UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-CSR
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: July 31, 2014
Date of reporting period: August 1, 2013 through July 31, 2014
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 CFR § 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.
Item 1. Reports to Stockholders.
Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR § 270.30e-1).
Annual Report
July 31, 2014
Nationwide Mutual Funds
Equity Funds
Nationwide Bailard Cognitive Value Fund
Nationwide Bailard International Equities Fund
Nationwide Bailard Technology & Science Fund
Nationwide Geneva Mid Cap Growth Fund
Nationwide Geneva Small Cap Growth Fund
Nationwide HighMark Balanced Fund
Nationwide HighMark Large Cap Core Equity Fund
Nationwide HighMark Large Cap Growth Fund
Nationwide HighMark Small Cap Core Fund
Nationwide HighMark Value Fund
Nationwide Ziegler Equity Income Fund
Nationwide Ziegler NYSE Arca Tech 100 Index 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 |
| Nationwide Funds® |
July 31, 2014
Dear Shareholder,
Watching children board a school bus can teach us a lot about human nature. As the red lights flash and the bus door slides open, some children rush to be first to climb up the steps. Others are hesitant, glancing back for reassurance. A few students freeze in fear, unable to proceed.
We understand that, like the students or anyone facing something daunting, investors vary in their approaches to financial planning. Whether you tend to climb right in, move tentatively or need support to move forward at all, please know that Nationwide Funds represent a range of products and investment strategies designed to suit all types of investors. We continually scan the investment universe seeking opportunities to expand our fund offerings to include potentially attractive asset classes. Our goal is to help provide the investment options you may need to prepare for and live in retirement. As a Nationwide Funds investor, you may be positioned for potential benefits from long-term investment solutions driven by tactical risk management and diversification.
Overall, most Nationwide Funds performed well during the one-year reporting period ended July 31, 2014. Broad U.S. stock market performance as measured by the S&P 500® Index grew 16.94% for the period, with all sectors reporting positive returns. The Barclays U.S. Aggregate Bond Index, a broad measurement of U.S. fixed-income investment performance, returned 3.97% for the one-year period.
Confucius reminds us that “Every journey starts with a single step.” By working with your financial advisor and investing with Nationwide Funds, you already have climbed that critical first step. We encourage you to stay true to your long-term plan no matter what your circumstances or investment temperament. Your advisor and Nationwide Funds are poised to help.
Sincerely,
Michael S. Spangler
President & CEO
Nationwide Funds
1
| Economic Review |
During the fiscal-year reporting period ended July 31, 2014, most asset classes produced a positive investment return. Domestic equities experienced a broad-based rally, with the S&P 500® Index delivering a 16.94% return, and nearly all sectors and capitalization ranges showing strong performance for the reporting period. International equities rose as well, with the MSCI Emerging Markets® Index recovering from a three-year period of underperformance versus developed markets to return 15.32% during the reporting period. Fixed-income returns were positive for the reporting period, primarily in the long-term and credit-sensitive segments.
In the United States, investment performance during the reporting period was affected positively by encouraging economic data and the anticipation of continued strong corporate earnings. While first-quarter gross domestic product (GDP) was disappointing, investors focused instead on an improving jobs picture and manufacturing data. Also supportive to equity and fixed-income returns were stable longer-term interest rates and the continuation of the accommodative Federal Reserve policy.
The S&P 500 Index produced positive performance in nine of the 12 months of the reporting period, including five of the last six months of the period. The weakest month was January 2014, registering -3.46%, but the brief downturn was more than offset by a 4.57% return in February 2014.
All sectors of the S&P 500 Index posted positive returns for the reporting period. The best-performing sectors for the S&P 500 Index during the reporting period were information technology, up 27.6%; materials, up 23.1%; and health care, up 20.9%. Technology and materials benefited from a strong earnings environment, and health care rallied in reaction to excitement surrounding new products. While all returns were positive, the sectors with the lowest returns included consumer staples, up 7.0%; telecommunication services, up 8.0%; and utilities, up 8.5%.
The strong performance in U.S. equities was broad based during the reporting period, with large-capitalization stocks outperforming small-cap stocks, and growth outperforming value.
U.S. economic activity showed volatility during the reporting period, with real GDP growing 4.5% and 3.5%, respectively, in the third and fourth quarters of calendar-year 2013, before shrinking by 2.1% in the first quarter of 2014 (constituting the worst result since the end of the economic recession in 2009) and then recovering to record 4.0% in the second quarter. Investors largely shrugged off the first-quarter 2014 stumble, blaming the weakness on the brutal winter weather’s effects on the economy. Expectations are for an acceleration of growth through the remainder of the year. Inflation remained well controlled throughout the reporting period, with the U.S. Consumer Price Index (CPI) and the core CPI (excluding the volatile food and energy categories) at roughly 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 7.3% to 6.2%.
Throughout the reporting period, the performance of international stocks continued to be positive but weaker relative to U.S. stocks. Investors’ focus was on uncertainty surrounding Russia and Ukraine, along with sluggish European economic growth; worries about a U.S. tapering (reduction of accommodative policy involving asset purchases) depressed relative returns during the period. In Asia, stock performance was strong during the reporting period, with Japan returning 15.1% and Asia (excluding Japan) up 16.9%. Despite headline risks, emerging market stocks performed roughly in line with those of developed markets, reversing the trend of underperformance that had prevailed since the fourth quarter of 2010.
Performance in the fixed-income markets was driven by declining interest rates and falling
2
| Economic Review (con’t.) |
credit spreads during the reporting period. Long-term Treasury yields were relatively stable during the reporting period, with the 10-year Treasury yield falling from 2.58% to 2.56% during the period. Fixed-income returns were positive, as investors absorbed the news that the Fed will begin to taper (reduce) the quantitative easing (QE) program. Long-term and credit-sensitive bonds delivered the strongest performance during the reporting period.
| Index | Fiscal Year (as of July 31, 2014) | |||
| Barclays U.S. 1-3 Year Government/Credit Bond | 0.85% | |||
| Barclays U.S. 10-20 Year Treasury Bond | 5.77% | |||
| Barclays Emerging Markets USD Aggregate Bond | 8.85% | |||
| Barclays Municipal Bond | 7.27% | |||
| Barclays U.S. Aggregate Bond | 3.97% | |||
| Barclays U.S. Corporate High Yield | 8.19% | |||
| MSCI EAFE® | 15.07% | |||
| MSCI Emerging Markets® | 15.32% | |||
| MSCI World ex USA | 15.48% | |||
| Russell 1000® Growth | 18.69% | |||
| Russell 1000® Value | 15.47% | |||
| Russell 2000® | 8.56% | |||
| S&P 500® | 16.94% | |||
3
| Fund Commentary | Nationwide Bailard Cognitive Value Fund |
For the annual period ended July 31, 2014, the Nationwide Bailard Cognitive Value Fund (Class M) returned 10.38%* versus 8.18% for its benchmark, the Russell 2000® Value Index, and 11.87% for its former benchmark, the S&P SmallCap 600® Value Index.** For broader comparison, the median return for the Fund’s closest Lipper peer category of Small-Cap Value Funds (consisting of 289 funds as of July 31, 2014) was 10.27% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
**The Fund’s benchmark changed to the Russell 2000® Value Index effective February 3, 2014.
Bailard utilizes a proprietary multifactor model, the Behavioral Ranking Model (“BRM” or the “model”), to aid in portfolio construction. There are two primary determinants of the Fund’s relative performance. One is how well Bailard’s BRM is working, and the other is how successfully the model’s signals are translated into Fund performance.
For the reporting period, the model’s results were good, outperforming both the Fund’s benchmark and the average competitor, and winning eight out of the 12 months against each. For the earlier months of the reporting period, these good results were largely unrealized in actual Fund performance. For the latter months of the reporting period, actual results tended to be as good as or better than the model’s results.
Changes were made to the model in 2012 to improve performance, with implementation of those changes to the actual Fund taking place between the fall of 2013 and March of 2014. Throughout the modification process, realizable performance moved closer to actual BRM performance.
Ideally, the Fund would make no sector or subsector bets at all, as we believe that stock selection holds much greater potential for excess return, and that effort on the margin is better spent on improving stock selection than in attempting sector rotation. Unfortunately, the tracking error without making sector bets tends to max out at around 4.5%, which is below the
typical small-capitalization value managers’ 6.5% tracking error. As a result, we limit variance to 24 economic subsectors, allowing up to +/-2% deviation from the average small-cap value competitor’s weight in each. Stock selection then overweights or underweights each subsector, depending upon the abundance or scarcity of high BRM scores within. Because we are making sector bets by default and not conscious choice, the sectors that happen to outperform or underperform are strictly a byproduct of overall BRM efficacy and our ability to capture that in the portfolio.
For the reporting period, the Fund’s overweights in aerospace and defense and shipping were the largest contributors to Fund performance versus the Fund’s benchmark. The Fund’s holdings in Kimball International and Universal Insurance were the largest individual stocks contributing to Fund performance during the reporting period. In Kimball’s case this was due to positive earnings surprises, and in Universal’s case, due to a lack of hurricane activity.
For the reporting period, the Fund’s overweights in telecommunication services and electrical equipment were the largest detractors from Fund performance versus the Fund’s benchmark. The Fund’s holdings in Schweitzer-Mauduit International and Trans World Entertainment were the largest individual stocks detracting from Fund performance during the reporting period. In Schweitzer’s case this was due to sharply lower earnings expectations, and in Trans World’s case, due to a substantial decline in reported earnings.
Subadviser:
Bailard, Inc.
Portfolio Manager:
Thomas J. Mudge III
The Fund is subject to the risks of investing in equity securities and risks associated with investing in stocks of smaller companies. Value funds may underperform other funds that use different investing styles. The Fund may invest in more-aggressive investments such as derivatives (many of which create investment leverage and are highly volatile), exchange-traded funds (ETFs) (shareholders will bear additional costs) and foreign securities (which are volatile, harder to price and less liquid than U.S. securities). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
4
| Fund Overview | Nationwide Bailard Cognitive Value Fund |
Objective
The Fund seeks long-term capital appreciation.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide Bailard Cognitive Value Fund (Class M) returned 10.38%, outperforming its benchmark by 2.20% and outperforming the Lipper peer category median by 0.11%. |
| Ÿ | Bailard uses a proprietary quantitative model to aid in portfolio construction. Changes were made to the model in 2012 to improve performance, with implementation of those changes to the actual Fund taking place between the fall of 2013 and March of 2014. |
| Ÿ | Ideally, the Fund would make no sector or subsector bets at all, as we believe that stock selection holds much greater potential for excess return, and that effort on the margin is better spent on improving stock selection than in attempting sector rotation. |
Asset Allocation†
| Common Stocks | 95.1% | |||
| Repurchase Agreement | 4.2% | |||
| Exchange Traded Funds | 4.2% | |||
| Mutual Fund | 0.5% | |||
| Liabilities in excess of other assets | (4.0)% | |||
| 100.0% |
Top Industries††
| Banks | 8.8% | |||
| Insurance | 7.5% | |||
| Real Estate Investment Trusts (REITs) | 5.9% | |||
| Information Technology Services | 5.8% | |||
| Electronic Equipment, Instruments & Components | 5.2% | |||
| Machinery | 4.6% | |||
| Equity Fund | 4.0% | |||
| Electrical Equipment | 4.0% | |||
| Chemicals | 3.9% | |||
| Health Care Providers & Services | 3.8% | |||
| Other Industries* | 46.5% | |||
| 100.0% |
Top Holdings††
| A. Schulman, Inc. | 3.3% | |||
| Benchmark Electronics, Inc. | 2.8% | |||
| CSG Systems International, Inc. | 2.8% | |||
| EnerSys | 2.8% | |||
| Hanover Insurance Group, Inc. (The) | 2.6% | |||
| National HealthCare Corp. | 2.5% | |||
| Vanguard Small-Cap Value ETF | 2.4% | |||
| Kimball International, Inc., Class B | 2.3% | |||
| Warren Resources, Inc. | 2.2% | |||
| Global Cash Access Holdings, Inc. | 2.1% | |||
| Other Holdings* | 74.2% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
| * | For purposes of listing top industries and top holdings, the repurchase agreement is included as part of Other. |
5
| Fund Performance | Nationwide Bailard Cognitive Value Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 9.91% | 16.53% | 8.17% | – | |||||||||||||
| w/ SC3 | 3.88% | 15.22% | 7.56% | – | ||||||||||||||
| Class C1 | w/o SC2 | 9.25% | 15.86% | 7.52% | – | |||||||||||||
| w/ SC4 | 8.25% | 15.86% | 7.52% | – | ||||||||||||||
| Class M1,5 | 10.38% | 17.01% | 8.61% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 10.15% | 16.89% | 8.50% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 10.15% | 7* | |||||||||||||
| Russell 2000® Value Index | 8.18% | 15.83% | 8.07% | – | ||||||||||||||
| S&P SmallCap 600 Value Index | 11.87% | 17.85% | 9.48% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.54% | 1.48% | ||||||
| Class C | 2.04% | 2.04% | ||||||
| Class M | 1.04% | 1.04% | ||||||
| Institutional Service Class | 1.29% | 1.23% | ||||||
| Institutional Class | 1.04% | 1.04% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
6
| Fund Performance (con’t.) | Nationwide Bailard Cognitive Value 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 Class M shares of the Nationwide Bailard Cognitive Value Fund versus the Russell 2000® Value Index (current benchmark), the S&P SmallCap 600 Value Index (former benchmark) and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
7
| Shareholder Expense Example | Nationwide Bailard Cognitive Value 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide Bailard Cognitive July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,062.60 | 6.55 | 1.28 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.45 | 6.41 | 1.28 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,058.60 | 10.21 | 2.00 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,014.88 | 9.99 | 2.00 | |||||||
| Class M Shares | Actual | (a) | 1,000.00 | 1,064.50 | 5.07 | 0.99 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,019.89 | 4.96 | 0.99 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,063.90 | 5.32 | 1.04 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,019.64 | 5.21 | 1.04 | |||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,063.70 | 5.12 | 1.00 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,019.84 | 5.01 | 1.00 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
8
Statement of Investments
July 31, 2014
Nationwide Bailard Cognitive Value Fund
| Common Stocks 95.1% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 0.9% |
| |||||||||
Engility Holdings, Inc.* | 28,100 | $ | 971,136 | |||||||
|
| |||||||||
| ||||||||||
Airlines 1.4% |
| |||||||||
JetBlue Airways Corp.* (a) | 136,100 | 1,458,992 | ||||||||
|
| |||||||||
| ||||||||||
Auto Components 1.4% |
| |||||||||
Modine Manufacturing Co.* | 106,500 | 1,466,505 | ||||||||
|
| |||||||||
| ||||||||||
Banks 9.2% |
| |||||||||
Associated Banc-Corp. | 52,700 | 944,384 | ||||||||
Central Pacific Financial Corp. | 74,800 | 1,338,920 | ||||||||
Financial Institutions, Inc. | 5,007 | 111,155 | ||||||||
First Busey Corp. | 226,698 | 1,258,174 | ||||||||
First Interstate BancSystem, Inc. | 66,921 | 1,746,638 | ||||||||
German American Bancorp, Inc. | 9,700 | 250,745 | ||||||||
MainSource Financial Group, Inc. | 116,969 | 1,910,104 | ||||||||
MidSouth Bancorp, Inc. | 16,800 | 327,600 | ||||||||
Northrim BanCorp, Inc. | 55,491 | 1,359,530 | ||||||||
Suffolk Bancorp* | 7,400 | 149,850 | ||||||||
|
| |||||||||
| 9,397,100 | ||||||||||
|
| |||||||||
| ||||||||||
Building Products 1.1% |
| |||||||||
A.O. Smith Corp. | 13,400 | 625,780 | ||||||||
Alpha Pro Tech Ltd.* | 90,800 | 185,232 | ||||||||
Simpson Manufacturing Co., Inc. | 8,800 | 267,608 | ||||||||
|
| |||||||||
| 1,078,620 | ||||||||||
|
| |||||||||
| ||||||||||
Capital Markets 1.5% |
| |||||||||
FBR & Co.* | 54,200 | 1,515,432 | ||||||||
|
| |||||||||
| ||||||||||
Chemicals 4.1% |
| |||||||||
A. Schulman, Inc. | 88,100 | 3,501,094 | ||||||||
Minerals Technologies, Inc. | 12,000 | 696,840 | ||||||||
|
| |||||||||
| 4,197,934 | ||||||||||
|
| |||||||||
| ||||||||||
Commercial Services & Supplies 2.7% |
| |||||||||
Brady Corp., Class A | 11,600 | 303,340 | ||||||||
Kimball International, Inc., Class B | 153,918 | 2,427,287 | ||||||||
|
| |||||||||
| 2,730,627 | ||||||||||
|
| |||||||||
| ||||||||||
Communications Equipment 0.8% |
| |||||||||
Comtech Telecommunications Corp. | 9,100 | 307,580 | ||||||||
Polycom, Inc.* | 38,800 | 497,416 | ||||||||
|
| |||||||||
| 804,996 | ||||||||||
|
| |||||||||
| ||||||||||
Construction & Engineering 1.3% |
| |||||||||
MYR Group, Inc.* | 55,800 | 1,384,398 | ||||||||
|
| |||||||||
| ||||||||||
Distributors 1.1% |
| |||||||||
Weyco Group, Inc. | 45,200 | 1,173,392 | ||||||||
|
| |||||||||
| ||||||||||
Electric Utilities 3.2% |
| |||||||||
Empire District Electric Co. (The) (a) | 12,900 | 316,179 | ||||||||
PNM Resources, Inc. | 45,500 | 1,167,075 | ||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Electric Utilities (continued) |
| |||||||||
Portland General Electric Co. | 23,200 | $ | 740,776 | |||||||
UIL Holdings Corp. | 30,800 | 1,081,388 | ||||||||
|
| |||||||||
| 3,305,418 | ||||||||||
|
| |||||||||
| ||||||||||
Electrical Equipment 4.1% |
| |||||||||
EnerSys | 46,400 | 2,943,152 | ||||||||
SL Industries, Inc.* | 35,403 | 1,280,881 | ||||||||
|
| |||||||||
| 4,224,033 | ||||||||||
|
| |||||||||
| ||||||||||
Electronic Equipment, Instruments & Components 5.4% |
| |||||||||
Benchmark Electronics, Inc.* | 125,100 | 3,021,165 | ||||||||
Insight Enterprises, Inc.* | 16,000 | 420,320 | ||||||||
Sanmina Corp.* | 72,600 | 1,690,854 | ||||||||
Vishay Intertechnology, Inc. | 30,300 | 446,319 | ||||||||
|
| |||||||||
| 5,578,658 | ||||||||||
|
| |||||||||
| ||||||||||
Energy Equipment & Services 3.4% |
| |||||||||
Bolt Technology Corp. | 73,300 | 1,251,231 | ||||||||
ION Geophysical Corp.* | 30,000 | 112,500 | ||||||||
Matrix Service Co.* | 80,100 | 2,150,685 | ||||||||
|
| |||||||||
| 3,514,416 | ||||||||||
|
| |||||||||
| ||||||||||
Gas Utilities 0.7% |
| |||||||||
Gas Natural, Inc. | 52,700 | 679,303 | ||||||||
|
| |||||||||
| ||||||||||
Health Care Equipment & Supplies 0.9% |
| |||||||||
CONMED Corp. | 8,600 | 335,400 | ||||||||
Digirad Corp. | 91,600 | 302,280 | ||||||||
Kewaunee Scientific Corp. | 15,925 | 286,968 | ||||||||
|
| |||||||||
| 924,648 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Providers & Services 4.0% |
| |||||||||
InfuSystems Holdings, Inc.* (a) | 297,500 | 827,050 | ||||||||
Kindred Healthcare, Inc. | 17,870 | 427,093 | ||||||||
National HealthCare Corp. | 48,400 | 2,660,064 | ||||||||
PharMerica Corp.* | 7,100 | 191,629 | ||||||||
|
| |||||||||
| 4,105,836 | ||||||||||
|
| |||||||||
| ||||||||||
Hotels, Restaurants & Leisure 1.1% |
| |||||||||
Marriott Vacations Worldwide Corp.* | 12,300 | 707,865 | ||||||||
Texas Roadhouse, Inc. | 6,100 | 151,768 | ||||||||
Wendy’s Co. (The) | 37,200 | 303,180 | ||||||||
|
| |||||||||
| 1,162,813 | ||||||||||
|
| |||||||||
| ||||||||||
Household Durables 0.5% |
| |||||||||
Helen of Troy Ltd.* | 8,700 | 466,581 | ||||||||
|
| |||||||||
| ||||||||||
Information Technology Services 6.0% |
| |||||||||
CSG Systems International, Inc. | 113,800 | 2,963,352 | ||||||||
Global Cash Access Holdings, Inc.* | 265,100 | 2,218,887 | ||||||||
NCI, Inc., Class A* | 106,400 | 955,472 | ||||||||
|
| |||||||||
| 6,137,711 | ||||||||||
|
| |||||||||
9
Statement of Investments (Continued)
July 31, 2014
Nationwide Bailard Cognitive Value Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Insurance 7.8% |
| |||||||||
Argo Group International Holdings Ltd. | 8,800 | $ | 438,328 | |||||||
Aspen Insurance Holdings Ltd. | 23,550 | 942,235 | ||||||||
First Acceptance Corp.* | 88,700 | 204,897 | ||||||||
Hanover Insurance Group, Inc. (The) | 48,138 | 2,782,858 | ||||||||
HCI Group, Inc. | 21,238 | 847,396 | ||||||||
Montpelier Re Holdings Ltd. | 33,400 | 986,302 | ||||||||
Symetra Financial Corp. | 41,600 | 948,480 | ||||||||
United Insurance Holdings Corp. | 33,800 | 490,776 | ||||||||
Universal Insurance Holdings, Inc. | 26,230 | 316,334 | ||||||||
|
| |||||||||
| 7,957,606 | ||||||||||
|
| |||||||||
| ||||||||||
Life Sciences Tools & Services 1.1% |
| |||||||||
Albany Molecular Research, Inc.* | 22,300 | 424,592 | ||||||||
Nordion, Inc.* | 57,600 | 746,496 | ||||||||
|
| |||||||||
| 1,171,088 | ||||||||||
|
| |||||||||
| ||||||||||
Machinery 4.8% |
| |||||||||
Hurco Cos., Inc. | 17,300 | 555,503 | ||||||||
Kadant, Inc. | 40,900 | 1,559,926 | ||||||||
LS Starrett Co. (The), Class A | 38,943 | 581,808 | ||||||||
MFRI, Inc.* | 152,806 | 1,682,394 | ||||||||
Standex International Corp. | 7,500 | 494,625 | ||||||||
|
| |||||||||
| 4,874,256 | ||||||||||
|
| |||||||||
| ||||||||||
Media 0.4% |
| |||||||||
Meredith Corp. | 8,200 | 376,544 | ||||||||
|
| |||||||||
| ||||||||||
Metals & Mining 1.4% |
| |||||||||
Century Aluminum Co.* | 25,700 | 483,160 | ||||||||
Commercial Metals Co. | 23,800 | 410,312 | ||||||||
Steel Dynamics, Inc. | 23,900 | 506,919 | ||||||||
|
| |||||||||
| 1,400,391 | ||||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 3.6% |
| |||||||||
Adams Resources & Energy, Inc. | 20,300 | 1,326,402 | ||||||||
Warren Resources, Inc.* | 404,587 | 2,383,017 | ||||||||
|
| |||||||||
| 3,709,419 | ||||||||||
|
| |||||||||
| ||||||||||
Paper & Forest Products 0.4% |
| |||||||||
Neenah Paper, Inc. | 8,200 | 406,884 | ||||||||
|
| |||||||||
| ||||||||||
Professional Services 1.4% |
| |||||||||
VSE Corp. | 24,129 | 1,437,365 | ||||||||
|
| |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 6.1% |
| |||||||||
DCT Industrial Trust, Inc. | 45,800 | 358,614 | ||||||||
DuPont Fabros Technology, Inc. | 40,500 | 1,110,105 | ||||||||
Franklin Street Properties Corp. | 64,400 | 781,816 | ||||||||
Monmouth Real Estate Investment Corp. | 27,100 | 278,588 | ||||||||
One Liberty Properties, Inc. | 46,000 | 953,120 | ||||||||
Post Properties, Inc. | 20,300 | 1,100,260 | ||||||||
Urstadt Biddle Properties, Inc., Class A | 22,700 | 465,123 | ||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) (continued) |
| |||||||||
Winthrop Realty Trust | 81,103 | $ | 1,222,222 | |||||||
|
| |||||||||
| 6,269,848 | ||||||||||
|
| |||||||||
| ||||||||||
Road & Rail 0.2% |
| |||||||||
ArcBest Corp. | 6,000 | 190,380 | ||||||||
|
| |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment 2.0% |
| |||||||||
ASM International NV, NYRS-NL | 10,300 | 389,752 | ||||||||
International Rectifier Corp.* | 68,300 | 1,696,572 | ||||||||
|
| |||||||||
| 2,086,324 | ||||||||||
|
| |||||||||
| ||||||||||
Software 0.5% |
| |||||||||
Perfect World Co., Ltd., ADR-CN | 24,900 | 483,807 | ||||||||
|
| |||||||||
| ||||||||||
Specialty Retail 3.1% |
| |||||||||
Aaron’s, Inc. | 24,300 | 641,034 | ||||||||
Brown Shoe Co., Inc. | 22,500 | 634,275 | ||||||||
Citi Trends, Inc.* | 62,000 | 1,249,300 | ||||||||
Zumiez, Inc.* | 23,500 | 654,475 | ||||||||
|
| |||||||||
| 3,179,084 | ||||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 1.9% |
| |||||||||
Lexmark International, Inc., Class A | 40,300 | 1,935,609 | ||||||||
|
| |||||||||
| ||||||||||
Textiles, Apparel & Luxury Goods 1.1% |
| |||||||||
Crown Crafts, Inc. | 143,000 | 1,108,250 | ||||||||
|
| |||||||||
| ||||||||||
Thrifts & Mortgage Finance 2.4% |
| |||||||||
First Defiance Financial Corp. | 34,100 | 921,041 | ||||||||
WSFS Financial Corp. | 22,240 | 1,592,162 | ||||||||
|
| |||||||||
| 2,513,203 | ||||||||||
|
| |||||||||
| ||||||||||
Wireless Telecommunication Services 2.1% |
| |||||||||
Spok Holdings, Inc. | 142,900 | 2,139,213 | ||||||||
|
| |||||||||
Total Common Stocks |
| 97,517,820 | ||||||||
|
| |||||||||
| Exchange Traded Funds 4.2% | ||||||||||
Equity Funds 4.2% |
| |||||||||
iShares Russell 2000 Value ETF (a) | 17,900 | 1,725,023 | ||||||||
Vanguard Small-Cap Value ETF (a) | 25,300 | 2,541,385 | ||||||||
|
| |||||||||
| 4,266,408 | ||||||||||
|
| |||||||||
Total Exchange Traded Funds |
| 4,266,408 | ||||||||
|
| |||||||||
10
Statement of Investments (Continued)
July 31, 2014
Nationwide Bailard Cognitive Value Fund (Continued)
| Mutual Fund 0.5% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Money Market Fund 0.5% |
| |||||||||
Fidelity Institutional Money Market Fund - Institutional Class, 0.09% (b)(c) | 470,456 | $ | 470,456 | |||||||
|
| |||||||||
Total Mutual Fund (cost $470,456) |
| 470,456 | ||||||||
|
| |||||||||
| Repurchase Agreement 4.2% | ||||||||||
| Principal Amount | ||||||||||
| ||||||||||
Royal Bank of Canada, 0.06%, dated 07/31/14, due 08/01/14, repurchase price $4,344,551, collateralized by a U.S. Treasury Note, 0.63%, maturing 09/30/17; total market value $4,433,236. (c) | $ | 4,344,544 | 4,344,544 | |||||||
|
| |||||||||
Total Repurchase Agreement |
| 4,344,544 | ||||||||
|
| |||||||||
Total Investments |
| 106,599,228 | ||||||||
Liabilities in excess of other assets — (4.0%) | (4,071,435 | ) | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 102,527,793 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | The security or a portion of this security is on loan at July 31, 2014. The total value of securities on loan at July 31, 2014 was $4,711,266. |
| (b) | Represents 7-day effective yield as of July 31, 2014. |
| (c) | Security or a portion of the security was purchased with cash collateral held from securities on loan. The total value of securities purchased with cash collateral as of July 31, 2014 was $4,815,000. |
| (d) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| ADR | American Depositary Receipt |
| CN | China |
| ETF | Exchange Traded Fund |
| Ltd. | Limited |
| NL | Netherlands |
| NV | Public Traded Company |
| NYRS | New York Registry Shares |
| REIT | Real Estate Investment Trust |
The accompanying notes are an integral part of these financial statements.
11
Statement of Assets and Liabilities
July 31, 2014
Nationwide Bailard Cognitive | ||||||
Assets: | ||||||
Investments, at value *(cost $96,799,130) | $ | 102,254,684 | ||||
Repurchase agreement, at value (cost $4,344,544) | 4,344,544 | |||||
|
| |||||
Total Investments, at value (total cost $101,143,674) | 106,599,228 | |||||
|
| |||||
Cash | 1,103,472 | |||||
Dividends receivable | 65,307 | |||||
Security lending income receivable | 4,639 | |||||
Receivable for investments sold | 402,836 | |||||
Receivable for capital shares issued | 43,856 | |||||
Prepaid expenses | 16,776 | |||||
|
| |||||
Total Assets | 108,236,114 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 459,510 | |||||
Payable for capital shares redeemed | 306,917 | |||||
Payable upon return of securities loaned (Note 2) | 4,815,000 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 68,732 | |||||
Fund administration fees | 9,745 | |||||
Distribution fees | 11,397 | |||||
Administrative servicing fees | 1,338 | |||||
Accounting and transfer agent fees | 2,637 | |||||
Trustee fees | 257 | |||||
Custodian fees | 447 | |||||
Compliance program costs (Note 3) | 1,352 | |||||
Professional fees | 22,970 | |||||
Printing fees | 4,427 | |||||
Other | 3,592 | |||||
|
| |||||
Total Liabilities | 5,708,321 | |||||
|
| |||||
Net Assets | $ | 102,527,793 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 89,353,813 | ||||
Accumulated undistributed net investment income | 102,851 | |||||
Accumulated net realized gains from investments | 7,615,575 | |||||
Net unrealized appreciation/(depreciation) from investments | 5,455,554 | |||||
|
| |||||
Net Assets | $ | 102,527,793 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 1,102,616 | ||||
Class C Shares | 12,501,150 | |||||
Class M Shares | 88,479,981 | |||||
Institutional Service Class Shares | 433,029 | |||||
Institutional Class Shares | 11,017 | |||||
|
| |||||
Total | $ | 102,527,793 | ||||
|
| |||||
| * | Includes value of securities on loan of $4,711,266 (Note 2). |
12
Statement of Assets and Liabilities (Continued)
July 31, 2014
| Nationwide Bailard Cognitive Value Fund | ||||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 83,307 | |||||
Class C Shares | 988,336 | |||||
Class M Shares | 6,705,048 | |||||
Institutional Service Class Shares | 32,766 | |||||
Institutional Class Shares | 835 | |||||
|
| |||||
Total | 7,810,292 | |||||
|
| |||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 13.24 | ||||
Class C Shares (b) | $ | 12.65 | ||||
Class M Shares | $ | 13.20 | ||||
Institutional Service Class Shares | $ | 13.22 | ||||
Institutional Class Shares | $ | 13.19 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 14.05 | ||||
|
| |||||
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 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.
13
Statement of Operations
For the Year Ended July 31, 2014
| Nationwide Bailard Cognitive Value Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 1,930,085 | ||||
Interest income | 39 | |||||
Income from securities lending (Note 2) | 19,165 | |||||
Foreign tax withholding | (2,728 | ) | ||||
|
| |||||
Total Income | 1,946,561 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 788,408 | |||||
Fund administration fees | 130,275 | |||||
Distribution fees Class A | 2,822 | |||||
Distribution fees Class C | 104,128 | |||||
Administrative servicing fees Class A | 1,422 | |||||
Administrative servicing fees Class C | 324 | |||||
Administrative servicing fees Institutional Service Class (a) | 1,939 | |||||
Registration and filing fees | 56,519 | |||||
Professional fees | 34,026 | |||||
Printing fees | 15,605 | |||||
Trustee fees | 2,672 | |||||
Custodian fees | 4,123 | |||||
Accounting and transfer agent fees | 9,849 | |||||
Compliance program costs (Note 3) | 1,748 | |||||
Other | 12,913 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 1,166,773 | |||||
|
| |||||
Earnings credit (Note 5) | (150 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (141 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (a) | (235 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (3,943 | ) | ||||
|
| |||||
Net Expenses | 1,162,304 | |||||
|
| |||||
NET INVESTMENT INCOME | 784,257 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 10,481,797 | |||||
Net change in unrealized appreciation/(depreciation) from investments | (922,140 | ) | ||||
|
| |||||
Net realized/unrealized gains from investments | 9,559,657 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 10,343,914 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
14
Statements of Changes in Net Assets
| Nationwide Bailard Cognitive Value Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 784,257 | $ | 1,330,136 | ||||||||
Net realized gains from investments | 10,481,797 | 22,104,698 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | (922,140 | ) | 1,516,351 | |||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 10,343,914 | 24,951,185 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (8,779 | ) | (5,466 | ) | ||||||||
Class C | (142,234 | ) | (1,418 | ) | ||||||||
Class M | (1,159,326 | ) | (975,185 | ) | ||||||||
Institutional Service Class (a) | (12,903 | ) | (35,776 | ) | ||||||||
Institutional Class | (129 | )(b) | – | |||||||||
Net realized gains: | ||||||||||||
Class A | (204,658 | ) | – | |||||||||
Class C | (2,644,093 | ) | – | |||||||||
Class M | (17,530,044 | ) | – | |||||||||
Institutional Service Class (a) | (246,368 | ) | – | |||||||||
Institutional Class | (1,945 | )(b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (21,950,479 | ) | (1,017,845 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 17,352,778 | (9,217,565 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets | 5,746,213 | 14,715,775 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 96,781,580 | 82,065,805 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 102,527,793 | $ | 96,781,580 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 102,851 | $ | 509,622 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 316,147 | $ | 493,322 | (c) | |||||||
Dividends reinvested | 187,155 | 4,699 | ||||||||||
Cost of shares redeemed | (413,516 | ) | (205,914 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 89,786 | 292,107 | ||||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 15,698,391 | 125,270 | (c) | |||||||||
Dividends reinvested | 2,776,516 | 1,190 | ||||||||||
Cost of shares redeemed | (4,562,217 | ) | (102,342 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 13,912,690 | 24,118 | ||||||||||
|
|
|
| |||||||||
Class M Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 7,493,203 | 6,055,974 | (c) | |||||||||
Dividends reinvested | 16,892,388 | 866,070 | ||||||||||
Cost of shares redeemed | (19,651,113 | ) | (12,514,797 | ) | ||||||||
|
|
|
| |||||||||
Total Class M Shares | 4,734,478 | (5,592,753 | ) | |||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
| (c) | Includes redemption fees. See Note 4 for further information. |
15
Statements of Changes in Net Assets (Continued)
| Nationwide Bailard Cognitive Value Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | $ | 64,180 | $ | 1,303,454 | (c) | |||||||
Dividends reinvested | 234,018 | 30,635 | ||||||||||
Cost of shares redeemed | (1,694,448 | ) | (5,275,126 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (1,396,250 | ) | (3,941,037 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 10,000 | (b) | – | |||||||||
Dividends reinvested | 2,074 | (b) | – | |||||||||
Cost of shares redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 12,074 | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 17,352,778 | $ | (9,217,565 | ) | |||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 23,095 | 36,204 | ||||||||||
Reinvested | 15,020 | 383 | ||||||||||
Redeemed | (29,775 | ) | (15,249 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 8,340 | 21,338 | ||||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 1,069,693 | 9,595 | ||||||||||
Reinvested | 232,150 | 100 | ||||||||||
Redeemed | (351,995 | ) | (7,810 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 949,848 | 1,885 | ||||||||||
|
|
|
| |||||||||
Class M Shares (Note 12) | ||||||||||||
Issued | 548,913 | 455,168 | ||||||||||
Reinvested | 1,360,746 | 70,873 | ||||||||||
Redeemed | (1,436,347 | ) | (922,037 | ) | ||||||||
|
|
|
| |||||||||
Total Class M Shares | 473,312 | (395,996 | ) | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Issued | 5,024 | 98,683 | ||||||||||
Reinvested | 18,826 | 2,507 | ||||||||||
Redeemed | (120,659 | ) | (412,288 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (96,809 | ) | (311,098 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 668 | (b) | – | |||||||||
Reinvested | 167 | (b) | – | |||||||||
Redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 835 | (b) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | 1,335,526 | (683,871 | ) | |||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
| (c) | Includes redemption fees. See Note 4 for further information. |
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 Bailard Cognitive Value 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 | Net Realized Gains | Total Distributions | Redemption Fees | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net (Loss) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | ||||||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 14.97 | 0.06 | 1.24 | 1.30 | (0.12 | ) | (2.91 | ) | (3.03 | ) | – | $ | 13.24 | 10.00% | (h) | $ | 1,102,616 | 1.37% | 0.46% | 1.38% | 286.05% | ||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.48 | 0.14 | 3.45 | 3.59 | (0.10 | ) | – | (0.10 | ) | – | $ | 14.97 | 31.48% | $ | 1,122,377 | 1.47% | 1.09% | 1.58% | 339.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.51 | 0.03 | (0.01 | ) | 0.02 | (0.05 | ) | – | (0.05 | ) | – | $ | 11.48 | 0.21% | $ | 615,772 | 1.47% | 0.23% | 1.60% | 268.00% | |||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 9.37 | 0.07 | 2.19 | 2.26 | (0.12 | ) | – | (0.12 | ) | – | $ | 11.51 | 24.05% | $ | 961,056 | 1.47% | 0.60% | 1.58% | 216.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 7.89 | 0.03 | 1.50 | (i) | 1.53 | (0.05 | ) | – | (0.05 | ) | – | $ | 9.37 | 19.60% | (i) | $ | 654,681 | 1.45% | 0.34% | 1.58% | 152.00% | ||||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 14.55 | (0.02 | ) | 1.19 | 1.17 | (0.16 | ) | (2.91 | ) | (3.07 | ) | – | $ | 12.65 | 9.25% | $ | 12,501,150 | 1.99% | (0.14% | ) | 1.99% | 286.05% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.17 | 0.06 | 3.36 | 3.42 | (0.04 | ) | – | (0.04 | ) | – | $ | 14.55 | 30.67% | $ | 559,903 | 2.07% | 0.49% | 2.08% | 339.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.20 | (0.04 | ) | 0.01 | (0.03 | ) | – | – | – | – | $ | 11.17 | (0.27% | ) | $ | 408,689 | 2.07% | (0.37% | ) | 2.10% | 268.00% | ||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 9.11 | – | 2.12 | 2.12 | (0.03 | ) | – | (0.03 | ) | – | $ | 11.20 | 23.30% | $ | 567,831 | 2.07% | – | 2.08% | 216.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 7.68 | (0.02 | ) | 1.47 | (i) | 1.45 | (0.02 | ) | – | (0.02 | ) | – | $ | 9.11 | 18.92% | (i) | $ | 520,057 | 2.05% | (0.26% | ) | 2.08% | 152.00% | ||||||||||||||||||||||||||||||||||||
| Class M Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 14.95 | 0.12 | 1.23 | 1.35 | (0.19 | ) | (2.91 | ) | (3.10 | ) | – | $ | 13.20 | 10.38% | $ | 88,479,981 | 1.00% | 0.85% | 1.01% | 286.05% | |||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.47 | 0.19 | 3.44 | 3.63 | (0.15 | ) | – | (0.15 | ) | – | $ | 14.95 | 31.94% | $ | 93,162,527 | 1.07% | 1.49% | 1.08% | 339.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.51 | 0.07 | – | 0.07 | (0.11 | ) | – | (0.11 | ) | – | $ | 11.47 | 0.71% | $ | 75,990,508 | 1.07% | 0.63% | 1.10% | 268.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 9.37 | 0.11 | 2.18 | 2.29 | (0.15 | ) | – | (0.15 | ) | – | $ | 11.51 | 24.54% | $ | 87,921,410 | 1.07% | 1.00% | 1.08% | 216.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 7.87 | 0.06 | 1.51 | (i) | 1.57 | (0.07 | ) | – | (0.07 | ) | – | $ | 9.37 | 20.08% | (i) | $ | 70,390,248 | 1.05% | 0.74% | 1.08% | 152.00% | ||||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 14.95 | 0.10 | 1.23 | 1.33 | (0.15 | ) | (2.91 | ) | (3.06 | ) | – | $ | 13.22 | 10.23% | (h) | $ | 433,029 | 1.14% | 0.75% | 1.16% | 286.05% | ||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.46 | 0.18 | 3.45 | 3.63 | (0.14 | ) | – | (0.14 | ) | – | $ | 14.95 | 31.93% | $ | 1,936,773 | 1.14% | 1.42% | 1.33% | 339.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.50 | 0.06 | – | 0.06 | (0.10 | ) | – | (0.10 | ) | – | $ | 11.46 | 0.60% | $ | 5,050,836 | 1.16% | 0.54% | 1.35% | 268.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 9.36 | 0.09 | 2.19 | 2.28 | (0.14 | ) | – | (0.14 | ) | – | $ | 11.50 | 24.32% | $ | 5,075,223 | 1.21% | 0.86% | 1.33% | 216.00% | ||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 7.87 | 0.06 | 1.50 | (i) | 1.56 | (0.07 | ) | – | (0.07 | ) | – | $ | 9.36 | 20.06% | (i) | $ | 2,230,226 | 1.13% | 0.66% | 1.33% | 152.00% | ||||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(k) | $ | 14.97 | 0.09 | 1.23 | 1.32 | (0.19 | ) | (2.91 | ) | (3.10 | ) | – | $ | 13.19 | 10.15% | $ | 11,017 | 0.99% | 0.76% | 0.99% | 286.05% | |||||||||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception date on September 16, 2013 are based on the perfomance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. |
| (i) | Includes payment by affiliates of $0.001 per share. The effects of such payments did not affect the amount shown as total return for the period. |
| (j) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (k) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
17
| Fund Commentary | Nationwide Bailard International Equities Fund |
For the annual period ended July 31, 2014, the Nationwide Bailard International Equities Fund (Class M) returned 16.42%* versus 15.07% for its benchmark, the MSCI EAFE® Index, and 15.91% for its former benchmark, the MSCI ACWI ex USA.** For broader comparison, the median return for the Fund’s closest Lipper peer category of International Multi-Cap Core Funds (consisting of 379 funds as of July 31, 2014) was 12.67% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
**The Fund’s benchmark changed to the MSCI EAFE® Index effective February 3, 2014.
The Fund operates from the top down, with a strategy that focuses first on country selection, followed by stock selection within each individual market. During the reporting period, country selection was neutral to slightly negative while stock selection was a positive contributor to Fund performance versus the benchmark.
During the reporting period, added value for the Fund in the area of country selection came from overweighting the Fund’s investments in selected emerging and developed markets. The reporting period was punctuated by two distinct periods. During the first six months, developed markets performed very well while emerging markets struggled; the reverse was true during the latter half of the reporting period. In the initial period, concerns about tapering (reduction) of bond purchases by the U.S. Federal Reserve and uncertainty about policies in Japan that were intended to weaken that country’s currency led to fears of both competitive currency devaluations in Asia and risk to a range of emerging markets (termed the “Fragile Five” consisting of Turkey, Brazil, India, South Africa and Indonesia). Due to large current account deficits, the Fragile Five were considered most dependent on foreign capital. In the latter half of the reporting period, concerns about continuing weakness in Europe led to talk of deflation, bringing the yield on 10-year Swiss government debt below that of Japan. Alternatively, investors discounted their fears of financial risk around emerging markets
(even as political risk cropped up in a diverse range of markets, including Thailand, Russia, Turkey and Argentina) and began to recognize the compelling relative value in many of these countries.
Beneficial country choices for the Fund during the reporting period included overweight positions in Finland, India, and Argentina and an underweight position in Switzerland. While Japanese companies produced great earnings during this period, Japanese shares failed to follow suit. The combination, though, of overweighting the market while hedging a portion of the currency risk did result in a slight net benefit for the Fund as the yen declined from 98 to 103 in relation to the U.S. dollar during the reporting period.
Results for the Fund on the stock selection side during the reporting period were strongest in Japan and across much of developed Europe (France, the U.K., Spain, and Switzerland), where portfolio holdings far outperformed the index. Within each market, the Fund’s sector weights are generally held in line with the index, and sector selection is not pursued as an investment strategy. Notable individual stocks held by the Fund that outperformed during the reporting period included printer and watch maker Seiko Epson in Japan, computer peripheral company Logitech International in Switzerland, banks Credit Agricole in France and Bankinter in Spain, auto parts supplier Valeo in France, and retailer W.H. Smith in the U.K.
Country selection decisions that did not help Fund results during the reporting period included a couple of “misses” in high-flying developed markets (underweights in Italy, Denmark and Australia) as well as overweight exposures to disappointing emerging markets Hungary and Russia.
Points of weakness for stock selection in the Fund during the reporting period were Netherlands, Italy, Hong Kong and India, where Fund holdings failed to keep up with the respective MSCI country indexes. The benefits of the Fund’s strong returns in the large developed markets outweighed the negative results from the Fund’s investments in these relatively smaller markets.
18
| Fund Commentary (con’t.) | Nationwide Bailard International Equities Fund |
The most notable individual stock detractor from Fund performance during the reporting period was a name not held by the Fund, Nokia in Finland, which rose mightily on a generous bid by Microsoft for its handset business. Other detractors from Fund performance included an exposure to PostNL, the Dutch mail service, and an overweight to Hong Kong developer New World Development.
During the reporting period, the Fund entered into financial futures contracts to enable the Fund to more closely approximate the performance of its benchmark or for tactical hedging purposes. The Fund entered into forward foreign currency contracts in connection with planned purchases or sales of securities denominated in a foreign currency and/or to hedge the U.S. dollar value of portfolio securities denominated in a foreign currency.
Subadviser:
Bailard, Inc.
Portfolio Managers:
Anthony Craddock, Peter M. Hill and Eric P. Leve
The Fund is subject to the risks of investing in equity securities and risks associated with investing in foreign securities, such as currency fluctuation, political risk, differences in accounting and limited availability of information, all of which are magnified in emerging markets. The Fund may invest in more-aggressive investments such as derivatives (many of which create investment leverage and are highly volatile) and exchange-traded funds (ETFs) (shareholders will bear additional costs). High double-digit returns are unusual and cannot be sustained. Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
19
| Fund Overview | Nationwide Bailard International Equities Fund |
Objective
The Fund seeks long-term capital appreciation.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide Bailard International Equities Fund (Class M) returned 16.42%, outperforming its benchmark by 1.35% and the Lipper peer category median by 3.75%. |
| Ÿ | During the reporting period, country selection was neutral to slightly negative while stock selection was a positive contributor to Fund performance versus the benchmark. |
| Ÿ | Beneficial country choices for the Fund during the reporting period included overweight positions in Finland, India, and Argentina and an underweight position in Switzerland. While Japanese companies produced great earnings during this period, Japanese shares failed to follow suit. |
Asset Allocation†
| Common Stocks | 96.4% | |||
| Repurchase Agreement | 1.7% | |||
| Exchange Traded Fund | 1.4% | |||
| Mutual Fund | 0.2% | |||
| Other assets in excess of liabilities | 0.3% | |||
| 100.0% |
Top Industries††
| Banks | 12.4% | |||
| Oil, Gas & Consumable Fuels | 7.8% | |||
| Pharmaceuticals | 6.1% | |||
| Insurance | 5.7% | |||
| Diversified Telecommunication Services | 4.1% | |||
| Food Products | 3.5% | |||
| Capital Markets | 3.5% | |||
| Auto Components | 3.2% | |||
| Construction & Engineering | 3.2% | |||
| Wireless Telecommunication Services | 2.9% | |||
| Other Industries* | 47.6% | |||
| 100.0% |
Top Holdings††
| Seiko Epson Corp. | 2.0% | |||
| Sumitomo Mitsui Financial Group, Inc. | 1.9% | |||
| Unilever PLC | 1.8% | |||
| Market Vectors Russia ETF | 1.4% | |||
| Vinci SA | 1.3% | |||
| Credit Agricole SA | 1.3% | |||
| BT Group PLC | 1.1% | |||
| Bayer AG | 1.1% | |||
| Deutsche Post AG | 1.1% | |||
| AstraZeneca PLC | 1.1% | |||
| Other Holdings* | 85.9% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
| * | For purposes of listing top industries, top holdings and top countries, the repurchase agreement is included as part of Other. |
20
| Fund Performance | Nationwide Bailard International Equities Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 15.92% | 9.30% | 7.99% | – | |||||||||||||
| w/ SC3 | 9.56% | 8.06% | 7.39% | – | ||||||||||||||
| Class C1 | w/o SC2 | 15.12% | 8.59% | 7.27% | – | |||||||||||||
| w/ SC4 | 14.12% | 8.59% | 7.27% | – | ||||||||||||||
| Class M1,5 | 16.42% | 9.67% | 8.36% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 16.13% | 9.48% | 8.20% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 8.78% | 7* | |||||||||||||
| MSCI EAFE Index | 15.07% | 9.40% | 7.07% | – | ||||||||||||||
| MSCI ACWI ex USA | 15.48% | 9.29% | 7.32% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Expense Ratio* | ||||
| Class A | 1.42% | |||
| Class C | 2.01% | |||
| Class M | 0.92% | |||
| Institutional Service Class | 1.17% | |||
| Institutional Class | 0.92% | |||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). Please see the Fund’s most recent prospectus for details. |
21
| Fund Performance (con’t.) | Nationwide Bailard International Equities 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 Class M shares of the Nationwide Bailard International Equities Fund versus the MSCI EAFE® Index (current benchmark), the MSCI ACWI ex USA (former benchmark) and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
22
| Shareholder Expense Example | Nationwide Bailard International Equities 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide Bailard International July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,053.80 | 5.96 | 1.17 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,018.99 | 5.86 | 1.17 | ||||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,050.20 | 9.86 | 1.94 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,015.17 | 9.69 | 1.94 | ||||||||
| Class M Shares | Actual | (a) | 1,000.00 | 1,055.10 | 4.43 | 0.87 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,020.48 | 4.36 | 0.87 | ||||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,055.20 | 4.64 | 0.91 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,020.28 | 4.56 | 0.91 | ||||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,055.20 | 4.38 | 0.86 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,020.53 | 4.31 | 0.86 | ||||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
23
Statement of Investments
July 31, 2014
Nationwide Bailard International Equities Fund
| Common Stocks 96.4% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
ARGENTINA 1.1% |
| |||||||||
Banks 0.5% |
| |||||||||
Grupo Financiero Galicia SA, ADR (a) | 70,000 | $ | 1,128,400 | |||||||
|
| |||||||||
Internet Software & Services 0.2% |
| |||||||||
MercadoLibre, Inc. | 7,000 | 647,500 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.4% |
| |||||||||
YPF SA, ADR | 30,000 | 1,061,400 | ||||||||
|
| |||||||||
| 2,837,300 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
AUSTRALIA 7.5% |
| |||||||||
Biotechnology 0.4% | ||||||||||
CSL Ltd. | 15,000 | 934,553 | ||||||||
|
| |||||||||
Capital Markets 1.2% |
| |||||||||
Macquarie Group Ltd. | 50,000 | 2,675,982 | ||||||||
Magellan Financial Group Ltd. | 60,000 | 647,491 | ||||||||
|
| |||||||||
| 3,323,473 | ||||||||||
|
| |||||||||
Commercial Services & Supplies 0.4% |
| |||||||||
Brambles Ltd. | 120,000 | 1,038,853 | ||||||||
|
| |||||||||
Construction Materials 0.5% |
| |||||||||
CSR Ltd. | 400,000 | 1,391,141 | ||||||||
|
| |||||||||
Containers & Packaging 0.9% |
| |||||||||
Amcor Ltd. | 250,000 | 2,392,822 | ||||||||
|
| |||||||||
Diversified Financial Services 0.7% |
| |||||||||
Challenger Ltd. | 250,000 | 1,851,367 | ||||||||
|
| |||||||||
Diversified Telecommunication Services 0.4% |
| |||||||||
Telstra Corp., Ltd. | 225,000 | 1,140,999 | ||||||||
|
| |||||||||
Food & Staples Retailing 0.8% |
| |||||||||
Wesfarmers Ltd. | 50,000 | 2,024,710 | ||||||||
|
| |||||||||
Health Care Providers & Services 0.3% |
| |||||||||
Primary Health Care Ltd. | 150,000 | 670,710 | ||||||||
|
| |||||||||
Hotels, Restaurants & Leisure 0.4% |
| |||||||||
Aristocrat Leisure Ltd. | 200,000 | 1,049,155 | ||||||||
|
| |||||||||
Insurance 0.5% |
| |||||||||
Suncorp Group Ltd. | 100,000 | 1,314,807 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.6% |
| |||||||||
Woodside Petroleum Ltd. | 40,000 | 1,570,158 | ||||||||
|
| |||||||||
Real Estate Investment Trusts (REITs) 0.4% |
| |||||||||
Dexus Property Group | 1,000,000 | 1,098,711 | ||||||||
|
| |||||||||
| 19,801,459 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
CANADA 4.0% |
| |||||||||
Auto Components 0.4% | ||||||||||
Magna International, Inc. | 10,000 | 1,073,875 | ||||||||
|
| |||||||||
Banks 0.7% | ||||||||||
Toronto-Dominion Bank (The) | 35,000 | 1,830,330 | ||||||||
|
| |||||||||
Capital Markets 0.7% | ||||||||||
CI Financial Corp. | 60,000 | 1,942,496 | ||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
CANADA (continued) |
| |||||||||
Metals & Mining 0.7% | ||||||||||
Agnico Eagle Mines Ltd. | 50,000 | $ | 1,859,036 | |||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 1.2% | ||||||||||
Enerplus Corp. | 70,000 | 1,600,495 | ||||||||
Suncor Energy, Inc. | 35,000 | 1,437,107 | ||||||||
|
| |||||||||
| 3,037,602 | ||||||||||
|
| |||||||||
Professional Services 0.3% |
| |||||||||
Stantec, Inc. | 12,000 | 761,370 | ||||||||
|
| |||||||||
| 10,504,709 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
COLOMBIA 0.9% |
| |||||||||
Banks 0.5% | ||||||||||
Bancolombia SA, ADR (a) | 20,000 | 1,248,200 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.4% |
| |||||||||
Ecopetrol SA, ADR (a) | 30,000 | 1,012,200 | ||||||||
|
| |||||||||
| 2,260,400 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
DENMARK 1.1% |
| |||||||||
Diversified Telecommunication Services 0.3% |
| |||||||||
TDC A/S | 70,000 | 706,169 | ||||||||
|
| |||||||||
Electrical Equipment 0.4% |
| |||||||||
Vestas Wind Systems A/S* | 25,000 | 1,127,180 | ||||||||
|
| |||||||||
Textiles, Apparel & Luxury Goods 0.4% |
| |||||||||
Pandora A/S | 15,000 | 1,026,465 | ||||||||
|
| |||||||||
| 2,859,814 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
EGYPT 0.9% |
| |||||||||
Banks 0.5% |
| |||||||||
Commercial International Bank Egypt SAE, GDR REG | 223,254 | 1,299,606 | ||||||||
|
| |||||||||
Wireless Telecommunication Services 0.4% |
| |||||||||
Global Telecom Holding, GDR* | 278,497 | 967,256 | ||||||||
|
| |||||||||
| 2,266,862 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
FINLAND 3.5% |
| |||||||||
Diversified Telecommunication Services 0.7% |
| |||||||||
Elisa OYJ | 60,000 | 1,718,599 | ||||||||
|
| |||||||||
Insurance 0.7% |
| |||||||||
Sampo OYJ, Class A | 35,000 | 1,738,645 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.3% | ||||||||||
Neste Oil OYJ (a) | 45,000 | 831,550 | ||||||||
|
| |||||||||
Paper & Forest Products 1.4% | ||||||||||
Stora Enso OYJ, Class R | 200,000 | 1,797,009 | ||||||||
UPM-Kymmene OYJ | 130,000 | 2,118,814 | ||||||||
|
| |||||||||
| 3,915,823 | ||||||||||
|
| |||||||||
Pharmaceuticals 0.4% | ||||||||||
Orion OYJ, Class B | 25,000 | 926,856 | ||||||||
|
| |||||||||
| 9,131,473 | ||||||||||
|
| |||||||||
24
Statement of Investments (Continued)
July 31, 2014
Nationwide Bailard International Equities Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
FRANCE 8.5% |
| |||||||||
Aerospace & Defense 0.3% | ||||||||||
Safran SA | 15,000 | $ | 881,509 | |||||||
|
| |||||||||
Auto Components 0.7% | ||||||||||
Valeo SA | 15,000 | 1,797,266 | ||||||||
|
| |||||||||
Automobiles 0.5% | ||||||||||
Renault SA | 15,000 | 1,252,201 | ||||||||
|
| |||||||||
Banks 1.3% | ||||||||||
Credit Agricole SA | 250,000 | 3,381,851 | ||||||||
|
| |||||||||
Construction & Engineering 1.8% | ||||||||||
Eiffage SA | 20,000 | 1,296,407 | ||||||||
Vinci SA | 50,000 | 3,450,646 | ||||||||
|
| |||||||||
| 4,747,053 | ||||||||||
|
| |||||||||
Diversified Telecommunication Services 0.4% |
| |||||||||
Orange SA | 70,000 | 1,096,152 | ||||||||
|
| |||||||||
Electric Utilities 0.4% | ||||||||||
Electricite de France SA | 35,000 | 1,130,635 | ||||||||
|
| |||||||||
Food & Staples Retailing 0.5% | ||||||||||
Casino Guichard Perrachon SA | 12,000 | 1,446,302 | ||||||||
|
| |||||||||
Information Technology Services 0.3% | ||||||||||
Cap Gemini SA | 12,000 | 870,160 | ||||||||
|
| |||||||||
Insurance 0.3% | ||||||||||
SCOR SE | 25,000 | 804,220 | ||||||||
|
| |||||||||
Multi-Utilities 0.5% | ||||||||||
GDF Suez | 50,000 | 1,289,226 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.7% | ||||||||||
Total SA | 30,000 | 1,934,842 | ||||||||
|
| |||||||||
Pharmaceuticals 0.8% | ||||||||||
Sanofi | 20,000 | 2,099,818 | ||||||||
|
| |||||||||
| 22,731,235 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
GERMANY 7.4% | ||||||||||
Air Freight & Logistics 1.1% | ||||||||||
Deutsche Post AG REG | 90,000 | 2,879,521 | ||||||||
|
| |||||||||
Auto Components 0.5% | ||||||||||
Continental AG | 6,000 | 1,292,186 | ||||||||
|
| |||||||||
Automobiles 0.3% | ||||||||||
Daimler AG REG | 10,000 | 825,187 | ||||||||
|
| |||||||||
Hotels, Restaurants & Leisure 0.7% | ||||||||||
TUI AG | 140,000 | 1,975,989 | ||||||||
|
| |||||||||
Insurance 1.7% | ||||||||||
Allianz SE REG | 10,000 | 1,664,861 | ||||||||
Hannover Rueck SE | 20,000 | 1,707,274 | ||||||||
Muenchener Rueckversicherungs AG REG | 5,000 | 1,060,861 | ||||||||
|
| |||||||||
| 4,432,996 | ||||||||||
|
| |||||||||
Media 0.3% | ||||||||||
ProSiebenSat.1 Media AG REG | 20,000 | 838,570 | ||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
GERMANY (continued) | ||||||||||
Pharmaceuticals 1.4% | ||||||||||
Bayer AG REG | 22,000 | $ | 2,901,942 | |||||||
Merck KGaA | 10,000 | 884,300 | ||||||||
|
| |||||||||
| 3,786,242 | ||||||||||
|
| |||||||||
Semiconductors & Semiconductor Equipment 0.8% |
| |||||||||
Infineon Technologies AG | 200,000 | 2,203,705 | ||||||||
|
| |||||||||
Wireless Telecommunication Services 0.6% |
| |||||||||
Freenet AG | 60,000 | 1,583,191 | ||||||||
|
| |||||||||
| 19,817,587 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
GREECE 1.7% | ||||||||||
Banks 0.6% | ||||||||||
Alpha Bank AE* | 2,000,000 | 1,598,079 | ||||||||
|
| |||||||||
Diversified Telecommunication Services 0.5% |
| |||||||||
Hellenic Telecommunications Organization SA* | 100,000 | 1,370,767 | ||||||||
|
| |||||||||
Hotels, Restaurants & Leisure 0.6% |
| |||||||||
OPAP SA | 100,000 | 1,629,649 | ||||||||
|
| |||||||||
| 4,598,495 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
INDIA 5.2% |
| |||||||||
Automobiles 0.4% |
| |||||||||
Tata Motors Ltd., ADR* | 25,000 | 983,000 | ||||||||
|
| |||||||||
Banks 0.8% |
| |||||||||
ICICI Bank Ltd., ADR | 40,000 | 2,000,800 | ||||||||
|
| |||||||||
Chemicals 0.3% |
| |||||||||
UPL Ltd.* | 150,000 | 811,868 | ||||||||
|
| |||||||||
Construction & Engineering 0.6% |
| |||||||||
IRB Infrastructure Developers Ltd. | 400,000 | 1,687,153 | ||||||||
|
| |||||||||
Diversified Financial Services 0.4% |
| |||||||||
Power Finance Corp., Ltd. | 220,000 | 967,230 | ||||||||
|
| |||||||||
Household Products 0.6% |
| |||||||||
Hindustan Unilever Ltd. | 150,000 | 1,695,630 | ||||||||
|
| |||||||||
Information Technology Services 0.9% |
| |||||||||
HCL Technologies Ltd. | 30,000 | 769,302 | ||||||||
Infosys Ltd., ADR | 27,000 | 1,480,140 | ||||||||
|
| |||||||||
| 2,249,442 | ||||||||||
|
| |||||||||
Metals & Mining 0.3% |
| |||||||||
Tata Steel Ltd. | 100,000 | 908,095 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.6% |
| |||||||||
Coal India Ltd. | 110,000 | 665,275 | ||||||||
Reliance Industries Ltd., GDR (b) | 30,000 | 991,823 | ||||||||
|
| |||||||||
| 1,657,098 | ||||||||||
|
| |||||||||
Pharmaceuticals 0.3% |
| |||||||||
Dr. Reddy’s Laboratories Ltd., ADR* (a) | 15,000 | 671,250 | ||||||||
|
| |||||||||
| 13,631,566 | ||||||||||
|
| |||||||||
25
Statement of Investments (Continued)
July 31, 2014
Nationwide Bailard International Equities Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
IRELAND 2.6% |
| |||||||||
Construction Materials 0.4% |
| |||||||||
CRH PLC | 40,000 | $ | 933,621 | |||||||
|
| |||||||||
Containers & Packaging 0.5% |
| |||||||||
Smurfit Kappa Group PLC | 60,000 | 1,302,073 | ||||||||
|
| |||||||||
Food Products 0.4% |
| |||||||||
Kerry Group PLC, Class A | 13,000 | 965,526 | ||||||||
|
| |||||||||
Industrial Conglomerates 0.4% |
| |||||||||
DCC PLC | 20,000 | 1,141,087 | ||||||||
|
| |||||||||
Pharmaceuticals 0.9% |
| |||||||||
Shire PLC | 30,000 | 2,469,250 | ||||||||
|
| |||||||||
| 6,811,557 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
ISRAEL 1.3% |
| |||||||||
Banks 0.3% |
| |||||||||
Bank Hapoalim BM | 150,000 | 874,988 | ||||||||
|
| |||||||||
Diversified Telecommunication Services 0.3% |
| |||||||||
Bezeq The Israeli Telecommunication Corp., Ltd. | 450,000 | 837,908 | ||||||||
|
| |||||||||
Pharmaceuticals 0.7% | ||||||||||
Teva Pharmaceutical Industries Ltd., ADR | 30,000 | 1,604,999 | ||||||||
|
| |||||||||
| 3,317,895 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
ITALY 1.5% | ||||||||||
Electric Utilities 0.4% | ||||||||||
Enel SpA | 200,000 | 1,138,596 | ||||||||
|
| |||||||||
Insurance 0.7% | ||||||||||
UnipolSai SpA | 600,000 | 1,816,322 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.4% | ||||||||||
Eni SpA | 40,000 | 1,017,837 | ||||||||
|
| |||||||||
| 3,972,755 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
JAPAN 17.0% | ||||||||||
Airlines 0.7% | ||||||||||
Japan Airlines Co., Ltd. | 35,000 | 1,933,312 | ||||||||
|
| |||||||||
Auto Components 1.6% | ||||||||||
Bridgestone Corp. | 60,000 | 2,165,422 | ||||||||
NHK Spring Co., Ltd. | 75,000 | 734,477 | ||||||||
Toyo Tire & Rubber Co., Ltd. | 75,000 | 1,361,799 | ||||||||
|
| |||||||||
| 4,261,698 | ||||||||||
|
| |||||||||
Automobiles 0.4% | ||||||||||
Fuji Heavy Industries Ltd. | 40,000 | 1,140,692 | ||||||||
|
| |||||||||
Banks 3.0% | ||||||||||
Mitsubishi UFJ Financial Group, Inc. | 300,000 | 1,769,191 | ||||||||
Resona Holdings, Inc. | 200,000 | 1,114,516 | ||||||||
Sumitomo Mitsui Financial Group, Inc. | 125,000 | 5,095,560 | ||||||||
|
| |||||||||
| 7,979,267 | ||||||||||
|
| |||||||||
Capital Markets 0.4% | ||||||||||
Daiwa Securities Group, Inc. | 120,000 | 1,007,519 | ||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
JAPAN (continued) | ||||||||||
Chemicals 1.4% | ||||||||||
DIC Corp. | 300,000 | $ | 687,301 | |||||||
Sumitomo Chemical Co., Ltd. | 300,000 | 1,140,308 | ||||||||
Tosoh Corp. | 400,000 | 1,755,067 | ||||||||
|
| |||||||||
| 3,582,676 | ||||||||||
|
| |||||||||
Food & Staples Retailing 0.4% | ||||||||||
Aeon Co., Ltd. | 100,000 | 1,122,812 | ||||||||
|
| |||||||||
Food Products 0.3% | ||||||||||
Nippon Suisan Kaisha Ltd.* | 300,000 | 864,080 | ||||||||
|
| |||||||||
Health Care Providers & Services 0.3% | ||||||||||
Medipal Holdings Corp. | 70,000 | 882,189 | ||||||||
|
| |||||||||
Household Durables 1.5% | ||||||||||
Panasonic Corp. | 80,000 | 997,474 | ||||||||
Sekisui Chemical Co., Ltd. | 90,000 | 1,079,141 | ||||||||
Sekisui House Ltd. | 140,000 | 1,837,483 | ||||||||
|
| |||||||||
| 3,914,098 | ||||||||||
|
| |||||||||
Information Technology Services 0.4% | ||||||||||
SCSK Corp. | 35,000 | 967,918 | ||||||||
|
| |||||||||
Leisure Products 0.4% |
| |||||||||
Heiwa Corp. | 40,000 | 942,219 | ||||||||
|
| |||||||||
Machinery 0.2% | ||||||||||
Mitsui Engineering & Shipbuilding Co., Ltd. | 300,000 | 610,550 | ||||||||
|
| |||||||||
Marine 0.4% | ||||||||||
Nippon Yusen KK | 400,000 | 1,146,092 | ||||||||
|
| |||||||||
Personal Products 0.5% | ||||||||||
Kao Corp. | 30,000 | 1,233,727 | ||||||||
|
| |||||||||
Road & Rail 0.4% | ||||||||||
Sankyu, Inc. | 240,000 | 1,168,627 | ||||||||
|
| |||||||||
Technology Hardware, Storage & Peripherals 2.5% |
| |||||||||
Ricoh Co., Ltd. | 100,000 | 1,144,751 | ||||||||
Seiko Epson Corp. | 125,000 | 5,350,737 | ||||||||
|
| |||||||||
| 6,495,488 | ||||||||||
|
| |||||||||
Trading Companies & Distributors 1.2% | ||||||||||
Marubeni Corp. | 350,000 | 2,459,815 | ||||||||
Sumitomo Corp. | 60,000 | 790,683 | ||||||||
|
| |||||||||
| 3,250,498 | ||||||||||
|
| |||||||||
Wireless Telecommunication Services 1.0% |
| |||||||||
KDDI Corp. | 45,000 | 2,586,732 | ||||||||
|
| |||||||||
| 45,090,194 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
NETHERLANDS 1.6% | ||||||||||
Food & Staples Retailing 0.6% | ||||||||||
Koninklijke Ahold NV | 92,307 | 1,609,495 | ||||||||
|
| |||||||||
Insurance 0.6% | ||||||||||
Aegon NV | 200,000 | 1,621,933 | ||||||||
|
| |||||||||
Media 0.4% | ||||||||||
Wolters Kluwer NV | 35,000 | 969,721 | ||||||||
|
| |||||||||
| 4,201,149 | ||||||||||
|
| |||||||||
26
Statement of Investments (Continued)
July 31, 2014
Nationwide Bailard International Equities Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
NORWAY 2.8% | ||||||||||
Banks 0.7% | ||||||||||
DNB ASA | 100,000 | $ | 1,772,159 | |||||||
|
| |||||||||
Diversified Telecommunication Services 0.4% |
| |||||||||
Telenor ASA | 50,000 | 1,150,652 | ||||||||
|
| |||||||||
Energy Equipment & Services 0.4% | ||||||||||
TGS Nopec Geophysical Co. ASA | 40,000 | 1,134,466 | ||||||||
|
| |||||||||
Food Products 0.4% | ||||||||||
Marine Harvest ASA | 70,000 | 952,173 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.9% | ||||||||||
Statoil ASA | 80,000 | 2,285,967 | ||||||||
|
| |||||||||
| 7,295,417 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
PAKISTAN 2.0% | ||||||||||
Banks 0.3% | ||||||||||
United Bank Ltd. | 400,000 | 788,820 | ||||||||
|
| |||||||||
Chemicals 0.6% | ||||||||||
Engro Corp., Ltd.* | 900,000 | 1,684,618 | ||||||||
Engro Fertilizers Ltd.* | 60,000 | 33,199 | ||||||||
|
| |||||||||
| 1,717,817 | ||||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.8% | ||||||||||
Oil & Gas Development Co., Ltd. | 250,000 | 698,127 | ||||||||
Pakistan Petroleum Ltd. | 450,000 | 1,051,598 | ||||||||
|
| |||||||||
| 1,749,725 | ||||||||||
|
| |||||||||
Textiles, Apparel & Luxury Goods 0.3% | ||||||||||
Nishat Mills Ltd. | 750,000 | 898,397 | ||||||||
|
| |||||||||
| 5,154,759 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
RUSSIA 1.6% | ||||||||||
Banks 0.3% | ||||||||||
Sberbank of Russia, ADR | 80,000 | 662,400 | ||||||||
|
| |||||||||
Metals & Mining 0.3% | ||||||||||
MMC Norilsk Nickel OJSC, ADR | 40,000 | 782,248 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.7% | ||||||||||
Gazprom OAO, ADR | 120,000 | 875,604 | ||||||||
Lukoil OAO, ADR | 20,000 | 1,116,000 | ||||||||
|
| |||||||||
| 1,991,604 | ||||||||||
|
| |||||||||
Wireless Telecommunication Services 0.3% |
| |||||||||
Mobile Telesystems OJSC, ADR | 40,000 | 717,200 | ||||||||
|
| |||||||||
| 4,153,452 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
SOUTH AFRICA 1.4% | ||||||||||
Diversified Financial Services 0.3% | ||||||||||
FirstRand Ltd. | 220,000 | 884,493 | ||||||||
|
| |||||||||
Household Durables 0.3% | ||||||||||
Steinhoff International Holdings Ltd. | 150,000 | 749,313 | ||||||||
|
| |||||||||
Metals & Mining 0.2% | ||||||||||
AngloGold Ashanti Ltd., ADR* | 35,000 | 601,650 | ||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
SOUTH AFRICA (continued) | ||||||||||
Oil, Gas & Consumable Fuels 0.3% | ||||||||||
Sasol Ltd. | 13,000 | $ | 749,884 | |||||||
|
| |||||||||
Wireless Telecommunication Services 0.3% |
| |||||||||
Vodacom Group Ltd. | 60,000 | 701,287 | ||||||||
|
| |||||||||
| 3,686,627 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
SPAIN 3.7% | ||||||||||
Banks 1.4% | ||||||||||
Banco Santander SA | 150,000 | 1,507,094 | ||||||||
Bankinter SA | 250,000 | 2,158,658 | ||||||||
|
| |||||||||
| 3,665,752 | ||||||||||
|
| |||||||||
Construction & Engineering 0.4% | ||||||||||
ACS Actividades de Construccion y Servicios SA | 25,000 | 1,093,228 | ||||||||
|
| |||||||||
Gas Utilities 0.9% | ||||||||||
Gas Natural SDG SA | 75,000 | 2,304,207 | ||||||||
|
| |||||||||
Information Technology Services 0.4% | ||||||||||
Amadeus IT Holding SA, Class A | 30,000 | 1,180,519 | ||||||||
|
| |||||||||
Oil, Gas & Consumable Fuels 0.6% | ||||||||||
Repsol SA | 65,000 | 1,620,942 | ||||||||
|
| |||||||||
| 9,864,648 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
SWEDEN 2.5% |
| |||||||||
Banks 0.8% |
| |||||||||
Skandinaviska Enskilda Banken AB, Class A | 170,000 | 2,275,786 | ||||||||
|
| |||||||||
Commercial Services & Supplies 0.3% | ||||||||||
Securitas AB, Class B | 70,000 | 813,873 | ||||||||
|
| |||||||||
Communications Equipment 0.4% | ||||||||||
Telefonaktiebolaget LM Ericsson, Class B | 80,000 | 996,151 | ||||||||
|
| |||||||||
Construction & Engineering 0.3% | ||||||||||
NCC AB, Class B | 25,000 | 781,177 | ||||||||
|
| |||||||||
Household Durables 0.4% | ||||||||||
Electrolux AB | 40,000 | 992,082 | ||||||||
|
| |||||||||
Household Products 0.3% | ||||||||||
Svenska Cellulosa AB SCA, Class B | 30,000 | 738,782 | ||||||||
|
| |||||||||
| 6,597,851 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
SWITZERLAND 2.9% | ||||||||||
Food Products 0.4% | ||||||||||
Aryzta AG* | 12,000 | 1,085,406 | ||||||||
|
| |||||||||
Insurance 0.7% | ||||||||||
Swiss Life Holding AG REG* | 8,000 | 1,849,987 | ||||||||
|
| |||||||||
Life Sciences Tools & Services 0.6% | ||||||||||
Lonza Group AG REG* | 15,000 | 1,663,405 | ||||||||
|
| |||||||||
Machinery 1.2% | ||||||||||
Georg Fischer AG REG* | 2,000 | 1,321,655 | ||||||||
OC Oerlikon Corp. AG REG* | 120,000 | 1,619,436 | ||||||||
|
| |||||||||
| 2,941,091 | ||||||||||
|
| |||||||||
| 7,539,889 | ||||||||||
|
| |||||||||
27
Statement of Investments (Continued)
July 31, 2014
Nationwide Bailard International Equities Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
TURKEY 1.4% | ||||||||||
Banks 0.4% | ||||||||||
Turkiye Halk Bankasi AS | 150,000 | $ | 1,129,431 | |||||||
|
| |||||||||
Metals & Mining 0.4% | ||||||||||
Eregli Demir ve Celik Fabrikalari TAS | 500,000 | 1,054,265 | ||||||||
|
| |||||||||
Real Estate Investment Trusts (REITs) 0.3% |
| |||||||||
Emlak Konut Gayrimenkul Yatirim Ortakligi AS | 600,000 | 777,498 | ||||||||
|
| |||||||||
Wireless Telecommunication Services 0.3% |
| |||||||||
Turkcell Iletisim Hizmetleri AS* | 120,000 | 784,717 | ||||||||
|
| |||||||||
| 3,745,911 | ||||||||||
|
| |||||||||
|
|
|
|
| ||||||
UNITED KINGDOM 12.3% | ||||||||||
Banks 0.3% | ||||||||||
Bank of Georgia Holdings PLC | 20,000 | 819,796 | ||||||||
|
| |||||||||
Capital Markets 1.1% | ||||||||||
3i Group PLC | 150,000 | 952,721 | ||||||||
Aberdeen Asset Management PLC | 300,000 | 2,082,725 | ||||||||
|
| |||||||||
| 3,035,446 | ||||||||||
|
| |||||||||
Containers & Packaging 0.3% | ||||||||||
DS Smith PLC | 200,000 | 881,959 | ||||||||
|
| |||||||||
Diversified Telecommunication Services 1.1% |
| |||||||||
BT Group PLC | 450,000 | 2,946,106 | ||||||||
|
| |||||||||
Food Products 2.0% |
| |||||||||
Tate & Lyle PLC | 70,000 | 734,901 | ||||||||
Unilever PLC | 110,000 | 4,752,720 | ||||||||
|
| |||||||||
| 5,487,621 | ||||||||||
|
| |||||||||
Household Products 0.4% | ||||||||||
Reckitt Benckiser Group PLC | 12,000 | 1,059,330 | ||||||||
|
| |||||||||
Insurance 0.5% | ||||||||||
| �� | Direct Line Insurance Group PLC | 300,000 | 1,440,059 | |||||||
|
| |||||||||
Media 1.0% | ||||||||||
Daily Mail & General Trust PLC, Class A | 80,000 | 1,127,862 | ||||||||
ITV PLC | 400,000 | 1,404,069 | ||||||||
|
| |||||||||
| 2,531,931 | ||||||||||
|
| |||||||||
Multiline Retail 0.4% | ||||||||||
Next PLC | 10,000 | 1,141,320 | ||||||||
|
| |||||||||
Paper & Forest Products 0.4% | ||||||||||
Mondi PLC | 60,000 | 1,050,838 | ||||||||
|
| |||||||||
Pharmaceuticals 1.7% | ||||||||||
AstraZeneca PLC | 38,085 | 2,780,833 | ||||||||
GlaxoSmithKline PLC | 70,000 | 1,686,913 | ||||||||
|
| |||||||||
| 4,467,746 | ||||||||||
|
| |||||||||
Professional Services 0.4% | ||||||||||
Capita PLC | 50,000 | 1,012,420 | ||||||||
|
| |||||||||
Road & Rail 0.2% | ||||||||||
Stagecoach Group PLC | 100,000 | 597,927 | ||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
UNITED KINGDOM (continued) | ||||||||||
Software 0.4% | ||||||||||
Micro Focus International PLC | 67,132 | $ | 960,677 | |||||||
|
| |||||||||
Specialty Retail 0.9% | ||||||||||
WH Smith PLC | 120,000 | 2,283,666 | ||||||||
|
| |||||||||
Tobacco 1.2% | ||||||||||
British American Tobacco PLC | 30,000 | 1,757,473 | ||||||||
Imperial Tobacco Group PLC | 30,000 | 1,298,819 | ||||||||
|
| |||||||||
| 3,056,292 | ||||||||||
|
| |||||||||
| 32,773,134 | ||||||||||
|
| |||||||||
Total Common Stocks (cost $212,653,875) |
| 254,646,138 | ||||||||
|
| |||||||||
| Exchange Traded Fund 1.4% | ||||||||||
UNITED STATES 1.4% | ||||||||||
Market Vectors Russia ETF* | 150,000 | 3,603,000 | ||||||||
|
| |||||||||
Total Exchange Traded Fund |
| 3,603,000 | ||||||||
|
| |||||||||
| Mutual Fund 0.2% | ||||||||||
Money Market Fund 0.2% |
| |||||||||
Fidelity Institutional Money Market Fund - Institutional Class, 0.09% (c)(d) | 500,041 | 500,041 | ||||||||
|
| |||||||||
Total Mutual Fund (cost $500,041) |
| 500,041 | ||||||||
|
| |||||||||
| Repurchase Agreement 1.7% | ||||||||||
| Principal Amount | ||||||||||
| ||||||||||
Royal Bank of Canada, 0.06%, dated 07/31/14, due 08/01/14, repurchase price $4,617,766, collateralized by a U.S. Treasury Note, 0.63%, maturing 09/30/17; total market value $4,712,029. (d) | $ | 4,617,759 | 4,617,759 | |||||||
|
| |||||||||
Total Repurchase Agreement |
| 4,617,759 | ||||||||
|
| |||||||||
Total Investments |
| 263,366,938 | ||||||||
Other assets in excess of liabilities — 0.3% | 918,051 | |||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 264,284,989 | |||||||
|
| |||||||||
28
Statement of Investments (Continued)
July 31, 2014
Nationwide Bailard International Equities Fund (Continued)
| * | Denotes a non-income producing security. |
| (a) | The security or a portion of this security is on loan at July 31, 2014. The total value of securities on loan at July 31, 2014 was $4,968,850. |
| (b) | 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 July 31, 2014 was $991,823 which represents 0.38% of net assets. |
| (c) | Represents 7-day effective yield as of July 31, 2014. |
| (d) | Security or a portion of the security was purchased with cash collateral held from securities on loan. The total value of securities purchased with cash collateral as of July 31, 2014 was $5,117,800. |
| (e) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| AB | Stock Company |
| ADR | American Depositary Receipt |
| AE | Limited Company |
| AG | Stock Corporation |
| A/S | Minimum Capital Public Traded Company |
| AS | Stock Corporation |
| ASA | Stock Corporation |
| BM | Limited Liability |
| ETF | Exchange Traded Fund |
| GDR | Global Depositary Receipt |
| KGaA | Limited Partnership with shares |
| KK | Joint Stock Company |
| Ltd. | Limited |
| NV | Public Traded Company |
| OAO | Joint Stock Company |
| OJSC | Open Joint Stock Company |
| OYJ | Public Traded Company |
| PLC | Public Limited Company |
| REG | Registered Shares |
| REIT | Real Estate Investment Trust |
| SA | Stock Company |
| SCA | Limited partnership with share capital |
| SE | European Public Limited Liability Company |
| SpA | Limited Share Company |
| TAS | Joint Stock Company |
At July 31, 2014, 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: | ||||||||||||||||||||||||
| Euro | Brown Brothers Harriman & Co. | 08/27/14 | (6,600,000 | ) | $ | (8,992,764 | ) | $ | (8,838,427 | ) | $ | 154,337 | ||||||||||||
| Japanese Yen | Brown Brothers Harriman & Co. | 09/19/14 | (2,000,000,000 | ) | (19,593,436 | ) | (19,448,660 | ) | 144,776 | |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
| Total Short Contracts | $ | (28,586,200 | ) | $ | (28,287,087 | ) | $ | 299,113 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
29
Statement of Assets and Liabilities
July 31, 2014
Nationwide Bailard International Equities Fund | ||||||
Assets: | ||||||
Investments, at value* (cost $217,327,744) | $ | 258,749,179 | ||||
Repurchase agreement, at value (cost $4,617,759) | 4,617,759 | |||||
|
| |||||
Total Investments, at value (total cost $221,945,503) | 263,366,938 | |||||
|
| |||||
Cash | 6,310,338 | |||||
Foreign currencies, at value (cost $20,485) | 20,452 | |||||
Dividends receivable | 298,709 | |||||
Security lending income receivable | 7,757 | |||||
Receivable for investments sold | 7,041,012 | |||||
Receivable for capital shares issued | 239,900 | |||||
Reclaims receivable | 376,633 | |||||
Unrealized appreciation on forward foreign currency contracts (Note 2) | 299,113 | |||||
Prepaid expenses | 17,055 | |||||
|
| |||||
Total Assets | 277,977,907 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 8,225,340 | |||||
Payable for capital shares redeemed | 2,106 | |||||
Payable upon return of securities loaned (Note 2) | 5,117,800 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 172,051 | |||||
Fund administration fees | 12,320 | |||||
Distribution fees | 2,524 | |||||
Administrative servicing fees | 37,434 | |||||
Accounting and transfer agent fees | 3,869 | |||||
Trustee fees | 596 | |||||
Deferred capital gain country tax | 80,099 | |||||
Custodian fees | 1,678 | |||||
Compliance program costs (Note 3) | 1,124 | |||||
Professional fees | 27,119 | |||||
Printing fees | 4,990 | |||||
Other | 3,868 | |||||
|
| |||||
Total Liabilities | 13,692,918 | |||||
|
| |||||
Net Assets | $ | 264,284,989 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 240,727,859 | ||||
Accumulated undistributed net investment income | 6,182,096 | |||||
Accumulated net realized losses from investments, futures, forward and foreign currency transactions | (24,263,279 | ) | ||||
Net unrealized appreciation/(depreciation) from investments† | 41,341,336 | |||||
Net unrealized appreciation/(depreciation) from forward foreign currency contracts (Note 2) | 299,113 | |||||
Net unrealized appreciation/(depreciation) from translation of assets and liabilities denominated in foreign currencies | (2,136 | ) | ||||
|
| |||||
Net Assets | $ | 264,284,989 | ||||
|
| |||||
| * | Includes value of securities on loan of $4,968,850 (Note 2). |
| † | Net of $80,099 of deferred capital gain country tax. |
30
Statement of Assets and Liabilities (Continued)
July 31, 2014
Nationwide Bailard International | ||||||
Net Assets: | ||||||
Class A Shares | $ | 3,238,747 | ||||
Class C Shares | 2,088,816 | |||||
Class M Shares | 172,401,379 | |||||
Institutional Service Class Shares | 85,990,498 | |||||
Institutional Class Shares | 565,549 | |||||
|
| |||||
Total | $ | 264,284,989 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 384,690 | |||||
Class C Shares | 249,617 | |||||
Class M Shares | 20,485,815 | |||||
Institutional Service Class Shares | 10,225,716 | |||||
Institutional Class Shares | 67,217 | |||||
|
| |||||
Total | 31,413,055 | |||||
|
| |||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 8.42 | ||||
Class C Shares (b) | $ | 8.37 | ||||
Class M Shares | $ | 8.42 | ||||
Institutional Service Class Shares | $ | 8.41 | ||||
Institutional Class Shares | $ | 8.41 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 8.93 | ||||
|
| |||||
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 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.
31
Statement of Operations
For the Year Ended July 31, 2014
| Nationwide Bailard International Equities Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 8,245,530 | ||||
Income from securities lending (Note 2) | 290,367 | |||||
Foreign tax withholding | (861,094 | ) | ||||
|
| |||||
Total Income | 7,674,803 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 1,853,615 | |||||
Fund administration fees | 175,765 | |||||
Distribution fees Class A | 9,465 | |||||
Distribution fees Class C | 16,303 | |||||
Administrative servicing fees Class A | 5,899 | |||||
Administrative servicing fees Class C | 655 | |||||
Administrative servicing fees Institutional Service Class (a) | 99,962 | |||||
Registration and filing fees | 56,672 | |||||
Professional fees | 53,456 | |||||
Printing fees | 18,292 | |||||
Trustee fees | 6,144 | |||||
Custodian fees | 25,616 | |||||
Accounting and transfer agent fees | 10,343 | |||||
Compliance program costs (Note 3) | 1,866 | |||||
Other | 29,152 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 2,363,205 | |||||
|
| |||||
Earnings credit (Note 5) | (223 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (1,055 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (a) | (7,733 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (5,050 | ) | ||||
|
| |||||
Net Expenses | 2,349,144 | |||||
|
| |||||
NET INVESTMENT INCOME | 5,325,659 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions† | 19,909,477 | |||||
Net realized gains from futures transactions (Note 2) | 114,341 | |||||
Net realized gains from forward and foreign currency transactions (Note 2) | 463,733 | |||||
|
| |||||
Net realized gains from investments, futures, forward and foreign currency transactions | 20,487,551 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments†† | 9,003,349 | |||||
Net change in unrealized appreciation/(depreciation) from futures contracts (Note 2) | (84,595 | ) | ||||
Net change in unrealized appreciation/(depreciation) from forward foreign currency contracts (Note 2) | 582,161 | |||||
Net change in unrealized appreciation/(depreciation) from translation of assets and liabilities denominated in foreign currencies | (22,628 | ) | ||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments, futures contracts, forward foreign currency contracts, and translation of assets and liabilities denominated in foreign currencies | 9,478,287 | |||||
|
| |||||
Net realized/unrealized gains from investments, futures, forward and foreign currency transactions, and translation of assets and liabilities denominated in foreign currencies | 29,965,838 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 35,291,497 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| † | Net of capital gain country taxes of $11,963. |
| †† | Net of increase in deferred capital gain country tax accrual on unrealized depreciation of $80,099. |
The accompanying notes are an integral part of these financial statements.
32
Statements of Changes in Net Assets
Nationwide Bailard International Equities Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 5,325,659 | $ | 4,674,601 | ||||||||
Net realized gains from investments, futures, forward and foreign currency transactions | 20,487,551 | 12,360,956 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments, futures contracts, forward foreign currency contracts, and translation of assets and liabilities denominated in foreign currencies | 9,478,287 | 21,360,062 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 35,291,497 | 38,395,619 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (81,222 | ) | (50,144 | ) | ||||||||
Class C | (17,079 | ) | (7,450 | ) | ||||||||
Class M | (3,735,701 | ) | (2,633,788 | ) | ||||||||
Institutional Service Class (a) | (1,435,087 | ) | (1,189,568 | ) | ||||||||
Institutional Class | (231 | )(b) | — | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (5,269,320 | ) | (3,880,950 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 19,788,821 | (10,857,206 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets | 49,810,998 | 23,657,463 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 214,473,991 | 190,816,528 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 264,284,989 | $ | 214,473,991 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 6,182,096 | $ | 4,542,327 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 1,296,717 | $ | 1,714,811 | (c) | |||||||
Dividends reinvested | 75,925 | 43,775 | ||||||||||
Cost of shares redeemed | (2,857,523 | ) | (1,484,760 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (1,484,881 | ) | 273,826 | |||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 993,880 | 141,363 | (c) | |||||||||
Dividends reinvested | 15,435 | 6,555 | ||||||||||
Cost of shares redeemed | (254,673 | ) | (363,280 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 754,642 | (215,362 | ) | |||||||||
|
|
|
| |||||||||
Class M Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 14,549,643 | 14,021,008 | (c) | |||||||||
Dividends reinvested | 3,344,102 | 2,300,833 | ||||||||||
Cost of shares redeemed | (14,872,680 | ) | (13,903,604 | ) | ||||||||
|
|
|
| |||||||||
Total Class M Shares | 3,021,065 | 2,418,237 | ||||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
| (c) | Includes redemption fees. See Note 4 for further information. |
33
Statements of Changes in Net Assets (Continued)
Nationwide Bailard International Equities Fund | ||||||||||||
Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | $ | 28,664,343 | $ | 18,806,412 | (c) | |||||||
Dividends reinvested | 491,055 | 460,313 | ||||||||||
Cost of shares redeemed | (12,206,688 | ) | (32,600,632 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 16,948,710 | (13,333,907 | ) | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 986,922 | (b) | – | |||||||||
Dividends reinvested | 231 | (b) | – | |||||||||
Cost of shares redeemed | (437,868 | )(b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 549,285 | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 19,788,821 | $ | (10,857,206 | ) | |||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 157,349 | 242,887 | ||||||||||
Reinvested | 9,599 | 6,353 | ||||||||||
Redeemed | (350,983 | ) | (208,284 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (184,035 | ) | 40,956 | |||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 120,551 | 19,970 | ||||||||||
Reinvested | 1,954 | 954 | ||||||||||
Redeemed | (30,963 | ) | (52,939 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 91,542 | (32,015 | ) | |||||||||
|
|
|
| |||||||||
Class M Shares (Note 12) | ||||||||||||
Issued | 1,798,547 | 1,959,519 | ||||||||||
Reinvested | 423,840 | 335,398 | ||||||||||
Redeemed | (1,801,419 | ) | (1,942,751 | ) | ||||||||
|
|
|
| |||||||||
Total Class M Shares | 420,968 | 352,166 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Issued | 3,479,364 | 2,671,833 | ||||||||||
Reinvested | 62,238 | 67,003 | ||||||||||
Redeemed | (1,496,688 | ) | (4,608,686 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 2,044,914 | (1,869,850 | ) | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 118,100 | (b) | – | |||||||||
Reinvested | 29 | (b) | – | |||||||||
Redeemed | (50,912 | )(b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 67,217 | (b) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | 2,440,606 | (1,508,743 | ) | |||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
| (c) | Includes redemption fees. See Note 4 for further information. |
The accompanying notes are an integral part of these financial statements.
34
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Bailard International Equities Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | 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)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 7.41 | 0.14 | 1.03 | 1.17 | (0.16 | ) | (0.16 | ) | – | $ | 8.42 | 15.92% | $ | 3,238,747 | 1.29% | 1.69% | 1.32% | 83.79% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 6.27 | 0.14 | 1.11 | 1.25 | (0.11 | ) | (0.11 | ) | – | $ | 7.41 | 20.04% | $ | 4,216,776 | 1.38% | 1.94% | 1.58% | 97.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 7.45 | 0.13 | (1.15 | ) | (1.02 | ) | (0.16 | ) | (0.16 | ) | – | $ | 6.27 | (13.57% | ) | $ | 3,306,852 | 1.49% | 2.04% | 1.67% | 102.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 6.32 | 0.11 | 1.14 | 1.25 | (0.12 | ) | (0.12 | ) | – | $ | 7.45 | 20.05% | $ | 5,066,564 | 1.62% | 1.52% | 1.77% | 95.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 5.98 | 0.08 | 0.40 | 0.48 | (0.14 | ) | (0.14 | ) | – | $ | 6.32 | 8.04% | $ | 6,692,942 | 1.60% | 1.28% | 1.78% | 84.00% | |||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 7.37 | 0.11 | 1.00 | 1.11 | (0.11 | ) | (0.11 | ) | – | $ | 8.37 | 15.12% | $ | 2,088,816 | 1.93% | 1.31% | 1.94% | 83.79% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 6.22 | 0.09 | 1.11 | 1.20 | (0.05 | ) | (0.05 | ) | – | $ | 7.37 | 19.28% | $ | 1,164,820 | 2.08% | 1.24% | 2.08% | 97.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 7.37 | 0.08 | (1.13 | ) | (1.05 | ) | (0.10 | ) | (0.10 | ) | – | $ | 6.22 | (14.07% | ) | $ | 1,181,621 | 2.17% | 1.36% | 2.17% | 102.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 6.26 | 0.06 | 1.13 | 1.19 | (0.08 | ) | (0.08 | ) | – | $ | 7.37 | 19.16% | $ | 2,289,773 | 2.27% | 0.87% | 2.27% | 95.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 5.92 | 0.04 | 0.39 | 0.43 | (0.09 | ) | (0.09 | ) | – | $ | 6.26 | 7.39% | $ | 1,974,951 | 2.28% | 0.60% | 2.28% | 84.00% | |||||||||||||||||||||||||||||||||||||
| Class M Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 7.40 | 0.18 | 1.02 | 1.20 | (0.18 | ) | (0.18 | ) | – | $ | 8.42 | 16.42% | $ | 172,401,379 | 0.90% | 2.19% | 0.90% | 83.79% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 6.26 | 0.16 | 1.12 | 1.28 | (0.14 | ) | (0.14 | ) | – | $ | 7.40 | 20.53% | $ | 148,561,732 | 1.08% | 2.24% | 1.08% | 97.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 7.47 | 0.15 | (1.16 | ) | (1.01 | ) | (0.20 | ) | (0.20 | ) | – | $ | 6.26 | (13.28% | ) | $ | 123,438,593 | 1.17% | 2.36% | 1.17% | 102.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 6.34 | 0.13 | 1.15 | 1.28 | (0.15 | ) | (0.15 | ) | – | $ | 7.47 | 20.39% | $ | 150,887,844 | 1.27% | 1.87% | 1.27% | 95.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 6.00 | 0.10 | 0.40 | 0.50 | (0.16 | ) | (0.16 | ) | – | $ | 6.34 | 8.31% | $ | 133,320,908 | 1.28% | 1.60% | 1.28% | 84.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 7.40 | 0.17 | 1.01 | 1.18 | (0.17 | ) | (0.17 | ) | – | $ | 8.41 | 16.13% | $ | 85,990,498 | 1.02% | 2.12% | 1.04% | 83.79% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 6.26 | 0.15 | 1.11 | 1.26 | (0.12 | ) | (0.12 | ) | – | $ | 7.40 | 20.34% | $ | 60,530,663 | 1.21% | 2.11% | 1.33% | 97.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 7.46 | 0.14 | (1.16 | ) | (1.02 | ) | (0.18 | ) | (0.18 | ) | – | $ | 6.26 | (13.35% | ) | $ | 62,889,462 | 1.31% | 2.21% | 1.42% | 102.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 6.33 | 0.12 | 1.15 | 1.27 | (0.14 | ) | (0.14 | ) | – | $ | 7.46 | 20.25% | $ | 93,100,614 | 1.45% | 1.69% | 1.52% | 95.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 6.00 | 0.09 | 0.39 | 0.48 | (0.15 | ) | (0.15 | ) | – | $ | 6.33 | 8.03% | $ | 79,236,673 | 1.44% | 1.44% | 1.53% | 84.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 7.91 | 0.18 | 0.50 | 0.68 | (0.18 | ) | (0.18 | ) | – | $ | 8.41 | 8.78% | $ | 565,549 | 0.86% | 2.39% | 0.86% | 83.79% | |||||||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
35
| Fund Commentary | Nationwide Bailard Technology & Science Fund |
For the annual period ended July 31, 2014, the Nationwide Bailard Technology & Science Fund (Class M) returned 22.85%* versus 24.89% for its benchmark, the S&P North American Technology Sector IndexTM, and 27.69% for its former benchmark, the NASDAQ-100 Index.** For broader comparison, the median return for the Fund’s closest Lipper peer category of Science & Technology Funds (consisting of 155 funds as of July 31, 2014) was 21.34% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
**The Fund’s benchmark changed to the S&P North American Technology Sector IndexTM effective February 3, 2014.
Portfolio Performance and Return Drivers
Underperformance against both the NASDAQ-100 Index and the S&P North American Technology Sector IndexTM can be attributed mainly to economic conditions that prevailed during the last month of the Fund’s fiscal year, when small-capitalization stocks severely lagged their large- and mega-cap competitors, detracting from relative Fund performance given the smaller-weighted average market cap.
The Fund’s stock selection within the semiconductor industry during the reporting period detracted from Fund performance, particularly through an underweight to bellwether Intel Corp. and an overweight to Xilinx, Inc. Intel has been the beneficiary of better-than-expected enterprise personal computer (PC) numbers, primarily due to the spring 2014 expiration of support for the popular Windows XP operating system. This event spurred a PC refresh for many users, representing the first shoots of green in the industry in years, and, combined with slowing tablet sales, boosted optimism that Intel can return to sustained growth. The market shrugged off continued weak mobile processor numbers. Xilinx suffered from inventory buildup as LTE (long-term evolution) wireless communication sales slowed in the second quarter of 2014, particularly in China, and because of an increase in competitive pressure.
The Fund’s positive stock selection during the reporting period helped within the information technology services and Internet retail sectors as the Fund’s overweight in Euronet Worldwide. Inc. and TripAdvisor, Inc. both outperformed due to better-than-expected revenue growth. Euronet Worldwide inked a large deal to provide white-label services for the new Walmart-to-Walmart money transfer offering. This offering has exceeded early expectations, and management left open the possibility of additional white-label services. TripAdvisor continues to execute well on a long-term plan to increase monetization of site visitors. The firm has struggled recently with some execution issues, but the market has rewarded the revenue growth acceleration thus far.
The Fund’s sector overweight in biotechnology also was helpful as the Fund’s health-care exposure posted a return of 28.41% against the NASDAQ Biotechnology Index (a modified, market cap-weighted index comprising approximately 120 members), which rose 27.27% during the reporting period. The Fund’s overweight bets in Gilead Sciences, Inc.; Biogen Idec Inc.; and Incyte Corp. were the largest contributors to Fund performance during the reporting period.
Market Commentary
Technology stocks enjoyed strong returns during the reporting period, with both the S&P North American Technology Sector IndexTM and NASDAQ-100 Index outperforming the broad S&P 500® Index, which returned 16.94%. High-multiple-growth stocks soared for the first two thirds of the Fund’s fiscal year, but, as we noted in the Fund’s semiannual report, those stocks pulled back dramatically in March 2014 as valuations finally trumped momentum. Investors quickly rotated into value and “old” tech, areas of the market in which valuations were much more reasonable. This rotation partly explains the outperformance of both indexes noted above when compared to the Morningstar Specialty Tech category, as open-ended funds were more heavily weighted to high-growth technology stocks. The Fund benefited significantly from this growth-to-value rotation during the reporting
36
| Fund Commentary (con’t.) | Nationwide Bailard Technology & Science Fund |
period. The other significant trend that has been developing in the market recently is the outperformance of mega-cap stocks; much of the performance differential occurred in the last month of the Fund’s fiscal year. Macroeconomic issues and the specter of rising interest rates were partly to blame as investors moved to reduce risk. Historically, our research indicates that these divergent periods of favor involving small-cap and large-cap stocks have been transitory in nature and may represent active opportunities.
Biotechnology stocks (as measured by the NASDAQ Biotechnology Index) performed well during the reporting period despite two significant drawdowns during the Fund’s fiscal year. Each of these pullbacks may be attributed largely to the Federal Reserve’s governors’ commenting on stretched biotechnology stock valuations. New York Fed Governor Dudley made his comments in early March 2014; in July 2014, Federal Reserve Chair Yellen reiterated those statements in her semiannual address to Congress. Offsetting these “warnings” were excellent clinical data from Gilead Sciences related to its Hepatitis C (HCV) franchise, which also had a positive effect on other HCV-focused companies (Merck & Co., Inc. announced the acquisition of Idenix Pharmaceuticals Inc. for $3.85 billion in early June 2014). In addition, surprisingly robust sales growth and pricing metrics from some newly established therapies (such as Biogen Idec’s TECFIDERA® treatment for multiple sclerosis) as well as the bid put in place by the sudden rush of companies seeking to invert (merge with a foreign corporation to avoid paying higher U.S. taxes on foreign-generated income) helped counteract the Fed’s broadcasted valuation concerns.
Outlook and Positioning
We believe the recent mega-cap outperformance has created opportunities within small-cap stocks in the technology sector. With a careful eye on risk, we have positioned the portfolio to take advantage of a reversal in this trend. We continue to focus on high-quality technology names with an opportunistic eye for investor overreactions.
Despite our previously voiced concerns about biotechnology sector observations of overvaluation, we were still surprised to hear the Fed specifically mention biotechnology stocks in a July policy report. We question the relevance of biotechnology valuations to the market in general and the relative impact a sector with just 394 publicly traded companies and a total market capitalization of only $645 billion (just a touch more than Apple Inc. alone) would have on U.S. economic policy. Our earlier observations ultimately prepared us well for this outcome, however, as we lowered the biotechnology overweight position in the Fund. We are looking for an opportunity to increase the biotechnology weight in the Fund and ideally become more focused in fewer biotechnology holdings, as we believe certain larger firms will come to own specific disease categories and with that drive significant earnings power — especially with the emergence of coordinated care in the U.S. health-care system.
Subadviser:
Bailard, Inc.
Portfolio Managers:
Warren Matthew Johnson, David H. Smith, CFA and Sonya Thadhani
The Fund is subject to the risks of investing in equity securities, including new public companies. Growth funds may underperform other funds that use different investing styles. Funds that concentrate on specific sectors may be subject to greater volatility than that of other mutual funds. The Fund may invest in more-aggressive investments such as derivatives (many of which create investment leverage and are highly volatile) and foreign securities (which are volatile, harder to price and less liquid than U.S. securities). High double-digit returns are unusual and cannot be sustained. Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
37
| Fund Overview | Nationwide Bailard Technology & Science Fund |
Objective
The Fund seeks long-term capital appreciation.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide Bailard Technology & Science Fund (Class M) returned 22.85%, underperforming its benchmark by 2.04% and outperforming the Lipper peer category median by 1.51%. |
| Ÿ | Small-cap stocks severely lagged their large- and mega-cap competitors, detracting from relative Fund performance during the reporting period, given the smaller-weighted average market cap. |
| Ÿ | We believe the recent mega-cap outperformance has created opportunities within small-cap stocks in the technology sector. |
Asset Allocation†
| Common Stocks | 99.4% | |||
| Other assets in excess of liabilities | 0.6% | |||
| 100.0% |
Top Industries††
| Semiconductors & Semiconductor Equipment | 16.3% | |||
| Software | 16.1% | |||
| Technology Hardware, Storage & Peripherals | 15.8% | |||
| Internet Software & Services | 15.7% | |||
| Information Technology Services | 12.9% | |||
| Communications Equipment | 9.8% | |||
| Biotechnology | 6.2% | |||
| Electronic Equipment, Instruments & Components | 3.5% | |||
| Internet & Catalog Retail | 2.5% | |||
| Pharmaceuticals | 0.7% | |||
| Other Industries | 0.5% | |||
| 100.0% |
Top Holdings††
| Apple, Inc. | 8.9% | |||
| Microsoft Corp. | 4.1% | |||
| Google, Inc., Class A | 3.4% | |||
| Google, Inc., Class C | 3.4% | |||
| QUALCOMM, Inc. | 3.3% | |||
| Cisco Systems, Inc. | 3.1% | |||
| Facebook, Inc., Class A | 2.9% | |||
| Micron Technology, Inc. | 2.1% | |||
| Oracle Corp. | 1.9% | |||
| Western Digital Corp. | 1.8% | |||
| Other Holdings | 65.1% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
38
| Fund Performance | Nationwide Bailard Technology & Science Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 22.35% | 15.74% | 7.74% | – | |||||||||||||
| w/ SC3 | 15.59% | 14.45% | 7.14% | – | ||||||||||||||
| Class C1 | w/o SC2 | 21.54% | 15.02% | 7.13% | – | |||||||||||||
| w/ SC4 | 20.54% | 15.02% | 7.13% | – | ||||||||||||||
| Class M1,5 | 22.85% | 16.18% | 8.21% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 22.63% | 16.11% | 8.12% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 17.25% | 7* | |||||||||||||
| S&P NA Technology Sector IndexTM | 24.89% | 17.12% | 9.69% | |||||||||||||||
| NASDAQ-100 Index | 27.69% | 20.61% | 11.64% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.53% | 1.45% | ||||||
| Class C | 2.05% | 2.05% | ||||||
| Class M | 1.03% | 1.03% | ||||||
| Institutional Service Class | 1.28% | 1.20% | ||||||
| Institutional Class | 1.03% | 1.03% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
39
| Fund Performance (con’t.) | Nationwide Bailard Technology & Science 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 Class M shares of the Nationwide Bailard Technology & Science Fund versus the S&P North American (NA) Technology Sector IndexTM (current benchmark), the NASDAQ-100 Index (former benchmark) and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
40
| Shareholder Expense Example | Nationwide Bailard Technology & Science 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide Bailard July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,067.10 | 6.87 | 1.34 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.15 | 6.71 | 1.34 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,063.50 | 10.69 | 2.09 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,014.43 | 10.44 | 2.09 | |||||||
| Class M Shares | Actual | (a) | 1,000.00 | 1,069.70 | 4.98 | 0.97 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,019.98 | 4.86 | 0.97 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,067.80 | 6.10 | 1.19 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.89 | 5.96 | 1.19 | |||||||
| Institutional Class Shares | Actual | (d) | 1,000.00 | 1,069.20 | 4.87 | 0.95 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,020.08 | 4.76 | 0.95 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (d) | Actual expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from September 19, 2013 through July 31, 2014 to reflect the period from commencement of operations. |
41
Statement of Investments
July 31, 2014
Nationwide Bailard Technology & Science Fund
| Common Stocks 99.4% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Biotechnology 6.1% | ||||||||||
Alexion Pharmaceuticals, Inc.* | 2,000 | $ | 317,980 | |||||||
Alkermes PLC* | 3,000 | 128,280 | ||||||||
Alnylam Pharmaceuticals, Inc.* | 2,400 | 129,720 | ||||||||
Amgen, Inc. | 5,400 | 687,906 | ||||||||
Biogen Idec, Inc.* | 2,000 | 668,780 | ||||||||
BioMarin Pharmaceutical, Inc.* | 3,500 | 216,370 | ||||||||
Celgene Corp.* | 8,000 | 697,200 | ||||||||
Clovis Oncology, Inc.* | 2,000 | 72,900 | ||||||||
Cubist Pharmaceuticals, Inc.* | 2,000 | 121,800 | ||||||||
Enanta Pharmaceuticals, Inc.* | 6,700 | 251,987 | ||||||||
Exelixis, Inc.* | 25,000 | 101,000 | ||||||||
Gilead Sciences, Inc.* | 8,000 | 732,400 | ||||||||
Hyperion Therapeutics, Inc.* | 3,500 | 79,695 | ||||||||
Ignyta, Inc.* | 15,000 | 121,800 | ||||||||
Incyte Corp.* | 1,500 | 71,355 | ||||||||
InterMune, Inc.* | 8,000 | 350,960 | ||||||||
Isis Pharmaceuticals, Inc.* | 3,000 | 92,970 | ||||||||
KaloBios Pharmaceuticals, Inc.* | 34,300 | 56,595 | ||||||||
Medivation, Inc.* | 1,500 | 111,345 | ||||||||
Momenta Pharmaceuticals, Inc.* | 5,000 | 53,200 | ||||||||
NPS Pharmaceuticals, Inc.* | 5,300 | 148,082 | ||||||||
Orexigen Therapeutics, Inc.* | 35,000 | 174,650 | ||||||||
Regeneron Pharmaceuticals, Inc.* | 1,000 | 316,220 | ||||||||
Seattle Genetics, Inc.* | 2,500 | 88,000 | ||||||||
Vertex Pharmaceuticals, Inc.* | 4,500 | 400,095 | ||||||||
|
| |||||||||
| 6,191,290 | ||||||||||
|
| |||||||||
| ||||||||||
Communications Equipment 9.7% |
| |||||||||
Brocade Communications Systems, Inc. | 29,500 | 271,695 | ||||||||
Cisco Systems, Inc. | 124,000 | 3,128,520 | ||||||||
F5 Networks, Inc.* | 7,400 | 833,166 | ||||||||
Juniper Networks, Inc.* | 20,780 | 489,161 | ||||||||
Motorola Solutions, Inc. | 17,115 | 1,089,883 | ||||||||
Palo Alto Networks, Inc.* | 8,565 | 692,566 | ||||||||
QUALCOMM, Inc. | 44,800 | 3,301,760 | ||||||||
|
| |||||||||
| 9,806,751 | ||||||||||
|
| |||||||||
| ||||||||||
Electronic Equipment, Instruments & Components 3.5% |
| |||||||||
Amphenol Corp., Class A | 12,000 | 1,154,040 | ||||||||
Sanmina Corp.* | 39,400 | 917,626 | ||||||||
TE Connectivity Ltd. | 22,905 | 1,417,590 | ||||||||
|
| |||||||||
| 3,489,256 | ||||||||||
|
| |||||||||
| ||||||||||
Information Technology Services 12.8% |
| |||||||||
Accenture PLC, Class A | 19,300 | 1,530,104 | ||||||||
Acxiom Corp.* | 31,715 | 581,019 | ||||||||
Alliance Data Systems Corp.* | 3,910 | 1,025,554 | ||||||||
Amdocs Ltd. | 31,200 | 1,414,608 | ||||||||
Automatic Data Processing, Inc. | 9,800 | 796,838 | ||||||||
Cognizant Technology Solutions Corp., Class A* | 29,000 | 1,422,450 | ||||||||
Computer Sciences Corp. | 14,365 | 896,232 | ||||||||
Euronet Worldwide, Inc.* | 31,000 | 1,551,240 | ||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Information Technology Services (continued) |
| |||||||||
Fidelity National Information Services, Inc. | 14,900 | $ | 840,360 | |||||||
Fiserv, Inc.* | 15,600 | 962,052 | ||||||||
International Business Machines Corp. | 2,515 | 482,050 | ||||||||
MasterCard, Inc., Class A | 10,800 | 800,820 | ||||||||
Visa, Inc., Class A | 2,850 | 601,379 | ||||||||
|
| |||||||||
| 12,904,706 | ||||||||||
|
| |||||||||
| ||||||||||
Internet & Catalog Retail 2.5% |
| |||||||||
Amazon.com, Inc.* | 1,835 | 574,337 | ||||||||
Priceline Group, Inc. (The)* | 600 | 745,470 | ||||||||
TripAdvisor, Inc.* | 12,960 | 1,229,126 | ||||||||
|
| |||||||||
| 2,548,933 | ||||||||||
|
| |||||||||
| ||||||||||
Internet Software & Services 15.7% |
| |||||||||
Akamai Technologies, Inc.* | 15,160 | 894,743 | ||||||||
Blucora, Inc.* | 17,300 | 295,311 | ||||||||
Conversant, Inc.* | 14,600 | 341,202 | ||||||||
eBay, Inc.* | 23,085 | 1,218,888 | ||||||||
Facebook, Inc., Class A* | 39,895 | 2,898,372 | ||||||||
Google, Inc., Class A* | 5,950 | 3,448,323 | ||||||||
Google, Inc., Class C* | 5,950 | 3,401,020 | ||||||||
IAC/InterActiveCorp. | 12,700 | 853,440 | ||||||||
LogMeIn, Inc.* | 15,530 | 632,226 | ||||||||
Tencent Holdings Ltd., ADR-CN | 13,000 | 210,990 | ||||||||
VeriSign, Inc.* | 18,500 | 999,925 | ||||||||
Yahoo!, Inc.* | 16,200 | 580,122 | ||||||||
|
| |||||||||
| 15,774,562 | ||||||||||
|
| |||||||||
| ||||||||||
Life Sciences Tools & Services 0.5% |
| |||||||||
Illumina, Inc.* | 2,000 | 319,820 | ||||||||
NanoString Technologies, Inc.* | 11,000 | 132,550 | ||||||||
|
| |||||||||
| 452,370 | ||||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 0.7% |
| |||||||||
BioDelivery Sciences International, Inc.* | 17,000 | 216,750 | ||||||||
Endocyte, Inc.* | 16,000 | 106,160 | ||||||||
Mylan, Inc.* | 5,000 | 246,850 | ||||||||
Salix Pharmaceuticals Ltd.* | 1,000 | 131,910 | ||||||||
|
| |||||||||
| 701,670 | ||||||||||
|
| |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment 16.2% |
| |||||||||
Analog Devices, Inc. | 26,000 | 1,290,380 | ||||||||
Applied Materials, Inc. | 13,700 | 287,152 | ||||||||
Avago Technologies Ltd. | 6,300 | 437,094 | ||||||||
Broadcom Corp., Class A | 18,000 | 688,680 | ||||||||
First Solar, Inc.* | 8,485 | 535,488 | ||||||||
KLA-Tencor Corp. | 25,100 | 1,794,399 | ||||||||
Lam Research Corp. | 6,220 | 435,400 | ||||||||
Linear Technology Corp. | 28,360 | 1,251,669 | ||||||||
Marvell Technology Group Ltd. | 24,400 | 325,496 | ||||||||
Maxim Integrated Products, Inc. | 33,200 | 973,092 | ||||||||
Micron Technology, Inc.* | 67,620 | 2,065,791 | ||||||||
42
Statement of Investments (Continued)
July 31, 2014
Nationwide Bailard Technology & Science Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment (continued) |
| |||||||||
NVIDIA Corp. | 50,000 | $ | 875,000 | |||||||
NXP Semiconductor NV* | 22,300 | 1,390,405 | ||||||||
Samsung Electronics Co., Ltd., GDR-KR Reg. S | 1,300 | 833,359 | ||||||||
Synaptics, Inc.* | 13,405 | 968,243 | ||||||||
Texas Instruments, Inc. | 15,000 | 693,750 | ||||||||
Xilinx, Inc. | 35,880 | 1,475,745 | ||||||||
|
| |||||||||
| 16,321,143 | ||||||||||
|
| |||||||||
| ||||||||||
Software 16.0% |
| |||||||||
Activision Blizzard, Inc. | 38,300 | 857,154 | ||||||||
Advent Software, Inc. | 10,300 | 334,338 | ||||||||
Aspen Technology, Inc.* | 33,650 | 1,461,756 | ||||||||
Autodesk, Inc.* | 8,000 | 426,800 | ||||||||
CA, Inc. | 9,200 | 265,696 | ||||||||
Intuit, Inc. | 14,695 | 1,204,549 | ||||||||
Manhattan Associates, Inc.* | 36,665 | 1,076,485 | ||||||||
Microsoft Corp. | 94,000 | 4,057,040 | ||||||||
NetScout Systems, Inc.* | 18,040 | 767,241 | ||||||||
NetSuite, Inc.* | 3,700 | 311,947 | ||||||||
Oracle Corp. | 47,570 | 1,921,352 | ||||||||
Red Hat, Inc.* | 12,410 | 721,269 | ||||||||
salesforce.com, Inc.* | 10,700 | 580,475 | ||||||||
ServiceNow, Inc.* | 5,470 | 321,636 | ||||||||
Splunk, Inc.* | 18,085 | 850,357 | ||||||||
Symantec Corp. | 41,605 | 984,374 | ||||||||
|
| |||||||||
| 16,142,469 | ||||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 15.7% |
| |||||||||
Apple, Inc. | 93,450 | 8,931,017 | ||||||||
Electronics For Imaging, Inc.* | 19,305 | 850,771 | ||||||||
EMC Corp. | 35,500 | 1,040,150 | ||||||||
Hewlett-Packard Co. | 5,600 | 199,416 | ||||||||
NetApp, Inc. | 32,020 | 1,243,657 | ||||||||
SanDisk Corp. | 4,800 | 440,208 | ||||||||
Seagate Technology PLC | 22,200 | 1,300,920 | ||||||||
Western Digital Corp. | 18,395 | 1,836,373 | ||||||||
|
| |||||||||
| 15,842,512 | ||||||||||
|
| |||||||||
Total Investments |
| 100,175,662 | ||||||||
Other assets in excess of liabilities — 0.6% | 627,050 | |||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 100,802,712 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| ADR | American Depositary Receipt |
| CN | China |
| GDR | Global Depositary Receipt |
| KR | Korea |
| Ltd. | Limited |
| NV | Public Traded Company |
| PLC | Public Limited Company |
| Reg. S | Regulation S – Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933 or pursuant to an exemption from registration. Currently there is no restriction on trading this security. |
The accompanying notes are an integral part of these financial statements.
43
Statement of Assets and Liabilities
July 31, 2014
| Nationwide Bailard Technology & Science Fund | ||||||
Assets: | ||||||
Investments, at value (cost $54,742,591) | $ | 100,175,662 | ||||
Cash | 717,938 | |||||
Dividends receivable | 7,139 | |||||
Receivable for capital shares issued | 2,060 | |||||
Prepaid expenses | 15,905 | |||||
|
| |||||
Total Assets | 100,918,704 | |||||
|
| |||||
Liabilities: | ||||||
Payable for capital shares redeemed | 7,324 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 66,112 | |||||
Fund administration fees | 8,934 | |||||
Distribution fees | 904 | |||||
Administrative servicing fees | 801 | |||||
Accounting and transfer agent fees | 799 | |||||
Trustee fees | 229 | |||||
Custodian fees | 442 | |||||
Compliance program costs (Note 3) | 1,372 | |||||
Professional fees | 22,304 | |||||
Printing fees | 3,205 | |||||
Other | 3,566 | |||||
|
| |||||
Total Liabilities | 115,992 | |||||
|
| |||||
Net Assets | $ | 100,802,712 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 49,843,745 | ||||
Accumulated undistributed net investment income | 12,056 | |||||
Accumulated net realized gains from investments | 5,513,840 | |||||
Net unrealized appreciation/(depreciation) from investments | 45,433,071 | |||||
|
| |||||
Net Assets | $ | 100,802,712 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 2,192,132 | ||||
Class C Shares | 498,395 | |||||
Class M Shares | 96,832,238 | |||||
Institutional Service Class Shares | 1,203,010 | |||||
Institutional Class Shares | 76,937 | |||||
|
| |||||
Total | $ | 100,802,712 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 132,638 | |||||
Class C Shares | 31,663 | |||||
Class M Shares | 5,683,788 | |||||
Institutional Service Class Shares | 70,770 | |||||
Institutional Class Shares | 4,525 | |||||
|
| |||||
Total | 5,923,384 | |||||
|
| |||||
44
Statement of Assets and Liabilities (Continued)
July 31, 2014
| Nationwide Bailard Technology & Science Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 16.53 | ||||
Class C Shares (b) | $ | 15.74 | ||||
Class M Shares | $ | 17.04 | ||||
Institutional Service Class Shares | $ | 17.00 | ||||
Institutional Class Shares | $ | 17.00 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 17.54 | ||||
|
| |||||
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 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.
45
Statement of Operations
For the Year Ended July 31, 2014
Nationwide Bailard | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 1,157,549 | ||||
Interest income | 47 | |||||
Foreign tax withholding | (687 | ) | ||||
|
| |||||
Total Income | 1,156,909 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 743,777 | |||||
Fund administration fees | 116,873 | |||||
Distribution fees Class A | 4,558 | |||||
Distribution fees Class C | 4,761 | |||||
Administrative servicing fees Class A | 2,666 | |||||
Administrative servicing fees Class C | 297 | |||||
Administrative servicing fees Institutional Service Class (a) | 2,531 | |||||
Registration and filing fees | 55,040 | |||||
Professional fees | 33,037 | |||||
Printing fees | 12,092 | |||||
Trustee fees | 2,472 | |||||
Custodian fees | 3,807 | |||||
Accounting and transfer agent fees | 3,268 | |||||
Compliance program costs (Note 3) | 1,747 | |||||
Other | 14,172 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 1,001,098 | |||||
|
| |||||
Earnings credit (Note 5) | (63 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (193 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (a) | (189 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (5,440 | ) | ||||
|
| |||||
Net Expenses | 995,213 | |||||
|
| |||||
NET INVESTMENT INCOME | 161,696 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 11,482,923 | |||||
Net change in unrealized appreciation/(depreciation) from investments | 8,574,027 | |||||
|
| |||||
Net realized/unrealized gains from investments | 20,056,950 | |||||
|
| �� | ||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 20,218,646 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
46
Statements of Changes in Net Assets
| Nationwide Bailard Technology & Science Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 161,696 | $ | 215,422 | ||||||||
Net realized gains from investments | 11,482,923 | 5,772,714 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | 8,574,027 | 7,636,756 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 20,218,646 | 13,624,892 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | – | – | ||||||||||
Class C | – | – | ||||||||||
Class M | (201,450 | ) | – | |||||||||
Institutional Service Class (a) | (708 | ) | – | |||||||||
Institutional Class | (22 | )(b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (202,180 | ) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (9,275,092 | ) | (4,517,352 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets | 10,741,374 | 9,107,540 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 90,061,338 | 80,953,798 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 100,802,712 | $ | 90,061,338 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 12,056 | $ | 67,241 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 768,454 | $ | 310,643 | ||||||||
Dividends reinvested | – | – | ||||||||||
Cost of shares redeemed | (385,966 | ) | (462,227 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 382,488 | (151,584 | ) | |||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 168,980 | 296,440 | ||||||||||
Dividends reinvested | – | – | ||||||||||
Cost of shares redeemed | (146,592 | ) | (62,169 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 22,388 | 234,271 | ||||||||||
|
|
|
| |||||||||
Class M Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 6,941,409 | 6,074,346 | ||||||||||
Dividends reinvested | 186,718 | – | ||||||||||
Cost of shares redeemed | (16,278,607 | ) | (9,179,691 | ) | ||||||||
|
|
|
| |||||||||
Total Class M Shares | (9,150,480 | ) | (3,105,345 | ) | ||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | 7,801 | 686,194 | ||||||||||
Dividends reinvested | 708 | – | ||||||||||
Cost of shares redeemed | (613,263 | ) | (2,180,888 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (604,754 | ) | (1,494,694 | ) | ||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
47
Statements of Changes in Net Assets (Continued)
| Nationwide Bailard Technology & Science Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | $ | 105,496 | (b) | $ | – | |||||||
Dividends reinvested | 22 | (b) | – | |||||||||
Cost of shares redeemed | (30,252 | )(b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 75,266 | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (9,275,092 | ) | $ | (4,517,352 | ) | ||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 50,026 | 25,493 | ||||||||||
Reinvested | – | – | ||||||||||
Redeemed | (25,336 | ) | (38,465 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 24,690 | (12,972 | ) | |||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 11,334 | 24,443 | ||||||||||
Reinvested | – | – | ||||||||||
Redeemed | (9,302 | ) | (5,480 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 2,032 | 18,963 | ||||||||||
|
|
|
| |||||||||
Class M Shares (Note 12) | ||||||||||||
Issued | 446,897 | 473,576 | ||||||||||
Reinvested | 12,236 | – | ||||||||||
Redeemed | (1,010,879 | ) | (709,516 | ) | ||||||||
|
|
|
| |||||||||
Total Class M Shares | (551,746 | ) | (235,940 | ) | ||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Issued | 551 | 54,441 | ||||||||||
Reinvested | 46 | – | ||||||||||
Redeemed | (41,111 | ) | (177,027 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (40,514 | ) | (122,586 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 6,260 | (b) | – | |||||||||
Reinvested | 2 | (b) | – | |||||||||
Redeemed | (1,737 | )(b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 4,525 | (b) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | (561,013 | ) | (352,535 | ) | ||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
48
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Bailard Technology & Science Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net (Loss) | Net Realized from | Total from Operations | Net Investment Income | Total Distributions | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net (Loss) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | ||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 13.51 | (0.03 | ) | 3.05 | 3.02 | – | – | $ | 16.53 | 22.35% | $ | 2,192,132 | 1.37% | (0.23% | ) | 1.39% | 36.99% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.56 | (0.02 | ) | 1.97 | 1.95 | – | – | $ | 13.51 | 16.87% | $ | 1,458,286 | 1.45% | (0.13% | ) | 1.58% | 45.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.98 | (0.06 | ) | 0.64 | 0.58 | – | – | $ | 11.56 | 5.28% | $ | 1,397,618 | 1.45% | (0.57% | ) | 1.60% | 11.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 9.05 | (0.06 | ) | 1.99 | 1.93 | – | – | $ | 10.98 | 21.33% | $ | 1,973,765 | 1.45% | (0.61% | ) | 1.58% | 16.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 7.96 | (0.04 | ) | 1.13 | 1.09 | – | – | $ | 9.05 | 13.71% | $ | 2,277,231 | 1.43% | (0.46% | ) | 1.58% | 17.00% | ||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 12.95 | (0.13 | ) | 2.92 | 2.79 | – | – | $ | 15.74 | 21.54% | $ | 498,395 | 2.05% | (0.90% | ) | 2.05% | 36.99% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.15 | (0.09 | ) | 1.89 | 1.80 | – | – | $ | 12.95 | 16.14% | $ | 383,795 | 2.05% | (0.73% | ) | 2.08% | 45.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.66 | (0.12 | ) | 0.61 | 0.49 | – | – | $ | 11.15 | 4.60% | $ | 118,946 | 2.05% | (1.17% | ) | 2.10% | 11.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 8.84 | (0.13 | ) | 1.95 | 1.82 | – | – | $ | 10.66 | 20.59% | $ | 271,742 | 2.05% | (1.21% | ) | 2.08% | 16.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 7.82 | (0.09 | ) | 1.11 | 1.02 | – | – | $ | 8.84 | 13.04% | $ | 179,645 | 2.03% | (1.06% | ) | 2.08% | 17.00% | ||||||||||||||||||||||||||||||||||
| Class M Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 13.90 | 0.03 | 3.14 | 3.17 | (0.03 | ) | (0.03 | ) | $ | 17.04 | 22.85% | $ | 96,832,238 | 0.99% | 0.18% | 0.99% | 36.99% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.85 | 0.03 | 2.02 | 2.05 | – | – | $ | 13.90 | 17.30% | $ | 86,675,286 | 1.05% | 0.27% | 1.08% | 45.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.21 | (0.02 | ) | 0.66 | 0.64 | – | – | $ | 11.85 | 5.71% | $ | 76,669,709 | 1.05% | (0.17% | ) | 1.10% | 11.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 9.20 | (0.02 | ) | 2.03 | 2.01 | – | – | $ | 11.21 | 21.85% | $ | 86,181,523 | 1.05% | (0.21% | ) | 1.08% | 16.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 8.07 | (0.01 | ) | 1.15 | 1.14 | (0.01 | ) | (0.01 | ) | $ | 9.20 | 14.04% | $ | 64,408,363 | 1.03% | (0.06% | ) | 1.08% | 17.00% | ||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 13.87 | – | 3.14 | 3.14 | (0.01 | ) | (0.01 | ) | $ | 17.00 | 22.63% | $ | 1,203,010 | 1.17% | 0.01% | 1.20% | 36.99% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.83 | 0.02 | 2.02 | 2.04 | – | – | $ | 13.87 | 17.24% | $ | 1,543,971 | 1.14% | 0.18% | 1.33% | 45.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.20 | (0.03 | ) | 0.66 | 0.63 | – | – | $ | 11.83 | 5.63% | $ | 2,767,525 | 1.11% | (0.23% | ) | 1.35% | 11.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 9.20 | (0.03 | ) | 2.03 | 2.00 | – | – | $ | 11.20 | 21.74% | $ | 1,980,407 | 1.09% | (0.25% | ) | 1.33% | 16.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 8.07 | (0.01 | ) | 1.15 | 1.14 | (0.01 | ) | (0.01 | ) | $ | 9.20 | 14.17% | $ | 1,676,367 | 1.06% | (0.09% | ) | 1.33% | 17.00% | ||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 14.53 | (0.02 | ) | 2.52 | 2.50 | (0.03 | ) | (0.03 | ) | $ | 17.00 | 17.25% | $ | 76,937 | 0.96% | (0.14% | ) | 0.96% | 36.99% | ||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
49
| Fund Commentary | Nationwide Geneva Mid Cap Growth Fund |
For the annual period ended July 31, 2014, the Nationwide Geneva Mid Cap Growth Fund (Institutional Service Class) returned 7.24%* versus 15.11% for its benchmark, the Russell Midcap® Growth Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mid-Cap Growth Funds (consisting of 412 funds as of July 31, 2014) was 12.24% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
The reporting period has been characterized as a Federal Reserve-induced “risk on” market, with prevailing low interest rates and tight credit spreads. These market conditions typically have favored companies possessing more leverage with historically little access to inexpensive outside capital.
Contributing the most to Fund performance during the reporting period were the Fund’s investments in the consumer discretionary, health-care and producer durables sectors. Specific stocks that contributed the most to Fund performance during the reporting period were Under Armour, Inc. in the consumer discretionary sector, Concho Resources Inc. in the energy sector and Chipotle Mexican Grill, Inc. in the consumer discretionary sector.
Under Armour’s solid performance during the reporting period was driven by innovative new products, marketing campaigns, channel expansion (e.g., direct-to-consumer, international) and market share gains. The Under Armour management team’s strong execution has resulted in consistent above-consensus results, which have helped drive the firm’s stock price higher during the past reporting period. Concho Resources performed well during the reporting period in light of an increased recognition of its Permian assets and an upward revaluation of its growth potential. Concho’s management indicated that the company has 80% more drilling locations and 200% more horizontal drilling locations compared to 2013, and an asset base of
six times its proved reserves. Chipotle Mexican
Grill continued to generate momentum in same-store sales during the reporting period and delivered solid results during the past reporting period. The company is outperforming its peers in the challenging restaurant industry by investing in marketing and advertising, expanding its store base, improving throughput, and focusing on new menu items and the expansion of its catering business.
The Fund’s holdings in the materials and processing and consumer staples sectors detracted the most from Fund performance during the reporting period due to the Fund’s underweight positioning and stock selection in those sectors. Individual Fund holdings that detracted the most from Fund performance during the reporting period were Chart Industries, Inc. in the producer durables sector, DSW Inc. in the consumer discretionary sector and CommVault Systems, Inc. in the technology sector.
Chart Industries underperformed during the reporting period due to lack of visibility in the LNG (liquefied natural gas) infrastructure market. After the company significantly increased capacity with the expectation for increased demand, the number of LNG projects did not rise as quickly as expected due to their complex nature. DSW suffered after the company lowered earnings guidance amid a highly promotional retail environment, weaker traffic due to the company’s exposure to areas affected by severe winter weather, and challenges in women’s footwear trends. CommVault Systems, a leader in the backup and recovery space, underperformed during the reporting period due to a transitioning pricing model and slower sales hiring, which led to a slowdown in revenues. While the Fund typically will invest in stocks that ultimately disappoint in any given year, the magnitude of the performance decline has shifted noticeably over time and has been extreme as of late.
From a quality perspective, low-quality companies significantly outperformed their high-quality counterparts, with stocks rated C and D by Standard & Poor’s up 19.7% for the reporting period and those rated B+ or better up 11.2%
50
| Fund Commentary (con’t.) | Nationwide Geneva Mid Cap Growth Fund |
during the same period. Within the Russell Midcap® Growth Index, highly leveraged companies in the top quintile, in terms of debt to capital, outperformed by a factor greater than two versus those companies in the bottom quintile, with the lowest debt-to-capital ratios. We also saw companies with the lowest interest coverage ratios outperform during the reporting period.
While the Fund has experienced periods of underperformance in its history, those periods typically have lasted from five to eight quarters. This most recent period of eight quarters of underperformance is unprecedented and is, in our opinion, related to the Fed’s ongoing accommodative policy.
For the balance of 2014, we expect improving economic growth that could finish the year at a 2.8% gross domestic product (GDP) growth rate. As policymakers take note of improving economic data, we feel that these policymakers may be inclined to revisit interest rates and fully address quantitative easing (e.g., possibly choose to further taper, or reduce, asset purchases) during 2015. Should that action take place, we feel that two to three quarters prior the market may reflect the expectation, which should change market sentiment back to fundamentals and away from financial engineering (e.g., buybacks, corporate inversions, mergers and acquisitions).
The Fund did not invest in derivatives during the reporting period.
Subadviser:
Geneva Capital Management Ltd.
Portfolio Managers:
Amy S. Croen, Michelle J. Picard, William A. Priebe and William Scott Priebe
The Fund is subject to the risks of investing in equity securities and risks associated with investing in stocks of mid-sized companies. The Fund may invest in exchange-traded funds (ETFs). An investment in an ETF is subject to the risks of the securities held by the ETF and carries additional costs. Growth funds may underperform other funds that use different investing styles. Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
51
| Fund Overview | Nationwide Geneva Mid Cap Growth Fund |
Objective
The Fund seeks long-term capital appreciation.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide Geneva Mid Cap Growth Fund (Institutional Service Class) returned 7.24%, underperforming its benchmark by 7.87% and the Lipper peer category median by 5.00%. |
| Ÿ | Contributing the most to Fund performance during the reporting period were the Fund’s investments in the consumer discretionary, health-care and producer durables sectors. |
| Ÿ | The Fund’s holdings in the materials and processing and consumer staples sectors detracted the most from Fund performance during the reporting period due to the Fund’s underweight positioning and stock selection in those sectors. |
Asset Allocation†
| Common Stocks | 96.9% | |||
| Repurchase Agreement | 0.3% | |||
| Mutual Fund†† | 0.0% | |||
| Other assets in excess of liabilities | 2.8% | |||
| 100.0% |
Top Industries†††
| Software | 10.7% | |||
| Health Care Equipment & Supplies | 8.8% | |||
| Machinery | 8.3% | |||
| Specialty Retail | 6.4% | |||
| Oil, Gas & Consumable Fuels | 4.5% | |||
| Information Technology Services | 4.4% | |||
| Electronic Equipment, Instruments & Components | 4.3% | |||
| Banks | 4.0% | |||
| Professional Services | 3.6% | |||
| Hotels, Restaurants & Leisure | 3.5% | |||
| Other Industries* | 41.5% | |||
| 100.0% |
Top Holdings†††
| O’Reilly Automotive, Inc. | 2.8% | |||
| Under Armour, Inc., Class A | 2.6% | |||
| Amphenol Corp., Class A | 2.5% | |||
| Tractor Supply Co. | 2.4% | |||
| LKQ Corp. | 2.4% | |||
| Polaris Industries, Inc. | 2.3% | |||
| Fiserv, Inc. | 2.3% | |||
| Chipotle Mexican Grill, Inc. | 2.2% | |||
| Affiliated Managers Group, Inc. | 2.2% | |||
| Perrigo Co. PLC | 2.2% | |||
| Other Holdings* | 76.1% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Amount rounds to less than 0.1%. |
| ††† | Percentages indicated are based upon total investments as of July 31, 2014. |
| * | For purposes of listing top industries and top holdings, the repurchase agreement is included as part of Other. |
52
| Fund Performance | Nationwide Geneva Mid Cap Growth Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 6.96% | 15.74% | 9.51% | – | |||||||||||||
| w/ SC3 | 1.09% | 14.43% | 8.89% | – | ||||||||||||||
| Class C1 | w/o SC2 | 6.30% | 15.06% | 8.78% | – | |||||||||||||
| w/ SC4 | 5.30% | 15.06% | 8.78% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 7.24% | 16.06% | 9.66% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 2.72% | 7* | |||||||||||||
| Russell Midcap® Growth Index | 15.11% | 18.61% | 10.25% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Expense Ratio* | ||||
| Class A | 1.36% | |||
| Class C | 1.92% | |||
| Institutional Service Class | 1.11% | |||
| Institutional Class | 0.86% | |||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). Please see the Fund’s most recent prospectus for details. |
53
| Fund Performance (con’t.) | Nationwide Geneva Mid Cap Growth 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 Class A shares of the Nationwide Geneva Mid Cap Growth Fund versus the Russell Midcap® Growth Index and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
54
| Shareholder Expense Example | Nationwide Geneva Mid Cap Growth 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide Geneva Mid Cap July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,002.10 | 5.76 | 1.16 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,019.04 | 5.81 | 1.16 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 998.40 | 9.27 | 1.87 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,015.52 | 9.35 | 1.87 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,003.10 | 4.32 | 0.87 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,020.48 | 4.36 | 0.87 | |||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,003.50 | 3.97 | 0.80 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,020.83 | 4.01 | 0.80 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
55
Statement of Investments
July 31, 2014
Nationwide Geneva Mid Cap Growth Fund
| Common Stocks 96.9% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Banks 3.9% |
| |||||||||
East West Bancorp, Inc. | 860,620 | $ | 29,312,717 | |||||||
Signature Bank* | 249,482 | 28,538,246 | ||||||||
|
| |||||||||
| 57,850,963 | ||||||||||
|
| |||||||||
| ||||||||||
Capital Markets 3.3% |
| |||||||||
Affiliated Managers Group, Inc.* | 161,990 | 32,276,508 | ||||||||
Raymond James Financial, Inc. | 348,131 | 17,737,274 | ||||||||
|
| |||||||||
| 50,013,782 | ||||||||||
|
| |||||||||
| ||||||||||
Chemicals 1.4% |
| |||||||||
Sigma-Aldrich Corp. | 204,362 | 20,522,032 | ||||||||
|
| |||||||||
| ||||||||||
Commercial Services & Supplies 3.3% |
| |||||||||
Copart, Inc.* | 801,719 | 26,761,380 | ||||||||
Stericycle, Inc.* | 198,520 | 23,355,878 | ||||||||
|
| |||||||||
| 50,117,258 | ||||||||||
|
| |||||||||
| ||||||||||
Distributors 2.3% |
| |||||||||
LKQ Corp.* | 1,322,464 | 34,589,046 | ||||||||
|
| |||||||||
| ||||||||||
Diversified Financial Services 1.8% |
| |||||||||
Intercontinental Exchange, Inc. | 143,254 | 27,536,284 | ||||||||
|
| |||||||||
| ||||||||||
Electrical Equipment 1.3% |
| |||||||||
AMETEK, Inc. | 404,048 | 19,673,097 | ||||||||
|
| |||||||||
| ||||||||||
Electronic Equipment, Instruments & Components 4.2% |
| |||||||||
Amphenol Corp., Class A | 373,244 | 35,894,875 | ||||||||
Trimble Navigation Ltd.* | 852,170 | 26,332,053 | ||||||||
|
| |||||||||
| 62,226,928 | ||||||||||
|
| |||||||||
| ||||||||||
Energy Equipment & Services 1.5% |
| |||||||||
Oceaneering International, Inc. | 330,241 | 22,426,666 | ||||||||
|
| |||||||||
| ||||||||||
Food Products 2.9% |
| |||||||||
Hain Celestial Group, Inc. (The)* | 332,804 | 28,454,742 | ||||||||
J.M. Smucker Co. (The) | 151,093 | 15,054,907 | ||||||||
|
| |||||||||
| 43,509,649 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Equipment & Supplies 8.6% |
| |||||||||
Align Technology, Inc.* | 458,308 | 24,844,877 | ||||||||
C.R. Bard, Inc. | 145,897 | 21,772,209 | ||||||||
Cooper Cos., Inc. (The) | 96,603 | 15,541,491 | ||||||||
IDEXX Laboratories, Inc.* | 122,421 | 15,238,966 | ||||||||
Sirona Dental Systems, Inc.* | 319,600 | 25,631,920 | ||||||||
Varian Medical Systems, Inc.* | 313,913 | 25,787,953 | ||||||||
|
| |||||||||
| 128,817,416 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Providers & Services 1.4% |
| |||||||||
Catamaran Corp.* | 460,816 | 20,962,520 | ||||||||
|
| |||||||||
| ||||||||||
Health Care Technology 2.1% |
| |||||||||
Cerner Corp.* | 572,340 | 31,593,168 | ||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Hotels, Restaurants & Leisure 3.4% |
| |||||||||
Chipotle Mexican Grill, Inc.* | 48,634 | $ | 32,706,365 | |||||||
Panera Bread Co., Class A* | 124,909 | 18,399,096 | ||||||||
|
| |||||||||
| 51,105,461 | ||||||||||
|
| |||||||||
| ||||||||||
Household Products 1.6% |
| |||||||||
Church & Dwight Co., Inc. | 374,311 | 24,023,280 | ||||||||
|
| |||||||||
| ||||||||||
Industrial Conglomerates 1.0% |
| |||||||||
Roper Industries, Inc. | 108,185 | 15,586,213 | ||||||||
|
| |||||||||
| ||||||||||
Information Technology Services 4.2% |
| |||||||||
Cognizant Technology Solutions Corp., Class A* | 606,143 | 29,731,314 | ||||||||
Fiserv, Inc.* | 548,999 | 33,856,768 | ||||||||
|
| |||||||||
| 63,588,082 | ||||||||||
|
| |||||||||
| ||||||||||
Insurance 1.3% |
| |||||||||
Brown & Brown, Inc. | 622,118 | 19,148,792 | ||||||||
|
| |||||||||
| ||||||||||
Internet Software & Services 1.2% |
| |||||||||
CoStar Group, Inc.* | 128,958 | 18,535,133 | ||||||||
|
| |||||||||
| ||||||||||
Leisure Products 2.3% |
| |||||||||
Polaris Industries, Inc. | 230,130 | 33,953,380 | ||||||||
|
| |||||||||
| ||||||||||
Life Sciences Tools & Services 1.6% |
| |||||||||
PAREXEL International Corp.* | 452,877 | 24,256,092 | ||||||||
|
| |||||||||
| ||||||||||
Machinery 8.1% |
| |||||||||
Chart Industries, Inc.* | 288,339 | 21,928,181 | ||||||||
IDEX Corp. | 368,509 | 27,940,352 | ||||||||
Middleby Corp. (The)* | 337,880 | 24,617,937 | ||||||||
Pall Corp. | 223,993 | 17,352,738 | ||||||||
Wabtec Corp. | 366,337 | 29,556,069 | ||||||||
|
| |||||||||
| 121,395,277 | ||||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 4.4% |
| |||||||||
Concho Resources, Inc.* | 218,738 | 30,798,311 | ||||||||
Range Resources Corp. | 282,654 | 21,365,816 | ||||||||
SM Energy Co. | 175,456 | 13,780,314 | ||||||||
|
| |||||||||
| 65,944,441 | ||||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 2.1% |
| |||||||||
Perrigo Co. PLC | 210,583 | 31,682,212 | ||||||||
|
| |||||||||
| ||||||||||
Professional Services 3.5% |
| |||||||||
IHS, Inc., Class A* | 240,066 | 31,537,470 | ||||||||
Verisk Analytics, Inc., Class A* | 347,716 | 20,876,869 | ||||||||
|
| |||||||||
| 52,414,339 | ||||||||||
|
| |||||||||
| ||||||||||
Road & Rail 3.1% |
| |||||||||
Genesee & Wyoming, Inc., Class A* | 285,537 | 28,476,605 | ||||||||
J.B. Hunt Transport Services, Inc. | 232,798 | 17,985,974 | ||||||||
|
| |||||||||
| 46,462,579 | ||||||||||
|
| |||||||||
56
Statement of Investments (Continued)
July 31, 2014
Nationwide Geneva Mid Cap Growth Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Software 10.5% |
| |||||||||
ANSYS, Inc.* | 346,039 | $ | 26,624,240 | |||||||
CommVault Systems, Inc.* | 215,854 | 10,365,309 | ||||||||
Intuit, Inc. | 381,934 | 31,307,130 | ||||||||
Manhattan Associates, Inc.* | 709,827 | 20,840,521 | ||||||||
Red Hat, Inc.* | 490,890 | 28,530,527 | ||||||||
Tyler Technologies, Inc.* | 251,990 | 22,863,053 | ||||||||
Ultimate Software Group, Inc. (The)* | 121,235 | 16,355,814 | ||||||||
|
| |||||||||
| 156,886,594 | ||||||||||
|
| |||||||||
| ||||||||||
Specialty Retail 6.2% |
| |||||||||
DSW, Inc., Class A | 623,597 | 16,581,444 | ||||||||
O’Reilly Automotive, Inc.* | 277,087 | 41,563,050 | ||||||||
Tractor Supply Co. | 560,196 | 34,827,386 | ||||||||
|
| |||||||||
| 92,971,880 | ||||||||||
|
| |||||||||
| ||||||||||
Textiles, Apparel & Luxury Goods 2.5% |
| |||||||||
Under Armour, Inc., Class A* | 571,035 | 38,116,586 | ||||||||
|
| |||||||||
| ||||||||||
Trading Companies & Distributors 1.9% |
| |||||||||
Beacon Roofing Supply, Inc.* | 412,087 | 11,390,085 | ||||||||
Fastenal Co.(a) | 385,467 | 17,095,461 | ||||||||
|
| |||||||||
| 28,485,546 | ||||||||||
|
| |||||||||
Total Common Stocks |
| 1,454,394,696 | ||||||||
|
| |||||||||
| Mutual Fund 0.0%† | ||||||||||
Money Market Fund 0.0%† |
| |||||||||
Fidelity Institutional Money Market Fund - Institutional Class, 0.09% (b)(c) | 559,979 | 559,979 | ||||||||
|
| |||||||||
Total Mutual Fund (cost $559,979) |
| 559,979 | ||||||||
|
| |||||||||
| Repurchase Agreement 0.3% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Royal Bank of Canada, 0.06%, dated 07/31/14, due 08/01/14, repurchase price $5,171,279, collateralized by a U.S. Treasury Note, 0.63%, maturing 09/30/17; total market value $5,276,840. (c) | $ | 5,171,271 | $ | 5,171,271 | ||||||
|
| |||||||||
Total Repurchase Agreement (cost $5,171,271) |
| 5,171,271 | ||||||||
|
| |||||||||
Total Investments |
| 1,460,125,946 | ||||||||
Other assets in excess of |
| 42,522,121 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 1,502,648,067 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | The security or a portion of this security is on loan at July 31, 2014. The total value of securities on loan at July 31, 2014 was $5,617,500. |
| (b) | Represents 7-day effective yield as of July 31, 2014. |
| (c) | Security or a portion of the security was purchased with cash collateral held from securities on loan. The total value of securities purchased with cash collateral as of July 31, 2014 was $5,731,250. |
| (d) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| † | Amount rounds to less than 0.1%. |
| Ltd. | Limited |
| PLC | Public Limited Company |
The accompanying notes are an integral part of these financial statements.
57
Statement of Assets and Liabilities
July 31, 2014
| Nationwide Geneva Mid Cap Growth Fund | ||||||
Assets: | ||||||
Investments, at value* (cost $1,174,106,457) | $ | 1,454,954,675 | ||||
Repurchase agreement, at value (cost $5,171,271) | 5,171,271 | |||||
|
| |||||
Total Investments, at value (total cost $1,179,277,728) | 1,460,125,946 | |||||
|
| |||||
Cash | 49,283,864 | |||||
Dividends receivable | 394,102 | |||||
Security lending income receivable | 452 | |||||
Receivable for capital shares issued | 2,572,358 | |||||
Prepaid expenses | 32,230 | |||||
|
| |||||
Total Assets | 1,512,408,952 | |||||
|
| |||||
Liabilities: | ||||||
Payable for capital shares redeemed | 2,100,252 | |||||
Payable upon return of securities loaned (Note 2) | 5,731,250 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 881,160 | |||||
Fund administration fees | 65,357 | |||||
Distribution fees | 186,440 | |||||
Administrative servicing fees | 505,843 | |||||
Accounting and transfer agent fees | 100,224 | |||||
Trustee fees | 3,958 | |||||
Custodian fees | 6,850 | |||||
Compliance program costs (Note 3) | 285 | |||||
Professional fees | 35,415 | |||||
Printing fees | 137,633 | |||||
Other | 6,218 | |||||
|
| |||||
Total Liabilities | 9,760,885 | |||||
|
| |||||
Net Assets | $ | 1,502,648,067 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 1,120,586,955 | ||||
Accumulated distributions in excess of net investment loss | (5,426,589 | ) | ||||
Accumulated net realized gains from investments | 106,639,483 | |||||
Net unrealized appreciation/(depreciation) from investments | 280,848,218 | |||||
|
| |||||
Net Assets | $ | 1,502,648,067 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 476,141,617 | ||||
Class C Shares | 95,287,969 | |||||
Institutional Service Class Shares | 919,189,168 | |||||
Institutional Class Shares | 12,029,313 | |||||
|
| |||||
Total | $ | 1,502,648,067 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 16,709,405 | |||||
Class C Shares | 3,724,240 | |||||
Institutional Service Class Shares | 31,782,503 | |||||
Institutional Class Shares | 415,317 | |||||
|
| |||||
Total | 52,631,465 | |||||
|
| |||||
| * | Includes value of securities on loan of $5,617,500 (Note 2). |
58
Statement of Assets and Liabilities (Continued)
July 31, 2014
| Nationwide Geneva Mid Cap Growth Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 28.50 | ||||
Class C Shares (b) | $ | 25.59 | ||||
Institutional Service Class Shares | $ | 28.92 | ||||
Institutional Class Shares | $ | 28.96 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 30.24 | ||||
|
| |||||
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 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.
59
Statement of Operations
For the Year Ended July 31, 2014
| Nationwide Geneva Mid Cap Growth Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 6,564,304 | ||||
Income from securities lending (Note 2) | 2,736 | |||||
|
| |||||
Total Income | 6,567,040 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 10,140,564 | |||||
Fund administration fees | 1,021,181 | |||||
Distribution fees Class A | 1,230,450 | |||||
Distribution fees Class B (a) | 2,013 | |||||
Distribution fees Class C | 999,838 | |||||
Administrative servicing fees Class A | 863,943 | |||||
Administrative servicing fees Class B (a) | 671 | |||||
Administrative servicing fees Class C | 27,078 | |||||
Administrative servicing fees Institutional Service Class (b) | 1,376,857 | |||||
Registration and filing fees | 107,469 | |||||
Professional fees | 114,226 | |||||
Printing fees | 442,042 | |||||
Trustee fees | 55,828 | |||||
Custodian fees | 57,414 | |||||
Accounting and transfer agent fees | 512,332 | |||||
Compliance program costs (Note 3) | 5,572 | |||||
Recoupment fees (Note 3) | 45,468 | |||||
Other | 76,682 | |||||
|
| |||||
Total expenses before earnings credit and fees waived | 17,079,628 | |||||
|
| |||||
Earnings credit (Note 5) | (428 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (60,206 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (b) | (104,251 | ) | ||||
|
| |||||
Net Expenses | 16,914,743 | |||||
|
| |||||
NET INVESTMENT LOSS | (10,347,703 | ) | ||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 108,159,253 | |||||
Net change in unrealized appreciation/(depreciation) from investments | 2,946,762 | |||||
|
| |||||
Net realized/unrealized gains from investments | 111,106,015 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 100,758,312 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
60
Statements of Changes in Net Assets
| Nationwide Geneva Mid Cap Growth Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment loss | $ | (10,347,703 | ) | $ | (7,898,601 | ) | ||||||
Net realized gains from investments | 108,159,253 | 88,815,733 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | 2,946,762 | 157,419,685 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 100,758,312 | 238,336,817 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net realized gains: | ||||||||||||
Class A | (25,361,042 | ) | (6,861,984 | ) | ||||||||
Class B (a) | – | (54,588 | ) | |||||||||
Class C | (5,688,359 | ) | (1,519,946 | ) | ||||||||
Institutional Service Class (b) | (46,021,008 | ) | (9,977,376 | ) | ||||||||
Institutional Class | (515 | )(c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (77,070,924 | ) | (18,413,894 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 86,503,149 | 323,508,195 | ||||||||||
|
|
|
| |||||||||
Change in net assets | 110,190,537 | 543,431,118 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 1,392,457,530 | 849,026,412 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 1,502,648,067 | $ | 1,392,457,530 | ||||||||
|
|
|
| |||||||||
Accumulated distributions in excess of net investment income at end of year | $ | (5,426,589 | ) | $ | (7,898,600 | ) | ||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 104,894,746 | $ | 148,745,590 | ||||||||
Proceeds from shares issued from class conversion | 2,015,421 | – | ||||||||||
Dividends reinvested | 24,126,492 | 6,402,395 | ||||||||||
Cost of shares redeemed | (138,009,148 | ) | (104,626,362 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (6,972,489 | ) | 50,521,623 | |||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | 1,748 | 3,668 | ||||||||||
Dividends reinvested | – | 51,653 | ||||||||||
Cost of shares redeemed in class conversion | (2,015,421 | ) | – | |||||||||
Cost of shares redeemed | (311,700 | ) | (1,841,076 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (2,325,373 | ) | (1,785,755 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 14,028,000 | 23,731,707 | ||||||||||
Dividends reinvested | 5,132,718 | 1,296,710 | ||||||||||
Cost of shares redeemed | (21,009,450 | ) | (10,901,080 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (1,848,732 | ) | 14,127,337 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Proceeds from shares issued | 316,755,456 | 407,746,116 | ||||||||||
Dividends reinvested | 37,689,226 | 8,126,513 | ||||||||||
Cost of shares redeemed | (268,631,619 | ) | (155,227,639 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 85,813,063 | 260,644,990 | ||||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
61
Statements of Changes in Net Assets (Continued)
| Nationwide Geneva Mid Cap Growth Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | $ | 11,932,537 | (c) | $ | – | |||||||
Dividends reinvested | 515 | (c) | – | |||||||||
Cost of shares redeemed | (96,372 | )(c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 11,836,680 | (c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 86,503,149 | $ | 323,508,195 | ||||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 3,623,353 | 5,904,464 | ||||||||||
Issued in class conversion | 69,832 | – | ||||||||||
Reinvested | 855,229 | 268,670 | ||||||||||
Redeemed | (4,767,055 | ) | (4,136,914 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (218,641 | ) | 2,036,220 | |||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Issued | 70 | 165 | ||||||||||
Reinvested | – | 2,407 | ||||||||||
Redeemed in class conversion | (77,898 | ) | – | |||||||||
Redeemed | (12,147 | ) | (81,834 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (89,975 | ) | (79,262 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 536,623 | 1,042,254 | ||||||||||
Reinvested | 201,837 | 59,674 | ||||||||||
Redeemed | (804,161 | ) | (470,443 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (65,701 | ) | 631,485 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Issued | 10,856,454 | 16,112,704 | ||||||||||
Reinvested | 1,318,728 | 337,620 | ||||||||||
Redeemed | (9,188,510 | ) | (6,065,193 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 2,986,672 | 10,385,131 | ||||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 418,599 | (c) | – | |||||||||
Reinvested | 18 | (c) | – | |||||||||
Redeemed | (3,300 | )(c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 415,317 | (c) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | 3,027,672 | 12,973,574 | ||||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
62
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Geneva Mid Cap Growth Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Loss | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Loss to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | ||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 28.09 | (0.24 | ) | 2.18 | 1.94 | (1.53 | ) | (1.53 | ) | $ | 28.50 | 6.96% | $ | 476,141,617 | 1.25% | (0.81% | ) | 1.26% | 32.13% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 23.26 | (0.20 | ) | 5.46 | 5.26 | (0.43 | ) | (0.43 | ) | $ | 28.09 | 22.96% | $ | 475,430,830 | 1.38% | (0.79% | ) | 1.45% | 26.00% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 22.71 | (0.20 | ) | 1.20 | 1.00 | (0.45 | ) | (0.45 | ) | $ | 23.26 | 4.46% | $ | 346,311,494 | 1.38% | (0.88% | ) | 1.51% | 17.00% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 17.92 | (0.20 | ) | 5.02 | 4.82 | (0.03 | ) | (0.03 | ) | $ | 22.71 | 26.82% | $ | 195,872,031 | 1.38% | (0.92% | ) | 1.54% | 23.00% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 15.03 | (0.15 | ) | 3.04 | 2.89 | – | – | $ | 17.92 | 19.22% | $ | 176,923,831 | 1.38% | (0.90% | ) | 1.57% | 26.00% | ||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 25.52 | (0.37 | ) | 1.97 | 1.60 | (1.53 | ) | (1.53 | ) | $ | 25.59 | 6.30% | $ | 95,287,969 | 1.87% | (1.43% | ) | 1.87% | 32.13% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 21.29 | (0.32 | ) | 4.98 | 4.66 | (0.43 | ) | (0.43 | ) | $ | 25.52 | 22.26% | $ | 96,702,988 | 1.98% | (1.39% | ) | 1.95% | 26.00% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 20.96 | (0.32 | ) | 1.10 | 0.78 | (0.45 | ) | (0.45 | ) | $ | 21.29 | 3.77% | $ | 67,244,463 | 1.98% | (1.48% | ) | 2.01% | 17.00% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 16.64 | (0.31 | ) | 4.66 | 4.35 | (0.03 | ) | (0.03 | ) | $ | 20.96 | 26.14% | $ | 32,580,381 | 1.98% | (1.52% | ) | 2.04% | 23.00% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 14.04 | (0.24 | ) | 2.84 | 2.60 | – | – | $ | 16.64 | 18.52% | $ | 18,896,175 | 1.98% | (1.50% | ) | 2.07% | 26.00% | ||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 28.41 | (0.16 | ) | 2.20 | 2.04 | (1.53 | ) | (1.53 | ) | $ | 28.92 | 7.24% | $ | 919,189,168 | 0.98% | (0.54% | ) | 0.99% | 32.13% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 23.46 | (0.14 | ) | 5.52 | 5.38 | (0.43 | ) | (0.43 | ) | $ | 28.41 | 23.28% | $ | 818,056,645 | 1.13% | (0.54% | ) | 1.02% | 26.00% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 22.85 | (0.15 | ) | 1.21 | 1.06 | (0.45 | ) | (0.45 | ) | $ | 23.46 | 4.70% | $ | 431,911,298 | 1.13% | (0.63% | ) | 1.26% | 17.00% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 17.98 | (0.15 | ) | 5.05 | 4.90 | (0.03 | ) | (0.03 | ) | $ | 22.85 | 27.25% | $ | 215,698,880 | 1.13% | (0.67% | ) | 1.29% | 23.00% | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 15.04 | (0.11 | ) | 3.05 | 2.94 | – | – | $ | 17.98 | 19.55% | $ | 19,588,342 | 1.11% | (0.63% | ) | 1.32% | 26.00% | ||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 29.70 | (0.08 | ) | 0.87 | 0.79 | (1.53 | ) | (1.53 | ) | $ | 28.96 | 2.72% | $ | 12,029,313 | 0.80% | (0.31% | ) | 0.80% | 32.13% | ||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
63
| Fund Commentary | Nationwide Geneva Small Cap Growth Fund |
For the annual period ended July 31, 2014, the Nationwide Geneva Small Cap Growth Fund (Institutional Service Class) returned 3.21%* versus 8.93% for its benchmark, the Russell 2000® Growth Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Small-Cap Growth Funds (consisting of 534 funds as of July 31, 2014) was 7.89% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
The reporting period has been characterized as a Federal Reserve-induced “risk on” market, with prevailing low interest rates and tight credit spreads. These market conditions typically have favored companies possessing more leverage with historically little access to inexpensive outside capital.
Contributing the most to Fund performance during the reporting period were the Fund’s investments in the health-care, energy and financial services sectors. Specific stocks that contributed the most to Fund performance during the reporting period were Envestnet, Inc. and Tyler Technologies, Inc. in the technology sector, and Cantel Medical Corp. in the health-care sector.
Envestnet saw its shares rise during the reporting period as the company continued to capitalize on the rise of independent advisors and a shift to fee-based advisory relationships. Envestnet’s management team continues to execute and has a proven track record of both organic and inorganic growth. Tyler Technologies’ solid performance during the reporting period was driven by a growing pipeline of deals as the overall budget environment in the public sector improved and new wins came from the California county court systems. Cantel Medical delivered strong results beating analyst sales estimates for every quarter. Despite making investments in sales and marketing and new product development, the company continued to exhibit strong growth in all product categories and announced several acquisitions that complement its existing businesses.
The Fund’s holdings in the consumer discretionary sector detracted the most from Fund performance during the reporting period. Individual Fund holdings that detracted from Fund performance were Infoblox Inc. in the technology sector, Chart Industries, Inc. in the producer durables sector and Beacon Roofing Supply, Inc. in the materials and processing sector.
Infoblox was sold from the portfolio during the reporting period after two consecutive quarters of missing street expectations and guiding down revenue significantly. Chart Industries underperformed during the reporting period due to lack of visibility in the LNG (liquefied natural gas) infrastructure market. After the company significantly increased capacity with the expectation for increased demand, the number of LNG projects did not rise as quickly as expected due to their complex nature. Beacon Roofing Supply underperformed during the reporting period due to the industry’s unfavorable pricing environment, which was compounded by the winter weather that also negatively affected demand. Also, lack of merger-and-acquisition (M&A) activity due to stretched valuations accounted for lower growth rates and stock performance during the reporting period.
From a quality perspective, low-quality companies significantly outperformed their high-quality counterparts, with stocks rated C and D by Standard & Poor’s up 19.7% for the reporting period and those rated B+ or better up 11.2% during the same period.
For the balance of 2014, we expect improving economic growth that could finish the year at a 2.8% gross domestic product (GDP) growth rate. As policymakers take note of improving economic data, we feel that these policymakers may be inclined to revisit interest rates and fully address quantitative easing (e.g., possibly choose to further taper, or reduce, asset purchases) during 2015. Should that action take place, we feel that two to three quarters prior the market may reflect the expectation, which should change market sentiment back to fundamentals and away from financial engineering (e.g., buybacks, corporate inversions, mergers and acquisitions).
64
| Fund Commentary (con’t.) | Nationwide Geneva Small Cap Growth Fund |
The Fund did not invest in derivatives during the reporting period.
Subadviser:
Geneva Capital Management Ltd.
Portfolio Managers:
Amy S. Croen, Michelle J. Picard, William A. Priebe and William Scott Priebe
The Fund is subject to the risks of investing in equity securities and risks associated with investing in stocks of smaller companies. The Fund may invest in exchange-traded funds (ETFs). An investment in an ETF is subject to the risks of the securities held by the ETF and carries additional costs. Growth funds may underperform other funds that use different investing styles. Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
65
| Fund Overview | Nationwide Geneva Small Cap Growth Fund |
Objective
The Fund seeks long-term capital appreciation.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide Geneva Small Cap Growth Fund (Institutional Service Class) returned 3.21%, underperforming its benchmark by 5.72% and the Lipper peer category median by 4.68%. |
| Ÿ | Contributing the most to Fund performance during the reporting period were the Fund’s investments in the health-care, energy and financial services sectors. |
| Ÿ | The Fund’s holdings in the consumer discretionary sector detracted the most from Fund performance during the reporting period. |
Asset Allocation†
| Common Stocks | 97.4% | |||
| Other assets in excess of liabilities | 2.6% | |||
| 100.0% |
Top Industries††
| Software | 11.9% | |||
| Machinery | 11.3% | |||
| Health Care Equipment & Supplies | 8.0% | |||
| Specialty Retail | 5.5% | |||
| Oil, Gas & Consumable Fuels | 5.5% | |||
| Life Sciences Tools & Services | 5.3% | |||
| Banks | 5.0% | |||
| Health Care Providers & Services | 4.3% | |||
| Chemicals | 4.0% | |||
| Food Products | 3.7% | |||
| Other Industries | 35.5% | |||
| 100.0% |
Top Holdings††
| Tyler Technologies, Inc. | 3.1% | |||
| PAREXEL International Corp. | 2.8% | |||
| Allegiant Travel Co. | 2.8% | |||
| Bank of the Ozarks, Inc. | 2.8% | |||
| MWI Veterinary Supply, Inc. | 2.6% | |||
| Ultimate Software Group, Inc. (The) | 2.6% | |||
| MarketAxess Holdings, Inc. | 2.6% | |||
| Middleby Corp. (The) | 2.6% | |||
| Cantel Medical Corp. | 2.5% | |||
| Techne Corp. | 2.5% | |||
| Other Holdings | 73.1% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
66
| Fund Performance | Nationwide Geneva Small Cap Growth Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | Inception | ||||||||||||
| Class A1 | w/o SC2 | 2.94% | 17.35% | 17.64% | 3 | |||||||||
| w/ SC4 | (2.72)% | 16.03% | 16.36% | 3 | ||||||||||
| Class C1 | w/o SC2 | 2.26% | 16.64% | 16.95% | 3 | |||||||||
| w/ SC5 | 1.26% | 16.64% | 16.95% | 3 | ||||||||||
| Institutional Service Class1,6,7 | 3.21% | 17.66% | 17.95% | 3 | ||||||||||
| Institutional Class6 | – | – | (2.79)% | 8* | ||||||||||
| Russell 2000® Growth Index | 8.93% | 17.24% | 17.82% | |||||||||||
| CPI | 1.99% | 2.04% | 1.97% | |||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | Since inception date of June 12, 2009. |
| 4 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 5 | 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. |
| 6 | Not subject to any SCs. |
| 7 | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 8 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.85% | 1.62% | ||||||
| Class C | 2.35% | 2.22% | ||||||
| Institutional Service Class | 1.60% | 1.37% | ||||||
| Institutional Class | 1.35% | 1.22% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
67
| Fund Performance (con’t.) | Nationwide Geneva Small Cap Growth 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 Service Class shares of the Nationwide Geneva Small Cap Growth Fund since inception* through 7/31/14 versus the Russell 2000® Growth Index and the Consumer Price Index (CPI) for the same period. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
*The inception date for the Nationwide Geneva Small Cap Growth Fund is 9/16/13. Performance prior to that date is based on the since-inception performance of the Fund’s predecessor fund.
68
| Shareholder Expense Example | Nationwide Geneva Small Cap Growth 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide Geneva Small Cap July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 913.70 | 7.40 | 1.56 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,017.06 | 7.80 | 1.56 | ||||||||
| Class C Shares | Actual | (a) | 1,000.00 | 910.60 | 10.52 | 2.22 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,013.79 | 11.08 | 2.22 | ||||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 915.00 | 5.89 | 1.24 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,018.65 | 6.21 | 1.24 | ||||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 915.30 | 5.60 | 1.18 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,018.94 | 5.91 | 1.18 | ||||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
69
Statement of Investments
July 31, 2014
Nationwide Geneva Small Cap Growth Fund
| Common Stocks 97.4% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Air Freight & Logistics 2.0% |
| |||||||||
Echo Global Logistics, Inc.* | 66,651 | $ | 1,466,989 | |||||||
Hub Group, Inc., Class A* | 29,023 | 1,340,282 | ||||||||
|
| |||||||||
| 2,807,271 | ||||||||||
|
| |||||||||
| ||||||||||
Airlines 2.7% |
| |||||||||
Allegiant Travel Co. | 32,420 | 3,817,779 | ||||||||
|
| |||||||||
| ||||||||||
Banks 4.8% |
| |||||||||
Bank of the Ozarks, Inc. | 122,886 | 3,781,202 | ||||||||
Texas Capital Bancshares, Inc.* | 58,650 | 3,052,733 | ||||||||
|
| |||||||||
| 6,833,935 | ||||||||||
|
| |||||||||
| ||||||||||
Capital Markets 1.0% |
| |||||||||
Affiliated Managers Group, Inc.* | 7,435 | 1,481,424 | ||||||||
|
| |||||||||
| ||||||||||
Chemicals 3.9% |
| |||||||||
Balchem Corp. | 55,027 | 2,751,350 | ||||||||
Sensient Technologies Corp. | 53,027 | 2,783,918 | ||||||||
|
| |||||||||
| 5,535,268 | ||||||||||
|
| |||||||||
| ||||||||||
Commercial Services & Supplies 3.4% |
| |||||||||
Healthcare Services Group, Inc. | 107,639 | 2,813,684 | ||||||||
Team, Inc.* | 49,856 | 1,974,796 | ||||||||
|
| |||||||||
| 4,788,480 | ||||||||||
|
| |||||||||
| ||||||||||
Distributors 1.0% |
| |||||||||
LKQ Corp.* | 53,555 | 1,400,731 | ||||||||
|
| |||||||||
| ||||||||||
Diversified Financial Services 2.5% |
| |||||||||
MarketAxess Holdings, Inc. | 63,217 | 3,554,692 | ||||||||
|
| |||||||||
| ||||||||||
Electrical Equipment 2.2% |
| |||||||||
Acuity Brands, Inc. | 29,061 | 3,117,373 | ||||||||
|
| |||||||||
| ||||||||||
Electronic Equipment, Instruments & Components 2.0% |
| |||||||||
Cognex Corp.* | 67,369 | 2,760,782 | ||||||||
|
| |||||||||
| ||||||||||
Energy Equipment & Services 1.7% |
| |||||||||
Dril-Quip, Inc.* | 24,381 | 2,456,873 | ||||||||
|
| |||||||||
| ||||||||||
Food Products 3.6% |
| |||||||||
J&J Snack Foods Corp. | 33,099 | 2,981,889 | ||||||||
TreeHouse Foods, Inc.* | 28,872 | 2,122,092 | ||||||||
|
| |||||||||
| 5,103,981 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Equipment & Supplies 7.8% |
| |||||||||
ABIOMED, Inc.* | 118,357 | 3,029,939 | ||||||||
Cantel Medical Corp. | 104,431 | 3,501,571 | ||||||||
Masimo Corp.* | 59,556 | 1,434,109 | ||||||||
Neogen Corp.* | 68,274 | 2,980,843 | ||||||||
|
| |||||||||
| 10,946,462 | ||||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Health Care Providers & Services 4.2% |
| |||||||||
IPC The Hospitalist Co., Inc.* | 46,648 | $ | 2,294,149 | |||||||
MWI Veterinary Supply, Inc.* | 25,513 | 3,603,966 | ||||||||
|
| |||||||||
| 5,898,115 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Technology 2.0% |
| |||||||||
Medidata Solutions, Inc.* | 64,010 | 2,870,208 | ||||||||
|
| |||||||||
| ||||||||||
Hotels, Restaurants & Leisure 3.5% |
| |||||||||
Chuy’s Holdings, Inc.* | 73,297 | 2,099,959 | ||||||||
Panera Bread Co., Class A* | 9,096 | 1,339,841 | ||||||||
Red Robin Gourmet Burgers, Inc.* | 24,117 | 1,552,170 | ||||||||
|
| |||||||||
| 4,991,970 | ||||||||||
|
| |||||||||
| ||||||||||
Internet Software & Services 3.4% |
| |||||||||
Envestnet, Inc.* | 68,388 | 2,982,401 | ||||||||
NIC, Inc. | 105,714 | 1,783,395 | ||||||||
|
| |||||||||
| 4,765,796 | ||||||||||
|
| |||||||||
| ||||||||||
Life Sciences Tools & Services 5.2% |
| |||||||||
PAREXEL International Corp.* | 72,199 | 3,866,978 | ||||||||
Techne Corp. | 37,024 | 3,455,080 | ||||||||
|
| |||||||||
| 7,322,058 | ||||||||||
|
| |||||||||
| ||||||||||
Machinery 11.0% |
| |||||||||
Barnes Group, Inc. | 78,049 | 2,673,178 | ||||||||
Chart Industries, Inc.* | 29,363 | 2,233,056 | ||||||||
Donaldson Co., Inc. | 58,575 | 2,272,124 | ||||||||
Middleby Corp. (The)* | 48,687 | 3,547,335 | ||||||||
Proto Labs, Inc.* | 26,004 | 2,106,324 | ||||||||
RBC Bearings, Inc. | 48,460 | 2,688,561 | ||||||||
|
| |||||||||
| 15,520,578 | ||||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 5.3% |
| |||||||||
Bonanza Creek Energy, Inc.* | 46,762 | 2,621,478 | ||||||||
Gulfport Energy Corp.* | 40,761 | 2,177,045 | ||||||||
SM Energy Co. | 34,722 | 2,727,066 | ||||||||
|
| |||||||||
| 7,525,589 | ||||||||||
|
| |||||||||
| ||||||||||
Professional Services 1.6% |
| |||||||||
Advisory Board Co. (The)* | 45,403 | 2,276,506 | ||||||||
|
| |||||||||
| ||||||||||
Road & Rail 3.4% |
| |||||||||
Genesee & Wyoming, Inc., Class A* | 29,627 | 2,954,701 | ||||||||
Marten Transport Ltd. | 88,051 | 1,782,152 | ||||||||
|
| |||||||||
| 4,736,853 | ||||||||||
|
| |||||||||
| ||||||||||
Software 11.6% |
| |||||||||
Bottomline Technologies de, Inc.* | 76,993 | 2,179,672 | ||||||||
Concur Technologies, Inc.* | 33,967 | 3,157,572 | ||||||||
FactSet Research Systems, Inc. | 10,605 | 1,273,979 | ||||||||
Interactive Intelligence Group, Inc.* | 42,723 | 1,938,342 | ||||||||
Tyler Technologies, Inc.* | 47,290 | 4,290,622 | ||||||||
Ultimate Software Group, Inc. (The)* | 26,457 | 3,569,314 | ||||||||
|
| |||||||||
| 16,409,501 | ||||||||||
|
| |||||||||
70
Statement of Investments (Continued)
July 31, 2014
Nationwide Geneva Small Cap Growth Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Specialty Retail 5.4% |
| |||||||||
Hibbett Sports, Inc.* | 57,631 | $ | 2,876,363 | |||||||
Monro Muffler Brake, Inc. | 59,103 | 3,001,841 | ||||||||
Vitamin Shoppe, Inc.* | 40,232 | 1,715,895 | ||||||||
|
| |||||||||
| 7,594,099 | ||||||||||
|
| |||||||||
| ||||||||||
Thrifts & Mortgage Finance 1.2% |
| |||||||||
BofI Holding, Inc.* | 22,494 | 1,677,827 | ||||||||
|
| |||||||||
| ||||||||||
Trading Companies & Distributors 1.0% |
| |||||||||
Beacon Roofing Supply, Inc.* | 50,385 | 1,392,641 | ||||||||
|
| |||||||||
Total Investments |
| 137,586,792 | ||||||||
Other assets in excess of liabilities — 2.6% | 3,627,761 | |||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 141,214,553 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| Ltd. | Limited |
The accompanying notes are an integral part of these financial statements.
71
Statement of Assets and Liabilities
July 31, 2014
| Nationwide Geneva Small Cap Growth Fund | ||||||
Assets: | ||||||
Investments, at value (cost $122,074,953) | $ | 137,586,792 | ||||
Cash | 1,047,031 | |||||
Dividends receivable | 3,926 | |||||
Receivable for investments sold | 2,262,968 | |||||
Receivable for capital shares issued | 1,371,711 | |||||
Prepaid expenses | 19,177 | |||||
|
| |||||
Total Assets | 142,291,605 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 361,576 | |||||
Payable for capital shares redeemed | 497,939 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 124,077 | |||||
Fund administration fees | 10,613 | |||||
Distribution fees | 20,477 | |||||
Administrative servicing fees | 21,225 | |||||
Accounting and transfer agent fees | 3,014 | |||||
Trustee fees | 358 | |||||
Custodian fees | 590 | |||||
Compliance program costs (Note 3) | 179 | |||||
Professional fees | 22,231 | |||||
Printing fees | 11,129 | |||||
Other | 3,644 | |||||
|
| |||||
Total Liabilities | 1,077,052 | |||||
|
| |||||
Net Assets | $ | 141,214,553 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 119,931,050 | ||||
Accumulated distributions in excess of net investment loss | (911,073 | ) | ||||
Accumulated net realized gains from investments | 6,682,737 | |||||
Net unrealized appreciation/(depreciation) from investments | 15,511,839 | |||||
|
| |||||
Net Assets | $ | 141,214,553 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 27,931,521 | ||||
Class C Shares | 15,458,648 | |||||
Institutional Service Class Shares | 97,340,606 | |||||
Institutional Class Shares | 483,778 | |||||
|
| |||||
Total | $ | 141,214,553 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 699,752 | |||||
Class C Shares | 400,247 | |||||
Institutional Service Class Shares | 2,403,215 | |||||
Institutional Class Shares | 11,933 | |||||
|
| |||||
Total | 3,515,147 | |||||
|
| |||||
72
Statement of Assets and Liabilities (Continued)
July 31, 2014
| Nationwide Geneva Small Cap Growth Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 39.92 | ||||
Class C Shares (b) | $ | 38.62 | ||||
Institutional Service Class Shares | $ | 40.50 | ||||
Institutional Class Shares | $ | 40.54 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 42.36 | ||||
|
| |||||
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 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.
73
Statement of Operations
For the Year Ended July 31, 2014
| Nationwide Geneva Small Cap Growth Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 612,173 | ||||
|
| |||||
Total Income | 612,173 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 1,398,445 | |||||
Fund administration fees | 144,648 | |||||
Distribution fees Class A | 83,429 | |||||
Distribution fees Class C | 156,341 | |||||
Administrative servicing fees Class A | 44,984 | |||||
Administrative servicing fees Class C | 4,419 | |||||
Administrative servicing fees Institutional Service Class (a) | 88,730 | |||||
Registration and filing fees | 57,450 | |||||
Professional fees | 36,187 | |||||
Printing fees | 34,216 | |||||
Trustee fees | 4,076 | |||||
Custodian fees | 5,236 | |||||
Accounting and transfer agent fees | 22,507 | |||||
Compliance program costs (Note 3) | 1,768 | |||||
Other | 12,843 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 2,095,279 | |||||
|
| |||||
Earnings credit (Note 5) | (66 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (3,108 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (a) | (9,476 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (23,530 | ) | ||||
|
| |||||
Net Expenses | 2,059,099 | |||||
|
| |||||
NET INVESTMENT LOSS | (1,446,926 | ) | ||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 8,299,863 | |||||
Net change in unrealized appreciation/(depreciation) from investments | (6,908,932 | ) | ||||
|
| |||||
Net realized/unrealized gains from investments | 1,390,931 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | (55,995 | ) | |||
|
| |||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
74
Statements of Changes in Net Assets
Nationwide Geneva Small Cap Growth Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment loss | $ | (1,446,926 | ) | $ | (764,763 | ) | ||||||
Net realized gains from investments | 8,299,863 | 4,210,112 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | (6,908,932 | ) | 18,438,559 | |||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | (55,995 | ) | 21,883,908 | |||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net realized gains: | ||||||||||||
Class A | (1,065,380 | ) | (583,961 | ) | ||||||||
Class C | (502,214 | ) | (285,618 | ) | ||||||||
Institutional Service Class (a) | (2,586,446 | ) | (1,574,763 | ) | ||||||||
Institutional Class | (325 | )(b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (4,154,365 | ) | (2,444,342 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 35,748,830 | 51,141,945 | ||||||||||
|
|
|
| |||||||||
Change in net assets | 31,538,470 | 70,581,511 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 109,676,083 | 39,094,572 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 141,214,553 | $ | 109,676,083 | ||||||||
|
|
|
| |||||||||
Accumulated distributions in excess of net investment income at end of year | $ | (911,073 | ) | $ | (764,763 | ) | ||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 25,755,368 | $ | 15,711,087 | (c) | |||||||
Dividends reinvested | 1,038,753 | 552,963 | ||||||||||
Cost of shares redeemed | (22,224,052 | ) | (6,057,104 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 4,570,069 | 10,206,946 | ||||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 6,693,233 | 6,971,615 | (c) | |||||||||
Dividends reinvested | 493,337 | 281,159 | ||||||||||
Cost of shares redeemed | (3,128,668 | ) | (1,075,169 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 4,057,902 | 6,177,605 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | 68,410,493 | 47,263,193 | (c) | |||||||||
Dividends reinvested | 2,109,678 | 1,100,299 | ||||||||||
Cost of shares redeemed | (43,907,701 | ) | (13,606,098 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 26,612,470 | 34,757,394 | ||||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 517,828 | (b) | – | |||||||||
Dividends reinvested | 325 | (b) | – | |||||||||
Cost of shares redeemed | (9,764 | )(b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 508,389 | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 35,748,830 | $ | 51,141,945 | ||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
| (c) | Includes redemption fees. See Note 4 for further information. |
75
Statements of Changes in Net Assets (Continued)
Nationwide Geneva Small Cap Growth Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 595,988 | 457,436 | ||||||||||
Reinvested | 24,367 | 17,383 | ||||||||||
Redeemed | (535,546 | ) | (176,348 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 84,809 | 298,471 | ||||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 159,154 | 205,357 | ||||||||||
Reinvested | 11,911 | 9,035 | ||||||||||
Redeemed | (77,239 | ) | (31,379 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 93,826 | 183,013 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Issued | 1,592,850 | 1,350,672 | ||||||||||
Reinvested | 48,858 | 34,256 | ||||||||||
Redeemed | (1,042,590 | ) | (383,045 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 599,118 | 1,001,883 | ||||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 12,169 | (b) | – | |||||||||
Reinvested | 7 | (b) | – | |||||||||
Redeemed | (243 | )(b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 11,933 | (b) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | 789,686 | 1,483,367 | ||||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
| (c) | Includes redemption fees. See Note 4 for further information. |
The accompanying notes are an integral part of these financial statements.
76
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Geneva Small Cap Growth Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Loss | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Realized Gains | Total Distributions | Redemption Fees | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Loss to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 40.05 | (0.49 | ) | 1.76 | 1.27 | (1.40 | ) | (1.40 | ) | – | $ | 39.92 | 2.94% | $ | 27,931,521 | 1.59% | (1.15% | ) | 1.61% | 27.16% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 31.36 | (0.42 | ) | 10.63 | 10.21 | (1.52 | ) | (1.52 | ) | – | $ | 40.05 | 33.86% | $ | 24,629,215 | 1.62% | (1.21% | ) | 1.88% | 30.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 30.87 | (0.38 | ) | 1.80 | 1.42 | (0.93 | ) | (0.93 | ) | – | $ | 31.36 | 4.69% | $ | 9,925,067 | 1.62% | (1.26% | ) | 2.07% | 45.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 24.39 | (0.39 | ) | 7.90 | 7.51 | (1.03 | ) | (1.03 | ) | – | $ | 30.87 | 30.90% | $ | 9,000,251 | 1.62% | (1.30% | ) | 2.25% | 45.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 20.70 | (0.26 | ) | 3.95 | 3.69 | – | – | – | $ | 24.39 | 17.83% | $ | 3,220,168 | 1.62% | (1.15% | ) | 2.73% | 62.00% | |||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 39.04 | (0.73 | ) | 1.71 | 0.98 | (1.40 | ) | (1.40 | ) | – | $ | 38.62 | 2.26% | $ | 15,458,648 | 2.22% | (1.78% | ) | 2.26% | 27.16% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 30.78 | (0.62 | ) | 10.40 | 9.78 | (1.52 | ) | (1.52 | ) | – | $ | 39.04 | 33.08% | $ | 11,961,250 | 2.22% | (1.81% | ) | 2.38% | 30.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 30.49 | (0.56 | ) | 1.78 | 1.22 | (0.93 | ) | (0.93 | ) | – | $ | 30.78 | 4.09% | $ | 3,798,576 | 2.22% | (1.86% | ) | 2.57% | 45.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 24.23 | (0.58 | ) | 7.87 | 7.29 | (1.03 | ) | (1.03 | ) | – | $ | 30.49 | 30.18% | $ | 2,133,507 | 2.22% | (1.90% | ) | 2.75% | 45.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 20.69 | (0.40 | ) | 3.94 | 3.54 | – | – | – | $ | 24.23 | 17.11% | $ | 259,851 | 2.22% | (1.75% | ) | 3.23% | 62.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 40.51 | (0.37 | ) | 1.76 | 1.39 | (1.40 | ) | (1.40 | ) | – | $ | 40.50 | 3.21% | $ | 97,340,606 | 1.30% | (0.86% | ) | 1.33% | 27.16% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 31.63 | (0.34 | ) | 10.74 | 10.40 | (1.52 | ) | (1.52 | ) | – | $ | 40.51 | 34.18% | $ | 73,085,618 | 1.36% | (0.95% | ) | 1.63% | 30.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 31.04 | (0.30 | ) | 1.82 | 1.52 | (0.93 | ) | (0.93 | ) | – | $ | 31.63 | 4.99% | $ | 25,370,929 | 1.35% | (0.99% | ) | 1.82% | 45.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 24.45 | (0.31 | ) | 7.93 | 7.62 | (1.03 | ) | (1.03 | ) | – | $ | 31.04 | 31.28% | $ | 12,477,289 | 1.35% | (1.03% | ) | 2.00% | 45.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 20.70 | (0.20 | ) | 3.95 | 3.75 | – | – | – | $ | 24.45 | 18.12% | $ | 6,252,291 | 1.37% | (0.89% | ) | 2.48% | 62.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 43.05 | (0.28 | ) | (0.83 | ) | (1.11 | ) | (1.40 | ) | (1.40 | ) | – | $ | 40.54 | (2.79% | ) | $ | 483,778 | 1.18% | (0.77% | ) | 1.18% | 27.16% | ||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
77
| Fund Commentary | Nationwide HighMark Balanced Fund |
For the annual period ended July 31, 2014, the Nationwide HighMark Balanced Fund (Institutional Service Class) returned 8.59%* versus 11.69% for its composite benchmark, 60% S&P 500® Index and 40% Barclays U.S. Aggregate Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mixed-Asset Target Allocation Conservative Funds (consisting of 360 funds as of July 31, 2014) was 7.32% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
Market Environment
The equity market environment during the year ended July 31, 2014, presented considerable headwinds to the performance of high-quality, large-capitalization core equity investment strategies such as those implemented for the equity portion of the Nationwide HighMark Balanced Fund. As U.S. economic conditions continued to improve, particularly after the harsh 2013-2014 winter, equity markets were driven by a “risk on” investment climate favoring lower-quality, more speculative or distressed companies. In this environment, firms with stronger fundamentals underperformed.
The fixed-income environment during the year ended July 31, 2014, was marked, as has been the case for several years, by the Federal Reserve’s attempts to engineer a U.S. economic recovery. Throughout the period the Fed emphasized that policy will remain accommodative well beyond the termination of its bond purchasing program in the fall of 2014 due to continued concern about the pace of economic growth which, although much improved during the reporting period, is still below the Fed’s comfort level. As a result, bond investors followed the approach of their equity colleagues and continued to add incremental risk to maintain a desired portfolio yield. The result was that valuations, particularly in the case of high-yield bonds, were increasingly driven to less-attractive levels.
Portfolio Performance
Throughout the reporting period, the sector allocation strategy of the equity portion of the Fund contributed slightly to Fund performance, as did stock selection in the financials, energy and health-care sectors. Stocks that contributed to Fund performance included the Fund’s overweighting of strong performers such as Wells Fargo & Co. in financials, Halliburton Co. in energy and Allergan, Inc. in health care.
Poor stock selection during the reporting period in the information technology and consumer discretionary sectors more than offset these positive contributions, however, as the Fund’s underweighting in Apple Inc., along with not holding Facebook, Inc. and Intel Corp., detracted from Fund performance in the information technology sector. In the consumer discretionary sector, Fund holdings Dick’s Sporting Goods, Inc. and Target Corp. failed to meet our expectations.
The bond portion of the Fund benefited during the reporting period as, despite negative returns during the last few weeks of July 2014, fixed-income risk assets and sectors responded to improving economic data and the Fed’s bond-buying program by handily outperforming U.S. Treasurys. Corporate bonds outperformed equivalent-duration Treasurys by nearly 4% during the reporting period, and the Fund’s overweight to this sector contributed to Fund performance in relation to the Barclays U.S. Aggregate Bond Index. Individual bond issues that contributed positively to Fund performance during the reporting period included Time Warner Entertainment, Los Angeles Department of Water and Power, and US Airways Group, Inc.; issues that detracted from Fund performance during the reporting period included bonds from CVS/Caremark Corp., Walgreen Co. and American International Group, Inc (AIG).
Derivatives were not used in the Nationwide HighMark Balanced Fund during the annual period ended July 31, 2014.
Outlook and Positioning
The philosophy and process driving the equity portion of the Fund involve building a portfolio of
78
| Fund Commentary (con’t.) | Nationwide HighMark Balanced Fund |
holdings from companies that we have identified as having compelling business models, sustainable competitive advantages and strong management teams. Stocks with these characteristics anchor the Fund’s equity component and, we believe, are positioned to outperform in a future stock market that we expect will reward companies with earnings and cash flow growth — with an emphasis on sustainable growth — and have the potential to outperform the lower-quality companies that have rallied in the “risk on” market environment of the period. As the Fed reduces its bond-buying program and rates rise, low-quality companies may no longer enjoy the low-cost financing boon of the past few years, and we expect this will benefit the higher-quality companies we prefer for the Fund’s portfolio.
In the fixed-income portion of the Fund, we plan to maintain the Fund’s significant underweight in U.S. Treasury and government-related securities. While these securities represent minimal credit risk, their low yield provides a limited degree of protection to offset the risk of declining prices in a rising rate environment. We believe that other sectors of the market — particularly corporate bonds — provide significantly greater yield, enhanced return potential and an opportunity to offset possible price declines as rates rise. We have seen significant spread compression during the period, but we continue to believe that the yield advantage provided by corporate bonds remains attractive on a risk-adjusted basis. We also anticipate that corporate bonds will outperform other fixed-income sectors in a rising interest rate environment as the additional income should help offset some of the price declines.
Subadviser:
HighMark Capital Management, Inc.
Portfolio Managers:
Derek Izuel, E. Jack Montgomery, Kenneth Wemer and David Wines
The Fund is subject to the risks of investing in equity securities and fixed-income securities. 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). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
79
| Fund Overview | Nationwide HighMark Balanced Fund |
Objective
The Fund seeks capital appreciation and income. Conservation of capital is a secondary consideration in selecting portfolio investments.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide HighMark Balanced Fund (Institutional Service Class) returned 8.59%, underperforming the composite benchmark by 3.10% and outperforming the Lipper peer category median by 1.27%. |
| Ÿ | Throughout the reporting period, the sector allocation strategy of the equity portion of the Fund contributed slightly to Fund performance, as did stock selection in the financials, energy and health-care sectors. The bond portion of the Fund benefited during the reporting period as, despite negative returns during the last few weeks of July 2014, fixed-income risk assets and sectors responded to improving economic data and the Fed’s bond-buying program. |
| Ÿ | Poor stock selection in the information technology and consumer discretionary sectors detracted from Fund performance during the reporting period. |
Asset Allocation†
| Common Stocks | 59.8% | |||
| Corporate Bonds | 21.1% | |||
| U.S. Treasury Notes | 5.6% | |||
| U.S. Government Mortgage Backed Agencies | 5.4% | |||
| Commercial Mortgage Backed Securities | 3.3% | |||
| Asset-Backed Securities | 2.0% | |||
| Municipal Bonds | 1.2% | |||
| Collateralized Mortgage Obligations | 0.3% | |||
| Bank Loan | 0.1% | |||
| Other assets in excess of liabilities | 1.2% | |||
| 100.0% |
Top Industries††
| Banks | 10.3% | |||
| Oil, Gas & Consumable Fuels | 6.0% | |||
| Pharmaceuticals | 5.4% | |||
| Chemicals | 4.2% | |||
| Food & Staples Retailing | 3.4% | |||
| Software | 2.9% | |||
| Media | 2.7% | |||
| Hotels, Restaurants & Leisure | 2.7% | |||
| Internet Software & Services | 2.6% | |||
| Industrial Conglomerates | 2.5% | |||
| Other Industries | 57.3% | |||
| 100.0% |
Top Holdings††
| Wells Fargo & Co. | 3.1% | |||
| Danaher Corp. | 2.5% | |||
| Ecolab, Inc. | 2.2% | |||
| U.S. Bancorp | 2.1% | |||
| Praxair, Inc. | 1.8% | |||
| American Tower Corp. | 1.7% | |||
| Microsoft Corp. | 1.5% | |||
| Halliburton Co. | 1.4% | |||
| Linear Technology Corp. | 1.4% | |||
| Walgreen Co. | 1.4% | |||
| Other Holdings | 80.9% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
80
| Fund Performance | Nationwide HighMark Balanced Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 8.34% | 10.31% | 5.76% | – | |||||||||||||
| w/ SC3 | 2.36% | 9.06% | 5.16% | – | ||||||||||||||
| Class C1 | w/o SC2 | 7.69% | 9.67% | 5.11% | – | |||||||||||||
| w/ SC4 | 6.69% | 9.67% | 5.11% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 8.59% | 10.59% | 6.02% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 7.18% | 7* | |||||||||||||
| Composite Index | 11.69% | 11.55% | 6.59% | – | ||||||||||||||
| S&P 500® Index | 16.94% | 16.79% | 8.00% | – | ||||||||||||||
| Barclays U.S. Aggregate Bond Index | 3.97% | 4.47% | 4.80% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.96% | 1.24% | ||||||
| Class C | 2.46% | 1.84% | ||||||
| Institutional Service Class | 1.71% | 0.99% | ||||||
| Institutional Class | 1.46% | 0.84% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
81
| Fund Performance (con’t.) | Nationwide HighMark Balanced 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 Service Class shares of the Nationwide HighMark Balanced Fund versus the Composite Index*, the S&P 500® Index, the Barclays U.S. Aggregate Bond Index and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
*The Fund’s Composite Index comprises 60% S&P 500® Index and 40% Barclays U.S. Aggregate Bond Index.
82
| Shareholder Expense Example | Nationwide HighMark Balanced 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide HighMark July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,052.10 | 6.31 | 1.24 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.65 | 6.21 | 1.24 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,049.60 | 9.35 | 1.84 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,015.67 | 9.20 | 1.84 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,053.90 | 5.04 | 0.99 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,019.89 | 4.96 | 0.99 | |||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,054.20 | 4.28 | 0.84 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,020.63 | 4.21 | 0.84 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
83
Statement of Investments
July 31, 2014
Nationwide HighMark Balanced Fund
| Common Stocks 59.8% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 0.9% |
| |||||||||
Honeywell International, Inc. | 3,036 | $ | 278,796 | |||||||
|
| |||||||||
| ||||||||||
Air Freight & Logistics 0.4% | ||||||||||
United Parcel Service, Inc., Class B | 1,372 | 133,207 | ||||||||
|
| |||||||||
| ||||||||||
Banks 6.0% | ||||||||||
Citigroup, Inc. | 5,601 | 273,945 | ||||||||
U.S. Bancorp | 15,761 | 662,435 | ||||||||
Wells Fargo & Co. | 18,892 | 961,603 | ||||||||
|
| |||||||||
| 1,897,983 | ||||||||||
|
| |||||||||
| ||||||||||
Beverages 0.6% | ||||||||||
Anheuser-Busch InBev NV ADR-BE | 1,717 | 185,402 | ||||||||
|
| |||||||||
| ||||||||||
Biotechnology 2.0% | ||||||||||
Amgen, Inc. | 1,741 | 221,786 | ||||||||
Gilead Sciences, Inc.* | 4,335 | 396,869 | ||||||||
|
| |||||||||
| 618,655 | ||||||||||
|
| |||||||||
| ||||||||||
Capital Markets 0.9% | ||||||||||
Charles Schwab Corp. (The) | 10,203 | 283,133 | ||||||||
|
| |||||||||
| ||||||||||
Chemicals 3.9% | ||||||||||
Ecolab, Inc. | 6,183 | 671,041 | ||||||||
Praxair, Inc. | 4,253 | 544,979 | ||||||||
|
| |||||||||
| 1,216,020 | ||||||||||
|
| |||||||||
| ||||||||||
Commercial Services & Supplies 0.8% | ||||||||||
Stericycle, Inc.* | 2,027 | 238,477 | ||||||||
|
| |||||||||
| ||||||||||
Communications Equipment 0.7% | ||||||||||
QUALCOMM, Inc. | 3,080 | 226,996 | ||||||||
|
| |||||||||
| ||||||||||
Electric Utilities 0.6% | ||||||||||
ITC Holdings Corp. | 5,524 | 199,416 | ||||||||
|
| |||||||||
| ||||||||||
Electronic Equipment, Instruments & Components 0.6% |
| |||||||||
FEI Co. | 2,301 | 176,257 | ||||||||
|
| |||||||||
| ||||||||||
Energy Equipment & Services 2.1% | ||||||||||
Halliburton Co. | 6,290 | 433,947 | ||||||||
Schlumberger Ltd. | 1,995 | 216,238 | ||||||||
|
| |||||||||
| 650,185 | ||||||||||
|
| |||||||||
| ||||||||||
Food & Staples Retailing 2.1% | ||||||||||
Costco Wholesale Corp. | 2,191 | 257,530 | ||||||||
Walgreen Co. | 6,095 | 419,153 | ||||||||
|
| |||||||||
| 676,683 | ||||||||||
|
| |||||||||
| ||||||||||
Food Products 0.5% | ||||||||||
Mondelez International, Inc., Class A | 4,412 | 158,832 | ||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Health Care Equipment & Supplies 1.1% | ||||||||||
Covidien PLC | 4,047 | $ | 350,106 | |||||||
|
| |||||||||
| ||||||||||
Hotels, Restaurants & Leisure 2.7% | ||||||||||
Cheesecake Factory, Inc. (The) | 4,153 | 178,080 | ||||||||
Marriott International, Inc., Class A | 3,593 | 232,503 | ||||||||
Starbucks Corp. | 3,207 | 249,120 | ||||||||
Yum! Brands, Inc. | 2,582 | 179,191 | ||||||||
|
| |||||||||
| 838,894 | ||||||||||
|
| |||||||||
| ||||||||||
Household Products 0.6% | ||||||||||
Procter & Gamble Co. (The) | 2,266 | 175,207 | ||||||||
|
| |||||||||
| ||||||||||
Industrial Conglomerates 2.5% | ||||||||||
Danaher Corp. | 10,492 | 775,149 | ||||||||
|
| |||||||||
| ||||||||||
Information Technology Services 0.3% | ||||||||||
Teradata Corp.* | 2,416 | 101,859 | ||||||||
|
| |||||||||
| ||||||||||
Insurance 0.8% | ||||||||||
Arch Capital Group Ltd.* | 4,973 | 265,807 | ||||||||
|
| |||||||||
| ||||||||||
Internet & Catalog Retail 0.7% | ||||||||||
Priceline Group, Inc. (The) * | 169 | 209,974 | ||||||||
|
| |||||||||
�� | ||||||||||
Internet Software & Services 2.6% | ||||||||||
Akamai Technologies, Inc.* | 2,859 | 168,738 | ||||||||
Equinix, Inc.* | 1,415 | 303,546 | ||||||||
Google, Inc., Class A* | 598 | 344,194 | ||||||||
|
| |||||||||
| 816,478 | ||||||||||
|
| |||||||||
| ||||||||||
Life Sciences Tools & Services 1.1% | ||||||||||
Agilent Technologies, Inc. | 3,928 | 220,321 | ||||||||
Bruker Corp. * | 5,194 | 118,060 | ||||||||
|
| |||||||||
| 338,381 | ||||||||||
|
| |||||||||
| ||||||||||
Machinery 0.7% | ||||||||||
Pall Corp. | 2,730 | 211,493 | ||||||||
|
| |||||||||
| ||||||||||
Media 1.7% | ||||||||||
Discovery Communications, Inc., Class A* | 3,375 | 287,584 | ||||||||
Twenty-First Century Fox, Inc., Class A | 8,016 | 253,947 | ||||||||
|
| |||||||||
| 541,531 | ||||||||||
|
| |||||||||
| ||||||||||
Multiline Retail 0.6% | ||||||||||
Dollar Tree, Inc.* | 3,428 | 186,723 | ||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 4.3% | ||||||||||
Anadarko Petroleum Corp. | 2,070 | 221,180 | ||||||||
Chevron Corp. | 1,002 | 129,499 | ||||||||
EOG Resources, Inc. | 2,905 | 317,923 | ||||||||
Exxon Mobil Corp. | 2,597 | 256,947 | ||||||||
Imperial Oil Ltd. | 8,086 | 415,135 | ||||||||
|
| |||||||||
| 1,340,684 | ||||||||||
|
| |||||||||
84
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Balanced Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Pharmaceuticals 4.4% | ||||||||||
Allergan, Inc. | 2,283 | $ | 378,658 | |||||||
Johnson & Johnson | 3,820 | 382,344 | ||||||||
Merck & Co., Inc. | 5,577 | 316,439 | ||||||||
Pfizer, Inc. | 10,891 | 312,572 | ||||||||
|
| |||||||||
| 1,390,013 | ||||||||||
|
| |||||||||
| ||||||||||
Professional Services 1.1% | ||||||||||
Equifax, Inc. | 4,583 | 348,720 | ||||||||
|
| |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 1.6% |
| |||||||||
American Tower Corp. | 5,496 | 518,767 | ||||||||
|
| |||||||||
| ||||||||||
Road & Rail 1.2% | ||||||||||
J.B. Hunt Transport Services, Inc. | 5,057 | 390,704 | ||||||||
|
| |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment 1.5% |
| |||||||||
Analog Devices, Inc. | 1,065 | 52,856 | ||||||||
Linear Technology Corp. | 9,523 | 420,298 | ||||||||
|
| |||||||||
| 473,154 | ||||||||||
|
| |||||||||
| ||||||||||
Software 2.9% | ||||||||||
Adobe Systems, Inc.* | 3,773 | 260,752 | ||||||||
ANSYS, Inc.* | 2,216 | 170,499 | ||||||||
Microsoft Corp. | 10,976 | 473,724 | ||||||||
|
| |||||||||
| 904,975 | ||||||||||
|
| |||||||||
| ||||||||||
Specialty Retail 2.0% | ||||||||||
Home Depot, Inc. (The) | 3,895 | 314,911 | ||||||||
Ross Stores, Inc. | 1,778 | 114,503 | ||||||||
TJX Cos., Inc. (The) | 3,988 | 212,520 | ||||||||
|
| |||||||||
| 641,934 | ||||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 1.5% |
| |||||||||
Apple, Inc. | 2,612 | 249,629 | ||||||||
EMC Corp. | 7,980 | 233,814 | ||||||||
|
| |||||||||
| 483,443 | ||||||||||
|
| |||||||||
| ||||||||||
Textiles, Apparel & Luxury Goods 0.8% | ||||||||||
NIKE, Inc., Class B | 3,135 | 241,803 | ||||||||
|
| |||||||||
| ||||||||||
Trading Companies & Distributors 1.0% | ||||||||||
W.W. Grainger, Inc. | 1,342 | 315,571 | ||||||||
|
| |||||||||
Total Common Stocks (cost $14,476,714) | 18,801,412 | |||||||||
|
| |||||||||
| Asset-Backed Securities 2.0% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Automobiles 1.1% | ||||||||||
ARI Fleet Lease Trust, | $ | 37,916 | $ | 37,894 | ||||||
Avis Budget Rental Car Funding AESOP LLC, Series 2012-2A, Class A, | 125,000 | 128,863 | ||||||||
Enterprise Fleet Financing LLC, | 50,534 | 50,538 | ||||||||
Hertz Vehicle Financing LLC, | 100,000 | 100,620 | ||||||||
World Omni Auto Receivables Trust, | 38,671 | 38,828 | ||||||||
|
| |||||||||
| 356,743 | ||||||||||
|
| |||||||||
| ||||||||||
Credit Card 0.3% | ||||||||||
American Express Credit Account Secured Note Trust, | 75,000 | 74,976 | ||||||||
|
| |||||||||
| ||||||||||
Other 0.6% | ||||||||||
AEP Texas Central Transition Funding LLC, Series 2012-1, Class A1, | 106,829 | 106,593 | ||||||||
CAL Funding Ltd., | 45,375 | 45,564 | ||||||||
SLM Private Education Loan Trust, | 41,644 | 41,895 | ||||||||
|
| |||||||||
| 194,052 | ||||||||||
|
| |||||||||
Total Asset-Backed Securities (cost $625,460) | 625,771 | |||||||||
|
| |||||||||
| Bank Loan 0.1% | ||||||||||
HJ Heinz Co., Term B-1 Loan, | 29,700 | 29,582 | ||||||||
|
| |||||||||
Total Bank Loan (cost $29,577) | 29,582 | |||||||||
|
| |||||||||
| Collateralized Mortgage Obligations 0.3% | ||||||||||
Sequoia Mortgage Trust | ||||||||||
Series 2012-1, Class 2A1, | 23,902 | 23,951 | ||||||||
Series 2012-2, Class A2, | 24,843 | 25,153 | ||||||||
85
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Balanced Fund (Continued)
| Collateralized Mortgage Obligations (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Sequoia Mortgage Trust (continued) | ||||||||||
Series 2013-1, Class 1A1, | $ | 42,340 | $ | 40,331 | ||||||
Wells Fargo Mortgage Backed Securities Trust, Series 2003-M, Class A1, | 8,780 | 8,989 | ||||||||
|
| |||||||||
Total Collateralized Mortgage Obligations (cost $100,202) |
| 98,424 | ||||||||
|
| |||||||||
| Commercial Mortgage Backed Securities 3.3% | ||||||||||
COMM 2013-CCRE8 Mortgage Trust, | 147,331 | 146,924 | ||||||||
Credit Suisse First Boston Mortgage Securities Corp., | 122,481 | 123,709 | ||||||||
DBUBS Mortgage Trust, | 185,350 | 192,446 | ||||||||
JPMBB Commercial Mortgage Securities Trust | ||||||||||
Series 2013-C15, Class A1, | 88,454 | 88,405 | ||||||||
Series 2014-C19, Class A1, | 117,271 | 116,885 | ||||||||
Morgan Stanley Bank of America Merrill Lynch Trust, | 198,767 | 199,127 | ||||||||
WF-RBS Commercial Mortgage Trust, | 170,179 | 169,774 | ||||||||
|
| |||||||||
Total Commercial Mortgage Backed Securities (cost $1,033,639) |
| 1,037,270 | ||||||||
|
| |||||||||
| Corporate Bonds 21.1% | ||||||||||
Aerospace & Defense 0.4% | ||||||||||
United Technologies Corp., | 125,000 | 125,968 | ||||||||
|
| |||||||||
| ||||||||||
Airlines 0.9% | ||||||||||
Continental Airlines Pass Through Trust, Series 2010-A, | 82,978 | 89,720 | ||||||||
Delta Air Lines Pass Through Trust, | 108,266 | 119,093 | ||||||||
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Airlines (continued) | ||||||||||
United Airlines Pass Through Trust, | $ | 70,000 | $ | 73,241 | ||||||
|
| |||||||||
| 282,054 | ||||||||||
|
| |||||||||
| ||||||||||
Automobiles 0.4% | ||||||||||
General Motors Co., | 125,000 | 126,562 | ||||||||
|
| |||||||||
| ||||||||||
Banks 4.1% | ||||||||||
Bank of Montreal, | 150,000 | 151,477 | ||||||||
Bank of New York Mellon Corp. (The), | 75,000 | 74,209 | ||||||||
BB&T Corp., | 100,000 | 102,258 | ||||||||
Capital One Financial Corp. | ||||||||||
1.00%, 11/06/15 | 25,000 | 25,072 | ||||||||
4.75%, 07/15/21 | 125,000 | 137,403 | ||||||||
Citigroup, Inc. | ||||||||||
3.88%, 10/25/23 | 125,000 | 127,005 | ||||||||
3.75%, 06/16/24 | 95,000 | 94,471 | ||||||||
Fifth Third Bank, | 105,000 | 103,931 | ||||||||
First Republic Bank/CA, | 100,000 | 100,167 | ||||||||
PNC Bank NA, | 50,000 | 49,980 | ||||||||
Royal Bank of Canada, | 145,000 | 145,425 | ||||||||
Wells Fargo & Co. | ||||||||||
5.63%, 12/11/17 | 50,000 | 56,531 | ||||||||
4.60%, 04/01/21 | 120,000 | 132,585 | ||||||||
|
| |||||||||
| 1,300,514 | ||||||||||
|
| |||||||||
| ||||||||||
Beverages 0.3% | ||||||||||
Anheuser-Busch InBev Worldwide, Inc., 2.50%, 07/15/22 | 100,000 | 96,365 | ||||||||
|
| |||||||||
| ||||||||||
Capital Markets 0.1% | ||||||||||
Lehman Brothers Holdings, Inc., | 125,000 | 25,156 | ||||||||
|
| |||||||||
| ||||||||||
Chemicals 0.3% | ||||||||||
Dow Chemical Co. (The), | 75,000 | 80,912 | ||||||||
|
| |||||||||
| ||||||||||
Consumer Finance 0.5% | ||||||||||
Ford Motor Credit Co. LLC, | 125,000 | 144,273 | ||||||||
|
| |||||||||
| ||||||||||
Containers & Packaging 0.4% | ||||||||||
Ball Corp., | 125,000 | 131,562 | ||||||||
|
| |||||||||
86
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Balanced Fund (Continued)
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Diversified Financial Services 2.0% | ||||||||||
Bank of America Corp. | ||||||||||
5.65%, 05/01/18 | $ | 50,000 | $ | 56,160 | ||||||
4.00%, 04/01/24 | 125,000 | 126,618 | ||||||||
General Electric Capital Corp., | 125,000 | 128,489 | ||||||||
JPMorgan Chase & Co., | 150,000 | 147,180 | ||||||||
KE Export Leasing LLC, | 91,789 | 91,700 | ||||||||
MSN 41079 and 41084 Ltd., | 88,460 | 84,715 | ||||||||
|
| |||||||||
| 634,862 | ||||||||||
|
| |||||||||
| ||||||||||
Diversified Telecommunication Services 0.5% |
| |||||||||
Verizon Communications, Inc., | 50,000 | 55,408 | ||||||||
Verizon Maryland LLC, | 35,000 | 45,824 | ||||||||
Verizon New England, Inc., | 50,000 | 63,926 | ||||||||
|
| |||||||||
| 165,158 | ||||||||||
|
| |||||||||
| ||||||||||
Electric Utilities 0.3% | ||||||||||
Berkshire Hathaway Energy Co., | 80,000 | 81,902 | ||||||||
|
| |||||||||
| ||||||||||
Food & Staples Retailing 1.2% | ||||||||||
CVS Caremark Corp., | 125,000 | 120,579 | ||||||||
Kroger Co. (The), | 125,000 | 126,452 | ||||||||
Walgreen Co., | 125,000 | 122,290 | ||||||||
|
| |||||||||
| 369,321 | ||||||||||
|
| |||||||||
| ||||||||||
Food Products 0.4% | ||||||||||
Unilever Capital Corp., | 75,000 | 76,172 | ||||||||
WM Wrigley Jr Co., | 60,000 | 60,798 | ||||||||
|
| |||||||||
| 136,970 | ||||||||||
|
| |||||||||
| ||||||||||
Gas Utilities 1.0% | ||||||||||
Enterprise Products Operating LLC, | 60,000 | 61,597 | ||||||||
Kinder Morgan Energy Partners LP, | 125,000 | 125,617 | ||||||||
Magellan Midstream Partners LP, | 100,000 | 118,326 | ||||||||
|
| |||||||||
| 305,540 | ||||||||||
|
| |||||||||
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Health Care Providers & Services 0.5% | ||||||||||
Laboratory Corp. of America Holdings, | $ | 50,000 | $ | 53,702 | ||||||
McKesson Corp., | 100,000 | 99,633 | ||||||||
|
| |||||||||
| 153,335 | ||||||||||
|
| |||||||||
| ||||||||||
Household Products 0.4% | ||||||||||
Clorox Co. (The), | 125,000 | 122,983 | ||||||||
|
| |||||||||
| ||||||||||
Information Technology Services 0.2% | ||||||||||
International Business Machines Corp., 6.50%, 01/15/28 | 50,000 | 64,428 | ||||||||
|
| |||||||||
| ||||||||||
Insurance 1.0% | ||||||||||
American International Group, Inc., | 120,000 | 125,063 | ||||||||
Berkshire Hathaway Finance Corp., | 50,000 | 56,587 | ||||||||
Berkshire Hathaway, Inc., | 125,000 | 124,183 | ||||||||
|
| |||||||||
| 305,833 | ||||||||||
|
| |||||||||
| ||||||||||
Media 1.0% | ||||||||||
Comcast Corp., | 50,000 | 58,200 | ||||||||
DIRECTV Holdings LLC/DIRECTV Financing Co., Inc., | 55,000 | 57,602 | ||||||||
TCI Communications, Inc., | 100,000 | 131,688 | ||||||||
Time Warner Entertainment Co. LP, | 50,000 | 66,934 | ||||||||
|
| |||||||||
| 314,424 | ||||||||||
|
| |||||||||
| ||||||||||
Metals & Mining 0.1% | ||||||||||
Rio Tinto Finance USA Ltd., | 25,000 | 29,337 | ||||||||
|
| |||||||||
| ||||||||||
Multiline Retail 0.4% | ||||||||||
Macy’s Retail Holdings, Inc., | 125,000 | 132,360 | ||||||||
|
| |||||||||
| ||||||||||
Office Electronics 0.2% | ||||||||||
Xerox Corp., | 50,000 | 52,001 | ||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 1.6% | ||||||||||
BP Capital Markets PLC | ||||||||||
1.38%, 11/06/17 | 75,000 | 74,784 | ||||||||
2.24%, 09/26/18 | 50,000 | 50,690 | ||||||||
Cimarex Energy Co. | ||||||||||
5.88%, 05/01/22 | 75,000 | 82,125 | ||||||||
4.38%, 06/01/24 | 75,000 | 76,688 | ||||||||
87
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Balanced Fund (Continued)
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels (continued) |
| |||||||||
Petrobras Global Finance BV, | $ | 125,000 | $ | 127,218 | ||||||
Petrohawk Energy Corp., | 100,000 | 103,640 | ||||||||
|
| |||||||||
| 515,145 | ||||||||||
|
| |||||||||
| ||||||||||
Paper & Forest Products 0.6% | ||||||||||
Georgia-Pacific LLC, | 150,000 | 201,757 | ||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 0.9% | ||||||||||
Actavis Funding SCS, | 110,000 | 109,290 | ||||||||
Mylan, Inc., | 160,000 | 176,000 | ||||||||
|
| |||||||||
| 285,290 | ||||||||||
|
| |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 0.7% |
| |||||||||
Boston Properties LP, | 125,000 | 132,555 | ||||||||
ERP Operating LP | ||||||||||
2.38%, 07/01/19 | 60,000 | 60,018 | ||||||||
4.63%, 12/15/21 | 25,000 | 27,443 | ||||||||
|
| |||||||||
| 220,016 | ||||||||||
|
| |||||||||
| ||||||||||
Road & Rail 0.4% | ||||||||||
Burlington Northern Santa Fe LLC, | 125,000 | 129,323 | ||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 0.3% |
| |||||||||
Hewlett-Packard Co., | 90,000 | 96,098 | ||||||||
|
| |||||||||
| ||||||||||
Total Corporate Bonds (cost $6,543,261) |
| 6,629,449 | ||||||||
|
| |||||||||
| Municipal Bonds 1.2% | ||||||||||
California 1.2% | ||||||||||
California State, GO, | 100,000 | 119,619 | ||||||||
Los Angeles, Department of Water & Power, RB, | 50,000 | 69,999 | ||||||||
Metropolitan Water District of Southern California, RB, | 150,000 | 177,638 | ||||||||
|
| |||||||||
Total Municipal Bonds | 367,256 | |||||||||
|
| |||||||||
| U.S. Government Mortgage Backed Agencies 5.4% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Federal Home Loan Mortgage Corp. Gold Pool |
| |||||||||
Pool# G11401 | $ | 11,493 | $ | 12,113 | ||||||
Pool# B14038 | 7,175 | 7,581 | ||||||||
Pool# G11769 | 5,764 | 6,169 | ||||||||
Pool# G13201 | 10,861 | 11,641 | ||||||||
Pool# C90698 | 163,869 | 177,561 | ||||||||
Pool# G13868 | 90,220 | 96,638 | ||||||||
Pool# V60563 | 217,107 | 223,944 | ||||||||
Federal National Mortgage Association Pool | ||||||||||
Pool# 254196 | 12,728 | 13,358 | ||||||||
Pool# 254546 | 13,970 | 14,725 | ||||||||
Pool# 254919 | 4,454 | 4,708 | ||||||||
Pool# 555872 | 2,298 | 2,434 | ||||||||
Pool# 725168 | 18,885 | 19,963 | ||||||||
Pool# 725414 | 48,224 | 50,976 | ||||||||
Pool# 254800 | 84,565 | 93,663 | ||||||||
Pool# 311811 | 8,990 | 10,603 | ||||||||
Pool# AE3066 | 49,491 | 52,209 | ||||||||
Pool# AE0552 | 27,363 | 29,629 | ||||||||
Pool# AL0243 | 31,736 | 33,766 | ||||||||
Pool# 364588 | 8,822 | 9,828 | ||||||||
Pool# AJ4093 | 61,376 | 64,766 | ||||||||
Pool# AB5710 | 194,112 | 195,537 | ||||||||
Pool# 251335 | 6,417 | 7,422 | ||||||||
Pool# 251477 | 5,269 | 6,012 | ||||||||
Pool# 412654 | 2,219 | 2,493 | ||||||||
Pool# AB8993 | 244,716 | 246,551 | ||||||||
Pool# MA0428 | 181,727 | 197,195 | ||||||||
88
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Balanced Fund (Continued)
| U.S. Government Mortgage Backed Agencies (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Federal National Mortgage Association Pool (continued) |
| |||||||||
Pool# 725205 | $ | 40,249 | $ | 44,611 | ||||||
Government National Mortgage Association I Pool | ||||||||||
Pool# 421686 | 6,208 | 7,186 | ||||||||
Pool# 412334 | 8,607 | 9,989 | ||||||||
Pool# 403847 | 8,826 | 9,910 | ||||||||
Pool# 497505 | 3,692 | 4,259 | ||||||||
Pool# 462109 | 13,063 | 15,305 | ||||||||
Pool# 506487 | 26,661 | 30,022 | ||||||||
|
| |||||||||
Total U.S. Government Mortgage Backed Agencies |
| 1,712,767 | ||||||||
|
| |||||||||
| U.S. Treasury Notes 5.6% | ||||||||||
U.S. Treasury Notes | ||||||||||
1.00%, 05/31/18 | 250,000 | 245,859 | ||||||||
1.13%, 04/30/20 | 250,000 | 238,399 | ||||||||
1.38%, 05/31/20 | 400,000 | 386,375 | ||||||||
1.50%, 01/31/19 | 100,000 | 99,281 | ||||||||
1.50%, 02/28/19 | 150,000 | 148,781 | ||||||||
2.00%, 02/15/23 | 400,000 | 386,500 | ||||||||
2.75%, 11/15/23 | 75,000 | 76,559 | ||||||||
2.75%, 02/15/24 | 185,000 | 188,469 | ||||||||
|
| |||||||||
Total U.S. Treasury Notes | 1,770,223 | |||||||||
|
| |||||||||
Total Investments | 31,072,154 | |||||||||
Other assets in excess of | 362,392 | |||||||||
|
| |||||||||
NET ASSETS — 100.0% | $ | 31,434,546 | ||||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | Variable Rate Security. The rate reflected in the Statement of Investments is the rate in effect on July 31, 2014. The maturity date represents the actual maturity date. |
| (b) | 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 July 31, 2014 was $943,908 which represents 3.00% of net assets. |
| (c) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| ADR | American Depositary Receipt |
| BE | Belgium |
| BV | Private Limited Liability Company |
| GO | General Obligation |
| LLC | Limited Liability Company |
| LP | Limited Partnership |
| Ltd. | Limited |
| NA | National Association |
| NV | Public Traded Company |
| PLC | Public Limited Company |
| RB | Revenue Bond |
| REIT | Real Estate Investment Trust |
The accompanying notes are an integral part of these financial statements.
89
Statement of Assets and Liabilities
July 31, 2014
Nationwide Balanced Fund | ||||||
Assets: | ||||||
Investments, at value (cost $26,576,591) | $ | 31,072,154 | ||||
Cash | 398,664 | |||||
Interest and dividends receivable | 93,787 | |||||
Receivable for capital shares issued | 25,878 | |||||
Prepaid expenses | 6,301 | |||||
|
| |||||
Total Assets | 31,596,784 | |||||
|
| |||||
Liabilities: | ||||||
Payable for capital shares redeemed | 82,898 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 15,021 | |||||
Fund administration fees | 8,245 | |||||
Distribution fees | 7,131 | |||||
Administrative servicing fees | 7,165 | |||||
Accounting and transfer agent fees | 2,138 | |||||
Trustee fees | 69 | |||||
Custodian fees | 120 | |||||
Compliance program costs (Note 3) | 889 | |||||
Professional fees | 32,093 | |||||
Printing fees | 3,030 | |||||
Other | 3,439 | |||||
|
| |||||
Total Liabilities | 162,238 | |||||
|
| |||||
Net Assets | $ | 31,434,546 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 25,602,655 | ||||
Accumulated undistributed net investment income | 24,537 | |||||
Accumulated net realized gains from investments | 1,311,791 | |||||
Net unrealized appreciation/(depreciation) from investments | 4,495,563 | |||||
|
| |||||
Net Assets | $ | 31,434,546 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 10,968,069 | ||||
Class C Shares | 5,544,829 | |||||
Institutional Service Class Shares | 14,859,466 | |||||
Institutional Class Shares | 62,182 | |||||
|
| |||||
Total | $ | 31,434,546 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 707,887 | |||||
Class C Shares | 360,510 | |||||
Institutional Service Class Shares | 956,540 | |||||
Institutional Class Shares | 3,995 | |||||
|
| |||||
Total | 2,028,932 | |||||
|
| |||||
90
Statement of Assets and Liabilities (Continued)
July 31, 2014
Nationwide Balanced Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 15.49 | ||||
Class C Shares (b) | $ | 15.38 | ||||
Institutional Service Class Shares | $ | 15.53 | ||||
Institutional Class Shares | $ | 15.56 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 16.44 | ||||
|
| |||||
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 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.
91
Statement of Operations
For the Year Ended July 31, 2014
Nationwide Balanced Fund | ||||||
INVESTMENT INCOME: | ||||||
Interest income | $ | 346,282 | ||||
Dividend income | 284,427 | |||||
Foreign tax withholding | (589 | ) | ||||
|
| |||||
Total Income | 630,120 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 185,521 | |||||
Fund administration fees | 103,192 | |||||
Distribution fees Class A | 27,795 | |||||
Distribution fees Class B (a) | 15 | |||||
Distribution fees Class C | 52,093 | |||||
Administrative servicing fees Class A | 11,385 | |||||
Administrative servicing fees Class B (a) | 5 | |||||
Administrative servicing fees Class C | 939 | |||||
Administrative servicing fees Institutional Service Class (b) | 26,484 | |||||
Registration and filing fees | 53,250 | |||||
Professional fees | 42,447 | |||||
Printing fees | 11,239 | |||||
Trustee fees | 793 | |||||
Custodian fees | 1,216 | |||||
Accounting and transfer agent fees | 7,755 | |||||
Compliance program costs (Note 3) | 1,694 | |||||
Other | 14,304 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 540,127 | |||||
|
| |||||
Earnings credit (Note 5) | (56 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (1,431 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (b) | (2,157 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (158,357 | ) | ||||
|
| |||||
Net Expenses | 378,126 | |||||
|
| |||||
NET INVESTMENT INCOME | 251,994 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 2,268,257 | |||||
Net change in unrealized appreciation/(depreciation) from investments | (62,445 | ) | ||||
|
| |||||
Net realized/unrealized gains from investments | 2,205,812 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 2,457,806 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
92
Statements of Changes in Net Assets
| Nationwide HighMark Balanced Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 251,994 | $ | 263,858 | ||||||||
Net realized gains from investments | 2,268,257 | 2,056,942 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | (62,445 | ) | (60,153 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 2,457,806 | 2,260,647 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (89,216 | ) | (80,133 | ) | ||||||||
Class B (a) | – | (164 | ) | |||||||||
Class C | (11,731 | ) | (8,365 | ) | ||||||||
Institutional Service Class (b) | (143,211 | ) | (216,399 | ) | ||||||||
Institutional Class | (234 | )(c) | – | |||||||||
Net realized gains: | ||||||||||||
Class A | (941,399 | ) | (219,482 | ) | ||||||||
Class B (a) | – | (1,094 | ) | |||||||||
Class C | (415,313 | ) | (49,397 | ) | ||||||||
Institutional Service Class (b) | (1,100,257 | ) | (489,144 | ) | ||||||||
Institutional Class | (857 | )(c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (2,702,218 | ) | (1,064,178 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (2,067,547 | ) | 8,072,990 | |||||||||
|
|
|
| |||||||||
Change in net assets | (2,311,959 | ) | 9,269,459 | |||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 33,746,505 | 24,477,046 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 31,434,546 | $ | 33,746,505 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 24,537 | $ | 3,250 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 1,773,791 | $ | 6,943,883 | ||||||||
Proceeds from shares issued from class conversion | 15,114 | – | ||||||||||
Dividends reinvested | 1,013,667 | 280,741 | ||||||||||
Cost of shares redeemed | (3,197,282 | ) | (2,700,169 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (394,710 | ) | 4,524,455 | |||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | – | – | ||||||||||
Dividends reinvested | – | 1,258 | ||||||||||
Cost of shares redeemed in class conversion | (15,114 | ) | – | |||||||||
Cost of shares redeemed | (1,289 | ) | (24,355 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (16,403 | ) | (23,097 | ) | ||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
93
Statements of Changes in Net Assets (Continued)
| Nationwide HighMark Balanced Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 1,204,118 | $ | 3,974,799 | ||||||||
Dividends reinvested | 414,088 | 55,438 | ||||||||||
Cost of shares redeemed | (934,001 | ) | (571,877 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 684,205 | 3,458,360 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Proceeds from shares issued | 3,598,818 | 3,637,134 | ||||||||||
Dividends reinvested | 1,243,451 | 705,479 | ||||||||||
Cost of shares redeemed | (7,244,056 | ) | (4,229,341 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (2,401,787 | ) | 113,272 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 60,057 | (c) | – | |||||||||
Dividends reinvested | 1,091 | (c) | – | |||||||||
Cost of shares redeemed | – | (c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 61,148 | (c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (2,067,547 | ) | $ | 8,072,990 | |||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 115,129 | 451,648 | ||||||||||
Issued in class conversion | 960 | – | ||||||||||
Reinvested | 68,764 | 18,899 | ||||||||||
Redeemed | (206,458 | ) | (177,068 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (21,605 | ) | 293,479 | |||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Issued | – | – | ||||||||||
Reinvested | – | 85 | ||||||||||
Redeemed in class conversion | (964 | ) | – | |||||||||
Redeemed | (82 | ) | (1,644 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (1,046 | ) | (1,559 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 79,278 | 258,222 | ||||||||||
Reinvested | 28,295 | 3,774 | ||||||||||
Redeemed | (60,251 | ) | (37,355 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 47,322 | 224,641 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Issued | 233,244 | 235,903 | ||||||||||
Reinvested | 84,116 | 47,314 | ||||||||||
Redeemed | (457,882 | ) | (276,326 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (140,522 | ) | 6,891 | |||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
94
Statements of Changes in Net Assets (Continued)
| Nationwide HighMark Balanced Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
SHARE TRANSACTIONS: (continued) | ||||||||||||
Institutional Class Shares | ||||||||||||
Issued | 3,922 | (c) | – | |||||||||
Reinvested | 73 | (c) | – | |||||||||
Redeemed | – | (c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 3,995 | (c) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | (111,856 | ) | 523,452 | |||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
95
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide HighMark Balanced Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment | Net Realized (Losses) | Total from Operations | Net Investment | Net Realized | Total Distributions | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 15.76 | 0.12 | 1.11 | 1.23 | (0.13 | ) | (1.37 | ) | (1.50 | ) | $ | 15.49 | 8.34% | $ | 10,968,069 | 1.24% | 0.80% | 1.72% | 51.49% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 15.12 | 0.14 | 1.12 | 1.26 | (0.16 | ) | (0.46 | ) | (0.62 | ) | $ | 15.76 | 8.60% | $ | 11,496,106 | 1.24% | 0.87% | 1.81% | 44.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 13.90 | 0.16 | 1.21 | 1.37 | (0.15 | ) | – | (0.15 | ) | $ | 15.12 | 9.94% | $ | 6,590,640 | 1.24% | 1.10% | 1.88% | 46.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 12.53 | 0.13 | 1.43 | 1.56 | (0.19 | ) | – | (0.19 | ) | $ | 13.90 | 12.50% | $ | 6,341,488 | 1.24% | 0.96% | 1.79% | 50.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.29 | 0.19 | 1.19 | 1.38 | (0.14 | ) | – | (0.14 | ) | $ | 12.53 | 12.24% | $ | 5,656,999 | 1.23% | 1.56% | 1.85% | 31.00% | |||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 15.66 | 0.03 | 1.10 | 1.13 | (0.04 | ) | (1.37 | ) | (1.41 | ) | $ | 15.38 | 7.69% | $ | 5,544,829 | 1.84% | 0.20% | 2.38% | 51.49% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 15.02 | 0.04 | 1.13 | 1.17 | (0.07 | ) | (0.46 | ) | (0.53 | ) | $ | 15.66 | 8.03% | $ | 4,903,200 | 1.84% | 0.27% | 2.31% | 44.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 13.81 | 0.07 | 1.21 | 1.28 | (0.07 | ) | – | (0.07 | ) | $ | 15.02 | 9.27% | $ | 1,330,078 | 1.84% | 0.50% | 2.38% | 46.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 12.46 | 0.05 | 1.42 | 1.47 | (0.12 | ) | – | (0.12 | ) | $ | 13.81 | 11.80% | $ | 853,968 | 1.84% | 0.36% | 2.29% | 50.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.22 | 0.12 | 1.18 | 1.30 | (0.06 | ) | – | (0.06 | ) | $ | 12.46 | 11.61% | $ | 510,316 | 1.83% | 0.96% | 2.35% | 31.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 15.80 | 0.16 | 1.11 | 1.27 | (0.17 | ) | (1.37 | ) | (1.54 | ) | $ | 15.53 | 8.59% | $ | 14,859,466 | 0.99% | 1.05% | 1.54% | 51.49% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 15.15 | 0.17 | 1.13 | 1.30 | (0.20 | ) | (0.45 | ) | (0.65 | ) | $ | 15.80 | 8.91% | $ | 17,330,766 | 0.99% | 1.12% | 1.56% | 44.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 13.93 | 0.19 | 1.21 | 1.40 | (0.18 | ) | – | (0.18 | ) | $ | 15.15 | 10.19% | $ | 16,517,048 | 0.99% | 1.35% | 1.63% | 46.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 12.56 | 0.16 | 1.43 | 1.59 | (0.22 | ) | – | (0.22 | ) | $ | 13.93 | 12.72% | $ | 18,267,117 | 0.99% | 1.21% | 1.54% | 50.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.31 | 0.22 | 1.20 | 1.42 | (0.17 | ) | – | (0.17 | ) | $ | 12.56 | 12.60% | $ | 17,551,594 | 0.98% | 1.81% | 1.60% | 31.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 16.03 | 0.16 | 0.90 | 1.06 | (0.16 | ) | (1.37 | ) | (1.53 | ) | $ | 15.56 | 7.18% | $ | 62,182 | 0.84% | 1.15% | 1.30% | 51.49% | ||||||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception date on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
96
| Fund Commentary | Nationwide HighMark Large Cap Core Equity Fund |
For the annual period ended July 31, 2014, the Nationwide HighMark Large Cap Core Equity Fund (Institutional Service Class) returned 16.04%* versus 16.94% for its benchmark, the S&P 500® Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Large-Cap Core Funds (consisting of 901 funds as of July 31, 2014) was 15.60% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
Market Environment
The U.S. economy continued to improve during the 12 months ended July 31, 2014. Manufacturing orders, employment numbers, domestic consumption and gross domestic product (GDP) growth all saw upward trends — particularly as economic conditions recovered during the second quarter of 2014 from the crippling effects of the brutal winter of 2013-2014.
Improvement in domestic economics and sentiment, however, created headwinds for the Fund as high-octane, high-valuation growth stocks and distressed-value stocks outperformed the broader market. While there were a few exceptions, for example during the fourth quarter of 2013, lower-quality, highly leveraged large-capitalization stocks continued to lead the large-cap core market for the year ended July 31, 2014. Given our investment philosophy and process, these types of holdings typically do not appear in the portfolios we manage.
Portfolio Performance
The Fund’s investment process and philosophy seeks to outperform the S&P 500 Index via stock selection, as opposed to significant sector weightings.
During the reporting period, the Fund’s sector weightings were generally in line with those of the Fund’s benchmark with the exception of
slight overweights in two sectors: materials and industrials. These overweights, along with strong stock selection in both sectors, contributed positive returns for the Fund versus its benchmark but did not provide enough of a contribution to offset poor stock selection in the consumer staples and energy sectors.
In the materials sector, the Fund’s investments during the reporting period in Westlake Chemical Corp. and PPG Industries Inc. helped Fund performance, as did the Fund’s holdings in railroad company Union Pacific Corp. in the industrials sector. These positive decisions were offset, however, by the Fund’s underweight in energy company Schlumberger Ltd. and underweights in Intel Corp. and Apple Inc. versus the Fund’s benchmark; these underweights detracted from Fund performance during the reporting period.
Equity index futures were held in the Fund during the reporting period. These futures are used to “equitize” the Fund’s cash holdings, including cash from inflows and requested portfolio redemptions, such that any return on cash replicates the return on equities, and the Fund performs as if it is 100% invested in securities.
Outlook and Positioning
We are optimistic about the prospects for the portfolio for the next 12 months. Cross-market correlations remain low and, despite moderate volatility levels, differences between the performances of similar large-cap firms remain significant, thus providing opportunities to potentially add value for investors.
We plan to maintain the portfolio’s fairly stable positioning across industries and sectors and look to retain the portfolio’s largest underweight in the diversified financials sector, due to a lack of attractive stocks in the brokerage, asset management and insurance industries.
Subadviser:
HighMark Capital Management, Inc.
Portfolio Manager:
Derek Izuel
The Fund is subject to the risks of investing in equity securities. The Fund may invest in more-aggressive investments such as derivatives (many of which create investment leverage and are highly volatile) and foreign securities (which are volatile, harder to price and less liquid than U.S. securities). High double-digit returns are unusual and cannot be sustained. Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
97
| Fund Overview | Nationwide HighMark Large Cap Core Equity Fund |
Objective
The Fund seeks long-term capital appreciation.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide HighMark Large Cap Core Equity Fund (Institutional Service Class) returned 16.04%, underperforming its benchmark by 0.90% and outperforming the Lipper peer category median by 0.44%. |
| Ÿ | The reporting period was marked by strong performance of lower-quality, highly leveraged large-capitalization stocks. Given our investment philosophy and process, these types of holdings typically do not appear in the portfolios we manage. |
| Ÿ | We are optimistic about the prospects for the portfolio for the next 12 months. Cross-market correlations remain low and, despite moderate volatility levels, differences between the performances of similar large-cap firms remain significant, thus providing opportunities to potentially add value for investors. |
Asset Allocation†
| Common Stocks | 96.0% | |||
| Other assets in excess of liabilities | 4.0% | |||
| 100.0% |
Top Industries††
| Banks | 8.6% | |||
| Oil, Gas & Consumable Fuels | 7.7% | |||
| Pharmaceuticals | 6.1% | |||
| Chemicals | 5.4% | |||
| Software | 5.1% | |||
| Information Technology Services | 4.6% | |||
| Road & Rail | 4.3% | |||
| Specialty Retail | 4.1% | |||
| Technology Hardware, Storage & Peripherals | 3.8% | |||
| Communications Equipment | 3.7% | |||
| Other Industries | 46.6% | |||
| 100.0% |
Top Holdings††
| Wells Fargo & Co. | 4.7% | |||
| Union Pacific Corp. | 3.6% | |||
| Chevron Corp. | 3.2% | |||
| Apple, Inc. | 3.0% | |||
| Procter & Gamble Co. (The) | 3.0% | |||
| Pfizer, Inc. | 2.7% | |||
| Abbott Laboratories | 2.6% | |||
| QUALCOMM, Inc. | 2.6% | |||
| General Electric Co. | 2.4% | |||
| Microsoft Corp. | 2.3% | |||
| Other Holdings | 69.9% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
98
| Fund Performance | Nationwide HighMark Large Cap Core Equity Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 15.72% | 16.48% | 7.40% | – | |||||||||||||
| w/ SC3 | 9.31% | 15.18% | 6.79% | – | ||||||||||||||
| Class C1 | w/o SC2 | 15.09% | 15.79% | 6.71% | – | |||||||||||||
| w/ SC4 | 14.09% | 15.79% | 6.71% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 16.04% | 16.84% | 7.69% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 13.44% | 7* | |||||||||||||
| S&P 500® Index | 16.94% | 16.79% | 8.00% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.46% | 1.22% | ||||||
| Class C | 1.96% | 1.82% | ||||||
| Institutional Service Class | 1.21% | 0.97% | ||||||
| Institutional Class | 0.96% | 0.82% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
99
| Fund Performance (con’t.) | Nationwide HighMark Large Cap Core Equity 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 Service Class shares of the Nationwide HighMark Large Cap Core Equity Fund versus the S&P 500® Index and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
100
| Shareholder Expense Example | Nationwide HighMark Large Cap Core Equity 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide HighMark Large July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,097.50 | 6.34 | 1.22 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,018.74 | 6.11 | 1.22 | ||||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,094.70 | 9.45 | 1.82 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,015.77 | 9.10 | 1.82 | ||||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,099.60 | 5.05 | 0.97 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,019.98 | 4.86 | 0.97 | ||||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,100.10 | 4.27 | 0.82 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,020.73 | 4.11 | 0.82 | ||||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
101
Statement of Investments
July 31, 2014
Nationwide HighMark Large Cap Core Equity Fund
| Common Stocks 96.0% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 3.0% |
| |||||||||
Boeing Co. (The) | 9,920 | $ | 1,195,162 | |||||||
Lockheed Martin Corp. | 4,500 | 751,365 | ||||||||
|
| |||||||||
| 1,946,527 | ||||||||||
|
| |||||||||
| ||||||||||
Auto Components 1.2% |
| |||||||||
Delphi Automotive PLC | 7,460 | 498,328 | ||||||||
Lear Corp. | 2,830 | 266,501 | ||||||||
|
| |||||||||
| 764,829 | ||||||||||
|
| |||||||||
| ||||||||||
Automobiles 0.5% |
| |||||||||
Ford Motor Co. | 19,105 | 325,167 | ||||||||
|
| |||||||||
| ||||||||||
Banks 8.3% |
| |||||||||
Citigroup, Inc. | 6,510 | 318,404 | ||||||||
Fifth Third Bancorp | 7,530 | 154,214 | ||||||||
JPMorgan Chase & Co. | 12,050 | 694,924 | ||||||||
PacWest Bancorp | 16,460 | 685,888 | ||||||||
Regions Financial Corp. | 55,380 | 561,553 | ||||||||
Wells Fargo & Co. | 56,510 | 2,876,359 | ||||||||
|
| |||||||||
| 5,291,342 | ||||||||||
|
| |||||||||
| ||||||||||
Beverages 1.2% |
| |||||||||
Coca-Cola Co. (The) | 19,795 | 777,746 | ||||||||
|
| |||||||||
| ||||||||||
Biotechnology 1.4% |
| |||||||||
Biogen Idec, Inc.* | 1,870 | 625,309 | ||||||||
Celgene Corp.* | 2,800 | 244,020 | ||||||||
|
| |||||||||
| 869,329 | ||||||||||
|
| |||||||||
| ||||||||||
Building Products 0.3% |
| |||||||||
Allegion PLC | 4,366 | 224,543 | ||||||||
|
| |||||||||
| ||||||||||
Capital Markets 2.2% |
| |||||||||
Affiliated Managers Group, Inc.* | 2,420 | 482,185 | ||||||||
Goldman Sachs Group, Inc. (The) | 3,400 | 587,758 | ||||||||
Lazard Ltd., Class A | 6,300 | 329,490 | ||||||||
|
| |||||||||
| 1,399,433 | ||||||||||
|
| |||||||||
| ||||||||||
Chemicals 5.2% |
| |||||||||
Ashland, Inc. | 5,410 | 566,156 | ||||||||
Monsanto Co. | 2,230 | 252,191 | ||||||||
PPG Industries, Inc. | 6,410 | 1,271,487 | ||||||||
Westlake Chemical Corp. | 13,940 | 1,218,217 | ||||||||
|
| |||||||||
| 3,308,051 | ||||||||||
|
| |||||||||
| ||||||||||
Commercial Services & Supplies 0.2% |
| |||||||||
Waste Connections, Inc. | 3,300 | 156,222 | ||||||||
|
| |||||||||
| ||||||||||
Communications Equipment 3.6% |
| |||||||||
Cisco Systems, Inc. | 27,500 | 693,825 | ||||||||
QUALCOMM, Inc. | 21,515 | 1,585,655 | ||||||||
|
| |||||||||
| 2,279,480 | ||||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Construction & Engineering 0.3% |
| |||||||||
Foster Wheeler AG | 5,760 | $ | 189,850 | |||||||
|
| |||||||||
| ||||||||||
Consumer Finance 1.3% |
| |||||||||
Discover Financial Services | 13,095 | 799,581 | ||||||||
|
| |||||||||
| ||||||||||
Diversified Consumer Services 0.4% |
| |||||||||
H&R Block, Inc. | 7,950 | 255,433 | ||||||||
|
| |||||||||
| ||||||||||
Electric Utilities 1.9% |
| |||||||||
OGE Energy Corp. | 33,875 | 1,217,806 | ||||||||
|
| |||||||||
| ||||||||||
Electrical Equipment 0.3% |
| |||||||||
Babcock & Wilcox Co. (The) | 5,570 | 172,893 | ||||||||
|
| |||||||||
| ||||||||||
Energy Equipment & Services 1.5% |
| |||||||||
Baker Hughes, Inc. | 7,320 | 503,397 | ||||||||
Dril-Quip, Inc.* | 4,460 | 449,434 | ||||||||
|
| |||||||||
| 952,831 | ||||||||||
|
| |||||||||
| ||||||||||
Food & Staples Retailing 0.3% |
| |||||||||
CVS Caremark Corp. | 2,390 | 182,500 | ||||||||
|
| |||||||||
| ||||||||||
Food Products 0.2% |
| |||||||||
Kellogg Co. | 2,430 | 145,387 | ||||||||
|
| |||||||||
| ||||||||||
Health Care Equipment & Supplies 2.5% |
| |||||||||
Abbott Laboratories | 38,250 | 1,611,090 | ||||||||
|
| |||||||||
| ||||||||||
Health Care Providers & Services 3.2% |
| |||||||||
Aetna, Inc. | 8,560 | 663,657 | ||||||||
McKesson Corp. | 6,065 | 1,163,631 | ||||||||
VCA, Inc.* | 5,965 | 222,435 | ||||||||
|
| |||||||||
| 2,049,723 | ||||||||||
|
| |||||||||
| ||||||||||
Hotels, Restaurants & Leisure 2.0% |
| |||||||||
McDonald’s Corp. | 5,865 | 554,595 | ||||||||
Starbucks Corp. | 5,500 | 427,240 | ||||||||
Starwood Hotels & Resorts Worldwide, Inc. | 3,855 | 296,218 | ||||||||
|
| |||||||||
| 1,278,053 | ||||||||||
|
| |||||||||
| ||||||||||
Household Durables 0.5% |
| |||||||||
Newell Rubbermaid, Inc. | 9,360 | 304,013 | ||||||||
|
| |||||||||
| ||||||||||
Household Products 2.9% |
| |||||||||
Procter & Gamble Co. (The) | 23,765 | 1,837,510 | ||||||||
|
| |||||||||
| ||||||||||
Independent Power and Renewable Electricity Producers 0.6% |
| |||||||||
Calpine Corp.* | 18,005 | 396,830 | ||||||||
|
| |||||||||
| ||||||||||
Industrial Conglomerates 2.3% |
| |||||||||
General Electric Co. | 59,610 | 1,499,192 | ||||||||
|
| |||||||||
| ||||||||||
Information Technology Services 4.4% |
| |||||||||
Amdocs Ltd. | 15,255 | 691,661 | ||||||||
DST Systems, Inc. | 7,640 | 688,135 | ||||||||
102
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Large Cap Core Equity Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
Information Technology Services (continued) |
| |||||||||
FleetCor Technologies, Inc.* | 1,306 | $ | 173,424 | |||||||
Xerox Corp. | 93,530 | 1,240,208 | ||||||||
|
| |||||||||
| 2,793,428 | ||||||||||
|
| |||||||||
| ||||||||||
Insurance 1.2% |
| |||||||||
Aspen Insurance Holdings Ltd. | 3,550 | 142,035 | ||||||||
PartnerRe Ltd. | 5,725 | 597,461 | ||||||||
|
| |||||||||
| 739,496 | ||||||||||
|
| |||||||||
| ||||||||||
Internet & Catalog Retail 0.7% |
| |||||||||
Amazon.com, Inc.* | 800 | 250,392 | ||||||||
Liberty Ventures, Series A* | 2,430 | 168,059 | ||||||||
|
| |||||||||
| 418,451 | ||||||||||
|
| |||||||||
| ||||||||||
Internet Software & Services 2.5% |
| |||||||||
eBay, Inc.* | 8,360 | 441,408 | ||||||||
Google, Inc., Class A* | 1,425 | 825,859 | ||||||||
Google, Inc., Class C* | 625 | 357,250 | ||||||||
|
| |||||||||
| 1,624,517 | ||||||||||
|
| |||||||||
| ||||||||||
Life Sciences Tools & Services 1.5% |
| |||||||||
Agilent Technologies, Inc. | 3,655 | 205,009 | ||||||||
Thermo Fisher Scientific, Inc. | 6,100 | 741,150 | ||||||||
|
| |||||||||
| 946,159 | ||||||||||
|
| |||||||||
| ||||||||||
Machinery 1.7% |
| |||||||||
Graco, Inc. | 3,935 | 291,780 | ||||||||
ITT Corp. | 3,585 | 164,803 | ||||||||
Snap-on, Inc. | 5,440 | 653,888 | ||||||||
|
| |||||||||
| 1,110,471 | ||||||||||
|
| |||||||||
| ||||||||||
Media 0.7% |
| |||||||||
Liberty Media Corp., Series C* | 5,000 | 235,000 | ||||||||
Viacom, Inc., Class B | 2,640 | 218,249 | ||||||||
|
| |||||||||
| 453,249 | ||||||||||
|
| |||||||||
| ||||||||||
Multiline Retail 0.3% |
| |||||||||
J.C. Penney Co., Inc.* | 17,640 | 165,463 | ||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 7.4% |
| |||||||||
Anadarko Petroleum Corp. | 4,240 | 453,044 | ||||||||
Chevron Corp. | 15,220 | 1,967,033 | ||||||||
EOG Resources, Inc. | 7,970 | 872,237 | ||||||||
Occidental Petroleum Corp. | 7,391 | 722,174 | ||||||||
Valero Energy Corp. | 8,810 | 447,548 | ||||||||
WPX Energy, Inc.* | 12,700 | 261,239 | ||||||||
|
| |||||||||
| 4,723,275 | ||||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 5.9% |
| |||||||||
AbbVie, Inc. | 10,815 | 566,057 | ||||||||
Johnson & Johnson | 11,160 | 1,117,004 | ||||||||
Merck & Co., Inc. | 7,530 | 427,252 | ||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
|
|
|
|
| ||||||
Pharmaceuticals (continued) |
| |||||||||
Pfizer, Inc. | 57,115 | $ | 1,639,201 | |||||||
|
| |||||||||
| 3,749,514 | ||||||||||
|
| |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 1.7% |
| |||||||||
Boston Properties, Inc. | 2,470 | 295,041 | ||||||||
Equity Lifestyle Properties, Inc. | 4,330 | 191,776 | ||||||||
Prologis, Inc. | 15,230 | 621,536 | ||||||||
|
| |||||||||
| 1,108,353 | ||||||||||
|
| |||||||||
| ||||||||||
Road & Rail 4.1% |
| |||||||||
Old Dominion Freight Line, Inc.* | 6,430 | 408,176 | ||||||||
Union Pacific Corp. | 22,580 | 2,219,840 | ||||||||
|
| |||||||||
| 2,628,016 | ||||||||||
|
| |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment 0.9% |
| |||||||||
Skyworks Solutions, Inc. | 11,730 | 595,415 | ||||||||
|
| |||||||||
| ||||||||||
Software 4.9% |
| |||||||||
Adobe Systems, Inc.* | 8,140 | 562,555 | ||||||||
CA, Inc. | 13,445 | 388,292 | ||||||||
Compuware Corp. | 39,265 | 357,312 | ||||||||
Microsoft Corp. | 32,445 | 1,400,326 | ||||||||
Oracle Corp. | 10,308 | 416,340 | ||||||||
|
| |||||||||
| 3,124,825 | ||||||||||
|
| |||||||||
| ||||||||||
Specialty Retail 3.9% |
| |||||||||
Foot Locker, Inc. | 9,950 | 472,923 | ||||||||
Home Depot, Inc. (The) | 10,463 | 845,934 | ||||||||
Lowe’s Cos., Inc. | 19,650 | 940,253 | ||||||||
Signet Jewelers Ltd. | 2,465 | 250,912 | ||||||||
|
| |||||||||
| 2,510,022 | ||||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 3.7% |
| |||||||||
Apple, Inc. | 19,460 | 1,859,792 | ||||||||
EMC Corp. | 5,550 | 162,615 | ||||||||
Hewlett-Packard Co. | 9,215 | 328,146 | ||||||||
|
| |||||||||
| 2,350,553 | ||||||||||
|
| |||||||||
| ||||||||||
Textiles, Apparel & Luxury Goods 0.6% |
| |||||||||
Hanesbrands, Inc. | 1,910 | 186,626 | ||||||||
NIKE, Inc., Class B | 2,160 | 166,601 | ||||||||
|
| |||||||||
| 353,227 | ||||||||||
|
| |||||||||
| ||||||||||
Tobacco 2.0% |
| |||||||||
Philip Morris International, Inc. | 15,690 | 1,286,737 | ||||||||
|
| |||||||||
103
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Large Cap Core Equity Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Wireless Telecommunication Services 0.6% |
| |||||||||
Telephone & Data Systems, Inc. | 14,405 | $ | 360,125 | |||||||
|
| |||||||||
Total Investments |
| 61,276,657 | ||||||||
Other assets in excess of liabilities — 4.0% |
| 2,559,153 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 63,835,810 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| AG | Stock Corporation |
| Ltd. | Limited |
| PLC | Public Limited Company |
| REIT | Real Estate Investment Trust |
At July 31, 2014, 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) | ||||||||||
| 26 | E-mini S&P 500 | 09/19/14 | $ | 2,502,240 | $ | (32,533 | ) | |||||||
|
|
|
| |||||||||||
The accompanying notes are an integral part of these financial statements.
104
Statement of Assets and Liabilities
July 31, 2014
Nationwide HighMark Large Cap Core Equity Fund | ||||||
Assets: | ||||||
Investments, at value (cost $47,751,913) | $ | 61,276,657 | ||||
Cash | 2,537,198 | |||||
Dividends receivable | 58,222 | |||||
Receivable for investments sold | 1,757,026 | |||||
Receivable for capital shares issued | 138,308 | |||||
Reclaims receivable | 163 | |||||
Receivable for variation margin on futures contracts | 67,215 | |||||
Prepaid expenses | 13,647 | |||||
|
| |||||
Total Assets | 65,848,436 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 1,893,630 | |||||
Payable for capital shares redeemed | 7,969 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 35,709 | |||||
Fund administration fees | 7,999 | |||||
Distribution fees | 3,393 | |||||
Administrative servicing fees | 33,269 | |||||
Accounting and transfer agent fees | 780 | |||||
Trustee fees | 154 | |||||
Custodian fees | 245 | |||||
Compliance program costs (Note 3) | 718 | |||||
Professional fees | 22,420 | |||||
Printing fees | 2,834 | |||||
Other | 3,506 | |||||
|
| |||||
Total Liabilities | 2,012,626 | |||||
|
| |||||
Net Assets | $ | 63,835,810 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 49,933,970 | ||||
Accumulated undistributed net investment income | 264,787 | |||||
Accumulated net realized gains from investments and futures transactions | 144,842 | |||||
Net unrealized appreciation/(depreciation) from investments | 13,524,744 | |||||
Net unrealized appreciation/(depreciation) from futures contracts (Note 2) | (32,533 | ) | ||||
|
| |||||
Net Assets | $ | 63,835,810 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 11,954,280 | ||||
Class C Shares | 1,008,150 | |||||
Institutional Service Class Shares | 50,826,838 | |||||
Institutional Class Shares | 46,542 | |||||
|
| |||||
Total | $ | 63,835,810 | ||||
|
| |||||
105
Statement of Assets and Liabilities (Continued)
July 31, 2014
Nationwide HighMark Large Cap Core Equity Fund | ||||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 906,144 | |||||
Class C Shares | 78,903 | |||||
Institutional Service Class Shares | 3,842,731 | |||||
Institutional Class Shares | 3,520 | |||||
|
| |||||
Total | 4,831,298 | |||||
|
| |||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 13.19 | ||||
Class C Shares (b) | $ | 12.78 | ||||
Institutional Service Class Shares | $ | 13.23 | ||||
Institutional Class Shares | $ | 13.22 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 13.99 | ||||
|
| |||||
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 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.
106
Statement of Operations
For the Year Ended July 31, 2014
Nationwide HighMark Large Cap Core Equity Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 1,171,031 | ||||
Interest income | 57 | |||||
|
| |||||
Total Income | 1,171,088 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 365,276 | |||||
Fund administration fees | 101,253 | |||||
Distribution fees Class A | 26,743 | |||||
Distribution fees Class C | 9,710 | |||||
Administrative servicing fees Class A | 15,106 | |||||
Administrative servicing fees Class C | 329 | |||||
Administrative servicing fees Institutional Service Class (a) | 49,081 | |||||
Registration and filing fees | 47,100 | |||||
Professional fees | 32,001 | |||||
Printing fees | 10,654 | |||||
Trustee fees | 1,493 | |||||
Custodian fees | 2,499 | |||||
Accounting and transfer agent fees | 4,714 | |||||
Compliance program costs (Note 3) | 1,597 | |||||
Other | 11,749 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 679,305 | |||||
|
| |||||
Earnings credit (Note 5) | (34 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (1,219 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (a) | (6,159 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (46,176 | ) | ||||
|
| |||||
Net Expenses | 625,717 | |||||
|
| |||||
NET INVESTMENT INCOME | 545,371 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 6,559,504 | |||||
Net realized gains from futures transactions (Note 2) | 334,482 | |||||
|
| |||||
Net realized gains from investments and futures transactions | 6,893,986 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments | 1,470,210 | |||||
Net change in unrealized appreciation/(depreciation) from futures contracts (Note 2) | (26,899 | ) | ||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments and futures contracts | 1,443,311 | |||||
|
| |||||
Net realized/unrealized gains from investments and futures transactions | 8,337,297 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 8,882,668 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
107
Statements of Changes in Net Assets
Nationwide HighMark Large Cap Core Equity Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 545,371 | $ | 852,788 | ||||||||
Net realized gains from investments and futures transactions | 6,893,986 | 10,629,141 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments and futures contracts | 1,443,311 | 4,812,139 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 8,882,668 | 16,294,068 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (32,211 | ) | (52,788 | ) | ||||||||
Class C | (464 | ) | (3,112 | ) | ||||||||
Institutional Service Class (a) | (258,727 | ) | (779,460 | ) | ||||||||
Institutional Class | (145 | )(b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (291,547 | ) | (835,360 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (5,542,422 | ) | (18,016,074 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets | 3,048,699 | (2,557,366 | ) | |||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 60,787,111 | 63,344,477 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 63,835,810 | $ | 60,787,111 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 264,787 | $ | 17,428 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 2,145,113 | $ | 6,029,593 | ||||||||
Dividends reinvested | 31,760 | 51,016 | ||||||||||
Cost of shares redeemed | (1,539,028 | ) | (1,153,545 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 637,845 | 4,927,064 | ||||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 166,542 | 175,860 | ||||||||||
Dividends reinvested | 291 | 1,826 | ||||||||||
Cost of shares redeemed | (290,879 | ) | (136,248 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (124,046 | ) | 41,438 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | 2,459,725 | 9,027,736 | ||||||||||
Dividends reinvested | 17,540 | 271,828 | ||||||||||
Cost of shares redeemed | (8,578,107 | ) | (32,284,140 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (6,100,842 | ) | (22,984,576 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 44,476 | (b) | – | |||||||||
Dividends reinvested | 145 | (b) | – | |||||||||
Cost of shares redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 44,621 | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (5,542,422 | ) | $ | (18,016,074 | ) | ||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
108
Statements of Changes in Net Assets (Continued)
Nationwide HighMark Large Cap Core Equity Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 171,269 | 577,813 | ||||||||||
Reinvested | 2,440 | 4,869 | ||||||||||
Redeemed | (125,004 | ) | (111,058 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 48,705 | 471,624 | ||||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 13,787 | 17,857 | ||||||||||
Reinvested | 23 | 182 | ||||||||||
Redeemed | (24,558 | ) | (14,178 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (10,748 | ) | 3,861 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Issued | 191,983 | 927,552 | ||||||||||
Reinvested | 1,364 | 26,611 | ||||||||||
Redeemed | (713,995 | ) | (3,014,582 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (520,648 | ) | (2,060,419 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 3,509 | (b) | – | |||||||||
Reinvested | 11 | (b) | – | |||||||||
Redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 3,520 | (b) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | (479,171 | ) | (1,584,934 | ) | ||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
109
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide HighMark Large Cap Core Equity 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 | Total Distributions | Net Asset Value, End | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | ||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 11.43 | 0.09 | 1.71 | 1.80 | (0.04 | ) | (0.04 | ) | $ | 13.19 | 15.72% | $ | 11,954,280 | 1.22% | 0.70% | 1.34% | 47.69% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 9.17 | 0.10 | 2.25 | 2.35 | (0.09 | ) | (0.09 | ) | $ | 11.43 | 25.80% | $ | 9,799,235 | 1.22% | 0.96% | 1.45% | 63.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 8.47 | 0.06 | 0.71 | 0.77 | (0.07 | ) | (0.07 | ) | $ | 9.17 | 9.12% | $ | 3,537,695 | 1.23% | 0.72% | 1.53% | 78.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 7.23 | 0.07 | 1.24 | 1.31 | (0.07 | ) | (0.07 | ) | $ | 8.47 | 18.15% | $ | 3,027,452 | 1.25% | 0.79% | 1.48% | 68.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 6.38 | 0.06 | 0.85 | 0.91 | (0.06 | ) | (0.06 | ) | $ | 7.23 | 14.27% | $ | 2,640,213 | 1.23% | 0.85% | 1.47% | 93.00% | ||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 11.11 | 0.01 | 1.67 | 1.68 | (0.01 | ) | (0.01 | ) | $ | 12.78 | 15.09% | $ | 1,008,150 | 1.82% | 0.11% | 1.99% | 47.69% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 8.92 | 0.04 | 2.19 | 2.23 | (0.04 | ) | (0.04 | ) | $ | 11.11 | 25.01% | $ | 995,957 | 1.82% | 0.36% | 1.95% | 63.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 8.24 | 0.01 | 0.69 | 0.70 | (0.02 | ) | (0.02 | ) | $ | 8.92 | 8.47% | $ | 765,173 | 1.83% | 0.12% | 2.03% | 78.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 7.03 | 0.02 | 1.21 | 1.23 | (0.02 | ) | (0.02 | ) | $ | 8.24 | 17.48% | $ | 639,507 | 1.85% | 0.19% | 1.98% | 68.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 6.21 | 0.02 | 0.82 | 0.84 | (0.02 | ) | (0.02 | ) | $ | 7.03 | 13.50% | $ | 440,991 | 1.83% | 0.25% | 1.97% | 93.00% | ||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 11.46 | 0.12 | 1.72 | 1.84 | (0.07 | ) | (0.07 | ) | $ | 13.23 | 16.04% | $ | 50,826,838 | 0.97% | 0.95% | 1.05% | 47.69% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 9.19 | 0.13 | 2.26 | 2.39 | (0.12 | ) | (0.12 | ) | $ | 11.46 | 26.21% | $ | 49,991,919 | 0.93% | 1.25% | 1.20% | 63.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 8.49 | 0.09 | 0.70 | 0.79 | (0.09 | ) | (0.09 | ) | $ | 9.19 | 9.39% | $ | 59,041,609 | 0.93% | 1.02% | 1.28% | 78.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 7.24 | 0.09 | 1.25 | 1.34 | (0.09 | ) | (0.09 | ) | $ | 8.49 | 18.63% | $ | 53,369,484 | 0.96% | 1.09% | 1.23% | 68.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 6.39 | 0.08 | 0.85 | 0.93 | (0.08 | ) | (0.08 | ) | $ | 7.24 | 14.56% | $ | 55,593,087 | 0.95% | 1.13% | 1.22% | 93.00% | ||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 11.73 | 0.13 | 1.44 | 1.57 | (0.08 | ) | (0.08 | ) | $ | 13.22 | 13.44% | $ | 46,542 | 0.82% | 1.12% | 0.92% | 47.69% | ||||||||||||||||||||||||||||||||||
| (a) | Excludes sales charge. |
| (b) | Not annualized for periods less than one year. |
| (c) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
110
| Fund Commentary | Nationwide HighMark Large Cap Growth Fund |
For the annual period ended July 31, 2014, the Nationwide HighMark Large Cap Growth Fund (Institutional Service Class) returned 12.83%* versus 18.69% for its benchmark, the Russell 1000® Growth Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Large-Cap Growth Funds (consisting of 715 funds as of July 31, 2014) was 18.21% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
Market Environment
The market environment during the year ended July 31, 2014, presented considerable headwinds to the performance of high-quality, large-capitalization growth investment strategies such as those employed by the Fund. As U.S. economic conditions continued to improve, particularly after the harsh 2013–2014 winter, equity markets were driven by lower-quality, more-speculative or distressed companies, and firms with stronger fundamentals underperformed.
Portfolio Performance
During the 12 months ended July 31, 2014, the Fund’s sector allocation strategy provided a modest positive contribution to Fund performance. The Fund also benefited from strong stock selection in the financials and consumer staples sectors. In the financials sector, the Fund’s overweight in the American Tower REIT, along with the Fund’s holding in The Charles Schwab Corp., helped Fund performance. In addition, the Fund’s holdings in consumer staples sector names Walgreen Co. and Anheuser-Busch InBev SA/NV contributed to the Fund’s return.
During the reporting period, the Fund’s performance detractors were concentrated in the information technology and industrials sectors. In information technology, the Fund did not hold a position in Facebook, Inc. or Oracle Corp., and significantly underweighted Apple Inc. In the industrials sector, the Fund’s overweights in W.W. Grainger, Inc.; Stericycle, Inc.; and Kansas City
Southern Co. proved disappointing during the 12-month reporting period.
Derivatives were not used in the Fund during the annual reporting period ended July 31, 2014.
Outlook and Positioning
The Fund’s philosophy and process involve holding stocks from companies with compelling business models, sustainable competitive advantages and strong management teams that can benefit from long-term secular growth tailwinds.
Stocks with these characteristics anchor the Fund and, we believe, are positioned to outperform in a stock market that may grow to reward companies with earnings and cash flow growth — with an emphasis on sustainable growth — that have the potential to outperform the lower-quality companies that have rallied since the end of the “Great Recession” in June 2009.
Subadviser:
HighMark Capital Management, Inc.
Portfolio Managers:
Derek Izuel and Kenneth Wemer
The Fund is subject to the risks of investing in equity securities. Growth funds may underperform other funds that use different investing styles. 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). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
111
| Fund Overview | Nationwide HighMark Large Cap Growth Fund |
Objective
The Fund seeks long-term capital appreciation through investments in U.S. equity securities; current income is incidental.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide HighMark Large Cap Growth Fund (Institutional Service Class) returned 12.83%, underperforming its benchmark by 5.86% and the Lipper peer category median by 5.38%. |
| Ÿ | The market environment during the year ended July 31, 2014, presented considerable headwinds to the performance of high-quality, large-capitalization growth investment strategies such as those employed by the Fund. |
| Ÿ | The Fund’s philosophy and process involve holding stocks from companies with compelling business models, sustainable competitive advantages and strong management teams that can benefit from long-term secular growth tailwinds. |
Asset Allocation†
| Common Stocks | 100.0% | |||
| Other assets in excess of liabilities†† | 0.0% | |||
| 100.0% |
Top Industries†††
| Software | 7.9% | |||
| Chemicals | 7.5% | |||
| Internet Software & Services | 6.7% | |||
| Pharmaceuticals | 6.4% | |||
| Hotels, Restaurants & Leisure | 5.0% | |||
| Oil, Gas & Consumable Fuels | 4.7% | |||
| Technology Hardware, Storage & Peripherals | 4.2% | |||
| Food & Staples Retailing | 3.8% | |||
| Specialty Retail | 3.7% | |||
| Biotechnology | 3.3% | |||
| Other Industries | 46.8% | |||
| 100.0% |
Top Holdings†††
| Ecolab, Inc. | 4.2% | |||
| Microsoft Corp. | 3.9% | |||
| Praxair, Inc. | 3.3% | |||
| American Tower Corp. | 3.2% | |||
| Danaher Corp. | 2.8% | |||
| Apple, Inc. | 2.8% | |||
| J.B. Hunt Transport Services, Inc. | 2.6% | |||
| Johnson & Johnson | 2.6% | |||
| Adobe Systems, Inc. | 2.5% | |||
| Stericycle, Inc. | 2.5% | |||
| Other Holdings | 69.6% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Amount rounds to less than 0.1%. |
| ††† | Percentages indicated are based upon total investments as of July 31, 2014. |
112
| Fund Performance | Nationwide HighMark Large Cap Growth Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 12.60% | 13.31% | 7.02% | – | |||||||||||||
| w/ SC3 | 6.44% | 12.03% | 6.41% | – | ||||||||||||||
| Class C1 | w/o SC2 | 11.95% | 12.64% | 6.37% | – | |||||||||||||
| w/ SC4 | 10.95% | 12.64% | 6.37% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 12.83% | 13.60% | 7.30% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 9.27% | 7* | |||||||||||||
| Russell 1000® Growth Index | 18.69% | 17.25% | 8.66% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.46% | 1.27% | ||||||
| Class C | 1.96% | 1.87% | ||||||
| Institutional Service Class | 1.21% | 1.02% | ||||||
| Institutional Class | 0.96% | 0.87% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
113
| Fund Performance (con’t.) | Nationwide HighMark Large Cap Growth 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 Service Class shares of the Nationwide HighMark Large Cap Growth Fund versus the Russell 1000® Growth Index and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
114
| Shareholder Expense Example | Nationwide HighMark Large Cap Growth 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide HighMark Large Cap July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,075.10 | 6.53 | 1.27 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.50 | 6.36 | 1.27 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,071.40 | 9.60 | 1.87 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,015.52 | 9.35 | 1.87 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,076.00 | 5.25 | 1.02 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,019.74 | 5.11 | 1.02 | |||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,076.70 | 4.48 | 0.87 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,020.48 | 4.36 | 0.87 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
115
Statement of Investments
July 31, 2014
Nationwide HighMark Large Cap Growth Fund
| Common Stocks 100.0% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 1.4% |
| |||||||||
Honeywell International, Inc. | 8,790 | $ | 807,186 | |||||||
|
| |||||||||
| ||||||||||
Air Freight & Logistics 1.0% |
| |||||||||
United Parcel Service, Inc., Class B | 6,315 | 613,123 | ||||||||
|
| |||||||||
| ||||||||||
Beverages 1.4% |
| |||||||||
Anheuser-Busch InBev NV, ADR-BE | 7,378 | 796,676 | ||||||||
|
| |||||||||
| ||||||||||
Biotechnology 3.3% | ||||||||||
Amgen, Inc. | 5,504 | 701,155 | ||||||||
Gilead Sciences, Inc.* | 13,706 | 1,254,784 | ||||||||
|
| |||||||||
| 1,955,939 | ||||||||||
|
| |||||||||
| ||||||||||
Capital Markets 2.4% |
| |||||||||
Charles Schwab Corp. (The) | 51,491 | 1,428,875 | ||||||||
|
| |||||||||
| ||||||||||
Chemicals 7.5% |
| |||||||||
Ecolab, Inc. | 22,469 | 2,438,561 | ||||||||
Praxair, Inc. | 15,178 | 1,944,909 | ||||||||
|
| |||||||||
| 4,383,470 | ||||||||||
|
| |||||||||
| ||||||||||
Commercial Services & Supplies 2.5% |
| |||||||||
Stericycle, Inc.* | 12,487 | 1,469,096 | ||||||||
|
| |||||||||
| ||||||||||
Communications Equipment 2.1% |
| |||||||||
QUALCOMM, Inc. | 16,628 | 1,225,484 | ||||||||
|
| |||||||||
| ||||||||||
Electric Utilities 1.3% |
| |||||||||
ITC Holdings Corp. | 21,468 | 774,995 | ||||||||
|
| |||||||||
| ||||||||||
Electronic Equipment, Instruments & Components 1.2% |
| |||||||||
FEI Co. | 9,214 | 705,792 | ||||||||
|
| |||||||||
| ||||||||||
Energy Equipment & Services 1.9% |
| |||||||||
Halliburton Co. | 16,307 | 1,125,020 | ||||||||
|
| |||||||||
| ||||||||||
Food & Staples Retailing 3.8% |
| |||||||||
Costco Wholesale Corp. | 7,555 | 888,015 | ||||||||
Walgreen Co. | 19,613 | 1,348,786 | ||||||||
|
| |||||||||
| 2,236,801 | ||||||||||
|
| |||||||||
| ||||||||||
Food Products 1.1% |
| |||||||||
Mondelez International, Inc., Class A | 18,607 | 669,852 | ||||||||
|
| |||||||||
| ||||||||||
Health Care Equipment & Supplies 2.1% |
| |||||||||
Covidien PLC | 14,226 | 1,230,691 | ||||||||
|
| |||||||||
| ||||||||||
Hotels, Restaurants & Leisure 5.0% |
| |||||||||
Cheesecake Factory, Inc. (The) | 13,731 | 588,785 | ||||||||
Marriott International, Inc., Class A | 11,351 | 734,523 | ||||||||
Starbucks Corp. | 13,217 | 1,026,697 | ||||||||
Yum! Brands, Inc. | 8,438 | 585,597 | ||||||||
|
| |||||||||
| 2,935,602 | ||||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Industrial Conglomerates 2.8% |
| |||||||||
Danaher Corp. | 22,641 | $ | 1,672,717 | |||||||
|
| |||||||||
|
|
|
|
| ||||||
Information Technology Services 1.9% |
| |||||||||
Teradata Corp.* | 8,145 | 343,393 | ||||||||
Visa, Inc., Class A | 3,569 | 753,095 | ||||||||
|
| |||||||||
| 1,096,488 | ||||||||||
|
| |||||||||
| ||||||||||
Internet & Catalog Retail 1.8% |
| |||||||||
Priceline Group, Inc. (The)* | 580 | 720,621 | ||||||||
TripAdvisor, Inc.* | 3,591 | 340,570 | ||||||||
|
| |||||||||
| 1,061,191 | ||||||||||
|
| |||||||||
| ||||||||||
Internet Software & Services 6.7% |
| |||||||||
Akamai Technologies, Inc.* | 8,892 | 524,806 | ||||||||
Equinix, Inc.* | 5,709 | 1,224,695 | ||||||||
Google, Inc., Class A* | 1,906 | 1,104,622 | ||||||||
Google, Inc., Class C* | 1,906 | 1,089,469 | ||||||||
|
| |||||||||
| 3,943,592 | ||||||||||
|
| |||||||||
| ||||||||||
Life Sciences Tools & Services 1.9% |
| |||||||||
Agilent Technologies, Inc. | 12,948 | 726,253 | ||||||||
Bruker Corp.* | 15,834 | 359,907 | ||||||||
|
| |||||||||
| 1,086,160 | ||||||||||
|
| |||||||||
| ||||||||||
Machinery 1.2% |
| |||||||||
Pall Corp. | 9,100 | 704,977 | ||||||||
|
| |||||||||
| ||||||||||
Media 3.0% |
| |||||||||
Discovery Communications, Inc., Class A* | 11,142 | 949,410 | ||||||||
Twenty-First Century Fox, Inc., Class A | 25,591 | 810,723 | ||||||||
|
| |||||||||
| 1,760,133 | ||||||||||
|
| |||||||||
| ||||||||||
Multiline Retail 1.6% |
| |||||||||
Dollar Tree, Inc.* | 16,776 | 913,789 | ||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 4.7% |
| |||||||||
Anadarko Petroleum Corp. | 6,763 | 722,627 | ||||||||
EOG Resources, Inc. | 7,993 | 874,754 | ||||||||
Imperial Oil Ltd. | 22,225 | 1,141,031 | ||||||||
|
| |||||||||
| 2,738,412 | ||||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 6.4% |
| |||||||||
Allergan, Inc. | 7,320 | 1,214,095 | ||||||||
Johnson & Johnson | 15,477 | 1,549,093 | ||||||||
Novartis AG, ADR-CH | 11,239 | 977,119 | ||||||||
|
| |||||||||
| 3,740,307 | ||||||||||
|
| |||||||||
| ||||||||||
Professional Services 1.8% |
| |||||||||
Equifax, Inc. | 14,191 | 1,079,793 | ||||||||
|
| |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 3.2% |
| |||||||||
American Tower Corp. | 20,218 | 1,908,377 | ||||||||
|
| |||||||||
116
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Large Cap Growth Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Road & Rail 2.6% |
| |||||||||
J.B. Hunt Transport Services, Inc. | 20,061 | $ | 1,549,913 | |||||||
|
| |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment 2.7% |
| |||||||||
Analog Devices, Inc. | 5,043 | 250,284 | ||||||||
Linear Technology Corp. | 30,472 | 1,344,882 | ||||||||
|
| |||||||||
| 1,595,166 | ||||||||||
|
| |||||||||
| ||||||||||
Software 7.9% |
| |||||||||
Adobe Systems, Inc.* | 21,345 | 1,475,153 | ||||||||
ANSYS, Inc.* | 11,776 | 906,045 | ||||||||
Microsoft Corp. | 52,606 | 2,270,475 | ||||||||
|
| |||||||||
| 4,651,673 | ||||||||||
|
| |||||||||
| ||||||||||
Specialty Retail 3.7% |
| |||||||||
Home Depot, Inc. (The) | 13,942 | 1,127,210 | ||||||||
Ross Stores, Inc. | 5,747 | 370,107 | ||||||||
TJX Cos., Inc. (The) | 12,634 | 673,266 | ||||||||
|
| |||||||||
| 2,170,583 | ||||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 4.2% |
| |||||||||
Apple, Inc. | 17,394 | 1,662,344 | ||||||||
EMC Corp. | 27,902 | 817,529 | ||||||||
|
| |||||||||
| 2,479,873 | ||||||||||
|
| |||||||||
| ||||||||||
Textiles, Apparel & Luxury Goods 1.7% |
| |||||||||
NIKE, Inc., Class B | 12,886 | 993,897 | ||||||||
|
| |||||||||
| ||||||||||
Trading Companies & Distributors 2.2% |
| |||||||||
W.W. Grainger, Inc. | 5,617 | 1,320,838 | ||||||||
|
| |||||||||
Total Investments |
| 58,826,481 | ||||||||
Other assets in excess of liabilities — 0.0%† |
| 10,061 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 58,836,542 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| † | Amount rounds to less than 0.1%. |
| ADR | American Depositary Receipt |
| AG | Stock Corporation |
| BE | Belgium |
| CH | Switzerland |
| Ltd. | Limited |
| NV | Public Traded Company |
| PLC | Public Limited Company |
| REIT | Real Estate Investment Trust |
The accompanying notes are an integral part of these financial statements.
117
Statement of Assets and Liabilities
July 31, 2014
Nationwide Large Cap | ||||||
Assets: | ||||||
Investments, at value (cost $45,186,094) | $ | 58,826,481 | ||||
Cash | 87,032 | |||||
Dividends receivable | 15,223 | |||||
Receivable for capital shares issued | 43,173 | |||||
Reclaims receivable | 13,652 | |||||
Prepaid expenses | 8,823 | |||||
|
| |||||
Total Assets | 58,994,384 | |||||
|
| |||||
Liabilities: | ||||||
Payable for capital shares redeemed | 36,919 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 44,929 | |||||
Fund administration fees | 9,224 | |||||
Distribution fees | 5,928 | |||||
Administrative servicing fees | 24,595 | |||||
Accounting and transfer agent fees | 4,156 | |||||
Trustee fees | 189 | |||||
Custodian fees | 212 | |||||
Compliance program costs (Note 3) | 1,225 | |||||
Professional fees | 22,283 | |||||
Printing fees | 4,680 | |||||
Other | 3,502 | |||||
|
| |||||
Total Liabilities | 157,842 | |||||
|
| |||||
Net Assets | $ | 58,836,542 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 33,367,088 | ||||
Accumulated undistributed net investment income | 71,118 | |||||
Accumulated net realized gains from investments | 11,757,949 | |||||
Net unrealized appreciation/(depreciation) from investments | 13,640,387 | |||||
|
| |||||
Net Assets | $ | 58,836,542 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 16,293,038 | ||||
Class C Shares | 2,709,588 | |||||
Institutional Service Class Shares | 39,822,695 | |||||
Institutional Class Shares | 11,221 | |||||
|
| |||||
Total | $ | 58,836,542 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 1,168,249 | |||||
Class C Shares | 212,574 | |||||
Institutional Service Class Shares | 2,802,076 | |||||
Institutional Class Shares | 790 | |||||
|
| |||||
Total | 4,183,689 | |||||
|
| |||||
118
Statement of Assets and Liabilities (Continued)
July 31, 2014
Nationwide Large Cap | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 13.95 | ||||
Class C Shares (b) | $ | 12.75 | ||||
Institutional Service Class Shares | $ | 14.21 | ||||
Institutional Class Shares | $ | 14.20 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 14.80 | ||||
|
| |||||
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 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.
119
Statement of Operations
For the Year Ended July 31, 2014
Nationwide Large Cap Growth Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 937,970 | ||||
Foreign tax withholding | (1,764 | ) | ||||
|
| |||||
Total Income | 936,206 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 415,766 | |||||
Fund administration fees | 123,080 | |||||
Distribution fees Class A | 42,190 | |||||
Distribution fees Class B (a) | 404 | |||||
Distribution fees Class C | 27,936 | |||||
Administrative servicing fees Class A | 18,882 | |||||
Administrative servicing fees Class B (a) | 135 | |||||
Administrative servicing fees Class C | 449 | |||||
Administrative servicing fees Institutional Service Class (b) | 74,063 | |||||
Registration and filing fees | 51,801 | |||||
Professional fees | 31,571 | |||||
Printing fees | 15,903 | |||||
Trustee fees | 1,614 | |||||
Custodian fees | 2,960 | |||||
Accounting and transfer agent fees | 21,540 | |||||
Compliance program costs (Note 3) | 1,720 | |||||
Other | 11,658 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 841,672 | |||||
|
| |||||
Earnings credit (Note 5) | (114 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (2,088 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (b) | (6,565 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (60,039 | ) | ||||
|
| |||||
Net Expenses | 772,866 | |||||
|
| |||||
NET INVESTMENT INCOME | 163,340 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 11,790,472 | |||||
Net change in unrealized appreciation/(depreciation) from investments | (3,544,983 | ) | ||||
|
| |||||
Net realized/unrealized gains from investments | 8,245,489 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 8,408,829 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
120
Statements of Changes in Net Assets
Nationwide HighMark Large Cap Growth Fund | ||||||||||||
Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 163,340 | $ | 569,850 | ||||||||
Net realized gains from investments | 11,790,472 | 11,021,133 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | (3,544,983 | ) | (2,517,102 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 8,408,829 | 9,073,881 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (115,949 | ) | (23,724 | ) | ||||||||
Class B (a) | – | – | ||||||||||
Class C | (11,474 | ) | – | |||||||||
Institutional Service Class (b) | (477,701 | ) | (277,645 | ) | ||||||||
Institutional Class | (122 | )(c) | – | |||||||||
Net realized gains: | ||||||||||||
Class A | (178,380 | ) | – | |||||||||
Class B (a) | – | – | ||||||||||
Class C | (32,946 | ) | – | |||||||||
Institutional Service Class (b) | (525,076 | ) | – | |||||||||
Institutional Class | (106 | )(c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (1,341,754 | ) | (301,369 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (21,148,547 | ) | (8,939,605 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets | (14,081,472 | ) | (167,093 | ) | ||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 72,918,014 | 73,085,107 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 58,836,542 | $ | 72,918,014 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 71,118 | $ | 513,024 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 348,756 | $ | 2,765,078 | ||||||||
Proceeds from shares issued from class conversion | 420,514 | – | ||||||||||
Dividends reinvested | 270,652 | 21,570 | ||||||||||
Cost of shares redeemed | (3,314,666 | ) | (4,618,218 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (2,274,744 | ) | (1,831,570 | ) | ||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | 1,748 | – | ||||||||||
Dividends reinvested | – | – | ||||||||||
Cost of shares redeemed in class conversion | (420,514 | ) | – | |||||||||
Cost of shares redeemed | (33,806 | ) | (274,550 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (452,572 | ) | (274,550 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 109,087 | 202,314 | ||||||||||
Dividends reinvested | 38,213 | – | ||||||||||
Cost of shares redeemed | (496,306 | ) | (349,735 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (349,006 | ) | (147,421 | ) | ||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
121
Statements of Changes in Net Assets (Continued)
Nationwide HighMark Large Cap Growth Fund | ||||||||||||
Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Proceeds from shares issued | $ | 3,798,372 | $ | 9,884,756 | ||||||||
Dividends reinvested | 753,144 | 159,942 | ||||||||||
Cost of shares redeemed | (22,634,257 | ) | (16,730,762 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (18,082,741 | ) | (6,686,064 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 10,288 | (c) | – | |||||||||
Dividends reinvested | 228 | (c) | – | |||||||||
Cost of shares redeemed | – | (c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 10,516 | (c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (21,148,547 | ) | $ | (8,939,605 | ) | ||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 26,392 | 240,066 | ||||||||||
Issued in class conversion | 32,961 | – | ||||||||||
Reinvested | 20,757 | 1,916 | ||||||||||
Redeemed | (247,495 | ) | (395,886 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (167,385 | ) | (153,904 | ) | ||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Issued | 153 | – | ||||||||||
Reinvested | – | – | ||||||||||
Redeemed in class conversion | (35,603 | ) | – | |||||||||
Redeemed | (2,879 | ) | (25,260 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (38,329 | ) | (25,260 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 9,187 | 19,005 | ||||||||||
Reinvested | 3,200 | – | ||||||||||
Redeemed | (40,700 | ) | (32,252 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (28,313 | ) | (13,247 | ) | ||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Issued | 280,176 | 831,934 | ||||||||||
Reinvested | 56,605 | 13,957 | ||||||||||
Redeemed | (1,648,051 | ) | (1,367,544 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (1,311,270 | ) | (521,653 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 773 | (c) | – | |||||||||
Reinvested | 17 | (c) | – | |||||||||
Redeemed | – | (c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 790 | (c) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | (1,544,507 | ) | (714,064 | ) | ||||||||
|
|
|
| |||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
122
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide HighMark Large Cap Growth Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, | Net Investment Income (Loss) | 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)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Income (Loss) to Average | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 12.61 | 0.01 | 1.56 | 1.57 | (0.09 | ) | (0.14 | ) | (0.23 | ) | $ | 13.95 | 12.60 | % | $ | 16,293,038 | 1.27 | % | 0.07 | % | 1.34 | % | 40.70 | % | |||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.23 | 0.07 | 1.33 | 1.40 | (0.02 | ) | – | (0.02 | ) | $ | 12.61 | 12.45 | % | $ | 16,839,693 | 1.27 | % | 0.58 | % | 1.49 | % | 41.00 | % | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.12 | 0.02 | 1.09 | 1.11 | – | – | – | $ | 11.23 | 10.97 | % | $ | 16,721,772 | 1.27 | % | 0.17 | % | 1.52 | % | 53.00 | % | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 8.64 | – | 1.57 | 1.57 | (0.09 | ) | – | (0.09 | ) | $ | 10.12 | 18.16 | % | $ | 16,620,770 | 1.27 | % | (0.05 | %) | 1.49 | % | 41.00 | % | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 7.74 | 0.08 | 0.89 | 0.97 | (0.07 | ) | – | (0.07 | ) | $ | 8.64 | 12.48 | % | $ | 19,881,394 | 1.25 | % | 0.89 | % | 1.46 | % | 34.00 | % | ||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 11.57 | (0.06 | ) | 1.43 | 1.37 | (0.05 | ) | (0.14 | ) | (0.19 | ) | $ | 12.75 | 11.95 | % | $ | 2,709,588 | 1.87 | % | (0.53 | %) | 1.99 | % | 40.70 | % | ||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.35 | – | 1.22 | 1.22 | – | – | – | $ | 11.57 | 11.79 | % | $ | 2,787,128 | 1.87 | % | (0.02 | %) | 1.99 | % | 41.00 | % | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 9.38 | (0.04 | ) | 1.01 | 0.97 | – | – | – | $ | 10.35 | 10.34 | % | $ | 2,629,339 | 1.87 | % | (0.43 | %) | 2.02 | % | 53.00 | % | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 8.02 | (0.06 | ) | 1.45 | 1.39 | (0.03 | ) | – | (0.03 | ) | $ | 9.38 | 17.36 | % | $ | 2,860,809 | 1.87 | % | (0.65 | %) | 1.99 | % | 41.00 | % | |||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 7.21 | 0.02 | 0.84 | 0.86 | (0.05 | ) | – | (0.05 | ) | $ | 8.02 | 11.88 | % | $ | 3,250,012 | 1.85 | % | 0.29 | % | 1.96 | % | 34.00 | % | ||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 12.85 | 0.05 | 1.58 | 1.63 | (0.13 | ) | (0.14 | ) | (0.27 | ) | $ | 14.21 | 12.83 | % | $ | 39,822,695 | 1.02 | % | 0.33 | % | 1.13 | % | 40.70 | % | |||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.45 | 0.10 | 1.36 | 1.46 | (0.06 | ) | – | (0.06 | ) | $ | 12.85 | 12.80 | % | $ | 52,843,472 | 1.01 | % | 0.84 | % | 1.24 | % | 41.00 | % | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.31 | 0.05 | 1.11 | 1.16 | (0.02 | ) | – | (0.02 | ) | $ | 11.45 | 11.25 | % | $ | 53,069,738 | 1.01 | % | 0.43 | % | 1.27 | % | 53.00 | % | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 8.81 | 0.02 | 1.60 | 1.62 | (0.12 | ) | – | (0.12 | ) | $ | 10.31 | 18.41 | % | $ | 57,206,982 | 1.01 | % | 0.21 | % | 1.24 | % | 41.00 | % | ||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 7.87 | 0.10 | 0.91 | 1.01 | (0.07 | ) | – | (0.07 | ) | $ | 8.81 | 12.82 | % | $ | 60,078,249 | 0.99 | % | 1.16 | % | 1.21 | % | 34.00 | % | ||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 13.29 | 0.05 | 1.16 | 1.21 | (0.16 | ) | (0.14 | ) | (0.30 | ) | $ | 14.20 | 9.27 | % | $ | 11,221 | 0.87 | % | 0.39 | % | 0.96 | % | 40.70 | % | |||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
123
| Fund Commentary | Nationwide HighMark Small Cap Core Fund |
For the annual period ended July 31, 2014, the Nationwide HighMark Small Cap Core Fund (Institutional Service Class) returned 13.69%* versus 8.56% for its benchmark, the Russell 2000® Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Small-Cap Core Funds (consisting of 747 funds as of July 31, 2014) was 9.65% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
Market Environment
For the first seven months of the annual reporting period, small-capitalization stocks, as measured by the Russell 2000 Index, continued their strong showing and outperformed against large- and mid-cap stocks. Some of this performance was given back during the remainder of the period ended July 31, 2014, as small-cap stocks returned negatively versus the large-cap universe S&P 500® Index’s positive performance for the same period.
It is not surprising that investors rotated away from small-cap names during the reporting period — particularly in April, May and June 2014 — as small-cap names have participated broadly in the U.S. equity market rally of the past several years but with more volatility than their large-cap brethren.
Overall, the past reporting period has seen credit spreads continue to fall, benefiting smaller, more highly leveraged stocks. As the Fed’s bond-buying program continues to wind down, both large- and small-cap stocks may come under pressure, but we are confident that our investment process has the potential to continue to benefit from low correlations between stocks across the capitalization spectrum.
Portfolio Performance
The philosophy and process of the Fund rely on information-based investing, which uses signals from the activity of informed market participants to assess potential company appreciation. As a result, we expect that stock selection, as opposed
to significant sector weighting versus the Fund’s benchmark, are likely to drive the majority of the Fund’s performance.
The year ended July 31, 2014 confirmed the above approach as the bulk of the Fund’s outperformance came from stock selection rather than sector allocation. In fact, some 75% of the Fund’s outperformance during the reporting period came from stock selection in the health-care, industrials and consumer discretionary sectors. Examples of these Fund holdings included Puma Biotechnology, Inc. and Lannet Co., Inc. in the health-care sector; TASER International, Inc. and Korn/Ferry International in the industrials sector; and Skechers U.S.A., Inc. in the consumer discretionary sector.
In terms of performance detractors for the Fund versus the Fund’s benchmark during the reporting period, the Fund’s modest overweight and stock selection within the information technology sector detracted less than half of 1%. Stocks held by the Fund in this sector that disappointed during the reporting period included Extreme Networks, Inc. and CommVault Systems, Inc.
Equity index futures were held in the Fund during the annual reporting period ended July 31, 2014.
Outlook and Positioning
Despite the small-cap sell-off in April through June 2014, valuations of small-cap stocks remain expensive versus their larger cousins. Despite their lofty valuations, as long as credit spreads remain tight and overall market volatility remains low, small caps are expected to perform in line with the market. A shift in trends for either of these indicators, however, would likely be accompanied by underperformance on the part of smaller stocks.
In regard to outperforming the Fund’s benchmark, however, we remain optimistic about the prospects for the portfolio. As with large-cap stocks, market correlations remain low, providing opportunities to potentially add value for investors. The inefficiencies and higher volatility of small-cap stocks provide additional
124
| Fund Commentary (con’t.) | Nationwide HighMark Small Cap Core Fund |
opportunities for active managers to potentially add value and more than offset small-cap stocks’ higher levels of volatility.
Subadviser:
HighMark Capital Management, Inc.
Portfolio Manager:
Derek Izuel
The Fund is subject to the risks of investing in equity securities and risks associated with investing in stocks of smaller companies. The Fund may invest in more-aggressive investments such as derivatives (many of which create investment leverage and are highly volatile), exchange-traded funds (ETFs) (shareholders will bear additional costs) and foreign securities (which are volatile, harder to price and less liquid than U.S. securities). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
125
| Fund Overview | Nationwide HighMark Small Cap Core Fund |
Objective
The Fund seeks long-term capital appreciation.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide HighMark Small Cap Core Fund (Institutional Service Class) returned 13.69%, outperforming its benchmark by 5.13% and the Lipper peer category median by 4.04%. |
| Ÿ | Approximately 75% of the Fund’s outperformance during the reporting period came from stock selection in the health-care, industrials and consumer discretionary sectors. |
| Ÿ | The Fund’s modest overweight and stock selection within the information technology sector detracted from relative Fund performance during the reporting period. |
Asset Allocation†
| Common Stocks | 97.4% | |||
| Other assets in excess of liabilities | 2.6% | |||
| 100.0% |
Top Industries††
| Real Estate Investment Trusts (REITs) | 10.6% | |||
| Health Care Equipment & Supplies | 7.0% | |||
| Semiconductors & Semiconductor Equipment | 6.6% | |||
| Banks | 6.0% | |||
| Software | 5.5% | |||
| Hotels, Restaurants & Leisure | 4.9% | |||
| Energy Equipment & Services | 4.8% | |||
| Professional Services | 4.2% | |||
| Biotechnology | 4.1% | |||
| Machinery | 3.5% | |||
| Other Industries | 42.8% | |||
| 100.0% |
Top Holdings††
| RF Micro Devices, Inc. | 2.5% | |||
| Graphic Packaging Holding Co. | 2.2% | |||
| Korn/Ferry International | 2.0% | |||
| Aspen Technology, Inc. | 2.0% | |||
| PNM Resources, Inc. | 1.8% | |||
| Align Technology, Inc. | 1.8% | |||
| West Pharmaceutical Services, Inc. | 1.7% | |||
| DCT Industrial Trust, Inc. | 1.7% | |||
| Extra Space Storage, Inc. | 1.6% | |||
| HFF, Inc., Class A | 1.6% | |||
| Other Holdings | 81.1% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
126
| Fund Performance | Nationwide HighMark Small Cap Core Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | Inception | ||||||||||||
| Class A1 | w/o SC2 | 13.39% | 19.22% | 5.03% | 3 | |||||||||
| w/ SC4 | 7.14% | 17.88% | 4.23% | 3 | ||||||||||
| Class C1 | w/o SC2 | 12.72% | 18.51% | 4.34% | 3 | |||||||||
| w/ SC5 | 11.72% | 18.51% | 4.34% | 3 | ||||||||||
| Institutional Service Class1,6,7 | 13.69% | 19.58% | 5.32% | 3 | ||||||||||
| Institutional Class6 | – | – | 9.86% | 8* | ||||||||||
| Russell 2000® Index | 8.56% | 16.56% | 6.21% | |||||||||||
| CPI | 1.99% | 2.04% | 2.05% | |||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | Since inception date of March 1, 2007. |
| 4 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 5 | 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. |
| 6 | Not subject to any SCs. |
| 7 | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 8 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.83% | 1.62% | ||||||
| Class C | 2.33% | 2.22% | ||||||
| Institutional Service Class | 1.58% | 1.37% | ||||||
| Institutional Class | 1.33% | 1.22% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
127
| Fund Performance (con’t.) | Nationwide HighMark Small Cap Core 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 Service Class shares of the Nationwide HighMark Small Cap Core Fund since inception* through 7/31/14 versus the Russell 2000® Index and the Consumer Price Index (CPI) for the same period. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
*The inception date for the Nationwide HighMark Small Cap Core Fund is 9/16/13. Performance prior to that date is based on the since-inception performance of the Fund’s predecessor fund.
128
| Shareholder Expense Example | Nationwide HighMark Small Cap Core 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide HighMark Small Cap July 31, 2014 | Beginning Account Value ($) | Ending 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,030.10 | 7.85 | 1.56 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,017.06 | 7.80 | 1.56 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,026.80 | 11.16 | 2.22 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,013.79 | 11.08 | 2.22 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,031.50 | 6.50 | 1.29 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.40 | 6.46 | 1.29 | |||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,031.80 | 6.15 | 1.22 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.74 | 6.11 | 1.22 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
129
Statement of Investments
July 31, 2014
Nationwide HighMark Small Cap Core Fund
| Common Stocks 97.4% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 1.4% |
| |||||||||
American Science & Engineering, Inc. | 9,210 | $ | 578,388 | |||||||
Taser International, Inc.* | 48,260 | 582,016 | ||||||||
|
| |||||||||
| 1,160,404 | ||||||||||
|
| |||||||||
| ||||||||||
Airlines 0.6% |
| |||||||||
Republic Airways Holdings, Inc.* | 53,960 | 536,362 | ||||||||
|
| |||||||||
| ||||||||||
Auto Components 1.5% | ||||||||||
Superior Industries International, Inc. | 39,350 | 736,239 | ||||||||
Tenneco, Inc.* | 4,020 | 256,074 | ||||||||
Tower International, Inc.* | 8,860 | 279,090 | ||||||||
|
| |||||||||
| 1,271,403 | ||||||||||
|
| |||||||||
| ||||||||||
Automobiles 0.4% | ||||||||||
Winnebago Industries, Inc.* | 13,390 | 314,665 | ||||||||
|
| |||||||||
| ||||||||||
Banks 5.8% | ||||||||||
First Interstate BancSystem, Inc. | 11,050 | 288,405 | ||||||||
Huntington Bancshares, Inc. | 54,160 | 531,851 | ||||||||
International Bancshares Corp. | 35,780 | 907,023 | ||||||||
PrivateBancorp, Inc. | 30,900 | 889,920 | ||||||||
Umpqua Holdings Corp. | 72,200 | 1,221,624 | ||||||||
Webster Financial Corp. | 25,300 | 725,351 | ||||||||
Wilshire Bancorp, Inc. | 39,140 | 368,699 | ||||||||
|
| |||||||||
| 4,932,873 | ||||||||||
|
| |||||||||
| ||||||||||
Biotechnology 4.0% | ||||||||||
Alkermes PLC* | 18,020 | 770,535 | ||||||||
Applied Genetic Technologies Corp.* | 11,700 | 187,200 | ||||||||
Isis Pharmaceuticals, Inc.* | 14,760 | 457,412 | ||||||||
Puma Biotechnology, Inc.* | 3,330 | 738,328 | ||||||||
Rigel Pharmaceuticals, Inc.* | 76,860 | 251,332 | ||||||||
Spectrum Pharmaceuticals, Inc.* | 87,300 | 614,592 | ||||||||
Sunesis Pharmaceuticals, Inc.* | 57,300 | 377,034 | ||||||||
|
| |||||||||
| 3,396,433 | ||||||||||
|
| |||||||||
| ||||||||||
Building Products 0.8% | ||||||||||
A.O. Smith Corp. | 4,380 | 204,546 | ||||||||
Insteel Industries, Inc. | 10,690 | 196,162 | ||||||||
Patrick Industries, Inc.* | 5,800 | 241,570 | ||||||||
|
| |||||||||
| 642,278 | ||||||||||
|
| |||||||||
| ||||||||||
Capital Markets 1.9% | ||||||||||
HFF, Inc., Class A | 38,690 | 1,313,912 | ||||||||
Investment Technology Group, Inc.* | 17,410 | 318,429 | ||||||||
|
| |||||||||
| 1,632,341 | ||||||||||
|
| |||||||||
| ||||||||||
Chemicals 0.8% | ||||||||||
Ferro Corp.* | 25,710 | 322,403 | ||||||||
Minerals Technologies, Inc. | 4,530 | 263,057 | ||||||||
Stepan Co. | 2,490 | 119,819 | ||||||||
|
| |||||||||
| 705,279 | ||||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Commercial Services & Supplies 0.7% | ||||||||||
Ennis, Inc. | 6,260 | $ | 88,767 | |||||||
Quad/Graphics, Inc. | 24,740 | 522,509 | ||||||||
|
| |||||||||
| 611,276 | ||||||||||
|
| |||||||||
| ||||||||||
Communications Equipment 1.6% | ||||||||||
Bel Fuse, Inc., Class B | 14,910 | 352,472 | ||||||||
Comtech Telecommunications Corp. | 21,380 | 722,644 | ||||||||
Novatel Wireless, Inc.* | 47,750 | 89,770 | ||||||||
ShoreTel, Inc.* | 28,000 | 173,040 | ||||||||
|
| |||||||||
| 1,337,926 | ||||||||||
|
| |||||||||
| ||||||||||
Construction & Engineering 1.0% | ||||||||||
Argan, Inc. | 7,230 | 245,097 | ||||||||
Dycom Industries, Inc.* | 10,180 | 286,261 | ||||||||
EMCOR Group, Inc. | 5,600 | 229,208 | ||||||||
Pike Corp.* | 10,180 | 82,051 | ||||||||
|
| |||||||||
| 842,617 | ||||||||||
|
| |||||||||
| ||||||||||
Construction Materials 0.8% | ||||||||||
Eagle Materials, Inc. | 4,070 | 369,637 | ||||||||
United States Lime & Minerals, Inc. | 4,630 | 266,781 | ||||||||
|
| |||||||||
| 636,418 | ||||||||||
|
| |||||||||
| ||||||||||
Containers & Packaging 2.4% | ||||||||||
AEP Industries, Inc.* | 4,680 | 190,710 | ||||||||
Graphic Packaging Holding Co.* | 152,500 | 1,830,000 | ||||||||
|
| |||||||||
| 2,020,710 | ||||||||||
|
| |||||||||
| ||||||||||
Diversified Consumer Services 0.6% | ||||||||||
Capella Education Co. | 8,090 | 517,436 | ||||||||
|
| |||||||||
| ||||||||||
Electric Utilities 2.0% | ||||||||||
El Paso Electric Co. | 5,850 | 215,573 | ||||||||
PNM Resources, Inc. | 58,840 | 1,509,246 | ||||||||
|
| |||||||||
| 1,724,819 | ||||||||||
|
| |||||||||
| ||||||||||
Electrical Equipment 0.3% | ||||||||||
Powell Industries, Inc. | 4,330 | 252,915 | ||||||||
|
| |||||||||
| ||||||||||
Electronic Equipment, Instruments & Components 0.3% |
| |||||||||
Mercury Systems, Inc.* | 19,700 | 217,685 | ||||||||
|
| |||||||||
| ||||||||||
Energy Equipment & Services 4.6% | ||||||||||
Dril-Quip, Inc.* | 9,570 | 964,369 | ||||||||
Forum Energy Technologies, Inc.* | 28,810 | 959,085 | ||||||||
Helix Energy Solutions Group, Inc.* | 46,220 | 1,175,374 | ||||||||
Pioneer Energy Services Corp.* | 57,210 | 841,559 | ||||||||
|
| |||||||||
| 3,940,387 | ||||||||||
|
| |||||||||
| ||||||||||
Food & Staples Retailing 1.1% | ||||||||||
SUPERVALU, Inc.* | 103,740 | 951,296 | ||||||||
|
| |||||||||
130
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Small Cap Core Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Food Products 0.4% | ||||||||||
Seaboard Corp.* | 120 | $ | 342,240 | |||||||
|
| |||||||||
| ||||||||||
Health Care Equipment & Supplies 6.8% | ||||||||||
Align Technology, Inc.* | 26,930 | 1,459,875 | ||||||||
AngioDynamics, Inc.* | 12,320 | 179,872 | ||||||||
DexCom, Inc.* | 18,730 | 705,747 | ||||||||
Greatbatch, Inc.* | 4,780 | 236,658 | ||||||||
Lumenis Ltd.*(a) | 2 | 18 | ||||||||
NuVasive, Inc.* | 25,400 | 949,452 | ||||||||
OraSure Technologies, Inc.* | 24,380 | 200,647 | ||||||||
SurModics, Inc.* | 9,980 | 189,520 | ||||||||
Thoratec Corp.* | 13,740 | 446,550 | ||||||||
West Pharmaceutical Services, Inc. | 35,020 | 1,427,065 | ||||||||
|
| |||||||||
| 5,795,404 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Providers & Services 2.5% | ||||||||||
CorVel Corp.* | 13,180 | 530,890 | ||||||||
Cross Country Healthcare, Inc.* | 32,320 | 232,381 | ||||||||
Magellan Health, Inc.* | 4,630 | 266,688 | ||||||||
Select Medical Holdings Corp. | 68,720 | 1,067,909 | ||||||||
|
| |||||||||
| 2,097,868 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Technology 1.4% | ||||||||||
MedAssets, Inc.* | 39,140 | 831,334 | ||||||||
Omnicell, Inc.* | 11,450 | 313,730 | ||||||||
|
| |||||||||
| 1,145,064 | ||||||||||
|
| |||||||||
| ||||||||||
Hotels, Restaurants & Leisure 4.8% | ||||||||||
DineEquity, Inc. | 7,740 | 627,327 | ||||||||
Jack in the Box, Inc. | 15,470 | 884,729 | ||||||||
Multimedia Games Holding Co., Inc.* | 13,640 | 328,997 | ||||||||
Papa John’s International, Inc. | 26,160 | 1,090,611 | ||||||||
Penn National Gaming, Inc.* | 82,000 | 859,360 | ||||||||
Six Flags Entertainment Corp. | 6,720 | 256,838 | ||||||||
|
| |||||||||
| 4,047,862 | ||||||||||
|
| |||||||||
| ||||||||||
Household Durables 0.4% | ||||||||||
Libbey, Inc.* | 13,950 | 363,258 | ||||||||
|
| |||||||||
| ||||||||||
Household Products 0.9% | ||||||||||
Spectrum Brands Holdings, Inc. | 9,620 | 802,308 | ||||||||
|
| |||||||||
| ||||||||||
Independent Power and Renewable Electricity Producers 1.1% |
| |||||||||
Dynegy, Inc.* | 34,300 | 910,665 | ||||||||
|
| |||||||||
| ||||||||||
Information Technology Services 0.6% | ||||||||||
Acxiom Corp.* | 8,550 | 156,636 | ||||||||
MAXIMUS, Inc. | 9,060 | 374,722 | ||||||||
|
| |||||||||
| 531,358 | ||||||||||
|
| |||||||||
| ||||||||||
Insurance 1.8% | ||||||||||
Navigators Group, Inc. (The)* | 13,080 | 795,264 | ||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Insurance (continued) | ||||||||||
OneBeacon Insurance Group Ltd., Class A | 29,620 | $ | 438,376 | |||||||
United Fire Group, Inc. | 10,490 | 296,447 | ||||||||
|
| |||||||||
| 1,530,087 | ||||||||||
|
| |||||||||
| ||||||||||
Internet Software & Services 1.9% | ||||||||||
comScore, Inc.* | 13,640 | 493,631 | ||||||||
Constant Contact, Inc.* | 7,130 | 221,957 | ||||||||
Digital River, Inc.* | 18,400 | 262,936 | ||||||||
Monster Worldwide, Inc.* | 30,740 | 199,810 | ||||||||
XO Group, Inc.* | 40,310 | 450,263 | ||||||||
|
| |||||||||
| 1,628,597 | ||||||||||
|
| |||||||||
| ||||||||||
Life Sciences Tools & Services 0.2% | ||||||||||
Pacific Biosciences of California, Inc.* | 32,680 | 149,348 | ||||||||
|
| |||||||||
| ||||||||||
Machinery 3.4% | ||||||||||
Columbus McKinnon Corp. | 12,220 | 284,115 | ||||||||
Middleby Corp. (The)* | 4,200 | 306,012 | ||||||||
Mueller Industries, Inc. | 38,890 | 1,082,309 | ||||||||
Mueller Water Products, Inc., Class A | 38,290 | 296,747 | ||||||||
Rexnord Corp.* | 22,800 | 613,548 | ||||||||
Xerium Technologies, Inc.* | 24,740 | 321,620 | ||||||||
|
| |||||||||
| 2,904,351 | ||||||||||
|
| |||||||||
| ||||||||||
Media 1.9% | ||||||||||
E.W. Scripps Co. (The), Class A* | 18,070 | 391,758 | ||||||||
Entravision Communications Corp., Class A | 38,967 | 217,825 | ||||||||
Live Nation Entertainment, Inc.* | 44,690 | 1,037,255 | ||||||||
|
| |||||||||
| 1,646,838 | ||||||||||
|
| |||||||||
| ||||||||||
Metals & Mining 0.7% | ||||||||||
SunCoke Energy, Inc.* | 9,080 | 207,296 | ||||||||
Worthington Industries, Inc. | 10,180 | 389,385 | ||||||||
|
| |||||||||
| 596,681 | ||||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 1.1% | ||||||||||
Ardmore Shipping Corp. | 16,400 | 215,332 | ||||||||
Clayton Williams Energy, Inc.* | 1,780 | 189,410 | ||||||||
REX American Resources Corp.* | 3,260 | 274,981 | ||||||||
Ring Energy, Inc.* | 12,100 | 209,330 | ||||||||
|
| |||||||||
| 889,053 | ||||||||||
|
| |||||||||
| ||||||||||
Paper & Forest Products 1.3% | ||||||||||
Boise Cascade Co.* | 13,340 | 375,521 | ||||||||
Deltic Timber Corp. | 5,090 | 310,999 | ||||||||
Neenah Paper, Inc. | 9,060 | 449,557 | ||||||||
|
| |||||||||
| 1,136,077 | ||||||||||
|
| |||||||||
| ||||||||||
Personal Products 0.2% | ||||||||||
Inter Parfums, Inc. | 7,230 | 188,920 | ||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 0.5% | ||||||||||
Nektar Therapeutics* | 18,940 | 199,817 | ||||||||
131
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Small Cap Core Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Pharmaceuticals (continued) | ||||||||||
Relypsa, Inc.* | 5,090 | $ | 115,085 | |||||||
XenoPort, Inc.* | 30,390 | 130,373 | ||||||||
|
| |||||||||
| 445,275 | ||||||||||
|
| |||||||||
| ||||||||||
Professional Services 4.1% | ||||||||||
Barrett Business Services, Inc. | 11,150 | 636,442 | ||||||||
Huron Consulting Group, Inc.* | 4,890 | 295,552 | ||||||||
Korn/Ferry International* | 56,200 | 1,653,404 | ||||||||
Resources Connection, Inc. | 57,620 | 870,062 | ||||||||
|
| |||||||||
| 3,455,460 | ||||||||||
|
| |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 10.4% |
| |||||||||
Anworth Mortgage Asset Corp. | 40,930 | 207,924 | ||||||||
Cedar Realty Trust, Inc. | 34,260 | 215,838 | ||||||||
Colony Financial, Inc. | 50,190 | 1,111,708 | ||||||||
CYS Investments, Inc. | 22,700 | 201,576 | ||||||||
DCT Industrial Trust, Inc. | 181,820 | 1,423,651 | ||||||||
Extra Space Storage, Inc. | 25,500 | 1,319,115 | ||||||||
First Industrial Realty Trust, Inc. | 59,350 | 1,071,268 | ||||||||
Healthcare Realty Trust, Inc. | 8,760 | 216,372 | ||||||||
Lexington Realty Trust | 34,610 | 378,633 | ||||||||
PennyMac Mortgage Investment Trust | 9,670 | 207,035 | ||||||||
Post Properties, Inc. | 1,530 | 82,926 | ||||||||
Potlatch Corp. | 24,940 | 1,030,022 | ||||||||
Sovran Self Storage, Inc. | 5,290 | 405,849 | ||||||||
Sunstone Hotel Investors, Inc. | 66,170 | 938,952 | ||||||||
|
| |||||||||
| 8,810,869 | ||||||||||
|
| |||||||||
| ||||||||||
Road & Rail 1.9% | ||||||||||
Old Dominion Freight Line, Inc.* | 8,140 | 516,727 | ||||||||
Saia, Inc.* | 23,160 | 1,057,254 | ||||||||
|
| |||||||||
| 1,573,981 | ||||||||||
|
| |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment 6.4% |
| |||||||||
Entropic Communications, Inc.* | 155,300 | 433,287 | ||||||||
FormFactor, Inc.* | 56,646 | 382,360 | ||||||||
Integrated Device Technology, Inc.* | 37,360 | 536,490 | ||||||||
Intermolecular, Inc.* | 22,350 | 49,841 | ||||||||
Intersil Corp., Class A | 52,228 | 670,085 | ||||||||
Kulicke & Soffa Industries, Inc.* | 52,430 | 714,097 | ||||||||
Lattice Semiconductor Corp.* | 84,832 | 580,251 | ||||||||
RF Micro Devices, Inc.* | 185,690 | 2,072,300 | ||||||||
|
| |||||||||
| 5,438,711 | ||||||||||
|
| |||||||||
| ||||||||||
Software 5.3% | ||||||||||
Aspen Technology, Inc.* | 37,720 | 1,638,557 | ||||||||
Glu Mobile, Inc.* | 29,500 | 165,495 | ||||||||
Model N, Inc.* | 29,730 | 292,543 | ||||||||
Pegasystems, Inc. | 28,710 | 613,533 | ||||||||
PTC, Inc.* | 5,290 | 190,229 | ||||||||
Rosetta Stone, Inc.* | 11,760 | 113,366 | ||||||||
SS&C Technologies Holdings, Inc.* | 5,290 | 229,110 | ||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Software (continued) | ||||||||||
Telenav, Inc.* | 52,020 | $ | 258,539 | |||||||
TIBCO Software, Inc.* | 14,150 | 273,095 | ||||||||
TiVo, Inc.* | 19,800 | 266,508 | ||||||||
Tyler Technologies, Inc.* | 3,370 | 305,760 | ||||||||
Varonis Systems, Inc.* | 9,160 | 193,093 | ||||||||
|
| |||||||||
| 4,539,828 | ||||||||||
|
| |||||||||
| ||||||||||
Specialty Retail 1.6% | ||||||||||
Brown Shoe Co., Inc. | 9,820 | 276,826 | ||||||||
Citi Trends, Inc.* | 4,630 | 93,294 | ||||||||
Lithia Motors, Inc., Class A | 4,780 | 424,703 | ||||||||
New York & Co., Inc.* | 54,670 | 184,238 | ||||||||
Pier 1 Imports, Inc. | 14,510 | 218,521 | ||||||||
Stein Mart, Inc. | 13,640 | 177,047 | ||||||||
|
| |||||||||
| 1,374,629 | ||||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 0.7% |
| |||||||||
QLogic Corp.* | 67,090 | 610,519 | ||||||||
|
| |||||||||
| ||||||||||
Textiles, Apparel & Luxury Goods 1.5% |
| |||||||||
Skechers U.S.A., Inc., Class A* | 25,090 | 1,308,945 | ||||||||
|
| |||||||||
| ||||||||||
Thrifts & Mortgage Finance 0.5% | ||||||||||
Tree.com, Inc.* | 9,620 | 245,502 | ||||||||
WSFS Financial Corp. | 3,006 | 215,200 | ||||||||
|
| |||||||||
| 460,702 | ||||||||||
|
| |||||||||
| ||||||||||
Wireless Telecommunication Services 0.5% |
| |||||||||
RingCentral, Inc., Class A* | 27,590 | 411,919 | ||||||||
|
| |||||||||
Total Investments | 82,782,340 | |||||||||
Other assets in excess of liabilities — 2.6% |
| 2,242,786 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 85,025,126 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | Fair valued security. |
| (b) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| Ltd. | Limited |
| PLC | Public Limited Company |
| REIT | Real Estate Investment Trust |
132
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Small Cap Core Fund (Continued)
At July 31, 2014, 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) | ||||||||||
| 21 | Russell 2000 Mini Future | 09/19/14 | $ | 2,345,070 | $ | (101,148 | ) | |||||||
|
|
|
| |||||||||||
The accompanying notes are an integral part of these financial statements.
133
Statement of Assets and Liabilities
July 31, 2014
Nationwide Small Cap Core Fund | ||||||
Assets: | ||||||
Investments, at value (cost $66,174,419) | $ | 82,782,340 | ||||
Cash | 2,468,463 | |||||
Dividends receivable | 24,511 | |||||
Receivable for investments sold | 5,649,628 | |||||
Receivable for capital shares issued | 57,487 | |||||
Receivable for variation margin on futures contracts | 68,770 | |||||
Prepaid expenses | 11,748 | |||||
|
| |||||
Total Assets | 91,062,947 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 5,835,786 | |||||
Payable for capital shares redeemed | 48,089 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 70,629 | |||||
Fund administration fees | 8,993 | |||||
Distribution fees | 6,083 | |||||
Administrative servicing fees | 33,428 | |||||
Accounting and transfer agent fees | 2,653 | |||||
Trustee fees | 206 | |||||
Custodian fees | 329 | |||||
Compliance program costs (Note 3) | 793 | |||||
Professional fees | 23,113 | |||||
Printing fees | 4,179 | |||||
Other | 3,540 | |||||
|
| |||||
Total Liabilities | 6,037,821 | |||||
|
| |||||
Net Assets | $ | 85,025,126 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 84,230,548 | ||||
Accumulated distributions in excess of net investment loss | (247,837 | ) | ||||
Accumulated net realized losses from investments and futures transactions | (15,464,358 | ) | ||||
Net unrealized appreciation/(depreciation) from investments | 16,607,921 | |||||
Net unrealized appreciation/(depreciation) from futures contracts (Note 2) | (101,148 | ) | ||||
|
| |||||
Net Assets | $ | 85,025,126 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 11,588,588 | ||||
Class C Shares | 4,030,378 | |||||
Institutional Service Class Shares | 69,395,173 | |||||
Institutional Class Shares | 10,987 | |||||
|
| |||||
Total | $ | 85,025,126 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 408,615 | |||||
Class C Shares | 148,184 | |||||
Institutional Service Class Shares | 2,408,432 | |||||
Institutional Class Shares | 381 | |||||
|
| |||||
Total | 2,965,612 | |||||
|
| |||||
134
Statement of Assets and Liabilities (Continued)
July 31, 2014
Nationwide Small Cap Core Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 28.36 | ||||
Class C Shares (b) | $ | 27.20 | ||||
Institutional Service Class Shares | $ | 28.81 | ||||
Institutional Class Shares | $ | 28.84 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 30.09 | ||||
|
| |||||
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 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.
135
Statement of Operations
For the Year Ended July 31, 2014
Nationwide HighMark Small Cap Core Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 719,750 | ||||
Interest income | 27 | |||||
Foreign tax withholding | (1,418 | ) | ||||
|
| |||||
Total Income | 718,359 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 757,315 | |||||
Fund administration fees | 117,150 | |||||
Distribution fees Class A | 29,408 | |||||
Distribution fees Class C | 43,122 | |||||
Administrative servicing fees Class A | 12,706 | |||||
Administrative servicing fees Class C | 1,166 | |||||
Administrative servicing fees Institutional Service Class (a) | 60,840 | |||||
Registration and filing fees | 44,634 | |||||
Professional fees | 33,609 | |||||
Printing fees | 14,940 | |||||
Trustee fees | 2,002 | |||||
Custodian fees | 3,151 | |||||
Accounting and transfer agent fees | 14,377 | |||||
Compliance program costs (Note 3) | 1,420 | |||||
Other | 12,649 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 1,148,489 | |||||
|
| |||||
Earnings credit (Note 5) | (45 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (1,426 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (a) | (7,145 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (11,750 | ) | ||||
|
| |||||
Net Expenses | 1,128,123 | |||||
|
| |||||
NET INVESTMENT LOSS | (409,764 | ) | ||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 8,550,857 | |||||
Net realized gains from futures transactions (Note 2) | 377,591 | |||||
|
| |||||
Net realized gains from investments and futures transactions | 8,928,448 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments | 1,270,806 | |||||
Net change in unrealized appreciation/(depreciation) from futures contracts (Note 2) | (116,978 | ) | ||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments and futures contracts | 1,153,828 | |||||
|
| |||||
Net realized/unrealized gains from investments and futures transactions | 10,082,276 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 9,672,512 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
136
Statements of Changes in Net Assets
Nationwide HighMark Small Cap Core Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment loss | $ | (409,764 | ) | $ | (20,351 | ) | ||||||
Net realized gains from investments and futures transactions | 8,928,448 | 12,871,094 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments and futures contracts | 1,153,828 | 8,055,058 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 9,672,512 | 20,905,801 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | – | – | ||||||||||
Class C | – | – | ||||||||||
Institutional Service Class (a) | – | (18,837 | ) | |||||||||
Institutional Class | – | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | – | (18,837 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 1,509,324 | (8,116,338 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets | 11,181,836 | 12,770,626 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 73,843,290 | 61,072,664 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 85,025,126 | $ | 73,843,290 | ||||||||
|
|
|
| |||||||||
Accumulated distributions in excess of net investment income at end of year | $ | (247,837 | ) | $ | (17,330 | ) | ||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 486,019 | $ | 630,988 | (c) | |||||||
Dividends reinvested | – | – | ||||||||||
Cost of shares redeemed | (1,911,642 | ) | (2,928,406 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (1,425,623 | ) | (2,297,418 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 90,409 | 364,794 | (c) | |||||||||
Dividends reinvested | – | – | ||||||||||
Cost of shares redeemed | (969,627 | ) | (858,039 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (879,218 | ) | (493,245 | ) | ||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | 17,436,398 | 23,986,569 | (c) | |||||||||
Dividends reinvested | – | 9,042 | ||||||||||
Cost of shares redeemed | (13,632,233 | ) | (29,321,286 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 3,804,165 | (5,325,675 | ) | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 10,000 | (b) | – | |||||||||
Dividends reinvested | – | (b) | – | |||||||||
Cost of shares redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 10,000 | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 1,509,324 | $ | (8,116,338 | ) | |||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
| (c) | Includes redemption fees. See Note 4 for further information. |
137
Statements of Changes in Net Assets (Continued)
Nationwide HighMark Small Cap Core Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 17,493 | 28,038 | ||||||||||
Reinvested | – | – | ||||||||||
Redeemed | (70,553 | ) | (138,488 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (53,060 | ) | (110,450 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 3,428 | 17,247 | ||||||||||
Reinvested | – | – | ||||||||||
Redeemed | (37,315 | ) | (41,869 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (33,887 | ) | (24,622 | ) | ||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(a) | ||||||||||||
Issued | 623,840 | 1,145,861 | ||||||||||
Reinvested | – | 447 | ||||||||||
Redeemed | (499,452 | ) | (1,277,868 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 124,388 | (131,560 | ) | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 381 | (b) | – | |||||||||
Reinvested | – | (b) | – | |||||||||
Redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 381 | (b) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | 37,822 | (266,632 | ) | |||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
138
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide HighMark Small Cap Core 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)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income (Loss) to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 25.02 | (0.19 | ) | 3.53 | 3.34 | – | – | – | $ | 28.36 | 13.35% | (h) | $ | 11,588,588 | 1.59% | (0.69% | ) | 1.62% | 49.64% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 19.00 | (0.05 | ) | 6.07 | 6.02 | – | – | – | $ | 25.02 | 31.69% | $ | 11,549,088 | 1.62% | (0.22% | ) | 1.80% | 77.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 19.09 | (0.05 | ) | (0.04 | ) | (0.09 | ) | – | – | – | $ | 19.00 | (0.52% | ) | $ | 10,869,386 | 1.62% | (0.27% | ) | 1.96% | 106.00% | (i) | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 14.47 | (0.11 | ) | 4.73 | 4.62 | – | – | – | $ | 19.09 | 32.00% | $ | 536,163 | 1.62% | (0.62% | ) | 2.01% | 67.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.80 | (0.08 | ) | 2.78 | 2.70 | (0.03 | ) | (0.03 | ) | – | $ | 14.47 | 22.86% | $ | 309,823 | 1.60% | (0.61% | ) | 2.04% | 78.00% | |||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 24.14 | (0.35 | ) | 3.41 | 3.06 | – | – | – | $ | 27.20 | 12.68% | (h) | $ | 4,030,378 | 2.22% | (1.32% | ) | 2.29% | 49.64% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 18.45 | (0.17 | ) | 5.86 | 5.69 | – | – | – | $ | 24.14 | 30.84% | $ | 4,395,523 | 2.22% | (0.82% | ) | 2.30% | 77.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 18.65 | (0.16 | ) | (0.04 | ) | (0.20 | ) | – | – | – | $ | 18.45 | (1.07% | ) | $ | 3,812,858 | 2.22% | (0.87% | ) | 2.46% | 106.00% | (i) | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 14.22 | (0.22 | ) | 4.65 | 4.43 | – | – | – | $ | 18.65 | 31.15% | $ | 216,583 | 2.22% | (1.22% | ) | 2.51% | 67.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.65 | (0.16 | ) | 2.73 | 2.57 | – | – | – | $ | 14.22 | 22.17% | $ | 77,175 | 2.20% | (1.21% | ) | 2.54% | 78.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 25.35 | (0.12 | ) | 3.58 | 3.46 | – | – | – | $ | 28.81 | 13.65% | (h) | $ | 69,395,173 | 1.33% | (0.43% | ) | 1.35% | 49.64% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 19.20 | 0.01 | 6.15 | 6.16 | (0.01 | ) | (0.01 | ) | – | $ | 25.35 | 32.07% | $ | 57,898,679 | 1.34% | 0.06% | 1.56% | 77.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 19.24 | 0.01 | (0.05 | ) | (0.04 | ) | – | – | – | $ | 19.20 | (0.21% | ) | $ | 46,390,420 | 1.33% | 0.03% | 1.71% | 106.00% | (i) | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 14.54 | (0.06 | ) | 4.76 | 4.70 | – | – | – | $ | 19.24 | 32.33% | $ | 27,136,559 | 1.31% | (0.31% | ) | 1.76% | 67.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.85 | (0.04 | ) | 2.79 | 2.75 | (0.06 | ) | (0.06 | ) | – | $ | 14.54 | 23.32% | $ | 23,527,050 | 1.30% | (0.30% | ) | 1.79% | 78.00% | |||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(k) | $ | 26.26 | (0.08 | ) | 2.66 | 2.58 | – | – | – | $ | 28.84 | 9.82% | (h) | $ | 10,987 | 1.22% | (0.34% | ) | 1.25% | 49.64% | ||||||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset values for financial reporting purposes and the returns based upon those net asset values may differ from the net asset values and returns for shareholder transactions. |
| (i) | Excludes merger activity. |
| (j) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (k) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
139
| Fund Commentary | Nationwide HighMark Value Fund |
For the annual period ended July 31, 2014, the Nationwide HighMark Value Fund (Institutional Service Class) returned 13.76%* versus 16.94% for its primary benchmark, the S&P 500® Index, and 15.47% for its secondary benchmark, the Russell 1000® Value Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Large-Cap Core Funds (consisting of 901 funds as of July 31, 2014) was 15.60% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
Market Environment
The year ended July 31, 2014 was characterized by a unique period of Federal Reserve intervention to support the economy and capital markets with highly aggressive monetary policies designed to promote risk-taking and economic growth. The Fed’s actions created distortions in the capital markets by facilitating easy financing for lower-credit-quality companies; as a result, low-quality stocks outperformed high-quality stocks. At the same time, near-zero interest rates led investors and portfolio managers to flock to higher-yielding companies as equities became viewed as bond surrogates.
The Fund’s relative value strategy invests with a long-term orientation favoring higher-quality companies that are under-earning their potential and possess strong free cash flow and the ability to self-finance. As a result, the portfolio’s holdings did not benefit to the same extent as did lower-quality and higher-yielding stocks during the reporting period. The Fund’s investment process does not look to buy the highest-yielding securities, but instead focuses on companies with strong free cash flow that gives them the financial flexibility to grow dividends over time, buy back stock, pay down debt, and invest to grow the business or make acquisitions. We believe that the Fund’s process should help position the portfolio to outperform as the economy improves and interest rates normalize.
Portfolio Performance
During the 12 months ended July 31, 2014, the Fund benefited from its overweighting in the information technology sector and its underweighting in the utilities sector. In the information technology sector, the Fund’s overweights in Microsoft Corp., Oracle Corp. and Western Digital Corp. added value and somewhat offset the detraction from Fund performance created by our decision not to hold the information technology stock Intel Corp. The Fund also saw a positive contribution to its performance versus the Russell 1000 Value Index benchmark during the reporting period due to stock selection in the consumer discretionary sector, with holdings in companies including Comcast Corp. and DIRECTV performing well.
Detractors from Fund performance during the reporting period included the Fund’s stock selection in the consumer staples and industrials sectors. In the industrials sector, Fund holdings in United Technologies Corp. and Southwest Airlines Co. did not meet our expectations. In addition, not holding a position in the Fund in consumer staples names CVS/Caremark Corp., Walgreen Co. and Safeway Inc. detracted from Fund performance versus the Fund’s benchmark.
Derivatives were not used in the Fund during the annual reporting period ended July 31, 2014.
Outlook and Positioning
The portfolio is positioned in companies that offer the potential for high and improving returns on capital and strong free cash flow yields to help improve financial flexibility in times of stress, regardless of the macroeconomic environment, while avoiding over-leveraged balance sheet firms. We focus on company fundamentals and issues to identify undervalued stocks with low expectations that are mispriced due to temporary factors.
We believe these types of companies should outperform when the U.S. equity market returns to an environment that is not dictated by Fed policies that have forced investors to scramble for yield. The Fund’s positioning is expected to benefit as the economically sensitive cyclical
140
| Fund Commentary (con’t.) | Nationwide HighMark Value Fund |
sectors of the market respond to a normalizing economy and normalization of interest rates.
Subadviser:
HighMark Capital Management, Inc.
Portfolio Managers:
Derek Izuel, Todd Lowenstein and Keith Stribling
The Fund is subject to the risks of investing in equity securities and risks associated with investing in stocks of mid-sized companies. Value funds may underperform other funds that use different investing styles. 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). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
141
| Fund Overview | Nationwide HighMark Value Fund |
Objective
The Fund seeks long-term capital growth; current income is a secondary objective.
Highlights
| Ÿ | The Nationwide HighMark Value Fund (Institutional Service Class) returned 13.76% for the annual reporting period ended July 31, 2014, underperforming the primary benchmark by 3.18% and the Lipper peer group median by 1.84%. |
| Ÿ | The Fund’s relative value strategy invests with a long-term orientation favoring higher-quality companies that are under-earning their potential and possess strong free cash flow and the ability to self-finance. As a result, the portfolio’s holdings did not benefit to the same extent as did lower-quality and higher-yielding stocks during the reporting period. |
| Ÿ | We believe that the Fund’s investment process should help position the portfolio to outperform as the economy improves and interest rates normalize. |
Asset Allocation†
| Common Stocks | 98.2% | |||
| Repurchase Agreement | 0.9% | |||
| Preferred Stock | 0.8% | |||
| Mutual Fund | 0.1% | |||
| Liabilities in excess of other assets†† | 0.0% | |||
| 100.0% |
Top Industries†††
| Oil, Gas & Consumable Fuels | 10.3% | |||
| Banks | 9.5% | |||
| Capital Markets | 8.3% | |||
| Media | 5.9% | |||
| Health Care Providers & Services | 4.9% | |||
| Pharmaceuticals | 4.6% | |||
| Software | 3.9% | |||
| Household Products | 3.8% | |||
| Machinery | 3.4% | |||
| Aerospace & Defense | 3.3% | |||
| Other Industries* | 42.1% | |||
| 100.0% |
Top Holdings†††
| JPMorgan Chase & Co. | 4.1% | |||
| Chevron Corp. | 3.7% | |||
| Pfizer, Inc. | 3.4% | |||
| Procter & Gamble Co. (The) | 3.1% | |||
| Citigroup, Inc. | 2.9% | |||
| Oracle Corp. | 2.3% | |||
| Goldman Sachs Group, Inc. (The) | 2.2% | |||
| Verizon Communications, Inc. | 2.1% | |||
CapitalOne Financial Corp. | 2.1% | |||
| Suncor Energy, Inc. | 2.1% | |||
| Other Holdings* | 72.0% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Amount rounds to less than 0.1%. |
| ††† | Percentages indicated are based upon total investments as of July 31, 2014. |
| * | For purposes of listing top industries and top holdings, the repurchase agreement is included as part of Other. |
142
| Fund Performance | Nationwide HighMark Value Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 13.45% | 15.17% | 7.13% | – | |||||||||||||
| w/ SC3 | 7.23% | 13.86% | 6.53% | – | ||||||||||||||
| Class C1 | w/o SC2 | 12.72% | 14.48% | 6.49% | – | |||||||||||||
| w/ SC4 | 11.72% | 14.48% | 6.49% | – | ||||||||||||||
| Class U5 | 13.87% | 15.55% | 7.45% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 13.76% | 15.47% | 7.41% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 9.77% | 7* | |||||||||||||
| S&P 500® Index | 16.94% | 16.79% | 8.00% | – | ||||||||||||||
| Russell 1000® Value Index | 15.47% | 16.97% | 7.99% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Expense Ratio* | ||||
| Class A | 1.25% | |||
| Class C | 1.81% | |||
| Class U | 0.75% | |||
| Institutional Service Class | 1.00% | |||
| Institutional Class | 0.75% | |||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). Please see the Fund’s most recent prospectus for details. |
143
| Fund Performance (con’t.) | Nationwide HighMark Value 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 Service Class shares of the Nationwide HighMark Value Fund versus the S&P 500® Index, the Russell 1000® Value Index and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
144
| Shareholder Expense Example | Nationwide HighMark Value 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide HighMark Value Fund July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,080.30 | 5.21 | 1.01 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,019.79 | 5.06 | 1.01 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,075.90 | 9.11 | 1.77 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,016.02 | 8.85 | 1.77 | |||||||
| Class U Shares | Actual | (a) | 1,000.00 | 1,081.90 | 3.72 | 0.72 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,021.22 | 3.61 | 0.72 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,082.00 | 3.97 | 0.77 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,020.98 | 3.86 | 0.77 | |||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,081.30 | 3.72 | 0.72 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,021.22 | 3.61 | 0.72 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
145
Statement of Investments
July 31, 2014
Nationwide HighMark Value Fund
| Common Stocks 98.2% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 3.3% |
| |||||||||
Airbus Group NV | 87,160 | $ | 5,057,041 | |||||||
Raytheon Co. | 33,650 | 3,054,410 | ||||||||
United Technologies Corp. | 31,160 | 3,276,474 | ||||||||
|
| |||||||||
| 11,387,925 | ||||||||||
|
| |||||||||
| ||||||||||
Air Freight & Logistics 1.6% | ||||||||||
United Parcel Service, Inc., Class B | 55,980 | 5,435,098 | ||||||||
|
| |||||||||
| ||||||||||
Auto Components 1.2% | ||||||||||
TRW Automotive Holdings Corp.* | 40,190 | 4,111,035 | ||||||||
|
| |||||||||
| ||||||||||
Banks 9.5% | ||||||||||
BB&T Corp. | 97,145 | 3,596,308 | ||||||||
CIT Group, Inc. | 100,665 | 4,943,658 | ||||||||
Citigroup, Inc. | 203,820 | 9,968,836 | ||||||||
JPMorgan Chase & Co. | 242,190 | 13,967,098 | ||||||||
|
| |||||||||
| 32,475,900 | ||||||||||
|
| |||||||||
| ||||||||||
Beverages 1.8% | ||||||||||
Carlsberg A/S, ADR-DK | 324,600 | 6,206,352 | ||||||||
|
| |||||||||
| ||||||||||
Capital Markets 8.3% | ||||||||||
Bank of New York Mellon Corp. (The) | 125,020 | 4,880,781 | ||||||||
Blackstone Group LP (The) | 94,730 | 3,095,776 | ||||||||
Franklin Resources, Inc. | 58,440 | 3,164,526 | ||||||||
Goldman Sachs Group, Inc. (The) | 44,100 | 7,623,567 | ||||||||
Lazard Ltd., Class A | 75,705 | 3,959,372 | ||||||||
UBS AG REG* | 321,495 | 5,520,069 | ||||||||
|
| |||||||||
| 28,244,091 | ||||||||||
|
| |||||||||
| ||||||||||
Chemicals 0.9% | ||||||||||
Mosaic Co. (The) | 67,330 | 3,104,586 | ||||||||
|
| |||||||||
| ||||||||||
Communications Equipment 1.6% | ||||||||||
QUALCOMM, Inc. | 72,185 | 5,320,035 | ||||||||
|
| |||||||||
| ||||||||||
Construction & Engineering 0.7% | ||||||||||
Chicago Bridge & Iron Co. NV | 40,890 | 2,425,595 | ||||||||
|
| |||||||||
| ||||||||||
Consumer Finance 2.1% | ||||||||||
Capital One Financial Corp. | 88,675 | 7,053,210 | ||||||||
|
| |||||||||
| ||||||||||
Diversified Financial Services 2.9% | ||||||||||
Intercontinental Exchange, Inc. | 33,250 | 6,391,315 | ||||||||
Pargesa Holding SA-Bearer Shares | 42,660 | 3,610,945 | ||||||||
|
| |||||||||
| 10,002,260 | ||||||||||
|
| |||||||||
| ||||||||||
Diversified Telecommunication Services 2.1% |
| |||||||||
Verizon Communications, Inc. | 142,970 | 7,208,547 | ||||||||
|
| |||||||||
| ||||||||||
Electrical Equipment 1.3% | ||||||||||
Eaton Corp. PLC | 65,160 | 4,425,667 | ||||||||
|
| |||||||||
| Common Stocks 98.2% (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Electronic Equipment, Instruments & Components 1.1% |
| |||||||||
Hitachi Ltd., ADR-JP | 49,200 | $ | 3,892,212 | |||||||
|
| |||||||||
| ||||||||||
Energy Equipment & Services 1.7% | ||||||||||
Ensco PLC, Class A | 50,100 | 2,537,565 | ||||||||
National Oilwell Varco, Inc. | 40,295 | 3,265,507 | ||||||||
|
| |||||||||
| 5,803,072 | ||||||||||
|
| |||||||||
| ||||||||||
Food Products 1.6% | ||||||||||
Mondelez International, Inc., Class A | 152,075 | 5,474,700 | ||||||||
|
| |||||||||
| ||||||||||
Health Care Equipment & Supplies 2.4% | ||||||||||
Baxter International, Inc. | 59,125 | 4,416,046 | ||||||||
Hologic, Inc.* | 137,530 | 3,585,407 | ||||||||
|
| |||||||||
| 8,001,453 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Providers & Services 4.9% | ||||||||||
Express Scripts Holding Co.* | 59,140 | 4,119,101 | ||||||||
HCA Holdings, Inc.* | 91,560 | 5,979,783 | ||||||||
UnitedHealth Group, Inc. | 82,595 | 6,694,325 | ||||||||
|
| |||||||||
| 16,793,209 | ||||||||||
|
| |||||||||
| ||||||||||
Household Products 3.8% | ||||||||||
Henkel AG & Co. KGaA, ADR-DE | 26,590 | 2,532,432 | ||||||||
Procter & Gamble Co. (The) | 134,795 | 10,422,349 | ||||||||
|
| |||||||||
| 12,954,781 | ||||||||||
|
| |||||||||
| ||||||||||
Industrial Conglomerates 0.9% | ||||||||||
Jardine Matheson Holdings Ltd., ADR-HK | 53,120 | 3,163,296 | ||||||||
|
| |||||||||
| ||||||||||
Information Technology Services 2.3% | ||||||||||
International Business Machines Corp. | 18,290 | 3,505,644 | ||||||||
Xerox Corp. | 321,400 | 4,261,764 | ||||||||
|
| |||||||||
| 7,767,408 | ||||||||||
|
| |||||||||
| ||||||||||
Insurance 3.2% |
| |||||||||
American International Group, Inc. | 118,480 | 6,158,590 | ||||||||
MetLife, Inc. | 90,515 | 4,761,089 | ||||||||
|
| |||||||||
| 10,919,679 | ||||||||||
|
| |||||||||
| ||||||||||
Internet & Catalog Retail 1.1% | ||||||||||
Liberty Interactive Corp., Series A* | 130,100 | 3,649,305 | ||||||||
|
| |||||||||
| ||||||||||
Machinery 3.4% | ||||||||||
CNH Industrial NV (a) | 216,047 | 1,989,793 | ||||||||
Joy Global, Inc. (a) | 58,570 | 3,470,858 | ||||||||
Stanley Black & Decker, Inc. | 44,580 | 3,898,521 | ||||||||
Timken Co. (The) | 47,850 | 2,119,755 | ||||||||
|
| |||||||||
| 11,478,927 | ||||||||||
|
| |||||||||
| ||||||||||
Media 5.9% | ||||||||||
Comcast Corp., Class A | 104,910 | 5,609,538 | ||||||||
DIRECTV* | 24,010 | 2,066,060 | ||||||||
146
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Value Fund (Continued)
| Common Stocks 98.2% (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Media (continued) | ||||||||||
Gannett Co., Inc. | 85,500 | $ | 2,797,560 | |||||||
Liberty Media Corp., Series A* | 54,860 | 2,579,335 | ||||||||
News Corp., Class A* | 165,360 | 2,918,604 | ||||||||
Time Warner, Inc. | 48,190 | 4,000,734 | ||||||||
|
| |||||||||
| 19,971,831 | ||||||||||
|
| |||||||||
| ||||||||||
Metals & Mining 0.3% |
| |||||||||
TimkenSteel Corp.* | 23,920 | 1,040,759 | ||||||||
|
| |||||||||
| ||||||||||
Multiline Retail 1.6% | ||||||||||
Target Corp. | 88,965 | 5,301,424 | ||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 10.3% | ||||||||||
Apache Corp. | 45,290 | 4,649,471 | ||||||||
Chevron Corp. | 97,925 | 12,655,827 | ||||||||
Occidental Petroleum Corp. | 64,260 | 6,278,845 | ||||||||
Phillips 66 | 56,220 | 4,560,004 | ||||||||
Suncor Energy, Inc. | 170,960 | 7,021,327 | ||||||||
|
| |||||||||
| 35,165,474 | ||||||||||
|
| |||||||||
| ||||||||||
Paper & Forest Products 1.1% | ||||||||||
International Paper Co. | 75,170 | 3,570,575 | ||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 4.6% | ||||||||||
Pfizer, Inc. | 401,710 | 11,529,077 | ||||||||
Roche Holding AG, ADR-CH | 109,320 | 3,971,049 | ||||||||
|
| |||||||||
| 15,500,126 | ||||||||||
|
| |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 1.1% |
| |||||||||
Weyerhaeuser Co. | 121,190 | 3,795,671 | ||||||||
|
| |||||||||
| ||||||||||
Road & Rail 1.1% | ||||||||||
Hertz Global Holdings, Inc.* | 133,915 | 3,779,081 | ||||||||
|
| |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment 0.8% |
| |||||||||
Marvell Technology Group Ltd. | 213,300 | 2,845,422 | ||||||||
|
| |||||||||
| ||||||||||
Software 3.9% | ||||||||||
Microsoft Corp. | 130,652 | 5,638,941 | ||||||||
Oracle Corp. | 190,990 | 7,714,086 | ||||||||
|
| |||||||||
| 13,353,027 | ||||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 2.5% |
| |||||||||
EMC Corp. | 153,300 | 4,491,690 | ||||||||
Western Digital Corp. | 41,340 | 4,126,972 | ||||||||
|
| |||||||||
| 8,618,662 | ||||||||||
|
| |||||||||
| ||||||||||
Tobacco 1.3% | ||||||||||
Philip Morris International, Inc. | 55,475 | 4,549,505 | ||||||||
|
| |||||||||
| ||||||||||
Trading Companies & Distributors 0.0%† |
| |||||||||
Veritiv Corp.* | 1,451 | 57,935 | ||||||||
|
| |||||||||
Total Common Stocks (cost $295,023,518) |
| 334,847,835 | ||||||||
|
| |||||||||
| Preferred Stock 0.8% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Automobiles 0.8% |
| |||||||||
Porsche Automobil Holding SE | 31,000 | $ | 2,897,544 | |||||||
|
| |||||||||
Total Preferred Stock (cost $2,668,761) |
| 2,897,544 | ||||||||
|
| |||||||||
| Mutual Fund 0.1% | ||||||||||
Money Market Fund 0.1% | ||||||||||
Fidelity Institutional Money Market Fund — Institutional Class, 0.09% (b)(c) | 319,930 | 319,930 | ||||||||
|
| |||||||||
Total Mutual Fund (cost $319,930) |
| 319,930 | ||||||||
|
| |||||||||
| Repurchase Agreement 0.9% | ||||||||||
| Principal Amount | ||||||||||
| ||||||||||
Royal Bank of Canada, 0.06%, dated 07/31/14, due 08/01/14, repurchase price $2,954,475, collateralized by a U.S. Treasury Note, 0.63%, maturing 09/30/17; total market value $3,014,785. (c) | $ | 2,954,470 | 2,954,470 | |||||||
|
| |||||||||
Total Repurchase Agreement |
| 2,954,470 | ||||||||
|
| |||||||||
Total Investments (cost $300,966,679) (d) — 100.0% | 341,019,779 | |||||||||
Liabilities in excess of other |
| (99,908 | ) | |||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 340,919,871 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | The security or a portion of this security is on loan at July 31, 2014. The total value of securities on loan at July 31, 2014 was $3,205,638. |
| (b) | Represents 7-day effective yield as of July 31, 2014. |
| (c) | Security or a portion of the security was purchased with cash collateral held from securities on loan. The total value of securities purchased with cash collateral as of July 31, 2014 was $3,274,400. |
| (d) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| † | Amount rounds to less than 0.1%. |
| ADR | American Depositary Receipt |
| AG | Stock Corporation |
147
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Value Fund (Continued)
| A/S | Minimum Capital Public Traded Company |
| CH | Switzerland |
| DE | Germany |
| DK | Denmark |
| HK | Hong Kong |
| JP | Japan |
| KGaA | Limited Partnership with shares |
| LP | Limited Partnership |
| Ltd. | Limited |
| NV | Public Traded Company |
| PLC | Public Limited Company |
| REG | Registered Shares |
| REIT | Real Estate Investment Trust |
| SA | Stock Company |
| SE | European Public Limited Liability Company |
The accompanying notes are an integral part of these financial statements.
148
Statement of Assets and Liabilities
July 31, 2014
Nationwide HighMark Value Fund | ||||||
Assets: | ||||||
Investments, at value* (cost $298,012,209) | $ | 338,065,309 | ||||
Repurchase agreement, at value (cost $2,954,470) | 2,954,470 | |||||
|
| |||||
Total Investments, at value (total cost $300,966,679) | 341,019,779 | |||||
|
| |||||
Cash | 3,172,419 | |||||
Dividends receivable | 384,110 | |||||
Security lending income receivable | 1,429 | |||||
Receivable for investments sold | 4,276,375 | |||||
Receivable for capital shares issued | 50,524 | |||||
Reclaims receivable | 237,908 | |||||
Prepaid expenses | 10,628 | |||||
|
| |||||
Total Assets | 349,153,172 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 4,265,496 | |||||
Payable for capital shares redeemed | 307,043 | |||||
Payable upon return of securities loaned (Note 2) | 3,274,400 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 178,889 | |||||
Fund administration fees | 17,169 | |||||
Distribution fees | 22,028 | |||||
Administrative servicing fees | 116,369 | |||||
Accounting and transfer agent fees | 9,763 | |||||
Trustee fees | 780 | |||||
Custodian fees | 2,345 | |||||
Compliance program costs (Note 3) | 994 | |||||
Professional fees | 23,707 | |||||
Printing fees | 10,882 | |||||
Other | 3,436 | |||||
|
| |||||
Total Liabilities | 8,233,301 | |||||
|
| |||||
Net Assets | $ | 340,919,871 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 275,875,201 | ||||
Accumulated distributions in excess of net investment income | (240,904 | ) | ||||
Accumulated net realized gains from investments and foreign currency transactions | 25,233,981 | |||||
Net unrealized appreciation/(depreciation) from investments | 40,053,100 | |||||
Net unrealized appreciation/(depreciation) from translation of assets and liabilities denominated in foreign currencies | (1,507 | ) | ||||
|
| |||||
Net Assets | $ | 340,919,871 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 86,074,940 | ||||
Class C Shares | 3,598,207 | |||||
Class U Shares | 134,180,244 | |||||
Institutional Service Class Shares | 117,053,763 | |||||
Institutional Class Shares | 12,717 | |||||
|
| |||||
Total | $ | 340,919,871 | ||||
|
| |||||
| * | Includes value of securities on loan of $3,205,638 (Note 2). |
149
Statement of Assets and Liabilities (Continued)
July 31, 2014
Nationwide HighMark Value Fund | ||||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 5,245,075 | |||||
Class C Shares | 228,734 | |||||
Class U Shares | 8,127,735 | |||||
Institutional Service Class Shares | 7,096,227 | |||||
Institutional Class Shares | 771 | |||||
|
| |||||
Total | 20,698,542 | |||||
|
| |||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 16.41 | ||||
Class C Shares (b) | $ | 15.73 | ||||
Class U Shares | $ | 16.51 | ||||
Institutional Service Class Shares | $ | 16.50 | ||||
Institutional Class Shares | $ | 16.49 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 17.41 | ||||
|
| |||||
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 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.
150
Statement of Operations
For the Year Ended July 31, 2014
Nationwide Value Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 6,738,102 | ||||
Income from securities lending (Note 2) | 21,665 | |||||
Foreign tax withholding | (73,300 | ) | ||||
|
| |||||
Total Income | 6,686,467 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 2,078,278 | |||||
Fund administration fees | 268,339 | |||||
Distribution fees Class A | 222,678 | |||||
Distribution fees Class B (a) | 831 | |||||
Distribution fees Class C | 37,894 | |||||
Administrative servicing fees Class A | 132,247 | |||||
Administrative servicing fees Class B (a) | 277 | |||||
Administrative servicing fees Class C | 946 | |||||
Administrative servicing fees Institutional Service Class (b) | 188,477 | |||||
Registration and filing fees | 51,261 | |||||
Professional fees | 47,124 | |||||
Printing fees | 36,815 | |||||
Trustee fees | 8,123 | |||||
Custodian fees | 15,769 | |||||
Accounting and transfer agent fees | 55,968 | |||||
Compliance program costs (Note 3) | 1,957 | |||||
Other | 28,586 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 3,175,570 | |||||
|
| |||||
Earnings credit (Note 5) | (121 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (11,137 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (b) | (16,216 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (18,823 | ) | ||||
|
| |||||
Net Expenses | 3,129,273 | |||||
|
| |||||
NET INVESTMENT INCOME | 3,557,194 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 51,700,042 | |||||
Net realized losses from foreign currency transactions (Note 2) | (16,668 | ) | ||||
|
| |||||
Net realized gains from investments and foreign currency transactions | 51,683,374 | |||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments | (11,234,162 | ) | ||||
Net change in unrealized appreciation/(depreciation) from translation of assets and liabilities denominated in foreign currencies | (4,715 | ) | ||||
|
| |||||
Net change in unrealized appreciation/(depreciation) from investments and translation of assets and liabilities denominated in foreign currencies | (11,238,877 | ) | ||||
|
| |||||
Net realized/unrealized gains from investments, foreign currency transactions, and translation of assets and liabilities denominated in foreign currencies | 40,444,497 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 44,001,691 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
151
Statements of Changes in Net Assets
| Nationwide HighMark Value Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 3,557,194 | $ | 4,221,800 | ||||||||
Net realized gains from investments and foreign currency transactions | 51,683,374 | 64,996,092 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments and translation of assets and liabilities denominated in foreign currencies | (11,238,877 | ) | 15,236,336 | |||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 44,001,691 | 84,454,228 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (1,111,182 | ) | (868,709 | ) | ||||||||
Class B (a) | – | (4,739 | ) | |||||||||
Class C | (38,056 | ) | (18,375 | ) | ||||||||
Class U | (1,868,788 | ) | (1,503,776 | ) | ||||||||
Institutional Service Class (b) | (1,607,865 | ) | (1,859,523 | ) | ||||||||
Institutional Class | (172 | )(c) | – | |||||||||
Net realized gains: | ||||||||||||
Class A | (16,926,608 | ) | (6,894,754 | ) | ||||||||
Class B (a) | – | (82,018 | ) | |||||||||
Class C | (739,307 | ) | (303,289 | ) | ||||||||
Class U | (24,016,009 | ) | (8,404,072 | ) | ||||||||
Institutional Service Class (b) | (22,294,154 | ) | (12,447,024 | ) | ||||||||
Institutional Class | (2,209 | )(c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (68,604,350 | ) | (32,386,279 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 16,457,627 | (38,328,884 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets | (8,145,032 | ) | 13,739,065 | |||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 349,064,903 | 335,325,838 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 340,919,871 | $ | 349,064,903 | ||||||||
|
|
|
| |||||||||
Accumulated distributions in excess of net investment income at end of year | $ | (240,904 | ) | $ | – | |||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 798,425 | $ | 1,347,842 | ||||||||
Proceeds from shares issued from class conversion | 822,072 | – | ||||||||||
Dividends reinvested | 16,978,066 | 7,275,918 | ||||||||||
Cost of shares redeemed | (14,951,547 | ) | (15,745,647 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 3,647,016 | (7,121,887 | ) | |||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | – | – | ||||||||||
Dividends reinvested | – | 83,105 | ||||||||||
Cost of shares redeemed in class conversion | (822,072 | ) | – | |||||||||
Cost of shares redeemed | (91,813 | ) | (493,107 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (913,885 | ) | (410,002 | ) | ||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
152
Statements of Changes in Net Assets (Continued)
| Nationwide HighMark Value Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 238,331 | $ | 187,337 | ||||||||
Dividends reinvested | 757,325 | 308,590 | ||||||||||
Cost of shares redeemed | (935,072 | ) | (977,349 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 60,584 | (481,422 | ) | |||||||||
|
|
|
| |||||||||
Class U Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 12,064,380 | 16,337,730 | ||||||||||
Dividends reinvested | 25,884,797 | 9,907,841 | ||||||||||
Cost of shares redeemed | (18,564,191 | ) | (19,448,653 | ) | ||||||||
|
|
|
| |||||||||
Total Class U Shares | 19,384,986 | 6,796,918 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Proceeds from shares issued | 23,356,001 | 14,668,770 | ||||||||||
Dividends reinvested | 21,556,339 | 12,856,808 | ||||||||||
Cost of shares redeemed | (50,647,347 | ) | (64,638,069 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (5,735,007 | ) | (37,112,491 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 11,552 | (c) | – | |||||||||
Dividends reinvested | 2,381 | (c) | – | |||||||||
Cost of shares redeemed | – | (c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 13,933 | (c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 16,457,627 | $ | (38,328,884 | ) | |||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 47,358 | 80,730 | ||||||||||
Issued in class conversion | 44,700 | – | ||||||||||
Reinvested | 1,114,778 | 475,129 | ||||||||||
Redeemed | (887,447 | ) | (947,843 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 319,389 | (391,984 | ) | |||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Issued | – | – | ||||||||||
Reinvested | – | 5,587 | ||||||||||
Redeemed in class conversion | (45,886 | ) | – | |||||||||
Redeemed | (5,185 | ) | (30,498 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (51,071 | ) | (24,911 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 13,993 | 11,314 | ||||||||||
Reinvested | 51,659 | 20,853 | ||||||||||
Redeemed | (56,724 | ) | (61,093 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 8,928 | (28,926 | ) | |||||||||
|
|
|
| |||||||||
Class U Shares (Note 12) | ||||||||||||
Issued | 719,034 | 980,824 | ||||||||||
Reinvested | 1,692,923 | 642,770 | ||||||||||
Redeemed | (1,097,881 | ) | (1,167,646 | ) | ||||||||
|
|
|
| |||||||||
Total Class U Shares | 1,314,076 | 455,948 | ||||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
153
Statements of Changes in Net Assets (Continued)
| Nationwide HighMark Value Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
SHARE TRANSACTIONS: (continued) | ||||||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Issued | 1,440,596 | 887,082 | ||||||||||
Reinvested | 1,410,756 | 837,907 | ||||||||||
Redeemed | (2,990,528 | ) | (3,850,323 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (139,176 | ) | (2,125,334 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 615 | (c) | – | |||||||||
Reinvested | 156 | (c) | – | |||||||||
Redeemed | – | (c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 771 | (c) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | 1,452,917 | (2,115,207 | ) | |||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
154
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide HighMark Value Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, | Net Investment Income | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 18.10 | 0.14 | 2.00 | 2.14 | (0.24 | ) | (3.59 | ) | (3.83 | ) | $ | 16.41 | 13.45% | $ | 86,074,940 | 1.13% | 0.80% | 1.15% | 58.15% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 15.67 | 0.16 | 3.80 | 3.96 | (0.16 | ) | (1.37 | ) | (1.53 | ) | $ | 18.10 | 27.18% | $ | 89,153,591 | 1.25% | 0.98% | 1.36% | 55.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 16.05 | 0.18 | 0.27 | 0.45 | (0.18 | ) | (0.65 | ) | (0.83 | ) | $ | 15.67 | 3.28% | $ | 83,338,902 | 1.26% | 1.20% | 1.39% | 44.00% | (h) | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 13.61 | 0.15 | 2.57 | 2.72 | (0.28 | ) | – | (0.28 | ) | $ | 16.05 | 20.12% | $ | 71,163,994 | 1.27% | 0.99% | 1.38% | 26.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 12.14 | 0.23 | 1.37 | 1.60 | (0.13 | ) | – | (0.13 | ) | $ | 13.61 | 13.18% | $ | 72,131,888 | 1.25% | 1.70% | 1.36% | 12.00% | |||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 17.55 | 0.03 | 1.92 | 1.95 | (0.18 | ) | (3.59 | ) | (3.77 | ) | $ | 15.73 | 12.72% | $ | 3,598,207 | 1.77% | 0.16% | 1.77% | 58.15% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 15.25 | 0.06 | 3.69 | 3.75 | (0.08 | ) | (1.37 | ) | (1.45 | ) | $ | 17.55 | 26.37% | $ | 3,857,499 | 1.85% | 0.38% | 1.86% | 55.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 15.63 | 0.09 | 0.27 | 0.36 | (0.09 | ) | (0.65 | ) | (0.74 | ) | $ | 15.25 | 2.70% | $ | 3,792,235 | 1.86% | 0.60% | 1.89% | 44.00% | (h) | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 13.26 | 0.06 | 2.51 | 2.57 | (0.20 | ) | – | (0.20 | ) | $ | 15.63 | 19.48% | $ | 2,503,285 | 1.87% | 0.39% | 1.88% | 26.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.84 | 0.15 | 1.32 | 1.47 | (0.05 | ) | – | (0.05 | ) | $ | 13.26 | 12.50% | $ | 2,547,983 | 1.85% | 1.10% | 1.86% | 12.00% | |||||||||||||||||||||||||||||||||||||
| Class U Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 18.17 | 0.20 | 2.01 | 2.21 | (0.28 | ) | (3.59 | ) | (3.87 | ) | $ | 16.51 | 13.87% | $ | 134,180,244 | 0.74% | 1.19% | 0.75% | 58.15% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 15.72 | 0.23 | 3.81 | 4.04 | (0.22 | ) | (1.37 | ) | (1.59 | ) | $ | 18.17 | 27.69% | $ | 123,771,869 | 0.85% | 1.38% | 0.86% | 55.00% | ||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2012 (g)(i) | $ | 14.85 | 0.14 | 0.85 | 0.99 | (0.12 | ) | – | (0.12 | ) | $ | 15.72 | 6.70% | $ | 99,929,775 | 0.86% | 1.60% | 0.89% | 44.00% | (h) | ||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 18.16 | 0.18 | 2.01 | 2.19 | (0.26 | ) | (3.59 | ) | (3.85 | ) | $ | 16.50 | 13.76% | $ | 117,053,763 | 0.88% | 1.04% | 0.90% | 58.15% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 15.71 | 0.21 | 3.81 | 4.02 | (0.20 | ) | (1.37 | ) | (1.57 | ) | $ | 18.16 | 27.54% | $ | 131,380,766 | 0.99% | 1.24% | 1.11% | 55.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 16.09 | 0.22 | 0.27 | 0.49 | (0.22 | ) | (0.65 | ) | (0.87 | ) | $ | 15.71 | 3.50% | $ | 147,100,903 | 1.00% | 1.46% | 1.14% | 44.00% | (h) | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 13.64 | 0.19 | 2.57 | 2.76 | (0.31 | ) | – | (0.31 | ) | $ | 16.09 | 20.50% | $ | 234,784,893 | 1.02% | 1.24% | 1.13% | 26.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 12.17 | 0.26 | 1.37 | 1.63 | (0.16 | ) | – | (0.16 | ) | $ | 13.64 | 13.43% | $ | 228,162,137 | 1.00% | 1.95% | 1.11% | 12.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(k) | $ | 18.83 | 0.17 | 1.36 | 1.53 | (0.28 | ) | (3.59 | ) | (3.87 | ) | $ | 16.49 | 9.77% | $ | 12,717 | 0.73% | 1.20% | 0.73% | 58.15% | ||||||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Excludes merger activity. |
| (i) | For the period from January 4, 2012 (commencement of operations) through July 31, 2012. |
| (j) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (k) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
155
| Fund Commentary | Nationwide Ziegler Equity Income Fund |
For the annual period ended July 31, 2014, the Nationwide Ziegler Equity Income Fund (Class A at NAV) returned 12.69%* versus 15.47% for its benchmark, the Russell 1000® Value Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Equity Income Funds (consisting of 455 funds as of July 31, 2014) was 13.24% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
The U.S. economy exhibited fairly robust expansion in the second half of 2013, but hit a speed bump in the first quarter of 2014 as unusually harsh winter conditions gripped much of North America. The climatic effects appear to have been temporary, with economic data signaling an expansion that is back on track for the second quarter of 2014. U.S. equities performed well during the Fund’s fiscal year ended July 31, 2014, with growth-oriented strategies generally outperforming value approaches. From a factor perspective, larger-capitalization stocks exhibiting high volatility and strong price momentum characteristics produced relatively strong performance during the Fund’s fiscal year. The Fund is managed with a more conservative exposure to lower-beta, dividend-paying stocks, which acted as a drag on Fund performance relative to the Fund’s benchmark during the reporting period.
The Fund began its fiscal year with an allocation to utilities stocks that was about 1.0% greater than that of the Fund’s benchmark, and the sector provided the lowest return for the fiscal year. The Fund’s exposure to utilities was reduced to an underweight position by fiscal year-end in recognition of the improving economy. Nevertheless, the initial overweight to utilities cost the Fund relative performance against its benchmark for the fiscal-year period ended July 31, 2014.
An overweight in the Fund to real estate investment trusts (REITs) during the reporting period detracted from Fund performance as
REITs underperformed along with other
interest-rate-sensitive sectors such as utilities and telecommunications. In particular, two REITs held by the Fund underperformed: Rayonier Inc. and Home Properties, Inc. Timberland manager Rayonier declined after missing earnings and cost the Fund 0.37% of total return before it was removed from the portfolio. Home Properties fell during the reporting period and cost the Fund 0.16% of relative performance; the stock was removed in early April 2014 after it recovered from its lows in December 2013. The portfolio’s exposure to REITs supplies higher yield and provides an important defensive play in a market downturn such as was seen in January 2014.
The Fund began the fiscal year with an under-allocation to health-care stocks, but added positions that brought it back in line with the benchmark by the end of July 2014. The Fund’s stock selection in the sector detracted from relative Fund performance for the reporting period. A Fund holding in Pfizer Inc. returned only 1.56% and cost 0.16% of relative Fund performance; a lack of exposure to Forest Laboratories, Inc., which appreciated 129% during the reporting period, subtracted 0.15% from relative Fund performance for the period. In addition, the Fund held no health-care providers during the reporting period, which produced a Fund performance shortfall, as the industry appreciated more than 23% on a weighted average basis in the Russell 1000 Value Index.
The Fund’s largest overweight by sector allocation during the reporting period was to the industrials sector, primarily through Fund holdings in the aerospace and defense and commercial services and supply industries. The industrials sector outperformed the broad market, and stock selection in the sector added to relative Fund performance. The Fund was overweight aerospace and defense industry stocks that returned 31.7% for the fiscal-year period versus a return of 25.7% for the industry within the Russell 1000 Value Index. The portfolio benefited from large positions in The Boeing Co. and Lockheed Martin Corp., which are not held in the benchmark, as well as portfolio holdings in Northrop Grumman Corp. and Raytheon Co., which are benchmark constituents. In the
156
| Fund Commentary (con’t.) | Nationwide Ziegler Equity Income Fund |
commercial services and supply industry, a Fund position in commercial printer Deluxe Corp. appreciated 37.1% during the reporting period, and a Fund holding in business solutions provider Pitney Bowes Inc. returned 17.8% from its addition to the Fund at the end of December 2013 through the end of the Fund’s fiscal year.
The Fund began the fiscal year with a large underweight to information technology stocks, but added to the sector during the course of the reporting period in anticipation of an improving economy. Two top contributors to the Fund’s performance were Fund holdings in Hewlett-Packard Co., which was up 70.3% from its purchase in early October 2013 through the end of the Fund’s fiscal year, and Lexmark International, Inc., which appreciated 37.3% from its addition to the portfolio in late December 2013 through July 31, 2014.
Looking ahead, we feel that dividends will remain an important contributor to total return, although the market will likely continue to move away from very-high-yielding, bond-like equities and focus more on companies that exhibit strong dividend growth and benefit from an improving economy. This view is reflected in the composition of the portfolio, which has lowered its exposure to the more defensive sectors such as utilities and consumer staples and increased exposure to the more cyclically sensitive information technology, materials and energy sectors.
Subadviser:
Ziegler Capital Management, LLC
Portfolio Managers:
Mikhail I. Alkhazov and Donald J. Nesbitt
The Fund is subject to the risks of investing in equity securities and fixed-income securities. Funds that concentrate on specific sectors may be subject to greater volatility than that of other mutual funds. The Fund may invest in more-aggressive investments such as derivatives (many of which create investment leverage and are highly volatile), exchange-traded funds (ETFs) (shareholders will bear additional costs) and foreign securities (which are volatile, harder to price and less liquid than U.S. securities). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
157
| Fund Overview | Nationwide Ziegler Equity Income Fund |
Objective
The Fund seeks total return from income and capital appreciation.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide Ziegler Equity Income Fund (Class A at NAV) returned 12.69%, underperforming its benchmark by 2.78% and the Lipper peer category median by 0.55%. |
| Ÿ | The Fund is managed with a more conservative exposure to lower-beta, dividend-paying stocks, which acted as a drag on Fund performance relative to the Fund’s benchmark during the reporting period. |
| Ÿ | Looking ahead, we feel that dividends will remain an important contributor to total return, although the market will likely continue to move away from very-high-yielding, bond-like equities and focus more on companies that exhibit strong dividend growth and benefit from an improving economy. |
Asset Allocation†
| Common Stocks | 97.0% | |||
| Exchange Traded Fund | 2.4% | |||
| Other assets in excess of liabilities | 0.6% | |||
| 100.0% |
Top Holdings††
| ConocoPhillips | 4.4% | |||
| Exxon Mobil Corp. | 4.1% | |||
| Wells Fargo & Co. | 4.1% | |||
| Johnson & Johnson | 4.0% | |||
| Chevron Corp. | 3.3% | |||
| Pfizer, Inc. | 2.9% | |||
| JPMorgan Chase & Co. | 2.7% | |||
| General Electric Co. | 2.6% | |||
| Vanguard Value ETF | 2.4% | |||
| Travelers Cos., Inc. (The) | 2.3% | |||
| Other Holdings | 67.2% | |||
| 100.0% |
Top Industries††
| Oil, Gas & Consumable Fuels | 12.7% | |||
| Banks | 11.1% | |||
| Insurance | 9.7% | |||
| Pharmaceuticals | 8.9% | |||
| Real Estate Investment Trusts (REITs) | 7.2% | |||
| Health Care Equipment & Supplies | 5.1% | |||
| Aerospace & Defense | 4.9% | |||
| Technology Hardware, Storage & Peripherals | 4.8% | |||
| Diversified Telecommunication Services | 3.2% | |||
| Commercial Services & Supplies | 2.8% | |||
| Other Industries | 29.6% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
158
| Fund Performance | Nationwide Ziegler Equity Income Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | Inception | ||||||||||||
| Class A1 | w/o SC2 | 12.69% | 16.63% | 6.43% | 3 | |||||||||
| w/ SC4 | 6.49% | 15.30% | 5.79% | 3 | ||||||||||
| Class C1 | w/o SC2 | 12.00% | 15.90% | 5.83% | 3 | |||||||||
| w/ SC5 | 11.00% | 15.90% | 5.83% | 3 | ||||||||||
| Institutional Service Class1,6,7 | 13.05% | 16.82% | 6.52% | 3 | ||||||||||
| Institutional Class6 | – | – | 12.19% | 8* | ||||||||||
| Russell 1000® Value Index | 15.47% | 16.97% | 7.99% | |||||||||||
| CPI | 1.99% | 2.04% | 2.21% | |||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | Since inception date of April 1, 2005. |
| 4 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 5 | 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. |
| 6 | Not subject to any SCs. |
| 7 | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 8 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.97% | 1.15% | ||||||
| Class C | 2.47% | 1.75% | ||||||
| Institutional Service Class | 1.72% | 0.90% | ||||||
| Institutional Class | 1.47% | 0.75% | ||||||
| * | Current effective prospectus dated September 16, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
159
| Fund Performance (con’t.) | Nationwide Ziegler Equity Income 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 Class A shares of the Nationwide Ziegler Equity Income Fund since inception* through 7/31/14 versus the Russell 1000® Value Index and the Consumer Price Index (CPI) for the same period. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
*The inception date for the Nationwide Ziegler Equity Income Fund is 9/16/13. Performance prior to that date is based on the since-inception performance of the Fund’s predecessor fund.
160
| Shareholder Expense Example | Nationwide Ziegler Equity Income 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide Ziegler Equity Income July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,087.00 | 5.07 | 0.98 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,019.93 | 4.91 | 0.98 | ||||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,084.00 | 9.04 | 1.75 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,016.12 | 8.75 | 1.75 | ||||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,088.40 | 4.35 | 0.84 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,020.63 | 4.21 | 0.84 | ||||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,089.30 | 3.32 | 0.64 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,021.62 | 3.21 | 0.64 | ||||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
161
Statement of Investments
July 31, 2014
Nationwide Ziegler Equity Income Fund
| Common Stocks 97.0% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 4.9% |
| |||||||||
Boeing Co. (The) | 48,360 | $ | 5,826,413 | |||||||
Lockheed Martin Corp. | 35,436 | 5,916,749 | ||||||||
Northrop Grumman Corp. | 42,832 | 5,279,900 | ||||||||
|
| |||||||||
| 17,023,062 | ||||||||||
|
| |||||||||
| ||||||||||
Automobiles 1.5% |
| |||||||||
Ford Motor Co. | 310,661 | 5,287,450 | ||||||||
|
| |||||||||
| ||||||||||
Banks 11.0% | ||||||||||
Fifth Third Bancorp | 162,031 | 3,318,395 | ||||||||
JPMorgan Chase & Co. | 160,393 | 9,249,864 | ||||||||
PNC Financial Services Group, Inc. (The) | 81,841 | 6,756,793 | ||||||||
U.S. Bancorp | 121,932 | 5,124,802 | ||||||||
Wells Fargo & Co. | 277,185 | 14,108,717 | ||||||||
|
| |||||||||
| 38,558,571 | ||||||||||
|
| |||||||||
| ||||||||||
Beverages 1.2% |
| |||||||||
Dr Pepper Snapple Group, Inc. | 73,230 | 4,302,995 | ||||||||
|
| |||||||||
| ||||||||||
Capital Markets 1.3% |
| |||||||||
Goldman Sachs Group, Inc. (The) | 27,218 | 4,705,176 | ||||||||
|
| |||||||||
| ||||||||||
Chemicals 1.5% |
| |||||||||
LyondellBasell Industries NV, Class A | 48,280 | 5,129,750 | ||||||||
|
| |||||||||
| ||||||||||
Commercial Services & Supplies 2.8% |
| |||||||||
Deluxe Corp. | 89,764 | 4,937,918 | ||||||||
Pitney Bowes, Inc. | 179,236 | 4,850,126 | ||||||||
|
| |||||||||
| 9,788,044 | ||||||||||
|
| |||||||||
| ||||||||||
Communications Equipment 2.4% |
| |||||||||
Cisco Systems, Inc. | 161,486 | 4,074,292 | ||||||||
Harris Corp. | 62,540 | 4,269,606 | ||||||||
|
| |||||||||
| 8,343,898 | ||||||||||
|
| |||||||||
| ||||||||||
Diversified Telecommunication Services 3.2% |
| |||||||||
AT&T, Inc. | 124,102 | 4,416,790 | ||||||||
Verizon Communications, Inc. | 133,298 | 6,720,885 | ||||||||
|
| |||||||||
| 11,137,675 | ||||||||||
|
| |||||||||
| ||||||||||
Electric Utilities 2.6% |
| |||||||||
Edison International | 105,389 | 5,775,317 | ||||||||
Westar Energy, Inc. | 95,346 | 3,436,270 | ||||||||
|
| |||||||||
| 9,211,587 | ||||||||||
|
| |||||||||
| ||||||||||
Gas Utilities 1.5% |
| |||||||||
Southwest Gas Corp. | 108,152 | 5,356,769 | ||||||||
|
| |||||||||
| ||||||||||
Health Care Equipment & Supplies 5.1% |
| |||||||||
Abbott Laboratories | 105,799 | 4,456,254 | ||||||||
Baxter International, Inc. | 49,780 | 3,718,068 | ||||||||
Becton, Dickinson and Co. | 43,350 | 5,039,004 | ||||||||
St. Jude Medical, Inc. | 69,175 | 4,509,518 | ||||||||
|
| |||||||||
| 17,722,844 | ||||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Hotels, Restaurants & Leisure 0.9% |
| |||||||||
DineEquity, Inc. | 40,102 | $ | 3,250,267 | |||||||
|
| |||||||||
| ||||||||||
Household Durables 1.6% |
| |||||||||
Garmin Ltd. | 103,665 | 5,705,722 | ||||||||
|
| |||||||||
| ||||||||||
Household Products 0.9% |
| |||||||||
Kimberly-Clark Corp. | 31,390 | 3,260,479 | ||||||||
|
| |||||||||
| ||||||||||
Industrial Conglomerates 2.6% |
| |||||||||
General Electric Co. | 358,341 | 9,012,276 | ||||||||
|
| |||||||||
| ||||||||||
Insurance 9.6% |
| |||||||||
ACE Ltd. | 64,796 | 6,486,080 | ||||||||
Allstate Corp. (The) | 116,332 | 6,799,605 | ||||||||
American Financial Group, Inc. | 76,183 | 4,265,486 | ||||||||
Assurant, Inc. | 53,152 | 3,367,711 | ||||||||
Chubb Corp. (The) | 54,959 | 4,765,495 | ||||||||
Travelers Cos., Inc. (The) | 89,477 | 8,013,560 | ||||||||
|
| |||||||||
| 33,697,937 | ||||||||||
|
| |||||||||
| ||||||||||
Machinery 2.1% |
| |||||||||
Caterpillar, Inc. | 39,332 | 3,962,699 | ||||||||
Deere & Co. | 37,702 | 3,208,817 | ||||||||
|
| |||||||||
| 7,171,516 | ||||||||||
|
| |||||||||
| ||||||||||
Media 1.0% |
| |||||||||
Time Warner, Inc. | 41,907 | 3,479,119 | ||||||||
|
| |||||||||
| ||||||||||
Multiline Retail 1.4% |
| |||||||||
Macy’s, Inc. | 81,688 | 4,720,750 | ||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 12.6% |
| |||||||||
Chevron Corp. | 87,883 | 11,357,999 | ||||||||
ConocoPhillips | 183,614 | 15,148,155 | ||||||||
Exxon Mobil Corp. | 144,746 | 14,321,169 | ||||||||
Williams Cos., Inc. (The) | 55,367 | 3,135,433 | ||||||||
|
| |||||||||
| 43,962,756 | ||||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 8.9% |
| |||||||||
Eli Lilly & Co. | 114,861 | 7,013,412 | ||||||||
Johnson & Johnson | 138,410 | 13,853,457 | ||||||||
Pfizer, Inc. | 353,944 | 10,158,193 | ||||||||
|
| |||||||||
| 31,025,062 | ||||||||||
|
| |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 7.1% |
| |||||||||
Annaly Capital Management, Inc. | 370,593 | 4,113,582 | ||||||||
Apartment Investment & Management Co., Class A | 144,265 | 4,930,978 | ||||||||
Chimera Investment Corp. | 1,649,758 | 5,229,733 | ||||||||
Macerich Co. (The) | 69,245 | 4,501,617 | ||||||||
Weingarten Realty Investors | 186,816 | 6,148,115 | ||||||||
|
| |||||||||
| 24,924,025 | ||||||||||
|
| |||||||||
162
Statement of Investments (Continued)
July 31, 2014
Nationwide Ziegler Equity Income Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Road & Rail 0.9% |
| |||||||||
Norfolk Southern Corp. | 30,231 | $ | 3,073,284 | |||||||
|
| |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment 2.5% |
| |||||||||
Intel Corp. | 118,021 | 3,999,731 | ||||||||
Texas Instruments, Inc. | 104,503 | 4,833,264 | ||||||||
|
| |||||||||
| 8,832,995 | ||||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 4.8% |
| |||||||||
Apple, Inc. | 53,305 | 5,094,359 | ||||||||
Hewlett-Packard Co. | 169,378 | 6,031,550 | ||||||||
Lexmark International, Inc., Class A | 115,927 | 5,567,974 | ||||||||
|
| |||||||||
| 16,693,883 | ||||||||||
|
| |||||||||
| ||||||||||
Tobacco 1.1% |
| |||||||||
Altria Group, Inc. | 92,164 | 3,741,858 | ||||||||
|
| |||||||||
Total Common Stocks (cost $318,803,995) |
| 339,119,750 | ||||||||
|
| |||||||||
| Exchange Traded Fund 2.4% | ||||||||||
Equity Fund 2.4% |
| |||||||||
Vanguard Value ETF | 104,063 | 8,322,959 | ||||||||
|
| |||||||||
Total Exchange Traded Fund |
| 8,322,959 | ||||||||
|
| |||||||||
Total Investments |
| 347,442,709 | ||||||||
Other assets in excess of liabilities — 0.6% |
| 2,216,731 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 349,659,440 | |||||||
|
| |||||||||
| (a) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| ETF | Exchange Traded Fund |
| Ltd. | Limited |
| NV | Public Traded Company |
| REIT | Real Estate Investment Trust |
The accompanying notes are an integral part of these financial statements.
163
Statement of Assets and Liabilities
July 31, 2014
Nationwide Ziegler Equity Income Fund | ||||||
Assets: | ||||||
Investments, at value (cost $326,981,890) | $ | 347,442,709 | ||||
Cash | 1,812,794 | |||||
Dividends receivable | 634,468 | |||||
Receivable for capital shares issued | 138,333 | |||||
Prepaid expenses | 12,107 | |||||
|
| |||||
Total Assets | 350,040,411 | |||||
|
| |||||
Liabilities: | ||||||
Payable for capital shares redeemed | 160,488 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 156,406 | |||||
Fund administration fees | 14,112 | |||||
Distribution fees | 10,532 | |||||
Administrative servicing fees | 4,872 | |||||
Accounting and transfer agent fees | 1,934 | |||||
Trustee fees | 789 | |||||
Custodian fees | 2,010 | |||||
Compliance program costs (Note 3) | 373 | |||||
Professional fees | 21,808 | |||||
Printing fees | 3,547 | |||||
Other | 4,100 | |||||
|
| |||||
Total Liabilities | 380,971 | |||||
|
| |||||
Net Assets | $ | 349,659,440 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 328,750,436 | ||||
Accumulated undistributed net investment income | 1,116,057 | |||||
Accumulated net realized losses from investments | (667,872 | ) | ||||
Net unrealized appreciation/(depreciation) from investments | 20,460,819 | |||||
|
| |||||
Net Assets | $ | 349,659,440 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 24,092,166 | ||||
Class C Shares | 6,126,678 | |||||
Institutional Service Class Shares | 10,198,392 | |||||
Institutional Class Shares | 309,242,204 | |||||
|
| |||||
Total | $ | 349,659,440 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 1,801,569 | |||||
Class C Shares | 461,133 | |||||
Institutional Service Class Shares | 760,143 | |||||
Institutional Class Shares | 23,045,780 | |||||
|
| |||||
Total | 26,068,625 | |||||
|
| |||||
164
Statement of Assets and Liabilities (Continued)
July 31, 2014
Nationwide Ziegler Equity Income Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 13.37 | ||||
Class C Shares (b) | $ | 13.29 | ||||
Institutional Service Class Shares | $ | 13.42 | ||||
Institutional Class Shares | $ | 13.42 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 14.19 | ||||
|
| |||||
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 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.
165
Statement of Operations
For the Year Ended July 31, 2014
Nationwide Ziegler Equity Income Fund | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 5,080,220 | ||||
Foreign tax withholding | (2,730 | ) | ||||
|
| |||||
Total Income | 5,077,490 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 888,263 | |||||
Fund administration fees | 131,315 | |||||
Distribution fees Class A | 56,379 | |||||
Distribution fees Class B (a) | 1,001 | |||||
Distribution fees Class C | 54,282 | |||||
Administrative servicing fees Class A | 22,016 | |||||
Administrative servicing fees Class B (a) | 334 | |||||
Administrative servicing fees Class C | 1,420 | |||||
Administrative servicing fees Institutional Service Class (b) | 13,730 | |||||
Registration and filing fees | 54,384 | |||||
Professional fees | 38,111 | |||||
Printing fees | 13,684 | |||||
Trustee fees | 4,978 | |||||
Custodian fees | 7,357 | |||||
Accounting and transfer agent fees | 12,411 | |||||
Compliance program costs (Note 3) | 1,544 | |||||
Other | 11,743 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 1,312,952 | |||||
|
| |||||
Earnings credit (Note 5) | (60 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (2,395 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (b) | (1,063 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (18,152 | ) | ||||
|
| |||||
Net Expenses | 1,291,282 | |||||
|
| |||||
NET INVESTMENT INCOME | 3,786,208 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 4,918,720 | |||||
Net change in unrealized appreciation/(depreciation) from investments | 13,248,057 | |||||
|
| |||||
Net realized/unrealized gains from investments | 18,166,777 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 21,952,985 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
(b) Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares.
The accompanying notes are an integral part of these financial statements.
166
Statements of Changes in Net Assets
| Nationwide Ziegler Equity Income Fund | ||||||||||||
Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 3,786,208 | $ | 560,037 | ||||||||
Net realized gains from investments | 4,918,720 | 1,256,886 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | 13,248,057 | 3,250,723 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 21,952,985 | 5,067,646 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (279,175 | ) | (328,753 | ) | ||||||||
Class B (a) | – | (20,580 | ) | |||||||||
Class C | (34,306 | ) | (54,983 | ) | ||||||||
Institutional Service Class (b) | (124,486 | ) | (188,098 | ) | ||||||||
Institutional Class | (2,255,227 | )(c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (2,693,194 | ) | (592,414 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 296,862,982 | 6,814,801 | ||||||||||
|
|
|
| |||||||||
Change in net assets | 316,122,773 | 11,290,033 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 33,536,667 | 22,246,634 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 349,659,440 | $ | 33,536,667 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 1,116,057 | $ | 28,689 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 6,141,187 | $ | 7,541,853 | ||||||||
Proceeds from shares issued from class conversion | 1,017,949 | – | ||||||||||
Dividends reinvested | 234,541 | 275,320 | ||||||||||
Cost of shares redeemed | (4,989,893 | ) | (2,591,284 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 2,403,784 | 5,225,889 | ||||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | – | 20,609 | ||||||||||
Dividends reinvested | – | 19,786 | ||||||||||
Cost of shares redeemed in class conversion | (1,017,949 | ) | – | |||||||||
Cost of shares redeemed | (79,683 | ) | (398,226 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (1,097,632 | ) | (357,831 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 1,980,691 | 1,818,705 | ||||||||||
Dividends reinvested | 31,563 | 47,853 | ||||||||||
Cost of shares redeemed | (984,062 | ) | (568,401 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 1,028,192 | 1,298,157 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Proceeds from shares issued | 2,749,801 | 2,075,494 | ||||||||||
Dividends reinvested | 103,574 | 157,453 | ||||||||||
Cost of shares redeemed | (2,284,497 | ) | (1,584,361 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 568,878 | 648,586 | ||||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
(b) Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares.
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
167
Statements of Changes in Net Assets (Continued)
| Nationwide Ziegler Equity Income Fund | ||||||||||||
Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | $ | 297,702,325 | (c) | $ | – | |||||||
Dividends reinvested | 2,255,227 | (c) | – | |||||||||
Cost of shares redeemed | (5,997,792 | )(c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 293,959,760 | (c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 296,862,982 | $ | 6,814,801 | ||||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 481,875 | 675,181 | ||||||||||
Issued in class conversion | 86,098 | – | ||||||||||
Reinvested | 18,381 | 25,768 | ||||||||||
Redeemed | (385,630 | ) | (237,901 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 200,724 | 463,048 | ||||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Issued | – | 1,935 | ||||||||||
Reinvested | – | 1,867 | ||||||||||
Redeemed in class conversion | (85,852 | ) | – | |||||||||
Redeemed | (6,754 | ) | (37,017 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (92,606 | ) | (33,215 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 158,529 | 159,501 | ||||||||||
Reinvested | 2,497 | 4,503 | ||||||||||
Redeemed | (77,197 | ) | (52,124 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 83,829 | 111,880 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Issued | 213,539 | 186,993 | ||||||||||
Reinvested | 8,114 | 14,697 | ||||||||||
Redeemed | (183,715 | ) | (146,919 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 37,938 | 54,771 | ||||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 23,345,684 | (c) | – | |||||||||
Reinvested | 173,255 | (c) | – | |||||||||
Redeemed | (473,159 | )(c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 23,045,780 | (c) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | 23,275,665 | 596,484 | ||||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
168
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Ziegler Equity Income Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Investment Income | Total Distributions | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Net Assets (d)(e) | Portfolio Turnover (f) | ||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 12.01 | 0.25 | 1.27 | 1.52 | (0.16 | ) | (0.16 | ) | $ | 13.37 | 12.69% | $ | 24,092,166 | 1.06% | 1.94% | 1.12% | 45.97% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.12 | 0.24 | 1.91 | 2.15 | (0.26 | ) | (0.26 | ) | $ | 12.01 | 21.57% | $ | 19,218,955 | 1.15% | 2.23% | 1.76% | 69.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 9.18 | 0.24 | 0.94 | 1.18 | (0.24 | ) | (0.24 | ) | $ | 10.12 | 13.12% | $ | 11,518,605 | 1.15% | 2.60% | 1.90% | 79.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 7.89 | 0.25 | 1.31 | 1.56 | (0.27 | ) | (0.27 | ) | $ | 9.18 | 19.98% | $ | 9,259,221 | 1.15% | 2.79% | 2.00% | 78.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 6.97 | 0.24 | 0.88 | 1.12 | (0.20 | ) | (0.20 | ) | $ | 7.89 | 16.06% | $ | 9,975,601 | 1.15% | 3.03% | 2.05% | 46.00% | ||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 11.94 | 0.16 | 1.27 | 1.43 | (0.08 | ) | (0.08 | ) | $ | 13.29 | 12.00% | $ | 6,126,678 | 1.75% | 1.25% | 1.80% | 45.97% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.07 | 0.18 | 1.89 | 2.07 | (0.20 | ) | (0.20 | ) | $ | 11.94 | 20.79% | $ | 4,504,018 | 1.75% | 1.63% | 2.26% | 69.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 9.14 | 0.19 | 0.93 | 1.12 | (0.19 | ) | (0.19 | ) | $ | 10.07 | 12.40% | $ | 2,673,144 | 1.75% | 2.00% | 2.40% | 79.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 7.85 | 0.19 | 1.32 | 1.51 | (0.22 | ) | (0.22 | ) | $ | 9.14 | 19.37% | $ | 2,431,052 | 1.75% | 2.19% | 2.50% | 78.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 6.94 | 0.19 | 0.87 | 1.06 | (0.15 | ) | (0.15 | ) | $ | 7.85 | 15.22% | $ | 2,193,955 | 1.75% | 2.43% | 2.55% | 46.00% | ||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 12.04 | 0.27 | 1.29 | 1.56 | (0.18 | ) | (0.18 | ) | $ | 13.42 | 13.05% | $ | 10,198,392 | 0.87% | 2.14% | 0.93% | 45.97% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.15 | 0.27 | 1.90 | 2.17 | (0.28 | ) | (0.28 | ) | $ | 12.04 | 21.80% | $ | 8,697,861 | 0.90% | 2.48% | 1.51% | 69.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 9.21 | 0.27 | 0.94 | 1.21 | (0.27 | ) | (0.27 | ) | $ | 10.15 | 13.38% | $ | 6,777,074 | 0.88% | 2.87% | 1.65% | 79.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 7.88 | 0.28 | 1.33 | 1.61 | (0.28 | ) | (0.28 | ) | $ | 9.21 | 20.68% | $ | 5,532,039 | 0.90% | 3.04% | 1.75% | 78.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 6.97 | 0.25 | 0.83 | 1.08 | (0.17 | ) | (0.17 | ) | $ | 7.88 | 15.50% | $ | 9,253 | 0.90% | 3.28% | 1.80% | 46.00% | ||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 12.15 | 0.27 | 1.20 | 1.47 | (0.20 | ) | (0.20 | ) | $ | 13.42 | 12.19% | $ | 309,242,204 | 0.66% | 2.33% | 0.66% | 45.97% | ||||||||||||||||||||||||||||||||||
| (a) | Excludes sales charge. |
| (b) | Not annualized for periods less than one year. |
| (c) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
169
| Fund Commentary | Nationwide Ziegler NYSE Arca Tech 100 Index Fund |
For the annual period ended July 31, 2014, the Nationwide Ziegler NYSE Arca Tech 100 Index Fund (Class A at NAV) returned 21.93%* versus 21.52% for its benchmark, the NYSE Arca Tech 100 Index®. For broader comparison, the median return for the Fund’s closest Lipper peer category of Science & Technology Funds (consisting of 155 funds as of July 31, 2014) was 21.34% for the same time period.
*Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund.
The U.S. economy exhibited fairly robust expansion in the second half of 2013, but hit a speed bump in the first quarter of 2014 as unusually harsh winter conditions gripped much of North America. The climatic effects appear to have been temporary, with economic data signaling an expansion that is back on track for the second quarter of 2014. The S&P 500® Index, a broad market indicator, returned 16.94% for the Fund’s fiscal year and the information technology sector within the S&P 500 Index performed even better, appreciating 28.1% during the same period. Investors have been drawn to the sector by its attractive prospects for future earnings growth. The information technology sector continues to appear attractive versus others sectors in the market; the Fund, with two-thirds of its holdings in technology, is well positioned to take advantage of potential gains. To potentially achieve investment growth, the Fund also provides a level of diversification through holdings in other sectors such as health care, which utilizes important technology.
The Fund is passively managed to the NYSE Arca Tech 100 Index, so performance differences between the Fund and its benchmark are primarily the result of Fund expenses and investor capital flows. Because the Fund is passively managed, it makes no active industry or security-selection bets as an investment strategy; therefore, the Fund’s performance reflects the NYSE Arca Tech 100 Index’s exposure to various industries and the individual stocks in the Index.
The New York Stock Exchange maintains the Index and determines any addition or deletion of
constituents, with the decisions generally driven by an annual rebalance or Index member corporate actions. Several corporate actions affected the Index and, thus, the portfolio’s composition during the first half of the Fund’s fiscal year. A consortium of private investors bought BMC Software, Inc. in mid-September; the name was removed from the Index and replaced with Informatica Corp., a global provider of enterprise data integration and data quality software and services. Dell Inc. was removed from the Index at the end of October 2013 when it also was taken private, and was replaced with Fusion-io, Inc., a global provider of storage memory platforms. At the end of January 2014, biotechnology company ViroPharma Inc. was acquired by Shire plc, prompting ViroPharma Inc.’s removal from the Index and replacement with MasterCard Inc., a global transaction processing and payment-related services company.
Additional changes to the Fund’s benchmark constituents occurred in the second half of the Fund’s fiscal year. Life Technologies Corp. was acquired by Thermo Fisher Scientific Inc. in February 2014 and was removed from the Index and replaced with energy service provider Baker Hughes Inc. In May 2014, LSI Corp. was acquired by Avago Technologies Ltd. and was removed from the Index and replaced with signal processing circuit producer Marvell Technology Group Ltd. The Index was rebalanced at the end of May 2014, and Internet service provider Ixia was replaced with global social networker Facebook, Inc. At the end of July 2014, recently added Fusion-io, Inc. was acquired by SanDisk Corp., prompting Fusion-io’s removal from the Index and replacement with Brocade Communications Systems, Inc., a provider of storage area networking (SAN) solutions.
Specific stocks that detracted from Fund performance during the reporting period included a 0.91% portfolio holding in Teradata Corp., which provides data warehousing solutions. Teradata declined 28.7% during the reporting period and detracted 0.39% from the Fund’s total return. A 1.20% Fund position in Citrix Systems, Inc., a global provider of enterprise and online services
170
| Fund Commentary (con’t.) | Nationwide Ziegler NYSE Arca Tech 100 Index Fund |
for cloud computing, declined 6.0% and detracted 0.13% from the Fund’s total return.
During the reporting period, the Fund carried a 67% exposure to stocks in the information technology sector, with an 18.0% allocation to software companies serving as the Fund’s largest industry exposure. The 21 stocks in the software industry held by the Index produced a weighted average return of 19.2% for the reporting period and contributed 3.59% to the Fund’s total return. A 1.14% Fund holding in digital media, marketing, print and publishing provider Adobe Systems Inc. appreciated 46.5% and added 0.48% to the Fund’s total return for the reporting period.
Fund holdings are well-diversified across numerous sectors and industries, with 24% of the Fund’s assets invested across 14 companies among four industries within the health-care sector. These investments outside of the “traditional” information technology sector have provided an effective diversification feature that has lowered the historical volatility of the Fund relative to its peers. The Fund’s allocation to the health-are sector contributed 7.36% to the Fund’s total return for the Fund’s fiscal year, led by a 5.3% position in Biogen Idec Inc. that contributed 2.53% to the Fund’s total return. Biogen Idec, which provides therapies for autoimmune diseases and cancer, appreciated 53.3% during the reporting period, bolstered by positive revenue and earnings growth.
During the reporting period, the Fund carried a 4.5% exposure to the aerospace and defense industry within the industrials sector, invested in two stocks: Lockheed Martin Corp., which appreciated 43.9%, and Raytheon Co., which returned 29.7% during the period. In past years, these stocks had fallen out of favor with investors who had discounted them in anticipation of defense spending cuts, but the stocks have been showing surprisingly strong relative earnings growth throughout recent quarters.
The Nationwide Ziegler NYSE Arca Tech 100 Index Fund employs a well-diversified approach for investing in the stocks of companies that represent innovative growth through the development and deployment of technology in
their products and services. The technology sector still carries attractive valuations, relative to the broad market, while displaying the potential for higher relative growth in future sales and earnings. Companies providing technological solutions that improve standards of living and increase productivity are expected to benefit from a pickup in the global economy and increased capital spending by companies during the next 12 months.
Subadviser:
Ziegler Capital Management, LLC
Portfolio Managers:
Mikhail I. Alkhazov and Donald J. Nesbitt
The Fund seeks to match the performance of an index. Correlation between Fund performance and index performance may be affected by Fund expenses, index composition changes, and the timing of Fund share purchases and redemptions. Funds that concentrate on specific sectors may be subject to greater volatility than that of other mutual funds. The Fund is subject to the risks of investing in equity securities. The Fund may invest in more-aggressive investments such as derivatives (many of which create investment leverage and are highly volatile) and exchange-traded funds (ETFs) (shareholders will bear additional costs). High double-digit returns are unusual and cannot be sustained. Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
“Archipelago®”, “ARCA®”, “ARCAEX®”, “NYSE®”, “NYSE ARCASM” and “NYSE Arca Tech 100SM” are trademarks of the NYSE Group, Inc. and Archipelago Holdings, Inc. and have been licensed for use by the Nationwide Funds. This Fund is not sponsored, endorsed, sold or promoted by Archipelago Holdings, Inc. (“ARCA”). ARCA makes no representation or warranty regarding the advisability of investing in securities generally, in the Fund particularly, or the ability of the NYSE Arca Tech 100 Index to track general stock market performance.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
171
| Fund Overview | Nationwide Ziegler NYSE Arca Tech 100 Index Fund |
Objective
The Fund seeks to track the total return of the NYSE Arca Tech 100 Index before deducting Fund expenses.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide Ziegler NYSE Arca Tech 100 Index Fund (Class A at NAV) returned 21.93%, outperforming its benchmark by 0.41% and the Lipper peer category median by 0.59%. |
| Ÿ | The Fund is passively managed to the NYSE Arca Tech 100 Index, so performance differences between the Fund and its benchmark are primarily the result of Fund expenses and investor capital flows. |
| Ÿ | During the reporting period, the Fund carried a 67% exposure to stocks in the information technology sector, with an 18.0% allocation to software companies serving as the Fund’s largest industry exposure. |
Asset Allocation†
| Common Stocks | 98.2% | |||
| Exchange Traded Fund | 1.3% | |||
| Other assets in excess of liabilities | 0.5% | |||
| 100.0% |
Top Industries††
| Software | 17.0% | |||
| Information Technology Services | 14.1% | |||
| Semiconductors & Semiconductor Equipment | 10.4% | |||
| Communications Equipment | 9.7% | |||
| Biotechnology | 9.6% | |||
| Technology Hardware, Storage & Peripherals | 6.4% | |||
| Internet Software & Services | 5.9% | |||
| Pharmaceuticals | 5.7% | |||
| Aerospace & Defense | 4.5% | |||
| Health Care Equipment & Supplies | 4.4% | |||
| Other Industries | 12.3% | |||
| 100.0% |
Top Holdings††
| Biogen Idec, Inc. | 5.8% | |||
| Visa, Inc., Class A | 3.7% | |||
| International Business Machines Corp. | 3.3% | |||
| Lockheed Martin Corp. | 2.9% | |||
| Amgen, Inc. | 2.2% | |||
| Thermo Fisher Scientific, Inc. | 2.1% | |||
| Valeant Pharmaceuticals International, Inc. | 2.0% | |||
| F5 Networks, Inc. | 2.0% | |||
| Schlumberger Ltd. | 1.9% | |||
| Western Digital Corp. | 1.7% | |||
| Other Holdings | 72.4% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
172
| Fund Performance | Nationwide Ziegler NYSE Arca Tech 100 Index Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 21.93% | 19.02% | 10.36% | – | |||||||||||||
| w/ SC3 | 15.22% | 17.68% | 9.74% | – | ||||||||||||||
| Class C1 | w/o SC2 | 21.13% | 18.30% | 9.61% | – | |||||||||||||
| w/ SC4 | 20.13% | 18.30% | 9.61% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 22.20% | 19.34% | 10.51% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 16.23% | 7* | |||||||||||||
| NYSE Arca Tech 100 Index® | 21.52% | 19.06% | 10.64% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | For the period from September 16, 2013 through July 31, 2014 a front-end sales charge of 5.75% was deducted. Prior to September 16, 2013, a front-end sales charge of 5.50% was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.10% | 1.08% | ||||||
| Class C | 1.67% | 1.67% | ||||||
| Institutional Service Class | 0.85% | 0.83% | ||||||
| Institutional Class | 0.60% | 0.60% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
173
| Fund Performance (con’t.) | Nationwide Ziegler NYSE Arca Tech 100 Index 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 Class A shares of the Nationwide Ziegler NYSE Arca Tech 100 Index Fund versus the NYSE Arca Tech 100 Index® and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
174
| Shareholder Expense Example | Nationwide Ziegler NYSE Arca Tech 100 Index 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide Ziegler NYSE Arca July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,070.00 | 4.05 | 0.79 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,020.88 | 3.96 | 0.79 | ||||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,066.20 | 7.89 | 1.54 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,017.16 | 7.70 | 1.54 | ||||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,071.30 | 2.93 | 0.57 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,021.97 | 2.86 | 0.57 | ||||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,071.60 | 2.41 | 0.47 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,022.46 | 2.36 | 0.47 | ||||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
175
Statement of Investments
July 31, 2014
Nationwide Ziegler NYSE Arca Tech 100 Index Fund
| Common Stocks 98.2% | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 4.5% |
| |||||||||
Lockheed Martin Corp. | 51,300 | $ | 8,565,561 | |||||||
Raytheon Co. | 51,300 | 4,656,501 | ||||||||
|
| |||||||||
| 13,222,062 | ||||||||||
|
| |||||||||
| ||||||||||
Biotechnology 9.6% |
| |||||||||
Amgen, Inc. | 51,300 | 6,535,107 | ||||||||
Biogen Idec, Inc.* | 51,300 | 17,154,207 | ||||||||
Gilead Sciences, Inc.* | 51,300 | 4,696,515 | ||||||||
|
| |||||||||
| 28,385,829 | ||||||||||
|
| |||||||||
| ||||||||||
Communications Equipment 9.6% |
| |||||||||
ARRIS Group, Inc.* | 51,300 | 1,752,921 | ||||||||
Brocade Communications Systems, Inc. | 51,300 | 472,473 | ||||||||
Ciena Corp.* | 51,300 | 1,001,889 | ||||||||
Cisco Systems, Inc. | 51,300 | 1,294,299 | ||||||||
Comtech Telecommunications Corp. | 51,300 | 1,733,940 | ||||||||
F5 Networks, Inc.* | 51,300 | 5,775,867 | ||||||||
Harmonic, Inc.* | 51,300 | 307,800 | ||||||||
Harris Corp. | 51,300 | 3,502,251 | ||||||||
InterDigital, Inc. | 51,300 | 2,261,817 | ||||||||
JDS Uniphase Corp.* | 51,300 | 608,931 | ||||||||
Juniper Networks, Inc.* | 51,300 | 1,207,602 | ||||||||
Motorola Solutions, Inc. | 51,300 | 3,266,784 | ||||||||
Polycom, Inc.* | 51,300 | 657,666 | ||||||||
QUALCOMM, Inc. | 51,300 | 3,780,810 | ||||||||
Riverbed Technology, Inc.* | 51,300 | 918,270 | ||||||||
|
| |||||||||
| 28,543,320 | ||||||||||
|
| |||||||||
| ||||||||||
Diversified Telecommunication Services 0.6% |
| |||||||||
AT&T, Inc. | 51,300 | 1,825,767 | ||||||||
|
| |||||||||
| ||||||||||
Electronic Equipment, Instruments & Components 2.6% |
| |||||||||
Amphenol Corp., Class A | 51,300 | 4,933,521 | ||||||||
Corning, Inc. | 51,300 | 1,008,045 | ||||||||
FLIR Systems, Inc. | 51,300 | 1,707,264 | ||||||||
|
| |||||||||
| 7,648,830 | ||||||||||
|
| |||||||||
| ||||||||||
Energy Equipment & Services 4.2% |
| |||||||||
Baker Hughes, Inc. | 51,300 | 3,527,901 | ||||||||
Halliburton Co. | 51,300 | 3,539,187 | ||||||||
Schlumberger Ltd. | 51,300 | 5,560,407 | ||||||||
|
| |||||||||
| 12,627,495 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Equipment & Supplies 4.4% |
| |||||||||
Baxter International, Inc. | 51,300 | 3,831,597 | ||||||||
Boston Scientific Corp.* | 51,300 | 655,614 | ||||||||
CONMED Corp. | 51,300 | 2,000,700 | ||||||||
Medtronic, Inc. | 51,300 | 3,167,262 | ||||||||
St. Jude Medical, Inc. | 51,300 | 3,344,247 | ||||||||
|
| |||||||||
| 12,999,420 | ||||||||||
|
| |||||||||
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Information Technology Services 14.0% |
| |||||||||
Amdocs Ltd. | 51,300 | $ | 2,325,942 | |||||||
Automatic Data Processing, Inc. | 51,300 | 4,171,203 | ||||||||
Computer Sciences Corp. | 51,300 | 3,200,607 | ||||||||
DST Systems, Inc. | 51,300 | 4,620,591 | ||||||||
International Business Machines Corp. | 51,300 | 9,832,671 | ||||||||
MasterCard, Inc., Class A | 51,300 | 3,803,895 | ||||||||
Teradata Corp.* | 51,300 | 2,162,808 | ||||||||
Visa, Inc., Class A | 51,300 | 10,824,813 | ||||||||
Xerox Corp. | 51,300 | 680,238 | ||||||||
|
| |||||||||
| 41,622,768 | ||||||||||
|
| |||||||||
| ||||||||||
Internet Software & Services 5.8% |
| |||||||||
Akamai Technologies, Inc.* | 51,300 | 3,027,726 | ||||||||
Digital River, Inc.* | 51,300 | 733,077 | ||||||||
eBay, Inc.* | 51,300 | 2,708,640 | ||||||||
Facebook, Inc., Class A* | 51,300 | 3,726,945 | ||||||||
j2 Global, Inc. | 51,300 | 2,509,596 | ||||||||
VeriSign, Inc.* | 51,300 | 2,772,765 | ||||||||
Yahoo!, Inc.* | 51,300 | 1,837,053 | ||||||||
|
| |||||||||
| 17,315,802 | ||||||||||
|
| |||||||||
| ||||||||||
Life Sciences Tools & Services 3.1% |
| |||||||||
Agilent Technologies, Inc. | 51,300 | 2,877,417 | ||||||||
Thermo Fisher Scientific, Inc. | 51,300 | 6,232,950 | ||||||||
|
| |||||||||
| 9,110,367 | ||||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 5.7% |
| |||||||||
AstraZeneca PLC, ADR-UK | 51,300 | 3,734,127 | ||||||||
Bristol-Myers Squibb Co. | 51,300 | 2,596,806 | ||||||||
Novartis AG, ADR-CH | 51,300 | 4,460,022 | ||||||||
Valeant Pharmaceuticals International, Inc.* | 51,300 | 6,022,107 | ||||||||
|
| |||||||||
| 16,813,062 | ||||||||||
|
| |||||||||
| ||||||||||
Semiconductors & Semiconductor Equipment 10.3% |
| |||||||||
Altera Corp. | 51,300 | 1,678,536 | ||||||||
Analog Devices, Inc. | 51,300 | 2,546,019 | ||||||||
Applied Materials, Inc. | 51,300 | 1,075,248 | ||||||||
Broadcom Corp., Class A | 51,300 | 1,962,738 | ||||||||
Cypress Semiconductor Corp.* | 51,300 | 518,643 | ||||||||
Intel Corp. | 51,300 | 1,738,557 | ||||||||
KLA-Tencor Corp. | 51,300 | 3,667,437 | ||||||||
Lam Research Corp. | 51,300 | 3,591,000 | ||||||||
Linear Technology Corp. | 51,300 | 2,264,125 | ||||||||
Marvell Technology Group Ltd. | 51,300 | 684,342 | ||||||||
Microchip Technology, Inc. | 51,300 | 2,309,526 | ||||||||
NVIDIA Corp. | 51,300 | 897,750 | ||||||||
SunEdison, Inc.* | 51,300 | 1,026,000 | ||||||||
Teradyne, Inc. | 51,300 | 934,686 | ||||||||
Tessera Technologies, Inc. | 51,300 | 1,303,533 | ||||||||
Texas Instruments, Inc. | 51,300 | 2,372,625 | ||||||||
Xilinx, Inc. | 51,300 | 2,109,969 | ||||||||
|
| |||||||||
| 30,680,734 | ||||||||||
|
| |||||||||
176
Statement of Investments (Continued)
July 31, 2014
Nationwide Ziegler NYSE Arca Tech 100 Index Fund (Continued)
| Common Stocks (continued) | ||||||||||
| Shares | Market Value | |||||||||
| ||||||||||
Software 17.0% |
| |||||||||
Activision Blizzard, Inc. | 51,300 | $ | 1,148,094 | |||||||
Adobe Systems, Inc.* | 51,300 | 3,545,343 | ||||||||
Autodesk, Inc.* | 51,300 | 2,736,855 | ||||||||
CA, Inc. | 51,300 | 1,481,544 | ||||||||
Check Point Software Technologies Ltd.* | 51,300 | 3,481,731 | ||||||||
Citrix Systems, Inc.* | 51,300 | 3,474,549 | ||||||||
Compuware Corp. | 51,300 | 466,830 | ||||||||
Informatica Corp.* | 51,300 | 1,627,236 | ||||||||
Intuit, Inc. | 51,300 | 4,205,061 | ||||||||
Microsoft Corp. | 51,300 | 2,214,108 | ||||||||
Open Text Corp. | 51,300 | 2,854,845 | ||||||||
Oracle Corp. | 51,300 | 2,072,007 | ||||||||
Progress Software Corp.* | 51,300 | 1,189,134 | ||||||||
PTC, Inc.* | 51,300 | 1,844,748 | ||||||||
Red Hat, Inc.* | 51,300 | 2,981,556 | ||||||||
salesforce.com, Inc.* | 51,300 | 2,783,025 | ||||||||
SAP SE, ADR-DE | 51,300 | 4,026,537 | ||||||||
Symantec Corp. | 51,300 | 1,213,758 | ||||||||
Synopsys, Inc.* | 51,300 | 1,937,601 | ||||||||
VMware, Inc., Class A* | 51,300 | 5,097,168 | ||||||||
|
| |||||||||
| 50,381,730 | ||||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 6.4% |
| |||||||||
EMC Corp. | 51,300 | 1,503,090 | ||||||||
Hewlett-Packard Co. | 51,300 | 1,826,793 | ||||||||
NetApp, Inc. | 51,300 | 1,992,492 | ||||||||
Nokia OYJ, ADR-FI | 51,300 | 406,809 | ||||||||
QLogic Corp.* | 51,300 | 466,830 | ||||||||
SanDisk Corp. | 51,300 | 4,704,723 | ||||||||
Seagate Technology PLC | 51,300 | 3,006,180 | ||||||||
Western Digital Corp. | 51,300 | 5,121,279 | ||||||||
|
| |||||||||
| 19,028,196 | ||||||||||
|
| |||||||||
| ||||||||||
Wireless Telecommunication Services 0.4% |
| |||||||||
Telephone & Data Systems, Inc. | 51,300 | 1,282,500 | ||||||||
|
| |||||||||
Total Common Stocks |
| 291,487,882 | ||||||||
|
| |||||||||
| Exchange Traded Fund 1.3% | ||||||||||
Equity Fund 1.3% |
| |||||||||
Powershares QQQ Trust | 40,999 | 3,896,135 | ||||||||
|
| |||||||||
Total Exchange Traded Fund |
| 3,896,135 | ||||||||
|
| |||||||||
Total Investments |
| 295,384,017 | ||||||||
Other assets in excess of liabilities — 0.5% |
| 1,385,133 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% | $ | 296,769,150 | ||||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| ADR | American Depositary Receipt |
| AG | Stock Corporation |
| CH | Switzerland |
| DE | Germany |
| FI | Finland |
| Ltd. | Limited |
| OYJ | Public Traded Company |
| PLC | Public Limited Company |
| SE | European Public Limited Liability Company |
| UK | United Kingdom |
The accompanying notes are an integral part of these financial statements.
177
Statement of Assets and Liabilities
July 31, 2014
Nationwide Arca Tech 100 | ||||||
Assets: | ||||||
Investments, at value (cost $156,296,426) | $ | 295,384,017 | ||||
Cash | 1,391,530 | |||||
Dividends receivable | 134,571 | |||||
Receivable for capital shares issued | 598,970 | |||||
Reclaims receivable | 32,282 | |||||
Prepaid expenses | 19,223 | |||||
|
| |||||
Total Assets | 297,560,593 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 378,846 | |||||
Payable for capital shares redeemed | 120,848 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 82,837 | |||||
Fund administration fees | 18,789 | |||||
Distribution fees | 69,636 | |||||
Administrative servicing fees | 53,960 | |||||
Accounting and transfer agent fees | 18,386 | |||||
Trustee fees | 655 | |||||
Custodian fees | 746 | |||||
Compliance program costs (Note 3) | 107 | |||||
Professional fees | 23,265 | |||||
Printing fees | 19,460 | |||||
Other | 3,908 | |||||
|
| |||||
Total Liabilities | 791,443 | |||||
|
| |||||
Net Assets | $ | 296,769,150 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 230,292,487 | ||||
Accumulated undistributed net investment income | 457,748 | |||||
Accumulated net realized losses from investments | (73,068,676 | ) | ||||
Net unrealized appreciation/(depreciation) from investments | 139,087,591 | |||||
|
| |||||
Net Assets | $ | 296,769,150 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 244,041,076 | ||||
Class C Shares | 19,986,986 | |||||
Institutional Service Class Shares | 32,435,707 | |||||
Institutional Class Shares | 305,381 | |||||
|
| |||||
Total | $ | 296,769,150 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 4,652,000 | |||||
Class C Shares | 418,996 | |||||
Institutional Service Class Shares | 613,023 | |||||
Institutional Class Shares | 5,775 | |||||
|
| |||||
Total | 5,689,794 | |||||
|
| |||||
178
Statement of Assets and Liabilities (Continued)
July 31, 2014
Nationwide Arca Tech 100 | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 52.46 | ||||
Class C Shares (b) | $ | 47.70 | ||||
Institutional Service Class Shares | $ | 52.91 | ||||
Institutional Class Shares | $ | 52.88 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 55.66 | ||||
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| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 5.75 | % | ||||
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| |||||
| (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 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.
179
Statement of Operations
For the Year Ended July 31, 2014
Nationwide Arca Tech 100 | ||||||
INVESTMENT INCOME: | ||||||
Dividend income | $ | 3,725,032 | ||||
Foreign tax withholding | (8,280 | ) | ||||
|
| |||||
Total Income | 3,716,752 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 915,150 | |||||
Fund administration fees | 283,917 | |||||
Distribution fees Class A | 583,277 | |||||
Distribution fees Class B (a) | 2,535 | |||||
Distribution fees Class C | 171,839 | |||||
Administrative servicing fees Class A | 302,893 | |||||
Administrative servicing fees Class B (a) | 845 | |||||
Administrative servicing fees Class C | 5,602 | |||||
Administrative servicing fees Institutional Service Class (b) | 35,783 | |||||
Registration and filing fees | 58,862 | |||||
Professional fees | 43,709 | |||||
Printing fees | 58,862 | |||||
Trustee fees | 7,076 | |||||
Custodian fees | 11,327 | |||||
Accounting and transfer agent fees | 94,584 | |||||
Compliance program costs (Note 3) | 1,920 | |||||
Other | 34,665 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 2,612,846 | |||||
|
| |||||
Earnings credit (Note 5) | (224 | ) | ||||
Investment advisory fees waived (Note 3) | (12,386 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (26,555 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (b) | (2,309 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (4,903 | ) | ||||
|
| |||||
Net Expenses | 2,566,469 | |||||
|
| |||||
NET INVESTMENT INCOME | 1,150,283 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 8,648,692 | |||||
Net change in unrealized appreciation/(depreciation) from investments | 43,924,900 | |||||
|
| |||||
Net realized/unrealized gains from investments | 52,573,592 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 53,723,875 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
180
Statements of Changes in Net Assets
| Nationwide Ziegler NYSE Arca Tech 100 Index Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 1,150,283 | $ | 743,106 | ||||||||
Net realized gains from investments | 8,648,692 | 3,953,136 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | 43,924,900 | 44,583,754 | ||||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 53,723,875 | 49,279,996 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (652,733 | ) | (242,613 | ) | ||||||||
Class B (a) | – | – | ||||||||||
Class C | – | – | ||||||||||
Institutional Service Class (b) | (158,119 | ) | (28,571 | ) | ||||||||
Institutional Class | (474 | )(c) | – | |||||||||
|
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|
| |||||||||
Change in net assets from shareholder distributions | (811,326 | ) | (271,184 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (1,448,371 | ) | 3,236,202 | |||||||||
|
|
|
| |||||||||
Change in net assets | 51,464,178 | 52,245,014 | ||||||||||
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| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 245,304,972 | 193,059,958 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 296,769,150 | $ | 245,304,972 | ||||||||
|
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|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 457,748 | $ | 252,717 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Proceeds from shares issued | $ | 41,502,077 | $ | 46,342,546 | ||||||||
Proceeds from shares issued from class conversion | 2,546,766 | – | ||||||||||
Dividends reinvested | 616,189 | 226,311 | ||||||||||
Cost of shares redeemed | (56,249,694 | ) | (48,959,110 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (11,584,662 | ) | (2,390,253 | ) | ||||||||
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| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Proceeds from shares issued | – | 200 | ||||||||||
Dividends reinvested | – | – | ||||||||||
Cost of shares redeemed in class conversion | (2,546,766 | ) | – | |||||||||
Cost of shares redeemed | (327,080 | ) | (1,773,895 | ) | ||||||||
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| |||||||||
Total Class B Shares | (2,873,846 | ) | (1,773,695 | ) | ||||||||
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| |||||||||
Class C Shares (Note 12) | ||||||||||||
Proceeds from shares issued | 5,383,789 | 1,987,025 | ||||||||||
Dividends reinvested | – | – | ||||||||||
Cost of shares redeemed | (2,493,189 | ) | (1,913,649 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 2,890,600 | 73,376 | ||||||||||
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|
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| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Proceeds from shares issued | 17,976,037 | 14,768,987 | ||||||||||
Dividends reinvested | 148,680 | 28,036 | ||||||||||
Cost of shares redeemed | (8,299,349 | ) | (7,470,249 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 9,825,368 | 7,326,774 | ||||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
181
Statements of Changes in Net Assets (Continued)
| Nationwide Ziegler NYSE Arca Tech 100 Index Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | $ | 464,503 | (c) | $ | – | |||||||
Dividends reinvested | 364 | (c) | – | |||||||||
Cost of shares redeemed | (170,698 | )(c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 294,169 | (c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (1,448,371 | ) | $ | 3,236,202 | |||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 12) | ||||||||||||
Issued | 859,437 | 1,198,597 | ||||||||||
Issued in class conversion | 57,223 | – | ||||||||||
Reinvested | 13,032 | 6,211 | ||||||||||
Redeemed | (1,155,636 | ) | (1,292,345 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (225,944 | ) | (87,537 | ) | ||||||||
|
|
|
| |||||||||
Class B Shares (Note 12)(a) | ||||||||||||
Issued | – | 5 | ||||||||||
Reinvested | – | – | ||||||||||
Redeemed in class conversion | (63,898 | ) | – | |||||||||
Redeemed | (8,347 | ) | (52,513 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (72,245 | ) | (52,508 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 12) | ||||||||||||
Issued | 122,156 | 56,354 | ||||||||||
Reinvested | – | – | ||||||||||
Redeemed | (56,894 | ) | (55,512 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | 65,262 | 842 | ||||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 12)(b) | ||||||||||||
Issued | 362,063 | 385,422 | ||||||||||
Reinvested | 3,086 | 763 | ||||||||||
Redeemed | (167,640 | ) | (189,452 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 197,509 | 196,733 | ||||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 9,044 | (c) | – | |||||||||
Reinvested | 7 | (c) | – | |||||||||
Redeemed | (3,276 | )(c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 5,775 | (c) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | (29,643 | ) | 57,530 | |||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
182
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Ziegler NYSE Arca Tech 100 Index 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 | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income (Loss) to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | ||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 43.15 | 0.21 | 9.24 | 9.45 | (0.14 | ) | (0.14 | ) | $ | 52.46 | 21.93 | % | $ | 244,041,076 | 0.91 | % | 0.44 | % | 0.93 | % | 21.68 | % | |||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 34.34 | 0.14 | 8.72 | 8.86 | (0.05 | ) | (0.05 | ) | $ | 43.15 | 25.83 | % | $ | 210,474,970 | 1.08 | % | 0.37 | % | 1.22 | % | 33.00 | % | |||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 32.07 | (0.02 | ) | 2.29 | 2.27 | – | – | $ | 34.34 | 7.05 | % | $ | 170,515,922 | 1.08 | % | (0.07 | %) | 1.27 | % | 30.00 | % | ||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 25.62 | (0.05 | ) | 6.50 | 6.45 | – | – | $ | 32.07 | 25.17 | % | $ | 182,410,113 | 1.08 | % | (0.15 | %) | 1.27 | % | 11.00 | % | ||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 22.06 | (0.06 | ) | 3.62 | 3.56 | – | – | $ | 25.62 | 16.18 | % | $ | 162,266,663 | 1.08 | % | (0.26 | %) | 1.25 | % | 9.00 | % | ||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 39.38 | - | 8.32 | 8.32 | – | – | $ | 47.70 | 21.13 | % | $ | 19,986,986 | 1.57 | % | (0.23 | %) | 1.57 | % | 21.68 | % | |||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 31.49 | (0.08 | ) | 7.97 | 7.89 | – | – | $ | 39.38 | 25.06 | % | $ | 13,930,080 | 1.68 | % | (0.23 | %) | 1.72 | % | 33.00 | % | ||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 29.58 | (0.20 | ) | 2.11 | 1.91 | – | – | $ | 31.49 | 6.42 | % | $ | 11,111,107 | 1.68 | % | (0.67 | %) | 1.77 | % | 30.00 | % | ||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 23.78 | (0.21 | ) | 6.01 | 5.80 | – | – | $ | 29.58 | 24.43 | % | $ | 11,269,283 | 1.68 | % | (0.75 | %) | 1.77 | % | 11.00 | % | ||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 20.59 | (0.20 | ) | 3.39 | 3.19 | – | – | $ | 23.78 | 15.49 | % | $ | 10,679,964 | 1.68 | % | (0.86 | %) | 1.75 | % | 9.00 | % | ||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 43.58 | 0.01 | 9.63 | 9.64 | (0.31 | ) | (0.31 | ) | $ | 52.91 | 22.20 | % | $ | 32,435,707 | 0.66 | % | 0.67 | % | 0.68 | % | 21.68 | % | |||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 34.63 | 0.25 | 8.80 | 9.05 | (0.10 | ) | (0.10 | ) | $ | 43.58 | 26.19 | % | $ | 18,106,198 | 0.81 | % | 0.64 | % | 0.97 | % | 33.00 | % | |||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 32.26 | 0.06 | 2.31 | 2.37 | – | – | $ | 34.63 | 7.35 | % | $ | 7,575,853 | 0.81 | % | 0.20 | % | 1.02 | % | 30.00 | % | |||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 25.69 | 0.05 | 6.52 | 6.57 | – | – | $ | 32.26 | 25.58 | % | $ | 5,989,789 | 0.77 | % | 0.16 | % | 1.02 | % | 11.00 | % | |||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 22.06 | - | 3.63 | 3.63 | – | – | $ | 25.69 | 16.46 | % | $ | 311,833 | 0.83 | % | (0.01 | %) | 1.00 | % | 9.00 | % | |||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 45.87 | 0.01 | 7.39 | 7.40 | (0.39 | ) | (0.39 | ) | $ | 52.88 | 16.23 | % | $ | 305,381 | 0.48 | % | 0.82 | % | 0.48 | % | 21.68 | % | |||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
183
July 31, 2014
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 July 31, 2014, the Trust operates fifty-six (56) 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 twelve (12) series listed below (each, a “Fund”; collectively, the “Funds”).
- Nationwide Bailard Cognitive Value Fund (“Cognitive Value”)
- Nationwide Bailard International Equities Fund (“International Equities”)
- Nationwide Bailard Technology & Science Fund (“Technology & Science”)
- Nationwide Geneva Mid Cap Growth Fund (“Mid Cap Growth”)
- Nationwide Geneva Small Cap Growth Fund (“Small Cap Growth”)
- Nationwide HighMark Balanced Fund (“Balanced”)
- Nationwide HighMark Large Cap Core Equity Fund (“Large Cap Core Equity”)
- Nationwide HighMark Large Cap Growth Fund (“Large Cap Growth”)
- Nationwide HighMark Small Cap Core Fund (“Small Cap Core”)
- Nationwide HighMark Value Fund (“Value”)
- Nationwide Ziegler Equity Income Fund (“Equity Income”)
- Nationwide Ziegler NYSE Arca Tech 100 Index Fund (“NYSE Arca Tech 100 Index”)
Each Fund commenced operations on September 16, 2013 as a result of a tax free reorganization in which Cognitive Value, International Equities, Technology & Science, Mid Cap Growth, Small Cap Growth, Balanced, Large Cap Core Equity, Large Cap Growth, Small Cap Core, Value, Equity Income, and NYSE Arca Tech 100 Index acquired all of the assets, subject to all liabilities and obligations, of the HighMark Cognitive Value Fund, HighMark International Opportunities Fund, HighMark Enhanced Growth Fund, HighMark Geneva Mid Cap Growth Fund, HighMark Geneva Small Cap Growth Fund, HighMark Balanced Fund, HighMark Large Cap Core Equity Fund, HighMark Large Cap Growth Fund, HighMark Small Cap Core Fund, HighMark Value Fund, HighMark Equity Income Fund, and HighMark NYSE Arca Tech 100 Index Fund, respectively, each a former series of HighMark Funds (each a “Predecessor Fund,” and collectively the “Predecessor Funds”). Each Fund has adopted the historical performance of its corresponding Predecessor Fund. Each Fund and its corresponding Predecessor Fund have substantially similar investment goals and strategies.
Each of the Funds is a 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 |
U.S. GAAP defines fair 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 to the Funds, Nationwide Fund Advisors (“NFA”), assigns a fair value, as defined by U.S. GAAP, 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
184
Notes to Financial Statements (Continued)
July 31, 2014
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) |
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-based quotations are readily available are valued at the 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. Shares of unaffiliated exchange-traded funds 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. Investments valued in this manner are generally categorized as Level 1 investments within the hierarchy.
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. Evaluations provided by independent pricing service providers may be determined without exclusive reliance on quoted prices and may use broker-dealer quotations, individual trading characteristics and other market data, reported trades or valuation estimates from their internal pricing models. The independent pricing service providers’ internal models use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates, anticipated timing of principal repayments, and quoted prices for similar assets and are generally categorized as Level 2 investments within the hierarchy. Debt obligations generally involve some risk of default with respect to interest and/or principal payments.
The Board of Trustees has delegated authority to NFA, and the Trust’s administrator, Nationwide Fund Management LLC (“NFM”), to assign a fair value under certain circumstances (e.g., pricing service does not provide a price as there may be no market-based quotations or price provided is deemed unreliable by NFA, NFM and/or designee), pursuant to valuation procedures approved by the Board of Trustees. NFA and NFM have established a Fair Valuation Committee (“FVC”) to assign these fair valuations.
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-based 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
185
Notes to Financial Statements (Continued)
July 31, 2014
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-based 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. That said, there can be no assurance that the fair value assigned to a security is the price at which a security could have been sold during the period in which the particular fair value was used to value the security. To the extent the inputs used are observable these securities are classified as Level 2 otherwise Level 3.
Securities listed on a non-American exchange are generally fair valued daily by an independent fair value pricing service approved by the Board of Trustees and categorized as Level 2 investments within the hierarchy. The fair valuations for these securities may not be the same as quoted or published prices of the securities on their primary markets. Securities for which daily fair value prices from the independent fair value pricing service are not available are generally valued at the last quoted sale price at the close of an exchange on which the security is traded and categorized as Level 2 investments within the hierarchy. 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.
Bank loans are valued using an average bid price provided by an independent pricing service. Evaluated quotes provided by the independent pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance, and other market data. The independent pricing service utilizes internal models and uses observable inputs such as issuer details, interest rates, tranche type, ratings and other market data. Securities valued in this manner are generally categorized as Level 2, consistent with similar valuation techniques and inputs described above for debt and equity securities.
At July 31, 2014, 100% of the market value of Small Cap Growth, Large Cap Core Equity, Large Cap Growth, Equity Income, and NYSE Arca Tech 100 Index were determined based on Level 1 inputs.
The following tables provide a summary of the inputs used to value the Funds’ net assets as of July 31, 2014. Please refer to the Statements of Investments for additional information on portfolio holdings.
Cognitive Value
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | $ | 97,517,820 | $ | — | $ | — | $ | 97,517,820 | ||||||||
Exchange Traded Funds | 4,266,408 | — | — | 4,266,408 | ||||||||||||
Mutual Fund | 470,456 | — | — | 470,456 | ||||||||||||
Repurchase Agreement | — | 4,344,544 | — | 4,344,544 | ||||||||||||
Total | $ | 102,254,684 | $ | 4,344,544 | $ | — | $ | 106,599,228 | ||||||||
186
Notes to Financial Statements (Continued)
July 31, 2014
International Equities
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Aerospace & Defense | $ | — | $ | 881,509 | $ | — | $ | 881,509 | ||||||||
Air Freight & Logistics | — | 2,879,521 | — | 2,879,521 | ||||||||||||
Airlines | — | 1,933,312 | — | 1,933,312 | ||||||||||||
Auto Components | 1,073,875 | 7,351,150 | — | 8,425,025 | ||||||||||||
Automobiles | 983,000 | 3,218,080 | — | 4,201,080 | ||||||||||||
Banks | 6,870,130 | 25,585,535 | — | 32,455,665 | ||||||||||||
Biotechnology | — | 934,553 | — | 934,553 | ||||||||||||
Capital Markets | 1,942,496 | 7,366,438 | — | 9,308,934 | ||||||||||||
Chemicals | — | 6,112,361 | — | 6,112,361 | ||||||||||||
Commercial Services & Supplies | — | 1,852,726 | — | 1,852,726 | ||||||||||||
Communications Equipment | — | 996,151 | — | 996,151 | ||||||||||||
Construction & Engineering | — | 8,308,611 | — | 8,308,611 | ||||||||||||
Construction Materials | — | 2,324,762 | — | 2,324,762 | ||||||||||||
Containers & Packaging | — | 4,576,854 | — | 4,576,854 | ||||||||||||
Diversified Financial Services | — | 3,703,090 | — | 3,703,090 | ||||||||||||
Diversified Telecommunication Services | — | 10,967,352 | — | 10,967,352 | ||||||||||||
Electric Utilities | — | 2,269,231 | — | 2,269,231 | ||||||||||||
Electrical Equipment | — | 1,127,180 | — | 1,127,180 | ||||||||||||
Energy Equipment & Services | — | 1,134,466 | — | 1,134,466 | ||||||||||||
Food & Staples Retailing | — | 6,203,319 | — | 6,203,319 | ||||||||||||
Food Products | — | 9,354,806 | — | 9,354,806 | ||||||||||||
Gas Utilities | — | 2,304,207 | — | 2,304,207 | ||||||||||||
Health Care Providers & Services | — | 1,552,899 | — | 1,552,899 | ||||||||||||
Hotels, Restaurants & Leisure | — | 4,654,793 | — | 4,654,793 | ||||||||||||
Household Durables | — | 5,655,493 | — | 5,655,493 | ||||||||||||
Household Products | — | 3,493,742 | — | 3,493,742 | ||||||||||||
Industrial Conglomerates | — | 1,141,087 | — | 1,141,087 | ||||||||||||
Information Technology Services | 1,480,140 | 3,787,899 | — | 5,268,039 | ||||||||||||
Insurance | — | 15,018,969 | — | 15,018,969 | ||||||||||||
Internet Software & Services | 647,500 | — | — | 647,500 | ||||||||||||
Leisure Products | — | 942,219 | — | 942,219 | ||||||||||||
Life Sciences Tools & Services | — | 1,663,405 | — | 1,663,405 | ||||||||||||
Machinery | — | 3,551,641 | — | 3,551,641 | ||||||||||||
Marine | — | 1,146,092 | — | 1,146,092 | ||||||||||||
Media | — | 4,340,222 | — | 4,340,222 | ||||||||||||
Metals & Mining | 2,460,686 | 2,744,608 | — | 5,205,294 | ||||||||||||
Multiline Retail | — | 1,141,320 | — | 1,141,320 | ||||||||||||
Multi-Utilities | — | 1,289,226 | — | 1,289,226 | ||||||||||||
Oil, Gas & Consumable Fuels | 6,227,202 | 14,293,607 | — | 20,520,809 | ||||||||||||
Paper & Forest Products | — | 4,966,661 | — | 4,966,661 | ||||||||||||
Personal Products | — | 1,233,727 | — | 1,233,727 | ||||||||||||
Pharmaceuticals | 2,276,249 | 13,749,912 | — | 16,026,161 | ||||||||||||
Professional Services | 761,370 | 1,012,420 | — | 1,773,790 | ||||||||||||
Real Estate Investment Trusts (REITs) | — | 1,876,209 | — | 1,876,209 | ||||||||||||
Road & Rail | — | 1,766,554 | — | 1,766,554 | ||||||||||||
Semiconductors & Semiconductor Equipment | — | 2,203,705 | — | 2,203,705 | ||||||||||||
Software | — | 960,677 | — | 960,677 | ||||||||||||
Specialty Retail | — | 2,283,666 | — | 2,283,666 | ||||||||||||
Technology Hardware, Storage & Peripherals | — | 6,495,488 | — | 6,495,488 | ||||||||||||
Textiles, Apparel & Luxury Goods | — | 1,924,862 | — | 1,924,862 | ||||||||||||
Tobacco | — | 3,056,292 | — | 3,056,292 | ||||||||||||
187
Notes to Financial Statements (Continued)
July 31, 2014
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: (continued) | ||||||||||||||||
Common Stocks (continued) | ||||||||||||||||
Trading Companies & Distributors | $ | — | $ | 3,250,498 | $ | — | $ | 3,250,498 | ||||||||
Wireless Telecommunication Services | 717,200 | 6,623,183 | — | 7,340,383 | ||||||||||||
Total Common Stocks | $ | 25,439,848 | $ | 229,206,290 | $ | — | $ | 254,646,138 | ||||||||
Exchange Traded Fund | 3,603,000 | — | — | 3,603,000 | ||||||||||||
Forward Foreign Currency Contracts | — | 299,113 | — | 299,113 | ||||||||||||
Mutual Fund | 500,041 | — | — | 500,041 | ||||||||||||
Repurchase Agreement | — | 4,617,759 | — | 4,617,759 | ||||||||||||
Total | $ | 29,542,889 | $ | 234,123,162 | $ | — | $ | 263,666,051 | ||||||||
Technology & Science
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Biotechnology | $ | 6,191,290 | $ | — | $ | — | $ | 6,191,290 | ||||||||
Communications Equipment | 9,806,751 | — | — | 9,806,751 | ||||||||||||
Electronic Equipment, Instruments & Components | 3,489,256 | — | — | 3,489,256 | ||||||||||||
Information Technology Services | 12,904,706 | — | — | 12,904,706 | ||||||||||||
Internet & Catalog Retail | 2,548,933 | — | — | 2,548,933 | ||||||||||||
Internet Software & Services | 15,774,562 | — | — | 15,774,562 | ||||||||||||
Life Sciences Tools & Services | 452,370 | — | — | 452,370 | ||||||||||||
Pharmaceuticals | 701,670 | — | — | 701,670 | ||||||||||||
Semiconductors & Semiconductor Equipment | 15,487,784 | 833,359 | — | 16,321,143 | ||||||||||||
Software | 16,142,469 | — | — | 16,142,469 | ||||||||||||
Technology Hardware, Storage & Peripherals | 15,842,512 | — | — | 15,842,512 | ||||||||||||
Total | $ | 99,342,303 | $ | 833,359 | $ | — | $ | 100,175,662 | ||||||||
Mid Cap Growth
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | $ | 1,454,394,696 | $ | — | $ | — | $ | 1,454,394,696 | ||||||||
Mutual Fund | 559,979 | — | — | 559,979 | ||||||||||||
Repurchase Agreement | — | 5,171,271 | — | 5,171,271 | ||||||||||||
Total | $ | 1,454,954,675 | $ | 5,171,271 | $ | — | $ | 1,460,125,946 | ||||||||
Balanced
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Asset-Backed Securities | $ | — | $ | 625,771 | $ | — | $ | 625,771 | ||||||||
Bank Loans | — | 29,582 | — | 29,582 | ||||||||||||
Collateralized Mortgage Obligations | — | 98,424 | — | 98,424 | ||||||||||||
Commercial Mortgage Backed Securities | — | 1,037,270 | — | 1,037,270 | ||||||||||||
Common Stocks | 18,801,412 | — | — | 18,801,412 | ||||||||||||
Corporate Bonds | — | 6,629,449 | — | 6,629,449 | ||||||||||||
Municipal Bonds | — | 367,256 | — | 367,256 | ||||||||||||
U.S. Government Mortgage Backed Agencies | — | 1,712,767 | — | 1,712,767 | ||||||||||||
U.S. Treasury Notes | — | 1,770,223 | — | 1,770,223 | ||||||||||||
Total | $ | 18,801,412 | $ | 12,270,742 | $ | — | $ | 31,072,154 | ||||||||
188
Notes to Financial Statements (Continued)
July 31, 2014
Small Cap Core
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Aerospace & Defense | $ | 1,160,404 | $ | — | $ | — | $ | 1,160,404 | ||||||||
Airlines | 536,362 | — | — | 536,362 | ||||||||||||
Auto Components | 1,271,403 | — | — | 1,271,403 | ||||||||||||
Automobiles | 314,665 | — | — | 314,665 | ||||||||||||
Banks | 4,932,873 | — | — | 4,932,873 | ||||||||||||
Biotechnology | 3,396,433 | — | — | 3,396,433 | ||||||||||||
Building Products | 642,278 | — | — | 642,278 | ||||||||||||
Capital Markets | 1,632,341 | — | — | 1,632,341 | ||||||||||||
Chemicals | 705,279 | — | — | 705,279 | ||||||||||||
Commercial Services & Supplies | 611,276 | — | — | 611,276 | ||||||||||||
Communications Equipment | 1,337,926 | — | — | 1,337,926 | ||||||||||||
Construction & Engineering | 842,617 | — | — | 842,617 | ||||||||||||
Construction Materials | 636,418 | — | — | 636,418 | ||||||||||||
Containers & Packaging | 2,020,710 | — | — | 2,020,710 | ||||||||||||
Diversified Consumer Services | 517,436 | — | — | 517,436 | ||||||||||||
Electric Utilities | 1,724,819 | — | — | 1,724,819 | ||||||||||||
Electrical Equipment | 252,915 | — | — | 252,915 | ||||||||||||
Electronic Equipment, Instruments & Components | 217,685 | — | — | 217,685 | ||||||||||||
Energy Equipment & Services | 3,940,387 | — | — | 3,940,387 | ||||||||||||
Food & Staples Retailing | 951,296 | — | — | 951,296 | ||||||||||||
Food Products | 342,240 | — | — | 342,240 | ||||||||||||
Health Care Equipment & Supplies | 5,795,386 | 18 | — | 5,795,404 | ||||||||||||
Health Care Providers & Services | 2,097,868 | — | — | 2,097,868 | ||||||||||||
Health Care Technology | 1,145,064 | — | — | 1,145,064 | ||||||||||||
Hotels, Restaurants & Leisure | 4,047,862 | — | — | 4,047,862 | ||||||||||||
Household Durables | 363,258 | — | — | 363,258 | ||||||||||||
Household Products | 802,308 | — | — | 802,308 | ||||||||||||
Independent Power and Renewable Electricity Producers | 910,665 | — | — | 910,665 | ||||||||||||
Information Technology Services | 531,358 | — | — | 531,358 | ||||||||||||
Insurance | 1,530,087 | — | — | 1,530,087 | ||||||||||||
Internet Software & Services | 1,628,597 | — | — | 1,628,597 | ||||||||||||
Life Sciences Tools & Services | 149,348 | — | — | 149,348 | ||||||||||||
Machinery | 2,904,351 | — | — | 2,904,351 | ||||||||||||
Media | 1,646,838 | — | — | 1,646,838 | ||||||||||||
Metals & Mining | 596,681 | — | — | 596,681 | ||||||||||||
Oil, Gas & Consumable Fuels | 889,053 | — | — | 889,053 | ||||||||||||
Paper & Forest Products | 1,136,077 | — | — | 1,136,077 | ||||||||||||
Personal Products | 188,920 | — | — | 188,920 | ||||||||||||
Pharmaceuticals | 445,275 | — | — | 445,275 | ||||||||||||
Professional Services | 3,455,460 | — | — | 3,455,460 | ||||||||||||
Real Estate Investment Trusts (REITs) | 8,810,869 | — | — | 8,810,869 | ||||||||||||
Road & Rail | 1,573,981 | — | — | 1,573,981 | ||||||||||||
Semiconductors & Semiconductor Equipment | 5,438,711 | — | — | 5,438,711 | ||||||||||||
Software | 4,539,828 | — | — | 4,539,828 | ||||||||||||
Specialty Retail | 1,374,629 | — | — | 1,374,629 | ||||||||||||
Technology Hardware, Storage & Peripherals | 610,519 | — | — | 610,519 | ||||||||||||
Textiles, Apparel & Luxury Goods | 1,308,945 | — | — | 1,308,945 | ||||||||||||
Thrifts & Mortgage Finance | 460,702 | — | — | 460,702 | ||||||||||||
189
Notes to Financial Statements (Continued)
July 31, 2014
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: (continued) | ||||||||||||||||
Common Stocks (continued) | ||||||||||||||||
Wireless Telecommunication Services | $ | 411,919 | $ | — | $ | — | $ | 411,919 | ||||||||
Total Common Stocks | $ | 82,782,322 | $ | 18 | $ | — | $ | 82,782,340 | ||||||||
Total Assets | $ | 82,782,322 | $ | 18 | $ | — | $ | 82,782,340 | ||||||||
Liabilities: | ||||||||||||||||
Futures Contracts | (101,148 | ) | — | — | (101,148 | ) | ||||||||||
Total Liabilities | $ | (101,148 | ) | $ | — | $ | — | $ | (101,148 | ) | ||||||
Total | $ | 82,681,174 | $ | 18 | $ | — | $ | 82,681,192 | ||||||||
Value
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Common Stocks | ||||||||||||||||
Aerospace & Defense | $ | 6,330,884 | $ | 5,057,041 | $ | — | $ | 11,387,925 | ||||||||
Air Freight & Logistics | 5,435,098 | — | — | 5,435,098 | ||||||||||||
Auto Components | 4,111,035 | — | — | 4,111,035 | ||||||||||||
Banks | 32,475,900 | — | — | 32,475,900 | ||||||||||||
Beverages | 6,206,352 | — | — | 6,206,352 | ||||||||||||
Capital Markets | 28,244,091 | — | — | 28,244,091 | ||||||||||||
Chemicals | 3,104,586 | — | — | 3,104,586 | ||||||||||||
Communications Equipment | 5,320,035 | — | — | 5,320,035 | ||||||||||||
Construction & Engineering | 2,425,595 | — | — | 2,425,595 | ||||||||||||
Consumer Finance | 7,053,210 | — | — | 7,053,210 | ||||||||||||
Diversified Financial Services | 6,391,315 | 3,610,945 | — | 10,002,260 | ||||||||||||
Diversified Telecommunication Services | 7,208,547 | — | — | 7,208,547 | ||||||||||||
Electrical Equipment | 4,425,667 | — | — | 4,425,667 | ||||||||||||
Electronic Equipment, Instruments & Components | 3,892,212 | — | — | 3,892,212 | ||||||||||||
Energy Equipment & Services | 5,803,072 | — | — | 5,803,072 | ||||||||||||
Food Products | 5,474,700 | — | — | 5,474,700 | ||||||||||||
Health Care Equipment & Supplies | 8,001,453 | — | — | 8,001,453 | ||||||||||||
Health Care Providers & Services | 16,793,209 | — | — | 16,793,209 | ||||||||||||
Household Products | 12,954,781 | — | — | 12,954,781 | ||||||||||||
Industrial Conglomerates | 3,163,296 | — | — | 3,163,296 | ||||||||||||
Information Technology Services | 7,767,408 | — | — | 7,767,408 | ||||||||||||
Insurance | 10,919,679 | — | — | 10,919,679 | ||||||||||||
Internet & Catalog Retail | 3,649,305 | — | — | 3,649,305 | ||||||||||||
Machinery | 11,478,927 | — | — | 11,478,927 | ||||||||||||
Media | 19,971,831 | — | — | 19,971,831 | ||||||||||||
Metals & Mining | 1,040,759 | — | — | 1,040,759 | ||||||||||||
Multiline Retail | 5,301,424 | — | — | 5,301,424 | ||||||||||||
Oil, Gas & Consumable Fuels | 35,165,474 | — | — | 35,165,474 | ||||||||||||
Paper & Forest Products | 3,570,575 | — | — | 3,570,575 | ||||||||||||
Pharmaceuticals | 15,500,126 | — | — | 15,500,126 | ||||||||||||
Real Estate Investment Trusts (REITs) | 3,795,671 | — | — | 3,795,671 | ||||||||||||
Road & Rail | 3,779,081 | — | — | 3,779,081 | ||||||||||||
Semiconductors & Semiconductor Equipment | 2,845,422 | — | — | 2,845,422 | ||||||||||||
Software | 13,353,027 | — | — | 13,353,027 | ||||||||||||
Technology Hardware, Storage & Peripherals | 8,618,662 | — | — | 8,618,662 | ||||||||||||
Tobacco | 4,549,505 | — | — | 4,549,505 | ||||||||||||
190
Notes to Financial Statements (Continued)
July 31, 2014
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: (continued) | ||||||||||||||||
Common Stocks (continued) | ||||||||||||||||
Trading Companies & Distributors | $ | 57,935 | $ | — | $ | — | $ | 57,935 | ||||||||
Total Common Stocks | $ | 326,179,849 | $ | 8,667,986 | $ | — | $ | 334,847,835 | ||||||||
Mutual Fund | 319,930 | — | — | 319,930 | ||||||||||||
Preferred Stock | — | 2,897,544 | — | 2,897,544 | ||||||||||||
Repurchase Agreement | — | 2,954,470 | — | 2,954,470 | ||||||||||||
Total | $ | 326,499,779 | $ | 14,520,000 | $ | — | $ | 341,019,779 | ||||||||
Amounts designated as “—”, which may include fair valued securities, are zero or have been rounded to zero.
During the year ended July 31, 2014, there were no significant transfers into or out of Level 1, Level 2 or Level 3.
| (b) | Foreign Currency Transactions |
The accounting records of the Funds are maintained in U.S. dollars. The Funds may, nevertheless, engage in foreign currency transactions. In those instances, a Fund will convert foreign currency amounts into U.S. dollars at the current rate of exchange between the foreign currency and the U.S. dollar in order to determine the value of the Fund’s investments, assets, and liabilities.
Purchases and sales of securities, receipts of income, and payments of expenses are converted at the prevailing rate of exchange on the respective date of such transactions. The accounting records of a Fund do not differentiate that portion of the results of operations resulting from changes in foreign exchange rates from those resulting from changes in the market prices of the relevant securities. Each portion contributes to the net realized gain or loss from investment transactions and net change in unrealized appreciation/(depreciation) from investments. Net currency gains or losses, realized and unrealized, that are a result of differences between the amount recorded on a Fund’s accounting records, and the U.S. dollar equivalent amount actually received or paid for interest or dividends, receivables and payables for investments sold or purchased, and foreign cash, are included in the Statement of Operations under “Net realized gains/losses from foreign currency transactions” and “Net change in unrealized appreciation/(depreciation) from translation of assets and liabilities denominated in foreign currencies”.
| (c) | Forward Foreign Currency Contracts |
International Equities is subject to foreign currency exchange risk in the normal course of pursuing its objectives. International Equities entered into forward foreign currency contracts in connection with planned purchases or sales of securities denominated in a foreign currency and/or to hedge the U.S. dollar value of portfolio securities denominated in a foreign currency. 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 foreign currency contract at the time of settlement date or if the fund enters into an offsetting contract before the contractual settlement date 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.
191
Notes to Financial Statements (Continued)
July 31, 2014
International Equities’ forward foreign currency contracts are reflected 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.”
| (d) | Options |
Technology & Science purchased put options on equity securities, and entered into closing transactions with respect to such options to terminate existing positions. Such put option investments are utilized to hedge against price volatility of the underlying investment. The purchase of put options serves as a short hedge.
Exchange-traded options are generally valued at the last quoted sale price or official closing price, if available, and otherwise at the last quoted bid price, and are generally categorized as Level 1 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.
Exchange-traded options are issued by a clearing organization affiliated with the exchange on which the option is listed that, in effect, guarantees completion of every exchange-traded option transaction.
The Fund effectively terminates its right 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 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.
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.”
At July 31, 2014, Technology & Science had no open options contracts.
| (e) | Futures Contracts |
International Equities, Large Cap Core Equity, and Small Cap Core are subject to equity price risk in the normal course of pursuing their investment objectives. International Equities, Large Cap Core Equity, and Small Cap Core entered into financial futures contracts (“futures contracts”) to enable the Funds to more closely approximate the performance of their benchmark indices or for tactical hedging purposes. 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, a 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, a Fund agrees to receive from or pay to a 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 a 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.
192
Notes to Financial Statements (Continued)
July 31, 2014
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, a 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, a 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. A Fund’s investments in futures contracts entail limited counterparty credit risk because the Fund invests only in exchange-traded futures contracts, which are settled through the exchange and whose fulfillment is guaranteed by the credit of the exchange.
A Fund’s futures contracts are reflected 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.”
At July 31, 2014, International Equities had no open futures contracts.
The following tables provide a summary of the Funds’ derivative instruments categorized by risk exposure as of July 31, 2014:
Fair Values of Derivatives not Accounted for as Hedging Instruments as of July 31, 2014
International Equities
| Assets: | Statement of Assets & Liabilities | Fair Value | ||||
Forward Foreign Currency Contracts | ||||||
Currency risk | Unrealized appreciation on forward foreign currency contracts | $ | 299,113 | |||
Total | $ | 299,113 | ||||
Large Cap Core Equity
| Liabilities: | Statement of Assets & Liabilities | Fair Value | ||||
Futures Contracts* | ||||||
Equity risk | Unrealized depreciation from futures contracts | $ | (32,533 | ) | ||
Total | $ | (32,533 | ) | |||
Small Cap Core
| Liabilities: | Statement of Assets & Liabilities | Fair Value | ||||
Futures Contracts* | ||||||
Equity risk | Unrealized depreciation from futures contracts | $ | (101,148 | ) | ||
Total | $ | (101,148 | ) | |||
| * | 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 & Liabilities. |
193
Notes to Financial Statements (Continued)
July 31, 2014
The Effect of Derivative Instruments on the Statement of Operations for the Year Ended July 31, 2014
International Equities
| Realized Gain/(Loss): | Total | |||
Forward Foreign Currency Contracts | ||||
Currency risk | $ | 1,262,043 | ||
| ||||
Futures Contracts | ||||
Equity risk | 114,341 | |||
| ||||
Total | $ | 1,376,384 | ||
| ||||
Technology & Science
| Realized Gain/(Loss): | Total | |||
Purchased Options(a) | ||||
Equity risk | $ | — | ||
| ||||
Total | $ | — | ||
| ||||
Large Cap Core Equity
| Realized Gain/(Loss): | Total | |||
Futures Contracts | ||||
Equity risk | $ | 334,482 | ||
| ||||
Total | $ | 334,482 | ||
| ||||
Small Cap Core
| Realized Gain/(Loss): | Total | |||
Futures Contracts | ||||
Equity risk | $ | 377,591 | ||
| ||||
Total | $ | 377,591 | ||
| ||||
| (a) | Realized gains/(losses) from purchased options are included in “Net realized gains/losses from investment transactions”. |
Amounts designated as “—” are zero or have been rounded to zero.
Change in Unrealized Appreciation/(Depreciation) on Derivatives Recognized in the Statement of Operations for the Year Ended July 31, 2014
International Equities
| Unrealized Appreciation/(Depreciation): | Total | |||
Forward Foreign Currency Contracts | ||||
Currency risk | $ | 582,161 | ||
| ||||
Futures Contracts | ||||
Equity risk | (84,595 | ) | ||
| ||||
Total | $ | 497,566 | ||
| ||||
194
Notes to Financial Statements (Continued)
July 31, 2014
Large Cap Core Equity
| Unrealized Appreciation/(Depreciation): | Total | |||
Futures Contracts | ||||
Equity risk | $ | (26,899 | ) | |
| ||||
Total | $ | (26,899 | ) | |
| ||||
Small Cap Core
| Unrealized Appreciation/(Depreciation): | Total | |||
Futures Contracts | ||||
Equity risk | $ | (116,978 | ) | |
| ||||
Total | $ | (116,978 | ) | |
| ||||
Information about derivative instruments reflected as of the date of this report is generally indicative of the type and volume of derivative activity for International Equities (forward foreign currency contracts), Large Cap Core Equity (futures contracts), and Small Cap Core (futures contracts) during the year ended July 31, 2014.
During February and March 2014, Technology & Science held purchased options contracts with an average notional balance of $22,800. For the remainder of the year ended July 31, 2014, Technology & Science had no investments in derivatives.
During August and September 2013, International Equities held futures contracts with an average notional balance of $6,303,114. For the remainder of the year ended July 31, 2014, International Equities had no investments in futures.
The Funds are required to disclose information about offsetting and related arrangements to enable users of the financial statements to understand the effect of those arrangements on the Funds’ financial position. For financial reporting purposes, International Equities, Large Cap Core Equity, and Small Cap Core present all financial assets and financial liabilities on a gross basis that are subject to master netting arrangements or similar agreements on the Statement of Assets and Liabilities. At July 31, 2014, the futures contracts agreements do not permit Large Cap Core Equity or Small Cap Core to enforce netting arrangements.
The following tables set forth International Equities’ net exposure by counterparty for forward foreign currency contracts that are subject to enforceable master netting arrangements or similar agreements as of July 31, 2014:
Offsetting of Financial Assets and Derivative Assets:
| Description | Gross Amounts of Recognized Derivative Assets | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Derivative Assets Presented in the Statement of Assets and Liabilities | |||||||
Forward Foreign Currency Contracts | $299,113 | $ | — | $ | 299,113 | |||||
Total | $299,113 | $ | — | $ | 299,113 | |||||
Amounts designated as “—” are zero.
195
Notes to Financial Statements (Continued)
July 31, 2014
Financial Assets, Derivative Assets and Collateral Pledged by Counterparty:
| Gross Amounts not Offset in the Statement of Assets and Liabilities | ||||||||||||||
| Counterparty | Net Amounts of Derivative Assets Presented in the Statement of Assets and Liabilities | Derivatives Available for Offset | Collateral Received | Net Amount of Derivative Assets | ||||||||||
Brown Brothers Harriman & Co. | $299,113 | $ | — | $ | — | $ | 299,113 | |||||||
Total | $299,113 | $ | — | $ | — | $ | 299,113 | |||||||
Amounts designated as “—” are zero.
| (f) | Securities Lending |
During the period from September 16, 2013 through July 31, 2014, Cognitive Value, International Equities, Mid Cap Growth, and Value entered into securities lending transactions. To generate additional income, the Funds lent their portfolio securities, up to 33 1/3% of the total assets of each Fund, to brokers, dealers, and other financial institutions. The collateral that a Fund receives is included in calculating the Fund’s total assets. The Funds’ securities lending standards and guidelines require that the borrower (i) deliver cash or U.S. Government securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (ii) at all times thereafter mark-to-market the collateral on a daily basis so that the market value of such collateral is at least 100% of the value of securities loaned. A Fund receives payments from the securities lending agent equivalent to the dividends and interest that would have been earned on the securities loaned while simultaneously seeking to earn income on the investment of cash collateral. Income from the securities lending program is recorded when received from the securities lending agent. There may be risks of delay or restrictions in recovery of the securities or disposal of collateral should the borrower of the securities fail financially. Loans are made, however, only to borrowers deemed by the securities lending agent to be of good standing and creditworthy. Loans are subject to termination by a Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. For the period from September 16, 2013 through March 31, 2014, JPMorgan Chase Bank, N.A. (“JPMorgan”) served as securities lending agent for the securities lending program of the Funds. JPMorgan received a fee based on a percentage of earnings derived from the investment of cash collateral. Effective April 1, 2014, Brown Brothers Harriman & Co. (“BBH”) began serving as the primary securities lending agent for the securities lending program of the Funds. BBH receives a fee based on the difference between the income earned on the investment of cash collateral received from borrowers and the cash collateral fee. Information on the investment of cash collateral is shown in the Statement of Investments.
For the period from September 16, 2013 through March 31, 2014, in the event of a default by a borrower with respect to any loan, JPMorgan exercised any and all remedies provided under the applicable borrower agreement to make a Fund whole. These remedies included purchasing replacement securities by applying the collateral held from the defaulting borrower against the purchase cost of the replacement securities. If, despite such efforts by JPMorgan to exercise these remedies, a Fund sustained losses as a result of a borrower’s default, JPMorgan indemnified the Fund by purchasing replacement securities at its expense, or would pay the Fund an amount equal to the market value of the replacement securities, subject to certain limitations which were set forth in detail in the Securities Lending Agency Agreement between the Funds and JPMorgan. Effective April 1, 2014, in the event of a default by a borrower with respect to any loan, BBH will exercise any and all remedies provided under the applicable borrower agreement to make a Fund whole. These remedies include purchasing replacement securities by applying the collateral held from the defaulting borrower against the purchase cost of the replacement securities. If, despite such efforts by BBH to exercise these remedies, the collateral is less than the purchase cost of the replacement securities, BBH is responsible for such shortfall, subject to certain limitations that are set forth in detail in the Securities Lending Agency Agreement between the Funds and BBH.
196
Notes to Financial Statements (Continued)
July 31, 2014
At July 31, 2014, the BBH Securities Lending Agreement does not permit the Funds to enforce a netting arrangement.
Prior to September 16, 2013, the Predecessor Funds did not enter into any securities lending transactions.
| (g) | Repurchase Agreements |
For the period from September 16, 2013 through July 31, 2014, Cognitive Value, International Equities, Mid Cap Growth, and Value, along with other series of the Trust, pursuant to procedures adopted by the Board of Trustees and applicable guidance from the Securities and Exchange Commission (“SEC”), transferred cash collateral received from securities lending transactions, through a joint account at the securities lending agent, the daily aggregate balance of which is invested in one or more repurchase agreements collateralized by U.S. Treasury or federal agency obligations. In a repurchase agreement, the seller of a security agrees to repurchase the security at a mutually agreed-upon time and price, which reflects the effective rate of return for the term of the agreement. For joint repurchase agreements, The Bank of New York Mellon, JPMorgan or BBH takes possession of the collateral pledged for investments in such repurchase agreements (“repo” or collectively “repos”). The underlying collateral is valued daily on a mark-to-market basis to ensure that the value is equal to or greater than the repurchase price including accrued interest. In the event of default of the obligation to repurchase, a Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by a Fund may be delayed or limited.
At July 31, 2014, the repo on a gross basis was as follows:
Royal Bank of Canada, 0.06%, dated 07/31/14, due 08/01/14, repurchase price $171,300,285, collateralized by a U.S. Treasury Note, 0.63%, maturing 09/30/17; total market value $174,797,033.
Please refer to the Statement of Investments for each Fund’s undivided interest in the joint repurchase agreement and related collateral.
At July 31, 2014, the Funds’ investment in the repurchase agreement was subject to an enforceable netting arrangement. The Funds’ proportionate holding in the repurchase agreement was as follows:
| Gross Amounts not Offset in the Statement of Assets and Liabilities | ||||||||||||||||||||||||
| Fund | Counterparty | Gross Amount of Recognized Assets | Gross Amounts Offset in the Statement of Assets and Liabilities | Net Amounts of Assets Presented in the Statement of Assets and Liabilities | Collateral Received | Net Amount of Assets | ||||||||||||||||||
Cognitive Value | Royal Bank of Canada | $ | 4,344,544 | $ | — | $ | 4,344,544 | $ | (4,344,544 | ) | $ | — | ||||||||||||
International Equities | Royal Bank of Canada | 4,617,759 | — | 4,617,759 | (4,617,759 | ) | — | |||||||||||||||||
Mid Cap Growth | Royal Bank of Canada | 5,171,271 | — | 5,171,271 | (5,171,271 | ) | — | |||||||||||||||||
Value | Royal Bank of Canada | 2,954,470 | — | 2,954,470 | (2,954,470 | ) | — | |||||||||||||||||
Amounts designated as “—” are zero.
197
Notes to Financial Statements (Continued)
July 31, 2014
| (h) | 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. Interest income is recognized on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts, and is recorded as such on a Fund’s Statement of Operations. Dividend income is recorded on the ex-dividend date and is recorded as such on a Fund’s Statement of Operations, except for certain dividends from foreign securities, which are recorded as soon as the Trust is informed on or after the ex-dividend date.
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. Foreign income or capital gains subject to foreign withholding taxes are recorded net of the applicable withholding tax.
For certain securities, including a real estate investment trust (“REIT”), a Fund records distributions received in excess of earnings and profits of such security as a reduction of cost of investments and/or realized gain (referred to as a return of capital). Additionally, a REIT may characterize distributions it pays as long-term capital gains. Such distributions are based on estimates if actual amounts are not available. Actual distributions of income, long-term capital gain and return of capital may differ from the estimated amounts. A Fund will recharacterize the estimated amounts of the components of distributions as necessary, once the issuers provide information about the actual composition of the distributions. Any portion of a distribution deemed a return of capital is generally not taxable to a Fund.
A Fund records as dividend income the amount characterized as ordinary income and records as realized gain the amount characterized by a REIT as long-term capital gain in the Statement of Operations. The amount characterized as return of capital is a reduction to the cost of investments in the Statement of Assets and Liabilities if the security is still held, otherwise it is recorded as an adjustment to realized gain / loss from investments transaction in the Statement of Operations. These characterizations are reflected in the accompanying financial statements.
| (i) | Distributions to Shareholders |
Effective September 16, 2013, distributions from net investment income, if any, are declared and paid quarterly. Prior to September 16, 2013, each of the Funds declared and paid dividends from net investment income periodically. 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 July 31, 2014 are primarily attributable to capital loss carryforward expirations, distribution redesignations, foreign currency gains and losses, net operating losses not utilized, non- REIT returns of capital dividends and reclassifications, partnership distributions, passive foreign investment company gain/loss on sales, and paydown gains and losses. These reclassifications have no effect upon the NAV of a 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.
198
Notes to Financial Statements (Continued)
July 31, 2014
Reclassifications for the year ended July 31, 2014 were as follows:
| Fund | Capital | Accumulated undistributed net investment income | Accumulated net realized gains/(losses) from investment transactions | |||||||||
Cognitive Value | $ | — | $ | 132,343 | $ | (132,343 | ) | |||||
International Equities | — | 1,583,430 | (1,583,430 | ) | ||||||||
Technology & Science | — | (14,701 | ) | 14,701 | ||||||||
Mid Cap Growth | (11,854,697 | ) | 12,819,714 | (965,017 | ) | |||||||
Small Cap Growth | (1,300,616 | ) | 1,300,616 | — | ||||||||
Balanced | — | 13,685 | (13,685 | ) | ||||||||
Large Cap Core Equity | — | (6,465 | ) | 6,465 | ||||||||
Large Cap Growth | — | — | — | |||||||||
Small Cap Core | (194,329 | ) | 179,257 | 15,072 | ||||||||
Value | (90,852 | ) | 827,965 | (737,113 | ) | |||||||
Equity Income | (1,741,439 | ) | (5,646 | ) | 1,747,085 | |||||||
NYSE Arca Tech 100 Index | — | (133,926 | ) | 133,926 | ||||||||
Amounts designated as “—” are zero or have been rounded to zero.
| (j) | Deferred Compensation Plan |
On April 17, 2013, the Predecessor Funds terminated a deferred compensation plan that had previously been established for the benefit of certain members of the Predecessor Funds’ Board. Effective September 16, 2013, the Funds assumed the deferred compensation liability of their corresponding Predecessor Funds. At July 31, 2014, the Funds fully paid the deferred compensation plan to the Predecessor Funds’ Board and no remaining liability remained for the Funds.
| (k) | Federal Income Taxes |
Each Fund elected to be treated as, and intends to qualify each year as, a “Regulated Investment Company” 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. A 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). The Funds file U.S. federal income tax returns and, if applicable, returns in various foreign jurisdictions in which they invest. 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.
199
Notes to Financial Statements (Continued)
July 31, 2014
Each Fund engages 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 positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
| (l) | 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
Effective September 16, 2013 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. NFA provides investment management evaluation services in monitoring, on an ongoing basis, the performance of the subadvisers.
As of July 31, 2014, the subadvisers for each Fund are as follows:
| Fund | Subadviser | |
Cognitive Value | Bailard, Inc. | |
International Equities | Bailard, Inc. | |
Technology & Science | Bailard, Inc. | |
Mid Cap Growth | Geneva Capital Management Ltd. | |
Small Cap Growth | Geneva Capital Management Ltd. | |
Balanced | HighMark Capital Management, Inc. (“HighMark”) | |
Large Cap Core Equity | HighMark | |
Large Cap Growth | HighMark | |
Small Cap Core | HighMark | |
Value | HighMark | |
Equity Income | Ziegler Capital Management, LLC | |
NYSE Arca Tech 100 Index | Ziegler Capital Management, LLC |
200
Notes to Financial Statements (Continued)
July 31, 2014
Effective September 16, 2013, under the terms of the Investment Advisory Agreement, each Fund pays NFA an investment advisory fee based on that Fund’s average daily net assets. The Funds paid investment advisory fees to NFA according to the schedule below.
| Fund | Fee Schedule | Advisory Fee (annual rate) | ||||
Cognitive Value | Up to $500 million | 0.75 | % | |||
| On $500 million and more | 0.70 | % | ||||
International Equities | Up to $1 billion | 0.75 | % | |||
| On $1 billion and more | 0.70 | % | ||||
Technology & Science | Up to $500 million | 0.75 | % | |||
| On $500 million up to $1 billion | 0.70 | % | ||||
| On $1 billion and more | 0.65 | % | ||||
Mid Cap Growth | Up to $250 million | 0.75 | % | |||
| On $250 million up to $500 million | 0.70 | % | ||||
| On $500 million and more | 0.65 | % | ||||
Small Cap Growth | Up to $250 million | 1.00 | % | |||
| On $250 million up to $500 million | 0.95 | % | ||||
| On $500 million and more | 0.90 | % | ||||
Balanced | All Assets | 0.60 | % | |||
Large Cap Core Equity | ||||||
Large Cap Growth | ||||||
Value | ||||||
Small Cap Core | All Assets | 0.95 | % | |||
Equity Income | Up to $100 million | 0.55 | % | |||
| $100 million up to $500 million | 0.50 | % | ||||
| On $500 million and more | 0.45 | % | ||||
NYSE Arca Tech 100 Index | Up to $50 million | 0.50 | % | |||
| $50 million up to $250 million | 0.30 | % | ||||
| $250 million up to $500 million | 0.25 | % | ||||
| On $500 million and more | 0.20 | % | ||||
201
Notes to Financial Statements (Continued)
July 31, 2014
Prior to September 16, 2013, each Fund paid investment advisory fees to HighMark under a similar agreement based on that Fund’s average daily net assets. The Funds paid investment advisory fees to HighMark according to the schedule below.
| Fund | Fee Schedule | Advisory Fee (annual rate) | ||||
Cognitive Value | Up to $500 million | 0.75 | % | |||
| On $500 million and more | 0.70 | % | ||||
International Equities | Up to $1 billion | 0.75 | % | |||
| On $1 billion and more | 0.70 | % | ||||
Technology & Science | Up to $500 million | 0.75 | % | |||
| On $500 million up to $1 billion | 0.70 | % | ||||
| On $1 billion and more | 0.65 | % | ||||
Mid Cap Growth | Up to $250 million | 0.75 | % | |||
| On $250 million up to $500 million | 0.70 | % | ||||
| On $500 million and more | 0.65 | % | ||||
Small Cap Growth | Up to $250 million | 1.00 | % | |||
| On $250 million up to $500 million | 0.95 | % | ||||
| On $500 million and more | 0.90 | % | ||||
Balanced | All Assets | 0.60 | % | |||
Large Cap Core Equity | ||||||
Large Cap Growth | ||||||
Value | ||||||
Small Cap Core | All Assets | 0.95 | % | |||
Equity Income | Up to $100 million | 0.55 | % | |||
| $100 million up to $500 million | 0.50 | % | ||||
| On $500 million and more | 0.45 | % | ||||
NYSE Arca Tech 100 Index | Up to $50 million | 0.50 | % | |||
| $50 million up to $250 million | 0.30 | % | ||||
| $250 million up to $500 million | 0.25 | % | ||||
| On $500 million and more | 0.20 | % | ||||
For the year ended July 31, 2014, the effective advisory fee rates before and after contractual advisory fee waivers were as follows:
| Fund | Effective Advisory Fee Rate Before Contractual* Fee Waivers | Effective Advisory Fee Rate After | ||||||
Cognitive Value | 0.75 | % | N/A | |||||
International Equities | 0.75 | N/A | ||||||
Technology & Science | 0.75 | N/A | ||||||
Mid Cap Growth | 0.67 | N/A | ||||||
Small Cap Growth | 1.00 | N/A | ||||||
Balanced | 0.60 | N/A | ||||||
Large Cap Core Equity | 0.60 | N/A | ||||||
Large Cap Growth | 0.60 | N/A | ||||||
Small Cap Core | 0.95 | N/A | ||||||
Value | 0.60 | N/A | ||||||
202
Notes to Financial Statements (Continued)
July 31, 2014
| Fund | Effective Advisory Fee Rate Before Contractual* Fee Waivers | Effective Advisory Fee Rate After | ||||||
Equity Income | 0.52 | % | N/A | |||||
NYSE Arca Tech 100 Index | 0.33 | 0.33 | % | |||||
| * | Please see below for additional information regarding contractual waivers. |
N/A — Not Applicable.
For the period from September 16, 2013 through July 31, 2014, the effective advisory rates for fees paid to NFA were as follows:
| Fund | Effective Advisory Fee Rate | |||
Cognitive Value | 0.75 | % | ||
International Equities | 0.75 | |||
Technology & Science | 0.75 | |||
Mid Cap Growth | 0.67 | |||
Small Cap Growth | 1.00 | |||
Balanced | 0.60 | |||
Large Cap Core Equity | 0.60 | |||
Large Cap Growth | 0.60 | |||
Small Cap Core | 0.95 | |||
Value | 0.60 | |||
Equity Income | 0.52 | |||
NYSE Arca Tech 100 Index | 0.33 | |||
For the period from September 16, 2013 through July 31, 2014, the Funds paid investment management fees to NFA in the amounts listed below.
| Fund | Amount | |||
Cognitive Value | $ | 698,862 | ||
International Equities | 1,647,720 | |||
Technology & Science | 657,983 | |||
Mid Cap Growth | 8,942,907 | |||
Small Cap Growth | 1,257,013 | |||
Balanced | 160,265 | |||
Large Cap Core Equity | 320,270 | |||
Large Cap Growth | 361,449 | |||
Small Cap Core | 670,692 | |||
Value | 1,817,262 | |||
Equity Income | 865,359 | |||
NYSE Arca Tech 100 Index | 809,651 | |||
From these fees, pursuant to the subadvisory agreements, NFA pays fees to the unaffiliated subadvisers.
203
Notes to Financial Statements (Continued)
July 31, 2014
Prior to September 16, 2013, the Funds were managed by, and paid investment management fees to, HighMark. For the period from August 1, 2013 through September 15, 2013, the Funds paid investment management fees to HighMark in the amounts listed below.
| Fund | Amount | |||
Cognitive Value | $ | 89,546 | ||
International Equities | 205,895 | |||
Technology & Science | 85,794 | |||
Mid Cap Growth | 1,197,657 | |||
Small Cap Growth | 141,432 | |||
Balanced | 25,256 | |||
Large Cap Core Equity | 45,006 | |||
Large Cap Growth | 54,317 | |||
Small Cap Core | 86,623 | |||
Value | 261,016 | |||
Equity Income | 22,904 | |||
NYSE Arca Tech 100 Index | 105,499 | |||
Effective September 16, 2013, the Funds and NFA have entered into a written Expense Limitation Agreement that limits the Funds’ operating expenses (excluding acquired fund fees and expenses, and certain other expenses) from exceeding the following amounts until February 28, 2015:
| Fund | Class A | Class C | Institutional Service Class | Institutional Class | Class U | Class M | ||||||||||||||||||
Cognitive Value | 1.47 | % | 2.07 | % | 1.22 | % | 1.07 | % | N/A | 1.07 | % | |||||||||||||
International Equities | 1.42 | 2.10 | 1.27 | 1.10 | N/A | 1.10 | ||||||||||||||||||
Technology & Science | 1.45 | 2.05 | 1.20 | 1.05 | N/A | 1.05 | ||||||||||||||||||
Mid Cap Growth | 1.38 | 1.98 | 1.13 | 0.98 | N/A | N/A | ||||||||||||||||||
Small Cap Growth | 1.62 | 2.22 | 1.37 | 1.22 | N/A | N/A | ||||||||||||||||||
Balanced | 1.24 | 1.84 | 0.99 | 0.84 | N/A | N/A | ||||||||||||||||||
Large Cap Core Equity | 1.22 | 1.82 | 0.97 | 0.82 | N/A | N/A | ||||||||||||||||||
Large Cap Growth | 1.27 | 1.87 | 1.02 | 0.87 | N/A | N/A | ||||||||||||||||||
Small Cap Core | 1.62 | 2.22 | 1.37 | 1.22 | N/A | N/A | ||||||||||||||||||
Value | 1.25 | 1.85 | 1.00 | 0.85 | 0.87 | % | N/A | |||||||||||||||||
Equity Income | 1.15 | 1.75 | 0.90 | 0.75 | N/A | N/A | ||||||||||||||||||
NYSE Arca Tech 100 Index | 1.08 | 1.68 | 0.83 | 0.68 | N/A | N/A | ||||||||||||||||||
| N/A | — Not Applicable. |
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.
204
Notes to Financial Statements (Continued)
July 31, 2014
As of July 31, 2014, the cumulative potential reimbursements for the Funds, listed by the period in which NFA waived fees or reimbursed expenses to the Funds, are:
| Fund | Period Ended July 31, 2014 (a) | |||
Cognitive Value | $ | — | ||
International Equities | — | |||
Technology & Science | — | |||
Mid Cap Growth | — | |||
Small Cap Growth | 3,329 | |||
Balanced | 141,707 | |||
Large Cap Core Equity | 30,107 | |||
Large Cap Growth | 45,495 | |||
Small Cap Core | 2,303 | |||
Value | — | |||
Equity Income | 45 | |||
NYSE Arca Tech 100 Index | — | |||
| (a) | For the period from September 16, 2013 through July 31, 2014. |
Amounts designated as “—” are zero or have been rounded to zero.
During the period from September 16, 2013 through July 31, 2014, no amounts were reimbursed to NFA by the Funds pursuant to the Expense Limitation Agreement.
Prior to September 16, 2013, HighMark contractually agreed to reduce its fees (excluding portfolio brokerage and transaction costs, taxes relating to transacting in foreign securities, if any, extraordinary expenses and any expenses indirectly incurred by a Fund through investments in pooled investment vehicles), and to the extent necessary to reimburse the Funds in order to limit the Funds from exceeding certain expense limitations. For the period from August 1, 2013 through September 15, 2013, expenses reimbursed under the terms of that agreement were as follows:
| Fund | Amount | |||
Cognitive Value | $ | 3,943 | ||
International Equities | 5,050 | |||
Technology & Science | 5,440 | |||
Mid Cap Growth | — | |||
Small Cap Growth | 20,201 | |||
Balanced | 16,650 | |||
Large Cap Core Equity | 16,069 | |||
Large Cap Growth | 14,544 | |||
Small Cap Core | 9,447 | |||
Value | 18,823 | |||
Equity Income | 18,107 | |||
NYSE Arca Tech 100 Index | 4,903 | |||
Amount designated as “—” is zero or has been rounded to zero.
Prior to September 16, 2013 the Funds were subject to a recoupment plan under HighMark (“Predecessor Plan”). Under the Predecessor Plan HighMark was able to recoup from the Funds any of the fees and expenses it waived until the end of the third fiscal year after the end of the fiscal year in which such waiver and/or reimbursement occurred, subject to
205
Notes to Financial Statements (Continued)
July 31, 2014
certain limitations. For the period from August 1, 2013 through September 15, 2013, Mid Cap Growth reimbursed $45,468 to HighMark for fees or expenses waived in prior years. Effective September 16, 2013, the Predecessor Plan was terminated.
Effective September 16, 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.
Effective September 16, 2013, 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 period from September 16, 2013 through July 31, 2014, NFM earned $2,000,299 in fees from the Funds under the Joint Fund Administration and Transfer Agency Agreement.
Prior to September 16, 2013, the Funds were series of an investment trust that was a party to an Administration Agreement with HighMark (the “Administrator”) under which the Administrator provided administrative services to such investment trust for an annual fee of 0.15% of the first $8 billion of the average daily net assets of the Funds and 0.14% of such average daily net assets in excess of $8 billion allocated to each Fund based on its respective net assets. For the period from August 1, 2013 through September 15, 2013, the Administrator received fees from the Funds in the amounts listed below.
| Fund | Amount | |||
Cognitive Value | $ | 21,782 | ||
International Equities | 47,839 | |||
Technology & Science | 20,469 | |||
Mid Cap Growth | 361,349 | |||
Small Cap Growth | 30,489 | |||
Balanced | 10,030 | |||
Large Cap Core Equity | 16,259 | |||
Large Cap Growth | 20,555 | |||
Small Cap Core | 17,238 | |||
Value | 84,464 | |||
Equity Income | 11,194 | |||
NYSE Arca Tech 100 Index | 75,021 | |||
Effective September 16, 2013, 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.
206
Notes to Financial Statements (Continued)
July 31, 2014
Effective September 16, 2013, 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 period from September 16, 2013 through July 31, 2014, the Funds’ aggregate portion of such costs amounted to $5,234. For the period from August 1, 2013, through September 15, 2013, the Funds paid $19,319 to HighMark under a similar agreement.
Effective September 16, 2013, 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 as follows:
| — | 0.25% of the average daily net assets of Class A shares of each Fund (distribution or service fee) |
| — | 1.00% of the average daily net assets of Class C shares of each Fund (0.75% of which may be a distribution fee and 0.25% service fee) |
Prior to September 16, 2013, HighMark Funds Distributors, LLC (the “Distributor”), a wholly owned subsidiary of Foreside Funds Distributors LLC, and the Funds were parties to an underwriting agreement. HighMark adopted 12b-1 Plans (the “Plans”) with respect to Class A, Class B, and Class C Shares that allowed each Fund to pay distribution and service fees to the Distributor as compensation for its services under the Plans. The Distributor received a distribution fee computed daily and paid monthly, at the annual rate of 0.25% of the daily net assets attributable to each Fund’s Class A Shares, 0.75% of the daily net assets attributable to each Fund’s Class B Shares and 1.00% of the daily net assets attributable to each Fund’s Class C Shares, which was used by the Distributor to provide compensation for sales support and distribution activities.
For the period from August 1, 2013 through September 15, 2013, the Funds paid distribution fees to the Distributor in the amounts listed below.
| Fund | Amount | |||
Cognitive Value | $ | 1,042 | ||
International Equities | 2,828 | |||
Technology & Science | 982 | |||
Mid Cap Growth | 275,112 | |||
Small Cap Growth | 23,357 | |||
Balanced | 9,780 | |||
Large Cap Core Equity | 4,280 | |||
Large Cap Growth | 9,092 | |||
Small Cap Core | 9,038 | |||
Value | 33,473 | |||
Equity Income | 12,704 | |||
NYSE Arca Tech 100 Index | 86,564 | |||
Effective September 16, 2013, 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. The Funds’ Class A sales charges ranged from 0.00% to 5.75% based on the amount of the purchase. For the period from September 16, 2013 through July 31, 2014, the Funds imposed front-end sales charges of $931,578. For the period from August 1, 2013 through September 15, 2013, the Predecessor Funds imposed front-end sales charges of $84,246.
207
Notes to Financial Statements (Continued)
July 31, 2014
Effective September 16, 2013, NFD also receives fees in the form of contingent deferred sales charges (“CDSCs”) on Class A and Class C shares. Any CDSC is based on the original purchase price or the current market value of the shares being redeemed, whichever is less. A CDSC is imposed on Class A shares for certain redemptions, and Class C shares made within 1 year of purchase. Class A CDSCs were 1.00% for the Funds. Class C CDSCs were 1.00% for the Funds. For the period from September 16, 2013 through July 31, 2014, the Funds imposed CDSCs of $9,297. For the period from August 1, 2013 through September 15, 2013, the Predecessor Funds imposed CDSCs of $1,760.
Effective September 16, 2013, 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 and Institutional Service Class shares of each Fund. Effective March 1, 2014, Class C shares began charging administrative servicing fees. These fees are calculated at an annual rate of up to 0.25% of the average daily net assets of Class C shares of the Funds. A Fund may retain all or a portion of the sales charges.
Prior to September 16, 2013, HighMark had similar administrative servicing plans permitting payment of compensation to service providers, which may have included HighMark or its affiliates that had agreed to provide certain shareholder support services for its customers who owned Fiduciary, Class A or Class B Shares. In consideration for such services, a service provider was entitled to receive compensation at the annual rate of up to 0.25% of the average daily net assets of the applicable class of shares of the Funds. The service providers had agreed to waive a portion of their fees for certain classes of all Funds for the period from August 1, 2013 through September 15, 2013. The administrative servicing fee waivers by HighMark, or its affiliates, were voluntary and not subject to recoupment.
For the year ended July 31, 2014, the effective rates for administrative services fees net of waivers were as follows:
| Fund | Class A | Class B (a) | Class C | Institutional Service Class (b) | ||||||||||||
Cognitive Value | 0.11 | % | N/A | — | % | 0.13 | % | |||||||||
International Equities | 0.13 | N/A | 0.04 | 0.13 | ||||||||||||
Technology & Science | 0.14 | N/A | 0.06 | 0.18 | ||||||||||||
Mid Cap Growth | 0.16 | 0.25 | % | 0.03 | 0.14 | |||||||||||
Small Cap Growth | 0.13 | N/A | 0.03 | 0.09 | ||||||||||||
Balanced | 0.09 | 0.26 | 0.02 | 0.17 | ||||||||||||
Large Cap Core Equity | 0.13 | N/A | 0.03 | 0.09 | ||||||||||||
Large Cap Growth | 0.10 | 0.25 | 0.02 | 0.14 | ||||||||||||
Small Cap Core | 0.10 | N/A | 0.03 | 0.08 | ||||||||||||
Value | 0.14 | 0.25 | 0.02 | 0.14 | ||||||||||||
Equity Income | 0.09 | 0.25 | 0.03 | 0.14 | ||||||||||||
NYSE Arca Tech 100 Index | 0.12 | 0.25 | 0.03 | 0.13 | ||||||||||||
| (a) | For the period August 1, 2013 through September 15, 2013. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
N/A — Not Applicable.
Amounts designated as “—” are zero or have been rounded to zero.
208
Notes to Financial Statements (Continued)
July 31, 2014
During the period from September 16, 2013 through July 31, 2014, the effective rates for administrative services fees that NFS earned were as follows:
| Fund | Class A | Class C | Institutional Service Class | |||||||||
Cognitive Value | 0.11 | % | — | % | 0.12 | % | ||||||
International Equities | 0.14 | 0.04 | 0.12 | |||||||||
Technology & Science | 0.13 | 0.07 | 0.19 | |||||||||
Mid Cap Growth | 0.17 | 0.03 | 0.14 | |||||||||
Small Cap Growth | 0.12 | 0.03 | 0.08 | |||||||||
Balanced | 0.08 | 0.02 | 0.17 | |||||||||
Large Cap Core Equity | 0.13 | 0.04 | 0.08 | |||||||||
Large Cap Growth | 0.09 | 0.02 | 0.13 | |||||||||
Small Cap Core | 0.09 | 0.03 | 0.08 | |||||||||
Value | 0.13 | 0.03 | 0.14 | |||||||||
Equity Income | 0.08 | 0.03 | 0.14 | |||||||||
NYSE Arca Tech 100 Index | 0.11 | 0.04 | 0.13 | |||||||||
Amount designated as “—” is zero or has been rounded to zero.
For the period from September 16, 2013 through July 31, 2014, NFS earned the following amounts in administrative services fees from each Fund:
| Fund | Amount | |||
Cognitive Value | $ | 2,745 | ||
International Equities | 85,865 | |||
Technology & Science | 4,539 | |||
Mid Cap Growth | 1,856,733 | |||
Small Cap Growth | 106,672 | |||
Balanced | 29,838 | |||
Large Cap Core Equity | 46,072 | |||
Large Cap Growth | 71,764 | |||
Small Cap Core | 53,284 | |||
Value | 253,286 | |||
Equity Income | 28,520 | |||
NYSE Arca Tech 100 Index | 272,119 | |||
209
Notes to Financial Statements (Continued)
July 31, 2014
For the period from August 1, 2013 through September 15, 2013, HighMark, or its affiliates earned the following amounts in administrative servicing fees, net of waivers, from each Fund:
| Fund | Amount | |||
Cognitive Value | $ | 564 | ||
International Equities | 11,863 | |||
Technology & Science | 573 | |||
Mid Cap Growth | 247,359 | |||
Small Cap Growth | 18,877 | |||
Balanced | 5,387 | |||
Large Cap Core Equity | 11,066 | |||
Large Cap Growth | 13,112 | |||
Small Cap Core | 12,857 | |||
Value | 41,308 | |||
Equity Income | 5,522 | |||
NYSE Arca Tech 100 Index | 44,140 | |||
As of July 31, 2014, NFA or its affiliates directly held the percentage indicated below of the shares outstanding of the applicable Fund.
| Fund | % of Shares Outstanding Owned | |||
Cognitive Value | 0.01 | % | ||
International Equities | — | |||
Technology & Science | 0.01 | |||
Mid Cap Growth | — | |||
Small Cap Growth | — | |||
Balanced | 0.03 | |||
Large Cap Core Equity | 0.02 | |||
Large Cap Growth | 0.02 | |||
Small Cap Core | 0.01 | |||
Value | — | |||
Equity Income | 88.39 | |||
NYSE Arca Tech 100 Index | — | |||
Amounts designated as “—” are zero or have been rounded to zero.
4. Redemption Fees
Effective September 16, 2013, the Funds do not impose redemption fees.
Prior to September 16, 2013, certain of the Funds imposed 2.00% redemption and exchange fees 30 days or less after purchase, and were designed to discourage short-term trading. A Fund’s redemption fees are allocated to all classes in that Fund based on relative net assets and are included in proceeds from shares issued on the Statements of Changes in Net Assets. For the period from August 1, 2013 through September 15, 2013, Cognitive Value imposed redemption fees of $3.
For the year ended July 31, 2013, Cognitive Value, International Equities, Small Cap Growth, and Small Cap Core received redemption fees of $801, $124, $1,503 and $192, respectively.
210
Notes to Financial Statements (Continued)
July 31, 2014
5. Line of Credit and Earnings Credit
Effective July 17, 2014, the Funds have been added to the Trust and Nationwide Variable Insurance Trust (together, the “Trusts”) renewed credit agreement with JPMorgan, The Bank of New York Mellon, and Wells Fargo Bank National Association, permitting the Trusts, in the aggregate, to borrow up to $100,000,000. Advances taken by a 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. 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. In addition, a Fund may not draw on any portion of the line of credit that is provided by a bank that is an affiliate of the Fund’s subadviser, if applicable. The line of credit is renewed annually, and next expires on July 16, 2015. There were no borrowings under the line of credit during the year ended July 31, 2014.
JPMorgan provides earnings credits for cash balances maintained in the Funds’ custody accounts, which are used to offset custody fees of a Fund.
6. Investment Transactions
For the year ended July 31, 2014, purchases of and sales of securities (excluding short-term securities) were as follows:
| Fund | Purchases | Sales | ||||||
Cognitive Value | $ | 296,806,807 | $ | 300,329,214 | ||||
International Equities | 223,955,836 | 200,966,242 | ||||||
Technology & Science | 36,255,935 | 45,222,435 | ||||||
Mid Cap Growth | 471,129,602 | 500,605,795 | ||||||
Small Cap Growth | 68,042,073 | 36,542,871 | ||||||
Balanced | 15,566,561 | 17,529,390 | ||||||
Large Cap Core Equity | 28,186,360 | 34,041,451 | ||||||
Large Cap Growth | 27,795,384 | 49,538,440 | ||||||
Small Cap Core | 38,986,243 | 38,402,739 | ||||||
Value | 198,144,805 | 246,534,532 | ||||||
Equity Income | 376,037,663 | 79,577,717 | ||||||
NYSE Arca Tech 100 Index | 59,611,178 | 61,639,657 | ||||||
For the year ended July 31, 2014, purchases and sales of U.S. Government securities were as follows:
| Fund | Purchases | Sales | ||||||
Balanced | $ | 2,354,536 | $ | 3,971,695 | ||||
7. Portfolio Investment Risks
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.
211
Notes to Financial Statements (Continued)
July 31, 2014
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 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.
Other
The Trust invests through an omnibus account at BBH cash collateral received from securities lending on a daily basis in the Fidelity Institutional Money Market Fund, Institutional Class. As with investments in any money market fund, the Trust’s investments of cash in the Fidelity Institutional Money Market Fund, Institutional Class are neither guaranteed nor insured, and shares of the Fidelity Institutional Money Market Fund, Institutional Class may decline in value, causing losses to the Trust.
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 June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-11: Repurchase-to-Maturity Transactions, Repurchase Financing, and Disclosures (“ASU 2014-11”). The FASB issued ASU 2014-11 to improve the financial reporting of repurchase agreements and other similar transactions. ASU 2014-11 changes the accounting for repurchase-to-maturity transactions and repurchase financing arrangements and requires enhanced disclosures about repurchase agreements and other similar transactions. ASU 2014-11 will take effect for funds with fiscal years beginning after December 15, 2014. Management is currently evaluating the impact ASU 2014-11 will have on the Funds financial statement disclosures.
212
Notes to Financial Statements (Continued)
July 31, 2014
10. Other
As of July 31, 2014, 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 | ||||||
Cognitive Value | 59.32 | % | 2 | |||||
International Equities | 64.58 | 3 | ||||||
Technology & Science | 66.86 | 2 | ||||||
Mid Cap Growth | 43.88 | 3 | ||||||
Small Cap Growth | 48.25 | 3 | ||||||
Balanced | 61.02 | 3 | ||||||
Large Cap Core Equity | 73.75 | 2 | ||||||
Large Cap Growth | 60.18 | 3 | ||||||
Small Cap Core | 60.51 | 2 | ||||||
Value | 61.25 | 3 | ||||||
Equity Income | 29.80 | 2 | (a) | |||||
NYSE Arca Tech 100 Index | 46.87 | 3 | ||||||
| (a) | Each such account is the account of an affiliated fund. |
11. Recaptured Brokerage Commissions
The Funds have entered into agreements with brokers whereby the brokers will return a portion of a 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 a Fund’s Statement of Operations. For the period from September 16, 2013 through July 31, 2014, the Funds recaptured the following amounts of brokerage commissions:
| Fund | Amount | |||
Cognitive Value | $ | — | ||
International Equities | — | |||
Technology & Science | — | |||
Mid Cap Growth | 56,286 | |||
Small Cap Growth | 23,885 | |||
Balanced | 1,385 | |||
Large Cap Core Equity | 5,187 | |||
Large Cap Growth | 6,485 | |||
Small Cap Core | 13,174 | |||
Value | 58,047 | |||
Equity Income | 68,368 | |||
NYSE Arca Tech 100 Index | 5,588 | |||
Amounts designated as “—” are zero or have been rounded to zero.
12. Reorganization
Each Fund commenced operation on September 16, 2013 as a result of a tax free reorganization in which Cognitive Value, International Equities, Technology & Science, Mid Cap Growth, Small Cap Growth, Balanced, Large Cap Core Equity, Large Cap Growth, Small Cap Core, Value, Equity Income, and NYSE Arca Tech 100 Index acquired all of the
213
Notes to Financial Statements (Continued)
July 31, 2014
assets, subject to all liabilities and obligations of the HighMark Cognitive Value Fund, HighMark International Opportunities Fund, HighMark Enhanced Growth Fund, HighMark Geneva Mid Cap Growth Fund, HighMark Geneva Small Cap Growth Fund, HighMark Balanced Fund, HighMark Large Cap Core Equity Fund, HighMark Large Cap Growth Fund, HighMark Small Cap Core Fund, HighMark Value Fund, HighMark Equity Income Fund, and HighMark NYSE Arca Tech 100 Index Fund, respectively, each a former series of HighMark Funds (each a “Predecessor Fund,” and collectively the “Predecessor Funds”). Class A, Class B, Class C, Class M, Class U and Fiduciary shareholders of each Predecessor Fund received Class A, Class B, Class C, Class M, Class U and Institutional Service Class shares, respectively, of the corresponding Funds with an aggregate share net asset value equal to the aggregate share net asset value of their shares in the respective Predecessor Funds immediately prior to the reorganization. Each Fund’s reorganization was treated as a tax-free reorganization for federal income tax purposes and, accordingly, the basis of the assets of each Fund reflects the historical basis of the assets of the corresponding Predecessor Fund as of the date of the reorganization. For financial reporting purposes, each Predecessor Fund’s operating history prior to the reorganization is reflected in the corresponding Nationwide Fund’s financial statements and financial highlights.
The reorganization was accomplished by the following tax-free exchange in which each shareholder of the Predecessor Fund received the same aggregate share net asset value in the corresponding Fund as noted below:
| Fund/Class | Shares | Value | ||||||
Cognitive Value | ||||||||
Class A | 79,122 | $ | 1,160,869 | |||||
Class C | 38,504 | 548,477 | ||||||
Class M | 6,178,315 | 90,565,455 | ||||||
Institutional Service Class* | 123,558 | 1,810,376 | ||||||
International Equities | ||||||||
Class A | 552,960 | 4,230,036 | ||||||
Class C | 163,235 | 1,239,920 | ||||||
Class M | 20,228,917 | 154,593,432 | ||||||
Institutional Service Class* | 8,207,651 | 62,668,697 | ||||||
Technology & Science | ||||||||
Class A | 115,935 | 1,609,414 | ||||||
Class C | 30,615 | 407,158 | ||||||
Class M | 6,212,912 | 88,795,564 | ||||||
Institutional Service Class* | 98,988 | 1,411,690 | ||||||
Mid Cap Growth | ||||||||
Class A | 16,855,620 | 486,466,686 | ||||||
Class B** | 77,898 | 2,015,420 | ||||||
Class C | 3,789,488 | 99,286,490 | ||||||
Institutional Service Class* | 29,120,415 | 850,380,173 | ||||||
Small Cap Growth | ||||||||
Class A | 618,599 | 25,816,384 | ||||||
Class C | 315,334 | 12,816,312 | ||||||
Institutional Service Class* | 1,854,739 | 78,316,905 | ||||||
Balanced | ||||||||
Class A | 737,766 | 11,611,484 | ||||||
Class B** | 964 | 15,113 | ||||||
Class C | 317,473 | 4,960,134 | ||||||
Institutional Service Class* | 1,087,608 | 17,164,629 | ||||||
214
Notes to Financial Statements (Continued)
July 31, 2014
| Fund/Class | Shares | Value | ||||||
Large Cap Core Equity | ||||||||
Class A | 864,698 | $ | 9,866,895 | |||||
Class C | 88,963 | 986,061 | ||||||
Institutional Service Class* | 4,076,059 | 46,641,531 | ||||||
Large Cap Growth | ||||||||
Class A | 1,307,603 | 16,687,369 | ||||||
Class B** | 35,603 | 420,647 | ||||||
Class C | 237,559 | 2,780,058 | ||||||
Institutional Service Class* | 3,946,704 | 51,337,939 | ||||||
Small Cap Core | ||||||||
Class A | 448,487 | 11,344,436 | ||||||
Class C | 179,874 | 4,387,651 | ||||||
Institutional Service Class* | 2,146,106 | 55,026,803 | ||||||
Value | ||||||||
Class A | 4,833,319 | 88,889,092 | ||||||
Class B** | 45,886 | 822,074 | ||||||
Class C | 213,293 | 3,800,477 | ||||||
Class U | 6,759,747 | 124,831,564 | ||||||
Institutional Service Class* | 6,788,513 | 125,287,440 | ||||||
Equity Income | ||||||||
Class A | 1,623,257 | 19,191,933 | ||||||
Class B** | 85,852 | 1,017,947 | ||||||
Class C | 426,237 | 5,007,174 | ||||||
Institutional Service Class* | 692,778 | 8,219,255 | ||||||
NYSE Arca Tech 100 Index | ||||||||
Class A | 4,822,175 | 214,618,126 | ||||||
Class B** | 63,898 | 2,546,789 | ||||||
Class C | 349,669 | 14,192,831 | ||||||
Institutional Service Class* | 423,576 | 19,044,498 | ||||||
| * | Effective September 16, 2013, Fiduciary shares were renamed Institutional Service Class Shares. |
** Effective September 16, 2013, Class B Shares were converted into Class A Shares. See Statements of Changes in Net Assets for additional information.
13. Federal Tax Information
The tax character of distributions paid during the year ended July 31, 2014 was as follows:
| Distributions paid from | ||||||||||||||||||||
| Fund | Ordinary Income* | Net Long-Term Capital Gains | Total Taxable Distributions | Return of Capital | Total Distributions Paid | |||||||||||||||
Cognitive Value | $ | 13,491,147 | $ | 8,459,332 | $ | 21,950,479 | $ | — | $ | 21,950,479 | ||||||||||
International Equities | 5,269,320 | — | 5,269,320 | — | 5,269,320 | |||||||||||||||
Technology & Science | 202,180 | — | 202,180 | — | 202,180 | |||||||||||||||
215
Notes to Financial Statements (Continued)
July 31, 2014
| Distributions paid from | ||||||||||||||||||||
| Fund | Ordinary Income* | Net Long-Term Capital Gains | Total Taxable Distributions | Return of Capital | Total Distributions Paid | |||||||||||||||
Mid Cap Growth | — | 77,070,924 | 77,070,924 | — | 77,070,924 | |||||||||||||||
Small Cap Growth | 538,446 | 3,615,919 | 4,154,365 | — | 4,154,365 | |||||||||||||||
Balanced | 247,056 | 2,455,162 | 2,702,218 | — | 2,702,218 | |||||||||||||||
Large Cap Core Equity | 291,547 | — | 291,547 | — | 291,547 | |||||||||||||||
Large Cap Growth | 605,246 | 736,508 | 1,341,754 | — | 1,341,754 | |||||||||||||||
Small Cap Core | — | — | — | — | — | |||||||||||||||
Value | 17,231,369 | 51,372,981 | 68,604,350 | — | 68,604,350 | |||||||||||||||
Equity Income | 2,693,194 | — | 2,693,194 | — | 2,693,194 | |||||||||||||||
NYSE Arca Tech 100 Index | 811,326 | — | 811,326 | — | 811,326 | |||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
| * | Ordinary income amounts include net short-term capital gains, if any. |
The tax character of distributions paid during the year ended July 31, 2013 was as follows:
| Fund | Ordinary Income* | Net Long-Term Capital Gains | Total Taxable Distributions | Return of Capital | Total Distributions Paid | |||||||||||||||
Cognitive Value | $ | 1,017,845 | $ | — | $ | 1,017,845 | $ | — | $ | 1,017,845 | ||||||||||
International Equities | 3,880,950 | — | 3,880,950 | — | 3,880,950 | |||||||||||||||
Technology & Science | — | — | — | — | — | |||||||||||||||
Mid Cap Growth | — | 18,413,894 | 18,413,894 | — | 18,413,894 | |||||||||||||||
Small Cap Growth | — | 2,444,342 | 2,444,342 | — | 2,444,342 | |||||||||||||||
Balanced | 361,070 | 703,108 | 1,064,178 | — | 1,064,178 | |||||||||||||||
Large Cap Core Equity | 835,360 | — | 835,360 | — | 835,360 | |||||||||||||||
Large Cap Growth | 301,369 | — | 301,369 | — | 301,369 | |||||||||||||||
Small Cap Core | 18,837 | — | 18,837 | — | 18,837 | |||||||||||||||
Value | 4,255,122 | 28,131,157 | 32,386,279 | — | 32,386,279 | |||||||||||||||
Equity Income | 592,414 | — | 592,414 | — | 592,414 | |||||||||||||||
NYSE Arca Tech 100 Index | 271,184 | — | 271,184 | — | 271,184 | |||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
| * | Ordinary income amounts include net short-term capital gains, if any. |
As of July 31, 2014, 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) | |||||||||||||||||||||
Cognitive Value | $ | 6,687,543 | $ | 1,109,495 | $ | 7,797,038 | $ | — | $ | — | $ | 5,376,942 | $ | 13,173,980 | ||||||||||||||
International Equities | 7,154,301 | — | 7,154,301 | — | (24,043,304 | ) | 40,446,133 | 23,557,130 | ||||||||||||||||||||
Technology & Science | 12,056 | 5,559,376 | 5,571,432 | — | — | 45,387,535 | 50,958,967 | |||||||||||||||||||||
Mid Cap Growth | — | 107,950,517 | 107,950,517 | — | (5,426,589 | ) | 279,537,184 | 382,061,112 | ||||||||||||||||||||
Small Cap Growth | — | 6,824,927 | 6,824,927 | — | (911,073 | ) | 15,369,649 | 21,283,503 | ||||||||||||||||||||
Balanced | 41,563 | 1,308,823 | 1,350,386 | — | — | 4,481,505 | 5,831,891 | |||||||||||||||||||||
216
Notes to Financial Statements (Continued)
July 31, 2014
| 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) | |||||||||||||||||||||
Large Cap Core Equity | 264,787 | 447,547 | 712,334 | — | — | 13,189,506 | 13,901,840 | |||||||||||||||||||||
Large Cap Growth | 521,691 | 11,363,369 | 11,885,060 | — | — | 13,584,394 | 25,469,454 | |||||||||||||||||||||
Small Cap Core | — | — | — | — | (15,802,896 | ) | 16,597,474 | 794,578 | ||||||||||||||||||||
Value | 3,843,809 | 28,425,090 | 32,268,899 | — | (6,768,814 | ) | 39,544,585 | 65,044,670 | ||||||||||||||||||||
Equity Income | 1,909,569 | 2,394,639 | 4,304,208 | — | (3,568,924 | ) | 20,173,720 | 20,909,004 | ||||||||||||||||||||
NYSE Arca Tech 100 Index | 457,748 | — | 457,748 | — | (64,188,848 | ) | 130,207,763 | 66,476,663 | ||||||||||||||||||||
Amounts designated as “—” are zero or have 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 and mark to market on Passive Foreign Investment Companies. |
As of July 31, 2014, the tax cost of securities (excluding derivative contracts) and the breakdown of unrealized appreciation/(depreciation) was as follows:
| Fund | Tax Cost of Securities | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation/ (Depreciation) | ||||||||||||
Cognitive Value | $ | 101,222,286 | $ | 7,631,765 | $ | (2,254,823 | ) | $ | 5,376,942 | |||||||
International Equities | 222,837,419 | 45,832,342 | (5,302,823 | ) | 40,529,519 | |||||||||||
Technology & Science | 54,788,127 | 46,711,114 | (1,323,579 | ) | 45,387,535 | |||||||||||
Mid Cap Growth | 1,180,588,762 | 322,338,157 | (42,800,973 | ) | 279,537,184 | |||||||||||
Small Cap Growth | 122,217,143 | 22,338,454 | (6,968,805 | ) | 15,369,649 | |||||||||||
Balanced | 26,590,649 | 4,692,175 | (210,670 | ) | 4,481,505 | |||||||||||
Large Cap Core Equity | 48,087,151 | 13,716,257 | (526,751 | ) | 13,189,506 | |||||||||||
Large Cap Growth | 45,242,087 | 13,820,176 | (235,782 | ) | 13,584,394 | |||||||||||
Small Cap Core | 66,184,866 | 18,887,621 | (2,290,147 | ) | 16,597,474 | |||||||||||
Value | 301,475,267 | 44,946,325 | (5,401,813 | ) | 39,544,512 | |||||||||||
Equity Income | 327,268,989 | 25,080,902 | (4,907,182 | ) | 20,173,720 | |||||||||||
NYSE Arca Tech 100 Index | 165,176,254 | 133,988,469 | (3,780,706 | ) | 130,207,763 | |||||||||||
As of July 31, 2014, for federal income tax purposes, the Funds have 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. Any unlimited losses will be required to be utilized prior to the losses which have an expiration date.
The following table represents capital loss carryforwards with the year the amounts will expire if not utilized to offset future capital gains.
| Fund | Amount | Expires | ||||||
International Equities | $ | 24,043,304 | 2018 | |||||
Small Cap Core | 10,357,345 | 2017 | ||||||
Small Cap Core* | 5,197,714 | 2018 | ||||||
Value* | 282,340 | 2016 | ||||||
Value* | 6,486,474 | 2017 | ||||||
217
Notes to Financial Statements (Continued)
July 31, 2014
| Fund | Amount | Expires | ||||||
Equity Income* | 1,233,864 | 2016 | ||||||
Equity Income* | 2,080,597 | 2017 | ||||||
Equity Income* | 254,463 | 2018 | ||||||
NYSE Arca Tech 100 Index | 32,909,542 | 2015 | ||||||
NYSE Arca Tech 100 Index | 14,282,341 | 2016 | ||||||
NYSE Arca Tech 100 Index | 16,996,965 | 2017 | ||||||
| * | A portion of the Fund’s capital loss carryforward is subject to an annual limitation under the Internal Revenue Code and related regulations. |
During the year ended July 31, 2014, the Funds had capital loss carryforwards that were utilized or expired, and are no longer eligible to offset future capital gains, if any, in the amounts listed below.
| Fund | Utilized | Expired | ||||||
International Equities | $ | 18,873,864 | $ | — | ||||
Technology & Science | 5,871,414 | — | ||||||
Large Cap Core Equity | 6,422,971 | — | ||||||
Small Cap Core | 8,829,935 | — | ||||||
Value | 2,444,498 | — | ||||||
Equity Income | 1,744,542 | 1,741,439 | ||||||
NYSE Arca Tech 100 Index | 8,217,583 | — | ||||||
Amounts designated as “—” are zero or have rounded to zero.
The Funds have elected to defer late-year losses in accordance with the Federal tax rules. These losses are treated as having arisen on the first day of the following fiscal year. For the year ended July 31, 2014, the Funds have elected to defer late year losses in the amounts listed below.
| Fund | Post-October Capital Loss | Late Year Ordinary Loss | ||||||
Mid Cap Growth | $ | — | $ | 5,426,589 | ||||
Small Cap Growth | — | 911,073 | ||||||
Small Cap Core | — | 247,837 | ||||||
Amounts designated as “—” are zero or have rounded to zero.
14. Subsequent Events
Management has evaluated the impact of subsequent events on the Funds and has determined that there are no subsequent events requiring recognition or disclosure in the financial statements.
218
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 schedules 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 Bailard Cognitive Value Fund, Nationwide Bailard International Equities Fund, Nationwide Bailard Technology & Science Fund, Nationwide Geneva Mid Cap Growth Fund, Nationwide Geneva Small Cap Growth Fund, Nationwide HighMark Balanced Fund, Nationwide HighMark Large Cap Core Equity Fund, Nationwide HighMark Large Cap Growth Fund, Nationwide HighMark Small Cap Core Fund, Nationwide HighMark Value Fund, Nationwide Ziegler Equity Income Fund, and Nationwide Ziegler NYSE Arca Tech 100 Index Fund (twelve of the series of Nationwide Mutual Funds, formerly HighMark Cognitive Value Fund, HighMark International Opportunities Fund, HighMark Enhanced Growth Fund, HighMark Geneva Mid Cap Growth Fund, HighMark Geneva Small Cap Growth Fund, HighMark Balanced Fund, HighMark Large Cap Core Equity Fund, HighMark Large Cap Growth Fund, HighMark Small Cap Core Fund, HighMark Value Fund, HighMark Equity Income Fund, and HighMark NYSE Arca Tech 100 Index Fund, hereafter referred to as the “Funds”) at July 31, 2014, the results of each of their operations, the changes in each of their net assets and the financial highlights for the year 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 July 31, 2014 by correspondence with the custodian, brokers and underlying funds’ transfer agent, provide a reasonable basis for our opinion. The statements of changes in net assets presented for the year ended July 31, 2013 and the financial highlights presented for the year ended July 31, 2013 or prior were audited by another independent registered public accounting firm whose report dated September 25, 2013 expressed an unqualified opinion on those statements and financial highlights.
/s/PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
September 24, 2014
219
July 31, 2014 (Unaudited)
Other Federal Tax Information
For the year ended July 31, 2014, 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 2014 Form 1099-DIV.
For the taxable year ended July 31, 2014, the following percentages of income dividends paid by the Funds qualify for the dividends received deduction available to corporations:
| Fund | Dividends Received Deductions | |||
Cognitive Value | 24.38 | % | ||
Technology & Science | 100.00 | |||
Small Cap Growth | 100.00 | |||
Balanced | 99.70 | |||
Large Cap Core Equity | 100.00 | |||
Large Cap Growth | 100.00 | |||
Value | 47.05 | |||
Equity Income | 100.00 | |||
NYSE Arca Tech 100 Index | 100.00 | |||
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 | |||
Cognitive Value | $ | 8,459,332 | ||
Mid Cap Growth | 77,070,924 | |||
Small Cap Growth | 3,615,919 | |||
Balanced | 2,455,162 | |||
Large Cap Growth | 736,508 | |||
Value | 51,372,981 | |||
Certain Funds have derived net income from sources within foreign countries. As of July 31, 2014, the foreign source income for each Fund was as follows:
| Fund | Amount | Per Share | ||||||
International Equities | $ | 7,395,552 | $ | 0.1181 | ||||
Certain Funds intend to elect to pass through to shareholders the income tax credit for taxes paid to foreign countries. As of July 31, 2014, the foreign tax credit for each Fund was as follows:
| Fund | Amount | Per Share | ||||||
International Equities | $ | 873,057 | $ | 0.0278 | ||||
220
July 31, 2014
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. | 119 | 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. | 119 | 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. | 119 | None | ||||||
221
Management Information (Continued)
July 31, 2014
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. | 119 | 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). | 119 | 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. | 119 | 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. | 119 | 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. | 119 | None | ||||||
222
Management Information (Continued)
July 31, 2014
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 | ||||||
| Lydia Micheaux Marshall5 1949 | Trustee since June 2014 | Ms. Marshall has been President of LM Marshall, LLC (investment and business consulting company) since 2007. | 119 | Director of Nationwide Corporation since 2001, Nationwide Financial Services, Inc. since 1997, Nationwide Foundation since 2002, Nationwide Life Insurance Company since 2002, Nationwide Life and Annuity Insurance Company since 2002, Nationwide Mutual Fire Insurance Company since 2001, Nationwide Mutual Insurance Company since 2002, and Scottsdale Insurance Company since 2001 (all financial services and insurance companies). Chair and CEO of Versura, Inc. (data processing) since 1999. Director of Seagate Technology (hard disk drive and storage manufacturer) since 2004. Director of Public Welfare Foundation (non-profit foundation) since 2009. | ||||||
223
Management Information (Continued)
July 31, 2014
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. | 119 | 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. |
| 5 | Ms. Marshall is considered an interested person of the Trust because she is a Director of the parent company of, and several affiliates of, the Trust’s investment adviser and distributor. |
224
Management Information (Continued)
July 31, 2014
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 Chief Operating Officer since 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, Mr. Grugeon also served as the acting President and Chief Executive Officer of the Trust and of Nationwide Funds Group. From December 2006 until January 2008, Mr. Grugeon 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, Mr. Finelli 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. | ||
| Jennifer Tiffany Grinstead 1976 | Chief Marketing Officer since March 2014 | Ms. Grinstead is Vice President of Nationwide Funds Marketing for NFS.3 From April 2012 through April 2014, Ms. Grinstead was Assistant Vice President, Life Marketing for NFS.3 From January 2009 through April 2012, Ms. Grinstead was Assistant Vice President, Retirement Plan Marketing for NFS.3 |
| 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.
225
| Market Index Definitions |
Barclays 7-Year Municipal Bond Index: An unmanaged index that consists of a broad selection of investment-grade general obligation and revenue bonds with maturities of approximately seven years.
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. 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.
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.
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.
MSCI ACWI ex USA: 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 EAFE® Index: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of large-cap and mid-cap stocks in developed markets outside the United States and Canada.
NASDAQ-100 Index: An unmanaged index that includes 100 of the largest domestic and international nonfinancial securities listed on the Nasdaq Stock Market, based on market capitalization.
NYSE Arca Tech 100 Index®: An unmanaged, price-weighted index of at least 100 individual technology-related securities, consisting of stocks of companies from various industries that produce or deploy innovative technologies to conduct their business.
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 small-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.
226
| Market Index Definitions (con’t.) |
Russell 2000® Value Index: An unmanaged index that measures the performance of the small-capitalization value 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 Midcap® Growth Index: An unmanaged index that measures the performance of the mid-capitalization growth segment of the U.S. equity universe; includes those Russell Midcap® Index companies with higher price-to-book ratios and higher forecasted growth values.
Note about Russell Indexes
Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group.
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 North American Technology Sector Index™: An unmanaged, modified, market capitalization-weighted index that measures the performance of the technology sector of the U.S. equity market.
S&P SmallCap 600® Value Index: An unmanaged index comprising small-capitalization value stocks included in the S&P SmallCap 600® Index. Performance is measured based on the ratios of book value, earnings, and sales to price.
227
| Glossary |
Definitions of some commonly used investment terms
Benchmark index: A broad-based securities index used as a comparison tool to measure the performance of a mutual fund.
Coefficient of correlation: a measure that determines the degree to which the movements of two variables are associated.
Derivative: A contract, security or investment with its value based on the performance of an underlying financial asset, index or economic measure.
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 and eventually return the principal at maturity.
Futures: Contracts that obligate the buyer to buy and the seller to sell a specified quantity of an underlying asset (or settle for cash the value of a contract based on the underlying asset) at a specified price on the contract’s maturity date.
Growth style: Investing in equity securities of companies that the Fund’s subadviser believes have above-average rates of earnings growth and which therefore may experience above-average increases in stock price.
High-yield bonds: Fixed-income securities that are rated below investment grade by nationally recognized statistical rating organizations. These bonds generally offer investors higher interest rates as a way to help compensate for the fact that the issuer is at greater risk of default.
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.
Preferred stock: A class of stock that often pays dividends at a specified rate and has preference over common stocks in dividend payments and liquidation of assets.
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.
228
| Glossary (con’t.) |
Value style: Investing in equity securities that a fund’s manager believes are undervalued, i.e., their stock prices are less than the manager believes they are intrinsically worth, based on such factors as a company’s stock price relative to its book value, earnings and cash flow.
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.
229
P.O. Box 701
Milwaukee, WI 53201-0701
nationwide.com/mutualfunds
Call 1-800-848-0920 to request a summary prospectus and/or a prospectus, or download prospectuses at nationwide.com/mutualfunds. These prospectuses outline investment objectives, risks, fees, charges and expenses, and other information that you should read and consider carefully before investing.
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.
Distributor
Nationwide Funds distributed by Nationwide Fund Distributors LLC (NFD), member FINRA, King of Prussia, Pa. NFD is not affiliated with any subadviser contracted by NFA, with the exception of Nationwide Asset Management, LLC (NWAM).
Nationwide, Nationwide Financial, the Nationwide framemark, Nationwide Funds, Nationwide Funds Group and On Your Side are service marks of Nationwide Mutual Insurance Company.
© 2014 Nationwide Funds Group. All rights reserved.
AR-HM-CEQ 9/14
Annual Report
July 31, 2014
Nationwide Mutual Funds
Fixed-Income Funds
Nationwide HighMark Bond Fund
Nationwide HighMark California Intermediate Tax Free Bond Fund
Nationwide HighMark National Intermediate Tax Free Bond Fund
Nationwide HighMark Short Term Bond Fund
Nationwide Ziegler Wisconsin Tax Exempt 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 |
| Nationwide Funds® |
July 31, 2014
Dear Shareholder,
Watching children board a school bus can teach us a lot about human nature. As the red lights flash and the bus door slides open, some children rush to be first to climb up the steps. Others are hesitant, glancing back for reassurance. A few students freeze in fear, unable to proceed.
We understand that, like the students or anyone facing something daunting, investors vary in their approaches to financial planning. Whether you tend to climb right in, move tentatively or need support to move forward at all, please know that Nationwide Funds represent a range of products and investment strategies designed to suit all types of investors. We continually scan the investment universe seeking opportunities to expand our fund offerings to include potentially attractive asset classes. Our goal is to help provide the investment options you may need to prepare for and live in retirement. As a Nationwide Funds investor, you may be positioned for potential benefits from long-term investment solutions driven by tactical risk management and diversification.
Overall, most Nationwide Funds performed well during the one-year reporting period ended July 31, 2014. Broad U.S. stock market performance as measured by the S&P 500® Index grew 16.94% for the period, with all sectors reporting positive returns. The Barclays U.S. Aggregate Bond Index, a broad measurement of U.S. fixed-income investment performance, returned 3.97% for the one-year period.
Confucius reminds us that “Every journey starts with a single step.” By working with your financial advisor and investing with Nationwide Funds, you already have climbed that critical first step. We encourage you to stay true to your long-term plan no matter what your circumstances or investment temperament. Your advisor and Nationwide Funds are poised to help.
Sincerely,
Michael S. Spangler
President & CEO
Nationwide Funds
1
| Economic Review |
During the fiscal-year reporting period ended July 31, 2014, most asset classes produced a positive investment return. Domestic equities experienced a broad-based rally, with the S&P 500® Index delivering a 16.94% return, and nearly all sectors and capitalization ranges showing strong performance for the reporting period. International equities rose as well, with the MSCI Emerging Markets® Index recovering from a three-year period of underperformance versus developed markets to return 15.32% during the reporting period. Fixed-income returns were positive for the reporting period, primarily in the long-term and credit-sensitive segments.
In the United States, investment performance during the reporting period was affected positively by encouraging economic data and the anticipation of continued strong corporate earnings. While first-quarter gross domestic product (GDP) was disappointing, investors focused instead on an improving jobs picture and manufacturing data. Also supportive to equity and fixed-income returns were stable longer-term interest rates and the continuation of the accommodative Federal Reserve policy.
The S&P 500 Index produced positive performance in nine of the 12 months of the reporting period, including five of the last six months of the period. The weakest month was January 2014, registering -3.46%, but the brief downturn was more than offset by a 4.57% return in February 2014.
All sectors of the S&P 500 Index posted positive returns for the reporting period. The best-performing sectors for the S&P 500 Index during the reporting period were information technology, up 27.6%; materials, up 23.1%; and health care, up 20.9%. Technology and materials benefited from a strong earnings environment, and health care rallied in reaction to excitement surrounding new products. While all returns were positive, the sectors with the lowest returns included consumer staples, up 7.0%;
telecommunication services, up 8.0%; and utilities, up 8.5%.
The strong performance in U.S. equities was broad based during the reporting period, with large-capitalization stocks outperforming small-cap stocks, and growth outperforming value.
U.S. economic activity showed volatility during the reporting period, with real GDP growing 4.5% and 3.5%, respectively, in the third and fourth quarters of calendar-year 2013, before shrinking by 2.1% in the first quarter of 2014 (constituting the worst result since the end of the economic recession in 2009) and then recovering to record 4.0% in the second quarter. Investors largely shrugged off the first-quarter 2014 stumble, blaming the weakness on the brutal winter weather’s effects on the economy. Expectations are for an acceleration of growth through the remainder of the year. Inflation remained well controlled throughout the reporting period, with the U.S. Consumer Price Index (CPI) and the core CPI (excluding the volatile food and energy categories) at roughly 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 7.3% to 6.2%.
Throughout the reporting period, the performance of international stocks continued to be positive but weaker relative to U.S. stocks. Investors’ focus was on uncertainty surrounding Russia and Ukraine, along with sluggish European economic growth; worries about a U.S. tapering (reduction of accommodative policy involving asset purchases) depressed relative returns during the period. In Asia, stock performance was strong during the reporting period, with Japan returning 15.1% and Asia (excluding Japan) up 16.9%. Despite headline risks, emerging market stocks performed roughly in line with those of developed markets, reversing the trend of underperformance that had prevailed since the fourth quarter of 2010.
2
| Economic Review (con’t.) |
Performance in the fixed-income markets was driven by declining interest rates and falling credit spreads during the reporting period. Long-term Treasury yields were relatively stable during the reporting period, with the 10-year Treasury yield falling from 2.58% to 2.56% during the period. Fixed-income returns were positive, as investors absorbed the news that the Fed will begin to taper (reduce) the quantitative easing (QE) program. Long-term and credit-sensitive bonds delivered the strongest performance during the reporting period.
| Index |
| Fiscal Year Total Return (as of July 31, 2014) |
| |
| Barclays U.S. 1-3 Year Government/Credit Bond | 0.85% | |||
| Barclays U.S. 10-20 Year Treasury Bond | 5.77% | |||
| Barclays Emerging Markets USD Aggregate Bond | 8.85% | |||
| Barclays Municipal Bond | 7.27% | |||
| Barclays U.S. Aggregate Bond | 3.97% | |||
| Barclays U.S. Corporate High Yield | 8.19% | |||
| MSCI EAFE® | 15.07% | |||
| MSCI Emerging Markets® | 15.32% | |||
| MSCI World ex USA | 15.48% | |||
| Russell 1000® Growth | 18.69% | |||
| Russell 1000® Value | 15.47% | |||
| Russell 2000® | 8.56% | |||
| S&P 500® | 16.94% |
3
| Fund Commentary | Nationwide HighMark Bond Fund |
For the annual period ended July 31, 2014, the Nationwide HighMark Bond Fund (Institutional Service Class) returned 4.28%* versus 3.97% for its benchmark, the Barclays U.S. Aggregate Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Corporate Debt Funds BBB-Rated (consisting of 195 funds as of July 31, 2014) was 6.82% for the same time period.
| * | Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund. |
Market Environment
U.S. fixed-income markets were volatile during the first half of the reporting period, mainly due to uncertainty about fiscal and monetary policy, and particularly in regard to the future of the Federal Reserve’s bond purchase program, also known as quantitative easing or QE. Treasury yields reached two-year highs in early September 2013, only to decline again the next month as investors reassessed the timing of the end of QE. Rates began rising once again in November 2013 as the Fed continued its debate about quantitative easing and job growth began to accelerate. On December 18, 2013, the Federal Open Market Committee (FOMC) took the first step toward ending its bond purchases, deciding to “modestly reduce the pace of its asset purchases” from $85 billion per month to $75 billion, and continued to reduce the size of purchases at each subsequent FOMC meeting.
Volatility declined during the second half of the reporting period as 10-year Treasury yields, having reached a peak of 3.0% at the end of December 2013, weakened when economic growth proved disappointing. Job growth also was slower than expected early in 2014, and the unusually cold winter temporarily softened housing, business surveys and retail sales reports. In addition, concerns about the pace of global growth extended to Japan as fears of economic weakness caused Japanese markets to sell off, and worries about a slowdown in China caused investors to exit emerging markets. Both investment-grade and high-yield bond issuance were strong during the reporting period as corporations took advantage of low interest rates
to pursue mergers and acquisitions as well as to fund stock repurchases.
Portfolio Performance
Despite the fact that risk assets posted negative returns during the last few weeks of the reporting period, that sector of the market far outperformed U.S. Treasurys as improving U.S. economic data and continued support from the Fed’s bond purchasing program helped boost risk asset prices.
The Fund outperformed its benchmark during the one-year reporting period primarily due to the Fund’s overweight to corporate bonds, which outperformed equivalent-duration Treasurys. Individual issuers that contributed positively to Fund performance during the reporting period included the Fund’s investments in Time Warner Entertainment, Los Angeles Department of Water and Power, and the State of California.
Issues that detracted from Fund performance during the reporting period included the Fund’s investments in CVS Caremark, Verizon and Walgreens. The Fund’s duration positioning also was a slight negative for performance during the reporting period as interest rates continued to decline and the yield curve flattened, while the Fund was positioned with a shorter duration and an underweight to 30-year bonds.
Derivatives were not used in the Nationwide HighMark Bond Fund during the annual reporting period ended July 31, 2014.
Outlook and Positioning
Although the Fed is on track to end the QE program in October 2014, the near-term outlook for interest rates remains mostly unchanged. The Fed continues to emphasize that policy will remain accommodative well beyond the termination of its bond purchasing program due to continued concern about the pace of economic growth.
While the unemployment rate declined more quickly than anticipated to a level of 6.1% as of the end of the reporting period, the number of long-term unemployed and other measures of
4
| Fund Commentary (cont’d) | Nationwide HighMark Bond Fund |
employment indicated there was still considerable slack in the labor market. The Fed’s primary motivation for ending QE is not an expectation of robust economic growth but rather concern about financial stability. Six years after the financial crisis, unconventional Fed policy has become more controversial as concerns grow that Fed policy may be leading to speculative excess and a misallocation of capital. Investors continue to add incremental risk to portfolios in an attempt to maintain a desired yield level, steadily driving valuations to less-attractive levels. In this environment, we continue to be cautious with respect to high-yield bonds, while investment-grade securities still appear relatively attractive.
As a result, we plan to maintain the Fund’s significant underweight in U.S. Treasury and government-related securities along with its overweight in investment-grade corporates. While Treasurys represent minimal credit risk, their low yield provides a limited degree of protection to offset the risk of declining prices in a rising rate environment. We believe that other sectors of the market — particularly corporate bonds — provide significantly greater yield, enhanced return potential and an opportunity to offset possible price declines should rates rise. We have seen significant spread compression during the past 12-month period ending July 31, 2014 but continue to believe the yield advantage provided by corporate bonds remains attractive on a risk-adjusted basis. We also anticipate that corporate bonds will outperform other fixed-income sectors in a rising interest rate environment as the additional income should help offset some of the price declines.
Subadviser:
HighMark Capital Management, Inc.
Portfolio Managers:
Jeffrey Klein, Gregory Lugosi,
E. Jack Montgomery and David Wines
The Fund is subject to the risks of investing in fixed-income securities, including high-yield bonds (which are more volatile and at a greater risk of default). 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). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
5
| Fund Overview | Nationwide HighMark Bond Fund |
Objective
The Fund seeks total return through investments in fixed-income securities.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide HighMark Bond Fund (Institutional Service Class) returned 4.28%, outperforming the benchmark by 0.31% and underperforming the Lipper peer category median by 2.54%. |
| Ÿ | The Fund outperformed its benchmark during the one-year reporting period primarily due to the Fund’s overweight to corporate bonds, which outperformed equivalent-duration Treasurys. |
| Ÿ | The Fund remains significantly underweight in U.S. Treasury and government-related securities, and overweight in investment-grade corporates. |
Asset Allocation†
| Corporate Bonds | 48.9% | |||
| U.S. Treasury Notes | 18.4% | |||
| U.S. Government Mortgage Backed Agencies | 14.0% | |||
| Asset-Backed Securities | 7.9% | |||
| Commercial Mortgage Backed Securities | 5.7% | |||
| Municipal Bonds | 3.3% | |||
| Collateralized Mortgage Obligations | 1.8% | |||
| Sovereign Bond | 0.3% | |||
| Bank Loan | 0.2% | |||
| Liabilities in excess of other assets | (0.5)% | |||
| 100.0% |
Top Industries††
| Banks | 10.7% | |||
| Automobiles | 4.8% | |||
| Diversified Financial Services | 3.3% | |||
| Food & Staples Retailing | 3.0% | |||
| Oil, Gas & Consumable Fuels | 3.0% | |||
| Gas Utilities | 2.9% | |||
| Pharmaceuticals | 2.4% | |||
| Credit Card | 2.3% | |||
| Media | 2.0% | |||
| Airlines | 1.7% | |||
| Other Industries | 63.9% | |||
| 100.0% |
Top Holdings††
| U.S. Treasury Notes, 1.50%, 02/28/19 | 5.2% | |||
| Federal Home Loan Mortgage Corp. Gold Pool, 3.00%, 06/01/29 | 4.0% | |||
| U.S. Treasury Notes, 2.13%, 06/30/21 | 3.4% | |||
| U.S. Treasury Notes, 1.00%, 05/31/18 | 2.7% | |||
| U.S. Treasury Notes, 2.75%, 02/15/24 | 2.5% | |||
| Chase Issuance Trust, 1.26%, 07/15/19 | 2.3% | |||
| U.S. Treasury Notes, 2.00%, 02/15/23 | 2.2% | |||
| U.S. Treasury Notes, 1.50%, 01/31/19 | 1.6% | |||
| Morgan Stanley Bank of America Merrill Lynch Trust, 1.31%, 08/15/46 | 1.4% | |||
| Georgia-Pacific LLC, 8.00%, 01/15/24 | 1.4% | |||
| Other Holdings | 73.3% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
6
| Fund Performance | Nationwide HighMark Bond Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 4.13% | 5.09% | 4.81% | – | |||||||||||||
| w/ SC3 | 1.80% | 4.62% | 4.57% | – | ||||||||||||||
| Class C1 | w/o SC2 | 3.68% | 4.65% | 4.38% | – | |||||||||||||
| w/ SC4 | 2.68% | 4.65% | 4.38% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 4.28% | 5.33% | 5.07% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 4.65% | 7* | |||||||||||||
| Barclays U.S. Aggregate Bond Index | 3.97% | 4.47% | 4.80% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | A 2.25% front-end sales charge was deducted. Prior to December 1, 2005, the front-end sales charge was 3.25%. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.15% | 0.97% | ||||||
| Class C | 1.43% | 1.40% | ||||||
| Institutional Service Class | 0.90% | 0.72% | ||||||
| Institutional Class | 0.65% | 0.65% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
7
| Fund Performance (con’t.) | Nationwide HighMark Bond 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 Service Class shares of the Nationwide HighMark Bond Fund versus the Barclays U.S. Aggregate Bond Index and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
8
| Shareholder Expense Example | Nationwide HighMark Bond 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide HighMark Bond Fund July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,020.40 | 4.46 | 0.89 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,020.38 | 4.46 | 0.89 | ||||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,018.00 | 7.05 | 1.41 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,017.80 | 7.05 | 1.41 | ||||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,021.00 | 3.46 | 0.69 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,021.37 | 3.46 | 0.69 | ||||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,021.50 | 2.96 | 0.59 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,021.87 | 2.96 | 0.59 | ||||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
9
Statement of Investments
July 31, 2014
Nationwide HighMark Bond Fund
| Asset-Backed Securities 7.9% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Automobiles 4.0% |
| |||||||||
ARI Fleet Lease Trust, | $ | 1,895,793 | $ | 1,894,725 | ||||||
Avis Budget Rental Car Funding AESOP LLC | 2,000,000 | 2,005,767 | ||||||||
Series 2012-2A, Class A, | 4,670,000 | 4,814,308 | ||||||||
Enterprise Fleet Financing LLC, | 1,985,260 | 1,985,409 | ||||||||
Hertz Vehicle Financing LLC, | 3,500,000 | 3,521,693 | ||||||||
Volkswagen Auto Loan Enhanced Trust, | 1,699,517 | 1,708,015 | ||||||||
World Omni Auto Receivables Trust, Series 2011-A, Class A4, 1.91%, 04/15/16 | 1,959,353 | 1,967,286 | ||||||||
|
| |||||||||
| 17,897,203 | ||||||||||
|
| |||||||||
| ||||||||||
Credit Card 2.3% |
| |||||||||
Chase Issuance Trust, | 10,000,000 | 9,998,640 | ||||||||
|
| |||||||||
| ||||||||||
Other 1.6% |
| |||||||||
AEP Texas Central Transition Funding LLC, | 3,662,715 | 3,654,611 | ||||||||
CAL Funding Ltd., | 1,650,000 | 1,656,890 | ||||||||
Oncor Electric Delivery Transition Bond Co. LLC, | 1,809,513 | 1,895,545 | ||||||||
|
| |||||||||
| 7,207,046 | ||||||||||
|
| |||||||||
Total Asset-Backed Securities |
| 35,102,889 | ||||||||
|
| |||||||||
| Bank Loan 0.2% | ||||||||||
Food Products 0.2% |
| |||||||||
HJ Heinz Co., Term B-1 Loan, 2.53%, 06/07/19 | 990,000 | 986,080 | ||||||||
|
| |||||||||
Total Bank Loan |
| 986,080 | ||||||||
|
| |||||||||
| Collateralized Mortgage Obligations 1.8% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Banc of America Mortgage Trust, | $ | 973,730 | $ | 977,544 | ||||||
Federal Home Loan Mortgage Corp. REMICS , | 898,116 | 996,675 | ||||||||
RFMSI Trust, | 630,625 | 634,735 | ||||||||
Sequoia Mortgage Trust | 853,642 | 855,393 | ||||||||
Series 2012-2, Class A2, | 1,407,760 | 1,425,336 | ||||||||
Series 2013-1, Class 1A1, | 2,546,939 | 2,426,079 | ||||||||
Wells Fargo Mortgage Backed Securities Trust, | 470,988 | 482,198 | ||||||||
|
| |||||||||
Total Collateralized Mortgage Obligations (cost $7,836,664) |
| 7,797,960 | ||||||||
|
| |||||||||
| Commercial Mortgage Backed Securities 5.7% | ||||||||||
COMM Mortgage Trust, | 3,872,694 | 3,862,005 | ||||||||
Credit Suisse First Boston Mortgage Securities Corp., | 4,082,687 | 4,123,627 | ||||||||
DBUBS Mortgage Trust, | 4,665,405 | 4,844,007 | ||||||||
JPMBB Commercial Mortgage Securities Trust | 1,769,073 | 1,768,106 | ||||||||
Series 2014-C19, Class A1, 1.27%, 04/15/47 | 2,003,372 | 1,996,789 | ||||||||
Morgan Stanley Bank of America Merrill Lynch Trust, | 6,135,853 | 6,146,963 | ||||||||
WF-RBS Commercial Mortgage Trust, Series 2014-C20, Class A1, 1.28%, 05/15/47 | 2,479,754 | 2,473,845 | ||||||||
|
| |||||||||
Total Commercial Mortgage Backed Securities (cost $25,031,356) |
| 25,215,342 | ||||||||
|
| |||||||||
10
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Bond Fund (Continued)
| Corporate Bonds 48.9% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 1.4% |
| |||||||||
United Technologies Corp. 3.10%, 06/01/22 | $ | 6,000,000 | $ | 6,046,474 | ||||||
|
| |||||||||
| ||||||||||
Airlines 1.7% |
| |||||||||
Continental Airlines Pass Through Trust | 418,933 | 458,993 | ||||||||
Series 2010-A, | 2,489,334 | 2,691,593 | ||||||||
Delta Air Lines Pass Through Trust Series 2011-1, 5.30%, 04/15/19 | 2,392,688 | 2,631,957 | ||||||||
United Airlines Pass Through Trust | 1,850,000 | 1,935,655 | ||||||||
|
| |||||||||
| 7,718,198 | ||||||||||
|
| |||||||||
| ||||||||||
Auto Components 0.7% |
| |||||||||
Johnson Controls, Inc. | 3,000,000 | 2,984,492 | ||||||||
|
| |||||||||
| ||||||||||
Automobiles 0.8% |
| |||||||||
General Motors Co. | 3,500,000 | 3,543,750 | ||||||||
|
| |||||||||
| ||||||||||
Banks 10.8% |
| |||||||||
Bank of New York Mellon Corp. (The) 1.35%, 03/06/18 | 2,500,000 | 2,473,622 | ||||||||
Bank of Nova Scotia | 6,000,000 | 5,992,329 | ||||||||
BB&T Corp. | 1,750,000 | 1,789,517 | ||||||||
Branch Banking & Trust Co. 2.30%, 10/15/18 | 2,750,000 | 2,783,193 | ||||||||
Capital One Financial Corp. 1.00%, 11/06/15 | 2,500,000 | 2,507,205 | ||||||||
4.75%, 07/15/21 | 4,500,000 | 4,946,511 | ||||||||
Citigroup, Inc. | 3,600,000 | 3,657,751 | ||||||||
3.75%, 06/16/24 | 2,400,000 | 2,386,637 | ||||||||
Fifth Third Bank | 3,804,000 | 3,765,260 | ||||||||
First Republic Bank | 3,500,000 | 3,505,839 | ||||||||
PNC Bank NA | 1,260,000 | 1,259,500 | ||||||||
Royal Bank of Canada | 4,400,000 | 4,412,898 | ||||||||
Wells Fargo & Co. | 3,000,000 | 3,391,833 | ||||||||
4.60%, 04/01/21 | 4,350,000 | 4,806,211 | ||||||||
|
| |||||||||
| 47,678,306 | ||||||||||
|
| |||||||||
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Beverages 0.8% |
| |||||||||
Heineken NV | $ | 3,450,000 | $ | 3,455,968 | ||||||
|
| |||||||||
| ||||||||||
Capital Markets 0.2% |
| |||||||||
Lehman Brothers Holdings, Inc. 5.63%, 01/24/13 * | 4,000,000 | 805,000 | ||||||||
|
| |||||||||
| ||||||||||
Consumer Finance 1.0% |
| |||||||||
Ford Motor Credit Co. LLC | 3,900,000 | 4,501,309 | ||||||||
|
| |||||||||
| ||||||||||
Containers & Packaging 1.3% |
| |||||||||
Ball Corp. | 5,261,000 | 5,537,202 | ||||||||
|
| |||||||||
| ||||||||||
Diversified Financial Services 3.3% |
| |||||||||
Bank of America Corp. | 1,700,000 | 1,909,456 | ||||||||
4.00%, 04/01/24 | 4,500,000 | 4,558,231 | ||||||||
General Electric Capital Corp. 2.30%, 04/27/17 | 1,000,000 | 1,027,912 | ||||||||
JPMorgan Chase & Co. | 6,000,000 | 5,887,177 | ||||||||
Osprey Aircraft Leasing US-Three LLC 2.21%, 06/21/25 | 1,250,562 | 1,224,887 | ||||||||
|
| |||||||||
| 14,607,663 | ||||||||||
|
| |||||||||
| ||||||||||
Diversified Telecommunication Services 1.5% |
| |||||||||
Verizon Communications, Inc. 5.15%, 09/15/23 | 2,000,000 | 2,216,312 | ||||||||
Verizon Maryland LLC | 1,020,000 | 1,335,441 | ||||||||
Verizon New England, Inc. | 2,425,000 | 3,100,428 | ||||||||
|
| |||||||||
| 6,652,181 | ||||||||||
|
| |||||||||
| ||||||||||
Electric Utilities 1.6% |
| |||||||||
Berkshire Hathaway Energy Co. 3.75%, 11/15/23 | 4,000,000 | 4,095,114 | ||||||||
Oklahoma Gas & Electric Co. | 2,500,000 | 3,124,468 | ||||||||
|
| |||||||||
| 7,219,582 | ||||||||||
|
| |||||||||
| ||||||||||
Food & Staples Retailing 3.0% |
| |||||||||
CVS Caremark Corp. | 4,750,000 | 4,582,012 | ||||||||
Kroger Co. (The) | 3,750,000 | 3,793,555 | ||||||||
Walgreen Co. | 5,000,000 | 4,891,607 | ||||||||
|
| |||||||||
| 13,267,174 | ||||||||||
|
| |||||||||
| ||||||||||
Gas Utilities 2.9% |
| |||||||||
Enterprise Products Operating LLC 3.35%, 03/15/23 | 499,000 | 495,745 | ||||||||
3.90%, 02/15/24 | 1,200,000 | 1,231,945 | ||||||||
11
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Bond Fund (Continued)
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Gas Utilities (continued) |
| |||||||||
Kinder Morgan Energy Partners LP 3.95%, 09/01/22 | $ | 5,500,000 | $ | 5,527,152 | ||||||
Magellan Midstream Partners LP 6.55%, 07/15/19 | 3,000,000 | 3,549,761 | ||||||||
4.25%, 02/01/21 | 500,000 | 541,885 | ||||||||
Transcontinental Gas Pipe Line Co. LLC 7.25%, 12/01/26 | 1,200,000 | 1,526,775 | ||||||||
|
| |||||||||
| 12,873,263 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Providers & Services 1.5% |
| |||||||||
Laboratory Corp. of America Holdings 4.63%, 11/15/20 | 3,000,000 | 3,222,143 | ||||||||
McKesson Corp. | 3,600,000 | 3,586,782 | ||||||||
|
| |||||||||
| 6,808,925 | ||||||||||
|
| |||||||||
| ||||||||||
Household Products 0.8% |
| |||||||||
Clorox Co. (The) | 3,750,000 | 3,689,496 | ||||||||
|
| |||||||||
| ||||||||||
Information Technology Services 0.4% |
| |||||||||
International Business Machines Corp. | 1,500,000 | 1,932,835 | ||||||||
|
| |||||||||
| ||||||||||
Insurance 1.2% |
| |||||||||
American International Group, Inc. 2.30%, 07/16/19 | 1,650,000 | 1,640,181 | ||||||||
4.13%, 02/15/24 | 2,700,000 | 2,813,928 | ||||||||
Berkshire Hathaway Finance Corp. 5.40%, 05/15/18 | 850,000 | 961,973 | ||||||||
|
| |||||||||
| 5,416,082 | ||||||||||
|
| |||||||||
| ||||||||||
Media 2.0% |
| |||||||||
Comcast Corp. | 3,500,000 | 4,074,004 | ||||||||
DIRECTV Holdings LLC/DIRECTV Financing Co., Inc. | 1,650,000 | 1,728,054 | ||||||||
News America, Inc. | 1,000,000 | 1,213,544 | ||||||||
TCI Communications, Inc. | 125,000 | 164,610 | ||||||||
Time Warner Entertainment Co. LP 8.38%, 03/15/23 | 1,420,000 | 1,900,924 | ||||||||
|
| |||||||||
| 9,081,136 | ||||||||||
|
| |||||||||
| ||||||||||
Metals & Mining 0.6% |
| |||||||||
Rio Tinto Finance USA Ltd. | 2,250,000 | 2,640,310 | ||||||||
|
| |||||||||
| ||||||||||
Multiline Retail 1.2% |
| |||||||||
Macy’s Retail Holdings, Inc. | 5,000,000 | 5,294,417 | ||||||||
|
| |||||||||
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 3.0% |
| |||||||||
Cimarex Energy Co. | $ | 2,215,000 | $ | 2,425,425 | ||||||
4.38%, 06/01/24 | 1,900,000 | 1,942,750 | ||||||||
Petrobras Global Finance BV | 4,000,000 | 4,070,966 | ||||||||
Petrohawk Energy Corp. | 4,550,000 | 4,715,620 | ||||||||
|
| |||||||||
| 13,154,761 | ||||||||||
|
| |||||||||
| ||||||||||
Paper & Forest Products 1.4% |
| |||||||||
Georgia-Pacific LLC | 4,500,000 | 6,052,701 | ||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 2.4% |
| |||||||||
Actavis Funding SCS | ||||||||||
1.30%, 06/15/17 (b) | 2,500,000 | 2,478,117 | ||||||||
2.45%, 06/15/19 (b) | 2,890,000 | 2,871,339 | ||||||||
Mylan, Inc. | ||||||||||
7.88%, 07/15/20 (b) | 5,000,000 | 5,500,000 | ||||||||
|
| |||||||||
| 10,849,456 | ||||||||||
|
| |||||||||
| ||||||||||
Real Estate Investment Trusts (REITs) 1.6% |
| |||||||||
Boston Properties LP | ||||||||||
4.13%, 05/15/21 | 4,200,000 | 4,453,843 | ||||||||
ERP Operating LP | ||||||||||
2.38%, 07/01/19 | 1,250,000 | 1,250,367 | ||||||||
4.63%, 12/15/21 | 1,210,000 | 1,328,248 | ||||||||
|
| |||||||||
| 7,032,458 | ||||||||||
|
| |||||||||
| ||||||||||
Road & Rail 1.1% |
| |||||||||
Burlington Northern Santa Fe LLC | ||||||||||
3.45%, 09/15/21 | 4,500,000 | 4,655,614 | ||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 0.7% |
| |||||||||
Hewlett-Packard Co. | ||||||||||
4.38%, 09/15/21 | 2,750,000 | 2,936,322 | ||||||||
|
| |||||||||
Total Corporate Bonds |
| 216,435,075 | ||||||||
|
| |||||||||
| Municipal Bonds 3.3% | ||||||||||
California 3.3% |
| |||||||||
California State, GO, | 4,000,000 | 4,784,760 | ||||||||
Los Angeles, Department of Water & Power, RB, | 2,900,000 | 4,059,942 | ||||||||
Metropolitan Water District of Southern California, RB, 6.95%, 07/01/40 | 5,000,000 | 5,921,250 | ||||||||
|
| |||||||||
Total Municipal Bonds |
| 14,765,952 | ||||||||
|
| |||||||||
12
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Bond Fund (Continued)
| Sovereign Bond 0.3% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
CANADA 0.3% |
| |||||||||
Province of Saskatchewan Canada, | $ | 1,000,000 | $ | 1,352,221 | ||||||
|
| |||||||||
Total Sovereign Bond |
| 1,352,221 | ||||||||
|
| |||||||||
| U.S. Government Mortgage Backed Agencies 14.0% | ||||||||||
Federal Home Loan Mortgage Corp. Gold Pool | ||||||||||
Pool# E01136 | 64,908 | 67,827 | ||||||||
Pool# G11401 | 259,937 | 273,966 | ||||||||
Pool# E01252 | 97,016 | 102,796 | ||||||||
Pool# B14038 | 223,971 | 236,634 | ||||||||
Pool# B15759 | 785,484 | 829,903 | ||||||||
Pool# G11678 | 92,196 | 97,861 | ||||||||
Pool# G11769 | 177,855 | 190,367 | ||||||||
Pool# G13201 | 562,296 | 602,645 | ||||||||
Pool# J15482 | 1,782,876 | 1,894,167 | ||||||||
Pool# J23807 | 4,666,777 | 4,816,672 | ||||||||
Pool# V60563 | 17,234,461 | 17,777,255 | ||||||||
Federal Home Loan Mortgage Corp. Gold Pool Pool | ||||||||||
Pool# J20465, | 4,785,183 | 4,823,129 | ||||||||
Federal Home Loan Mortgage Corp. Non Gold Pool | ||||||||||
Pool# 848191 | 1,364,930 | 1,449,660 | ||||||||
Pool# 848134 | 421,872 | 450,850 | ||||||||
Federal National Mortgage Association Pool | ||||||||||
Pool# 357119 | 58,358 | 60,469 | ||||||||
Pool# 254003 | 91,857 | 95,819 | ||||||||
Pool# 566881 | 49,829 | 52,088 | ||||||||
Pool# 623489 | 24,135 | 25,165 | ||||||||
Pool# 555170 | 171,787 | 180,032 | ||||||||
| U.S. Government Mortgage Backed Agencies (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Federal National Mortgage Association Pool (continued) |
| |||||||||
Pool# 254546 | $ | 299,993 | $ | 316,192 | ||||||
Pool# 555872 | 73,437 | 77,798 | ||||||||
Pool# 735521 | 1,715,139 | 1,831,433 | ||||||||
Pool# 292234 | 1,550 | 1,809 | ||||||||
Pool# 931892 | 1,329,250 | 1,422,557 | ||||||||
Pool# 293495 | 342 | 399 | ||||||||
Pool# AD6156 | 445,587 | 474,237 | ||||||||
Pool# 303300 | 10,109 | 11,999 | ||||||||
Pool# AE3066 | 2,729,519 | 2,879,430 | ||||||||
Pool# AE0552 | 1,532,338 | 1,659,237 | ||||||||
Pool# AE5487 | 1,211,368 | 1,277,898 | ||||||||
Pool# 342718 | 53,092 | 60,501 | ||||||||
Pool# AJ4093 | 3,439,527 | 3,629,508 | ||||||||
Pool# 250764 | 73,984 | 86,448 | ||||||||
Pool# AB5710 | 5,681,234 | 5,722,956 | ||||||||
Pool# AP9771 | 1,453,211 | 1,500,951 | ||||||||
Pool# 251497 | 437 | 492 | ||||||||
Pool# 402854 | 10,408 | 11,640 | ||||||||
Pool# 415652 | 5,349 | 6,067 | ||||||||
Pool# 421427 | 53,638 | 61,487 | ||||||||
Pool# 432037 | 96,836 | 108,893 | ||||||||
Pool# 437979 | 35,287 | 39,700 | ||||||||
Pool# 444861 | 43,358 | 48,915 | ||||||||
Pool# 446099 | 21,595 | 24,202 | ||||||||
Pool# 440738 | 135,456 | 152,457 | ||||||||
Pool# 450653 | 105,969 | 119,032 | ||||||||
13
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Bond Fund (Continued)
| U.S. Government Mortgage Backed Agencies (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Federal National Mortgage Association Pool (continued) |
| |||||||||
Pool# 453865 | $ | 48,545 | $ | 54,768 | ||||||
Pool# 252212 | 199,193 | 228,104 | ||||||||
Pool# 484939 | 48,563 | 55,775 | ||||||||
Pool# 504076 | 85,678 | 98,071 | ||||||||
Pool# 252570 | 92,154 | 105,635 | ||||||||
Pool# 506638 | 37,231 | 42,634 | ||||||||
Pool# 535300 | 106,736 | 122,308 | ||||||||
Pool# 539932 | 34,860 | 40,530 | ||||||||
Pool# 524343 | 4,939 | 5,941 | ||||||||
Pool# 725027 | 1,638,368 | 1,816,156 | ||||||||
Pool# 725205 | 553,430 | 613,400 | ||||||||
Pool# 829431 | 2,066,835 | 2,215,236 | ||||||||
Government National Mortgage Association I Pool | ||||||||||
Pool# 348637 | 35,968 | 40,951 | ||||||||
Pool# 354696 | 13,010 | 14,682 | ||||||||
Pool# 369270 | 3,372 | 3,818 | ||||||||
Pool# 368335 | 5,306 | 6,016 | ||||||||
Pool# 359986 | 909 | 1,056 | ||||||||
Pool# 362734 | 503 | 580 | ||||||||
Pool# 368677 | 18,040 | 20,867 | ||||||||
Pool# 371909 | 38,393 | 43,391 | ||||||||
Pool# 392055 | 11,264 | 12,701 | ||||||||
Pool# 442138 | 74,791 | 88,348 | ||||||||
Pool# 439463 | 31,899 | 36,939 | ||||||||
Pool# 399109 | 13,827 | 16,306 | ||||||||
Pool# 435777 | 3,987 | 4,702 | ||||||||
| U.S. Government Mortgage Backed Agencies (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Government National Mortgage Association I Pool (continued) | ||||||||||
Pool# 445661 | $ | 10,537 | $ | 12,448 | ||||||
Pool# 443887 | 6,873 | 8,132 | ||||||||
Pool# 450591 | 1,006 | 1,189 | ||||||||
Pool# 453295 | 557 | 656 | ||||||||
Pool# 455381 | 7,246 | 8,536 | ||||||||
Pool# 446699 | 48,287 | 54,762 | ||||||||
Pool# 460906 | 44,556 | 50,372 | ||||||||
Pool# 482748 | 119,478 | 135,394 | ||||||||
Pool# 476969 | 131,627 | 150,422 | ||||||||
Pool# 781029 | 223,103 | 256,630 | ||||||||
Pool# 503106 | 15,510 | 17,875 | ||||||||
|
| |||||||||
Total U.S. Government Mortgage Backed Agencies |
| 61,938,874 | ||||||||
|
| |||||||||
| U.S. Treasury Notes 18.4% | ||||||||||
U.S. Treasury Notes | ||||||||||
1.00%, 05/31/18 | 12,000,000 | 11,801,250 | ||||||||
1.50%, 01/31/19 | 7,000,000 | 6,949,687 | ||||||||
1.50%, 02/28/19 | 23,350,000 | 23,160,281 | ||||||||
1.13%, 04/30/20 | 2,000,000 | 1,907,188 | ||||||||
2.13%, 06/30/21 | 15,000,000 | 14,896,875 | ||||||||
2.00%, 02/15/23 | 10,000,000 | 9,662,500 | ||||||||
2.75%, 11/15/23 | 2,000,000 | 2,041,562 | ||||||||
2.75%, 02/15/24 | 11,050,000 | 11,257,188 | ||||||||
|
| |||||||||
Total U.S. Treasury Notes |
| 81,676,531 | ||||||||
|
| |||||||||
Total Investments |
| 445,270,924 | ||||||||
Liabilities in excess of other |
| (2,110,533 | ) | |||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 443,160,391 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
14
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Bond Fund (Continued)
| (a) | Variable Rate Security. The rate reflected in the Statement of Investments is the rate in effect on July 31, 2014. The maturity date represents the actual maturity date. |
| (b) | 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 July 31, 2014 was $35,028,223 which represents 7.90% of net assets. |
| (c) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| BV | Private Limited Liability Company |
| GO | General Obligation |
| LLC | Limited Liability Company |
| LP | Limited Partnership |
| Ltd. | Limited |
| NA | National Association |
| NV | Public Traded Company |
| RB | Revenue Bond |
| REIT | Real Estate Investment Trust |
| REMICS | Real Estate Mortgage Investment Conduits |
The accompanying notes are an integral part of these financial statements.
15
Statement of Assets and Liabilities
July 31, 2014
| Nationwide HighMark Bond Fund | ||||||
Assets: | ||||||
Investments, at value (cost $437,879,655) | $ | 445,270,924 | ||||
Cash | 536,912 | |||||
Interest and dividends receivable | 2,910,711 | |||||
Receivable for investments sold | 42,052 | |||||
Receivable for capital shares issued | 445,719 | |||||
Prepaid expenses | 10,899 | |||||
|
| |||||
Total Assets | 449,217,217 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 5,358,326 | |||||
Distributions payable | 235,935 | |||||
Payable for capital shares redeemed | 155,737 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 170,551 | |||||
Fund administration fees | 15,369 | |||||
Distribution fees | 11,567 | |||||
Administrative servicing fees | 61,175 | |||||
Accounting and transfer agent fees | 3,606 | |||||
Trustee fees | 993 | |||||
Custodian fees | 1,254 | |||||
Compliance program costs (Note 3) | 1,070 | |||||
Professional fees | 34,390 | |||||
Printing fees | 2,886 | |||||
Other | 3,967 | |||||
|
| |||||
Total Liabilities | 6,056,826 | |||||
|
| |||||
Net Assets | $ | 443,160,391 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 432,368,193 | ||||
Accumulated undistributed net investment income | 62,679 | |||||
Accumulated net realized gains from investments | 3,338,250 | |||||
Net unrealized appreciation/(depreciation) from investments | 7,391,269 | |||||
|
| |||||
Net Assets | $ | 443,160,391 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 28,985,479 | ||||
Class C Shares | 8,293,872 | |||||
Institutional Service Class Shares | 405,870,576 | |||||
Institutional Class Shares | 10,464 | |||||
|
| |||||
Total | $ | 443,160,391 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 2,680,704 | |||||
Class C Shares | 771,521 | |||||
Institutional Service Class Shares | 36,853,095 | |||||
Institutional Class Shares | 950 | |||||
|
| |||||
Total | 40,306,270 | |||||
|
| |||||
16
Statement of Assets and Liabilities (Continued)
July 31, 2014
| Nationwide HighMark Bond Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 10.81 | ||||
Class C Shares (b) | $ | 10.75 | ||||
Institutional Service Class Shares | $ | 11.01 | ||||
Institutional Class Shares | $ | 11.01 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 11.06 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 2.25 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 0.50% on sales of shares of original purchases of $250,000 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.
17
Statement of Operations
For the Year Ended July 31, 2014
| Nationwide HighMark Bond Fund | ||||||
INVESTMENT INCOME: | ||||||
Interest income | $ | 12,145,127 | ||||
Dividend income | 3,342 | |||||
Income from securities lending (Note 2) | 2,163 | |||||
|
| |||||
Total Income | 12,150,632 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 1,670,677 | |||||
Fund administration fees | 225,921 | |||||
Distribution fees Class A | 59,817 | |||||
Distribution fees Class B (a) | 74 | |||||
Distribution fees Class C | 78,987 | |||||
Administrative servicing fees Class A | 21,321 | |||||
Administrative servicing fees Class B (a) | 25 | |||||
Administrative servicing fees Class C | 2,266 | |||||
Administrative servicing fees Institutional Service Class (b) | 362,033 | |||||
Registration and filing fees | 55,728 | |||||
Professional fees | 59,348 | |||||
Printing fees | 23,009 | |||||
Trustee fees | 7,455 | |||||
Custodian fees | 12,576 | |||||
Accounting and transfer agent fees | 18,164 | |||||
Compliance program costs (Note 3) | 1,991 | |||||
Other | 36,777 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 2,636,169 | |||||
|
| |||||
Earnings credit (Note 4) | (270 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (5,835 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (b) | (69,913 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (55,593 | ) | ||||
|
| |||||
Net Expenses | 2,504,558 | |||||
|
| |||||
NET INVESTMENT INCOME | 9,646,074 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 3,762,220 | |||||
Net change in unrealized appreciation/(depreciation) from investments | (106,155 | ) | ||||
|
| |||||
Net realized/unrealized gains from investments | 3,656,065 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 13,302,139 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
18
Statements of Changes in Net Assets
| Nationwide HighMark Bond Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 9,646,074 | $ | 9,849,670 | ||||||||
Net realized gains from investments | 3,762,220 | 9,617,231 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | (106,155 | ) | (20,179,034 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 13,302,139 | (712,133 | ) | |||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (673,434 | ) | (970,780 | ) | ||||||||
Class B (a) | (125 | ) | (2,623 | ) | ||||||||
Class C | (251,109 | ) | (388,979 | ) | ||||||||
Institutional Service Class (b) | (9,068,802 | ) | (9,320,669 | ) | ||||||||
Institutional Class | (281 | )(c) | – | |||||||||
Net realized gains: | ||||||||||||
Class A | (556,525 | ) | (510,196 | ) | ||||||||
Class B (a) | – | (1,648 | ) | |||||||||
Class C | (253,730 | ) | (237,798 | ) | ||||||||
Institutional Service Class (b) | (6,797,971 | ) | (4,233,165 | ) | ||||||||
Institutional Class | (235 | )(c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (17,602,212 | ) | (15,665,858 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 95,855,447 | (18,007,338 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets | 91,555,374 | (34,385,329 | ) | |||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 351,605,017 | 385,990,346 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 443,160,391 | $ | 351,605,017 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 62,679 | $ | 107,557 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Proceeds from shares issued | $ | 9,888,133 | $ | 5,284,159 | ||||||||
Proceeds from shares issued from class conversion | 77,778 | – | ||||||||||
Dividends reinvested | 1,013,374 | 1,175,363 | ||||||||||
Cost of shares redeemed | (8,214,934 | ) | (23,227,122 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 2,764,351 | (16,767,600 | ) | |||||||||
|
|
|
| |||||||||
Class B Shares (Note 10) (a) | ||||||||||||
Proceeds from shares issued | – | 4,083 | ||||||||||
Dividends reinvested | 93 | 3,700 | ||||||||||
Cost of shares redeemed in class conversion | (77,778 | ) | – | |||||||||
Cost of shares redeemed | (459 | ) | (141,856 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (78,144 | ) | (134,073 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Proceeds from shares issued | 628,539 | 6,097,969 | ||||||||||
Dividends reinvested | 342,302 | 385,574 | ||||||||||
Cost of shares redeemed | (7,635,255 | ) | (6,245,598 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (6,664,414 | ) | 237,945 | |||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
19
Statements of Changes in Net Assets (Continued)
| Nationwide HighMark Bond Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Service Class Shares (Note 10) (b) | ||||||||||||
Proceeds from shares issued | $ | 150,835,359 | $ | 77,556,706 | ||||||||
Dividends reinvested | 11,684,162 | 9,435,633 | ||||||||||
Cost of shares redeemed | (62,696,383 | ) | (88,335,949 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 99,823,138 | (1,343,610 | ) | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 10,000 | (c) | – | |||||||||
Dividends reinvested | 516 | (c) | – | |||||||||
Cost of shares redeemed | – | (c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 10,516 | (c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 95,855,447 | $ | (18,007,338 | ) | |||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Issued | 913,616 | 465,233 | ||||||||||
Issued in class conversion | 7,204 | – | ||||||||||
Reinvested | 94,327 | 103,825 | ||||||||||
Redeemed | (759,076 | ) | (2,053,587 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | 256,071 | (1,484,529 | ) | |||||||||
|
|
|
| |||||||||
Class B Shares (Note 10) (a) | ||||||||||||
Issued | – | 356 | ||||||||||
Reinvested | 9 | 328 | ||||||||||
Redeemed in class conversion | (7,234 | ) | – | |||||||||
Redeemed | (43 | ) | (12,533 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (7,268 | ) | (11,849 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Issued | 58,546 | 539,509 | ||||||||||
Reinvested | 32,061 | 34,278 | ||||||||||
Redeemed | (708,229 | ) | (560,950 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (617,622 | ) | 12,837 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 10) (b) | ||||||||||||
Issued | 13,664,040 | 6,723,082 | ||||||||||
Reinvested | 1,068,686 | 819,418 | ||||||||||
Redeemed | (5,700,594 | ) | (7,721,823 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | 9,032,132 | (179,323 | ) | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 903 | (c) | – | |||||||||
Reinvested | 47 | (c) | – | |||||||||
Redeemed | – | (c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 950 | (c) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | 8,664,263 | (1,662,864 | ) | |||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
20
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide HighMark Bond Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning | Net Investment Income | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.94 | 0.29 | 0.15 | 0.44 | (0.31 | ) | (0.26 | ) | (0.57 | ) | $ | 10.81 | 4.13% | $ | 28,985,479 | 0.93% | 2.71% | 0.97% | 57.14% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.42 | 0.27 | (0.31 | ) | (0.04 | ) | (0.29 | ) | (0.15 | ) | (0.44 | ) | $ | 10.94 | (0.41% | ) | $ | 26,524,432 | 0.97% | 2.35% | 1.24% | 53.00% | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.28 | 0.34 | 0.40 | 0.74 | (0.36 | ) | (0.24 | ) | (0.60 | ) | $ | 11.42 | 6.87% | $ | 44,658,869 | 0.99% | 3.05% | 1.25% | 44.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 11.21 | 0.38 | 0.18 | 0.56 | (0.40 | ) | (0.09 | ) | (0.49 | ) | $ | 11.28 | 5.09% | $ | 29,448,806 | 1.04% | 3.45% | 1.26% | 58.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 10.61 | 0.43 | 0.62 | 1.05 | (0.45 | ) | – | (0.45 | ) | $ | 11.21 | 10.08% | $ | 28,951,830 | 1.03% | 3.97% | 1.25% | 32.00% | |||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.88 | 0.24 | 0.15 | 0.39 | (0.26 | ) | (0.26 | ) | (0.52 | ) | $ | 10.75 | 3.68% | $ | 8,293,872 | 1.40% | 2.27% | 1.42% | 57.14% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.36 | 0.21 | (0.30 | ) | (0.09 | ) | (0.24 | ) | (0.15 | ) | (0.39 | ) | $ | 10.88 | (0.84% | ) | $ | 15,111,946 | 1.40% | 1.92% | 1.49% | 53.00% | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.22 | 0.29 | 0.40 | 0.69 | (0.31 | ) | (0.24 | ) | (0.55 | ) | $ | 11.36 | 6.36% | $ | 15,638,520 | 1.42% | 2.62% | 1.50% | 44.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 11.15 | 0.33 | 0.18 | 0.51 | (0.35 | ) | (0.09 | ) | (0.44 | ) | $ | 11.22 | 4.77% | $ | 7,773,796 | 1.47% | 3.02% | 1.51% | 58.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 10.56 | 0.38 | 0.61 | 0.99 | (0.40 | ) | – | (0.40 | ) | $ | 11.15 | 9.58% | $ | 4,164,326 | 1.46% | 3.54% | 1.50% | 32.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares(h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 11.14 | 0.32 | 0.14 | 0.46 | (0.33 | ) | (0.26 | ) | (0.59 | ) | $ | 11.01 | 4.28% | $ | 405,870,576 | 0.70% | 2.88% | 0.74% | 57.14% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.62 | 0.30 | (0.31 | ) | (0.01 | ) | (0.32 | ) | (0.15 | ) | (0.47 | ) | $ | 11.14 | (0.15% | ) | $ | 309,889,434 | 0.72% | 2.60% | 0.99% | 53.00% | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.46 | 0.38 | 0.41 | 0.79 | (0.39 | ) | (0.24 | ) | (0.63 | ) | $ | 11.62 | 7.11% | $ | 325,475,420 | 0.74% | 3.30% | 1.00% | 44.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 11.38 | 0.42 | 0.18 | 0.60 | (0.43 | ) | (0.09 | ) | (0.52 | ) | $ | 11.46 | 5.45% | $ | 337,142,952 | 0.79% | 3.70% | 1.01% | 58.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 10.77 | 0.47 | 0.62 | 1.09 | (0.48 | ) | – | (0.48 | ) | $ | 11.38 | 10.29% | $ | 330,317,720 | 0.78% | 4.23% | 1.00% | 32.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 11.07 | 0.29 | 0.21 | 0.50 | (0.30 | ) | (0.26 | ) | (0.56 | ) | $ | 11.01 | 4.65% | $ | 10,464 | 0.60% | 3.08% | 0.60% | 57.14% | ||||||||||||||||||||||||||||||||||||
| �� | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
21
| Fund Commentary | Nationwide HighMark California Intermediate Tax Free Bond Fund |
For the annual period ended July 31, 2014, the Nationwide HighMark California Intermediate Tax Free Bond Fund (Institutional Service Class) returned 5.77%* versus 5.31% for its benchmark, the Barclays 7-Year Municipal Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of California Intermediate Municipal Debt Funds (consisting of 40 funds as of July 31, 2014) was 5.73% for the same time period.
| * | Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund. |
Market Environment
The California municipal bond market shared many similarities with the national municipal bond market during the annual reporting period ended July 31, 2014.
Both markets experienced two distinct phases during the period; during the first half, the Federal Reserve’s stimulus program led to a steepening of the yield curve, and, as the yield curve steepened, investors across the U.S. pulled assets from municipal bond funds. This action by investors led to further price declines as managers were forced to sell to meet redemptions, setting in motion a vicious cycle which reversed course in mid-2014 only after investors returned to the municipal bond market at levels not seen since mid-January 2013.
As a result of investor demand and lower-than-average municipal bond issuance nationwide, the second half of the reporting period saw yields fall significantly across all maturities and states but most notably for bonds with longer maturities.
Portfolio Performance
Our investment philosophy and process seek to provide a yield competitive with longer-maturity municipal bonds from issuers in California but with lower volatility by holding municipal bond issues with a duration of three to six years. During much of the 12-month period ended July 31, 2014, the Fund benefited from this strategy as its lower duration provided protection in an environment of rising interest rates and a steepening yield curve.
The Fund’s high credit quality also provided outperformance during the reporting period, as bonds rated AAA and AA outperformed
lower-quality securities, especially those rated BBB and lower, for much of the reporting period.
Individual issues that contributed positively to Fund performance during the reporting period included the Fund’s investments in the recently upgraded California State General Obligation issue, the longer-duration Mount Diablo Unified School District General Obligation bond, and Los Angeles City’s General Obligation bond.
Issues that detracted from Fund performance during the reporting period included the Fund’s investments in shorter-duration positions in California Department of Water, Sacramento Municipal Utility District and North Orange County Community College.
Derivatives were not used in the Nationwide HighMark California Intermediate Tax Free Bond Fund during the annual reporting period ended July 31, 2014.
Outlook and Positioning
We expect that the municipal bond market, including California’s, will be affected by rising rates, and so we anticipate maintaining the Fund’s current duration strategy of being slightly short of that of the Fund’s benchmark, with the majority of the Fund’s duration exposure in bonds from issuers in California with durations of three to five years. Despite broad-based investor demand for lower-credit-quality issues offering higher yields, we do not plan to alter our core strategy for the Fund of holding high-quality bonds from issuers in California that meet our criteria for inclusion in the Fund.
Subadviser:
HighMark Capital Management, Inc.
Portfolio Managers:
Robert Bigelow, Raymond Mow and David Wines
The Fund is subject to the risks of investing in fixed-income securities. By concentrating its investments in bonds issued in California, the Fund’s credit risk is dependent on the ability of the state and its cities and municipalities to make timely payments on their obligations. The Fund may invest in more-aggressive investments such as derivatives (many of which create investment leverage and are highly volatile). The Fund may invest in municipal securities that generate interest that is subject to alternative minimum tax (“AMT”). As a result, taxpayers who are subject to the AMT potentially could earn a lower after-tax return. Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
22
| Fund Overview | Nationwide HighMark California Intermediate Tax Free Bond Fund |
Objective
The Fund seeks to provide high current income that is exempt from federal income tax and California personal income tax.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide HighMark California Intermediate Tax Free Bond Fund (Institutional Service Class) returned 5.77%, outperforming the benchmark by 0.46% and the Lipper peer category median by 0.04%. |
| Ÿ | The Fund’s high credit quality also provided outperformance during the reporting period, as bonds rated AAA and AA outperformed lower-quality securities, especially those rated BBB and lower, for much of the reporting period. |
| Ÿ | Despite broad-based investor demand for lower-credit-quality issues offering higher yields, we do not plan to alter our core strategy for the Fund of holding high-quality bonds. |
Asset Allocation†
| Municipal Bonds | 97.5% | |||
| Mutual Fund | 1.4% | |||
| Other assets in excess of liabilities | 1.1% | |||
| 100.0% |
Top Holdings††
| California State, Economic Recovery, Refunding, GO, 5.25%, 07/01/21 | 2.6% | |||
| San Diego, Public Facilities Financing Authority, Sewer Revenue, Refunding, RB, 5.50%, 05/15/23 | 2.4% | |||
| Southern California, Public Power Authority, Power Project Revenue, Canyon Power, Refunding, RB, 5.00%, 07/01/25 | 1.9% | |||
| Los Angeles, Refunding, GO, 5.00%, 09/01/23 | 1.6% | |||
| Los Angeles, Water & Power Department Revenue, Power System, Refunding, RB, 5.00%, 07/01/22 | 1.5% | |||
| University of California, Limited Project Revenue, Refunding, RB, 5.00%, 05/15/24 | 1.4% | |||
| Peralta, Community College District, Refunding, GO, 5.00%, 08/01/20 | 1.4% | |||
| Orange County, Sanitation District, COP, AGM Insured, 5.00%, 02/01/23 | 1.4% | |||
| Goldman Sachs Tax Exempt California — Institutional Shares, 0.10% | 1.4% | |||
| San Francisco City & County, Airport Commission, International Airport Revenue, Second Series, Issue 32F, Refunding, RB, National-RE FGIC Insured, 5.25%, 05/01/19 | 1.4% | |||
| Other Holdings | 83.0% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
23
| Fund Performance | Nationwide HighMark California Intermediate Tax Free Bond |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 5.54% | 3.55% | 3.48% | – | |||||||||||||
| w/ SC3 | 3.21% | 3.08% | 3.24% | – | ||||||||||||||
| Class C1 | w/o SC2 | 4.99% | 3.09% | 2.99% | – | |||||||||||||
| w/ SC4 | 3.99% | 3.09% | 2.99% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 5.77% | 3.81% | 3.74% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 5.34% | 7* | |||||||||||||
| Barclays 7-Year Municipal Bond Index | 5.31% | 4.88% | 4.82% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | A 2.25% front-end sales charge was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.15 | % | 0.79 | % | ||||
| Class C | 1.40 | % | 1.24 | % | ||||
| Institutional Service Class | 0.90 | % | 0.54 | % | ||||
| Institutional Class | 0.65 | % | 0.49 | % | ||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
24
| Fund Performance (con’t.) | Nationwide HighMark California Intermediate Tax Free Bond 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 Service Class shares of the Nationwide HighMark California Intermediate Tax Free Bond Fund versus the Barclays 7-Year Municipal Bond Index and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
25
| Shareholder Expense Example | Nationwide HighMark California Intermediate Tax Free Bond 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide HighMark California July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,025.90 | 3.97 | 0.79 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,020.88 | 3.96 | 0.79 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,023.80 | 6.22 | 1.24 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.65 | 6.21 | 1.24 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,028.00 | 2.72 | 0.54 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,022.12 | 2.71 | 0.54 | |||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,028.30 | 2.46 | 0.49 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,022.36 | 2.46 | 0.49 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
26
Statement of Investments
July 31, 2014
Nationwide HighMark California Intermediate Tax Free Bond Fund
| Municipal Bonds 97.5% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
California 97.5% |
| |||||||||
Alhambra, Unified School District, Election 2004, GO, AGM Insured, | $ | 1,150,000 | $ | 1,295,808 | ||||||
Alhambra, Unified School District, Refunding, GO | 495,000 | 586,560 | ||||||||
Series A, 5.00%, 08/01/21 | 475,000 | 565,435 | ||||||||
Atascadero, Unified School District, Election 2010, GO, AGM Insured, | 345,000 | 397,350 | ||||||||
Bay Area Toll Authority, San Francisco Bay Area, Refunding, RB | ||||||||||
Series F-1, 5.25%, 04/01/23 | 1,775,000 | 2,097,340 | ||||||||
Series F-1, 5.00%, 04/01/24 | 665,000 | 794,150 | ||||||||
Bay Area Water Supply & Conservation Agency, Capital Cost Recovery Prepayment Program, RB, | 845,000 | 961,576 | ||||||||
Burlingame, Elementary School District, Refunding, GO, AGM Insured, | 795,000 | 872,202 | ||||||||
California Educational Facilities Authority, Pepperdine University, Refunding, RB, Series 2012, 5.00%, 09/01/24 | 405,000 | 486,769 | ||||||||
California State, Department of Water Resources, Central Valley Project, Prerefunded Balance, RB, | 85,000 | 86,371 | ||||||||
California State, Department of Water Resources, Central Valley Project, Refunding, ETM, RB, AGM Insured, | 10,000 | 10,179 | ||||||||
California State, Department of Water Resources, Power Supply Revenue, RB, Sub-Series F-5, 5.00%, 05/01/22 | 1,325,000 | 1,514,289 | ||||||||
California State, Department of Water Resources, Power Supply Revenue, Refunding, RB, AGM Insured | ||||||||||
Series H, 5.00%, 05/01/21 | 1,485,000 | 1,710,765 | ||||||||
Series H, 5.00%, 05/01/22 | 1,770,000 | 2,032,721 | ||||||||
California State, Economic Recovery, National-RE Insured, GO, | 645,000 | 647,651 | ||||||||
California State, Economic Recovery, Refunding, GO | ||||||||||
Series A, 5.00%, 07/01/20 | 555,000 | 655,688 | ||||||||
Series A, 5.25%, 07/01/21 | 4,000,000 | 4,753,320 | ||||||||
California State, Educational Facilities Authority Revenue, Santa Clara University, RB | ||||||||||
5.25%, 04/01/23 | 250,000 | 284,493 | ||||||||
5.25%, 04/01/24 | 695,000 | 790,889 | ||||||||
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
California (continued) |
| |||||||||
California State, GO, | $ | 2,000,000 | $ | 2,353,380 | ||||||
California State, Public Works Board, Lease Revenue, Regents of the University of California, ETM, RB | ||||||||||
Series G, 5.00%, 12/01/17 | 1,525,000 | 1,746,369 | ||||||||
Series G, 5.00%, 12/01/21 | 1,000,000 | 1,228,520 | ||||||||
California State, Refunding, GO, | 1,545,000 | 1,713,328 | ||||||||
California State, Refunding, GO, AMBAC Insured, | 1,000,000 | 1,139,750 | ||||||||
California State, University, Systemwide, RB, | 255,000 | 299,862 | ||||||||
California State, University, Systemwide, Refunding, RB | ||||||||||
Series A, 5.00%, 11/01/25 | 945,000 | 1,066,073 | ||||||||
Series A, 5.00%, 11/01/26 | 1,500,000 | 1,681,260 | ||||||||
California State, Various Purposes, GO | ||||||||||
5.25%, 10/01/21 | 1,000,000 | 1,196,740 | ||||||||
5.63%, 04/01/25 | 2,030,000 | 2,394,953 | ||||||||
Campbell, Unified High School District, Refunding, GO, | 695,000 | 796,567 | ||||||||
Cerritos, Community College District, Election 2004, GO | ||||||||||
Series C, 5.25%, 08/01/24 | 450,000 | 517,603 | ||||||||
Series C, 5.25%, 08/01/25 | 750,000 | 859,605 | ||||||||
Chaffey, Community College District, Election 2002, GO, | 1,000,000 | 1,209,120 | ||||||||
Chaffey, Unified High School District, Refunding, GO, National-RE FGIC Insured, | 1,100,000 | 1,153,383 | ||||||||
Chino Valley, Unified School District, Election 2002, Refunding, GO, | 975,000 | 1,159,441 | ||||||||
Citrus, Community College District, Election 2004, GO, | 545,000 | 622,897 | ||||||||
Corona-Norco, Unified School District, Election 2006, GO, | 920,000 | 1,005,247 | ||||||||
Desert Sands, Unified School District, Election 2001, GO | ||||||||||
5.75%, 08/01/19 | 865,000 | 1,016,582 | ||||||||
5.25%, 08/01/20 | 610,000 | 700,469 | ||||||||
5.25%, 08/01/22 | 825,000 | 949,567 | ||||||||
5.50%, 08/01/25 | 590,000 | 680,825 | ||||||||
El Camino, Community College District, Refunding, GO, | 1,250,000 | 1,513,512 | ||||||||
27
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark California Intermediate Tax Free Bond Fund (Continued)
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
California (continued) |
| |||||||||
El Camino, Community College District, Refunding, GO, AGM Insured, | $ | 1,000,000 | $ | 1,048,330 | ||||||
Fallbrook, Union Elementary School District, San Diego County, Election 2002, Refunding, GO, | 720,000 | 861,415 | ||||||||
Fontana, Unified School District, Prerefunded Balance, GO, AGM Insured, | 40,000 | 40,000 | ||||||||
Gavilan, Joint Community College District, Refunding, GO, | 1,000,000 | 1,205,700 | ||||||||
Gilroy, Unified School District, Election 2008, GO, AGM Insured | ||||||||||
Series A, 5.25%, 08/01/22 | 1,945,000 | 2,237,197 | ||||||||
Series A, 6.00%, 08/01/25 | 1,400,000 | 1,672,440 | ||||||||
Grant, Joint Union High School District, Election 2006, GO, AGM Insured, | 975,000 | 1,090,362 | ||||||||
Hayward, Unified School District, Election 2008, GO, | 1,000,000 | 1,075,950 | ||||||||
Imperial, Irrigation District, Electric Revenue, Refunding, RB | ||||||||||
Series B, 5.00%, 11/01/26 | 2,600,000 | 2,921,256 | ||||||||
Kern, High School District, Refunding, GO | ||||||||||
4.00%, 08/01/18 | 430,000 | 481,411 | ||||||||
4.00%, 08/01/19 | 740,000 | 835,453 | ||||||||
5.00%, 08/01/22 | 885,000 | 1,069,363 | ||||||||
Long Beach, Harbor Revenue, Refunding, RB, | 1,845,000 | 2,110,994 | ||||||||
Long Beach, Unified School District, Election 2008, GO | 180,000 | 180,000 | ||||||||
Series A, 5.25%, 08/01/25 | 1,640,000 | 1,899,891 | ||||||||
Long Beach, Unified School District, Refunding, GO, | 1,570,000 | 1,818,798 | ||||||||
Los Angeles, Airport Department Revenue, Los Angeles International Airport, RB, Series D, 5.00%, 05/15/24 | 1,100,000 | 1,277,672 | ||||||||
Los Angeles, Airport Department Revenue, Los Angeles International Airport, Refunding, RB | 500,000 | 594,260 | ||||||||
Series A, 5.00%, 05/15/23 | 1,000,000 | 1,168,600 | ||||||||
Los Angeles, Community College District, Election 2003, GO, AGM Insured | 1,000,000 | 1,090,520 | ||||||||
Series E, 5.00%, 08/01/23 | 1,360,000 | 1,479,571 | ||||||||
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
California (continued) |
| |||||||||
Los Angeles, Community College District, Election 2008, GO | ||||||||||
Series A, 5.50%, 08/01/22 | $ | 1,695,000 | $ | 2,013,084 | ||||||
Series A, 5.50%, 08/01/24 | 1,200,000 | 1,422,660 | ||||||||
Los Angeles, GO, | 950,000 | 1,138,490 | ||||||||
Los Angeles, GO, National-RE Insured, | 1,000,000 | 1,087,360 | ||||||||
Los Angeles, Harbor Department Revenue, RB | ||||||||||
Series A, 5.00%, 08/01/20 | 2,090,000 | 2,470,087 | ||||||||
Series A, 5.25%, 08/01/21 | 350,000 | 416,875 | ||||||||
Los Angeles, Refunding, GO, | 2,515,000 | 3,028,764 | ||||||||
Los Angeles, Unified School District, Election 2002, GO, | 1,000,000 | 1,176,220 | ||||||||
Los Angeles, Unified School District, Election 2004, GO, | 1,910,000 | 2,213,232 | ||||||||
Los Angeles, Unified School District, Election 2008, Prerefunded Balance, GO, FGIC Insured, | 680,000 | 741,445 | ||||||||
Los Angeles, Waste Water System Revenue, Senior Lien, Refunding, RB, | 1,535,000 | 1,844,410 | ||||||||
Los Angeles, Water & Power Department Revenue, Power System, RB, | 575,000 | 600,697 | ||||||||
Los Angeles, Water & Power Department Revenue, Power System, RB, AGM Insured, | 1,000,000 | 1,044,130 | ||||||||
Los Angeles, Water & Power Department Revenue, Power System, Refunding, RB | ||||||||||
Series A, 5.00%, 07/01/18 | 1,425,000 | 1,656,520 | ||||||||
Series A, 5.00%, 07/01/22 | 2,380,000 | 2,850,169 | ||||||||
Manteca, Sewer Revenue, Refunding, RB, | 1,580,000 | 1,877,151 | ||||||||
Modesto, Irrigation District, Capital Improvements, COP, | 1,500,000 | 1,726,755 | ||||||||
Modesto, Irrigation District, Electric Revenue, Refunding, RB | ||||||||||
Series A, 5.00%, 07/01/20 | 535,000 | 637,297 | ||||||||
Series A, 5.00%, 07/01/21 | 750,000 | 899,505 | ||||||||
Series A, 5.00%, 07/01/22 | 1,575,000 | 1,850,468 | ||||||||
Mount Diablo, Unified School District, Election 2002, Refunding, GO | ||||||||||
Series B, 5.00%, 07/01/20 | 1,145,000 | 1,367,863 | ||||||||
Series B-2, 5.00%, 07/01/24 | 2,000,000 | 2,376,840 | ||||||||
28
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark California Intermediate Tax Free Bond Fund (Continued)
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
California (continued) |
| |||||||||
Mount Diablo, Unified School District, Refunding, GO | ||||||||||
5.00%, 08/01/23 | $ | 2,125,000 | $ | 2,497,279 | ||||||
5.00%, 08/01/26 | 300,000 | 343,401 | ||||||||
North Orange County, Community College District, Refunding, Prerefunded Balance, GO, National-RE Insured, | 2,295,000 | 2,405,275 | ||||||||
Northern California Transmission Agency Revenue, California-Oregon Project, Refunding, RB, | 1,200,000 | 1,364,796 | ||||||||
Ohlone, Community College District, Refunding, GO, | 720,000 | 877,075 | ||||||||
Orange County, Sanitation District, COP, AGM Insured | ||||||||||
Series B, 5.00%, 02/01/17 | 530,000 | 590,462 | ||||||||
Series B, 5.00%, 02/01/23 | 2,350,000 | 2,615,080 | ||||||||
Series B, 5.00%, 02/01/25 | 1,200,000 | 1,335,360 | ||||||||
Pajaro Valley, Unified School District, Refunding, GO, | 500,000 | 562,940 | ||||||||
Peralta, Community College District, Refunding, GO, | 2,240,000 | 2,663,830 | ||||||||
Port of Oakland, Intermediate Lien, Refunding, RB, National-RE Insured, | 1,875,000 | 2,110,294 | ||||||||
Redding, Electric System Revenue, Refunding, COP, AGM Insured | ||||||||||
Series A, 5.25%, 06/01/19 | 475,000 | 545,637 | ||||||||
Series A, 5.00%, 06/01/22 | 1,525,000 | 1,724,714 | ||||||||
Series A, 5.00%, 06/01/24 | 1,160,000 | 1,305,441 | ||||||||
Riverside, Community College District, Refunding, Prerefunded Balance, GO, AGM Insured, | 1,750,000 | 1,834,630 | ||||||||
Sacramento, Municipal Utility District, Electric Revenue, Refunding, RB, | 1,000,000 | 1,165,090 | ||||||||
Sacramento, Municipal Utility District, Electric Revenue, Refunding, RB, AGM Insured | ||||||||||
Series U, 5.00%, 08/15/23 | 1,690,000 | 1,935,625 | ||||||||
Series U, 5.00%, 08/15/24 | 595,000 | 679,710 | ||||||||
Sacramento, Unified School District, Refunding, GO, | 1,140,000 | 1,329,012 | ||||||||
San Bernardino, Community College District, Election 2002, Prerefunded Balance, GO, | 1,055,000 | 1,280,422 | ||||||||
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
California (continued) |
| |||||||||
San Bernardino, Community College District, Refunding, GO | ||||||||||
Series A, 4.00%, 08/01/18 | $ | 405,000 | $ | 454,102 | ||||||
Series A, 5.00%, 08/01/20 | 1,000,000 | 1,198,040 | ||||||||
San Diego, Community College District, Refunding, GO | ||||||||||
5.00%, 08/01/20 | 560,000 | 676,614 | ||||||||
5.00%, 08/01/21 | 400,000 | 488,444 | ||||||||
5.00%, 08/01/24 | 1,000,000 | 1,202,400 | ||||||||
San Diego, Public Facilities Financing Authority, Sewer Revenue, Refunding, RB | ||||||||||
Series B, 5.50%, 05/15/23 | 3,750,000 | 4,458,862 | ||||||||
Series A, 5.25%, 05/15/26 | 1,675,000 | 1,965,211 | ||||||||
San Diego, Public Facilities Financing Authority, Water Revenue, Refunding, RB, | 1,000,000 | 1,165,810 | ||||||||
San Francisco City & County, Airport Commission, International Airport Revenue, Second Series, Issue 32F, Refunding, RB, National-RE FGIC Insured | ||||||||||
5.25%, 05/01/19 | 2,150,000 | 2,545,407 | ||||||||
5.00%, 05/01/22 | 2,000,000 | 2,153,780 | ||||||||
San Francisco City & County, Earthquake Safety, GO, | 1,000,000 | 1,179,820 | ||||||||
San Francisco City & County, General Hospital Improvement, GO, | 250,000 | 289,940 | ||||||||
San Francisco City & County, Public Utilities Commission, Water Revenue, RB, AGM Insured, | 1,000,000 | 1,076,890 | ||||||||
San Francisco City & County, Refunding, GO, | 755,000 | 897,506 | ||||||||
San Francisco City & County, Unified School District, Prop A, Election 2006, GO, | 950,000 | 1,105,629 | ||||||||
San Francisco, Bay Area Rapid Transit, District Sales Tax Revenue, Refunding, RB, | 500,000 | 601,415 | ||||||||
San Francisco, Community College District, Election 2001, GO, National-RE Insured, | 2,085,000 | 2,093,069 | ||||||||
San Mateo Union High School District, Election 2006, GO | ||||||||||
Series 2013-A, 5.00%, 09/01/20 | 400,000 | 486,020 | ||||||||
Series 2013-A, 5.00%, 09/01/22 | 1,000,000 | 1,239,420 | ||||||||
29
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark California Intermediate Tax Free Bond Fund (Continued)
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
California (continued) |
| |||||||||
San Mateo, Joint Powers Financing Authority, Lease Revenue, San Mateo County, Capital Projects, Refunding, RB, | $ | 1,000,000 | $ | 1,147,920 | ||||||
Santa Maria, Joint Unified High School District, Election 2000, ETM, GO, AGM Insured, | 510,000 | 537,209 | ||||||||
Santa Rosa, High School District, Refunding, GO, AGM Insured, | 1,090,000 | 1,239,875 | ||||||||
Southern California, Public Power Authority, Power Project Revenue, Canyon Power, Refunding, RB, | 3,065,000 | 3,485,825 | ||||||||
Southern California, Public Power Authority, Transmission Project Revenue, Sub-Southern Transmission, Refunding, RB, | 1,200,000 | 1,386,612 | ||||||||
State Center, Community College District, Refunding, GO, | 1,000,000 | 1,192,980 | ||||||||
Stockton, Unified School District, Election 2005, GO, AGM Insured, | 645,000 | 697,767 | ||||||||
The Regents of the University of California Ltd. Project, Refunding, RB, | 935,000 | 1,133,903 | ||||||||
Torrance, Unified School District, Election 2008, Measure Z, GO, | 1,000,000 | 1,158,440 | ||||||||
University of California, Generated Revenue, RB, | 2,000,000 | 2,401,280 | ||||||||
University of California, Limited Project Revenue, Refunding, RB, | 2,270,000 | 2,693,446 | ||||||||
Upland, Unified School District, Refunding, GO, | 500,000 | 576,525 | ||||||||
Vista, Unified School District, Refunding, GO | ||||||||||
5.00%, 08/01/21 | 500,000 | 600,665 | ||||||||
5.00%, 08/01/22 | 500,000 | 604,160 | ||||||||
5.00%, 08/01/24 | 300,000 | 355,410 | ||||||||
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
California (continued) |
| |||||||||
West Valley-Mission, Community College District, Election 2012, GO, | $ | 1,615,000 | $ | 1,947,141 | ||||||
|
| |||||||||
Total Municipal Bonds |
| 183,751,424 | ||||||||
|
| |||||||||
| Mutual Fund 1.4% | ||||||||||
| Shares | ||||||||||
| ||||||||||
Money Market Fund 1.4% | ||||||||||
Goldman Sachs Tax Exempt California — Institutional Shares, 0.01% (a) | 2,568,639 | 2,568,639 | ||||||||
|
| |||||||||
Total Mutual Fund |
| 2,568,639 | ||||||||
|
| |||||||||
Total Investments |
| 186,320,063 | ||||||||
Other assets in excess of liabilities — 1.1% |
| 1,983,374 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 188,303,437 | |||||||
|
| |||||||||
| (a) | Represents 7-day effective yield as of July 31, 2014. |
| (b) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| (c) | The following entity has either issued, guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the securities held in the portfolio. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the issuer’s obligations but may be called upon to satisfy the issuer’s obligations. At July 31, 2014, the percentage attributed to Assured Guaranty Municipal Corporation was 17.25%. |
| AGM | Assured Guaranty Municipal Corporation |
| AMBAC | American Municipal Bond Assurance Corporation |
| COP | Certificates of Participation |
| ETM | Escrowed to Maturity |
| FGIC | Financial Guaranty Insurance Corporation |
| GO | General Obligation |
| Ltd. | Limited |
| RB | Revenue Bond |
| RE | Reinsured |
The accompanying notes are an integral part of these financial statements.
30
Statement of Assets and Liabilities
July 31, 2014
| Nationwide HighMark California Intermediate Tax Free Bond Fund | ||||||
Assets: | ||||||
Investments, at value (cost $174,697,668) | $ | 186,320,063 | ||||
Interest and dividends receivable | 2,565,916 | |||||
Receivable for capital shares issued | 374,584 | |||||
Prepaid expenses | 5,540 | |||||
|
| |||||
Total Assets | 189,266,103 | |||||
|
| |||||
Liabilities: | ||||||
Distributions payable | 163,314 | |||||
Payable for capital shares redeemed | 628,060 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 64,506 | |||||
Fund administration fees | 10,634 | |||||
Distribution fees | 31,331 | |||||
Administrative servicing fees | 14,948 | |||||
Accounting and transfer agent fees | 5,197 | |||||
Trustee fees | 898 | |||||
Custodian fees | 915 | |||||
Compliance program costs (Note 3) | 525 | |||||
Professional fees | 31,928 | |||||
Printing fees | 6,696 | |||||
Other | 3,714 | |||||
|
| |||||
Total Liabilities | 962,666 | |||||
|
| |||||
Net Assets | $ | 188,303,437 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 175,341,807 | ||||
Accumulated undistributed net investment income | 30,150 | |||||
Accumulated net realized gains from investments | 1,309,085 | |||||
Net unrealized appreciation/(depreciation) from investments | 11,622,395 | |||||
|
| |||||
Net Assets | $ | 188,303,437 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 57,843,395 | ||||
Class C Shares | 30,015,316 | |||||
Institutional Service Class Shares | 100,434,193 | |||||
Institutional Class Shares | 10,533 | |||||
|
| |||||
Total | $ | 188,303,437 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 5,522,753 | |||||
Class C Shares | 2,876,548 | |||||
Institutional Service Class Shares | 9,541,030 | |||||
Institutional Class Shares | 1,000 | |||||
|
| |||||
Total | 17,941,331 | |||||
|
| |||||
31
Statement of Assets and Liabilities (Continued)
July 31, 2014
| Nationwide HighMark California Intermediate Tax Free Bond Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 10.47 | ||||
Class C Shares (b) | $ | 10.43 | ||||
Institutional Service Class Shares | $ | 10.53 | ||||
Institutional Class Shares | $ | 10.53 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 10.71 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 2.25 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 0.50% on sales of shares of original purchases of $250,000 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.
32
Statement of Operations
For the Year Ended July 31, 2014
| Nationwide HighMark California Intermediate Tax Free Bond Fund | ||||||
INVESTMENT INCOME: | ||||||
Interest income | $ | 6,309,387 | ||||
Dividend income | 148 | |||||
|
| |||||
Total Income | 6,309,535 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 1,018,976 | |||||
Fund administration fees | 166,272 | |||||
Distribution fees Class A | 164,728 | |||||
Distribution fees Class C | 251,360 | |||||
Administrative servicing fees Class A | 49,150 | |||||
Administrative servicing fees Class C | 5,242 | |||||
Administrative servicing fees Institutional Service Class (a) | 60,085 | |||||
Registration and filing fees | 11,284 | |||||
Professional fees | 50,431 | |||||
Printing fees | 17,219 | |||||
Trustee fees | 4,653 | |||||
Custodian fees | 8,024 | |||||
Accounting and transfer agent fees | 29,771 | |||||
Compliance program costs (Note 3) | 1,867 | |||||
Other | 27,469 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 1,866,531 | |||||
|
| |||||
Earnings credit (Note 4) | (297 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (18,689 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (a) | (28,433 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (319,879 | ) | ||||
|
| |||||
Net Expenses | 1,499,233 | |||||
|
| |||||
NET INVESTMENT INCOME | 4,810,302 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 1,795,473 | |||||
Net change in unrealized appreciation/(depreciation) from investments | 4,282,229 | |||||
|
| |||||
Net realized/unrealized gains from investments | 6,077,702 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 10,888,004 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
33
Statements of Changes in Net Assets
| Nationwide HighMark California Intermediate Tax Free Bond Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 4,810,302 | $ | 5,979,705 | ||||||||
Net realized gains from investments | 1,795,473 | 150,196 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | 4,282,229 | (9,210,247 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 10,888,004 | (3,080,346 | ) | |||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (1,523,538 | ) | (2,024,600 | ) | ||||||||
Class C | (627,954 | ) | (689,179 | ) | ||||||||
Institutional Service Class (a) | (2,648,495 | ) | (3,289,031 | ) | ||||||||
Institutional Class | (228 | )(b) | – | |||||||||
Net realized gains: | ||||||||||||
Class A | (130,280 | ) | – | |||||||||
Class C | (66,279 | ) | – | |||||||||
Institutional Service Class (a) | (203,718 | ) | – | |||||||||
Institutional Class | (19 | )(b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (5,200,511 | ) | (6,002,810 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (48,021,143 | ) | (21,511,423 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets | (42,333,650 | ) | (30,594,579 | ) | ||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 230,637,087 | 261,231,666 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 188,303,437 | $ | 230,637,087 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 30,150 | $ | 20,063 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Proceeds from shares issued | $ | 16,143,389 | $ | 31,490,036 | ||||||||
Dividends reinvested | 1,244,489 | 1,519,633 | ||||||||||
Cost of shares redeemed | (37,861,210 | ) | (46,078,095 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (20,473,332 | ) | (13,068,426 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Proceeds from shares issued | 4,749,449 | 15,323,206 | ||||||||||
Dividends reinvested | 597,855 | 521,271 | ||||||||||
Cost of shares redeemed | (14,518,232 | ) | (11,632,434 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (9,170,928 | ) | 4,212,043 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 10) (a) | ||||||||||||
Proceeds from shares issued | 21,181,458 | 34,674,779 | ||||||||||
Dividends reinvested | 1,052,228 | 1,295,602 | ||||||||||
Cost of shares redeemed | (40,620,816 | ) | (48,625,421 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (18,387,130 | ) | (12,655,040 | ) | ||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
34
Statements of Changes in Net Assets (Continued)
| Nationwide HighMark California Intermediate Tax Free Bond Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | $ | 10,000 | (b) | $ | – | |||||||
Dividends reinvested | 247 | (b) | – | |||||||||
Cost of shares redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 10,247 | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (48,021,143 | ) | $ | (21,511,423 | ) | ||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Issued | 1,572,624 | 2,994,460 | ||||||||||
Reinvested | 120,788 | 144,930 | ||||||||||
Redeemed | (3,687,683 | ) | (4,403,602 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (1,994,271 | ) | (1,264,212 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Issued | 463,976 | 1,460,144 | ||||||||||
Reinvested | 58,238 | 49,913 | ||||||||||
Redeemed | (1,418,052 | ) | (1,118,976 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (895,838 | ) | 391,081 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 10) (a) | ||||||||||||
Issued | 2,045,485 | 3,275,945 | ||||||||||
Reinvested | 101,649 | 122,883 | ||||||||||
Redeemed | (3,939,157 | ) | (4,630,981 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (1,792,023 | ) | (1,232,153 | ) | �� | |||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 976 | (b) | – | |||||||||
Reinvested | 24 | (b) | – | |||||||||
Redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 1,000 | (b) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | (4,681,132 | ) | (2,105,284 | ) | ||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
35
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide HighMark California Intermediate Tax Free Bond Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.17 | 0.24 | 0.32 | 0.56 | (0.24 | ) | (0.02 | ) | (0.26 | ) | $ | 10.47 | 5.54% | $ | 57,843,395 | 0.79% | 2.31% | 0.98% | 3.67% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.54 | 0.23 | (0.37 | ) | (0.14 | ) | (0.23 | ) | – | (0.23 | ) | $ | 10.17 | (1.38% | ) | $ | 76,478,399 | 0.79% | 2.17% | 1.25% | 20.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.14 | 0.24 | 0.40 | 0.64 | (0.24 | ) | – | (0.24 | ) | $ | 10.54 | 6.40% | $ | 92,569,680 | 0.79% | 2.30% | 1.27% | 34.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 10.18 | 0.25 | (0.04 | ) | 0.21 | (0.25 | ) | – | (0.25 | ) | $ | 10.14 | 2.13% | $ | 78,038,152 | 0.79% | 2.54% | 1.27% | 32.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 9.98 | 0.30 | 0.22 | 0.52 | (0.30 | ) | (0.02 | ) | (0.32 | ) | $ | 10.18 | 5.26% | $ | 76,111,437 | 0.78% | 2.97% | 1.27% | 17.00% | ||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.14 | 0.19 | 0.31 | 0.50 | (0.19 | ) | (0.02 | ) | (0.21 | ) | $ | 10.43 | 4.99% | $ | 30,015,316 | 1.24% | 1.87% | 1.43% | 3.67% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.50 | 0.18 | (0.36 | ) | (0.18 | ) | (0.18 | ) | – | (0.18 | ) | $ | 10.14 | (1.72% | ) | $ | 38,244,483 | 1.24% | 1.72% | 1.50% | 20.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.10 | 0.19 | 0.41 | 0.60 | (0.20 | ) | – | (0.20 | ) | $ | 10.50 | 5.96% | $ | 35,519,408 | 1.24% | 1.85% | 1.52% | 34.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 10.15 | 0.21 | (0.05 | ) | 0.16 | (0.21 | ) | – | (0.21 | ) | $ | 10.10 | 1.59% | $ | 22,805,903 | 1.24% | 2.09% | 1.52% | 32.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 9.95 | 0.25 | 0.22 | 0.47 | (0.25 | ) | (0.02 | ) | (0.27 | ) | $ | 10.15 | 4.82% | $ | 14,859,778 | 1.23% | 2.52% | 1.52% | 17.00% | ||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.23 | 0.26 | 0.32 | 0.58 | (0.26 | ) | (0.02 | ) | (0.28 | ) | $ | 10.53 | 5.77% | $ | 100,434,193 | 0.54% | 2.55% | 0.71% | 3.67% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.60 | 0.26 | (0.37 | ) | (0.11 | ) | (0.26 | ) | – | (0.26 | ) | $ | 10.23 | (1.12% | ) | $ | 115,914,205 | 0.54% | 2.42% | 1.00% | 20.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.19 | 0.27 | 0.41 | 0.68 | (0.27 | ) | – | (0.27 | ) | $ | 10.60 | 6.73% | $ | 133,142,578 | 0.54% | 2.55% | 1.02% | 34.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 10.23 | 0.28 | (0.04 | ) | 0.24 | (0.28 | ) | – | (0.28 | ) | $ | 10.19 | 2.38% | $ | 123,643,818 | 0.54% | 2.79% | 1.02% | 32.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 10.03 | 0.33 | 0.21 | 0.54 | (0.32 | ) | (0.02 | ) | (0.34 | ) | $ | 10.23 | 5.49% | $ | 112,406,697 | 0.53% | 3.22% | 1.02% | 17.00% | ||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 10.24 | 0.23 | 0.31 | 0.54 | (0.23 | ) | (0.02 | ) | (0.25 | ) | $ | 10.53 | 5.34% | $ | 10,533 | 0.49% | 2.58% | 0.64% | 3.67% | ||||||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
36
| Fund Commentary | Nationwide HighMark National Intermediate Tax Free Bond Fund |
For the annual period ended July 31, 2014, the Nationwide HighMark National Intermediate Tax Free Bond Fund (Institutional Service Class) returned 4.75%* versus 5.31% for its benchmark, the Barclays 7-Year Municipal Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Intermediate Municipal Debt Funds (consisting of 203 funds as of July 31, 2014) was 5.21% for the same time period.
| * | Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund. |
Market Environment
The municipal bond market environment saw two distinct phases during the annual reporting period ended July 31, 2014. During the first half of the period, the Federal Reserve’s stimulus program led to a steepening of the yield curve, and, as the yield curve steepened, investors pulled assets from municipal bond funds. This action by investors led to further price declines as managers were forced to sell to meet redemptions, which reversed course in mid-2014 only after investors returned to the municipal bond market at levels not seen since mid-January 2013.
As a result of investor demand and lower-than-average municipal bond issuance, the second half of the reporting period saw the municipal bond yield curve flatten significantly across all maturities, but most notably at the long end of the curve. Investors shrugged off the downgrade of Puerto Rico and the bankruptcy filing of Detroit, and returned to lower-credit-quality issues in their search for yield.
Portfolio Performance
Our investment philosophy and process seek to provide a yield competitive with longer-maturity municipal bonds but with lower volatility by holding municipal bond issues with a duration of three to six years. During much of the 12-month period ended July 31, 2014, the Fund benefited from this strategy as its lower duration provided protection in an environment of rising interest rates and a steepening yield curve.
The Fund’s high credit quality also provided outperformance during the reporting period, as bonds rated AAA and AA outperformed lower-quality securities, especially those rated BBB and lower, for much of the reporting period.
Individual issuers that contributed positively to Fund performance during the reporting period included the Fund’s positions in Los Angeles City’s General Obligation issues, Idaho Housing and Finance Association, and Chico (CA) Unified School District bonds.
In terms of detractors from Fund performance for the reporting period, while the Fund benefited from not holding municipal bonds from U.S. territories — including Puerto Rico, the U.S. Virgin Islands and Guam — during the first half of the reporting period, territory issues, particularly Puerto Rico’s bonds, rallied in the second half of the reporting period as investors reached for higher-yielding, often longer-duration, bonds regardless of issuer quality.
Issues that detracted from Fund performance during the reporting period included the Fund’s positions in general obligation bonds from Chicago, and shorter-duration positions in New York City General Obligations and Houston Utilities debt.
Derivatives were not used in the Nationwide HighMark National Intermediate Tax Free Bond Fund during the annual reporting period ended July 31, 2014.
Outlook and Positioning
We expect that the municipal bond market will be affected by rising rates, and so we anticipate maintaining the Fund’s current duration strategy of being slightly short of that of the Fund’s benchmark, with the majority of the Fund’s duration exposure in bonds with durations of three to five years. Despite investor demand for lower-credit-quality issues offering higher yields, we do not plan to alter our core strategy for the Fund of holding high-quality bonds from issuers that meet our criteria for inclusion in the Fund.
37
| Fund Commentary (con’t.) | Nationwide HighMark National Intermediate Tax Free Bond Fund |
Subadviser:
HighMark Capital Management, Inc.
Portfolio Managers:
Robert Bigelow, Raymond Mow and David Wines
The Fund is subject to the risks of investing in fixed-income securities. The Fund may invest in more-aggressive investments such as derivatives (many of which create investment leverage and are highly volatile). The Fund may invest in municipal securities that generate interest that is subject to alternative minimum tax (“AMT”). As a result, taxpayers who are subject to the AMT potentially could earn a lower after-tax return. Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
38
| Fund Overview | Nationwide HighMark National Intermediate Tax Free Bond Fund |
Objective
The Fund seeks to provide high current income that is exempt from federal income tax.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide HighMark National Intermediate Tax Free Bond Fund (Institutional Service Class) returned 4.75%, underperforming the benchmark by 0.56% and the Lipper peer category median by 0.46%. |
| Ÿ | The Fund’s high credit quality provided relative outperformance during the reporting period, as bonds rated AAA and AA outperformed lower-quality securities, especially those rated BBB and lower, for much of the reporting period. |
| Ÿ | Despite investor demand for lower-credit-quality issues offering higher yields, we do not plan to alter our core strategy for the Fund of holding high-quality bonds. |
Asset Allocation†
| Municipal Bonds | 98.9% | |||
| Mutual Fund | 0.1% | |||
| Other assets in excess of liabilities | 1.0% | |||
| 100.0% |
Top Holdings††
| Florida State, Board of Education, Public Education, Refunding, GO, 5.00%, 06/01/22 | 3.4% | |||
| Chicago, O’Hare International Airport Revenue, General Apartment-Third Lien, RB, AGM Insured, 5.00%, 01/01/19 | 3.0% | |||
| Houston, Utility System Revenue, Refunding, RB, Combined First Lien, 5.00%, 11/15/19 | 3.0% | |||
| Idaho State, Housing & Finance Association, Grant & Revenue Anticipation, Federal Highway Trust, RB, 5.25%, 07/15/24 | 2.9% | |||
| Massachusetts State Development Finance Agency, Harvard University, Refunding, RB, 5.00%, 10/15/20 | 2.8% | |||
| Chico, Unified School District, Election 1998, GO, AGM Insured, 5.00%, 08/01/25 | 2.6% | |||
| Clark County, Limited Tax-Bond Bank, GO, 5.00%, 06/01/25 | 2.6% | |||
| Washington State, Various Purpose, GO, 5.00%, 07/01/19 | 2.3% | |||
| Hawaii State, Refunding, GO, 5.00%, 12/01/19 | 2.3% | |||
| Portland, Sewer System Revenue, Second Lien, Refunding, RB, AGM Insured, 5.00%, 06/15/23 | 2.2% | |||
| Other Holdings | 72.9% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
39
| Fund Performance | Nationwide HighMark National Intermediate Tax Free Bond Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 4.49% | 3.24% | 3.39% | – | |||||||||||||
| w/ SC3 | 2.15% | 2.77% | 3.15% | – | ||||||||||||||
| Class C1 | w/o SC2 | 4.11% | 2.86% | 2.84% | – | |||||||||||||
| w/ SC4 | 3.11% | 2.86% | 2.84% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 4.75% | 3.52% | 3.65% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 4.61% | 7* | |||||||||||||
| Barclays 7-Year Municipal Bond Index | 5.31% | 4.88% | 4.82% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | A 2.25% front-end sales charge was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.26% | 0.77% | ||||||
| Class C | 1.51% | 1.22% | ||||||
| Institutional Service Class | 1.01% | 0.52% | ||||||
| Institutional Class | 0.76% | 0.47% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
40
| Fund Performance (con’t.) | Nationwide HighMark National Intermediate Tax Free Bond 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 Service Class shares of the Nationwide HighMark National Intermediate Tax Free Bond Fund versus the Barclays 7-Year Municipal Bond Index and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
41
| Shareholder Expense Example | Nationwide HighMark National Intermediate Tax Free Bond 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide HighMark National July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,020.20 | 3.86 | 0.77 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,020.98 | 3.86 | 0.77 | ||||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,017.90 | 6.10 | 1.22 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,018.74 | 6.11 | 1.22 | ||||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,021.40 | 2.61 | 0.52 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,022.22 | 2.61 | 0.52 | ||||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,021.70 | 2.36 | 0.47 | ||||||
| Hypothetical(a)(b) | 1,000.00 | 1,022.46 | 2.36 | 0.47 | ||||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
42
Statement of Investments
July 31, 2014
Nationwide HighMark National Intermediate Tax Free Bond Fund
| Municipal Bonds 98.9% | ||||||||||
Principal Amount | Market Value | |||||||||
| ||||||||||
Alaska 3.3% |
| |||||||||
Alaska State, International Airports Revenue, Refunding, RB, National-RE Insured, | $ | 500,000 | $ | 545,325 | ||||||
Anchorage Alaska Schools, GO, | 1,000,000 | 1,135,020 | ||||||||
Anchorage Alaska Schools, Refunding, GO, National-RE FGIC Insured, | 580,000 | 657,384 | ||||||||
|
| |||||||||
| 2,337,729 | ||||||||||
|
| |||||||||
| ||||||||||
Arizona 2.9% | ||||||||||
Phoenix, Refunding, GO, | 1,025,000 | 1,191,542 | ||||||||
Tucson Arizona, Water System Revenue, RB, | 775,000 | 882,585 | ||||||||
|
| |||||||||
| 2,074,127 | ||||||||||
|
| |||||||||
| ||||||||||
California 17.4% | ||||||||||
Apple Valley Unified School District, California State, Refunding, GO, BAM Insured, | 425,000 | 478,613 | ||||||||
California State, Department of Water Resources, Power Supply Revenue, Refunding, RB, AGM Insured, | 1,000,000 | 1,148,430 | ||||||||
California State, Various Purposes, GO, | 1,250,000 | 1,474,725 | ||||||||
Chico, Unified School District, Election 1998, GO, AGM Insured, | 1,625,000 | 1,840,345 | ||||||||
Long Beach, Unified School District, Election 2008, GO | ||||||||||
Series A, 5.25%, 08/01/24 | 525,000 | 608,197 | ||||||||
Series A, 5.25%, 08/01/25 | 1,000,000 | 1,158,470 | ||||||||
Los Angeles, Refunding, GO, | 1,000,000 | 1,204,280 | ||||||||
Los Angeles, Unified School District, Election 2004, GO, | 1,000,000 | 1,158,760 | ||||||||
Redding, Electric System Revenue, Refunding, COP, AGM Insured, | 1,000,000 | 1,130,960 | ||||||||
San Francisco City & County, Airport Commission, International Airport Revenue, Second Series, Issue 32F, Refunding, RB, National-RE FGIC Insured, | 1,000,000 | 1,183,910 | ||||||||
| Municipal Bonds (continued) | ||||||||||
Principal Amount | Market Value | |||||||||
| ||||||||||
California (continued) | ||||||||||
Torrance, Unified School District, Election 2008, Measure Y, GO, | $ | 775,000 | $ | 897,791 | ||||||
|
| |||||||||
| 12,284,481 | ||||||||||
|
| |||||||||
| ||||||||||
Colorado 0.7% | ||||||||||
Denver Colorado City & County School District No. 1, Refunding, GO, National-RE FGIC Insured, | 390,000 | 476,510 | ||||||||
|
| |||||||||
| ||||||||||
Connecticut 1.7% | ||||||||||
Connecticut State, GO, | 1,000,000 | 1,178,220 | ||||||||
|
| |||||||||
| ||||||||||
Florida 8.6% | ||||||||||
Florida State, Board of Education, Public Education, Refunding, GO | ||||||||||
Series A, 5.00%, 06/01/18 | 525,000 | 605,955 | ||||||||
Series C, 5.00%, 06/01/19 | 525,000 | 616,150 | ||||||||
Series D, 5.00%, 06/01/22 | 2,000,000 | 2,393,180 | ||||||||
Orlando, Utilities Commission, Utility System Revenue, Refunding, RB, | 1,050,000 | 1,251,673 | ||||||||
Tampa Bay, Water Utility System Revenue and Improvement, Refunding, RB, National-RE FGIC Insured, | 970,000 | 1,199,066 | ||||||||
|
| |||||||||
| 6,066,024 | ||||||||||
|
| |||||||||
| ||||||||||
Hawaii 9.3% | ||||||||||
Hawaii State, Refunding, GO | ||||||||||
Series EA, 5.00%, 12/01/19 | 1,330,000 | 1,576,808 | ||||||||
Series EF, 5.00%, 11/01/23 | 1,140,000 | 1,366,096 | ||||||||
Honolulu City and County, Refunding, GO | ||||||||||
Series B, 5.00%, 11/01/24 | 600,000 | 718,332 | ||||||||
Series A, 5.00%, 04/01/25 | 1,080,000 | 1,243,771 | ||||||||
Honolulu City and County, Wastewater System Revenue, Refunding, RB, | 425,000 | 504,947 | ||||||||
University of Hawaii Revenue, RB | ||||||||||
Series A, 5.50%, 10/01/22 | 500,000 | 593,020 | ||||||||
Series A, 5.50%, 10/01/23 | 500,000 | 589,765 | ||||||||
|
| |||||||||
| 6,592,739 | ||||||||||
|
| |||||||||
| ||||||||||
Idaho 5.4% | ||||||||||
Idaho State, Housing & Finance Association, Grant & Revenue Anticipation, Federal Highway Trust, RB | ||||||||||
Series A, 5.00%, 07/15/22 | 580,000 | 657,494 | ||||||||
Series A, 5.25%, 07/15/24 | 1,780,000 | 2,028,755 | ||||||||
43
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark National Intermediate Tax Free Bond Fund (Continued)
| Municipal Bonds (continued) | ||||||||||
Principal Amount | Market Value | |||||||||
| ||||||||||
Idaho (continued) | ||||||||||
Twin Falls County, School District No. 411, GO, National-RE Insured, | $ | 1,000,000 | $ | 1,097,450 | ||||||
|
| |||||||||
| 3,783,699 | ||||||||||
|
| |||||||||
| ||||||||||
Illinois 6.6% | ||||||||||
Chicago Project, Refunding, GO, AGM Insured, | 1,075,000 | 1,109,873 | ||||||||
Chicago, Board of Education, Dedicated Revenues, Refunding, Special Tax Revenue, AMBAC Insured, | 1,375,000 | 1,437,095 | ||||||||
Chicago, O’Hare International Airport Revenue, General Apartment-Third Lien, RB, AGM Insured, | 1,930,000 | 2,129,987 | ||||||||
|
| |||||||||
| 4,676,955 | ||||||||||
|
| |||||||||
| ||||||||||
Maryland 0.8% | ||||||||||
Maryland State, State & Local Facilities-3rd, GO, | 500,000 | 583,905 | ||||||||
|
| |||||||||
| ||||||||||
Massachusetts 7.0% | ||||||||||
Massachusetts Bay Transportation Authority, Refunding, RB, | 300,000 | 362,148 | ||||||||
Massachusetts State Development Finance Agency, Harvard University, Refunding, RB, | 1,620,000 | 1,948,811 | ||||||||
Massachusetts State, Bay Transportation Authority, Massachussets Sales Tax Revenue, Refunding, RB, Senior | 600,000 | 700,470 | ||||||||
Massachusetts State, Water Resources Authority, Refunding, RB, | 415,000 | 489,277 | ||||||||
Massachusetts State, Water Resources Authority, Refunding, RB, National-RE Insured, | 1,310,000 | 1,439,205 | ||||||||
|
| |||||||||
| 4,939,911 | ||||||||||
|
| |||||||||
| ||||||||||
Minnesota 1.4% | ||||||||||
Minnesota State, GO, | 855,000 | 1,026,009 | ||||||||
|
| |||||||||
| ||||||||||
Nevada 2.6% | ||||||||||
Clark County, Limited Tax-Bond Bank, GO, | 1,620,000 | 1,837,987 | ||||||||
|
| |||||||||
| Municipal Bonds (continued) | ||||||||||
Principal Amount | Market Value | |||||||||
| ||||||||||
New Jersey 3.9% | ||||||||||
New Jersey State, Transportation Trust Fund Authority, Refunding, RB, | ||||||||||
Series A, 5.25%, 12/15/21 | $ | 760,000 | $ | 877,785 | ||||||
Series A, 5.50%, 12/15/22 | 1,020,000 | 1,200,662 | ||||||||
New Jersey State, Transportation Trust Fund Authority, Refunding, RB, AGM Insured, | 625,000 | 713,825 | ||||||||
|
| |||||||||
| 2,792,272 | ||||||||||
|
| |||||||||
| ||||||||||
New York 3.6% | ||||||||||
New York City, GO, AGM Insured, Fiscal 2008, | 705,000 | 791,229 | ||||||||
New York State, Thruway Authority Second Highway and Bridge Trust Fund, RB, | 1,075,000 | 1,229,348 | ||||||||
New York State, Thruway Authority, State Personal Transportation, Special Tax Revenue, | 430,000 | 492,548 | ||||||||
|
| |||||||||
| 2,513,125 | ||||||||||
|
| |||||||||
| ||||||||||
Oregon 2.2% | ||||||||||
Portland, Sewer System Revenue, Second Lien, Refunding, RB, AGM Insured, | 1,360,000 | 1,549,448 | ||||||||
|
| |||||||||
| ||||||||||
Pennsylvania 1.5% | ||||||||||
Pennsylvania State, GO, | 550,000 | 625,972 | ||||||||
Pennsylvania State, Refunding, GO, | 385,000 | 433,783 | ||||||||
|
| |||||||||
| 1,059,755 | ||||||||||
|
| |||||||||
| ||||||||||
Texas 13.1% | ||||||||||
Houston, Utility System Revenue, Refunding, RB, Combined First Lien, | 1,800,000 | 2,125,440 | ||||||||
Lamar Consolidated Independent School District Schoolhouse, GO, PSF Insured, | 800,000 | 890,928 | ||||||||
Lower Colorado River Authority, Prerefunded Balance, RB | ||||||||||
5.00%, 05/15/21 | 5,000 | 5,842 | ||||||||
5.00%, 05/15/22 | 5,000 | 5,842 | ||||||||
5.00%, 05/15/23 | 15,000 | 17,525 | ||||||||
Lower Colorado River Authority, Unrefunded Balance, RB | ||||||||||
5.00%, 05/15/21 | 1,100,000 | 1,251,239 | ||||||||
5.00%, 05/15/22 | 805,000 | 906,937 | ||||||||
5.00%, 05/15/23 | 90,000 | 100,505 | ||||||||
North East Independent School District, Texas School Building, GO, PSF Insured, | 650,000 | 735,111 | ||||||||
44
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark National Intermediate Tax Free Bond Fund (Continued)
| Municipal Bonds (continued) | ||||||||||
Principal Amount | Market Value | |||||||||
| ||||||||||
Texas (continued) | ||||||||||
San Antonio, Water Revenue, Refunding, RB, | $ | 500,000 | $ | 599,675 | ||||||
San Antonio, Water Revenue, Refunding, RB, National-RE FGIC Insured, | 1,000,000 | 1,122,200 | ||||||||
Texas State, University Systems Financing Revenue, Refunding, RB, | 1,280,000 | 1,465,126 | ||||||||
|
| |||||||||
| 9,226,370 | ||||||||||
|
| |||||||||
| ||||||||||
Virginia 2.1% | ||||||||||
Fairfax County, Public Improvements, GO, | 500,000 | 572,255 | ||||||||
Newport News, General Improvement, GO, | 785,000 | 940,501 | ||||||||
|
| |||||||||
| 1,512,756 | ||||||||||
|
| |||||||||
| ||||||||||
Washington 4.8% | ||||||||||
King & Pierce County, School District No. 408, Refunding, GO, | 1,000,000 | 1,165,310 | ||||||||
Washington State, Various Purpose, GO, | 1,425,000 | 1,607,785 | ||||||||
Washington State, Various Purpose, Refunding, GO, | 500,000 | 594,055 | ||||||||
|
| |||||||||
| 3,367,150 | ||||||||||
|
| |||||||||
Total Municipal Bonds |
| 69,879,172 | ||||||||
|
| |||||||||
| Mutual Fund 0.1% | ||||||||||
| Shares | ||||||||||
| ||||||||||
Money Market Fund 0.1% | ||||||||||
Dreyfus Tax Exempt Cash Management — Institutional Shares, 0.00% (a) | 84,157 | 84,157 | ||||||||
|
| |||||||||
Total Mutual Fund |
| 84,157 | ||||||||
|
| |||||||||
Total Investments | 69,963,329 | |||||||||
Other assets in excess of liabilities — 1.0% |
| 709,120 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% | $ | 70,672,449 | ||||||||
|
| |||||||||
| (a) | Represents 7-day effective yield as of July 31, 2014. |
| (b) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| (c) | The following entity has either issued, guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the securities held in the portfolio. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the issuer’s obligations but may be called upon to satisfy the issuer’s obligations. At July 31, 2014, the percentage attributed to Assured Guaranty Municipal Corporation was 14.89%. |
| AGM | Assured Guaranty Municipal Corporation |
| AMBAC | American Municipal Bond Assurance Corporation |
| BAM | Build America Mutual |
| COP | Certificates of Participation |
| FGIC | Financial Guaranty Insurance Corporation |
| GO | General Obligation |
| PSF | Priority Solidarity Fund |
| RB | Revenue Bond |
| RE | Reinsured |
The accompanying notes are an integral part of these financial statements.
45
Statement of Assets and Liabilities
July 31, 2014
Nationwide HighMark National Intermediate Tax Free Bond Fund | ||||||
Assets: | ||||||
Investments, at value (cost $66,005,517) | $ | 69,963,329 | ||||
Interest receivable | 766,034 | |||||
Receivable for capital shares issued | 106,729 | |||||
Prepaid expenses | 9,821 | |||||
|
| |||||
Total Assets | 70,845,913 | |||||
|
| |||||
Liabilities: | ||||||
Distributions payable | 84,476 | |||||
Payable for capital shares redeemed | 16,579 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 8,007 | |||||
Fund administration fees | 8,115 | |||||
Distribution fees | 6,119 | |||||
Administrative servicing fees | 7,792 | |||||
Accounting and transfer agent fees | 2,073 | |||||
Trustee fees | 382 | |||||
Custodian fees | 367 | |||||
Compliance program costs (Note 3) | 1,424 | |||||
Professional fees | 30,914 | |||||
Printing fees | 3,708 | |||||
Other | 3,508 | |||||
|
| |||||
Total Liabilities | 173,464 | |||||
|
| |||||
Net Assets | $ | 70,672,449 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 65,701,707 | ||||
Accumulated undistributed net investment income | 3,018 | |||||
Accumulated net realized gains from investments | 1,009,912 | |||||
Net unrealized appreciation/(depreciation) from investments | 3,957,812 | |||||
|
| |||||
Net Assets | $ | 70,672,449 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 13,921,742 | ||||
Class C Shares | 4,787,696 | |||||
Institutional Service Class Shares | 51,952,550 | |||||
Institutional Class Shares | 10,461 | |||||
|
| |||||
Total | $ | 70,672,449 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 1,215,540 | |||||
Class C Shares | 417,500 | |||||
Institutional Service Class Shares | 4,533,534 | |||||
Institutional Class Shares | 913 | |||||
|
| |||||
Total | 6,167,487 | |||||
|
| |||||
46
Statement of Assets and Liabilities (Continued)
July 31, 2014
Nationwide HighMark National Intermediate Tax Free Bond Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 11.45 | ||||
Class C Shares (b) | $ | 11.47 | ||||
Institutional Service Class Shares | $ | 11.46 | ||||
Institutional Class Shares | $ | 11.46 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 11.71 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 2.25 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 0.50% on sales of shares of original purchases of $250,000 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.
47
Statement of Operations
For the Year Ended July 31, 2014
Nationwide HighMark National Intermediate Tax Free Bond Fund | ||||||
INVESTMENT INCOME: | ||||||
Interest income | $ | 2,378,066 | ||||
Dividend income | 2 | |||||
|
| |||||
Total Income | 2,378,068 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 390,489 | |||||
Fund administration fees | 109,605 | |||||
Distribution fees Class A | 40,314 | |||||
Distribution fees Class C | 42,616 | |||||
Administrative servicing fees Class A | 12,846 | |||||
Administrative servicing fees Class C | 572 | |||||
Administrative servicing fees Institutional Service Class (a) | 35,962 | |||||
Registration and filing fees | 41,973 | |||||
Professional fees | 43,194 | |||||
Printing fees | 12,767 | |||||
Trustee fees | 1,834 | |||||
Custodian fees | 3,171 | |||||
Accounting and transfer agent fees | 10,055 | |||||
Compliance program costs (Note 3) | 1,735 | |||||
Other | 14,765 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 761,898 | |||||
|
| |||||
Earnings credit (Note 4) | (169 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (4,284 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (a) | (15,565 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (255,947 | ) | ||||
|
| |||||
Net Expenses | 485,933 | |||||
|
| |||||
NET INVESTMENT INCOME | 1,892,135 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 1,077,555 | |||||
Net change in unrealized appreciation/(depreciation) from investments | 556,200 | |||||
|
| |||||
Net realized/unrealized gains from investments | 1,633,755 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 3,525,890 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
48
Statements of Changes in Net Assets
| Nationwide HighMark National Intermediate Tax Free Bond Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 1,892,135 | $ | 2,472,643 | ||||||||
Net realized gains from investments | 1,077,555 | 828,693 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | 556,200 | (4,224,048 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 3,525,890 | (922,712 | ) | |||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (366,775 | ) | (449,232 | ) | ||||||||
Class C | (104,001 | ) | (160,274 | ) | ||||||||
Institutional Service Class (a) | (1,419,543 | ) | (1,887,503 | ) | ||||||||
Institutional Class | (226 | )(b) | – | |||||||||
Net realized gains: | ||||||||||||
Class A | (173,393 | ) | (75,784 | ) | ||||||||
Class C | (58,083 | ) | (29,953 | ) | ||||||||
Institutional Service Class (a) | (567,480 | ) | (257,137 | ) | ||||||||
Institutional Class | (100 | )(b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (2,689,601 | ) | (2,859,883 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (18,479,627 | ) | (8,059,890 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets | (17,643,338 | ) | (11,842,485 | ) | ||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 88,315,787 | 100,158,272 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 70,672,449 | $ | 88,315,787 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 3,018 | $ | 1,428 | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Proceeds from shares issued | $ | 5,135,974 | $ | 8,288,589 | ||||||||
Dividends reinvested | 360,673 | 314,655 | ||||||||||
Cost of shares redeemed | (9,659,205 | ) | (8,904,688 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (4,162,558 | ) | (301,444 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Proceeds from shares issued | 407,245 | 2,009,124 | ||||||||||
Dividends reinvested | 150,187 | 152,335 | ||||||||||
Cost of shares redeemed | (3,060,213 | ) | (2,602,230 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (2,502,781 | ) | (440,771 | ) | ||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 10) (a) | ||||||||||||
Proceeds from shares issued | 4,188,054 | 12,657,301 | ||||||||||
Dividends reinvested | 834,836 | 686,042 | ||||||||||
Cost of shares redeemed | (16,847,504 | ) | (20,661,018 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (11,824,614 | ) | (7,317,675 | ) | ||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
49
Statements of Changes in Net Assets (Continued)
| Nationwide HighMark National Intermediate Tax Free Bond Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | $ | 10,000 | (b) | $ | – | |||||||
Dividends reinvested | 326 | (b) | – | |||||||||
Cost of shares redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 10,326 | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (18,479,627 | ) | $ | (8,059,890 | ) | ||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Issued | 454,122 | 714,223 | ||||||||||
Reinvested | 31,839 | 26,898 | ||||||||||
Redeemed | (853,046 | ) | (767,467 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (367,085 | ) | (26,346 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Issued | 35,884 | 171,146 | ||||||||||
Reinvested | 13,251 | 13,017 | ||||||||||
Redeemed | (269,524 | ) | (223,034 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (220,389 | ) | (38,871 | ) | ||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 10) (a) | ||||||||||||
Issued | 368,489 | 1,077,972 | ||||||||||
Reinvested | 73,868 | 58,586 | ||||||||||
Redeemed | (1,485,682 | ) | (1,774,237 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (1,043,325 | ) | (637,679 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 884 | (b) | – | |||||||||
Reinvested | 29 | (b) | – | |||||||||
Redeemed | – | (b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 913 | (b) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | (1,629,886 | ) | (702,896 | ) | ||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
50
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide HighMark National Intermediate Tax Free Bond Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 11.32 | 0.26 | 0.24 | 0.50 | (0.26 | ) | (0.11 | ) | (0.37 | ) | $ | 11.45 | 4.49% | $ | 13,921,742 | 0.77% | 2.28% | 1.14% | 10.35% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.78 | 0.28 | (0.42 | ) | (0.14 | ) | (0.28 | ) | (0.04 | ) | (0.32 | ) | $ | 11.32 | (1.23% | ) | $ | 17,914,754 | 0.77% | 2.37% | 1.32% | 27.00% | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.42 | 0.28 | 0.36 | 0.64 | (0.28 | ) | – | (0.28 | ) | $ | 11.78 | 5.70% | $ | 18,949,616 | 0.77% | 2.46% | 1.33% | 20.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 11.48 | 0.29 | (0.06 | ) | 0.23 | (0.29 | ) | – | (0.29 | ) | $ | 11.42 | 2.08% | $ | 23,674,401 | 0.77% | 2.56% | 1.33% | 22.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.20 | 0.31 | 0.28 | 0.59 | (0.31 | ) | – | (0.31 | ) | $ | 11.48 | 5.33% | $ | 22,334,709 | 0.76% | 2.74% | 1.32% | 14.00% | |||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 11.33 | 0.21 | 0.25 | 0.46 | (0.21 | ) | (0.11 | ) | (0.32 | ) | $ | 11.47 | 4.11% | $ | 4,787,696 | 1.22% | 1.83% | 1.57% | 10.35% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.79 | 0.23 | (0.42 | ) | (0.19 | ) | (0.23 | ) | (0.04 | ) | (0.27 | ) | $ | 11.33 | (1.68% | ) | $ | 7,230,375 | 1.22% | 1.92% | 1.57% | 27.00% | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.43 | 0.23 | 0.36 | 0.59 | (0.23 | ) | – | (0.23 | ) | $ | 11.79 | 5.22% | $ | 7,978,232 | 1.22% | 2.01% | 1.58% | 20.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 11.49 | 0.24 | (0.06 | ) | 0.18 | (0.24 | ) | – | (0.24 | ) | $ | 11.43 | 1.71% | $ | 4,161,043 | 1.22% | 2.11% | 1.58% | 22.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.40 | 0.17 | 0.20 | 0.37 | (0.28 | ) | – | (0.28 | ) | $ | 11.49 | 2.25% | $ | 2,362,903 | 1.21% | 2.29% | 1.57% | 14.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014(g) | $ | 11.33 | 0.29 | 0.24 | 0.53 | (0.29 | ) | (0.11 | ) | (0.40 | ) | $ | 11.46 | 4.75% | $ | 51,952,550 | 0.52% | 2.53% | 0.87% | 10.35% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 11.78 | 0.31 | (0.41 | ) | (0.10 | ) | (0.31 | ) | (0.04 | ) | (0.35 | ) | $ | 11.33 | (0.89% | ) | $ | 63,170,658 | 0.52% | 2.62% | 1.07% | 27.00% | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 11.43 | 0.31 | 0.35 | 0.66 | (0.31 | ) | – | (0.31 | ) | $ | 11.78 | 5.87% | $ | 73,230,424 | 0.52% | 2.71% | 1.08% | 20.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 11.48 | 0.32 | (0.05 | ) | 0.27 | (0.32 | ) | – | (0.32 | ) | $ | 11.43 | 2.43% | $ | 79,902,327 | 0.52% | 2.81% | 1.08% | 22.00% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 11.20 | 0.34 | 0.28 | 0.62 | (0.34 | ) | – | (0.34 | ) | $ | 11.48 | 5.60% | $ | 81,120,621 | 0.51% | 2.99% | 1.07% | 14.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 11.31 | 0.25 | 0.26 | 0.51 | (0.25 | ) | (0.11 | ) | (0.36 | ) | $ | 11.46 | 4.61% | $ | 10,461 | 0.47% | 2.55% | 0.80% | 10.35% | ||||||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
51
| Fund Commentary | Nationwide HighMark Short Term Bond Fund |
For the annual period ended July 31, 2014, the Nationwide HighMark Short Term Bond Fund (Institutional Service Class) returned 1.26%* versus 0.85% for its benchmark, the 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 Short Investment Grade Debt Funds (consisting of 297 funds as of July 31, 2014) was 1.36% for the same time period.
| * | Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund. |
Market Environment
U.S. fixed-income markets were volatile during the first half of the reporting period, mainly due to uncertainty about fiscal and monetary policy, and particularly in regard to the future of the Federal Reserve’s bond purchase program, also known as quantitative easing or QE. Treasury yields reached two-year highs in early September 2013, only to decline again the next month as investors reassessed the timing of the end of QE. Rates began rising once again in November 2013 as the Fed continued its debate about quantitative easing (QE), and job growth began to accelerate. On December 18, 2013, the Federal Open Market Committee (FOMC) took the first step toward ending its bond purchases, deciding to “modestly reduce the pace of its asset purchases” from $85 billion per month to $75 billion, and continued to reduce the size of purchases at each subsequent FOMC meeting.
Volatility declined during the second half of the reporting period as 10-year Treasury yields, having reached a peak of 3.00% at the end of December 2013, weakened when economic growth proved disappointing. Job growth also was slower than expected early in 2014, along with housing, business surveys, and retail sales, although all were affected by severe winter weather. In addition, concerns about the pace of global growth extended to Japan as fears of economic weakness, resulting in a sell-off there, and worries about a slowdown in China caused investors to exit emerging markets. Both investment-grade and high-yield bond issuance were strong during the reporting period as
corporations took advantage of low interest rates to pursue mergers and acquisitions as well as to fund stock repurchases.
Portfolio Performance
Despite the fact that risk assets posted negative returns during the last few weeks of the reporting period ended July 31, 2014, that sector of the market significantly outperformed U.S. Treasurys, as improving U.S. economic data and ongoing support from the Fed’s bond purchasing program helped boost risk asset prices. The U.S. Treasury 1-3 year sector gained 0.53% for the annual reporting period, while 1-3 year investment-grade corporate bonds returned 2.14% and 0-3 year mortgage-backed securities advanced 1.67% for the same time period.
The Fund outperformed its benchmark during the reporting period mainly due to the Fund’s overweight to corporate bonds, which outperformed equivalent-duration Treasurys. Individual issuers that contributed positively to Fund performance during the reporting period included the Fund’s investments in Petrobras, El Paso Natural Gas and Rio Tinto, while issues that detracted from Fund performance during the reporting period included the Fund’s investments in BP, BB&T and Bank of America. The Fund’s duration positioning was a slight negative for performance during the reporting period as interest rates continued to decline while the Fund maintained a shorter duration than that of the Fund’s benchmark throughout the reporting period.
Derivatives were not used in the Nationwide HighMark Short Term Bond Fund during the annual reporting period ended July 31, 2014.
Outlook and Positioning
Although the Fed is on track to end the QE program in October 2014, the near-term outlook for interest rates remains mostly unchanged. The Fed continues to emphasize that policy will remain accommodative well beyond the termination of its bond purchasing program due to continued concern about the pace of economic growth.
52
| Fund Commentary (con’t.) | Nationwide HighMark Short Term Bond Fund |
While the unemployment rate declined more quickly than anticipated to a level of 6.1% as of the end of the reporting period ended July 31, 2014, the number of long-term unemployed and other measures of employment indicated there was still considerable slack in the labor market. The Fed’s primary motivation for ending QE is not an expectation of robust economic growth but rather concern about financial stability. Six years after the financial crisis, unconventional Fed policy has become even more controversial, and concerns continue to grow that Fed policy may be leading to speculative excess and a misallocation of capital. Investors continue to add incremental risk to portfolios in an attempt to maintain a desired yield level, steadily driving valuations to less-attractive levels. In this environment, we continue to be cautious with respect to high-yield bonds, while investment-grade securities still appear relatively attractive.
As a result, we plan to maintain the Fund’s significant underweight in U.S. Treasury and government-related securities along with its overweight in investment-grade corporates. While Treasurys represent minimal credit risk, their low yield provides a limited degree of protection to offset the risk of declining prices in a rising rate environment. We believe that other sectors of the market — particularly corporate bonds — provide significantly greater yield, enhanced return potential and an opportunity to offset possible price declines should rates rise. We have seen significant spread compression during the past reporting year ended July 31, 2014, but continue to believe the yield advantage provided by corporate bonds remains attractive on a risk-adjusted basis. We also anticipate that corporate bonds will outperform other fixed-income sectors in a rising interest rate environment as the additional income should help offset some of the price declines.
Subadviser:
HighMark Capital Management, Inc.
Portfolio Managers:
Jeffrey Klein, Gregory Lugosi, E. Jack Montgomery and David Wines
The Fund is subject to the risks of investing in fixed-income securities, including high-yield bonds (which are more volatile and at a greater risk of default). 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). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
53
| Fund Overview | Nationwide HighMark Short Term Bond Fund |
Objective
The Fund seeks total return through investments in fixed-income securities.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide HighMark Short Term Bond Fund (Institutional Service Class) returned 1.26%, outperforming the benchmark by 0.41% and underperforming the Lipper peer category median by 0.10%. |
| Ÿ | The Fund outperformed its benchmark during the reporting period mainly due to the Fund’s overweight to corporate bonds, which outperformed equivalent-duration Treasurys. |
| Ÿ | We plan to maintain the Fund’s significant underweight in U.S. Treasury and government-related securities, and overweight in investment-grade corporates. |
Asset Allocation†
| Corporate Bonds | 52.9% | |||
| Asset-Backed Securities | 12.4% | |||
| U.S. Government Mortgage Backed Agencies | 12.3% | |||
| U.S. Treasury Notes | 8.4% | |||
| Commercial Paper | 5.0% | |||
| Commercial Mortgage Backed Securities | 4.6% | |||
| Collateralized Mortgage Obligations | 0.7% | |||
| Sovereign Bond | 0.5% | |||
| Bank Loan | 0.1% | |||
| Other assets in excess of liabilities | 3.1% | |||
| 100.0% |
Top Industries††
| Banks | 15.1% | |||
| Automobiles | 9.4% | |||
| Diversified Financial Services | 6.9% | |||
| Pharmaceuticals | 5.0% | |||
| Credit Card | 3.9% | |||
| Oil, Gas & Consumable Fuels | 3.3% | |||
| Health Care Providers & Services | 2.9% | |||
| Diversified Telecommunication Services | 2.7% | |||
| Beverages | 2.6% | |||
| Insurance | 2.1% | |||
| Other Industries | 46.1% | |||
| 100.0% |
Top Holdings††
| U.S. Treasury Notes, 0.50%, 07/31/17 | 7.6% | |||
| Federal National Mortgage Association Pool, 3.00%, 05/01/24 | 2.6% | |||
| Anglesea Funding LLC, 0.18%, 08/01/14 | 2.6% | |||
| White Plains Capital Co. LLC, 0.18%, 08/01/14 | 2.6% | |||
| Citibank Credit Card Issuance Trust, 1.32%, 09/07/18 | 2.0% | |||
| Mylan, Inc., 7.88%, 07/15/20 | 1.9% | |||
| Ford Credit Auto Owner Trust, 0.67%, 04/15/18 | 1.7% | |||
| Royal Bank of Canada, 0.76%, 03/15/19 | 1.6% | |||
| Walgreen Co., 1.80%, 09/15/17 | 1.6% | |||
| American International Group, Inc., 5.05%, 10/01/15 | 1.6% | |||
| Other Holdings | 74.2% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
54
| Fund Performance | Nationwide HighMark Short Term Bond Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | Inception | ||||||||||||
| Class A1 | w/o SC2 | 0.98% | 1.85% | 2.67% | 3 | |||||||||
| w/ SC4 | (1.29)% | 1.39% | 2.43% | 3 | ||||||||||
| Class C1 | w/o SC2 | 0.50% | 1.39% | 2.27% | 3 | |||||||||
| w/ SC5 | (0.50)% | 1.39% | 2.27% | 3 | ||||||||||
| Institutional Service Class1,6,7 | 1.26% | 2.12% | 2.96% | 3 | ||||||||||
| Institutional Class6 | – | – | 1.19% | 8* | ||||||||||
| Barclays U.S. 1-3 Yr Gov’t/Credit Bond Index | 0.85% | 1.62% | 2.88% | |||||||||||
| CPI | 1.99% | 2.04% | 2.31% | |||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | Since inception date of November 2, 2004. |
| 4 | A 2.25% front-end sales charge was deducted. Prior to December 1, 2005, the front-end sales charge was 3.25%. |
| 5 | 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. |
| 6 | Not subject to any SCs. |
| 7 | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 8 | Since inception date of September 18, 2013. |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio* | |||||||
| Class A | 1.06% | 0.76% | ||||||
| Class C | 1.31% | 1.20% | ||||||
| Institutional Service Class | 0.81% | 0.51% | ||||||
| Institutional Class | 0.56% | 0.45% | ||||||
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014), supplement dated June 11, 2014. The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2016. Please see the Fund’s most recent prospectus for details. |
55
| Fund Performance (con’t.) | Nationwide HighMark Short Term Bond 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 Service Class shares of the Nationwide HighMark Short Term Bond Fund since inception* through 7/31/14 versus the Barclays U.S. 1-3 Year Government/Credit Bond Index and the Consumer Price Index (CPI) for the same period. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
*The inception date for the Nationwide HighMark Short Term Bond Fund is 9/16/13. Performance prior to that date is based on the since-inception performance of the Fund’s predecessor fund.
56
| Shareholder Expense Example | Nationwide HighMark Short Term Bond 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide HighMark Short Term July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,002.40 | 3.87 | 0.78 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,020.93 | 3.91 | 0.78 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,000.10 | 6.20 | 1.25 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.60 | 6.26 | 1.25 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,003.90 | 2.43 | 0.49 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,022.36 | 2.46 | 0.49 | |||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,004.00 | 2.34 | 0.47 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,022.46 | 2.36 | 0.47 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
57
Statement of Investments
July 31, 2014
Nationwide HighMark Short Term Bond Fund
| Asset-Backed Securities 12.4% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Auto Floor Plan 0.1% |
| |||||||||
Ally Master Owner Trust, | $ | 300,000 | $ | 300,374 | ||||||
|
| |||||||||
| ||||||||||
Automobiles 6.8% |
| |||||||||
Ally Auto Receivables Trust, | 2,720,000 | 2,722,194 | ||||||||
ARI Fleet Lease Trust, | 796,233 | 795,784 | ||||||||
Avis Budget Rental Car Funding AESOP LLC | 500,000 | 501,442 | ||||||||
Series 2012-2A, Class A, | 4,500,000 | 4,639,054 | ||||||||
Enterprise Fleet Financing LLC, | 1,443,825 | 1,443,934 | ||||||||
Ford Credit Auto Owner Trust, | 6,500,000 | 6,496,785 | ||||||||
Hertz Vehicle Financing LLC | 5,000,000 | 5,195,466 | ||||||||
Series 2011-1A, Class A1, | 1,400,000 | 1,408,677 | ||||||||
Honda Auto Receivables Owner Trust, | 2,000,000 | 1,995,255 | ||||||||
Toyota Auto Receivables Owner Trust, | 1,490,374 | 1,490,899 | ||||||||
World Omni Auto Receivables Trust, | 734,757 | 737,732 | ||||||||
|
| |||||||||
| 27,427,222 | ||||||||||
|
| |||||||||
| ||||||||||
Credit Card 3.8% |
| |||||||||
American Express Credit Account Secured Note Trust, | 2,500,000 | 2,499,194 | ||||||||
Chase Issuance Trust, | 5,000,000 | 4,999,320 | ||||||||
Citibank Credit Card Issuance Trust, | 7,800,000 | 7,861,201 | ||||||||
|
| |||||||||
| 15,359,715 | ||||||||||
|
| |||||||||
| Asset-Backed Securities (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Other 1.1% |
| |||||||||
AEP Texas Central Transition Funding LLC, | $ | 1,526,131 | $ | 1,522,755 | ||||||
CAL Funding Ltd., | 825,000 | 828,445 | ||||||||
CenterPoint Energy Transition Bond Co. LLC, | 720,471 | 751,396 | ||||||||
PSE&G Transition Funding LLC, | 1,394,000 | 1,460,381 | ||||||||
|
| |||||||||
| 4,562,977 | ||||||||||
|
| |||||||||
| ||||||||||
Student Loan 0.6% |
| |||||||||
SLM Private Education Loan Trust, | 999,447 | 1,005,469 | ||||||||
SLM Student Loan Trust, | 1,282,983 | 1,294,314 | ||||||||
|
| |||||||||
| 2,299,783 | ||||||||||
|
| |||||||||
Total Asset-Backed Securities |
| 49,950,071 | ||||||||
|
| |||||||||
| Bank Loan 0.1% | ||||||||||
Food Products 0.1% |
| |||||||||
HJ Heinz Co., | 495,000 | 493,040 | ||||||||
|
| |||||||||
Total Bank Loan |
| 493,040 | ||||||||
|
| |||||||||
| Collateralized Mortgage Obligations 0.7% | ||||||||||
Federal National Mortgage Association REMICS | 133,059 | 140,120 | ||||||||
Series 2611, Class HD, | 379,214 | 412,436 | ||||||||
RFMSI Trust, | 237,587 | 239,136 | ||||||||
Sequoia Mortgage Trust | 341,457 | 342,157 | ||||||||
Series 2012-2, Class A2, | 662,475 | 670,747 | ||||||||
Series 2013-1, Class 1A1, | 1,042,226 | 992,769 | ||||||||
58
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Short Term Bond Fund (Continued)
| Collateralized Mortgage Obligations (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Washington Mutual Mortgage Pass Through Certificates Trust, | $ | 34,004 | $ | 31,082 | ||||||
Wells Fargo Mortgage Backed Securities Trust, | 154,278 | 157,950 | ||||||||
|
| |||||||||
Total Collateralized Mortgage Obligations |
| 2,986,397 | ||||||||
|
| |||||||||
| Commercial Mortgage Backed Securities 4.6% | ||||||||||
Commercial Mortgage Trust, | 2,525,670 | 2,518,699 | ||||||||
DBUBS Mortgage Trust, | 5,511,688 | 5,722,687 | ||||||||
Government National Mortgage Association | 413,307 | 423,467 | ||||||||
Series 2011-20, Class A, | 316,447 | 316,868 | ||||||||
JP Morgan Chase Commercial Mortgage Securities Trust, | 2,257,200 | 2,253,453 | ||||||||
JPMBB Commercial Mortgage Securities Trust | 1,769,073 | 1,768,106 | ||||||||
Series 2014-C19, Class A1, | 1,148,274 | 1,144,501 | ||||||||
Morgan Stanley Bank of America Merrill Lynch Trust, | 2,981,506 | 2,986,904 | ||||||||
WF-RBS Commercial Mortgage Trust, | 1,312,811 | 1,309,683 | ||||||||
|
| |||||||||
Total Commercial Mortgage Backed Securities |
| 18,444,368 | ||||||||
|
| |||||||||
| Commercial Paper 5.0% | ||||||||||
Diversified Financial Services 5.0% |
| |||||||||
Anglesea Funding LLC, | 10,000,000 | 9,999,950 | ||||||||
White Plains Capital Co. LLC, | 10,000,000 | 9,999,949 | ||||||||
|
| |||||||||
| 19,999,899 | ||||||||||
|
| |||||||||
Total Commercial Paper |
| 19,999,899 | ||||||||
|
| |||||||||
| Corporate Bonds 52.9% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Aerospace & Defense 0.2% |
| |||||||||
L-3 Communications Corp., | $ | 850,000 | $ | 846,871 | ||||||
|
| |||||||||
| ||||||||||
Airlines 0.7% |
| |||||||||
Continental Airlines Pass Through Trust, | 1,120,200 | 1,211,217 | ||||||||
Delta Air Lines Pass Through Trust, | 721,776 | 793,954 | ||||||||
Series 2012-1, Class A, | 896,792 | 975,261 | ||||||||
|
| |||||||||
| 2,980,432 | ||||||||||
|
| |||||||||
| ||||||||||
Auto Components 0.9% |
| |||||||||
Johnson Controls, Inc., | 3,750,000 | 3,730,616 | ||||||||
|
| |||||||||
| ||||||||||
Automobiles 2.3% |
| |||||||||
General Motors Co., | 4,000,000 | 4,050,000 | ||||||||
Nissan Motor Acceptance Corp., | 4,000,000 | 4,006,168 | ||||||||
PACCAR Financial Corp., | 1,210,000 | 1,214,388 | ||||||||
|
| |||||||||
| 9,270,556 | ||||||||||
|
| |||||||||
| ||||||||||
Banks 14.7% |
| |||||||||
Bank of America Corp., | 6,000,000 | 6,089,926 | ||||||||
Bank of Montreal, | 1,000,000 | 1,009,850 | ||||||||
Bank of New York Mellon Corp. (The), | 2,500,000 | 2,473,622 | ||||||||
Bank of Nova Scotia, | 4,250,000 | 4,244,566 | ||||||||
BB&T Corp., | 5,850,000 | 5,953,945 | ||||||||
Canadian Imperial Bank of Commerce, | 3,550,000 | 3,589,178 | ||||||||
Capital One Financial Corp., | 2,300,000 | 2,306,629 | ||||||||
Citigroup, Inc., | 5,000,000 | 4,941,199 | ||||||||
Fifth Third Bank, | 3,917,000 | 3,877,109 | ||||||||
JPMorgan Chase & Co., | 6,000,000 | 6,244,469 | ||||||||
KeyBank NA, | 4,500,000 | 4,519,850 | ||||||||
PNC Bank NA, | 2,280,000 | 2,296,622 | ||||||||
59
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Short Term Bond Fund (Continued)
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Banks (continued) |
| |||||||||
Royal Bank of Canada, | $ | 2,000,000 | $ | 2,000,204 | ||||||
0.76%, 03/15/19 (a) | 6,360,000 | 6,386,251 | ||||||||
Wells Fargo & Co., | 3,000,000 | 2,974,188 | ||||||||
|
| |||||||||
| 58,907,608 | ||||||||||
|
| |||||||||
| ||||||||||
Beverages 2.5% |
| |||||||||
Anheuser-Busch InBev Worldwide, Inc., | 6,000,000 | 6,017,422 | ||||||||
Heineken NV, | 4,000,000 | 4,006,919 | ||||||||
|
| |||||||||
| 10,024,341 | ||||||||||
|
| |||||||||
| ||||||||||
Biotechnology 0.4% |
| |||||||||
Gilead Sciences, Inc., | 1,500,000 | 1,567,638 | ||||||||
|
| |||||||||
| ||||||||||
Capital Markets 0.0%† |
| |||||||||
Lehman Brothers Holdings, Inc., | 500,000 | 100,625 | ||||||||
|
| |||||||||
| ||||||||||
Chemicals 1.3% |
| |||||||||
Ecolab, Inc., | 1,133,000 | 1,137,353 | ||||||||
3.00%, 12/08/16 | 3,825,000 | 3,992,683 | ||||||||
|
| |||||||||
| 5,130,036 | ||||||||||
|
| |||||||||
| ||||||||||
Consumer Finance 1.9% |
| |||||||||
American Express Credit Corp., | 2,000,000 | 2,022,647 | ||||||||
Capital One Bank USA NA, | 1,250,000 | 1,247,427 | ||||||||
Ford Motor Credit Co. LLC, | 1,450,000 | 1,471,511 | ||||||||
2.75%, 05/15/15 | 2,750,000 | 2,795,187 | ||||||||
|
| |||||||||
| 7,536,772 | ||||||||||
|
| |||||||||
| ||||||||||
Containers & Packaging 1.2% |
| |||||||||
Ball Corp., | 4,500,000 | 4,736,250 | ||||||||
|
| |||||||||
| ||||||||||
Diversified Financial Services 1.7% |
| |||||||||
General Electric Capital Corp., | 3,000,000 | 3,083,737 | ||||||||
KE Export Leasing LLC, | 1,835,770 | 1,834,003 | ||||||||
Series 2013-A, | 1,801,950 | 1,796,556 | ||||||||
|
| |||||||||
| 6,714,296 | ||||||||||
|
| |||||||||
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Diversified Telecommunication Services 2.6% |
| |||||||||
AT&T, Inc., | $ | 4,500,000 | $ | 4,589,097 | ||||||
Verizon Communications, Inc., | 2,500,000 | 2,498,311 | ||||||||
1.00%, 06/17/19 (a) | 3,500,000 | 3,554,274 | ||||||||
|
| |||||||||
| 10,641,682 | ||||||||||
|
| |||||||||
| ||||||||||
Electric Utilities 0.9% |
| |||||||||
Hydro Quebec, | 3,500,000 | 3,585,294 | ||||||||
|
| |||||||||
| ||||||||||
Food & Staples Retailing 1.6% |
| |||||||||
Walgreen Co., | 6,275,000 | 6,312,115 | ||||||||
|
| |||||||||
| ||||||||||
Food Products 0.8% |
| |||||||||
WM Wrigley Jr Co., | 3,000,000 | 3,019,711 | ||||||||
|
| |||||||||
| ||||||||||
Gas Utilities 1.7% |
| |||||||||
El Paso Natural Gas Co. LLC, | 2,296,000 | 2,564,493 | ||||||||
Enterprise Products Operating LLC, | 1,500,000 | 1,538,849 | ||||||||
3.20%, 02/01/16 | 2,500,000 | 2,589,450 | ||||||||
|
| |||||||||
| 6,692,792 | ||||||||||
|
| |||||||||
| ||||||||||
Health Care Providers & Services 2.8% |
| |||||||||
Baxter International, Inc., | 2,125,000 | 2,131,973 | ||||||||
McKesson Corp., | 2,500,000 | 2,503,583 | ||||||||
1.29%, 03/10/17 | 5,000,000 | 4,997,166 | ||||||||
UnitedHealth Group, Inc., | 1,500,000 | 1,505,023 | ||||||||
|
| |||||||||
| 11,137,745 | ||||||||||
|
| |||||||||
| ||||||||||
Household Durables 0.3% |
| |||||||||
Whirlpool Corp., | 1,250,000 | 1,247,035 | ||||||||
|
| |||||||||
| ||||||||||
Insurance 2.0% |
| |||||||||
American International Group, Inc., | 6,000,000 | 6,303,510 | ||||||||
Berkshire Hathaway Finance Corp., | 1,800,000 | 1,820,808 | ||||||||
|
| |||||||||
| 8,124,318 | ||||||||||
|
| |||||||||
| ||||||||||
Machinery 1.6% |
| |||||||||
Caterpillar Financial Services Corp., | 1,750,000 | 1,767,027 | ||||||||
John Deere Capital Corp., | 4,500,000 | 4,511,865 | ||||||||
|
| |||||||||
| 6,278,892 | ||||||||||
|
| |||||||||
60
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Short Term Bond Fund (Continued)
| Corporate Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Metals & Mining 0.4% |
| |||||||||
Rio Tinto Finance USA PLC, | $ | 1,750,000 | $ | 1,763,565 | ||||||
|
| |||||||||
| ||||||||||
Multiline Retail 0.8% |
| |||||||||
Macy’s Retail Holdings, Inc., | 1,000,000 | 1,068,226 | ||||||||
7.45%, 07/15/17 | 1,750,000 | 2,040,295 | ||||||||
|
| |||||||||
| 3,108,521 | ||||||||||
|
| |||||||||
| ||||||||||
Oil, Gas & Consumable Fuels 3.1% |
| |||||||||
BP Capital Markets PLC, | 750,000 | 747,845 | ||||||||
0.86%, 09/26/18 (a) | 5,700,000 | 5,718,781 | ||||||||
Petrobras Global Finance BV, | 2,500,000 | 2,544,354 | ||||||||
Petrohawk Energy Corp., | 3,500,000 | 3,627,400 | ||||||||
|
| |||||||||
| 12,638,380 | ||||||||||
|
| |||||||||
| ||||||||||
Pharmaceuticals 4.9% |
| |||||||||
AbbVie, Inc., | 2,600,000 | 2,613,639 | ||||||||
Actavis Funding SCS, | 4,650,000 | 4,609,297 | ||||||||
Merck & Co., Inc., | 2,050,000 | 2,060,123 | �� | |||||||
Mylan, Inc., | 6,650,000 | 7,315,000 | ||||||||
Pfizer, Inc., | 3,000,000 | 2,991,750 | ||||||||
|
| |||||||||
| 19,589,809 | ||||||||||
|
| |||||||||
| ||||||||||
Road & Rail 0.3% |
| |||||||||
Burlington Northern and Santa Fe Railway Co. Pass Through Trust, | 1,102,717 | 1,190,934 | ||||||||
|
| |||||||||
| ||||||||||
Software 0.7% |
| |||||||||
Oracle Corp., | 2,850,000 | 2,875,305 | ||||||||
|
| |||||||||
| ||||||||||
Technology Hardware, Storage & Peripherals 0.6% |
| |||||||||
Hewlett-Packard Co., | 2,500,000 | 2,598,399 | ||||||||
|
| |||||||||
Total Corporate Bonds |
| 212,350,538 | ||||||||
|
| |||||||||
| Sovereign Bond 0.5% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
CANADA 0.5% |
| |||||||||
Province of Ontario Canada, | $ | 2,000,000 | $ | 2,011,315 | ||||||
|
| |||||||||
Total Sovereign Bond |
| 2,011,315 | ||||||||
|
| |||||||||
| U.S. Government Mortgage Backed Agencies 12.3% | ||||||||||
Federal Home Loan Mortgage Corp. Gold Pool | ||||||||||
Pool# G11038 | 269 | 271 | ||||||||
Pool# E85741 | 22,611 | 23,635 | ||||||||
Pool# E01136 | 20,501 | 21,423 | ||||||||
Pool# E89121 | 69,435 | 72,979 | ||||||||
Pool# E92833 | 2,333 | 2,464 | ||||||||
Pool# E01311 | 31,841 | 33,709 | ||||||||
Pool# E01488 | 98,763 | 104,631 | ||||||||
Pool# E01497 | 3,825 | 4,083 | ||||||||
Pool# G11712 | 369,748 | 392,876 | ||||||||
Pool# G18065 | 43,246 | 46,365 | ||||||||
Pool# G14780 | 4,319,382 | 4,346,885 | ||||||||
Pool# G13746 | 545,293 | 584,081 | ||||||||
Pool# G13888 | 186,660 | 201,426 | ||||||||
Pool# J12635 | 473,339 | 503,182 | ||||||||
Pool# J13795 | 472,692 | 497,453 | ||||||||
Pool# E03083 | 727,943 | 767,212 | ||||||||
Pool# C00748 | 33,439 | 37,619 | ||||||||
Pool# C01418 | 206,158 | 229,058 | ||||||||
Pool# G01740 | 115,401 | 128,289 | ||||||||
Pool# G04342 | 154,952 | 172,275 | ||||||||
Federal Home Loan Mortgage Corp. Non Gold Pool | ||||||||||
Pool# 972136 | 185,907 | 197,721 | ||||||||
61
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Short Term Bond Fund (Continued)
| U.S. Government Mortgage Backed Agencies (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Federal Home Loan Mortgage Corp. Non Gold Pool (continued) | ||||||||||
Pool# 848191 | $ | 963,934 | $ | 1,023,772 | ||||||
Pool# 1B2139 | 124,042 | 132,807 | ||||||||
Pool# 1B2446 | 949,342 | 1,014,293 | ||||||||
Pool# 848621 | 825,370 | 885,016 | ||||||||
Pool# 848251 | 1,082,840 | 1,155,909 | ||||||||
Pool# 848134 | 168,749 | 180,340 | ||||||||
Federal National Mortgage Association Pool | ||||||||||
Pool# 535170 | 11 | 11 | ||||||||
Pool# 253752 | 27,696 | 28,648 | ||||||||
Pool# 535846 | 55,551 | 57,361 | ||||||||
Pool# 357119 | 73,154 | 75,799 | ||||||||
Pool# 555569 | 4,318 | 4,466 | ||||||||
Pool# 545015 | 2,921 | 3,026 | ||||||||
Pool# 545019 | 7,355 | 7,627 | ||||||||
Pool# 253880 | 6,492 | 6,757 | ||||||||
Pool# 253883 | 6,220 | 6,467 | ||||||||
Pool# 254003 | 18,371 | 19,164 | ||||||||
Pool# 545299 | 6,352 | 6,635 | ||||||||
Pool# 254088 | 8,089 | 8,423 | ||||||||
Pool# 254140 | 59,021 | 61,540 | ||||||||
Pool# 254142 | 7,604 | 7,983 | ||||||||
Pool# 545449 | 2,724 | 2,855 | ||||||||
Pool# 254261 | 12,261 | 12,953 | ||||||||
Pool# 254373 | 12,597 | 13,347 | ||||||||
Pool# 254442 | 108,081 | 113,662 | ||||||||
Pool# 545899 | 10,173 | 10,660 | ||||||||
| U.S. Government Mortgage Backed Agencies (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Federal National Mortgage Association Pool (continued) | ||||||||||
Pool# 254473 | $ | 17,010 | $ | 17,909 | ||||||
Pool# 555013 | 27,034 | 28,397 | ||||||||
Pool# 668358 | 15,558 | 16,398 | ||||||||
Pool# 685185 | 2,217 | 2,344 | ||||||||
Pool# 555384 | 5,034 | 5,325 | ||||||||
Pool# 725135 | 50,094 | 52,498 | ||||||||
Pool# 555918 | 5,345 | 5,634 | ||||||||
Pool# 735930 | 181,709 | 190,644 | ||||||||
Pool# MA0517 | 642,438 | 679,930 | ||||||||
Pool# 981257 | 434,684 | 470,101 | ||||||||
Pool# MA1519 | 4,214,290 | 4,377,759 | ||||||||
Pool# MA1577 | 3,254,632 | 3,316,165 | ||||||||
Pool# AL5434 | 4,928,519 | 5,069,277 | ||||||||
Pool# MA1892 | 9,650,646 | 10,024,986 | ||||||||
Pool# 931892 | 1,595,100 | 1,707,068 | ||||||||
Pool# AL0802 | 441,171 | 472,140 | ||||||||
Pool# AE3066 | 1,102,306 | 1,162,847 | ||||||||
Pool# AH0969 | 606,245 | 639,541 | ||||||||
Pool# AH9377 | 368,432 | 388,667 | ||||||||
Pool# AI2067 | 1,811,087 | 1,910,555 | ||||||||
Pool# AB3298 | 366,650 | 386,787 | ||||||||
Pool# AB4998 | 1,701,641 | 1,758,607 | ||||||||
Pool# 53839 | 13,535 | 13,865 | ||||||||
Pool# 190307 | 2,271 | 2,729 | ||||||||
Pool# 253516 | 1,520 | 1,776 | ||||||||
Pool# 737253 | 72,688 | 76,981 | ||||||||
62
Statement of Investments (Continued)
July 31, 2014
Nationwide HighMark Short Term Bond Fund (Continued)
| U.S. Government Mortgage Backed Agencies (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Federal National Mortgage Association Pool (continued) | ||||||||||
Pool# 725726 | $ | 735,112 | $ | 779,814 | ||||||
Pool# 725773 | 252,973 | 281,768 | ||||||||
Pool# 815323 | 360,392 | 378,214 | ||||||||
Pool# 811773 | 209,946 | 234,500 | ||||||||
Pool# AL1009 | 1,141,022 | 1,196,663 | ||||||||
Pool# 829431 | 519,257 | 556,540 | ||||||||
|
| |||||||||
Total U.S. Government Mortgage Backed Agencies |
| 49,413,587 | ||||||||
|
| |||||||||
| U.S. Treasury Notes 8.4% | ||||||||||
U.S. Treasury Notes | 4,000,000 | 4,020,625 | ||||||||
0.50%, 07/31/17 | 30,000,000 | 29,521,875 | ||||||||
|
| |||||||||
Total U.S. Treasury Notes |
| 33,542,500 | ||||||||
|
| |||||||||
Total Investments |
| 389,191,715 | ||||||||
Other assets in excess of liabilities — 3.1% |
| 12,404,151 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 401,595,866 | |||||||
|
| |||||||||
| * | Denotes a non-income producing security. |
| (a) | Variable Rate Security. The rate reflected in the Statement of Investments is the rate in effect on July 31, 2014. The maturity date represents the actual maturity date. |
| (b) | 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 July 31, 2014 was $64,497,952 which represents 16.06% of net assets. |
| (c) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
| † | Amount rounds to less than 0.1%. |
| BV | Private Limited Liability Company |
| LLC | Limited Liability Company |
| Ltd. | Limited |
| NA | National Association |
| NV | Public Traded Company |
| PLC | Public Limited Company |
| REMICS | Real Estate Mortgage Investment Conduits |
The accompanying notes are an integral part of these financial statements.
63
Statement of Assets and Liabilities
July 31, 2014
| Nationwide HighMark Short Term Bond Fund | ||||||
Assets: | ||||||
Investments, at value (cost $389,189,743) | $ | 389,191,715 | ||||
Cash | 29,465,835 | |||||
Interest and dividends receivable | 1,234,150 | |||||
Receivable for investments sold | 57,109 | |||||
Receivable for capital shares issued | 62,403 | |||||
Prepaid expenses | 11,053 | |||||
|
| |||||
Total Assets | 420,022,265 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 17,240,516 | |||||
Distributions payable | 54,412 | |||||
Payable for capital shares redeemed | 946,013 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 88,659 | |||||
Fund administration fees | 13,643 | |||||
Distribution fees | 21,523 | |||||
Administrative servicing fees | 10,513 | |||||
Accounting and transfer agent fees | 3,930 | |||||
Trustee fees | 933 | |||||
Custodian fees | 600 | |||||
Compliance program costs (Note 3) | 1,102 | |||||
Professional fees | 33,511 | |||||
Printing fees | 7,152 | |||||
Other | 3,892 | |||||
|
| |||||
Total Liabilities | 18,426,399 | |||||
|
| |||||
Net Assets | $ | 401,595,866 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 401,991,173 | ||||
Accumulated distributions in excess of net investment income | (63,539 | ) | ||||
Accumulated net realized losses from investments | (333,740 | ) | ||||
Net unrealized appreciation/(depreciation) from investments | 1,972 | |||||
|
| |||||
Net Assets | $ | 401,595,866 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 43,251,067 | ||||
Class C Shares | 19,025,184 | |||||
Institutional Service Class Shares | 83,068,672 | |||||
Institutional Class Shares | 256,250,943 | |||||
|
| |||||
Total | $ | 401,595,866 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 4,323,702 | |||||
Class C Shares | 1,878,867 | |||||
Institutional Service Class Shares | 8,293,551 | |||||
Institutional Class Shares | 25,573,941 | |||||
|
| |||||
Total | 40,070,061 | |||||
|
| |||||
64
Statement of Assets and Liabilities (Continued)
July 31, 2014
| Nationwide HighMark Short Term Bond Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 10.00 | ||||
Class C Shares (b) | $ | 10.13 | ||||
Institutional Service Class Shares | $ | 10.02 | ||||
Institutional Class Shares | $ | 10.02 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 10.23 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 2.25 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 0.50% on sales of shares of original purchases of $250,000 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.
65
Statement of Operations
For the Year Ended July 31, 2014
| Nationwide HighMark Short Term Bond Fund | ||||||
INVESTMENT INCOME: | ||||||
Interest income | $ | 3,259,884 | ||||
Dividend income | 5,080 | |||||
|
| |||||
Total Income | 3,264,964 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 763,450 | |||||
Fund administration fees | 170,838 | |||||
Distribution fees Class A | 108,071 | |||||
Distribution fees Class C | 170,255 | |||||
Administrative servicing fees Class A | 34,679 | |||||
Administrative servicing fees Class C | 4,029 | |||||
Administrative servicing fees Institutional Service Class (a) | 49,894 | |||||
Registration and filing fees | 45,670 | |||||
Professional fees | 52,219 | |||||
Printing fees | 23,023 | |||||
Trustee fees | 5,565 | |||||
Custodian fees | 7,532 | |||||
Accounting and transfer agent fees | 20,879 | |||||
Compliance program costs (Note 3) | 1,812 | |||||
Other | 25,181 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 1,483,097 | |||||
|
| |||||
Earnings credit (Note 4) | (303 | ) | ||||
Administrative servicing fees voluntarily waived — Class A (Note 3) | (11,127 | ) | ||||
Administrative servicing fees voluntarily waived — Institutional Service Class (Note 3) (a) | (23,377 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (44,063 | ) | ||||
|
| |||||
Net Expenses | 1,404,227 | |||||
|
| |||||
NET INVESTMENT INCOME | 1,860,737 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized gains from investment transactions | 380,353 | |||||
Net change in unrealized appreciation/(depreciation) from investments | (246,267 | ) | ||||
|
| |||||
Net realized/unrealized gains from investments | 134,086 | |||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,994,823 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
66
Statements of Changes in Net Assets
| Nationwide HighMark Short Term Bond Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 1,860,737 | $ | 1,718,409 | ||||||||
Net realized gains from investments | 380,353 | 722,040 | ||||||||||
Net change in unrealized appreciation/(depreciation) from investments | (246,267 | ) | (1,929,412 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 1,994,823 | 511,037 | ||||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (421,351 | ) | (505,762 | ) | ||||||||
Class C | (116,588 | ) | (224,745 | ) | ||||||||
Institutional Service Class (a) | (1,084,475 | ) | (1,693,174 | ) | ||||||||
Institutional Class | (759,644 | )(b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (2,382,058 | ) | (2,423,681 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | 237,400,971 | 7,588,632 | ||||||||||
|
|
|
| |||||||||
Change in net assets | 237,013,736 | 5,675,988 | ||||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 164,582,130 | 158,906,142 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 401,595,866 | $ | 164,582,130 | ||||||||
|
|
|
| |||||||||
Accumulated distributions in excess of net investment income at end of year | $ | (63,539 | ) | $ | – | |||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Proceeds from shares issued | $ | 14,428,646 | $ | 37,806,686 | ||||||||
Dividends reinvested | 253,950 | 430,908 | ||||||||||
Cost of shares redeemed | (15,788,849 | ) | (25,347,925 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (1,106,253 | ) | 12,889,669 | |||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Proceeds from shares issued | 3,083,868 | 11,724,804 | ||||||||||
Dividends reinvested | 98,147 | 173,180 | ||||||||||
Cost of shares redeemed | (10,854,637 | ) | (9,478,565 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (7,672,622 | ) | 2,419,419 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 10) (a) | ||||||||||||
Proceeds from shares issued | 26,125,044 | 39,762,430 | ||||||||||
Dividends reinvested | 451,406 | 851,530 | ||||||||||
Cost of shares redeemed | (37,025,340 | ) | (48,334,416 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (10,448,890 | ) | (7,720,456 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | 353,705,935 | (b) | – | |||||||||
Dividends reinvested | 759,318 | (b) | – | |||||||||
Cost of shares redeemed | (97,836,517 | )(b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 256,628,736 | (b) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | 237,400,971 | $ | 7,588,632 | ||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
67
Statements of Changes in Net Assets (Continued)
| Nationwide HighMark Short Term Bond Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Issued | 1,440,475 | 3,759,066 | ||||||||||
Reinvested | 25,361 | 42,721 | ||||||||||
Redeemed | (1,576,599 | ) | (2,521,226 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (110,763 | ) | 1,280,561 | |||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Issued | 304,287 | 1,146,731 | ||||||||||
Reinvested | 9,682 | 16,954 | ||||||||||
Redeemed | (1,070,660 | ) | (928,566 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (756,691 | ) | 235,119 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 10) (a) | ||||||||||||
Issued | 2,605,575 | 3,931,680 | ||||||||||
Reinvested | 45,019 | 84,306 | ||||||||||
Redeemed | (3,693,645 | ) | (4,797,488 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (1,043,051 | ) | (781,502 | ) | ||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 35,243,596 | (b) | – | |||||||||
Reinvested | 75,648 | (b) | – | |||||||||
Redeemed | (9,745,303 | )(b) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 25,573,941 | (b) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | 23,663,436 | 734,178 | ||||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (b) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
68
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide HighMark Short Term Bond Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Investment Income | Total Distributions | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | ||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.00 | 0.07 | 0.03 | 0.10 | (0.10 | ) | (0.10 | ) | $ | 10.00 | 0.98% | $ | 43,251,067 | 0.81% | 0.72% | 0.86% | 52.08% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.11 | 0.09 | (0.07 | ) | 0.02 | (0.13 | ) | (0.13 | ) | $ | 10.00 | 0.22% | $ | 44,364,179 | 0.85% | 0.89% | 1.19% | 62.00% | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.09 | 0.17 | 0.05 | 0.22 | (0.20 | ) | (0.20 | ) | $ | 10.11 | 2.18% | $ | 31,888,147 | 0.88% | 1.71% | 1.22% | 45.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 10.10 | 0.19 | 0.02 | 0.21 | (0.22 | ) | (0.22 | ) | $ | 10.09 | 2.07% | $ | 24,352,508 | 0.95% | 1.89% | 1.23% | 48.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 9.98 | 0.24 | 0.14 | 0.38 | (0.26 | ) | (0.26 | ) | $ | 10.10 | 3.86% | $ | 22,581,313 | 0.94% | 2.39% | 1.24% | 27.00% | ||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.13 | 0.03 | 0.02 | 0.05 | (0.05 | ) | (0.05 | ) | $ | 10.13 | 0.50% | $ | 19,025,184 | 1.26% | 0.26% | 1.30% | 52.08% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.24 | 0.05 | (0.07 | ) | (0.02 | ) | (0.09 | ) | (0.09 | ) | $ | 10.13 | (0.24% | ) | $ | 26,690,172 | 1.30% | 0.44% | 1.44% | 62.00% | |||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.21 | 0.13 | 0.05 | 0.18 | (0.15 | ) | (0.15 | ) | $ | 10.24 | 1.79% | $ | 24,569,388 | 1.33% | 1.26% | 1.47% | 45.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 10.22 | 0.15 | 0.01 | 0.16 | (0.17 | ) | (0.17 | ) | $ | 10.21 | 1.59% | $ | 20,876,269 | 1.40% | 1.44% | 1.48% | 48.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 10.10 | 0.20 | 0.14 | 0.34 | (0.22 | ) | (0.22 | ) | $ | 10.22 | 3.37% | $ | 17,565,330 | 1.39% | 1.94% | 1.49% | 27.00% | ||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.02 | 0.10 | 0.03 | 0.13 | (0.13 | ) | (0.13 | ) | $ | 10.02 | 1.26% | $ | 83,068,672 | 0.54% | 1.00% | 0.59% | 52.08% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.13 | 0.12 | (0.07 | ) | 0.05 | (0.16 | ) | (0.16 | ) | $ | 10.02 | 0.48% | $ | 93,527,779 | 0.59% | 1.16% | 0.94% | 62.00% | |||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.10 | 0.20 | 0.05 | 0.25 | (0.22 | ) | (0.22 | ) | $ | 10.13 | 2.55% | $ | 102,448,607 | 0.61% | 1.98% | 0.97% | 45.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 10.12 | 0.22 | 0.01 | 0.23 | (0.25 | ) | (0.25 | ) | $ | 10.10 | 2.35% | $ | 87,476,317 | 0.67% | 2.17% | 0.98% | 48.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 10.00 | 0.27 | 0.14 | 0.41 | (0.29 | ) | (0.29 | ) | $ | 10.12 | 4.04% | $ | 71,121,675 | 0.66% | 2.67% | 0.99% | 27.00% | ||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(i) | $ | 10.01 | 0.09 | 0.03 | 0.12 | (0.11 | ) | (0.11 | ) | $ | 10.02 | 1.19% | $ | 256,250,943 | 0.48% | 0.99% | 0.48% | 52.08% | ||||||||||||||||||||||||||||||||||
| (a) | Excludes sales charge. |
| (b) | Not annualized for periods less than one year. |
| (c) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
69
| Fund Commentary | Nationwide Ziegler Wisconsin Tax Exempt Fund |
For the annual period ended July 31, 2014, the Nationwide Ziegler Wisconsin Tax Exempt Fund (Class A at NAV) returned 1.06%* versus 7.27% for its benchmark, the Barclays Municipal Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Other States Municipal Debt Funds (consisting of 253 funds as of July 31, 2014) was 6.30% for the same time period.
| * | Performance prior to the Fund’s inception on September 16, 2013, is based on the performance of the Fund’s predecessor fund. |
The reporting period was very challenging for the municipal bond market; the City of Detroit filed for bankruptcy and Puerto Rico lost its investment-grade ratings. Municipal bond funds recorded 32 consecutive weeks of outflows to end 2013, and the year saw a record $67 billion in net outflows. The following paragraphs are intended to put the performance of the municipal bond market in the context of the overall objectives and goals of the Fund.
Wisconsin ranks #5 in the United States in terms of total tax burden (state and local taxes). Investors purchase the Fund due to its objective of being fully invested in double tax-exempt bonds and the high relative current income the Fund has the potential to offer. Managing a dedicated Wisconsin state fund has its particular nuances. Often not enough paper is available to purchase within the state of Wisconsin to be 100% invested in Wisconsin double tax-exempt paper, because the supply has dwindled in recent years due to austerity at the local levels and limited interest in new municipal projects. Almost all new issuance has been from the refunding of existing bonds to save interest expense. We also have seen Wisconsin double tax-exempt bonds being refinanced in the bank loan market, once again shrinking investable Wisconsin double tax-exempt municipal bond opportunities.
General obligation bonds of Wisconsin are not state tax exempt, further limiting investment options. The only other bonds that are eligible for this double tax-exempt status are territory paper issued by Guam, the U.S. Virgin Islands and Puerto Rico. Puerto Rico is the largest issuer of
territory paper with bonds readily available in the secondary market. Liquidity in U.S. Virgin Islands and Guam bonds is very limited. The Fund’s 8% end of reporting period allocation to Puerto Rico paper is due to this dearth of quality investable Wisconsin double tax-exempt bonds in the market.
Puerto Rico bonds saw significant pressure in the reporting period. Puerto Rico paper was under severe stress during the second half of 2013, with bond prices down more than 18% during that period. In the summer of 2013, a negative cover story on Puerto Rico in Barron’s ignited a major sell-off in Puerto Rico bonds. Investors remain very concerned with Puerto Rico’s heavy debt burden and its poor economy. Following Detroit’s bankruptcy in July 2013, investors became worried that Puerto Rico was headed down the same path. Prices rapidly deteriorated during 2013 as bond funds sourced liquidity to fund redemptions. Puerto Rico general obligation bonds were downgraded to below investment grade in February 2014.
In June 2014, Puerto Rico enacted a new restructuring law that offers public corporations in financial distress a controlled, orderly way to negotiate with creditors to lower debt burdens. The top detractors from Fund performance during the reporting period were the Fund’s positions in Puerto Rico Highway & Transportation revenue bonds and Puerto Rico Electric Power Authority revenue bonds. The bonds of these companies were targets of the new restructuring legislation. Uninsured COFINA (Puerto Rico sales tax) revenue bonds also sold off sharply during the reporting period, even though they are not eligible for the restructuring law. As of the end of the reporting period, the Fund owned 5% in COFINA bonds, which are Puerto Rico’s best credit and were still considered investment grade at Standard & Poor’s (S&P) at the end of the reporting period. Puerto Rico recently passed a balanced budget for the first time in decades, and the territory will no longer support public corporations, which should help the territory’s finances in the long run. In the future, Puerto Rico will have limited capital market access.
70
| Fund Commentary (con’t.) | Nationwide Ziegler Wisconsin Tax Exempt Fund |
The Fund’s exposure to Puerto Rico is not unusual. Many single-state funds have nearly one-third of their assets in Puerto Rico bonds, and 75% of all municipal funds have some exposure to Puerto Rican credits. At the end of the reporting period, Puerto Rican credits made up 8% of the Fund, greatly reduced from a maximum during the period of 27%. We have funded redemptions predominantly with territory bond sales for prudent risk management. The Fund’s percentage of Wisconsin assets has risen from 63% at the beginning of the reporting period to more than 83% as of the end of the reporting period. The top contributors to Fund performance during the reporting period were the Fund’s positions in Wisconsin Center District capital appreciation bonds; Waukesha, Wisconsin, Redevelopment Authority bonds; and Wisconsin Housing and Economic Development bonds. These bonds benefited from long duration as municipal interest rates plunged during the 12 months ended July 31, 2014.
The benchmark for the Fund is not a Wisconsin single-state benchmark, but rather the Barclays Municipal Bond Index, which held a weight of 2.46% in Puerto Rican credits and only 1.23% in total Wisconsin credits during the reporting period. The Barclays Municipal Bond Index in fact has only a small allocation to Wisconsin state tax-exempt issues. Non-Wisconsin investments are not beneficial from a tax standpoint for investors, so we avoid investments in state taxable bonds, limiting the Fund’s ability to invest outside of the U.S. territories, a strategy pursued by some other single-state funds. The Nationwide Ziegler Wisconsin Tax Exempt portfolio seeks to provide investors with a high level of current income that is exempt from both federal income tax and Wisconsin personal income tax.
We improved the overall credit rating of the portfolio from A2 to A1 during the past reporting period. The Fund is well positioned for any future volatility in the municipal market. We will continue to seek to add high-quality Wisconsin state tax-exempt issues and reduce territory exposure, where appropriate.
In our view, the municipal market should be interesting for the remainder of 2014 and into 2015. We expect to see final resolutions regarding Detroit’s bankruptcy, Puerto Rico’s potential restructuring of public corporation debt and future capital market access. We expect interest rates to rise as the Federal Reserve ends its zero-interest-rate policy in 2015. Fiscal austerity continues at Wisconsin local levels, and new issuance of Wisconsin state tax-exempt bonds may once again prove to be extremely scarce. We will look to take advantage of any and all opportunities that present themselves and focus on capital preservation and potential high double tax-free income for the Fund’s investors.
Subadviser:
Ziegler Capital Management, LLC
Portfolio Managers:
Paula M. Horn, Richard D. Scargill and Eric Zenner
The Fund is subject to the risks of investing in fixed-income securities. By concentrating its investments in bonds issued in specific geographic areas, the Fund’s credit risk is more dependent on the ability of the territory or state and its cities and municipalities to make timely payments on their obligations. The Fund is a nondiversified fund that may invest a greater percentage of its assets in a particular issuer, and thereby have greater exposure to risks associated with an individual issuer. The Fund may invest in municipal securities that generate interest that is subject to alternative minimum tax (“AMT”). As a result, taxpayers who are subject to the AMT potentially could earn a lower after-tax return. Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.
A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
71
| Fund Overview | Nationwide Ziegler Wisconsin Tax Exempt Fund |
Objective
The Fund seeks to provide investors with a high level of current income that is exempt from federal income tax and Wisconsin personal income tax.
Highlights
| Ÿ | For the annual period ended July 31, 2014, the Nationwide Ziegler Wisconsin Tax Exempt Fund (Class A at NAV) returned 1.06%, underperforming the benchmark by 6.21% and the Lipper peer category median by 5.24%. |
| Ÿ | Performance in the Fund was negatively affected by exposure to Puerto Rico general obligation bonds, which lost their investment-grade rating in February 2014. Puerto Rican credits made up 8% of the Fund as of the end of the reporting period, greatly reduced from 27% as of March 31, 2013. |
| Ÿ | We improved the overall credit rating of the portfolio from A2 to A1 during the past reporting period. |
Asset Allocation†
| Municipal Bonds | 96.3% | |||
| Mutual Fund | 3.5% | |||
| Other assets in excess of liabilities | 0.2% | |||
| 100.0% |
Top Holdings††
| Southeast Wisconsin Professional Baseball Park District, Sales Tax Revenue, Refunding, RB, National-RE Insured, 5.50%, 12/15/26 | 4.5% | |||
| Madison, Community Development Authority Revenue, Alumni Research Foundation Project, RB, 5.00%, 10/01/34 | 4.2% | |||
| Invesco Tax Free Cash Reserve Portfolio — Institutional Shares | 3.5% | |||
| Glendale, Community Development Authority, Lease Revenue, Tax Increment District No.7, Refunding, RB, 2.60%, 09/01/21 | 2.7% | |||
| Monroe, Redevelopment Authority, Development Revenue, MonroeClinic Inc., RB, 5.88%, 02/15/39 | 2.5% | |||
| Wisconsin Center District, Junior Dedicated Tax Revenue, Refunding, RB, AGM Insured, 5.25%, 12/15/23 | 2.5% | |||
| Wisconsin Health and Educational Facilities Authority, Rogers Memorial Hospital Inc., RB, 4.40%, 07/01/38 | 2.5% | |||
| Glendale, Community Development Authority, Lease Revenue, Tax Increment District No.7, Refunding, RB, 2.75%, 09/01/22 | 2.3% | |||
| Southeast Wisconsin Professional Baseball Park District, Sales Tax Revenue, Refunding, ETM, RB, National-RE Insured, 5.50%, 12/15/19 | 2.2% | |||
| Milwaukee, Redevelopment Authority Revenue, Milwaukee School of Engineering, Refunding, RB, AGM Insured, 4.10%, 04/01/32 | 2.1% | |||
| Other Holdings | 71.0% | |||
| 100.0% |
| † | Percentages indicated are based upon net assets as of July 31, 2014. |
| †† | Percentages indicated are based upon total investments as of July 31, 2014. |
72
| Fund Performance | Nationwide Ziegler Wisconsin Tax Exempt Fund |
Average Annual Total Return
(For periods ended July 31, 2014)
| 1 Yr. | 5 Yr. | 10 Yr. | Inception | |||||||||||||||
| Class A1 | w/o SC2 | 1.06% | 3.30% | 3.16% | – | |||||||||||||
| w/ SC3 | (1.24)% | 2.83% | 2.92% | – | ||||||||||||||
| Class C1 | w/o SC2 | 0.71% | 2.84% | 2.56% | – | |||||||||||||
| w/ SC4 | (0.29)% | 2.84% | 2.56% | – | ||||||||||||||
| Institutional Service Class1,5,6 | 1.31% | 3.51% | 3.26% | – | ||||||||||||||
| Institutional Class5 | – | – | – | 3.32% | 7* | |||||||||||||
| Barclays Municipal Bond Index | 7.27% | 5.50% | 4.85% | – | ||||||||||||||
| CPI | 1.99% | 2.04% | 2.32% | – | ||||||||||||||
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.
| * | Not annualized. |
| 1 | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| 2 | These returns do not reflect the effects of SCs. |
| 3 | A 2.25% front-end sales charge was deducted. |
| 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 September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| 7 | Since inception date of September 18, 2013. |
Expense Ratios
Gross Ratio* | Net Ratio* | |||
| Class A | 1.22% | 0.91% | ||
| Class C | 1.47% | 1.36% | ||
| Institutional Service Class | 0.97% | 0.66% | ||
| Institutional Class | 0.72% | 0.61% |
| * | Current effective prospectus dated November 29, 2013 (as revised March 1, 2014). The difference between gross and net operating expenses reflects contractual waivers in place through November 30, 2015. Please see the Fund’s most recent prospectus for details. |
73
| Fund Performance (con’t.) | Nationwide Ziegler Wisconsin Tax Exempt 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 Class A shares of the Nationwide Ziegler Wisconsin Tax Exempt Fund versus the Barclays Municipal Bond Index and the Consumer Price Index (CPI) over the 10-year period ended 7/31/14. Fund performance prior to the Fund’s inception on 9/16/13 is based on the Fund’s predecessor fund. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. One cannot invest directly in a market index. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.
74
| Shareholder Expense Example | Nationwide Ziegler Wisconsin Tax Exempt 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 February 1, 2014 and continued to hold your shares at the end of the reporting period July 31, 2014.
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 February 1, 2014 through July 31, 2014. 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 February 1, 2014 through July 31, 2014. 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 $1,000 Investment
Nationwide Ziegler Wisconsin July 31, 2014 | Beginning Account Value ($) 02/01/14 | Ending Account Value ($) 07/31/14 | Expenses Paid During Period ($) 02/01/14 - 07/31/14 | Expense Ratio During Period (%) 02/01/14 - 07/31/14 | ||||||||
| Class A Shares | Actual | (a) | 1,000.00 | 1,021.50 | 4.51 | 0.90 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,020.33 | 4.51 | 0.90 | |||||||
| Class C Shares | Actual | (a) | 1,000.00 | 1,020.30 | 6.76 | 1.35 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,018.10 | 6.76 | 1.35 | |||||||
| Institutional Service Class Shares(c) | Actual | (a) | 1,000.00 | 1,022.70 | 3.26 | 0.65 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,021.57 | 3.26 | 0.65 | |||||||
| Institutional Class Shares | Actual | (a) | 1,000.00 | 1,023.00 | 3.01 | 0.60 | ||||||
| Hypothetical | (a)(b) | 1,000.00 | 1,021.82 | 3.01 | 0.60 | |||||||
| (a) | Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from February 1, 2014 through July 31, 2014 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. |
| (c) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
75
Statement of Investments
July 31, 2014
Nationwide Ziegler Wisconsin Tax Exempt Fund
| Municipal Bonds 96.3% | ||||||||||
| Principal Amount | Market Value | |||||||||
| ||||||||||
Guam 2.5% |
| |||||||||
Guam Government Business Privilege, Special Tax Revenue | $ | 750,000 | $ | 854,182 | ||||||
Series A, 5.00%, 01/01/22 | 500,000 | 575,725 | ||||||||
Guam Power Authority Revenue, Refunding, RB, AGM Insured | 515,000 | 593,466 | ||||||||
Series A, 5.00%, 10/01/22 | 870,000 | 1,019,048 | ||||||||
|
| |||||||||
| 3,042,421 | ||||||||||
|
| |||||||||
| ||||||||||
Massachusetts 0.9% |
| |||||||||
Massachusetts State, Housing Finance Agency, Multi-Family, ETM, RB, | 910,000 | 1,157,893 | ||||||||
|
| |||||||||
| ||||||||||
Puerto Rico 8.3% |
| |||||||||
Puerto Rico Commonwealth, Highway & Transportation, RB, AGM Insured, 5.50%, 07/01/23 | 620,000 | 622,133 | ||||||||
Puerto Rico Commonwealth, Public Improvement, GO, AGM Insured, 5.13%, 07/01/30 | 750,000 | 732,817 | ||||||||
Puerto Rico Municipal Finance Agency, GO, AGM Insured, | 880,000 | 829,110 | ||||||||
Puerto Rico Municipal Finance Agency, Refunding, GO, | 1,000,000 | 996,460 | ||||||||
Puerto Rico Public Buildings Authority Revenue, Guaranteed, Government Facilities, Refunding, RB, | 1,000,000 | 753,690 | ||||||||
Puerto Rico Public Buildings Authority Revenue, Guaranteed, Refunding, RB, XLCA Insured, | 500,000 | 422,715 | ||||||||
Puerto Rico Sales Tax Financing, Corporate Sales Tax Revenue, RB, | 1,400,000 | 1,067,500 | ||||||||
6.38%, 08/01/39 | 3,000,000 | 2,369,220 | ||||||||
6.00%, 08/01/42 | 1,000,000 | 757,540 | ||||||||
6.50%, 08/01/44 | 2,000,000 | 1,585,940 | ||||||||
|
| |||||||||
| 10,137,125 | ||||||||||
|
| |||||||||
| ||||||||||
Wisconsin 84.6% |
| |||||||||
Appleton Redevelopment Authority, Room Tax, Fox Cities Performing Arts, Refunding, RB | 355,000 | 356,047 | ||||||||
2.40%, 09/01/19 | 290,000 | 288,976 | ||||||||
2.60%, 09/01/20 | 355,000 | 350,517 | ||||||||
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
|
|
| ||||||||
Wisconsin (continued) |
| |||||||||
Beloit, Community Development Authority, Lease Revenue, RB 4.70%, 03/01/21 | $ | 345,000 | $ | 369,947 | ||||||
4.75%, 03/01/22 | 300,000 | 320,094 | ||||||||
Beloit, Community Development Authority, Redevelopment Lease Revenue, RB, | 475,000 | 478,140 | ||||||||
Burlington, Community Development Authority, Lease Revenue, Refunding, RB | 200,000 | 204,672 | ||||||||
4.10%, 04/01/17 | 750,000 | 766,695 | ||||||||
Cudahy, Community Development Authority, Redevelopment Lease Revenue, Refunding, RB | 500,000 | 503,325 | ||||||||
4.25%, 06/01/17 | 500,000 | 525,680 | ||||||||
Series A, 1.50%, 06/01/18 | 400,000 | 401,176 | ||||||||
Series A, 1.75%, 06/01/19 | 300,000 | 298,536 | ||||||||
Series A, 1.95%, 06/01/19 | 145,000 | 145,764 | ||||||||
Series A, 2.20%, 06/01/20 | 250,000 | 250,518 | ||||||||
Series A, 2.40%, 06/01/21 | 360,000 | 358,484 | ||||||||
Series A, 2.60%, 06/01/22 | 245,000 | 243,618 | ||||||||
Glendale, Community Development Authority, Lease Revenue, Bayshore Public Parking Facility, RB, | 1,500,000 | 1,512,090 | ||||||||
Glendale, Community Development Authority, Lease Revenue, Bayshore, Refunding, RB, | 1,000,000 | 1,018,640 | ||||||||
Glendale, Community Development Authority, Lease Revenue, Tax Increment District No.6, Refunding, RB, Series A, 4.00%, 10/01/15 | 150,000 | 156,169 | ||||||||
Glendale, Community Development Authority, Lease Revenue, Tax Increment District No.7, Refunding, RB Series B, 3.85%, 09/01/20 | 2,250,000 | 2,401,717 | ||||||||
2.60%, 09/01/21 | 3,250,000 | 3,278,762 | ||||||||
2.75%, 09/01/22 | 2,750,000 | 2,768,123 | ||||||||
Green Bay, Redevelopment Authority, Development Revenue, Bellin Memorial Hospital, RB | 1,000,000 | 1,085,000 | ||||||||
6.15%, 12/01/32 | 1,000,000 | 1,088,100 | ||||||||
Green Bay, Redevelopment Authority, Lease Revenue, Convention Center Project, Refunding, Special Tax Revenue | 1,000,000 | 1,027,830 | ||||||||
4.30%, 06/01/29 | 1,000,000 | 1,021,980 | ||||||||
76
Statement of Investments (Continued)
July 31, 2014
Nationwide Ziegler Wisconsin Tax Exempt Fund (Continued)
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
|
|
| ||||||||
Wisconsin (continued) |
| |||||||||
Johnson Creek, Community Development Authority, Lease Revenue, Tax Increment District No. 3, Refunding, RB | $ | 350,000 | $ | 314,524 | ||||||
2.80%, 12/01/25 | 200,000 | 179,446 | ||||||||
2.90%, 12/01/26 | 200,000 | 178,324 | ||||||||
Madison, Community Development Authority Revenue, Alumni Research Foundation Project, RB 5.00%, 10/01/14 | 225,000 | 226,800 | ||||||||
5.00%, 10/01/22 | 1,065,000 | 1,246,114 | ||||||||
5.00%, 10/01/27 | 925,000 | 1,073,324 | ||||||||
5.00%, 10/01/28 | 250,000 | 289,295 | ||||||||
5.00%, 10/01/34 | 4,500,000 | 5,145,165 | ||||||||
Milwaukee, Redevelopment Authority Revenue, Milwaukee Public Schools, Refunding, RB | 1,000,000 | 1,119,390 | ||||||||
Series A, 5.00%, 08/01/18 | 1,000,000 | 1,143,260 | ||||||||
Milwaukee, Redevelopment Authority Revenue, Milwaukee School of Engineering, Refunding, RB, AGM Insured | 1,080,000 | 1,114,625 | ||||||||
3.00%, 04/01/22 | 375,000 | 388,012 | ||||||||
3.20%, 04/01/23 | 1,000,000 | 1,031,370 | ||||||||
3.75%, 04/01/28 | 950,000 | 963,899 | ||||||||
4.10%, 04/01/32 | 2,500,000 | 2,579,950 | ||||||||
Milwaukee, Redevelopment Authority Revenue, Summerfest Project, RB 4.50%, 08/01/23 | 110,000 | 119,181 | ||||||||
4.70%, 08/01/25 | 110,000 | 118,973 | ||||||||
5.00%, 08/01/30 | 2,000,000 | 2,157,460 | ||||||||
Milwaukee, Redevelopment Authority, Lease Revenue, Milwaukee Public Schools, Congress, RB, | 500,000 | 511,020 | ||||||||
Monroe, Redevelopment Authority, Development Revenue, MonroeClinic Inc., RB, | 2,850,000 | 3,077,116 | ||||||||
Neenah, Community Development Authority, Lease Revenue, District No.8 Riverwalk Zone, Prerefunded Balance, RB | 1,000,000 | 1,013,770 | ||||||||
Series A, 5.13%, 12/01/23 | 1,000,000 | 1,016,520 | ||||||||
Series A, 4.70%, 12/01/28 | 1,250,000 | 1,268,875 | ||||||||
Neenah, Community Development Authority, Lease Revenue, RB, Series A, 4.75%, 12/01/32 | 400,000 | 425,268 | ||||||||
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
|
|
| ||||||||
Wisconsin (continued) |
| |||||||||
Neenah, Community Development Authority, Lease Revenue, Refunding, RB | $ | 500,000 | $ | 544,920 | ||||||
4.10%, 12/01/27 | 1,000,000 | 1,093,720 | ||||||||
4.20%, 12/01/28 | 500,000 | 547,060 | ||||||||
Osceola, Redevelopment Authority, Lease Revenue, Refunding, RB | 200,000 | 200,604 | ||||||||
Series A, 1.90%, 12/01/15 | 175,000 | 177,289 | ||||||||
Platteville, Redevelopment Authority, Real Estate Foundation Project, RB, Series A, 5.00%, 07/01/42 | 1,000,000 | 1,020,930 | ||||||||
Southeast Wisconsin Professional Baseball Park District, ETM, COP, National-RE Insured | 970,000 | 967,255 | ||||||||
0.00%, 12/15/17 | 1,000,000 | 973,450 | ||||||||
Southeast Wisconsin Professional Baseball Park District, Sales Tax Revenue, Refunding, ETM, RB, National-RE Insured | 250,000 | 296,127 | ||||||||
Series A, 5.50%, 12/15/19 | 2,200,000 | 2,650,186 | ||||||||
Series A, 5.50%, 12/15/20 | 1,000,000 | 1,223,790 | ||||||||
Series A, 5.50%, 12/15/21 | 1,500,000 | 1,856,760 | ||||||||
Southeast Wisconsin Professional Baseball Park District, Sales Tax Revenue, Refunding, RB, National-RE Insured | 1,025,000 | 1,255,010 | ||||||||
Series A, 5.50%, 12/15/26 | 4,510,000 | 5,485,784 | ||||||||
Sun Prairie, Community Development Authority, Lease Revenue, Tax Incremental District No. 8, Prerefunded, RB | 975,000 | 1,014,731 | ||||||||
4.35%, 08/01/22 | 975,000 | 1,015,219 | ||||||||
Sun Prairie, Community Development Authority, Tax Incremental District No. 8, Refunding, RB | 1,025,000 | 1,005,873 | ||||||||
Series A, 2.05%, 08/01/22 | 750,000 | 736,155 | ||||||||
Series A, 2.25%, 08/01/23 | 500,000 | 489,820 | ||||||||
Series A, 2.40%, 08/01/24 | 250,000 | 245,610 | ||||||||
Waukesha, Redevelopment Authority, Weldall Manufacturing Inc. Project, RB 4.20%, 12/01/24 | 150,000 | 162,104 | ||||||||
4.50%, 12/01/30 | 1,200,000 | 1,265,760 | ||||||||
West Bend, Redevelopment Authority, Lease Revenue, Prerefunded Balance, RB | 250,000 | 262,505 | ||||||||
77
Statement of Investments (Continued)
July 31, 2014
Nationwide Ziegler Wisconsin Tax Exempt Fund (Continued)
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
|
|
| ||||||||
Wisconsin (continued) |
| |||||||||
4.55%, 10/01/24 | $ | 250,000 | $ | 262,650 | ||||||
4.60%, 10/01/25 | 150,000 | 157,677 | ||||||||
4.65%, 10/01/28 | 250,000 | 262,943 | ||||||||
Weston, Community Development Authority, Lease Revenue, RB | 500,000 | 502,935 | ||||||||
Series A, 4.25%, 10/01/17 | 200,000 | 201,122 | ||||||||
Series A, 4.35%, 10/01/18 | 500,000 | 500,985 | ||||||||
Series A, 4.40%, 10/01/18 | 500,000 | 502,640 | ||||||||
Series A, 4.45%, 10/01/19 | 500,000 | 500,870 | ||||||||
Series A, 5.25%, 10/01/20 | 445,000 | 447,514 | ||||||||
Series A, 4.50%, 10/01/21 | 100,000 | 104,936 | ||||||||
Series A, 4.70%, 10/01/21 | 1,230,000 | 1,235,215 | ||||||||
Series B, 4.75%, 10/01/22 | 130,000 | 130,510 | ||||||||
Series B, 4.75%, 10/01/23 | 140,000 | 140,504 | ||||||||
Series A, 4.63%, 10/01/25 | 825,000 | 855,756 | ||||||||
Wisconsin Center District, Junior Dedicated Tax Revenue, Refunding, RB Series A, 5.00%, 12/15/29 | 750,000 | 829,283 | ||||||||
Series A, 5.00%, 12/15/32 | 1,000,000 | 1,094,330 | ||||||||
Wisconsin Center District, Junior Dedicated Tax Revenue, Refunding, RB, AGM Insured, | 2,585,000 | 3,027,552 | ||||||||
Wisconsin Center District, Senior Dedicated Tax Revenue, RB, National- RE Insured, | 2,500,000 | 1,606,425 | ||||||||
Wisconsin Dells, Community Development Authority, Lease Revenue, Prerefunded Balance, RB 5.00%, 03/01/22 | 1,500,000 | 1,609,950 | ||||||||
4.60%, 03/01/25 | 1,200,000 | 1,231,056 | ||||||||
Wisconsin Dells, Community Development Authority, Lease Revenue, RB | 225,000 | 231,671 | ||||||||
Series A, 4.45%, 03/01/25 | 300,000 | 307,227 | ||||||||
Wisconsin Health and Educational Facilities Authority, Rogers Memorial Hospital Inc., RB, | 3,000,000 | 2,995,500 | ||||||||
Wisconsin Housing & Economic Development Authority, Home Ownership Revenue, Prerefunded Balance, RB, | 680,000 | 766,020 | ||||||||
Wisconsin Housing & Economic Development Authority, Home Ownership Revenue, Prerefunded Balance, RB, National-RE Insured, 6.10%, 06/01/21 | 670,000 | 754,755 | ||||||||
| Municipal Bonds (continued) | ||||||||||
| Principal Amount | Market Value | |||||||||
|
|
| ||||||||
Wisconsin (continued) |
| |||||||||
Wisconsin Housing & Economic Development Authority, Housing Revenue, RB | $ | 275,000 | $ | 277,802 | ||||||
Series B, 4.30%, 05/01/27 | 1,000,000 | 1,016,240 | ||||||||
Series E, 4.90%, 11/01/35 | 1,650,000 | 1,662,227 | ||||||||
Series B, 4.40%, 05/01/37 | 500,000 | 504,245 | ||||||||
Wisconsin Housing & Economic Development Authority, Housing Revenue, Refunding, RB | 465,000 | 516,318 | ||||||||
Series A, 4.88%, 11/01/25 | 2,225,000 | 2,397,771 | ||||||||
Series A, 5.38%, 11/01/30 | 2,135,000 | 2,250,674 | ||||||||
Wisconsin Housing & Economic Development Authority, Multifamily Housing, RB | 150,000 | 152,520 | ||||||||
Series B, 2.40%, 04/01/20 | 100,000 | 102,568 | ||||||||
Series B, 2.80%, 04/01/21 | 150,000 | 154,989 | ||||||||
Series B, 3.10%, 04/01/22 | 100,000 | 103,951 | ||||||||
Series B, 3.45%, 04/01/24 | 100,000 | 105,454 | ||||||||
Series B, 3.80%, 04/01/26 | 285,000 | 300,080 | ||||||||
Series B, 4.30%, 04/01/30 | 115,000 | 121,910 | ||||||||
Series A, 4.25%, 12/01/35 | 1,500,000 | 1,561,980 | ||||||||
|
| |||||||||
| 103,901,698 | ||||||||||
|
| |||||||||
Total Municipal Bonds |
| 118,239,137 | ||||||||
|
| |||||||||
| Mutual Fund 3.5% | ||||||||||
| Shares | ||||||||||
| ||||||||||
Money Market Fund 3.5% |
| |||||||||
Invesco Tax Free Cash Reserve Portfolio — Institutional | 4,263,679 | 4,263,679 | ||||||||
|
| |||||||||
Total Mutual Fund |
| 4,263,679 | ||||||||
|
| |||||||||
Total Investments |
| 122,502,816 | ||||||||
Other assets in excess of |
| 243,547 | ||||||||
|
| |||||||||
NET ASSETS — 100.0% |
| $ | 122,746,363 | |||||||
|
| |||||||||
| (a) | Represents 7-day effective yield as of July 31, 2014. |
| (b) | See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities. |
78
Statement of Investments (Continued)
July 31, 2014
Nationwide Ziegler Wisconsin Tax Exempt Fund (Continued)
| (c) | The following entity has either issued, guaranteed, backed or otherwise enhanced the credit quality of more than 5% of the securities held in the portfolio. In instances where the entity has guaranteed, backed or otherwise enhanced the credit quality of a security, it is not primarily responsible for the issuer’s obligations but may be called upon to satisfy the issuer’s obligations. At July 31, 2014, the percentage attributed to Assured Guaranty Municipal Corporation was 10.53%. |
| AGM | Assured Guaranty Municipal Corporation |
| COP | Certificates of Participation |
| ETM | Escrowed to Maturity |
| GO | General Obligation |
| RB | Revenue Bond |
| RE | Reinsured |
| XLCA | XL Capital Assurance |
The accompanying notes are an integral part of these financial statements.
79
Statement of Assets and Liabilities
July 31, 2014
| Nationwide Ziegler Wisconsin Tax Exempt Fund | ||||||
Assets: | ||||||
Investments, at value (cost $120,052,245) | $ | 122,502,816 | ||||
Interest and dividends receivable | 1,450,051 | |||||
Receivable for investments sold | 2,102,309 | |||||
Receivable for capital shares issued | 73 | |||||
Prepaid expenses | 2,813 | |||||
|
| |||||
Total Assets | 126,058,062 | |||||
|
| |||||
Liabilities: | ||||||
Payable for investments purchased | 3,000,000 | |||||
Distributions payable | 35,605 | |||||
Payable for capital shares redeemed | 123,296 | |||||
Accrued expenses and other payables: | ||||||
Investment advisory fees | 44,496 | |||||
Fund administration fees | 10,591 | |||||
Distribution fees | 31,447 | |||||
Administrative servicing fees | 14,941 | |||||
Accounting and transfer agent fees | 6,865 | |||||
Trustee fees | 510 | |||||
Custodian fees | 582 | |||||
Compliance program costs (Note 3) | 1,174 | |||||
Professional fees | 31,339 | |||||
Printing fees | 7,250 | |||||
Other | 3,603 | |||||
|
| |||||
Total Liabilities | 3,311,699 | |||||
|
| |||||
Net Assets | $ | 122,746,363 | ||||
|
| |||||
Represented by: | ||||||
Capital | $ | 125,299,981 | ||||
Accumulated undistributed net investment income | 14,362 | |||||
Accumulated net realized losses from investments | (5,018,551 | ) | ||||
Net unrealized appreciation/(depreciation) from investments | 2,450,571 | |||||
|
| |||||
Net Assets | $ | 122,746,363 | ||||
|
| |||||
Net Assets: | ||||||
Class A Shares | $ | 109,711,271 | ||||
Class C Shares | 12,554,401 | |||||
Institutional Service Class Shares | 470,359 | |||||
Institutional Class Shares | 10,332 | |||||
|
| |||||
Total | $ | 122,746,363 | ||||
|
| |||||
Shares Outstanding (unlimited number of shares authorized): | ||||||
Class A Shares | 10,862,053 | |||||
Class C Shares | 1,244,611 | |||||
Institutional Service Class Shares | 46,571 | |||||
Institutional Class Shares | 1,023 | |||||
|
| |||||
Total | 12,154,258 | |||||
|
| |||||
80
Statement of Assets and Liabilities (Continued)
July 31, 2014
| Nationwide Ziegler Wisconsin Tax Exempt Fund | ||||||
Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively): | ||||||
Class A Shares (a) | $ | 10.10 | ||||
Class C Shares (b) | $ | 10.09 | ||||
Institutional Service Class Shares | $ | 10.10 | ||||
Institutional Class Shares | $ | 10.10 | ||||
Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent): | ||||||
Class A Shares | $ | 10.33 | ||||
|
| |||||
Maximum Sales Charge: | ||||||
Class A Shares | 2.25 | % | ||||
|
| |||||
| (a) | For Class A Shares, the redemption price per share is reduced by 0.50% on sales of shares of original purchases of $250,000 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.
81
Statement of Operations
For the Year Ended July 31, 2014
| Nationwide Ziegler Wisconsin Tax Exempt Fund | ||||||
INVESTMENT INCOME: | ||||||
Interest income | $ | 5,197,950 | ||||
Dividend income | 1,428 | |||||
|
| |||||
Total Income | 5,199,378 | |||||
|
| |||||
EXPENSES: | ||||||
Investment advisory fees | 661,898 | |||||
Fund administration fees | 155,297 | |||||
Distribution fees Class A | 293,988 | |||||
Distribution fees Class B (a) | 393 | |||||
Distribution fees Class C | 106,293 | |||||
Administrative servicing fees Class A | 85,292 | |||||
Administrative servicing fees Class B (a) | 131 | |||||
Administrative servicing fees Class C | 2,141 | |||||
Administrative servicing fees Institutional Service Class (b) | 515 | |||||
Registration and filing fees | 20,165 | |||||
Professional fees | 46,206 | |||||
Printing fees | 23,049 | |||||
Trustee fees | 3,068 | |||||
Custodian fees | 5,222 | |||||
Accounting and transfer agent fees | 30,147 | |||||
Compliance program costs (Note 3) | 1,611 | |||||
Other | 21,348 | |||||
|
| |||||
Total expenses before earnings credit, fees waived, and expenses reimbursed | 1,456,764 | |||||
|
| |||||
Earnings credit (Note 4) | (236 | ) | ||||
Administrative servicing fees voluntarily waived – Class A (Note 3) | (32,166 | ) | ||||
Administrative servicing fees voluntarily waived – Institutional Service Class (Note 3) (b) | (185 | ) | ||||
Expenses reimbursed by adviser (Note 3) | (170,502 | ) | ||||
|
| |||||
Net Expenses | 1,253,675 | |||||
|
| |||||
NET INVESTMENT INCOME | 3,945,703 | |||||
|
| |||||
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS: | ||||||
Net realized losses from investment transactions | (4,759,889 | ) | ||||
Net change in unrealized appreciation/(depreciation) from investments | 1,844,901 | |||||
|
| |||||
Net realized/unrealized losses from investments | (2,914,988 | ) | ||||
|
| |||||
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 1,030,715 | ||||
|
| |||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
The accompanying notes are an integral part of these financial statements.
82
Statements of Changes in Net Assets
| Nationwide Ziegler Wisconsin Tax Exempt Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
Operations: | ||||||||||||
Net investment income | $ | 3,945,703 | $ | 4,558,938 | ||||||||
Net realized gains/(losses) from investments | (4,759,889 | ) | 119,834 | |||||||||
Net change in unrealized appreciation/(depreciation) from investments | 1,844,901 | (9,152,540 | ) | |||||||||
|
|
|
| |||||||||
Change in net assets resulting from operations | 1,030,715 | (4,473,768 | ) | |||||||||
|
|
|
| |||||||||
Distributions to Shareholders From: | ||||||||||||
Net investment income: | ||||||||||||
Class A | (3,547,872 | ) | (4,059,716 | ) | ||||||||
Class B (a) | (701 | ) | (18,645 | ) | ||||||||
Class C | (364,785 | ) | (459,370 | ) | ||||||||
Institutional Service Class (b) | (17,644 | ) | (35,247 | ) | ||||||||
Institutional Class | (299 | )(c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from shareholder distributions | (3,931,301 | ) | (4,572,978 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | (26,358,317 | ) | (4,957,196 | ) | ||||||||
|
|
|
| |||||||||
Change in net assets | (29,258,903 | ) | (14,003,942 | ) | ||||||||
|
|
|
| |||||||||
Net Assets: | ||||||||||||
Beginning of year | 152,005,266 | 166,009,208 | ||||||||||
|
|
|
| |||||||||
End of year | $ | 122,746,363 | $ | 152,005,266 | ||||||||
|
|
|
| |||||||||
Accumulated undistributed net investment income at end of year | $ | 14,362 | $ | – | ||||||||
|
|
|
| |||||||||
CAPITAL TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Proceeds from shares issued | $ | 2,131,046 | $ | 11,633,693 | ||||||||
Proceeds from shares issued from class conversion | 332,070 | – | ||||||||||
Dividends reinvested | 2,876,602 | 3,074,159 | ||||||||||
Cost of shares redeemed | (26,060,405 | ) | (20,534,726 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (20,720,687 | ) | (5,826,874 | ) | ||||||||
|
|
|
| |||||||||
Class B Shares (Note 10) (a) | ||||||||||||
Proceeds from shares issued | – | 8,299 | ||||||||||
Dividends reinvested | 602 | 7,893 | ||||||||||
Cost of shares redeemed in class conversion | (332,070 | ) | – | |||||||||
Cost of shares redeemed | (164,770 | ) | (523,647 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (496,238 | ) | (507,455 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Proceeds from shares issued | 353,590 | 4,810,457 | ||||||||||
Dividends reinvested | 309,049 | 368,866 | ||||||||||
Cost of shares redeemed | (5,366,869 | ) | (4,087,279 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (4,704,230 | ) | 1,092,044 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 10) (b) | ||||||||||||
Proceeds from shares issued | 230,984 | 1,193,688 | ||||||||||
Dividends reinvested | 13,222 | 26,519 | ||||||||||
Cost of shares redeemed | (691,685 | ) | (935,118 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (447,479 | ) | 285,089 | |||||||||
|
|
|
| |||||||||
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
83
Statements of Changes in Net Assets (Continued)
| Nationwide Ziegler Wisconsin Tax Exempt Fund | ||||||||||||
| Year Ended July 31, 2014 | Year Ended July 31, 2013 | |||||||||||
CAPITAL TRANSACTIONS: (continued) | ||||||||||||
Institutional Class Shares | ||||||||||||
Proceeds from shares issued | $ | 14,119 | (c) | $ | – | |||||||
Dividends reinvested | 292 | (c) | – | |||||||||
Cost of shares redeemed | (4,094 | )(c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 10,317 | (c) | – | |||||||||
|
|
|
| |||||||||
Change in net assets from capital transactions | $ | (26,358,317 | ) | $ | (4,957,196 | ) | ||||||
|
|
|
| |||||||||
SHARE TRANSACTIONS: | ||||||||||||
Class A Shares (Note 10) | ||||||||||||
Issued | 211,499 | 1,075,462 | ||||||||||
Issued in class conversion | 33,262 | – | ||||||||||
Reinvested | 284,348 | 286,146 | ||||||||||
Redeemed | (2,580,977 | ) | (1,920,307 | ) | ||||||||
|
|
|
| |||||||||
Total Class A Shares | (2,051,868 | ) | (558,699 | ) | ||||||||
|
|
|
| |||||||||
Class B Shares (Note 10) (a) | ||||||||||||
Issued | – | 772 | ||||||||||
Reinvested | 59 | 735 | ||||||||||
Redeemed in class conversion | (33,303 | ) | – | |||||||||
Redeemed | (16,248 | ) | (49,457 | ) | ||||||||
|
|
|
| |||||||||
Total Class B Shares | (49,492 | ) | (47,950 | ) | ||||||||
|
|
|
| |||||||||
Class C Shares (Note 10) | ||||||||||||
Issued | 35,074 | 445,674 | ||||||||||
Reinvested | 30,594 | 34,392 | ||||||||||
Redeemed | (533,181 | ) | (386,759 | ) | ||||||||
|
|
|
| |||||||||
Total Class C Shares | (467,513 | ) | 93,307 | |||||||||
|
|
|
| |||||||||
Institutional Service Class Shares (Note 10) (b) | ||||||||||||
Issued | 22,934 | 110,801 | ||||||||||
Reinvested | 1,307 | 2,468 | ||||||||||
Redeemed | (68,103 | ) | (87,654 | ) | ||||||||
|
|
|
| |||||||||
Total Institutional Service Class Shares | (43,862 | ) | 25,615 | |||||||||
|
|
|
| |||||||||
Institutional Class Shares | ||||||||||||
Issued | 1,404 | (c) | – | |||||||||
Reinvested | 29 | (c) | – | |||||||||
Redeemed | (410 | )(c) | – | |||||||||
|
|
|
| |||||||||
Total Institutional Class Shares | 1,023 | (c) | – | |||||||||
|
|
|
| |||||||||
Total change in shares | (2,611,712 | ) | (487,727 | ) | ||||||||
|
|
|
| |||||||||
Amounts designated as “–” are zero or have been rounded to zero.
| (a) | Effective September 16, 2013, Class B Shares converted into Class A Shares. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (c) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
84
Financial Highlights
Selected data for each share of capital outstanding throughout the periods indicated
Nationwide Ziegler Wisconsin Tax Exempt Fund
| Operations | Distributions | Ratios/Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period | Net Investment Income | Net Realized and Unrealized Gains (Losses) from Investments | Total from Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return (a)(b)(c) | Net Assets at End of Period | Ratio of Expenses to Average Net Assets (d) | Ratio of Net Investment Income to Average Net Assets (d) | Ratio of Expenses (Prior to Reimbursements) to Average Net Assets (d)(e) | Portfolio Turnover (f) | |||||||||||||||||||||||||||||||||||||||||||
| Class A Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.30 | 0.31 | (0.21 | ) | 0.10 | (0.30 | ) | – | (0.30 | ) | $ | 10.10 | 1.06% | $ | 109,711,271 | 0.90% | 3.03% | 1.05% | 8.61% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.88 | 0.30 | (0.58 | ) | (0.28 | ) | (0.30 | ) | – | (0.30 | ) | $ | 10.30 | (2.65% | ) | $ | 132,960,429 | 0.90% | 2.79% | 1.29% | 14.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.37 | 0.34 | 0.51 | 0.85 | (0.34 | ) | – | (0.34 | ) | $ | 10.88 | 8.30% | $ | 146,648,612 | 0.90% | 3.17% | 1.31% | 13.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 10.52 | 0.36 | (0.13 | ) | 0.23 | (0.37 | ) | (0.01 | ) | (0.38 | ) | $ | 10.37 | 2.28% | $ | 130,165,154 | 0.90% | 3.53% | 1.31% | 10.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 10.10 | 0.36 | 0.42 | 0.78 | (0.36 | ) | – | (0.36 | ) | $ | 10.52 | 7.95% | $ | 146,664,880 | 0.90% | 3.45% | 1.29% | 13.00% | |||||||||||||||||||||||||||||||||||||
| Class C Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.28 | 0.26 | (0.19 | ) | 0.07 | (0.26 | ) | – | (0.26 | ) | $ | 10.09 | 0.71% | $ | 12,554,401 | 1.35% | 2.58% | 1.50% | 8.61% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.87 | 0.25 | (0.59 | ) | (0.34 | ) | (0.25 | ) | – | (0.25 | ) | $ | 10.28 | (3.18% | ) | $ | 17,604,748 | 1.35% | 2.34% | 1.54% | 14.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.36 | 0.29 | 0.51 | 0.80 | (0.29 | ) | – | (0.29 | ) | $ | 10.87 | 7.82% | $ | 17,595,471 | 1.35% | 2.71% | 1.56% | 13.00% | |||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2011 (g) | $ | 10.51 | 0.32 | (0.14 | ) | 0.18 | (0.32 | ) | (0.01 | ) | (0.33 | ) | $ | 10.36 | 1.93% | $ | 10,831,411 | 1.35% | 3.08% | 1.56% | 10.00% | |||||||||||||||||||||||||||||||||||
Year Ended July 31, 2010 (g) | $ | 10.09 | 0.31 | 0.43 | 0.74 | (0.32 | ) | – | (0.32 | ) | $ | 10.51 | 7.37% | $ | 10,156,665 | 1.35% | 3.00% | 1.54% | 13.00% | |||||||||||||||||||||||||||||||||||||
| Institutional Service Class Shares (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2014 (g) | $ | 10.30 | 0.33 | (0.20 | ) | 0.13 | (0.33 | ) | – | (0.33 | ) | $ | 10.10 | 1.31% | $ | 470,359 | 0.65% | 3.28% | 0.83% | 8.61% | ||||||||||||||||||||||||||||||||||||
Year Ended July 31, 2013 (g) | $ | 10.88 | 0.33 | (0.58 | ) | (0.25 | ) | (0.33 | ) | – | (0.33 | ) | $ | 10.30 | (2.40% | ) | $ | 931,021 | 0.65% | 3.04% | 1.04% | 14.00% | ||||||||||||||||||||||||||||||||||
Year Ended July 31, 2012 (g) | $ | 10.37 | 0.36 | 0.52 | 0.88 | (0.37 | ) | – | (0.37 | ) | $ | 10.88 | 8.57% | $ | 705,422 | 0.65% | 3.42% | 1.06% | 13.00% | |||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2011 (g)(i) | $ | 10.52 | 0.38 | (0.12 | ) | 0.26 | (0.40 | ) | (0.01 | ) | (0.41 | ) | $ | 10.37 | 2.45% | $ | 281,684 | 0.65% | 3.78% | 1.06% | 10.00% | |||||||||||||||||||||||||||||||||||
| Institutional Class Shares | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Period Ended July 31, 2014 (g)(j) | $ | 10.06 | 0.29 | 0.04 | 0.33 | (0.29 | ) | – | (0.29 | ) | $ | 10.10 | 3.32% | $ | 10,332 | 0.60% | 3.34% | 0.71% | 8.61% | |||||||||||||||||||||||||||||||||||||
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) | Total returns prior to the Fund’s inception on September 16, 2013 are based on the performance of the Fund’s predecessor fund. |
| (d) | Annualized for periods less than one year. |
| (e) | 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. |
| (f) | Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares. |
| (g) | Per share calculations were performed using average shares method. |
| (h) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
| (i) | For the period from August 3, 2010 (commencement of operations) through July 31, 2011. |
| (j) | For the period from September 19, 2013 (commencement of operations) through July 31, 2014. Total return is calculated based on inception date of September 18, 2013 through July 31, 2014. |
The accompanying notes are an integral part of these financial statements.
85
July 31, 2014
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 July 31, 2014, the Trust operates fifty-six (56) 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 HighMark Bond Fund (“Bond”)
- Nationwide HighMark California Intermediate Tax Free Bond Fund (“California Intermediate Tax Free Bond”)
- Nationwide HighMark National Intermediate Tax Free Bond Fund (“National Intermediate Tax Free Bond”)
- Nationwide HighMark Short Term Bond Fund (“Short Term Bond”)
- Nationwide Ziegler Wisconsin Tax Exempt Fund (“Wisconsin Tax Exempt”)
Each Fund commenced operations on September 16, 2013 as a result of a tax free reorganization in which Bond, California Intermediate Tax Free Bond, National Intermediate Tax Free Bond, Short Term Bond, and Wisconsin Tax Exempt acquired all of the assets, subject to all liabilities and obligations, of the HighMark Bond Fund, HighMark California Intermediate Tax-Free Bond Fund, HighMark National Intermediate Tax-Free Bond Fund, HighMark Short Term Bond Fund, and HighMark Wisconsin Tax-Exempt Fund, respectively, each a former series of HighMark Funds (each a “Predecessor Fund,” and collectively the “Predecessor Funds”). Each Fund has adopted the historical performance of its corresponding Predecessor Fund. Each Fund and its corresponding Predecessor Fund have substantially similar investment goals and strategies.
Each of the Funds, except Wisconsin Tax Exempt, is a diversified fund, as defined in the 1940 Act. Wisconsin Tax Exempt 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 |
U.S. GAAP defines fair 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 to the Funds, Nationwide Fund Advisors (“NFA”), assigns a fair value, as defined by U.S. GAAP, 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.) |
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Notes to Financial Statements (Continued)
July 31, 2014
| — | Level 3 — Significant unobservable inputs (including a 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-based quotations are readily available are valued at the 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). 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.
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. Evaluations provided by independent pricing service providers may be determined without exclusive reliance on quoted prices and may use broker-dealer quotations, individual trading characteristics and other market data, reported trades or valuation estimates from their internal pricing models. The independent pricing service providers’ internal models use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates, anticipated timing of principal repayments, and quoted prices for similar assets and are generally categorized as Level 2 investments within the hierarchy. Debt obligations generally involve some risk of default with respect to interest and/or principal payments.
Municipal securities are fair valued as determined by an independent pricing service. The independent pricing service utilizes internal models and uses observable inputs such as: (i) yields or prices of municipal securities of comparable quality, coupon, maturity and type; (ii) indications as to values from dealers; and (iii) general market conditions. Municipal securities are categorized within Level 2 of the fair value hierarchy.
The Board of Trustees has delegated authority to NFA, and the Trust’s administrator, Nationwide Fund Management LLC (“NFM”), to assign a fair value under certain circumstances (e.g., pricing service does not provide a price as there may be no market-based quotations or price provided is deemed unreliable by NFA, NFM and/or designee), pursuant to valuation procedures approved by the Board of Trustees. NFA and NFM have established a Fair Valuation Committee (“FVC”) to assign these fair valuations.
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-based 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-based 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
87
Notes to Financial Statements (Continued)
July 31, 2014
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. That said, there can be no assurance that the fair value assigned to a security is the price at which a security could have been sold during the period in which the particular fair value was used to value the security. To the extent the inputs used are observable these securities are classified as Level 2 otherwise Level 3.
Bank loans are valued using an average bid price provided by an independent pricing service. Evaluated quotes provided by the independent pricing service may reflect appropriate factors such as ratings, tranche type, industry, company performance spread, individual trading characteristics, institution-size trading in similar groups of securities and other market data. The independent pricing service utilizes internal models and uses observable inputs such as issuer details, interest rates, yield curves, credit risk/spreads and quoted prices for similar assets. Securities valued in this manner are generally categorized as Level 2, consistent with similar valuation techniques and inputs described above for debt and equity securities.
At July 31, 2014, 100% of the market value of Bond and Short Term Bond were determined based on Level 2 inputs.
The following tables provide a summary of the inputs used to value the Funds’ net assets as of July 31, 2014. Please refer to the Statements of Investments for additional information on portfolio holdings.
California Intermediate Tax Free Bond
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Municipal Bonds | $ | — | $ | 183,751,424 | $ | — | $ | 183,751,424 | ||||||||
Mutual Fund | 2,568,639 | — | — | 2,568,639 | ||||||||||||
Total | $ | 2,568,639 | $ | 183,751,424 | $ | — | $ | 186,320,063 | ||||||||
National Intermediate Tax Free Bond
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Municipal Bonds | $ | — | $ | 69,879,172 | $ | — | $ | 69,879,172 | ||||||||
Mutual Fund | 84,157 | — | — | 84,157 | ||||||||||||
Total | $ | 84,157 | $ | 69,879,172 | $ | — | $ | 69,963,329 | ||||||||
Wisconsin Tax Exempt
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Municipal Bonds | $ | — | $ | 118,239,137 | $ | — | $ | 118,239,137 | ||||||||
Mutual Fund | 4,263,679 | — | — | 4,263,679 | ||||||||||||
Total | $ | 4,263,679 | $ | 118,239,137 | $ | — | $ | 122,502,816 | ||||||||
Amounts designated as “—”, which may include fair valued securities, are zero or have been rounded to zero.
During the year ended July 31, 2014, there were no transfers into or out of Level 1, Level 2 or Level 3.
| (b) | Securities Lending |
During the period from September 16, 2013 through July 31, 2014, Bond entered into securities lending transactions. To generate additional income, the Funds lent their portfolio securities, up to 33 1/3% of the total assets of each Fund, to brokers, dealers, and other financial institutions. The collateral that a Fund receives is
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Notes to Financial Statements (Continued)
July 31, 2014
included in calculating the Fund’s total assets. The Funds’ securities lending standards and guidelines require that the borrower (i) deliver cash or U.S. Government securities as collateral with respect to each new loan of U.S. securities, equal to at least 102% of the value of the portfolio securities loaned, and with respect to each new loan on non-U.S. securities, collateral of at least 105% of the value of the portfolio securities loaned; and (ii) at all times thereafter mark-to-market the collateral on a daily basis so that the market value of such collateral is at least 100% of the value of securities loaned. A Fund receives payments from the securities lending agent equivalent to the dividends and interest that would have been earned on the securities loaned while simultaneously seeking to earn income on the investment of cash collateral. Income from the securities lending program is recorded when received from the securities lending agent. There may be risks of delay or restrictions in recovery of the securities or disposal of collateral should the borrower of the securities fail financially. Loans are made, however, only to borrowers deemed by the securities lending agent to be of good standing and creditworthy. Loans are subject to termination by a Fund or the borrower at any time, and, therefore, are not considered to be illiquid investments. For the period from September 16, 2013 through March 31, 2014, JPMorgan Chase Bank, N.A. (“JPMorgan”) served as securities lending agent for the securities lending program of the Funds. JPMorgan received a fee based on a percentage of earnings derived from the investment of cash collateral. Effective April 1, 2014, Brown Brothers Harriman & Co. (“BBH”) began serving as the primary securities lending agent for the securities lending program of the Funds. BBH receives a fee based on the difference between the income earned on the investment of cash collateral received from borrowers and the cash collateral fee. Information on the investment of cash collateral is shown in the Statement of Investments.
For the period from September 16, 2013 through March 31, 2014, in the event of a default by a borrower with respect to any loan, JPMorgan exercised any and all remedies provided under the applicable borrower agreement to make a Fund whole. These remedies included purchasing replacement securities by applying the collateral held from the defaulting borrower against the purchase cost of the replacement securities. If, despite such efforts by JPMorgan to exercise these remedies, a Fund sustained losses as a result of a borrower’s default, JPMorgan indemnified the Fund by purchasing replacement securities at its expense, or would pay the Fund an amount equal to the market value of the replacement securities, subject to certain limitations which were set forth in detail in the Securities Lending Agency Agreement between the Funds and JPMorgan. Effective April 1, 2014, in the event of a default by a borrower with respect to any loan, BBH will exercise any and all remedies provided under the applicable borrower agreement to make a Fund whole. These remedies include purchasing replacement securities by applying the collateral held from the defaulting borrower against the purchase cost of the replacement securities. If, despite such efforts by BBH to exercise these remedies, the collateral is less than the purchase cost of the replacement securities, BBH is responsible for such shortfall, subject to certain limitations that are set forth in detail in the Securities Lending Agency Agreement between the Funds and BBH.
At July 31, 2014, the BBH Securities Lending Agreement does not permit the Funds to enforce a netting arrangement.
At July 31, 2014, Bond had no portfolio securities on loan.
Prior to September 16, 2013, the Predecessor Funds did not enter into any securities lending transactions.
| (c) | Repurchase Agreements |
For the period from September 16, 2013 through July 31, 2014, Bond, along with other series of the Trust, pursuant to procedures adopted by the Board of Trustees and applicable guidance from the Securities and Exchange Commission (“SEC”), transferred cash collateral received from securities lending transactions, through a joint account at the securities lending agent, the daily aggregate balance of which is invested in one or more repurchase agreements collateralized by U.S. Treasury or federal agency obligations. In a repurchase agreement, the seller of a security agrees to repurchase the security at a mutually agreed-upon time and price, which reflects the effective rate of return for the term of the agreement. For joint repurchase agreements, The Bank of New York Mellon, JPMorgan or BBH takes possession of the collateral pledged for investments in such repurchase agreements (“repo”
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Notes to Financial Statements (Continued)
July 31, 2014
or collectively “repos”). The underlying collateral is valued daily on a mark-to-market basis to ensure that the value is equal to or greater than the repurchase price including accrued interest. In the event of default of the obligation to repurchase, a Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by a Fund may be delayed or limited.
At July 31, 2014, Bond held no repurchase agreements.
| (d) | 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. Interest income is recognized on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts, and is recorded as such on a Fund’s Statement of Operations. Dividend income is recorded on the ex-dividend date and is recorded as such on a Fund’s Statement of Operations, except for certain dividends from foreign securities, which are recorded as soon as the Trust is informed on or after the ex-dividend date.
| (e) | Distributions to Shareholders |
Distributions from net investment income, if any, are declared daily and paid monthly. Prior to September 16, 2013, distributions from net investment income, if any, were declared and paid monthly. 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 July 31, 2014 are primarily attributable to paydown gains and losses and market discount on sales. These reclassifications have no effect upon the NAV of a 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.
Reclassifications for the year ended July 31, 2014 were as follows:
| Fund | Capital | Accumulated undistributed net investment income | Accumulated net realized gains/(losses) from investment transactions | |||||||||
Bond | $ | — | $ | 302,799 | $ | (302,799 | ) | |||||
California Intermediate Tax Free Bond | — | — | — | |||||||||
National Intermediate Tax Free Bond | — | — | — | |||||||||
Short Term Bond | — | 457,782 | (457,782 | ) | ||||||||
Wisconsin Tax Exempt | — | (40 | ) | 40 | ||||||||
Amounts designated as “—” are zero or have been rounded to zero.
| (f) | Deferred Compensation Plan |
On April 17, 2013, the Predecessor Funds terminated a deferred compensation plan that had previously been established for the benefit of certain members of the Predecessor Funds’ Board. Effective September 16, 2013, the Funds assumed the deferred compensation liability of their corresponding Predecessor Funds. At July 31, 2014, the Funds fully paid the deferred compensation to the Predecessor Funds’ Board and no liability remained for the Funds.
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Notes to Financial Statements (Continued)
July 31, 2014
| (g) | Federal Income Taxes |
Each Fund elected to be treated as, and intends to qualify each year as, a “Regulated Investment Company” 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. A 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). The Funds file U.S. federal income tax returns and, if applicable, returns in various foreign jurisdictions in which they invest. 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.
Each Fund engages 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 positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
| (h) | 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
Effective September 16, 2013 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. NFA provides investment management evaluation services in monitoring, on an ongoing basis, the performance of the subadvisers.
As of July 31, 2014, the subadvisers for each Fund are as follows:
| Fund | Subadviser | |
Bond | HighMark Capital Management, Inc. (“HighMark”) | |
California Intermediate Tax Free Bond | HighMark | |
National Intermediate Tax Free Bond | HighMark | |
Short Term Bond | HighMark | |
Wisconsin Tax Exempt | Ziegler Capital Management, LLC |
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Notes to Financial Statements (Continued)
July 31, 2014
Effective September 16, 2013, under the terms of the Investment Advisory Agreement, each Fund pays NFA an investment advisory fee based on that Fund’s average daily net assets. The Funds paid investment advisory fees to NFA according to the schedule below.
| Fund | Fee Schedule | Advisory Fee (annual rate) | ||||
Bond | Up to $250 million | 0.50 | % | |||
| $250 million up to $1 billion | 0.475 | % | ||||
| $1 billion up to $2 billion | 0.45 | % | ||||
| $2 billion up to $5 billion | 0.425 | % | ||||
| $5 billion and more | 0.40 | % | ||||
California Intermediate Tax Free Bond | All Assets | 0.50 | % | |||
National Intermediate Tax Free Bond | ||||||
Short Term Bond | Up to $500 million | 0.35 | % | |||
| $500 million up to $1 billion | 0.34 | % | ||||
| $1 billion up to $3 billion | 0.325 | % | ||||
| $3 billion up to $5 billion | 0.30 | % | ||||
| $5 billion up to $10 billion | 0.285 | % | ||||
| $10 billion and more | 0.275 | % | ||||
Wisconsin Tax Exempt | Up to $250 million | 0.50 | % | |||
| On $250 million and more | 0.40 | % | ||||
Prior to September 16, 2013, each Fund paid investment advisory fees to HighMark under a similar agreement based on that Fund’s average daily net assets. The Funds paid investment advisory fees to HighMark according to the schedule below.
| Fund | Fee Schedule | Advisory Fee (annual rate) | ||||
Bond | All Assets | 0.50 | % | |||
California Intermediate Tax Free Bond | ||||||
National Intermediate Tax Free Bond | ||||||
Short Term Bond | All Assets | 0.40 | % | |||
Wisconsin Tax Exempt | Up to $250 million | 0.50 | % | |||
| On $250 million and more | 0.40 | % | ||||
For the year ended July 31, 2014, the effective advisory fee rates were as follows:
| Fund | Effective Advisory Fee Rate | |||
Bond | 0.49 | % | ||
California Intermediate Tax Free Bond | 0.50 | |||
National Intermediate Tax Free Bond | 0.50 | |||
Short Term Bond | 0.35 | |||
Wisconsin Tax Exempt | 0.50 | |||
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Notes to Financial Statements (Continued)
July 31, 2014
For the period from September 16, 2013 through July 31, 2014, the effective advisory fee rates for fees paid to NFA were as follows:
| Fund | Effective Advisory Fee Rate | |||
Bond | 0.49 | % | ||
California Intermediate Tax Free Bond | 0.50 | |||
National Intermediate Tax Free Bond | 0.50 | |||
Short Term Bond | 0.35 | |||
Wisconsin Tax Exempt | 0.50 | |||
For the period from September 16, 2013 through July 31, 2014, the Funds paid investment management fees to NFA in the amounts listed below.
| Fund | Amount | |||
Bond | $ | 1,451,224 | ||
California Intermediate Tax Free Bond | 878,116 | |||
National Intermediate Tax Free Bond | 336,499 | |||
Short Term Bond | 681,072 | |||
Wisconsin Tax Exempt | 570,273 | |||
From these fees, pursuant to the subadvisory agreements, NFA pays fees to the unaffiliated subadvisers.
Prior to September 16, 2013, the Funds were managed by, and paid investment management fees to, HighMark. For the period from August 1, 2013 through September 15, 2013, the Funds paid investment management fees to HighMark in the amounts listed below.
| Fund | Amount | |||
Bond | $ | 219,453 | ||
California Intermediate Tax Free Bond | 140,860 | |||
National Intermediate Tax Free Bond | 53,990 | |||
Short Term Bond | 82,378 | |||
Wisconsin Tax Exempt | 91,625 | |||
Effective September 16, 2013, the Funds and NFA have entered into a written Expense Limitation Agreement that limits the Funds’ operating expenses (excluding acquired fund fees and expenses, and certain other expenses) from exceeding the following amounts until February 28, 2015:
| Fund | Class A | Class C | Institutional Service Class | Institutional Class | ||||||||||||
Bond | 0.97 | % | 1.40 | % | 0.72 | % | 0.65 | % | ||||||||
California Intermediate Tax Free Bond | 0.79 | 1.24 | 0.54 | 0.49 | ||||||||||||
National Intermediate Tax Free Bond | 0.77 | 1.22 | 0.52 | 0.47 | ||||||||||||
Short Term Bond(a) | 0.85 | 1.30 | 0.60 | 0.55 | ||||||||||||
Wisconsin Tax Exempt | 0.90 | 1.35 | 0.65 | 0.60 | ||||||||||||
| (a) | For the period September 16, 2013 through June 30, 2014. |
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Notes to Financial Statements (Continued)
July 31, 2014
Effective July 1, 2014, the Expense Limitation Agreement between Short Term Bond and NFA was restated and limits the Fund’s operating expenses (excluding acquired fund fees and expenses, and certain other expenses) from exceeding the following amounts until November 30, 2016.
| Fund | Class A | Class C | Institutional Service Class | Institutional Class | ||||||||||||
Short Term Bond | 0.76 | % | 1.20 | % | 0.51 | % | 0.45 | % | ||||||||
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 July 31, 2014, the cumulative potential reimbursements for the Funds, listed by the period in which NFA waived fees or reimbursed expenses to the Funds, are:
| Fund | Period Ended July 31, 2014 (a) | |||
Bond | $ | — | ||
California Intermediate Tax Free Bond | 235,685 | |||
National Intermediate Tax Free Bond | 212,031 | |||
Short Term Bond | 5,849 | |||
Wisconsin Tax Exempt | 126,293 | |||
| (a) | For the period from September 16, 2013 through July 31, 2014. |
Amount designated as “—” is zero or has been rounded to zero.
During the period from September 16, 2013 through July 31, 2014, no amounts were reimbursed to NFA pursuant to the Expense Limitation Agreement.
Prior to September 16, 2013, HighMark contractually agreed to reduce its fees (excluding portfolio brokerage and transaction costs, taxes relating to transacting in foreign securities, if any, extraordinary expenses and any expenses indirectly incurred by a Fund through investments in pooled investment vehicles), and to the extent necessary to reimburse the Funds in order to limit the Funds from exceeding certain expense limitations. For the period from August 1, 2013 through September 15, 2013, expenses reimbursed under the terms of that agreement were as follows:
| Fund | Amount | |||
Bond | $ | 55,593 | ||
California Intermediate Tax Free Bond | 84,194 | |||
National Intermediate Tax Free Bond | 43,916 | |||
Short Term Bond | 38,214 | |||
Wisconsin Tax Exempt | 44,209 | |||
Prior to September 16, 2013 the Funds were subject to a recoupment plan under HighMark (“Predecessor Plan”). Under the Predecessor Plan HighMark was able to recoup from the Fund any of the fees and expenses it waived until the end of the third fiscal year after the end of the fiscal year in which such waiver and/or reimbursement occurred, subject to certain limitations. For the period from August 1, 2013 through September 15, 2013, no amounts were reimbursed to HighMark. Effective September 16, 2013, the Predecessor Plan was terminated.
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Notes to Financial Statements (Continued)
July 31, 2014
Effective September 16, 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.
Effective September 16, 2013, 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 period from September 16, 2013 through July 31, 2014, NFM earned $611,875 in fees from the Funds under the Joint Fund Administration and Transfer Agency Agreement.
Prior to September 16, 2013, the Funds were a series of an investment trust that was a party to an Administration Agreement with HighMark (the “Administrator”) under which the Administrator provided administrative services to such investment trust for an annual fee of 0.15% of the first $8 billion of the average daily net assets of the Funds and 0.14% of such average daily net assets in excess of $8 billion allocated to each Fund based on its respective net assets. For the period from August 1, 2013 through September 15, 2013, the Administrator received fees from the Funds in the amounts listed below.
| Fund | Amount | |||
Bond | $ | 75,609 | ||
California Intermediate Tax Free Bond | 47,527 | |||
National Intermediate Tax Free Bond | 18,658 | |||
Short Term Bond | 37,765 | |||
Wisconsin Tax Exempt | 36,469 | |||
Effective September 16, 2013, 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.
Effective September 16, 2013, 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 period from September 16, 2013 through July 31, 2014, the Funds’ aggregate portion of such costs amounted to $931. For the period from August 1, 2013, through September 15, 2013, the Funds paid $8,085 to HighMark.
Effective September 16, 2013, 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
95
Notes to Financial Statements (Continued)
July 31, 2014
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 as follows:
| — | 0.25% of the average daily net assets of Class A shares of each Fund (distribution or service fee) |
| — | 0.75% of the average daily net assets of Class C shares of each Fund (0.75% of which may be a distribution fee and 0.25% service fee) |
Prior to September 16, 2013, HighMark Funds Distributors, LLC (the “Distributor”), a wholly owned subsidiary of Foreside Funds Distributors LLC, and the Funds were parties to an underwriting agreement. HighMark adopted 12b-1 Plans (the “Plans”) with respect to Class A, Class B, and Class C Shares that allowed each Fund to pay distribution and service fees to the Distributor as compensation for its services under the Plans. The Distributor received a distribution fee computed daily and paid monthly, at the annual rate of 0.25% of the daily net assets attributable to each Fund’s Class A Shares, 0.75% of the daily net assets attributable to each Fund’s Class B Shares and 0.75% of the daily net assets attributable to each Fund’s Class C Shares, which was used by the Distributor to provide compensation for sales support and distribution activities.
For the period from August 1, 2013 through September 15, 2013, the Funds paid distribution fees to the Distributor in the amounts listed below.
| Fund | Amount | |||
Bond | $ | 21,669 | ||
California Intermediate Tax Free Bond | 57,943 | |||
National Intermediate Tax Free Bond | 11,906 | |||
Short Term Bond | 38,979 | |||
Wisconsin Tax Exempt | 56,329 | |||
Effective September 16, 2013, 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. Effective September 16, 2013, the Funds’ Class A sales charges ranged from 0.00% to 2.25% based on the amount of the purchase. For the period from September 16, 2013 through July 31, 2014, the Funds imposed front-end sales charges of $65,485. For the period from August 1, 2013 through September 15, 2013, the Predecessor Funds imposed front-end sales charges of $13,808.
Effective September 16, 2013, NFD also receives fees in the form of contingent deferred sales charges (“CDSCs”) on Class A and Class C shares. Any CDSC is based on the original purchase price or the current market value of the shares being redeemed, whichever is less. A CDSC is imposed on Class A shares for certain redemptions, and Class C shares made within 1 year of purchase. Effective September 16, 2013, applicable Class A CDSCs were 0.50% for the Funds. Class C CDSCs were 1.00% for the Funds. For the period from September 16, 2013 through July 31, 2014, the Funds imposed CDSCs of $11,169. For the period from August 1, 2013 through September 15, 2013, the Predecessor Funds imposed CDSCs of $2,077.
A Fund may retain all or a portion of the sales charges.
Effective September 16, 2013, 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 and Institutional Service Class shares of each Fund. Effective March 1, 2014, Class C shares began charging administrative servicing fees. These fees are calculated at an annual rate of up to 0.25% of the average daily net assets of Class C shares of the Funds.
96
Notes to Financial Statements (Continued)
July 31, 2014
Prior to September 16, 2013, HighMark had similar administrative servicing plans permitting payment of compensation to service providers, which may have included HighMark or its affiliates that had agreed to provide certain shareholder support services for its customers who owned Fiduciary and Class A or Class B Shares. In consideration for such services, a service provider was entitled to receive compensation at the annual rate of up to 0.25% of the average daily net assets of the applicable class or classes of shares of the Funds. The service providers had agreed to waive a portion of their fees for certain classes of all Funds for the period from August 1, 2013 through September 15, 2013. The administrative servicing fee waivers by HighMark, or its affiliates, were voluntary and not subject to recoupment.
For the year ended July 31, 2014, the effective rates for administrative services fees, net of waivers, were as follows:
| Fund | Class A | Class B (a) | Class C | Institutional Service Class (b) | ||||||||||||
Bond | 0.06 | % | 0.25 | % | 0.02 | % | 0.10 | % | ||||||||
California Intermediate Tax Free Bond | 0.05 | N/A | 0.02 | 0.03 | ||||||||||||
National Intermediate Tax Free Bond | 0.05 | N/A | 0.01 | 0.04 | ||||||||||||
Short Term Bond | 0.05 | N/A | 0.02 | 0.03 | ||||||||||||
Wisconsin Tax Exempt | 0.05 | 0.25 | 0.02 | 0.06 | ||||||||||||
| (a) | For the period August 1, 2013 through September 15, 2013. |
| (b) | Effective September 16, 2013, Fiduciary Shares were renamed Institutional Service Class Shares. |
N/A — Not Applicable.
During the period from September 16, 2013 through July 31, 2014, the effective rates for administrative services fees that NFS earned were as follows:
| Fund | Class A | Class C | Institutional Service Class | |||||||||
Bond | 0.06 | % | 0.03 | % | 0.10 | % | ||||||
California Intermediate Tax Free Bond | 0.05 | 0.02 | 0.03 | |||||||||
National Intermediate Tax Free Bond | 0.05 | 0.01 | 0.03 | |||||||||
Short Term Bond | 0.06 | 0.02 | 0.03 | |||||||||
Wisconsin Tax Exempt | 0.04 | 0.02 | 0.06 | |||||||||
For the period from September 16, 2013 through July 31, 2014, NFS earned the following amounts in administrative services fees from each Fund:
| Fund | Amount | |||
Bond | $ | 280,414 | ||
California Intermediate Tax Free Bond | 55,575 | |||
National Intermediate Tax Free Bond | 24,569 | |||
Short Term Bond | 45,472 | |||
Wisconsin Tax Exempt | 47,510 | |||
For the period from August 1, 2013 through September 15, 2013, HighMark, or its affiliates earned the following amounts in administrative servicing fees, net of waivers, from each Fund:
| Fund | Amount | |||
Bond | $ | 29,483 | ||
California Intermediate Tax Free Bond | 11,780 | |||
National Intermediate Tax Free Bond | 4,962 | |||
Short Term Bond | 8,626 | |||
Wisconsin Tax Exempt | 8,218 | |||
97
Notes to Financial Statements (Continued)
July 31, 2014
As of July 31, 2014, NFA or its affiliates directly held the percentage indicated below of the shares outstanding of the applicable Fund.
| Fund | % of Shares Outstanding Owned | |||
Bond | — | |||
California Intermediate Tax Free Bond | 0.01 | % | ||
National Intermediate Tax Free Bond | 0.01 | |||
Short Term Bond | 63.89 | |||
Wisconsin Tax Exempt | 0.01 | |||
Amount designated as “—” is zero or has been rounded to zero.
4. Line of Credit and Earnings Credit
Effective July 17, 2014, the Funds have been added to the Trust and Nationwide Variable Insurance Trust (together, the “Trusts”) renewed credit agreement with JPMorgan, The Bank of New York Mellon, and Wells Fargo Bank National Association, permitting the Trusts, in the aggregate, to borrow up to $100,000,000. Advances taken by a 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. 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. In addition, a Fund may not draw on any portion of the line of credit that is provided by a bank that is an affiliate of the Fund’s subadviser, if applicable. The line of credit is renewed annually, and next expires on July 16, 2015. There were no borrowings under the line of credit during the year ended July 31, 2014.
JPMorgan provides earnings credits for cash balances maintained in the Funds’ custody accounts, which are used to offset custody fees of a Fund.
5. Investment Transactions
For the year ended July 31, 2014, purchases of and sales of securities (excluding short-term securities) were as follows:
| Fund | Purchases | Sales | ||||||
Bond | $ | 289,494,250 | $ | 192,428,638 | ||||
California Intermediate Tax Free Bond | 7,367,750 | 53,734,913 | ||||||
National Intermediate Tax Free Bond | 7,958,868 | 23,588,226 | ||||||
Short Term Bond | 313,566,183 | 110,128,578 | ||||||
Wisconsin Tax Exempt | 11,044,569 | 35,882,044 | ||||||
For the year ended July 31, 2014, purchases and sales of U.S. Government securities were as follows:
| Fund | Purchases | Sales | ||||||
Bond | $ | 77,805,311 | $ | 28,329,863 | ||||
Short Term Bond | 56,814,141 | 30,387,588 | ||||||
98
Notes to Financial Statements (Continued)
July 31, 2014
6. 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 Low Quality/High Yield Securities
Lower quality securities, while generally offering higher yields than investment grade securities with similar maturities, involve greater risks, including the possibility of default or bankruptcy. There is more risk associated with these investments because of reduced creditworthiness and increased risk of default. Lower-quality securities are considered to have extremely poor prospects of ever attaining any real investment standing, to have a current identifiable vulnerability to default or to be in default, to be unlikely to have the capacity to make required interest payments and repay principal when due in the event of adverse business, financial or economic conditions, or to be in default or not current in the payment of interest or principal. They are regarded as predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal.
Concentration of Credit Risk
As of the date of these financial statements, the California Intermediate Tax-Free Bond Fund invests in debt securities issued by the State of California and its political subdivisions. As of the date of these financial statements, the Wisconsin Tax- Exempt Fund invests in debt securities issued by the State of Wisconsin and its political subdivisions. The ability of the issuers of the securities held by these Funds to meet their obligations may be affected by economic and political developments in their respective states.
Other
The Trust invests through an omnibus account at the Funds’ custodian, JPMorgan, any un-invested cash on a daily basis into one of the following money market funds: Dreyfus Tax Exempt Cash Management, Institutional Shares, Goldman Sachs Tax Exempt California Fund, Institutional Shares or Invesco Tax Free Cash Reserve Portfolio, Institutional Shares. As with investments in any money market fund, the Trust’s investments in the aforementioned money market funds are neither guaranteed nor insured, and shares of these money market funds may decline in value, causing losses to the Trust.
7. 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.
99
Notes to Financial Statements (Continued)
July 31, 2014
8. Other
As of July 31, 2014, 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 | ||||||
Bond | 75.05 | % | 5 | |||||
California Intermediate Tax Free Bond | 64.91 | 4 | ||||||
National Intermediate Tax Free Bond | 64.50 | 3 | ||||||
Short Term Bond | 63.89 | 4 | (a) | |||||
Wisconsin Tax Exempt | 33.74 | 1 | ||||||
| (a) | Each such account is the account of an affiliated fund. |
9. New Accounting Pronouncements
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-11: Repurchase-to-Maturity Transactions, Repurchase Financing, and Disclosures (“ASU 2014-11”). The FASB issued ASU 2014-11 to improve the financial reporting of repurchase agreements and other similar transactions. ASU 2014-11 changes the accounting for repurchase-to-maturity transactions and repurchase financing arrangements and requires enhanced disclosures about repurchase agreements and other similar transactions. ASU 2014-11 will take effect for funds with fiscal years beginning after December 15, 2014. Management is currently evaluating the impact ASU 2014-11 will have on the Funds financial statement disclosures.
10. Reorganization
Each Fund commenced operation on September 16, 2013 as a result of a tax free reorganization in which Bond, California Intermediate Tax Free Bond, National Intermediate Tax Free Bond, Short Term Bond, and Wisconsin Tax Exempt acquired all of the assets, subject to all liabilities and obligations of the HighMark Bond Fund, HighMark California Intermediate Tax-Free Bond Fund, HighMark National Intermediate Tax-Free Bond Fund, HighMark Short Term Bond Fund, and HighMark Wisconsin Tax-Exempt Fund, respectively, each a former series of HighMark Funds (each a “Predecessor Fund,” and collectively the “Predecessor Funds”). Class A, Class B, Class C and Fiduciary shareholders of each Predecessor Fund received Class A, Class B, Class C and Institutional Service Class shares, respectively, of the corresponding Funds with an aggregate share net asset value equal to the aggregate share net asset value of their shares in the respective Predecessor Funds immediately prior to the reorganization. Each Fund’s reorganization was treated as a tax-free reorganization for federal income tax purposes and, accordingly, the basis of the assets of each Fund reflects the historical basis of the assets of the corresponding Predecessor Fund as of the date of the reorganization. For financial reporting purposes, each Predecessor Fund’s operating history prior to the reorganization is reflected in the corresponding Nationwide Fund’s financial statements and financial highlights.
The reorganization was accomplished by the following tax-free exchange in which each shareholder of the Predecessor Fund received the same aggregate share net asset value in the corresponding Fund as noted below:
| Fund/Class | Shares | Value | ||||||
Bond |
| |||||||
Class A | 2,306,938 | $ | 24,906,629 | |||||
Class B** | 7,234 | 77,781 | ||||||
Class C | 1,240,147 | 13,312,114 | ||||||
Institutional Service Class* | 26,544,533 | 291,849,172 | ||||||
100
Notes to Financial Statements (Continued)
July 31, 2014
| Fund/Class | Shares | Value | ||||||
California Intermediate Tax Free Bond |
| |||||||
Class A | 6,970,811 | $ | 70,555,059 | |||||
Class C | 3,490,146 | 35,188,004 | ||||||
Institutional Service Class* | 10,733,860 | 109,199,848 | ||||||
National Intermediate Tax Free Bond |
| |||||||
Class A | 1,509,371 | 16,969,709 | ||||||
Class C | 603,212 | 6,789,697 | ||||||
Institutional Service Class* | 5,420,075 | 60,983,970 | ||||||
Short Term Bond |
| |||||||
Class A | 4,322,803 | 43,089,271 | ||||||
Class C | 2,602,075 | 26,249,990 | ||||||
Institutional Service Class* | 8,932,889 | 89,162,736 | ||||||
Wisconsin Tax Exempt |
| |||||||
Class A | 12,406,596 | 123,860,012 | ||||||
Class B** | 33,303 | 332,069 | ||||||
Class C | 1,576,731 | 15,717,642 | ||||||
Institutional Service Class* | 63,797 | 636,889 | ||||||
| * | Effective September 16, 2013, Fiduciary shares were renamed Institutional Service Class Shares. |
| ** | Effective September 16, 2013, Class B Shares were converted into Class A Shares. See Statements of Changes in Net Assets for additional information. |
11. Federal Tax Information
The tax character of distributions paid during the year ended July 31, 2014 was as follows:
| Distributions paid from | ||||||||||||||||||||||||
| Fund | Ordinary Income* | Net Long-Term Capital Gains | Total Taxable Distributions | Total Tax- exempt Distributions | Return of Capital | Total Distributions Paid | ||||||||||||||||||
Bond | $ | 10,622,007 | $ | 6,980,205 | $ | 17,602,212 | $ | — | $ | — | $ | 17,602,212 | ||||||||||||
California Intermediate Tax Free Bond | 565 | 400,296 | 400,861 | 4,799,650 | — | 5,200,511 | ||||||||||||||||||
National Intermediate Tax Free Bond | 10,759 | 788,297 | 799,056 | 1,890,545 | — | 2,689,601 | ||||||||||||||||||
Short Term Bond | 2,382,058 | — | 2,382,058 | — | — | 2,382,058 | ||||||||||||||||||
Wisconsin Tax Exempt | — | — | — | 3,931,301 | — | 3,931,301 | ||||||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
| * | Ordinary Income amounts include taxable market discount and net short-term capital gains, if any. |
101
Notes to Financial Statements (Continued)
July 31, 2014
The tax character of distributions paid during the year ended July 31, 2013 was as follows:
| Distributions paid from | ||||||||||||||||||||||||
| Fund | Ordinary Income* | Net Long-Term Capital Gains | Total Taxable Distributions | Total Tax- exempt Distributions | Return of Capital | Total Distributions Paid | ||||||||||||||||||
Bond | $ | 13,540,134 | $ | 2,125,724 | $ | 15,665,858 | $ | — | $ | — | $ | 15,665,858 | ||||||||||||
California Intermediate Tax Free Bond | 529 | — | 529 | 6,002,281 | — | 6,002,810 | ||||||||||||||||||
National Intermediate Tax Free Bond | — | 363,888 | 363,888 | 2,495,995 | — | 2,859,883 | ||||||||||||||||||
Short Term Bond | 2,423,681 | — | 2,423,681 | — | — | 2,423,681 | ||||||||||||||||||
Wisconsin Tax Exempt | 6,126 | — | 6,126 | 4,566,852 | — | 4,572,978 | ||||||||||||||||||
Amounts designated as “—” are zero or have been rounded to zero.
| * | Ordinary Income amounts include taxable market discount and net short-term capital gains, if any. |
As of July 31, 2014, the components of accumulated earnings/(deficit) on a tax basis were as follows:
| Fund | Undistributed Ordinary Income | Undistributed Tax-exempt Income | Undistributed Long-Term Capital Gains | Accumulated Earnings | Distributions Payable* | Accumulated Capital and Other Losses | Unrealized Appreciation/ (Depreciation)** | Total Accumulated Earnings (Deficit) | ||||||||||||||||||||||||
Bond | $ | 840,362 | $ | — | $ | 3,371,925 | $ | 4,212,287 | $ | (802,324 | ) | $ | — | $ | 7,382,235 | $ | 10,792,198 | |||||||||||||||
California Intermediate Tax Free Bond | — | 383,304 | 1,309,085 | 1,692,389 | (373,410 | ) | — | 11,642,651 | 12,961,630 | |||||||||||||||||||||||
National Intermediate Tax Free Bond | 1,454 | 143,176 | 1,008,458 | 1,153,088 | (141,628 | ) | — | 3,959,282 | 4,970,742 | |||||||||||||||||||||||
Short Term Bond | 215,272 | — | — | 215,272 | (278,811 | ) | (333,740 | ) | 1,972 | (395,307 | ) | |||||||||||||||||||||
Wisconsin Tax Exempt | — | 315,220 | — | 315,220 | (301,005 | ) | (5,018,551 | ) | 2,450,718 | (2,553,618 | ) | |||||||||||||||||||||
Amounts designated as “—” are zero or have rounded to zero.
| * | Differences between financial statement distributions payable and tax-basis distributions payable are a result of accrual-based accounting and cash-basis accounting used for federal tax reporting purposes. |
| ** | 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 July 31, 2014, the tax cost of securities and the breakdown of unrealized appreciation/(depreciation) was as follows:
| Fund | Tax Cost of Securities | Unrealized Appreciation | Unrealized Depreciation | Net Unrealized Appreciation/ (Depreciation) | ||||||||||||
Bond | $ | 437,888,689 | $ | 12,170,584 | $ | (4,788,349 | ) | $ | 7,382,235 | |||||||
California Intermediate Tax Free Bond | 174,677,412 | 11,728,539 | (85,888 | ) | 11,642,651 | |||||||||||
National Intermediate Tax Free Bond | 66,004,047 | 4,041,500 | (82,218 | ) | 3,959,282 | |||||||||||
Short Term Bond | 389,189,743 | 1,392,368 | (1,390,396 | ) | 1,972 | |||||||||||
Wisconsin Tax Exempt | 120,052,098 | 5,157,402 | (2,706,684 | ) | 2,450,718 | |||||||||||
As of July 31, 2014, for federal income tax purposes, the Funds have 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. Any unlimited losses will be required to be utilized prior to the losses which have an expiration date.
102
Notes to Financial Statements (Continued)
July 31, 2014
The following table represents capital loss carryforwards with the year the amounts will expire if not utilized to offset future capital gains.
| Fund | Amount | Expires | ||||||
Short Term Bond | $ | 214,854 | 2018 | |||||
Short Term Bond | 67,812 | Unlimited | ||||||
Wisconsin Tax Exempt | 638,017 | Unlimited | ||||||
During the year ended July 31, 2014, the Funds had capital loss carryforwards that were utilized or expired, and are no longer eligible to offset future capital gains, if any, in the amounts listed below.
| Fund | Utilized | Expired | ||||||
California Intermediate Tax Free Bond | $ | 86,092 | $ | — | ||||
Amount designated as “—” is zero or has rounded to zero.
The Funds have elected to defer late-year losses in accordance with the Federal tax rules. These losses are treated as having arisen on the first day of the following fiscal year. For the year ended July 31, 2014, the Funds have elected to defer late year losses in the amounts listed below.
| Fund | Post-October Capital Loss | Late Year Ordinary Loss | ||||||
Short Term Bond | $ | 51,074 | — | |||||
Wisconsin Tax Exempt | 4,380,534 | — | ||||||
Amounts designated as “—” are zero or have rounded to zero.
12. Subsequent Events
Management has evaluated the impact of subsequent events on the Funds and has determined that there are no subsequent events requiring recognition or disclosure in the financial statements.
103
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 schedules 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 HighMark Bond Fund, Nationwide HighMark California Intermediate Tax Free Bond Fund, Nationwide HighMark National Intermediate Tax Free Bond Fund, Nationwide HighMark Short Term Bond Fund, and Nationwide Ziegler Wisconsin Tax Exempt Fund (five of the series of Nationwide Mutual Funds, formerly HighMark Bond Fund, HighMark California Intermediate Tax-Free Bond Fund, HighMark National Intermediate Tax-Free Bond Fund, HighMark Short Term Bond Fund, and HighMark Wisconsin Tax-Exempt Fund, hereafter referred to as the “Funds”) at July 31, 2014, the results of each of their operations, the changes in each of their net assets and the financial highlights for the year 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 July 31, 2014 by correspondence with the custodian, brokers and underlying funds’ transfer agent, provide a reasonable basis for our opinion. The statements of changes in net assets presented for the year ended July 31, 2013 and the financial highlights presented for the year ended July 31, 2013 or prior were audited by another independent registered public accounting firm whose report dated September 25, 2013 expressed an unqualified opinion on those statements and financial highlights.
/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
September 24, 2014
104
July 31, 2014 (Unaudited)
Other Federal Tax Information
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 | |||
Bond | $ | 6,980,205 | ||
California Intermediate Tax Free Bond | 400,296 | |||
National Intermediate Tax Free Bond | 788,297 | |||
For the year ended July 31, 2014, the Funds’ percentage of earned income which was tax exempt was as follows:
| Fund | % of Tax Exempt Income | |||
California Intermediate Tax Free Bond | 99 | % | ||
National Intermediate Tax Free Bond | 100 | |||
Wisconsin Tax Exempt | 100 | |||
105
July 31, 2014
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. | 119 | 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. | 119 | 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. | 119 | None | ||||||
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Management Information (Continued)
July 31, 2014
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. | 119 | 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). | 119 | 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. | 119 | 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. | 119 | 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. | 119 | None | ||||||
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Management Information (Continued)
July 31, 2014
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 | ||||||
Lydia Micheaux Marshall5 1949 | Trustee since June 2014 | Ms. Marshall has been President of LM Marshall, LLC (investment and business consulting company) since 2007. | 119 | Director of Nationwide Corporation since 2001, Nationwide Financial Services, Inc. since 1997, Nationwide Foundation since 2002, Nationwide Life Insurance Company since 2002, Nationwide Life and Annuity Insurance Company since 2002, Nationwide Mutual Fire Insurance Company since 2001, Nationwide Mutual Insurance Company since 2002, and Scottsdale Insurance Company since 2001 (all financial services and insurance companies). Chair and CEO of Versura, Inc. (data processing) since 1999. Director of Seagate Technology (hard disk drive and storage manufacturer) since 2004. Director of Public Welfare Foundation (non-profit foundation) since 2009. | ||||||
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Management Information (Continued)
July 31, 2014
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. | 119 | 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. |
| 5 | Ms. Marshall is considered an interested person of the Trust because she is a Director of the parent company of, and several affiliates of, the Trust’s investment adviser and distributor. |
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Management Information (Continued)
July 31, 2014
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 Chief Operating Officer since 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, Mr. Grugeon also served as the acting President and Chief Executive Officer of the Trust and of Nationwide Funds Group. From December 2006 until January 2008, Mr. Grugeon 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, Mr. Finelli 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. | ||
Jennifer Tiffany Grinstead 1976 | Chief Marketing Officer since March 2014 | Ms. Grinstead is Vice President of Nationwide Funds Marketing for NFS.3 From April 2012 through April 2014, Ms. Grinstead was Assistant Vice President, Life Marketing for NFS.3 From January 2009 through April 2012, Ms. Grinstead was Assistant Vice President, Retirement Plan Marketing for NFS.3 |
| 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.
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| Market Index Definitions |
Barclays 7-Year Municipal Bond Index: An unmanaged index that consists of a broad selection of investment-grade general obligation and revenue bonds with maturities of approximately seven years.
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. 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.
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.
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.
MSCI ACWI ex USA: 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 EAFE® Index: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of large-cap and mid-cap stocks in developed markets outside the United States and Canada.
NASDAQ-100 Index: An unmanaged index that includes 100 of the largest domestic and international nonfinancial securities listed on the Nasdaq Stock Market, based on market capitalization.
NYSE Arca Tech 100 Index®: An unmanaged, price-weighted index of at least 100 individual technology-related securities, consisting of stocks of companies from various industries that produce or deploy innovative technologies to conduct their business.
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 small-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.
111
| Market Index Definitions (con’t.) |
Russell 2000® Value Index: An unmanaged index that measures the performance of the small-capitalization value 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 Midcap® Growth Index: An unmanaged index that measures the performance of the mid-capitalization growth segment of the U.S. equity universe; includes those Russell Midcap® Index companies with higher price-to-book ratios and higher forecasted growth values.
Note about Russell Indexes
Russell Investment Group is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group.
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 North American Technology Sector IndexTM: An unmanaged, modified, market capitalization-weighted index that measures the performance of the technology sector of the U.S. equity market.
S&P SmallCap 600® Value Index: An unmanaged index comprising small-capitalization value stocks included in the S&P SmallCap 600® Index. Performance is measured based on the ratios of book value, earnings, and sales to price.
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| Glossary |
Definitions of some commonly used investment terms
Benchmark index: A broad-based securities index used as a comparison tool to measure the performance of a mutual fund.
Coefficient of correlation: A measure that determines the degree to which the movements of two variables are associated.
Derivative: A contract, security or investment with its value based on the performance of an underlying financial asset, index or economic measure.
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 and eventually return the principal at maturity.
Futures: Contracts that obligate the buyer to buy and the seller to sell a specified quantity of an underlying asset (or settle for cash the value of a contract based on the underlying asset) at a specified price on the contract’s maturity date.
Growth style: Investing in equity securities of companies that the Fund’s subadviser believes have above-average rates of earnings growth and which therefore may experience above-average increases in stock price.
High-yield bonds: Fixed-income securities that are rated below investment grade by nationally recognized statistical rating organizations. These bonds generally offer investors higher interest rates as a way to help compensate for the fact that the issuer is at greater risk of default.
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.
Preferred stock: A class of stock that often pays dividends at a specified rate and has preference over common stocks in dividend payments and liquidation of assets.
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.
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| Glossary (con’t.) |
Value style: Investing in equity securities that a fund’s manager believes are undervalued, i.e., their stock prices are less than the manager believes they are intrinsically worth, based on such factors as a company’s stock price relative to its book value, earnings and cash flow.
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.
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P.O. Box 701
Milwaukee, WI 53201-0701
nationwide.com/mutualfunds
Call 1-800-848-0920 to request a summary prospectus and/or a prospectus, or download prospectuses at nationwide.com/mutualfunds. These prospectuses outline investment objectives, risks, fees, charges and expenses, and other information that you should read and consider carefully before investing.
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.
Distributor
Nationwide Funds distributed by Nationwide Fund Distributors LLC (NFD), member FINRA, King of Prussia, Pa. NFD is not affiliated with any subadviser contracted by NFA, with the exception of Nationwide Asset Management, LLC (NWAM).
Nationwide, Nationwide Financial, the Nationwide framemark, Nationwide Funds, Nationwide Funds Group and On Your Side are service marks of Nationwide Mutual Insurance Company.
© 2014 Nationwide Funds Group. All rights reserved.
AR-HM-CFX 9/14
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 the registrant 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) | 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, the registrant must explain why the registrant does not have an audit committee financial expert. |
2
| 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 July 31, 2013, and July 31, 2014.
| 2013 | 2014 | |||||||
Audit Fees | N/A | $ | 414,500 | |||||
Audit-Related Fees | N/A | $ | 0 | |||||
Tax Fees | N/A | $ | 83,675 | |||||
All Other Fees | N/A | $ | 0 | |||||
Total | N/A | $ | 498,175 | |||||
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 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 July 31, 2013, and July 31, 2014.
| 2013 | 2014 | |||||||
Audit-Related Fees | N/A | $ | 34,000 | |||||
Tax Fees | N/A | $ | 25,000 | |||||
All Other Fees | N/A | $ | 0 | |||||
Total | N/A | $ | 59,000 | |||||
(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.
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(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.
At the close of business on September 16, 2013, the Nationwide HighMark Balanced Fund, Nationwide Bailard Cognitive Value Fund, Nationwide Bailard Technology & Science Fund, Nationwide Ziegler Equity Income Fund, Nationwide Geneva Mid Cap Growth Fund, Nationwide Geneva Small Cap Growth Fund, Nationwide Bailard International Equities Fund, Nationwide HighMark Large Cap Core Equity Fund, Nationwide HighMark Large Cap Growth Fund, Nationwide Ziegler NYSE Arca Tech 100 Index Fund, Nationwide HighMark Small Cap Core Fund, Nationwide HighMark Value Fund, Nationwide HighMark Bond Fund, Nationwide HighMark Short Term Bond Fund, Nationwide HighMark California Intermediate Tax Free Bond Fund, Nationwide HighMark National Intermediate Tax Free Bond Fund and Nationwide Ziegler Wisconsin Tax Exempt Fund (collectively, the “Nationwide HighMark Funds”) acquired the assets, subject to stated liabilities, of the HighMark Balanced Fund, HighMark Cognitive Value Fund, HighMark Enhanced Growth Fund, HighMark Equity Income Fund, HighMark Geneva Mid Cap Growth Fund, HighMark Geneva Small Cap Growth Fund, HighMark International Opportunities Fund, HighMark Large Cap Core Equity Fund, HighMark Large Cap Growth Fund, HighMark NYSE Arca Tech 100 Index Fund, HighMark Small Cap Core Fund, HighMark Value Fund, HighMark Bond Fund, HighMark Short Term Bond Fund, HighMark California Intermediate Tax-Free Bond Fund, HighMark National Intermediate Tax-Free Bond Fund and HighMark Wisconsin Tax-Exempt Fund (collectively, the “HighMark Funds”), respectively, through a reorganization transaction (the “Reorganization”).
Prior to the Reorganization, HighMark Capital Management, Inc. (“HighMark”), an indirect, wholly owned subsidiary of Mitsubishi UFJ Financial Group, Inc. (“Mitsubishi UFJ”), served as the investment adviser to the HighMark Funds. Mitsubishi UFJ, as such, was an affiliate of the HighMark Funds. For the period of August 1, 2013 to September 16, 2013, PwC provided services to Mitsubishi UFJ and its related entities (collectively “Mitsubishi”) that are inconsistent with the auditor independence rules provided in Rule 2-01 of Regulation S-X (“Rule 2-01”) if provided to an affiliate of an audit client. Some of those services included secondment of PwC staff to Mitsubishi, project management office services, payroll processing, and acting as a tax agent. The Audit Committee and PwC each considered the impact that these services have on PwC’s independence with respect to the Nationwide HighMark Funds. The Audit Committee considered that the Nationwide HighMark Funds’ records under audit are under the control of Nationwide HighMark Funds’ management, who are responsible for those records for the year and for the preparation of the financial statements being audited by PwC, and considered statements by management to the
4
effect that there was and will be no involvement of Mitsubishi in overseeing the preparation of financial statements of the Nationwide HighMark Funds that PwC is auditing and that an unaffiliated third party maintained the books and records of the HighMark Funds during the period in question. The Audit Committee further considered statements by PwC to the effect that the services provided by PwC to Mitsubishi were unrelated to the Highmark Funds and were performed by persons who will not be part of the PwC team that audits the Nationwide HighMark Funds. On the basis of the information provided by PwC, and in particular various mitigating factors such as the fact that PwC has maintained and will continue to maintain SEC level independence of the Nationwide Funds and their affiliates, the Audit Committee determined that the activities of PwC that cause it not to qualify as an independent accountant for the Nationwide HighMark Funds are not of such a nature or extent as to impair the ability of PwC to perform the proposed audits of the Nationwide HighMark Funds impartially and in accordance with applicable auditing standards. PwC has concluded that no reasonable reader of the financial statements of the Nationwide HighMark Funds would believe that PwC lacked objectivity to render the reports on those financial statements. Accordingly, and for the reasons enumerated above, PwC concludes that the services identified do not affect its ability to render an objective audit for the Nationwide HighMark Funds for the year ending July 31, 2014.
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 July 31, 2013, and July 31, 2014:
| 2013 | 2014 | |||||||
Audit-Related Fees | N/A | None | ||||||
Tax Fees | N/A | None | ||||||
All Other Fees | N/A | None | ||||||
Total | N/A | None | ||||||
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 July 31, 2013, and July 31, 2014:
| 2013 | 2014 | |||||||
Audit-Related Fees | N/A | N/A | ||||||
Tax Fees | N/A | N/A | ||||||
All Other Fees | N/A | N/A | ||||||
Total | N/A | N/A | ||||||
(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 July 31, 2014, 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.
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4(g) The aggregate fees billed by PwC for non-audit services rendered to the registrant and service affiliates for the fiscal-years ended July 31, 2013, and July 31, 2014, were $0 and $0, respectively.
(h) Disclose whether the registrant’s audit committee of the board of directors has considered whether the provision of non-audit 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 (17CFR § 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 CFR § 240.10A-3(d)) regarding an exemption from the listing standards for all audit committees. |
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 CFR § 210.12-12], unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form. |
This schedule is included as part of the report to shareholders filed under Item 1 of this Form N-CSR.
| (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; |
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| (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 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 thereunder) 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.
Item 8. Portfolio Managers of Closed-End Management Investment Company.
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 CFR § 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 CFR § 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,
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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, concerned 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 CFR § 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 CFR § 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR § 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 are adequately designed and are operating effectively to ensure that information required to be disclosed by 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 CFR § 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 second fiscal quarter of the period 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 CFR § 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 CFR § 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to ten (10) or more persons.
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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: | October 1, 2014 | |||
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.
| NATIONWIDE MUTUAL FUNDS | ||||
| By (Signature and Title) | /s/ Michael S. Spangler | |||
| Name: | Michael S. Spangler | |||
| Title: | Principal Executive Officer | |||
| Date: | October 1, 2014 | |||
| NATIONWIDE MUTUAL FUNDS | ||||
| By (Signature and Title) | /s/ Joseph A. Finelli | |||
| Name: | Joseph A. Finelli | |||
| Title: | Principal Financial Officer | |||
| Date: | October 1, 2014 | |||
| * | Print the name and title of each signing officer under his or her signature. |