<PAGE> 1
[NATIONWIDE ADVISORY SERVICES, INC. LOGO]
SEMI-ANNUAL REPORT
------------------
JUNE 30, 1997
-------------
NATIONWIDE(R) FAMILY OF FUNDS
-----------------------------
NATIONWIDE(R) GROWTH FUND
NATIONWIDE(R) FUND
NATIONWIDE(R) BOND FUND
NATIONWIDE(R) TAX-FREE INCOME FUND
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND
NATIONWIDE(R) MONEY MARKET FUND
<PAGE> 2
[COVER FROM DESKTOP]
<PAGE> 3
CONTENTS
CHAIRMAN'S LETTER..............................................................3
NATIONWIDE(R) GROWTH FUND..................................................4 - 7
NATIONWIDE(R) FUND........................................................8 - 11
NATIONWIDE(R) BOND FUND..................................................12 - 15
NATIONWIDE(R) TAX-FREE INCOME FUND.......................................16 - 21
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND................................22 - 24
NATIONWIDE(R) MONEY MARKET FUND..........................................25 - 29
FINANCIAL STATEMENTS.....................................................30 - 33
FINANCIAL HIGHLIGHTS.....................................................34 - 36
NOTES TO FINANCIAL STATEMENTS............................................37 - 38
NATIONWIDE(R) FAMILY OF FUNDS TRUSTEES AND OFFICERS...........................39
This report is for the information of shareholders of the Nationwide Family of
Funds. It may be used as sales literature only when preceded or accompanied by a
current prospectus which gives further details about the funds.
Nationwide(R) and [NATIONWIDE LOGO] are registered Federal Service marks of
Nationwide Mutual Insurance Company.
2
<PAGE> 4
TO OUR SHAREHOLDERS
[PICTURE]
MESSAGE TO SHAREHOLDERS:
The early months of 1997 will be remembered as an exciting
one for investors and for our shareholders. The Dow Jones
Industrial Average (DJIA) set records early on, breaking the
7000 barrier on March 12, 1997, then suffered a brief market
correction before rebounding to close at 7008.9 on April 30,
1997, an increase of 16% from the October 31, 1996, close.
A combination of low inflation, strong employment levels and consistent
consumer spending have continued the bull run on Wall Street. The American
economy is currently running at full capacity, and most consumers are optimistic
about their financial futures. This state of economic confidence has enabled the
political leadership in Washington to move forward with a balanced budget
proposal. Even without such a measure, it is estimated that the federal budget
deficit will drop to $75 billion this year, its lowest level in six years.
The financial markets have been buoyed by these events, and many analysts
now believe the economy can continue to reach new heights without triggering the
brakes of inflation.
Economic growth jumped 5.6% in the first quarter on an annualized basis
fueled by a large inventory build-up, warm weather and the biggest surge in
consumer spending in nearly 10 years. At the same time, inflation was just 2.2%,
down from 2.6% during the fourth quarter of 1996. While few analysts expect this
level of growth to continue throughout the year, Gross Domestic Product (GDP)
rates for the second quarter are expected in the 2-3% range.
For the six-months ended April 30, 1997, the Nationwide(R) Growth Fund
gained 10.9% and the Nationwide(R) Fund increased 16.2%. Total return of the S&P
500 for the same period was 14.7%.
Returns on long-term taxable bonds also were strong. For the six-months
ended April 30, 1997, the Nationwide(R) Bond Fund returned .9% as compared to
.2% for its benchmark index, the Lehman Brothers Long-Term Government/Corporate
Index. For the six-month period, the Nationwide(R) U.S. Government Income Fund
returned 1.6% compared to 1.4% for its benchmark index, the Merrill Lynch
Government Master Index.
For the six-months ended April 30, 1997, the Nationwide(R) Tax-Free Income
Fund total return was 1.6% compared to 2.0% for its benchmark index, the Lehman
Brothers Municipal Bond Index.
The Money Market Fund continues to post consistent yields. Total return for
the Fund was 2.4% for the six-months ended April 30, 1997, with a 30-day current
yield of 4.9% as of that date. This compares favorably to the Consumer Price
Index total return of 1.1% for the six-months ended April 30, 1997.
The Nationwide(R) Fund was highlighted in the May issue of Money magazine
as one of only seven stock funds that has posted profits each of the last 10
years. Overall, the Nationwide(R) Fund has had 19 years of positive performance,
12 of those under the current portfolio manager, Charles S. Bath.
On the following pages, you can read the comments of your funds' portfolio
managers which describe in detail important factors which explain each fund's
performance and unique characteristics.
As always, you are welcome to call 1-800-848-0920 with any suggestions or
comments that you might have, or call 1-800-637-0012 to be connected to NAS NOW,
our 24-hour automated voice response system.
DIMON R. MCFERSON, CHAIRMAN
JUNE, 1997
<PAGE> 5
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) GROWTH FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
For the six-month period ended April 30, 1997, the Nationwide(R) Growth Fund
provided a total return of 10.9%, excluding sales charges, as compared to a
14.7% total return for the S&P 500 Index.
Performance for this half of the fiscal year has continued to lag the S&P 500
Index. However, since the beginning of 1997 the Growth Fund has begun to improve
in its Morningstar peer group comparisons. This is mainly due to the Fund's
reduced exposure in the technology area, as outlined in the last report. During
the first quarter the technology sector was very weak, and having a lower
weighting there has helped comparisons. In addition, sectors such as energy and
financial, where we had previously focused our buying and built up asset
weightings, performed reasonably well and helped results. Even so, the market
continues to react violently to even mildly negative news, and we held several
stocks that were "taken out and shot" during the period, even though we continue
to like their long term prospects. These included Columbia/HCA Healthcare,
Archer Daniels Midland, Electronic Data Systems, and 360 degrees Communications,
all of which are large positions, and held back overall results.
The weakness in technology, especially during the last half of March and
continuing through mid-April, began to spill over into growth stocks in general.
This created some very attractive opportunities to add to the Fund's holdings in
growth stocks, and at the same time, reduce the exposure to some of the more
value-oriented holdings. As a result of this, we have, as of this writing, added
three new names to the Fund: Boston Scientific, Conseco and WorldCom, Inc. We
have also added to our holdings of 360 degrees Communications, CUC
International, Electronic Data Systems, First Data Corp., Monsanto, and Smart &
Final. At the same time we have eliminated or reduced positions in AT&T, Bear
Stearns, Chubb, Grand Metropolitan, Loctite, MCI Corp., Morgan Stanley, Seagram,
Silicon Valley Bancshares, and Standard Financial. With the exceptions of AT&T
and Silicon Valley, which also had fundamental issues, the sales were made
simply on the basis of greater long-term potential in the stocks being
purchased.
To the extent the market continues to give us opportunities to buy quality
growth stocks at attractive prices, we will take advantage of them, and sell
stocks with a less attractive combination of valuation and growth potential.
JOHN M. SCHAFFNER, MBA, CFA
PORTFOLIO MANAGER
TOP FIVE HOLDINGS
<TABLE>
<CAPTION>
VALUE %
- -----------------------------------------------------
<S> <C> <C>
Equitable Companies, Inc. $28,928,250 4.2%
Allstate Corp. 26,200,000 3.8%
First Data Corp. 24,150,000 3.5%
Merrill Lynch & Co., Inc. 23,812,500 3.4%
Mobil Corp. 23,400,000 3.4%
</TABLE>
FUND PERFORMANCE
$10,000 Lump Sum Investment
<TABLE>
<CAPTION>
Value of Value of Reinvested
Measurement Period Initial Dividends Including
(Fiscal Year Covered) Investment Capital Gains
<S> <C> <C>
1988 8496 1768
1989 9268 2592
1990 8599 3130
1991 8928 4566
1992 10535 5890
1993 10648 6608
1994 11153 7590
1995 12327 9215
1996 13532 12874
1997 14170 15720
</TABLE>
The value of a long-term investment in the Growth Fund is illustrated in the
chart above. Over a 10-year period ended April 30, 1997, an investment of
$10,000 would have earned an average annual compound total return of 11.6%, not
including sales charge. The chart above illustrates the growth of this
investment to $29,890.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
<TABLE>
<CAPTION>
*$1,000 *$100 **$1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS w/o sc w/o sc w/ sc
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 13.2% 16.2% 6.6%
- -----------------------------------------------------------------------
5 12.7% 15.3% 11.3%
- -----------------------------------------------------------------------
10 11.6% 13.3% 10.2%
- -----------------------------------------------------------------------
15 16.2% 14.1% 15.9%
- -----------------------------------------------------------------------
</TABLE>
*For Periods Ended 4/30/97. These returns do not reflect the effects of sales
charges.
**For Periods Ended 3/31/97. Assumes a 4.5% sales charge was paid on purchases
of the Growth Fund which has the most dramatic effect on the 1-year
performance figures.
Average annual (compound) total return represents the average percentage change
in the value of an investment for the specified periods assuming a redemption of
the investment at the end of such periods. It reflects the changes in share
price and assumes reinvestment of all dividends and distributions at net asset
value. Total return figures represent past performance and are not predictive of
future performance. Investment returns and principal value of an investment will
fluctuate so that individual shares, when redeemed, may be worth more or less
than the original cost.
4
<PAGE> 6
NATIONWIDE(R) FAMILY OF FUNDS
GROWTH FUND HIGHLIGHTS
- - Despite the market's "dips" in the last six months, it rebounded and surpassed
the 7000 mark. Investors who did not try to time the market by selling their
shares when the market dropped were rewarded with a 10.9% total return,
excluding sales charges, for the six-month period ended April 30, 1997. Time,
not timing, is the secret to successful investing.
- - The Nationwide(R) Growth Fund focuses on investing in companies whose
businesses have clearly visible, well-defined potential to grow long term at
above-average rates. The Fund looks for these companies to have both
management and financial resources capable of taking full advantage of
favorable business opportunities to realize growth potential.
- - The Fund practices a "buy and hold" strategy -- it does not try to time the
market. This strategy focuses on growth over time and means that investors may
not miss out on the growth in the market.
5
<PAGE> 7
STATEMENT OF INVESTMENTS
NATIONWIDE(R) GROWTH FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
---------------------------------------------------------------
SHARES SECURITY VALUE
---------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (94.8%)
AIRLINES (0.4%)
199,000 SkyWest, Inc. ...................... $ 2,537,250
------------
AUTO INDUSTRY (1.4%)
300,000 Genuine Parts Co. .................. 9,712,500
------------
BUSINESS SERVICES (4.4%)
251,800 Cognizant Corp. .................... 8,214,975
157,200 Insurance Auto Auctions, Inc.*...... 1,041,450
300,000 Manpower, Inc. ..................... 12,037,500
531,150 Olsten Corp. ....................... 9,361,519
------------
30,655,444
------------
CABLE (2.2%)
600,000 Comcast Corp., Class A.............. 9,525,000
325,000 U.S. West Media Group*.............. 5,606,250
------------
15,131,250
------------
CHEMICALS (2.6%)
250,000 Monsanto Co. ....................... 10,687,500
244,000 Sigma-Aldrich Corp. ................ 7,320,000
------------
18,007,500
------------
COMPUTER EQUIPMENT (6.7%)
286,300 EMC Corp.*.......................... 10,414,162
325,000 Hewlett-Packard Co. ................ 17,062,500
120,000 International Business Machines
Corp. .............................. 19,290,000
------------
46,766,662
------------
COMPUTER SOFTWARE & SERVICES (7.2%)
200,000 Automatic Data Processing, Inc. .... 9,050,000
500,000 Electronic Data Systems Corp. ...... 16,687,500
700,000 First Data Corp. ................... 24,150,000
------------
49,887,500
------------
CONGLOMERATES (1.6%)
160,000 Honeywell, Inc. .................... 11,300,000
------------
CONSUMER GOODS (1.5%)
300,000 Newell Co. ......................... 10,500,000
------------
DISTRIBUTION (1.6%)
328,125 Bergen Brunswig Corp., Class A...... 11,197,266
------------
DRUGS (8.1%)
419,200 Allergan, Inc. ..................... 11,213,600
325,000 Glaxo Wellcome, PLC ADR............. 12,796,875
160,000 Schering-Plough Corp. .............. 12,800,000
200,000 Warner-Lambert Co. ................. 19,600,000
------------
56,410,475
------------
ELECTRONICS (2.0%)
146,484 Molex, Inc. ........................ 4,540,996
238,573 Molex, Inc., Class A................ 6,918,603
189,000 Woodhead Industries, Inc. .......... 2,835,000
------------
14,294,599
------------
FINANCIAL (14.7%)
400,000 Allstate Corp. ..................... 26,200,000
67,500 American International Group,
Inc. ............................... 8,673,750
50,000 Chubb Corp. ........................ 2,887,500
186,500 Conseco, Inc. ...................... 7,716,437
989,000 Equitable Companies, Inc. .......... 28,928,250
486,202 Gainsco, Inc. ...................... 4,254,267
250,000 Merrill Lynch & Co., Inc. .......... 23,812,500
------------
102,472,704
------------
<CAPTION>
---------------------------------------------------------------
SHARES SECURITY VALUE
---------------------------------------------------------------
<S> <C> <C>
FOOD & BEVERAGE (2.4%)
2,000,000 Grand Metropolitan PLC.............. $ 16,712,600
------------
FOOD-GRAIN & AGRICULTURE (2.7%)
1,034,271 Archer Daniels Midland Co. ......... 19,004,730
------------
HEALTHCARE SERVICES (4.0%)
415,000 Apria Healthcare Group, Inc.*....... 7,003,125
600,000 Columbia/HCA Healthcare Corp. ...... 21,000,000
------------
28,003,125
------------
MACHINERY & CAPITAL GOODS (5.9%)
200,000 Applied Materials, Inc.*............ 10,975,000
139,650 Durco International, Inc. .......... 3,473,794
120,000 Emerson Electric Co. ............... 6,090,000
225,000 Lindsay Manufacturing Co. .......... 6,412,500
60,000 Nordson Corp. ...................... 3,000,000
492,600 Zebra Technologies Corp.*........... 11,329,800
------------
41,281,094
------------
MEDICAL PRODUCTS (2.2%)
200,000 Biomet, Inc. ....................... 3,037,500
250,000 Boston Scientific Corp.*............ 12,062,500
------------
15,100,000
------------
OIL & GAS (10.5%)
215,000 Amoco Corp. ........................ 17,979,375
250,000 Exxon Corp. ........................ 14,156,250
180,000 Mobil Corp. ........................ 23,400,000
60,000 Royal Dutch Petroleum Co. .......... 10,815,000
235,000 Union Pacific Resources Group,
Inc. ............................... 6,374,375
------------
72,725,000
------------
PRINTING & PUBLISHING (0.8%)
100,000 Merrill Corp. ...................... 2,325,000
160,000 Reader's Digest Association, Inc.,
Class B............................. 3,520,000
------------
5,845,000
------------
RESTAURANTS (1.3%)
200,000 Bob Evans Farms, Inc. .............. 2,650,000
300,000 Wendy's International, Inc. ........ 6,187,500
------------
8,837,500
------------
RETAIL (3.2%)
617,000 CUC International, Inc.*............ 13,034,125
200,000 Franklin Quest Co.*................. 4,225,000
265,000 Smart & Final, Inc. ................ 5,134,375
------------
22,393,500
------------
TELECOMMUNICATIONS (7.4%)
300,000 MCI Communications Corp. ........... 11,437,500
300,000 Sprint Corp. ....................... 13,162,500
977,500 360 degrees Communications Co.*..... 16,984,062
400,000 WorldCom, Inc.*..................... 9,600,000
------------
51,184,062
------------
Total common stock
(cost $483,073,441) 659,959,761
------------
</TABLE>
6
<PAGE> 8
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) GROWTH FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ------------------------------------------------------------
<S> <C> <C>
U.S. AGENCY-FULL FAITH & CREDIT (5.4%)
$2,340,000 Federal Home Loan Mortgage
Corp. Notes 5.16% through
5.545%, 05/19/97 through
07/25/97....................... $ 2,321,538
36,080,000 Federal National Mortgage
Association Notes 5.15% through
5.55%, 05/23/97 through
09/29/97....................... 35,487,976
------------
Total U.S. agency-full faith &
credit
(cost $37,817,474)............. 37,809,514
------------
Total investments
(cost $520,890,915)............ $697,769,275
============
</TABLE>
- ------------------------
The abbreviations in the above statement stand for the following:
PLC Public Limited Company
ADR American Depository Receipt
* Denotes non-income producing securities.
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
7
<PAGE> 9
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The total return for the Nationwide(R) Fund for the six-month period ended April
30, 1997, was 16.2%, excluding sales charges and assuming all distributions were
invested, compared to 14.7% for the S&P 500.
The Nationwide(R) Fund continued to benefit from the strong performance of the
pharmaceutical stocks. Both Warner-Lambert and Schering-Plough, the Fund's two
largest holdings, appreciated considerably in the six months ended April 30.
Continued strong earnings growth for both these companies has allowed the stocks
to outperform the market in the most recent reporting period. The Nationwide(R)
Fund also benefited from consolidation in the financial services industry. Both
First USA and U.S. Bancorp were acquired recently at significant premiums to
their current market prices.
Raychem and Pall Corporation are examples of two specialty chemical companies
that performed poorly in the trailing 12 months due to poor earnings
performance. While the performance was disappointing, these two companies are
attractively positioned for the long term and remain holdings in the Fund.
New holdings in the portfolio include Fannie Mae and McDonald's. Both are
examples of the type of inexpensive franchise companies that dominate the
portfolio. I feel confident the shares of these two companies will perform well
for the long-term investor.
CHARLES S. BATH, MBA, CFA, CPA
PORTFOLIO MANAGER
TOP FIVE HOLDINGS
<TABLE>
<CAPTION>
VALUE %
- -----------------------------------------------------
<S> <C> <C>
Warner-Lambert Co. $88,846,800 7.9%
Schering-Plough Corp. 64,968,000 5.8%
Texaco, Inc. 50,291,850 4.5%
Mellon Bank Corp. 45,535,875 4.1%
Avon Products, Inc. 42,200,800 3.8%
</TABLE>
FUND PERFORMANCE
$100 Monthly Investment
<TABLE>
<CAPTION>
Value of Value of Reinvested
Measurement Period Monthly Dividends Including
(Fiscal Year Covered) Investment Capital Gains
<S> <C> <C>
1988 1059 87
1989 2395 414
1990 3498 852
1991 5317 1358
1992 6727 1812
1993 7915 2259
1994 8973 3062
1995 10080 4390
1996 13685 6743
1997 17400 9897
</TABLE>
An individual investing $100 per month in the Nationwide(R) Fund over the past
10 years (ended April 30, 1997) would have earned an average annual compound
total return 15.7% with no sales charges deducted. The chart above illustrates
the growth of this monthly investment to more than $27,297.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
<TABLE>
<CAPTION>
*$1,000 *$100 **$1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS w/o sc w/o sc w/ sc
- -----------------------------------------------------------------------
<S> <C> <C> <C>
1 26.8% 31.7% 15.3%
- -----------------------------------------------------------------------
5 15.4% 20.0% 13.3%
- -----------------------------------------------------------------------
10 13.2% 15.7% 11.9%
- -----------------------------------------------------------------------
15 16.4% 15.7% 15.8%
- -----------------------------------------------------------------------
</TABLE>
*For Periods Ended 4/30/97. These returns do not reflect the effects of sales
charges.
**For Periods Ended 3/31/97. Assumes a 4.5% sales charge was paid on purchases
of the Nationwide Fund which has the most dramatic effect on the 1-year
performance figures.
Average annual (compound) total return represents the average annual percentage
change in the value of an investment for the specified periods assuming a
redemption of the investment at the end of such periods. It reflects the changes
in share price and assumes reinvestment of all dividends and distributions at
net asset value. Total return figures represent past performance and are not
predictive of future performance. Investment returns and principal value of an
investment will fluctuate so that individual shares, when redeemed, may be worth
more or less than the original cost.
8
<PAGE> 10
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) FUND HIGHLIGHTS
- - The Nationwide(R) Fund was highlighted in the May 1997 issue of Money magazine
in an article entitled "These Funds Refuse to Lose." Of the 368 diversified
funds that have kept the same managers over the past decade, Money found just
seven stock funds that have made money every year. Charles S. Bath, who has
managed the Fund since 1985, has posted profits in 12 consecutive years.
- - The portfolio of the Nationwide(R) Fund consists of large, rapidly growing
firms that dominate their markets, such as Avon Products and McDonald's. The
Fund generates gains while minimizing risks by purchasing large-company growth
stocks at reasonable prices.
- - The Fund has had a 12.4% annualized gain for the 10 years ended March 1997,
placing it in the top 30% of growth and income funds for that time period,
while incurring 18% less volatility than the average equity fund.*
- - For the three-month period ended April 30, 1997, Morningstar, one of the
leading publications of the mutual fund industry, ranked the Nationwide(R)
Fund in the top 1% out of 659 of its peer funds. For a 12-month period ended
April 30, 1997, the Fund was ranked in the top 3% out of 609 peer funds. For
five years the Fund was in the top 40% out of 235 funds and for 10 years the
Fund was in the top 24% out of 134 funds (for the period ended April 30,
1997). The Fund and its peers invest in large capitalization stocks with an
objective of value and growth. Morningstar's rankings are based on total
return and are unadjusted for sales charges. Past performance is no guarantee
of future results.
* Money, May 1997
9
<PAGE> 11
STATEMENT OF INVESTMENTS
NATIONWIDE(R) FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
---------------------------------------------------------------
SHARES SECURITY VALUE
---------------------------------------------------------------
<S> <C> <C>
COMMON STOCK (98.4%)
AUTOMOBILES (4.5%)
708,600 Chrysler Corp. ................... $ 21,258,000
832,900 Ford Motor Co. ................... 28,943,275
--------------
50,201,275
--------------
BUILDING (4.0%)
440,000 Martin Marietta Materials, Inc. .. 11,990,000
337,500 Masco Corp. ...................... 12,740,625
302,200 Vulcan Materials Co. ............. 19,756,325
--------------
44,486,950
--------------
BUSINESS SERVICES (1.0%)
301,800 Cognizant Corp. .................. 9,846,225
100,599 ACNielsen Corp.*.................. 1,508,985
--------------
11,355,210
--------------
CHEMICALS (8.8%)
485,200 Georgia Gulf Corp. ............... 11,766,100
493,900 Millipore Corp. .................. 18,644,725
593,700 Morton International, Inc. ....... 24,861,187
335,400 OM Group, Inc. ................... 9,349,275
401,743 Pall Corp. ....................... 9,290,307
378,075 Raychem Corp. .................... 24,385,838
--------------
98,297,432
--------------
COMPUTER EQUIPMENT (2.9%)
200,000 International Business Machines
Corp. ............................ 32,150,000
--------------
CONGLOMERATES (2.1%)
500,000 Corning, Inc. .................... 24,125,000
--------------
DRUGS (16.7%)
364,700 Allergan, Inc. ................... 9,755,725
149,000 American Home Products Corp. ..... 9,871,250
151,200 Pfizer, Inc. ..................... 14,515,200
812,100 Schering-Plough Corp. ............ 64,968,000
906,600 Warner-Lambert Co. ............... 88,846,800
--------------
187,956,975
--------------
ELECTRICAL EQUIPMENT (1.7%)
558,400 Black & Decker Corp. ............. 18,706,400
--------------
ENTERTAINMENT (1.8%)
246,265 Walt Disney Company............... 20,193,730
--------------
FINANCIAL (18.8%)
73,400 Bancorp Hawaii, Inc. ............. 3,137,850
250,300 Bank of New York Co., Inc. ....... 9,886,850
564,600 Barnett Banks, Inc. .............. 27,594,825
624,700 Chubb Corp. ...................... 36,076,425
205,900 Corestates Financial Corp. ....... 10,423,687
678,600 Fannie Mae........................ 27,907,425
209,400 First USA, Inc. .................. 10,077,375
404,700 Horace Mann Educators Corp. ...... 18,970,312
547,800 Mellon Bank Corp. ................ 45,535,875
379,573 US Bancorp........................ 21,683,108
--------------
211,293,732
--------------
<CAPTION>
---------------------------------------------------------------
SHARES SECURITY VALUE
---------------------------------------------------------------
<S> <C> <C>
FOOD & BEVERAGE (10.0%)
594,800 Anheuser-Bush Companies, Inc. .... $ 25,502,050
1,147,500 PepsiCo, Inc. .................... 40,019,062
432,900 Philip Morris Companies, Inc. .... 17,045,438
364,200 Ralston-Ralston Purina Group...... 30,000,975
--------------
112,567,525
--------------
HOSPITAL -- SUPPLY (1.1%)
125,000 Covance, Inc.*.................... 1,843,750
582,500 Quest Diagnostics, Inc.*.......... 10,266,563
--------------
12,110,313
--------------
HOUSEHOLD -- PRODUCTS (5.4%)
684,800 Avon Products, Inc. .............. 42,200,800
73,700 Gillette Company.................. 6,264,500
100,000 Procter & Gamble Co. ............. 12,575,000
--------------
61,040,300
--------------
MACHINERY & CAPITAL GOODS (0.1%)
342,400 Johnstown America Industries,
Inc.*............................. 1,412,400
--------------
OIL & GAS (7.9%)
161,900 Mobil Corp. ...................... 21,047,000
476,700 Texaco, Inc. ..................... 50,291,850
465,100 Unocal Corp. ..................... 17,731,937
--------------
89,070,787
--------------
PRINTING & PUBLISHING (7.5%)
760,000 American Greetings Corp., Class
A................................. 24,320,000
568,700 Dun & Bradstreet Corp. ........... 14,004,238
184,000 Gannett Co., Inc. ................ 16,054,000
277,300 Gibson Greetings, Inc.*........... 5,684,650
200,000 Tribune Co. ...................... 8,775,000
40,700 Washington Post Co., Class B...... 14,621,475
--------------
83,459,363
--------------
RESTAURANTS (0.9%)
191,200 McDonald's Corp. ................. 10,253,100
--------------
RETAIL (0.8%)
325,300 Wal-Mart Stores, Inc. ............ 9,189,725
--------------
TELECOMMUNICATIONS (0.3%)
81,100 MCI Communications Corp. ......... 3,091,938
--------------
TOYS (2.1%)
828,840 Mattel, Inc. ..................... 23,103,915
--------------
Total common stock
(cost $616,274,004)............... 1,104,066,070
--------------
</TABLE>
10
<PAGE> 12
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- -------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS (0.5%)
$7,826,000 Consorcio G Grupo Dina, 8.00%,
2004
(cost $7,276,925).............. $ 5,947,760
--------------
COMMERCIAL PAPER (0.6%)
341,000 Merrill Lynch & Co. 5.50%,
05/07/97....................... 340,634
2,210,000 Goldman Sachs Group 5.50%,
05/16/97....................... 2,204,590
3,765,000 Marsh & McLennan Co. 5.48%,
05/02/97....................... 3,763,840
--------------
Total commercial paper
(cost $6,310,050).............. 6,309,064
--------------
REPURCHASE AGREEMENT (0.6%)
6,572,847 MBS Tri Party Repo 5.36%,
05/01/97, Collateralized by
$6,705,000 GNMA CMO, 6.00%,
04/20/27, market value
$6,707,972 (cost $6,572,847)... 6,572,847
--------------
Total investments (cost
$636,433,826).................. $1,122,895,741
==============
</TABLE>
- ------------------------
The abbreviations in the above statement stand for the following:
<TABLE>
<S> <C>
GNMA Government National Mortgage Association
CMO Collateralized Mortgage Obligation
</TABLE>
* 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.
11
<PAGE> 13
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) BOND FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The Bond Fund's total return for the six-month period ended April 30, 1997 was
0.9%, excluding sales charges. Though disappointing, it did outperform the 0.2%
return of the Lehman Long-Term Government/Corporate Bond Index. Yields increased
substantially during the period, causing prices on fixed-income securities to
fall and the resulting weak returns. The yield on the 30 year treasury increased
by 31 basis points to 6.95% and the two-year yield increased by 54 basis points
to 6.27%. The market reacted to the Federal Reserve Board's initial tightening
and expectations of a further increase in the federal funds rate to 6.00% by
year end.
Interest rates have fluctuated widely the last four years as have the returns of
long-term bond funds. The behavior of the bond market is changing, with lower
average returns accompanied with low inflation and increasing volatility.
Because of these changes, we have decided to make a fundamental change in the
management of the Bond Fund. The new benchmark will be the Lehman
Government/Corporate Bond Index. It includes all of the long-term securities
found in the Long-Term Index, but includes intermediates (1-10 years) as well.
It has an average life of 9.5 years and returns that have shown more stability.
This change will reduce the interest rate risk of the Bond Fund and should
improve its risk/return profile.
In April, some initial steps were taken to restructure the portfolio to conform
to the new Index. Some positions in long-term securities were sold with the
proceeds reinvested temporarily in commercial paper. This brought the average
life down from approximately 13 years to the 9.5 years of the Index.
Mortgage-backed securities were reduced from 9.1% to 4.4% of the portfolio to
reduce prepayment risk in an uncertain interest rate environment.
Looking to the next few months, we will be purchasing intermediate securities
with funds raised from further sales of long-term securities and maturing
commercial paper. I am also considering increasing the holdings of U.S.
Governments significantly to take advantage of any corporate spread widening
that may occur prior to the Federal Reserve completing their tightening move in
this interest rate cycle.
DOUGLAS KITCHEN, CFA
PORTFOLIO MANAGER
TOP FIVE HOLDINGS
<TABLE>
<CAPTION>
VALUE %
- -----------------------------------------------------
<S> <C> <C>
Armstrong World Industries, Inc. $4,735,084 3.8%
AMBAC, Inc. 4,684,808 3.8%
Aetna Life & Casualty Corp. 4,149,963 3.4%
US Treasury Note 4,142,500 3.4%
English China Clays Del., Inc. 4,045,876 3.3%
</TABLE>
FUND PERFORMANCE
$10,000 Lump Sum Investment
<TABLE>
<CAPTION>
Value of Value of Reinvested
Measurement Period Initial Dividends Including
(Fiscal Year Covered) Investment Capital Gains
<S> <C> <C>
1988 9498 1060
1989 9293 2002
1990 9129 3088
1991 9467 4452
1992 9447 5757
1993 10081 7620
1994 9263 8149
1995 9048 9269
1996 9324 10834
1997 9334 12231
</TABLE>
The graph above shows the appreciation achieved in the Bond Fund through a
$10,000 investment over a 10-year period of time ended April 30, 1997.
Shareholders would have seen their account grow to more than $21,565 for an
average annual compound total return of 8.0%, not including sales charges.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
<TABLE>
<CAPTION>
*$1,000 *$100 **$1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS w/o sc w/o sc w/ sc
- -----------------------------------------------------------------------
<S> <C> <C> <C>
1 7.0% 5.9% -0.9%
- -----------------------------------------------------------------------
5 7.2% 6.1% 6.0%
- -----------------------------------------------------------------------
10 8.0% 7.7% 6.9%
- -----------------------------------------------------------------------
15 10.1% 8.5% 9.8%
- -----------------------------------------------------------------------
</TABLE>
*For Periods Ended 4/30/97. These returns do not reflect the effects of sales
charges.
**For Periods Ended 3/31/97. Assumes a 4.5% sales charge was paid on purchases
of the Bond Fund which has the most dramatic effect on the 1-year performance
figures.
Average annual (compound) total return represents the average annual percentage
change in the value of an investment for the specified periods assuming a
redemption of the investment at the end of such periods. It reflects the changes
in share price and assumes reinvestment of all dividends and distributions at
net asset value. Total return figures represent past performance and are not
predictive of future performance. Investment returns and principal value of an
investment will fluctuate so that individual shares, when redeemed, may be worth
more or less than the original cost.
12
<PAGE> 14
NATIONWIDE(R) FAMILY OF FUNDS
BOND FUND HIGHLIGHTS
- - The Nationwide(R) Bond Fund is designed for investors who are less willing to
accept the risk associated with stocks through investment in income
obligations, including corporate debt securities, United States and Canadian
Government obligations and commercial paper.
- - Investors in the Bond Fund who reinvested their dividends would have more than
doubled their money over a 10-year period. A $10,000 investment made in 1987
would have grown to $21,565, for an average annual compound total return of
8.0%, not including sales charges.
- - The Fund provides shareholders with a monthly income from high-quality
corporate and government obligations. Included in the portfolio are corporate
bonds from well-known companies such as J.C. Penney, Wal-Mart and McGraw-Hill.
13
<PAGE> 15
STATEMENT OF INVESTMENTS
NATIONWIDE(R) BOND FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- -------------------------------------------------------------
<S> <C> <C>
CANADIAN GOVERNMENT BONDS (4.8%)
$2,000,000 Hydro-Quebec, 8.05%, 07/07/24.... $ 2,127,138
1,000,000 Hydro-Quebec, 11.75%, 02/01/12... 1,359,960
2,250,000 Quebec (Prov. of) 8.625%,
01/19/05......................... 2,476,166
------------
Total Canadian government
bonds............................ 5,963,264
------------
(Cost $5,693,965)
CORPORATE BONDS (68.6%)
BANKS (5.5%)
3,000,000 Banc One Corp. 9.875%, 03/01/09.. 3,557,628
1,000,000 Banc One Corp. 10.00%, 08/15/10.. 1,208,279
2,000,000 Toronto-Dominion Bank, NY.,
7.875%, 08/15/04................. 2,020,718
------------
6,786,625
------------
BROKER-DEALERS (7.4%)
2,000,000 Bear Stearns Companies, Inc.,
8.75%, 03/15/04.................. 2,153,654
1,000,000 Bear Stearns Companies, Inc.,
9.375%, 06/01/01................. 1,081,933
1,000,000 Lehman Brothers Holdings, Inc.,
11.625%, 05/15/05................ 1,243,959
3,000,000 Morgan Stanley Group, Inc.,
10.00%, 06/15/08................. 3,570,426
1,000,000 Morgan Stanley Group, Inc.,
8.10%, 06/24/02.................. 1,044,499
------------
9,094,471
------------
BUILDING MATERIALS (6.2%)
3,000,000 Hanson Overseas Sr. Note, 6.75%,
09/15/05......................... 2,892,282
4,000,000 Armstrong World Industries,
9.75%, 04/15/08.................. 4,735,084
------------
7,627,366
------------
CHEMICALS (1.6%)
2,000,000 ICI Wilmington, Inc., 7.50%,
01/15/02......................... 2,043,462
------------
DIVERSIFIED FINANCE (4.3%)
2,000,000 Bass America Inc., 8.125%,
03/31/02......................... 2,093,496
2,000,000 Ford Capital BV Notes,10.125%,
11/15/00......................... 2,199,136
1,000,000 General Electric Capital Corp.,
8.75%, 09/25/00.................. 1,058,021
------------
5,350,653
------------
HEALTH CARE (5.2%)
4,500,000 Aetna Life & Casualty Corp.,
6.75%, 09/15/13.................. 4,149,963
2,000,000 Kaiser Foundation, 9.55%,
07/15/05......................... 2,289,926
------------
6,439,889
------------
INSURANCE (8.7%)
4,000,000 AMBAC Inc., 9.375%, 08/01/11..... 4,684,808
2,000,000 Equitable of Iowa Companies,
8.50%, 02/15/05.................. 2,113,598
3,515,000 Loews Corp., 8.875%, 04/15/11.... 3,883,952
------------
10,682,358
------------
PAPER AND FOREST PRODUCTS (2.2%)
2,500,000 Temple-Inland Inc., 9.00%,
05/01/01......................... 2,683,283
------------
<CAPTION>
- -------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- -------------------------------------------------------------
<S> <C> <C>
PUBLISHING (4.2%)
$2,000,000 Times Mirror Co., 7.25%,
03/01/13......................... $ 1,935,190
3,000,000 McGraw-Hill Inc Note, 9.43%,
09/01/00......................... 3,215,184
------------
5,150,374
------------
RETAIL TRADE (11.7%)
2,000,000 Dayton Hudson Co., 9.250%,
08/15/11......................... 2,275,050
3,000,000 May Department Stores Company
10.625%, 11/01/10................ 3,781,875
2,000,000 Penney, J.C. 7.40%, 04/01/37..... 2,022,396
2,000,000 Wal-Mart Stores, Inc., 7.25%,
06/01/13......................... 1,948,856
2,000,000 Wal-Mart Stores, Inc., 7.50%,
05/15/04......................... 2,049,731
2,000,000 Dillard Department Stores,
9.125%, 08/01/11................. 2,345,012
------------
14,422,920
------------
UTILITIES (1.1%)
1,250,000 Pacific Gas & Electric Co.,
8.75%, 01/01/01.................. 1,322,204
------------
OTHER (10.5%)
4,000,000 English China Clays Delaware,
Inc.,7.375%, 10/01/02............ 4,045,876
2,000,000 Grand Metropolitan Inv. (G)
9.00%, 08/15/11.................. 2,271,372
3,500,000 Waste Management, Inc., 8.75%,
05/01/18......................... 3,802,827
3,000,000 Mayne Nickless Notes, 6.25%,
02/01/06......................... 2,791,356
------------
12,911,431
------------
Total corporate bonds
(cost $83,883,721)............... 84,515,036
------------
MORTGAGE-BACKED SECURITIES (4.4%)
500,000 FHLMC REMIC 1360-VK, 7.50%,
08/15/07......................... 498,691
169,329 FHLMC-GNMA 29X 6.75%, 02/25/23... 164,412
338,658 FHLMC-GNMA 29Z 6.75%, 04/25/24... 314,891
1,119,000 FNMA REMIC 1992-145E 7.00%,
08/25/22......................... 1,117,410
646,000 FNMA REMIC G1992-15G 7.00%,
04/25/20......................... 635,974
485,447 FNMA REMIC G1992-64M 7.00%,
11/25/22......................... 469,977
2,396,000 FNMA REMIC S G93-10E 5.00%,
04/25/20......................... 2,244,070
------------
Total mortgage-backed securities
(cost $5,445,350)................ 5,445,425
------------
U.S. GOVERNMENT LONG-TERM
OBLIGATION (3.4%)
4,000,000 U.S. Treasury Note, 7.50%,
11/15/01......................... 4,142,500
------------
(cost $4,173,488)
</TABLE>
14
<PAGE> 16
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) BOND FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- -------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER (10.0%)
$552,000 AIG Funding Inc., 5.48%,
05/28/97......................... $ 549,749
2,910,000 Goldman Sachs Group, 5.45%,
05/13/97......................... 2,903,805
2,594,000 Goldman Sachs Group, 5.52%,
05/05/97......................... 2,591,645
2,236,000 Koch Industries Private
Placement, 5.48%, 05/21/97....... 2,228,686
4,000,000 Merrill Lynch & Co., 5.45%,
05/09/97 3,994,472
------------
Total commercial paper
(cost $12,270,345)............... 12,268,357
------------
REPURCHASE AGREEMENT (3.5%)
4,320,533 MBS Tri Party 5.36%, 05/01/97,
Collateralized by $4,405,000 GNMA
CMO, 6.00%, 04/20/27, market
value $4,385,662 (cost
$4,320,533)...................... 4,320,533
------------
Total investments
(cost $115,787,402).............. $116,655,115
============
</TABLE>
- ------------------------
The abbreviations in the above statement stand for the following:
<TABLE>
<S> <C>
FHLMC Federal Home Loan Mortgage Corp.
REMIC Real Estate Mortgage Investment Conduit
FNMA Federal National Mortgage Association
CMO Collateralized Mortgage Obligation
</TABLE>
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
15
<PAGE> 17
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) TAX-FREE INCOME FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
For the six-month period ended April 30, 1997, the Nationwide(R) Tax-Free Income
Fund's total return was 1.6% as compared to 2.0% total return for the Lehman
Municipal Bond Index. The Fund's 30-day annualized yield for the period ended
April 30, 1997, was 4.8% based on the offering price of $10.15.
The municipal market produced modest returns during a volatile period. The Bond
Buyer 11-General Obligation Municipal Bond Index increased from 5.60% to 5.68%.
However, average yields on the weekly index were as low as 5.44% and as high as
5.79%. The yield on the 30-year Treasury Bond rose as well from 6.64% to 6.96%.
Yields on the 30-year Treasury were as low as 6.35% and as high as 7.17%.
Overall interest rates trended higher and the net asset value of the Fund
declined during the period.
During the last few months of 1996, the economy was perceived to be growing at a
slow, manageable, non-inflationary pace. Municipal bond prices were trending
higher, interest rates trending lower, while supply and demand were well
balanced. However, economic statistics began to show signs that the economy was
gaining strength and in a preemptive move against inflation on March 25, the
Federal Reserve raised the federal funds rate 25 basis points. Bond values
declined. This action seemed justified as first quarter Gross Domestic Product
emerged at a staggering 5.6% and the nation's unemployment rate plunged to 4.9%.
The market became concerned that further credit tightening moves would be needed
to control inflation. In late April, the announcement of an agreement between
the White House and Congressional leaders for a balanced budget overshadowed
concern about the growth rate and bond prices began to improve. The Federal
Reserve remains unclear as to whether further intervention is needed at the next
scheduled meeting in May. The market is expected to remain unsettled.
As the period ended, demand increased, the yield curve flattened further beyond
10 years and quality spreads narrowed. As a result, an investor isn't being
compensated to extend maturities or reduce quality. The management of the Fund
will remain cautious, maintain a credit quality at "AA," and seek to maximize
total return opportunities should they develop on the yield curve in the future.
The current average maturity is 19 years while the average coupon is
approximately 6.00%.
ALPHA L. BENSON, MBA
PORTFOLIO MANAGER
TOP FIVE STATES
<TABLE>
<CAPTION>
VALUE %
- -----------------------------------------------------
<S> <C> <C>
Virginia $35,058,612 13.7%
Texas 34,504,518 13.5%
Illinois 26,878,018 10.5%
North Carolina 23,725,650 9.2%
Washington 15,871,832 6.2%
</TABLE>
FUND PERFORMANCE
$10,000 Lump Sum Investment
<TABLE>
<CAPTION>
Value of Value of Reinvested
Measurement Period Initial Dividends Including
(Fiscal Year Covered) Investment Capital Gains
<S> <C> <C>
1988 9794 673
1989 10130 1461
1990 10000 2225
1991 10411 3143
1992 10671 4058
1993 11397 5352
1994 10671 5980
1995 10769 6946
1996 10899 7965
1997 10996 9007
</TABLE>
The graph above shows how a hypothetical $10,000 investment grew through
reinvestment of dividends. Shareholders for a period of 10 years ended April 30,
1997, saw their account grow to $20,003 for an average annual compound total
return of 7.2% without including sales charge.
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN(+)
<TABLE>
<CAPTION>
*$1,000 *$100 **$1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS w/o sc w/o sc w/ sc
- -----------------------------------------------------------------------
<S> <C> <C> <C>
1 6.0% 4.6% -0.2%
- -----------------------------------------------------------------------
5 6.3% 5.3% 6.2%
- -----------------------------------------------------------------------
10 7.2% 6.7% 6.3%
- -----------------------------------------------------------------------
Life 6.3% 6.7% 6.3%
- -----------------------------------------------------------------------
(11 years, 2 months)
</TABLE>
(+)Certain shareholders may be subject to local, state, and federal alternative
minimum taxes.
*For Periods Ended 4/30/97. These returns do not reflect the effects of sales
charges.
**For Periods Ended 3/31/97. Assumes the applicable contingent deferred sales
charge (CDSC) was paid on withdrawals from the Tax-Free Income Fund 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.
Average annual (compound) total return represents the average annual percentage
change in the value of an investment for the specified periods assuming a
redemption of the investment at the end of such periods. It reflects the changes
in share price and assumes reinvestment of all dividends and distributions at
net asset value. Total return figures represent past performance and are not
predictive of future performance. Investment returns and principal value of an
investment will fluctuate so that individual shares, when redeemed, may be worth
more or less than the original cost.
16
<PAGE> 18
NATIONWIDE(R) FAMILY OF FUNDS
TAX-FREE INCOME FUND HIGHLIGHTS
- - The Nationwide(R) Tax-Free Income Fund's portfolio manager, using a "buy and
hold," or long term, purchasing strategy attempts to position the Fund's
assets in a portfolio with a good balance of coupon, credit quality and
maturity. The Fund's manager maintains a portfolio of bonds rated with the
three safest investment grades assigned by Moody's Investor Services and
Standard & Poor's Corporation.
- - Taxable securities of comparable quality and maturity to municipal
bonds -- which make up the portfolio of the Nationwide(R) Tax-Free Income
Fund -- may provide higher yields, but investors may be farther ahead with the
Tax-Free Income Fund. For example, an investor could earn $7,500 annually from
a fully taxable investment, assuming a 7.5% rate of return, or $5,500 in a
tax-free investment, assuming a 5.5% rate of return. After taxes, an investor
in the 36% tax bracket would keep just $4,800. But an investor in the tax-free
investment would keep all of the $5,500 federally tax-exempt income.
17
<PAGE> 19
STATEMENT OF INVESTMENTS
NATIONWIDE(R) TAX FREE INCOME FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ------------------------------------------------------------
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES -- (99.5%)
ALABAMA (4.6%)
$3,000,000 Alabama Housing Finance
Authority Single-Family Mortgage
Revenue Bonds (Collateralized
Home Mortgage Revenue Bond
Program), 1996 Series D, 6.00%,
2016............................ $ 3,018,750
1,100,000 Birmingham, Alabama General
Obligation Parking Warrants,
Series 1995-A, 5.90%, 2018...... 1,087,625
2,500,000 Birmingham, Alabama General
Obligation Refunding Revenue,
Series 1992 B, 6.25%, 2016...... 2,590,625
2,480,000 Birmingham, Alabama Water Works
& Sewer Board Refunding Revenue,
Series 1992, 6.125%, 2012....... 2,542,000
2,500,000 Huntsville, Alabama General
Obligation Limited Tax Warrants,
Series 1992 A, 6.00%, 2012...... 2,578,125
----------
11,817,125
----------
ARIZONA (1.0%)
2,500,000 Salt River Project Agricultural
Improvement & Power District,
Arizona Electric System Revenue
Bonds, Series 1992 C, 6.20%,
2012............................ 2,578,125
---------
COLORADO (0.1%)
340,000 Colorado Housing Finance
Authority Single-Family Housing
Revenue Refunding Bonds, Series
1991-A, 7.15%, 2014............. 358,700
---------
CONNECTICUT (2.0%)
4,790,000 Connecticut Housing Finance
Authority Housing Mortgage
Finance Program Bonds, Series
1992-B, 6.70%, 2012............. 5,035,488
---------
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............................ 2,607,000
---------
GEORGIA (2.5%)
1,250,000 Columbus, Georgia Building
Authority Lease Revenue Bonds,
Series 1997A, 5.65%, 2017....... 1,228,125
1,210,000 Dekalb County, Georgia General
Obligation Refunding Bonds,
6.00%, 2012..................... 1,256,887
2,750,000 Georgia Municipal Electric
Authority Power Revenue Bonds,
Series 1991-V, 6.60%, 2018...... 3,011,250
1,005,000 Georgia Residential Financial
Authority Revenue Bonds, Series
A, 7.50%, 2017.................. 1,048,969
---------
6,545,231
---------
ILLINOIS (10.5%)
2,050,000 Chicago Park District, Illinois
General Obligation Unlimited Tax
Park Bonds, Series 1996, 5.60%,
2021............................ 1,965,437
<CAPTION>
- ------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ------------------------------------------------------------
<S> <C> <C>
$3,000,000 Cook County, Illinois General
Obligation Capital Improvement
Bonds, 5.875%, 2022............. $ 2,985,000
2,185,000 Illinois Educational Facility
Authority Revenue, Series
1991-A, Loyola University,
7.125%, 2021.................... 2,346,144
1,975,000 Illinois Regional Transportation
Authority General Obligation
Refunding Bonds, Series 1996,
5.40%, 2015..................... 1,881,187
7,500,000 Illinois State Build Illinois
Bonds Sales Tax Revenue, Series
O, 6.00%, 2018.................. 7,500,000
2,500,000 Illinois State Build Illinois
Bonds Sales Tax Revenue, Series
V, 6.375%, 2017................. 2,571,875
3,000,000 Illinois State General
Obligation Bonds, Series of
March 1994, 5.80%, 2019......... 2,992,500
2,500,000 Illinois State General
Obligation Bonds, Series of
December 1995, 5.125%, 2017..... 2,293,750
1,100,000 Metropolitan Pier & Exposition
Authority, Illinois Dedicated
State Tax Revenue, 6.50%,
2022............................ 1,205,875
1,000,000 Palatine, Illinois Corporate
Purpose General Obligation
Bonds, Series 1985, 9.90%,
2016............................ 1,136,250
----------
26,878,018
----------
INDIANA (2.9%)
5,335,000 Indiana State Toll Road
Commission East-West Toll Road
Revenue Bonds, Series 1980,
9.00%, 2015..................... 7,275,606
---------
KENTUCKY (1.4%)
3,250,000 Jefferson County, Kentucky
Jewish Hospital Healthcare
Services Health Facilities
Revenue Bonds, Series 1995,
6.50%, 2015..................... 3,465,313
---------
MASSACHUSETTS (1.4%)
2,525,000 Massachusetts State General
Obligation Bonds Consolidated
Loan, Series 1992-B, 6.50%,
2013............................ 2,723,844
1,000,000 Massachusetts General Obligation
Refunding Bonds, 1995 Series A,
5.00%, 2012..................... 952,500
---------
3,676,344
---------
MICHIGAN (3.2%)
3,500,000 Cheboygan, Michigan Area Schools
General Obligation Unlimited
Tax, 5.60%, 2021................ 3,403,750
3,500,000 Michigan State General
Obligation Bonds, Environmental
Protection Program, Series 1992,
6.25%, 2012..................... 3,797,500
1,150,000 University of Michigan Higher
Education Housing Revenue Bonds,
Series 1996A, 5.125%, 2015...... 1,076,688
---------
8,277,938
---------
</TABLE>
18
<PAGE> 20
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) TAX FREE INCOME FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ------------------------------------------------------------
<S> <C> <C>
MINNESOTA (3.2%)
$2,000,000 Minneapolis, Minnesota General
Obligation Special Purpose
Refunding Bonds, Series 1993B,
5.20%, 2013..................... $ 1,950,000
2,220,000 Minnesota Housing Finance Agency
Rental Housing Revenue Bonds,
1995 Series D, 5.90%, 2015...... 2,217,225
3,870,000 Minnesota State Housing Finance
Agency Single Family Mortgage
Revenue Bonds, Series 1994 K,
6.40%, 2015..................... 3,971,588
---------
8,138,813
---------
MISSOURI (0.8%)
2,000,000 Missouri State Environmental
Improvement & Energy Resources
Authority Water Pollution
Control Revenue Bonds, 6.55%,
2014............................ 2,127,500
---------
NEBRASKA (2.0%)
5,000,000 Nebraska Public Power District
Power Supply System Revenue
Bonds, Series 1993, 6.125%,
2015............................ 5,100,000
---------
NORTH CAROLINA (9.2%)
3,460,000 North Carolina Housing Finance
Agency Multi-Family Revenue
Refunding Bonds, Series H,
5.95%, 2021..................... 3,447,025
2,020,000 North Carolina Housing Finance
Agency Single-Family Revenue
Bonds, Series AA, 6.25%, 2017... 2,067,975
2,185,000 North Carolina Housing Finance
Agency Single-Family Revenue
Bonds, Series GG, 5.90%, 2013... 2,187,731
1,820,000 North Carolina Housing Finance
Agency Single-Family Revenue
Bonds, Series N, 7.40%, 2028.... 1,899,625
1,815,000 North Carolina Housing Finance
Agency Single-Family Revenue
Bonds, Series J, 7.40%, 2022.... 1,880,794
3,000,000 North Carolina Medical Care
Commission Health Care Revenue
Bonds, (Carolina Medicorp
Project), Series 1996, 5.125%,
2016............................ 2,778,750
1,000,000 North Carolina Medical Care
Commission Hospital Revenue
Bonds, Duke University Hospital
Project, Series C, 5.25%,
2017............................ 943,750
2,000,000 North Carolina Medical Care
Commission Hospital Revenue
Refunding Bonds, Series 1992 A
(North Carolina Baptist
Hospitals Project), 6.375%,
2014............................ 2,080,000
1,000,000 North Carolina Medical Care
Commission Hospital Revenue
Bonds (Wake County Hospital
System), Series 1997, 5.375%,
2026............................ 935,000
- ------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ------------------------------------------------------------
$6,000,000 Pitt County, North Carolina Pitt
County Memorial Hospital Revenue
Bonds, Series 1995, 5.25%,
2021............................ $ 5,505,000
------------
23,725,650
------------
OHIO (1.7%)
1,100,000 Franklin County, Ohio Hospital
Refunding and Improvement
Revenue Bonds (The Children's
Hospital Project), 1996 Series
A, 5.75%, 2020.................. 1,097,250
1,230,000 Ohio Housing Finance Agency
Mortgage Revenue Bonds
Residential Mortgage Backed
Securities, Series A-1, 5.70%,
2017............................ 1,205,400
2,000,000 Ohio Turnpike Commission
Turnpike Revenue Bonds, 1996
Series A, 5.70%, 2017........... 1,985,000
---------
4,287,650
---------
PENNSYLVANIA (6.1%)
2,000,000 Pennsylvania General Obligation
Bonds, Second Series of 1995,
5.00%, 2012..................... 1,890,000
4,500,000 Pennsylvania Higher Educational
Facilities Authority, The
University of Pennsylvania
Health Services Revenue Bonds,
Series A of 1996, 5.875%,
2015............................ 4,528,125
4,055,000 Pennsylvania Housing Finance
Agency Rental Housing Refunding
Revenue Bonds, Issue 1992,
6.40%, 2012..................... 4,151,306
1,500,000 Pennsylvania Housing Finance
Agency Rental Housing Refunding
Revenue Bonds, Issue 1992,
6.25%, 2007..................... 1,550,625
2,000,000 Pennsylvania State Turnpike
Commission Oil Franchise Tax
Revenue, Series A, 6.00%,
2014............................ 2,042,500
1,500,000 Pittsburgh, Pennsylvania Water
and Sewer Authority, Water and
Sewer System First Lien Revenue
Bonds, Series A of 1995, 5.50%,
2015............................ 1,449,375
----------
15,611,931
----------
SOUTH CAROLINA (6.1%)
6,980,000 Charleston, South Carolina
Waterworks & Sewer System
Refunding & Capital Improvement
Revenue Bonds, Series 1991,
6.00%, 2018..................... 7,075,975
1,400,000 Greenville, South Carolina
Hospital System Revenue Bonds
Hospital Facilities, Series B,
5.25%, 2017..................... 1,309,000
1,000,000 South Carolina Public Service
Authority, Santee Cooper,
Revenue Bonds, 1991 Series D,
6.625%, 2031.................... 1,096,250
1,500,000 South Carolina State Housing
Finance & Development Authority
Multi-Family Development Revenue
Refunding, Series 1992-A,
6.875%, 2023.................... 1,550,625
</TABLE>
19
<PAGE> 21
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) TAX FREE INCOME FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ------------------------------------------------------------
<S> <C> <C>
$2,075,000 South Carolina State Housing
Finance & Development Authority
Homeownership Mortgage Purchase
Bonds, Series 1994 A, 6.375%,
2016............................ $ 2,100,938
1,500,000 Spartanburg, South Carolina
Water System Improvement
&Refunding Revenue Bonds, Series
1992, 6.25%, 2017............... 1,545,000
1,000,000 Spartanburg, South Carolina
Water System Revenue Bonds,
Series 1996, 6.10%, 2021........ 1,023,750
----------
15,701,538
----------
TENNESSEE (1.4%)
1,000,000 Nashville & Davidson County,
Tennessee General Obligation
Multi-Purpose Improvement Bonds,
Series 1994, 6.125%, 2014....... 1,032,500
1,500,000 Nashville & Davidson County,
Tennessee Health & Educational
Facilities Revenue Bonds, Series
1979, 7.875%, 2004.............. 1,646,250
1,000,000 Shelby County, Tennessee General
Obligation Public Improvement
Bonds, 1996 Series A, 5.85%,
2017............................ 1,000,000
---------
3,678,750
---------
TEXAS (13.5%)
2,325,000 Beaumont Independent School
District, Texas Unlimited Tax
School Building, Series 1996,
5.00%, 2016..................... 2,139,000
1,000,000 Carrollton-Farmers Branch
Independent School District,
Texas General Obligation
Permanent School Fund Guarantee,
Series 1996, 5.70%, 2017........ 995,000
1,100,000 Cypress-Fairbanks Independent
School District, Texas General
Obligation Permanent School Fund
Guarantee, Series 1996, 5.375%,
2019............................ 1,043,625
2,300,000 Fort Bend Independent School
District, Texas General
Obligation Permanent School Fund
Guarantee, Series 1996, 5.00%,
2018............................ 2,093,000
1,350,000 Fort Worth, Texas General
Obligation Limited Tax Bonds,
5.625%, 2017.................... 1,331,437
2,500,000 Houston Independent School
District, Texas Limited Tax
Schoolhouse Refunding Bonds,
Series 1997, 5.375%, 2017....... 2,375,000
7,720,000 Houston, Texas Water & Sewer
Junior Lien Revenue Refunding,
Series 1991-C, 6.375%, 2017..... 8,125,300
490,000 Lower Colorado River Authority
Texas Junior Lien Refunding
Revenue Bonds, Series 1992
(ETM), 6.00%, 2017.............. 509,600
2,630,000 Lower Colorado River Authority
Texas Junior Lien Refunding
Revenue Bonds, Series 1992
(Unrefunded), 6.00%, 2017....... 2,643,150
- ------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ------------------------------------------------------------
$2,000,000 Texas A&M University System
Board of Regents Revenue
Financing System Bonds, Series
1996, 5.375%, 2014.............. $ 1,920,000
1,250,000 Texas National Research
Laboratory Commission Revenue
(Superconducting Super Collider
Project), Series 1991, 7.10%,
2021............................ 1,387,500
3,175,000 Texas State Water Development
Bonds, Series 1994, 6.90%,
2017............................ 3,480,594
2,000,000 University of Texas System
Permanent University Fund Bonds,
Series 1992B, 6.25%, 2013....... 2,122,500
3,000,000 Weatherford, Texas Independent
School District Unlimited Tax
School Building and Refunding
Bonds, Series 1994, 6.50%,
2015............................ 3,187,500
1,090,000 Weatherford, Texas Independent
School District Unlimited Tax
School Building and Refunding
Bonds, Series 1994, 6.40%,
2012............................ 1,151,312
----------
34,504,518
----------
UTAH (0.4%)
1,080,000 Intermountain Power Agency, Utah
Power Supply Revenue Refunding
Bonds, Series 1993-A, 5.50%,
2020............................ 1,012,500
---------
VIRGINIA (13.7%)
1,500,000 Fairfax County, Virginia Water
Authority Water Refunding
Revenue Series 1992, 6.00%,
2022............................ 1,513,125
4,250,000 Henrico County, Virginia Water
and Sewer System Refunding
Revenue Bonds, Series 1994,
5.875%, 2014.................... 4,228,750
1,985,000 Newport News, Virginia General
Improvement Bonds, Series 1993
E, 5.20%, 2013.................. 1,908,081
8,000,000 Richmond, Virginia General
Obligation Public Improvement
Refunding Bonds, Series 1991-B,
6.25%, 2018..................... 8,190,000
2,000,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1992 C Subseries
C-7, 6.30%, 2015................ 2,030,000
1,000,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1995 B Subseries
B-3, 6.35%, 2015................ 1,023,750
1,930,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1995 B Subseries
B-3, 6.35%, 2016................ 1,975,837
5,500,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1992 A, 7.10%,
2022............................ 5,699,375
1,000,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series B Subseries B-2,
6.50%, 2010..................... 1,062,500
</TABLE>
20
<PAGE> 22
STATEMENT OF INVESTMENTS (CONTINUED)
NATIONWIDE(R) TAX FREE INCOME FUND
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ------------------------------------------------------------
<S> <C> <C>
$1,080,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1995-D, Subseries
D-1, 5.95%, 2013................ $ 1,084,050
2,000,000 Virginia Public School Authority
School Financing Bonds (1991
Resolution), Series 1994 A,
6.20%, 2013..................... 2,110,000
4,595,000 Virginia Public School Authority
School Financing Bonds (1991
Resolution), Series 1995 C,
5.00%, 2016..................... 4,233,144
----------
35,058,612
----------
Washington (6.2%)
2,950,000 Seattle, Washington Metropolitan
General Obligation Bonds, Series
1991, 6.875%, 2020.............. 3,015,520
7,650,000 Seattle, Washington Water System
and Refunding Revenue Bonds,
1993, 5.50%, 2018............... 7,296,187
3,500,000 Washington State Motor Vehicle
Fuel Tax General Obligation
Bonds, Series 1997 D, 5.375%,
2022............................ 3,351,250
2,155,000 Washington State General
Obligation Unlimited Tax Bonds,
Series DD-14 and B, 6.00%,
2015............................ 2,208,875
----------
15,871,832
----------
- ------------------------------------------------------------
PRINCIPAL SECURITY VALUE
- ------------------------------------------------------------
WISCONSIN (4.6%)
$1,000,000 Wisconsin Housing and Economic
Development Authority Home
Ownership Revenue Bonds, Series
A, 5.65%, 2010.................. $ 1,006,250
2,000,000 Wisconsin State General
Obligation, Series 1992-A,
6.30%, 2011..................... 2,122,500
3,065,000 Wisconsin State General
Obligation Refunding Bonds of
1996, Series 1, 5.00%, 2014..... 2,861,944
2,000,000 Wisconsin State General
Obligation Bonds of 1994, Series
A, 5.00%, 2014.................. 1,867,500
2,500,000 Wisconsin State Transportation
Revenue Bonds, Series A, 5.50%,
2012............................ 2,468,750
1,500,000 Wisconsin State Transportation
Revenue Bonds,1994 Series A,
5.50%, 2011..................... 1,475,625
----------
11,802,569
----------
Total municipal securities
(cost $247,982,616)............. $255,136,751
------------
</TABLE>
- ------------------------
Cost also represents cost for federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
21
<PAGE> 23
NATIONWIDE(R) FAMILY OF FUNDS
NATIONWIDE(R) U.S. GOVERNMENT INCOME FUND
MANAGEMENT DISCUSSION
OF FUND PERFORMANCE
The total return for the Nationwide(R) U.S. Government Income Fund for the
six-month period ended April 30, 1997 was 1.6% compared to a total return of
1.4% for its benchmark index, the Merrill Lynch Government Master Index.
The past six months have been a volatile period for the U.S. bond market. Early
in the period, rates fell as the economy grew slowly with little inflation.
Rates began to rise late in the year as investors became concerned that economic
growth and low unemployment would lead to inflationary pressures. The Federal
Reserve raised the federal funds rate by 25 basis points on March 25 and bond
yields reached their highs in April. The net change in interest rates was
approximately 50 basis points in intermediate rates and 35 basis points in long
rates. The Fund outperformed its benchmark due to the tightening of spreads in
the mortgage backed and callable agency sectors.
The U.S. Government Income Fund continues to maintain exposure to the mortgage
market with approximately 80% in collateralized mortgage obligations (CMOs).
These CMOs are well-structured bonds which should continue to enhance the yield
and the return of the Fund. The Fund also continues to hold positions in both
callable and non-callable agency notes. The remainder of the portfolio is
invested in repurchase agreements for liquidity.
WAYNE T. FRISBEE, CFA
KIMBERLY BINGLE, CFA, FLMI
GARY HUNT, MBA
PORTFOLIO MANAGERS
TOP FIVE HOLDINGS
<TABLE>
<CAPTION>
VALUE %
- -----------------------------------------------------
<S> <C> <C>
FNMA Remics $15,324,252 39.4%
FHLMC Remics 15,204,627 39.2%
Federal Home Loan Bank 3,960,068 10.2%
Federal National Mortgage
Association 1,533,167 3.9%
Federal Home Loan Mortgage
Corp. 1,000,232 2.6%
</TABLE>
FUND PERFORMANCE
$10,000 Lump Sum Investment
<TABLE>
<CAPTION>
Value of Value of Reinvested
Measurement Period Initial Dividends Including
(Fiscal Year Covered) Investment Capital Gains
<S> <C> <C>
1992 9848 103
1993 10192 905
1994 9686 1491
1995 9727 2207
1996 9909 2984
1997 10020 3806
</TABLE>
The graph above shows the ending investment value as of 4/30/97 on a
hypothetical $10,000 investment with dividends reinvested for the life of the
Fund (inception 2/28/92). The ending value of $13,826 represents an average
annual compound total return of 6.5% without including the contingent deferred
sales charge (CDSC).
AVERAGE ANNUAL (COMPOUND) TOTAL RETURN
<TABLE>
<CAPTION>
*$1,000 *$100 **$1,000
LUMP SUM MONTHLY LUMP SUM
INVESTMENT INVESTMENT INVESTMENT
YEARS w/o sc w/o sc w/ sc
- -----------------------------------------------------------------------
<S> <C> <C> <C>
1 7.2% 6.2% .1%
- -----------------------------------------------------------------------
5 6.8% 6.3% 6.4%
- -----------------------------------------------------------------------
Life 6.5% 6.3% 6.3%
- -----------------------------------------------------------------------
</TABLE>
(5 years, 2 months)
*For Periods Ended 4/30/97. These returns do not reflect the effects of sales
charges.
**For Periods Ended 3/31/97. Assumes the applicable contingent deferred sales
charge (CDSC) was paid on withdrawals from the U.S. Government Income Fund
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.
Average annual (compound) total return represents the average annual percentage
change in the value of an investment for the specified periods assuming a
redemption of the investment at the end of such periods. It reflects the changes
in share price and assumes reinvestment of all dividends and distributions at
net asset value. Total return figures represent past performance and are not
predictive of future performance. Investment returns and principal value of an
investment will fluctuate so that individual shares, when redeemed, may be worth
more or less than the original cost.
22
