LOGO:
NATIONWIDE
ADVISORY
SERVICES, INC.
SEMI-ANNUAL
REPORT
APRIL 30, 1998
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) GROWTH FUND
NATIONWIDE(R) FUND
NATIONWIDE(R) BOND FUND
NATIONWIDE(R) TAX-FREE INCOME FUND
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND
NATIONWIDE(R) MONEY MARKET FUND
<PAGE>
NATIONWIDE FAMILY OF FUNDS SEMI-ANNUAL REPORT 1998
CONTENTS
CHAIRMAN'S LETTER 1
NATIONWIDE(R)GROWTH FUND 2 - 3
NATIONWIDE(R)FUND 4 - 5
NATIONWIDE(R)BOND FUND 6 - 8
NATIONWIDE(R)TAX-FREE INCOME FUND 9 - 13
NATIONWIDE(R)U.S. GOVERNMENT INCOME FUND 14 - 15
NATIONWIDE(R)MONEY MARKET FUND 16 - 18
FINANCIAL STATEMENTS 19 - 22
FINANCIAL HIGHLIGHTS 23 - 25
NOTES TO FINANCIAL STATEMENTS 26 - 29
TRUSTEES AND OFFICERS
TRUSTEES
Dimon R. McFerson - Nationwide Investing Foundation (NIF) & Nationwide
Investing Foundation II (NIF II)
Chairman
Columbus, Ohio
Dr. John C. Bryant - NIF & NIF II
Cincinnati, Ohio
Dr. C. Brent DeVore - NIF
Westerville, Ohio
Sue A. Doody - NIF
Columbus, Ohio
Robert M. Duncan - NIF & NIF II
Columbus, Ohio
Charles L. Fuellgraf, Jr. - NIF
Butler, Pennsylvania
Dr. Thomas J. Kerr, IV - NIF & NIF II
Westerville, Ohio
Douglas F. Kridler - NIF
Columbus, Ohio
Nancy C. Thomas - NIF
Louisville, Ohio
Harold W. Weihl - NIF
Bowling Green, Ohio
David C. Wetmore - NIF
Herndon, Virginia
OFFICERS
James F. Laird, Jr. - Treasurer
David E. Simaitis - Secretary
Elizabeth A. Davin - Assistant Secretary
Patricia J. Smith - Assistant Secretary
Charles S. Bath - Assistant Treasurer
Craig A. Carver - Assistant Treasurer
Christopher A. Cray - Assistant Treasurer
Scott A. Englehart - Assistant Treasurer
Edwin P. McCausland, Jr. - Assistant Treasurer
Peter Neckermann - Assistant Treasurer
Karen R. Tackett - Assistant Treasurer
TRANSFER AGENT
Nationwide Investors Services, Inc.
Box 1492
Columbus, Ohio 43216-1492
CUSTODIAN
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263-0001
LEGAL COUNSEL
Druen, Dietrich, Reynolds & Kooger
One Nationwide Plaza
Columbus, Ohio 43215-2220
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215-2537
DISTRIBUTOR
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215-2220
This report is for the information of shareholders of the Nationwide Family of
Funds. It may be used as sales literature only when preceded or accompanied by a
current prospectus which gives further details about the funds.
Nationwide(R) is a registered Federal Service mark of Nationwide Mutual
Insurance Company.
<PAGE>
MESSAGE TO SHAREHOLDERS
APRIL 30, 1998
PHOTO OF:DIMON R. MCFERSON
CHAIRMAN
Our shareholders have much reason to be optimistic.
The U.S. economy has continued to exhibit healthy growth with declining
inflation. While the Federal Reserve Board had expressed some concern over
possible rising inflationary pressures, such elevations have yet to materialize
and interest rates have remained unchanged.
A strong economy and good employment growth have buoyed consumer confidence --
more and more Americans are achieving the goals they've set for themselves and
their families.
The stock market has been generous to investors, increasing by more than 20
percent for three years in a row. Volatility in the Asian markets may create
some shock waves that could affect markets here in the United States and
throughout the world. But the fundamental strength of the American economy
should continue to draw investors to our markets. These observations reinforce
our belief in the importance of maintaining a long-term investment strategy.
ACCOLADES FOR THE NATIONWIDE FUND
The Nationwide Fund has been consistently recognized in national newspapers and
magazines including The Wall Street Journal, USA Today, Kiplinger's and Barron's
for its performance. To site just one example, the April 1998 issue of Mutual
Funds magazine listed the Nationwide Fund as one of only 22 growth funds that
has outperformed the S&P 500 (the leading benchmark of stock-market performance)
and met the magazine's "more reward...less risk" standards over a five-year
period ended 3/31/98.
Chuck Bath, Nationwide Fund portfolio manager, says the secret to his success is
finding unique businesses that have the potential to outperform their
competitors over long periods of time.
INVESTMENT CHOICES BROADENED
In keeping with our commitment to offer increasing opportunities to our
investors, the Nationwide Family of Funds has been expanded from six to eight
funds.
On May 11, 1998, The Financial Horizons Trust was dissolved and two of the funds
from the Trust became part of the Nationwide Family of Funds offering.
In addition to the expansion of the Nationwide funds, PortfolioSelectSM by
Nationwide was introduced. PortfolioSelect is a new retail portfolio of funds
from leading money management companies -- Fidelity, Dreyfus, Oppenheimer and
Nationwide. It allows shareholders to centralize their investments without
sacrificing portfolio diversification, giving them more choice.
Nationwide Advisory Services has also introduced a new share-class structure.
Effective May 11, 1998, current shareholders were automatically converted to the
new D class. Shares in the PortfolioSelect product are available in A or B
classes. This new class structure allows us to offer our investors more
purchasing options.
FUND PERFORMANCE
For the six-month period ended April 30, 1998, the Nationwide Growth Fund gained
20.21% and the Nationwide Fund increased 23.40%. For the same period, the
Nationwide Bond Fund returned 3.52% and the Nationwide Tax-Free Income Fund
total return stood at 2.65%. The Nationwide U.S. Government Income Fund returned
2.87%. Returns for these funds do not reflect sales charges. The Nationwide
Money Market Fund, which has no sales charges, posted a total return of 2.55%.
On pages 2 through 16 of this report, you can read the comments of your funds'
portfolio managers, which describe in detail important factors that explain each
fund's performance and unique characteristics.
Thank you for giving Nationwide Advisory Services, Inc. the opportunity to help
meet your investment needs.
For more information about the Nationwide funds or PortfolioSelect, please call
1-800-848-0920.
Dimon R. McFerson, Chairman,
April 1998
<PAGE>
NATIONWIDE(R) INVESTING FOUNDATION
NATIONWIDE(R) GROWTH FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
For the six-month period ended April 30, 1998, the Nationwide Growth Fund had a
total return of 20.21%, (without sales charge) compared to a 22.47% total return
for the S&P 500 Index.
This six-month period was marked by two distinct directions in performance by
the Fund. The last two months of 1997 saw technology-related stocks
significantly underperform the market, due mainly to turmoil in Asia. Since we
had been finding greater opportunities in growth stocks during 1997, and a
significant number of them were technology-related, this decline hurt
performance, as it showed up in the year-end numbers, even though up through the
year-ended October 31, 1997, performance had been quite good. Although this was
frustrating, the Fund continued to invest according to strategy, and added to
attractively priced, fundamentally strong growth stocks. Then, beginning late in
January 1998, the depressed sectors began to stage strong recoveries, and the
Fund's performance this year-to-date has been much more favorable. The strongest
performance has come from EMC Corp., Boston Scientific, Warner Lambert, 360(0)
Communications, and BMC Software. A dramatic loss was incurred in one of our
large holdings, Cendant Corp., which announced the discovery of accounting
irregularities on April 16, requiring a restatement of earnings. So far, this
seems to be the extent of the problem. By itself, this caused a drop of nearly
2% in the price of the Fund. Since then, Cendant's stock price has recovered a
bit, but, despite the loss, the Fund has managed to show good results thus far
in 1998.
Going forward, we are following the same strategy, and continue to find greater
opportunities in growth stocks. However, with the market having recovered
strongly, and with valuations at record highs, we are trying to buy stocks with
strong, visible long-term fundamentals on weakness caused by short-term
developments. The focus is not just on holding stocks with strong growth
potential, but also on the likelihood and consistency of it being achieved. I
believe the stocks we now hold in the Fund measure well on those criteria.
JOHN M. SCHAFFNER, MBA, CFA, PORTFOLIO MANAGER
PORTFOLIO COMPOSITION
PIE CHART:
U.S. Government Agency Obligations 1.1%
Repurchase Agreements 1.4%
Common Stock 97.6%
FUND VALUE $979,530,643
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
$1,000 $100 $1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS W/O SC* W/O SC* W/SC**
1 43.19% 37.83% 40.24%
5 19.92% 24.12% 18.39%
10 15.35% 17.87% 14.94%
* For periods ended 4/30/98. These returns do not reflect the effects of sales
charges.
** For periods ended 3/31/98. 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.
<PAGE>
STATEMENT OF INVESTMENTS - NATIONWIDE(R)
GROWTH FUND - APRIL 30, 1998 - (UNAUDITED)
<TABLE>
<CAPTION>
SHARES SECURITY VALUE
<S> <C> <C>
COMMON STOCK (97.6%)
BUSINESS SERVICES (6.1%)
348,000 ABR Information Services* $ 10,070,250
601,800 Cognizant Corp. 30,955,088
250,000 Covance, Inc.* 5,359,375
300,000 Manpower, Inc. 13,218,750
-------------
59,603,463
-------------
CABLE (2.2%)
600,000 Comcast Corp. 20,962,500
-------------
CHEMICALS (4.5%)
200,000 Millipore Corp. 6,900,000
500,000 Monsanto Co. 26,437,500
244,000 Sigma-Aldrich Corp. 9,729,500
-------------
43,067,000
-------------
COMPUTER EQUIPMENT (6.0%)
747,600 EMC Corp.* 34,483,050
325,000 Hewlett-Packard Co. 24,476,563
-------------
58,959,613
-------------
COMPUTER SOFTWARE & SERVICES (16.9%)
400,000 Automatic Data Processing, Inc. 26,775,000
325,000 BMC Software, Inc.* 30,407,813
500,000 Electronic Data Systems Corp. 21,500,000
1,200,000 First Data Corp. 40,650,000
1,400,000 Gartner Group, Inc.* 46,375,000
-------------
165,707,813
-------------
CONGLOMERATES (1.2%)
300,000 Corning, Inc. 12,000,000
-------------
CONSUMER GOODS (4.8%)
400,000 Avon Products, Inc. 32,875,000
300,000 Newell Co. 14,493,750
-------------
47,368,750
-------------
DISTRIBUTION (1.6%)
350,000 Bergen Brunswig Corp. Class A 15,881,250
-------------
DRUGS (10.9%)
300,000 Allergan, Inc. 12,468,750
20,960 Allergan Specialty
Therapeutics, Inc. Class A* 217,460
325,000 Glaxo Wellcome, plc ADR 18,382,813
100,000 Merck & Co., Inc. 12,050,000
320,000 Schering-Plough Corp. 25,640,000
200,000 Warner-Lambert Co. 37,837,500
-------------
106,596,523
-------------
ELECTRONICS (2.6%)
300,000 Microchip Technology* 8,512,500
183,103 Molex, Inc. 5,241,323
298,215 Molex, Inc. Class A 8,014,528
189,000 Woodhead Industries, Inc. 3,543,750
-------------
25,312,101
-------------
FINANCIAL (13.5%)
350,000 Allstate Corp. 33,687,500
101,250 American International Group, Inc. 13,320,703
739,000 Equitable Companies, Inc. 45,356,125
450,000 Merrill Lynch & Co., Inc. 39,487,500
-------------
131,851,828
-------------
<PAGE>
<CAPTION>
SHARES SECURITY VALUE
<S> <C> <C>
COMMON STOCK (CONTINUED)
FOOD & BEVERAGE (0.9%)
175,000 Quaker Oats Co. $ 9,100,000
-------------
FOOD - GRAIN & AGRICULTURE (1.5%)
704,600 Archer-Daniels-Midland Co. 15,148,900
-------------
MACHINERY & CAPITAL GOODS (4.7%)
250,000 Applied Materials, Inc.* 9,031,250
120,000 Emerson Electric Co. 7,635,000
225,000 Lindsay Manufacturing Co. 10,546,875
492,600 Zebra Technologies Corp.* 19,088,250
-------------
46,301,375
-------------
MEDICAL PRODUCTS (3.9%)
200,000 Biomet, Inc. 6,000,000
250,000 Boston Scientific, Inc.* 18,078,123
200,000 Johnson & Johnson Co. 14,275,000
-------------
38,353,123
-------------
OIL & GAS (3.9%)
250,000 Anadarko Petroleum Corp. 18,312,500
250,000 Mobil Corp. 19,750,000
-------------
38,062,500
-------------
PRINTING & PUBLISHING (0.4%)
160,000 Reader's Digest Association, Inc.
Class B 4,390,000
-------------
RETAIL (3.1%)
1,200,000 Cendant Corp.* 30,000,000
-------------
TELECOMMUNICATIONS (8.9%)
677,500 360(degree)Communications Co.* 20,706,094
400,000 Cincinnati Bell, Inc. 15,300,000
1,200,000 WorldCom, Inc.* 51,337,440
-------------
87,343,534
-------------
TOTAL COMMON STOCKS (cost $573,112,087) 956,010,273
-------------
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (1.1%)
$10,000,000 Federal Home Loan Mortgage
Corp. Notes, 5.37% - 5.40%, 05/15/98 9,978,990
320,000 Federal Home Loan Mortgage
Corp. Notes, 5.42%, 5/14/98 319,376
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(cost $10,298,491) 10,298,366
-------------
REPURCHASE AGREEMENT (1.4%)
13,910,000 MBS TRI PARTY REPO, 5.46%,
05/01/98 Collateralized by
$14,840,000 GNMA 7% ARM, 10/20/27,
market value $14,191,820
(cost $13,910,000) 13,910,000
-------------
TOTAL INVESTMENTS (cost $597,320,578) $ 980,218,639
=============
- --------------------
The abbreviations in the above statement stand for the following:
ADR American Depository Receipt
ARM Adjustable Rate Mortgage
GNMA Government National Mortgage Association
PLC Public Limited Company
* 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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NATIONWIDE(R) INVESTING FOUNDATION
NATIONWIDE(R) FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The total return for the Nationwide(R) Fund for the six-month period ended April
30, 1998, was 23.40% (without sales charge) assuming all distributions were
reinvested compared to 22.47% for the S&P 500.
The Nationwide Fund continues to benefit from the strong performance of the
pharmaceutical stocks. Warner-Lambert and Schering-Plough remain the two largest
holdings in the Fund, and I remain positive on the outlook. New products and
strong unit growth should lead to outstanding earnings growth for the next
several years. The bank stocks have continued to perform well and I have
recently increased the Fund's investment in this sector. Wells Fargo is now the
dominant independent bank in the western United States. However, in my opinion,
the valuation does not reflect this unique franchise.
Pall Corporation has continued to be a disappointing investment. Historically,
this has been an excellent company with a solid business franchise. However,
increased competition in the blood-filter market has led to poor performance in
this important market. I have continued to keep this investment due to the
attractive valuation.
Massive consolidation continues in the financial services sector. The most
recent example affecting the Fund is the Banc-One merger with First Chicago.
While I am skeptical of the benefits of these mergers, I anticipate large-scale
consolidation will continue. Regardless of the direction of future consolidation
in the financial services industry, I am confident our financial services
holdings will prove to be good investments.
CHARLES S. BATH, MBA, CFA, CPA - PORTFOLIO MANAGER
PORTFOLIO COMPOSITION
PIE CHART:
Debt Obligations 3.9%
Common Stock 96.6%
FUND VALUE $1,976,743,535
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
$1,000 $100 $1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS W/O SC* W/O SC* W/SC**
1 48.86% 45.43% 47.10%
5 23.69% 30.37% 21.47%
10 18.81% 20.66% 17.98%
* For periods ended 4/30/98. These returns do not reflect the effects of sales
charges.
** For periods ended 3/31/98. 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.
<PAGE>
<TABLE>
STATEMENT OF INVESTMENTS - NATIONWIDE(R) FUND - APRIL 30, 1998 - (UNAUDITED)
SHARES SECURITY VALUE
<S> <C> <C>
COMMON STOCK (96.6%)
AUTO & AUTO PARTS (2.4%)
202,451 Autoliv AB $ 6,010,264
857,900 Ford Motor Co. 39,302,544
-------------
45,312,808
-------------
BUILDING (3.8%)
436,300 Martin Marietta Materials, Inc. 20,478,831
337,500 Masco Corp. 19,575,000
302,200 Vulcan Materials Co. 34,771,888
-------------
74,825,719
-------------
CHEMICALS (4.6%)
544,400 Millipore Corp. 18,781,800
593,700 Morton International, Inc. 18,998,400
335,400 OM Group, Inc. 14,862,412
401,743 Pall Corp. 7,884,206
756,150 Raychem Corp. 30,387,778
-------------
90,914,596
-------------
COMPUTER EQUIPMENT (2.4%)
4,000,000 International Business
Machines Corp. 46,350,000
-------------
CONGLOMERATES (1.0%)
498,700 Corning, Inc. 19,948,000
-------------
DRUGS (18.6%)
564,700 Allergan, Inc. 23,470,344
28,235 Allergan Specialty Therapeutics, Inc.
Class A* 292,938
149,000 American Home Products Corp. 13,875,625
302,400 Pfizer, Inc. 34,416,900
1,624,200 Schering-Plough Corp. 130,139,025
872,600 Warner-Lambert Co. 165,085,012
-------------
367,279,844
-------------
ELECTRICAL EQUIPMENT (5.3%)
1,677,900 Black & Decker Corp. 86,621,588
355,600 Maytag Corp. 18,313,400
-------------
104,934,988
-------------
ENTERTAINMENT (1.5%)
246,265 Walt Disney Company 30,613,818
-------------
FINANCIAL - BANKS (15.2%)
969,308 Banc One Corp. 57,007,427
250,300 Bank of New York Co., Inc. 14,783,344
1,376,900 Mellon Bank Corp. 99,136,800
480,200 Pacific Century Financial Corp. 11,854,938
202,177 U.S. Bancorp 25,676,478
252,300 Wells Fargo & Co. 92,972,550
-------------
301,431,537
-------------
FINANCIAL - INSURANCE (6.2%)
632,500 Chubb Corp. 49,927,968
1,031,500 Horace Mann Educators Corp. 35,457,813
939,900 Provident Companies, Inc. 36,714,844
-------------
122,100,625
-------------
FINANCIAL SERVICES - OTHER (4.0%)
270,842 Associates First Capital Corp. 20,245,438
838,600 Fannie Mae 50,211,175
120,800 MBIA, Inc. 9,014,700
-------------
79,471,313
-------------
FOOD & BEVERAGE (9.9%)
53,100 Agribrands International, Inc. 2,021,119
594,800 Anheuser-Busch Companies, Inc. 27,249,274
1,050,200 PepsiCo, Inc. 41,679,813
632,900 Philip Morris Companies, Inc. 23,615,081
<PAGE>
<CAPTION>
SHARES SECURITY VALUE
<S> <C> <C>
COMMON STOCK (CONTINUED)
FOOD & BEVERAGE (CONTINUED)
858,400 Quaker Oats Co. $ 44,636,800
531,000 Ralston-Ralston Purina Group 56,286,000
-------------
195,488,087
-------------
HOSPITAL - SUPPLY (1.8%)
125,000 Covance, Inc.* 2,679,687
647,700 Quest Diagnostics, Inc.* 12,468,225
557,400 St. Jude Medical, Inc.* 19,752,863
-------------
34,900,775
-------------
HOUSEHOLD - PRODUCTS (0.8%)
200,000 Procter & Gamble Co. 16,437,500
-------------
MACHINERY & CAPITAL GOODS (0.1%)
167,400 Johnstown America Industries, Inc.* 2,741,175
-------------
OIL & GAS (4.3%)
323,800 Mobil Corp. 25,580,200
953,400 Texaco, Inc. 58,634,100
-------------
84,214,300
-------------
PRINTING & PUBLISHING (9.5%)
100,599 ACNielsen Corp.* 2,816,772
760,000 American Greetings Corp. Class A 35,150,000
301,800 Cognizant Corp. 15,523,837
653,100 Dun & Bradstreet Corp. 23,185,050
315,800 Gannett Co., Inc. 21,454,663
277,300 Gibson Greetings, Inc.* 7,253,114
766,200 New York Times Co. Class A* 54,352,313
112,000 Tribune Co. 7,392,000
40,700 Washington Post Co. Class B 21,336,975
-------------
188,464,724
-------------
RESTAURANTS (1.7%)
558,400 McDonalds Corp. 34,551,000
-------------
RETAIL (0.8%)
325,300 Wal-Mart Stores, Inc. 16,447,981
-------------
TELECOMMUNICATIONS (1.2%)
571,200 360(degree) Communications Co.* 17,457,300
106,600 Airtouch Communications, Inc.* 5,663,125
-------------
23,120,425
-------------
TOYS (1.5%)
778,840 Mattel, Inc. 29,839,308
-------------
TOTAL COMMON STOCK (cost $968,830,345) 1,909,388,523
-------------
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
CONVERTIBLE BONDS (0.3%)
$7,826,000 Consorcio G Grupo Dina,
8.00%, 2004
(cost $7,312,035) 6,691,230
-------------
GOVERNMENT OBLIGATIONS (2.1%)
15,000,000 U.S. Treasury Bond,
8.875%, 08/15/17 19,832,805
-------------
20,000,000 U.S. Treasury Note,
6.50%, 08/15/05 20,881,240
-------------
TOTAL GOVERNMENT OBLIGATIONS (cost $40,352,928) 40,714,045
-------------
SHORT TERM DEBT (1.5%)
29,015,000 Export Development, 5.52%, 05/01/98
(cost $29,015,000) 29,015,000
-------------
TOTAL INVESTMENTS (cost $1,045,510,308) $1,985,808,798
==============
- ------------------
* 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.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NATIONWIDE(R) INVESTING FOUNDATION
NATIONWIDE(R) BOND FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The Nationwide Bond Fund's total return for the six-month period ended April 30,
1998, was 3.52% (without sales charge), slightly below the 3.64% return for the
Lehman Government/Corporate Bond Index, the Fund's benchmark. Interest rates
continued to decline into December, but have traded in a narrow range since
then. The 30-year treasury yields 5.95%, not much more than the 5.57% yield on
the two-year treasury yield.
Powerful economic forces have kept rates locked in a narrow range, and it might
take some time to resolve these conflicting forces. On the long end of the
curve, there is good value at 6.00%, with inflation at 2% and unlikely to
worsen. Commodity prices are weak, the federal budget surplus continues to grow,
and the full deflationary impact from Asia has yet to be felt. On the other
hand, the U.S. economy is operating at full capacity and remains exceptionally
strong. With real wages increasing, the stock market continuing to soar, and
housing prices rising from coast to coast, consumers are in excellent condition
and are unlikely to cut back on consumption. Thus, short-term interest rates are
held in check by the Federal Funds rate of 5.50% and there is pressure on the
Federal Reserve Board to increase the Funds rate to prevent an asset bubble from
developing.
In the corporate market, spreads have been very volatile, first widening out on
fears of the impact Asia will have on our economy, and then on supply fears as
U.S. corporations greeted the new year with an onslaught of new issuance. I took
advantage of the wider spreads and moved 10% of the portfolio out of treasuries
and into corporates. Corporates are much more attractively priced than they were
last year, particularly those issues that have performed poorly -BBBs and
cyclicals. The Bond Fund now has 80% invested in corporates -- nearly a full
weighting in this sector of the bond market.
In the next few months I intend to look for opportunities to add yield. This
would include swaps into BBBs and into callable securities if the
option-adjusted spread is attractive. There might also be opportunities in the
mortgage-backed market. These securities have performed poorly of late as
prepayments have accelerated. With faster speeds priced in, it might be time to
increase our holdings in these AAA securities.
DOUGLAS E. KITCHEN, CFA - PORTFOLIO MANAGER
PORTFOLIO COMPOSITION
Pie Chart:
Repurchase Agreements 1.4%
Canadian Government 2.9%
Mortgage-Backed Securities 4.0%
U.S. Government Long-Term Obligations 8.1%
Corporate Bonds 80.3%
FUND VALUE $128,476,709
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
$1,000 $100 $1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS W/O SC* W/O SC* W/SC**
1 11.14% 8.99% 7.35%
5 6.25% 7.79% 5.19%
10 8.54% 8.15% 7.97%
* For the periods ended 4/30/98. These returns do not reflect the effects of
sales charges.
** For the periods ended 3/31/98. 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.
<PAGE>
<TABLE>
STATEMENT OF INVESTMENTS - NATIONWIDE(R)
BOND FUND - APRIL 30, 1998 - (UNAUDITED)
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
CANADIAN GOVERNMENT BONDS (2.9%)
GOVERNMENT
$1,000,000 Quebec (Province of),
8.625%, 01/19/05 $ 1,120,018
2,250,000 Quebec (Province of),
8.625%, 01/19/05 2,568,407
-----------
TOTAL CANADIAN GOVERNMENT BONDS
(cost $3,477,602) 3,688,425
-----------
CORPORATE BONDS (80.3%)
AEROSPACE/DEFENSE (1.2%)
1,500,000 Lockheed Corp., 7.875%, 03/15/23 1,586,499
-----------
AIRLINES (1.4%)
1,500,000 American Airlines, 10.33%, 03/04/05 1,788,032
-----------
BROKERS-DEALERS (5.7%)
2,000,000 Bear Stearns Companies, Inc.,
8.75%,03/15/04 2,231,558
1,000,000 Lehman Brothers Holdings, Inc.,
11.625%, 05/15/05 1,283,991
3,000,000 Morgan Stanley Group, Inc.,
10.00%, 06/15/08 3,768,465
-----------
7,284,014
-----------
BUILDING MATERIALS (6.2%)
4,000,000 Armstrong World Industries, Inc.,
9.75%, 04/15/08 4,946,112
3,000,000 Hanson Overseas Sr. Note,
6.75%, 09/15/05 3,062,319
-----------
8,008,431
-----------
CHEMICALS (5.5%)
3,000,000 ICI Wilmington, Inc.,
7.50%, 01/15/02 3,135,231
2,000,000 Praxair, Inc., 6.625%, 10/15/07 2,011,680
2,000,000 Witco Corp., 6.125%, 02/01/06 1,958,240
-----------
7,105,151
-----------
DIVERSIFIED FINANCE (2.5%)
2,000,000 Ford Capital BV Notes,
10.125%, 11/15/00 2,184,404
1,000,000 General Electric Capital Corp.
8.75%, 09/25/00 1,057,976
-----------
3,242,380
-----------
HEALTHCARE (1.8%)
2,000,000 Kaiser Foundation, 9.55%, 07/15/05 2,359,500
-----------
HOTELS/MOTELS (2.4%)
3,000,000 Hilton Hotels Corp.,
7.375%, 06/01/02 3,030,189
-----------
INSURANCE (9.3%)
4,000,000 AMBAC, Inc., 9.375%, 08/01/11 5,040,724
2,000,000 Equitable of Iowa Companies,
8.50%, 02/15/05 2,213,272
4,000,000 Loews Corp., 8.875%, 04/15/11 4,726,660
-----------
11,980,656
-----------
LEASE/RENTAL (1.8%)
2,260,000 Ryder System, Inc.,
7.56%, 08/15/00 2,334,668
-----------
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
CORPORATE BONDS (CONTINUED)
LEISURE TIME PRODUCTS (4.1%)
$3,000,000 Bass America, Inc.,
8.125%, 03/31/02 $ 3,225,096
2,000,000 Rank Group Finance,
6.75%, 11/30/04 2,013,538
-----------
5,238,634
-----------
MANUFACTURING (1.6%)
2,000,000 Worthington Industries,
7.125%, 05/15/06 2,080,276
-----------
NATURAL GAS (3.3%)
2,000,000 K N Energy, Inc., 6.67%, 11/01/27 2,063,078
2,000,000 Northwest National Gas,
9.75%, 07/01/15 2,202,310
-----------
4,265,388
-----------
OIL & GAS (1.7%)
2,000,000 Petro-Canada Notes,
8.60%, 10/15/01 2,138,540
-----------
PAPER AND FOREST PRODUCTS (6.1%)
3,000,000 ITT Rayonier, Inc., 7.50%, 10/15/02 3,144,333
2,500,000 Temple-Inland, Inc., 9.00%, 05/01/01 2,701,403
2,000,000 Willamette Industries,
6.45%, 02/01/05 1,998,156
-----------
7,843,892
-----------
PUBLISHING (2.5%)
3,000,000 McGraw-Hill, Inc., 9.43%, 09/01/00 3,208,116
-----------
RAILROADS (1.7%)
2,000,000 CSX Corp.
7.25%, 05/01/27 2,143,348
-----------
RETAIL TRADE (6.2%)
2,000,000 Dayton Hudson Co., 9.25%, 08/15/11 2,475,972
2,000,000 J.C.Penny, 7.40%, 04/01/37 2,185,750
3,000,000 May Department Stores,
8.30%, 07/15/26 3,345,828
-----------
8,007,550
-----------
TELECOMMUNICATIONS (3.3%)
1,000,000 Nynex Capital Funding Corp.,
8.24%, 10/17/01 1,066,823
3,000,000 Rochester Telephone Corp.,
8.77%, 04/16/01 3,220,953
-----------
4,287,776
-----------
OTHER (11.9%)
2,000,000 CSR America, 6.875%, 07/21/05 2,072,594
4,000,000 English China Clays Delaware, Inc.,
7.375%, 10/01/02 4,171,728
3,000,000 Mayne Nickless Notes,
6.25%, 02/01/06 2,924,400
2,000,000 VF Corp., 9.50%, 05/01/01 2,188,162
3,500,000 Waste Management, Inc.,
8.75%, 05/01/18 3,872,179
-----------
15,229,063
-----------
TOTAL CORPORATE BONDS (cost $99,672,593) 103,162,103
-----------
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS - NATIONWIDE(R)
BOND FUND - APRIL 30, 1998 - (UNAUDITED)
PRINCIPAL SECURITY VALUE
<S> <C> <C>
MORTGAGE BACKED SECURITIES (4.0%)
$ 500,000 FHLMC REMIC 1360-VK,
7.50%, 08/15/07 $ 502,127
144,636 FHLMC-GNMA 29X,
6.75%, 02/25/23 146,044
289,271 FHLMC-GNMA 29Z,
6.75%, 04/25/24 284,075
873,345 FNMA REMIC 1992-145E,
7.00%, 08/25/22 874,370
646,000 FNMA REMIC G1992-15G,
7.00%, 04/25/20 651,830
300,892 FNMA REMIC G1992-64M,
7.00%, 11/25/22 296,221
2,396,000 FNMA REMIC S G93-10E,
5.00%, 04/25/20 2,368,398
-----------
TOTAL MORTGAGE BACKED SECURITIES
(cost $5,025,666) 5,123,065
-----------
U.S. GOVERNMENT OBLIGATIONS (8.1%)
9,000,000 U.S. Treasury Bond, 7.25%,
08/15/22
(cost $10,538,514) 10,372,500
-----------
REPURCHASE AGREEMENT (1.4%)
1,824,000 MBS Tri Party 5.44%, 05/01/98
Collateralized by $2,090,000 GNMA2,
5.50%, 5/20/26, market
value $1,862,835
(cost $1,824,000) 1,824,000
-----------
TOTAL INVESTMENTS (cost $120,538,375) $124,170,093
============
- -------------------
The abbreviations in the above statement 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>
<PAGE>
NATIONWIDE(R) INVESTING FOUNDATION II
NATIONWIDE(R) TAX-FREE INCOME FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The Nationwide Tax-Free Income Fund's total return for the six-month period
ended April 30, 1998, was 2.65% (without sales charge) assuming all
distributions were reinvested, while the Lehman Brothers Municipal Bond Index
returned 2.77%.
For the period, the Bond-Buyer 11-General Obligation Municipal Index declined
.03% from 5.28% to 5.25%. However, during the second week of January, the Index
posted a historical low of 4.87% -- the lowest yield level since September 1973
when the Index was 4.87%. The yield on the most current U.S. Treasury 30-year
bond declined 0.19% from 6.15% to 5.96%. Municipals under performed Treasury
bonds.
The returns for the Municipal market as well as the Fund were not spectacular.
Historically, low interest rates and an exceptionally healthy economy with very
little inflation keep returns low. The Federal Reserve saw no need to raise
interest rates. The Asian financial crisis that produced a flight to quality
from equity securities into Treasury securities during the latter part of
October 1997 continued to plague the equity market. As a result, the bond
markets held their value.
Issuers took advantage of the lower interest rates by increasing issuance. For
the first four months of 1998, issuance was up a whopping 60% over the same
period in 1997. Supply outpaced demand during the latter part of the first
quarter, causing Municipal bonds to cheapen versus Treasury bonds.
At current market levels, an investor isn't compensated to extend maturity or
reduce quality, therefore the Fund management continues to concentrate on
improving portfolio structure by extending call protection to reduce
reinvestment rate risk. The average quality of the Fund is "AA"; the average
coupon is 5.92%; and the average maturity is approximately 18 years.
ALPHA L. BENSON, MBA - PORTFOLIO MANAGER
PORTFOLIO COMPOSITION
Pie Chart:
Municipal Securities 100%
FUND VALUE $253,875,512
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
$1,000 $100 $1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS W/O SC* W/O SC* W/SC***
1 8.85% 5.86% 5.13%
5 5.39% 6.34% 5.51%
10 7.60% 6.93% 7.67%
* For periods ended 4/30/98. These returns do not reflect the effects of sales
charges.
** For periods ended 3/31/98. 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.
<PAGE>
<TABLE>
STATEMENT OF INVESTMENTS - NATIONWIDE(R)
TAX-FREE INCOME FUND - APRIL 30, 1998 - (UNAUDITED)
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (100.0%)
ALABAMA (4.2%)
$2,960,000 Alabama Housing Finance
Authority Revenue
Series D-1, 6.00%, 2016 $ 3,126,500
1,000,000 Birmingham, Alabama General
Obligation Refunding Bonds,
Series 1992B, 6.25%, 2016 1,068,750
1,100,000 Birmingham, Alabama General
Obligation Parking Warrants,
Series 1995-A, 5.90%, 2018 1,175,625
2,480,000 Birmingham, Alabama Water
Works & Sewer Board Refunding
Revenue, Series 1992,
6.125%, 2012 2,613,300
2,500,000 Huntsville, Alabama General
Obligation Limited Tax
Warrants, Series 1992 A,
6.00%, 2012 2,659,375
-----------
10,643,550
-----------
ARIZONA (1.1%)
2,500,000 Salt River Project Agricultural
Improvement & Power District,
Arizona Electric System
Revenue Bonds,
Series 1992 C, 6.20%, 2012 2,653,125
-----------
COLORADO (0.1%)
340,000 Colorado Housing Finance
Authority Single-Family Housing
Revenue Refunding Bonds,
Series 1991-A, 7.15%, 2014 363,374
-----------
CONNECTICUT (3.0%)
4,220,000 Connecticut Housing Finance
Authority Housing Mortgage
Finance Program Bonds,
Series 1992-B, 6.70%, 2012 4,547,050
3,085,000 Connecticut State General
Obligation Bonds, 1998 Series B,
5.00%, 2017 2,980,881
-----------
7,527,931
-----------
FLORIDA (1.0%)
2,400,000 Jacksonville, Florida Electric
Authority Bulk Power Revenue
Bonds, (Scherer 4 Project,
Issue One, Series 1991-A),
7.00%, 2012 2,589,000
-----------
GEORGIA (2.1%)
1,250,000 Columbus, Georgia Building
Authority Lease Revenue Bonds,
Series 1997A, 5.65%, 2017 1,296,875
2,750,000 Georgia Municipal Electric
Authority Power Revenue Bonds,
Series 1991-V, 6.60%, 2018 3,186,563
905,000 Georgia Residential Financial
Authority Revenue Bonds,
Series A, 7.50%, 2017 957,037
-----------
5,440,475
-----------
ILLINOIS (7.7%)
2,050,000 Chicago Park District, Illinois
General Obligation Unlimited Tax
Park Bonds, Series 1996,
5.60%, 2021 2,096,125
-----------
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (CONTINUED)
ILLINOIS (CONTINUED)
$2,185,000 Illinois Educational Facility
Authority Revenue, Series
1991-A, Loyola University,
7.125%, 2021 $ 2,406,231
1,500,000 Illinois State General Obligation
Refunding Bonds, Series of
December 1995, 5.125%, 2015 1,490,625
3,000,000 Illinois State General Obligation
Bonds, Series of March 1994,
5.80%, 2019 3,105,000
2,500,000 Illinois State General Obligation
Bonds, Series of December 1995,
5.125%, 2017 2,468,750
4,000,000 Illinois State General Obligation
Bonds, Series of May 1996,
5.75%, 2017 4,190,000
2,500,000 Illinois State Sales Tax Revenue,
Series V, 6.375%, 2017 2,775,000
1,000,000 Palatine, Illinois Corporate Purpose
General Obligation Bonds,
Series 1985, 9.90%, 2016 1,106,250
-----------
19,637,981
-----------
INDIANA (3.0%)
5,335,000 Indiana State Toll Road Commission
East-West Toll Road Revenue Bonds,
Series 1980, 9.00%, 2015 7,482,338
-----------
KENTUCKY (1.4%)
3,250,000 Jefferson County, Kentucky Jewish
Hospital Healthcare Services
Health Facilities Revenue Bonds,
Series 1995, 6.50%, 2015 3,501,875
-----------
MASSACHUSETTS (1.8%)
2,525,000 Massachusetts State General
Obligation Bonds Consolidated
Loan, Series 1992-B, 6.50%, 2013 2,745,938
2,000,000 Massachusetts State Special
Obligation Refunding Bonds,
1997 Series A,
5.00%, 2017 1,940,000
-----------
4,685,938
-----------
MICHIGAN (3.4%)
3,500,000 Cheboygan, Michigan Area Schools
General Obligation Unlimited Tax,
5.60%, 2021 3,578,750
3,500,000 Michigan State General Obligation
Bonds, Environmental Protection
Program, Series 1992,
6.25%, 2012 3,976,875
1,150,000 University of Michigan Higher
Education Housing Revenue Bonds,
Series 1996A, 5.125%, 2015 1,144,250
-----------
8,699,875
-----------
MINNESOTA (2.4%)
2,055,000 Minnesota Housing Finance Agency
Rental Housing Revenue Bonds,
1995 Series D, 5.90%, 2015 2,144,906
3,735,000 Minnesota State Housing Finance
Agency Single Family Mortgage
Revenue Bonds, Series 1994 K,
6.40%, 2015 3,977,775
-----------
6,122,681
-----------
<PAGE>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (CONTINUED)
MISSOURI (0.9%)
$2,000,000 Missouri State Environmental
Improvement & Energy Resources
Authority Water Pollution Control
Revenue Bonds, 6.55%, 2014 $ 2,165,000
-----------
NEBRASKA (2.1%)
5,000,000 Nebraska Public Power District
Power Supply System Revenue
Bonds, Series 1993, 6.125%, 2015 5,362,500
-----------
NORTH CAROLINA (13.9%)
1,000,000 Appalachian State University Student
Fee Refunding Bonds, Series 1998,
5.00%, 2018 971,250
1,000,000 Appalachian State University Student
Fee Refunding Bonds, Series 1998,
5.00%, 2024 956,250
5,000,000 Charlotte-Mecklenberg, Hospital
Authority Health Care Revenue
Bonds, Series 1997 A,
5.125%, 2022 4,850,000
1,000,000 North Carolina Medical Care
Commission Hospital Revenue Bonds
(Duke University Hospital Project),
Series 1996 C, 5.25%, 2017 993,750
1,500,000 Gastonia, North Carolina - Combined
Utilities System Revenue Bonds,
Series 1998, 4.75%, 2015 1,436,250
3,250,000 North Carolina Medical Care Commission
Hospital Revenue Bonds
(Rex Healthcare), Series 1998
5.00%, 2017 3,144,375
1,000,000 North Carolina Educational Facilities
Finance Agency Revenue Bonds
(Wake Forest University) Series 1997,
5.00%, 2017 962,500
3,460,000 North Carolina Housing Finance
Agency Multi-Family Revenue
Refunding Bonds, Series H,
5.95%, 2021 3,641,650
1,985,000 North Carolina Housing Finance
Agency Single-Family Revenue
Bonds, Series AA, 6.25%, 2017 2,116,506
2,185,000 North Carolina Housing Finance
Agency Single-Family Revenue
Bonds, Series GG, 5.90%, 2013 2,299,713
1,670,000 North Carolina Housing Finance
Agency Single-Family Revenue
Bonds, Series J, 7.40%, 2022 1,736,800
1,560,000 North Carolina Housing Finance
Authority Single-Family Revenue
Bonds, Series N, 7.40%, 2028 1,643,850
1,995,000 North Carolina Medical Care
Commission Health Care Revenue
Refunding Bonds, (Nuvant Health
Project) Series 1998 A, 5.00%, 2018 1,920,188
2,000,000 North Carolina Medical Care Commission
Hospital Revenue Refunding Bonds,
(NC Baptist Hospitals Project),
Series 1992 A, 6.375%, 2014 2,145,000
2,000,000 University of North Carolina Greensboro
Student Facilities System Revenue
Bonds, Series C, 5.125%, 2018 1,972,500
1,080,000 University of North Carolina at
Chapel Hill Dining System Revenue
Bonds, Series A, 5.40%, 2016 1,104,300
1,140,000 University of North Carolina at
Chapel Hill Dining System Revenue
Bonds, Series 1997, 5.40%, 2017 1,161,375
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
LONG-TERM MUNICIPAL SECURITIES (CONTINUED)
<S> <C> <C>
NORTH CAROLINA (CONTINUED)
$2,210,000 University of North Carolina
Wilmington Student Fee Revenue
Bonds, (Student Recreation Center)
Series 1998, 5.15%, 2019 $ 2,174,087
-----------
35,230,344
-----------
OHIO (1.8%)
1,100,000 Franklin County, Ohio Hospital
Refunding and Improvement
Revenue Bonds (The Children's
Hospital Project), 1996 Series A,
5.75%, 2020 1,138,500
1,220,000 Ohio Housing Finance Agency Mortgage
Revenue Bonds Residential Mortgage
Backed Securities, Series A-1,
5.70%, 2017 1,258,125
2,000,000 Ohio Turnpike Commission Turnpike
Revenue Bonds, 1996 Series A,
5.70%, 2017 2,082,500
-----------
4,479,125
-----------
PENNSYLVANIA (6.4%)
2,000,000 Pennsylvania General Obligation
Bonds, Second Series of 1995,
5.00%, 2012 1,992,500
4,500,000 Pennsylvania Higher Educational
Facilities Authority, The University
of Pennsylvania Health Services
Revenue Bonds, Series A of 1996,
5.875%, 2015 4,713,750
1,500,000 Pennsylvania Housing Finance
Agency Rental Housing Refunding
Revenue Bonds, Issue 1992,
6.25%, 2007 1,591,875
4,055,000 Pennsylvania Housing Finance
Agency Rental Housing Refunding
Revenue Bonds, Issue 1992,
6.40%, 2012 4,318,575
2,000,000 Pennsylvania State Turnpike
Commission Oil Franchise Tax
Revenue, Series A, 6.00%, 2014 2,140,000
1,500,000 Pittsburgh, Pennsylvania Water
and Sewer Authority, Water and
Sewer System First Lien Revenue
Bonds, Series A of 1995,
5.50%, 2015 1,588,125
-----------
16,344,825
-----------
SOUTH CAROLINA (5.9%)
4,980,000 Charleston, South Carolina
Waterworks & Sewer System
Refunding & Capital Improvement
Revenue Bonds, Series 1991,
6.00%, 2018 5,285,025
3,610,000 Greenville, South Carolina Hospital
System Revenue Bonds Hospital
Facilities, Series B,
5.25%, 2017 3,605,488
2,075,000 South Carolina State Housing
Finance & Development Authority
Homeownership Mortgage Purchase
Bonds, Series 1994 A,
6.375%, 2016 2,186,531
1,500,000 South Carolina State Housing Finance &
Development Authority Multi-Family
Development Revenue Refunding,
Series 1992-A, 6.875%, 2023 1,588,125
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS - NATIONWIDE(R)
TAX-FREE INCOME FUND - APRIL 30, 1998 - (UNAUDITED)
PRINCIPAL SECURITY VALUE
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (CONTINUED)
SOUTH CAROLINA (CONTINUED)
$1,205,000 Spartanburg, South Carolina Water
System Improvement & Refunding
Revenue Bonds, Series 1992,
6.25%, 2017 $ 1,299,894
1,000,000 Spartanburg, South Carolina Water
System Revenue Bonds,
Series 1996, 6.10%, 2021 1,103,750
-----------
15,068,813
-----------
SOUTH DAKOTA (0.6%)
1,500,000 South Dakota Health and Educational
Facilities Authority Revenue Refunding
Bonds, Series 1998, 5.00%, 2022 1,423,125
TENNESSEE (1.4%)
1,360,000 Nashville & Davidson County,
Tennessee Health & Educational
Facilities Revenue Bonds,
Series 1979, 7.875%, 2004 $ 1,518,100
1,000,000 Shelby County, Tennessee General
Obligation Public Improvement Bonds,
1996 Series A, 5.85%, 2017 1,083,750
1,000,000 Shelby County, Tennessee General
Obligation School Bonds,
Series 1996A, 5.875%, 2019 1,085,000
-----------
3,686,850
-----------
TEXAS (17.8%)
1,025,000 Amarillo, Texas Junior College District General
Obligation Bonds Limited,
5.125%, 2015 1,018,594
1,140,000 Arlington, Texas Certificates of General
Obligation Limited, 5.00%, 2019 1,087,275
2,325,000 Beaumont Independent School District,
Texas Unlimited Tax School Building,
Series 1996, 5.00%, 2016 2,263,969
1,000,000 Carrollton-Farmers Branch Independent
School District, Texas General
Obligation Permanent School Fund
Guarantee, Series 1996, 5.70%, 2017 1,025,000
1,235,000 Cedar Park, Texas General Obligation
Bonds Unlimited, 5.25%, 2016 1,235,000
1,000,000 Corsicana, Texas, Independent
School District Building Unlimited
Tax Bonds, Series 1998, 5.10%, 2018 972,500
1,100,000 Cypress-Fairbanks Independent
School District, Texas General
Obligation Permanent School Fund
Guarantee, Series 1996,
5.375%, 2019 1,155,000
3,465,000 Dayton, Texas Independent School
District Unlimited Tax School Building
and Refunding Bonds, Series 1996,
5.375%, 2017 3,482,325
2,300,000 Fort Bend Independent School District,
Texas General Obligation Permanent
School Fund Guarantee, Series 1996,
5.00%, 2018 2,208,000
1,350,000 Fort Worth, Texas General Purpose Bonds,
Series 1997, 5.625%, 2017 1,387,125
5,325,000 Harris County, Texas Health Facilities
Revenue Bonds School Health Care
System, Series B, 5.75%, 2027 5,518,030
2,500,000 Houston Independent School District,
Texas Limited Tax School Refunding
Bonds, Series 1997,
5.375%, 2017 2,512,500
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (CONTINUED)
TEXAS (CONTINUED)
$1,000,000 Houston, Texas Water & Sewer Junior
Lien Revenue Refunding, Series 1991-C,
6.375%, 2017 $1,070,000
1,245,000 Lower Colorado River Authority Texas
Junior Lien Refunding Revenue Bonds,
Series 1992 (ETM),
6.00%, 2017 1,378,838
1,165,000 Lower Colorado River Authority Texas
Junior Lien Refunding Revenue
Bonds, Series 1992 (Unrefunded),
6.00%, 2017 1,205,775
4,000,000 San Antonio, Texas General
Improvement and Refunding Bonds,
Series 1996 A, 5.00%, 2016 3,860,000
2,000,000 Texas A&M University System Board of
Regents Revenue Financing System Bonds,
Series 1996, 5.375%, 2014 2,032,500
3,175,000 Texas State Water Development Bonds,
Series 1994, 6.90%, 2017 3,536,156
2,810,000 Texas Water Development Board State
Revolving Fund Senior Lien Revenue
Bonds, Series 1997 A, 5.25%, 2019 2,820,538
1,500,000 Travis County, Texas Health Facilities
Development Corporation Hospital
Revenue Bonds, Series 1998 A,
5.125%, 2024 1,432,500
1,000,000 Uvalde, Texas Consolidated Independent
School District Unlimited Tax School
Building Bonds, Series 1998,
5.00%, 2017 965,000
2,655,000 Weatherford, Texas Independent School
District Unlimited Tax School Building
and Refunding Bonds, Series 1994,
6.50%, 2015 2,953,688
-----------
45,120,313
-----------
UTAH (0.4%)
1,080,000 Intermountain Power Agency, Utah
Power Supply Revenue Refunding
Bonds, Series 1993-A, 5.50%, 2020 1,082,700
VIRGINIA (10.3%)
940,000 Fairfax County, Virginia Water
Authority Water Refunding Revenue
Series 1992, 6.00%, 2022 999,925
4,250,000 Henrico County, Virginia Water and
Sewer System Refunding Revenue
Bonds, Series 1994, 5.875%, 2014 4,414,688
5,500,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1992 A,
7.10%, 2022 5,836,875
2,000,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1992 C Subseries C-7,
6.30%, 2015 2,092,500
1,000,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1995 B Subseries B-3,
6.35%, 2015 1,072,500
1,930,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1995 B Subseries B-3,
6.35%, 2016 2,069,925
1,080,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1995-D, Subseries D-1,
5.95%, 2013 1,117,800
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS - NATIONWIDE(R)
TAX-FREE INCOME FUND - APRIL 30, 1998 - (UNAUDITED)
PRINCIPAL SECURITY VALUE
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (CONTINUED)
VIRGINIA (CONTINUED)
$1,000,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, B-B2, 6.50%, 2010 1,103,750
2,650,000 Virginia Public School Authority
General Obligation Bonds,
Series 1996 B, 5.125%, 2017 2,623,500
2,000,000 Virginia Public School Authority
School Financing Bonds
(1991 Resolution), Series 1994 A,
6.20%, 2013 2,187,500
2,595,000 Virginia Public School Authority School
Financing Bonds (1991 Resolution),
Series 1995 C, 5.00%, 2016 2,546,343
-----------
26,065,306
-----------
WASHINGTON (4.4%)
1,500,000 King County, Washington Limited General
Obligations Refunding Bonds,
Series 1996 C, 5.25%, 2021 1,486,875
6,150,000 Seattle, Washington Water System
and Refunding Revenue Bonds,
Series 1993, 5.50%, 2018 6,273,000
3,500,000 Washington State Motor Vehicle Fuel
Tax General Obligation Bonds,
Series 1997 D, 5.375%, 2022 3,521,875
-----------
11,281,750
WISCONSIN (2.9%)
$1,000,000 Wisconsin Housing and Economic
Development Authority Home
Ownership Revenue Bonds,
Series A, 5.65%, 2010 $ 1,061,250
2,000,000 Wisconsin State General Obligation,
Series 1992-A, 6.30%, 2011 2,137,500
1,500,000 Wisconsin State Transportation
Revenue Bonds, Series A, 1994,
5.50%, 2011 1,526,250
2,500,000 Wisconsin State Transportation
Revenue Bonds, Series A,
5.50%, 2012 2,559,375
-----------
7,284,375
-----------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(cost $240,931,431) $ 253,943,169
=============
- --------------------
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.
Distribution of investments by industry, as a percentage of total investment in
securities at value, is as follows:
INDUSTRY MARKET VALUE PERCENT
County/City/School Districts $ 21,239,006 8.37%
Education 23,261,181 9.16%
Electric Utilities 14,873,887 5.86%
Hospitals 31,327,806 12.34%
Housing 56,130,750 22.09%
Miscellaneous 7,036,125 2.77%
Political Subdivisions - City/County 17,529,625 6.91%
State Territories and Possessions 34,249,594 13.48%
Transportation 15,790,463 6.22%
Water, Sewer and Combined Utilities 32,504,732 12.80%
- ----------------------------------------------------------------
$253,943,169 100.00%
================================================================
</TABLE>
<PAGE>
NATIONWIDE(R) INVESTING FOUNDATION II
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The Nationwide U.S. Government Income Fund's total return for the six-month
period ended April 30, 1998, was 2.87% (without sales charge) assuming all
distributions were reinvested, while the Merrill Lynch Government Master Index
returned 3.59%.
The economy continued to perform exceptionally well in this six-month period
with scant evidence of inflation. This conundrum has left Federal Reserve
members on hold as they continue to wait for signs of a slowing economy or pick
up in inflation before acting. The result of this is a range-bound Treasury
market. Intermediate Treasury yields fell slightly during this period, finishing
in a range of 5.56%-5.67%, while the 30-year Treasury yield declined to 5.95%
from 6.15%.
While most sectors of the government market performed in line with expectations,
the premium Collateralized Mortgage Obligation (CMO) market under performed the
overall market as homeowners prepaid their mortgages faster than expected. The
Fund had a fairly high weighting in this sector which hurt returns. These
holdings appear to be undervalued by the market now, and should provide good
returns going forward.
During the period, STRIPS (Separate Trading of Registered Interest and Principal
of Securities) were purchased to lengthen the Fund and help offset the faster
prepayments on premium CMO holdings. In addition, some of the CMO positions
which had an unfavorable risk/reward profile were eliminated. The proceeds were
placed in long Treasury bonds and noncallable Agencies, which had grown to
historically wide levels.
Fund holdings consist of 48% in CMOs, down from 80%, 47% in Treasuries and
Agencies, and 5% in Repurchase Agreements.
PORTFOLIO MANAGERS:
WAYNE T. FRISBEE, CFA
GARY R. HUNT, MBA
PORTFOLIO COMPOSITION
PIE CHART:
Mortgage-Backed Securities 47.2%
Repurchase Agreements 5.1%
U.S. Government and Agency Long-Term Obligations 47.0%
FUND VALUE $45,089,674
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
$1,000 $100 $1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS W/O SC* W/O SC* W/SC**
1 10.19% 7.96% 6.14%
5 6.54% 7.59% 6.51%
Life 7.06% 7.34% 7.10%
(6 years, 2 months)
* For periods ended 4/30/98. These returns do not reflect the effects of sales
charges.
** For periods ended 3/31/98. 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.
<PAGE>
<TABLE>
STATEMENT OF INVESTMENTS - NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND -
APRIL 30, 1998 - (UNAUDITED)
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
MORTGAGE BACKED SECURITIES (47.2%)
$4,755,524 FHLMC REMIC Series 1462,
Class PT, 7.50%, 1/15/03 $ 4,885,787
3,000,000 FHLMC REMIC Series 1313,
Class G, 7.25%, 6/15/07 3,074,790
1,000,000 FHLMC REMIC Series 1512,
Class HB, 6.50%, 2/15/08 1,008,181
5,000,000 FHLMC REMIC Series 1560,
Class PN, 7.00%, 12/15/12 5,159,775
3,437,917 FHLMC REMIC Series 31,
Class E, 7.55%, 05/15/20 3,539,624
1,307,326 FNMA REMIC Series 92-126,
Class VB, 8.00%, 07/25/02 1,354,312
289,677 FNMA REMIC Series 1988-25,
Class B, 9.25%, 10/25/18 310,233
1,837,977 FNMA REMIC Series 1990-7,
Class B, 8.50%, 1/25/20 1,935,489
-----------
TOTAL MORTGAGE BACKED SECURITIES
(cost $20,605,353) 21,268,191
-----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (47.0%)
2,950,000 Federal Farm Credit,
5.68%, 03/12/01 2,941,725
3,000,000 FHLMC, 5.98%, 12/08/05 3,008,658
4,000,000 FNMA MT, 7.35%, 03/28/05 4,318,156
1,550,000 FNMA MT, 7.26%, 10/05/05 1,552,027
2,000,000 Resolution Funding STRIPS,
00.00%, 07/15/07 1,163,378
2,000,000 Resolution Funding STRIPS,
00.00%, 07/15/13 788,858
7,500,000 Resolution Funding STRIPS,
00.00%, 10/15/13 2,909,468
3,000,000 U.S. Treasury Bond,
7.50%, 11/15/16 3,489,375
1,000,000 U.S. Treasury Note,
6.625%, 07/31/01 1,028,437
-----------
TOTAL GOVERNMENT OBLIGATIONS (cost $20,939,305) 21,200,082
-----------
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
REPURCHASE AGREEMENT (5.1%)
$2,303,000 UBS SECURITIES 5.46%, due 05/01/98
Collateralized by $2,303,000
U.S. Treasury Note,
6.75%, 08/15/26, market value
$2,349,375 (cost $2,303,000) $ 2,303,000
-----------
TOTAL INVESTMENTS (cost $43,847,658) $44,771,273
===========
- ---------------------
The abbreviations in the above statement stand for the following:
FNMA Federal National Mortgage Association
FHLMCFederal Home Loan Mortgage Corporation
REMIC Real Estate Mortgage Investment Conduit
STRIPS Separate Trading of Registered Interest and Prinicipal
of Securities
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>
<PAGE>
NATIONWIDE(R) INVESTING FOUNDATION
NATIONWIDE(R) MONEY MARKET FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The net assets of Nationwide Money Market Fund were $895.2 million on April 30,
1998. The Fund has performed better than its benchmark, the Consumer Price Index
for the past 10 years. For the past 12 months, the Fund's return was 5.18%
versus 1.50% for the Consumer Price Index.
The inflation rate for the first quarter of 1998 was zero.
We are in the eighth year of economic expansion. The employment situation is the
best it has been in 25 years. For example, in Central Ohio, the rate of
unemployment is below 3%. The Securities markets are nervous that borrowing
costs may increase in the coming months, and scrutinize all remarks made by
Allan Greenspan, Chariman of the Federal Reserve. The Federal Funds rate is
5.50%. This rate last changed in the first quarter of 1997.
Your Fund continues to keep a very diversified, liquid investment portfolio. The
dollar-weighted average maturity of the Fund remains between 35-45 days. Prime
Commercial Paper provides the best risk/return profile, accounting for its
dominant portfolio weighting.
PATRICIA A. MYNSTER - PORTFOLIO MANAGER
PORTFOLIO COMPOSITION
PIE CHART:
U.S. Government and Agency Obligations 3.3%
Canadian Government and Provincial 2.7%
Commercial Paper 94.9%
FUND VALUE $895,221,166
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
$1,000 $100
LUMP SUM MONTHLY
YEARS INVESTMENT* INVESTMENT*
1 5.18% 5.16%
5 4.55% 4.98%
10 5.41% 4.82%
7 Day Current Yield (at 4/30/98): 5.04%
*For periods ended 4/30/98. There are no sales charges in the Nationwide(R)
Money Market Fund.
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.
<PAGE>
<TABLE>
STATEMENT OF INVESTMENTS - NATIONWIDE(R)
MONEY MARKET FUND - APRIL 30, 1998 - (UNAUDITED)
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
CANADIAN OBLIGATIONS (2.7%)
British Columbia (Providence Of)
$10,000,000 5.41%, 06/01/98 $ 9,953,414
Export Development
4,400,000 5.47%,05/08/98 4,395,320
10,000,000 5.45%,06/08/98 9,942,472
-----------
TOTAL CANADIAN OBLIGATIONS
(Cost $24,291,206) 24,291,206
-----------
COMMERCIAL PAPER (94.9%)
AGRICULTURE/FINANCE (1.1%)
Deere, John Capital
10,000,000 5.48%,07/02/98 9,905,622
-----------
AGRICULTURE/SUPPLIES (2.7%) Deere & Co.
16,913,000 5.52%, 05/11/98 16,887,067
7,000,000 5.48%, 06/15/98 6,952,050
-----------
23,839,117
-----------
AUTO/FINANCE (6.0%)
Ford Motor Credit Co.
672,000 5.52%, 05/08/98 671,279
5,000,000 5.50%, 05/15/98 4,989,306
10,000,000 5.45%, 05/20/98 9,971,236
7,916,000 5.48%, 06/15/98 7,861,775
General Motors Acceptance Corp.
6,000,000 5.50%, 05/04/98 5,997,250
9,000,000 5.53%, 05/07/98 8,991,705
15,000,000 5.51%, 05/18/98 14,960,971
-----------
53,443,522
-----------
BANKS (8.4%)
Banc One Corp.
10,000,000 5.50%, 05/11/98 9,984,722
Morgan (J.P.) & Co.
3,000,000 5.53%, 05/08/98 2,996,774
1,777,000 5.40%, 06/19/98 1,763,939
5,000,000 5.33%, 07/17/98 4,942,999
National City Credit
20,000,000 5.50%, 05/01/98 20,000,000
5,000,000 5.51%, 05/14/98 4,990,052
SunTrust Banks, Inc.
5,000,000 5.50%, 05/06/98 5,000,000
15,000,000 5.50%, 06/12/98 14,903,750
Toronto-Dominion USA
6,026,000 5.47%, 05/15/98 6,013,181
4,400,000 5.47%, 06/23/98 4,364,567
-----------
74,959,984
-----------
BROKER/DEALERS (14.8%)
Bear Stearns Co.
10,000,000 5.50%, 06/04/98 9,949,055
2,000,000 5.51%, 06/05/98 1,989,286
5,000,000 5.45%, 07/06/98 4,950,042
6,000,000 5.50%, 07/10/98 5,935,833
10,000,000 5.51%, 07/17/98 9,882,147
Goldman Sachs Group
7,117,000 5.48%, 05/04/98 7,113,750
5,000,000 5.42-5.50%, 05/14/98 4,990,069
4,000,000 5.48%, 05/15/98 3,991,476
15,087,000 5.47%, 05/29/98 15,022,813
Merrill Lynch & Co.
13,500,000 5.45%, 05/05/98 13,491,825
5,000,000 5.49-5.5%, 05/27/98 4,980,175
7,029,000 5.53%, 06/26/98 6,968,535
5,000,000 5.48%, 07/02/98 4,952,811
4,000,000 5.49%, 07/20/98 3,951,200
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
BROKER/DEALERS (CONTINUED)
Morgan Stanley Group
$10,000,000 5.48%, 07/13/98 $ 9,888,878
11,790,000 5.49%, 07/20/98 11,646,162
13,194,000 5.49%, 07/21/98 13,031,021
-----------
132,735,078
-----------
CHEMICALS (6.6%)
Monsanto Co.
17,319,000 5.52%, 05/07/98 17,303,066
10,000,000 5.50%, 05/14/98 9,980,139
3,000,000 5.50%, 06/01/98 2,985,792
2,600,000 5.48%, 06/26/98 2,577,836
PPG Industries, Inc.
26,500,000 5.51%, 06/30/98 26,256,642
-----------
59,103,475
-----------
CONSUMER PRODUCTS (2.6%)
Clorox Co.
8,000,000 5.50%, 05/29/98 7,965,778
15,000,000 5.50%, 06/03/98 14,924,375
-----------
22,890,153
-----------
CONSUMER SALES FINANCE (14.7%)
American Express Credit Corp.
2,600,000 5.50%, 05/06/98 2,598,014
8,000,000 5.50%, 05/12/98 7,986,556
5,353,000 5.50-5.51%, 05/20/98 5,337,461
3,000,000 5.49-5.50%, 05/22/98 2,990,392
8,000,000 5.48%, 06/02/98 7,961,031
4,000,000 5.47%, 06/09/98 3,976,297
Associates Corp. of North America
12,000,000 5.51%, 05/13/98 11,977,960
4,000,000 5.48%, 05/19/98 3,989,040
6,913,000 5.47%, 06/16/98 6,864,682
Avco Financial Services, Inc.
5,000,000 5.49%, 05/04/98 4,997,712
9,000,000 5.43%, 05/06/98 8,993,213
5,000,000 5.52%, 05/15/98 4,989,267
10,000,000 5.48%, 07/22/98 9,875,178
Commercial Credit Corp.
15,000,000 5.52%, 05/01/98 15,000,000
8,000,000 5.50-5.51%, 05/08/98 7,991,429
3,000,000 5.50%, 05/18/98 2,992,208
8,000,000 5.49%, 06/05/98 7,957,300
Norwest Financial, Inc.
15,000,000 5.51%, 05/19/98 14,958,675
-----------
131,436,415
-----------
DATA SERVICES (2.0%)
First Data Corp.
8,000,000 5.54%, 05/05/98 7,995,075
10,000,000 5.50%, 05/26/98 9,961,806
-----------
17,956,881
-----------
DIVERSIFIED FINANCE (3.2%)
General Electric Capital Corp.
4,000,000 5.66%, 05/04/98 3,998,113
6,667,000 5.52%, 05/22/98 6,645,532
9,000,000 5.51%, 05/26/98 8,965,563
3,000,000 5.48%, 05/27/98 2,988,127
6,000,000 5.52%, 06/04/98 5,968,720
-----------
28,566,055
-----------
<PAGE>
<CAPTION>
STATEMENT OF INVESTMENTS - NATIONWIDE(R)
MONEY MARKET FUND - APRIL 30, 1998 - (UNAUDITED)
PRINCIPAL SECURITY VALUE
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
ELECTRICAL EQUIPMENT (1.9%)
Johnson Controls, Inc.
$10,000,000 5.53%, 05/13/98 $ 9,981,567
7,450,000 5.53%, 06/02/98 7,413,379
-----------
17,394,946
-----------
ENTERTAINMENT (0.6%)
Walt Disney Co.
5,378,000 5.43%,05/21/98 5,361,776
-----------
FINANCIAL SERVICE/UTILITIES (3.4%)
National Rural Utilities Cooperative Finance Corp.
5,000,000 5.45-5.50%,05/18/98 4,987,014
5,000,000 5.47%, 06/08/98 4,971,130
2,000,000 5.50%, 06/11/98 1,987,472
10,000,000 5.46%, 07/14/98 9,887,767
10,000,000 5.48%, 07/16/98 9,884,311
-----------
31,717,694
-----------
FOOD & BEVERAGE (3.6%)
Campbell Soup Co.
8,830,000 5.51%, 05/28/98 8,793,510
Heinz "HJ" Co.
3,000,000 5.49%, 05/05/98 2,998,170
10,000,000 5.51%, 05/13/98 9,981,633
1,400,000 5.48%, 05/28/98 1,394,246
9,160,000 5.48%, 06/03/98 9,113,986
-----------
32,281,545
-----------
HEAVY EQUIPMENT/FINANCE (0.4%)
Caterpillar Financial Services, Inc.
3,648,000 5.50%, 05/08/98 3,644,099
-----------
INSURANCE (5.3%) Marsh & McLennan Co.
11,302,000 5.50-5.51%, 05/28/98 11,255,294
10,902,000 5.47-5.50%, 07/09/98 10,787,362
MetLife Funding, Inc.
10,000,000 5.50%, 05/27/98 9,960,278
5,331,000 5.48%, 06/05/98 5,302,598
5,000,000 5.48%, 06/10/98 4,969,555
5,000,000 5.48%, 06/16/98 4,964,989
-----------
47,240,076
-----------
LEASE/FINANCE (2.6%) IBM Credit Corp.
8,000,000 5.50%, 05/21/98 7,975,556
10,000,000 5.47%, 05/28/98 9,958,975
5,325,000 5.46%, 06/19/98 5,285,426
-----------
23,219,957
-----------
MISCELLANEOUS MANUFACTURING (0.4%)
Allied Signal, Inc.
3,406,000 5.51%, 05/05/98 3,403,915
-----------
OFFICE EQUIPMENT & SUPPLIES (0.7%)
Pitney Bowes Credit
6,390,000 5.47%, 07/01/98 6,330,774
-----------
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
COMMERCIAL PAPER (CONTINUED)
OIL & GAS (1.7%)
Chevron Transportation
$5,000,000 5.46%, 05/21/98 $ 4,984,833
5,000,000 5.49%, 07/07/98 4,948,913
5,000,000 5.49%, 07/10/98 4,946,625
-----------
14,880,371
-----------
PACKAGING/CONTAINERS (1.5%)
Bemis Co., Inc.
7,000,000 5.50%, 06/04/98 6,963,639
5,000,000 5.50-5.51%, 05/14/98 4,990,070
1,300,000 5.52%, 06/08/98 1,292,425
-----------
13,246,134
-----------
PHARMACEUTICALS/PERSONAL CARE (5.8%)
Abbott Laboratories
9,600,000 5.45%, 05/14/98 9,581,107
Becton Dickinson
7,700,000 5.51%, 05/27/98 7,669,358
7,323,000 5.48%, 06/10/98 7,278,411
Glaxo Wellcome
10,000,000 5.49%, 06/01/98 9,952,935
10,000,000 5.48%, 06/08/98 9,943,088
Schering Corp.
7,798,000 5.48%, 05/12/98 7,784,943
-----------
52,209,842
-----------
PREMIUM FINANCE (2.1%)
A.I. Credit Corp.
3,000,000 5.50%, 05/05/98 2,998,166
6,214,000 5.45%, 05/06/98 6,209,296
10,000,000 5.47%, 06/18/98 9,927,067
-----------
19,134,529
-----------
PRINTING & PUBLISHING (2.8%)
E.W. Scripps Co.
5,000,000 5.44%, 05/12/98 4,991,689
10,000,000 5.49%, 06/08/98 9,942,050
3,850,000 5.48%, 06/09/98 3,827,144
6,000,000 5.48%, 06/09/98 5,964,380
-----------
24,725,263
-----------
TOTAL COMMERCIAL PAPER (cost $849,627,223) 849,627,223
-----------
U.S.GOVERNMENT AND AGENCY OBLIGATIONS (3.3%)
Federal Home Loan Mortgage
10,000,000 5.44%, 05/08/98 9,989,422
10,000,000 5.32%, 06/05/98 9,948,278
10,000,000 Federal National Mortgage Association
5.41%, 06/05/98 9,947,403
-----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(cost $29,885,103) 29,885,103
-----------
TOTAL INVESTMENTS
(cost $903,803,532) $903,803,532
============
- --------------------
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>
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1998 - (UNAUDITED)
<CAPTION>
NATIONWIDE(R)
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) MONEY
GROWTH NATIONWIDE(R) BOND TAX-FREE U.S. GOV'T MARKET
FUND FUND FUND INCOME FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $597,320,578, $1,045,510,308, $120,538,375,
$240,931,431, $43,847,658 and $903,803,532,
respectively) $980,218,639 $1,985,808,798 $124,170,093 $253,943,169 $ 44,771,273 $903,803,532
Cash 13,620 1,761,068 -- 3,514,017 -- 3,972,732
Receivable for Fund shares sold 5,032,562 (456,769) 12,498 64,719 26,442 (6,686,733)
Receivable for investment securities sold 17,655,326 30,211,000 4,202,541 -- 2,294,586 20,832,000
Accrued interest and dividends receivable 458,367 2,461,369 2,177,356 4,588,893 394,890 64,931
Withholding tax reclaim receivable 12,860 -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets 1,003,391,374 2,019,785,466 130,562,488 262,110,798 47,487,191 921,986,462
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Bank loan -- -- 41,527 -- 166 --
Payable for Fund shares redeemed 278,638 681,849 24,686 210,463 5,663 11,200,736
Payable for investment securities purchased 23,032,230 41,402,097 1,824,000 7,517,715 2,303,000 14,922,083
Accrued management fees 398,131 799,954 52,871 135,942 24,158 330,786
Accrued transfer agent fees 59,399 64,676 11,114 11,507 2,964 58,768
Accrued distribution fees -- -- -- 41,889 7,433 --
Dividends payable 17,245 13,304 102,168 296,065 41,990 173,656
Other accrued expenses 75,088 80,051 29,413 21,705 12,143 79,267
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 23,860,731 43,041,931 2,085,779 8,235,286 2,397,517 26,765,296
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $979,530,643 $1,976,743,535 $128,476,709 $253,875,512 $ 45,089,674 $895,221,166
===================================================================================================================================
NET ASSETS REPRESENTED BY:
Capital Shares, $1 par value outstanding $ 56,951,128 $ 63,757,974 $ 13,476,131 $ 24,095,387 $ 4,370,730 $895,221,487
Capital paid in excess of par value 506,798,171 896,749,392 119,399,637 214,959,300 39,449,201 --
Net unrealized appreciation 382,898,061 940,298,490 3,631,718 13,011,738 923,615 --
Accumulated undistributed net
realized gain (loss) 33,225,523 74,973,256 (8,096,568) 1,809,415 340,235 541
Accumulated undistributed (distributions in excess of)
net investment income (342,240) 964,423 65,791 (328) 5,893 (862)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $979,530,643 $1,976,743,535 $128,476,709 $253,875,512 $ 45,089,674 $895,221,166
===================================================================================================================================
Shares outstanding (unlimited number of
shares authorized) 56,951,128 63,757,974 13,476,131 24,095,387 4,370,730 895,221,487
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value per share $ 17.20 $ 31.00 $ 9.53 $ 10.54 $ 10.32 $ 1.00
===================================================================================================================================
Offering price (100%/(100%-Maximum Sales Charge)
of net asset value adjusted to nearest cent)
per share* $ 18.01 $ 32.46 $ 9.98 $ 10.54 $ 10.32 $ 1.00
===================================================================================================================================
Maximum sales charge 4.50% 4.50% 4.50% -- -- --
===================================================================================================================================
*For Nationwide Tax-Free Income Fund and U.S. Government Income Fund,
redemption price per share varies by length of time shares are held.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 - (UNAUDITED)
<CAPTION>
NATIONWIDE(R)
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R) MONEY
GROWTH NATIONWIDE(R) BOND TAX-FREE U.S. GOV'T MARKET
FUND FUND FUND INCOME FUND INCOME FUND FUND
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends $ 3,640,364 $ 12,503,272 $ -- $ -- $ -- $ --
Interest 774,768 1,901,012 4,318,381 7,222,926 1,456,960 23,982,248
- -----------------------------------------------------------------------------------------------------------------------------------
Total income 4,415,132 14,404,284 4,318,381 7,222,926 1,456,960 23,982,248
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment management fees 2,180,824 4,144,558 316,306 826,829 143,259 2,114,165
Distribution fees -- -- -- 446,166 77,134 --
Transfer agent fees 374,963 442,485 68,974 69,429 18,290 341,595
Shareholders' reports 38,965 38,395 5,892 257 1,541 11,183
Registration fees -- -- -- 11,770 8,375 --
Professional services 5,457 11,679 668 1,745 494 6,164
Custodian fees 24,156 34,755 12,778 9,860 2,371 25,328
Trustees' fees and expenses 6,828 17,647 1,271 1,368 221 11,218
Other 138,033 163,490 39,003 36,817 11,988 155,826
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses before waived expenses 2,769,226 4,853,009 444,892 1,404,241 263,673 2,665,479
Total waived expenses -- -- -- (191,214) (33,058) (211,417)
- -----------------------------------------------------------------------------------------------------------------------------------
Net expenses 2,769,226 4,853,009 444,892 1,213,027 230,615 2,454,062
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 1,645,906 $ 9,551,275 $ 3,873,489 $ 6,009,899 $ 1,226,345 $ 21,528,186
===================================================================================================================================
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments $ 33,225,523 $ 74,973,256 $ 1,426,573 $ 2,713,160 $ 823,208 $ (562)
Net change in unrealized appreciation 129,041,102 269,677,507 (871,186) (1,948,520) (743,854) --
===================================================================================================================================
Net realized and unrealized gain (loss)
on investments 162,266,625 344,650,763 555,387 764,640 79,354 (562)
===================================================================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 163,912,531 $ 354,202,038 $ 4,428,876 $ 6,774,539 $ 1,305,699 $ 21,527,624
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
NATIONWIDE(R) GROWTH FUND NATIONWIDE(R) FUND NATIONWIDE(R) BOND FUND
SIX MONTHS ENDED YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED ENDED
APRIL 30, 1998 OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1998 1998
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,645,906 $ 5,769,105 $ 9,551,275 $ 15,679,007 $ 3,873,489 $8,088,836
Net realized gain on investments 33,225,523 102,060,567 74,973,256 76,009,135 1,426,573 2,142
Net change in unrealized appreciation
(depreciation) of investments 129,041,102 95,167,674 269,677,507 296,992,877 (871,186) 1,831,074
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 163,912,531 202,997,346 354,202,038 388,681,019 4,428,876 9,922,052
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,645,906) (6,066,772) (9,770,737) (15,825,647) (3,878,170) (8,085,400)
In excess of net investment income (342,240) -- -- -- -- --
Net realized gain from investment transactions (101,432,058) (46,087,353) (76,009,135) (59,238,908) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to
shareholders (103,420,204) (52,154,125) (85,779,872) (75,064,555) (3,878,170) (8,085,400)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 57,119,124 72,950,910 268,923,923 258,190,771 14,444,652 14,913,782
Net asset value of shares issued
to shareholders from reinvestment
of dividends 101,875,362 51,457,653 81,309,685 70,531,213 3,241,741 6,679,886
Cost of shares redeemed (58,080,285) (112,743,374) (90,334,143) (152,506,314) (14,164,802) (32,278,640)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from
capital share transactions 100,914,201 11,665,189 259,899,465 176,215,670 3,521,591 (10,684,972)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 161,406,528 162,508,410 528,321,631 489,832,134 4,072,297 (8,848,320)
NET ASSETS-BEGINNING OF PERIOD 818,124,115 655,615,705 1,448,421,904 958,589,770 124,404,412 133,252,732
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS-END OF PERIOD $ 979,530,643 $ 818,124,115 $1,976,743,535 $1,448,421,904 $128,476,709 $124,404,412
===================================================================================================================================
Undistributed net realized gain (loss) on investments
included in net assets at end of period $ 33,225,523 $ 101,432,058 $ 74,973,256 $ 76,009,135 $ (8,096,568) $ (9,523,141)
===================================================================================================================================
Undistributed (distributions in excess of)
net investment income included in net
assets at end of period $ (342,240) $ -- $ 964,423 $ 1,183,885 $ 65,791 $ 70,472
===================================================================================================================================
SHARE ACTIVITY:
Shares sold 3,500,235 4,900,859 9,389,650 10,843,635 1,508,367 1,606,337
Reinvestment of dividends 6,943,332 3,793,570 3,045,497 3,363,376 339,688 719,798
Shares redeemed (3,618,299) (7,721,538) (3,191,046) (6,650,915) (1,481,995) (3,480,898)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in number of shares 6,825,268 972,891 9,244,101 7,556,096 366,060 (1,154,763)
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
NATIONWIDE(R) NATIONWIDE(R) NATIONWIDE(R)
TAX-FREE INCOME FUND U.S. GOV'T INCOME FUND MONEY MARKET FUND
SIX MONTHS ENDED YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED ENDED
APRIL 30, 1998 OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1998 1998
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 6,009,899 $ 12,646,632 $ 1,226,345 $ 2,306,288 $ 21,528,186 $38,645,269
Net realized gain (loss) on investments 2,713,160 2,342,626 823,208 (81,299) (562) 1,103
Net change in unrealized appreciation
(depreciation) of investments (1,948,520) 4,275,526 (743,854) 1,146,999 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 6,774,539 19,264,784 1,305,699 3,371,988 21,527,624 38,646,372
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (6,009,899) (12,646,632) (1,220,452) (2,306,288) (21,528,113) (38,644,882)
In excess of net investment income (328) (87) -- -- -- --
Paid in capital -- -- -- (437) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to
shareholders (6,010,227) (12,646,719) (1,220,452) (2,306,725) (21,528,113) (38,644,882)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 8,399,265 16,022,089 14,601,583 5,663,442 657,149,043 1,058,258,745
Net asset value of shares issued
to shareholders from reinvestment
of dividends 4,221,925 8,939,393 945,846 1,727,803 20,553,452 36,945,028
Cost of shares redeemed (15,996,292) (39,735,005) (11,870,788) (6,625,927) (603,138,245)(1,004,047,620)
- -----------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from
capital share transactions (3,375,102) (14,773,523) 3,676,641 765,318 74,564,250 91,156,153
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (2,610,790) (8,155,458) 3,761,888 1,830,581 74,563,761 91,157,643
NET ASSETS--BEGINNING OF PERIOD 256,486,302 264,641,760 41,327,786 39,497,205 820,657,405 729,499,762
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS--END OF PERIOD $253,875,512 $256,486,302 $ 45,089,674 $41,327,786 $895,221,166 $820,657,405
===================================================================================================================================
Undistributed net realized gain (loss)
on investments included in net assets
at end of period $ 1,809,415 $ (903,745) $ 340,235 $ (482,973) $ 541 $ 1,103
===================================================================================================================================
Undistributed (distributions in excess of)
net investment income included in net
assets at end of period $ (328) $ -- $ 5,893 $ -- $ (862) $ (935)
===================================================================================================================================
SHARE ACTIVITY:
Shares sold 791,216 1,554,772 1,412,563 562,553 657,149,043 1,058,258,745
Reinvestment of dividends 397,871 865,550 91,468 171,768 20,553,452 36,945,028
Shares redeemed (1,505,974) (3,850,987) (1,141,206) (658,930) (603,138,245)(1,004,047,620)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in number of shares (316,887) (1,430,665) 362,825 75,391 74,564,250 91,156,153
===================================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<CAPTION>
NATIONWIDE(R) GROWTH FUND
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 16.32 $ 13.34 $ 13.22 $ 11.35 $ 11.14 $ 9.94
Net investment income 0.03 0.12 0.16 0.21 0.09 0.17
Net realized gain (loss) and unrealized
appreciation (depreciation) 2.91 3.94 1.36 2.10 0.53 1.41
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.94 4.06 1.52 2.31 0.62 1.58
Dividends from net investment income (0.03) (0.12) (0.16) (0.20) (0.19) (0.17)
Dividends in excess of net investment income (0.01) -- -- -- -- --
Distributions from net realized gain from
investment transactions (2.02) (0.96) (1.24) (0.24) (0.22) (0.21)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.06) (1.08) (1.40) (0.44) (0.41) (0.38)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net asset value 0.88 2.98 0.12 1.87 0.21 1.20
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE--END OF PERIOD $ 17.20 $ 16.32 $ 13.34 $ 13.22 $ 11.35 $11.14
===================================================================================================================================
Total return (excluding sales charges) 20.21%(a) 32.12% 12.36% 21.01% 5.73% 16.16%
Net Assets, End of Period (000's) $ 979,531 $ 818,124 $ 655,616 $ 582,927 $ 464,715 $411,853
Ratio of expenses to average net assets 0.63%(b) 0.64% 0.64% 0.66% 0.68% 0.68%
Ratio of net investment income to average net assets 0.38%(b) 0.81% 1.20% 1.66% 1.71% 1.63%
Portfolio turnover 18.55% 45.07% 25.61% 27.10% 14.50% 10.20%
Average commission rate paid* 4.5458(cent) 4.6222(cent) 5.3923(cent) -- -- --
<PAGE>
<CAPTION>
NATIONWIDE(R) FUND
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 26.57 $ 20.41 $ 17.35 $ 16.12 $ 16.55 $ 16.31
Net investment income 0.16 0.31 0.36 0.31 0.37 0.31
Net realized gain (loss) and unrealized
appreciation (depreciation) 5.81 7.44 3.98 2.49 0.41 0.67
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 5.97 7.75 4.34 2.80 0.78 0.98
Dividends from net investment income (0.17) (0.31) (0.35) (0.31) (0.36) (0.33)
Distributions from net realized gain from
investment transactions (1.37) (1.28) (0.93) (1.26) (0.85) (0.41)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.54) (1.59) (1.28) (1.57) (1.21) (0.74)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value 4.43 6.16 3.06 1.23 (0.43) 0.24
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE--END OF PERIOD $ 31.00 $ 26.57 $ 20.41 $ 17.35 $ 16.12 $ 16.55
===================================================================================================================================
Total return (excluding sales charges) 23.40%(a) 40.17% 26.11% 19.24% 4.88% 6.16%
Net Assets, End of Period (000's) $1,976,744 $1,448,422 $ 958,590 $ 795,666 $ 706,674 $753,239
Ratio of expenses to average net assets 0.59%(b) 0.60% 0.61% 0.63% 0.63% 0.62%
Ratio of net investment income to average net assets 1.15%(b) 1.32% 1.89% 1.95% 2.26% 1.96%
Portfolio turnover 7.59% 14.94% 16.71% 16.50% 15.40% 25.80%
Average commission rate paid* 5.2067(cent) 5.8506(cent) 5.9393(cent) -- -- --
- -----------------------
*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.
(a) Not annualized.
(b) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<CAPTION>
NATIONWIDE(R) BOND FUND
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 9.49 $ 9.34 $ 9.50 $ 8.46 $ 10.07 $ 9.58
Net investment income 0.29 0.60 0.61 0.63 0.60 0.74
Net realized gain (loss) and unrealized
appreciation (depreciation) 0.04 0.15 (0.15) 1.04 (1.56) 0.52
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.33 0.75 0.46 1.67 (0.96) 1.26
Dividends from net investment income (0.29) (0.60) (0.62) (0.63) (0.65) (0.77)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.29) (0.60) (0.62) (0.63) (0.65) (0.77)
- ---------------------------------------------------------------------------------------------------------------------------------
Net increase in net asset value 0.04 0.15 (0.16) 1.04 (1.61) 0.49
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE--END OF PERIOD $ 9.53 $ 9.49 $ 9.34 $ 9.50 $ 8.46$ 10.07
==================================================================================================================================
Total return (excluding sales charges) 3.52%(a) 8.33% 5.05% 20.41% (9.81%) 13.61%
Net Assets, End of Period (000's) $ 128,477 $ 124,404 $ 133,253 $ 133,633 $ 124,455 $151,090
Ratio of expenses to average net assets 0.70%(b) 0.72% 0.70% 0.71% 0.71% 0.68%
Ratio of net investment income to average net assets 6.12%(b) 6.43% 6.60% 7.04% 7.11% 7.63%
Portfolio turnover 34.40% 70.63% 38.95% 70.40% 58.00% 68.50%
<PAGE>
<CAPTION>
NATIONWIDE(R) TAX-FREE INCOME FUND
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.51 $ 10.24 $ 10.22 $ 9.40 $ 10.95 $9.94
Net investment income 0.25 0.50 0.51 0.51 0.53 0.54
Net realized gain (loss) and unrealized
appreciation (depreciation) 0.03 0.27 0.02 0.84 (1.45) 1.10
- ----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.28 0.77 0.53 1.35 (0.92) 1.64
Dividends from net investment income (0.25) (0.50) (0.51) (0.53) (0.51) (0.54)
Distributions from net realized gain from
investment transactions -- -- -- -- (0.12) (0.09)
- ----------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.25) (0.50) (0.51) (0.53) (0.63) (0.63)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net asset value 0.03 0.27 0.02 0.82 (1.55) 1.01
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE--END OF PERIOD $ 10.54 $ 10.51 $ 10.24 $ 10.22 $ 9.40 $10.95
==================================================================================================================================
Total return (excluding sales charges) 2.65%(a) 7.72% 5.31% 14.66% (8.74%) 16.97%
Net Assets, End of Period (000's) $ 253,876 $ 256,486 $ 264,642 $ 262,484 $ 241,097 $253,042
Ratio of expenses to average net assets 0.95%(b) 0.96% 0.96% 0.98% 0.99% 0.98%
Ratio of expenses to average net assets* 1.10%(b) 1.11% 1.11% 1.13% 1.14% 1.14%
Ratio of net investment income to average
net assets 4.71%(b) 4.85% 4.98% 5.20% 5.02% 5.07%
Ratio of net investment income to average net
assets* 4.86%(b) 4.70% 4.83% 5.05% 4.87% 4.92%
Portfolio turnover 17.46% 39.49% 24.15% 31.70% 59.20% 28.40%
- ----------------------------
*Ratios calculated as if no expenses were waived.
(a) Not annualized.
(b) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUT STAND ING
<CAPTION>
NATIONWIDE(R) U.S. GOV'T INCOME FUND
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 10.31 $ 10.04 $ 10.12 $ 9.22 $ 10.26 $9.97
Net investment income 0.28 0.59 0.59 0.59 0.54 0.53
Net realized gain (loss) and unrealized
appreciation (depreciation) 0.01 0.27 (0.08) 0.89 (0.96) 0.45
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.29 0.86 0.51 1.48 (0.42) 0.98
Dividends from net investment income (0.28) (0.59) (0.58) (0.58) (0.55) (0.53)
Dividends in excess of net investment income -- -- (0.01) -- -- --
Distributions from net
realized gain from
investment transactions -- -- -- -- (0.07) (0.16)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.28) (0.59) (0.59) (0.58) (0.62) (0.69)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net asset value 0.01 0.27 (0.08) 0.90 (1.04) 0.29
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE--END OF PERIOD $ 10.32 $ 10.31 $ 10.04 $ 10.12 $ 9.22 $10.26
================================================================================================================================
Total return (excluding sales charges) 2.87%(a) 8.86% 5.28% 16.47% (4.20%) 10.15%
Net Assets, End of Period (000's) $ 45,090 $ $41,328 $ 39,497 $ 39,777 $ 37,749 $38,452
Ratio of expenses to average net assets 1.05%(b) 1.07% 1.06% 1.08% 1.09% 1.10%
Ratio of expenses to average net assets* 1.20%(b) 1.22% 1.21% 1.23% 1.24% 1.25%
Ratio of net investment income to average net assets 5.56%(b) 5.85% 5.86% 5.92% 5.62% 5.12%
Ratio of net investment income to average net
assets * 5.71%(b) 5.70% 5.71% 5.77% 5.47% 4.97%
Portfolio turnover 44.37% 26.58% 9.30% 25.40% 67.50% 99.00%
<PAGE>
<CAPTION>
NATIONWIDE(R) MONEY MARKET FUND
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income 0.03 0.05 0.05 0.05 0.03 0.03
Dividends from net investment income (0.03) (0.05) (0.05) (0.05) (0.03) (0.03)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE--END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===================================================================================================================================
Total return 2.55%(a) 5.07% 5.05% 5.46% 3.34% 2.60%
Net Assets, End of Period (000's) $895,221 $ 820,657 $ 729,500 $ 604,711 $ 491,737 $ 418,615
Ratio of expenses to average net assets 0.58%(b) 0.59% 0.60% 0.62% 0.65% 0.70%
Ratio of expenses to average net assets* 0.63%(b) 0.64% 0.65% 0.67% 0.70% 0.73%
Ratio of net investment income to average
net assets 5.09%(b) 4.96% 4.93% 5.34% 3.33% 2.57%
Ratio of net investment income to average
net assets* 5.14%(b) 4.91% 4.88% 5.29% 3.28% 2.54%
- ----------------------
* Ratios calculated as if no expenses were waived.
(a) Not annualized.
(b) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (UNAUDITED)
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 the
last quoted sale price, as provided by an independent pricing agent.
Securities traded in the over-the-counter (OTC) market are valued at
the last quoted sale price, or if no sale price, the quoted bid price.
U.S. Government securities are valued at the quoted bid price. Bonds
are valued by a combination of daily quotes and matrix evaluations.
Securities for which reliable market quotations are not available, or
for which an independent pricing agent does not provide a value or
provides a value that does not represent fair value in the judgment of
the Fund's investment adviser, are valued in accordance with 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
Each series of NIF and NIF II qualify as a regulated investment company
under the Internal Revenue Code during the periods covered by the
accompanying statements. No provision has been made for federal income
taxes as it is the intention to continue such qualification and to
distribute all taxable income to shareholders. To the extent net realized
gains are offset through the application of a capital loss carryover, they
will not be distributed to shareholders but will be retained by the
applicable Fund.
As of October 31, 1997, the Nationwide Bond, Tax-Free Income, and U.S.
Government Income Funds had net capital loss carry forwards in the amounts
of $9,523,141, $908,719, and $482,973, respectively. The Bond Fund's carry
forwards will expire within 4 to 6 years, the Tax-Free Income Fund's carry
forwards will expire within 5 to 6 years, and the U.S. Government Income
Fund's carry forwards will expire within 5 to 8 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 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
Accordingly, as of October 31, 1997 undistributed net investment income
and capital paid in excess of par value have been adjusted by the
following amounts:
<TABLE>
<CAPTION>
UNDISTRIBUTED CAPITAL PAID IN
UNDISTRIBUTED NET NET REALIZED EXCESS OF
INVESTMENT INCOME GAIN PAR VALUE
<S> <C> <C> <C>
NW Fund $ 47,525 $(47,525) $ --
Tax Free Income Fund (11,116) (4,974) 16,090
U.S. Government Income Fund (34,406) -- 34,406
</TABLE>
(E) EXPENSES
Direct expenses of a fund are allocated to that fund. General expenses of
a Trust are allocated to that Trust 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), an affiliated company, earns an annual fee of .50% based on
the average daily net assets; this fee would not be payable in full if the
effect of such payment would increase total expenses (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.
NAS voluntarily waived annual fees totaling .050% of average daily net
assets in the Money Market Fund for the six months ended April 30, 1998,
of $211,417 representing $.0005 per average share outstanding.
NAS also receives fees for services as principal underwriter for the
Growth Fund, the Nationwide Fund and the Bond Fund. 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 $680,300 on Growth Fund shares, $1,944,378 on Fund Shares,
and $77,167 Bond Fund shares for the six months ended April 30, 1998.
(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.
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 six months ended April 30, 1998, 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 six months ended April 30, 1998, NAS waived $191,214 and
$33,058 for the Tax-Free Income and U.S. Government Income Funds,
respectively, representing $.016 per average share outstanding for each
fund.
NAS, as principal underwriter, also receives fees in the form of
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 $55,038 on the Tax-Free
Income Fund shares and $12,794 on the U.S. Government Income Fund shares
for the six months ended April 30, 1998.
A subsidiary of NAS (Nationwide Investors Services, Inc.) acts as Transfer
and Dividend Disbursing Agent for the Funds.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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.
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 six
months ended April 30, 1998, are summarized as follows:
<TABLE>
<CAPTION>
U.S. GOVT.
SECURITIES OBLIGATIONS
PURCHASES SALES PURCHASES SALES
<S> <C> <C> <C> <C>
Growth $158,567,275 $158,809,864 $108,223,056 $34,162,407
Fund 258,140,263 126,204,238 40,427,344 --
Bond 26,369,522 15,573,416 16,522,813 28,760,039
Tax-Free Income 44,786,185 45,671,273 -- --
U.S. Gov't. Income 1,008,594 11,261,805 19,852,070 6,562,109
Money Market -- -- 56,072,899 --
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized appreciation at April 30, 1998, are the following
components:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
GAINS LOSSES APPRECIATION
<S> <C> <C> <C>
Growth $390,256,077 $(7,358,016) $382,898,061
Fund 951,224,500 (10,926,010) 940,298,490
Bond 3,873,431 (241,713) 3,631,718
Tax-Free Income 13,437,028 (425,290) 13,011,738
U.S. Gov't. Income 991,437 (67,822) 923,615
</TABLE>
5. SUBSEQUENT EVENT
The transaction described below was effective May 9, 1998.
At a meeting of the Board of Trustees on November 7, 1997, the Board authorized
a Special Meeting of Shareholders to be held on February 16, 1998. At this
Special Meeting, shareholders of NIF approved an Agreement and Plan of
Reorganization between NIF and Nationwide Investing Foundation III ("New
Trust"), and shareholders of NIF II approved a similar agreement between NIF II
and the New Trust. At another Special Meeting, held at the same time,
shareholders of the Financial Horizons Investment Trust (FHIT) also approved a
similar agreement between FHIT and the New Trust. The transactions approved by
the shareholders at these meetings were the following:
(a) The transfer of assets of the NIF Nationwide Growth Fund to the
Nationwide Growth Fund series of the New Trust in exchange for Class
D shares of such series, to be distributed to the shareholders of
the NIF Growth Fund, and the assumption of the liabilities of the
Growth Fund.
(b) The transfer of assets of the NIF Nationwide Fund to the Nationwide
Fund series of the New Trust in exchange for Class D shares of such
series, to be distributed to the shareholders of the NIF Nationwide,
and the assumption of the liabilities of the Nationwide Fund.
(c) The transfer of assets of the NIF Nationwide Bond Fund to the
Nationwide Bond Fund series of the New Trust in exchange for Class D
shares of such series, to be distributed to the shareholders of the
NIF Nationwide Bond Fund, and the assumption of the liabilities of
the Nationwide Bond Fund.
(d) The transfer of assets of the FHIT Cash Reserve and the NIF
Nationwide Money Market Funds to the Nationwide Money Market Fund
series of the New Trust in exchange for shares of such series, to be
distributed to the shareholders of the FHIT Cash Reserve Fund and
NIF Nationwide Money Market Fund, and the assumption of such Funds'
liabilities.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(e) The transfer of assets of the FHIT Municipal Bond and the NIF II
Nationwide Tax-Free Income Funds to the Nationwide Tax-Free Income
Fund series of the New Trust in exchange for Class D shares of such
series, to be distributed to the shareholders of the FHIT Municipal
Bond and NIF II Tax-Free Income Funds, and the assumption of such
Funds' liabilities.
(f) The transfer of assets of the NIF II Nationwide U.S. Government Bond
Fund to the Nationwide Long-Term U.S. Government Bond Fund series of
the New Trust in exchange for Class D shares of such series, to be
distributed to the shareholders of the NIF II U.S. Government Bond
Fund, and the assumption of the liabilities of the Nationwide U.S.
Government Bond Fund.
The results of the shareholder voting at the Special Meetings for NIF and
NIF II on February 16, 1998 are as follows:
<TABLE>
<CAPTION>
Withheld/
Fund For Against Abstained
<S> <C> <C> <C>
Nationwide Growth Fund 26,717,920 3,698,439 1,328,067
Nationwide Fund 31,078,009 2,414,543 1,240,416
Nationwide Bond Fund 7,719,583 486,398 266,537
Nationwide Money Market Fund 486,881,203 76,626,178 22,104,401
Nationwide Tax-Free Income Fund 13,026,966 472,171 635,079
Nationwide U.S. Government
Income Fund 2,270,467 67,429 132,472
</TABLE>
All assets of the NIF, NIF II and FHIT Funds were transferred and all
liabilities were assumed by the appropriate series of the New Trust on May 8,
1998, as voted by the shareholders at the Special Meetings held on February 16,
1998. Upon completion of such transactions, the shares of the applicable series
of the New Trust received by the NIF, NIF II and FHIT Funds were distributed to
shareholders of those Funds in complete liquidation on May 8, 1998.
FEDERAL INCOME TAX INFORMATION
The tax status for Federal income tax purposes of the capital gain
distribution paid to shareholders in connection with the reorganization of the
Funds is as follows:
SHORT-TERM 28% RATE 20% RATE
GAIN GAIN GAIN
- -----------------------------------------------------------------------------
Nationwide Growth Fund 0% 0% 100%
Nationwide Fund 1.86% 0% 98.14%
Nationwide Tax-Free 0% 0% 100%
Nationwide U.S. Government 0% 0% 100%
All of the income dividends paid from January 1, 1998, through May 9, 1998,
to shareholders in the Nationwide Tax-Free Income Fund are exempt from federal
income tax.
<PAGE>
LOGO:
NATIONWIDE
ADVISORY
SERVICES, INC.
NATIONWIDE(R) FAMILY OF FUNDS
TOLL-FREE TELEPHONE ASSISTANCE
GENERAL ACCOUNT SERVICE AND EXCHANGES:
1-800-848-0920
NAS NOW
24 HOUR, 7 DAYS PER WEEK FUND INFORMATION
1-800-637-0012
NATIONWIDE FAMILY OF FUNDS
THREE NATIONWIDE PLAZA
COLUMBUS OHIO 43215-2220
April 1998
SEMI-ANNUAL REPORT
BULK RATE
U.S. POSTAGE
PAID
BERWYN IL
PERMIT NO. 150
HS-401-K
