15/03 601,315
----------
TOTAL CORPORATE BONDS (cost $1,645,979) 1,646,577
----------
PRINCIPAL SECURITY VALUE
REPURCHASE AGREEMENT (7.7%)
-----------------------------------------------------------
$966,000 Fifth Third Bank 6.35%, 10/31/00,
Matures 11/01/00, Collateralized
by 985,320 FNMA Pool #303741,
7.00%, 02/01/11, Market Value
$985,320 $ 966,000
----------
TOTAL REPURCHASE AGREEMENT (cost $966,000) 966,000
----------
TOTAL INVESTMENTS (cost $12,364,566) $12,427,722
==========
The abbreviations in the above statement stand for the following:
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
SLMA Student Loan Marketing Association
* VARIABLE RATE SECURITY. THE RATE REFLECTED IN THE STATEMENT OF INVESTMENTS
IS THE RATE IN EFFECT ON OCTOBER 31, 2000. MATURITY DATE REFLECTS NEXT RATE
CHANGE DATE.
COST FOR FEDERAL INCOME TAX PURPOSES: $12,419,864.
PORTFOLIO HOLDING PERCENTAGES BASED ON NET ASSETS OF $12,478,812.
At October 31, 2000 the Fund's open short futures contracts were as follows:
UNREALIZED
MARKET VALUE APPRECIATION
NUMBER OF SHORT COVERED BY (DEPRECIATION)
CONTRACTS CONTRACT** EXPIRATION CONTRACTS AT 10/31/00
-------------------------------------------------------------------
53 U.S. Treasury 01/03/01 $10,606,625 $(51,484)
2 Year Note
4 U.S. Treasury 12/29/00 402,750 (3,813)
5 Year Note
** CASH PLEDGED AS COLLATERAL.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
60 NATIONWIDE
<PAGE> 63
STATEMENTS OF ASSETS AND LIABILITIES
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
VALUE HIGH YIELD
OPPORTUNITIES BOND
FUND FUND
<S> <C> <C>
ASSETS:
Investments in securities at value (cost $6,443,725, and $101,575,368, respectively) $ 7,014,485 $ 85,098,023
Repurchase Agreements, at value (cost $671,000, and $5,082,000, respectively) 671,000 5,082,000
Cash 45 165
Receivable from adviser 19,528 41,547
Interest and dividends receivable 3,132 2,509,010
Prepaid and other assets 9,420 11,037
------------ ------------
Total Assets 7,717,610 92,741,782
------------ ------------
LIABILITIES:
Dividends payable - 1,004,957
Payable for investment securities purchased 8,668 -
Accrued expenses and other payables:
Investment advisory fees 4,065 44,070
Fund administration fees 6,352 5,609
Transfer agent fees 472 2,079
Distribution fees 1,041 726
Other 44,363 53,279
------------ ------------
Total Liabilities 64,961 1,110,720
------------ ------------
NET ASSETS $ 7,652,649 $ 91,631,062
============ ============
NET ASSETS:
Capital $ 7,143,478 $ 111,644,255
Accumulated net investment income 7,295 7,577
Net unrealized appreciation (depreciation) from investments 570,760 (16,477,345)
Accumulated net realized losses from
investment transactions (68,884) (3,543,425)
------------ ------------
NET ASSETS $ 7,652,649 $ 91,631,062
============ ============
NET ASSETS:
Class A Shares $ 2,460,327 $ 2,804,261
Class B Shares 751,132 187,822
Institutional Service Class Shares 4,441,190 88,638,979
------------ ------------
Total $ 7,652,649 $ 91,631,062
============ ============
SHARES OUTSTANDING (unlimited number of shares authorized):
Class A Shares 198,921 352,496
Class B Shares 60,795 23,607
Institutional Service Class Shares 357,524 11,064,926
------------ ------------
Total 617,240 11,441,029
============ ============
NET ASSET VALUE PER SHARE:
Class A Shares $ 12.37 $ 7.96
Class B Shares $ 12.36 $ 7.96
Institutional Service Class Shares $ 12.42 $ 8.01
MAXIMUM OFFERING PRICE (100%/(100%-Maximum Sales Charge) of net asset
value adjusted to nearest cent) per share:
Class A Shares * $ 13.12 $ 8.34
Class B Shares ** $ 12.36 $ 7.96
Institutional Service Class Shares *** $ 12.42 $ 8.01
------------ ------------
Maximum sales charge - Class A 5.75% 4.50%
============ ============
</TABLE>
* CLASS A INCLUDES 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.
CONTINUED
NATIONWIDE 61
<PAGE> 64
STATEMENTS OF ASSETS AND LIABILITIES CONTINUED
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
MORLEY
ENHANCED
INCOME FUND
ASSETS:
<S> <C>
Investments in securities, at value (cost $11,398,566) $ 11,461,722
Repurchase Agreements, at value (cost $966,000) 966,000
Cash 2,322
Restricted cash for initial margin on futures 27,050
Receivable for futures variation margin 1,545
Receivable from adviser 7,144
Prepaid and other assets 23,977
Interest and dividends receivable 105,872
----------
Total Assets 12,595,632
----------
LIABILITIES:
Dividends payable 62,800
Accrued expenses and other payables:
Investment advisory fees 3,653
Fund administration fees 6,353
Transfer agent fees 155
Distribution fees 78
Other 43,781
----------
Total Liabilities $ 116,820
----------
NET ASSETS $ 12,478,812
==========
NET ASSETS:
Capital $ 12,590,650
Undistributed net investment income 6,712
Net unrealized appreciation from investments and futures 7,859
Accumulated undistributed net realized (losses) from
investments and futures (126,409)
----------
NET ASSETS $ 12,478,812
==========
NET ASSETS:
Class A Shares $ 368,275
Institutional Service Class Shares 11,613,658
Institutional Class Shares 496,879
----------
Total $ 12,478,812
==========
SHARES OUTSTANDING (unlimited number of shares authorized):
Class A Shares 37,210
Institutional Service Class Shares 1,173,197
Institutional Class Shares 50,216
----------
Total 1,260,623
==========
NET ASSET VALUE PER SHARE:
Class A Shares $ 9.90
Institutional Service Class Shares $ 9.90
Institutional Class Shares $ 9.89
MAXIMUM OFFERING PRICE (100%/(100%-Maximum Sales Charge) of net asset
value adjusted to nearest cent) per share:
Class A Shares* $ 10.37
Institutional Service Class Shares** $ 9.90
Institutional Class Shares** $ 9.89
----------
Maximum sales charge - Class A Shares 4.50%
==========
</TABLE>
* CLASS A SHARES INCLUDE A FRONT-END SALES CHARGE.
** INSTITUTIONAL SERVICE CLASS AND INSTITUTIONAL CLASS SHARES ARE NOT SUBJECT
TO ANY SALES CHARGE.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
62 NATIONWIDE
<PAGE> 65
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE PERIOD FROM DECEMBER 29, 1999 TO OCTOBER 31, 2000
<TABLE>
<CAPTION>
VALUE HIGH YIELD
OPPORTUNITIES BOND
FUND (a) FUND (a)
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 19,849 $ 9,825,501
Dividend income 37,856 24,397
-------- ---------
Total Income 57,705 9,849,898
-------- ---------
EXPENSES:
Investment advisory fees 20,249 443,174
Fund administration fees 63,115 56,405
Custodian fees 7,418 18,460
Distribution fees 6,535 4,731
Administrative servicing fees 361 19,325
Professional fees 13,320 29,929
Trustees' fees and expenses 175 1,775
Transfer agent fees 2,562 2,523
Registration and filing fees 35,863 37,320
Shareholders' reports 24,375 23,655
Other 12,500 42,841
-------- ---------
Total expenses before waived or reimbursed expenses 186,473 680,138
Expenses waived or reimbursed (150,154) (109,730)
-------- ---------
Net expenses 36,319 570,408
-------- ---------
NET INVESTMENT INCOME $ 21,385 $ 9,279,490
======== =========
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized (losses) from investment transactions $ (68,885) $ (3,543,425)
Net change in unrealized appreciation (depreciation) from investments 570,760 (16,477,345)
-------- ---------
Net realized/unrealized gains (losses) from investments 501,875 (20,020,770)
-------- ---------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 523,261 $(10,741,280)
======== ===========
</TABLE>
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
CONTINUED
NATIONWIDE 63
<PAGE> 66
STATEMENTS OF OPERATIONS CONTINUED
--------------------------------------------------------------------------------
FOR THE PERIOD FROM DECEMBER 29, 1999 TO OCTOBER 31, 2000
<TABLE>
<CAPTION>
MORLEY
ENHANCED
INCOME
FUND (a)
<S> <C>
INVESTMENT INCOME:
Interest income $ 598,241
Dividend income 42,490
-------
Total Income 640,731
-------
EXPENSES:
Investment advisory fees 33,541
Fund administration fees 63,115
Custodian fees 3,064
Distribution fees 387
Administrative servicing fees 3,321
Professional fees 14,020
Trustees' fees and expenses 212
Transfer agent fees 1,189
Registration and filing fees 17,005
Shareholders' reports 23,013
Other 8,913
-------
Total expenses before waived or reimbursed expenses 167,780
Expenses waived or reimbursed (100,281)
-------
Net expenses 67,499
-------
NET INVESTMENT INCOME $ 573,232
=======
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized (losses) from investment transactions (126,409)
Net change in unrealized appreciation from investments 7,859
-------
Net realized/unrealized (losses) from investments (118,550)
-------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $454,682
=======
</TABLE>
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
64 NATIONWIDE
<PAGE> 67
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
FOR THE PERIOD FROM DECEMBER 29, 1999 TO OCTOBER 31, 2000
<TABLE>
<CAPTION>
VALUE
OPPORTUNITIES HIGH YIELD
FUND (a) BOND FUND (a)
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 21,386 $ 9,279,490
Net realized (losses) from investment transactions (68,885) (3,543,425)
Net change in unrealized appreciation (depreciation) from investments 570,760 $ (16,477,345)
-------- -----------
Change in net assets resulting from operations 523,261 (10,741,280)
-------- ----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS FROM:
Net investment income (7,578) (206,852)
DISTRIBUTIONS TO CLASS B SHAREHOLDERS FROM:
Net investment income (1,067) (7,317)
DISTRIBUTIONS TO INSTITUTIONAL SERVICE CLASS SHAREHOLDERS FROM:
Net investment income (6,905) (9,065,321)
-------- ----------
CHANGE IN NET ASSETS FROM SHAREHOLDER DISTRIBUTIONS (15,550) (9,279,490)
-------- ----------
CAPITAL TRANSACTIONS: (b)
Net proceeds from shares issued 7,612,598 103,658,155
Net proceeds from dividends reinvested 15,492 8,276,652
Cost of shares redeemed (483,152) (282,975)
--------- -----------
Change in net assets from capital transactions 7,144,938 111,651,832
--------- -----------
Change in net assets 7,652,649 91,631,062
NET ASSETS:
Beginning of period - -
--------- ----------
End of period $ 7,652,649 $ 91,631,062
========= ==========
SHARE TRANSACTIONS: (b)
Sold 656,316 10,566,173
Reinvested 1,296 906,140
Redeemed (40,372) (31,284)
-------- ----------
Change in shares 617,240 11,441,029
======== ==========
</TABLE>
(a) CLASS A, CLASS B, AND INSTITUTIONAL CLASS SHARES WERE FIRST OFFERED TO THE
PUBLIC ON DECEMBER 29, 1999.
(b) BOTH THE CAPITAL AND SHARE TRANSACTIONS SECTIONS REPRESENT COMBINED DATA
FOR ALL CLASSES OF SHARES.
CONTINUED
NATIONWIDE 65
<PAGE> 68
STATEMENTS OF CHANGES IN NET ASSETS CONTINUED
--------------------------------------------------------------------------------
FOR THE PERIOD FROM DECEMBER 29, 1999 TO OCTOBER 31, 2000
<TABLE>
<CAPTION>
MORLEY ENHANCED
INCOME FUND (a)
<S> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income $ 573,232
Net realized (losses) from investment transactions (126,409)
Net change in unrealized appreciation from investments 7,859
----------
Change in net assets resulting from operations 454,682
----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS FROM:
Net investment income (9,160)
DISTRIBUTIONS TO INSTITUTIONAL SERVICE CLASS SHAREHOLDERS FROM:
Net investment income (561,098)
DISTRIBUTIONS TO INSTITUTIONAL CLASS SHAREHOLDERS FROM:
Net investment income (2,974)
----------
CHANGE IN NET ASSETS FROM SHAREHOLDER DISTRIBUTIONS (573,232)
----------
CAPITAL TRANSACTIONS: (b)
Net proceeds from shares issued 17,930,028
Net proceeds from dividends reinvested 511,148
Cost of shares redeemed (5,843,814)
----------
Change in net assets from capital transactions 12,597,362
----------
Change in net assets 12,478,812
NET ASSETS:
Beginning of period -
----------
End of period $ 12,478,812
==========
SHARE TRANSACTIONS: (b)
Sold 1,797,110
Reinvested 51,525
Redeemed (588,012)
----------
Change in shares 1,260,623
==========
</TABLE>
(a) CLASS A, INSTITUTIONAL SERVICE CLASS, AND INSTITUTIONAL CLASS SHARES WERE
FIRST OFFERED TO THE PUBLIC ON DECEMBER 29, 1999.
(b) BOTH THE CAPITAL AND SHARE TRANSACTIONS SECTIONS REPRESENT COMBINED DATA
FOR ALL CLASSES OF SHARES.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
66 NATIONWIDE
<PAGE> 69
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING
<TABLE>
<CAPTION>
NATIONWIDE VALUE OPPORTUNITIES FUND
INSTITUTIONAL SERVICE
PERIOD FROM DECEMBER 29, 1999 TO OCTOBER 31, 2000 (a) CLASS A SHARES(a) CLASS B SHARES(a) CLASS SHARES(a)
<S> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00
-------- -------- --------
INVESTMENT ACTIVITIES:
Net investment income 0.06 0.01 0.07
Net realized and unrealized gain 2.38 2.37 2.40
-------- -------- --------
Total investment activities 2.44 2.38 2.47
-------- -------- --------
DISTRIBUTIONS:
Net investment income (0.07) (0.02) (0.05)
-------- -------- --------
Total distributions (0.07) (0.02) (0.05)
-------- -------- --------
Net increase (decrease) in net asset value 2.37 2.36 2.42
-------- -------- --------
NET ASSET VALUE--END OF PERIOD $ 12.37 $ 12.36 $ 12.42
======== ======== ========
Total Return (excluding sales charge) (b) 24.38% 23.79% 24.72%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 2,460 $ 751 $ 4,441
Ratio of expenses to average net assets (c) 1.35% 1.95% 1.00%
Ratio of net investment income to average net assets (c) 0.62% 0.10% 0.98%
Ratio of expenses to average net assets* (c) 6.59% 7.70% 5.99%
Portfolio turnover rate (b, d) 119.39% 119.39% 119.39%
NATIONWIDE HIGH YIELD BOND FUND
INSTITUTIONAL SERVICE
PERIOD FROM DECEMBER 29, 1999 TO OCTOBER 31, 2000 (a) CLASS A SHARES(a) CLASS B SHARES(a) CLASS SHARES(a)
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00
-------- -------- --------
INVESTMENT ACTIVITIES:
Net investment income 0.86 0.80 0.87
Net realized and unrealized loss (2.04) (2.04) (1.99)
-------- -------- --------
Total investment activities (1.18) (1.24) (1.12)
-------- -------- --------
DISTRIBUTIONS:
Net investment income (0.86) (0.80) (0.87)
-------- -------- --------
Total distributions (0.86) (0.80) (0.87)
-------- -------- --------
Net increase (decrease) in net asset value (2.04) (2.04) (1.99)
-------- -------- --------
NET ASSET VALUE--END OF PERIOD $ 7.96 $ 7.96 $ 8.01
======== ======== ========
Total Return (excluding sales charge) (b) (12.48%) (13.02%) (11.80%)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 2,804 $ 188 $ 88,639
Ratio of expenses to average net assets (c) 0.95% 1.70% 0.70%
Ratio of net investment income to average net assets (c) 12.35% 13.09% 11.46%
Ratio of expenses to average net assets* (c) 1.15% 3.46% 0.83%
Portfolio turnover rate (b, d) 76.93% 76.93% 76.93%
</TABLE>
(a) CLASS A, CLASS B, AND INSTITUTIONAL CLASS SHARES WERE FIRST OFFERED TO THE
PUBLIC ON DECEMBER 29, 1999.
(b) NOT ANNUALIZED.
(c) ANNUALIZED.
(d) PORTFOLIO TURNOVER IS CALCULATED ON THE BASIS OF THE FUND AS A WHOLE
WITHOUT DISTINGUISHING AMONG THE CLASS OF SHARES.
* RATIOS CALCULATED AS IF NO FEES WERE WAIVED OR EXPENSES REIMBURSED.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
NATIONWIDE 67
<PAGE> 70
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
SELECTED DATA FOR EACH SHARE OF CAPITAL OUTSTANDING
<TABLE>
<CAPTION>
NATIONWIDE MORLEY ENHANCED INCOME FUND
INSTITUTIONAL SERVICE INSTITUTIONAL
PERIOD FROM DECEMBER 29, 1999 TO OCTOBER 31, 2000 (a) CLASS A SHARES (a) CLASS SHARES (a) CLASS SHARES (a)
<S> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.00 $ 10.00 $ 10.00
Investment activities: -------- -------- --------
Net investment income 0.48 0.49 0.51
Net realized and unrealized loss (0.10) (0.10) (0.11)
-------- -------- --------
Total investment activities 0.38 0.39 0.40
-------- -------- --------
DISTRIBUTIONS:
Net investment income (0.48) (0.49) (0.51)
-------- -------- --------
Total distributions (0.48) (0.49) (0.51)
-------- -------- --------
Net increase (decrease) in net asset value (0.10) (0.10) (0.11)
-------- -------- --------
NET ASSET VALUE--END OF PERIOD $ 9.90 $ 9.90 $ 9.89
======== ======== ========
Total Return (excluding sales charge) (b) 3.86% 4.02% 4.16%
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000) $ 368 $ 11,614 $ 497
Ratio of expenses to average net assets (c) 0.90% 0.70% 0.45%
Ratio of net investment income to average net assets (c) 5.90% 5.96% 6.44%
Ratio of expenses to average net assets* (c) 2.63% 1.73% 2.13%
Portfolio turnover rate (b, d) 4.42% 4.42% 4.42%
</TABLE>
(a) CLASS A, INSTITUTIONAL SERVICE CLASS, AND INSTITUTIONAL CLASS SHARES WERE
FIRST OFFERED TO THE PUBLIC ON DECEMBER 29, 1999.
(b) NOT ANNUALIZED.
(c) ANNUALIZED.
(d) PORTFOLIO TURNOVER IS CALCULATED ON THE BASIS OF THE FUND AS A WHOLE
WITHOUT DISTINGUISHING AMONG THE CLASS OF SHARES.
* RATIOS CALCULATED AS IF NO FEES WERE WAIVED OR EXPENSES REIMBURSED.
SEE ACCOMPANYING NOTES TO THE FINANCIAL STATEMENTS.
68 NATIONWIDE
<PAGE> 71
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
1.ORGANIZATION
Nationwide Mutual Funds ("NMF" or the "Trust"), 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 amend, and is registered under the Investment Company Act of 1940,
as amended. The Trust offer shares in thirty-three separate series, or mutual
funds, each with its own investment objectives and strategies. The accompanying
financial statements and financial highlights relate to the three Funds listed
below. (Individually, the "Fund", and collectively the "Funds").
- Nationwide Value Opportunities Fund (Value Opportunities)
- Nationwide High Yield Bond Fund (High Yield Bond)
- Morley Enhanced Income Fund (Enhanced Income)
The Value Opportunities and High Yield Bond Funds commenced operations on
December 29, 1999 and each Fund currently offers three classes of shares: Class
A, Class B and Institutional Service Class. 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 contain a 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
Fund's distributor, Nationwide Advisory Services, Inc. (NAS) which either
retains them or pays them to 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 to them a selling
representative.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America. The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
(a) SECURITIES VALUATION
(1)Securities traded on national securities exchanges 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)Each Fund may enter into repurchase agreements with member banks of the
Federal Deposit Insurance Corporation and with registered
brokers/dealers that the applicable investment adviser deems
creditworthy under guidelines approved by the Board of Trustees, subject
to the seller's agreement to repurchase such securities at a mutually
agreed-upon date and price. The repurchase price generally equals the
price paid by the Fund plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the
underlying portfolio securities. The seller, under a repurchase
agreement, is required to maintain the value of collateral held pursuant
to the agreement at not less than the repurchase price (including
accrued interest). Securities subject to repurchase agreements are held
by the Funds' custodian, another qualified custodian or in the Federal
Reserve/Treasury book-entry system. In the event of counterparty
default, the Fund has the right to use the collateral to offset losses
incurred. There is potential for loss to the Fund in the event the Fund
is delayed or prevented from exercising its rights to dispose of the
collateral securities, including the risk of a possible decline in the
value of the underlying securities during the period while the Fund
seeks to assert its rights.
(4)Futures contracts and options traded on a commodities exchange or board
of trade are valued the last sales price at the close of trading, or if
there was no sale, the quoted bid price at the close of trading. Futures
are used for purposes other than hedging.
(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 investment adviser, are valued in accordance with procedures
authorized by the Trust's Board of Trustees.
(6)Short-term money market obligations that have 60 days or less to
maturity, are valued according to amortized cost.
NATIONWIDE 69
<PAGE> 72
NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
OCTOBER 31, 2000
(b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME
Securities transactions are recorded on the trade date. Dividend income is
recognized on the ex-dividend date. Interest income is recorded on an accrual
basis and includes, where applicable, the pro rata amortization/accretion of
premium or discount.
(c) FEDERAL INCOME TAXES
Each Fund's policy is to qualify or continue to qualify as a regulated
investment company under the Internal Revenue Code, and to distribute
substantially 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, 2000, the Value Opportunities, High
Yield Bond, and Morley Enhanced Income Funds had net capital loss carry forwards
of $63,514, $3,543,425, and $181,706, respectively. If unused they will expire
in 8 years. It is the intent of the Funds to use this carryforward to offset
future capital gains.
(d) DISTRIBUTIONS TO SHAREHOLDERS
(1)Value Opportunities Fund:
Net investment income, if any, is declared and paid quarterly and is
recorded on the ex-dividend date.
(2)High Yield Bond, Morley Enhanced Income Fund:
Net investment 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.
(4)Dividends and distributions to shareholders are determined in accordance
with federal income tax regulations, which may differ from accounting
principles generally accepted in the United States of America. 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 (i.e.
Reclass of market discounts, gain/loss, paydowns, and distributions) are
reclassified within the capital accounts based on their nature for
federal income tax purposes; temporary differences do not require
reclassification. Dividends and distributions that exceed net investment
income and net realized gains for financial reporting purposes but not
for tax purposes are reported as dividends in excess of net investment
income and net realized gains. To the extent distributions exceed
current and accumulated earnings and profits for federal income tax
purposes, they are reported as distributions of paid-in-capital. These
reclassifications have no effect upon the net asset value of the Fund.
For the fiscal year ended October 31, 2000 the following reclasses were
necessary.
CAPITAL PAID UNDISTRIBUTED
IN EXCESS OF NET INVESTMENT
FUND PAR VALUE INCOME
Value Opportunities $(1,460) $1,460
High Yield Bond (7,577) 7,577
Morley Enhanced Income (6,712) 6,712
(e) EXPENSES
General expenses of the Trust, not directly attributable to a Fund or to any
class of shares, are charged 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 charged to a Fund, they are charged
to the classes based on total settled shares outstanding of each class for the
High Yield Bond, Morley Enhanced Income Fund, and total shares outstanding of
each class for the Value Opportunities Fund.
Direct expenses of a Fund are applied to that Fund and charged to the classes in
the methods mentioned above.
Direct expenses of a class are charged 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.
70 NATIONWIDE
<PAGE> 73
NOTES TO FINANCIAL STATEMENTS [PICTURE]
--------------------------------------------------------------------------------
October 31, 2000
(f) CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
Transactions in class level shares of the Funds were as follows:
VALUE OPPORTUNITIES HIGH YIELD BOND
-------------------- --------------------
PERIOD FROM PERIOD FROM
DECEMBER 29, 1999 TO DECEMBER 29, 1999 TO
CAPITAL TRANSACTIONS: OCTOBER 31, 2000 (a) OCTOBER 31, 2000 (a)
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLASS A SHARES:
Proceeds from shares issued $ 2,661,531 $ 3,421,946
Distributions reinvested 7,565 172,927
Cost of shares redeemed (375,852) (262,441)
--------- -----------
Change in capital $ 2,293,244 $ 3,332,432
========= ===========
CLASS B SHARES:
Proceeds from shares issued $ 699,399 $ 226,368
Distributions reinvested 1,022 2,897
Cost of shares redeemed (37,468) (20,534)
--------- -----------
Change in capital $ 662,953 $ 208,731
========= ===========
INSTITUTIONAL SERVICE CLASS:
Proceeds from shares issued $ 4,251,668 $100,009,841
Distributions reinvested 6,905 8,100,828
Cost of shares redeemed (69,832) -
--------- -----------
Change in capital $ 4,188,741 $108,110,669
========= ===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
DECEMBER 29, 1999 TO DECEMBER 29, 1999 TO
SHARE TRANSACTIONS: OCTOBER 31, 2000 (a) OCTOBER 31, 2000 (a)
<S> <C> <C>
CLASS A SHARES:
Issued 229,806 362,150
Reinvested 628 19,315
Redeemed (31,513) (28,969)
--------- -----------
Change in shares 198,921 352,496
========= ===========
CLASS B SHARES:
Issued 63,909 25,578
Reinvested 84 344
Redeemed (3,198) (2,315)
--------- -----------
Change in shares 60,795 23,607
========= ===========
INSTITUTIONAL SERVICE CLASS:
Issued 362,601 10,178,445
Reinvested 584 886,481
Redeemed (5,661) -
--------- -----------
Change in shares 357,524 11,064,926
========= ===========
</TABLE>
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
NATIONWIDE 71
<PAGE> 74
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
<TABLE>
<CAPTION>
MORLEY ENHANCED INCOME
PERIOD FROM
DECEMBER 29, 1999 TO
CAPITAL TRANSACTIONS: OCTOBER 31, 2000 (a)
-----------------------------------------------------------------------------------------------------------------------
<S> <C>
CLASS A SHARES:
Proceeds from shares issued $ 442,297
Distributions reinvested 7,005
Cost of shares redeemed (80,360)
----------
Change in capital $ 368,942
==========
INSTITUTIONAL SERVICE CLASS:
Proceeds from shares issued $16,958,124
Distributions reinvested 503,088
Cost of shares redeemed (5,730,186)
----------
Change in capital $11,731,026
==========
INSTITUTIONAL CLASS:
Proceeds from shares issued $ 529,607
Distributions reinvested 1,055
Cost of shares redeemed (33,268)
----------
Change in capital $ 497,394
==========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
DECEMBER 29, 1999 TO
SHARE TRANSACTIONS: OCTOBER 31, 2000 (a)
-----------------------------------------------------------------------------------------------------------------------
<S> <C>
CLASS A SHARES:
Issued 44,620
Reinvested 707
Redeemed (8,117)
----------
Change in shares 37,210
==========
INSTITUTIONAL SERVICE CLASS:
Issued 1,699,022
Reinvested 50,712
Redeemed (576,537)
----------
Change in shares 1,173,197
==========
INSTITUTIONAL CLASS:
Issued 53,468
Reinvested 106
Redeemed (3,358)
----------
Change in shares 50,216
==========
</TABLE>
(a) FUND COMMENCED OPERATIONS ON DECEMBER 29, 1999.
72 NATIONWIDE
<PAGE> 75
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
3. TRANSACTIONS 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 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 pay 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
subadvisory fees to NorthPointe with respect to Value Opportunities Fund.
Additional information regarding investment advisory fees and subadvisory fees
is as follows for the period of December 29, 1999 through October 31, 2000 for
Value Opportunities Fund, High Yield Bond Fund and Morley Enhanced Income Fund:
<TABLE>
<CAPTION>
TOTAL ADVISORY ADVISORY FEES SUB-ADVISORY FEE TOTAL FEES PAID TO
FUND FEES RETAINED FEES PAID SCHEDULE FEES RETAINED SUB ADVISER
<S> <C> <C> <C> <C> <C> <C> <C>
Value Opportunities $ 20,249 $ - $20,249 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 $443,174 $443,174 NA Up to $250 million 0.55% 0.55% -
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% -
Enhanced Income $ 33,541 $ 33,541 $ NA All Assets 0.35% 0.35% -
</TABLE>
VMF and UBT have entered into an Expense Limitation Agreement with the Trust on
behalf of the Funds they advise. Pursuant to the Expense Limitation Agreement,
VMF and UBT have agreed to waive fees or otherwise reimburse expenses (except
for Rule 12b-1 and administrative service fees) of each such Fund in order to
limit annual Fund operating expenses at or below stated expense caps. The
following table illustrates the stated expense caps for each class of shares for
the period ended October 31, 2000:
<TABLE>
<CAPTION>
EXPENSE CAPS
---------------------------------------------------------------------------
INSTITUTIONAL
FUND CLASS A SHARES CLASS B SHARES SERVICE CLASS SHARES
<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 SHARES CLASS SHARES
Morley Enhanced Income 0.90% 0.70% 0.45%
</TABLE>
NATIONWIDE 73
<PAGE> 76
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
During the period ended October 31, 2000, VMF and UBT reduced expenses for the
respective 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 $186,473 $85,926 $ 64,228 $150,154 $ 36,319
High Yield Bond 680,138 109,730 - 109,730 570,408
Morley Enhanced Income 167,780 97,845 2,436 100,281 67,499
</TABLE>
*Includes adviser, transfer agent and fund administration.
VMF and UBT may request and receive reimbursement from each Fund they advise of
the advisory fees waived or limited and other expenses reimbursed by VMF or UBT
pursuant to the Expense Limitation Agreement at a later date not to exceed five
fiscal years from commencement of operations if the Fund has reached a
sufficient asset size to permit reimbursement to be made without causing the
total annual operating expense ratio of the Fund to exceed the limits set forth
above. No reimbursement will be made unless: (i) the Fund's assets exceed $100
million; (ii) the total annual expense ratio of the Class making such
reimbursement is less than the limit set forth above; and (iii) the payment of
such reimbursement is approved by the Board of Trustees on a quarterly basis.
Except as provided for in the Expense Limitation Agreement, reimbursement of
amounts previously waived or assumed by VMF or UBT is not permitted. As of
fiscal year ended October 31, 2000, the cumulative reimbursements were $150,154,
$109,730, and $100,281 for the Value Opportunities, High Yield Bond, and Morley
Enhanced Income Funds, respectively.
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 Class A and Class B shares of the Funds. These fees are
based on average daily net assets of the respective classes, at an annual rate
not to exceed for Class A shares 0.25%, and for Class B shares 1.00%. Additional
information regarding distribution fees incurred is as follows for the period
ended October 31, 2000:
<TABLE>
<CAPTION>
DISTRIBUTION FEES
FUND CLASS A SHARES CLASS B SHARES
<S> <C> <C>
Value Opportunities $2,373 $4,162
High Yield Bond 4,173 558
Enhanced Income 387 N/A
</TABLE>
Pursuant to an Underwriting Agreement, NAS serves as principal underwriter of
the Funds in the continuous distribution of their Class A shares and receives
commissions in the form of a front-end sales charge on the Class A shares. Such
fees are deducted from and are not included in proceeds from sales of Class A
shares. From such fees, NAS pays sales commissions, salaries, and other expenses
in connection with generating new sales of Class A shares of the Fund. For the
period ended October 31, 2000, the commissions were collected as follows:
FUND CLASS A SHARES
Value Opportunities $21,410
High Yield Bond 3,532
Enhanced Income 5,445
NAS also receives fees for services as principal underwriter for Class B shares
of the Funds. Such fees are contingent deferred sales charges (CDSCs) ranging
from 1% to 5% imposed on redemptions of Class B shares which may cause the
current value of a shareholder's account to fall below the total purchase
payments; the CDSC, if applicable, will be imposed on redemptions made within 6
years of the purchase. CDSCs collected for the period ended October 31, 2000, on
redemptions of Class B Shares were as follows:
FUND CLASS B SHARES
Value Opportunities $2,572
High Yield Bond 341
74 NATIONWIDE
<PAGE> 77
NOTES TO FINANCIAL STATEMENTS [PICTURE]
--------------------------------------------------------------------------------
OCTOBER 31, 2000
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 period ended October 31, 2000, the
Funds incurred fund administration fees according to the following schedule:
<TABLE>
<CAPTION>
FUND ADMINISTRATION FUND ADMINISTRATION
FUND FEE FEE SCHEDULE
<S> <C> <C> <C>
Value Opportunities* $63,115 Up to $250 million 0.07%
High Yield Bond* 56,405 On the next $750 million 0.05%
Enhanced Income* 63,115 On $1 billion and more 0.04%
</TABLE>
* The Fund Administration fee is subject to a minimum of $75,000 per year.
VSA has entered into an agreement with BISYS Fund Services to provide
subadministrative services to the Fund.
Nationwide Investors Services, Inc. ("NISI"), a subsidiary of VSA, serves as
Transfer and Dividend Disbursing Agent for the Funds. For these services, NISI
received fees at $18 per account for Class A, and Class B shares (effective
October 1, 2000, per account fees were increased to $20), and 0.01% of the
average daily net assets of the other classes of shares. During the period ended
October 31, 2000, the Funds incurred the following transfer agent fees:
<TABLE>
<CAPTION>
Transfer Agent Fees
--------------------------------------------------------------------------
INSTITUTIONAL
FUND CLASS A SHARES CLASS B SHARES SERVICE CLASS SHARES
<S> <C> <C> <C>
Value Opportunities $1,669 $740 $ 153
High Yield Bond 939 792 7,884
INSTITUTIONAL INSTITUTIONAL
FUND CLASS A SHARES SERVICE CLASS SHARES CLASS SHARES
Enhanced Income $ 240 $944 $ 5
</TABLE>
VSA has entered into an agreement with BISYS Fund Services Ohio, Inc., to
provide sub-transfer agent services to the Funds.
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. To these shareholders;
these servicing organizations may include Nationwide Financial Services, Inc.
("NFS"). 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 inquiries 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 the Funds for
the period ended October 31, 2000. The Funds incurred the following
administrative services fees:.
<TABLE>
<CAPTION>
ADMINISTRATIVE SERVICING FEES (a)
------------------------------------
INSTITUTIONAL
FUND CLASS A SERVICE CLASS
<S> <C> <C>
Value Opportunities $ 34 $ 327
High Yield Bond 145 19,180
Enhanced Income - 3,321
</TABLE>
(a) Classes of funds without administrative servicing fees do not currently have
an active agreement to incur an expense.
Affiliate NFS received payments (which are included in the total administration
fees) as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A SERVICE CLASS
<S> <C> <C>
Value Opportunities $ - $ 295
High Yield Bond - 18,750
Enhanced Income - 3,205
</TABLE>
NATIONWIDE 75
<PAGE> 78
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
OCTOBER 31, 2000
4. 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 0.50%.
These interest costs are included in custodian fees in the Statements of
Operations. No compensating balances are required under the terms of this
arrangement. The average borrowings outstanding for Value Opportunities and High
Yield Bond Funds during the year (ended October 31, 2000) was $7,383 and
$135,294 at an average interest rate of 7.03% and 6.86%, respectively.
5. 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 October 31, 2000, are summarized as follows:
<TABLE>
<CAPTION>
NON U.S. GOVERNMENT U.S. GOVERNMENT
SECURITIES SECURITIES
------------------------------ -----------------------------
FUND PURCHASES SALES PURCHASES SALES
<S> <C> <C> <C> <C>
Value Opportunities $ 10,626,362 $ 7,795 $ - $ -
High Yield Bond 164,987,990 62,092,595 - -
Morley Enhanced Income 1,647,200 - 27,242,695 17,557,950
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis
unless otherwise specified by the adviser or sub-adviser. Cost for financial
reporting purposes differs from cost for federal income tax purposes by the
amount of losses recognized for financial reporting in excess of federal income
tax reporting of $5,371, $0, and $0 for Value Opportunities, High Yield Bond,
and Morley Enhanced Income, respectively. Cost for federal income tax differs
from market value by net unrealized appreciation (depreciation) of securities as
follows:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED APPRECIATION
FUND APPRECIATION (DEPRECIATION) (DEPRECIATION)
<S> <C> <C> <C>
Value Opportunities $806,894 $ (241,505) $ 565,389
High Yield Bond 485,235 (16,962,580) (16,477,345)
Morley Enhanced Income 68,135 (60,276) 7,859
</TABLE>
6. FEDERAL INCOME TAX (UNAUDITED)
For corporate shareholders. 100% of the Nationwide Value Opportunities Fund
income dividends and short-term capital gain distributions in the fiscal period
ended October 31, 2000, qualify for the dividend received deductions available
for certain corporate shareholders.
7. SUBSEQUENT EVENT
At a regular quarterly meeting of the Board of Trustees on December 14 and 15,
2000, the Board the considered and approved the following transactions:
(a) Approved the change in the principal underwriter of Nationwide Mutual Funds
from Nationwide Advisory Services, Inc. to Villanova Distribution Services,
Inc. This change will occur as soon as practicable after all necessary
regulatory approvals are received.
(b) Subject to shareholder approval by the shareholders of the Select Value
Portfolio, a series of Principal Preservation Portfolios, Inc., approved
the reorganization and transfer of substantially all of the assets of
Select Value Portfolio into the Nationwide Value Opportunities Fund in
exchange for shares of the same class of the Nationwide Value Opportunities
Fund.
(c) Approved the addition of Class C shares for each of the Funds except Morley
Enhanced Income Fund. These shares will be available for sale no earlier
than March 1, 2001.
76 NATIONWIDE
<PAGE> 79
INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------
THE SHAREHOLDERS AND BOARD
OF TRUSTEES OF NATIONWIDE MUTUAL FUNDS:
We have audited the accompanying statements of assets and liabilities of
Nationwide Mutual Funds - Nationwide Value Opportunities Fund, Nationwide High
Yield Bond Fund and Morley Enhanced Income Fund (the Funds), including the
statements of investments, as of October 31, 2000, and the related statements of
operations, statements of changes in net assets and the financial highlights for
each of the periods indicated herein. These financial statements and the
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000, by confirmation with the custodian,
correspondence with brokers and other appropriate audit procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned Funds as of October 31, 2000, the results of their
operations, the changes in their net assets and the financial highlights for
each of the periods indicated herein, in conformity with accounting principles
generally accepted in the United States of America.
KPMG LLP
COLUMBUS, OHIO
DECEMBER 18, 2000
NATIONWIDE 77
<PAGE> 80
SHAREHOLDER MEETING
--------------------------------------------------------------------------------
(UNAUDITED)
At the Annual Meeting of Shareholders of Nationwide Mutual Funds held on July
26, 2000, shareholders of the Funds acted upon and approved the following
matters:
<TABLE>
<CAPTION>
PROPOSAL 1
Election of Twelve Trustees
WITHHOLD
AUTHORITY
NAME FOR TO VOTE FOR
<S> <C> <C>
Charles E. Allen 1,210,772,374 27,409,050
Paula H. J. Cholmondeley 1,210,595,553 27,585,870
C. Brent DeVore 1,210,760,725 27,420,699
Robert M. Duncan 1,210,511,422 27,670,001
Joseph J. Gasper 1,208,526,105 29,655,318
Barbara Hennigar 1,210,762,798 27,418,626
Paul J. Hondros 1,210,374,609 27,806,815
Thomas J. Kerr IV 1,210,723,620 27,457,804
Douglas F. Kridler 1,210,285,022 27,896,402
Dimon R. McFerson 1,207,073,052 31,108,372
Arden L. Shisler 1,210,645,041 27,536,382
David C. Wetmore 1,211,159,071 27,022,352
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL 2
Ratification of Board of Trustees' Selection of
KPMG LLP AS TRUST'S AUDITORS FOR
THE FISCAL YEAR ENDING OCTOBER 31, 2000
SERIES FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
Mid Cap Growth Fund* 392,953 6,553 56,343 455,849
Growth Fund 29,420,887 1,083,286 1,765,968 32,270,141
Nationwide Fund 41,708,118 652,212 1,616,954 43,977,284
Bond Fund 7,055,764 37,856 326,750 7,420,370
Tax-Free Income Fund 10,875,825 151,369 764,561 11,791,755
Long-Term U.S. Government Bond Fund 1,504,410 3,959 112,030 1,620,399
Intermediate U.S. Government Bond Fund 8,570,166 41,535 158,603 8,770,304
Money Market Fund 1,032,957,631 22,226,133 38,225,984 1,093,409,748
S&P 500 Index Fund 14,589,716 178,031 620,230 15,387,977
Morley Capital Accumulation Fund 1,058,429 - - 1,058,429
Morley Enhanced Income Fund 1,109,538 - - 1,109,538
Value Opportunities Fund 106,180 - 785 106,965
High Yield Bond Fund 10,485,743 - - 10,485,743
Prestige Large Cap Value Fund 2,796,280 7,171 8,362 2,811,813
Prestige Large Cap Growth Fund 2,875,424 1,973 19,391 2,896,788
Prestige Small Cap Fund 1,953,699 3,087 7,408 1,964,194
Prestige Balanced Fund 729,593 62 26,853 756,508
</TABLE>
*EFFECTIVE OCTOBER 1, 2000, KNOWN AS GARTMORE MILLENIUM GROWTH FUND
78 NATIONWIDE
<PAGE> 81
SHAREHOLDER MEETING CONTINUED [PICTURE]
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSAL 2 (CONTINUED)
SERIES FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
Prestige International Fund 1,346,839 - 3,588 1,350,427
Small Cap Index Fund 2,453 - - 2,453
International Index Fund 12,881 - 998 13,879
Bond Index Fund 4,777 - - 4,777
Mid Cap Market Index Fund 501,087 - - 501,087
Investor Destinations Aggressive Fund 3,000 - - 3,000
Investor Destinations Moderately
Aggressive Fund 3,000 - - 3,000
Investor Destinations Moderate Fund 3,000 - - 3,000
Investor Destinations Moderately
Conservative Fund 3,000 - - 3,000
Investor Destinations Conservative Fund 3,000 - - 3,000
------------- ---------- ---------- -------------
All twenty-seven Funds 1,170,073,393 24,393,227 43,714,808 1,238,181,428
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL 3
Amend Funds' Fundamental Investment Policy
REGARDING MAKING LOANS
SERIES FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
Morley Enhanced Income Fund 1,109,538 - - 1,109,538
Value Opportunities Fund 106,006 174 785 106,965
High Yield Bond Fund 10,485,743 - - 10,485,743
Prestige Large Cap Value Fund 2,791,352 16,766 3,695 2,811,814
Prestige Large Cap Growth Fund 2,821,082 36,111 39,594 2,896,787
Prestige Small Cap Fund 1,922,478 13,740 27,976 1,964,194
Prestige Balanced Fund 715,642 13,503 27,363 756,508
Prestige International Fund 1,343,753 1,065 5,608 1,350,426
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL 4
Amend Funds' Fundamental Investment Policy
REGARDING COMMODITIES AND COMMODITIES CONTRACTS
SERIES FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
Morley Enhanced Income Fund 1,104,326 5,212 - 1,109,538
Value Opportunities Fund 106,006 174 785 106,965
High Yield Bond Fund 10,485,743 - - 10,485,743
Prestige Large Cap Value Fund 2,791,299 11,263 9,252 2,811,814
Prestige Large Cap Growth Fund 2,839,384 16,564 40,839 2,896,787
Prestige Small Cap Fund 1,926,237 8,290 29,667 1,964,194
Prestige Balanced Fund 716,342 12,803 27,363 756,508
Prestige International Fund 1,344,781 37 5,608 1,350,426
</TABLE>
NATIONWIDE 79
<PAGE> 82
SHAREHOLDER MEETING CONTINUED
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSAL 5
Amend Funds' Fundamental Investment Policy
REGARDING REAL ESTATE
SERIES FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
Morley Enhanced Income Fund 1,109,538 - - 1,109,538
Value Opportunities Fund 106,006 174 785 106,965
High Yield Bond Fund 10,480,015 5,728 - 10,485,743
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL 6
Amend Funds' Fundamental Investment Policy
REGARDING BORROWING MONEY AND ISSUING SENIOR SECURITIES
SERIES FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
Prestige Cap Value Fund 2,791,303 11,026 9,485 2,811,814
Prestige Large Cap Growth Fund 2,838,704 17,429 40,654 2,896,787
Prestige Small Cap Fund 1,919,026 15,571 29,597 1,964,194
Prestige Balanced Fund 717,518 11,627 27,363 756,508
Prestige International Fund 1,344,123 695 5,608 1,350,426
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL 7
Amend Funds' Fundamental Investment Policy
REGARDING DIVERSIFICATION
SERIES FOR AGAINST ABSTAIN TOTAL
<S> <C> <C>
Morley Enhanced Income Fund 1,109,538 - - 1,109,538
Value Opportunities Fund 106,006 174 785 106,965
High Yield Bond Fund 10,485,743 - - 10,485,743
</TABLE>
<TABLE>
<CAPTION>
PROPOSAL 8
Approve Funds' reclassification of the fundamental investment objective as non-fundamental of each of the
Mid Cap Growth Fund*, Growth Fund, Nationwide Fund, Bond Fund, Tax-Free Income Fund,
Long-Term U.S. Government Bond Fund, Intermediate U.S. Government Bond Fund, Money Market Fund,
S&P 500 Index Fund, Prestige Large Cap Value Fund, Prestige Large Cap Growth Fund, Prestige Small Cap Fund,
Prestige Balanced Fund and Prestige International Fund
SERIES FOR AGAINST ABSTAIN TOTAL
<S> <C> <C> <C> <C>
Prestige Large Cap Value Fund 2,790,327 17,180 4,307 2,811,814
Prestige Large Cap Growth Fund 2,803,493 51,507 41,788 2,896,788
Prestige Small Cap Fund 1,885,497 32,726 45,971 1,964,194
Prestige Balanced Fund 715,399 13,566 27,543 756,508
Prestige International Fund 1,345,421 123 4,883 1,305,427
</TABLE>
At such Annual Meeting, shareholders of the other Funds of the Trust voted upon
these and other proposals. Results of such voting are not reported here in their
entirety to the extent they do not directly affect the Fund. However, for more
information about the results of the Annual Meeting, interested shareholders
should contact the Trust.
80 NATIONWIDE
<PAGE> 83
OFFICERS
Joseph J. Gasper - Chairman
Kevin S. Crossett - Secretary
Elizabeth A. Davin - Assistant Secretary
Alaina V. Metz - Assistant Secretary
Zita A. Resurreccion - Assistant Secretary
Michael A. Krulikowski - Assistant Secretary
Dina A. Tantra - Assistant Secretary
Gerald J. Holland - Treasurer
James F. Laird, Jr. - Assistant Treasurer
William J. Baltrus - Assistant Treasurer
Laurice A. Frysinger - Assistant Treasurer
Edwin P. McCausland - Assistant Treasurer
Bryan C. Haft - Assistant Treasurer
Mark R. Thresher - Assistant Treasurer
INVESTMENT ADVISOR
Villanova Mutual Fund Capital Trust
1200 River Road
Conshohocken, Pennsylvania 19428
TRANSFER AGENT
Nationwide Investor Services, Inc.
P.O. Box 1492
Columbus, Ohio 43216-1492
CUSTODIAN
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263-0001
LEGAL COUNSEL
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
INDEPENDENT AUDITOR
KPMG LLP
Two Nationwide Plaza
Columbus, Ohio 43215-2537
DISTRIBUTOR
Nationwide Advisory Services, Inc.
P.O. Box 1492
Columbus, Ohio 43216-1492
This report is for the information of shareholders of the Nationwide Family of
Funds. For more complete information regarding any of the mutual funds within
the Nationwide Family of Funds, including all sales charges and expenses, please
ask your representative for a prospectus. Please read it carefully before you
invest or send any money.
Nationwide is a registered Federal Service mark of the Nationwide Mutual
Insurance Company.
TRUSTEES
Joseph J. Gasper
Chairman
Columbus, Ohio
Charles E. Allen
Detroit, Michigan
Paula H.J. Cholmondeley
Boston, Massachusetts
C. Brent DeVore
Westerville, Ohio
Robert M. Duncan
Columbus, Ohio
Barbara Henningar
Englewood, Colorado
Paul J. Hondros
Conshohocken, Pennsylvania
Thomas J. Kerr, IV
Westerville, Ohio
Douglas F. Kridler
Columbus, Ohio
Dimon R. McFerson
Columbus, Ohio
Arden L. Shisler
Dayton, Ohio
David C. Wetmore
Reston, Virginia
2000
A FOUNDATION OF STRONG PRINCIPLES
We built Villanova Capital on four core values:
- CLIENT FOCUS. As the stewards of our clients' assets, we must deliver on
our promise to manage their assets in a manner consistent with their
objectives. Thus, a growth portfolio must concentrate on growth only, just
as a value or core equity portfolio must adhere strictly to its mandate.
- PEOPLE. We must attract and retain talented and committed professionals,
and we must provide them with the best research and technology tools
available to do their jobs well.
- PERFORMANCE. We must strive to produce competitive risk-adjusted results
for our investors and work to ensure that our funds follow consistent,
well-articulated and repeatable investment processes.
- INTEGRITY. We must uphold our pledge to maintain the highest level of
integrity in all aspects of our business.
<PAGE> 84
A HEADQUARTERS RICH IN HISTORY, RENOVATED FOR THE 21ST CENTURY
Photographs of Villanova Capital's Pennsylvania headquarters are found
throughout this report.
Villanova Capital is based in historic River Park, some 15 miles west of
central Philadelphia, on the banks of the Schuylkill River.
We occupy three buildings in River Park, which, as recently as ten years
ago, was the site of a working paper mill. The site's original mill was built in
1746 with financial assistance from Benjamin Franklin, who used paper from the
mill to print currency for the 13 colonies during the American Revolution.
We worked closely with the property's developer to create a financial
services center for the new millennium, while protecting the masonry and beams
of the two-centuries-old buildings.
General Account Service and Exchanges:
1-800-848-0920
Fund Information
24 Hours a Day, 7 Days a Week:
1-800-637-0012
www.nationwidefunds.com
[PICTURE]
Nationwide(R) Family of Funds - offered by Villanova
Capital through Nationwide Advisory Services
[LOGO] PRSRT STD
NATIONWIDE US POSTAGE
Family of Funds PAID
CLEVELAND OH
P.O. Box 1492 PERMIT NO. 1702
Columbus, Ohio 43216-1492
October 2000
Annual Report
HS-1214-12/00
