<PAGE> 1
[LOGO] NATIONWIDE
ADVISORY
SERVICES, INC.
[PHOTO]
ANNUAL
REPORT
OCTOBER 31, 1996
NATIONWIDE(R) FAMILY OF FUNDS
-----------------------------
NATIONWIDE(R) GROWTH FUND
NATIONWIDE(R) FUND
NATIONWIDE(R) BOND FUND
NATIONWIDE(R) TAX-FREE INCOME FUND
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND
NATIONWIDE(R) MONEY MARKET FUND
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
CHAIRMAN'S LETTER .......................................................3
NATIONWIDE(R) GROWTH FUND .............................................4-6
NATIONWIDE(R) FUND ....................................................7-9
NATIONWIDE(R) BOND FUND .............................................10-11
NATIONWIDE(R) TAX-FREE INCOME FUND ..................................12-15
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND ...........................16-17
NATIONWIDE(R) MONEY MARKET FUND .....................................18-20
FINANCIAL STATEMENTS ................................................21-24
FINANCIAL HIGHLIGHTS ................................................25-27
NOTES TO FINANCIAL STATEMENTS........................................28-29
INDEPENDENT AUDITORS' REPORT............................................30
NATIONWIDE(R) FAMILY OF FUNDS TRUSTEES AND OFFICERS.....................31
</TABLE>
This report is for the information of shareholders of the Nationwide Family of
Funds. It may be used as sales literature only when preceded or accompanied by a
current prospectus which gives further details about the funds.
Nationwide(R) and [NATIONWIWIDE GRAPHIC] are registered Federal Service marks of
Nationwide Mutual Insurance Company.
2
<PAGE> 3
TO OUR SHAREHOLDERS
[PHOTO]
MESSAGE TO SHAREHOLDERS:
The year 1996 will be remembered as an exciting one for investors and for
our shareholders.
The Dow Jones Industrial Average (DJIA) broke through the 6000 mark in
October and continued to reach more all-time highs before closing on October 31
at 6029, an 18% increase for the year.
A combination of low inflation, high employment and strong levels of
consumer confidence have produced significant gains in the equity markets. While
no one can predict the market with certainty, corporate earnings forecasts for
1997 are generally weaker than in years past, causing some to speculate that the
great earnings boom that has helped propel the market and buoy the economy for
more than four years may be over. Realistic expectations and a long-term
investment horizon are essential for fund investors.
Economic growth slowed to 2.2% in the third quarter and wages rose at a
slower pace than earlier in the year. On the positive side, 220,000 new jobs
were added in October and American financial markets continue to perform well.
The U.S. is still a sought after investment area and many domestic companies
have successfully made the transition from a local to a global competitor.
Overall, economic fundamentals are good, despite being somewhat weaker than
in the past year. A period of slow growth is predicted for early in 1997,
followed by an anticipated phase of expansion in the second half of the year.
For the year ended October 31, 1996, the Nationwide(R) Growth Fund gained
12.36% and the Nationwide(R) Fund increased 26.11%. Total return of the S&P 500
for the same period was 24.10%.
Returns on long-term taxable bonds also were strong. For the year ended
October 31, 1996, the Nationwide(R) Bond Fund returned 5.05% as compared to
4.39% for its benchmark index, the Lehman Brothers Long-Term
Government/Corporate Bond Index. For the year ended October 31, 1996, the
Nationwide(R) U.S. Government Income Fund returned 5.28% compared to 5.67% for
its benchmark index, the Lehman Brothers Intermediate Government Bond Index.
For the year ended October 31, 1996, the Nationwide(R) Tax-Free Income Fund
total return was 5.31%, compared to 5.70% for its benchmark index, the Lehman
Brothers Municipal Bond Index.
The Nationwide(R) Money Market Fund continues to post consistent yields.
Total return for the Fund was 5.05% for the year ended October 31, 1996, with a
30-day effective yield of 4.98% as of that date. This compares favorably to the
Consumer Price Index total return of 2.99%.
On pages 4 through 18 of this report, you can read the comments of your
funds' portfolio managers which describe in detail important factors which
explain each fund's performance and unique characteristics.
You may have noticed that your investment advisor has changed its name to
Nationwide Advisory Services, Inc. While the name is new, the belief in
providing high-quality shareholder services remains unchanged. You're welcome to
call 1-800-848-0920 with any suggestions or comments you might have.
Thank you for giving Nationwide Advisory Services, Inc. the opportunity to
meet your investment needs.
D. RICHARD MCFERSON, CHAIRMAN
DECEMBER 1996
3
<PAGE> 4
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) GROWTH FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the year ended October 31, 1996, the Nationwide Growth Fund provided a total
return of 12.36% as compared to a 24.10% total return for the S&P 500 Index.
Performance for the second half of the fiscal year has continued to suffer from
the results of the long-distance telephone carriers, especially AT&T. While I
continue to like the telecommunications industry long term, fears of competition
plus AT&T's loss of share in residential markets has hurt current results. The
Fund has had mixed results from its technology holdings, with some holdings,
such as Intel and EMC Corp., performing very well, and others, such as Motorola
and Applied Materials, lagging badly. Home healthcare issues, such as Apria and
Olsten (included in Business Services), have also been weak. Again, the weakness
seems to relate to short-term issues, and has not changed the fundamental
long-term attractiveness of these companies. Financial stocks, which we had
added to earlier this year, have performed well.
During the last several months the Fund's exposure to technology has been
reduced. In some cases, such as sales of Intel and Cisco, this was due to
overvaluation, as the stocks recovered strongly from weakness they had suffered
in June and July. In other cases, fundamentals had changed for the worse. New
names that were added to the Fund included Genuine Parts, First Data and
Monsanto.
The Growth Fund's strategy is based on finding undervalued growth. Over the past
year, with high valuations accorded to quality, recognized growth, this has
meant buying and holding situations with good long-term potential but that also
have temporary problems, or perceptions of problems, that keep valuations
reasonable. This strategy has NOT been in favor in the stock market. Since early
1995, stocks with high valuations have performed well by going to even higher
valuations. As a result, the Fund has had poor relative performance during this
time. Buying stocks with high valuations has been repeatedly and overwhelmingly
shown to be a poor long-term strategy, and I do not believe the current period
will ultimately prove to be different.
JOHN M. SCHAFFNER, MBA, CFA, PORTFOLIO MANAGER
FUND VALUE $655,615,705
PORTFOLIO COMPOSITION
COMMON STOCK.......................................90.3%
U.S. GOVERNMENT AND AGENCY OBLIGATIONS AND
OTHER ASSETS LESS LIABILITIES.......................9.7%
TOP FIVE HOLDINGS
<TABLE>
<CAPTION>
VALUE %
- --------------------------------------------------------------
<S> <C> <C>
Federal Nat'l Mortgage Assoc. Notes $44,196,827 6.7%
Archer-Daniels-Midland Co. 24,670,394 3.8%
Equitable Companies 23,241,500 3.5%
Grand Metropolitan PLC 22,642,800 3.5%
Allstate Corp. 22,450,000 3.4%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
S&P 500 Growth CPI
<S> <C> <C> <C>
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996 $39,407 $29,874 $14,365
</TABLE>
Comparative performance of $10,000 invested in the Nationwide(R) Growth Fund,
the S&P 500* and the Consumer Price Index (CPI)** over a 10-year period ended
10/31/96.
* The S&P 500 is a broad, unmanaged index of equity securities, and unlike the
Growth Fund returns, does not reflect any fees or expenses.
** The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Growth Fund, does not
reflect any fees or expenses.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge....12.36%....12.30%......12.07%
With sales charge........7.30%....11.27%......11.55%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes a 4.5% sales charge was paid which has the most
dramatic effect on the one-year performance figures.
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 HIGHLIGHTS
The Nationwide(R) Growth Fund invests primarily in the common stock of companies
in industries with favorable economic trends and new technology. Historically,
these companies, which generally are smaller, pay smaller dividends, but show
greater-than-average growth potential.
The Nationwide(R) Growth Fund is for investors more interested in long-term
growth of capital to meet their future financial needs than in current income.
The rise in market performance over the past few years underscores the
importance of remaining fully invested for a long period of time.
4
<PAGE> 5
STATEMENT OF INVESTMENTS
NATIONWIDE(R) GROWTH FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (90.3%)
---------------------
AIRLINES (0.5%)
---------------
199,000 Skywest, Inc.......................... $ 2,985,000
------------
AUTO INDUSTRY (1.3%)
--------------------
200,000 Genuine Parts Co...................... 8,750,000
------------
BUSINESS SERVICES (3.2%)
------------------------
157,200 Insurance Auto Auctions, Inc.*........ 1,591,650
300,000 Manpower, Inc......................... 8,512,500
531,150 Olsten Corp. ......................... 10,623,000
------------
20,727,150
------------
CABLE (2.1%)
------------
600,000 Comcast Corp.......................... 8,625,000
325,000 U.S. West Media Group*................ 5,078,125
------------
13,703,125
------------
CHEMICALS (2.8%)
----------------
100,000 FMC Corp.*............................ 7,362,500
100,000 Monsanto Co........................... 3,962,500
122,000 Sigma-Aldrich Corp.................... 7,167,500
------------
18,492,500
------------
CHEMICALS - SPECIALTY (1.0%)
----------------------------
116,800 Loctite Corp.......................... 6,847,400
------------
COMPUTER EQUIPMENT (7.0%)
-------------------------
180,000 American Power Conversion Corp.*...... 3,847,500
286,300 EMC Corp.*............................ 7,515,375
325,000 Hewlett-Packard Co.................... 14,340,625
120,000 International Business Machines Corp.. 15,480,000
97,225 Lucent Technologies, Inc. ............ 4,569,575
------------
45,753,075
------------
COMPUTER SOFTWARE & SERVICES (2.2%)
-----------------------------------
200,000 Automatic Data Processing, Inc........ 8,325,000
75,000 Electronic Data Systems............... 3,375,000
30,000 First Data Corp....................... 2,392,500
29,000 Informix Corp.*....................... 643,438
------------
14,735,938
------------
CONGLOMERATES (1.5%)
--------------------
160,000 Honeywell, Inc........................ 9,940,000
------------
CONSUMER PRODUCTS (1.3%)
------------------------
300,000 Newell Co............................. 8,512,500
------------
CONTRACT MANUFACTURING (0.1%)
-----------------------------
63,900 Electronic Fab Technology Corp.*...... 199,688
------------
DISTRIBUTION (1.6%)
-------------------
328,125 Bergen Brunswig Corp., Class A........ 10,294,922
------------
DRUGS (7.4%)
------------
419,200 Allergan, Inc......................... 12,785,600
200,000 Glaxo Wellcome, PLC .................. 6,300,000
160,000 Schering-Plough Corp.................. 10,240,000
300,000 Warner-Lambert Co..................... 19,087,500
------------
48,413,100
------------
ELECTRONICS (4.2%)
------------------
200,000 Applied Materials, Inc.*.............. 5,287,500
117,187 Molex, Inc............................ 4,218,732
190,858 Molex, Inc., Class A.................. 6,179,028
200,000 Motorola, Inc......................... 9,200,000
189,000 Woodhead Industries, Inc.............. 2,598,750
------------
27,484,010
------------
FINANCIAL (17.3%)
-----------------
400,000 Allstate Corp......................... 22,450,000
67,500 American International Group, Inc..... 7,332,187
607,752 Bear Stearns Companies, Inc........... 14,358,141
229,400 Chubb Corp............................ 11,470,000
989,000 Equitable Cos......................... 23,241,500
486,202 Gainsco, Inc.......................... 4,679,694
250,000 Merrill Lynch & Co., Inc.............. 17,562,500
100,000 Morgan Stanley Group, Inc............. 5,025,000
200,000 Silicon Valley Bancshares*............ 5,225,000
100,000 Standard Financial, Inc............... 1,781,250
------------
113,125,272
------------
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
FOOD & BEVERAGE (4.3%)
----------------------
3,000,000 Grand Metropolitan, PLC............... $ 22,642,800
150,000 Seagram Co. Ltd....................... 5,681,250
------------
28,324,050
------------
FOOD-GRAIN & AGRICULTURE (3.7%)
-------------------------------
1,134,271 Archer-Daniels-Midland Co............. 24,670,394
------------
HEALTHCARE - GENERAL (1.2%)
---------------------------
415,000 Apria Healthcare Group, Inc.*......... 7,936,875
------------
HEALTHCARE SERVICES (3.3%)
--------------------------
600,000 Columbia/HCA Healthcare Corp.......... 21,450,000
------------
MACHINERY & CAPITAL GOODS (5.0%)
--------------------------------
139,650 Duriron Company, Inc.................. 3,735,637
60,000 Emerson Electric Co................... 5,340,000
150,000 Lindsay Manufacturing Co.............. 6,450,000
60,000 Nordson Corp.......................... 3,300,000
492,600 Zebra Technologies Corp.*............. 14,223,825
------------
33,049,462
------------
MEDICAL PRODUCTS (0.5%)
-----------------------
200,000 Biomet, Inc........................... 3,225,000
------------
OIL & GAS (5.3%)
----------------
150,000 Amoco Corp............................ 11,362,500
50,000 Exxon Corp............................ 4,431,250
80,000 Mobil Corp............................ 9,340,000
60,000 Royal Dutch Petroleum Co.............. 9,922,500
------------
35,056,250
------------
PAPER AND FOREST PRODUCTS (0.2%)
--------------------------------
80,000 Glatfelter (P.H.) Co.................. 1,520,000
------------
PRINTING & PUBLISHING (2.1%)
----------------------------
101,800 Dun & Bradstreet Corp................. 5,891,675
100,000 Merrill Corp.......................... 2,225,000
160,000 Reader's Digest Assoc. Inc., Class B.. 5,540,000
------------
13,656,675
------------
RESTAURANTS (1.3%)
------------------
200,000 Bob Evans Farms, Inc.................. 2,500,000
300,000 Wendy's International, Inc............ 6,187,500
------------
8,687,500
------------
RETAIL (2.3%)
-------------
300,000 CUC, International*................... 7,350,000
200,000 Franklin Quest Co.*................... 4,050,000
145,000 Smart & Final, Inc.................... 3,407,500
------------
14,807,500
------------
TELECOMMUNICATIONS (7.6%)
-------------------------
400,000 360 Communications Co.* .............. 9,050,000
300,000 AT & T Corp........................... 10,462,500
744,000 MCI Communications Corp............... 18,693,000
300,000 Sprint Corp........................... 11,775,000
------------
49,980,500
------------
Total common stocks
(cost $433,662,411)................... 592,327,886
------------
</TABLE>
5
<PAGE> 6
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) GROWTH FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ----------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS (1.0%)
----------------------------------
<S> <C>
$6,910,000 U.S. Treasury Bills
5.06% through 5.30%, due 11/14/96 through
03/06/97(cost $6,808,879)............. $ 6,812,907
------------
U.S. AGENCY-FULL FAITH & CREDIT (8.2%)
--------------------------------------
9,585,000 Federal Home Loan Mortgage Corp. Notes
5.21% through 5.35%, due 12/10/96 through
04/01/97(cost $9,439,014)............. 9,440,508
44,845,000 Federal National Mortgage Association Notes
5.21% through 5.50%, due 11/04/96 through
04/15/97(cost $44,178,539)............ 44,196,827
------------
Total U.S. agency-full faith & credit
(cost $53,617,553).................... 53,637,335
------------
Total investments
(cost $494,088,843)................... $652,778,128
============
<FN>
The abbreviation in the above statement stands for the following:
PLC Public Limited Company
* Denotes non-income producing securities.
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
</TABLE>
See accompanying notes to financial statements.
[PHOTO]
Courtney Demick -- Growth Fund
6
<PAGE> 7
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
The total return for the Nationwide Fund for the year ended October 31, 1996,
was 26.11%, assuming all distributions were reinvested, while the S&P 500
returned 24.10%.
The Fund benefited from the strong performance of several of the larger
holdings. Warner-Lambert, the Fund's largest holding, appreciated considerably.
The market is beginning to recognize the strength of Warner-Lambert's new
product profile. Several new drugs should enter the market in the next two years
causing an acceleration in the company's growth rate. Corporate restructuring
and a change in management provided the catalyst for Raychem's strong
performance. I have observed for several years that Raychem's shares were
undervalued due to losses in a telecommunications subsidiary. Following a change
in management, investment has been focused in the core business. Losses in the
subsidiary are no longer a drag on the strong performance of Raychem's core
operations.
The poorer-performing stocks for the last 12 months were generally cyclical
stocks whose fortunes are tied to a strong economy. Bowater and Georgia Gulf are
examples of cyclical companies whose shares performed poorly due to weak
commodity prices. These are well-managed companies but their fortunes are tied
to the prices of various commodities. Strong management cannot compensate for a
fundamentally poor business environment.
In the nearly 12 years I have managed the Nationwide Fund, I have maintained
holdings in the tobacco industry due to attractive secular fundamentals. These
have proven to be rewarding investments. However, the legal risks to the
industry have been mounting in the past few years to the point I felt the risks
outweighed the potential returns. I anticipate continuing a cautious investment
posture toward the tobacco stocks until the risk is further discounted in the
stock prices or the product liability risks are better defined.
Two of the Nationwide Fund's holdings are involved in financial restructurings.
Corning and Dun & Bradstreet are both splitting into three companies focused on
serving specific end markets. Historically, this breaking down of a conglomerate
into its component parts has proved rewarding for investors. The ability of
management to concentrate on its core market combined with a simpler financial
structure should allow these newly independent subsidiaries to perform better
than if the companies had maintained their former conglomerate structure.
CHARLES BATH, MBA, CFA, CPA, PORTFOLIO MANAGER
VALUE FUND $958,589,770
PORTFOLIO COMPOSITION
COMMON STOCK.......................................99.0%
DEBT OBLIGATIONS AND OTHER ASSETS LESS LIABILITIES..1.0%
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
VALUE %
- --------------------------------------------------------------
<S> <C> <C>
Warner-Lambert Company $60,227,425 6.3%
Schering-Plough Corp. 51,974,400 5.4%
Texaco Inc. 48,444,638 5.1%
Avon Products Inc. 37,649,500 3.9%
Raychem Corp. 35,060,547 3.7%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
S&P 500 Fund CPI
<S> <C> <C> <C>
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996 $39,407 $33,139 $14,365
</TABLE>
Comparative performance of $10,000 invested in the Nationwide(R) Fund, the S&P
500* and the Consumer Price Index (CPI)** over a 10-year period ended 10/31/96.
* The S&P 500 is a broad, unmanaged index of equity securities, and unlike
Fund returns, does not reflect any fees or expenses.
** The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Fund, does not reflect any
fees or expenses.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge............26.11%......12.72%......13.23%
With sales charge...............20.43%......11.68%......12.72%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes a 4.5% sales charge was paid which has the most
dramatic effect on the one-year performance figures.
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 HIGHLIGHTS
Our flagship fund, Nationwide(R) Fund, was started in 1933 and is one of the
oldest mutual funds in the country. Its portfoliO emphasizes blue-chip,
industry-leading stocks generally held for the long term.
The Nationwide(R) Fund emphasizes a "buy-and-hold" strategy maintaining a
relatively low turnover ratio which translates into less expense for the
shareholder.
7
<PAGE> 8
STATEMENT OF INVESTMENTS
NATIONWIDE(R) FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (99.0%)
---------------------
AUTO & AUTO PARTS (6.0%)
------------------------
929,800 Chrysler Corp......................... $ 31,264,525
832,900 Ford Motor Co......................... 26,028,125
------------
57,292,650
------------
BUILDING (4.1%)
---------------
440,000 Martin Marietta Materials Inc ........ 10,450,000
337,500 Masco Corp............................ 10,589,063
302,200 Vulcan Materials Co................... 18,358,650
------------
39,397,713
------------
CHEMICALS (11.9%)
-----------------
512,300 Georgia Gulf Corp..................... 13,832,100
283,100 IMC Global, Inc....................... 10,616,250
493,900 Millipore Corp........................ 17,286,500
593,700 Morton International, Inc............. 23,376,938
223,600 OM Group, Inc......................... 9,167,600
185,200 Pall Corp............................. 4,745,750
448,775 Raychem Corp.......................... 35,060,547
------------
114,085,685
------------
COMPUTER EQUIPMENT (2.7%)
-------------------------
200,000 International Business Machines Corp.. 25,800,000
------------
CONGLOMERATES (2.0%)
--------------------
500,000 Corning, Inc.......................... 19,375,000
------------
DRUGS (14.9%)
-------------
309,000 Allergan Inc.......................... 9,424,500
149,000 American Home Products Corp........... 9,126,250
151,200 Pfizer, Inc........................... 12,511,800
812,100 Schering-Plough Corp.................. 51,974,400
946,600 Warner-Lambert Co..................... 60,227,425
------------
143,264,375
------------
ELECTRICAL EQUIPMENT (1.2%)
---------------------------
303,400 Black & Decker Corp................... 11,339,575
------------
ENTERTAINMENT (1.7%)
--------------------
246,265 Disney, (Walt) Co..................... 16,222,707
------------
FINANCIAL (14.8%)
-----------------
283,600 Bank of NY Co., Inc................... 9,394,250
593,800 Barnett Banks, Inc.................... 22,638,625
664,800 Chubb Corp............................ 33,240,000
233,400 CoreStates Financial Corp............. 11,349,075
126,200 First USA Inc......................... 7,256,500
404,700 Horace Mann Educators Corp........... 13,860,975
397,800 Mellon Bank Corp...................... 25,906,725
454,073 U. S. Bancorp......................... 18,162,920
------------
141,809,070
------------
FOOD & BEVERAGE (9.2%)
----------------------
594,800 Anheuser-Busch Companies Inc.......... 22,899,800
1,147,500 PepsiCo, Inc.......................... 33,994,687
349,033 Ralcorp Holdings Inc.*................ 7,329,693
364,200 Ralston-Ralston Purina Group.......... 24,082,725
------------
88,306,905
------------
FURNITURE/HOME APPLIANCE (0.6%)
-------------------------------
322,000 Singer Co. N.V. (The)................. 6,158,250
------------
HOUSEHOLD - GENERAL PRODUCTS (6.0%)
-----------------------------------
694,000 Avon Products, Inc.................... 37,649,500
127,200 Gillette Company (The)................ 9,508,200
100,000 Proctor & Gamble Co................... 9,900,000
------------
57,057,700
------------
MACHINERY (1.1%)
----------------
342,400 Johnstown America Industries, Inc.*... 1,155,600
262,700 Trinity Industries, Inc............... 9,095,987
------------
10,251,587
------------
<CAPTION>
- ---------------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------------
<S> <C> <C>
OIL & GAS (9.0%)
----------------
161,900 Mobil Corp............................ $ 18,901,825
476,700 Texaco Inc............................ 48,444,638
513,600 Unocal Corp........................... 18,810,600
------------
86,157,063
------------
PAPER AND FOREST PRODUCTS (1.3%)
--------------------------------
362,900 Bowater Inc........................... 12,837,587
------------
PRINTING & PUBLISHING (8.6%)
----------------------------
760,000 American Greetings Corp. Class A...... 22,277,500
301,800 Dun & Bradstreet Corp................. 17,466,675
211,700 Gannett Co., Inc...................... 16,062,737
297,300 Gibson Greetings, Inc.*............... 4,645,313
100,000 Tribune Co............................ 8,175,000
40,900 Washington Post Co. (The), Class B.... 13,456,100
------------
82,083,325
------------
RETAIL (0.9%)
-------------
325,300 Wal-Mart Stores Inc................... 8,661,112
------------
TELECOMMUNICATIONS (0.3%)
-------------------------
100,000 MCI Communications Corp............... 2,512,500
------------
TOYS (2.7%)
-----------
908,840 Mattel, Inc........................... 26,242,755
------------
Total common stocks
(cost $572,700,339)................... 948,855,559
------------
</TABLE>
8
<PAGE> 9
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS (0.5%)
------------------------
$7,826,000 Consorcio G. Grupo Dina, 8.00%, 2004
(cost $7,249,051)..................... $ 4,715,165
------------
COMMERCIAL PAPER (0.7%)
-----------------------
3,870,000 Merrill Lynch & Co.
5.26%, due 11/12/96.............. 3,863,255
2,480,000 Banc One Corp.
5.30%, due 11/21/96.............. 2,479,995
------------
Total commercial paper
(cost $6,336,478)..................... 6,343,250
------------
REPURCHASE AGREEMENT (0.1%)
---------------------------
591,493 Merrill Lynch & Co., Inc.
5.63%, due 11/01/96, Collateralized by
$610,000 GNMA CMO, 5.50%, due 07/20/26,
market value $604,759
(cost $591,493)....................... 591,493
------------
Total investments
(cost $586,877,361)................... $960,505,467
============
<FN>
The abbreviations in the above statement stand for the following:
GNMA Government National Mortgage Association
CMO Collateral Mortgage Obligation
*Denotes a non-income producing security.
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
</TABLE>
See accompanying notes to financial statements.
[PHOTO]
Back row, l. to r.: Ron Hubbard -- Nationwide(R) Fund, Charles Hubbard, Juanita
Miller-Hubbard and Lucille Hubbard
[PHOTO]
Clara Duncan Clemens -- Nationwide(R) Fund, Bond Fund, Tax-Free Fund and Money
Market Fund, celebrates with her husband, Reece, on her graduation day from
college at age 64.
9
<PAGE> 10
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) BOND FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the year ended October 31, 1996, the Nationwide Bond Fund's total return was
5.05% assuming all distributions were reinvested, compared to the Lehman
Brothers Long-Term Government/Corporate Bond Index total return of 4.39%. Bond
yields on October 31, 1996, as compared to November 1, 1995, were lower (prices
higher) on securities having a maturity longer than one year. The effect was to
steepen the slope of the yield curve in the maturities less than five years and
to flatten the curve in the longer maturity range. In spite of the fact that
treasuries with longer maturities (15 to 30 years) performed better than ones
with 10-15 year maturities, the Nationwide Bond Fund (Bond Fund) with an average
maturity of 13.2 years performed better than the longer Lehman Brothers Index.
The yield spread between bonds and U.S. Treasuries continued to narrow. The
opportunities to improve the return on corporate bond holdings were limited and
few trades were transacted. The list of the top holdings of the Bond Fund
remained relatively the same. Overall the Bond Fund has maintained approximately
79% of its holdings in long-term corporate bonds.
The remainder of the Bond Fund's holdings are divided among mortgage-backed
securities, Canadian bonds, U.S. Treasuries, and commercial paper and repurchase
agreements. Opportunities to improve the return and future performance of
individual securities were most prevalent in the mortgage-backed securities
(MBS) area. The characteristics and payment history of MBS are continually
changing, thus presenting opportunities to trade into a better-performing
security.
The Bond Fund's portfolio consists of high-quality corporates, U.S. Governments,
mortgage-backed securities (secured by pools of home mortgages from the Federal
National Mortgage Association, the Government National Mortgage Association, and
the Federal Home Loan Mortgage Corporation), and high-quality Canadian
securities. This type of portfolio has low credit risk; however, since the
average maturity of the securities in the portfolio is fairly long, the interest
rate risk is relatively high. Changes in interest rates will cause valuation
changes in the bond holdings and changes in the price of shares of the Bond
Fund. Quarter by quarter for the past 12 months, interest rates were down in the
first quarter, up the second quarter, slightly up the third quarter and down the
fourth quarter. This volatility carries over to the share prices of the Bond
Fund. A basic premise for a long-term corporate bond fund is that the price of
its shares will fluctuate with the market.
MICHAEL D. GROSECLOSE, MBA, CFA, PORTFOLIO MANAGER
FUND VALUE $133,252,732
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
<S> <C>
CORPORATE BONDS....................................78.5%
MORTGAGE-BACKED SECURITIES..........................9.1%
CANADIAN GOVERNMENT.................................4.6%
U.S. GOVERNMENT OBLIGATIONS.........................4.0%
OTHER ASSETS LESS LIABILITIES.......................3.8%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
VALUE %
- --------------------------------------------------------------
<S> <C> <C>
Berkley, (WR) Corp. $5,998,810 4.5%
Seagram (JE) & Sons 5,741,050 4.3%
U.S. Treasury Note 5,293,155 4.0%
Prudential Surplus Note 5,027,810 3.8%
AMBAC Inc. 4,814,088 3.6%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond $20,471
CPI $14,365
LT G/C $25,146
</TABLE>
Comparative performance of $10,000 invested in the Nationwide(R) Bond Fund, the
Lehman Brothers Long-Term Govt/Corp Bond Index* and the Consumer Price Index
(CPI)** over a 10-year period ended 10/31/96.
* The Lehman Brothers Long-Term Govt/Corp Bond Index represents an unmanaged
group of bonds that are not adjusted for expenses and includes bonds of
lower quality than those purchased by our Fund.
** The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Bond Fund, does not reflect
any fees or expenses.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge.............5.05%.......7.52%.......7.92%
With sales charge................0.32%.......6.53%.......7.42%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes a 4.5% sales charge was paid which has the most
dramatic effect on the one-year performance figures.
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 HIGHLIGHTS
Nationwide(R) Bond Fund is for investors seeking monthly income from
high-quality bonds and other fixed-income securities. Corporate bonds selected
for its portfolio consist primarily of securities rated "A" or above by Moody's
Investor Services and Standard & Poor's Corporation.
Investments of Nationwide(R) Bond Fund are made in different types of securities
among many companies and industries which provide diversification and help to
minimize risk.
Nationwide(R) Bond Fund has consistently provided a steady stream of income for
its shareholders -- paying dividends every month since inception (March 1,
1980).
10
<PAGE> 11
STATEMENT OF INVESTMENTS
NATIONWIDE(R) BOND FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
CANADIAN GOVERNMENT BONDS (4.6%)
--------------------------------
<S> <C>
$1,000,000 Hydro-Quebec, 11.75%, 02/01/12........ $ 1,401,239
2,000,000 Hydro-Quebec, 8.05%, 07/07/24......... 2,175,000
2,250,000 Quebec (Prov. of), 8.625%, 01/19/05... 2,537,397
------------
Total Canadian government bonds
(cost $5,706,065)..................... 6,113,636
------------
CORPORATE BONDS (78.5%)
-----------------------
BANKS (5.2%)
------------
1,000,000 Banc One Corp., 10.00%, 08/15/10...... 1,241,730
3,000,000 Banc One Corp., 9.875%, 03/01/09...... 3,665,475
2,000,000 Toronto-Dominion Bank, NY., 7.875%,
due 08/15/04....................... 2,056,758
------------
6,963,963
------------
BROKER/DEALER (7.0%)
--------------------
2,000,000 Bear Stearns Companies, Inc., 8.75%,
03/15/04........................... 2,196,972
1,000,000 Bear Stearns Companies, Inc., 9.375%,
06/01/01........................... 1,106,481
1,000,000 Lehman Brothers Holdings, Inc., 11.625%,
05/15/05........................... 1,265,700
3,000,000 Morgan Stanley Group, Inc., 10.00%,
10/15/08........................... 3,649,452
1,000,000 Morgan Stanley Group, Inc., 8.10%,
06/24/02........................... 1,067,483
------------
9,286,088
------------
CHEMICALS (1.6%)
----------------
2,000,000 ICI Wilmington, Inc., 7.50%, 01/15/02. 2,089,780
------------
FINANCE (14.6%)
---------------
2,500,000 Associates Corp. of North America, 8.15%,
O8/01/09.............................. 2,704,140
2,000,000 Bass America, Inc., 8.125%, 03/31/02.. 2,145,810
2,000,000 Ford Capital BV Notes, 10.125%,
11/15/00.............................. 2,250,036
3,000,000 Ford Capital BV Notes, 9.50%,
06/01/10.............................. 3,572,562
1,000,000 General Electric Capital Corp., 8.75%,
09/25/00.............................. 1,081,448
3,235,000 General Electric Capital Corp., 8.50%,
07/24/08.............................. 3,658,212
3,515,000 Loew's Corp., 8.875%, 04/15/11........ 4,039,624
------------
19,451,832
------------
FOOD & BEVERAGE (4.3%)
----------------------
5,000,000 Seagram, (J.E.) & Sons, Inc., 8.875%,
09/15/11.............................. 5,741,050
------------
INSURANCE (17.4%)
-----------------
1,000,000 AMBAC, Inc., 7.50%, 05/01/23.......... 1,008,044
4,000,000 AMBAC, Inc., 9.375%, 08/01/11......... 4,814,088
4,500,000 Aetna Life & Casualty Co., 6.75%,
09/15/13.............................. 4,222,202
5,000,000 Berkley (W.R.) Corp., 9.875%, 05/15/08 5,998,810
2,000,000 Equitable of Iowa Companies, 8.50%,
02/15/05.............................. 2,158,806
5,000,000 Prudential Surplus Note, 8.10%,
07/15/15*............................. 5,027,810
------------
23,229,760
------------
PAPER & FOREST PRODUCTS (0.8%)
------------------------------
1,000,000 Temple-Inland, Inc., 9.00%, 05/01/01.. 1,093,996
------------
PUBLISHING (1.5%)
-----------------
2,000,000 Times Mirror Co., 7.25%, 03/01/13..... 1,989,122
------------
RETAIL TRADE (10.4%)
--------------------
3,000,000 Dayton Hudson Co., 8.60%, 01/15/12.... 3,351,015
2,000,000 Dayton Hudson Co., 9.25%, 08/15/11.... 2,361,566
3,000,000 May Department Stores Company., 10.625%,
11/01/10.............................. 4,007,505
2,000,000 Wal-Mart Stores, Inc., 7.25%, 01/01/13 2,030,554
2,000,000 Wal-Mart Stores, Inc., 7.50%, 05/15/04 2,102,106
------------
13,852,746
------------
UTILITIES : GAS & ELECTRIC (1.0%)
---------------------------------
1,250,000 Pacific Gas & Electric Co., 8.75%,
01/01/01.............................. 1,334,910
------------
OTHER (14.7%)
-------------
4,000,000 Armstong World Industries, Inc., 9.75%,
04/15/08.............................. 4,683,252
4,000,000 Englis China Clays Delaware, Inc., 7.375%,
10/01/02.............................. 4,158,100
2,000,000 Grand Metropolitan Inv. (G) 9.00%,
08/15/11.............................. 2,349,296
2,000,000 Kaiser Foundation, 9.55%, 07/15/05.... 2,348,702
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
$2,000,000 Waste Management, Inc., 7.65%,
03/15/11 $ 2,098,940
3,500,000 Waste Management, Inc., 8.75%,
05/01/18.............................. 3,944,234
------------
19,582,524
------------
Total corporate bonds
(cost $102,498,898)................... 104,615,771
------------
MORTGAGE-BACKED SECURITIES (9.1%)
---------------------------------
1,000,000 FHLMC (REMIC) Class 1188-H, 7.50%,
12/15/20.............................. 1,016,559
700,000 FHLMC (REMIC) Class 1228-G, 7.00%,
01/15/21.............................. 692,348
500,000 FHLMC (REMIC) Class 1358-I, 7.00%,
07/15/21.............................. 495,510
500,000 FHLMC (REMIC) Class 1360-VK, 7.50%,
08/15/07............................. 515,840
990,530 FHLMC (REMIC) Class 1709-EA, 7.25%,
12/15/23.............................. 963,467
183,595 FHLMC-GNMA (REMIC) Class 29X, 6.75%,
02/25/23 ............................. 179,666
367,190 FHLMC-GNMA (REMIC) Class 29Z, 6.75%,
04/25/24 ............................. 338,615
500,000 FNMA (REMIC) Class 1991-118K, 7.00%,
08/25/21.............................. 487,120
929,000 FNMA (REMIC) Class 1992-145E, 7.00%,
08/25/22.............................. 935,762
353,239 FNMA (REMIC) Class 1994-96D, 8.00%,
09/25/24.............................. 348,551
1,000,000 FNMA (REMIC) Class 92-200 MB, 7.50%, .
01/25/22.............................. 990,559
646,000 FNMA (REMIC) Class G1992-15G, 7.00%,
04/25/20.............................. 643,945
590,540 FNMA (REMIC) Class G1992-64M, 7.00%,
11/25/22.............................. 571,235
537,688 FNMA (REMIC) Class G1992-65NA, 7.00%,
11/25/22.............................. 509,841
500,000 FNMA (REMIC) Class G1993-10G, 5.00%,
05/25/22.............................. 428,490
1,010,000 FNMA (REMIC) Class G1993-10H, 5.00%,
08/25/22.............................. 822,573
2,396,000 FNMA (REMIC) Class S G93-10E, 5.00%,
04/25/20.............................. 2,246,487
------------
Total mortgage-backed securities
(cost $12,094,761).................... 12,186,566
------------
U.S. GOVERNMENT LONG-TERM OBLIGATION (4.0%)
-------------------------------------------
5,000,000 U.S. Treasury Note, 7.50%, 11/15/01
(cost $5,237,271)..................... 5,293,155
------------
COMMERCIAL PAPER (1.7%)
-----------------------
880,000 Dean Witter, Discover & Company, 5.24%,
due 11/25/96.......................... 876,805
931,000 Merrill Lynch & Co, Inc., 5.27%, due
11/13/96.............................. 929,242
426,000 National Rural Utilities Cooperative,
5.24%, due 11/14/96................... 425,134
------------
Total commercial paper
(cost $2,231,484)..................... 2,231,181
------------
REPURCHASE AGREEMENT (0.4%)
---------------------------
578,037 MBS Tri Party 5.63%, due 11/01/96,
Collaterlized by $595,000 GNMA CMO, 5.50%,
due 07/20/26, market value $589,888
(cost $578,037)....................... 578,037
------------
Total investments
(cost $128,346,516)................... $131,018,346
============
<FN>
The abbreviations in the above statement stand for the following:
* Represents a security registered under Rule 144-A, which limits the resale to
certain qualified buyers.
The abbreviations in the above statement stand for the following:
FHLMC Federal Home Loan Mortgage Corp.
REMIC Real Estate Mortgage Investment Conduit
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
CMO Collateralized Mortgage Obligation
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 12
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) TAX-FREE INCOME FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
The Nationwide Tax-Free Income Fund's total return for the year ended October
31, 1996, was 5.31% assuming all distributions were reinvested while the Lehman
Brothers Municipal Bond Index returned 5.70%.
During fiscal year 1996 the municipal bond market performed well. Demand for
municipal bonds remained strong, fear of tax reform diminished while the economy
grew at a slow manageable noninflationary pace. The 11-Bond General Obligation
Index as published by the Bond Buyer declined from 5.62% to 5.60%, only .02%,
while the 30-year Treasury rose from 6.29% to 6.64%, a .35% increase.
Issuers taking advantage of the current low interest rate environment increased
issuance of municipal bonds during the latter part of the period. Issuers were
concerned about the results that the upcoming election would have upon the
economy and interest rates. However, the increased supply was quickly absorbed
by property and casualty companies and bond funds.
The yield spread on a 20-year AA rated General Obligation bond as compared to a
20-year A rated General Obligation Municipal bond declined from .18% to .16%
during the period. Faced with such narrow quality spreads, current low yields
and uncertainties about interest rates, the strategy of the Fund did not change.
Management maintained an average credit rating of AA and an average maturity of
approximately 19 years. Assets will continue to be managed for the long term.
ALPHA L. BENSON, MBA, PORTFOLIO MANAGER
FUND VALUE $264,641,760
PORTFOLIO COMPOSITION
MUNICIPAL SECURITIES...............................98.4%
OTHER ASSETS LESS LIABILITIES.......................1.6%
TOP FIVE HOLDINGS BY STATE
<TABLE>
<CAPTION>
VALUE %
- --------------------------------------------------------------
<S> <C> <C>
Texas $40,510,025 15.3%
Virginia 35,247,131 13.3%
Illinois 24,985,213 9.4%
Washington 18,885,979 7.1%
North Carolina 15,800,219 6.0%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
Tax-Free CPI LBMBI
<S> <C> <C> <C>
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996 $18,783 $14,365 $21,240
<FN>
Comparative performance of $10,000 invested in the Nationwide(R) Tax-Free Income
Fund, the Lehman Brothers Municipal Bond Index* and the Consumer Price Index
(CPI)** over a 10-year period ended 10/31/96.
* The Lehman Brothers Municipal Bond Index represents an unmanaged group of
bonds that are not adjusted for expenses and includes bonds of lower
quality than those purchased by our Fund.
** The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Tax-Free Income Fund, does
not reflect any fees or expenses.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge.............5.31%.......6.67%.......6.50%
With sales charge................0.31%.......6.52%.......6.50%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes the applicable contingent deferred sales charge
(CDSC) was paid on withdrawals which has the most dramatic effect on the
one-year performance figures. The CDSC declines from 5% in the first year to 0%
after 5 years.
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 HIGHLIGHTS
Nationwide(R) Tax-Free Income Fund offers a monthly income that's free from
federal taxes. For certain shareholders, a portion of income may be subject to
state, local or federal alternative minimum tax.
By investing in the Nationwide(R) Tax-Free Income Fund, you can earn tax-free
dividends from municipal bonds carefully selected for their relative safety and
security.
The Nationwide(R) Tax-Free Income Fund invests in a diversified portfolio of
high-quality and intermediate-term (maturities of from 3-10 years) and long-term
(maturities over 10 years) municipal obligations.
12
<PAGE> 13
STATEMENT OF INVESTMENTS
NATIONIDE(R) TAX-FREE INCOME FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
LONG-TERM MUNICIPAL SECURITIES (98.4%)
--------------------------------------
ALABAMA (4.9%)
--------------
$3,000,000 Alabama Housing Finance Authority Single-
Family Mortgage Revenue Bonds
(Collateralized Home Mortgage Revenue
Bond Program), 1996 Series D, 6.00%,
10/01/16........................... $ 3,026,250
1,100,000 Birmingham, Alabama General Obligation
Parking Warrants, Series 1995-A, 5.90%,
06/01/18........................... 1,102,750
2,500,000 Birmingham, Alabama General Obligation
Refunding Revenue, Series 1992 B,
6.25%, 04/01/16 ................... 2,609,375
2,480,000 Birmingham, Alabama Water Works & Sewer
Board Refunding Revenue,
Series 1992, 6.125%, 01/01/12 ..... 2,569,900
3,500,000 Huntsville, Alabama General Obligation
Limited Tax Warrants, Series 1992 A,
6.00%, 11/01/12.................... 3,626,875
----------
12,935,150
----------
ARIZONA (2.9%)
--------------
5,100,000 Salt River Project, Agricultural Improvement
& Power District, Arizona Electric System
Revenue Bonds, Series 1992 C,
6.00%, 01/01/16.................... 5,182,875
2,500,000 Salt River Project, Agricultural Improvement
& Power District, Arizona Electric System
Revenue Bonds, Series 1992 C, 6.20%,
01/01/12........................... 2,596,875
----------
7,779,750
----------
COLORADO (0.4%)
---------------
1,000,000 Colorado Housing Finance Authority Single-
Family Housing Revenue Refunding Bonds,
Series 1991-A, 7.15%, 11/01/14..... 1,060,000
----------
CONNECTICUT (2.0%)
------------------
5,000,000 Connecticut Housing Finance Authority Housing
Mortgage Finance Program Bonds,
Series 1992-B, 6.70%, 11/15/12..... 5,275,000
----------
FLORIDA (2.3%)
--------------
2,205,000 Florida State Board of Education General
Obligation Full Faith and Credit Public
Education Capital Outlay Refunding Bonds,
1995 Series A, 5.50%, 06/01/15..... 2,199,488
1,320,000 Florida State Full Faith and Credit State Board
of Education Public Education Capital Outlay
Bonds, 1992 Series D, 5.20%, 06/01/13 1,273,800
2,400,000 Jacksonville, Florida Electric Authority Bulk
Power Revenue Bonds, (Scherer 4 Project,
Issue One, Series 1991-A), 7.00%, 10/01/12 2,652,000
----------
6,125,288
----------
GEORGIA (2.0%)
--------------
1,210,000 Dekalb County, Georgia General Obligation
Refunding Bonds, 6.00%, 01/01/12... 1,261,425
2,750,000 Georgia Municipal Electric Authority Power
Revenue Bonds,
Series 1991-V, 6.60%, 01/01/18..... 3,031,875
1,005,000 Georgia Residential Financial Authority
Revenue Bonds, Series A, 7.50%, 06/01/17 1,053,994
----------
5,347,294
----------
ILLINOIS (9.4%)
---------------
3,000,000 Chicago, Illinois General Airport Revenue
Refunding Bonds, Series 1993-A
(Chicago-O'Hare International Airport),
5.00%, 01/01/16.................... 2,722,500
2,185,000 Illinois Educational Facility Authority Revenue,
Series 1991-A, Loyola University, 7.125%,
07/01/21........................... 2,367,994
1,975,000 Illinois Regional Transportation Authority
General Obligation Refunding Bonds,
Series 1996, 5.40%, 06/01/15....... 1,898,469
$7,500,000 Illinois State Builders Illinois Bonds Sales Tax
Revenue, Series O, 6.00%, 06/15/18. $7,537,500
2,500,000 llinois State Builders Illinois Bonds Sales Tax
Revenue, Series V, 6.375%, 06/15/17 2,603,125
3,000,000 Illinois State General Obligation Bonds,
Series of March 1994, 5.80%, 04/01/19 3,003,750
1,350,000 Illinois State General Obligation Bonds,
Series of July 1995, 5.75%, 07/01/16 1,350,000
2,500,000 Illinois State General Obligation Bonds,
Series of December 1995, 5.125%, 12/01/17 2,340,625
1,000,000 Palatine, Illinois Corporate Purpose General
Obligation Bonds, Series 1985, 9.90%, 01/01/16 1,161,250
----------
24,985,213
----------
INDIANA (2.8%)
--------------
5,335,000 Indiana State Toll Road Commission East-West
Toll Road Revenue Bonds,
Series 1980, 9.00%, 01/01/15....... 7,302,281
----------
MARYLAND (0.4%)
---------------
1,000,000 Howard County, Maryland Public Improvement
General Obligation Unlimited Tax,
Series 1994 A, 6.00%, 05/15/14..... 1,035,000
----------
MASSACHUSETTS (3.9%)
--------------------
3,775,000 Massachusetts State General Obligation
Bonds Consolidated
Loan, Series 1992-B, 6.50%, 06/01/13 4,015,656
2,500,000 Massachusetts State General Obligation Bonds,
Consolidated Loan of 1995,
Series D, 5.125%, 11/01/12......... 2,400,000
4,000,000 Massachusetts Water Resources Authority
General Revenue Bonds,
Series 1992A, 5.50%, 07/15/22...... 3,850,000
----------
10,265,656
----------
MICHIGAN (1.5%)
---------------
3,500,000 Michigan State General Obligation Bonds,
Environmental Protection Program,
Series 1992, 6.25%, 11/01/12....... 3,823,750
----------
MINNESOTA (2.4%)
----------------
2,300,000 Minnesota Housing Finance Agency
Rental Housing Revenue
Bonds, 1995 Series D, 5.90%, 08/01/15 2,300,000
3,950,000 Minnesota State Housing Finance Agency
Single Family Mortgage Revenue Bonds,
Series 1994 K, 6.40%, 01/01/15.... 4,058,625
----------
6,358,625
----------
MISSOURI (0.8%)
---------------
2,000,000 Missouri State Environmental Improvement
& Energy Resources Authority Water
Pollution Control Revenue
Bonds, 6.55%, 07/01/14............. 2,152,500
----------
NEBRASKA (2.0%)
---------------
5,000,000 Nebraska Public Power District Power
Supply System Revenue Bonds,
Series 1993, 6.125%, 01/01/15...... 5,137,500
----------
NEVADA (0.9%)
-------------
2,190,000 Nevada State Colorado River Commission
General Obligation (Limited Tax, Revenue
Supported) Bonds Series November 1, 1994
6.50%, 07/01/19.................... 2,433,637
----------
NORTH CAROLINA (6.0%)
---------------------
1,035,000 Charlotte-Mecklenburg Hospital Authority,
North Carolina Health Care System
Revenue Bonds, Series 1992, 6.00%, 01/01/22 1,046,644
3,460,000 North Carolina Housing Finance Agency
Multi-Family Revenue
Refunding Bonds, Series H, 5.95%, 07/01/21 3,468,650
</TABLE>
13
<PAGE> 14
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONIDE(R) TAX-FREE INCOME FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
$2,035,000 North Carolina Housing Finance Agency
Single-Family Revenue Bonds,
Series AA, 6.25%, 03/01/17......... $ 2,088,419
2,185,000 North Carolina Housing Finance Agency
Single-Family Revenue Bonds,
Series GG, 5.90%, 03/01/13......... 2,193,194
1,910,000 North Carolina Housing Finance Agency
Single-Family Revenue Bonds,
Series N, 7.40%, 03/01/28.......... 2,003,112
1,880,000 North Carolina Housing Finance Agency
Single-Family Revenue Bonds,
Series J, 7.40%, 03/01/22.......... 1,955,200
1,000,000 North Carolina Medical Care Commission
Hospital Revenue Bonds, Duke University
Hospital Project, Series C, 5.25%, 06/01/17 955,000
2,000,000 North Carolina Medical Care Commission
Hospital Revenue Refunding Bonds,
Series 1992 A (North Carolina Baptist
Hospitals Project), 6.375%, 06/01/14 2,090,000
----------
15,800,219
----------
OHIO (2.0%)
-----------
1,000,000 Columbus, Ohio Water Works & Sewer Board
Refunding Revenue, Series 1991, 6.375%, 11/01/10 1,061,250
1,100,000 Franklin County, Ohio Hospital Refunding and
Improvement Revenue Bonds,
(The Children's Hospital Project)
1996 Series A, 5.75%, 11/01/20..... 1,100,000
1,250,000 Ohio Housing Finance Agency Mortgage
Revenue Bonds Residential Mortgage Backed
Securities, Series A-1, 5.70%, 03/01/17 1,248,437
2,000,000 Ohio Turnpike Commission Turnpike Revenue
Bonds 1996 Series A, 5.70%, 02/15/17 2,017,500
----------
5,427,187
----------
PENNSYLVANIA (3.5%)
-------------------
4,055,000 Pennsylvania Housing Finance Agency
Rental Housing Refunding Revenue Bonds,
Issue 1992, 6.40%, 07/01/12........ 4,161,444
1,500,000 Pennsylvania Housing Finance Agency
Rental Housing Refunding Revenue Bonds,
Issue 1992, 6.25%, 07/01/07........ 1,554,375
2,000,000 Pennsylvania State Turnpike Commission
Oil Franchise Tax
Revenue, Series A, 6.00%, 12/01/14. 2,087,500
1,500,000 Pittsburgh, Pennsylvania Water and Sewer
Authority, Water and Sewer System First Lien
Revenue Bonds, Series A of 1995,
5.50%, 09/01/15.................... 1,468,125
----------
9,271,444
----------
SOUTH CAROLINA (5.6%)
---------------------
6,980,000 Charleston, South Carolina Waterworks
& Sewer System Refunding & Capital
Improvement Revenue Bonds,
Series 1991, 6.00%, 01/01/18....... 7,171,950
1,400,000 Greenville, South Carolina Hospital System
Revenue Bonds Hospital Facilities,
Series B, 5.25%, 05/01/17.......... 1,309,000
1,500,000 South Carolina State Housing Finance
& Development Authority Multi-Family
Development Revenue Refunding,
Series 1992-A, 6.875%, 11/15/23.... 1,556,250
2,075,000 South Carolina State Housing Finance &
Development Authority Homeownership
Mortgage Purchase Bonds,
Series 1994 A, 6.375%, 07/01/16.... 2,106,125
1,500,000 Spartanburg, South Carolina Water System
Improvement & Refunding Revenue Bonds,
Series 1992, 6.25%, 06/01/17....... 1,563,750
1,000,000 Spartanburg, South Carolina Water System
Revenue Bonds,
Series 1996, 6.10%, 06/01/21....... 1,033,750
----------
14,740,825
----------
TENNESSEE (1.8%)
----------------
$1,000,000 Nashville & Davidson County, Tennessee General
Obligation Multi-Purpose Improvement Bonds,
Series 1994, 6.125%, 05/15/14...... $ 1,037,500
1,500,000 Nashville & Davidson County, Tennessee Health
& Educational Facilities Revenue Bonds,
Series 1979, 7.875%, 12/01/04...... 1,668,750
1,000,000 Shelby County, Tennessee General Obligation
School Bonds, Series 1994 B,
6.00%, 03/01/14.................... 1,033,750
1,000,000 Shelby County, Tennessee General Obligation
Public Improvement Bonds,
1996 Series A, 5.85%, 06/01/17..... 1,010,890
----------
4,750,890
----------
TEXAS (15.3%)
-------------
1,250,000 Bexar County, Texas Combination Tax and
Revenue Certificates, Series 1992, 6.20%,
06/15/12........................... 1,342,188
1,000,000 Carrollton-Farmers Branch Independent
School District, Texas General Obligation
Permanent School Fund
Guarantee, Series 1996, 5.70%, 02/15/17 1,002,500
3,500,000 Conroe, Texas Independent School District
Unlimited Tax Schoolhouse and Refunding
Bonds, Series 1993, 5.00%, 02/01/18 3,198,125
1,100,000 Cypress-Fairbanks Independent School District,
Texas General Obligation Permanent School
Fund Guarantee, Series 1996,
5.375%, 02/15/19................... 1,061,500
2,300,000 Fort Bend Independent School District,
Texas General Obligation Permanent School
Fund Guarantee, Series 1996, 5.00%, 02/15/18 2,127,500
1,000,000 Harris County, Texas Detention Facility
Certificates, Series 1992, 6.00%, 12/15/10 1,065,000
3,500,000 Harris County, Texas General Obligation
Tax and Revenue Certificates,
Series 1994, 6.10%, 10/01/13....... 3,666,250
7,720,000 Houston, Texas Water & Sewer Junior Lien
Revenue Refunding, Series 1991-C,
6.375%, 12/01/17................... 8,192,850
1,215,000 Irving, Texas Independent School District
Unlimited Tax School Building Bonds,
Series 1991-C-Permanent School
Fund, 5.25%, 02/15/09.............. 1,202,850
270,000 Lower Colorado River Authority Texas Junior
Lien Refunding Revenue Bonds,
Series 1992 (ETC), 6.00%, 01/01/17. 289,912
490,000 Lower Colorado River Authority Texas Junior
Lien Refunding Revenue Bonds,
Series 1992 (ETM), 6.00%, 01/01/17 515,725
2,630,000 Lower Colorado River Authority Texas Junior
Lien Refunding Revenue Bonds,
Series 1992 (Unrefunded), 6.00%, 01/01/17 2,656,300
2,000,000 Texas A&M University System Board of Regents
Revenue Financing System Bonds,
Series 1996, 5.375%, 05/15/14...... 1,950,000
3,175,000 Texas State Water Development Bonds,
Series 1994, 6.90%, 08/01/17....... 3,516,312
2,000,000 University of Texas Revenue Financing System
Bonds, Series 1991, 6.50%, 07/01/11 2,195,000
2,000,000 University of Texas System Permanent University
Fund Bonds, Series 1992B, 6.25%, 07/01/13 2,157,500
3,000,000 Weatherford, Texas Independent School
District Unlimited Tax School Building and
Refunding Bonds, Series 1994, 6.50%, 02/15/15 3,213,750
1,090,000 Weatherford, Texas Independent School District
Unlimited Tax School Building and Refunding
Bonds, Series 1994, 6.40%, 02/15/12 1,156,763
----------
40,510,025
----------
UTAH (1.1%)
-----------
3,080,000 Intermountain Power Agency, Utah Power
Supply Revenue Refunding Bonds,
Series 1993-A, 5.50%, 07/01/20..... 2,937,550
----------
</TABLE>
14
<PAGE> 15
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONIDE(R) TAX-FREE INCOME FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
VIRGINIA (13.3%)
----------------
$1,500,000 Fairfax County, Virginia Water Authority
Water Refunding Revenue
Series 1992, 6.00%, 04/01/22....... $ 1,537,500
4,250,000 Henrico County, Virginia Water and Sewer
System Refunding Revenue Bonds,
Series 1994, 5.875%, 05/01/14...... 4,281,875
1,985,000 Newport News, Virgina General Improvement
Bonds, Series 1993 E, 5.20%, 01/01/13 1,908,081
8,000,000 Richmond, Virginia General Obligation Public
Improvement Refunding Bonds,
Series 1991-B, 6.25%, 01/15/18..... 8,280,000
2,150,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds,
Series 1993 H, 5.25%, 07/01/23..... 1,980,687
2,000,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds, Series 1992
C Subseries C-7, 6.30%, 01/01/15... 2,035,000
1,000,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds, Series 1995
B Subseries B-3, 6.35%, 01/01/15... 1,021,250
5,500,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds,
Series 1992 A, 7.10%, 01/01/22.... 5,651,250
1,000,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds, Series B
Subseries B-2, 6.50%, 01/01/10..... 1,066,250
1,080,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds,
Series 1995-D, Subseries D-1, 5.95%, 01/01/13 1,085,400
2,000,000 Virginia Public School Authority School
Financing Bonds (1991 Resolution),
Series 1994 A, 6.20%, 08/01/13..... 2,115,000
4,595,000 Virginia Public School Authority School
Financing Bonds (1991 Resolution),
Series 1995 C, 5.00%, 08/01/16..... 4,284,838
----------
35,247,131
----------
WASHINGTON (7.1%)
-----------------
$2,950,000 Seattle, Washington Metropolitan General
Obligation Bonds,
Series 1991, 6.875%, 01/01/20...... $ 3,015,991
6,150,000 Seattle, Washington Water System and
Refunding Revenue Bonds, 1993, 5.50%,
06/01/18........................... 5,996,250
7,635,000 Washington State General Obligation,
Series 1992 A and
AT-6, 5.75%, 02/01/17.............. 7,654,088
2,155,000 Washington State General Obligation
Unlimited Tax Bonds,
Series DD-14 and B, 6.00%, 09/01/15 2,219,650
----------
18,885,979
----------
WISCONSIN (4.1%)
----------------
2,000,000 Wisconsin State General Obligation,
Series 1992-A, 6.30%, 05/01/11..... 2,157,500
3,065,000 Wisconsin State General Obligation Refunding
Bonds of 1996,
Series1, 5.00%, 05/01/14........... 2,900,256
2,000,000 Wisconsin State General Obligation Bonds
of 1994, Series A, 5.00%, 05/01/14. 1,892,500
2,500,000 Wisconsin State Transportation Revenue Bonds,
Series A, 5.50%, 07/01/12.......... 2,481,250
1,500,00 Wisconsin State Transportation Revenue
Bonds,1994 Series A, 5.50%, 07/01/11 1,462,500
----------
10,894,006
----------
Total long-term municipal securities
(cost $249,797,168)................... $260,481,900
============
</TABLE>
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
[PHOTO] [PHOTO]
Mary Ellen Gere-Penna-- E. Chris Evan--Nationwide(R)
Growth Fund and Money Fund and Government Bond
Market Fund, with her pet Fund, portrays Ohio Civil War
Sheltie, Mackenzie. General William T. Sherman.
15
<PAGE> 16
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The total return for the Nationwide U.S. Government Income Fund for the year
ended October 31, 1996, was 5.28% compared to a total return of 5.67% for its
benchmark index, the Lehman Brothers Intermediate Government Bond Index.
The past 12 months have been a volatile period for the U.S. bond market. Early
in the year, fears of a strengthening economy and higher inflation led to an
increase in interest rates. More recently, as favorable inflation results have
been released, inflationary concerns have eased and rates have declined from
their highs at midyear. Content with the current state of the economy, the
Federal Reserve has left the federal funds rate unchanged at 5.00% since early
this year. The net change in interest rates over the past 12 months was an
increase of approximately .35% in intermediate and long rates. The Fund
under-performed the index during this period due to the Fund having a slightly
longer average maturity than the index.
The U.S. Government Income Fund continues to be invested in sectors of the
government agency and mortgage-backed markets perceived to be undervalued.
Approximately 80% of portfolio assets are invested in the collateralized
mortgage obligation (CMO) market. The yield on these conservatively structured
investments continues to make them attractive portfolio holdings. The remainder
of the portfolio is invested in repurchase agreements for liquidity purposes and
callable government agency notes for increased portfolio yield.
Wayne T. Frisbee, CFA, Portfolio Manager
FUND VALUE $39,497,205
PORTFOLIO COMPOSITION
<TABLE>
<S> <C>
Mortgage-backed securities.........................78.8%
U.S. government and agency long-term obligations...18.2%
Other assets less liabilities.......................3.0%
</TABLE>
TOP FIVE HOLDINGS
<TABLE>
<CAPTION>
VALUE %
- -------------------------------------------------------------------------------
<S> <C> <C>
FHLMC (REMIC) Series 1462, Class PT $5,155,545 13.1%
FNMA (REMIC) Series 93-203, Class PJ 4,905,045 12.4%
Federal Home Loan Banks 4,012,716 10.2%
FNMA (REMIC) Series 92-151, Class H 3,745,596 9.5%
FHLMC (REMIC) Series 1344, Class D 3,735,156 9.5%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
<S> <C>
U.S.G.I. $13,532
CPI $11,413
L. Int. Govt. $13,504
<FN>
Comparative performance of $10,00 invested in the Nationwide(R) U.S. Government
Income Fund since inception (2/10/92), the Lehman Brothers Intermediate
Government Bond Index* and the Consumer Price Index (CPI)** over the period
since inception ended 10/31/96.
* The Lehaman Bothers Intermediate Government Bond Index represents an
unmanaged group of bonds that are not adjusted for expense and includes
bonds of lower quality than those purchaseed by our Fund.
** The Consumer Price Index is a broad index reflecting the price changes in a
market basket of consumer goods and, unlike the U.S.G.I. Fund, does not
reflect any fees or expenses.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIOD ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR LIFE
<S> <C> <C>
Without sales charge.......................5.28%.........6.81%
With sales charge..........................0.32%.........6.64%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes the applicable contigent deferred sales charge
(CDSC) was paid on withdrawls wich has the most dramatic effect on the one-year
performance figures. The CDSC declines from 5% in the first year to 0% after 5
years.
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 HIGHLIGHTS
Monthly income is paid by the Nationwide(R) U.S. Government
Income Fund from a high-quality portfolio of government securities. These
securities are generally considered among the safest, though they are not
specifically rated by the credit rating agencies.
In a attempt to minimize share price fluctuation, the Nation- wide(R) U. S.
Government Income Fund maintains an average portfolio maturity of 10 years or
less. Generally, shorter maturities are less subject to price fluctuation. Of
course, all bond prices (U.S. Government, municipal and corporate) are affected
by interest rates.
16
<PAGE> 17
STATEMENT OF INVESTMENTS
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
MORTGAGE-BACKED SECURITIES (78.8%)
----------------------------------
$1,500,000 FNMA Series 92-126, Class VB,
8.00%, 07/25/02.................... $ 1,553,774
5,000,000 FHLMC REMIC Series 1462, Class PT,
7.50%, 01/15/03.................... 5,155,545
3,000,000 FHLMC REMIC Series 1313, Class G,
7.25%, 06/15/07.................... 3,054,297
4,000,000 FHLMC REMIC Series 1344, Class D,
6.00%, 08/15/07.................... 3,735,156
4,000,000 FNMA REMIC Series 92-151, Class H,
6.00%, 08/25/07................... 3,745,596
414,545 FNMA REMIC Series 1988-25, Class B,
9.25%, 10/25/18.................... 439,405
2,614,713 FNMA REMIC Series 1990-7, Class B,
8.50%, 01/25/20.................... 2,722,698
3,437,917 FHLMC REMIC Series 31, Class E,
7.55%, 05/15/20.................... 3,482,847
2,180,509 FNMA REMIC Series 1992-81, Class Z,
8.50%, 04/25/22.................... 2,314,019
5,000,000 FNMA REMIC Series 1993-203, Class PJ,
6.50%, 10/15/23.................... 4,905,045
----------
Total mortgage backed securities
(cost $30,801,959).................... 31,108,382
----------
U.S. GOVERNMENT AND AGENCY
LONG-TERM OBLIGATIONS (18.2%)
-----------------------------
1,000,000 Federal Home Loan Mortgage Corp.
7.445%, 04/14/04................... 1,015,967
4,000,000 Federal Home Loan Banks
6.36%, 03/21/01.................... 4,012,716
1,550,000 Federal National Mortgage Association
7.26%, 10/05/05.................... 1,545,296
2,000,000 Resolution Funding STRIPS,
0.00%, 07/15/13.................... 633,058
----------
Total U.S. government and agency
long-term obligations
(cost $6,992,990)..................... 7,207,037
----------
REPURCHASE AGREEMENT (2.7%)
---------------------------
1,055,000 Prudential Securities
5.55%, due 11/01/96, Collateralized by
$1,075,000 Student Loan Marketing
Association Fund 0.00%, due 04/10/97,
market value $1,077,688 (cost $1,055,000) 1,055,000
----------
Total investments
(cost $38,849,949).................... $ 39,370,419
============
<FN>
The abbreviations in the statement above stand for the following:
FNMA Federal National Mortgage Association
FHLMC Federal Home Loan Mortgage Corporation
REMIC Real Estate Mortgage Investment Conduit
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
</TABLE>
[PHOTO]
Christopher M. Hungerford (right)-
Growth Fund, accepts his first place
certificate for winning the Champlain
Country Club's 1995 Jr. Championship in
St. Albans, Vermont.
[PHOTO]
From l. to r. Miranda, Katrina and Desiree (twins)
and Nichole are the daughters of Timothy Guaraldi-
Nationwide(R) Fund and Growth Fund.
17
<PAGE> 18
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) MONEY MARKET FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The year ended October 31, 1996, has been one of very stable short-term interest
rates, which has produced the consistent yield in the Nationwide Money Market
Fund. The total return for the year ended October 31, 1996, was 5.05% compared
to the Consumer Price Index total return of 2.99%.
The Federal Reserve Board (Feds) has not found sufficient justification to alter
monetary policy, and has left the discount rate unchanged at 5.00% since January
of this year. Market rates have been nearly as steady. For example, 30-day prime
commercial paper has traded between 5.16% and 5.45% this year, and 3-month U.S.
Treasury bills have traded between 5.02% and 5.48%.
The absence of inflation has allowed the Feds to stay the course despite
periodic indications of strength in the economy and upward pressure on some
commodity prices, particularly oil. Both consumer and producer prices have held
in what is perceived by the markets as an acceptable range.
Prime commercial paper has continued to provide the best risk/return profile,
accounting for its dominant portfolio weighting. The strategy of selecting
securities which provide the optimal relative value within a balanced maturity
structure will continue, with the focus on liquidity and a stable share value.
William M. Burtch, MBA, Portfolio Manager
FUND VALUE $729,499,762
PORTFOLIO COMPOSITION
<TABLE>
<S> <C>
Commercial paper................................................ 92.4%
Canadian government............................................. 5.1%
U.S. government obligations and other assets less liabilities .. 2.5%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
VALUE %
- ------------------------------------------------------------------------------
<S> <C> <C>
Merrill Lynch & Co. $29,181,062 4.0%
MetLife Funding, Inc. 28,247,486 3.9%
Old Republic Capital Corp. 28,036,983 3.8%
National Rural Utilities 27,891,342 3.8%
Norwest Corporation 27,027,238 3.7%
</TABLE>
<TABLE>
<CAPTION>
FUND PERFORMAMCE
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MMF $17,176
CPI $14,365
<FN>
Comparative performance of $10,000 invested in the Nationwide(R) Money market
Fund and the Consumer Price Index (CPI)* over a 10-year period ended 10/31/96.
* The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Money Market Fund, does not
reflect any fees or expenses.
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge.............5.05%.......3.99%.......5.55%
</TABLE>
An investment in the Money Market Fund is neither insured nor guaranteed by the
U.S. Government and there can be no assurance that it will be able to maintain a
stable net asset value of $1.00 per share. There are no sales charges in the
Nationwide(R) Money Market Fund. Past performance is no guarantee of future
results.
FUND HIGHLIGHTS
Due to daily dividend compounding from a high-quality portfolio, the
Nationwide(R) Money Market Fund offers high current market rates -- plus
stability of principal since the Fund seeks to maintain a constant $1.00 per
share net asset value. During the Fund's life, its share price has always been
$1.00.
Benefits of the Nationwide(R) Money Market Fund include liquidity without
penalty, competitive current market rates, daily compounding, security of
principal and free checkwriting privileges ($500 minimum).
18
<PAGE> 19
STATEMENT OF INVESTMENTS
NATIONWIDE(R) MONEY MARKET FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
CANADIAN GOVERNMENT OBLIGATIONS (5.1%)
--------------------------------------
British Columbia (Providence Of)
$5,000,000 5.23%, due 11/18/96................... $ 4,987,652
5,000,000 5.23%, due 12/27/96................... 4,959,322
5,000,000 5.37%, due 02/10/97................... 4,924,671
5,000,000 5.44%, due 03/13/97................... 4,900,267
Canadian Wheat Board
5,000,000 5.35%, due 11/20/96................... 4,985,882
8,000,000 5.37%, due 12/16/96................... 7,946,300
1,500,000 5.27%, due 12/20/96................... 1,489,240
3,395,000 5.25%, due 01/10/97................... 3,360,343
-----------
Total Canadian government obligations
(cost $37,553,677).................... 37,553,677
-----------
COMMERCIAL PAPER (92.4%)
--------------------------
Auto/Finance (2.5%)
Ford Motor Credit Co.
4,000,000 5.48%, due 11/07/96................... 3,996,347
3,800,000 5.30%, due 11/12/96................... 3,793,846
5,500,000 5.25%, due 12/09/96................... 5,469,521
5,440,000 5.31%, due 01/30/97................... 5,367,784
-----------
18,627,498
-----------
BANKS (12.0%)
-------------
Banc One Corp.
5,000,000 5.30%, due 11/15/96................... 4,989,694
5,000,000 5.24%, due 12/13/96................... 4,969,433
Corestates Capital Corp.
8,000,000 5.32%, due 01/28/97................... 7,895,964
J.P. Morgan & Co., Inc.
4,000,000 5.23%, due 11/06/96................... 3,997,094
3,000,000 5.48%, due 11/08/96................... 2,996,804
5,000,000 5.47%, due 11/12/96................... 4,991,643
8,640,000 5.42%, due 12/12/96................... 8,586,667
5,000,000 5.40%, due 12/13/96................... 4,968,500
National City Credit Corp.
9,000,000 5.35%, due 11/06/96................... 8,993,313
8,000,000 5.26%, due 12/04/96................... 7,961,427
Norwest Corp.
6,000,000 5.42%, due 11/04/96................... 5,997,290
7,530,000 5.30%, due 11/26/96................... 7,502,285
9,480,000 5.30%, due 01/08/97................... 9,385,095
4,185,000 5.29%, due 01/09/97................... 4,142,568
-----------
87,377,777
-----------
BROKER-DEALERS (14.1%)
----------------------
Bear Stearns Companies, Inc.
8,000,000 5.34%, due 11/08/96................... 7,991,693
7,000,000 5.42%, due 11/12/96................... 6,988,407
8,000,000 5.42%, due 01/03/97................... 7,924,120
Dean Witter Discover & Co.
5,000,000 5.30%, due 01/31/97................... 4,933,014
5,000,000 5.31%, due 01/31/97................... 4,932,888
Goldman Sachs Group
8,000,000 5.25%, due 11/18/96................... 7,980,167
2,123,000 5.26%, due 11/21/96................... 2,116,796
8,000,000 5.24%, due 11/25/96................... 7,972,053
Merrill Lynch & Co., Inc.
2,912,000 5.62%, due 11/01/96................... 2,912,000
3,165,000 5.26%, due 11/05/96................... 3,163,150
7,900,000 5.37%, due 11/07/96................... 7,892,930
4,150,000 5.43%, due 11/19/96................... 4,138,733
5,000,000 5.40%, due 11/22/96................... 4,984,250
870,000 5.27%, due 11/27/96................... 866,689
4,000,000 5.30%, due 11/27/96................... 3,984,689
1,245,000 5.27%, due 12/06/96................... 1,238,621
Morgan Stanley Group, Inc.
8,000,000 5.52%, due 01/13/97................... 7,910,453
6,000,000 5.32%, due 01/15/97................... 5,933,500
Smith Barney, Inc.
9,055,000 5.27%, due 11/04/96................... 9,051,023
-----------
102,915,176
-----------
CHEMICALS (7.2%)
----------------
Great Lakes Chemical Corp.
5,000,000 5.25%, due 11/18/96................... 4,987,604
$8,000,000 5.25%, due 11/20/96................... $ 7,977,833
6,545,000 5.25%, due 12/02/96................... 6,515,411
Monsanto Co.
6,116,000 5.45%, due 11/22/96................... 6,096,556
7,000,000 5.25%, due 12/06/96................... 6,964,271
5,000,000 5.25%, due 12/09/96................... 4,972,292
7,000,000 5.32%, due 01/08/97................... 6,929,658
PPG Industries, Inc.
8,000,000 5.24%, due 12/18/96................... 7,945,271
-----------
52,388,896
-----------
CONSUMER PRODUCTS (1.1%)
------------------------
Clorox Co.
8,000,000 5.40%, due 12/09/96................... 7,954,400
-----------
CONSUMER SALES FINANCE (5.5%)
-----------------------------
Associates Corp. of North America
8,050,000 5.33%, due 12/02/96................... 8,013,053
6,000,000 5.28%, due 12/11/96................... 5,964,800
7,000,000 5.26%, due 12/17/96................... 6,952,952
5,260,000 5.30%, due 01/10/97................... 5,205,793
Avco Financial Services, Inc.
6,000,000 5.29%, due 01/28/97................... 5,922,413
Beneficial Corp.
8,370,000 5.38%, due 11/14/96.................. 8,353,739
-----------
40,412,750
-----------
CORPORATE CREDIT UNIONS (1.5%)
------------------------------
U.S. Central Credit
2,570,000 5.25%, due 11/07/96................... 2,567,751
8,730,000 5.32%, due 12/03/96................... 8,688,717
-----------
11,256,468
-----------
DIVERSIFIED FINANCE (3.5%)
--------------------------
General Electric Capital Corp.
3,000,000 5.40%, due 11/20/96................... 2,991,450
7,000,000 5.39%, due 11/25/96................... 6,974,847
8,375,000 5.33%, due 11/27/96................... 8,342,761
4,400,000 5.425%, due 12/05/96.................. 4,377,456
3,240,000 5.33%, due 03/06/97................... 3,180,038
-----------
25,866,552
-----------
ELECTRIC UTILITY (3.8%)
-----------------------
National Rural Utilities Cooperative Finance Corp.
4,247,000 5.36%, due 11/01/96................... 4,247,000
375,000 5.36%, due 11/18/96................... 374,051
7,455,000 5.25%, due 12/10/96................... 7,412,600
6,000,000 5.33%, due 12/10/96................... 5,965,355
5,000,000 5.32%, due 01/09/97................... 4,949,017
5,000,000 5.30%, due 01/17/97................... 4,943,319
-----------
27,891,342
-----------
ENTERTAINMENT (3.2%)
--------------------
Walt Disney Co.
8,000,000 5.28%, due 12/04/96................... 7,961,280
8,000,000 5.27%, due 01/06/97................... 7,922,707
2,545,000 5.27%, due 01/06/97................... 2,520,411
5,000,000 5.28%, due 02/03/97................... 4,931,067
-----------
23,335,465
-----------
FINANCE (2.7%)
--------------
American Express Credit Corp.
6,000,000 5.28%, due 12/11/96................... 5,964,800
8,000,000 5.26%, due 12/12/96................... 7,952,076
6,000,000 5.24%, due 12/20/96................... 5,957,207
-----------
19,874,083
-----------
FOOD & BEVERAGES (6.2%)
-----------------------
CPC International, Inc.
2,790,000 5.27%, due 11/20/96................... 2,782,240
6,747,000 5.30%, due 12/03/96................... 6,715,214
8,765,000 5.31%, due 01/13/97................... 8,670,623
3,200,000 5.31%, due 01/27/97................... 3,158,936
Campbell Soup Co.
5,000,000 5.46%, due 12/05/96................... 4,974,217
</TABLE>
19
<PAGE> 20
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) MONEY MARKET FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
$8,000,000 5.47%, due 12/30/96................... $ 7,928,283
Heinz (H.J.) Co.
8,000,000 5.24%, due 11/26/96................... 7,970,889
2,790,000 5.25%, due 12/04/96................... 2,776,573
-----------
44,976,975
-----------
HEAVY EQUIPMENT FINANCE (1.9%)
------------------------------
Caterpillar Financial Services
8,000,000 5.27%, due 11/01/96................... 8,000,000
5,675,000 5.27%, due 12/03/96................... 5,648,416
-----------
13,648,416
-----------
INSURANCE (9.2%)
----------------
Marsh & McLennan Co.
4,535,000 5.26%, due 11/05/96................... 4,532,350
MetLife Funding, Inc.
8,065,000 5.38%, due 11/05/96................... 8,060,179
9,290,000 5.28%, due 11/14/96................... 9,272,287
6,000,000 5.23%, due 12/06/96................... 5,969,492
5,000,000 5.30%, due 01/14/97................... 4,945,528
Old Republic Capital Corp.
5,000,000 5.53%, due 11/06/96................... 4,996,160
5,000,000 5.37%, due 12/04/96................... 4,975,387
5,000,000 5.26%, due 12/10/96................... 4,971,508
2,171,000 5.26%, due 12/10/96................... 2,158,629
5,000,000 5.55%, due 01/07/97................... 4,948,354
6,050,000 5.60%, due 01/07/97................... 5,986,945
Principal Mutual Life Co., Inc.
1,000,000 5.24%, due 11/05/96................... 999,418
5,000,000 5.24%, due 11/08/96................... 4,994,906
-----------
66,811,143
-----------
LEASE FINANCING (1.9%)
----------------------
PHH Corp.
9,000,000 5.23%, due 11/13/96................... 8,984,310
5,000,000 5.25%, due 12/17/96................... 4,966,458
-----------
13,950,768
-----------
MISCELLANEOUS MANUFACTURING (1.1%)
----------------------------------
Illinois Tool Works
3,000,000 5.32%, due 11/19/96................... 2,992,020
5,000,000 5.37%, due 11/19/96................... 4,986,575
-----------
7,978,595
-----------
OFFICE EQUIPMENT & SUPPLIES (1.2%)
----------------------------------
Pitney Bowes Credit Corp.
5,000,000 5.47%, due 02/20/97................... 4,915,671
4,275,000 5.42%, due 02/24/97................... 4,200,982
-----------
9,116,653
-----------
OIL & GAS (0.2%)
----------------
Koch Industries, Inc.
1,193,000 5.24%, due 12/17/96................... 1,185,012
-----------
PACKAGING/CONTAINERS (2.0%)
---------------------------
Bemis Co., Inc.
8,600,000 5.28%, due 11/04/96................... 8,596,215
6,000,000 5.25%, due 12/03/96................... 5,972,000
-----------
14,568,215
-----------
PAPER & FOREST PRODUCTS (0.7%)
------------------------------
Sonoco Products Co.
5,000,000 5.38%, due 11/12/96................... 4,991,780
-----------
PHARMACEUTICALS/PERSONAL CARE (3.2%)
------------------------------------
Abbott Laboratories
2,350,000 5.27%, due 01/16/97................... 2,323,855
Glaxo Wellcome
3,000,000 5.31%, due 01/22/97................... 2,963,715
8,000,000 5.31%, due 01/22/97................... 7,903,240
Schering Corp.
2,040,000 5.27%, due 11/21/96................... 2,034,027
8,000,000 5.30%, due 03/18/97................... 7,838,643
-----------
23,063,480
-----------
PREMIUM FINANCE (1.7%)
----------------------
A.I. Credit Corp.
$3,000,000 5.27%, due 01/06/97................... $ 2,971,015
9,600,000 5.30%, due 03/10/97................... 9,417,680
-----------
12,388,695
-----------
PRINTING & PUBLISHING (3.6%)
----------------------------
Donnelley RR & Sons
5,000,000 5.25%, due 12/16/96................... 4,967,188
6,600,000 5.25%, due 12/16/96................... 6,556,688
McGraw-Hill, Inc.
9,740,000 5.33%, due 11/19/96................... 9,714,043
4,684,000 5.45%, due 11/26/96................... 4,666,271
-----------
25,904,190
-----------
RAILROADS (2.4%)
----------------
Norfolk & Southern Railway Co.
5,000,000 5.29%, due 12/06/96................... 4,974,285
8,000,000 5.42%, due 12/19/96................... 7,942,187
5,000,000 5.30%, due 01/14/97................... 4,945,528
-----------
17,862,000
-----------
Total commercial paper
(cost $674,346,329)................... 674,346,329
-----------
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS (2.4%)
------------------
U.S. Treasury Bills
5,000,000 4.81%, due 11/14/96................... 4,991,316
3,090,000 4.86%, due 01/09/97................... 3,061,216
5,000,000 5.08%, due 02/06/97................... 4,931,562
5,000,000 5.41%, due 05/29/97................... 4,842,960
-----------
Total U.S. government and agency obligations
(cost $17,827,054).................... 17,827,054
-----------
Total investments
(cost $729,727,060)................... $729,727,060
============
<FN>
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent value as a percentage of net assets.
See accompanying notes to financial statements.
</TABLE>
20
<PAGE> 21
NATIONWIDE(R) FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R)
GROWTH NATIONWIDE(R) BOND TAX-FREE U.S. GOV'T MONEY MARKET
FUND FUND FUND INCOME FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value $ 652,778,128 $960,505,467 $ 131,018,346 $ 260,481,900 $ 39,370,419 $ 729,727,060
(cost $494,088,843; $586,877,361;
$128,346,516; $249,797,168;
$38,849,949 and $729,727,060,
respectively)
Cash 94,763 50,014 29,236 -- 6,124 283,618
Receivable for Fund shares sold 210,998 -- 37,561 27,805 41,813 116,465
Receivable for investment
securities sold 2,528,450 782,206 973,125 1,442,362 -- --
Accrued interest and dividends
receivable 427,232 1,751,914 2,595,433 5,172,757 225,705 --
---------------------------------------------------------------------------------------------
Total assets 656,039,571 963,089,601 134,653,701 267,124,824 39,644,061 730,127,143
---------------------------------------------------------------------------------------------
LIABILITIES
Bank loan -- -- -- 502,400 -- --
Payable for Fund shares redeemed -- 1,222,647 189,600 379,446 60,012 97,247
Payable for investment securities
purchased -- 2,726,188 994,063 1,031,040 -- --
Accrued management fees 281,477 402,203 55,806 145,200 21,576 270,342
Accrued transfer agent fees 59,010 60,499 13,201 26,200 3,553 57,390
Accrued distribution fees -- -- -- 44,732 6,639 --
Dividends payable (892) 3,907 122,798 321,112 48,045 126,215
Other accrued expenses 84,271 84,387 25,501 32,934 7,031 76,187
---------------------------------------------------------------------------------------------
Total liabilities 423,866 4,499,831 1,400,969 2,483,064 146,856 627,381
---------------------------------------------------------------------------------------------
NET ASSETS $ 655,615,705 $958,589,770 $ 133,252,732 $ 264,641,760 $ 39,497,205 $ 729,499,762
=============================================================================================
NET ASSETS REPRESENTED BY:
Capital Shares, $1 par value
outstanding $ 49,152,969 $ 46,957,777 $ 14,264,079 $ 25,842,939 $ 3,932,514 $ 729,501,084
Capital paid in excess of par value 402,016,940 477,434,454 125,775,070 231,376,463 35,480,301 --
Net unrealized appreciation 158,689,285 373,628,106 2,671,830 10,684,732 520,470 --
Accumulated undistributed net
realized gain (loss) 45,458,844 59,191,383 (9,525,283) (3,251,345) (401,674) --
Accumulated undistributed
(distributions in excess of)
net investment income 297,667 1,378,050 67,036 (11,029) (34,406) (1,322)
---------------------------------------------------------------------------------------------
NET ASSETS $ 655,615,705 $958,589,770 $ 133,252,732 $ 264,641,760 $ 39,497,205 $ 729,499,762
=============================================================================================
Shares outstanding (unlimited
number of shares authorized) 49,152,969 46,957,777 14,264,079 25,842,939 3,932,514 729,501,084
=============================================================================================
Net asset value per share $ 13.34 $ 20.41 $ 9.34 $ 10.24 $ 10.04 $ 1.00
=============================================================================================
Offering price (100%/(100%-Maximum
Sales Charge) of net asset value
adjusted to nearest cent) per
share* $ 13.97 $ 21.37 $ 9.78 $ 10.24 $ 10.04 $ 1.00
=============================================================================================
Maximum sales charge 4.50% 4.50% 4.50% -- -- --
=============================================================================================
<FN>
*For Nationwide(R) Tax-Free Income Fund and U.S. Government Income Fund,
redemption price per share varies by length of time shares are held.
</TABLE>
See accompanying notes to financial statements.
21
<PAGE> 22
NATIONWIDE(R) FAMILY OF FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R)
GROWTH NATIONWIDE(R) BOND TAX-FREE U.S. GOV'T MONEY MARKET
FUND FUND FUND INCOME FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends $ 8,494,220 $ 20,514,352 -- -- -- --
Interest 3,349,087 1,573,774 $9,681,741 $15,653,726 $ 2,717,130 $36,273,232
---------------------------------------------------------------------------------
Total income 11,843,307 22,088,126 9,681,741 15,653,726 2,717,130 36,273,232
---------------------------------------------------------------------------------
EXPENSES:
Investment management fees 3,212,196 4,425,921 663,545 1,704,966 255,149 3,280,802
Distribution fees -- -- -- 921,340 137,388 --
Transfer agent fees 683,043 698,913 161,300 159,115 40,299 653,631
Shareholders' reports 138,109 139,217 65,742 52,776 15,248 190,601
Registration fees -- -- -- 22,972 15,000 --
Professional services 29,866 32,656 5,234 12,679 1,260 24,893
Custodian fees 31,869 43,290 16,048 41,455 7,400 41,694
Trustees' fees and expenses 17,978 21,747 3,822 2,743 396 18,215
Other 26,307 34,960 6,992 12,994 2,336 27,000
---------------------------------------------------------------------------------
Total expenses before waived expenses 4,139,368 5,396,704 922,683 2,931,040 474,476 4,236,836
Total waived expenses -- -- -- 394,860 58,881 328,076
Net expenses 4,139,368 5,396,704 922,683 2,536,180 415,595 3,908,760
---------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 7,703,939 $16,691,422 $8,759,058 $13,117,546 $ 2,301,535 $32,364,472
=================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investments $45,484,621 $ 59,251,910 $ (171,239) $ 2,055,736 $ 34,406 --
Net change in unrealized appreciation
(depreciation) 20,001,960 127,452,048 (2,045,242) (1,473,376) (277,059) --
---------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 65,486,581 186,703,958 (2,216,481) 582,360 (242,653) --
---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $73,190,520 $203,395,380 $6,542,577 $13,699,906 $2,058,882 $32,364,472
=================================================================================
</TABLE>
See accompanying notes to financial statements.
22
<PAGE> 23
NATIONWIDE(R) FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R)
GROWTH FUND FUND BOND FUND
Year ended Year ended Year ended Year ended Year ended Year ended
October 31, October 31, October 31, October 31, October 31, October 31,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 7,703,939 $ 8,424,199 $ 16,691,422 $ 14,301,965 $ 8,759,058 $ 8,946,837
Net realized gain (loss) on investment 45,484,621 55,104,961 59,251,910 42,454,076 (171,239) (2,695,214)
Net change in unrealized appreciation
(depreciation) of investments 20,001,960 34,260,953 127,452,048 73,761,567 (2,045,242) 17,358,003
---------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 73,190,520 97,790,113 203,395,380 130,517,608 6,542,577 23,609,626
Distributions to shareholders from:
Net investment income (7,521,249) (8,424,199) (16,077,181) (14,459,586) (8,801,481) (8,917,890)
In excess of net investment income -- (50,491) -- -- -- --
Net realized gain from investment
transactions (55,130,738) (9,636,714) (42,514,603) (54,955,514) -- --
---------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (62,651,987) (18,111,404) (58,591,784) (69,415,100) (8,801,481) (8,917,890)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 91,753,548 78,233,932 100,830,600 44,342,114 17,666,533 14,412,502
Net asset value of shares issued to
shareholders from reinvestment of
dividends 61,359,336 17,836,103 51,530,171 60,306,894 7,287,372 7,950,830
Cost of shares redeemed (90,962,567) (57,537,318) (134,240,940) (76,759,052) (23,074,853) (27,877,661)
---------------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from capital share
transactions 62,150,317 38,532,717 18,119,831 27,889,956 1,879,052 (5,514,329)
---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 72,688,850 118,211,426 162,923,427 88,992,464 (379,852) 9,177,407
NET ASSETS-BEGINNING OF PERIOD 582,926,855 464,715,429 795,666,343 706,673,879 133,632,584 124,455,177
---------------------------------------------------------------------------------------------
NET ASSETS-END OF PERIOD $ 655,615,705 $ 582,926,855 $ 958,589,770 $ 795,666,343 $ 133,252,732 $ 133,632,584
=============================================================================================
Undistributed net realized gain (loss)
on investments included in net assets
at end of period $ 45,458,844 $ 55,104,961 $ 59,191,383 $ 42,454,076 $ (9,525,283) $ (9,354,044)
=============================================================================================
Undistributed net investment income
included in net assets at end
of period $ 297,667 $ 114,977 $ 1,378,050 $ 763,809 $ 67,036 $ 109,459
=============================================================================================
SHARE ACTIVITY:
Shares sold 7,069,963 6,444,023 5,349,375 2,806,172 1,897,464 1,613,435
Reinvestment of dividends 4,952,188 1,578,080 2,874,632 4,081,126 784,086 892,591
Shares redeemed (6,978,391) (4,861,121) (7,129,736) (4,857,164) (2,486,318) (3,144,695)
---------------------------------------------------------------------------------------------
Net increase (decrease) in number
of shares 5,043,760 3,160,982 1,094,271 2,030,134 195,232 (638,669)
=============================================================================================
</TABLE>
See accompanying notes to financial statements.
23
<PAGE> 24
NATIONWIDE(R) FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R)
TAX-FREE INCOME FUND U.S. GOV'T INCOME FUND MONEY MARKET FUND
Year ended Year ended Year ended Year ended Year ended Year ended
October 31, October 31, October 31, October 31, October 31, October 31,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
OPERATIONS:
Net investment income $ 13,117,546 $ 13,060,318 $ 2,301,535 $ 2,266,549 $ 32,364,472 $ 29,238,839
Net realized gain (loss) on
investments 2,055,736 (3,951,178) 34,406 70,730 -- 4,106
Net change in unrealized
appreciation (depreciation)
of investments (1,473,376) 24,981,359 (277,059) 3,505,345 -- --
---------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 13,699,906 34,090,499 2,058,882 5,842,624 32,364,472 29,242,945
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (13,122,781) (13,407,484) (2,301,535) (2,266,549) (32,359,207) (29,239,264)
In excess of net investment
income (11,029) -- (34,406) -- -- (6,587)
Net realized gain from
investment transactions -- -- -- -- (4,106) --
Paid in capital -- -- (10) (14,726) -- --
---------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (13,133,810) (13,407,484) (2,335,951) (2,281,275) (32,363,313) (29,245,851)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 20,245,316 18,662,663 4,773,320 3,165,132 746,407,569 626,666,560
Net asset value of shares
issued to shareholders from
reinvestment of dividends 9,330,442 10,382,144 1,753,068 1,830,091 30,963,908 29,971,841
Cost of shares redeemed (27,983,697) (28,340,872) (6,529,084) (6,528,260) (652,583,762)
---------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from capital
share transactions 1,592,061 703,935 (2,696) (1,533,037) 124,787,715 112,976,889
---------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS 2,158,157 21,386,950 (279,765) 2,028,312 124,788,874 112,973,983
NET ASSETS-BEGINNING OF PERIOD 262,483,603 241,096,653 39,776,970 37,748,658 604,710,888 491,736,905
---------------------------------------------------------------------------------------
NET ASSETS-END OF PERIOD $ 264,641,760 $ 262,483,603 $ 39,497,205 $ 39,776,970 $ 729,499,762 $ 604,710,888
=======================================================================================
Undistributed net realized
gain (loss) on investments
included in net assets
at end of period $ (3,251,345) $ (5,307,081) $ (401,674) $ (436,080) $ -- $ 4,106
=======================================================================================
Undistributed (distributions
in excess of) net investment
income included in net assets
at end of period $ (11,029) $ 5,235 $ (34,406) $ -- $ (1,322) $ (6,587)
=======================================================================================
SHARE ACTIVITY:
Shares sold 1,986,252 1,898,854 482,073 326,609 746,407,569 626,666,560
Reinvestment of dividends 914,259 1,056,582 175,851 189,664 30,963,908 29,971,841
Shares redeemed (2,748,350) (2,901,957) (655,486) (681,184) (652,583,762) (543,661,512)
---------------------------------------------------------------------------------------
Net increase (decrease) in
number of shares 152,161 53,479 2,438 (164,911) 124,787,715 112,976,889
=======================================================================================
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 25
NATIONWIDE(R) FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<TABLE>
<CAPTION>
NATIONWIDE(R) GROWTH FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 13.22 $ 11.35 $ 11.14 $ 9.94 $ 9.57
Net investment income 0.16 0.21 0.09 0.17 0.20
Net realized gain (loss) and unrealized
appreciation (depreciation) 1.36 2.10 0.53 1.41 0.46
------------------------------------------------------------------------------
Total from investment operations 1.52 2.31 0.62 1.58 0.66
Dividends from net investment income (0.16) (0.20) (0.19) (0.17) (0.20)
Distributions from net realized gain from
investment transactions (1.24) (0.24) (0.22) (0.21) (0.09)
------------------------------------------------------------------------------
Total distributions (1.40) (0.44) (0.41) (0.38) (0.29)
------------------------------------------------------------------------------
Net increase (decrease) in net asset value 0.12 1.87 0.21 1.20 0.37
NET ASSET VALUE-END OF PERIOD $ 13.34 $ 13.22 $ 11.35 $ 11.14 $ 9.94
==============================================================================
Total Return (excludes sales charges) 12.36% 21.01% 5.73% 16.16% 6.94%
Net Assets, End of Period (000) $ 655,616 $ 582,927 $ 464,715 $ 411,853 $ 330,950
Ratio of expenses to average net assets 0.64% 0.66% 0.68% 0.68% 0.65%
Ratio of net investment income to average net assets 1.20% 1.66% 1.71% 1.63% 1.97%
Portfolio turnover 25.61% 27.10% 14.50% 10.20% 13.10%
Average commission rate paid * 5.3923(cent) - - -
<CAPTION>
NATIONWIDE(R) FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 17.35 $ 16.12 $ 16.55 $ 16.31 $ 15.77
Net investment income 0.36 0.31 0.37 0.31 0.37
Net realized gain (loss) and unrealized
appreciation (depreciation) 3.98 2.49 0.41 0.67 0.98
------------------------------------------------------------------------------
Total from investment operations 4.34 2.80 0.78 0.98 1.35
Dividends from net investment income (0.35) (0.31) (0.36) (0.33) (0.36)
Distributions from net realized gain from
investment transactions (0.93) (1.26) (0.85) (0.41) (0.45)
------------------------------------------------------------------------------
Total distributions (1.28) (1.57) (1.21) (0.74) (0.81)
------------------------------------------------------------------------------
Net increase (decrease) in net asset value 3.06 1.23 (0.43) 0.24 0.54
------------------------------------------------------------------------------
NET ASSET VALUE-END OF PERIOD $ 20.41 $ 17.35 $ 16.12 $ 16.55 $ 16.31
==============================================================================
Total Return (excludes sales charges) 26.11% 19.24% 4.88% 6.16% 8.68%
Net Assets, End of Period (000) $ 958,590 $ 795,666 $ 706,674 $ 753,239 $ 726,012
Ratio of expenses to average net assets 0.61% 0.63% 0.63% 0.62% 0.61%
Ratio of net investment income to average net assets 1.89% 1.95% 2.26% 1.96% 2.32%
Portfolio turnover 16.71% 16.50% 15.40% 25.80% 12.80%
Average commission rate paid * 5.9393(cent) - - - -
<FN>
* Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold by the
Fund for which commissions were charged.
</TABLE>
See accompanying notes to financial statements.
25
<PAGE> 26
NATIONWIDE(R) FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<TABLE>
<CAPTION>
NATIONWIDE(R) BOND FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 9.50 $ 8.46 $ 10.07 $ 9.58 $ 9.46
Net investment income 0.61 0.63 0.60 0.74 0.76
Net realized gain (loss) and unrealized
appreciation (depreciation) (0.15) 1.04 (1.56) 0.52 0.23
---------------------------------------------------------------------------
Total from investment operations 0.46 1.67 (.96) 1.26 0.99
Dividends from net investment income (0.62) (0.63) (0.65) (0.77) (0.85)
Distribution from paid in capital - - - - (0.02)
---------------------------------------------------------------------------
Total distributions (0.62) (0.63) (0.65) (0.77) (0.87)
---------------------------------------------------------------------------
Net increase (decrease) in net asset value (0.16) 1.04 (1.61) 0.49 0.12
NET ASSET VALUE-END OF PERIOD $ 9.34 $ 9.50 $ 8.46 $ 10.07 $ 9.58
===========================================================================
Total Return (excludes sales charges) 5.05% 20.41% (9.81%) 13.61% 10.85%
Net Assets, End of Period (000) $ 133,253 $ 133,633 $ 124,455 $ 151,090 $ 90,187
Ratio of expenses to average net assets 0.70% 0.71% 0.71% 0.68% 0.65%
Ratio of net investment income to average net assets 6.60% 7.04% 7.11% 7.63% 8.63%
Portfolio turnover 38.95% 70.40% 58.00% 68.50% 100.80%
<CAPTION>
NATIONWIDE(R) TAX-FREE INCOME FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 10.22 $ 9.40 $ 10.95 $ 9.94 $ 9.81
Net investment income 0.51 0.51 0.53 0.54 0.56
Net realized gain (loss) and unrealized
appreciation (depreciation) 0.02 0.84 (1.45) 1.10 0.13
---------------------------------------------------------------------------
Total from investment operations 0.53 1.35 (0.92) 1.64 0.69
Dividends from net investment income (0.51) (0.53) (0.51) (0.54) (0.56)
Distributions from net realized gain from
investment transactions - - (0.12) (0.09) -
-
---------------------------------------------------------------------------
Total distributions (0.51) (0.53) (0.63) (0.63) (0.56)
---------------------------------------------------------------------------
Net increase (decrease) in net asset value 0.02 0.82 (1.55) 1.01 0.13
---------------------------------------------------------------------------
NET ASSET VALUE-END OF PERIOD $ 10.24 $ 10.22 $ 9.40 $ 10.95 $ 9.94
===========================================================================
Total Return 5.31% 14.66% (8.74%) 16.97% 7.18%
Net Assets, End of Period (000) $ 264,642 $ 262,484 $ 241,097 $ 253,042 $170,650
Ratio of expenses to average net assets 0.96% 0.98% 0.99% 0.98% 0.98%
Ratio of expenses to average net assets * 1.11% 1.13% 1.14% 1.13% 1.13%
Ratio of net investment income to average net assets 4.98% 5.20% 5.02% 5.07% 5.62%
Ratio of net investment income to average net assets * 4.83% 5.05% 4.87% 4.92% 5.47%
Portfolio turnover 24.15% 31.70% 59.20% 28.40% 69.80%
<FN>
* Ratio calculated as if no expenses were waived.
</TABLE>
See accompanying notes to financial statements.
26
<PAGE> 27
NATIONWIDE(R) FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<TABLE>
<CAPTION>
NATIONWIDE(R) U.S. GOV'T INCOME FUND
Years ended October 31,
Period from 2/10/92
(commencement
of operations)
1996 1995 1994 1993 to 10/31/92
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 10.12 $ 9.22 $ 10.26 $ 9.97 $ 10.00
Net investment income 0.59 0.59 0.54 0.53 0.46
Net realized gain (loss) and unrealized
appreciation (depreciation) (0.08) 0.89 (0.96) 0.45 (0.03)
------------------------------------------------------------------------------
Total from investment operations 0.51 1.48 (0.42) 0.98 0.43
Dividends from net investment income (0.58) (0.58) (0.55) (0.53) (0.46)
In excess of net investment income (0.01) -- -- -- --
Distributions from net realized gain from
investment transactions -- -- (0.07) (0.16) --
------------------------------------------------------------------------------
Total distributions (0.59) (0.58) (0.62) (0.69) (0.46)
------------------------------------------------------------------------------
Net increase (decrease) in net asset value (0.08) 0.90 (1.04) 0.29 (0.03)
------------------------------------------------------------------------------
NET ASSET VALUE-END OF PERIOD $ 10.04 $ 10.12 $ 9.22 $ 10.26 $ 9.97
==============================================================================
Total Return 5.28% 16.47% (4.20%) 10.15% 7.26%*
Net Assets, End of Period (000) $ 39,497 $ 39,777 $ 37,749 $ 38,452 $ 18,211
Ratio of expenses to average net assets 1.06% 1.08% 1.09% 1.10% 1.00%*
Ratio of expenses to average net assets ** 1.21% 1.23% 1.24% 1.25% 1.17%*
Ratio of net investment income to average net assets 5.86% 5.92% 5.62% 5.12% 6.38%*
Ratio of net investment income to average net assets ** 5.71% 5.77% 5.47% 4.97% 6.21%*
Portfolio turnover 9.30% 25.40% 67.50% 99.00% 157.40%
<CAPTION>
NATIONWIDE(R) MONEY MARKET FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.05 0.05 0.03 0.03 0.03
Dividends from net investment income (0.05) (0.05) (0.03) (0.03) (0.03)
------------------------------------------------------------------------------
Net increase (decrease) in net asset value - - - - -
------------------------------------------------------------------------------
NET ASSET VALUE-END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==============================================================================
Total Return 5.05% 5.46% 3.34% 2.60% 3.53%
Net Assets, End of Period (000) $ 729,500 $ 604,711 $ 491,737 $ 418,615 $488,998
Ratio of expenses to average net assets 0.60% 0.62% 0.65% 0.70% 0.71%
Ratio of expenses to average net assets ** 0.65% 0.67% 0.70% 0.73% 0.71%
Ratio of net investment income to average net assets 4.93% 5.34% 3.33% 2.57% 3.50%
Ratio of net investment income to average net assets ** 4.88% 5.29% 3.28% 2.54% 3.50%
<FN>
* Total Return and ratios are annualized for periods of less than one year.
** Ratios calculated as if no expenses were waived.
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 28
NATIONWIDE(R) FAMILY OF FUNDS
NOTES TO FINANICAL STATEMENTS
OCTOBER 31, 1996
1. Summary of Significant Accounting Policies
Nationwide Investing Foundation (NIF) and Nationwide Investing Foundation II
(NIF-II) are diversified, open-end investment companies. NIF was created under
the laws of Michigan by an Indenture of Trust, dated May 5, 1933. NIF-II was
created under the laws of Massachusetts as a Massachusetts Business Trust on
October 5, 1985. The Trusts, which are registered under the Investment Company
Act of 1940, as amended, offer shares in six separate mutual funds.
(a) Security Valuation
----------------------
(1) Growth, Fund, Bond, Tax-Free Income, and U.S. Government Income
Funds:
Securities traded on a national securities exchange are valued at
closing prices. Listed securities for which no sale was reported on
the valuation date are valued at quoted bid prices or fair market
procedures authorized by the Boards of Trustees.
(2) Money Market Fund:
Securities are valued at amortized cost, which approximates market
value, in accordance with Rule 2a-7 of the Investment Company Act of
1940 as amended.
The value of a repurchase agreement generally equals the purchase
price paid by the Fund (cost) plus the interest accrued to date. The
seller, under the repurchase agreement, is required to maintain the
market value of the underlying collateral at not less than the value
of the repurchase agreement. Securities subject to repurchase
agreements are held by the Federal Reserve/Treasury book-entry system
or by the Fund's custodian or an approved sub-custodian.
(b) Security Transactions and Investment Income
-----------------------------------------------
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date; interest income is recorded on an
accrual basis and includes, where applicable, the pro rata amortization of
premium or discount.
(c) Federal Income Taxes
------------------------
NIF and NIF-II qualify as regulated investment companies under the
Internal Revenue Code during the periods covered by the accompanying
statements. No provision has been made for federal income taxes as it is
the intention to continue such qualification and to distribute all taxable
income to shareholders. To the extent net realized gains are offset
through the application of a capital loss carryover, they will not be
distributed to shareholders but will be retained by the Trusts.
As of October 31, 1996, the Nationwide Bond, Tax-Free Income, and U.S.
Government Income Funds had net capital loss carry forwards in the
amounts of $9,525,283, $3,251,345, and $401,674, respectively. The Bond
Fund carry forwards will expire within 5 to 8 years, the Tax-Free Income
Fund carry forwards will expire within 7 years, and the U.S. Government
Income Fund carry forwards will expire within 6 years.
(d) Dividends to Shareholders
-----------------------------
(1) Growth and Nationwide Funds:
Dividends are paid quarterly and are recorded on the ex-dividend date.
(2) Bond, Tax-Free Income, U.S. Government Income, and Money Market Funds:
Dividends are declared daily and paid monthly from the sum of the net
investment income
Distributable net realized capital gains are declared and distributed at
least annually for all funds.
Dividends and distributions to shareholders are determined in accordance
with federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences are considered
either permanent or temporary in nature. In accordance with AICPA Statement
of Position 93-2, permanent differences are reclassified within the capital
accounts based on their nature for federal income tax purposes; temporary
differences do not require reclassification. Dividends and distributions
that exceed net investment income and net realized gains for financial
reporting purposes but not for tax purposes are reported as dividends in
excess of net investment income and net realized gains. To the extent
distributions exceed current and accumulated earnings and profits for
federal income tax purposes, they are reported as distributions of
paid-in-capital. These reclassifications have no effect upon the net asset
value of the respective funds.
(e) Expenses
------------
Direct expenses of a fund are allocated to that fund. General expenses of
the Trusts are allocated to the funds based upon each fund's relative
average net assets.
(f) Use of Estimates
--------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
2. TRANSACTIONS WITH AFFILIATES
(a) Growth, Fund, Bond, and Money Market Funds
----------------------------------------------
As investment manager for the NIF Funds, Nationwide Advisory Services,
Inc. (NAS), (formerly Nationwide Financial Services, Inc.), an affiliated
company, earns an annual fee of
28
<PAGE> 29
NATIONWIDE(R) FAMILY OF FUNDS
NOTES TO FINANICAL STATEMENTS
OCTOBER 31, 1996
.5% based on the average daily net assets; this fee would not be payable in
full if the effect of such payment would increase total expense (excluding
taxes other than payroll taxes and brokerage commissions on portfolio
transactions) to an amount exceeding 1% of average daily net assets for any
fiscal year. Such limitations on total expenses did not affect management
fees during the periods covered by the financial statements.
The investment manager voluntarily waived annual fees totaling .05% of
average daily net assets in the Money Market Fund for the year ended
October 31, 1996, or $328,076 representing $.0005 per average share
outstanding.
NAS also receives fees for services as principal underwriter. Such fees are
deducted from and are not included in proceeds from sales of capital
shares. From such fees, NAS pays sales commissions, salaries, and other
expenses. Such fees aggregated $1,029,727 on Growth Fund shares, $1,089,371
on Fund Shares, and $202,206 on Bond Fund shares for the year ended October
31, 1996.
(b) Tax-Free Income, and U.S. Government Income Funds
-----------------------------------------------------
As investment manager for each NIF-II Fund, NAS earns an annual fee based
on average daily net assets of each Fund at the rate of .65% on the first
$250 million, .60% on the next $250 million, .55% on the next $250 million,
and .50% on the average daily net assets in excess of $750 million. Total
annual expenses will not exceed the limits prescribed by any state in which
the Fund shares are offered for sale. Such limitation did not affect the
management fees for the year ended October 31, 1996.
NAS may also receive fees on the NIF-II Funds for distribution pursuant to
a Rule 12b-1 Distribution Plan approved by the Board of Trustees. These
fees are based on average daily net assets of each Fund at an annual rate
of .35%. During the year ended October 31, 1996, each Fund paid
distribution fees at the annual rate of .20% of average daily net assets,
with the distributor voluntarily waiving the remaining .15%. During the
year ended October 31, 1996, NAS waived $394,860 and $58,881 for both the
Tax-Free Income and U.S. Government Income Funds, representing $.015 per
average share outstanding for each fund.
NAS also receives fees for services as principal underwriter. Such fees are
contingent deferred sales charges for the NIF-II Funds ranging from 5% to
1% imposed on redemptions which cause the current value of an account to
fall below the total purchase payments made during the past five years.
Contingent deferred sales charges aggregated $169,310 on the Tax-Free
Income Fund shares and $58,918 on the U.S. Government Income Fund shares
for the year ended October 31, 1996.
A subsidiary of NAS (Nationwide Investors Services, Inc.) acts as Transfer and
Dividend Disbursing Agent for the Funds.
3. BANK LOANS
Both NIF and NIF II Trusts have unsecured bank lines of credit of $25,000,000
each. Borrowings under these arrangements bear interest at the Federal Funds
rate plus .50%. These interest costs are included in custodian fees in the
Statements of Operations. No compensating balances are required. The Tax-Free
Income Fund had an outstanding balance on these lines at October 31, 1996, of
$502,400.
4. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding U.S. Government and short-term
securities), and purchases and sales of U.S. Government Obligations for the year
ended October 31, 1996, are summarized as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES OBLIGATIONS
PURCHASES SALES PURCHASES SALES
<S> <C> <C> <C> <C>
Growth............ $189,946,018 $149,806,703 $140,798,139 $177,258,794
Fund.............. 152,063,007 162,300,308 -- --
Bond.............. 45,363,936 44,199,913 5,484,075 5,655,312
Tax-Free Income... 64,427,275 63,072,201 -- --
U.S. Gov't Income 2,349,359 549,166 2,548,984 2,993,516
Money Market...... -- -- 31,107,476 42,347,000
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized appreciation (depreciation) at October 31, 1996, are
the following components:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
GAINS LOSSES APPRECIATION
<S> <C> <C> <C>
Growth................ $174,291,915 $(15,602,630) $158,689,285
Fund ................ 387,579,796 (13,951,690) 373,628,106
Bond.................. 3,405,725 (733,895) 2,671,830
Tax-Free Income....... 11,242,731 (557,999) 10,684,732
U.S. Gov't Income..... 773,537 (253,067) 520,470
</TABLE>
5. FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For corporate shareholders, 89.3% of the Growth Fund and 97.5% of the Fund
income dividends and short-term capital gain distributions in the fiscal year
ended October 31, 1996, qualify for the corporate dividend received deduction.
All of the distributions paid by the Tax-Free Income Fund during the fiscal year
are exempt from federal income tax.
29
<PAGE> 30
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
The Nationwide Investing Foundation
The Nationwide Investing Foundation II:
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of The Nationwide Investing
Foundation--Nationwide Growth Fund, Nationwide Fund, Nationwide Bond Fund,
Nationwide Money Market Fund, and of The Nationwide Investing Foundation
II--Nationwide Tax-Free Income Fund and Nationwide U.S. Government Income Fund,
as of October 31, 1996, 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
October 31, 1996, by confirmation with the custodian 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 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 comprising The Nationwide Investing Foundation and
The Nationwide Investing Foundation II as of October 31, 1996, 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 generally accepted
accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
December 13, 1996
30
<PAGE> 31
NATIONWIDE(R) FAMILY OF FUNDS
<TABLE>
<CAPTION>
TRUSTEES OFFICERS
<S> <C>
D. RICHARD MCFERSON - Nationwide Investing JAMES F. LAIRD, JR. - Treasurer
Foundation (NIF) & Nationwide Investing RAE I. MERCER - Secretary
Foundation II (NIF II) CRAIG A. ALVEY - Assistant Treasurer
Chairman CRAIG A. CARVER - Assistant Treasurer
Columbus, Ohio WILLIAM G. GOSLEE - Assistant Treasurer
PETER NECKERMANN - Assistant Treasurer
DR. JOHN C. BRYANT - NIF & NIF II HARRY A. SCHERMER - Assistant Treasurer
Wilmington, Ohio
DR. C. BRENT DEVORE - NIF TRANSFER AGENT
Westerville, Ohio Nationwide Investors Services, Inc.
Box 1492
SUE A. DOODY - NIF Columbus, Ohio 43216-1492
Columbus, Ohio
CUSTODIAN
ROBERT M. DUNCAN - NIF & NIF II The Fifth Third Bank
Columbus, Ohio 38 Fountain Square Plaza
Cincinnati, Ohio 45263-0001
CHARLES L. FUELLGRAF, JR. - NIF
Butler, Pennsylvania LEGAL COUNSEL
Druen, Rath & Dietrich
DR. THOMAS J. KERR, IV - NIF & NIF II One Nationwide Plaza
Westerville, Ohio Columbus, Ohio 43215-2220
DOUGLAS F. KRIDLER - NIF AUDITORS
Columbus, Ohio KPMG Peat Marwick LLP
Two Nationwide Plaza
NANCY C. THOMAS - NIF Columbus, Ohio 43215-2537
Louisville, Ohio
DISTRIBUTOR
HAROLD W. WEIHL - NIF Nationwide Advisory Services, Inc.
Bowling Green, Ohio Three Nationwide Plaza
Columbus, Ohio 43215-2220
DAVID C. WETMORE - NIF
Herndon, Virginia
</TABLE>
31
<PAGE> 32
NATIONWIDE
[LOGO] ADVISORY
SERVICES, INC.
NATIONWIDE(R) FAMILY OF FUNDS
TOLL-FREE TELEPHONE ASSISTANCE
General account service and exchanges:
1-800-848-0920
24-HOUR PRERECORDED INFORMATION
1-800-848-0920
[SEAL]
NATIONWIDE FAMILY OF FUNDS BULK RATE
THREE NATIONWIDE PLAZA U.S. POSTAGE
COLUMBUS OHIO 43215-2220 PAID
CLEVELAND, OHIO
PERMIT NO. 1702
OCTOBER 1996
ANNUAL REPORT
HS-402-K (97)
