UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File number: 811-08495
NATIONWIDE MUTUAL FUNDS
(Exact name of registrant as specified in charter)
1000 CONTINENTAL DRIVE, SUITE 400, KING OF PRUSSIA, PENNSYLVANIA 19406-2850
(Address of principal executive offices) (Zip code)
Eric E. Miller, Esq.
1000 Continental Drive
Suite 400
King of Prussia, Pennsylvania 19406-2850
(Name and address of agent for service)
Registrant’s telephone number, including area code: (610) 230-2839
Date of fiscal year end: October 31, 2013
Date of reporting period: November 1, 2012 through October 31, 2013
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than ten (10) days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 C.F.R. § 270.30e-1). The Commission may use the information provided on Form N-CSR in the Commission’s regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, D. C. 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Explanatory Note: This Form N-CSR/A for Nationwide Mutual Funds (the “Registrant”) is being filed solely to reflect a change in the information shown in the Performance of a $10,000 Investment for Nationwide Alternatives Allocation Fund, Nationwide Investor Destinations Aggressive Fund, Nationwide Investor Destinations Moderately Aggressive Fund, Nationwide Investor Destinations Moderate Fund, Nationwide Investor Destinations Moderately Conservative Fund and Nationwide Investor Destinations Conservative Fund within Item 1 “Reports to Stockholders” which were caused by a printer error. The annual reports for the other portfolios of the Registrant are contained in the Form N-CSR filed on December 30, 2013 (Accession Number 0001193125-13-487656) and are not amended or modified in any way by this Form N-CSR/A. Other than the aforementioned amendment, no other information or disclosures contained in the Registrant’s Form N-CSR filed on December 30, 2013 are being amended by this Form N-CSR/A.
Item 1. Reports to Stockholders.
Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 C.F.R. § 270.30e-1).
Annual Report
October 31, 2013
Nationwide Mutual Funds
Alternatives Allocation Fund
Nationwide Alternatives Allocation Fund
| Nationwide Funds® |
Commentary in this report is provided by the portfolio manager(s) of each Fund as of the date of this report and is subject to change at any time based on market or other conditions.
Third-party information has been obtained from sources that Nationwide Fund Advisors (NFA), the investment adviser to the Funds, deems reliable. This report and the holdings provided are for informational purposes only and are not intended to be relied on as investment advice. Portfolio composition is accurate as of the date of this report and is subject to change at any time and without notice. NFA, one of its affiliated advisers or its employees may hold a position in the securities in this report.
Statement Regarding Availability of Quarterly Portfolio Holdings
The Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. Additionally, the Trust files a schedule of portfolio holdings monthly for the Nationwide Money Market Fund on Form N-MFP. Forms N-Q and Forms N-MFP are available on the SEC’s website at http://www.sec.gov. Forms N-Q and Forms N-MFP may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330. The Trust also makes this information available to shareholders on nationwide.com/mutualfunds or upon request without charge.
Statement Regarding Availability of Proxy Voting Record
Information regarding how the Funds voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30 is available without charge, upon request, by calling 800-848-0920, and on the SEC’s website at http://www.sec.gov.
| Nationwide Funds® Annual Report |
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Nationwide Funds®
October 31, 2013
Dear Shareholder,
I am proud to report that Nationwide Financial has acquired 17 mutual funds through an agreement with HighMark Capital Management, Inc. and approval of its shareholders. This agreement is the latest step in the Nationwide Financial strategy to pursue Nationwide Funds growth.
Why is this important to you, a Nationwide Funds shareholder? By adding these HighMark Funds to the Nationwide Mutual Funds lineup, we continue to expand our selection of investment strategies. The transaction provides Nationwide Funds with approximately $3.6 billion in new mutual fund assets, enabling Nationwide to present a wider array of investment offerings. It also underscores our commitment to helping Americans, like you, prepare for and live in retirement.
During the 12-month reporting period ended October 31, 2013, broad U.S. stock market performance was predominantly positive, with the S&P 500® Index returning 27.18%. Yet despite recent encouraging returns, several years of economic volatility and uncertainty have left some investors distrustful of the markets and wary about their economic futures. In short, they have developed a fear of financial planning.
Nationwide Funds recently released the results of its in-depth investor sentiment survey conducted by Harris Interactive, titled Fear of Financial Planning. The study revealed that 26 percent of potential investors do not have a financial plan. Given that we live in an era when Americans are more responsible for their own financial security than ever before, we find this statistic troubling and are working to spread the word that financial planning is a necessity, not an option.
We encourage all of our shareholders to meet regularly with their financial advisors. An effective financial plan involves much more than just opening an investment account. It includes taking a macro-level view of your circumstances and making use of thoughtful, customized long-term analysis. An effective financial plan also contains contingencies to offset potential surprises and risks, specific action steps and defined milestones to help increase your confidence and measure success. Armed with a plan, you are never alone.
In his novel “The Hobbit,” author J.R.R. Tolkien wrote, “It does not do to leave a live dragon out of your calculations, if you live near him.” Since the beginning of the financial crisis, investors have been living close to a live dragon and have felt his heat. However, as every experienced dragon slayer knows, having a comprehensive plan of attack, a wide array of tools and a team of trusted experts by your side quiets fear and fortifies you to pursue victory.
Thank you for investing with Nationwide Funds.
Sincerely,
Michael S. Spangler
President & CEO
Nationwide Funds
1
| Economic Review |
During the fiscal year ended October 31, 2013, most asset classes reported strong performance. Domestic equities experienced a broad-based rally, with the S&P 500® Index delivering a 27.2% return, and with nearly all sectors and capitalization ranges delivering strong performance. International equities also were solid, with developed markets outperforming emerging markets. Fixed-income results were mixed, as credit-sensitive indexes showed positive returns, while rate-sensitive indexes were affected by rising Treasury yields.
Domestically, the reporting period was dominated by news from Washington. The main topics from November 2012 through January 2013 consisted of the national election for president and congressional control and a heated debate on the fiscal cliff. Concerns about the tapering (gradual reduction) of the Federal Reserve’s Quantitative Easing (“QE”) policy, the federal government shutdown and rhetoric in Congress related to raising the debt ceiling affected trading in August, September and October 2013.
The S&P 500 Index was up 10 of the 12 months of the fiscal year, including consecutively from November 2012 through May 2013.
The S&P 500 Index showed modest gains in November and December 2012 of 0.58% and 0.91%, respectively, despite the political uncertainty.
The first quarter of calendar-year 2013 saw a substantial rally, with the S&P 500 Index up 10.6% on relief over a conclusion to a contentious election season and the implementation of the federal spending cuts on March 1. The broad-based market’s strength continued in April and May, with the S&P 500 Index returning 1.9% and 2.3%, respectively, before the market became choppy for the remainder of the reporting period on a spike in interest rates. The equity and fixed-income markets reacted to comments from Federal Reserve Chairman Ben Bernanke suggesting a tapering of the Fed’s QE program
later in the year. Volatility increased materially, with substantial positive returns for the S&P 500 Index of 5.1% in July, 3.1% in September and 4.6% in October, somewhat offset by postings of -1.3% in June and -2.9% in August. A theme in the market during 2013 was “sell the rumor, buy the news,” as the market sold off modestly into the period of uncertainty, and rallied substantially as a conclusion was reached.
While gradually improving through the reporting period, U.S. economic activity was sluggish during the period, with GDP growth of 0.1%, 1.1%, 2.5% and 2.8% from calendar 4Q12 through calendar 3Q13. This was the primary impetus for the cautious approach by the Federal Reserve with regard to maintaining the QE program. Inflation remained well controlled during the reporting period, with the core Consumer Price Index (CPI) below 2% throughout the period, ending at 1.7% in October 2013. CPI, which includes the volatile food and energy categories, was actually lower than core CPI, averaging 1.6% and exiting September 2013 at 1.2%. Despite job-creation levels coming in lower than during many past recoveries, the unemployment rate continued to decline during the reporting period, falling from 7.9% to 7.2%, aided by the labor participation rate declining to 63.3% from 63.8% a year ago (the figure was more than 66% at the beginning of the 2008 recession).
The strong performance in domestic equities was broad based during the reporting period, with small-capitalization stocks outperforming large-cap stocks, and growth and value roughly equal. The best-performing sectors in the S&P 500 Index were consumer discretionary, with 40.5%, industrials, with 35.8% and health care, with 34.3%. Consumer discretionary and industrials benefited from improved profits and expanding valuations, and health care rose in reaction to excitement surrounding new products. The worst-performing sectors were utilities, with 9.5% and telecommunications, with 13.1%. Utilities and telecommunications were relatively impacted by rising rates, as the high dividends paid by these sectors were relatively less attractive.
2
| Economic Review (con’t.) |
The strong performance in domestic equities was broad based during the reporting period, with small-capitalization stocks outperforming large-cap stocks, and growth and value roughly equal.
International stocks were very strong at the start of the reporting period, as European shares rallied on hopes that the worst of the stress on the banking system was behind them. Asian shares rose in reaction to a U.S. rally and the prospect of additional stimulus from Japan’s Central Bank. In November and December 2012, international shares materially outperformed U.S. shares, with the MSCI ACWI ex USA Index outperforming the S&P 500 Index by nearly 4%. Throughout the year, the performance of international stocks continued to be positive but weaker relative to U.S. stocks. Europe was reminded of the fragile state of the banking systems of its weaker members, this time with Cyprus. Continued political tensions in Greece, sluggish economic growth and worries about a U.S. tapering depressed relative returns through mid-year, before the market rallied in response to stabilization of political and banking system risk. Asia was relatively strong throughout the year, primarily due to the prospect of renewed stimulus by Japan’s Central Bank and a beneficial exchange rate. Emerging market stocks lagged on concerns about China’s slowing economic growth as well as political tensions in Brazil, Turkey, North Korea and the Middle East, and steadily declining commodity prices.
Performance in the fixed-income markets was driven by a sustained period of rising rates throughout most of the reporting period. Long-term Treasury yields rose meaningfully during the period, moving from a low of 1.70% in October 2012 to a high of 3.00% in September 2013 on anticipation of the tapering of Fed policy, but fell to 2.54% by the end of October as those concerns faded. The broadly based Barclays U.S. Aggregate Bond Index posted a total return of -1.1% for the reporting period. Long-duration benchmarks showed negative relative
performance, with the Barclays Long U.S. Treasury Index down 9.3%. A generally benign economic environment allowed a narrowing of most credit spreads, resulting in positive performance for high-yield and emerging market benchmarks. Municipal bonds performed largely in line with the broader index, as the positive impact from the gradual improvement in economic conditions was offset by a few high-profile events, such as the fears of a possible default of Puerto Rico, the third-largest municipal issuer behind California and New York.
| Index | Fiscal Year Total Return | |||
| S&P 500® | 27.18% | |||
| Russell 1000® Growth | 28.30% | |||
| Russell 1000® Value | 28.29% | |||
| Russell 2000® | 36.28% | |||
| MSCI World ex USA | 24.65% | |||
| MSCI Emerging Markets | 6.53% | |||
| Barclays U.S. Aggregate Bond | -1.08% | |||
| Barclays U.S. 10-20 Year Treasury Bond | -5.23% | |||
| Barclays U.S. 1-3 Year Government/Credit Bond | 0.77% | |||
| Barclays Municipal Bond | -1.72% | |||
| Barclays U.S. Corporate High Yield | 8.87% | |||
| Barclays Emerging Markets USD Aggregate Bond | -1.24% | |||
3
| Fund Commentary | Nationwide Alternatives Allocation Fund |
For the annual period ended October 31, 2013, the Nationwide Alternatives Allocation Fund (Institutional Class) returned 1.28% versus 10.34% for its composite benchmark, 50% Barclays Global Aggregate Bond Index and 50% MSCI All Country World IndexSM. For broader comparison, the average return for the Fund’s closest Lipper peer category of Global Flexible Portfolio Funds (consisting of 425 funds as of October 31, 2013) was 10.11% for the same time period.
The Fund is designed to provide investors with exposure to seven alternative asset classes with investment performance that may have a low correlation to the performance of more traditional asset classes (e.g., stocks of U.S. and international developed-country issuers and investment-grade bonds issued in the U.S.). These seven asset classes are global real estate stocks, emerging market stocks, emerging market bonds, international (developed market) bonds, U.S. high-yield bonds, U.S. Treasury Inflation-Protected Securities (TIPS) and commodities. The Fund seeks to achieve its objective by investing in a professionally selected mix of these different alternative asset classes that the Fund’s investment adviser believes offer the risk and return characteristics that may provide a complement to an investor’s investments in more traditional asset classes.
From a macroeconomic standpoint, the period was arguably dominated by statements from the U.S. Federal Reserve (Fed) supporting its pace of asset purchases to bolster the economy, then wavering on the subject, and eventually reaffirming its intent to support the economy by maintaining its current pace. Along the way, the Fund’s returns from these seven asset classes reacted sharply to each of these changes in direction and wound up mixed over the 12-month period. Double-digit returns were posted by the U.S. high-yield bond and global real estate sleeves, and smaller positive returns were generated by emerging market equities and international developed market bonds. U.S. high yield continued a string of strong quarterly returns (briefly interrupted in May and June) for this asset class as investors seeking higher bond yields and willing to trade higher credit risk for lower interest-rate risk have driven strong flows
into this class. Global real estate gained as commercial real estate markets in Europe rebounded strongly during the quarter while U.S. markets were slightly positive.
The Fund sleeves representing commodities, TIPS and emerging market debt posted negative returns. The commodities sleeve was adversely affected by, among other things, slackening demand for precious and industrial metals as slowing growth took hold in China, Brazil and other emerging market economies. Both TIPS and emerging market debt were adversely affected by the gradual rise in longer-term bond prices (as noted above). In the case of TIPS, inflation remained relatively low in the U.S., causing “real” yields (current yield minus current inflation level) to be negative and a disincentive to investment. In the case of emerging market debt, the slowing of inflows of foreign capital to many of these markets and the strengthening of the U.S. dollar against certain currencies further combined to reduce returns.
The returns from the Fund’s investments in the U.S. high-yield and global real estate sleeves, combined with their relatively significant allocations within the Fund, made them the largest contributors to the Fund’s return during the period, as shown in the chart below.
The negative returns from the Fund’s investments in the commodities and TIPS sleeves were the largest detractors from the Fund’s return during the period, as shown in the chart below.
Subadviser:
Goldman Sachs Asset Management, L.P.
Portfolio Managers:
Gary Chropuvka, Matthew Hoehn and Amna Qaiser
Asset allocation is the process of spreading assets across several different investment styles and asset classes. The Fund is designed to provide asset allocation across several types of alternative investments in an attempt to achieve performance that may have a low correlation to the performance of more traditional investments. The Fund consists of separate sleeves to represent the investments in each of the different asset classes. Each sleeve invests in securities and derivatives with the goal of matching the investment characteristics and performance of a specified asset class benchmark index.
4
| Fund Commentary (con’t) | Nationwide Alternatives Allocation Fund |
The Fund is subject to the risks of investing in fixed-income securities, including high-yield bonds. The Fund may invest in more aggressive investments such as foreign securities (which are volatile, harder to price and less liquid than U.S. securities) and real estate investment trusts (REITs) (which include possible declines in the value of real estate and the relative lack of liquidity associated with investments in real estate).
The Fund also invests in derivatives (many of which create investment leverage and are highly volatile). Substantially all of the Fund’s exposure to commodities will be through investing in commodity-linked notes, which are derivatives. Investing in commodities and commodity-linked investments may expose the Fund to increased volatility and decreased liquidity. Please refer to the summary prospectus for a more detailed explanation of the Fund’s principal risks.
The Fund is a nondiversified fund, which means that a relatively high percentage of the Fund’s assets may be invested in a limited number of issuers. The Fund is not intended to serve as a complete investment program. There is no assurance that the investment objective of the Fund will be achieved.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
Actual Asset Class Allocations
(as of October 31, 2013)
| International Bonds | 24% | |||
| Commodities | 17% | |||
| High-Yield Bonds | 15% | |||
| Emerging Market Bonds | 15% | |||
| Global Real Estate Stocks | 11% | |||
| Emerging Market Stocks | 10% | |||
| Treasury Inflation-Protected Securities | 8% | |||
| 100% |
Asset class allocations are stated as a percentage of the Fund’s total net assets. Allocations may change over time in order for the Fund to meet its objective or due to market and/or economic conditions.
Contributions of Underlying Asset Classes to Fund Performance
(For the year ended October 31, 2013)
The contribution of underlying asset classes to Fund performance is based on target asset class allocations through the reporting period. Nationwide Fund Advisors (NFA), the investment adviser to the Fund, applies a long-term investment horizon with respect to the Fund, and allocation changes are not likely to be made in response to short-term market conditions. NFA may add or delete asset classes or change allocations at any time and without notice. For more information, refer to the Fund’s prospectus.
5
| Fund Overview | Nationwide Alternatives Allocation Fund |
Objective
The Fund seeks to provide total return.
Highlights
| Ÿ | International bonds, high-yield bonds, global real estate stocks and emerging market stocks contributed positively to overall Fund performance over the one-year period. |
| Ÿ | TIPS, emerging market bonds and commodities detracted from overall Fund performance over the one-year period. |
| Ÿ | High-yield bonds and global real estate stocks both posted double-digit positive returns and contributed the most to the Fund’s overall performance. |
Asset Allocation†
| Mutual Fund | 41.6% | |||
| U.S. Treasury Note | 32.2% | |||
| Common Stocks | 12.3% | |||
| U.S. Treasury Bonds | 7.0% | |||
| Commodity-Linked Notes | 4.8% | |||
| Purchased Options | 0.1% | |||
| Other assets in excess of liabilities | 2.0% | |||
| 100.0% |
Top Industries††
| Real Estate Investment Trusts (REITs) | 10.2% | |||
| Real Estate Management & Development | 2.3% | |||
| Other Industries | 87.5% | |||
| 100.0% |
Top Holdings††
| Fidelity Institutional Money Market Fund — Institutional Class | 42.4% | |||
| U.S. Treasury Note, 3.13%, 05/15/19 | 32.9% | |||
| JPMorgan Chase Bank, NA Commodity Note | 3.5% | |||
| Bank of America Corp. Commodity Note | 0.9% | |||
| Simon Property Group, Inc. | 0.7% | |||
| Mitsui Fudosan Co., Ltd. | 0.4% | |||
| Unibail-Rodamco SE | 0.4% | |||
| U.S. Treasury Inflation Indexed Bonds, 0.13%, 04/15/17 | 0.4% | |||
| Public Storage | 0.4% | |||
| Brookfield Asset Management, Inc., Class A | 0.3% | |||
| Other Holdings | 17.7% | |||
| 100.0% |
Top Countries††
| United States | 93.9% | |||
| Japan | 1.1% | |||
| United Kingdom | 0.9% | |||
| Australia | 0.8% | |||
| France | 0.7% | |||
| Canada | 0.5% | |||
| Hong Kong | 0.5% | |||
| Singapore | 0.5% | |||
| Liechtenstein | 0.2% | |||
| Netherlands | 0.1% | |||
| Other Countries | 0.8% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of October 31, 2013. |
| †† | Percentages indicated are based upon total investments as of October 31, 2013. |
6
| Fund Performance | Nationwide Alternatives Allocation Fund |
Average Annual Total Return
| (For periods ended October 31, 2013) | 1 Yr. | Inception5 | ||||||||
| Class A | w/o SC1 | 1.07% | (0.69)% | |||||||
| w/SC2 | (3.21)% | (2.56)% | ||||||||
| Class C | w/o SC1 | 0.31% | (1.38)% | |||||||
| w/SC3 | (0.69)% | (1.38)% | ||||||||
| Institutional Service Class4 | 1.38% | (0.38)% | ||||||||
| Institutional Class4 | 1.28% | (0.42)% | ||||||||
All figures showing the effect of a sales charge (SC) reflect the maximum charge possible, because it has the most significant effect on performance data.
| 1 | These returns do not reflect the effects of SCs. |
| 2 | Prior to October 29, 2013, a 4.25% front-end sales charge was deducted. Effective October 29, 2013, a 2.25% front-end sales charge was deducted. |
| 3 | A 1.00% contingent deferred sales charge was deducted from the one year return because it is charged when you sell Class C shares within the first year after purchase. |
| 4 | Not subject to any SCs. |
| 5 | Since inception date of July 25, 2011. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||
| Class A | 1.16% | 0.97% | ||||
| Class C | 1.66% | 1.47% | ||||
| Institutional Service Class | 0.91% | 0.72% | ||||
| Institutional Class | 0.66% | 0.47% | ||||
* Current effective prospectus dated March 1, 2013. The difference between gross and net operating expenses reflects contractual waivers in place through February 28, 2014. Please see the Fund's most recent prospectus for details.
7
| Fund Performance (cont.) | Nationwide Alternatives Allocation Fund |
Performance of a $10,000 Investment
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 and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investing in mutual funds involves market risk, including loss of principal. Performance returns assume the reinvestment of all distributions.
Comparative performance of $10,000 invested in Institutional Class shares of the Nationwide Alternatives Allocation Fund from inception through 10/31/13 versus the Barclays Global Aggregate Bond Index, the MSCI All Country World IndexSM, the Composite Index* and the Consumer Price Index (CPI) from 8/1/11 through 10/31/13. Unlike the Fund, the returns for these unmanaged indexes do not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
| * | The Composite Index is an unmanaged, hypothetical representation of the performance of each of the Fund’s asset classes according to its respective weighting. The Composite Index comprises 50% Barclays Global Aggregate Bond Index and 50% MSCI All Country World Index. |
8
| Shareholder Expense Example | Nationwide Alternatives Allocation Fund |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2013) and continued to hold your shares at the end of the reporting period (October 31, 2013).
Actual Expenses
For each Class of the Fund in the table below, the first line provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid from May 1, 2013 through October 31, 2013. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Expenses for Comparison Purposes
The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period from May 1, 2013 through October 31, 2013. You may use this information to compare the ongoing costs of investing in the Class of the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) or redemption fees. If these transaction costs were included, your costs would have been higher. Therefore, the second line for each Class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The examples also assume all dividends and distributions are reinvested.
Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment
Nationwide Alternatives October 31, 2013 | Beginning Account Value ($) 05/01/13 | Ending Account Value ($) 10/31/13 | Expenses Paid During Period ($) 05/01/13 - 10/31/13 | Expense Ratio During Period (%) 05/01/13 - 10/31/13 | ||||||||
| Class A Shares | Actual | a | 1,000.00 | 971.30 | 3.53 | 0.71 | ||||||
| Hypothetical | a,b | 1,000.00 | 1,021.63 | 3.62 | 0.71 | |||||||
| Class C Shares | Actual | a | 1,000.00 | 968.00 | 6.94 | 1.40 | ||||||
| Hypothetical | a,b | 1,000.00 | 1,018.15 | 7.12 | 1.40 | |||||||
| Institutional Service Class Shares | Actual | a | 1,000.00 | 973.30 | 1.99 | 0.40 | ||||||
| Hypothetical | a,b | 1,000.00 | 1,023.19 | 2.04 | 0.40 | |||||||
| Institutional Class Shares | Actual | a | 1,000.00 | 971.30 | 1.99 | 0.40 | ||||||
| Hypothetical | a,b | 1,000.00 | 1,023.19 | 2.04 | 0.40 | |||||||
| a | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2013 through October 31, 2013 multiplied to reflect one-half year period. The expense ratio presented represents a six-month, annualized ratio in accordance with Securities and Exchange Commission guidelines. |
| b | Represents the hypothetical 5% return before expenses. |
9
Statement of Investments
October 31, 2013
Nationwide Alternatives Allocation Fund
| Common Stocks 12.3% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 10.0% |
| |||||||||
Acadia Realty Trust | 2,888 | $ | 77,023 | |||||||
Activia Properties, Inc. | 20 | 174,415 | ||||||||
Alexandria Real Estate Equities, Inc. | 9,363 | 615,898 | ||||||||
American Campus Communities, Inc. | 13,287 | 459,199 | ||||||||
Apartment Investment & Management Co., Class A | 17,018 | 476,164 | ||||||||
Artis Real Estate Investment Trust | 4,300 | 59,470 | ||||||||
Ascendas Real Estate Investment Trust | 286,000 | 543,782 | ||||||||
Ashford Hospitality Trust, Inc. | 7,913 | 103,344 | ||||||||
Associated Estates Realty Corp. | 4,262 | 65,379 | ||||||||
AvalonBay Communities, Inc. | 14,670 | 1,834,483 | ||||||||
Befimmo SCA Sicafi | 655 | 46,938 | ||||||||
Beni Stabili SpA | 45,913 | 31,430 | ||||||||
Big Yellow Group PLC | 3,258 | 24,401 | ||||||||
BioMed Realty Trust, Inc. | 25,010 | 498,199 | ||||||||
Boardwalk Real Estate Investment Trust | 2,700 | 153,587 | ||||||||
Boston Properties, Inc. | 18,485 | 1,913,198 | ||||||||
Brandywine Realty Trust | 25,270 | 359,592 | ||||||||
BRE Properties, Inc. | 8,254 | 450,751 | ||||||||
British Land Co. PLC | 126,134 | 1,257,987 | ||||||||
BWP Trust | 10,844 | 23,603 | ||||||||
Calloway Real Estate Investment Trust | 7,500 | 180,550 | ||||||||
Cambridge Industrial Trust | 32,641 | 18,362 | ||||||||
Camden Property Trust | 9,502 | 610,028 | ||||||||
Canadian Apartment Properties REIT | 4,400 | 90,857 | ||||||||
Canadian Real Estate Investment Trust | 3,900 | 158,858 | ||||||||
CapitaCommercial Trust | 289,000 | 341,971 | ||||||||
Capital Property Fund | 153,134 | 163,117 | ||||||||
CapitaMall Trust | 328,000 | 532,736 | ||||||||
CBL & Associates Properties, Inc. | 24,562 | 486,573 | ||||||||
Cedar Realty Trust, Inc. | 11,852 | 67,675 | ||||||||
CFS Retail Property Trust Group | 285,031 | 557,833 | ||||||||
Champion REIT | 95,000 | 42,341 | ||||||||
Charter Hall Retail REIT | 17,463 | 66,673 | ||||||||
Chartwell Retirement Residences | 7,100 | 72,999 | ||||||||
Cofinimmo | 2,500 | 301,966 | ||||||||
Commonwealth Property Office Fund | 286,575 | 324,221 | ||||||||
CommonWealth REIT | 12,753 | 310,791 | ||||||||
Corio NV | 12,347 | 537,471 | ||||||||
Corporate Office Properties Trust | 14,151 | 348,115 | ||||||||
Cousins Properties, Inc. | 20,989 | 237,805 | ||||||||
CubeSmart | 13,580 | 248,107 | ||||||||
Daiwa Office Investment Corp. | 23 | 101,874 | ||||||||
DCT Industrial Trust, Inc. | 38,778 | 300,530 | ||||||||
DDR Corp. | 29,775 | 504,686 | ||||||||
Derwent London PLC | 7,967 | 319,800 | ||||||||
Dexus Property Group | 646,419 | 662,465 | ||||||||
DiamondRock Hospitality Co. | 21,689 | 247,038 | ||||||||
Digital Realty Trust, Inc. | 15,395 | 733,726 | ||||||||
Douglas Emmett, Inc. | 14,931 | 372,230 | ||||||||
Duke Realty Corp. | 43,631 | 722,966 | ||||||||
DuPont Fabros Technology, Inc. | 7,388 | 183,592 | ||||||||
EastGroup Properties, Inc. | 3,537 | 225,165 | ||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) (continued) |
| |||||||||
Education Realty Trust, Inc. | 9,171 | $ | 83,823 | |||||||
Equity Lifestyle Properties, Inc. | 7,582 | 288,040 | ||||||||
Equity One, Inc. | 8,726 | 210,384 | ||||||||
Equity Residential | 40,695 | 2,130,790 | ||||||||
Essex Property Trust, Inc. | 3,874 | 623,714 | ||||||||
Eurocommercial Properties NV | 4,452 | 189,163 | ||||||||
Extra Space Storage, Inc. | 11,761 | 540,888 | ||||||||
Federal Realty Investment Trust | 6,872 | 711,939 | ||||||||
FelCor Lodging Trust, Inc. * | 10,364 | 69,646 | ||||||||
First Industrial Realty Trust, Inc. | 15,659 | 282,958 | ||||||||
First Potomac Realty Trust | 5,002 | 61,475 | ||||||||
Fonciere des Regions | 5,972 | 511,446 | ||||||||
Fountainhead Property Trust | 132,152 | 101,683 | ||||||||
Franklin Street Properties Corp. | 5,685 | 75,042 | ||||||||
Frasers Commercial Trust | 12,000 | 12,443 | ||||||||
Frontier Real Estate Investment Corp. | 25 | 249,796 | ||||||||
Fukuoka REIT Co. | 7 | 57,755 | ||||||||
Gecina SA | 3,586 | 478,537 | ||||||||
General Growth Properties, Inc. | 66,244 | 1,406,360 | ||||||||
Glimcher Realty Trust | 21,997 | 225,469 | ||||||||
Goodman Group | 189,972 | 907,874 | ||||||||
Goodman Property Trust | 1,658 | 1,409 | ||||||||
GPT Group | 189,331 | 659,873 | ||||||||
Great Portland Estates PLC | 50,827 | 466,411 | ||||||||
Growthpoint Properties Ltd. | 189,125 | 480,924 | ||||||||
H&R Real Estate Investment Trust | 17,980 | 372,482 | ||||||||
Hammerson PLC | 90,288 | 765,076 | ||||||||
HCP, Inc. | 55,327 | 2,296,071 | ||||||||
Health Care REIT, Inc. | 35,133 | 2,278,375 | ||||||||
Healthcare Realty Trust, Inc. | 11,626 | 279,140 | ||||||||
Hersha Hospitality Trust | 23,541 | 133,477 | ||||||||
Highwoods Properties, Inc. | 10,692 | 412,711 | ||||||||
Home Properties, Inc. | 5,581 | 336,590 | ||||||||
Hospitality Properties Trust | 19,552 | 574,438 | ||||||||
Host Hotels & Resorts, Inc. | 91,833 | 1,703,502 | ||||||||
Inland Real Estate Corp. | 3,592 | 38,398 | ||||||||
Intu Properties PLC | 62,801 | 346,366 | ||||||||
Investa Office Fund | 101,504 | 297,984 | ||||||||
Is Gayrimenkul Yatirim Ortakligi AS | 10,765 | 7,746 | ||||||||
Japan Excellent, Inc. | 22 | 136,014 | ||||||||
Japan Prime Realty Investment Corp. | 87 | 289,113 | ||||||||
Japan Real Estate Investment Corp. | 74 | 845,443 | ||||||||
Japan Retail Fund Investment Corp. | 246 | 498,229 | ||||||||
Kenedix Realty Investment Corp. | 27 | 121,290 | ||||||||
Kilroy Realty Corp. | 9,632 | 512,037 | ||||||||
Kimco Realty Corp. | 46,852 | 1,006,381 | ||||||||
Kite Realty Group Trust | 6,060 | 38,784 | ||||||||
Kiwi Income Property Trust | 4,998 | 4,518 | ||||||||
KLCC Property Holdings Bhd | 3,600 | 7,358 | ||||||||
Klepierre | 9,678 | 434,070 | ||||||||
Land Securities Group PLC | 94,012 | 1,490,290 | ||||||||
LaSalle Hotel Properties | 13,324 | 413,710 | ||||||||
Liberty Property Trust | 19,134 | 711,593 | ||||||||
10
Statement of Investments (Continued)
October 31, 2013
Nationwide Alternatives Allocation Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) (continued) |
| |||||||||
Link REIT (The) | 256,000 | $ | 1,287,845 | |||||||
LTC Properties, Inc. | 6,580 | 259,581 | ||||||||
Macerich Co. (The) | 16,612 | 983,597 | ||||||||
Mack-Cali Realty Corp. | 10,340 | 212,590 | ||||||||
Mapletree Logistics Trust | 134,000 | 117,996 | ||||||||
Mercialys SA | 1,601 | 34,541 | ||||||||
Mid-America Apartment Communities, Inc. | 7,700 | 511,280 | ||||||||
Mori Hills REIT Investment Corp. | 25 | 175,451 | ||||||||
MORI TRUST Sogo Reit, Inc. | 18 | 160,085 | ||||||||
Nippon Building Fund, Inc. | 86 | 1,063,897 | ||||||||
Nomura Real Estate Office Fund, Inc. | 43 | 212,420 | ||||||||
Orix JREIT, Inc. | 161 | 200,778 | ||||||||
Parkway Properties, Inc. | 2,946 | 53,352 | ||||||||
Pebblebrook Hotel Trust | 4,134 | 124,847 | ||||||||
Pennsylvania Real Estate Investment Trust | 12,470 | 226,081 | ||||||||
Piedmont Office Realty Trust, Inc., Class A | 14,272 | 263,747 | ||||||||
Post Properties, Inc. | 5,622 | 257,150 | ||||||||
Premier Investment Corp. | 16 | 65,534 | ||||||||
Prologis, Inc. | 59,982 | 2,396,281 | ||||||||
PS Business Parks, Inc. | 847 | 69,022 | ||||||||
Public Storage | 17,013 | 2,840,661 | ||||||||
Ramco-Gershenson Properties Trust | 7,583 | 123,300 | ||||||||
Regency Centers Corp. | 12,435 | 642,392 | ||||||||
RioCan Real Estate Investment Trust | 19,000 | 463,770 | ||||||||
Rouse Properties, Inc. | 5,476 | 110,725 | ||||||||
SA Corporate Real Estate Fund | 334,984 | 133,810 | ||||||||
Segro PLC | 91,294 | 478,156 | ||||||||
Senior Housing Properties Trust | 22,486 | 554,055 | ||||||||
Shaftesbury PLC | 19,702 | 187,604 | ||||||||
Simon Property Group, Inc. | 37,144 | 5,740,605 | ||||||||
SL Green Realty Corp. | 11,098 | 1,049,538 | ||||||||
Sovran Self Storage, Inc. | 3,326 | 254,406 | ||||||||
Starhill Global REIT | 13,000 | 8,467 | ||||||||
Sun Communities, Inc. | 6,056 | 269,916 | ||||||||
Sunstone Hotel Investors, Inc. | 25,168 | 333,476 | ||||||||
Suntec Real Estate Investment Trust | 337,000 | 463,841 | ||||||||
Sycom Property Fund | 2,648 | 6,990 | ||||||||
Tanger Factory Outlet Centers | 9,396 | 327,451 | ||||||||
Taubman Centers, Inc. | 7,905 | 520,070 | ||||||||
Tokyu REIT, Inc. | 21 | 129,757 | ||||||||
Top REIT, Inc. | 10 | 46,664 | ||||||||
UDR, Inc. | 27,841 | 690,735 | ||||||||
Unibail-Rodamco SE | 12,009 | 3,137,582 | ||||||||
United Urban Investment Corp. | 289 | 441,082 | ||||||||
Universal Health Realty Income Trust | 3,195 | 140,324 | ||||||||
Vastned Retail NV | 3,099 | 143,212 | ||||||||
Ventas, Inc. | 35,586 | 2,321,631 | ||||||||
Vornado Realty Trust | 21,434 | 1,908,912 | ||||||||
Washington Real Estate Investment Trust | 6,967 | 182,605 | ||||||||
Weingarten Realty Investors | 14,778 | 468,906 | ||||||||
Wereldhave NV | 1,762 | 136,908 | ||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) (continued) |
| |||||||||
Westfield Group | 240,403 | $ | 2,460,164 | |||||||
Westfield Retail Trust | 322,403 | 940,621 | ||||||||
Workspace Group PLC | 3,876 | 30,415 | ||||||||
|
| |||||||||
| 82,785,818 | ||||||||||
|
| |||||||||
| ||||||||||
Real Estate Management & Development 2.3% |
| |||||||||
Aeon Mall Co., Ltd. | 13,730 | 389,945 | ||||||||
Atrium European Real Estate Ltd. | 5,530 | 33,082 | ||||||||
Ayala Land, Inc. | 654,400 | 445,496 | ||||||||
BR Malls Participacoes SA | 62,000 | 600,571 | ||||||||
Brookfield Asset Management, Inc., Class A | 69,900 | 2,767,441 | ||||||||
Brookfield Office Properties, Inc. | 29,400 | 549,285 | ||||||||
CA Immobilien Anlagen AG * | 6,666 | 101,371 | ||||||||
Capital & Counties Properties PLC | 73,316 | 407,764 | ||||||||
CapitaLand Ltd. | 341,000 | 854,373 | ||||||||
Castellum AB | 23,796 | 365,382 | ||||||||
Central Pattana PCL | 158,900 | 244,401 | ||||||||
Daibiru Corp. | 14,700 | 187,331 | ||||||||
Echo Investment SA * | 13,101 | 29,578 | ||||||||
Fabege AB | 20,886 | 240,314 | ||||||||
First Capital Realty, Inc. | 5,400 | 93,846 | ||||||||
Forest City Enterprises, Inc., Class A * | 18,558 | 375,985 | ||||||||
Global Logistic Properties Ltd. | 381,000 | 945,758 | ||||||||
Grainger PLC | 13,715 | 42,830 | ||||||||
GuocoLand Ltd. | 11,000 | 19,916 | ||||||||
Hang Lung Group Ltd. | 83,000 | 439,072 | ||||||||
Hang Lung Properties Ltd. | 266,000 | 875,972 | ||||||||
Heiwa Real Estate Co., Ltd. | 9,300 | 168,448 | ||||||||
Hongkong Land Holdings Ltd. | 137,000 | 844,596 | ||||||||
Hulic Co., Ltd. | 38,900 | 618,989 | ||||||||
Hysan Development Co., Ltd. | 62,342 | 291,624 | ||||||||
Immofinanz AG * | 131,707 | 576,822 | ||||||||
Kerry Properties Ltd. | 70,000 | 303,558 | ||||||||
Kungsleden AB | 17,608 | 129,332 | ||||||||
Mitsui Fudosan Co., Ltd. | 107,000 | 3,544,472 | ||||||||
NTT Urban Development Corp. | 19,600 | 250,201 | ||||||||
PSP Swiss Property AG * | 4,276 | 367,517 | ||||||||
Robinsons Land Corp. | 52,700 | 27,645 | ||||||||
SM Prime Holdings, Inc. | 894,875 | 396,408 | ||||||||
Swiss Prime Site AG * | 6,670 | 505,041 | ||||||||
Tokyu Fudosan Holdings Corp. * | 51,700 | 507,904 | ||||||||
Wheelock & Co., Ltd. | 107,000 | 546,055 | ||||||||
|
| |||||||||
| 19,088,325 | ||||||||||
|
| |||||||||
Total Common Stocks |
| 101,874,143 | ||||||||
|
| |||||||||
11
Statement of Investments (Continued)
October 31, 2013
Nationwide Alternatives Allocation Fund (Continued)
| U.S. Treasury Bonds 7.0% | ||||||||||
| Principal Amount† | Market Value | |||||||||
| ||||||||||
U.S. Treasury Inflation Indexed Bonds | ||||||||||
0.13%, 04/15/16 (a) | $ | 2,392,000 | $ | 2,602,977 | ||||||
0.13%, 04/15/17 (a) | 2,770,000 | 2,949,424 | ||||||||
0.13%, 04/15/18 | 2,120,000 | 2,218,976 | ||||||||
0.13%, 01/15/22 (a) | 2,575,000 | 2,639,180 | ||||||||
0.13%, 07/15/22 (a) | 2,557,000 | 2,574,109 | ||||||||
0.13%, 01/15/23 | 2,557,000 | 2,532,156 | ||||||||
0.38%, 07/15/23 | 936,000 | 940,220 | ||||||||
0.50%, 04/15/15 | 1,324,000 | 1,457,898 | ||||||||
0.63%, 07/15/21 (a) | 2,235,300 | 2,423,542 | ||||||||
0.63%, 02/15/43 | 997,000 | 840,041 | ||||||||
0.75%, 02/15/42 | 1,441,000 | 1,288,497 | ||||||||
1.13%, 01/15/21 (a) | 2,287,000 | 2,641,879 | ||||||||
1.25%, 07/15/20 (a) | 2,019,000 | 2,379,009 | ||||||||
1.38%, 07/15/18 | 934,000 | 1,116,345 | ||||||||
1.38%, 01/15/20 | 1,183,000 | 1,408,595 | ||||||||
1.63%, 01/15/15 | 1,185,000 | 1,495,886 | ||||||||
1.63%, 01/15/18 | 1,023,000 | 1,258,761 | ||||||||
1.75%, 01/15/28 | 974,000 | 1,221,914 | ||||||||
1.88%, 07/15/15 | 1,060,000 | 1,341,845 | ||||||||
1.88%, 07/15/19 | 946,000 | 1,178,517 | ||||||||
2.00%, 01/15/16 | 1,060,000 | 1,334,349 | ||||||||
2.00%, 01/15/26 | 1,247,000 | 1,699,700 | ||||||||
2.12%, 02/15/40 | 946,000 | 1,221,008 | ||||||||
2.13%, 01/15/19 | 920,000 | 1,141,539 | ||||||||
2.13%, 02/15/41 | 1,496,000 | 1,908,500 | ||||||||
2.38%, 01/15/17 | 1,075,000 | 1,383,458 | ||||||||
2.38%, 01/15/25 | 1,746,000 | 2,592,850 | ||||||||
2.38%, 01/15/27 | 1,028,000 | 1,437,349 | ||||||||
2.50%, 07/15/16 | 1,248,000 | 1,594,329 | ||||||||
2.50%, 01/15/29 | 882,000 | 1,185,963 | ||||||||
2.63%, 07/15/17 | 873,000 | 1,119,660 | ||||||||
3.38%, 04/15/32 | 313,000 | 579,637 | ||||||||
3.63%, 04/15/28 | 1,045,000 | 2,093,555 | ||||||||
3.88%, 04/15/29 | 1,215,000 | 2,485,052 | ||||||||
|
| |||||||||
Total U.S. Treasury Bonds | 58,286,720 | |||||||||
|
| |||||||||
| U.S. Treasury Note 32.2% | ||||||||||
U.S. Treasury Note, | 245,766,000 | 267,347,327 | ||||||||
|
| |||||||||
Total U.S. Treasury Note |
| 267,347,327 | ||||||||
|
| |||||||||
| Commodity-Linked Notes 4.8% | ||||||||||
Bank of America Corp. | 9,800,000 | 7,500,215 | ||||||||
| Commodity-Linked Notes (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
JPMorgan Chase Bank, NA | $ | 300,000 | $ | 234,009 | ||||||
JPMorgan Chase Bank, NA | 440,00 | 352,960 | ||||||||
JPMorgan Chase Bank, NA | 250,000 | 219,455 | ||||||||
JPMorgan Chase Bank, NA | 290,000 | 289,141 | ||||||||
JPMorgan Chase Bank, NA | 29,970,000 | 28,367,548 | ||||||||
JPMorgan Chase Bank, NA | 1,720,000 | 1,694,530 | ||||||||
UBS AG Commodity Note, | 250,000 | 188,246 | ||||||||
UBS AG Commodity Note, | 250,000 | 219,513 | ||||||||
12
Statement of Investments (Continued)
October 31, 2013
Nationwide Alternatives Allocation Fund (Continued)
| Commodity-Linked Notes (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
UBS AG Commodity Note, | $ | 450,000 | $ | 436,061 | ||||||
UBS AG Commodity Note, | 250,000 | 231,808 | ||||||||
UBS AG Commodity Note, | 330,000 | 346,737 | ||||||||
|
| |||||||||
Total Commodity-Linked Notes |
| 40,080,223 | ||||||||
|
| |||||||||
| Purchased Options 0.1% | ||||||||||
| Number of Contracts | ||||||||||
|
|
| ||||||||
Call Options 0.1% |
| |||||||||
KOSPI 200 Index, | 83 | 245,308 | ||||||||
KOSPI 200 Index, | 3 | 10,569 | ||||||||
KOSPI 200 Index, | 33 | 155,286 | ||||||||
KOSPI 200 Index, | 1 | 3,852 | ||||||||
SET50 Index, | 4 | 7,316 | ||||||||
SET50 Index, | 32 | 47,835 | ||||||||
SET50 Index, | 76 | 134,906 | ||||||||
|
| |||||||||
Total Purchased Options |
| 605,072 | ||||||||
|
| |||||||||
| Mutual Fund 41.6% | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
Money Market Fund 41.6% | ||||||||||
Fidelity Institutional Money Market Fund — Institutional Class, | 345,109,370 | $ | 345,109,370 | |||||||
|
| |||||||||
Total Mutual Fund |
| 345,109,370 | ||||||||
|
| |||||||||
Total Investments |
| 813,302,855 | ||||||||
Other assets in excess of |
| 16,801,380 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 830,104,235 | |||||||
|
| |||||||||
* Denotes a non-income producing security. |
† Principal amounts are not adjusted for inflation. |
(a) Security or a portion of the security was used to cover the margin requirement for futures contracts. |
(b) Variable Rate Security. The rate reflected in the Statement of Investments is the rate in effect on October 31, 2013. The maturity date represents the actual maturity date. |
(c) Security is linked to the Dow Jones-UBS Commodity Index 3 Month Forward Total Return. Security does not guarantee any return of principal at maturity but instead, will pay at maturity or upon exchange, an amount based on the closing value of the Dow Jones-UBS Commodity Index 3 Month Forward Total Return. Although these instruments are primarily debt obligations, they indirectly provide exposure to changes in the value of the underlying commodities. Holders of the security have the right to exchange these notes at any time. |
(d) Rule 144A, Section 4(2), or other security which is restricted as to sale to institutional investors. These securities were deemed liquid pursuant to procedures approved by the Board of Trustees. The aggregate value of these securities at October 31, 2013 was $40,080,223 which represents 4.83% of net assets. |
(e) Represents 7-day effective yield as of October 31, 2013. |
(f) See notes to financial statements for tax unrealized appreciation/(depreciation) of securities. |
AB Stock Company |
AG Stock Corporation |
AS Stock Corporation |
Bhd Public Limited Company |
13
Statement of Investments (Continued)
October 31, 2013
Nationwide Alternatives Allocation Fund (Continued)
KOSPI Korean Composite Stock Price Index |
KRW South Korean Won |
LIBOR London Interbank Offered Rate |
Ltd. Limited |
NA National Association |
NV Public Traded Company |
PCL Public Company Limited |
PLC Public Limited Company |
REIT Real Estate Investment Trust |
SA Stock Company |
SCA Limited partnership with share capital |
SE European Public Limited Liability Company |
SET Stock Exchange of Thailand |
SpA Limited Share Company |
THB Thailand Baht |
At October 31, 2013, the Fund’s open written options contracts were as follows:
Put Options
| Number of contracts | Description | Counterparty | Expiration Date | Premiums Paid/(Received) | Value at October 31, 2013 | Unrealized Appreciation/ (Depreciation) | ||||||||||||||
| 83 | KOSPI 200 Index (Strike Price KRW 265.53) | Credit Suisse International | 12/12/13 | $ | — | $ | (158,670 | ) | $ | (158,670 | ) | |||||||||
| 3 | KOSPI 200 Index (Strike Price KRW 263.70) | Credit Suisse International | 12/12/13 | — | (4,863 | ) | (4,863 | ) | ||||||||||||
| 33 | KOSPI 200 Index (Strike Price KRW 260.25) | Credit Suisse International | 12/12/13 | — | (39,036 | ) | (39,036 | ) | ||||||||||||
| 1 | KOSPI 200 Index (Strike Price KRW 262.70) | Credit Suisse International | 12/12/13 | — | (1,480 | ) | (1,480 | ) | ||||||||||||
| 4 | SET50 Index (Strike Price THB 969.50) | Credit Suisse International | 12/27/13 | — | (4,604 | ) | (4,604 | ) | ||||||||||||
| 76 | SET50 Index (Strike Price THB 972.25) | Credit Suisse International | 12/27/13 | — | (90,081 | ) | (90,081 | ) | ||||||||||||
| 32 | SET50 Index (Strike Price THB 987.37) | Credit Suisse International | 12/27/13 | — | (44,442 | ) | (44,442 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||
| $ | — | $ | (343,176 | ) | $ | (343,176 | ) | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
At October 31, 2013, the Fund’s open swap contracts were as follows:
Credit default swaps on sovereign issues — sell protection1
| Counterparty | Reference Entity | Fixed Annual Rate Paid by Fund | Notional Amount2 | Implied Credit Spread as of October 31, 20133 | Termination Date | Upfront Premium (Received)/ Paid4 | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| Bank of America Corp. | Federal Republic of Brazil | 1.00 | % | $ | 3,600,000 | 1.487 | % | 12/20/17 | $ | (11,443 | ) | $ | (54,464 | ) | ||||||||||||
| Bank of America Corp. | Republic of Colombia | 1.00 | 100,000 | 0.955 | 06/20/17 | (1,586 | ) | 1,862 | ||||||||||||||||||
| Bank of America Corp. | Republic of Indonesia | 1.00 | 3,600,000 | 1.382 | 06/20/17 | (111,871 | ) | 67,416 | ||||||||||||||||||
14
Statement of Investments (Continued)
October 31, 2013
Nationwide Alternatives Allocation Fund (Continued)
Credit default swaps on sovereign issues — sell protection1 (continued)
| Counterparty | Reference Entity | Fixed Annual Rate Paid by Fund | Notional Amount2 | Implied Credit Spread as of October 31, 20133 | Termination Date | Upfront Premium (Received)/ Paid4 | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| Bank of America Corp. | Republic of Indonesia | 1.00 | % | $ | 1,400,000 | 1.523 | % | 12/20/17 | $ | (27,060 | ) | $ | (438 | ) | ||||||||||||
| Bank of America Corp. | Republic of Philippines | 1.00 | 1,000,000 | 0.597 | 06/20/17 | (22,968 | ) | 38,632 | ||||||||||||||||||
| Bank of America Corp. | Republic of Philippines | 1.00 | 500,000 | 0.688 | 12/20/17 | (5,078 | ) | 12,012 | ||||||||||||||||||
| Credit Suisse International | Republic of Colombia | 1.00 | 100,000 | 0.850 | 12/20/16 | (2,873 | ) | 3,456 | ||||||||||||||||||
| Credit Suisse International | Republic of Colombia | 1.00 | 9,100,000 | 1.242 | 12/20/18 | (140,999 | ) | 43,085 | ||||||||||||||||||
| Credit Suisse International | Republic of Indonesia | 1.00 | 200,000 | 1.195 | 12/20/16 | (5,834 | ) | 4,863 | ||||||||||||||||||
| Credit Suisse International | Republic of Indonesia | 1.00 | 200,000 | 1.295 | 03/20/17 | (6,541 | ) | 4,823 | ||||||||||||||||||
| Credit Suisse International | Republic of Indonesia | 1.00 | 100,000 | 1.295 | 03/20/17 | (2,156 | ) | 1,298 | ||||||||||||||||||
| Credit Suisse International | Republic of Panama | 1.00 | 100,000 | 0.790 | 09/20/16 | (55 | ) | 774 | ||||||||||||||||||
| Credit Suisse International | Republic of Panama | 1.00 | 3,100,000 | 1.181 | 12/20/18 | (48,033 | ) | 24,052 | ||||||||||||||||||
| Credit Suisse International | Republic of Peru | 1.00 | 500,000 | 0.861 | 09/20/16 | (6,063 | ) | 8,642 | ||||||||||||||||||
| Credit Suisse International | Republic of Peru | 1.00 | 100,000 | 0.861 | 09/20/16 | (684 | ) | 1,200 | ||||||||||||||||||
| Credit Suisse International | Republic of Peru | 1.00 | 1,200,000 | 0.998 | 06/20/17 | (25,919 | ) | 27,411 | ||||||||||||||||||
| Credit Suisse International | Republic of Peru | 1.00 | 5,000,000 | 1.282 | 12/20/18 | (110,834 | ) | 47,390 | ||||||||||||||||||
| Credit Suisse International | Republic of Philippines | 1.00 | 200,000 | 0.448 | 09/20/16 | (3,222 | ) | 6,637 | ||||||||||||||||||
| Credit Suisse International | Republic of Philippines | 1.00 | 200,000 | 0.478 | 12/20/16 | (8,899 | ) | 12,397 | ||||||||||||||||||
| Credit Suisse International | Republic of Turkey | 1.00 | 1,800,000 | 1.363 | 09/20/16 | (78,529 | ) | 62,054 | ||||||||||||||||||
| Credit Suisse International | Republic of Turkey | 1.00 | 100,000 | 1.363 | 09/20/16 | (2,392 | ) | 1,478 | ||||||||||||||||||
| Credit Suisse International | Republic of Turkey | 1.00 | 600,000 | 1.452 | 03/20/17 | (27,246 | ) | 18,993 | ||||||||||||||||||
| Credit Suisse International | Republic of Venezuela | 5.00 | 1,200,000 | 9.476 | 09/20/16 | (214,200 | ) | 89,741 | ||||||||||||||||||
| Credit Suisse International | Republic of Venezuela | 5.00 | 100,000 | 9.476 | 09/20/16 | (9,811 | ) | (561 | ) | |||||||||||||||||
| Credit Suisse International | Republic of Venezuela | 5.00 | 100,000 | 9.499 | 12/20/16 | (11,217 | ) | 35 | ||||||||||||||||||
| Credit Suisse International | Republic of Venezuela | 5.00 | 200,000 | 9.545 | 03/20/17 | (13,883 | ) | (10,169 | ) | |||||||||||||||||
| Credit Suisse International | Russia Foreign Bond | 1.00 | 1,500,000 | 1.097 | 09/20/16 | (33,229 | ) | 30,834 | ||||||||||||||||||
| Credit Suisse International | Russia Foreign Bond | 1.00 | 100,000 | 1.097 | 09/20/16 | (1,161 | ) | 1,002 | ||||||||||||||||||
| Deutsche Bank AG | Federal Republic of Brazil | 1.00 | 1,100,000 | 1.191 | 09/20/16 | (7,230 | ) | 2,519 | ||||||||||||||||||
| Deutsche Bank AG | Federal Republic of Brazil | 1.00 | 100,000 | 1.191 | 09/20/16 | (414 | ) | (14 | ) | |||||||||||||||||
| Deutsche Bank AG | Federal Republic of Brazil | 1.00 | 4,100,000 | 1.382 | 06/20/17 | (80,281 | ) | 29,416 | ||||||||||||||||||
| Deutsche Bank AG | Federal Republic of Brazil | 1.00 | 16,800,000 | 1.727 | 12/20/18 | (593,078 | ) | 19,386 | ||||||||||||||||||
| Deutsche Bank AG | Republic of Indonesia | 1.00 | 11,500,000 | 1.909 | 12/20/18 | (809,756 | ) | 321,182 | ||||||||||||||||||
| Deutsche Bank AG | Republic of Panama | 1.00 | 800,000 | 0.790 | 09/20/16 | (1,173 | ) | 6,921 | ||||||||||||||||||
| Deutsche Bank AG | Republic of Peru | 1.00 | 2,400,000 | 1.076 | 12/20/17 | 0 | (4,580 | ) | ||||||||||||||||||
| Deutsche Bank AG | Republic of Philippines | 1.00 | 14,300,000 | 0.933 | 12/20/18 | (151,164 | ) | 215,584 | ||||||||||||||||||
| Deutsche Bank AG | Republic of Turkey | 1.00 | 200,000 | 1.452 | 03/20/17 | (11,436 | ) | 8,685 | ||||||||||||||||||
| Deutsche Bank AG | Republic of Turkey | 1.00 | 2,300,000 | 1.599 | 12/20/17 | (56,487 | ) | 4,287 | ||||||||||||||||||
| Deutsche Bank AG | Republic of Turkey | 1.00 | 22,100,000 | 1.854 | 12/20/18 | (1,201,298 | ) | 315,594 | ||||||||||||||||||
| Deutsche Bank AG | Republic of Venezuela | 5.00 | 3,600,000 | 9.585 | 06/20/17 | (331,416 | ) | (131,402 | ) | |||||||||||||||||
| Deutsche Bank AG | Republic of Venezuela | 5.00 | 900,000 | 9.650 | 12/20/17 | (80,879 | ) | (48,816 | ) | |||||||||||||||||
| Deutsche Bank AG | Republic of Venezuela | 5.00 | 23,000,000 | 9.771 | 12/20/18 | (3,597,035 | ) | (373,257 | ) | |||||||||||||||||
| Deutsche Bank AG | Russia Foreign Bond | 1.00 | 200,000 | 1.205 | 03/20/17 | (10,753 | ) | 9,620 | ||||||||||||||||||
| Deutsche Bank AG | Russia Foreign Bond | 1.00 | 2,200,000 | 1.265 | 06/20/17 | (97,329 | ) | 79,156 | ||||||||||||||||||
| Deutsche Bank AG | Russia Foreign Bond | 1.00 | 600,000 | 1.361 | 12/20/17 | (11,285 | ) | 3,288 | ||||||||||||||||||
| Deutsche Bank AG | Russia Foreign Bond | 1.00 | 14,700,000 | 1.616 | 12/20/18 | (505,193 | ) | 80,748 | ||||||||||||||||||
| Deutsche Bank AG | United Mexican States | 1.00 | 3,900,000 | 0.754 | 06/20/17 | (57,876 | ) | 96,886 | ||||||||||||||||||
| Deutsche Bank AG | United Mexican States | 1.00 | 21,700,000 | 1.047 | 12/20/18 | (210,863 | ) | 185,701 | ||||||||||||||||||
| UBS AG | Federal Republic of Brazil | 1.00 | 300,000 | 1.318 | 03/20/17 | (5,689 | ) | 2,876 | ||||||||||||||||||
| UBS AG | Republic of Indonesia | 1.00 | 1,100,000 | 1.133 | 09/20/16 | (18,400 | ) | 15,522 | ||||||||||||||||||
| UBS AG | Republic of Indonesia | 1.00 | 100,000 | 1.133 | 09/20/16 | (970 | ) | 709 | ||||||||||||||||||
| UBS AG | Republic of Panama | 1.00 | 100,000 | 0.790 | 09/20/16 | (1,014 | ) | 1,733 | ||||||||||||||||||
| UBS AG | Republic of Panama | 1.00 | 500,000 | 0.875 | 03/20/17 | (7,617 | ) | 10,286 | ||||||||||||||||||
15
Statement of Investments (Continued)
October 31, 2013
Nationwide Alternatives Allocation Fund (Continued)
Credit default swaps on sovereign issues — sell protection1 (continued)
| Counterparty | Reference Entity | Fixed Annual Rate Paid by Fund | Notional Amount2 | Implied Credit Spread as of October 31, 20133 | Termination Date | Upfront Premium (Received)/ Paid4 | Unrealized Appreciation/ (Depreciation) | |||||||||||||||||||
| UBS AG | Republic of Panama | 1.00 | % | $ | 1,900,000 | 0.924 | % | 06/20/17 | $ | (30,833 | ) | $ | 38,245 | |||||||||||||
| UBS AG | Republic of Peru | 1.00 | 300,000 | 0.894 | 12/20/16 | (3,826 | ) | 5,161 | ||||||||||||||||||
| UBS AG | Republic of Peru | 1.00 | 100,000 | 0.949 | 03/20/17 | (2,266 | ) | 2,552 | ||||||||||||||||||
| UBS AG | Republic of Philippines | 1.00 | 600,000 | 0.448 | 09/20/16 | (9,754 | ) | 20,000 | ||||||||||||||||||
| UBS AG | Republic of Philippines | 1.00 | 100,000 | 0.448 | 09/20/16 | (884 | ) | 2,592 | ||||||||||||||||||
| UBS AG | Republic of Turkey | 1.00 | 100,000 | 1.363 | 09/20/16 | (2,745 | ) | 1,830 | ||||||||||||||||||
| UBS AG | Republic of Turkey | 1.00 | 4,100,000 | 1.508 | 06/20/17 | (201,009 | ) | 132,187 | ||||||||||||||||||
| UBS AG | Russia Foreign Bond | 1.00 | 300,000 | 1.138 | 12/20/16 | (9,236 | ) | 8,308 | ||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
| $ | (9,042,975 | ) | $ | 1,507,360 | ||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
Centrally cleared credit default swaps on credit indices — sell protection1
| Reference Entity | Fixed Annual Rate Paid by Fund | Notional Amount2 | Implied Credit Spread as of October 31, 20133 | Termination Date | Upfront Premium (Received)/ Paid4 | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||||
| Markit CDX North America High Yield Index Series 20 | 5.00 | % | $ | 116,220,000 | 3.534 | % | 12/20/18 | $ | 5,578,102 | $ | 2,725,090 | |||||||||||||
|
|
|
| |||||||||||||||||||||
| $ | 5,578,102 | $ | 2,725,090 | |||||||||||||||||||||
|
|
|
| |||||||||||||||||||||
CDX Credit Default Swap Index
| 1 | The Fund, as a seller of credit protection, receives periodic payments and any upfront premium from the protection buyer, and is obligated to make a contingent payment, upon occurrence of a credit event with respect to an underlying reference obligation, as defined under the terms of each individual swap contract. |
| 2 | The notional amount is the maximum amount that a seller of a credit default swap would be obligated to pay and a buyer of credit protection would receive, upon occurrence of a credit event. |
| 3 | Implied credit spreads are an indication of the seller’s performance risk, related to the likelihood of a credit event occurring that would require a seller to make a payment to a buyer. Implied credit spreads are used to determine the value of swap contracts and reflect the cost of buying/selling protection, which may include upfront payments made to enter into the contract. Therefore, higher spreads would indicate a greater likelihood that a seller will be obligated to perform (i.e., make payment) under the swap contract. Increasing values, in absolute terms and relative notional amounts, are also indicative of greater performance risk. Implied credit spreads for credit default swaps on credit indices are linked to the weighted average spread across the underlying reference obligations included in a particular index. |
| 4 | Upfront premiums generally related to payments received at the initiation of the agreement to compensate the differences between the stated terms of the swap agreement and current market conditions (credit spreads, interest rates and other relevant factors). |
At October 31, 2013, the Fund has $120,000 and $11,540,000 segregated as collateral with Bank of America Corp. and Deutsche Bank AG, respectively, for open credit default swap contracts.
Equity Swaps
| Counterparty | Reference Entity | Termination Date | Notional Amount | Unrealized Appreciation/ (Depreciation) | ||||||||||||
| Credit Suisse International | Bovespa Index | 12/18/13 | BRL | 25,218,276 | $ | 237,414 | ||||||||||
| Credit Suisse International | FTSE KLCI Index | 11/29/13 | MYR | 16,679,636 | (43,257 | ) | ||||||||||
| Credit Suisse International | ISE 30 Index | 12/31/13 | TRY | 4,551,097 | (38,428 | ) | ||||||||||
| Credit Suisse International | RTS Index | 12/16/13 | $ | 5,701,827 | 213,833 | |||||||||||
| Credit Suisse International | WIG20 Index | 12/20/13 | PLN | 3,849,921 | 65,327 | |||||||||||
|
| |||||||||||||||
| $ | 434,889 | |||||||||||||||
|
| |||||||||||||||
16
Statement of Investments (Continued)
October 31, 2013
Nationwide Alternatives Allocation Fund (Continued)
BRL Brazilian Real |
FTSE Financial Times Stock Exchange |
ISE Istanbul Stock Exchange |
KLCI Kuala Lumpur Composite Index |
MYR Malaysia Ringgit |
PLN Poland Zloty |
RTS Russian Trading System |
TRY Turkish Lira |
WIG Warsaw Stock Exchange |
At October 31, 2013, the Fund has $2,120,000 segregated as collateral with Credit Suisse International for open written options, credit default swaps, and equity swaps contracts.
At October 31, 2013, the Fund’s open futures contracts were as follows (Note 2):
| Number of Contracts | Long Contracts | Expiration | Notional Value Covered by Contracts | Unrealized Appreciation/ (Depreciation) | ||||||||||||
| 49 | Australian 10 Year Bond Future | 12/16/13 | $ | 5,396,819 | $ | 411 | ||||||||||
| 54 | Canadian 10 Year Bond Future | 12/18/13 | 6,802,762 | 120,130 | ||||||||||||
| 1,005 | EURO-BOBL Future | 12/06/13 | 170,963,058 | 1,764,761 | ||||||||||||
| 170 | FTSE/JSE Top 40 Future | 12/19/13 | 6,921,081 | 168,729 | ||||||||||||
| 263 | H-Shares Index Future | 11/28/13 | 18,041,603 | 794,785 | ||||||||||||
| 34 | Japan 10 Year Bond Treasury Future | 12/11/13 | 50,161,497 | 440,512 | ||||||||||||
| 62 | Long GILT Future | 12/27/13 | 11,060,445 | 126,982 | ||||||||||||
| 180 | Mexican Bolsa Index Future | 12/20/13 | 5,654,433 | (27,829 | ) | |||||||||||
| 353 | MSCI Taiwan Index Future | 11/28/13 | 10,515,870 | 12,532 | ||||||||||||
| 476 | SGX S&P CNX Nifty Future | 11/28/13 | 6,019,496 | 93,684 | ||||||||||||
|
|
|
| |||||||||||||
| $ | 291,537,064 | $ | 3,494,697 | |||||||||||||
|
|
|
| |||||||||||||
BOBL Bundesobligationen (Federal Republic of Germany) |
CNX CRISIL NSE Index |
FTSE Financial Times Stock Exchange |
GILT Government Index-Linked Treasury |
JSE Johannesburg Stock Exchange |
SGX Singapore Exchange |
At October 31, 2013, the Fund’s open forward foreign currency contracts against the United States Dollar were as follows (Note 2):
| Currency | Counterparty | Delivery Date | Currency Delivered | Contract Value | Market Value | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||
Short Contracts: | ||||||||||||||||||||||
| Brazilian Real | UBS AG | 11/04/13 | (23,600,000 | ) | $ | (10,781,179 | ) | $ | (10,534,774 | ) | $ | 246,405 | ||||||||||
| Turkish Lira | UBS AG | 12/18/13 | (100,000 | ) | (48,400 | ) | (49,705 | ) | (1,305 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||||||
| Total Short Contracts | $ | (10,829,579 | ) | $ | (10,584,479 | ) | $ | 245,100 | ||||||||||||||
|
|
|
|
|
| |||||||||||||||||
17
Statement of Investments (Continued)
October 31, 2013
Nationwide Alternatives Allocation Fund (Continued)
| Currency | Counterparty | Delivery Date | Currency Received | Contract Value | Market Value | Unrealized Appreciation/ (Depreciation) | ||||||||||||||||
Long Contracts: | ||||||||||||||||||||||
| Brazilian Real | UBS AG | 11/04/13 | 600,000 | $ | 270,819 | $ | 267,833 | $ | (2,986 | ) | ||||||||||||
| Brazilian Real | UBS AG | 11/04/13 | 16,600,000 | 7,309,234 | 7,410,053 | 100,819 | ||||||||||||||||
| Brazilian Real | UBS AG | 11/04/13 | 6,400,000 | 2,877,116 | 2,856,888 | (20,228 | ) | |||||||||||||||
| Brazilian Real | UBS AG | 12/03/13 | 23,600,000 | 10,708,776 | 10,461,167 | (247,609 | ) | |||||||||||||||
| Czech Republic Koruna | UBS AG | 12/18/13 | 2,200,000 | 115,907 | 115,802 | (105 | ) | |||||||||||||||
| Czech Republic Koruna | UBS AG | 12/18/13 | 2,200,000 | 117,122 | 115,802 | (1,320 | ) | |||||||||||||||
| Hong Kong Dollar | UBS AG | 12/18/13 | 40,700,000 | 5,249,495 | 5,250,177 | 682 | ||||||||||||||||
| Hong Kong Dollar | UBS AG | 12/18/13 | 3,000,000 | 386,956 | 386,991 | 35 | ||||||||||||||||
| Hong Kong Dollar | UBS AG | 12/18/13 | 107,400,000 | 13,853,149 | 13,854,275 | 1,126 | ||||||||||||||||
| Hungarian Forint | UBS AG | 12/18/13 | 39,200,000 | 176,992 | 179,522 | 2,530 | ||||||||||||||||
| Hungarian Forint | UBS AG | 12/18/13 | 19,600,000 | 85,806 | 89,761 | 3,955 | ||||||||||||||||
| Indian Rupee | UBS AG | 12/18/13 | 96,800,000 | 1,449,536 | 1,558,930 | 109,394 | ||||||||||||||||
| Indian Rupee | UBS AG | 12/18/13 | 8,800,000 | 140,340 | 141,721 | 1,381 | ||||||||||||||||
| Indian Rupee | UBS AG | 12/18/13 | 237,600,000 | 3,690,301 | 3,826,464 | 136,163 | ||||||||||||||||
| Korean Won | UBS AG | 12/18/13 | 3,935,400,000 | 3,611,784 | 3,698,005 | 86,221 | ||||||||||||||||
| Korean Won | UBS AG | 12/18/13 | 10,869,200,000 | 10,072,468 | 10,213,537 | 141,069 | ||||||||||||||||
| Korean Won | UBS AG | 12/18/13 | 281,100,000 | 257,961 | 264,143 | 6,182 | ||||||||||||||||
| Korean Won | UBS AG | 12/18/13 | 562,200,000 | 522,182 | 528,286 | 6,104 | ||||||||||||||||
| Malaysian Ringgit | UBS AG | 12/18/13 | 300,000 | 94,212 | 94,777 | 565 | ||||||||||||||||
| Malaysian Ringgit | UBS AG | 12/18/13 | 300,000 | 91,127 | 94,777 | 3,650 | ||||||||||||||||
| Malaysian Ringgit | UBS AG | 12/18/13 | 8,700,000 | 2,675,277 | 2,748,532 | 73,255 | ||||||||||||||||
| Malaysian Ringgit | UBS AG | 12/18/13 | 3,300,000 | 997,612 | 1,042,547 | 44,935 | ||||||||||||||||
| Mexican Peso | UBS AG | 12/18/13 | 2,200,000 | 166,965 | 168,020 | 1,055 | ||||||||||||||||
| Mexican Peso | UBS AG | 12/18/13 | 48,400,000 | 3,661,950 | 3,696,433 | 34,483 | ||||||||||||||||
| Mexican Peso | UBS AG | 12/18/13 | 1,100,000 | 83,366 | 84,010 | 644 | ||||||||||||||||
| Mexican Peso | UBS AG | 12/18/13 | 17,600,000 | 1,327,521 | 1,344,158 | 16,637 | ||||||||||||||||
| Polish Zlotych | UBS AG | 12/18/13 | 3,000,000 | 957,426 | 971,184 | 13,758 | ||||||||||||||||
| Polish Zlotych | UBS AG | 12/18/13 | 1,200,000 | 370,356 | 388,474 | 18,118 | ||||||||||||||||
| South African Rand | UBS AG | 12/18/13 | 1,400,000 | 138,686 | 138,524 | (162 | ) | |||||||||||||||
| South African Rand | UBS AG | 12/18/13 | 48,300,000 | 4,738,313 | 4,779,073 | 40,760 | ||||||||||||||||
| South African Rand | UBS AG | 12/18/13 | 1,400,000 | 138,279 | 138,524 | 245 | ||||||||||||||||
| South African Rand | UBS AG | 12/18/13 | 16,800,000 | 1,658,538 | 1,662,286 | 3,748 | ||||||||||||||||
| Taiwan Dollar | UBS AG | 12/18/13 | 3,300,000 | 112,841 | 112,433 | (408 | ) | |||||||||||||||
| Taiwan Dollar | UBS AG | 12/18/13 | 3,300,000 | 111,993 | 112,433 | 440 | ||||||||||||||||
| Taiwan Dollar | UBS AG | 12/18/13 | 85,800,000 | 2,909,215 | 2,923,270 | 14,055 | ||||||||||||||||
| Taiwan Dollar | UBS AG | 12/18/13 | 231,000,000 | 7,851,801 | 7,870,341 | 18,540 | ||||||||||||||||
| Thailand Baht | UBS AG | 12/18/13 | 59,500,000 | 1,896,717 | 1,906,243 | 9,526 | ||||||||||||||||
| Thailand Baht | UBS AG | 12/18/13 | 24,500,000 | 755,939 | 784,923 | 28,984 | ||||||||||||||||
| Turkish Lira | UBS AG | 12/18/13 | 1,000,000 | 484,174 | 497,050 | 12,876 | ||||||||||||||||
| Turkish Lira | UBS AG | 12/18/13 | 2,500,000 | 1,214,447 | 1,242,624 | 28,177 | ||||||||||||||||
| Turkish Lira | UBS AG | 12/18/13 | 100,000 | 49,478 | 49,705 | 227 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
| Total Long Contracts | $93,382,177 | $ | 94,069,698 | $ | 687,521 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||
The accompanying notes are an integral part of these financial statements.
18
Statement of Assets and Liabilities
October 31, 2013
Nationwide Alternatives Allocation Fund | ||||||
Assets: | ||||||
Investments, at value (cost $812,664,232) | $ | 813,302,855 | ||||
Cash | 136,202 | |||||
Restricted cash, collateral for open written options, credit default swaps, and equity swaps contracts | 13,780,000 | |||||
Foreign currencies, at value (cost $467,676) | 464,647 | |||||
Interest and dividends receivable | 3,876,307 | |||||
Receivable for investments sold | 1,643 | |||||
Receivable for capital shares issued | 9,477 | |||||
Reclaims receivable | 4,947 | |||||
Swaps contracts, at value (Note 2) | 685,803 | |||||
Receivable for variation margin on swap contracts | 6,029,348 | |||||
Unrealized appreciation on forward foreign currency contracts (Note 2) | 1,206,744 | |||||
Prepaid expenses | 26,057 | |||||
|
| |||||
Total Assets | 839,524,030 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 6,606 | |||||
Payable for capital shares redeemed | 280,917 | |||||
Payable for variation margin on futures contracts | 1,297 | |||||
Cash collateral due to broker for open swap contracts | 410,000 | |||||
Written options, at value (premiums $0)(Note 2) | 343,176 | |||||
Swap contracts, at value (Note 2) | 7,786,529 | |||||
Unrealized depreciation on forward foreign currency contracts (Note 2) | 274,123 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 235,992 | |||||
Fund administration fees | 22,998 | |||||
Distribution fees | 669 | |||||
Administrative servicing fees | 102 | |||||
Accounting and transfer agent fees | 1,877 | |||||
Trustee fees | 568 | |||||
Deferred capital gain country tax | 3,523 | |||||
Custodian fees | 2,500 | |||||
Compliance program costs (Note 3) | 3 | |||||
Professional fees | 39,204 | |||||
Printing fees | 8,125 | |||||
Other | 1,586 | |||||
|
| |||||
Total Liabilities | 9,419,795 | |||||
|
| |||||
Net Assets | $ | 830,104,235 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 823,971,768 | ||||
Accumulated distributions in excess of net investment income | 1,997,205 | |||||
Accumulated net realized losses from investment, futures, forward and foreign currency, written option, and swap transactions | (5,194,627 | ) | ||||
Net unrealized appreciation/(depreciation) from investments† | 635,100 | |||||
Net unrealized appreciation/(depreciation) from futures contracts (Note 2) | 3,494,697 | |||||
Net unrealized appreciation/(depreciation) from forward foreign currency contracts (Note 2) | 932,621 | |||||
Net unrealized appreciation/(depreciation) from translation of assets and liabilities denominated in foreign currencies | (56,692 | ) | ||||
Net unrealized appreciation/(depreciation) from written options (Note 2) | (343,176 | ) | ||||
Net unrealized appreciation/(depreciation) from swap contracts (Note 2) | 4,667,339 | |||||
|
| |||||
Net Assets | $ | 830,104,235 | ||||
|
| |||||
| † | Net of $3,523 of deferred capital gain country tax. |
19
Statement of Assets and Liabilities (Continued)
October 31, 2013
Nationwide Alternatives Allocation Fund | ||||||
Net Assets: | ||||||
Class A Shares | $ | 1,237,486 | ||||
Class C Shares | 492,813 | |||||
Institutional Service Class Shares | 82,618 | |||||
Institutional Class Shares | 828,291,318 | |||||
|
| |||||
Total | $ | 830,104,235 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 126,306 | |||||
Class C Shares | 50,876 | |||||
Institutional Service Class Shares | 8,408 | |||||
Institutional Class Shares | 84,314,017 | |||||
|
| |||||
Total | 84,499,607 | |||||
|
| |||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares(a) | $ | 9.80 | ||||
Class C Shares(b) | $ | 9.69 | ||||
Institutional Service Class Shares | $ | 9.83 | ||||
Institutional Class Shares | $ | 9.82 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 10.03 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 2.25 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 0.75% on sales of shares of original purchases of $500,000 or more or that were not subject to a front-end sales charge made within 18 months of the purchase date. |
| (b) | For Class C Shares, the redemption price per share is reduced by 1.00% for shares held less than one year. |
The accompanying notes are an integral part of these financial statements.
20
Statement of Operations
For the Year Ended October 31, 2013
Nationwide Alternatives Allocation Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 1,037,813 | ||||
Interest income | 1,181,549 | |||||
Other income | 45 | |||||
Foreign tax withholding | (36,490 | ) | ||||
|
| |||||
Total Income | 2,182,917 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 1,042,040 | |||||
Fund administration fees | 142,447 | |||||
Distribution fees Class A | 2,386 | |||||
Distribution fees Class C | 4,352 | |||||
Administrative servicing fees Class A | 585 | |||||
Registration and filing fees | 47,441 | |||||
Professional fees | 64,116 | |||||
Printing fees | 20,182 | |||||
Trustee fees | 7,595 | |||||
Custodian fees | 18,027 | |||||
Accounting and transfer agent fees | 16,706 | |||||
Compliance program costs (Note 3) | 1,160 | |||||
Other | 46,685 | |||||
|
| |||||
Total expenses before earnings credit and expenses reimbursed | 1,413,722 | |||||
|
| |||||
Earnings credit (Note 5) | (9,326 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (347,963 | ) | ||||
|
| |||||
Net Expenses | 1,056,433 | |||||
|
| |||||
NET INVESTMENT INCOME | 1,126,484 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized losses from investment transactions | (1,827,338 | ) | ||||
Net realized gains from futures transactions (Note 2) | 80,703 | |||||
Net realized losses from forward and foreign currency transactions (Note 2) | (477,728 | ) | ||||
Net realized losses from written option transactions (Note 2) | (503,578 | ) | ||||
Net realized gains from swap transactions (Note 2) | 4,435,791 | |||||
|
| |||||
Net realized gains from investment, futures, forward and foreign currency, written options, and swap transactions | 1,707,850 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments†† | (489,731 | ) | ||||
Net change in unrealized appreciation/(depreciation) from futures contracts (Note 2) | 3,457,077 | |||||
Net change in unrealized appreciation/(depreciation) from forward foreign currency contracts (Note 2) | 750,078 | |||||
Net change in unrealized appreciation/(depreciation) from translation of assets and liabilities denominated in foreign currencies | (51,946 | ) | ||||
Net change in unrealized appreciation/(depreciation) from written options (Note 2) | (220,177 | ) | ||||
Net change in unrealized appreciation/(depreciation) from swap contracts (Note 2) | 3,719,582 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments, futures contracts, forward foreign currency contracts, translation of assets and liabilities denominated in foreign currencies, written options, and swap contracts | 7,164,883 | |||||
|
| |||||
Net realized/unrealized gains from investments, futures, forward and foreign currency transactions, translation of assets and liabilities denominated in foreign currencies, written options, and swap contracts | 8,872,733 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 9,999,217 | ||||
|
| |||||
| †† | Net of increase in deferred capital gain country tax accrual on unrealized depreciation of $3,523. |
The accompanying notes are an integral part of these financial statements.
21
Statements of Changes in Net Assets
| Nationwide Alternatives Allocation Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 1,126,484 | $ | 881,844 | ||||||||
Net realized gains from investment, futures, forward and foreign currency, written option, and swap transactions | 1,707,850 | 4,912,299 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments, futures contracts, forward foreign currency contracts, translation of assets and liabilities denominated in foreign currencies, written options, and swap contracts | 7,164,883 | (1,399,121 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 9,999,217 | 4,395,022 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (3,230 | ) | — | |||||||||
Class C | — | — | ||||||||||
Institutional Service Class | (67 | ) | (8 | ) | ||||||||
Institutional Class | (1,451,513 | ) | (150,008 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (1,454,810 | ) | (150,016 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 634,082,770 | 17,275,341 | ||||||||||
|
|
|
| |||||||||
Change in net assets | 642,627,177 | 21,520,347 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 187,477,058 | 165,956,711 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 830,104,235 | $ | 187,477,058 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed (distributions in excess of) net investment income at end of year | $ | 1,997,205 | $ | (690,314 | ) | |||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Proceeds from shares issued | $ | 842,794 | $ | 427,024 | ||||||||
Dividends reinvested | 3,083 | — | ||||||||||
Cost of shares redeemed | (317,253 | ) | (251,239 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 528,624 | 175,785 | ||||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Proceeds from shares issued | 172,669 | 226,058 | ||||||||||
Dividends reinvested | — | — | ||||||||||
Cost of shares redeemed | (8,745 | ) | (38,624 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 163,924 | 187,434 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares | ||||||||||||
Proceeds from shares issued | 74,601 | — | ||||||||||
Dividends reinvested | 67 | 8 | ||||||||||
Cost of shares redeemed | (54 | ) | — | |||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 74,614 | 8 | ||||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 690,499,174 | 51,792,053 | ||||||||||
Dividends reinvested | 1,451,513 | 150,008 | ||||||||||
Cost of shares redeemed | (58,635,079 | ) | (35,029,947 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 633,315,608 | 16,912,114 | ||||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 634,082,770 | $ | 17,275,341 | ||||||||
|
|
|
| |||||||||
22
Statements of Changes in Net Assets (Continued)
| Nationwide Alternatives Allocation Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Issued | 85,783 | 45,644 | ||||||||||
Reinvested | 313 | — | ||||||||||
Redeemed | (32,426 | ) | (26,429 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 53,670 | 19,215 | ||||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Issued | 17,759 | 24,427 | ||||||||||
Reinvested | — | — | ||||||||||
Redeemed | (900 | ) | (4,105 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 16,859 | 20,322 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares | ||||||||||||
Issued | 7,505 | — | ||||||||||
Reinvested | 7 | 1 | ||||||||||
Redeemed | (5 | ) | — | |||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 7,507 | 1 | ||||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 71,213,198 | 5,479,295 | ||||||||||
Reinvested | 147,362 | 16,668 | ||||||||||
Redeemed | (6,124,539 | ) | (3,758,195 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 65,236,021 | 1,737,768 | ||||||||||
|
|
|
| |||||||||
Total change in shares | 65,314,057 | 1,777,306 | ||||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
The accompanying notes are an integral part of these financial statements.
23
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Alternatives Allocation Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Investment Income | Total Distributions | Redemption Fees | Net Asset Value, End of Period | Total Return(a)(b) | Net Assets at End of Period | Ratio of to Average | Ratio of Net Investment Income (Loss) to Average Net Assets(c) | Ratio of Expenses Net Assets(c)(d) | Portfolio Turnover(e) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013(f) | $ | 9.74 | 0.01 | 0.09 | 0.10 | (0.04 | ) | (0.04 | ) | — | $ | 9.80 | 1.07% | $ | 1,237,486 | 0.71% | 0.12% | 0.86% | 7.42% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012(f) | $ | 9.53 | 0.02 | 0.19 | 0.21 | — | — | — | $ | 9.74 | 2.20% | $ | 707,666 | 0.72% | 0.18% | 0.93% | 87.25% | |||||||||||||||||||||||||||||||||||||||
Period Ended October 31, 2011(f)(g) | $ | 10.00 | 0.01 | (0.48 | ) | (0.47 | ) | — | — | — | $ | 9.53 | (4.70% | ) | $ | 508,909 | 0.65% | 0.24% | 1.15% | 15.06% | ||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013(f) | $ | 9.66 | (0.05 | ) | 0.08 | 0.03 | — | — | — | $ | 9.69 | 0.31% | $ | 492,813 | 1.40% | (0.56% | ) | 1.55% | 7.42% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012(f) | $ | 9.51 | (0.05 | ) | 0.20 | 0.15 | — | — | — | $ | 9.66 | 1.58% | $ | 328,521 | 1.40% | (0.52% | ) | 1.61% | 87.25% | |||||||||||||||||||||||||||||||||||||
Period Ended October 31, 2011(f)(g) | $ | 10.00 | (0.01 | ) | (0.48 | ) | (0.49 | ) | — | — | — | $ | 9.51 | (4.90% | ) | $ | 130,226 | 1.39% | (0.47% | ) | 1.95% | 15.06% | ||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013(f) | $ | 9.77 | 0.04 | 0.09 | 0.13 | (0.07 | ) | (0.07 | ) | — | $ | 9.83 | 1.38% | $ | 82,618 | 0.40% | 0.42% | 0.54% | 7.42% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012(f) | $ | 9.53 | 0.05 | 0.20 | 0.25 | (0.01 | ) | (0.01 | ) | — | $ | 9.77 | 2.62% | $ | 8,803 | 0.40% | 0.49% | 0.60% | 87.25% | |||||||||||||||||||||||||||||||||||||
Period Ended October 31, 2011(f)(g) | $ | 10.00 | 0.01 | (0.48 | ) | (0.47 | ) | — | — | — | $ | 9.53 | (4.70% | ) | $ | 8,580 | 0.40% | 0.40% | 0.77% | 15.06% | ||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013(f) | $ | 9.77 | 0.04 | 0.09 | 0.13 | (0.08 | ) | (0.08 | ) | — | $ | 9.82 | 1.28% | $ | 828,291,318 | 0.40% | 0.43% | 0.54% | 7.42% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012(f) | $ | 9.53 | 0.05 | 0.20 | 0.25 | (0.01 | ) | (0.01 | ) | — | $ | 9.77 | 2.61% | $ | 186,432,068 | 0.40% | 0.49% | 0.61% | 87.25% | |||||||||||||||||||||||||||||||||||||
Period Ended October 31, 2011(f)(g) | $ | 10.00 | 0.01 | (0.48 | ) | (0.47 | ) | — | — | — | $ | 9.53 | (4.70% | ) | $ | 165,308,996 | 0.40% | 0.41% | 0.76% | 15.06% | ||||||||||||||||||||||||||||||||||||
Amounts designated as "–" are zero or have been rounded to zero.
| (a) | Excludes sales charge. |
| (b) | Not annualized for periods less than one year. |
| (c) | Annualized for periods less than one year. |
| (d) | During the period, certain fees may have been waived and/or reimbursed. If such waivers/reimbursements had not occurred, the ratios would have been as indicated. |
| (e) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (f) | Per share calculations were performed using average shares method. |
| (g) | For the period from July 26, 2011 (commencement of operations) through October 31, 2011. |
The accompanying notes are an integral part of these financial statements.
24
October 31, 2013
1. Organization
Nationwide Mutual Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, organized as a statutory trust under the laws of the State of Delaware. The Trust has authorized an unlimited number of shares of beneficial interest (“shares”), without par value. As of October 31, 2013, the Trust operates fifty-three (53) separate series, or mutual funds, each with its own investment objective(s) and strategies. This report contains the financial statements and financial highlights of the Nationwide Alternatives Allocation Fund (the “Fund”), a series of the Trust.
The Fund is a non-diversified fund, as defined in the 1940 Act.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements requires Fund management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses for the period. The Fund utilizes various methods to measure the value of its investments on a recurring basis. Amounts received upon the sale of such investments could differ from those estimated values and those differences could be material.
| (a) | Security Valuation |
The fair market value of the Fund’s portfolio securities is determined in accordance with the procedures described below. U.S. GAAP defines fair market value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trust’s investment adviser, Nationwide Fund Advisors (“NFA”), to the Fund assigns a fair value to Fund investments in accordance with a hierarchy that prioritizes the various types of inputs used to measure fair value. The hierarchy gives the highest priority to readily available unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements) when market prices are not readily available or reliable.
The three levels of the hierarchy are summarized below.
| — | Level 1 — Quoted prices in active markets for identical assets |
| — | Level 2 — Other significant observable inputs (including quoted prices of similar securities, interest rates, prepayment speeds, credit risk, etc.) |
| — | Level 3 — Significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Changes in valuation techniques may result in transfers into or out of an investment’s assigned level within the hierarchy.
An investment’s categorization within the hierarchy is based on the lowest level of any input that is significant to the fair valuation in its entirety. The inputs or methodology used to value investments are not intended to indicate the risk associated with investing in those investments.
Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time). Equity securities are generally valued at the last quoted sale price or official closing price, or, if there is no such price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees (the “Board of Trustees”). Prices are taken from the primary market or exchange on which each security trades. Shares of registered open-end management investment companies are valued at net asset value (“NAV”) as reported by such company. Investments valued in this manner are generally categorized as Level 1 investments within the hierarchy.
25
Notes to Financial Statements (continued)
October 31, 2013
The Board of Trustees has delegated authority to NFA, and the Trust’s administrator, Nationwide Fund Management LLC (“NFM”), to assign fair value. NFA and NFM have established a Fair Valuation Committee (“FVC”) to assign these fair valuations.
The FVC follows guidelines approved by the Board of Trustees to assign the fair value. The fair value of a security may differ from its quoted or published price. Fair valuation of portfolio securities may occur on a daily basis.
Securities may be fair valued in a variety of circumstances, such as where (i) market quotations are not readily available; (ii) an independent pricing service does not provide a value or the value provided by an independent pricing service is determined to be unreliable in the judgment of NFA or its designee; (iii) a significant event has occurred that affects the value of the Fund’s securities after trading has stopped (e.g., earnings announcements or news relating to natural disasters affecting an issuer’s operations); (iv) the securities are illiquid; (v) the securities have defaulted or been delisted from an exchange and are no longer trading; or (vi) any other circumstance in which the FVC believes that market quotations do not accurately reflect the value of a security.
The fair valuation of securities takes into account relevant factors and surrounding circumstances, including, but not limited to, the prices of related or comparable assets or liabilities, recent transactions, market multiples, anticipated cash flows, the nature and duration of any restrictions on transfer, book values, and other information relevant to the investment. Methods utilized to determine fair value may include, among others, the following: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a combination of these and other methods. Fair valuations may also take into account significant events that occur before Valuation Time but after the close of the principal market on which a security trades that materially affect the value of such security. The FVC monitors the results of fair valuation determinations and regularly reports the results to the Board of Trustees.
Securities listed on a foreign exchange are generally fair valued by an independent fair value pricing service approved by the Board of Trustees or otherwise are valued at the last sale price at the close of the exchange on which the security is principally traded. Securities valued in this manner are generally categorized as Level 2 and Level 1 investments, respectively, within the hierarchy. Fair valuation factors are provided by an independent pricing service provider. When fair valuation factors are utilized, the value assigned to securities may not be the same as quoted or published prices of the securities on their primary markets. Values of foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.
Debt and other fixed-income securities are generally valued at the bid evaluation price provided by an independent pricing service as approved by the Board of Trustees. Independent pricing service providers may use broker-dealer quotations, reported trades or valuation estimates from their internal pricing models. The service providers’ internal models use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar assets and are generally categorized as Level 2 investments within the hierarchy.
Commodity-linked notes are valued at the last quoted bid price provided by the counterparty, which generally considers the movement of an underlying commodity index as well as other terms of the contract including the leverage factor and any fee and/or interest components of the note, and are categorized as Level 2 investments within the hierarchy.
Valuation of various derivatives used by the Fund is discussed below.
26
Notes to Financial Statements (continued)
October 31, 2013
The following table provides a summary of the inputs used to value the Fund’s net assets as of October 31, 2013. Please refer to the Statements of Investments for additional information on portfolio holdings.
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Commodity-Linked Notes | $ | — | $ | 40,080,223 | $ | — | $ | 40,080,223 | ||||||||
Common Stocks | ||||||||||||||||
Real Estate Investment Trusts (REITs) | 55,287,801 | 27,498,017 | — | 82,785,818 | ||||||||||||
Real Estate Management & Development | 5,016,468 | 14,071,857 | — | 19,088,325 | ||||||||||||
Total Common Stocks | $ | 60,304,269 | $ | 41,569,874 | $ | — | $ | 101,874,143 | ||||||||
Swap Contracts* | 516,574 | 2,894,319 | — | 3,410,893 | ||||||||||||
Forward Foreign Currency Contracts | — | 1,206,744 | — | 1,206,744 | ||||||||||||
Futures Contracts | 3,522,526 | — | — | 3,522,526 | ||||||||||||
Mutual Fund | 345,109,370 | — | — | 345,109,370 | ||||||||||||
Purchased Options | — | 605,072 | — | 605,072 | ||||||||||||
U.S. Treasury Bonds | — | 58,286,720 | — | 58,286,720 | ||||||||||||
U.S. Treasury Note | — | 267,347,327 | — | 267,347,327 | ||||||||||||
Total Assets | $ | 409,452,739 | $ | 411,990,279 | $ | — | $ | 821,443,018 | ||||||||
Liabilities: | ||||||||||||||||
Swap Contracts* | (81,685 | ) | (7,704,844 | ) | — | (7,786,529 | ) | |||||||||
Forward Foreign Currency Contracts | — | (274,123 | ) | — | (274,123 | ) | ||||||||||
Futures Contracts | (27,829 | ) | — | — | (27,829 | ) | ||||||||||
Written Options | — | (343,176 | ) | — | (343,176 | ) | ||||||||||
Total Liabilities | $ | (109,514 | ) | $ | (8,322,143 | ) | $ | — | $ | (8,431,657 | ) | |||||
Total | $ | 409,343,225 | $ | 403,668,136 | $ | — | $ | 813,011,361 | ||||||||
Amounts designated as “—”, which may include fair valued securities, are zero or have been rounded to zero.
| * | Swap contracts are included in the table at value, with the exception of centrally cleared and equity swap contracts which are included in the table at unrealized appreciation/(depreciation). |
During the year ended October 31, 2013, there were no transfers into or out of Level 1, Level 2 or Level 3.
| (b) | Foreign Currency Transactions |
The accounting records of the Fund are maintained in U.S. dollars. The Fund engages in foreign currency transactions and translates foreign currency amounts into U.S. dollars at the current rate of exchange to determine the value of investments, assets, and liabilities. Purchases and sales of securities, receipts of income, and payments of expenses are translated at the prevailing rate of exchange on the respective date of such transactions. The Fund does not isolate that portion of the results of operations resulting from fluctuations in foreign exchange rates from those resulting from fluctuations in market prices of securities. Both fluctuations are included in the net realized and unrealized gain or loss from investments and foreign currencies.
| (c) | Commodity-Linked Notes |
The Fund invests in commodity-linked notes to gain exposure to the investment returns of the commodity markets without direct investment in physical commodities or commodity futures contracts. The value of commodity-linked notes may be affected by a variety of factors, including, but not limited to, overall market movements and other factors affecting the value of particular industries or changes in the underlying commodity or related commodity index. Because commodity-linked notes are often leveraged, their values may be more volatile than the underlying index. Certain commodity-linked notes may be illiquid. In addition to the performance of commodities, other factors that can affect the value of commodity-linked notes include liquidity, quality, and maturity. The notes are subject to prepayment, credit, and interest rate risk. Because of the relatively small number of issuers, the Fund’s
27
Notes to Financial Statements (continued)
October 31, 2013
investment in commodity-linked notes will also be subject to counterparty risk, which is the risk that the issuer of the commodity-linked note will not fulfill its contractual obligations. If the underlying index declines from the entrance date by an amount specified in the note, the note may be automatically redeemed. The Fund can request prepayment from the issuer at any time. The Fund records a realized gain or loss when a note matures or is sold.
| (d) | Options |
The Fund purchased call options and wrote put options on foreign indices, and entered into closing transactions with respect to such options to terminate existing positions. Such call and put option investments are utilized to replicate the performance of an index. Writing put options serves as a limited long hedge because increases in the value of the hedged investment would be offset to the extent of the premium received for writing the option. However, if the security depreciates to a price lower than the strike price of the put option, it can be expected that the put option will be exercised, and the Fund will be obligated to purchase the security at more than its market value. The Fund segregates liquid assets to cover its obligations under its option contracts.
When the Fund writes an option, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. Premiums received from writing options which expire unexercised are treated as realized gains. Premiums received from writing options which are exercised or closed are added to the proceeds from or offset against amounts paid on the underlying transaction to determine the realized gain or loss on such underlying transaction. When the Fund writes an option, it has no control over whether the option will be exercised, and as a result bears the risk of an unfavorable change in the price of the instrument underlying the written option. Writing options entails the risk that the Fund may not be able to enter into a closing transaction because of an illiquid market.
Options traded in the over-the-counter (“OTC”) market, and which are not quoted by NASDAQ, are valued at the last sale price, if available, and otherwise at the last quoted bid price, and are generally categorized as Level 2 investments within the hierarchy. The value of an option position reflects, among other things, the implied price volatility of the underlying investment, the current market value of the underlying investment, the time remaining until expiration of the option, the relationship of the strike price to the market price of the underlying investment, and general market conditions. Options that expire unexercised have no value. The Fund uses only American-style options, which can be exercised at any time prior to the expiration date of the option. This is in contrast to European-style options which can only be exercised at expiration of the option.
The Fund effectively terminates its right or obligation under an option by entering into a closing transaction. Closing transactions permit the Fund to realize the profit or limit the loss on an option position prior to its exercise or expiration.
If the Fund is unable to effect a closing transaction for an option it purchased, it would have to exercise the option to realize any profit. The inability to enter into a closing purchase transaction for a covered call option written by the Fund could cause material losses because the Fund would be unable to sell the investment used as a cover for the written option until the option expires or is exercised.
The writing and purchasing of options is a highly specialized activity that involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Imperfect correlation between options and the securities markets may detract from the effectiveness of attempted hedging. Transactions using OTC options (other than options written by the Fund) expose the Fund to counterparty risk. To the extent required by Securities Exchange Commission (“SEC”) guidelines, the Fund will not enter into any options transactions unless it owns either (i) an offsetting (“covered”) position in securities, other options, or futures or (ii) cash and liquid obligations with a value sufficient at all times to cover its potential obligations to the extent not covered as provided in (i) above. The Fund will also earmark or set aside cash and/or appropriate liquid assets in a segregated custodial account as required by SEC and U.S. Commodity Futures Trading Commission regulations. Assets used as cover or held in a segregated account cannot be sold while the position in the corresponding option or futures contract is open, unless they are replaced with other eligible assets. As a result, the commitment of a large portion
28
Notes to Financial Statements (continued)
October 31, 2013
of the Fund’s assets to earmarking or segregated accounts as a cover could impede portfolio management or the Fund’s ability to meet redemption requests or other current obligations.
The Fund’s written options contracts are disclosed in the Statement of Assets and Liabilities under “Written options, at value” and in the Statement of Operations under “Net realized gains/losses from written option transactions” and “Net change in unrealized appreciation/(depreciation) from written options.”
The Fund’s purchased options are disclosed in the Statement of Assets and Liabilities under “Investments, at value” and in the Statement of Operations under “Net realized gains/losses from investment transactions” and “Net change in unrealized appreciation/(depreciation) from investments.”
Transactions in written options during the year ended October 31, 2013
| Put Options | ||||||||
| Number of Contracts | Premiums | |||||||
Balance at 10/31/12 | 95 | $ | — | |||||
Written | 1,150 | — | ||||||
Terminated in closing purchase transactions | (1,013 | ) | — | |||||
Expirations | — | — | ||||||
Exercised | — | — | ||||||
Balance as of 10/31/13 | 232 | $ | — | |||||
Amounts designated as “—” are zero or have been rounded to zero.
| (e) | Swap Contracts |
Credit Default Swaps. The Fund entered into credit default swap contracts during the year ended October 31, 2013. Swap contracts are privately negotiated agreements between the Fund and a counterparty. The Fund uses credit default swap contracts to create synthetic long exposure to domestic indices and sovereign debt securities. The Fund segregates liquid assets to cover its obligations under its credit default swap contracts. Upfront premiums received or paid at the beginning of the initiation period are included in the Statement of Assets and Liabilities under “Swap contracts, at value.” These upfront premiums are recorded as realized gains or losses on the Statement of Operations upon maturity or termination of the swap.
As the seller in a credit default swap contract, the Fund receives from the counterparty a periodic stream of payments over the term of the contract, provided that no credit event or default (or similar event) occurs. However, the Fund is required to pay the par (or other agreed-upon) value of a referenced debt obligation to the counterparty in the event of a default (or similar event) by an issuer, such as a U.S. or foreign issuer, on the debt obligation. In return, if no credit event or default (or similar event) occurs, the Fund keeps the stream of payments and would have no payment obligations.
If a credit event or default (or similar event) occurs, the Fund either (i) pays to the counterparty an amount equal to the notional amount of the swap and takes delivery of the referenced obligation, other deliverable obligations or underlying securities comprising the referenced index, or (ii) pays the counterparty a net settlement amount in the form of cash or securities to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. By selling a credit default swap contract, the Fund effectively adds economic leverage to its portfolio because, in addition to its total net assets, the Fund is subject to investment exposure on the notional amount of the swap.
Credit default swaps on sovereign issues involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a default or other credit event. The Fund uses credit default swaps on sovereign issues to take a long position to replicate performance of a particular sovereign issue.
29
Notes to Financial Statements (continued)
October 31, 2013
Credit default swap agreements on credit indices involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a write-down, principal shortfall, interest shortfall or default of all or part of the referenced entities comprising the credit index. A credit index is a basket of credit instruments or exposures designed to be representative of some part of the credit market as a whole. These indices are made up of reference credits that are judged by a poll of dealers to be the most liquid entities in the credit default swap market based on the sector of the index. Components of the indices include high-yield securities. Credit indices are traded using credit default swaps with standardized terms including a fixed spread and standard maturity dates. A credit default swap on an index references all the names in the index, and if there is a default, the credit event is settled based on the name’s weight in the index. For most indices, each name has an equal weight in the index. The composition of the indices changes periodically. The use of credit default swaps on indices is often less expensive than it would be to buy many issuer-specific credit default swaps to achieve a similar effect.
Credit default swaps are marked-to-market daily based on valuations from independent pricing services. Pricing services utilize comparisons to two valuation sources. If the valuations differ by more than 100 basis points against the notional amount, further investigation with the pricing services takes place. Credit default swaps are generally categorized as Level 2 investments within the hierarchy.
Implied credit spreads are utilized in determining the market value of credit default swap agreements on sovereign issues and credit indices, and serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. Implied credit spreads utilized in valuing the Fund’s investments as of October 31, 2013 are disclosed in the Statement of Investments. The implied credit spread of a particular referenced entity reflects the cost of selling protection on such entity’s debt, and may include upfront payments required to be made to enter into the agreement. For credit default swap agreements on credit indices, the quoted market prices and resulting value serve as the indicator of the current status of the payment/performance risk. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.
Certain clearinghouses currently offer clearing for limited types of derivatives transactions, such as interest and credit derivatives. In a cleared derivative transaction, the Fund typically enters into the transaction with a financial institution counterparty, and performance of the transaction is effectively guaranteed by a central clearinghouse, thereby reducing or eliminating the Fund’s exposure to the credit risk of its original counterparty. The Fund will be required to post specified levels of margin with the clearinghouse or at the instruction of the clearinghouse; the margin required by a clearinghouse may be greater than the margin the Fund would be required to post in an uncleared transaction. Upon entering into a swap contract, the Fund may be required to pledge to the counterparty an initial margin deposit of cash and/or other assets. Subsequent receipts or payments, known as “variation margin” receipts or payments, are made each day, depending on the fluctuation in the fair value of the centrally cleared swap contract, and are recognized by the Fund as unrealized gains or losses.
Equity Swaps. The Fund entered into equity swap contracts to gain exposure to a market, index, or issuer without owning or taking physical custody of securities. The counterparty to an equity swap contract is a financial institution. The Fund’s equity swap contracts are structured in a manner in which the counterparty and the Fund each agree to pay the other party the difference between the relative investment performances that would have been achieved if the notional amount of the equity swap contract had been invested in the particular indices. The Fund segregates liquid assets to cover its obligations under the equity swap contracts.
The Fund entered into equity swaps on a net basis, which means that the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. Payments are made at the conclusion of an equity swap contract or periodically during its term. Equity swaps normally do not involve the delivery of securities or other underlying assets. Accordingly, the risk of loss with respect to equity swaps is normally limited to the net amount of payments that the Fund is contractually obligated to make. If the other party to an equity swap defaults, the Fund’s risk of loss consists of the net amount of payments that the Fund is
30
Notes to Financial Statements (continued)
October 31, 2013
contractually entitled to receive, if any. Equity swaps are valued at their last quoted sales price on the valuation date and are generally categorized as Level 1 investments within the hierarchy.
The Fund’s swap agreements are disclosed in the Statement of Assets and Liabilities under “Swap contracts, at value” and in the Statement of Operations under “Net realized gains/losses from swap transactions” and “Net change in unrealized appreciation/(depreciation) from swap contracts”.
| (f) | Forward Foreign Currency Contracts |
The Fund is subject to foreign currency exchange risk in the normal course of pursuing its objectives. The Fund entered into forward foreign currency contracts to gain exposure to certain currencies. A forward foreign currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. Forward foreign currency contracts are generally valued at the mean of the last quoted bid and ask prices, as provided by an independent pricing service approved by the Board of Trustees, and are generally categorized as Level 2 investments within the hierarchy. The market value of a forward foreign currency contract fluctuates with changes in foreign currency exchange rates. All commitments are marked to market daily at the applicable exchange rates and any resulting unrealized appreciation or depreciation is recorded. Realized gains or losses are recorded at the time the forward contract matures or by delivery of the currency. Forward foreign currency contracts entail the risk of unanticipated movements in the value of the foreign currency relative to the U.S. dollar, and the risk that the counterparties to the contracts may be unable to meet their obligations under the contract.
The Fund’s forward foreign currency contracts are disclosed in the Statement of Assets and Liabilities under “Unrealized appreciation/ (depreciation) on forward foreign currency contracts,” and in the Statement of Operations under “Net realized gains/losses from forward and foreign currency transactions” and “Net change in unrealized appreciation/(depreciation) from forward foreign currency contracts.”
| (g) | Futures Contracts |
The Fund is subject to equity price and interest rate risk in the normal course of pursuing its investment objectives. The Fund entered into financial futures contracts (“futures contracts”) to meet the Fund’s investment objectives and to obtain and/or manage exposure related to the value of equities and interest rates. Futures contracts are contracts for delayed delivery of securities or currencies at a specific future date and at a specific price or currency amount.
Upon entering into a futures contract, the Fund is required to pledge to the broker an initial margin deposit of cash and/or other assets equal to a certain percentage of the futures contract’s notional value. Under a futures contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in value of the futures contract. Subsequent receipts or payments, known as “variation margin” receipts or payments, are made each day, depending on the fluctuation in the fair value of the futures contract, and are recognized by the Fund as unrealized gains or losses. Futures contracts are generally valued daily at their settlement price as provided by an independent pricing service approved by the Board of Trustees, and are generally categorized as Level 1 investments within the hierarchy.
A “sale” of a futures contract means a contractual obligation to deliver the securities or foreign currency called for by the contract at a fixed price or amount at a specified time in the future. A “purchase” of a futures contract means a contractual obligation to acquire the securities or foreign currency at a fixed price at a specified time in the future. When a futures contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the futures contract at the time it was opened and its value at the time it was closed.
Should market conditions change unexpectedly, the Fund may not achieve the anticipated benefits of futures contracts and may realize a loss. The use of futures contracts for hedging purposes involves the risk of imperfect correlation in the movements in the price of the futures contracts and the underlying assets. The Fund’s
31
Notes to Financial Statements (continued)
October 31, 2013
investments in futures contracts entail limited counterparty credit risk because the Fund invests only in exchange-traded futures contracts, which are settled through a clearing house and whose fulfillment is guaranteed by the credit of the exchange.
The Fund’s futures contracts are disclosed in the Statement of Assets and Liabilities under “Net unrealized appreciation/(depreciation) from futures contracts,” and in the Statement of Operations under “Net realized gains/losses from futures transactions” and “Net change in unrealized appreciation/(depreciation) from futures contracts.”
The following tables provide a summary of the Fund’s derivative instruments categorized by risk exposure as of October 31, 2013:
Fair Values of Derivatives not Accounted for as Hedging Instruments as of October 31, 2013
| Assets: | Statement of Assets and Liabilities | Fair Value | ||||
Purchased Options | ||||||
Equity risk | Investments, at value | $ | 605,072 | |||
| ||||||
Swap Contracts(a) | ||||||
Credit risk | Swap contracts, at value | 2,894,319 | ||||
Equity risk | Swap contracts, at value | 516,574 | ||||
| ||||||
Futures Contracts(b) | ||||||
Equity risk | Unrealized appreciation from futures contracts | 1,069,730 | ||||
Interest rate risk | Unrealized appreciation from futures contracts | 2,452,796 | ||||
| ||||||
Forward Foreign Currency Contracts | ||||||
Currency risk | Unrealized appreciation on forward foreign currency contracts | 1,206,744 | ||||
| ||||||
Total | $ | 8,745,235 | ||||
| ||||||
Liabilities: | ||||||
Written Options | ||||||
Equity risk | Written options, at value | $ | (343,176 | ) | ||
| ||||||
Swap Contracts(a) | ||||||
Credit risk | Swap contracts, at value | (7,704,844 | ) | |||
Equity risk | Swap contracts, at value | (81,685 | ) | |||
| ||||||
Futures Contracts(b) | ||||||
Equity risk | Unrealized depreciation from futures contracts | (27,829 | ) | |||
| ||||||
Forward Foreign Currency Contracts | ||||||
Currency risk | Unrealized depreciation on forward foreign currency contracts | (274,123 | ) | |||
| ||||||
Total | $ | (8,431,657 | ) | |||
| ||||||
| (a) | Swap contracts are included in the table at value, with the exception of centrally cleared and equity swap contracts which are included in the table at unrealized appreciation/(depreciation). For centrally cleared swaps, only the variation margin on swap contracts is reported in the Statement of Assets and Liabilities. |
| (b) | Includes cumulative appreciation/(depreciation) of futures contracts as reported in the Statement of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
32
Notes to Financial Statements (continued)
October 31, 2013
The Effect of Derivative Instruments on the Statement of Operations for the Year ended October 31, 2013
| Realized Gain/(Loss): | Total | |||
Purchased Options(a) | ||||
Equity risk | $ | 811,759 | ||
| ||||
Written Options | ||||
Equity risk | (503,578 | ) | ||
| ||||
Swap Contracts | ||||
Credit risk | 4,749,583 | |||
Equity risk | (313,792 | ) | ||
| ||||
Futures Contracts | ||||
Equity risk | 640,410 | |||
Interest rate risk | (559,707 | ) | ||
| ||||
Forward Foreign Currency Contracts | ||||
Currency risk | 151,543 | |||
| ||||
Total | $4,976,218 | |||
| ||||
| (a) | Realized gains/(losses) from purchased options are included in “Net realized gains/losses from investment transactions”. |
Change in Unrealized Appreciation/(Depreciation) on Derivatives Recognized in the Statement of Operations for the Year ended October 31, 2013
| Unrealized Appreciation/(Depreciation): | Total | |||
Purchased Options(a) | ||||
Equity risk | $ | 524,581 | ||
| ||||
Written Options | ||||
Equity risk | (220,177 | ) | ||
| ||||
Swap Contracts | ||||
Credit risk | 3,061,446 | |||
Equity risk | 658,136 | |||
| ||||
Futures Contracts | ||||
Equity risk | 1,042,699 | |||
Interest rate risk | 2,414,378 | |||
| ||||
Forward Foreign Currency Contracts | ||||
Currency risk | 750,078 | |||
| ||||
Total | $8,231,141 | |||
| ||||
| (a) | Unrealized appreciation/(depreciation) from purchased options is included in “Net change in unrealized appreciation/(depreciation) from investments”. |
Information about derivative instruments reflected as of the date of this report is generally indicative of the type and volume of derivative activity of the Fund during the year ended October 31, 2013.
| (h) | Security Transactions and Investment Income |
Security transactions are accounted for on the date the security is purchased or sold. Securities gains and losses are calculated on the identified cost basis. Interest income is recognized on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities, which are recorded as soon as the Trust is
33
Notes to Financial Statements (continued)
October 31, 2013
informed after the ex-dividend date. Inflation adjustments to the face amount of inflation-indexed securities are included in interest income.
Funds which earn foreign income and capital gains may be subject to foreign withholding taxes and capital gains taxes at various rates. Under applicable foreign law, a withholding of tax may be imposed on interest and dividends paid by a foreign security and capital gains from the sale of a foreign security.
| (i) | Distributions to Shareholders |
Distributions from net investment income, if any, are declared and paid quarterly. Distributions from net realized capital gains, if any, are declared and distributed at least annually. All distributions are recorded on the ex-dividend date.
Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. These “book/tax” differences are considered either permanent or temporary. Permanent differences are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. The permanent differences as of October 31, 2013 are primarily attributable to foreign currency gains and losses, passive foreign investment company gain/loss on sales, real estate investment trust (“REIT”) returns of capital dividends, and swap contracts. These reclassifications have no effect upon the NAV of the Fund. Any distribution in excess of current and accumulated earnings and profits for federal income tax purposes is reported as a “return of capital” distribution.
| (j) | Federal Income Taxes |
The Fund elected to be treated as, and intends to qualify each year as, a “Regulated Investment Company” (“RIC”) by complying with the provisions available to certain investment companies under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and to make distributions of net investment income and net realized capital gains sufficient to relieve the Fund from all, or substantially all, federal income taxes. Therefore, no federal income tax provision is required.
The Fund recognizes a tax benefit from an uncertain position only if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authorities’ widely understood administrative practices and precedents. The Fund undertakes an affirmative evaluation of tax positions taken or expected to be taken in the course of preparing tax returns to determine whether it is more likely than not (i.e., greater than 50 percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. If such a tax position taken by the Fund is not sustained upon examination by a taxing authority, the Fund could incur taxes and penalties related to that position, and those amounts could be material. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefits to recognize in the financial statements. Differences result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable) and an increase in a deferred tax liability (or a reduction in a deferred tax asset). The Fund files U.S. federal income tax returns and, if applicable, returns in various foreign jurisdictions in which it invests. The last four tax year ends, or since inception (if shorter), and any interim tax period since then generally remain open for examination by taxing authorities.
The Fund engages in ongoing monitoring and analysis; future conclusions reached by management could be different and result in adjustments to the Fund’s NAV and financial statements. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Distributions received from the Fund’s investments in U.S. REITs often include a “return of capital”, which is recorded by the Fund as a reduction of its cost basis in such investments. The Code requires a REIT to distribute at least 95% of its taxable income to investors. In many cases, however, because of “non-cash” expenses such as property depreciation, a REIT’s cash flow will exceed its taxable income. The REIT may distribute this excess cash to offer a more competitive yield. This portion of the REIT’s distribution is deemed a return of capital and is generally not taxable to the Fund.
34
Notes to Financial Statements (continued)
October 31, 2013
The Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”) is effective in the current tax year.
| (k) | Allocation of Expenses, Income, and Gains and Losses |
Expenses directly attributable to the Fund are charged to the Fund. Expenses not directly attributable to the Fund are allocated proportionally among various or all series of the Trust. Income, fund level expenses, and realized and unrealized gains or losses are allocated to each class of shares of the Fund based on the value of the outstanding shares of that class relative to the total value of the outstanding shares of the Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that specific class.
3. Transactions with Affiliates
Under the terms of the Trust’s Investment Advisory Agreement, NFA manages the investment of the assets and supervises the daily business affairs of the Fund in accordance with policies and procedures established by the Board of Trustees. NFA is a wholly owned subsidiary of Nationwide Financial Services, Inc. (“NFS”), a holding company which is a direct wholly owned subsidiary of Nationwide Corporation. NFA has selected Goldman Sachs Asset Management, L.P. (the “Subadviser”) as the subadviser for the Fund, and provides investment management evaluation services in monitoring, on an ongoing basis, the performance of the Subadviser.
Under the terms of the Investment Advisory Agreement, the Fund pays NFA an investment advisory fee based on the Fund’s average daily net assets. For the year ended October 31, 2013, the Fund paid investment advisory fees to NFA according to the schedule below.
| Fee Schedule | Advisory Fee (annual rate) | |||||
All Assets | 0.40 | % | ||||
From these fees, pursuant to the subadvisory agreement, NFA pays fees to the unaffiliated Subadviser.
The Trust and NFA have entered into a written Expense Limitation Agreement that limits the Fund’s operating expenses (excluding Rule 12b-1 fees, administrative services fees, acquired fund fees and expenses, and certain other expenses) from exceeding 0.40% for all share classes until February 28, 2014.
NFA may request and receive reimbursement from the Fund for advisory fees waived and other expenses reimbursed by NFA pursuant to the Expense Limitation Agreement at a date not to exceed three years from the month in which the corresponding waiver or reimbursement to the Fund was made. However, no reimbursement may be made unless: (i) the Fund’s assets exceed $100 million and (ii) the total annual expense ratio of the class making such reimbursement is no higher than the amount of the expense limitation that was in place at the time NFA waived the fees or reimbursed the expenses and does not cause the expense ratio to exceed the current expense limitation. Reimbursement by the Fund of amounts previously waived or assumed by NFA is not permitted except as provided for in the Expense Limitation Agreement. The Expense Limitation Agreement may be changed or eliminated only with the consent of the Board of Trustees.
As of October 31, 2013, the cumulative potential reimbursements for the Fund, listed by the period or year in which NFA waived fees or reimbursed expenses to the Fund, are:
Fiscal Period Ended October 31, 2011 Amount (a) | Fiscal Year 2012 Amount | Fiscal Year 2013 Amount | Total | |||||||||
| $159,203 | $378,975 | $347,963 | $886,141 | |||||||||
| (a) | For the period from July 26, 2011 (commencement of operations) through October 31, 2011. |
35
Notes to Financial Statements (continued)
October 31, 2013
During the year ended October 31, 2013, no amount was reimbursed to NFA pursuant to the Expense Limitation Agreement.
NFM, a wholly owned subsidiary of NFS Distributors, Inc. (“NFSDI”) (a wholly owned subsidiary of NFS), provides various administrative and accounting services for the Fund and serves as Transfer and Dividend Disbursing Agent for the Fund. NFM has entered into an agreement with a third-party service provider to provide certain sub-administration and sub-transfer agency services to the Fund. NFM pays the service provider a fee for these services.
Under the terms of a Joint Fund Administration and Transfer Agency Agreement, the fees for such services are based on the sum of the following: (i) the amount payable by NFM to its sub-administrator and sub-transfer agent; and (ii) a percentage of the combined average daily net assets of the Trust and Nationwide Variable Insurance Trust, a Delaware statutory trust and registered investment company that is affiliated with the Trust, according to the fee schedule below.
| Combined Fee Schedule | ||
Up to $25 billion | 0.025% | |
$25 billion and more | 0.020% |
During the year ended October 31, 2013, NFM received $142,447 in fees from the Fund under the Joint Fund Administration and Transfer Agency Agreement.
In addition, the Trust pays out-of-pocket expenses reasonably incurred by NFM in providing services to the Fund and the Trust, including, but not limited to, the cost of pricing services that NFM utilizes and networking fees paid to broker-dealers that provide sub-accounting and sub-transfer agency services to their customers who are Fund shareholders. Such services, which are not otherwise provided by NFM, generally include individual account maintenance and recordkeeping, dividend disbursement, responding to shareholder calls and inquiries, providing statements and transaction confirmations, tax reporting, and other shareholder services. Depending on the nature and quality of the services provided, fees for these services may range from $6 to $21 per customer per year.
Under the terms of the Joint Fund Administration and Transfer Agency Agreement and a letter agreement between NFM and the Trust, the Trust has agreed to reimburse NFM for certain costs related to the Fund’s portion of ongoing administration, monitoring and annual (compliance audit) testing of the Trust’s Rule 38a-1 Compliance Program subject to the pre-approval of the Trust’s Audit Committee. These costs are allocated among the series of the Trust based upon their relative net assets. For the year ended October 31, 2013, the Fund’s portion of such costs amounted to $1,160.
Under the terms of a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act, Nationwide Fund Distributors LLC (“NFD”), the Fund’s principal underwriter, is compensated by the Fund for expenses associated with the distribution of certain classes of shares of the Fund. NFD is a wholly owned subsidiary of NFSDI. These fees are based on average daily net assets of the respective class of the Fund at an annual rate of 0.25% of Class A shares and 1.00% of Class C shares of the Fund.
Pursuant to an Underwriting Agreement, NFD serves as principal underwriter of the Fund in the continuous distribution of its shares and receives commissions in the form of a front-end sales charge on Class A shares. These fees are deducted from, and are not included in, proceeds from sales of Class A shares of the Fund. From these fees, NFD pays sales commissions, salaries and other expenses in connection with generating new sales of Class A shares of the Fund. Class A sales charges ranged from 0% to 4.25% based on the amount purchased. Effective October 29, 2013, Class A sales charges changed in such a manner that the new Class A sales charges are equal to or lower than the prior Class A sales charges. For the year ended October 31, 2013, the Fund imposed front-end sales charges of $17,672.
NFD also receives fees in the form of contingent deferred sales charges (“CDSCs”) on Class A and Class C shares. These fees may cause the redeemed value of a shareholder’s account to fall below the total purchase payments. A CDSC is imposed on Class A shares for certain redemptions and Class C shares made within 1 year of purchase. Effective July 1, 2013, applicable Class A CDSCs were 0.75% based on the original purchase price or the current market value of the shares being redeemed. Prior to July 1, 2013, applicable Class A CDSCs ranged from 0.25% to 0.75% based on the original purchase price or the current market value of the shares being redeemed. Class C CDSCs were 1% based on the
36
Notes to Financial Statements (continued)
October 31, 2013
original purchase price or the current market value of the shares being redeemed. For the year ended October 31, 2013, the Fund imposed CDSCs of $15.
Under the terms of an Administrative Services Plan, the Fund pays fees to servicing organizations, such as broker-dealers, including NFS, and financial institutions that agree to provide administrative support services to the shareholders of certain classes. These services may include, but are not limited to, the following: (i) establishing and maintaining shareholder accounts; (ii) processing purchase and redemption transactions; (iii) arranging bank wires; (iv) performing shareholder sub-accounting; (v) answering inquiries regarding the Fund; and (vi) other such services. These fees are calculated at an annual rate of up to 0.25% of the average daily net assets of Class A shares of the Fund.
For the year ended October 31, 2013, NFS earned $585 in administrative services fees from the Fund.
As of October 31, 2013, NFA or its affiliates directly held 99.78% of the outstanding shares of the Fund.
4. Redemption Fees
For the period from November 1, 2011 through July 31, 2012, the Fund assessed a 2.00% redemption fee on shares that were sold or exchanged within 90 calendar days of purchase. The redemption fee, if any, was paid directly to the Fund and was intended to offset the cost to the Fund of excess brokerage commissions, market impact, and other costs associated with fluctuations in Fund asset levels and cash flow caused by short-term trading of Fund shares. For purposes of determining whether the redemption fee applied, the shares that were held the longest were redeemed first. This redemption fee was in addition to any CDSCs that were applicable at the time of sale. The redemption fee was not applied in certain circumstances, such as redemptions or exchanges of shares held in certain omnibus accounts or retirement plans that were not able to implement the redemption fee. The fee did not apply to shares purchased through automatically reinvested dividends or capital gain distributions. Effective August 1, 2012, redemption fees were eliminated.
For the year ended October 31, 2012, the Fund had contributions to capital due to the collection of redemption fees in the amount of $282.
5. Bank Loans and Earnings Credit
The Trust has a credit agreement with JPMorgan, The Bank of New York Mellon, Wells Fargo Bank National Association, and U.S. Bank National Association, permitting the Trust to borrow up to $100,000,000. Advances taken by the Fund under this arrangement would be primarily for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to the Fund’s borrowing restrictions. The line of credit requires a commitment fee of 0.07% per year on $100,000,000. Prior to July 18, 2013, the line of credit required a commitment fee of 0.08% on $90,000,000. Borrowings under this arrangement bear interest at a rate of 1.00% per annum plus the higher of (a) the one month London Interbank Offered Rate or (b) the Federal Funds Rate. Interest costs, if any, would be shown on the Statement of Operations. No compensating balances are required under the terms of the line of credit. The line of credit is renewed annually, and next expires on July 17, 2014. There were no borrowings under the line of credit during the year ended October 31, 2013.
JPMorgan provides earnings credits for cash balances maintained in the Fund’s custody accounts, which are used to offset custody fees of the Fund.
6. Investment Transactions
For the year ended October 31, 2013, the Fund had purchases of $383,818,763 and sales of $12,243,611 (excluding short-term securities).
For the year ended October 31, 2013, the Fund had purchases of $260,810,110 and sales of $2,792,780 of U.S. Government securities.
37
Notes to Financial Statements (continued)
October 31, 2013
7. Portfolio Investment Risks
Risks Associated with Interest Rates
Prices of fixed-income securities generally increase when interest rates decline and decrease when interest rates increase. Prices of longer-term securities generally change more in response to interest rate changes than prices of shorter-term securities. To the extent the Fund invests a substantial portion of its assets in fixed-income securities with longer-term maturities, rising interest rates are more likely to cause the value of the Fund’s investments to decline significantly.
Risks Associated with Foreign Securities and Currencies
Investments in securities of foreign issuers carry certain risks not ordinarily associated with investments in securities of U.S. issuers. These risks include foreign currency fluctuations, future disruptive political and economic developments and the possible imposition of exchange controls or other unfavorable foreign government laws and restrictions. In addition, investments in certain countries may carry risks of expropriation of assets, confiscatory taxation, political or social instability, or diplomatic developments that adversely affect investments in those countries.
Certain countries also may impose substantial restrictions on investments in their capital markets by foreign entities, including restrictions on investments in issuers in industries deemed sensitive to relevant national interests. These factors may limit the investment opportunities available and result in a lack of liquidity and high price volatility with respect to securities of issuers from developing countries.
Risks Associated with REIT and Real Estate Investments
Investments in REITs and in real estate securities carry certain risks associated with direct ownership of real estate and with the real estate industry in general. These risks include possible declines in the value of real estate, possible lack of availability of mortgage funds, unexpected vacancies of properties, and the relative lack of liquidity associated with investments in real estate.
Risks Associated with Derivatives
Derivatives may be volatile and may involve significant risks. A derivative or its underlying security, commodity, measure or other instrument may not perform as expected. Certain derivatives may involve leverage, which means that their use can significantly magnify the effect of price movements of the underlying securities or reference measures, disproportionately increasing the Fund’s losses and reducing the Fund’s opportunities for gains. Some derivatives have the potential for significant losses, including a loss that may be greater than the amount invested. Derivatives may also present default risk because the counterparty to a derivatives contract may fail to fulfill its obligations to the Fund. Certain derivatives held by the Fund may be illiquid, making it difficult to close out an unfavorable position.
Futures. The prices of futures contracts are typically more volatile than those of stocks and bonds. Small movements in the values of the assets or measures underlying a futures contract can cause disproportionately larger losses to the Fund. Futures may experience periods when they are less liquid than stocks, bonds or other investments.
Swaps and Forwards. Using swaps and forwards can involve greater risks than investing directly in the underlying securities or assets. Swaps and forwards often involve leverage, increasing their price volatility relative to changes in the price of the underlying asset. Currently there is no central exchange or market for swap and forward contracts, and therefore they are less liquid than exchange-traded instruments. If a swap or forward counterparty fails to meet its obligations under the contract, the Fund may lose money.
Commodity-Linked Notes. Commodity-linked notes are subject to the risk that the counterparty will fail to meet its obligations, as well as to the risk that the commodity or commodity index underlying a note may change in value. Commodity-linked notes often are leveraged, increasing the volatility of each note’s market value relative to changes in the underlying commodity, commodity futures contract or commodity index. In addition, because they are debt securities, commodity-linked notes are subject to risks typically associated with fixed-income securities, such as movements in interest rates, the time remaining until maturity and the creditworthiness of the issuer. A liquid secondary market may not exist for certain commodity-linked notes, making it difficult for the Fund to sell them at the desired time at an acceptable price.
38
Notes to Financial Statements (continued)
October 31, 2013
8. Indemnifications
Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into indemnification agreements with its Trustees and certain of its Officers. Trust Officers receive no compensation from the Trust for serving as its Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum liability under these arrangements is unknown, as this would involve future claims made against the Trust. Based on experience, however, the Trust expects the risk of loss to be remote.
9. New Accounting Pronouncements
In January 2013, Accounting Standards Update 2013-01 (“ASU 2013-01”), Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, replaced Accounting Standards Update 2011-11 (“ASU 2011-11”), Disclosures about Offsetting Assets and Liabilities. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. ASU 2011-11 was intended to enhance disclosure requirements on the offsetting of financial assets and liabilities. ASU 2013-01 limits the scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are (i) offset in the financial statements or (ii) subject to an enforceable master netting arrangement or similar agreement. Management is currently evaluating the application of ASU 2013-01 and its impact, if any, on the Funds’ financial statements.
10. Other
The Fund has substantial exposure to the Fidelity Institutional Money Market Fund, Institutional Class, about which more information may be found in the most recent annual or semi-annual report to shareholders, which is available at www.fidelity.com.
As of October 31, 2013, the Fund had individual shareholder accounts and/or omnibus shareholder accounts (comprising a group of individual shareholders) which held more than 10% of the total shares outstanding of the Fund. The Fund had 3 accounts holding 60.11% of the total outstanding shares of the Fund. Each such account is the account of an affiliated fund.
11. Recaptured Brokerage Commissions
The Fund has entered into agreements with brokers whereby the brokers will return a portion of the Fund’s brokerage commissions on the Fund’s behalf. Such amounts, under such agreements, are included in net realized gain/(loss) on the sale of investments presented in the Fund’s Statement of Operations. For the year ended October 31, 2013, the Fund recaptured $0 of brokerage commissions.
12. Federal Tax Information
The tax character of distributions paid during the year ended October 31, 2013 was as follows:
Distributions paid from | ||||||||||||||||
| Ordinary Income | Net Long-Term Capital Gains | Total Taxable Distributions | Return of Capital | Total Distributions Paid | ||||||||||||
| $1,454,810 | $— | $1,454,810 | $— | $1,454,810 | ||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
39
Notes to Financial Statements (continued)
October 31, 2013
The tax character of distributions paid during the year ended October 31, 2012 was as follows:
Distributions paid from | ||||||||||||||||
| Ordinary Income | Net Long-Term Capital Gains | Total Taxable Distributions | Return of Capital | Total Distributions Paid | ||||||||||||
| $150,016 | $— | $150,016 | $— | $150,016 | ||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
As of October 31, 2013, the components of accumulated earnings/(deficit) on a tax basis were as follows:
| Undistributed Ordinary Income | Undistributed Long-Term Capital Gains | Accumulated Earnings | Distributions Payable | Accumulated Capital and Other Losses | Unrealized Appreciation/ (Depreciation)* | Total Accumulated Earnings (Deficit) | ||||||||||||||||||
| $6,931,825 | $— | $6,931,825 | $— | $(2,991,055) | $2,191,697 | $6,132,467 | ||||||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
| * | The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is primarily attributable to timing differences in recognizing certain gains and losses on investment transactions. |
As of October 31, 2013, the tax cost of securities (excluding derivative contracts) and the breakdown of unrealized appreciation/(depreciation) was as follows:
| Tax Cost of Securities | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation/ (Depreciation) | |||||||||
| $813,861,992 | $12,185,283 | $(12,744,420) | $(559,137) | |||||||||
As of October 31, 2013, for federal income tax purposes, the Fund has capital loss carryforwards available to offset capital gains, if any, to the extent provided by the U.S. Treasury regulations and in any given year may be limited due to large shareholder redemptions or contributions. Losses incurred that will be carried forward under the provisions of the Modernization Act are as follows:
| Loss Carryforward Character | ||||||
Short Term | Long Term | |||||
$2,991,055* | $— | |||||
| * | A portion of the capital loss carryforward is subject to an annual limitation under the Internal Revenue Code and Regulations. |
Amount designated as “—” is zero or has been rounded to zero.
During the year ended October 31, 2013, for federal income tax purposes, the Fund utilized capital loss carryforwards of $1,566,519 to offset capital gains.
13. Subsequent Events
Management has evaluated the impact of subsequent events on the Fund and has determined that there are no subsequent events requiring recognition or disclosure in the financial statements.
40
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Nationwide Mutual Funds and Shareholders of Nationwide
Alternatives Allocation Fund:
In our opinion, the accompanying statement of assets and liabilities, including the statement of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Nationwide Alternatives Allocation Fund (a series of Nationwide Mutual Funds, hereafter referred to as the “Fund”) at October 31, 2013, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 23, 2013
41
October 31, 2013
Trustees and Officers of the Trust
The address for each Trustee is: c/o Nationwide Funds Group, 1000 Continental Drive, Suite 400, King of Prussia, PA 19406.
Name and Year of Birth | Position(s) Held with the Trust and Length of Time Served1,2 | Principal Occupation(s) During Past Five Years (or longer)3 | Number of Portfolios in the Nationwide Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During Past Five Years4 | ||||||
Charles E. Allen 1948 | Trustee since July 2000 | Mr. Allen was Chairman, Chief Executive Officer and President of Graimark Realty Advisors, Inc. (real estate development, investment and asset management) from its founding in 1987 to 2012. | 112 | None | ||||||
Paula H.J. Cholmondeley 1947 | Trustee since July 2000 | Ms. Cholmondeley focuses full time on corporate governance. She sits on public company boards and is also on the faculty of the National Association of Corporate Directors. She has served as a Chief Executive Officer of Sorrel Group (management consulting company) since January 2004. From April 2000 through December 2003, Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America. | 112 | Director of Dentsply International, Inc. (dental products) from 2002 to present, Ultralife Batteries, Inc. from 2004 to 2010, Albany International Corp. (paper industry) from 2005 to 2013, Terex Corporation (construction equipment) from 2004 to present, and Minerals Technology, Inc. (specialty chemicals) from 2005 to present. | ||||||
Phyllis Kay Dryden 1947 | Trustee since December 2004 | Ms. Dryden became CEO and President of Energy Dispute Solutions, LLC in January 2013, leading a company providing strategy consulting, arbitration and mediation services. She has been a management consultant since 1996, first as a partner of Mitchell Madison Group, then as a managing partner and head of west coast business development for marchFIRST, returning to Mitchell Madison Group in 2003 as an associated partner until January 2010 and thereafter as an independent strategy consultant through December 2012. Ms. Dryden was VP and General Counsel of Lucasfilm, Ltd. from 1981 to 1984, SVP and General Counsel of Charles Schwab and Co., Inc. from 1984 to 1992, and EVP and General Counsel of Del Monte Foods from 1992 to 1995. | 112 | None | ||||||
42
Management Information (Continued)
October 31, 2013
The address for each Trustee is: c/o Nationwide Funds Group, 1000 Continental Drive, Suite 400, King of Prussia, PA 19406.
Name and Year of Birth | Position(s) Held with the Trust and Length of Time Served1,2 | Principal Occupation(s) During Past Five Years (or longer)3 | Number of Portfolios in the Nationwide Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During Past Five Years4 | ||||||
Barbara L. Hennigar 1935 | Trustee since July 2000 | Ms. Hennigar was Executive Vice President of Oppenheimer Funds (an asset management company) from October 1992 until June 2000; Chairman of Oppenheimer Funds Services from October 1999 until June 2000; and President and CEO of Oppenheimer Funds Services from June 1992 until October 1999. She was previously Board Chair of a non-profit independent school, and is currently an independent trustee and endowment chair of St. Mary’s Academy, an independent school in Denver, CO. | 112 | None | ||||||
Barbara I. Jacobs 1950 | Trustee since December 2004 | Ms. Jacobs served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, from January 2001 through January 2006. From 1988 through 2003, Ms. Jacobs was also a Managing Director and European Portfolio Manager of CREF Investments (Teachers Insurance and Annuity Association-College Retirement Equities Fund). | 112 | None | ||||||
Keith F. Karlawish 1964 | Trustee since March 2012 | Mr. Karlawish has been a partner of Park Ridge Asset Management, LLC since December 2008, at which he also serves as a portfolio manager. From May 2002 until October 2008, Mr. Karlawish was the President of BB&T Asset Management, Inc., and was President of the BB&T Mutual Funds and BB&T Variable Insurance Funds from February 2005 until October 2008. | 112 | Trustee of the BB&T Mutual Funds and BB&T Variable Insurance Funds from June 2006 until December 2008. | ||||||
Carol A. Kosel 1963 | Trustee since March 2013 | Ms. Kosel was a consultant to the Evergreen Funds Board of Trustees from October 2005 to December 2007. She was Senior Vice President, Treasurer, and Head of Fund Administration of the Evergreen Funds from April 1997 to October 2005. | 112 | Trustee of Sun Capital Advisers Trust from April 2011 to December 2012 and Trustee of Evergreen Funds from January 2008 to July 2010. | ||||||
Douglas F. Kridler 1955 | Trustee since September 1997 | Mr. Kridler is the President and Chief Executive Officer of The Columbus Foundation, a $1.5 billion community foundation with 2,000 funds in 55 Ohio counties and 37 states in the U.S. | 112 | None | ||||||
43
Management Information (Continued)
October 31, 2013
The address for each Trustee is: c/o Nationwide Funds Group, 1000 Continental Drive, Suite 400, King of Prussia, PA 19406.
Name and Year of Birth | Position(s) Held with the Trust and Length of Time Served1,2 | Principal Occupation(s) During Past Five Years (or longer)3 | Number of Portfolios in the Nationwide Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During Past Five Years4 | ||||||
David C. Wetmore 1948 | Trustee since 1995 and Chairman since February 2005 | Mr. Wetmore was a Managing Director of Updata Capital, Inc. (a technology-oriented investment banking and venture capital firm) from 1995 through 2000. Prior to 1995, Mr. Wetmore served as the Chief Operating Officer, Chief Executive Officer and Chairman of the Board of several publicly-held software and services companies, and as the managing partner of a “big 8” public accounting firm. | 112 | None | ||||||
|
|
|
|
| ||||||
| 1 | Length of time served includes time served with predecessor of the Trust. |
| 2 | Each Trustee holds office for the lifetime of the Trust or until such Trustee’s earlier death, resignation, removal, retirement or inability otherwise to serve, or the election and qualification of his or her successor. |
| 3 | Unless otherwise noted, the information presented is the principal occupation of the Trustee during the past five years. |
| 4 | Directorships held in (i) any other investment companies registered under the 1940 Act, (ii) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or (iii) any company subject to the requirements of Section 15(d) of the Exchange Act. |
44
Management Information (Continued)
October 31, 2013
The address for each Officer is: c/o Nationwide Funds Group, 1000 Continental Drive, Suite 400, King of Prussia, PA 19406.
Name and Year of Birth | Position(s) Held with Fund and Length of Time Served1 | Principal Occupation(s) During Past Five Years2 | ||
Michael S. Spangler 1966 | President and Chief Executive Officer since June 2008 | Mr. Spangler is President and Chief Executive Officer of Nationwide Funds Group, which includes NFA3, Nationwide Fund Management LLC3 and Nationwide Fund Distributors LLC3, and is a Senior Vice President of NFS3. From May 2004 through May 2008, Mr. Spangler was Managing Director, Head of Americas Retail and Intermediary Product Management for Morgan Stanley Investment Management. | ||
Stephen T. Grugeon 1950 | Executive Vice June 2008 | Mr. Grugeon has been Executive Vice President and Chief Operating Officer of Nationwide Funds Group since May 20073. From February 2008 through June 2008, he also served as the acting President and Chief Executive Officer of the Trust and of Nationwide Funds Group. From December 2006 until January 2008, he was Executive Vice President of NWD Investments3. | ||
Joseph Finelli 1957 | Treasurer since September 2007 | Mr. Finelli is the Principal Financial Officer and Senior Vice President for Nationwide Funds Group3. From July 2001 until September 2007, he was Assistant Treasurer and Vice President of Investment Accounting and Operations of NWD Investments3. | ||
Brian Hirsch 1956 | Chief Compliance Officer since January 2012 | Mr. Hirsch is Vice President of NFA and Chief Compliance Officer of NFA and the Trust. From January 2003 through January 2012, Mr. Hirsch was the Senior Vice President for Compliance and Fund Administration at IFS Financial Services, Inc., a subsidiary of the Western Southern Financial Group. | ||
| Eric E. Miller 1953 | Secretary since December 2002 | Mr. Miller is Senior Vice President, General Counsel, and Assistant Secretary for Nationwide Funds Group and NWD Investments3. | ||
| Doff Meyer 1950 | Vice President and Chief Marketing Officer since January 2008 | Ms. Meyer is Senior Vice President and Chief Marketing Officer of Nationwide Funds Group (since August 2007)3. From September 2004 until August 2007, Ms. Meyer was Director of Finance and Marketing, Principal of Piedmont Real Estate Associates LLC. |
| 1 | Length of time served includes time served with the Trust’s predecessors. |
| 2 | Unless otherwise noted, the information presented is the principal occupation of the Officer during the past five years. |
| 3 | These positions are held with an affiliated person or principal underwriter of the Funds. |
Additional information regarding the Trustees and Officers may be found in the Trust’s Statement of Additional Information, which is available without charge upon request, by calling 800-848-0920.
Federal law requires the Trust and each of its investment advisers and subadvisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Fund. The Fund’s proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Trust’s website at nationwide.com/mutualfunds, and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.
45
| Market Index Definitions |
Barclays Emerging Markets USD Aggregate Bond Index: An unmanaged index comprising fixed-rate and floating-rate U.S. dollar-denominated bonds from sovereign, quasi-sovereign and corporate emerging market issuers; the countries considered to be emerging markets are determined by annual review using rules-based classifications from the World Bank income group and the International Monetary Fund (IMF).
Barclays Global Aggregate Bond Index: An unmanaged index of fixed-rate, publicly issued, taxable bond market issues with a remaining maturity of at least one year; a broad-based measurement of the performance of the global investment-grade fixed-income markets.
Barclays Long U.S. Treasury Index: An unmanaged index that measures the performance of all investment-grade, publicly issued U.S. Treasury securities with a remaining maturity of 10 years or more and $250 million or more in outstanding face value.
Barclays Municipal Bond Index: An unmanaged, market value-weighted index of investment-grade municipal bonds with a minimum credit rating of Baa and maturities of one year or more; serves as a broad market performance index for the tax-exempt bond market.
Barclays U.S. 1-3 Year Government/Credit Bond Index: An unmanaged index of U.S. dollar-denominated, investment-grade, fixed-rate, publicly issued, taxable bond market issues (including Treasury, government and corporate securities) with a remaining maturity of one to three years.
Barclays U.S. 10-20 Year Treasury Bond Index: An unmanaged index that measures the performance of U.S. Treasury securities with a remaining maturity of 10 to 20 years.
Barclays U.S. Aggregate Bond Index: An unmanaged, market value-weighted index of investment-grade, fixed-rate debt issues (including government, corporate, asset-backed, and mortgage-backed securities with maturities of one year or more) that is generally representative of the bond market as a whole.
Barclays U.S. Corporate High Yield Index: An unmanaged index that reflects the performance of fixed-rate, non-investment-grade, U.S. dollar-denominated taxable corporate bonds with at least $150 million par value outstanding, a maximum credit rating of Ba1 and a maturity of one year or more; gives a broad look at how high-yield (“junk”) bonds have performed.
Barclays U.S. Credit Index: An unmanaged, market value-weighted index that measures the performance of investment-grade, fixed-rate, publicly issued U.S. corporates and non-corporates, including foreign agencies, sovereigns, supranationals and foreign local government issues, with at least $250 million par value outstanding and a maturity of one year or more.
Barclays U.S. Treasury Inflation-Protected Securities (TIPS) IndexSM: An unmanaged, market capitalization-weighted index that measures the performance of all U.S. dollar-denominated, investment-grade, fixed-rate, publicly issued U.S. TIPS with a remaining maturity of at least one year and $250 million or more in outstanding face value.
BofA Merrill Lynch (BofAML) 1-Year Treasury Bill (T-Bill) Index: An unmanaged index that measures the returns of 12-month Treasury bills. Comprises a single issue purchased at the beginning of a month and held for the full month. At the end of that month, that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding T-Bill with the longest maturity.
BofA Merrill Lynch (BofAML) 6-Month Treasury Bill (T-Bill) Index: An unmanaged index that measures the returns of six-month Treasury bills. Comprises a single issue purchased at the beginning of a month and held for the full month. At the end of that month, that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding T-Bill that matures closest to, but not beyond, six months from the rebalancing date.
46
| Market Index Definitions (con’t.) |
BofA Merrill Lynch (BofAML) AAA U.S. Treasury/Agency Master Index: An unmanaged index that gives a broad look at how fixed-rate U.S. government bonds with a remaining maturity of at least one year have performed.
BofA Merrill Lynch (BofAML) U.S. High Yield Cash Pay Constrained Index: An unmanaged, market value-weighted index that measures the performance of U.S. dollar-denominated, below-investment-grade, fixed-rate, publicly issued, non-convertible, coupon-bearing corporate debt with a remaining maturity of at least one year. Each issue represented must have an outstanding par value of at least $50 million, must be less than BBB/Baa3-rated but not in default, and is restricted to a maximum of 2% of the total index.
Citigroup 3-Month Treasury Bill (T-Bill) Index: An unmanaged index that is generally representative of 3-month Treasury bills; consists of an average of the last 3-month Treasury bill issues (excluding the current month-end bill).
Consumer Price Index (CPI): Calculated by the U.S. Department of Labor’s Bureau of Labor Statistics, the CPI represents changes in prices of a basket of goods and services purchased for consumption by urban households.
Dow Jones Industrial Average (DJIA): A market indicator consisting of a price-weighted average of 30 blue chip stocks actively traded on the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ) system; invented by Charles Dow in 1896, the DJIA represents 15% to 20% of the value of NYSE stocks.
iMoneyNet Prime Retail Index: An unmanaged index that is an average of non-government retail money market mutual funds. Portfolio holdings of prime money market mutual funds include U.S. Treasury, U.S. other, repurchase agreements, time deposits, domestic and foreign bank obligations, commercial paper, floating-rate notes and asset-backed commercial paper.
KOSPI 200 Index: An unmanaged index that is a subset of the Korea Composite Stock Price Index; measures the performance of the stocks of the 200 largest publicly traded companies on the Korea Stock Exchange.
Lipper Analytical Services, Inc. (Lipper) is an industry research firm whose rankings are based on total return performance and do not reflect the effect of sales charges. Each fund is ranked within a universe of funds similar in investment objective as determined by Lipper.
Morningstar® (Mstar) Lifetime Allocation Indexes: A series of 13 unmanaged, multi-asset-class indexes designed to benchmark target-date investment products. Each index is available in three risk profiles: aggressive, moderate and conservative. The index asset allocations adjust over time, reducing equity exposure and shifting toward traditional income-producing investments. The strategic asset allocation of the indexes is based on Ibbotson Associates’ Lifetime Asset Allocation methodology.
MSCI ACWI ex USA Index: An unmanaged, market capitalization-weighted index that is designed to measure the performance of the stocks in the global developed and emerging markets, excluding U.S.-based companies.
MSCI All Country World IndexSM: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of the stocks in the global developed and emerging markets.
47
| Market Index Definitions (con’t.) |
MSCI EAFE® Index: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of the stocks in developed markets outside the United States and Canada.
MSCI Emerging Markets (EM) Index: An unmanaged, free float-adjusted market capitalization-weighted index that is designed to measure equity market performance of emerging markets.
MSCI Greece Index: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of the stocks in Greece.
MSCI World ex USA Index: An unmanaged index that measures the equity market performance of developed-market countries excluding the United States; covers approximately 85% of the free float-adjusted market capitalization in each country, capturing large- and mid-cap representation.
MSCI World IndexSM Free: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of global developed-market equities. The “Free” suffix denotes an index with a somewhat different history but the same constituents and performance in relation to its counterpart index without the suffix.
Russell 1000® Index: An unmanaged index that measures the performance of the large-capitalization segment of the U.S. equity universe.
Russell 1000® Growth Index: An unmanaged index that measures the performance of the large-capitalization growth segment of the U.S. equity universe; includes those Russell 1000® Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index: An unmanaged index that measures the performance of the large-capitalization value segment of the U.S. equity universe; includes those Russell 1000® Index companies with lower price-to-book ratios and lower forecasted growth values.
Russell 2000® Index: An unmanaged index that measures the performance of the small-capitalization segment of the U.S. equity universe.
Russell 2000® Growth Index: An unmanaged index that measures the performance of the large-capitalization growth segment of the U.S. equity universe; includes those Russell 2000® Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 2000® Value Index: An unmanaged index that measures the performance of the large-capitalization growth segment of the U.S. equity universe; includes those Russell 2000® Index companies with lower price-to-book ratios and lower forecasted growth values.
Russell 3000® Index: An unmanaged index that measures the performance of the 3,000 largest U.S. companies in the investable U.S. equity universe.
S&P 500® Index: An unmanaged, market capitalization-weighted index of 500 stocks of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.
S&P MidCap 400® (S&P 400) Index: An unmanaged index that measures the performance of 400 stocks of medium-sized U.S. companies (those with a market capitalization of $1 billion to $4.4 billion).
SET50 Index: An unmanaged index that measures the performance of the stocks of the 50 largest companies trading on the Stock Exchange of Thailand.
48
| Glossary |
Definitions of some commonly used investment terms
Asset allocation: The process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.
Benchmark index: A broad-based securities index used as a comparison tool to measure the performance of a mutual fund.
Derivative: A contract, security or investment with its value based on the performance of an underlying financial asset, index or economic measure.
Diversification: An investment strategy that seeks to reduce risk in a portfolio so that the positive performance of some investments will neutralize the negative performance of others.
Duration: A measure of how much the price of a bond would change compared to a change in market interest rates, based on the remaining time until a bond’s maturity together with other factors. A bond’s value drops when interest rates rise, and vice versa. Bonds with longer durations have higher risk and volatility.
Emerging market countries: Developing and low- or middle-income countries as identified by the International Finance Corporation or the World Bank. Emerging market countries may be found in regions such as Asia, Latin America, Eastern Europe, the Middle East and Africa.
Equity securities: Securities that represent an ownership interest in the issuer. Common stocks are the most common type of equity securities.
Expense ratio: The percentage of fees paid by a fund to its adviser for management and operational costs. A fund’s expense ratio includes all administrative expenses and 12b-1 fees but excludes sales charges.
Fixed-income securities: Securities, including bonds and other debt securities, that represent an obligation by the issuer to pay a specified rate of interest or dividend at specified times.
Market capitalization: A common way of measuring the size of a company based on the price of its common stock multiplied by the number of outstanding shares.
Quantitative techniques: Mathematical and statistical methods used in the investment process to identify securities of issuers for possible purchase or sale by a mutual fund.
Sector: An industry or market that shares common characteristics. Sectors are used to group investments into categories such as energy, health, technology and utilities.
Yield curve: A plotted graph line showing the interest rates of bonds, at a set point in time, that have equal credit quality but different maturity dates.
49
P.O. Box 701
Milwaukee, WI 53201-0701
nationwide.com/mutualfunds
Investors should carefully consider a fund’s (and, if applicable, each of its underlying funds’) investment objectives, risks, fees, charges and expenses before investing any money. To obtain this and other information on Nationwide Funds, please call 1-800-848-0920 to request a summary prospectus and/or a prospectus, or download a summary prospectus and/or a prospectus at nationwide.com/mutualfunds. Please read it carefully before investing any money.
About Nationwide Funds Group (NFG)
NFG comprises Nationwide Fund Advisors, Nationwide Fund Distributors LLC and Nationwide Fund Management LLC. Together they provide advisory, distribution and administration services, respectively, to Nationwide Funds. Nationwide Fund Advisors (NFA) is the investment adviser to Nationwide Funds. NFA is a wholly owned subsidiary of Nationwide Financial Services, Inc. (NFS).
Distributor
Nationwide Funds distributed by Nationwide Fund Distributors LLC (NFD), member FINRA, King of Prussia, Pa. NFD is not an affiliate of any subadviser discussed in this material, except Nationwide Asset Management, LLC.
Nationwide, Nationwide Financial, the Nationwide framemark, Nationwide Funds, Nationwide Funds Group and On Your Side are service marks of Nationwide Mutual Insurance Company.
© 2013 Nationwide Funds Group. All rights reserved.
AR-ALT 12/13
Annual Report
October 31, 2013
Nationwide Mutual Funds
Investor Destinations Funds
Nationwide Investor Destinations Aggressive Fund
Nationwide Investor Destinations Moderately Aggressive Fund
Nationwide Investor Destinations Moderate Fund
Nationwide Investor Destinations Moderately Conservative Fund
Nationwide Investor Destinations Conservative Fund
| Nationwide Funds® |
Commentary in this report is provided by the portfolio manager(s) of each Fund as of the date of this report and is subject to change at any time based on market or other conditions.
Third-party information has been obtained from sources that Nationwide Fund Advisors (NFA), the investment adviser to the Funds, deems reliable. This report and the holdings provided are for informational purposes only and are not intended to be relied on as investment advice. Portfolio composition is accurate as of the date of this report and is subject to change at any time and without notice. NFA, one of its affiliated advisers or its employees may hold a position in the securities in this report.
Statement Regarding Availability of Quarterly Portfolio Holdings
The Trust files complete schedules of portfolio holdings for each Fund with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. Additionally, the Trust files a schedule of portfolio holdings monthly for the Nationwide Money Market Fund on Form N-MFP. Forms N-Q and Forms N-MFP are available on the SEC’s website at http://www.sec.gov. Forms N-Q and Forms N-MFP may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330. The Trust also makes this information available to shareholders on nationwide.com/mutualfunds or upon request without charge.
Statement Regarding Availability of Proxy Voting Record
Information regarding how the Funds voted proxies relating to portfolio securities held during the most recent 12-month period ended June 30 is available without charge, upon request, by calling 800-848-0920, and on the SEC’s website at http://www.sec.gov.
| Nationwide Funds® Annual Report |
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Nationwide Funds®
October 31, 2013
Dear Shareholder,
I am proud to report that Nationwide Financial has acquired 17 mutual funds through an agreement with HighMark Capital Management, Inc. and approval of its shareholders. This agreement is the latest step in the Nationwide Financial strategy to pursue Nationwide Funds growth.
Why is this important to you, a Nationwide Funds shareholder? By adding these HighMark Funds to the Nationwide Mutual Funds lineup, we continue to expand our selection of investment strategies. The transaction provides Nationwide Funds with approximately $3.6 billion in new mutual fund assets, enabling Nationwide to present a wider array of investment offerings. It also underscores our commitment to helping Americans, like you, prepare for and live in retirement.
During the 12-month reporting period ended October 31, 2013, broad U.S. stock market performance was predominantly positive, with the S&P 500® Index returning 27.18%. Yet despite recent encouraging returns, several years of economic volatility and uncertainty have left some investors distrustful of the markets and wary about their economic futures. In short, they have developed a fear of financial planning.
Nationwide Funds recently released the results of its in-depth investor sentiment survey conducted by Harris Interactive, titled Fear of Financial Planning. The study revealed that 26 percent of potential investors do not have a financial plan. Given that we live in an era when Americans are more responsible for their own financial security than ever before, we find this statistic troubling and are working to spread the word that financial planning is a necessity, not an option.
We encourage all of our shareholders to meet regularly with their financial advisors. An effective financial plan involves much more than just opening an investment account. It includes taking a macro-level view of your circumstances and making use of thoughtful, customized long-term analysis. An effective financial plan also contains contingencies to offset potential surprises and risks, specific action steps and defined milestones to help increase your confidence and measure success. Armed with a plan, you are never alone.
In his novel “The Hobbit,” author J.R.R. Tolkien wrote, “It does not do to leave a live dragon out of your calculations, if you live near him.” Since the beginning of the financial crisis, investors have been living close to a live dragon and have felt his heat. However, as every experienced dragon slayer knows, having a comprehensive plan of attack, a wide array of tools and a team of trusted experts by your side quiets fear and fortifies you to pursue victory.
Thank you for investing with Nationwide Funds.
Sincerely,
Michael S. Spangler
President & CEO
Nationwide Funds
1
| Economic Review |
During the fiscal year ended October 31, 2013, most asset classes reported strong performance. Domestic equities experienced a broad-based rally, with the S&P 500® Index delivering a 27.2% return, and with nearly all sectors and capitalization ranges delivering strong performance. International equities also were solid, with developed markets outperforming emerging markets. Fixed-income results were mixed, as credit-sensitive indexes showed positive returns, while rate-sensitive indexes were affected by rising Treasury yields.
Domestically, the reporting period was dominated by news from Washington. The main topics from November 2012 through January 2013 consisted of the national election for president and congressional control and a heated debate on the fiscal cliff. Concerns about the tapering (gradual reduction) of the Federal Reserve’s Quantitative Easing (“QE”) policy, the federal government shutdown and rhetoric in Congress related to raising the debt ceiling affected trading in August, September and October 2013. The S&P 500 Index was up 10 of the 12 months of the fiscal year, including consecutively from November 2012 through May 2013. The S&P 500 Index showed modest gains in November and December 2012 of 0.58% and 0.91%, respectively, despite the political uncertainty.
The S&P 500 Index was up 10 of the 12 months of the fiscal year, including consecutively from November 2012 through May 2013.
The first quarter of calendar-year 2013 saw a substantial rally, with the S&P 500 Index up 10.6% on relief over a conclusion to a contentious election season and the implementation of the federal spending cuts on March 1. The broad-based market’s strength continued in April and May, with the S&P 500 Index returning 1.9% and 2.3%, respectively, before the market became choppy for the remainder of the reporting period on a spike in interest rates. The equity and fixed-income markets reacted to comments from Federal Reserve Chairman Ben Bernanke
suggesting a tapering of the Fed’s QE program later in the year. Volatility increased materially, with substantial positive returns for the S&P 500 Index of 5.1% in July, 3.1% in September and 4.6% in October, somewhat offset by postings of -1.3% in June and -2.9% in August. A theme in the market during 2013 was “sell the rumor, buy the news,” as the market sold off modestly into the period of uncertainty, and rallied substantially as a conclusion was reached.
While gradually improving through the reporting period, U.S. economic activity was sluggish during the period, with GDP growth of 0.1%, 1.1%, 2.5% and 2.8% from calendar 4Q12 through calendar 3Q13. This was the primary impetus for the cautious approach by the Federal Reserve with regard to maintaining the QE program. Inflation remained well controlled during the reporting period, with the core Consumer Price Index (CPI) below 2% throughout the period, ending at 1.7% in October 2013. CPI, which includes the volatile food and energy categories, was actually lower than core CPI, averaging 1.6% and exiting September 2013 at 1.2%. Despite job-creation levels coming in lower than during many past recoveries, the unemployment rate continued to decline during the reporting period, falling from 7.9% to 7.2%, aided by the labor participation rate declining to 63.3% from 63.8% a year ago (the figure was more than 66% at the beginning of the 2008 recession).
The strong performance in domestic equities was broad based during the reporting period, with small-capitalization stocks outperforming large-cap stocks, and growth and value roughly equal. The best-performing sectors in the S&P 500 Index were consumer discretionary, with 40.5%, industrials, with 35.8% and health care, with 34.3%. Consumer discretionary and industrials benefited from improved profits and expanding valuations, and health care rose in reaction to excitement surrounding new products. The worst-performing sectors were utilities, with 9.5% and telecommunications, with 13.1%. Utilities and telecommunications were relatively impacted by rising rates, as the high dividends paid by these sectors were relatively less attractive.
2
| Economic Review (con’t.) |
The strong performance in domestic equities was broad based during the reporting period, with small-capitalization stocks outperforming large-cap stocks, and growth and value roughly equal.
International stocks were very strong at the start of the reporting period, as European shares rallied on hopes that the worst of the stress on the banking system was behind them. Asian shares rose in reaction to a U.S. rally and the prospect of additional stimulus from Japan’s Central Bank. In November and December 2012, international shares materially outperformed U.S. shares, with the MSCI ACWI ex USA Index outperforming the S&P 500 Index by nearly 4%. Throughout the year, the performance of international stocks continued to be positive but weaker relative to U.S. stocks. Europe was reminded of the fragile state of the banking systems of its weaker members, this time with Cyprus. Continued political tensions in Greece, sluggish economic growth and worries about a U.S. tapering depressed relative returns through mid-year, before the market rallied in response to stabilization of political and banking system risk. Asia was relatively strong throughout the year, primarily due to the prospect of renewed stimulus by Japan’s Central Bank and a beneficial exchange rate. Emerging market stocks lagged on concerns about China’s slowing economic growth as well as political tensions in Brazil, Turkey, North Korea and the Middle East, and steadily declining commodity prices.
Performance in the fixed-income markets was driven by a sustained period of rising rates throughout most of the reporting period. Long-term Treasury yields rose meaningfully during the period, moving from a low of 1.70% in October 2012 to a high of 3.00% in September 2013 on anticipation of the tapering of Fed policy, but fell to 2.54% by the end of October as those concerns
faded. The broadly based Barclays U.S. Aggregate Bond Index posted a total return of -1.1% for the reporting period. Long-duration benchmarks showed negative relative performance, with the Barclays Long U.S. Treasury Index down 9.3%. A generally benign economic environment allowed a narrowing of most credit spreads, resulting in positive performance for high-yield and emerging market benchmarks. Municipal bonds performed largely in line with the broader index, as the positive impact from the gradual improvement in economic conditions was offset by a few high-profile events, such as the fears of a possible default of Puerto Rico, the third-largest municipal issuer behind California and New York.
| Index | Fiscal Year Total Return | |||
| S&P 500® | 27.18% | |||
| Russell 1000® Growth | 28.30% | |||
| Russell 1000® Value | 28.29% | |||
| Russell 2000® | 36.28% | |||
| MSCI World ex USA | 24.65% | |||
| MSCI Emerging Markets | 6.53% | |||
| Barclays U.S. Aggregate Bond | -1.08% | |||
| Barclays U.S. 10-20 Year Treasury Bond | -5.23% | |||
| Barclays U.S. 1-3 Year Government/Credit Bond | 0.77% | |||
| Barclays Municipal Bond | -1.72% | |||
| Barclays U.S. Corporate High Yield | 8.87% | |||
| Barclays Emerging Markets USD Aggregate Bond | -1.24% | |||
3
| Fund Commentary | Nationwide Investor Destinations Aggressive Fund |
For the annual period ended October 31, 2013, the Nationwide Investor Destinations Aggressive Fund (Service Class) returned 26.04% versus 25.20% for its composite benchmark*, 60% Russell 3000® Index, 30% MSCI EAFE® Index and 10% Barclays U.S. Aggregate Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Global Multi-Cap Core Funds (consisting of 148 funds as of October 31, 2013) was 24.13% for the same time period.
*The Fund changed its composite benchmark on September 30, 2013. The Fund’s former composite benchmark, comprising 95% S&P 500® Index and 5% Barclays U.S. Aggregate Bond Index, returned 25.64% for the annual period ended October 31, 2013.
The Fund’s return for the 12-month period covered in this report was primarily driven by strong positive returns across the equity markets in the U.S. and foreign developed countries. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted double-digit gains. Specifically, the S&P 500 Index (representing large-cap stocks) rose more than 27%, S&P MidCap 400® Index (mid-cap stocks) increased more than 33% and Russell 2000® Index (small-cap stocks) gained more than 36%. During the period, the U.S. Federal Reserve (Fed) reaffirmed its intent to support the economy by maintaining its pace of asset purchases, helping to underpin the gains delivered in the U.S. equity markets.
The equity markets within foreign developed countries (as distinguished from emerging market countries) generally posted double-digit returns as well. The MSCI EAFE Index (representing developed international markets) posted a gain of nearly 27% during the period. Concerns regarding political and economic uncertainty in various parts of the eurozone receded further from the headlines and were also helped by the Fed’s decision not to taper (gradually reduce) its pace of asset purchases and the dissipation of tensions in Syria.
With regard to intermediate-term, investment-grade U.S. fixed-income bonds, the Barclays U.S. Aggregate Bond Index (representing such U.S. bonds) posted a negative return of -1.08% during the period. Interest rates on the bellwether 10-year U.S. Treasury note increased nearly 100 basis points during the period, beginning November 2012 at 1.62%, increasing to 3.00% by early September 2013 and easing back at the end of the period to 2.56% after the Fed’s announcement to postpone the tapering of its asset purchases. The rise in interest rates generally coincided with an increase in intermediate- and long-term bond prices and a decrease in bond returns for the period as a whole. Short-term bond interest rates remained range-bound near zero, effectively keeping returns in the very low single digits.
The returns from the Fund’s investments in the Nationwide S&P 500 Index Fund and Nationwide International Index Fund, combined with their sizable allocations within the Fund, made these underlying funds the largest contributors to the Fund’s return during the period, as shown in the chart below.
The negative return from the Fund’s investment in the Nationwide Bond Index Fund made this underlying fund the sole detractor from the Fund’s return during the period, as shown in the chart below.
Portfolio Manager:
Thomas R. Hickey Jr., Nationwide Fund Advisors
The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.
Investments in the Fund are subject to the risks of its underlying funds. Please refer to the summary prospectus for a more detailed explanation of the Fund’s principal risks.
The Fund may invest in the Nationwide Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Contract may lose money from unpaid principal or unpaid or reduced interest.
4
| Fund Commentary (con’t.) | Nationwide Investor Destinations Aggressive Fund |
Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.
There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
Note: On September 30, 2013, important changes were made to the Fund’s allocations, including the addition of two more underlying investments — Nationwide Alternatives Allocation Fund and Nationwide Core Plus Bond Fund. These new underlying investments are included in the chart to the right, but are not included in the chart below.
Actual Underlying Fund Allocations
(as of October 31, 2013)
| Nationwide S&P 500 Index Fund | 32% | |||
| Nationwide International Index Fund | 27% | |||
| Nationwide Mid Cap Market Index Fund | 14% | |||
| Nationwide Small Cap Index Fund | 13% | |||
| Nationwide Alternatives Allocation Fund | 10% | |||
| Nationwide Bond Index Fund | 2% | |||
| Nationwide Core Plus Bond Fund | 2% | |||
| 100% |
Actual underlying fund allocations in the chart above are stated as a percentage of the Fund’s total net assets. Allocations may change over time in order for the Fund to meet its objective or due to market and/or economic conditions.
Contributions of Underlying Funds to Fund Performance
(For the year ended October 31, 2013)
The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Aggressive Fund’s fees and expenses. Performance is based on the 12-month trailing returns of the underlying funds and their respective allocation on the last day of the reporting period, October 31, 2013, and may not result in the annualized return of the Fund. The Nationwide Alternatives Allocation Fund and Nationwide Core Plus Bond Fund are not shown since they were held as underlying investments for only one month of the reporting period. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, Nationwide Fund Advisors periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. The asset class target allocations are subject to change at any time and without notice. For more information, refer to the Fund’s prospectus.
5
| Fund Overview | Nationwide Investor Destinations Aggressive Fund |
Objective
The Fund seeks to maximize total investment return for an aggressive level of risk.
Highlights
| Ÿ | The Fund’s investments in U.S. and foreign developed market mutual funds account for more than 85% of its allocations and contributed more than 95% to the returns of the Fund during the period |
| Ÿ | The Fund’s principal investment in U.S. bonds detracted from returns during the period |
| Ÿ | The Fund recently added exposures to six additional asset classes within two additional underlying funds that are intended to help diversify the sources of risk and return for the Fund |
Asset Allocation†
| Equity Funds | 86.1% | |||
| Alternative Assets | 10.0% | |||
| Fixed Income Funds | 3.9% | |||
| Liabilities in excess of other assets†† | 0.0% | |||
| 100.0% |
Top Holdings†††
| Nationwide S&P 500 Index Fund, Institutional Class | 32.1% | |||
| Nationwide International Index Fund, Institutional Class | 26.9% | |||
| Nationwide Mid Cap Market Index Fund, Institutional Class | 14.1% | |||
| Nationwide Small Cap Index Fund, Institutional Class | 12.9% | |||
| Nationwide Alternatives Allocation Fund, Institutional Class | 10.0% | |||
| Nationwide Bond Index Fund, Institutional Class | 2.0% | |||
| Nationwide Core Plus Bond Fund, Institutional Class | 2.0% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of October 31, 2013. |
| †† | Amount rounds to less than 0.1%. |
| ††† | Percentages indicated are based upon total investments as of October 31, 2013. |
6
| Fund Performance | Nationwide Investor Destinations Aggressive Fund |
Average Annual Total Return
| (For periods ended October 31, 2013) | 1 Yr. | 5 Yr. | 10 Yr. | |||||||||||
| Class A | w/o SC1 | 26.24% | 13.92% | 7.44% | ||||||||||
| w/SC2 | 18.95% | 12.57% | 6.80% | |||||||||||
| Class B | w/o SC1 | 25.29% | 13.13% | 6.69% | ||||||||||
| w/SC3 | 20.29% | 12.89% | 6.69% | |||||||||||
| Class C | w/o SC1 | 25.26% | 13.12% | 6.67% | ||||||||||
| w/SC4 | 24.26% | 13.12% | 6.67% | |||||||||||
| Class R25,6 | 25.73% | 13.52% | 7.15% | |||||||||||
| Institutional Class5,7 | 26.57% | 14.26% | 7.74% | |||||||||||
| Service Class5 | 26.04% | 13.81% | 7.33% | |||||||||||
Expense Ratios
| Expense Ratio* | ||
| Class A | 0.77% | |
| Class B | 1.47% | |
| Class C | 1.47% | |
| Class R2 | 1.11% | |
| Institutional Class | 0.47% | |
| Service Class | 0.87% |
*Current effective prospectus dated March 1, 2013. Expenses also include indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details.
All figures showing the effect of a sales charge (SC) reflect the maximum charge possible, because it has the most significant effect on performance data.
| 1 | These returns do not reflect the effects of SCs. |
| 2 | A 5.75% front-end sales charge was deducted. |
| 3 | A 5.00% maximum contingent deferred sales charge (CDSC) was deducted. The CDSC declines to 0% after 6 years and is not deducted from returns after 6 years. |
| 4 | A 1.00% CDSC was deducted from the one year return because it is charged when you sell Class C shares within the first year after purchase. |
| 5 | Not subject to any SCs. |
| 6 | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
| 7 | These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. |
7
| Fund Performance (con’t.) | Nationwide Investor Destinations Aggressive Fund |
Performance of a $10,000 Investment
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 and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investing in mutual funds involves market risk, including loss of principal. Performance returns assume the reinvestment of all distributions.
Comparative performance of $10,000 invested in Service Class shares of the Nationwide Investor Destinations Aggressive Fund versus the Russell 3000® Index (current benchmark), the S&P 500® Index (former benchmark), the Barclays U.S. Aggregate Bond Index, the MSCI EAFE® Index, the Current Composite Index*, the Former Composite Index** and the Consumer Price Index (CPI) over the 10-year period ended 10/31/13. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
| * | The Current Composite Index comprises 60% Russell 3000® Index, 30% MSCI EAFE® Index and 10% Barclays U.S. Aggregate Bond Index. |
| ** | The Former Composite Index comprises 95% S&P 500® Index and 5% Barclays U.S. Aggregate Bond Index. |
8
| Shareholder Expense Example | Nationwide Investor Destinations Aggressive Fund |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2013) and continued to hold your shares at the end of the reporting period (October 31, 2013).
Actual Expenses
For each Class of the Fund in the table below, the first line provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid from May 1, 2013 through October 31, 2013. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Expenses for Comparison Purposes
The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period from May 1, 2013 through October 31, 2013. You may use this information to compare the ongoing costs of investing in the Class of the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) or redemption fees. If these transaction costs were included, your costs would have been higher. Therefore, the second line for each Class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The examples also assume all dividends and distributions are reinvested.
Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment
Nationwide Investor October 31, 2013 | Beginning Account Value ($) 05/01/13 | Ending Account Value ($) 10/31/13 | Expenses Paid During Period ($) 05/01/13 - 10/31/13a | Expense Ratio During Period (%) 05/01/13 - 10/31/13a | ||||||||
| Class A Shares | Actual | b | 1,000.00 | 1,097.00 | 2.64 | 0.50 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.68 | 2.55 | 0.50 | |||||||
| Class B Shares | Actual | b | 1,000.00 | 1,093.70 | 6.28 | 1.19 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.21 | 6.06 | 1.19 | |||||||
| Class C Shares | Actual | b | 1,000.00 | 1,093.50 | 6.28 | 1.19 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.21 | 6.06 | 1.19 | |||||||
| Class R2 Shares | Actual | b | 1,000.00 | 1,095.60 | 4.44 | 0.84 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,020.97 | 4.28 | 0.84 | |||||||
| Institutional Class Shares | Actual | b | 1,000.00 | 1,099.70 | 1.01 | 0.19 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,024.25 | 0.97 | 0.19 | |||||||
| Service Class Shares | Actual | b | 1,000.00 | 1,097.30 | 3.17 | 0.60 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.18 | 3.06 | 0.60 | |||||||
| a | Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus. |
| b | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2013 through October 31, 2013 multiplied to reflect one-half year period. The expense ratio presented represents a six-month, annualized ratio in accordance with Securities and Exchange Commission guidelines. |
| c | Represents the hypothetical 5% return before expenses. |
9
Statement of Investments
October 31, 2013
Nationwide Investor Destinations Aggressive Fund
| Mutual Funds 100.0% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Alternative Assets 10.0% |
| |||||||||
Nationwide Alternatives Allocation Fund, Institutional Class (a) | 12,437,363 | $ | 122,134,901 | |||||||
|
| |||||||||
Total Alternative Assets (cost $120,667,241) |
| 122,134,901 | ||||||||
|
| |||||||||
| ||||||||||
Equity Funds 86.1% |
| |||||||||
Nationwide International Index Fund, Institutional Class (a) | 39,097,287 | 330,372,078 | ||||||||
Nationwide Mid Cap Market Index Fund, Institutional Class (a) | 9,176,215 | 172,329,310 | ||||||||
Nationwide S&P 500 Index Fund, Institutional Class (a) | 27,017,297 | 393,912,196 | ||||||||
Nationwide Small Cap Index Fund, Institutional Class (a) | 10,069,135 | 158,588,875 | ||||||||
|
| |||||||||
Total Equity Funds (cost $784,789,092) |
| 1,055,202,459 | ||||||||
|
| |||||||||
| ||||||||||
Fixed Income Funds 3.9% |
| |||||||||
Nationwide Bond Index Fund, Institutional Class (a) | 2,138,138 | 24,203,719 | ||||||||
Nationwide Core Plus Bond Fund, Institutional Class (a) | 2,357,293 | 24,091,538 | ||||||||
|
| |||||||||
Total Fixed Income Funds (cost $48,856,685) |
| 48,295,257 | ||||||||
|
| |||||||||
Total Mutual Funds |
| 1,225,632,617 | ||||||||
|
| |||||||||
Total Investments |
| 1,225,632,617 | ||||||||
Liabilities in excess of other |
| (459,418 | ) | |||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 1,225,173,199 | |||||||
|
| |||||||||
| (a) | Investment in affiliate. |
| (b) | See notes to financial statements for tax unrealized appreciation/(depreciation) of securities. |
| † | Amount rounds to less than 0.1%. |
The accompanying notes are an integral part of these financial statements.
10
Statement of Assets and Liabilities
October 31, 2013
Nationwide Aggressive Fund | ||||||
Assets: | ||||||
Investments in affiliates, at value (cost $954,313,018) | $ | 1,225,632,617 | ||||
Cash | 77 | |||||
Receivable for investments sold | 503,945 | |||||
Receivable for capital shares issued | 1,298,966 | |||||
Prepaid expenses | 31,702 | |||||
|
| |||||
Total Assets | 1,227,467,307 | |||||
|
| |||||
Liabilities: | ||||||
Payable for capital shares redeemed | 1,573,822 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 133,913 | |||||
Fund administration fees | 32,533 | |||||
Distribution fees | 303,391 | |||||
Administrative servicing fees | 189,436 | |||||
Accounting and transfer agent fees | 21,361 | |||||
Trustee fees | 2,190 | |||||
Custodian fees | 4,073 | |||||
Compliance program costs (Note 3) | 793 | |||||
Professional fees | 20,078 | |||||
Printing fees | 11,128 | |||||
Other | 1,390 | |||||
|
| |||||
Total Liabilities | 2,294,108 | |||||
|
| |||||
Net Assets | $ | 1,225,173,199 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 984,754,156 | ||||
Accumulated undistributed net investment income | 82,090 | |||||
Accumulated net realized losses from affiliated investments | (30,982,646 | ) | ||||
Net unrealized appreciation/(depreciation) from investments in affiliates | 271,319,599 | |||||
|
| |||||
Net Assets | $ | 1,225,173,199 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 59,507,180 | ||||
Class B Shares | 3,938,655 | |||||
Class C Shares | 71,452,684 | |||||
Class R2 Shares | 108,654,200 | |||||
Institutional Class Shares | 118,716,482 | |||||
Service Class Shares | 862,903,998 | |||||
|
| |||||
Total | $ | 1,225,173,199 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 5,408,237 | |||||
Class B Shares | 364,282 | |||||
Class C Shares | 6,643,994 | |||||
Class R2 Shares | 10,031,716 | |||||
Institutional Class Shares | 10,688,167 | |||||
Service Class Shares | 78,324,552 | |||||
|
| |||||
Total | 111,460,948 | |||||
|
| |||||
11
Statement of Assets and Liabilities (Continued)
October 31, 2013
Nationwide Aggressive Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 11.00 | ||||
Class B Shares (b) | $ | 10.81 | ||||
Class C Shares (c) | $ | 10.75 | ||||
Class R2 Shares | $ | 10.83 | ||||
Institutional Class Shares | $ | 11.11 | ||||
Service Class Shares | $ | 11.02 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 11.67 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 5.75 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 1.00% on sales of shares of original purchases of $1,000,000 or more or that were not subject to a front-end sales charge made within 18 months of the purchase date. |
| (b) | For Class B Shares, the redemption price per share varies by the length of time shares are held. |
| (c) | For Class C Shares, the redemption price per share is reduced by 1.00% for shares held less than one year. |
The accompanying notes are an integral part of these financial statements.
12
Statement of Operations
For the Year Ended October 31, 2013
Nationwide Investor Destinations Aggressive Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income from affiliates | $ | 24,101,039 | ||||
|
| |||||
Total Income | 24,101,039 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 1,471,070 | |||||
Fund administration fees | 326,120 | |||||
Distribution fees Class A | 135,456 | |||||
Distribution fees Class B | 46,672 | |||||
Distribution fees Class C | 637,652 | |||||
Distribution fees Class R2 | 510,117 | |||||
Distribution fees Service Class | 2,018,622 | |||||
Administrative servicing fees Class A | 26,129 | |||||
Administrative servicing fees Class R2 | 155,732 | |||||
Administrative servicing fees Service Class | 1,257,326 | |||||
Registration and filing fees | 69,697 | |||||
Professional fees | 52,727 | |||||
Printing fees | 24,827 | |||||
Trustee fees | 39,632 | |||||
Custodian fees | 42,572 | |||||
Accounting and transfer agent fees | 145,916 | |||||
Compliance program costs (Note 3) | 4,232 | |||||
Other | 26,289 | |||||
|
| |||||
Total expenses before earnings credit | 6,990,788 | |||||
|
| |||||
Earnings credit (Note 5) | (1 | ) | ||||
|
| |||||
Net Expenses | 6,990,787 | |||||
|
| |||||
NET INVESTMENT INCOME | 17,110,252 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gain distributions from underlying affiliated funds | 14,031,985 | |||||
Net realized losses from investment transactions with affiliates | (2,571,213 | ) | ||||
|
| |||||
Net realized gains from affiliated investments | 11,460,772 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | 232,591,753 | |||||
|
| |||||
Net realized/unrealized gains from affiliated investments | 244,052,525 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 261,162,777 | ||||
|
| |||||
The accompanying notes are an integral part of these financial statements.
13
Statements of Changes in Net Assets
| Nationwide Investor Destinations Aggressive Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 17,110,252 | $ | 13,488,926 | ||||||||
Net realized gains from affiliated investments | 11,460,772 | 3,368,487 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | 232,591,753 | 84,900,154 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 261,162,777 | 101,757,567 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (968,045 | ) | (782,878 | ) | ||||||||
Class B | (55,790 | ) | (58,355 | ) | ||||||||
Class C | (675,982 | ) | (523,364 | ) | ||||||||
Class R2 | (1,424,243 | ) | (1,126,053 | ) | ||||||||
Institutional Class | (1,928,613 | ) | (1,416,774 | ) | ||||||||
Service Class | (13,132,526 | ) | (10,596,686 | ) | ||||||||
Net realized gains: | ||||||||||||
Class A | (572,967 | ) | (102,998 | ) | ||||||||
Class B | (56,776 | ) | (15,271 | ) | ||||||||
Class C | (637,640 | ) | (121,921 | ) | ||||||||
Class R2 | (1,028,497 | ) | (184,154 | ) | ||||||||
Institutional Class | (921,180 | ) | (145,546 | ) | ||||||||
Service Class | (8,184,292 | ) | (1,466,350 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (29,586,551 | ) | (16,540,350 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (47,705,603 | ) | (38,589,262 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets | 183,870,623 | 46,627,955 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 1,041,302,576 | 994,674,621 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 1,225,173,199 | $ | 1,041,302,576 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 82,090 | $ | – | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Proceeds from shares issued | $ | 15,322,388 | $ | 10,261,493 | ||||||||
Dividends reinvested | 1,039,315 | 580,205 | ||||||||||
Cost of shares redeemed | (19,061,602 | ) | (15,175,604 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (2,699,899 | ) | (4,333,906 | ) | ||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Proceeds from shares issued | 175,032 | 112,217 | ||||||||||
Dividends reinvested | 86,638 | 51,121 | ||||||||||
Cost of shares redeemed | (2,810,581 | ) | (3,090,647 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (2,548,911 | ) | (2,927,309 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Proceeds from shares issued | 11,975,603 | 6,102,521 | ||||||||||
Dividends reinvested | 572,226 | 264,082 | ||||||||||
Cost of shares redeemed | (11,464,078 | ) | (12,798,033 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 1,083,751 | (6,431,430 | ) | |||||||||
|
|
|
| |||||||||
14
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Aggressive Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Class R2 Shares | ||||||||||||
Proceeds from shares issued | $ | 11,886,523 | $ | 10,780,294 | ||||||||
Dividends reinvested | 2,357,861 | 1,260,389 | ||||||||||
Cost of shares redeemed | (17,978,126 | ) | (16,565,388 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (3,733,742 | ) | (4,524,705 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 62,767,157 | 20,738,085 | ||||||||||
Dividends reinvested | 2,849,793 | 1,562,320 | ||||||||||
Cost of shares redeemed | (52,343,098 | ) | (14,117,451 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 13,273,852 | 8,182,954 | ||||||||||
|
|
|
| |||||||||
Service Class Shares | ||||||||||||
Proceeds from shares issued | 57,991,604 | 48,881,901 | ||||||||||
Dividends reinvested | 21,316,629 | 12,062,908 | ||||||||||
Cost of shares redeemed | (132,388,887 | ) | (89,499,675 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (53,080,654 | ) | (28,554,866 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (47,705,603 | ) | $ | (38,589,262 | ) | ||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Issued | 1,559,786 | 1,184,816 | ||||||||||
Reinvested | 111,899 | 70,182 | ||||||||||
Redeemed | (1,969,347 | ) | (1,769,322 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (297,662 | ) | (514,324 | ) | ||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Issued | 18,323 | 16,824 | ||||||||||
Reinvested | 9,696 | 6,431 | ||||||||||
Redeemed | (292,860 | ) | (365,643 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (264,841 | ) | (342,388 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Issued | 1,223,229 | 727,426 | ||||||||||
Reinvested | 64,114 | 33,173 | ||||||||||
Redeemed | (1,178,718 | ) | (1,526,263 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 108,625 | (765,664 | ) | |||||||||
|
|
|
| |||||||||
Class R2 Shares | ||||||||||||
Issued | 1,229,532 | 1,270,454 | ||||||||||
Reinvested | 259,973 | 155,613 | ||||||||||
Redeemed | (1,816,307 | ) | (1,944,412 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (326,802 | ) | (518,345 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 6,223,977 | 2,378,555 | ||||||||||
Reinvested | 301,972 | 185,987 | ||||||||||
Redeemed | (5,214,478 | ) | (1,624,207 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 1,311,471 | 940,335 | ||||||||||
|
|
|
| |||||||||
15
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Aggressive Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
SHARE TRANSACTIONS: (continued) | ||||||||||||
Service Class Shares | ||||||||||||
Issued | 5,841,621 | 5,704,825 | ||||||||||
Reinvested | 2,299,608 | 1,458,610 | ||||||||||
Redeemed | (13,366,053 | ) | (10,368,289 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (5,224,824 | ) | (3,204,854 | ) | ||||||||
|
|
|
| |||||||||
Total change in shares | (4,694,033 | ) | (4,405,240 | ) | ||||||||
|
|
|
| |||||||||
Amount designated as “–” is zero or has been rounded to zero.
The accompanying notes are an integral part of these financial statements.
16
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Investor Destinations Aggressive Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Beginning | Net Investment Income | Net Realized and Unrealized Gains from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return (a) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income to Average Net Assets | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets | Portfolio Turnover (b) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 8.97 | 0.17 | 2.13 | 2.30 | (0.17 | ) | (0.10 | ) | (0.27 | ) | $ | 11.00 | 26.24% | $ | 59,507,180 | 0.49% | 1.69% | 0.49% | 22.52% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.26 | 0.13 | 0.73 | 0.86 | (0.13 | ) | (0.02 | ) | (0.15 | ) | $ | 8.97 | 10.56% | $ | 51,210,338 | 0.50% | 1.44% | 0.50% | 11.55% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.13 | 0.13 | 0.14 | 0.27 | (0.14 | ) | – | (0.14 | ) | $ | 8.26 | 3.24% | $ | 51,388,289 | 0.48% | 1.54% | 0.48% | 9.70% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.30 | 0.11 | 1.02 | 1.13 | (0.10 | ) | (0.20 | ) | (0.30 | ) | $ | 8.13 | 15.81% | $ | 49,682,066 | 0.49% | 1.44% | 0.49% | 8.89% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 7.02 | 0.13 | 0.78 | 0.91 | (0.13 | ) | (0.50 | ) | (0.63 | ) | $ | 7.30 | 14.98% | $ | 39,797,434 | 0.55% | 1.99% | 0.55% | 11.99% | ||||||||||||||||||||||||||||||||||||
| Class B Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 8.82 | 0.10 | 2.09 | 2.19 | (0.10 | ) | (0.10 | ) | (0.20 | ) | $ | 10.81 | 25.29% | $ | 3,938,655 | 1.20% | 1.08% | 1.20% | 22.52% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.11 | 0.07 | 0.73 | 0.80 | (0.07 | ) | (0.02 | ) | (0.09 | ) | $ | 8.82 | 9.91% | $ | 5,548,111 | 1.20% | 0.77% | 1.20% | 11.55% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 7.99 | 0.08 | 0.12 | 0.20 | (0.08 | ) | – | (0.08 | ) | $ | 8.11 | 2.47% | $ | 7,883,490 | 1.21% | 0.91% | 1.21% | 9.70% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.19 | 0.06 | 1.01 | 1.07 | (0.07 | ) | (0.20 | ) | (0.27 | ) | $ | 7.99 | 15.10% | $ | 11,618,585 | 1.20% | 0.75% | 1.20% | 8.89% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 6.93 | 0.08 | 0.77 | 0.85 | (0.09 | ) | (0.50 | ) | (0.59 | ) | $ | 7.19 | 14.11% | $ | 12,280,157 | 1.22% | 1.32% | 1.22% | 11.99% | ||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 8.78 | 0.09 | 2.09 | 2.18 | (0.11 | ) | (0.10 | ) | (0.21 | ) | $ | 10.75 | 25.26% | $ | 71,452,684 | 1.19% | 0.92% | 1.19% | 22.52% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.08 | 0.07 | 0.72 | 0.79 | (0.07 | ) | (0.02 | ) | (0.09 | ) | $ | 8.78 | 9.90% | $ | 57,370,350 | 1.20% | 0.76% | 1.20% | 11.55% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 7.97 | 0.07 | 0.12 | 0.19 | (0.08 | ) | – | (0.08 | ) | $ | 8.08 | 2.36% | $ | 59,022,254 | 1.21% | 0.86% | 1.21% | 9.70% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.17 | 0.06 | 1.01 | 1.07 | (0.07 | ) | (0.20 | ) | (0.27 | ) | $ | 7.97 | 15.15% | $ | 67,454,100 | 1.20% | 0.75% | 1.20% | 8.89% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 6.91 | 0.09 | 0.76 | 0.85 | (0.09 | ) | (0.50 | ) | (0.59 | ) | $ | 7.17 | 14.15% | $ | 70,213,439 | 1.22% | 1.36% | 1.22% | 11.99% | ||||||||||||||||||||||||||||||||||||
| Class R2 Shares (d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 8.84 | 0.12 | 2.11 | 2.23 | (0.14 | ) | (0.10 | ) | (0.24 | ) | $ | 10.83 | 25.73% | $ | 108,654,200 | 0.85% | 1.27% | 0.85% | 22.52% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.14 | 0.09 | 0.73 | 0.82 | (0.10 | ) | (0.02 | ) | (0.12 | ) | $ | 8.84 | 10.23% | $ | 91,551,218 | 0.84% | 1.10% | 0.84% | 11.55% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.01 | 0.10 | 0.14 | 0.24 | (0.11 | ) | – | (0.11 | ) | $ | 8.14 | 2.90% | $ | 88,524,201 | 0.85% | 1.18% | 0.85% | 9.70% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.21 | 0.08 | 1.01 | 1.09 | (0.09 | ) | (0.20 | ) | (0.29 | ) | $ | 8.01 | 15.41% | $ | 84,348,618 | 0.84% | 1.07% | 0.84% | 8.89% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 6.95 | 0.10 | 0.77 | 0.87 | (0.11 | ) | (0.50 | ) | (0.61 | ) | $ | 7.21 | 14.53% | $ | 64,237,573 | 0.87% | 1.56% | 0.87% | 11.99% | ||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.06 | 0.19 | 2.16 | 2.35 | (0.20 | ) | (0.10 | ) | (0.30 | ) | $ | 11.11 | 26.57% | $ | 118,716,482 | 0.19% | 1.88% | 0.19% | 22.52% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.34 | 0.15 | 0.75 | 0.90 | (0.16 | ) | (0.02 | ) | (0.18 | ) | $ | 9.06 | 11.05% | $ | 84,918,686 | 0.20% | 1.74% | 0.20% | 11.55% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.20 | 0.15 | 0.15 | 0.30 | (0.16 | ) | – | (0.16 | ) | $ | 8.34 | 3.49% | $ | 70,317,290 | 0.21% | 1.78% | 0.21% | 9.70% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.36 | 0.13 | 1.04 | 1.17 | (0.13 | ) | (0.20 | ) | (0.33 | ) | $ | 8.20 | 16.19% | $ | 57,247,781 | 0.20% | 1.71% | 0.20% | 8.89% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 7.08 | 0.14 | 0.79 | 0.93 | (0.15 | ) | (0.50 | ) | (0.65 | ) | $ | 7.36 | 15.23% | $ | 42,570,681 | 0.22% | 2.17% | 0.22% | 11.99% | ||||||||||||||||||||||||||||||||||||
| Service Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 8.99 | 0.15 | 2.14 | 2.29 | (0.16 | ) | (0.10 | ) | (0.26 | ) | $ | 11.02 | 26.04% | $ | 862,903,998 | 0.60% | 1.53% | 0.60% | 22.52% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.27 | 0.12 | 0.74 | 0.86 | (0.12 | ) | (0.02 | ) | (0.14 | ) | $ | 8.99 | 10.56% | $ | 750,703,873 | 0.60% | 1.34% | 0.60% | 11.55% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.14 | 0.12 | 0.13 | 0.25 | (0.12 | ) | – | (0.12 | ) | $ | 8.27 | 3.09% | $ | 717,539,097 | 0.61% | 1.43% | 0.61% | 9.70% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.32 | 0.10 | 1.03 | 1.13 | (0.11 | ) | (0.20 | ) | (0.31 | ) | $ | 8.14 | 15.66% | $ | 719,252,841 | 0.59% | 1.34% | 0.59% | 8.89% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 7.04 | 0.12 | 0.79 | 0.91 | (0.13 | ) | (0.50 | ) | (0.63 | ) | $ | 7.32 | 14.91% | $ | 640,465,271 | 0.63% | 1.87% | 0.63% | 11.99% | ||||||||||||||||||||||||||||||||||||
Amounts designated as “ – “are zero or have been rounded to zero.
| (a) | Excludes sales charge. |
| (b) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (c) | Per share calculations were performed using average shares method. |
| (d) | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
The accompanying notes are an integral part of these financial statements.
17
| Fund Commentary | Nationwide Investor Destinations Moderately Aggressive Fund |
For the annual period ended October 31, 2013, the Nationwide Investor Destinations Moderately Aggressive Fund (Service Class) returned 21.37% versus 22.18% for its composite benchmark*, 55% Russell 3000® Index, 25% MSCI EAFE® Index, 15% Barclays U.S. Aggregate Bond Index and 5% Barclays U.S. 1-3 Year Government/Credit Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mixed-Asset Target Allocation Growth Funds (consisting of 561 funds as of October 31, 2013) was 17.94% for the same time period.
*The Fund changed its composite benchmark on September 30, 2013. The Fund’s former composite benchmark, comprising 80% S&P 500® Index, 15% Barclays U.S. Aggregate Bond Index and 5% Citigroup 3-Month Treasury Bill Index, returned 21.16% for the annual period ended October 31, 2013.
The Fund’s return for the 12-month period covered in this report was primarily driven by strong positive returns across the equity markets in the U.S. and foreign developed countries. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted double-digit gains. Specifically, the S&P 500 Index (representing large-cap stocks) rose more than 27%, S&P MidCap 400® Index (mid-cap stocks) increased more than 33% and Russell 2000® Index (small-cap stocks) gained more than 36%. During the period, the U.S. Federal Reserve (Fed) reaffirmed its intent to support the economy by maintaining its pace of asset purchases, helping to underpin the gains delivered in the U.S. equity markets.
The equity markets within foreign developed countries (as distinguished from emerging market countries) generally posted double-digit returns as well. The MSCI EAFE Index (representing developed international markets) posted a gain of nearly 27% during the period. Concerns regarding political and economic uncertainty in various parts of the eurozone receded further from the headlines and were also helped by the Fed’s decision not to taper (gradually reduce) its pace of asset purchases and the dissipation of tensions in Syria.
With regard to intermediate-term, investment-grade U.S. fixed-income bonds, the Barclays U.S. Aggregate Bond Index (representing such U.S. bonds) posted a negative return of -1.08% during the period. Interest rates on the bellwether 10-year U.S. Treasury note increased nearly 100 basis points during the period, beginning November 2012 at 1.62%, increasing to 3.00% by early September 2013 and easing back at the end of the period to 2.56% after the Fed’s announcement to postpone the tapering of its asset purchases. The rise in interest rates generally coincided with an increase in intermediate- and long-term bond prices and a decrease in bond returns for the period as a whole. Short-term bond interest rates remained range-bound near zero, effectively keeping returns in the very low single digits.
The returns from the Fund’s investments in the Nationwide S&P 500 Index Fund and Nationwide International Index Fund, combined with their sizable allocations within the Fund, made these underlying funds the largest contributors to the Fund’s return during the period, as shown in the chart below.
The negative returns from the Fund’s investments in the Nationwide Bond Index Fund made this underlying fund the only detractor from the Fund’s return during the period, as shown in the chart below.
Portfolio Manager:
Thomas R. Hickey Jr., Nationwide Fund Advisors
The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.
Investments in the Fund are subject to the risks of its underlying funds. Please refer to the summary prospectus for a more detailed explanation of the Fund’s principal risks.
The Fund may invest in the Nationwide Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Contract may lose money from unpaid principal or unpaid or reduced interest.
18
| Fund Commentary (con’t.) | Nationwide Investor Destinations Moderately Aggressive Fund |
Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.
There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
Note: On September 30, 2013, important changes were made to the Fund’s allocations, including the addition of four more underlying investments — Nationwide Alternatives Allocation Fund, Nationwide Core Plus Bond Fund, Nationwide HighMark Short Term Bond Fund and Nationwide Ziegler Equity Income Fund. These new underlying investments are included in the chart to the right, but are not included in the chart below.
Actual Underlying Fund Allocations
(as of October 31, 2013)
| Nationwide S&P 500 Index Fund | 28% | |||
| Nationwide International Index Fund | 25% | |||
| Nationwide Mid Cap Market Index Fund | 12% | |||
| Nationwide Alternatives Allocation Fund | 10% | |||
| Nationwide Small Cap Index Fund | 10% | |||
| Nationwide Bond Index Fund | 6% | |||
| Nationwide Core Plus Bond Fund | 4% | |||
| Nationwide Contract | 2% | |||
| Nationwide HighMark Short Term Bond Fund | 2% | |||
| Nationwide Ziegler Equity Income Fund | 1% | |||
| 100% |
Actual underlying fund allocations in the chart above are stated as a percentage of the Fund’s total net assets. Allocations may change over time in order for the Fund to meet its objective or due to market and/or economic conditions.
Contributions of Underlying Funds to Fund Performance
(For the year ended October 31, 2013)
The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Moderately Aggressive Fund’s fees and expenses. Performance is based on the 12-month trailing returns of the underlying funds and their respective allocation on the last day of the reporting period, October 31, 2013, and may not result in the annualized return of the Fund. The Nationwide Alternatives Allocation Fund, Nationwide Core Plus Bond Fund, Nationwide HighMark Short Term Bond Fund and Nationwide Ziegler Equity Income Fund are not shown since they were held as underlying investments for only one month of the reporting period. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, Nationwide Fund Advisors periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. The asset class target allocations are subject to change at any time and without notice. For more information, refer to the Fund’s prospectus.
19
| Fund Overview | Nationwide Investor Destinations Moderately Aggressive Fund |
Objective
The Fund seeks to maximize total investment return for a moderately aggressive level of risk.
Highlights
| Ÿ | The Fund’s investments in U.S. and foreign developed market mutual funds account for more than 75% of its allocations and contributed more than 95% to the returns of the Fund during the period |
| Ÿ | Two of the Fund’s investments in U.S. bonds detracted from returns during the period |
| Ÿ | The Fund recently added exposures to six additional asset classes within four additional underlying funds that are intended to help diversify the sources of risk and return for the Fund |
Asset Allocation†
| Equity Funds | 76.3% | |||
| Fixed Income Funds | 11.8% | |||
| Alternative Assets | 9.9% | |||
| Fixed Contract | 2.0% | |||
| Liabilities in excess of other assets†† | 0.0% | |||
| 100.0% |
Top Holdings†††
| Nationwide S&P 500 Index Fund, Institutional Class | 28.1% | |||
| Nationwide International Index Fund, Institutional Class | 25.1% | |||
| Nationwide Mid Cap Market Index Fund, Institutional Class | 12.1% | |||
| Nationwide Small Cap Index Fund, Institutional Class | 10.0% | |||
| Nationwide Alternatives Allocation Fund, Institutional Class | 9.9% | |||
| Nationwide Bond Index Fund, Institutional Class | 5.9% | |||
| Nationwide Core Plus Bond Fund, Institutional Class | 3.9% | |||
| Nationwide HighMark Short Term Bond Fund, Institutional Class | 2.0% | |||
| Nationwide Fixed Contract | 2.0% | |||
| Nationwide Ziegler Equity Income Fund, Institutional Class | 1.0% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of October 31, 2013. |
| †† | Amount rounds to less than 0.1%. |
| ††† | Percentages indicated are based upon total investments as of October 31, 2013. |
20
| Fund Performance | Nationwide Investor Destinations Moderately Aggressive Fund |
Average Annual Total Return
| (For periods ended October 31, 2013) | 1 Yr. | 5 Yr. | 10 Yr. | |||||||||||
| Class A | w/o SC1 | 21.44% | 12.69% | 7.05% | ||||||||||
| w/SC2 | 14.40% | 11.36% | 6.41% | |||||||||||
| Class B | w/o SC1 | 20.72% | 11.89% | 6.28% | ||||||||||
| w/SC3 | 15.72% | 11.64% | 6.28% | |||||||||||
| Class C | w/o SC1 | 20.72% | 11.90% | 6.27% | ||||||||||
| w/SC4 | 19.72% | 11.90% | 6.27% | |||||||||||
| Class R25,6 | 21.15% | 12.27% | 6.73% | |||||||||||
| Institutional Class5,7 | 21.83% | 13.00% | 7.29% | |||||||||||
| Service Class5 | 21.37% | 12.57% | 6.92% | |||||||||||
Expense Ratios
| Expense Ratio* | ||
| Class A | 0.76% | |
| Class B | 1.46% | |
| Class C | 1.46% | |
| Class R2 | 1.11% | |
| Institutional Class | 0.46% | |
| Service Class | 0.86% |
*Current effective prospectus dated March 1, 2013. Expenses also include indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details.
All figures showing the effect of a sales charge (SC) reflect the maximum charge possible, because it has the most significant effect on performance data.
| 1 | These returns do not reflect the effects of SCs. |
| 2 | A 5.75% front-end sales charge was deducted. |
| 3 | A 5.00% maximum contingent deferred sales charge (CDSC) was deducted. The CDSC declines to 0% after 6 years and is not deducted from returns after 6 years. |
| 4 | A 1.00% CDSC was deducted from the one year return because it is charged when you sell Class C shares within the first year after purchase. |
| 5 | Not subject to any SCs. |
| 6 | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
| 7 | These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. |
21
| Fund Performance (con’t.) | Nationwide Investor Destinations Moderately Aggressive Fund |
Performance of a $10,000 Investment
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 and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investing in mutual funds involves market risk, including loss of principal. Performance returns assume the reinvestment of all distributions.
Comparative performance of $10,000 invested in Service Class shares of the Nationwide Investor Destinations Moderately Aggressive Fund versus the Russell 3000® Index (current benchmark), the S&P 500® Index (former benchmark), the Barclays U.S. Aggregate Bond Index, the MSCI EAFE® Index, the Barclays U.S. 1-3 Year Government/Credit Bond Index, the Citigroup 3-Month Treasury Bill (T-Bill) Index, the Current Composite Index*, the Former Composite Index** and the Consumer Price Index (CPI) over the 10-year period ended 10/31/13. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
| * | The Current Composite Index comprises 55% Russell 3000® Index, 15% Barclays U.S. Aggregate Bond Index, 25% MSCI EAFE® Index and 5% Barclays U.S. 1-3 Year Gov’t/Credit Bond Index. |
| ** | The Former Composite Index comprises 80% S&P 500® Index, 15% Barclays U.S. Aggregate Bond Index and 5% Citigroup 3-Month T-Bill Index. |
22
| Shareholder Expense Example | Nationwide Investor Destinations Moderately Aggressive Fund |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2013) and continued to hold your shares at the end of the reporting period (October 31, 2013).
Actual Expenses
For each Class of the Fund in the table below, the first line provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid from May 1, 2013 through October 31, 2013. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Expenses for Comparison Purposes
The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period from May 1, 2013 through October 31, 2013. You may use this information to compare the ongoing costs of investing in the Class of the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) or redemption fees. If these transaction costs were included, your costs would have been higher. Therefore, the second line for each Class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The examples also assume all dividends and distributions are reinvested.
Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment
Nationwide Investor Destinations October 31, 2013 | Beginning Account Value ($) 05/01/13 | Ending Account Value ($) 10/31/13 | Expenses Paid During Period ($) 05/01/13 - 10/31/13a | Expense Ratio During Period (%) 05/01/13 - 10/31/13a | ||||||||
| Class A Shares | Actual | b | 1,000.00 | 1,079.70 | 2.57 | 0.49 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.74 | 2.50 | 0.49 | |||||||
| Class B Shares | Actual | b | 1,000.00 | 1,076.10 | 6.23 | 1.19 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.21 | 6.06 | 1.19 | |||||||
| Class C Shares | Actual | b | 1,000.00 | 1,076.60 | 6.23 | 1.19 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.21 | 6.06 | 1.19 | |||||||
| Class R2 Shares | Actual | b | 1,000.00 | 1,078.60 | 4.40 | 0.84 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,020.97 | 4.28 | 0.84 | |||||||
| Institutional Class Shares | Actual | b | 1,000.00 | 1,081.50 | 1.00 | 0.19 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,024.25 | 0.97 | 0.19 | |||||||
| Service Class Shares | Actual | b | 1,000.00 | 1,079.40 | 3.09 | 0.59 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.23 | 3.01 | 0.59 | |||||||
| a | Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus. |
| b | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2013 through October 31, 2013 multiplied to reflect one-half year period. The expense ratio presented represents a six-month, annualized ratio in accordance with Securities and Exchange Commission guidelines. |
| c | Represents the hypothetical 5% return before expenses. |
23
Statement of Investments
October 31, 2013
Nationwide Investor Destinations Moderately Aggressive Fund
| Mutual Funds 98.0% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Alternative Assets 9.9% |
| |||||||||
Nationwide Alternatives Allocation Fund, Institutional Class (a) | 20,572,166 | $ | 202,018,670 | |||||||
|
| |||||||||
Total Alternative Assets (cost $199,568,997) |
| 202,018,670 | ||||||||
|
| |||||||||
| ||||||||||
Equity Funds 76.3% |
| |||||||||
Nationwide International Index Fund, Institutional Class (a) | 60,355,841 | 510,006,859 | ||||||||
Nationwide Mid Cap Market Index Fund, Institutional Class (a) | 13,104,144 | 246,095,831 | ||||||||
Nationwide S&P 500 Index Fund, Institutional Class (a) | 39,208,811 | 571,664,464 | ||||||||
Nationwide Small Cap Index Fund, Institutional Class (a) | 12,902,695 | 203,217,452 | ||||||||
Nationwide Ziegler Equity Income Fund, Institutional Class *(a) | 1,674,395 | 20,812,731 | ||||||||
|
| |||||||||
Total Equity Funds (cost $1,144,067,419) |
| 1,551,797,337 | ||||||||
|
| |||||||||
| ||||||||||
Fixed Income Funds 11.8% |
| |||||||||
Nationwide Bond Index Fund, Institutional Class (a) | 10,712,719 | 121,267,974 | ||||||||
Nationwide Core Plus Bond Fund, Institutional Class (a) | 7,862,646 | 80,356,242 | ||||||||
Nationwide HighMark Short Term Bond Fund, Institutional Class (a) | 3,974,897 | 39,907,971 | ||||||||
|
| |||||||||
Total Fixed Income Funds (cost $244,471,306) |
| 241,532,187 | ||||||||
|
| |||||||||
Total Mutual Funds |
| 1,995,348,194 | ||||||||
|
| |||||||||
| Fixed Contract 2.0% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Nationwide Fixed Contract, 3.50% (a)(b) | $ | 39,899,967 | 39,899,967 | |||||||
|
| |||||||||
Total Fixed Contract |
| 39,899,967 | ||||||||
|
| |||||||||
Total Investments |
| 2,035,248,161 | ||||||||
Liabilities in excess of other |
| (988,641 | ) | |||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 2,034,259,520 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | Investment in affiliate. |
| (b) | The Nationwide Fixed Contract rate changes quarterly. The security is restricted and, as the affiliated counterparty is required by contract to redeem daily upon request, it has been deemed liquid pursuant to procedures approved by the Board of Trustees. |
| (c) | See notes to financial statements for tax unrealized appreciation/(depreciation) of securities. |
| † | Amount rounds to less than 0.1%. |
The accompanying notes are an integral part of these financial statements.
24
Statement of Assets and Liabilities
October 31, 2013
| Nationwide Investor Destinations Moderately Aggressive Fund | ||||||
Assets: | ||||||
Investments in affiliates, at value (cost $1,628,007,689) | $ | 2,035,248,161 | ||||
Cash | 26,862 | |||||
Receivable for investments sold | 3,092,599 | |||||
Receivable for capital shares issued | 286,470 | |||||
Prepaid expenses | 31,277 | |||||
|
| |||||
Total Assets | 2,038,685,369 | |||||
|
| |||||
Liabilities: | ||||||
Payable for capital shares redeemed | 3,327,524 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 222,511 | |||||
Fund administration fees | 51,714 | |||||
Distribution fees | 505,888 | |||||
Administrative servicing fees | 224,691 | |||||
Accounting and transfer agent fees | 35,260 | |||||
Trustee fees | 3,296 | |||||
Custodian fees | 6,774 | |||||
Compliance program costs (Note 3) | 1,293 | |||||
Professional fees | 25,314 | |||||
Printing fees | 19,322 | |||||
Other | 2,262 | |||||
|
| |||||
Total Liabilities | 4,425,849 | |||||
|
| |||||
Net Assets | $ | 2,034,259,520 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 1,648,931,491 | ||||
Accumulated undistributed net investment income | 626,817 | |||||
Accumulated net realized losses from affiliated investments | (22,539,260 | ) | ||||
Net unrealized appreciation/(depreciation) from investments in affiliates | 407,240,472 | |||||
|
| |||||
Net Assets | $ | 2,034,259,520 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 112,242,046 | ||||
Class B Shares | 4,879,382 | |||||
Class C Shares | 125,294,548 | |||||
Class R2 Shares | 246,852,482 | |||||
Institutional Class Shares | 270,917,338 | |||||
Service Class Shares | 1,274,073,724 | |||||
|
| |||||
Total | $ | 2,034,259,520 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 9,862,131 | |||||
Class B Shares | 436,570 | |||||
Class C Shares | 11,227,075 | |||||
Class R2 Shares | 22,120,971 | |||||
Institutional Class Shares | 23,824,875 | |||||
Service Class Shares | 112,179,525 | |||||
|
| |||||
Total | 179,651,147 | |||||
|
| |||||
25
Statement of Assets and Liabilities (Continued)
October 31, 2013
| Nationwide Investor Destinations Moderately Aggressive Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 11.38 | ||||
Class B Shares (b) | $ | 11.18 | ||||
Class C Shares (c) | $ | 11.16 | ||||
Class R2 Shares | $ | 11.16 | ||||
Institutional Class Shares | $ | 11.37 | ||||
Service Class Shares | $ | 11.36 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 12.07 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 5.75 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 1.00% on sales of shares of original purchases of $1,000,000 or more or that were not subject to a front-end sales charge made within 18 months of the purchase date. |
| (b) | For Class B Shares, the redemption price per share varies by the length of time shares are held. |
| (c) | For Class C Shares, the redemption price per share is reduced by 1.00% for shares held less than one year. |
The accompanying notes are an integral part of these financial statements.
26
Statement of Operations
For the Year Ended October 31, 2013
| Nationwide Investor Destinations Moderately Aggressive Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income from affiliates | $ | 38,670,159 | ||||
Interest income from affiliates | 1,561,784 | |||||
|
| |||||
Total Income | 40,231,943 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 2,453,567 | |||||
Fund administration fees | 514,218 | |||||
Distribution fees Class A | 247,500 | |||||
Distribution fees Class B | 63,520 | |||||
Distribution fees Class C | 1,172,534 | |||||
Distribution fees Class R2 | 1,150,787 | |||||
Distribution fees Service Class | 3,019,708 | |||||
Administrative servicing fees Class A | 56,144 | |||||
Administrative servicing fees Class R2 | 345,096 | |||||
Administrative servicing fees Service Class | 1,811,057 | |||||
Registration and filing fees | 69,146 | |||||
Professional fees | 77,746 | |||||
Printing fees | 36,226 | |||||
Trustee fees | 65,870 | |||||
Custodian fees | 71,074 | |||||
Accounting and transfer agent fees | 240,369 | |||||
Compliance program costs (Note 3) | 7,059 | |||||
Other | 39,218 | |||||
|
| |||||
Total expenses before earnings credit | 11,440,839 | |||||
|
| |||||
Earnings credit (Note 5) | (12 | ) | ||||
|
| |||||
Net Expenses | 11,440,827 | |||||
|
| |||||
NET INVESTMENT INCOME | 28,791,116 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gain distributions from underlying affiliated funds | 20,611,210 | |||||
Net realized gains from investment transactions with affiliates | 17,910,194 | |||||
|
| |||||
Net realized gains from affiliated investments | 38,521,404 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | 297,497,297 | |||||
|
| |||||
Net realized/unrealized gains from affiliated investments | 336,018,701 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 364,809,817 | ||||
|
| |||||
The accompanying notes are an integral part of these financial statements.
27
Statements of Changes in Net Assets
| Nationwide Investor Destinations Moderately Aggressive Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 28,791,116 | $ | 24,933,810 | ||||||||
Net realized gains/(losses) from affiliated investments | 38,521,404 | (3,822,213 | ) | |||||||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | 297,497,297 | 134,676,397 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 364,809,817 | 155,787,994 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (1,662,703 | ) | (1,398,575 | ) | ||||||||
Class B | (78,781 | ) | (100,762 | ) | ||||||||
Class C | (1,258,871 | ) | (1,120,478 | ) | ||||||||
Class R2 | (3,211,038 | ) | (2,641,463 | ) | ||||||||
Institutional Class | (4,393,383 | ) | (3,221,621 | ) | ||||||||
Service Class | (19,720,854 | ) | (17,349,471 | ) | ||||||||
Net realized gains: | ||||||||||||
Class A | (573,158 | ) | (545,880 | ) | ||||||||
Class B | (50,991 | ) | (83,389 | ) | ||||||||
Class C | (730,521 | ) | (784,088 | ) | ||||||||
Class R2 | (1,380,636 | ) | (1,300,465 | ) | ||||||||
Institutional Class | (1,227,423 | ) | (1,008,220 | ) | ||||||||
Service Class | (7,389,943 | ) | (7,346,673 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (41,678,302 | ) | (36,901,085 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (32,566,829 | ) | (52,427,189 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets | 290,564,686 | 66,459,720 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 1,743,694,834 | 1,677,235,114 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 2,034,259,520 | $ | 1,743,694,834 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 626,817 | $ | 276,366 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Proceeds from shares issued | $ | 26,002,812 | $ | 23,556,125 | ||||||||
Dividends reinvested | 1,515,552 | 1,299,470 | ||||||||||
Cost of shares redeemed | (21,691,704 | ) | (25,535,129 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 5,826,660 | (679,534 | ) | |||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Proceeds from shares issued | 229,017 | 172,824 | ||||||||||
Dividends reinvested | 107,509 | 143,752 | ||||||||||
Cost of shares redeemed | (4,896,209 | ) | (6,375,870 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (4,559,683 | ) | (6,059,294 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Proceeds from shares issued | 12,991,645 | 9,281,354 | ||||||||||
Dividends reinvested | 794,176 | 696,299 | ||||||||||
Cost of shares redeemed | (19,801,123 | ) | (25,704,782 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (6,015,302 | ) | (15,727,129 | ) | ||||||||
|
|
|
| |||||||||
28
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Moderately Aggressive Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Class R2 Shares | ||||||||||||
Proceeds from shares issued | $ | 21,793,440 | $ | 20,623,390 | ||||||||
Dividends reinvested | 4,506,550 | 3,861,189 | ||||||||||
Cost of shares redeemed | (26,930,614 | ) | (22,885,860 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (630,624 | ) | 1,598,719 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 150,731,613 | 41,081,627 | ||||||||||
Dividends reinvested | 5,620,806 | 4,229,841 | ||||||||||
Cost of shares redeemed | (111,178,853 | ) | (21,995,140 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 45,173,566 | 23,316,328 | ||||||||||
|
|
|
| |||||||||
Service Class Shares | ||||||||||||
Proceeds from shares issued | 84,075,133 | 67,827,864 | ||||||||||
Dividends reinvested | 27,110,797 | 24,696,144 | ||||||||||
Cost of shares redeemed | (183,547,376 | ) | (147,400,287 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (72,361,446 | ) | (54,876,279 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (32,566,829 | ) | $ | (52,427,189 | ) | ||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Issued | 2,498,666 | 2,547,115 | ||||||||||
Reinvested | 152,350 | 145,952 | ||||||||||
Redeemed | (2,106,669 | ) | (2,808,067 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 544,347 | (115,000 | ) | |||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Issued | 22,744 | 27,486 | ||||||||||
Reinvested | 11,235 | 16,722 | ||||||||||
Redeemed | (485,197 | ) | (704,597 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (451,218 | ) | (660,389 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Issued | 1,271,094 | 1,031,319 | ||||||||||
Reinvested | 82,704 | 80,586 | ||||||||||
Redeemed | (1,948,208 | ) | (2,838,707 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (594,410 | ) | (1,726,802 | ) | ||||||||
|
|
|
| |||||||||
Class R2 Shares | ||||||||||||
Issued | 2,139,310 | 2,269,412 | ||||||||||
Reinvested | 465,340 | 443,781 | ||||||||||
Redeemed | (2,608,574 | ) | (2,531,867 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (3,924 | ) | 181,326 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 14,394,144 | 4,435,053 | ||||||||||
Reinvested | 561,989 | 473,144 | ||||||||||
Redeemed | (10,611,639 | ) | (2,373,128 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 4,344,494 | 2,535,069 | ||||||||||
|
|
|
| |||||||||
29
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Moderately Aggressive Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
SHARE TRANSACTIONS: (continued) | ||||||||||||
Service Class Shares | ||||||||||||
Issued | 8,063,586 | 7,369,462 | ||||||||||
Reinvested | 2,739,801 | 2,784,387 | ||||||||||
Redeemed | (17,626,125 | ) | (15,977,535 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (6,822,738 | ) | (5,823,686 | ) | ||||||||
|
|
|
| |||||||||
Total change in shares | (2,983,449 | ) | (5,609,482 | ) | ||||||||
|
|
|
| |||||||||
The accompanying notes are an integral part of these financial statements.
30
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Investor Destinations Moderately Aggressive Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gains from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return (a) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income to Average Net Assets | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets | Portfolio Turnover (b) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.60 | 0.17 | 1.85 | 2.02 | (0.18 | ) | (0.06 | ) | (0.24 | ) | $ | 11.38 | 21.44% | $ | 112,242,046 | 0.50% | 1.62% | 0.50% | 29.31% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.95 | 0.15 | 0.71 | 0.86 | (0.15 | ) | (0.06 | ) | (0.21 | ) | $ | 9.60 | 9.82% | $ | 89,406,859 | 0.49% | 1.59% | 0.49% | 13.11% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.80 | 0.16 | 0.15 | 0.31 | (0.16 | ) | – | (0.16 | ) | $ | 8.95 | 3.49% | $ | 84,467,234 | 0.47% | 1.72% | 0.47% | 13.88% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.99 | 0.14 | 0.97 | 1.11 | (0.14 | ) | (0.16 | ) | (0.30 | ) | $ | 8.80 | 14.19% | $ | 79,563,235 | 0.48% | 1.72% | 0.48% | 8.57% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 7.69 | 0.16 | 0.86 | 1.02 | (0.16 | ) | (0.56 | ) | (0.72 | ) | $ | 7.99 | 15.29% | $ | 76,075,551 | 0.51% | 2.24% | 0.51% | 15.94% | ||||||||||||||||||||||||||||||||||||
| Class B Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.42 | 0.12 | 1.80 | 1.92 | (0.10 | ) | (0.06 | ) | (0.16 | ) | $ | 11.18 | 20.72% | $ | 4,879,382 | 1.19% | 1.14% | 1.19% | 29.31% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.79 | 0.08 | 0.69 | 0.77 | (0.08 | ) | (0.06 | ) | (0.14 | ) | $ | 9.42 | 8.89% | $ | 8,364,641 | 1.20% | 0.92% | 1.20% | 13.11% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.64 | 0.10 | 0.14 | 0.24 | (0.09 | ) | – | (0.09 | ) | $ | 8.79 | 2.79% | $ | 13,606,502 | 1.20% | 1.09% | 1.20% | 13.88% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.86 | 0.08 | 0.95 | 1.03 | (0.09 | ) | (0.16 | ) | (0.25 | ) | $ | 8.64 | 13.29% | $ | 21,474,892 | 1.19% | 1.03% | 1.19% | 8.57% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 7.57 | 0.11 | 0.85 | 0.96 | (0.11 | ) | (0.56 | ) | (0.67 | ) | $ | 7.86 | 14.57% | $ | 24,958,525 | 1.21% | 1.55% | 1.21% | 15.94% | ||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.41 | 0.10 | 1.82 | 1.92 | (0.11 | ) | (0.06 | ) | (0.17 | ) | $ | 11.16 | 20.72% | $ | 125,294,548 | 1.19% | 0.95% | 1.19% | 29.31% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.79 | 0.08 | 0.69 | 0.77 | (0.09 | ) | (0.06 | ) | (0.15 | ) | $ | 9.41 | 8.87% | $ | 111,289,595 | 1.19% | 0.89% | 1.19% | 13.11% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.64 | 0.09 | 0.15 | 0.24 | (0.09 | ) | – | (0.09 | ) | $ | 8.79 | 2.81% | $ | 119,068,548 | 1.20% | 1.03% | 1.20% | 13.88% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.86 | 0.08 | 0.95 | 1.03 | (0.09 | ) | (0.16 | ) | (0.25 | ) | $ | 8.64 | 13.31% | $ | 131,008,292 | 1.19% | 1.02% | 1.19% | 8.57% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 7.57 | 0.11 | 0.85 | 0.96 | (0.11 | ) | (0.56 | ) | (0.67 | ) | $ | 7.86 | 14.58% | $ | 131,214,546 | 1.21% | 1.55% | 1.21% | 15.94% | ||||||||||||||||||||||||||||||||||||
| Class R2 Shares(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Year Ended October 31, 2013 (c) | $ | 9.41 | 0.13 | 1.82 | 1.95 | (0.14 | ) | (0.06 | ) | (0.20 | ) | $ | 11.16 | 21.15% | $ | 246,852,482 | 0.84% | 1.28% | 0.84% | 29.31% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.79 | 0.11 | 0.69 | 0.80 | (0.12 | ) | (0.06 | ) | (0.18 | ) | $ | 9.41 | 9.27% | $ | 208,283,759 | 0.84% | 1.23% | 0.84% | 13.11% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.64 | 0.12 | 0.16 | 0.28 | (0.13 | ) | – | (0.13 | ) | $ | 8.79 | 3.18% | $ | 192,888,041 | 0.84% | 1.34% | 0.84% | 13.88% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.86 | 0.11 | 0.94 | 1.05 | (0.11 | ) | (0.16 | ) | (0.27 | ) | $ | 8.64 | 13.65% | $ | 176,660,604 | 0.83% | 1.34% | 0.83% | 8.57% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 7.58 | 0.13 | 0.85 | 0.98 | (0.14 | ) | (0.56 | ) | (0.70 | ) | $ | 7.86 | 14.89% | $ | 134,283,065 | 0.87% | 1.81% | 0.87% | 15.94% | ||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.59 | 0.20 | 1.85 | 2.05 | (0.21 | ) | (0.06 | ) | (0.27 | ) | $ | 11.37 | 21.83% | $ | 270,917,338 | 0.19% | 1.88% | 0.19% | 29.31% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.95 | 0.17 | 0.71 | 0.88 | (0.18 | ) | (0.06 | ) | (0.24 | ) | $ | 9.59 | 10.03% | $ | 186,769,240 | 0.19% | 1.86% | 0.19% | 13.11% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.79 | 0.18 | 0.16 | 0.34 | (0.18 | ) | – | (0.18 | ) | $ | 8.95 | 3.89% | $ | 151,618,037 | 0.20% | 1.99% | 0.20% | 13.88% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.99 | 0.16 | 0.97 | 1.13 | (0.17 | ) | (0.16 | ) | (0.33 | ) | $ | 8.79 | 14.39% | $ | 130,223,401 | 0.19% | 1.97% | 0.19% | 8.57% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 7.69 | 0.17 | 0.87 | 1.04 | (0.18 | ) | (0.56 | ) | (0.74 | ) | $ | 7.99 | 15.63% | $ | 85,728,623 | 0.21% | 2.42% | 0.21% | 15.94% | ||||||||||||||||||||||||||||||||||||
| Service Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.58 | 0.16 | 1.85 | 2.01 | (0.17 | ) | (0.06 | ) | (0.23 | ) | $ | 11.36 | 21.37% | $ | 1,274,073,724 | 0.59% | 1.56% | 0.59% | 29.31% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 8.94 | 0.14 | 0.70 | 0.84 | (0.14 | ) | (0.06 | ) | (0.20 | ) | $ | 9.58 | 9.60% | $ | 1,139,580,740 | 0.59% | 1.49% | 0.59% | 13.11% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 8.78 | 0.15 | 0.16 | 0.31 | (0.15 | ) | – | (0.15 | ) | $ | 8.94 | 3.47% | $ | 1,115,586,752 | 0.60% | 1.61% | 0.60% | 13.88% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 7.98 | 0.13 | 0.96 | 1.09 | (0.13 | ) | (0.16 | ) | (0.29 | ) | $ | 8.78 | 13.96% | $ | 1,119,852,454 | 0.58% | 1.61% | 0.58% | 8.57% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 7.68 | 0.15 | 0.87 | 1.02 | (0.16 | ) | (0.56 | ) | (0.72 | ) | $ | 7.98 | 15.22% | $ | 1,012,147,730 | 0.63% | 2.10% | 0.63% | 15.94% | ||||||||||||||||||||||||||||||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Excludes sales charge. |
| (b) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (c) | Per share calculations were performed using average shares method. |
| (d) | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
The accompanying notes are an integral part of these financial statements.
31
| Fund Commentary | Nationwide Investor Destinations Moderate Fund |
For the annual period ended October 31, 2013, the Nationwide Investor Destinations Moderate Fund (Service Class) returned 15.30% versus 16.31% for its composite benchmark*, 45% Russell 3000® Index, 15% MSCI EAFE® Index, 25% Barclays U.S. Aggregate Bond Index and 15% Barclays U.S. 1-3 Year Government/Credit Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mixed-Asset Target Allocation Moderate Funds (consisting of 531 funds as of October 31, 2013) was 13.83% for the same time period.
*The Fund changed its composite benchmark on September 30, 2013. The Fund’s former composite benchmark, comprising 60% S&P 500® Index, 25% Barclays U.S. Aggregate Bond Index and 15% Citigroup 3-Month Treasury Bill Index, returned 15.43% for the annual period ended October 31, 2013.
The Fund’s return for the 12-month period covered in this report was primarily driven by strong positive returns across the equity markets in the U.S. and foreign developed countries. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted double-digit gains. Specifically, the S&P 500 Index (representing large-cap stocks) rose more than 27%, S&P MidCap 400® Index (mid-cap stocks) increased more than 33% and Russell 2000® Index (small-cap stocks) gained more than 36%. During the period, the U.S. Federal Reserve (Fed) reaffirmed its intent to support the economy by maintaining its pace of asset purchases, helping to underpin the gains delivered in the U.S. equity markets.
The equity markets within foreign developed countries (as distinguished from emerging market countries) generally posted double-digit returns as well. The MSCI EAFE Index (representing developed international markets) posted a gain of nearly 27% during the period. Concerns regarding political and economic uncertainty in various parts of the eurozone receded further from the headlines and were also helped by the Fed’s decision not to taper (gradually reduce) its pace of asset purchases and the dissipation of tensions in Syria.
With regard to intermediate-term, investment-grade U.S. fixed-income bonds, the Barclays U.S. Aggregate Bond Index (representing such U.S. bonds) posted a negative return of -1.08% during the period. Interest rates on the bellwether 10-year U.S. Treasury note increased nearly 100 basis points during the period, beginning November 2012 at 1.62%, increasing to 3.00% by early September 2013 and easing back at the end of the period to 2.56% after the Fed’s announcement to postpone the tapering of its asset purchases. The rise in interest rates generally coincided with an increase in intermediate- and long-term bond prices and a decrease in bond returns for the period as a whole. Short-term bond interest rates remained range-bound near zero, effectively keeping returns in the very low single digits.
The returns from the Fund’s investments in the Nationwide S&P 500 Index Fund and Nationwide International Index Fund, combined with their sizable allocations within the Fund, made these underlying funds the largest contributors to the Fund’s return during the period, as shown in the chart below.
The negative returns from the Fund’s investments in the Nationwide Bond Index Fund and Nationwide Inflation-Protected Securities Fund made these underlying funds the only detractors from the Fund’s return during the period, as shown in the chart below.
Portfolio Manager:
Thomas R. Hickey Jr., Nationwide Fund Advisors
The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.
Investments in the Fund are subject to the risks of its underlying funds. Please refer to the summary prospectus for a more detailed explanation of the Fund’s principal risks.
The Fund may invest in the Nationwide Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Contract may lose money from unpaid principal or unpaid or reduced interest.
32
| Fund Commentary (con’t.) | Nationwide Investor Destinations Moderate Fund |
Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.
There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
Note: On September 30, 2013, important changes were made to the Fund’s allocations, including the addition of three more underlying investments — Nationwide Alternatives Allocation Fund, Nationwide Core Plus Bond Fund and Nationwide Ziegler Equity Income Fund. These new underlying investments are included in the chart to the right, but are not included in the chart below.
Actual Underlying Fund Allocations
(as of October 31, 2013)
| Nationwide S&P 500 Index Fund | 20% | |||
| Nationwide International Index Fund | 18% | |||
| Nationwide Bond Index Fund | 13% | |||
| Nationwide Alternatives Allocation Fund | 10% | |||
| Nationwide Mid Cap Market Index Fund | 10% | |||
| Nationwide Enhanced Income Fund | 6% | |||
| Nationwide Small Cap Index Fund | 6% | |||
| Nationwide Contract | 8% | |||
| Nationwide Core Plus Bond Fund | 4% | |||
| Nationwide Inflation-Protected Securities Fund | 3% | |||
| Nationwide Ziegler Equity Income Fund | 2% | |||
| 100% |
Actual underlying fund allocations in the chart above are stated as a percentage of the Fund’s total net assets. Allocations may change over time in order for the Fund to meet its objective or due to market and/or economic conditions.
Contributions of Underlying Funds to Fund Performance
(For the year ended October 31, 2013)
The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Moderate Fund’s fees and expenses. Performance is based on the 12-month trailing returns of the underlying funds and their respective allocation on the last day of the reporting period, October 31, 2013, and may not result in the annualized return of the Fund. The Nationwide Alternatives Allocation Fund, Nationwide Core Plus Bond Fund and Nationwide Ziegler Equity Income Fund are not shown since they were held as underlying investments for only one month of the reporting period. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, Nationwide Fund Advisors periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. The asset class target allocations are subject to change at any time and without notice. For more information, refer to the Fund’s prospectus.
33
| Fund Overview | Nationwide Investor Destinations Moderate Fund |
Objective
The Fund seeks to maximize total investment return for a moderate level of risk.
Highlights
| Ÿ | The Fund’s investments in U.S. and foreign developed market mutual funds account for more than 55% of its allocations and contributed more than 95% to the returns of the Fund during the period |
| Ÿ | Two of the Fund’s investments in U.S. bonds detracted from returns during the period |
| Ÿ | The Fund recently added exposures to six additional asset classes within three additional underlying funds that are intended to help diversify the sources of risk and return for the Fund |
Asset Allocation†
| Equity Funds | 56.3% | |||
| Fixed Income Funds | 25.8% | |||
| Alternative Assets | 10.0% | |||
| Fixed Contract | 7.9% | |||
| Liabilities in excess of other assets†† | 0.0% | |||
| 100.0% |
Top Holdings†††
| Nationwide S&P 500 Index Fund, Institutional Class | 20.1% | |||
| Nationwide International Index Fund, Institutional Class | 18.0% | |||
| Nationwide Bond Index Fund, Institutional Class | 13.0% | |||
| Nationwide Mid Cap Market Index Fund, Institutional Class | 10.1% | |||
| Nationwide Alternatives Allocation Fund, Institutional Class | 9.9% | |||
| Nationwide Fixed Contract | 7.9% | |||
| Nationwide Small Cap Index Fund, Institutional Class | 6.0% | |||
| Nationwide Enhanced Income Fund, Institutional Class | 5.9% | |||
| Nationwide Core Plus Bond Fund, Institutional Class | 4.0% | |||
| Nationwide Inflation-Protected Securities Fund, Institutional Class | 3.0% | |||
| Nationwide Ziegler Equity Income Fund, Institutional Class | 2.1% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of October 31, 2013. |
| †† | Amount rounds to less than 0.1%. |
| ††† | Percentages indicated are based upon total investments as of October 31, 2013. |
34
| Fund Performance | Nationwide Investor Destinations Moderate Fund |
Average Annual Total Return
| (For periods ended October 31, 2013) | 1 Yr. | 5 Yr. | 10 Yr. | |||||||||||
| Class A | w/o SC1 | 15.56% | 10.61% | 6.19% | ||||||||||
| w/SC2 | 8.87% | 9.29% | 5.56% | |||||||||||
| Class B | w/o SC1 | 14.74% | 9.83% | 5.43% | ||||||||||
| w/SC3 | 9.74% | 9.55% | 5.43% | |||||||||||
| Class C | w/o SC1 | 14.68% | 9.81% | 5.42% | ||||||||||
| w/SC4 | 13.68% | 9.81% | 5.42% | |||||||||||
| Class R25,6 | 15.06% | 10.20% | 5.85% | |||||||||||
| Institutional Class5,7 | 15.86% | 10.91% | 6.45% | |||||||||||
| Service Class5 | 15.30% | 10.47% | 6.05% | |||||||||||
Expense Ratios
| Expense Ratio* | ||
| Class A | 0.75% | |
| Class B | 1.46% | |
| Class C | 1.46% | |
| Class R2 | 1.11% | |
| Institutional Class | 0.46% | |
| Service Class | 0.86% |
*Current effective prospectus dated March 1, 2013. Expenses also include indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details.
All figures showing the effect of a sales charge (SC) reflect the maximum charge possible, because it has the most significant effect on performance data.
| 1 | These returns do not reflect the effects of SCs. |
| 2 | A 5.75% front-end sales charge was deducted. |
| 3 | A 5.00% maximum contingent deferred sales charge (CDSC) was deducted. The CDSC declines to 0% after 6 years and is not deducted from returns after 6 years. |
| 4 | A 1.00% CDSC was deducted from the one year return because it is charged when you sell Class C shares within the first year after purchase. |
| 5 | Not subject to any SCs. |
| 6 | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
| 7 | These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. |
35
| Fund Performance (con’t.) | Nationwide Investor Destinations Moderate Fund |
Performance of a $10,000 Investment
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 and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investing in mutual funds involves market risk, including loss of principal. Performance returns assume the reinvestment of all distributions.
Comparative performance of $10,000 invested in Service Class shares of the Nationwide Investor Destinations Moderate Fund versus the Russell 3000® Index (current benchmark), the S&P 500® Index (former benchmark), the Barclays U.S. Aggregate Bond Index, the MSCI EAFE® Index, the Barclays U.S. 1-3 Year Government/Credit Bond Index, the Citigroup 3-Month Treasury Bill (T-Bill) Index, the Current Composite Index*, the Former Composite Index** and the Consumer Price Index (CPI) over the 10-year period ended 10/31/13. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
| * | The Current Composite Index comprises 45% Russell 3000® Index, 25% Barclays U.S. Aggregate Bond Index, 15% MSCI EAFE® Index and 15% Barclays U.S. 1-3 Year Gov’t/Credit Bond Index. |
| ** | The Former Composite Index comprises 25% Barclays U.S. Aggregate Bond Index, 15% Citigroup 3-Month T-Bill Index and 60% S&P 500® Index. |
36
| Shareholder Expense Example | Nationwide Investor Destinations Moderate Fund |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2013) and continued to hold your shares at the end of the reporting period (October 31, 2013).
Actual Expenses
For each Class of the Fund in the table below, the first line provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid from May 1, 2013 through October 31, 2013. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Expenses for Comparison Purposes
The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period from May 1, 2013 through October 31, 2013. You may use this information to compare the ongoing costs of investing in the Class of the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) or redemption fees. If these transaction costs were included, your costs would have been higher. Therefore, the second line for each Class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The examples also assume all dividends and distributions are reinvested.
Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment
Nationwide Investor October 31, 2013 | Beginning Account Value ($) 05/01/13 | Ending Account Value ($) 10/31/13 | Expenses Paid During Period ($) 05/01/13 - 10/31/13a | Expense Ratio During Period (%) 05/01/13 - 10/31/13a | ||||||||
| Class A Shares | Actual | b | 1,000.00 | 1,057.00 | 2.49 | 0.48 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.79 | 2.45 | 0.48 | |||||||
| Class B Shares | Actual | b | 1,000.00 | 1,053.00 | 6.21 | 1.20 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.16 | 6.11 | 1.20 | |||||||
| Class C Shares | Actual | b | 1,000.00 | 1,052.20 | 6.16 | 1.19 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.21 | 6.06 | 1.19 | |||||||
| Class R2 Shares | Actual | b | 1,000.00 | 1,054.40 | 4.35 | 0.84 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,020.97 | 4.28 | 0.84 | |||||||
| Institutional Class Shares | Actual | b | 1,000.00 | 1,057.80 | 0.99 | 0.19 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,024.25 | 0.97 | 0.19 | |||||||
| Service Class Shares | Actual | b | 1,000.00 | 1,055.80 | 3.06 | 0.59 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.23 | 3.01 | 0.59 | |||||||
| a | Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus. |
| b | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2013 through October 31, 2013 multiplied to reflect one-half year period. The expense ratio presented represents a six-month, annualized ratio in accordance with Securities and Exchange Commission guidelines. |
| c | Represents the hypothetical 5% return before expenses. |
37
Statement of Investments
October 31, 2013
Nationwide Investor Destinations Moderate Fund
| Mutual Funds 92.1% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Alternative Assets 10.0% |
| |||||||||
Nationwide Alternatives Allocation Fund, Institutional Class (a) | 17,799,694 | $ | 174,792,995 | |||||||
|
| |||||||||
Total Alternative Assets (cost $172,657,031) |
| 174,792,995 | ||||||||
|
| |||||||||
| ||||||||||
Equity Funds 56.3% |
| |||||||||
Nationwide International Index Fund, Institutional Class (a) | 37,571,070 | 317,475,542 | ||||||||
Nationwide Mid Cap Market Index Fund, Institutional Class (a) | 9,450,097 | 177,472,824 | ||||||||
Nationwide S&P 500 Index Fund, Institutional Class (a) | 24,263,343 | 353,759,541 | ||||||||
Nationwide Small Cap Index Fund, Institutional Class (a) | 6,714,884 | 105,759,431 | ||||||||
Nationwide Ziegler Equity Income Fund, Institutional Class *(a) | 2,918,771 | 36,280,322 | ||||||||
|
| |||||||||
Total Equity Funds (cost $683,807,354) |
| 990,747,660 | ||||||||
|
| |||||||||
| ||||||||||
Fixed Income Funds 25.8% |
| |||||||||
Nationwide Bond Index Fund, Institutional Class (a) | 20,150,874 | 228,107,895 | ||||||||
Nationwide Core Plus Bond Fund, Institutional Class (a) | 6,831,849 | 69,821,494 | ||||||||
Nationwide Enhanced Income Fund, Institutional Class (a) | 11,715,397 | 104,149,878 | ||||||||
Nationwide Inflation-Protected Securities Fund, Institutional Class (a) | 5,531,869 | 52,220,847 | ||||||||
|
| |||||||||
Total Fixed Income Funds (cost $463,436,887) |
| 454,300,114 | ||||||||
|
| |||||||||
Total Mutual Funds |
| 1,619,840,769 | ||||||||
|
| |||||||||
| Fixed Contract 7.9% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Nationwide Fixed Contract, 3.50% (a)(b) | $ | 139,475,697 | 139,475,697 | |||||||
|
| |||||||||
Total Fixed Contract |
| 139,475,697 | ||||||||
|
| |||||||||
Total Investments |
| 1,759,316,466 | ||||||||
Liabilities in excess of other |
| (352,605 | ) | |||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 1,758,963,861 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | Investment in affiliate. |
| (b) | The Nationwide Fixed Contract rate changes quarterly. The security is restricted and, as the affiliated counterparty is required by contract to redeem daily upon request, it has been deemed liquid pursuant to procedures approved by the Board of Trustees. |
| (c) | See notes to financial statements for tax unrealized appreciation/(depreciation) of securities. |
| † | Amount rounds to less than 0.1%. |
The accompanying notes are an integral part of these financial statements.
38
Statement of Assets and Liabilities
October 31, 2013
| Nationwide Investor Destinations Moderate Fund | ||||||
Assets: | ||||||
Investments in affiliates, at value (cost $1,459,376,969) | $ | 1,759,316,466 | ||||
Cash | 1,115 | |||||
Receivable for investments sold | 1,070,136 | |||||
Receivable for capital shares issued | 1,526,058 | |||||
Prepaid expenses | 36,533 | |||||
|
| |||||
Total Assets | 1,761,950,308 | |||||
|
| |||||
Liabilities: | ||||||
Payable for capital shares redeemed | 2,007,688 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 192,621 | |||||
Fund administration fees | 45,218 | |||||
Distribution fees | 443,877 | |||||
Administrative servicing fees | 199,115 | |||||
Accounting and transfer agent fees | 45,129 | |||||
Trustee fees | 1,551 | |||||
Custodian fees | 5,995 | |||||
Compliance program costs (Note 3) | 1,004 | |||||
Professional fees | 23,687 | |||||
Printing fees | 18,714 | |||||
Other | 1,848 | |||||
|
| |||||
Total Liabilities | 2,986,447 | |||||
|
| |||||
Net Assets | $ | 1,758,963,861 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 1,453,266,459 | ||||
Accumulated undistributed net investment income | 1,247,267 | |||||
Accumulated net realized gains from affiliated investments | 4,510,638 | |||||
Net unrealized appreciation/(depreciation) from investments in affiliates | 299,939,497 | |||||
|
| |||||
Net Assets | $ | 1,758,963,861 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 134,092,908 | ||||
Class B Shares | 2,084,000 | |||||
Class C Shares | 137,680,905 | |||||
Class R2 Shares | 207,910,628 | |||||
Institutional Class Shares | 284,753,727 | |||||
Service Class Shares | 992,441,693 | |||||
|
| |||||
Total | $ | 1,758,963,861 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 11,942,595 | |||||
Class B Shares | 186,760 | |||||
Class C Shares | 12,447,220 | |||||
Class R2 Shares | 18,894,035 | |||||
Institutional Class Shares | 25,445,998 | |||||
Service Class Shares | 88,733,265 | |||||
|
| |||||
Total | 157,649,873 | |||||
|
| |||||
39
Statement of Assets and Liabilities (Continued)
October 31, 2013
| Nationwide Investor Destinations Moderate Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 11.23 | ||||
Class B Shares (b) | $ | 11.16 | ||||
Class C Shares (c) | $ | 11.06 | ||||
Class R2 Shares | $ | 11.00 | ||||
Institutional Class Shares | $ | 11.19 | ||||
Service Class Shares | $ | 11.18 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 11.92 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 5.75 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 1.00% on sales of shares of original purchases of $1,000,000 or more or that were not subject to a front-end sales charge made within 18 months of the purchase date. |
| (b) | For Class B Shares, the redemption price per share varies by the length of time shares are held. |
| (c) | For Class C Shares, the redemption price per share is reduced by 1.00% for shares held less than one year. |
The accompanying notes are an integral part of these financial statements.
40
Statement of Operations
For the Year Ended October 31, 2013
| Nationwide Investor Destinations Moderate Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income from affiliates | $ | 30,314,442 | ||||
Interest income from affiliates | 4,598,481 | |||||
|
| |||||
Total Income | 34,912,923 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 2,177,473 | |||||
Fund administration fees | 460,714 | |||||
Distribution fees Class A | 317,254 | |||||
Distribution fees Class B | 34,654 | |||||
Distribution fees Class C | 1,310,712 | |||||
Distribution fees Class R2 | 992,937 | |||||
Distribution fees Service Class | 2,414,812 | |||||
Administrative servicing fees Class A | 68,592 | |||||
Administrative servicing fees Class R2 | 297,755 | |||||
Administrative servicing fees Service Class | 1,448,262 | |||||
Registration and filing fees | 69,386 | |||||
Professional fees | 70,715 | |||||
Printing fees | 33,695 | |||||
Trustee fees | 57,211 | |||||
Custodian fees | 63,130 | |||||
Accounting and transfer agent fees | 295,895 | |||||
Compliance program costs (Note 3) | 6,100 | |||||
Other | 35,967 | |||||
|
| |||||
Total expenses before earnings credit | 10,155,264 | |||||
|
| |||||
Earnings credit (Note 5) | (2 | ) | ||||
|
| |||||
Net Expenses | 10,155,262 | |||||
|
| |||||
NET INVESTMENT INCOME | 24,757,661 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gain distributions from underlying affiliated funds | 15,824,018 | |||||
Net realized gains from investment transactions with affiliates | 39,519,853 | |||||
|
| |||||
Net realized gains from affiliated investments | 55,343,871 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | 159,032,853 | |||||
|
| |||||
Net realized/unrealized gains from affiliated investments | 214,376,724 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 239,134,385 | ||||
|
| |||||
The accompanying notes are an integral part of these financial statements.
41
Statements of Changes in Net Assets
| Nationwide Investor Destinations Moderate Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 24,757,661 | $ | 23,634,567 | ||||||||
Net realized gains/(losses) from affiliated investments | 55,343,871 | (4,377,680 | ) | |||||||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | 159,032,853 | 102,198,147 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 239,134,385 | 121,455,034 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (2,105,107 | ) | (2,468,336 | ) | ||||||||
Class B | (39,206 | ) | (68,287 | ) | ||||||||
Class C | (1,305,304 | ) | (1,300,682 | ) | ||||||||
Class R2 | (2,703,277 | ) | (2,407,902 | ) | ||||||||
Institutional Class | (4,818,247 | ) | (3,836,839 | ) | ||||||||
Service Class | (15,315,096 | ) | (14,082,991 | ) | ||||||||
Net realized gains: | ||||||||||||
Class A | (544,335 | ) | (597,076 | ) | ||||||||
Class B | (21,215 | ) | (55,475 | ) | ||||||||
Class C | (570,539 | ) | (747,797 | ) | ||||||||
Class R2 | (874,892 | ) | (1,023,412 | ) | ||||||||
Institutional Class | (1,020,096 | ) | (1,039,621 | ) | ||||||||
Service Class | (4,259,363 | ) | (5,188,856 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (33,576,677 | ) | (32,817,274 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (24,468,070 | ) | (6,434,726 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets | 181,089,638 | 82,203,034 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 1,577,874,223 | 1,495,671,189 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 1,758,963,861 | $ | 1,577,874,223 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 1,247,267 | $ | 1,140,723 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Proceeds from shares issued | $ | 42,432,527 | $ | 28,088,966 | ||||||||
Dividends reinvested | 1,615,503 | 1,816,932 | ||||||||||
Cost of shares redeemed | (39,848,430 | ) | (28,672,014 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 4,199,600 | 1,233,884 | ||||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Proceeds from shares issued | 84,241 | 100,465 | ||||||||||
Dividends reinvested | 43,343 | 75,666 | ||||||||||
Cost of shares redeemed | (3,692,609 | ) | (6,294,510 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (3,565,025 | ) | (6,118,379 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Proceeds from shares issued | 24,614,959 | 14,230,844 | ||||||||||
Dividends reinvested | 809,225 | 791,332 | ||||||||||
Cost of shares redeemed | (28,142,283 | ) | (27,267,175 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (2,718,099 | ) | (12,244,999 | ) | ||||||||
|
|
|
| |||||||||
42
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Moderate Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Class R2 Shares | ||||||||||||
Proceeds from shares issued | $ | 26,722,973 | $ | 23,609,186 | ||||||||
Dividends reinvested | 3,465,223 | 3,313,570 | ||||||||||
Cost of shares redeemed | (33,324,366 | ) | (24,723,372 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (3,136,170 | ) | 2,199,384 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 170,761,954 | 50,721,635 | ||||||||||
Dividends reinvested | 5,838,343 | 4,876,460 | ||||||||||
Cost of shares redeemed | (142,402,818 | ) | (24,422,694 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 34,197,479 | 31,175,401 | ||||||||||
|
|
|
| |||||||||
Service Class Shares | ||||||||||||
Proceeds from shares issued | 90,884,102 | 73,233,283 | ||||||||||
Dividends reinvested | 19,574,429 | 19,271,847 | ||||||||||
Cost of shares redeemed | (163,904,386 | ) | (115,185,147 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (53,445,855 | ) | (22,680,017 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (24,468,070 | ) | $ | (6,434,726 | ) | ||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Issued | 4,038,405 | 2,896,933 | ||||||||||
Reinvested | 158,178 | 191,889 | ||||||||||
Redeemed | (3,760,039 | ) | (2,978,653 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 436,544 | 110,169 | ||||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Issued | 8,173 | 14,936 | ||||||||||
Reinvested | 4,347 | 8,256 | ||||||||||
Redeemed | (355,894 | ) | (661,466 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (343,374 | ) | (638,274 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Issued | 2,372,525 | 1,504,463 | ||||||||||
Reinvested | 81,304 | 86,170 | ||||||||||
Redeemed | (2,708,625 | ) | (2,872,343 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (254,796 | ) | (1,281,710 | ) | ||||||||
|
|
|
| |||||||||
Class R2 Shares | ||||||||||||
Issued | 2,591,531 | 2,501,191 | ||||||||||
Reinvested | 347,787 | 361,008 | ||||||||||
Redeemed | (3,215,310 | ) | (2,611,965 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (275,992 | ) | 250,234 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 16,149,599 | 5,272,049 | ||||||||||
Reinvested | 571,848 | 518,479 | ||||||||||
Redeemed | (13,469,400 | ) | (2,523,190 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 3,252,047 | 3,267,338 | ||||||||||
|
|
|
| |||||||||
43
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Moderate Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
SHARE TRANSACTIONS: (continued) | ||||||||||||
Service Class Shares | ||||||||||||
Issued | 8,652,746 | 7,616,789 | ||||||||||
Reinvested | 1,928,700 | 2,061,796 | ||||||||||
Redeemed | (15,560,542 | ) | (12,009,859 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (4,979,096 | ) | (2,331,274 | ) | ||||||||
|
|
|
| |||||||||
Total change in shares | (2,164,667 | ) | (623,517 | ) | ||||||||
|
|
|
| |||||||||
The accompanying notes are an integral part of these financial statements.
44
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Investor Destinations Moderate Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gains from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return (a) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income to Average Net Assets | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets | Portfolio Turnover (b) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.93 | 0.17 | 1.36 | 1.53 | (0.18 | ) | (0.05 | ) | (0.23 | ) | $ | 11.23 | 15.56% | $ | 134,092,908 | 0.50% | 1.58% | 0.50% | 32.04% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 9.43 | 0.16 | 0.61 | 0.77 | (0.22 | ) | (0.05 | ) | (0.27 | ) | $ | 9.93 | 8.38% | $ | 114,304,018 | 0.49% | 1.66% | 0.49% | 16.02% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.23 | 0.17 | 0.20 | 0.37 | (0.17 | ) | – | (0.17 | ) | $ | 9.43 | 4.06% | $ | 107,508,362 | 0.48% | 1.82% | 0.48% | 14.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 8.37 | 0.17 | 0.82 | 0.99 | (0.10 | ) | (0.03 | ) | (0.13 | ) | $ | 9.23 | 11.86% | $ | 96,798,604 | 0.47% | 1.89% | 0.47% | 9.42% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.29 | 0.18 | 0.80 | 0.98 | (0.19 | ) | (0.71 | ) | (0.90 | ) | $ | 8.37 | 13.54% | $ | 73,380,653 | 0.50% | 2.38% | 0.50% | 20.17% | ||||||||||||||||||||||||||||||||||||
| Class B Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.86 | 0.11 | 1.33 | 1.44 | (0.09 | ) | (0.05 | ) | (0.14 | ) | $ | 11.16 | 14.74% | $ | 2,084,000 | 1.20% | 1.07% | 1.20% | 32.04% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 9.30 | 0.09 | 0.60 | 0.69 | (0.08 | ) | (0.05 | ) | (0.13 | ) | $ | 9.86 | 7.56% | $ | 5,228,875 | 1.20% | 1.00% | 1.20% | 16.02% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.09 | 0.11 | 0.20 | 0.31 | (0.10 | ) | – | (0.10 | ) | $ | 9.30 | 3.41% | $ | 10,862,496 | 1.21% | 1.20% | 1.21% | 14.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 8.31 | 0.11 | 0.81 | 0.92 | (0.11 | ) | (0.03 | ) | (0.14 | ) | $ | 9.09 | 11.14% | $ | 17,847,479 | 1.20% | 1.24% | 1.20% | 9.42% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.24 | 0.13 | 0.78 | 0.91 | (0.13 | ) | (0.71 | ) | (0.84 | ) | $ | 8.31 | 12.66% | $ | 22,546,617 | 1.21% | 1.69% | 1.21% | 20.17% | ||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.79 | 0.09 | 1.33 | 1.42 | (0.10 | ) | (0.05 | ) | (0.15 | ) | $ | 11.06 | 14.68% | $ | 137,680,905 | 1.19% | 0.89% | 1.19% | 32.04% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 9.25 | 0.09 | 0.60 | 0.69 | (0.10 | ) | (0.05 | ) | (0.15 | ) | $ | 9.79 | 7.58% | $ | 124,362,072 | 1.20% | 0.97% | 1.20% | 16.02% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.05 | 0.11 | 0.20 | 0.31 | (0.11 | ) | – | (0.11 | ) | $ | 9.25 | 3.37% | $ | 129,312,497 | 1.21% | 1.13% | 1.21% | 14.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 8.28 | 0.10 | 0.81 | 0.91 | (0.11 | ) | (0.03 | ) | (0.14 | ) | $ | 9.05 | 11.09% | $ | 142,313,710 | 1.20% | 1.21% | 1.20% | 9.42% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.21 | 0.13 | 0.78 | 0.91 | (0.13 | ) | (0.71 | ) | (0.84 | ) | $ | 8.28 | 12.72% | $ | 139,055,974 | 1.21% | 1.68% | 1.21% | 20.17% | ||||||||||||||||||||||||||||||||||||
| Class R2 Shares (d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.74 | 0.13 | 1.32 | 1.45 | (0.14 | ) | (0.05 | ) | (0.19 | ) | $ | 11.00 | 15.06% | $ | 207,910,628 | 0.84% | 1.24% | 0.84% | 32.04% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 9.20 | 0.12 | 0.60 | 0.72 | (0.13 | ) | (0.05 | ) | (0.18 | ) | $ | 9.74 | 7.96% | $ | 186,740,830 | 0.85% | 1.31% | 0.85% | 16.02% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.01 | 0.14 | 0.19 | 0.33 | (0.14 | ) | – | (0.14 | ) | $ | 9.20 | 3.67% | $ | 174,027,334 | 0.85% | 1.46% | 0.85% | 14.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 8.24 | 0.13 | 0.81 | 0.94 | (0.14 | ) | (0.03 | ) | (0.17 | ) | $ | 9.01 | 11.56% | $ | 158,746,294 | 0.83% | 1.54% | 0.83% | 9.42% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.21 | 0.15 | 0.78 | 0.93 | (0.19 | ) | (0.71 | ) | (0.90 | ) | $ | 8.24 | 13.11% | $ | 123,534,769 | 0.87% | 1.94% | 0.87% | 20.17% | ||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.90 | 0.20 | 1.35 | 1.55 | (0.21 | ) | (0.05 | ) | (0.26 | ) | $ | 11.19 | 15.86% | $ | 284,753,727 | 0.20% | 1.86% | 0.20% | 32.04% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 9.35 | 0.19 | 0.60 | 0.79 | (0.19 | ) | (0.05 | ) | (0.24 | ) | $ | 9.90 | 8.64% | $ | 219,767,806 | 0.20% | 1.95% | 0.20% | 16.02% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.15 | 0.19 | 0.21 | 0.40 | (0.20 | ) | – | (0.20 | ) | $ | 9.35 | 4.38% | $ | 176,900,980 | 0.21% | 2.06% | 0.21% | 14.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 8.37 | 0.19 | 0.82 | 1.01 | (0.20 | ) | (0.03 | ) | (0.23 | ) | $ | 9.15 | 12.19% | $ | 131,966,219 | 0.20% | 2.18% | 0.20% | 9.42% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.29 | 0.20 | 0.80 | 1.00 | (0.21 | ) | (0.71 | ) | (0.92 | ) | $ | 8.37 | 13.87% | $ | 90,723,665 | 0.21% | 2.61% | 0.21% | 20.17% | ||||||||||||||||||||||||||||||||||||
| Service Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 9.90 | 0.16 | 1.34 | 1.50 | (0.17 | ) | (0.05 | ) | (0.22 | ) | $ | 11.18 | 15.30% | $ | 992,441,693 | 0.60% | 1.50% | 0.60% | 32.04% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 9.34 | 0.15 | 0.61 | 0.76 | (0.15 | ) | (0.05 | ) | (0.20 | ) | $ | 9.90 | 8.30% | $ | 927,470,622 | 0.60% | 1.56% | 0.60% | 16.02% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.14 | 0.16 | 0.20 | 0.36 | (0.16 | ) | – | (0.16 | ) | $ | 9.34 | 3.96% | $ | 897,059,520 | 0.61% | 1.71% | 0.61% | 14.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 8.36 | 0.16 | 0.81 | 0.97 | (0.16 | ) | (0.03 | ) | (0.19 | ) | $ | 9.14 | 11.76% | $ | 891,324,745 | 0.59% | 1.81% | 0.59% | 9.42% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.28 | 0.17 | 0.80 | 0.97 | (0.18 | ) | (0.71 | ) | (0.89 | ) | $ | 8.36 | 13.40% | $ | 813,670,095 | 0.63% | 2.24% | 0.63% | 20.17% | ||||||||||||||||||||||||||||||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Excludes sales charge. |
| (b) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (c) | Per share calculations were performed using average shares method. |
| (d) | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
The accompanying notes are an integral part of these financial statements.
45
| Fund Commentary | Nationwide Investor Destinations Moderately Conservative Fund |
For the annual period ended October 31, 2013, the Nationwide Investor Destinations Moderately Conservative Fund (Service Class) returned 9.53% versus 10.58% for its composite benchmark*, 30% Russell 3000® Index, 10% MSCI EAFE® Index, 35% Barclays U.S. Aggregate Bond Index and 25% Barclays U.S. 1-3 Year Government/Credit Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mixed-Asset Target Allocation Moderate Funds (consisting of 531 funds as of October 31, 2013) was 13.83% for the same time period.
*The Fund changed its composite benchmark on September 30, 2013. The Fund’s former composite benchmark, comprising 40% S&P 500® Index, 35% Barclays U.S. Aggregate Bond Index and 25% Citigroup 3-Month Treasury Bill Index, returned 9.90% for the annual period ended October 31, 2013.
The Fund’s return for the 12-month period covered in this report was primarily driven by strong positive returns across the equity markets in the U.S. and foreign developed countries. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted double-digit gains. Specifically, the S&P 500 Index (representing large-cap stocks) rose more than 27%, S&P MidCap 400® Index (mid-cap stocks) increased more than 33% and Russell 2000® Index (small-cap stocks) gained more than 36%. During the period, the U.S. Federal Reserve (Fed) reaffirmed its intent to support the economy by maintaining its pace of asset purchases, helping to underpin the gains delivered in the U.S. equity markets.
The equity markets within foreign developed countries (as distinguished from emerging market countries) generally posted double-digit returns as well. The MSCI EAFE Index (representing developed international markets) posted a gain of nearly 27% during the period. Concerns regarding political and economic uncertainty in various parts of the eurozone receded further from the headlines and were also helped by the Fed’s decision not to taper (gradually reduce) its pace of asset purchases and the dissipation of tensions in Syria.
With regard to intermediate-term, investment-grade U.S. fixed-income bonds, the Barclays U.S. Aggregate Bond Index (representing such U.S. bonds) posted a negative return of -1.08% during the period. Interest rates on the bellwether 10-year U.S. Treasury note increased nearly 100 basis points during the period, beginning November 2012 at 1.62%, increasing to 3.00% by early September 2013 and easing back at the end of the period to 2.56% after the Fed’s announcement to postpone the tapering of its asset purchases. The rise in interest rates generally coincided with an increase in intermediate- and long-term bond prices and a decrease in bond returns for the period as a whole. Short-term bond interest rates remained range-bound near zero, effectively keeping returns in the very low single digits.
The returns from the Fund’s investments in the Nationwide S&P 500 Index Fund and Nationwide International Index Fund, combined with their sizable allocations within the Fund, made these underlying funds the largest contributors to the Fund’s return during the period, as shown in the chart below.
The negative returns from the Fund’s investments in the Nationwide Bond Index Fund and Nationwide Inflation-Protected Securities Fund made these underlying funds the only detractors from the Fund’s return during the period, as shown in the chart below.
Portfolio Manager:
Thomas R. Hickey Jr., Nationwide Fund Advisors
The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.
Investments in the Fund are subject to the risks of its underlying funds. Please refer to the summary prospectus for a more detailed explanation of the Fund’s principal risks.
The Fund may invest in the Nationwide Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Contract may lose money from unpaid principal or unpaid or reduced interest.
46
| Fund Commentary (con’t.) | Nationwide Investor Destinations Moderately Conservative Fund |
Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.
There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
Note: On September 30, 2013, important changes were made to the Fund’s allocations, including the addition of three more underlying investments — Nationwide Alternatives Allocation Fund, Nationwide Core Plus Bond Fund and Nationwide Ziegler Equity Income Fund. These new underlying investments are included in the chart to the right, but are not included in the chart below.
Actual Underlying Fund Allocations
(as of October 31, 2013)
| Nationwide Bond Index Fund | 20% | |||
| Nationwide Contract | 15% | |||
| Nationwide S&P 500 Index Fund | 13% | |||
| Nationwide Alternatives Allocation Fund | 10% | |||
| Nationwide International Index Fund | 10% | |||
| Nationwide Enhanced Income Fund | 10% | |||
| Nationwide Mid Cap Market Index Fund | 7% | |||
| Nationwide Inflation-Protected Securities Fund | 5% | |||
| Nationwide Core Plus Bond Fund | 4% | |||
| Nationwide Ziegler Equity Income Fund | 3% | |||
| Nationwide Small Cap Index Fund | 3% | |||
| 100% |
Actual underlying fund allocations in the chart above are stated as a percentage of the Fund’s total net assets. Allocations may change over time in order for the Fund to meet its objective or due to market and/or economic conditions.
Contributions of Underlying Funds to Fund Performance
(For the year ended October 31, 2013)
The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Moderately Conservative Fund’s fees and expenses. Performance is based on the 12-month trailing returns of the underlying funds and their respective allocation on the last day of the reporting period, October 31, 2013, and may not result in the annualized return of the Fund. The Nationwide Alternatives Allocation Fund, Nationwide Core Plus Bond Fund and Nationwide Ziegler Equity Income Fund are not shown since they were held as underlying investments for only one month of the reporting period. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, Nationwide Fund Advisors periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. The asset class target allocations are subject to change at any time and without notice. For more information, refer to the Fund’s prospectus.
47
| Fund Overview | Nationwide Investor Destinations Moderately Conservative Fund |
Objective
The Fund seeks to maximize total investment return for a moderately conservative level of risk.
Highlights
| Ÿ | The Fund’s investments in U.S. and foreign developed market mutual funds account for more than 35% of its allocations and contributed more than 95% to the returns of the Fund during the period |
| Ÿ | Two of the Fund’s investments in U.S. bonds detracted from returns during the period |
| Ÿ | The Fund recently added exposures to six additional asset classes within three additional underlying funds that are intended to help diversify the sources of risk and return for the Fund |
Asset Allocation†
| Fixed Income Funds | 39.0% | |||
| Equity Funds | 36.1% | |||
| Fixed Contract | 15.0% | |||
| Alternative Assets | 10.0% | |||
| Liabilities in excess of other assets | (0.1%) | |||
| 100.0% |
Top Holdings††
| Nationwide Bond Index Fund, Institutional Class | 20.0% | |||
| Nationwide Fixed Contract | 15.0% | |||
| Nationwide S&P 500 Index Fund, Institutional Class | 13.0% | |||
| Nationwide International Index Fund, Institutional Class | 10.0% | |||
| Nationwide Enhanced Income Fund, Institutional Class | 10.0% | |||
| Nationwide Alternatives Allocation Fund, Institutional Class | 10.0% | |||
| Nationwide Mid Cap Market Index Fund, Institutional Class | 7.0% | |||
| Nationwide Inflation-Protected Securities Fund, Institutional Class | 5.0% | |||
| Nationwide Core Plus Bond Fund, Institutional Class | 4.0% | |||
| Nationwide Ziegler Equity Income Fund, Institutional Class | 3.0% | |||
| Nationwide Small Cap Index Fund, Institutional Class | 3.0% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of October 31, 2013. |
| †† | Percentages indicated are based upon total investments as of October 31, 2013. |
48
| Fund Performance | Nationwide Investor Destinations Moderately Conservative Fund |
Average Annual Total Return
(For periods ended October 31, 2013) | 1 Yr. | 5 Yr. | 10 Yr. | |||||||||||
| Class A | w/o SC1 | 9.59% | 8.48% | 5.34% | ||||||||||
| w/SC2 | 3.27% | 7.19% | 4.72% | |||||||||||
| Class B | w/o SC1 | 8.81% | 7.71% | 4.60% | ||||||||||
| w/SC3 | 3.81% | 7.41% | 4.60% | |||||||||||
| Class C | w/o SC1 | 8.88% | 7.73% | 4.61% | ||||||||||
| w/SC4 | 7.88% | 7.73% | 4.61% | |||||||||||
| Class R25,6 | 9.30% | 8.11% | 5.06% | |||||||||||
| Institutional Class5,7 | 9.93% | 8.81% | 5.62% | |||||||||||
| Service Class5 | 9.53% | 8.36% | 5.23% | |||||||||||
Expense Ratios
| Expense Ratio* | ||
| Class A | 0.76% | |
| Class B | 1.47% | |
| Class C | 1.47% | |
| Class R2 | 1.11% | |
| Institutional Class | 0.47% | |
| Service Class | 0.87% |
*Current effective prospectus dated March 1, 2013. Expenses also include indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details.
All figures showing the effect of a sales charge (SC) reflect the maximum charge possible, because it has the most significant effect on performance data.
| 1 | These returns do not reflect the effects of SCs. |
| 2 | A 5.75% front-end sales charge was deducted. |
| 3 | A 5.00% maximum contingent deferred sales charge (CDSC) was deducted. The CDSC declines to 0% after 6 years and is not deducted from returns after 6 years. |
| 4 | A 1.00% CDSC was deducted from the one year return because it is charged when you sell Class C shares within the first year after purchase. |
| 5 | Not subject to any SCs. |
| 6 | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
| 7 | These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. |
49
| Fund Performance (con’t.) | Nationwide Investor Destinations Moderately Conservative Fund |
Performance of a $10,000 Investment
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 and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investing in mutual funds involves market risk, including loss of principal. Performance returns assume the reinvestment of all distributions.
Comparative performance of $10,000 invested in Service Class shares of the Nationwide Investor Destinations Moderately Conservative Fund versus the Barclays U.S. Aggregate Bond Index, the Russell 3000® Index, the MSCI EAFE® Index, the Barclays U.S. 1-3 Year Government/Credit Bond Index, the Citigroup 3-Month Treasury Bill (T-Bill) Index, the S&P 500® Index, the Current Composite Index*, the Former Composite Index** and the Consumer Price Index (CPI) over the 10-year period ended 10/31/13. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
| * | The Current Composite Index comprises 30% Russell 3000® Index, 35% Barclays U.S. Aggregate Bond Index, 10% MSCI EAFE® Index and 25% Barclays U.S. 1-3 Year Gov’t/Credit Bond Index. |
| ** | The Former Composite Index comprises 35% Barclays U.S. Aggregate Bond Index, 25% Citigroup 3-Month T-Bill Index and 40% S&P 500® Index. |
50
| Shareholder Expense Example | Nationwide Investor Destinations Moderately Conservative Fund |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2013) and continued to hold your shares at the end of the reporting period (October 31, 2013).
Actual Expenses
For each Class of the Fund in the table below, the first line provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid from May 1, 2013 through October 31, 2013. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Expenses for Comparison Purposes
The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period from May 1, 2013 through October 31, 2013. You may use this information to compare the ongoing costs of investing in the Class of the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) or redemption fees. If these transaction costs were included, your costs would have been higher. Therefore, the second line for each Class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The examples also assume all dividends and distributions are reinvested.
Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment
Nationwide Investor Destinations October 31, 2013 | Beginning 05/01/13 | Ending 10/31/13 | Expenses Paid During Period ($) 05/01/13- 10/31/13a | Expense Ratio During Period (%) 05/01/13- 10/31/13a | ||||||||
| Class A Shares | Actual | b | 1,000.00 | 1,032.00 | 2.71 | 0.53 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.53 | 2.70 | 0.53 | |||||||
| Class B Shares | Actual | b | 1,000.00 | 1,028.00 | 6.19 | 1.21 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.11 | 6.16 | 1.21 | |||||||
| Class C Shares | Actual | b | 1,000.00 | 1,028.60 | 6.19 | 1.21 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.11 | 6.16 | 1.21 | |||||||
| Class R2 Shares | Actual | b | 1,000.00 | 1,030.20 | 4.40 | 0.86 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,020.87 | 4.38 | 0.86 | |||||||
| Institutional Class Shares | Actual | b | 1,000.00 | 1,033.30 | 1.08 | 0.21 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,024.15 | 1.07 | 0.21 | |||||||
| Service Class Shares | Actual | b | 1,000.00 | 1,032.30 | 3.12 | 0.61 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.13 | 3.11 | 0.61 | |||||||
| a | Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus. |
| b | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2013 through October 31, 2013 multiplied to reflect one-half year period. The expense ratio presented represents a six-month, annualized ratio in accordance with Securities and Exchange Commission guidelines. |
| c | Represents the hypothetical 5% return before expenses. |
51
Statement of Investments
October 31, 2013
Nationwide Investor Destinations Moderately Conservative Fund
| Mutual Funds 85.1% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Alternative Assets 10.0% |
| |||||||||
Nationwide Alternatives Allocation Fund, Institutional Class (a) | 5,890,554 | $ | 57,845,236 | |||||||
|
| |||||||||
Total Alternative Assets (cost $57,138,369) |
| 57,845,236 | ||||||||
|
| |||||||||
| ||||||||||
Equity Funds 36.1% |
| |||||||||
Nationwide International Index Fund, Institutional Class (a) | 6,864,969 | 58,008,986 | ||||||||
Nationwide Mid Cap Market Index Fund, Institutional Class (a) | 2,170,800 | 40,767,621 | ||||||||
Nationwide S&P 500 Index Fund, Institutional Class (a) | 5,168,534 | 75,357,231 | ||||||||
Nationwide Small Cap Index Fund, Institutional Class (a) | 1,109,199 | 17,469,881 | ||||||||
Nationwide Ziegler Equity Income Fund, Institutional Class *(a) | 1,417,779 | 17,622,990 | ||||||||
|
| |||||||||
Total Equity Funds (cost $160,144,005) |
| 209,226,709 | ||||||||
|
| |||||||||
| ||||||||||
Fixed Income Funds 39.0% |
| |||||||||
Nationwide Bond Index Fund, Institutional Class (a) | 10,266,137 | 116,212,668 | ||||||||
Nationwide Core Plus Bond Fund, Institutional Class (a) | 2,264,882 | 23,147,099 | ||||||||
Nationwide Enhanced Income Fund, Institutional Class (a) | 6,509,415 | 57,868,703 | ||||||||
Nationwide Inflation-Protected Securities Fund, Institutional Class (a) | 3,054,760 | 28,836,937 | ||||||||
|
| |||||||||
Total Fixed Income Funds (cost $231,065,470) |
| 226,065,407 | ||||||||
|
| |||||||||
Total Mutual Funds |
| 493,137,352 | ||||||||
|
| |||||||||
| Fixed Contract 15.0% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Nationwide Fixed Contract, | $ | 87,005,416 | 87,005,416 | |||||||
|
| |||||||||
Total Fixed Contract |
| 87,005,416 | ||||||||
|
| |||||||||
Total Investments |
| 580,142,768 | ||||||||
Liabilities in excess of other |
| (322,552 | ) | |||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 579,820,216 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | Investment in affiliate. |
| (b) | The Nationwide Fixed Contract rate changes quarterly. The security is restricted and, as the affiliated counterparty is required by contract to redeem daily upon request, it has been deemed liquid pursuant to procedures approved by the Board of Trustees. |
| (c) | See notes to financial statements for tax unrealized appreciation/(depreciation) of securities. |
The accompanying notes are an integral part of these financial statements.
52
Statement of Assets and Liabilities
October 31, 2013
| Nationwide Investor Destinations Moderately Conservative Fund | ||||||
Assets: | ||||||
Investments in affiliates, at value (cost $535,353,260) | $ | 580,142,768 | ||||
Cash | 209 | |||||
Receivable for capital shares issued | 381,189 | |||||
Prepaid expenses | 37,159 | |||||
|
| |||||
Total Assets | 580,561,325 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 12,098 | |||||
Payable for capital shares redeemed | 383,266 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 63,763 | |||||
Fund administration fees | 18,257 | |||||
Distribution fees | 151,988 | |||||
Administrative servicing fees | 70,756 | |||||
Accounting and transfer agent fees | 12,893 | |||||
Trustee fees | 200 | |||||
Custodian fees | 2,013 | |||||
Compliance program costs (Note 3) | 313 | |||||
Professional fees | 15,393 | |||||
Printing fees | 9,555 | |||||
Other | 614 | |||||
|
| |||||
Total Liabilities | 741,109 | |||||
|
| |||||
Net Assets | $ | 579,820,216 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 508,768,330 | ||||
Accumulated undistributed net investment income | 661,891 | |||||
Accumulated net realized gains from affiliated investments | 25,600,487 | |||||
Net unrealized appreciation/(depreciation) from investments in affiliates | 44,789,508 | |||||
|
| |||||
Net Assets | $ | 579,820,216 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 48,814,648 | ||||
Class B Shares | 898,699 | |||||
Class C Shares | 46,881,793 | |||||
Class R2 Shares | 88,286,612 | |||||
Institutional Class Shares | 93,302,759 | |||||
Service Class Shares | 301,635,705 | |||||
|
| |||||
Total | $ | 579,820,216 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 4,391,922 | |||||
Class B Shares | 80,648 | |||||
Class C Shares | 4,236,484 | |||||
Class R2 Shares | 7,934,853 | |||||
Institutional Class Shares | 8,322,610 | |||||
Service Class Shares | 27,011,363 | |||||
|
| |||||
Total | 51,977,880 | |||||
|
| |||||
53
Statement of Assets and Liabilities (Continued)
October 31, 2013
| Nationwide Investor Destinations Moderately Conservative Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 11.11 | ||||
Class B Shares (b) | $ | 11.14 | ||||
Class C Shares (c) | $ | 11.07 | ||||
Class R2 Shares | $ | 11.13 | ||||
Institutional Class Shares | $ | 11.21 | ||||
Service Class Shares | $ | 11.17 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 11.79 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 5.75 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 1.00% on sales of shares of original purchases of $1,000,000 or more or that were not subject to a front-end sales charge made within 18 months of the purchase date. |
| (b) | For Class B Shares, the redemption price per share varies by the length of time shares are held. |
| (c) | For Class C Shares, the redemption price per share is reduced by 1.00% for shares held less than one year. |
The accompanying notes are an integral part of these financial statements.
54
Statement of Operations
For the Year Ended October 31, 2013
| Nationwide Investor Destinations Moderately Conservative Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income from affiliates | $ | 9,208,841 | ||||
Interest income from affiliates | 2,749,038 | |||||
|
| |||||
Total Income | 11,957,879 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 736,727 | |||||
Fund administration fees | 191,250 | |||||
Distribution fees Class A | 116,634 | |||||
Distribution fees Class B | 11,182 | |||||
Distribution fees Class C | 434,116 | |||||
Distribution fees Class R2 | 434,924 | |||||
Distribution fees Service Class | 767,416 | |||||
Administrative servicing fees Class A | 28,841 | |||||
Administrative servicing fees Class R2 | 129,145 | |||||
Administrative servicing fees Service Class | 460,244 | |||||
Registration and filing fees | 68,955 | |||||
Professional fees | 33,123 | |||||
Printing fees | 16,826 | |||||
Trustee fees | 19,117 | |||||
Custodian fees | 21,379 | |||||
Accounting and transfer agent fees | 95,464 | |||||
Compliance program costs (Note 3) | 2,032 | |||||
Other | 16,833 | |||||
|
| |||||
Total expenses before earnings credit | 3,584,208 | |||||
|
| |||||
Earnings credit (Note 5) | (1 | ) | ||||
|
| |||||
Net Expenses | 3,584,207 | |||||
|
| |||||
NET INVESTMENT INCOME | 8,373,672 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gain distributions from underlying affiliated funds | 3,996,958 | |||||
Net realized gains from investment transactions with affiliates | 40,899,282 | |||||
|
| |||||
Net realized gains from affiliated investments | 44,896,240 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | (1,962,287 | ) | ||||
|
| |||||
Net realized/unrealized gains from affiliated investments | 42,933,953 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 51,307,625 | ||||
|
| |||||
The accompanying notes are an integral part of these financial statements.
55
Statements of Changes in Net Assets
| Nationwide Investor Destinations Moderately Conservative Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 8,373,672 | $ | 8,771,046 | ||||||||
Net realized gains from affiliated investments | 44,896,240 | 4,788,937 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | (1,962,287 | ) | 20,565,691 | |||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 51,307,625 | 34,125,674 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (790,719 | ) | (731,332 | ) | ||||||||
Class B | (11,210 | ) | (21,703 | ) | ||||||||
Class C | (442,720 | ) | (449,061 | ) | ||||||||
Class R2 | (1,172,443 | ) | (1,219,869 | ) | ||||||||
Institutional Class | (1,593,164 | ) | (1,323,095 | ) | ||||||||
Service Class | (4,898,835 | ) | (5,089,246 | ) | ||||||||
Net realized gains: | ||||||||||||
Class A | (626,934 | ) | (382,640 | ) | ||||||||
Class B | (18,026 | ) | (23,918 | ) | ||||||||
Class C | (594,060 | ) | (395,891 | ) | ||||||||
Class R2 | (1,190,565 | ) | (821,285 | ) | ||||||||
Institutional Class | (1,028,081 | ) | (574,644 | ) | ||||||||
Service Class | (4,228,483 | ) | (2,977,979 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (16,595,240 | ) | (14,010,663 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (2,485,220 | ) | 23,688,151 | |||||||||
|
|
|
| |||||||||
Change in net assets | 32,227,165 | 43,803,162 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 547,593,051 | 503,789,889 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 579,820,216 | $ | 547,593,051 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 661,891 | $ | 700,147 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Proceeds from shares issued | $ | 16,704,699 | $ | 13,398,701 | ||||||||
Dividends reinvested | 1,013,536 | 790,087 | ||||||||||
Cost of shares redeemed | (16,171,370 | ) | (8,221,513 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 1,546,865 | 5,967,275 | ||||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Proceeds from shares issued | 57,939 | 135,383 | ||||||||||
Dividends reinvested | 25,751 | 34,410 | ||||||||||
Cost of shares redeemed | (739,852 | ) | (1,364,733 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (656,162 | ) | (1,194,940 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Proceeds from shares issued | 10,964,387 | 10,429,778 | ||||||||||
Dividends reinvested | 502,323 | 377,866 | ||||||||||
Cost of shares redeemed | (8,616,439 | ) | (9,874,261 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 2,850,271 | 933,383 | ||||||||||
|
|
|
| |||||||||
56
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Moderately Conservative Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Class R2 Shares | ||||||||||||
Proceeds from shares issued | $ | 9,853,636 | $ | 13,622,774 | ||||||||
Dividends reinvested | 2,282,342 | 1,970,575 | ||||||||||
Cost of shares redeemed | (15,025,660 | ) | (13,484,241 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (2,889,682 | ) | 2,109,108 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 59,582,114 | 20,915,768 | ||||||||||
Dividends reinvested | 2,620,089 | 1,897,424 | ||||||||||
Cost of shares redeemed | (44,476,814 | ) | (9,193,153 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 17,725,389 | 13,620,039 | ||||||||||
|
|
|
| |||||||||
Service Class Shares | ||||||||||||
Proceeds from shares issued | 39,820,384 | 39,162,376 | ||||||||||
Dividends reinvested | 9,127,318 | 8,067,220 | ||||||||||
Cost of shares redeemed | (70,009,603 | ) | (44,976,310 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (21,061,901 | ) | 2,253,286 | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (2,485,220 | ) | $ | 23,688,151 | |||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Issued | 1,554,739 | 1,307,142 | ||||||||||
Reinvested | 97,016 | 78,723 | ||||||||||
Redeemed | (1,505,531 | ) | (804,446 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 146,224 | 581,419 | ||||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Issued | 5,355 | 13,937 | ||||||||||
Reinvested | 2,473 | 3,457 | ||||||||||
Redeemed | (69,551 | ) | (133,356 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (61,723 | ) | (115,962 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Issued | 1,028,773 | 1,021,811 | ||||||||||
Reinvested | 48,420 | 38,024 | ||||||||||
Redeemed | (811,185 | ) | (972,228 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 266,008 | 87,607 | ||||||||||
|
|
|
| |||||||||
Class R2 Shares | ||||||||||||
Issued | 922,547 | 1,328,773 | ||||||||||
Reinvested | 218,515 | 196,723 | ||||||||||
Redeemed | (1,404,329 | ) | (1,314,245 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (263,267 | ) | 211,251 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 5,491,565 | 2,031,905 | ||||||||||
Reinvested | 248,037 | 187,174 | ||||||||||
Redeemed | (4,095,776 | ) | (888,672 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 1,643,826 | 1,330,407 | ||||||||||
|
|
|
| |||||||||
57
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Moderately Conservative Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
SHARE TRANSACTIONS: (continued) | ||||||||||||
Service Class Shares | ||||||||||||
Issued | 3,699,770 | 3,799,940 | ||||||||||
Reinvested | 870,046 | 801,659 | ||||||||||
Redeemed | (6,484,136 | ) | (4,371,081 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (1,914,320 | ) | 230,518 | |||||||||
|
|
|
| |||||||||
Total change in shares | (183,252 | ) | 2,325,240 | |||||||||
|
|
|
| |||||||||
The accompanying notes are an integral part of these financial statements.
58
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Investor Destinations Moderately Conservative Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gains from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return (a) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income to Average Net Assets | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets | Portfolio Turnover (b) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.46 | 0.17 | 0.81 | 0.98 | (0.18 | ) | (0.15 | ) | (0.33 | ) | $ | 11.11 | 9.59% | $ | 48,814,648 | 0.52% | 1.58% | 0.52% | 36.85% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.08 | 0.18 | 0.49 | 0.67 | (0.19 | ) | (0.10 | ) | (0.29 | ) | $ | 10.46 | 6.81% | $ | 44,422,496 | 0.51% | 1.80% | 0.51% | 20.61% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.86 | 0.20 | 0.22 | 0.42 | (0.20 | ) | – | (0.20 | ) | $ | 10.08 | 4.31% | $ | 36,925,502 | 0.49% | 1.99% | 0.49% | 17.89% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.21 | 0.21 | 0.64 | 0.85 | (0.20 | ) | – | (0.20 | ) | $ | 9.86 | 9.38% | $ | 33,209,551 | 0.50% | 2.17% | 0.50% | 12.60% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.64 | 0.21 | 0.82 | 1.03 | (0.22 | ) | (0.24 | ) | (0.46 | ) | $ | 9.21 | 12.46% | $ | 27,499,985 | 0.52% | 2.47% | 0.52% | 22.80% | ||||||||||||||||||||||||||||||||||||
| Class B Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.48 | 0.10 | 0.81 | 0.91 | (0.10 | ) | (0.15 | ) | (0.25 | ) | $ | 11.14 | 8.81% | $ | 898,699 | �� | 1.21% | 0.95% | 1.21% | 36.85% | |||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.09 | 0.11 | 0.49 | 0.60 | (0.11 | ) | (0.10 | ) | (0.21 | ) | $ | 10.48 | 6.09% | $ | 1,491,869 | 1.22% | 1.11% | 1.22% | 20.61% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.86 | 0.13 | 0.22 | 0.35 | (0.12 | ) | – | (0.12 | ) | $ | 10.09 | 3.55% | $ | 2,605,396 | 1.22% | 1.33% | 1.22% | 17.89% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.21 | 0.14 | 0.64 | 0.78 | (0.13 | ) | – | (0.13 | ) | $ | 9.86 | 8.58% | $ | 4,807,063 | 1.21% | 1.48% | 1.21% | 12.60% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.64 | 0.15 | 0.82 | 0.97 | (0.16 | ) | (0.24 | ) | (0.40 | ) | $ | 9.21 | 11.68% | $ | 5,867,608 | 1.22% | 1.80% | 1.22% | 22.80% | ||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.42 | 0.10 | 0.81 | 0.91 | (0.11 | ) | (0.15 | ) | (0.26 | ) | $ | 11.07 | 8.88% | $ | 46,881,793 | 1.21% | 0.90% | 1.21% | 36.85% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.04 | 0.11 | 0.49 | 0.60 | (0.12 | ) | (0.10 | ) | (0.22 | ) | $ | 10.42 | 6.09% | $ | 41,368,353 | 1.22% | 1.10% | 1.22% | 20.61% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.82 | 0.13 | 0.22 | 0.35 | (0.13 | ) | – | (0.13 | ) | $ | 10.04 | 3.55% | $ | 38,970,245 | 1.22% | 1.27% | 1.22% | 17.89% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.18 | 0.14 | 0.64 | 0.78 | (0.14 | ) | – | (0.14 | ) | $ | 9.82 | 8.65% | $ | 40,700,682 | 1.21% | 1.46% | 1.21% | 12.60% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.61 | 0.15 | 0.82 | 0.97 | (0.16 | ) | (0.24 | ) | (0.40 | ) | $ | 9.18 | 11.64% | $ | 38,316,174 | 1.22% | 1.79% | 1.22% | 22.80% | ||||||||||||||||||||||||||||||||||||
| Class R2 Shares(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.47 | 0.13 | 0.83 | 0.96 | (0.15 | ) | (0.15 | ) | (0.30 | ) | $ | 11.13 | 9.30% | $ | 88,286,612 | 0.86% | 1.25% | 0.86% | 36.85% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.09 | 0.15 | 0.48 | 0.63 | (0.15 | ) | (0.10 | ) | (0.25 | ) | $ | 10.47 | 6.43% | $ | 85,855,793 | 0.86% | 1.45% | 0.86% | 20.61% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.87 | 0.16 | 0.23 | 0.39 | (0.17 | ) | – | (0.17 | ) | $ | 10.09 | 3.92% | $ | 80,556,773 | 0.87% | 1.61% | 0.87% | 17.89% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.22 | 0.17 | 0.65 | 0.82 | (0.17 | ) | – | (0.17 | ) | $ | 9.87 | 9.00% | $ | 72,987,185 | 0.85% | 1.78% | 0.85% | 12.60% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.65 | 0.18 | 0.82 | 1.00 | (0.19 | ) | (0.24 | ) | (0.43 | ) | $ | 9.22 | 12.09% | $ | 55,375,781 | 0.89% | 2.06% | 0.89% | 22.80% | ||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.55 | 0.20 | 0.82 | 1.02 | (0.21 | ) | (0.15 | ) | (0.36 | ) | $ | 11.21 | 9.93% | $ | 93,302,759 | 0.21% | 1.88% | 0.21% | 36.85% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.16 | 0.22 | 0.49 | 0.71 | (0.22 | ) | (0.10 | ) | (0.32 | ) | $ | 10.55 | 7.17% | $ | 70,457,429 | 0.22% | 2.09% | 0.22% | 20.61% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.94 | 0.23 | 0.22 | 0.45 | (0.23 | ) | – | (0.23 | ) | $ | 10.16 | 4.55% | $ | 54,326,098 | 0.22% | 2.21% | 0.22% | 17.89% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.28 | 0.23 | 0.66 | 0.89 | (0.23 | ) | – | (0.23 | ) | $ | 9.94 | 9.74% | $ | 38,719,904 | 0.21% | 2.39% | 0.21% | 12.60% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.70 | 0.24 | 0.83 | 1.07 | (0.25 | ) | (0.24 | ) | (0.49 | ) | $ | 9.28 | 12.83% | $ | 20,004,640 | 0.22% | 2.73% | 0.22% | 22.80% | ||||||||||||||||||||||||||||||||||||
| Service Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.51 | 0.16 | 0.82 | 0.98 | (0.17 | ) | (0.15 | ) | (0.32 | ) | $ | 11.17 | 9.53% | $ | 301,635,705 | 0.61% | 1.50% | 0.61% | 36.85% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.12 | 0.17 | 0.50 | 0.67 | (0.18 | ) | (0.10 | ) | (0.28 | ) | $ | 10.51 | 6.77% | $ | 303,997,111 | 0.62% | 1.70% | 0.62% | 20.61% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 9.90 | 0.19 | 0.22 | 0.41 | (0.19 | ) | – | (0.19 | ) | $ | 10.12 | 4.15% | $ | 290,405,875 | 0.62% | 1.86% | 0.62% | 17.89% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.25 | 0.20 | 0.64 | 0.84 | (0.19 | ) | – | (0.19 | ) | $ | 9.90 | 9.22% | $ | 283,720,301 | 0.60% | 2.05% | 0.60% | 12.60% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 8.68 | 0.21 | 0.81 | 1.02 | (0.21 | ) | (0.24 | ) | (0.45 | ) | $ | 9.25 | 12.32% | $ | 263,198,654 | 0.64% | 2.38% | 0.64% | 22.80% | ||||||||||||||||||||||||||||||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Excludes sales charge. |
| (b) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (c) | Per share calculations were performed using average shares method. |
| (d) | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
The accompanying notes are an integral part of these financial statements.
59
| Fund Commentary | Nationwide Investor Destinations Conservative Fund |
For the annual period ended October 31, 2013, the Nationwide Investor Destinations Conservative Fund (Service Class) returned 4.16% versus 5.14% for its composite benchmark*, 15% Russell 3000® Index, 5% MSCI EAFE® Index, 40% Barclays U.S. Aggregate Bond Index, 35% Barclays U.S. 1-3 Year Government/Credit Bond Index and 5% Citigroup 3-Month Treasury Bill (T-Bill) Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mixed-Asset Target Allocation Conservative Funds (consisting of 353 funds as of October 31, 2013) was 7.20% for the same time period.
*The Fund changed its composite benchmark on September 30, 2013. The Fund’s former composite benchmark, comprising 20% S&P 500® Index, 35% Barclays U.S. Aggregate Bond Index and 45% Citigroup 3-Month Treasury Bill Index, returned 4.69% for the annual period ended October 31, 2013.
The Fund’s return for the 12-month period covered in this report was primarily driven by strong positive returns across the equity markets in the U.S. and foreign developed countries. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted double-digit gains. Specifically, the S&P 500 Index (representing large-cap stocks) rose more than 27%, S&P MidCap 400® Index (mid-cap stocks) increased more than 33% and Russell 2000® Index (small-cap stocks) gained more than 36%. During the period, the U.S. Federal Reserve (Fed) reaffirmed its intent to support the economy by maintaining its pace of asset purchases, helping to underpin the gains delivered in the U.S. equity markets.
The equity markets within foreign developed countries (as distinguished from emerging market countries) generally posted double-digit returns as well. The MSCI EAFE Index (representing developed international markets) posted a gain of nearly 27% during the period. Concerns regarding political and economic uncertainty in various parts of the eurozone receded further from the headlines and were also helped by the Fed’s decision not to taper (gradually reduce) its pace of asset purchases and the dissipation of tensions in Syria.
With regard to intermediate-term, investment-grade U.S. fixed-income bonds, the Barclays U.S. Aggregate Bond Index (representing such U.S. bonds) posted a negative return of -1.08% during the period. Interest rates on the bellwether 10-year U.S. Treasury note increased nearly 100 basis points during the period, beginning November 2012 at 1.62%, increasing to 3.00% by early September 2013 and easing back at the end of the period to 2.56% after the Fed’s announcement to postpone the tapering of its asset purchases. The rise in interest rates generally coincided with an increase in intermediate- and long-term bond prices and a decrease in bond returns for the period as a whole. Short-term bond interest rates remained range-bound near zero, effectively keeping returns in the very low single digits.
The returns from the Fund’s investments in the Nationwide S&P 500 Index Fund and Nationwide International Index Fund, combined with their sizable allocations within the Fund, made these underlying funds the largest contributors to the Fund’s return during the period, as shown in the chart below.
The negative returns from the Fund’s investments in the Nationwide Bond Index Fund and Nationwide Inflation-Protected Securities Fund made these underlying funds the only detractors from the Fund’s return during the period, as shown in the chart below.
Portfolio Manager:
Thomas R. Hickey Jr., Nationwide Fund Advisors
The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.
Investments in the Fund are subject to the risks of its underlying funds. Please refer to the summary prospectus for a more detailed explanation of the Fund’s principal risks.
The Fund may invest in the Nationwide Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Contract may lose money from unpaid principal or unpaid or reduced interest.
60
| Fund Commentary (con’t.) | Nationwide Investor Destinations Conservative Fund |
Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.
There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
Note: On September 30, 2013, important changes were made to the Fund’s allocations, including the addition of four more underlying investments — Nationwide Alternatives Allocation Fund, Nationwide Core Plus Bond Fund, Nationwide Small Cap Index Fund and Nationwide Ziegler Equity Income Fund. These new underlying investments are included in the chart to the right, but are not included in the chart below.
Actual Underlying Fund Allocations
(as of October 31, 2013)
| Nationwide Bond Index Fund | 26% | |||
| Nationwide Contract | 22% | |||
| Nationwide Enhanced Income Fund | 14% | |||
| Nationwide Alternatives Allocation Fund | 8% | |||
| Nationwide Inflation-Protected Securities Fund | 8% | |||
| Nationwide S&P 500 Index Fund | 5% | |||
| Nationwide International Index Fund | 4% | |||
| Nationwide Ziegler Equity Income Fund | 4% | |||
| Nationwide Core Plus Bond Fund | 3% | |||
| Nationwide Mid Cap Market Index Fund | 3% | |||
| Nationwide Money Market Fund | 2% | |||
| Nationwide Small Cap Index Fund | 1% | |||
| 100% |
Actual underlying fund allocations in the chart above are stated as a percentage of the Fund’s total net assets. Allocations may change over time in order for the Fund to meet its objective or due to market and/or economic conditions.
Contributions of Underlying Funds to Fund Performance
(For the year ended October 31, 2013)
The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Conservative Fund’s fees and expenses. Performance is based on the 12-month trailing returns of the underlying funds and their respective allocation on the last day of the reporting period, October 31, 2013, and may not result in the annualized return of the Fund. The Nationwide Alternatives Allocation Fund, Nationwide Core Plus Bond Fund, Nationwide Small Cap Index Fund and Nationwide Ziegler Equity Income Fund are not shown since they were held as underlying investments for only one month of the reporting period. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, Nationwide Fund Advisors periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. The asset class target allocations are subject to change at any time and without notice. For more information, refer to the Fund’s prospectus.
61
| Fund Overview | Nationwide Investor Destinations Conservative Fund |
Objective
The Fund seeks to maximize total investment return for a conservative level of risk.
Highlights
| Ÿ | The Fund’s investments in U.S. and foreign developed market mutual funds account for nearly 20% of its allocations and contributed more than 95% to the returns of the Fund during the period |
| Ÿ | Two of the Fund’s investments in U.S. bonds detracted from returns during the period |
| Ÿ | The Fund recently added exposures to six additional asset classes within four additional underlying funds that are intended to help diversify the sources of risk and return for the Fund |
Asset Allocation†
| Fixed Income Funds | 51.0% | |||
| Fixed Contract | 22.0% | |||
| Equity Funds | 17.0% | |||
| Alternative Assets | 8.0% | |||
| Money Market Fund | 2.0% | |||
| Other assets in excess of liabilities†† | 0.0% | |||
| 100.0% |
Top Holdings†††
| Nationwide Bond Index Fund, Institutional Class | 26.0% | |||
| Nationwide Fixed Contract | 22.0% | |||
| Nationwide Enhanced Income Fund, Institutional Class | 14.0% | |||
| Nationwide Alternatives Allocation Fund, Institutional Class | 8.0% | |||
| Nationwide Inflation-Protected Securities Fund, Institutional Class | 8.0% | |||
| Nationwide S&P 500 Index Fund, Institutional Class | 5.0% | |||
| Nationwide Ziegler Equity Income Fund, Institutional Class | 4.0% | |||
| Nationwide International Index Fund, Institutional Class | 4.0% | |||
| Nationwide Core Plus Bond Fund, Institutional Class | 3.0% | |||
| Nationwide Mid Cap Market Index Fund, Institutional Class | 3.0% | |||
| Other Holdings | 3.0% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of October 31, 2013. |
| †† | Amount rounds to less than 0.1%. |
| ††† | Percentages indicated are based upon total investments as of October 31, 2013. |
62
| Fund Performance | Nationwide Investor Destinations Conservative Fund |
Average Annual Total Return
| (For periods ended October 31, 2013) | 1 Yr. | 5 Yr. | 10 Yr. | |||||||||||
| Class A | w/o SC1 | 4.17% | 5.79% | 4.18% | ||||||||||
| w/SC2 | (1.78)% | 4.56% | 3.57% | |||||||||||
| Class B | w/o SC1 | 3.51% | 5.06% | 3.45% | ||||||||||
| w/SC3 | (1.49)% | 4.73% | 3.45% | |||||||||||
| Class C | w/o SC1 | 3.49% | 5.04% | 3.45% | ||||||||||
| w/SC4 | 2.49% | 5.04% | 3.45% | |||||||||||
| Class R25,6 | 3.92% | 5.43% | 3.91% | |||||||||||
| Institutional Class5,7 | 4.58% | 6.11% | 4.47% | |||||||||||
| Service Class5 | 4.16% | 5.70% | 4.07% | |||||||||||
Expense Ratios
| Expense Ratio* | ||
| Class A | 0.77% | |
| Class B | 1.48% | |
| Class C | 1.48% | |
| Class R2 | 1.13% | |
| Institutional Class | 0.48% | |
| Service Class | 0.88% |
*Current effective prospectus dated March 1, 2013. Expenses also include indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details.
All figures showing the effect of a sales charge (SC) reflect the maximum charge possible, because it has the most significant effect on performance data.
| 1 | These returns do not reflect the effects of SCs. |
| 2 | A 5.75% front-end sales charge was deducted. |
| 3 | A 5.00% maximum contingent deferred sales charge (CDSC) was deducted. The CDSC declines to 0% after 6 years and is not deducted from returns after 6 years. |
| 4 | A 1.00% CDSC was deducted from the one year return because it is charged when you sell Class C shares within the first year after purchase. |
| 5 | Not subject to any SCs. |
| 6 | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
| 7 | These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. |
63
| Fund Performance (con’t.) | Nationwide Investor Destinations Conservative Fund |
Performance of a $10,000 Investment
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 and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investing in mutual funds involves market risk, including loss of principal. Performance returns assume the reinvestment of all distributions.
Comparative performance of $10,000 invested in Service Class shares of the Nationwide Investor Destinations Conservative Fund versus the Barclays U.S. Aggregate Bond Index, the Russell 3000® Index, the MSCI EAFE® Index, the Barclays U.S. 1-3 Year Government/Credit Bond Index, the Citigroup 3-Month Treasury Bill (T-Bill) Index, the Current Composite Index*, the Former Composite Index** and the Consumer Price Index (CPI) over the 10-year period ended 10/31/13. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
| * | The Current Composite Index comprises 15% Russell 3000® Index, 5% MSCI EAFE® Index, 40% Barclays U.S. Aggregate Bond Index, 35% Barclays U.S. 1-3 Year Gov’t/Credit Bond Index and 5% Citigroup 3-Month T-Bill Index. |
| ** | The Former Composite Index comprises 35% Barclays U.S. Aggregate Bond Index, 45% Citigroup 3-Month T-Bill Index and 20% S&P 500® Index. |
64
| Shareholder Expense Example | Nationwide Investor Destinations Conservative Fund |
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2013) and continued to hold your shares at the end of the reporting period (October 31, 2013).
Actual Expenses
For each Class of the Fund in the table below, the first line provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid from May 1, 2013 through October 31, 2013. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line of each Class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Expenses for Comparison Purposes
The second line of each Class in the table below provides information about hypothetical account values and hypothetical expenses based on the Class’ actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Class’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period from May 1, 2013 through October 31, 2013. You may use this information to compare the ongoing costs of investing in the Class of the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) or redemption fees. If these transaction costs were included, your costs would have been higher. Therefore, the second line for each Class in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. The examples also assume all dividends and distributions are reinvested.
Schedule of Shareholder Expenses
Expense Analysis of a $1,000 Investment
Nationwide Investor October 31, 2013 | Beginning 05/01/13 | Ending Account Value ($) 10/31/13 | Expenses Paid During Period ($) 05/01/13 - 10/31/13a | Expense Ratio During Period (%) 05/01/13 - 10/31/13a | ||||||||
| Class A Shares | Actual | b | 1,000.00 | 1,009.50 | 2.79 | 0.55 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.43 | 2.80 | 0.55 | |||||||
| Class B Shares | Actual | b | 1,000.00 | 1,006.30 | 6.22 | 1.23 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.00 | 6.26 | 1.23 | |||||||
| Class C Shares | Actual | b | 1,000.00 | 1,006.00 | 6.22 | 1.23 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,019.00 | 6.26 | 1.23 | |||||||
| Class R2 Shares | Actual | b | 1,000.00 | 1,008.60 | 4.46 | 0.88 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,020.77 | 4.48 | 0.88 | |||||||
| Institutional Class Shares | Actual | b | 1,000.00 | 1,011.00 | 1.17 | 0.23 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,024.05 | 1.17 | 0.23 | |||||||
| Service Class Shares | Actual | b | 1,000.00 | 1,008.90 | 3.19 | 0.63 | ||||||
| Hypothetical | b,c | 1,000.00 | 1,022.03 | 3.21 | 0.63 | |||||||
| a | Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus. |
| b | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2013 through October 31, 2013 multiplied to reflect one-half year period. The expense ratio presented represents a six-month, annualized ratio in accordance with Securities and Exchange Commission guidelines. |
| c | Represents the hypothetical 5% return before expenses. |
65
Statement of Investments
October 31, 2013
Nationwide Investor Destinations Conservative Fund
| Mutual Funds 78.0% | ||||||||||
| Shares | Market Value | |||||||||
|
|
| ||||||||
Alternative Assets 8.0% | ||||||||||
Nationwide Alternatives Allocation Fund, Institutional Class (a) | 3,484,424 | $ | 34,217,041 | |||||||
|
| |||||||||
Total Alternative Assets (cost $33,799,014) |
| 34,217,041 | ||||||||
|
| |||||||||
| ||||||||||
Equity Funds 17.0% | ||||||||||
Nationwide International Index Fund, Institutional Class (a) | 2,021,794 | 17,084,155 | ||||||||
Nationwide Mid Cap Market Index Fund, Institutional Class (a) | 686,377 | 12,890,163 | ||||||||
Nationwide S&P 500 Index Fund, Institutional Class (a) | 1,467,486 | 21,395,946 | ||||||||
Nationwide Small Cap Index Fund, Institutional Class (a) | 272,086 | 4,285,359 | ||||||||
Nationwide Ziegler Equity Income Fund, Institutional Class *(a) | 1,378,992 | 17,140,875 | ||||||||
|
| |||||||||
Total Equity Funds (cost $61,453,029) |
| 72,796,498 | ||||||||
|
| |||||||||
| ||||||||||
Fixed Income Funds 51.0% | ||||||||||
Nationwide Bond Index Fund, Institutional Class (a) | 9,865,279 | 111,674,964 | ||||||||
Nationwide Core Plus Bond Fund, Institutional Class (a) | 1,265,206 | 12,930,405 | ||||||||
Nationwide Enhanced Income Fund, Institutional Class (a) | 6,744,021 | 59,954,344 | ||||||||
Nationwide Inflation-Protected Securities Fund, Institutional Class (a) | 3,624,687 | 34,217,041 | ||||||||
|
| |||||||||
Total Fixed Income Funds (cost $224,110,082) |
| 218,776,754 | ||||||||
|
| |||||||||
| ||||||||||
Money Market Fund 2.0% | ||||||||||
Nationwide Money Market Fund, Institutional Class, 0.00% *(a)(b) | 8,551,186 | 8,551,186 | ||||||||
|
| |||||||||
Total Money Market Fund (cost $8,551,186) |
| 8,551,186 | ||||||||
|
| |||||||||
Total Mutual Funds |
| 334,341,479 | ||||||||
|
| |||||||||
| Fixed Contract 22.0% | ||||||||||
| Principal Amount | Market Value | |||||||||
|
|
| ||||||||
Nationwide Fixed Contract, | $ | 94,283,195 | $ | 94,283,195 | ||||||
|
| |||||||||
Total Fixed Contract |
| 94,283,195 | ||||||||
|
| |||||||||
Total Investments |
| 428,624,674 | ||||||||
Other assets in excess of liabilities — 0.0%† |
| 48,349 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 428,673,023 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | Investment in affiliate. |
| (b) | Represents 7-day effective yield as of October 31, 2013. |
| (c) | The Nationwide Fixed Contract rate changes quarterly. The security is restricted and, as the affiliated counterparty is required by contract to redeem daily upon request, it has been deemed liquid pursuant to procedures approved by the Board of Trustees. |
| (d) | See notes to financial statements for tax unrealized appreciation/(depreciation) of securities. |
| † | Amount rounds to less than 0.1%. |
The accompanying notes are an integral part of these financial statements.
66
Statement of Assets and Liabilities
October 31, 2013
| Nationwide Investor Destinations Conservative Fund | ||||||
Assets: | ||||||
Investments in affiliates, at value (cost $422,196,506) | $ | 428,624,674 | ||||
Cash | 208 | |||||
Receivable for capital shares issued | 1,530,109 | |||||
Prepaid expenses | 42,841 | |||||
|
| |||||
Total Assets | 430,197,832 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 107,106 | |||||
Payable for capital shares redeemed | 1,156,251 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 47,259 | |||||
Fund administration fees | 15,233 | |||||
Distribution fees | 121,622 | |||||
Administrative servicing fees | 41,449 | |||||
Accounting and transfer agent fees | 15,681 | |||||
Trustee fees | 36 | |||||
Custodian fees | 1,479 | |||||
Compliance program costs (Note 3) | 228 | |||||
Professional fees | 14,314 | |||||
Printing fees | 3,697 | |||||
Other | 454 | |||||
|
| |||||
Total Liabilities | 1,524,809 | |||||
|
| |||||
Net Assets | $ | 428,673,023 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 402,771,368 | ||||
Accumulated undistributed net investment income | 652,785 | |||||
Accumulated net realized gains from affiliated investments | 18,820,702 | |||||
Net unrealized appreciation/(depreciation) from investments in affiliates | 6,428,168 | |||||
|
| |||||
Net Assets | $ | 428,673,023 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 61,383,390 | ||||
Class B Shares | 400,106 | |||||
Class C Shares | 50,139,130 | |||||
Class R2 Shares | 58,782,811 | |||||
Institutional Class Shares | 63,938,645 | |||||
Service Class Shares | 194,028,941 | |||||
|
| |||||
Total | $ | 428,673,023 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 5,777,847 | |||||
Class B Shares | 37,424 | |||||
Class C Shares | 4,737,367 | |||||
Class R2 Shares | 5,547,580 | |||||
Institutional Class Shares | 5,992,024 | |||||
Service Class Shares | 18,221,357 | |||||
|
| |||||
Total | 40,313,599 | |||||
|
| |||||
67
Statement of Assets and Liabilities (Continued)
October 31, 2013
| Nationwide Investor Destinations Conservative Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 10.62 | ||||
Class B Shares (b) | $ | 10.69 | ||||
Class C Shares (c) | $ | 10.58 | ||||
Class R2 Shares | $ | 10.60 | ||||
Institutional Class Shares | $ | 10.67 | ||||
Service Class Shares | $ | 10.65 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 11.27 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 5.75 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 1.00% on sales of shares of original purchases of $1,000,000 or more or that were not subject to a front-end sales charge made within 18 months of the purchase date. |
| (b) | For Class B Shares, the redemption price per share varies by the length of time shares are held. |
| (c) | For Class C Shares, the redemption price per share is reduced by 1.00% for shares held less than one year. |
The accompanying notes are an integral part of these financial statements.
68
Statement of Operations
For the Year Ended October 31, 2013
| Nationwide Investor Destinations Conservative Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income from affiliates | $ | 5,957,514 | ||||
Interest income from affiliates | 3,117,863 | |||||
|
| |||||
Total Income | 9,075,377 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 557,206 | |||||
Fund administration fees | 160,564 | |||||
Distribution fees Class A | 132,426 | |||||
Distribution fees Class B | 5,148 | |||||
Distribution fees Class C | 481,042 | |||||
Distribution fees Class R2 | 312,253 | |||||
Distribution fees Service Class | 520,486 | |||||
Administrative servicing fees Class A | 35,542 | |||||
Administrative servicing fees Class R2 | 94,611 | |||||
Administrative servicing fees Service Class | 313,313 | |||||
Registration and filing fees | 68,710 | |||||
Professional fees | 28,370 | |||||
Printing fees | 16,325 | |||||
Trustee fees | 14,371 | |||||
Custodian fees | 16,193 | |||||
Accounting and transfer agent fees | 110,536 | |||||
Compliance program costs (Note 3) | 1,536 | |||||
Other | 14,669 | |||||
|
| |||||
Total expenses before earnings credit | 2,883,301 | |||||
|
| |||||
Earnings credit (Note 5) | (8 | ) | ||||
|
| |||||
Net Expenses | 2,883,293 | |||||
|
| |||||
NET INVESTMENT INCOME | 6,192,084 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gain distributions from underlying affiliated funds | 2,119,734 | |||||
Net realized gains from investment transactions with affiliates | 23,784,953 | |||||
|
| |||||
Net realized gains from affiliated investments | 25,904,687 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | (14,781,998 | ) | ||||
|
| |||||
Net realized/unrealized gains from affiliates investments | 11,122,689 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 17,314,773 | ||||
|
| |||||
The accompanying notes are an integral part of these financial statements.
69
Statements of Changes in Net Assets
| Nationwide Investor Destinations Conservative Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 6,192,084 | $ | 7,002,148 | ||||||||
Net realized gains from affiliated investments | 25,904,687 | 8,324,173 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments in affiliates | (14,781,998 | ) | 3,421,973 | |||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 17,314,773 | 18,748,294 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (896,263 | ) | (769,039 | ) | ||||||||
Class B | (4,868 | ) | (9,629 | ) | ||||||||
Class C | (479,474 | ) | (442,622 | ) | ||||||||
Class R2 | (842,015 | ) | (959,653 | ) | ||||||||
Institutional Class | (1,087,995 | ) | (909,976 | ) | ||||||||
Service Class | (3,314,045 | ) | (3,855,913 | ) | ||||||||
Net realized gains: | ||||||||||||
Class A | (913,246 | ) | (243,056 | ) | ||||||||
Class B | (10,854 | ) | (6,927 | ) | ||||||||
Class C | (794,205 | ) | (234,129 | ) | ||||||||
Class R2 | (1,134,899 | ) | (407,871 | ) | ||||||||
Institutional Class | (872,748 | ) | (255,378 | ) | ||||||||
Service Class | (3,722,603 | ) | (1,451,556 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (14,073,215 | ) | (9,545,749 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (3,525,222 | ) | 33,907,899 | |||||||||
|
|
|
| |||||||||
Change in net assets | (283,664 | ) | 43,110,444 | |||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 428,956,687 | 385,846,243 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 428,673,023 | $ | 428,956,687 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 652,785 | $ | 746,764 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Proceeds from shares issued | $ | 35,486,527 | $ | 28,088,835 | ||||||||
Dividends reinvested | 1,189,076 | 573,415 | ||||||||||
Cost of shares redeemed | (27,016,636 | ) | (13,277,796 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 9,658,967 | 15,384,454 | ||||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Proceeds from shares issued | 122,678 | 76,534 | ||||||||||
Dividends reinvested | 11,564 | 11,723 | ||||||||||
Cost of shares redeemed | (447,379 | ) | (506,578 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (313,137 | ) | (418,321 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Proceeds from shares issued | 19,103,463 | 16,648,043 | ||||||||||
Dividends reinvested | 712,048 | 288,589 | ||||||||||
Cost of shares redeemed | (13,093,639 | ) | (8,494,625 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 6,721,872 | 8,442,007 | ||||||||||
|
|
|
| |||||||||
70
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Conservative Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Class R2 Shares | ||||||||||||
Proceeds from shares issued | $ | 10,116,540 | $ | 14,219,967 | ||||||||
Dividends reinvested | 1,922,683 | 1,321,992 | ||||||||||
Cost of shares redeemed | (18,559,538 | ) | (12,687,834 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (6,520,315 | ) | 2,854,125 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 58,072,714 | 18,255,802 | ||||||||||
Dividends reinvested | 1,960,346 | 1,165,198 | ||||||||||
Cost of shares redeemed | (44,516,969 | ) | (9,306,587 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 15,516,091 | 10,114,413 | ||||||||||
|
|
|
| |||||||||
Service Class Shares | ||||||||||||
Proceeds from shares issued | 32,082,777 | 40,640,891 | ||||||||||
Dividends reinvested | 7,036,372 | 5,307,224 | ||||||||||
Cost of shares redeemed | (67,707,849 | ) | (48,416,894 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (28,588,700 | ) | (2,468,779 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (3,525,222 | ) | $ | 33,907,899 | |||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares | ||||||||||||
Issued | 3,381,795 | 2,694,576 | ||||||||||
Reinvested | 114,647 | 55,629 | ||||||||||
Redeemed | (2,575,432 | ) | (1,275,423 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 921,010 | 1,474,782 | ||||||||||
|
|
|
| |||||||||
Class B Shares | ||||||||||||
Issued | 11,562 | 7,478 | ||||||||||
Reinvested | 1,110 | 1,139 | ||||||||||
Redeemed | (42,395 | ) | (48,528 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (29,723 | ) | (39,911 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares | ||||||||||||
Issued | 1,827,122 | 1,603,586 | ||||||||||
Reinvested | 68,934 | 28,143 | ||||||||||
Redeemed | (1,254,646 | ) | (820,403 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 641,410 | 811,326 | ||||||||||
|
|
|
| |||||||||
Class R2 Shares | ||||||||||||
Issued | 967,846 | 1,372,770 | ||||||||||
Reinvested | 186,013 | 128,776 | ||||||||||
Redeemed | (1,774,803 | ) | (1,222,639 | ) | ||||||||
|
|
|
| |||||||||
Total Class R2 Shares | (620,944 | ) | 278,907 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 5,509,774 | 1,747,718 | ||||||||||
Reinvested | 188,197 | 112,569 | ||||||||||
Redeemed | (4,216,114 | ) | (891,910 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 1,481,857 | 968,377 | ||||||||||
|
|
|
| |||||||||
71
Statements of Changes in Net Assets (Continued)
| Nationwide Investor Destinations Conservative Fund | ||||||||||||
| Year Ended October 31, 2013 | Year Ended October 31, 2012 | |||||||||||
SHARE TRANSACTIONS: (continued) | ||||||||||||
Service Class Shares | ||||||||||||
Issued | 3,052,095 | 3,896,223 | ||||||||||
Reinvested | 677,319 | 514,656 | ||||||||||
Redeemed | (6,442,924 | ) | (4,645,014 | ) | ||||||||
|
|
|
| |||||||||
Total Service Class Shares | (2,713,510 | ) | (234,135 | ) | ||||||||
|
|
|
| |||||||||
Total change in shares | (319,900 | ) | 3,259,346 | |||||||||
|
|
|
| |||||||||
The accompanying notes are an integral part of these financial statements.
72
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Investor Destinations Conservative Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gains from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset of Period | Total Return (a) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets | Ratio of Net Investment Income to Average Net Assets | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets | Portfolio Turnover (b) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.55 | 0.16 | 0.27 | 0.43 | (0.18 | ) | (0.18 | ) | (0.36 | ) | $ | 10.62 | 4.17% | $ | 61,383,390 | 0.55% | 1.57% | 0.55% | 39.16% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.32 | 0.19 | 0.31 | 0.50 | (0.20 | ) | (0.07 | ) | (0.27 | ) | $ | 10.55 | 4.89% | $ | 51,231,565 | 0.52% | 1.87% | 0.52% | 15.75% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 10.18 | 0.21 | 0.14 | 0.35 | (0.21 | ) | – | (0.21 | ) | $ | 10.32 | 3.51% | $ | 34,889,691 | 0.50% | 2.04% | 0.50% | 17.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.77 | 0.23 | 0.41 | 0.64 | (0.23 | ) | – | (0.23 | ) | $ | 10.18 | 6.66% | $ | 22,095,197 | 0.51% | 2.33% | 0.51% | 15.48% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 9.26 | 0.23 | 0.65 | 0.88 | (0.24 | ) | (0.13 | ) | (0.37 | ) | $ | 9.77 | 9.84% | $ | 15,347,604 | 0.55% | 2.50% | 0.55% | 23.94% | ||||||||||||||||||||||||||||||||||||
| Class B Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.60 | 0.10 | 0.26 | 0.36 | (0.09 | ) | (0.18 | ) | (0.27 | ) | $ | 10.69 | 3.51% | $ | 400,106 | 1.23% | 0.93% | 1.23% | 39.16% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.36 | 0.12 | 0.30 | 0.42 | (0.11 | ) | (0.07 | ) | (0.18 | ) | $ | 10.60 | 4.15% | $ | 711,796 | 1.23% | 1.18% | 1.23% | 15.75% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 10.21 | 0.14 | 0.14 | 0.28 | (0.13 | ) | – | (0.13 | ) | $ | 10.36 | 2.75% | $ | 1,108,932 | 1.24% | 1.37% | 1.24% | 17.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.79 | 0.17 | 0.40 | 0.57 | (0.15 | ) | – | (0.15 | ) | $ | 10.21 | 5.90% | $ | 1,741,629 | 1.23% | 1.70% | 1.23% | 15.48% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 9.27 | 0.17 | 0.65 | 0.82 | (0.17 | ) | (0.13 | ) | (0.30 | ) | $ | 9.79 | 9.14% | $ | 2,821,364 | 1.23% | 1.84% | 1.23% | 23.94% | ||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.51 | 0.09 | 0.27 | 0.36 | (0.11 | ) | (0.18 | ) | (0.29 | ) | $ | 10.58 | 3.49% | $ | 50,139,130 | 1.23% | 0.87% | 1.23% | 39.16% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.28 | 0.12 | 0.30 | 0.42 | (0.12 | ) | (0.07 | ) | (0.19 | ) | $ | 10.51 | 4.17% | $ | 43,051,481 | 1.23% | 1.17% | 1.23% | 15.75% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 10.15 | 0.14 | 0.13 | 0.27 | (0.14 | ) | – | (0.14 | ) | $ | 10.28 | 2.63% | $ | 33,770,729 | 1.24% | 1.33% | 1.24% | 17.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.74 | 0.16 | 0.41 | 0.57 | (0.16 | ) | – | (0.16 | ) | $ | 10.15 | 5.92% | $ | 33,490,120 | 1.23% | 1.64% | 1.23% | 15.48% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 9.23 | 0.17 | 0.65 | 0.82 | (0.18 | ) | (0.13 | ) | (0.31 | ) | $ | 9.74 | 9.13% | $ | 31,268,010 | 1.24% | 1.81% | 1.24% | 23.94% | ||||||||||||||||||||||||||||||||||||
| Class R2 Shares(d) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.52 | 0.13 | 0.27 | 0.40 | (0.14 | ) | (0.18 | ) | (0.32 | ) | $ | 10.60 | 3.92% | $ | 58,782,811 | 0.88% | 1.24% | 0.88% | 39.16% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.29 | 0.16 | 0.30 | 0.46 | (0.16 | ) | (0.07 | ) | (0.23 | ) | $ | 10.52 | 4.52% | $ | 64,893,180 | 0.88% | 1.52% | 0.88% | 15.75% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 10.15 | 0.17 | 0.14 | 0.31 | (0.17 | ) | – | (0.17 | ) | $ | 10.29 | 3.10% | $ | 60,593,403 | 0.88% | 1.67% | 0.88% | 17.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.75 | 0.19 | 0.41 | 0.60 | (0.20 | ) | – | (0.20 | ) | $ | 10.15 | 6.31% | $ | 53,173,161 | 0.87% | 1.96% | 0.87% | 15.48% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 9.24 | 0.20 | 0.66 | 0.86 | (0.22 | ) | (0.13 | ) | (0.35 | ) | $ | 9.75 | 9.44% | $ | 38,324,442 | 0.87% | 2.14% | 0.87% | 23.94% | ||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.59 | 0.20 | 0.27 | 0.47 | (0.21 | ) | (0.18 | ) | (0.39 | ) | $ | 10.67 | 4.58% | $ | 63,938,645 | 0.23% | 1.86% | 0.23% | 39.16% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.36 | 0.23 | 0.30 | 0.53 | (0.23 | ) | (0.07 | ) | (0.30 | ) | $ | 10.59 | 5.16% | $ | 47,775,938 | 0.23% | 2.16% | 0.23% | 15.75% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 10.22 | 0.24 | 0.14 | 0.38 | (0.24 | ) | – | (0.24 | ) | $ | 10.36 | 3.75% | $ | 36,683,488 | 0.24% | 2.31% | 0.24% | 17.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.81 | 0.25 | 0.42 | 0.67 | (0.26 | ) | – | (0.26 | ) | $ | 10.22 | 6.94% | $ | 26,174,857 | 0.23% | 2.54% | 0.23% | 15.48% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 9.29 | 0.26 | 0.66 | 0.92 | (0.27 | ) | (0.13 | ) | (0.40 | ) | $ | 9.81 | 10.24% | $ | 10,218,039 | 0.24% | 2.78% | 0.24% | 23.94% | ||||||||||||||||||||||||||||||||||||
| Service Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2013 (c) | $ | 10.57 | 0.16 | 0.27 | 0.43 | (0.17 | ) | (0.18 | ) | (0.35 | ) | $ | 10.65 | 4.16% | $ | 194,028,941 | 0.63% | 1.49% | 0.63% | 39.16% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2012 (c) | $ | 10.34 | 0.18 | 0.30 | 0.48 | (0.18 | ) | (0.07 | ) | (0.25 | ) | $ | 10.57 | 4.75% | $ | 221,292,727 | 0.63% | 1.77% | 0.63% | 15.75% | ||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2011 (c) | $ | 10.20 | 0.20 | 0.14 | 0.34 | (0.20 | ) | – | (0.20 | ) | $ | 10.34 | 3.35% | $ | 218,800,000 | 0.64% | 1.93% | 0.64% | 17.28% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2010 (c) | $ | 9.79 | 0.22 | 0.41 | 0.63 | (0.22 | ) | – | (0.22 | ) | $ | 10.20 | 6.52% | $ | 208,433,654 | 0.62% | 2.25% | 0.62% | 15.48% | |||||||||||||||||||||||||||||||||||||
Year Ended October 31, 2009 (c) | $ | 9.27 | 0.23 | 0.65 | 0.88 | (0.23 | ) | (0.13 | ) | (0.36 | ) | $ | 9.79 | 9.85% | $ | 197,458,875 | 0.65% | 2.41% | 0.65% | 23.94% | ||||||||||||||||||||||||||||||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Excludes sales charge. |
| (b) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (c) | Per share calculations were performed using average shares method. |
| (d) | Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. |
The accompanying notes are an integral part of these financial statements.
73
October 31, 2013
1. Organization
Nationwide Mutual Funds (the “Trust”) is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, organized as a statutory trust under the laws of the State of Delaware. The Trust has authorized an unlimited number of shares of beneficial interest (“shares”), without par value. As of October 31, 2013, the Trust operates fifty-three (53) separate series, or mutual funds, each with its own investment objective(s) and strategies. This report contains the financial statements and financial highlights of the five (5) series listed below (each, a “Fund”; collectively, the “Funds”).
- Nationwide Investor Destinations Aggressive Fund (“Investor Destinations Aggressive”)
- Nationwide Investor Destinations Moderately Aggressive Fund (“Investor Destinations Moderately Aggressive”)
- Nationwide Investor Destinations Moderate Fund (“Investor Destinations Moderate”)
- Nationwide Investor Destinations Moderately Conservative Fund (“Investor Destinations Moderately Conservative”)
- Nationwide Investor Destinations Conservative Fund (“Investor Destinations Conservative”)
Each of the Funds is constructed as a “fund-of-funds,” which means that each of the Funds pursues its investment objective by allocating its investments primarily among other affiliated series of the Trust (“Underlying Funds”). The Underlying Funds typically invest, either directly or indirectly, in stocks, bonds, and other securities. Each of the Funds may also invest in an unregistered fixed interest contract (the “Nationwide Contract”) issued by Nationwide Life Insurance Company (“Nationwide Life”).
Each of the Funds is a non-diversified fund, as defined in the 1940 Act.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements requires Fund management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses for the period. The Funds utilize various methods to measure the value of their investments on a recurring basis. Amounts received upon the sale of such investments could differ from those estimated values and those differences could be material.
| (a) | Security Valuation |
The fair market value of a Fund’s investments in its Underlying Funds and the Nationwide Contract is determined in accordance with the procedures described below. U.S. GAAP defines fair market value as the price that a Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trust’s investment adviser, Nationwide Fund Advisors (“NFA”), to the Funds assigns a fair value to a Fund’s investments in accordance with a hierarchy that prioritizes the various types of inputs used to measure fair value. The hierarchy gives the highest priority to readily available unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements) when market prices are not readily available or reliable.
The three levels of the hierarchy are summarized below.
| — | Level 1 — Quoted prices in active markets for identical assets |
| — | Level 2 — Other significant observable inputs (including quoted prices of similar securities, interest rates, prepayment speeds, credit risk, etc.) |
| — | Level 3 — Significant unobservable inputs (including a Fund’s own assumptions in determining the fair value of investments) |
74
Notes to Financial Statements (Continued)
October 31, 2013
Changes in valuation techniques may result in transfers into or out of an investment’s assigned level within the hierarchy.
An investment’s categorization within the hierarchy is based on the lowest level of any input that is significant to the fair valuation in its entirety. The inputs or methodology used to value investments are not intended to indicate the risk associated with investing in those investments.
Shares of registered open-end Underlying Funds in which a Fund invests are valued at their respective net asset value (“NAV”) as reported by such Underlying Fund. Investments valued in this manner are generally categorized as Level 1 investments within the hierarchy.
Each of the Funds (except Investor Destinations Aggressive) currently invests in the Nationwide Contract. The Nationwide Contract is a fixed interest rate contract issued and guaranteed by Nationwide Life. This contract has a stable principal value and pays a Fund a rate of interest, which is currently adjusted on a quarterly basis. During the year ended October 31, 2013, the rate ranged from 3.50%, the minimum annual rate, to 3.55%. Because the contract is guaranteed by Nationwide Life, assuming no default, a Fund receives no more or less than the guaranteed principal amount. Each Fund can redeem all or a portion of its investment in the Nationwide Contract on a daily basis at par. The par value is calculated each day by the summation of the following factors: (i) prior day’s par value; (ii) prior day’s interest accrued (par multiplied by guaranteed fixed rate); and (iii) current day net purchase or redemption.
At October 31, 2013, 100% of the market value of Investor Destinations Aggressive was determined based on Level 1 inputs.
The following tables provide a summary of the inputs used to value the Funds’ net assets as of October 31, 2013. Please refer to the Statements of Investments for additional information on portfolio holdings.
Investor Destinations Moderately Aggressive
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Fixed Contract | $ | — | $ | 39,899,967 | $ | — | $ | 39,899,967 | ||||||||
Mutual Funds | 1,995,348,194 | — | — | 1,995,348,194 | ||||||||||||
Total Assets | $ | 1,995,348,194 | $ | 39,899,967 | $ | — | $ | 2,035,248,161 | ||||||||
Investor Destinations Moderate
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Fixed Contract | $ | — | $ | 139,475,697 | $ | — | $ | 139,475,697 | ||||||||
Mutual Funds | 1,619,840,769 | — | — | 1,619,840,769 | ||||||||||||
Total Assets | $ | 1,619,840,769 | $ | 139,475,697 | $ | — | $ | 1,759,316,466 | ||||||||
Investor Destinations Moderately Conservative
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Fixed Contract | $ | — | $ | 87,005,416 | $ | — | $ | 87,005,416 | ||||||||
Mutual Funds | 493,137,352 | — | — | 493,137,352 | ||||||||||||
Total Assets | $ | 493,137,352 | $ | 87,005,416 | $ | — | $ | 580,142,768 | ||||||||
75
Notes to Financial Statements (Continued)
October 31, 2013
Investor Destinations Conservative
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Fixed Contract | $ | — | $ | 94,283,195 | $ | — | $ | 94,283,195 | ||||||||
Mutual Funds | 334,341,479 | — | — | 334,341,479 | ||||||||||||
Total Assets | $ | 334,341,479 | $ | 94,283,195 | $ | — | $ | 428,624,674 | ||||||||
Amounts designated as “—” are zero or have been rounded to zero.
| During | the year ended October 31, 2013, there were no transfers into or out of Level 1, Level 2 or Level 3. |
The following are the valuation policies of the affiliated Underlying Funds:
Securities for which market quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time). Equity securities are generally valued at the last quoted sale price or official closing price, or, if there is no such price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees (the “Board of Trustees”). Prices are taken from the primary market or exchange on which each security trades. Shares of registered open-end management investment companies are valued at NAV as reported by such company. Investments valued in this manner are generally categorized as Level 1 investments within the hierarchy.
The Board of Trustees has delegated authority to NFA, and the Trust’s administrator, Nationwide Fund Management LLC (“NFM”), to assign fair value. NFA and NFM have established a Fair Valuation Committee (“FVC”) to assign these fair valuations.
The FVC follows guidelines approved by the Board of Trustees to assign the fair value. The fair value of a security may differ from its quoted or published price. Fair valuation of portfolio securities may occur on a daily basis.
Securities may be fair valued in a variety of circumstances, such as where (i) market quotations are not readily available; (ii) an independent pricing service does not provide a value or the value provided by an independent pricing service is determined to be unreliable in the judgment of NFA or its designee; (iii) a significant event has occurred that affects the value of a Fund’s securities after trading has stopped (e.g., earnings announcements or news relating to natural disasters affecting an issuer’s operations); (iv) the securities are illiquid; (v) the securities have defaulted or been delisted from an exchange and are no longer trading; or (vi) any other circumstance in which the FVC believes that market quotations do not accurately reflect the value of a security.
The fair valuation of securities takes into account relevant factors and surrounding circumstances, including, but not limited to, the prices of related or comparable assets or liabilities, recent transactions, market multiples, anticipated cash flows, the nature and duration of any restrictions on transfer, book values, and other information relevant to the investment. Methods utilized to determine fair value may include, among others, the following: (i) a multiple of earnings; (ii) the discount from market value of a similar, freely traded security; (iii) the yield-to-maturity for debt issues; or (iv) a combination of these and other methods. Fair valuations may also take into account significant events that occur before Valuation Time but after the close of the principal market on which a security trades that materially affect the value of such security. The FVC monitors the results of fair valuation determinations and regularly reports the results to the Board of Trustees.
Securities listed on a foreign exchange are generally fair valued by an independent fair value pricing service approved by the Board of Trustees or otherwise are valued at the last sale price at the close of the exchange on which the security is principally traded. Securities valued in this manner are generally categorized as Level 2 and Level 1 investments, respectively, within the hierarchy. Fair valuation factors are provided by an independent pricing service provider. When fair valuation factors are utilized, the value assigned to securities may not be the same as quoted or published prices of the securities on their primary markets. Values of foreign securities, currencies, and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of said currencies against the U.S. dollar, as of Valuation Time, as provided by an independent pricing service approved by the Board of Trustees.
76
Notes to Financial Statements (Continued)
October 31, 2013
Debt and other fixed-income securities are generally valued at the bid evaluation price provided by an independent pricing service as approved by the Board of Trustees. Independent pricing service providers may use broken-dealer quotations, reported trades or valuation estimates from their internal pricing models. The service providers’ internal models use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar assets and are generally categorized as Level 2 investments within the hierarchy.
| (b) | Security Transactions and Investment Income |
Security transactions are accounted for on the date the security is purchased or sold. Security gains and losses are calculated on the identified cost basis. Dividend income received from the Underlying Funds is recognized on the ex-dividend date and is recorded as income on the Statement of Operations. Capital gain distributions received from the Underlying Funds are recognized on ex-dividend date and are recorded on the Statement of Operations as such. Interest income is recognized on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts.
| (c) | Distributions to Shareholders |
Distributions from net investment income, if any, are declared and paid quarterly. Distributions from net realized capital gains, if any, are declared and distributed at least annually. All distributions are recorded on the ex-dividend date.
Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. These “book/tax” differences are considered either permanent or temporary. Permanent differences are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. The permanent differences as of October 31, 2013 are primarily attributable to capital distributions from Underlying Funds. These reclassifications have no effect upon the NAV of the respective Funds. Any distribution in excess of current and accumulated earnings and profits for federal income tax purposes is reported as a “return of capital” distribution.
| (d) | Federal Income Taxes |
Each Fund elected to be treated as, and intends to qualify each year as, a “Regulated Investment Company” (“RIC”) by complying with the provisions available to certain investment companies under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended, and to make distributions of net investment income and net realized capital gains sufficient to relieve a Fund from all, or substantially all, federal income taxes. Therefore, no federal income tax provision is required.
A Fund recognizes a tax benefit from an uncertain position only if it is more likely than not that the position is sustainable, based solely on its technical merits and consideration of the relevant taxing authorities’ widely understood administrative practices and precedents. Each Fund undertakes an affirmative evaluation of tax positions taken or expected to be taken in the course of preparing tax returns to determine whether it is more likely than not (i.e., greater than 50 percent) that each tax position will be sustained upon examination by a taxing authority based on the technical merits of the position. If such a tax position taken by a Fund is not sustained upon examination by a taxing authority, that Fund could incur taxes and penalties related to that position, and those amounts could be material. A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefits to recognize in the financial statements. Differences result in an increase in a liability for taxes payable (or a reduction of a tax refund receivable) and an increase in a deferred tax liability (or a reduction in a deferred tax asset). Each Fund files U.S. federal income tax returns and, if applicable, returns in various foreign jurisdictions in which it invests. The last four tax year ends, or since inception (if shorter), and any interim tax period since then generally remain open for examination by taxing authorities.
The Funds engage in ongoing monitoring and analysis; future conclusions reached by management could be different and result in adjustments to a Fund’s NAV and financial statements. The Funds are not aware of any tax
77
Notes to Financial Statements (Continued)
October 31, 2013
positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
The Regulated Investment Company Modernization Act of 2010 (the “Modernization Act”) is effective in the current tax year.
| (e) | Allocation of Expenses, Income, and Gains and Losses |
Expenses directly attributable to a Fund are charged to that Fund. Expenses not directly attributable to a Fund are allocated proportionally among various or all series of the Trust. Income, fund level expenses, and realized and unrealized gains or losses are allocated to each class of shares of a Fund based on the value of the outstanding shares of that class relative to the total value of the outstanding shares of that Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that specific class.
3. Transactions with Affiliates
Under the terms of the Trust’s Investment Advisory Agreement, NFA manages the investments of the assets and supervises the daily business affairs of the Funds in accordance with policies and procedures established by the Board of Trustees. NFA is a wholly owned subsidiary of Nationwide Financial Services, Inc. (“NFS”), a holding company which is a direct wholly owned subsidiary of Nationwide Corporation. Each Fund pays NFA an investment advisory fee of 0.13% per year based on the Fund’s average daily net assets.
The Trust and NFA have entered into a written Expense Limitation Agreement that limits the Funds’ operating expenses (excluding Rule 12b-1 fees, administrative services fees, acquired fund fees and expenses, and certain other expenses) from exceeding 0.25% for each share class until February 28, 2014.
NFA may request and receive reimbursement from a Fund for advisory fees waived and other expenses reimbursed by NFA pursuant to the Expense Limitation Agreement at a date not to exceed three years from the month in which the corresponding waiver or reimbursement to a Fund was made. However, no reimbursement may be made unless: (i) a Fund’s assets exceed $100 million and (ii) the total annual expense ratio of the class making such reimbursement is no higher than the amount of the expense limitation that was in place at the time NFA waived the fees or reimbursed the expenses and does not cause the expense ratio to exceed the current expense limitation. Reimbursement by a Fund of amounts previously waived or assumed by NFA is not permitted except as provided for in the Expense Limitation Agreement. The Expense Limitation Agreement may be changed or eliminated only with the consent of the Board of Trustees.
As of October 31, 2013, the Funds had no cumulative potential reimbursements, and no amounts were reimbursed to NFA pursuant to the Expense Limitation Agreement during the year ended October 31, 2013.
NFM, a wholly owned subsidiary of NFS Distributors, Inc. (“NFSDI”) (a wholly owned subsidiary of NFS), provides various administrative and accounting services for the Funds, and serves as Transfer and Dividend Disbursing Agent for the Funds. NFM has entered into an agreement with a third-party service provider to provide certain sub-administration and sub-transfer agency services to the Funds. NFM pays the service provider a fee for these services.
Under the terms of a Joint Fund Administration and Transfer Agency Agreement, the fees for such services are based on the sum of the following: (i) the amount payable by NFM to its sub-administrator and sub-transfer agent; and (ii) a percentage of the combined average daily net assets of the Trust and Nationwide Variable Insurance Trust, a Delaware statutory trust and registered investment company that is affiliated with the Trust, according to the fee schedule below.
| Combined Fee Schedule | ||||
Up to $25 billion | 0.025 | % | ||
$25 billion and more | 0.020 | % | ||
During the year ended October 31, 2013, NFM received $1,652,866 in fees from the Funds under the Joint Fund Administration and Transfer Agency Agreement.
78
Notes to Financial Statements (Continued)
October 31, 2013
In addition, the Trust pays out-of-pocket expenses reasonably incurred by NFM in providing services to the Funds and the Trust, including, but not limited to, the cost of pricing services that NFM utilizes and networking fees paid to broker-dealers that provide sub-accounting and sub-transfer agency services to their customers who are Fund shareholders. Such services, which are not otherwise provided by NFM, generally include individual account maintenance and recordkeeping, dividend disbursement, responding to shareholder calls and inquiries, providing statements and transaction confirmations, tax reporting, and other shareholder services. Depending on the nature and quality of the services provided, fees for these services may range from $6 to $21 per customer per year.
Under the terms of the Joint Fund Administration and Transfer Agency Agreement and a letter agreement between NFM and the Trust, the Trust has agreed to reimburse NFM for certain costs related to the Funds’ portion of ongoing administration, monitoring and annual (compliance audit) testing of the Trust’s Rule 38a-1 Compliance Program subject to the pre-approval of the Trust’s Audit Committee. These costs are allocated among the series of the Trust based upon their relative net assets. For the year ended October 31, 2013, the Funds’ aggregate portion of such costs amounted to $20,959.
Under the terms of a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act, Nationwide Fund Distributors LLC (“NFD”), the Funds’ principal underwriter, is compensated by the Funds for expenses associated with the distribution of certain classes of shares of the Funds. NFD is a wholly owned subsidiary of NFSDI. These fees are based on average daily net assets of the respective class of the Funds at an annual rate of 0.25% of Class A shares, 1.00% of Class B shares, 1.00% of Class C shares, 0.50% of Class R2 shares, and 0.25% of Service Class shares of each Fund. Institutional Class shares do not pay a distribution fee.
Pursuant to an Underwriting Agreement, NFD serves as principal underwriter of the Funds in the continuous distribution of their shares and receives commissions in the form of a front-end sales charge on Class A shares. These fees are deducted from, and are not included in, proceeds from sales of Class A shares of the Funds. From these fees, NFD pays sales commissions, salaries and other expenses in connection with generating new sales of Class A shares of the Funds. Class A sales charges ranged from 0% to 5.75% based on the amount purchased. For the year ended October 31, 2013, the Funds imposed front-end sales charges of $1,292,415.
NFD also receives fees in the form of contingent deferred sales charges (“CDSCs”) on Class A, Class B and Class C shares. These fees may cause the redeemed value of a shareholder’s account to fall below the total purchase payments. A CDSC is imposed on Class A shares for certain redemptions, Class B shares made within 6 years of purchase, and Class C shares made within 1 year of purchase. Effective July 1, 2013, applicable Class A CDSCs were 1% based on the original purchase price or the current market value of the shares being redeemed. Prior to July 1, 2013, applicable Class A CDSCs ranged from 0.15% to 1.00% based on the original purchase price or the current market value of the shares being redeemed. Class B CDSCs ranged from 1% to 5% based on the original purchase price or the current market value of the shares being redeemed and depending on how long the shares were held before redemption. Class C CDSCs were 1% based on the original purchase price or the current market value of the shares being redeemed. For the year ended October 31, 2013, the Funds imposed CDSCs of $72,623.
Under the terms of an Administrative Services Plan, the Funds pay fees to servicing organizations, such as broker-dealers, including NFS, and financial institutions, that agree to provide administrative support services to the shareholders of certain classes. These services may include, but are not limited to, the following: (i) establishing and maintaining shareholder accounts; (ii) processing purchase and redemption transactions; (iii) arranging bank wires; (iv) performing shareholder sub-accounting; (v) answering inquiries regarding the Funds; and (vi) other such services. These fees are calculated at an annual rate of up to 0.25% of the average daily net assets of Class A, Class R2, and Service Class shares of each Fund.
79
Notes to Financial Statements (Continued)
October 31, 2013
For the year ended October 31, 2013, NFS earned the following amounts in administrative services fees from each Fund:
| Fund | Amount | |||
Investor Destinations Aggressive | $ | 1,439,187 | ||
Investor Destinations Moderately Aggressive | 2,212,297 | |||
Investor Destinations Moderate | 1,814,609 | |||
Investor Destinations Moderately Conservative | 618,230 | |||
Investor Destinations Conservative | 443,466 | |||
As of October 31, 2013, NFA or its affiliates directly held the percentage indicated below of the shares outstanding of the applicable Fund.
| Fund | % of Shares Outstanding Owned | |||
Investor Destinations Aggressive | 39.74 | % | ||
Investor Destinations Moderately Aggressive | 32.77 | |||
Investor Destinations Moderate | 26.58 | |||
Investor Destinations Moderately Conservative | 22.17 | |||
Investor Destinations Conservative | 16.58 | |||
Each Fund is a shareholder of its Underlying Funds. The Underlying Funds do not charge a Fund any sales charge for buying or selling Underlying Fund shares. However, a Fund indirectly pays a portion of the operating expenses of each Underlying Fund in which it invests, including management, administration and custodian fees of the Underlying Funds. These expenses are deducted from each Underlying Fund’s net assets before its share price is calculated and are in addition to the fees and expenses of the Fund. Actual indirect expenses vary depending on how a Fund’s assets are allocated among the Underlying Funds.
4. Investments in Affiliated Issuers
Each of the Funds invests in Institutional Class shares of the affiliated Underlying Funds, and each of the Funds (except Investor Destinations Aggressive) invests in the Nationwide Contract. The Funds’ transactions in the shares of Underlying Funds and in the Nationwide Contract during the year ended October 31, 2013 were as follows:
Investor Destinations Aggressive
| Affiliated Issuer | Market Value at October 31, 2012 | Purchases at Cost | Sales Proceeds | Dividend Income | Realized (Loss) | Market Value at October 31, | ||||||||||||||||||
Nationwide Alternative Allocation Fund | $ | — | $ | 121,975,549 | $ | 1,305,171 | $ | — | $ | (3,139 | ) | $ | 122,134,901 | |||||||||||
Nationwide International Index Fund | 315,196,764 | 21,131,721 | 74,133,349 | 10,904,275 | (28,879,178 | ) | 330,372,078 | |||||||||||||||||
Nationwide Mid Cap Market Index Fund | 155,662,995 | 10,560,468 | 40,034,656 | 2,243,639 | 8,864,299 | 172,329,310 | ||||||||||||||||||
Nationwide S&P 500 Index Fund | 414,518,630 | 22,929,267 | 139,747,654 | 7,817,355 | 25,822,338 | 393,912,196 | ||||||||||||||||||
Nationwide Small Cap Index Fund | 102,495,665 | 42,129,957 | 20,401,156 | 1,721,857 | 4,689,257 | 158,588,875 | ||||||||||||||||||
Nationwide Bond Index Fund | 53,994,823 | 11,333,832 | 38,678,895 | 1,370,431 | 967,195 | 24,203,719 | ||||||||||||||||||
Nationwide Core Plus Bond Fund | — | 24,128,579 | 178,234 | 43,482 | — | 24,091,538 | ||||||||||||||||||
80
Notes to Financial Statements (Continued)
October 31, 2013
Investor Destinations Moderately Aggressive
| Affiliated Issuer | Market Value at October 31, | Purchases at Cost | Sales Proceeds | Dividend/ Interest Income | Realized (Loss) | Market Value at October 31, | ||||||||||||||||||
Nationwide Alternatives Allocation Fund | $ | — | $ | 201,625,551 | $ | 2,051,607 | $ | — | $ | (4,948 | ) | $ | 202,018,670 | |||||||||||
Nationwide International Index Fund | 437,448,403 | 27,165,010 | 51,079,949 | 15,244,685 | (24,012,530 | ) | 510,006,859 | |||||||||||||||||
Nationwide Mid Cap Market Index Fund | 207,391,652 | 15,759,426 | 39,539,703 | 3,010,686 | 11,899,701 | 246,095,831 | ||||||||||||||||||
Nationwide S&P 500 Index Fund | 604,083,644 | 26,751,519 | 200,088,311 | 11,440,701 | 38,298,271 | 571,664,464 | ||||||||||||||||||
Nationwide Small Cap Index Fund | 136,557,290 | 46,961,182 | 26,286,186 | 2,311,822 | 8,205,396 | 203,217,452 | ||||||||||||||||||
Nationwide Ziegler Equity Income Fund | — | 20,050,594 | 125,082 | — | (211 | ) | 20,812,731 | |||||||||||||||||
Nationwide Bond Index Fund | 269,803,340 | 48,003,805 | 185,860,397 | 6,105,400 | 7,854,640 | 121,267,974 | ||||||||||||||||||
Nationwide Enhanced Income Fund | 44,657,508 | 3,295,844 | 47,646,737 | 338,720 | (984,336 | ) | — | |||||||||||||||||
Nationwide Inflation- Protected Securities Fund | — | 39,765,400 | 37,030,822 | 28,300 | (2,734,579 | ) | — | |||||||||||||||||
Nationwide Core Plus Bond Fund | — | 80,520,198 | 635,159 | 144,913 | — | 80,356,242 | ||||||||||||||||||
Nationwide HighMark Short Term Bond Fund | — | 40,146,135 | 317,575 | 44,932 | — | 39,907,971 | ||||||||||||||||||
Nationwide Fixed Contract | 44,763,100 | 2,120,640 | 8,613,596 | 1,561,784 | — | 39,899,967 | ||||||||||||||||||
Investor Destinations Moderate
| Affiliated Issuer | Market Value at October 31, | Purchases at Cost | Sales Proceeds | Dividend/ Interest Income | Realized (Loss) | Market Value at October 31, | ||||||||||||||||||
Nationwide Alternatives Allocation Fund | $ | — | $ | 173,666,919 | $ | 1,008,359 | $ | — | $ | (1,527 | ) | $ | 174,792,995 | |||||||||||
Nationwide International Index Fund | 251,649,184 | 46,022,108 | 35,945,838 | 8,736,326 | (6,983,507 | ) | 317,475,542 | |||||||||||||||||
Nationwide Mid Cap Market Index Fund | 155,340,707 | 13,807,912 | 38,145,417 | 2,249,057 | 9,875,217 | 177,472,824 | ||||||||||||||||||
Nationwide S&P 500 Index Fund | 449,939,392 | 21,845,438 | 220,109,893 | 8,461,909 | 34,940,565 | 353,759,541 | ||||||||||||||||||
Nationwide Small Cap Index Fund | 76,717,281 | 20,061,018 | 16,577,035 | 1,304,359 | 5,057,417 | 105,759,431 | ||||||||||||||||||
Nationwide Ziegler Equity Income Fund | — | 34,733,374 | — | — | — | 36,280,322 | ||||||||||||||||||
Nationwide Bond Index Fund | 388,060,827 | 57,251,043 | 202,797,526 | 8,580,152 | 13,762,921 | 228,107,895 | ||||||||||||||||||
Nationwide Core Plus Bond Fund | — | 69,592,753 | 180,462 | 125,992 | — | 69,821,494 | ||||||||||||||||||
Nationwide Enhanced Income Fund | 96,343,914 | 11,463,426 | 3,106,732 | 805,255 | (63,182 | ) | 104,149,878 | |||||||||||||||||
Nationwide Inflation-Protected Securities Fund | — | 73,256,437 | 16,422,718 | 51,392 | (1,244,033 | ) | 52,220,847 | |||||||||||||||||
Nationwide Money Market Fund | 32,061,473 | 2,063,387 | 34,124,861 | — | — | |||||||||||||||||||
Nationwide Fixed Contract | 128,760,576 | 11,594,432 | 5,698,277 | 4,598,481 | — | 139,475,697 | ||||||||||||||||||
81
Notes to Financial Statements (Continued)
October 31, 2013
Investor Destinations Moderately Conservative
| Affiliated Issuer | Market Value at October 31, | Purchases at Cost | Sales Proceeds | Dividend/ Interest Income | Realized (Loss) | Market Value at October 31, | ||||||||||||||||||
Nationwide Alternatives Allocation Fund | $ | — | $ | 57,551,030 | $ | 415,130 | $ | — | $ | 2,470 | $ | 57,845,236 | ||||||||||||
Nationwide International Index Fund | 54,191,551 | 4,809,889 | 12,651,464 | 1,865,871 | 3,939,732 | 58,008,986 | ||||||||||||||||||
Nationwide Mid Cap Market Index Fund | 32,114,861 | 8,601,086 | 9,613,170 | 459,675 | 5,380,996 | 40,767,621 | ||||||||||||||||||
Nationwide S&P 500 Index Fund | 117,628,259 | 9,702,535 | 77,800,637 | 2,186,398 | 29,472,748 | 75,357,231 | ||||||||||||||||||
Nationwide Small Cap Index Fund | 10,574,447 | 6,090,302 | 2,721,437 | 179,683 | 1,001,361 | 17,469,881 | ||||||||||||||||||
Nationwide Ziegler Equity Income Fund | — | 17,265,300 | 407,680 | — | 13,947 | 17,622,990 | ||||||||||||||||||
Nationwide Bond Index Fund | 183,856,193 | 24,597,069 | 85,613,684 | 3,991,013 | 5,620,952 | 116,212,668 | ||||||||||||||||||
Nationwide Core Plus Bond Fund | — | 23,062,174 | 50,733 | 41,768 | — | 23,147,099 | ||||||||||||||||||
Nationwide Enhanced Income Fund | 55,328,260 | 5,792,111 | 2,935,488 | 457,729 | (62,893 | ) | 57,868,703 | |||||||||||||||||
Nationwide Inflation-Protected Securities Fund | — | 37,655,734 | 6,410,892 | 26,704 | (473,073 | ) | 28,836,937 | |||||||||||||||||
Nationwide Money Market Fund | 16,570,919 | 1,202,732 | 17,773,651 | — | — | — | ||||||||||||||||||
Nationwide Fixed Contract | 77,640,289 | 12,198,785 | 5,561,534 | 2,749,038 | — | 87,005,416 | ||||||||||||||||||
Investor Destinations Conservative
| Affiliated Issuer | Market Value at October 31, | Purchases at Cost | Sales Proceeds | Dividend/ Interest Income | Realized (Loss) | Market Value at October 31, | ||||||||||||||||||
Nationwide Alternatives Allocation Fund | $ | — | $ | 34,345,822 | $ | 549,429 | $ | — | $ | 2,621 | $ | 34,217,041 | ||||||||||||
Nationwide International Index Fund | 21,059,266 | 3,484,960 | 11,828,791 | 711,609 | 2,180,781 | 17,084,155 | ||||||||||||||||||
Nationwide Mid Cap Market Index Fund | 12,480,268 | 2,269,770 | 5,494,851 | 176,473 | 1,875,757 | 12,890,163 | ||||||||||||||||||
Nationwide S&P 500 Index Fund | 49,863,348 | 8,126,474 | 46,982,723 | 907,905 | 16,417,319 | 21,395,946 | ||||||||||||||||||
Nationwide Small Cap Index Fund | — | 4,302,442 | 123,836 | — | 3,057 | 4,285,359 | ||||||||||||||||||
Nationwide Ziegler Equity Income Fund | — | 17,274,221 | 888,395 | — | 22,377 | 17,140,875 | ||||||||||||||||||
Nationwide Bond Index Fund | 173,172,124 | 23,749,522 | 79,377,759 | 3,623,087 | 5,699,829 | 111,674,964 | ||||||||||||||||||
Nationwide Core Plus Bond Fund | — | 12,899,777 | 45,175 | 23,350 | 22 | 12,930,405 | ||||||||||||||||||
Nationwide Enhanced Income Fund | 60,191,836 | 6,968,729 | 6,868,852 | 487,114 | (138,172 | ) | 59,954,344 | |||||||||||||||||
Nationwide Inflation-Protected Securities Fund | — | 39,777,715 | 3,141,522 | 27,976 | (158,904 | ) | 34,217,041 | |||||||||||||||||
Nationwide Money Market Fund | 21,461,542 | 1,954,833 | 14,865,189 | — | — | 8,551,186 | ||||||||||||||||||
Nationwide Fixed Contract | 90,496,673 | 12,572,220 | 11,970,311 | 3,117,863 | — | 94,283,195 | ||||||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
Further information about each affiliated Underlying Fund (excluding the Nationwide Contract, which is not a mutual fund) may be found in such Underlying Fund’s most recent annual report to shareholders, which is available at www.nationwide.com/mutualfunds.
5. Bank Loans and Earnings Credit
The Trust has a credit agreement with JPMorgan Chase Bank, N.A. (“JPMorgan”), The Bank of New York Mellon, Wells Fargo Bank National Association, and U.S. Bank National Association, permitting the Trust to borrow up to $100,000,000. Advances taken by a Fund under this arrangement would be primarily for temporary or emergency purposes, including
82
Notes to Financial Statements (Continued)
October 31, 2013
the meeting of redemption requests that otherwise might require the untimely disposition of securities, and are subject to a Fund’s borrowing restrictions. The line of credit requires a commitment fee of 0.07% per year on $100,000,000. Prior to July 18, 2013, the line of credit required a commitment fee of 0.08% on $90,000,000. Borrowings under this arrangement bear interest at a rate of 1.00% per annum plus the higher of (a) the one month London Interbank Offered Rate or (b) the Federal Funds Rate. Interest costs, if any, would be shown on the Statement of Operations. No compensating balances are required under the terms of the line of credit. The line of credit is renewed annually, and next expires on July 17, 2014. There were no borrowings under the line of credit during the year ended October 31, 2013.
JPMorgan provides earnings credits for cash balances maintained in a Fund’s custody accounts, which are used to offset custody fees of a Fund.
6. Investment Transactions
For the year ended October 31, 2013, purchases and sales of investments (excluding short-term securities) were as follows:
| Fund | Purchases | Sales | ||||||
Investor Destinations Aggressive | $ | 254,189,373 | $ | 300,447,130 | ||||
Investor Destinations Moderately Aggressive | 552,165,304 | 578,663,913 | ||||||
Investor Destinations Moderate | 535,358,247 | 558,293,101 | ||||||
Investor Destinations Moderately Conservative | 208,528,747 | 217,958,542 | ||||||
Investor Destinations Conservative | 167,726,485 | 180,017,098 | ||||||
7. Portfolio Investment Risks from Underlying Funds
Information about the risks of an investment in each affiliated Underlying Fund may be found in such Underlying Fund’s annual report to shareholders, which is available at www.nationwide.com/mutualfunds. Additional information about derivatives-related risks, if applicable to the Fund, may also be found in each such Underlying Fund’s annual report to shareholders.
8. Indemnifications
Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into indemnification agreements with its Trustees and certain of its Officers. Trust Officers receive no compensation from the Trust for serving as its Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum liability under these arrangements is unknown, as this would involve future claims made against the Trust. Based on experience, however, the Trust expects the risk of loss to be remote.
9. New Accounting Pronouncements
In January 2013, Accounting Standards Update 2013-01 (“ASU 2013-01”), Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, replaced Accounting Standards Update 2011-11 (“ASU 2011-11”), Disclosures about Offsetting Assets and Liabilities. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. ASU 2011-11 was intended to enhance disclosure requirements on the offsetting of financial assets and liabilities. ASU 2013-01 limits the scope of the new balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are (i) offset in the financial statements or (ii) subject to an enforceable master netting arrangement or similar agreement. Management is currently evaluating the application of ASU 2013-01 and its impact, if any, on the Funds’ financial statements.
83
Notes to Financial Statements (Continued)
October 31, 2013
10. Other
As of October 31, 2013, the Funds had individual shareholder accounts and/or omnibus shareholder accounts (comprising a group of individual shareholders), which held more than 10% of the total shares outstanding of the Funds as detailed below.
| Fund | % of Shares | Number of Accounts | ||||||
Investor Destinations Aggressive | 49.13 | % | 3 | |||||
Investor Destinations Moderately Aggressive | 57.59 | 4 | ||||||
Investor Destinations Moderate | 52.71 | 4 | ||||||
Investor Destinations Moderately Conservative | 47.70 | 3 | ||||||
Investor Destinations Conservative | 45.68 | 3 | ||||||
11. Federal Tax Information
The tax character of distributions paid during the year ended October 31, 2013 was as follows:
| Distributions paid from | ||||||||||||||||||||
| Fund | Ordinary Income | Net Long-Term Capital Gains | Total Taxable Distributions | Return of Capital | Total Distributions Paid | |||||||||||||||
Investor Destinations Aggressive | $ | 18,185,199 | $ | 11,401,352 | $ | 29,586,551 | $— | $ | 29,586,551 | |||||||||||
Investor Destinations Moderately Aggressive | 30,325,630 | 11,352,672 | 41,678,302 | — | 41,678,302 | |||||||||||||||
Investor Destinations Moderate | 26,286,237 | 7,290,440 | 33,576,677 | — | 33,576,677 | |||||||||||||||
Investor Destinations Moderately Conservative | 8,909,091 | 7,686,149 | 16,595,240 | — | 16,595,240 | |||||||||||||||
Investor Destinations Conservative | 6,624,660 | 7,448,555 | 14,073,215 | — | 14,073,215 | |||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
The tax character of distributions paid during the year ended October 31, 2012 was as follows:
| Distributions paid from | ||||||||||||||||||||
| Fund | Ordinary Income | Net Long-Term Capital Gains | Total Taxable Distributions | Return of Capital | Total Distributions Paid | |||||||||||||||
Investor Destinations Aggressive | $ | 14,142,605 | $ | 2,397,745 | $ | 16,540,350 | $ | — | $ | 16,540,350 | ||||||||||
Investor Destinations Moderately Aggressive | 25,832,370 | 11,068,715 | 36,901,085 | — | 36,901,085 | |||||||||||||||
Investor Destinations Moderate | 24,165,037 | 8,652,237 | 32,817,274 | — | 32,817,274 | |||||||||||||||
Investor Destinations Moderately Conservative | 8,834,306 | 5,176,357 | 14,010,663 | — | 14,010,663 | |||||||||||||||
Investor Destinations Conservative | 6,946,832 | 2,598,917 | 9,545,749 | — | 9,545,749 | |||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
84
Notes to Financial Statements (Continued)
October 31, 2013
As of October 31, 2013, the components of accumulated earnings/(deficit) on a tax basis were as follows:
| Fund | Undistributed Ordinary Income | Undistributed Long-Term Capital Gains | Accumulated Earnings | Distributions Payable | Accumulated Capital and Other Losses | Unrealized Appreciation/ (Depreciation)* | Total Accumulated Earnings (Deficit) | |||||||||||||||||||||
Investor Destinations Aggressive | $ | 82,090 | $ | 16,531,421 | $ | 16,613,511 | $ | — | $ | — | $ | 223,805,532 | $ | 240,419,043 | ||||||||||||||
Investor Destinations Moderately Aggressive | 626,817 | 43,453,809 | 44,080,626 |
| — |
| — | 341,247,403 | 385,328,029 | |||||||||||||||||||
Investor Destinations Moderate | 1,247,266 | 55,098,283 | 56,345,549 | — | — | 249,351,853 | 305,697,402 | |||||||||||||||||||||
Investor Destinations Moderately Conservative | 661,891 | 39,396,269 | 40,058,160 | — | — | 30,993,726 | 71,051,886 | |||||||||||||||||||||
Investor Destinations Conservative | 678,628 | 20,979,258 | 21,657,886 | — | — | 4,243,769 | 25,901,655 | |||||||||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
| * | The difference between book-basis and tax-basis unrealized appreciation/(depreciation) is primarily attributable to timing differences in recognizing certain gains and losses on investment transactions. |
As of April 30, 2013, the tax cost of securities and the breakdown of unrealized appreciation/(depreciation) for each Fund was as follows:
| Fund | Tax Cost of Securities | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation/ (Depreciation) | ||||||||||||
Investor Destinations Aggressive | $ | 1,001,827,085 | $ | 232,933,971 | $ | (9,128,439 | ) | $ | 223,805,532 | |||||||
Investor Destinations Moderately Aggressive | 1,694,000,758 | 360,634,703 | (19,387,300 | ) | 341,247,403 | |||||||||||
Investor Destinations Moderate | 1,509,964,613 | 261,410,029 | (12,058,176 | ) | 249,351,853 | |||||||||||
Investor Destinations Moderately Conservative | 549,149,042 | 37,732,569 | (6,738,843 | ) | 30,993,726 | |||||||||||
Investor Destinations Conservative | 424,380,905 | 10,743,121 | (6,499,352 | ) | 4,243,769 | |||||||||||
12. Subsequent Events
Effective on or about February 21, 2014, the existing Class B shares of the Funds will be converted to Class A shares of the same Fund. Class B shares will no long be offered as of the same date.
Management has evaluated the impact of subsequent events on the Funds and has determined that there are no additional subsequent events requiring recognition or disclosure in the financial statements.
85
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of Nationwide Mutual Funds:
In our opinion, the accompanying statements of assets and liabilities, including the statements of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Nationwide Investor Destinations Aggressive Fund, Nationwide Investor Destinations Moderately Aggressive Fund, Nationwide Investor Destinations Moderate Fund, Nationwide Investor Destinations Moderately Conservative Fund, and Nationwide Investor Destinations Conservative Fund (five series of Nationwide Mutual Funds, hereafter referred to as the “Funds”) at October 31, 2013, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2013 by correspondence with the underlying funds’ transfer agent and fixed contract issuer, provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 23, 2013
86
October 31, 2013 (Unaudited)
Other Federal Tax Information
For the year ended October 31, 2013, certain dividends paid by the Funds may be subject to a maximum tax rate of 20% as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Funds intend to designate the maximum amount allowable as taxed at a maximum rate of 15%. Complete information will be reported in conjunction with your 2013 Form 1099-DIV.
For the taxable year ended October 31, 2013, the following percentages of income dividends paid by the Funds qualify for the dividends received deduction available to corporations:
| Fund | Dividends Received Deductions | |||
Investor Destinations Aggressive | 100.00 | % | ||
Investor Destinations Moderately Aggressive | 49.26 | |||
Investor Destinations Moderate | 7.93 | |||
Investor Destinations Moderately Conservative | 30.03 | |||
Investor Destinations Conservative | 16.06 | |||
The Funds designate the following amounts, or the maximum amount allowable under the Internal Revenue Code, as long term capital gain distributions qualifying for the maximum 20% income tax rate for individuals:
| Fund | Amount | |||
Investor Destinations Aggressive | $ | 11,401,352 | ||
Investor Destinations Moderately Aggressive | 11,352,672 | |||
Investor Destinations Moderate | 7,290,400 | |||
Investor Destinations Moderately Conservative | 7,686,149 | |||
Investor Destinations Conservative | 7,448,555 | |||
Certain Funds have derived net income from sources within foreign countries. As of October 31, 2013, the foreign source income for each Fund was as follows:
| Fund | Amount | Per Share | ||||||
Investor Destinations Aggressive | $ | 10,904,274 | $ | 0.0978 | ||||
Investor Destinations Moderately Aggressive | 15,244,685 | 0.0849 | ||||||
Investor Destinations Moderate | 6,658,691 | 0.0424 | ||||||
Investor Destinations Moderately Conservative | 135,000 | 0.0026 | ||||||
Investor Destinations Conservative | 579,783 | 0.0144 | ||||||
Certain Funds intend to elect to pass through to shareholders the income tax credit for taxes paid to foreign countries. As of October 31, 2013, the foreign tax credit for each Fund was as follows:
| Fund | Amount | Per Share | ||||||
Investor Destinations Aggressive | $ | 361,379 | $ | 0.0032 | ||||
Investor Destinations Moderately Aggressive | 505,226 | 0.0028 | ||||||
Investor Destinations Moderate | 179,570 | 0.0011 | ||||||
Investor Destinations Moderately Conservative | 38,521 | 0.0007 | ||||||
Investor Destinations Conservative | 15,165 | 0.0004 | ||||||
87
October 31, 2013
Trustees and Officers of the Trust
The address for each Trustee is: c/o Nationwide Funds Group, 1000 Continental Drive, Suite 400, King of Prussia, PA 19406.
| Name and Year of Birth | Position(s) Held with the Trust and Length of Time Served1,2 | Principal Occupation(s) During Past Five Years (or longer)3 | Number of Portfolios in the Nationwide Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During Past Five Years4 | ||||||
Charles E. Allen 1948 | Trustee since July 2000 | Mr. Allen was Chairman, Chief Executive Officer and President of Graimark Realty Advisors, Inc. (real estate development, investment and asset management) from its founding in 1987 to 2012. | 112 | None | ||||||
Paula H.J. Cholmondeley 1947 | Trustee since July 2000 | Ms. Cholmondeley focuses full time on corporate governance. She sits on public company boards and is also on the faculty of the National Association of Corporate Directors. She has served as a Chief Executive Officer of Sorrel Group (management consulting company) since January 2004. From April 2000 through December 2003, Ms. Cholmondeley was Vice President and General Manager of Sappi Fine Paper North America. | 112 | Director of Dentsply International, Inc. (dental products) from 2002 to present, Ultralife Batteries, Inc. from 2004 to 2010, Albany International Corp. (paper industry) from 2005 to 2013, Terex Corporation (construction equipment) from 2004 to present, and Minerals Technology, Inc. (specialty chemicals) from 2005 to present. | ||||||
Phyllis Kay Dryden 1947 | Trustee since December 2004 | Ms. Dryden became CEO and President of Energy Dispute Solutions, LLC in January 2013, leading a company providing strategy consulting, arbitration and mediation services. She has been a management consultant since 1996, first as a partner of Mitchell Madison Group, then as a managing partner and head of west coast business development for marchFIRST, returning to Mitchell Madison Group in 2003 as an associated partner until January 2010 and thereafter as an independent strategy consultant through December 2012. Ms. Dryden was VP and General Counsel of Lucasfilm, Ltd. from 1981 to 1984, SVP and General Counsel of Charles Schwab and Co., Inc. from 1984 to 1992, and EVP and General Counsel of Del Monte Foods from 1992 to 1995. | 112 | None | ||||||
88
Management Information (Continued)
October 31, 2013
The address for each Trustee is: c/o Nationwide Funds Group, 1000 Continental Drive, Suite 400, King of Prussia, PA 19406.
| Name and Year of Birth | Position(s) Held with the Trust and Length of Time Served1,2 | Principal Occupation(s) During Past Five Years (or longer)3 | Number of Portfolios in the Nationwide Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During Past Five Years4 | ||||||
Barbara L. Hennigar 1935 | Trustee since July 2000 | Ms. Hennigar was Executive Vice President of Oppenheimer Funds (an asset management company) from October 1992 until June 2000; Chairman of Oppenheimer Funds Services from October 1999 until June 2000; and President and CEO of Oppenheimer Funds Services from June 1992 until October 1999. She was previously Board Chair of a non-profit independent school, and is currently an independent trustee and endowment chair of St. Mary’s Academy, an independent school in Denver, CO. | 112 | None | ||||||
Barbara I. Jacobs 1950 | Trustee since December 2004 | Ms. Jacobs served as Chairman of the Board of Directors of KICAP Network Fund, a European (United Kingdom) hedge fund, from January 2001 through January 2006. From 1988 through 2003, Ms. Jacobs was also a Managing Director and European Portfolio Manager of CREF Investments (Teachers Insurance and Annuity Association-College Retirement Equities Fund). | 112 | None | ||||||
Keith F. Karlawish 1964 | Trustee since March 2012 | Mr. Karlawish has been a partner of Park Ridge Asset Management, LLC since December 2008, at which he also serves as a portfolio manager. From May 2002 until October 2008, Mr. Karlawish was the President of BB&T Asset Management, Inc., and was President of the BB&T Mutual Funds and BB&T Variable Insurance Funds from February 2005 until October 2008. | 112 | Trustee of the BB&T Mutual Funds and BB&T Variable Insurance Funds from June 2006 until December 2008. | ||||||
Carol A. Kosel 1963 | Trustee since March 2013 | Ms. Kosel was a consultant to the Evergreen Funds Board of Trustees from October 2005 to December 2007. She was Senior Vice President, Treasurer, and Head of Fund Administration of the Evergreen Funds from April 1997 to October 2005. | 112 | Trustee of Sun Capital Advisers Trust from April 2011 to December 2012 and Trustee of Evergreen Funds from January 2008 to July 2010. | ||||||
Douglas F. Kridler 1955 | Trustee since September 1997 | Mr. Kridler is the President and Chief Executive Officer of The Columbus Foundation, a $1.5 billion community foundation with 2,000 funds in 55 Ohio counties and 37 states in the U.S. | 112 | None | ||||||
89
Management Information (Continued)
October 31, 2013
The address for each Trustee is: c/o Nationwide Funds Group, 1000 Continental Drive, Suite 400, King of Prussia, PA 19406.
Name and Year of Birth | Position(s) Held with the Trust and Length of Time Served1,2 | Principal Occupation(s) During Past Five Years (or longer)3 | Number of Portfolios in the Nationwide Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During Past Five Years4 | ||||||
David C. Wetmore 1948 | Trustee since 1995 and Chairman since February 2005 | Mr. Wetmore was a Managing Director of Updata Capital, Inc. (a technology-oriented investment banking and venture capital firm) from 1995 through 2000. Prior to 1995, Mr. Wetmore served as the Chief Operating Officer, Chief Executive Officer and Chairman of the Board of several publicly-held software and services companies, and as the managing partner of a “big 8” public accounting firm. | 112 | None | ||||||
| 1 | Length of time served includes time served with predecessor of the Trust. |
| 2 | Each Trustee holds office for the lifetime of the Trust or until such Trustee’s earlier death, resignation, removal, retirement or inability otherwise to serve, or the election and qualification of his or her successor. |
| 3 | Unless otherwise noted, the information presented is the principal occupation of the Trustee during the past five years. |
| 4 | Directorships held in (i) any other investment companies registered under the 1940 Act, (ii) any company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or (iii) any company subject to the requirements of Section 15(d) of the Exchange Act. |
90
Management Information (Continued)
October 31, 2013
The address for each Officer is: c/o Nationwide Funds Group, 1000 Continental Drive, Suite 400, King of Prussia, PA 19406.
| Name and Year of Birth | Position(s) Held with Fund and Length of Time Served1 | Principal Occupation(s) During Past Five Years2 | ||
Michael S. Spangler 1966 | President and Chief Executive Officer since June 2008 | Mr. Spangler is President and Chief Executive Officer of Nationwide Funds Group, which includes NFA3, Nationwide Fund Management LLC3 and Nationwide Fund Distributors LLC3, and is a Senior Vice President of NFS3. From May 2004 through May 2008, Mr. Spangler was Managing Director, Head of Americas Retail and Intermediary Product Management for Morgan Stanley Investment Management. | ||
Stephen T. Grugeon 1950 | Executive Vice President and June 2008 | Mr. Grugeon has been Executive Vice President and Chief Operating Officer of Nationwide Funds Group since May 20073. From February 2008 through June 2008, he also served as the acting President and Chief Executive Officer of the Trust and of Nationwide Funds Group. From December 2006 until January 2008, he was Executive Vice President of NWD Investments3. | ||
Joseph Finelli 1957 | Treasurer since September 2007 | Mr. Finelli is the Principal Financial Officer and Senior Vice President for Nationwide Funds Group3. From July 2001 until September 2007, he was Assistant Treasurer and Vice President of Investment Accounting and Operations of NWD Investments3. | ||
Brian Hirsch 1956 | Chief Compliance Officer since January 2012 | Mr. Hirsch is Vice President of NFA and Chief Compliance Officer of NFA and the Trust. From January 2003 through January 2012, Mr. Hirsch was the Senior Vice President for Compliance and Fund Administration at IFS Financial Services, Inc., a subsidiary of the Western Southern Financial Group. | ||
Eric E. Miller 1953 | Secretary since December 2002 | Mr. Miller is Senior Vice President, General Counsel, and Assistant Secretary for Nationwide Funds Group and NWD Investments3. | ||
Doff Meyer 1950 | Vice President and Chief Marketing Officer since January 2008 | Ms. Meyer is Senior Vice President and Chief Marketing Officer of Nationwide Funds Group (since August 2007)3. From September 2004 until August 2007, Ms. Meyer was Director of Finance and Marketing, Principal of Piedmont Real Estate Associates LLC. |
| 1 | Length of time served includes time served with the Trust’s predecessors. |
| 2 | Unless otherwise noted, the information presented is the principal occupation of the Officer during the past five years. |
| 3 | These positions are held with an affiliated person or principal underwriter of the Funds. |
Additional information regarding the Trustees and Officers may be found in the Trust’s Statement of Additional Information, which is available without charge upon request, by calling 800-848-0920.
Federal law requires the Trust and each of its investment advisers and subadvisers to adopt procedures for voting proxies (“Proxy Voting Guidelines”) and to provide a summary of those Proxy Voting Guidelines used to vote the securities held by the Fund. The Fund’s proxy voting policies and procedures are available without charge (i) upon request, by calling 800-848-0920, (ii) on the Trust’s website at nationwide.com/mutualfunds, and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.
91
| Market Index Definitions |
Barclays Emerging Markets USD Aggregate Bond Index: An unmanaged index comprising fixed-rate and floating-rate U.S. dollar-denominated bonds from sovereign, quasi-sovereign and corporate emerging market issuers; the countries considered to be emerging markets are determined by annual review using rules-based classifications from the World Bank income group and the International Monetary Fund (IMF).
Barclays Global Aggregate Bond Index: An unmanaged index of fixed-rate, publicly issued, taxable bond market issues with a remaining maturity of at least one year; a broad-based measurement of the performance of the global investment-grade fixed-income markets.
Barclays Long U.S. Treasury Index: An unmanaged index that measures the performance of all investment-grade, publicly issued U.S. Treasury securities with a remaining maturity of 10 years or more and $250 million or more in outstanding face value.
Barclays Municipal Bond Index: An unmanaged, market value-weighted index of investment-grade municipal bonds with a minimum credit rating of Baa and maturities of one year or more; serves as a broad market performance index for the tax-exempt bond market.
Barclays U.S. 1-3 Year Government/Credit Bond Index: An unmanaged index of U.S. dollar-denominated, investment-grade, fixed-rate, publicly issued, taxable bond market issues (including Treasury, government and corporate securities) with a remaining maturity of one to three years.
Barclays U.S. 10-20 Year Treasury Bond Index: An unmanaged index that measures the performance of U.S. Treasury securities with a remaining maturity of 10 to 20 years.
Barclays U.S. Aggregate Bond Index: An unmanaged, market value-weighted index of investment-grade, fixed-rate debt issues (including government, corporate, asset-backed, and mortgage-backed securities with maturities of one year or more) that is generally representative of the bond market as a whole.
Barclays U.S. Corporate High Yield Index: An unmanaged index that reflects the performance of fixed-rate, non-investment-grade, U.S. dollar-denominated taxable corporate bonds with at least $150 million par value outstanding, a maximum credit rating of Ba1 and a maturity of one year or more; gives a broad look at how high-yield (“junk”) bonds have performed.
Barclays U.S. Credit Index: An unmanaged, market value-weighted index that measures the performance of investment-grade, fixed-rate, publicly issued U.S. corporates and non-corporates, including foreign agencies, sovereigns, supranationals and foreign local government issues, with at least $250 million par value outstanding and a maturity of one year or more.
Barclays U.S. Treasury Inflation-Protected Securities (TIPS) IndexSM: An unmanaged, market capitalization-weighted index that measures the performance of all U.S. dollar-denominated, investment-grade, fixed-rate, publicly issued U.S. TIPS with a remaining maturity of at least one year and $250 million or more in outstanding face value.
BofA Merrill Lynch (BofAML) 1-Year Treasury Bill (T-Bill) Index: An unmanaged index that measures the returns of 12-month Treasury bills. Comprises a single issue purchased at the beginning of a month and held for the full month. At the end of that month, that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding T-Bill with the longest maturity.
BofA Merrill Lynch (BofAML) 6-Month Treasury Bill (T-Bill) Index: An unmanaged index that measures the returns of six-month Treasury bills. Comprises a single issue purchased at the beginning of a month and held for the full month. At the end of that month, that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding T-Bill that matures closest to, but not beyond, six months from the rebalancing date.
92
| Market Index Definitions (con’t.) |
BofA Merrill Lynch (BofAML) AAA U.S. Treasury/Agency Master Index: An unmanaged index that gives a broad look at how fixed-rate U.S. government bonds with a remaining maturity of at least one year have performed.
BofA Merrill Lynch (BofAML) U.S. High Yield Cash Pay Constrained Index: An unmanaged, market value-weighted index that measures the performance of U.S. dollar-denominated, below-investment-grade, fixed-rate, publicly issued, non-convertible, coupon-bearing corporate debt with a remaining maturity of at least one year. Each issue represented must have an outstanding par value of at least $50 million, must be less than BBB/Baa3-rated but not in default, and is restricted to a maximum of 2% of the total index.
Citigroup 3-Month Treasury Bill (T-Bill) Index: An unmanaged index that is generally representative of 3-month Treasury bills; consists of an average of the last 3-month Treasury bill issues (excluding the current month-end bill).
Consumer Price Index (CPI): Calculated by the U.S. Department of Labor’s Bureau of Labor Statistics, the CPI represents changes in prices of a basket of goods and services purchased for consumption by urban households.
Dow Jones Industrial Average (DJIA): A market indicator consisting of a price-weighted average of 30 blue chip stocks actively traded on the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ) system; invented by Charles Dow in 1896, the DJIA represents 15% to 20% of the value of NYSE stocks.
iMoneyNet Prime Retail Index: An unmanaged index that is an average of non-government retail money market mutual funds. Portfolio holdings of prime money market mutual funds include U.S. Treasury, U.S. other, repurchase agreements, time deposits, domestic and foreign bank obligations, commercial paper, floating-rate notes and asset-backed commercial paper.
KOSPI 200 Index: An unmanaged index that is a subset of the Korea Composite Stock Price Index; measures the performance of the stocks of the 200 largest publicly traded companies on the Korea Stock Exchange.
Lipper Analytical Services, Inc. (Lipper) is an industry research firm whose rankings are based on total return performance and do not reflect the effect of sales charges. Each fund is ranked within a universe of funds similar in investment objective as determined by Lipper.
Morningstar® (Mstar) Lifetime Allocation Indexes: A series of 13 unmanaged, multi-asset-class indexes designed to benchmark target-date investment products. Each index is available in three risk profiles: aggressive, moderate and conservative. The index asset allocations adjust over time, reducing equity exposure and shifting toward traditional income-producing investments. The strategic asset allocation of the indexes is based on Ibbotson Associates’ Lifetime Asset Allocation methodology.
MSCI ACWI ex USA Index: An unmanaged, market capitalization-weighted index that is designed to measure the performance of the stocks in the global developed and emerging markets, excluding U.S.-based companies.
MSCI All Country World IndexSM: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of the stocks in the global developed and emerging markets.
MSCI EAFE® Index: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of the stocks in developed markets outside the United States and Canada.
93
| Market Index Definitions (con’t.) |
MSCI Emerging Markets (EM) Index: An unmanaged, free float-adjusted market capitalization-weighted index that is designed to measure equity market performance of emerging markets.
MSCI Greece Index: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of the stocks in Greece.
MSCI World ex USA Index: An unmanaged index that measures the equity market performance of developed-market countries excluding the United States; covers approximately 85% of the free float-adjusted market capitalization in each country, capturing large- and mid-cap representation.
MSCI World IndexSM Free: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of global developed-market equities. The “Free” suffix denotes an index with a somewhat different history but the same constituents and performance in relation to its counterpart index without the suffix.
Russell 1000® Index: An unmanaged index that measures the performance of the large-capitalization segment of the U.S. equity universe.
Russell 1000® Growth Index: An unmanaged index that measures the performance of the large-capitalization growth segment of the U.S. equity universe; includes those Russell 1000® Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index: An unmanaged index that measures the performance of the large-capitalization value segment of the U.S. equity universe; includes those Russell 1000® Index companies with lower price-to-book ratios and lower forecasted growth values.
Russell 2000® Index: An unmanaged index that measures the performance of the small-capitalization segment of the U.S. equity universe.
Russell 2000® Growth Index: An unmanaged index that measures the performance of the large-capitalization growth segment of the U.S. equity universe; includes those Russell 2000® Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 2000® Value Index: An unmanaged index that measures the performance of the large-capitalization growth segment of the U.S. equity universe; includes those Russell 2000® Index companies with lower price-to-book ratios and lower forecasted growth values.
Russell 3000® Index: An unmanaged index that measures the performance of the 3,000 largest U.S. companies in the investable U.S. equity universe.
S&P 500® Index: An unmanaged, market capitalization-weighted index of 500 stocks of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.
S&P MidCap 400® (S&P 400) Index: An unmanaged index that measures the performance of 400 stocks of medium-sized U.S. companies (those with a market capitalization of $1 billion to $4.4 billion).
SET50 Index: An unmanaged index that measures the performance of the stocks of the 50 largest companies trading on the Stock Exchange of Thailand.
94
| Glossary |
Definitions of some commonly used investment terms
Asset allocation: The process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.
Benchmark index: A broad-based securities index used as a comparison tool to measure the performance of a mutual fund.
Derivative: A contract, security or investment with its value based on the performance of an underlying financial asset, index or economic measure.
Diversification: An investment strategy that seeks to reduce risk in a portfolio so that the positive performance of some investments will neutralize the negative performance of others.
Duration: A measure of how much the price of a bond would change compared to a change in market interest rates, based on the remaining time until a bond’s maturity together with other factors. A bond’s value drops when interest rates rise, and vice versa. Bonds with longer durations have higher risk and volatility.
Emerging market countries: Developing and low- or middle-income countries as identified by the International Finance Corporation or the World Bank. Emerging market countries may be found in regions such as Asia, Latin America, Eastern Europe, the Middle East and Africa.
Equity securities: Securities that represent an ownership interest in the issuer. Common stocks are the most common type of equity securities.
Expense ratio: The percentage of fees paid by a fund to its adviser for management and operational costs. A fund’s expense ratio includes all administrative expenses and 12b-1 fees but excludes sales charges.
Fixed-income securities: Securities, including bonds and other debt securities, that represent an obligation by the issuer to pay a specified rate of interest or dividend at specified times.
Market capitalization: A common way of measuring the size of a company based on the price of its common stock multiplied by the number of outstanding shares.
Quantitative techniques: Mathematical and statistical methods used in the investment process to identify securities of issuers for possible purchase or sale by a mutual fund.
Sector: An industry or market that shares common characteristics. Sectors are used to group investments into categories such as energy, health, technology and utilities.
Yield curve: A plotted graph line showing the interest rates of bonds, at a set point in time, that have equal credit quality but different maturity dates.
95
P.O. Box 701
Milwaukee, WI 53201-0701
nationwide.com/mutualfunds
Investors should carefully consider a fund’s (and, if applicable, each of its underlying funds’) investment objectives, risks, fees, charges and expenses before investing any money. To obtain this and other information on Nationwide Funds, please call 1-800-848-0920 to request a summary prospectus and/or a prospectus, or download a summary prospectus and/or a prospectus at nationwide.com/mutualfunds. Please read it carefully before investing any money.
About Nationwide Funds Group (NFG)
NFG comprises Nationwide Fund Advisors, Nationwide Fund Distributors LLC and Nationwide Fund Management LLC. Together they provide advisory, distribution and administration services, respectively, to Nationwide Funds. Nationwide Fund Advisors (NFA) is the investment adviser to Nationwide Funds. NFA is a wholly owned subsidiary of Nationwide Financial Services, Inc. (NFS).
Distributor
Nationwide Funds distributed by Nationwide Fund Distributors LLC (NFD), member FINRA, King of Prussia, Pa. NFD is not an affiliate of any subadviser discussed in this material, except Nationwide Asset Management, LLC.
Nationwide, Nationwide Financial, the Nationwide framemark, Nationwide Funds, Nationwide Funds Group and On Your Side are service marks of Nationwide Mutual Insurance Company.
© 2013 Nationwide Funds Group. All rights reserved.
AR-ID 12/13
Item 2. Code of Ethics.
Disclose whether, as of the end of the period covered by the report, the registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, explain why it has not done so.
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is included as Exhibit 12 (a)(1).
The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 11(a)(1), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item.
If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver.
During the period covered by the report, with respect to the registrant’s Code of Ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, except as may be noted hereinbelow, there have been no amendments to, nor any waivers granted from, a provision that relates to any element of the Code of Ethics definition enumerated in paragraph (b) of this Item 2.
Item 3. Audit Committee Financial Expert.
(a) (1) Disclose that the registrant’s board of directors has determined that the registrant either:
(i) Has at least one audit committee financial expert serving on its audit committee; or
(ii) Does not have an audit committee financial expert serving on its audit committee.
2
| (2) | If the registrant provides the disclosure required by paragraph (a)(1)(i) of this Item, it must disclose the name of the audit committee financial expert and whether that person is “independent.” In order to be considered “independent” for purposes of this Item, a member of an audit committee may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: |
(i) Accept directly or indirectly any consulting, advisory, or other compensatory fee from the issuer; or
(ii) Be an “interested person” of the investment company as defined in Section 2(a)(19) of the Act (15 U.S.C. § 80a-2(a)(19)).
(3) If the registrant provides the disclosure required by paragraph (a)(1)(ii) of this Item, it must explain why it does not have an audit committee financial expert.
| 3(a)(1) | The registrant’s board of trustees has determined that the registrant has at least one audit committee financial expert serving on board’s audit committee. |
| 3(a)(2) | The audit committee financial expert of the registrant’s board of trustees is Paula H.J. Cholmondeley, who, for purposes of this Item 3 of Form N-CSR, is an “independent” trustee of the registrant. |
Item 4. Principal Accountant Fees and Services.
(a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
(b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category.
(c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category.
(d) Disclose, under the caption All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category.
4(a) through 4(d): The information in the table below is provided for services rendered to the registrant by the registrant’s principal accountant, PricewaterhouseCoopers LLP (“PwC”), for the registrant’s fiscal years ended October 31, 2012, and October 31, 2013.
| 2012 | 2013 | |||||||
Audit Fees | $ | 509,125 | $ | 709,889 | ||||
Audit-Related Fees | $ | 0 | $ | 33,037 | ||||
Tax Fees | $ | 158,682 | $ | 346,456 | ||||
All Other Fees | $ | 0 | $ | 0 | ||||
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Total | $ | 667,807 | $ | 1,089,382 | ||||
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The information in the table below is provided with respect to non-audit services that directly relate to the registrant’s operations and financial reporting and that were rendered by PwC to the registrant’s investment adviser, Nationwide Fund Advisors (“NFA”), and any service
3
provider to the registrant controlling, controlled by, or under common control with NFA that provided ongoing services to the registrant (hereinafter referred to collectively as the “Covered Services Provider”), for the registrant’s fiscal years ended October 31, 2012, and October 31, 2013.
| 2012 | 2013 | |||||||
Audit-Related Fees | None | None | ||||||
Tax Fees | None | None | ||||||
All Other Fees | None | None | ||||||
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Total | None | None | ||||||
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(e)(1) Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
4(e)(1) Pre-Approval Policies and Procedures. The Audit Committee (the “Committee”) of the registrant is responsible for pre-approving (i) all audit and permissible non-audit services to be provided by the independent auditors to the registrant and (ii) all permissible non-audit services to be provided by the independent auditors to NFA and any Covered Services Provider if the engagement relates directly to the operations and financial reporting of the registrant. The Committee may delegate the Committee’s responsibility to pre-approve any such audit and permissible non-audit services to the Chairperson of the Committee, and the Chairperson shall report to the Committee, at the Committee’s next regularly-scheduled meeting after the Chairperson’s pre-approval of such services, his or her decision(s).
The Committee also may establish detailed pre-approval policies and procedures for pre-approval of these services in accordance with applicable laws, including the delegation of some or all of the Committee’s pre-approval responsibilities to other persons (other than NFA or the registrant’s officers). Pre-approval by the Committee of any permissible non-audit services shall not be required so long as: (i) the aggregate amount of all said permissible non-audit services provided to the registrant, NFA, and any Covered Services Provider constitutes not more than five percent (5%) of the total amount of revenues paid by the registrant to the registrant’s independent auditors during the fiscal year in which the permissible non-audit services are provided; (ii) the permissible non-audit services were not recognized by the registrant at the time of the engagement to be non-audit services; and (iii) these services are promptly brought to the attention of the Committee and approved by the Committee (or the Committee’s delegate(s)) prior to the completion of the audit.
4(e)(2) The information in the table below sets forth the percentages of fees for services (other than audit, review, or attest services) rendered by PwC to the registrant for which the pre-approval requirement was waived pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X, for the registrant’s fiscal-years ended October 31, 2012, and October 31, 2013:
| 2012 | 2013 | |||||||
Audit-Related Fees | None | None | ||||||
Tax Fees (1) | None | None | ||||||
All Other Fees | None | None | ||||||
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Total | None | None | ||||||
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4
The information in the table below sets forth the percentages of fees for services (other than audit, review, or attest services) rendered by PwC to NFA and any Covered Services Provider required to be approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X, for the registrant’s fiscal-years ended October 31, 2012, and October 31, 2013:
| 2012 | 2013 | |||||||
Audit-Related Fees | N/A | N/A | ||||||
Tax Fees | N/A | N/A | ||||||
All Other Fees | N/A | N/A | ||||||
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Total | N/A | N/A | ||||||
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(f) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.
4(f) Not Applicable: The percentage of hours expended to audit the registrant’s financial statements for the fiscal-year ended October 31, 2013, that were attributed to work performed by persons other than PwC’s full-time, permanent employees was not over fifty percent (50%).
(g) Disclose the aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant.
4(g) The aggregate fees billed by PwC for non-audit services rendered to the registrant and service affiliates for the fiscal-years ended October 31, 2012, and October 31, 2013, were $0 and $0, respectively.
(h) Disclose whether the registrant’s audit committee of the board of directors has considered whether the provision of nonaudit services that were rendered to the registrant’s investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
4(h) The registrant’s Audit Committee has considered whether the provision by PwC of non-audit services to NFA and Covered Services Providers, that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X because these services did not directly relate to the registrant’s operations and financial reporting, is compatible with maintaining PwC’s independence.
Item 5. Audit Committee of Listed Registrants.
| (a) | If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17 C.F.R. § 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. § 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant’s audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. § 78c(a)(58)(B)), so state. |
Not Applicable: The registrant is not a listed issuer as defined in Rule 10A-3 under the Exchange Act.
| (b) | If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17 C.F.R. §240.10A-3(d)) regarding an exemption from the listing standards for all audit committees. |
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Not Applicable: The registrant is not a listed issuer as defined in Rule 10A-3 under the Exchange Act.
Item 6. Investments.
| (a) | File Schedule I – Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in § 210.1212 of the Regulation S-X [17 C.F.R. § 210.12-12], unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form. |
Instruction of paragraph (a)
Schedule I - Investments In Securities of unaffiliated issuers filed under this Item must be audited, except that in the case of a report on this Form N-CSR as of the end of a fiscal half-year Schedule I – Investments in securities of unaffiliated issuers need not be audited.
| (b) | If the registrant has divested itself of securities in accordance with Section 13(c) of the Investment Company Act of 1940 following the filing of its last report on Form N-CSR and before filing of the current report, disclosed the following information for each such divested security: |
| (1) | Name of the issuer; |
| (2) | Exchange ticker symbol; |
| (3) | Committee on Uniform Securities Identification Procedures (“CUSIP’) number; |
| (4) | Total number of shares or, for debt securities, principal amount divested; |
| (5) | Date(s) that the securities were divested; |
| (6) | If the registrant holds any securities of the issuer on the date of filing, the exchange ticker symbol; CUSIP number; and the total number of shares or, for debt securities, principal amount held on the date of filing; and |
| (7) | Name of the statute that added the provision of Section 13(c) in accordance with which the securities were divested. This Item 6(b) shall terminate one year after the first date on which all statutory provisions that underlie Section 13(c) of the Investment Company Act of 1940 have terminated. |
The Registrant made no divestments of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company’s investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. § 80a-2(a)(3)) and the rules there under) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company’s investment adviser, or any other third party, that the company uses, or that are used on the company’s behalf, to determine how to vote proxies relating to portfolio securities.
Not Applicable. The registrant is an open-end management investment company, not a closed-end management investment company.
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Item 8. Portfolio Managers of Closed-End Management Investment Companies.
If the registrant is a closed-end management investment company that is filing an annual report on this Form N-CSR, provide the information specified in paragraphs (a) and (b) of this Item with respect to portfolio managers.
Not Applicable. The registrant is an open-end management investment company, not a closed-end management investment company.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
If the registrant is a closed-end management investment company, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act (17 C.F.R. § 240.10b-18(a)(3)), of shares or other units of any class of the registrant’s equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. § 781).
Not Applicable. The registrant is an open-end management investment company, not a closed-end management investment company.
Item 10. Submission of Matters to a Vote of Security Holders.
Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 C.F.R. § 240.14a-101), or this Item.
The Independent Trustees and the Board of Trustees of the registrant adopted a formal, written “Policy Regarding Shareholder Submission of Trustee Candidates,” as well as a formal, written “Statement of Policy On Criteria For Selecting Trustees,” on June 9, 2005, and June 10, 2005, respectively. Neither this policy nor this statement of policy has been materially changed since the Board of Trustees adoption of the policy and the statement of policy, respectively. The Nominating and Fund Governance Committee of the Board of Trustees (the “NFGC”) and the Board of Trustees, however, on November 11, 2005, and January 12, 2006, respectively, approved amendments to this policy; these amendments to the policy, though, concern the criteria for selecting candidates for Trustees and the characteristics expected of candidates for Trustees, as set forth in the Exhibit A, “Statement of Policy On Criteria For Selecting Trustees,” to the policy and, arguably, may not be deemed to be material changes to the policy.
{NOTE – THIS IS REQUIRED BEGINNING WITH THE FIRST REPORTING PERIOD ENDING AFTER JANUARY 1, 2004. For purposes of this Item, adoption of procedures by which shareholders may recommend nominees to the registrant’s board of directors, where the registrant’s most recent proxy disclosure (in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR § 240.14a-101)), or this Item, indicated that the registrant did not have in place such procedures, will constitute a material change.}
Item 11. Controls and Procedures.
(a) Disclose the conclusions of the registrant’s principal executive and principal financial officers, or persons performing similar functions, regarding the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 C.F.R. § 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 C.F.R. § 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 C.F.R. § 240.13a-15(b) or § 240.15d-15(b)).
The registrant’s principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within ninety (90) days of the filing date of this report, that these disclosure controls and procedures, as most-recently amended effective as of December 11, 2013, are adequately designed and are operating effectively to ensure that information required to be disclosed by
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the registrant on Form N-CSR is: (i) accumulated and communicated to the investment company’s management, including the investment company’s certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
(b) Disclose any change in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 C.F.R. § 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
There were no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal half year covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits.
(a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit.
The code of ethics that is the subject of the disclosure required by Item 2 is attached hereto.
(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 C.F.R. § 270.30a-2).
Certifications pursuant to Rule 30a-2(a) are attached hereto.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 C.F.R. § 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.
Not Applicable.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange Act, provide the certifications required by Rule 30a-2(b) under the Act as an exhibit. A certification furnished pursuant to this paragraph will not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant incorporates it by reference.
Certifications pursuant to Rule 30a-2(b) are furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | NATIONWIDE MUTUAL FUNDS | |||
By (Signature and Title)* | /s/ Joseph A. Finelli | |||
| Name: | Joseph A. Finelli | |||
| Title: | Principal Financial Officer | |||
| Date: | December 27, 2013 | |||
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | /s/ Michael S. Spangler | |||
| Name: | Michael S. Spangler | |||
| Title: | Principal Executive Officer | |||
| Date: | December 27, 2013 | |||
By (Signature and Title)* | /s/ Joseph A. Finelli | |||
| Name: | Joseph A. Finelli | |||
| Title: | Principal Financial Officer | |||
| Date: | December 27, 2013 | |||
| * | Print the name and title of each signing officer under his or her signature. |
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