<PAGE> 1
'33 Act File No. 33-896
'40 Act File No. 811-04436
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 13
and/or /x/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14
(Check appropriate box or boxes) /x/
NATIONWIDE INVESTING FOUNDATION II
(Exact Name of Registrant as Specified in Charter)
Nationwide Tax Free Income Fund
Nationwide U.S. Government Income Fund
One Nationwide Plaza
Columbus, Ohio 43216
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (614) 249-7855
Ms. Rae I. Mercer Send Copies of Communications to:
One Nationwide Plaza Druen,
Columbus, Ohio 43216 Rath & Dietrich
(Name and Address of Agent for Service) One Nationwide Plaza
Columbus, Ohio 43216
/x/ It is proposed that this filing will become effective on February 29,
1996 pursuant to paragraph (b) of Rule 485
Pursuant to Rule 24f-2, the Registrant has declared an indefinite
number of its shares of beneficial interest of Nationwide Money Market
Fund, Nationwide Bond Fund, Nationwide Fund and Nationwide Growth Fund
registered. Registrant filed its Rule 24f-2 Notice for the fiscal year
ended October 31, 1995 on December 19, 1995.
<PAGE> 2
- --------------------------------------------------------------------------------
NATION WIDE INVESTING FOUNDATION II
- --------------------------------------------------------------------------------
NATIONWIDE TAX-FREE INCOME FUND
NATIONWIDE U.S. GOVERNMENT BOND FUND
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
N-1A Item No. Location
- ------------- --------
PART A
<S> <C> <C>
Item 1. Cover Page.............................................. Cover Page
Item 2. Synopsis................................................ *
Item 3. Condensed Financial Information......................... Financial Highlights
Item 4. General Description of Registrant....................... Investment Objectives, Policies, Management,
........................................................ Performance and Portfolio Holdings
Item 5. Management of the Fund.................................. Management of the Trust
Item 6. Capital Stock and Other Securities...................... Additional Information; Distributions and Taxes
Item 7. Purchase of Securities Being Offered.................... How to Purchase Shares
Item 8. Redemption or Repurchase................................ How to Sell (Redeem) Shares
Item 9. Pending Legal Proceedings............................... *
PART B
Item 10. Cover Page.............................................. Cover Page
Item 11. Table of Contents....................................... Table of Contents
Item 12. General Information and History......................... General Information and History
Item 13. Investment Objectives and Policies...................... Investment Objectives and Policies; Investment Restrictions
Item 14. Management of the Registrant............................ Trustees and Officers of the Trust
Item 15. Control Persons and Principal Holders of Securities..... Major Shareholders
Item 16. Investment Advisory and Other Services ................. Investment Manager and Other Services
Item 17. Brokerage Allocation.................................... Brokerage Allocation
Item 18. Capital Stock and Other Securities...................... *
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered........................................... Purchases, Redemptions, Pricing of Shares
Item 20. Tax Status.............................................. Tax Status
Item 21. Underwriters............................................ *
Item 22. Calculation of Yield Quotations of
Money Market Funds...................................... *
Item 23. Financial Statements.................................... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration statement.
- ----------------
* Not applicable or negative answer.
<PAGE> 3
PART A: PROSPECTUS
FEBRUARY 29, 1996
NIF I
This Prospectus provides you with information you should know before
investing in the Funds. Read it and keep it for future reference.
Statements of Additional Information dated February 29, 1996, incorporated
herein by reference and containing further information about the Funds, have
been filed with the Securities and Exchange Commission. You may obtain a copy
without charge by calling or writing Nationwide Financial Services, Inc. (NFS),
One Nationwide Plaza, P.O. Box 1492, Columbus, Ohio 43216-1492.
Nationwide Investing Foundation (NIF) and Nationwide Investing Foundation II
(NIF-II) are diversified open-end investment management 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 offer shares in six separate
mutual funds, each with its own investment objectives.
NIF FUNDS:
Nationwide(R) Growth Fund
Nationwide(R) Fund
Nationwide(R) Bond Fund
Nationwide(R) Money Market
Fund
NIF-II FUNDS:
Nationwide(R) Tax-Free
Income Fund
Nationwide(R) U.S. Government
Income Fund
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
AN INVESTMENT IN THE NATIONWIDE MONEY MARKET FUND IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE
NATIONWIDE MONEY MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE
OF $1.00 PER SHARE.
One Nationwide Plaza - P.O. Box 1492
Columbus, Ohio 43216-1492
February 29, 1996
Call toll-free 1-800-848-0920
for information, assistance,
and wire orders, 8:00 AM-5:00 PM
Call toll-free 1-800-848-0520
for 24-hour yield information
FAX: (614) 249-8705
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Summary of Fund Expenses .............................................. 3
Financial Highlights .................................................. 4
Which Fund Is Right for You ........................................... 6
Historical Performance ................................................ 8
Investment Objectives, Policies, Management,
Performance and Portfolio Holdings ............................... 10
Minimum Investment .................................................... 16
How to Purchase Shares ................................................ 17
How to Sell (Redeem) Shares ........................................... 18
Investor Strategies ................................................... 20
Investor Privileges ................................................... 21
Investor Services ..................................................... 23
Management of the Trusts .............................................. 24
The Effect of Interest Rates on Bond Values ........................... 25
Distributions and Taxes ............................................... 25
Tax Advantages of the Tax-Free Income Fund ............................ 27
Performance Advertising for the Funds ................................. 28
Additional Information ................................................ 29
</TABLE>
NATIONWIDE(R)
FAMILY OF
FUNDS
NATIONWIDE(R)
GROWTH FUND
Capital Appreciation--
Companies of all Sizes
NATIONWIDE(R)
FUND
Capital Appreciation --
Generally Larger
Company Stocks
NATIONWIDE(R)
BOND FUND
Monthly Income --
A-Rated or Better
Debt Securities
NATIONWIDE(R)
TAX-FREE INCOME
FUND
Monthly Income--
Free from Federal Taxes
NATIONWIDE(R)
U.S. GOVERNMENT
INCOME FUND
Monthly Income --
U.S. Gov't Securities
NATIONWIDE(R)
MONEY MARKET
FUND
Monthly Income --
Current Rates of Return
2
<PAGE> 4
SUMMARY
OF FUND
EXPENSES
This summary helps you understand the various costs and expenses you will bear,
directly or indirectly, when investing in the Funds.
For a more detailed explanation of these expenses, see "Management of the
Trusts" on page 24. The expenses and fees in this table are based on the fiscal
year ended October 31, 1995.
NIF FUNDS:
Nationwide(R) Growth Fund
Nationwide(R) Fund
Nationwide(R) Bond Fund
Nationwide(R) Money Market
Fund
NIF-II FUNDS:
Nationwide(R) Tax-Free
Income Fund
Nationwide(R) U.S. Gov't
Income Fund
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Tax-Free U.S. Gov't Money
Growth Fund Bond Income Income Market
<S> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases * 4.5% 4.5% 4.5% None None None
Maximum Contingent Deferred
Sales Charge on Redemptions ** None None None 5.0% 5.0% None
Maximum Sales Charge Imposed
on Reinvested Dividends None None None None None None
Redemption Fees+ None None None None None None
Exchange Fees None None None None None None
</TABLE>
* Lower sales charges are available as the amount of the investment increases.
To receive even greater sales charge discounts, investors may also include the
value of shares held in other accounts (including household family members'
accounts). See page 21.
** The Contingent Deferred Sales Charge declines by 1% each year, from 5% to 0%
after 5 years. See page 19.
+ Although no redemption fee is charged, applicable contingent deferred sales
charges apply to redemptions from the Nationwide Tax-Free Income Fund and
Nationwide U.S. Government Income Fund. If you choose to have your redemption
wired to your bank, a $5 wire transfer fee will be deducted from the proceeds.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets, after expense reimbursements)
<TABLE>
<CAPTION>
Tax-Free U.S. Gov't Money
Growth Fund Bond Income Income Market
<S> <C> <C> <C> <C> <C> <C>
Management Fees..................... 0.50% 0.50% 0.50% 0.65% 0.65% 0.45%
12b-1 Fees.......................... 0% 0% 0% +0.20% +0.20% 0%
Other Expenses...................... 0.16% 0.13% 0.21% 0.13% 0.23% 0.17%
---- ---- ---- ----- ----- ----
Total Fund Operating Expenses....... 0.66% 0.63% 0.71% +0.98% +1.08% 0.62%
</TABLE>
+For the Tax-Free Income and U.S. Government Income Funds, the distributor will
charge a 12b-1 fee of .20%, rather than the .35% allowed and waive the remaining
.15% until further written notice.
*The investment manager will waive .05% of the .50% management fee until further
written notice.
Example:
The following example illustrates the expenses you would pay on a $1,000
investment over various time periods assuming: (1) a 5% annual return, and (2)
redemption at the end of each time period. Contingent deferred sales charges
apply to redemptions of shares held 5 years or less in the Tax-Free Income and
U.S. Government Income Funds, for more information see page 19.
<TABLE>
<CAPTION>
Tax-Free U.S. Gov't Money
Growth Fund Bond Income Income Market
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year $51 $51 $52 $60 $10* $61 $11* $ 6
3 Years $65 $64 $67 $61 $31* $64 $34* $20
5 Years $80 $79 $83 $64 $54* $70 $60* $35
10 Years $124 $120 $129 $120 $120* $132 $132* $77
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
* Tax-Free Income and U.S. Government Income expenses assuming no redemption.
3
<PAGE> 5
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout the Periods Ended October 31
<TABLE>
<CAPTION>
Net
Realized Distributions
Gain from
Net (Loss) Dividends Net
Asset and Total from Realized
Value-- Net Unrealized from Net Gain from Returns
Beginning Investment Appreciation Investment Investment Investment of
of Period Income (Depreciation) Operations Income Transactions Capital
INCOME FROM LESS DISTRIBUTIONS
INVESTMENT OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
GROWTH $9.18 $.31 $1.98 $2.29 $(.27) $(1.34) --
FUND 9.86 .27 (.28) (.01) (.30) (1.21) --
8.34 .23 1.70 1.93 (.42) (1.07) --
8.78 .31 .63 .94 (.20) (.34) --
9.18 .33 (1.53) (1.20) (.31) (.33) --
7.34 .22 2.77 2.99 (.25) (.51) --
9.57 .20 .46 .66 (.20) (.09) --
9.94 .17 1.41 1.58 (.17) (.21) --
11.14 .09 .53 .62 (.19) (.22) --
11.35 .21 2.10 2.31 (.20) (.24) --
<CAPTION>
Net
Investment
Net Income
Asset Expenses to Net Assets
Value-- to Average Average at End of
Total End of Total Net Net Portfolio Period
Distributions Period Return Assets Assets Turnover (000's)
RATIOS & SUPPLEMENTAL DATA ASSETS YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH $(1.61) $9.86 28.5% .65% 3.25% 64.4% $171,068 1986
FUND (1.51) 8.34 (.3) .64 2.70 69.9 192,723 1987
(1.49) 8.78 28.4 .67 2.82 40.8 231,901 1988
(.54) 9.18 11.2 .67 3.35 38.8 252,456 1989
(.64) 7.34 (14.1) .68 3.86 36.2 198,691 1990
(.76) 9.57 43.4 .68 2.54 12.4 277,019 1991
(.29) 9.94 6.9 .65 1.97 13.1 330,950 1992
(.38) 11.14 16.2 .68 1.63 10.2 411,853 1993
(.41) 11.35 5.7 .68 1.71 14.5 464,715 1994
(.44) 13.22 21.0 .66 1.66 27.1 582,927 1995
</TABLE>
<TABLE>
<CAPTION>
Net
Realized Distributions
Gain from
Net (Loss) Dividends Net
Asset and Total from Realized
Value-- Net Unrealized from Net Gain from Returns
Beginning Investment Appreciation Investment Investment Investment of
of Period Income (Depreciation) Operations Income Transactions Capital
INCOME FROM LESS DISTRIBUTIONS
INVESTMENT OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
NATIONWIDE $11.81 $.39 $3.34 $3.73 $(.41) $(.59) --
FUND 14.54 .36 (.19) .17 (.37) (.81) --
13.53 .35 1.63 1.98 (.47) (1.42) --
13.62 .44 2.78 3.22 (.45) (1.51) --
14.88 .37 (1.23) (.86) (.39) (1.31) --
12.32 .38 3.97 4.35 (.40) (.50) --
15.77 .37 .98 1.35 (.36) (.45) --
16.31 .31 .67 .98 (.33) (.41) --
16.55 .37 .41 .78 (.36) (.85) --
16.12 .31 2.49 2.80 (.31) (1.26) --
<CAPTION>
Net
Investment
Net Income
Asset Expenses to Net Assets
Value-- to Average Average at End of
Total End of Total Net Net Portfolio Period
Distributions Period Return Assets Assets Turnover (000's)
RATIOS & SUPPLEMENTAL DATA ASSETS YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NATIONWIDE $(1.00) $14.54 33.3% .62% 2.86% 17.4% $372,282 1986
FUND (1.18) 13.53 .9 .62 2.25 22.2 383,099 1987
(1.89) 13.62 17.2 .63 2.79 13.3 407,175 1988
(1.96) 14.88 27.1 .64 3.21 21.9 469,427 1989
(1.70) 12.32 (7.0) .63 2.69 13.4 441,188 1990
(.90) 15.77 36.5 .61 2.56 13.6 620,113 1991
(.81) 16.31 8.7 .61 2.32 12.8 726,012 1992
(.74) 16.55 6.2 .62 1.96 25.8 753,239 1993
(1.21) 16.12 4.9 .63 2.26 15.4 706,674 1994
(1.57) 17.35 19.2 .63 1.95 16.5 795,666 1995
</TABLE>
<TABLE>
<CAPTION>
Net
Realized Distributions
Gain from
Net (Loss) Dividends Net
Asset and Total from Realized
Value-- Net Unrealized from Net Gain from Returns
Beginning Investment Appreciation Investment Investment Investment of
of Period Income (Depreciation) Operations Income Transactions Capital
INCOME FROM LESS DISTRIBUTIONS
INVESTMENT OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
BOND $9.70 $.92 $.56 $1.48 $(.95) $(.02) --
FUND 10.21 .88 (.90) (.02) (.87) (.04) --
9.28 .88 .18 1.06 (.99) -- --
9.35 .88 (.02) .86 (.84) -- --
9.37 .88 (.36) .52 (.90) -- --
8.99 .85 .45 1.30 (.83) -- --
9.46 .76 .23 .99 (.85) -- (.02)
9.58 .74 .52 1.26 (.77) -- --
10.07 .60 (1.56) (.96) (.65) -- --
8.46 .63 1.04 1.67 (.63) -- --
<CAPTION>
Net
Investment
Net Income
Asset Expenses to Net Assets
Value-- to Average Average at End of
Total End of Total Net Net Portfolio Period
Distributions Period Return Assets Assets Turnover (000's)
RATIOS & SUPPLEMENTAL DATA ASSETS YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BOND $(.97) $10.21 16.0% .68% 9.06% 38.5% $22,568 1986
FUND (.91) 9.28 (.3) .70 8.95 61.2 32,712 1987
(.99) 9.35 12.0 .66 9.45 73.1 35,759 1988
(.84) 9.37 9.7 .68 9.38 72.7 36,430 1989
(.90) 8.99 5.9 .68 9.62 82.1 36,378 1990
(.83) 9.46 15.1 .67 9.13 93.6 54,187 1991
(.87) 9.58 10.9 .65 8.63 100.8 90,187 1992
(.77) 10.07 13.6 .68 7.63 68.5 151,090 1993
(.65) 8.46 (9.8%) .71 7.11 58.0 124,455 1994
(.63) 9.50 20.4 .71 7.04 70.4 133,633 1995
</TABLE>
THE INFORMATION IN THE ABOVE TABLES HAS BEEN AUDITED BY KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS, WHOSE REPORTS THEREON, TOGETHER WITH CERTAIN FINANCIAL
STATEMENTS, APPEAR IN THE STATEMENTS OF ADDITIONAL INFORMATION. THE STATEMENTS
OF ADDITIONAL INFORMATION AND THE ANNUAL REPORT FOR THE FUNDS, WHICH CONTAIN
FURTHER INFORMATION ABOUT THE FUNDS' PERFORMANCE INCLUDING MANAGEMENT'S
DISCUSSION OF FUND PERFORMANCE, MAY BE OBTAINED FREE OF CHARGE BY CALLING
1-800-848-0920.
4
<PAGE> 6
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a Share Oustanding Throughout the Periods Ended October 31
Net
Realized Distributions
Gain fom
Net (Loss) Dividends Net
Asset and Total fom Realized
Value-- Net Unrealized from Net Gain from
Beginning Investment Appreciation Investment Investment Investment Total
of Period Income (Depreciation) Operations Income Transactions Distributions
INCOME FROM LESS DISTRIBUTIONS
INVESTMENT OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C>
TAX-FREE $ 10.00 $ .37 $ (.01) $ .36 $ (.37) $-- $ (.37)
INCOME 9.99 .61 (1.35) (.74) (.61) (.03) (.64)
8.61 .62 .75 1.37 (.62) -- (.62)
9.36 .62 .08 .70 (.62) -- (.62)
9.44 .61 (.13) .48 (.61) -- (.61)
9.31 .58 .50 1.08 (.58) -- (.58)
9.81 .56 .13 .69 (.56) -- (.56)
9.94 .54 1.10 1.64 (.54) (.09) (.63)
10.95 .53 (1.45) (.92) (.51) (.12) (.63)
9.40 .51 .84 1.35 (.53) -- (.53)
<CAPTION>
Net Net
Investment Investment
Net Expenses Expenses Income Income
Asset to to to to Net Assets
Value-- Average Average Average Average at End of
End of Total Net Net Net Net Portfolio Period
Period Return Assets Assets* Assets Assets* Turnover (000's)
RATIOS & SUPPLEMENTAL DATA ASSETS YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TAX-FREE $ 9.99 3.1% .99% 1.36% 6.39% 6.00% 36.9% $ 15,330 1986+
INCOME 8.61 (7.9) .97 1.32 6.42 6.32 202.8 37,815 1987
9.36 16.3 .86 1.21 6.82 6.45 117.7 51,884 1988
9.44 7.7 .85 1.20 6.62 6.28 79.7 72,097 1989
9.31 5.3 .90 1.16 6.51 6.25 68.9 89,374 1990
9.81 11.9 1.01 1.16 6.05 5.90 45.5 122,005 1991
9.94 7.2 .98 1.13 5.62 5.47 69.8 170,650 1992
10.95 17.0 .98 1.13 5.07 4.92 28.4 253,042 1993
9.40 (8.7) .99 1.14 5.02 4.87 59.2 241,097 1994
10.22 14.7 .98 1.13 5.20 5.05 31.7 262,484 1995
</TABLE>
+ Period from March 17, 1986 (date of commencement of operations)
through October 31, 1986. Ratio percentages and total return
are annualized for periods of less than twelve months.
<TABLE>
<CAPTION>
Net
Realized Distributions
Gain fom
Net (Loss) Dividends Net
Asset and Total fom Realized
Value-- Net Unrealized from Net Gain from
Beginning Investment Appreciation Investment Investment Investment Total
of Period Income (Depreciation) Operations Income Transactions Distributions
INCOME FROM LESS DISTRIBUTIONS
INVESTMENT OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. $ 10.00 $ .46 $ (.03) $ .43 $ (.46) $ -- $ (.46)
GOV'T 9.97 .53 .45 .98 (.53) (.16) (.69)
10.26 .54 (.96) (.42) (.55) (.07) (.62)
9.22 .59 .89 1.48 (.58) -- (.58)
</TABLE>
<TABLE>
<CAPTION>
Net Net
Investment Investment
Net Expenses Expenses Income Income
Asset to to to to Net Assets
Value-- Average Average Average Average at End of
End of Total Net Net Net Net Portfolio Period
Period Return Assets Assets* Assets Assets* Turnover (000's)
RATIOS & SUPPLEMENTAL DATA ASSETS YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. $ 9.97 7.3% 1.00% 1.17% 6.38% 6.21% 157.4% $18,211 1992(DELTA)
GOV'T 10.26 10.2 1.10 1.25 5.12 4.97 99.0 38,452 1993
9.22 (4.2) 1.09 1.24 5.62 5.47 67.5 37,749 1994
10.12 16.5 1.08 1.23 5.92 5.77 25.4 39,777 1995
</TABLE>
(DELTA) Period from February 10, 1992 (date of commencement of
operations) through October 31, 1992. Ratio percentages and
total return are annualized for periods of less than twelve
months.
<TABLE>
<CAPTION>
Net
Realized Distributions
Gain fom
Net (Loss) Dividends Net
Asset and Total fom Realized
Value-- Net Unrealized from Net Gain from
Beginning Investment Appreciation Investment Investment Investment Total
of Period Income (Depreciation) Operations Income Transactions Distributions
INCOME FROM LESS DISTRIBUTIONS
INVESTMENT OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C>
MONEY $1.00 $.07 $-- $ .07 $ (.07) $-- $ (.07)
MARKET 1.00 .06 -- .06 (.06) -- (.06)
1.00 .07 -- .07 (.07) -- (.07)
1.00 .09 -- .09 (.09) -- (.09)
1.00 .08 -- .08 (.08) -- (.08)
1.00 .06 -- .06 (.06) -- (.06)
1.00 .03 -- .03 (.03) -- (.03)
1.00 .03 -- .03 (.03) -- (.03)
1.00 .03 -- .03 (.03) -- (.03)
1.00 .05 -- .05 (.05) -- (.05)
</TABLE>
<TABLE>
<CAPTION>
Net Net
Investment Investment
Net Expenses Expenses Income Income
Asset to to to to Net Assets
Value-- Average Average Average Average at End of
End of Total Net Net Net Net Portfolio Period
Period Return Assets Assets* Assets Assets* Turnover (000's)
RATIOS & SUPPLEMENTAL DATA ASSETS YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY $1.00 6.7% .77% .77% 6.50% 6.50% -- $410,061 1986
MARKET 1.00 5.9 .79 .79 5.75 5.75 -- 388,750 1987
1.00 6.9 .76 .76 6.71 6.71 -- 421,901 1988
1.00 8.9 .74 .74 8.55 8.55 -- 535,257 1989
1.00 8.0 .73 .73 7.67 7.67 -- 600,324 1990
1.00 6.1 .71 .71 5.97 5.97 -- 594,987 1991
1.00 3.5 .71 .71 3.50 3.50 -- 488,998 1992
1.00 2.6 .70 .73 2.57 2.54 -- 418,615 1993
1.00 3.3 .65 .70 3.33 3.28 -- 491,737 1994
1.00 5.5 .62 .67 5.34 5.29 -- 604,711 1995
</TABLE>
*Ratios calculated as if no expenses were waived.
THE INFORMATION IN THE ABOVE TABLES HAS BEEN AUDITED BY KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS, WHOSE REPORTS THEREON, TOGETHER WITH CERTAIN FINANCIAL
STATEMENTS, APPEAR IN THE STATEMENTS OF ADDITIONAL INFORMATION. THE STATEMENTS
OF ADDITIONAL INFORMATION AND THE ANNUAL REPORT FOR THE FUNDS, WHICH CONTAIN
FURTHER INFORMATION ABOUT THE FUNDS' PERFORMANCE INCLUDING MANAGEMENT'S
DISCUSSION OF FUND PERFORMANCE, MAY BE OBTAINED FREE OF CHARGE BY CALLING
1-800-848-0920.
5
<PAGE> 7
WHICH FUND IS RIGHT FOR YOU?
Long-term and short-term goals require different financial planning. Whether
you're seeking greater growth opportunity, looking for more income, or a
combination of both, Nationwide's Family of Funds, strategies, and services may
help.
CONSIDER YOUR TIME FRAME
For long-term goals, you have the luxury of time on your side. With goals five
or more years away--where growth of your money is the highest priority--you may
want to consider Nationwide's common stock funds (Growth or Fund). These funds
provide greater long-term return potential through portfolios of common stocks.
If you`re seeking greater income today, have intermediate to long-term goals,
or--as the time to your long-term goals gets closer--you may consider
Nationwide's income-oriented funds (Bond, Tax-Free Income, or U.S. Government
Income). These funds invest in high-quality bonds, providing monthly income and
normally provide greater price stability than stock funds. Plus, it is possible
to have capital appreciation in these funds.
For short-term goals--such as saving for next year's needs, an emergency
reserve, or as a temporary "parking place" for your money--the Money Market Fund
may be most suitable for you. This fund provides investors with greater
stability of principal while providing current monthly income.
Most investors have a combination of long and short-term goals. By investing in
several, or all, of the Family of Funds, you'll have the opportunity to satisfy
your many investment needs.
ASSESS TOLERANCE FOR RISK
Where you choose to invest depends as much on your tolerance for risk as on your
desire for reward. Opportunity and risk go hand-in-hand. The greater the
potential long-term opportunity, the greater the potential risk of account value
fluctuation.
The most common risk people associate with investing is short-term market
risk--the day-to-day fluctuation in an investment's value. To lower this risk,
Nationwide's portfolio managers seek to invest only in high-quality securities.
This commitment to quality provides shareholders with a greater potential for
growth or income, while maintaining a high degree of relative stability.
Investors looking for greater growth in our common stock funds (Growth and Fund)
should be willing to accept short-term account value fluctuation. A wide range
of factors--corporate earnings potential, interest rates, competition, and other
economic conditions--can cause both downward and upward share price changes.
In the past, investors with a long-term time horizon and a tolerance for
fluctuation have been rewarded. Despite years when short-term returns have not
been satisfactory, over long-term holding periods, money has grown more in the
common stock funds than in our other funds.
The growth of money and average annual returns over 1, 5, 10 and 15-year periods
are shown on pages 8 and 9. Tables on pages 4 and 5 show the annual dividends
paid in each fund over the past 10 years.
The income-oriented funds (Bond, Tax-Free Income, and U.S. Government Income)
provide investors with greater price stability than our common stock funds. More
predictable
GROWTH NATIONWIDE
FUND FUND
WHICH NATIONWIDE(R) FUNDS ARE RIGHT FOR YOU?
The charts to the right show the relative growth (blue rectangle), income (green
oval), and price stability (red triangle) of each fund in the Nationwide Family
of Funds in comparison to one another. These charts are based upon the Funds'
investment objectives and are not intended to be projections of future results.
The top of each chart represents higher potential. The bottom of each chart
represents lower potential. Often, investors choose to allocate their money to
several of the funds to achieve specific financial goals and to match their
tolerance for risk.
GROWTH
INCOME
PRICE STABILITY
(CHARTS SHOW GROWTH, INCOME, AND PRICE STABILITY POTENTIAL
OF EACH OF THE FUNDS.)
6
<PAGE> 8
NATIONWIDE(R) FAMILY OF FUNDS
investments can make an investor more comfortable, but the total return
potential in these funds is less than in common stock funds. Prevailing interest
rates, more than any other factor, contribute to price fluctuation in these
funds, and long-term bonds are generally affected more than shorter-term bonds.
A discussion of the relationship of interest rates and bond prices is found on
page 25.
Investors who would prefer not to have their investment principal fluctuate
should consider the Money Market Fund. While it provides the greatest price
stability, over its history it has the least long-term return potential.
One of the biggest risks investors may face is being too conservative, thereby
not earning enough return on their investments to achieve their future needs.
Another big risk to consider is the eroding value of the dollar, known as
inflation. The amount of money needed to satisfy a goal (after taking inflation
into consideration) may dictate investment in a fund with a potential for
greater returns. Although common stock funds are the most volatile over short
periods of time, they are one of the few investments that have provided
double-digit returns and exceeded inflation over long periods.
Procrastination is yet another risk investors must consider. Delay, and you take
the chance that there may not be enough time to attain your objective. Start
early and invest regularly in funds with growth opportunities, and you stand a
better chance to reach your goals.
CONSIDER YOUR TAX BRACKET
For investors seeking to shelter their investment income from federal taxes, the
Tax-Free Income Fund may be a suitable investment. The tax-equivalent yield of
this fund can be especially appealing for investors in the 28% or higher tax
brackets. To determine if a tax-free investment may be right for you, see page
27.
BOND TAX-FREE U.S. GOVERNMENT MONEY MARKET
FUND INCOME FUND* INCOME FUND FUND
(CHARTS SHOW GROWTH,
INCOME, AND PRICE STABILITY POTENTIAL
OF EACH OF THE FUNDS.)
7
<PAGE> 9
$1,000 LUMP SUM INVESTMENT GROWTH
Calendar Year Historical Performance Measured Against Inflation (CPI)
<TABLE>
<CAPTION>
Consumer TAX-FREE U.S. GOV'T MONEY
Price Index GROWTH FUND BOND INCOME INCOME MARKET
INVESTED FOR 15 YEARS -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT VALUE ON 12/31/95 $1,778 $7,801 $7,023 $4,307 FUND NOT IN FUND NOT IN $2,959
AVERAGE ANNUAL COMPOUND
TOTAL RETURN 3.9% 14.7% 13.9% 10.2% EXISTENCE EXISTENCE 7.5%
TOTAL RETURN 77.8% 680.1% 602.3% 330.7% 15 YEARS AGO 15 YEARS AGO 195.9%
INVESTED FOR 10 YEARS -----------------------------------------------------------------------------------
INVESTMENT VALUE ON 12/31/95 $1,403 $3,169 $3,360 $2,234 FUND NOT IN FUND NOT IN $1,738
AVERAGE ANNUAL COMPOUND
TOTAL RETURN 3.4% 12.2% 12.9% 8.4% EXISTENCE EXISTENCE 5.7%
TOTAL RETURN 40.3% 216.9% 236.0% 123.4% 10 YEARS AGO 10 YEARS AGO 73.8%
INVESTED FOR 5 YEARS -----------------------------------------------------------------------------------
INVESTMENT VALUE ON 12/31/95 $1,147 $2,008 $1,787 $1,522 $1,451 FUND NOT IN $1,224
AVERAGE ANNUAL COMPOUND
TOTAL RETURN 2.8% 15.0% 12.3% 8.8% 7.7% EXISTENCE 4.1%
TOTAL RETURN 14.7% 100.8% 78.7% 52.2% 45.1% 5 YEARS AGO 22.4%
INVESTED FOR 1 YEAR -----------------------------------------------------------------------------------
INVESTMENT VALUE ON 12/31/95 $1,025 $1,229 $1,241 $1,186 $1,125 $1,136 $1,055
TOTAL RETURN
TOTAL RETURN WITHOUT SALES 2.5% 22.9% 24.1% 18.6% 12.5% 13.6% 5.5%
CHARGES DEDUCTED 2.5% 28.7% 30.0% 24.2% 17.5% 18.6% 5.5%
</TABLE>
The Bond and Money Market Funds began
operations on 3/1/80; Tax-Free Income on
3/17/86, and U.S. Government Income on
2/10/92.
$1,000 LUMP SUM
INVESTMENT GROWTH
(CHARTS GROWTH OF
EACH OF THE FUNDS.)
These graphs compare each Fund's performance over the calendar years shown to
the money required to stay even with the Consumer Price Index (CPI). The
Consumer Price Index is a statistical measure of change, over time, in the
prices of goods and services in major expenditure groups. The results shown
assume reinvestment of all dividends and capital gains distributions. Returns
have been reduced for the 4.5% sales charge incurred on a $1,000 lump sum
investment in the Growth, Fund, and Bond Funds, and the applicable contingent
deferred sales charge on a $1,000 investment in the Tax-Free Income and U.S.
Government Income Funds, which has the greatest impact on the 1-year returns.
Because of the special sales charge discounts on purchases of the Growth, Fund
and Bond Funds, larger investments would have had even greater average annual
(compound) total returns. Adjustments were not made for income taxes payable on
reinvested distributions since that varies with each shareholder. While the
figures above accurately reflect the Funds' performance, keep in mind that
market conditions varied widely over the periods shown and past results are not
a guarantee of future performance which may be more or less.
Total return includes market appreciation or depreciation and assumes
reinvestment of all dividends and capital gains distributions. The average
annual (compound) total return is the return required to be earned each year on
an investment to grow into the total investment value at 12/31/95. Unlike the
simple average total return, it includes the effects of money compounding.
8
<PAGE> 10
$100 MONTHLY SUM INVESTMENT GROWTH
Calendar Year Historical Performance Measured Against Inflation (CPI)
<TABLE>
<CAPTION>
Consumer TAX-FREE U.S. GOV'T MONEY
Price Index GROWTH FUND BOND INCOME INCOME MARKET
INVESTED FOR 15 YEARS ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT VALUE ON 12/31/95 $23,519 $55,919 $55,480 $38,686 FUND NOT IN FUND NOT IN $28,905
TOTAL DOLLARS INVESTED $18,000 $18,000 $18,000 $18,000 EXISTENCE EXISTENCE $18,000
TOTAL RETURN 30.7% 210.7% 208.2% 114.9% 15 YEARS AGO 15 YEARS AGO 60.6%
INVESTED FOR 10 YEARS ------------------------------------------------------------------------------------
INVESTMENT VALUE ON 12/31/95 $14,199 $21,939 $22,368 $18,489 FUND NOT IN FUND NOT IN $15,578
TOTAL DOLLARS INVESTED $12,000 $12,000 $12,000 $12,000 EXISTENCE EXISTENCE $12,000
TOTAL RETURN 18.3% 82.8% 86.4% 54.1% 10 YEARS AGO 10 YEARS AGO 29.8%
INVESTED FOR 5 YEARS ------------------------------------------------------------------------------------
INVESTMENT VALUE ON 12/31/95 $6,409 $8,206 $8,007 $7,278 $7,044 FUND NOT IN $6,659
TOTAL DOLLARS INVESTED $6,000 $6,000 $6,000 $6,000 $6,000 EXISTENCE $6,000
TOTAL RETURN 6.8% 36.8% 33.5% 21.3% 17.4% 5 YEARS AGO 11.0%
INVESTED FOR 1 YEAR ------------------------------------------------------------------------------------
INVESTMENT VALUE ON 12/31/95 $1,211 $1,285 $1,343 $1,283 $1,230 $1,241 $1,235
TOTAL DOLLARS INVESTED $1,200 $1,200 $1,200 $1,200 $1,200 $1,200 $1,200
TOTAL RETURN 0.9% 7.1% 11.9% 6.9% 2.5% 3.5% 2.9%
</TABLE>
The Bond and Money Market Funds began
operations on 3/1/80; Tax-Free Income on
3/17/86, and U.S. Government Income on
2/10/92.
$100 MONTHLY SUM
INVESTMENT GROWTH
(CHARTS GROWTH OF
EACH OF THE FUNDS.)
These graphs show how $100 invested at the start of each month grew over time by
establishing a systematic investment plan (commonly referred to as dollar cost
averaging), without any withdrawals. All results assume reinvestment of all
dividends and capital gains distributions. These results reflect the effects of
the reduced sales charges discussed on page 21 Sales Charge Schedule and
Available Discounts section, which shows the investment values at which sales
charge discounts occur. Adjustments were not made for income taxes payable on
reinvested distributions since that varies with each shareholder. While the
figures above accurately reflect the Funds' performance, keep in mind that
market conditions varied widely over the period shown and past results are not a
guarantee of future performance which may be more or less.
Total return includes market appreciation or depreciation and assumes
reinvestment of all dividends and capital gains distributions.
9
<PAGE> 11
INVESTMENT OBJECTIVES, POLICIES, MANAGEMENT,
THE GROWTH FUND
is designed to serve investors who do not require current income but are
primarily interested in the growth of their capital to meet their future
financial needs.
INVESTMENT OBJECTIVE & POLICY: To achieve long-term capital appreciation without
emphasis on current return. This is accomplished by retaining maximum
flexibility in the management of the Fund's portfolio consisting mainly of
common stocks.
- - LONG-TERM GROWTH WITH CAPITAL APPRECIATION POTENTIAL.
- - COMMON STOCK PORTFOLIO--COMPANIES OF ALL SIZES.
RISK PROFILE: The illustration below shows a continuum of risk. The triangle
shows where the Growth Fund falls on this continuum.
(ARROW CHART SHOWS RELATIVE RISK.)
More risk: greater Less risk: lower
potential for reward growth potential
PORTFOLIO MANAGEMENT: Major emphasis in the selection of securities is placed on
companies which have capable management, and are in fields where social and
economic trends, technological developments, and new processes or products
indicate a potential for greater than average growth.
While it is generally intended to invest in common stocks or in issues
convertible to common stock, there are no restrictive provisions covering the
proportion of one or another class of securities that may be held. Therefore,
management is not in any way inhibited in the selection of appropriate
investments to reach the objectives. However, certain other restrictions exist
to protect investors.
Investments are made in different types of securities among many companies
and industries which provide diversification to minimize risk. While there is
careful selection and constant supervision by a professional investment manager,
there can be no guarantee that the Fund's objective will be achieved.
PORTFOLIO MANAGER: John M. Schaffner, MBA, CFA--is the portfolio manager for the
Nationwide(R) Growth Fund. He has been with Nationwide since 1977 and has
managed the Growth Fund since June 1981. Schaffner graduated with a Bachelor of
Arts in Economics from Occidental College. He received his Master of Business
Administration degree from the University of Michigan and is a Chartered
Financial Analyst.
<TABLE>
<CAPTION>
YEARLY TOTAL RETURNS*
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
28.7% 1.5% 11.3% 6.3% 36.1% (7.6%) 14.9% 22.5% 2.4% 18.4%
<CAPTION>
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
33.3% 8.4% 21.9% 35.6% 3.1% 18.8% 21.7% 9.9% (.7%) 23.6%
<CAPTION>
1975 1974 1973 1972 1971 1970 1969 1968 1967 1966
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
41.3% (34.9%) (27.5%) 8.7% 18.7% (12.0%) (9.7%) 13.5% 28.3% (6.5%)
</TABLE>
*Total Returns reflect market appreciation or depreciation, dividends, and
capital gains for the periods ended December 31. Results shown assume
reinvestment of all distributions. Adjustments have not been made for income
taxes or the one time sales charge, if any, which varies with the size of the
investment. Although each Fund's record should be considered in light of its
investment objectives and policies, past results are not a guarantee of future
performance which may be less or more.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS+
(for periods ending 12/31/95, $1,000 lump sum investment minus 4.5% sales
charge)
<TABLE>
<CAPTION>
1 Year 5 Year 10 Year 15 Year
<S> <C> <C> <C>
22.9% 15.0% 12.2% 14.7%
</TABLE>
+ See notes on page 8 for more detail.
Repurchase
Agreements
0.2%
U.S. Government &
Government Agency
Securities & Other Assets
Less Liabilities
10.7%
(PIE CHART SHOWS PORTFOLIO.) Common
Stocks
89.1%
<TABLE>
<CAPTION>
TOTAL VALUE OF PORTFOLIO $613,407,323
=====================================================================
TOP 10 HOLDINGS VALUE % OF
PORTFOLIO
<S> <C> <C>
Federal National Mortgage Association $61,600,091 10.2%
Intel Corp. 25,706,250 4.4
Grand Metropolitan Plc 21,662,100 3.5
Columbia/HCA Health 20,850,000 3.4
Zebra Technologies Corp. 20,262,550 3.3
MCI Communications Corp. 19,530,000 3.2
Archer Daniels Midland Co. 19,444,662 3.2
AT & T Corp. 19,387,500 3.2
Merrill Lynch & Co., Inc. 17,675,000 2.9
Hewlett-Packard Co. 16,750,000 2.7
</TABLE>
10
<PAGE> 12
PERFORMANCE & PORTFOLIO HOLDINGS (AT 12/31/95)
THE NATIONWIDE(R) FUND
is designed to serve investors who seek long-term capital appreciation and
income through a portfolio which, based on the current market environment,
provides the greatest total return opportunities.
INVESTMENT OBJECTIVE & POLICY: To obtain a total return from a flexible
combination of current income and capital appreciation. This is accomplished by
retaining maximum flexibility in the management of the Fund's portfolio which
consists primarily of common stocks, but also includes convertible issues, bonds
and money market instruments.
- - LONG-TERM GROWTH WITH CAPITAL APPRECIATION AND INCOME POTENTIAL.
- - COMMON STOCK PORTFOLIO--GENERALLY LARGER COMPANIES.
RISK PROFILE: The illustration below shows a continuum of risk. The triangle
shows where the Nationwide Fund falls on this continuum.
(ARROW CHART SHOWS RELATIVE RISK.)
More risk: greater Less risk: lower
potential for reward growth potential
PORTFOLIO MANAGEMENT: Major emphasis is placed on securities which provide a
combination of current income and the possibility of capital gains. The Fund
seeks to maximize shareholder returns through a diversified portfolio where the
primary emphasis is given to common stocks. Although not limited to these
investments, in the past the majority of the Fund's portfolio assets have
normally contained the common stocks of well-known, larger companies.
While it is generally intended to invest in common stocks or in issues
convertible to common stock, there are no restrictive provisions covering the
proportion of one or another class of securities that may be held. Therefore,
management is not in any way inhibited in the selection of appropriate
investments to reach the objectives. However, certain other restrictions exist
to protect investors.
Investments are made in different types of securities among many companies
and industries which provide diversification to minimize risk. While there is
careful selection and constant supervision by a professional investment manager,
there can be no guarantee that the Fund's objective will be achieved.
PORTFOLIO MANAGER: Charles Bath, MBA, CFA, CPA--is the portfolio manager of the
Nationwide(R) Fund. Bath joined Nationwide as a securities analyst and has
managed the Nationwide(R) Fund since 1985. He graduated with a Bachelor of
Science in Accounting from Miami University. He received his Master of Business
Administration degree in Finance from The Ohio State University and is a
Certified Public Accountant and a Chartered Financial Analyst.
<TABLE>
<CAPTION>
YEARLY TOTAL RETURNS*
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
30.0% .6% 6.8% 3.0% 30.2% .3% 33.8% 16.8% 2.0% 17.6%
<CAPTION>
1985 1984 1983 1982 1981 1980 1979 1978 1977 1976
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
36.4% 6.1% 15.8% 22.2% 2.0% 17.9% 9.8% .8% (9.1%) 26.7%
<CAPTION>
1975 1974 1973 1972 1971 1970 1969 1968 1967 1966
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
38.6% (20.3%) (6.7%) 9.7% 10.2% 8.5% (16.3%) 28.6% 29.0% (10.3%)
</TABLE>
* Total Returns reflect market appreciation or depreciation, dividends, and
capital gains for the periods ended December 31. Results shown assume
reinvestment of all distributions. Adjustments have not been made for income
taxes or the one time sales charge, if any, which varies with the size of the
investment. Although each Fund's record should be considered in light of its
investment objectives and policies, past results are not a guarantee of future
performance which may be less or more.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS+
(for periods ending 12/31/95, $1,000 lump sum investment minus 4.5% sales
charge)
<TABLE>
<CAPTION>
1 Year 5 Year 10 Year 15 Year
<S> <C> <C> <C>
24.1% 12.3% 12.9% 13.9%
</TABLE>
+ See notes on page 8 for more detail.
Repurchase Agreement
and Other Assets
Less Liabiilties
.5%
Commercial
Paper
1.9%
(PIE CHART SHOWS PORTFOLIO)
Common
Stocks
97.6%
TOTAL VALUE OF PORTFOLIO $848,373,952
=============================================================================
<TABLE>
<CAPTION>
TOP 10 HOLDINGS VALUE % OF
PORTFOLIO
<S> <C> <C>
Warner-Lambert Co. $44,322.450 5.2%
Schering-Plough Corp. 39,559,963 4.7
Texaco, Inc. 37,599,713 4.4
Raychem Corp. 34,324,984 4.1
Chubb Corp. 32,492,100 3.8
PepsiCo, Inc. 29,475,000 3.5
Chrysler Corp. 29,344,550 3.5
Avon Products Inc. 26,155,125 3.1
Capital Cities/ABC 25,376,063 3.0
Ford Motor Co. 25,103,925 3.0
</TABLE>
11
<PAGE> 13
INVESTMENT OBJECTIVES, POLICIES, MANAGEMENT,
THE BOND FUND
is designed for investors seeking high yield along with conservation of capital.
The Fund seeks to serve those who are less willing to accept the risk associated
with stocks through investment in long-term income obligations, including
corporate debt securities, United States and Canadian Government obligations and
commercial paper.
INVESTMENT OBJECTIVE & POLICY: To generate a high level of income, consistent
with capital preservation, through investment in high-quality bonds and other
fixed income securities. This is accomplished by retaining maximum flexibility
in the management of its portfolio consisting mainly of corporate debt
instruments.
- - MONTHLY INCOME FROM A PORTFOLIO OF HIGH QUALITY CORPORATE AND GOVERNMENT
OBLIGATIONS.
- - LONGER MATURITIES--YIELDS USUALLY HIGHER THAN INTERMEDIATE AND SHORT-TERM
FUNDS.
RISK PROFILE: The illustration below shows a continuum of risk. The triangle
shows where the Bond Fund falls on this continuum.
(ARROW CHART SHOWS RELATIVE RISK.)
More risk: greater Less risk: lower
potential for reward growth potential
PORTFOLIO MANAGEMENT: Major emphasis is placed on a diversified portfolio of
high-quality taxable debt securities including corporate debt securities rated
within the three highest credit categories by Standard & Poor's Corporation
(AAA, AA, or A) or Moody's Investors Service, Inc. (Aaa, Aa, or A), U.S. and
Canadian Government obligations, mortgage-backed securities, and the highest
investment grade commercial paper rated by Moody's Investors Service, Inc.
(Prime-1 or Prime-2) or by Standard & Poor's Corporation (A-1 or A-2).
While the majority of the portfolio is invested in corporate debt issues,
there is flexibility for management to vary the composition of the remaining
holdings among government obligations, mortgage-backed securities and short-term
paper. There are, however, certain restrictions concerning diversification and
types of securities to protect the investor. At least 65 percent of the total
assets of the Bond Fund will be invested in corporate bonds, corporate
debentures, corporate notes, U .S. Treasury Bonds, U.S. Treasury Notes, Canadian
Government or Provincial Bonds, Canadian Government or Provincial Notes,
Canadian Government or Provincial Debentures, and mortgage bonds.
Investments are made in different types of securities among many companies
and industries which provide diversification to minimize risk. While there is
careful selection and constant supervision by a professional investment manager,
there can be no guarantee that the Fund's objective will be achieved.
PORTFOLIO MANAGER: Michael D. Groseclose, MBA, CFA--is the portfolio manager
of the Nationwide(R) Bond Fund. He joined Nationwide in 1970 and has managed the
Nationwide(R) Bond Fund since 1981. Groseclose graduated with a Bachelor of
Science in Finance from The Ohio State University. He received his Master of
Business Administration degree from the University of Dayton. He is also a
Chartered Financial Analyst.
YEARLY TOTAL RETURNS*
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
24.2% (8.1%) 10.7% 8.0% 16.9% 8.2% 10.7% 8.2% 0.3% 12.9%
<CAPTION>
1985 1984 1983 1982 1981 1980
<S> <C> <C> <C> <C> <C>
19.1% 14.1% 6.0% 31.0% 2.2% (8.7%)
</TABLE>
*Total Returns reflect market appreciation or depreciation, dividends, and
capital gains for the periods ended December 31. Results shown assume
reinvestment of all distributions. Adjustments have not been made for income
taxes or the one time sales charge, if any, which varies with the size of the
investment. Although each Fund's record should be considered in light of its
investment objectives and policies, past results are not a guarantee of future
performance which may be less or more.
+The Bond Fund began operations on 3/1/80. Annual total returns for the Fund's
initial year of operation are annualized.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS+
(for periods ending 12/31/95, $1,000 lump sum investment minus 4.5% sales
charge)
<TABLE>
<CAPTION>
1 Year 5 Year 10 Year 15 Year
<S> <C> <C> <C>
18.6% 8.8% 8.4% 10.2%
</TABLE>
+ See notes on page 8 for more detail.
Canadian
Government
Bonds U.S. Government
6.4% Bonds
4.2%
(PIE CHART SHOWS PORTFOLIO.) Corporate
Bonds
78.1%
Mortgage Backed
Securities
9.4%
Commercial Paper, Repurchase
Agreements and Other
Assets Less Liabilities
1.9%
TOTAL VALUE OF PORTFOLIO $136,383,120
====================================================================
<TABLE>
<CAPTION>
TOP 10 HOLDINGS VALUE % OF
PORTFOLIO
<S> <C> <C>
Berkley, (W.R.) Corp. $ 6,247,795 4.6%
U.S. Treasury Note 5,673,430 4.2
Prudential Surplus Note 5,304,800 4.0
AMBAC Inc. 5,113,248 3.8
Armstrong World Ind. 4,960,236 3.7
Hydro-Quebec 4,544,516 3.3
Aetna Life & Casualty 4,327,178 3.2
English China Clays 4,255,952 3.1
Loew's Corp. 4,242,187 3.1
FHLMC REMIC 1709-EA 7 4,179,781 3.1
</TABLE>
12
<PAGE> 14
PERFORMANCE & PORTFOLIO HOLDINGS (AT 12/31/95)
THE TAX-FREE INCOME FUND
is designed for investors seeking high monthly income free from federal income
tax* with the degree of safety provided by high-quality municipal bonds.
INVESTMENT OBJECTIVE & POLICY: To provide as high a level of current income
exempt from federal income tax* as is consistent with the preservation of
capital through investing in a diversified portfolio of high-quality
intermediate-term municipal obligations with maturities ranging from 3 to 10
years and long-term municipal obligations with maturities in excess of 10 years.
- - MONTHLY INCOME FROM AN INTERMEDIATE TO LONG-TERM MATURITY PORTFOLIO OF
HIGH-QUALITY MUNICIPAL BONDS.
- - INCOME FREE FROM FEDERAL TAXES.*
* Investors may be subject to state and local tax and the federal alternative
minimum tax.
RISK PROFILE: The illustration below shows a continuum of risk. The triangle
shows where the Tax-Free Income Fund falls on this continuum.
(ARROW CHART SHOWS RELATIVE RISK.)
More risk: greater Less risk: lower
potential for reward growth potential
PORTFOLIO MANAGEMENT: Major emphasis is placed on a diversified portfolio of
municipal obligations rated within the three highest credit categories (safest
investment grades) assigned by Moody's Investors Services, Inc. ("Moody's"), and
Standard & Poor's Corporation ("Standard & Poor's"), or, if not rated,
equivalent investment quality as determined by Nationwide Financial Services,
Inc.
Such obligations include: (1) municipal securities backed by the full faith
and credit of the United States; (2) municipal bonds rated within the three
highest credit categories Aaa, Aa, or A by Moody's and/or AAA, AA, or A by
Standard & Poor's; (3) state and municipal notes rated MIG-1, MIG-2, and MIG-3
by Moody's; and (4) other types of municipal securities such as commercial
paper, provided that such securities are rated at least Prime-2 by Moody's or
A-2 by Standard & Poor's.
The Fund may, on a temporary basis or for defensive purposes, hold and
invest up to 20% of its assets in cash and in temporary taxable investments such
as Treasury notes, bills, and bonds with remaining maturities of one year or
less. The Fund has, however, adopted an investment restriction which requires it
to invest at least 80% of its net assets in the types of securities listed in
the preceding paragraphs.
Although the Fund seeks to reduce risk by investing in a diversified
portfolio of high-quality securities, there can be no guarantee that the Fund's
objective will be realized.
PORTFOLIO MANAGER: Alpha Benson, MBA--is the portfolio manager of the
Nationwide(R) Tax-Free Income Fund. She joined Nationwide in 1977 as a financial
analyst in the Securities Investment Department. She has managed the Tax-Free
Income Fund since its inception in March 1986. Benson graduated with a Bachelor
of Science in Accounting from Central State University. She received her Master
of Business Administration degree from the University of Dayton.
<TABLE>
<CAPTION>
YEARLY TOTAL RETURNS*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
17.5% (9.1%) 12.7% 9.5% 10.8% 6.0% 10.3% 10.2% (3.6%) 4.3%
</TABLE>
*Total Returns reflect market appreciation or depreciation, dividends, and
capital gains for the periods ended December 31. Results shown assume
reinvestment of all distributions. Adjustments have not been made for income
taxes or the one time sales charge, if any, which varies with the size of the
investment. Although each Fund's record should be considered in light of its
investment objectives and policies, past results are not a guarantee of future
performance which may be less or more.
+The Tax-Free Income Fund began operations on 3/17/86. Annual total returns for
the Fund's initial year of operation are annualized.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS+
(for periods ending 12/31/95, $1,000 lump sum investment minus the applicable
contingent deferred sales charge imposed on redemptions, which declines from 5%
in the first year to 0% after 5 years)
<TABLE>
<CAPTION>
1 Year 5 Year Life
- --------------------------------------------------------------------------------
<S> <C> <C>
12.5% 7.7% 6.7%
</TABLE>
+ See notes on page 8 for more detail.
A-rated
63%
(PIE CHART SHOWS PORTFOLIO.)
Aaa-rated
17.6%
Aa-rated
19.4%
<TABLE>
<CAPTION>
TOTAL VALUE OF PORTFOLIO $263,907,356
====================================================================================================================
TOP 10 HOLDINGS (BY STATE) VALUE % OF
PORTFOLIO
<S> <C> <C>
Texas $56,708,656 21.5%
Virginia 31,645,613 12.0
Illinois 23,775,588 9.0
Washington 15,486,750 5.9
Massachusetts 13,508,781 5.1
Georgia 13,442,494 5.1
South Carolina 12,651,213 4.8
North Carolina 9,840,050 3.7
Alabama 8,944,900 3.4
Pennsylvania 7,874,494 3.0
</TABLE>
13
<PAGE> 15
INVESTMENT OBJECTIVES, POLICIES, MANAGEMENT,
THE U.S.GOVERNMENT INCOME FUND
is designed for investors seeking high monthly income, reduced share price
fluctuations and the relative safety generally associated with a portfolio of
intermediate-term U. S. government obligations.
INVESTMENT OBJECTIVE & POLICY: To provide as high a level of current income as
is consistent with the preservation of capital by investing in securities of the
U.S. government, its agencies and instrumentalities. The average dollar-weighted
maturity of the Fund will be maintained at between 3 and 10 years.
- - MONTHLY INCOME FROM A PORTFOLIO OF U.S. GOVERNMENT AND AGENCY OBLIGATIONS.
- - INTERMEDIATE-TERM PORTFOLIO SEEKS LOW PRICE FLUCTUATION.
RISK PROFILE: The illustration below shows a continuum of risk. The
triangle shows where the U.S. Government Income Fund falls on this continuum.
(ARROW CHART SHOWS RELATIVE RISK.)
More risk; greater Less risk; lower
potential for reward. growth potential.
PORTFOLIO MANAGEMENT: The Fund will normally invest all of its net assets
in securities issued by the U.S. government, its agencies and
instrumentalities, and in repurchase agreements in these securities.
The Fund may invest up to 80% of its net assets in mortgage-related
securities which represent part ownership of a pool of mortgage loans. These
securities differ from typical bonds because principal is repaid monthly over
the term of the loan rather than returned in a lump sum at maturity. Certain
government agencies also issue collateralized mortgage obligations (CMOs) which
are fully collateralized directly or indirectly by a pool of mortgages on which
payments of principal and interest are dedicated to payment of principal and
interest on the CMOs.
The Fund may also invest up to 20% in zero-coupon securities that are
direct obligations of the U.S. government, and its agencies and
instrumentalities. Short-term securities of the Fund will include obligations
with remaining maturities of less than one year issued by the U.S. government,
its agencies, or instrumentalities, and repurchase agreements.
In selecting securities for the Fund, the investment manager utilizes
interest rate expectations, yield curve analysis, economic forecasting, market
sector analysis, and other security selection techniques. The Fund's investments
will be concentrated in areas of the bond market (based on sector, coupon, or
maturity) the investment manager believes are relatively undervalued.
Although the Fund seeks to reduce risk by investing in securities backed by
the U.S. government, and its agencies and instrumentalities, there can be no
guarantee that the Fund's objective will be realized.
PORTFOLIO MANAGER: Wayne Frisbee, CFA--is the portfolio manager of the
Nationwide(R) U.S. Government Income Fund. Frisbee joined Nationwide in 1981
as a securities analyst and has managed the U.S. Government Income Fund since
its inception in February 1992. He received a Bachelor of Science from
The Ohio State University and is a Chartered Financial Analyst.
<TABLE>
<CAPTION>
YEARLY TOTAL RETURNS* 1995 1994 1993
<S> <C> <C>
18.6% (3.6%) 8.8%
</TABLE>
*Total Returns reflect market appreciation or depreciation, dividends, and
capital gains for the periods ended December 31. Results shown assume
reinvestment of all distributions. Adjustments have not been made for income
taxes or the one time sales charge, if any, which varies with the size of the
investment. Although each Fund's record should be considered in light of its
investment objectives and policies, past results are not a guarantee of future
performance which may be less or more.
+The U.S. Government Income Fund began operations on 2/10/92. Annual total
returns for the Fund's initial year of operation are annualized.
AVERAGE ANNUAL
(COMPOUND) TOTAL RETURNS+
(for periods ending 12/31/95, $1,000 lump sum investment minus the applicable
contingent deferred sales charge imposed on redemptions, which declines from 5%
in the first year to 0% after 5 years)
<TABLE>
<CAPTION>
1 Year Life
<S> <C>
13.6% 7.2%
</TABLE>
+ See notes on page 8 for more detail.
U.S. Government
and Agency Long-Term
Obligations
17.0%
Repurchase Agreement
& Other Assets
Less Liabilities
2.6%
(PIE CHART SHOWS PORTFOLIO.)
Mortgage-Backed
Securities
80.4%
<TABLE>
<CAPTION>
TOTAL VALUE OF PORTFOLIO $39,969,240
====================================================================================================================
TOP 10 HOLDINGS VALUE % OF
PORTFOLIO
<S> <C> <C>
FHLMC REMIC Series 1462-PT $5,193,395 13.0%
FNMA REMIC Series 1993-203 PJ 5,034,845 12.6
FHLB, 2001 4,122,924 10.3
FNMA REMIC Series 92-151-H 3,859,036 9.7
FHLMC REMIC Series 1344-D 3,838,559 9.6
FHLMC REMIC Series 31-E 3,548,958 8.9
FNMA REMIC Series 1990-7-B 3,128,937 7.9
FHLMC REMIC Series 1313-G 3,092,757 7.8
FNMA REMIC Series 1992-81-Z 2,239,921 5.6
FNMA REMIC Series 92-126 1,578,059 4.0
</TABLE>
14
<PAGE> 16
PERFORMANCE & PORTFOLIO HOLDINGS (AT 12/31/95)
THE MONEY MARKET FUND
is designed to serve investors who seek monthly income at current market rates
while maintaining share price stability--principal is not intended to fluctuate.
There can be no assurance that the Fund will be able to maintain a stable net
asset value of $1.00 per share.
INVESTMENT OBJECTIVE & POLICY: To provide as high a level of current income as
is consistent with the preservation of capital and maintenance of liquidity,
through investment in a diversified portfolio of high quality money market
instruments maturing in 397 days or less. This is accomplished by investing
mainly in debt securities, but the Fund shall retain maximum flexibility in the
management of its portfolio.
- - MONTHLY INCOME WITH QUICK LIQUIDITY THROUGH CHECK-WRITING PRIVILEGE.
- - HISTORICALLY MAINTAINED A FIXED SHARE PRICE THROUGH HIGH-QUALITY SHORT-TERM
SECURITIES.
RISK PROFILE: The illustration below shows a continuum of risk. The triangle
shows where the Money Market Fund falls on this continuum.
(ARROW CHART SHOWS RELATIVE RISK.)
More risk; greater Less risk; lower
potential for reward. growth potential.
PORTFOLIO MANAGEMENT: Emphasis is on a diversified portfolio having a dollar
weighted average maturity of 90 days or less. The portfolio consists of high
quality money market instruments with a remaining maturity of 397 days or less
including, but not limited to: U.S. government and agency obligations;
obligations of commercial banks which have assets over $500 million, and the 50
largest foreign banks with U.S. branches; CDs of savings associations with
assets over $500 million which are FDIC members; taxable or partly taxable
obligations issued by state, county, or municipal governments; commercial paper
rated in one of the two highest rating categories by at least two Nationally
Recognized Statistical Rating Organizations (NRSROs); corporate obligations at
the time of purchase with the two highest investment grades assigned by the
NRSROs; repurchase agreements in any of the above.
While it is generally intended to invest in the above short-term debt
issues, there are no restrictive provisions covering the proportion of one or
another class of securities that may be held which in any way inhibit management
in the selection of appropriate investments to reach the objectives. However,
certain other restrictions exist to protect investors.
Investments are made in different types of securities among many companies
and industries which provide diversification to minimize risk. While there is
careful selection and constant supervision by a professional investment manager,
there can be no guarantee that the Fund's objective will be achieved.
PORTFOLIO MANAGER: William Burtch, MBA--is the portfolio manager of the
Nationwide(R) Money Market Fund. He has managed the Money Market Fund since
1987. He received a Bachelor of Science from Franklin University and his Master
of Business Administration degree from Miami University.
<TABLE>
<CAPTION>
YEARLY TOTAL RETURNS*
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.5% 3.7% 2.6% 3.2% 5.6% 7.8% 8.9% 7.1% 6.2% 6.3% 7.9% 10.4%
</TABLE>
* Total Returns reflect dividends reinvested for the periods ended December 31.
Although the Fund's record should be considered in light of its investment
objectives and policies, past results are not a guarantee of future performance
which may be less or more. Fund results shown for the periods indicated are
without adjustment for any income taxes payable by a shareholder on reinvested
distributions. The current yield of the Money Market Fund may be more reflective
of what you could earn if you invested today. Call 1-800-848-0520 for the most
recent current yield.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS+
(for periods ending 12/31/95, $1,000 lump sum investment--there are no sales
charges on Money Market investments)
<TABLE>
<CAPTION>
1 Year 5 Year 10 Year 15 Year
<S> <C> <C> <C>
5.5% 4.1% 5.7% 7.5%
</TABLE>
+ See notes on page 8 for more detail.
Corporate Notes & Other
Assets Less Liabilities
1.6%
U.S. Government &
Agency Obligations
2.1%
Commercial
Paper
96.3%
(PIE CHART SHOWS PORTFOLIO.)
<TABLE>
<CAPTION>
TOTAL VALUE OF PORTFOLIO $604,357,332
====================================================================================================================
TOP 10 HOLDINGS VALUE % OF
PORTFOLIO
<S> <C> <C>
CPC International $24,878,929 4.1%
Old Republic Corp. 24,786,487 4.0
PHH Corp. 24,399,453 4.0
H.J. Heinz Co. 24,337,419 4.0
Dean Witter Discover 23,938,729 3.9
Ford Motor Credit Co. 22,922,178 3.7
Fleet Funding Inc. 22,640,625 3.7
TransAmerica Corp. 21,938,141 3.6
Beneficial Corp. 21,845,921 3.6
American General Corp. 21,559,133 3.5
</TABLE>
15
<PAGE> 17
NATIONWIDE(R) FAMILY OF FUNDS
MINIMUM INVESTMENT
GROWTH FUND;
NATIONWIDE FUND;
BOND FUND
A minimum investment of $250 is required and subsequent investments of $25 or
more may be made at any time.
--OR--
You may establish a systematic Automatic Asset Accumulation(SM) plan for as
little as $25 per month. See page 20. Also available for certain qualified
plans, i.e. Individual Retirement Accounts (IRA), Simplified Employee Pensions
(SEP), Profit Sharing, and Money Purchase Plans.
There is an initial sales charge for investments made in the above Funds. Sales
charges decline as the amount invested increases according to the chart on page
21.
There are no sales charges on dividends and capital gains reinvested, nor is
there a charge for redeeming your investment.
TAX-FREE
INCOME FUND;
U.S. GOVERNMENT
INCOME FUND
A minimum investment of $1,000 is required and subsequent investments of
$100 or more may be made at any time.
--OR--
You may establish a systematic Automatic Asset Accumulation(SM) plan for as
little as $100 per month. See page 20. The U.S. Government Income Fund is
also available for certain qualified plans, i.e. Individual Retirement
Accounts (IRA), Simplified Employee Pensions (SEP), Profit Sharing, and
Money Purchase Plans.
There is NO initial sales charge for investments made in the above Funds.
However, a contingent deferred sales charge (CDSC, see page 19) may apply
to redemptions made in these Funds. The CDSC declines to 0% after 5 years.
There is never a CDSC on withdrawals of dividends and capital gains
(reinvested or taken in cash), or realized account appreciation.
MONEY MARKET
FUND
A minimum investment of $1,000 is required and subsequent investments of $100 or
more may be made at any time.
--OR--
You may establish a systematic Automatic Asset Accumulation(SM) plan for as
little as $100 per month. See page 20. Also available for certain qualified
plans, i.e. Individual Retirement Accounts (IRA), Simplified Employee Pensions
(SEP), Profit Sharing, and Money Purchase Plans.
There are NO sales charges for Money Market Fund investments or withdrawals.
Robert Orr (front and center), Nationwide Fund shareholder, celebrates with
parents Karen and Gary Meade (left), and his friend, Don Monday (right).
(PICTURE.)
16
<PAGE> 18
NATIONWIDE(R) FAMILY OF FUNDS
HOW TO PURCHASE SHARES
YOU MAY INVEST IN TWO CONVENIENT WAYS:
BY MAIL--Complete the enclosed application and mail with your check or
other negotiable bank draft payable to: NATIONWIDE FINANCIAL SERVICES, INC., ONE
NATIONWIDE PLAZA, P.O. BOX 1492, COLUMBUS, OHIO 43216-1492. Purchases must be
made in U.S. dollars only. The share price you receive will be determined as of
the close of business on the day the properly completed application is received
by NFS in Columbus, Ohio. Checks or drafts drawn on non-U.S. banks must be
collected before investments are credited to accounts. NFS reserves the right to
refuse certain third party checks.
BY WIRE--To avoid mail delays on initial and subsequent investments, you can
request that your bank transmit funds (Federal Funds) by wire to the Fund's
custodian bank. In order to use this method, you must call NFS by 11 A.M.
Eastern Time, and the wire must be received by the custodian bank by 2 P.M.
Eastern Time. The bank that wires your money may charge you a fee for this
service. IF YOU CHOOSE THIS METHOD TO OPEN YOUR ACCOUNT, YOU MUST CALL OUR
TOLL-FREE NUMBER BEFORE YOU WIRE YOUR INVESTMENT. If this is an initial
investment, you must then complete and mail the application found in this
prospectus.
The net asset value per share for each Fund is determined as of the close
of the New York Stock Exchange (usually 4 P.M. Eastern Time), each day that the
exchange is open and on such other days as the Board of Trustees determines and
on days in which there is sufficient trading in the portfolio to materially
affect the net asset value of a Fund. The Funds will not compute net asset value
on customary business holidays, including Christmas, New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, and Thanksgiving.
The net asset value per share is computed by adding the value of all
securities and other assets in the portfolio, deducting any liabilities and
dividing by the number of shares outstanding. The purchase prices of the Funds
are determined as follows:
GROWTH, FUND, AND BOND PURCHASE PRICE
Shares of the above Funds are purchased at the offering price. The offering
price is determined by adding the sales charge (based as a percentage of the
offering price) to the net asset value per share. THE SALES CHARGE IS DETERMINED
ACCORDING TO THE "SALES CHARGE SCHEDULE AND AVAILABLE DISCOUNTS" SECTION ON PAGE
21. In determining net asset value, portfolio securities listed on national
exchanges are valued at the last sale price on the principal exchange, or if
there is no sale on that day, or if the securities are traded only in the
over-the-counter market, at the quoted bid prices. Expenses and fees are accrued
daily.
TAX-FREE INCOME, U.S. GOVERNMENT INCOME, AND MONEY MARKET PURCHASE PRICE
Shares of the above Funds are purchased at net asset value. In determining net
asset value, portfolio securities are valued at the quoted prices obtained from
an independent pricing organization which employs a combination of methods
including, among others, the obtaining of market valuations from dealers who
make markets and deal in such securities, and by comparing valuations from
dealers who make markets and deal in such securities, and by comparing
valuations with those of other comparable securities in a matrix of such
securities. The pricing service activities and results are reviewed by an
officer of the Trusts. Securities of the Funds listed on national exchanges are
valued at the last sale price on the principal exchange, or if there is no sale
on that day, or if the securities are traded only in the over-the-counter
market, at the quoted bid prices. Securities for which market quotations are not
readily available are valued at fair value in accordance with procedures adopted
by the Boards of Trustees. In addition, money market instruments are valued at
amortized cost. Expenses and fees are accrued daily.
(PICTURE.)
John Rolf is custodian for Nicole, Melissa, and Jordan (above), Growth Fund
shareholders, frolicking in the wildflowers.
(PICTURE.)
Farm owner Corwin Burrer, Money Market Fund shareholder, shown taking a short
break beside his giant grain harvester.
17
<PAGE> 19
NATIONWIDE(R) FAMILY OF FUNDS
HOW TO SELL (REDEEM) SHARES
You can sell (redeem) all, or any part of, your shares of any Fund at any time.
Shares are redeemed at net asset value at the close of the New York Stock
Exchange on the day the properly completed request is received by Nationwide
Financial Services, Inc. (NFS), at its offices in Columbus, Ohio. A CONTINGENT
DEFERRED SALES CHARGE MAY APPLY TO REDEMPTION OF SHARES OF THE TAX-FREE INCOME
OR U.S. GOVERNMENT INCOME FUNDS (see "Contingent Deferred Sales Charge," page
19).
Requests for redemptions may be in writing, or you may use the
pre-authorized telephone redemption option. PAYMENT FOR SHARES REDEEMED IS MADE
WITHIN 3 DAYS OF RECEIPT. THE VALUE OF SHARES REDEEMED DEPENDS UPON THE MARKET
VALUE OF THE INVESTMENTS of each Fund at the time of redemption and may be more
or less than the shareholder's cost.
You cannot redeem investments which have been on deposit for a period of
less than 12 days. This is to assure that your check has cleared. To avoid this
possible 12-day delay, you may make your investment by wire (see "How To
Purchase Shares by Wire," page 17). You will receive a confirmation each time a
liquidation of shares is requested. Redemptions may be suspended or the date of
payment postponed when the New York Stock Exchange is closed (other than
customary weekend and holiday closings listed in the "How To Purchase Shares"
section, page 17), or if trading is restricted, or if any emergency exists.
YOU CAN REDEEM IN ANY OF THE FOLLOWING WAYS:
BY MAIL OR FAX (NO MINIMUM)--Write or fax to Nationwide Financial Services,
Inc., One Nationwide Plaza, P.O. Box 1492, Columbus, Ohio 43216-1492 or FAX
(614) 249-8705. Please be sure that your letter or fascimile is signed exactly
as your account is registered and that your account number and the Fund from
which you wish to make the withdrawal are included. For example, if your account
is registered John Doe and Mary Doe, `Joint Tenants With Right of Survivorship,'
then both John and Mary must sign the redemption request. For an IRA redemption,
you must include date of birth. Also, you must indicate whether or not you wish
federal income tax (not less than 10%) to be withheld from the distribution. The
distribution will be processed effective the date the signed letter or fax is
received. Fax requests received after 4:00 P.M.Eastern time will be processed as
of the next business day. NFS reserves the right to require the original
document if you use the fax method.
BY TELEPHONE (NOW INCLUDING IRAS)--If you have an authorization form on file, a
check payable to the registrant of record will be mailed to the address of
record, or redemptions of $1,000 or more can be wired directly to your account
at a commercial bank. Just call 1-800-848-0920 toll-free between 8 A.M. and 4
P.M. Eastern time.
IRA redemptions by telephone will be subject to mandatory 10% federal
income tax withholding, unless you elect out of withholding.
The Funds will employ reasonable procedures for the protection of
shareholders to confirm that instructions communicated by telephone are genuine
such as, but not limited to, recording the conversation, requiring some form of
personal identification and providing written confirmation of the transaction.
If these procedures are not followed, the Funds may be liable for any loss due
to unauthorized or fraudulent instructions.
Normally, the money you request will be wired to your bank the next
business day after your redemption order has been received. A $5 fee will be
deducted from the proceeds for this service. Your financial institution may also
charge you a fee for receipt of the wire. If redemptions are mailed to your
address of record or your bank, no fee is charged.
Before you may request a redemption by telephone, you must have
authorized this procedure. You can do this when you complete the application.
The authorization will remain in effect until written notice of its termination
is received by NFS.
BY WESTERN UNION--With Western Union's Quick Cash(R) service, you can receive
your redemptions the next day across the U.S. or throughout the world. If you
have set up the telephone withdrawal privilege, you can phone your redemption
request, as above, and receive your funds at 24,000 locations--including major
supermarkets and mail box type outlets--many open 24 hours a day, 7 days a week.
You may also send your redemption request by mail or fax. The fee for the
Western Union service is $10 per redemption which is deducted from your account.
BY MONEY MARKET CHECK WRITING--Money Market shareholders receive free check
writing privileges (see Privilege 10, page 23 for more details). If you wish to
withdraw your money this way, please complete Section #12 of the application.
You pay no fee for this service, but the Fund reserves the right to charge for
it or to terminate this service.
IF YOU HAVE MONEY MARKET CHECK WRITING PRIVILEGES, YOU SHOULD NOT ATTEMPT
TO REDEEM YOUR ENTIRE ACCOUNT BY WRITING A CHECK. This is because dividends are
accrued daily which will not be credited to your account until the end of the
month. This could result in a small remaining balance, which would be subject to
the $2 per month fee on Money Market accounts below minimum requirements (see
page 19).
ALTERNATE METHODS--In the event of significant market activity, it may be
difficult to reach Nationwide Financial Services by telephone. If so, an
investor may choose to use alternate methods to
18
<PAGE> 20
NATIONWIDE(R) FAMILY OF FUNDS
contact NFS such as sending instructions by a special delivery service, or by
facsimile (FAX) machine (614-249-8705). If you use the FAX method, NFS reserves
the right to require the original document.
CONTINGENT DEFERRED SALES CHARGE
(TAX-FREE INCOME AND U.S. GOVERNMENT INCOME ONLY)
A contingent deferred sales charge will be imposed on any redemption which
causes the current value of your account to fall below the total amount of all
purchases made during the preceding five years. THE CONTINGENT DEFERRED SALES
CHARGE IS NEVER IMPOSED ON DIVIDENDS, WHETHER PAID IN CASH OR REINVESTED, OR ON
APPRECIATION. The contingent deferred sales charge applies only to the lesser of
the original investment or current market value.
Where the charge is imposed, the amount of the charge will depend on the
number of months since you made the purchase payment from which an amount is
being redeemed, according to the following table:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Months since purchase 0- 13- 25- 37- 49- 61 &
payment was made 12 24 36 48 60 over
- --------------------------------------------------------------------------------
Contingent deferred
sales charge percentage 5% 4% 3% 2% 1% none
</TABLE>
For purposes of the charge, it is assumed that the oldest shares remaining
in your account will be sold first. All payments during a month will be
aggregated and deemed to have been made on the last day of the preceding month.
Your money will earn daily dividends through the date of liquidation. If
you redeem all of your shares, you will receive a check representing the value
of your account, less any applicable contingent deferred sales charge, on the
date of withdrawal, including all daily income dividends credited to your
account through the date of withdrawal.
THE CONTINGENT DEFERRED SALES CHARGE WILL BE WAIVED IN THE CASE OF A TOTAL
OR PARTIAL REDEMPTION FOLLOWING THE DEATH OR DISABILITY OF A SHAREHOLDER
(ACCOUNTS OWNED BY AN INDIVIDUAL OR AN INDIVIDUAL JOINTLY WITH SPOUSE) IF
REDEMPTION OCCURS WITHIN ONE YEAR OF DEATH OR INITIAL DETERMINATION OF
DISABILITY. (Also see "Waiver of Contingent Deferred Sales Charge," page 23 for
other situations where the contingent deferred sales charge will be waived.)
ACCOUNTS FALLING BELOW MINIMUM INVESTMENT REQUIREMENTS
Because of the high cost of maintaining small accounts, NFS MAY CLOSE ANY
ACCOUNT WHICH, AS A RESULT OF REDEMPTIONS, HAS A VALUE OF LESS THAN $250.
However, you will be notified if your account value is less than the required
minimum, and you will be allowed 90 days to make additional investments before
the account is liquidated.
IN THE CASE OF A MONEY MARKET FUND ACCOUNT BELOW THE MINIMUM, ON AVERAGE
FOR ANY MONTH, A $2 MONTHLY FEE WILL BE ASSESSED. The fee is deposited into the
Fund to offset the expenses of carrying these small accounts. Shares are
redeemed in the first week of the following month to cover the fee.
SIGNATURE GUARANTEE
NFS reserves the right to require that your signature be guaranteed by an
authorized agent of an "eligible guarantor institution," which include but are
not limited to certain banks, credit unions, savings associations, and member
firms of national security exchanges. A signature guarantee is designed to
protect the shareholder by helping to prevent an unauthorized person from
redeeming shares and obtaining the proceeds. A notary public is not an
acceptable guarantor. In certain special cases (such as corporate or fiduciary
registrations), additional legal documents may be required to ensure proper
authorizations.
(PICTURE.)
Brenda Dunn is custodian for Jason Dunn (front row, center), Growth Fund
shareholder, on a hayride with his playmates.
19
<PAGE> 21
NATIONWIDE(R) FAMILY OF FUNDS
INVESTOR STRATEGIES
1 MONEY MARKET PLUS GROWTH(SM)--This strategy provides the security of principal
that the Money Market Fund offers plus the opportunity for greater long-term
capital appreciation through reinvestment of dividends into one of the common
stock funds (Growth or Fund).
An initial investment of $5,000 or more is made in the Money Market, and
monthly dividends are then automatically invested into the common stock funds
(Growth or Fund) at offering price. Money Market Plus Growth(SM) gives investors
stability of principal through the Money Market's fixed share price, which is
unaffected by market swings, and its portfolio of high quality, short-term money
market investments. And the Money Market offers instant liquidity through
unlimited free checking ($500 minimum) or telephone redemption--all without
penalty for early withdrawal. NOTE: Money Market Fund dividends reinvested into
one of the stock funds are subject to applicable sales charges.
2 MONEY MARKET PLUS INCOME(SM)--This strategy provides the security of principal
that the Money Market Fund offers plus the opportunity for greater income and
capital appreciation by reinvesting dividends into one of Nationwide's bond
funds (Bond, Tax-Free Income, or U.S. Government Income).
An initial investment of $5,000 or more is made in the Money Market, and
monthly dividends are then reinvested into a bond fund. Money Market Plus
Income(SM) allows investors the opportunity to capitalize on shifts in interest
rates.
When short-term interest rates increase, so do Money Market dividends. At
the same time, bond fund share prices generally decrease. So, with Money Market
Plus Income(SM), when you earn higher Money Market dividends, you can generally
purchase more bond fund shares at lower prices. Conversely, when interest rates
and Money Market dividends decrease, bond fund share prices usually
increase--you will automatically buy fewer bond fund shares at higher prices.
Money Market Plus Income(SM) provides investors with stability of principal,
instant liquidity through Money Market free checking ($500 minimum), and the
opportunity for greater income and capital appreciation. NOTE: Money Market Fund
dividends reinvested into one of the bond funds are subject to applicable sales
charges.
3 AUTOMATIC ASSET ACCUMULATION(SM)--This is a systematic investment strategy
which combines automatic monthly transfers from your personal checking account
to your mutual fund account with the concept of Dollar Cost Averaging. With this
strategy, you invest a fixed amount monthly over an extended period of time,
during both market highs and lows. Dollar Cost Averaging can allow you to
achieve a favorable average share cost over time since your fixed monthly
investment buys more shares when share prices fall during low markets, and fewer
shares at inflated prices during market highs. Although no formula can assure a
profit or protect against loss in a declining market, systematic investing has
proven a valuable investment strategy in the past.
You can get started with Automatic Asset Accumulation(SM) for as little
as $25 a month (Growth, Fund, or Bond), or $100 a month (Tax-Free Income, U.S.
Government Income, or Money Market). Another way to take advantage of the
benefits that Dollar Cost Averaging can offer is through the Money Market Plus
Growth(SM) or Money Market Plus Income(SM) investor strategies.
4 AUTOMATIC ASSET ALLOCATION(SM)--This strategy is for investors who want to set
up an account in more than one of our Funds. This allows you to further
diversify your portfolio to accommodate your unique needs. If you set up your
account with Automatic Asset Accumulation(SM), additional investments can be
automatically allocated among the Funds based upon your initial percentage. You
must satisfy the account minimum requirements of each Fund in which you invest.
Changes to your percentage allocation can be made by calling toll-free
1-800-848-0920.
5 AUTOMATIC ASSET TRANSFER(SM)--This systematic investment plan is designed
especially for investors who want to invest $5,000 or more in the stock or bond
funds, but not all at one time. An initial investment of $5,000 or more is made
in the Money Market Fund. Then, a fixed amount that you predetermine is
transferred systematically monthly or quarterly into another Fund ($50 minimum
transfer, $100 minimum for the Tax-Free Income and U.S. Government Income
Funds). The money is transferred on the 25th day of the month, or on the
business day preceding the 25th day. This strategy can provide investors with
the benefits of Dollar Cost Averaging through an opportunity to achieve a
favorable average share cost over time. With this plan, your fixed monthly or
quarterly transfer from the Money Market to any Fund you select buys more shares
when share prices fall during low markets, and fewer shares at higher prices
during market highs. Although no formula can assure a profit or protect against
loss in a declining market, systematic investing has proven a valuable
investment strategy in the past.
Those who have a more conservative outlook on investing can transfer
smaller sums monthly and spread the transfer of assets into another Fund over a
longer period of time, while those with a more aggressive outlook can transfer
larger sums over a shorter period. Either way, you receive the added benefits of
current rates paid on the portion of your investment in the Money Market, along
with the stability offered by the Money Market's fixed share price.
6 AUTOMATIC WITHDRAWAL PLAN(SM) ($50 OR MORE)--You may have checks for
any fixed amount of $50 or more automatically sent monthly, quarterly or
annually, to you (or anyone you designate) from your account. WITHDRAWALS MADE
FROM THE TAX-FREE INCOME OR U.S. GOVERNMENT INCOME FUNDS UNDER THIS PLAN,
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NATIONWIDE(R) FAMILY OF FUNDS
LIKE OTHER REDEMPTIONS, MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE.
NOTE: If your monthly withdrawals exceed the monthly dividends from your
account, you will be depleting principal, which will reduce your future dividend
potential.
INVESTOR PRIVILEGES
The Funds offer the following privileges to shareholders. Additional information
may be obtained by calling Nationwide Financial Services, Inc. (NFS) toll-free
at 1-800-848-0920.
1 NO SALES CHARGE ON MONEY MARKET--You pay no sales charge when you invest or
redeem in the Money Market.
2 SALES CHARGE SCHEDULE AND AVAILABLE DISCOUNTS--
INITIAL SALES CHARGE DISCOUNT
For purchases of the Growth, Fund, and Bond Funds, your sales charge percentage
will be reduced according to the chart below:
<TABLE>
<CAPTION>
SALES CHARGE SCHEDULE As a percentage of:
- -----------------------------------------------------------------
If your investment plus the value Offering Amount
of other shares held is: Price Invested
- -----------------------------------------------------------------
<S> <C> <C>
less than $50,000, the sales charge is: 4.5 % 4.71 %
$50,000 but less than $100,000 4.0 % 4.17 %
$100,000 but less than $250,000 3.0 % 3.09 %
$250,000 but less than $500,000 2.0 % 2.04 %
$500,000 but less than $1,000,000 1.0 % 1.01 %
$1,000,000 but less than $5,000,000 0.25% 0.251%
$5,000,000 or more 0.0 % 0.0 %
</TABLE>
Shareholders can receive even greater discounts through the cumulative
effect of the discounts below:
LIFETIME ADDITIONAL DISCOUNT
The sales charge is computed at the rate applied to the amount invested plus the
accumulated value of all shares held in any of the Nationwide Family of Funds,
including shares acquired by reinvestment of dividends and capital gains
distributions.
FAMILY MEMBER DISCOUNT
In addition, all shares held in any Fund accounts of members of the registrant's
family may be included, provided these family members reside at the registrant's
address.
For other discount privileges, see "Insurance Proceeds or Benefits
Discount Privilege" and "Letter of Intent (LOI) Discount," page 22.
3 NO SALES CHARGE ON REINVESTMENTS--All dividends and capital gains may be
reinvested free of charge within the same Fund. The Trust will not mail checks
for dividends of less than $5. Dividends will be reinvested, and you will
receive a confirmation.
4 EXCHANGE PRIVILEGE--The exchange privilege is a convenient way to exchange
shares from one Fund to another Fund in order to respond to changes in your
goals or in market conditions. There is no administrative fee, exchange fee or
limit to the number of exchanges permitted. HOWEVER, AN EXCHANGE IS A SALE AND
PURCHASE OF SHARES AND, FOR FEDERAL AND STATE INCOME TAX PURPOSES, MAY RESULT IN
A CAPITAL GAIN OR LOSS. The registration of the account to which you are making
an exchange must be exactly the same as that of the Fund account from which the
exchange is made, and the amount you exchange must meet the applicable minimum
investment of the Fund being purchased. (Shares of the Fund exchanged to must be
registered in the shareholder's state of residence).
EXCHANGES FROM GROWTH, FUND, BOND, AND MONEY MARKET FUNDS
Shares of the Growth, Fund, and Bond Funds may be exchanged among any of
Nationwide's Family of Funds without sales charge, and shares of the Tax-Free
Income or U.S. Government Income Funds acquired as a result of such exchanges
will not be subject to the applicable contingent deferred sales charge normally
assessed on redemptions.
Exchanges from the Money Market Fund to any other Fund will be subject to
applicable sales charges. (For exchanges to the Growth, Fund or Bond Funds, see
"Sales Charge Schedule and Available Discounts" on this page. For exchanges to
the Tax-Free Income or U.S. Government Income Funds, see "Contingent Deferred
Sales Charge," page 19).
EXCHANGES FROM TAX-FREE INCOME AND U.S. GOV'T INCOME FUNDS
Shares of the Tax-Free Income and U.S. Government Income Funds may be exchanged
between these two Funds without incurring any contingent deferred sales charges.
For exchanges to the Growth, Fund, or Bond Funds, the applicable contingent
deferred sales charge will be waived, but the investor will be subject to the
normal sales charges for the Growth, Fund and Bond Funds according to "Sales
Charge Schedule and Available Discounts," page 21.
NOTE: Shareholders moving money to the Money Market Fund are subject to
the applicable contingent deferred sales charge on their redemption of Tax-Free
Income or U.S. Government Income Fund shares.
EXCHANGES MAY BE MADE BY EITHER OF TWO CONVENIENT WAYS:
BY MAIL--An exchange may be made by writing to Nationwide Financial Services,
Inc., One Nationwide Plaza, P.O. Box 1492, Columbus, Ohio 43216-1492. Please be
sure that your letter is
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NATIONWIDE(R) FAMILY OF FUNDS
signed by all owners of the account and that your account number and the Fund
you wish to exchange to are included.
BY TELEPHONE--You may use the Telephone Exchange Privilege if you have
established that privilege and if you hold no share certificates. Requests may
be made only by the account owner(s) for whom Nationwide Financial Services,
Inc. (NFS) has a properly completed, signed authorization form on file. You must
call our toll-free number by 4 P.M. Eastern time to receive that day's closing
share price. You may not revoke your request once instructions have been
recorded and accepted.
Election of the privilege authorizes NFS to voice-record all instructions
to exchange. NFS may not honor your instructions unless you grant permission to
record such a call. NFS reserves the right at any time without prior notice to
suspend, limit or terminate the Telephone Exchange Privilege or its use in any
manner by any person or class.
The Funds will employ the same procedure described under "How to Sell
(Redeem) Shares" on page 18 to confirm that the instructions are genuine.
In the event of significant market activity, it may be difficult to reach
NFS by telephone. If so, an investor may choose to use alternate methods to
contact NFS such as sending instructions by a special delivery service or by
facsimile (FAX) machine (614-249-8705). If you use the FAX method, NFS reserves
the right to require the original document.
5 INSURANCE PROCEEDS OR BENEFITS DISCOUNT PRIVILEGE (GROWTH, FUND, OR BOND FUNDS
ONLY)--If the funds used to purchase shares come from proceeds or benefits of an
insurance policy issued by any of the Nationwide Enterprise of insurance
companies or their affiliated companies, the sales charge is one-half the rate
established, provided the purchase is made within 60 days after receipt of the
proceeds or benefits.
6 LETTER OF INTENT (LOI) DISCOUNT--This discount permits you to purchase shares
of the Growth, Fund, or Bond Funds at a reduced cost during a 13-month period if
the amount invested, or the value of shares held by you and other family members
of your household, plus the amount invested, equals or exceeds $50,000. LOI is
not a binding obligation upon the investor to buy the shares. It is merely a
statement of intent.
By marking the appropriate box and signing the application, you indicate
your intention to complete the appropriate LOI. The LOI will be completed when
your new investments, together with the value of all existing shares held by
you, your spouse, minor children, and other family members of your household,
total an amount equal to the amount checked on the application. You obtain a
reduced sales charge on each share purchased during the 13-month period. The LOI
may be backdated, up to 90 days, to include previous purchases under the reduced
sales charge available under the LOI.
If the intended investment is not completed, the investor will be asked
to pay the difference between the sales charge actually paid and the sales
charge due on the amount invested according to the "Sales Charge Schedule," page
21. If the difference is not paid within 20 days after written request, the
investor irrevocably constitutes and appoints Nationwide Financial Services,
Inc. as their attorney-in-fact, with full power of substitution, to redeem an
appropriate number of shares from their account to cover the amount due. For
more details on the LOI Discount, call 1-800-848-0920.
7 NET ASSET VALUE PURCHASE PRIVILEGE (GROWTH, FUND, BOND FUNDS ONLY)--All sales
of shares to the public are made at the public offering price, except the
following sales made at net asset value: (1) shares sold through institutional
sales to other registered investment companies affiliated with Nationwide
Financial Services, Inc., (2) shares issued on transfer of investments from the
Growth, Fund, or Bond Funds to another Fund in the Nationwide Family of Funds
(see "Exchange Privilege," page 21), and (3) sales which may be made (a) to any
pension, profit sharing, or other employee benefit plan for the employees of
NFS, any of its affiliated companies, or investment advisory clients and their
affiliates, (b) to Trustees and retired Trustees of NIF and NIF-II; directors,
officers, full-time employees, sales representatives and their employees, and
retired directors, officers, employees, and sales representatives, their
spouses, children or immediate relatives, and immediate relatives of deceased
employees (immediate relatives include mother, father, brothers, sisters,
grandparents, grandchildren) of any of the Nationwide Enterprise of insurance
companies or their affiliates, or any investment advisory clients of the Funds'
advisor and their affiliates, (c) to directors, officers and full-time
employees, their spouses, children or immediate relatives, and immediate
relatives of deceased employees (immediate relatives include mother, father,
brothers, sisters, grandparents, grandchildren) of any sponsor group which may
be affiliated with the Nationwide Group of Insurance Companies from time to
time, which include but are not limited to Farmland Industries, Inc., Maryland
Farm Bureau, Inc., Ohio Farm Bureau Federation, Inc., Pennsylvania Farmers'
Association, Ruralite Services, Inc., and Southern States Cooperative, (d) any
endowment or non-profit organization, (e) any pension, profit sharing, or
deferred compensation plan which is qualified under section 401(a), 403(b) or
457 of the Internal Revenue Code of 1986 as amended, dealing directly with the
Distributor with no sales representative involved, at net asset value, upon
written assurance of the purchaser that the shares are acquired for investment
purposes and will not be resold except to the Trust, (f) any life insurance
company separate account registered as a unit investment trust, and (g) any
qualified pension or profit sharing plan established by a Nationwide sales
representative for himself/herself and his/her employees.
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NATIONWIDE(R) FAMILY OF FUNDS
8 WAIVER OF CONTINGENT DEFERRED SALES CHARGE (TAX-FREE INCOME AND U.S.
GOVERNMENT INCOME FUNDS ONLY)--The contingent deferred sales charge is waived
under the circumstances of a shareholder's death or permanent disability (see
"Contingent Deferred Sales Charge," page 19). The contingent deferred sales
charge is also waived on redemptions of shares effected by: (1) any of the
classes of shareholders listed in Privilege 7, sections (1), and (3)(a) through
(3)(f) above; and (2) shares redeemed that were acquired as a result of a
transfer of investments from the Tax-Free Income, U.S. Government Income,
Growth, Fund, or Bond Funds (see "Exchange Privilege," page 21).
9 NO SALES CHARGE ON A REPURCHASE--If you redeem all or part of your Growth,
Fund, or Bond Fund shares for which you paid sales charges, you have a one-time
privilege to reinvest all or part of the redemption proceeds in any of the NIF
Funds without a sales charge, within 30 days after the effective date of the
redemption.
If you redeem all or part of your Tax-Free Income or U.S. Government
Income Fund shares on which you paid a contingent deferred sales charge, you
have a one-time privilege to reinvest all, or part, of the redemption proceeds
in either of the NIF-II Funds within 30 days and receive credit for any
contingent deferred sales charge pro-rated according to the percentage of the
reinvestment, e.g., 100% for a full reinvestment, etc.
If you realize a gain on your redemption, the transaction is taxable and
reinvestment will not alter any capital gains tax payable. If you realize a loss
and you use the reinstatement privilege, some or all of the loss will not be
allowed as a tax deduction depending upon the amount reinvested.
10 FREE CHECKING ACCOUNT PRIVILEGE (MONEY MARKET FUND ONLY)--You may request a
supply of free checks for your personal use and there is no monthly service fee.
You may use them to make withdrawals of $500 or more from your account at any
time. Your account will continue to earn daily income dividends until your check
clears your account. There is no limit on the number of checks you may write.
Cancelled checks will not be returned to you. However, your monthly statement
will provide the check number, date and amount of each check written. You will
also be able to obtain copies of cancelled checks by contacting one of our
service representatives at 1-800-848-0920.
INVESTOR SERVICES
1 TWENTY-FOUR HOUR INFORMATION RECORDING--Our toll-free number provides
information on share prices for all the Funds, and Money Market yields at
1-800-848-0520.
2 TOLL-FREE INFORMATION AND ASSISTANCE--Customer service representatives
are available to answer questions regarding the Funds and your account(s)
between the hours of 8:00 A.M. and 5:00 P.M. Eastern Time. Call toll-free:
1-800-848-0920. Or contact NFS at our FAX telephone number (614) 249-8705.
3 AUTOMATED ACCOUNT ACCESS(SM)--24-hour access to current information about the
Funds and your account(s) is available from the convenience of any touch-tone
phone. By dialing 1-800-NFS-0012 (637-0012), you may obtain share prices,
yields, account balances and confirm your last transaction. You may also order
duplicate statements, duplicate tax forms and reorder Money Market Fund checks.
For confidentiality, each investor has a Personal Identification Number (PIN).
For more information, call 1-800-848-0920.
4 RETIREMENT PLANS (Not available with the Tax-Free Income Fund)--Shares of the
Funds may be purchased for Self-Employed Retirement Plans, Individual Retirement
Accounts (IRAs), Simplified Employee Pension Plans, Corporate Pension Plans,
Profit Sharing Plans, 403(b) Tax-Sheltered Accounts, and Money Purchase Plans.
For a free information kit, call 1-800-848-0920.
5 MUTUAL FUND GIFT CERTIFICATES--Gift Certificates may be purchased for
special occasions such as birthdays, graduations, weddings, and as
appreciation gifts. Minimum purchase amounts: $25 in the Growth, Fund or Bond
Funds; $100 in the Tax-Free Income, U.S. Government Income, and Money
Market Funds. Contact one of our service representatives at 1-800-848-0920
for complete details and instructions.
6 SHAREHOLDER CONFIRMATIONS--You will receive a confirmation statement each time
a requested transaction is processed. However, no confirmations are mailed on
certain pre-authorized, systematic transactions. Instead, these will appear on
your next consolidated statement.
7 CONSOLIDATED STATEMENTS--Growth and Fund shareholders receive quarterly
statements as of the end of March, June, September, and December. Bond, Tax-Free
Income, U.S. Government Income and Money Market Fund shareholders receive
monthly statements. Please review your statement carefully and notify us
immediately if there is a discrepancy or error in your
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NATIONWIDE(R) FAMILY OF FUNDS
account. We will not be able to correct any error which has not been brought to
our attention within one year of occurrence.
For shareholders with multiple accounts, your consolidated statement will
reflect all your current holdings in the Funds. Your accounts are consolidated
by social security number and zip code. Accounts in your household under other
social security numbers may be added to your statement at your request.
Depending on which Funds you own, your consolidated statement will be sent
either monthly or quarterly. Only transactions during the reporting period will
be reflected on the statements. An annual summary statement reflecting all
calendar year transactions in all your Funds will be sent after year end.
8 AVERAGE COST STATEMENT--This statement may aid you in preparing your tax
return and in reporting capital gains and losses to the IRS. If you redeemed any
shares during the calendar year, a statement reflecting your taxable gain or
loss for the calendar year (based on the average cost you paid for the redeemed
shares) will be mailed to you following each year end. Average cost can only be
calculated on accounts opened on or after January 1, 1984. Fiduciary accounts
and accounts with shares acquired by gift, inheritance, transfer, or by any
means other than a purchase cannot be calculated.
Average cost is one of the IRS approved methods available to compute
gains or losses. You may wish to consult a tax advisor on the other methods
available. The information on your average cost statement will not be provided
to the IRS. If you have any questions, contact one of our service
representatives at 1-800-848-0920.
9 SHAREHOLDER REPORTS--All shareholders will receive reports semi-annually
detailing the financial operations of the Funds.
10 PROSPECTUSES--Updated prospectuses will be mailed to you annually.
11 UNDELIVERABLE MAIL--If mail from Nationwide Financial Services to a
shareholder is returned as undeliverable on two or more consecutive occasions,
Nationwide Financial Services will not send any future mail to the shareholder
unless it receives notification of a correct mailing address for the
shareholder. Any dividends that would be payable by check to such shareholders
will be reinvested in the shareholder's account until Nationwide Financial
Services receives notification of the shareholder's correct mailing address.
MANAGEMENT OF THE TRUSTS
The business and affairs of the Funds are managed under the direction of their
respective Boards of Trustees.
Under the terms of the Investment Management Agreement, Nationwide
Financial Services, Inc. (NFS) manages the investment of the assets and,
subject to the supervision of the Trustees, provides various administrative
services and supervises the daily business affairs of the Trusts. NFS, an Ohio
corporation, is a wholly-owned subsidiary of Nationwide Life Insurance Company,
which in turn is a wholly-owned subsidiary of the Nationwide Insurance
Enterprise.
The Growth, Fund, and Bond Funds pay the Investment Manager fees based on
average daily net assets of that Fund at the rate of .5% per year. The Money
Market Fund pays the Investment Manager fees of .45% per year.
The Tax-Free Income and U.S. Government Income Funds pay the Investment
Manager based on average daily net assets of each Fund at the rate of .65% on
the first $250 million of average daily net assets, .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.
At its option, the Investment Manager may waive any portion of the
management fee charged to the Money Market Fund in order to offer shareholders
the highest possible current yields consistent with the investment policies and
types of permitted investments of the Fund.
NFS, as Distributor of the Funds, markets the Funds. It also provides the
administrative and accounting services, including daily valuation of the Funds'
shares, preparation of financial statements, taxes, and regulatory reports. For
accounting services, NFS receives a total annual fee of $48,000 from NIF Funds
only.
MANAGEMENTS' DISCUSSION OF FUNDS' PERFORMANCE
Managements' discussion of the Funds' performance is contained in the
Funds' Annual Report, which will be made available upon request and without
charge by writing to NFS at One Nationwide Plaza, P.O. Box 1492, Columbus, Ohio
43216-1492, or call toll-free 1-800-848-0920.
TRANSFER AND DIVIDEND DISBURSING AGENT
Nationwide Financial Services, Inc. (NFS), through its wholly-owned
subsidiary, Nationwide Investors Services, Inc. (NIS), serves as transfer
agent and dividend disbursing agent for the Trust.
DISTRIBUTION PLAN (TAX-FREE INCOME AND U.S. GOVERNMENT INCOME FUNDS ONLY)
The NIF-II Trust has adopted a Distribution Plan (the "Plan") under Rule
12b-1 of the Investment Company Act of 1940
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NATIONWIDE(R) FAMILY OF FUNDS
which permits the Funds to compensate the Distributor for expenses associated
with the distribution of its shares. Under the Plan, each Fund pays the
Distributor compensation accrued daily and paid monthly at a maximum annual rate
of .35% of the Trust's average daily net assets. Currently, the Tax-Free Income
and U.S. Government Income Funds accrue daily and pay monthly to the Distributor
compensation at the annual rate of .20% of the Funds' average daily net assets.
The Distributor will continue to waive the remaining .15% until further written
notice.
The Distributor also receives the proceeds of contingent deferred sales
charges imposed on certain redemptions of shares (See "Contingent Deferred Sales
Charge," page 19). Distribution expenses paid by the Distributor may include the
costs of printing and mailing prospectuses and sales literature to prospective
investors, advertising, and compensation to sales personnel and broker-dealers.
EXPENSES
For the fiscal year ended October 31, 1995, the ratio of operating expenses to
average net assets was .66% for Growth, .63% for Fund, .71% for Bond, .98% for
Tax-Free Income, 1.08% for U.S. Government Income, and .62% for Money Market. By
agreement with NFS, no Fund will bear expenses in excess of limits prescribed by
any state in which the Funds' shares are offered for sale. Also, the Growth,
Fund, Bond, and Money Market Funds will not bear expenses in excess of 1% of
average daily net assets. Such limitations did not affect any of the funds
during the year ended October 31, 1995.
THE EFFECT OF INTEREST RATES
ON BOND VALUES
All bond prices (U.S. government, municipal and corporate) are affected by
interest rates. Generally, as prevailing interest rates rise, the market value
of bonds falls. Conversely, as interest rates fall, bond market values generally
rise. Thus, if interest rates have increased from the time a security was
purchased for a Fund, that security's value could be less than cost, reducing
the net asset value per share of the Fund. If later sold, that security might be
sold at a price less than its cost resulting in a capital loss. Similarly, if
interest rates have declined from the time a security was purchased, that
security's value could be greater than its cost, resulting in an increase in the
net asset value per share. If later sold, it might be sold at a price greater
than its cost resulting in a capital gain. In either instance, if the security
was purchased at face value and held to maturity, no gain or loss would be
realized.
The change in interest rates does not affect all bond prices equally. Many
other factors contribute to a change in value, such as the time to maturity,
supply and demand for the securities, perception of credit quality, and other
economic forces.
Generally, debt securities with shorter maturities are subject to less
price fluctuation resulting from interest rate changes. Securities with
longer-term maturities are subject to greater price fluctuation.
The table below shows the effect on prices (stated as a percentage change)
of an intermediate-term bond and a long-term bond given a 1, 2 and 3 percentage
point change in interest rates. As the example shows, the longer the time to
maturity, the greater the price change.
<TABLE>
<CAPTION>
APPROXIMATE CHANGE IN MARKET VALUE OF A BOND
CHANGE IN RISING FALLING
INTEREST RATES INTEREST RATES INTEREST RATES
- -------------------------------------------------------
7-YEAR BOND YIELDING 8%
<S> <C> <C>
1 % -5.1% +5.5%
2 % -9.9 +11.3
3 % -14.4 +17.5
<CAPTION>
30-YEAR BOND YIELDING 8%
1 % -10.3% +12.5%
2 % -18.9 +27.7
3 % -26.2 +46.4
</TABLE>
Supply and demand also affect prices and can moderate or exaggerate the
price fluctuation resulting from changes in interest rates. Similarly, a change
in a security's credit rating (e.g., a reduction from AA-rated to A or below)
can have an adverse effect on the price of a security.
Changes in the value of portfolio securities will not affect the interest
income from those securities but will be reflected in the net asset value per
share of the Funds.
DISTRIBUTIONS AND TAXES
INCOME DIVIDENDS AND CAPITAL GAINS
Substantially all of the net investment income, if any, will be paid to
shareholders quarterly at the end of March, June, September, and December by the
stock funds (Growth and Fund), and at the end of each month by the Bond,
Tax-Free Income, U.S. Government Income and Money Market Funds. Checks will not
be mailed for dividends of less than $5. These dividends will be reinvested, and
you will receive a confirmation showing the transaction.
In those years in which sales of a Fund's portfolio securities result in
net realized capital gains, these gains will be distributed to shareholders in
December.
FEDERAL TAXES
Each of the Funds intends to qualify for treatment under subchapter M of the
Internal Revenue Code of 1986, as amended, (the "Code") and, therefore, must
distribute substantially all net investment income and capital gains to
shareholders annually. In general, if the Funds distribute all of their net
investment income, they are not required to pay any federal income taxes. In
addition to federal income tax, if the Funds fail to distribute the required
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NATIONWIDE(R) FAMILY OF FUNDS
portion of investment income or capital gains in any year, they will be subject
to a non-deductible 4% excise tax on the amount which they have failed to
distribute. The Funds intend to make distributions in sufficient amounts to
avoid the imposition of this excise tax.
Dividends paid by each of the Funds (with the exception of the Tax-Free
Income Fund) are taxable as income to the shareholder for federal income tax
purposes. For corporate shareholders, the appropriate portion of each year's
distribution is eligible for the corporate dividend received deduction.
Dividends paid by the Tax-Free Income Fund will be exempt from federal
income tax to the extent that the income of the Fund is derived from bonds which
qualify for such exemption. Some portion of the income from the Tax-Free Income
Fund may be taxable annually. The taxable portion of each distribution will be
based on the ratio, each year, between the Fund's taxable income and total
income. This ratio shall be determined within 60 days following the close of the
taxable year. The annual ratio may differ significantly from the ratio for the
period actually covered by each distribution.
Under current tax law as of February 29, 1996, net long-term capital
gains, if any, realized by the Funds are generally taxable to the shareholder at
the same tax rate as ordinary income, but in no event may the tax rate on such
gains exceed 28% for an individual or 35% for a corporation.
The Funds will annually report to each shareholder that shareholder's
portion of the net income and capital gain of each Fund, for inclusion in the
shareholder's income.
Individual and corporate shareholders may be subject to the Alternative
Minimum Tax ("AMT") if their Alternative Minimum Taxable Income ("AMTI") exceeds
the exemption amounts set forth in Section 55 of the Code. The AMT, at rates as
high as 28% for individuals and 20% for corporations, is reduced by the regular
tax due for the year. AMTI is the taxpayer's taxable income for the year for
regular tax purposes, increased by the tax preferences described in Section 57
of the Code and adjusted as described in Section 56 of the Code. Preferences
include interest from Specified Private Activity Bonds, as defined in Section 57
(a) (5) (C) of the Code. Bonds of this type may be held by one or more of the
Funds from time to time.
A shareholder may be subject to federal backup withholding at a rate of
31% of each distribution if the shareholder fails to certify that the taxpayer
identification number given is correct and that the shareholder is not subject
to such withholding because of underreporting of income (or if the Internal
Revenue Service gives notice that such certifications are not accurate).
STATE AND LOCAL TAXES
Distributions to shareholders of the Funds may be subject to state and local
taxes, even if not subject to federal income taxes. These laws vary, and you are
advised to consult a tax adviser regarding such taxes.
REDEMPTIONS OF SHARES
Redeeming shares may result in a capital gain or loss for tax purposes. For your
convenience, NFS provides a year-end statement, reflecting your taxable gain or
loss for the year based on the average cost paid for redeemed shares (see
"Average Cost Statement," page 24.)
(PICTURE.)
Donald and Vertie Robinson, Growth Fund shareholders, enjoying dining out
together.
(PICTURE.)
Christopher Colsey is custodian for
Elizabeth Colsey, Growth Fund shareholder, proudly posing in a pumpkin patch.
26
<PAGE> 28
NATIONWIDE(R) FAMILY OF FUNDS
TAX ADVANTAGES OF THE
TAX-FREE INCOME FUND
The yield on taxable securities is normally higher than on tax-exempt securities
of comparable quality and maturity. However, you can determine whether a
tax-free investment provides a higher after-tax yield or return than an
investment subject to tax by using the following formula:
Tax-Free Yield What you must earn
- ------------------------- on a taxable investment
100%-- [Your Tax Rate] = to equal this tax-free yield
By using current tax-free yields and your own tax rate in the formula
above, you can make an informed investment decision. This formula will not be
applicable if you are subject to the Alternative Minimum Tax (see page 26).
The tables below show the advantages of investing in municipal obligations
for those individuals in higher tax brackets. Taxable yields are compared to
equivalent tax-free yields. The first table is based on the maximum marginal tax
rates currently in effect under the Internal Revenue Code for the 1996 tax year
at various levels of taxable income.
For example, if you file a joint return with an adjusted gross income
of $40,000, you are in the 28% tax bracket. A 5% tax-free yield would be
equivalent to an 6.9% taxable yield for you.
Over the long term, the effect of tax-free investing is significant. With
the Tax-Free Income Fund, dividends can be automatically reinvested and allowed
to accumulate on a tax-free basis. You can see this advantage in the "How a
$20,000 Investment Grows at 5% Tax-Free vs. 5% Taxable" table below:
<TABLE>
<CAPTION>
TAX-EQUIVALENT YIELDS BASED ON INCOME, TAX RATE, AND TAX-FREE YIELD
TAXABLE INCOME* 1996 FEDERAL TAX-FREE YIELD
JOINT RETURN SINGLE RETURN INCOME TAX RATE 4% 4.5% 5% 5.5% 6% 6.5% 7% 7.5% 8%
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 - 40,100 $0 - 24,000 15% 4.7 5.3 5.9 6.5 7.1 7.6 8.2 8.8 9.4
$40,100 - 96,900 $24,000 - 58,150 28% 5.6 6.3 6.9 7.6 8.3 9.0 9.7 10.4 11.1
$96,900 - 147,700 $58,150 - 121,300 31% 5.8 6.5 7.2 8.0 8.7 9.4 10.1 10.9 11.6
$147,700 - 263,750 $121,300 - 263,750 36% 6.3 7.0 7.8 8.6 9.4 10.2 10.9 11.7 12.5
Over $263,750 Over $263,750 39.6% 6.6 7.5 8.3 9.1 9.9 10.8 11.6 12.4 13.2
</TABLE>
*Net amount after exemptions and deductions.
<TABLE>
<CAPTION>
HOW A $20,000 INVESTMENT GROWS AT 5% TAX-FREE VS. 5% TAXABLE**
1996
TAX 5 YEARS 10 YEARS 20 YEARS 30 YEARS
BRACKET TAXABLE TAX-FREE TAXABLE TAX-FREE TAXABLE TAX-FREE TAXABLE TAX-FREE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
15% $24,627 $25,525 $30,324 $32,578 $45,978 $53,066 $69,713 $86,439
28% $23,869 $25,525 $28,486 $32,578 $40,572 $53,066 $57,786 $86,439
31% $23,696 $25,525 $28,076 $32,578 $39,413 $53,066 $55,328 $86,439
36% $23,412 $25,525 $27,405 $32,578 $37,551 $53,066 $51,454 $86,439
39.6% $23,208 $25,525 $26,931 $32,578 $36,263 $53,066 $48,829 $86,439
</TABLE>
**Rates are compounded daily, and taxes are assumed to be paid once a year. The
information contained in the above chart is not a projection or guarantee of the
Fund's performance. It is only a general comparison of two investments: one
taxable and one tax-exempt. The Fund's performance may not duplicate the chart
27 results. The percentage return figures were chosen arbitrarily and are not a
forecast of future results.
27
<PAGE> 29
NATIONWIDE(R) FAMILY OF FUNDS
PERFORMANCE ADVERTISING
FOR THE FUNDS
FUND PERFORMANCE ADVERTISING
The Funds may use historical performance in advertisements, sales literature,
semi-annual and annual reports and the prospectus. Such figures will include
quotations of average annual (compound) total return for the most recent one,
five, and ten-year periods (or the life of the Fund if less). Average annual
(compound) total return represents the average annual percentage change in the
value of an investment for the specified periods assuming a redemption of the
investment at the end of such periods. It reflects the changes in share price
and assumes reinvestment of all dividends and distributions at net asset value.
Average annual (compound) total return reflects the effect of maximum sales
charges.
The Funds may also choose to show nonstandard returns including total
return and simple average total return. Nonstandard returns may or may not
reflect reinvestment of all dividends and capital gains. In addition, sales
charge assumptions will vary. Initial sales charge percentages decrease as
amounts invested increase and contingent deferred sales charges decrease over
time, as outlined on pages 21 and 19 of this prospectus, respectively;
therefore, returns increase as sales charges decrease.
Total return represents the cumulative percentage change in the value of
an investment over time, calculated by subtracting the original investment from
the redeemable value and dividing the result by the original amount of the
investment. The simple average total return is calculated by dividing total
return by the number of years in the period, and unlike average annual
(compound) total return, does not reflect compounding.
The Bond, Tax-Free Income and U.S. Government Income Funds may advertise
their SEC yields. The SEC yield is based on a 30-day period. This yield takes
into account the yields to maturity on all debt instruments and all dividends
accrued on equity securities, since equity securities do not have maturity
dates. The SEC yield is computed by dividing the net investment income per share
earned during the 30-day period by the maximum offering price per share on the
last day of the period.
The Money Market Fund may advertise current seven-day yield quotations
computed by determining the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of the base period to obtain a base period return and then
multiplying the base period return by (365/7). For purposes of this calculation,
the net change in account value reflects the value of additional shares
purchased with dividends from the original share, and dividends declared on both
the original share and any such additional shares. The Money Market's effective
yield represents a compounding on an annualized basis of the current yield
quotations.
RANKINGS AND RATINGS IN FINANCIAL PUBLICATIONS
The Funds may report their performance relative to other mutual funds or
investments. The performance comparisons are made to: other mutual funds with
similar objectives; other mutual funds with different objectives; or, to the
investment industry as a whole. Other investments which the Funds may be
compared to include, but are not limited to: precious metals; real estate;
stocks and bonds; closed-end funds; market indexes; fixed-rate, insured bank
CDs, bank money market deposit accounts and passbook savings; and the Consumer
Price Index.
Normally these rankings and ratings are published by independent tracking
services and publications of general interest including, but not limited to:
Lipper Analytical Services, Inc., CDA/Wiesenberger, Morningstar, Donoghue's,
Schabaker Investment Management, Kanon Bloch Carre & Co.; magazines such as
Money, Fortune, Forbes, Kiplinger's Personal Finance Magazine, Smart Money,
Mutual Funds, Worth, Financial World, Consumer Reports, Business Week, Time,
Newsweek, U.S. News and World Report; and other publications such as the Wall
Street Journal, Barron's, Columbus Dispatch, Investor's Business Daily, and
Standard & Poor's Outlook.
The rankings may or may not include the effects of sales charges. Lipper
Analytical Services is an independent rating service that ranks over 8,000
mutual funds based upon total return performance. These rating services and
publications rank the
(PICTURE.)
Royal Schomp, Growth Fund shareholder, smiling and at his ease in the company of
man's best friend.
28
<PAGE> 30
NATIONWIDE(R) FAMILY OF FUNDS
performance of the Funds against all funds over specified periods and against
funds in specified categories. The categories in which the Funds may be cited
include, but are not limited to:
GROWTH FUND:
Growth Funds, Long-Term Growth Funds
NATIONWIDE FUND:
Growth and Income Funds, Growth Funds,
Long-Term Growth Funds
BOND FUND:
Income Funds, High Grade Corporate Bond Funds,
A-Rated Bond Funds
TAX-FREE INCOME FUND:
General Municipal Bond Funds, High-Quality Municipal Bond Funds, A-Rated
Municipal Bond Funds, Municipal Bond Funds, Tax-Free Funds
U.S. GOVERNMENT INCOME FUND:
U.S. Government Bond Funds, Intermediate-Term U.S. Government Bond Funds,
Limited-Term U.S. Government Bond Funds, U.S. Government Securities Funds,
Government Bond Funds
MONEY MARKET FUND:
Money Market Funds, Current Income Funds
The comparative material found in advertisements, sales literature, or in
reports to shareholders may contain past and/or present performance ratings.
Past performance of the Funds, like any investment, is no guarantee of future
results. Future results may be less or more.
ADDITIONAL INFORMATION
STATEMENTS OF ADDITIONAL
INFORMATION
These documents (one each for the NIF and NIF-II trusts), containing more
information on the Funds, are filed with the Securities and Exchange Commission.
Free copies may be obtained from NFS upon request (see "Shareholder Inquiries,"
page 30).
DESCRIPTION OF SHARES
The assets of each Fund are segregated, and you have an interest only in the
assets of the class in which you own shares. Shares of a particular class are
equal in all respects to the other shares of that class and in the event of
liquidation of the Fund will share pro rata in the distribution of the net
assets of such Fund. All shares are of $1 par value and fully paid,
nonassessable, transferable, and redeemable. There are no preemptive rights.
JOINT PROSPECTUS DISCLOSURE
Although each Trust (NIF and NIF-II) is offering only shares of its own Funds,
it is possible that a Trust might become liable under the Securities Act of 1933
for any material misstatement or omission in the Prospectus about Funds of the
other Trust. The Trustees of each Trust have considered this in approving the
use of a single combined Nationwide Family of Funds Prospectus.
(PICTURE.)
Colleen Felix is custodian for Growth Fund shareholder Shayna Snyder (right)
with her friend Dylan Anderko.
29
<PAGE> 31
NATIONWIDE(R) FAMILY OF FUNDS
VOTING RIGHTS
Shareholders of each class of shares have one vote for each share held. Voting
rights cover the Investment Management Agreement, Distribution Agreement,
election of Trustees, termination of the Trust, sale of assets as a whole,
change of investment objectives, investment policies, investment restrictions
(NIF only), and other business matters. In regard to termination, sale of
assets, or change of investment objectives, policies and restrictions (NIF
only), the right to vote is limited to the holders of shares of the particular
class affected by the proposal.
SHAREHOLDER INQUIRIES
Inquiries regarding the Funds should be directed to Nationwide Financial
Services, Inc., One Nationwide Plaza, P.O. Box 1492, Columbus, Ohio 43216-1492,
or call 1-800-848-0920.
(PICTURE.)
Jane and Rod Mullins, shareholders in Bond, Tax-Free, Growth, and Money Market
Funds, reach the summit of Pikes Peak.
(PICTURE.)
Erma Sullivan, Money Market Fund shareholder, cuddles great- grandbaby Andrea, a
shareholder in Growth Fund.
NATIONWIDE INVESTING
FOUNDATION FUNDS:
Growth Fund
Nationwide Fund
Bond Fund
Money Market Fund
NATIONWIDE INVESTING
FOUNDATION II FUNDS:
Tax-Free Income Fund
U.S. Government Income Fund
NATIONAL DISTRIBUTOR AND
INVESTMENT MANAGER
Nationwide Financial Services, Inc.
P.O. Box 1492
One Nationwide Plaza
Columbus, Ohio 43216-1492
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215-2537
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
Nationwide Financial Services, Inc.
(Through its wholly owned subsidiary,
Nationwide Investors Services, Inc.)
LEGAL COUNSEL
Druen, Rath & Dietrich
One Nationwide Plaza
Columbus, Ohio 43215-2220
CUSTODIAN
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263-0001
30
<PAGE> 32
NATIONWIDE(R)
FAMILY OF
FUNDS
INVESTOR
PROFILES:
Nationwide(R) Growth Fund is for investors seeking to maximize capital growth by
investing in the common stock of companies in industries where economic trends
and new technologies indicate greater than average growth potential.
Nationwide(R) Fund is for investors seeking to maximize returns through a
flexible combination of income and long-term capital appreciation, generally
from common stocks of well-known, larger companies.
Nationwide(R) Bond Fund is for investors seeking high monthly income with the
degree of safety that can be provided through high-quality bonds and other fixed
income securities.
Nationwide(R) Tax-Free Income Fund is for investors seeking high monthly income
free from federal taxes with the degree of safety that can be provided through
high-quality municipal bonds.
Nationwide(R) U.S. Government Income Fund is for investors seeking high monthly
income, reduced share price fluctuations and relative safety of principal
through securities backed by the U.S.government and its agencies.
Nationwide(R) Money Market Fund is for investors seeking monthly income at
current rates of return with maximum share price stability (principal is not
intended to fluctuate).
INVESTING IN THE FUNDS
<TABLE>
<CAPTION>
Growth Tax-Free Income
Fund U.S. Gov't Income
Bond Money Market
<S> <C> <C>
INVESTMENT MINIMUMS :
New Accounts $ 250 $ 1,000
Subsequent Investments $ 25 $ 100
</TABLE>
(Certain investor strategies, privileges, and services allow initial investments
below these minimums. See details contained within this prospectus.)
HOW TO INVEST: A new account can be opened by completing the application
contained in this Prospectus and mailing along with your check payable to
Nationwide Financial Services, Inc. at the address shown on the back cover.
Subsequent investments can be made by mail or wire. More details on purchasing
and selling shares can be found on pages 16 through 19.
INVESTOR STRATEGIES
Nationwide offers six investor strategies to assist with your financial goals. A
complete description of each strategy can be found on pages 19 and 20.
MONEY MARKET PLUS GROWTH(SM)
MONEY MARKET PLUS INCOME(SM)
AUTOMATIC ASSET ACCUMULATION(SM)
AUTOMATIC ASSET ALLOCATION(SM)
AUTOMATIC ASSET TRANSFER(SM)
AUTOMATIC WITHDRAWAL PLAN(SM)
INVESTOR PRIVILEGES & SERVICES
Investors have the following privileges and services available to them. Further
details begin on page 21.
SALES CHARGE DISCOUNTS
NO SALES CHARGES ON DIVIDENDS & CAPITAL GAINS REINVESTED
NO SALES CHARGES ON REPURCHASE
EXCHANGE PRIVILEGES AND FREE TELEPHONE EXCHANGES
TOLL-FREE CUSTOMER ASSISTANCE
24-HOUR AUTOMATED ACCOUNT ACCESS(SM)
24-HOUR SHARE PRICE AND YIELD INFORMATION
RETIREMENT PLANS (IRAS, SEPS, AND OTHERS)
MUTUAL FUND GIFT CERTIFICATES
CONSOLIDATED STATEMENTS
AVERAGE COST STATEMENT
FREE CHECKING ACCOUNT (MONEY MARKET FUND ONLY)
Nationwide(R) and [LOGO] are registered Federal Service marks of the Nationwide
Mutual Insurance Company.
31
<PAGE> 33
NATIONWIDE FAMILY OF FUNDS BULK RATE
ONE NATIONWIDE PLAZA U.S. POSTAGE
COLUMBUS, OHIO 43215-2220 PAID
COLUMBUS, OHIO
1996 PROSPECTUS PERMIT NO. 492
HS-409-(96)
32
<PAGE> 34
APPLICATION
IMPORTANT: THE SUITABILITY AND SIGNATURE SECTIONS ON PAGE A2 MUST BE COMPLETED
TO OPEN A NEW ACCOUNT.
For IRA Plans use application from IRA Booklet. Make checks payable to:
Nationwide Financial Services, Inc.
<TABLE>
<CAPTION>
<S> <C>
PLEASE PRINT OR TYPE
To complete application, follow Send application and check to:
instructions to the left of each For assistance in NATIONWIDE FINANCIAL SERVICES, INC. NOTE:
section, then remove from opening an account: ONE NATIONWIDE PLAZA To avoid delays, do not use
prospectus booklet and mail with CALL TOLL-FREE: P.O. BOX 1492 P.O. Box for special delivery
check to address at right. 1-800-848-0920 COLUMBUS, OHIO 43216-1492 and other overnight services.
- ------------------------------------------------------------------------------------------------------------------------------------
SALES REPRESENTATIVE
USE ONLY Agent Name____________________________________________________________
Stamps are permitted provided Agent #_____________________________State # _____________Phone # ( )-----------------
all necessary information is
included.
- ------------------------------------------------------------------------------------------------------------------------------------
1 - INITIAL INVESTMENT GROWTH+ $_____________________ TAX-FREE INCOME++ $_____________________
Specify dollar amount you wish to FUND+ $_____________________ U.S. GOVERNMENT INCOME++ $_____________________
invest in each Fund (purchases BOND+ $_____________________ MONEY MARKET++ $_____________________
must be in U.S. dollars). You may + Minimum investment $250 (or $25 monthly*) ++ Minimum investment $1,000 (or $100 monthly*)
allocate your investment among
any or all funds provided account / / Initial investment from insurance proceeds/benefits of Nationwide/Affiliate companies
minimums are met for each fund insurance policy.
(only one check needed). *MINIMUM
MONTHLY INVESTMENTS AVAILABLE ONLY
WITH AUTOMATIC ASSET ACCUMULATION.
- ------------------------------------------------------------------------------------------------------------------------------------
2 - ACCOUNT REGISTRATION / / INDIVIDUAL / / JOINT TENANT / / GIFTS TO / / TRANSFER
a) Check only one box b) Fill in WITH RIGHT OF MINORS ON DEATH
complete name, address, telephone SURVIVORSHIP (Complete #4) (Complete pg. A5)
number, date of birth,
occupation, and employer. / / OTHER (Complete appropriate form on pages A5-A7
c) If any party is a minor, you if corporation, association,
must also complete #4 below. partnership, etc.)
d) IF YOU WISH TO NAME ONE OR
MORE BENEFICIARIES, YOU MUST ALSO -------------------------------------------------------------- -------------------------------
COMPLETE THE TRANSFER ON DEATH Name of Individual (first, middle initial, last), Custodian, Joint Tenant
FORM ON PAGE A5. Corporation, or Trustee
----------------------------------------------------------- ( ----- )------------------------
Address - Street Business Phone
----------------------------------------------------------- ( ----- )------------------------
City State Zip Home Phone
----- /----- /---------- ------------------------------ ---------------------------------
Date of Birth (mo/day/yr) Occupation Employer
I am a / / Nationwide/Affiliate/Advisory Client employee/retiree/relative
/ / Nationwide Sponsor Group employee/relative
- ------------------------------------------------------------------------------------------------------------------------------------
3 - SOCIAL SECURITY | | | | | | | | | | / / Initial here if you have
NUMBER / TAXPAYER been notified by the
IDENTIFICATION NUMBER / / Soc. Sec. Number or / / Tax Identification Number Internal Revenue Service
A Social Security or tax that you are subject to the
identification number is required (Required by IRS; you cannot open an account unless provided.) 31% withholding due to
by federal law. Trust account--use under-reporting of income.
owner's SS number. Gifts/Transfers
to Minors account--use the minor's I am a / / U.S Citizen. / / Other (specify)___________________________
SS number, NOT custodian's, and
complete #4 below.
- ------------------------------------------------------------------------------------------------------------------------------------
4 - GIFTS/TRANSFERS TO MINORS _______________________________________________custodian for___________________________________
Complete only if account is Custodian (one only) Minor (one only)
established under the Uniform
Gifts/Transfers to Minors Act, under the___________________________________ Uniform Gifts/Transfers to Minors Act.
making sure you report the minor's (State of Residence) ______ /______ / ______
Social Security number in #3 (minor's Date of Birth--mo/day/yr)
above.
- ------------------------------------------------------------------------------------------------------------------------------------
5 - DIVIDEND OPTION Check One: / / Reinvest Dividends and Capital Gains / / Pay Dividends in Cash and
Check how you wish to receive Reinvest Capital Gains
your dividends and capital gains. / / Pay Dividends and Capital Gains in Cash / / Pay Capital Gains in Cash and
Reinvest Dividends
/ / I want my dividends and/or capital gains deposited directly to my banking institution
(ATTACH COPY OF VOIDED CHECK).
- ------------------------------------------------------------------------------------------------------------------------------------
6 - DISCOUNT PRIVILEGE / / I have other Nationwide Mutual Fund Accounts (also list below any other
To receive maximum sales charge members of your household with accounts).
discounts on purchases of the
Growth, Fund, or Bond Funds, Spouse: SS# _________ - _____ - _______________ Child: SS# _________ - _____ - _________
check box. Also list Social
Security numbers of all members Child: SS# _________ - _____ - _______________ Child: SS# _________ - _____ - _________
of your household with Nationwide
Mutual Fund accounts (all must Other ______________________________________ SS# _________ - _____ - _________
reside at address listed in (Relationship)
#2 above).
</TABLE>
A1
<PAGE> 35
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
7 - EXCHANGE PRIVILEGE / / By initialing this box and signing this application below, I authorize Nationwide
You must initial this box in Investors Services, Inc. to act upon my voice recorded telephone instructions to exchange
order to exchange shares of a my account among Nationwide's Mutual Funds. I have read and agree to the terms and
Fund for shares of another Fund conditions of the telephone exchange privilege on page 21 of the prospectus. I understand
by telephone (no fee). Certain that this privilege may be suspended, limited or terminated without notice and exchanges
restrictions apply (see page may entail a sales charge.
21).
- ------------------------------------------------------------------------------------------------------------------------------------
8 - TELEPHONE / / The Transfer Agent is authorized to honor telephoned requests from any registered
WITHDRAWALS shareholder for the redemption of Fund shares. (The funds will employ reasonable
Initial the box if you want to procedures for the protection of shareholders to confirm that instructions communicated
redeem shares by telephone. A by telephone are genuine such as, but not limited to, recording the conversation,
check from your account can be requiring some form of personal identification and providing written confirmation of the
sent to the address on this transaction. If these procedures are not followed, the funds may be liable for any loss
application (no fee). If you want due to unauthorized or fraudulent instructions.) Amounts of $1,000 or more can be wired
amounts of $1,000 or more wired provided that proceeds are transmitted ONLY to this bank account (ATTACH COPY OF VOIDED
to your banking institution CHECK):
($5 fee applies) fill in bank
name, address, and account Bank Name_____________________________________________________ Account No.____________________
number. (Bank must be a Federal Reserve Bank member)
Bank Address__________________________________________________________
City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
9 - SUITABILITY REVIEW PRIMARY INFORMATION
The SEC / NASD Rules require that INVESTMENT OBJECTIVE _____ Growth Potential _____Price Stability
all registered representatives _____ Income Potential _____Other /Specify____________________________
have reasonable grounds for
believing that an investment is INVESTMENT GOALS _____ Retirement _____ Savings _____ Professional Mgmt.
suitable for you. Such a decision _____ Education _____ Diversification _____ Other
is based on the facts, if any,
disclosed by you. Please answer
all questions to the best of your -----------------------------------------------------------------------------------------------
ability. If you are not certain ADDITIONAL INFORMATION Estimated Annual Income Face Value of Life Cash Value of
of a particular value, please make FINANCIAL INFORMATION Insurance Life Insurance
a reasonable estimate. If a
category does not apply to you, $---------------------- $----------------------- $-------------
indicate this by entering an NA.
Value of Passbook Savings Value of Mutual Funds Value of CD's
IF YOU CHOOSE NOT TO DISCLOSE ANY
INFORMATION, YOU MUST SIGN THE $---------------------- $----------------------- $-------------
SPACE BELOW.
Value of Stocks Est. Value of Residence / Value of Bonds
Other Real Estate
$---------------------- $----------------------- $-------------
Other Assets Est. Indebtedness (Includes Mortgages and
Car Loans)
$---------------------- $-----------------------
Marital Status ___ Married ___ Single ___ Widowed
--------------------
Spouse's Occupation
Number of Dependents ___ Sex ___ M ___ F
--------------------
Spouse's Employer
I CHOOSE NOT TO DISCLOSE ANY SUITABILITY INFORMATION.
ADDITIONAL COMMENTS ___________________________________________________
X____________________________________________________
Client Signature ___________________________________________________
</TABLE>
- --------------------------------------------------------------------------------
10 - SIGNATURE SECTION IMPORTANT: BOTH AGENT AND CLIENT MUST SIGN THIS
SECTION OF THE APPLICATION TO OPEN A NEW ACCOUNT.
I UNDERSTAND THE INVESTMENT OBJECTIVES OF THE(SE) FUND(S) AND I BELIEVE THAT
THEY ARE CONSISTENT WITH MY NEEDS AND OBJECTIVES. ALSO, I UNDERSTAND THAT THE
VALUE OF MY SHARES WILL FLUCTUATE (EXCEPT THE MONEY MARKET FUND WHICH SEEKS TO
MAINTAIN A FIXED $1.00 SHARE PRICE) AND, DEPENDING ON THE MARKET VALUE OF THE
FUNDS' INVESTMENTS AT THE TIME I REDEEM MY SHARES, I MAY RECEIVE MORE OR LESS
THAN THE ORIGINAL AMOUNT.
I AM OF LEGAL AGE, AND I HAVE RECEIVED A NATIONWIDE(R) FAMILY OF FUNDS
PROSPECTUS DATED FEBRUARY 29, 1996, AND HAVE READ IT CAREFULLY AND AGREE TO ITS
TERMS. I UNDERSTAND THAT I WILL RECEIVE A CONFIRMATION OF ALL TRANSACTIONS. I
CERTIFY, UNDER PENALTIES OF PERJURY, THAT I AM NOT SUBJECT TO BACK-UP
WITHHOLDING UNLESS INDICATED ON THE REVERSE SIDE OF THIS APPLICATION AND THAT
THE INFORMATION REGARDING TAX IDENTIFICATION AND SOCIAL SECURITY NUMBER AND
BACK-UP WITHHOLDING IS TRUE, CORRECT AND COMPLETE.
X ___________________ X______________________________________ Date______________
SIGNATURES (WITH TITLE, IF ANY) OF ALL OWNERS SHOWN IN ACCOUNT REGISTRATION,
SECTION 2 ON PAGE A1.
APPROVED FOR SUITABILITY BY HOME OFFICE
PRINCIPAL:
X _________________ Date____________ _______________________________________
AGENT SIGNATURE (NO STAMPS) Principal's Signature
A2
<PAGE> 36
<TABLE>
<CAPTION>
NATIONWIDE(R) MUTUAL FUND SERVICES
COMPLETE THIS SECTION ONLY IF YOU WISH TO ELECT ONE OR
MORE OF THESE ADDITIONAL SERVICES. TO ELECT ADDITIONAL
INVESTMENT STRATEGIES, SEE PAGE A4.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
11 - GIFT CERTIFICATE Name of Recipient: ___________________________________________________________________________
Complete only if you are opening
a new account (for the person Giver: ___________________________________________________________________________
named in Section 2) with a gift
certificate. If you have any Occasion: _________________________________________________ Amount of Gift:________
questions, contact one of our
service representatives at Mail Certficate to: ___________________________________________________________________________
1-800-848-0920 between 8 A.M. and
5 P.M. (Eastern Time) Monday thru ---------------------------------------------------------------------------
Friday before mailing
application.
- ------------------------------------------------------------------------------------------------------------------------------------
12 - FREE CHECKS / / Please initial the box if you would like a supply of free checks. Be sure all
(MONEY MARKET FUND ONLY) authorized account holders sign below. Checks may be written for $500 or more only.
To receive a free supply of
checks to use for withdrawing CHECK BOX TO INDICATE / / Only one signature / / Two signatures / / ____signatures
funds from your Money Market Fund HOW MANY SIGNATURES is required are required are required
account: a) initial the first box; ARE REQUIRED
b) check the number of signatures
required to withdraw, and c) have SIGNATURES OF ALL AUTHORIZED ACCOUNT HOLDERS:
ALL authorized account holders
sign here (i.e., Joint Tenant X_________________________________________________________ X________________________________
named in the Account Registration
or all authorized individuals X_________________________________________________________ Account No.______________________
listed on the accompanying
Corporate, Partnership or In signing this section the signator(s) agree to be subject to the customary rules and
Association Certified regulations governing checking accounts and to the conditions set forth below. If the Checking
Resolutions). Account Privilege is established after the opening of the account, or if any change is made in
the above information, all signatures will have to be guaranteed.
NAMES MUST BE SIGNED EXACTLY AS
THEY APPEAR IN THE ACCOUNT The payment of funds on the conditions set forth in this section is authorized by the
REGISTRATION signature(s) appearing above. Nationwide Investors Services, Inc., the Fund's Transfer Agent,
is hereby appointed agent by the person(s) signing this card and will cause the Fund to redeem
a sufficient number of shares from the account to cover checks presented for payment without
requiring signature guarantees. The Fund and its agents will not be liable for any loss,
expense or cost arising out of check redemptions or checks returned without payment. Shares
outstanding in the account for less than 12 days will not be liquidated to pay checks presented
unless the Transfer Agent is assured that good payment has been collected through normal
banking channels. The Transfer Agent has the right not to honor checks that are for less than
$500 or checks in an amount exceeding the value of the account at the time the check is
presented for payment. This privilege is subject to the provisions of the current prospectus of
the Fund as amended from time to time. This agreement may be modified or terminated at any
time.
</TABLE>
A3
<PAGE> 37
<TABLE>
<CAPTION>
NATIONWIDE(R) MUTUAL FUND INVESTOR STRATEGIES
COMPLETE THIS SECTION ONLY IF YOU WISH TO ELECT ONE OR MORE OF THESE INVESTOR STRATEGIES.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
13 - MONEY MARKET PLUS / / I want my monthly Money Market Fund dividends invested into indicated Fund (one
GROWTH(SM) & MONEY MARKET only).
PLUS INCOME(SM) PLANS Minimum $5,000 Money Market Fund investment. See Page 19.
Check appropriate box to select
the Fund in which you want to MONEY MARKET PLUS GROWTH(SM) / / Growth / / Fund
reinvest your monthly Money Market
Fund dividends. If you have an MONEY MARKET PLUS INCOME(SM) / / Bond / / Tax-Free Income* / / U.S. Government Income*
established account you want Money * Must have an established account.
Market dividends reinvested into,
write account number in space / / I want my Money Market dividends reinvested into my previously established account #:_____
provided. See page 19.
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14 - AUTOMATIC ASSET / / I want to establish an Automatic Asset Accumulation plan. I want the specified dollar
ACCUMULATION(SM) & amount(s) invested into the Fund(s) of my choice, as specified below. NOTE: You must meet
AUTOMATIC ASSET the account minimums of each fund in which you invest. If you have any questions, please
ALLOCATION(SM) PLANS contact one of our representatives at 1-800-848-0920. See page 20 for more details.
Initialing the box and completing (YOU MUST ATTACH COPY OF A VOIDED CHECK.)
the Authorization Form below
authorizes your bank to make
monthly investments directly from Select Investment Date: / / 5th / / 15th / / 25th
your checking account into the (Choose one only)
Fund(s) of your choice in the
dollar amount(s) indicated. If you Monthly investments are to be allocated as follows:
are taking advantage of Automatic
Asset Allocation(SM) by selecting GROWTH+ $__________________ TAX-FREE INCOME++ $__________________
more than one Fund, be sure to FUND+ $__________________ U.S. GOVERNMENT INCOME++ $__________________
specify the dollar amount for each BOND+ $__________________ MONEY MARKET++ $__________________
Fund (YOU MUST MEET THE ACCOUNT + Minimum investment $25 monthly ++ Minimum investment $100 monthly
MINIMUMS FOR EACH FUND IN WHICH
YOU INVEST). See page 20.
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15 - AUTOMATIC ASSET / / I want to establish an Automatic Asset Transfer Plan. $50 per month minimum transfer.
TRANSFER(SM) PLAN See page 20.
Fill in the blanks and initial the Please transfer $________________ beginning __________ each / / month / / quarter
box to establish regular transfers ($50 minimum) Month/Year
from your Money Market Fund
account to the Fund account of Into the _____________________________ Fund Account # _________________________
your choice. See page 20.
(if already established)
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16 - AUTOMATIC / / I want to receive a check drawn on my account
WITHDRAWAL PLAN(SM) each / / month / / quarter for $____________ .
Fill in the blanks and initial the ($50 minimum)
box allowing you to receive Specify month you want to receive your first check: Month_________ . Checks
checks for $50 or more monthly or will be mailed to the address indicated in Section #2 unless otherwise
quarterly from your account. See specified in writing, or you can elect direct deposit to your bank account.
page 20.
/ / Check box if you want withdrawals deposited directly to your banking
institution (ATTACH COPY OF A VOIDED CHECK).
- -----------------------------------------------------------------------------------------------------------------------------------
17- LETTER OF INTENT / / I want to establish a Letter of Intent, and agree to the conditions and terms on page
22.
Initial the box and check the
amount you intend to invest in one / / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000 or more
13-month period to obtain a
reduced sales charge. See page 22.
</TABLE>
A4
<PAGE> 38
FORMS SECTION
IF YOU CHECKED BOX MARKED "TRUST/OTHER" OF SECTION 2
OF APPLICATION, YOU MUST COMPLETE APPROPRIATE FORM FROM THIS SECTION AND MAIL
ALONG WITH APPLICATION.
FOR INDIVIDUAL AND JOINT TENANCY ACCOUNTS ONLY
Shareholders of each Fund may choose to have their shares transferred upon death
directly to their designated beneficiary(ies). If you choose to name one or more
beneficiaries for the account you are opening with this application, all shares
in the account, including those purchased in the future, will be transferred
directly to the designated beneficiary(ies) upon your death. If you designate
one or more beneficiaries for your account, you have the right to change or
revoke the beneficiary designation at any time in the future, without the
consent of the beneficiary(ies). If you elect to use this method of transferring
the shares in your account upon your death, please complete the section below.
This form of transfer is available only for individual and joint tenancy
accounts.
I (We) request that the mutual fund account that is opened with this application
be registered in beneficiary form under the Ohio Uniform Transfer- On-Death
Security Registration Act. I (We) assign ownership upon my (our) death to the
beneficiary(ies) named below in the percentage shares indicated. I (We) direct
the transfer agent to transfer the shares in such account and any unpaid
dividends and capital gains payments in accordance with this direction and the
provisions of the Ohio Uniform Transfer On Death Security Registration Act. If
the account created with this application is established in joint tenancy, no
transfer of ownership of shares under this beneficiary designation will occur
until the death of all owners of the account. This beneficiary designation may
be modified or revoked for the account any time prior to the death of the last
surviving owner of the account, without the consent of the beneficiary(ies),
provided the modification or revocation is on the form provided by Nationwide
Financial Services, Inc., and is received by Nationwide Financial Services,
Inc., in Columbus, Ohio, prior to the death of the owner(s) of the account.
FUND:________________________________ ACCOUNT NUMBER: ____________________
NAME OF PRIMARY BENEFICIARY(IES): NAME OF CONTINGENT BENEFICIARY(IES):
(if he/she/they shall survive me (us)): (if primary beneficiary(ies) shall
not survive me (us)):
Date of Birth Date of Birth
(1)_________________________ % of shares (1)________________________ % of shares
(2)_________________________ % of shares (2)________________________ % of shares
(3)_________________________ % of shares (3)________________________ % of shares
______________________________________ _______________________________________
Signature Date Signature Date
APPOINTMENT OF SUCCESSOR CUSTODIAN
FOR UNIFORM GIFT/TRANSFER ACCOUNT REGISTRATION ONLY
Account #
-----------------------
Gentleman:
I, ____________________________________, Hereby appoint _____________________
as the Successor Custodian for this account.
------------------------------------
Signature
I, _________________________, Hereby accept the appointment as the Successor
Custodian.
------------------------------------
Signature
A5
<PAGE> 39
USE ONLY FOR AN ASSOCIATION
A Certified Association Resolution (Part C) must be completed and submitted
with the new account application.
CERTIFIED ASSOCIATION RESOLUTION
I, _________________________________, duly elected and acting Secretary of an
unincorporated association, _____________________________certify that the
following resolution is a true copy, which is now in full force and effect,
adopted by the / / members / / Trustees or / / Executive Committee of the
association, at a meeting duly held in the City of____________________, County
of__________________________, State of ______________ on ____________, 19______.
RESOLVED, that the persons named and signing below are authorized, pursuant to
the association's articles of association and bylaws, to execute and deliver any
written instrument necessary to effect purchases and redemptions and to transact
any other business necessary on this association's account invested in any of
the Nationwide Investing Foundation or Nationwide Investing Foundation II Funds.
X
- --------------------------------------------------------------------------------
Printed Name Title Signature
X
- --------------------------------------------------------------------------------
Printed Name Title Signature
X
- --------------------------------------------------------------------------------
Printed Name Title Signature
X
- --------------------------------------------------------------------------------
Printed Name Title Signature
and that the signatures of not less than ___________of said persons shall be
required to carry out the said authority.
RESOLVED FURTHER, that the association and its members, jointly and severally,
assume entire responsibility for, and agree to indemnify and hold harmless, the
Fund and/or its agents against any and all claims, liabilities, damages,
actions, charges, and expense resulting from, or arising out of, the acts of the
Fund in accordance with the authority hereby granted the above named persons,
and honoring signatures thereof, prior to receipt of any contrary written
notification, or for refusing to honor any signature for which it has not
received appropriate written notification.
Signed on this ______________________ day of ________________________, 19_____.
- --------------------------------------------------------------------------------
(Secretary) (Seal)
I, the (Title)___________________________________ of this association, hereby
certify that the foregoing certificate has been signed by the Secretary of this
association.
Signature______________________________________ Date ______ / ______ / ______
A6
<PAGE> 40
USE ONLY FOR A CORPORATION
(See reverse Side) (NON QUALIFIED PLANS) Account No.______________
A Certified Corporate Resolution (Part D) must be completed and submitted with
the new account application.
CERTIFIED CORPORATE RESOLUTION
I, ______________________ Secretary of _________________________, a corporation
organized under the laws of (State) ____________________________certify that
the following is a true copy, which is now in full force and effect, adopted by
the Board of Directors on _______________________________, 19 ____________.
RESOLVED, that the persons named and signing below are authorized to execute and
deliver any written instrument necessary to effect purchases and redemptions and
to transact any other business necessary on this corporation's account invested
in any of the Nationwide Investing Foundation or Nationwide Investing Foundation
II Funds.
X
- --------------------------------------------------------------------------------
Printed Name Title Signature
X
- --------------------------------------------------------------------------------
Printed Name Title Signature
X
- --------------------------------------------------------------------------------
Printed Name Title Signature
X
- --------------------------------------------------------------------------------
Printed Name Title Signature
and that the signatures of not less than ___________of said persons shall be
required to carry out the said authority.
RESOLVED FURTHER, that the Secretary of this corporation is hereby authorized to
certify to the Fund the names and signatures of the officers of this corporation
and the offices respectively held by them, and that this corporation assumes
entire responsibility for and agrees to indemnify and hold harmless the Fund
and/or its agents against any and all claims, liabilities, damages, actions,
charges, and expenses resulting from, or arising out of, the acts of the Fund in
accordance with the authority hereby granted the above named persons, and
honoring signatures thereof, prior to the receipt of any contrary certification,
of for refusing to honor any signature for which it has not received any
certification.
Signed on this _________________________ day of ______________________, 19_____.
- --------------------------------------------------------------------------------
(Secretary) (Seal)
I, the (Title)________________________________________________________ of this
corporation, hereby certify that the foregoing certificate has been signed by
the Secretary of this corporation.
Signature____________________________________ Date ______ / ______ / _______
A7
<PAGE> 41
USE ONLY FOR A RETIREMENT PLAN TRUST
(See Reverse Side) (NORMALLY FOR QUALIFIED PLANS) Account No.____________
A Certification of Authority (Part A) must be completed and submitted with the
new account application.
CERTIFICATION OF AUTHORITY
We, the undersigned, being the Trustees of the ______________________hereby
acknowledge that we are authorized to invest the assets of the Trust/Plan and
do hereby appoint_______________________________________________________________
Names of Individuals
to execute any investment applications for any of the Nationwide Investing
Foundation or Nationwide Investing Foundation II Funds in which assets of the
Trust/Plan may be invested; and do further authorize and appoint ____________and
_____________________________________________________to purchase, sell, assign,
and transfer securities and to sign checks issuable by the Trust/Plan redeeming
shares of the Fund. We further state that this individual authority shall
continue to be honored until revoked by written notice from either of us and
received by the Transfer Agent, Nationwide Investors Services, Inc. By signing
this authorization, we agree that any of the Nationwide Investing Foundation
Funds, Nationwide Investing Foundation II Funds, Nationwide Investors Services,
Inc., and Nationwide Financial Services, Inc. shall be indemnified and held
harmless from any loss, damage, cost, or claim that may arise from any
authorized or unauthorized use of the assets or checks of the Trust/Plan in
connection with the holdings of the Fund.
X
____________________________________________ _______________________________
Printed Name Signature
X
____________________________________________ _______________________________
Printed Name Signature
(Attach additional list if necessary) Date_____________________
USE ONLY FOR A PARTNERSHIP
(NON QUALIFIED PLANS)
A Certification of Authority (Part B) must be completed and submitted with the
new account application.
CERTIFICATION OF AUTHORITY (Partnership)
We, the undersigned, being the principal partners of the________________________
Partnership's Name
hereby state that we are authorized to invest the assets of the partnership
either jointly or individually in any of the Nationwide Investing Foundation or
Nationwide Investing Foundation II Funds. We also agree that either _________ or
_______________________________have individual authority to purchase, sell,
assign, and transfer securities and to sign checks issuable by the partnership
redeeming shares of the Fund. We further state that this individual authority
shall continue to be honored until written notice is received by the Transfer
Agent, Nationwide Investors Services, Inc. from either of us revoking same. By
signing this authorization, we agree that any of the Nationwide Investing
Foundation Funds, Nationwide Investing Foundation II Funds, Nationwide Investors
Services, Inc. and Nationwide Financial Services, Inc. shall be indemnified and
held harmless and fully protected from any loss, damage, cost, or claim that may
arise from any authorized or unauthorized use of the assets or checks of the
partnership in connection with the holdings of the Fund.
X
- ----------------------------------------------- -----------------------------
Printed Name Signature
X
- ------------------------------------------------ -----------------------------
Printed Name Signature
(Attach additional list if necessary) Date___________________
A8
<PAGE> 42
PART B:
STATEMENT OF ADDITIONAL INFORMATION FEBRUARY 29, 1996
NATIONWIDE INVESTING FOUNDATION II:
NATIONWIDE TAX-FREE INCOME FUND
NATIONWIDE U.S. GOVERNMENT INCOME FUND
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than that set forth in the
prospectus and should be read in conjunction with the Funds' prospectus dated
February 29, 1996. The prospectus may be obtained from Nationwide Financial
Services, Inc. (NFS), P.O. Box 1492, One Nationwide Plaza, Columbus, Ohio 43216.
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information and History 1
Investment Objectives and Policies 1
Descriptions of Securities 2
Investment Restrictions 4
Trustees and Officers of the Trust 6
Investment Management Agreement 6
Distribution Agreement 7
Pricing of Shares 7
Redemption of Shares 8
Contingent Deferred Sales Charge 8
Fund Performance Advertising 9
Shareholders' Rights 10
Custodian 10
Brokerage Allocation 10
Tax Status 11
Financial Statements 12
Independent Auditors' Report 19
Appendix 20
</TABLE>
GENERAL INFORMATION AND HISTORY
Nationwide Investing Foundation II is a diversified, open-end management
investment company, created under the laws of Massachusetts by a Declaration of
Trust dated October 8, 1985.
The trust contains two Funds, the Nationwide U.S. Government Income Fund
and the Nationwide Tax-Free Income Fund.
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the Funds' investment
objectives and policies discussed on pages 13 and 14 of the prospectus. The
investment policy and types of permitted investments may be changed without
approval or notice to shareholders.
NATIONWIDE TAX-FREE INCOME FUND
The Nationwide Tax-Free Income Fund is designed to provide as high a level of
current income exempt from federal tax as is consistent with the preservation of
capital through investing in a diversified portfolio of high quality municipal
obligations.
As stated in the prospectus, the Fund may purchase securities on a
"when-issued" basis and "forward delivery" basis, for payment and delivery at a
later date, generally within one month for when-issued and longer periods for
forward commitments. The price and yield are generally fixed on the date of
commitment to purchase, and the value of the security is reflected in the Fund's
net asset value. Failure of an issuer to deliver the security may result in the
Fund incurring a loss or missing an opportunity to make an alternative
investment. At the time of settlement, the market value of the security may be
more or less than the purchase price, resulting in an unrealized appreciation or
depreciation to the Fund. The Fund maintains in a segregated account cash, U.S.
government securities, or other high-grade liquid securities in an amount equal
to the purchase price as long as the obligation to purchase continues.
The Fund may purchase municipal bonds on a "forward delivery" basis at
fixed purchase terms. The purchase will be recorded on the date the Fund enters
into the commitment and the value of the security will thereafter be reflected
in the calculation of the portfolio's net asset value. The value of the security
on the delivery date may be more or less than its purchase price resulting in
unrealized appreciation or depreciation to the Fund. A separate account of the
portfolio will be established with its Custodian consisting of cash or liquid
municipal bonds having a market value at all times at least equal to the amount
of the forward commitment.
The types of instruments in which the Fund may invest are described in the
prospectus. For more information on ratings of municipal obligations from
Standard & Poor's Corporation (Standard & Poor's) and Moody's Investors Service,
Inc. (Moody's), see the Appendix. For purposes of the restrictions set forth
below, the Fund will regard the entity which has the ultimate responsibility for
the payment of interest and principal as the issuer.
From time to time the Fund may invest less than the 25% of its total assets
in the securities of issuers in the same industry, state or similar type project
where such securities are related in such a way that economic, business and
political developments or changes that affect one such security could affect the
other securities.
<PAGE> 43
NATIONWIDE U.S. GOVERNMENT INCOME FUND
The Nationwide U.S. Government Income Fund is designed to provide as high a
level of income as is consistent with the preservation of capital through a
portfolio consisting of securities from the U.S. government, and its agencies
and instrumentalities. The intermediate average dollar-weighted maturity of the
portfolio (between 3 and 10 years) should generally provide higher yields than a
money market fund while producing greater price stability than other bond
portfolios with longer maturities.
As stated in the prospectus, the U.S. Government Income Fund will normally
invest all of its net assets in securities issued by the U.S. government, its
agencies and instrumentalities (see U.S. Government Securities, p. 2), and in
repurchase agreements in these securities (see Repurchase Agreements, p. 4).
The Fund may invest up to 80% of its net assets in mortgage-related
securities (see Mortgage-Related Securities, p. 3) which represent part
ownership of a pool of mortgage loans. This would include investments in
collateralized mortgage obligations (CMOs). The Fund may also invest up to 20%
in zero-coupon securities (see Zero-Coupon Securities p. 2).
There is minimal default risk involved in the purchase of U.S. government
or U.S. government guaranteed securities. Securities issued by U.S. government
agencies or instrumentalities, while perhaps having the implicit backing of the
U.S. government, may not have an explicit guarantee of the payment of principal
and interest (see U.S. Government Securities, p. 2).
The value of shares of the U.S. Government Income Fund will vary inversely
with changes in interest rates. As with any fixed income investment, interest
rate risk (when interest rates decline, the market value of a portfolio invested
at higher yields can be expected to rise; conversely, when interest rates rise,
the market value of a portfolio invested at lower yields can be expected to
fall) does exist. While the U.S. Government Income Fund will engage in portfolio
trading (shortening the average maturity of the portfolio in anticipation of a
rise in interest rates so as to minimize depreciation of principal or
lengthening the portfolio in anticipation of a decline in interest rates so as
to maximize appreciation of capital) to manage this risk, there is no assurance
that capital will be preserved.
Generally, debt securites with shorter maturities are less subject to
market fluctuation as a result of a change in interest rates. Thus, though there
will be share price fluctuation of the U.S. Government Income Fund, the average
maturity of the portfolio will be between 3 and 10 years (intermediate-term),
which should result in less fluctuation than longer-term maturities.
DESCRIPTION OF SECURITIES
U.S. GOVERNMENT SECURITIES
U.S. government securities include obligations issued (1) by the U.S. Treasury
and (2) by agencies and instrumentalities of the United States government. U.S.
government agencies are government-sponsored organizations acting under
authority of Congress, such as Federal Land Banks, Central Banks for
Cooperatives, Federal Home Loan Banks, the Farmers Home Administration, and the
Federal Farm Credit System. U.S. government instrumentalities are organized by
Congress under a federal charter and supervised and regulated by the U.S.
government, such as the Federal National Mortgage Association and the Student
Loan Marketing Association. A distinction must be made between these obligations
since some are supported by the full faith and credit of the U.S. Treasury,
others by the discretionary authority of the U.S. government, and still others
only by the credit of the issuer.
Securities guaranteed by the U.S. government include: (1) direct
obligations of the U.S. Treasury (such as Treasury bills, notes and bonds) and
(2) federal agency obligations guaranteed as to principal and interest by the
U.S. Treasury (such as securities issued by the Farmers Home Association, the
Federal Financing Bank, the Government National Mortgage Association, the
Maritime Administration Guaranteed Ship Financing Bonds issued after 1972 and
the Small Business Administration). In these securities, the payment of
principal and interest is unconditionally guaranteed by the U.S. government;
thus, they are of the highest possible credit quality.
Securities issued by U.S. government instrumentalities and certain federal
agencies are neither direct obligations of, nor guaranteed by, the Treasury.
However, they involve federal sponsorship in one way or another: some are backed
by the issuer's right to borrow from the U.S. Treasury (such as securities
issued by the Farm Credit System and the Tennessee Valley Authority); some are
supported by the authority of the U.S. Treasury to purchase obligations issued
by agencies or instrumentalities (such as the Federal National Mortgage
Association, Student Loan Marketing Association, and the Tennessee Valley
Authority). Some are supported only by the credit of the issuing government
agency or instrumentality (such as securities issued by the Financing
Corporation, FICO).
ZERO-COUPON SECURITIES
Zero-coupon securities are securities that make no periodic interest payments
but instead are sold at a deep discount from their face value. The buyer of such
a bond receives the rate of return by the gradual appreciation of the security,
which is redeemed at face value on a specified maturity date. For tax purposes,
the Internal Revenue Service maintains that the holder of a zero-coupon bond
owes income tax on the interest that has accrued each year, even though the
bondholder does not actually receive the cash until maturity.
The U.S. Government Income Fund will only invest in zero-coupon securities
which are direct obligations of the U.S. Treasury or agencies of the U.S.
government. No zero-coupon securities issued by brokerage firms will be
purchased by the U.S. Government Income Fund.
To the extent that the U.S. Government Income Fund utilizes portfolio cash
to distribute zero coupon income to shareholders, it will forego the purchase of
additional income-producing assets with these funds.
<PAGE> 44
MORTGAGE-RELATED SECURITIES
Mortgage-related securities include GNMA certificates, FNMA and FHLMC
mortgage-based obligations.
GNMA certificates are mortgage-backed securities representing part
ownership of a pool of mortgage loans on which timely payment of interest and
principal is guaranteed by the full faith and credit of the U.S. government.
GNMA certificates differ from typical bonds because principal is repaid monthly
over the term of the loan rather than returned in a lump sum at maturity.
Because both interest and principal payments (including prepayments) on the
underlying mortgage loans are passed through to the holder of the certificate,
GNMA certificates are called "pass-through" securities.
Although the mortgage loans in a GNMA pool will have maturities of up to 30
years, the actual average life of the GNMA certificates typically will be
substantially less because the mortgages will be subject to normal principal
amortization and may be prepaid prior to maturity. Prepayment rates vary widely
and may be affected by changes in market interest rates. In periods of falling
interest rates, the rate of prepayment tends to increase, thereby shortening the
actual average life of the GNMA certificates. Conversely, when interest rates
are rising, the rate of prepayment tends to decrease, thereby lengthening the
actual average life of the GNMA certificates. Accordingly, it is not possible to
accurately predict the average life of a particular pool. Reinvestment of
prepayments may occur at higher or lower rates than the original yield on the
certificates. Due to the prepayment feature and the need to reinvest prepayments
of principal at current rates, GNMA certificates can be less effective than
typical bonds of similar maturities at "locking in" yields during periods of
declining interest rates, although they may have comparable risks of decline in
value during periods of rising interest rates. Because prepayments are made at
par value, losses could be sustained on prepayments of GNMA certificates which
had been purchased at prices above their par values.
The Federal National Mortgage Association ("FNMA"), a federally chartered
and privately-owned corporation, issues pass-through securities representing
interests in a pool of conventional mortgage loans. FNMA guarantees the timely
payment of principal and interest but this guarantee is not backed by the full
faith and credit of the U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC"), a corporate
instrumentality of the U.S. government, issues participation certificates which
represent an interest in a pool of conventional mortgage loans. FHLMC guarantees
the timely payment of interest and the ultimate collection of principal and
maintains reserves to protect holders against losses due to default, but the
certificates are not backed by the full faith and credit of the U.S. government.
As is the case with GNMA certificates, the actual maturity of and realized
return on particular FNMA and FHLMC pass-through securities will vary based on
the prepayment experience of the underlying pool of mortgages.
FNMA and FHLMC also issue collateralized mortgage obligations ("CMO's").
CMO's are obligations fully collateralized directly or indirectly by a pool of
mortgages on which payments of principal and interest are dedicated to payment
of principal and interest on the CMO's. Payments are passed through to the
holders although not necessarily on a pro rata basis on the same schedule as
they are received. Accordingly, a change in the rate of prepayments on the pool
of mortgages could change the effective maturity of a CMO.
WHEN-ISSUED SECURITIES
In order to help ensure the availability of suitable securities for its
portfolio, the U.S. Government Income Fund and the Tax-Free Income Fund may
purchase securities on a "when-issued" or on a "forward delivery" basis which
means that the obligations will be delivered to the Fund making the purchase at
a future date beyond customary settlement time. It is expected that, under
normal circumstances, a Fund purchasing securities on a "when-issued" or
"forward delivery" basis will take delivery of such securities. In general, a
Fund does not pay for the securities or start earning interest on them until the
obligations are scheduled to be settled. While awaiting delivery of the
obligations purchased on such basis, a Fund will establish a segregated account
consisting of cash or high quality debt securities equal to the amount of the
commitments to purchase "when-issued" securities.
To the extent a Fund engages in "when-issued" or "forward delivery"
transactions, it will do so for the purpose of acquiring portfolio securities
consistent with the Fund's investment objectives and policies and not for the
purpose of investment leverage or to speculate in interest rate changes. The
U.S. Government Income Fund and the Tax-Free Income Fund will make commitments
to purchase securities on a "when-issued" or "forward delivery" basis only with
the intention of actually acquiring the securities, but the Funds reserve the
right to sell these securities before the settlement date if deemed advisable.
Because a Fund must set aside cash or liquid high grade securities to
satisfy its commitments to purchase "when-issued" or "forward delivery"
securities, management of a Fund's investments may be limited by commitments to
purchase "when-issued" or "forward delivery" securities.
When a Fund commits to purchase a security on a "when-issued" or on a
"forward-delivery" basis, it follows procedures consistent with Securities and
Exchange Commission policies. Since those policies currently recommend that an
amount of a Fund's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment, a Fund will always have cash or
high quality debt securities sufficient to cover any commitments or to limit any
potential risk. However, although neither of the Funds intends to make such
purchases for speculative purposes and each Fund intends to adhere to the
provisions of Securities and Exchange Commission policies, purchases of
securities on such bases may involve more risk than other types of purchases.
For example, a Fund may have to sell assets which have been set aside in order
to meet redemptions. Also, if a Fund determines it is advisable as a matter of
investment strategy to sell the "when-issued" or "forward delivery" securities
before delivery, that Fund may incur a loss because of market fluctuations since
the time the commitment to purchase such securities was made and any gain or
loss would not be tax-exempt. When the time comes to pay for "when-issued" or
"forward delivery" securities, a Fund will meet its obligations from the then
available cash flow or the sale of securities, or, although it would not
normally expect to do so, from the sale of the "when-issued" or "forward
delivery" securities themselves (which may have a value greater or less than a
Fund's payment obligation).
<PAGE> 45
REPURCHASE AGREEMENTS
The U.S. Government Income Fund may enter into Repurchase Agreements (Repos)
with banks and securities dealers. Under Repurchase Agreements, the U.S.
Government Income Fund buys a security and obtains a simultaneous commitment
from the seller to repurchase the security at a specified time and price. Repos,
also called RPs or buybacks, are widely used both as a money market investment
vehicle and as an instrument of Federal Reserve Monetary Policy. Where a
repurchase agreement is used as a short-term investment, a government securities
dealer borrows from an investor (for instance, a mutual fund) with excess cash,
to finance its inventory, using the securities as collateral. Such RPs may have
a fixed maturity date or be Open Repos, callable at any time. Rates are
negotiated directly by the parties involved, but are generally lower than rates
on collateralized loans made by New York banks. The attraction of repos is the
flexibility of maturities that makes them an ideal place to invest excess funds
on a temporary basis. The Trust will only invest in repurchase agreements which
are fully collateralized and monitored on a continuous basis by the Investment
Adviser and have been affirmed by the Board of Trustees. Repurchase agreements
permit the Fund to maintain liquidity and earn income over periods of time as
short as overnight. The seller must maintain with the Fund's Custodian
securities equal to at least 102% of the acquired security's market value as
monitored daily by the Investment Adviser (see "Management" below). The U.S.
Government Income Fund will only enter into repurchase agreements involving
securities in which it could otherwise invest and with selected banks and
securities dealers whose financial condition is monitored by the Investment
Adviser, subject to review by the Board of Trustees. If the seller under the
repurchase agreement defaults, the Fund may incur a loss if the value of the
collateral securing the repurchase agreement has declined, and may incur
disposition costs in connection with liquidating the collateral. If bankruptcy
proceedings are commenced with respect to the seller, realization of the
collateral by the Fund may be delayed or limited.
INVESTMENT RESTRICTIONS
The Funds have adopted the following restrictions which are fundamental
policies. These fundamental policies, as well as the investment objective of the
Funds, cannot be changed without approval of the holders of a majority of the
outstanding shares of the Fund. All percentage limitations expressed in the
following investment restrictions are measured immediately after the relevant
transaction is made.
RESTRICTIONS FOR BOTH FUNDS
The Funds may not:
1 Enter into any repurchase agreement if, as a result, more than 10% of the
Fund's total assets would be subject to repurchase agreements maturing in more
than seven days;
2 Make loans to others except for the purchase of the debt securities listed
above or entering into repurchase agreement listed above;
3 Borrow money, except under the following circumstances:
(a) A Fund may borrow an amount not in excess of 33 1/3% of the value of
the Fund's total assets (calculated when the loan is made) from banks for
temporary purposes to facilitate the orderly sale of portfolio securities to
accommodate unusually heavy redemption requests, if they should occur. This
borrowing provision is not intended for investment purposes, nor will the Funds
purchase portfolio securities during periods of borrowings outstanding;
(b) A Fund may borrow an amount equal to no more than 5% of the value of
each of the Funds' total assets (calculated when the loan is made) for
temporary, emergency purposes, or for the clearance of transactions, to provide
the Investment Manager additional flexibility in the execution of routine daily
transactions, and allow for more efficient cash management. This borrowing
provision will not be used to leverage the funds or to borrow for extended
periods of time.
4 Act as underwriter except to the extent that in conjunction with the
disposition of portfolio securities, the Fund may be deemed an underwriter under
certain federal securities laws;
5 Pledge more than 10% of its assets and then only to secure temporary
borrowings from banks;
6 Sell securities short or purchase securities restricted under federal
securities laws;
7 Write, purchase, or sell puts, calls, straddles, spreads or any combination
thereof;
8 Purchase or sell securities of other investment companies (except in
connection with a merger, consolidation, acquisition or reorganization), real
estate, real estate mortgage loans, commodities or futures contracts;
<PAGE> 46
9 Issue any senior securities;
10 Purchase securities on margin, but the Fund may obtain such credits as may
be necessary for the clearance of purchases and sales of securities;
11 Purchase any illiquid or unmarketable securities;
12 Invest for the purpose of making short-term trading profits or for the
purpose of exercising control of management or deal with the Trustees in the
purchase and sale of securities.
RESTRICTIONS FOR TAX-FREE INCOME FUND ONLY
The Fund may not:
1 Invest more than 20% of its assets in securities whose interest is subject
to federal income taxes;
2 Invest more than 5% of its total assets (excluding cash and cash items) in
the securities of any one issuer, except the U. S. government, its agencies and
instrumentalities;
3 Invest 25% or more of the Fund's total assets in the securities of issuers
in the same industry, except that the Fund may invest more than 25% of the value
of its total assets in municipal bonds and obligations issued or guaranteed by
the U.S. government, its agencies or instrumentalities;
4 Invest more than 5% of its total assets taken at cost in securities whose
issuer or guarantor of principal and interest, including any predecessors, has
been in operation for less than three years.
The Funds have executed an undertaking to comply with the following
requirements of Section 123.2 of the regulations of the State Securities Board
of Texas, as long as shares of the Fund are offered for sale within the State of
Texas.
1 Section 123.2(3). Investments which are not readily marketable, including
illiquid assets, are limited to 15% of average net assets of the Fund, at the
time of purchase.
2 Section 123.2(9). Investments in warrants, valued at the lower of cost or
market, may not exceed 5.0% of the value of the Fund's net assets. Included
within that amount, but not to exceed 2.0% of the value of the Fund's net
assets, may be warrants which are not listed on the New York or American Stock
Exchanges. Warrants acquired by the Fund in units or attached to securities may
be deemed to be without value.
3 Section 123.2(10). Investments in oil, gas and other mineral leases, or
arbitrage transactions are not permitted in the Fund.
<PAGE> 47
TRUSTEES AND OFFICERS
OF THE TRUST
TRUSTEES AND OFFICERS
The principal occupation of the Trustees and Officers during the last five years
and their affiliations are:
PETER F. FRENZER, Trustee, Chairman.*
One Nationwide Plaza, Columbus, Ohio.
Mr. Frenzer is President of Nationwide Life Insurance Company and Nationwide
Corporation and Executive Vice President - Investments of the Nationwide
Insurance Enterprise.
JOHN C. BRYANT, Trustee.
44 Faculty Place, Wilmington, Ohio.
Dr. Bryant is Executive Director of the Cincinnati Youth Collaborative. He was
formerly Professor of Education, Wilmington College.
ROBERT M. DUNCAN, Trustee.
378 Bricker Hall, 190 North Oval Mall, Columbus, Ohio.
Mr. Duncan is Vice President--General Counsel of The Ohio State University. He
was formerly a partner in the law firm of Jones, Day, Reavis & Pogue in
Columbus, Ohio. He was formerly a U.S. District Court Judge, Southern District
of Ohio.
THOMAS J. KERR, IV, Trustee.
1223-A Central Street, Evanston, Illinois.
Dr. Kerr is President of Kendall College. He was formerly President of Grant
Hospital Development Foundation.
D. RICHARD MCFERSON*
One Nationwide Plaza, Columbus, Ohio
Mr. McFerson is President and Chief Executive Officer of the Nationwide
Insurance Enterprise.
JAMES F. LAIRD, JR., Treasurer.
One Nationwide Plaza, Columbus, Ohio.
Mr. Laird is General Manager of Nationwide Financial Services, Inc., the
Distributor and Investment Manager.
WILLIAM G. GOSLEE, Assistant Treasurer.
One Nationwide Plaza, Columbus, Ohio.
Mr. Goslee is Treasurer of Nationwide Financial Services, Inc., the Distributor
and Investment Manager.
RAE I. MERCER, Secretary
One Nationwide Plaza, Columbus, Ohio.
Ms. Mercer is Corporate Secretary of Nationwide Financial Services, Inc., the
Distributor and Investment Manager.
* A Trustee who is an "interested person" of the Fund as defined in the
Investment Company Act of 1940.
The Trustees receive fees and reimbursement for expenses of attending Board
meetings of the Trust. The Compensation Table to the right sets forth the total
compensation to the Trustees from the Trust and from all funds in the Nationwide
Fund Complex during the fiscal year ended October 31, 1995. Trust officers
receive no compensation from the Trust in their capacity as officers.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or
Retirement Estimated
Aggregate Benefits Accrued Annual Benefits Total Compensa-
Name of Person, Compensation as Part of Fund Upon Retire- tion from the
Position from the Trust Expenses ment Fund Complex*
<S> <C> <C> <C> <C>
Peter F. Frenzer,
Chairman --0-- --0-- --0-- --0--
John C. Bryant,
Trustee $5,500 --0-- --0-- $12,500
Robert M Duncan,
Trustee $5,500 --0-- --0-- $12,500
Thomas J. Kerr, IV,
Trustee 5,500 --0-- --0-- $12,500
D. Richard McFerson,
Trustee --0-- --0-- --0-- --0--
</TABLE>
*The Fund Complex includes four Trusts comprised of fifteen investment company
portfolios.
INVESTMENT MANAGEMENT
AGREEMENT
Under the terms of the Investment Management Agreement, Nationwide Financial
Services, Inc., (NFS) manages the investment of the assets of the Funds in
accordance with the policies and procedures established by the Trustees,
administers and manages the affairs of the Trust and furnishes office
facilities, equipment and personnel to the Funds. The Agreement also provides
that NFS shall reimburse the Trust for the compensation of the Trustees who are
"interested persons" of NFS.
Each Fund pays the Investment Manager a fee based on its average daily
net assets at the rate of .65% of the first $250 million of average daily net
assets, .60% of the next $250 million, .55% on the next $250 million, and .50%
on the average daily net assets in excess of $750 million. The Funds also pays
the custodial, transfer agents, federal and state share registrations, brokerage
and legal fees; taxes; printing costs; and the compensation and expenses of the
Trustees.
Investment management fees will not be paid in full if such payment
would result in total expenses of the Funds (excluding the distribution fee and
taxes, other than payroll taxes, and brokerage commissions on portfolio
transactions) exceeding limits prescribed by any state in which the Funds'
shares are being offered for sale. The current applicable expense limitation is
2.5% of the first $30 million of the Funds' average annual net assets, 2.0% of
the next $70 million of such assets and 1.5% of the remainder in excess of $100
million. During the fiscal years ended October 31, 1995, 1994, and 1993, the
Investment Manager earned management fees for the Tax-Free Income Fund of
$1,629,584, $1,642,067, and $1,378,829, respectively, and $248,765, $252,358,
and $195,113 for the U.S. Government Income Fund. Neither the Investment Manager
nor any company affiliated with it receives any brokerage commissions from the
Funds.
NFS is wholly-owned by Nationwide Life Insurance Company, which is
wholly-owned by Nationwide Corporation, a holding company, which is wholly-owned
by the Nationwide Insurance Enterprise.
<PAGE> 48
DISTRIBUTION AGREEMENT
Nationwide Financial Services also acts as Distributor of the Funds' shares
pursuant to the Distribution Agreement with the Funds. The Distributor pays
commissions to salespersons, the cost of printing and mailing prospectuses to
potential investors, and any sales promotional expenses incurred in connection
with the distribution of Fund shares.
The Distribution Agreement provides that it shall terminate
automatically if assigned and that it may be terminated without penalty by
either party upon not more than 60 days' nor less than 30 days' written notice.
To compensate the Distributor for the services it provides and for the
expenses it bears under the Distribution Agreement, the Funds have adopted a
Plan of Distribution (the "Plan") under Rule 12b-1 under the Investment Company
Act. Under the Plan, the Funds pays the Distributor compensation accrued daily
and paid monthly at the annual rate of .35% of the average daily net assets of
the Funds.
For the Tax-Free Income Fund, these fees were waived from the inception
of the Fund through February 28, 1990. For the period from March 1, 1990 through
August 31, 1990 the Fund accrued distribution fees at the annual rate of .10% of
average daily net assets. For the period from September 1, 1990 through October
31, 1995, the Fund accrued distribution fees at the annual rate of .20% of
average daily net assets.
During the fiscal years ended October 31, 1995, 1994, and 1993, the
Tax-Free Income Fund accrued distribution fees totalling $878,689, $885,243, and
$742,466, respectively, and $133,950, $135,885, and $105,061 for the U.S.
Government Income Fund. During the years ended October 31, 1995, 1994, and 1993,
the Distributor waived Plan fees for the Tax-Free Income Fund totalling
$376,581, $379,390, and $318,200, respectively, and $57,407, $58,236, and
$45,026 for the U.S. Government Income Fund.
The Distributor also receives the proceeds of contingent deferred sales
charges imposed on certain redemptions of shares (see "Contingent Deferred Sales
Charge"). During the years ended October 31, 1995, 1994, and 1993, such charges
for the Tax-Free Income Fund aggregated $234,339, $285,604, and $109,706,
respectively, and $72,664, $72,305, and $24,776 for the U.S. Government Income
Fund.
Pursuant to the Plan, at least quarterly, the Distributor shall provide
the Fund a written report for review by the Trustees of the amounts expended
under the Plan and the purpose for which such expenditures were made.
The Plan shall remain in effect until the earlier of one year after the
respective date of execution or the first meeting of shareholders after the
effective date of the Funds' prospectus. If approved at such meeting by a vote
of a majority of the outstanding voting securities of the Fund, the Plan shall
continue in effect thereafter, provided such continuance is approved annually by
a vote of the Trustees of the Fund, including a majority of the Trustees who are
not interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan, cast in person at a meeting called for
the purpose of voting on such Plan. The Plan may not be amended to increase
materially the amount to be spent for the services described therein without
approval of the shareholders, and all material amendments of the Plan must also
be approved by the Trustees in the manner described above. The Plan may be
terminated at any time, without payment of any penalty, by vote of a majority of
the Trustees who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operations of the Plan or by a vote of a
majority of the outstanding voting securities of the Fund (as defined in the
Investment Company Act) on not more than 60 days' written notice to any other
party to the Plan. The Plan will automatically terminate in the event of its
assignment (as defined in the Investment Company Act). The Trustees have
determined that, in their judgment, there is a reasonable likelihood that the
Plan will benefit the Fund and its shareholders. In the Trustees' review of the
Plan, they will consider the continued appropriateness and the level of
compensation provided therein. So long as the Plan is in effect, the election
and nomination of Trustees who are not interested persons of the Fund shall be
at the discretion of the Trustees who are not such interested persons.
PRICING OF SHARES
The net asset value per share of the Fund is determined once daily as of the
close of the New York Stock Exchange (usually 4 P.M. Eastern Time) on days when
the New York Stock Exchange is open or on any other day during which there is a
sufficient degree of trading in the Funds' portfolio securities that the net
asset value of the Fund is materially affected by changes in the value of
portfolio securities. The Fund will not compute net asset value on customary
national business holidays, including the following: Christmas, New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, and
Thanksgiving.
The net asset value per share is calculated by adding the value of all
securities and other assets of the Fund, deducting its liabilities, and dividing
by the number of shares outstanding.
Portfolio securities for which market quotations are readily available
are valued at their bid quotations. Securities for which market quotations are
not readily available are valued at fair value in accordance with procedures
adopted by the Board of Trustees. Under these procedures the Fund values
municipal securities on the basis of valuations provided by an independent
pricing service which uses information with respect to transactions in bonds,
quotations from bond dealers, market transactions in comparable securities and
various relationships between securities in determining value. Short-term
investments are valued at amortized cost, which approximates market value.
<PAGE> 49
REDEMPTION OF SHARES
CONTINGENT DEFERRED
SALES CHARGE
A contingent deferred sales charge will be imposed on an investor's redemption
which reduces the current value of the investor's shares in the Fund to an
amount which is lower than the amount of all payments by the shareholder for the
purchase of shares during the preceding five years. However, such a charge will
be imposed only to the extent that the net asset value of the shares redeemed
exceeds (a) the current net asset value of shares purchased more than five years
prior to the redemption, plus (b) the current net asset value of shares
purchased through reinvestment of dividends or distributions, plus (c) increases
in the net asset value of the investor's shares above the total amount of
payments for the purchase of shares made during the preceding five years. The
amount of any contingent deferred sales charge will be paid to and retained by
the Distributor.
In determining the applicability of a contingent deferred sales charge
to each redemption, the amount which represents an increase in the net asset
value of the investor's shares above the amount of the total payments for the
purchase of shares within the last five years will be deemed to be redeemed
first. In the event that the redemption amount exceeds such increase in value,
the next portion of the amount redeemed will be deemed to be the amount which
represents the net asset value of the investor's shares purchased more than five
years prior to the redemption and/or shares purchased through reinvestment of
dividends or distributions. Any portion of the amount redeemed which exceeds an
amount representing both such increase in value and the value of shares
purchased more than five years prior to the redemption and/or shares purchased
through reinvestment of dividends or distributions will be subject to contingent
deferred sales charge.
The amount of the contingent deferred sales charge, if any, will vary
depending on the number of months from the time of payment for the purchase of
shares until the time of redemption of such shares. Solely for purposes of
determining the number of months from the time of any payment for the purchases
of shares, all payments during a month will be aggregated and deemed to have
been made on the last day of the preceding month. The following table sets forth
the rates of the contingent deferred sales charge:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Months since purchase 0- 13- 25- 37- 49- 61 &
payment was made 12 24 36 48 60 over
Contingent deferred
sales charge percentage 5% 4% 3% 2% 1% none
</TABLE>
In determining the rate of any applicable contingent deferred sales
charge, it will be assumed that a redemption is made of shares held by the
investor for the longest period of time within the applicable 60-month period.
This will result in any such charge being imposed at the lowest possible rate.
Accordingly, shareholders may redeem, without incurring any contingent
deferred sales charge, amounts equal to any net increase in the value of their
shares above the amount of their purchase payments made within the past five
years, and amounts equal to the current value of shares purchased through
reinvestment of dividends or distributions. The contingent deferred sales charge
will be imposed, in accordance with the table above, on any redemptions within
five years of purchase which are in excess of these amounts. For federal income
tax purposes, the amount of the contingent deferred sales charge will reduce the
gain or increase the loss, as the case may be, on the amount recognized on the
redemption or repurchase of shares.
The contingent deferred sales charge will be waived in the case of a
redemption following death or disability of a shareholder if the redemption is
made within one year of death or initial determination of disability. The waiver
is available for total or partial redemptions of shares owned by an individual
or an individual jointly with his or her spouse, but only for redemptions of
shares held at the time of death or initial determination of disability. The
charge will also be waived on redemptions effected by: (i) shares held by other
registered investment companies affiliated with Nationwide Financial Services,
Inc., (ii) shares redeemed that were acquired as a result of a transfer of
investments from the Nationwide Tax-Free Income Fund, U.S. Government Income
Fund, Nationwide Growth Fund, Nationwide Fund, or Nationwide Bond Fund, (iii)
shares redeemed by (a) any pension, profit-sharing or other employee benefit
plan for the employees of NFS, any of its affiliated companies or investment
advisory clients and their affiliates, (b) Trustees and retired Trustees of NIF
and NIF II; directors, officers, full-time employees employed for not less than
90 days, sales representatives and their employees, and retired directors,
officers, employees, and sales representatives, their spouses, children or
immediate relatives, and immediate relatives of deceased employees (immediate
relatives include mother, father, brothers, sisters, grandparents,
grandchildren) of any of the Nationwide Group of Insurance Companies or their
affiliates, or any investment advisory clients of the Funds' advisor and their
affiliates, (c) directors, officers and full-time employees, their spouses,
children or immediate relatives, and immediate relatives of deceased employees
(immediate relatives include mother, father, brothers, sisters, grandparents,
grandchildren) of any sponsor group which may be affiliated with the Nationwide
Group of Insurance Companies from time to time, which include but are not
limited to Farmland Industries, Inc., Maryland Farm Bureau, Inc., Ohio Farm
Bureau Federation, Inc., Pennsylvannia Farmers' Association, Ruralite Services,
Inc., and Southern States Cooperative (d) any endowment or pension, profit
sharing, or deferred compensation plan which is qualified under Section 401(a)
of the Internal Revenue Code of 1986 as amended, dealing directly with the
Distributor with no sales representative involved, at net asset value upon
written assurance of the purchaser that the shares are acquired for investment
purposes and will not be resold except to the Trust, and (e) any life insurance
company separate account registered as a unit investment trust, (f) any
qualified pension or profit sharing plan established by a Nationwide sales
representative for himself/herself and his/her employees. The shareholder must
notify the Funds' Transfer Agent either directly or indirectly or through the
Distributor, at the time of redemption, that the shareholder is entitled to
waiver of the contingent deferred sales charge.
<PAGE> 50
Redemptions of shares which were recently purchased may be delayed in
order to permit a determination to be made that the purchase check will be
honored. Such determination may be made upon the passage of a reasonable period
of time (not to exceed 12 days) from the time of receipt of the check by
Nationwide Investors Services, Inc.
FUND PERFORMANCE
ADVERTISING
The Funds may use historical performance in advertisements, sales literature,
and the prospectus. Performance figures reflect the maximum 5% deferred sales
charge, which decreases to zero at the end of year five. It also includes
reinvestment of all dividends and capital gains distributions. Performance
figures will include quotations of average annual (compound) total return for
the most recent one, five, and ten-year periods (or, in this case, the life of
the Fund). Average annual (compound) total return represents the rate required
each year for an initial investment to equal the redeemable value at the end of
the specified period.
<TABLE>
<CAPTION>
Nationwide Tax-Free Income Fund
Average Annual (Compound) Total Returns
For Periods Ended October 31, 1995
(Reflect Maximum Sales Charges)
<S> <C>
1 year 9.66%
5 year 7.83%
Life* 6.54%
</TABLE>
* Life of the Tax-Free Income Fund since commencement of operations 3/17/86.
<TABLE>
<CAPTION>
Nationwide U.S. Government Income Fund
Average Annual (Compound) Total Returns
For Periods Ended October 31, 1995
(Reflect Maximum Sales Charges)
<S> <C>
1 year 11.47%
Life** 6.78%
</TABLE>
**Life of the U.S. Government Income Fund since commencement of operations
2/28/92.
The Funds may also choose to show nonstandard returns including total
return and simple average total return, over various time periods based on
lump-sum or periodic investments. Nonstandard returns may or may not reflect
reinvestment of all dividends and capital gains.
Total return represents the cumulative percentage change in the value
of an investment over a time, calculated by subtracting the initial investment
from the redeemable value and dividing the result by the amount of the initial
investment. The simple average total return equals the total return (or
cumulative total return) divided by the number of years in the period and,
unlike average annual (compound) total return, does not reflect compounding.
<TABLE>
<CAPTION>
Nationwide Tax-Free Income Fund
Total Returns
For Periods Ended October 31, 1995
(Reflect Maximum Sales Charges)
<S> <C>
1 year 9.66%
5 year 45.81%
Life* 84.04%
</TABLE>
<TABLE>
<CAPTION>
Nationwide U.S. Government Income Fund
Total Returns
For Periods Ended October 31, 1995
(Reflect Maximum Sales Charges)
<S> <C>
1 year 11.47%
Life** 27.22%
</TABLE>
<TABLE>
<CAPTION>
Nationwide Tax-Free Income Fund
Simple Average Total Returns
For Periods Ended October 31, 1995
(Reflect Maximum Sales Charges)
<S> <C>
1 year 9.66%
5 year 9.16%
Life* 8.73%
</TABLE>
<TABLE>
<CAPTION>
Nationwide U.S. Government Income Fund
Simple Average Total Returns
For Periods Ended October 31, 1995
(Reflect Maximum Sales Charges)
<S> <C>
1 year 11.47%
Life** 7.42%
</TABLE>
The Funds may also from time to time advertise a uniformly calculated
yield quotation. This yield is calculated by dividing the net investment income
per share earned during a 30-day base period by the maximum offering price per
share on the last day of the 30-day period, assuming reinvestment of all
dividends and distributions. This yield formula uses the average number of
shares entitled to receive dividends, provides for semi-annual compounding of
interest, and includes a modified market value method for determining
amortization. The yield will fluctuate, and there can be no assurance that the
yield quoted on any given occasion will remain in effect for any period of time.
For the 30-day period ended October 31, 1995, the Tax-Free Income Fund's yield
was 4.87% and the U.S. Government Income Fund's yield was 5.85%.
Additionally, the Nationwide Tax-Free Income Fund may show
tax-equivalent yield which is computed by dividing yield by one minus a stated
income tax rate. The tax-equivalent yields for the 15%, 28%, 31%, 36%, and 39.6%
federal tax rates are shown below:
<TABLE>
<CAPTION>
Nationwide Tax-Free Income Fund
Tax Equivalent 30-Day Yields
For The Period Ended October 31, 1995
<S> <C>
Tax Rate Yield
15% 5.73%
28% 6.76%
31% 7.06%
36% 7.61%
39.6% 8.06%
</TABLE>
<PAGE> 51
SHAREHOLDERS' RIGHTS
No shareholder shall be subject to any personal liability whatsoever to any
person in connection with Fund property or the acts, obligations or affairs of
the Fund. No Trustee, officer, employee or agent of the Fund shall be subject to
any personal liability whatsoever to any person, other than the Fund or its
shareholders, in connection with Fund property or the affairs of the Fund, save
only that arising from bad faith, willful misfeasance, gross negligence or
reckless disregard for his duty to such person; and all such persons shall look
solely to the Fund property for satisfaction of claims of any nature arising in
connection with the affairs of the Fund. If any shareholder of the Fund is made
a party to any suit or proceeding to enforce any such liability, he shall not,
on account thereof, be held to any personal liability. The Fund shall indemnify
and hold each shareholder harmless from and against all claims and liabilities,
to which such shareholder may become subject by reason of his being or having
been a shareholder, and shall reimburse such shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. Such rights accruing to a shareholder shall not exclude any other
right to which such shareholder may be lawfully entitled, nor shall anything
herein contained restrict the right of the Fund to indemnify or reimburse a
shareholder in any appropriate situation even though not specifically provided
herein.
CUSTODIAN
The Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, OH 45263, is the
Custodian for the Funds and makes all receipts and disbursements under a
Custodian agreement. The Custodian performs no managerial or policymaking
functions of the Fund.
TRANSFER AGENT AND
DIVIDEND DISBURSEMENT
Nationwide Investors Services, Inc. (NIS) is the Transfer and Dividend
Disbursing Agent for all Nationwide Funds. NIS, a wholly-owned subsidiary of
Nationwide Financial Services, Inc. received fees for transfer agent services
during the fiscal year ended October 31, 1995 of $163,259 from the Nationwide
Tax-Free Income Fund and $40,489 from the Nationwide U. S. Government Income
Fund. Management believes the charges for the services performed are comparable
to fees charged by other companies performing similar services.
BROKERAGE ALLOCATION
There is no commitment to place orders with any particular broker/dealer or
group of broker/dealers. Orders for the purchases and sales of portfolio
securities of the Funds are placed where, in the judgment of the Investment
Manager, the best executions can be obtained. None of the firms with whom orders
are placed are engaged in the sale of shares of the Funds. In allocating orders
among brokers for execution on an agency basis, in addition to price
considerations, the usefulness of the brokers' overall services is also
considered. Services provided by brokerage firms include efficient handling of
orders, useful analyses of corporations, industries and the economy, statistical
reports and other related services for which no charge is made by the broker
over and above negotiated brokerage commissions. The Fund and the Investment
Manager believe that these services and information, which in many cases would
be otherwise unavailable to the Investment Manager, are of significant value to
the Investment Manager, but it is not possible to place an exact dollar value
thereon. The Investment Manager does not believe that the receipt of such
services and information tends to reduce materially the Investment Manager's
expense.
No formula, method or criteria other than as stated above was used in
the allocation of orders among any such firms. In the case of securities traded
in the over-the-counter market, the Funds normally deal with the market makers
for such securities unless better prices can be obtained through brokers.
<PAGE> 52
TAX STATUS
FEDERAL TAXES--The Funds intend to qualify for treatment under subchapter M of
the Internal Revenue Code of 1986, as amended, and, therefore, must distribute
substantially all of its net investment income and capital gains to shareholders
annually. In general, if a Fund distributes all of its net investment income, it
is not required to pay any federal income taxes. In addition to federal income
tax, if a Fund fails to distribute the required portion of such investment
income or capital gains in any year, it will be subject to a non-deductible 4%
excise tax on the amount which it has failed to distribute. The Funds intend to
make distributions in amounts sufficient to avoid the imposition of this excise
tax.
Dividends paid by the Tax-Free Income Fund will be exempt from federal
income tax to the extent that the income of the Fund is derived from bonds which
qualify for such exemption. Some portion of the income from the Tax-Free Income
Fund may be taxable annually. The taxable portion of each distribution will be
based on the ratio, each year, between the Fund's taxable income and total
income. Such ratio shall be determined within 60 days following the close of the
taxable year. The annual ratio may differ significantly from the ratio for the
period actually covered by each distribution.
Dividends paid by the Nationwide U.S. Government Income Fund are
taxable as income to the shareholder for federal income tax purposes. For
corporate shareholders, the appropriate portion of each year's distribution is
eligible for the corporate dividend received deduction.
Under current tax law as of February 29, 1996, net long-term capital
gains, if any, realized by the Funds are generally taxable to the shareholder at
the same tax rate as ordinary income, but in no event may the tax rate on such
gains exceed 28% for individuals or 35% for a corporation.
Shareholders not subject to tax on their income will not have to pay
tax on amounts distributed to them.
The Funds will annually report to each shareholder that shareholder's
portion of the net income and capital gain of the Funds for inclusion in the
shareholder's income.
Individual and corporate shareholders may be subject to the Alternative
Minimum Tax ("AMT") if their Alternative Minimum Taxable Income ("AMTI") exceeds
the exemption amounts set forth in Section 55 of the Code. The AMT, at rates as
high as 28% for individuals and 20% for corporations, is reduced by the regular
tax due for the year. AMTI is the taxpayer's taxable income for the year for
regular tax purposes, increased by the tax preferences described in Section 57
of the Code and adjusted as described in Section 56 of the Code. Preferences
include interest from Specified Private Activity Bonds, a type of state or local
government bond described in Section 57 (a) (5) (C) of the Code. Bonds of this
type may be held for one or more of the Funds from time to time.
A shareholder may be subject to federal backup withholding at a rate of
31% of each distribution if the shareholder fails to certify that the taxpayer
identification number given is correct and that the shareholder is not subject
to such withholding because of underreporting of income (or if the Internal
Revenue Service gives notice that such certifications are not accurate).
STATE AND LOCAL TAXES--Distributions to shareholders of the Funds may
be subject to state and local taxes, even if not subject to federal income
taxes. These laws vary, and you are advised to consult a tax adviser regarding
such taxes.
<PAGE> 53
STATEMENTS OF ASSETS AND LIABILITIES
Year Ended October 31, 1995
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R)
TAX-FREE U.S. GOV'T
INCOME FUND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
Investments in securities, at value (cost $443,788,910, 258,600,418 39,693,331
$550,074,584, $126,868,177, $246,442,310,
$38,895,802, and $604,306,639, respectively)
- ---------------------------------------------------------------------------------------------------------------------------
Cash 812,050 --
- ---------------------------------------------------------------------------------------------------------------------------
Accrued interest and dividends receivable 4,926,872 250,276
- ---------------------------------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 206,404 7,674
- ---------------------------------------------------------------------------------------------------------------------------
Receivable for investment securities sold -- 60,989
- ---------------------------------------------------------------------------------------------------------------------------
Total assets 264,545,744 40,012,270
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ---------------------------------------------------------------------------------------------------------------------------
Payable for investment securities purchased 1,075,950 --
- ---------------------------------------------------------------------------------------------------------------------------
Net payable for Fund shares redeemed 412,007 146,292
- ---------------------------------------------------------------------------------------------------------------------------
Sales charge payable 3,306 --
- ---------------------------------------------------------------------------------------------------------------------------
Accrued management fees (note 2) 143,476 21,789
- ---------------------------------------------------------------------------------------------------------------------------
Accrued transfer agent fees (note 2) 26,492 3,224
- ---------------------------------------------------------------------------------------------------------------------------
Accrued distribution fees (note 2) 43,633 6,704
- ---------------------------------------------------------------------------------------------------------------------------
Distribution payable 320,784 47,875
- ---------------------------------------------------------------------------------------------------------------------------
Other accrued expenses 36,493 9,416
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 2,062,141 235,300
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS 262,483,603 39,776,970
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
REPRESENTED BY:
Capital Shares, $1 par value outstanding 25,690,778 3,930,076
- ---------------------------------------------------------------------------------------------------------------------------
Capital paid in excess of par value 229,936,563 35,485,445
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation 12,158,108 797,529
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) (5,307,081) (436,080)
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of)
net investment income 5,235 --
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS 262,483,603 39,776,970
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Shares outstanding (unlimited number of shares authorized) 25,690,778 3,930,076
- ---------------------------------------------------------------------------------------------------------------------------
Net assets per share 10.22 10.12
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 54
STATEMENTS OF OPERATIONS
Year Ended October 31, 1995
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R)
TAX-FREE U.S. GOV'T
INCOME FUND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------------------------------
Income:
- ---------------------------------------------------------------------------------------------------------------------------
Interest 15,520,660 2,678,439
- ---------------------------------------------------------------------------------------------------------------------------
Total income 15,520,660 2,678,439
- ---------------------------------------------------------------------------------------------------------------------------
Expenses (note 2):
- ---------------------------------------------------------------------------------------------------------------------------
Investment management fees 1,629,584 248,765
- ---------------------------------------------------------------------------------------------------------------------------
Distribution fees 878,689 133,950
- ---------------------------------------------------------------------------------------------------------------------------
Transfer agent fees 163,259 40,489
- ---------------------------------------------------------------------------------------------------------------------------
Shareholders' reports 69,661 20,889
- ---------------------------------------------------------------------------------------------------------------------------
Registration fees 21,958 13,494
- ---------------------------------------------------------------------------------------------------------------------------
Professional services 29,926 4,374
- ---------------------------------------------------------------------------------------------------------------------------
Custodian fees 30,000 4,750
- ---------------------------------------------------------------------------------------------------------------------------
Trustees' fees and expenses 2,704 409
- ---------------------------------------------------------------------------------------------------------------------------
Other 11,142 2,177
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses before waived expenses 2,836,923 469,297
- ---------------------------------------------------------------------------------------------------------------------------
Total waived expenses (376,581) (57,407)
- ---------------------------------------------------------------------------------------------------------------------------
Net expenses 2,460,342 411,890
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 13,060,318 2,266,549
- ---------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investments (note 3) (3,951,178) 70,730
- ---------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 24,981,359 3,505,345
- ---------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 21,030,181 3,576,075
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 34,090,499 5,842,624
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 55
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R)
TAX-FREE INCOME FUND U.S. GOV'T INCOME FUND
========================== ===========================
Year ended Year ended Year ended Year ended
October 31, October 31, October 31, October 31,
1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income $ 13,060,318 12,693,760 2,266,549 2,181,294
Net realized gain (loss) on investments (3,951,178) (1,355,903) 70,730 (506,810)
Net change in unrealized appreciation
or depreciation of investments 24,981,359 (34,497,354) 3,505,345 (3,400,389)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 34,090,499 (23,159,497) 5,842,624 (1,725,905)
- ----------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (13,407,484) (12,754,708) (2,266,549) (2,213,397)
Net realized gain from investment transactions -- (2,730,484) -- (290,611)
Paid in capital -- -- (14,726) --
- ----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions (13,407,484) (15,485,192) (2,281,275) (2,504,008)
to shareholders
- ----------------------------------------------------------------------------------------------------------------------------------
Capital share transactions:
Net proceeds from sale of shares 18,662,663 43,480,776 3,165,132 8,821,355
Net asset value of shares issued to shareholders
from reinvestment of dividends and distributions 10,382,144 10,818,456 1,830,091 1,705,923
Cost of shares redeemed (28,340,872) (27,599,621) (6,528,260) (7,000,815)
Increase (decrease) in net assets derived 703,935 26,699,611 (1,533,037) 3,526,463
from capital share transactions
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 21,386,950 (11,945,078) 2,028,312 (703,450)
NET ASSETS--BEGINNING OF PERIOD 241,096,653 253,041,731 37,748,658 38,452,108
NET ASSETS--END OF PERIOD $ 262,483,603 241,096,653 39,776,970 37,748,658
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) on investments
included in net assets at end of period (note 1) $ (5,307,081) (1,355,903) (436,080) (506,810)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Undistributed (distributions in excess of) net investment
income included in net assets at end of period (note 1) $5,235 352,401 -- (35,184)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Shares sold 1,898,854 4,201,850 326,609 893,369
- ----------------------------------------------------------------------------------------------------------------------------------
Shares issued to shareholders from reinvest-
ment of dividends and distributions 1,056,582 1,052,029 189,664 174,751
- ----------------------------------------------------------------------------------------------------------------------------------
Shares redeemed (2,901,957) (2,727,527) (681,184) (720,169)
Net increase (decrease) in number of shares 53,479 2,526,352 (164,911) 347,951
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE> 56
NATIONWIDE TAX-FREE INCOME FUND
Statement of Investments - October 31, 1995
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE (NOTE 1)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES - (98.5%)
ALABAMA (3.3%)
Birmingham, Alabama General Obligation Refunding
$2,500,000 Revenue, Series 1992 B, 6.25%, 2016............................. $2,587,500
Birmingham, Alabama Water Works & Sewer Board Refunding
2,480,000 Revenue, Series 1992, 6.125%, 2012.............................. 2,582,300
Huntsville, Alabama General Obligation Limited Tax
3,500,000 Warrants, Series 1992 A, 6.00%, 2012............................ 3,600,625
----------
8,770,425
----------
ARIZONA (3.0%)
Salt River Project, Agricultural Improvement & Power
District, Arizona Electric System Revenue Bonds,
5,100,000 Series 1992 C, 6.00%, 2016...................................... 5,195,625
Salt River Project, Agricultural Improvement & Power
District, Arizona Electric System Revenue Bonds,
2,500,000 Series 1992 C, 6.20%, 2012...................................... 2,603,125
----------
7,798,750
----------
COLORADO (0.4%)
Colorado Housing Finance Authority Single-Family
Housing Revenue Refunding Bonds,
1,000,000 Series 1991-A, 7.15%, 2014...................................... 1,046,250
----------
CONNECTICUT (2.0%)
Connecticut Housing Finance Authority
Housing Mortgage Finance Program Bonds,
5,000,000 Series 1992-B, 6.70%, 2012...................................... 5,281,250
----------
FLORIDA (2.5%)
Florida Municipal Power Agency, Stanton II Project Revenue
1,880,000 Bonds, Series 1992, 6.50%, 2020................................. 2,122,050
Florida State Full Faith and Credit Capital Outlay
1,550,000 Bonds, Series 1991 A, 6.75%, 2012............................... 1,728,250
Jacksonville, Florida Electric Authority Bulk Power
Revenue Bonds, (Scherer 4 Project, Issue One,
2,400,000 Series 1991-A), 7.00%, 2012..................................... 2,709,000
----------
6,559,300
----------
GEORGIA (5.0%)
Atlanta, Georgia General Obligation School Improvement
1,805,000 Bonds, Series 1993, 5.60%, 2018................................. 1,777,925
Dekalb County, Georgia General Obligation Refunding
2,710,000 Bonds, 6.00%, 2012.............................................. 2,831,950
Georgia General Obligation Refunding Revenue Bonds,
2,500,000 Series 1993 D, 6.50%, 2008...................................... 2,825,000
Georgia Municipal Electric Authority Power Revenue
1,600,000 Bonds, Series T, 6.50%, 2025.................................... 1,618,000
Georgia Municipal Electric Authority Power Revenue
2,750,000 Bonds, Series 1991-V, 6.60%, 2018............................... 2,976,875
Georgia Residential Financial Authority Revenue Bonds,
1,005,000 Series A, 7.50%, 2017........................................... 1,062,788
----------
13,092,538
----------
ILLINOIS (7.9%)
Chicago, Illinois General Airport Revenue Refunding Bonds,
Series 1993-A (Chicago-O'Hare International Airport),
3,000,000 5.00%, 2016..................................................... 2,696,250
Illinois Educational Facility Authority Revenue, Series
2,185,000 1991-A, Loyola University, 7.125%, 2021......................... 2,419,888
Illinois State Build Illinois Bonds Sales Tax Revenue,
7,500,000 Series O, 6.00%, 2018........................................... 7,593,750
Illinois State Build Illinois Bonds Sales Tax Revenue,
2,500,000 Series V, 6.375%, 2017.......................................... 2,653,125
Illinois State General Obligation Bonds,
3,000,000 Series of March 1994, 5.80%, 2019............................... 2,958,750
Illinois State General Obligation Bonds,
1,350,000 Series of July 1995, 5.75%, 2016................................ 1,343,250
Palatine, Illinois Corporate Purpose General Obligation
1,000,000 Bonds, Series 1985, 9.90%, 2016................................. 1,210,000
----------
20,875,013
----------
INDIANA (2.8%)
Indiana State Toll Road Commission East-West Toll Road
5,335,000 Revenue Bonds, Series 1980, 9.00%, 2015......................... 7,322,288
----------
MAINE (0.4%)
Maine Municipal Bond Bank General Obligation,
1,000,000 Series 1988 A, 7.70%, 2008...................................... 1,118,750
----------
MARYLAND (2.5%)
Baltimore County, Maryland General Obligation
Pension Funding Bonds, Refunding
$3,200,000 Series 1991, 6.70%, 2016........................................ 3,420,000
Howard County, Maryland Public Improvement
General Obligation Unlimited Tax,
1,000,000 Series 1994 A, 6.00%, 2014...................................... 1,027,500
Montgomery County, Maryland Consolidated Public
1,700,000 Improvement Bonds, Series 1984, 9.75%, 2001..................... 2,135,625
----------
6,583,125
----------
MASSACHUSETTS (4.9%)
Massachusetts Bay Transportation Authority, General
Transportation System Bonds, Series 1991 A,
2,600,000 7.00%, 2011..................................................... $2,944,500
Massachusetts State General Obligation Bonds Consolidated
3,775,000 Loan, Series 1992-B, 6.50%, 2013................................ 4,034,531
Massachusetts State General Obligation Bonds Consolidated
2,250,000 Loan, Series 1993-B, 4.875%, 2013............................... 2,055,938
Massachusetts Water Resources Authority General Revenue Bonds,
4,000,000 Series 1992A, 5.50%, 2022....................................... 3,800,000
----------
12,834,969
----------
MICHIGAN (1.5%)
Michigan State General Obligation Bonds, Environmental
3,500,000 Protection Program, Series 1992, 6.25%, 2012.................... 3,828,125
----------
MINNESOTA (1.6%)
Minnesota State Housing Finance Agency Single Family
Mortgage Revenue Bonds,
4,000,000 Series 1994 K, 6.40%, 2015...................................... 4,135,000
----------
MISSOURI (1.2%)
Kansas City, Missouri Water Works & Sewer Board
1,000,000 Refunding Revenue, Series 1994-D, 6.55%, 2012................... 1,085,000
Missouri State Environmental Improvement & Energy
Resources Authority Water Pollution Control Revenue
2,000,000 Bonds, 6.55%, 2014.............................................. 2,147,500
----------
3,232,500
----------
NEBRASKA (2.0%)
Nebraska Public Power District Power Supply System
5,000,000 Revenue Bonds, Series 1993, 6.125%, 2015........................ 5,137,500
----------
NEW YORK (0.4%)
New York Local Government Assistance Corporation,
1,000,000 Series 1991-B, 7.50%, 2020...................................... 1,161,250
----------
NORTH CAROLINA (3.7%)
Charlotte-Mecklenburg Hospital Authority, North Carolina
Health Care System Revenue Bonds,
1,035,000 Series 1992, 6.00%, 2022........................................ 1,042,762
North Carolina Housing Finance Agency Single Family
2,350,000 Revenue Bonds, Series AA, 6.25%, 2017........................... 2,397,000
North Carolina Housing Finance Agency Single Family
2,085,000 Revenue Bonds, Series J, 7.40%, 2022............................ 2,173,613
North Carolina Housing Finance Agency Single Family
1,910,000 Revenue Bonds, Series N, 7.40%, 2028............................ 2,003,112
North Carolina Medical Care Commission Hospital Revenue
Refunding Bonds, Series 1992 A (North Carolina Baptist
2,000,000 Hospitals Project), 6.375%, 2014................................ 2,085,000
----------
9,701,487
----------
OHIO (0.9%)
Columbus, Ohio Water Works & Sewer Board Refunding
1,000,000 Revenue, Series 1991, 6.375%, 2010............................. 1,062,500
Ohio State Full Faith & Credit General Obligation
Infrastructure Improvement & Refunding Bonds,
1,395,000 Series 1994, 4.80%, 2013....................................... 1,295,606
----------
2,358,106
----------
PENNSYLVANIA (2.9%)
Pennsylvania Housing Finance Agency Rental
Housing Refunding Revenue Bonds,
4,055,000 Issue 1992, 6.40%, 2012......................................... 4,125,962
Pennsylvania Housing Finance Agency Rental
Housing Refunding Revenue Bonds,
1,500,000 Issue 1992, 6.25%, 2007......................................... 1,546,875
</TABLE>
(continued)
<PAGE> 57
NATIONWIDE TAX-FREE INCOME FUND (Continued)
Statement of Investments - October 31, 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE (NOTE 1)
- ----------------------------------------------------------------------------------------------
<S> <C>
Pennsylvania State Turnpike Commission Oil
2,000,000 Franchise Tax Revenue, Series A, 6.00%, 2014.............. 2,045,000
------------
7,717,837
------------
SOUTH CAROLINA (4.7%)
Charleston, South Carolina Waterworks & Sewer System
Refunding & Capital Improvement Revenue Bonds,
6,980,000 Series 1991, 6.00%, 2018.................................. 7,128,325
South Carolina State Housing Finance & Development
Authority Multi-Family Development Revenue Refunding,
1,500,000 Series 1992-A, 6.875%, 2023............................... 1,554,375
South Carolina State Housing Finance & Development
Authority Homeownership Mortgage Purchase Bonds,
2,075,000 Series 1994 A, 6.375%, 2016............................... 2,106,125
Spartanburg, South Carolina Water System
Improvement & Refunding Revenue Bonds,
1,500,000 Series 1992, 6.25%, 2017.................................. 1,561,875
------------
12,350,700
------------
TENNESSEE (1.4%)
Nashville & Davidson County, Tennessee General
Obligation Multi-purpose Improvement Bonds,
1,000,000 Series 1994, 6.125%, 2014................................. 1,040,000
Nashville & Davidson County, Tennessee Health &
Educational Facilities Revenue Bonds, Series 1979,
1,500,000 7.875%, 2004.............................................. 1,685,625
Shelby County, Tennessee General Obligation
$1,000,000 School Bonds, Series 1994 B, 6.00%, 2014..................... $ 1,025,000
------------
3,750,625
------------
TEXAS (21.3%)
Bexar County, Texas Combination Tax and Revenue
5,000,000 Certificates, Series 1992, 6.20%, 2012.................... 5,168,750
Grand Prairie Independent School District, Texas
Unlimited Tax School Building Bonds,
1,075,000 Series 1992, 6.50%, 2011.................................. 1,159,750
Harris County, Texas Detention Facility Certificates,
1,000,000 Series 1992, 6.00%, 2010.................................. 1,068,750
Harris County, Texas General Obligation Tax and Revenue
3,500,000 Certificates, Series 1994, 6.10%, 2013.................... 3,626,875
Harris County, Texas Toll Road Revenue, Series 1992 A,
1,835,000 6.50%, 2011............................................... 1,958,862
Houston, Texas General Obligation Public Improvement
5,435,000 Unrefunded, Series C, 6.25%, 2012......................... 5,638,813
Houston, Texas Water & Sewer Junior Lien Revenue
7,720,000 Refunding, Series 1991-C, 6.375%, 2017.................... 8,067,400
Irving, Texas Independent School District Unlimited Tax
School Building Bonds, Series 1991-C-Permanent School
1,215,000 Fund, 5.25%, 2009......................................... 1,196,775
Lower Colorado River Authority Texas Junior Lien Refunding
3,390,000 Revenue Bonds, Series 1992, 6.00%, 2017................... 3,436,612
San Antonio, Texas Electric & Gas Systems
Revenue Refunding Bonds,
2,700,000 New Series 1989-B, 6.50%, 2012............................ 2,828,250
San Antonio, Texas General Improvement Refunding Bonds,
5,000,000 Series 1992, 5.75%, 2013.................................. 5,031,250
Texas State Water Development Bonds,
3,175,000 Series 1994, 6.90%, 2017.................................. 3,500,438
Texas Water Resources Finance Authority Revenue Bonds,
1,490,000 Series 1989, 7.625%, 2008................................. 1,629,688
University of Texas Revenue Financing System,
2,750,000 Series 1991-B, 6.75%, 2013................................ 2,966,562
University of Texas Revenue Financing System,
2,000,000 Series 1991, 6.50%, 2011.................................. 2,130,000
University of Texas System Permanent University Fund
2,000,000 Bonds, Series 1992B, 6.25%, 2013.......................... 2,067,500
Weatherford, Texas Independent School District Unlimited
Tax School Building and Refunding Bonds,
3,000,000 Series 1994, 6.50%, 2015.................................. 3,195,000
Weatherford, Texas Independent School District Unlimited
Tax School Building and Refunding Bonds,
1,090,000 Series 1994, 6.40%, 2012.................................. 1,162,212
------------
55,833,487
------------
UTAH (2.0%)
Intermountain Power Agency, Utah Power Supply Revenue
$5,580,000 Refunding Bonds, Series 1993-A, 5.50%, 2020............... 5,328,900
------------
VIRGINIA (11.8%)
Fairfax County, Virginia Water Authority Water Refunding
1,500,000 Revenue Series 1992, 6.00%, 2022.......................... 1,530,000
Henrico County, Virginia Water and Sewer System Refunding
4,250,000 Revenue Bonds, Series 1994, 5.875%, 2014.................. 4,313,750
Newport News, Virginia General Improvement Bonds,
1,985,000 Series 1993 E, 5.20%, 2013................................ 1,905,600
Richmond, Virginia General Obligation Public
Improvement Refunding Bonds, Series 1991-B,
8,000,000 6.25%, 2018............................................... $ 8,140,000
Virginia Housing Development Authority Commonwealth
2,150,000 Mortgage Bonds, Series 1993 H, 5.25%, 2023................ 1,943,062
Virginia Housing Development Authority Commonwealth
Mortgage Bonds, Series 1992 C Subseries C-7,
2,000,000 6.30%, 2015............................................... 2,037,500
Virginia Housing Development Authority
Commonwealth Mortgage Bonds, 1995 Series B,
1,000,000 Subseries B-3, 6.35%, 2015................................ 1,020,000
Virginia Housing Development Authority Commonwealth
5,500,000 Mortgage Bonds, Series 1992 A, 7.10%, 2022................ 5,809,375
Virginia Housing Development Authority Commonwealth
Mortgage Bonds, Series 1995-D, Subseries D-1,
1,080,000 5.95%, 2013*.............................................. 1,080,000
Virginia Housing Development Authority Commonwealth
Mortgage Bonds, Series B, Subseries B-2,
1,000,000 6.50%, 2010............................................... 1,068,750
Virginia Public School Authority School Financing Bonds
2,000,000 (1991 Resolution), Series 1994 A, 6.20%, 2013............. 2,095,000
------------
30,943,037
------------
WASHINGTON (5.9%)
Seattle, Washington Metropolitan General Obligation Bonds,
2,950,000 Series 1991, 6.875%, 2020................................. 3,045,875
Seattle, Washington Municipal Light and Power Refunding
1,500,000 Revenue Bonds, Series 1992 B, 5.75%, 2010................. 1,533,750
Washington State General Obligation, Series 1992 A and
8,635,000 AT-6, 5.75%, 2017......................................... 8,591,825
Washington State General Obligation Unlimited Tax,
2,155,000 Series DD-14 and B, 6.00%, 2015........................... 2,184,631
------------
15,356,081
------------
WISCONSIN (2.5%)
Wisconsin State General Obligation, Series 1992-A,
2,000,000 6.30%, 2011............................................... 2,182,500
Wisconsin State General Obligation Bonds, Series 1994 A,
2,000,000 5.00%, 2014............................................... 1,860,000
Wisconsin State Transportation Revenue Bonds, Series A,
2,500,000 5.50%, 2012............................................... 2,440,625
------------
6,483,125
------------
Total municipal securities
(cost $246,442,310)....................................... $258,600,418
============
</TABLE>
Cost also represents cost for Federal income tax purposes. Portfolio holding
percentages represent market value as a percentage of net assets.
*When-issued security. The Statement of Additional Information states this type
of security has a longer settlement period than is customary. The Tax-Free Fund
has committed high quality debt securities to equal the amount required for
settlement.
See accompanying notes to financial statements.
<PAGE> 58
NATIONWIDE U.S. GOVERNMENT INCOME FUND
Statement of Investments - October 31, 1995
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE (NOTE 1)
- ----------------------------------------------------------------------------------
<S> <C>
MORTGAGE BACKED SECURITIES (74.3%)
FHLMC REMIC Series 1462, Class PT,
$5,000,000 7.50%, 2003...................................... $ 5,182,895
FHLMC REMIC Series 1313, Class G,
3,000,000 7.25%, 2007...................................... 3,065,817
FHLMC REMIC Series 1344, Class D,
4,000,000 6.00%, 2007...................................... 3,757,476
FHLMC REMIC Series 31, Class E,
3,437,917 7.55%, 2020...................................... 3,514,373
FNMA REMIC Series 1992-126, Class VB,
1,500,000 8.00%, 2002...................................... 1,570,243
FNMA REMIC Series 1992-151, Class H,
4,000,000 6.00%, 2007...................................... 3,799,036
FNMA REMIC Series 1988-25, Class B,
547,340 9.25%, 2018...................................... 571,324
FNMA REMIC Series 1990-7, Class B,
3,000,000 8.50%, 2020...................................... 3,122,517
FNMA REMIC Series 1993-203, Class PJ,
5,000,000 6.50%, 2023...................................... 4,971,845
-----------
Total mortgage backed securities
(cost $29,076,198)............................... 29,555,526
-----------
U.S. GOVERNMENT AND AGENCY
LONG-TERM OBLIGATIONS (19.3%)
Federal Home Loan Banks
1,000,000 7.08%, 2000...................................... 1,006,146
4,000,000 6.36%, 2001...................................... 4,043,172
Federal Home Loan Mortgage Corp.
1,000,000 6.31%, 2004...................................... 977,190
Federal National Mortgage Association
1,000,000 7.05%, 2000...................................... 1,010,659
Resolution Funding STRIPS,
2,000,000 0.00%, 2013...................................... 620,638
-----------
Total U.S. government and agency
long-term obligations
(cost $7,339,604)................................ 7,657,805
-----------
REPURCHASE AGREEMENT (6.2%)
Prudential Securities
5.75%, due 11/1/95, Collateralized by
$2,670,000 U.S. Treasury Bills, due 10/17/96
market value - $2,536,126
2,480,000 (cost $2,480,000)............................ 2,480,000
-----------
Total investments
(cost $38,895,802)............................... $39,693,331
===========
</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.
<PAGE> 59
NOTES TO FINANCIAL STATEMENTS
October 31, 1995--
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
1 Nationwide Investing Foundation II (NIF-II) is a diversified, open-end
investment company. NIF-II was created under the laws of Massachusetts as
a Massachusetts Business Trust on October 5, 1985. The Trust, which is
registered under the Investment Company Act of 1940, as amended, offer shares in
two separate mutual funds.
SECURITY VALUATION
(a) 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 Board of Trustees. Short-term
securities are valued at amortized cost, which approximates market.
FEDERAL INCOME TAXES
NIF-II qualifies as a regulated investment company 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 Trust. Each fund within the Trust is treated as a separate entity.
As of October 31, 1995, the Tax-Free Income Fund had a net capital loss carry
forward in the amount of $5,307,081 which will expire within 7 to 8 years.
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 or constant yield
amortization of premium or discount.
DIVIDENDS TO SHAREHOLDERS
The Tax-Free Income and U.S. Government Income Funds declare income dividends
daily and pay dividends monthly from the sum of 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. Accordingly, undistributed net investment
income and paid-in capital as of October 31, 1995, have been adjusted by the
following amounts:
<TABLE>
<CAPTION>
Undistributed Net Paid-in
Investment Income Capital
<S> <C> <C>
U.S. Gov't Income $35,184 (35,184)
</TABLE>
These reclassifications have no effect upon the net asset value of the fund.
EXPENSES
Direct expenses of a fund are allocated to that fund. General expenses of the
Trust are allocated to the funds based upon each fund's relative average net
assets.
TRANSACTION WITH AFFILIATES
2 Tax-Free Income and U.S. Gov't Income Funds As investment manager for each
NIF-II Fund, NFS receives 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,
1995.
NFS 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,
which were waived prior to March 1, 1990, are based on average daily net assets
of each Fund at an annual rate of .35%. During the year ended October 31, 1995,
each Fund paid distribution fees at the annual rate of .20% of average daily net
assets, with the distributor waiving the remaining .15%. During year ended
October 31, 1995, NFS waived $376,581 and $57,407 for both the Tax-Free Income
and U.S. Government Income Funds, representing $.015 and $.014 per average share
outstanding, respectively.
NFS 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 $234,339 on the Tax-Free Income Fund shares and $72,664
on the U.S. Government Income Fund shares for the year ended October 31, 1995.
TRANSFER & DIVIDEND DISBURSING AGENT
A subsidiary of NFS (Nationwide Investors Services, Inc.) acts as Transfer and
Dividend Disbursing Agent for the Funds.
BANK LOANS
3 The NIF II Trust has an unsecured bank line of credit of $2,250,000.
Borrowings under this arrangement bear interest at the Federal Funds rate plus
.50%. No compensating balances are required.
INVESTMENT TRANSACTIONS
4 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, 1995 are summarized as follows:
<TABLE>
<CAPTION>
Purchases Sales
<S> <C> <C>
Tax-Free Income $78,571,457 80,392,065
U.S. Gov't Income -- 1,232,575
</TABLE>
U.S. Government Obligations
<TABLE>
<CAPTION>
Purchases Sales
<S> <C> <C>
Tax-Free Income $10,429,189 11,414,201
U.S. Gov't Income -- --
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized appreciation (depreciation) at October 31, 1995 are
the following components:
<TABLE>
<CAPTION>
Net unrealized
Unrealized Unrealized appreciation
gains losses (depreciation)
<S> <C> <C> <C>
Tax-Free Income $12,726,453 (568,345) 12,158,108
U.S. Gov't Income 985,117 (160,588) 797,529
</TABLE>
<PAGE> 60
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of 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
II--Nationwide Tax-Free Income Fund and Nationwide U.S. Government Income
Fund--as of October 31, 1995, and the related statements of operations,
statements of changes in net assets and financial highlights for each of the
periods indicated herein. These financial statements and 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, 1995 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 II as
of October 31, 1995, 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 8, 1995
<PAGE> 61
APPENDIX
MUNICIPAL BONDS
Excerpts from Moody's Investors Service Inc., description of its three highest
bond ratings: Aaa--judged to be the best quality. They carry the smallest degree
of investment risk; Aa--judged to be of high quality by all standards;
A--possess favorable attributes and are considered "upper medium" grade
obligations. Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbol Aa 1, A 1, Baa 1, Ba 1 and B 1.
Excerpts from Standard & Poor's Corporation description of its three highest
bond ratings: AAA--highest grade obligations; they possess the ultimate degree
of protection as to principal and interest; AA--also qualify as high grade
obligations, and, in the majority of instances, differ from AAA issues only in a
small degree; A--strong ability to pay interest and repay principal although
more susceptible to change in circumstances.
COMMERCIAL PAPER
Excerpts from Standard & Poor's Corporation description of its two highest
commercial paper ratings:
A-1--judged to be the highest investment grade category possessing the highest
relative strength;
A-2--investment grade category possessing less relative strength than the
highest rating.
Excerpts from Moody's Investors Service, Inc., description of its two highest
commercial paper ratings:
P-1--the highest grade possessing greatest relative strength;
P-2--second highest grade possessing less relative strength than the highest
grade.
STATE AND MUNICIPAL NOTES
Excerpts from Moody's Investors Service, Inc., description of state and
municipal note ratings:
MIG-1--Notes bearing this designation are of the best quality, enjoying strong
protection from established cash flows of funds for their servicing or from
established and broad-based access to the market for refinancing, or both.
MIG-2--Notes bearing this designation are of high quality, with margins of
protection ample although not so large as in the preceding group.
MIG-3--Notes bearing this designation are of favorable quality, with all
security elements accounted for but lacking the strength of the preceding grade.
Market access for refinancing, in particular, is likely to be less well
established.
<PAGE> 62
INDEPENDENT AUDITORS' CONSENT
To the Trustees
Nationwide Investing Foundation II:
We consent to the use of our report dated December 8, 1995 included in the
Statement of Additional Information and to the reference to our firm under the
heading "Financial Highlights" in the prospectus.
KPMG Peat Marwick LLP
Columbus, Ohio
February 29, 1996
<PAGE> 63
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Nationwide Tax-Free Income Fund
Nationwide U.S. Governement Bond Fund
Page
(1) Financial statements and schedules included in Prospectus (Part
A):
Financial Highlights for the Nationwide Tax-Free Income Fund
for the years ended October 31, 1995, 1994, 1993, 1992, 1991,
1990, 1989, 1988, 1987, and the period from March 17, 1986
(date of commencement of operations) through October 31, 1986.
Financial Highlights for the Nationwide U.S. Government Income
Fund for the years ended October 31, 1995, 1994, 1993, and the
period from February 10, 1992 (date of commencement of operations
through October 31, 1992.
(2) Financial statements and schedules included in Part B:
Those financial statements and schedules required by Item 23 to
be included in Part B have been incorporated therein by
reference to the Prospectus (Part A).
Statements of Assets and Liabilities at October 31, 1995.
Statements of Operations for the year ended October 31, 1995.
Statements of Changes in Net Assets for the Nationwide Tax-Free
Income Fund for the years ended October 31, 1995, 1994, and
1993 and for the Nationwide U.S. Government Income Fund for the
years ended October 31, 1995, 1994, and 1993.
Statements of Investments at October 31, 1995.
Notes to Financial Statements.
Independent Auditors' Report relating to the above financial
statements and the Financial Highlights.
Appendix
(b) Exhibits:
(1) Amended Declaration of Trust (Charter), previously filed with
Registration Statement and Post- Effective Amendments, and
herein incorporated by reference.
(2) Amended Bylaws, previously filed with Registration Statement
and Post-Effective Amendments, and herein incorporated by
reference.
(3) Not applicable.
(4) Not applicable.
<PAGE> 64
(5) Restated Investment Management Agreement, previously filed
with Registration Statement and Post-Effective Amendments, and
herein incorporated by reference.
(6) Restated Underwriting Contract, previously filed with
Registration Statement and Post-Effective Amendments, and
herein incorporated by reference.
(7) Not applicable.
(8) Restated Mutual Fund Custody Agreement, previously filed with
Registration Statement and Post- Effective Amendments, and
herein incorporated by reference.
(9) Not applicable.
(10) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will,
when sold, be legally issued, fully paid and non-assessable
was filed with the Securities and Exchange Commission on
December 20, 1995, pursuant to Rule 24f-2, and herein
incorporated by reference.
(11) Independent Auditors' Consent.
(12) Financial Statements for Inclusion, Part C of Registration
Statement.
(13) Not applicable.
(14) Not applicable.
(15) Restated Distribution Plan of Nationwide Investing Foundation
II, previously filed with Registration Statement and
Post-Effective Amendments and herein incorporated by
reference.
(16) Performance Quotation Computation Schedule.
Item 25. Persons Controlled by or Under Common Control with Registrant
No person is presently controlled by or under common control with
Registrant.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record
Holders as of
Title of Class December 31, 1995
-------------- -----------------
<S> <C>
Nationwide Tax-Free Income Fund 8,781
Nationwide U.S. Governement Income Fund 2,201
</TABLE>
Item 27. Indemnification
Indemnification provisions for officers, directors and employees of
Registrant are set forth in Article X, Section 2 of the Trust Indenture. Each
person who is or has been a Trustee, Officer or Beneficiary of the Trust shall
be indemnified by the Trust against expenses reasonably incurred by him in
connection with any claim or in connection with any action, suit or proceeding,
civil or criminal, to which he may be a party by reason of his being or having
been a Trustee, Officer or Beneficiary of the Trust, if he acted (i) in good
faith in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust and with respect to any criminal action or proceeding had
no reasonable cause to believe that his conduct was unlawful and (ii) without
willful misfeasance,
<PAGE> 65
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office. The term "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, fines, penalties, amounts paid in settlement
or to secure termination of litigation, and other liabilities, other than
amounts paid to the Trust itself.
Any indemnification under subsection (a) shall be made by the Trust
only upon the determination that indemnification is proper in the circumstances
because the Trustee, Officer or Beneficiary has met the applicable standards of
conduct set forth herein. The determination provided for herein shall be made
(1) by the Trustees of a majority vote of a quorum consisting of Trustees who
were not parties to such claim, action, suit or proceeding, or (2) if such a
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
Trustees so directs, by independent legal counsel in a written opinion, or (3)
by a majority vote of a quorum of the Beneficiaries at any regular or special
meeting of said Beneficiaries.
The foregoing right of indemnification shall be in addition to any
other rights to which such Trustee, Officer or Beneficiary may be entitled under
any regulation, agreement, insurance purchased by the Trust, vote of
Beneficiaries or disinterested Trustees or otherwise.
Anything to the contrary notwithstanding, nothing herein shall protect
any Trustee or Officer against any liability to the Trust or its Beneficiaries
to which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Item 28. Business and Other Connections of Investment Adviser
Nationwide Financial Services, Inc. (NFS), the investment adviser of
Nationwide Investing Foundation, also serves as investment adviser to the
Nationwide Investing Foundation II, Nationwide Separate Account Trust and
Financial Horizons Investment Trust, and serves as general distributor to the
Nationwide Multi-Flex, Nationwide Spectrum, Nationwide DC, and Nationwide
Variable Accounts, separate accounts of Nationwide Life Insurance Company,
registered as unit investment trusts under the Investment Company Act of 1940.
Directors and Officers of Investment Adviser
Lewis J. Alphin Farm Owner and Operator, 519 Bethel Church
Road, Mount Olive, NC 28365
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Wausau Service Corporation.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company.
Willard J. Engel General Manager--Lyon County Cooperative Oil
Company, 1100 East Main Street, Marshall, MN
56258
Director
Nationwide Mutual, Nationwide Mutual Fire,
<PAGE> 66
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company.
Fred C. Finney Farm Owner and Operator-Melrose Fruit Farm; Operator-
Melrose Orchard, 1558 West Moreland Road,
Wooster, OH 44691
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Wausau Service Corporation
Wausau Business Insurance Company
Wausau Underwriters Insurance Company
Wausau General Insurance Company.
Peter F. Frenzer President and Chief Operating Officer and Director
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
President and Director
California Cash Management Company
National Premium and Benefit Administration Company
Nationwide Cash Management Company
Nationwide Corporation
Nationwide Investors Services, Inc.
Nationwide Property Management, Inc.
Executive Vice President and Director
Employers Insurance of Wausau A Mutual Company
Employers Life Insurance Company of Wausau
Wausau Service Corporation
Wausau Preferred Health Insurance Company
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Indemnity Company
Executive Vice President
Colonial Insurance Company of California
Lone Star General Agency, Inc.
Nationwide Mutual Insurance Company
Nationwide Mutual Fire Insurance Company
Nationwide General Insurance Company
Nationwide Property and Casualty Insurance
Company
Executive Vice President-Investments
The Beak and Wire Corporation
<PAGE> 67
Colonial County Mutual Insurance Company
Trustee
Nationwide Insurance Enterprise Foundation
Vice Chairman and Director
Nationwide Financial Institution Distributors Agency, Inc.
Nationwide Communications Inc.
Nationwide Development Company
NEA Valuebuilder Investor Services, Inc.
PEBSCO Securities Corp.
Public Employees Benefit Services Corporation
Director, Chairman and Chief Executive Officer
Pension Associates of Wausau, Inc.
Director
Affiliate Agency, Inc.
Affiliate Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Alabama,
Inc.
Financial Horizons Distributors Agency of Ohio,
Inc.
Financial Horizons Distributors Agency of
Oklahoma, Inc.
Financial Horizons Securities Corporation
InHealth Agency, Inc.
Nationwide HMO, Inc.
InHealth Management Systems, Inc.
Landmark Financial Services of New York, Inc.
MRM Investments, Inc.
National Casualty Company
National Premium & Benefit Administration
Company
Nationwide Community Urban Redevelopment
Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company
NWE, Inc.
Chairman of the Board and Director
West Coast Life Insurance Company
Neckura Holding Company
Vice Chairman, President and Director
Nationwide Financial Services, Inc.
Chairman and Trustee
Financial Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust.
Charles L. Fuellgraf, Jr.
Chief Executive Officer
Fuellgraf Electric Co., Electrical Construction and
Engineering Services, 600 S. Washington St.,
Butler, PA 16001
<PAGE> 68
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Financial Services, Inc.
Nationwide Property Management, Inc.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company
Wausau Service Corporation
Chairman of the Board and Director
Nationwide Communications Inc.
Nationwide Development Company
Trustee
Nationwide Insurance Enterprise Foundation
Nationwide Investing Foundation.
Henry S. Holloway
FarmOwner and Operator, 1247 Stafford Road,
Darlington, MD 21034
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Property and Casualty, and Nationwide
General Insurance Companies
Chairman of the Board and Director
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Nationwide Corporation
Director
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Property Management, Inc.
Nationwide Development Company
Nationwide Financial Services, Inc.
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company
Wausau Service Corporation
West Coast Life Insurance Company
Trustee
Nationwide Insurance Enterprise Foundation.
Gordon E. McCutchan
Executive Vice President-Law and Corporate
Services and Secretary
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty, and Nationwide Life and
Annuity Insurance Companies
NEA Valuebuilder Investor Services, Inc.
<PAGE> 69
Nationwide Financial Institution Distributors Agency, Inc.
Colonial County Mutual Insurance Company
Colonial Insurance Company of California
Lone Star General Agency, Inc.
Nationwide Communications Inc.
Employers Insurance of Wausau A Mutual Company
National Premium and Benefit Administration Company
Nationwide Community Urban Redevelopment
Corporation
Nationwide Corporation
Nationwide Insurance Enterprise Foundation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Underwriters Insurance Company
Wausau Service Corporation
Wausau Business Insurance Company
Wausau General Insurance Company
West Coast Life Insurance Company
Executive Vice President-Law and Corporate
Services
Employers Life Insurance Company of Wausau
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Pension Associates of Wausau, Inc.
PEBSCO Securities Corp.
Public Employees Benefit Services Corporation
Wausau Preferred Health Insurance Company
Companies Agency, Inc.
Companies Agency of Alabama, Inc.
Companies Agency Insurance Services of California
Companies Agency of Idaho, Inc.
Companies Agency of Illinois, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Nationwide Development Company
Nationwide Property Management, Inc.
Wausau International Underwriters
Executive Vice President-Law and Corporate
Services and Director
Nationwide Financial Services, Inc.
Nationwide Investor Services, Inc.
Executive Vice President-Law and Corporate
Services and Secretary and Director
California Cash Management Company
National Casualty Company
Nationwide Cash Management Company
Nationwide Indemnity Company
Vice Chairman and Director
Neckura Insurance Company
Neckura Life Insurance Company
Secretary
The Beak and Wire Corporation
Affiliate Agency, Inc.
<PAGE> 70
Affiliate Agency of Ohio, Inc.
Financial Horizons Distributors Agency of Alabama,
Inc.
Financial Horizons Distributors Agency of Ohio,
Inc.
Financial Horizons Distributors Agency of
Oklahoma, Inc.
Financial Horizons Securities Corporation
Landmark Financial Services of New York, Inc.
NEA Valuebuilder Investor Services of Alabama,
Inc.
NEA Valuebuilder Investor Services of Montana
NEA Valuebuilder Investor Services of Nevada
NEA Valuebuilder Investor Services of Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma,
Inc.
NEA Valuebuilder Investor Services of Wyoming
Vice Chairman, Secretary and Director
Gates, McDonald & Company
Chairman of the Board, Secretary and Director
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York, Inc.
Secretary and Director
InHealth Agency, Inc.
Nationwide HMO, Inc.
InHealth Management Systems, Inc.
Director
Leben Direkt Insurance Company
MRM Investments, Inc.
NWE, Inc.
Neckura Holding Company.
D. Richard McFerson
President and Chief Executive Officer-Nationwide
Insurance Enterprise and Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and Annuity
Insurance Companies
Colonial Insurance Company of California
West Coast Life Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Company
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
National Casualty Company
Nationwide Financial Services, Inc.
California Cash Management Company
Nationwide Cash Management Company
Employers Insurance of Wausau A Mutual Company
Wausau Service Corporation
Wausau Business Insurance Company
Wausau Underwriters Insurance Company
Chairman, President and Chief Executive Officer-
Nationwide Insurance Enterprise and Director
American Marine Underwriters, Inc.
<PAGE> 71
Companies Agency, Inc.
Companies Agency of Alabama, Inc.
Companies Agency Insurance Services of California
Companies Agency of Idaho, Inc.
Companies Agency of Illinois, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Employers Life Insurance Company of Wausau
Nationwide Financial Institution Distributors Agency, Inc.
Wausau International Underwriters
Wausau Preferred Health Insurance Company
Chairman and Director
PEBSCO Securities Corp.
NEA Valuebuilder Investor Services, Inc.
President and Chief Executive Officer and Director
Nationwide Indemnity Company
Trustee
Financial Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust
Vice Chairman and Chief Executive Officer and
Director
Wausau General Insurance Company
Chairman of the Board
Nationwide Insurance Golf Charities, Inc.
Chairman of the Board and Director
Lone Star General Agency, Inc.
Nationwide Community Urban Redevelopment
Corporation
Colonial County Mutual Insurance Company
Nationwide Property Management, Inc.
Vice Chairman, President and Chief Executive
Officer-Nationwide Insurance Enterprise and
Director
Scottsdale Indemnity Company
Scottsdale Insurance Company
Chairman of the Board, President and Chief
Executive Officer-Nationwide Insurance Enterprise
and Director
Gates, McDonald & Company
Nationwide Investor Services, Inc.
Public Employees Benefit Services Corporation
Director
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York
Chairman of the Board, President and Chief
Executive Officer-Nationwide Insurance Enterprise
and Trustee
Nationwide Insurance Enterprise Foundation.
<PAGE> 72
David O. Miller
President Owen Potato Farm, Inc. and Partner,
M&M Enterprises, 115 Sprague Drive,
Hebron, OH 43025
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty, and Nationwide Life and
Annuity Insurance Companies
Colonial Insurance Company of California
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Company
Nationwide Financial Services, Inc.
Nationwide Property Management, Inc.
Scottsdale Indemnity Company
Scottsdale Insurance Company
West Coast Life Insurance Company
Chairman of the Board and Director
Employers Insurance of Wausau A Mutual Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
Trustee
Nationwide Insurance Enterprise Foundation.
C. Ray Noecker
Farm Owner and Operator, 2770 State Route 674
South, Ashville, Ohio 43203
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company.
James Ferry Patterson
President, Patterson Farms, Inc.; Vice President, Pattersons Inc. -
8765 Mulberry Road, Chesterland, OH
44026
Director
Nationwide Mutual, Nationwide Life, Nationwide
General, Nationwide Property and Casualty and
Nationwide Life and Annuity Insurance Companies
Colonial Insurance Company of California
Farmland Mutual Insurance Company
Nationwide Financial Services, Inc.
National Casualty Company
Nationwide Agribusiness Insurance Company
Nationwide Property Management, Inc.
<PAGE> 73
Scottsdale Indemnity Company
Scottsdale Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Company
Employers Insurance of Wausau A Mutual Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Chairman of the Board and Director
Nationwide Mutual Fire Insurance Company
Trustee
Nationwide Insurance Enterprise Foundation.
Robert H. Rickel Rancher, P.O. Box 319, Bayview, ID 83803
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide Property and Casualty
and Nationwide Life and Annuity Insurance
Companies
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Scottsdale Insurance Company
Scottsdale Indemnity Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Director and Chairman of the Board
Nationwide General Insurance Company
Trustee
Nationwide Investing Foundation.
Arden L. Shisler President and CEO, K&B Transport, Inc.; Farm Owner;
1356 North Wenger Road, Dalton, OH 44618
Chairman of the Board and Director
Nationwide Mutual Insurance Company
Director
Nationwide Mutual Fire, Nationwide Life,
Nationwide General, Nationwide Property and
Casualty and Nationwide Life and Annuity Insurance
Companies
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Company
Nationwide Property Management Inc.
Scottsdale Insurance Company
Scottsdale Indemnity Company
West Coast Life Insurance Company
Nationwide Financial Services, Inc.
<PAGE> 74
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
Trustee
Nationwide Insurance Enterprise Foundation.
Robert Leonard Stewart
Farm Owner and Operator; Owner, Sunnydale Mining,
88740 Fairview Road, Jewett, OH 43986
Chairman of the Board and Director
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty and Nationwide Life and
Annuity Insurance Company.
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Employers Insurance of Wausau A Mutual Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company.
Nancy C. Thomas Farm Owner and Operator Da-Ma-Lor Farms,
10835 Georgetown Road, N.E., Louisville, Ohio
44641
Chairman of the Board and Director
Nationwide Property and Casualty Insurance
Company
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General and
Nationwide Life and Annuity Insurance Companies
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Farmland Mutual Insurance Company
Nationwide Communications Inc.
Nationwide Financial Services, Inc.
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Trustee
Nationwide Investing Foundation.
Harold W. Weihl
Farm Owner and Operator, 14282 King Road,
Bowling Green, Ohio 43402
Chairman of the Board and Director
<PAGE> 75
Nationwide Financial Services, Inc.
Director
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty and Nationwide Life and
Annuity Insurance Companies
Employers Insurance of Wausau A Mutual Company
Nationwide Communications Inc.
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
Trustee
Nationwide Investing Foundation.
Robert A. Oakley Executive Vice President-Chief Financial Officer
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty, and Nationwide Life and
Annuity Insurance Companies
American Marine Underwriters, Inc.
Companies Agency, Inc.
Companies Agency of Alabama, Inc.
Companies Agency of Idaho, Inc.
Companies Agency of Illinois, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Employers Life Insurance Company of Wausau
National Casualty Company
National Premium and Benefit Administration
Company
The Beak and Wire Corporation
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Farmland Mutual Insurance Company
Nationwide Financial Institution Distributors Agency, Inc.
Lone Star General Agency, Inc.
MRM Investments, Inc.
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Development Co.
Nationwide Financial Services, Inc.
Nationwide Investor Services, Inc.
Nationwide Insurance Enterprise Foundation
Nationwide Property Management, Inc.
NEA Valuebuilder Investor Services, Inc.
Colonial County Mutual Insurance Company
PEBSCO Securities Corp.
Pension Associates of Wausau, Inc.
Public Employees Benefit Services Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
<PAGE> 76
Wausau General Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Senior Vice President-Chief Financial Officer
Countrywide Services Corporation
Executive Vice President-Chief Financial Officer and Director
California Cash Management Company
Nationwide Cash Management Company
Nationwide Community Urban Redevelopment
Corporation
Nationwide Indemnity Company
Executive Vice President
Companies Agency Insurance Services of California
Wausau International Underwriters
Director
Auto Direkt Insurance Company
Neckura Holding Company
Wausau Insurance Company (U.K.) Limited.
Robert J. Woodard, Jr.
Executive Vice President-Chief Investment Officer
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and Casualty,
Nationwide Life and Nationwide Life and Annuity Insurance Companies
Colonial Country Mutual Insurance Company
Colonial Insurance Company of California
Employers Insurance of Wausau A Mutual Company
Employers Life Insurance Company of Wausau
Farmland Mutual Insurance Company
Gates, McDonald & Company
Lone Star General Agency, Inc.
National Casualty Company
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Financial Services, Inc.
Nationwide Indemnity Company
Nationwide Insurance Enterprise Foundation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Director and Senior Vice President
Nationwide Property Management, Inc.
President
Nationwide Development Company
Director and President
Nationwide Community Urban Redevelopment Corporation
MRM Investments, Inc.
NWE, Inc.
<PAGE> 77
Senior Vice President
California Cash Management Company
Nationwide Cash Management Company.
James F. Laird, Jr.
Vice President and General Manager
Nationwide Financial Services, Inc.
Vice President and General Manager and Director
Nationwide Investors Services, Inc.
Treasurer
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust
Assistant Treasurer
Financial Horizons Investment Trust.
Harry A. Schermer
Vice President-Equity Securities
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty and Nationwide Life and
Annuity Insurance Companies
Nationwide Indemnity Company
Vice President-Investments
Nationwide Financial Services, Inc.
Vice President
Nationwide Insurance Enterprise Foundation
Assistant Treasurer
Financial Horizons Investment Trust
Nationwide Separate Account Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II.
W. Sidney Druen Senior Vice President and General Counsel and
Assistant Secretary
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Life, Nationwide General, Nationwide
Property and Casualty, and Nationwide Life and
Annuity Insurance Companies
Nationwide Financial Services, Inc.
Employers Insurance of Wausau A Mutual Company
Employers Life Insurance Company of Wausau
Wausau Business Insurance Company
Wausau General Insurance Company
Wausau Underwriters Insurance Company
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Senior Vice President and General Counsel
Affiliate Agency, Inc.
Affiliate Agency of Ohio, Inc.
American Marine Underwriters, Inc.
The Beak and Wire Corporation
California Cash Management Company
Colonial County Mutual Insurance Company
Colonial Insurance Company of California
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
<PAGE> 78
Nationwide Financial Institution Distributors Agency, Inc.
Financial Horizons Distributors Agency of Alabama,
Inc.
Financial Horizons Distributors Agency of Ohio,
Inc.
Financial Horizons Distributors Agency of
Oklahoma, Inc.
Financial Horizons Securities Corporation
Gates, McDonald & Company
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York
Landmark Financial Services of New York, Inc.
National Casualty Company
Nationwide Cash Management Company
Nationwide Communications Inc.
Nationwide Corporation
Companies Agency, Inc.
Companies Agency Insurance Services of California
Companies Agency of Alabama, Inc.
Companies Agency of Idaho, Inc.
Companies Agency of Illinois, Inc.
Companies Agency of Kentucky, Inc.
Companies Agency of Massachusetts, Inc.
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Lone Star General Agency Inc.
Nationwide Development Company
Nationwide Insurance Enterprise Foundation
Nationwide Indemnity Company
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Alabama,
Inc.
NEA Valuebuilder Investor Services of Montana
NEA Valuebuilder Investor Services of Nevada
NEA Valuebuilder Investor Services of Ohio, Inc.
NEA Valuebuilder Investor Services of Oklahoma,
Inc.
NEA Valuebuilder Investor Services of Wyoming
Nationwide Investor Services, Inc.
MRM Investments, Inc.
NWE, Inc.
Nationwide Property Management, Inc.
PEBSCO of Massachusetts Insurance Agency, Inc.
PEBSCO Securities Corp.
Pension Associates of Wausau, Inc.
Public Employees Benefit Services Corporation
Public Employees Benefit Services Corporation of
Alabama
Public Employees Benefit Services Corporation of
Arkansas
Public Employees Benefit Services Corporation of
Montana
Public Employees Benefit Services Corporation of
New Mexico
Scottsdale Indemnity Company
<PAGE> 79
Scottsdale Insurance Company
West Coast Life Insurance Company
Senior Vice President and General Counsel and
Director
Nationwide Community Urban Redevelopment
Corporation
General Counsel
Nationwide Insurance Golf Charities, Inc.
William G. Goslee
Treasurer
Nationwide Financial Services, Inc.
Nationwide Investors Services, Inc.
Assistant Treasurer
Nationwide Investing Foundation
Nationwide Separate Account Trust
Nationwide Investing Foundation II
Financial Horizons Investment Trust.
Rae I. Mercer Secretary
Nationwide Financial Services, Inc.
Nationwide Investors Services, Inc.
Nationwide Investing Foundation
Nationwide Separate Account Trust
Nationwide Investing Foundation II
Financial Horizons Investment Trust.
Peter J. Neckermann
VicePresident - Economic and Investment Services
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide General, Nationwide Property and
Casualty, Nationwide Life and Nationwide Life and
Annuity Insurance Companies
Nationwide Indemnity Company
Vice President
Nationwide Financial Services, Inc.
Director
Nationwide Investors Services, Inc.
Assistant Secretary
West Coast Life Insurance Company
Assistant Treasurer
Financial Horizons Investment Trust
National Casualty Company
National Premium and Benefit Administration
Company
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust.
Except as otherwise noted, the principal business address of any company with
which any person specified above is connected in the capacity of director,
officer, employee, partner or trustee is One Nationwide Plaza, Columbus, Ohio
43215, except for the following companies:
<PAGE> 80
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
1963 Bell Avenue
Des Moines, Iowa 50315-1000
Colonial Insurance Company of California
2390 East Orangewood Avenue
P.O. Box 4347
Anaheim, California 92803-4347
Employers Insurance of Wausau A Mutual Company
2000 Westwood Drive
Wausau, Wisconsin 54401-7881
Scottsdale Insurance Company
8877 North Gainey Center Drive
P.O. Box 4110
Scottsdale, Arizona 85261-4110
West Coast Life Insurance Company
343 Sansome Street
San Francisco, California 94104-1303
National Casualty Company
8877 North Gainey Center Drive
P.O. Box 4110
Scottsdale, Arizona 85261-4110
Lone Star General Agency, Inc.
P.O. Box 14700
Austin, Texas 78761
Auto Direkt Insurance Company
Columbus Insurance Brokerage Service, GMBH
Neckura General Insurance Company
Neckura Holding Company
Neckura Insurance Company
Neckura Life Insurance Company
John E. Fisher Str. 1
61440 Oberursel/Ts.
Germany
Nationwide Development Company
One Nationwide Plaza
Columbus, Ohio 43215
Public Employees Benefit Services Corporation
Two Nationwide Plaza
Columbus, Ohio 43215
Item 29. Principal Underwriters
(a) See Item 28 above.
<PAGE> 81
(b) NATIONWIDE FINANCIAL SERVICES, INC.
DIRECTORS
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS TITLE POSITION WITH
REGISTRANT
<S> <C> <C> <C>
Harold W. Weihl 14282 King Road Chairman of Board N/A
Bowling Green, OH 43402 of Directors
Lewis J. Alphin 519 Bethel Church Road Director N/A
Mt. Olive, NC 28365
Willard J. Engel 1100 E. Main Street Director N/A
Marshall, MN 56258
Frederick C. Finney 1558 W. Moreland Road Director N/A
Wooster, OH 44691
Peter F. Frenzer One Nationwide Plaza Director and Vice Chairman of
Columbus, OH 43215 Chairman Board of Trustees
Charles L. Fuellgraf, Jr. 600 S. Washington Street Director N/A
Butler, PA 16001
Henry S. Holloway 1247 Stafford Road Director N/A
Darlington, MD 21034
Gordon E. McCutchan One Nationwide Plaza Director N/A
Columbus, OH 43215
D. Richard McFerson One Nationwide Plaza President and Director Trustee
Columbus, OH 43215 and Chief Executive
Officer-Nationwide
Insurance Enterprise
David O. Miller 115 Sprague Drive Director N/A
Hebron, OH 43025
C. Ray Noecker 2770 St. Rt. 674 Director N/A
Ashville, OH 43103
James F. Patterson 8765 Mulberry Road Director N/A
Chesterland, OH 44026
Robert H. Rickel P.O. Box 319 Director N/A
Bayview, ID 83803
Arden L. Shisler 2724 West Lebanon Road Director N/A
Dalton, OH 44618
Robert L. Stewart 88740 Fairview Road Director N/A
Jewett, OH 43986
Nancy C. Thomas 10835 Georgetown St. N.E. Director N/A
Louisville, OH 44641
</TABLE>
<PAGE> 82
OFFICERS
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS TITLE POSITION WITH
REGISTRANT
<S> <C> <C> <C>
Harold W. Wiehl 14282 King Road Chairman of Board of Trustee
Bowling Green, OH 43402 Directors
Peter F. Frenzer One Nationwide Plaza Vice Chairman and Chairman of Board
Columbus, OH 43215 President of Trustees
Robert J. Woodward, Jr. One Nationwide Plaza Executive Vice Presi- N/A
dent-Chief Investment
Officer
Gordon E. McCutchan One Nationwide Plaza Executive Vice N/A
Columbus, OH 43215 President-Law and
Corporate Services
Robert A. Oakley One Nationwide Plaza Executive Vice Presi- N/A
Columbus, OH 43215 dent, Chief Financial
Officer
W. Sidney Druen One Nationwide Plaza Senior Vice President, Counsel
Columbus, OH 43215 General Counsel
and Assistant Secretary
Peter J. Neckermann One Nationwide Plaza Vice President Assistant
Columbus, OH 43215 Treasurer
Harry A. Schermer One Nationwide Plaza Vice President- Assistant
Columbus, OH 43215 Investments Treasurer
James F. Laird, Jr. One Nationwide Plaza Vice President and Assistant
Columbus, OH 43215 General Manager Treasurer
William G. Goslee One Nationwide Plaza Treasurer Assistant
Columbus, OH 43215 Treasurer
Rae Mercer One Nationwide Plaza Secretary Secretary
Columbus, OH 43215
</TABLE>
Item 30. Location of Accounts and Records
William G. Goslee
Nationwide Financial Services, Inc.
One Nationwide Plaza
Columbus, OH 43215
Item 31. Management Services
<PAGE> 83
Not applicable.
Item 32. Undertakings
(a) The Trust shall furnish to each person to whom a prospectus is
delivered, a copy of the Trust's Annual Report, upon request and without charge.
(b) Registrant will call such meeting when requested in writing to do
so by the holders of not less than 10 percent of its outstanding shares;
whenever ten or more shareholders of record of registrant who have been such for
at least six months preceding the date of application, and who hold in the
aggregate either shares having a net asset value of at least $25,000 or at least
1 percent of the outstanding shares of registrant, whichever is less, shall
apply to the Trustees of registrant in writing, stating that they wish to
communicate with the other shareholders with a view to obtaining signatures to a
request for a meeting pursuant to Section 16(c) of the Investment Company Act of
1940 and accompanied by a form of communications and request which they wish to
transmit, registrant shall thereafter comply in all respects with the provisions
of said Section 16(c) insof ar as they relate to such shareholder
communications.
<PAGE> 84
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrants certify that they meet all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and have caused this Registration
Statement to be signed on their behalf by the undersigned, thereunto duly
authorized, in the City of Columbus, and the State of Ohio, on the 29 day of
February, 1996.
NATIONWIDE INVESTING FOUNDATION
NATIONWIDE INVESTING FOUNDATION II
By
---------------------------------
James F. Laird, Jr., Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following person in the
capacity and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------- -----
<S> <C>
PRINCIPAL EXECUTIVE OFFICER
/S/ PETER F. FRENZER Trustee and Chairman, Nationwide Investing Foundation (NIF),
- ------------------------------------
Peter F. Frenzer Nationwide Investing Foundation II (NIF-II)
PRINCIPAL ACCOUNTING AND
FINANCIAL OFFICER
/S/ JAMES F. LAIRD, JR. Treasurer, Nationwide Investing Foundation (NIF),
- ------------------------------------
James F. Laird, Jr. Nationwide Investing Foundation II (NIF-II)
/S/ JOHN C. BRYANT Trustee, NIF, NIF-II
- ------------------------------------
John C. Bryant
/S/ C. BRENT DEVORE Trustee, NIF
- ------------------------------------
C. Brent DeVore
/S/ SUE A. DOODY Trustee, NIF
- ------------------------------------
Sue A. Doody
/S/ ROBERT M. DUNCAN Trustee, NIF, NIF-II
- ------------------------------------
Robert M. Duncan
/S/ CHARLES L. FUELLGRAF, JR. Trustee, NIF
- ------------------------------------
Charles L. Fuellgraf, Jr.
/S/ THOMAS J. KERR, IV Trustee, NIF, NIF-II
- ------------------------------------
Thomas J. Kerr, IV
/S/ DOUGLAS F. KRIDLER Trustee, NIF
- ------------------------------------
Douglas F. Kridler
/S/ D. RICHARD MCFERSON Trustee, NIF, NIF-II
- ------------------------------------
D. Richard McFerson
/S/ ROBERT H. RICKEL Trustee, NIF
- ------------------------------------
Robert H. Rickel
/S/ NANCY C. THOMAS Trustee, NIF
- ------------------------------------
Nancy C. Thomas
/S/ HAROLD W. WEIHL Trustee, NIF
- ------------------------------------
Harold W. Weihl
/S/ DAVID C. WETMORE Trustee, NIF
- ------------------------------------
David C. Wetmore
By
James F. Laird, Jr.
Attorney-in-Fact, Nationwide Investing Foundation
Nationwide Investing Foundation II
February 29 , 1996
</TABLE>
<PAGE> 85
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrants certify that they meet all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and have caused this Registration
Statement to be signed on their behalf by the undersigned, thereunto duly
authorized, in the City of Columbus, and the State of Ohio, on the 29 day of
February, 1996.
NATIONWIDE INVESTING FOUNDATION
NATIONWIDE INVESTING FOUNDATION II
By
---------------------------------
James F. Laird, Jr., Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following person in the
capacity and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------- -----
<S> <C>
PRINCIPAL EXECUTIVE OFFICER
/S/ PETER F. FRENZER Trustee and Chairman, Nationwide Investing Foundation (NIF),
- ------------------------------------
Peter F. Frenzer Nationwide Investing Foundation II (NIF-II)
PRINCIPAL ACCOUNTING AND
FINANCIAL OFFICER
/S/ JAMES F. LAIRD, JR. Treasurer, Nationwide Investing Foundation (NIF),
- ------------------------------------
James F. Laird, Jr. Nationwide Investing Foundation II (NIF-II)
/S/ JOHN C. BRYANT Trustee, NIF, NIF-II
- ------------------------------------
John C. Bryant
/S/ C. BRENT DEVORE Trustee, NIF
- ------------------------------------
C. Brent DeVore
/S/ SUE A. DOODY Trustee, NIF
- ------------------------------------
Sue A. Doody
/S/ ROBERT M. DUNCAN Trustee, NIF, NIF-II
- ------------------------------------
Robert M. Duncan
/S/ CHARLES L. FUELLGRAF, JR. Trustee, NIF
- ------------------------------------
Charles L. Fuellgraf, Jr.
/S/ THOMAS J. KERR, IV Trustee, NIF, NIF-II
- ------------------------------------
Thomas J. Kerr, IV
/S/ DOUGLAS F. KRIDLER Trustee, NIF
- ------------------------------------
Douglas F. Kridler
/S/ D. RICHARD MCFERSON Trustee, NIF, NIF-II
- ------------------------------------
D. Richard McFerson
/S/ ROBERT H. RICKEL Trustee, NIF
- ------------------------------------
Robert H. Rickel
/S/ NANCY C. THOMAS Trustee, NIF
- ------------------------------------
Nancy C. Thomas
/S/ HAROLD W. WEIHL Trustee, NIF
- ------------------------------------
Harold W. Weihl
/S/ DAVID C. WETMORE Trustee, NIF
- ------------------------------------
David C. Wetmore
By /S/ JAMES F. LAIRD, JR.
James F. Laird, Jr.
Attorney-in-Fact, Nationwide Investing Foundation
Nationwide Investing Foundation II
February 29 , 1996
</TABLE>
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
To the Trustees
Financial Horizons Investment Trust
We consent to the use of our report dated December 12, 1995 included in the
Statement of Additional Information and to the reference to our firm under the
heading "Financial Highlights" in the Prospectus.
KPMG Peat Marwick LLP
Columbus, Ohio
February 29, 1996
<PAGE> 1
Exhibit. Item 24 (b)16 of Form N-1A, Schedule for Computation of Performance
Quotation
A yield and effective yield may be advertised for money market funds, computed
according to the following formulas:
Yield = BPR x (365/7) - l
Effective Yield = ((BPR / 1)(365/7)) - 1
Where:
BPT = Base Period Return - (Account Value End / Account Value Beg.)
Standardized total returns are computed according to the following general
formula:
Average Annual Total Return = [((ERV-BV) / (BV))exponent(1/N)] - 1
Where:
ERV = ending redeemable value of BV less applicable contingent deferred sales
charges.
BV = beginning value equal to $1,000 less applicable front-end sales charges.
N = number of years.
Non-standard returns are calculated as follows:
Total Return = (ERV-BV) / (BV)
Simple Return = (ERV-BV) / ((BV)/N)
Average Annual Total Return = [((ERV-BV) / (BV))exponent(1/N)] - 1
Where:
ERV = ending redeemable value of a $1,000 investment at the beginning of the
period.
BV = beginning value - $1,000.
N = number of years.
<PAGE> 2
A yield and tax equivalent yield may be advertised for non-money market funds
calculated as follows:
Yield = 2 ([([(a-b)/(cd)] / 1)exponent(6)] - 1)
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = average daily number of shares outstnding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
Tax-Equivalent Yield = Tax-Exempt Yield / (1 - Stated Tax Rate)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000779239
<NAME> NATIONWIDE INVESTING FOUNDATION II
<SERIES>
<NUMBER> 1
<NAME> NATIONWIDE TAX-FREE INCOME FUND
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 246442310
<INVESTMENTS-AT-VALUE> 258600418
<RECEIVABLES> 5133276
<ASSETS-OTHER> 812050
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 264545744
<PAYABLE-FOR-SECURITIES> 1075950
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 986191
<TOTAL-LIABILITIES> 2062141
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 255627341
<SHARES-COMMON-STOCK> 25690778
<SHARES-COMMON-PRIOR> 25637299
<ACCUMULATED-NII-CURRENT> 5235
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5307081)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12158108
<NET-ASSETS> 262483603
<DIVIDEND-INCOME> 0
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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