<PAGE> 1
NATIONWIDE(R)
MULTI-FLEX(R)
ANNUITY
Semi-Annual Report
June 30, 1998
Nationwide(R)
Multi-Flex
Variable Account
NATIONWIDE
INSURANCE
Nationwide is on your side
Columbus, Ohio
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to present the 1998
semi-annual report of the Nationwide Multi-Flex Variable Account.
The bull market continued its run in the first half of 1998. Most of the gains
came in the first quarter with more modest returns or small losses for the
second half of the period. At this writing, a market correction that began in
the second quarter continues to provide a good deal of day-to-day volatility.
Much of the capriciousness of the market is due to uncertainty about the
economic outcome in Asia. However, we think the correction will be of limited
magnitude and duration and will provide a healthy respite before further market
advances.
We believe that existing economic and market fundamentals provide an ongoing
favorable environment for financial assets. Interest rates remain low; inflation
is nearly nonexistent; corporate earnings, albeit slowing, remain positive, and
U.S. economic growth appears to be on a modest but sustainable track.
Against this backdrop, we believe our variable insurance products continue to
provide the versatile investment vehicle you need to respond to changing market
conditions. We are committed to the continual evaluation of our products and
services to ensure that we remain responsive to your long-term financial
planning and retirement-savings needs.
JOSEPH J. GASPER
Joseph J. Gasper, President
August 17, 1998
3
<PAGE> 3
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
AIM VI - Capital Appreciation Fund (AIMCapAp)
20,898 shares (cost $483,868) $ 512,843
AIM VI - International Equity Fund (AIMIntEq)
2,514 shares (cost $48,904) 51,161
American Century VP - American Century VP Advantage (ACVPAdv)
1,559,026 shares (cost $8,965,957) 10,196,032
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
2,989,219 shares (cost $29,561,917) 27,799,737
American Century VP - American Century VP Income & Growth (ACVPIncGr)
335,370 shares (cost $1,971,113) 2,116,185
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
1,036,273 shares (cost $23,760,446) 30,632,227
Dreyfus Stock Index Fund (DryStkIx)
2,555,732 shares (cost $55,377,604) 76,723,083
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
47,568 shares (cost $1,523,433) 1,601,615
Dreyfus VIF - Quality Bond Portfolio (DryQualBd)
484,658 shares (cost $5,607,091) 5,772,275
Dreyfus VIF - Small Cap Portfolio (DrySmCap)
1,247,474 shares (cost $65,370,721) 75,522,060
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
5,841,949 shares (cost $111,102,446) 147,041,868
Fidelity VIP - High Income Portfolio (FidVIPHI)
1,963,993 shares (cost $24,246,231) 24,805,232
Janus AS - Janus Aspen International Growth Portfolio (JanASIntGr)
60,862 shares (cost $1,284,152) 1,350,523
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
2,747,898 shares (cost $38,783,119) 69,219,556
Nationwide SAT - Government Bond Fund (NSATGvtBd)
9,602,369 shares (cost $107,390,569) 110,427,245
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
14,547 shares (cost $151,994) 150,856
</TABLE>
4
<PAGE> 4
<TABLE>
<S> <C>
Nationwide SAT - Money Market Fund (NSATMyMkt)
38,213,186 shares (cost $38,213,186) 38,213,186
Nationwide SAT - Total Return Fund (NSATTotRe)
30,504,520 shares (cost $328,511,431) 570,434,532
Neuberger &Berman AMT - Balanced Portfolio (NBAMTBal)
2,911,280 shares (cost $44,508,658) 46,900,723
Strong Opportunity Fund II, Inc. (StOpp2)
936,836 shares (cost $18,655,737) 20,366,809
Templeton VPS - Templeton International Fund - Class I (TemIntFd)
1,670,320 shares (cost $30,109,064) 36,162,427
---------------
Total investments 1,296,000,175
Accounts receivable -
---------------
Total assets 1,296,000,175
ACCOUNTS PAYABLE 201,230
---------------
CONTRACT OWNERS' EQUITY (NOTE 4) $ 1,295,798,945
===============
</TABLE>
See accompanying notes to financial statements.
- -------------------------------------------------------------------------------
5
<PAGE> 5
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL AIMCAPAP
---------------------------------- ----------------------
1998 1997 1998 1997
-------------- -------------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 13,566,618 13,217,687 -- --
Mortality, expense and administration
charges (note 2)............................... (8,392,402) (6,482,430) (1,800) --
-------------- -------------- -------- --------
Net investment activity........................ 5,174,216 6,735,257 (1,800) --
-------------- -------------- -------- --------
Proceeds from mutual fund shares sold............ 142,583,680 50,134,226 9,185 --
Cost of mutual fund shares sold.................. (81,280,249) (40,911,238) (8,566) --
-------------- -------------- -------- --------
Realized gain (loss) on investments............ 61,303,431 9,222,988 619 --
Change in unrealized gain (loss) on investments.. 52,140,387 100,814,722 28,371 --
-------------- -------------- -------- --------
Net gain (loss) on investments................. 113,443,818 110,037,710 28,990 --
-------------- -------------- -------- --------
Reinvested capital gains......................... 20,209,671 11,056,889 -- --
-------------- -------------- -------- --------
Net increase (decrease) in contract owners'
equity resulting from operations............ 138,827,705 127,829,856 27,190 --
-------------- -------------- -------- --------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 98,523,648 79,012,562 239,839 --
Transfers between funds.......................... -- -- 229,416 --
Redemptions...................................... (160,355,817) (46,813,776) (9,017) --
Annuity benefits................................. (54,214) (46,579) -- --
Annual contract maintenance charge (note 2)...... (1,055,163) (923,052) (160) --
Contingent deferred sales charges (note 2)....... (547,300) (415,541) -- --
Adjustments to maintain reserves................. (26,620) 5,454 (2) --
-------------- -------------- -------- --------
Net equity transactions...................... (63,515,466) 30,819,068 460,076 --
-------------- -------------- -------- --------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 75,312,239 158,648,924 487,266 --
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........ 1,220,486,706 940,182,482 25,570 --
-------------- -------------- -------- --------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. $1,295,798,945 1,098,831,406 512,836 --
============== ============== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AIMINTEQ ACVPADV
--------------------- ----------------------------
1998 1997 1998 1997
------- -------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ -- -- 216,901 158,735
Mortality, expense and administration
charges (note 2)............................... (156) -- (61,871) (63,801)
------- -------- ----------- -----------
Net investment activity........................ (156) -- 155,030 94,934
------- -------- ----------- -----------
Proceeds from mutual fund shares sold............ 4,205 -- 955,648 930,364
Cost of mutual fund shares sold.................. (3,868) -- (789,120) (789,051)
------- -------- ----------- -----------
Realized gain (loss) on investments............ 337 -- 166,528 141,313
Change in unrealized gain (loss) on investments.. 2,139 -- (203,097) (186,614)
------- -------- ----------- -----------
Net gain (loss) on investments................. 2,476 -- (36,569) (45,301)
------- -------- ----------- -----------
Reinvested capital gains......................... -- -- 816,147 548,350
------- -------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations............ 2,320 -- 934,608 597,983
------- -------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 19,981 -- 320,438 397,343
Transfers between funds.......................... 24,816 -- (407,106) (726,082)
Redemptions...................................... (1,814) -- (639,275) (318,241)
Annuity benefits................................. -- -- (7) --
Annual contract maintenance charge (note 2)...... (3) -- (8,347) (9,121)
Contingent deferred sales charges (note 2)....... -- -- (8,798) (5,570)
Adjustments to maintain reserves................. (1) -- 28 (13)
------- -------- ----------- -----------
Net equity transactions...................... 42,979 -- (743,067) (661,684)
------- -------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 45,299 -- 191,541 (63,701)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........ 5,859 -- 10,004,517 10,368,913
------- -------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. 51,158 -- 10,196,058 10,305,212
======= ======== =========== ===========
</TABLE>
6
<PAGE> 6
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ACVPCAPAP ACVPINCGR
---------------------------- ------------------------
1998 1997 1998 1997
----------- ----------- ---------- --------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ -- -- 1,023 --
Mortality, expense and administration
charges (note 2).................................. (197,247) (248,441) (7,787) --
----------- ----------- ---------- --------
Net investment activity........................... (197,247) (248,441) (6,764) --
----------- ----------- ---------- --------
Proceeds from mutual fund shares sold............... 4,980,131 7,138,099 64,309 --
Cost of mutual fund shares sold..................... (4,380,301) (6,122,953) (57,919) --
----------- ----------- ---------- --------
Realized gain (loss) on investments............... 599,830 1,015,146 6,390 --
Change in unrealized gain (loss) on investments..... (1,736,030) (3,498,702) 144,031 --
----------- ----------- ---------- --------
Net gain (loss) on investments.................... (1,136,200) (2,483,556) 150,421 --
----------- ----------- ---------- --------
Reinvested capital gains............................ 1,515,406 818,434 2,123 --
----------- ----------- ---------- --------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 181,959 (1,913,563) 145,780 --
----------- ----------- ---------- --------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 1,311,385 1,814,323 977,833 --
Transfers between funds............................. (3,793,925) (6,122,642) 798,389 --
Redemptions......................................... (2,167,041) (2,424,373) (22,017) --
Annuity benefits.................................... (20) -- -- --
Annual contract maintenance charge (note 2)......... (30,227) (41,911) (517) --
Contingent deferred sales charges (note 2).......... (34,175) (45,658) (102) --
Adjustments to maintain reserves.................... (243) (186) (42) --
----------- ----------- ---------- --------
Net equity transactions......................... (4,714,246) (6,820,447) 1,753,544 --
----------- ----------- ---------- --------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. (4,532,287) (8,734,010) 1,899,324 --
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........... 32,331,863 44,852,368 216,859 --
----------- ----------- ---------- --------
CONTRACT OWNERS' EQUITY END OF PERIOD................. $27,799,576 36,118,358 2,116,183 --
=========== =========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
DRYSRGRO DRYSTKIX
---------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... -- -- 464,672 260,101
Mortality, expense and administration
charges (note 2).................................. (166,922) (64,489) (431,919) (192,525)
----------- ----------- ----------- -----------
Net investment activity........................... (166,922) (64,489) 32,753 67,576
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold............... 166,307 253,595 415,155 236,622
Cost of mutual fund shares sold..................... (92,048) (156,945) (215,152) (171,587)
----------- ----------- ----------- -----------
Realized gain (loss) on investments............... 74,259 96,650 200,003 65,035
Change in unrealized gain (loss) on investments..... 4,178,533 1,457,911 9,601,495 5,314,092
----------- ----------- ----------- -----------
Net gain (loss) on investments.................... 4,252,792 1,554,561 9,801,498 5,379,127
----------- ----------- ----------- -----------
Reinvested capital gains............................ -- -- 114,123 --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 4,085,870 1,490,072 9,948,374 5,446,703
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 5,803,612 3,738,328 10,583,718 6,311,392
Transfers between funds............................. 686,355 1,393,851 4,280,853 5,364,725
Redemptions......................................... (683,219) (147,875) (2,550,346) (624,904)
Annuity benefits.................................... -- -- -- --
Annual contract maintenance charge (note 2)......... (32,538) (14,138) (64,922) (32,428)
Contingent deferred sales charges (note 2).......... (8,774) (1,724) (35,444) (8,573)
Adjustments to maintain reserves.................... 107 307 (12,096) 259
----------- ----------- ----------- -----------
Net equity transactions......................... 5,765,543 4,968,749 12,201,763 11,010,471
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. 9,851,413 6,458,821 22,150,137 16,457,174
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........... 20,780,931 6,861,492 54,561,165 21,990,935
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD................. 30,632,344 13,320,313 76,711,302 38,448,109
=========== =========== =========== ===========
</TABLE>
7
<PAGE> 7
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
DRYCAPAP DRYQUALBD
------------------------ --------------------------
1998 1997 1998 1997
---------- -------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ 56 -- 130,933 69,386
Mortality, expense and administration
charges (note 2).................................. (4,264) -- (34,091) (17,646)
---------- -------- ---------- ----------
Net investment activity........................... (4,208) -- 96,842 51,740
---------- -------- ---------- ----------
Proceeds from mutual fund shares sold............... 60,897 -- 316,690 168,946
Cost of mutual fund shares sold..................... (52,849) -- (305,116) (174,243)
---------- -------- ---------- ----------
Realized gain (loss) on investments............... 8,048 -- 11,574 (5,297)
Change in unrealized gain (loss) on investments..... 78,427 -- 67,247 16,227
---------- -------- ---------- ----------
Net gain (loss) on investments.................... 86,475 -- 78,821 10,930
---------- -------- ---------- ----------
Reinvested capital gains............................ 186 -- -- --
---------- -------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 82,453 -- 175,663 62,670
---------- -------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 717,004 -- 1,028,428 978,668
Transfers between funds............................. 827,549 -- 160,607 (95,856)
Redemptions......................................... (58,023) -- (284,339) (23,624)
Annuity benefits.................................... -- -- -- --
Annual contract maintenance charge (note 2)......... (256) -- (7,356) (5,502)
Contingent deferred sales charges (note 2).......... (144) -- (5,174) (421)
Adjustments to maintain reserves.................... (161) -- 9 (2)
---------- -------- ---------- ----------
Net equity transactions......................... 1,485,969 -- 892,175 853,263
---------- -------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. 1,568,422 -- 1,067,838 915,933
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........... 33,181 -- 4,704,446 2,311,843
---------- -------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD................. $1,601,603 -- 5,772,284 3,227,776
========== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DRYSMCAP FIDVIPEI
---------------------------- ------------------------------
1998 1997 1998 1997
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... -- -- 1,767,643 1,376,653
Mortality, expense and administration
charges (note 2).................................. (458,099) (246,039) (900,381) (577,457)
----------- ----------- ------------ ------------
Net investment activity........................... (458,099) (246,039) 867,262 799,196
----------- ----------- ------------ ------------
Proceeds from mutual fund shares sold............... 694,122 69,890 1,650,577 291,488
Cost of mutual fund shares sold..................... (425,827) (49,324) (1,014,591) (225,562)
----------- ----------- ------------ ------------
Realized gain (loss) on investments............... 268,295 20,566 635,986 65,926
Change in unrealized gain (loss) on investments..... 3,543,527 3,498,983 4,748,749 5,547,741
----------- ----------- ------------ ------------
Net gain (loss) on investments.................... 3,811,822 3,519,549 5,384,735 5,613,667
----------- ----------- ------------ ------------
Reinvested capital gains............................ -- -- 6,290,729 6,921,505
----------- ----------- ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 3,353,723 3,273,510 12,542,726 13,334,368
----------- ----------- ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 13,486,824 11,242,983 14,216,728 10,991,565
Transfers between funds............................. (1,236,099) 1,001,793 2,447,081 2,544,454
Redemptions......................................... (2,592,510) (644,943) (6,207,548) (2,090,687)
Annuity benefits.................................... -- -- (938) (132)
Annual contract maintenance charge (note 2)......... (108,966) (74,059) (124,096) (103,424)
Contingent deferred sales charges (note 2).......... (30,159) (10,238) (79,439) (34,420)
Adjustments to maintain reserves.................... (457) 39 38 348
----------- ----------- ------------ ------------
Net equity transactions......................... 9,518,633 11,515,575 10,251,826 11,307,704
----------- ----------- ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. 12,872,356 14,789,085 22,794,552 24,642,072
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........... 62,649,484 32,373,939 124,247,535 78,456,637
----------- ----------- ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD................. 75,521,840 47,163,024 147,042,087 103,098,709
=========== =========== ============ ============
</TABLE>
8
<PAGE> 8
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
FIDVIPHI JANASINTGR
---------------------------- ------------------------
1998 1997 1998 1997
----------- ----------- ---------- --------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ 1,423,227 662,094 19,902 --
Mortality, expense and administration
charges (note 2).................................. (145,427) (68,902) (3,557) --
----------- ----------- ---------- --------
Net investment activity........................... 1,277,800 593,192 16,345 --
----------- ----------- ---------- --------
Proceeds from mutual fund shares sold............... 197,840 167,045 37,431 --
Cost of mutual fund shares sold..................... (161,258) (151,951) (35,421) --
----------- ----------- ---------- --------
Realized gain (loss) on investments............... 36,582 15,094 2,010 --
Change in unrealized gain (loss) on investments..... (1,401,948) 72,075 66,590 --
----------- ----------- ---------- --------
Net gain (loss) on investments.................... (1,365,366) 87,169 68,600 --
----------- ----------- ---------- --------
Reinvested capital gains............................ 904,342 81,832 3,054 --
----------- ----------- ---------- --------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 816,776 762,193 87,999 --
----------- ----------- ---------- --------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 4,683,945 3,381,980 607,829 --
Transfers between funds............................. 617,851 583,280 656,472 --
Redemptions......................................... (597,484) (171,449) (32,240) --
Annuity benefits.................................... -- -- -- --
Annual contract maintenance charge (note 2)......... (28,419) (17,401) (266) --
Contingent deferred sales charges (note 2).......... (6,777) (2,903) (73) --
Adjustments to maintain reserves.................... 34 15 (6) --
----------- ----------- ---------- --------
Net equity transactions......................... 4,669,150 3,773,522 1,231,716 --
----------- ----------- ---------- --------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. 5,485,926 4,535,715 1,319,715 --
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........... 19,319,305 8,681,879 30,802 --
----------- ----------- ---------- --------
CONTRACT OWNERS' EQUITY END OF PERIOD................. $24,805,231 13,217,594 1,350,517 --
=========== =========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
NSATCAPAP NSATGVTBD
---------------------------- ------------------------------
1998 1997 1998 1997
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... 310,209 296,159 3,268,407 3,845,937
Mortality, expense and administration
charges (note 2).................................. (466,273) (345,137) (766,358) (809,660)
----------- ----------- ------------ ------------
Net investment activity........................... (156,064) (48,978) 2,502,049 3,036,277
----------- ----------- ------------ ------------
Proceeds from mutual fund shares sold............... 13,710,694 2,146,369 18,129,129 11,629,642
Cost of mutual fund shares sold..................... (5,967,140) (1,268,762) (17,645,903) (12,137,193)
----------- ----------- ------------ ------------
Realized gain (loss) on investments............... 7,743,554 877,607 483,226 (507,551)
Change in unrealized gain (loss) on investments..... 4,660,825 9,140,255 811,067 96,074
----------- ----------- ------------ ------------
Net gain (loss) on investments.................... 12,404,379 10,017,862 1,294,293 (411,477)
----------- ----------- ------------ ------------
Reinvested capital gains............................ -- -- -- --
----------- ----------- ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 12,248,315 9,968,884 3,796,342 2,624,800
----------- ----------- ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 2,886,468 2,293,138 3,226,460 3,274,189
Transfers between funds............................. 1,900,296 2,001,178 (2,123,162) (5,391,916)
Redemptions......................................... (15,395,367) (2,241,463) (17,159,325) (8,284,360)
Annuity benefits.................................... (2,736) (2,000) (9,537) (9,078)
Annual contract maintenance charge (note 2)......... (41,388) (37,191) (82,557) (97,517)
Contingent deferred sales charges (note 2).......... (21,030) (17,360) (60,898) (71,579)
Adjustments to maintain reserves.................... 501 337 (5,758) (316)
----------- ----------- ------------ ------------
Net equity transactions......................... (10,673,256) 1,996,639 (16,214,777) (10,580,577)
----------- ----------- ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. 1,575,059 11,965,523 (12,418,435) (7,955,777)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........... 67,645,086 48,315,224 122,839,668 130,153,978
----------- ----------- ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD................. 69,220,145 60,280,747 110,421,233 122,198,201
=========== =========== ============ ============
</TABLE>
9
<PAGE> 9
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
NSATHINCBD NSATMYMKT
---------------------- ----------------------------
1998 1997 1998 1997
-------- -------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ 3,377 -- 1,052,272 1,134,778
Mortality, expense and administration
charges (note 2).................................. (610) -- (263,507) (293,386)
-------- -------- ----------- -----------
Net investment activity........................... 2,767 -- 788,765 841,392
-------- -------- ----------- -----------
Proceeds from mutual fund shares sold............... 50,543 -- 12,319,703 11,152,191
Cost of mutual fund shares sold..................... (49,728) -- (12,319,703) (11,152,191)
-------- -------- ----------- -----------
Realized gain (loss) on investments............... 815 -- -- --
Change in unrealized gain (loss) on investments..... (1,156) -- -- --
-------- -------- ----------- -----------
Net gain (loss) on investments.................... (341) -- -- --
-------- -------- ----------- -----------
Reinvested capital gains............................ -- -- -- --
-------- -------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 2,426 -- 788,765 841,392
-------- -------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 101,412 -- 5,205,654 8,386,111
Transfers between funds............................. 46,487 -- (3,200,882) (5,794,863)
Redemptions......................................... (2,262) -- (7,044,679) (4,211,467)
Annuity benefits.................................... -- -- (2,243) (2,326)
Annual contract maintenance charge (note 2)......... (55) -- (33,933) (40,806)
Contingent deferred sales charges (note 2).......... -- -- (45,315) (30,669)
Adjustments to maintain reserves.................... -- -- 4,435 97
-------- -------- ----------- -----------
Net equity transactions......................... 145,582 -- (5,116,963) (1,693,923)
-------- -------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. 148,008 -- (4,328,198) (852,531)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........... 2,848 -- 42,366,073 46,180,606
-------- -------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD................. $150,856 -- 38,037,875 45,328,075
======== ======== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NSATTOTRE NBAMTBAL
------------------------------ ----------------------------
1998 1997 1998 1997
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... 3,154,100 4,219,008 1,016,529 704,341
Mortality, expense and administration
charges (note 2).................................. (3,856,486) (3,130,288) (291,183) (254,382)
------------ ------------ ----------- -----------
Net investment activity........................... (702,386) 1,088,720 725,346 449,959
------------ ------------ ----------- -----------
Proceeds from mutual fund shares sold............... 85,307,544 13,151,379 1,719,595 2,535,921
Cost of mutual fund shares sold..................... (35,018,554) (6,007,184) (1,531,752) (2,308,639)
------------ ------------ ----------- -----------
Realized gain (loss) on investments............... 50,288,990 7,144,195 187,843 227,282
Change in unrealized gain (loss) on investments..... 29,729,715 75,743,872 (3,798,103) 1,458,387
------------ ------------ ----------- -----------
Net gain (loss) on investments.................... 80,018,705 82,888,067 (3,610,260) 1,685,669
------------ ------------ ----------- -----------
Reinvested capital gains............................ -- -- 7,139,906 1,807,809
------------ ------------ ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 79,316,319 83,976,787 4,254,992 3,943,437
------------ ------------ ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 20,884,005 17,099,059 2,397,749 1,807,914
Transfers between funds............................. 386,785 4,806,349 (759,457) (1,727,408)
Redemptions......................................... (100,865,645) (23,469,985) (1,966,543) (1,700,486)
Annuity benefits.................................... (38,717) (33,043) (16) --
Annual contract maintenance charge (note 2)......... (398,663) (378,849) (34,556) (36,361)
Contingent deferred sales charges (note 2).......... (154,222) (147,426) (35,890) (32,287)
Adjustments to maintain reserves.................... (13,294) 5,602 56 246
------------ ------------ ----------- -----------
Net equity transactions......................... (80,199,751) (2,118,293) (398,657) (1,688,382)
------------ ------------ ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. (883,432) 81,858,494 3,856,335 2,255,055
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........... 571,309,010 450,382,051 43,044,453 38,423,351
------------ ------------ ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD................. $570,425,578 532,240,545 46,900,788 40,678,406
============ ============ =========== ===========
</TABLE>
10
<PAGE> 10
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
STOPP2 TEMINTFD
--------------------------- ----------------------------
1998 1997 1998 1997
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ 5,741 23,587 731,626 466,908
Mortality, expense and administration
charges (note 2).................................. (114,680) (47,661) (219,784) (122,616)
----------- ---------- ----------- -----------
Net investment activity........................... (108,939) (24,074) 511,842 344,292
----------- ---------- ----------- -----------
Proceeds from mutual fund shares sold............... 304,002 22,434 1,489,973 240,241
Cost of mutual fund shares sold..................... (233,879) (22,076) (971,554) (173,577)
----------- ---------- ----------- -----------
Realized gain (loss) on investments............... 70,123 358 518,419 66,664
Change in unrealized gain (loss) on investments..... (120,062) 131,314 1,740,067 2,023,107
----------- ---------- ----------- -----------
Net gain (loss) on investments.................... (49,939) 131,672 2,258,486 2,089,771
----------- ---------- ----------- -----------
Reinvested capital gains............................ 2,115,597 691,280 1,308,058 187,679
----------- ---------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 1,956,719 798,878 4,078,386 2,621,742
----------- ---------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 4,062,838 2,565,740 5,761,498 4,729,829
Transfers between funds............................. 298,598 855,472 (1,840,924) 1,307,665
Redemptions......................................... (424,950) (98,635) (1,652,173) (361,284)
Annuity benefits.................................... -- -- -- --
Annual contract maintenance charge (note 2)......... (21,890) (11,550) (36,048) (22,794)
Contingent deferred sales charges (note 2).......... (4,419) (2,470) (16,467) (4,243)
Adjustments to maintain reserves.................... 51 (246) 181 (1,033)
----------- ---------- ----------- -----------
Net equity transactions......................... 3,910,228 3,308,311 2,216,067 5,648,140
----------- ---------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. 5,866,947 4,107,189 6,294,453 8,269,882
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........... 14,499,894 5,410,688 29,868,157 15,418,578
----------- ---------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD................. $20,366,841 9,517,877 36,162,610 23,688,460
=========== ========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 11
NATIONWIDE MULTI-FLEX VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
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 American
Century VP - American Century VP 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.
The Company offers tax qualified and non-tax qualified Individual
Deferred Variable Annuity Contracts through the Account. The primary
distributions for the contracts is through Company Agents and an
affiliated sales organization; however, other distributors may be
utilized.
(b) The Contracts
Only 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:
Funds of the AIM Variable Insurance Funds, Inc. (AIM VI);
AIM VI - Capital Appreciation Fund (AIMCapAp)*
AIM VI - International Equity Fund (AIMIntEq)*
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP) (formerly TCI Portfolios, Inc.);
American Century VP - American Century VP Advantage (ACVPAdv)
(formerly TCI Portfolios - TCI Advantage)
American Century VP - American Century VP Capital Appreciation
(ACVPCapAp) (formerly TCI Portfolios - TCI Growth)
American Century VP - American Century VP Income & Growth
(ACVPIncGr)*
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)*
Dreyfus Stock Index Fund (DryStkIx)
Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF);
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)*
Dreyfus VIF - Quality Bond Portfolio (DryQualBd)*
Dreyfus VIF - Small Cap Portfolio (DrySmCap)*
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
Fidelity VIP - High Income Portfolio (FidVIPHI)*
Portfolio of the Janus Aspen Series (Janus AS);
Janus AS - Janus Aspen International Growth Portfolio
(JanASIntGr)*
Funds of the Nationwide Separate Account Trust
(Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - High Income Bond Fund (NSATHIncBd)*
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Total Return Fund (NSATTotRe)
12
<PAGE> 12
Portfolio of the Neuberger & Berman Advisers Management Trust
(Neuberger & Berman AMT); Neuberger & Berman AMT - Balanced
Portfolio (NBAMTBal)
Strong Opportunity Fund II, Inc. (StOpp2)*
(formerly Strong Special Fund II, Inc.)
Portfolio of the Templeton Variable Products Series Fund
(Templeton VPS);
Templeton VPS - Templeton International Fund - Class I
(TemIntFd)*
At June 30, 1998, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment
results of each fund, equity transactions by contract owners 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.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at June 30, 1998. 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.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(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 contract 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 funding, or from earnings thereon.
(3) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
*This fund is only available for contracts issued to Plans established under the
NEA Valuebuilder Annuity.
13
<PAGE> 13
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at June 30, 1998, for
each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
Contract owners' equity represented by:
PERIOD
Contracts in accumulation phase: UNITS UNIT VALUE RETURN
-------- --------- -------
<S> <C> <C> <C> <C>
AIM VI - Capital Appreciation Fund:
Tax qualified ............................. 44,548 $ 10.647704 $ 474,334 12%
Non-tax qualified ......................... 3,616 10.647704 38,502 12%
AIM VI - International Equity Fund:
Tax qualified ............................. 3,921 11.701372 45,881 18%
Non-tax qualified ......................... 451 11.701372 5,277 18%
American Century VP - American Century
VP Advantage:
Tax qualified ............................. 408,281 17.173472 7,011,602 10%
Non-tax qualified ......................... 158,062 17.173472 2,714,473 10%
Initial Funding by Depositor .............. 25,000 18.789246 469,731 10%
American Century VP - American Century
VP Capital Appreciation:
Tax qualified ............................. 1,303,051 14.863627 19,368,064 0%
Non-tax qualified ......................... 567,245 14.863627 8,431,318 0%
American Century VP - American Century
VP Income & Growth:
Tax qualified ............................. 161,050 12.142573 1,955,561 17%
Non-tax qualified ......................... 13,228 12.142573 160,622 17%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified ............................. 1,218,355 23.786181 28,980,013 18%
Non-tax qualified ......................... 69,466 23.786181 1,652,331 18%
Dreyfus Stock Index Fund:
Tax qualified ............................. 2,493,722 25.583023 63,796,947 17%
Non-tax qualified ......................... 504,769 25.583023 12,913,517 17%
Dreyfus VIF - Capital Appreciation Portfolio:
Tax qualified ............................. 121,848 12.287982 1,497,266 20%
Non-tax qualified ......................... 8,491 12.287982 104,337 20%
Dreyfus VIF - Quality Bond Portfolio:
Tax qualified ............................. 452,468 11.930914 5,398,357 3%
Non-tax qualified ......................... 31,341 11.930914 373,927 3%
Dreyfus VIF - Small Cap Portfolio:
Tax qualified ............................. 3,909,172 18.492483 72,290,297 5%
Non-tax qualified ......................... 174,749 18.492483 3,231,543 5%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ............................. 5,267,724 22.571268 118,899,210 10%
Non-tax qualified ......................... 1,246,534 22.571268 28,135,853 10%
Fidelity VIP - High Income Portfolio:
Tax qualified ............................. 1,471,696 16.030689 23,592,301 4%
Non-tax qualified ......................... 75,663 16.030689 1,212,930 4%
Janus AS - Janus Aspen
International Growth Portfolio:
Tax qualified ............................. 106,264 12.085049 1,284,206 21%
Non-tax qualified ......................... 5,487 12.085049 66,311 21%
</TABLE>
14
<PAGE> 14
]
<TABLE>
<CAPTION>
PERIOD
UNITS UNIT VALUE RETURN
-------- --------- -------
<S> <C> <C> <C> <C>
Nationwide SAT - Capital Appreciation Fund:
Tax qualified ............................. 1,780,501 28.283511 50,358,820 19%
Non-tax qualified ......................... 664,745 28.283511 18,801,323 19%
Nationwide SAT - Government Bond Fund:
Tax qualified ............................. 2,316,289 33.654758 77,954,146 3%
Non-tax qualified ......................... 960,980 33.667167 32,353,474 3%
Nationwide SAT - High Income Bond Fund:
Tax qualified ............................. 14,101 10.698257 150,856 5%
Nationwide SAT - Money Market Fund:
Tax qualified ............................. 1,310,251 21.534407 28,215,478 2%
Non-tax qualified ......................... 418,909 23.397522 9,801,433 2%
Nationwide SAT - Total Return Fund:
Tax qualified ............................. 4,606,338 90.561482 417,156,796 14%
Non-tax qualified ......................... 1,737,246 87.956670 152,802,373 14%
Neuberger & Berman AMT - Balanced Portfolio:
Tax qualified ............................. 1,705,662 20.162589 34,390,562 10%
Non-tax qualified ......................... 620,454 20.162589 12,509,959 10%
Strong Opportunity Fund II, Inc.:
Tax qualified ............................. 1,126,808 17.013071 19,170,465 13%
Non-tax qualified ......................... 70,321 17.013071 1,196,376 13%
Templeton VPS - Templeton International Fund:
Tax qualified ............................. 1,953,370 17.730976 34,635,157 14%
Non-tax qualified ......................... 86,146 17.730976 1,527,453 14%
========= =========
Reserves for annuity contracts in payout phase:
Tax qualified ............................. 390,268
Non-tax qualified ......................... 279,295
---------------
$ 1,295,798,945
===============
</TABLE>
15
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OHIO 43215-2220
Nationwide(R) is a registered federal service mark of
Nationwide Mutual Insurance Company
Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
