<PAGE> 1
[NATIONWIDE MULTI-FLEX ANNUITY LOGO]
Semi-Annual Report
June 30, 1995
Nationwide(R)
Multi-Flex
Variable Account
[NATIONWIDE INSURANCE LOGO]
<PAGE> 2
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
<PAGE> 3
[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216
[PHOTO]
PRESIDENT'S MESSAGE
We are pleased to present the 1995 semi-annual report of the Nationwide
Multi-Flex Variable Account.
The first half of 1995 proved rewarding for both stock and bond fund investors.
During this period, stock funds as a group scored a gain of almost 17 percent
while bond funds were ahead by over 9 percent, as measured by Lipper Analytical
Services, Inc.
The economy slowed during the second quarter in deference to the Federal
Reserve's goal of a "soft landing". In early July the Fed trimmed the federal
funds rate 25 basis points, the first easing by the Fed in almost three years,
This move provided additional fuel to the markets in the current quarter.
Continued low inflation, favorable corporate earnings and slow but sustainable
economic growth should support further advances in the equity and fixed income
markets for the remainder of the year and into 1996.
We extend our thanks that you have selected our investment products to help you
meet your financial planning and retirement needs.
/s/ PETER F. FRENZER
--------------------
Peter F. Frenzer, President
3
<PAGE> 4
CONTENTS
<TABLE>
<S> <C>
HOW TO READ THE SEMI-ANNUAL REPORT.............................................................. 5
Explanation on how to read and understand
the various financial reports
A FEW WORDS ABOUT OUR FUNDS..................................................................... 7
Fund Objectives and Narratives
written by the fund managers*
FUND PERFORMANCES...............................................................................18
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY....................................20
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY......................................................................22
NOTES TO FINANCIAL STATEMENTS...................................................................23
SCHEDULES OF CHANGES IN UNIT VALUE..............................................................25
</TABLE>
* The discussions refer to a stock market index. The Standard & Poor's 500 Index
(S&P 500) is an unmanaged index of 500 U.S. common stocks and the historical
performance assumes the reinvestment of dividends.
The performance figures quoted by the fund managers may not include the annual
mortality, expense and administration charges of the annuity contract.
4
<PAGE> 5
HOW TO READ THE SEMI-ANNUAL REPORT
This Semi-Annual Report is sent to all customers who own one of the following
contracts:
- Nationwide Multi-Flex Variable Annuity
- NEA Valuebuilder Annuity
- Nationwide Variable Annuity -
Citibank, New York
All or some of the funds in the Nationwide Multi-Flex Variable Account (the
Account) are available through these contracts. The Account is a separate
account trust which invests in thirteen mutual funds from six mutual fund
houses. An explanation of the funds and their objectives can be found on pages 7
through 17.
The Semi-Annual Report has three major financial sections.
Statement of Assets, Liabilities and Contract Owners' Equity
This statement, found on page 20, lists all the funds in the Account, the number
of shares owned, the amount paid for the shares (i.e., cost) and their market
value on June 30, 1995. The funds are presented in alphabetical order by
investment company. The market value of the assets change as the underlying
mutual fund shares change in value. As contract owners make exchanges between
the funds, the number of shares in each fund increases and decreases. When money
is deposited by contract owners, shares of the mutual funds are bought by the
Account. The total market value of the funds is equal to the Total investments.
Accounts receivable, if applicable, is an asset of the Account for money market
fund shares added to the contract owners' accounts, but not yet added to Total
investments. Total investments plus Accounts receivable equals Total assets.
Accounts payable, if applicable, is a liability of the Account for money market
fund shares deducted from the contract owners' accounts, but not yet deducted
from Total investments.
Total assets minus Accounts payable equals Contract owners' equity. For a
summary of Contract owners' equity by fund series turn to page 21.
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
These statements, found on page 22, show the activity in the Account from
January 1 to June 30, 1995, 1994 and 1993.
The Investment activity section shows the changes in unrealized gain or loss of
the mutual funds in the Account, realized gain or loss as shares of the funds
are bought and sold, and dividends and capital gains earnings from the
underlying mutual funds.
The Equity transactions section illustrates the purchase payments received by
the Account as new contracts are sold, existing contract owners deposit
additional funds, contracts are canceled and annuity benefits are paid.
Expenses are the charges associated with the contract. Note 2 on page 24
outlines these charges.
Net change in contract owners' equity equals Investment activity plus Equity
transactions minus Expenses.
The Contract owners' equity at the beginning of the period plus the Net change
in contract owners' equity equals the Contract owners' equity at the end of the
period. Contract owners' equity at the end of the calendar year will equal the
Contract owners' equity at the beginning of the next year.
5
<PAGE> 6
SCHEDULES OF CHANGES IN UNIT VALUE
As a contract owner, you invest in the mutual funds offered in your annuity
contract. However, you do not buy shares of the mutual fund. Instead, the
Account buys shares of the fund and you in turn purchase units of the Account.
Except for the units surrendered for the annual contract maintenance charge, the
number of units you own will not change unless you contribute to or withdraw
money from your account. The value of your contract can change based on the
value of the units you own. For example, if you purchase 100 units at $10 per
unit, the value of your contract is $1,000. If the value of the units increases
to $12 per unit, your contract value increases to $1,200. Therefore, to
determine the value of your account, multiply the number of units of each fund
you own by the fund's unit value.
The Schedules of Changes in Unit Value show you the unit value at the beginning
of the period and at the end of the period. The percentage increase (decrease)
in unit value shows how it changed in value. This is computed by subtracting the
beginning unit value from the ending unit value and dividing the difference by
the beginning unit value. This can be used as a measure of the performance of
the funds over the three semi-annual periods reported.
As you review the following pages of the Semi-Annual Report, the Notes to
Financial Statements on page 23 will also help explain and clarify the various
statements and schedules.
6
<PAGE> 7
A FEW WORDS ABOUT OUR FUNDS
[DREYFUS LOGO]
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH
FUND, INC.
OBJECTIVE - To attain long term superior growth through investment in companies
that are socially responsible in several aspects: employee relations, the
environment, product liability, weapons manufacturing, community relations,
women and minority hiring.
(Not offered in Nationwide Multi-Flex Variable Annuity and Nationwide Variable
Annuity - Citibank, New York)
NARRATIVE BY DREYFUS CORPORATION
The first six months of 1995 have represented a period of new directions for the
Socially Responsible Growth Fund. Our firm, NCM Capital Management Group was
retained as sub-advisor August of 1994 and the fund was fully-transitioned to
our portfolio management style by December of 1994. In our letter to the
shareholders at that time we outlined our growth-oriented investment style and
the specific changes that the fund had undergone in the first half of the fiscal
year. Many of those changes are beginning to bear fruit as the returns for the
portfolio have begun an upward trend that we believe is indicative of the fund's
longer term prospects. In fact on a calendar year basis (since 12/31/94), the
Socially Responsible Growth Fund has been a top-rated socially-responsible fund
in terms of performance among actively-managed funds. However, the fund does
still trail the S&P 500 index for the calendar year-to-date (17.76% vs. 20.19%
for the S&P 500), as would be expected, because of the broad transitioning of
the portfolio. Additionally, it is important to note that 1994 and the first
half of 1995 has been a period of much stock market volatility, making it a
particularly difficult time to transition a portfolio. However, we feel that
shareholders will be pleased with the recent improvement in performance.
The most salient issue confronting the equity markets in 1994 was the Federal
Reserve's vigilance in fighting inflation and overly expansive economic growth.
The Fed did this by raising interest rates an unprecedented seven times in a
12-month period. The hope was that by doing so businesses would seek to grow
their bottom lines via productivity enhancements and market share growth rather
than simply raising prices, as has been the case in previous economic cycles.
The volatility that ensued made for a difficult environment for money managers.
Despite this environment our management team made several portfolio changes that
have contributed to the fund's status as a top-rated socially-responsible fund
on a year-to-date basis. In other words, the recent positive trends are
indicative of the longer term prospects for the Socially Responsible Growth
Fund.
In terms of the economic sectors of the fund, we changed many of the weightings.
We cut the Basics sector weighting in half. Basics include chemicals, paper and
forest products, and metals. The pricing environment for these companies became
more negative as the Fed made it clear that inflation was going to be controlled
in this economic cycle. We reorganized our weighting in the Consumer Cyclical
sector as it became obvious that the consumer's high debt position was
preventing their participation in the economic expansion. We moved into names
that would be less sensitive to consumer spending. The most strategic change we
made was to further increase our weightings in the more traditional growth
sectors of the economy, namely Consumer Staples (which include foods and health
care) and Technology. These moves, in combination with the others did the most
to dramatically improve the fund's performance. Our weightings went from
significantly underweighted to market weighted in the Consumer Staples and from
market weighted to overweighted in Technology. Consequently, the average growth
rate of securities in the portfolio rose significantly, as did the trade-off of
average
+ "Standard & Poor's 500", "S&P 500(R)" are trademarks of the Standard &
Poor's Corporation and have been licensed for use. The fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's Corporation.
++ Formerly the Dreyfus Life and Annuity Index Fund.
7
<PAGE> 8
SOCIALLY RESPONSIBLE GROWTH FUND (CONT'D)
value for average unit of growth. In other words, we greatly improved
the risk/return trade-off of the average security in the portfolio.
Other secondary sector adjustments we made were in the Financials and Utilities.
We feel that it is appropriate to focus the portfolio into areas that will
provide above average growth relative to the broad market averages and therefore
chose to reduce the weightings in these two areas. However, we did concentrate
the weightings into the stocks of aggressively growing stocks in both sectors.
In the Financial area we focused on fee-oriented businesses, which are less
likely to be impacted by changes in interest rates and in Utilities we are
focused on names that should experience good long term secular growth because of
technological or new product advancements.
Year-to-date there are many individual securities that have contributed nicely
to the positive performance trends of the fund. In the Consumer Cyclical sector,
Capital Cities ABC, Walt Disney, Nike, and Phillips Electronics have had
superior performance. These names represent secular growth stocks that will grow
regardless of the economic environment because of globally-oriented, diversified
operations. Among Consumer Staple stocks in the portfolio that have contributed
to performance, Coca-Cola, Colgate-Palmolive, IBP, Inc., Amgen, Medtronic, and
Merck are a few standouts. The food, beverage and household products companies
have benefited from more positive investor sentiment toward their long term,
globally-driven growth rates. The health care stocks benefited from an improved
outlook for their operations due to the collapse of the Clinton health care
reform initiative.
Stock selection in the Financial area contributed mightily to the fund's
positive results as did a more benign interest rate outlook. Advanta, a credit
card company, and banks such as Citicorp, Bank of New York, and Midlantic, and
specialty financial services companies such as Green Tree Financial, a provider
of mobile home financing, and Federal National Mortgage Corp. have performed
beautifully for the year-to-date period.
Our focus in the Technology sector was in stocks of companies with fairly
established market positions, superior technology, and outstanding management
teams. Individual issues such as 3Com, Applied Materials, Hewlett Packard,
Linear Technology, and Sun Microsystems, were all stellar performers. Each of
these companies stand to benefit not just from demand for a single product, but
a broad, diversified product offering with multiple down-stream beneficiaries.
These qualities lower the risk profile of the fund's technology weighting
relative to the typical technology stock and lowers the general level of
volatility in that sector.
Going forward we feel that the Federal Reserve's hold on the market will
persist; however, this time we expect that the Fed's action will benefit stocks
because rates will actually be reduced rather than raised, as the economy shows
signs of slowing. The Socially Responsible Growth Fund is well positioned to
benefit from such a trend. For the calendar year-to-date the fund is outpacing
most socially-responsible funds by an average of 4.0%. Additionally, the fund is
performing in-line with the average growth fund. Both relative performances are
notable given the strength of the overall market. We are confident that the fund
is positioned to achieve performance superior to funds that do not have our
socially-responsible charter. Now that the transition of fiscal 1995 is over, we
can get down to the business of providing superior returns to our shareholders
while honoring your socially-responsible investment objectives. We are confident
in the outlook for the fund and appreciative of the demonstrated confidence of
our shareholders. We take your socially-responsible directives seriously as we
endeavor to provide the maximum return on and return of shareholder capital.
DREYFUS STOCK INDEX FUND++
OBJECTIVE - To provide investment results that correspond to the price and yield
performance of the S&P 500.
(Not offered in Nationwide Multi-Flex Variable Annuity)
NARRATIVE BY DREYFUS CORPORATION
The objective of the Stock Index Fund is to provide investment results that
correspond to the price and yield performance of publicly traded common stocks
in the aggregate, as represented by the Standard & Poor's 500 Composite Price
Index, better known as the S&P 500.
8
<PAGE> 9
STOCK INDEX FUND (CONT'D)
The manager generally selects stocks for the Fund's portfolio in the order of
their weightings in the S&P 500, beginning with the heaviest weighted stocks.
With respect to the Fund's assets invested in the stocks in the S&P 500, the
percentage of such assets invested in each stock is approximately the same as
the percentage it represents in the S&P 500.
The Fund will attempt to achieve a correlation between the performance of its
portfolio and that of the S&P 500 of at least 0.95, without taking into account
expenses. The Fund's ability to correlate its performance with the S&P 500 may
be affected by, among other things, changes in securities markets, the manner in
which the S&P 500 is calculated by Standard & Poor's Corporation, the timing of
purchases and redemptions, the size of the Fund's portfolio, and the size of
cash flow into and out of the Fund. There can be no assurance that the Fund's
investment objective will be achieved and an investment in the Fund involves
risks similar to those of investing in common stocks.
DREYFUS VARIABLE INVESTMENT FUND -- SMALL CAP PORTFOLIO
OBJECTIVE - To maximize capital appreciation by investing in common stocks of
emerging smaller-sized companies.
(Not offered in Nationwide Multi-Flex Variable Annuity and Nationwide Variable
Annuity - Citibank, New York)
NARRATIVE BY DREYFUS CORPORATION
During the six-month period ended June 30th, the small company universe
represented by the Russell 2000 Index broadly underperformed the large company
gains of the Standard & Poor's 500 Composite Stock Price Index. This trend
actually began in early 1994, and appears related to the strength of economies
on a global basis in 1994, primarily benefiting the large U.S.-based
multinationals whose exports were especially enhanced by the weakened dollar.
The business of smaller companies, on the contrary, has been generally perceived
as domestic and, therefore, relatively less attractive in such an environment.
As we have mentioned in earlier reports to you, we have purposely taken and held
positions of smaller companies in capital goods, technology and specialty
materials where foreign sales have been strong and, in a number of cases, where
U.S. products actually dominate global markets. Examples include Bush Boake
Allen, in specialized flavors and fragrances; Albany International, Cl. A, in
paper machinery clothing; OM Group, in cobalt refining and metallurgy; Roper
Industries, in process controls; and both Rohr and Precision Castparts, as
suppliers to Boeing.
A second important investment theme relates to the dramatic shift away from
consumer stocks. Quietly burdened by the weak local currency, spent out during
the 1980s, and demographically older and more prone to save, the American
consumer has become elusive. Conversely, after years of industrial restructuring
and benefited by the local currency, the capital goods and technology sectors
have been invigorated by a strong export market combined with American corporate
demand for productivity. Coming after 12 years of consumer stocks' relative
strength, the shift toward producer stocks appears to be in the early stages.
This has been led by the large company performance of such companies as Intel
and Microsoft, which now dominate the NASDAQ Composite Index.
In recent months, small company technology stocks have joined the bull market
with vigor, in many cases with speculative fervor not seen since the late 1960s.
Our largest positions include Integrated Silicon Solution, Auspex Systems and
Glenayre Technologies -- all of which have moved from relative obscurity into
important global product offerings. Although we have strong positive feelings
about each company's management and corporate prospects, the stocks of these and
other technology firms have already reached price targets we set for 1996 or
beyond.
For this reason, you may find our technology sector weighting reduced for a
while and our primary efforts aimed at increasing the consumer holdings, while
they remain out of favor.
9
<PAGE> 10
[FIDELITY INVESTMENTS LOGO]
VARIABLE INSURANCE PRODUCTS FUND
EQUITY-INCOME PORTFOLIO
OBJECTIVE - To seek reasonable income by investing primarily in income-producing
equity securities.
AN INTERVIEW WITH BETTINA DOULTON,PORTFOLIO MANAGER
Q. BETTINA, HOW DID THE FUND PERFORM?
A. Although the fund did well relative to its peers, it slightly trailed the
performance of the Standard & Poor's 500 stock index for the six and 12-month
periods ended June 30, 1995. The index had total returns of 20.21% and 26.07%
for those periods, respectively. Because this recent stock market rally was
quite narrow -- led by a few sectors, namely technology, financials and the
large-cap and blue-chip stocks -- relatively few stock mutual funds have topped
the performance of the index thus far in 1995.
Q. THE STOCK MARKET SHOWED A RENEWED VIGOR OVER THE PAST SIX MONTHS. WHAT
ACCOUNTED FOR THIS?
A. The market's strength was driven by investors' belief that the Federal
Reserve Board would manage the economy to a soft landing -- steady, albeit
slower, economic growth and continued low inflation. If achieved, those
conditions are ideal for Corporate America to sustain strong profit growth.
During the six-month period, corporate earnings reports were excellent, which
provided the fuel for stock prices to move higher. Excluding the consistently
outstanding performance of the technology and financial sectors, the market has
been characterized by rapid industry rotation. Investors have spent the past six
months racing from one industry to the next, trying to stay one step ahead of
the crowd. Sometimes, the fund was in the right place at the right time, and
sometimes it wasn't.
Q. WHAT CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Several of the fund's largest holdings have driven returns recently.
Highlights include Philip Morris. The stock has been rewarded for the company's
strong profit growth and free cash flow; both are attributable to terrific
results in the company's domestic and international tobacco businesses, which
more than offset mediocre results in its food division. Second in line is the
Federal National Mortgage Association (Fannie Mae). Although its stock price
suffered a significant setback last fall, it has since recovered as conditions
in the secondary mortgage market have turned more favorable. IBM was another
strong performer. The company has done an excellent job cutting costs and
cleaning up its balance sheet. In addition, global economic growth and wide
acceptance of the company's new products have contributed to accelerating
revenue growth. Finally, in the energy sector, energy service companies
Schlumberger and Halliburton performed well. Both benefited from improving
worldwide supply/demand dynamics for oil and corporate restructuring efforts.
Elsewhere in the energy sector, however, British Petroleum (BP) and Amerada Hess
have been somewhat disappointing in terms of stock performance. Both are
restructuring stories; BP's stock may just be taking a breather after making
significant gains, while Amerada Hess' turnaround may be just taking a bit
longer than investors had expected.
Q. YOU MORE THAN DOUBLED THE FUND'S STAKE IN FINANCIAL STOCKS; THEY WENT FROM
7.3% OF THE FUND SIX MONTHS AGO TO 17.9% ON JUNE 30 . . .
A. Recent purchases of bank stocks made up most of that increase. Along with the
diversified financial services companies such as American Express and Fannie
Mae, banks had a strong, if volatile, run. My only regret is not owning more of
them early in the period, when they began to outperform. Prices did fall in the
spring, however, which allowed me to buy stocks such as Chemical Banking and
BankAmerica off their highs. In the coming months, I expect the market to drive
bank stock valuations -- prices relative to earnings -- higher. That's because
earnings are becoming more consistent, the industry is consolidating, and
companies are using excess capital to repurchase shares of their own stocks.
10
<PAGE> 11
EQUITY-INCOME PORTFOLIO (CONT'D)
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. When interest rates fall, as they've done over the past few months, the
market usually rewards stocks with higher valuations. However, we have to keep
in mind that the economy has slowed, which could negatively affect corporate
earnings going forward. The 64-thousand-dollar question then becomes:will the
market's willingness to drive up valuations and look toward an economic
resurgence be enough to offset the negative effects of potential short-term
earnings disappointments? I'm afraid not. Companies that report
less-than-expected earnings growth in the coming months will most likely pay
dearly with falling stock prices. In light of this, I plan to focus intensely on
owning companies that trade at attractive valuations, offer good prospects for
higher earnings through 1996, and are working to enhance shareholder value.
HIGH INCOME PORTFOLIO
OBJECTIVE - Seeks to obtain a high level of current income by investing
primarily in high risk, lower-rated, high-yielding, fixed income securities,
while also considering growth of capital.
(Not offered in Nationwide Multi-Flex Variable Annuity and Nationwide Variable
Annuity - Citibank, New York)
AN INTERVIEW WITH BARRY COFFMAN, PORTFOLIO MANAGER
Q. HOW HAS THE FUND PERFORMED, BARRY?
A. Although the fund did well relative to its peers, it trailed the performance
of the Merrill Lynch High Yield Index, which returned 12.75% and 14.88%,
respectively, for the six and 12-month periods ended June 30, 1995. The index
has a larger percentage of Ba-rated bonds than most high-yield mutual funds,
which tend to be more concentrated in B-rated bonds. Generally speaking,
Ba-rated bonds are more sensitive to changing interest rates, and therefore,
benefited more from the recent decline in interest rates than B-rated bonds. As
a result, very few high yield funds outperformed the index.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. As I already mentioned, the fund's relatively low weighting in Ba-rated
securities was the primary reason for its underperformance relative to its
benchmark during the most recent period. On the positive side, we have
maintained a high weighting, compared to the benchmark, in deferred coupon
securities. These bonds sell at a deep discount because they do not pay current
interest for some period, usually three to five years. They generally have
longer durations -- which measures how sensitive their price is to changes in
interest rates -- and therefore, their prices are more volatile. We also avoided
most of the credit disasters that occurred in the market.
Q. WHAT INVESTMENTS HAVE DONE WELL IN THE PAST SIX MONTHS?
A. Revlon continued to benefit from an operational restructuring and the very
successful launch of two key new products: Color Stay lipstick and Age Defying
Makeup. Our Revlon position is concentrated in the most junior securities which
are most sensitive to changes in credit quality, which has been a recent plus.
Another strong performer was Big Flower Press, a large commercial printer of
advertising inserts, comics and television guides. The company was helped by the
strong growth in advertising and the synergies it gained from some recent
acquisitions. Finally, our concentration in casinos and hotels did relatively
well during the period.
Q. GIVEN THE MARKET'S STRENGTH SO FAR IN 1995, WAS IT DIFFICULT TO FIND
OPPORTUNITIES?
A. Not particularly. The new issues market was active and provided ample
opportunity to selectively add new names to the fund. One example was PanAmSat
Corp., which operates an international satellite communications system and
provides satellite services to the broadcasting and business communications
markets. It currently has two satellites operating and also has a large backlog
of contracted time from companies including ESPN and Viacom for two new
satellites it will be launching later this year. The company is participating
in a joint venture to provide Direct to Home (DTH) television broadcasting
service to Latin America, similar to the Direct TV service in the
11
<PAGE> 12
HIGH INCOME PORTFOLIO (CONT'D)
United States. Another new issue we purchased was Stratosphere Corp., a Las
Vegas-based casino owned by industry-leader Grand Casino. These bonds are
attractive in part, because in addition to their 14.25% coupon, they pay
additional interest based on a percentage of the company's cash flow.
Q. WHAT INVESTMENTS DIDN'T FARE AS WELL?
A. The high-yield restaurant sector, in general, did not perform well during the
period due to competitive pressures and a slowing economy. One of our largest
holdings is Flagstar, the parent of Denny's and the largest franchisee of
Hardees. Although Denny's has benefited from an aggressive remodeling program,
Hardees has suffered due to aggressive price promotions from the major burger
chains. Another restaurant chain, American Restaurant Group, also underperformed
partly due to the concentration of its chains in California, where the economy
continues to be weaker than the rest of the country.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The probability of the soft landing scenario is increasing, which could
provide a favorable backdrop for the high-yield bond market. Slow economic
growth and low inflation could allow many companies in the high-yield market to
improve their credit quality. Absolute yields remain attractive, and absent a
sharp drop in interest rates from current levels, high-yield bonds could perform
well relative to other fixed-income investments. In my view, the key is to be
selective. I'm focusing on companies that are less cyclical, or sensitive to the
economy, and choosing companies that I think can perform well in a slow-growth
environment. In my view, the uncertainty in the marketplace should provide some
attractive opportunities.
[NATIONWIDE FINANCIAL SERVICES, INC. LOGO]
NATIONWIDE(R) SEPARATE ACCOUNT TRUST
CAPITAL APPRECIATION FUND
OBJECTIVE - To obtain long-term growth.
NARRATIVE BY CHARLES BATH, FUND MANAGER
Warner-Lambert is currently the largest holding in the Capital Appreciation
Fund. Warner-Lambert is a very successful consumer products company with a
pharmaceutical division which has been struggling recently due to an important
patent expiration. However, the company has several new pharmaceutical products
which may be available in the next two to three years. For long-term
shareholders the current low valuation is an attractive opportunity to own an
improving diversified consumer products and health care company.
Chrysler Corporation is a large holding of the Fund which has recently been
involved in considerable controversy. The company's largest shareholder has made
and withdrawn an offer to buy the entire company. While somewhat unusual, these
events have highlighted the undervaluation of Chrysler's shares in the
marketplace. I have been baffled by the low valuation accorded Chrysler's
shares. The vastly improved balance sheet and strong competitive position as one
of the world's low cost producers of automobiles should lead to higher valuation
of the shares. Chrysler's management has taken several steps to reward
shareholders by repurchasing shares and raising the dividend. Hopefully,
long-term shareholders will benefit more by continued investment in Chrysler's
shares than is possible through the short-term opportunity provided by a
buy-out.
12
<PAGE> 13
GOVERNMENT BOND FUND
OBJECTIVE - To provide as high a level of income as is consistent with the
preservation of capital.
NARRATIVE BY WAYNE FRISBEE, FUND MANAGER
In our Annual Report six months ago, we discussed the unusual fundamental value
then available in the bond market. During the first half of 1995 that value was
largely realized as bond market investors were rewarded for their patience after
what had been a very difficult prior year. Long-term interest rates dropped by
125 basis points during this period while rates on intermediate-term assets
dropped by even more. The rates on the five-year U.S. Treasury note, for
instance, fell from 7.83 percent to 5.97 percent.
The rally in the fixed-income markets was largely due to the perception in the
markets that the U.S. Federal Reserve would move away from a policy of
increasing short-term interest rates to slow an economy that had been growing
too fast and would begin to reduce rates to support an economy that was
obviously slowing. Continued reports of subdued inflation has also added
critical support to the market.
The Government Bond Fund reduced market exposure slightly as bond prices rose
while continuing to be invested in sectors of the government, agency, and
mortgage-backed markets perceived to be undervalued. Approximately one-third of
portfolio assets continue to be invested in the Collateralized Mortgage
Obligation (CMO) market. The additional yield on these conservatively-structured
investments continue to make them attractive portfolio holdings. The portfolio
will avoid the risks inherent in the more-risky "derivative" structures that
have received so much negative press coverage.
MONEY MARKET FUND
OBJECTIVE - To seek as high a level of current income as is considered
consistent with the preservation of capital and liquidity by investing primarily
in money market instruments.
NARRATIVE BY KAREN MADER, FUND MANAGER
On July 6, 1995, the Federal Reserve changed its previous course and lowered the
Federal Funds rate by 25 basis points to 5.75% from 6.00%. In doing so, the
Federal Reserve was expressing concern over a possible slowdown in the economy.
The last time such a cut was done was nearly three years ago in September of
1992. The Fed Funds rate is used to price money market instruments. As a result
yields on money market instruments are also lower. For example, in February
1995, the three month treasury bill had a yield of 6.13%. The current yield is
5.61%.
The Separate Account Money Market Fund continues to invest in only the highest
rated instruments. An internal credit review is completed on every company we
invest in. The Fund's yield remains competitive with the other funds included in
Donoghue's Taxable First Tier Money Market Group.
13
<PAGE> 14
TOTAL RETURN FUND
OBJECTIVE - To obtain a reasonable long term total return (i.e., earnings growth
plus potential dividend yield) on invested capital from a flexible combination
of current return and capital gains through investments in common stocks,
convertible issues, money market instruments and bonds with a primary emphasis
on common stocks.
NARRATIVE BY JOHN M. SCHAFFNER, FUND MANAGER
Technology stocks have had very strong performance so far this year. Due to high
price volatility, above-average business risk, and generally low dividend
yields, the Total Return Fund's philosophy is to limit investments in this
sector. These limits involve buying only the strongest, best positioned
companies, buying only when the capital gain potential is well in excess of the
risk of loss, and to keep total exposure to a low percentage of Fund assets. The
Fund currently has about a 5% asset weighting in technology, after some recent
sales. The stocks held by the Fund have increased by such large percentages in
the first half of 1995 that even the relatively modest amount held by the Fund
has significantly helped performance. The Fund has more substantial asset
weightings in the Financial sector (about 12%) and Telecommunications (about
10%), both of which have had generally good performance in the first half. While
some individual issues have had negative results, there does not appear to be
any significant sector weaknesses in the Fund's holdings.
A number of attractive buying opportunities appeared during the first quarter,
and the Fund was able to establish new positions in Columbia/ HCA Healthcare,
Magna International and Premark International. The current level of cash remains
at 15%.
The Fund's strategy continues to be one of purchasing companies with clearly
visible business opportunities, at valuation levels that allow for future
improvement. Sales are being made when the fundamental outlook becomes less
clear than is satisfactory, or when valuation levels become uncomfortably high.
[NEUBERGER & BERMAN MANAGEMENT INC. LOGO]
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
BALANCED PORTFOLIO
OBJECTIVE - The portfolio seeks long-term capital growth and reasonable current
income without undue risk to principal.
(Not offered in Nationwide Multi-Flex Variable Annuity)
NARRATIVE BY MARK GOLDSTEIN, THERESA HAVELL AND DIDI WEINBLATT
The strength exhibited in both fixed income and equity markets have assisted the
AMT Balanced Portfolio to get off to one of its strongest years since
inception.With interest rates coming down 200 basis points and corporate
earnings on the Standard & Poor's 500 at all time highs, money is streaming into
bonds and stocks. This simultaneous rally has provided strong total return and
new opportunities.
The equity portion of the portfolio was able to capture much of the rally
exhibited by the broad market. Significant performers during the first half of
the year were the Technology, Financial Services and Gaming stocks. Names like
Intel, Citicorp and Promus all played a central role. Further boosts came from
specialty retailing shops as 9West (women's shoes), General Nutrition Centers
(vitamins and diet supplements), and Circuit City (consumer electronics).
In our attempts to add value, we look for companies that have earnings growth
rates in excess of 15%-20% and market valuations that put the price-to-earnings
ratio at or about the market average. With the recent acceleration of earnings
in much of the mid to large capitalization equity market, many new and appealing
opportunities for investment are available.
14
<PAGE> 15
BALANCE PORTFOLIO (CONT'D)
On the fixed income side, the portfolio has seen steady total returns over the
first six months. With the Federal Reserve Board easing rates and the fixed
income market already pricing in another rate cut, the bond market has done very
well. Though we have benefitted from these general market movements, our
conservative management style has also been able to add value.
During the last few months, the slowing of the economy has allowed corporate
bond spreads to widen, providing opportunity (we added bonds of issuers such as
Xerox, AT&T and Morgan Stanley). Additionally, government agency mortgage-backed
securities continued to look attractive.
Going forward, we believe that the AMT Balanced Portfolio can continue to act as
the cornerstone of almost any asset allocation. With its concentration on
conservatively managed fixed income securities in conjunction with a disciplined
blend of value and growth equity, the fund provides opportunities and
diversification across the capital market spectrum.
[TWENTIETH CENTURY MUTUAL FUNDS LOGO]
A MEMBER OF THE TWENTIETH CENTURY FAMILY OF MUTUAL FUNDS.
TCI ADVANTAGE
OBJECTIVE - To seek current income and capital growth
(Not offered in Nationwide Multi-Flex Variable Annuity)
NARRATIVE BY TWENTIETH CENTURY COMPANIES, INC.
After a difficult 1994, TCI Advantage achieved the best return for a single
six-month reporting period in the fund's history. These unusually strong results
for this fund reflect powerful and lucrative rallies in the equity and
fixed-income markets over the period. The fund's benchmark index, a combination
of the S&P 500, the Lehman Brothers Intermediate Government Index, and the
three-month Treasury Bill Index, turned in an even higher return of 12.26%.
TCI Advantage is a blended portfolio. Its approximate 40% stock position is
compiled using Twentieth Century's focus on earnings and revenue growth, and is
designed to provide long-term opportunities for capital growth. Income is
derived from an approximate 40% stake in intermediate-term government bonds.
Finally, share price consistency is aided by a near 20% weighting in
money-market securities. The goal of this mix is to provide income to
conservative investors while still providing the modest, long-term share-price
growth investors need to outpace the rate of inflation. With an annual inflation
rate currently running at about 3%, as measured by the consumer price index
(CPI), TCI Advantage has accomplished this task since its inception. We believe
strongly that the fund's investment approach will help it to meet its goals over
longer periods of time as well.
15
<PAGE> 16
TCI ADVANTAGE (CONT'D)
TCI Advantage's success over the six months ended June 30, 1995, owes to strong
recoveries in the bond and stock markets from 1994's lows. While the fund's bond
and money-market positions performed only moderately compared with more
aggressive, longer-term bonds as interest rates fell over the period, they did
contribute meaningfully to fund performance. In keeping with its investment
approach, TCI Advantage's stock portfolio seeks larger, more established firms
that exhibit accelerating earnings growth. Its investments in computer and
communications related stocks helped it profit from strength in the technology
sector, while holdings in industrial cyclicals prospered in a slow growth
economic environment. This success helped to overcome limited participation in a
broad rally for smaller sized companies, as well as limited exposure to the
types of stocks, such as bank related issues, that take advantage of a falling
interest rate environment.
Moderate economic growth and low interest rates bode well for the markets as the
year heads into its second half. Your fund's management team is currently
investigating opportunities overseas, where falling interest rates could
substantially improve corporate profitability. Prices for many foreign firms are
also fairly low compared with their growth prospects. Yet international holdings
will continue to comprise only a small portion of the fund's portfolio. The
management team will continue to emphasize domestic stocks with earnings and
revenue acceleration, conservative government bonds, and money-market
securities.
TCI GROWTH
OBJECTIVE - To seek capital growth by investing in common stocks (including
securities convertible into common stocks) that meet certain fundamental and
technical standards of selection and, in the opinion of the fund's management,
have better than average potential for appreciation.
(Not offered in Nationwide Multi-Flex Variable Annuity)
NARRATIVE BY TWENTIETH CENTURY COMPANIES, INC.
Responding to a potent rally in many different equity markets, TCI Growth posted
the second best performance for a six-month reporting period in the fund's
history. These results closely tracked the 20.14% return for the S&P 500, and
also outpaced the 17.46% gain for the average growth mutual fund over the
period, as measured by Lipper Analytical Services.
While the fund's ending performance was similar to that of the S&P 500, its path
to success was quite different. The S&P is a collection of 500 of the largest
U.S. companies from a broad variety of industries. TCI Growth, on the other
hand, is designed to single out stocks with earnings and revenue acceleration.
Sometimes, this acceleration can be found in many different industries. At other
times, the most impressive acceleration occurs in specific areas of the economy.
Recently, the management team has found the most compelling investment choices
in a broad range of stocks that come together under the umbrella heading of
technology. TCI Growth is currently more than 50% invested in this sector. The
remarkable growth posted by many of the stocks that fall under the technology
banner presents extraordinary long-term investment opportunity. When earnings
and revenue statements begin to show deceleration, these stocks immediately
become candidates to be sold.
The fund's exposure to technology stocks dictated the course of its performance
over the period. The fund's returns were crimped by a brief decline in the
prices of technology shares in early 1995. Weak economic numbers at that time
led some investors to believe that the growth of technology firms would slow.
The ensuing sell-off hurt fund performance, especially in comparison with a
surging S&P 500. As the year progressed, however, impressive earnings reports
for numerous technology issues sparked an industry-wide rally -- allowing the
fund to nearly catch up with the index in a relatively brief span at the end of
the period.
That sharp increase came despite flat performance for the fund's 10% or 11%
stake in international stocks. The fund is continuing to investigate global
investment opportunities, however, as improving interest-rate environments
should be beneficial for these issues in the future.
TCI Growth's return for the six-month period, while unusually strong, reaffirms
to us the potential of combining growth-oriented stocks with a disciplined
buying and selling process. We strongly believe that this strategy has the
potential to provide significant benefits to those investors investing to
achieve long-term financial goals.
16
<PAGE> 17
[FRANKLIN TEMPLETON FUND]
TEMPLETON VARIABLE PRODUCTS SERIES FUND
TEMPLETON INTERNATIONAL FUND
OBJECTIVE - To seek long-term capital growth through investing in opportunities
(stocks and bonds) located outside the United States. (There are special risk
considerations associated with foreign investing).
(Not offered in Nationwide Multi-Flex Variable Annuity and Nationwide Variable
Annuity - Citibank, New York)
NARRATIVE BY DAN JACOBS, FUND MANAGER
At the end of the reporting period, equities represented 80.8% of the Fund's
total net assets, with the remaining 19.2% in cash and other liquid assets. Our
largest geographic concentration of securities continued to be in Europe, which
represented 51.6% of total net assets on June 30, up from 44.0% on December 31,
1994. The weakness of the U.S. dollar versus many European currencies enhanced
the performance of our European stocks during the reporting period. Although it
was difficult to find many bargain stocks in Europe, we did focus on some banks
that should benefit from improved balance sheets and a growing demand for loans.
An example is Sparbanken Sverige AB, which is the central banking institution
for the Swedish savings bank system. We also found value in those utilities
companies whose cash flows have increased and whose costs have come down through
privatization and restructuring. We increased our pharmaceutical exposure by
purchasing additional shares of Pharmacia AB, a Swedish holding company that has
operating divisions in pharmaceuticals, biotechnology, consumer products,
beverages and foods.
Political instability and economic uncertainty created volatility in Asian stock
markets during this period, and we took advantage of price declines by
purchasing shares of some Asian banks and Hong Kong-based conglomerates that
should benefit from development and growth in Asia. Examples include Daegu Bank
Co. Ltd., Shinhan Bank Co. Ltd., Cheung Kong Holdings Ltd., Hutchison Whampoa
Ltd., and Jardine Matheson Holdings Ltd. As investors regained some confidence
in emerging markets, many Asian stocks rebounded in the second half of the
reporting period. The Fund's performance relative to other international funds
was also aided by its small amount of exposure to the struggling Japanese equity
market.
Latin American stocks experienced volatility throughout the reporting period,
largely due to fears of export declines in Mexico and potential currency
weakness in Argentina. This gave us the opportunity to purchase several
telecommunications stocks at potentially bargain prices. For example, we added
to our positions in Telefonica de Argentina SA, Compania de Telecomunicaciones
de Chile SA, and Telefonos de Mexico SA (Telmex). Although we are optimistic
about the long-term outlook for this region, we continue to be very selective by
conducting in-depth research before making any new stock purchases.
There are, of course, special risks involved with global investing related to
market, currency, economic, political, and other factors;developing markets
involve similar but heightened risks. These risks are discussed in the
prospectus.
17
<PAGE> 18
FUND PERFORMANCES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
TOTAL RETURN: ASSUMING CONTRACT NOT SURRENDERED** (NON-STANDARDIZED)
APPROXIMATE PERCENT CHANGE IN NET ASSETS WITH CAPITAL GAINS AND INCOME DIVIDENDS REINVESTED
- ----------------------------------------------------------------------------------------------------------------
NON-ANNUALIZED PERCENT CHANGE*** ANNUALIZED PERCENT CHANGE***
INCEPTION 1 YR. TO 5 YR. TO INCEPTION TO 5 YR. TO INCEPTION TO
FUNDS++ DATE*+ 6/30/95 6/30/95+ 6/30/95+ 6/30/95 6/30/95
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DREYFUS CORPORATION
Socially Responsible Growth Fund 10/07/93 18.86% NA* 25.43% NA* 13.99%
Stock Index Fund 09/29/89 23.72% 61.63% 68.12% 10.08% 9.46%
VIF - Small Cap Portfolio 08/31/90 19.70% NA* 719.19% NA* 54.57%
FIDELITY VIP FUND
Equity-Income Portfolio 10/09/86 22.39% 88.95% 145.78% 13.57% 10.86%
High Income Portfolio 09/19/85 10.44% 104.15% 157.11% 15.34% 10.14%
NATIONWIDE SEPARATE ACCOUNT TRUST
Capital Appreciation Fund 04/15/92 13.31% NA* 21.26% NA* 6.20%
Government Bond Fund 11/08/82 11.28% 49.27% 181.24% 8.34% 8.52%
Money Market Fund 11/10/81 3.79% 16.93% 120.29% 3.18% 5.96%
Total Return Fund 11/08/82 16.03% 69.71% 372.05% 11.16% 13.06%
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST
Balanced Portfolio 02/28/89 18.83% 45.35% 72.69% 7.77% 9.01%
TCI PORTFOLIOS, INC.
TCI Advantage 08/01/91 11.24% NA* 23.41% NA* 5.52%
TCI Growth 11/20/87 25.40% 53.12% 119.79% 8.89% 10.90%
TEMPLETON VPS FUND
Templeton International 05/01/92 9.97% NA* 40.19% NA* 11.27%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
* Performance information is not available for all or part of the period
indicated (See Fund Inception Date).
** SEC and NASD regulations require that any reporting of product
performance be accompanied by standardized data and the disclosures are
on the following page. Please review this information and a product
prospectus before investing.
*** Percent change in unit value price represents total return after the
deduction of a 1.3% annual asset fee.
+ Numbers in this column represent the total percentage change in the unit
value for the period indicated. This is not an annual return figure.
++ Funds are neither insured nor guaranteed by the U.S. Government. For the
Money Market Fund, there is no assurance that a stable $1 fund NAV (used to
calculate Unit Value) can be maintained. Figures quoted represent past
performance and returns can fluctuate.
*+ Performance for some funds reflects performance for periods before the
fund was actually available in the separate account. That hypothetical
performance is calculated by imposing contract charges on actual fund
performance, to determine how the fund would have performed if it had
been available in the separate account.
18
<PAGE> 19
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
TOTAL RETURN: ASSUMING CONTRACT SURRENDERED (STANDARDIZED)
APPROXIMATE PERCENT CHANGE IN NET ASSETS WITH CAPITAL GAINS AND INCOME DIVIDENDS REINVESTED
- --------------------------------------------------------------------------------------------------------------
INCEPTION 1 YR. TO 5 YR. TO 10 YR. TO INCEPTION TO
FUNDS++ DATE*+ 6/30/95 6/30/95 6/30/95 6/30/95
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DREYFUS CORPORATION
Socially Responsible Growth Fund 10/07/93 10.46% NA* NA* 7.58%
Stock Index Fund 09/29/89 15.32% 7.07% NA* 6.33%
VIF - Small Cap Portfolio 08/31/90 11.30% NA* NA* 53.00%
FIDELITY VIP FUND
Equity-Income Portfolio 10/09/86 13.99% 10.71% NA* 8.34%
High Income Portfolio 09/19/85 2.04% 12.88% NA* 7.78%
NATIONWIDE SEPARATE ACCOUNT TRUST
Capital Appreciation Fund 04/15/92 4.91% NA* NA* 1.26%
Government Bond Fund 11/08/82 2.88% 5.43% 6.05% 6.25%
Money Market Fund 11/10/81 - 4.61% - 0.14% 1.95% 3.65%
Total Return Fund 11/08/82 7.63% 8.30% 9.36% 11.44%
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST
Balanced Portfolio 02/28/89 10.43% 4.68% NA* 6.03%
TCI PORTFOLIOS, INC.
TCI Advantage 08/01/91 2.84% NA* NA* 1.64%
TCI Growth 11/20/87 17.00% 5.75% NA* 8.37%
TEMPLETON VPS FUND
Templeton International 05/01/92 1.57% NA* NA* 6.47%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The above illustration represents past fund performance based on a $1,000
hypothetical investment. The performance figures reflect the deduction of a 1.3%
annual asset fee, a $30 annual administrative charge, and a maximum of a 6.0%
contingent deferred sales charge (after one year, declining thereafter). They
also reflect the application of an annual 10% free withdrawal privilege
available after the first year. Investment principal and investment returns are
not guaranteed under these variable options. Account values at the time of
redemption may be more or less than the purchase payment, due to market
fluctuations and any specific charges that may apply. This is neither an offer
to sell nor a solicitation to buy securities. The results shown are not a
representation of future investment performance. Any comparisons should be made
only after a recognition of the differences in the investment policies and
objectives of the funds' investments. This report is authorized for distribution
to prospective investors only when preceded or accompanied by prospectuses
containing more complete information, which should be read carefully before
investing or sending money.
* Performance information is not available for all or part of the period
indicated (See Fund Inception Date).
++ Funds are neither insured nor guaranteed by the U.S. Government. For the
Money Market Fund, there is no assurance that a stable $1 fund NAV (used
to calculate Unit Value) can be maintained. Figures quoted represent past
performance and returns can fluctuate.
*+ Performance for some funds reflects performance for periods before the
fund was actually available in the separate account. That hypothetical
performance is calculated by imposing contract charges on actual fund
performance, to determine how the fund would have performed if it had been
available in the separate account.
19
<PAGE> 20
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
30,718 shares (cost $428,448)............................................... $ 478,582
Dreyfus Stock Index Fund (DryStkIx)
455,679 shares (cost $6,209,626)............................................ 6,990,113
Dreyfus VIF -- Small Cap Portfolio (DrySmCap)
119,141 shares (cost $4,480,189)............................................ 4,997,975
Fidelity VIP -- Equity-Income Portfolio (FidEqInc)
2,235,351 shares (cost $34,253,886)......................................... 37,755,080
Fidelity VIP -- High Income Portfolio (FidHiInc)
103,640 shares (cost $1,116,771)............................................ 1,159,728
Nationwide SAT -- Capital Appreciation Fund (NWCapApp)
2,575,247 shares (cost $27,725,014)......................................... 30,671,192
Nationwide SAT -- Government Bond Fund (NWGvtBd)
12,726,480 shares (cost $142,519,731)....................................... 140,627,600
Nationwide SAT -- Money Market Fund (NWMyMkt)
48,385,602 shares (cost $48,385,602)........................................ 48,385,602
Nationwide SAT -- Total Return Fund (NWTotRet)
30,591,615 shares (cost $275,371,815)....................................... 339,566,928
Neuberger & Berman --Balanced Portfolio (NBBal)
2,048,596 shares (cost $30,313,612)......................................... 33,617,462
TCI Portfolios -- TCI Advantage (TCIAdv)
1,570,619 shares (cost $8,507,766).......................................... 9,313,774
TCI Portfolios -- TCI Growth (TCIGro)
3,948,687 shares (cost $34,434,199)......................................... 43,396,065
Templeton VPS -- Templeton International Fund (TemIntFd)
285,117 shares (cost $3,837,321)............................................ 4,025,857
-----------
Total assets........................................................... 700,985,958
Accounts payable................................................................... 12,177
-----------
Contract owners' equity............................................................ $ 700,973,781
===========
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
Contract owners' equity represented by: Units Unit Value
------ ----------
<S> <C> <C> <C>
Contracts in accumulation phase:
The Dreyfus Socially Responsible Growth Fund, Inc.:
Tax qualified............................... 38,684 $ 11.745506 $ 454,363
Non-tax qualified........................... 2,062 11.745506 24,219
Dreyfus Stock Index Fund:
Tax qualified............................... 369,698 12.176915 4,501,781
Non-tax qualified........................... 204,349 12.176915 2,488,340
Dreyfus VIF -- Small Cap Portfolio:
Tax qualified............................... 387,136 11.839924 4,583,661
Non-tax qualified........................... 34,991 11.839924 414,291
Fidelity VIP -- Equity-Income Portfolio:
Tax qualified............................... 2,047,523 12.579456 25,756,725
Non-tax qualified........................... 953,803 12.579456 11,998,323
Fidelity VIP -- High Income Portfolio:
Tax qualified............................... 98,663 11.010257 1,086,305
Non-tax qualified........................... 6,667 11.010257 73,405
Nationwide SAT -- Capital Appreciation Fund:
Tax qualified............................... 1,687,695 12.367512 20,872,588
Non-tax qualified........................... 792,276 12.367512 9,798,483
Nationwide SAT -- Government Bond Fund:
Tax qualified............................... 3,332,815 27.941908 93,125,210
Non-tax qualified........................... 1,694,979 27.952211 47,378,411
Nationwide SAT -- Money Market Fund:
Tax qualified............................... 1,684,560 19.197459 32,339,272
Non-tax qualified........................... 767,577 20.858385 16,010,417
Nationwide SAT -- Total Return Fund:
Tax qualified............................... 5,051,336 46.777431 236,288,521
Non-tax qualified........................... 2,267,087 45.431980 102,998,251
Neuberger & Berman -- Balanced Portfolio:
Tax qualified............................... 1,639,798 13.909110 22,808,131
Non-tax qualified........................... 777,146 13.909110 10,809,409
TCI Portfolios -- TCI Advantage:
Tax qualified............................... 513,469 12.341197 6,336,822
Non-tax qualified........................... 214,917 12.341197 2,652,333
Initial Funding by Depositor (note 1a)...... 25,000 12.982772 324,569
TCI Portfolios -- TCI Growth:
Tax qualified............................... 1,898,154 15.086649 28,636,783
Non-tax qualified........................... 978,294 15.086649 14,759,178
Templeton VPS -- Templeton International Fund:
Tax qualified............................... 344,262 10.642105 3,663,672
Non-tax qualified........................... 34,032 10.642105 362,172
========= =========
Reserves for annuity contracts in payout phase:
Tax qualified............................... 163,270
Non-tax qualified........................... 264,876
-----------
$ 700,973,781
===========
</TABLE>
See accompanying notes to financial statements.
21
<PAGE> 22
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested capital gains and dividends ........... $ 13,550,783 11,455,848 7,387,758
----------- ----------- -----------
Gain (loss) on investments:
Proceeds from redemptions of mutual fund shares 45,491,116 31,233,141 23,562,383
Cost of mutual fund shares sold ................ (41,538,838) (29,588,048) (22,791,650)
----------- ----------- -----------
Realized gain on investments ................... 3,952,278 1,645,093 770,733
Change in unrealized gain (loss) on investments 69,304,533 (26,425,042) 13,719,558
----------- ----------- -----------
Net gain (loss) on investments ............... 73,256,811 (24,779,949) 14,490,291
----------- ----------- -----------
Net investment activity ................. 86,807,594 (13,324,101) 21,878,049
----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners .. 36,752,204 84,782,422 86,375,242
Redemptions ...................................... (43,031,272) (26,780,063) (17,860,940)
Annuity benefits ................................. (33,440) (34,294) (50,458)
Adjustments to maintain reserves ................. (1,816) (11,088) (2,468)
----------- ----------- -----------
Net equity transactions ................. (6,314,324) 57,956,977 68,461,376
----------- ----------- -----------
EXPENSES (NOTE 2):
Contract charges ................................. (5,031,931) (4,571,965) (3,284,784)
Contingent deferred sales charges ................ (502,375) (462,092) (280,355)
----------- ----------- -----------
Total expenses .......................... (5,534,306) (5,034,057) (3,565,139)
----------- ----------- -----------
Net change in contract owners' equity ............... 74,958,964 39,598,819 86,774,286
Contract owners' equity beginning of period ......... 626,014,817 582,012,184 394,242,935
----------- ----------- -----------
Contract owners' equity end of period ............... $ 700,973,781 621,611,003 481,017,221
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
22
<PAGE> 23
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
The Nationwide Multi-Flex Variable Account (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life Insurance
Company (the Company) on October 7, 1981. The Account has been registered as a
unit investment trust under the Investment Company Act of 1940. On August 21,
1991, the Company (the Depositor) transferred to the Account 50,000 shares of
the TCI Portfolios, Inc. -- TCI Advantage fund for which the Account was
credited with 25,000 accumulation units. The value of the accumulation units
purchased by the Company on August 21, 1991 was $250,000.
(b) The Contracts
Only flexible purchase payment contracts without a front-end sales charge,
but with a contingent deferred sales charge and certain other fees, are offered
for purchase. See note 2 for a discussion of contract expenses. With certain
exceptions, contract owners in either the accumulation or payout phase may
invest in any of the following:
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)(formerly Dreyfus Life and Annuity Index
Fund, Inc. (DLAI))
Portfolio of the Dreyfus Variable Investment Fund (Dreyfus VIF);
Dreyfus VIF -- Small Cap Portfolio (DrySmCap)
Portfolios of the Fidelity Variable Insurance Products Fund (Fidelity VIP);
Fidelity VIP -- Equity-Income Portfolio (FidEqInc)
Fidelity VIP -- High Income Portfolio (FidHiInc)
Funds of the Nationwide Separate Account Trust (Nationwide SAT) (managed
for a fee by an affiliated investment advisor);
Nationwide SAT -- Capital Appreciation Fund (NWCapApp)
Nationwide SAT -- Government Bond Fund (NWGvtBd)
Nationwide SAT -- Money Market Fund (NWMyMkt)
Nationwide SAT -- Total Return Fund (NWTotRet)
Portfolio of the Neuberger & Berman Advisers Management Trust (Neuberger
& Berman);
Neuberger & Berman -- Balanced Portfolio (NBBal)
Portfolios of the TCI Portfolios, Inc. (TCI Portfolios);
TCI Portfolios -- TCI Advantage (TCIAdv)
TCI Portfolios -- TCI Growth (TCIGro)
Portfolio of the Templeton Variable Products Series Fund (Templeton VPS);
Templeton VPS -- Templeton International Fund (TemIntFd)
At June 30, 1995, contract owners have invested in all of the above funds.
The contract owners' equity is affected by the investment results of each fund
and certain contract expenses (see note 2). The accompanying financial
statements include only contract owners' purchase payments pertaining to the
variable portions of their contracts and exclude any purchase payments for fixed
dollar benefits, the latter being included in the accounts of the Company.
23
<PAGE> 24
(c) Security Valuation, Transactions and Related Investment Income
The market value of investments is based on the closing bid prices at June
30, 1995. The cost of investments sold is determined on a specific
identification basis. Investment transactions are accounted for on the trade
date (date the order to buy or sell is executed) and dividend income is recorded
on the ex-dividend date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, operations of
the Company which is taxed as a life insurance company under the Internal
Revenue Code.
The Company does not provide for income taxes within the Account. Taxes are
the responsibility of the contract owner upon termination or withdrawal.
(2) Expenses
The Company does not deduct a sales charge from purchase payments received
from the contract owners. However, if any part of the contract value of such
contracts is surrendered, the Company will, with certain exceptions, deduct from
a contract owner's contract value a contingent deferred sales charge. For
contracts issued prior to February 1, 1989, the contingent deferred sales charge
will be equal to 5% of the lesser of the total of all purchase payments made
within 96 months prior to the date of the request for surrender or the amount
surrendered. For contracts issued on or after February 1, 1989, the Company will
deduct a contingent deferred sales charge not to exceed 7% of the lesser of
purchase payments or the amount surrendered, such charge declining 1% per year,
to 0%, after the purchase payment has been held in the contract for 84 months.
No sales charges are deducted on redemptions used to purchase units in the fixed
investment options of the Company.
The following administrative charges are deducted by the Company: (a) an
annual contract maintenance charge of $30, with certain exceptions, which is
satisfied by surrendering units; and (b) for contracts issued prior to February
1, 1989, a charge for mortality and expense risk assessed through the daily unit
value calculation equal to an annual rate of 0.80% and 0.50%, respectively; for
contracts issued on or after February 1, 1989, a mortality risk charge, an
expense risk charge and an administration charge assessed through the daily unit
value calculation equal to an annual rate of 0.80%, 0.45% and 0.05%,
respectively. No charges were deducted from the initial fundings, or from
earnings thereon.
(3) SCHEDULE I
Schedule I presents the components of the change in the unit values, which
are the basis for contract owners' equity. This schedule is presented for each
series, as applicable, in the following format:
- Beginning unit value - Jan. 1
- Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to capital
gains and dividend distributions from the underlying mutual funds.)
- Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the fund.)
- Contract charges
(This amount reflects the decrease in the unit value due to the
mortality risk charge, expense risk charge and administration charge
discussed in note 2.)
- Ending unit value - June 30
- Percentage increase (decrease) in unit value.
For contracts in the payout phase, an assumed investment return of 3.5%,
used in the calculation of the annuity benefit payment amount, results in a
corresponding reduction in the components of the unit values as shown in
Schedule I.
24
<PAGE> 25
SCHEDULE I
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
NWGvtBd NWGvtBd
DrySRGro DryStkIx DrySmCap FidEqInc FidHiInc NWCapApp Qual Non-Qual
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value
- Jan. 1 $10.039093 10.227308 10.374796 10.808255 9.895223 11.311683 25.138302 25.147577
- ---------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .000000 .126203 .000000 .696469 .716438 .108494 .865541 .865860
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.776256 1.896381 1.535865 1.151231 .466968 1.024511 2.110894 2.111676
- ---------------------------------------------------------------------------------------------------------------------------------
Contract charges (.069843) (.072977) (.070737) (.076499) (.068372) (.077176) (.172829) (.172902)
- ---------------------------------------------------------------------------------------------------------------------------------
Ending unit value
- June 30 $11.745506 12.176915 11.839924 12.579456 11.010257 12.367512 27.941908 27.952211
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 17% 19% 14% 16% 11% 9% 11% 11%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value
- Jan. 1 $10.000000 10.271065 10.000000 10.227513 10.000000 11.564256 26.318797 26.328516
- ---------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .000000 .054292 .000000 .641584 .000000 .072046 .785221 .785511
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized gain
(loss) (.096807) (.417159) (.087337) (.523924) (.009174) (.647961) (1.826612) (1.827284)
- ---------------------------------------------------------------------------------------------------------------------------------
Contract charges (.021070) (.065924) (.021030) (.067007) (.021215) (.073837) (.167004) (.167073)
- ---------------------------------------------------------------------------------------------------------------------------------
Ending unit value
- June 30 $ 9.882123 9.842274 9.891633 10.278166 9.969611 10.914504 25.110402 25.119670
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) (1)%(b) (4)% (1)%(b) 0% 0%(b) (6)% (5)% (5)%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit
value - Jan. 1 ** ** ** ** ** $10.689287 24.348055 24.357055
- ---------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .081517 .771433 .771719
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized gain
(loss) (.020679) 1.007196 1.007561
- ---------------------------------------------------------------------------------------------------------------------------------
Contract charges (.068890) (.163949) (.164006)
- ---------------------------------------------------------------------------------------------------------------------------------
Ending unit
value - June 30 $10.681235 25.962735 25.972329
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 0% 7% 7%
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*This is not an annualized rate of return as it is the change for a six month
period and:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not utilized for the entire six month period
indicated.
**This investment option was not utilized or was not available.
25
<PAGE> 26
SCHEDULE I, CONTINUED
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
TAX QUALIFIED AND NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
NWMyMkt NWMyMkt NWTotRet NWTotRet
Qual Non-Qual Qual Non-Qual NBBal TCIAdv TCIGro TemIntFd TCIAdv+
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value
- Jan. 1 $18.790546 20.416267 40.575816 39.408735 12.077573 11.312248 12.711014 9.913613 11.822996
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .531125 .577076 .626675 .608650 .307323 .175923 .014626 .112246 .184730
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain
(loss) .000000 .000000 5.859308 5.690781 1.608511 .929239 2.449089 .681740 .975046
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.124212) (.134958) (.284368) (.276186) (.084297) (.076213) (.088080) (.065494) .000000
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value
- June 30 $19.197459 20.858385 46.777431 45.431980 13.909110 12.341197 15.086649 10.642105 12.982772
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 2% 2% 15% 15% 15% 9% 19% 7% 10%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value
- Jan. 1 $18.325918 19.911440 40.671816 39.501981 12.661508 11.343435 13.030369 10.000000 11.701906
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and dividends .289499 .314549 .502500 .488047 .493737 .129050 .001393 .000000 .133775
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain
(loss) .000000 .000000 (.596269) (.579116) (1.369729) (.304900) (.916849) (.302152) (.316874)
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.119563) (.129912) (.264556) (.256951) (.080910) (.073870) (.084356) (.020942) .000000
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value
- June 30 $18.495854 20.096077 40.313491 39.153961 11.704606 11.093715 12.030557 9.676906 11.518807
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 1% 1% (1)% (1)% (8)% (2)% (8)% (3)%(b) (2)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit value
- Jan. 1 $18.069824 19.633190 37.150744 36.082181 12.050347 10.757355 11.967533 ** 10.953160
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and dividends .246320 .267632 .450752 .437787 .185739 .104855 .000000 .107273
- -----------------------------------------------------------------------------------------------------------------------------------
Unrealized gain
(loss) .000000 .000000 1.610126 1.563810 (.074003) .283411 .576845 .289584
- -----------------------------------------------------------------------------------------------------------------------------------
Contract charges (.117809) (.128002) (.246762) (.239662) (.077728) (.070497) (.078556) .000000
- -----------------------------------------------------------------------------------------------------------------------------------
Ending unit value
- June 30 $18.198335 19.772820 38.964860 37.844116 12.084355 11.075124 12.465822 11.350017
- -----------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (a) 1% 1% 5% 5% 0% 3% 4% 4%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*This is not an annualized rate of return as it is the change for a six month
period and:
(a) Contract charges do not include the annual contract maintenance charge
discussed in note 2; and
(b) This investment option was not utilized for the entire six month
period indicated.
**This investment option was not utilized or was not available.
+For Depositor, see note 1a.
26
<PAGE> 27
This report is for the information of contract owners with funds in the
Nationwide Multi-Flex Variable Account. It may also be used, from time to time,
as sales literature, but only when accompanied or preceded by the current
prospectus, which contains complete information about the contracts which
invest in the separate account, and their fees, charges and expenses. If this
report is used as sales literature after September 30, 1995, it must be
accompanied by the fund performance report reflecting performances for the
most recently completed calendar quarter. Prospective investors should read the
prospectus carefully before investing.
27
<PAGE> 28
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220
- --------------
Bulk Rate
U.S. Postage
P A I D
Columbus, Ohio
Permit No. 521
- --------------
