N-CSR/A 1 d877975dncsra.htm NATIONWIDE MUTUAL FUNDS Nationwide Mutual Funds

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

 

FORM N-CSR/A

 

 

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act File number: 811-08495

 

 

NATIONWIDE MUTUAL FUNDS

(Exact name of registrant as specified in charter)

 

 

1000 CONTINENTAL DRIVE, SUITE 400, KING OF PRUSSIA, PENNSYLVANIA 19406-2850

(Address of principal executive offices) (Zip code)

 

 

Eric E. Miller, Esq.

1000 Continental Drive

Suite 400

King of Prussia, Pennsylvania 19406-2850

(Name and address of agent for service)

 

 

Registrant’s telephone number, including area code: (610) 230-2839

Date of fiscal year end: October 31, 2014

Date of reporting period: November 1, 2013 through October 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 C.F.R. § 270.30e-1). The Commission may use the information provided on Form N-CSR in the Commission’s regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, D. C. 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Explanatory Note:

This Form N-CSR/A for Nationwide Mutual Funds (the “Registrant”) is being filed solely to reflect the addition of the Statement of Cash Flows for Nationwide Investor Destinations Conservative Fund (Investor Destinations Fund”) within Item 1 “Reports to Stockholders” which were caused by a technical correction. After issuing Investor Destinations Fund’s October 31, 2014 financial statements, fund management became aware of a technical correction that requires Investor Destinations Fund to present a Statement of Cash Flows in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 230 (“ASC 230”). Prior to the technical correction, ASC 230 required that substantially all Investor Destinations Fund’s investments must be carried at fair value and classified as liquid to be exempt from having to provide a Statement of Cash Flows. The technical update to ASC 230 now requires that substantially all of Investor Destinations Fund’s investments must be carried at fair value and classified as level 1 or level 2 measurements, in accordance with the valuation hierarchy, in order to be exempt from presenting the Statement of Cash Flows. Investor Destinations Fund’s financial statements for the year ended October 31, 2014 did not present the Statement of Cash Flows. Fund Management has decided to restate the October 31, 2014 financial statements to include the Statement of Cash Flows because Investor Destinations Fund did not have substantially all of the Fund’s holdings classified as level 1 and level 2 securities in that it held a significant portion of its holdings in a level 3 security within the hierarchy. The annual reports for the other portfolios of the Registrant are contained in the Form N-CSR filed on December 29, 2014 (Accession Number 0001193125-14-455374) and are not amended or modified in any way by this Form N-CSR/A. Other than the aforementioned amendment, no other information or disclosures contained in the Registrant’s Form N-CSR filed on December 29, 2014 are being amended by this Form N-CSR/A.

 

 

 

Item 1. Reports to Stockholders.

Include a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 C.F.R. § 270.30e-1).

LOGO

Annual Report

October 31, 2014

Nationwide Mutual Funds

Investor Destinations Funds

Nationwide Investor Destinations Aggressive Fund

Nationwide Investor Destinations Moderately Aggressive Fund

Nationwide Investor Destinations Moderate Fund

Nationwide Investor Destinations Moderately Conservative Fund

Nationwide Investor Destinations Conservative Fund

 

LOGO

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      

Contents

 

Message to Investors    1
Economic Review    2
      
Investor Destinations Funds     
Nationwide Investor Destinations Aggressive Fund    4
Nationwide Investor Destinations Moderately Aggressive Fund    18
Nationwide Investor Destinations Moderate Fund    32
Nationwide Investor Destinations Moderately Conservative Fund    46
Nationwide Investor Destinations Conservative Fund    60
      
Notes to Financial Statements    75
Report of Independent Registered Public Accounting Firm    90
Supplemental Information    91
Management Information    92
Market Index Definitions    97
Glossary    100

 

LOGO

Nationwide Funds®

 

 

Message to Investors

October 31, 2014

Dear Investor,

At Nationwide®, we pride ourselves on our dedication to helping America prepare for and live in retirement. Three-time Super Bowl-winning coach Joe Gibbs likes to say that “A winning effort begins with preparation.” We agree. It is satisfying to help investors work with financial advisors to begin to plan for a stable future. Even more gratifying is to watch investors progress through the years and ultimately reach retirement with the confidence and resources to thrive.

You may have noticed that the Nationwide logo has changed. Rest assured that we are still the same solid company with an 85-year history of looking out for our customers. During the past several months we have taken deliberate steps to more fully align as one company. As we begin the transition to one brand, we will be known as one business — one Nationwide — offering insurance, banking and financial services and products with operations in all 50 states. We believe that as one company we will be even better positioned to put you first.

During the one-year reporting period ended October 31, 2014, most Nationwide mutual funds performed well. The broad U.S. stock market performance as measured by the S&P 500® Index grew 17.27% 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 4.14% for the period.

This report brings you information about market trends during the one-year reporting period as well as your fund’s specific holdings and performance. You also can read insights from Nationwide’s portfolio management partners and analysts.

We are here for the long term, poised to help you prepare for your “winning effort.” As always, thank you for your investment in Nationwide funds.

Sincerely,

 

LOGO

Michael S. Spangler

President & CEO

Nationwide Funds

 

1

Economic Review      

During the fiscal-year reporting period ended October 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 17.27% return, and nearly all market sectors and capitalization ranges showing strong performance for the reporting period. The performance of international equities was mixed during the reporting period, with the MSCI EAFE® Index registering -0.60% as positive local market return was more than offset by the negative impact of the decline in local currencies relative to the U.S. dollar. Fixed-income investment returns were positive during the reporting period, driven by declining long-term interest rates and strong performance of credit-sensitive market segments.

In the United States, investment performance during the reporting period was affected positively by encouraging economic data and continued strong corporate earnings. With the exception of a weak report in the first calendar quarter of 2014 due to the impact of winter storms, each quarter experienced real gross domestic product (GDP) growth of greater than 3%. In addition, equity and fixed-income investment returns were supported during the reporting period by declining longer-term interest rates and the continuation of the accommodative Federal Reserve policy. The 10-year Treasury yield fell during the reporting period, and despite the end of the Quantitative Easing (QE) program, Fed officials remained committed to keeping the federal funds rate low for “a considerable time.”1

 

 

The S&P 500 Index produced positive performance in nine of the 12 months of the reporting 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 during the

reporting period were health care, up 30.1%; information technology, up 25.4%; and utilities, up 20.5%. Health care rallied in reaction to excitement surrounding new products; technology, due to strong earnings; and utilities, due to declining interest rates. While all sector returns were positive, the sectors with the lowest returns included energy, up 5.0%; telecommunication services, up 7.2%; and consumer discretionary, up 11.0%.

 

 

The strong performance of 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 growth was solid during the reporting period, with real GDP growth averaging 2.4% for the past four calendar quarters despite a -2.1% report for the first calendar quarter of 2014. The -2.1% figure stands as the only negative result reported since the end of the most recent economic recession in 2009 and was largely due to unusually disruptive winter weather. The one negative result does appear to be an anomaly, as expectations are for continued positive growth for the remainder of 2014 and through 2015. Inflation remained well controlled through the reporting period, with the U.S. Consumer Price Index (CPI) and the core CPI (excluding the volatile food and energy categories) below 2%. Despite job-creation levels coming in lower than those seen during many past economic recoveries, the unemployment rate continued to decline during the reporting period, falling from 7.2% to 5.8%.

Despite strong domestic equity performance during the reporting period, the performance of international stocks was relatively flat for the period. 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)

 

 

2

Economic Review (Con’t.)      

depressed relative returns during the reporting period. The investment return in local currencies was positive in international markets during the reporting period, although largely offset by the negative impact of the stronger dollar. The MSCI EAFE Index registered -0.60%, while the MSCI Emerging Markets® Index returned 0.64% for the reporting period. Despite headline risks, emerging markets stocks slightly outperformed 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 credit spreads during the reporting period. Long-term Treasury yields fell during the reporting period, with the 10-year Treasury yield declining from 2.56% to 2.34%. Fixed-income investment returns were positive, as investors absorbed the news of the Fed’s tapering (reduce) the quantitative easing (QE) program. Long-term and credit-sensitive bonds delivered the strongest performance among fixed-income investments during the reporting period.

Index   Fiscal  Year Total Return

(as of October 31, 2014)

Barclays U.S. 1-3 Year Government/Credit Bond   0.89%
Barclays U.S. 10-20 Year Treasury Bond   7.42%
Barclays Emerging Markets USD Aggregate Bond   6.86%
Barclays Municipal Bond   7.82%
Barclays U.S. Aggregate Bond   4.14%
Barclays U.S. Corporate High Yield   5.82%
MSCI EAFE®   -0.60%
MSCI Emerging Markets®   0.64%
MSCI World ex USA   -0.15%
Russell 1000® Growth   17.11%
Russell 1000® Value   16.46%
Russell 2000®   8.06%
S&P 500®   17.27%

Source: Morningstar

 

1 http://www.federalreserve.gov/newsevents/press/monetary/20141029a.htm
 

 

3

Fund Commentary    Nationwide Investor Destinations Aggressive  Fund

For the annual period ended October 31, 2014, the Nationwide Investor Destinations Aggressive Fund (Service Class) returned 7.75% versus 9.69% for its composite benchmark, 60% Russell 3000® Index, 30% MSCI EAFE® Index and 10% Barclays U.S. Aggregate Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Global Multi-Cap Core Funds (consisting of 127 funds as of October 31, 2014) was 7.36% for the same time period. Performance for the Fund’s other share classes versus the benchmark is stated in the Average Annual Total Return chart in this report’s Fund Performance section.

The Fund’s return for the 12-month period covered in this report was driven primarily by strong positive returns from domestic equities. Representing about 59% of the Fund’s allocations, the Fund’s exposure to the U.S. equity markets contributed significantly to the Fund’s positive performance. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted gains far exceeding those of international markets during the reporting period. Specifically, the S&P 500® Index (representing large-cap U.S. stocks) rose more than 17%, the S&P MidCap 400® Index (mid-cap stocks) increased 11.7%, and the Russell 2000® Index (small-cap stocks) gained 8.1%. During the reporting period, the Federal Reserve ceased its purchases of assets citing “substantial improvement in the outlook for the labor market since the inception of [the Fed’s] currency asset purchase program” and noting that the Fed “continues to see sufficient underlying strength in the broader economy.”1

The equity markets within foreign developed countries (as distinguished from emerging market countries) posted near-zero returns during the reporting period. The MSCI EAFE® Index (representing developed international equity markets) registered -0.1% for the reporting period. Concerns about the health of Europe’s economy and heightened risk in emerging markets posed headwinds to the international markets.

The Fund’s return also was supported during the reporting period by positive returns from

intermediate-term, investment-grade, U.S. fixed-income investments. The Barclays U.S. Aggregate Bond Index (representing a broad spectrum of such bonds) posted a return of 4.1% during the reporting period, helped along by the drop in interest rates on the bellwether 10-year U.S. Treasury note from a high of 3.04% at the end of 2013 to its period low of 2.34% at the end of October 2014. The drop in rates in the latter part of the reporting period, combined with a flattening of the overall yield curve (a plotted graph line of the yields [or interest rates] on long-term and short-term maturity bonds), resulted in generally positive performance for intermediate-term bonds. Short-term, investment-grade, fixed-income rates remained range-bound near zero, effectively keeping returns for this asset class very low.

The return from the Fund’s investment in the Nationwide S&P 500 Index Fund, combined with this underlying fund’s sizable allocation within the Fund, made this underlying fund the largest contributor to the Fund’s return during the reporting period, as shown in the chart below.

All of the Fund’s underlying funds posted positive returns during the reporting period; however, the Fund’s investment in the Nationwide International Index Fund posted a 0.05% return (contributing 0.01% to the overall Fund performance), thus contributing the least to the Fund’s overall positive return.

 

1 http://www.federalreserve.gov/newsevents/press/monetary/20141029a.htm

Portfolio Managers:

Thomas R. Hickey Jr. and Benjamin A. Richer*, Nationwide Fund Advisors

 

* As of April 30, 2014.

The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.

Investments in the Fund are subject to the risks of the Fund’s underlying funds. The Fund is subject to different levels of risk, based on the types and sizes of its underlying asset class allocations and its allocation strategy. In addition, the Fund’s underlying funds may be subject to specific investment risks, including but not limited to: stock market risk (equity securities); default risk and interest rate risk — if interest rates go up, bond prices go down and if interest rates go down, bond prices go up (bonds); and

 

 

4

Fund Commentary (con’t.)

   

Nationwide Investor Destinations Aggressive Fund

currency fluctuations, political risks, and differences in accounting and availability of information (international securities). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.

The Fund may invest in the Nationwide Fixed Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Fixed Contract may lose money from unpaid principal or unpaid or reduced interest.

Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.

Nationwide Asset Management, LLC (NWAM) provides asset allocation consulting services to Nationwide Fund Advisors (NFA), the Fund’s investment adviser. NWAM is a registered investment adviser and wholly owned subsidiary of Nationwide Mutual Insurance Company, and therefore is affiliated with NFA. NFA makes both the asset allocation and underlying fund selection decisions for the Fund. In addition, NWAM serves as the subadviser to certain other Nationwide Funds.

There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.

A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

Nationwide Investor Destinations

Aggressive Fund

(October 31, 2014)

 

Underlying Fund   Actual
Allocation
to Fund		     Contribution
to Fund
Performance		  
Nationwide S&P 500 Index Fund Institutional Class     32%        5.45%   
Nationwide International Index Fund Institutional Class     27%        0.01%   
Nationwide Mid Cap Market Index Fund Institutional Class     14%        1.59%   
Nationwide Small Cap Index Fund Institutional Class     13%        1.05%   
Nationwide Portfolio Completion Fund Institutional Class     10%        0.27%   
Nationwide Bond Index Fund Institutional Class     2%        0.08%   
Nationwide Core Plus Bond Fund Institutional Class     2%        0.08%   
      100%           

Actual underlying fund allocations are stated as a percentage of the Fund’s total net assets. Nationwide Fund Advisors (NFA), the investment adviser to the Fund, may add or delete asset classes or change allocations at any time and without notice in order for the Fund to meet its objective or due to market and/or economic conditions. NFA applies a long-term investment horizon with respect to the Fund, and allocation changes are not likely to be made in response to short-term market conditions.

The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Aggressive Fund’s fees and expenses. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, NFA periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. For more information, refer to the Fund’s prospectus.

 

 

5

Fund Overview    Nationwide Investor Destinations Aggressive  Fund

Objective

The Fund seeks to maximize total investment return for an aggressive level of risk.

Highlights

 

  Ÿ  

All of the Fund’s underlying funds posted positive returns during the reporting period

 

 

  Ÿ  

The Fund’s investments in U.S. equity mutual funds accounted for 59% of its allocations and were the largest contributors to the returns of the Fund during the reporting period

 

Asset Allocation†

 

Equity Funds     86.3%   
Alternative Assets     9.7%   
Fixed Income Funds     4.1%   
Liabilities in excess of other assets     (0.1)%   
      100.0%   

Top Holdings††

 

Nationwide S&P 500 Index Fund, Institutional Class     32.3%   
Nationwide International Index Fund, Institutional Class     26.4%   
Nationwide Mid Cap Market Index Fund, Institutional Class     14.3%   
Nationwide Small Cap Index Fund, Institutional Class     13.3%   
Nationwide Portfolio Completion Fund, Institutional Class     9.7%   
Nationwide Core Plus Bond Fund, Institutional Class     2.0%   
Nationwide Bond Index Fund, Institutional Class     2.0%   
      100.0%   
 
† Percentages indicated are based upon net assets as of October 31, 2014.

 

†† Percentages indicated are based upon total investments as of October 31, 2014.

 

6

Fund Performance    Nationwide Investor Destinations Aggressive Fund

Average Annual Total Return

(For periods ended October 31, 2014)

 

    1 Yr.     5 Yr.     10 Yr.     Inception  
Class A   w/o SC1     7.92%        12.49%        7.08%        –   
    w/ SC2     1.72%        11.15%        6.44%        –   
Class C   w/o SC1     7.21%        11.71%        6.32%        –   
    w/SC3     6.21%        11.71%        6.32%        –   
Class R4,5         7.54%        12.10%        6.75%        –   
Institutional Service Class4         –        –        –        3.93%6*   
Institutional Class4,7         8.21%        12.83%        7.42%        –   
Service Class4         7.75%        12.36%        6.96%        –   
Russell 3000® Index         16.07%        17.01%        8.55%        –   
S&P 500® Index         17.27%        16.69%        8.20%        –   
Barclays U.S. Aggregate Bond Index         4.14%        4.22%        4.64%        –   
MSCI EAFE® Index         (0.60)%        6.52%        5.81%        –   
Composite Index         8.83%        11.69%        6.65%        –   
CPI         1.66%        1.89%        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 

These returns do not reflect the effects of SCs.

 

2 

A 5.75% front-end sales charge was deducted.

 

3 

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.

 

4 

Not subject to any SCs.

 

5 

Effective February 21, 2014, Class R2 Shares were renamed Class R Shares.

 

6 

Since inception date of March 3, 2014.

 

7 

These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. Effective February 21, 2014, Class B shares were converted into Class A shares.

Expense Ratios

 

    Expense Ratio^
Class A   0.83%
Class C   1.54%
Class R   1.12%
Institutional Service Class   0.58%
Institutional Class   0.47%
Service Class   0.88%

 

^ Current effective prospectus dated March 1, 2014 (as revised March 26, 2014). The expense ratio also includes indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details. Please refer to the Financial Highlights for each respective share class’ actual results.
 

 

7

Fund Performance (con’t.)    Nationwide Investor Destinations Aggressive Fund

Performance of a $50,000 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.

 

LOGO

Comparative performance of $50,000 invested in Service Class shares of the Nationwide Investor Destinations Aggressive Fund versus the Russell 3000® Index, the Barclays U.S. Aggregate Bond Index, the MSCI EAFE® Index, the Composite Index* and the Consumer Price Index (CPI) over the 10-year period ended 10/31/14. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

 

* The Composite Index comprises 60% Russell 3000® Index, 30% MSCI EAFE® Index and 10% Barclays U.S. Aggregate Bond Index.

 

8

Shareholder Expense Example    Nationwide Investor Destinations Aggressive Fund

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2014) and continued to hold your shares at the end of the reporting period (October 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 May 1, 2014 through October 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 May 1, 2014 through October 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 Investor Destinations
Aggressive Fund

October 31, 2014

     Beginning
Account Value ($)
05/01/14		   Ending
Account Value ($)
10/31/14		   Expenses Paid
During Period ($)
05/01/14 - 10/31/14(a)		   Expense Ratio
During Period (%)
05/01/14 - 10/31/14(a)
Class A Shares     Actual (b)    1,000.00   1,025.30   2.81   0.55
      Hypothetical (b)(c)   1,000.00   1,022.43   2.80   0.55
Class C Shares     Actual (b)    1,000.00   1,021.40   6.47   1.27
      Hypothetical (b)(c)   1,000.00   1,018.80   6.46   1.27
Class R Shares(d)     Actual (b)    1,000.00   1,023.50   4.23   0.83
      Hypothetical (b)(c)   1,000.00   1,021.02   4.23   0.83
Institutional Service Class Shares     Actual (b)    1,000.00   1,027.00   1.07   0.21
      Hypothetical (b)(c)   1,000.00   1,024.15   1.07   0.21
Institutional Class Shares     Actual (b)    1,000.00   1,027.00   0.92   0.18
      Hypothetical (b)(c)   1,000.00   1,024.30   0.92   0.18
Service Class Shares     Actual (b)    1,000.00   1,024.30   2.96   0.58
      Hypothetical (b)(c)   1,000.00   1,022.28   2.96   0.58

 

(a) Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus.

 

(b) Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2014 through October 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.

 

(c) Represents the hypothetical 5% return before expenses.

 

(d) Effective March 3, 2014 Class R2 Shares were renamed Class R Shares.

 

9

Statement of Investments

October 31, 2014

Nationwide Investor Destinations Aggressive Fund

    Mutual Funds 100.1%  
        Shares     Market
Value		  
 

 

  
 

Alternative Assets 9.7%

 

 

Nationwide Portfolio Completion Fund, Institutional Class (a)

     12,174,003     $ 121,131,334  
     

 

 

  
 

Total Alternative Assets
(cost $118,089,637)

   

     121,131,334  
     

 

 

  
 

 

  
 

Equity Funds 86.3%

  

 

Nationwide International Index Fund, Institutional Class (a)

     40,238,019       329,146,996  
 

Nationwide Mid Cap Market Index Fund, Institutional Class (a)

     8,967,629       177,828,083  
 

Nationwide S&P 500 Index Fund, Institutional Class (a)

     25,905,496       402,830,465  
 

Nationwide Small Cap Index Fund, Institutional Class (a)

     10,455,625       165,930,765  
     

 

 

  
 

Total Equity Funds
(cost $786,180,161)

   

     1,075,736,309  
     

 

 

  
 

 

  
 

Fixed Income Funds 4.1%

  

 

Nationwide Bond Index Fund, Institutional Class (a)

     2,223,249       25,100,478  
 

Nationwide Core Plus Bond Fund, Institutional Class (a)

     2,450,428       25,214,901  
     

 

 

  
 

Total Fixed Income Funds
(cost $50,715,475)

   

     50,315,379  
     

 

 

  
 

Total Mutual Funds
(cost $954,985,273)

   

     1,247,183,022  
     

 

 

  
 

Total Investments
(cost $954,985,273) (b) — 100.1%

   

     1,247,183,022  
 

Liabilities in excess of other
assets — (0.1)%

   

     (635,890 )
     

 

 

  
 

NET ASSETS — 100.0%

  

   $ 1,246,547,132  
     

 

 

  

 

  (a) Investment in affiliate.

 

  (b) See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities.
 

 

The accompanying notes are an integral part of these financial statements.

 

10

Statement of Assets and Liabilities

October 31, 2014

      Nationwide 
Investor Destinations 
Aggressive Fund 

Assets:

       

Investments in affiliates, at value (cost $954,985,273)

    $ 1,247,183,022      

Receivable for investments sold

      461,014      

Receivable for capital shares issued

      707,713      

Prepaid expenses

      30,353      
  

 

 

      

Total Assets

      1,248,382,102      
  

 

 

      

Liabilities:

       

Payable for capital shares redeemed

      1,135,478      

Accrued expenses and other payables:

       

Investment advisory fees

      132,947      

Fund administration fees

      29,105      

Distribution fees

      294,507      

Administrative servicing fees

      196,020      

Accounting and transfer agent fees

      7,948      

Trustee fees

      3,727      

Custodian fees

      3,849      

Compliance program costs (Note 3)

      367      

Professional fees

      20,059      

Printing fees

      7,066      

Other

      3,897      
  

 

 

      

Total Liabilities

      1,834,970      
  

 

 

      

Net Assets

    $ 1,246,547,132      
  

 

 

      
   

Represented by:

       

Capital

    $ 949,736,755      

Accumulated net realized gains from affiliated investments

      4,612,628      

Net unrealized appreciation/(depreciation) from investments in affiliates

      292,197,749      
  

 

 

      

Net Assets

    $ 1,246,547,132      
  

 

 

      

Net Assets:

       

Class A Shares

    $ 61,402,299      

Class C Shares

      76,857,144      

Class R Shares

      106,558,652      

Institutional Service Class Shares

      3,569,632      

Institutional Class Shares

      146,720,517      

Service Class Shares

      851,438,888      
  

 

 

      

Total

    $ 1,246,547,132      
  

 

 

      

Shares Outstanding (unlimited number of shares authorized):

       

Class A Shares

      5,335,143      

Class C Shares

      6,840,512      

Class R Shares

      9,410,492      

Institutional Service Class Shares

      309,897      

Institutional Class Shares

      12,623,756      

Service Class Shares

      73,879,402      
  

 

 

      

Total

      108,399,202      
  

 

 

      
      
      
   
      

 

11

Statement of Assets and Liabilities (Continued)

October 31, 2014

      Nationwide 
Investor Destinations 
Aggressive Fund 

Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively):

       

Class A Shares (a)

    $ 11.51       

Class C Shares (b)

    $ 11.24       

Class R Shares

    $ 11.32       

Institutional Service Class Shares

    $ 11.52       

Institutional Class Shares

    $ 11.62       

Service Class Shares

    $ 11.52       

Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent):

       

Class A Shares

    $ 12.21       
  

 

 

      

Maximum Sales Charge:

       

Class A Shares

      5.75 %     
  

 

 

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
              
(a) For Class A Shares that were purchased without a sales charge because such purchase exceeded $1,000,000, a contingent deferred sales charge of 1.00% may apply to any redemption of such shares within 18 months of their purchase.
(b) For Class C Shares, the redemption price per share is reduced by a contingent deferred sales charge of 1.00% for shares held less than one year.

The accompanying notes are an integral part of these financial statements.

 

12

Statement of Operations

For the Period Ended October 31, 2014

      Nationwide 
Investor Destinations 
Aggressive Fund 

INVESTMENT INCOME:

       

Dividend income from affiliates

    $ 25,467,882      
  

 

 

      

Total Income

      25,467,882      
  

 

 

      

EXPENSES:

       

Investment advisory fees

      1,625,106      

Fund administration fees

      346,574      

Distribution fees Class A

      159,324      

Distribution fees Class B (a)

      10,760      

Distribution fees Class C

      758,233      

Distribution fees Class R (b)

      541,769      

Distribution fees Service Class

      2,169,839      

Administrative servicing fees Class A

      66,857      

Administrative servicing fees Class C

      44,347      

Administrative servicing fees Class R (b)

      162,531      

Administrative servicing fees Institutional Service Class (c)

      90      

Administrative servicing fees Service Class

      1,301,910      

Registration and filing fees

      77,561      

Professional fees

      67,420      

Printing fees

      23,272      

Trustee fees

      39,186      

Custodian fees

      47,064      

Accounting and transfer agent fees

      66,195      

Compliance program costs (Note 3)

      3,564      

Other

      33,953      
  

 

 

      

Total expenses before earnings credit

      7,545,555      
  

 

 

      

Earnings credit (Note 5)

      (17 )     
  

 

 

      

Net Expenses

      7,545,538      
  

 

 

      

NET INVESTMENT INCOME

      17,922,344      
  

 

 

      

REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:

       

Net realized gain distributions from underlying affiliated funds

      44,599,831      

Net realized gains from investment transactions with affiliates

      10,205,754      
  

 

 

      

Net realized gains from affiliated investments

      54,805,585      
  

 

 

      

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      20,878,150      
  

 

 

      

Net realized/unrealized gains from affiliated investments

      75,683,735      
  

 

 

      

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 93,606,079      
  

 

 

      
      
      
      
      
   
      
      
      
              
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

13

Statements of Changes in Net Assets

     Nationwide Investor Destinations
Aggressive Fund
      Year Ended
October 31, 2014		    Year Ended
October 31,  2013

Operations:

            

Net investment income

    $ 17,922,344        $ 17,110,252      

Net realized gains from affiliated investments

      54,805,585          11,460,772      

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      20,878,150          232,591,753      
  

 

 

   

 

 

      

Change in net assets resulting from operations

      93,606,079          261,162,777      
  

 

 

   

 

 

      
     

Distributions to Shareholders From:

            

Net investment income:

            

Class A

      (1,075,210 )         (968,045 )     

Class B (a)

      (31,916 )         (55,790 )     

Class C

      (812,641 )         (675,982 )     

Class R (b)

      (1,595,494 )         (1,424,243 )     

Institutional Service Class

      (1,087 )(c)         –      

Institutional Class

      (2,659,351 )         (1,928,613 )     

Service Class

      (14,506,612 )         (13,132,526 )     

Net realized gains:

            

Class A

      (804,434 )         (572,967 )     

Class B (a)

      (46,855 )         (56,776 )     

Class C

      (997,370 )         (637,640 )     

Class R (b)

      (1,496,117 )         (1,028,497 )     

Institutional Service Class

      –  (c)         –       

Institutional Class

      (1,621,624 )         (921,180 )     

Service Class

      (11,566,034 )         (8,184,292 )     
  

 

 

   

 

 

      

Change in net assets from shareholder distributions

      (37,214,745 )         (29,586,551 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

      (35,017,401 )         (47,705,603 )     
  

 

 

   

 

 

      

Change in net assets

      21,373,933          183,870,623      
  

 

 

   

 

 

      
     

Net Assets:

            

Beginning of year

      1,225,173,199          1,041,302,576      
  

 

 

   

 

 

      

End of year

    $ 1,246,547,132        $ 1,225,173,199      
  

 

 

   

 

 

      

Accumulated undistributed net investment income at end of year

    $ –         $ 82,090      
  

 

 

   

 

 

      
     

CAPITAL TRANSACTIONS:

            

Class A Shares

            

Proceeds from shares issued

    $ 15,425,571        $ 15,322,388      

Proceeds from shares issued from class conversion

      2,574,611          –      

Dividends reinvested

      1,345,536          1,039,315      

Cost of shares redeemed

      (20,237,535 )         (19,061,602 )     
  

 

 

   

 

 

      

Total Class A Shares

      (891,817 )         (2,699,899 )     
  

 

 

   

 

 

      

Class B Shares (a)

            

Proceeds from shares issued

      69,236          175,032      

Dividends reinvested

      65,577           86,638      

Cost of shares redeemed in class conversion

      (2,574,611 )         –      

Cost of shares redeemed

      (1,533,001 )         (2,810,581 )     
  

 

 

   

 

 

      

Total Class B Shares

      (3,972,799 )         (2,548,911 )     
  

 

 

   

 

 

      
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.

(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

14

Statements of Changes in Net Assets (Continued)

     Nationwide Investor Destinations
Aggressive Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

CAPITAL TRANSACTIONS: (continued)

            

Class C Shares

            

Proceeds from shares issued

    $ 14,310,984        $ 11,975,603      

Dividends reinvested

      862,428          572,226      

Cost of shares redeemed

      (13,151,457 )         (11,464,078 )     
  

 

 

   

 

 

      

Total Class C Shares

      2,021,955          1,083,751      
  

 

 

   

 

 

      

Class R Shares (b)

            

Proceeds from shares issued

      10,382,606          11,886,523      

Dividends reinvested

      2,999,821          2,357,861      

Cost of shares redeemed

      (20,342,495 )         (17,978,126 )     
  

 

 

   

 

 

      

Total Class R Shares

      (6,960,068 )         (3,733,742 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Proceeds from shares issued

      3,710,364  (c)         –      

Dividends reinvested

      1,087  (c)         –      

Cost of shares redeemed

      (228,247 )(c)         –      
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      3,483,204  (c)         –      
  

 

 

   

 

 

      

Institutional Class Shares

            

Proceeds from shares issued

      35,279,465          62,767,157      

Dividends reinvested

      4,280,948          2,849,793      

Cost of shares redeemed

      (17,585,600 )         (52,343,098 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      21,974,813          13,273,852      
  

 

 

   

 

 

      

Service Class Shares

            

Proceeds from shares issued

      69,876,145          57,991,604      

Dividends reinvested

      26,072,627          21,316,629      

Cost of shares redeemed

      (146,621,461 )         (132,388,887 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (50,672,689 )         (53,080,654 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

    $ (35,017,401 )       $ (47,705,603 )     
  

 

 

   

 

 

      

SHARE TRANSACTIONS:

            

Class A Shares

            

Issued

      1,375,334          1,559,786      

Issued in class conversion

      230,901          –      

Reinvested

      121,713          111,899      

Redeemed

      (1,801,042 )         (1,969,347 )     
  

 

 

   

 

 

      

Total Class A Shares

      (73,094 )         (297,662 )     
  

 

 

   

 

 

      

Class B Shares (a)

            

Issued

      6,387          18,323      

Reinvested

      6,100          9,696      

Redeemed in class conversion

      (235,131 )         –      

Redeemed

      (141,638 )         (292,860 )     
  

 

 

   

 

 

      

Total Class B Shares

      (364,282 )         (264,841 )     
  

 

 

   

 

 

      
           
           
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.

(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

15

Statements of Changes in Net Assets (Continued)

     Nationwide Investor Destinations
Aggressive Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

SHARE TRANSACTIONS: (continued)

            

Class C Shares

            

Issued

      1,309,213          1,223,229      

Reinvested

      80,407          64,114      

Redeemed

      (1,193,102 )         (1,178,718 )     
  

 

 

   

 

 

      

Total Class C Shares

      196,518          108,625      
  

 

 

   

 

 

      

Class R Shares (b)

            

Issued

      939,975          1,229,532      

Reinvested

      276,629          259,973      

Redeemed

      (1,837,828 )         (1,816,307 )     
  

 

 

   

 

 

      

Total Class R Shares

      (621,224 )         (326,802 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Issued

      330,525  (c)         –      

Reinvested

      94  (c)         –      

Redeemed

      (20,722 )(c)         –      
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      309,897  (c)         –      
  

 

 

   

 

 

      

Institutional Class Shares

            

Issued

      3,101,365          6,223,977      

Reinvested

      382,190          301,972      

Redeemed

      (1,547,966 )         (5,214,478 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      1,935,589          1,311,471      
  

 

 

   

 

 

      

Service Class Shares

            

Issued

      6,147,981          5,841,621      

Reinvested

      2,356,942          2,299,608      

Redeemed

      (12,950,073 )         (13,366,053 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (4,445,150 )         (5,224,824 )     
  

 

 

   

 

 

      

Total change in shares

      (3,061,746 )         (4,694,033 )     
  

 

 

   

 

 

      
           
           
           
           
           
           
           
           
           
           
           
     
           
           
           
                           

Amount designated as “–” is zero or has been rounded to zero.

 

(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

16

Financial Highlights

Selected data for each share of capital outstanding throughout the periods indicated

Nationwide Investor Destinations Aggressive Fund

 

          Operations     Distributions          

Ratios/Supplemental Data

  
     Net Asset
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)		     Net Assets
at End of
Period		    

Ratio of
Expenses
to Average

Net Assets (c)

     Ratio of Net
Investment
Income
to Average
Net Assets (c)		     Ratio of Expenses
(Prior to
Reimbursements)
to Average
Net Assets (c)		     Portfolio
Turnover (d)		  
Class A Shares                              

Year Ended October 31, 2014 (e)

   $ 11.00        0.17        0.68        0.85        (0.19 )      (0.15 )      (0.34 )    $ 11.51        7.92%      $ 61,402,299        0.54%        1.47%        0.54%        8.41%   

Year Ended October 31, 2013 (e)

   $ 8.97        0.17        2.13        2.30        (0.17 )      (0.10 )      (0.27 )    $ 11.00        26.24%      $ 59,507,180        0.49%        1.69%        0.49%        22.52%   

Year Ended October 31, 2012 (e)

   $ 8.26        0.13        0.73        0.86        (0.13 )      (0.02 )      (0.15 )    $ 8.97        10.56%      $ 51,210,338        0.50%        1.44%        0.50%        11.55%   

Year Ended October 31, 2011 (e)

   $ 8.13        0.13        0.14        0.27        (0.14 )      –        (0.14 )    $ 8.26        3.24%      $ 51,388,289        0.48%        1.54%        0.48%        9.70%   

Year Ended October 31, 2010 (e)

   $ 7.30        0.11        1.02        1.13        (0.10 )      (0.20 )      (0.30 )    $ 8.13        15.81%      $ 49,682,066        0.49%        1.44%        0.49%        8.89%   
                           
Class C Shares                              

Year Ended October 31, 2014 (e)

   $ 10.75        0.08        0.68        0.76        (0.12 )      (0.15 )      (0.27 )    $ 11.24        7.21%      $ 76,857,144        1.24%        0.77%        1.24%        8.41%   

Year Ended October 31, 2013 (e)

   $ 8.78        0.09        2.09        2.18        (0.11 )      (0.10 )      (0.21 )    $ 10.75        25.26%      $ 71,452,684        1.19%        0.92%        1.19%        22.52%   

Year Ended October 31, 2012 (e)

   $ 8.08        0.07        0.72        0.79        (0.07 )      (0.02 )      (0.09 )    $ 8.78        9.90%      $ 57,370,350        1.20%        0.76%        1.20%        11.55%   

Year Ended October 31, 2011 (e)

   $ 7.97        0.07        0.12        0.19        (0.08 )      –        (0.08 )    $ 8.08        2.36%      $ 59,022,254        1.21%        0.86%        1.21%        9.70%   

Year Ended October 31, 2010 (e)

   $ 7.17        0.06        1.01        1.07        (0.07 )      (0.20 )      (0.27 )    $ 7.97        15.15%      $ 67,454,100        1.20%        0.75%        1.20%        8.89%   
                           
Class R Shares (f)(g)                              

Year Ended October 31, 2014 (e)

   $ 10.83        0.13        0.67        0.80        (0.16 )      (0.15 )      (0.31 )    $ 11.32        7.54%      $ 106,558,652        0.84%        1.22%        0.84%        8.41%   

Year Ended October 31, 2013 (e)

   $ 8.84        0.12        2.11        2.23        (0.14 )      (0.10 )      (0.24 )    $ 10.83        25.73%      $ 108,654,200        0.85%        1.27%        0.85%        22.52%   

Year Ended October 31, 2012 (e)

   $ 8.14        0.09        0.73        0.82        (0.10 )      (0.02 )      (0.12 )    $ 8.84        10.23%      $ 91,551,218        0.84%        1.10%        0.84%        11.55%   

Year Ended October 31, 2011 (e)

   $ 8.01        0.10        0.14        0.24        (0.11 )      –        (0.11 )    $ 8.14        2.90%      $ 88,524,201        0.85%        1.18%        0.85%        9.70%   

Year Ended October 31, 2010 (e)

   $ 7.21        0.08        1.01        1.09        (0.09 )      (0.20 )      (0.29 )    $ 8.01        15.41%      $ 84,348,618        0.84%        1.07%        0.84%        8.89%   
                           
Institutional Service Class Shares                              

Period Ended October 31, 2014 (e)(h)

   $ 11.18        0.02        0.42        0.44        (0.10 )      –        (0.10 )    $ 11.52        3.93%      $ 3,569,632        0.21%        0.24%        0.21%        8.41%   
                           
Institutional Class Shares                              

Year Ended October 31, 2014 (e)

   $ 11.11        0.21        0.68        0.89        (0.23 )      (0.15 )      (0.38 )    $ 11.62        8.21%      $ 146,720,517        0.19%        1.81%        0.19%        8.41%   

Year Ended October 31, 2013 (e)

   $ 9.06        0.19        2.16        2.35        (0.20 )      (0.10 )      (0.30 )    $ 11.11        26.57%      $ 118,716,482        0.19%        1.88%        0.19%        22.52%   

Year Ended October 31, 2012 (e)

   $ 8.34        0.15        0.75        0.90        (0.16 )      (0.02 )      (0.18 )    $ 9.06        11.05%      $ 84,918,686        0.20%        1.74%        0.20%        11.55%   

Year Ended October 31, 2011 (e)

   $ 8.20        0.15        0.15        0.30        (0.16 )      –        (0.16 )    $ 8.34        3.49%      $ 70,317,290        0.21%        1.78%        0.21%        9.70%   

Year Ended October 31, 2010 (e)

   $ 7.36        0.13        1.04        1.17        (0.13 )      (0.20 )      (0.33 )    $ 8.20        16.19%      $ 57,247,781        0.20%        1.71%        0.20%        8.89%   
                           
Service Class Shares                              

Year Ended October 31, 2014 (e)

   $ 11.02        0.16        0.68        0.84        (0.19 )      (0.15 )      (0.34 )    $ 11.52        7.75%      $ 851,438,888        0.59%        1.46%        0.59%        8.41%   

Year Ended October 31, 2013 (e)

   $ 8.99        0.15        2.14        2.29        (0.16 )      (0.10 )      (0.26 )    $ 11.02        26.04%      $ 862,903,998        0.60%        1.53%        0.60%        22.52%   

Year Ended October 31, 2012 (e)

   $ 8.27        0.12        0.74        0.86        (0.12 )      (0.02 )      (0.14 )    $ 8.99        10.56%      $ 750,703,873        0.60%        1.34%        0.60%        11.55%   

Year Ended October 31, 2011 (e)

   $ 8.14        0.12        0.13        0.25        (0.12 )      –        (0.12 )    $ 8.27        3.09%      $ 717,539,097        0.61%        1.43%        0.61%        9.70%   

Year Ended October 31, 2010 (e)

   $ 7.32        0.10        1.03        1.13        (0.11 )      (0.20 )      (0.31 )    $ 8.14        15.66%      $ 719,252,841        0.59%        1.34%        0.59%        8.89%   
                                                                                                                 

Amounts designated as “–” are zero or have been rounded to zero.

(a) Excludes sales charge.
(b) Not annualized for periods less than one year.
(c) Annualized for periods less than one year.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.
(e) Per share calculations were performed using average shares method.
(f) Effective February 28, 2009, Class R Shares were renamed Class R2 Shares.
(g) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(h) For the period from March 4, 2014 (commencement of operations) through October 31, 2014. Total return is calculated based on inception date of March 3, 2014 through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

17

Fund Commentary    Nationwide Investor Destinations Moderately Aggressive  Fund

For the annual period ended October 31, 2014, the Nationwide Investor Destinations Moderately Aggressive Fund (Service Class) returned 7.19% versus 9.20% for its composite benchmark, 55% Russell 3000® Index, 25% MSCI EAFE® Index, 15% Barclays U.S. Aggregate Bond Index and 5% Barclays U.S. 1-3 Year Government/Credit Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mixed-Asset Target Allocation Growth Funds (consisting of 561 funds as of October 31, 2014) was 8.65% for the same time period. Performance for the Fund’s other share classes versus the benchmark is stated in the Average Annual Total Return chart in this report’s Fund Performance section.

The Fund’s return for the 12-month period covered in this report was driven primarily by strong positive returns from domestic equities. Representing about 51% of the Fund’s allocations, the Fund’s exposure to the U.S. equity markets contributed significantly to the Fund’s positive performance. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted gains far exceeding those of international markets during the reporting period. Specifically, the S&P 500® Index (representing large-cap U.S. stocks) rose more than 17%, the S&P MidCap 400® Index (mid-cap stocks) increased 11.7%, and the Russell 2000® Index (small-cap stocks) gained 8.1%. During the reporting period, the Federal Reserve ceased its purchases of assets citing “substantial improvement in the outlook for the labor market since the inception of [the Fed’s] currency asset purchase program” and noting that the Fed “continues to see sufficient underlying strength in the broader economy.”1

The equity markets within foreign developed countries (as distinguished from emerging market countries) posted near-zero returns during the reporting period. The MSCI EAFE Index (representing developed international equity markets) registered -0.1% for the reporting period. Concerns about the health of Europe’s economy and heightened risk in emerging markets posed headwinds to the international markets.

The Fund’s return also was supported by positive returns from intermediate-term, investment-grade, U.S. fixed-income investments. The Barclays U.S. Aggregate Bond Index (representing a broad spectrum of such bonds) posted a return of 4.1% during the reporting period, helped along by the drop in interest rates on the bellwether 10-year U.S. Treasury note from a high of 3.04% at the end of 2013 to its period low of 2.34% at the end of October 2014. The drop in rates in the latter part of the reporting period, combined with a flattening of the overall yield curve, resulted in generally positive performance for intermediate-term bonds. Short-term, investment-grade, fixed-income rates remained range-bound near zero, effectively keeping returns for this asset class very low.

The return from the Fund’s investment in the Nationwide S&P 500 Index Fund, combined with this underlying fund’s sizable allocation within the Fund, made this underlying fund the largest contributor to the Fund’s return during the reporting period, as shown in the chart below.

All of the Fund’s underlying allocations posted positive returns during the reporting period; however, the Fund’s investment in the Nationwide International Index Fund posted a 0.05% return (contributing 0.01% to the overall Fund performance), thus contributing the least to the Fund’s overall positive return.

 

1 http://www.federalreserve.gov/newsevents/press/monetary/20141029a.htm

Portfolio Managers:

Thomas R. Hickey Jr. and Benjamin A. Richer*, Nationwide Fund Advisors

 

* As of April 30, 2014.

Investments in the Fund are subject to the risks of the Fund’s underlying funds. The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.

The Fund is subject to different levels of risk, based on the types and sizes of its underlying asset class allocations and its allocation strategy. In addition, the Fund’s underlying funds may be subject to specific investment risks, including but not limited to: stock market risk (equity securities); default risk and interest rate risk — if interest rates go up, bond prices go down and if interest rates go down, bond

 

 

18

Fund Commentary (con’t.)    Nationwide Investor Destinations Moderately Aggressive Fund

prices go up (bonds); and currency fluctuations, political risks, and differences in accounting and availability of information (international securities). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.

The Fund may invest in the Nationwide Fixed Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Fixed Contract may lose money from unpaid principal or unpaid or reduced interest.

Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.

Nationwide Asset Management, LLC (NWAM) provides asset allocation consulting services to Nationwide Fund Advisors (NFA), the Fund’s investment adviser. NWAM is a registered investment adviser and wholly owned subsidiary of Nationwide Mutual Insurance Company, and therefore is affiliated with NFA. NFA makes both the asset allocation and underlying fund selection decisions for the Fund. In addition, NWAM serves as the subadviser to certain other Nationwide Funds.

There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.

A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

Nationwide Investor Destinations Moderately Aggressive Fund

(October 31, 2014)

 

Underlying Fund or
Contract		   Actual
Allocation
to Fund		     Contribution
to Fund
Performance		  
Nationwide S&P 500 Index Fund Institutional Class     28%        4.77%   
Nationwide International Index Fund Institutional Class     24%        0.01%   
Nationwide Mid Cap Market Index Fund Institutional Class     12%        1.36%   
Nationwide Portfolio Completion Fund Institutional Class     12%        0.33%   
Nationwide Small Cap Index Fund Institutional Class     10%        0.80%   
Nationwide Bond Index Fund Institutional Class     5%        0.20%   
Nationwide Core Plus Bond Fund Institutional Class     4%        0.15%   
Nationwide HighMark Short Term Bond Fund Institutional Class     2%        0.02%   
Nationwide Fixed Contract     2%        0.07%   
Nationwide Ziegler Equity Income Fund Institutional Class     1%        0.14%   
      100%           

Actual underlying allocations are stated as a percentage of the Fund’s total net assets. Nationwide Fund Advisors (NFA), the investment adviser to the Fund, may add or delete asset classes or change allocations at any time and without notice in order for the Fund to meet its objective or due to market and/or economic conditions. NFA applies a long-term investment horizon with respect to the Fund, and allocation changes are not likely to be made in response to short-term market conditions.

The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Moderately Aggressive Fund’s fees and expenses. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, NFA periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. For more information, refer to the Fund’s prospectus.

 

 

19

Fund Overview    Nationwide Investor Destinations Moderately Aggressive  Fund

Objective

The Fund seeks to maximize total investment return for a moderately aggressive level of risk.

Highlights

 

  Ÿ  

All of the Fund’s underlying allocations posted positive returns during the reporting period

 

 

  Ÿ  

The Fund’s investments in U.S. equity mutual funds accounted for 51% of its allocations and were the largest contributors to the returns of the Fund during the reporting period

 

 

  Ÿ  

Although short-term bond interest rates remained low, the Fund’s 2% allocation to the Nationwide Fixed Contract contributed 0.07% to the Fund’s overall return during the reporting period

 

Asset Allocation†

 

Equity Funds     75.4%   
Asset Allocation Fund     11.7%   
Fixed Income Funds     10.9%   
Fixed Contract     2.1%   
Liabilities in excess of other assets     (0.1)%   
      100.0%   

Top Holdings††

 

Nationwide S&P 500 Index Fund, Institutional Class     28.3%   
Nationwide International Index Fund, Institutional Class     23.4%   
Nationwide Mid Cap Market Index Fund, Institutional Class     12.2%   
Nationwide Portfolio Completion Fund, Institutional Class     11.7%   
Nationwide Small Cap Index Fund, Institutional Class     10.3%   
Nationwide Bond Index Fund, Institutional Class     4.9%   
Nationwide Core Plus Bond Fund, Institutional Class     4.0%   
Nationwide Fixed Contract     2.1%   
Nationwide HighMark Short Term Bond Fund, Institutional Class     2.0%   
Nationwide Ziegler Equity Income Fund, Institutional Class     1.1%   
      100.0%   
 

 

† Percentages indicated are based upon net assets as of October 31, 2014.

 

†† Percentages indicated are based upon total investments as of October 31, 2014.

 

20

Fund Performance    Nationwide Investor Destinations Moderately Aggressive Fund

Average Annual Total Return

(For periods ended October 31, 2014)

 

        1 Yr.     5 Yr.     10 Yr.     Inception  
Class A   w/o SC1     7.33%        11.09%        6.74%        –   
    w/ SC2     1.20%        9.77%        6.10%        –   
Class C   w/o SC1     6.55%        10.28%        5.98%        –   
    w/SC3     5.55%        10.28%        5.98%        –   
Class R4,5         6.92%        10.67%        6.40%        –   
Institutional Service Class4         –        –        –        3.77%6*   
Institutional Class4,7         7.70%        11.40%        7.05%        –   
Service Class4         7.19%        10.95%        6.62%        –   
Russell 3000® Index         16.07%        17.01%        8.55%        –   
S&P 500® Index         17.27%        16.69%        8.20%        –   
Barclays U.S. Aggregate Bond Index         4.14%        4.22%        4.64%        –   
MSCI EAFE® Index         (0.60)%        6.52%        5.81%        –   
Barclays U.S. 1-3 Year Gov’t/Credit Bond Index         0.89%        1.45%        2.84%        –   
Citigroup 3-Month T-Bill Index         0.04%        0.07%        1.50%        –   
Composite Index         8.48%        11.00%        6.54%        –   
CPI         1.66%        1.89%        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 

These returns do not reflect the effects of SCs.

 

2 

A 5.75% front-end sales charge was deducted.

 

3 

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.

 

4 

Not subject to any SCs.

 

5 

Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.

 

6

Since inception date of March 3, 2014.

 

7 

These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. Effective February 21, 2014, Class B shares were converted into Class A shares.

Expense Ratios

 

    Expense Ratio^
Class A   0.86%
Class C   1.55%
Class R   1.14%
Institutional Service Class   0.61%
Institutional Class   0.49%
Service Class   0.89%

 

^ Current effective prospectus dated March 1, 2014 (as revised March 26, 2014). The expense ratio also includes indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details. Please refer to the Financial Highlights for each respective share class’ actual results.
 

 

21

Fund Performance (con’t.)    Nationwide Investor Destinations Moderately Aggressive Fund

Performance of a $50,000 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.

 

LOGO

Comparative performance of $50,000 invested in Service Class shares of the Nationwide Investor Destinations Moderately Aggressive Fund versus the Russell 3000® Index, the Barclays U.S. Aggregate Bond Index, the MSCI EAFE® Index, the Barclays U.S. 1-3 Year Government/Credit Bond Index, the Composite Index* and the Consumer Price Index (CPI) over the 10-year period ended 10/31/14. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

 

* The Composite Index comprises 55% Russell 3000® Index, 15% Barclays U.S. Aggregate Bond Index, 25% MSCI EAFE® Index and 5% Barclays U.S. 1-3 Year Gov’t/Credit Bond Index.

 

22

Shareholder Expense Example    Nationwide Investor Destinations Moderately Aggressive Fund

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2014) and continued to hold your shares at the end of the reporting period (October 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 May 1, 2014 through October 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 May 1, 2014 through October 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 Investor Destinations
Moderately Aggressive Fund

October 31, 2014

     Beginning
Account Value ($)
05/01/14		   Ending
Account Value ($)
10/31/14		   Expenses Paid
During Period ($)
05/01/14 - 10/31/14(a)		   Expense Ratio
During Period (%)
05/01/14 - 10/31/14(a)
Class A Shares     Actual (b)    1,000.00   1,023.50   2.75   0.54
      Hypothetical (b)(c)    1,000.00   1,022.48   2.75   0.54
Class C Shares     Actual (b)    1,000.00   1,019.60   6.41   1.26
      Hypothetical (b)(c)    1,000.00   1,018.85   6.41   1.26
Class R Shares(d)     Actual (b)    1,000.00   1,020.90   4.23   0.83
      Hypothetical (b)(c)    1,000.00   1,021.02   4.23   0.83
Institutional Service Class Shares     Actual (b)    1,000.00   1,024.20   1.02   0.20
      Hypothetical (b)(c)    1,000.00   1,024.20   1.02   0.20
Institutional Class Shares     Actual (b)    1,000.00   1,025.50   0.92   0.18
      Hypothetical (b)(c)    1,000.00   1,024.30   0.92   0.18
Service Class Shares     Actual (b)    1,000.00   1,022.60   2.96   0.58
      Hypothetical (b)(c)    1,000.00   1,022.28   2.96   0.58

 

(a) Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus.

 

(b) Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2014 through October 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.

 

(c) Represents the hypothetical 5% return before expenses.

 

(d) Effective March 3, 2014 Class R2 Shares were renamed Class R Shares.

 

23

Statement of Investments

October 31, 2014

Nationwide Investor Destinations Moderately Aggressive Fund

    Mutual Funds 98.0%  
        Shares     Market
Value		  
 

 

  
 

Asset Allocation Fund 11.7%

  

 

Nationwide Portfolio Completion Fund, Institutional Class (a)

     24,567,317      $ 244,444,800   
     

 

 

  
 

Total Asset Allocation Fund
(cost $238,568,484)

   

     244,444,800   
     

 

 

  
 

 

  
 

Equity Funds 75.4%

    
 

Nationwide International Index Fund, Institutional Class (a)

     59,493,556        486,657,289   
 

Nationwide Mid Cap Market Index Fund, Institutional Class (a)

     12,866,461        255,141,922   
 

Nationwide S&P 500 Index Fund, Institutional Class (a)

     37,890,753        589,201,202   
 

Nationwide Small Cap Index Fund, Institutional Class (a)

     13,517,674        214,525,486   
 

Nationwide Ziegler Equity Income Fund, Institutional Class (a)

     1,638,826        22,812,462   
     

 

 

  
 

Total Equity Funds
(cost $1,131,221,611)

   

     1,568,338,361   
     

 

 

  
 

 

  
 

Fixed Income Funds 10.9%

    
 

Nationwide Bond Index Fund, Institutional Class (a)

     9,010,486        101,728,389   
 

Nationwide Core Plus Bond Fund, Institutional Class (a)

     8,023,819        82,565,094   
 

Nationwide HighMark Short Term Bond Fund, Institutional Class (a)

     4,199,846        42,082,458   
     

 

 

  
 

Total Fixed Income Funds
(cost $228,275,296)

   

     226,375,941   
     

 

 

  
 

Total Mutual Funds
(cost $1,598,065,391)

   

     2,039,159,102   
     

 

 

  
     
    Fixed Contract 2.1%  
        Principal
Amount		        
 

 

  
 

Nationwide Fixed Contract,
3.50% (a)(b)(c)

   $ 42,824,351        42,824,351   
     

 

 

  
 

Total Fixed Contract
(cost $42,824,351)

   

     42,824,351   
     

 

 

  
 

Total Investments
(cost $1,640,889,742) (d) — 100.1%

   

     2,081,983,453   
 

Liabilities in excess of other
assets — (0.1)%

   

     (1,156,740 ) 
     

 

 

  
 

NET ASSETS — 100.0%

  

   $ 2,080,826,713   
     

 

 

  
  (a) Investment in affiliate.

 

  (b) Fair valued security.

 

  (c) The Nationwide Fixed Contract interest rate changes quarterly. The contract is restricted and has been deemed liquid pursuant to procedures approved by the Board of Trustees. Please refer to Note 2(a) for additional information on the contract.

 

  (d) See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities.
 

 

The accompanying notes are an integral part of these financial statements.

 

24

Statement of Assets and Liabilities

October 31, 2014

      Nationwide 
Investor Destinations 
Moderately 
Aggressive Fund 

Assets:

       

Investments in affiliates, at value (cost $1,640,889,742)

    $ 2,081,983,453       

Receivable for investments sold

      1,750,051       

Receivable for capital shares issued

      735,012       

Prepaid expenses

      36,194       
  

 

 

      

Total Assets

      2,084,504,710       
  

 

 

      

Liabilities:

       

Payable for capital shares redeemed

      2,619,094       

Accrued expenses and other payables:

       

Investment advisory fees

      223,198       

Fund administration fees

      46,051       

Distribution fees

      489,780       

Administrative servicing fees

      226,195       

Accounting and transfer agent fees

      11,734       

Trustee fees

      6,247       

Custodian fees

      6,255       

Compliance program costs (Note 3)

      605       

Professional fees

      30,324       

Printing fees

      10,154       

Other

      8,360       
  

 

 

      

Total Liabilities

      3,677,997       
  

 

 

      

Net Assets

    $ 2,080,826,713       
  

 

 

      
   

Represented by:

       

Capital

    $ 1,629,457,568       

Accumulated net realized gains from affiliated investments

      10,275,434       

Net unrealized appreciation/(depreciation) from investments in affiliates

      441,093,711       
  

 

 

      

Net Assets

    $ 2,080,826,713       
  

 

 

      

Net Assets:

       

Class A Shares

    $ 123,408,650       

Class C Shares

      128,626,192       

Class R Shares

      242,451,059       

Institutional Service Class Shares

      2,589,232       

Institutional Class Shares

      341,959,809       

Service Class Shares

      1,241,791,771       
  

 

 

      

Total

    $ 2,080,826,713       
  

 

 

      

Shares Outstanding (unlimited number of shares authorized):

       

Class A Shares

      10,506,682       

Class C Shares

      11,187,197       

Class R Shares

      21,075,898       

Institutional Service Class Shares

      220,927       

Institutional Class Shares

      29,137,435       

Service Class Shares

      105,943,870       
  

 

 

      

Total

      178,072,009       
  

 

 

      
      
   
      

 

25

Statement of Assets and Liabilities (Continued)

October 31, 2014

      Nationwide 
Investor Destinations 
Moderately 
Aggressive Fund 

Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively):

       

Class A Shares (a)

    $ 11.75       

Class C Shares (b)

    $ 11.50       

Class R Shares

    $ 11.50       

Institutional Service Class Shares

    $ 11.72       

Institutional Class Shares

    $ 11.74       

Service Class Shares

    $ 11.72       

Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent):

       

Class A Shares

    $ 12.47       
  

 

 

      

Maximum Sales Charge:

       

Class A Shares

      5.75 %     
  

 

 

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
              
(a) For Class A Shares that were purchased without a sales charge because such purchase exceeded $1,000,000, a contingent deferred sales charge of 1.00% may apply to any redemption of such shares within 18 months of their purchase.
(b) For Class C Shares, the redemption price per share is reduced by a contingent deferred sales charge of 1.00% for shares held less than one year.

The accompanying notes are an integral part of these financial statements.

 

26

Statement of Operations

For the year Ended October 31, 2014

      Nationwide 
Investor Destinations 
Moderately 
Aggressive Fund 

INVESTMENT INCOME:

       

Dividend income from affiliates

    $ 41,745,568       

Interest income from affiliates

      1,431,515       
  

 

 

      

Total Income

      43,177,083       
  

 

 

      

EXPENSES:

       

Investment advisory fees

      2,705,173       

Fund administration fees

      544,639       

Distribution fees Class A

      302,298       

Distribution fees Class B (a)

      14,087       

Distribution fees Class C

      1,274,683       

Distribution fees Class R (b)

      1,231,919       

Distribution fees Service Class

      3,188,768       

Administrative servicing fees Class A

      115,841       

Administrative servicing fees Class C

      69,725       

Administrative servicing fees Class R (b)

      369,578       

Administrative servicing fees Institutional Service Class (c)

      58       

Administrative servicing fees Service Class

      1,913,270       

Registration and filing fees

      79,223       

Professional fees

      103,782       

Printing fees

      25,386       

Trustee fees

      65,596       

Custodian fees

      78,367       

Accounting and transfer agent fees

      107,107       

Compliance program costs (Note 3)

      5,955       

Other

      53,786       
  

 

 

      

Total expenses before earnings credit

      12,249,241       
  

 

 

      

Earnings credit (Note 5)

      (1,644 )     
  

 

 

      

Net Expenses

      12,247,597       
  

 

 

      

NET INVESTMENT INCOME

      30,929,486       
  

 

 

      

REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:

       

Net realized gain distributions from underlying affiliated funds

      64,980,038       

Net realized gains from investment transactions with affiliates

      14,588,323       
  

 

 

      

Net realized gains from affiliated investments

      79,568,361       
  

 

 

      

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      33,853,239       
  

 

 

      

Net realized/unrealized gains from affiliated investments

      113,421,600       
  

 

 

      

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 144,351,086       
  

 

 

      
      
      
      
      
   
      
              
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

27

Statements of Changes in Net Assets

 

     Nationwide Investor Destinations
Moderately Aggressive Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

Operations:

            

Net investment income

    $ 30,929,486         $ 28,791,116       

Net realized gains from affiliated investments

      79,568,361           38,521,404       

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      33,853,239           297,497,297       
  

 

 

   

 

 

      

Change in net assets resulting from operations

      144,351,086           364,809,817       
  

 

 

   

 

 

      
     

Distributions to Shareholders From:

            

Net investment income:

            

Class A

      (2,051,321 )         (1,662,703 )     

Class B (a)

      (39,391 )         (78,781 )     

Class C

      (1,458,768 )         (1,258,871 )     

Class R (b)

      (3,712,820 )         (3,211,038 )     

Institutional Service Class

      (684 )(c)         –       

Institutional Class

      (6,196,668 )         (4,393,383 )     

Service Class

      (21,395,325 )         (19,720,854 )     

Net realized gains:

            

Class A

      (2,417,686 )         (573,158 )     

Class B (a)

      (96,165 )         (50,991 )     

Class C

      (2,704,902 )         (730,521 )     

Class R (b)

      (5,350,857 )         (1,380,636 )     

Institutional Service Class

      –  (c)         –       

Institutional Class

      (5,912,957 )         (1,227,423 )     

Service Class

      (26,972,426 )         (7,389,943 )     
  

 

 

   

 

 

      

Change in net assets from shareholder distributions

      (78,309,970 )         (41,678,302 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

      (19,473,923 )         (32,566,829 )     
  

 

 

   

 

 

      

Change in net assets

      46,567,193           290,564,686       
  

 

 

   

 

 

      
     

Net Assets:

            

Beginning of year

      2,034,259,520           1,743,694,834       
  

 

 

   

 

 

      

End of year

    $ 2,080,826,713         $ 2,034,259,520       
  

 

 

   

 

 

      

Accumulated undistributed net investment income at end of year

    $ –         $ 626,817       
  

 

 

   

 

 

      
     

CAPITAL TRANSACTIONS:

            

Class A Shares

            

Proceeds from shares issued

    $ 26,749,727         $ 26,002,812       

Proceeds from shares issued from class conversion

      3,915,904           –       

Dividends reinvested

      3,127,547           1,515,552       

Cost of shares redeemed

      (26,513,481 )         (21,691,704 )     
  

 

 

   

 

 

      

Total Class A Shares

      7,279,697           5,826,660       
  

 

 

   

 

 

      

Class B Shares (a)

            

Proceeds from shares issued

      102,366           229,017       

Dividends reinvested

      126,042           107,509       

Cost of shares redeemed in class conversion

      (3,915,904 )         –       

Cost of shares redeemed

      (1,190,364 )         (4,896,209 )     
  

 

 

   

 

 

      

Total Class B Shares

      (4,877,860 )         (4,559,683 )     
  

 

 

   

 

 

      
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

28

Statements of Changes in Net Assets (Continued)

 

     Nationwide Investor Destinations
Moderately Aggressive Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

CAPITAL TRANSACTIONS: (continued)

            

Class C Shares

            

Proceeds from shares issued

    $ 16,465,882         $ 12,991,645       

Dividends reinvested

      1,889,835           794,176       

Cost of shares redeemed

      (18,884,806 )         (19,801,123 )     
  

 

 

   

 

 

      

Total Class C Shares

      (529,089 )         (6,015,302 )     
  

 

 

   

 

 

      

Class R Shares (b)

            

Proceeds from shares issued

      18,339,370           21,793,440       

Dividends reinvested

      8,904,328           4,506,550       

Cost of shares redeemed

      (39,125,265 )         (26,930,614 )     
  

 

 

   

 

 

      

Total Class R Shares

      (11,881,567 )         (630,624 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Proceeds from shares issued

      2,665,534  (c)         –       

Dividends reinvested

      684  (c)         –       

Cost of shares redeemed

      (134,084 )(c)         –       
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      2,532,134  (c)         –       
  

 

 

   

 

 

      

Institutional Class Shares

            

Proceeds from shares issued

      74,350,309           150,731,613       

Dividends reinvested

      12,109,625           5,620,806       

Cost of shares redeemed

      (25,935,011 )         (111,178,853 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      60,524,923           45,173,566       
  

 

 

   

 

 

      

Service Class Shares

            

Proceeds from shares issued

      96,659,941           84,075,133       

Dividends reinvested

      48,367,751           27,110,797       

Cost of shares redeemed

      (217,549,853 )         (183,547,376 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (72,522,161 )         (72,361,446 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

    $ (19,473,923 )       $ (32,566,829 )     
  

 

 

   

 

 

      

SHARE TRANSACTIONS:

            

Class A Shares

            

Issued

      2,321,321           2,498,666       

Issued in class conversion

      343,539           –       

Reinvested

      276,955           152,350       

Redeemed

      (2,297,264 )         (2,106,669 )     
  

 

 

   

 

 

      

Total Class A Shares

      644,551           544,347       
  

 

 

   

 

 

      

Class B Shares (a)

            

Issued

      9,181           22,744       

Reinvested

      11,469           11,235       

Redeemed in class conversion

      (350,075 )         –       

Redeemed

      (107,145 )         (485,197 )     
  

 

 

   

 

 

      

Total Class B Shares

      (436,570 )         (451,218 )     
  

 

 

   

 

 

      
           
           
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

29

Statements of Changes in Net Assets (Continued)

 

     Nationwide Investor Destinations
Moderately Aggressive Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

SHARE TRANSACTIONS: (continued)

            

Class C Shares

            

Issued

      1,463,227           1,271,094       

Reinvested

      171,499           82,704       

Redeemed

      (1,674,604 )         (1,948,208 )     
  

 

 

   

 

 

      

Total Class C Shares

      (39,878 )         (594,410 )     
  

 

 

   

 

 

      

Class R Shares (b)

            

Issued

      1,627,254           2,139,310       

Reinvested

      806,449           465,340       

Redeemed

      (3,478,776 )         (2,608,574 )     
  

 

 

   

 

 

      

Total Class R Shares

      (1,045,073 )         (3,924 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Issued

      232,378  (c)         –       

Reinvested

      58  (c)         –       

Redeemed

      (11,509 )(c)         –       
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      220,927  (c)         –       
  

 

 

   

 

 

      

Institutional Class Shares

            

Issued

      6,487,867           14,394,144       

Reinvested

      1,070,657           561,989       

Redeemed

      (2,245,964 )         (10,611,639 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      5,312,560           4,344,494       
  

 

 

   

 

 

      

Service Class Shares

            

Issued

      8,320,769           8,063,586       

Reinvested

      4,295,269           2,739,801       

Redeemed

      (18,851,693 )         (17,626,125 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (6,235,655 )         (6,822,738 )     
  

 

 

   

 

 

      

Total change in shares

      (1,579,138 )         (2,983,449 )     
  

 

 

   

 

 

      
           
           
           
           
           
           
           
           
           
           
           
           
           
           
                           

Amounts designated as “–” are zero or haves been rounded to zero.

 

(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

30

Financial Highlights

Selected data for each share of capital outstanding throughout the periods indicated

Nationwide Investor Destinations Moderately Aggressive Fund

 

          Operations     Distributions           Ratios/Supplemental Data  
     Net Asset
Value,
Beginning
of Period		     Net
Investment
Income		     Net Realized
and
Unrealized
Gains
(Losses)
from
Investments		     Total from
Operations		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		     Total
Return (a)(b)		     Net Assets
at End of
Period		     Ratio of
Expenses
to Average
Net Assets (c)		     Ratio of Net
Investment
Income
to Average
Net Assets (c)		     Ratio of Expenses
(Prior to
Reimbursements)
to Average
Net
Assets (c)		     Portfolio
Turnover (d)		  
Class A Shares                              

Year Ended October 31, 2014 (e)

   $ 11.38        0.18        0.63        0.81        (0.20 )      (0.24 )      (0.44 )    $ 11.75        7.33%      $ 123,408,650        0.53%        1.53%        0.53%        9.54%   

Year Ended October 31, 2013 (e)

   $ 9.60        0.17        1.85        2.02        (0.18 )      (0.06 )      (0.24 )    $ 11.38        21.44%      $ 112,242,046        0.50%        1.62%        0.50%        29.31%   

Year Ended October 31, 2012 (e)

   $ 8.95        0.15        0.71        0.86        (0.15 )      (0.06 )      (0.21 )    $ 9.60        9.82%      $ 89,406,859        0.49%        1.59%        0.49%        13.11%   

Year Ended October 31, 2011 (e)

   $ 8.80        0.16        0.15        0.31        (0.16 )      –        (0.16 )    $ 8.95        3.49%      $ 84,467,234        0.47%        1.72%        0.47%        13.88%   

Year Ended October 31, 2010 (e)

   $ 7.99        0.14        0.97        1.11        (0.14 )      (0.16 )      (0.30 )    $ 8.80        14.19%      $ 79,563,235        0.48%        1.72%        0.48%        8.57%   
                           
Class C Shares                              

Year Ended October 31, 2014 (e)

   $ 11.16        0.09        0.62        0.71        (0.13 )      (0.24 )      (0.37 )    $ 11.50        6.55%      $ 128,626,192        1.24%        0.84%        1.24%        9.54%   

Year Ended October 31, 2013 (e)

   $ 9.41        0.10        1.82        1.92        (0.11 )      (0.06 )      (0.17 )    $ 11.16        20.72%      $ 125,294,548        1.19%        0.95%        1.19%        29.31%   

Year Ended October 31, 2012 (e)

   $ 8.79        0.08        0.69        0.77        (0.09 )      (0.06 )      (0.15 )    $ 9.41        8.87%      $ 111,289,595        1.19%        0.89%        1.19%        13.11%   

Year Ended October 31, 2011 (e)

   $ 8.64        0.09        0.15        0.24        (0.09 )      –        (0.09 )    $ 8.79        2.81%      $ 119,068,548        1.20%        1.03%        1.20%        13.88%   

Year Ended October 31, 2010 (e)

   $ 7.86        0.08        0.95        1.03        (0.09 )      (0.16 )      (0.25 )    $ 8.64        13.31%      $ 131,008,292        1.19%        1.02%        1.19%        8.57%   
                           
Class R Shares (f)(g)                              

Year Ended October 31, 2014 (e)

   $ 11.16        0.14        0.61        0.75        (0.17 )      (0.24 )      (0.41 )    $ 11.50        6.92%      $ 242,451,059        0.83%        1.26%        0.83%        9.54%   

Year Ended October 31, 2013 (e)

   $ 9.41        0.13        1.82        1.95        (0.14 )      (0.06 )      (0.20 )    $ 11.16        21.15%      $ 246,852,482        0.84%        1.28%        0.84%        29.31%   

Year Ended October 31, 2012 (e)

   $ 8.79        0.11        0.69        0.80        (0.12 )      (0.06 )      (0.18 )    $ 9.41        9.27%      $ 208,283,759        0.84%        1.23%        0.84%        13.11%   

Year Ended October 31, 2011 (e)

   $ 8.64        0.12        0.16        0.28        (0.13 )      –        (0.13 )    $ 8.79        3.18%      $ 192,888,041        0.84%        1.34%        0.84%        13.88%   

Year Ended October 31, 2010 (e)

   $ 7.86        0.11        0.94        1.05        (0.11 )      (0.16 )      (0.27 )    $ 8.64        13.65%      $ 176,660,604        0.83%        1.34%        0.83%        8.57%   
                           
Institutional Service Class Shares                              

Period Ended October 31, 2014 (e)(h)

   $ 11.39        0.03        0.40        0.43        (0.10 )      –        (0.10 )    $ 11.72        3.77%      $ 2,589,232        0.20%        0.44%        0.20%        9.54%   
                           
Institutional Class Shares                              

Year Ended October 31, 2014 (e)

   $ 11.37        0.21        0.64        0.85        (0.24 )      (0.24 )      (0.48 )    $ 11.74        7.70%      $ 341,959,809        0.18%        1.85%        0.18%        9.54%   

Year Ended October 31, 2013 (e)

   $ 9.59        0.20        1.85        2.05        (0.21 )      (0.06 )      (0.27 )    $ 11.37        21.83%      $ 270,917,338        0.19%        1.88%        0.19%        29.31%   

Year Ended October 31, 2012 (e)

   $ 8.95        0.17        0.71        0.88        (0.18 )      (0.06 )      (0.24 )    $ 9.59        10.03%      $ 186,769,240        0.19%        1.86%        0.19%        13.11%   

Year Ended October 31, 2011 (e)

   $ 8.79        0.18        0.16        0.34        (0.18 )      –        (0.18 )    $ 8.95        3.89%      $ 151,618,037        0.20%        1.99%        0.20%        13.88%   

Year Ended October 31, 2010 (e)

   $ 7.99        0.16        0.97        1.13        (0.17 )      (0.16 )      (0.33 )    $ 8.79        14.39%      $ 130,223,401        0.19%        1.97%        0.19%        8.57%   
                           
Service Class Shares                              

Year Ended October 31, 2014 (e)

   $ 11.36        0.17        0.62        0.79        (0.19 )      (0.24 )      (0.43 )    $ 11.72        7.19%      $ 1,241,791,771        0.58%        1.50%        0.58%        9.54%   

Year Ended October 31, 2013 (e)

   $ 9.58        0.16        1.85        2.01        (0.17 )      (0.06 )      (0.23 )    $ 11.36        21.37%      $ 1,274,073,724        0.59%        1.56%        0.59%        29.31%   

Year Ended October 31, 2012 (e)

   $ 8.94        0.14        0.70        0.84        (0.14 )      (0.06 )      (0.20 )    $ 9.58        9.60%      $ 1,139,580,740        0.59%        1.49%        0.59%        13.11%   

Year Ended October 31, 2011 (e)

   $ 8.78        0.15        0.16        0.31        (0.15 )      –        (0.15 )    $ 8.94        3.47%      $ 1,115,586,752        0.60%        1.61%        0.60%        13.88%   

Year Ended October 31, 2010 (e)

   $ 7.98        0.13        0.96        1.09        (0.13 )      (0.16 )      (0.29 )    $ 8.78        13.96%      $ 1,119,852,454        0.58%        1.61%        0.58%        8.57%   
                                                                                                                 

Amounts designated as “–” are zero or have been rounded to zero.

(a) Excludes sales charge.
(b) Not annualized for periods less than one year.
(c) Annualized for periods less than one year.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.
(e) Per share calculations were performed using average shares method.
(f) Effective February 28, 2009, Class R Shares were renamed Class R2 Shares.
(g) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(h) For the period from March 4, 2014 (commencement of operations) through October 31, 2014. Total return is calculated based on inception date of March 3, 2014 through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

31

Fund Commentary    Nationwide Investor Destinations Moderate Fund

For the annual period ended October 31, 2014, the Nationwide Investor Destinations Moderate Fund (Service Class) returned 6.05% versus 8.20% for its composite benchmark, 45% Russell 3000® Index, 15% MSCI EAFE® Index, 25% Barclays U.S. Aggregate Bond Index and 15% Barclays U.S. 1-3 Year Government/Credit Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mixed-Asset Target Allocation Moderate Funds (consisting of 537 funds as of October 31, 2014) was 7.05% for the same time period. Performance for the Fund’s other share classes versus the benchmark is stated in the Average Annual Total Return chart in this report’s Fund Performance section.

The Fund’s return for the 12-month period covered in this report was driven primarily by strong positive returns from domestic equities. Representing about 38% of the Fund’s allocations, the Fund’s exposure to the U.S. equity markets contributed significantly to the Fund’s positive performance. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted gains far exceeding those of international markets during the reporting period. Specifically, the S&P 500® Index (representing large-cap U.S. stocks) rose more than 17%, the S&P MidCap 400® Index (mid-cap stocks) increased 11.7%, and the Russell 2000® Index (small-cap stocks) gained 8.1%. During the reporting period, the Federal Reserve ceased its purchases of assets citing “substantial improvement in the outlook for the labor market since the inception of [the Fed’s] currency asset purchase program” and noting that the Fed “continues to see sufficient underlying strength in the broader economy.”1

The equity markets within foreign developed countries (as distinguished from emerging market countries) posted near-zero returns during the reporting period. The MSCI EAFE Index (representing developed international equity markets) registered -0.1% for the reporting period. Concerns about the health of Europe’s economy and heightened risk in emerging markets posed headwinds to the international markets.

The Fund’s return also was supported during the reporting period by positive returns from intermediate-term, investment-grade, U.S. fixed-income investments. The Barclays U.S. Aggregate Bond Index (representing a broad spectrum of such bonds) posted a return of 4.1% during the reporting period, helped along by the drop in interest rates on the bellwether 10-year U.S. Treasury note from a high of 3.04% at the end of 2013 to its period low of 2.34% at the end of October 2014. The drop in rates in the latter part of the reporting period, combined with a flattening of the overall yield curve (a plotted graph line of the yields [or interest rates] on long-term and short-term maturity bonds), resulted in generally positive performance for intermediate-term bonds. Short-term, investment-grade, fixed-income rates remained range-bound near zero, effectively keeping returns for this asset class very low.

The return from the Fund’s investment in the Nationwide S&P 500 Index Fund, combined with this underlying fund’s sizable allocation within the Fund, made this underlying fund the largest contributor to the Fund’s return during the reporting period, as shown in the chart below.

All of the Fund’s underlying allocations posted positive returns during the reporting period; however, the Fund’s investment in the Nationwide International Index Fund posted a 0.05% return (contributing 0.01% to the overall Fund performance), thus contributing the least to the Fund’s overall positive return.

Portfolio Managers:

Thomas R. Hickey Jr. and Benjamin A. Richer*, Nationwide Fund Advisors

 

1 http://www.federalreserve.gov/newsevents/press/monetary/20141029a.htm

 

* As of April 30, 2014.

The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.

Investments in the Fund are subject to the risks of the Fund’s underlying funds. The Fund is subject to different levels of risk, based on the types and sizes of its underlying asset class allocations and its allocation strategy. In addition, the Fund’s underlying funds may be subject to

 

 

32

Fund Commentary (con’t.)    Nationwide Investor Destinations Moderate Fund

specific investment risks, including but not limited to: stock market risk (equity securities); default risk and interest rate risk — if interest rates go up, bond prices go down and if interest rates go down, bond prices go up (bonds); and currency fluctuations, political risks, and differences in accounting and availability of information (international securities). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.

The Fund may invest in the Nationwide Fixed Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Fixed Contract may lose money from unpaid principal or unpaid or reduced interest.

Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.

Nationwide Asset Management, LLC (NWAM) provides asset allocation consulting services to Nationwide Fund Advisors (NFA), the Fund’s investment adviser. NWAM is a registered investment adviser and wholly owned subsidiary of Nationwide Mutual Insurance Company, and therefore is affiliated with NFA. NFA makes both the asset allocation and underlying fund selection decisions for the Fund. In addition, NWAM serves as the subadviser to certain other Nationwide Funds.

There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.

A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

Nationwide Investor Destinations Moderate Fund

(October 31, 2014)

 

Underlying Fund or
Contract		   Actual
Allocation
to Fund		    

Contribution

to Fund

Performance

  
Nationwide S&P 500 Index Fund Institutional Class     20%        3.41%   
Nationwide International Index Fund Institutional Class     17%        0.01%   
Nationwide Portfolio Completion Fund Institutional Class     14%        0.38%   
Nationwide Mid Cap Market Index Fund Institutional Class     10%        1.14%   
Nationwide Bond Index Fund Institutional Class     10%        0.41%   
Nationwide Fixed Contract     8%        0.28%   
Nationwide Small Cap Index Fund Institutional Class     6%        0.48%   
Nationwide Core Plus Bond Fund Institutional Class     5%        0.19%   
Nationwide HighMark Short Term Bond Fund Institutional Class     5%        0.05%   
Nationwide Inflation-Protected Securities Fund Institutional Class     3%        0.06%   
Nationwide Ziegler Equity Income Fund Institutional Class     2%        0.28%   
      100%           

Actual underlying allocations are stated as a percentage of the Fund’s total net assets. Nationwide Fund Advisors (NFA), the investment adviser to the Fund, may add or delete asset classes or change allocations at any time and without notice in order for the Fund to meet its objective or due to market and/or economic conditions. NFA applies a long-term investment horizon with respect to the Fund, and allocation changes are not likely to be made in response to short-term market conditions.

The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Moderate Fund’s fees and expenses. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, NFA periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. For more information, refer to the Fund’s prospectus.

 

 

33

Fund Overview    Nationwide Investor Destinations Moderate Fund

 

Objective

The Fund seeks to maximize total investment return for a moderate level of risk.

Highlights

 

  Ÿ  

All of the Fund’s underlying allocations posted positive returns during the reporting period

 

 

  Ÿ  

The Fund’s investments in U.S. equity mutual funds accounted for 38% of its allocations and were the largest contributors to the return of the Fund during the reporting period

 

 

  Ÿ  

Although short-term bond interest rates remained low, the Fund’s 8% allocation to the Nationwide Fixed Contract contributed 0.28% to the Fund’s overall return during the reporting period

 

Asset Allocation†

 

Equity Funds     55.3%   
Fixed Income Funds     22.8%   
Asset Allocation Fund     14.0%   
Fixed Contract     8.0%   
Liabilities in excess of other assets     (0.1)%   
      100.0%   

Top Holdings††

 

Nationwide S&P 500 Index Fund, Institutional Class     20.3%   
Nationwide International Index Fund,
Institutional Class		     16.6%   
Nationwide Portfolio Completion Fund,
Institutional Class		     14.0%   
Nationwide Mid Cap Market Index Fund,
Institutional Class		     10.2%   
Nationwide Bond Index Fund, Institutional Class     9.8%   
Nationwide Fixed Contract     8.0%   
Nationwide Small Cap Index Fund, Institutional Class     6.0%   
Nationwide Core Plus Bond Fund, Institutional Class     5.0%   
Nationwide HighMark Short Term Bond Fund, Institutional Class     4.9%   
Nationwide Inflation-Protected Securities Fund, Institutional Class     3.0%   
Nationwide Ziegler Equity Income Fund, Institutional Class     2.2%   
      100.0%   
 

 

† Percentages indicated are based upon net assets as of October 31, 2014.

 

†† Percentages indicated are based upon total investments as of October 31, 2014.

 

34

Fund Performance    Nationwide Investor Destinations Moderate Fund

Average Annual Total Return

(For periods ended October 31, 2014)

 

        1 Yr.     5 Yr.     10 Yr.     Inception  
Class A   w/o SC1     6.08%        9.11%        5.96%        –   
    w/ SC2     (0.06)%        7.83%        5.33%        –   
Class C   w/o SC1     5.39%        8.35%        5.19%        –   
    w/SC3     4.39%        8.35%        5.19%        –   
Class R4,5         5.80%        8.73%        5.61%        –   
Institutional Service Class4         –        –        –        3.35%6*   
Institutional Class4,7         6.47%        9.43%        –        5.80%6   
Service Class4         6.05%        9.00%        5.83%        –   
Russell 3000® Index         16.07%        17.01%        8.55%        –   
S&P 500® Index         17.27%        16.69%        8.20%        –   
Barclays U.S. Aggregate Bond Index         4.14%        4.22%        4.64%        –   
MSCI EAFE® Index         (0.60)%        6.52%        5.81%        –   
Barclays U.S. 1-3 Year Gov’t/Credit Bond Index         0.89%        1.45%        2.84%        –   
Citigroup 3-Month T-Bill Index         0.04%        0.07%        1.50%        –   
Composite Index         7.77%        9.57%        6.22%        –   
CPI         1.66%        1.89%        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 

These returns do not reflect the effects of SCs.

 

2 

A 5.75% front-end sales charge was deducted.

 

3 

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.

 

4 

Not subject to any SCs.

 

5 

Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.

 

6 

Since inception date of March 3, 2014.

 

7 

These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. Effective February 21, 2014, Class B shares were converted into Class A shares.

Expense Ratios

 

    Expense Ratio^
Class A   0.88%
Class C   1.56%
Class R   1.15%
Institutional Service Class   0.63%
Institutional Class   0.50%
Service Class   0.90%

 

^ Current effective prospectus dated March 1, 2014 (as revised March 26, 2014). The expense ratio also includes indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details. Please refer to the Financial Highlights for each respective share class’ actual results.
 

 

35

Fund Performance (con’t.)    Nationwide Investor Destinations Moderate Fund

Performance of a $50,000 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.

 

LOGO

Comparative performance of $50,000 invested in Service Class shares of the Nationwide Investor Destinations Moderate Fund versus the Russell 3000® Index, the Barclays U.S. Aggregate Bond Index, the MSCI EAFE® Index, the Barclays U.S. 1-3 Year Government/Credit Bond Index, the Composite Index* and the Consumer Price Index (CPI) over the 10-year period ended 10/31/14. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

 

* The Composite Index comprises 45% Russell 3000® Index, 25% Barclays U.S. Aggregate Bond Index, 15% MSCI EAFE® Index and 15% Barclays U.S. 1-3 Year Gov’t/Credit Bond Index.

 

36

Shareholder Expense Example    Nationwide Investor Destinations Moderate Fund

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2014) and continued to hold your shares at the end of the reporting period (October 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 May 1, 2014 through October 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 May 1, 2014 through October 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 Investor Destinations
Moderate Fund

October 31, 2014

     Beginning
Account Value ($)
05/01/14		   Ending
Account Value ($)
10/31/14		   Expenses Paid
During Period ($)
05/01/14 - 10/31/14(a)		   Expense Ratio
During Period (%)
05/01/14 - 10/31/14(a)
Class A Shares     Actual (b)    1,000.00   1,019.80   2.90   0.57
      Hypothetical (b)(c)   1,000.00   1,022.33   2.91   0.57
Class C Shares     Actual (b)    1,000.00   1,016.80   6.41   1.26
      Hypothetical (b)(c)   1,000.00   1,018.85   6.41   1.26
Class R Shares(d)     Actual (b)    1,000.00   1,019.10   4.22   0.83
      Hypothetical (b)(c)   1,000.00   1,021.02   4.23   0.83
Institutional Service Class Shares     Actual (b)    1,000.00   1,021.60   1.12   0.22
      Hypothetical (b)(c)   1,000.00   1,024.10   1.12   0.22
Institutional Class Shares     Actual (b)    1,000.00   1,022.00   0.92   0.18
      Hypothetical (b)(c)   1,000.00   1,024.30   0.92   0.18
Service Class Shares     Actual (b)    1,000.00   1,020.00   2.95   0.58
      Hypothetical (b)(c)   1,000.00   1,022.28   2.96   0.58

 

(a) Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus.

 

(b) Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2014 through October 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.

 

(c) Represents the hypothetical 5% return before expenses.

 

(d) Effective March 3, 2014 Class R2 Shares were renamed Class R Shares.

 

37

Statement of Investments

October 31, 2014

Nationwide Investor Destinations Moderate Fund

    Mutual Funds 92.1%  
        Shares     Market
Value		  
 

 

  

 

 

    

 

 

  
 

Asset Allocation Fund 14.0%

 

 

Nationwide Portfolio Completion Fund, Institutional Class (a)

     25,303,982     $ 251,774,619  
     

 

 

  
 

Total Asset Allocation Fund (cost $245,827,832)

   

     251,774,619  
     

 

 

  
 

 

  
 

Equity Funds 55.3%

  

 

Nationwide International Index Fund, Institutional Class (a)

     36,540,124       298,898,216  
 

Nationwide Mid Cap Market Index Fund, Institutional Class (a)

     9,231,580       183,062,237  
 

Nationwide S&P 500 Index Fund, Institutional Class (a)

     23,529,407       365,882,282  
 

Nationwide Small Cap Index Fund, Institutional Class (a)

     6,818,251       108,205,638  
 

Nationwide Ziegler Equity Income Fund, Institutional Class (a)

     2,792,855       38,876,540  
     

 

 

  
 

Total Equity Funds
(cost $687,430,104)

   

     994,924,913  
     

 

 

  
 

 

  
 

Fixed Income Funds 22.8%

  

 

Nationwide Bond Index Fund, Institutional Class (a)

     15,716,386       177,437,996  
 

Nationwide Core Plus Bond Fund, Institutional Class (a)

     8,807,468       90,628,847  
 

Nationwide HighMark Short Term Bond Fund, Institutional Class (a)

     8,746,874       87,643,680  
 

Nationwide Inflation-Protected Securities Fund, Institutional Class (a)

     5,750,432       55,031,633  
     

 

 

  
 

Total Fixed Income Funds
(cost $417,461,227)

   

     410,742,156  
     

 

 

  
 

Total Mutual Funds
(cost $1,350,719,163)

   

     1,657,441,688  
     

 

 

  
     
    Fixed Contract 8.0%  
        Principal
Amount		     Market
Value		  
 

 

  
 

Nationwide Fixed Contract, 3.50% (a)(b)(c)

   $ 143,734,124     $ 143,734,124  
     

 

 

  
 

Total Fixed Contract
(cost $143,734,124)

   

     143,734,124  
     

 

 

  
 

Total Investments
(cost $1,494,453,287) (d) — 100.1%

   

     1,801,175,812  
 

Liabilities in excess of other
assets — (0.1)%

   

     (917,880 )
     

 

 

  
 

NET ASSETS — 100.0%

  

   $ 1,800,257,932  
     

 

 

  

 

  (a) Investment in affiliate.

 

  (b) Fair valued security.

 

  (c) The Nationwide Fixed Contract interest rate changes quarterly. The contract is restricted and has been deemed liquid pursuant to procedures approved by the Board of Trustees. Please refer to Note 2(a) for additional information on the contract.

 

  (d) See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities.
 

 

The accompanying notes are an integral part of these financial statements.

 

38

Statement of Assets and Liabilities

October 31, 2014

      Nationwide 
Investor Destinations 
Moderate Fund 

Assets:

        

Investments in affiliates, at value (cost $1,494,453,287)

    $ 1,801,175,812       

Receivable for investments sold

      784,573       

Receivable for capital shares issued

      1,155,211       

Prepaid expenses

      41,542       
  

 

 

       

Total Assets

      1,803,157,138       
  

 

 

       

Liabilities:

        

Payable for capital shares redeemed

      1,953,506       

Accrued expenses and other payables:

        

Investment advisory fees

      194,516       

Fund administration fees

      41,205       

Distribution fees

      431,999       

Administrative servicing fees

      207,352       

Accounting and transfer agent fees

      10,628       

Trustee fees

      5,361       

Custodian fees

      5,512       

Compliance program costs (Note 3)

      514       

Professional fees

      26,799       

Printing fees

      9,410       

Other

      12,404       
  

 

 

       

Total Liabilities

      2,899,206       
  

 

 

       

Net Assets

    $ 1,800,257,932       
  

 

 

       
   

Represented by:

        

Capital

    $ 1,474,125,521       

Accumulated undistributed net investment income

      594,954        

Accumulated net realized gains from affiliated investments

      18,814,932       

Net unrealized appreciation/(depreciation) from investments in affiliates

      306,722,525       
  

 

 

       

Net Assets

    $ 1,800,257,932       
  

 

 

       

Net Assets:

        

Class A Shares

    $ 143,271,556       

Class C Shares

      140,221,911       

Class R Shares

      195,865,740       

Institutional Service Class Shares

      4,576,528       

Institutional Class Shares

      343,231,738       

Service Class Shares

      973,090,459       
  

 

 

       

Total

    $ 1,800,257,932       
  

 

 

       

Shares Outstanding (unlimited number of shares authorized):

        

Class A Shares

      12,625,784       

Class C Shares

      12,558,877       

Class R Shares

      17,629,538       

Institutional Service Class Shares

      405,011       

Institutional Class Shares

      30,352,132       

Service Class Shares

      86,097,896       
  

 

 

       

Total

      159,669,238       
  

 

 

       
       
   
       
       

 

39

Statement of Assets and Liabilities (Continued)

October 31, 2014

      Nationwide 
Investor Destinations 
Moderate Fund 

Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively):

       

Class A Shares (a)

    $ 11.35       

Class C Shares (b)

    $ 11.17       

Class R Shares

    $ 11.11       

Institutional Service Class Shares

    $ 11.30       

Institutional Class Shares

    $ 11.31       

Service Class Shares

    $ 11.30       

Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent):

       

Class A Shares

    $ 12.04       
  

 

 

      

Maximum Sales Charge:

       

Class A Shares

      5.75 %     
  

 

 

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
              
(a) For Class A Shares that were purchased without a sales charge because such purchase exceeded $1,000,000, a contingent deferred sales charge of 1.00% may apply to any redemption of such shares within 18 months of their purchase.
(b) For Class C Shares, the redemption price per share is reduced by a contingent deferred sales charge of 1.00% for shares held less than one year.

The accompanying notes are an integral part of these financial statements.

 

40

Statement of Operations

For the Period Ended October 31, 2014

      Nationwide 
Investor Destinations 
Moderate Fund 

INVESTMENT INCOME:

        

Dividend income from affiliates

    $ 31,917,752       

Interest income from affiliates

      4,941,659       
  

 

 

       

Total Income

      36,859,411       
  

 

 

       

EXPENSES:

        

Investment advisory fees

      2,333,971       

Fund administration fees

      480,489       

Distribution fees Class A

      357,902       

Distribution fees Class B (a)

      5,858       

Distribution fees Class C

      1,399,266       

Distribution fees Class R (b)

      1,013,436       

Distribution fees Service Class

      2,488,007       

Administrative servicing fees Class A

      145,918       

Administrative servicing fees Class C

      76,599       

Administrative servicing fees Class R (b)

      304,032       

Administrative servicing fees Institutional Service Class (c)

      260       

Administrative servicing fees Service Class

      1,492,812       

Registration and filing fees

      80,435       

Professional fees

      91,183       

Printing fees

      21,865       

Trustee fees

      57,734       

Custodian fees

      67,341       

Accounting and transfer agent fees

      118,453       

Compliance program costs (Note 3)

      5,234       

Other

      47,833       
  

 

 

       

Total expenses before earnings credit

      10,588,628       
  

 

 

       

Earnings credit (Note 5)

      (20 )      
  

 

 

       

Net Expenses

      10,588,608       
  

 

 

       

NET INVESTMENT INCOME

      26,270,803       
  

 

 

       

REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:

        

Net realized gain distributions from underlying affiliated funds

      42,721,452       

Net realized gains from investment transactions with affiliates

      28,610,711       
  

 

 

       

Net realized gains from affiliated investments

      71,332,163       
  

 

 

       

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      6,783,028       
  

 

 

       

Net realized/unrealized gains from affiliated investments

      78,115,191       
  

 

 

       

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 104,385,994       
  

 

 

       
       
       
       
       
   
       
               
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

41

Statements of Changes in Net Assets

 

     Nationwide Investor Destinations
Moderate Fund
      Year Ended
October 31, 2014		           Year Ended
October 31, 2013		       

Operations:

            

Net investment income

    $ 26,270,803        $ 24,757,661      

Net realized gains from affiliated investments

      71,332,163          55,343,871      

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      6,783,028          159,032,853      
  

 

 

   

 

 

      

Change in net assets resulting from operations

      104,385,994          239,134,385      
  

 

 

   

 

 

      
     

Distributions to Shareholders From:

            

Net investment income:

            

Class A

      (2,342,048 )         (2,105,107 )     

Class B (a)

      (13,539 )         (39,206 )     

Class C

      (1,431,978 )         (1,305,304 )     

Class R (b)

      (2,845,110 )         (2,703,277 )     

Institutional Service Class

      (5,932 )(c)         –      

Institutional Class

      (6,170,928 )         (4,818,247 )     

Service Class

      (16,041,966 )         (15,315,096 )     

Net realized gains:

            

Class A

      (4,253,649 )         (544,335 )     

Class B (a)

      (59,199 )         (21,215 )     

Class C

      (4,344,180 )         (570,539 )     

Class R (b)

      (6,497,933 )         (874,892 )     

Institutional Service Class

      –  (c)         –      

Institutional Class

      (9,048,933 )         (1,020,096 )     

Service Class

      (30,895,590 )         (4,259,363 )     
  

 

 

   

 

 

      

Change in net assets from shareholder distributions

      (83,950,985 )         (33,576,677 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

      20,859,062          (24,468,070 )     
  

 

 

   

 

 

      

Change in net assets

      41,294,071          181,089,638      
  

 

 

   

 

 

      
     

Net Assets:

            

Beginning of year

      1,758,963,861          1,577,874,223      
  

 

 

   

 

 

      

End of year

    $ 1,800,257,932        $ 1,758,963,861      
  

 

 

   

 

 

      

Accumulated undistributed net investment income at end of year

    $ 594,954         $ 1,247,267      
  

 

 

   

 

 

      
     

CAPITAL TRANSACTIONS:

            

Class A Shares

            

Proceeds from shares issued

    $ 40,822,367        $ 42,432,527      

Proceeds from shares issued from class conversion

      1,477,480          –      

Dividends reinvested

      4,423,056          1,615,503      

Cost of shares redeemed

      (39,387,604 )         (39,848,430 )     
  

 

 

   

 

 

      

Total Class A Shares

      7,335,299          4,199,600      
  

 

 

   

 

 

      

Class B Shares (a)

            

Proceeds from shares issued

      33,347          84,241      

Dividends reinvested

      66,278          43,343      

Cost of shares redeemed in class conversion

      (1,477,480 )         –      

Cost of shares redeemed

      (672,906 )         (3,692,609 )     
  

 

 

   

 

 

      

Total Class B Shares

      (2,050,761 )         (3,565,025 )     
  

 

 

   

 

 

      
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

42

Statements of Changes in Net Assets (Continued)

 

     Nationwide Investor Destinations
Moderate Fund
      Year Ended
October 31, 2014		           Year Ended
October 31, 2013		       

CAPITAL TRANSACTIONS: (continued)

            

Class C Shares

            

Proceeds from shares issued

    $ 22,902,065        $ 24,614,959      

Dividends reinvested

      2,706,509          809,225      

Cost of shares redeemed

      (24,520,559 )         (28,142,283 )     
  

 

 

   

 

 

      

Total Class C Shares

      1,088,015          (2,718,099 )     
  

 

 

   

 

 

      

Class R Shares (b)

            

Proceeds from shares issued

      15,367,094          26,722,973      

Dividends reinvested

      8,971,795          3,465,223      

Cost of shares redeemed

      (38,306,310 )         (33,324,366 )     
  

 

 

   

 

 

      

Total Class R Shares

      (13,967,421 )         (3,136,170 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Proceeds from shares issued

      4,628,969  (c)         –      

Dividends reinvested

      5,932  (c)         –      

Cost of shares redeemed

      (110,821 )(c)         –      
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      4,524,080  (c)         –      
  

 

 

   

 

 

      

Institutional Class Shares

            

Proceeds from shares issued

      79,027,163          170,761,954      

Dividends reinvested

      15,218,911          5,838,343      

Cost of shares redeemed

      (39,981,794 )         (142,402,818 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      54,264,280          34,197,479      
  

 

 

   

 

 

      

Service Class Shares

            

Proceeds from shares issued

      99,229,155          90,884,102      

Dividends reinvested

      46,936,868          19,574,429      

Cost of shares redeemed

      (176,500,453 )         (163,904,386 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (30,334,430 )         (53,445,855 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

    $ 20,859,062        $ (24,468,070 )     
  

 

 

   

 

 

      

SHARE TRANSACTIONS:

            

Class A Shares

            

Issued

      3,654,435          4,038,405      

Issued in class conversion

      133,728          –      

Reinvested

      403,947          158,178      

Redeemed

      (3,508,921 )         (3,760,039 )     
  

 

 

   

 

 

      

Total Class A Shares

      683,189          436,544      
  

 

 

   

 

 

      

Class B Shares (a)

            

Issued

      3,048          8,173      

Reinvested

      6,126          4,347      

Redeemed in class conversion

      (134,543 )         –      

Redeemed

      (61,391 )         (355,894 )     
  

 

 

   

 

 

      

Total Class B Shares

      (186,760 )         (343,374 )     
  

 

 

   

 

 

      
           
     
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

43

Statements of Changes in Net Assets (Continued)

 

     Nationwide Investor Destinations
Moderate Fund
      Year Ended
October 31, 2014		           Year Ended
October 31, 2013		       

SHARE TRANSACTIONS: (continued)

            

Class C Shares

            

Issued

      2,084,082          2,372,525      

Reinvested

      251,756          81,304      

Redeemed

      (2,224,181 )         (2,708,625 )     
  

 

 

   

 

 

      

Total Class C Shares

      111,657          (254,796 )     
  

 

 

   

 

 

      

Class R Shares (b)

            

Issued

      1,401,087          2,591,531      

Reinvested

      837,637          347,787      

Redeemed

      (3,503,221 )         (3,215,310 )     
  

 

 

   

 

 

      

Total Class R Shares

      (1,264,497 )         (275,992 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Issued

      414,530  (c)         –      

Reinvested

      524  (c)         –      

Redeemed

      (10,043 )(c)         –      
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      405,011  (c)         –      
  

 

 

   

 

 

      

Institutional Class Shares

            

Issued

      7,094,639          16,149,599      

Reinvested

      1,392,407          571,848      

Redeemed

      (3,580,912 )         (13,469,400 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      4,906,134          3,252,047      
  

 

 

   

 

 

      

Service Class Shares

            

Issued

      8,847,176          8,652,746      

Reinvested

      4,304,229          1,928,700      

Redeemed

      (15,786,774 )         (15,560,542 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (2,635,369 )         (4,979,096 )     
  

 

 

   

 

 

      

Total change in shares

      2,019,365          (2,164,667 )     
  

 

 

   

 

 

      
           
           
           
           
           
           
           
           
           
           
           
           
           
           
                           
Amounts designated as “–” are zero or have been rounded to zero.

 

(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

44

Financial Highlights

Selected data for each share of capital outstanding throughout the periods indicated

Nationwide Investor Destinations Moderate Fund

 

          Operations     Distributions                 Ratios/Supplemental Data  
     Net Asset
Value,
Beginning
of Period		     Net
Investment
Income		     Net Realized
and
Unrealized
Gains
(Losses)
from
Investments		     Total from
Operations		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		     Total
Return (a)(b)		     Net Assets
at End
of Period		     Ratio of
Expenses
to Average
Net Assets (c)		     Ratio of Net
Investment
Income
to Average
Net Assets (c)		     Ratio of Expenses
(Prior to
Reimbursements)
to Average
Net Assets (c)		     Portfolio
Turnover (d)		  
Class A Shares                              

Year Ended October 31, 2014 (e)

   $ 11.23        0.17        0.49        0.66        (0.19 )      (0.35 )      (0.54 )    $ 11.35        6.08%      $ 143,271,556        0.54%        1.50%        0.54%        17.14%   

Year Ended October 31, 2013 (e)

   $ 9.93        0.17        1.36        1.53        (0.18 )      (0.05 )      (0.23 )    $ 11.23        15.56%      $ 134,092,908        0.50%        1.58%        0.50%        32.04%   

Year Ended October 31, 2012 (e)

   $ 9.43        0.16        0.61        0.77        (0.22 )      (0.05 )      (0.27 )    $ 9.93        8.38%      $ 114,304,018        0.49%        1.66%        0.49%        16.02%   

Year Ended October 31, 2011 (e)

   $ 9.23        0.17        0.20        0.37        (0.17 )      –        (0.17 )    $ 9.43        4.06%      $ 107,508,362        0.48%        1.82%        0.48%        14.28%   

Year Ended October 31, 2010 (e)

   $ 8.37        0.17        0.82        0.99        (0.10 )      (0.03 )      (0.13 )    $ 9.23        11.86%      $ 96,798,604        0.47%        1.89%        0.47%        9.42%   
                           
Class C Shares                              

Year Ended October 31, 2014 (e)

   $ 11.06        0.09        0.48        0.57        (0.11 )      (0.35 )      (0.46 )    $ 11.17        5.39%      $ 140,221,911        1.24%        0.81%        1.24%        17.14%   

Year Ended October 31, 2013 (e)

   $ 9.79        0.09        1.33        1.42        (0.10 )      (0.05 )      (0.15 )    $ 11.06        14.68%      $ 137,680,905        1.19%        0.89%        1.19%        32.04%   

Year Ended October 31, 2012 (e)

   $ 9.25        0.09        0.60        0.69        (0.10 )      (0.05 )      (0.15 )    $ 9.79        7.58%      $ 124,362,072        1.20%        0.97%        1.20%        16.02%   

Year Ended October 31, 2011 (e)

   $ 9.05        0.11        0.20        0.31        (0.11 )      –        (0.11 )    $ 9.25        3.37%      $ 129,312,497        1.21%        1.13%        1.21%        14.28%   

Year Ended October 31, 2010 (e)

   $ 8.28        0.10        0.81        0.91        (0.11 )      (0.03 )      (0.14 )    $ 9.05        11.09%      $ 142,313,710        1.20%        1.21%        1.20%        9.42%   
                           
Class R Shares(f)(g)                              

Year Ended October 31, 2014 (e)

   $ 11.00        0.14        0.47        0.61        (0.15 )      (0.35 )      (0.50 )    $ 11.11        5.80%      $ 195,865,740        0.83%        1.23%        0.83%        17.14%   

Year Ended October 31, 2013 (e)

   $ 9.74        0.13        1.32        1.45        (0.14 )      (0.05 )      (0.19 )    $ 11.00        15.06%      $ 207,910,628        0.84%        1.24%        0.84%        32.04%   

Year Ended October 31, 2012 (e)

   $ 9.20        0.12        0.60        0.72        (0.13 )      (0.05 )      (0.18 )    $ 9.74        7.96%      $ 186,740,830        0.85%        1.31%        0.85%        16.02%   

Year Ended October 31, 2011 (e)

   $ 9.01        0.14        0.19        0.33        (0.14 )      –        (0.14 )    $ 9.20        3.67%      $ 174,027,334        0.85%        1.46%        0.85%        14.28%   

Year Ended October 31, 2010 (e)

   $ 8.24        0.13        0.81        0.94        (0.14 )      (0.03 )      (0.17 )    $ 9.01        11.56%      $ 158,746,294        0.83%        1.54%        0.83%        9.42%   
                           
Institutional Service Class Shares                              

Period Ended October 31, 2014 (e)(h)

   $ 11.03        0.09        0.28        0.37        (0.10 )      –        (0.10 )    $ 11.30        3.35%      $ 4,576,528        0.22%        1.16%        0.22%        17.14%   
                           
Institutional Class Shares                              

Year Ended October 31, 2014 (e)

   $ 11.19        0.21        0.49        0.70        (0.23 )      (0.35 )      (0.58 )    $ 11.31        6.47%      $ 343,231,738        0.18%        1.84%        0.18%        17.14%   

Year Ended October 31, 2013 (e)

   $ 9.90        0.20        1.35        1.55        (0.21 )      (0.05 )      (0.26 )    $ 11.19        15.86%      $ 284,753,727        0.20%        1.86%        0.20%        32.04%   

Year Ended October 31, 2012 (e)

   $ 9.35        0.19        0.60        0.79        (0.19 )      (0.05 )      (0.24 )    $ 9.90        8.64%      $ 219,767,806        0.20%        1.95%        0.20%        16.02%   

Year Ended October 31, 2011 (e)

   $ 9.15        0.19        0.21        0.40        (0.20 )      –        (0.20 )    $ 9.35        4.38%      $ 176,900,980        0.21%        2.06%        0.21%        14.28%   

Year Ended October 31, 2010 (e)

   $ 8.37        0.19        0.82        1.01        (0.20 )      (0.03 )      (0.23 )    $ 9.15        12.19%      $ 131,966,219        0.20%        2.18%        0.20%        9.42%   
                           
Service Class Shares                              

Year Ended October 31, 2014 (e)

   $ 11.18        0.16        0.49        0.65        (0.18 )      (0.35 )      (0.53 )    $ 11.30        6.05%      $ 973,090,459        0.58%        1.48%        0.58%        17.14%   

Year Ended October 31, 2013 (e)

   $ 9.90        0.16        1.34        1.50        (0.17 )      (0.05 )      (0.22 )    $ 11.18        15.30%      $ 992,441,693        0.60%        1.50%        0.60%        32.04%   

Year Ended October 31, 2012 (e)

   $ 9.34        0.15        0.61        0.76        (0.15 )      (0.05 )      (0.20 )    $ 9.90        8.30%      $ 927,470,622        0.60%        1.56%        0.60%        16.02%   

Year Ended October 31, 2011 (e)

   $ 9.14        0.16        0.20        0.36        (0.16 )      –        (0.16 )    $ 9.34        3.96%      $ 897,059,520        0.61%        1.71%        0.61%        14.28%   

Year Ended October 31, 2010 (e)

   $ 8.36        0.16        0.81        0.97        (0.16 )      (0.03 )      (0.19 )    $ 9.14        11.76%      $ 891,324,745        0.59%        1.81%        0.59%        9.42%   
                                                                                                                 

Amounts designated as “–” are zero or have been rounded to zero.

(a) Excludes sales charge.
(b) Not annualized for periods less than one year.
(c) Annualized for periods less than one year.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.
(e) Per share calculations were performed using average shares method.
(f) Effective February 28, 2009, Class R Shares were renamed Class R2 Shares.
(g) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(h) For the period from March 4, 2014 (commencement of operations) through October 31, 2014. Total return is calculated based on inception date of March 3, 2014 through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

45

Fund Commentary    Nationwide Investor Destinations Moderately Conservative  Fund

For the annual period ended October 31, 2014, the Nationwide Investor Destinations Moderately Conservative Fund (Service Class) returned 4.88% versus 6.35% for its composite benchmark, 30% Russell 3000® Index, 10% MSCI EAFE® Index, 35% Barclays U.S. Aggregate Bond Index and 25% Barclays U.S. 1-3 Year Government/Credit Bond Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mixed-Asset Target Allocation Moderate Funds (consisting of 537 funds as of October 31, 2014) was 7.05% for the same time period. Performance for the Fund’s other share classes versus the benchmark is stated in the Average Annual Total Return chart in this report’s Fund Performance section.

The Fund’s return for the 12-month period covered in this report was driven primarily by strong positive returns from domestic equities. Representing about 26% of the Fund’s allocations, the Fund’s exposure to the U.S. equity markets contributed significantly to the Fund’s positive performance. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted gains far exceeding those of international markets during the reporting period. Specifically, the S&P 500® Index (representing large-cap U.S. stocks) rose more than 17%, the S&P MidCap 400® Index (mid-cap stocks) increased 11.7%, and the Russell 2000® Index (small-cap stocks) gained 8.1%. During the reporting period, the Federal Reserve ceased its purchases of assets citing “substantial improvement in the outlook for the labor market since the inception of [the Fed’s] currency asset purchase program” and noting that the Fed “continues to see sufficient underlying strength in the broader economy.”1

The equity markets within foreign developed countries (as distinguished from emerging market countries) posted near-zero returns during the reporting period. The MSCI EAFE Index (representing developed international equity markets) registered -0.1% for the reporting period. Concerns about the health of Europe’s economy and heightened risk in emerging markets posed headwinds to the international markets.

The Fund’s return also was supported by positive returns from intermediate-term, investment-grade, U.S. fixed-income investments. The Barclays U.S. Aggregate Bond Index (representing a broad spectrum of such bonds) posted a return of 4.1% during the reporting period, helped along by the drop in interest rates on the bellwether 10-year U.S. Treasury note from a high of 3.04% at the end of 2013 to its period low of 2.34% at the end of October 2014. The drop in rates in the latter part of the reporting period, combined with a flattening of the overall yield curve (a plotted graph line of the yields [or interest rates] on long-term and short-term maturity bonds), resulted in generally positive performance for intermediate-term bonds. Short-term, investment-grade, fixed-income rates remained range-bound near zero, effectively keeping returns for this asset class very low.

The return from the Fund’s investment in the Nationwide S&P 500 Index Fund, combined with this underlying fund’s allocation within the Fund, made this underlying fund the largest contributor to the Fund’s return during the reporting period, as shown in the chart below.

All of the Fund’s underlying allocations posted positive returns during the reporting period; however, the Fund’s investment in the Nationwide International Index Fund posted a 0.05% return (contributing 0.01% to the overall Fund performance), thus contributing the least to the Fund’s overall positive return.

 

1 http://www.federalreserve.gov/newsevents/press/monetary/20141029a.htm

Portfolio Managers:

Thomas R. Hickey Jr. and Benjamin Richer*, Nationwide Fund Advisors

 

* As of April 30, 2014.

Investments in the Fund are subject to the risks of the Fund’s underlying funds. The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.

The Fund is subject to different levels of risk, based on the types and sizes of its underlying asset class allocations and its allocation strategy. In addition, the Fund’s underlying funds may be subject to specific investment risks, including

 

 

46

Fund Commentary (con’t.)    Nationwide Investor Destinations Moderately Conservative Fund

but not limited to: stock market risk (equity securities); default risk and interest rate risk — if interest rates go up, bond prices go down and if interest rates go down, bond prices go up (bonds); and currency fluctuations, political risks, and differences in accounting and availability of information (international securities). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.

The Fund may invest in the Nationwide Fixed Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Fixed Contract may lose money from unpaid principal or unpaid or reduced interest.

Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.

Nationwide Asset Management, LLC (NWAM) provides asset allocation consulting services to Nationwide Fund Advisors (NFA), the Fund’s investment adviser. NWAM is a registered investment adviser and wholly owned subsidiary of Nationwide Mutual Insurance Company, and therefore is affiliated with NFA. NFA makes both the asset allocation and underlying fund selection decisions for the Fund. In addition, NWAM serves as the subadviser to certain other Nationwide Funds.

There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.

A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

Nationwide Investor Destinations Moderately Conservative Fund

(October 31, 2014)

 

Underlying Fund or Contract   Actual
Allocation
to Fund		     Contribution
to Fund
Performance		  
Nationwide Bond Index Fund Institutional Class     20%        0.81%   
Nationwide Fixed Contract     15%        0.53%   
Nationwide S&P 500 Index Fund Institutional Class     13%        2.21%   
Nationwide International Index Fund Institutional Class     10%        0.01%   
Nationwide Portfolio Completion Fund Institutional Class     10%        0.27%   
Nationwide HighMark Short Term Bond Fund Institutional Class     10%        0.10%   
Nationwide Mid Cap Market Index Fund Institutional Class     7%        0.79%   
Nationwide Inflation-Protected Securities Fund Institutional Class     5%        0.10%   
Nationwide Core Plus Bond Fund Institutional Class     4%        0.15%   
Nationwide Ziegler Equity Income Fund Institutional Class     3%        0.42%   
Nationwide Small Cap Index Fund Institutional Class     3%        0.24%   
      100%           

Actual underlying allocations are stated as a percentage of the Fund’s total net assets. Nationwide Fund Advisors (NFA), the investment adviser to the Fund, may add or delete asset classes or change allocations at any time and without notice in order for the Fund to meet its objective or due to market and/or economic conditions. NFA applies a long-term investment horizon with respect to the Fund, and allocation changes are not likely to be made in response to short-term market conditions.

The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Moderately Conservative Fund’s fees and expenses. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, NFA periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. For more information, refer to the Fund’s prospectus.

 

 

47

Fund Overview    Nationwide Investor Destinations Moderately Conservative  Fund

Objective

The Fund seeks to maximize total investment return for a moderately conservative level of risk.

Highlights

 

  Ÿ  

All of the Fund’s underlying allocations posted positive returns during the reporting period

 

 

  Ÿ  

The Fund’s investments in U.S. equity mutual funds accounted for 26% of its allocations and were the largest contributors of the return of the Fund during the reporting period

 

 

  Ÿ  

Although short-term bond interest rates remained low, the Fund’s 15% allocation to the Nationwide Fixed Contract contributed 0.53% to the Fund’s overall return during the reporting period

 

Asset Allocation†

 

Fixed Income Funds     38.8%   
Equity Funds     36.2%   
Fixed Contract     15.0%   
Asset Allocation Fund     10.0%   
Liabilities in excess of other assets ††     0.0%   
      100.0%   

Top Holdings†††

 

Nationwide Bond Index Fund, Institutional Class     19.8%   
Nationwide Fixed Contract     15.0%   
Nationwide S&P 500 Index Fund, Institutional Class     13.1%   
Nationwide HighMark Short Term Bond Fund, Institutional Class     10.0%   
Nationwide Portfolio Completion Fund, Institutional Class     10.0%   
Nationwide International Index Fund, Institutional Class     9.9%   
Nationwide Mid Cap Market Index Fund, Institutional Class     7.1%   
Nationwide Inflation-Protected Securities Fund, Institutional Class     5.0%   
Nationwide Core Plus Bond Fund, Institutional Class     4.0%   
Nationwide Ziegler Equity Income Fund, Institutional Class     3.1%   
Nationwide Small Cap Index Fund, Institutional Class     3.0%   
      100.0%   
 
† Percentages indicated are based upon net assets as of October 31, 2014.

 

†† Amount rounds to less than 0.1%.

 

††† Percentages indicated are based upon total investments as of October 31, 2014.

 

48

Fund Performance    Nationwide Investor Destinations Moderately Conservative Fund

Average Annual Total Return

(For periods ended October 31, 2014)

 

    1 Yr.     5 Yr.     10 Yr.     Inception  
Class A   w/o SC1     4.95%        6.99%        5.17%        –   
    w/ SC2     (1.10)%        5.73%        4.55%        –   
Class C   w/o SC1     4.17%        6.25%        4.43%        –   
    w/SC3     3.21%        6.25%        4.43%        –   
Class R4,5         4.63%        6.63%        4.87%        –   
Institutional Service Class4         –        –        –        3.06%6*   
Institutional Class4,7         5.38%        7.33%        –        5.23%6   
Service Class4         4.88%        6.89%        5.06%        –   
Barclays U.S. Aggregate Bond Index         4.14%        4.22%        4.64%        –   
Russell 3000® Index         16.07%        17.01%        8.55%        –   
MSCI EAFE® Index         (0.60)%        6.52%        5.81%        –   
Barclays U.S. 1-3 Year Gov’t/Credit Bond Index         0.89%        1.45%        2.84%        –   
Citigroup 3-Month T-Bill Index         0.04%        0.07%        1.50%        –   
S&P 500® Index         17.27%        16.69%        8.20%        –   
Composite Index         6.07%        7.42%        5.52%        –   
CPI         1.66%        1.89%        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 

These returns do not reflect the effects of SCs.

 

2 

A 5.75% front-end sales charge was deducted.

 

3

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.

 

4 

Not subject to any SCs.

 

5 

Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.

 

6 

Since inception date of March 3, 2014.

 

7 

These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. Effective February 21, 2014, Class B shares were converted into Class A shares.

Expense Ratios

 

    Expense Ratio^
Class A   0.88%
Class C   1.55%
Class R   1.15%
Institutional Service Class   0.63%
Institutional Class   0.50%
Service Class   0.90%

 

^ Current effective prospectus dated March 1, 2014 (as revised March 26, 2014). The expense ratio also includes indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details. Please refer to the Financial Highlights for each respective share class’ actual results.
 

 

49

Fund Performance (con’t.)    Nationwide Investor Destinations Moderately Conservative Fund

Performance of a $50,000 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.

 

LOGO

Comparative performance of $50,000 invested in Service Class shares of the Nationwide Investor Destinations Moderately Conservative Fund versus the Barclays U.S. Aggregate Bond Index, the Russell 3000® Index, the MSCI EAFE® Index, the Barclays U.S. 1-3 Year Government/Credit Bond Index, the Composite Index* and the Consumer Price Index (CPI) over the 10-year period ended 10/31/14. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

 

* The Composite Index comprises 30% Russell 3000® Index, 35% Barclays U.S. Aggregate Bond Index, 10% MSCI EAFE® Index and 25% Barclays U.S. 1-3 Year Gov’t/Credit Bond Index.

 

50

Shareholder Expense Example    Nationwide Investor Destinations Moderately Conservative Fund

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2014) and continued to hold your shares at the end of the reporting period (October 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 May 1, 2014 through October 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 May 1, 2014 through October 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 Investor Destinations
Moderately Conservative Fund

October 31, 2004

     Beginning
Account Value ($)
05/01/14		   Ending
Account Value ($)
10/31/14		   Expenses Paid
During Period ($)
05/01/14 - 10/31/14(a)		   Expense Ratio
During Period (%)
05/01/14 - 10/31/14(a)
Class A Shares     Actual (b)    1,000.00   1,017.90   2.90   0.57
      Hypothetical (b)(c)   1,000.00   1,022.33   2.91   0.57
Class C Shares     Actual (b)    1,000.00   1,014.50   6.50   1.28
      Hypothetical (b)(c)   1,000.00   1,018.75   6.51   1.28
Class R Shares(d)     Actual (b)    1,000.00   1,017.40   4.32   0.85
      Hypothetical (b)(c)   1,000.00   1,020.92   4.33   0.85
Institutional Service Class Shares     Actual (b)    1,000.00   1,020.10   1.17   0.23
      Hypothetical (b)(c)   1,000.00   1,024.05   1.17   0.23
Institutional Class Shares     Actual (b)    1,000.00   1,020.60   1.02   0.20
      Hypothetical (b)(c)   1,000.00   1,024.20   1.02   0.20
Service Class Shares     Actual (b)    1,000.00   1,018.60   3.05   0.60
      Hypothetical (b)(c)   1,000.00   1,022.18   3.06   0.60

 

(a) Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus.

 

(b) Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2014 through October 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.

 

(c) Represents the hypothetical 5% return before expenses.

 

(d) Effective March 3, 2014 Class R2 Shares were renamed Class R Shares.

 

51

Statement of Investments

October 31, 2014

Nationwide Investor Destinations Moderately Conservative Fund

    Mutual Funds 85.0%  
        Shares     Market
Value		  
 

 

  
     
 

Asset Allocation Fund 10.0%

 

 

Nationwide Portfolio Completion Fund, Institutional Class (a)

     5,987,241     $ 59,573,052  
     

 

 

  
 

Total Asset Allocation Fund
(cost $58,073,772)

   

     59,573,052  
     

 

 

  
 

 

  
 

Equity Funds 36.2%

  

 

Nationwide International Index Fund, Institutional Class (a)

     7,253,420       59,332,974  
 

Nationwide Mid Cap Market Index Fund, Institutional Class (a)

     2,132,093       42,279,411  
 

Nationwide S&P 500 Index Fund, Institutional Class (a)

     5,016,274       78,003,054  
 

Nationwide Small Cap Index Fund, Institutional Class (a)

     1,127,051       17,886,298  
 

Nationwide Ziegler Equity Income Fund, Institutional Class (a)

     1,326,412       18,463,648  
     

 

 

  
 

Total Equity Funds
(cost $164,987,820)

   

     215,965,385  
     

 

 

  
 

 

  
 

Fixed Income Funds 38.8%

  

 

Nationwide Bond Index Fund, Institutional Class (a)

     10,441,133       117,880,392  
 

Nationwide Core Plus Bond Fund, Institutional Class (a)

     2,315,382       23,825,280  
 

Nationwide HighMark Short Term Bond Fund, Institutional Class (a)

     5,951,980       59,638,836  
 

Nationwide Inflation-Protected Securities Fund, Institutional Class (a)

     3,100,565       29,672,403  
     

 

 

  
 

Total Fixed Income Funds
(cost $234,781,175)

   

     231,016,911  
     

 

 

  
 

Total Mutual Funds
(cost $457,842,767)

   

     506,555,348  
     

 

 

  
     
    Fixed Contract 15.0%  
        Principal
Amount		        
 

 

  
 

Nationwide Fixed Contract, 3.50% (a)(b)(c)

   $ 89,187,160       89,187,160  
     

 

 

  
 

Total Fixed Contract
(cost $89,187,160)

   

     89,187,160  
     

 

 

  
 

Total Investments
(cost $547,029,927) (d) — 100.0%

   

     595,742,508  
 

Liabilities in excess of other
assets — 0.0%††

   

     (230,406 )
     

 

 

  
 

NET ASSETS — 100.0%

  

   $ 595,512,102  
     

 

 

  
  (a) Investment in affiliate.

 

  (b) Fair valued security.

 

  (c) The Nationwide Fixed Contract interest rate changes quarterly. The contract is restricted and has been deemed liquid pursuant to procedures approved by the Board of Trustees. Please refer to Note 2(a) for additional information on the contract.

 

  (d) See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities.

 

  †† Amount rounds to less than 0.1%.
 

 

The accompanying notes are an integral part of these financial statements.

 

52

Statement of Assets and Liabilities

October 31, 2014

      Nationwide
Investor Destinations
Moderately
Conservative Fund

Assets:

       

Investments in affiliates, at value (cost $547,029,927)

    $ 595,742,508      

Receivable for investments sold

      918,871      

Receivable for capital shares issued

      554,051      

Prepaid expenses

      38,702      
  

 

 

      

Total Assets

      597,254,132      
  

 

 

      

Liabilities:

       

Payable for capital shares redeemed

      1,399,604      

Accrued expenses and other payables:

       

Investment advisory fees

      64,914      

Fund administration fees

      17,079      

Distribution fees

      153,646      

Administrative servicing fees

      77,912      

Accounting and transfer agent fees

      5,983      

Trustee fees

      1,783      

Custodian fees

      1,809      

Compliance program costs (Note 3)

      165      

Professional fees

      13,427      

Printing fees

      3,923      

Other

      1,785      
  

 

 

      

Total Liabilities

      1,742,030      
  

 

 

      

Net Assets

    $ 595,512,102      
  

 

 

      
   

Represented by:

       

Capital

    $ 545,267,845      

Accumulated undistributed net investment income

      500,233      

Accumulated net realized gains from affiliated investments

      1,031,443      

Net unrealized appreciation/(depreciation) from investments in affiliates

      48,712,581      
  

 

 

      

Net Assets

    $ 595,512,102      
  

 

 

      
   

Net Assets:

       

Class A Shares

    $ 58,734,361      

Class C Shares

      55,313,487      

Class R Shares

      83,675,301      

Institutional Service Class Shares

      2,070,270      

Institutional Class Shares

      111,372,125      

Service Class Shares

      284,346,558      
  

 

 

      

Total

    $ 595,512,102      
  

 

 

      

Shares Outstanding (unlimited number of shares authorized):

       

Class A Shares

      5,497,597      

Class C Shares

      5,202,497      

Class R Shares

      7,821,691      

Institutional Service Class Shares

      192,539      

Institutional Class Shares

      10,326,129      

Service Class Shares

      26,475,687      
  

 

 

      

Total

      55,516,140      
  

 

 

      
      
      

 

53

Statement of Assets and Liabilities (Continued)

October 31, 2014

      Nationwide
Investor Destinations
Moderately
Conservative Fund

Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively):

       

Class A Shares (a)

    $ 10.68       

Class C Shares (b)

    $ 10.63       

Class R Shares

    $ 10.70       

Institutional Service Class Shares

    $ 10.75       

Institutional Class Shares

    $ 10.79       

Service Class Shares

    $ 10.74       

Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent):

       

Class A Shares

    $ 11.33       
  

 

 

      

Maximum Sales Charge:

       

Class A Shares

      5.75 %     
  

 

 

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
              
(a) For Class A Shares that were purchased without a sales charge because such purchase exceeded $1,000,000, a contingent deferred sales charge of 1.00% may apply to any redemption of such shares within 18 months of their purchase.
(b) For Class C Shares, the redemption price per share is reduced by a contingent deferred sales charge of 1.00% for shares held less than one year.

The accompanying notes are an integral part of these financial statements.

 

54

Statement of Operations

For the Period Ended October 31, 2014

      Nationwide
Investor Destinations
Moderately
Conservative Fund

INVESTMENT INCOME:

        

Dividend income from affiliates

    $ 9,413,463       

Interest income from affiliates

      3,018,446       
  

 

 

       

Total Income

      12,431,909       
  

 

 

       

EXPENSES:

        

Investment advisory fees

      764,286       

Fund administration fees

      197,533       

Distribution fees Class A

      136,841       

Distribution fees Class B (a)

      2,472       

Distribution fees Class C

      515,187       

Distribution fees Class R (b)

      431,949       

Distribution fees Service Class

      731,635       

Administrative servicing fees Class A

      60,533       

Administrative servicing fees Class C

      25,892       

Administrative servicing fees Class R (b)

      129,585       

Administrative servicing fees Institutional Service Class (c)

      106       

Administrative servicing fees Service Class

      438,983       

Registration and filing fees

      78,476       

Professional fees

      48,924       

Printing fees

      15,945       

Trustee fees

      19,196       

Custodian fees

      21,997       

Accounting and transfer agent fees

      45,925       

Compliance program costs (Note 3)

      1,727       

Other

      13,637       
  

 

 

       

Total expenses before earnings credit

      3,680,829       
  

 

 

       

Earnings credit (Note 5)

      (17 )      
  

 

 

       

Net Expenses

      3,680,812       
  

 

 

       

NET INVESTMENT INCOME

      8,751,097       
  

 

 

       

REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:

        

Net realized gain distributions from underlying affiliated funds

      10,154,623       

Net realized gains from investment transactions with affiliates

      5,069,612       
  

 

 

       

Net realized gains from affiliated investments

      15,224,235       
  

 

 

       

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      3,923,073       
  

 

 

       

Net realized/unrealized gains from affiliated investments

      19,147,308       
  

 

 

       

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 27,898,405       
  

 

 

       
       
       
       
       
       
               
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

55

Statements of Changes in Net Assets

 

     Nationwide Investor Destinations
Moderately Conservative Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

Operations:

            

Net investment income

    $ 8,751,097        $ 8,373,672      

Net realized gains from affiliated investments

      15,224,235          44,896,240      

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      3,923,073          (1,962,287 )     
  

 

 

   

 

 

      

Change in net assets resulting from operations

      27,898,405          51,307,625      
  

 

 

   

 

 

      
     

Distributions to Shareholders From:

            

Net investment income:

            

Class A

      (903,512 )         (790,719 )     

Class B (a)

      (4,766 )         (11,210 )     

Class C

      (497,299 )         (442,720 )     

Class R (b)

      (1,181,605 )         (1,172,443 )     

Institutional Service Class

      (2,557 )(c)         –       

Institutional Class

      (2,009,152 )         (1,593,164 )     

Service Class

      (4,710,564 )         (4,898,835 )     

Net realized gains:

            

Class A

      (3,513,884 )         (626,934 )     

Class B (a)

      (54,900 )         (18,026 )     

Class C

      (3,262,285 )         (594,060 )     

Class R (b)

      (5,946,445 )         (1,190,565 )     

Institutional Service Class

      –  (c)         –       

Institutional Class

      (6,388,104 )         (1,028,081 )     

Service Class

      (20,230,961 )         (4,228,483 )     
  

 

 

   

 

 

      

Change in net assets from shareholder distributions

      (48,706,034 )         (16,595,240 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

      36,499,515          (2,485,220 )     
  

 

 

   

 

 

      

Change in net assets

      15,691,886          32,227,165      
  

 

 

   

 

 

      
     

Net Assets:

            

Beginning of year

      579,820,216          547,593,051      
  

 

 

   

 

 

      

End of year

    $ 595,512,102        $ 579,820,216      
  

 

 

   

 

 

      

Accumulated undistributed net investment income at end of year

    $ 500,233        $ 661,891      
  

 

 

   

 

 

      
     

CAPITAL TRANSACTIONS:

            

Class A Shares

            

Proceeds from shares issued

    $ 23,332,546        $ 16,704,699      

Proceeds from shares issued from class conversion

      607,783          –       

Dividends reinvested

      3,079,322          1,013,536      

Cost of shares redeemed

      (15,278,212 )         (16,171,370 )     
  

 

 

   

 

 

      

Total Class A Shares

      11,741,439          1,546,865      
  

 

 

   

 

 

      

Class B Shares (a)

            

Proceeds from shares issued

      3,131          57,939      

Dividends reinvested

      58,311          25,751      

Cost of shares redeemed in class conversion

      (607,783 )         –       

Cost of shares redeemed

      (302,833 )         (739,852 )     
  

 

 

   

 

 

      

Total Class B Shares

      (849,174 )         (656,162 )     
  

 

 

   

 

 

      
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

56

Statements of Changes in Net Assets (Continued)

 

     Nationwide Investor Destinations
Moderately Conservative Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

CAPITAL TRANSACTIONS: (continued)

            

Class C Shares

            

Proceeds from shares issued

    $ 17,151,764        $ 10,964,387      

Dividends reinvested

      2,120,357          502,323      

Cost of shares redeemed

      (9,165,457 )         (8,616,439 )     
  

 

 

   

 

 

      

Total Class C Shares

      10,106,664          2,850,271      
  

 

 

   

 

 

      

Class R Shares (b)

            

Proceeds from shares issued

      10,205,993          9,853,636      

Dividends reinvested

      6,892,215          2,282,342      

Cost of shares redeemed

      (18,473,547 )         (15,025,660 )     
  

 

 

   

 

 

      

Total Class R Shares

      (1,375,339 )         (2,889,682 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Proceeds from shares issued

      2,130,820  (c)         –       

Dividends reinvested

      2,557  (c)         –       

Cost of shares redeemed

      (85,693 )(c)         –       
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      2,047,684  (c)         –       
  

 

 

   

 

 

      

Institutional Class Shares

            

Proceeds from shares issued

      30,154,011          59,582,114      

Dividends reinvested

      8,395,081          2,620,089      

Cost of shares redeemed

      (17,337,575 )         (44,476,814 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      21,211,517          17,725,389      
  

 

 

   

 

 

      

Service Class Shares

            

Proceeds from shares issued

      37,612,776          39,820,384      

Dividends reinvested

      24,940,540          9,127,318      

Cost of shares redeemed

      (68,936,592 )         (70,009,603 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (6,383,276 )         (21,061,901 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

    $ 36,499,515        $ (2,485,220 )     
  

 

 

   

 

 

      

SHARE TRANSACTIONS:

            

Class A Shares

            

Issued

      2,193,771          1,554,739      

Issued in class conversion

      58,209          –       

Reinvested

      297,377          97,016      

Redeemed

      (1,443,682 )         (1,505,531 )     
  

 

 

   

 

 

      

Total Class A Shares

      1,105,675          146,224      
  

 

 

   

 

 

      

Class B Shares (a)

            

Issued

      296          5,355      

Reinvested

      5,456          2,473      

Redeemed in class conversion

      (57,974 )         –       

Redeemed

      (28,426 )         (69,551 )     
  

 

 

   

 

 

      

Total Class B Shares

      (80,648 )         (61,723 )     
  

 

 

   

 

 

      
           
           
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

57

Statements of Changes in Net Assets (Continued)

 

     Nationwide Investor Destinations
Moderately Conservative Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

SHARE TRANSACTIONS: (continued)

            

Class C Shares

            

Issued

      1,624,684          1,028,773      

Reinvested

      205,906          48,420      

Redeemed

      (864,577 )         (811,185 )     
  

 

 

   

 

 

      

Total Class C Shares

      966,013          266,008      
  

 

 

   

 

 

      

Class R Shares (b)

            

Issued

      964,420          922,547      

Reinvested

      665,030          218,515      

Redeemed

      (1,742,612 )         (1,404,329 )     
  

 

 

   

 

 

      

Total Class R Shares

      (113,162 )         (263,267 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Issued

      200,465  (c)         –       

Reinvested

      239  (c)         –       

Redeemed

      (8,165 )(c)         –       
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      192,539  (c)         –       
  

 

 

   

 

 

      

Institutional Class Shares

            

Issued

      2,821,603          5,491,565      

Reinvested

      803,170          248,037      

Redeemed

      (1,621,254 )         (4,095,776 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      2,003,519          1,643,826      
  

 

 

   

 

 

      

Service Class Shares

            

Issued

      3,520,508          3,699,770      

Reinvested

      2,398,310          870,046      

Redeemed

      (6,454,494 )         (6,484,136 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (535,676 )         (1,914,320 )     
  

 

 

   

 

 

      

Total change in shares

      3,538,260          (183,252 )     
  

 

 

   

 

 

      
           
           
           
           
           
           
           
           
           
           
           
           
           
           
                           

Amount designated as “–” is zero or has been rounded to zero.

 

(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

58

Financial Highlights

Selected data for each share of capital outstanding throughout the periods indicated

Nationwide Investor Destinations Moderately Conservative Fund

 

          Operations     Distributions           Ratios/Supplemental Data  
     Net Asset
Value,
Beginning
of Period		     Net
Investment
Income		     Net  Realized
and
Unrealized
Gains
(Losses)
from
Investments		     Total from
Operations		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End
of Period		     Total
Return (a)(b)		     Net Assets
at End of
Period		     Ratio of
Expenses
to Average
Net Assets (c)		     Ratio of Net
Investment
Income
to Average
Net Assets  (c)		     Ratio of Expenses
(Prior to
Reimbursements)
to  Average
Net Assets (c)		     Portfolio
Turnover (d)		  
Class A Shares                              

Year Ended October 31, 2014 (e)

   $ 11.11        0.16        0.35        0.51        (0.18 )      (0.76 )      (0.94 )    $ 10.68        4.95%      $ 58,734,361        0.57%        1.54%        0.57%        18.14%   

Year Ended October 31, 2013 (e)

   $ 10.46        0.17        0.81        0.98        (0.18 )      (0.15 )      (0.33 )    $ 11.11        9.59%      $ 48,814,648        0.52%        1.58%        0.52%        36.85%   

Year Ended October 31, 2012 (e)

   $ 10.08        0.18        0.49        0.67        (0.19 )      (0.10 )      (0.29 )    $ 10.46        6.81%      $ 44,422,496        0.51%        1.80%        0.51%        20.61%   

Year Ended October 31, 2011 (e)

   $ 9.86        0.20        0.22        0.42        (0.20 )      –        (0.20 )    $ 10.08        4.31%      $ 36,925,502        0.49%        1.99%        0.49%        17.89%   

Year Ended October 31, 2010 (e)

   $ 9.21        0.21        0.64        0.85        (0.20 )      –        (0.20 )    $ 9.86        9.38%      $ 33,209,551        0.50%        2.17%        0.50%        12.60%   
                           
Class C Shares                              

Year Ended October 31, 2014 (e)

   $ 11.07        0.09        0.34        0.43        (0.11 )      (0.76 )      (0.87 )    $ 10.63        4.17%      $ 55,313,487        1.26%        0.84%        1.26%        18.14%   

Year Ended October 31, 2013 (e)

   $ 10.42        0.10        0.81        0.91        (0.11 )      (0.15 )      (0.26 )    $ 11.07        8.88%      $ 46,881,793        1.21%        0.90%        1.21%        36.85%   

Year Ended October 31, 2012 (e)

   $ 10.04        0.11        0.49        0.60        (0.12 )      (0.10 )      (0.22 )    $ 10.42        6.09%      $ 41,368,353        1.22%        1.10%        1.22%        20.61%   

Year Ended October 31, 2011 (e)

   $ 9.82        0.13        0.22        0.35        (0.13 )      –        (0.13 )    $ 10.04        3.55%      $ 38,970,245        1.22%        1.27%        1.22%        17.89%   

Year Ended October 31, 2010 (e)

   $ 9.18        0.14        0.64        0.78        (0.14 )      –        (0.14 )    $ 9.82        8.65%      $ 40,700,682        1.21%        1.46%        1.21%        12.60%   
                           
Class R Shares(f)(g)                              

Year Ended October 31, 2014 (e)

   $ 11.13        0.13        0.35        0.48        (0.15 )      (0.76 )      (0.91 )    $ 10.70        4.63%      $ 83,675,301        0.86%        1.27%        0.86%        18.14%   

Year Ended October 31, 2013 (e)

   $ 10.47        0.13        0.83        0.96        (0.15 )      (0.15 )      (0.30 )    $ 11.13        9.30%      $ 88,286,612        0.86%        1.25%        0.86%        36.85%   

Year Ended October 31, 2012 (e)

   $ 10.09        0.15        0.48        0.63        (0.15 )      (0.10 )      (0.25 )    $ 10.47        6.43%      $ 85,855,793        0.86%        1.45%        0.86%        20.61%   

Year Ended October 31, 2011 (e)

   $ 9.87        0.16        0.23        0.39        (0.17 )      –        (0.17 )    $ 10.09        3.92%      $ 80,556,773        0.87%        1.61%        0.87%        17.89%   

Year Ended October 31, 2010 (e)

   $ 9.22        0.17        0.65        0.82        (0.17 )      –        (0.17 )    $ 9.87        9.00%      $ 72,987,185        0.85%        1.78%        0.85%        12.60%   
                           
Institutional Service Class Shares                              

Period Ended October 31, 2014 (e)(h)

   $ 10.53        0.10        0.22        0.32        (0.10 )      –        (0.10 )    $ 10.75        3.06%      $ 2,070,270        0.24%        1.37%        0.24%        18.14%   
                           
Institutional Class Shares                              

Year Ended October 31, 2014 (e)

   $ 11.21        0.20        0.36        0.56        (0.22 )      (0.76 )      (0.98 )    $ 10.79        5.38%      $ 111,372,125        0.21%        1.89%        0.21%        18.14%   

Year Ended October 31, 2013 (e)

   $ 10.55        0.20        0.82        1.02        (0.21 )      (0.15 )      (0.36 )    $ 11.21        9.93%      $ 93,302,759        0.21%        1.88%        0.21%        36.85%   

Year Ended October 31, 2012 (e)

   $ 10.16        0.22        0.49        0.71        (0.22 )      (0.10 )      (0.32 )    $ 10.55        7.17%      $ 70,457,429        0.22%        2.09%        0.22%        20.61%   

Year Ended October 31, 2011 (e)

   $ 9.94        0.23        0.22        0.45        (0.23 )      –        (0.23 )    $ 10.16        4.55%      $ 54,326,098        0.22%        2.21%        0.22%        17.89%   

Year Ended October 31, 2010 (e)

   $ 9.28        0.23        0.66        0.89        (0.23 )      –        (0.23 )    $ 9.94        9.74%      $ 38,719,904        0.21%        2.39%        0.21%        12.60%   
                           
Service Class Shares                              

Year Ended October 31, 2014 (e)

   $ 11.17        0.16        0.34        0.50        (0.17 )      (0.76 )      (0.93 )    $ 10.74        4.88%      $ 284,346,558        0.61%        1.52%        0.61%        18.14%   

Year Ended October 31, 2013 (e)

   $ 10.51        0.16        0.82        0.98        (0.17 )      (0.15 )      (0.32 )    $ 11.17        9.53%      $ 301,635,705        0.61%        1.50%        0.61%        36.85%   

Year Ended October 31, 2012 (e)

   $ 10.12        0.17        0.50        0.67        (0.18 )      (0.10 )      (0.28 )    $ 10.51        6.77%      $ 303,997,111        0.62%        1.70%        0.62%        20.61%   

Year Ended October 31, 2011 (e)

   $ 9.90        0.19        0.22        0.41        (0.19 )      –        (0.19 )    $ 10.12        4.15%      $ 290,405,875        0.62%        1.86%        0.62%        17.89%   

Year Ended October 31, 2010 (e)

   $ 9.25        0.20        0.64        0.84        (0.19 )      –        (0.19 )    $ 9.90        9.22%      $ 283,720,301        0.60%        2.05%        0.60%        12.60%   
                                                                                                                 

Amounts designated as “–” are zero or have been rounded to zero.

(a) Excludes sales charge.
(b) Not annualized for periods less than one year.
(c) Annualized for periods less than one year.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.
(e) Per share calculations were performed using average shares method.
(f) Effective February 28, 2009, Class R Shares were renamed Class R2 Shares.
(g) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(h) For the period from March 4, 2014 (commencement of operations) through October 31, 2014. Total return is calculated based on inception date of March 3, 2014 through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

59

Fund Commentary    Nationwide Investor Destinations Conservative  Fund

For the annual period ended October 31, 2014, the Nationwide Investor Destinations Conservative Fund (Service Class) returned 3.52% versus 4.30% for its composite benchmark, 15% Russell 3000® Index, 5% MSCI EAFE® Index, 40% Barclays U.S. Aggregate Bond Index, 35% Barclays U.S. 1-3 Year Government/Credit Bond Index and 5% Citigroup 3-Month US Treasury Bill (T-Bill) Index. For broader comparison, the median return for the Fund’s closest Lipper peer category of Mixed-Asset Target Allocation Conservative Funds (consisting of 353 funds as of October 31, 2014) was 5.45% for the same time period. Performance for the Fund’s other share classes versus the benchmark is stated in the Average Annual Total Return chart in this report’s Fund Performance section.

The Fund’s return for the 12-month period covered in this report was driven primarily by positive returns from intermediate-term, investment-grade, U.S. fixed-income investments. The Barclays U.S. Aggregate Bond Index (representing a broad spectrum of such bonds) posted a return of 4.1% during the reporting period, helped along by the drop in interest rates on the bellwether 10-year U.S. Treasury note from a high of 3.04% at the end of 2013 to its period low of 2.34% at the end of October 2014. The drop in rates in the latter part of the reporting period, combined with a flattening of the overall yield curve, resulted in generally positive performance for intermediate-term bonds. Short-term, investment-grade, fixed-income rates remained range-bound near zero, effectively keeping returns for this asset class very low.

The Fund’s return also was supported during the reporting period by strong positive returns from domestic equities. Representing about 13% of the Fund’s allocations, the Fund’s exposure to the U.S. equity markets contributed significantly to the Fund’s positive performance. In general, U.S. equity markets led the way as large-, mid- and small-capitalization stocks posted gains far exceeding those of international markets during the reporting period. Specifically, the S&P 500® Index (representing large-cap U.S. stocks) rose more than 17%, the S&P MidCap 400® Index (mid-cap stocks) increased 11.7%, and the Russell 2000® Index (small-cap stocks) gained 8.1%.

During the reporting period, the Federal Reserve ceased its purchases of assets citing “substantial improvement in the outlook for the labor market since the inception of [the Fed’s] currency asset purchase program” and noting that the Fed “continues to see sufficient underlying strength in the broader economy.”1

The equity markets within foreign developed countries (as distinguished from emerging market countries) posted near-zero returns during the reporting period. The MSCI EAFE Index (representing developed international equity markets) registered -0.1% for the reporting period. Concerns about the health of Europe’s economy and heightened risk in emerging markets posed headwinds to the international markets.

The return from the Fund’s investment in the Nationwide Bond Index Fund, combined with this underlying fund’s sizable allocation within the Fund, made this underlying fund the largest contributor to the Fund’s return during the reporting period, as shown in the chart below.

Nearly all of the Fund’s underlying allocations posted positive returns during the reporting period; the Fund’s investment in the Nationwide Money Market Fund, while relatively small, posted a 0.00% return, thus contributing the least to the Fund’s overall positive return. While slightly positive on an absolute basis, the low allocation to the Nationwide International Index Fund had a 0.00% impact on fund performance.

 

1 http://www.federalreserve.gov/newsevents/press/monetary/20141029a.htm

Portfolio Managers:

Thomas R. Hickey Jr. and Benjamin A. Richer*, Nationwide Fund Advisors

 

* As of April 30, 2014.

The Fund is designed to provide diversification across a variety of asset classes, primarily by investing in underlying funds. Therefore, in addition to the expenses of the Fund, each investor is indirectly paying a proportionate share of the applicable fees and expenses of its underlying funds.

Investments in the Fund are subject to the risks of the Fund’s underlying funds. The Fund is subject to different levels of risk, based on the types and sizes of its underlying asset class allocations and its allocation strategy. In addition, the Fund’s underlying funds may be subject to

 

 

60

Fund Commentary (con’t.)    Nationwide Investor Destinations Conservative Fund

specific investment risks, including but not limited to: stock market risk (equity securities); default risk and interest rate risk — if interest rates go up, bond prices go down and if interest rates go down, bond prices go up (bonds); and currency fluctuations, political risks, and differences in accounting and availability of information (international securities). Please refer to the most recent prospectus for a more detailed explanation of the Fund’s principal risks.

The Fund may invest in the Nationwide Fixed Contract, which is a fixed interest contract issued and guaranteed by Nationwide Life Insurance Company (Nationwide), an affiliate of the Fund’s investment adviser, Nationwide Fund Advisors. If Nationwide becomes unable to meet this guarantee, a Fund that invests in the Nationwide Fixed Contract may lose money from unpaid principal or unpaid or reduced interest.

Asset allocation is the process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.

Nationwide Asset Management, LLC (NWAM) provides asset allocation consulting services to Nationwide Fund Advisors (NFA), the Fund’s investment adviser. NWAM is a registered investment adviser and wholly owned subsidiary of Nationwide Mutual Insurance Company, and therefore is affiliated with NFA. NFA makes both the asset allocation and underlying fund selection decisions for the Fund. In addition, NWAM serves as the subadviser to certain other Nationwide Funds.

There is no assurance that the investment objective of any fund (or that of any underlying fund) will be achieved or that a diversified portfolio will produce better results than a nondiversified portfolio. Diversification does not guarantee returns or insulate an investor from potential losses, including the possible loss of principal.

A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

Nationwide Investor Destinations Conservative Fund

(October 31, 2014)

 

Underlying Fund or Contract   Actual
Allocation
to Fund		     Contribution
to Fund
Performance		  
Nationwide Bond Index Fund Institutional Class     25%        1.02%   
Nationwide Fixed Contract     22%        0.78%   
Nationwide HighMark Short Term Bond Fund Institutional Class     14%        0.14%   
Nationwide Portfolio Completion Fund Institutional Class     8%        0.22%   
Nationwide Inflation-Protected Securities Fund Institutional Class     8%        0.15%   
Nationwide S&P 500 Index Fund Institutional Class     5%        0.85%   
Nationwide Ziegler Equity Income Fund Institutional Class     4%        0.55%   
Nationwide International Index Fund Institutional Class     4%        0.00%   
Nationwide Core Plus Bond Fund Institutional Class     4%        0.15%   
Nationwide Mid Cap Market Index Fund Institutional Class     3%        0.34%   
Nationwide Money Market Fund Institutional Class     2%        0.00%   
Nationwide Small Cap Index Fund Institutional Class     1%        0.08%   
      100%           

Actual underlying allocations are stated as a percentage of the Fund’s total net assets. Nationwide Fund Advisors (NFA), the investment adviser to the Fund, may add or delete asset classes or change allocations at any time and without notice in order for the Fund to meet its objective or due to market and/or economic conditions. NFA applies a long-term investment horizon with respect to the Fund, and allocation changes are not likely to be made in response to short-term market conditions.

The contribution of underlying funds to Fund performance is based on target underlying fund allocations through the reporting period. Returns reflect the impact of each underlying fund’s fees and expenses, but do not reflect the Nationwide Investor Destinations Conservative Fund’s fees and expenses. Day-to-day market activity will likely cause the Fund’s target allocations to fluctuate. Under ordinary circumstances, NFA periodically will rebalance the assets of the Fund in order to conform its actual allocations to those stated in the then-current prospectus. For more information, refer to the Fund’s prospectus.

 

 

61

Fund Overview    Nationwide Investor Destinations Conservative  Fund

Objective

The Fund seeks to maximize total investment return for a conservative level of risk.

Highlights

 

  Ÿ  

Nearly all of the Fund’s underlying allocations posted positive returns during the reporting period

 

 

  Ÿ  

The Fund’s investments in U.S. equity mutual funds had the greatest absolute performance during the period.

 

 

  Ÿ  

Although short-term bond interest rates remained low, the Fund’s 22% allocation to the Nationwide Fixed Contract contributed 0.78% to the Fund’s overall return during the reporting period.

 

Asset Allocation†

 

Fixed Income Funds     50.8%   
Fixed Contract     21.9%   
Equity Funds     17.2%   
Asset Allocation Fund     8.0%   
Money Market Fund     2.0%   
Other assets in excess of liabilities     0.1%   
      100.0%   

Top Holdings††

 

Nationwide Bond Index Fund, Institutional Class     25.0%   
Nationwide Fixed Contract     21.9%   
Nationwide HighMark Short Term Bond Fund, Institutional Class     14.0%   
Nationwide Portfolio Completion Fund, Institutional Class     8.0%   
Nationwide Inflation-Protected Securities Fund, Institutional Class     8.0%   
Nationwide S&P 500 Index Fund, Institutional Class     5.0%   
Nationwide Ziegler Equity Income Fund, Institutional Class     4.0%   
Nationwide International Index Fund, Institutional Class     4.0%   
Nationwide Core Plus Bond Fund, Institutional Class     4.0%   
Nationwide Mid Cap Market Index Fund, Institutional Class     3.1%   
Other Holdings     3.0%   
      100.0%   
 
† Percentages indicated are based upon net assets as of October 31, 2014.

 

†† Percentages indicated are based upon total investments as of October 31, 2014.

 

62

Fund Performance    Nationwide Investor Destinations Conservative Fund

Average Annual Total Return

(For periods ended October 31, 2014)

 

        1 Yr.     5 Yr.     10 Yr.     Inception  
Class A   w/o SC1     3.70%        4.58%        4.07%        –   
    w/ SC2     (2.28)%        3.34%        3.45%        –   
Class C   w/o SC1     2.91%        3.82%        3.33%        –   
    w/SC3     1.94%        3.82%        3.33%        –   
Class R4,5         3.28%        4.22%        3.77%        –   
Institutional Service Class4         –        –        –        2.51%6*   
Institutional Class4,7         4.04%        4.88%        4.40%        –   
Service Class4         3.52%        4.45%        3.96%        –   
Barclays U.S. Aggregate Bond Index         4.14%        4.22%        4.64%        –   
Russell 3000® Index         16.07%        17.01%        8.55%        –   
MSCI EAFE® Index         (0.60)%        6.52%        5.81%        –   
Barclays U.S. 1-3 Year Gov’t/Credit Bond Index         0.89%        1.45%        2.84%        –   
Citigroup 3-Month T-Bill Index         0.04%        0.07%        1.50%        –   
S&P 500® Index         17.27%        16.69%        8.20%        –   
Composite Index         4.16%        5.00%        4.57%        –   
CPI         1.66%        1.89%        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 

These returns do not reflect the effects of SCs.

2 

A 5.75% front-end sales charge was deducted.

3 

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.

4 

Not subject to any SCs.

5 

Effective February 28, 2009, Class R Shares were renamed Class R2 Shares. Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.

6 

Since inception date of March 3, 2014.

 

7 

These returns until the creation of Institutional Class shares (12/29/04) include the performance of the Fund’s Class B shares. The returns have been adjusted for the fact that Institutional Class shares do not have any applicable SCs but have not been adjusted for the lower expenses applicable to Institutional Class shares. Excluding the effect of any fee waivers or reimbursements, such prior performance is similar to what Institutional Class shares would have produced because the Institutional Class shares invest in the same portfolio of securities as Class B shares. Effective February 21, 2014, Class B shares were converted into Class A shares.

Expense Ratios

 

    Expense Ratio^
Class A   0.89%
Class C   1.55%
Class R   1.16%
Institutional Service Class   0.64%
Institutional Class   0.51%
Service Class   0.91%

 

^ Current effective prospectus dated March 1, 2014 (as revised March 26, 2014). The expense ratio also includes indirect underlying fund expenses. Please see the Fund’s most recent prospectus for details. Please refer to the Financial Highlights for each respective share class’ actual results. Please refer to the Financial Highlights for each respective share class’ actual results.
 

 

63

Fund Performance (con’t.)    Nationwide Investor Destinations Conservative Fund

Performance of a $50,000 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.

 

LOGO

Comparative performance of $50,000 invested in Service Class shares of the Nationwide Investor Destinations Conservative Fund versus the Barclays U.S. Aggregate Bond Index, the Russell 3000® Index, the MSCI EAFE® Index, the Barclays U.S. 1-3 Year Government/Credit Bond Index, the Citigroup 3-Month Treasury Bill (T-Bill) Index, the Composite Index* and the Consumer Price Index (CPI) over the 10-year period ended 10/31/14. Unlike the Fund, the performance for these unmanaged indexes does not reflect any fees, expenses, or sales charges. Investors cannot invest directly in market indexes. A description of the benchmarks can be found on the Market Index Definitions page at the back of this book.

 

* The Composite Index comprises 15% Russell 3000® Index, 40% Barclays U.S. Aggregate Bond Index, 5% MSCI EAFE® Index, 35% Barclays U.S. 1-3 Year Gov’t/Credit Bond Index and 5% Citigroup 3-Month T-Bill Index.

 

64

Shareholder Expense Example    Nationwide Investor Destinations Conservative Fund

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) paid on purchase payments and redemption fees; and (2) ongoing costs, including investment advisory fees, administration fees, distribution fees and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. Per Securities and Exchange Commission (“SEC”) requirements, the examples assume that you had a $1,000 investment in the Class at the beginning of the reporting period (May 1, 2014) and continued to hold your shares at the end of the reporting period (October 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 May 1, 2014 through October 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 May 1, 2014 through October 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 Investor Destinations
Conservative Fund

October 31, 2014

     Beginning
Account Value ($)
05/01/14		   Ending
Account Value ($)
10/31/14		   Expenses Paid
During Period ($)
05/01/14 - 10/31/14(a)		   Expense Ratio
During Period (%)
05/01/14 - 10/31/14(a)
Class A Shares     Actual (b)    1,000.00   1,015.80   2.95   0.58
      Hypothetical (b)(c)   1,000.00   1,022.28   2.96   0.58
Class C Shares     Actual (b)    1,000.00   1,011.40   6.54   1.29
      Hypothetical (b)(c)   1,000.00   1,018.70   6.56   1.29
Class R Shares(d)     Actual (b)    1,000.00   1,014.30   4.42   0.87
      Hypothetical (b)(c)   1,000.00   1,020.82   4.43   0.87
Institutional Service Class Shares     Actual (b)    1,000.00   1,017.40   1.27   0.25
      Hypothetical (b)(c)   1,000.00   1,023.95   1.28   0.25
Institutional Class Shares     Actual (b)    1,000.00   1,017.60   1.12   0.22
      Hypothetical (b)(c)   1,000.00   1,024.10   1.12   0.22
Service Class Shares     Actual (b)    1,000.00   1,014.60   3.15   0.62
      Hypothetical (b)(c)   1,000.00   1,022.08   3.16   0.62

 

(a) Expenses are based on the direct expenses of the Fund and do not include the effect of the underlying Funds’ expenses, which are disclosed in the Fee and Expense table and described more fully in a footnote to that table in your Fund Prospectus.

 

(b) Expenses are equal to the Fund’s annualized expense ratio multiplied by the average account value from May 1, 2014 through October 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.

 

(c) Represents the hypothetical 5% return before expenses.

 

(d) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.

 

65

Statement of Investments

October 31, 2014

Nationwide Investor Destinations Conservative Fund

    Mutual Funds 78.0%  
        Shares     Market
Value		  
 

 

  
 

Asset Allocation Fund 8.0%

    
 

Nationwide Portfolio Completion Fund, Institutional Class (a)

     3,807,686     $ 37,886,479  
     

 

 

  
 

Total Asset Allocation Fund
(cost $36,973,062)

   

     37,886,479  
     

 

 

  
 

 

  
 

Equity Funds 17.2%

    
 

Nationwide International Index Fund, Institutional Class (a)

     2,332,635       19,080,955  
 

Nationwide Mid Cap Market Index Fund, Institutional Class (a)

     724,294       14,362,749  
 

Nationwide S&P 500 Index Fund, Institutional Class (a)

     1,530,493       23,799,160  
 

Nationwide Small Cap Index Fund, Institutional Class (a)

     298,447       4,736,347  
 

Nationwide Ziegler Equity Income Fund, Institutional Class (a)

     1,370,758       19,080,955  
     

 

 

  
 

Total Equity Funds
(cost $66,558,544)

   

     81,060,166  
     

 

 

  
 

 

  
 

Fixed Income Funds 50.8%

    
 

Nationwide Bond Index Fund, Institutional Class (a)

     10,440,333       117,871,360  
 

Nationwide Core Plus Bond Fund, Institutional Class (a)

     1,829,217       18,822,644  
 

Nationwide HighMark Short Term Bond Fund, Institutional Class (a)

     6,583,686       65,968,529  
 

Nationwide Inflation-Protected Securities Fund, Institutional Class (a)

     3,927,680       37,587,896  
     

 

 

  
 

Total Fixed Income Funds
(cost $244,313,420)

   

     240,250,429  
     

 

 

  
 

 

  
 

Money Market Fund 2.0%

 

 

Nationwide Money Market Fund, Institutional Class, 0.00% (a)(b)

     9,354,946       9,354,946  
     

 

 

  
 

Total Money Market Fund
(cost $9,354,946)

   

     9,354,946  
     

 

 

  
 

Total Mutual Funds
(cost $357,199,972)

   

     368,552,020  
     

 

 

  
     
    Fixed Contract 21.9%  
        Principal
Amount		     Market
Value		  
 

 

  
 

Nationwide Fixed Contract,
3.50% (a)(c)(d)

   $ 103,605,467     $ 103,605,467  
     

 

 

  
 

Total Fixed Contract
(cost $103,605,467)

   

     103,605,467  
     

 

 

  
 

Total Investments
(cost $460,805,439) (e) — 99.9%

   

     472,157,487  
 

Other assets in excess of liabilities — 0.1%

  

     243,578  
     

 

 

  
 

NET ASSETS — 100.0%

     $ 472,401,065  
     

 

 

  

 

  (a) Investment in affiliate.

 

  (b) Represents 7-day effective yield as of October 31, 2014.

 

  (c) The Nationwide Fixed Contract interest rate changes quarterly. The contract is restricted and has been deemed liquid pursuant to procedures approved by the Board of Trustees. Please refer to Note 2(a) for additional information on the contract.

 

  (d) Fair valued security.

 

  (e) See notes to financial statements for tax cost and unrealized appreciation/(depreciation) of securities.
 

 

The accompanying notes are an integral part of these financial statements.

 

66

Statement of Assets and Liabilities

October 31, 2014

      Nationwide
Investor Destinations
Conservative Fund

Assets:

       

Investments in affiliates, at value (cost $460,805,439)

    $ 472,157,487      

Cash

      46      

Receivable for investments sold

      387,208      

Receivable for capital shares issued

      1,054,125      

Prepaid expenses

      40,476      
  

 

 

      

Total Assets

      473,639,342      
  

 

 

      

Liabilities:

       

Payable for capital shares redeemed

      946,645      

Accrued expenses and other payables:

       

Investment advisory fees

      51,426      

Fund administration fees

      14,800      

Distribution fees

      135,972      

Administrative servicing fees

      60,262      

Accounting and transfer agent fees

      6,098      

Trustee fees

      1,387      

Custodian fees

      1,278      

Compliance program costs (Note 3)

      122      

Professional fees

      11,894      

Printing fees

      5,786      

Other

      2,607      
  

 

 

      

Total Liabilities

      1,238,277      
  

 

 

      

Net Assets

    $ 472,401,065      
  

 

 

      
   

Represented by:

       

Capital

    $ 458,759,594      

Accumulated undistributed net investment income

      565,388      

Accumulated net realized gains from affiliated investments

      1,724,035      

Net unrealized appreciation/(depreciation) from investments in affiliates

      11,352,048      
  

 

 

      

Net Assets

    $ 472,401,065      
  

 

 

      

Net Assets:

       

Class A Shares

    $ 81,289,282      

Class C Shares

      72,301,458      

Class R Shares

      51,948,486      

Institutional Service Class Shares

      13,465,257      

Institutional Class Shares

      69,248,334      

Service Class Shares

      184,148,248      
  

 

 

      

Total

    $ 472,401,065      
  

 

 

      

Shares Outstanding (unlimited number of shares authorized):

       

Class A Shares

      7,893,961      

Class C Shares

      7,050,873      

Class R Shares

      5,057,922      

Institutional Service Class Shares

      1,303,964      

Institutional Class Shares

      6,692,754      

Service Class Shares

      17,835,494      
  

 

 

      

Total

      45,834,968      
  

 

 

      
      
      

 

67

Statement of Assets and Liabilities (Continued)

October 31, 2014

      Nationwide
Investor Destinations
Conservative Fund

Net asset value and redemption price per share (Net assets by class divided by shares outstanding by class, respectively):

       

Class A Shares (a)

    $ 10.30       

Class C Shares (b)

    $ 10.25       

Class R Shares

    $ 10.27       

Institutional Service Class Shares

    $ 10.33       

Institutional Class Shares

    $ 10.35       

Service Class Shares

    $ 10.32       

Maximum offering price per share (100%/(100%-maximum sales charge) of net asset value adjusted to the nearest cent):

       

Class A Shares

    $ 10.93       
  

 

 

      

Maximum Sales Charge:

       

Class A Shares

      5.75 %     
  

 

 

      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
              
(a) For Class A Shares that were purchased without a sales charge because such purchase exceeded $1,000,000, a contingent deferred sales charge of 1.00% may apply to any redemption of such shares within 18 months of their purchase.
(b) For Class C Shares, the redemption price per share is reduced by a contingent deferred sales charge of 1.00% for shares held less than one year.

The accompanying notes are an integral part of these financial statements.

 

68

Statement of Operations

For the Period Ended October 31, 2014

      Nationwide
Investor Destinations
Conservative Fund

INVESTMENT INCOME:

       

Dividend income from affiliates

    $ 5,955,748       

Interest income from affiliates

      3,321,629       
  

 

 

      

Total Income

      9,277,377      
  

 

 

      

EXPENSES:

       

Investment advisory fees

      575,004      

Fund administration fees

      165,441      

Distribution fees Class A

      180,874      

Distribution fees Class B (a)

      1,107      

Distribution fees Class C

      567,208      

Distribution fees Class R (b)

      275,989      

Distribution fees Service Class

      467,574      

Administrative servicing fees Class A

      74,084      

Administrative servicing fees Class C

      29,766      

Administrative servicing fees Class R (b)

      82,797      

Administrative servicing fees Institutional Service Class (c)

      542      

Administrative servicing fees Service Class

      286,992      

Registration and filing fees

      85,438      

Professional fees

      42,546      

Printing fees

      22,376      

Trustee fees

      14,526      

Custodian fees

      16,417      

Accounting and transfer agent fees

      49,163      

Compliance program costs (Note 3)

      1,306      

Other

      10,695      
  

 

 

      

Total expenses before earnings credit

      2,949,845      
  

 

 

      

Earnings credit (Note 5)

      (16 )     
  

 

 

      

Net Expenses

      2,949,829      
  

 

 

      

NET INVESTMENT INCOME

      6,327,548      
  

 

 

      

REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:

       

Net realized gain distributions from underlying affiliated funds

      4,257,614      

Net realized losses from investment transactions with affiliates

      (234,765 )     
  

 

 

      

Net realized gains from affiliated investments

      4,022,849      
  

 

 

      

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      4,923,880      
  

 

 

      

Net realized/unrealized gains from affiliated investments

      8,946,729      
  

 

 

      

CHANGE IN NET ASSETS RESULTING FROM OPERATIONS

    $ 15,274,277      
  

 

 

      
      
      
      
      
              
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

69

Statements of Changes in Net Assets

 

     Nationwide Investor Destinations
Conservative Fund
      Year Ended
October 31, 2014		    Year Ended
October 31,  2013

Operations:

            

Net investment income

    $ 6,327,548        $ 6,192,084      

Net realized gains from affiliated investments

      4,022,849          25,904,687      

Net change in unrealized appreciation/(depreciation) from investments in affiliates

      4,923,880          (14,781,998 )     
  

 

 

   

 

 

      

Change in net assets resulting from operations

      15,274,277          17,314,773      
  

 

 

   

 

 

      
     

Distributions to Shareholders From:

            

Net investment income:

            

Class A

      (1,125,442 )         (896,263 )     

Class B (a)

      (1,735 )         (4,868 )     

Class C

      (504,991 )         (479,474 )     

Class R (b)

      (711,860 )         (842,015 )     

Institutional Service Class

      (18,248 )(c)         –      

Institutional Class

      (1,319,073 )         (1,087,995 )     

Service Class

      (2,847,468 )         (3,314,045 )     

Net realized gains:

            

Class A

      (3,043,206 )         (913,246 )     

Class B (a)

      (18,499 )         (10,854 )     

Class C

      (2,475,725 )         (794,205 )     

Class R (b)

      (2,830,129 )         (1,134,899 )     

Institutional Service Class

      –  (c)         –      

Institutional Class

      (3,270,104 )         (872,748 )     

Service Class

      (9,367,981 )         (3,722,603 )     
  

 

 

   

 

 

      

Change in net assets from shareholder distributions

      (27,534,461 )         (14,073,215 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

      55,988,226          (3,525,222 )     
  

 

 

   

 

 

      

Change in net assets

      43,728,042          (283,664 )     
  

 

 

   

 

 

      
     

Net Assets:

            

Beginning of year

      428,673,023          428,956,687      
  

 

 

   

 

 

      

End of year

    $ 472,401,065        $ 428,673,023      
  

 

 

   

 

 

      

Accumulated undistributed net investment income at end of year

    $ 565,388        $ 652,785      
  

 

 

   

 

 

      
     

CAPITAL TRANSACTIONS:

            

Class A Shares

            

Proceeds from shares issued

    $ 60,098,017        $ 35,486,527      

Proceeds from shares issued from class conversion

      253,391          –      

Dividends reinvested

      2,961,550          1,189,076      

Cost of shares redeemed

      (41,736,036 )         (27,016,636 )     
  

 

 

   

 

 

      

Total Class A Shares

      21,576,922          9,658,967      
  

 

 

   

 

 

      

Class B Shares (a)

            

Proceeds from shares issued

      575          122,678      

Dividends reinvested

      18,324          11,564      

Cost of shares redeemed in class conversion

      (253,391 )         –      

Cost of shares redeemed

      (147,348 )         (447,379 )     
  

 

 

   

 

 

      

Total Class B Shares

      (381,840 )         (313,137 )     
  

 

 

   

 

 

      
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

70

Statements of Changes in Net Assets (Continued)

 

     Nationwide Investor Destinations
Conservative Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

CAPITAL TRANSACTIONS: (continued)

            

Class C Shares

            

Proceeds from shares issued

    $ 37,388,479        $ 19,103,463      

Dividends reinvested

      1,804,373          712,048      

Cost of shares redeemed

      (15,639,872 )         (13,093,639 )     
  

 

 

   

 

 

      

Total Class C Shares

      23,552,980          6,721,872      
  

 

 

   

 

 

      

Class R Shares (b)

            

Proceeds from shares issued

      6,253,476          10,116,540      

Dividends reinvested

      3,462,123          1,922,683      

Cost of shares redeemed

      (14,803,137 )         (18,559,538 )     
  

 

 

   

 

 

      

Total Class R Shares

      (5,087,538 )         (6,520,315 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Proceeds from shares issued

      13,777,518  (c)         –      

Dividends reinvested

      18,248  (c)         –      

Cost of shares redeemed

      (412,793 )(c)         –      
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      13,382,973  (c)         –      
  

 

 

   

 

 

      

Institutional Class Shares

            

Proceeds from shares issued

      34,078,911          58,072,714      

Dividends reinvested

      4,588,443          1,960,346      

Cost of shares redeemed

      (31,475,093 )         (44,516,969 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      7,192,261          15,516,091      
  

 

 

   

 

 

      

Service Class Shares

            

Proceeds from shares issued

      38,286,740          32,082,777      

Dividends reinvested

      12,214,017          7,036,372      

Cost of shares redeemed

      (54,748,289 )         (67,707,849 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (4,247,532 )         (28,588,700 )     
  

 

 

   

 

 

      

Change in net assets from capital transactions

    $ 55,988,226        $ (3,525,222 )     
  

 

 

   

 

 

      

SHARE TRANSACTIONS:

            

Class A Shares

            

Issued

      5,863,781          3,381,795      

Issued in class conversion

      25,055          –      

Reinvested

      294,189          114,647      

Redeemed

      (4,066,911 )         (2,575,432 )     
  

 

 

   

 

 

      

Total Class A Shares

      2,116,114          921,010      
  

 

 

   

 

 

      

Class B Shares (a)

            

Issued

      57          11,562      

Reinvested

      1,812          1,110      

Redeemed in class conversion

      (24,865 )         –      

Redeemed

      (14,428 )         (42,395 )     
  

 

 

   

 

 

      

Total Class B Shares

      (37,424 )         (29,723 )     
  

 

 

   

 

 

      
           
           
           
(a) Effective February 21, 2014, Class B Shares were converted into Class A Shares.
(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

 

71

Statements of Changes in Net Assets (Continued)

 

     Nationwide Investor Destinations
Conservative Fund
      Year Ended
October 31, 2014		    Year Ended
October 31, 2013

SHARE TRANSACTIONS: (continued)

            

Class C Shares

            

Issued

      3,664,978          1,827,122      

Reinvested

      180,084          68,934      

Redeemed

      (1,531,556 )         (1,254,646 )     
  

 

 

   

 

 

      

Total Class C Shares

      2,313,506          641,410      
  

 

 

   

 

 

      

Class R Shares (b)

            

Issued

      614,406          967,846      

Reinvested

      345,144          186,013      

Redeemed

      (1,449,208 )         (1,774,803 )     
  

 

 

   

 

 

      

Total Class R Shares

      (489,658 )         (620,944 )     
  

 

 

   

 

 

      

Institutional Service Class Shares

            

Issued

      1,342,318  (c)         –      

Reinvested

      1,777  (c)         –      

Redeemed

      (40,131 )(c)         –      
  

 

 

   

 

 

      

Total Institutional Service Class Shares

      1,303,964  (c)         –      
  

 

 

   

 

 

      

Institutional Class Shares

            

Issued

      3,314,086          5,509,774      

Reinvested

      454,057          188,197      

Redeemed

      (3,067,413 )         (4,216,114 )     
  

 

 

   

 

 

      

Total Institutional Class Shares

      700,730          1,481,857      
  

 

 

   

 

 

      

Service Class Shares

            

Issued

      3,720,256          3,052,095      

Reinvested

      1,211,040          677,319      

Redeemed

      (5,317,159 )         (6,442,924 )     
  

 

 

   

 

 

      

Total Service Class Shares

      (385,863 )         (2,713,510 )     
  

 

 

   

 

 

      

Total change in shares

      5,521,369          (319,900 )     
  

 

 

   

 

 

      
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
    

 

 

   

 

 

      

Amount designated as “–” is zero or has been rounded to zero.

 

(b) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(c) For the period from March 4, 2014 (commencement of operations) through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

72

Statement of Cash Flows

For the Year Ended October 31, 2014 (as restated) (a)

      Investor
Destination
Conservative
Fund

DECREASE IN CASH

       

Cash flows used in operating activities:

       

Net increase in net assets from operations

    $ 15,274,277       

Adjustments to reconcile net increase/decrease in net assets from operations to net cash used in operating activities:

       

Purchase of affiliated investments

      (136,282,389 )     

Proceeds from disposition of affiliated investments

      110,973,682       

Reinvestment of dividend income from affiliates

      (5,955,748 )     

Reinvestment of interest income from affiliates

      (3,321,629 )     

Change in unrealized (appreciation)/depreciation from investments in affiliates

      (4,923,880 )     

Reinvestment of net realized gain distributions from underlying affiliated funds

      (4,257,614 )     

Net realized loss from investment transactions with affiliates

      234,765       

Increase in receivable for investments sold

      (387,208 )     

Decrease in prepaid expenses

      2,365       

Decrease in payable for investments purchased

      (107,106 )     

Increase in investment advisory fees

      4,167       

Decrease in fund administration fees

      (433 )     

Increase in administrative servicing fees

      18,813       

Increase in distribution fees

      14,350       

Decrease in accounting and transfer agent fees

      (9,583 )     

Decrease in custodian fees

      (201 )     

Increase in trustee fees

      1,351       

Decrease in compliance program costs

      (106 )     

Decrease in professional fees

      (2,420 )     

Increase in printing fees

      2,089       

Increase in other payables

      2,153       
  

 

 

      

Net cash used in operating activities

      (28,720,305 )     
  

 

 

      
   

Cash flows provided by financing activities:

       

Proceeds from shares issued

      190,359,700       

Cost of shares redeemed

      (159,172,174 )     

Cash distributions paid to shareholders

      (2,467,383 )     
  

 

 

      

Net cash provided by financing activities

      28,720,143       
  

 

 

      

Net decrease in cash

      (162 )     
  

 

 

      
   

Cash:

       

Beginning of period

      208       
  

 

 

      

End of period

    $ 46       
  

 

 

      
      
      
      
      
      
              

Supplemental disclosure of cash flow information:

Noncash financing activities not included herein consist of reinvestment of dividends and distributions of $25,067,078 and share class conversion of $253,391.

(a) Please refer to Note 12 for additional information.

The accompanying notes are an integral part of these financial statements.

 

73

Financial Highlights

Selected data for each share of capital outstanding throughout the periods indicated

Nationwide Investor Destinations Conservative Fund

 

          Operations     Distributions           Ratios/Supplemental Data  
     Net Asset
Value,
Beginning
of Period		     Net
Investment
Income		     Net Realized
and
Unrealized
Gains
(Losses)
from
Investments		     Total from
Operations		     Net
Investment
Income		     Net
Realized
Gains		     Total
Distributions		     Net Asset
Value, End of
Period		     Total
Return (a)(b)		     Net Assets
at End of
Period		     Ratio of
Expenses
to Average
Net Assets (c)		     Ratio of Net
Investment
Income
to Average
Net Assets (c)		     Ratio of
Expenses
(Prior to
Reimbursements)
to Average
Net Assets (c)		     Portfolio
Turnover (d)		  
Class A Shares                              

Year Ended October 31, 2014 (e)

   $ 10.62        0.15        0.22        0.37        (0.17 )      (0.52 )      (0.69 )    $ 10.30        3.70%      $ 81,289,282        0.57%        1.51%        0.57%        25.03%   

Year Ended October 31, 2013 (e)

   $ 10.55        0.16        0.27        0.43        (0.18 )      (0.18 )      (0.36 )    $ 10.62        4.17%      $ 61,383,390        0.55%        1.57%        0.55%        39.16%   

Year Ended October 31, 2012 (e)

   $ 10.32        0.19        0.31        0.50        (0.20 )      (0.07 )      (0.27 )    $ 10.55        4.89%      $ 51,231,565        0.52%        1.87%        0.52%        15.75%   

Year Ended October 31, 2011 (e)

   $ 10.18        0.21        0.14        0.35        (0.21 )      –        (0.21 )    $ 10.32        3.51%      $ 34,889,691        0.50%        2.04%        0.50%        17.28%   

Year Ended October 31, 2010 (e)

   $ 9.77        0.23        0.41        0.64        (0.23 )      –        (0.23 )    $ 10.18        6.66%      $ 22,095,197        0.51%        2.33%        0.51%        15.48%   
                           
Class C Shares                              

Year Ended October 31, 2014 (e)

   $ 10.58        0.08        0.21        0.29        (0.10 )      (0.52 )      (0.62 )    $ 10.25        2.91%      $ 72,301,458        1.27%        0.81%        1.27%        25.03%   

Year Ended October 31, 2013 (e)

   $ 10.51        0.09        0.27        0.36        (0.11 )      (0.18 )      (0.29 )    $ 10.58        3.49%      $ 50,139,130        1.23%        0.87%        1.23%        39.16%   

Year Ended October 31, 2012 (e)

   $ 10.28        0.12        0.30        0.42        (0.12 )      (0.07 )      (0.19 )    $ 10.51        4.17%      $ 43,051,481        1.23%        1.17%        1.23%        15.75%   

Year Ended October 31, 2011 (e)

   $ 10.15        0.14        0.13        0.27        (0.14 )      –        (0.14 )    $ 10.28        2.63%      $ 33,770,729        1.24%        1.33%        1.24%        17.28%   

Year Ended October 31, 2010 (e)

   $ 9.74        0.16        0.41        0.57        (0.16 )      –        (0.16 )    $ 10.15        5.92%      $ 33,490,120        1.23%        1.64%        1.23%        15.48%   
                           
Class R Shares (f)(g)                              

Year Ended October 31, 2014 (e)

   $ 10.60        0.13        0.19        0.32        (0.13 )      (0.52 )      (0.65 )    $ 10.27        3.28%      $ 51,948,486        0.87%        1.23%        0.87%        25.03%   

Year Ended October 31, 2013 (e)

   $ 10.52        0.13        0.27        0.40        (0.14 )      (0.18 )      (0.32 )    $ 10.60        3.92%      $ 58,782,811        0.88%        1.24%        0.88%        39.16%   

Year Ended October 31, 2012 (e)

   $ 10.29        0.16        0.30        0.46        (0.16 )      (0.07 )      (0.23 )    $ 10.52        4.52%      $ 64,893,180        0.88%        1.52%        0.88%        15.75%   

Year Ended October 31, 2011 (e)

   $ 10.15        0.17        0.14        0.31        (0.17 )      –        (0.17 )    $ 10.29        3.10%      $ 60,593,403        0.88%        1.67%        0.88%        17.28%   

Year Ended October 31, 2010 (e)

   $ 9.75        0.19        0.41        0.60        (0.20 )      –        (0.20 )    $ 10.15        6.31%      $ 53,173,161        0.87%        1.96%        0.87%        15.48%   
                           
Institutional Service Class Shares                              

Period Ended October 31, 2014 (e)(h)

   $ 10.18        0.11        0.14        0.25        (0.10 )      –        (0.10 )    $ 10.33        2.51%      $ 13,465,257        0.25%        1.64%        0.25%        25.03%   
                           
Institutional Class Shares                              

Year Ended October 31, 2014 (e)

   $ 10.67        0.19        0.21        0.40        (0.20 )      (0.52 )      (0.72 )    $ 10.35        4.04%      $ 69,248,334        0.22%        1.87%        0.22%        25.03%   

Year Ended October 31, 2013 (e)

   $ 10.59        0.20        0.27        0.47        (0.21 )      (0.18 )      (0.39 )    $ 10.67        4.58%      $ 63,938,645        0.23%        1.86%        0.23%        39.16%   

Year Ended October 31, 2012 (e)

   $ 10.36        0.23        0.30        0.53        (0.23 )      (0.07 )      (0.30 )    $ 10.59        5.16%      $ 47,775,938        0.23%        2.16%        0.23%        15.75%   

Year Ended October 31, 2011 (e)

   $ 10.22        0.24        0.14        0.38        (0.24 )      –        (0.24 )    $ 10.36        3.75%      $ 36,683,488        0.24%        2.31%        0.24%        17.28%   

Year Ended October 31, 2010 (e)

   $ 9.81        0.25        0.42        0.67        (0.26 )      –        (0.26 )    $ 10.22        6.94%      $ 26,174,857        0.23%        2.54%        0.23%        15.48%   
                           
Service Class Shares                              

Year Ended October 31, 2014 (e)

   $ 10.65        0.15        0.20        0.35        (0.16 )      (0.52 )      (0.68 )    $ 10.32        3.52%      $ 184,148,248        0.63%        1.48%        0.63%        25.03%   

Year Ended October 31, 2013 (e)

   $ 10.57        0.16        0.27        0.43        (0.17 )      (0.18 )      (0.35 )    $ 10.65        4.16%      $ 194,028,941        0.63%        1.49%        0.63%        39.16%   

Year Ended October 31, 2012 (e)

   $ 10.34        0.18        0.30        0.48        (0.18 )      (0.07 )      (0.25 )    $ 10.57        4.75%      $ 221,292,727        0.63%        1.77%        0.63%        15.75%   

Year Ended October 31, 2011 (e)

   $ 10.20        0.20        0.14        0.34        (0.20 )      –        (0.20 )    $ 10.34        3.35%      $ 218,800,000        0.64%        1.93%        0.64%        17.28%   

Year Ended October 31, 2010 (e)

   $ 9.79        0.22        0.41        0.63        (0.22 )      –        (0.22 )    $ 10.20        6.52%      $ 208,433,654        0.62%        2.25%        0.62%        15.48%   
                                                                                                                 

Amounts designated as “–” are zero or have been rounded to zero.

(a) Excludes sales charge.
(b) Not annualized for periods less than one year.
(c) Annualized for periods less than one year.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing among the classes of shares.
(e) Per share calculations were performed using average shares method.
(f) Effective February 28, 2009, Class R Shares were renamed Class R2 Shares.
(g) Effective March 3, 2014, Class R2 Shares were renamed Class R Shares.
(h) For the period from March 4, 2014 (commencement of operations) through October 31, 2014. Total return is calculated based on inception date of March 3, 2014 through October 31, 2014.

The accompanying notes are an integral part of these financial statements.

 

74

Notes to Financial Statements

October 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 October 31, 2014, the Trust operates fifty-four (54) separate series, or mutual funds, each with its own investment objective(s) and strategies. This report contains the financial statements and financial highlights of the five (5) series listed below (each, a “Fund”; collectively, the “Funds”).

- Nationwide Investor Destinations Aggressive Fund (“Investor Destinations Aggressive”)

- Nationwide Investor Destinations Moderately Aggressive Fund (“Investor Destinations Moderately Aggressive”)

- Nationwide Investor Destinations Moderate Fund (“Investor Destinations Moderate”)

- Nationwide Investor Destinations Moderately Conservative Fund (“Investor Destinations Moderately Conservative”)

- Nationwide Investor Destinations Conservative Fund (“Investor Destinations Conservative”)

Each of the Funds operates as a “fund of funds,” which means that each of the Funds pursues its investment objective by allocating its investments primarily among other affiliated series of the Trust (“Underlying Funds”). The Underlying Funds typically invest, either directly or indirectly, in stocks, bonds, and other securities. Each of the Funds may also invest in an unregistered fixed interest contract (the “Nationwide Fixed Contract”) issued by Nationwide Life Insurance Company (“Nationwide Life”).

The Funds currently offer Class A, Class C, Class R, Service Class, Institutional Service Class and Institutional Class shares. Each class of a Fund represents interests in the same portfolio of investments of that Fund and the classes are identical except for differences in the sales charge structure, distribution or service fees, administrative services fees, class specific expenses, certain voting rights, conversion features, exchange privileges, and class names or designations.

Each of the Funds is a non-diversified fund, as defined in the 1940 Act.

2.  Summary of Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements requires Fund management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses for the period. The Funds utilize various methods to measure the value of their investments on a recurring basis. Amounts received upon the sale of such investments could differ from those estimated values and those differences could be material.

 

(a) Security Valuation

U.S. GAAP defines fair market value as the price that a Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. The Trust’s investment adviser 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.

 

75

Notes to Financial Statements (Continued)

October 31, 2014

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.

Shares of registered open-end Underlying Funds in which a Fund invests are valued at their respective net asset value (“NAV”) as reported by such Underlying Fund. Investments valued in this manner are generally categorized as Level 1 investments within the hierarchy.

Each of the Funds (except Investor Destinations Aggressive) currently invests in the Nationwide Fixed Contract. The Nationwide Fixed Contract is a fixed interest rate contract issued and guaranteed by Nationwide Life. This contract has a stable principal value and pays a Fund a rate of interest, which is currently adjusted on a quarterly basis. During the year ended October 31, 2014, the rate was 3.50%, the minimum annual rate. Because the contract is guaranteed by Nationwide Life, assuming no default, a Fund receives no more or less than the guaranteed principal amount. NFA can redeem on a daily basis at par all or a portion of each Fund’s investment in the Nationwide Fixed Contract. The par value is calculated each day by the summation of the following factors: (i) prior day’s par value; (ii) prior day’s interest accrued (par multiplied by guaranteed fixed rate); and (iii) current day net purchase or redemption.

At October 31, 2014, 100% of the market value of Investor Destinations Aggressive was determined based on Level 1 inputs.

The following tables provide a summary of the inputs used to value the Funds’ net assets as of October 31, 2014. Please refer to the Statements of Investments for additional information on portfolio holdings.

Investor Destinations Moderately Aggressive

 

      Level 1      Level 2      Level 3      Total  

Assets:

            

Fixed Contract

    $ —      $ —      $ 42,824,351      $ 42,824,351  

Mutual Funds

      2,039,159,102        —        —        2,039,159,102  

Total

    $ 2,039,159,102      $ —      $ 42,824,351      $ 2,081,983,453  

Investor Destinations Moderate

 

      Level 1      Level 2      Level 3      Total  

Assets:

            

Fixed Contract

    $ —      $ —      $ 143,734,124      $ 143,734,124  

Mutual Funds

      1,657,441,688        —        —        1,657,441,688  

Total

    $ 1,657,441,688      $ —       $ 143,734,124      $ 1,801,175,812  

 

76

Notes to Financial Statements (Continued)

October 31, 2014

Investor Destinations Moderately Conservative

 

      Level 1      Level 2      Level 3      Total  

Assets:

            

Fixed Contract 

    $ —      $ —      $ 89,187,160      $ 89,187,160  

Mutual Funds 

      506,555,348        —        —        506,555,348  

Total

    $ 506,555,348      $ —      $ 89,187,160      $ 595,742,508  

Investor Destinations Conservative

 

      Level 1      Level 2      Level 3      Total  

Assets:

            

Fixed Contract

    $ —      $ —      $ 103,605,467      $ 103,605,467  

Mutual Funds

      368,552,020        —        —        368,552,020  

Total

    $ 368,552,020      $ —      $ 103,605,467      $ 472,157,487  

Amounts designated as “—” are zero or have been rounded to zero.

During the year ended October 31, 2014, Investor Destinations Aggressive had no transfers into or out of Level 1, Level 2 or Level 3. During the same period, Investor Destinations Moderately Aggressive, Investor Destinations Moderate, Investor Destinations Moderately Conservative, and Investor Destinations Conservative had one transfer from Level 2 to Level 3.

During an evaluation of the inputs used to fair value the Nationwide Fixed Contract, management transferred the Nationwide Fixed Contract from the Level 2 category to Level 3. While management utilizes judgment in determining the level of observable and the transparency of the inputs, management believes that placing the investment in the Level 3 category would be appropriate at this time due to the shifting of the significance of the unobservable inputs used at the reporting period.

The following is a reconciliation of assets for which Level 3 inputs were used in determining fair value:

Investor Destinations Moderately Aggressive

 

      Fixed Contract      Total  

Balance as of 10/31/13

    $ —       $ —   

Interest Income from Affiliates

      1,431,515         1,431,515   

Purchases

      1,492,869         1,492,869   

Sales

      (— )       (— ) 

Change in Net Appreciation/(Depreciation)

      —         —   

Transfers Into Level 3

      39,899,967         39,899,967   

Transfers Out of Level 3

      —         —   

Balance as of 10/31/14

    $ 42,824,351       $ 42,824,351   

The following table represents Investor Destinations Moderately Aggressive Level 3 financial instrument, the valuation technique used to measure the fair value of this financial instrument, and the significant unobservable inputs and the ranges of values for those inputs.

 

Instrument   Fair Value at
10/31/14		     Principal Valuation
Technique		   Unobservable Inputs   Significant Input
Values*		  
Nationwide Fixed Contract   $ 42,824,351      Discounted Cash Flow   Daily Transactions     daily   
      Interest Rate     3.50 % 
      Redemption Feature     daily   
      Non Assignment Feature     daily   
                Termination Feature     daily   

 

77

Notes to Financial Statements (Continued)

October 31, 2014

Investor Destinations Moderate

 

      Fixed Contract      Total  

Balance as of 10/31/13

    $ —       $ —   

Interest Income from Affiliates

      4,941,659         4,941,659   

Purchases

      2,905,869         2,905,869   

Sales

      (3,589,101 )       (3,589,101 ) 

Change in Net Appreciation/(Depreciation)

      —         —   

Transfers Into Level 3

      139,475,697         139,475,697   

Transfers Out of Level 3

      —         —   

Balance as of 10/31/14

    $ 143,734,124       $ 143,734,124   

The following table represents Investor Destinations Moderate Level 3 financial instrument, the valuation technique used to measure the fair value of this financial instrument, and the significant unobservable inputs and the ranges of values for those inputs.

 

Instrument   Fair Value at
10/31/14		     Principal Valuation
Technique		   Unobservable Inputs   Significant Input
Values*		  
Nationwide Fixed Contract   $ 143,734,124      Discounted Cash Flow   Daily Transactions     daily   
      Interest Rate     3.50 % 
      Redemption Feature     daily   
      Non Assignment Feature     daily   
                Termination Feature     daily   

Investor Destinations Moderately Conservative

 

      Fixed Contract      Total  

Balance as of 10/31/13

    $ —       $ —   

Interest Income from Affiliates

      3,018,446         3,018,446   

Purchases

      1,574,527         1,574,527   

Sales

      (2,411,229 )       (2,411,229 ) 

Change in Net Appreciation/(Depreciation)

      —         —   

Transfers Into Level 3

      87,005,416         87,005,416   

Transfers Out of Level 3

      —         —   

Balance as of 10/31/14

    $ 89,187,160       $ 89,187,160   

The following table represents Investor Destinations Moderately Conservative Level 3 financial instrument, the valuation technique used to measure the fair value of this financial instrument, and the significant unobservable inputs and the ranges of values for those inputs.

 

Instrument   Fair Value at
10/31/14		     Principal Valuation
Technique		   Unobservable Inputs   Significant Input
Values*		  
Nationwide Fixed Contract   $ 89,187,160      Discounted Cash Flow   Daily Transactions     daily   
      Interest Rate     3.50 % 
      Redemption Feature     daily   
      Non Assignment Feature     daily   
                Termination Feature     daily   

 

78

Notes to Financial Statements (Continued)

October 31, 2014

Investor Destinations Conservative

 

      Fixed Contract      Total  

Balance as of 10/31/13

    $ —       $ —   

Interest Income from Affiliates

      3,321,629         3,321,629   

Purchases

      7,363,806         7,363,806   

Sales

      (1,363,163 )       (1,363,163 ) 

Change in Net Appreciation/(Depreciation)

      —         —   

Transfers Into Level 3

      94,283,195         94,283,195   

Transfers Out of Level 3

      —         —   

Balance as of 10/31/14

    $ 103,605,467       $ 103,605,467   

The following table represents Investor Destinations Conservative Level 3 financial instrument, the valuation technique used to measure the fair value of this financial instrument, and the significant unobservable inputs and the ranges of values for those inputs.

 

Instrument   Fair Value at
10/31/14		     Principal Valuation
Technique		   Unobservable Inputs   Significant Input
Values*		  
Nationwide Fixed Contract   $ 103,605,467      Discounted Cash Flow   Daily Transactions     daily   
      Interest Rate     3.50 % 
      Redemption Feature     daily   
      Non Assignment Feature     daily   
                Termination Feature     daily   

Amounts designated as “—” are zero or have been rounded to zero.

 

  * NFA can increase or redeem all or a portion of each Funds’ investment in the Fixed Contract on a daily basis at par. The Funds cannot assign or transfer their interest in the Nationwide Fixed Contract to any party. If a Fund transferred its interest in the Nationwide Fixed Contract, the issuer would terminate the arrangement and pay the Fund the amount of its holding as of the termination date. The Funds or the issuer have the ability to terminate their investments in the Nationwide Fixed Contract at their discretion. The Fair Value Committee (“FVC”) continues to evaluate any information that could cause an adjustment to the fair value for this investment such as market news or the credit rating of the issuer.

The following are the valuation policies of the affiliated Underlying Funds:

Securities for which market-based quotations are readily available are valued at current market value as of “Valuation Time.” Valuation Time is as of the close of regular trading on the New York Stock Exchange (usually 4:00 p.m. Eastern time). Equity securities are generally valued at the last quoted sale price or official closing price, or, if there is no such price, the last quoted bid price provided by an independent pricing service approved by the Trust’s Board of Trustees (the “Board of Trustees”). Prices are taken from the primary market or exchange on which each security trades. Shares of registered open-end management investment companies are valued at NAV as reported by such company. Investments valued in this manner are generally categorized as Level 1 investments within the hierarchy.

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.

 

79

Notes to Financial Statements (Continued)

October 31, 2014

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 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 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 held by the Nationwide Money Market Fund (“Money Market”) are valued at amortized cost, which approximates market value. Securities valued in this manner are generally categorized as Level 2 securities within the hierarchy. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, to the maturity of the security. Money Market’s use of amortized cost is subject to compliance with certain conditions as specified by Rule 2a-7 under the 1940 Act.

 

(b) Security Transactions and Investment Income

Security transactions are accounted for on the date the security is purchased or sold. Security gains and losses are calculated on the identified cost basis. Dividend income received from the Underlying Funds is recognized on the ex-dividend date and is recorded as income on the Statement of Operations. Capital gain distributions received from the Underlying Funds are recognized on ex-dividend date and are recorded on the Statement of Operations as such. Interest income is recognized on the accrual basis and includes, where applicable, the amortization of premiums or accretion of discounts, and is recorded as such on a Fund’s Statement of Operations.

 

(c) Distributions to Shareholders

Distributions from net investment income, if any, are declared and paid quarterly. Distributions from net realized capital gains, if any, are declared and distributed at least annually. All distributions are recorded on the ex-dividend date.

Dividends and distributions to shareholders are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. These “book/tax” differences are considered either permanent or temporary.

 

80

Notes to Financial Statements (Continued)

October 31, 2014

Permanent differences are reclassified within the capital accounts based on their nature for federal income tax purposes; temporary differences do not require reclassification. The permanent differences as of October 31, 2014 are primarily attributable to capital distributions from Underlying Funds and distribution redesignation. 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 October 31, 2014 were as follows:

 

Fund    Capital      Accumulated
undistributed net
investment income		      Accumulated net
realized gains/(losses)
from investment
transactions		  

Investor Destinations Aggressive

    $ —       $ 2,677,877       $ (2,677,877 ) 

Investor Destinations Moderately Aggressive

      —         3,298,674         (3,298,674 ) 

Investor Destinations Moderate

      —         1,928,385         (1,928,385 ) 

Investor Destinations Moderately Conservative

      —         396,700         (396,700 ) 

Investor Destinations Conservative

      —         113,872         (113,872 ) 

 

(d) 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). Each Fund files U.S. federal income tax returns and, if applicable, returns in various foreign jurisdictions in which it invests. The last three 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.

 

(e) Cash and Cash Equivalents

For the purposes of the Statement of Cash Flows, the Funds define Cash and Cash Equivalents as cash, money market funds and other investments held in lieu of cash.

 

(f) 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

 

81

Notes to Financial Statements (Continued)

October 31, 2014

shares of that class relative to the total value of the outstanding shares of that Fund. Expenses specific to a class (such as Rule 12b-1 and administrative services fees) are charged to that specific class.

3.  Transactions with Affiliates

Under the terms of the Trust’s Investment Advisory Agreement, NFA manages the investments of the assets and supervises the daily business affairs of the Funds in accordance with policies and procedures established by the Board of Trustees. NFA is a wholly owned subsidiary of Nationwide Financial Services, Inc. (“NFS”), a holding company which is a direct wholly owned subsidiary of Nationwide Corporation. Each Fund pays NFA an investment advisory fee of 0.13% per year based on the Fund’s average daily net assets. For the year ended October 31, 2014, the Funds effective advisory fee rate was 0.13%.

The Trust and NFA have entered into a written Expense Limitation Agreement that limits the Funds’ operating expenses (excluding any taxes, interest, brokerage commissions and other costs incurred in connection with the purchase and sale of portfolio securities, short sale dividend expenses, Rule 12b-1 fees, fees paid pursuant to an Administrative Services Plan, other expenditures which are capitalized in accordance with U.S. GAAP, expenses incurred by a Fund in connection with any merger or reorganization and may exclude other non-routine expenses not incurred in the ordinary course of a Fund’s business) from exceeding 0.25% for each share class until February 28, 2015.

NFA may request and receive reimbursement from a Fund for advisory fees waived and other expenses reimbursed by NFA pursuant to the Expense Limitation Agreement at a date not to exceed three years from the month in which the corresponding waiver or reimbursement to a Fund was made. However, no reimbursement may be made unless: (i) a Fund’s assets exceed $100 million and (ii) the total annual expense ratio of the class making such reimbursement is no higher than the amount of the expense limitation that was in place at the time NFA waived the fees or reimbursed the expenses and does not cause the expense ratio to exceed the current expense limitation. Reimbursement by a Fund of amounts previously waived or assumed by NFA is not permitted except as provided for in the Expense Limitation Agreement. The Expense Limitation Agreement may be changed or eliminated only with the consent of the Board of Trustees.

As of October 31, 2014, the Funds had no cumulative potential reimbursements, and no amounts were reimbursed to NFA pursuant to the Expense Limitation Agreement during the year ended October 31, 2014.

NFM, a wholly owned subsidiary of NFS Distributors, Inc. (“NFSDI”) (a wholly owned subsidiary of NFS), provides various administrative and accounting services for the Funds, and serves as Transfer and Dividend Disbursing Agent for the Funds. NFM has entered into an agreement with a third-party service provider to provide certain sub-administration and sub-transfer agency services to the Funds. NFM pays the service provider a fee for these services.

Under the terms of a Joint Fund Administration and Transfer Agency Agreement, the fees for such services are based on the sum of the following: (i) the amount payable by NFM to its sub-administrator and sub-transfer agent; and (ii) a percentage of the combined average daily net assets of the Trust and Nationwide Variable Insurance Trust (“NVIT Trust”), a Delaware statutory trust and registered investment company that is affiliated with the Trust, according to the fee schedule below.

 

Combined Fee Schedule        

Up to $25 billion

      0.025%   

$25 billion and more

      0.020%   

During the year ended October 31, 2014, NFM received $1,734,676 in fees from the Funds under the Joint Fund Administration and Transfer Agency Agreement.

In addition, the Trust pays out-of-pocket expenses reasonably incurred by NFM in providing services to the 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

 

82

Notes to Financial Statements (Continued)

October 31, 2014

transaction confirmations, tax reporting, and other shareholder services. Depending on the nature and quality of the services provided, fees for these services may range from $6 to $21 per customer per year.

Under the terms of the Joint Fund Administration and Transfer Agency Agreement and a letter agreement between NFM and the Trust, the Trust has agreed to reimburse NFM for certain costs related to the Funds’ portion of ongoing administration, monitoring and annual (compliance audit) testing of the Trust’s Rule 38a-1 Compliance Program subject to the pre-approval of the Trust’s Audit Committee. These costs are allocated among the series of the Trust based upon their relative net assets. For the year ended October 31, 2014, the Funds’ aggregate portion of such costs amounted to $17,786.

Under the terms of a Distribution Plan pursuant to Rule 12b-1 under the 1940 Act, Nationwide Fund Distributors LLC (“NFD”), the Funds’ principal underwriter, is compensated by the Funds for expenses associated with the distribution of certain classes of shares of the Funds. NFD is a wholly owned subsidiary of NFSDI. These fees are based on average daily net assets of the respective class of the Funds at an annual rate of 0.25% of Class A shares, 1.00% of Class C shares, and 0.50% of Class R shares, and 0.25% of Service Class shares of each Fund. Institutional Class and Institutional Service Class shares do not pay a distribution fee.

Pursuant to an Underwriting Agreement, NFD serves as principal underwriter of the Funds in the continuous distribution of their shares and receives commissions in the form of a front-end sales charge on Class A shares. These fees are deducted from, and are not included in, proceeds from sales of Class A shares of the Funds. From these fees, NFD pays sales commissions, salaries and other expenses in connection with generating new sales of Class A shares of the Funds. During the year ended October 31, 2014, the Fund’s Class A sales charges ranged from 0.00% to 5.75% based on the amount purchased. During the year ended October 31, 2014, the Funds imposed front-end sales charges of $1,773,003.

NFD also receives fees in the form of contingent deferred sales charges (“CDSCs”) on Class A, Class B 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 , Class B shares made within 6 years of purchase, and Class C shares made within 1 year of purchase. During the year ended October 31, 2014, applicable Class A CDSCs were 1.00% based on the original purchase price or the current market value of the shares being redeemed. Class B CDSCs ranged from 1.00% to 5.00% based on the original purchase price or the current market value of the shares being redeemed and depending on how long the shares were held before redemption. Class B shares converted to Class A shares on February 21, 2014. Class C CDSCs were 1.00% based on the original purchase price or the current market value of the shares being redeemed. During the year ended October 31, 2014, the Funds imposed CDSCs of $22,726.

Under the terms of an Administrative Services Plan, the Funds pay fees to servicing organizations, such as broker-dealers, including NFS, and financial institutions, that agree to provide administrative support services to the shareholders of certain classes. These services may include, but are not limited to, the following: (i) establishing and maintaining shareholder accounts; (ii) processing purchase and redemption transactions; (iii) arranging bank wires; (iv) performing shareholder sub-accounting; (v) answering inquiries regarding the Funds; and (vi) other such services. These fees are calculated at an annual rate of up to 0.25% of the average daily net assets of Class A, Class R, Institutional Service Class, and 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.

During the year ended October 31, 2014, the effective rate for administrative services fees that NFS earned was as follows:

 

Fund    Class A      Class C      Class R      Institutional
Service Class		      Service Class  

Investor Destinations Aggressive

      0.10 %       0.06 %       0.15 %       0.03 %       0.15 % 

Investor Destinations Moderately Aggressive

      0.10         0.05         0.15         0.03         0.15   

Investor Destinations Moderate

      0.10         0.05         0.15         0.04         0.15   

Investor Destinations Moderately Conservative

      0.11         0.05         0.15         0.04         0.15   

Investor Destinations Conservative

      0.10         0.05         0.15         0.03         0.15   

 

83

Notes to Financial Statements (Continued)

October 31, 2014

During the year ended October 31, 2014, NFS earned the following amounts in administrative services fees from each Fund:

 

Fund    Amount  

Investor Destinations Aggressive

    $ 1,575,735   

Investor Destinations Moderately Aggressive

      2,468,472   

Investor Destinations Moderate

      2,019,621   

Investor Destinations Moderately Conservative

      655,099   

Investor Destinations Conservative

      474,181   

As of October 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		  

Investor Destinations Aggressive

      39.23 % 

Investor Destinations Moderately Aggressive

      31.96   

Investor Destinations Moderate

      26.55   

Investor Destinations Moderately Conservative

      21.46   

Investor Destinations Conservative

      14.20   

Each Fund is a shareholder of its Underlying Funds. The Underlying Funds do not charge a Fund any sales charge for buying or selling Underlying Fund shares. However, a Fund indirectly pays a portion of the operating expenses of each Underlying Fund in which it invests, including management, administration and custodian fees of the Underlying Funds. These expenses are deducted from each Underlying Fund’s net assets before its share price is calculated and are in addition to the fees and expenses of the Fund. Actual indirect expenses vary depending on how a Fund’s assets are allocated among the Underlying Funds.

4.  Investments in Affiliated Issuers

Each of the Funds invests in Institutional Class shares of the affiliated Underlying Funds, and each of the Funds (except Investor Destinations Aggressive) invests in the Nationwide Fixed Contract. The Funds’ transactions in the shares of Underlying Funds and in the Nationwide Fixed Contract during the year ended October 31, 2014 were as follows:

Investor Destinations Aggressive

 

Affiliated Issuer   Market
Value at
October 31,
2013		     Purchases
at Cost		     Sales
Proceeds		     Dividend
Income		     Realized
Gain/
(Loss)		     Capital Gain
Distributions		     Market
Value at
October 31,
2014		  

Nationwide Portfolio Completion Fund

   $ 122,134,901      $ 7,529,523      $ 10,291,582      $ 1,682,207      $ 184,457      $ —      $ 121,131,334   

Nationwide International Index Fund

     330,372,078        26,136,985        16,846,869        11,002,235        (4,088,757 )      —        329,146,996   

Nationwide Mid Cap Market Index Fund

     172,329,310        9,089,000        13,547,619        1,900,713        2,092,525        7,188,288        177,828,083   

Nationwide S&P 500 Index Fund

     393,912,196        38,207,579        57,118,141        7,503,324        9,389,989        28,001,993        402,830,465   

Nationwide Small Cap Index Fund

     158,588,875        20,928,005        15,494,902        2,034,455        2,643,272        8,949,614        165,930,765   

Nationwide Bond Index Fund

     24,203,719        1,905,978        978,876        630,733        (25,022 )      414,805        25,100,478   

Nationwide Core Plus Bond Fund

     24,091,538        1,624,260        676,839        714,215        9,290        45,131        25,214,901   

 

84

Notes to Financial Statements (Continued)

October 31, 2014

Investor Destinations Moderately Aggressive

 

Affiliated Issuer   Market
Value at
October 31,
2013		     Purchases
at Cost		     Sales
Proceeds		     Dividend/
Interest
Income		     Realized
Gain/
(Loss)		     Capital Gain
Distributions		     Market
Value at
October 31,
2014		  

Nationwide Portfolio Completion Fund

   $ 202,018,670      $ 55,031,132      $ 16,360,110      $ 2,901,617      $ 328,465      $ —      $ 244,444,800   

Nationwide International Index Fund

     510,006,859        34,259,005        42,365,307        16,573,466        (9,069,660 )      —        486,657,289   

Nationwide Mid Cap Market Index Fund

     246,095,831        13,264,866        18,356,219        2,719,839        4,877,920        10,319,866        255,141,922   

Nationwide S&P 500 Index Fund

     571,664,464        52,124,412        75,204,300        10,929,313        11,086,052        40,858,207        589,201,202   

Nationwide Small Cap Index Fund

     203,217,452        28,173,191        19,529,062        2,622,021        8,290,994        11,561,235        214,525,486   

Nationwide Ziegler Equity Income Fund

     20,812,731        354,543        815,050        354,542        62,810        —        22,812,462   

Nationwide Bond Index Fund

     121,267,974        7,191,121        26,286,658        2,781,823        (1,028,713 )      2,090,197        101,728,389   

Nationwide Core Plus Bond Fund

     80,356,242        4,840,934        3,212,975        2,367,015        40,455        150,533        82,565,094   

Nationwide HighMark Short Term Bond Fund

     39,907,971        2,259,823        —        495,932        —        —        42,082,458   

Nationwide Fixed Contract

     39,899,967        1,492,869        —        1,431,515        —        —        42,824,351   

Investor Destinations Moderate

 

Affiliated Issuer   Market
Value at
October 31,
2013		     Purchases
at Cost		     Sales
Proceeds		     Dividend/
Interest
Income		     Realized
Gain/
(Loss)		     Capital Gain
Distributions		     Market
Value at
October 31,
2014		  

Nationwide Portfolio Completion Fund

   $ 174,792,995      $ 78,915,653      $ 5,915,536      $ 2,560,368      $ 170,684      $ —      $ 251,774,619   

Nationwide International Index Fund

     317,475,542        12,446,954        21,651,138        10,229,986        4,541,879        —        298,898,216   

Nationwide Mid Cap Market Index Fund

     177,472,824        9,354,114        13,996,639        1,952,973        5,115,176        7,401,141        183,062,237   

Nationwide S&P 500 Index Fund

     353,759,541        32,058,336        45,188,499        6,772,966        18,773,712        25,285,371        365,882,282   

Nationwide Small Cap Index Fund

     105,759,431        7,968,312        6,622,558        1,347,967        2,277,636        6,010,922        108,205,638   

Nationwide Ziegler Equity Income Fund

     36,280,322        607,778        2,232,995        607,778        170,683        —        38,876,540   

Nationwide Bond Index Fund

     228,107,895        8,830,574        58,436,297        4,937,356        (384,742 )      3,893,220        177,437,996   

Nationwide Core Plus Bond Fund

     69,821,494        21,797,842        1,559,104        2,383,252        22,985        130,798        90,628,847   

Nationwide Enhanced Income Fund

     104,149,878        415,921        104,486,365        420,182        (2,075,456 )      —        —   

Nationwide Highmark Short Term Bond Fund

     —        132,536,748        44,696,852        410,600        3,777        —        87,643,680   

Nationwide Inflation-Protected Securities Fund

     52,220,847        2,167,115        106,183        294,324        (5,623 )      —        55,031,633   

Nationwide Fixed Contract

     139,475,697        2,905,869        3,589,101        4,941,659        —        —        143,734,124   

 

85

Notes to Financial Statements (Continued)

October 31, 2014

Investor Destinations Moderately Conservative

 

Affiliated Issuer   Market
Value at
October 31,
2013		     Purchases
at Cost		     Sales
Proceeds		     Dividend/
Interest
Income		     Realized
Gain/
(Loss)		     Capital Gain
Distributions		     Market
Value at
October 31,
2014		  

Nationwide Portfolio Completion Fund

   $ 57,845,236      $ 935,403      $ —      $ 791,489      $ —      $ —      $ 59,573,052   

Nationwide International Index Fund

     58,008,986        4,901,633        1,737,961        1,918,208        787,295        —        59,332,974   

Nationwide Mid Cap Market Index Fund

     40,767,621        2,157,372        2,939,495        448,322        1,202,729        1,709,050        42,279,411   

Nationwide S&P 500 Index Fund

     75,357,231        6,876,045        9,571,825        1,444,892        3,472,580        5,423,897        78,003,054   

Nationwide Small Cap Index Fund

     17,469,881        1,724,042        1,485,716        221,406        523,018        995,506        17,886,298   

Nationwide Ziegler Equity Income Fund

     17,622,990        296,890        1,498,963        296,890        136,165        —        18,463,648   

Nationwide Bond Index Fund

     116,212,668        7,168,710        5,263,456        2,936,829        46,463        1,982,808        117,880,392   

Nationwide Core Plus Bond Fund

     23,147,099        709,921        193,290        666,560        1,697        43,362        23,825,280   

Nationwide Enhanced Income Fund

     57,868,703        270,894        58,082,276        284,695        (1,092,716 )      —        —   

Nationwide HighMark Short Term Bond Fund

     —        83,416,722        23,693,177        245,780        (7,619 )      —        59,638,836   

Nationwide Inflation-Protected Securities Fund

     28,836,937        433,839        —        158,392        —        —        29,672,403   

Nationwide Fixed Contract

     87,005,416        1,574,527        2,411,229        3,018,446        —        —        89,187,160   

Investor Destinations Conservative

 

Affiliated Issuer   Market
Value at
October 31,
2013		     Purchases
at Cost		     Sales
Proceeds		     Dividend/
Interest
Income		     Realized
Gain/
(Loss)		     Capital Gain
Distributions		     Market
Value at
October 31,
2014		  

Nationwide Porfolio Completion Fund

   $ 34,217,041      $ 3,174,048      $ —      $ 469,662      $ —      $ —      $ 37,886,479   

Nationwide International Index Fund

     17,084,155        2,955,435        456,508        567,371        49,181        —        19,080,955   

Nationwide Mid Cap Market Index Fund

     12,890,163        1,636,038        960,878        142,698        197,581        540,975        14,362,749   

Nationwide S&P 500 Index Fund

     21,395,946        2,619,647        1,813,986        415,213        534,304        1,538,295        23,799,160   

Nationwide Small Cap Index Fund

     4,285,359        683,640        313,527        54,587        11,269        244,197        4,736,347   

Nationwide Ziegler Equity Income Fund

     17,140,875        780,789        899,994        292,962        82,528        —        19,080,955   

Nationwide Bond Index Fund

     111,674,964        11,014,164        4,548,797        2,793,685        19,197        1,909,924        117,871,360   

Nationwide Core Plus Bond Fund

     12,930,405        5,785,120        —        455,249        —        24,223        18,822,644   

Nationwide Enhanced Income Fund

     59,954,344        276,111        60,173,125        289,658        (1,105,689 )      —        —   

Nationwide Highmark Short Term Bond Fund

     —        106,505,881        40,443,704        284,046        (23,136 )      —        65,968,529   

Nationwide Inflation-Protected Securities Fund

     34,217,041        2,897,312        —        190,617        —        —        37,587,896   

Nationwide Money Market Fund

     8,551,186        803,760        —        —        —        —        9,354,946   

Nationwide Fixed Contract

     94,283,195        7,363,806        1,363,163        3,321,629        —        —        103,605,467   

Amounts designated as “—” are zero or have been rounded to zero.

 

86

Notes to Financial Statements (Continued)

October 31, 2014

Further information about each affiliated Underlying Fund (excluding the Nationwide Fixed Contract, which is not a mutual fund) may be found in such Underlying Fund’s most recent annual report to shareholders, which is available at www.nationwide.com/mutualfunds.

5.  Line of Credit and Earnings Credit

Effective July 17, 2014, the Trust and NVIT Trust (together, the “Trusts”) have renewed the 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. The line of credit is renewed annually, and next expires on July 16, 2015.

JPMorgan provides earnings credits for cash balances maintained in a Fund’s custody accounts, which are used to offset custody fees of a Fund.

6.  Investment Transactions

For the year ended October 31, 2014, purchases and sales of investments (excluding short-term securities) were as follows:

 

Fund      Purchases        Sales  

Investor Destinations Aggressive

      $ 105,421,330         $ 114,954,828   

Investor Destinations Moderately Aggressive

        198,991,896           202,129,681   

Investor Destinations Moderate

        310,005,216           308,481,267   

Investor Destinations Moderately Conservative

        110,465,998           106,877,388   

Investor Destinations Conservative

        146,495,751           110,973,682   

7.  Portfolio Investment Risks from Underlying Funds

Information about the risks of an investment in each affiliated Underlying Fund may be found in such Underlying Fund’s annual report to shareholders, which is available at www.nationwide.com/mutualfunds. Additional information about derivatives-related risks, if applicable to the Fund, may also be found in each such Underlying Fund’s annual report to shareholders.

8.  Indemnifications

Under the Trust’s organizational documents, the Trust’s Officers and Trustees are indemnified by the Trust against certain liabilities arising out of the performance of their duties to the Trust. In addition, the Trust has entered into indemnification agreements with its Trustees and certain of its Officers. Trust Officers receive no compensation from the Trust for serving as its Officers. In addition, in the normal course of business, the Trust enters into contracts with its vendors and others that provide for general indemnifications. The Trust’s maximum liability under these arrangements is unknown, as this would involve future claims made against the Trust. Based on experience, however, the Trust expects the risk of loss to be remote.

9.  Money Market Reform

In July 2014, the Securities and Exchange Commission (“SEC”) adopted amendments to the rules that govern money market mutual funds under the 1940 Act that reform the structure and operations of these funds. Money Market, which

 

87

Notes to Financial Statements (Continued)

October 31, 2014

is an Underlying Fund, is required to comply with these amendments, and the compliance dates for the various amendments range from 9 months to 2 years. As a result of the amendments, Money Market may be required to take certain steps with respect to its structure and/or operations.

10.  Other

As of October 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  

Investor Destinations Aggressive

        46.82 %       3 (a) 

Investor Destinations Moderately Aggressive

        65.81         5 (a) 

Investor Destinations Moderate

        61.05         5 (a) 

Investor Destinations Moderately Conservative

        44.90         3   

Investor Destinations Conservative

        40.17         3   
(a) Each such account is the account of an affiliated fund.

11.  Federal Tax Information

The tax character of distributions paid during the year ended October 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		  

Investor Destinations Aggressive Fund

   $ 20,454,239      $ 16,760,506      $ 37,214,745      $ —      $ 37,214,745   

Investor Destinations Moderately Aggressive Fund

     34,854,977        43,454,993        78,309,970        —        78,309,970   

Investor Destinations Moderate Fund

     28,851,501        55,099,484        83,950,985        —        83,950,985   

Investor Destinations Moderately Conservative Fund

     9,309,455        39,396,579        48,706,034        —        48,706,034   

Investor Destinations Conservative Fund

     6,554,859        20,979,602        27,534,461        —        27,534,461   

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 October 31, 2013 was as follows:

 

    Distributions paid from                    
Fund   Ordinary
Income*		     Net Long-Term
Capital Gains		     Total Taxable
Distributions		     Return of
Capital		     Total Distributions
Paid		  

Investor Destinations Aggressive

   $ 18,185,199      $ 11,401,352      $ 29,586,551      $ —      $ 29,586,551   

Investor Destinations Moderately Aggressive

     30,325,630        11,352,672        41,678,302        —        41,678,302   

Investor Destinations Moderate

     26,286,237        7,290,440        33,576,677        —        33,576,677   

Investor Destinations Moderately Conservative

     8,909,091        7,686,149        16,595,240        —        16,595,240   

Investor Destinations Conservative

     6,624,660        7,448,555        14,073,215        —        14,073,215   

Amounts designated as “—” are zero or have been rounded to zero.

 

* Ordinary income amounts include net short-term capital gains, if any.

 

88

Notes to Financial Statements (Continued)

October 31, 2014

As of October 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)		  

Investor Destinations Aggressive Fund

   $ —      $ 55,099,896      $ 55,099,896      $ —      $ —      $ 241,710,481      $ 296,810,377   

Investor Destinations Moderately Aggressive Fund

     225,205        78,919,329        79,144,534        —        —        372,224,611        451,369,145   

Investor Destinations Moderate Fund

     938,257        64,360,108        65,298,365        —        —        260,834,046        326,132,411   

Investor Destinations Moderately Conservative Fund

     567,513        12,677,496        13,245,009        —        —        36,999,248        50,244,257   

Investor Destinations Conservative Fund

     597,257        3,163,853        3,761,110        —        —        9,880,361        13,641,471   

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 October 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)		  

Investor Destinations Aggressive Fund

    $ 1,005,472,541         $ 247,384,868         $ (5,674,387 )       $ 241,710,481   

Investor Destinations Moderately Aggressive Fund

      1,709,758,842           381,919,330           (9,694,719 )         372,224,611   

Investor Destinations Moderate Fund

      1,540,341,766           270,775,596           (9,941,550 )         260,834,046   

Investor Destinations Moderately Conservative Fund

      558,743,260           42,317,104           (5,317,856 )         36,999,248   

Investor Destinations Conservative Fund

      462,277,126           14,858,346           (4,977,985 )         9,880,361   

Amounts designated as “—” are zero or have rounded to zero.

12.  Restatement of Previously Issued Financial Statements

After issuing Investor Destinations Conservative’s October 31, 2014 financial statements, fund management became aware of a technical correction that requires Investor Destinations Conservative to present a Statement of Cash Flows in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 230 (“ASC 230”). Prior to the technical correction, FASB ASC 230 required that substantially all securities of Investor Destinations Conservative be carried at fair value and liquid to be exempt from having to provide a Statement of Cash Flows. The technical update to FASB ASC 230 now requires that substantially all of Investor Destinations Conservative investments must be carried at fair value and classified as level 1 or level 2 measurements in accordance with the fair value leveling hierarchy in order to be exempt from presenting the Statement of Cash Flows. Investor Destinations Conservative’s financial statements for the year ended October 31, 2014 did not present the Statement of Cash Flows. Fund Management has decided to restate the October 31, 2014 financial statements to include the Statement of Cash Flows.

13.  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.

 

89

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Nationwide Mutual Funds:

In our opinion, the accompanying statements of assets and liabilities, including the statements of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Nationwide Investor Destinations Aggressive Fund, Nationwide Investor Destinations Conservative Fund, Nationwide Investor Destinations Moderate Fund, Nationwide Investor Destinations Moderately Aggressive Fund and Nationwide Investor Destinations Moderately Conservative Fund (five series of Nationwide Mutual Funds, hereafter referred to as the “Funds”) at October 31, 2014, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2014 by correspondence with the underlying funds’ transfer agent and fixed contract issuer, provide a reasonable basis for our opinion.

As discussed in Note 12, the Nationwide Investor Destinations Conservative Fund has restated its October 31, 2014 financial statements to correct an error.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania

December 22, 2014, except for Note 12 as to which the date is February 24, 2015

 

90

Supplemental Information

October 31, 2014 (Unaudited)

Other Federal Tax Information

For the year ended October 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 October 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

  

Investor Destinations Aggressive

      55.69 % 

Investor Destinations Moderately Aggressive

      48.04   

Investor Destinations Moderate

      37.74   

Investor Destinations Moderately Conservative

      27.24   

Investor Destinations Conservative

      15.16   

The Funds designate the following amounts, or the maximum amount allowable under the Internal Revenue Code, as long term capital gain distributions qualifying for the maximum 20% income tax rate for individuals:

 

Fund    Amount  

Investor Destinations Aggressive

    $ 16,760,506   

Investor Destinations Moderately Aggressive

      43,454,993   

Investor Destinations Moderate

      55,099,484   

Investor Destinations Moderately Conservative

      39,396,579   

Investor Destinations Conservative

      20,979,602   

Certain Funds have derived net income from sources within foreign countries. As of October 31, 2014, the foreign source income for each Fund was as follows:

 

Fund    Amount      Per Share  

Investor Destinations Aggressive

    $ 10,816,515       $ 0.0998   

Investor Destinations Moderately Aggressive

      16,293,948         0.0915   

Investor Destinations Moderate

      10,057,466         0.0630   

Investor Destinations Moderately Conservative

      1,885,857         0.0340   

Investor Destinations Conservative

      557,802         0.0122   

Certain Funds intend to elect to pass through to shareholders the income tax credit for taxes paid to foreign countries. As of October 31, 2014, the foreign tax credit for each Fund was as follows:

 

Fund    Amount      Per Share  

Investor Destinations Aggressive

    $ 476,109       $ 0.0044   

Investor Destinations Moderately Aggressive

      717,287         0.0040   

Investor Destinations Moderate

      442,768         0.0028   

Investor Destinations Moderately Conservative

      83,014         0.0015   

Investor Destinations Conservative

      24,553         0.0005   

 

91

Management Information

October 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.     117      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.     117     

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.     117      None

 

92

Management Information (Continued)

October 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.     117      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).     117      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.     117      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.     117     

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.     117      None

 

93

Management Information (Continued)

October 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.     117     

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.

 

94

Management Information (Continued)

October 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.     117      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.

 

95

Management Information (Continued)

October 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.

 

96

Market Index Definitions      

Barclays Global Aggregate Bond Index: An unmanaged index of fixed-rate, publicly issued, taxable bond market issues with a remaining maturity of at least one year; a broad-based measurement of the performance of the global investment-grade fixed-income markets.

Barclays 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 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. Aggregate Bond Index: An unmanaged, market value-weighted index of investment-grade, fixed-rate debt issues (including government, corporate, asset-backed, and mortgage-backed securities with maturities of one year or more) that is generally representative of the bond market as a whole.

Barclays U.S. Treasury Inflation-Protected Securities (TIPS) IndexSM: An unmanaged, market capitalization-weighted index that measures the performance of all U.S. dollar-denominated, investment-grade, fixed-rate, publicly issued U.S. TIPS with a remaining maturity of at least one year and $250 million or more in outstanding face value.

BofA Merrill Lynch (BofAML) AAA U.S. Treasury/Agency Master Index: An unmanaged index that gives a broad look at how fixed-rate U.S. government bonds with a remaining maturity of at least one year have performed.

BofA Merrill Lynch (BofAML) U.S. High Yield Cash Pay Constrained Index: An unmanaged, market value-weighted index that measures the performance of U.S. dollar-denominated, below-investment-grade, fixed-rate, publicly issued, non-convertible, coupon-bearing corporate debt with a remaining maturity of at least one year. Each issue represented must have an outstanding par value of at least $50 million, must be less than BBB/Baa3-rated but not in default, and is restricted to a maximum of 2% of the total index.

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.

iMoneyNet Prime Retail Index: An unmanaged index that is an average of non-government retail money market mutual funds. Portfolio holdings of prime money market mutual funds include U.S. Treasury, U.S. non-Treasury obligations, repurchase agreements, time deposits, domestic and foreign bank obligations, commercial paper, floating-rate notes and asset-backed commercial paper.

Lipper Analytical Services, Inc. (Lipper) is an industry research firm whose rankings are based on total return performance and do not reflect the effect of sales charges. Each fund is ranked within a universe of funds similar in investment objective as determined by Lipper.

Morningstar® (Mstar) Lifetime Allocation Indexes: A series of 13 unmanaged, multi-asset-class indexes designed to benchmark target-date investment products. Each index is available in three risk profiles: aggressive, moderate and conservative. The index asset allocations adjust over time, reducing equity

 

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Market Index Definitions (con’t.)      

exposure and shifting toward traditional income-producing investments. The strategic asset allocation of the indexes is based on Ibbotson Associates’ Lifetime Asset Allocation methodology.

MSCI ACWI: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of large-cap and mid-cap stocks in global developed and emerging markets.

MSCI EAFE® Index: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of large-cap and mid-cap stocks in developed markets outside the United States and Canada.

MSCI Emerging Markets® 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 emerging-country markets.

MSCI World ex USA Index: An unmanaged index that measures the equity market performance of developed-market countries excluding the United States; covers approximately 85% of the free float-adjusted market capitalization in each country, capturing large-cap and mid-cap representation.

MSCI World IndexSM Free: An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of large-cap and mid-cap stocks in global developed markets. The “Free” suffix denotes an index with a somewhat different history but the same constituents and performance in relation to its counterpart index without the suffix.

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.

Russell 2000® Value 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 lower price-to-book ratios and lower forecasted growth values.

Russell 3000® Index: An unmanaged index that measures the performance of the 3,000 largest U.S. companies in the investable U.S. equity universe.

 

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Market Index Definitions (con’t.)      

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.

Russell Midcap® Value Index: An unmanaged index that measures the performance of the mid-capitalization value segment of the U.S. equity universe; includes those Russell Midcap Index companies with lower price-to-book ratios and lower 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 MidCap 400® (S&P 400) Index: An unmanaged index that measures the performance of 400 stocks of medium-sized U.S. companies (those with a market capitalization of $1 billion to $4.4 billion).

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

Asset allocation: The process of spreading assets across several different investment styles and asset classes. The purpose is to potentially reduce long-term risk and capture potential profits across various asset classes.

Benchmark index: A broad-based securities index used as a comparison tool to measure the performance of a mutual fund.

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.

Diversification: An investment strategy that seeks to reduce risk in a portfolio so that the positive performance of some investments will neutralize the negative performance of others.

Duration: A measure of how much the price of a bond would change compared to a change in market interest rates, based on the remaining time until a bond’s maturity together with other factors. A bond’s value drops when interest rates rise, and vice versa. Bonds with longer durations have higher risk and volatility.

Emerging market countries: Developing and low- or middle-income countries as identified by the International Finance Corporation or the World Bank. Emerging market countries may be found in regions such as Asia, Latin America, Eastern Europe, the Middle East and Africa.

Equity securities: Securities that represent an ownership interest in the issuer. Common stock is 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.

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.

 

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Glossary (con’t.)      

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.

Sector: An industry or market that shares common characteristics. Sectors are used to group investments into categories such as energy, health, technology and utilities.

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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LOGO

P.O. Box 701

Milwaukee, WI 53201-0701

nationwide.com/mutualfunds

 

LOGO

 

LOGO

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 Nationwide Fund Advisors (NFA), with the exception of Nationwide Asset Management, LLC (NWAM).

Nationwide, the Nationwide N and Eagle, Nationwide is on your side, Nationwide Funds Group and Nationwide Funds are service marks of Nationwide Mutual Insurance Company. © 2014

AR-ID 12/14

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 it has not done so.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is included as Exhibit 12 (a)(1).

The registrant must briefly describe the nature of any amendment, during the period covered by the report, to a provision of its code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item. The registrant must file a copy of any such amendment as an exhibit pursuant to Item 11(a)(1), unless the registrant has elected to satisfy paragraph (f) of this Item by posting its code of ethics on its website pursuant to paragraph (f)(2) of this Item, or by undertaking to provide its code of ethics to any person without charge, upon request, pursuant to paragraph (f)(3) of this Item.

If the registrant has, during the period covered by the report, granted a waiver, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more items set forth in paragraph (b) of this Item, the registrant must briefly describe the nature of the waiver, the name of the person to whom the waiver was granted, and the date of the waiver.

During the period covered by the report, with respect to the registrant’s Code of Ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, except as may be noted hereinbelow, there have been no amendments to, nor any waivers granted from, a provision that relates to any element of the Code of Ethics definition enumerated in paragraph (b) of this Item 2.

Item 3. Audit Committee Financial Expert.

(a) (1) Disclose that the registrant’s board of directors has determined that the registrant either:

(i) Has at least one audit committee financial expert serving on its audit committee; or

 

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(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, it must explain why it does not have an audit committee financial expert.

 

  3(a)(1) The registrant’s board of trustees has determined that the registrant has at least one audit committee financial expert serving on board’s audit committee.

 

  3(a)(2) The audit committee financial expert of the registrant’s board of trustees is Paula H.J. Cholmondeley, who, for purposes of this Item 3 of Form N-CSR, is an “independent” trustee of the registrant.

Item 4. Principal Accountant Fees and Services.

(a) Disclose, under the caption Audit Fees, the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.

(b) Disclose, under the caption Audit-Related Fees, the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category.

(c) Disclose, under the caption Tax Fees, the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. Registrants shall describe the nature of the services comprising the fees disclosed under this category.

(d) Disclose, under the caption All Other Fees, the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item. Registrants shall describe the nature of the services comprising the fees disclosed under this category.

4(a) through 4(d): The information in the table below is provided for services rendered to the registrant by the registrant’s principal accountant, PricewaterhouseCoopers LLP (“PwC”), for the registrant’s fiscal years ended October 31, 2013, and October 31, 2014.

 

     2013      2014  

Audit Fees

    $ 709,889       $ 1,102,201   

Audit-Related Fees

    $ 33,037       $ 1,730   

Tax Fees

    $ 346,456       $ 358,389 (a) 

All Other Fees

    $ 0       $ 0   

Total

    $ 1,089,382       $ 1,462,320   

 

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  (a) Tax fee amount represents tax compliance for federal, state and international matters, general consulting as well as consulting as it relates to foreign tax reclaims.

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 October 31, 2013, and October 31, 2014.

 

     2013    2014

Audit-Related Fees

    None    None

Tax Fees

    None    None

All Other Fees

    None    None

Total

    None    None

(e)(1) Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

(2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

4(e)(1) Pre-Approval Policies and Procedures. The Audit Committee (the “Committee”) of the registrant is responsible for pre-approving (i) all audit and permissible non-audit services to be provided by the independent auditors to the registrant and (ii) all permissible non-audit services to be provided by the independent auditors to NFA and any Covered Services Provider if the engagement relates directly to the operations and financial reporting of the registrant. The Committee may delegate the Committee’s responsibility to pre-approve any such audit and permissible non-audit services to the Chairperson of the Committee, and the Chairperson shall report to the Committee, at the Committee’s next regularly-scheduled meeting after the Chairperson’s pre-approval of such services, his or her decision(s).

The Committee also may establish detailed pre-approval policies and procedures for pre-approval of these services in accordance with applicable laws, including the delegation of some or all of the Committee’s pre-approval responsibilities to other persons (other than NFA or the registrant’s officers). Pre-approval by the Committee of any permissible non-audit services shall not be required so long as: (i) the aggregate amount of all said permissible non-audit services provided to the registrant, NFA, and any Covered Services Provider constitutes not more than five percent (5%) of the total amount of revenues paid by the registrant to the registrant’s independent auditors during the fiscal year in which the permissible non-audit services are provided; (ii) the permissible non-audit services were not recognized by the registrant at the time of the engagement to be non-audit services; and (iii) these services are promptly brought to the attention of the Committee and approved by the Committee (or the Committee’s delegate(s)) prior to the completion of the audit.

4(e)(2) The information in the table below sets forth the percentages of fees for services (other than audit, review, or attest services) rendered by PwC to the registrant for which the pre-approval requirement was waived pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X, for the registrant’s fiscal-years ended October 31, 2013, and October 31, 2014:

 

     2013      2014  

Audit-Related Fees

      None         None   

Tax Fees (1)

      None         None   

All Other Fees

      None         None   

Total

      None         None   

 

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The information in the table below sets forth the percentages of fees for services (other than audit, review, or attest services) rendered by PwC to NFA and any Covered Services Provider required to be approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X, for the registrant’s fiscal-years ended October 31, 2013, and October 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 October 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.

4(g) The aggregate fees billed by PwC for non-audit services rendered to the registrant and service affiliates for the fiscal-years ended October 31, 2013, and October 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 nonaudit services that were rendered to the registrant’s investment adviser (not including any subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

4(h) The registrant’s Audit Committee has considered whether the provision by PwC of non-audit services to NFA and Covered Services Providers, that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X because these services did not directly relate to the registrant’s operations and financial reporting, is compatible with maintaining PwC’s independence.

Item 5. Audit Committee of Listed Registrants.

 

  (a) If the registrant is a listed issuer as defined in Rule 10A-3 under the Exchange Act (17 C.F.R. § 240.10A-3), state whether or not the registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (15 U.S.C. § 78c(a)(58)(A)). If the registrant has such a committee, however designated, identify each committee member. If the entire board of directors is acting as the registrant’s audit committee as specified in Section 3(a)(58)(B) of the Exchange Act (15 U.S.C. § 78c(a)(58)(B)), so state.

Not Applicable: The registrant is not a listed issuer as defined in Rule 10A-3 under the

Exchange Act.

 

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  (b) If applicable, provide the disclosure required by Rule 10A-3(d) under the Exchange Act (17 C.F.R. §240.10A-3(d)) regarding an exemption from the listing standards for all audit committees.

Not Applicable: The registrant is not a listed issuer as defined in Rule 10A-3 under the

Exchange Act.

Item 6. Investments.

 

  (a) File Schedule I – Investments in securities of unaffiliated issuers as of the close of the reporting period as set forth in § 210.1212 of the Regulation S-X [17 C.F.R. § 210.12-12], unless the schedule is included as part of the report to shareholders filed under Item 1 of this Form.

Instruction of paragraph (a)

Schedule I-Investments In Securities of unaffiliated issuers filed under this Item must be audited, except that in the case of a report on this Form N-CSR as of the end of a fiscal half-year Schedule I – Investments in securities of unaffiliated issuers need not be audited.

 

  (b) If the registrant has divested itself of securities in accordance with Section 13(c) of the Investment Company Act of 1940 following the filing of its last report on Form N-CSR and before filing of the current report, disclosed the following information for each such divested security:

 

  (1) Name of the issuer;

 

  (2) Exchange ticker symbol;

 

  (3) Committee on Uniform Securities Identification Procedures (“CUSIP’) number;

 

  (4) Total number of shares or, for debt securities, principal amount divested;

 

  (5) Date(s) that the securities were divested;

 

  (6) If the registrant holds any securities of the issuer on the date of filing, the exchange ticker symbol; CUSIP number; and the total number of shares or, for debt securities, principal amount held on the date of filing; and

 

  (7) Name of the statute that added the provision of Section 13(c) in accordance with which the securities were divested. This Item 6(b) shall terminate one year after the first date on which all statutory provisions that underlie Section 13(c) of the Investment Company Act of 1940 have terminated.

The Registrant made no divestments of securities in accordance with Section 13(c) of the

Investment Company Act of 1940.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company’s investment adviser; principal underwriter; or any affiliated person (as defined in Section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. § 80a-2(a)(3)) and the rules there under) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company’s investment adviser, or any other third party, that the company uses, or that are used on the company’s behalf, to determine how to vote proxies relating to portfolio securities.

 

6

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 Companies.

If the registrant is a closed-end management investment company that is filing an annual report on this Form N-CSR, provide the information specified in paragraphs (a) and (b) of this Item with respect to portfolio managers.

Not Applicable. The registrant is an open-end management investment company, not a

closed-end management investment company.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

If the registrant is a closed-end management investment company, provide the information specified in paragraph (b) of this Item with respect to any purchase made by or on behalf of the registrant or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) under the Exchange Act (17 C.F.R. § 240.10b-18(a)(3)), of shares or other units of any class of the registrant’s equity securities that is registered by the registrant pursuant to Section 12 of the Exchange Act (15 U.S.C. § 781).

Not Applicable. The registrant is an open-end management investment company, not a closed-end management investment company.

Item 10. Submission of Matters to a Vote of Security Holders.

Describe any material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 C.F.R. § 240.14a-101), or this Item.

The Independent Trustees and the Board of Trustees of the registrant adopted a formal, written “Policy Regarding Shareholder Submission of Trustee Candidates,” as well as a formal, written “Statement of Policy On Criteria For Selecting Trustees,” on June 9, 2005, and June 10, 2005, respectively. Neither this policy nor this statement of policy has been materially changed since the Board of Trustees adoption of the policy and the statement of policy, respectively. The Nominating and Fund Governance Committee of the Board of Trustees (the “NFGC”) and the Board of Trustees, however, on November 11, 2005, and January 12, 2006, respectively, approved amendments to this policy; these amendments to the policy, though, concern the criteria for selecting candidates for Trustees and the characteristics expected of candidates for Trustees, as set forth in the Exhibit A, “Statement of Policy On Criteria For Selecting Trustees,” to the policy and, arguably, may not be deemed to be material changes to the policy.

{NOTE – THIS IS REQUIRED BEGINNING WITH THE FIRST REPORTING PERIOD ENDING AFTER JANUARY 1, 2004. For purposes of this Item, adoption of procedures by which shareholders may recommend nominees to the registrant’s board of directors, where the registrant’s most recent proxy disclosure (in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR § 240.14a-101)), or this Item, indicated that the registrant did not have in place such procedures, will constitute a material change.}

Item 11. Controls and Procedures.

(a) Disclose the conclusions of the registrant’s principal executive and principal financial officers, or persons performing similar functions, regarding the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act (17 C.F.R. § 270.30a-3(c))) as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the Act (17 C.F.R. § 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 C.F.R. § 240.13a-15(b) or § 240.15d-15(b)).

 

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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, except as discussed in the following paragraph, these disclosure controls and procedures, as most-recently amended effective as of June 11, 2014, are adequately designed and 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. The registrant’s management, including its principal executive officer and principal financial officer, believes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Management has determined that because the Nationwide Mutual Funds Investor Destinations Conservative Fund (the “Fund”) did not have substantially all of the Fund’s holdings classified as level 1 and level 2 securities in that it held a significant portion of its holdings in a level 3 security within the hierarchy, a Statement of Cash Flows should be presented in accordance with the a recent technical correction to Financial Accounting Standards Board Accounting Standards Codification Topic 230 (“ASC 230”). As a result, Management is amending this shareholder report (the “Amendment”). The Amendment does not change any of the existing financial statement information including the financial highlights and the notes to the financial statements, nor did any of the share class net asset values, net assets, or shares outstanding require any update. There was no impact to the net asset value of the Fund’s shares or the total return of the Fund’s shares for any period. The controls in place were insufficient to ensure that the technical correction described above, was appropriately incorporated into the Fund’s financial statements which resulted in a material weakness as of October 31, 2014. Management has subsequently modified controls to review such future technical corrections to ensure compliance with ASC 230.

(b) Disclose any change in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 C.F.R. § 270.30a-3(d)) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Other than the modification of controls to review future technical corrections as noted above to ensure compliance with ASC 230, there were no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s second fiscal half year covered by this report that have materially affected or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

(a) File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.

(a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit.

The code of ethics that is the subject of the disclosure required by Item 2 is attached hereto.

(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 C.F.R. § 270.30a-2).

Certifications pursuant to Rule 30a-2(a) are attached hereto.

(a)(3) Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 C.F.R. § 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.

Not Applicable.

 

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(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: February 25, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)*            

/s/ Michael S. Spangler

Name:   Michael S. Spangler
Title: Principal Executive Officer
Date: February 25, 2015

 

By (Signature and Title)*            

/s/ Joseph A. Finelli

Name:   Joseph A. Finelli
Title: Principal Financial Officer
Date: February 25, 2015

 

* Print the name and title of each signing officer under his or her signature.

 

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