<PAGE> 1
As filed with the Securities and Exchange Commission.
`33 Act File No
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
NATIONWIDE VARIABLE ACCOUNT-9
(EXACT NAME OF REGISTRANT)
NATIONWIDE LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
DENNIS W. CLICK, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Name and Address of Agent for Service)
================================================================================
Approximate date of proposed public offering: (Upon the effective date of this
Registration Statement. September 17, 1999 requested.)
The Registrant hereby agrees to amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall therefore become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such a date as the Commission, acting pursuant to Section 8(a), may
determine.
================================================================================
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<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT-9
REFERENCE TO ITEMS REQUIRED BY FORM N-4
Caption in Prospectus and Statement of Additional Information and Other
Information
<TABLE>
<CAPTION>
N-4 ITEM PAGE
<S> <C>
Part A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page.................................................................................3
Item 2. Definitions................................................................................5
Item 3. Synopsis or Highlights.....................................................................7
Item 4. Condensed Financial Information..........................................................N/A
Item 5. General Description of Registrant, Depositor, and Portfolio Companies.....................12
Item 6. Deductions and Expenses...................................................................14
Item 7. General Description of Variable Annuity Contracts.........................................16
Item 8. Annuity Period............................................................................20
Item 9. Death Benefit and Distributions...........................................................25
Item 10. Purchases and Contract Value..............................................................16
Item 11. Redemptions...............................................................................18
Item 12. Taxes.....................................................................................29
Item 13. Legal Proceedings.........................................................................36
Item 14. Table of Contents of the Statement of Additional Information..............................37
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page................................................................................50
Item 16. Table of Contents.........................................................................50
Item 17. General Information and History...........................................................50
Item 18. Services..................................................................................50
Item 19. Purchase of Securities Being Offered......................................................51
Item 20. Underwriters..............................................................................51
Item 21. Calculation of Performance Information....................................................51
Item 22. Annuity Payments..........................................................................52
Item 23. Financial Statements......................................................................53
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits........................................................116
Item 25. Directors and Officers of the Depositor..................................................118
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant...............................................................................120
Item 27. Number of Contract Owners................................................................132
Item 28. Indemnification..........................................................................132
Item 29. Principal Underwriter....................................................................134
Item 30. Location of Accounts and Records.........................................................134
Item 31. Management Services......................................................................134
Item 32. Undertakings.............................................................................135
</TABLE>
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<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY
Individual Single Premium Immediate Variable Annuity Contracts
Issued by Nationwide Life Insurance Company through its Nationwide Variable
Account-9
The date of this prospectus is September 17, 1999.
- --------------------------------------------------------------------------------
This prospectus contains basic information you should know about the contracts
before investing.
Please read it and keep it for future reference.
The following investment options are available under the contracts:
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
- American Century VP Income & Growth
- American Century VP International
- American Century VP Value
DREYFUS
- The Dreyfus Socially Responsible Growth Fund, Inc.
- Dreyfus Stock Index Fund, Inc.
- Dreyfus Variable Investment Fund - Capital Appreciation Portfolio
FEDERATED INSURANCE SERIES
- Federated Quality Bond Fund II
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
- VIP Equity-Income Portfolio: Service Class
- VIP Growth Portfolio: Service Class
- VIP High Income Portfolio: Service Class*
- VIP Overseas Portfolio: Service Class
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
- VIP II Contrafund Portfolio: Service Class
FIDELITY VARIABLE INSURANCE PRODUCT FUND III
- VIP III Growth Opportunities Portfolio: Service Class
MORGAN STANLEY
- Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging Markets Debt
Portfolio
- Van Kampen Life Investment Trust - Morgan Stanley Real Estate Securities
Portfolio
NATIONWIDE SEPARATE ACCOUNT TRUST
- Capital Appreciation Fund
- Government Bond Fund
- Money Market Fund
- Total Return Fund
- Nationwide Balanced Fund (subadviser: Salomon Brothers Asset Management,
Inc.)
- Nationwide Equity Income Fund (subadviser: Federated Investment
Counseling)
- Nationwide Global Equity Fund (subadviser: J.P. Morgan Investment
Management Inc.)
- Nationwide High Income Bond Fund* (subadviser: Federated Investment
Counseling)
- Nationwide Multi Sector Bond Fund* (subadviser: Salomon Brothers Asset
Management, Inc. with Salomon Brothers Asset Management Limited)
- Nationwide Select Advisers Mid Cap Fund (subadvisers: First Pacific
Advisors, Inc., Pilgrim Baxter & Associates, Ltd., and Rice, Hall,
James & Associates)
- Nationwide Select Advisers Small Cap Growth Fund (subadvisers: Franklin
Advisers, Inc., Miller Anderson & Sherrerd, LLP, Neuberger Berman, LLC)
- Nationwide Small Cap Value Fund (subadviser: The Dreyfus Corporation)
- Nationwide Small Company Fund (subadvisers: The Dreyfus Corporation,
Neuberger Berman, LLC, Lazard Asset Management, Strong Capital
Management, Inc. and Warburg Pincus Asset Management, Inc.)
- Nationwide Strategic Growth Fund (subadviser: Strong Capital Management
Inc.)
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<PAGE> 4
- Nationwide Strategic Value Fund (subadviser: Strong Capital Management
Inc./Schafer Capital Management Inc.)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- AMT Guardian Portfolio
- AMT Mid-Cap Growth Portfolio
- AMT Partners Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS
- Oppenheimer Aggressive Growth Fund/VA (formerly "Oppenheimer Capital
Appreciation Fund"
- Oppenheimer Capital Appreciation Fund/VA (formerly "Oppenheimer Growth
Fund")
- Oppenheimer Main Street Growth & Income Fund/VA (formerly "Oppenheimer
Growth & Income Fund")
VAN ECK WORLDWIDE INSURANCE TRUST
- Worldwide Emerging Markets Fund
- Worldwide Hard Assets Fund
WARBURG PINCUS TRUST
- Growth & Income Portfolio
- International Equity Portfolio
- Post-Venture Capital Portfolio
*Invests in lower quality debt securities commonly referred to as junk bonds.
Purchase payments not invested in the investment options of the Nationwide
Variable Account-9 ("variable account") may be allocated for the purchase of
fixed annuity payments (see Appendix B).
The Statement of Additional Information (dated September 17, 1999) which
contains additional information about the contracts and the variable account is
filed with the Securities and Exchange Commission ("SEC") and is incorporated
herein by reference. The table of contents for the Statement of Additional
Information is on page 37.
For general information or to obtain FREE copies of the:
Statement of Additional Information
prospectus for any investment option
required Nationwide forms,
call: 1-800-243-6295
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE INSURANCE COMPANY
P.O. BOX 182356
COLUMBUS, OHIO 43218-2356
The Statement of Additional Information and other material incorporated by
reference can be found on the SEC website at:
www.sec.gov
Information about this and other Best of America products can be found at:
www.bestofamerica.com
THIS ANNUITY IS NOT:
- A BANK DEPOSIT - FEDERALLY INSURED
- ENDORSED BY A BANK OR - AVAILABLE IN EVERY
GOVERNMENT AGENCY STATE
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
These contracts are offered to customers of various financial institutions and
brokerage firms. No financial institution or brokerage firm is responsible for
the guarantees under the contracts. Guarantees under the contracts are the sole
responsibility of Nationwide.
In the future, additional underlying mutual funds managed by certain financial
institutions or brokerage firms (or their affiliates) may be added to the
variable account. These additional underlying mutual funds may be offered
exclusively to purchasing customers of the particular financial institution or
brokerage firm.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
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<PAGE> 5
GLOSSARY OF SPECIAL TERMS
ANNUITY INCOME UNIT- An accounting unit of measure used to calculate the
variable annuity payments after the first payment.
ASSUMED INVESTMENT RETURN- The net investment return required to maintain level
variable annuity payments. The selected assumed investment return is used in
calculating the initial variable annuity payment.
ASSUMED INVESTMENT RETURN FACTOR- The assumed investment return factor adjusts
the annuity income unit value based on the assumed investment return chosen by
the owner and permitted under the contract.
COMMUTATION VALUE- The value of future annuity payments that are converted
(commuted) into a lump sum. The commutation value may be available for
withdrawal under certain income options and may be available to beneficiaries
when an annuitant dies before all term certain payments have been made.
CONTRACT VALUE- The value of any amount allocated to the variable account (plus
or minus any investment experience), plus any amount designated for the purchase
of fixed annuity payments, less any distributions previously made.
FIXED ANNUITY PAYMENT(S)- Annuity payments which are guaranteed by Nationwide as
to dollar amount.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
INCOME OPTION- The type of annuity payments chosen by the contract owner.
INCOME START DATE- The date annuity payments actually commence.
INDIVIDUAL RETIREMENT ANNUITY- An annuity described in Section 408(b) of the
Internal Revenue Code (not including Roth IRAs or Simple IRAs).
INVESTMENT OPTION(S)- The underlying mutual funds which are purchased by the
variable account and accounted for in separate sub-accounts of the variable
account. The performance of selected investment options determines the value of
variable annuity payments after the first payment.
NATIONWIDE- Nationwide Life Insurance Company.
NON-QUALIFIED CONTRACT- A contract which does not qualify for favorable tax
treatment as an Individual Retirement Annuity, Roth IRA, SEP IRA, Simple IRA, or
Tax Sheltered Annuity.
ROTH IRA- An annuity described in Section 408A of the Internal Revenue Code.
SEP IRA- An annuity described in Section 408(k) of the Internal Revenue Code.
SIMPLE IRA- An annuity described Section 408(p) of the Internal Revenue Code.
SUB-ACCOUNTS- Separate and distinct divisions of the variable account. Each
sub-account corresponds to a specific underlying mutual fund upon which
investment performance is based.
TAX SHELTERED ANNUITY- An annuity described in Section 403(b) of the Internal
Revenue Code.
VALUATION DAY- Each day the New York Stock Exchange is open for business.
VALUATION PERIOD- The period of time beginning at the close of a valuation day
and ending at the close of business on the next valuation day.
VARIABLE ACCOUNT- Nationwide Variable Account-9, which is a separate account of
Nationwide. The variable account is divided into sub-accounts, each of which
invests in shares of a separate investment option.
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<PAGE> 6
VARIABLE ACCOUNT VALUE- The amount allocated to the variable account plus or
minus investment experience minus any previous variable account distributions.
VARIABLE ANNUITY PAYMENT(S)- Annuity payments which are not guaranteed as to
dollar amount and which vary with the investment experience of the investment
options.
4
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<PAGE> 7
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS.........................3
SUMMARY OF STANDARD CONTRACT EXPENSES.............7
ADDITIONAL CONTRACT CHARGE........................7
INVESTMENT OPTION ANNUAL EXPENSES.................8
EXAMPLE..........................................10
SYNOPSIS OF THE CONTRACTS........................12
FINANCIAL STATEMENTS.............................12
NATIONWIDE LIFE INSURANCE COMPANY................12
NATIONWIDE ADVISORY SERVICES, INC................12
INVESTING IN THE CONTRACT........................13
The Variable Account and Investment Options
STANDARD CHARGES AND DEDUCTIONS..................14
Mortality and Expense Risk Charges
Contingent Deferred Sales Charge
Premium Taxes
ADDITIONAL CONTRACT CHARGE.......................15
Enhanced Death Benefit Charge
CONTRACT OWNERSHIP...............................15
Ownership Rights between the Date of Issue
and the Income Start Date
Ownership Rights Between the Income Start
Date and Prior to the Annuitant's Death
Changes
Joint Ownership
Annuitant and Joint Annuitant
Beneficiary and Contingent Beneficiary
OPERATION OF THE CONTRACT........................16
Purchase Payments
Pricing
Allocation of Purchase Payment
Transfers
RIGHT TO REVOKE..................................18
WITHDRAWAL (REDEMPTION)..........................18
Restrictions on Withdrawals from a Tax
Sheltered Annuity
ASSIGNMENT.......................................20
ANNUITY PAYMENTS.................................20
Income Start Date
Fixed Annuity Payments
Variable Annuity Payments
Frequency and Amount of Annuity Payments
Annual Benefit Leveling
INCOME OPTIONS...................................22
Single Life
Life with Term Certain
Single Life with Cash Refund
Joint and Last Survivor
Joint and 100% Last Survivor with Term Certain
Joint and 100% Last Survivor with Cash Refund
Joint and 50% Survivor
Term Certain
Term Certain with Enhanced Death Benefit
DEATH BEFORE THE INCOME START DATE...............25
Death of Contract Owner
Death of Annuitant
DEATH AFTER THE INCOME START DATE................25
Death of Contract Owner
Death of Annuitant
REQUIRED DISTRIBUTIONS...........................26
Required Distributions for Non-Qualified
Contracts
Required Distributions for Tax Sheltered
Annuities
Required Distributions for IRAs and SEP IRAs
Required Distributions for Roth IRAs
FEDERAL TAX CONSIDERATIONS.......................29
Federal Income Taxes
IRAs, SEP IRAs, and Tax Sheltered Annuities
Roth IRAs
Withholding
Non-Resident Aliens
Federal Estate, Gift, and Generation Skipping
Transfer Taxes
Puerto Rico
Charge for Tax
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<PAGE> 8
Diversification
Tax Changes
STATEMENTS AND REPORTS...........................34
YEAR 2000 COMPLIANCE ISSUES......................35
LEGAL PROCEEDINGS................................36
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION.................37
APPENDIX A: OBJECTIVES FOR INVESTMENT OPTIONS....38
APPENDIX B: FIXED ANNUITY PAYMENTS...............48
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<PAGE> 9
SUMMARY OF STANDARD CONTRACT EXPENSES
The expenses listed below are charged to all contracts unless otherwise
provided.
VARIABLE ACCOUNT CHARGES
(as a percentage of average account value)
Mortality and Expense Risk Charges............1.20%
Total Variable Account Charges...........1.20%
These charges apply only to sub-account allocations. They are charged on a daily
basis at the annual rate noted above.
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of
of purchase payments withdrawn)...................6%
CDSC Percentages
Years from Date of Issue CDSC Percentage
1 6%
2 6%
3 5%
4 5%
5 4%
6 3%
7 2%
Thereafter 0%
A CDSC will ONLY be assessed if a withdrawal (other than an annuity payment) is
taken as permitted under certain income options. Income options permitting such
withdrawals are:
Term Certain; and
Term Certain with Enhanced Death Benefit.
ADDITIONAL CONTRACT CHARGE
Enhanced Death Benefit Charge..................0.20%
Total Variable Account Charges
(including Enhanced Death
Benefit Charge)...........................1.40%
The Enhanced Death Benefit Charge is assessed ONLY if the contract owner elects
the Term Certain with Enhanced Death Benefit income option. The charge is in
addition to the variable account charges of 1.20% that are assessed to every
contract.
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<PAGE> 10
INVESTMENT OPTION ANNUAL EXPENSES
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS, AFTER EXPENSE
REIMBURSEMENT)
<TABLE>
<CAPTION>
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - American 0.70% 0.00% 0.00% 0.70%
Century VP Income & Growth
American Century Variable Portfolios, Inc. - American 1.47% 0.00% 0.00% 1.47%
Century VP International
American Century Variable Portfolios, Inc. - American 1.00% 0.00% 0.00% 1.00%
Century VP Value
The Dreyfus Socially Responsible Growth Fund, Inc. 0.75% 0.05% 0.00% 0.80%
Dreyfus Stock Index Fund, Inc. 0.25% 0.01% 0.00% 0.26%
Dreyfus Variable Investment Fund - Capital 0.75% 0.05% 0.00% 0.80%
Appreciation Portfolio
Federated Insurance Series - Federated Quality Bond 0.23% 0.47% 0.00% 0.70%
Fund II
Fidelity VIP Equity-Income Portfolio: Service Class, 0.49% 0.08% 0.10% 0.67%
Fidelity VIP Growth Portfolio: Service Class 0.59% 0.06% 0.10% 0.75%
Fidelity VIP High Income Portfolio: Service Class 0.58% 0.14% 0.10% 0.82%
Fidelity VIP Overseas Portfolio: Service Class 0.74% 0.13% 0.10% 0.97%
Fidelity VIP II Contrafund Portfolio: Service Class 0.59% 0.06% 0.10% 0.75%
Fidelity VIP III Growth Opportunities Portfolio: 0.59% 0.10% 0.10% 0.79%
Service Class
Morgan Stanley Dean Witter Universal Funds, Inc. - 0.27% 1.25% 0.00% 1.52%
Emerging Markets Debt Portfolio
NSAT Capital Appreciation Fund 0.60% 0.07% 0.00% 0.67%
NSAT Government Bond Fund 0.50% 0.07% 0.00% 0.57%
NSAT Money Market Fund 0.40% 0.06% 0.00% 0.46%
NSAT Total Return Fund 0.59% 0.06% 0.00% 0.65%
NSAT Nationwide Balanced Fund 0.75% 0.15% 0.00% 0.90%
NSAT Nationwide Equity Income Fund 0.80% 0.15% 0.00% 0.95%
NSAT Nationwide Global Equity Fund 1.00% 0.20% 0.00% 1.20%
NSAT Nationwide High Income Bond Fund 0.80% 0.15% 0.00% 0.95%
NSAT Nationwide Multi-Sector Bond Fund 0.75% 0.15% 0.00% 0.90%
NSAT Nationwide Select Advisers Mid Cap Fund 1.05% 0.15% 0.00% 1.20%
NSAT Nationwide Select Advisers Small Cap Growth Fund 1.10% 0.20% 0.00% 1.30%
NSAT Nationwide Small Cap Value Fund 0.90% 0.15% 0.00% 1.05%
NSAT Nationwide Small Company Fund 1.00% 0.07% 0.00% 1.07%
NSAT Nationwide Strategic Growth Fund 0.90% 0.10% 0.00% 1.00%
NSAT Nationwide Strategic Value Fund 0.90% 0.10% 0.00% 1.00%
Neuberger Berman AMT Guardian Portfolio 0.85% 0.15% 0.00% 1.00%
Neuberger Berman AMT Mid-Cap Growth Portfolio 0.85% 0.15% 0.00% 1.00%
Neuberger Berman AMT Partners Portfolio 0.78% 0.06% 0.00% 0.84%
Oppenheimer Variable Account Funds - Oppenheimer 0.69% 0.02% 0.00% 0.71%
Aggressive Growth Fund/VA
Oppenheimer Variable Account Funds - Oppenheimer 0.72% 0.03% 0.00% 0.75%
Capital Appreciation Fund/VA
Oppenheimer Variable Account Funds - Oppenheimer Main 0.74% 0.05% 0.00% 0.79%
Street Growth & Income Fund/VA
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
<S> <C> <C> <C> <C>
Van Eck Worldwide Insurance Trust - Worldwide 1.00% 0.50% 0.00% 1.50%
Emerging Markets Fund
Van Eck Worldwide Insurance Trust - Worldwide Hard 1.00% 0.16% 0.00% 1.16%
Assets Fund
Van Kampen Life Investment Trust - Morgan Stanley 1.20% 0.00% 0.00% 1.20%
Real Estate Securities Portfolio
Warburg Pincus Trust - Growth & Income Portfolio 0.51% 0.49% 0.00% 1.00%
Warburg Pincus Trust - International Equity Portfolio 1.00% 0.33% 0.00% 1.33%
Warburg Pincus Trust - Post-Venture Capital Portfolio 1.08% 0.32% 0.00% 1.40%
</TABLE>
The expenses shown above are deducted by the investment option before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value to calculate the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each investment option.
Information relating to the investment options was provided by the investment
options and not independently verified by Nationwide.
Some investment options are subject to fee waivers and expense reimbursements.
The following chart shows what the expenses would have been for such funds
without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
Fidelity VIP Equity-Income Portfolio: Service 0.49% 0.09% 0.10% 0.68%
Class
Fidelity VIP Growth Portfolio: Service Class 0.59% 0.11% 0.10% 0.80%
Fidelity VIP Overseas Portfolio: Service Class 0.74% 0.17% 0.10% 1.01%
Fidelity VIP II Contrafund Portfolio: Service 0.59% 0.11% 0.10% 0.80%
Class
Fidelity VIP III Growth Opportunities Portfolio: 0.59% 0.11% 0.10% 0.80%
Service Class
Morgan Stanley Dean Witter Universal Funds, Inc. 0.80% 1.25% 0.00% 2.05%
- - Emerging Markets Debt Portfolio
NSAT Nationwide Balanced Fund 0.75% 0.21% 0.00% 0.96%
NSAT Nationwide Equity Income Fund 0.80% 0.35% 0.00% 1.15%
NSAT Nationwide Global Equity Fund 1.00% 0.46% 0.00% 1.46%
NSAT Nationwide High Income Bond Fund 0.80% 0.32% 0.00% 1.12%
NSAT Nationwide Multi-Sector Bond Fund 0.75% 0.21% 0.00% 0.96%
NSAT Nationwide Select Advisers Mid Cap Fund 1.05% 0.49% 0.00% 1.54%
NSAT Nationwide Select Advisers Small Cap Growth 1.10% 0.58% 0.00% 1.68%
Fund
NSAT Nationwide Small Cap Value Fund 0.90% 0.43% 0.00% 1.33%
NSAT Nationwide Strategic Growth Fund 0.90% 0.65% 0.00% 1.55%
NSAT Nationwide Strategic Value Fund 0.90% 0.33% 0.00% 1.23%
Van Eck Worldwide Insurance Trust - Worldwide 1.00% 0.61% 0.00% 1.61%
Emerging Markets Fund
Van Eck Worldwide Insurance Trust - Worldwide 1.00% 0.20% 0.00% 1.20%
Hard Assets Fund
</TABLE>
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<PAGE> 12
EXAMPLE
The following chart shows the amount of expenses (in dollars) that would be
incurred under this contract assuming a $1,000 investment, 5% annual return, no
change in expenses, and election of a 10-year Term Certain with Enhanced Death
Benefit income option. These dollar figures are illustrative only and should not
be considered a representation of past or future expenses. Actual expenses may
be greater or less than those shown below.
The chart reflects the maximum variable account charge of 1.40% and the expenses
of the investment options (underlying mutual funds).
For those contracts that elect a Term Certain income option with a payout period
other than 10 years, or who do not elect the Enhanced Death Benefit, the
expenses would be different.
THE CHART BELOW IS ONLY RELEVANT TO CONTRACTS WHERE THE CONTRACT OWNER HAS
ELECTED EITHER A TERM CERTAIN OR TERM CERTAIN WITH ENHANCED DEATH BENEFIT INCOME
OPTION. Only under Term Certain income options are surrenders permitted.
Deductions for premium taxes are not reflected but may apply.
The summary of contract expenses and example are to help contract owners
understand the expenses associated with the contract.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
If you surrender your If you do not surrender your
contract at the contract at the
end of the applicable end of the applicable
time period time period
- ------------------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
American Century Variable Portfolios, Inc.
- - American Century VP Income & Growth
- ------------------------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.
- - American Century VP International
- ------------------------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.
- - American Century VP Value
- ------------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth
Fund, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund - Capital
Appreciation Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Federated Insurance Series - Federated
Quality Bond Fund II
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio:
Service Class
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio: Service Class
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio: Service Class
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio: Service Class
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio:
Service Class
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio:
Service Class
- ------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter Universal Funds,
Inc. - Emerging Markets Debt Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
If you surrender your If you do not surrender your
contract at the contract at the
end of the applicable end of the applicable
time period time period
- ------------------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NSAT Nationwide Balanced Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Equity Income Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Global Equity Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide High Income Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Multi-Sector Bond Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Select Advisers Mid Cap Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Select Advisers Small Cap
Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap Value Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Company Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic Value Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT - Guardian Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT - Mid-Cap Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT - Partners Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds -
Oppenheimer Aggressive Growth Fund/VA
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds -
Oppenheimer Capital Appreciation Fund/VA
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds -
Oppenheimer Main Street Growth & Income
Fund/VA
- ------------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust -
Worldwide Emerging Markets Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust -
Worldwide Hard Assets Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Van Kampen Life Investment Trust -
Morgan Stanley Real Estate Securities
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Growth & Income
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - International Equity
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Post-Venture Capital
Portfolio
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SYNOPSIS OF THE CONTRACTS
The contracts described in this prospectus are individual single premium
immediate variable annuity contracts.
The contracts can be categorized as:
- Non-Qualified;
- IRAs;
- Roth IRAs;
- SEP IRAs;
- Simple IRAs; or
- Tax Sheltered Annuities.
PURCHASE PAYMENTS
The minimum single purchase payment is $35,000. No additional purchase payments
will be accepted or permitted.
CHARGES AND EXPENSES
Nationwide deducts a mortality and expense risk charge equal to an annual rate
of 1.20% of the daily net assets of the variable account. Nationwide assesses
these charges in return for bearing certain mortality and expense risks, and for
administrative expenses.
Nationwide does not deduct a sales charge from purchase payments upon deposit
into the contract. However, if the income option elected permits withdrawals
other than annuity payments, Nationwide may deduct a CDSC upon such withdrawal.
This CDSC reimburses Nationwide for sales expenses. The amount of the CDSC will
not exceed 6% of purchase payments withdrawn.
If the contract owner elects the Term Certain with Enhanced Death Benefit income
option, Nationwide will deduct an additional 0.20% of the daily net assets of
the variable account. This charge reimburses Nationwide for increased mortality
expenses associated with the enhanced death benefit.
ANNUITY PAYMENTS
Annuity payments begin on the income start date. The payments will be based on
the income option chosen at the time of application (see "Income Options").
TAXATION
The tax treatment of the contracts depends on the type of contract issued.
Nationwide will charge against the contract any premium taxes levied by any
governmental authority (see "Federal Tax Considerations" and "Premium Taxes").
TEN DAY FREE LOOK
Contract owners may return the contract for any reason within ten days of
receipt and Nationwide will refund the contract value or the amount as required
by law (see "Right to Revoke").
FINANCIAL STATEMENTS
Financial statements for the variable account and Nationwide are located in the
Statement of Additional Information. A current Statement of Additional
Information may be obtained, without charge, by contacting Nationwide's home
office at the telephone number listed on page 2 of this prospectus.
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in March,
1929, with its home office at One Nationwide Plaza, Columbus, Ohio 43215.
Nationwide is a provider of life insurance, annuities and retirement products.
It is admitted to do business in all states, the District of Columbia and Puerto
Rico.
NATIONWIDE ADVISORY SERVICES, INC.
The contracts are distributed by the general distributor, Nationwide Advisory
Services, Inc. ("NAS"), Three Nationwide Plaza, Columbus, Ohio 43215. NAS is a
wholly owned subsidiary of Nationwide.
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INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND INVESTMENT OPTIONS
Nationwide Variable Account-9 is a separate account that invests in the
investment options listed in Appendix A. Nationwide established the separate
account on May 22, 1997, pursuant to Ohio law. Although the separate account is
registered with the SEC as a unit investment trust pursuant to the Investment
Company Act of 1940 ("1940 Act"), the SEC does not supervise the management of
Nationwide or the variable account.
Income, gains, and losses credited to, or charged against, the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's other assets and are not chargeable with
liabilities incurred in any other business of Nationwide.
The variable account is divided into sub-accounts. Nationwide uses the assets of
each sub-account to buy shares of the investment options based on contract owner
instructions. There are two sub-accounts for each investment option. One
sub-account contains shares attributable to accumulation units and annuity
income units under Non-Qualified Contracts. The other contains shares
attributable to accumulation units and annuity income units under IRAs, Simple
IRAs, SEP IRAs, Roth IRAs, and Tax Sheltered Annuities.
Each investment option's prospectus contains more detailed information about
that fund. Prospectuses for the investment options should be read in conjunction
with this prospectus.
Investment options in the variable account are NOT publicly traded mutual funds.
They are only available as investment options in variable life insurance
policies or variable annuity contracts issued by life insurance companies, or in
some cases, through participation in certain qualified pension or retirement
plans.
The investment advisers of the investment options may manage publicly traded
mutual funds with similar names and investment objectives. However, the
investment options are NOT directly related to any publicly traded mutual fund.
Contract owners should not compare the performance of a publicly traded fund
with the performance of investment options participating in the variable
account. The performance of the investment options could differ substantially
from that of any publicly traded funds.
Voting Rights
Contract owners who have allocated assets to the investment options are entitled
to certain voting rights. Nationwide will vote contract owner shares at special
shareholder meetings based on contract owner instructions. However, if the law
changes and Nationwide is allowed to vote in its own right, it may elect to do
so.
Contract owners with voting interests in an investment option will be notified
of issues requiring a shareholders' vote as soon as possible before the
shareholder meeting. Notification will contain proxy materials and a form with
which to give Nationwide voting instructions. Nationwide will vote shares for
which no instructions are received in the same proportion as those that are
received.
The number of shares which a contract owner may vote will be determined as of a
date to be chosen by Nationwide not more than 60 days prior to the shareholder
meeting.
Material Conflicts
The investment options may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these investment options
participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life
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insurance policies and variable annuity contracts, or differences in the voting
instructions of the contract owners and those of other companies. If a material
conflict occurs, Nationwide will take whatever steps are necessary to protect
contract owners and variable annuity payees, including withdrawal of the
variable account from participation in the investment option(s) involved in the
conflict.
Substitution of Securities
Nationwide may substitute, eliminate, or combine shares of another investment
option for shares already purchased or to be purchased in the future if either
of the following occurs:
1) shares of a current investment option are no longer available for
investment; or
2) further investment in an investment option becomes inappropriate in the
judgement of Nationwide management.
No substitution, elimination, or combination of shares may take place without
the prior approval of the SEC and state insurance departments.
STANDARD CHARGES AND DEDUCTIONS
MORTALITY AND EXPENSE RISK CHARGES
Nationwide deducts a Mortality and Expense Risk Charge from the variable
account. This amount is computed on a daily basis, and is equal to an annual
rate of 1.20% of the daily net assets of the variable account.
The mortality risk charges compensate Nationwide for guaranteeing the annuity
rate of the contracts. This guarantee ensures that the annuity rates will not
change regardless of the death rates of annuity payees or the general
population.
The expense risk charges compensate Nationwide for guaranteeing that
administration charges will not increase regardless of actual expenses.
If the Mortality and Expense Risk Charge is insufficient to cover actual
expenses, the loss is borne by Nationwide.
CONTINGENT DEFERRED SALES CHARGE
No sales charge deduction is made from the purchase payments when amounts are
deposited into the contracts. However, if the income option elected permits
withdrawals other than regular annuity payments, Nationwide will deduct a CDSC
upon such withdrawal. The CDSC will not exceed 6% of purchase payments
withdrawn.
The CDSC is calculated by multiplying the applicable CDSC percentage (noted
below) by the amount that is withdrawn. The applicable CDSC will not be applied
to any amount in excess of the single purchase payment.
For purposes of calculating the CDSC, withdrawals are considered to come first
from the oldest purchase payment made to the contract, then the next oldest
purchase payment, and so forth. For tax purposes, a withdrawal is usually
treated as a withdrawal of earnings first.
The CDSC applies as follows:
Years from Date of Issue CDSC Percentage
1 6%
2 6%
3 5%
4 5%
5 4%
6 3%
7 2%
Thereafter 0%
The CDSC is used to cover sales expenses, including commissions (maximum of 5.5%
of purchase payments), production of sales material, and other promotional
expenses. If expenses are greater than the CDSC, the shortfall will be made up
from Nationwide's general account, which may indirectly include portions of the
variable account charges, since Nationwide may generate a profit from these
charges.
Contract owners taking withdrawals (other than substantially equal periodic
payments for life) before age 59 1/2 may be subject to a 10% tax penalty. In
addition, all or a portion of the withdrawal may be subject to federal income
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taxes (see "Non-Qualified Contracts - Natural Persons as Contract Owners").
PREMIUM TAXES
Nationwide will charge against the commutation value any premium taxes levied by
a state or other government entity. Premium tax rates currently range from 0% to
3.5%. This range is subject to change. The method used to assess premium tax
will be determined by Nationwide at its sole discretion in compliance with state
law.
If applicable, Nationwide will deduct premium taxes from the contract either at:
(1) the time the contract is withdrawn;
(2) annuitization; or
(3) such earlier date as Nationwide becomes subject to premium taxes.
ADDITIONAL CONTRACT CHARGE
ENHANCED DEATH BENEFIT CHARGE
If the contract owner elects the Term Certain with Enhanced Death Benefit income
option, Nationwide will deduct an additional 0.20% of the daily net assets of
the variable account. This charge is in addition to the variable account charges
of 1.20% assessed against every contract. The Enhanced Death Benefit Charge
reimburses Nationwide for increased mortality expenses associated with the
enhanced death benefit.
CONTRACT OWNERSHIP
The contract owner has all rights under the contract. Purchasers who name
someone other than themselves as the contract owner will have no rights under
the contract.
At the time of application, the contract owner designates/elects:
1) an annuitant and joint annuitant, if applicable;
2) the frequency of payments, income option, assumed investment return, and
income start date;
3) a beneficiary and contingent beneficiary, if applicable;
4) the portion of the single purchase payment used to purchase fixed annuity
payments and/or variable annuity payments;
5) the allocation among investment options; and
6) any optional benefits that may be provided under the elected income
option.
Once elected, the income option cannot be changed.
OWNERSHIP RIGHTS BETWEEN THE DATE OF ISSUE AND THE INCOME START DATE
Between the date of issue and the income start date, the contract owner has the
right to:
1) cancel the contract during the free look period;
2) change the beneficiary and/or the contingent beneficiary;
3) change allocations among investment options;
4) elect to take a partial or full withdrawal, depending on the income
option selected and subject to any restrictions described in this
prospectus; and
5) elect or revoke a prior election of annual benefit leveling (see "Annual
Benefit Leveling").
OWNERSHIP RIGHTS BETWEEN THE INCOME START DATE AND PRIOR TO THE ANNUITANT'S
DEATH
After the income start date and prior to the annuitant's death, the contract
owner has the right to:
1) change the beneficiary and/or the contingent beneficiary;
2) change allocations among investment options;
3) elect to take a partial or full withdrawal, depending on the income option
selected and subject to any restrictions described in this prospectus; and
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4) elect or discontinue annual benefit leveling.
CHANGES
All changes, except those to annual benefit leveling will take effect as of the
time such changes are recorded by Nationwide, whether or not the contract owner
or annuitant is living at the time of the recording. Nationwide will not be
liable for any payments made or actions taken by Nationwide before recording the
change.
Nationwide may require that all changes be submitted in writing or in another
form Nationwide deems acceptable. Nationwide may require that signatures be
guaranteed by a member firm of a major stock exchange or other depository
institution qualified to give such a guarantee.
JOINT OWNERSHIP
Joint owners each own an undivided interest in the contract. Joint owners must
be spouses at the time joint ownership is requested unless state law requires
Nationwide to allow non-spousal joint owners. A joint owner may only be named in
Non-Qualified Contracts.
The exercise of any ownership right in the contract will require a written
request signed by both joint owners.
If a contract owner who IS NOT the annuitant dies before the income start date
and there is a surviving joint owner, the joint owner will become the contract
owner.
If the contract owner who IS the annuitant dies before the income start date and
there is a surviving joint owner, the contract will terminate and Nationwide
will pay the contract value to the joint owner.
ANNUITANT AND JOINT ANNUITANT
The annuitant (and joint annuitant, if applicable) must be age 85 or younger at
the time of contract issuance, unless Nationwide approves a request for an
annuitant or joint annuitant of greater age. Once designated, the annuitant and
joint annuitant, if applicable, cannot be changed. Joint annuitants can be named
only if permitted under the elected income option.
For contracts issued as IRAs or Tax Sheltered Annuities, the contract owner and
annuitant must be the same person and that individual's entire interest in the
contract is nonforfeitable. For either of these contract types, if a joint and
survivor income option is elected, the joint annuitant must be the annuitant's
spouse.
BENEFICIARY AND CONTINGENT BENEFICIARY
The beneficiary is the person who may receive benefits under the contract if the
annuitant (and joint annuitant, if any) dies after the income start date. The
contract owner can name more than one beneficiary. The beneficiaries will share
the benefits equally, unless otherwise specified.
If no beneficiaries survive the annuitant, the beneficiary's rights will vest in
the contingent beneficiary. Contingent beneficiaries will share the benefits
equally, unless otherwise specified.
If no beneficiary or contingent beneficiary survives the annuitant (and the
joint annuitant, if applicable), all beneficiary rights will vest with the
contract owner or the last surviving contract owner's estate.
If the annuitant (and joint annuitant, if any) dies before the income start
date, and there is no surviving contract owner or joint owner, Nationwide will
pay the contract proceeds to the beneficiary.
OPERATION OF THE CONTRACT
PURCHASE PAYMENTS
The minimum single purchase payment must be at least $35,000. No additional
purchase payments will be accepted or permitted.
The cumulative total of all purchase payments under contracts issued by
Nationwide on the life of any one annuitant cannot exceed $1,000,000 without
Nationwide's prior consent.
PRICING
The single purchase payment will be allocated to sub-accounts and will be priced
at the accumulation unit value determined no later than 2 business days after
receipt of an order to
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purchase if the application and all necessary information are complete. If the
application is not complete, Nationwide may retain the purchase payment for up
to 5 business days while attempting to complete it. If the application is not
completed within 5 business days, the prospective purchaser will be informed of
the reason for the delay. The purchase payment will be returned unless the
prospective purchaser specifically allows Nationwide to hold the purchase
payment until the application is completed.
Purchase payments will not be priced when the New York Stock Exchange is closed
or on the following nationally recognized holidays:
- - New Year's Day - Independence Day
- - Martin Luther King, Jr. Day - Labor Day
- - Presidents' Day - Thanksgiving
- - Good Friday - Christmas
- - Memorial Day
Nationwide also will not price purchase payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in
the variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, account value may be affected since the contract owner would
not have access to their account.
ALLOCATION OF THE PURCHASE PAYMENT
For any particular income option, the single purchase payment may be allocated
to provide variable annuity payments, fixed annuity payments, or a combination
of both. The chosen allocation is irrevocable.
Nationwide allocates that portion of the purchase payment intended for variable
annuity payments to investment options as instructed by the contract owner.
Shares of the investment options are purchased by the separate account at net
asset value and maintained as accumulation units until being converted into
annuity income units on the income start date. Contract owners can change
allocations or make exchanges among the sub-accounts subject to conditions
imposed by the investment options and those set forth in the contract.
TRANSFERS
Any portion of the single purchase payment that is allocated to provide fixed
annuity payments may not be transferred to any sub-accounts. Similarly, any
portion of the single purchase payment that is allocated to provide variable
annuity payments may not be transferred to provide fixed annuity payments.
However, any portion of a single purchase payment that is allocated to provide
variable annuity payments may be reallocated by the contract owner among
investment options, subject to the following conditions:
- Transfers between sub-accounts may be made once daily without charges or
penalties.
- Nationwide reserves the right to limit transfers between sub-accounts to
12 per year or to assess a fee for any transfer in excess of 12 per year.
Amounts transferred between the sub-accounts will receive the annuity income
unit value that is next computed immediately following the transfer.
Transfer Requests
Nationwide will accept transfer requests in writing or, in those states that
allow them, over the telephone. Nationwide will use reasonable procedures to
confirm that telephone instructions are genuine and will not be liable for
following telephone instructions that it reasonably determined to be genuine.
Nationwide may withdraw the telephone exchange privilege upon 30 days written
notice to contract owners.
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Market Timing Firms
Some contract owners may use market timing firms or other third parties to make
transfers on their behalf. Generally, in order to take advantage of perceived
market trends, market-timing firms will submit transfer or exchange requests on
behalf of multiple contract owners at the same time. Sometimes this can result
in unusually large transfers of funds. These large transfers might interfere
with the ability of Nationwide or the investment option (the underlying mutual
fund) to process transactions. This can potentially disadvantage contract owners
not using market-timing firms. To avoid this, Nationwide may modify transfer
rights of contract owners who use market timing firms (or other third parties)
to transfer or exchange funds on their behalf.
The transfer rights of individual contract owners will not be modified in any
way when instructions are submitted directly by the contract owner, or by the
contract owner's representative (as authorized by the execution of a valid
Nationwide Limited Power of Attorney Form).
To protect contract owners, Nationwide may refuse transfer requests:
- submitted by any agent acting under a power of attorney on behalf of more
than one contract owner; or
- submitted on behalf of individual contract owners who have executed
pre-authorized exchange forms which are submitted by market timing firms
(or other third parties) on behalf of more than one contract owner at the
same time.
Nationwide will not restrict exchange rights unless Nationwide believes it to be
necessary for the protection of all contract owners.
RIGHT TO REVOKE
Contract owners have a ten day "free look" to examine the contract. The contract
may be returned to Nationwide's home office for any reason within ten days of
receipt and Nationwide will refund the contract value or another amount required
by law. The refunded contract value will reflect the deduction of any contract
charges, unless otherwise required by law. All IRA and Roth IRA refunds will be
a return of purchase payments. State and/or federal law may provide additional
free look privileges.
Liability of the variable account under this provision is limited to the
contract value in each sub-account on the date of revocation. Any additional
amounts refunded to the contract owner will be paid by Nationwide.
WITHDRAWAL (REDEMPTION)
Withdrawal requests must be in writing or in a form otherwise acceptable to
Nationwide. Nationwide reserves the right to require that the signature(s) be
guaranteed by a member firm of a major stock exchange or other depository
institution qualified to give such a guarantee.
Nationwide will pay any amounts withdrawn to the contract owner within seven
days of receipt of a proper request and instructions satisfactory to Nationwide.
WITHDRAWALS ON OR BEFORE THE INCOME START DATE
A contract owner may take a partial or full withdrawal on or before the income
start date if the contract owner elected either the Term Certain or the Term
Certain with Enhanced Death Benefit income option at the time of application. If
the contract owner did not elect one of the two income options listed above, the
contract owner may not withdraw value from the contract after the free-look
period and before the income start date.
The contract value on the date of withdrawal will reflect the investment
performance of the sub-accounts chosen by the contract owner. A CDSC may apply.
WITHDRAWALS AFTER THE INCOME START DATE
A contract owner may take a partial or full withdrawal after the income start
date if the contract owner elected either the Term Certain
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or the Term Certain with Enhanced Death Benefit income option at the time of
application. If the contract owner did not elect one of the two income options
listed above, the contract owner may not withdraw value from the contract after
the income start date.
Any withdrawal after the income start date will be based on the commutation
value and will reflect the investment performance of the sub-accounts chosen by
the contract owner. A CDSC may apply.
Commutation Value of Variable Annuity Payments
The commutation value of variable annuity payments is equal to the present value
of the variable annuity payments remaining in the term certain period calculated
using the assumed investment return for the contract and the annuity income unit
values determined at the next unit value calculation after Nationwide receives
the withdrawal request.
The calculation of the commutation value of variable annuity payments takes into
account annual benefit leveling by including the present value of the leveled
variable annuity payments scheduled to be paid after the date Nationwide
receives the withdrawal request, but before the next income start date
anniversary. This present value will be calculated using the annual benefit
leveling interest rate that was assumed when the leveled payment amount was
calculated.
Commutation Value of Fixed Annuity Payments
Withdrawals after the income start date may also be taken from the commutation
value of fixed annuity payments. Please see Appendix B.
PARTIAL WITHDRAWALS (PARTIAL REDEMPTIONS)
If the income option elected provides for partial withdrawals, and the contract
owner so elects, Nationwide will withdraw annuity income units from the
sub-accounts. The contract owner must specify the percentage of the withdrawal
to be taken from fixed annuity payments and/or variable annuity payments.
A partial withdrawal will result in the reduction of the remaining term certain
period payments. If the contract owner elects a partial withdrawal of fixed
annuity payments, Nationwide will reduce the remaining payments by the ratio of
the withdrawal amount requested from fixed annuity payments, before any CDSC
deduction, to the total commutation value available from fixed annuity payments.
If the contract owner elects a partial withdrawal of variable annuity payments,
Nationwide will reduce the number of annuity income units provided by each
sub-account on a pro-rata basis, unless the contract owner specifies otherwise.
The minimum partial withdrawal amount is $2,000 and after the partial
withdrawal, each remaining annuity payment must equal $100 or more. A CDSC may
apply.
The contract owner may take the CDSC from either:
a) the amount requested; or
b) the commutation value remaining after the contract owner has received the
requested amount.
If the contract owner does not make a specific election, any applicable CDSC
will be taken from the commutation value remaining after the contract owner has
received the requested amount.
FULL WITHDRAWALS (FULL REDEMPTIONS)
The commutation value upon full withdrawal may be more or less than the purchase
payment made to the contract. The commutation value will reflect variable
account charges, investment option charges, the investment performance of the
investment options, prior redemptions and annuity payments. A CDSC may apply.
RESTRICTIONS ON WITHDRAWALS FROM A TAX SHELTERED ANNUITY
The withdrawal of interest in the contract attributable to contributions made
pursuant to a salary reduction agreement (within the meaning of Internal Revenue
Code Section 402(g)(3)(C)), or transfers from a custodial
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account as described in Internal Revenue Code Section 403(b)(7), may be executed
only if otherwise permitted by the contract and:
(1) when the contract owner attains age 59 1/2, separates from service, dies,
or becomes disabled (within the meaning of Internal Revenue Code Section
72(m)(7)); or
(2) in the case of hardship (as defined for purposes of Internal Revenue Code
Section 401(k)), provided that any withdrawal in the case of hardship may
not include any income attributable to salary reduction contributions.
These withdrawal limitations apply to the withdrawal of interest in the contract
attributable to the following:
(1) salary reduction contributions to Tax Sheltered Annuities made for plan
years beginning after December 31, 1988;
(2) earnings credited to such contracts after the last plan year beginning
before January 1, 1989, on amounts attributable to salary reduction
contributions; and
(3) all amounts transferred from custodial accounts described in Internal
Revenue Code Section 403(b)(7) (except that employer contributions and
earnings in such accounts as of December 31, 1988, may be withdrawn in
the case of hardship).
These provisions explain Nationwide's understanding of current withdrawal
restrictions. These restrictions may change.
Distributions pursuant to Qualified Domestic Relations Orders will not violate
the restrictions stated above, but may be subject to restrictions found in the
employer's plan or the Internal Revenue Code.
ASSIGNMENT
Contract rights are personal to the contract owner and may not be assigned.
ANNUITY PAYMENTS
INCOME START DATE
The income start date is the date chosen by the contract owner as the date for
annuity payments to begin. The income start date must be no earlier than the day
after the end of the free look period and no later than 60 days after the date
of issue. In connection with the income start date, the contract owner also
elects the frequency of annuity payment dates.
FIXED ANNUITY PAYMENTS
Fixed annuity payments provide for level annuity payments. The fixed annuity
payments will remain level unless the income option calls for a reduction in the
annuity income upon withdrawal or death of the annuitant (or joint annuitant).
See Appendix B.
VARIABLE ANNUITY PAYMENTS
Variable annuity payments will vary depending on the performance of the
investment options selected.
First Variable Annuity Payment
The following factors determine the amount of the first variable annuity
payment:
- the portion of the single purchase payment allocated to provide variable
annuity payments;
- the variable account value on the income start date;
- the age and sex of the annuitant (and joint annuitant, if any);
- the income option elected;
- the frequency of annuity payments;
- the income start date;
- the selected assumed investment return (the net investment return required
to maintain level variable annuity payments);
- the deduction of applicable premium taxes; and
- the date the contract was issued.
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Subsequent Variable Annuity Payments
Variable annuity payments after the first will vary with the performance of
the investment options chosen by the contract owner after the investment
performance is adjusted by the assumed investment return factor.
The dollar amount of each subsequent variable annuity payment is determined
as follows:
The portion of the first annuity payment funded by a particular sub-account
is divided by the annuity income unit value for that sub-account as of the
income start date. This establishes the number of annuity income units
provided by each sub-account for each variable annuity payment after the
first.
The number of annuity income units for each sub-account will remain constant,
subject to the following exceptions:
1) if a reduction applies after the first death when the contract owner
elected a joint and survivor income option;
2) if the contract owner takes a withdrawal, as permitted under the income
option elected; or
3) if the contract owner transfers value from one investment option to
another.
The number of annuity income units for each sub-account is multiplied by the
annuity income unit value for that sub-account for the valuation day for which
the payment is due. The sum of these results for all the sub-accounts in which
the contract owner invests establishes the dollar amount of the variable annuity
payment.
Subsequent variable annuity payments may be more or less than the previous
variable annuity payment, depending on whether the net investment performance of
the elected investment options is greater or lesser than the assumed investment
return.
Assumed Investment Return
An assumed investment return is the net investment return required to maintain
level variable annuity payments. The contract owner elects one of three
available assumed investment return percentages: 3.5%, 5.0%, or 6.0%. One or
more of the above assumed investment return percentages may not be available in
all states. Please refer to your contract for specific information.
Nationwide uses this percentage rate of return to determine the amount of the
first variable annuity payment.
Value of an Annuity Income Unit
Annuity income unit values for sub-accounts are determined by:
1) multiplying the annuity income unit value for each sub-account for the
immediately preceding valuation day by the net investment factor for the
sub-account for the subsequent valuation day; and then
2) multiplying the result from (1) by the assumed investment return factor
adjusted for the number of days in the valuation period. The assumed
investment return factor corresponds with the assumed investment return
chosen by the contract owner.
The net investment factor is determined by dividing (a) by (b), and then
subtracting (c) from the result, where:
(a) is:
(1) the net asset value of the investment option as of the end of the
current valuation period; and
(2) the per share amount of any dividend or income distributions made
by the investment option (if the ex-dividend date occurs during
the current valuation period).
(b) is the net asset value of the investment option determined as of the end of
the preceding valuation period.
(c) is a factor representing the daily variable account charges, which may
include charges for contract options chosen by the contract owner. The
factor is equal to an annual rate of 1.20%
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(1.40% if an income option with an Enhanced Death Benefit has been chosen)
of the daily net assets of the variable account.
Based on the net investment factor, adjusted by the assumed investment return
factor for the number of days in the valuation period, the value of an annuity
income unit may increase or decrease. Changes in the net investment factor may
not be directly proportional to changes in the net asset value of the investment
option shares because of the deduction of variable account charges.
Though the number of annuity income units will not change as a result of
investment experience, the value of an annuity income unit may increase or
decrease from valuation day to valuation day.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Payments are made based on the income option and frequency selected. Payment
frequencies available are: monthly, quarterly, semi-annually, or annually. In no
event will Nationwide make payments less frequently than annually.
Nationwide reserves the right to change the frequency of payments if the amount
of any payment becomes less than $100. The payment frequency will be changed to
an interval that will result in payments of at least $100.
ANNUAL BENEFIT LEVELING
If the contract owner elects Annual Benefit Leveling, variable annuity payments
will be adjusted to reflect the performance of the investment options once every
12 months, instead of with every payment.
On the income start date (or the income start date anniversary on which Annual
Benefit Leveling begins), the number of annuity income units necessary to make
the payments for the following year will be calculated. These annuity income
units will be redeemed from the sub-accounts and transferred to Nationwide's
general account. The Annual Benefit Leveling interest rate for that quarter will
be used to calculate the guaranteed amount of level payments for the following
year.
The level payment calculated on each subsequent income start date anniversary
could be higher or lower than the level payment for the previous year.
An election to start or discontinue Annual Benefit Leveling will take effect
only on the income start date or anniversary thereof. In order for such an
election to take effect on the next income start date anniversary, Nationwide
must receive the election at least 5 days prior to the income start date
anniversary. If a contract owner elects Annual Benefit Leveling, the process of
calculating leveled variable annuity payments will take place on each subsequent
income start date anniversary until the contract owner instructs Nationwide
otherwise.
Nationwide reserves the right to discontinue Annual Benefit Leveling. If
Nationwide does discontinue this program, any contract owner receiving leveled
variable annuity payments will continue to do so until the next income start
date anniversary.
INCOME OPTIONS
Contract owners must elect an income option. This election is made at the time
of application and is irrevocable.
The income options available are:
- Single Life;
- Life with Term Certain;
- Single Life with Cash Refund;
- Joint and Last Survivor;
- Joint and 100% Last Survivor with Term Certain;
- Joint and 100% Last Survivor with Cash Refund;
- Joint and 50% Survivor;
- Term Certain; and
- Term Certain with Enhanced Death Benefit.
Each of the income options is discussed more thoroughly below.
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SINGLE LIFE
The Single Life income option provides for annuity payments to be paid during
the lifetime of the annuitant.
Payments will cease with the last payment before the annuitant's death. No death
benefit will be paid.
No withdrawals other than the scheduled annuity payments are permitted.
LIFE WITH TERM CERTAIN
The Life with Term Certain income option provides that annuity payments will be
made during the annuitant's lifetime or for the term certain selected by the
contract owner on the application, whichever is longer. The term certain
selected must be (a whole number of years) between ten and twenty, inclusive.
If the annuitant dies during this term certain period, the beneficiary will have
the option to continue payments for the remainder of the term certain period or
to receive the commutation value of the remaining payments in a single lump sum
payment.
No withdrawals other than the death benefit and the scheduled annuity payments
are permitted.
SINGLE LIFE WITH CASH REFUND
The Single Life with Cash Refund income option provides that annuity payments
will be made during the lifetime of the annuitant.
If the annuitant dies before receiving aggregate annuity payments at least equal
to the single purchase payment, less any premium tax, the difference between the
aggregate annuity payments and the single purchase payment, less any premium
tax, will be paid to the beneficiary in a single lump sum.
No withdrawals other than the death benefit or scheduled annuity payments are
permitted.
JOINT AND LAST SURVIVOR
The Joint and Last Survivor income option provides for annuity payments to
continue during the joint lifetimes of the annuitant and joint annuitant. After
the death of either the annuitant or joint annuitant, payments will continue for
the life of the survivor. Payments to the survivor will be 50%, 75%, or 100% of
the amount that would have been paid if both annuitants were living, depending
on which continuation percentage was selected by the contract owner on the
application.
Payments will cease with the last payment due prior to the death of the last
survivor of the annuitant and joint annuitant. No death benefit will be paid.
No withdrawals other than the scheduled annuity payments are permitted.
JOINT AND 100% LAST SURVIVOR WITH TERM CERTAIN
The Joint and 100% Last Survivor with Term Certain income option provides for
annuity payments to be made during the joint lifetimes of the annuitant and
joint annuitant. After the death of either the annuitant or joint annuitant,
payments will continue at the same level for the life of the survivor.
If the annuitant and joint annuitant die during the term certain period, the
beneficiary will have the option to continue payments for the remainder of the
period or to receive the commutation value of the remaining payments in a single
lump sum payment.
The contract owner may select a term certain of 10, 15, or 20 years at the time
of application.
No withdrawals other than the death benefit and the scheduled annuity payments
are permitted.
JOINT AND 100% LAST SURVIVOR WITH CASH REFUND
The Joint and 100% Last Survivor with Cash Refund income option provides for
annuity payments to be made during the joint lifetimes of the annuitant and
joint annuitant.
After the death of either the annuitant or joint annuitant, payments will
continue at the same level for the life of the survivor.
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If the survivor dies after the income start date, but before aggregate annuity
payments have been made that are at least equal to the single purchase payment,
less any premium tax, the difference between the aggregate annuity payments and
the single purchase payment, less any premium tax, will be paid to the
beneficiary in a single lump sum.
No withdrawals other than the death benefit and scheduled annuity payments are
permitted.
JOINT AND 50% SURVIVOR
The Joint and 50% Survivor income option provides for annuity payments to be
made during the joint lifetimes of the annuitant and joint annuitant.
After the death of the annuitant, payments of 50% of the amount that would have
been paid if the annuitant were living will be made for the life of the joint
annuitant. If the joint annuitant dies before the annuitant, the 50% reduction
does not apply.
Payments will cease with the last payment due before the death of the last
survivor of the annuitant and joint annuitant. No death benefit will be paid.
No withdrawals other than the scheduled annuity payments are permitted.
TERM CERTAIN
The Term Certain income option provides for annuity payments to be made for the
term certain selected by the contract owner on the application, between 10 and
20 years, inclusive.
The contract owner may elect at any time prior to the annuitant's death to
withdraw all or part of the value of the contract as set forth in the
"Withdrawals (Redemptions)" provision. Withdrawals may be subject to a CDSC.
If the annuitant dies during the term certain period, the beneficiary will have
the option to continue payments for the remainder of the period or to receive
the commutation value of the remaining payments in a single lump sum payment.
TERM CERTAIN WITH ENHANCED DEATH BENEFIT
The Term Certain with Enhanced Death Benefit income option provides for annuity
payments to be made for the term certain selected by the contract owner on the
application, between 10 and 20 years, inclusive.
The contract owner may elect at any time prior to the Annuitant's death to
withdraw all or part of the value of the contract. Withdrawals may be subject to
a CDSC.
If the annuitant dies during the term certain period, the beneficiary will have
the option to continue payments for the remainder of the period or to receive
the commutation value of the remaining payments in a single lump sum payment.
Because of the enhanced death benefit associated with this income option,
Nationwide will assess an additional charge of 0.20% to the variable account
charges of 1.20% of the daily net assets of the variable account.
Lump Sum Death Benefit Option
If the beneficiary elects to receive the death benefit in one lump sum, the
amount will be calculated as described in Appendix B for fixed annuity payments
remaining in the term certain period after Nationwide receives proper proof of
death and complete instructions, plus the greater of (1) or (2) where:
1) is the commutation value of variable annuity payments remaining in the
term certain period after Nationwide receives proper proof of death and
complete instructions; and
2) is the commutation value of variable annuity payments remaining in the
term certain period after Nationwide receives proper proof of death and
complete instructions, calculated as if each remaining payment would be
equal to the highest variable annuity payment the annuitant received
under the contract prior to the earlier of the annuitant's attainment
of age 80 or the date of the annuitant's death. This
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commutation value will be calculated using the assumed investment
return elected for the contract, and will be appropriately adjusted for
any partial withdrawals that have been taken.
If Annual Benefit Leveling is in effect, the lump sum death benefit will be made
up of two components: 1) the commutation values described above (which do not
include amounts allocated to Annual Benefit Leveling); and 2) the present value
of the leveled variable annuity payments scheduled to be paid after Nationwide
receives complete instructions, but before the next income start date
anniversary. The present value of these payments will be calculated using the
Annual Benefit Leveling interest rate that was assumed when the leveled payment
amount was determined.
Continuation of Payments Death Benefit Option
If the beneficiary elects to receive the annuity payments remaining in the term
certain period, Nationwide will proportionately adjust the number of annuity
income units associated with each remaining variable annuity payment to reflect
the greater of (1) or (2) as described in the "Lump Sum Death Benefit Option"
provision. All remaining variable annuity payments will be paid on the basis of
this adjusted number of units. Remaining fixed annuity payments will be paid
without enhancement or adjustment.
If Annual Benefit Leveling is in effect, the amount of the leveled variable
annuity payments scheduled to be made after Nationwide receives complete
instructions, but before the next income start date anniversary, will not be
changed.
ANY OTHER OPTION
Income options not set forth in this provision may be available. Any income
option not set forth in this provision must be approved by both Nationwide and
the contract owner.
DEATH BEFORE THE INCOME START DATE
DEATH OF CONTRACT OWNER
If a contract owner, who is not the annuitant, dies before the income start
date, ownership rights will vest in the surviving joint owner, if any. If there
is no surviving joint owner, ownership rights will vest in the annuitant.
Subject to the "Required Distributions" provisions, the annuitant will be
entitled to receive scheduled annuity payments.
If the contract owner, who is also the annuitant, dies before the income start
date, the terms of the "Death of Annuitant" provision apply.
DEATH OF ANNUITANT
If the annuitant dies before the income start date, the contract will terminate
and Nationwide will pay the contract value to the surviving joint owner. If
there is no surviving joint owner, the beneficiary will be entitled to elect a
lump sum distribution or to receive annuity benefits in accordance with the
"Required Distributions" provisions.
DEATH AFTER THE INCOME START DATE
DEATH OF CONTRACT OWNER
If any contract owner dies after the income start date, annuity payments will
continue under the elected income option and ownership rights will vest in any
surviving joint owner. If there is no surviving joint owner, ownership rights
will vest in the annuitant.
DEATH OF ANNUITANT
If the annuitant dies after the income start date, the terms of the income
option elected by the contract owner will apply.
Once Nationwide is notified of the annuitant's (and joint annuitant's, if
applicable) death, any remaining term certain fixed or variable annuity payments
will be suspended until Nationwide has received proper proof of death and
complete instructions to either continue payments or pay the death benefit in a
single lump sum. In addition, the commutation value of any
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remaining term certain variable annuity payments will be transferred to the
money market investment option no later than the valuation day following receipt
by Nationwide of notification of death.
Once Nationwide receives proper proof of death and complete instructions,
Nationwide will make any payments that were suspended. No withdrawals will be
allowed until Nationwide has received proper proof of death and complete
instructions to either continue payments or pay the death benefit in a single
lump sum. The amount of each suspended variable annuity payment will be
determined using the annuity income unit values for the money market investment
option on the date the variable annuity payment was originally scheduled to be
made. No interest will be paid on any payments that were suspended. Once any
remaining term certain fixed or variable annuity payments have resumed, the
beneficiary shall have the right to make any transfers to other investment
options allowed by the contract.
Instructions regarding payment of any death benefit provided by the income
option selected must be in writing or in a form otherwise acceptable to
Nationwide. Nationwide reserves the right to require that the signature(s) be
guaranteed by a member firm of a major stock exchange or other depository
institution qualified to give such a guarantee.
If a lump sum death benefit is available and has been elected, it will be paid
to the beneficiary within seven days of receipt of proper proof of death and
instructions satisfactory to Nationwide.
REQUIRED DISTRIBUTIONS
REQUIRED DISTRIBUTIONS FOR NON-QUALIFIED CONTRACTS
Internal Revenue Code Section 72(s) requires Nationwide to make certain
distributions when a contract owner dies. The following distributions will be
made according to those requirements:
1) If any contract owner dies on or after the income start date and before
the entire interest in the contract has been distributed, then the
remaining interest must be distributed at least as rapidly as the
distribution method in effect on the contract owner's death.
2) If any contract owner dies before the income start date, then the entire
interest in the contract (consisting of either the death benefit or the
contract value reduced by charges set forth elsewhere in the contract)
will be distributed within 5 years of the contract owner's death,
provided however:
a) any interest payable to or for the benefit of a natural person
(referred to herein as a "designated beneficiary"), may be
distributed over the life of the designated beneficiary or over a
period not longer than the life expectancy of the designated
beneficiary. Payments must begin within one year of the contract
owner's death unless otherwise permitted by federal income tax
regulations; and
b) if the designated beneficiary is the surviving spouse of the deceased
contract owner, the spouse can choose to become the contract owner
instead of receiving a death benefit. Any distributions required
under these distribution rules will be made upon that spouse's death.
In the event that the contract owner is NOT a natural person (e.g., a trust or
corporation), then, for purposes of these distribution provisions:
a) the death of the annuitant will be treated as the death of a contract
owner;
b) any change of annuitant will be treated as the death of a contract
owner; and
c) in either case, the appropriate distribution will be made upon the death
or change, as the case may be.
These distribution provisions do not apply to any contract exempt from Section
72(s) of the
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Internal Revenue Code by reason of Section 72(s)(5) or any other law or rule.
The designated beneficiary must elect a method of distribution and notify
Nationwide of this election within 60 days of the contract owner's death.
REQUIRED DISTRIBUTIONS FOR TAX SHELTERED ANNUITIES
Distributions from Tax Sheltered Annuities will be made according to the Minimum
Distribution and Incidental Benefit ("MDIB") provisions of Section 401(a)(9) of
the Internal Revenue Code. Distributions will be made to the annuitant according
to the selected annuity payment option over a period not longer than:
a) the life of the annuitant or the joint lives of the annuitant and the
annuitant's designated beneficiary; or
b) a period not longer than the life expectancy of the annuitant or the
joint life expectancies of the annuitant and the annuitant's
designated beneficiary.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another Tax Sheltered Annuity of the annuitant.
If the annuitant's entire interest in a Tax Sheltered Annuity will be
distributed in equal or substantially equal payments over a period described in
a) or b), the payments will begin on the required beginning date. The required
beginning date is the later of:
a) April 1 of the calendar year following the calendar year in which the
annuitant reaches age 70 1/2; or
b) the annuitant's retirement date.
Provision b) does not apply to any employee who is a 5% owner (as defined in
Section 416 of the Internal Revenue Code) with respect to the plan year ending
in the calendar year when the employee attains the age of 70 1/2.
Distribution commencing on the required distribution date must satisfy MDIB
provisions set forth in the Internal Revenue Code. Those provisions require that
distributions cannot be less than the amount determined by dividing the
annuitant's interest in the Tax Sheltered Annuity determined by the end of the
previous calendar year by (a) the annuitant's life expectancy; or, if
applicable, (b) the joint and survivor life expectancy of the annuitant and the
annuitant's beneficiary. The life expectancies and joint life expectancies are
determined by reference to Treasury Regulation 1.72-9.
If the annuitant dies before distributions begin, the interest in the Tax
Sheltered Annuity must be distributed by December 31 of the calendar year in
which the fifth anniversary of the annuitant's death occurs unless:
a) the annuitant names his or her surviving spouse as the beneficiary and
the spouse chooses to receive distribution of the contract in
substantially equal payments over his or her life (or a period not
longer than his or her life expectancy) and beginning no later than
December 31 of the year in which the annuitant would have attained age
70 1/2; or
b) the annuitant names a beneficiary other than his or her surviving
spouse and the beneficiary elects to receive distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year in which the annuitant
dies.
If the annuitant dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule used before the annuitant's
death.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
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REQUIRED DISTRIBUTIONS FOR IRAS AND SEP IRAS
Distributions from an IRA or SEP IRA must begin no later than April 1 of the
calendar year following the calendar year in which the contract owner reaches
age 70 1/2. Distribution may be paid in a lump sum or in substantially equal
payments over:
a) the contract owner's life or the lives of the contract owner and his
or her spouse or designated beneficiary; or
b) a period not longer than the life expectancy of the contract owner or
the joint life expectancy of the contract owner and the contract
owner's designated beneficiary.
If the contract owner dies before distributions begin, the interest in the IRA
or SEP IRA must be distributed by December 31 of the calendar year in which the
fifth anniversary of the contract owner's death occurs, unless:
a) the contract owner names his or her surviving spouse as the
beneficiary and such spouse chooses to:
1) treat the contract as an IRA or SEP IRA established for his or
her benefit; or
2) receive distribution of the contract in substantially equal
payments over his or her life (or a period not longer than his or
her life expectancy) and beginning no later than December 31 of
the year in which the contract owner would have reached age 70
1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and such beneficiary elects to receive a distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year of the contract
owner's death.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another IRA or SEP IRA of the contract owner.
If the contract owner dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule being used before the
contract owner's death. However, a surviving spouse who is the beneficiary under
the annuity payment option may treat the contract as his or her own, in the same
manner as is described in section (a)(i) of this provision.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
A portion of each distribution will be included in the recipient's gross income
and taxed at ordinary income tax rates. The portion of a distribution which is
taxable is based on the ratio between the amount by which non-deductible
purchase payments exceed prior non-taxable distributions and total account
balances at the time of the distribution. The owner of an IRA or SEP IRA must
annually report the amount of non-deductible purchase payments, the amount of
any distribution, the amount by which non-deductible purchase payments for all
years exceed non-taxable distributions for all years, and the total balance of
all IRAs.
If the contract owner dies before the entire interest in the contract has been
distributed, the balance will also be included in his or her gross estate.
REQUIRED DISTRIBUTIONS FOR ROTH IRAS
The rules for Roth IRAs do not require distributions to begin during the
contract owner's lifetime.
When the contract owner dies, the entire interest in the Roth IRA must be
distributed by December 31 of the calendar year in which the fifth anniversary
of his or her death occurs, unless:
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a) the contract owner names his or her surviving spouse as the
beneficiary and the spouse chooses to:
1) treat the contract as a Roth IRA established for his or her
benefit; or
2) receive distribution of the contract in substantially equal
payments over his or her life (or a period not longer than his or
her life expectancy) and beginning no later than December 31 of
the year following the year in which the contract owner would
have reached age 70 1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and the beneficiary chooses to receive distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year in which the contract
owner dies.
Distributions from Roth IRAs may be either taxable or nontaxable, depending upon
whether they are "qualified distributions" or "non-qualified distributions" (see
"Federal Tax Considerations").
FEDERAL TAX CONSIDERATIONS
FEDERAL INCOME TAXES
Contract owners should consult a financial consultant, legal counsel or tax
advisor to discuss in detail the taxation and the use of the contracts.
Nationwide does not guarantee the tax status of the contracts or any
transactions involving the contracts.
Section 72 of the Internal Revenue Code governs federal income taxation of
annuities in general. That section sets forth different rules for: (1) IRAs,
including SEP IRAs; (2) Roth IRAs; (3) Tax Sheltered Annuities; and (4)
Non-Qualified Contracts. Each type of annuity is discussed below.
IRAs and SEP IRAs
Distributions from IRAs and SEP IRAs and contracts owned by Individual
Retirement Accounts are generally taxed when received. The excludable portion of
each payment is based on the ratio between the amount by which non-deductible
purchase payments to all the contracts exceeds prior non-taxable distributions
from the contracts, and the total account balances in the contracts at the time
of the distribution. The owner of the IRA or SEP IRA or the annuitant under
contracts held by Individual Retirement Accounts must annually report to the
Internal Revenue Service:
- the amount of nondeductible purchase payments;
- the amount of any distributions;
- the amount by which nondeductible purchase payments for all years exceed
non-taxable distributions for all years; and
- the total balance in all IRAs.
Roth IRAs
Distributions of earnings from Roth IRAs are taxable or non-taxable, depending
upon whether they are "qualified distributions" or "non-qualified
distributions." A "qualified distribution" is one that satisfies the five-year
rule and meets one of the following requirements:
(i) it is made on or after the date on which the contract owner attains age
59 1/2;
(ii) it is made to a beneficiary (or the contract owner's estate) on or
after the death of the contract owner;
(iii) it is attributable to the contract owner's disability; or
(iv) it is a qualified first-time homebuyer distribution (as defined in
Section 72(t)(2)(F) of the Internal Revenue Code).
The five year rule is satisfied if the distribution is not made within the five
taxable year period commencing with the taxable year in which the
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first contribution to a Roth IRA (including a conversion from a traditional IRA)
is made.
A non-qualified distribution is any distribution that is not a qualified
distribution.
A qualified distribution is not included in gross income for federal income tax
purposes. A non-qualified distribution is not includible in gross income to the
extent that the distribution, when added to all previous distributions, does not
exceed that total amount of contributions made to the Roth IRA. Any
non-qualified distribution in excess of the aggregate amount of contributions
will be included in the contract owner's gross income in the year that is
distributed to the contract owner.
If the contract owner dies before the contract is completely distributed, the
balance will also be included in the contract owner's gross estate for tax
purposes.
Tax Sheltered Annuities
Distributions from Tax Sheltered Annuities are generally taxed when received. A
portion of each distribution is excludable from income based on a formula
required by the Internal Revenue Code. The formula excludes from income the
amount invested in the contract divided by the number of anticipated payments
(as determined pursuant to Section 72(d) of the Internal Revenue Code) until the
full investment in the contract is recovered. Thereafter all distributions are
fully taxable.
Non-Qualified Contracts - Natural Persons as Contract Owners
The rules applicable to Non-Qualified Contracts provide that a portion of each
annuity payment is excludable from taxable income based on the ratio between the
contract owner's investment in the contract and the expected return on the
contract until the investment has been recovered. Thereafter the entire amount
is includible in income. The maximum amount excludable from income is the
investment in the contract. If the annuitant dies before the entire investment
in the contract has been excluded from income, and no additional payments are
due after his or her death, then he or she may be entitled to a deduction for
the balance of the unrecovered investment in the contract on his or her final
income tax return.
Non-annuity distributions that are made after the income start date are
generally required to be included in income. However, this general rule does not
apply to a distribution arising from a complete withdrawal, redemption, or
maturity of a contract. The Internal Revenue Code, Treasury Regulations, and
other informational releases by the IRS contain complex rules regarding the
taxation of non-annuity distributions, which the contract owner should review
with his or her tax advisors prior to requesting such a distribution.
Distributions before the income start date are taxable to the contract owner to
the extent that the cash value of the contract exceeds the contract owner's
investment at the time of the distribution. Distributions, for this purpose,
include partial withdrawals or dividends, or for contracts issued after April
22, 1987, any portion of the contract transferred by gift. For these purposes, a
transfer by gift may occur if the contract owner and the annuitant are not the
same individual.
A change of the annuitant or contingent annuitant may be treated as a taxable
distribution by the IRS.
In determining the taxable amount of a distribution, all annuity contracts
issued after October 21, 1988 by the same company to the same contract owner
during any 12-month period will be treated as one annuity contract. Additional
limitations on the use of multiple contracts may be imposed by Treasury
Regulations.
Internal Revenue Code Section 72 assesses a penalty tax if a distribution is
made before the contract owner reaches age 59 1/2. The amount of the penalty is
10% of the portion of any distribution that is includible in gross income. The
penalty tax does not apply if the distribution:
1) is the result of a contract owner's death;
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2) is the result of a contract owner's disability;
3) is one of a series of substantially equal periodic payments made over
the life or life expectancy of the contract owner (or the joint lives
or joint life expectancies of the contract owner and the beneficiary
selected by the contract owner to receive payment under the annuity
payment option selected by the contract owner);
4) is for the purchase of an immediate annuity; and
5) is allocable to an investment in the contract before August 14, 1982.
A contract owner that wants to begin taking distributions to which the 10% tax
penalty does not apply should forward a written request to Nationwide. Upon
receipt of this written request, Nationwide will inform the contract owner of
Nationwide's policies and procedures, as well as contract limitations. An
election to begin taking these withdrawals will be irrevocable and may not be
amended or changed.
In order to qualify as an annuity contract under Section 72 of the Internal
Revenue Code, the contract must provide for distribution of the entire contract
upon a contract owner's death. These rules are described in "Required
Distributions for Non-Qualified Contracts."
The Internal Revenue Code requires that any election to receive an annuity
instead of a lump sum payment be made within 60 days after the lump sum becomes
payable (generally, within 60 days of the death of a contract owner or the
annuitant). As long as the election is made within the 60 day period, each
distribution will be taxable when it is paid. Upon the end of this 60 day
period, if no election has been made, the entire amount of the lump sum will be
subject to immediate tax, even if the payee decides at a later date to take the
distribution as an annuity.
Non-Qualified Contracts - Non-Natural Persons as Contract Owners
The previous discussion related to the taxation of Non-Qualified Contracts owned
(or, pursuant to Section 72(u) of the Internal Revenue Code, deemed to be owned)
by individuals. Different rules apply if the contract owner is not a natural
person.
Generally, contracts owned by corporations, partnerships, trusts, and similar
entities ("non-natural persons") are not treated as annuity contracts under the
Internal Revenue Code. Specifically, they are not treated as annuity contracts
for purposes of Section 72. Therefore, income earned under a Non-Qualified
Contract that is owned by a non-natural person is taxed as ordinary income
during the taxable year that it is earned. Taxation is not deferred, even if the
income is not distributed out of the contract to the contract owner.
This non-natural person rule does not apply to all entity-owned contracts. A
contract that is owned by a non-natural person as an agent for an individual is
treated as owned by the individual. This would put the contract back under
Section 72, allowing tax deferral. However, this exception does not apply when
the non-natural person is an employer that holds the contract under a
non-qualified deferred compensation arrangement for one or more employees.
The non-natural person rule also does not apply to a contract that is:
a) acquired by the estate of a decedent by reason of the death of the
decedent;
b) issued in connection with certain qualified retirement plans and
individual retirement plans;
c) used in connection with certain structured settlements;
d) purchased by an employer upon the termination of certain qualified
retirement plans; or
e) an immediate annuity.
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IRAS, SEP IRAS, AND TAX SHELTERED ANNUITIES
Contract owners looking for information on eligibility, limitations on
permissible amounts of purchase payments, and the tax consequences of
distributions from IRAs, SEP IRAs, and Tax Sheltered Annuities should contact a
qualified adviser. The terms of each plan may limit the rights available under
the contracts.
Section 403(b)(1)(E) of the Internal Revenue Code requires a contract issued as
a Tax Sheltered Annuity to limit purchase payments for any year to an amount
that does not exceed the limit set forth in Section 402(g) of the Internal
Revenue Code. This limit is increased from time to time to reflect increases in
the cost of living. This limit may be reduced by deposits, contributions or
payments made to another Tax Sheltered Annuity or other plan, contract or
arrangement by or on behalf of the contract owner.
The Internal Revenue Code allows most distributions from Qualified Plans to be
rolled into IRAs or SEP IRAs. Most distributions from Tax Sheltered Annuities
may be rolled into another Tax Sheltered Annuity, IRA or SEP IRA. Distributions
that may NOT be rolled over are those that are:
a) one of a series of substantially equal annual (or more frequent)
payments made:
1) over the life (or life expectancy) of the contract owner;
2) over the joint lives (or joint life expectancies) of the contract
owner and the contract owner's designated beneficiary; or
3) for a specified period of ten years or more; or
b) a required minimum distribution.
Any distribution that is eligible for rollover will be subject to federal tax
withholding of 20% if the distribution is not rolled into an appropriate plan as
described above.
IRAs and SEP IRAs may not provide life insurance benefits. If the death benefit
exceeds the greater of the contract's cash value or the sum of all purchase
payments (less any withdrawals), the contract could be considered life
insurance. Consequently, the Internal Revenue Service could determine that the
IRA or SEP IRA does not qualify for the desired tax treatment.
ROTH IRAS
The contract may be purchased as a Roth IRA. For detailed information on
purchasing and holding this contract as a Roth IRA, the contract owner should
contact a financial adviser.
The Internal Revenue Code allows distributions (other than required minimum
distributions) from Individual Retirement Accounts and Individual Retirement
Annuities to be rolled into Roth IRAs. The rollovers are subject to federal
income tax as distributions from the Individual Retirement Account or Individual
Retirement Annuity.
For rollovers from Individual Retirement Accounts or Individual Retirement
Annuities, all of the income from the rollover will be required to be included
in income in the year of the rollover distribution from the Individual
Retirement Account or Individual Retirement Annuity.
A distribution from a Roth IRA that contains the proceeds of a rollover from an
Individual Retirement Account or Individual Retirement Annuity within the
preceding five years could be subject to a 10% penalty, even if the distribution
is not taxable. In addition, if the rollover from the Individual Retirement
Account or Individual Retirement Annuity was made in 1998, and the income from
that rollover was included in income ratably over a four year period, a
distribution from the Roth IRA within four years of the rollover may result in
the loss of the four year spread, subject to the amount deferred under the four
year election to be taxed immediately.
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WITHHOLDING
Pre-death distributions from the contracts are subject to federal income tax.
Nationwide will withhold the tax from the distributions unless the contract
owner requests otherwise. Contract owners may not waive withholding if the
distribution is subject to mandatory back-up withholding (if no mandatory
taxpayer identification number is given or if the Internal Revenue Service
notifies Nationwide that mandatory back-up withholding is required), or if it is
an eligible rollover distribution. Mandatory back-up withholding rates are 31%
of income that is distributed.
NON-RESIDENT ALIENS
Generally, a pre-death distribution from a contract to a non-resident alien is
subject to federal income tax at a rate of 30% of the amount of income that is
distributed. Nationwide is required to withhold this amount and send it to the
Internal Revenue Service. Some distributions to non-resident aliens may be
subject to a lower (or no) tax if a treaty applies. In order to obtain the
benefits of such a treaty, the non-resident alien must:
1) provide Nationwide with proof of residency and citizenship (in
accordance with Internal Revenue Service requirements); and
2) provide Nationwide with an individual taxpayer identification number.
If the non-resident alien does not meet the above conditions, Nationwide will
withhold 30% of income from the distribution.
Another way to avoid the 30% withholding is for the non-resident alien to
provide Nationwide with sufficient evidence that:
1) the distribution is connected to the non-resident alien's conduct of
business in the United States; and
2) the distribution is includible in the non-resident alien's gross
income for United States federal income tax purposes.
Note that these distributions may be subject to back-up withholding, currently
31%, if a correct taxpayer identification number is not provided.
FEDERAL ESTATE, GIFT, AND GENERATION SKIPPING TRANSFER TAXES
The following transfers may be considered a gift for federal gift tax purposes:
- a transfer of the contract from one contract owner to another; or
- a distribution to someone other than a contract owner.
Upon the contract owner's death, the value of the contract may subject to estate
taxes, even if all or a portion of the value is also subject to federal income
taxes.
Section 2612 of the Internal Revenue Code may require Nationwide to determine
whether a death benefit or other distribution is a "direct skip" and the amount
of the resulting generation skipping transfer tax, if any. A direct skip is when
property is transferred to, or a death benefit or other distribution is made to:
a) an individual who is two or more generations younger than the contract
owner; or
b) certain trusts, as described in Section 2613 of the Internal Revenue
Code (generally, trusts that have no beneficiaries who are not 2 or
more generations younger than the contract owner).
If the contract owner is not an individual, then for this purpose ONLY,
"contract owner" refers to any person:
- who would be required to include the contract, death benefit,
distribution, or other payment in his or her federal gross estate at
his or her death; or
- who is required to report the transfer of the contract, death benefit,
distribution, or other payment for federal gift tax purposes.
If a transfer is a direct skip, Nationwide will deduct the amount of the
transfer tax from the
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death benefit, distribution or other payment, and remit it directly to the
Internal Revenue Service.
PUERTO RICO
Under the Puerto Rico tax code, distributions from a Non-Qualified Contract
before annuitization are treated as nontaxable return of principal until the
principal is fully recovered. Thereafter all distributions are fully taxable.
Distributions after annuitization are treated as part taxable income and part
non-taxable return of principal. The amount excluded from gross income after
annuitization is equal to the amount of the distribution in excess of 3% of the
total purchase payments paid, until an amount equal to the total purchase
payments paid has been excluded. Thereafter, the entire distribution is included
in gross income. Puerto Rico does not impose an early withdrawal penalty tax.
Generally, Puerto Rico does not require income tax to be withheld from
distributions of income. A personal adviser should be consulted in these
situations.
CHARGE FOR TAX
Nationwide is not required to maintain a capital gain reserve liability on
Non-Qualified Contracts. If tax laws change requiring a reserve, Nationwide may
implement and adjust a tax charge.
DIVERSIFICATION
Internal Revenue Code Section 817(h) contains rules on diversification
requirements for variable annuity contracts. A variable annuity contract that
does not meet these diversification requirements will not be treated as an
annuity, unless
- the failure to diversify was accidental;
- the failure is corrected; and
- a fine is paid to the Internal Revenue Service.
The amount of the fine will be the amount of tax that would have been paid by
the contract owner if the income, for the period the contract was not
diversified, had been received by the contract owner.
If the violation is not corrected, the contract owner will be considered the
owner of the underlying securities and will be taxed on the earnings of his or
her contract. Nationwide believes that the investments underlying this contract
meet these diversification requirements.
TAX CHANGES
The foregoing tax information is based on Nationwide's understanding of federal
tax laws. It is NOT intended as tax advice. All information is subject to change
without notice. For more details, contact your personal tax and/or financial
advisor.
STATEMENTS AND REPORTS
Nationwide will mail contract owners statements and reports. Therefore, contract
owners should promptly notify Nationwide of any address change.
These mailings will contain:
- statements showing the contract's quarterly activity;
- confirmation statements showing transactions that affect the contract's
value. Confirmation statements will not be sent for recurring
transactions (i.e., salary reduction programs). Instead, confirmation of
recurring transactions will appear in the contract's quarterly
statements;
- annual and semi-annual reports containing all applicable information and
financial statements or their equivalent, which must be sent to the
underlying mutual fund beneficial shareholders as required by the rules
under the Investment Company Act of 1940 for the variable account.
Contract owners should review statements and confirmations carefully. All errors
or corrections must be reported to Nationwide immediately to assure proper
crediting to the contract. Unless Nationwide is notified within 30 days of
receipt of the statement, Nationwide
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will assume statements and confirmation statements are correct.
YEAR 2000 COMPLIANCE ISSUES
Nationwide has developed and implemented a plan to address issues related to the
Year 2000. The problem relates to many existing computer systems using only two
digits to identify a year in a date field. These systems were designed and
developed without considering the impact of the upcoming change in the century.
If not corrected, many computer systems could fail or create erroneous results
when processing information dated after December 31, 1999. Like many
organizations, Nationwide is required to renovate or replace many computer
systems so that the systems will function properly after December 31, 1999.
Nationwide has completed an inventory and assessment of all computer systems and
has implemented a plan to renovate or replace all applications that were
identified as not Year 2000 compliant. Nationwide has renovated all applications
that required renovation. Testing of the renovated programs included running
each application in a Year 2000 environment and was completed as planned during
1998. For applications being replaced, Nationwide had all replacement systems in
place and functioning as planned by year-end 1998. The shareholder services
system that supports mutual fund products was fully deployed during the first
quarter 1999. Conversions of existing traditional life policies to the new
compliant system will continue through second quarter 1999.
Nationwide has completed an inventory and assessment of all vendor products and
has tested and certified that each vendor product is Year 2000 compliant. Any
vendor products that could not be certified as Year 2000 compliant were replaced
or eliminated in 1998.
Nationwide's facilities in Columbus, Ohio have been inventoried, assessed, and
tested as being Year 2000 compliant. Systems supporting Nationwide's
infrastructure such as telecommunications, voice and networks were renovated and
will be brought into compliance before the end of the second quarter 1999.
Nationwide has also addressed issues associated with the exchange of electronic
data with external organizations. Nationwide has completed an inventory and
assessment of all business partners utilizing electronic interfaces with
Nationwide and processes have been put in place to allow Nationwide to accept
data regardless of the format.
In addition to resolving internal Year 2000 readiness issues, Nationwide is
surveying significant external organizations (business partners) to assess if
they will be Year 2000 compliant and be in a position to do business in the Year
2000 and beyond. Specifically, Nationwide has contacted mutual fund
organizations that provide funds for Nationwide's variable annuity and life
products and wholesale producers to determine when they will be Year 2000
compliant. The results are currently being gathered and analyzed.
In addition to the contingency plans developed for electronic interfaces between
Nationwide and its business partners, contingency plans were also developed for
wholesale producers who may not become compliant before the end of 1999.
Additional contingency plans will be developed for mutual fund organizations
during the second quarter 1999. Nationwide has identified external risk
scenarios, prioritized those risks and is now in the process of developing
contingency plans to minimize the impact to Nationwide, customers and producers.
Contingency plan efforts are expected to be completed by the end of the third
quarter 1999.
Operating expenses in 1998 and 1997 include approximately $44.7 million and
$45.4 million, respectively, for technology projects, including costs related to
Year 2000. Nationwide anticipates spending less than $5 million on Year 2000
activities in 1999, and spent $2.4 million during first quarter 1999. These
expenses do not have an effect on the assets of the variable account and are not
charged through to the contract owner.
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Management does not anticipate that the completion of Year 2000 renovation and
replacement activities will result in a reduction in operating expenses. Rather,
personnel and resources currently allocated to Year 2000 issues will be assigned
to other technology-related projects.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance and
annuity pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
In November 1997, two plaintiffs, one who was the owner of a variable life
insurance policy and the other who was the owner of a variable annuity contract,
commenced a lawsuit in a federal court in Texas against Nationwide and the
American Century group of defendants (Robert Young and David D. Distad v.
Nationwide Life Insurance Company et al.). In this lawsuit, plaintiffs seek to
represent a class of variable life insurance policy owners and variable annuity
contract owners whom they claim were allegedly misled when purchasing these
variable contracts into believing that the performance of their underlying
mutual fund option managed by American Century, whose shares may only be
purchased by insurance companies, would track the performance of a mutual fund,
also managed by American Century, whose shares are publicly traded. The amended
complaint seeks unspecified compensatory and punitive damages. On April 27,
1998, the district court denied, in part, and granted, in part, Nationwide and
American Century's motions to dismiss the complaint. The remaining claims
against Nationwide allege securities fraud, common law fraud, civil conspiracy
and breach of contract. On December 2, 1998, the district court issued an order
denying plaintiffs' motion for class certification. On December 10, 1998, the
district court stayed the lawsuit pending plaintiffs' petition to the federal
appeals court for interlocutory review of the order denying class certification.
On March 26, 1999, the appeals court denied plaintiffs' petition for
interlocutory review of the order. On April 28, 1999, the court denied
plaintiffs' motion for reconsideration of the denial of interlocutory review.
Nationwide intends to defend the case vigorously.
On October 29, 1998, Nationwide and certain of its subsidiaries were named in a
lawsuit filed in Ohio state court related to the sale of deferred annuity
products for use as investments in tax-deferred contributory retirement plans
(Mercedes Castillo v. Nationwide Financial
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Services, Inc., Nationwide Life Insurance Company and Nationwide Life and
Annuity Insurance Company). The plaintiff in such lawsuit seeks to represent a
national class of Nationwide's customers and seeks unspecified compensatory and
punitive damages. Nationwide currently is evaluating this lawsuit, which has not
been certified as a class. Nationwide intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, NAS, is not engaged in any litigation of any material
nature.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information and History.................................................1
Services........................................................................1
Purchase of Securities Being Offered............................................2
Underwriters....................................................................2
Calculations of Performance.....................................................2
Annuity Payments................................................................3
Financial Statements............................................................4
</TABLE>
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APPENDIX A: OBJECTIVES FOR INVESTMENT OPTIONS
The underlying mutual funds listed below are designed primarily as investments
for variable annuity contracts and variable life insurance policies issued by
insurance companies.
There is no guarantee that the investment objectives will be met.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN
CENTURY(SM) FAMILY OF INVESTMENTS
American Century Variable Portfolios, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end investment management company
that offers its shares only as investment vehicles for variable annuity and
variable life insurance products of insurance companies. American Century
Variable Portfolios, Inc. is managed by American Century Investment Management,
Inc.
AMERICAN CENTURY VP INCOME & GROWTH
Investment Objective: Dividend growth, current income and capital
appreciation. The Fund seeks to achieve its investment objective by
investing in common stocks. The investment manager constructs the portfolio
to match the risk characteristics of the S&P 500 Stock Index and then
optimizes each portfolio to achieve the desired balance of risk and return
potential. This includes targeting a dividend yield that exceeds that of
the S&P 500. Such a management technique known as "portfolio optimization"
may cause the Fund to be more heavily invested in some industries than in
others. However, the Fund may not invest more than 25% of its total assets
in companies whose principal business activities are in the same industry.
AMERICAN CENTURY VP INTERNATIONAL
Investment Objective: To seek capital growth. The Fund will seek to achieve
its investment objective by investing primarily in securities of foreign
companies that meet certain fundamental and technical standards of
selection and, in the opinion of the investment manager, have potential for
appreciation. Under normal conditions, the Fund will invest at least 65% of
its assets in common stocks or other equity securities of issuers from at
least three countries outside the United States. While securities of United
States issuers may be included in the portfolio from time to time, it is
the primary intent of the manager to diversify investments across a broad
range of foreign issuers. Although the primary investment of the Fund will
be common stocks (defined to include depository receipts for common stock
and other equity equivalents), the Fund may also invest in other types of
securities consistent with the Fund's objective. When the manager believes
that the total capital growth potential of other securities equals or
exceeds the potential return of common stocks, the Fund may invest up to
35% of its assets in such other securities. There can be no assurance that
the Fund will achieve its objectives.
AMERICAN CENTURY VP VALUE
Investment Objective: The investment objective of the Fund is long-term
capital growth; income is a secondary objective. The equity securities in
which the Fund will invest will be primarily securities of well-established
companies with intermediate-to-large market capitalizations that are
believed by management to be undervalued at the time of purchase. Under
normal market conditions, the Fund expects to invest at least 80% of the
value of its total asset in equity securities, including common and
preferred stock, convertible preferred stock and convertible debt
obligations.
DREYFUS STOCK INDEX FUND, INC.
The Dreyfus Stock Index Fund, Inc. is an open-end, non-diversified, management
investment company incorporated under Maryland law on January 24, 1989 and
commenced operations on September 29, 1989. The Fund offers its shares only as
investment vehicles for variable annuity and variable life insurance products of
insurance companies. The Dreyfus Corporation
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("Dreyfus") serves as the Fund's manager, while Mellon Equity Associates, an
affiliate of Dreyfus, serves as the Fund's index manager. Dreyfus is a wholly
owned subsidiary of Mellon Bank, N.A., which is a wholly owned subsidiary of
Mellon Bank Corporation.
Investment Objective: 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 Stock
Price Index. The Fund is neither sponsored by nor affiliated with Standard
& Poor's Corporation.
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus Variable Investment Fund is an open-end, management investment company.
It was organized as an unincorporated business trust under the laws of the
Commonwealth of Massachusetts on October 29, 1986 and commenced operations on
August 31, 1990. The Fund offers its shares only as investment vehicles for
variable annuity and variable life insurance products of insurance companies.
Dreyfus serves as the Fund's manager. Fayez Sarofim & Company serves as the
sub-adviser and provides day-to-day management of the Portfolio.
CAPITAL APPRECIATION PORTFOLIO
Investment Objective: The Portfolio's primary investment objective is to
provide long-term capital growth consistent with the preservation of
capital; current income is a secondary investment objective. This Portfolio
invests primarily in the common stocks of domestic and foreign issuers.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
The Dreyfus Socially Responsible Growth Fund, Inc. is an open-end, diversified,
management investment company incorporated under Maryland law on July 20, 1992
and commenced operations on October 7, 1993. The Fund offers its share only as
investment vehicles for variable annuity and variable life insurance products of
insurance companies. Dreyfus serves as the Fund's investment adviser. NCM
Capital Management Group, Inc. serves as the Fund's sub-investment adviser and
provides day-to-day management of the Fund's portfolio.
Investment Objective: Capital growth through equity investment in companies
that, in the opinion of the Fund's advisers, not only meet traditional
investment standards, but which also show evidence that they conduct their
business in a manner that contributes to the enhancement of the quality of
life in America. Current income is secondary to the primary goal.
FEDERATED INSURANCE SERIES
Federated Insurance Series (the "Trust"), an Open-End Management Investment
Company, was established as a Massachusetts business trust, under a Declaration
of Trust dated September 15, 1993. The Trust offers its shares only as
investment vehicles for variable annuity and variable life insurance products of
insurance companies. Federated Advisers serves as the investment adviser.
FEDERATED QUALITY BOND FUND II
Investment Objective: Current income by investing in investment grade fixed
income securities.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
The Fidelity Variable Insurance Products Fund (VIP) is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
November 13, 1981. Shares of VIP are purchased by insurance companies to fund
benefits under variable life insurance policies and variable annuity contracts.
Fidelity Management & Research Company ("FMR") is the manager for VIP and its
portfolios.
VIP EQUITY-INCOME PORTFOLIO: SERVICE CLASS
Investment Objective: Reasonable income by investing primarily in
income-producing equity securities. In choosing these securities FMR also
will consider the potential for capital appreciation. The Portfolio's goal
is to achieve a yield which exceeds the composite yield on the
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securities comprising the Standard & Poor's 500 Composite Stock Price
Index.
VIP GROWTH PORTFOLIO: SERVICE CLASS
Investment Objective: Capital appreciation. This Portfolio will invest in
the securities of both well-known and established companies, and smaller,
less well-known companies which may have a narrow product line or whose
securities are thinly traded. These latter securities will often involve
greater risk than may be found in the ordinary investment security. FMR's
analysis and expertise plays an integral role in the selection of
securities and, therefore, the performance of the Portfolio. Many
securities which FMR believes would have the greatest potential may be
regarded as speculative, and investment in the Portfolio may involve
greater risk than is inherent in other underlying mutual funds. It is also
important to point out that this Portfolio makes sense for you if you can
afford to ride out changes in the stock market because it invests primarily
in common stocks. FMR can also make temporary investments in securities
such as investment-grade bonds, high-quality preferred stocks and
short-term notes, for defensive purposes when it believes market conditions
warrant.
VIP HIGH INCOME PORTFOLIO: SERVICE CLASS
Investment Objective: High level of current income by investing primarily
in high-risk, lower-rated, high-yielding, fixed-income securities, while
also considering growth of capital. FMR will seek high current income
normally by investing the Portfolio's assets as follows:
- at least 65% in income-producing debt securities and preferred stocks,
including convertible securities
- up to 20% in common stocks and other equity securities when consistent
with the Portfolio's primary objective or acquired as part of a unit
combining fixed-income and equity securities
Higher yields are usually available on securities that are lower-rated or
that are unrated. Lower-rated securities are usually defined as Ba or lower
by Moody's Investor Service, Inc. ("Moody's"); BB or lower by Standard &
Poor's and may be deemed to be of a speculative nature. The Portfolio may
also purchase lower-quality bonds such as those rated Ca3 by Moody's or C-
by Standard & Poor's which provide poor protection for payment of principal
and interest (commonly referred to as "junk bonds"). For a further
discussion of lower-rated securities, please see the "Risks of Lower-Rated
Debt Securities" section of the Portfolio's prospectus.
VIP OVERSEAS PORTFOLIO: SERVICE CLASS
Investment Objective: Long-term capital growth primarily through
investments in foreign securities. This Portfolio provides a means for
investors to diversify their own portfolios by participating in companies
and economies outside the United States.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
The Fidelity Variable Insurance Products Fund II (VIP II) is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on March 21, 1988. VIP II's shares are purchased by insurance companies to
fund benefits under variable life insurance policies and variable annuity
contracts. FMR is the manager of VIP II and its portfolios.
VIP II CONTRAFUND PORTFOLIO: SERVICE CLASS
Investment Objective: To seek capital appreciation by investing primarily
in companies that FMR believes to be undervalued due to an overly
pessimistic appraisal by the public. This strategy can lead to investments
in domestic or foreign companies, small and large, many of which may not be
well known. The Portfolio primarily invests in common stock and securities
convertible into common stock, but it has the flexibility to invest in any
type
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of security that may produce capital appreciation.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
The Fidelity Variable Insurance Products Fund III (VIP III) is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on July 14, 1994. VIP III's shares are purchased by insurance companies to
fund benefits under variable life insurance policies and variable annuity
contracts. FMR is the manager of VIP III and it's portfolios.
VIP III GROWTH OPPORTUNITIES PORTFOLIO: SERVICE CLASS
Investment Objective: Capital growth by investing primarily in common
stocks and securities convertible into common stocks. The Portfolio, under
normal conditions, will invest at least 65% of its total assets in
securities of companies that FMR believes have long-term growth potential.
Although the Portfolio invests primarily in common stock and securities
convertible into common stock, it has the ability to purchase other
securities, such as preferred stock and bonds, that may produce capital
growth. The Portfolio may invest in foreign securities without limitation.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
Morgan Stanley Dean Witter Universal Funds, Inc. is a mutual fund designed to
provide investment vehicles for variable annuity contracts and variable life
insurance policies and for certain tax-qualified investors. Its Emerging Markets
Debt Portfolio is managed by Morgan Stanley Dean Witter Asset Management, Inc.
EMERGING MARKETS DEBT PORTFOLIO
Investment Objective: High total return by investing primarily in dollar
and non-dollar denominated fixed income securities of government and
government-related issuers located in emerging market countries, which
securities provide a high level of current income, while at the same time
holding the potential for capital appreciation if the perceived
creditworthiness of the issuer improves due to improving economic,
financial, political, social or other conditions in the country in which
the issuer is located.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end management
investment company created under the laws of Massachusetts. NSAT offers shares
in the mutual funds listed below, each with its own investment objectives.
Shares of NSAT will be sold primarily to separate accounts to fund the benefits
under variable life insurance policies and variable annuity contracts issued by
life insurance companies. The assets of NSAT are managed by Nationwide Advisory
Services, Inc. ("NAS"), a wholly-owned subsidiary of Nationwide Life Insurance
Company.
CAPITAL APPRECIATION FUND
Investment Objective: Long-term growth by primarily investing in a
diversified portfolio of the common stock of companies which NAS determines
have a better-than-average potential for sustained capital growth over the
long term.
GOVERNMENT BOND FUND
Investment Objective: As high a level of income as is consistent with the
preservation of capital by investing in a diversified portfolio of
securities issued or backed by the U.S. Government, its agencies or
instrumentalities.
MONEY MARKET FUND
Investment Objective: 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.
TOTAL RETURN FUND
Investment Objective: Capital growth by investing in common stocks of
companies that NAS believes will have above-average earnings or otherwise
provide investors with above-average potential for capital
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appreciation. To maximize this potential, NAS may also utilize from time to
time, securities convertible into common stock, warrants and options to
purchase such stocks.
SUBADVISED NATIONWIDE FUNDS
NATIONWIDE BALANCED FUND
Subadviser: Salomon Brothers Asset Management, Inc.
Investment Objective: Primarily seeks above-average income compared to a
portfolio entirely invested in equity securities. The Fund's secondary
objective is to take advantage of opportunities for growth of capital and
income. The Fund seeks its objective primarily through investments in a
broad variety of securities, including equity securities, fixed-income
securities and short-term obligations. Under normal market conditions, it
is anticipated that the Fund will invest at least 40% of the Fund's total
assets in equity securities and at least 25% in fixed-income senior
securities. The Fund's subadviser, Salomon Brothers Asset Management,
Inc., will have discretion to invest in the full range of maturities of
fixed-income securities. Generally, most of the Fund's long-term debt
investments will consist of "investment grade" securities, but the Fund
may invest up to 20% of its net assets in non-convertible fixed-income
securities rated below investment grade or determined by the subadviser
to be of comparable quality. These securities are commonly known as junk
bonds. In addition, the Fund may invest an unlimited amount in
convertible securities rated below investment grade.
NATIONWIDE EQUITY INCOME FUND
Subadviser: Federated Investment Counseling
Investment Objective: Seeks above average income and capital appreciation
by investing at least 65% of its assets in income-producing equity
securities. Such equity securities include common stocks, preferred
stocks, and securities (including debt securities) that are convertible
into common stocks. The portion of the Fund's total assets invested in
each type of equity security will vary according to the Fund's
subadviser's assessment of market, economic conditions and outlook.
NATIONWIDE GLOBAL EQUITY FUND
Subadviser: J. P. Morgan Investment Management Inc.
Investment Objective: To provide high total return from a globally
diversified portfolio of equity securities. Total return will consist of
income plus realized and unrealized capital gains and losses. The Fund
seeks its investment objective through country allocation, stock
selection and management of currency exposure. Under normal market
conditions, J.P. Morgan Investment Management Inc. intends to keep the
Fund essentially fully invested with at least 65% of the value of its
total assets in equity securities consisting of common stocks and other
securities with equity characteristics such as preferred stocks,
warrants, rights, convertible securities, trust certificates, limited
partnership interests and equity participations. The Fund's primary
equity instruments are the common stock of companies based in the
developed countries around the world. The assets of the Fund will
ordinarily be invested in the securities of at least five different
countries.
NATIONWIDE HIGH INCOME BOND FUND
Subadviser: Federated Investment Counseling
Investment Objective: Seeks to provide high current income by investing
primarily in a professionally managed, diversified portfolio of fixed
income securities. To meet its objective, the Fund intends to invest at
least 65% of its assets in lower-rated fixed income securities such as
preferred stocks, bonds,
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debentures, notes, equipment lease certificates and equipment trust
certificates which are rated BBB or lower by Standard & Poor's or Fitch
Investors Service or Baa or lower by Moody's (or if not rated, are
determined by the Fund's subadviser to be of a comparable quality). Such
investments are commonly referred to as "junk bonds." For a further
discussion of lower-rated securities, please see the "High Yield
Securities" section of the Fund's prospectus.
NATIONWIDE MULTI SECTOR BOND FUND
Subadviser: Salomon Brothers Asset Management, Inc. with Salomon Brothers
Asset Management Limited
Investment Objective: Primarily seeks a high level of current income.
Capital appreciation is a secondary objective. The Fund seeks to achieve
its objectives by investing in a globally diverse portfolio of
fixed-income investments and by giving the subadviser, Salomon Brothers
Asset Management, Inc. broad discretion to deploy the Fund's assets among
certain segments of the fixed-income market that the subadviser believes
will best contribute to achievement of the Fund's investment objectives.
The Fund reserves the right to invest predominantly in securities rated
in medium or lower categories, or as determined by the subadviser to be
of comparable quality, commonly referred to as "junk bonds." Although the
subadviser has the ability to invest up to 100% of the Fund's assets in
lower-rated securities, the subadviser does not anticipate investing in
excess of 75% of the Fund's assets in such securities. The Subadviser has
entered into a subadvisory agreement with its London based affiliate,
Salomon Brothers Asset Management Limited, pursuant to which the
subadviser has delegated to Salomon Brothers Asset Management Limited
responsibility for management of the Fund's investments in non-dollar
denominated debt securities and currency transactions.
NATIONWIDE SELECT ADVISERS MID CAP FUND
Subadvisers: First Pacific Advisors, Inc., Pilgrim Baxter & Associates,
Ltd., and Rice, Hall, James & Associates
Investment Objective: Capital appreciation by investing primarily in
equity securities of medium-sized companies (market capitalization
between $500 million and $7 billion). Under normal market conditions, the
Fund will invest in equity securities consisting of common stock,
preferred stock and securities convertible into common stocks, including
convertible preferred stock and convertible bonds. NAS has chosen the
Fund's subadvisers because they utilize a number of different investment
styles. In utilizing these different styles, NAS hopes to increase
prospects for investment return and to reduce market risk and volatility.
NATIONWIDE SELECT ADVISERS SMALL CAP GROWTH FUND
Subadvisers: Franklin Advisers, Inc., Miller Anderson & Sherrerd, LLP,
Neuberger Berman, LLC.
Investment Objective: Seeks capital growth by investing in a broadly
diversified portfolio of equity securities issued by U.S. and foreign
companies with market capitalizations in the range of companies
represented by the Russell 2000, known has small cap companies. Under
normal market conditions, the Fund will invest at least 65% of its total
assets in the equity securities of small cap companies. The balance of
the Fund's assets may be invested in equity securities of larger cap
companies. The Fund may also invest in foreign securities.
NATIONWIDE SMALL CAP VALUE FUND
Subadviser: The Dreyfus Corporation
Investment Objective: Capital appreciation through investment in a
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diversified portfolio of equity securities of companies with a median
market capitalization of approximately $1 billion. Under normal market
conditions, at least 75% of the Fund's total assets will be invested in
equity securities of companies with market capitalizations at the time of
purchase of between $200 million and $2.5 billion. The Fund will invest
in equity securities of domestic and foreign issuers characterized as
"value" companies according to criteria established by The Dreyfus
Corporation, the Fund's subadviser.
NATIONWIDE SMALL COMPANY FUND
Subadvisers: The Dreyfus Corporation, Neuberger & Berman, L.P., Lazard
Asset Management, Strong Capital Management, Inc. and Warburg Pincus
Asset Management, Inc.
Investment Objective: Long-term growth of capital by investing primarily
in equity securities of domestic and foreign companies with market
capitalizations of less than $1 billion at the time of purchase. The
subadvisers were chosen because they utilize a number of different
investment styles when investing in small company stocks. By utilizing
different investment styles, NAS hopes to increase prospects for
investment return and to reduce market risk and volatility.
NATIONWIDE STRATEGIC GROWTH FUND
Subadviser: Strong Capital Management Inc.
Investment Objective: Capital growth by investing primarily in equity
securities that the Fund's subadviser believes have above-average growth
prospects. The Fund will generally invest in companies whose earnings are
believed to be in a relatively strong growth trend, and to a lesser
extent, in companies in which significant further growth is not
anticipated but whose market value is thought to be undervalued. Under
normal market conditions, the Fund will invest at least 65% of its total
assets in equity securities, including common stocks, preferred stocks,
and securities convertible into common or preferred stocks, such as
warrants and convertible bonds. The Fund may invest up to 35% of its
total assets in debt obligations, including intermediate- to long-term
corporate or U.S. Government debt securities.
NATIONWIDE STRATEGIC VALUE FUND
Subadviser: Strong Capital Management Inc./Schafer Capital Management
Inc.
Investment Objective: Primarily long-term capital appreciation; current
income is a secondary objective. The Fund seeks to meet its objectives by
investing in securities which are believed to offer the possibility of
increase in value, primarily common stocks of established companies
having a strong financial position and a low stock market valuation at
the time of purchase in relation to investment value. Other than
considered appropriate for cash reserves, the Fund will generally
maintain a fully invested position in common stocks of publicly held
companies, primarily in stocks of companies listed on a national
securities exchange or other equity securities (common stock or
securities convertible into common stock). Investments may also be made
in debt securities which are convertible into common stocks and in
warrants or other rights to purchase common stock, which in such case are
considered equity securities by the Fund. Strong Capital Management, Inc.
has subcontracted with Schafer Capital Management, Inc. to subadvise the
Fund.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Neuberger Berman Advisers Management Trust ("NB AMT") is an open-end,
diversified management investment company consisting of several series. Shares
of the series of NB AMT are offered in connection with certain
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variable annuity contracts and variable life insurance policies issued through
life insurance company separate accounts and are also offered directly to
qualified pension and retirement plans outside of the separate account context.
The Guardian, Partners and Mid-Cap Growth Portfolios of NB AMT invest all of
their investable assets in a corresponding series of Advisers Managers Trust
managed by Neuberger Berman Management Incorporated ("NB Management"). Each
series then invests in securities in accordance with an investment objective,
policies and limitations identical to those of the Portfolio. This
"master/feeder fund" structure is different from that of many other investment
companies which directly acquire and manage their own portfolios of securities.
(For more information regarding "master/feeder fund" structure, see "Special
Information Regarding Organization, Capitalization, and Other Matters" in the
underlying mutual fund prospectus.) The investment advisor is NB Management.
AMT GUARDIAN PORTFOLIO
Investment Objective: Capital appreciation and secondarily, current income.
The Portfolio and its corresponding series seek to achieve these objectives
by investing in common stocks of long-established, high-quality companies.
NB Management uses a value-oriented investment approach in selecting
securities, looking for low price-to-earnings ratios, strong balance
sheets, solid management, and consistent earnings.
AMT MID-CAP GROWTH PORTFOLIO
Investment Objective: Capital appreciation by investing in equity
securities of medium-sized companies that NB Management believes have the
potential for long-term, above-average capital appreciation. Medium-sized
companies have market capitalizations form $300 million to $10 billion at
the time of investment. The Portfolio and its corresponding series may
invest up to 10% of its net assets, measured at the time of investment, in
corporate debt securities that are below investment grade or, if unrated,
deemed by NB Management to be of comparable quality. Securities that are
below investment grade, as well as unrated securities, are often considered
to be speculative and usually entail greater risk. As a part of the
Portfolio's investment strategy, the Portfolio may invest up to 20% of its
net assets in securities of issuers organized and doing business
principally outside the United States. This limitation does not apply with
respect to foreign securities that are denominated in U.S. dollars.
AMT PARTNERS PORTFOLIO
Investment Objective: Capital growth by investing primarily in the common
stock of established companies. Its investment program seeks securities
believed to be undervalued based on fundamentals such as low
price-to-earnings ratios, consistent cash flows, and the company's track
record through all parts of the market cycle.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
The Oppenheimer variable account Funds are an open-end, diversified management
investment company organized as a Massachusetts business trust in 1984. Shares
of the Funds are sold to provide benefits under variable life insurance policies
and variable annuity contracts. OppenheimerFunds, Inc. is the investment
adviser.
OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (FORMERLY "OPPENHEIMER CAPITAL
APPRECIATION FUND")
Investment Objective: Capital appreciation by investing in "growth type"
companies. Such companies are believed to have relatively favorable
long-term prospects for increasing demand for their goods or services, or
to be developing new products, services or markets and normally retain a
relatively larger portion of their earnings for research, development and
investment in capital assets. The Fund may also invest in cyclical
industries in "special situations"
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that OppenheimerFunds, Inc. believes present opportunities for capital
growth.
OPPENHEIMER CAPITAL APPRECIATION FUND/VA (FORMERLY "OPPENHEIMER GROWTH
FUND")
Investment Objective: Capital appreciation by investing in securities of
well-known established companies. Such securities generally have a history
of earnings and dividends and are issued by seasoned companies (companies
which have an operating history of at least five years including
predecessors). Current income is a secondary consideration in the selection
of the Fund's portfolio securities.
OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA (FORMERLY "OPPENHEIMER
GROWTH & INCOME FUND")
Investment Objective: High total return, which stocks, preferred stocks,
convertible securities and warrants. Debt investments will include bonds,
participation includes growth in the value of its shares as well as current
income from quality and debt securities. In seeking its investment
objectives, the Fund may invest in equity and debt securities. Equity
investments will include common interests, asset-backed securities,
private-label mortgage-backed securities and CMOs, zero coupon securities
and U.S. debt obligations, and cash and cash equivalents. From time to
time, the Fund may focus on small to medium capitalization issuers, the
securities of which may be subject to greater price volatility than those
of larger capitalized issuers.
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Worldwide Insurance Trust is an open-end management investment company
organized as a business trust under the laws of the Commonwealth of
Massachusetts on January 7, 1987. Shares of Van Eck Trust are offered only to
separate accounts of insurance companies to fund the benefits of variable life
insurance policies and variable annuity contracts. The investment advisor and
manager is Van Eck Associates Corporation.
WORLDWIDE EMERGING MARKETS FUND
Investment Objective: Seeks long-term capital appreciation by investing
primarily in equity securities in emerging markets around the world. The
Fund emphasizes investment in countries that, compared to the world's major
economies, exhibit relatively low gross national product per capita, as
well as the potential for rapid economic growth.
-WORLDWIDE HARD ASSETS FUND
Investment Objective: Long-term capital appreciation by investing primarily
in "Hard Asset Securities." For the Fund's purpose, "Hard Assets" are real
estate, energy, timber, and industrial and precious metals.
Income is a secondary consideration.
VAN KAMPEN LIFE INVESTMENT TRUST
Van Kampen Life Investment Trust is an open-end diversified management
investment company organized as a Delaware business trust. Shares are offered in
separate portfolios which are sold only to insurance companies to provide
funding for variable life insurance policies and variable annuity contracts. Van
Kampen Asset Management Inc. serves as the Fund's investment adviser.
MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO
Investment Objective: Long-term capital growth by investing principally in
a diversified portfolio of securities of companies operating in the real
estate industry ("Real Estate Securities"). Current income is a secondary
consideration. Real Estate Securities include equity securities, including
common stocks and convertible securities, as well as non-convertible
preferred stocks and debt securities of real estate industry companies. A
"real estate industry company" is a company that derives at least 50% of
its assets (marked to market), gross income or net profits from the
ownership, construction, management or sale of residential, commercial or
industrial
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real estate. Under normal market conditions, at least 65% of the Fund's
total assets will be invested in Real Estate Securities, primarily equity
securities of real estate investment trusts. The Portfolio may invest up to
25% of its total assets in securities issued by foreign issuers, some or
all of which may also be Real Estate Securities.
WARBURG PINCUS TRUST
The Warburg Pincus Trust is an open-end management investment company organized
in March 1995 as a business trust under the laws of The Commonwealth of
Massachusetts. The Trust offers its shares to insurance companies for allocation
to separate accounts for the purpose of funding variable annuity and variable
life contracts. Portfolios are managed by Warburg Pincus Asset Management, Inc.
("Warburg").
GROWTH & INCOME PORTFOLIO
Investment Objective: Long-term growth of capital and income by investing
primarily in dividend-paying equity securities. Under normal market
conditions, the Portfolio will invest substantially all of its asset in
equity securities that Warburg considers to be relatively undervalued based
upon research and analysis, taking into account factors such as price/book
ratio, price/cash flow ratio, earnings growth, debt/capital ratio and
multiples of earnings of comparable securities. Although the Portfolio may
hold securities of any size, it currently expects to focus on companies
with market capitalizations of $1 billion or greater at the time of initial
purchase.
INTERNATIONAL EQUITY PORTFOLIO
Investment Objective: Long-term capital appreciation by investing primarily
in a broadly diversified portfolio of equity securities of companies,
wherever organized, that in the judgment of Warburg have their principal
business activities and interests outside the United States. The Portfolio
will ordinarily invest substantially all of its assets, but no less than
65% of its total assets, in common stocks, warrants and securities
convertible into or exchangeable for common stocks. The Portfolio intends
to invest principally in the securities of financially strong companies
with opportunities for growth within growing international economies and
markets through increased earning power and improved utilization or
recognition of assets.
POST-VENTURE CAPITAL PORTFOLIO
Investment Objective: Long-term growth of capital by investing primarily in
equity securities of issuers in their post-venture capital stage of
development and pursues an aggressive investment strategy. Under normal
market conditions, the Portfolio will invest at least 65% of its total
assets in equity securities of "post-venture capital companies." A
post-venture capital company is one that has received venture capital
financing either: (a) during the early stages of the company's existence or
the early stages of the development of a new product or service; or (b) as
part of a restructuring or recapitalization of the company. The Portfolio
may invest up to 10% of its assets in venture capital and other investment
funds.
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APPENDIX B: FIXED ANNUITY PAYMENTS
The contracts described in this prospectus are combination fixed and variable
immediate annuity contracts. This APPENDIX discusses those interests under the
contracts that relate to fixed annuity payments.
Interests in fixed annuity payments purchased under the contracts are supported
by Nationwide's general account. In reliance on certain exemptions provided for
under the Securities Act of 1933, such interests have not been registered with
the SEC, and the following disclosures have not been reviewed by the SEC.
FIXED ANNUITY PAYMENT ALLOCATIONS UNDER THE CONTRACT
Contract owners not allocating all of their single purchase payment to the
variable account for the purchase of variable annuity payments may allocate
their single purchase payment to Nationwide's general account for the purchase
of fixed annuity payments. Alternatively, contract owners may allocate their
single purchase payment to the general account and the variable account for the
purchase of a combination of fixed and variable annuity payments.
Amounts originally allocated for the purchase of variable annuity payments may
not be reallocated to the general account to purchase fixed annuity payments;
similarly, amounts originally allocated for the purchase of fixed annuity
payments may not be reallocated to the variable account to purchase variable
annuity payments.
DETERMINATION OF FIXED ANNUITY PAYMENTS
Fixed annuity payments are level, meaning that each payment received will be the
same as long as no (non-annuity payment) withdrawals are taken as permitted
under some term certain annuity income options. Fixed annuity payments may also
be reduced under the terms of the income option elected. For example, under the
joint and last survivor income option, annuity payments continuing to a survivor
after the death of either the annuitant or joint annuitant may be reduced if the
contract owner selected a continuation percentage of less than 100%. Other
income options may provide for similar reductions in fixed annuity payments.
When the contract owner allocates all or part of the single purchase payment for
the purchase of fixed annuity payments, the amount of such payments will be
determined by Nationwide, based on the following factors:
- The amount/portion of the single purchase payment allocated for the
purchase of fixed annuity payments;
- The age and sex of the annuitant (and joint annuitant, if any);
- The income option elected;
- The frequency of annuity payments (monthly, quarterly, etc.);
- The income start date;
- The deduction of applicable premium taxes; and
- The date the contract was issued.
These factors will allow Nationwide to determine the level of fixed annuity
payments it is able to guarantee on the basis of its expense and normal profit
assumptions.
FIXED ANNUITY PAYMENTS AND THE ANNUITY INCOME OPTIONS
Fixed annuity payments may be purchased in conjunction with any of the income
options available under the contract.
COMMUTATION VALUE OF FIXED ANNUITY PAYMENTS
Under certain circumstances, it may be necessary to "commute" the value of fixed
annuity payments. The commutation value of fixed annuity payments is the value
of future guaranteed fixed annuity payments that are converted mathematically
into a lump sum. This is commonly referred to as a "present
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value" calculation. There are two basic purposes for which it may be necessary
to calculate the commutation value of fixed annuity payments.
First, under term certain income options, the contract owner has the right to
make withdrawals from the contract that are in addition to regularly scheduled
annuity payments. In order to know what can be withdrawn from allocations for
fixed annuity payments, it is necessary to know the commutation value of fixed
annuity payments at the time the withdrawal is taken. (It is important to
understand that partial withdrawals of this nature will reduce on-going fixed
annuity payments subsequent to the withdrawal, and a Contingent Deferred Sales
Charge may apply as well - see the following section.)
Second, for those income options that provide a death benefit, the commutation
value of remaining fixed annuity payments will equal the lump sum death benefit
to which a beneficiary is entitled, insofar as fixed annuity payments are
concerned.
It may also be necessary to calculate the commutation value of fixed annuity
payments when a contract owner and/or annuitant dies prior to the income start
date.
The Adjusted Contract Rate
For purposes of calculating the commutation value of guaranteed fixed annuity
payments, Nationwide calculates the present value of such payments, using the
adjusted contract rate.
The adjusted contract rate is equal to the commutation value interest rate
(which is a rate of interest established and identified in the contract
specification pages which are provided to all contract owners upon the purchase
of a contract), plus the interest rate adjustment.
The interest rate adjustment is equal to
CMT(c) - CMT(i), where
CMT(c) = the 10-year Constant Maturity Treasury (CMT) rate in effect on the date
the request for withdrawal is received (or on the date of a death benefit
calculation), and
CMT(i) = the 10-year Constant Maturity Treasury (CMT) rate in effect on the date
of issue of the contract.
The CMT rates are interest rate quotations for various maturity durations
published by the Federal Reserve Board on a regular basis. These rates represent
a readily available and consistently reliable interest rate benchmark in
financial markets.
If the Federal Reserve Board halts publication of CMT rates, or if for any
reason the CMT rates become unavailable, Nationwide will use appropriate rates
based on Treasury bond yields.
CONTINGENT DEFERRED SALES CHARGES (CDSC)
Under term certain income options (including the term certain with enhanced
death benefit option) withdrawals in addition to regularly scheduled annuity
payments may be taken. Nationwide may assess a CDSC if such withdrawals are
taken.
The CDSC is calculated by multiplying the applicable CDSC percentage by the
amount that is withdrawn. The applicable CDSC will not be applied to any amount
in excess of the single purchase payment.
CDSC may be assessed based on amounts withdrawn from variable annuity payment
allocations as well as fixed annuity payment allocations. The CDSC table is set
forth in the prospectus - see "Summary of Contract Expenses" and "Standard
Charges and Deductions."
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STATEMENT OF ADDITIONAL INFORMATION
SEPTEMBER 17, 1999
Individual Single Premium Immediate Variable Annuity Contracts
Issued by Nationwide Life Insurance Company through its Nationwide Variable
Account-9
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the prospectus
and should be read in conjunction with the prospectus dated September 17, 1999.
The prospectus may be obtained from Nationwide Life Insurance Company by writing
P.O. Box 16609, Columbus, Ohio 43216-6609, or calling 1-800-848-6331, TDD
1-800-238-3035.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information and History.........................................................1
Services................................................................................1
Purchase of Securities Being Offered....................................................2
Underwriters............................................................................2
Calculations of Performance.............................................................2
Annuity Payments........................................................................3
Financial Statements....................................................................4
</TABLE>
GENERAL INFORMATION AND HISTORY
The Nationwide Variable Account-9 is a separate investment account of Nationwide
Life Insurance Company ("Nationwide"). Nationwide is a member of the Nationwide
Insurance Enterprise. All of Nationwide's common stock is owned by Nationwide
Financial Services, Inc. ("NFS"), a holding company. NFS has two classes of
common stock outstanding with different voting rights enabling Nationwide
Corporation (the holder of all of the outstanding Class B Common Stock) to
control NFS. Nationwide Corporation is a holding company, as well. All of its
common stock is held by Nationwide Mutual Insurance Company (95.24%) and
Nationwide Mutual Fire Insurance Company (4.76%), the ultimate controlling
persons of Nationwide Insurance Enterprise. The Nationwide Insurance Enterprise
is one of America's largest insurance and financial services family of
companies, with combined assets of over $98.28 billion as of December 31, 1998.
SERVICES
Nationwide, which has responsibility for administration of the contracts and the
variable account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each contract owner
and the number and type of contract issued to each contract owner and records
with respect to the contract/commutation value.
The custodian of the assets of the variable account is Nationwide. Nationwide
will maintain a record of all purchases and redemptions of shares of the
investment options. Nationwide, or affiliates of Nationwide, may have entered
into agreements with either the investment adviser or distributor for the
investment options. The agreements relate to administrative services furnished
by Nationwide or an affiliate of Nationwide and provide for an annual fee based
on the average aggregate net assets of the variable account (and other separate
accounts of Nationwide or life insurance company subsidiaries of Nationwide)
invested in particular underlying mutual funds. These fees in no way affect the
net asset value of the underlying mutual funds or fees paid by the contract
owner.
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The audited financial statements have been included herein in reliance upon the
reports of KPMG LLP, independent certified public accountants, Two Nationwide
Plaza, Columbus, Ohio 43215, and upon the authority of said firm as experts in
accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The contracts will be sold by licensed insurance agents in the states where the
contracts may be lawfully sold. Such agents will be registered representatives
of broker-dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc. ("NASD").
UNDERWRITERS
The contracts, which are offered continuously, are distributed by Nationwide
Advisory Services, Inc. ("NAS"), One Nationwide Plaza, Columbus, Ohio 43215, a
wholly owned subsidiary of Nationwide. During the fiscal years ended December
31, 1998, 1997 and 1996, no underwriting commissions were paid by Nationwide to
NAS.
CALCULATIONS OF PERFORMANCE
Any current yield quotations of the NSAT Money Market Fund, subject to Rule 482
of the Securities Act of 1933, will consist of a seven calendar day historical
yield, carried at least to the nearest hundredth of a percent. The yield will be
calculated by determining the net change, exclusive of capital changes, in the
value of hypothetical pre-existing account having a balance of one accumulation
unit at the beginning of the base period, subtracting a hypothetical charge
reflecting deductions from contract owner accounts, and dividing the net change
in account value by the value of the account at the beginning of the period to
obtain a base period return, and multiplying the base period return by (365/7)
or (366/7) in a leap year. The NSAT Money Market Fund's effective yield is
computed similarly, but includes the effect of assumed compounding on an
annualized basis of the current unit value yield quotations of the NSAT Money
Market Fund.
The NSAT Money Market Fund's yield and effective yield will fluctuate daily.
Actual yields will depend on factors such as the type of instruments in the
fund's portfolio, portfolio quality and average maturity, changes in interest
rates, and the fund's expenses. Although the NSAT Money Market Fund determines
its yield on the basis of a seven day period, it may use a different time period
on occasion. The yield quotes may reflect the expense limitation described
"Investment Manager and Other Services" in the NSAT Money Market Fund's
Statement of Additional Information. There is no assurance that the yields
quoted on any given occasion will remain in effect for any period of time and
there is no guarantee that the net asset values will remain constant. It should
be noted that a contract owner's investment in the NSAT Money Market Fund is not
guaranteed or insured. Yield of other money market funds may not be comparable
if a different base period or another method of calculation is used.
All performance advertising will include quotations of standardized average
annual total return, calculated in accordance with a standard method prescribed
by rules of the SEC. Standardized average annual total return is found by taking
a hypothetical $1,000 investment in each of the sub-accounts' units on the first
day of the period at the offering price, which is the accumulation unit value
per unit ("initial investment") and computing the ending redeemable value
("redeemable value") of that investment at the end of the period. The redeemable
value is then divided by the initial investment and this quotient is taken to
the Nth root (N represents the number of years in the period) and 1 is
subtracted from the result which is then expressed as a percentage, carried to
at least the nearest hundredth of a percent. Standardized average annual total
return reflects the maximum CDSC and the deduction of variable account charges,
except for premium taxes, which may be imposed by certain states.
Nonstandardized total return may also be advertised, and is calculated in a
manner similar to standardized average annual
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total return except the nonstandardized total return is based on a hypothetical
initial investment of $25,000. An assumed initial investment of $25,000 will be
used because that figure more closely approximates the size of a typical
contract than does the $1,000 figure used in calculating the standardized
average annual total return quotations.
The standardized average annual total return and nonstandardized average annual
total return quotations will be current to the last day of the calendar quarter
preceding the date on which an advertisement is submitted for publication. The
standardized average annual return will be based on rolling calendar quarters
and will cover periods of one, five, and ten years, or a period covering the
time the underlying mutual fund has been available in the variable account if
the underlying mutual fund has not been available for one of the prescribed
periods. Nonstandardized average annual total return will based on rolling
calendar quarters and will cover periods of one, five and ten years, or a period
covering the time the underlying mutual fund has been in existence.
Quotations of average annual total return and total return are based upon
historical earnings and will fluctuate. Any quotation of performance, is not a
guarantee of future performance. Factors affecting a sub-account's performance
include general market conditions, operating expenses and investment management.
A contract owner's account when redeemed may be more or less than the original
cost.
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity Payments" located in the prospectus.
- --------------------------------------------------------------------------------
The Immediate VA commenced sales in September, 1999. Therefore, the following
financial statements do not reflect performance for the Immediate VA. However,
the financial statements do reflect performance for other annuity contracts
issued through the Nationwide Variable Account-9.
- --------------------------------------------------------------------------------
3
52 of 138
<PAGE> 55
<PAGE> 1
Independent Auditors' Report
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of Nationwide Variable Account-9:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account-9 as of December 31,
1998, and the related statements of operations and changes in contract owners'
equity for the year then ended and the period November 3, 1997 (commencement of
operations) through December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nationwide Variable
Account-9 as of December 31, 1998, and the results of its operations and its
changes in contract owners' equity for the year then ended and the period
November 3, 1997 (commencement of operations) through December 31, 1997, in
conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 5, 1999
<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Income & Growth (ACVPIncGr)
6,808,423 shares (cost $41,583,538) ........................................ $ 46,161,106
American Century VP - American Century VP International (ACVPInt)
6,855,908 shares (cost $51,855,024) ........................................ 52,242,021
American Century VP - American Century VP Value (ACVPValue)
3,217,095 shares (cost $21,777,436) ........................................ 21,651,051
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
1,248,565 shares (cost $35,462,984) ........................................ 38,805,415
Dreyfus Stock Index Fund (DryStkIx)
9,577,288 shares (cost $279,024,199) ....................................... 311,453,398
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
1,589,914 shares (cost $52,116,562) ........................................ 57,411,798
Fidelity VIP - Equity-Income Portfolio - Service Class (FidVIPEIS)
7,742,140 shares (cost $188,934,420) ....................................... 196,572,937
Fidelity VIP - Growth Portfolio - Service Class (FidVIPGrS)
2,439,295 shares (cost $92,723,883) ........................................ 109,329,206
Fidelity VIP - High Income Portfolio - Service Class (FidVIPHIS)
8,982,394 shares (cost $109,103,276) ....................................... 103,387,351
Fidelity VIP - Overseas Portfolio - Service Class (FidVIPOvS)
1,311,658 shares (cost $25,776,988) ........................................ 26,272,515
Fidelity VIP-II - Contrafund Portfolio - Service Class (FidVIPConS)
5,268,891 shares (cost $110,700,033) ....................................... 128,666,318
Fidelity VIP-III - Growth Opportunities Portfolio - Service Class (FidVIPGrOpS)
4,400,750 shares (cost $88,712,986) ........................................ 100,601,146
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
533,017 shares (cost $4,220,740) ........................................... 3,251,406
Nationwide SAT - Balanced Fund (NSATBal)
3,702,529 shares (cost $38,838,888) ........................................ 39,172,762
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
7,353,398 shares (cost $180,569,944) ....................................... 195,526,840
Nationwide SAT - Equity Income Fund (NSATEqInc)
1,115,255 shares (cost $11,913,630) ........................................ 12,791,978
Nationwide SAT - Global Equity Fund (NSATGlobEq)
1,278,862 shares (cost $14,086,471) ........................................ 15,026,629
Nationwide SAT - Government Bond Fund (NSATGvtBd)
11,611,591 shares (cost $135,670,425) ...................................... 135,739,496
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
2,988,003 shares (cost $30,639,154) ........................................ 29,999,551
Nationwide SAT - Money Market Fund (NSATMyMkt)
190,044,189 shares (cost $190,044,189) ..................................... 190,044,189
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Nationwide SAT - Multi Sector Bond Fund (NSATMSecBd)
3,559,456 shares (cost $35,711,253) .................................. 34,953,863
Nationwide SAT - Select Advisers Mid Cap Fund (NSATMidCap)
663,376 shares (cost $6,840,714) ..................................... 7,244,064
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
3,132,624 shares (cost $29,764,563) .................................. 29,728,605
Nationwide SAT - Small Company Fund (NSATSmCo)
2,686,535 shares (cost $42,607,479) .................................. 43,011,428
Nationwide SAT - Strategic Growth Fund (NSATStrGro)
746,793 shares (cost $7,919,572) ..................................... 8,737,474
Nationwide SAT - Strategic Value Fund (NSATStrVal)
1,344,546 shares (cost $13,728,595) .................................. 13,606,806
Nationwide SAT - Total Return Fund (NSATTotRe)
15,536,927 shares (cost $281,022,843) ................................ 285,879,460
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
2,338,020 shares (cost $31,751,426) .................................. 32,358,203
Neuberger & Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr)
1,748,395 shares (cost $23,894,825) .................................. 28,358,964
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
5,754,650 shares (cost $111,859,485) ................................. 108,935,530
Oppenheimer VAF - Aggressive Growth Fund (OppAggGro)
610,901 shares (cost $25,670,049) .................................... 27,386,693
Oppenheimer VAF - Growth Fund (OppGro)
1,127,365 shares (cost $37,003,995) .................................. 41,340,470
Oppenheimer VAF - Growth & Income Fund (OppGrInc)
2,521,659 shares (cost $51,774,563) .................................. 51,643,569
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
664,975 shares (cost $5,629,404) ..................................... 4,734,621
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
222,585 shares (cost $2,130,378) ..................................... 2,047,778
Van Kampen American Capital LIT -
Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
1,308,962 shares (cost $19,243,692) .................................. 18,011,317
Warburg Pincus Trust - Growth & Income Portfolio (WPGrInc)
1,140,740 shares (cost $12,673,239) .................................. 13,095,697
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
1,439,870 shares (cost $16,523,314) .................................. 15,824,169
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
552,506 shares (cost $6,237,564) ..................................... 6,508,526
--------------
Total investments ................................................. 2,587,514,350
Accounts receivable ........................................................ 1,282,585
--------------
Total assets ...................................................... 2,588,796,935
ACCOUNTS PAYABLE .............................................................. --
--------------
CONTRACT OWNERS' EQUITY (NOTE 4) .............................................. $2,588,796,935
==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
TOTAL ACVPIncGr
---------------------------------- ----------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 20,037,926 184,101 220,567 --
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (6,687,096) (26,321) (104,919) (119)
Asset fee @ 1.00% rate ..................... (4,480,001) (13,431) (64,746) (83)
Asset fee @ 1.05% rate ..................... (1,009,646) (4,753) (13,006) (29)
Asset fee @ 1.10% rate ..................... (909) -- (46) --
Asset fee @ 1.15% rate ..................... (244) -- (14) --
Asset fee @ 1.20% rate ..................... (1,510) -- (19) --
Asset fee @ 1.25% rate ..................... (131) -- -- --
Asset fee @ 1.30% rate ..................... (50) -- -- --
Asset fee @ 1.35% rate ..................... (37) -- -- --
--------------- --------------- --------------- ---------------
Net investment activity ...................... 7,858,302 139,596 37,817 (231)
--------------- --------------- --------------- ---------------
Proceeds from mutual fund shares sold ......... 147,138,081 1,928,035 299,469 3,255
Cost of mutual fund shares sold ............... (151,277,931) (1,932,025) (260,801) (3,092)
--------------- --------------- --------------- ---------------
Realized gain (loss) on investments .......... (4,139,850) (3,990) 38,668 163
Change in unrealized gain (loss) on investments 121,513,304 259,323 4,570,573 6,996
--------------- --------------- --------------- ---------------
Net gain (loss) on investments ............... 117,373,454 255,333 4,609,241 7,159
--------------- --------------- --------------- ---------------
Reinvested capital gains ...................... 27,066,537 478,503 9,256 --
--------------- --------------- --------------- ---------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 152,298,293 873,432 4,656,314 6,928
--------------- --------------- --------------- ---------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 2,421,579,829 81,649,336 34,231,141 389,541
Transfers between funds ....................... -- -- 7,880,597 61,740
Redemptions ................................... (66,628,531) (339,129) (1,021,174) (635)
Contingent deferred sales charges (note 2) .... (676,512) (409) (7,094) --
Adjustments to maintain reserves .............. 38,184 2,442 (27,089) 5
--------------- --------------- --------------- ---------------
Net equity transactions .................... 2,354,312,970 81,312,240 41,056,381 450,651
--------------- --------------- --------------- ---------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 2,506,611,263 82,185,672 45,712,695 457,579
Contract owners' equity beginning of period .... 82,185,672 -- 457,579 --
--------------- --------------- --------------- ---------------
Contract owners' equity end of period .......... $ 2,588,796,935 82,185,672 46,170,274 457,579
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
ACVPInt ACVPValue
---------------------------------- ----------------------------------
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 26,394 -- 28,096 --
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (135,323) (169) (68,970) (235)
Asset fee @ 1.00% rate ..................... (74,971) (58) (44,443) (348)
Asset fee @ 1.05% rate ..................... (14,635) (20) (8,106) (55)
Asset fee @ 1.10% rate ..................... (9) -- (4) --
Asset fee @ 1.15% rate ..................... (9) -- -- --
Asset fee @ 1.20% rate ..................... (2) -- (24) --
Asset fee @ 1.25% rate ..................... -- -- (2) --
Asset fee @ 1.30% rate ..................... -- -- -- --
Asset fee @ 1.35% rate ..................... (4) -- -- --
--------------- --------------- --------------- ---------------
Net investment activity ...................... (198,559) (247) (93,453) (638)
--------------- --------------- --------------- ---------------
Proceeds from mutual fund shares sold ......... 2,580,905 -- 1,595,103 --
Cost of mutual fund shares sold ............... (2,610,970) -- (1,678,560) --
--------------- --------------- --------------- ---------------
Realized gain (loss) on investments .......... (30,065) -- (83,457) --
Change in unrealized gain (loss) on investments 379,163 7,835 (147,770) 21,385
--------------- --------------- --------------- ---------------
Net gain (loss) on investments ............... 349,098 7,835 (231,227) 21,385
--------------- --------------- --------------- ---------------
Reinvested capital gains ...................... 270,951 -- 335,441 --
--------------- --------------- --------------- ---------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 421,490 7,588 10,761 20,747
--------------- --------------- --------------- ---------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 39,680,086 451,373 19,091,612 929,382
Transfers between funds ....................... 12,597,519 90,951 1,715,026 410,117
Redemptions ................................... (1,031,134) (18) (518,275) (856)
Contingent deferred sales charges (note 2) .... (7,206) -- (7,315) --
Adjustments to maintain reserves .............. 31,510 4 (218) 8
--------------- --------------- --------------- ---------------
Net equity transactions .................... 51,270,775 542,310 20,280,830 1,338,651
--------------- --------------- --------------- ---------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 51,692,265 549,898 20,291,591 1,359,398
Contract owners' equity beginning of period .... 549,898 -- 1,359,398 --
--------------- --------------- --------------- ---------------
Contract owners' equity end of period .......... 52,242,163 549,898 21,650,989 1,359,398
=============== =============== =============== ===============
</TABLE>
<PAGE> 5
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
DrySRGro DryStkix
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 60,373 2,537 2,203,648 19,230
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (87,632) (245) (736,785) (1,875)
Asset fee @ 1.00% rate ..................... (63,281) (157) (495,327) (946)
Asset fee @ 1.05% rate ..................... (13,367) (30) (102,440) (152)
Asset fee @ 1.10% rate ..................... (51) -- (137) --
Asset fee @ 1.15% rate ..................... (15) -- (51) --
Asset fee @ 1.20% rate ..................... (13) -- (305) --
Asset fee @ 1.25% rate ..................... (15) -- (30) --
Asset fee @ 1.30% rate ..................... (6) -- (2) --
Asset fee @ 1.35% rate ..................... -- -- (5) --
------------ ------------ ------------ ------------
Net investment activity ...................... (104,007) 2,105 868,566 16,257
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 777,497 -- 3,532,880 53,202
Cost of mutual fund shares sold ............... (725,553) -- (3,554,666) (55,328)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 51,944 -- (21,786) (2,126)
Change in unrealized gain (loss) on investments 3,346,139 (3,707) 32,439,748 (10,549)
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... 3,398,083 (3,707) 32,417,962 (12,675)
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 1,392,227 20,741 435,046 83,330
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 4,686,303 19,139 33,721,574 86,912
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 29,765,433 806,446 242,868,858 5,885,293
Transfers between funds ....................... 4,305,104 32,713 34,854,129 151,175
Redemptions ................................... (803,449) (1,570) (6,057,535) (3,783)
Contingent deferred sales charges (note 2) .... (4,582) -- (83,383) --
Adjustments to maintain reserves .............. 66 (4) 30,385 1,038
------------ ------------ ------------ ------------
Net equity transactions .................... 33,262,572 837,585 271,612,454 6,033,723
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 37,948,875 856,724 305,334,028 6,120,635
Contract owners' equity beginning of period .... 856,724 -- 6,120,635 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... $ 38,805,599 856,724 311,454,663 6,120,635
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
DryCapAp FidVIPEIS
--------------------------- -----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 296,317 4,948 217,564 --
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (111,207) (267) (505,712) (1,422)
Asset fee @ 1.00% rate ..................... (62,252) (133) (395,500) (815)
Asset fee @ 1.05% rate ..................... (17,737) (30) (90,638) (339)
Asset fee @ 1.10% rate ..................... (62) -- (58) --
Asset fee @ 1.15% rate ..................... (27) -- (7) --
Asset fee @ 1.20% rate ..................... (19) -- (41) --
Asset fee @ 1.25% rate ..................... -- -- (22) --
Asset fee @ 1.30% rate ..................... (4) -- (14) --
Asset fee @ 1.35% rate ..................... (4) -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... 105,005 4,518 (774,428) (2,576)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 692,754 -- 628,613 72,868
Cost of mutual fund shares sold ............... (632,372) -- (599,673) (74,460)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 60,382 -- 28,940 (1,592)
Change in unrealized gain (loss) on investments 5,296,793 (1,557) 7,558,663 79,853
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... 5,357,175 (1,557) 7,587,603 78,261
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 1,464 414 774,271 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 5,463,644 3,375 7,587,446 75,685
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 37,281,447 894,637 175,676,909 4,978,409
Transfers between funds ....................... 14,756,161 34,011 13,491,409 268,956
Redemptions ................................... (999,653) -- (5,441,684) (7,395)
Contingent deferred sales charges (note 2) .... (11,014) -- (54,879) --
Adjustments to maintain reserves .............. (10,617) (1) (2,947) 1,150
------------ ------------ ------------ ------------
Net equity transactions .................... 51,016,324 928,647 183,668,808 5,241,120
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 56,479,968 932,022 191,256,254 5,316,805
Contract owners' equity beginning of period .... 932,022 -- 5,316,805 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... 57,411,990 932,022 196,573,059 5,316,805
============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 6
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
FidVIPGrS FidVIPHIS
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 27,645 -- 609,157 --
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (212,170) (572) (294,475) (1,047)
Asset fee @ 1.00% rate ..................... (166,839) (312) (193,581) (382)
Asset fee @ 1.05% rate ..................... (35,112) (72) (58,296) (139)
Asset fee @ 1.10% rate ..................... (51) -- (22) --
Asset fee @ 1.15% rate ..................... (10) -- (5) --
Asset fee @ 1.20% rate ..................... (99) -- (16) --
Asset fee @ 1.25% rate ..................... (6) -- -- --
Asset fee @ 1.30% rate ..................... (1) -- -- --
Asset fee @ 1.35% rate ..................... -- -- (4) --
------------- ------------- ------------- -------------
Net investment activity ...................... (386,643) (956) 62,758 (1,568)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 1,691,790 24,231 5,911,230 --
Cost of mutual fund shares sold ............... (1,783,855) (24,000) (7,053,926) --
------------- ------------- ------------- -------------
Realized gain (loss) on investments .......... (92,065) 231 (1,142,696) --
Change in unrealized gain (loss) on investments 16,582,085 23,237 (5,732,014) 16,089
------------- ------------- ------------- -------------
Net gain (loss) on investments ............... 16,490,020 23,468 (6,874,710) 16,089
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 723,135 -- 387,069 --
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 16,826,512 22,512 (6,424,883) 14,521
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 71,107,684 1,981,907 106,687,268 2,761,595
Transfers between funds ....................... 21,283,689 1,697 3,713,555 132,705
Redemptions ................................... (1,868,105) (577) (3,477,421) (954)
Contingent deferred sales charges (note 2) .... (25,533) -- (19,045) --
Adjustments to maintain reserves .............. 198 (111) (220) (1)
------------- ------------- ------------- -------------
Net equity transactions .................... 90,497,933 1,982,916 106,904,137 2,893,345
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 107,324,445 2,005,428 100,479,254 2,907,866
Contract owners' equity beginning of period .... 2,005,428 -- 2,907,866 --
------------- ------------- ------------- -------------
Contract owners' equity end of period .......... $ 109,329,873 2,005,428 103,387,120 2,907,866
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FidVIPOvS FidVIPConS
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 39,473 -- 56,795 --
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (70,614) (303) (299,506) (1,607)
Asset fee @ 1.00% rate ..................... (42,096) (95) (193,026) (564)
Asset fee @ 1.05% rate ..................... (13,142) (40) (37,910) (160)
Asset fee @ 1.10% rate ..................... -- -- (67) --
Asset fee @ 1.15% rate ..................... (2) -- (15) --
Asset fee @ 1.20% rate ..................... (32) -- (115) --
Asset fee @ 1.25% rate ..................... -- -- -- --
Asset fee @ 1.30% rate ..................... -- -- (2) --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------- ------------- ------------- -------------
Net investment activity ...................... (86,413) (438) (473,846) (2,331)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 4,459,537 5,931 389,637 --
Cost of mutual fund shares sold ............... (4,576,878) (5,843) (408,471) --
------------- ------------- ------------- -------------
Realized gain (loss) on investments .......... (117,341) 88 (18,834) --
Change in unrealized gain (loss) on investments 489,713 5,814 17,909,633 56,652
------------- ------------- ------------- -------------
Net gain (loss) on investments ............... 372,372 5,902 17,890,799 56,652
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 116,340 -- 417,852 --
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 402,299 5,464 17,834,805 54,321
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 21,535,431 757,896 95,817,883 3,573,555
Transfers between funds ....................... 3,800,935 157,648 13,757,369 83,693
Redemptions ................................... (383,762) -- (2,362,374) (70)
Contingent deferred sales charges (note 2) .... (3,534) -- (32,976) --
Adjustments to maintain reserves .............. 163 (2) (59,196) 7
------------- ------------- ------------- -------------
Net equity transactions .................... 24,949,233 915,542 107,120,706 3,657,185
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 25,351,532 921,006 124,955,511 3,711,506
Contract owners' equity beginning of period .... 921,006 -- 3,711,506 --
------------- ------------- ------------- -------------
Contract owners' equity end of period .......... 26,272,538 921,006 128,667,017 3,711,506
============= ============= ============= =============
</TABLE>
<PAGE> 7
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
FidVIPGrOpS MSEmMkt
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 67,013 -- 387,439 3,740
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (225,407) (596) (13,756) (54)
Asset fee @ 1.00% rate ..................... (198,453) (418) (5,701) (40)
Asset fee @ 1.05% rate ..................... (34,785) (123) (1,939) (16)
Asset fee @ 1.10% rate ..................... (23) -- -- --
Asset fee @ 1.15% rate ..................... -- -- -- --
Asset fee @ 1.20% rate ..................... (7) -- (8) --
Asset fee @ 1.25% rate ..................... -- -- (1) --
Asset fee @ 1.30% rate ..................... -- -- -- --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------- ------------- ------------- -------------
Net investment activity ...................... (391,662) (1,137) 366,034 3,630
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 312,351 3 1,077,168 810
Cost of mutual fund shares sold ............... (318,329) (3) (1,547,782) (823)
------------- ------------- ------------- -------------
Realized gain (loss) on investments .......... (5,978) -- (470,614) (13)
Change in unrealized gain (loss) on investments 11,843,161 44,999 (967,487) (1,847)
------------- ------------- ------------- -------------
Net gain (loss) on investments ............... 11,837,183 44,999 (1,438,101) (1,860)
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 232,948 -- -- 1,623
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 11,678,469 43,862 (1,072,067) 3,393
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 79,527,836 2,201,875 3,872,593 185,958
Transfers between funds ....................... 8,581,600 332,841 313,112 6,858
Redemptions ................................... (1,722,323) (304) (58,191) --
Contingent deferred sales charges (note 2) .... (20,999) -- (253) --
Adjustments to maintain reserves .............. (21,308) (4) (62) (1)
------------- ------------- ------------- -------------
Net equity transactions .................... 86,344,806 2,534,408 4,127,199 192,815
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 98,023,275 2,578,270 3,055,132 196,208
Contract owners' equity beginning of period .... 2,578,270 -- 196,208 --
------------- ------------- ------------- -------------
Contract owners' equity end of period .......... $ 100,601,545 2,578,270 3,251,340 196,208
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
NSATBal NSATCapAp
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 683,468 3,951 750,851 5,462
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (90,403) (195) (465,341) (739)
Asset fee @ 1.00% rate ..................... (70,281) (154) (270,821) (447)
Asset fee @ 1.05% rate ..................... (15,676) (110) (52,969) (244)
Asset fee @ 1.10% rate ..................... (11) -- (81) --
Asset fee @ 1.15% rate ..................... (7) -- (20) --
Asset fee @ 1.20% rate ..................... (9) -- (17) --
Asset fee @ 1.25% rate ..................... -- -- -- --
Asset fee @ 1.30% rate ..................... (1) -- -- --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------- ------------- ------------- -------------
Net investment activity ...................... 507,080 3,492 (38,398) 4,032
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 181,876 -- 2,717,344 --
Cost of mutual fund shares sold ............... (178,647) -- (2,728,836) --
------------- ------------- ------------- -------------
Realized gain (loss) on investments .......... 3,229 -- (11,492) --
Change in unrealized gain (loss) on investments 328,826 5,048 14,966,388 (9,492)
------------- ------------- ------------- -------------
Net gain (loss) on investments ............... 332,055 5,048 14,954,896 (9,492)
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 115,971 -- 5,341,096 52,894
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 955,106 8,540 20,257,594 47,434
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 33,253,731 818,465 150,374,491 2,528,751
Transfers between funds ....................... 4,913,679 65,644 25,963,419 88,972
Redemptions ................................... (833,930) (90) (3,752,392) (3,756)
Contingent deferred sales charges (note 2) .... (8,225) -- (30,248) --
Adjustments to maintain reserves .............. 177 (26) 53,212 4
------------- ------------- ------------- -------------
Net equity transactions .................... 37,325,432 883,993 172,608,482 2,613,971
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 38,280,538 892,533 192,866,076 2,661,405
Contract owners' equity beginning of period .... 892,533 -- 2,661,405 --
------------- ------------- ------------- -------------
Contract owners' equity end of period .......... 39,173,071 892,533 195,527,481 2,661,405
============= ============= ============= =============
</TABLE>
(Continued)
<PAGE> 8
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
NSATEqinc NSATGlobEq
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 75,504 989 141,975 871
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (34,439) (265) (39,570) (165)
Asset fee @ 1.00% rate ..................... (27,139) (116) (28,746) (116)
Asset fee @ 1.05% rate ..................... (5,129) (30) (8,199) (45)
Asset fee @ 1.10% rate ..................... -- -- (5) --
Asset fee @ 1.15% rate ..................... (1) -- -- --
Asset fee @ 1.20% rate ..................... (18) -- -- --
Asset fee @ 1.25% rate ..................... -- -- (2) --
Asset fee @ 1.30% rate ..................... -- -- -- --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... 8,778 578 65,453 545
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 376,534 2 685,356 --
Cost of mutual fund shares sold ............... (366,898) (3) (668,251) --
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 9,636 (1) 17,105 --
Change in unrealized gain (loss) on investments 869,248 9,100 936,891 3,267
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... 878,884 9,099 953,996 3,267
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 137,183 -- 98,132 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 1,024,845 9,677 1,117,581 3,812
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 10,836,292 524,315 12,466,313 505,387
Transfers between funds ....................... 736,897 58,870 1,290,714 4,389
Redemptions ................................... (392,814) (135) (359,325) --
Contingent deferred sales charges (note 2) .... (5,629) -- (2,129) --
Adjustments to maintain reserves .............. (359) 14 35 (105)
------------ ------------ ------------ ------------
Net equity transactions .................... 11,174,387 583,064 13,395,608 509,671
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 12,199,232 592,741 14,513,189 513,483
Contract owners' equity beginning of period .... 592,741 -- 513,483 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... $ 12,791,973 592,741 15,026,672 513,483
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATGvtBd NSATHIncBd
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 4,068,221 46,514 1,175,418 9,587
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (325,601) (1,060) (70,627) (359)
Asset fee @ 1.00% rate ..................... (228,102) (369) (51,930) (153)
Asset fee @ 1.05% rate ..................... (64,068) (301) (17,784) (125)
Asset fee @ 1.10% rate ..................... (51) -- -- --
Asset fee @ 1.15% rate ..................... (13) -- -- --
Asset fee @ 1.20% rate ..................... (11) -- (14) --
Asset fee @ 1.25% rate ..................... (14) -- (1) --
Asset fee @ 1.30% rate ..................... (1) -- -- --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... 3,450,360 44,784 1,035,062 8,950
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 6,875,359 24,775 1,434,798 663
Cost of mutual fund shares sold ............... (6,712,656) (24,775) (1,454,954) (653)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 162,703 -- (20,156) 10
Change in unrealized gain (loss) on investments 96,330 (27,259) (637,940) (1,663)
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... 259,033 (27,259) (658,096) (1,653)
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 644,842 -- -- --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 4,354,235 17,525 376,966 7,297
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 135,535,861 3,147,571 26,481,762 762,946
Transfers between funds ....................... (2,966,402) 4,912 2,932,999 144,381
Redemptions ................................... (4,331,237) -- (701,614) (643)
Contingent deferred sales charges (note 2) .... (23,933) -- (4,542) --
Adjustments to maintain reserves .............. 1,128 1 (12) --
------------ ------------ ------------ ------------
Net equity transactions .................... 128,215,417 3,152,484 28,708,593 906,684
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 132,569,652 3,170,009 29,085,559 913,981
Contract owners' equity beginning of period .... 3,170,009 -- 913,981 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... 135,739,661 3,170,009 29,999,540 913,981
============ ============ ============ ============
</TABLE>
<PAGE> 9
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
NSATMyMkt NSATSecBd
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 5,541,671 35,527 1,155,410 5,220
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (597,802) (4,055) (95,878) (353)
Asset fee @ 1.00% rate ..................... (367,633) (1,841) (61,058) (186)
Asset fee @ 1.05% rate ..................... (112,880) (1,142) (20,762) (71)
Asset fee @ 1.10% rate ..................... (56) -- (2) --
Asset fee @ 1.15% rate ..................... (1) -- -- --
Asset fee @ 1.20% rate ..................... (530) -- (20) --
Asset fee @ 1.25% rate ..................... -- -- (1) --
Asset fee @ 1.30% rate ..................... -- -- (1) --
Asset fee @ 1.35% rate ..................... (16) -- -- --
------------- ------------- ------------- -------------
Net investment activity ...................... 4,462,753 28,489 977,688 4,610
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 74,592,150 772,983 474,327 3
Cost of mutual fund shares sold ............... (74,592,150) (772,983) (482,830) (3)
------------- ------------- ------------- -------------
Realized gain (loss) on investments .......... -- -- (8,503) --
Change in unrealized gain (loss) on investments -- -- (757,239) (151)
------------- ------------- ------------- -------------
Net gain (loss) on investments ............... -- -- (765,742) (151)
------------- ------------- ------------- -------------
Reinvested capital gains ...................... -- -- 31,361 --
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 4,462,753 28,489 243,307 4,459
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 406,622,866 16,698,066 29,533,663 862,594
Transfers between funds ....................... (219,515,750) (3,252,991) 4,903,909 174,229
Redemptions ................................... (13,347,779) (289,851) (761,323) --
Contingent deferred sales charges (note 2) .... (133,217) (409) (7,092) --
Adjustments to maintain reserves .............. 36,549 2,636 78 14
------------- ------------- ------------- -------------
Net equity transactions .................... 173,662,669 13,157,451 33,669,235 1,036,837
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 178,125,422 13,185,940 33,912,542 1,041,296
Contract owners' equity beginning of period .... 13,185,940 -- 1,041,296 --
------------- ------------- ------------- -------------
Contract owners' equity end of period .......... $ 191,311,362 13,185,940 34,953,838 1,041,296
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
NSATMidCap NSATSmCapV
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 40,624 535 -- 590
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (20,251) (37) (83,736) (376)
Asset fee @ 1.00% rate ..................... (14,445) (62) (45,868) (190)
Asset fee @ 1.05% rate ..................... (4,536) (22) (9,629) (37)
Asset fee @ 1.10% rate ..................... (9) -- (7) --
Asset fee @ 1.15% rate ..................... -- -- (4) --
Asset fee @ 1.20% rate ..................... -- -- (35) --
Asset fee @ 1.25% rate ..................... -- -- (2) --
Asset fee @ 1.30% rate ..................... -- -- -- --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------- ------------- ------------- -------------
Net investment activity ...................... 1,383 414 (139,281) (13)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 1,063,903 -- 2,135,282 --
Cost of mutual fund shares sold ............... (1,093,420) -- (2,330,458) --
------------- ------------- ------------- -------------
Realized gain (loss) on investments .......... (29,517) -- (195,176) --
Change in unrealized gain (loss) on investments 397,911 5,439 (40,635) 4,678
------------- ------------- ------------- -------------
Net gain (loss) on investments ............... 368,394 5,439 (235,811) 4,678
------------- ------------- ------------- -------------
Reinvested capital gains ...................... -- -- -- 4,611
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 369,777 5,853 (375,092) 9,276
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 6,187,234 205,427 24,448,985 1,082,589
Transfers between funds ....................... 558,871 20,348 5,269,520 65,401
Redemptions ................................... (98,756) (2,559) (761,878) --
Contingent deferred sales charges (note 2) .... (2,133) -- (10,195) --
Adjustments to maintain reserves .............. 6 (7) 49 (112)
------------- ------------- ------------- -------------
Net equity transactions .................... 6,645,222 223,209 28,946,481 1,147,878
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 7,014,999 229,062 28,571,389 1,157,154
Contract owners' equity beginning of period .... 229,062 -- 1,157,154 --
------------- ------------- ------------- -------------
Contract owners' equity end of period .......... 7,244,061 229,062 29,728,543 1,157,154
============= ============= ============= =============
</TABLE>
(Continued)
<PAGE> 10
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
NSATSmCo NSATStrGro
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- -- -- 301
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (117,084) (473) (27,226) (83)
Asset fee @ 1.00% rate ..................... (81,828) (380) (13,699) (44)
Asset fee @ 1.05% rate ..................... (15,866) (83) (3,029) (23)
Asset fee @ 1.10% rate ..................... (7) -- (12) --
Asset fee @ 1.15% rate ..................... -- -- -- --
Asset fee @ 1.20% rate ..................... -- -- -- --
Asset fee @ 1.25% rate ..................... -- -- -- --
Asset fee @ 1.30% rate ..................... -- -- (1) --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... (214,785) (936) (43,967) 151
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 1,735,242 -- 487,613 1
Cost of mutual fund shares sold ............... (1,907,541) -- (466,818) (1)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... (172,299) -- 20,795 --
Change in unrealized gain (loss) on investments 424,838 (20,889) 809,463 8,439
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... 252,539 (20,889) 830,258 8,439
------------ ------------ ------------ ------------
Reinvested capital gains ...................... -- 39,296 -- --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 37,754 17,471 786,291 8,590
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 35,742,935 1,396,707 7,304,155 310,341
Transfers between funds ....................... 6,599,455 144,223 441,689 7,111
Redemptions ................................... (919,776) (19) (118,200) --
Contingent deferred sales charges (note 2) .... (7,264) -- (2,477) --
Adjustments to maintain reserves .............. 6 (67) (24) --
------------ ------------ ------------ ------------
Net equity transactions .................... 41,415,356 1,540,844 7,625,143 317,452
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 41,453,110 1,558,315 8,411,434 326,042
Contract owners' equity beginning of period .... 1,558,315 -- 326,042 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... $ 43,011,425 1,558,315 8,737,476 326,042
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATStrVal NSATTotRe
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 63,791 542 1,708,752 15,396
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (41,771) (125) (790,615) (2,108)
Asset fee @ 1.00% rate ..................... (23,731) (66) (504,264) (945)
Asset fee @ 1.05% rate ..................... (7,171) (31) (88,737) (369)
Asset fee @ 1.10% rate ..................... (1) -- (65) --
Asset fee @ 1.15% rate ..................... -- -- (29) --
Asset fee @ 1.20% rate ..................... (9) -- (28) --
Asset fee @ 1.25% rate ..................... -- -- (9) --
Asset fee @ 1.30% rate ..................... -- -- (8) --
Asset fee @ 1.35% rate ..................... -- -- (4) --
------------ ------------ ------------ ------------
Net investment activity ...................... (8,892) 320 324,993 11,974
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 1,450,301 -- 467,344 --
Cost of mutual fund shares sold ............... (1,513,062) -- (439,529) --
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... (62,761) -- 27,815 --
Change in unrealized gain (loss) on investments (125,831) 4,042 4,936,630 (80,013)
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... (188,592) 4,042 4,964,445 (80,013)
------------ ------------ ------------ ------------
Reinvested capital gains ...................... -- -- 11,040,291 175,028
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... (197,484) 4,362 16,329,729 106,989
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 12,996,713 364,129 262,212,521 5,708,934
Transfers between funds ....................... 616,493 114,972 8,063,395 247,938
Redemptions ................................... (291,210) -- (6,698,439) (5,049)
Contingent deferred sales charges (note 2) .... (1,123) -- (83,262) --
Adjustments to maintain reserves .............. (115) -- (796) (666)
------------ ------------ ------------ ------------
Net equity transactions .................... 13,320,758 479,101 263,493,419 5,951,157
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 13,123,274 483,463 279,823,148 6,058,146
Contract owners' equity beginning of period .... 483,463 -- 6,058,146 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... 13,606,737 483,463 285,881,294 6,058,146
============ ============ ============ ============
</TABLE>
<PAGE> 11
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
NBAMTGuard NBAMTMCGr
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 1,976 -- 2,804 --
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (72,339) (110) (60,842) (183)
Asset fee @ 1.00% rate ..................... (65,593) (158) (55,230) (427)
Asset fee @ 1.05% rate ..................... (12,071) (54) (11,986) (92)
Asset fee @ 1.10% rate ..................... (10) -- (1) --
Asset fee @ 1.15% rate ..................... -- -- -- --
Asset fee @ 1.20% rate ..................... -- -- (4) --
Asset fee @ 1.25% rate ..................... -- -- -- --
Asset fee @ 1.30% rate ..................... -- -- -- --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... (148,037) (322) (125,259) (702)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 3,798,426 34 2,635,124 2
Cost of mutual fund shares sold ............... (3,492,087) (32) (2,223,804) (2)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 306,339 2 411,320 --
Change in unrealized gain (loss) on investments 594,984 11,793 4,390,487 73,651
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... 901,323 11,795 4,801,807 73,651
------------ ------------ ------------ ------------
Reinvested capital gains ...................... -- -- 19,626 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 753,286 11,473 4,696,174 72,949
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 24,467,744 399,649 18,933,486 1,023,027
Transfers between funds ....................... 7,388,132 51,821 3,753,367 488,359
Redemptions ................................... (704,350) -- (610,060) (3,016)
Contingent deferred sales charges (note 2) .... (8,663) -- (5,247) --
Adjustments to maintain reserves .............. (16) (876) 10,095 3
------------ ------------ ------------ ------------
Net equity transactions .................... 31,142,847 450,594 22,081,641 1,508,373
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 31,896,133 462,067 26,777,815 1,581,322
Contract owners' equity beginning of period .... 462,067 -- 1,581,322 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... $ 32,358,200 462,067 28,359,137 1,581,322
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NBAMTPart OppAggGro
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 110,164 -- 9,456 --
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (403,079) (5,247) (66,368) (275)
Asset fee @ 1.00% rate ..................... (264,681) (1,929) (43,278) (120)
Asset fee @ 1.05% rate ..................... (43,176) (298) (9,592) (83)
Asset fee @ 1.10% rate ..................... (16) -- (7) --
Asset fee @ 1.15% rate ..................... (3) -- (2) --
Asset fee @ 1.20% rate ..................... (17) -- (26) --
Asset fee @ 1.25% rate ..................... (3) -- (5) --
Asset fee @ 1.30% rate ..................... -- -- (4) --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... (600,811) (7,474) (109,826) (478)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 11,129,126 8,557 1,420,396 1,564
Cost of mutual fund shares sold ............... (12,460,209) (8,600) (1,460,125) (1,616)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... (1,331,083) (43) (39,729) (52)
Change in unrealized gain (loss) on investments (3,000,603) 76,648 1,711,620 5,023
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... (4,331,686) 76,605 1,671,891 4,971
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 3,470,168 -- 97,107 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... (1,462,329) 69,131 1,659,172 4,493
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 107,647,557 12,820,732 21,395,189 690,779
Transfers between funds ....................... (8,050,973) 483,875 4,014,156 25,316
Redemptions ................................... (2,536,518) (12,173) (398,429) (192)
Contingent deferred sales charges (note 2) .... (22,496) -- (3,886) --
Adjustments to maintain reserves .............. (1,292) 21 66 45
------------ ------------ ------------ ------------
Net equity transactions .................... 97,036,278 13,292,455 25,007,096 715,948
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 95,573,949 13,361,586 26,666,268 720,441
Contract owners' equity beginning of period .... 13,361,586 -- 720,441 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... 108,935,535 13,361,586 27,386,709 720,441
============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 12
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
OppGro OppGrInc
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 37,971 -- 15,499 1,975
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (97,646) (182) (118,139) (341)
Asset fee @ 1.00% rate ..................... (61,251) (193) (87,278) (204)
Asset fee @ 1.05% rate ..................... (15,113) (94) (21,510) (129)
Asset fee @ 1.10% rate ..................... (5) -- (18) --
Asset fee @ 1.15% rate ..................... (2) -- (5) --
Asset fee @ 1.20% rate ..................... (6) -- (26) --
Asset fee @ 1.25% rate ..................... (6) -- -- --
Asset fee @ 1.30% rate ..................... (1) -- (4) --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... (136,059) (469) (211,481) 1,301
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 597,638 -- 1,051,542 8
Cost of mutual fund shares sold ............... (673,390) -- (1,137,377) (8)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... (75,752) -- (85,835) --
Change in unrealized gain (loss) on investments 4,326,733 9,743 (156,268) 25,274
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... 4,250,981 9,743 (242,103) 25,274
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 458,139 -- 341,298 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 4,573,061 9,274 (112,286) 26,575
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 34,076,956 933,456 47,098,256 953,722
Transfers between funds ....................... 2,552,479 7,668 4,855,602 104,635
Redemptions ................................... (796,810) (27) (1,267,689) (199)
Contingent deferred sales charges (note 2) .... (15,293) -- (14,711) --
Adjustments to maintain reserves .............. (7) (138) 6 (358)
------------ ------------ ------------ ------------
Net equity transactions .................... 35,817,325 940,959 50,671,464 1,057,800
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 40,390,386 950,233 50,559,178 1,084,375
Contract owners' equity beginning of period .... 950,233 -- 1,084,375 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... $ 41,340,619 950,233 51,643,553 1,084,375
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
VEWrldEMkt VEWrldHAs
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 10,120 -- 2,513 --
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (15,766) (204) (8,058) (79)
Asset fee @ 1.00% rate ..................... (11,953) (380) (3,644) (15)
Asset fee @ 1.05% rate ..................... (2,830) (6) (1,503) (17)
Asset fee @ 1.10% rate ..................... -- -- (5) --
Asset fee @ 1.15% rate ..................... -- -- -- --
Asset fee @ 1.20% rate ..................... (14) -- -- --
Asset fee @ 1.25% rate ..................... -- -- -- --
Asset fee @ 1.30% rate ..................... -- -- -- --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... (20,443) (590) (10,697) (111)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 1,437,687 505,309 1,320,656 --
Cost of mutual fund shares sold ............... (1,801,946) (492,562) (1,839,705) --
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... (364,259) 12,747 (519,049) --
Change in unrealized gain (loss) on investments (898,926) 4,143 (85,920) 3,319
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... (1,263,185) 16,890 (604,969) 3,319
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 8,995 -- 61,720 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... (1,274,633) 16,300 (553,946) 3,208
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 5,631,777 1,193,031 2,371,551 178,412
Transfers between funds ....................... (119,473) (549,841) 111,448 38,553
Redemptions ................................... (159,609) (1,956) (100,995) --
Contingent deferred sales charges (note 2) .... (976) -- (454) --
Adjustments to maintain reserves .............. 120 2 (228) 6
------------ ------------ ------------ ------------
Net equity transactions .................... 5,351,839 641,236 2,381,322 216,971
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 4,077,206 657,536 1,827,376 220,179
Contract owners' equity beginning of period .... 657,536 -- 220,179 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... 4,734,742 657,536 2,047,555 220,179
============ ============ ============ ============
</TABLE>
<PAGE> 13
NATIONWIDE VARIABLE ACCOUNT - 9
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
Year Ended December 31, 1998 and For the Period November 3, 1997
(commencement of operations) Through December 31, 1997
<TABLE>
<CAPTION>
VKMSRESec WPGrinc
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 10,631 19,701 108,063 1,508
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (67,026) (302) (39,367) (61)
Asset fee @ 1.00% rate ..................... (39,789) (166) (19,708) (130)
Asset fee @ 1.05% rate ..................... (7,635) (77) (6,454) (28)
Asset fee @ 1.10% rate ..................... (8) -- (2) --
Asset fee @ 1.15% rate ..................... (2) -- -- --
Asset fee @ 1.20% rate ..................... (26) -- -- --
Asset fee @ 1.25% rate ..................... -- -- (6) --
Asset fee @ 1.30% rate ..................... -- -- -- --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... (103,855) 19,156 42,526 1,289
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 1,342,798 -- 492,211 --
Cost of mutual fund shares sold ............... (1,619,581) -- (462,324) --
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... (276,783) -- 29,887 --
Change in unrealized gain (loss) on investments (1,172,272) (60,104) 416,403 6,055
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... (1,449,055) (60,104) 446,290 6,055
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 104,608 66,235 -- --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... (1,448,302) 25,287 488,816 7,344
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 17,955,980 917,137 11,279,862 402,032
Transfers between funds ....................... 861,422 117,890 1,072,048 25,646
Redemptions ................................... (416,792) -- (178,134) --
Contingent deferred sales charges (note 2) .... (1,112) -- (1,134) --
Adjustments to maintain reserves .............. (276) (46) (786) (2)
------------ ------------ ------------ ------------
Net equity transactions .................... 18,399,222 1,034,981 12,171,856 427,676
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 16,950,920 1,060,268 12,660,672 435,020
Contract owners' equity beginning of period .... 1,060,268 -- 435,020 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... $ 18,011,188 1,060,268 13,095,692 435,020
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
WPIntEq WPPVenCap
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 82,563 4,961 -- 16
Mortality and expense risk charges (note 2):
Asset fee @ 0.95% rate ..................... (53,651) (325) (17,995) (108)
Asset fee @ 1.00% rate ..................... (28,614) (112) (9,221) (177)
Asset fee @ 1.05% rate ..................... (7,209) (32) (3,019) (5)
Asset fee @ 1.10% rate ..................... -- -- -- --
Asset fee @ 1.15% rate ..................... -- -- -- --
Asset fee @ 1.20% rate ..................... -- -- -- --
Asset fee @ 1.25% rate ..................... -- -- (6) --
Asset fee @ 1.30% rate ..................... -- -- -- --
Asset fee @ 1.35% rate ..................... -- -- -- --
------------ ------------ ------------ ------------
Net investment activity ...................... (6,911) 4,492 (30,241) (274)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 2,101,509 5,961 1,184,605 447,873
Cost of mutual fund shares sold ............... (2,099,792) (6,534) (1,319,705) (460,704)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 1,717 (573) (135,100) (12,831)
Change in unrealized gain (loss) on investments (655,153) (43,991) 268,939 2,023
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... (653,436) (44,564) 133,839 (10,808)
------------ ------------ ------------ ------------
Reinvested capital gains ...................... -- 34,331 -- --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... (660,347) (5,741) 103,598 (11,082)
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 14,240,840 838,600 5,338,928 584,670
Transfers between funds ....................... 1,644,029 (19,613) 1,058,670 (427,813)
Redemptions ................................... (211,060) -- (134,332) (3,302)
Contingent deferred sales charges (note 2) .... (2,448) -- (810) --
Adjustments to maintain reserves .............. (112) 11 15 --
------------ ------------ ------------ ------------
Net equity transactions .................... 15,671,249 818,998 6,262,471 153,555
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .......... 15,010,902 813,257 6,366,069 142,473
Contract owners' equity beginning of period .... 813,257 -- 142,473 --
------------ ------------ ------------ ------------
Contract owners' equity end of period .......... 15,824,159 813,257 6,508,542 142,473
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 14
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide Variable Account-9 (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
Insurance Company (the Company) on May 22, 1997. The Account has been
registered as a unit investment trust under the Investment Company Act
of 1940.
The Company offers tax qualified and non-tax qualified Modified Single
Premium Deferred Variable Annuity Contracts through the Account. The
primary distribution for the contracts is through the brokerage
community; however, other distributors are 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
the payout phase may invest in the following:
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP);
American Century VP - American Century VP Income & Growth
(ACVPIncGr)
American Century VP - American Century VP International
(ACVPInt)
American Century VP - American Century VP Value (ACVPValue)
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)
Portfolio of the Dreyfus Variable Investment Fund (Dreyfus VIF);
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIPS);
Fidelity VIP - Equity-Income Portfolio - Service Class
(FidVIPEIS)
Fidelity VIP - Growth Portfolio - Service Class (FidVIPGrS)
Fidelity VIP - High Income Portfolio - Service Class
(FidVIPHIS)
Fidelity VIP - Overseas Portfolio - Service Class (FidVIPOvS)
Portfolio of the Fidelity Variable Insurance Products Fund II
(Fidelity VIP-II);
Fidelity VIP-II - Contrafund Portfolio - Service Class
(FidVIPConS)
Portfolio of the Fidelity Variable Insurance Products Fund III
(Fidelity VIP-III);
Fidelity VIP-III - Growth Opportunities Portfolio - Service
Class (FidVIPGrOpS)
Portfolio of the Morgan Stanley Universal Funds, Inc. (Morgan
Stanley);
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Balanced Fund (NSATBal)
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Equity Income Fund (NSATEqInc)
Nationwide SAT - Global Equity Fund (NSATGlobEq)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Multi Sector Bond Fund (NSATMSecBd)
Nationwide SAT - Select Advisers Mid Cap Fund (NSATMidCap)
<PAGE> 15
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
Nationwide SAT - Small Company Fund (NSATSmCo)
Nationwide SAT - Strategic Growth Fund (NSATStrGro)
Nationwide SAT - Strategic Value Fund (NSATStrVal)
Nationwide SAT - Total Return Fund (NSATTotRe)
Portfolios of the Neuberger & Berman Advisers Management Trust
(Neuberger &Berman AMT);
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
Neuberger & Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr)
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
Funds of the Oppenheimer Variable Account Funds (Oppenheimer VAF);
Oppenheimer VAF - Aggressive Growth Fund (OppAggGro)
(formerly Oppenheimer VAF - Capital Appreciation Fund)
Oppenheimer VAF - Growth Fund (OppGro)
Oppenheimer VAF - Growth & Income Fund (OppGrInc)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT);
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
Portfolio of the Van Kampen American Capital Life Investment Trust
(Van Kampen American Capital LIT);
Van Kampen American Capital LIT - Morgan Stanley Real Estate
Securities Portfolio (VKMSRESec)
Portfolios of the Warburg Pincus Trust;
Warburg Pincus Trust - Growth & Income Portfolio (WPGrInc)
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
Warburg Pincus Trust - Post Venture Capital Portfolio
(WPPVenCap)
At December 31, 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.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
(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 December 31, 1998. The cost of investments
sold is determined on the 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.
<PAGE> 16
(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
(a) Sales Charges
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 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. On NEA Valuebuilder Select Roth IRA and BOA V Roth IRA
contracts, for an additional charge of 0.15% of the daily net assets,
such charge will decline to 0%, after the purchases payment has been
held in the contract for 60 months.
For all contracts, except BOA Exclusive II, which have elected a death
benefit option at the time of application, the following long term care
facility provisions also apply. Beginning at the third contract
anniversary, surrender charges on withdrawals will not apply if a
contract owner is diagnosed with a terminal illness or has been
confined to a long term care facility or hospital for a continuous 90
day period which has commenced any time after the date of issue.
No sales charges are deducted on BOA Exclusive II contracts and no
sales charges are deducted on redemptions used to purchase units in the
fixed investment options of the Company.
(b) Mortality and Expense Risk Charges
The Company deducts a mortality and expense risk charge assessed
through the daily unit value calculation. Refer to the following table
to determine the mortality and risk expense associated with each of the
products offered in the Account:
<TABLE>
<CAPTION>
ASSET FEE RATE
-----------------------------------------------------------------------
0.95% 1.00% 1.05% 1.10% 1.15% 1.20% 1.25% 1.30% 1.35%
----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BOA Future/NEA Valuebuilder Future ....... X
Optional long term care facility
with a stepped up death benefit ................ X
Optional long term care facility
with a 5% enhanced death benefit ........................ X
BOA V/NEA Valuebuilder Select ..................................... X
Optional long term care facility
with a stepped up death benefit ......................................... X
Optional long term care facility
with a 5% enhanced death benefit ................................................ X
BOA Choice/BOA Vision II .......................................................... X
Optional long term care facility
with a 5% enhanced death benefit ......................................................... X
BOA Exclusive II .................................................................. X
Optional long term care facility
with a stepped up death benefit .................................................................. X
Optional long term care facility
with a 5% enhanced death benefit ........................................................................ X
</TABLE>
<PAGE> 17
(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.
<PAGE> 18
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1998.
<TABLE>
<CAPTION>
ANNUAL
Contract owners' equity represented by: UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Contracts in accumulation phase:
Asset fee @ 0.95% rate:
American Century VP -
American Century VP Income & Growth:
Tax qualified ........................................ 954,865 $13.081019 $12,490,607 26%
Non-tax qualified .................................... 1,156,159 13.081019 15,123,738 26%
American Century VP -
American Century VP International:
Tax qualified ........................................ 1,231,761 11.866841 14,617,112 18%
Non-tax qualified .................................... 1,439,143 11.866841 17,078,081 18%
American Century VP -
American Century VP Value:
Tax qualified ........................................ 628,798 10.689857 6,721,761 4%
Non-tax qualified .................................... 591,188 10.689857 6,319,715 4%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified ........................................ 897,734 13.034607 11,701,610 28%
Non-tax qualified .................................... 729,174 13.034607 9,504,497 28%
Dreyfus Stock Index Fund:
Tax qualified ........................................ 6,530,360 13.135997 85,782,789 27%
Non-tax qualified .................................... 6,930,101 13.135997 91,033,786 27%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified ........................................ 994,159 13.220513 13,143,292 29%
Non-tax qualified .................................... 1,635,130 13.220513 21,617,257 29%
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax qualified ........................................ 4,652,014 11.422130 53,135,909 10%
Non-tax qualified .................................... 4,431,491 11.422130 50,617,066 10%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax qualified ........................................ 2,225,770 13.848033 30,822,536 38%
Non-tax qualified .................................... 1,962,518 13.848033 27,177,014 38%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax qualified ........................................ 3,021,525 9.586675 28,966,378 (5)%
Non-tax qualified .................................... 3,109,107 9.586675 29,805,998 (5)%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax qualified ........................................ 630,058 11.047878 6,960,804 12%
Non-tax qualified .................................... 759,889 11.047878 8,395,161 12%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax qualified ........................................ 2,868,661 12.812355 36,754,303 29%
Non-tax qualified .................................... 2,993,987 12.812355 38,360,024 29%
</TABLE>
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C>
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax qualified ....................... 2,015,088 12.826216 25,845,954 23%
Non-tax qualified ................... 2,029,092 12.826216 26,025,572 23%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax qualified ....................... 148,936 7.395794 1,101,500 (29)%
Non-tax qualified ................... 152,995 7.395794 1,131,520 (29)%
Nationwide SAT - Balanced Fund:
Tax qualified ....................... 1,042,085 10.844036 11,300,407 7%
Non-tax qualified ................... 927,751 10.844036 10,060,565 7%
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified ....................... 4,235,753 13.369463 56,629,743 29%
Non-tax qualified ................... 4,697,136 13.369463 62,798,186 29%
Nationwide SAT - Equity Income Fund:
Tax qualified ....................... 237,366 11.588459 2,750,706 14%
Non-tax qualified ................... 340,149 11.588459 3,941,803 14%
Nationwide SAT - Global Equity Fund:
Tax qualified ....................... 296,907 11.921445 3,539,560 18%
Non-tax qualified ................... 382,578 11.921445 4,560,883 18%
Nationwide SAT - Government Bond Fund:
Tax qualified ....................... 3,607,650 10.941842 39,474,336 8%
Non-tax qualified ................... 3,232,045 10.941842 35,364,526 8%
Nationwide SAT - High Income Bond Fund:
Tax qualified ....................... 656,370 10.701912 7,024,414 5%
Non-tax qualified ................... 709,535 10.701912 7,593,381 5%
Nationwide SAT - Money Market Fund:
Tax qualified ....................... 4,931,150 10.504509 51,799,310 4%
Non-tax qualified ................... 5,513,782 10.504509 57,919,573 4%
Nationwide SAT - Multi Sector Bond Fund:
Tax qualified ....................... 915,760 10.252876 9,389,174 2%
Non-tax qualified ................... 934,096 10.252876 9,577,170 2%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax qualified ....................... 171,632 10.919701 1,874,170 10%
Non-tax qualified ................... 185,246 10.919701 2,022,831 10%
Nationwide SAT - Small Cap Value Fund:
Tax qualified ....................... 930,565 9.432351 8,777,416 (4)%
Non-tax qualified ................... 1,021,664 9.432351 9,636,693 (4)%
Nationwide SAT - Small Company Fund:
Tax qualified ....................... 1,269,546 9.617964 12,210,448 0%
Non-tax qualified ................... 1,253,383 9.617964 12,054,993 0%
Nationwide SAT - Strategic Growth Fund:
Tax qualified ....................... 265,377 11.582258 3,073,665 14%
Non-tax qualified ................... 223,704 11.582258 2,590,997 14%
Nationwide SAT - Strategic Value Fund:
Tax qualified ....................... 345,847 10.090240 3,489,679 (1)%
Non-tax qualified ................... 505,486 10.090240 5,100,475 (1)%
</TABLE>
(Continued)
<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C>
Nationwide SAT - Total Return Fund:
Tax qualified .................. 8,225,066 11.979444 98,531,718 17%
Non-tax qualified .............. 5,639,031 11.979444 67,552,456 17%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax qualified .................. 578,032 13.699229 7,918,593 30%
Non-tax qualified .............. 609,746 13.699229 8,353,050 30%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax qualified .................. 436,579 16.144809 7,048,485 38%
Non-tax qualified .............. 449,661 16.144809 7,259,691 38%
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified .................. 3,020,772 10.458607 31,593,067 3%
Non-tax qualified .............. 2,842,880 10.458607 29,732,565 3%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax qualified .................. 787,398 10.609896 8,354,211 11%
Non-tax qualified .............. 753,325 10.609896 7,992,700 11%
Oppenheimer VAF - Growth Fund:
Tax qualified .................. 916,203 12.070167 11,058,723 23%
Non-tax qualified .............. 1,094,091 12.070167 13,205,861 23%
Oppenheimer VAF -
Growth & Income Fund:
Tax qualified .................. 1,242,544 10.639805 13,220,426 4%
Non-tax qualified .............. 1,352,028 10.639805 14,385,314 4%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified .................. 217,873 5.751082 1,253,005 (35)%
Non-tax qualified .............. 279,325 5.751082 1,606,421 (35)%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax qualified .................. 82,690 6.139717 507,693 (32)%
Non-tax qualified .............. 115,681 6.139717 710,249 (32)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio:
Tax qualified .................. 646,017 9.050353 5,846,682 (12)%
Non-tax qualified .............. 606,338 9.050353 5,487,573 (12)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax qualified .................. 373,962 11.521372 4,308,555 11%
Non-tax qualified .............. 328,455 11.521372 3,784,252 11%
Warburg Pincus Trust -
International Equity Portfolio:
Tax qualified .................. 479,917 9.865775 4,734,753 4%
Non-tax qualified .............. 496,472 9.865775 4,898,081 4%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified .................. 192,595 10.394476 2,001,924 5%
Non-tax qualified .............. 209,056 10.394476 2,173,028 5%
</TABLE>
<PAGE> 21
Asset fee @ 1.00% rate:
<TABLE>
<S> <C> <C> <C> <C>
American Century VP -
American Century VP Income & Growth:
Tax qualified ....................... 583,554 13.073386 7,629,027 26%
Non-tax qualified ................... 612,111 13.073386 8,002,363 26%
American Century VP -
American Century VP International:
Tax qualified ....................... 667,671 11.859906 7,918,515 18%
Non-tax qualified ................... 795,739 11.859906 9,437,390 18%
American Century VP -
American Century VP Value:
Tax qualified ....................... 355,592 10.683601 3,799,003 4%
Non-tax qualified ................... 298,758 10.683601 3,191,811 4%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified ....................... 570,245 13.026995 7,428,579 28%
Non-tax qualified ................... 538,134 13.026995 7,010,269 28%
Dreyfus Stock Index Fund:
Tax qualified ....................... 4,403,681 13.128325 57,812,955 27%
Non-tax qualified ................... 4,086,832 13.128325 53,653,259 27%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified ....................... 620,733 13.212796 8,201,618 29%
Non-tax qualified ................... 689,993 13.212796 9,116,737 29%
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax qualified ....................... 3,163,281 11.415454 36,110,289 10%
Non-tax qualified ................... 3,558,258 11.415454 40,619,131 10%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax qualified ....................... 1,633,140 13.839948 22,602,573 38%
Non-tax qualified ................... 1,450,527 13.839948 20,075,218 38%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax qualified ....................... 1,716,342 9.581067 16,444,388 (5)%
Non-tax qualified ................... 1,953,504 9.581067 18,716,653 (5)%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax qualified ....................... 390,759 11.041416 4,314,533 12%
Non-tax qualified ................... 364,389 11.041416 4,023,371 12%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax qualified ....................... 1,744,153 12.804877 22,333,665 29%
Non-tax qualified ................... 1,750,402 12.804877 22,413,682 29%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax qualified ....................... 1,566,691 12.818700 20,082,942 23%
Non-tax qualified ................... 1,701,741 12.818700 21,814,107 23%
</TABLE>
(Continued)
<PAGE> 22
<TABLE>
<S> <C> <C> <C> <C>
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax qualified ....................... 50,958 7.391460 376,654 (29)%
Non-tax qualified ................... 56,822 7.391460 419,998 (29)%
Nationwide SAT - Balanced Fund:
Tax qualified ....................... 724,101 10.837697 7,847,587 7%
Non-tax qualified ................... 641,839 10.837697 6,956,057 7%
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified ....................... 2,719,427 13.361662 36,336,064 29%
Non-tax qualified ................... 2,067,286 13.361662 27,622,377 29%
Nationwide SAT - Equity Income Fund:
Tax qualified ....................... 182,603 11.581699 2,114,853 14%
Non-tax qualified ................... 263,284 11.581699 3,049,276 14%
Nationwide SAT - Global Equity Fund:
Tax qualified ....................... 209,682 11.914478 2,498,252 18%
Non-tax qualified ................... 265,967 11.914478 3,168,858 18%
Nationwide SAT - Government Bond Fund:
Tax qualified ....................... 2,389,465 10.935440 26,129,851 8%
Non-tax qualified ................... 2,162,208 10.935440 23,644,696 8%
Nationwide SAT - High Income Bond Fund:
Tax qualified ....................... 563,880 10.695657 6,031,067 5%
Non-tax qualified ................... 507,316 10.695657 5,426,078 5%
Nationwide SAT - Money Market Fund:
Tax qualified ....................... 3,146,947 10.498325 33,037,672 4%
Non-tax qualified ................... 2,859,923 10.498325 30,024,401 4%
Nationwide SAT - Multi Sector Bond Fund:
Tax qualified ....................... 628,805 10.246882 6,443,291 2%
Non-tax qualified ................... 548,001 10.246882 5,615,302 2%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax qualified ....................... 124,451 10.913315 1,358,173 10%
Non-tax qualified ................... 125,175 10.913315 1,366,074 10%
Nationwide SAT - Small Cap Value Fund:
Tax qualified ....................... 502,680 9.426837 4,738,682 (4)%
Non-tax qualified ................... 467,220 9.426837 4,404,407 (4)%
Nationwide SAT - Small Company Fund:
Tax qualified ....................... 832,015 9.612340 7,997,611 0%
Non-tax qualified ................... 830,194 9.612340 7,980,107 0%
Nationwide SAT - Strategic Growth Fund:
Tax qualified ....................... 105,819 11.575478 1,224,906 13%
Non-tax qualified ................... 115,940 11.575478 1,342,061 13%
Nationwide SAT - Strategic Value Fund:
Tax qualified ....................... 134,335 10.084334 1,354,679 (1)%
Non-tax qualified ................... 239,315 10.084334 2,413,332 (1)%
Nationwide SAT - Total Return Fund:
Tax qualified ....................... 4,784,644 11.972436 57,283,844 17%
Non-tax qualified ................... 3,784,283 11.972436 45,307,086 17%
</TABLE>
<PAGE> 23
<TABLE>
<S> <C> <C> <C> <C>
Neuberger & Berman AMT -
Guardian Portfolio:
Tax qualified ................ 519,550 13.691238 7,113,283 30%
Non-tax qualified ............ 425,826 13.691238 5,830,085 30%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax qualified ................ 347,143 16.135377 5,601,283 38%
Non-tax qualified ............ 372,662 16.135377 6,013,042 38%
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified ................ 1,949,091 10.452498 20,372,870 3%
Non-tax qualified ............ 1,997,553 10.452498 20,879,419 3%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax qualified ................ 395,607 10.603692 4,194,895 11%
Non-tax qualified ............ 446,338 10.603692 4,732,831 11%
Oppenheimer VAF - Growth Fund:
Tax qualified ................ 587,304 12.063121 7,084,719 23%
Non-tax qualified ............ 591,561 12.063121 7,136,072 23%
Oppenheimer VAF -
Growth & Income Fund:
Tax qualified ................ 825,742 10.633592 8,780,604 4%
Non-tax qualified ............ 1,013,404 10.633592 10,776,125 4%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified ................ 141,469 5.747723 813,125 (35)%
Non-tax qualified ............ 104,323 5.747723 599,620 (35)%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax qualified ................ 69,784 6.136113 428,203 (32)%
Non-tax qualified ............ 36,296 6.136113 222,716 (32)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio:
Tax qualified ................ 372,172 9.045055 3,366,316 (13)%
Non-tax qualified ............ 250,104 9.045055 2,262,204 (13)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax qualified ................ 150,366 11.514627 1,731,408 11%
Non-tax qualified ............ 193,659 11.514627 2,229,911 11%
Warburg Pincus Trust -
International Equity Portfolio:
Tax qualified ................ 216,678 9.860001 2,136,445 4%
Non-tax qualified ............ 284,936 9.860001 2,809,469 4%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified ................ 92,766 10.388404 963,691 5%
Non-tax qualified ............ 59,430 10.388404 617,383 5%
</TABLE>
(Continued)
<PAGE> 24
Asset fee @ 1.05% rate:
<TABLE>
<S> <C> <C> <C> <C>
American Century VP -
American Century VP Income & Growth:
Tax qualified ....................... 81,928 13.065728 1,070,449 26%
Non-tax qualified ................... 128,629 13.065728 1,680,632 26%
American Century VP -
American Century VP International:
Tax qualified ....................... 99,298 11.852979 1,176,977 18%
Non-tax qualified ................... 165,809 11.852979 1,965,331 18%
American Century VP -
American Century VP Value:
Tax qualified ....................... 77,126 10.677353 823,502 4%
Non-tax qualified ................... 72,329 10.677353 772,282 4%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified ....................... 89,640 13.019372 1,167,057 28%
Non-tax qualified ................... 135,100 13.019372 1,758,917 28%
Dreyfus Stock Index Fund:
Tax qualified ....................... 783,466 13.120640 10,279,575 27%
Non-tax qualified ................... 913,818 13.120640 11,989,877 27%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified ....................... 131,684 13.205079 1,738,898 29%
Non-tax qualified ................... 246,123 13.205079 3,250,074 29%
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax qualified ....................... 524,588 11.408770 5,984,904 10%
Non-tax qualified ................... 864,765 11.408770 9,865,905 10%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax qualified ....................... 253,263 13.831860 3,503,098 38%
Non-tax qualified ................... 343,224 13.831860 4,747,426 38%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax qualified ....................... 376,294 9.575458 3,603,187 (5)%
Non-tax qualified ................... 598,620 9.575458 5,732,061 (5)%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax qualified ....................... 91,010 11.034969 1,004,293 11%
Non-tax qualified ................... 137,943 11.034969 1,522,197 11%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax qualified ....................... 214,618 12.797393 2,746,551 29%
Non-tax qualified ................... 446,178 12.797393 5,709,915 29%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax qualified ....................... 231,845 12.811215 2,970,216 23%
Non-tax qualified ................... 295,189 12.811215 3,781,730 23%
</TABLE>
<PAGE> 25
<TABLE>
<S> <C> <C> <C> <C>
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax qualified ....................... 9,703 7.387124 71,677 (29)%
Non-tax qualified ................... 19,124 7.387124 141,271 (29)%
Nationwide SAT - Balanced Fund:
Tax qualified ....................... 123,286 10.831355 1,335,354 7%
Non-tax qualified ................... 149,449 10.831355 1,618,735 7%
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified ....................... 391,203 13.353842 5,224,063 29%
Non-tax qualified ................... 499,622 13.353842 6,671,873 29%
Nationwide SAT - Equity Income Fund:
Tax qualified ....................... 32,573 11.574924 377,030 14%
Non-tax qualified ................... 46,558 11.574924 538,905 14%
Nationwide SAT - Global Equity Fund:
Tax qualified ....................... 52,138 11.907510 620,834 18%
Non-tax qualified ................... 52,521 11.907510 625,394 18%
Nationwide SAT - Government Bond Fund:
Tax qualified ....................... 425,444 10.929045 4,649,697 8%
Non-tax qualified ................... 578,467 10.929045 6,322,092 8%
Nationwide SAT - High Income Bond Fund:
Tax qualified ....................... 168,923 10.689393 1,805,684 5%
Non-tax qualified ................... 196,834 10.689393 2,104,036 5%
Nationwide SAT - Money Market Fund:
Tax qualified ....................... 773,874 10.492136 8,119,591 4%
Non-tax qualified ................... 932,153 10.492136 9,780,276 4%
Nationwide SAT - Multi Sector Bond Fund:
Tax qualified ....................... 180,699 10.240891 1,850,519 2%
Non-tax qualified ................... 200,225 10.240891 2,050,482 2%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax qualified ....................... 20,280 10.906928 221,192 10%
Non-tax qualified ................... 35,289 10.906928 384,895 10%
Nationwide SAT - Small Cap Value Fund:
Tax qualified ....................... 73,139 9.421309 689,065 (4)%
Non-tax qualified ................... 149,068 9.421309 1,404,416 (4)%
Nationwide SAT - Small Company Fund:
Tax qualified ....................... 103,212 9.606706 991,527 0%
Non-tax qualified ................... 182,983 9.606706 1,757,864 0%
Nationwide SAT - Strategic Growth Fund:
Tax qualified ....................... 28,004 11.568711 323,970 13%
Non-tax qualified ................... 14,539 11.568711 168,197 13%
Nationwide SAT - Strategic Value Fund:
Tax qualified ....................... 36,418 10.078441 367,037 (1)%
Non-tax qualified ................... 85,804 10.078441 864,771 (1)%
Nationwide SAT - Total Return Fund:
Tax qualified ....................... 705,982 11.965436 8,447,382 17%
Non-tax qualified ................... 695,165 11.965436 8,317,952 17%
</TABLE>
(Continued)
<PAGE> 26
<TABLE>
<S> <C> <C> <C> <C>
Neuberger & Berman AMT -
Guardian Portfolio:
Tax qualified ................ 66,839 13.683246 914,574 30%
Non-tax qualified ............ 161,709 13.683246 2,212,704 30%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax qualified ................ 41,741 16.125954 673,113 38%
Non-tax qualified ............ 107,495 16.125954 1,733,459 38%
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified ................ 269,744 10.446379 2,817,848 3%
Non-tax qualified ............ 330,876 10.446379 3,456,456 3%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax qualified ................ 75,188 10.597477 796,803 11%
Non-tax qualified ............ 118,302 10.597477 1,253,703 11%
Oppenheimer VAF - Growth Fund:
Tax qualified ................ 110,392 12.056049 1,330,891 23%
Non-tax qualified ............ 122,036 12.056049 1,471,272 23%
Oppenheimer VAF -
Growth & Income Fund:
Tax qualified ................ 155,966 10.627355 1,657,506 4%
Non-tax qualified ............ 254,947 10.627355 2,709,412 4%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified ................ 31,317 5.744349 179,896 (35)%
Non-tax qualified ............ 46,981 5.744349 269,875 (35)%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax qualified ................ 10,468 6.132522 64,195 (32)%
Non-tax qualified ............ 17,880 6.132522 109,649 (32)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio:
Tax qualified ................ 40,468 9.039759 365,821 (13)%
Non-tax qualified ............ 71,613 9.039759 647,364 (13)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax qualified ................ 18,436 11.507907 212,160 11%
Non-tax qualified ............ 71,280 11.507907 820,284 11%
Warburg Pincus Trust -
International Equity Portfolio:
Tax qualified ................ 43,919 9.854235 432,788 4%
Non-tax qualified ............ 82,462 9.854235 812,600 4%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified ................ 32,373 10.382320 336,107 5%
Non-tax qualified ............ 39,431 10.382320 409,385 5%
</TABLE>
<PAGE> 27
Asset fee @ 1.10% rate:
<TABLE>
<S> <C> <C> <C> <C>
American Century VP -
American Century VP Income & Growth:
Tax qualified ....................... 7,515 12.515499 94,054 25%(a)
Non-tax qualified ................... 411 12.515499 5,144 25%(a)
American Century VP -
American Century VP International:
Non-tax qualified ................... 1,791 12.062037 21,603 21%(a)
American Century VP -
American Century VP Value:
Tax qualified ....................... 360 11.279817 4,061 13%(a)
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified ....................... 10,035 12.784895 128,296 28%(a)
Non-tax qualified ................... 706 12.784895 9,026 28%(a)
Dreyfus Stock Index Fund:
Tax qualified ....................... 29,563 12.464249 368,481 25%(a)
Non-tax qualified ................... 1,760 12.464249 21,937 25%(a)
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified ....................... 19,433 12.389971 240,774 24%(a)
Non-tax qualified ................... 366 12.389971 4,535 24%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax qualified ....................... 8,946 11.809798 105,650 18%(a)
Non-tax qualified ................... 384 11.809798 4,535 18%(a)
Fidelity VIP - Growth Portfolio -
Service Class:
Tax qualified ....................... 17,524 12.914475 226,313 29%(a)
Non-tax qualified ................... 382 12.914475 4,933 29%(a)
Fidelity VIP - High Income Portfolio -
Service Class:
Tax qualified ....................... 7,652 10.530579 80,580 5%(a)
Non-tax qualified ................... 71 10.530579 748 5%(a)
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax qualified ....................... 171 12.187321 2,084 22%(a)
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax qualified ....................... 12,351 12.797152 158,058 28%(a)
Non-tax qualified ................... 54 12.797152 691 28%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax qualified ....................... 3,636 12.309512 44,757 23%(a)
Non-tax qualified ................... 534 12.309512 6,573 23%(a)
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax qualified ....................... 18 11.395495 205 14%(a)
Nationwide SAT - Balanced Fund:
Tax qualified ....................... 2,359 10.677473 25,188 7%(a)
</TABLE>
(Continued)
<PAGE> 28
<TABLE>
<S> <C> <C> <C> <C>
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified ....................... 12,023 12.439602 149,561 24%(a)
Non-tax qualified ................... 1,118 12.439602 13,907 24%(a)
Nationwide SAT - Equity Income Fund:
Tax qualified ....................... 17 11.846282 201 18%(a)
Nationwide SAT - Global Equity Fund:
Tax qualified ....................... 586 12.212250 7,156 22%(a)
Non-tax qualified ................... 86 12.212250 1,050 22%(a)
Nationwide SAT - Government Bond Fund:
Tax qualified ....................... 9,774 9.853072 96,304 (1)%(a)
Non-tax qualified ................... 345 9.853072 3,399 (1)%(a)
Nationwide SAT - High Income Bond Fund:
Tax qualified ....................... 85 10.339812 879 3%(a)
Nationwide SAT - Money Market Fund:
Tax qualified ....................... 9,288 10.095781 93,770 1%(a)
Nationwide SAT - Multi Sector Bond Fund:
Tax qualified ....................... 338 10.245831 3,463 2%(a)
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax qualified ....................... 1,248 12.253848 15,293 23%(a)
Non-tax qualified ................... 36 12.253848 441 23%(a)
Nationwide SAT - Small Cap Value Fund:
Tax qualified ....................... 1,427 12.964349 18,500 30%(a)
Nationwide SAT - Small Company Fund:
Tax qualified ....................... 1,394 12.123056 16,900 21%(a)
Non-tax qualified ................... 89 12.123056 1,079 21%(a)
Nationwide SAT - Strategic Growth Fund:
Tax qualified ....................... 896 12.668723 11,351 27%(a)
Nationwide SAT - Strategic Value Fund:
Tax qualified ....................... 184 13.028676 2,397 30%(a)
Nationwide SAT - Total Return Fund:
Tax qualified ....................... 24,285 11.993303 291,257 20%(a)
Non-tax qualified ................... 1,477 11.993303 17,714 20%(a)
Neuberger & Berman AMT -
Guardian Portfolio:
Tax qualified ....................... 1,095 12.887023 14,111 29%(a)
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax qualified ....................... 318 14.077949 4,477 41%(a)
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified ....................... 2,949 11.858021 34,969 19%(a)
Oppenheimer VAF -
Aggressive Growth Fund:
Tax qualified ....................... 1,583 13.191805 20,883 32%(a)
Oppenheimer VAF - Growth Fund:
Tax qualified ....................... 591 13.244991 7,828 32%(a)
Non-tax qualified ................... 199 13.244991 2,636 32%(a)
</TABLE>
<PAGE> 29
<TABLE>
<S> <C> <C> <C> <C>
Oppenheimer VAF -
Growth & Income Fund:
Tax qualified ....................... 4,829 12.340636 59,593 23%(a)
Non-tax qualified ................... 274 12.340636 3,381 23%(a)
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified ....................... 18 12.634284 227 26%(a)
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax qualified ....................... 489 9.918535 4,850 (1)%(a)
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio:
Tax qualified ....................... 883 10.411332 9,193 4%(a)
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax qualified ....................... 252 11.896081 2,998 19%(a)
Warburg Pincus Trust -
International Equity Portfolio:
Tax qualified ....................... 2 11.551939 23 16%(a)
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified ....................... 61 12.839012 783 28%(a)
Asset fee @ 1.15% rate:
American Century VP -
American Century VP Income & Growth:
Tax qualified ....................... 1,887 12.513926 23,614 25%(a)
Non-tax qualified ................... 1,522 12.513926 19,046 25%(a)
American Century VP -
American Century VP International:
Tax qualified ....................... 1,080 12.060517 13,025 21%(a)
Non-tax qualified ................... 698 12.060517 8,418 21%(a)
American Century VP -
American Century VP Value:
Tax qualified ....................... 9 11.278389 102 13%(a)
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified ....................... 2,027 12.783289 25,912 28%(a)
Non-tax qualified ................... 662 12.783289 8,463 28%(a)
Dreyfus Stock Index Fund:
Tax qualified ....................... 6,396 12.462691 79,711 25%(a)
Non-tax qualified ................... 964 12.462691 12,014 25%(a)
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified ....................... 2,784 12.388419 34,489 24%(a)
Non-tax qualified ................... 1,343 12.388419 16,638 24%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax qualified ....................... 1,580 11.808307 18,657 18%(a)
Non-tax qualified ................... 324 11.808307 3,826 18%(a)
</TABLE>
(Continued)
<PAGE> 30
<TABLE>
<S> <C> <C> <C> <C>
Fidelity VIP - Growth Portfolio -
Service Class:
Tax qualified ....................... 667 12.912859 8,613 29%(a)
Non-tax qualified ................... 670 12.912859 8,652 29%(a)
Fidelity VIP - High Income Portfolio -
Service Class:
Tax qualified ....................... 852 10.529250 8,971 5%(a)
Non-tax qualified ................... 168 10.529250 1,769 5%(a)
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax qualified ....................... 221 12.185792 2,693 22%(a)
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax qualified ....................... 1,632 12.795546 20,882 28%(a)
Non-tax qualified ................... 887 12.795546 11,350 28%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax qualified ....................... 52 12.307964 640 23%(a)
Nationwide SAT - Balanced Fund:
Tax qualified ....................... 798 10.676123 8,520 7%(a)
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified ....................... 2,994 12.438039 37,239 24%(a)
Non-tax qualified ................... 573 12.438039 7,127 24%(a)
Nationwide SAT - Equity Income Fund:
Tax qualified ....................... 58 11.844786 687 18%(a)
Nationwide SAT - Global Equity Fund:
Tax qualified ....................... 97 12.210713 1,184 22%(a)
Nationwide SAT - Government Bond Fund:
Tax qualified ....................... 2,196 9.851828 21,635 (1)%(a)
Non-tax qualified ................... 346 9.851828 3,409 (1)%(a)
Nationwide SAT - High Income Bond Fund:
Tax qualified ....................... 2 10.338506 21 3%(a)
Nationwide SAT - Money Market Fund:
Tax qualified ....................... 99 10.094495 999 1%(a)
Nationwide SAT - Multi Sector Bond Fund:
Tax qualified ....................... 367 10.244538 3,760 2%(a)
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax qualified ....................... 81 12.252304 992 23%(a)
Nationwide SAT - Small Cap Value Fund:
Tax qualified ....................... 757 12.962717 9,813 30%(a)
Nationwide SAT - Small Company Fund:
Tax qualified ....................... 67 12.121529 812 21%(a)
Nationwide SAT - Strategic Growth Fund:
Tax qualified ....................... 52 12.667131 659 27%(a)
Nationwide SAT - Strategic Value Fund:
Tax qualified ....................... 283 13.027042 3,687 30%(a)
</TABLE>
<PAGE> 31
<TABLE>
<S> <C> <C> <C> <C>
Nationwide SAT - Total Return Fund:
Tax qualified ................... 4,692 11.991803 56,266 20%(a)
Non-tax qualified ............... 645 11.991803 7,735 20%(a)
Neuberger & Berman AMT -
Guardian Portfolio:
Tax qualified ................... 110 12.885403 1,417 29%(a)
Non-tax qualified ............... 2 12.885403 26 29%(a)
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax qualified ................... 120 14.076184 1,689 41%(a)
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified ................... 392 11.856528 4,648 19%(a)
Non-tax qualified ............... 110 11.856528 1,304 19%(a)
Oppenheimer VAF -
Aggressive Growth Fund:
Tax qualified ................... 461 13.190143 6,081 32%(a)
Oppenheimer VAF - Growth Fund:
Tax qualified ................... 206 13.243332 2,728 32%(a)
Oppenheimer VAF -
Growth & Income Fund:
Tax qualified ................... 1,075 12.339083 13,265 23%(a)
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified ................... 20 12.632701 253 26%(a)
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio:
Tax qualified ................... 227 10.410018 2,363 4%(a)
Asset fee @ 1.20% rate:
American Century VP -
American Century VP Income & Growth:
Tax qualified ................... 1,366 12.431326 16,981 24%(a)
Non-tax qualified ............... 1,176 12.431326 14,619 24%(a)
American Century VP -
American Century VP International:
Non-tax qualified ............... 223 10.904652 2,432 9%(a)
American Century VP -
American Century VP Value:
Tax qualified ................... 3 11.497731 34 15%(a)
Non-tax qualified ............... 1,306 11.497731 15,016 15%(a)
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified ................... 925 12.758878 11,802 28%(a)
Non-tax qualified ............... 2,098 12.758878 26,768 28%(a)
Dreyfus Stock Index Fund:
Tax qualified ................... 3,618 12.367188 44,744 24%(a)
Non-tax qualified ............... 26,086 12.367188 322,610 24%(a)
</TABLE>
(Continued)
<PAGE> 32
<TABLE>
<S> <C> <C> <C> <C>
Dreyfus VIF --
Capital Appreciation Portfolio:
Tax qualified ....................... 390 12.207586 4,761 22%(a)
Non-tax qualified ................... 2,910 12.207586 35,524 22%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax qualified ....................... 3,974 11.850451 47,094 19%(a)
Non-tax qualified ................... 776 11.850451 9,196 19%(a)
Fidelity VIP - Growth Portfolio -
Service Class:
Tax qualified ....................... 10,429 13.015101 135,734 30%(a)
Fidelity VIP - High Income Portfolio -
Service Class:
Tax qualified ....................... 991 10.384114 10,291 4%(a)
Non-tax qualified ................... 1,251 10.384114 12,991 4%(a)
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax qualified ....................... 3,385 11.296846 38,240 13%(a)
Non-tax qualified ................... 811 11.296846 9,162 13%(a)
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax qualified ....................... 1,641 12.602507 20,681 26%(a)
Non-tax qualified ................... 10,719 12.602507 135,086 26%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax qualified ....................... 1 12.421717 12 24%(a)
Non-tax qualified ................... 2,338 12.421717 29,042 24%(a)
Morgan Stanley -
Emerging Markets Debt Portfolio:
Non-tax qualified ................... 593 11.400149 6,760 14%(a)
Nationwide SAT - Balanced Fund:
Tax qualified ....................... 2 10.772545 22 8%(a)
Non-tax qualified ................... 842 10.772545 9,070 8%(a)
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified ....................... 35 12.392954 434 24%(a)
Non-tax qualified ................... 2,724 12.392954 33,758 24%(a)
Nationwide SAT - Equity Income Fund:
Non-tax qualified ................... 1,552 11.927845 18,512 19%(a)
Nationwide SAT - Government Bond Fund:
Tax qualified ....................... 10 10.174058 102 2%(a)
Non-tax qualified ................... 1,172 10.174058 11,924 2%(a)
Nationwide SAT - High Income Bond Fund:
Tax qualified ....................... 19 10.558563 201 6%(a)
Non-tax qualified ................... 1,154 10.558563 12,185 6%(a)
Nationwide SAT - Money Market Fund:
Non-tax qualified ................... 48,756 10.126097 493,708 1%(a)
Nationwide SAT - Multi Sector Bond Fund:
Non-tax qualified ................... 1,706 10.475252 17,871 5%(a)
</TABLE>
<PAGE> 33
<TABLE>
<S> <C> <C> <C> <C>
Nationwide SAT - Small Cap Value Fund:
Tax qualified ..................... 1,749 12.586199 22,013 26%(a)
Non-tax qualified ................. 1,878 12.586199 23,637 26%(a)
Nationwide SAT - Small Company Fund:
Tax qualified ..................... 3 12.016781 36 20%(a)
Nationwide SAT - Strategic Value Fund:
Tax qualified ..................... 853 12.477330 10,643 25%(a)
Nationwide SAT - Total Return Fund:
Tax qualified ..................... 335 11.968910 4,010 20%(a)
Non-tax qualified ................. 2,349 11.968910 28,115 20%(a)
Neuberger & Berman AMT -
Guardian Portfolio:
Tax qualified ..................... 29 12.307946 357 23%(a)
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Non-tax qualified ................. 1,744 13.702754 23,898 37%(a)
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified ..................... 874 11.821068 10,332 18%(a)
Non-tax qualified ................. 1,913 11.821068 22,614 18%(a)
Oppenheimer VAF -
Aggressive Growth Fund:
Tax qualified ..................... 47 12.961315 609 30%(a)
Non-tax qualified ................. 1,383 12.961315 17,925 30%(a)
Oppenheimer VAF - Growth Fund:
Tax qualified ..................... 1 12.752843 13 28%(a)
Non-tax qualified ................. 2,543 12.752843 32,430 28%(a)
Oppenheimer VAF -
Growth & Income Fund:
Tax qualified ..................... 806 12.149185 9,792 21%(a)
Non-tax qualified ................. 1,940 12.149185 23,569 21%(a)
Van Eck WIT -
Worldwide Emerging Markets Fund:
Non-tax qualified ................. 1,018 12.101814 12,320 21%(a)
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio:
Tax qualified ..................... 3 10.740684 32 7%(a)
Non-tax qualified ................. 2,201 10.740684 23,640 7%(a)
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax qualified ..................... 25 11.688738 292 17%(a)
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified ..................... 3 12.739606 38 27%(a)
</TABLE>
(Continued)
<PAGE> 34
<TABLE>
<S> <C> <C> <C> <C>
Asset fee @ 1.25% rate:
American Century VP --
American Century VP Value:
Non-tax qualified ................... 322 11.495807 3,702 15%(a)
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified ....................... 1,342 12.756741 17,120 28%(a)
Dreyfus Stock Index Fund:
Tax qualified ....................... 1,241 12.365124 15,345 24%(a)
Non-tax qualified ................... 1,686 12.365124 20,848 24%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax qualified ....................... 739 11.848469 8,756 18%(a)
Non-tax qualified ................... 1,549 11.848469 18,353 18%(a)
Fidelity VIP - Growth Portfolio -
Service Class:
Tax qualified ....................... 41 13.012933 534 30%(a)
Non-tax qualified ................... 1,201 13.012933 15,629 30%(a)
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax qualified ....................... 154 11.398245 1,755 14%(a)
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified ....................... 203 12.390885 2,515 24%(a)
Nationwide SAT - Global Equity Fund:
Tax qualified ....................... 155 11.745400 1,821 17%(a)
Non-tax qualified ................... 143 11.745400 1,680 17%(a)
Nationwide SAT - Government Bond Fund:
Tax qualified ....................... 997 10.172348 10,142 2%(a)
Non-tax qualified ................... 598 10.172348 6,083 2%(a)
Nationwide SAT - High Income Bond Fund:
Non-tax qualified ................... 151 10.556787 1,594 6%(a)
Nationwide SAT - Multi Sector Bond Fund:
Non-tax qualified ................... 153 10.473496 1,602 5%(a)
Nationwide SAT - Small Cap Value Fund:
Non-tax qualified ................... 310 12.584102 3,901 26%(a)
Nationwide SAT - Total Return Fund:
Tax qualified ....................... 1,038 11.966903 12,422 20%(a)
Non-tax qualified ................... 137 11.966903 1,639 20%(a)
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified ....................... 7 11.819096 83 18%(a)
Non-tax qualified ................... 789 11.819096 9,325 18%(a)
Oppenheimer VAF -
Aggressive Growth Fund:
Tax qualified ....................... 147 12.959156 1,905 30%(a)
Non-tax qualified ................... 678 12.959156 8,786 30%(a)
Oppenheimer VAF - Growth Fund:
Tax qualified ....................... 482 12.750719 6,146 28%(a)
</TABLE>
<PAGE> 35
<TABLE>
<S> <C> <C> <C> <C>
Oppenheimer VAF -
Growth & Income Fund:
Tax qualified ....................... 9 12.147153 109 21%(a)
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax qualified ....................... 499 11.686779 5,832 17%(a)
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified ....................... 487 12.737475 6,203 27%(a)
Asset fee @ 1.30% rate:
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified ....................... 571 12.754610 7,283 28%(a)
Dreyfus Stock Index Fund:
Tax qualified ....................... 1,040 12.363055 12,858 24%(a)
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified ....................... 343 12.203505 4,186 22%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax qualified ....................... 2,008 11.846486 23,788 18%(a)
Fidelity VIP - Growth Portfolio -
Service Class:
Tax qualified ....................... 123 13.010755 1,600 30%(a)
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax qualified ....................... 169 12.598299 2,129 26%(a)
Nationwide SAT - Balanced Fund:
Tax qualified ....................... 1,074 10.768931 11,566 8%(a)
Nationwide SAT - Government Bond Fund:
Tax qualified ....................... 144 10.170644 1,465 2%(a)
Nationwide SAT - Multi Sector Bond Fund:
Tax qualified ....................... 115 10.471735 1,204 5%(a)
Nationwide SAT - Small Company Fund:
Tax qualified ....................... 4 12.012761 48 20%(a)
Nationwide SAT - Strategic Growth Fund:
Tax qualified ....................... 134 12.459415 1,670 25%(a)
Nationwide SAT - Strategic Value Fund:
Tax qualified ....................... 3 12.473162 37 25%(a)
Nationwide SAT - Total Return Fund:
Tax qualified ....................... 1,548 11.964909 18,522 20%(a)
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified ....................... 3 11.817120 35 18%(a)
Oppenheimer VAF -
Aggressive Growth Fund:
Tax qualified ....................... 415 12.956986 5,377 30%(a)
</TABLE>
(Continued)
<PAGE> 36
<TABLE>
<S> <C> <C> <C> <C>
Oppenheimer VAF - Growth Fund:
Tax qualified ..................... 102 12.748581 1,300 27%(a)
Oppenheimer VAF -
Growth & Income Fund:
Tax qualified ..................... 367 12.145122 4,457 21%(a)
Asset fee @ 1.35% rate:
American Century VP -
American Century VP International:
Tax qualified ..................... 272 12.054452 3,279 21%(a)
Dreyfus Stock Index Fund:
Tax qualified ..................... 311 12.456413 3,874 25%(a)
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified ..................... 259 12.382184 3,207 24%(a)
Fidelity VIP - High Income Portfolio -
Service Class:
Tax qualified ..................... 295 10.523939 3,105 5%(a)
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified ..................... 51 12.431774 634 24%(a)
Nationwide SAT - Money Market Fund:
Tax qualified ..................... 4,169 10.089342 42,062 1%(a)
Nationwide SAT - Total Return Fund:
Tax qualified ..................... 265 11.985762 3,176 20%(a)
===== =========
$2,588,796,935
==============
</TABLE>
(a) This investment option was not being utilized for the entire period.
Accordingly, the annual return was computed for such period as the
investment option was utilized.
(b) The annual return does not include contract charges satisfied by
surrendering units.
<PAGE> 56
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Nationwide Life
Insurance Company and subsidiaries (collectively the Company), a wholly owned
subsidiary of Nationwide Financial Services, Inc., as of December 31, 1998 and
1997, and the related consolidated statements of income, shareholder's equity
and cash flows for each of the years in the three-year period ended December 31,
1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide Life
Insurance Company and subsidiaries as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1998, in conformity with generally accepted
accounting principles.
KPMG LLP
Columbus, Ohio
January 29, 1999
<PAGE> 2
<TABLE>
<CAPTION>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Balance Sheets
(in millions of dollars, except per share amounts)
December 31,
-----------------------
Assets 1998 1997
------ --------- ---------
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $14,245.1 $13,204.1
Equity securities 127.2 80.4
Mortgage loans on real estate, net 5,328.4 5,181.6
Real estate, net 243.6 311.4
Policy loans 464.3 415.3
Other long-term investments 44.0 25.2
Short-term investments 289.1 358.4
--------- ---------
20,741.7 19,576.4
--------- ---------
Cash 3.4 175.6
Accrued investment income 218.7 210.5
Deferred policy acquisition costs 2,022.2 1,665.4
Other assets 420.3 438.4
Assets held in separate accounts 50,935.8 37,724.4
--------- ---------
$74,342.1 $59,790.7
========= =========
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims $19,767.1 $18,702.8
Other liabilities 866.1 885.6
Liabilities related to separate accounts 50,935.8 37,724.4
--------- ---------
71,569.0 57,312.8
--------- ---------
Commitments and contingencies (notes 7 and 12)
Shareholder's equity:
Common stock, $1 par value. Authorized 5.0 million shares;
3.8 million shares issued and outstanding 3.8 3.8
Additional paid-in capital 914.7 914.7
Retained earnings 1,579.0 1,312.3
Accumulated other comprehensive income 275.6 247.1
--------- ---------
2,773.1 2,477.9
--------- ---------
$74,342.1 $59,790.7
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
<TABLE>
<CAPTION>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Income
(in millions of dollars)
Years ended December 31,
-----------------------------------
1998 1997 1996
-------- -------- ---------
<S> <C> <C> <C>
Revenues:
Policy charges $ 698.9 $ 545.2 $ 400.9
Life insurance premiums 200.0 205.4 198.6
Net investment income 1,481.6 1,409.2 1,357.8
Realized gains (losses) on investments 28.4 11.1 (0.3)
Other 66.8 46.5 35.9
-------- -------- --------
2,475.7 2,217.4 1,992.9
-------- -------- --------
Benefits and expenses:
Interest credited to policyholder account balances 1,069.0 1,016.6 982.3
Other benefits and claims 175.8 178.2 178.3
Policyholder dividends on participating policies 39.6 40.6 41.0
Amortization of deferred policy acquisition costs 214.5 167.2 133.4
Other operating expenses 419.7 384.9 342.4
-------- -------- --------
1,918.6 1,787.5 1,677.4
-------- -------- --------
Income from continuing operations before federal income tax expense 557.1 429.9 315.5
Federal income tax expense 190.4 150.2 110.9
-------- -------- --------
Income from continuing operations 366.7 279.7 204.6
Income from discontinued operations (less federal income tax expense
of $4.5 in 1996) -- -- 11.3
-------- -------- --------
Net income $ 366.7 $ 279.7 $ 215.9
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
<TABLE>
<CAPTION>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1998, 1997 and 1996
(in millions of dollars)
Accumulated
Additional other Total
Common paid-in Retained comprehensive shareholder's
stock capital earnings income equity
----- ------- -------- ------ ------
<S> <C> <C> <C> <C> <C>
December 31, 1995 $ 3.8 $ 657.2 $1,583.2 $ 384.3 $2,628.5
Comprehensive income:
Net income -- -- 215.9 -- 215.9
Net unrealized losses on securities
available-for-sale arising during
the year -- -- -- (170.9) (170.9)
--------
Total comprehensive income 45.0
--------
Dividends to shareholder -- (129.3) (366.5) (39.8) (535.6)
------ ------- -------- ------- --------
December 31, 1996 3.8 527.9 1,432.6 173.6 2,137.9
Comprehensive income:
Net income -- -- 279.7 -- 279.7
Net unrealized gains on securities
available-for-sale arising during
the year -- -- -- 73.5 73.5
--------
Total comprehensive income 353.2
--------
Capital contribution -- 836.8 -- -- 836.8
Dividend to shareholder -- (450.0) (400.0) -- (850.0)
------ ------- -------- ------- --------
December 31, 1997 3.8 914.7 1,312.3 247.1 2,477.9
Comprehensive income:
Net income -- -- 366.7 -- 366.7
Net unrealized gains on securities
available-for-sale arising during
the year -- -- -- 28.5 28.5
--------
Total comprehensive income 395.2
--------
Dividend to shareholder -- -- (100.0) -- (100.0)
------ ------- -------- ------- --------
December 31, 1998 $ 3.8 $ 914.7 $1,579.0 $ 275.6 $2,773.1
====== ======= ======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
<TABLE>
<CAPTION>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Cash Flows
(in millions of dollars)
Years ended December 31,
---------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 366.7 $ 279.7 $ 215.9
Adjustments to reconcile net income to net cash provided by operating
activities:
Interest credited to policyholder account balances 1,069.0 1,016.6 982.3
Capitalization of deferred policy acquisition costs (584.2) (487.9) (422.6)
Amortization of deferred policy acquisition costs 214.5 167.2 133.4
Amortization and depreciation (8.5) (2.0) 7.0
Realized gains on invested assets, net (28.4) (11.1) (0.3)
(Increase) decrease in accrued investment income (8.2) (0.3) 2.8
(Increase) decrease in other assets 16.4 (12.7) (38.9)
Decrease in policy liabilities (8.3) (23.1) (151.0)
(Decrease) increase in other liabilities (34.8) 230.6 191.4
Other, net (11.3) (10.9) (61.7)
--------- --------- ---------
Net cash provided by operating activities 982.9 1,146.1 858.3
--------- --------- ---------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 1,557.0 993.4 1,162.8
Proceeds from sale of securities available-for-sale 610.5 574.5 299.6
Proceeds from repayments of mortgage loans on real estate 678.2 437.3 309.0
Proceeds from sale of real estate 103.8 34.8 18.5
Proceeds from repayments of policy loans and sale of other invested assets 23.6 22.7 22.8
Cost of securities available-for-sale acquired (3,182.8) (2,828.1) (1,573.6)
Cost of mortgage loans on real estate acquired (829.1) (752.2) (972.8)
Cost of real estate acquired (0.8) (24.9) (7.9)
Policy loans issued and other invested assets acquired (88.4) (62.5) (57.7)
Short-term investments, net 69.3 (354.8) 28.0
--------- --------- ---------
Net cash used in investing activities (1,058.7) (1,959.8) (771.3)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from capital contributions -- 836.8 --
Cash dividends paid (100.0) -- (50.0)
Increase in investment product and universal life insurance
product account balances 2,682.1 2,488.5 1,781.8
Decrease in investment product and universal life insurance
product account balances (2,678.5) (2,379.8) (1,784.5)
--------- --------- ---------
Net cash (used in) provided by financing activities (96.4) 945.5 (52.7)
--------- --------- ---------
Net (decrease) increase in cash (172.2) 131.8 34.3
Cash, beginning of year 175.6 43.8 9.5
--------- --------- ---------
Cash, end of year $ 3.4 $ 175.6 $ 43.8
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1998, 1997 and 1996
(1) Organization and Description of Business
----------------------------------------
Prior to January 27, 1997, Nationwide Life Insurance Company (NLIC) was
wholly owned by Nationwide Corporation (Nationwide Corp.). On that
date, Nationwide Corp. contributed the outstanding shares of NLIC's
common stock to Nationwide Financial Services, Inc. (NFS), a holding
company formed by Nationwide Corp. in November 1996 for NLIC and the
other companies within the Nationwide Insurance Enterprise that offer
or distribute long-term savings and retirement products. On March 11,
1997, NFS completed an initial public offering of its Class A common
stock.
During 1996 and 1997, Nationwide Corp. and NFS completed certain
transactions in anticipation of the initial public offering that
focused the business of NFS on long-term savings and retirement
products. On September 24, 1996, NLIC declared a dividend payable to
Nationwide Corp. on January 1, 1997 consisting of the outstanding
shares of common stock of certain subsidiaries that do not offer or
distribute long-term savings or retirement products. In addition,
during 1996, NLIC entered into two reinsurance agreements whereby all
of NLIC's accident and health and group life insurance business was
ceded to two affiliates effective January 1, 1996. These subsidiaries,
through December 31, 1996, and all accident and health and group life
insurance business have been accounted for as discontinued operations
for all periods presented. See notes 10 and 14. Additionally, NLIC paid
$900.0 million of dividends, $50.0 million to Nationwide Corp. on
December 31, 1996 and $850.0 million to NFS, which then made an
equivalent dividend to Nationwide Corp., on February 24, 1997.
NFS contributed $836.8 million to the capital of NLIC during March
1997.
Wholly owned subsidiaries of NLIC include Nationwide Life and Annuity
Insurance Company (NLAIC), Nationwide Advisory Services, Inc.,
Nationwide Investment Services Corporation and NWE, Inc. NLIC and its
subsidiaries are collectively referred to as "the Company."
The Company is a leading provider of long-term savings and retirement
products, including variable annuities, fixed annuities and life
insurance.
(2) Summary of Significant Accounting Policies
------------------------------------------
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles, which differ
from statutory accounting practices prescribed or permitted by
regulatory authorities. Annual Statements for NLIC and NLAIC, filed
with the Department of Insurance of the State of Ohio (the Department),
are prepared on the basis of accounting practices prescribed or
permitted by the Department. Prescribed statutory accounting practices
include a variety of publications of the National Association of
Insurance Commissioners (NAIC), as well as state laws, regulations and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosures of contingent
assets and liabilities as of the date of the consolidated financial
statements and the reported amounts of revenues and expenses for the
reporting period. Actual results could differ significantly from those
estimates.
The most significant estimates include those used in determining
deferred policy acquisition costs, valuation allowances for mortgage
loans on real estate and real estate investments and the liability for
future policy benefits and claims. Although some variability is
inherent in these estimates, management believes the amounts provided
are adequate.
(a) Consolidation Policy
--------------------
The consolidated financial statements include the accounts of NLIC
and its wholly owned subsidiaries. Operations that are classified
and reported as discontinued operations are not consolidated but
rather are reported as "Income from discontinued operations" in
the accompanying consolidated statements of income. All
significant intercompany balances and transactions have been
eliminated.
(b) Valuation of Investments and Related Gains and Losses
-----------------------------------------------------
The Company is required to classify its fixed maturity securities
and equity securities as either held-to-maturity,
available-for-sale or trading. Fixed maturity securities are
classified as held-to-maturity when the Company has the positive
intent and ability to hold the securities to maturity and are
stated at amortized cost. Fixed maturity securities not classified
as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the
unrealized gains and losses, net of adjustments to deferred policy
acquisition costs and deferred federal income tax, reported as a
separate component of shareholder's equity. The adjustment to
deferred policy acquisition costs represents the change in
amortization of deferred policy acquisition costs that would have
been required as a charge or credit to operations had such
unrealized amounts been realized. The Company has no fixed
maturity securities classified as held-to-maturity or trading as
of December 31, 1998 or 1997.
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based
on a review by portfolio managers. The measurement of impaired
loans is based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a
practical expedient, at the fair value of the collateral, if the
loan is collateral dependent. Loans in foreclosure and loans
considered to be impaired are placed on non-accrual status.
Interest received on non-accrual status mortgage loans on real
estate is included in interest income in the period received.
Real estate is carried at cost less accumulated depreciation and
valuation allowances. Other long-term investments are carried on
the equity basis, adjusted for valuation allowances. Impairment
losses are recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the
assets' carrying amount.
Realized gains and losses on the sale of investments are
determined on the basis of specific security identification.
Estimates for valuation allowances and other than temporary
declines are included in realized gains and losses on investments.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(c) Revenues and Benefits
---------------------
Investment Products and Universal Life Insurance Products:
Investment products consist primarily of individual and group
variable and fixed deferred annuities. Universal life insurance
products include universal life insurance, variable universal life
insurance, corporate owned life insurance and other
interest-sensitive life insurance policies. Revenues for
investment products and universal life insurance products consist
of net investment income, asset fees, cost of insurance, policy
administration and surrender charges that have been earned and
assessed against policy account balances during the period. Policy
benefits and claims that are charged to expense include interest
credited to policy account balances and benefits and claims
incurred in the period in excess of related policy account
balances.
Traditional Life Insurance Products: Traditional life insurance
products include those products with fixed and guaranteed premiums
and benefits and consist primarily of whole life insurance,
limited-payment life insurance, term life insurance and certain
annuities with life contingencies. Premiums for traditional life
insurance products are recognized as revenue when due. Benefits
and expenses are associated with earned premiums so as to result
in recognition of profits over the life of the contract. This
association is accomplished by the provision for future policy
benefits and the deferral and amortization of policy acquisition
costs.
(d) Deferred Policy Acquisition Costs
---------------------------------
The costs of acquiring new business, principally commissions,
certain expenses of the policy issue and underwriting department
and certain variable sales expenses have been deferred. For
investment products and universal life insurance products,
deferred policy acquisition costs are being amortized with
interest over the lives of the policies in relation to the present
value of estimated future gross profits from projected interest
margins, asset fees, cost of insurance, policy administration and
surrender charges. For years in which gross profits are negative,
deferred policy acquisition costs are amortized based on the
present value of gross revenues. For traditional life insurance
products, these deferred policy acquisition costs are
predominantly being amortized with interest over the premium
paying period of the related policies in proportion to the ratio
of actual annual premium revenue to the anticipated total premium
revenue. Such anticipated premium revenue was estimated using the
same assumptions as were used for computing liabilities for future
policy benefits. Deferred policy acquisition costs are adjusted to
reflect the impact of unrealized gains and losses on fixed
maturity securities available-for-sale as described in note 2(b).
(e) Separate Accounts
-----------------
Separate account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. For all but $743.9 million of separate
account assets, the investment income and gains or losses of these
accounts accrue directly to the contractholders. The activity of
the separate accounts is not reflected in the consolidated
statements of income and cash flows except for the fees the
Company receives.
(f) Future Policy Benefits
----------------------
Future policy benefits for investment products in the accumulation
phase, universal life insurance and variable universal life
insurance policies have been calculated based on participants'
contributions plus interest credited less applicable contract
charges. The average interest rate credited on investment product
policy reserves was 6.0%, 6.1% and 6.3% for the years ended
December 31, 1998, 1997 and 1996, respectively.
Future policy benefits for traditional life insurance policies
have been calculated by the net level premium method using
interest rates varying from 6.0% to 10.5% and estimates of
mortality, morbidity, investment yields and withdrawals which were
used or which were being experienced at the time the policies were
issued, rather than the assumptions prescribed by state regulatory
authorities.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(g) Participating Business
----------------------
Participating business represents approximately 40% in 1998 (50%
in 1997 and 52% in 1996) of the Company's life insurance in force,
74% in 1998 (77% in 1997 and 78% in 1996) of the number of life
insurance policies in force, and 14% in 1998 (27% in 1997 and 40%
in 1996) of life insurance statutory premiums. The provision for
policyholder dividends is based on current dividend scales and is
included in "Future policy benefits and claims" in the
accompanying consolidated balance sheets.
(h) Federal Income Tax
------------------
The Company files a consolidated federal income tax return with
Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Nationwide Corp. The members of the consolidated
tax return group have a tax sharing arrangement which provides, in
effect, for each member to bear essentially the same federal
income tax liability as if separate tax returns were filed.
The Company utilizes the asset and liability method of accounting
for income tax. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under this method, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce the
deferred tax assets to the amounts expected to be realized.
(i) Reinsurance Ceded
-----------------
Reinsurance premiums ceded and reinsurance recoveries on benefits
and claims incurred are deducted from the respective income and
expense accounts. Assets and liabilities related to reinsurance
ceded are reported on a gross basis. All of the Company's accident
and health and group life insurance business is ceded to
affiliates and is accounted for as discontinued operations. See
notes 10 and 14.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(j) Recently Issued Accounting Pronouncements
-----------------------------------------
On January 1, 1998 the Company adopted SFAS No. 131 - Disclosures
about Segments of an Enterprise and Related Information (SFAS
131). SFAS 131 supersedes SFAS No. 14 - Financial Reporting for
Segments of a Business Enterprise. SFAS 131 establishes standards
for public business enterprises to report information about
operating segments in annual financial statements and selected
information about operating segments in interim financial reports.
SFAS 131 also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The
adoption of SFAS 131 did not affect results of operations or
financial position, nor did it affect the manner in which the
Company defines its operating segments. The segment information
required for annual financial statements is included in note 13.
On January 1, 1998, the Company adopted SFAS No. 132 - Employers'
Disclosures about Pensions and Other Postretirement Benefits (SFAS
132). SFAS 132 revises employers' disclosures about pension and
other postretirement benefit plans. The Statement does not change
the measurement or recognition of benefit plans in the financial
statements. The revised disclosures required by SFAS 132 are
included in note 8.
In June 1998, the FASB issued SFAS No. 133 - Accounting for
Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133
establishes accounting and reporting standards for derivative
instruments and for hedging activities. Contracts that contain
embedded derivatives, such as certain insurance contracts, are
also addressed by the Statement. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at
fair value. The Statement is effective for fiscal years beginning
after June 15, 1999. It may be implemented earlier provided
adoption occurs as of the beginning of any fiscal quarter after
issuance. The Company plans to adopt this Statement in first
quarter 2000 and is currently evaluating the impact on results of
operations and financial condition.
In March 1998, The American Institute of Certified Public
Accountant's Accounting Standards Executive Committee issued
Statement of Position 98-1 - Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use (SOP 98-1). SOP
98-1 provides guidance intended to standardize accounting
practices for costs incurred to develop or obtain computer
software for internal use. Specifically, SOP 98-1 provides
guidance for determining whether computer software is for internal
use and when costs incurred for internal use software are to be
capitalized. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998. The Company does
not expect the adoption of SOP 98-1, which occurred on January 1,
1999, to have a material impact on the Company's financial
statements.
(k) Reclassification
----------------
Certain items in the 1997 and 1996 consolidated financial
statements have been reclassified to conform to the 1998
presentation.
<PAGE> 11
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(3) Investments
-----------
The amortized cost, gross unrealized gains and losses and estimated
fair value of securities available-for-sale as of December 31, 1998 and
1997 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
(in millions of dollars) cost gains losses fair value
------------------------ ---- ----- ------ ----------
<S> <C> <C> <C> <C>
December 31, 1998:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 255.9 $ 13.0 $ -- $ 268.9
Obligations of states and political subdivisions 1.6 -- -- 1.6
Debt securities issued by foreign governments 106.5 4.5 -- 111.0
Corporate securities 9,899.6 423.2 (18.7) 10,304.1
Mortgage-backed securities 3,457.7 104.2 (2.4) 3,559.5
--------- ------ ------ ---------
Total fixed maturity securities 13,721.3 544.9 (21.1) 14,245.1
Equity securities 110.4 18.3 (1.5) 127.2
--------- ------ ------ ---------
$13,831.7 $563.2 $(22.6) $14,372.3
========= ====== ====== =========
December 31, 1997:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 305.1 $ 8.6 $ -- $ 313.7
Obligations of states and political subdivisions 1.6 -- -- 1.6
Debt securities issued by foreign governments 93.3 2.7 (0.2) 95.8
Corporate securities 8,698.7 355.5 (11.5) 9,042.7
Mortgage-backed securities 3,634.2 118.6 (2.5) 3,750.3
--------- ------ ------ ---------
Total fixed maturity securities 12,732.9 485.4 (14.2) 13,204.1
Equity securities 67.8 12.9 (0.3) 80.4
--------- ------ ------ ---------
$12,800.7 $498.3 $(14.5) $13,284.5
========= ====== ====== =========
</TABLE>
As of December 31, 1998 the Company had entered into S&P 500 futures
contracts with a notional amount of $20.0 million to reduce the risk of
changes in the fair market value of certain investments classified as
equity securities. These contracts had an unrealized loss of $1.3
million as of December 31, 1998 which is included in the recorded
amount of the equity securities and in accumulated other comprehensive
income, net of tax, similar to other unrealized gains and losses on
securities available-for-sale.
<PAGE> 12
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1998, by expected
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
(in millions of dollars) cost fair value
---- ----------
<S> <C> <C>
Fixed maturity securities available for sale:
Due in one year or less $ 2,019.9 $ 2,048.0
Due after one year through five years 8,169.1 8,470.6
Due after five years through ten years 2,795.0 2,927.7
Due after ten years 737.3 798.8
--------- ---------
$13,721.3 $14,245.1
========= =========
</TABLE>
The components of unrealized gains on securities available-for-sale,
net, were as follows as of December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997
---- ----
<S> <C> <C>
Gross unrealized gains $ 540.6 $ 483.8
Adjustment to deferred policy acquisition costs (116.6) (103.7)
Deferred federal income tax (148.4) (133.0)
------- -------
$ 275.6 $ 247.1
======= =======
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturity securities
held-to-maturity follows for the years ended December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $52.6 $137.5 $(289.2)
Equity securities 4.2 (2.7) 8.9
----- ------ -------
$56.8 $134.8 $(280.3)
===== ====== =======
</TABLE>
Proceeds from the sale of securities available-for-sale during 1998,
1997 and 1996 were $610.5 million, $574.5 million and $299.6 million,
respectively. During 1998, gross gains of $9.0 million ($9.9 million
and $6.6 million in 1997 and 1996, respectively) and gross losses of
$7.6 million ($18.0 million and $6.9 million in 1997 and 1996,
respectively) were realized on those sales. In addition, gross gains of
$15.1 million and gross losses of $0.7 million were realized in 1997
when the Company paid a dividend to NFS, which then made an equivalent
dividend to Nationwide Corp., consisting of securities having an
aggregate fair value of $850.0 million.
The recorded investment of mortgage loans on real estate considered to
be impaired as of December 31, 1998 was $3.7 million. No valuation
allowance has been recorded for these loans as of December 31, 1998.
The recorded investment of mortgage loans on real estate considered to
be impaired as of December 31, 1997 was $19.9 million which includes
$3.9 million of impaired mortgage loans on real estate for which the
related valuation allowance was $0.1 million and $16.0 million of
impaired mortgage loans on real estate for which there was no valuation
allowance. During 1998, the average recorded investment in impaired
mortgage loans on real estate was approximately $9.1 million ($31.8
million in 1997) and interest income recognized on those loans was $0.3
million ($1.0 million in 1997), which is equal to interest income
recognized using a cash-basis method of income recognition.
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the years ended December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997
---- ----
<S> <C> <C>
Allowance, beginning of year $42.5 $51.0
Reductions credited to operations (0.1) (1.2)
Direct write-downs charged against the allowance -- (7.3)
----- -----
Allowance, end of year $42.4 $42.5
===== =====
</TABLE>
Real estate is presented at cost less accumulated depreciation of $21.5
million as of December 31, 1998 ($45.1 million as of December 31, 1997)
and valuation allowances of $5.4 million as of December 31, 1998 ($11.1
million as of December 31, 1997).
Investments that were non-income producing for the twelve month period
preceding December 31, 1998 amounted to $42.4 million ($19.4 million
for 1997) and consisted of $32.7 million ($3.0 million in 1997) in
securities available-for-sale and $9.7 million ($16.4 million in 1997)
in real estate.
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $ 982.5 $ 911.6 $ 917.1
Equity securities 0.8 0.8 1.3
Mortgage loans on real estate 458.9 457.7 432.8
Real estate 40.4 42.9 44.3
Short-term investments 17.8 22.7 4.2
Other 30.7 21.0 4.0
-------- -------- --------
Total investment income 1,531.1 1,456.7 1,403.7
Less investment expenses 49.5 47.5 45.9
-------- -------- --------
Net investment income $1,481.6 $1,409.2 $1,357.8
======== ======== ========
</TABLE>
An analysis of realized gains (losses) on investments, net of valuation
allowances, by investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(0.7) $ 3.6 $(3.5)
Equity securities 2.1 2.7 3.2
Mortgage loans on real estate 3.9 1.6 (4.1)
Real estate and other 23.1 3.2 4.1
----- ----- -----
$28.4 $11.1 $(0.3)
===== ===== =====
</TABLE>
Fixed maturity securities with an amortized cost of $6.5 million and
$6.2 million as of December 31, 1998 and 1997, respectively, were on
deposit with various regulatory agencies as required by law.
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(4) Federal Income Tax
------------------
The Company's current federal income tax liability was $72.8 million
and $60.1 million as of December 31, 1998 and 1997, respectively.
The tax effects of temporary differences that give rise to significant
components of the net deferred tax liability as of December 31, 1998
and 1997 are as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997
---- ----
<S> <C> <C>
Deferred tax assets:
Future policy benefits $207.7 $200.1
Liabilities in Separate Accounts 319.9 242.0
Mortgage loans on real estate and real estate 17.5 19.0
Other assets and other liabilities 58.9 59.2
------ ------
Total gross deferred tax assets 604.0 520.3
Less valuation allowance (7.0) (7.0)
------ ------
Net deferred tax assets 597.0 513.3
------ ------
Deferred tax liabilities:
Deferred policy acquisition costs 568.7 480.5
Fixed maturity securities 212.2 193.3
Deferred tax on realized investment gains 34.8 40.1
Equity securities and other long-term investments 9.6 7.5
Other 21.6 22.2
------ ------
Total gross deferred tax liabilities 846.9 743.6
------ ------
Net deferred tax liability $249.9 $230.3
====== ======
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion of the
total gross deferred tax assets will not be realized. Nearly all future
deductible amounts can be offset by future taxable amounts or recovery
of federal income tax paid within the statutory carryback period. There
has been no change in the valuation allowance for the years ended
December 31, 1998, 1997 and 1996.
Federal income tax expense attributable to income from continuing
operations for the years ended December 31 was as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Currently payable $186.1 $121.7 $116.5
Deferred tax expense (benefit) 4.3 28.5 (5.6)
------ ------ ------
$190.4 $150.2 $110.9
====== ====== ======
</TABLE>
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Total federal income tax expense for the years ended December 31, 1998,
1997 and 1996 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(in millions of dollars) Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $195.0 35.0 $150.5 35.0 $110.4 35.0
Tax exempt interest and dividends
received deduction (4.9) (0.9) - 0.0 (0.2) (0.1)
Other, net 0.3 0.1 (0.3) (0.1) 0.7 0.3
------ ---- ------ ---- ------ ----
Total (effective rate of each year) $190.4 34.2 $150.2 34.9 $110.9 35.2
====== ==== ====== ==== ====== ====
</TABLE>
Total federal income tax paid was $173.4 million, $91.8 million and
$115.8 million during the years ended December 31, 1998, 1997 and 1996,
respectively.
(5) Comprehensive Income
--------------------
Pursuant to SFAS No. 130 - Reporting Comprehensive Income, which the
Company adopted January 1, 1998, the Consolidated Statements of
Shareholder's Equity include a new measure called "Comprehensive
Income". Comprehensive Income includes net income as well as certain
items that are reported directly within separate components of
shareholders' equity that bypass net income. Currently, the Company's
only component of Other Comprehensive Income is unrealized gains
(losses) on securities available-for-sale. The related before and after
federal tax amounts are as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Unrealized gains (losses) on securities
available-for-sale arising during the period:
Gross $ 58.2 $141.1 $(272.4)
Adjustment to deferred policy acquisition costs (12.9) (21.8) 57.0
Related federal income tax (expense) benefit (15.9) (41.7) 44.0
------ ------ ------
Net 29.4 77.6 (171.4)
------ ------ ------
Reclassification adjustment for net (gains) losses
on securities available-for-sale realized
during the period:
Gross (1.4) (6.3) 0.7
Related federal income tax expense (benefit) 0.5 2.2 (0.2)
------ ------ -------
Net (0.9) (4.1) 0.5
------ ------ -------
Total Other Comprehensive Income $ 28.5 $ 73.5 $(170.9)
====== ====== =======
</TABLE>
(6) Fair Value of Financial Instruments
-----------------------------------
The following disclosures summarize the carrying amount and estimated
fair value of the Company's financial instruments. Certain assets and
liabilities are specifically excluded from the disclosure requirements
of financial instruments. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The fair value of a financial instrument is defined as the amount at
which the financial instrument could be exchanged in a current
transaction between willing parties. In cases where quoted market
prices are not available, fair value is to be based on estimates using
present value or other valuation techniques. Many of the Company's
assets and liabilities subject to the disclosure requirements are not
actively traded, requiring fair values to be estimated by management
using present value or other valuation techniques. These techniques are
significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. Although fair value estimates
are calculated using assumptions that management believes are
appropriate, changes in assumptions could cause these estimates to vary
materially. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases,
could not be realized in the immediate settlement of the instruments.
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from the disclosure requirements, estimated fair value of policy
reserves on life insurance contracts is provided to make the fair value
disclosures more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
Fixed maturity and equity securities: The fair value for fixed
maturity securities is based on quoted market prices, where
available. For fixed maturity securities not actively traded, fair
value is estimated using values obtained from independent pricing
services or, in the case of private placements, is estimated by
discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the
investments. The fair value for equity securities is based on
quoted market prices. The carrying amount and fair value for
equity securities exclude the fair value of futures contracts
designated as hedges of equity securities.
Mortgage loans on real estate, net: The fair value for mortgage
loans on real estate is estimated using discounted cash flow
analyses, using interest rates currently being offered for similar
loans to borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations.
Fair value for mortgage loans in default is the estimated fair
value of the underlying collateral.
Policy loans, short-term investments and cash: The carrying amount
reported in the consolidated balance sheets for these instruments
approximates their fair value.
Separate account assets and liabilities: The fair value of assets
held in separate accounts is based on quoted market prices. The
fair value of liabilities related to separate accounts is the
amount payable on demand, which is net of certain surrender
charges.
Investment contracts: The fair value for the Company's liabilities
under investment type contracts is disclosed using two methods.
For investment contracts without defined maturities, fair value is
the amount payable on demand. For investment contracts with known
or determined maturities, fair value is estimated using discounted
cash flow analysis. Interest rates used are similar to currently
offered contracts with maturities consistent with those remaining
for the contracts being valued.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Policy reserves on life insurance contracts: Included are
disclosures for individual life insurance, universal life
insurance and supplementary contracts with life contingencies for
which the estimated fair value is the amount payable on demand.
Also included are disclosures for the Company's limited payment
policies, which the Company has used discounted cash flow analyses
similar to those used for investment contracts with known
maturities to estimate fair value.
Commitments to extend credit: Commitments to extend credit have
nominal fair value because of the short-term nature of such
commitments. See note 7.
Futures contracts: The fair value for futures contracts is based
on quoted market prices.
Carrying amount and estimated fair value of financial instruments
subject to disclosure requirements and policy reserves on life
insurance contracts were as follows as of December 31:
<TABLE>
<CAPTION>
1998 1997
------------------------- --------------------------
Carrying Estimated Carrying Estimated
(in millions of dollars) amount fair value amount fair value
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $14,245.1 $14,245.1 $13,204.1 $13,204.1
Equity securities 128.5 128.5 80.4 80.4
Mortgage loans on real estate, net 5,328.4 5,527.6 5,181.6 5,509.7
Policy loans 464.3 464.3 415.3 415.3
Short-term investments 289.1 289.1 358.4 358.4
Cash 3.4 3.4 175.6 175.6
Assets held in separate accounts 50,935.8 50,935.8 37,724.4 37,724.4
Liabilities:
Investment contracts 15,468.7 15,158.6 14,708.2 14,322.1
Policy reserves on life insurance contracts 3,914.0 3,768.9 3,345.4 3,182.4
Liabilities related to separate accounts 50,935.8 49,926.5 37,724.4 36,747.0
Futures contracts 1.3 1.3 -- --
</TABLE>
(7) Risk Disclosures
----------------
The following is a description of the most significant risks facing
life insurers and how the Company mitigates those risks:
Credit Risk: The risk that issuers of securities owned by the Company
or mortgagors on mortgage loans on real estate owned by the Company
will default or that other parties, including reinsurers, which owe the
Company money, will not pay. The Company minimizes this risk by
adhering to a conservative investment strategy, by maintaining
reinsurance and credit and collection policies and by providing for any
amounts deemed uncollectible.
Interest Rate Risk: The risk that interest rates will change and cause
a decrease in the value of an insurer's investments. This change in
rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent that
liabilities come due more quickly than assets mature, an insurer would
have to borrow funds or sell assets prior to maturity and potentially
recognize a gain or loss.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Legal/Regulatory Risk: The risk that changes in the legal or regulatory
environment in which an insurer operates will result in increased
competition, reduced demand for a company's products, or create
additional expenses not anticipated by the insurer in pricing its
products. The Company mitigates this risk by offering a wide range of
products and by operating throughout the United States, thus reducing
its exposure to any single product or jurisdiction, and also by
employing underwriting practices which identify and minimize the
adverse impact of this risk.
Financial Instruments with Off-Balance-Sheet Risk: The Company is a
party to financial instruments with off-balance-sheet risk in the
normal course of business through management of its investment
portfolio. These financial instruments include commitments to extend
credit in the form of loans. These instruments involve, to varying
degrees, elements of credit risk in excess of amounts recognized on the
consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property represents
the collateral if the commitment is funded. The Company's policy for
new mortgage loans on real estate is to lend no more than 75% of
collateral value. Should the commitment be funded, the Company's
exposure to credit loss in the event of nonperformance by the borrower
is represented by the contractual amounts of these commitments less the
net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments.
Commitments on mortgage loans on real estate of $156.0 million
extending into 1999 were outstanding as of December 31, 1998. The
Company also had $40.0 million of commitments to purchase fixed
maturity securities outstanding as of December 31, 1998.
Significant Concentrations of Credit Risk: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the
United States. The Company has a diversified portfolio with no more
than 22% (20% in 1997) in any geographic area and no more than 2% (2%
in 1997) with any one borrower as of December 31, 1998. As of December
31, 1998, 42% (46% in 1997) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed retail
properties.
Reinsurance: The Company has entered into a reinsurance contract to
cede a portion of its general account individual annuity business to
The Franklin Life Insurance Company (Franklin). Total recoveries due
from Franklin were $187.9 million and $220.2 million as of December 31,
1998 and 1997, respectively. The contract is immaterial to the
Company's results of operations. The ceding of risk does not discharge
the original insurer from its primary obligation to the policyholder.
Under the terms of the contract, Franklin has established a trust as
collateral for the recoveries. The trust assets are invested in
investment grade securities, the market value of which must at all
times be greater than or equal to 102% of the reinsured reserves.
(8) Pension Plan and Postretirement Benefits Other Than Pensions
------------------------------------------------------------
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least
one year of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company. Assets of the
Retirement Plan are invested in group annuity contracts of NLIC and
Employers Life Insurance Company of Wausau (ELICW).
Pension costs charged to operations by the Company during the years
ended December 31, 1998, 1997 and 1996 were $2.0 million, $7.5 million
and $7.4 million, respectively. The Company has recorded a prepaid
pension asset of $5.0 million as of December 31, 1998 and no prepaid or
accrued pension asset or expense as of December 31, 1997.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years
of service with the Company after reaching age 40. Postretirement
health care benefit contributions are adjusted annually and contain
cost-sharing features such as deductibles and coinsurance. In addition,
there are caps on the Company's portion of the per-participant cost of
the postretirement health care benefits. These caps can increase
annually, but not more than three percent. The Company's policy is to
fund the cost of health care benefits in amounts determined at the
discretion of management. Plan assets are invested primarily in group
annuity contracts of NLIC.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation (APBO), however, certain affiliated
companies elected to amortize their initial transition obligation over
periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of December 31,
1998 and 1997 was $40.1 million and $36.5 million, respectively, and
the net periodic postretirement benefit cost (NPPBC) for 1998, 1997 and
1996 was $4.1 million, $3.0 million and $3.3 million, respectively.
Information regarding the funded status of the pension plan as a whole
and the postretirement life and health care benefit plan as a whole as
of December 31, 1998 and 1997 follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
--------------------- -----------------------
(in millions of dollars) 1998 1997 1998 1997
--------------------------------------------------------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $2,033.8 $1,847.8 $237.9 $ 200.7
Service cost 87.6 77.3 9.8 7.0
Interest cost 123.4 118.6 15.4 14.0
Actuarial loss 123.2 60.0 15.6 24.4
Plan curtailment in 1998/merger in 1997 (107.2) 1.5 - -
Benefits paid (75.8) (71.4) (8.6) (8.2)
-------- -------- ------- -------
Benefit obligation at end of year 2,185.0 2,033.8 270.1 237.9
-------- -------- ------- -------
Change in plan assets:
Fair value of plan assets at beginning of year 2,212.9 1,947.9 69.2 63.0
Actual return on plan assets 300.7 328.1 5.0 3.6
Employer contribution 104.1 7.2 12.1 10.6
Plan merger - 1.1 - -
Benefits paid (75.8) (71.4) (8.4) (8.0)
-------- -------- ------- -------
Fair value of plan assets at end of year 2,541.9 2,212.9 77.9 69.2
-------- -------- ------- -------
Funded status 356.9 179.1 (192.2) (168.7)
Unrecognized prior service cost 31.5 34.7 - -
Unrecognized net (gains) losses (345.7) (330.7) 16.0 1.6
Unrecognized net (asset) obligation at transition (11.0) 33.3 1.3 1.5
-------- -------- ------- -------
Prepaid (accrued) benefit cost $ 31.7 $ (83.6) $(174.9) $(165.6)
======== ======== ======= =======
</TABLE>
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of the pension plan and
postretirement life and health care benefit plan:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
-------------------- -----------------------
1998 1997 1998 1997
-------- ------ -------- --------
<S> <C> <C> <C> <C>
Weighted average discount rate 5.50% 6.00% 6.65% 6.70%
Rate of increase in future compensation levels 3.75% 4.25% -- --
Assumed health care cost trend rate:
Initial rate -- -- 15.00% 12.13%
Ultimate rate -- -- 8.00% 6.12%
Uniform declining period -- -- 15 Years 12 Years
</TABLE>
The net periodic pension cost for the pension plan as a whole for the
years ended December 31, 1998, 1997 and 1996 follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
-------------------------------------------------------------------------------- ---- ----
<S> <C> <C>
Service cost (benefits earned during the period) $ 87.6 $ 77.3 $ 75.5
Interest cost on projected benefit obligation 123.4 118.6 105.5
Expected return on plan assets (159.0) (139.0) (116.1)
Recognized gains (3.8) - -
Amortization of prior service cost 3.2 3.2 3.2
Amortization of unrecognized transition obligation 4.2 4.2 4.1
------- ------- -------
$ 55.6 $ 64.3 $ 72.2
======= ======= =======
</TABLE>
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its
affiliation with the Nationwide Insurance Enterprise and employees of
WSC ended participation in the plan. A curtailment gain of $67.1
million resulted (consisting of a $107.2 million reduction in the
projected benefit obligation, net of the write-off of the $40.1 million
remaining unamortized transition obligation related to WSC). The
Company anticipates that the plan will settle the obligation related to
WSC employees with a transfer of assets during 1999.
Basis for measurements, net periodic pension cost for the pension plan:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate 6.00% 6.50% 6.00%
Rate of increase in future compensation levels 4.25% 4.75% 4.25%
Expected long-term rate of return on plan assets 7.25% 7.25% 6.75%
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The amount of NPPBC for the postretirement benefit plan as a whole for
the years ended December 31, 1998, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service cost (benefits attributed to employee service during the year) $ 9.8 $ 7.0 $ 6.5
Interest cost on accumulated postretirement benefit obligation 15.4 14.0 13.7
Actual return on plan assets (5.0) (3.6) (4.3)
Amortization of unrecognized transition obligation of affiliates 0.2 0.2 0.2
Net amortization and deferral 1.2 (0.5) 1.8
----- ----- -----
$21.6 $17.1 $17.9
===== ===== =====
</TABLE>
Actuarial assumptions used for the measurement of the accumulated
postretirement benefit obligation (APBO) and the NPPBC for the
postretirement benefit plan for 1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- ----
<S> <C> <C> <C>
NPPBC:
Discount rate 6.70% 7.25% 6.65%
Long term rate of return on plan
assets, net of tax 5.83% 5.89% 4.80%
Assumed health care cost trend rate:
Initial rate 12.00% 11.00% 11.00%
Ultimate rate 6.00% 6.00% 6.00%
Uniform declining period 12 Years 12 Years 12 Years
</TABLE>
For the postretirement benefit plan as a whole, a one percentage point
increase or decrease in the assumed health care cost trend rate would
have no impact on the APBO as of December 31, 1998 and have no impact
on the NPPBC for the year ended December 31, 1998.
(9) Shareholder's Equity, Regulatory Risk-Based Capital, Retained Earnings
----------------------------------------------------------------------
and Dividend Restrictions
-------------------------
Ohio, NLIC's and NLAIC's state of domicile, imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. NLIC and NLAIC each exceed
the minimum risk-based capital requirements.
The statutory capital and surplus of NLIC as of December 31, 1998, 1997
and 1996 was $1.32 billion, $1.13 billion and $1.00 billion,
respectively. The statutory net income of NLIC for the years ended
December 31, 1998, 1997 and 1996 was $171.0 million, $111.7 million and
$73.2 million, respectively.
The Company is limited in the amount of shareholder dividends it may
pay without prior approval by the Department. As of December 31, 1998,
the maximum amount available for dividend payment from the Company to
its shareholder without prior approval of the Department was $71.0
million.
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
In addition, the payment of dividends by NLIC may also be subject to
restrictions set forth in the insurance laws of New York that limit the
amount of statutory profits on NLIC's participating policies (measured
before dividends to policyholders) that can inure to the benefit of the
Company and its shareholder.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and shareholder dividends
in the future.
(10) Transactions With Affiliates
----------------------------
As part of the restructuring described in note 1, NLIC paid a dividend
valued at $485.7 million to Nationwide Corp. on January 1, 1997
consisting of the outstanding shares of common stock of ELICW, National
Casualty Company (NCC) and West Coast Life Insurance Company (WCLIC).
Also, on February 24, 1997, NLIC paid a dividend to NFS, and NFS paid
an equivalent dividend to Nationwide Corp., consisting of securities
having an aggregate fair value of $850.0 million. The Company
recognized a gain of $14.4 million on the transfer of securities.
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1998, 1997 and 1996, the
Company made lease payments to NMIC and its subsidiaries of $8.0
million, $8.4 million and $9.1 million, respectively.
Pursuant to a cost sharing agreement among NMIC and certain of its
direct and indirect subsidiaries, including the Company, NMIC provides
certain operational and administrative services, such as sales support,
advertising, personnel and general management services, to those
subsidiaries. Expenses covered by this agreement are subject to
allocation among NMIC, the Company and other affiliates. Amounts
allocated to the Company were $95.0 million, $85.8 million and $101.6
million in 1998, 1997 and 1996, respectively. The allocations are based
on techniques and procedures in accordance with insurance regulatory
guidelines. Measures used to allocate expenses among companies include
individual employee estimates of time spent, special cost studies,
salary expense, commissions expense and other methods agreed to by the
participating companies that are within industry guidelines and
practices. The Company believes these allocation methods are
reasonable. In addition, the Company does not believe that expenses
recognized under the inter-company agreements are materially different
than expenses that would have been recognized had the Company operated
on a stand alone basis. Amounts payable to NMIC from the Company under
the cost sharing agreement were $31.9 million and $20.5 million as of
December 31, 1998 and 1997, respectively.
The Company also participates in intercompany repurchase agreements
with affiliates whereby the seller will transfer securities to the
buyer at a stated value. Upon demand or a stated period, the securities
will be repurchased by the seller at the original sales price plus a
price differential. Transactions under the agreements during 1998 and
1997 were not material. The Company believes that the terms of the
repurchase agreements are materially consistent with what the Company
could have obtained with unaffiliated parties.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Intercompany reinsurance agreements exist between NLIC and,
respectively, NMIC and ELICW whereby all of NLIC's accident and health
and group life insurance business is ceded on a modified coinsurance
basis. NLIC entered into the reinsurance agreements during 1996 because
the accident and health and group life insurance business was unrelated
to the Company's long-term savings and retirement products.
Accordingly, the accident and health and group life insurance business
has been accounted for as discontinued operations for all periods
presented. Under modified coinsurance agreements, invested assets are
retained by the ceding company and investment earnings are paid to the
reinsurer. Under the terms of the Company's agreements, the investment
risk associated with changes in interest rates is borne by ELICW or
NMIC, as the case may be. Risk of asset default is retained by the
Company, although a fee is paid by ELICW or NMIC, as the case may be,
to the Company for the Company's retention of such risk. The agreements
will remain in force until all policy obligations are settled. However,
with respect to the agreement between NLIC and NMIC, either party may
terminate the contract on January 1 of any year with prior notice. The
ceding of risk does not discharge the original insurer from its primary
obligation to the policyholder. The Company believes that the terms of
the modified coinsurance agreements are consistent in all material
respects with what the Company could have obtained with unaffiliated
parties. Amounts ceded to NMIC and ELICW for the years ended December
31, 1998, 1997 and 1996 were:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------------------------------------------------------------------
(in millions of dollars) NMIC ELICW NMIC ELICW NMIC ELICW
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Premiums $90.1 $106.3 $ 91.4 $199.8 $ 97.3 $224.2
Net investment income and other
revenue $11.1 $ 9.4 $ 10.7 $ 13.4 $ 10.9 $ 14.8
Benefits, claims and expenses $98.8 $160.5 $100.7 $225.9 $100.5 $246.6
</TABLE>
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC), an affiliate, under which
NCMC acts as a common agent in handling the purchase and sale of
short-term securities for the respective accounts of the participants.
Amounts on deposit with NCMC were $248.4 million and $211.0 million as
of December 31, 1998 and 1997, respectively, and are included in
short-term investments on the accompanying consolidated balance sheets.
Certain annuity products are sold through three affiliated companies,
which are also subsidiaries of NFS. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1998 were $60.0
million, $66.1 million and $76.9 million, respectively.
(11) Bank Lines of Credit
--------------------
In August 1996, NLIC, along with NMIC, entered into a $600.0 million
revolving credit facility which provides for a $600.0 million loan over
a five year term on a fully revolving basis with a group of national
financial institutions. The credit facility provides for several and
not joint liability with respect to any amount drawn by either NLIC or
NMIC. NLIC and NMIC pay facility and usage fees to the financial
institutions to maintain the revolving credit facility. All previously
existing line of credit agreements were canceled. In September 1997,
the credit agreement was amended to include NFS as a party to and
borrower under the agreement. As of December 31, 1998 the Company had
no amounts outstanding under the agreement.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(12) Contingencies
-------------
On October 29, 1998, the Company and certain of its affiliates were
named in a lawsuit filed in the Common Pleas Court of Franklin County,
Ohio related to the sale of deferred annuity products for use as
investments in tax-deferred contributory retirement plans (Mercedes
Castillo v. Nationwide Financial Services, Inc., Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company).
The plaintiff in such lawsuit seeks to represent a national class of
the Company's customers and seeks unspecified compensatory and punitive
damages. The Company is currently evaluating this lawsuit, which is in
an early stage and has not been certified as a class. The Company
intends to defend this lawsuit vigorously.
(13) Segment Information
-------------------
The Company uses differences in products as the basis for defining its
reportable segments. The Company reports three product segments:
Variable Annuities, Fixed Annuities and Life Insurance.
The Variable Annuities segment consists of annuity contracts that
provide the customer with the opportunity to invest in mutual funds
managed by independent investment managers and the Company, with
investment returns accumulating on a tax-deferred basis. The Company's
variable annuity products consist almost entirely of flexible premium
deferred variable annuity contracts.
The Fixed Annuities segment consists of annuity contracts that generate
a return for the customer at a specified interest rate, fixed for a
prescribed period, with returns accumulating on a tax-deferred basis.
Such contracts consist of single premium deferred annuities, flexible
premium deferred annuities and single premium immediate annuities. The
Fixed Annuities segment includes the fixed option under variable
annuity contracts.
The Life Insurance segment consists of insurance products, including
variable universal life insurance and corporate-owned life insurance
products, that provide a death benefit and may also allow the customer
to build cash value on a tax-deferred basis.
In addition to the product segments, the Company reports corporate
revenue and expenses, investments and related investment income
supporting capital not specifically allocated to its product segments,
revenues and expenses of its investment advisor subsidiary (other than
the portion allocated to the Variable Annuities and Life Insurance
segments), revenues and expenses related to group annuity contracts
sold to Nationwide Insurance Enterprise employee and agent benefit
plans and all realized gains and losses on investments in a Corporate
and Other segment.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The following table summarizes the financial results of the Company's business
segments for the years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
(in millions of dollars) Annuities Annuities Insurance and Other Total
- ------------------------------------ --------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
1998:
Net investment income (1) $ (31.3) $ 1,116.6 $ 231.6 $ 164.7 $ 1,481.6
Other operating revenue 560.8 35.7 319.6 49.6 965.7
--------- --------- -------- -------- ---------
Total operating revenue (2) 529.5 1,152.3 551.2 214.3 2,447.3
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 828.6 115.4 125.0 1,069.0
Amortization of deferred policy
acquisition costs 123.9 44.2 46.4 -- 214.5
Other benefits and expenses 187.2 104.2 294.6 49.1 635.1
--------- --------- -------- -------- ---------
Total expenses 311.1 977.0 456.4 174.1 1,918.6
--------- --------- -------- -------- ---------
Operating income (loss) before
federal income tax 218.4 175.3 94.8 40.2 528.7
Realized gains on investments -- -- -- 28.4 28.4
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 218.4 $ 175.3 $ 94.8 $ 68.6 $ 557.1
========= ========= ======== ======== =========
Assets as of year end $47,668.7 $15,215.7 $5,187.6 $6,270.1 $74,342.1
========= ========= ======== ======== =========
1997:
Net investment income (1) $ (26.9) $ 1,098.2 $ 189.1 $ 148.8 $ 1,409.2
Other operating revenue 430.9 43.2 284.0 39.0 797.1
--------- --------- -------- -------- ---------
Total operating revenue (2) 404.0 1,141.4 473.1 187.8 2,206.3
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 823.4 78.5 114.7 1,016.6
Amortization of deferred policy
acquisition costs 87.8 39.8 39.6 -- 167.2
Other benefits and expenses 165.3 108.7 284.1 45.6 603.7
--------- --------- -------- -------- ---------
Total expenses 253.1 971.9 402.2 160.3 1,787.5
--------- --------- -------- -------- ---------
Operating income before federal
income tax 150.9 169.5 70.9 27.5 418.8
Realized gains on investments -- -- -- 11.1 11.1
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 150.9 $ 169.5 $ 70.9 $ 38.6 $ 429.9
========= ========= ======== ======== =========
Assets as of year end $35,278.7 $14,436.3 $3,901.4 $6,174.3 $59,790.7
========= ========= ======== ======== =========
</TABLE>
<PAGE> 26
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
(in millions of dollars) Annuities Annuities Insurance and Other Total
------------------------------------ ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1996:
Net investment income (1) $ (21.5) $ 1,050.6 $ 174.0 $ 154.7 $ 1,357.8
Other operating revenue 306.1 42.0 261.6 25.7 635.4
---------- ---------- --------- --------- ---------
Total operating revenue (2) 284.6 1,092.6 435.6 180.4 1,993.2
---------- ---------- --------- --------- ---------
Interest credited to policyholder
account balances -- 805.0 70.2 107.1 982.3
Amortization of deferred policy
acquisition costs 57.4 38.6 37.4 -- 133.4
Benefits and expenses 136.9 113.6 260.8 50.4 561.7
---------- ---------- --------- --------- ---------
Total expenses 194.3 957.2 368.4 157.5 1,677.4
---------- ---------- --------- --------- ---------
Operating income before federal
income tax 90.3 135.4 67.2 22.9 315.8
Realized losses on investments -- -- -- (0.3) (0.3)
---------- ---------- --------- --------- ---------
Consolidated income from
continuing operations before
federal tax expense $ 90.3 $ 135.4 $ 67.2 $ 22.6 $ 315.5
========== ========== ======== ======== =========
Assets as of year end $ 25,069.7 $ 13,994.7 $3,353.3 $5,348.5 $47,766.2
========== ========== ======== ======== =========
</TABLE>
-----------
(1) The Company's method of allocating net investment income results
in a charge (negative net investment income) to the Variable
Annuities segment which is recognized in the Corporate and Other
segment. The charge relates to non-invested assets which support
this segment on a statutory basis.
(2) Excludes realized gains and losses on investments.
The Company has no significant revenue from customers located outside
of the United States nor does the Company have any significant
long-lived assets located outside the United States.
(14) Discontinued Operations
-----------------------
As discussed in note 1, NFS is a holding company for NLIC and certain
other companies within the Nationwide Insurance Enterprise that offer
or distribute long-term savings and retirement products. Prior to the
contribution by Nationwide Corp. of the outstanding common stock of
NLIC to NFS, NLIC effected certain transactions with respect to certain
subsidiaries and lines of business that were unrelated to long-term
savings and retirement products.
On September 24, 1996, NLIC's Board of Directors declared a dividend
payable to Nationwide Corp. on January 1, 1997 consisting of the
outstanding shares of common stock of three subsidiaries: ELICW, NCC
and WCLIC. ELICW writes group accident and health and group life
insurance business and maintains it offices in Wausau, Wisconsin. NCC
is a property and casualty company with offices in Scottsdale, Arizona
that serves as a fronting company for a property and casualty
subsidiary of NMIC. WCLIC writes high dollar term life insurance
policies and is located in San Francisco, California. ELICW, NCC and
WCLIC have been accounted for as discontinued operations in the
accompanying consolidated financial statements through December 31,
1996. The Company did not recognize any gain or loss on the disposal of
these subsidiaries.
<PAGE> 27
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Also, during 1996, NLIC entered into two reinsurance agreements whereby
all of NLIC's accident and health and group life insurance business was
ceded to ELICW and NMIC, effective January 1, 1996. See note 10 for a
complete discussion of the reinsurance agreements. The Company has
discontinued its accident and health and group life insurance business
and in connection therewith has entered into reinsurance agreements to
cede all existing and any future writings to other affiliated
companies. NLIC's accident and health and group life insurance business
is accounted for as discontinued operations for all periods presented.
The Company did not recognize any gain or loss on the disposal of the
accident and health and group life insurance business. The assets,
liabilities, results of operations and activities of discontinued
operations are distinguished physically, operationally and for
financial reporting purposes from the remaining assets, liabilities,
results of operations and activities of the Company.
A summary of the results of operations of discontinued operations for
the years ended December 31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C>
Revenues $ -- $ -- $ 668.9
Net income $ -- $ -- $ 11.3
</TABLE>
A summary of the assets and liabilities of discontinued operations as
of December 31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Assets, consisting primarily of investments $221.5 $247.3 $3,288.5
Liabilities, consisting primarily of policy benefits and claims $221.5 $247.3 $2,802.8
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements: PAGE
<S> <C>
(1) Financial statements included in Prospectus.
(Part A):
Condensed Financial Information. N/A
in Part B:
Those financial statements required by
Item 23 to be included in Part B have been
incorporated therein by reference to the
Prospectus (Part A).
Nationwide Variable Account-9:
Independent Auditors' Report. 53
Statement of Assets, Liabilities and Contract
Owners' Equity as of December 31, 1998. 54
Statements of Operations and Changes in
Contract Owners' Equity for the year ended
December 31, 1998 and for the period November 3, 1997
(commencement of operations) through
December 31, 1997. 56
Notes to Financial Statements. 66
Nationwide Life Insurance Company and subsidiaries:
Independent Auditors' Report. 89
Consolidated Balance Sheets as of December
31, 1998 and 1997. 90
Consolidated Statements of Income for the
years ended December 31, 1998, 1997 and
1996. 91
Consolidated Statements of Shareholder's
Equity for the years ended December 31,
1998, 1997 and 1996. 92
Consolidated Statements of Cash Flows for
the years ended December 31, 1998, 1997
and 1996. 93
Notes to Consolidated Financial Statements. 94
</TABLE>
116 of 138
<PAGE> 58
<TABLE>
<S> <C>
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of Directors
authorizing the establishment of the Registrant -
Filed previously with initial registration
statement (333-28995) and is hereby incorporated
by reference.
(2) Not Applicable
(3) Underwriting or Distribution of contracts between
the Registrant and Principal Underwriter - Filed
previously with initial registration statement
(333-28995) and is hereby incorporated by
reference.
(4) The form of the variable annuity contract -
Attached hereto.
(5) Variable Annuity Application - Attached hereto.
(6) Articles of Incorporation of Depositor - Filed
previously with initial registration statement
(333-28995) and is hereby incorporated by
reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Attached hereto.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Performance Advertising Calculation Schedule - To
be added by Pre-Effective Amendment to the
Registration Statement.
</TABLE>
117 of 138
<PAGE> 59
<TABLE>
<CAPTION>
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olive, NC 28365
A. I. Bell Director
4121 North River Road West
Zanesville, OH 43701
Kenneth D. Davis Director
7229 Woodmansee Road
Leesburg, OH 45135
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
300 East Marshall Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Dimon R. McFerson Chairman and Chief Executive Officer
One Nationwide Plaza and Director
Columbus, OH 43215
David O. Miller Chairman of the Board and Director
115 Sprague Drive
Hebron, OH 43025
Yvonne L. Montgomery Director
2859 Paces Ferry Road
Atlanta, GA 30339
Ralph M. Paige, Executive Director Director
Federation of Southern
Cooperatives/Land Assistance Fund
2769 Church Street
East Point, GA 30344
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
</TABLE>
118 of 138
<PAGE> 60
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
1733A Westwood Avenue
Alliance, OH 44601
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
Robert J. Woodward Jr. Executive Vice President
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
James E. Brock Senior Vice President - Corporate
One Nationwide Plaza Development
Columbus, OH 43215
John R. Cook, Jr. Senior Vice President -
One Nationwide Plaza Chief Communications Officer
Columbus, OH 43215
Phillip C. Gath Senior Vice President -
One Nationwide Plaza Chief Actuary
Columbus, OH 43215
Richard D. Headley Senior Vice President - Chief
One Nationwide Plaza Information Technology Officer
Columbus, OH 43215
Donna A James Senior Vice President - Human
One Nationwide Plaza Resources
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
</TABLE>
119 of 138
<PAGE> 61
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Douglas C. Robinette Senior Vice President-
One Nationwide Plaza Marketing and Product
Columbus, OH 43215 Management Nationwide
Financial Services of the
Nationwide Insurance Enterprise
Susan A. Wolken Senior Vice President - Life
One Nationwide Plaza Company Operations
Columbus, OH 43215
Bruce C. Barnes Vice President - Technology
One Nationwide Plaza Strategy and Planning
Columbus, OH 43215
Dennis W. Click Vice President - Secretary
One Nationwide Plaza
Columbus, OH 43215
David A. Diamond Vice President - Enterprise
One Nationwide Plaza Controller
Columbus, OH 43215
Matthew S. Easley Vice President -
One Nationwide Plaza Investment Life Actuarial
Columbus, OH 43215
R. Dennis Noice Vice President - Systems
One Nationwide Plaza
Columbus, OH 43215
Joseph P. Rath Vice President - Product
One Nationwide Plaza and Market Compliance
Columbus, OH 43215
Mark Thresher Vice President - Finance and
One Nationwide Plaza Treasurer
Columbus, OH 43215
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated financial statements
*** Subsidiaries included in the respective group financial statements filed for
unconsolidated subsidiaries
**** other subsidiaries
</TABLE>
120 of 138
<PAGE> 62
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
The 401K Companies, Inc. Texas Holding Company
The 401(K) Company Texas Third-party administrator for 401(k)
plans
401K Investment Advisors, Inc. Texas Investment Advisor registered with the
SEC
401K Investments Services, Inc. Texas NASD registered Broker-Dealer
Affiliate Agency, Inc. Delaware Life Insurance Agency
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
AID Finance Services, Inc. Iowa Holding Company
ALLIED General Agency Company Iowa Managing General Agent and Surplus
Lines Broker (P&C)
ALLIED Group, Inc. Iowa Holding Company
ALLIED Group Insurance Marketing Iowa Direct Marketer (P&C)
Company
ALLIED Group Merchant Banking Iowa Broker-Dealer
Corporation
ALLIED Group Mortgage Company Iowa Mortgage Lender
ALLIED Life Brokerage Agency, Inc. Iowa Insurance Broker
ALLIED Life Financial Corporation Iowa Holding Company
ALLIED Life Insurance Company Iowa Insurance Company
ALLIED Property and Casualty Iowa Underwrites General P&C Insurance
Insurance Company
Allnations, Inc. Ohio Promotes international cooperative
insurance organizations
AMCO Insurance Company Iowa Underwrites General P&C Insurance
American Marine Underwriters, Inc. Florida Underwriting Manager
Auto Direkt Insurance Company Germany Insurance Company
CalFarm Insurance Company California Stock Corporation
Caliber Funding Corporation Delaware Stock Corporation
Colonial County Mutual Insurance Texas Insurance Company
Company
Colonial Insurance Company of Wisconsin Insurance Company
Wisconsin
Columbus Insurance Brokerage and Germany Insurance Broker
Service GmbH
</TABLE>
121 of 138
<PAGE> 63
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Cooperative Service Company Nebraska Insurance Agency
Depositors Insurance Company Iowa Underwrites P&C insurance
*Employers Life Insurance Company Wisconsin Life Insurance Company
of Wausau
Excaliber Funding Corporation Delaware Limited purpose corporation
F&B, Inc. Iowa Insurance Agency
Farmland Mutual Insurance Company Iowa Mutual Insurance Company
Financial Horizons Distributors Alabama Insurance Agency
Agency of Alabama, Inc.
Financial Horizons Distributors Ohio Insurance Agency
Agency of Ohio, Inc.
Financial Horizons Distributors Oklahoma Insurance Agency
Agency of Oklahoma, Inc.
Financial Horizons Distributors Texas Insurance Agency
Agency of Texas, Inc.
*Financial Horizons Investment Trust Massachusetts Investment Company
Financial Horizons Securities Oklahoma Broker-Dealer
Corporation
GatesMcDonald Health Plus, Inc. Ohio Managed Care Organization
Gates, McDonald & Company Ohio Cost Control
Gates, McDonald & Company of Nevada Nevada Self-insurance administration, claims
examinations and data processing
services
Gates, McDonald & Company of New New York Workers' compensation claims
York, Inc. administration
MedPro Solutions, Inc. Massachusetts Third-party administration services
for workers' compensation, automobile
injury and disability claims
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance Agency
Irvin L. Schwartz and Associates, Ohio Insurance Agency
Inc.
Landmark Financial Services of New New York Life Insurance Agency
York, Inc.
Leben Direkt Insurance Company Germany Life Insurance Company
</TABLE>
122 of 138
<PAGE> 64
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Lone Star General Agency, Inc. Texas Insurance Agency
Midwest Printing Services, Inc. Iowa General Printing Services
Morley & Associates Oregon Insurance Broker
Morley Capital Management, Inc. Oregon Investment Adviser and stable value
money management
Morley Financial Services, Inc. Oregon Holding Company
Morley Research Associates, Ltd. Delaware Credit research consulting
**MRM Investments, Inc. Ohio Owns and operates a recreational ski
facility
**National Casualty Company Wisconsin Insurance Company
National Casualty Company of America, Great Britain Insurance Company
Ltd.
National Deferred Compensation, Inc. Ohio Administers deferred compensation
plans for public employees
**National Premium and Benefit Delaware Insurance Administrative Services
Administration Company
Nationwide Advisory Services, Inc. Ohio Investment Management and
Administrative Services
**Nationwide Agency, Inc. Ohio Insurance Agency
Nationwide Agribusiness Insurance Iowa Insurance Company
Company
Nationwide Asset Allocation Trust Massachusetts Investment Company
Nationwide Cash Management Company Ohio Investment Securities Agent
Nationwide Community Urban Ohio Special purpose real estate corporation
Redevelopment Corporation
Nationwide Corporation Ohio Holding Company
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
Nationwide Financial Services Bermuda Life Insurance Company
(Bermuda) Ltd.
Nationwide Financial Services Delaware Statutory Business Trust
Capital Trust
Nationwide Financial Services Delaware Statutory Business Trust
Capital Trust II
</TABLE>
123 of 138
<PAGE> 65
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Nationwide Financial Services, Inc. Delaware Holding Company
Nationwide General Insurance Company Ohio Insurance Company
Nationwide Global Holdings, Inc. Ohio Holding Company for International
Operations
Nationwide Health Plans, Inc. Ohio Health Maintenance Organization
*Nationwide Indemnity Company Ohio Reinsurance Company
Nationwide Insurance Company of California Underwriter
America
Nationwide Insurance Company of Ohio Insurance Company
Florida
Nationwide Insurance Enterprise Ohio Membership Non-Profit Corporation
Foundation
Nationwide Services Company, LCC Ohio Shared services functions
Nationwide Insurance Golf Charities, Ohio Membership Non-Profit Corporation
Inc.
Nationwide International Underwriters California Underwriting Manager
Nationwide Investing Foundation Michigan Provide investors with continuous
source of investment
*Nationwide Investing Foundation II Massachusetts Common Law Trust
Nationwide Investment Services Oklahoma Registered Broker-Dealer in deferred
Corporation compensation market
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
**Nationwide Life and Annuity Ohio Life Insurance Company
Insurance Company
**Nationwide Life Insurance Company Ohio Life Insurance Company
Nationwide Lloyds Texas Property Insurance
Nationwide Management Systems, Inc. Ohio Preferred provider organization,
products and related services
Nationwide Mutual Fire Insurance Ohio Mutual Insurance Company
Company
Nationwide Mutual Funds Ohio Investment Company
Nationwide Mutual Insurance Company Ohio Mutual Insurance Company
</TABLE>
124 of 138
<PAGE> 66
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Nationwide Properties, Ltd. Ohio Develop, own and operate real estate
and real estate investments
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
Nationwide Realty Investors, Inc. Ohio Develop, own and operate real estate
and real estate investments
Nationwide Retirement Solutions, Inc. Delaware Market and administer deferred
compensation plans for public employees
Nationwide Retirement Solutions, Alabama Market and administer deferred
Inc. of Alabama compensation plans for public employees
Nationwide Retirement Solutions, Arizona Market and administer deferred
Inc. of Arizona compensation plans for public employees
Nationwide Retirement Solutions, Arkansas Market and administer deferred
Inc. of Arkansas compensation plans for public employees
Nationwide Retirement Solutions, Montana Market and administer deferred
Inc. of Montana compensation plans for public employees
Nationwide Retirement Solutions, Nevada Market and administer deferred
Inc. of Nevada compensation plans for public employees
Nationwide Retirement Solutions, New Mexico Market and administer deferred
Inc. of New Mexico compensation plans for public employees
Nationwide Retirement Solutions, Ohio Market variable annuity contracts to
Inc. of Ohio members of the National Education
Association in the state of Ohio
Nationwide Retirement Solutions, Oklahoma Market variable annuity contracts to
Inc. of Oklahoma members of the National Education
Association in the state of Oklahoma
Nationwide Retirement Solutions, South Dakota Market and administer deferred
Inc. of South Dakota compensation plans for public employees
Nationwide Retirement Solutions, Texas Market and administer deferred
Inc. of Texas compensation plans for public employees
Nationwide Retirement Solutions, Wyoming Market variable annuity contracts to
Inc. of Wyoming members of the National Education
Association in the state of Wyoming
</TABLE>
125 of 138
<PAGE> 67
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Nationwide Retirement Solutions Massachusetts Market and administer deferred
Insurance Agency Inc. compensation plans for public employees
*Nationwide Separate Account Trust Massachusetts Investment Company
Nationwide Trust Company, FSB United States of America Federal Savings Bank
Neckura Holding Company Germany Administrative services for Neckura
Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life Insurance Company
Nevada Independent Nevada Workers' compensation administrative
Companies-Construction services
Nevada Independent Companies-Health Nevada Workers' compensation administrative
and Nonprofit services
Nevada Independent Companies- Nevada Workers' compensation administrative
Hospitality and Entertainment services
Nevada Independent Companies- Nevada Workers' compensation administrative
Manufacturing services
NFS Distributors, Inc. Delaware Holding Company
NWE, Inc. Ohio Special Investments
PanEuroLife Luxembourg Life Insurance
Pension Associates, Inc. Wisconsin Pension plan administration
Portland Investment Services, Inc. Oregon NASD Registered Broker-Dealer
Premier Agency, Inc. Iowa Insurance Agency
Riverview Agency, Inc. Texas Stock Corporation
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
Scottsdale Surplus Lines Insurance Arizona Excess and Surplus Lines Insurance
Company Company
SVM Sales GmbH, Neckura Insurance Germany Sales support for Neckura Insurance
Group Group
Union Bond and Trust Company Oregon Oregon state bank with trust powers
Villanova Capital, Inc. Delaware Holding Company
</TABLE>
126 of 138
<PAGE> 68
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Villanova Mutual Fund Capital Trust Delaware Business Trust
Villanova SA Capital Trust Delaware Business Trust
**Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance Company
Company
Western Heritage Insurance Company Arizona Excess and Surplus Lines Insurance
Company
</TABLE>
127 of 138
<PAGE> 69
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DC Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
Nationwide DCVA-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
Nationwide VA Separate Account-Q Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-9 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
Nationwide Variable Account-10 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VL Separate Account-A Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
</TABLE>
128 of 138
<PAGE> 70
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
<S> <C> <C> <C>
Nationwide VL Separate Account-B Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
* Nationwide VL Separate Account-C Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
Nationwide VL Separate Account -D Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
* Nationwide VLI Separate Account-4 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
Nationwide VLI Separate Account-5 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
</TABLE>
129 of 138
<PAGE> 71
<TABLE>
<CAPTION>
(left side)
<S> <C> <C> <C>
- ------------------------
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
- ------------------------
-------------------------------------------------------------------------------------------------------------------------
| | |
- --------------------------- --------------------------- ----------------------------
| ALLIED LIFE | | ALLIED | | AID FINANCE |
| FINANCIAL | | GROUP, INC. | | SERVICES, INC. |
| CORPORATION | | (AGI) | | (AID FINANCE) |
| (ALFC) | | | | |
|Common Stock: 850 | |Common Stock: 850 Shares | |Common Stock: 10,000 |
|------------ Shares | |------------ | |------------ Shares |
| |---| | |---| | |
| Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- |
|Casualty- | | |Casualty- | | |Casualty- |
|100% $47,286,429 | | |100% $1,049,237,226| | |100% $19,545,634 |
- --------------------------- | --------------------------- | ----------------------------
| | |
- --------------------------- | --------------------------- | ----------------------------
| ALLIED GROUP | | | AMCO | | | ALLIED |
| MERCHANT BANKING | | | INSURANCE COMPANY | | | GROUP INSURANCE |
| CORPORATION | | | (AMCO) | | | MARKETING COMPANY |
|Common Stock: 10,000 | | |Common Stock: 155,991 | | |Common Stock: 20,000 |
|------------ Shares | | |------------ Shares | | |------------ Shares |
| |---| |----| |---| | |
| Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | | ---- |
| | | | | | | |Aid Finance- |
|AFLC-100% $100,000 | | | |AGI-100% $95,925,450| | |100% $16,059,469 |
- --------------------------- | | --------------------------- | ----------------------------
| | |
- --------------------------- | | --------------------------- | ----------------------------
| ALLIED LIFE | | | | WESTERN | | | DEPOSITORS |
| BROKERAGE | | | | HERITAGE INSURANCE | | | INSURANCE COMPANY |
| AGENCY, INC. | | | | COMPANY | | | (DEPOSITORS) |
|Common Stock: 500,000 | | | |Common Stock: 4,776,076 | | |Common Stock: 199,991 |
|------------ Shares | | | |------------ Shares | | |------------ Shares |
| |---| |----| | |---| |
| Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | | ---- |
|AFLC-100% $442,695 | | | |AMCO-100% $11,686,037| | |AGI-100% $15,251,842 |
- --------------------------- | | --------------------------- | ----------------------------
| | |
- --------------------------- | | --------------------------- | ----------------------------
| ALLIED LIFE | | | | ALLIED | | | ALLIED PROPERTY |
| INSURANCE | | | | GENERAL AGENCY | | | AND CASUALTY |
| COMPANY | | | | COMPANY | | | INSURANCE COMPANY |
|Common Stock: 250,000 | | | |Common Stock: 5,000 | | |Common Stock: 156,822 |
|------------ Shares | | | |------------ Shares | | |------------ Shares |
| |---| |----| | |---| |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|AFLC-100% $41,732,343| |AMCO-100% $135,342 | | |AGI-100% $33,018,634 |
- --------------------------- --------------------------- | ----------------------------
|
--------------------------- | ----------------------------
| PREMIER | | | ALLIED |
| AGENCY, | | | GROUP MORTGAGE |
| INC. | | | COMPANY |
|Common Stock: 100,000 | | |Common Stock: 9,500 |
|------------ Shares | | |------------ Shares |
| |---|---| |
| Cost | | | Cost |
| ---- | | | ---- |
|AGI-100% $100,000 | | |AGI-100% $213,976 |
--------------------------- | ----------------------------
|
| ----------------------------
| | MIDWEST |
| | PRINTING SERVICES |
| | LTD. |
| |Common Stock: 10,000 |
| |------------ Shares |
|---| |
| Cost |
| ---- |
|AFLC-100% $610,000 |
----------------------------
</TABLE>
<PAGE> 72
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE(R) (middle)
<S> <C> <C>
------------------------------------------ ------------------------------------------
| | | |
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |============================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
| | | |
------------------------------------------ ------------------------------------------
| || | |
| || |--------------------------------------------------------------------| |--------------------------
- --| || |
|| |--------------------------------------------------------------|----------------
|| | |
|| -------------------------------- | -------------------------------- --------------------------------
|| | | | | NATIONWIDE GENERAL | | NECKURA HOLDING |
|| | | | | INSURANCE COMPANY | | COMPANY (NECKURA) |
|| | NATIONWIDE LLOYDS | | | | | |
|| | | | |Common Stock: 20,000 | |Common Stock: 10,000 |
||==| | |---|------------ Shares | |--|------------ Shares |
|| | A TEXAS LLOYDS | | | | | | |
|| | | | | Cost | | | Cost |
|| | | | | ---- | | | ---- |
|| | | | |Casualty-100% $5,944,422 | | |Casualty-100% $87,943,140 |
|| -------------------------------- | -------------------------------- | --------------------------------
|| | |
|| -------------------------------- | -------------------------------- | --------------------------------
|| | FARMLAND MUTUAL | | | NATIONWIDE PROPERTY | | | NECKURA |
|| | INSURANCE COMPANY | | | AND CASUALTY | | | INSURANCE COMPANY |
|| |Guaranty Fund | | | INSURANCE COMPANY | | | |
|| |------------ | | |Common Stock: 60,000 | |--|Common Stock: 6,000 |
||==|Certificate |---| |---|------------ Shares | | |------------ Shares |
|----------- Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | |Neckura- ---- |
|Casualty $500,000 | | | |Casualty-100% $6,000,000 | | |100% DM 6,000,000 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| F & B, INC. | | | | COLONIAL INSURANCE | | | NECKURA LIFE |
| | | | | COMPANY OF WISCONSIN | | | INSURANCE COMPANY |
|Common Stock: 1 Share | | | | (COLONIAL) | | | |
|------------ |---- |---|Common Stock: 1,750 | |--|Common Stock: 4,000 |
| Cost | | | |------------ Shares | | |------------ Shares |
| ---- | | | | Cost | | | Cost |
|Farmland | | | | ---- | | | ---- |
|Mutual-100% $10 | | | |Casualty-100% $41,750,000 | | |Neckura-100% DM 15,825,681 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| COOPERATIVE SERVICE | | | | SCOTTSDALE | | | NECKURA GENERAL |
| COMPANY | | | | INSURANCE COMPANY | | | INSURANCE COMPANY |
|Common Stock: 600 Shares | | | | (SIC) | | | |
|------------ | | | |Common Stock: 30,136 | | |Common Stock: 1,500 |
| Cost |---- |---|------------ Shares | ---- |--|------------ Shares |
| ---- | | | Cost | | | | Cost |
|Farmland $3,506,173 | | | ---- | | | | ---- |
|Mutual-100% | | |Casualty-100% $150,000,000 | | | |Neckura-100% DM 1,656,925 |
-------------------------------- | -------------------------------- | | --------------------------------
| | |
-------------------------------- | -------------------------------- | | --------------------------------
| NATIONWIDE AGRIBUSINESS | | | SCOTTSDALE | | | | COLUMBUS INSURANCE |
| INSURANCE COMPANY | | | SURPLUS LINES | | | | BROKERAGE AND SERVICE |
|Common Stock: 1,000,000 | | | INSURANCE COMPANY | | | | GmbH |
|------------ Shares | | | Common Stock: 10,000 | | | |Common Stock: 1 Share |
| |--------| | ------------ Shares | ---| |--|------------ |
| Cost | | | | | | | |
|Casualty-99.9% ---- | | | Cost | | | | Cost |
|Other Capital: $26,714,335 | | | ---- | | | | ---- |
|------------- | | | SIC-100% $6,000,000 | | | |Neckura-100% DM 51,639 |
|Casualty-Ptd. $ 713,576 | | | | | | | |
-------------------------------- | -------------------------------- | | --------------------------------
| | |
-------------------------------- | -------------------------------- | | --------------------------------
| NATIONAL CASUALTY | | | NATIONAL PREMIUM & | | | | LEBEN DIREKT |
| COMPANY | | | BENEFIT ADMINISTRATION | | | | INSURANCE COMPANY |
| (NC) | | | COMPANY | | | | |
|Common Stock: 100 Shares | | |Common Stock: 10,000 | | | |Common Stock: 4,000 Shares |
|------------ |--------| |------------ Shares |----| |--|------------ |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|Casualty-100% $67,442,439 | |Scottsdale-100% $10,000 | | |Neckura-100% DM 4,000,000 |
-------------------------------- -------------------------------- | --------------------------------
| |
-------------------------------- -------------------------------- | --------------------------------
| NCC OF AMERICA, LTD. | | SVM SALES | | | AUTO DIREKT |
| (INACTIVE) | | GmbH | | | INSURANCE COMPANY |
| | | | | | |
| | |Common Stock: 50 Shares | | |Common Stock: 1500 Shares |
| | |------------ |------------|------------ |
| | | Cost | | Cost |
|NC-100% | | ---- | | ---- |
| | |Neckura-100% DM 50,000 | |Neckura-100% DM 1,643,149 |
| | | | | |
| | | | | |
-------------------------------- -------------------------------- --------------------------------
</TABLE>
<PAGE> 73
<TABLE>
<CAPTION>
(right side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE INSURANCE |
| ENTERPRISE FOUNDATION|
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
------------------------
- -----------------------------------------------------------------------|
|
- --------------- --------------------------------------------------
| |
- -----------------------------------------------------------------------------------------|----------------------- |
| | | | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | SCOTTSDALE | | | NATIONWIDE | | | NATIONWIDE |
| | INDEMNITY COMPANY | | | COMMUNITY URBAN | | | CORPORATION |
| | | | | REDEVELOPMENT | | | |
| | | | | CORPORATION | | |Common Stock: Control: |
| |Common Stock: 50,000 | | |Common Stock: 10 Shares | | |------------ ------- |
|-----|------------ Shares | |----|------------ | | |$13,642,432 100% |
| | Cost | | | Cost | | | Shares Cost |
| | ---- | | | ---- | | | ------ ---- |
| |Casualty-100% $8,800,000 | | |Casualty-100% $1,000 | | |Casualty 12,992,922 $751,352,485|
| | | | | | | |Fire 649,510 24,007,936|
| | | | | | | | (See Page 2) |
| -------------------------------- | -------------------------------- | ----------------------------------
| | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | NATIONWIDE | | | INSURANCE | | | ALLNATIONS, INC. |
| | INDEMNITY COMPANY | | | INTERMEDIARIES, INC. | | |Common Stock: 10,330 Shares |
| | | | | | | |------------- Cost |
|-----|Common Stock: 28,000 | |----|Common Stock: 1,615 | |--------| ---- |
| |------------ Shares | | |------------ Shares | | |Casualty-18.6% $88,320 |
| | Cost | | | Cost | | |Fire-18.6% $88,463 |
| | ---- | | | ---- | | |Preferred Stock 1466 Shares |
| |Casualty-100% $294,529,000 | | |Casualty-100% $1,615,000 | | |--------------- Cost |
| | | | | | | | ---- |
| | | | | | | |Casualty-6.8% $100,000 |
| | | | | | | |Fire-6.8% $100,000 |
| -------------------------------- | -------------------------------- | ----------------------------------
| | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | LONE STAR | | | NATIONWIDE CASH | | | PENSION ASSOCIATES |
| | GENERAL AGENCY, INC. | | | MANAGEMENT COMPANY | | | OF WAUSAU, INC. |
| | | | |Common Stock: 100 Shares | | |Common Stock: 1,000 Shares |
------|Common Stock: 1,000 | |----|------------ | |--------|------------- |
| |------------ Shares | | | Cost | | | Cost |
| | Cost | | | ---- | | | ---- |
| | ---- | | |Casualty-90% $9,000 | | | |
| |Casualty-100% $5,000,000 | | |NW Adv. Serv. 1,000 | | |Casualty-100% $2,839,392 |
| -------------------------------- | -------------------------------- | ----------------------------------
| || | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | COLONIAL COUNTY MUTUAL | | | NATIONWIDE INSURANCE | | | AMERCIAN MARINE |
| | INSURANCE COMPANY | | | COMPANY OF FLORIDA | | | UNDERWRITERS, INC. |
| | | | |Common Stock: 10,000 | | |Common Stock: 20 Shares |
| |Surplus Debentures | | |------------- Shares | | |------------- |
| |------------------ | |----| | |--------| Cost |
| | Cost | | | Cost | | ---- |
| | ---- | | | ---- | | |
| |Colonial $500,000 | | |Casualty-100% $300,000,000 | |Casualty-100% $5,020 |
| |Lone Star 150,000 | | | | | |
| -------------------------------- | -------------------------------- ----------------------------------
| |
| -------------------------------- | --------------------------------
| | TIG COUNTRYWIDE | | | WAUSAU INTERNATIONAL |
| | INSURANCE COMPANY | | | UNDERWRITERS |
| |Common Stock 12,000 | | | |
| |------------ Shares | | |Common Stock: 1,000 Shares |
|-----| | -----|------------ |
| | Cost | | | Cost |
| | ---- | | | ---- |
| |Casualty-100% $215,273,000 | | |Casualty-100% $10,000 |
| | | | | |
| -------------------------------- | | |
| | --------------------------------
| |
| -------------------------------- | --------------------------------
| | NATIONWIDE INSURANCE | | | NATIONWIDE |
| | ENTERPRISE SERVICES, LTD. | | | ARENA LLC |
| | | | | |
| |Single Member Limited | | | |
|.....|Liability Company | |....| |
| | | |
| | | |
|Casualty-100% | |Casualty-90% |
| | | |
-------------------------------- --------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1998
</TABLE>
Page 1
<PAGE> 74
<TABLE>
<CAPTION>
(Left Side)
<S> <C> <C> <C> <C> <C> <C>
|----------------------------------|-----------------------------------|-------------------------------
| | |
----------------------------- ----------------------------- -----------------------------
| NATIONWIDE LIFE INSURANCE | | NATIONWIDE | | NATIONWIDE FINANCIAL |
| COMPANY (NW LIFE) | | FINANCIAL SERVICES | | INSTITUTION DISTRIBUTORS |
| | | CAPITAL TRUST | | AGENCY, INC. (NFIDAI) |
| Common Stock: 3,814,779 | | Preferred Stock: | | Common Stock: 1,000 |
| ------------ Shares | | --------------- | | ------------ Shares |
| | | | | |
| NFS--100% | | NFS--100% | | NFS--100% |
----------------|------------ ----------------------------- ---------------||------------
| ||
- ----------------------------- | ----------------------------- ----------------------------- || ----------------------------
| NATIONWIDE LIFE AND | | | NATIONWIDE | | FINANCIAL HORIZONS | || | |
| ANNUITY INSURANCE COMPANY | | | ADVISORY SERVICES, INC. | | DISTRIBUTORS AGENCY | || | |
| | | | (NW ADV. SERV.) | | OF ALABAMA, INC. | || | |
| Common Stock: 66,000 | | | Common Stock: 7,676 | | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--|--| ------------ Shares |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OHIO, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life -100% $58,070,003 | | | NW Life -100% $5,996,261 | || | NFIDAI -100% $100 | || | |
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| || ||
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| NWE, INC. | | | NATIONWIDE | || | LANDMARK FINANCIAL | || | |
| | | | INVESTORS SERVICES, INC. | || | SERVICES OF | || | |
| | | | | || | NEW YORK, INC. | || | |
| Common Stock: 100 | | | Common Stock: 5 Shares | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | ------------ |--|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OKLAHOMA, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life -100% $35,971,375 | | | NW Adv. Serv. -100% $5,000| || | NFIDAI -100% $10,100 | || | |
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| || ||
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| NATIONWIDE INVESTMENT | | | FINANCIAL HORIZONS | || | FINANCIAL HORIZONS | || | |
| SERVICES CORPORATION | | | INVESTMENT TRUST | || | SECURITIES CORP. | || | |
| | | | | || | | || | |
| Common Stock: 5,000 | | | | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF TEXAS, INC. |
| Cost | | | | || | Cost | || | |
| ---- | | | | || | ---- | || | |
| NW Life -100% $529,728 | | | COMMON LAW TRUST | || | NFIDAI -100% $153,000 | || | |
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| || ||
- ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| NATIONWIDE REALTY | | | NATIONWIDE | || | AFFILIATE AGENCY, INC. | || | |
| INVESTORS, LTD. | | | INVESTING | || | | || | |
| | | | FOUNDATION | || | | || | |
| Units: | | | | || | Common Stock: 100 | || | AFFILIATE |
| ------ |..| | |==|| | ------------ Shares |--||==| AGENCY OF |
| | | | | || | | | OHIO, INC. |
| | | | | || | Cost | | |
| NW Life -90% | | | | || | ---- | | |
| NW Mutual-10% | | | COMMON LAW TRUST | || | NFIDAI -100% $100 | | |
- ----------------------------- | ----------------------------- || ----------------------------- ----------------------------
| ||
- ----------------------------- | ----------------------------- || -----------------------------
| NATIONWIDE | | | NATIONWIDE | || | NATIONWIDE |
| PROPERTIES, LTD. | | | INVESTING | || | INVESTING |
| | | | FOUNDATION II | || | FOUNDATION III |
| Units: |..| | | || | |
| ------ | | |==||==| |
| | | | || | |
| | | | || | | ----------------------
| NW Life -97.6% | | | || | | | MORLEY RESEARCH |
| NW Mutual -2.4% | | COMMON LAW TRUST | || | OHIO BUSINESS TRUST | | ASSOCIATES, LTD. |
- ----------------------------- ----------------------------- || ----------------------------- | |
|| |Common Stock: 1,000 |
----------------------------- || ----------------------------- |------------- Shares|------
| NATIONWIDE | || | NATIONWIDE | | Cost |
| SEPARATE ACCOUNT | || | ASSET ALLOCATION TRUST | | ---- |
| TRUST | || | | |Morley-100% $1,000|
| | || | | ----------------------
| |==||==| |
| | | |
| | | |
| | | MASSACHUSETTS |
| COMMON LAW TRUST | | BUSINESS TRUST |
----------------------------- -----------------------------
</TABLE>
<PAGE> 75
<TABLE>
<CAPTION>
(Center)
NATIONWIDE INSURANCE ENTERPRISE (R)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------- --------------------------------------------------
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |================================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | | (FIRE) |
- -------------------------------------------------- | --------------------------------------------------
|
-----------------------------------------
| NATIONWIDE CORPORATION (NW CORP) |
| Common Stock: Control: |
| ------------ ------- |
| 13,642,432 100% |
| Shares Cost |
| ------ ---- |
|Casualty 12,992,922 $751,352,485 |
|Fire 649,510 24,007,936 |
-------------------|---------------------
|--------------------------------------------------------------
---------------|-------------
| NATIONWIDE FINANCIAL |
| SERVICES, INC. (NFS) |
| |
|Common Stock: Control: |
|------------ ------- |
| |
| |
|Class A Public--100% |
|Class B NW Corp--100% |
---------------|-------------
|
- -----------------|-------------------------------|-------------------|--------------------------------|-----------------------------
| | | |
-------------|--------------- --------------|-------------- | ---------------|-------------
| MORLEY FINANCIAL | | THE 401(k) COMPANIES, INC.| | | NATIONWIDE RETIREMENT |
| SERVICES, INC. (MORLEY) | | (401(k)) | | | SOLUTIONS, INC. |
|Common Stock: 82,343 | |Common Stock: Control: | | |Common Stock: 236,494 |
|---|------------- Shares | |------------- ------- |--| | |------------- Shares |
| | | |Class A Other-100% | | | | |
| |NFS-100% | |Class B NFS -100% | | | |NRS-100% |
| ----------------------------- ----------------------------- | | ---------------|-------------
| | | |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | MORLEY & | | 401(k) INVESTMENT | | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | ASSOCIATES, INC. | | SERVICES, INC. | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF NEW |
| | | | | | | | ALABAMA | | | MEXICO |
| |Common Stock: 3,500 | | Common Stock: 1,000,000 | | | | Common Stock: 10,000 | | | Common Stock: 1,000 |
|---|------------- Shares | | ------------- Shares |--| | | ------------- Shares |--|--| ------------- Shares |
| | Cost | | Cost | | | | Cost | | | Cost |
| | ---- | | ---- | | | | ---- | | | ---- |
| |Morley-100% $1,000 | |401(k)-100% $7,800 | | | |NRS-100% $1,000 | | |NRS-100% $1,000 |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | | |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | MORLEY CAPITAL | | 401(k) INVESTMENT | | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | MANAGEMENT | | ADVISORS, INC. | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | | ARIZONA | | | SO. DAKOTA |
| |Common Stock: 500 | |Common Stock: 1,000 | | | |Common Stock: 1,000 | | |Common Stock: 1,000 |
|---|------------- Shares | |------------- Shares |--| | |------------- Shares |--|--|------------- Shares |
| | Cost | | Cost | | | | Cost | | | Cost |
| | ---- | | ---- | | | | ---- | | | ---- |
| |Morley-100% $5,000 | |401(k)-100% $1,000 | | | |NRS-100% $1,000 | | |NRS-100% $1,000 |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | | |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | UNION BOND | | 401(k) ICOMPANY | | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | & TRUST COMPANY | | | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | | ARKANSAS | | | WYOMING |
| |Common Stock: 2,000 | |Common Stock: 855,000 | | | |Common Stock: 50,000 | | |Common Stock: 500 |
|---|------------- Shares | |------------- Shares |--| | |------------- Shares |--|--|------------- Shares |
| | Cost | | Cost | | | Cost | | | Cost |
| | ---- | | ---- | | | ---- | | | ---- |
| |Morley-100% $50,000 | |401(k)-100% $1,000 | | |NRS-100% $500 | | |NRS-100% $500 |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | PORTLAND INVESTMENT | | NATIONWIDE TRUST | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | SERVICES, INC. | | COMPANY, FSB | | | SOLUTIONS, INS. AGENCY, | | | SOLUTIONS, INC. OF |
| | | | | | | INC. | | | OHIO |
| |Common Stock: 1,000 | |Common Stock: 2,800,000 | | |Common Stock: 1,000 | | | |
|---|------------- Shares | |------------- Shares |-----| |------------- Shares |--|==| |
| | Cost | | Cost | | | Cost | | | |
| | ---- | | ---- | | | ---- | | | |
| |Morley-100% $25,000 | |NFS-100% $3,500,000 | | |NRS -100% $1,000 | | | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | |
| ----------------------------- ----------------------------- | ---------------------------- | ---------------------------
| | EXCALIBER FUNDING | | NATIONWIDE FINANCIAL | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | CORPORATION | | SERVICES CAPITAL TRUST II | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | MONTANA | | | OKLAHOMA |
| |Common Stock: 1,000 | | | | |Common Stock: 500 | | | |
|---|------------- Shares | | |-----| |------------- Shares |--|==| |
| | Cost | | | | | Cost | | | |
| | ---- | | | | | ---- | | | |
| |Morley-100% $1,000 | |NFS-100% | | |NRS-100% $500 | | | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | CALIBER FUNDING | | NFS DISTRIBUTORS INC. | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | CORPORATION | | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | NEVADA | | | TEXAS |
| | | | | | | Common Stock: 1,000 | | | |
|---| | | |-----| | ------------- Shares |--|==| |
| | | | | Cost | | |
| | | | | ---- | | |
|Morley-100% | |NFS-100% | | NRS-100% $1,000 | | |
----------------------------- ----------------------------- ----------------------------- ---------------------------
</TABLE>
<PAGE> 76
<TABLE>
<CAPTION>
(Right)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------|--------------------|---------------------------------------|
| | |
| ---------------|---------------- --------------|----------------
| | EMPLOYERS LIFE INSURANCE CO. | | GATES MCDONALD |
| | OF WAUSAU (ELIOW) | | & COMPANY (GATES) |
| | | | |
| |Common Stock: 250,000 | |Common Stock: 254 |
| |--|------------- Shares | |--|------------- Shares |
| | | | | | |
| | | Cost | | | Cost |
| | | ---- | | | ---- |
| | |NW CORP. -100% $126,509,480 | | |NW CORP. -100% $25,683,532 |
| | -------------------------------- | -------------------------------
- ------------ | | |
| -------------------------------- | | -------------------------------- | --------------------------------
| | NATIONWIDE TRUST | | | | WAUSAU PREFERRED | | | HEALTHCARE |
| | COMPANY | | | | HEALTH INSURANCE CO. | | | FIRST, INC. |
| | | | | | | | | |
| |Common Stock: 2,800,000 | | | |Common Stock: 200 | | | |
|--|------------- Shares | | |--|------------- Shares | |--| |
| | | | | | | | |
| | Cost | | | Cost | | | Cost |
| | ---- | | | ---- | | | ---- |
| |NFS-100% $3,500,000 | | |ELIOW -100% $57,413,193 | | |Gates-100% $6,700,000 |
| -------------------------------- | -------------------------------- | --------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------
| | NATIONWIDE FINANCIAL | | | NATIONWIDE GLOBAL | | | GATES MCDONALD & COMPANY |
| | SERVICES (BERMUDA) INC. | | | HOLDINGS, INC. (NGH) | | | OF NEW YORK, INC. |
| | | | | | | | |
| |Common Stock: 250,000 | | |Common Stock: 1 | | |Common Stock: 3 |
|--|------------- Shares | |-----|------------- Share | |--|------------- Shares |
| | | | | | | | |
| | Cost | | | Cost | | | Cost |
| | ---- | | | ---- | | | ---- |
| |NFS-100% $3,500,000 | | |NW CORP.-100% $7,000,000 | | |Gates-100% $106,947 |
| -------------------------------- | -------------------------------- | -------------------------------
| | | |
| -------------------------------- | -------------------------------- | -------------------------------
| | NATIONWIDE DEFERRED | | | NATIONWIDE GLOBAL HOLDINGS | | | GATES MCDONALD & COMPANY |
| | COMPENSATION, INC. | | | -HONG KONG, LIMITED | | | OF NEVADA |
| | | | | | | | |
| | | | |Common Stock: 2 | | |Common Stock: 40 |
|--| | | |------------- Shares | |--|------------- Shares |
| | | | | | | | |
| | | | | | | | Cost |
| | | | | | | | ---- |
| |NFS-100% | | |NGH-100% | | |Gates-100% $93,750 |
| -------------------------------- | -------------------------------- | -------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------
| | IRVIN L. SCHWARTZ | | | NATIONWIDE | | | GATES McDONALD |
| | AND ASSOCIATES, INC. | | | HEALTH PLANS, INC. (NHP) | | | HEALTH PLUS, INC. |
| | | | | | | | |
| |Common Stock: Control | | |Common Stock: 100 | | |Common Stock: 200 |
|--|------------- ------- | |-----|------------- Shares |--| |--|------------- Shares |
| | | | | | | |
| | | | Cost | | | Cost |
|Class A Other-100% | | | ---- | | | ---- |
|Class B NFS -100% | | |NW CORP.-100% $14,603,732 | | |Gates-100% $2,000,000 |
-------------------------------- | -------------------------------- | -------------------------------
| |
-------------------------------- | -------------------------------- |
| MRM INVESTMENTS, INC. | | | NATIONWIDE MANAGEMENT | |
| | | | SYSTEMS, INC. | |
| | | | | |
|Common Stock: 1 | | |Common Stock: 100 | |
|------------- Share |--| |------------- Shares |--|
| | | | |
| Cost | | Cost | |
| ---- | | ---- | |
|NW CORP.-100% $7,000,000 | |NHP Inc.-100% $25,149 | |
-------------------------------- -------------------------------- |
|
-------------------------------- |
| NATIONWIDE | |
| AGENCY, INC. | |
| | |
|Common Stock: 100 | |
|------------ Shares |--|
| |
| Cost |
| ---- |
|NHP Inc.-99% $116,077 |
--------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1998
Page 2
</TABLE>
<PAGE> 77
Item 27. NUMBER OF CONTRACT OWNERS
N/A
Item 28. INDEMNIFICATION
Provision is made in Nationwide's Amended and Restated Code of
Regulations and expressly authorized by the General Corporation
Law of the State of Ohio, for indemnification by Nationwide of any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that such person is or was a
director, officer or employee of Nationwide, against expenses,
including attorneys fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, to the extent and
under the circumstances permitted by the General Corporation Law
of the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors,
officers or persons controlling Nationwide pursuant to the
foregoing provisions, Nationwide has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) Nationwide Advisory Services, Inc. ("NAS") acts as
principal underwriter and general distributor for the
Nationwide Variable Account, Nationwide Multi-Flex Variable
Account, Nationwide Variable Account-II, Nationwide
Variable Account-5, Nationwide Variable Account-6,
Nationwide Variable Account-8, Nationwide Variable
Account-9, Nationwide Variable Account-10, Nationwide VA
Separate Account-A, Nationwide VA Separate Account-B,
Nationwide VA Separate Account-C, Nationwide VL Separate
Account-A, Nationwide VL Separate Account-B, Nationwide VL
Separate Account-C, Nationwide VL Separate Account-D,
Nationwide VLI Separate Account-2, Nationwide VLI Separate
Account-3, Nationwide VLI Separate Account-4, and the
Nationwide VLI Separate Account-5, all of which are
separate investment accounts of Nationwide or its
affiliates.
NAS also acts as principal underwriter for Nationwide
Mutual Funds, Nationwide Separate Account Trust, and
Nationwide Asset Allocation Trust, which are open-end
management investment companies.
132 of 138
<PAGE> 78
(b) NATIONWIDE ADVISORY SERVICES, INC.
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
------------------------------------------------------------------------------------------------------------------
<S> <C>
Joseph J. Gasper President and Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Dimon R. McFerson Chairman of the Board of Directors and Chairman and Chief Executive
One Nationwide Plaza Officer and Director
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Robert A. Oakley Executive Vice President - Chief Financial Officer and Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Susan A. Wolken Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Paul J. Hondros Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Robert J. Woodward, Jr. Executive Vice President - Chief Investment Officer and Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Edwin P. McCausland, Jr. Senior Vice President-Fixed Income Securities
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Charles S. Bath Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Alan A. Todryk Vice President - Taxation
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Dennis W. Click Vice President and Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
William G. Goslee Vice President
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
James F. Laird, Jr. Vice President and General Manager
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Joseph P. Rath Vice President - Compliance
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Christopher A. Cray Treasurer
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
</TABLE>
133 of 138
<PAGE> 79
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
------------------------------------------------------------------------------------------------------------------
<S> <C>
Elizabeth A. Davin Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
David E. Simaitis Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Patricia J. Smith Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(c)
NAME OF PRINCIPAL UNDERWRITER NET UNDERWRITING COMPENSATION ON BROKERAGE COMPENSATION
DISCOUNTS AND REDEMPTION OR COMMISSIONS
COMMISSIONS ANNUITIZATION
<S> <C> <C> <C> <C>
Nationwide Advisory N/A N/A N/A N/A
Services, Inc.
</TABLE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
John Davis
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43215
Item 31. MANAGEMENT SERVICES
Not Applicable
134 of 138
<PAGE> 80
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration statement
as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never
more than 16 months old for so long as payments under the
variable annuity contracts may be accepted;
(b) include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant
can check to request a Statement of Additional Information, or
(2) a post card or similar written communication affixed to or
included in the prospectus that the applicant can remove to
send for a Statement of Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under this
form promptly upon written or oral request.
The Registrant represents that any of the contracts which are
issued pursuant to Section 403(b) of the Internal Revenue Code,
are issued by Nationwide through the Registrant in reliance upon,
and in compliance with, a no-action letter issued by the Staff of
the Securities and Exchange Commission to the American Council of
Life Insurance (publicly available November 28, 1988) permitting
withdrawal restrictions to the extent necessary to comply with
Section 403(b)(11) of the Internal Revenue Code.
Nationwide represents that the fees and charges deducted under the
contract in the aggregate are reasonable in relation to the
services rendered, the expenses expected to be incurred and risks
assumed by Nationwide.
135 of 138
<PAGE> 81
Offered by
Nationwide Life Insurance Company
NATIONWIDE LIFE INSURANCE COMPANY
NATIONWIDE VARIABLE ACCOUNT - 9
INDIVIDUAL SINGLE PREMIUM IMMEDIATE VARIABLE ANNUITY CONTRACT
PROSPECTUS
September 17, 1999
136 of 138
<PAGE> 82
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT-9, certifies that it meets the
requirements of Securities Act Rule 485 for effectiveness of this Registration
Statement and has caused this Registration Statement to be signed on its behalf,
in the City of Columbus, and State of Ohio on this 26th day of May, 1999.
<TABLE>
<S> <C> <C> <C>
NATIONWIDE VARIABLE ACCOUNT-9
---------------------------------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
---------------------------------------------------------------
(Depositor)
By/s/JOSEPH P. RATH
---------------------------------------------------------------
Joseph P. Rath
Vice President - Product and Market Compliance
As required by the Securities Act of 1933, this Registration Statement has been signed by the following persons in
the capacities indicated on the 26th day of May, 1999.
SIGNATURE TITLE
LEWIS J. ALPHIN Director
- ---------------------------------------
Lewis J. Alphin
A. I. BELL Director
- ---------------------------------------
A. I. Bell
KENNETH D. DAVIS Director
- ---------------------------------------
Kenneth D. Davis
KEITH W. ECKEL Director
- ---------------------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- ---------------------------------------
Willard J. Engel
FRED C. FINNEY Director
- ---------------------------------------
Fred C. Finney
JOSEPH J. GASPER President and Chief Operating
- --------------------------------------- Officer and Director
Joseph J. Gasper
DIMON R. MCFERSON Chairman and Chief Executive
- --------------------------------------- Officer and Director
Dimon R. McFerson
DAVID O. MILLER Chairman of the Board and
- --------------------------------------- Director
David O. Miller
YVONNE L. MONTGOMERY Director
- ---------------------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President and Chief
- --------------------------------------- Financial Officer
Robert A. Oakley
RALPH M. PAIGE Director
- ---------------------------------------
Ralph M. Paige
JAMES F. PATTERSON Director
- ---------------------------------------
James F. Patterson
ARDEN L. SHISLER Director By /s/ JOSEPH P. RATH
- --------------------------------------- --------------------------------------
Arden L. Shisler Joseph P. Rath
ROBERT L. STEWART Director Attorney-in-Fact
- ---------------------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- ---------------------------------------
Nancy C. Thomas
</TABLE>
<PAGE> 1
Exhibit 4
[LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
One Nationwide Plaza Columbus, Ohio 43216
(Hereinafter called the Company)
P.O. BOX 182290
COLUMBUS, OHIO 43218-2290
1-800-452-7126 (FOR ANY INQUIRIES)
NATIONWIDE LIFE INSURANCE COMPANY will make annuity payments to the Annuitant
beginning on the Income Start Date and continuing thereafter, subject to the
terms and conditions of this Contract.
This Contract is provided in return for the Single Purchase Payment (minimum
$35,000).
FREE LOOK
UPON DELIVERY OF THIS CONTRACT TO THE OWNER, HE OR SHE WILL HAVE TEN DAYS TO
EXAMINE IT AND RETURN IT TO THE HOME OFFICE OF THE COMPANY FOR ANY REASON. IF
THE CONTRACT IS RETURNED DURING THIS "FREE LOOK" PERIOD, THE COMPANY WILL REFUND
THE CONTRACT VALUE WITHOUT DEDUCTION OF CONTINGENT DEFERRED SALES CHARGES.
IF THE CONTRACT IS ISSUED AS AN IRA AND IS RETURNED WITHIN THE "FREE LOOK"
PERIOD, THE COMPANY WILL REFUND THE SINGLE PURCHASE PAYMENT.
Executed for the Company on the Date of Issue.
/s/ Dennis W. Click /s/ Joseph J. Gasper
SECRETARY PRESIDENT
READ YOUR CONTRACT CAREFULLY
INDIVIDUAL SINGLE PURCHASE PAYMENT IMMEDIATE VARIABLE AND/OR FIXED INCOME
ANNUITY, NON-PARTICIPATING
ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
NOTICE- The details of variable provisions are on pages 9, 13, 14, 15, 16 and
17.
<PAGE> 2
CONTENTS
<TABLE>
<S> <C>
CONTENTS...............................................................................................2
DEFINITIONS............................................................................................4
GENERAL PROVISIONS.....................................................................................7
ENTIRE CONTRACT
NON-PARTICIPATING
INCONTESTABILITY
EVIDENCE OF SURVIVAL
ALTERATION OR MODIFICATION
ASSIGNMENT
PROTECTION OF PROCEEDS
MISSTATEMENT OF AGE OR SEX
REPORTS
NUMBER
RETURN OF CONTRACT DURING FREE LOOK PERIOD
DEDUCTIONS AND CHARGES.................................................................................9
VARIABLE ACCOUNT CHARGE
DEDUCTION FOR PREMIUM TAXES
OWNERSHIP PROVISIONS ..................................................................................9
CONTRACT OWNERSHIP
JOINT OWNERSHIP
ANNUITANT/JOINT ANNUITANT
BENEFICIARY
PURCHASE PAYMENT PROVISIONS..........................................................................12
SINGLE PURCHASE PAYMENT
SINGLE PURCHASE PAYMENT ALLOCATION
VARIABLE ACCOUNT.....................................................................................13
ANNUITY INCOME UNITS
NET INVESTMENT FACTOR
SUBSTITUTION OF UNDERLYING MUTUAL FUND SHARES
ANNUITY PROVISIONS...................................................................................14
INCOME START DATE
FIXED ANNUITY PAYMENTS
VARIABLE ANNUITY PAYMENT - FIRST PAYMENT
VARIABLE ANNUITY PAYMENTS - SUBSEQUENT PAYMENTS
FREQUENCY AND AMOUNT OF PAYMENTS
ANNUAL BENEFIT LEVELING
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
TRANSFERS............................................................................................17
RESTRICTIONS ON WITHDRAWALS..........................................................................18
RESTRICTIONS ON WITHDRAWALS FROM TSAS
OTHER WITHDRAWAL PROVISIONS
SUSPENSION OR DELAY OF WITHDRAWAL
REQUIRED DISTRIBUTION PROVISIONS.....................................................................19
REQUIRED DISTRIBUTION - NON-QUALIFIED CONTRACTS
REQUIRED DISTRIBUTION - TSAS AND IRAS
DEATH PROVISIONS PRIOR TO THE INCOME START DATE......................................................22
DEATH OF OWNER
DEATH OF ANNUITANT
DEATH PROVISIONS AFTER THE INCOME START DATE.........................................................23
DEATH OF OWNER
DEATH OF ANNUITANT
INCOME SPECIFICATIONS............................................................................INSERT
</TABLE>
3
<PAGE> 4
DEFINITIONS
- -----------
ANNUITANT - The person upon whose continuation of life any lifetime annuity
payments depend. The Annuitant is the recipient of annuity payments.
ANNUITY INCOME UNIT(S) - An accounting unit of measure used to calculate the
value of Variable Annuity Payments after the first payment.
ASSUMED INVESTMENT RETURN (AIR) - The net investment return required to maintain
level Variable Annuity Payments. The selected Assumed Investment Return is
stated in the Income Specifications and will be used in calculating the initial
Variable Annuity Payment.
ASSUMED INVESTMENT RETURN FACTOR - The Assumed Investment Return Factor adjusts
the Annuity Income Unit value based on the Assumed Investment Return chosen by
the Owner and permitted under this Contract.
BENEFICIARY - The person designated to receive certain benefits under the
Contract upon the later death of the Annuitant or the Joint Annuitant, if any,
as applicable.
CODE - The Internal Revenue Code of 1986, as amended.
COMMUTATION VALUE - The value of future annuity payments that are converted
(commuted) into a lump sum. The Commutation Value may be available under certain
Income Options (see Income Specifications), and may be available to
Beneficiaries when an Annuitant dies before all term certain payments have been
made.
COMPANY - Nationwide Life Insurance Company.
CONSTANT MATURITY TREASURY (CMT) RATES - The CMT Rates are interest rate
quotations for various maturity durations published by the Federal Reserve Board
on a regular basis. These rates represent a readily available and consistently
reliable interest rate benchmark in financial markets.
CONTINGENT BENEFICIARY - The person or entity designated to be the Beneficiary
if the named Beneficiary is not living at the time of the later death of the
Annuitant or Joint Annuitant, if any.
CONTRACT - The rights, benefits, duties, obligations and guarantees set forth in
this document, the application and the attached Income Specifications.
CONTRACT OWNER (OWNER(S)) - The person who possesses all rights under the
Contract. All references to Owner shall include Joint Owner and all references
to Joint Owner shall include Owner unless the context clearly indicates
otherwise.
CONTRACT VALUE - The value of any amount allocated to the Variable Account (plus
or minus any investment experience), plus any amount designated for the purchase
of Fixed Annuity Payments, less any distributions previously made.
DATE OF ISSUE - The date the Contract becomes effective as shown on the Income
Specifications.
4
<PAGE> 5
FIXED ANNUITY PAYMENT(S) - Annuity payments which are guaranteed by the Company
as to dollar amount.
HOME OFFICE - The main office of the Company located in Columbus, Ohio.
INCOME OPTION - The type of annuity payments chosen and identified on the Income
Specifications.
INCOME SPECIFICATION(S) - Information unique to the individual Owner(s),
Annuitant(s), and Beneficiary(ies) who purchase, or have an interest in this
Contract, as set forth in the Income Specifications regarding the elected Income
Option.
INCOME START DATE - The date annuity payments actually commence.
INDIVIDUAL RETIREMENT ANNUITY (IRA) - An annuity described in Section 408 of the
Code, established for the exclusive benefit of the Owner or the Owner's
beneficiaries.
INVESTMENT OPTION(S) - The Underlying Mutual Funds which are purchased by the
Variable Account and accounted for in separate Sub-Accounts of the Variable
Account. The performance of selected Investment Options determines the value of
Variable Annuity Payments after the first Variable Annuity Payment.
JOINT ANNUITANT - A person other than the Annuitant upon whose continuation of
life any lifetime annuity payments may depend.
JOINT OWNER(S) - The Joint Owner, if any, possesses an undivided interest in the
entire Contract in conjunction with the Owner. All references to Joint Owner
shall include Owner and all references to Owner shall include Joint Owner unless
the context clearly indicates otherwise.
MINIMUM DISTRIBUTION(S) - The amount required to be withdrawn from Tax Sheltered
Annuities and IRAs to meet distribution requirements under the Code.
NET ASSET VALUE - The value of one share of an Underlying Mutual Fund at the end
of a market day or at the close of the New York Stock Exchange. Net Asset Value
is computed by adding the value of all portfolio holdings plus other assets,
deducting liabilities and then dividing the result by the number of shares
outstanding.
NON-QUALIFIED CONTRACT - A Contract which does not qualify for tax treatment
under the provisions of Code Sections 401, 403(a), 403(b) (Tax-Sheltered
Annuities), 408 (IRAs) or 408A (Roth IRAs).
SINGLE PURCHASE PAYMENT - The consideration for which this Contract is issued.
SUB-ACCOUNTS - Separate and distinct divisions of the Variable Account. Each
Sub-Account corresponds to a specific Underlying Mutual Fund upon which
investment performance is based.
TAX SHELTERED ANNUITY (TSA) - An annuity described in Code Section 403(b).
5
<PAGE> 6
UNDERLYING MUTUAL FUNDS - The registered management investment companies in
which the assets of the Sub-Accounts of the Variable Account will be invested.
VALUATION DAY - Each day the New York Stock Exchange is open for business or any
other day during which there is a sufficient degree of trading of the Variable
Account Underlying Mutual Fund shares such that the current Net Asset Value of
its Annuity Income Units might be materially affected.
VALUATION PERIOD - The period of time commencing at the close of a Valuation Day
and ending at the close of business for the next succeeding Valuation Day.
VARIABLE ACCOUNT - A separate investment account of the Company into which the
Single Purchase Payment may be allocated. The Variable Account supports this
Contract and certain other variable annuity contracts the Company may offer.
VARIABLE ACCOUNT VALUE - The amount allocated to the Variable Account plus or
minus investment experience minus any distributions from the Variable Account
previous made.
VARIABLE ANNUITY PAYMENT(S) - Annuity Payments which are not predetermined or
guaranteed as to dollar amount and which vary in amount with the investment
experience of the Investment Options.
6
<PAGE> 7
GENERAL PROVISIONS
- ------------------
ENTIRE CONTRACT
This Contract makes up the entire agreement between the Company and the
Owner(s).
NON-PARTICIPATING
This Contract is non-participating. It will not share in the surplus of the
Company.
INCONTESTABILITY
This Contract will not be contested.
EVIDENCE OF SURVIVAL
Where any payments under this Contract depend on a person being alive on a given
date, proof that such person is living may be required by the Company. Such
proof may be required prior to making the payments.
ALTERATION OR MODIFICATION
Changes in or to the terms of the Contract must be made in writing and signed by
the President or Secretary of the Company. No other person can alter or change
any of the terms or conditions of the Contract.
Provisions of the Contract may be modified or superseded by the Company as
required by the Code, the Internal Revenue Regulations or other relevant
provisions of law. Unless otherwise provided, other changes to the Contract will
be made only with mutual agreement of the Company and the Owner. A copy of the
amendment will be furnished to the Owner.
The Company reserves the right to discontinue any Income Option for new
Contracts.
ASSIGNMENT
This Contract cannot be assigned.
PROTECTION OF PROCEEDS
To the extent permitted by applicable law, proceeds are not subject to the
claims of creditors or to legal process.
7
<PAGE> 8
MISSTATEMENT OF AGE OR SEX
If the age or sex of the Annuitant or Joint Annuitant, if any, has been
misstated, all payments and benefits under the Contract will be adjusted.
Payments and benefits will be made based on the correct age or sex. The dollar
amount of any overpayment will be deducted from the next payment or payments due
under the Contract; the dollar amount of any underpayment made by the Company
will be paid in full with the next payment due under the Contract.
Proof of age or sex of an Annuitant or Joint Annuitant, if any, may be required
at any time in a form satisfactory to the Company.
REPORTS
If an Income Option which includes Variable Annuity Payments is selected, the
Company will, at least annually, send a statement to the Owner showing:
1. the number of Annuity Income Units for each Investment Option; and
2. the value of an Annuity Income Unit for each Investment Option.
Such statement will include no information about Fixed Annuity Payments since
they do not vary from payment to payment.
A confirmation statement will be sent each time amounts are transferred among
Investment Options or if partial or full withdrawals, as permitted by Income
Option, are taken.
NUMBER
Unless otherwise provided, all references in this Contract which are in the
singular form will include the plural; all references in the plural form will
include the singular.
RETURN OF CONTRACT DURING FREE LOOK PERIOD
Any Contract, if mailed in the U.S. in an envelope properly addressed, with
first class postage affixed, that is returned during the free look period will
be deemed to be mailed on the date of the postmark, registration or
certification.
8
<PAGE> 9
DEDUCTIONS AND CHARGES
VARIABLE ACCOUNT CHARGE
The Company deducts a charge of [1.20%] from the Variable Account. This charge
is applied on a daily basis at an annual rate against the assets of the Variable
Account.
The Company guarantees that the variable account charge will not increase
regardless of variations in the Company's expenses or mortality experience.
DEDUCTION FOR PREMIUM TAXES
The Company will deduct any applicable premium taxes from this Contract in
compliance with applicable state law. If the Company is required to pay premium
taxes prior to any distribution under this Contract, such distribution will be
reduced by the amount of the premium tax.
OWNERSHIP PROVISIONS
- --------------------
CONTRACT OWNERSHIP
Unless otherwise provided, the Owner has all rights under the Contract. IF THE
PURCHASER NAMES SOMEONE OTHER THAN HIMSELF/HERSELF AS OWNER, THE PURCHASER WILL
HAVE NO RIGHTS UNDER THE CONTRACT.
Upon application, the Owner designates/elects:
1. An Annuitant and Joint Annuitant, if applicable;
2. The frequency of payments, Income Option, Assumed Investment Return, and
Income Start Date (subject to the restrictions set forth in this Contract);
3. A Beneficiary and any Contingent Beneficiary, if applicable;
4. The portion of the Single Purchase Payment used to purchase Fixed Annuity
Payments and/or Variable Annuity Payments;
5. The allocation among the Investment Options; and
6. Any optional benefits that may be provided under the elected Income Option.
Once elected on the application, the Income Option cannot be changed.
Between the Date of Issue and the Income Start Date, the Owner has the right to:
1. Cancel the Contract during the free look period;
2. Change the Beneficiary and Contingent Beneficiary;
3. Change allocations among Investment Options;
9
<PAGE> 10
4. Elect to take a partial or full withdrawal (the right to take partial or
full withdrawals will depend on the Income Option selected and will be
subject to any restrictions found in the Death Provisions Prior to Income
Start Date section); and
5. Elect or revoke prior election of annual benefit leveling (annual benefit
leveling is an optional method of receiving Variable Annuity Payments.
Please see the Annual Benefit Leveling section.)
After the Income Start Date and prior to the death of the Annuitant, the Owner
has the right to:
1. Change the Beneficiary and Contingent Beneficiary;
2. Change allocations among Investment Options;
3. Elect a partial or full withdrawal (the right to take partial or full
withdrawals will depend on the Income Option selected and will be subject
to any restrictions found in the Death Provisions Prior to Income Start
Date section); and
4. Elect or discontinue annual benefit leveling.
All changes, except those to annual benefit leveling will take effect as of the
time such changes are recorded by the Company, whether or not the Owner or
Annuitant is living at the time the Company makes such recording. The Company
shall have no liability as to any payment made or action taken by the Company
before recording of such change.
The Company may require that all changes be made in writing, or in a form
otherwise acceptable by the Company. The Company reserves the right to require
that a signature(s) be guaranteed by a member firm of a major stock exchange or
other depository institution qualified to give such a guaranty.
JOINT OWNERSHIP
Joint Owners must be spouses at the time joint ownership is requested. If a
Joint Owner is named, the Joint Owner will possess an undivided interest in the
Contract. Unless otherwise permitted by the Company, the exercise of any
ownership right shall require a written request signed by both Owners.
If an Owner who is not also the Annuitant dies before the Income Start Date and
there is a surviving Joint Owner, the Joint Owner shall become the Owner.
If an Owner who is also the Annuitant dies before the Income Start Date and
there is a surviving Joint Owner, the Contract will terminate and the Contract
Value will be paid to the Joint Owner.
A Joint Owner can be named only in a Non-Qualified Contract.
ANNUITANT/JOINT ANNUITANT
The Annuitant (and any Joint Annuitant, if applicable) must be age 85 or younger
at the time the Contract is issued, unless the Company has approved a request
for an Annuitant or Joint
10
<PAGE> 11
Annuitant older than age 85. Once designated, the Annuitant (and any Joint
Annuitant, if applicable) cannot be changed. Joint Annuitants can be elected
only if permitted under the elected Income Option.
For Contracts that are issued as IRAs or TSAs, the Owner must be the Annuitant
and the entire interest of the Annuitant in the Contract is nonforfeitable. For
any such Contract, if a joint and survivor Income Option is elected, the Joint
Annuitant must be the spouse of the Annuitant.
BENEFICIARY
The Beneficiary is the person who may receive benefits under the Contract if the
Annuitant (and the Joint Annuitant, if any) dies after the Income Start Date.
If more than one Beneficiary survives the Annuitant (and the Joint Annuitant, if
any), each will share equally unless otherwise specified on the application. If
there is no surviving Beneficiary upon the death of the Annuitant, all
Beneficiary rights will vest in the Contingent Beneficiary, and if more than one
Contingent Beneficiary survives, each will share equally unless otherwise
specified on the application. If no Beneficiary or Contingent Beneficiary
survives the Annuitant (and the Joint Annuitant, if any), all Beneficiary rights
will vest with the Owner(s), or the estate of the last surviving Owner.
If the Annuitant (and the Joint Annuitant, if any) dies prior to the Income
Start Date, the Beneficiary will be entitled to the proceeds of the Contract if
there is no surviving Owner or Joint Owner.
11
<PAGE> 12
PURCHASE PAYMENT PROVISIONS
- ---------------------------
SINGLE PURCHASE PAYMENT
The Contract is provided in return for a Single Purchase Payment which may not
be less than [$35,000.00]. No additional purchase payments will be accepted or
permitted. The cumulative total of all purchase payments under this and any
other annuity Contract(s) issued by the Company having the same Annuitant may
not exceed [$1,000,000] without the prior written consent of the Company.
For Contracts issued as IRAs, except in the case of a rollover contribution (as
permitted by Code Section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3)) no
contributions will be accepted unless: (1) they are in cash; (2) the total of
such contributions shall not exceed any limits set by the Code and (3) all
related transactions comply with the provisions of the Code. Any refund of
purchase payments will be applied before the close of the calendar year
following the year of the refund toward the payment of future premiums or the
purchase of additional benefits.
For Contracts issued as a TSA, the amount of deposits, contributions or payments
made by or on behalf of the Owner during any taxable year shall not exceed the
Code Section 402(g) limit (as increased from time to time by the Secretary of
the Treasury to reflect changes in the cost of living) for the calendar year in
which such taxable year begins. The Code Section 402(g) limit applies to
deposits, contributions, or payments that are elective deferrals within the
meaning of Code Section 402(g)(3) and are made by or on behalf of the Owner
under this Contract and all other contracts, plans or arrangements of the
Owner's employer. However the maximum amount of deposits, contributions, or
payments that may be made by the Owner may be increased or decreased under the
provisions of Code Sections 403(b) or 415.
SINGLE PURCHASE PAYMENT ALLOCATION
For any particular Income Option elected, the Single Purchase Payment may be
allocated to provide Variable Annuity Payments, Fixed Annuity Payments or a
combination of Variable Annuity Payments and Fixed Annuity Payments. The chosen
allocation between Fixed Annuity Payments and Variable Annuity Payments is shown
on the Income Specifications and may not be changed. For information regarding
transfers among Investment Options, see the Transfers section.
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VARIABLE ACCOUNT
The Company owns the assets in the Variable Account. Gains and losses from
assets allocated to the Variable Account, whether or not realized, will be
credited to or charged against the Variable Account without regard to the
Company's other gains or losses.
Assets equal to the reserves and other liabilities of the Variable Account will
not be charged with liabilities that arise from any other business conducted by
the Company.
ANNUITY INCOME UNITS
The value of an Annuity Income Unit for any Valuation Day is determined as
follows:
1. The Annuity Income Unit value for the immediately preceding Valuation Day
is multiplied by the net investment factor (see below) for the Sub-Account
for the Valuation Period ending on the Valuation Day for which the Annuity
Income Unit value is being calculated.
2. The result is multiplied by the Assumed Investment Return Factor, shown on
the Income Specifications, adjusted for the number of days in the Valuation
Period. The Assumed Investment Return Factor adjusts the Annuity Income
Unit value based on the Assumed Investment Return chosen by the Owner and
permitted under this Contract.
NET INVESTMENT FACTOR
The net investment factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Day to the next. The product of
the Assumed Investment Return Factor, adjusted for the number of days in the
Valuation Period, and the net investment factor may be greater or less than one
and cause the value of an Annuity Income Unit to increase or decrease.
The net investment factor for any Sub-Account for any Valuation Period is
determined by: dividing (1) by (2) and subtracting (3) from the result, where:
1. is the sum of:
a. the Net Asset Value per share of the Underlying Mutual Fund,
determined at the end of the current Valuation Period; plus
b. the per share amount of any dividend or capital gain
distributions made by the Underlying Mutual Fund, if the
"ex-dividend" date occurs during the current Valuation Period.
2. is the net result of:
a. the Net Asset Value per share of the Underlying Mutual Fund,
determined at the end of the last prior Valuation Period; plus or
minus
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<PAGE> 14
b. the per share credit or charge for any taxes reserved for the
last prior Valuation Period.
3. is a factor representing the variable account charge plus additional
charges for any riders or options which become part of the Contract.
For Underlying Mutual Funds that credit dividends on a daily basis and pay such
dividends once a month, the net investment factor allows for the monthly
reinvestment of these daily dividends.
SUBSTITUTION OF UNDERLYING MUTUAL FUND SHARES
If the shares of the Underlying Mutual Funds should no longer be available for
investment by the Variable Account or if in the judgment of the Company's
management further investment in such Underlying Mutual Fund shares would be
inappropriate in view of the purposes of the Contract, the Company may
substitute shares of another Underlying Mutual Fund for shares already purchased
or to be purchased through the reallocation of invested amounts.
In the event of such substitution or change, the Company may, by appropriate
endorsement, make such changes to this and other contracts of this class as may
be necessary to reflect such substitution or change. Nothing contained herein
shall prevent the Variable Account from purchasing other securities for other
series or classes of contracts.
ANNUITY PROVISIONS
- ------------------
INCOME START DATE
The Income Start Date is a date chosen by the Owner(s) as the day annuity
payments will commence. This date is shown on the Income Specifications. The
Income Start Date must be no earlier than the day after the end of the free look
period and no later than 60 days after the Date of Issue. The frequency of
annuity payment dates selected (monthly, quarterly, semi-annually, or annually)
is shown on the Income Specifications.
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<PAGE> 15
FIXED ANNUITY PAYMENTS
Fixed Annuity Payments provide a guaranteed amount of income that will be the
same on each date a payment is received, unless the Income Option calls for a
reduction in annuity income upon the death of the Annuitant or Joint Annuitant
or if a withdrawal has been taken.
The Fixed Annuity Payment amount will be determined by the following factors:
1. the portion of the Single Purchase Payment allocated to provide Fixed
Annuity Payments;
2. the age and sex (based upon contract type and in compliance with applicable
state law) of the Annuitant (and Joint Annuitant, if any);
3. the Income Option selected;
4. the frequency of payments;
5. the Income Start Date;
6. the deduction of any applicable premium tax; and
7. the Date of Issue of the Contract.
VARIABLE ANNUITY PAYMENT - FIRST PAYMENT
The first Variable Annuity Payment is determined by the following factors:
1. the portion of the Single Purchase Payment allocated to provide Variable
Annuity Payments;
2. the Variable Account Value on the Income Start Date;
3. the age and sex (based upon contract type and in compliance with applicable
state law) of the Annuitant (and Joint Annuitant, if any);
4. the Income Option selected;
5. the frequency of payments;
6. the Income Start Date;
7. the selected Assumed Investment Return;
8. the deduction for any applicable premium tax; and
9. the Date of Issue of the Contract.
VARIABLE ANNUITY PAYMENTS - SUBSEQUENT PAYMENTS
Variable Annuity Payments after the first payment will vary in accordance with
the investment performance of the Underlying Mutual Funds selected by the Owner
after the investment
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<PAGE> 16
performance is adjusted by the Assumed Investment Return Factor. The dollar
amount of such subsequent payments is determined as follows:
1. For each Sub-Account the Owner has selected, the portion of the first
annuity payment that is funded by that Sub-Account is divided by the
Annuity Income Unit value for that Sub-Account as of the Income Start Date.
This establishes the number of Annuity Income Units which each Sub-Account
provides for each Variable Annuity Payment after the first. The number of
Annuity Income Units provided by each Sub-Account remains constant during
the annuity payment period, except in the following instances:
- if a reduction applies after the first death when a joint and
survivor Income Option has been selected; or
- if any withdrawal option allowed under the Income Option elected
has been exercised; or
- if a transfer to or from another Investment Option has been made.
2. The number of Annuity Income Units provided by each Sub-Account is
multiplied by the Annuity Income Unit value for that Sub-Account for the
Valuation Day for which the payment is due. The sum of these results for
all Sub-Accounts in which the Owner is invested establishes the dollar
amount of the Variable Annuity Payment.
Subsequent Variable Annuity Payments may be greater or less than the preceding
payment, based on whether the net investment performance of selected Investment
Options is greater or lesser than the Assumed Investment Return.
FREQUENCY AND AMOUNT OF PAYMENTS
Payments will be made based on the Income Option and frequency selected.
Frequencies that may be selected include: monthly, quarterly, semi-annually, or
annually. In no event will the Company make payments under an Income Option less
frequently than annually.
If any payment would be or becomes less than [$100], the Company has the right
to change the frequency of payments to an interval that will result in payments
of at least [$100].
ANNUAL BENEFIT LEVELING
If the Owner has elected annual benefit leveling, Variable Annuity Payments will
be adjusted to reflect the performance of the Investment Options once every
twelve months instead of with every payment. On the Income Start Date or the
Income Start Date anniversary on which annual benefit leveling commences, the
number of Annuity Income Units necessary to make these payments will be
calculated. These Annuity Income Units will be redeemed from the Sub-Accounts
and transferred to the Company's general account, where the annual benefit
leveling interest rate for that quarter will be used to calculate the guaranteed
amount of level payments for the following year.
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The level payment calculated on each subsequent Income Start Date anniversary
could be higher or lower than the level payment for the previous year.
An election to start or discontinue annual benefit leveling will take effect
only on the Income Start Date or Income Start Date anniversary. In order for
such an election to take effect on the next Income Start Date anniversary, the
Company must receive the election at least five days prior to the Income Start
Date anniversary. If an Owner has elected annual benefit leveling the process of
calculating leveled Variable Annuity Payments will take place on each subsequent
Income Start Date anniversary until the Owner instructs otherwise. However, the
Company reserves the right to discontinue offering annual benefit leveling.
Should the Company discontinue annual benefit leveling, anyone receiving leveled
Variable Annuity Payments will continue to do so until the next Income Start
Date anniversary.
TRANSFERS
- ---------
Any portion of the Single Purchase Payment that is allocated to provide Fixed
Annuity Payments may not be transferred to any Sub-Accounts. Similarly, any
portion of the Single Purchase Payment that is allocated to provide Variable
Annuity Payments may not be transferred to provide Fixed Annuity Payments.
However, any portion of the Single Purchase Payment that is allocated to provide
Variable Annuity Payments may be reallocated by the Owner among the
Sub-Accounts. Transfers among the Sub-Accounts may occur once daily without
charges and penalties. The Company reserves the right to limit such transfers to
[12] per year or to assess a fee for any transfer in excess of [12] per year.
The Company also reserves the right to refuse any transfer requests submitted by
individuals or firms performing market timing services on behalf of multiple
Owners, or when disposal or purchase of securities is not reasonably practicable
due to actions taken, or limitations imposed, independently by Underlying Mutual
Fund companies.
RESTRICTIONS ON WITHDRAWALS
- ---------------------------
RESTRICTIONS ON WITHDRAWALS FROM TSAS
The withdrawal of interest in the Contract attributable to contributions made
pursuant to a salary reduction agreement (within the meaning of Code Section
402(g)(3)(C)), or transfers from a custodial account as described in Code
Section 403(b)(7), may be executed only if otherwise permitted by this Contract
and:
(1) when the Owner attains age 59 1/2, separates from service, dies,
or becomes disabled (within the meaning of Code Section 72(m)(7));
or
(2) in the case of hardship (as defined for purposes of Code Section
401(k)), provided that any withdrawal in the case of hardship may
not include any income attributable to salary reduction
contributions.
These withdrawal limitations apply to the withdrawal of interest in the Contract
attributable to the following:
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<PAGE> 18
(1) salary reduction contributions to Tax Sheltered Annuities made for
plan years beginning after December 31, 1988;
(2) earnings credited to such contracts after the last plan year
beginning before January 1, 1989, on amounts attributable to
salary reduction contributions; and
(3) all amounts transferred from custodial accounts described in Code
Section 403(b)(7) (except that employer contributions and earnings
in such accounts as of December 31, 1988, may be withdrawn in the
case of hardship).
Payments pursuant to a qualified domestic relations order (as the term is
described and used in the Code) will not violate any withdrawal limitations
included herein, but may be subject to restrictions found in the employer's plan
or the Code.
OTHER WITHDRAWAL PROVISIONS
To assist in preventing disqualification in the event of a withdrawal during the
free look period, the Company will agree to transfer the proceeds to another
contract which meets the requirements of Code Section 408 (for IRAs) or Section
403(b) or 408 (for TSAs), upon proper direction by the Owner.
SUSPENSION OR DELAY OF WITHDRAWAL
The Company has the right to suspend or delay the date of any withdrawal from
the Variable Account for any period, whether it occurs before or after the
Income Start Date:
1. When the New York Stock Exchange is closed;
2. When trading on the New York Stock Exchange is restricted;
3. When an emergency exists as a result of which disposal of securities held
in the Variable Account is not reasonably practicable or it is not
reasonably practicable to fairly determine the value of the net assets of
the Variable Account; or
4. During any other period when the Securities and Exchange Commission, by
order, so permits for the protection of security holders.
Rules and regulations of the Securities and Exchange Commission may govern as to
whether certain conditions set forth above exist.
Payment of funds from the Variable Account will be made within seven days of
receipt of both proper written application and proof of interest satisfactory to
the Company.
REQUIRED DISTRIBUTION PROVISIONS
- --------------------------------
This Contract is intended to be treated as an "annuity contract" for federal
income tax purposes. Accordingly, all provisions of this Contract shall be
interpreted and administered in accordance with the requirements of Code Section
72(s). In no event shall any payment be deferred beyond the time limits
permitted by Code Section 72(s). The Company reserves the right to amend this
Contract to
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<PAGE> 19
comply with requirements set out in the Code and regulations and rulings
thereunder, as they may exist from time to time.
Payments commencing on the Required Beginning Date will not be less than the
lesser of the quotient obtained by dividing the entire interest of the
Annuitant, determined as of the end of the prior calendar year, by the life
expectancy of the Annuitant or the joint and last survivor expectancy of the
Annuitant and the Beneficiary (whichever is applicable).
Payments will be calculated by use of the expected return multiples specified in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations and calculated
in accordance with the calculation methods made available by the Company,
prescribed by the regulations and elected by the Owner.
REQUIRED DISTRIBUTION--NON-QUALIFIED CONTRACTS
Upon the death of any Owner or Joint Owner (each of the foregoing "a deceased
Owner"), certain distributions for Non-Qualified Contracts are required by Code
Section 72(s). Notwithstanding any provision of the Contract to the contrary,
the following distributions shall be made in accordance with such requirements.
1. If any deceased Owner died on or after the Income Start Date and
before the entire interest under the Contract has been distributed, then the
remaining portion of such interest shall be distributed at least as rapidly as
under the method of distribution in effect as of the date of such deceased
Owner's death.
2. If any deceased Owner died prior to the Income Start Date, then the
entire interest in the Contract (consisting of either the Death Benefit or the
entire value in the Contract reduced by certain charges as set forth elsewhere
in the Contract) shall be distributed within 5 years of the death of the
deceased Owner, provided however:
(a) If any portion of such interest is payable to or for the benefit
of a natural person who is a surviving Owner, Joint Owner,
Annuitant, Beneficiary, or Contingent Beneficiary as the case may
be (each a "designated beneficiary"), such portion may, at the
election of the designated Beneficiary, be distributed over the
life of such designated beneficiary, or over a period not
extending beyond the life expectancy of such designated
beneficiary, provided that payments begin within one year of the
date of the deceased Owner's death (or such longer period as may
be permitted by federal income tax regulations). Life expectancy
and the amount of each payment will be determined as prescribed by
Federal Treasury Regulations.
(b) If the designated beneficiary is the surviving spouse of the
deceased Owner, such spouse may elect to become the Owner of this
Contract, and the distributions required under these Required
Distribution Provisions will be made upon the death of such
spouse.
In the event that the Owner is a person that is not a natural person (e.g., a
trust or corporation), then, for purposes of these distribution provisions, (i)
the death of the Annuitant shall be treated as the
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death of any Owner, (ii) any change of the Annuitant shall be treated as the
death of any Owner, and (iii) in either case the appropriate distribution
required under these distribution rules shall be made upon such death or change,
as the case may be. The Annuitant is the primary Annuitant as defined in Code
Section 72(s)(6)(B).
These distribution provisions shall not be applicable to any Contract that is
not required to be subject to the provisions of Code Section 72(s) by reason of
Section 72(s)(5) or any other law or rule. Such contracts include, but are not
limited to, any Contract issued as a TSA or an IRA.
REQUIRED DISTRIBUTION--TSAS AND IRAS
The entire interest of an Annuitant under an IRA or a TSA will be distributed in
a manner consistent with the provisions of Code Section 401(a)(9), including the
incidental death benefit requirements of Code Section 401(a)(9)(G), and
regulations thereunder, including the minimum distribution incidental benefit
requirement of Section 1.401(a)(9)-2 of the Proposed Income Tax Regulations, as
applicable (collectively, "Minimum Distributions"), and, notwithstanding
anything else contained herein, will be paid to the Annuitant, over a period not
exceeding:
A. the life of the Annuitant or the lives of the Annuitant and the Annuitant's
designated beneficiary; or
B. a period not extending beyond the life expectancy of the Annuitant or the
life expectancy of the Annuitant and the Annuitant's designated
beneficiary.
If the Annuitant's entire interest is to be distributed in equal or
substantially equal payments over a period described in A or B, such payments
will commence no later than the Required Beginning Date which (1) for an IRA, is
not later than the first day of April following the calendar year in which the
Annuitant attains age 70 1/2 or (2) for a TSA, is not later than the first day
of April following the calendar year in which the Annuitant attains the age of
70 1/2 or retires, whichever is later.
Payments commencing on the Required Beginning Date will not be less than the
lesser of the quotient obtained by dividing the entire interest of the
Annuitant, determined as of the end of the prior calendar year, by the life
expectancy of the Annuitant or the joint and last survivor expectancy of the
Annuitant and the Beneficiary (whichever is applicable). Life expectancy of the
Annuitant and/or his or her spouse (if such spouse is the Beneficiary) may be
recomputed annually if the Annuitant irrevocably elects to do so upon the
commencement of such payments. The life expectancy of a nonspouse beneficiary
may not be recalculated. Instead, life expectancy will be calculated using the
attained age of such beneficiary during the calendar year in which the
Beneficiary attains age 70 1/2 and payments for subsequent years shall be
calculated based on such life expectancy reduced by one for each calendar year
which has elapsed since the calendar year for which life expectancy was first
calculated.
If the Annuitant dies on or after the date Minimum Distributions have begun, the
remaining Contract interest will continue to be distributed at least as rapidly
as under the method of distribution being used prior to the Owner's death,
unless otherwise permitted by the Code.
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If the Annuitant dies prior to the commencement of required Minimum
Distributions, the interest in the Contract must be distributed by December 31
of the calendar year in which the fifth anniversary of the death occurs unless:
1. the Annuitant names the surviving spouse as the Beneficiary and such spouse
elects to receive the Distribution in substantially equal payments over the
surviving spouse's life (or a period not exceeding the surviving spouse's
life expectancy) and commencing not later than December 31 of the year in
which the deceased Annuitant would have attained 70 1/2. If such surviving
spouse dies before distributions begin under this provision, this section
shall be applied as if the surviving spouse were the Annuitant.
2. the Annuitant names a Beneficiary other than the surviving spouse and such
Beneficiary elects to receive a Distribution in substantially equal
payments over the Beneficiary's life (or a period not exceeding the
Beneficiary's life expectancy) commencing not later than December 31 of the
year following the year in which the deceased Annuitant died.
For purposes of this requirement, any amount paid to a child of the Annuitant
will be treated as if it has been paid to the surviving spouse if the remainder
of the interest becomes payable to the surviving spouse when the child reaches
the age of majority.
If the Beneficiary under an IRA is the surviving spouse of the Annuitant, the
surviving spouse may elect to treat the Contract as his or her own, whether or
not distributions had commenced prior to the death of the Owner. This election
will be deemed to have been made if such surviving spouse makes a regular IRA
contribution to the Contract, makes a rollover to or from the Contract, or fails
to elect any of the above provisions. The result of such an election is that the
surviving spouse will be considered the individual for whose benefit the IRA is
maintained.
For TSAs these provisions apply only to the value in the Contract of a 403(b)
TSA which accrued after December 31, 1986. Amounts accruing prior to January 1,
1987, will be distributed in accordance with the rules in effect prior to the
Tax Reform Act of 1986.
DEATH PROVISIONS PRIOR TO THE INCOME START DATE
All provisions relating to the death of the Owner may be subject to the Required
Distribution Provisions section.
DEATH OF OWNER
If the Owner who is not the Annuitant dies prior to the Income Start Date,
ownership rights will vest in the surviving Joint Owner, if any. If there is no
surviving Joint Owner, ownership rights, as outlined in the Contract Ownership
section, will vest in the Annuitant. Subject to the Required Distribution
Provisions section, the Annuitant will be entitled to receive scheduled annuity
payments.
If the Owner is also the Annuitant dies prior to the Income Start Date, the
terms of the Death of Annuitant section will apply.
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<PAGE> 22
DEATH OF ANNUITANT
If the Annuitant dies prior to the Income Start Date, this Contract will
terminate and the Contract Value shall be paid to the surviving Owner.
If there is no surviving Owner, the Beneficiary will be entitled to elect a lump
sum distribution or to receive annuity benefits in accordance with the Required
Distribution Provisions section.
DEATH PROVISIONS AFTER THE INCOME START DATE
- --------------------------------------------
DEATH OF OWNER
If any Owner dies after the Income Start Date, annuity payments will continue to
be made to the Annuitant under the originally elected Income Option and
ownership rights will vest in any surviving Joint Owner. If there is no
surviving Joint Owner, ownership rights will vest in the primary Annuitant.
DEATH OF THE ANNUITANT
If the Annuitant dies after the Income Start Date, the terms of the Income
Option as elected by the Owner at time of application will apply.
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INCOME SPECIFICATIONS
SINGLE LIFE
<TABLE>
<S> <C>
Annuitant: [John Doe] Single Purchase Payment: [$35,000]
Annuitant Date of Birth: [February 2,1935] Contract Number: [01-000000000]
Contract Owner: [John Doe] Contract Type: [Non-qualified]
Joint Owner: [N/A] Income Start Date: [November 15, 1999]
Date of Issue: [November 1, 1999]
</TABLE>
================================================================================
Annuity Payment Frequency: [monthly]
Assumed Investment Return: [3.5%], [5.0%], [6.0%]
AIR Factor: [.9999058], [.9998663], [.9998404]
Variable Account Charge: [1.20%]
Annual Benefit Leveling (ABL) Interest Rate for the first year's payments:
[3.0%]
Allocation of Single Purchase Payment to Fixed Annuity Payments: [XX%], [$XX]
Allocation of Single Purchase Payment to Variable Annuity Payments: [XX%], [$XX]
Fixed Annuity Benefit Payment: [$100]
DESCRIPTION OF INCOME OPTION
LIFE OPTION
Annuity payments will be paid during the lifetime of the Annuitant.
DEATH OF THE ANNUITANT AFTER THE INCOME START DATE
Payments will cease with the last payment due prior to the death of the
Annuitant. No death benefit will be paid.
WITHDRAWAL RESTRICTIONS
No withdrawals other than the scheduled annuity payments are permitted.
<PAGE> 24
INCOME SPECIFICATIONS
LIFE WITH [10] YEAR TERM CERTAIN
<TABLE>
<S> <C>
Annuitant: [John Doe] Single Purchase Payment: [$35,000]
Annuitant Date of Birth: [February 2,1935] Contract Number: [01-000000000]
Contract Owner: [John Doe] Contract Type: [Non-qualified]
Joint Owner: [N/A] Income Start Date: [November 15, 1999]
Beneficiary: [ ] Date of Issue: [November 1, 1999]
</TABLE>
================================================================================
Annuity Payment Frequency: [monthly]
Assumed Investment Return: [3.5%], [5.0%], [6.0%]
AIR Factor: [.9999058], [.9998663], [.9998404]
Variable Account Charge: [1.20%]
Annual Benefit Leveling (ABL) Interest Rate for the first year's payments:
[3.0%]
Fixed Annuity Commutation Value Interest Rate: [6.0%]
Allocation of Single Purchase Payment to Fixed Annuity Payments: [XX%], [$XX]
Allocation of Single Purchase Payment to Variable Annuity Payments: [XX%], [$XX]
Fixed Annuity Benefit Payment: [$100]
DESCRIPTION OF INCOME OPTION
- ----------------------------
LIFE WITH [10] YEAR TERM CERTAIN
Annuity payments will be made during the lifetime of the Annuitant or for [10]
years, whichever is longer.
DEATH OF THE ANNUITANT AFTER THE INCOME START DATE
If the Annuitant dies during this [10] year term certain period, the Beneficiary
will have the option to continue payments for the remainder of the term certain
period or to receive the Commutation Value of the remaining payments in a single
lump sum payment described herein.
Once the Company has been notified of the Annuitant's death, Fixed Annuity
Payments and Variable Annuity Payments will be suspended until the Company has
received proper proof of death and complete instructions to either continue
payments or pay the death benefit in a single lump sum. In addition, the
Commutation Value of the Variable
<PAGE> 25
Annuity Payments will be transferred to the money market Investment Option no
later than the Valuation Day following receipt by the Company of notification of
death.
Once the Company receives proper proof of death and complete instructions, the
Company will make any payments that were suspended. The amount of each suspended
Variable Annuity Payment will be determined using the Annuity Income Unit values
for the money market Investment Option on the date the Variable Annuity Payment
was originally scheduled to be made. No interest will be paid on any payments
that were suspended. Once payments have resumed, the Beneficiary shall have the
right to make any transfers to other Investment Options allowed by this
Contract.
DEATH BENEFIT AS A SINGLE LUMP SUM PAYMENT
Should the Beneficiary elect to receive the death benefit in a single lump sum
payment, the value of the remaining term certain period payments will be
calculated as follows:
Commutation Value of Variable Annuity Payments
The Commutation Value of Variable Annuity Payments is equal to the present
value of the Variable Annuity Payments remaining in the term certain period
calculated using the Assumed Investment Return for the Contract and the
Annuity Income Unit Values determined at the next unit value calculation
after the Company received the request for a single lump sum payment in
good order.
However, the calculation of the Commutation Value of Variable Annuity
Payments takes into account annual benefit leveling by including the
present value of the leveled Variable Annuity Payments scheduled to be paid
after the date the Company receives complete instructions, but before the
next Income Start Date anniversary. This present value will be calculated
using the annual benefit leveling interest rate that was assumed when the
leveled payment amount was calculated.
Commutation Value of Fixed Annuity Payments
The Commutation Value of Fixed Annuity Payments is equal to the present
value of the Fixed Annuity Payments remaining in the term certain period
calculated using the adjusted contract rate.
The adjusted contract rate equals the fixed annuity Commutation Value
interest rate (shown on the first page of the Income Specifications) plus
the interest rate adjustment.
Interest Rate Adjustment = CMT(c) - CMT(i) where;
CMT(c) = the 10-year Constant Maturity Treasury (CMT) Rate in effect on the
date the instruction to pay a single lump sum death benefit is received in
the Home Office, in good order; and
CMT (i) = the 10-year Constant Maturity Treasury (CMT) Rate in effect on
the Date of Issue.
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The CMT Rates are interest rate quotations for various maturity durations
published by the Federal Reserve Board on a regular basis. These rates
represent a readily available and consistently reliable interest rate
benchmarks in financial markets.
If the Federal Reserve Board halts publication of CMT Rates, or if for any
reason the CMT Rates are not available to be relied upon, the Company will
use appropriate rates based on treasury bond yields.
NOTIFICATION TO THE COMPANY
Instructions regarding payment of the death benefit must be in writing or in a
form otherwise acceptable to the Company. The Company reserves the right to
require that the signature(s) be guaranteed by a member firm of a major stock
exchange or other depository institution qualified to give such a guaranty.
If a lump sum death benefit has been elected, the Commutation Value will be paid
to the Beneficiary within seven days of receipt of proper proof of death and
instructions satisfactory to the Company.
WITHDRAWAL RESTRICTIONS
No withdrawals other than the death benefit or the scheduled annuity payments
are permitted.
3
<PAGE> 27
INCOME SPECIFICATIONS
SINGLE LIFE WITH CASH REFUND
<TABLE>
<S> <C>
Annuitant: [John Doe] Single Purchase Payment: [$35,000]
Annuitant Date of Birth: [February 2,1963] Contract Number: [01-000000000]
Contract Owner: [John Doe] Contract Type: [Non-qualified]
Joint Owner: [N/A] Income Start Date: [January 10, 1999]
Beneficiary [ ] Date of Issue: [January 1, 1999]
</TABLE>
================================================================================
Annuity Payment Frequency: [monthly]
Assumed Investment Return: [3.5%], [5.0%], [6.0%]
AIR Factor: [.9999058], [.9998663], [.9998404]
Variable Account Charge: [1.20%]
Annual Benefit Leveling (ABL) Interest Rate for the first year's payments:
[3.0%]
Allocation of Single Purchase Payment to Fixed Annuity Payments: [XX%], [$XX]
Allocation of Single Purchase Payment to Variable Annuity Payments: [XX%], [$XX]
Fixed Annuity Benefit Payment: [$100]
DESCRIPTION OF INCOME OPTION
- ----------------------------
SINGLE LIFE WITH CASH REFUND
Annuity payments will be made during the lifetime of the Annuitant.
DEATH OF THE ANNUITANT AFTER THE INCOME START DATE
If the Annuitant dies prior to receiving aggregate annuity payments that are at
least equal to the Single Purchase Payment less any premium tax, the difference
between the
<PAGE> 28
aggregate annuity payments and the Single Purchase Payment less any premium tax
will be paid to the Beneficiary in a single lump sum.
WITHDRAWAL RESTRICTIONS
No withdrawals other than the death benefit or the scheduled annuity payments
are permitted.
2
<PAGE> 29
INCOME SPECIFICATIONS
JOINT AND [100%] LAST SURVIVOR
<TABLE>
<S> <C>
Annuitant: [John Doe] Single Purchase Payment: [$35,000]
Annuitant Date of Birth: [February 2,1963] Contract Number: [01-000000000]
Contract Owner: [John Doe] Contract Type: [Non-qualified]
Joint Owner: [N/A] Income Date: [January 1, 2010]
Date of Issue: [January 1, 1999]
Joint Annuitant: [Mary Doe] Joint Annuitant Date of Birth: [March 8, 1930]
</TABLE>
================================================================================
Annuity Payment Frequency: [monthly]
Assumed Investment Return: [3.5%], [5.0%], [6.0%]
AIR Factor: [.9999058], [.9998663], [.9998404]
Variable Account Charge: [1.20%]
Annual Benefit Leveling (ABL) Interest Rate for the first year's payments:
[3.0%]
Allocation of Single Purchase Payment to Fixed Annuity Payments: [XX%], [$XX]
Allocation of Single Purchase Payment to Variable Annuity Payments: [%XX], [$XX]
Fixed Annuity Benefit Payment: [$100]
DESCRIPTION OF INCOME OPTION
- ----------------------------
JOINT AND [100%] LAST SURVIVOR
Annuity payments will continue during the joint lifetimes of the Annuitant and
Joint Annuitant. After the death of either the Annuitant or Joint Annuitant,
payments of [100%] of the amount that would have been paid if both were living
will be made for the life of the survivor.
DEATH OF THE ANNUITANT/JOINT ANNUITANT AFTER THE INCOME START DATE
Payments will cease with the last payment due prior to the death of the last
survivor of the Annuitant and Joint Annuitant. No death benefit will be paid.
<PAGE> 30
WITHDRAWAL RESTRICTIONS
No withdrawals other than the scheduled annuity payments are permitted.
2
<PAGE> 31
INCOME SPECIFICATIONS
JOINT AND [100%] LAST SURVIVOR WITH [10] YEAR TERM CERTAIN
<TABLE>
<S> <C>
Annuitant: [John Doe] Single Purchase Payment: [$35,000]
Annuitant Date of Birth: [February 2,1963] Contract Number: [01-000000000]
Contract Owner: [John Doe] Contract Type: [Non-qualified]
Joint Owner: [N/A] Income Start Date: [January 10, 1999]
Beneficiary: [ ] Date of Issue: [January 1, 1999]
Joint Annuitant: [ Mary Doe] Joint Annuitant Date of Birth: [March 8, 1930]
</TABLE>
================================================================================
Annuity Payment Frequency: [monthly]
Assumed Investment Return: [3.5%], [5.0%], [6.0%]
AIR Factor: [.9999058], [.9998663], [.9998404]
Variable Account Charge: [1.20%]
Annual Benefit Leveling (ABL) Interest Rate for the first year's payments:
[3.0%]
Fixed Annuity Commutation Value Interest Rate: [3.0%]
Allocation of Single Purchase Payment to Fixed Annuity Payments: [XX%], [$XX]
Allocation of Single Purchase Payment to Variable Annuity Payments: [XX%], [$XX]
Fixed Annuity Benefit Payment: [$100]
DESCRIPTION OF INCOME OPTION
JOINT AND LAST SURVIVOR WITH [10] YEAR TERM CERTAIN
Annuity payments will be made during the joint lifetimes of the Annuitant and
Joint Annuitant. After the death of either the Annuitant or Joint Annuitant,
payments of [100%] of the amount that would have been paid if both were living
will be made for the life of the survivor.
DEATH OF THE ANNUITANT AND JOINT ANNUITANT AFTER THE INCOME START DATE
- ----------------------------------------------------------------------
If the Annuitant and Joint Annuitant die during this [10] year term certain
period, the Beneficiary will have the option to continue payments for the
remainder of the period or to receive the Commutation Value of the remaining
payments in a single lump sum payment described herein.
Once the Company has been notified of the Annuitant's and Joint Annuitant's
death, Fixed Annuity Payments and Variable Annuity Payments will be suspended
until the Company has received proper proof of death and complete instructions
to either continue payments or pay the death benefit in a single lump sum. In
addition, the Commutation
<PAGE> 32
Value of the Variable Annuity Payments will be transferred to the money market
Investment Option no later than the Valuation Day following receipt by the
Company of notification of death.
Once the Company receives proper proof of death and complete instructions, the
Company will make any payments that were suspended. The amount of each suspended
Variable Annuity Payment will be determined using the Annuity Income Unit values
for the money market Investment Option on the date the Variable Annuity Payment
was originally scheduled to be made. No interest will be paid on any payments
that were suspended. Once payments have resumed, the Beneficiary shall have the
right to make any transfers to other Investment Options allowed by this
Contract.
DEATH BENEFIT AS A SINGLE LUMP SUM PAYMENT
Should the Beneficiary elect to receive the death benefit in a single lump sum
payment, the value of the remaining term certain period payments will be
calculated as follows:
Commutation Value of Variable Annuity Payments
The Commutation Value of Variable Annuity Payments is equal to the present
value of the Variable Annuity Payments remaining in the term certain period
calculated using the Assumed Investment Return for the Contract and the
Annuity Income Unit values determined at the next unit value calculation
after the Company received the request for a single lump sum payment in
good order.
However, the calculation of the Commutation Value of Variable Annuity
Payments takes into account annual benefit leveling by including the
present value of the leveled Variable Annuity Payments scheduled to be paid
after the date the Company receives complete instructions, but before the
next Income Start Date anniversary. This present value will be calculated
using the annual benefit leveling interest rate that was assumed when the
leveled payment amount was calculated.
Commutation Value of Fixed Annuity Payments
The Commutation Value of Fixed Annuity Payments is equal to the present
value of the Fixed Annuity Payments remaining in the term certain period
are calculated using the adjusted contract rate.
The adjusted contract rate equals the fixed annuity Commutation Value
interest rate (shown on the first page of the Income Specifications) plus
the interest rate adjustment.
Interest Rate Adjustment = CMT(c) - CMT (i) where;
CMT (c) = the 10-year Constant Maturity Treasury (CMT) Rate in effect on
the date the instruction to pay a single lump sum death benefit is received
in the Home Office, in good order; and
CMT (i) = the 10-year Constant Maturity Treasury (CMT) Rate in effect on
the Date of Issue.
2
<PAGE> 33
The CMT Rates are interest rates quotations for various maturity durations
published by the Federal Reserve Board on a regular basis. These rates
represent a readily available and consistently reliable interest rate
benchmark in financial markets.
If the Federal Reserve Board halts publication of the CMT Rates, or if for
any reason the CMT Rates are not available to be relied upon, the Company
will use appropriate rates based on Treasury bond yields.
NOTIFICATION TO THE COMPANY
Instructions regarding payment of the death benefit must be in writing or in a
form otherwise acceptable to the Company. The Company reserves the right to
require that the signature(s) be guaranteed by a member firm of a major stock
exchange or other depository institution qualified to give such a guaranty.
If a lump sum death benefit has been elected, the Commutation Value will be paid
to the Beneficiary within seven days of receipt of proper proof of death and
instructions satisfactory to the Company.
WITHDRAWAL RESTRICTIONS
No withdrawals other than the death benefit and the scheduled annuity payments
are permitted.
3
<PAGE> 34
INCOME SPECIFICATIONS
JOINT AND [100%] LAST SURVIVOR WITH CASH REFUND
<TABLE>
<S> <C>
Annuitant: [John Doe] Single Purchase Payment: [$35,000]
Annuitant Date of Birth: [February 2,1935] Contract Number: [01-000000000]
Contract Owner: [John Doe] Contract Type: [Non-qualified]
Joint Owner: [N/A] Income Start Date: [November 15, 1999]
Beneficiary: [ ] Date of Issue: [November 1, 1999]
Joint Annuitant [Mary Doe] Joint Annuitant Date of Birth: [March 8, 1930]
</TABLE>
================================================================================
Annuity Payment Frequency: [monthly]
Assumed Investment Return: [3.5%], [5.0%], [6.0%]
AIR Factor: [.9999058], [.9998663], [.9998404]
Variable Account Charge: [1.20%]
Annual Benefit Leveling (ABL) Interest Rate for the first year's payments:
[3.0%]
Allocation of Single Purchase Payment to Fixed Annuity Payments: [XX%], [$XX]
Allocation of Single Purchase Payment to Variable Annuity Payments: [XX%], [$XX]
Fixed Annuity Benefit Payment: [$100]
DESCRIPTION OF INCOME OPTION
- ----------------------------
JOINT AND [100%] LAST SURVIVOR WITH CASH REFUND
Annuity payments will be made during the joint lifetimes of the Annuitant and
Joint Annuitant.
DEATH OF THE ANNUITANT/JOINT ANNUITANT AFTER THE INCOME START DATE
<PAGE> 35
After the death of either the Annuitant or Joint Annuitant, payments of [100%]
of the amount that would have been paid if both were living will be made for the
life of the survivor. If the survivor dies prior to when aggregate annuity
payments have been made that are at least equal to the Single Purchase Payment
less any premium tax, the difference between the aggregate annuity payments and
the Single Purchase Payment less any premium tax will be paid to the Beneficiary
in a single lump sum.
WITHDRAWAL RESTRICTIONS
No withdrawals other than the death benefit and scheduled annuity payments are
permitted.
2
<PAGE> 36
INCOME SPECIFICATIONS
JOINT AND [50%] SURVIVOR
<TABLE>
<S> <C>
Annuitant: [John Doe] Single Purchase Payment: [$35,000]
Annuitant Date of Birth: [February 2,1935] Contract Number: [01-000000000]
Contract Owner: [John Doe] Contract Type: [Non-qualified]
Joint Owner: [N/A] Income Start Date: [November 15, 1999]
Date of Issue: [November 1, 1999]
Joint Annuitant [Mary Doe] Joint Annuitant Date of Birth: [March 8, 1930]
</TABLE>
================================================================================
Annuity Payment Frequency: [monthly]
Assumed Investment Return: [3.5%], [5.0%], [6.0%]
AIR Factor: [.9999058], [.9998663], [.9998404]
Variable Account Charge: [1.20%]
Annual Benefit Leveling (ABL) Interest Rate for the first year's payments:
[3.0%]
Allocation of Single Purchase Payment to Fixed Annuity Payments: [XX%], [$XX]
Allocation of Single Purchase Payment to Variable Annuity Payments: [XX%], [$XX]
Fixed Annuity Benefit Payment: [$100]
DESCRIPTION OF INCOME OPTION
JOINT AND [50%] SURVIVOR
Annuity payments will be made during the joint lifetimes of the Annuitant and
Joint Annuitant.
DEATH OF THE ANNUITANT AFTER THE INCOME START DATE
After the death of the Annuitant, payments of [50%] of the amount that would
have been paid if the Annuitant were living will be made for the life of the
Joint Annuitant. If the Joint Annuitant dies before the Annuitant, the [50%]
reduction does not apply.
Payments will cease with the last payment due prior to the death of the last
survivor of the Annuitant and Joint Annuitant. No death benefit will be paid.
WITHDRAWAL RESTRICTIONS
No withdrawals other than the scheduled annuity payments are permitted.
<PAGE> 37
INCOME SPECIFICATIONS
[10] YEAR TERM CERTAIN
<TABLE>
<S> <C>
Annuitant: [John Doe] Single Purchase Payment: [$35,000]
Annuitant Date of Birth: [February 2,1935] Contract Number: [01-000000000]
Contract Owner: [John Doe] Contract Type: [Non-qualified]
Joint Owner: [N/A] Income Start Date: [November 15, 1999]
Beneficiary: [ ] Date of Issue: [November 1, 1999]
</TABLE>
================================================================================
Annuity Payment Frequency: [monthly]
Assumed Investment Return: [3.5%], [5.0%], [6.0%]
AIR Factor: [.9999058], [.9998663], [.9998404]
Variable Account Charge: [1.20%]
Annual Benefit Leveling (ABL) Interest Rate for the first year's payments:
[3.0%]
Fixed Annuity Commutation Value Interest Rate: [6.0%]
Allocation of Single Purchase Payment to Fixed Annuity Payments: [XX%], [$XX]
Allocation of Single Purchase Payment to Variable Annuity Payments: [XX%], [$XX]
Fixed Annuity Benefit Payment: [$100]
DESCRIPTION OF INCOME OPTION
- ----------------------------
[10] YEAR TERM CERTAIN
Annuity payments will be made for a period of [10] years.
The Owner may elect at any time prior to the death of the Annuitant to withdraw
all or part of the value of the Contract. Withdrawals may be subject to a
Contingent Deferred Sales Charge (CDSC) as described herein.
<PAGE> 38
If the Annuitant dies during the [10] year term certain period, the Beneficiary
will have the option to continue payments for the remainder of the period or to
receive the Commutation Value of the remaining payments in a single lump sum
payment described herein.
FULL AND PARTIAL WITHDRAWALS
- ----------------------------
PARTIAL WITHDRAWALS
If a partial withdrawal is elected, the Owner must specify the percentage of the
withdrawal to be taken from Fixed Annuity Payments and/or Variable Annuity
Payments. In addition, the remaining term certain period payments will be
reduced. If a partial withdrawal of Fixed Annuity Payments is elected, the
remaining payments will be reduced by the ratio of the withdrawal amount
requested from Fixed Annuity Payments, before reduction for any CDSC, to the
total Commutation Value available from Fixed Annuity Payments. If a partial
withdrawal of Variable Annuity Payments is elected, the number of Annuity Income
Units provided by each Sub-Account will be reduced on a pro-rata basis, unless
the Owner specifies otherwise.
The minimum partial withdrawal amount allowed is [$2,000.00] and the minimum of
each remaining annuity payment must equal [$100] or more. Withdrawals may be
subject to a CDSC as described in this Income Specification.
AMOUNTS AVAILABLE FOR WITHDRAWALS
Should the Owner elect at any time to withdrawal all or part of the value of the
Contract, the amount available for withdrawal will be calculated as follows:
Commutation Value of Variable Annuity Payments
The Commutation Value of Variable Annuity Payments is equal to the present
value of the Variable Annuity Payments remaining in the term certain period
calculated using the Assumed Investment Return for the Contract and the
Annuity Income Unit Values determined at the next unit value calculation
after the Company received the request for a withdrawal in good order.
Annual Benefit Leveling Adjustments -
If a full withdrawal of the value of the Contract is requested and the
annual benefit leveling option is in effect at the time of the
request, the present value of the leveled Variable Annuity Payments
scheduled to be paid before the next Income Start Date anniversary
will be calculated using the annual benefit leveling
2
<PAGE> 39
interest rate that was used to determine those level payments. This
amount will be added to the Commutation Value of the Variable Annuity
Payments.
If a partial withdrawal is requested and the annual benefit leveling
option is in effect at the time of the request, no portion of the
present value of the leveled Variable Annuity Payments scheduled to be
paid before the next Income Start Date anniversary will be withdrawn.
Only the Commutation Value of the amounts remaining in the Investment
Options or of the Fixed Annuity Payments may be withdrawn.
Commutation Value of Fixed Annuity Payments
The Commutation Value of Fixed Annuity Payments is equal to the present
value of the Fixed Annuity Payments remaining in the term certain period
calculated using the adjusted contract rate.
The adjusted contract rate equals the fixed annuity Commutation Value
interest rate (shown on the first page of the Income Specifications) plus
the interest rate adjustment.
Interest Rate Adjustment = CMT(c) - CMT(i) where;
CMT(c) = the 10-year Constant Maturity Treasury (CMT) Rate in effect on the
date the request for a withdrawal is received in the Home Office, in good
order; and
CMT (i) = the 10-year Constant Maturity Treasury (CMT) Rate in effect on
the Date of Issue.
The CMT Rates are interest rate quotations for various maturity durations
published by the Federal Reserve Board on a regular basis. These rates
represent a readily available and consistently reliable interest rate
benchmark in financial markets
If the Federal Reserve Board halts publication of CMT Rates, or if for any
reason the CMT Rates are not available to be relied upon, the Company will
use appropriate rates based on Treasury bond yields.
CONTINGENT DEFERRED SALES CHARGES (CDSC)
The Company may assess a CDSC if there are any withdrawals.
The CDSC is calculated by multiplying the applicable CDSC percentages by the
amount that is withdrawn. The applicable CDSC will not be applied to any amount
in excess of the Single Purchase Payment.
3
<PAGE> 40
Contingent Deferred Sales Charge (CDSC) Table:
Years Measured From Date of Issue
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 Thereafter
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CDSC %: 6% 6% 5% 5% 4% 3% 2% 0%
</TABLE>
NOTIFICATION TO THE COMPANY - FULL OR PARTIAL WITHDRAWALS
Instructions must be in writing or in a form otherwise acceptable to the
Company. The Company reserves the right to require that the signature(s) be
guaranteed by a member firm of a major stock exchange or other depository
institution qualified to give such a guaranty.
The amount withdrawn will be paid to the Owner within seven days of receipt of a
proper request and instructions satisfactory to the Company.
DEATH OF THE ANNUITANT AFTER THE INCOME START DATE
- --------------------------------------------------
Once the Company has been notified of the Annuitant's death, Fixed Annuity
Payments and Variable Annuity Payments will be suspended, and no withdrawals
will be allowed until the Company has received proper proof of death and
complete instructions to either continue payments or pay the death benefit in a
single lump sum. In addition, the Commutation Value of the Variable Annuity
Payments will be transferred to the money market Investment Option no later than
the Valuation Day following receipt by the Company of notification of death.
Once the Company receives proper proof of death and complete instructions, the
Company will make any payments that were suspended. The amount of each suspended
Variable Annuity Payment will be determined using the Annuity Income Unit values
for the money market Investment Option on the date the Variable Annuity Payment
was originally scheduled to be made. No interest will be paid on any payments
that were suspended. Once payments have resumed, the Beneficiary shall have the
right to make any transfers to other Investment Options allowed by this
Contract.
DEATH BENEFIT AS A SINGLE LUMP SUM PAYMENT
Should the Beneficiary elect to receive the death benefit in a single lump sum
payment, the value of the term certain period payments remaining after the
Company receives proper proof of death and complete instructions will be
calculated in the same manner described above in Commutation Value of Variable
Annuity Payments and Commutation Value of Fixed Annuity Payments.
4
<PAGE> 41
NOTIFICATION TO THE COMPANY - CONTINUATION OF PAYMENTS OR SINGLE LUMP SUM
Instructions must be in writing or in a form otherwise acceptable to the
Company. The Company reserves the right to require that the signature(s) be
guaranteed by a member firm of a major stock exchange or other depository
institution qualified to give such a guaranty.
The amount of any lump sum death benefit will be paid to the Beneficiary within
seven days of receipt of a proper request and instructions satisfactory to the
Company.
5
<PAGE> 42
INCOME SPECIFICATIONS
[10] YEAR TERM CERTAIN WITH ENHANCED DEATH BENEFIT
<TABLE>
<S> <C>
Annuitant: [John Doe] Single Purchase Payment: [$35,000]
Annuitant Date of Birth: [February 2,1935] Contract Number: [01-000000000]
Contract Owner: [John Doe] Contract Type: [Non-qualified]
Joint Owner: [N/A] Income Start Date: [November 15, 1999]
Beneficiary: [ ] Date of Issue: [November 1, 1999]
</TABLE>
================================================================================
Annuity Payment Frequency: [monthly]
Assumed Investment Return: [3.5%], [5.0%], [6.0%]
AIR Factor: [.9999058], [.9998663 ], [.9998404]
Variable Account Charge: [1.20%]
Enhanced Death Benefit Charge: [.20%]
Annual Benefit Leveling (ABL) Interest Rate for the first year's payments:
[3.0%]
Fixed Annuity Commutation Value Interest Rate: [6.0%]
Allocation of Single Purchase Payment to Fixed Annuity Payments: [XX%], [$XX]
Allocation of Single Purchase Payment to Variable Annuity Payments: [XX%], [$XX]
Fixed Annuity Benefit Payment: [$100]
DESCRIPTION OF INCOME OPTION
- ----------------------------
[10] YEAR TERM CERTAIN WITH ENHANCED DEATH BENEFIT
Annuity payments will be made for a period of [10] years.
The Owner may elect at any time prior to the death of the Annuitant to withdraw
all or part of the value of the Contract. Withdrawals may be subject to a
Contingent Deferred Sales Charge(CDSC) as described herein.
If the Annuitant dies during the [10] year term certain period, the Beneficiary
will have the option to continue payments for the remainder of the period or to
receive the Commutation Value of the remaining payments in a single lump sum
payment described herein.
<PAGE> 43
Because of the enhanced death benefit associated with this Income Option, the
Company will add an additional charge of [.20%] to the variable account charge
of [1.20%].
FULL AND PARTIAL WITHDRAWALS
- ----------------------------
PARTIAL WITHDRAWALS
If a partial withdrawal is elected, the Owner must specify the percentage of the
withdrawal to be taken from the Fixed Annuity Payments and/or Variable Annuity
Payments. In addition, the remaining term certain period payments will be
reduced. If a partial withdrawal of Fixed Annuity Payments is elected, the
remaining payments will be reduced by the ratio of the withdrawal amount
requested from Fixed Annuity Payments, before reduction for any CDSC, to the
total Commutation Value available from Fixed Annuity Payments. If a partial
withdrawal of Variable Annuity Payments is elected, the number of Annuity Income
Units for each Sub-Account will be reduced on a pro-rata basis, unless the Owner
specifies otherwise.
The minimum partial withdrawal amount allowed is [$2,000.00] and the minimum of
each remaining annuity payment must equal [$100] or more. Withdrawals may be
subject to a CDSC as described in this Income Specification.
AMOUNTS AVAILABLE FOR WITHDRAWALS
Should the Owner elect to withdraw all or part of the value of the Contract, the
amount available for withdrawal will be calculated as follows:
Commutation Value of Variable Annuity Payments
The Commutation Value of Variable Annuity Payments is equal to the present
value of the Variable Annuity Payments remaining in the term certain period
calculated using the Assumed Investment Return for the Contract and the
Annuity Income Unit values determined at the next unit value calculation
after the Company receives the request for a withdrawal in good order.
Annual Benefit Leveling Adjustments -
If a full withdrawal of the value of the Contract is requested and the
annual benefit leveling option is in effect at the time of the
request, the present value of the leveled Variable Annuity Payments
scheduled to be paid before the next Income Start Date anniversary
will be calculated using the annual benefit leveling interest rate
that was used to determine those level payments. This amount will be
added to the Commutation Value of the Variable Annuity Payments.
If a partial withdrawal is requested and the annual benefit leveling
option is in effect at the time of the request, no portion of the
present value of the leveled Variable Annuity Payments scheduled to be
paid before the next Income Start Date anniversary will be withdrawn.
Only the Commutation Value of the amounts remaining in the Investment
Options or of the Fixed Annuity Payments may be withdrawn.
2
<PAGE> 44
COMMUTATION VALUE OF FIXED ANNUITY PAYMENTS
-------------------------------------------
The Commutation Value of Fixed Annuity Payments is equal to the present
value of the Fixed Annuity Payments remaining in the term certain period
calculated using the adjusted contract rate.
The adjusted contract rate equals the fixed annuity Commutation Value
interest rate (shown on the first page of the Income Specifications) plus
the interest rate adjustment.
Interest Rate Adjustment =CMT(c) - CMT(i) where;
CMT(c) = the 10-year Constant Maturity Treasury (CMT) Rate in effect on the
date the request for a withdrawal is received in the Home Office, in good
order; and
CMT (i) = the 10-year Constant Maturity Treasury (CMT) Rate in effect on
the Date of Issue.
The CMT Rates are interest rate quotations for various maturity durations
published by the Federal Reserve Board on a regular basis. These rates
represent a readily available and consistently reliable interest rate
benchmark in financial markets.
If the Federal Reserve Board halts publication of CMT Rates, or if for any
reason the CMT Rates are not available to be relied upon, the Company will
use appropriate rates based on Treasury bond yields.
CONTINGENT DEFERRED SALES CHARGE (CDSC)
- ---------------------------------------
The Company may access CDSC if there are any withdrawals. The CDSC is designed
to cover expenses relating to the sale of the Contract.
The CDSC is calculated by multiplying the applicable CDSC percentages shown
below by the amount that is withdrawn. The applicable CDSC will not be applied
to any amount in excess of the Single Purchase Payment.
Contingent Deferred Sales Charge (CDSC) Table:
Years Measured From Date of Issue
<TABLE>
<CAPTION>
1 2 3 4 5 6 7 Thereafter
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CDSC %: 6% 6% 5% 5% 4% 3% 2% 0%
</TABLE>
NOTIFICATION TO THE COMPANY - FULL OR PARTIAL WITHDRAWALS
- ---------------------------------------------------------
Instructions must be in writing or in a form otherwise acceptable to the
Company. The Company reserves the right to require that the signature(s) be
guaranteed by a member firm of a major stock exchange or other depository
institution qualified to give such a guaranty.
3
<PAGE> 45
The amount withdrawn will be paid to the Owner within seven days of receipt of a
proper request and instructions satisfactory to the Company.
DEATH OF THE ANNUITANT AFTER THE INCOME START DATE
- --------------------------------------------------
Once the Company has been notified of the Annuitant's death, Fixed Annuity
Payments and Variable Annuity Payments will be suspended, and no withdrawals
will be allowed until the Company has received proper proof of death and
complete instructions to either continue payments or pay the death benefit in a
single lump sum. In addition, the Commutation Value of the Variable Annuity
Payments will be transferred to the money market Investment Option no later than
the Valuation Day following receipt by the Company of notification of death.
Once the Company receives proper proof of death and complete instructions, the
Company will make any payments that were suspended. The amount of each suspended
Variable Annuity Payment will be determined using the Annuity Income Unit values
for the money market Investment Option on the date the Variable Annuity Payment
was originally scheduled to be made. No interest will be paid on any payments
that were suspended. If the Company is instructed to resume payments, the
Beneficiary shall have the right to make any withdrawals or transfers to other
Investment Options allowed by this Contract.
LUMP SUM DEATH BENEFIT OPTION
- -----------------------------
If the Beneficiary elects to receive the death benefit in one lump sum, the
Beneficiary will receive an amount calculated as described in the Commutation
Value of Fixed Annuity Payments for the Fixed Annuity Payments remaining in the
term certain period after the Company receives proper proof of death and
complete instructions, plus the greater of (1) or (2) where:
1) is the Commutation Value of Variable Annuity Payments remaining
in the term certain period after the Company receives proper
proof of death and complete instructions; and
2) is the Commutation Value of the Variable Annuity Payments
remaining in the term certain period after the Company receives
proper proof of death and complete instructions, calculated as if
each remaining payment would be equal to the highest Variable
Annuity Payment the Annuitant received under the Contract prior
to the earlier of the Annuitant's attainment of age 80 or the
date of the Annuitant's death. This Commutation Value will be
calculated using the Assumed Investment Return elected for the
Contract, and will be appropriately adjusted for any partial
withdrawals that have been taken.
(If the ABL option is in effect, the lump sum death benefit will also include
the present value of the leveled Variable Annuity Payments scheduled to be paid
after the Company receives complete instructions, but before the next Income
Start Date anniversary. This present value will be calculated using the ABL
interest rate that was assumed when the leveled payment amount was calculated.)
4
<PAGE> 46
CONTINUATION OF PAYMENTS DEATH BENEFIT OPTION
If the Beneficiary elects to receive the annuity payments remaining in the [10]
year term certain period, the Company will proportionately adjust the number of
Annuity Income Units associated with each remaining Variable Annuity Payment to
reflect the greater of (1) or (2) as described in the Lump Sum Death Benefit
Option, and all remaining Variable Annuity Payments will be paid on the basis of
this adjusted number of units. Remaining Fixed Annuity Payments will be paid
without enhancement or adjustment.
(If the ABL option is in effect, the amount of the leveled Variable Annuity
Payments scheduled to be made after the Company receives complete instructions,
but before the next Income Start Date anniversary, will not be changed.)
NOTIFICATION TO THE COMPANY - CONTINUATION OF PAYMENTS OR SINGLE LUMP SUM
Instructions regarding the death benefit must be in writing or in a form
otherwise acceptable to the Company. The Company reserves the right to require
that the signature(s) be guaranteed by a member firm of a major stock exchange
or other depository institution qualified to give such a guaranty.
The amount of any lump sum death benefit will be paid to the Beneficiary within
seven days of receipt of a proper request and instructions satisfactory to the
Company.
5
<PAGE> 1
Exhibit 5
THE BEST OF AMERICA(R)
[THE BEST OF AMERICA LOGO] AMERICA'S INCOME ANNUITY(SM)
APPLICATION
$35,000 MINIMUM PURCHASE PAYMENT
- --------------------------------------------------------------------------------
PLAN TYPE This contract is established as a A PLAN TYPE MUST BE SELECTED
[ ] 403(b) TRANSFER DISCLOSURE FORM REQUIRED. [ ] NON-QUALIFIED [ ] IRA
- --------------------------------------------------------------------------------
DISTRIBUTION CHANNEL:
[ ] ID [ ] Agency [ ] NRS [ ] Pensions [ ] FI [ ] Wirehouse [ ] Other_______
- --------------------------------------------------------------------------------
CONTRACT OWNER [ ]JOINT OWNER SPOUSE ONLY UNLESS PROHIBITED BY
Last Name or Trust Name Last Name
First Name or Trust Name (CONTINUED) MI First Name MI
Address Address
------------------------------ --------------------------------
- ------------------------------------- ----------------------------------------
Telephone No. ( ) [ ]H [ ]W
--------------------------------
Sex [ ]M [ ]F Birthdate / / Sex [ ]M [ ]F Birthdate / /
MM DD YYYY MM DD YYYY
Maximum issue age through age 85 Maximum issue age through age 85
Soc. Sec. No. or Tax ID Soc. Sec. No. or Tax ID
---------------- --------------
- --------------------------------------------------------------------------------
ANNUITANT COMPLETE ONLY IF DIFFERENT FROM [ ] JOINT ANNUITANT COMPLETE ONLY
CONTRACT OWNER IF INCOME OPTION ALLOWS PAYMENTS
TO A SURVIVOR. SPOUSE ONLY FOR
TSA OR IRA.
Last Name Last Name
First Name MI First Name MI
Address Address
----------------------------------- ------------------------
- ------------------------------------------ --------------------------------
Telephone No. ( ) [ ]H [ ]W
--------------------------------
Sex [ ]M [ ]F Birthdate / / Sex [ ]M [ ]F Birthdate / /
MM DD YYYY MM DD YYYY
Maximum issue age through age 85 Maximum issue age through age 85
Soc. Sec. No. or Tax ID Soc. Sec. No. or Tax ID
---------------- --------------
- --------------------------------------------------------------------------------
BENEFICIARY WHOLE PERCENTAGES ONLY, ALL PRIMARY BENEFICIARIES MUST TOTAL 100%;
ALL CONTINGENT BENEFICIARIES MUST TOTAL 100%.
<TABLE>
<CAPTION>
Relationship
Primary Contingent Print Full Name (Last, First, MI) Allocation to Annuitant Soc. Sec. No.
<S> <C> <C> <C> <C> <C>
[ ] __________________________________ ___________% ___________ ____________________
[ ] [ ] __________________________________ ___________% ___________ ____________________
[ ] [ ] __________________________________ ___________% ___________ ____________________
[ ] [ ] __________________________________ ___________% ___________ ____________________
</TABLE>
APO-4365 Product of Nationwide Life Insurance Co. AO (3/1999)
<PAGE> 2
- --------------------------------------------------------------------------------
REMARKS
- --------------------------------------------------------------------------------
INCOME START DATE (NO LATER THAN 60 DAYS AFTER DATE OF ISSUE) ______________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FREQUENCY OF PAYMENTS [ ]Monthly [ ]Quarterly [ ]Semi-Annually [ ]Annually
- --------------------------------------------------------------------------------
[ ] Electronic Funds Transfer (If Electronic Funds Transfer is not selected, a
check will be issued and mailed to you.)
- --------------------------------------------------------------------------------
Bank Name and Address Bank Telephone Number ( )
------------------
-----------------------------------------
Type of Account (PLEASE ATTACH VOIDED
CHECK OR DEPOSIT SLIP)
[ ] Checking [ ] Savings
- -------------------------------------- -----------------------------------------
Bank Routing No. Bank Account No.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INCOME OPTIONS CANNOT BE CHANGED ONCE ELECTED
(only one option may be selected)
[ ] SINGLE LIFE WITH TERM CERTAIN ____YEARS*
[ ] SINGLE LIFE CASH REFUND*
[ ] SINGLE LIFE*
[ ] JOINT AND ____% LAST SURVIVOR**
[ ] JOINT AND ____% LAST SURVIVOR WITH TERM CERTAIN ____YEARS**
[ ] JOINT AND ____% SURVIVOR WITH CASH REFUND**
[ ] JOINT AND ____% SURVIVOR**
[ ] TERM CERTAIN ____ YEARS
[ ] TERM CERTAIN WITH ENHANCED DEATH BENEFIT ____ YEARS
*Birth Certificate of Annuitant Required **Birth Certificate of Both Annuitant
and Joint Annuitant Required
- --------------------------------------------------------------------------------
PURCHASE PAYMENT [ ] ROLLOVER [ ] PAYMENT ENCLOSED [ ] TRANSFER/1035
(requires transfer form)
Single Purchase Payment $__________ submitted (minimum $35,000). A copy of this
application properly signed by the producer will constitute receipt for such
amount. If this application is declined by the Company, there will be no
liability on the part of the Company, and any payments submitted with this
application will be refunded.
- --------------------------------------------------------------------------------
PURCHASE PAYMENT ALLOCATION WHOLE PERCENTAGES ONLY, MUST TOTAL 100%. A
CONTRACT CANNOT BE ISSUED UNLESS THIS SECTION
IS COMPLETE.
ALLOCATION OF PURCHASE PAYMENT TO FIXED ANNUITY PAYMENTS: ________%
ALLOCATION OF PURCHASE PAYMENT TO VARIABLE ANNUITY PAYMENTS: ________%
ASSUMED INVESTMENT RETURN [ ] 3.5% [ ] 5.0% [ ] 6.0%
ANNUAL BENEFIT LEVELING FOR VARIABLE ANNUITY PAYMENTS* [ ] YES [ ] NO
*If this option is elected, Annual Frequency of Payments cannot be chosen.
- --------------------------------------------------------------------------------
<PAGE> 3
- --------------------------------------------------------------------------------
ALLOCATION OF INVESTMENT OPTIONS TO PROVIDE VARIABLE
ANNUITY PAYMENTS (WHOLE PERCENTAGES ONLY, MUST TOTAL 100%)
THE INVESTMENT OPTIONS LISTED ON THIS APPLICATION ARE ONLY AVAILABLE IN VARIABLE
ANNUITY INSURANCE PRODUCTS ISSUED BY LIFE INSURANCE COMPANIES OR, IN SOME CASES,
THROUGH PARTICIPATION IN CERTAIN QUALIFIED PENSION OR RETIREMENT PLANS. THEY ARE
NOT OFFERED TO THE GENERAL PUBLIC DIRECTLY.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN CENTURY VARIABLE MORGAN STANLEY DEAN WITTER NATIONWIDE SEPARATE
PORTFOLIOS, INC. ACCOUNT TRUST (CONT.)
<S> <C> <C>
______% Morgan Stanley Dean Witter ______% Nationwide High Income Bond Fund
______% American Century VP Income & Universal Funds-Emerging (Federated Investment Counseling,
Growth Markets Debt Portfolio Inc.)
______% American Century VP ______% Van Kampen Life Investment
International Trust-Morgan Stanley Real ______% Nationwide High Income Bond
______% American Century VP Value Estate Securities Portfolio Fund (Federated Investment
DREYFUS NEUBERGER & BERMAN ADVISORS MANAGEMENT Counseling)
______% The Dreyfus Socially TRUST
Responsible Growth Fund, Inc. ______% AMT Guardian Portfolio ______% Nationwide Multi Sector Bond
______% Dreyfus Stock Index Fund, Inc. ______% AMT Mid-Cap Growth Portfolio Fund (Salomon Brothers Asset
______% Dreyfus Variable Investment ______% AMT Partners Portfolio Management, Inc. with Salomon
Fund - Capital Appreciation OPPENHEIMER VARIABLE ACCOUNT FUNDS Brothers Asset Management
Portfolio ______% Oppenheimer Aggressive Growth Limited)
FEDERATED INSURANCE SERIES Fund/VA
______%Federated Quality Bond Fund II ______% Oppenheimer Capital ______% Nationwide Select Advisers
FIDELITY VARIABLE INSURANCE PRODUCTS FUND Appreciation Fund/VA Mid Cap Fund (First Pacific
______% VIP Equity-Income Portfolio: ______% Oppenheimer Main Street Growth Advisors, Inc., Pilgrim Baxter
Service Class & Income Fund/VA & Associates Ltd. & Rice,
______% VIP Growth Portfolio: Service WARBURG PINCUS TRUST Hall, James and Associates)
Class ______% Growth & Income Portfolio
______% VIP High Income Portfolio: ______% International Equity Portfolio ______% Nationwide Select Advisers
Service Class ______% Post-Venture Capital Portfolio Small Cap Growth Fund
______% VIP Overseas Portfolio: NATIONWIDE SEPARATE ACCOUNT TRUST (Franklin Advisers, Inc.,
Service Class (SUBADVISORS) Miller Anderson & Sherrerd,
FIDELITY VARIABLE INSURANCE PRODUCTS FUND ______% Capital Appreciation Fund LLP, Neuberger Berman, LLC)
II ______% Government Bond Fund
______% VIP II Contrafund Portfolio: ______% Money Market Fund ______% Nationwide Small Cap Value
Service Class ______% Total Return Fund Fund (The Dreyfus Corporation)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND ______% Nationwide Balanced Fund
III (Salomon Brothers Asset ______% Nationwide Small Company
______% VIP III Growth Opportunities Management, Inc.) Fund (The Dreyfus Corporation,
Portfolio: Service Class ______% Nationwide Equity Income Fund Neuberger Berman, L.P., Lazard
VAN ECK WORLDWIDE INSURANCE TRUST (Federated Investment Asset Management, Strong
______% Worldwide Emerging Markets Fund Counseling, Inc.) Capital Management, Inc.,
______% Worldwide Hard Assets Fund ______% Nationwide Global Equity Fund Warburg Pincus Asset
(J. P. Morgan Investment Management, Inc.
Management, Inc.)
______% Nationwide Strategic Growth
Fund (Strong Capital
Management, Inc.)
______% Nationwide Strategic Value
Fund (Strong Capital
Management, Inc., Schafer
Capital Management, Inc.)
</TABLE>
<PAGE> 4
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX WITHHOLDING
A. [ ] I elect to have no income tax withheld from my income payments (do not
complete B or C)
B. [ ] I want my withholding from each income payment to be figured using the
number of allowances and marital status shown (you may also designate an
additional amount in item C)
_____ Allowances [ ] Single [ ] Married [ ] Married, but withhold
at higher single rate
C. [ ] Withhold the following additional amount from each income payment (you
must complete B) $_____________
- --------------------------------------------------------------------------------
CONTRACT OWNER SIGNATURES
Are you a U.S. Citizen? [ ] Yes [ ] No If No, country of citizenship
---------
I hereby represent my answers to the above questions to be accurate and complete
and acknowledge that I have received a copy of the current prospectus for this
variable annuity contract.
Do you have any reason to believe the Contract applied for is to replace
existing annuities or insurance? [ ] Yes [ ]No
Please send me a copy of the Statement of Additional Information to the
Prospectus. [ ]
STATE IN WHICH APPLICATION WAS SIGNED DATE
------------------------- -----------
CONTRACT OWNER JOINT OWNER
------------------------ --------------------------
Signature Signature
- --------------------------------------------------------------------------------
PRODUCER INFORMATION
Do you have any reason to believe the Contract applied for is to replace
existing annuities or insurance? [ ] Yes [ ] No
PRODUCER SIGNATURE
-------------------------------------------------------------
Signature
NAME PRODUCER SSN
------------------------------- ------------------------
FIRM NAME PHONE ( )
--------------------------- -------------------------------
ADDRESS
----------------------------
- ---------------------------------------
- ---------------------------------------
- --------------------------------------------------------------------------------
REGULAR MAIL EXPRESS MAIL
<TABLE>
- ----------------------------------------- --------------------------------------- -----------------------------------------
<S> <C> <C>
Nationwide Life Insurance Co. INCOME PRODUCTS SERVICE CENTER Nationwide Life Insurance Co.
P.O. Box 182290 1-800-452-7126 Income Products Service Center,
Columbus, Ohio 42272-4875 Fax 614-677-3279 1-14-RO
One Nationwide Plaza
Columbus, Ohio 43215
- ----------------------------------------- --------------------------------------- -----------------------------------------
---------------------------------------
SEND APPLICATIONS WITH CHECKS TO:
Nationwide Life Insurance Co.
P. O. Box 71-0767
Columbus, OH
43271-0767
---------------------------------------
</TABLE>
<PAGE> 1
Exhibit 9
DIETRICH, REYNOLDS & KOOGLER
ATTORNEYS AT LAW
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43216
(614) 249-7617
FACSIMILE: (614) 249-2418
May 21, 1999
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, Ohio 43215
To the Company:
We have prepared the Registration Statement being filed with the Securities and
Exchange Commission for the purpose of registering under the Securities Act of
1933, as amended, Immediate Variable Annuity Contracts to be sold by Nationwide
Life Insurance Company ("Nationwide") and to be issued and administered through
the Nationwide Variable Account-9. In connection therewith, we have examined the
Articles of Incorporation, Code of Regulations and Bylaws of Nationwide, minutes
of meetings of the Board of Directors, pertinent provisions of federal and Ohio
laws, together with such other documents as we have deemed relevant for the
purposes of this opinion. Based on the foregoing, it is our opinion that:
1. Nationwide is a stock life insurance corporation duly organized and validly
existing under the laws of the State of Ohio and duly authorized to issue
and sell life insurance and annuity contracts.
2. Nationwide Variable Account-9 has been properly created and is a validly
existing separate account pursuant to the laws of the State of Ohio.
3. The issuance and sale of the Immediate Variable Annuity Contracts have been
duly authorized by Nationwide. When issued and sold in the manner stated in
the prospectus which is contained in the Registration Statement, the
contracts will be legal and binding obligations of Nationwide in accordance
with their terms, except that clearance must be obtained, or the contract
form must be approved, prior to the issuance thereof in certain
jurisdictions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name as the firm determining the
legality of the securities being registered.
Very truly yours,
/s/ Dietrich, Reynolds & Koogler
DIETRICH, REYNOLDS & KOOGLER