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NATIONWIDE
VARIABLE
ACCOUNT-3
Semi-Annual Report
to
Contract Owners
June 30, 1995
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
APO-1545-S (6/95)
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[NATIONWIDE LIFE INSURANCE COMPANY LOGO]
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216
PRESIDENT'S MESSAGE
We are pleased to present the 1995 semi-annual report of the Nationwide
Variable Account-3.
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 out investment products to help you
meet your financial planning and retirement needs.
/s/ Peter F. Frenzer
---------------------------
Peter F. Frenzer, President
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
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NATIONWIDE VARIABLE ACCOUNT-3
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
June 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
American Capital - Common Stock Portfolio
2,141,717 shares (cost $30,059,453) ....................... $ 31,547,490
American Capital - Domestic Strategic Income Portfolio
1,985,760 shares (cost $15,889,331) ....................... 16,561,241
American Capital - Government Portfolio
1,070,701 shares (cost $9,660,537) ........................ 9,432,878
American Capital - Money Market Portfolio
8,431,203 shares (cost $8,431,203) ........................ 8,431,203
American Capital - Multiple Strategy Portfolio
2,932,469 shares (cost $33,815,052) ....................... 34,397,859
------------
Total assets ............................................ 100,370,671
ACCOUNTS PAYABLE ................................................ 2,110
------------
CONTRACT OWNERS' EQUITY ......................................... $ 100,368,561
============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Units Unit Value
Contract owners' equity represented by: --------- ----------
Contracts in accumulation phase:
American Capital - Common Stock Portfolio:
Tax qualified .......................................... 460,035 $ 22.784700 $ 10,481,759
Non-tax qualified ...................................... 924,006 22.784700 21,053,200
American Capital - Domestic Strategic Income Portfolio:
Tax qualified .......................................... 324,335 14.934583 4,843,808
Non-tax qualified ...................................... 783,384 14.934583 11,699,513
American Capital - Government Portfolio:
Tax qualified .......................................... 219,980 14.032269 3,086,819
Non-tax qualified ...................................... 449,477 14.032269 6,307,182
American Capital - Money Market Portfolio:
Tax qualified .......................................... 230,745 13.456030 3,104,912
Non-tax qualified ...................................... 393,734 13.456030 5,298,097
American Capital - Multiple Strategy Portfolio:
Tax qualified .......................................... 659,934 19.161276 12,645,178
Non-tax qualified ...................................... 1,133,905 19.161276 21,727,067
========= =========
Reserves for annuity contracts in payout phase:
Non-tax qualified ...................................... 121,026
-----------
$ 100,368,561
===========
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VARIABLE ACCOUNT-3
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 ............................... $ 952,302 746,451 705,115
----------- ----------- -----------
Gain (loss) on investments:
Proceeds from redemptions of mutual fund shares .................... 23,255,744 26,321,109 20,221,073
Cost of mutual fund shares sold .................................... (23,765,214) (25,481,967) (18,601,503)
----------- ----------- -----------
Realized gain (loss) on investments ................................ (509,470) 839,142 1,619,570
Change in unrealized gain (loss) on investments .................... 13,849,017 (6,167,350) 2,008,778
----------- ----------- -----------
Net gain (loss) on investments ................................... 13,339,547 (5,328,208) 3,628,348
----------- ----------- -----------
Net investment activity ........................................ 14,291,849 (4,581,757) 4,333,463
----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners ...................... 1,689,821 3,844,735 14,836,003
Redemptions .......................................................... (11,442,174) (5,931,522) (3,174,611)
Annuity benefits ..................................................... (7,055) (5,062) (3,512)
Adjustments to maintain reserves ..................................... (3,553) (869) (541)
----------- ----------- -----------
Net equity transactions ........................................ (9,762,961) (2,092,718) 11,657,339
----------- ----------- -----------
EXPENSES (NOTE 2):
Contract charges ..................................................... (696,926) (768,310) (673,805)
Contingent deferred sales charges .................................... (264,767) (148,835) (79,199)
----------- ----------- -----------
Total expenses ................................................. (961,693) (917,145) (753,004)
----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ................................... 3,567,195 (7,591,620) 15,237,798
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ............................. 96,801,366 111,635,860 88,109,849
----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ................................... $ 100,368,561 104,044,240 103,347,647
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VARIABLE ACCOUNT-3
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
Nationwide Variable Account-3 (the Account) was established pursuant to
a resolution of the Board of Directors of Nationwide Life Insurance Company
(the Company) on October 7, 1987. The Account has been registered as a unit
investment trust under the Investment Company Act of 1940.
(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.
Contract owners in either the accumulation or the payout phase may invest
in the following portfolios of the American Capital Life Investment Trust
(American Capital):
American Capital - Common Stock Portfolio
American Capital - Domestic Strategic Income Portfolio
(formerly American Capital - Corporate Bond Portfolio)
American Capital - Government Portfolio
American Capital - Money Market Portfolio
American Capital - Multiple Strategy Portfolio
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.
(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.
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(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 the contract owner's contract value a contingent deferred sales
charge, not to exceed 6% (3% after 36 months) of the lesser of the total of all
purchase payments made within 72 months prior to the date of the request for
surrender, or the amount surrendered. (For contracts issued in the State of New
York, the contingent deferred sales charge will not exceed 7% of purchase
payments, such charge declining 1% per year, to 0%, after the purchase payment
has been held in the contract for seven years.) 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 $35 ($30 for contracts issued in the
State of New York) which is satisfied by surrendering units; and (b) 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.
(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 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.
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SCHEDULE I
NATIONWIDE VARIABLE ACCOUNT-3
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>
DOMESTIC
COMMON STRATEGIC MONEY MULTIPLE
STOCK INCOME GOVERNMENT MARKET STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $19.065611 13.235145 12.821877 13.183559 16.406732
Reinvested capital gains and dividends .245406 .013461 .470142 .359349 .020462
Unrealized gain (loss) 3.610635 1.777828 .828947 .000000 2.850082
Contract charges (.136952) (.091851) (.088697) (.086878) (.116000)
Ending unit value - June 30 $22.784700 14.934583 14.032269 13.456030 19.161276
- --------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 20% 13% 9% 2% 17%
================================================================================================================================
1994
Beginning unit value - Jan. 1 $19.993094 14.016253 13.620968 12.879003 17.253369
Reinvested capital gains and dividends .106004 .012212 .401054 .193155 .014574
Unrealized gain (loss) (.982335) (.683550) (1.128428) .000000 (.916871)
Contract charges (.128824) (.088916) (.085342) (.083870) (.110036)
Ending unit value - June 30 $18.987939 13.255999 12.808252 12.988288 16.241036
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Percentage increase (decrease)
in unit value* (5)% (5)% (6)% 1% (6)%
================================================================================================================================
1993
Beginning unit value - Jan. 1 $18.587100 12.208185 12.794291 12.709641 16.230095
Reinvested capital gains and dividends .019557 .022817 .428599 .169340 .111970
Unrealized gain (loss) .482734 1.355208 .353594 .000000 .584495
Contract charges (.122149) (.083507) (.085965) (.082763) (.107331)
Ending unit value - June 30 $18.967242 13.502703 13.490519 12.796218 16.819229
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Percentage increase (decrease)
in unit value* 2% 11% 5% 1% 4%
================================================================================================================================
<FN>
*This is not an annualized rate of return as it is the change for a six month period and contract charges do not include the
annual contract maintenance charge discussed in note 2.
</TABLE>
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NATIONWIDE LIFE INSURANCE COMPANY BULK RATE
HOME OFFICE: ONE NATIONWIDE PLAZA * COLUMBUS, OHIO 43215-2220 U.S. POSTAGE
P A I D
COLUMBUS, OHIO
PERMIT NO. 521
