<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. 14
AND/OR /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 15
(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 Mercer Pollina Send Copies of Communications to:
Three 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 28, 1997
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, 1996 on
December 30, 1996.
<PAGE> 2
NATION WIDE INVESTING FOUNDATION II
NATIONWIDE TAX-FREE INCOME FUND
NATIONWIDE U.S. GOVERNMENT BOND FUND
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
<S> <C>
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis *
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Objectives, Management,
Performance 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
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
28, 1997, 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
Advisory Services, Inc.
(NAS), Three 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.
Three Nationwide Plaza - P.O.
Box 1492
Columbus, Ohio 43216-1492
February 28, 1997
Call toll-free 1-800-848-0920
for information, assistance,
and wire orders, 8 AM-5 PM
Call toll-free 1-800-637-0012
for 24-hour account access
FAX: (614) 249-8705
CONTENTS
<TABLE>
<S> <C>
Summary of Fund Expenses................... 3
Financial Highlights....................... 4
Which Fund Is Right for You................ 6
Historical Performance..................... 7
Objectives, Management, Performance and
Holdings................................. 9
Minimum Investment......................... 15
How to Purchase Shares..................... 16
How to Sell (Redeem) Shares................ 17
Investor Strategies........................ 19
Investor Privileges........................ 20
Investor Services.......................... 23
Management of the Trusts................... 23
The Effect of Interest Rates on Bond
Values................................... 24
Distributions and Taxes.................... 25
Tax Advantages of the Tax-Free Income
Fund..................................... 26
Performance Advertising for the Funds...... 27
Additional Information..................... 28
</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
<PAGE> 4
NATIONWIDE(R) FAMILY OF FUNDS
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 23.
The expenses and fees in
this table are based on
the fiscal year ended
October 31, 1996.
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
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 20.
** The Contingent Deferred Sales Charge declines by 1%
each year, from 5% to 0% after 5 years. See page 18.
(+) 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 0.14% 0.11% 0.20% 0.11% 0.21% 0.15%
------ ----- ----- -------- ---------- --------
Total Fund Operating Expenses 0.64% 0.61% 0.70% 0.96%+ 1.06%+ 0.60%*
</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 18.
<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 $66 $ 61 $ 31* $ 64 $ 34* $ 19
5 Years $ 79 $78 $82 $ 63 $ 53* $ 68 $ 58* $ 33
10 Years $121 $118 $128 $118 $118* $129 $129* $ 75
</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
Net Gain (Loss) from Net Net
Asset and Total Dividends Realized Asset
Value-- Net Unrealized from from Net Gain from Value--
Beginning Investment Appreciation Investment Investment Investment Total End of
of Period Income (Depreciation) Operations Income Transactions Distributions Period
INCOME FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
$ 9.86 $.27 $ (.28) $ (.01) $ (.30) $ (1.21) $ (1.51) $ 8.34
----------------------------------------------------------------------------------------------------------------------------
8.34 .23 1.70 1.93 (.42) (1.07) (1.49) 8.78
----------------------------------------------------------------------------------------------------------------------------
8.78 .31 .63 .94 (.20) (.34) (.54) 9.18
----------------------------------------------------------------------------------------------------------------------------
9.18 .33 (1.53) (1.20) (.31) (.33) (.64) 7.34
----------------------------------------------------------------------------------------------------------------------------
7.34 .22 2.77 2.99 (.25) (.51) (.76) 9.57
----------------------------------------------------------------------------------------------------------------------------
9.57 .20 .46 .66 (.20) (.09) (.29) 9.94
----------------------------------------------------------------------------------------------------------------------------
9.94 .17 1.41 1.58 (.17) (.21) (.38) 11.14
----------------------------------------------------------------------------------------------------------------------------
11.14 .09 .53 .62 (.19) (.22) (.41) 11.35
----------------------------------------------------------------------------------------------------------------------------
11.35 .21 2.10 2.31 (.20) (.24) (.44) 13.22
----------------------------------------------------------------------------------------------------------------------------
13.22 .16 1.36 1.52 (.16) (1.24) (1.40) 13.34
NATIONWIDE FUND
$ 14.54 $.36 $ (.19) $ .17 $ (.37) $ (.81) $ (1.18) $13.53
----------------------------------------------------------------------------------------------------------------------------
13.53 .35 1.63 1.98 (.47) (1.42) (1.89) 13.62
----------------------------------------------------------------------------------------------------------------------------
13.62 .44 2.78 3.22 (.45) (1.51) (1.96) 14.88
----------------------------------------------------------------------------------------------------------------------------
14.88 .37 (1.23) (.86) (.39) (1.31) (1.70) 12.32
----------------------------------------------------------------------------------------------------------------------------
12.32 .38 3.97 4.35 (.40) (.50) (.90) 15.77
----------------------------------------------------------------------------------------------------------------------------
15.77 .37 .98 1.35 (.36) (.45) (.81) 16.31
----------------------------------------------------------------------------------------------------------------------------
16.31 .31 .67 .98 (.33) (.41) (.74) 16.55
----------------------------------------------------------------------------------------------------------------------------
16.55 .37 .41 .78 (.36) (.85) (1.21) 16.12
----------------------------------------------------------------------------------------------------------------------------
16.12 .31 2.49 2.80 (.31) (1.26) (1.57) 17.35
----------------------------------------------------------------------------------------------------------------------------
17.35 .36 3.98 4.34 (.35) (.93) (1.28) 20.41
BOND FUND
$ 10.21 $.88 $ (.90) $ (.02) $ (.87) $ (.04) $ (.91) $ 9.28
----------------------------------------------------------------------------------------------------------------------------
9.28 .88 .18 1.06 (.99) -- (.99) 9.35
----------------------------------------------------------------------------------------------------------------------------
9.35 .88 (.02) .86 (.84) -- (.84) 9.37
----------------------------------------------------------------------------------------------------------------------------
9.37 .88 (.36) .52 (.90) -- (.90) 8.99
----------------------------------------------------------------------------------------------------------------------------
8.99 .85 .45 1.30 (.83) -- (.83) 9.46
----------------------------------------------------------------------------------------------------------------------------
9.46 .76 .23 .99 (.85) -- (.87)* 9.58
----------------------------------------------------------------------------------------------------------------------------
9.58 .74 .52 1.26 (.77) -- (.77) 10.07
----------------------------------------------------------------------------------------------------------------------------
10.07 .60 (1.56) (.96) (.65) -- (.65) 8.46
----------------------------------------------------------------------------------------------------------------------------
8.46 .63 1.04 1.67 (.63) -- (.63) 9.50
----------------------------------------------------------------------------------------------------------------------------
9.50 .61 (.15) .46 (.62) -- (.62) 9.34
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Net
Investment Average Net Assets
Expenses Income to Commission at End of
Total to Average Average Portfolio Rate Period
Return Net Assets Net Assets Turnover Paid (000's)
RATIOS & SUPPLEMENTAL DATA ASSETS YEAR
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
(.3)% .64% 2.70% 69.9% -- $ 192,723 1987
-----------------------------------------------------------------------------------------------------
28.4 .67 2.82 40.8 -- 231,901 1988
---------------------------------------------------------------------------------------------------------------
11.2 .67 3.35 38.8 -- 252,456 1989
-------------------------------------------------------------------------------------------------------------------------
(14.1) .68 3.86 36.2 -- 198,691 1990
----------------------------------------------------------------------------------------------------------------------------
43.4 .68 2.54 12.4 -- 277,019 1991
----------------------------------------------------------------------------------------------------------------------------
6.9 .65 1.97 13.1 -- 330,950 1992
----------------------------------------------------------------------------------------------------------------------------
16.2 .68 1.63 10.2 -- 411,853 1993
----------------------------------------------------------------------------------------------------------------------------
5.7 .68 1.71 14.5 -- 464,715 1994
----------------------------------------------------------------------------------------------------------------------------
21.0 .66 1.66 27.1 -- 582,927 1995
----------------------------------------------------------------------------------------------------------------------------
12.4 .64 1.20 25.6 5.3923c 655,616 1996
NATIONWIDE FUND
.9% .62% 2.25% 22.2% -- $ 383,099 1987
----------------------------------------------------------------------------------------------------------------------------
17.2 .63 2.79 13.3 -- 407,175 1988
----------------------------------------------------------------------------------------------------------------------------
27.1 .64 3.21 21.9 -- 469,427 1989
----------------------------------------------------------------------------------------------------------------------------
(7.0) .63 2.69 13.4 -- 441,188 1990
----------------------------------------------------------------------------------------------------------------------------
36.5 .61 2.56 13.6 -- 620,113 1991
----------------------------------------------------------------------------------------------------------------------------
8.7 .61 2.32 12.8 -- 726,012 1992
----------------------------------------------------------------------------------------------------------------------------
6.2 .62 1.96 25.8 -- 753,239 1993
----------------------------------------------------------------------------------------------------------------------------
4.9 .63 2.26 15.4 -- 706,674 1994
----------------------------------------------------------------------------------------------------------------------------
19.2 .63 1.95 16.5 -- 795,666 1995
----------------------------------------------------------------------------------------------------------------------------
26.1 .61 1.89 16.7 5.9393c 958,590 1996
BOND FUND
(.3)% .70% 8.95% 61.2% -- $ 32,712 1987
----------------------------------------------------------------------------------------------------------------------------
12.0 .66 9.45 73.1 -- 35,759 1988
----------------------------------------------------------------------------------------------------------------------------
9.7 .68 9.38 72.7 -- 36,430 1989
----------------------------------------------------------------------------------------------------------------------------
5.9 .68 9.62 82.1 -- 36,378 1990
----------------------------------------------------------------------------------------------------------------------------
15.1 .67 9.13 93.6 -- 54,187 1991
----------------------------------------------------------------------------------------------------------------------------
10.9 .65 8.63 100.8 -- 90,187 1992
----------------------------------------------------------------------------------------------------------------------------
13.6 .68 7.63 68.5 -- 151,090 1993
----------------------------------------------------------------------------------------------------------------------------
(9.8%) .71 7.11 58.0 -- 124,455 1994
----------------------------------------------------------------------------------------------------------------------------
20.4 .71 7.04 70.4 -- 133,633 1995
----------------------------------------------------------------------------------------------------------------------------
5.1 .70 6.60 39.0 -- 133,253 1996
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes $.02 from Paid In Capital.
THE INFORMATION IN THE ABOVE TABLES HAS BEEN AUDITED BY KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS, WHOSE REPORTS THEREON INSOFAR AS IT RELATES TO EACH OF THE
YEARS IN THE FIVE YEAR PERIOD ENDED OCTOBER 31, 1996, 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
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout the Periods Ended October 31,
<TABLE>
<CAPTION>
Net
Realized Distributions
Net Gain (Loss) from Net Net
Asset and Total Dividends Realized Asset
Value-- Net Unrealized from from Net Gain from Value--
Beginning Investment Appreciation Investment Investment Investment Total End of
of Period Income (Depreciation) Operations Income Transactions Distributions Period
INCOME FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TAX-FREE INCOME
$ 9.99 $.61 $(1.35) $ (.74) $ (.61) $ (.03) $ (.64) $ 8.61
----------------------------------------------------------------------------------------------------------------------------
8.61 .62 .75 1.37 (.62) -- (.62) 9.36
----------------------------------------------------------------------------------------------------------------------------
9.36 .62 .08 .70 (.62) -- (.62) 9.44
----------------------------------------------------------------------------------------------------------------------------
9.44 .61 (.13) .48 (.61) -- (.61) 9.31
----------------------------------------------------------------------------------------------------------------------------
9.31 .58 .50 1.08 (.58) -- (.58) 9.81
----------------------------------------------------------------------------------------------------------------------------
9.81 .56 .13 .69 (.56) -- (.56) 9.94
----------------------------------------------------------------------------------------------------------------------------
9.94 .54 1.10 1.64 (.54) (.09) (.63) 10.95
----------------------------------------------------------------------------------------------------------------------------
10.95 .53 (1.45) (.92) (.51) (.12) (.63) 9.40
----------------------------------------------------------------------------------------------------------------------------
9.40 .51 .84 1.35 (.53) -- (.53) 10.22
----------------------------------------------------------------------------------------------------------------------------
10.22 .51 .02 .53 (.51) -- (.51) 10.24
U.S. GOV'T
$ 10.00 $.46 $ (.03) $ .43 $ (.46) $ -- $ (.46) $ 9.97
----------------------------------------------------------------------------------------------------------------------------
9.97 .53 .45 .98 (.53) (.16) (.69) 10.26
----------------------------------------------------------------------------------------------------------------------------
10.26 .54 (.96) (.42) (.55) (.07) (.62) 9.22
----------------------------------------------------------------------------------------------------------------------------
9.22 .59 .89 1.48 (.58) -- (.58) 10.12
----------------------------------------------------------------------------------------------------------------------------
10.12 .59 (.08) .51 (.59)** -- (.59) 10.04
<CAPTION>
Net Net
Investment Investment Net Assets
Expenses Expenses Income to Income to at End of
Total to Average to Average Average Average Portfolio Period
Return Net Assets Net Assets* Net Assets Net Assets* Turnover (000's)
RATIOS & SUPPLEMENTAL DATA ASSETS YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TAX-FREE INCOME
(7.9)% .97% 1.32% 6.42% 6.32% 202.8% $ 37,815 1987
-------------------------------------------------------------------------------------------------------------------------
16.3 .86 1.21 6.82 6.45 117.7 51,884 1988
----------------------------------------------------------------------------------------------------------------------------
7.7 .85 1.20 6.62 6.28 79.7 72,097 1989
----------------------------------------------------------------------------------------------------------------------------
5.3 .90 1.16 6.51 6.25 68.9 89,374 1990
----------------------------------------------------------------------------------------------------------------------------
11.9 1.01 1.16 6.05 5.90 45.5 122,005 1991
----------------------------------------------------------------------------------------------------------------------------
7.2 .98 1.13 5.62 5.47 69.8 170,650 1992
----------------------------------------------------------------------------------------------------------------------------
17.0 .98 1.13 5.07 4.92 28.4 253,042 1993
----------------------------------------------------------------------------------------------------------------------------
(8.7) .99 1.14 5.02 4.87 59.2 241,097 1994
----------------------------------------------------------------------------------------------------------------------------
14.7 .98 1.13 5.20 5.05 31.7 262,484 1995
----------------------------------------------------------------------------------------------------------------------------
5.3 .96 1.11 4.98 4.83 24.2 264,642 1996
U.S. GOV'T
7.3% 1.00% 1.17% 6.38% 6.21% 157.4% $ 18,211 1992(i)
----------------------------------------------------------------------------------------------------------------------------
10.2 1.10 1.25 5.12 4.97 99.0 38,452 1993
----------------------------------------------------------------------------------------------------------------------------
(4.2) 1.09 1.24 5.62 5.47 67.5 37,749 1994
----------------------------------------------------------------------------------------------------------------------------
16.5 1.00 1.23 5.92 5.77 25.4 39,777 1995
----------------------------------------------------------------------------------------------------------------------------
5.3 1.06 1.21 5.86 5.71 9.3 39,497 1996
</TABLE>
(i) 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>
Net
Realized Distributions
Net Gain (Loss) from Net Net
Asset and Total Dividends Realized Asset
Value-- Net Unrealized from from Net Gain from Value--
Beginning Investment Appreciation Investment Investment Investment Total End of
of Period Income (Depreciation) Operations Income Transactions Distributions Period
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET
$ 1.00 $.06 -- $ .06 $ (.06) -- $ (.06) $ 1.00
----------------------------------------------------------------------------------------------------------------------------
1.00 .07 -- .07 (.07) -- (.07) 1.00
----------------------------------------------------------------------------------------------------------------------------
1.00 .09 -- .09 (.09) -- (.09) 1.00
----------------------------------------------------------------------------------------------------------------------------
1.00 .08 -- .08 (.08) -- (.08) 1.00
----------------------------------------------------------------------------------------------------------------------------
1.00 .06 -- .06 (.06) -- (.06) 1.00
----------------------------------------------------------------------------------------------------------------------------
1.00 .03 -- .03 (.03) -- (.03) 1.00
----------------------------------------------------------------------------------------------------------------------------
1.00 .03 -- .03 (.03) -- (.03) 1.00
----------------------------------------------------------------------------------------------------------------------------
1.00 .03 -- .03 (.03) -- (.03) 1.00
----------------------------------------------------------------------------------------------------------------------------
1.00 .05 -- .05 (.05) -- (.05) 1.00
----------------------------------------------------------------------------------------------------------------------------
1.00 .05 -- .05 (.05) -- (.05) 1.00
----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Net Net
Investment Investment Net Assets
Expenses Expenses Income to Income to at End of
Total to Average to Average Average Average Portfolio Period
Return Net Assets Net Assets* Net Assets Net Assets* Turnover (000's)
RATIOS & SUPPLEMENTAL DATA ASSETS YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.9% .79% .79% 5.75% 5.75% -- $ 388,750 1987
----------------------------------------------------------------------------------------------------------------------------
6.9 .76 .76 6.71 6.71 -- 421,901 1988
----------------------------------------------------------------------------------------------------------------------------
8.9 .74 .74 8.55 8.55 -- 535,257 1989
----------------------------------------------------------------------------------------------------------------------------
8.0 .73 .73 7.67 7.67 -- 600,324 1990
----------------------------------------------------------------------------------------------------------------------------
6.1 .71 .71 5.97 5.97 -- 594,987 1991
----------------------------------------------------------------------------------------------------------------------------
3.5 .71 .71 3.50 3.50 -- 488,998 1992
----------------------------------------------------------------------------------------------------------------------------
2.6 .70 .73 2.57 2.54 -- 418,615 1993
----------------------------------------------------------------------------------------------------------------------------
3.3 .65 .70 3.33 3.28 -- 491,737 1994
----------------------------------------------------------------------------------------------------------------------------
5.5 .62 .67 5.34 5.29 -- 604,711 1995
----------------------------------------------------------------------------------------------------------------------------
5.1 .60 .65 4.93 4.88 -- 729,500 1996
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Ratios calculated as if no expenses were waived.
**Includes $.01 dividend in excess of net investment income.
THE INFORMATION IN THE ABOVE TABLES HAS BEEN AUDITED BY KPMG PEAT MARWICK LLP,
INDEPENDENT AUDITORS, WHOSE REPORTS THEREON INSOFAR AS IT RELATES TO EACH OF THE
YEARS IN THE FIVE YEAR PERIOD ENDED OCTOBER 31, 1996, 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
NATIONWIDE(R) FAMILY OF FUNDS
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 get 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 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 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 24.
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
26.
6
<PAGE> 8
PERFORMANCE
The following graphs show comparative performance of $10,000 invested in each of
the Nationwide Funds to the broad-based, unmanaged index primarily used as a
benchmark for measuring the performance of each Fund and to the Consumer Price
Index (CPI), a widely recognized measure of inflation. The graphs can also be
used to help you compare the past performance of the Nationwide Funds to that of
other mutual funds with similar investment objectives.
Mutual fund performance, often referred to as total return, is the change in
value of an investment in the fund over a given period, assuming reinvestment of
dividends and capital gains. Fund performance in the graphs reflect the
deduction of all applicable sales charges but have not been adjusted for income
taxes. The period covered in the graphs is the 10-year period ended December 31,
1996, (except the U.S. Government Income Fund which is from 2/10/92 (inception
date) through December 31, 1996.
NATIONWIDE(R) GROWTH FUND
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(CALENDAR YEAR COVERED)
S&P GROWTH CPI
<S> <C> <C> <C>
1987 10525 9776 10442
1988 12268 11979 10903
1989 16147 13769 11408
1990 15647 12727 12121
1991 20403 17315 12482
1992 21956 18406 12852
1993 24160 20490 13204
1994 24477 20790 13547
1995 33665 26759 13899
1996 41389 31227 14358
</TABLE>
NATIONWIDE(R) FUND
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(CALENDAR YEAR COVERED)
S&P NW FUND CPI
<S> <C> <C> <C>
1987 10525 9742 10442
1988 12268 11374 10903
1989 16147 15219 11408
1990 15647 15265 12121
1991 20403 19879 12482
1992 21956 20467 12852
1993 24160 21852 13204
1994 24477 21979 13547
1995 33665 28569 13899
1996 41389 35405 14358
</TABLE>
* The S&P 500 is a broad, unmanaged index of equity securities, and unlike the
funds, does not reflect any expenses.
** The CPI is a broad index reflecting price changes in a market basket of
goods, and unlike the funds, does not reflect any expenses.
Past results are not a guarantee of future performance. Investment results and
principal will fluctuate, and when redeemed, shares may be worth more or less
than original cost.
Ed and Karen Reich, Money Market Fund and Bond Fund shareholders, in front of
Mt. Ranier.
Lumir and Alice Palma, Bond Fund and Money Market Fund shareholders, with the
1956 Packard their son, Bob, restored and gave to them on their 50th wedding
anniversary in 1993.
7
<PAGE> 9
PERFORMANCE
NATIONWIDE(R) BOND FUND
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(CALENDAR YEAR COVERED) LB GOVT./CORP* BOND CPI**
<S> <C> <C> <C>
1987 9916 9576 10442
1988 10881 10358 10903
1989 12789 11468 11408
1990 13614 12411 12121
1991 16273 14506 12482
1992 17661 15663 12852
1993 20515 17342 13204
1994 19061 15937 13547
1995 24769 19786 13899
1996 24804 20080 14358
</TABLE>
* The Lehman Brothers Long-Term Govt./Corp. Bond Index represents an unmanaged
group of bonds that is not adjusted for expenses and includes bonds of lower
quality than the Bond Fund.
** The CPI is a broad index reflecting price changes in a market basket of
goods, and unlike the funds, does not reflect any expenses.
NATIONWIDE(R) TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(CALENDAR YEAR COVERED) LB MB* TAX-FREE CPI**
<S> <C> <C> <C>
1987 10150 9636 10442
1988 11181 10621 10903
1989 12388 11713 11408
1990 12291 12416 12121
1991 14904 13761 12482
1992 16219 15063 12852
1993 18210 16978 13204
1994 17269 15435 13547
1995 20284 18135 13899
1996 21183 18804 14358
</TABLE>
* The Lehman Brothers Municipal Bond Index represents an unmanaged group of
bonds that is not adjusted for expenses and includes bonds of lower quality
than the Tax-Free Fund.
** The CPI is a broad index reflecting price changes in a market basket of
goods, and unlike the funds, does not reflect any expenses.
Past results are not a guarantee of future performance. Investment results and
principal will fluctuate, and when redeemed, shares may be worth more or less
than original cost.
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND(+)
<TABLE>
<CAPTION>
Measurement Period
(Calendar Year Covered)
LB GB* NW US. GI CPI**
<S> <C> <C> <C>
1992 10763 10638 10267
1993 11693 11577 10548
1994 11439 11165 10822
1995 13087 13241 11103
1996 13618 13681 11470
</TABLE>
(+) Period from 2/10/92 (USGI inception) through 12/31/96.
* The Lehman Brothers Intermediate Government Bond Index represents an
unmanaged group of bonds that are not adjusted for expenses and includes
bonds of lower quality than the U.S. GI Fund.
** The CPI is a broad index reflecting price changes in a market basket of
goods, and unlike the funds, does not reflect any expenses.
Past results are not a guarantee of future performance. Investment results and
principal will fluctuate, and when redeemed, shares may be worth more or less
than original cost.
NATIONWIDE(R) MONEY MARKET FUND
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(CALENDAR YEAR COVERED) MMF CPI**
<S> <C> <C>
1987 10616 10442
1988 11372 10903
1989 12385 11408
1990 13356 12121
1991 14108 12482
1992 14562 12852
1993 14937 13204
1994 15496 13547
1995 16350 13899
1996 17164 14358
</TABLE>
** The CPI is a broad index reflecting price changes in a market basket of
goods, and unlike the funds, does not reflect any expenses.
Past results are not a guarantee of future performance.
8
<PAGE> 10
OBJECTIVES, MANAGEMENT, PERFORMANCE & HOLDINGS
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. The Fund seeks to benefit from both the underlying
economic growth of the companies it invests in, plus improvement in the
valuation of the stock.
- - 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 Growth Fund falls on this continuum.
ARROW
<TABLE>
<CAPTION>
<S> <C>
More risk; greater Less risk; lower
potential for reward. growth potential.
</TABLE>
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.
CALENDER YEAR TOTAL RETURNS (excluding sales charge)*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
16.7% 28.7% 1.5% 11.3% 6.3% 36.1% (7.6%) 14.9% 22.5% 2.4%
1986 1985 1984 1983 1982 1981 1980 1979 1978 1977
18.4% 33.3% 8.4% 21.9% 35.6% 3.1% 18.8% 21.7% 9.9% (.7%)
1976 1975 1974 1973 1972 1971 1970 1969 1968 1967
23.6% 41.3% (34.9%) (27.5%) 8.7% 18.7% (12.0%) (9.7%) 13.5% 28.3%
</TABLE>
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS*
(For periods ending 12/31/96, $1,000 lump-sum investment minus 4.5% sales
charge)
<TABLE>
<CAPTION>
<S> <C> <C>
1 Year 5 Year 10 Year
- ------------------------------
11.5% 11.5% 12.1%
- ------------------------------
</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. Past performance is not a guarantee of future results. Investment return
and principal value will fluctuate, and when redeemed, shares may be worth more
or less than original cost.
<TABLE>
<CAPTION>
[PIE CHART]
<S> <C>
Repurchase Agreements 0.8%
Common Stocks 93.2%
U.S. Government & Government Agency
Securities & Other Assets Less
Liabilities 6.0%
</TABLE>
TOTAL VALUE OF PORTFOLIO (12/31/96) $689,931,601
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
% OF
TOP 10 HOLDINGS VALUE PORTFOLIO
<S> <C> <C>
Federal National Mortgage Association $27,224,623 3.9%
Columbia/HCA Health 24,450,000 3.5
Equitable Companies 24,354,125 3.5
Archer Daniels Midland Co. 23,862,762 3.5
Grand Metropolitan PLC 23,564,400 3.4
Allstate Corp. 23,150,000 3.4
Mobil Corp. 22,005,000 3.2
Merrill Lynch & Co., Inc. 20,375,000 3.0
Warner-Lambert Co. 18,750,000 2.7
International Business Machines 18,120,000 2.6
</TABLE>
9
<PAGE> 11
OBJECTIVES, MANAGEMENT, PERFORMANCE & HOLDINGS
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(R) Fund falls on this continuum.
ARROW
<TABLE>
<S> <C>
More risk; greater Less risk; lower
potential for reward. growth potential.
</TABLE>
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.
CALENDAR YEAR TOTAL RETURNS (Excluding sales charge)*
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
23.9% 30.0% .6% 6.8% 3.0% 30.2% .3% 33.8% 16.8% 2.0%
1986 1985 1984 1983 1982 1981 1980 1979 1978 1977
17.6% 36.4% 6.1% 15.8% 22.2% 2.0% 17.9% 9.8% .8% (9.1%)
1976 1975 1974 1973 1972 1971 1970 1969 1968 1967
26.7% 38.6% (20.3%) (6.7%) 9.7% 10.2% 8.5% (16.3%) 28.6% 29.0%
</TABLE>
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS*
(For periods ending 12/31/96, $1,000 lump-sum investment minus 4.5% sales
charge.)
<TABLE>
<S> <C> <C>
1 Year 5 Year 10 Year
- ------------------------------
18.4% 11.2% 13.5%
- ------------------------------
</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. Past performance is not a guarantee of future results. Investment return
and principal will fluctuate, and when redeemed, shares may be worth more or
less than original cost.
<TABLE>
<CAPTION>
<S> <C>
[PIE CHART]
Repurchase Agreements and Other Assets Less Liabilities .3%
Corporate Bonds 0.5%
Common Stocks 99.2%
</TABLE>
TOTAL VALUE OF PORTFOLIO (12/31/96) $997,925,767
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
% OF
TOP 10 HOLDINGS VALUE PORTFOLIO
<S> <C> <C>
Warner-Lambert Co. $70,995,000 7.1%
Schering-Plough Corp. 52,583,475 5.3
Texaco, Inc. 46,776,188 4.7
Avon Products 39,644,750 4.0
Chubb Corp. 34,115,125 3.4
PepsiCo, Inc. 33,564,375 3.4
Raychem Corp. 30,910,222 3.1
Chrysler Corp. 30,683,400 3.1
International Business Machines 30,200,000 3.0
Mellon Bank Corp. 28,243,800 2.8
</TABLE>
10
<PAGE> 12
OBJECTIVES, MANAGEMENT, PERFORMANCE & HOLDINGS
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
<TABLE>
<S> <C>
More risk; greater Less risk; lower
potential for reward. growth potential.
</TABLE>
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.
CALENDAR YEAR TOTAL RETURNS (Excluding sales charge)*
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
1.5% 24.2% (8.1%) 10.7% 8.0% 16.9% 8.2% 10.7% 8.2% 0.3%
1986 1985 1984 1983 1982 1981
12.9% 19.1% 14.1% 6.0% 31.0% 2.2%
</TABLE>
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS*
(For periods ending 12/31/96, $1,000 lump-sum investment minus 4.5% sales
charge.)
<TABLE>
<S> <C> <C>
1 Year 5 Year 10 Year
- -------------------------------
(3.1%) 5.7% 7.2%
- -------------------------------
</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. Past performance is not a guarantee of future results. Investment return
and principal will fluctuate, and when redeemed, shares may be worth more or
less than original cost.
<TABLE>
<CAPTION>
[PIE CHART]
<S> <C>
Corporate Bond 79.7%
U.S. Government Bonds 4.0%
Canadian Government Bonds 4.7%
Commercial Paper, Repurchase Agreements
and Other Assets and Liabilities 2.1%
Mortgage Backed Securities 9.5%
</TABLE>
TOTAL VALUE OF PORTFOLIO (12/31/96) $128,627,612
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
% OF
TOP 10 HOLDINGS VALUE PORTFOLIO
<S> <C> <C>
Federal National Mortgage Association $8,432,706 6.6%
Berkley, (W.R.) Corp. 5,950,555 4.6
Seagram (JE) & Sons 5,715,775 4.4
U.S. Treasury Note 5,264,060 4.1
Prudential Surplus Note 5,052,515 3.9
Armstrong World Ind. 4,839,856 3.8
AMBAC Inc. 4,798,932 3.7
Aetna Life & Casualty 4,242,173 3.3
English China Clays 4,098,672 3.2
Loew's Corp. 3,984,390 3.1
</TABLE>
11
<PAGE> 13
OBJECTIVES, MANAGEMENT, PERFORMANCE & HOLDINGS
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 three 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
<TABLE>
<S> <C>
More risk; greater Less risk; lower
potential for reward. growth potential.
</TABLE>
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 Advisory 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 achieved.
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.
CALENDAR YEAR TOTAL RETURNS (Excluding CDSC)*
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
3.7% 17.5% (9.1%) 12.7% 9.5% 10.8% 6.0% 10.3% 10.2% (3.6%)
</TABLE>
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS*
(For periods ending 12/31/96, $1,000 lump-sum investment minus the applicable
contingent deferred sales charge (CDSC) imposed on redemptions, which declines
from 5% in the first year to 0% after 5 years.)
<TABLE>
<S> <C> <C>
1 Year 5 Year Life(+)
- ----------------------------
(1.3%) 6.3% 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. Past performance is not a guarantee of future results. Investment return
and principal will fluctuate, and when redeemed, shares may be worth more or
less than original cost.
(+)The Tax-Free Income Fund began operations on 3/17/86.
<TABLE>
<CAPTION>
[PIE CHART]
<S> <C>
A rated 23.4%
Aa rated 46.4%
Aaa rated 30.2%
</TABLE>
TOTAL VALUE OF PORTFOLIO (12/31/96) $260,563,239
- ---------------------------------------------------------------
TOP TEN HOLDINGS (BY STATE)
<TABLE>
<CAPTION>
% OF
VALUE PORTFOLIO
<S> <C> <C>
Texas $35,901,363 13.8%
Virginia 35,461,194 13.6
Illinois 25,109,519 9.6
Washington 18,971,476 7.3
North Carolina 18,072,256 6.9
South Carolina 14,755,881 5.7
Alabama 12,981,925 5.0
Wisconsin 10,950,119 4.2
Pennsylvania 9,305,956 3.6
Massachusetts 8,023,063 3.1
</TABLE>
12
<PAGE> 14
OBJECTIVES, MANAGEMENT, PERFORMANCE & HOLDINGS
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 three 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
<TABLE>
<S> <C>
More risk; greater Less risk; lower
potential for reward. growth potential.
</TABLE>
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 collateralized by 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 achieved.
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.
CALENDAR YEAR TOTAL RETURNS (Excluding CDSC)*
<TABLE>
<S> <C> <C> <C>
1996 1995 1994 1993
3.3% 18.6% (3.6%) 8.8%
</TABLE>
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS
(For periods ending 12/31/96, $1,000 lump sum investment minus the applicable
contingent deferred sales charge (CDSC) imposed on redemptions, which declines
from 5% in the first year to 0% after 5 years.)
<TABLE>
<S> <C>
1 Year Life(+)
------------------------------------
(1.6%) 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. Past performance is not a guarantee of future results. Investment return
and principal will fluctuate, and when redeemed, shares may be worth more or
less than original cost.
(+)The U.S. Government Income Fund began operations on 2/10/92.
<TABLE>
<CAPTION>
[PIE CHART]
<S> <C>
Mortgage-Backed Securities 78.8%
U.S. Government and Agency Long-Term Obligations 18.4%
Repurchase Agreements &
Other Assets Less Liabilities 2.8%
</TABLE>
TOTAL VALUE OF PORTFOLIO (12/31/96) $39,100,925
- ---------------------------------------------------------------
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
% OF
VALUE PORTFOLIO
<S> <C> <C>
FHLMC REMIC Series 1462-PT $5,102,290 13.0%
FNMA REMIC Series 1993-203 PJ 4,882,900 12.5
FHLB, 2001 4,001,300 10.2
FNMA REMIC Series 92-151-H 3,742,000 9.6
FHLMC REMIC Series 1344-D 3,726,240 9.5
FHLMC REMIC Series 31-E 3,467,758 8.9
FNMA REMIC Series 1313-G 3,033,864 7.8
FHLMC REMIC Series 1990-7-B 2,638,031 6.7
FNMA REMIC Series 1992-81-Z 2,346,703 6.0
FNMA REMIC Series 92-126 1,546,227 4.0
</TABLE>
13
<PAGE> 15
OBJECTIVES, MANAGEMENT, PERFORMANCE & HOLDINGS
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
<TABLE>
<S> <C>
More risk; greater Less risk; lower
potential for reward. growth potential.
</TABLE>
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; U.S.
dollar denominated obligations of foreign governments; 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; and repurchase agreements
collateralized by 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.
CALENDAR YEAR TOTAL RETURNS*
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
5.0% 5.5% 3.7% 2.6% 3.2% 5.6% 7.8% 8.9% 7.1% 6.2%
1986 1985 1984
6.3% 7.9% 10.4%
</TABLE>
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS*
(For periods ending 12/31/96, $1,000 lump-sum investment. There are no sales
charges on Money Market investments.)
<TABLE>
<S> <C> <C>
1 Year 5 Year 10 Year
- ------------------------------
5.0% 4.0% 5.6%
- ------------------------------
</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 1-800-637-0012 for the most
recent current yield.
[PIE CHART]
TOTAL VALUE OF PORTFOLIO (12/31/96) $748,610,423
- ---------------------------------------------------------------
TOP 10 HOLDINGS
<TABLE>
<CAPTION>
% OF
VALUE PORTFOLIO
<S> <C> <C>
Goldman Sachs Group $34,032,486 4.5%
Metropolitan Life Ins. Co. 31,112,020 4.2
Caterpillar Financial Services 30,900,003 4.1
Old Republic Corp. 30,869,506 4.1
Banc One Corp. 30,593,786 4.1
National Rural Utilities Finance Corp. 30,507,710 4.1
Ford Motor Credit Co. 30,182,033 4.0
Bear Stearns 28,586,165 3.8
Walt Disney Co. 28,453,542 3.8
Dean Witter Disover & Co. 28,156,851 3.8
</TABLE>
14
<PAGE> 16
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 AccumulationSM 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
20.
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 AccumulationSM 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 18) 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 AccumulationSM 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.
Joscelyne Swift and her sister, Colbi, Nationwide(R) Fund shareholders, hunt
for Easter eggs.
15
<PAGE> 17
NATIONWIDE(R) FAMILY OF FUNDS
HOW TO PURCHASE SHARES
YOU MAY INVEST IN THREE CONVENIENT WAYS:
BY MAIL -- Complete the enclosed application and mail with your check or other
negotiable bank draft payable to: NATIONWIDE ADVISORY SERVICES, INC., THREE
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 Nationwide Advisory Services, Inc. (NAS) in Columbus, Ohio. Checks or drafts
drawn on non-U.S. banks are not accepted. NAS 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 NAS 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.
BY TELEPHONE (NAS NOW) -- By calling 1-800-637-0012, 24 hours a day, seven days
a week you will be connected to our new automated voice-response system, NAS
NOW. It gives you quick, easy access to mutual fund information. Select from a
menu of choices to conduct transactions and hear fund price information, mailing
and wiring instructions as well as other mutual fund information.
IN ORDER TO USE NAS NOW TO MAKE A PURCHASE YOU MUST COMPLETE ITEM 15 ON THE
APPLICATION.
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.
Anthony Lindsay, Growth Fund shareholder, holds his sister,
Victoria, Growth Fund and Tax-free Fund shareholder.
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 (except in the Money Market Fund) 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
16
<PAGE> 18
NATIONWIDE(R) FAMILY OF FUNDS
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. Investments in
the Money Market Fund are valued at amortized cost. Expenses and fees are
accrued daily.
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
Advisory Services, Inc. (NAS), 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
18).
Requests for redemptions may be in writing, or you may use the
pre-authorized telephone redemption option by dialing NAS NOW at (800) 637-0012.
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 16), or if trading is restricted or if any emergency exists.
YOU CAN REDEEM IN ANY OF THE FOLLOWING WAYS:
BY TELEPHONE (NAS NOW) -- By calling 1-800-637-0012, 24 hours a day, seven days
a week you will be connected to our new automated voice response system, NAS
NOW. It gives you quick, easy access to mutual fund information. Select from a
menu of choices to conduct transactions and hear fund price information, mailing
and wiring instructions as well as other mutual fund information.
IN ORDER TO USE NAS NOW TO MAKE A REDEMPTION YOU MUST COMPLETE ITEM 15 ON THE
APPLICATION.
BY MAIL OR FAX (NO MINIMUM) -- Write or fax to Nationwide Advisory Services,
Inc., Three Nationwide Plaza, P.O. Box 1492, Columbus, Ohio 43216-1492 or FAX
(614) 249-8705. Please be sure that your letter or facsimile 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 P.M. Eastern time will be processed as
of the next business day. NAS reserves the right to require the original
document if you use the fax method.
CUSTOMER SERVICE LINE -- 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 NAS.
BY WESTERN UNION -- With Western Union's Quick Cash(R) service, you can receive
your redemptions the next day across the United
17
<PAGE> 19
NATIONWIDE(R) FAMILY OF FUNDS
States 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, seven days a week. You may also send your
redemption request by mail or fax. The fee for the Western Union service is
$9.50 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 22 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.
ALTERNATE METHODS -- In the event of significant market activity, it may be
difficult to reach Nationwide Advisory Services, Inc. by telephone. If so, an
investor may choose to use alternate methods to contact NAS such as sending
instructions by a special delivery service, or by facsimile (FAX) machine
(614-249-8705). If you use the FAX method, NAS reserves the right to require the
original document.
CONTINGENT DEFERRED SALES CHARGE
(TAX-FREE INCOME FUND AND U.S. GOVERNMENT INCOME FUND 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 22 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, NAS MAY CLOSE ANY
ACCOUNT WHICH, AS A RESULT OF REDEMPTIONS, HAS A VALUE OF LESS THAN $250
(EXCLUDING AUTOMATIC ASSET ACCUMULATION(SM) accounts). 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
NAS 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
18
<PAGE> 20
NATIONWIDE(R) FAMILY OF FUNDS
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.
Alexandra Marie Bukeavich, Bond Fund shareholder.
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 the offering price. Money Market Plus GrowthSM 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), telephone redemption,
or NAS NOW -- 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), telephone
redemption, or NAS NOW, 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 AccumulationSM 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 (subsequent investments) of each
fund in which you invest.
19
<PAGE> 21
NATIONWIDE(R) FAMILY OF FUNDS
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 Fund and U.S. Government Income
Fund). 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 bi-monthly, monthly, quarterly,
three times/year, semi-annually or annually, to you (or anyone you designate)
from your account. WITHDRAWALS MADE FROM THE TAX-FREE INCOME FUND OR U.S.
GOVERNMENT INCOME FUND UNDER THIS PLAN, 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 Advisory Services, Inc. (NAS) 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% 0.25%
$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
(except Nationwide Money Market Fund) including shares acquired by reinvestment
of dividends and capital gains distributions.
FAMILY MEMBER DISCOUNT
In addition, all shares held in any Fund accounts (except Nationwide Money
Market Fund) 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 21.
3 NO SALES CHARGE ON REINVESTMENTS(SM) -- 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(SM) -- 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
20
<PAGE> 22
NATIONWIDE(R) FAMILY OF FUNDS
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 page 20. For exchanges to the
Tax-Free Income or U.S. Government Income Funds, see "Contingent Deferred Sales
Charge," page 18).
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 20.
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 Fund or U.S. Government Income Fund shares.
EXCHANGES MAY BE MADE BY THREE CONVENIENT WAYS:
BY TELEPHONE (NAS NOW) -- By calling 1-800-637-0012, 24 hours a day, seven days
a week you will be connected to our new automated voice response system, NAS
NOW. It gives you quick, easy access to mutual fund information. Select from a
menu of choices to conduct transactions and hear fund price information, mailing
and wiring instructions as well as other mutual fund information.
BY MAIL -- An exchange may be made by writing to Nationwide Advisory Services,
Inc., Three Nationwide Plaza, P.O. Box 1492, Columbus, Ohio 43216-1492. Please
be sure that your letter is signed by all owners of the account and that your
account number and the Fund you wish to exchange to are included.
IN ORDER TO USE NAS NOW TO MAKE AN EXCHANGE, CHECK THE BOX IN ITEM 7-EXCHANGE
PRIVILEGE.
CUSTOMER SERVICE LINE -- 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 Advisory Services,
Inc. (NAS) 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 NAS to voice-record all instructions to
exchange. NAS may not honor your instructions unless you grant permission to
record such a call. NAS 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 17 to confirm that the instructions are genuine.
In the event of significant market activity, it may be difficult to reach
NAS by telephone. If so, an investor may choose to use alternate methods to
contact NAS such as sending instructions by a special delivery service or by
facsimile (FAX) machine (614-249-8705). If you use the FAX method, NAS 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 (excluding
investments in Nationwide Money Market Fund), 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
21
<PAGE> 23
NATIONWIDE(R) FAMILY OF FUNDS
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 20. If
the difference is not paid within 20 days after written request, the investor
irrevocably constitutes and appoints Nationwide Advisory 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
Advisory 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 20), and (3) sales which may be made (a) to any
pension, profit sharing, or other employee benefit plan for the employees of
NAS, 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 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 Enterprise 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.
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 (including either spouse on joint
spousal accounts) death or permanent disability (see "Contingent Deferred Sales
Charge," page 18). 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); 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 20).
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 Fund 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.
22
<PAGE> 24
NATIONWIDE(R) FAMILY OF FUNDS
INVESTOR SERVICES
1 NAS NOW AUTOMATED VOICE RESPONSE SYSTEM -- Our toll-free number 1-800-637-0012
will connect you 24 hours a day, seven days a week to NAS NOW, our new automated
voice response system. Through a selection of menu options, you can conduct
transactions, hear fund price information, mailing and wiring instructions and
other mutual fund information.
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 A.M. and 5 P.M. Eastern Time. Call toll-free: 1-800-848-0920. Or
contact NAS at our FAX telephone number (614) 249-8705.
3 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 and Money Purchase Plans. For a free information
kit, call 1-800-848-0920.
4 MUTUAL FUND GIFT CERTIFICATES -- Gift Certificates may be purchased for
special occasions such as birthdays, graduations, weddings and as appreciation
gifts. Minimum subsequent purchase amounts: $25 in the Growth, Fund or Bond
funds; $100 in the Tax-Free Income, U.S. Government Income, and Money Market
funds. NOTE: Respective minimum purchase amounts ($250 for the Growth, Fund and
Bond funds; $1,000 for the Tax-Free Income, U.S. Government Income and Money
Market funds) must be met when using gift certificates to open new accounts.
Contact one of our service representatives at 1-800-848-0920 for complete
details and instructions.
5 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.
6 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 account.
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.
7 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.
8 SHAREHOLDER REPORTS -- All shareholders will receive reports semi-annually
detailing the financial operations of the funds.
9 PROSPECTUSES -- Updated prospectuses will be mailed to you annually.
10 UNDELIVERABLE MAIL -- If mail from Nationwide Advisory Services, Inc. (NAS)
to a shareholder is returned as undeliverable on two or more consecutive
occasions, NAS 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 NAS 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 Advisory
Services, Inc. (NAS) 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. NAS, an Ohio corporation,
23
<PAGE> 25
NATIONWIDE(R) FAMILY OF FUNDS
is a wholly-owned subsidiary of Nationwide Life Insurance Company, which in turn
is a wholly-owned subsidiary of Nationwide Financial Services, Inc.
The Funds pay the Investment Manager fees based on average daily net assets
of that Fund at the rate of .5% per year. Currently the Money Market Fund pays
the Investment Manager fees of .45% per year, with the remaining .5% waived.
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.
NAS, 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, NAS 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 NAS at Three Nationwide Plaza, P.O. Box 1492, Columbus, Ohio
43216-1492, or call toll-free 1-800-848-0920.
TRANSFER AND DIVIDEND DISBURSING AGENT
NAS, 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 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, 1996, the ratio of operating expenses to
average net assets was .64% for Growth, .61% for Fund, .70% for Bond, .96% for
Tax-Free Income, 1.06% for U.S. Government Income, and .60% for Money Market.
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, 1996.
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 on the next page 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
24
<PAGE> 26
NATIONWIDE(R) FAMILY OF FUNDS
interest rates. As the example shows, the longer the time to maturity, the
greater the price change.
APPROXIMATE CHANGE IN
MARKET VALUE OF A BOND
<TABLE>
<CAPTION>
CHANGE IN RISING FALLING
INTEREST RATES INTEREST RATES INTEREST RATES
- ---------------------------------------------------------------
<S> <C> <C> <C> <C>
7-YEAR BOND YIELDING 8%
1% -5.1% +5.5%
2% -9.9 +11.3
3% -14.4 +17.5
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
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 28, 1997, 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.
25
<PAGE> 27
NATIONWIDE(R) FAMILY OF FUNDS
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, NAS 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.)
Nathan Hart, Money Market Fund shareholder, with his wife,
Carol, on their wedding day.
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:
<TABLE>
<C> <C> <S>
Tax-Free What you must earn
Yield = on a taxable investment
100%--[Your Tax Rate] to equal this tax-free yield
</TABLE>
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 25).
The table below and on the following page show the advantages of investing
in tax-exempt 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 1997 tax year at various levels of taxable income.
For example, if you file a joint return with an adjusted gross income of
$50,000, 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 on the next page:
TAX-EQUIVALENT YIELDS BASED ON INCOME, TAX RATE, AND TAX-FREE YIELD
<TABLE>
<CAPTION>
TAX-FREE YIELD
TAXABLE INCOME* 1997 MARGINAL FEDERAL -------------------------------------------------------
JOINT RETURN SINGLE RETURN INCOME TAX RATE 4% 4.5% 5% 5.5% 6% 6.5% 7%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0 - 41,200 $0 - 24,650 15% 4.7 5.3 5.9 6.5 7.1 7.6 8.2
$41,200 - 99,600 $24,650 - 59,750 28% 5.6 6.3 6.9 7.6 8.3 9.0 9.7
$99,600 - 151,750 $59,750 - 124,650 31% 5.8 6.5 7.2 8.0 8.7 9.4 10.1
$151,750 - 271,050 $124,650 - 271,050 36% 6.3 7.0 7.8 8.6 9.4 10.2 10.9
Over $271,050 Over $271,050 39.6% 6.6 7.5 8.3 9.1 9.9 10.8 11.6
<CAPTION>
7.5% 8%
<C> <C>
8.8 9.4
10.4 11.1
10.9 11.6
11.7 12.5
12.4 13.2
</TABLE>
* Net amount after exemptions and deductions.
26
<PAGE> 28
NATIONWIDE(R) FAMILY OF FUNDS
HOW A $20,000 INVESTMENT GROWS AT 5% TAX-FREE VS. 5% TAXABLE**
<TABLE>
<CAPTION>
1997 5 YEARS 10 YEARS 20 YEARS 30 YEARS
TAX -------------------- -------------------- -------------------- --------------------
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
results. The percentage return figures were chosen arbitrarily and are not a
forecast of future results.
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 20 and 18 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
27
<PAGE> 29
NATIONWIDE(R) FAMILY OF FUNDS
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.
Emily Sullivan, Bond Fund shareholder.
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 NAS upon request (see "Shareholder Inquiries,"
page 29).
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.
28
<PAGE> 30
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 Advisory
Services, Inc., Three Nationwide Plaza,
P.O. Box 1492, Columbus, Ohio
43216-1492, or call 1-800-848-0920.
Front row, left to right: Jessica Taff
and her cousin, Rebecca Taff,
Nationwide(R) Fund shareholder, with
their aunt, Betsy Taff, Money Market
Fund, Nationwide(R) Fund and Growth
Fund shareholder.
William Reeves, Bond Fund shareholder,
helps out with the sweet corn.
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 Advisory Services, Inc.
P.O. Box 1492
Three 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 Advisory 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
29
<PAGE> 31
[THIS PAGE LEFT BLANK INTENTIONALLY]
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>
Tax-Free Income
Growth U.S. Gov't
Fund 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 it along with your check made
payable to Nationwide Advisory Services, Inc. at the
address shown on the back cover. Subsequent
investments can be made by mail, wire or NAS NOW.
More details on purchasing and selling shares can be
found on pages 16 through 18.
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 20.
SALES CHARGE DISCOUNTS
NO SALES CHARGES ON DIVIDENDS & CAPITAL GAINS
REINVESTED
NO SALES CHARGES ON REPURCHASE
NAS NOW 24-HOUR AUTOMATED VOICE RESPONSE SYSTEM
EXCHANGE PRIVILEGES AND FREE TELEPHONE EXCHANGES
TOLL-FREE CUSTOMER ASSISTANCE
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
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 Advisory Services, Inc.
<TABLE>
<CAPTION>
PLEASE PRINT OR TYPE
<S> <C>
To complete application, follow Send application and check to:
instructions to the left of each For assistance in NATIONWIDE ADVISORY SERVICES, INC. NOTE:
section, then remove from opening an account: THREE 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 ++ Minimum investment $1,000
allocate your investment among (or $25 monthly*) (or $100 monthly*)
any or all funds provided account
minimums are net for each fund / / Initial investment from insurance proceeds/benefits of Nationwide/Affiliate companies
(only one check needed). *MINIMUM insurance policy.
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, partnership, etc.)
must also complete #4 below.
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 underreporting 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>
<PAGE> 34
<TABLE>
<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
If you want your check or cash sent
the next day to a Western Union
location, fill in the eight character
Western Union personal identification
number at the right. (Choose any 8 numbers or letters. Be sure to keep your PIN number for future reference.)
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 ___________________________________________________
10 - SIGNATURE SECTION IMPORTANT: BOTH AGENT AND CLIENT MUST SIGN THIS SECTION OF THE APPLICATION TO OPEN A NEW ACCOUNT.
</TABLE>
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.
THE INTERNAL REVENUE SERVUCE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIERD TO AVOID BACKUP
WITHHOLDING.
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
<PAGE> 35
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.
<TABLE>
<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 The payment of funds on the conditions set forth in this section is authorized
THEY APPEAR IN THE ACCOUNT by the signature(s) appearing above. Nationwide Investors Services, Inc., the
REGISTRATION 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>
<PAGE> 36
NATIONWIDE(R) MUTUAL FUND INVESTOR STRATEGIES
COMPLETE THIS SECTION ONLY IF YOU WISH TO ELECT ONE OR MORE OF THESE INVESTOR
STRATEGIES.
<TABLE>
<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.
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.
15 - NAS NOW SPECIAL PURCHASE and / / Special Purchase Authority By initialing this box, you give NAS the authority to add bank
REDEMPTION wiring instructions to your account.
Initial the apropriate box(es) if
you want the ability to process a Bank Name:_______________________________
purchase or redemption through the (Please attach a voided check)
NAS NOW line (see page ). These
funds will be transmitted to/from / / Special Redemption Authority By initialing this box, you give NAS the authority to add
your bank through the automated telephone redemption and bank wiring instructions to your account.
clearing house.
Bank Name:_______________________________
(Please attach a voided check)
16 - 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)
17 - AUTOMATIC / / I want to receive a check drawn on my account
WITHDRAWAL PLAN(SM) / / bi-weekly / / monthly / / quarterly / / 3/year / / semi-annually / / annually 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).
18- LETTER OF INTENT / / I want to establish a Letter of Intent, and agree to the conditions and terms on
Initial the box and check the page 22.
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>
<PAGE> 37
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.
TRANSFER ON DEATH (TOD)
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
Advisory Services, Inc.(NAS), and is received by NAS, in Columbus, Ohio, prior
to the death of the owner(s) of the account. NAS reserves the right to reject
any Transfer-On-Death forms which do not meet these and other terms and
conditions. NAS will only accept beneficiary designations in which shares are
divided among beneficiaries who survive shareholder(s).
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
If listing a minor as beneficiary also not survive me (us)):
list the legal guardian in whose name If listing a minor as beneficiary also
the securities will be registered. list the legal guardian in whose name
the securities will be registered.
Date of Birth Date of Birth
(1)_________________________ % of shares (1)________________________ % of shares
(2)_________________________ % of shares (2)________________________ % of shares
(3)_________________________ % of shares (3)________________________ % of shares
- -------------------------- -------------------------
Name of Guardian(if minor) Name of Guardian(if minor)
- ---------------- ---------------------------------------
Signature Date Signature Date
APPOINTMENT OF SUCCESSOR CUSTODIAN
FOR UNIFORM GIFT/TRANSFER ACCOUNT REGISTRATION ONLY
Gentleman: Account #_________________
I,______________________, hereby accept the appointment as the Successor
Custodian for this account as the Successor Custodian.______________________
Signature
I, ____________________________________, Hereby appoint _____________________ as
the Successor Custodian for this account.
------------------------------------
Signature
<PAGE> 38
I, _________________________, Hereby accept the appointment as the Successor
Custodian.
------------------------------------
Signature
<PAGE> 39
PART B:
STATEMENT OF ADDITIONAL INFORMATION FEBRUARY 28, 1997
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 28, 1997. The prospectus may be obtained from Nationwide Advisory
Services, Inc. (NAS), P.O. Box 1492, Three Nationwide Plaza, Columbus, Ohio
43216.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
General Information and History 1
Investment Objectives and Policies 1
Descriptions of Securities 3
Investment Restrictions 6
Trustees and Officers of the Trust 8
Investment Management Agreement 9
Distribution Agreement 10
Pricing of Shares 11
Redemption of Shares 12
Contingent Deferred Sales Charge 12
Fund Performance Advertising 13
Shareholders' Rights 15
Custodian 16
Brokerage Allocation 16
Tax Status 17
Financial Statements 18
Independent Auditors' Report 30
Appendix 31
</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 12 and 13 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
1
<PAGE> 40
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.
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),
and in repurchase agreements in these securities (see Repurchase Agreements, p.
6).
The Fund may invest up to 80% of its net assets in mortgage-related
securities (see Mortgage-Related Securities, p. 4) which represent part
ownership of a pool of mortgage loans. This would include investments in
collateralized mortgage obligations
2
<PAGE> 41
(CMOs). The Fund may also invest up to 20% in zero-coupon securities (see
Zero-Coupon Securities p. 4).
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, below).
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 securities 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
3
<PAGE> 42
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.
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.
4
<PAGE> 43
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
5
<PAGE> 44
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).
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:
6
<PAGE> 45
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;
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:
7
<PAGE> 46
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.
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:
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.
1397 Haddon Road, Columbus, Ohio.
Mr. Duncan is Vice President & Secretary Emeritus 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.
4890 Smoketalk Lane, Westerville, Ohio.
Dr. Kerr is President Emeritus of Kendall College. He was formerly President of
Grant Hospital Development Foundation.
DIMON R. MCFERSON*
One Nationwide Plaza, Columbus, Ohio
Mr. McFerson is President and Chief Executive Officer of the Nationwide
Insurance Enterprise.
JAMES F. LAIRD, JR., TREASURER.
Three Nationwide Plaza, Columbus, Ohio.
Mr. Laird is Vice President-General Manager of Nationwide Advisory Services,
Inc., the
8
<PAGE> 47
Distributor and Investment Manager.
WILLIAM G. GOSLEE, ASSISTANT TREASURER.
Three Nationwide Plaza, Columbus, Ohio.
Mr. Goslee is Treasurer of Nationwide Advisory Services, Inc., the Distributor
and Investment Manager.
RAE MERCER POLLINA, SECRETARY
Three Nationwide Plaza, Columbus, Ohio.
Mrs. Pollina is Corporate Secretary of Nationwide Advisory 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 below 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, 1996. Trust officers
receive no compensation from the Trust in their capacity as officers. All
Trustees and Officers of the Trust own less than 1% of its outstanding shares.
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>
John C. Bryant,
Trustee $1,000 --0-- --0-- $15,500
Robert M. Duncan,
Trustee $1,000 --0-- --0-- $15,500
Thomas J. Kerr, IV,
Trustee $1,000 --0-- --0-- $15,500
Dimon R. McFerson,
Trustee --0-- --0-- --0-- --0--
</TABLE>
* The Fund Complex includes Trusts comprised of fifteen investment company
portfolios.
INVESTMENT MANAGEMENT
AGREEMENT
Under the terms of the Investment Management Agreement, Nationwide Advisory
Services, Inc., (NAS) 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 NAS shall reimburse the Trust for the compensation of the Trustees who are
"interested persons" of NAS.
9
<PAGE> 48
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.
During the fiscal years ended October 31, 1996, 1995, and 1994, the Investment
Manager earned management fees for the Tax-Free Income Fund of $1,704,966,
$1,629,584, and $1,642,067, respectively, and $255,149, $248,765, and $252,358,
respectively for the U.S. Government Income Fund. Neither the Investment Manager
nor any company affiliated with it receives any brokerage commissions from the
Funds.
NAS is wholly-owned by Nationwide Life Insurance Company, which is
wholly-owned by Nationwide Financial Services, Inc., an insurance company
holding Company. Nationwide Financial Services, Inc. is wholly-owned by
Nationwide Corporation. All of the common stock of Nationwide Corporation is
held by Nationwide Mutual Insurance Company (95.3%) and Nationwide Mutual Fire
Insurance Company (4.7%).
DISTRIBUTION AGREEMENT
Nationwide Advisory Services, Inc. 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, 1996, the Fund accrued distribution fees at the annual rate of .20% of
average daily net assets.
During the fiscal years ended October 31, 1996, 1995, and 1994, the
Tax-Free Income Fund accrued distribution fees totalling $921,340, $878,689, and
$885,243, respectively, and $137,388, $133,950, and $135,885 for the U.S.
Government Income Fund. During the years ended October 31, 1996, 1995, and 1994,
the Distributor waived Plan fees for the Tax-Free Income Fund totaling
$394,860, $376,581, and $379,390, respectively, and $58,881, $57,407, and
$58,236, respectively 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, 1996, 1995, and 1994, such charges for the
Tax-Free Income Fund aggregated $169,310, $234,339, and $285,604, respectively,
and $58,918, $72,664, and $72,305, respectively for the U.S. Government Income
Fund.
10
<PAGE> 49
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.
REDEMPTION OF SHARES
CONTINGENT DEFERRED
SALES CHARGE
11
<PAGE> 50
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>
<CAPTION>
<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(including either spouse on joint
12
<PAGE> 51
spousal accounts) 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 Advisory 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 NAS,
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., Pennsylvania
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.
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.
NATIONWIDE TAX-FREE INCOME FUND
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS
13
<PAGE> 52
FOR PERIODS ENDED OCTOBER 31, 1996
(REFLECT MAXIMUM SALES CHARGES)
<TABLE>
<CAPTION>
<S> <C>
1 year .31%
5 year 6.52%
10 year 6.50%
</TABLE>
NATIONWIDE U.S. GOVERNMENT INCOME FUND
AVERAGE ANNUAL (COMPOUND) TOTAL RETURNS
FOR PERIODS ENDED OCTOBER 31, 1996
(REFLECT MAXIMUM SALES CHARGES)
<TABLE>
<CAPTION>
<S> <C>
1 year .32%
Life** 6.64%
</TABLE>
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.
NATIONWIDE TAX-FREE INCOME FUND
CUMMULATIVE TOTAL RETURNS
FOR PERIODS ENDED OCTOBER 31, 1996
(REFLECT MAXIMUM SALES CHARGES)
<TABLE>
<CAPTION>
<S> <C>
1 year .31%
5 year 37.13%
10 year 87.83%
</TABLE>
NATIONWIDE U.S. GOVERNMENT INCOME FUND
CUMMULATIVE TOTAL RETURNS
FOR PERIODS ENDED OCTOBER 31, 1996
(REFLECT MAXIMUM SALES CHARGES)
<TABLE>
<CAPTION>
<S> <C>
1 year .32%
Life** 35.05%
</TABLE>
** Life of the U.S. Government Income Fund since commencement of operations
2/10/92.
NATIONWIDE TAX-FREE INCOME FUND
SIMPLE AVERAGE TOTAL RETURNS
FOR PERIODS ENDED OCTOBER 31, 1996
(REFLECT MAXIMUM SALES CHARGES)
14
<PAGE> 53
<TABLE>
<CAPTION>
<S> <C>
1 year .31%
5 year 7.43%
10 year 8.77%
</TABLE>
NATIONWIDE U.S. GOVERNMENT INCOME FUND
SIMPLE AVERAGE TOTAL RETURNS
FOR PERIODS ENDED OCTOBER 31, 1996
(REFLECT MAXIMUM SALES CHARGES)
<TABLE>
<CAPTION>
<S> <C>
1 year .32%
Life** 7.50%
</TABLE>
** Life of the U.S. Government Income Fund since commencement of operations
2/10/92.
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, 1996, the Tax-Free Income Fund's yield was 4.71% and the U.S.
Government Income Fund's yield was 6.11%.
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:
NATIONWIDE TAX-FREE INCOME FUND
TAX EQUIVALENT 30-DAY YIELDS
FOR THE PERIOD ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
Tax Rate Yield
<S> <C>
15% 5.46%
28% 6.44%
31% 6.72%
36% 7.25%
39.6% 7.68%
</TABLE>
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
15
<PAGE> 54
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 Advisory Services, Inc. received fees for transfer agent services
during the fiscal year ended October 31, 1996 of $159,115 from the Nationwide
Tax-Free Income Fund and $40,299 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.
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
16
<PAGE> 55
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 28, 1997, 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.
APPENDIX
MUNICIPAL BONDS
17
<PAGE> 56
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) GROWTH FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the year ended October 31, 1996, the Nationwide Growth Fund provided a total
return of 12.36% as compared to a 24.10% total return for the S&P 500 Index.
Performance for the second half of the fiscal year has continued to suffer from
the results of the long-distance telephone carriers, especially AT&T. While I
continue to like the telecommunications industry long term, fears of competition
plus AT&T's loss of share in residential markets has hurt current results. The
Fund has had mixed results from its technology holdings, with some holdings,
such as Intel and EMC Corp., performing very well, and others, such as Motorola
and Applied Materials, lagging badly. Home healthcare issues, such as Apria and
Olsten (included in Business Services), have also been weak. Again, the weakness
seems to relate to short-term issues, and has not changed the fundamental
long-term attractiveness of these companies. Financial stocks, which we had
added to earlier this year, have performed well.
During the last several months the Fund's exposure to technology has been
reduced. In some cases, such as sales of Intel and Cisco, this was due to
overvaluation, as the stocks recovered strongly from weakness they had suffered
in June and July. In other cases, fundamentals had changed for the worse. New
names that were added to the Fund included Genuine Parts, First Data and
Monsanto.
The Growth Fund's strategy is based on finding undervalued growth. Over the past
year, with high valuations accorded to quality, recognized growth, this has
meant buying and holding situations with good long-term potential but that also
have temporary problems, or perceptions of problems, that keep valuations
reasonable. This strategy has NOT been in favor in the stock market. Since early
1995, stocks with high valuations have performed well by going to even higher
valuations. As a result, the Fund has had poor relative performance during this
time. Buying stocks with high valuations has been repeatedly and overwhelmingly
shown to be a poor long-term strategy, and I do not believe the current period
will ultimately prove to be different.
JOHN M. SCHAFFNER, MBA, CFA, PORTFOLIO MANAGER
FUND VALUE $655,615,705
PORTFOLIO COMPOSITION
COMMON STOCK.......................................90.3%
U.S. GOVERNMENT AND AGENCY OBLIGATIONS AND
OTHER ASSETS LESS LIABILITIES.......................9.7%
TOP FIVE HOLDINGS
<TABLE>
<CAPTION>
VALUE %
- --------------------------------------------------------------
<S> <C> <C>
Federal Nat'l Mortgage Assoc. Notes $44,196,827 6.7%
Archer-Daniels-Midland Co. 24,670,394 3.8%
Equitable Companies 23,241,500 3.5%
Grand Metropolitan PLC 22,642,800 3.5%
Allstate Corp. 22,450,000 3.4%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
S&P 500 Growth CPI
<S> <C> <C> <C>
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996 $39,407 $29,874 $14,365
</TABLE>
Comparative performance of $10,000 invested in the Nationwide(R) Growth Fund,
the S&P 500* and the Consumer Price Index (CPI)** over a 10-year period ended
10/31/96.
* The S&P 500 is a broad, unmanaged index of equity securities, and unlike the
Growth Fund returns, does not reflect any fees or expenses.
** The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Growth Fund, does not
reflect any fees or expenses.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge....12.36%....12.30%......12.07%
With sales charge........7.30%....11.27%......11.55%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes a 4.5% sales charge was paid which has the most
dramatic effect on the one-year performance figures.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than original cost. Past performance is no guarantee
of future results.
FUND HIGHLIGHTS
The Nationwide(R) Growth Fund invests primarily in the common stock of companies
in industries with favorable economic trends and new technology. Historically,
these companies, which generally are smaller, pay smaller dividends, but show
greater-than-average growth potential.
The Nationwide(R) Growth Fund is for investors more interested in long-term
growth of capital to meet their future financial needs than in current income.
The rise in market performance over the past few years underscores the
importance of remaining fully invested for a long period of time.
4
<PAGE> 57
STATEMENT OF INVESTMENTS
NATIONWIDE(R) GROWTH FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (90.3%)
---------------------
AIRLINES (0.5%)
---------------
199,000 Skywest, Inc.......................... $ 2,985,000
------------
AUTO INDUSTRY (1.3%)
--------------------
200,000 Genuine Parts Co...................... 8,750,000
------------
BUSINESS SERVICES (3.2%)
------------------------
157,200 Insurance Auto Auctions, Inc.*........ 1,591,650
300,000 Manpower, Inc......................... 8,512,500
531,150 Olsten Corp. ......................... 10,623,000
------------
20,727,150
------------
CABLE (2.1%)
------------
600,000 Comcast Corp.......................... 8,625,000
325,000 U.S. West Media Group*................ 5,078,125
------------
13,703,125
------------
CHEMICALS (2.8%)
----------------
100,000 FMC Corp.*............................ 7,362,500
100,000 Monsanto Co........................... 3,962,500
122,000 Sigma-Aldrich Corp.................... 7,167,500
------------
18,492,500
------------
CHEMICALS - SPECIALTY (1.0%)
----------------------------
116,800 Loctite Corp.......................... 6,847,400
------------
COMPUTER EQUIPMENT (7.0%)
-------------------------
180,000 American Power Conversion Corp.*...... 3,847,500
286,300 EMC Corp.*............................ 7,515,375
325,000 Hewlett-Packard Co.................... 14,340,625
120,000 International Business Machines Corp.. 15,480,000
97,225 Lucent Technologies, Inc. ............ 4,569,575
------------
45,753,075
------------
COMPUTER SOFTWARE & SERVICES (2.2%)
-----------------------------------
200,000 Automatic Data Processing, Inc........ 8,325,000
75,000 Electronic Data Systems............... 3,375,000
30,000 First Data Corp....................... 2,392,500
29,000 Informix Corp.*....................... 643,438
------------
14,735,938
------------
CONGLOMERATES (1.5%)
--------------------
160,000 Honeywell, Inc........................ 9,940,000
------------
CONSUMER PRODUCTS (1.3%)
------------------------
300,000 Newell Co............................. 8,512,500
------------
CONTRACT MANUFACTURING (0.1%)
-----------------------------
63,900 Electronic Fab Technology Corp.*...... 199,688
------------
DISTRIBUTION (1.6%)
-------------------
328,125 Bergen Brunswig Corp., Class A........ 10,294,922
------------
DRUGS (7.4%)
------------
419,200 Allergan, Inc......................... 12,785,600
200,000 Glaxo Wellcome, PLC .................. 6,300,000
160,000 Schering-Plough Corp.................. 10,240,000
300,000 Warner-Lambert Co..................... 19,087,500
------------
48,413,100
------------
ELECTRONICS (4.2%)
------------------
200,000 Applied Materials, Inc.*.............. 5,287,500
117,187 Molex, Inc............................ 4,218,732
190,858 Molex, Inc., Class A.................. 6,179,028
200,000 Motorola, Inc......................... 9,200,000
189,000 Woodhead Industries, Inc.............. 2,598,750
------------
27,484,010
------------
FINANCIAL (17.3%)
-----------------
400,000 Allstate Corp......................... 22,450,000
67,500 American International Group, Inc..... 7,332,187
607,752 Bear Stearns Companies, Inc........... 14,358,141
229,400 Chubb Corp............................ 11,470,000
989,000 Equitable Cos......................... 23,241,500
486,202 Gainsco, Inc.......................... 4,679,694
250,000 Merrill Lynch & Co., Inc.............. 17,562,500
100,000 Morgan Stanley Group, Inc............. 5,025,000
200,000 Silicon Valley Bancshares*............ 5,225,000
100,000 Standard Financial, Inc............... 1,781,250
------------
113,125,272
------------
<CAPTION>
- --------------------------------------------------------------------------------
SHARES SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
FOOD & BEVERAGE (4.3%)
----------------------
3,000,000 Grand Metropolitan, PLC............... $ 22,642,800
150,000 Seagram Co. Ltd....................... 5,681,250
------------
28,324,050
------------
FOOD-GRAIN & AGRICULTURE (3.7%)
-------------------------------
1,134,271 Archer-Daniels-Midland Co............. 24,670,394
------------
HEALTHCARE - GENERAL (1.2%)
---------------------------
415,000 Apria Healthcare Group, Inc.*......... 7,936,875
------------
HEALTHCARE SERVICES (3.3%)
--------------------------
600,000 Columbia/HCA Healthcare Corp.......... 21,450,000
------------
MACHINERY & CAPITAL GOODS (5.0%)
--------------------------------
139,650 Duriron Company, Inc.................. 3,735,637
60,000 Emerson Electric Co................... 5,340,000
150,000 Lindsay Manufacturing Co.............. 6,450,000
60,000 Nordson Corp.......................... 3,300,000
492,600 Zebra Technologies Corp.*............. 14,223,825
------------
33,049,462
------------
MEDICAL PRODUCTS (0.5%)
-----------------------
200,000 Biomet, Inc........................... 3,225,000
------------
OIL & GAS (5.3%)
----------------
150,000 Amoco Corp............................ 11,362,500
50,000 Exxon Corp............................ 4,431,250
80,000 Mobil Corp............................ 9,340,000
60,000 Royal Dutch Petroleum Co.............. 9,922,500
------------
35,056,250
------------
PAPER AND FOREST PRODUCTS (0.2%)
--------------------------------
80,000 Glatfelter (P.H.) Co.................. 1,520,000
------------
PRINTING & PUBLISHING (2.1%)
----------------------------
101,800 Dun & Bradstreet Corp................. 5,891,675
100,000 Merrill Corp.......................... 2,225,000
160,000 Reader's Digest Assoc. Inc., Class B.. 5,540,000
------------
13,656,675
------------
RESTAURANTS (1.3%)
------------------
200,000 Bob Evans Farms, Inc.................. 2,500,000
300,000 Wendy's International, Inc............ 6,187,500
------------
8,687,500
------------
RETAIL (2.3%)
-------------
300,000 CUC, International*................... 7,350,000
200,000 Franklin Quest Co.*................... 4,050,000
145,000 Smart & Final, Inc.................... 3,407,500
------------
14,807,500
------------
TELECOMMUNICATIONS (7.6%)
-------------------------
400,000 360 Communications Co.* .............. 9,050,000
300,000 AT & T Corp........................... 10,462,500
744,000 MCI Communications Corp............... 18,693,000
300,000 Sprint Corp........................... 11,775,000
------------
49,980,500
------------
Total common stocks
(cost $433,662,411)................... 592,327,886
------------
</TABLE>
5
<PAGE> 58
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) GROWTH FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ----------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS (1.0%)
----------------------------------
<S> <C>
$6,910,000 U.S. Treasury Bills
5.06% through 5.30%, due 11/14/96 through
03/06/97(cost $6,808,879)............. $ 6,812,907
------------
U.S. AGENCY-FULL FAITH & CREDIT (8.2%)
--------------------------------------
9,585,000 Federal Home Loan Mortgage Corp. Notes
5.21% through 5.35%, due 12/10/96 through
04/01/97(cost $9,439,014)............. 9,440,508
44,845,000 Federal National Mortgage Association Notes
5.21% through 5.50%, due 11/04/96 through
04/15/97(cost $44,178,539)............ 44,196,827
------------
Total U.S. agency-full faith & credit
(cost $53,617,553).................... 53,637,335
------------
Total investments
(cost $494,088,843)................... $652,778,128
============
<FN>
The abbreviation in the above statement stands for the following:
PLC Public Limited Company
* Denotes non-income producing securities.
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
</TABLE>
See accompanying notes to financial statements.
[PHOTO]
Courtney Demick -- Growth Fund
6
<PAGE> 59
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
The total return for the Nationwide Fund for the year ended October 31, 1996,
was 26.11%, assuming all distributions were reinvested, while the S&P 500
returned 24.10%.
The Fund benefited from the strong performance of several of the larger
holdings. Warner-Lambert, the Fund's largest holding, appreciated considerably.
The market is beginning to recognize the strength of Warner-Lambert's new
product profile. Several new drugs should enter the market in the next two years
causing an acceleration in the company's growth rate. Corporate restructuring
and a change in management provided the catalyst for Raychem's strong
performance. I have observed for several years that Raychem's shares were
undervalued due to losses in a telecommunications subsidiary. Following a change
in management, investment has been focused in the core business. Losses in the
subsidiary are no longer a drag on the strong performance of Raychem's core
operations.
The poorer-performing stocks for the last 12 months were generally cyclical
stocks whose fortunes are tied to a strong economy. Bowater and Georgia Gulf are
examples of cyclical companies whose shares performed poorly due to weak
commodity prices. These are well-managed companies but their fortunes are tied
to the prices of various commodities. Strong management cannot compensate for a
fundamentally poor business environment.
In the nearly 12 years I have managed the Nationwide Fund, I have maintained
holdings in the tobacco industry due to attractive secular fundamentals. These
have proven to be rewarding investments. However, the legal risks to the
industry have been mounting in the past few years to the point I felt the risks
outweighed the potential returns. I anticipate continuing a cautious investment
posture toward the tobacco stocks until the risk is further discounted in the
stock prices or the product liability risks are better defined.
Two of the Nationwide Fund's holdings are involved in financial restructurings.
Corning and Dun & Bradstreet are both splitting into three companies focused on
serving specific end markets. Historically, this breaking down of a conglomerate
into its component parts has proved rewarding for investors. The ability of
management to concentrate on its core market combined with a simpler financial
structure should allow these newly independent subsidiaries to perform better
than if the companies had maintained their former conglomerate structure.
CHARLES BATH, MBA, CFA, CPA, PORTFOLIO MANAGER
VALUE FUND $958,589,770
PORTFOLIO COMPOSITION
COMMON STOCK.......................................99.0%
DEBT OBLIGATIONS AND OTHER ASSETS LESS LIABILITIES..1.0%
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
VALUE %
- --------------------------------------------------------------
<S> <C> <C>
Warner-Lambert Company $60,227,425 6.3%
Schering-Plough Corp. 51,974,400 5.4%
Texaco Inc. 48,444,638 5.1%
Avon Products Inc. 37,649,500 3.9%
Raychem Corp. 35,060,547 3.7%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
S&P 500 Fund CPI
<S> <C> <C> <C>
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996 $39,407 $33,139 $14,365
</TABLE>
Comparative performance of $10,000 invested in the Nationwide(R) Fund, the S&P
500* and the Consumer Price Index (CPI)** over a 10-year period ended 10/31/96.
* The S&P 500 is a broad, unmanaged index of equity securities, and unlike
Fund returns, does not reflect any fees or expenses.
** The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Fund, does not reflect any
fees or expenses.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge............26.11%......12.72%......13.23%
With sales charge...............20.43%......11.68%......12.72%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes a 4.5% sales charge was paid which has the most
dramatic effect on the one-year performance figures.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than original cost. Past performance is no guarantee
of future results.
FUND HIGHLIGHTS
Our flagship fund, Nationwide(R) Fund, was started in 1933 and is one of the
oldest mutual funds in the country. Its portfoliO emphasizes blue-chip,
industry-leading stocks generally held for the long term.
The Nationwide(R) Fund emphasizes a "buy-and-hold" strategy maintaining a
relatively low turnover ratio which translates into less expense for the
shareholder.
7
<PAGE> 60
STATEMENT OF INVESTMENTS
NATIONWIDE(R) FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (99.0%)
---------------------
AUTO & AUTO PARTS (6.0%)
------------------------
929,800 Chrysler Corp......................... $ 31,264,525
832,900 Ford Motor Co......................... 26,028,125
------------
57,292,650
------------
BUILDING (4.1%)
---------------
440,000 Martin Marietta Materials Inc ........ 10,450,000
337,500 Masco Corp............................ 10,589,063
302,200 Vulcan Materials Co................... 18,358,650
------------
39,397,713
------------
CHEMICALS (11.9%)
-----------------
512,300 Georgia Gulf Corp..................... 13,832,100
283,100 IMC Global, Inc....................... 10,616,250
493,900 Millipore Corp........................ 17,286,500
593,700 Morton International, Inc............. 23,376,938
223,600 OM Group, Inc......................... 9,167,600
185,200 Pall Corp............................. 4,745,750
448,775 Raychem Corp.......................... 35,060,547
------------
114,085,685
------------
COMPUTER EQUIPMENT (2.7%)
-------------------------
200,000 International Business Machines Corp.. 25,800,000
------------
CONGLOMERATES (2.0%)
--------------------
500,000 Corning, Inc.......................... 19,375,000
------------
DRUGS (14.9%)
-------------
309,000 Allergan Inc.......................... 9,424,500
149,000 American Home Products Corp........... 9,126,250
151,200 Pfizer, Inc........................... 12,511,800
812,100 Schering-Plough Corp.................. 51,974,400
946,600 Warner-Lambert Co..................... 60,227,425
------------
143,264,375
------------
ELECTRICAL EQUIPMENT (1.2%)
---------------------------
303,400 Black & Decker Corp................... 11,339,575
------------
ENTERTAINMENT (1.7%)
--------------------
246,265 Disney, (Walt) Co..................... 16,222,707
------------
FINANCIAL (14.8%)
-----------------
283,600 Bank of NY Co., Inc................... 9,394,250
593,800 Barnett Banks, Inc.................... 22,638,625
664,800 Chubb Corp............................ 33,240,000
233,400 CoreStates Financial Corp............. 11,349,075
126,200 First USA Inc......................... 7,256,500
404,700 Horace Mann Educators Corp........... 13,860,975
397,800 Mellon Bank Corp...................... 25,906,725
454,073 U. S. Bancorp......................... 18,162,920
------------
141,809,070
------------
FOOD & BEVERAGE (9.2%)
----------------------
594,800 Anheuser-Busch Companies Inc.......... 22,899,800
1,147,500 PepsiCo, Inc.......................... 33,994,687
349,033 Ralcorp Holdings Inc.*................ 7,329,693
364,200 Ralston-Ralston Purina Group.......... 24,082,725
------------
88,306,905
------------
FURNITURE/HOME APPLIANCE (0.6%)
-------------------------------
322,000 Singer Co. N.V. (The)................. 6,158,250
------------
HOUSEHOLD - GENERAL PRODUCTS (6.0%)
-----------------------------------
694,000 Avon Products, Inc.................... 37,649,500
127,200 Gillette Company (The)................ 9,508,200
100,000 Proctor & Gamble Co................... 9,900,000
------------
57,057,700
------------
MACHINERY (1.1%)
----------------
342,400 Johnstown America Industries, Inc.*... 1,155,600
262,700 Trinity Industries, Inc............... 9,095,987
------------
10,251,587
------------
<CAPTION>
- ---------------------------------------------------------------
SHARES SECURITY VALUE
- ---------------------------------------------------------------
<S> <C> <C>
OIL & GAS (9.0%)
----------------
161,900 Mobil Corp............................ $ 18,901,825
476,700 Texaco Inc............................ 48,444,638
513,600 Unocal Corp........................... 18,810,600
------------
86,157,063
------------
PAPER AND FOREST PRODUCTS (1.3%)
--------------------------------
362,900 Bowater Inc........................... 12,837,587
------------
PRINTING & PUBLISHING (8.6%)
----------------------------
760,000 American Greetings Corp. Class A...... 22,277,500
301,800 Dun & Bradstreet Corp................. 17,466,675
211,700 Gannett Co., Inc...................... 16,062,737
297,300 Gibson Greetings, Inc.*............... 4,645,313
100,000 Tribune Co............................ 8,175,000
40,900 Washington Post Co. (The), Class B.... 13,456,100
------------
82,083,325
------------
RETAIL (0.9%)
-------------
325,300 Wal-Mart Stores Inc................... 8,661,112
------------
TELECOMMUNICATIONS (0.3%)
-------------------------
100,000 MCI Communications Corp............... 2,512,500
------------
TOYS (2.7%)
-----------
908,840 Mattel, Inc........................... 26,242,755
------------
Total common stocks
(cost $572,700,339)................... 948,855,559
------------
</TABLE>
8
<PAGE> 61
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ----------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS (0.5%)
------------------------
$7,826,000 Consorcio G. Grupo Dina, 8.00%, 2004
(cost $7,249,051)..................... $ 4,715,165
------------
COMMERCIAL PAPER (0.7%)
-----------------------
3,870,000 Merrill Lynch & Co.
5.26%, due 11/12/96.............. 3,863,255
2,480,000 Banc One Corp.
5.30%, due 11/21/96.............. 2,479,995
------------
Total commercial paper
(cost $6,336,478)..................... 6,343,250
------------
REPURCHASE AGREEMENT (0.1%)
---------------------------
591,493 Merrill Lynch & Co., Inc.
5.63%, due 11/01/96, Collateralized by
$610,000 GNMA CMO, 5.50%, due 07/20/26,
market value $604,759
(cost $591,493)....................... 591,493
------------
Total investments
(cost $586,877,361)................... $960,505,467
============
<FN>
The abbreviations in the above statement stand for the following:
GNMA Government National Mortgage Association
CMO Collateral Mortgage Obligation
*Denotes a non-income producing security.
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
</TABLE>
See accompanying notes to financial statements.
[PHOTO]
Back row, l. to r.: Ron Hubbard -- Nationwide(R) Fund, Charles Hubbard, Juanita
Miller-Hubbard and Lucille Hubbard
[PHOTO]
Clara Duncan Clemens -- Nationwide(R) Fund, Bond Fund, Tax-Free Fund and Money
Market Fund, celebrates with her husband, Reece, on her graduation day from
college at age 64.
9
<PAGE> 62
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) BOND FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
For the year ended October 31, 1996, the Nationwide Bond Fund's total return was
5.05% assuming all distributions were reinvested, compared to the Lehman
Brothers Long-Term Government/Corporate Bond Index total return of 4.39%. Bond
yields on October 31, 1996, as compared to November 1, 1995, were lower (prices
higher) on securities having a maturity longer than one year. The effect was to
steepen the slope of the yield curve in the maturities less than five years and
to flatten the curve in the longer maturity range. In spite of the fact that
treasuries with longer maturities (15 to 30 years) performed better than ones
with 10-15 year maturities, the Nationwide Bond Fund (Bond Fund) with an average
maturity of 13.2 years performed better than the longer Lehman Brothers Index.
The yield spread between bonds and U.S. Treasuries continued to narrow. The
opportunities to improve the return on corporate bond holdings were limited and
few trades were transacted. The list of the top holdings of the Bond Fund
remained relatively the same. Overall the Bond Fund has maintained approximately
79% of its holdings in long-term corporate bonds.
The remainder of the Bond Fund's holdings are divided among mortgage-backed
securities, Canadian bonds, U.S. Treasuries, and commercial paper and repurchase
agreements. Opportunities to improve the return and future performance of
individual securities were most prevalent in the mortgage-backed securities
(MBS) area. The characteristics and payment history of MBS are continually
changing, thus presenting opportunities to trade into a better-performing
security.
The Bond Fund's portfolio consists of high-quality corporates, U.S. Governments,
mortgage-backed securities (secured by pools of home mortgages from the Federal
National Mortgage Association, the Government National Mortgage Association, and
the Federal Home Loan Mortgage Corporation), and high-quality Canadian
securities. This type of portfolio has low credit risk; however, since the
average maturity of the securities in the portfolio is fairly long, the interest
rate risk is relatively high. Changes in interest rates will cause valuation
changes in the bond holdings and changes in the price of shares of the Bond
Fund. Quarter by quarter for the past 12 months, interest rates were down in the
first quarter, up the second quarter, slightly up the third quarter and down the
fourth quarter. This volatility carries over to the share prices of the Bond
Fund. A basic premise for a long-term corporate bond fund is that the price of
its shares will fluctuate with the market.
MICHAEL D. GROSECLOSE, MBA, CFA, PORTFOLIO MANAGER
FUND VALUE $133,252,732
PORTFOLIO COMPOSITION
<TABLE>
<CAPTION>
<S> <C>
CORPORATE BONDS....................................78.5%
MORTGAGE-BACKED SECURITIES..........................9.1%
CANADIAN GOVERNMENT.................................4.6%
U.S. GOVERNMENT OBLIGATIONS.........................4.0%
OTHER ASSETS LESS LIABILITIES.......................3.8%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
VALUE %
- --------------------------------------------------------------
<S> <C> <C>
Berkley, (WR) Corp. $5,998,810 4.5%
Seagram (JE) & Sons 5,741,050 4.3%
U.S. Treasury Note 5,293,155 4.0%
Prudential Surplus Note 5,027,810 3.8%
AMBAC Inc. 4,814,088 3.6%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond $20,471
CPI $14,365
LT G/C $25,146
</TABLE>
Comparative performance of $10,000 invested in the Nationwide(R) Bond Fund, the
Lehman Brothers Long-Term Govt/Corp Bond Index* and the Consumer Price Index
(CPI)** over a 10-year period ended 10/31/96.
* The Lehman Brothers Long-Term Govt/Corp Bond Index represents an unmanaged
group of bonds that are not adjusted for expenses and includes bonds of
lower quality than those purchased by our Fund.
** The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Bond Fund, does not reflect
any fees or expenses.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge.............5.05%.......7.52%.......7.92%
With sales charge................0.32%.......6.53%.......7.42%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes a 4.5% sales charge was paid which has the most
dramatic effect on the one-year performance figures.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than original cost. Past performance is no guarantee
of future results.
FUND HIGHLIGHTS
Nationwide(R) Bond Fund is for investors seeking monthly income from
high-quality bonds and other fixed-income securities. Corporate bonds selected
for its portfolio consist primarily of securities rated "A" or above by Moody's
Investor Services and Standard & Poor's Corporation.
Investments of Nationwide(R) Bond Fund are made in different types of securities
among many companies and industries which provide diversification and help to
minimize risk.
Nationwide(R) Bond Fund has consistently provided a steady stream of income for
its shareholders -- paying dividends every month since inception (March 1,
1980).
10
<PAGE> 63
STATEMENT OF INVESTMENTS
NATIONWIDE(R) BOND FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
CANADIAN GOVERNMENT BONDS (4.6%)
--------------------------------
<S> <C>
$1,000,000 Hydro-Quebec, 11.75%, 02/01/12........ $ 1,401,239
2,000,000 Hydro-Quebec, 8.05%, 07/07/24......... 2,175,000
2,250,000 Quebec (Prov. of), 8.625%, 01/19/05... 2,537,397
------------
Total Canadian government bonds
(cost $5,706,065)..................... 6,113,636
------------
CORPORATE BONDS (78.5%)
-----------------------
BANKS (5.2%)
------------
1,000,000 Banc One Corp., 10.00%, 08/15/10...... 1,241,730
3,000,000 Banc One Corp., 9.875%, 03/01/09...... 3,665,475
2,000,000 Toronto-Dominion Bank, NY., 7.875%,
due 08/15/04....................... 2,056,758
------------
6,963,963
------------
BROKER/DEALER (7.0%)
--------------------
2,000,000 Bear Stearns Companies, Inc., 8.75%,
03/15/04........................... 2,196,972
1,000,000 Bear Stearns Companies, Inc., 9.375%,
06/01/01........................... 1,106,481
1,000,000 Lehman Brothers Holdings, Inc., 11.625%,
05/15/05........................... 1,265,700
3,000,000 Morgan Stanley Group, Inc., 10.00%,
10/15/08........................... 3,649,452
1,000,000 Morgan Stanley Group, Inc., 8.10%,
06/24/02........................... 1,067,483
------------
9,286,088
------------
CHEMICALS (1.6%)
----------------
2,000,000 ICI Wilmington, Inc., 7.50%, 01/15/02. 2,089,780
------------
FINANCE (14.6%)
---------------
2,500,000 Associates Corp. of North America, 8.15%,
O8/01/09.............................. 2,704,140
2,000,000 Bass America, Inc., 8.125%, 03/31/02.. 2,145,810
2,000,000 Ford Capital BV Notes, 10.125%,
11/15/00.............................. 2,250,036
3,000,000 Ford Capital BV Notes, 9.50%,
06/01/10.............................. 3,572,562
1,000,000 General Electric Capital Corp., 8.75%,
09/25/00.............................. 1,081,448
3,235,000 General Electric Capital Corp., 8.50%,
07/24/08.............................. 3,658,212
3,515,000 Loew's Corp., 8.875%, 04/15/11........ 4,039,624
------------
19,451,832
------------
FOOD & BEVERAGE (4.3%)
----------------------
5,000,000 Seagram, (J.E.) & Sons, Inc., 8.875%,
09/15/11.............................. 5,741,050
------------
INSURANCE (17.4%)
-----------------
1,000,000 AMBAC, Inc., 7.50%, 05/01/23.......... 1,008,044
4,000,000 AMBAC, Inc., 9.375%, 08/01/11......... 4,814,088
4,500,000 Aetna Life & Casualty Co., 6.75%,
09/15/13.............................. 4,222,202
5,000,000 Berkley (W.R.) Corp., 9.875%, 05/15/08 5,998,810
2,000,000 Equitable of Iowa Companies, 8.50%,
02/15/05.............................. 2,158,806
5,000,000 Prudential Surplus Note, 8.10%,
07/15/15*............................. 5,027,810
------------
23,229,760
------------
PAPER & FOREST PRODUCTS (0.8%)
------------------------------
1,000,000 Temple-Inland, Inc., 9.00%, 05/01/01.. 1,093,996
------------
PUBLISHING (1.5%)
-----------------
2,000,000 Times Mirror Co., 7.25%, 03/01/13..... 1,989,122
------------
RETAIL TRADE (10.4%)
--------------------
3,000,000 Dayton Hudson Co., 8.60%, 01/15/12.... 3,351,015
2,000,000 Dayton Hudson Co., 9.25%, 08/15/11.... 2,361,566
3,000,000 May Department Stores Company., 10.625%,
11/01/10.............................. 4,007,505
2,000,000 Wal-Mart Stores, Inc., 7.25%, 01/01/13 2,030,554
2,000,000 Wal-Mart Stores, Inc., 7.50%, 05/15/04 2,102,106
------------
13,852,746
------------
UTILITIES : GAS & ELECTRIC (1.0%)
---------------------------------
1,250,000 Pacific Gas & Electric Co., 8.75%,
01/01/01.............................. 1,334,910
------------
OTHER (14.7%)
-------------
4,000,000 Armstong World Industries, Inc., 9.75%,
04/15/08.............................. 4,683,252
4,000,000 Englis China Clays Delaware, Inc., 7.375%,
10/01/02.............................. 4,158,100
2,000,000 Grand Metropolitan Inv. (G) 9.00%,
08/15/11.............................. 2,349,296
2,000,000 Kaiser Foundation, 9.55%, 07/15/05.... 2,348,702
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
$2,000,000 Waste Management, Inc., 7.65%,
03/15/11 $ 2,098,940
3,500,000 Waste Management, Inc., 8.75%,
05/01/18.............................. 3,944,234
------------
19,582,524
------------
Total corporate bonds
(cost $102,498,898)................... 104,615,771
------------
MORTGAGE-BACKED SECURITIES (9.1%)
---------------------------------
1,000,000 FHLMC (REMIC) Class 1188-H, 7.50%,
12/15/20.............................. 1,016,559
700,000 FHLMC (REMIC) Class 1228-G, 7.00%,
01/15/21.............................. 692,348
500,000 FHLMC (REMIC) Class 1358-I, 7.00%,
07/15/21.............................. 495,510
500,000 FHLMC (REMIC) Class 1360-VK, 7.50%,
08/15/07............................. 515,840
990,530 FHLMC (REMIC) Class 1709-EA, 7.25%,
12/15/23.............................. 963,467
183,595 FHLMC-GNMA (REMIC) Class 29X, 6.75%,
02/25/23 ............................. 179,666
367,190 FHLMC-GNMA (REMIC) Class 29Z, 6.75%,
04/25/24 ............................. 338,615
500,000 FNMA (REMIC) Class 1991-118K, 7.00%,
08/25/21.............................. 487,120
929,000 FNMA (REMIC) Class 1992-145E, 7.00%,
08/25/22.............................. 935,762
353,239 FNMA (REMIC) Class 1994-96D, 8.00%,
09/25/24.............................. 348,551
1,000,000 FNMA (REMIC) Class 92-200 MB, 7.50%, .
01/25/22.............................. 990,559
646,000 FNMA (REMIC) Class G1992-15G, 7.00%,
04/25/20.............................. 643,945
590,540 FNMA (REMIC) Class G1992-64M, 7.00%,
11/25/22.............................. 571,235
537,688 FNMA (REMIC) Class G1992-65NA, 7.00%,
11/25/22.............................. 509,841
500,000 FNMA (REMIC) Class G1993-10G, 5.00%,
05/25/22.............................. 428,490
1,010,000 FNMA (REMIC) Class G1993-10H, 5.00%,
08/25/22.............................. 822,573
2,396,000 FNMA (REMIC) Class S G93-10E, 5.00%,
04/25/20.............................. 2,246,487
------------
Total mortgage-backed securities
(cost $12,094,761).................... 12,186,566
------------
U.S. GOVERNMENT LONG-TERM OBLIGATION (4.0%)
-------------------------------------------
5,000,000 U.S. Treasury Note, 7.50%, 11/15/01
(cost $5,237,271)..................... 5,293,155
------------
COMMERCIAL PAPER (1.7%)
-----------------------
880,000 Dean Witter, Discover & Company, 5.24%,
due 11/25/96.......................... 876,805
931,000 Merrill Lynch & Co, Inc., 5.27%, due
11/13/96.............................. 929,242
426,000 National Rural Utilities Cooperative,
5.24%, due 11/14/96................... 425,134
------------
Total commercial paper
(cost $2,231,484)..................... 2,231,181
------------
REPURCHASE AGREEMENT (0.4%)
---------------------------
578,037 MBS Tri Party 5.63%, due 11/01/96,
Collaterlized by $595,000 GNMA CMO, 5.50%,
due 07/20/26, market value $589,888
(cost $578,037)....................... 578,037
------------
Total investments
(cost $128,346,516)................... $131,018,346
============
<FN>
The abbreviations in the above statement stand for the following:
* Represents a security registered under Rule 144-A, which limits the resale to
certain qualified buyers.
The abbreviations in the above statement stand for the following:
FHLMC Federal Home Loan Mortgage Corp.
REMIC Real Estate Mortgage Investment Conduit
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
CMO Collateralized Mortgage Obligation
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 64
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) TAX-FREE INCOME FUND
MANAGEMENT DISCUSSION OF FUND PERFORMANCE
The Nationwide Tax-Free Income Fund's total return for the year ended October
31, 1996, was 5.31% assuming all distributions were reinvested while the Lehman
Brothers Municipal Bond Index returned 5.70%.
During fiscal year 1996 the municipal bond market performed well. Demand for
municipal bonds remained strong, fear of tax reform diminished while the economy
grew at a slow manageable noninflationary pace. The 11-Bond General Obligation
Index as published by the Bond Buyer declined from 5.62% to 5.60%, only .02%,
while the 30-year Treasury rose from 6.29% to 6.64%, a .35% increase.
Issuers taking advantage of the current low interest rate environment increased
issuance of municipal bonds during the latter part of the period. Issuers were
concerned about the results that the upcoming election would have upon the
economy and interest rates. However, the increased supply was quickly absorbed
by property and casualty companies and bond funds.
The yield spread on a 20-year AA rated General Obligation bond as compared to a
20-year A rated General Obligation Municipal bond declined from .18% to .16%
during the period. Faced with such narrow quality spreads, current low yields
and uncertainties about interest rates, the strategy of the Fund did not change.
Management maintained an average credit rating of AA and an average maturity of
approximately 19 years. Assets will continue to be managed for the long term.
ALPHA L. BENSON, MBA, PORTFOLIO MANAGER
FUND VALUE $264,641,760
PORTFOLIO COMPOSITION
MUNICIPAL SECURITIES...............................98.4%
OTHER ASSETS LESS LIABILITIES.......................1.6%
TOP FIVE HOLDINGS BY STATE
<TABLE>
<CAPTION>
VALUE %
- --------------------------------------------------------------
<S> <C> <C>
Texas $40,510,025 15.3%
Virginia 35,247,131 13.3%
Illinois 24,985,213 9.4%
Washington 18,885,979 7.1%
North Carolina 15,800,219 6.0%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
Tax-Free CPI LBMBI
<S> <C> <C> <C>
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996 $18,783 $14,365 $21,240
<FN>
Comparative performance of $10,000 invested in the Nationwide(R) Tax-Free Income
Fund, the Lehman Brothers Municipal Bond Index* and the Consumer Price Index
(CPI)** over a 10-year period ended 10/31/96.
* The Lehman Brothers Municipal Bond Index represents an unmanaged group of
bonds that are not adjusted for expenses and includes bonds of lower
quality than those purchased by our Fund.
** The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Tax-Free Income Fund, does
not reflect any fees or expenses.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge.............5.31%.......6.67%.......6.50%
With sales charge................0.31%.......6.52%.......6.50%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes the applicable contingent deferred sales charge
(CDSC) was paid on withdrawals which has the most dramatic effect on the
one-year performance figures. The CDSC declines from 5% in the first year to 0%
after 5 years.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than original cost. Past performance is no guarantee
of future results.
FUND HIGHLIGHTS
Nationwide(R) Tax-Free Income Fund offers a monthly income that's free from
federal taxes. For certain shareholders, a portion of income may be subject to
state, local or federal alternative minimum tax.
By investing in the Nationwide(R) Tax-Free Income Fund, you can earn tax-free
dividends from municipal bonds carefully selected for their relative safety and
security.
The Nationwide(R) Tax-Free Income Fund invests in a diversified portfolio of
high-quality and intermediate-term (maturities of from 3-10 years) and long-term
(maturities over 10 years) municipal obligations.
12
<PAGE> 65
STATEMENT OF INVESTMENTS
NATIONIDE(R) TAX-FREE INCOME FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
LONG-TERM MUNICIPAL SECURITIES (98.4%)
--------------------------------------
ALABAMA (4.9%)
--------------
$3,000,000 Alabama Housing Finance Authority Single-
Family Mortgage Revenue Bonds
(Collateralized Home Mortgage Revenue
Bond Program), 1996 Series D, 6.00%,
10/01/16........................... $ 3,026,250
1,100,000 Birmingham, Alabama General Obligation
Parking Warrants, Series 1995-A, 5.90%,
06/01/18........................... 1,102,750
2,500,000 Birmingham, Alabama General Obligation
Refunding Revenue, Series 1992 B,
6.25%, 04/01/16 ................... 2,609,375
2,480,000 Birmingham, Alabama Water Works & Sewer
Board Refunding Revenue,
Series 1992, 6.125%, 01/01/12 ..... 2,569,900
3,500,000 Huntsville, Alabama General Obligation
Limited Tax Warrants, Series 1992 A,
6.00%, 11/01/12.................... 3,626,875
----------
12,935,150
----------
ARIZONA (2.9%)
--------------
5,100,000 Salt River Project, Agricultural Improvement
& Power District, Arizona Electric System
Revenue Bonds, Series 1992 C,
6.00%, 01/01/16.................... 5,182,875
2,500,000 Salt River Project, Agricultural Improvement
& Power District, Arizona Electric System
Revenue Bonds, Series 1992 C, 6.20%,
01/01/12........................... 2,596,875
----------
7,779,750
----------
COLORADO (0.4%)
---------------
1,000,000 Colorado Housing Finance Authority Single-
Family Housing Revenue Refunding Bonds,
Series 1991-A, 7.15%, 11/01/14..... 1,060,000
----------
CONNECTICUT (2.0%)
------------------
5,000,000 Connecticut Housing Finance Authority Housing
Mortgage Finance Program Bonds,
Series 1992-B, 6.70%, 11/15/12..... 5,275,000
----------
FLORIDA (2.3%)
--------------
2,205,000 Florida State Board of Education General
Obligation Full Faith and Credit Public
Education Capital Outlay Refunding Bonds,
1995 Series A, 5.50%, 06/01/15..... 2,199,488
1,320,000 Florida State Full Faith and Credit State Board
of Education Public Education Capital Outlay
Bonds, 1992 Series D, 5.20%, 06/01/13 1,273,800
2,400,000 Jacksonville, Florida Electric Authority Bulk
Power Revenue Bonds, (Scherer 4 Project,
Issue One, Series 1991-A), 7.00%, 10/01/12 2,652,000
----------
6,125,288
----------
GEORGIA (2.0%)
--------------
1,210,000 Dekalb County, Georgia General Obligation
Refunding Bonds, 6.00%, 01/01/12... 1,261,425
2,750,000 Georgia Municipal Electric Authority Power
Revenue Bonds,
Series 1991-V, 6.60%, 01/01/18..... 3,031,875
1,005,000 Georgia Residential Financial Authority
Revenue Bonds, Series A, 7.50%, 06/01/17 1,053,994
----------
5,347,294
----------
ILLINOIS (9.4%)
---------------
3,000,000 Chicago, Illinois General Airport Revenue
Refunding Bonds, Series 1993-A
(Chicago-O'Hare International Airport),
5.00%, 01/01/16.................... 2,722,500
2,185,000 Illinois Educational Facility Authority Revenue,
Series 1991-A, Loyola University, 7.125%,
07/01/21........................... 2,367,994
1,975,000 Illinois Regional Transportation Authority
General Obligation Refunding Bonds,
Series 1996, 5.40%, 06/01/15....... 1,898,469
$7,500,000 Illinois State Builders Illinois Bonds Sales Tax
Revenue, Series O, 6.00%, 06/15/18. $7,537,500
2,500,000 llinois State Builders Illinois Bonds Sales Tax
Revenue, Series V, 6.375%, 06/15/17 2,603,125
3,000,000 Illinois State General Obligation Bonds,
Series of March 1994, 5.80%, 04/01/19 3,003,750
1,350,000 Illinois State General Obligation Bonds,
Series of July 1995, 5.75%, 07/01/16 1,350,000
2,500,000 Illinois State General Obligation Bonds,
Series of December 1995, 5.125%, 12/01/17 2,340,625
1,000,000 Palatine, Illinois Corporate Purpose General
Obligation Bonds, Series 1985, 9.90%, 01/01/16 1,161,250
----------
24,985,213
----------
INDIANA (2.8%)
--------------
5,335,000 Indiana State Toll Road Commission East-West
Toll Road Revenue Bonds,
Series 1980, 9.00%, 01/01/15....... 7,302,281
----------
MARYLAND (0.4%)
---------------
1,000,000 Howard County, Maryland Public Improvement
General Obligation Unlimited Tax,
Series 1994 A, 6.00%, 05/15/14..... 1,035,000
----------
MASSACHUSETTS (3.9%)
--------------------
3,775,000 Massachusetts State General Obligation
Bonds Consolidated
Loan, Series 1992-B, 6.50%, 06/01/13 4,015,656
2,500,000 Massachusetts State General Obligation Bonds,
Consolidated Loan of 1995,
Series D, 5.125%, 11/01/12......... 2,400,000
4,000,000 Massachusetts Water Resources Authority
General Revenue Bonds,
Series 1992A, 5.50%, 07/15/22...... 3,850,000
----------
10,265,656
----------
MICHIGAN (1.5%)
---------------
3,500,000 Michigan State General Obligation Bonds,
Environmental Protection Program,
Series 1992, 6.25%, 11/01/12....... 3,823,750
----------
MINNESOTA (2.4%)
----------------
2,300,000 Minnesota Housing Finance Agency
Rental Housing Revenue
Bonds, 1995 Series D, 5.90%, 08/01/15 2,300,000
3,950,000 Minnesota State Housing Finance Agency
Single Family Mortgage Revenue Bonds,
Series 1994 K, 6.40%, 01/01/15.... 4,058,625
----------
6,358,625
----------
MISSOURI (0.8%)
---------------
2,000,000 Missouri State Environmental Improvement
& Energy Resources Authority Water
Pollution Control Revenue
Bonds, 6.55%, 07/01/14............. 2,152,500
----------
NEBRASKA (2.0%)
---------------
5,000,000 Nebraska Public Power District Power
Supply System Revenue Bonds,
Series 1993, 6.125%, 01/01/15...... 5,137,500
----------
NEVADA (0.9%)
-------------
2,190,000 Nevada State Colorado River Commission
General Obligation (Limited Tax, Revenue
Supported) Bonds Series November 1, 1994
6.50%, 07/01/19.................... 2,433,637
----------
NORTH CAROLINA (6.0%)
---------------------
1,035,000 Charlotte-Mecklenburg Hospital Authority,
North Carolina Health Care System
Revenue Bonds, Series 1992, 6.00%, 01/01/22 1,046,644
3,460,000 North Carolina Housing Finance Agency
Multi-Family Revenue
Refunding Bonds, Series H, 5.95%, 07/01/21 3,468,650
</TABLE>
13
<PAGE> 66
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONIDE(R) TAX-FREE INCOME FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
$2,035,000 North Carolina Housing Finance Agency
Single-Family Revenue Bonds,
Series AA, 6.25%, 03/01/17......... $ 2,088,419
2,185,000 North Carolina Housing Finance Agency
Single-Family Revenue Bonds,
Series GG, 5.90%, 03/01/13......... 2,193,194
1,910,000 North Carolina Housing Finance Agency
Single-Family Revenue Bonds,
Series N, 7.40%, 03/01/28.......... 2,003,112
1,880,000 North Carolina Housing Finance Agency
Single-Family Revenue Bonds,
Series J, 7.40%, 03/01/22.......... 1,955,200
1,000,000 North Carolina Medical Care Commission
Hospital Revenue Bonds, Duke University
Hospital Project, Series C, 5.25%, 06/01/17 955,000
2,000,000 North Carolina Medical Care Commission
Hospital Revenue Refunding Bonds,
Series 1992 A (North Carolina Baptist
Hospitals Project), 6.375%, 06/01/14 2,090,000
----------
15,800,219
----------
OHIO (2.0%)
-----------
1,000,000 Columbus, Ohio Water Works & Sewer Board
Refunding Revenue, Series 1991, 6.375%, 11/01/10 1,061,250
1,100,000 Franklin County, Ohio Hospital Refunding and
Improvement Revenue Bonds,
(The Children's Hospital Project)
1996 Series A, 5.75%, 11/01/20..... 1,100,000
1,250,000 Ohio Housing Finance Agency Mortgage
Revenue Bonds Residential Mortgage Backed
Securities, Series A-1, 5.70%, 03/01/17 1,248,437
2,000,000 Ohio Turnpike Commission Turnpike Revenue
Bonds 1996 Series A, 5.70%, 02/15/17 2,017,500
----------
5,427,187
----------
PENNSYLVANIA (3.5%)
-------------------
4,055,000 Pennsylvania Housing Finance Agency
Rental Housing Refunding Revenue Bonds,
Issue 1992, 6.40%, 07/01/12........ 4,161,444
1,500,000 Pennsylvania Housing Finance Agency
Rental Housing Refunding Revenue Bonds,
Issue 1992, 6.25%, 07/01/07........ 1,554,375
2,000,000 Pennsylvania State Turnpike Commission
Oil Franchise Tax
Revenue, Series A, 6.00%, 12/01/14. 2,087,500
1,500,000 Pittsburgh, Pennsylvania Water and Sewer
Authority, Water and Sewer System First Lien
Revenue Bonds, Series A of 1995,
5.50%, 09/01/15.................... 1,468,125
----------
9,271,444
----------
SOUTH CAROLINA (5.6%)
---------------------
6,980,000 Charleston, South Carolina Waterworks
& Sewer System Refunding & Capital
Improvement Revenue Bonds,
Series 1991, 6.00%, 01/01/18....... 7,171,950
1,400,000 Greenville, South Carolina Hospital System
Revenue Bonds Hospital Facilities,
Series B, 5.25%, 05/01/17.......... 1,309,000
1,500,000 South Carolina State Housing Finance
& Development Authority Multi-Family
Development Revenue Refunding,
Series 1992-A, 6.875%, 11/15/23.... 1,556,250
2,075,000 South Carolina State Housing Finance &
Development Authority Homeownership
Mortgage Purchase Bonds,
Series 1994 A, 6.375%, 07/01/16.... 2,106,125
1,500,000 Spartanburg, South Carolina Water System
Improvement & Refunding Revenue Bonds,
Series 1992, 6.25%, 06/01/17....... 1,563,750
1,000,000 Spartanburg, South Carolina Water System
Revenue Bonds,
Series 1996, 6.10%, 06/01/21....... 1,033,750
----------
14,740,825
----------
TENNESSEE (1.8%)
----------------
$1,000,000 Nashville & Davidson County, Tennessee General
Obligation Multi-Purpose Improvement Bonds,
Series 1994, 6.125%, 05/15/14...... $ 1,037,500
1,500,000 Nashville & Davidson County, Tennessee Health
& Educational Facilities Revenue Bonds,
Series 1979, 7.875%, 12/01/04...... 1,668,750
1,000,000 Shelby County, Tennessee General Obligation
School Bonds, Series 1994 B,
6.00%, 03/01/14.................... 1,033,750
1,000,000 Shelby County, Tennessee General Obligation
Public Improvement Bonds,
1996 Series A, 5.85%, 06/01/17..... 1,010,890
----------
4,750,890
----------
TEXAS (15.3%)
-------------
1,250,000 Bexar County, Texas Combination Tax and
Revenue Certificates, Series 1992, 6.20%,
06/15/12........................... 1,342,188
1,000,000 Carrollton-Farmers Branch Independent
School District, Texas General Obligation
Permanent School Fund
Guarantee, Series 1996, 5.70%, 02/15/17 1,002,500
3,500,000 Conroe, Texas Independent School District
Unlimited Tax Schoolhouse and Refunding
Bonds, Series 1993, 5.00%, 02/01/18 3,198,125
1,100,000 Cypress-Fairbanks Independent School District,
Texas General Obligation Permanent School
Fund Guarantee, Series 1996,
5.375%, 02/15/19................... 1,061,500
2,300,000 Fort Bend Independent School District,
Texas General Obligation Permanent School
Fund Guarantee, Series 1996, 5.00%, 02/15/18 2,127,500
1,000,000 Harris County, Texas Detention Facility
Certificates, Series 1992, 6.00%, 12/15/10 1,065,000
3,500,000 Harris County, Texas General Obligation
Tax and Revenue Certificates,
Series 1994, 6.10%, 10/01/13....... 3,666,250
7,720,000 Houston, Texas Water & Sewer Junior Lien
Revenue Refunding, Series 1991-C,
6.375%, 12/01/17................... 8,192,850
1,215,000 Irving, Texas Independent School District
Unlimited Tax School Building Bonds,
Series 1991-C-Permanent School
Fund, 5.25%, 02/15/09.............. 1,202,850
270,000 Lower Colorado River Authority Texas Junior
Lien Refunding Revenue Bonds,
Series 1992 (ETC), 6.00%, 01/01/17. 289,912
490,000 Lower Colorado River Authority Texas Junior
Lien Refunding Revenue Bonds,
Series 1992 (ETM), 6.00%, 01/01/17 515,725
2,630,000 Lower Colorado River Authority Texas Junior
Lien Refunding Revenue Bonds,
Series 1992 (Unrefunded), 6.00%, 01/01/17 2,656,300
2,000,000 Texas A&M University System Board of Regents
Revenue Financing System Bonds,
Series 1996, 5.375%, 05/15/14...... 1,950,000
3,175,000 Texas State Water Development Bonds,
Series 1994, 6.90%, 08/01/17....... 3,516,312
2,000,000 University of Texas Revenue Financing System
Bonds, Series 1991, 6.50%, 07/01/11 2,195,000
2,000,000 University of Texas System Permanent University
Fund Bonds, Series 1992B, 6.25%, 07/01/13 2,157,500
3,000,000 Weatherford, Texas Independent School
District Unlimited Tax School Building and
Refunding Bonds, Series 1994, 6.50%, 02/15/15 3,213,750
1,090,000 Weatherford, Texas Independent School District
Unlimited Tax School Building and Refunding
Bonds, Series 1994, 6.40%, 02/15/12 1,156,763
----------
40,510,025
----------
UTAH (1.1%)
-----------
3,080,000 Intermountain Power Agency, Utah Power
Supply Revenue Refunding Bonds,
Series 1993-A, 5.50%, 07/01/20..... 2,937,550
----------
</TABLE>
14
<PAGE> 67
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONIDE(R) TAX-FREE INCOME FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
VIRGINIA (13.3%)
----------------
$1,500,000 Fairfax County, Virginia Water Authority
Water Refunding Revenue
Series 1992, 6.00%, 04/01/22....... $ 1,537,500
4,250,000 Henrico County, Virginia Water and Sewer
System Refunding Revenue Bonds,
Series 1994, 5.875%, 05/01/14...... 4,281,875
1,985,000 Newport News, Virgina General Improvement
Bonds, Series 1993 E, 5.20%, 01/01/13 1,908,081
8,000,000 Richmond, Virginia General Obligation Public
Improvement Refunding Bonds,
Series 1991-B, 6.25%, 01/15/18..... 8,280,000
2,150,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds,
Series 1993 H, 5.25%, 07/01/23..... 1,980,687
2,000,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds, Series 1992
C Subseries C-7, 6.30%, 01/01/15... 2,035,000
1,000,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds, Series 1995
B Subseries B-3, 6.35%, 01/01/15... 1,021,250
5,500,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds,
Series 1992 A, 7.10%, 01/01/22.... 5,651,250
1,000,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds, Series B
Subseries B-2, 6.50%, 01/01/10..... 1,066,250
1,080,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds,
Series 1995-D, Subseries D-1, 5.95%, 01/01/13 1,085,400
2,000,000 Virginia Public School Authority School
Financing Bonds (1991 Resolution),
Series 1994 A, 6.20%, 08/01/13..... 2,115,000
4,595,000 Virginia Public School Authority School
Financing Bonds (1991 Resolution),
Series 1995 C, 5.00%, 08/01/16..... 4,284,838
----------
35,247,131
----------
WASHINGTON (7.1%)
-----------------
$2,950,000 Seattle, Washington Metropolitan General
Obligation Bonds,
Series 1991, 6.875%, 01/01/20...... $ 3,015,991
6,150,000 Seattle, Washington Water System and
Refunding Revenue Bonds, 1993, 5.50%,
06/01/18........................... 5,996,250
7,635,000 Washington State General Obligation,
Series 1992 A and
AT-6, 5.75%, 02/01/17.............. 7,654,088
2,155,000 Washington State General Obligation
Unlimited Tax Bonds,
Series DD-14 and B, 6.00%, 09/01/15 2,219,650
----------
18,885,979
----------
WISCONSIN (4.1%)
----------------
2,000,000 Wisconsin State General Obligation,
Series 1992-A, 6.30%, 05/01/11..... 2,157,500
3,065,000 Wisconsin State General Obligation Refunding
Bonds of 1996,
Series1, 5.00%, 05/01/14........... 2,900,256
2,000,000 Wisconsin State General Obligation Bonds
of 1994, Series A, 5.00%, 05/01/14. 1,892,500
2,500,000 Wisconsin State Transportation Revenue Bonds,
Series A, 5.50%, 07/01/12.......... 2,481,250
1,500,00 Wisconsin State Transportation Revenue
Bonds,1994 Series A, 5.50%, 07/01/11 1,462,500
----------
10,894,006
----------
Total long-term municipal securities
(cost $249,797,168)................... $260,481,900
============
</TABLE>
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
[PHOTO] [PHOTO]
Mary Ellen Gere-Penna-- E. Chris Evan--Nationwide(R)
Growth Fund and Money Fund and Government Bond
Market Fund, with her pet Fund, portrays Ohio Civil War
Sheltie, Mackenzie. General William T. Sherman.
15
<PAGE> 68
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The total return for the Nationwide U.S. Government Income Fund for the year
ended October 31, 1996, was 5.28% compared to a total return of 5.67% for its
benchmark index, the Lehman Brothers Intermediate Government Bond Index.
The past 12 months have been a volatile period for the U.S. bond market. Early
in the year, fears of a strengthening economy and higher inflation led to an
increase in interest rates. More recently, as favorable inflation results have
been released, inflationary concerns have eased and rates have declined from
their highs at midyear. Content with the current state of the economy, the
Federal Reserve has left the federal funds rate unchanged at 5.00% since early
this year. The net change in interest rates over the past 12 months was an
increase of approximately .35% in intermediate and long rates. The Fund
under-performed the index during this period due to the Fund having a slightly
longer average maturity than the index.
The U.S. Government Income Fund continues to be invested in sectors of the
government agency and mortgage-backed markets perceived to be undervalued.
Approximately 80% of portfolio assets are invested in the collateralized
mortgage obligation (CMO) market. The yield on these conservatively structured
investments continues to make them attractive portfolio holdings. The remainder
of the portfolio is invested in repurchase agreements for liquidity purposes and
callable government agency notes for increased portfolio yield.
Wayne T. Frisbee, CFA, Portfolio Manager
FUND VALUE $39,497,205
PORTFOLIO COMPOSITION
<TABLE>
<S> <C>
Mortgage-backed securities.........................78.8%
U.S. government and agency long-term obligations...18.2%
Other assets less liabilities.......................3.0%
</TABLE>
TOP FIVE HOLDINGS
<TABLE>
<CAPTION>
VALUE %
- -------------------------------------------------------------------------------
<S> <C> <C>
FHLMC (REMIC) Series 1462, Class PT $5,155,545 13.1%
FNMA (REMIC) Series 93-203, Class PJ 4,905,045 12.4%
Federal Home Loan Banks 4,012,716 10.2%
FNMA (REMIC) Series 92-151, Class H 3,745,596 9.5%
FHLMC (REMIC) Series 1344, Class D 3,735,156 9.5%
</TABLE>
FUND PERFORMANCE
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
<S> <C>
U.S.G.I. $13,532
CPI $11,413
L. Int. Govt. $13,504
<FN>
Comparative performance of $10,00 invested in the Nationwide(R) U.S. Government
Income Fund since inception (2/10/92), the Lehman Brothers Intermediate
Government Bond Index* and the Consumer Price Index (CPI)** over the period
since inception ended 10/31/96.
* The Lehaman Bothers Intermediate Government Bond Index represents an
unmanaged group of bonds that are not adjusted for expense and includes
bonds of lower quality than those purchaseed by our Fund.
** The Consumer Price Index is a broad index reflecting the price changes in a
market basket of consumer goods and, unlike the U.S.G.I. Fund, does not
reflect any fees or expenses.
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIOD ENDED 10/31/96
<TABLE>
<CAPTION>
1 YEAR LIFE
<S> <C> <C>
Without sales charge.......................5.28%.........6.81%
With sales charge..........................0.32%.........6.64%
</TABLE>
The without sales charge returns do not reflect the effects of sales charges.
The with sales charge assumes the applicable contigent deferred sales charge
(CDSC) was paid on withdrawls wich has the most dramatic effect on the one-year
performance figures. The CDSC declines from 5% in the first year to 0% after 5
years.
Investment return and principal value will fluctuate, and when redeemed, shares
may be worth more or less than original cost. Past performance is no guarantee
of future results.
FUND HIGHLIGHTS
Monthly income is paid by the Nationwide(R) U.S. Government
Income Fund from a high-quality portfolio of government securities. These
securities are generally considered among the safest, though they are not
specifically rated by the credit rating agencies.
In a attempt to minimize share price fluctuation, the Nation- wide(R) U. S.
Government Income Fund maintains an average portfolio maturity of 10 years or
less. Generally, shorter maturities are less subject to price fluctuation. Of
course, all bond prices (U.S. Government, municipal and corporate) are affected
by interest rates.
16
<PAGE> 69
STATEMENT OF INVESTMENTS
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
MORTGAGE-BACKED SECURITIES (78.8%)
----------------------------------
$1,500,000 FNMA Series 92-126, Class VB,
8.00%, 07/25/02.................... $ 1,553,774
5,000,000 FHLMC REMIC Series 1462, Class PT,
7.50%, 01/15/03.................... 5,155,545
3,000,000 FHLMC REMIC Series 1313, Class G,
7.25%, 06/15/07.................... 3,054,297
4,000,000 FHLMC REMIC Series 1344, Class D,
6.00%, 08/15/07.................... 3,735,156
4,000,000 FNMA REMIC Series 92-151, Class H,
6.00%, 08/25/07................... 3,745,596
414,545 FNMA REMIC Series 1988-25, Class B,
9.25%, 10/25/18.................... 439,405
2,614,713 FNMA REMIC Series 1990-7, Class B,
8.50%, 01/25/20.................... 2,722,698
3,437,917 FHLMC REMIC Series 31, Class E,
7.55%, 05/15/20.................... 3,482,847
2,180,509 FNMA REMIC Series 1992-81, Class Z,
8.50%, 04/25/22.................... 2,314,019
5,000,000 FNMA REMIC Series 1993-203, Class PJ,
6.50%, 10/15/23.................... 4,905,045
----------
Total mortgage backed securities
(cost $30,801,959).................... 31,108,382
----------
U.S. GOVERNMENT AND AGENCY
LONG-TERM OBLIGATIONS (18.2%)
-----------------------------
1,000,000 Federal Home Loan Mortgage Corp.
7.445%, 04/14/04................... 1,015,967
4,000,000 Federal Home Loan Banks
6.36%, 03/21/01.................... 4,012,716
1,550,000 Federal National Mortgage Association
7.26%, 10/05/05.................... 1,545,296
2,000,000 Resolution Funding STRIPS,
0.00%, 07/15/13.................... 633,058
----------
Total U.S. government and agency
long-term obligations
(cost $6,992,990)..................... 7,207,037
----------
REPURCHASE AGREEMENT (2.7%)
---------------------------
1,055,000 Prudential Securities
5.55%, due 11/01/96, Collateralized by
$1,075,000 Student Loan Marketing
Association Fund 0.00%, due 04/10/97,
market value $1,077,688 (cost $1,055,000) 1,055,000
----------
Total investments
(cost $38,849,949).................... $ 39,370,419
============
<FN>
The abbreviations in the statement above stand for the following:
FNMA Federal National Mortgage Association
FHLMC Federal Home Loan Mortgage Corporation
REMIC Real Estate Mortgage Investment Conduit
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
</TABLE>
[PHOTO]
Christopher M. Hungerford (right)-
Growth Fund, accepts his first place
certificate for winning the Champlain
Country Club's 1995 Jr. Championship in
St. Albans, Vermont.
[PHOTO]
From l. to r. Miranda, Katrina and Desiree (twins)
and Nichole are the daughters of Timothy Guaraldi-
Nationwide(R) Fund and Growth Fund.
17
<PAGE> 70
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) MONEY MARKET FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The year ended October 31, 1996, has been one of very stable short-term interest
rates, which has produced the consistent yield in the Nationwide Money Market
Fund. The total return for the year ended October 31, 1996, was 5.05% compared
to the Consumer Price Index total return of 2.99%.
The Federal Reserve Board (Feds) has not found sufficient justification to alter
monetary policy, and has left the discount rate unchanged at 5.00% since January
of this year. Market rates have been nearly as steady. For example, 30-day prime
commercial paper has traded between 5.16% and 5.45% this year, and 3-month U.S.
Treasury bills have traded between 5.02% and 5.48%.
The absence of inflation has allowed the Feds to stay the course despite
periodic indications of strength in the economy and upward pressure on some
commodity prices, particularly oil. Both consumer and producer prices have held
in what is perceived by the markets as an acceptable range.
Prime commercial paper has continued to provide the best risk/return profile,
accounting for its dominant portfolio weighting. The strategy of selecting
securities which provide the optimal relative value within a balanced maturity
structure will continue, with the focus on liquidity and a stable share value.
William M. Burtch, MBA, Portfolio Manager
FUND VALUE $729,499,762
PORTFOLIO COMPOSITION
<TABLE>
<S> <C>
Commercial paper................................................ 92.4%
Canadian government............................................. 5.1%
U.S. government obligations and other assets less liabilities .. 2.5%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS
VALUE %
- ------------------------------------------------------------------------------
<S> <C> <C>
Merrill Lynch & Co. $29,181,062 4.0%
MetLife Funding, Inc. 28,247,486 3.9%
Old Republic Capital Corp. 28,036,983 3.8%
National Rural Utilities 27,891,342 3.8%
Norwest Corporation 27,027,238 3.7%
</TABLE>
<TABLE>
<CAPTION>
FUND PERFORMAMCE
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MMF $17,176
CPI $14,365
<FN>
Comparative performance of $10,000 invested in the Nationwide(R) Money market
Fund and the Consumer Price Index (CPI)* over a 10-year period ended 10/31/96.
* The Consumer Price Index is a broad index reflecting price changes in a
market basket of consumer goods and, unlike the Money Market Fund, does not
reflect any fees or expenses.
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED 10/31/96
1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
Without sales charge.............5.05%.......3.99%.......5.55%
</TABLE>
An investment in the Money Market Fund is neither insured nor guaranteed by the
U.S. Government and there can be no assurance that it will be able to maintain a
stable net asset value of $1.00 per share. There are no sales charges in the
Nationwide(R) Money Market Fund. Past performance is no guarantee of future
results.
FUND HIGHLIGHTS
Due to daily dividend compounding from a high-quality portfolio, the
Nationwide(R) Money Market Fund offers high current market rates -- plus
stability of principal since the Fund seeks to maintain a constant $1.00 per
share net asset value. During the Fund's life, its share price has always been
$1.00.
Benefits of the Nationwide(R) Money Market Fund include liquidity without
penalty, competitive current market rates, daily compounding, security of
principal and free checkwriting privileges ($500 minimum).
18
<PAGE> 71
STATEMENT OF INVESTMENTS
NATIONWIDE(R) MONEY MARKET FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
CANADIAN GOVERNMENT OBLIGATIONS (5.1%)
--------------------------------------
British Columbia (Providence Of)
$5,000,000 5.23%, due 11/18/96................... $ 4,987,652
5,000,000 5.23%, due 12/27/96................... 4,959,322
5,000,000 5.37%, due 02/10/97................... 4,924,671
5,000,000 5.44%, due 03/13/97................... 4,900,267
Canadian Wheat Board
5,000,000 5.35%, due 11/20/96................... 4,985,882
8,000,000 5.37%, due 12/16/96................... 7,946,300
1,500,000 5.27%, due 12/20/96................... 1,489,240
3,395,000 5.25%, due 01/10/97................... 3,360,343
-----------
Total Canadian government obligations
(cost $37,553,677).................... 37,553,677
-----------
COMMERCIAL PAPER (92.4%)
--------------------------
Auto/Finance (2.5%)
Ford Motor Credit Co.
4,000,000 5.48%, due 11/07/96................... 3,996,347
3,800,000 5.30%, due 11/12/96................... 3,793,846
5,500,000 5.25%, due 12/09/96................... 5,469,521
5,440,000 5.31%, due 01/30/97................... 5,367,784
-----------
18,627,498
-----------
BANKS (12.0%)
-------------
Banc One Corp.
5,000,000 5.30%, due 11/15/96................... 4,989,694
5,000,000 5.24%, due 12/13/96................... 4,969,433
Corestates Capital Corp.
8,000,000 5.32%, due 01/28/97................... 7,895,964
J.P. Morgan & Co., Inc.
4,000,000 5.23%, due 11/06/96................... 3,997,094
3,000,000 5.48%, due 11/08/96................... 2,996,804
5,000,000 5.47%, due 11/12/96................... 4,991,643
8,640,000 5.42%, due 12/12/96................... 8,586,667
5,000,000 5.40%, due 12/13/96................... 4,968,500
National City Credit Corp.
9,000,000 5.35%, due 11/06/96................... 8,993,313
8,000,000 5.26%, due 12/04/96................... 7,961,427
Norwest Corp.
6,000,000 5.42%, due 11/04/96................... 5,997,290
7,530,000 5.30%, due 11/26/96................... 7,502,285
9,480,000 5.30%, due 01/08/97................... 9,385,095
4,185,000 5.29%, due 01/09/97................... 4,142,568
-----------
87,377,777
-----------
BROKER-DEALERS (14.1%)
----------------------
Bear Stearns Companies, Inc.
8,000,000 5.34%, due 11/08/96................... 7,991,693
7,000,000 5.42%, due 11/12/96................... 6,988,407
8,000,000 5.42%, due 01/03/97................... 7,924,120
Dean Witter Discover & Co.
5,000,000 5.30%, due 01/31/97................... 4,933,014
5,000,000 5.31%, due 01/31/97................... 4,932,888
Goldman Sachs Group
8,000,000 5.25%, due 11/18/96................... 7,980,167
2,123,000 5.26%, due 11/21/96................... 2,116,796
8,000,000 5.24%, due 11/25/96................... 7,972,053
Merrill Lynch & Co., Inc.
2,912,000 5.62%, due 11/01/96................... 2,912,000
3,165,000 5.26%, due 11/05/96................... 3,163,150
7,900,000 5.37%, due 11/07/96................... 7,892,930
4,150,000 5.43%, due 11/19/96................... 4,138,733
5,000,000 5.40%, due 11/22/96................... 4,984,250
870,000 5.27%, due 11/27/96................... 866,689
4,000,000 5.30%, due 11/27/96................... 3,984,689
1,245,000 5.27%, due 12/06/96................... 1,238,621
Morgan Stanley Group, Inc.
8,000,000 5.52%, due 01/13/97................... 7,910,453
6,000,000 5.32%, due 01/15/97................... 5,933,500
Smith Barney, Inc.
9,055,000 5.27%, due 11/04/96................... 9,051,023
-----------
102,915,176
-----------
CHEMICALS (7.2%)
----------------
Great Lakes Chemical Corp.
5,000,000 5.25%, due 11/18/96................... 4,987,604
$8,000,000 5.25%, due 11/20/96................... $ 7,977,833
6,545,000 5.25%, due 12/02/96................... 6,515,411
Monsanto Co.
6,116,000 5.45%, due 11/22/96................... 6,096,556
7,000,000 5.25%, due 12/06/96................... 6,964,271
5,000,000 5.25%, due 12/09/96................... 4,972,292
7,000,000 5.32%, due 01/08/97................... 6,929,658
PPG Industries, Inc.
8,000,000 5.24%, due 12/18/96................... 7,945,271
-----------
52,388,896
-----------
CONSUMER PRODUCTS (1.1%)
------------------------
Clorox Co.
8,000,000 5.40%, due 12/09/96................... 7,954,400
-----------
CONSUMER SALES FINANCE (5.5%)
-----------------------------
Associates Corp. of North America
8,050,000 5.33%, due 12/02/96................... 8,013,053
6,000,000 5.28%, due 12/11/96................... 5,964,800
7,000,000 5.26%, due 12/17/96................... 6,952,952
5,260,000 5.30%, due 01/10/97................... 5,205,793
Avco Financial Services, Inc.
6,000,000 5.29%, due 01/28/97................... 5,922,413
Beneficial Corp.
8,370,000 5.38%, due 11/14/96.................. 8,353,739
-----------
40,412,750
-----------
CORPORATE CREDIT UNIONS (1.5%)
------------------------------
U.S. Central Credit
2,570,000 5.25%, due 11/07/96................... 2,567,751
8,730,000 5.32%, due 12/03/96................... 8,688,717
-----------
11,256,468
-----------
DIVERSIFIED FINANCE (3.5%)
--------------------------
General Electric Capital Corp.
3,000,000 5.40%, due 11/20/96................... 2,991,450
7,000,000 5.39%, due 11/25/96................... 6,974,847
8,375,000 5.33%, due 11/27/96................... 8,342,761
4,400,000 5.425%, due 12/05/96.................. 4,377,456
3,240,000 5.33%, due 03/06/97................... 3,180,038
-----------
25,866,552
-----------
ELECTRIC UTILITY (3.8%)
-----------------------
National Rural Utilities Cooperative Finance Corp.
4,247,000 5.36%, due 11/01/96................... 4,247,000
375,000 5.36%, due 11/18/96................... 374,051
7,455,000 5.25%, due 12/10/96................... 7,412,600
6,000,000 5.33%, due 12/10/96................... 5,965,355
5,000,000 5.32%, due 01/09/97................... 4,949,017
5,000,000 5.30%, due 01/17/97................... 4,943,319
-----------
27,891,342
-----------
ENTERTAINMENT (3.2%)
--------------------
Walt Disney Co.
8,000,000 5.28%, due 12/04/96................... 7,961,280
8,000,000 5.27%, due 01/06/97................... 7,922,707
2,545,000 5.27%, due 01/06/97................... 2,520,411
5,000,000 5.28%, due 02/03/97................... 4,931,067
-----------
23,335,465
-----------
FINANCE (2.7%)
--------------
American Express Credit Corp.
6,000,000 5.28%, due 12/11/96................... 5,964,800
8,000,000 5.26%, due 12/12/96................... 7,952,076
6,000,000 5.24%, due 12/20/96................... 5,957,207
-----------
19,874,083
-----------
FOOD & BEVERAGES (6.2%)
-----------------------
CPC International, Inc.
2,790,000 5.27%, due 11/20/96................... 2,782,240
6,747,000 5.30%, due 12/03/96................... 6,715,214
8,765,000 5.31%, due 01/13/97................... 8,670,623
3,200,000 5.31%, due 01/27/97................... 3,158,936
Campbell Soup Co.
5,000,000 5.46%, due 12/05/96................... 4,974,217
</TABLE>
19
<PAGE> 72
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) MONEY MARKET FUND
OCTOBER 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- --------------------------------------------------------------------------------
<S> <C>
$8,000,000 5.47%, due 12/30/96................... $ 7,928,283
Heinz (H.J.) Co.
8,000,000 5.24%, due 11/26/96................... 7,970,889
2,790,000 5.25%, due 12/04/96................... 2,776,573
-----------
44,976,975
-----------
HEAVY EQUIPMENT FINANCE (1.9%)
------------------------------
Caterpillar Financial Services
8,000,000 5.27%, due 11/01/96................... 8,000,000
5,675,000 5.27%, due 12/03/96................... 5,648,416
-----------
13,648,416
-----------
INSURANCE (9.2%)
----------------
Marsh & McLennan Co.
4,535,000 5.26%, due 11/05/96................... 4,532,350
MetLife Funding, Inc.
8,065,000 5.38%, due 11/05/96................... 8,060,179
9,290,000 5.28%, due 11/14/96................... 9,272,287
6,000,000 5.23%, due 12/06/96................... 5,969,492
5,000,000 5.30%, due 01/14/97................... 4,945,528
Old Republic Capital Corp.
5,000,000 5.53%, due 11/06/96................... 4,996,160
5,000,000 5.37%, due 12/04/96................... 4,975,387
5,000,000 5.26%, due 12/10/96................... 4,971,508
2,171,000 5.26%, due 12/10/96................... 2,158,629
5,000,000 5.55%, due 01/07/97................... 4,948,354
6,050,000 5.60%, due 01/07/97................... 5,986,945
Principal Mutual Life Co., Inc.
1,000,000 5.24%, due 11/05/96................... 999,418
5,000,000 5.24%, due 11/08/96................... 4,994,906
-----------
66,811,143
-----------
LEASE FINANCING (1.9%)
----------------------
PHH Corp.
9,000,000 5.23%, due 11/13/96................... 8,984,310
5,000,000 5.25%, due 12/17/96................... 4,966,458
-----------
13,950,768
-----------
MISCELLANEOUS MANUFACTURING (1.1%)
----------------------------------
Illinois Tool Works
3,000,000 5.32%, due 11/19/96................... 2,992,020
5,000,000 5.37%, due 11/19/96................... 4,986,575
-----------
7,978,595
-----------
OFFICE EQUIPMENT & SUPPLIES (1.2%)
----------------------------------
Pitney Bowes Credit Corp.
5,000,000 5.47%, due 02/20/97................... 4,915,671
4,275,000 5.42%, due 02/24/97................... 4,200,982
-----------
9,116,653
-----------
OIL & GAS (0.2%)
----------------
Koch Industries, Inc.
1,193,000 5.24%, due 12/17/96................... 1,185,012
-----------
PACKAGING/CONTAINERS (2.0%)
---------------------------
Bemis Co., Inc.
8,600,000 5.28%, due 11/04/96................... 8,596,215
6,000,000 5.25%, due 12/03/96................... 5,972,000
-----------
14,568,215
-----------
PAPER & FOREST PRODUCTS (0.7%)
------------------------------
Sonoco Products Co.
5,000,000 5.38%, due 11/12/96................... 4,991,780
-----------
PHARMACEUTICALS/PERSONAL CARE (3.2%)
------------------------------------
Abbott Laboratories
2,350,000 5.27%, due 01/16/97................... 2,323,855
Glaxo Wellcome
3,000,000 5.31%, due 01/22/97................... 2,963,715
8,000,000 5.31%, due 01/22/97................... 7,903,240
Schering Corp.
2,040,000 5.27%, due 11/21/96................... 2,034,027
8,000,000 5.30%, due 03/18/97................... 7,838,643
-----------
23,063,480
-----------
PREMIUM FINANCE (1.7%)
----------------------
A.I. Credit Corp.
$3,000,000 5.27%, due 01/06/97................... $ 2,971,015
9,600,000 5.30%, due 03/10/97................... 9,417,680
-----------
12,388,695
-----------
PRINTING & PUBLISHING (3.6%)
----------------------------
Donnelley RR & Sons
5,000,000 5.25%, due 12/16/96................... 4,967,188
6,600,000 5.25%, due 12/16/96................... 6,556,688
McGraw-Hill, Inc.
9,740,000 5.33%, due 11/19/96................... 9,714,043
4,684,000 5.45%, due 11/26/96................... 4,666,271
-----------
25,904,190
-----------
RAILROADS (2.4%)
----------------
Norfolk & Southern Railway Co.
5,000,000 5.29%, due 12/06/96................... 4,974,285
8,000,000 5.42%, due 12/19/96................... 7,942,187
5,000,000 5.30%, due 01/14/97................... 4,945,528
-----------
17,862,000
-----------
Total commercial paper
(cost $674,346,329)................... 674,346,329
-----------
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS (2.4%)
------------------
U.S. Treasury Bills
5,000,000 4.81%, due 11/14/96................... 4,991,316
3,090,000 4.86%, due 01/09/97................... 3,061,216
5,000,000 5.08%, due 02/06/97................... 4,931,562
5,000,000 5.41%, due 05/29/97................... 4,842,960
-----------
Total U.S. government and agency obligations
(cost $17,827,054).................... 17,827,054
-----------
Total investments
(cost $729,727,060)................... $729,727,060
============
<FN>
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent value as a percentage of net assets.
See accompanying notes to financial statements.
</TABLE>
20
<PAGE> 73
NATIONWIDE(R) FAMILY OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R)
GROWTH NATIONWIDE(R) BOND TAX-FREE U.S. GOV'T MONEY MARKET
FUND FUND FUND INCOME FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value $ 652,778,128 $960,505,467 $ 131,018,346 $ 260,481,900 $ 39,370,419 $ 729,727,060
(cost $494,088,843; $586,877,361;
$128,346,516; $249,797,168;
$38,849,949 and $729,727,060,
respectively)
Cash 94,763 50,014 29,236 -- 6,124 283,618
Receivable for Fund shares sold 210,998 -- 37,561 27,805 41,813 116,465
Receivable for investment
securities sold 2,528,450 782,206 973,125 1,442,362 -- --
Accrued interest and dividends
receivable 427,232 1,751,914 2,595,433 5,172,757 225,705 --
---------------------------------------------------------------------------------------------
Total assets 656,039,571 963,089,601 134,653,701 267,124,824 39,644,061 730,127,143
---------------------------------------------------------------------------------------------
LIABILITIES
Bank loan -- -- -- 502,400 -- --
Payable for Fund shares redeemed -- 1,222,647 189,600 379,446 60,012 97,247
Payable for investment securities
purchased -- 2,726,188 994,063 1,031,040 -- --
Accrued management fees 281,477 402,203 55,806 145,200 21,576 270,342
Accrued transfer agent fees 59,010 60,499 13,201 26,200 3,553 57,390
Accrued distribution fees -- -- -- 44,732 6,639 --
Dividends payable (892) 3,907 122,798 321,112 48,045 126,215
Other accrued expenses 84,271 84,387 25,501 32,934 7,031 76,187
---------------------------------------------------------------------------------------------
Total liabilities 423,866 4,499,831 1,400,969 2,483,064 146,856 627,381
---------------------------------------------------------------------------------------------
NET ASSETS $ 655,615,705 $958,589,770 $ 133,252,732 $ 264,641,760 $ 39,497,205 $ 729,499,762
=============================================================================================
NET ASSETS REPRESENTED BY:
Capital Shares, $1 par value
outstanding $ 49,152,969 $ 46,957,777 $ 14,264,079 $ 25,842,939 $ 3,932,514 $ 729,501,084
Capital paid in excess of par value 402,016,940 477,434,454 125,775,070 231,376,463 35,480,301 --
Net unrealized appreciation 158,689,285 373,628,106 2,671,830 10,684,732 520,470 --
Accumulated undistributed net
realized gain (loss) 45,458,844 59,191,383 (9,525,283) (3,251,345) (401,674) --
Accumulated undistributed
(distributions in excess of)
net investment income 297,667 1,378,050 67,036 (11,029) (34,406) (1,322)
---------------------------------------------------------------------------------------------
NET ASSETS $ 655,615,705 $958,589,770 $ 133,252,732 $ 264,641,760 $ 39,497,205 $ 729,499,762
=============================================================================================
Shares outstanding (unlimited
number of shares authorized) 49,152,969 46,957,777 14,264,079 25,842,939 3,932,514 729,501,084
=============================================================================================
Net asset value per share $ 13.34 $ 20.41 $ 9.34 $ 10.24 $ 10.04 $ 1.00
=============================================================================================
Offering price (100%/(100%-Maximum
Sales Charge) of net asset value
adjusted to nearest cent) per
share* $ 13.97 $ 21.37 $ 9.78 $ 10.24 $ 10.04 $ 1.00
=============================================================================================
Maximum sales charge 4.50% 4.50% 4.50% -- -- --
=============================================================================================
<FN>
*For Nationwide(R) Tax-Free Income Fund and U.S. Government Income Fund,
redemption price per share varies by length of time shares are held.
</TABLE>
See accompanying notes to financial statements.
21
<PAGE> 74
NATIONWIDE(R) FAMILY OF FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R)
GROWTH NATIONWIDE(R) BOND TAX-FREE U.S. GOV'T MONEY MARKET
FUND FUND FUND INCOME FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends $ 8,494,220 $ 20,514,352 -- -- -- --
Interest 3,349,087 1,573,774 $9,681,741 $15,653,726 $ 2,717,130 $36,273,232
---------------------------------------------------------------------------------
Total income 11,843,307 22,088,126 9,681,741 15,653,726 2,717,130 36,273,232
---------------------------------------------------------------------------------
EXPENSES:
Investment management fees 3,212,196 4,425,921 663,545 1,704,966 255,149 3,280,802
Distribution fees -- -- -- 921,340 137,388 --
Transfer agent fees 683,043 698,913 161,300 159,115 40,299 653,631
Shareholders' reports 138,109 139,217 65,742 52,776 15,248 190,601
Registration fees -- -- -- 22,972 15,000 --
Professional services 29,866 32,656 5,234 12,679 1,260 24,893
Custodian fees 31,869 43,290 16,048 41,455 7,400 41,694
Trustees' fees and expenses 17,978 21,747 3,822 2,743 396 18,215
Other 26,307 34,960 6,992 12,994 2,336 27,000
---------------------------------------------------------------------------------
Total expenses before waived expenses 4,139,368 5,396,704 922,683 2,931,040 474,476 4,236,836
Total waived expenses -- -- -- 394,860 58,881 328,076
Net expenses 4,139,368 5,396,704 922,683 2,536,180 415,595 3,908,760
---------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 7,703,939 $16,691,422 $8,759,058 $13,117,546 $ 2,301,535 $32,364,472
=================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investments $45,484,621 $ 59,251,910 $ (171,239) $ 2,055,736 $ 34,406 --
Net change in unrealized appreciation
(depreciation) 20,001,960 127,452,048 (2,045,242) (1,473,376) (277,059) --
---------------------------------------------------------------------------------
Net realized and unrealized gain (loss)
on investments 65,486,581 186,703,958 (2,216,481) 582,360 (242,653) --
---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $73,190,520 $203,395,380 $6,542,577 $13,699,906 $2,058,882 $32,364,472
=================================================================================
</TABLE>
See accompanying notes to financial statements.
22
<PAGE> 75
NATIONWIDE(R) FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R)
GROWTH FUND FUND BOND FUND
Year ended Year ended Year ended Year ended Year ended Year ended
October 31, October 31, October 31, October 31, October 31, October 31,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 7,703,939 $ 8,424,199 $ 16,691,422 $ 14,301,965 $ 8,759,058 $ 8,946,837
Net realized gain (loss) on investment 45,484,621 55,104,961 59,251,910 42,454,076 (171,239) (2,695,214)
Net change in unrealized appreciation
(depreciation) of investments 20,001,960 34,260,953 127,452,048 73,761,567 (2,045,242) 17,358,003
---------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 73,190,520 97,790,113 203,395,380 130,517,608 6,542,577 23,609,626
Distributions to shareholders from:
Net investment income (7,521,249) (8,424,199) (16,077,181) (14,459,586) (8,801,481) (8,917,890)
In excess of net investment income -- (50,491) -- -- -- --
Net realized gain from investment
transactions (55,130,738) (9,636,714) (42,514,603) (54,955,514) -- --
---------------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (62,651,987) (18,111,404) (58,591,784) (69,415,100) (8,801,481) (8,917,890)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 91,753,548 78,233,932 100,830,600 44,342,114 17,666,533 14,412,502
Net asset value of shares issued to
shareholders from reinvestment of
dividends 61,359,336 17,836,103 51,530,171 60,306,894 7,287,372 7,950,830
Cost of shares redeemed (90,962,567) (57,537,318) (134,240,940) (76,759,052) (23,074,853) (27,877,661)
---------------------------------------------------------------------------------------------
Increase (decrease) in net assets
derived from capital share
transactions 62,150,317 38,532,717 18,119,831 27,889,956 1,879,052 (5,514,329)
---------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 72,688,850 118,211,426 162,923,427 88,992,464 (379,852) 9,177,407
NET ASSETS-BEGINNING OF PERIOD 582,926,855 464,715,429 795,666,343 706,673,879 133,632,584 124,455,177
---------------------------------------------------------------------------------------------
NET ASSETS-END OF PERIOD $ 655,615,705 $ 582,926,855 $ 958,589,770 $ 795,666,343 $ 133,252,732 $ 133,632,584
=============================================================================================
Undistributed net realized gain (loss)
on investments included in net assets
at end of period $ 45,458,844 $ 55,104,961 $ 59,191,383 $ 42,454,076 $ (9,525,283) $ (9,354,044)
=============================================================================================
Undistributed net investment income
included in net assets at end
of period $ 297,667 $ 114,977 $ 1,378,050 $ 763,809 $ 67,036 $ 109,459
=============================================================================================
SHARE ACTIVITY:
Shares sold 7,069,963 6,444,023 5,349,375 2,806,172 1,897,464 1,613,435
Reinvestment of dividends 4,952,188 1,578,080 2,874,632 4,081,126 784,086 892,591
Shares redeemed (6,978,391) (4,861,121) (7,129,736) (4,857,164) (2,486,318) (3,144,695)
---------------------------------------------------------------------------------------------
Net increase (decrease) in number
of shares 5,043,760 3,160,982 1,094,271 2,030,134 195,232 (638,669)
=============================================================================================
</TABLE>
See accompanying notes to financial statements.
23
<PAGE> 76
NATIONWIDE(R) FAMILY OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R)
TAX-FREE INCOME FUND U.S. GOV'T INCOME FUND MONEY MARKET FUND
Year ended Year ended Year ended Year ended Year ended Year ended
October 31, October 31, October 31, October 31, October 31, October 31,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
OPERATIONS:
Net investment income $ 13,117,546 $ 13,060,318 $ 2,301,535 $ 2,266,549 $ 32,364,472 $ 29,238,839
Net realized gain (loss) on
investments 2,055,736 (3,951,178) 34,406 70,730 -- 4,106
Net change in unrealized
appreciation (depreciation)
of investments (1,473,376) 24,981,359 (277,059) 3,505,345 -- --
---------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 13,699,906 34,090,499 2,058,882 5,842,624 32,364,472 29,242,945
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (13,122,781) (13,407,484) (2,301,535) (2,266,549) (32,359,207) (29,239,264)
In excess of net investment
income (11,029) -- (34,406) -- -- (6,587)
Net realized gain from
investment transactions -- -- -- -- (4,106) --
Paid in capital -- -- (10) (14,726) -- --
---------------------------------------------------------------------------------------
Decrease in net assets from
distributions to shareholders (13,133,810) (13,407,484) (2,335,951) (2,281,275) (32,363,313) (29,245,851)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 20,245,316 18,662,663 4,773,320 3,165,132 746,407,569 626,666,560
Net asset value of shares
issued to shareholders from
reinvestment of dividends 9,330,442 10,382,144 1,753,068 1,830,091 30,963,908 29,971,841
Cost of shares redeemed (27,983,697) (28,340,872) (6,529,084) (6,528,260) (652,583,762)
---------------------------------------------------------------------------------------
Increase (decrease) in net
assets derived from capital
share transactions 1,592,061 703,935 (2,696) (1,533,037) 124,787,715 112,976,889
---------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS 2,158,157 21,386,950 (279,765) 2,028,312 124,788,874 112,973,983
NET ASSETS-BEGINNING OF PERIOD 262,483,603 241,096,653 39,776,970 37,748,658 604,710,888 491,736,905
---------------------------------------------------------------------------------------
NET ASSETS-END OF PERIOD $ 264,641,760 $ 262,483,603 $ 39,497,205 $ 39,776,970 $ 729,499,762 $ 604,710,888
=======================================================================================
Undistributed net realized
gain (loss) on investments
included in net assets
at end of period $ (3,251,345) $ (5,307,081) $ (401,674) $ (436,080) $ -- $ 4,106
=======================================================================================
Undistributed (distributions
in excess of) net investment
income included in net assets
at end of period $ (11,029) $ 5,235 $ (34,406) $ -- $ (1,322) $ (6,587)
=======================================================================================
SHARE ACTIVITY:
Shares sold 1,986,252 1,898,854 482,073 326,609 746,407,569 626,666,560
Reinvestment of dividends 914,259 1,056,582 175,851 189,664 30,963,908 29,971,841
Shares redeemed (2,748,350) (2,901,957) (655,486) (681,184) (652,583,762) (543,661,512)
---------------------------------------------------------------------------------------
Net increase (decrease) in
number of shares 152,161 53,479 2,438 (164,911) 124,787,715 112,976,889
=======================================================================================
</TABLE>
See accompanying notes to financial statements.
24
<PAGE> 77
NATIONWIDE(R) FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<TABLE>
<CAPTION>
NATIONWIDE(R) GROWTH FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 13.22 $ 11.35 $ 11.14 $ 9.94 $ 9.57
Net investment income 0.16 0.21 0.09 0.17 0.20
Net realized gain (loss) and unrealized
appreciation (depreciation) 1.36 2.10 0.53 1.41 0.46
------------------------------------------------------------------------------
Total from investment operations 1.52 2.31 0.62 1.58 0.66
Dividends from net investment income (0.16) (0.20) (0.19) (0.17) (0.20)
Distributions from net realized gain from
investment transactions (1.24) (0.24) (0.22) (0.21) (0.09)
------------------------------------------------------------------------------
Total distributions (1.40) (0.44) (0.41) (0.38) (0.29)
------------------------------------------------------------------------------
Net increase (decrease) in net asset value 0.12 1.87 0.21 1.20 0.37
NET ASSET VALUE-END OF PERIOD $ 13.34 $ 13.22 $ 11.35 $ 11.14 $ 9.94
==============================================================================
Total Return (excludes sales charges) 12.36% 21.01% 5.73% 16.16% 6.94%
Net Assets, End of Period (000) $ 655,616 $ 582,927 $ 464,715 $ 411,853 $ 330,950
Ratio of expenses to average net assets 0.64% 0.66% 0.68% 0.68% 0.65%
Ratio of net investment income to average net assets 1.20% 1.66% 1.71% 1.63% 1.97%
Portfolio turnover 25.61% 27.10% 14.50% 10.20% 13.10%
Average commission rate paid * 5.3923(cent) - - -
<CAPTION>
NATIONWIDE(R) FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 17.35 $ 16.12 $ 16.55 $ 16.31 $ 15.77
Net investment income 0.36 0.31 0.37 0.31 0.37
Net realized gain (loss) and unrealized
appreciation (depreciation) 3.98 2.49 0.41 0.67 0.98
------------------------------------------------------------------------------
Total from investment operations 4.34 2.80 0.78 0.98 1.35
Dividends from net investment income (0.35) (0.31) (0.36) (0.33) (0.36)
Distributions from net realized gain from
investment transactions (0.93) (1.26) (0.85) (0.41) (0.45)
------------------------------------------------------------------------------
Total distributions (1.28) (1.57) (1.21) (0.74) (0.81)
------------------------------------------------------------------------------
Net increase (decrease) in net asset value 3.06 1.23 (0.43) 0.24 0.54
------------------------------------------------------------------------------
NET ASSET VALUE-END OF PERIOD $ 20.41 $ 17.35 $ 16.12 $ 16.55 $ 16.31
==============================================================================
Total Return (excludes sales charges) 26.11% 19.24% 4.88% 6.16% 8.68%
Net Assets, End of Period (000) $ 958,590 $ 795,666 $ 706,674 $ 753,239 $ 726,012
Ratio of expenses to average net assets 0.61% 0.63% 0.63% 0.62% 0.61%
Ratio of net investment income to average net assets 1.89% 1.95% 2.26% 1.96% 2.32%
Portfolio turnover 16.71% 16.50% 15.40% 25.80% 12.80%
Average commission rate paid * 5.9393(cent) - - - -
<FN>
* Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold by the
Fund for which commissions were charged.
</TABLE>
See accompanying notes to financial statements.
25
<PAGE> 78
NATIONWIDE(R) FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<TABLE>
<CAPTION>
NATIONWIDE(R) BOND FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 9.50 $ 8.46 $ 10.07 $ 9.58 $ 9.46
Net investment income 0.61 0.63 0.60 0.74 0.76
Net realized gain (loss) and unrealized
appreciation (depreciation) (0.15) 1.04 (1.56) 0.52 0.23
---------------------------------------------------------------------------
Total from investment operations 0.46 1.67 (.96) 1.26 0.99
Dividends from net investment income (0.62) (0.63) (0.65) (0.77) (0.85)
Distribution from paid in capital - - - - (0.02)
---------------------------------------------------------------------------
Total distributions (0.62) (0.63) (0.65) (0.77) (0.87)
---------------------------------------------------------------------------
Net increase (decrease) in net asset value (0.16) 1.04 (1.61) 0.49 0.12
NET ASSET VALUE-END OF PERIOD $ 9.34 $ 9.50 $ 8.46 $ 10.07 $ 9.58
===========================================================================
Total Return (excludes sales charges) 5.05% 20.41% (9.81%) 13.61% 10.85%
Net Assets, End of Period (000) $ 133,253 $ 133,633 $ 124,455 $ 151,090 $ 90,187
Ratio of expenses to average net assets 0.70% 0.71% 0.71% 0.68% 0.65%
Ratio of net investment income to average net assets 6.60% 7.04% 7.11% 7.63% 8.63%
Portfolio turnover 38.95% 70.40% 58.00% 68.50% 100.80%
<CAPTION>
NATIONWIDE(R) TAX-FREE INCOME FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 10.22 $ 9.40 $ 10.95 $ 9.94 $ 9.81
Net investment income 0.51 0.51 0.53 0.54 0.56
Net realized gain (loss) and unrealized
appreciation (depreciation) 0.02 0.84 (1.45) 1.10 0.13
---------------------------------------------------------------------------
Total from investment operations 0.53 1.35 (0.92) 1.64 0.69
Dividends from net investment income (0.51) (0.53) (0.51) (0.54) (0.56)
Distributions from net realized gain from
investment transactions - - (0.12) (0.09) -
-
---------------------------------------------------------------------------
Total distributions (0.51) (0.53) (0.63) (0.63) (0.56)
---------------------------------------------------------------------------
Net increase (decrease) in net asset value 0.02 0.82 (1.55) 1.01 0.13
---------------------------------------------------------------------------
NET ASSET VALUE-END OF PERIOD $ 10.24 $ 10.22 $ 9.40 $ 10.95 $ 9.94
===========================================================================
Total Return 5.31% 14.66% (8.74%) 16.97% 7.18%
Net Assets, End of Period (000) $ 264,642 $ 262,484 $ 241,097 $ 253,042 $170,650
Ratio of expenses to average net assets 0.96% 0.98% 0.99% 0.98% 0.98%
Ratio of expenses to average net assets * 1.11% 1.13% 1.14% 1.13% 1.13%
Ratio of net investment income to average net assets 4.98% 5.20% 5.02% 5.07% 5.62%
Ratio of net investment income to average net assets * 4.83% 5.05% 4.87% 4.92% 5.47%
Portfolio turnover 24.15% 31.70% 59.20% 28.40% 69.80%
<FN>
* Ratio calculated as if no expenses were waived.
</TABLE>
See accompanying notes to financial statements.
26
<PAGE> 79
NATIONWIDE(R) FAMILY OF FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<TABLE>
<CAPTION>
NATIONWIDE(R) U.S. GOV'T INCOME FUND
Years ended October 31,
Period from 2/10/92
(commencement
of operations)
1996 1995 1994 1993 to 10/31/92
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 10.12 $ 9.22 $ 10.26 $ 9.97 $ 10.00
Net investment income 0.59 0.59 0.54 0.53 0.46
Net realized gain (loss) and unrealized
appreciation (depreciation) (0.08) 0.89 (0.96) 0.45 (0.03)
------------------------------------------------------------------------------
Total from investment operations 0.51 1.48 (0.42) 0.98 0.43
Dividends from net investment income (0.58) (0.58) (0.55) (0.53) (0.46)
In excess of net investment income (0.01) -- -- -- --
Distributions from net realized gain from
investment transactions -- -- (0.07) (0.16) --
------------------------------------------------------------------------------
Total distributions (0.59) (0.58) (0.62) (0.69) (0.46)
------------------------------------------------------------------------------
Net increase (decrease) in net asset value (0.08) 0.90 (1.04) 0.29 (0.03)
------------------------------------------------------------------------------
NET ASSET VALUE-END OF PERIOD $ 10.04 $ 10.12 $ 9.22 $ 10.26 $ 9.97
==============================================================================
Total Return 5.28% 16.47% (4.20%) 10.15% 7.26%*
Net Assets, End of Period (000) $ 39,497 $ 39,777 $ 37,749 $ 38,452 $ 18,211
Ratio of expenses to average net assets 1.06% 1.08% 1.09% 1.10% 1.00%*
Ratio of expenses to average net assets ** 1.21% 1.23% 1.24% 1.25% 1.17%*
Ratio of net investment income to average net assets 5.86% 5.92% 5.62% 5.12% 6.38%*
Ratio of net investment income to average net assets ** 5.71% 5.77% 5.47% 4.97% 6.21%*
Portfolio turnover 9.30% 25.40% 67.50% 99.00% 157.40%
<CAPTION>
NATIONWIDE(R) MONEY MARKET FUND
Years ended October 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE-BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.05 0.05 0.03 0.03 0.03
Dividends from net investment income (0.05) (0.05) (0.03) (0.03) (0.03)
------------------------------------------------------------------------------
Net increase (decrease) in net asset value - - - - -
------------------------------------------------------------------------------
NET ASSET VALUE-END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
==============================================================================
Total Return 5.05% 5.46% 3.34% 2.60% 3.53%
Net Assets, End of Period (000) $ 729,500 $ 604,711 $ 491,737 $ 418,615 $488,998
Ratio of expenses to average net assets 0.60% 0.62% 0.65% 0.70% 0.71%
Ratio of expenses to average net assets ** 0.65% 0.67% 0.70% 0.73% 0.71%
Ratio of net investment income to average net assets 4.93% 5.34% 3.33% 2.57% 3.50%
Ratio of net investment income to average net assets ** 4.88% 5.29% 3.28% 2.54% 3.50%
<FN>
* Total Return and ratios are annualized for periods of less than one year.
** Ratios calculated as if no expenses were waived.
</TABLE>
See accompanying notes to financial statements.
27
<PAGE> 80
NATIONWIDE(R) FAMILY OF FUNDS
NOTES TO FINANICAL STATEMENTS
OCTOBER 31, 1996
1. Summary of Significant Accounting Policies
Nationwide Investing Foundation (NIF) and Nationwide Investing Foundation II
(NIF-II) are diversified, open-end investment companies. NIF was created under
the laws of Michigan by an Indenture of Trust, dated May 5, 1933. NIF-II was
created under the laws of Massachusetts as a Massachusetts Business Trust on
October 5, 1985. The Trusts, which are registered under the Investment Company
Act of 1940, as amended, offer shares in six separate mutual funds.
(a) Security Valuation
----------------------
(1) Growth, Fund, Bond, Tax-Free Income, and U.S. Government Income
Funds:
Securities traded on a national securities exchange are valued at
closing prices. Listed securities for which no sale was reported on
the valuation date are valued at quoted bid prices or fair market
procedures authorized by the Boards of Trustees.
(2) Money Market Fund:
Securities are valued at amortized cost, which approximates market
value, in accordance with Rule 2a-7 of the Investment Company Act of
1940 as amended.
The value of a repurchase agreement generally equals the purchase
price paid by the Fund (cost) plus the interest accrued to date. The
seller, under the repurchase agreement, is required to maintain the
market value of the underlying collateral at not less than the value
of the repurchase agreement. Securities subject to repurchase
agreements are held by the Federal Reserve/Treasury book-entry system
or by the Fund's custodian or an approved sub-custodian.
(b) Security Transactions and Investment Income
-----------------------------------------------
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date; interest income is recorded on an
accrual basis and includes, where applicable, the pro rata amortization of
premium or discount.
(c) Federal Income Taxes
------------------------
NIF and NIF-II qualify as regulated investment companies under the
Internal Revenue Code during the periods covered by the accompanying
statements. No provision has been made for federal income taxes as it is
the intention to continue such qualification and to distribute all taxable
income to shareholders. To the extent net realized gains are offset
through the application of a capital loss carryover, they will not be
distributed to shareholders but will be retained by the Trusts.
As of October 31, 1996, the Nationwide Bond, Tax-Free Income, and U.S.
Government Income Funds had net capital loss carry forwards in the
amounts of $9,525,283, $3,251,345, and $401,674, respectively. The Bond
Fund carry forwards will expire within 5 to 8 years, the Tax-Free Income
Fund carry forwards will expire within 7 years, and the U.S. Government
Income Fund carry forwards will expire within 6 years.
(d) Dividends to Shareholders
-----------------------------
(1) Growth and Nationwide Funds:
Dividends are paid quarterly and are recorded on the ex-dividend date.
(2) Bond, Tax-Free Income, U.S. Government Income, and Money Market Funds:
Dividends are declared daily and paid monthly from the sum of the net
investment income
Distributable net realized capital gains are declared and distributed at
least annually for all funds.
Dividends and distributions to shareholders are determined in accordance
with federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences are considered
either permanent or temporary in nature. In accordance with AICPA Statement
of Position 93-2, permanent differences are reclassified within the capital
accounts based on their nature for federal income tax purposes; temporary
differences do not require reclassification. Dividends and distributions
that exceed net investment income and net realized gains for financial
reporting purposes but not for tax purposes are reported as dividends in
excess of net investment income and net realized gains. To the extent
distributions exceed current and accumulated earnings and profits for
federal income tax purposes, they are reported as distributions of
paid-in-capital. These reclassifications have no effect upon the net asset
value of the respective funds.
(e) Expenses
------------
Direct expenses of a fund are allocated to that fund. General expenses of
the Trusts are allocated to the funds based upon each fund's relative
average net assets.
(f) Use of Estimates
--------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
2. TRANSACTIONS WITH AFFILIATES
(a) Growth, Fund, Bond, and Money Market Funds
----------------------------------------------
As investment manager for the NIF Funds, Nationwide Advisory Services,
Inc. (NAS), (formerly Nationwide Financial Services, Inc.), an affiliated
company, earns an annual fee of
28
<PAGE> 81
NATIONWIDE(R) FAMILY OF FUNDS
NOTES TO FINANICAL STATEMENTS
OCTOBER 31, 1996
.5% based on the average daily net assets; this fee would not be payable in
full if the effect of such payment would increase total expense (excluding
taxes other than payroll taxes and brokerage commissions on portfolio
transactions) to an amount exceeding 1% of average daily net assets for any
fiscal year. Such limitations on total expenses did not affect management
fees during the periods covered by the financial statements.
The investment manager voluntarily waived annual fees totaling .05% of
average daily net assets in the Money Market Fund for the year ended
October 31, 1996, or $328,076 representing $.0005 per average share
outstanding.
NAS also receives fees for services as principal underwriter. Such fees are
deducted from and are not included in proceeds from sales of capital
shares. From such fees, NAS pays sales commissions, salaries, and other
expenses. Such fees aggregated $1,029,727 on Growth Fund shares, $1,089,371
on Fund Shares, and $202,206 on Bond Fund shares for the year ended October
31, 1996.
(b) Tax-Free Income, and U.S. Government Income Funds
-----------------------------------------------------
As investment manager for each NIF-II Fund, NAS earns an annual fee based
on average daily net assets of each Fund at the rate of .65% on the first
$250 million, .60% on the next $250 million, .55% on the next $250 million,
and .50% on the average daily net assets in excess of $750 million. Total
annual expenses will not exceed the limits prescribed by any state in which
the Fund shares are offered for sale. Such limitation did not affect the
management fees for the year ended October 31, 1996.
NAS may also receive fees on the NIF-II Funds for distribution pursuant to
a Rule 12b-1 Distribution Plan approved by the Board of Trustees. These
fees are based on average daily net assets of each Fund at an annual rate
of .35%. During the year ended October 31, 1996, each Fund paid
distribution fees at the annual rate of .20% of average daily net assets,
with the distributor voluntarily waiving the remaining .15%. During the
year ended October 31, 1996, NAS waived $394,860 and $58,881 for both the
Tax-Free Income and U.S. Government Income Funds, representing $.015 per
average share outstanding for each fund.
NAS also receives fees for services as principal underwriter. Such fees are
contingent deferred sales charges for the NIF-II Funds ranging from 5% to
1% imposed on redemptions which cause the current value of an account to
fall below the total purchase payments made during the past five years.
Contingent deferred sales charges aggregated $169,310 on the Tax-Free
Income Fund shares and $58,918 on the U.S. Government Income Fund shares
for the year ended October 31, 1996.
A subsidiary of NAS (Nationwide Investors Services, Inc.) acts as Transfer and
Dividend Disbursing Agent for the Funds.
3. BANK LOANS
Both NIF and NIF II Trusts have unsecured bank lines of credit of $25,000,000
each. Borrowings under these arrangements bear interest at the Federal Funds
rate plus .50%. These interest costs are included in custodian fees in the
Statements of Operations. No compensating balances are required. The Tax-Free
Income Fund had an outstanding balance on these lines at October 31, 1996, of
$502,400.
4. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding U.S. Government and short-term
securities), and purchases and sales of U.S. Government Obligations for the year
ended October 31, 1996, are summarized as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES OBLIGATIONS
PURCHASES SALES PURCHASES SALES
<S> <C> <C> <C> <C>
Growth............ $189,946,018 $149,806,703 $140,798,139 $177,258,794
Fund.............. 152,063,007 162,300,308 -- --
Bond.............. 45,363,936 44,199,913 5,484,075 5,655,312
Tax-Free Income... 64,427,275 63,072,201 -- --
U.S. Gov't Income 2,349,359 549,166 2,548,984 2,993,516
Money Market...... -- -- 31,107,476 42,347,000
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized appreciation (depreciation) at October 31, 1996, are
the following components:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED NET UNREALIZED
GAINS LOSSES APPRECIATION
<S> <C> <C> <C>
Growth................ $174,291,915 $(15,602,630) $158,689,285
Fund ................ 387,579,796 (13,951,690) 373,628,106
Bond.................. 3,405,725 (733,895) 2,671,830
Tax-Free Income....... 11,242,731 (557,999) 10,684,732
U.S. Gov't Income..... 773,537 (253,067) 520,470
</TABLE>
5. FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For corporate shareholders, 89.3% of the Growth Fund and 97.5% of the Fund
income dividends and short-term capital gain distributions in the fiscal year
ended October 31, 1996, qualify for the corporate dividend received deduction.
All of the distributions paid by the Tax-Free Income Fund during the fiscal year
are exempt from federal income tax.
29
<PAGE> 82
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
The Nationwide Investing Foundation
The Nationwide Investing Foundation II:
We have audited the accompanying statements of assets and liabilities, including
the statements of investments, of The Nationwide Investing
Foundation--Nationwide Growth Fund, Nationwide Fund, Nationwide Bond Fund,
Nationwide Money Market Fund, and of The Nationwide Investing Foundation
II--Nationwide Tax-Free Income Fund and Nationwide U.S. Government Income Fund,
as of October 31, 1996, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
October 31, 1996, by confirmation with the custodian and other appropriate audit
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds comprising The Nationwide Investing Foundation and
The Nationwide Investing Foundation II as of October 31, 1996, the results of
their operations, the changes in their net assets and the financial highlights
for each of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
December 13, 1996
30
<PAGE> 83
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.
18
<PAGE> 84
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Nationwide Tax-Free Income Fund
Nationwide U.S. Governement Bond Fund
(1) Financial statements and schedules included in Prospectus (Part A):
Financial Highlights for each of the years in the ten year period
ended October 31, 1996.
(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, 1996.
Statements of Operations for the year ended October 31, 1996.
Statements of Changes in Net Assets for each of the years in the
two year period ended October 31, 1996.
Statements of Investments at October 31, 1996.
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.
(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.
<PAGE> 85
(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, 1996
<S> <C>
Nationwide Tax-Free Income Fund 8,433
Nationwide U.S. Government Income Fund 2,116
</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, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. The term "expenses"
<PAGE> 86
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 Advisory Services, Inc. (NAS), 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
Directors and Officers of Investment Adviser
Joseph J. Gasper
Director and President and Chief Operating Officer
--------------------------------------------------
Nationwide Life Insurance Company
Nationwide Life and Annuity Insurance Company
Nationwide Financial Services, Inc.
Director and Chairman of the Board
----------------------------------
Nationwide Investment Services Corporation
West Coast Life Insurance Company
Director and Vice Chairman
--------------------------
Nationwide Financial Institution Distributors Agency, Inc.
NEA Valuebuilder Investor Services, Inc.
Public Employees Benefit Services Corporation
Director and President
----------------------
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
<PAGE> 87
Director
--------
Affliate Agency, Inc.
Affliate 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
GatesMcdonald Health Plus, Inc.
Gates, McDonald & Company
Landmark Financial Services of New York, Inc.
Nationwide Indemnity Company
Trustee and President
---------------------
Nationwide Insurance GolfCharities, Inc.
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
Nationwide Financial Services, Inc.
Nationwide Properties, Ltd.
Nationwide Realty investors, Ltd.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc.
Nationwide Financial Institution Distributors Agency, Inc.
Colonial County Mutual Insurance Company
Colonial Insurance Company of California
Farmland Mutual Insurance Company
Lone Star General Agency, Inc.
Nationwide Agribusiness Insurance Company
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
Nationwide Investment Services Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines 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
---------------------------------------------------
American Marine Underwriters, Inc.
Employers Life Insurance Company of Wausau
Pension Associates of Wausau, Inc.
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.
<PAGE> 88
Companies Agency of New York, Inc.
Companies Agency of Pennsylvania, Inc.
Companies Agency of Phoenix, Inc.
Countrywide Services Corporation
Wausau International Underwriters
Executive Vice President-Law and Corporate
------------------------------------------
Services and Director
---------------------
Nationwide Advisory 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 Holding Company
Neckura Insurance Company
Neckura Life Insurance Company
Secretary
---------
The Beak and Wire Corporation
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
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, Inc.
Vice Chairman, Secretary and Director
-------------------------------------
Gates, McDonald & Company
GatesMcDonald Health Plus, Inc.
Chairman of the Board, Secretary and Director
---------------------------------------------
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York, Inc.
Secretary and Director
----------------------
Nationwide Agency, Inc.
Nationwide HMO, Inc.
Nationwide Management Systems, Inc.
Director
--------
Leben Direkt Insurance Company
MRM Investments, Inc.
NWE, Inc.
Clerk
-----
NEA Valuebuilder Services Insurance Agency, Inc.
Dimon R. McFerson
Chairman and Chief Executive Officer-Nationwide
------------------------------------------------
Insurance Enterprise and Director
---------------------------------
Nationwide Mutual, Nationwide Mutual Fire,
<PAGE> 89
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
Farmland Mutual Insurance Company
Nationwide Agribusiness Insurance Company
National Casualty Company
Nationwide Financial Services, Inc.
Nationwide Investment Services Corporation
California Cash Management Company
Nationwide Cash Management Company
Employers Insurance of Wausau A Mutual Company
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines Insurance Company
Wausau Service Corporation
Wausau General Insurance Company
Wausau Business Insurance Company
Wausau Underwriters Insurance Company
Chairman of the Board, Chairman and Chief Executive Officer-
------------------------------------------------------------
Nationwide Insurance Enterprise and Director
--------------------------------------------
American Marine Underwriters, Inc.
Gates, McDonald & Company
GatesMcDonald Health Plus, Inc.
Nationwide Investor Services, Inc.
Public Employees Benefit Services Corporation
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 Advisory Services, Inc.
Nationwide Financial Institution Distributors Agency, Inc.
Wausau International Underwriters
Wausau Preferred Health Insurance Company
Chairman and Director
---------------------
NEA Investor Services of Arizona, Inc.
Chairman and Chief Executive Officer and Director
-------------------------------------------------
Nationwide Indemnity Company
Trustee, Chairman
-----------------
Financial Horizons Investment Trust
Nationwide Investing Foundation
Nationwide Investing Foundation II
Nationwide Separate Account Trust
Chairman of the Board
---------------------
Nationwide Insurance Golf Charities, Inc.
Chairman of the Board and Director
----------------------------------
Lone Star General Agency, Inc.
<PAGE> 90
Nationwide Community Urban Redevelopment Corporation
NEA Valuebuilder Investor Services, Inc.
Colonial County Mutual Insurance Company
Director
--------
Gates, McDonald & Company of Nevada
Gates, McDonald & Company of New York
Chairman of the Board, Chairman and Chief
-----------------------------------------
Executive Officer-Nationwide Insurance Enterprise
-------------------------------------------------
and Trustee
-----------
Nationwide Insurance Enterprise Foundation.
Member-Board of Managers, Chairman of the Board, Chairman
---------------------------------------------------------
and Chief Executive Officer-Nationwide Insurance Enterprise
-----------------------------------------------------------
Nationwide Properties, Ltd.
Nationwide Realty investors, Ltd.
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.
Countrywide Services Corporation
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.
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Financial Services, Inc.
Nationwide Investment Services Corporation
Nationwide Investor Services, Inc.
Nationwide Insurance Enterprise Foundation
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Arizona, Inc.
Colonial County Mutual Insurance Company
Pension Associates of Wausau, Inc.
Public Employees Benefit Services Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines insurance Company
Wausau Business Insurance Company
Wausau General Insurance Company
<PAGE> 91
Wausau Preferred Health Insurance Company
Wausau Service Corporation
Wausau Underwriters Insurance Company
West Coast Life Insurance Company
Director, Chairman of the Board
-------------------------------
Neckura Insurance Company
Neckura Life Insurance Company
Executive Vice President-Chief Financial Officer and
-----------------------------------------------------
Director
--------
California Cash Management Company
Nationwide Cash Management Company
Nationwide Community Urban Redevelopment Corporation
MRM Investments, Inc.
Nationwide Advisory Services, Inc.
Nationwide Indemnity Company
Executive Vice President
------------------------
Companies Agency Insurance Services of California
Wausau International Underwriters
Director, Vice Chairman
-----------------------
Leben Direkt Insurance Company
Neckura General Insurance Company
Auto Direkt Insurance Company
Director
--------
NWE, Inc.
Wausau Insurance Company (U.K.) Limited
Neckura Holding Company
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
GatesMcDonald Health Plus, Inc.
Lone Star General Agency, Inc.
National Casualty Company
Nationwide Financial Services, Inc.
Nationwide Agribusiness Insurance Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Advisory Services, Inc.
Nationwide Insurance Enterprise Foundation
Nationwide Investment Services Corporation
Pension Associates of Wausau
Public Employees Benefit Services Corporation
Scottsdale Indemnity Company
Scottsdale Insurance Company
Scottsdale Surplus Lines 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
<PAGE> 92
Member-Board of Managers, Vice Chairman
---------------------------------------
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
Director and President
----------------------
California Cash Management Company
MRM Investments, Inc.
Nationwide Cash Management Company.
Nationwide Community Urban Redevelopment Corporation
NWE, Inc.
Director, Executive Vice President - Chief Investment
----------------------------------------------------------
Officer
-------
Nationwide Indemnity Company
James F. Laird, Jr.
Vice President and General Manager
----------------------------------
Nationwide Advisory 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
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 Advisory 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 Advisory Services, Inc.
Nationwide Ivestors 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
<PAGE> 93
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
Nationwide Financial Services, Inc.
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
GatesMcDonald Health Plus, Inc.
Landmark Financial Services of New York, Inc.
National Casualty Company
Nationwide Cash Management Company
Nationwide Communications Inc.
Nationwide Corporation
Nationwide Investment Services 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 Insurance Enterprise Foundation
Nationwide Indemnity Company
Nationwide Properties, Ltd.
Nationwide Realty Investors, Ltd.
NEA Valuebuilder Investor Services, Inc.
NEA Valuebuilder Investor Services of Alabama, Inc.
NEA Valuebulider Investor Services of Arizona, 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
NEA Valuebuilder Services Insurance Agency, Inc.
MRM Investments, Inc.
NWE, Inc.
PEBSCO of Massachusetts Insurance Agency, Inc.
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> 94
Scottsdale Insurance Company
Scottsdale Surplus Lines Insurance Company
Wausau International Underwriters
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 Advisory 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. Pollina Secretary
---------
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
Nationwide Investing Foundation
Nationwide Separate Account Trust
Nationwide Investing Foundation II
Financial Horizons Investment Trust.
Peter J. Neckermann
Vice President - Economic and Investment Services
-------------------------------------------------
Nationwide Mutual, Nationwide Mutual Fire,
Nationwide Property and Casualty, Nationwide Life and
Nationwide Life and Annuity Insurance Companies
Nationwide Indemnity Company
Vice President
--------------
Nationwide Advisory Services, Inc.
Director
--------
Nationwide Investors Services, Inc.
Neckura Holding Company
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> 95
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 and Service, GMBH
Leben Direkt Insurance Company
Neckura General Insurance Company
Neckura Holding Company
Neckura Insurance Company
Neckura Life Insurance Company
John E. Fisher Str. 1
61440 Oberursel/Ts.
Germany
Public Employees Benefit Services Corporation
Two Nationwide Plaza
Columbus, Ohio 43215
Nationwide Advisory Services, Inc.
Nationwide Investors Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43216
ITEM 29. PRINCIPAL UNDERWRITERS
(a) See Item 28 above.
(B) NATIONWIDE ADVISORY SERVICES, INC.
<PAGE> 96
DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH
NAME BUSINESS ADDRESS TITLE REGISTRANT
<S> <C> <C> <C>
Joseph J. Gasper One Nationwide Plaza President N/A
Columbus, OH 43215
Gordon E. McCutchan One Nationwide Plaza Executive VP - N/A
Columbus, OH 43215 Law and Corporate
Services
Dimon R. McFerson One Nationwide Plaza Chairman and Chairman of the
Columbus, OH 43215 Chief Executive Board of Trustees
Officer-Nationwide
Insurance Enterprise
Robert A. Oakley One Nationwide Plaza Executive Vice Presi- N/A
Columbus, OH 43215 dent, Chief Financial
Officer
Robert J. Woodward, Jr. One Nationwide Plaza Executive Vice Presi- N/A
Columbus, OH 43215 dent-Chief Investment
Officer
</TABLE>
OFFICERS
<TABLE>
<CAPTION>
POSITION WITH
NAME BUSINESS ADDRESS TITLE REGISTRANT
<S> <C> <C> <C>
Joseph J. Gasper One Nationwide Plaza President N/A
Columbus, OH 43215
Dimon R. McFerson One Nationwide Plaza Chairman and Chief Chairman of the
Columbus, OH 43215 Executive Officer - Board of Trustees
Nationwide Insurance
Enterprise
Robert J. Woodward, Jr. One Nationwide Plaza Executive Vice Presi- N/A
Columbus, OH 43215 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 Treasurer
Columbus, OH 43215
Harry A. Schermer One Nationwide Plaza Vice President- Assistant Treasurer
Columbus, OH 43215 Investments
James F. Laird, Jr. One Nationwide Plaza Vice President and Assistant Treasurer
Columbus, OH 43215 General Manager
William G. Goslee One Nationwide Plaza Treasurer Assistant
Columbus, OH 43215 Treasurer
Rae I. Pollina One Nationwide Plaza Secretary Secretary
Columbus, OH 43215
</TABLE>
<PAGE> 97
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
William G. Goslee
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, OH 43215
ITEM 31. MANAGEMENT SERVICES
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) insofar as they relate to such shareholder communications.
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:
365
Yield = BPR x --- - 1
7
365
Effective Yield = ((BPR / 1) --- ) - 1
7
Where:
Account Value End
BPT = Base Period Return - -----------------
Account Velue Beg.
Standardized total returns are computed according to the following general
formula:
<PAGE> 98
1
-
(ERV-BV) N
Average Annual Total Return = -------- - 1
( BV )
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:
ERV-BV
Total Return = ------
BV
ERV-BV
Simple Return = ------
( BV )
------
N
1
-
(ERV-BV) N
Average Annual Total Return = -------- - 1
( BV )
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.
A yield and tax equivalent yield may be advertised for non-money market funds
calculated as follows:
a-b 6
Yield = 2 ( ( --- / 1) - 1)
cd
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-Exempt Yield
Tax-Equivalent Yield = ----------------
(1 - Stated Tax Rate)
<PAGE> 99
INDEPENDENT AUDITORS' CONSENT
To the Trustees
Nationwide Investing Foundation II
We consent to the use of our report dated December 13, 1996 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 28, 1997
<PAGE> 100
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 28 day of
February, 1997.
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
DIMON R. MCFERSON Trustee and Chairman, Nationwide Investing Foundation (NIF),
Dimon R. McFerson Nationwide Investing Foundation II (NIF-II)
PRINCIPAL ACCOUNTING AND
FINANCIAL OFFICER
JAMES F. LAIRD, JR. Treasurer, Nationwide Investing Foundation (NIF),
James F. Laird, Jr. Nationwide Investing Foundation II (NIF-II)
JOHN C. BRYANT Trustee, NIF, NIF-II
John C. Bryant
C. BRENT DEVORE Trustee, NIF
C. Brent DeVore
SUE A. DOODY Trustee, NIF
Sue A. Doody
ROBERT M. DUNCAN Trustee, NIF, NIF-II
Robert M. Duncan
CHARLES L. FUELLGRAF, JR. Trustee, NIF
Charles L. Fuellgraf, Jr.
THOMAS J. KERR, IV Trustee, NIF, NIF-II
Thomas J. Kerr, IV
DOUGLAS F. KRIDLER Trustee, NIF
Douglas F. Kridler
NANCY C. THOMAS Trustee, NIF
Nancy C. Thomas
HAROLD W. WEIHL Trustee, NIF
Harold W. Weihl
DAVID C. WETMORE Trustee, NIF
David C. Wetmore
By
James F. Laird, Jr.
Attorney-in-Fact, Nationwide Investing Foundation
Nationwide Investing Foundation II
February 28 , 1997
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000069369
<NAME> NIF
<SERIES>
<NUMBER> 4
<NAME> NIF MNYMKT
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 729,727,060
<INVESTMENTS-AT-VALUE> 729,727,060
<RECEIVABLES> 116,465
<ASSETS-OTHER> 283,618
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 730,127,143
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 627,381
<TOTAL-LIABILITIES> 627,381
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 729,501,084
<SHARES-COMMON-STOCK> 729,501,084
<SHARES-COMMON-PRIOR> 604,713,369
<ACCUMULATED-NII-CURRENT> (1,322)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 729,499,762
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 36,273,232
<OTHER-INCOME> 0
<EXPENSES-NET> 3,908,760
<NET-INVESTMENT-INCOME> 32,364,472
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 32,364,472
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 35,359,207
<DISTRIBUTIONS-OF-GAINS> 4,106
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 746,407,569
<NUMBER-OF-SHARES-REDEEMED> 652,583,762
<SHARES-REINVESTED> 30,963,908
<NET-CHANGE-IN-ASSETS> 121,788,874
<ACCUMULATED-NII-PRIOR> (6,587)
<ACCUMULATED-GAINS-PRIOR> 4,106
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,280,802
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,236,836
<AVERAGE-NET-ASSETS> 656,161,205
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> (0.05)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000069369
<NAME> NIF
<SERIES>
<NUMBER> 3
<NAME> NIF BOND
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 128,346,516
<INVESTMENTS-AT-VALUE> 131,018,346
<RECEIVABLES> 3,606,119
<ASSETS-OTHER> 29,236
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 134,653,701
<PAYABLE-FOR-SECURITIES> 994,063
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 406,906
<TOTAL-LIABILITIES> 1,400,969
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 140,039,149
<SHARES-COMMON-STOCK> 14,264,079
<SHARES-COMMON-PRIOR> 14,068,847
<ACCUMULATED-NII-CURRENT> 56,278
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (9,514,525)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,671,830
<NET-ASSETS> 133,252,732
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9,670,983
<OTHER-INCOME> 0
<EXPENSES-NET> 922,683
<NET-INVESTMENT-INCOME> 8,748,300
<REALIZED-GAINS-CURRENT> (160,481)
<APPREC-INCREASE-CURRENT> (2,045,242)
<NET-CHANGE-FROM-OPS> 6,542,577
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,801,481
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,897,464
<NUMBER-OF-SHARES-REDEEMED> 2,486,318
<SHARES-REINVESTED> 784,088
<NET-CHANGE-IN-ASSETS> (379,852)
<ACCUMULATED-NII-PRIOR> 109,459
<ACCUMULATED-GAINS-PRIOR> 9,354,044
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 663,545
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 922,683
<AVERAGE-NET-ASSETS> 132,709,010
<PER-SHARE-NAV-BEGIN> 9.50
<PER-SHARE-NII> 0.62
<PER-SHARE-GAIN-APPREC> (0.16)
<PER-SHARE-DIVIDEND> 0.62
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.34
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000069369
<NAME> NIF
<SERIES>
<NUMBER> 1
<NAME> NIF FUND
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 586,877,361
<INVESTMENTS-AT-VALUE> 960,505,467
<RECEIVABLES> 2,534,120
<ASSETS-OTHER> 50,014
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 963,089,601
<PAYABLE-FOR-SECURITIES> 2,726,188
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,773,643
<TOTAL-LIABILITIES> 4,499,831
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 524,392,231
<SHARES-COMMON-STOCK> 46,957,777
<SHARES-COMMON-PRIOR> 45,863,506
<ACCUMULATED-NII-CURRENT> 1,378,050
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 59,191,383
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 373,628,106
<NET-ASSETS> 958,589,770
<DIVIDEND-INCOME> 20,514,352
<INTEREST-INCOME> 1,573,774
<OTHER-INCOME> 0
<EXPENSES-NET> 5,396,704
<NET-INVESTMENT-INCOME> 16,691,422
<REALIZED-GAINS-CURRENT> 59,251,910
<APPREC-INCREASE-CURRENT> 127,452,048
<NET-CHANGE-FROM-OPS> 203,395,380
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16,077,181
<DISTRIBUTIONS-OF-GAINS> 42,514,603
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,349,375
<NUMBER-OF-SHARES-REDEEMED> 7,129,736
<SHARES-REINVESTED> 2,874,632
<NET-CHANGE-IN-ASSETS> 162,923,427
<ACCUMULATED-NII-PRIOR> 763,809
<ACCUMULATED-GAINS-PRIOR> 42,454,076
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,425,921
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,396,704
<AVERAGE-NET-ASSETS> 885,184,114
<PER-SHARE-NAV-BEGIN> 17.35
<PER-SHARE-NII> 0.36
<PER-SHARE-GAIN-APPREC> 3.98
<PER-SHARE-DIVIDEND> 0.35
<PER-SHARE-DISTRIBUTIONS> 0.93
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.41
<EXPENSE-RATIO> 0.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000069369
<NAME> NIF
<SERIES>
<NUMBER> 2
<NAME> NIF-GROW
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 494,088,843
<INVESTMENTS-AT-VALUE> 652,778,128
<RECEIVABLES> 3,166,680
<ASSETS-OTHER> 94,763
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 656,039,571
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 423,866
<TOTAL-LIABILITIES> 423,866
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 451,169,909
<SHARES-COMMON-STOCK> 49,152,969
<SHARES-COMMON-PRIOR> 44,109,209
<ACCUMULATED-NII-CURRENT> 297,667
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 45,458,844
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 158,689,285
<NET-ASSETS> 655,615,705
<DIVIDEND-INCOME> 8,494,220
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