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NATIONWIDE LIFE INSURANCE COMPANY
Modified Single Premium Deferred Variable Annuity Contracts
Issued by Nationwide Life Insurance Company through its Nationwide Variable
Account-9
The date of this prospectus is May 1, 2000 as amended December 6, 2000.
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Variable annuities are complex investment products with unique benefits and
advantages that may be particularly useful to many investors in meeting
long-term savings and retirement needs. There are, however, costs and charges
associated with some of these unique benefits - costs and charges that do not
exist or are not present with other investment products. With help from
financial consultants or advisers, investors are encouraged to compare and
contrast the costs and benefits of the variable annuity described in this
prospectus with those of other investment products, including other variable
annuity or variable life insurance products offered by Nationwide Life Insurance
Company and its affiliates. This process will aid in determining whether the
purchase of the contract described in this prospectus is consistent with an
individual's goals, risk tolerance, time horizon, marital status, tax situation,
and other personal characteristics and needs.
THIS PROSPECTUS CONTAINS BASIC INFORMATION YOU SHOULD KNOW ABOUT THE CONTRACTS
BEFORE INVESTING. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE
REFERENCE.
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The following underlying mutual funds are available under the contracts:
W&R TARGET FUNDS, INC.
- Asset Strategy Portfolio
- Balanced Portfolio
- Bond Portfolio
- Core Equity Portfolio
- Growth Portfolio
- High Income Portfolio
- International Portfolio
- Limited-Term Bond Portfolio
- Money Market Portfolio
- Science and Technology Portfolio
- Small Cap Portfolio
Purchase payments not invested in the underlying mutual fund options of the
Nationwide Variable Account-9 ("variable account") may be allocated to the fixed
account or the Guaranteed Term Options (Guaranteed Term Options may not be
available in every jurisdiction - refer to your contract for specific
information).
The Statement of Additional Information (dated May 1, 2000) which contains
additional information about the contracts and the variable account has been
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 56.
For general information or to obtain FREE copies of the:
- Statement of Additional Information;
- prospectus, annual report or semi-annual report for any underlying
mutual fund;
- prospectus for the Guaranteed Term Options; or
- required Nationwide forms,
call: 1-866-221-1100
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA
P.O. BOX 182449
COLUMBUS, OHIO 43218-2449
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The Statement of Additional Information and other material incorporated by
reference can be found on the SEC website at:
www.sec.gov
THIS ANNUITY IS NOT:
- A BANK DEPOSIT - FEDERALLY INSURED
- ENDORSED BY A BANK - AVAILABLE IN EVERY
OR GOVERNMENT STATE
AGENCY
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, 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.
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the contract
value allocated to the variable account before the annuitization date.
ANNUITIZATION DATE- The date on which annuity payments begin.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
begin. This date may be changed by the contract owner with Nationwide's consent.
ANNUITY UNIT- An accounting unit of measure used to calculate the variable
annuity payments.
CONTRACT VALUE- The total value of all accumulation units in a contract plus any
amount held in the fixed account and any amount held under Guaranteed Term
Options.
CONTRACT YEAR- Each year the contract is in force beginning with the date the
contract is issued.
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
FIXED ACCOUNT- An investment option that is funded by the general account of
Nationwide.
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.
INDIVIDUAL RETIREMENT ACCOUNT- An account that qualifies for favorable tax
treatment under Section 408(a) of the Internal Revenue Code, but does not
include Roth IRAs.
INDIVIDUAL RETIREMENT ANNUITY- An annuity contract that qualifies for favorable
tax treatment under Section 408(b) of the Internal Revenue Code, but does not
include Roth IRAs.
INVESTMENT-ONLY CONTRACT- A contract purchased by a Qualified Pension,
Profit-Sharing or Stock Bonus Plan as defined by Section 401(a) of the Internal
Revenue Code.
NATIONWIDE- Nationwide Life Insurance Company.
NON-QUALIFIED CONTRACT- A contract which does not qualify for favorable tax
treatment as a Qualified Plan, Individual Retirement Annuity, Roth IRA, SEP IRA,
Simple IRA, or Tax Sheltered Annuity.
QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
Section 401 or 403(a) of the Internal Revenue Code.
ROTH IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408A of the Internal Revenue Code.
SEP IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408(k) of the Internal Revenue Code.
SIMPLE IRA- An annuity contract which qualifies for favorable tax treatment
under Section 408(p) of the Internal Revenue Code.
SUB-ACCOUNTS- Divisions of the variable account for which accumulation units and
annuity units are separately maintained - each sub-account corresponds to a
single underlying mutual fund.
TAX SHELTERED ANNUITY- An annuity that qualifies for favorable tax treatment
under Section 403(b) of the Internal Revenue Code.
VALUATION PERIOD- Each day the New York Stock Exchange is open for business.
VARIABLE ACCOUNT- Nationwide Variable Account-9, a separate account of
Nationwide that contains variable account allocations. The variable account is
divided into sub-accounts, each of which invests in shares of a separate
underlying mutual fund.
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TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS................................................3
SUMMARY OF STANDARD CONTRACT
EXPENSES...... ..................................................6
ADDITIONAL CONTRACT OPTIONS..............................................7
UNDERLYING MUTUAL FUND ANNUAL
EXPENSES....... ...................................................9
EXAMPLE.................................................................10
SYNOPSIS OF THE CONTRACTS...............................................11
FINANCIAL STATEMENTS....................................................12
CONDENSED FINANCIAL INFORMATION.........................................12
NATIONWIDE LIFE INSURANCE COMPANY.......................................13
GENERAL DISTRIBUTOR.....................................................13
TYPES OF CONTRACTS......................................................13
Non-Qualified Annuity Contracts
Individual Retirement Annuities (IRAs)
Simplified Employee Pension IRAs (SEP IRAs)
Simple IRAs
Roth IRAs
Tax Sheltered Annuities
Qualified Plans
INVESTING IN THE CONTRACT...............................................15
The Variable Account and Underlying Mutual Funds
Guaranteed Term Options
The Fixed Account
STANDARD CHARGES AND DEDUCTIONS.........................................18
Mortality and Expense Risk Charge
Contingent Deferred Sales Charge
Premium Taxes
OPTIONAL CONTRACT BENEFITS, CHARGES AND DEDUCTIONS......................19
Reduced Purchase Payment Option
CDSC Options and Charges
Death Benefit Options
Guaranteed Minimum Income Benefit Options
Extra Value Option
CONTRACT OWNERSHIP......................................................25
Joint Ownership
Contingent Ownership
Annuitant
Beneficiary and Contingent Beneficiary
OPERATION OF THE CONTRACT...............................................27
Minimum Initial and Subsequent
Purchase Payments
Pricing
Allocation of Purchase Payments
Determining the Contract Value
Transfers Prior to Annuitization
Transfers After Annuitization
Transfer Requests
RIGHT TO REVOKE.........................................................30
SURRENDER (REDEMPTION)..................................................31
Partial Surrenders (Partial Redemptions)
Full Surrenders (Full Redemptions)
Surrenders Under a Texas Optional
Retirement Program or a Louisiana
Optional Retirement Plan
Surrenders Under a Tax Sheltered Annuity
LOAN PRIVILEGE..........................................................32
Minimum & Maximum Loan Amounts
Loan Processing Fee
How Loan Requests are Processed
Loan Interest
Loan Repayment
Distributions & Annuity Payments
Transferring the Contract
Grace Period & Loan Default
ASSIGNMENT..............................................................34
CONTRACT OWNER SERVICES.................................................34
Asset Rebalancing
Dollar Cost Averaging
Systematic Withdrawals
ANNUITY COMMENCEMENT DATE...............................................36
ANNUITIZING THE CONTRACT................................................36
Annuitization Date
Annuitization
Fixed Payment Annuity
Variable Payment Annuity
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Frequency and Amount of Annuity Payments
Guaranteed Minimum Income Benefit Options ("GMIB")
Annuity Payment Options
DEATH BENEFITS..........................................................41
Death of Contract Owner - Non-Qualified Contracts
Death of Annuitant - Non-Qualified Contracts
Death of Contract Owner/Annuitant
Death Benefit Payment
REQUIRED DISTRIBUTIONS..................................................43
Required Distributions for Non-Qualified Contracts
Required Distributions for Tax Sheltered Annuities
Required Distributions for Individual
Retirement Annuities, SEP IRAs and
Simple IRAs
Required Distributions for Roth IRAs
FEDERAL TAX CONSIDERATIONS..............................................46
Federal Income Taxes
Withholding
Non-Resident Aliens
Federal Estate, Gift, and Generation
Skipping Transfer Taxes
Charge for Tax
Diversification
Tax Changes
STATEMENTS AND REPORTS..................................................51
LEGAL PROCEEDINGS.......................................................52
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY.........................53
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION ..............................................56
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS......................57
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SUMMARY OF STANDARD CONTRACT EXPENSES
The expenses listed below are charged to all contracts unless:
- the contract owner meets an available exception under the contract; or
- a contract owner has replaced a standard benefit with an available option
for an additional charge.
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of
purchase payments surrendered)....................7%(1)
Range of CDSC over time:
Number of Completed Years from CDSC
Date of Purchase Payment Percentage
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 0%
(1) Each contract year, the contract owner may withdraw without a CDSC the
greater of:
(1) 10% of all purchase payments made to the contract; or
(2) any amount withdrawn to meet minimum distribution requirements under
the Internal Revenue Code
This free withdrawal privilege is non-cumulative. Free amounts not taken
during any given contract year cannot be taken as free amounts in a
subsequent contract year (see "Contingent Deferred Sales Charge").
Withdrawals may be restricted for contracts issued as Tax Sheltered Annuities
due to Internal Revenue Code restrictions.
VARIABLE ACCOUNT CHARGES(2)
(as a percentage of the daily net assets of the variable account)
Mortality and Expense Risk Charges............0.95%
Total Variable Account Charges...........0.95%(3)
(2)These charges apply only to sub-account allocations. They do not apply to
allocations made to the fixed account or to the Guaranteed Term Options. They
are charged on a daily basis at the annual rate noted above.
(3)Charges shown include the Five-Year Reset Death Benefit that is standard to
every contract (see "Death Benefit Payment").
Nationwide may assess a loan processing fee at the time each new loan is
processed. Loans are only available for contracts issued as Tax Sheltered
Annuities. Loans are not available in all states. In addition, some states may
not permit Nationwide to assess a loan processing fee (see "Loan Privilege").
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ADDITIONAL CONTRACT OPTIONS
For an additional charge, the following options are available to contract owners
(upon approval by state insurance authorities). These options must be elected at
the time of application and will replace the corresponding standard contract
benefits.
If the contract owner chooses one or more of the following optional benefits, a
corresponding charge will be deducted. Charges for the optional benefits are IN
ADDITION TO the standard variable account charges. Except as otherwise noted,
optional benefit charges will only apply to allocations made to the variable
account and are charged as a percentage of the average variable account value.
REDUCED PURCHASE PAYMENT OPTION
For an additional charge at an annualized rate of 0.25% of the daily net assets
of the variable account, Nationwide will lower an applicant's minimum initial
purchase payment to $1,000 and subsequent purchase payments to $25. This option
in not available to contracts issued as Investment-only Contracts.
Reduced Purchase Payment Option...........0.25%
Total Variable Account Charges
(including Reduced Purchase
Payment Option) .......................1.20%
FIVE YEAR CDSC OPTION
For an additional charge at an annualized rate of 0.15% of the daily net assets
of the variable account, an applicant can receive a five year CDSC schedule,
instead of the standard seven year CDSC schedule.
Five Year CDSC Option .......................0.15%
Total Variable Account Charges
(including Five Year CDSC Option)..........1.10%
Range of Five-Year CDSC over time:
Number of Completed Years from CDSC
Date of Purchase Payment Percentage
0 7%
1 7%
2 6%
3 4%
4 2%
5 0%
For contracts issued in the State of New York, this option is available only for
contracts issued as Roth IRAs and is not available when the Extra Value Option
is elected.
CDSC WAIVER OPTIONS
ADDITIONAL WITHDRAWAL WITHOUT CHARGE AND DISABILITY WAIVER
For an additional charge at an annualized rate of 0.10% of the daily net assets
of the variable account, an applicant can receive an additional 5% CDSC-free
withdrawal privilege, which also includes a disability waiver. This 5% is in
addition to the standard 10% CDSC-free withdrawal privilege that applies to
every contract (see "CDSC Options and Charges").
Additional Withdrawal Without
Charge and Disability Waiver ..............0.10%
Total Variable Account Charges
(including Additional Withdrawal
Without Charge and
Disability Waiver) .....................1.05%
ADDITIONAL CDSC WAIVER OPTIONS FOR TAX SHELTERED ANNUITIES
Tax Sheltered Annuity applicants may also elect two additional CDSC waiver
options (see "CDSC Options and Charges").
10 Year and Disability Waiver..............0.05%
Total Variable Account Charges
(including 10 Year and Disability
Waiver) .................................1.00%
Hardship Waiver............................0.15%
Total Variable Account Charges
(including Hardship Waiver) .............1.10%
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DEATH BENEFIT OPTIONS
Applicants may choose among the following death benefits as a replacement for
the Five-Year Reset Death Benefit that is standard to every contract if their
contract is issued on or after the later of January 2, 2001 or the date on which
state insurance authorities approve applicable contract modifications:
Optional One-Year Enhanced Death Benefit
with Long Term Care/Nursing Home Waiver
and Spousal Protection.......................0.15%
Total Variable Account Charges
(including option only)....................1.10%
Optional Greater of One-Year or 5%
Enhanced Death Benefit with Long Term
Care/Nursing Home Waiver and Spousal
Protection...................................0.20%
Total Variable Account Charges
(including option only)....................1.15%
Applicants may choose among the following death benefits as a replacement for
the Five-Year Reset Death Benefit that is standard to every contract if their
contract is issued prior to January 2, 2001 or on a date prior to which state
insurance authorities approve the contract options listed above:
Optional One-Year Step Up Death
Benefit......................................0.05%
Total Variable Account Charges
(including option only)....................1.00%
Optional 5% Enhanced Death
Benefit......................................0.10%
Total Variable Account Charges
(including option only)....................1.05%
GUARANTEED MINIMUM INCOME BENEFIT OPTIONS
Prior to January 2, 2001, for an additional charge at an annualized rate of
0.45% of the daily net assets of the variable account, an applicant may elect
the Guaranteed Minimum Income Benefit Option 1.
Guaranteed Minimum Income
Benefit Option 1.............................0.45%
Total Variable Account Charges
(including Guaranteed Minimum Income
Benefit Option 1 only) ....................1.40%
Effective January 2, 2001, applicants may elect one of two Guaranteed Minimum
Income Benefit options (see "Guaranteed Minimum Income Benefit Options"). Not
all options may be available in every state.
Guaranteed Minimum Income
Benefit Option 1.............................0.45%
Total Variable Account Charges
(including Guaranteed Minimum Income
Benefit Option 1 only) ....................1.40%
Guaranteed Minimum Income
Benefit Option 2.............................0.30%
Total Variable Account Charges
(including Guaranteed Minimum Income
Benefit Option 2 only) ....................1.25%
EXTRA VALUE OPTION
For an additional charge at an annualized rate of 0.45% of the daily net assets
of the variable account, Nationwide will credit 3% of the purchase payment(s)
made to the contract during the first 12 months the contract is in force.
Nationwide will discontinue deducting this charge seven years from the date the
contract was issued (see "Extra Value Option").
Extra Value Option...........................0.45%
Total Variable Account Charges (including
Extra Value Option) .......................1.40%
The charge for the Extra Value Option will be assessed against the fixed account
and the Guaranteed Term Option allocations during the first seven contract years
in the form of crediting rates that may be up to 0.45% less than the crediting
rates available when the Extra Value Option is not elected (see "Fixed Account"
and "Guaranteed Term Options").
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<TABLE>
<CAPTION>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS, AFTER EXPENSE REIMBURSEMENT)
Management Other 12b-1 Total Underlying
Fees Expenses Fees Mutual Fund
Expenses
<S> <C> <C> <C> <C>
W&R Target Funds, Inc. - Asset Strategy Portfolio 0.74% 0.14% 0.24% 1.12%
W&R Target Funds, Inc. - Balanced Portfolio 0.65% 0.06% 0.24% 0.95%
W&R Target Funds, Inc. - Bond Portfolio 0.52% 0.06% 0.24% 0.82%
W&R Target Funds, Inc. - Core Equity Portfolio 0.69% 0.02% 0.24% 0.95%
W&R Target Funds, Inc. - Growth Portfolio 0.69% 0.02% 0.24% 0.95%
W&R Target Funds, Inc. - High Income Portfolio 0.63% 0.05% 0.24% 0.92%
W&R Target Funds, Inc. - International Portfolio 0.82% 0.15% 0.24% 1.21%
W&R Target Funds, Inc. - Limited-Term Bond Portfolio 0.52% 0.15% 0.24% 0.91%
W&R Target Funds, Inc. - Money Market Portfolio 0.44% 0.08% 0.24% 0.76%
W&R Target Funds, Inc. - Science and Technology Portfolio 0.80% 0.06% 0.24% 1.10%
W&R Target Funds, Inc. - Small Cap Portfolio 0.84% 0.04% 0.24% 1.12%
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
The above underlying mutual funds are not subject to fee waivers and expense
reimbursements.
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EXAMPLE
The following chart shows the expenses (in dollars) that would be incurred under
this contract assuming a $1,000 investment, 5% annual return, and no change in
underlying mutual fund expenses. 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 example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the 7 year CDSC schedule and an assumed
variable account charge of 2.70% which is the maximum charge for the maximum
number of rider options.
For those contracts that do not elect the maximum number of rider options, the
expenses are reduced. Deductions for premium taxes are not reflected but may
apply.
<TABLE>
<CAPTION>
If you surrender your contract If you do not surrender your If you annuitize your
at the end of the applicable contract at the end of the contract
time period applicable time period at the end of the applicable
time period
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 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> <C> <C> <C> <C>
W&R Target Funds, Inc. - 103 176 241 419 40 122 205 419 * 122 205 419
Asset Strategy Portfolio
W&R Target Funds, Inc. - 101 170 232 404 38 116 196 404 * 116 196 404
Balanced Portfolio
W&R Target Funds, Inc. - Bond 100 166 226 392 37 112 190 392 * 112 190 392
Portfolio
W&R Target Funds, Inc. - Core 101 170 232 404 38 116 196 404 * 116 196 404
Equity Portfolio
W&R Target Funds, Inc. - 101 170 232 404 38 116 196 404 * 116 196 404
Growth Portfolio
W&R Target Funds, Inc. - High 101 169 231 401 38 115 195 401 * 115 195 401
Income Portfolio
W&R Target Funds, Inc. - 104 178 245 427 41 124 209 427 * 124 209 427
International Portfolio
W&R Target Funds, Inc. - 101 169 230 401 38 115 194 401 * 115 194 401
Limited-Term Bond Portfolio
W&R Target Funds, Inc. - 99 164 223 386 36 110 187 386 * 110 187 386
Money Market Portfolio
W&R Target Funds, Inc. - 103 175 240 418 40 121 204 418 * 121 204 418
Science and Technology
Portfolio
W&R Target Funds, Inc. - 103 176 241 419 40 122 205 419 * 122 205 419
Small Cap Portfolio
</TABLE>
*The contracts sold under this prospectus do not permit annuitization during the
first two contract years.
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SYNOPSIS OF THE CONTRACTS
The contracts described in this prospectus are modified single purchase payment
contracts. The contracts may be issued as either individual or group contracts.
In those states where contracts are issued as group contracts, references
throughout this prospectus to "contract(s)" will also mean "certificate(s)."
The contracts can be categorized as:
- Investment-only;
- Non-Qualified;
- Individual Retirement Annuities with contributions rolled over or
transferred from certain tax-qualified plans*;
- Roth IRAs;
- Tax Sheltered Annuities with contributions rolled over or transferred
from other Tax Sheltered Annuity plans*;
- Charitable Remainder Trusts;
- SEP IRAs; and
- Simple IRAs.
*Contributions are not required to be rolled over or transferred if the contract
owner elects the Reduced Purchase Payment Option.
For more detailed information with regard to the differences in contract types,
please see "Types of Contracts" later in this prospectus.
MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS
MINIMUM INITIAL MINIMUM
CONTRACT PURCHASE PAYMENT SUBSEQUENT
TYPE PAYMENTS
Investment-only $15,000 $1,000
Non-Qualified $15,000 $1,000
IRA $15,000 $1,000
Roth IRA $15,000 $1,000
Tax Sheltered $15,000 $1,000
Annuity
Charitable $15,000 $1,000
Remainder Trust
SEP IRA $15,000 $1,000
Simple IRA $15,000 $1,000
If the contract owner elects the Reduced Purchase Payment Option, minimum
initial and subsequent purchase payments will be reduced accordingly.
If the contract owner elects the Extra Value Option, amounts credited to the
contract in excess of total purchase payments may not be used to meet the
minimum initial and subsequent purchase payment requirements.
Guaranteed Term Options
Guaranteed Term Options are separate investment options under the contract. The
minimum amount that may be allocated to a Guaranteed Term Option is $1,000.
CHARGES AND EXPENSES
Nationwide deducts a Mortality and Expense Risk Charge equal to an annual rate
of 0.95% of the daily net assets of the variable account. Nationwide assesses
this charge 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, Nationwide may deduct a CDSC if any amount is
withdrawn from the contract. This CDSC reimburses Nationwide for sales expenses.
The amount of the CDSC will not exceed 7% of purchase payments surrendered.
There are several CDSC options that are available to contract owners, each with
different characteristics and costs. The charge associated with each option is
charged as a percentage of the daily net assets of the variable account. They
are as follows:
OPTION CONTRACT CHARGE
TYPE
Five Year CDSC Option All* 0.15%
Additional Withdrawal All 0.10%
Without Charge and
Disability Waiver
10 Year and Disability Tax 0.05%
Waiver Sheltered
Annuities
Hardship Waiver Tax 0.15%
Sheltered
Annuities
*In the State of New York, this option is available only for contracts issued as
Roth IRAs and is not available when the Extra Value Option is elected.
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If the contract owner elects the Reduced Purchase Payment Option, Nationwide
will reduce the minimum initial purchase payment to $1,000 and subsequent
purchase payments to $25. In return for the reduction, Nationwide will deduct an
additional charge of 0.25% of the daily net assets of the variable account. This
option is not available for contracts issued as Investment-only contracts.
Optional death benefits are available under the contract. For contracts issued
on or after the later of January 2, 2001 or the date on which state insurance
authorities approve applicable contract modifications, Nationwide will deduct an
additional charge at an annualized rate of 0.15% of the daily net assets of the
variable account if the One-Year Enhanced Death Benefit with Long Term
Care/Nursing Home Waiver and Spousal Protection is elected or 0.20% of the daily
net assets of the variable account if the Greater of One-Year or 5% Enhanced
Death Benefit with Long Term Care/Nursing Home Waiver and Spousal Protection is
elected. For contracts issued prior to January 2, 2001 or on a date prior to
which state insurance authorities approve the contract options listed above,
Nationwide will deduct an annualized rate of 0.05% of the daily net assets of
the variable account if the One-Year Step Up Death Benefit is elected, or 0.10%
of the daily net assets of the variable account if the 5% Enhanced Death Benefit
is elected.
Prior to January 2, 2001, Guaranteed Minimum Income Benefit Option 1 is
available under the contract. If the contract owner elects the Guaranteed
Minimum Income Benefit Option 1, Nationwide will deduct an additional charge at
an annualized rate of 0.45% of the daily net assets of the variable account (see
"Guaranteed Minimum Income Benefit Option 1").
Effective January 2, 2001, two Guaranteed Minimum Income Benefit options are
available under the contract. If the contract owner elects one of the Guaranteed
Minimum Income Benefit options, Nationwide will deduct an additional charge at
an annual rate of 0.45% or 0.30% of the daily net assets of the variable
account, depending on which option was chosen (see "Guaranteed Minimum Income
Benefits"). An Extra Value Option is available under the contract. The Extra
Value Option is only available at the time of application. If the contract owner
elects the Extra Value Option on the application, Nationwide will apply a credit
of 3% of the purchase payment(s) made during the first 12 months the contract is
in force. In exchange, Nationwide will deduct an additional charge at an
annualized rate of 0.45% of the daily net assets of the variable account.
Nationwide will discontinue deducting this charge seven years from the date the
contract was issued. Once the Extra Value Option is elected, it may not be
revoked (see "Extra Value Option").
Upon annuitization of the contract, any amounts assessed for any rider options
elected will be waived and only those charges applicable to the base contract
will be assessed.
ANNUITY PAYMENTS
Annuity payments begin on the annuitization date. The payments will be based on
the annuity payment option chosen at the time of application (see "Annuity
Payment Options").
TAXATION
How a contract is taxed depends on the type of contract issued and the purpose
for which the contract is purchased. 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 other amounts 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 1 of this prospectus.
CONDENSED FINANCIAL INFORMATION
The value of an accumulation unit is determined on the basis of changes in the
per share value of the underlying mutual funds and the assessment of a
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variable account charge which may vary from contract to contract (for more
information on the calculation of accumulation unit values, see "Determining
Variable Account Value - Valuing an Accumulation Unit"). Please refer to
Appendix B for information regarding each class of accumulation units.
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.
GENERAL DISTRIBUTOR
The contracts are also distributed by Waddell & Reed, Inc., 6300 Lamar Avenue,
Overland Park Kansas 66202.
TYPES OF CONTRACTS
The contracts described in this prospectus are classified according to the tax
treatment they are subject to under the Internal Revenue Code. The following is
a general description of the various types of contracts. Eligibility
requirements, tax benefits (if any), limitations, and other features of the
contracts will differ depending on the type of contract.
NON-QUALIFIED ANNUITY CONTRACTS
A Non-Qualified Annuity Contract is a contract that does not qualify for certain
tax benefits under the Internal Revenue Code, and which is not an IRA, a Roth
IRA, a SEP IRA, a Simple IRA, or a Tax Sheltered Annuity.
Upon the death of the owner of a Non-Qualified Annuity Contract, mandatory
distribution requirements are imposed to ensure distribution of the entire
balance in the contract within a required statutory period.
Non-Qualified Annuity contracts that are owned by natural persons allow for the
deferral of taxation on the income earned in the contract until it is
distributed or deemed to be distributed.
INDIVIDUAL RETIREMENT ANNUITIES (IRAS)
Individual Retirement Annuities are contracts that are issued by insurance
companies and satisfy the following requirements:
- the contract is not transferable by the owner;
- the premiums are not fixed;
- the annual premium cannot exceed $2,000 (although rollovers of greater
amounts from qualified plans, tax-sheltered annuities and other IRAs can
be received);
- certain minimum distribution requirements must be satisfied after the
owner attains the age of 70 1/2;
- the entire interest of the owner in the contract is nonforfeitable; and
- after the death of the owner, additional distribution requirements may be
imposed to ensure distribution of the entire balance in the contract
within the statutory period of time.
Depending on the circumstance of the owner, all or a portion of the
contributions made to the account may be deducted for federal income tax
purposes.
Failure to make the mandatory distributions can result in an additional penalty
tax of 50% of the excess of the amount required to be distributed over the
amount that was actually distributed.
IRAs may receive rollover contributions from other Individual Retirement
Accounts and Individual Retirement Annuities,
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from Tax Sheltered Annuities, and from qualified retirement plans, including
401(k) plans.
For further details regarding IRAs, please refer to the disclosure statement
provided when the IRA was established.
SIMPLIFIED EMPLOYEE PENSION IRAS (SEP IRAS)
A SEP IRA is a written plan established by an employer for the benefit of
employees which permits the employer to make contributions to an IRA established
for the benefit of each employee.
An employee may make deductible contributions to a SEP IRA in the same way, and
with the same restrictions and limitations, as for an IRA. In addition, the
employer may make contributions to the SEP IRA, subject to dollar and percentage
limitations imposed by both the Internal Revenue Code and the written plan.
A SEP IRA plan established by an employer must satisfy certain requirements:
- minimum participation rules;
- top-heavy contribution rules;
- nondiscriminatory allocation rules; and
- requirements regarding a written allocation formula.
In addition, the plan cannot restrict withdrawals of non-elective contributions,
and must restrict withdrawals of elective contributions before March 15th of the
following year.
SIMPLE IRAS
A Simple IRA is an individual retirement annuity which is funded exclusively by
a qualified salary reduction arrangement and satisfies the following:
- vesting requirements,
- participation requirements; and
- administrative requirements.
The funds contributed to a Simple IRA cannot be commingled with funds in IRAs or
SEP IRAs.
A Simple IRA cannot receive rollover distributions except from another Simple
IRA.
ROTH IRAS
Roth IRA contracts are contracts that are issued by insurance companies and
satisfy the following requirements:
- the contract is not transferable by the owner;
- the premiums are not fixed;
- the annual premium cannot exceed $2,000 (although rollovers of greater
amounts from other Roth IRAs and IRAs can be received);
- the entire interest of the owner in the contract is nonforfeitable; and
- after the death of the owner, certain distribution requirements may be
imposed to ensure distribution of the entire balance in the contract
within the statutory period of time.
A Roth IRA can receive a rollover from an IRA; however, the amount rolled over
from the IRA to the Roth IRA is required to be included in the owner's federal
gross income at the time of the rollover, and will be subject to federal income
tax.
There are income limitations on eligibility to participate in a Roth IRA and
additional income limitations for eligibility to roll over amounts from an IRA
to a Roth IRA. For further details regarding Roth IRAs, please refer to the
disclosure statement provided when the Roth IRA was established.
TAX SHELTERED ANNUITIES
Certain tax-exempt organizations (described in section 501(c)(3) of the Internal
Revenue Code) and public school systems may establish a plan under which annuity
contracts can be purchased for their employees. These annuity contracts are
often referred to as Tax Sheltered Annuities.
Purchase payments made to Tax Sheltered Annuities are excludible from the income
of the employee, up to statutory maximum amounts. These amounts should be set
forth in the plan adopted by the employer.
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The owner's interest in the contract is nonforfeitable (except for failure to
pay premiums) and cannot be transferred. Certain minimum distribution
requirements must be satisfied after the owner attains the age of 70 1/2, and
after the death of the owner. Additional distribution requirements may be
imposed to ensure distribution of the entire balance in the contract within the
required period of time.
QUALIFIED PLANS
Contracts that are owned by Qualified Plans are not intended to confer tax
benefits on the beneficiaries of the plan; they are used as investment vehicles
for the plan. The income tax consequences to the beneficiary of a Qualified Plan
are controlled by the operation of the plan, not by operation of the assets in
which the plan invests.
Beneficiaries of Qualified Plans should contact their employer and/or trustee of
the plan to obtain and review the plan, trust, summary plan description and
other documents for the tax and other consequences of being a participant in a
qualified plan.
INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
Nationwide Variable Account-9 is a variable account that invests in the
underlying mutual funds listed in Appendix A. Nationwide established the
variable account on May 22, 1997, pursuant to Ohio law. Although the variable
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 assets and are not chargeable with liabilities
incurred in any other business of Nationwide. Nationwide is obligated to pay all
amounts promised to contract owners under the contracts.
The variable account is divided into sub-accounts, each corresponding to a
single underlying mutual fund. Nationwide uses the assets of each sub-account to
buy shares of the underlying mutual funds based on contract owner instructions.
There are two sub-accounts for each underlying mutual fund. One sub-account
contains shares attributable to accumulation units under Non-Qualified
Contracts. The other contains shares attributable to accumulation units under
Investment-only Contracts, Individual Retirement Annuities, Simple IRAs, SEP
IRAs, Roth IRAs, and Tax Sheltered Annuities.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Underlying mutual funds 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 underlying mutual funds may manage publicly
traded mutual funds with similar names and investment objectives. However, the
underlying mutual funds 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 underlying mutual funds participating in the
variable account. The performance of the underlying mutual funds could differ
substantially from that of any publicly traded funds.
Voting Rights
Contract owners who have allocated assets to the underlying mutual funds 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
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allowed to vote in its own right, it may elect to do so.
Contract owners with voting interests in an underlying mutual fund will be
notified of issues requiring the 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 is determined by dividing
the cash value of the amount they have allocated to an underlying mutual fund by
the net asset value of that underlying mutual fund. Nationwide will designate a
date for this determination not more than 90 days before the shareholder
meeting.
Material Conflicts
The underlying mutual funds 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 underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life 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 underlying mutual fund(s)
involved in the conflict.
Substitution of Securities
Nationwide may substitute, eliminate, or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occurs:
1) shares of a current underlying mutual fund are no longer available for
investment; or
2) further investment in an underlying mutual fund is inappropriate.
No substitution, elimination, or combination of shares may take place without
the prior approval of the SEC.
GUARANTEED TERM OPTIONS
Guaranteed Term Options are separate investment options under the contract. A
Guaranteed Term Option prospectus should be read along with this prospectus. The
minimum amount that may be allocated to a Guaranteed Term Option is $1,000.
Allocations to the Guaranteed Term Options are not subject to variable account
charges.
Guaranteed Term Options provide a guaranteed rate of interest over four
different maturity durations: three (3), five (5), seven (7) or ten (10) years.
Note: The guaranteed term may last for up to 3 months beyond the 3, 5, 7, or 10
year period since every guaranteed term will end on the final day of a calendar
quarter.
For the duration selected, Nationwide will declare a guaranteed interest rate.
For contract owners that elect the Extra Value Option, allocations made to the
Guaranteed Term Options for the first seven contract years will be credited a
guaranteed interest rate of 0.45% less than the guaranteed interest rate that
applies to the Guaranteed Term Options if the Extra Value Option is not elected.
That rate will be credited to amounts allocated to the Guaranteed Term Option
UNLESS a distribution is taken before the maturity date. If a distribution
occurs before the maturity date, the amount distributed will be subject to a
market value adjustment. A market value adjustment can increase or decrease the
amount distributed depending on current interest rate fluctuations. No market
value adjustment will be applied if Guaranteed Term Option allocations are held
to maturity.
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Because a market value adjustment can affect the value of a distribution, its
effects should be carefully considered before surrendering or transferring from
Guaranteed Term Options. When actual interest rates are higher than the
guaranteed rate, a market value adjustment would reduce the value of the amount
distributed. When actual interest rates are lower than the guaranteed rate, the
value of the amount distributed would increase.
Guaranteed Term Options are available only during the accumulation phase of a
contract. They are not available after the annuitization date. In addition,
Guaranteed Term Options are not available for use with asset rebalancing, Dollar
Cost Averaging, or systematic withdrawals.
Guaranteed Term Options may not be available in every state.
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks. The general account is not subject
to the same laws as the variable account and the SEC has not reviewed material
in this prospectus relating to the fixed account. However, information relating
to the fixed account is subject to federal securities laws relating to accuracy
and completeness of prospectus disclosure.
Purchase payments will be allocated to the fixed account by election of the
contract owner.
The investment income earned by the fixed account will be allocated to the
contracts at varying guaranteed interest rate(s) depending on the following
categories of fixed account allocations:
- New Money Rate - The rate credited on the fixed account allocation when the
contract is purchased or when subsequent purchase payments are made.
Subsequent purchase payments may receive different New Money Rates than the
rate when the contract was issued, since the New Money Rate is subject to
change based on market conditions.
- Variable Account to Fixed Rate - Allocations transferred from any of the
underlying investment options in the variable account to the fixed account
may receive a different rate. The rate may be lower than the New Money
Rate. There may be limits on the amount and frequency of movements from the
variable account to the fixed account.
- Renewal Rate - The rate available for maturing fixed account allocations
which are entering a new guarantee period. The contract owner will be
notified of this rate in a letter issued with the quarterly statements when
any of the money in the contract owner's fixed account matures. At that
time, the contract owner will have an opportunity to leave the money in the
fixed account and receive the Renewal Rate or the contract owner can move
the money to any of the other underlying mutual fund options.
- Dollar Cost Averaging Rate - From time to time, Nationwide may offer a more
favorable rate for an initial purchase payment into a new contract when
used in conjunction with a Dollar Cost Averaging program.
For contract owners that elect the Extra Value Option, payments or transfers
made to the fixed account will, for the first seven contract years, be credited
a guaranteed interest rate of 0.45% less than the crediting rate that applies to
the fixed account if the Extra Value Option is not elected. Nationwide
guarantees, however, that the rate will not be less than 3.0% for any given
year.
All of these rates are subject to change on a daily basis; however, once applied
to the fixed account, the interest rates are guaranteed until the end of the
calendar quarter during which the12 month anniversary of the fixed account
allocation occurs.
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Credited interest rates are annualized rates - the effective yield of interest
over a one year period. Interest is credited to each contract on a daily basis.
As a result, the credited interest rate is compounded daily to achieve the
stated effective yield.
The guaranteed rate for any purchase payment will be effective for not less than
twelve months. Nationwide guarantees that the rate will not be less than 3.0%
per year.
Any interest in excess of 3.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The contract owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of
3.0% for any given year.
Nationwide guarantees that the fixed account contract value will not be less
than the amount of the purchase payments allocated to the fixed account, plus
interest credited as described above, less any surrenders and any applicable
charges including CDSC.
STANDARD CHARGES AND DEDUCTIONS
MORTALITY AND EXPENSE RISK CHARGE
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 0.95% of the daily net assets of the variable account.
The Mortality Risk Charge compensates Nationwide for guaranteeing the annuity
purchase rates of the contracts. This guarantee ensures that the annuity
purchase rates will not change regardless of the death rates of annuity payees
or the general population. The Mortality Risk Charge also compensates Nationwide
for risks assumed in connection with the standard death benefit, but only
partially compensates Nationwide in connection with the two optional death
benefits, for which there are separate charges.
The Expense Risk Charge compensates Nationwide for guaranteeing that 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 any part of the contract is
surrendered, Nationwide will deduct a CDSC. The CDSC will not exceed 7% of
purchase payments surrendered.
The CDSC is calculated by multiplying the applicable CDSC percentage (noted
below) by the amount of purchase payments surrendered. For purposes of
calculating the CDSC, surrenders are considered to come first from the oldest
purchase payment made to the contract, then the next oldest purchase payment,
and so forth. Earnings are not subject to the CDSC, but may not be distributed
prior to the distribution of all purchase payments. (For tax purposes, a
surrender is usually treated as a withdrawal of earnings first.)
The CDSC applies as follows:
Number of Years from Date CDSC
of Purchase Payment Percentage
0 7%
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 0%
The CDSC is used to cover sales expenses, including commissions (maximum of 6%
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 assets, which may indirectly include portions of the
variable account charges, since Nationwide may generate a profit from these
charges.
All or a portion of any withdrawal may be subject to federal income taxes.
Contract owners taking withdrawals before age 59 1/2 may be subject to a 10%
penalty tax.
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Waiver of Contingent Deferred Sales Charge
Each contract year, the contract owner may withdraw without a CDSC the greater
of:
(a) 10% of all purchase payments; or
(b) any amount withdrawn to meet minimum distribution requirements under
the Internal Revenue Code.
This CDSC-free privilege is non-cumulative. Free amounts not taken during any
given contract year cannot be taken as free amounts in a subsequent contract
year.
In addition, no CDSC will be deducted:
(1) upon the annuitization of contracts which have been in force for at least
two years;
(2) upon payment of a death benefit; or
(3) from any values which have been held under a contract for at least 7
years.
No CDSC applies to transfers among sub-accounts or between or among the
Guaranteed Term Options, the fixed account, or the variable account. Nationwide
may waive the CDSC if a contract described in this prospectus is exchanged for
another Nationwide contract (or a contract of any of its affiliated insurance
companies). A CDSC may apply to the contract received in the exchange.
A contract held by a Charitable Remainder Trust may withdraw CDSC-free the
greater of (a) or (b), where:
(a) is the amount which would otherwise be available for withdrawal without a
CDSC; and
(b) is the difference between the total purchase payments made to the contract
as of the date of the withdrawal (reduced by previous withdrawals) and the
contract value at the close of the day prior to the date of the withdrawal.
The CDSC will not be eliminated if to do so would be unfairly discriminatory or
prohibited by state law.
PREMIUM TAXES
Nationwide will charge against the contract value any premium taxes levied by a
state or other government entity. Premium tax rates currently range from 0% to
5.0%. 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 surrendered;
(2) annuitization; or
(3) such earlier date as Nationwide becomes subject to premium taxes.
Premium taxes may be deducted from death benefit proceeds.
OPTIONAL CONTRACT BENEFITS, CHARGES AND DEDUCTIONS
REDUCED PURCHASE PAYMENT OPTION
If the contract owner chooses the Reduced Purchase Payment Option, Nationwide
will deduct an additional charge equal to an annualized rate of 0.25% of the
daily net assets of the variable account. In return, the minimum initial
purchase payment for that contract will be $1,000 and minimum subsequent
purchase payment will be $25. This option is not available for Investment-only
Contracts.
The contract owner may elect to terminate this option if, throughout a period of
at least two years and continuing until such election, the total of all purchase
payments, less surrenders and withdrawals, is maintained at $25,000 or more.
This election must be submitted in writing on a form provided by Nationwide.
Termination of the rider will occur as of the date on the election form, and the
charge for this rider will no longer be assessed. Subsequent purchase payments,
if any, will be subject to the terms of the contract and must be at least
$1,000.
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CDSC OPTIONS AND CHARGES
Five Year CDSC Option
For an additional charge at an annualized rate of 0.15% of the daily net assets
of the variable account, the contract owner may choose the Five Year CDSC
Option.
Under this option, CDSC will not exceed 7% of purchase payments surrendered.
The Five Year CDSC Option applies as follows:
Number of Years from Date of CDSC
Purchase Payment Percentage
0 7%
1 7%
2 6%
3 4%
4 2%
5 0%
For contracts issued in the State of New York, this option is available only for
contracts issued as Roth IRAs and is not available when the Extra Value Option
is elected.
Additional Withdrawal without Charge and Disability Waiver
Each contract has a standard 10% CDSC-free withdrawal privilege each year. For
an additional charge at an annualized rate of 0.10% of the daily net assets of
the variable account, the contract owner can withdraw an additional 5% of total
purchase payments each year without incurring a CDSC. This would allow the
contract owner to withdraw a total of 15% of the total of all purchase payments
each year free of CDSC. Like the standard 10% CDSC-free privilege, this
additional withdrawal benefit is non-cumulative.
This option also contains a disability waiver. Nationwide will waive CDSC if a
contract owner (or annuitant if the contract is owned by a non-natural owner) is
disabled after the contract is issued but before reaching age 65. If this waiver
becomes effective due to disability, no additional purchase payments may be made
to the contract.
Additional CDSC Waiver Options for Tax Sheltered Annuities
10 Year and Disability Waiver
For an additional charge at an annualized rate of 0.05% of the daily net
assets of the variable account, the contract owner of a Tax Sheltered
Annuity can purchase the 10 Year and Disability Waiver. Under this option,
Nationwide will waive CDSC if two conditions are met:
(1) the contract owner has been the owner of the contract for 10
years; and
(2) the contract owner has made regular payroll deferrals during the
entire contract year for at least 5 of those 10 years.
This option also contains a disability waiver. Nationwide will waive CDSC
if the contract owner is disabled after the contract is issued but before
reaching age 65. If this waiver becomes effective due to disability, no
additional purchase payments may be made to the contract.
Hardship Waiver
For an additional charge at an annualized rate of 0.15% of the daily net
assets of the variable account, the contract owner of a Tax Sheltered
Annuity can purchase the Hardship Waiver. Under this option, Nationwide
will waive CDSC if the contract owner experiences a hardship (as defined
for purposes of Internal Revenue Code Section (401(k)). The contract owner
may be required to provide proof of hardship.
If this waiver becomes effective, no additional purchase payments may be
made to the contract.
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DEATH BENEFIT OPTIONS
The following death benefit options are available with the contracts. Not all of
the death benefit options may be available in every state.
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THE FOLLOWING BENEFITS ARE AVAILABLE FOR CONTRACTS ISSUED ON OR AFTER THE LATER
OF JANUARY 2, 2001 OR THE DATE ON WHICH STATE INSURANCE AUTHORITIES APPROVE
APPLICABLE CONTRACT MODIFICATIONS.
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If the contract owner chooses an optional death benefit, Nationwide will deduct
a charge equal to an annualized rate of either 0.15% (for the One-Year Enhanced
Death Benefit with Long Term Care/Nursing Home Waiver and Spousal Protection) or
0.20% (for the Greater of One-Year or 5% Enhanced Death Benefit with Long Term
Care/Nursing Home waiver and Spousal Protection) of the daily net assets of the
variable account, depending upon which option was chosen. Each benefit is
described below.
One-Year Enhanced Death Benefit
If the annuitant dies before the annuitization date, the death benefit will be
the greatest of:
(1) the contract value;
(2) the total of all purchase payments, less an adjustment for amounts
surrendered; or
(3) the highest contract value on any contract anniversary before the
annuitant's 86th birthday, less an adjustment for amounts subsequently
surrendered, plus purchase payments received after that contract
anniversary.
The adjustment for amounts surrendered will reduce items (2) and (3) above in
the same proportion that the contract value was reduced on the date(s) or the
partial surrender(s).
Greater of One-Year or 5% Enhanced Death Benefit
If the annuitant dies before the annuitization date, the death benefit will be
the greatest of:
(1) the contract value;
(2) the total of all purchase payments, less an adjustment for amounts
surrendered;
(3) the highest contract value on any contract anniversary before the
annuitant's 86th birthday, less an adjustment for amounts subsequently
surrendered, plus purchase payments received after that contract
anniversary; or
(4) the 5% interest anniversary value.
The adjustment for amounts surrendered will reduce items (2) and (3) above in
the same proportion that the contract value was reduced on the date(s) of the
partial surrender(s).
The 5% Interest Anniversary Value is equal to purchase payments minus amounts
surrendered, accumulated at 5% compound interest until the last contract
anniversary prior to the annuitant's 86th birthday. Such total accumulated
amount shall not exceed 200% of the net of purchase payments and amounts
surrendered. The adjustment for amounts subsequently surrendered after the most
recent contract anniversary will reduce the 5% Interest Anniversary Value in the
same proportion that the contract value was reduced on the date(s) of the
partial surrender(s).
EACH DEATH BENEFIT OPTION HAS A SPOUSAL PROTECTION FEATURE. THE SPOUSAL
PROTECTION FEATURE ALLOWS A SURVIVING SPOUSE TO CONTINUE THE CONTRACT WHILE
RECEIVING THE ECONOMIC BENEFIT OF THE DEATH BENEFIT UPON THE DEATH OF THE OTHER
SPOUSE. THE SPOUSAL PROTECTION FEATURE IS AVAILABLE ONLY FOR CONTRACTS ISSUED AS
NON-QUALIFIED CONTRACTS, INDIVIDUAL RETIREMENT ANNUITIES (IRAS) AND ROTH IRAS,
PROVIDED THE CONDITIONS DESCRIBED BELOW ARE SATISFIED. THERE IS NO ADDITIONAL
CHARGE FOR THIS FEATURE.
(1) One or both spouses (or a revocable trust of which either or both of the
spouses is/are grantor(s)) must be named as the contract owner. For
contracts issued as IRAs and Roth IRAs, only the person for whom the IRA or
Roth IRA was established may be named as the contract owner;
(2) The spouses must be co-annuitants;
(3) Both co-annuitants must be age 85 or younger at the time the contract is
issued;
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(4) The spouses must each be named as beneficiaries;
(5) No person other than the spouse may be named as contract owner, annuitant
or primary beneficiary;
(6) If both spouses are alive upon annuitization, the contract owner must
specify which spouse is the annuitant upon whose continuation of life any
annuity payments involving life contingencies depend (for IRA and Roth IRA
contracts, this person must be the contract owner);
(7) If a co-annuitant dies before the annuitization date, the surviving spouse
may continue the contract as its sole contract owner. If the chosen death
benefit is higher than the contract value at the time of death, the
contract value will be adjusted to equal the applicable death benefit
amount. The surviving spouse may then name a new beneficiary but may not
name another co-annuitant; and
(8) If a co-annuitant is added at any time after the election of the optional
death benefit rider, a copy of the certificate of marriage must be provided
to the home office. In addition, the date of marriage must be after the
election of the death benefit option.
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THE FOLLOWING BENEFITS ARE AVAILABLE FOR CONTRACTS ISSUED PRIOR TO JANUARY 2,
2001 OR ON A DATE PRIOR TO WHICH STATE INSURANCE AUTHORITIES APPROVE THE
CONTRACT MODIFICATIONS LISTED ABOVE.
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If the contract owner chooses an optional death benefit, Nationwide will deduct
a charge equal to an annualized rate of either 0.05% (for the One-Year Step Up
Death Benefit) or 0.10% (for the 5% Enhanced Death Benefit) of the daily net
assets of the variable account, depending upon which option was chosen. Each
benefit is described below.
One-Year Step Up Death Benefit
If the annuitant dies before the annuitization date, the death benefit will be
the greatest of:
(1) the contract value;
(2) the total of all purchase payments, less an adjustment for amounts
surrendered; or
(3) the highest contract value on any contract anniversary before the
annuitant's 86th birthday, less an adjustment for amounts subsequently
surrendered, plus purchase payments received after that contract
anniversary.
The adjustment for amounts surrendered will reduce items (2) and (3) above in
the same proportion that the contract value was reduced on the date(s) or the
partial surrender(s).
5% Enhanced Death Benefit
If the annuitant dies before the annuitization date, the death benefit will be
the greater of:
(1) the contract value; or
(2) the total of all purchase payments, less any amounts surrendered,
accumulated at 5% simple interest from the date of each purchase payment or
surrender to the most recent contract anniversary prior to the annuitant's
86th birthday, less an adjustment for amounts subsequently surrendered,
plus purchase payments received since that contract anniversary.
The total accumulated amount will not exceed 200% of the net of purchase
payments and amounts surrendered. The adjustment for amounts subsequently
surrendered after the most recent contract anniversary will reduce the 5%
interest anniversary value in the same proportion that the contract value was
reduced on the date(s) of the partial surrender(s).
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IN ADDITION, ALL DEATH BENEFITS HAVE A LONG TERM CARE FACILITY AND TERMINAL
ILLNESS BENEFIT AVAILABLE AT NO ADDITIONAL CHARGE PROVIDED THE CONDITIONS
DESCRIBED BELOW ARE SATISFIED.
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No CDSC will be charged if:
(1) the third contract anniversary has passed; and
(2) the contract owner has been confined to a long-term care facility or
hospital for a continuous 90-day period that began after the contract issue
date; or
(3) the contract owner has been diagnosed by a physician to have a terminal
illness; and
(4) Nationwide receives and records such a letter from that physician
indicating such diagnosis.
Written notice and proof of terminal illness or confinement for 90 days in a
hospital or long term care facility must be received in a form satisfactory to
Nationwide and recorded at Nationwide's home office prior to waiver of the CDSC.
In the case of joint ownership, the waivers will apply if either joint owner
meets the qualifications listed above. For those contracts that have a
non-natural person as contract owner as an agent for a natural person, the
annuitant may exercise the right of the contract owner for purposes described in
this provision. If the non-natural contract owner does not own the contract as
an agent for a natural person (e.g., the contract owner is a corporation or a
trust for the benefit of an entity), the annuitant may not exercise the rights
described in this provision.
For those contracts that have a non-natural person as contract owner as an agent
for a natural person, the annuitant may exercise the right of the contract owner
for purposes described in this provision. If the non-natural contract owner does
not own the contract as an agent for a natural person (.e.g., the contract owner
is a corporation or a trust for the benefit of an entity), the annuitant may not
exercise the rights described in this provision.
GUARANTEED MINIMUM INCOME BENEFIT OPTION
Prior to January 2, 2001, the contract owner can purchase a Guaranteed Minimum
Income Benefit option at the time of application. If elected, Nationwide will
deduct an additional charge of 0.45% of the daily net assets of the variable
account.
The contract owner can purchase one of two Guaranteed Minimum Income Benefit
options at the time of application. If elected, Nationwide will deduct an
additional charge of either 0.45% or 0.30% of the daily net assets of the
variable account, depending on which option was chosen. Guaranteed Minimum
Income Benefit options provide for a minimum guaranteed value that may replace
the contract value as the amount to be annuitized under certain circumstances. A
Guaranteed Minimum Income Benefit may afford protection against unfavorable
investment performance.
EXTRA VALUE OPTION
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THE EXTRA VALUE OPTION MAY NOT BE AVAILABLE IN ALL
STATES. APPLICANTS SHOULD BE AWARE OF THE FOLLOWING
PRIOR TO ELECTING THE EXTRA VALUE OPTION:
1. ELECTING THE EXTRA VALUE OPTION WILL BE
BENEFICIAL FOR CONTRACT OWNERS ONLY IF THE
INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL
FUNDS, AND RATE OF RETURN IN THE FIXED ACCOUNT AND
GUARANTEED TERM OPTIONS, IS GREAT ENOUGH TO
COMPENSATE FOR THE REDUCTION IN CONTRACT VALUE DUE
TO THE 0.45% CHARGE;
2. NATIONWIDE MAY MAKE A PROFIT FROM THE CHARGE
ASSESSED BY THE EXTRA VALUE OPTION;
3. BECAUSE THE 0.45% CHARGE ASSOCIATED WITH THE
EXTRA VALUE OPTION WILL BE ASSESSED AGAINST THE
ENTIRE VARIABLE ACCOUNT VALUE FOR THE FIRST SEVEN
(7) CONTRACT YEARS, CONTRACT OWNERS WHO ANTICIPATE
MAKING ADDITIONAL PURCHASE PAYMENTS AFTER THE
FIRST CONTACT YEAR SHOULD CAREFULLY EXAMINE THE
EXTRA VALUE OPTION AND CONSULT THEIR FINANCIAL
ADVISER REGARDING ITS DESIRABILITY;
4. ONCE THE EXTRA VALUE OPTION IS ELECTED, IT MAY
NOT BE REVOKED; AND
5. NATIONWIDE MAY RECAPTURE ALL OR PART OF THE
AMOUNT CREDITED IN THE EVENT OF EARLY SURRENDERS,
INCLUDING REVOCATION OF THE CONTRACT DURING THE
CONTRACTUAL FREE-LOOK PERIOD.
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For an additional charge at an annualized rate of 0.45% of the daily net assets
of the variable account, the contract owner can purchase an Extra Value Option
at the time of application. Nationwide may reduce this charge.
In exchange, Nationwide will apply a credit of 3% of the purchase payment(s)
made during the first 12 months the contract is in force. This credit is funded
from Nationwide's general account. The amount credited will be allocated among
the sub-accounts, the fixed account, and/or the Guaranteed Term Options in the
same proportion that the purchase payment is allocated to the contract.
The option of electing the Extra Value Option allows prospective contract owners
to choose between two different variable account charge structures for the first
seven years of the contract.
If the credit is elected and no additional contract options are elected, the
total variable account charges under the contract will be an annualized rate of
1.40% of the daily net assets of the variable account for the first seven years
of the contract. If the Extra Value Option is not elected, total variable
account charges will be an annualized rate of 0.95% (assuming no other contract
options are elected) of the daily net assets of the variable account for the
first seven years of the contract and thereafter.
Under these circumstances, the decision to elect or decline the Extra Value
Option will depend primarily on whether the prospective contract owner believes
it is more advantageous to have:
(a) a 1.40% variable account charge for the first seven years of the
contract, plus the Extra Value Option credit; or
(b) a 0.95% variable account charge for the first seven years of the
contract, without the Extra Value Option credit.
The following table demonstrates hypothetical rates of return for contracts with
the Extra Value Option and no other optional benefits (total variable account
asset charges of 1.40%) and contracts with no additional contract options
whatsoever (total variable account asset charges of 0.95%). The figures are
based upon:
(a) a $100,000 initial purchase payment with no additional purchase payments;
(b) the deduction of variable account charges of an annualized rate of 0.95%
(base contract) and 1.40% (contract with only the Extra Value Option) of
the daily net asset value; and
(c) an assumed annual rate of return before charges of 7.75% for all years for
a period of 10 years.
7.75% RATE OF RETURN
Contract Year Base Contract Contract With Extra
(0.95% total asset Value Option (1.40%
charges) total asset
charges)
1 $106,731 $109,470
2 $113,916 $116,347
3 $121,584 $123,655
4 $129,768 $131,423
5 $138,504 $139,679
6 $147,827 $148,453
7 $157,778 $157,778
8 $168,398 $168,399
9 $179,734 $179,734
10 $191,833 $191,833
Generally, the higher the rate of return, the more advantageous the Extra Value
Option becomes and vice versa. The table above assumes no additional purchase
payments are made to the contract after the first contract anniversary. If
subsequent purchase payments are made to the contract after the first contract
anniversary (assuming a rate of return of 7.75%) the number of contract years
needed to "break-even" increases in direct correlation with the amount of
subsequent purchase payments made to the contract after the first contract
anniversary.
Amounts credited to the contract in connection with the Extra Value Option may
be recaptured if:
(a) the contract owner elects to surrender the contract pursuant to the
contractual free-look provisions; or
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(b) withdrawals that are subject to a CDSC are taken before the end of the
seventh contract year.
If the contract is surrendered pursuant to the contractual free-look, Nationwide
may recapture the full credited amount if the contract value, at the time of the
request to surrender, is equal to or greater than the purchase payments made to
the contract. In such a situation, the contract owner is entitled to keep any
earnings. If, however, the contract value is less than the purchase payments
made to the contract, Nationwide will bear the loss.
After the free look period and before the seventh contract anniversary, any
amounts withdrawn from the contract that are subject to a CDSC subjects a part
of the amount credited to recapture. For example, if a contract owner withdraws
13% of purchase payments made within the first contract year, 3% of the amount
credited will be recaptured by Nationwide, since the contract owner may withdraw
only 10% of purchase payments without a CDSC. This means that the percentage of
the amount credited to be recaptured will be the determined by the percentage of
total purchase payments reflected in the amount surrendered that is subject to
CDSC. The amount recaptured will be taken from the sub-accounts, the fixed
account and/or the Guaranteed Term Options in the same proportion as allocated
by the contract owner at the time of the withdrawal.
For contracts issued in the State of New York, after the free look period and
before the seventh contract anniversary, amounts credited under the contract may
be recaptured whenever withdrawals are made that are subject to a CDSC in
accordance with the following:
(EXTRA VALUE AMOUNT) PERCENTAGE
OF FIRST YEAR PURCHASE PAYMENTS
CONTRACT YEARS
1 and 2 3%
3,4 and 5 2%
6 and 7 1%
After year 7 0%
The percentage of the amount credited to be recaptured will be determined by the
percentage of total purchase payments reflected in the amount surrendered that
is subject to CDSC. The amount recaptured will be taken from the sub-accounts
and the fixed account in the same proportion as allocated by the contract owner
at the same time of the withdrawal.
NO AMOUNT CREDITED WILL BE SUBJECT TO RECAPTURE IF THE WITHDRAWAL IS NOT SUBJECT
TO A CDSC OR IF A DISTRIBUTION IS TAKEN AS A RESULT OF DEATH, ANNUITIZATION, OR
TO MEET MINIMUM DISTRIBUTION REQUIREMENTS UNDER THE INTERNAL REVENUE CODE. IN
ADDITION, NO RECAPTURE WILL TAKE PLACE AFTER THE SEVENTH CONTRACT YEAR.
After the end of the first seven contract years, the 0.45% charge for the Extra
Value Option will no longer be assessed and the amount credited will be fully
vested. Nationwide intends to administer the removal of the 0.45% rider option
charge by decreasing the number of units and increasing the unit value of the
sub-accounts in which the contract owner was invested at the end of the seventh
contract year. The elimination of the 0.45% charge and the adjustment in the
number of units and unit values will not affect contract owners' contract
values.
Upon annuitization of the contract, any amounts assessed for any rider options
elected will be waived and only those charges applicable to the base contract
will be assessed.
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. Contract owners of Non-Qualified Contracts may name a new contract
owner at any time before the annuitization date. Any change of contract owner
automatically revokes any prior contract owner designation. Changes in contract
ownership may result in federal income taxation and may be subject to state and
federal gift taxes.
A change in contract ownership must be submitted in writing and recorded at
Nationwide's home office. Once recorded, the change will be effective as of the
date signed. However, the change will not affect
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any payments made or actions taken by Nationwide before it was recorded. The
contract owner may also request a change in the annuitant, contingent annuitant,
contingent owner, beneficiary, or contingent beneficiary before the
annuitization date. These changes must be:
- on a Nationwide form;
- signed by the contract owner; and
- received at Nationwide's home office before the annuitization date.
Nationwide must review and approve any change requests. If the contract owner is
not a natural person and there is a change of the annuitant, distributions will
be made as if the contract owner died at the time of the change.
On the annuitization date, the annuitant will become the contract owner, unless
the contract owner is a Charitable Remainder Trust.
JOINT OWNERSHIP
Joint owners each own an undivided interest in the contract.
Contract owners can name a joint owner at any time before annuitization subject
to the following conditions:
- joint owners can only be named for Non-Qualified Contracts;
- joint owners must be spouses at the time joint ownership is requested,
unless state law requires Nationwide to allow non-spousal joint owners;
- the exercise of any ownership right in the contract will generally require
a written request signed by both joint owners;
- an election in writing signed by both contract owners must be made to
authorize Nationwide to allow the exercise of ownership rights
independently by either joint owner; and
- Nationwide will not be liable for any loss, liability, cost, or expense for
acting in accordance with the instructions of either joint owner.
CONTINGENT OWNERSHIP
The contingent owner is entitled to certain benefits under the contract if a
contract owner who is NOT the annuitant dies before the annuitization date, and
there is no surviving joint owner.
The contract owner may name or change a contingent owner at any time before the
annuitization date. To change the contingent owner, a written request must be
submitted to Nationwide. Once Nationwide has recorded the change, it will be
effective as of the date it was signed, whether or not the contract owner was
living at the time it was recorded. The change will not affect any action taken
by Nationwide before the change was recorded.
ANNUITANT
The annuitant is the person who will receive annuity payments and upon whose
continuation of life any annuity payment involving life contingencies depends.
This person must be age 85 or younger at the time of contract issuance (age 83
or younger if electing a Guaranteed Minimum Income Benefit option), unless
Nationwide approves a request for an annuitant of greater age. The annuitant may
be changed before the annuitization date with Nationwide's consent.
BENEFICIARY AND CONTINGENT BENEFICIARY
The beneficiary is the person who is entitled to the death benefit if the
annuitant dies before the annuitization date and there is no joint owner. The
contract owner can name more than one beneficiary. Multiple beneficiaries will
share the death benefit equally, unless otherwise specified.
The contract owner may change the beneficiary or contingent beneficiary during
the annuitant's lifetime by submitting a written request to Nationwide. Once
recorded, the change will be effective as of the date it was signed, whether or
not the annuitant was living at the time it was recorded. The change will not
affect any action taken by Nationwide before the change was recorded.
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OPERATION OF THE CONTRACT
MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS
MINIMUM INITIAL MINIMUM
CONTRACT PURCHASE PAYMENT SUBSEQUENT
TYPE PAYMENTS
Investment-only $15,000 $1,000
Non-Qualified $15,000 $1,000
IRA $15,000 $1,000
Roth IRA $15,000 $1,000
Tax Sheltered $15,000 $1,000
Annuity
Charitable $15,000 $1,000
Remainder Trust
SEP IRA $15,000 $1,000
Simple IRA $15,000 $1,000
Subsequent purchase payments are not permitted for contracts issued in the State
of Oregon and may not be permitted in other states under certain circumstances.
If the contract owner elects the Reduced Purchase Payment Option, minimum
initial and subsequent purchase payments will be reduced accordingly.
If the contract owner elects the Extra Value Option, amounts credited to the
contract may not be used to meet the minimum initial and subsequent purchase
payment requirements.
Guaranteed Term Options
Guaranteed Term Options are separate investment options under the contract. The
minimum amount that may be allocated to a Guaranteed Term Option is $1,000.
PRICING
Initial purchase payments allocated to sub-accounts will be priced at the
accumulation unit value determined no later than 2 business days after receipt
of an order to purchase if the application and all necessary information are
complete. If the application is not complete, Nationwide may retain a 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.
Subsequent purchase payments will be priced based on the next available
accumulation unit value after the payment is received. 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.
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, contract value may be affected since the contract owner will
not have access to their account.
ALLOCATION OF PURCHASE PAYMENTS
Nationwide allocates purchase payments to sub-accounts, the fixed account,
and/or Guaranteed Term Options as instructed by the contract owner. Shares of
the underlying mutual funds allocated to the sub-accounts are purchased at net
asset value, then converted into accumulation units. Contract owners can change
allocations or make exchanges among the sub-accounts, fixed account or
Guaranteed Term Options. However, no change may be
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made that would result in an amount less than 1% of the purchase payments being
allocated to any sub-account. Certain transactions may be subject to conditions
imposed by the underlying mutual funds, as well as those set forth in the
contract.
DETERMINING THE CONTRACT VALUE
The contract value is the sum of:
(1) the value of amounts allocated to the sub-accounts of the variable
account; and
(2) amounts allocated to the fixed account; and
(3) amounts allocated to a Guaranteed Term Option.
If part or all of the contract value is surrendered, or charges are assessed
against the whole contract value, Nationwide will deduct a proportionate amount
from each sub-account, the fixed account and any Guaranteed Term Option based on
current cash values.
Determining Variable Account Value - Valuing an Accumulation Unit
Purchase payments or transfers allocated to sub-accounts are accounted for in
accumulation units. Accumulation unit values (for each sub-account) are
determined by calculating the net investment factor for the underlying mutual
funds for the current valuation period and multiplying that result with the
accumulation unit values determined on the previous valuation period.
Nationwide uses the net investment factor as a way to calculate the investment
performance of a sub-account from valuation period to valuation period. For each
sub-account, the net investment factor shows the investment performance of the
underlying mutual fund in which a particular sub-account invests, including the
charges assessed against that sub-account for a valuation period.
The net investment factor for any particular sub-account is determined by
dividing (a) by (b), and then subtracting (c) from the result, where:
(a) is:
(1) the net asset value of the underlying mutual fund as of the end of the
current valuation period; and
(2) the per share amount of any dividend or income distributions made by
the underlying mutual fund (if the ex-dividend date occurs during the
current valuation period).
(b) is the net asset value of the underlying mutual fund 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 ranging from 0.95% to 2.70% of the daily
net assets of the variable account, depending on which contract features
the contract owner chooses.
Based on the change in the net investment factor, the value of an accumulation
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 underlying mutual
fund shares because of the deduction of variable account charges.
Though the number of accumulation units will not change as a result of
investment experience, the value of an accumulation unit may increase or
decrease from valuation period to valuation period.
Determining Fixed Account Value
Nationwide determines the value of the fixed account by:
(1) adding all amounts allocated to the fixed account, minus amounts
previously transferred or withdrawn; and
(2) adding any interest earned on the amounts allocated.
Determining the Guaranteed Term Option Value
Nationwide determines the value of a Guaranteed Term Option by:
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(1) adding all amounts allocated to any Guaranteed Term Option, minus
amounts previously transferred or withdrawn (which may be subject to a
market value adjustment); and
(2) adding any interest earned on the amounts allocated to any Guaranteed
Term Option.
TRANSFERS PRIOR TO ANNUITIZATION
Transfers from the Fixed Account to the Variable Account or a Guaranteed Term
Option
Fixed account allocations may be transferred to the variable account or to a
Guaranteed Term Option only upon reaching the end of an interest rate guarantee
period. Normally, Nationwide will permit 100% of such fixed account allocations
to be transferred to the variable account or a Guaranteed Term Option; however
Nationwide may, under certain economic conditions and at its discretion, limit
the maximum transferable amount. Under no circumstances will the maximum
transferable amount be less than 10% of the fixed account allocation reaching
the end of an interest rate guarantee period. Transfers of the fixed account
allocations must be made within 45 days after reaching the end of an interest
rate guarantee period.
Contract owners who use Dollar Cost Averaging may transfer from the fixed
account to the variable account (but not to Guaranteed Term Options) under the
terms of that program (see "Dollar Cost Averaging").
Transfers to the Fixed Account
Variable account allocations may be transferred to the fixed account at any
time. Normally, Nationwide will not restrict transfers from the variable account
to the fixed account; however, Nationwide may establish a maximum transfer limit
from the variable account to the fixed account. Except as noted below, under no
circumstances will the transfer limit be less than 10% of the current value of
the variable account, less any transfers made in the 12 months preceding the
date the transfer is requested, but not including transfers made prior to the
imposition of the transfer limit. However, where permitted by state law,
Nationwide reserves the right to refuse transfers or purchase payments to the
fixed account (whether from the variable account or a Guaranteed Term Option)
when the fixed account value is greater than or equal to 30% of the contract
value at the time the purchase payment is made or the transfer is requested.
Transfers from a Guaranteed Term Option
Transfers from a Guaranteed Term Option prior to maturity are subject to a
market value adjustment.
Transfers Among the Sub-Accounts
Allocations may be transferred among the sub-accounts once per valuation period.
TRANSFERS AFTER ANNUITIZATION
After annuitization, transfers may only be made on the anniversary of the
annuitization date.
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.
Amounts transferred to the variable account will receive the accumulation unit
value next determined after the transfer request is received.
Interest Rate Guarantee Period
The interest rate guarantee period is the period of time that the fixed account
interest rate is guaranteed to remain the same. Within 45 days of the end of an
interest rate guarantee period, transfers may be made from the fixed account to
the variable account or to the Guaranteed Term Options. Nationwide will
determine the amount that may be transferred and will declare this amount at the
end of the guarantee period. This
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amount will not be less than 10% of the amount in the fixed account that is
maturing.
For new purchase payments allocated to the fixed account, or transfers to the
fixed account from the variable account or a Guaranteed Term Option, this period
begins on the date of deposit or transfer and ends on the one year anniversary
of the deposit or transfer. The guaranteed interest rate period may last for up
to 3 months beyond the 1 year anniversary because guaranteed terms end on the
last day of a calendar quarter.
The interest rate guarantee period does not in any way refer to interest rate
crediting practices connected with Guaranteed Term Options.
During an interest rate guarantee period, transfers cannot be made from the
fixed account, and amounts transferred to the fixed account must remain on
deposit.
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 underlying mutual fund to process
transactions. This can potentially disadvantage contract owners not using market
timing firms. To avoid this, Nationwide may modify transfer and exchange rights
of contract owners who use market timing firms (or other third parties) to
transfer or exchange funds on their behalf.
The exchange and 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 exchange and 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 Individual Retirement Annuity,
SEP IRA, Simple IRA and Roth IRA refunds will be a return of purchase payments.
State and/or federal law may provide additional free look privileges.
Contract owners who have elected the Extra Value Option and subsequently
terminate the contract under the free look provision will forfeit any amounts
credited to the contract. For those jurisdictions that allow a return of
contract value, the contract owner will retain any earnings attributable to the
amount credited; all losses attributable to the amount credited will be incurred
by Nationwide.
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.
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SURRENDER (REDEMPTION)
Contract owners may surrender some or all of their contract value before the
earlier of the annuitization date or the annuitant's death. Surrender requests
must be in writing and Nationwide may require additional information. When
taking a full surrender, the contract must accompany the written request.
Nationwide may require a signature guarantee.
If the Extra Value Option has been elected, and the amount withdrawn is subject
to a CDSC, then for the first seven contract years only, a portion of the amount
credited under the Extra Value Option may be recaptured. No recapture will take
place after the seventh contract year. The amount credited will not, however, be
subject to recapture if a withdrawal not subject to the CDSC is being made (see
"Extra Value Option").
Nationwide will pay any amounts surrendered from the sub-accounts within 7 days.
However, Nationwide may suspend or postpone payment when it is unable to price a
purchase payment or transfer. Nationwide is required by state law to reserve the
right to postpone payment of assets in the fixed account for a period of up to
six months from the date of the surrender request.
PARTIAL SURRENDERS (PARTIAL REDEMPTIONS)
Nationwide will surrender accumulation units from the sub-accounts and an amount
from the fixed account and Guaranteed Term Options. The amount withdrawn from
each investment option will be in proportion to the value in each option at the
time of the surrender request.
A CDSC may apply. The contract owner may take the CDSC from either:
(a) the amount requested; or
(b) the contract value remaining after the contract owner has received the
amount requested.
If the contract owner does not make a specific election, any applicable CDSC
will be taken from the contract value remaining after the contract owner has
received the amount requested.
The CDSC deducted is a percentage of the amount requested by the contract owner.
Amounts deducted for CDSC are not subject to subsequent CDSC.
FULL SURRENDERS (FULL REDEMPTIONS)
The contract value upon full surrender may be more or less than the total of all
purchase payments made to the contract. The contract value will reflect variable
account charges, underlying mutual fund charges and the investment performance
of the underlying mutual funds. A CDSC may apply.
SURRENDERS UNDER A TEXAS OPTIONAL RETIREMENT PROGRAM OR A LOUISIANA OPTIONAL
RETIREMENT PLAN
Redemption restrictions apply to contracts issued under the Texas Optional
Retirement Program or the Louisiana Optional Retirement Plan.
The Texas Attorney General has ruled that participants in contracts issued under
the Texas Optional Retirement Program may only take withdrawals if:
- the participant dies;
- the participant retires;
- the participant terminates employment due to total disability; or
- the participant that works in a Texas public institution of higher
education terminates employment.
A participant under a contract issued under the Louisiana Optional Retirement
Plan may only take distributions from the contract upon retirement or
termination of employment. All retirement benefits under this type of plan must
be paid as lifetime income; lump sum cash payments are not permitted, except for
death benefits.
Due to the restrictions described above, a participant under either of these
plans will not be able to withdraw cash values from the
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contract unless one of the applicable conditions is met. However, contract value
may be transferred to other carriers, subject to any CDSC.
Nationwide issues this contract to participants in the Texas Optional Retirement
Program in reliance upon and in compliance with Rule 6c-7 of the Investment
Company Act of 1940. Nationwide issues this contract to participants in the
Louisiana Optional Retirement Plan in reliance upon and in compliance with an
exemptive order that Nationwide received from the SEC on August 22, 1990.
SURRENDERS UNDER A TAX SHELTERED ANNUITY
Contract owners of a Tax Sheltered Annuity may surrender part or all of their
contract value before the earlier of the annuitization date or the annuitant's
death, except as provided below:
A. Contract value attributable to contributions made under a qualified cash or
deferred arrangement (within the meaning of Internal Revenue Code Section
402(g)(3)(A)), a salary reduction agreement (within the meaning of Internal
Revenue Code Section 402(g)(3)(C)), or transfers from a Custodial Account
(described in Section 403(b)(7) of the Internal Revenue Code), may be
surrendered only:
1. when the contract owner reaches 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 such hardship surrender may
NOT include any income earned on salary reduction contributions.
B. The surrender limitations described in Section A also apply to:
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 403(b)(7) Custodial Accounts (except that
earnings and employer contributions as of December 31, 1988 in such
Custodial Accounts may be withdrawn in the case of hardship).
C. Any distribution other than the above, including a ten day free look
cancellation of the contract (when available) may result in taxes,
penalties, and/or retroactive disqualification of a Tax Sheltered Annuity.
In order to prevent disqualification of a Tax Sheltered Annuity after a ten day
free look cancellation, Nationwide will transfer the proceeds to another Tax
Sheltered Annuity upon proper direction by the contract owner.
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.
LOAN PRIVILEGE
The loan privilege is ONLY available to owners of Tax Sheltered Annuities. These
contract owners can take loans from the contract value beginning 30 days after
the contract is issued up to the annuitization date. Loans are subject to the
terms of the contract, the plan, and the Internal Revenue Code. Nationwide may
modify the terms of a loan to comply with changes in applicable law.
MINIMUM & MAXIMUM LOAN AMOUNTS
Contract owners may borrow a minimum of $1,000, unless Nationwide is required by
law to allow a lesser minimum amount. Each loan must individually satisfy the
contract minimum amount.
Nationwide will calculate the maximum nontaxable loan amount based upon
information provided by the participant or the employer.
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Loans may be taxable if a participant has additional loans from other plans. The
total of all outstanding loans must not exceed the following limits:
CONTRACT MAXIMUM OUTSTANDING LOAN
VALUES BALANCE ALLOWED
NON-ERISA PLANS up to up to 80% of contract
$20,000 value (not more than
$10,000)
$20,000 up to 50% of contract
and over value (not more than
$50,000*)
ERISA PLANS All up to 50% of contract
value (not more than
$50,000*)
* The $50,000 limits will be reduced by the highest outstanding balance owed
during the previous 12 months.
For salary reduction Tax Sheltered Annuities, loans may be secured only by the
contract value.
LOAN PROCESSING FEE
Nationwide may charge a loan processing fee at the time each new loan is
processed. If assessed, this fee compensates Nationwide for expenses related to
administering and processing loans. Loans are not available in all states. In
addition, some states may not allow Nationwide to assess a Loan Processing Fee.
The fee is taken from the sub-accounts, fixed account, and Guaranteed Term
Options in proportion to the contract value at the time the loan is processed.
HOW LOAN REQUESTS ARE PROCESSED
All loans are made from the collateral fixed account. Nationwide transfers
accumulation units in proportion to the assets in each sub-account to the
collateral fixed account until the requested amount is reached. If there are not
enough accumulation units available in the contract to reach the requested loan
amount, Nationwide next transfers contract value from the fixed account. Any
remaining required collateral will be transferred from the Guaranteed Term
Options. Transfers from the Guaranteed Term Options may be subject to a market
value adjustment. No CDSC will be deducted on transfers related to loan
processing.
LOAN INTEREST
The outstanding loan balance in the collateral fixed account is credited with
interest until the loan is repaid in full. The interest rate will be 2.25% less
than the loan interest rate fixed by Nationwide. The interest rate is guaranteed
never to fall below 3.0%.
Specific loan terms are disclosed at the time of loan application or issuance.
LOAN REPAYMENT
Loans must be repaid in five years. However, if the loan is used to purchase the
contract owner's principal residence, the contract owner has 15 years to repay
the loan.
Contract owners must identify loan repayments as loan repayments or they will be
treated as purchase payments and will not reduce the outstanding loan. Payments
must be substantially level and made at least quarterly.
Loan repayments will consist of principal and interest in amounts set forth in
the loan agreement. Repayments are allocated to the sub-accounts in accordance
with the contract, unless Nationwide and the contract owner have agreed to amend
the contract at a later date on a case by case basis.
Loan repayments to the Guaranteed Term Options must be at least $1,000. If the
proportional share of the repayment to the Guaranteed Term Option is less than
$1,000, that portion of the repayment will be allocated to the NSAT Money Market
Fund or the W&R Target Funds, Inc. - Money Market Portfolio unless the contract
owner directs otherwise.
DISTRIBUTIONS & ANNUITY PAYMENTS
Distributions made from the contract while a loan is outstanding will be reduced
by the amount of the outstanding loan plus accrued interest if:
- the contract is surrendered;
- the contract owner/annuitant dies;
- the contract owner who is not the annuitant dies prior to
annuitization; or
- annuity payments begin.
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TRANSFERRING THE CONTRACT
Nationwide reserves the right to restrict any transfer of the contract while the
loan is outstanding.
GRACE PERIOD & LOAN DEFAULT
If a loan payment is not made when due, interest will continue to accrue. A
grace period may be available (please refer to the terms of the loan agreement).
If a loan payment is not made by the end of the applicable grace period, the
entire loan will be treated as a deemed distribution and will be taxable to the
borrower. This deemed distribution may also be subject to an early withdrawal
tax penalty by the Internal Revenue Service.
After default, interest will continue to accrue on the loan. Defaulted amounts,
plus interest, are deducted from the contract value when the participant is
eligible for a distribution of at least that amount. Additional loans are not
available while a previous loan is in default.
ASSIGNMENT
Contract rights are personal to the contract owner and may not be assigned
without Nationwide's written consent.
A Non-Qualified Contract owner may assign some or all rights under the contract.
An assignment must occur before annuitization while the annuitant is alive. Once
proper notice of assignment is recorded by Nationwide's home office, the
assignment will become effective as of the date the written request was signed.
Investment-only Contracts, Individual Retirement Annuities, Roth IRAs, SEP IRAs,
Simple IRAs, and Tax Sheltered Annuities may not be assigned, pledged or
otherwise transferred except where allowed by law.
Nationwide is not responsible for the validity or tax consequences of any
assignment. Nationwide is not liable for any payment or settlement made before
the assignment is recorded. Assignments will not be recorded until Nationwide
receives sufficient direction from the contract owner and the assignee regarding
the proper allocation of contract rights.
Amounts pledged or assigned will be treated as distributions and will be
included in gross income to the extent that the cash value exceeds the
investment in the contract for the taxable year in which it was pledged or
assigned. Amounts assigned may be subject to a tax penalty equal to 10% of the
amount included in gross income.
Assignment of the entire contract value may cause the portion of the contract
value exceeding the total investment in the contract and previously taxed
amounts to be included in gross income for federal income tax purposes each year
that the assignment is in effect.
CONTRACT OWNER SERVICES
ASSET REBALANCING
Asset rebalancing is the automatic reallocation of contract values to the
sub-accounts on a predetermined percentage basis. Asset rebalancing is not
available for assets held in the fixed account or the Guaranteed Term Options.
Requests for asset rebalancing must be on a Nationwide form.
Asset rebalancing occurs every three months or on another frequency if permitted
by Nationwide. If the last day of the three-month period falls on a Saturday,
Sunday, recognized holiday, or any other day when the New York Stock Exchange is
closed, asset rebalancing will occur on the next business day.
Asset rebalancing may be subject to employer limitations or restrictions for
contracts issued to a Tax Sheltered Annuity plan. Contract owners should consult
a financial adviser to discuss the use of asset rebalancing.
Nationwide reserves the right to stop establishing new asset rebalancing
programs. Nationwide also reserves the right to assess a processing fee for this
service.
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DOLLAR COST AVERAGING
Dollar Cost Averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from the fixed account and/or certain sub-accounts into other
sub-accounts. Nationwide does not guarantee that this program will result in
profit or protect contract owners from loss.
Contract owners direct Nationwide to automatically transfer specified amounts
from the fixed account and the W&R Target Funds, Inc. - Money Market Portfolio
to any other underlying mutual fund. Dollar Cost Averaging transfers may not be
directed to Guaranteed Term Options.
Transfers occur monthly or on another frequency if permitted by Nationwide.
Nationwide will process transfers until either the value in the originating
investment option is exhausted, or the contract owner instructs Nationwide in
writing to stop the transfers.
Nationwide reserves the right to stop establishing new Dollar Cost Averaging
programs. Nationwide also reserves the right to assess a processing fee for this
service.
Dollar Cost Averaging from the Fixed Account
Transfers from the fixed account must be equal to or less than 1/30th of the
fixed account value at the time the program is requested. A Dollar Cost
Averaging program which transfers amounts from the fixed account to the variable
account is not the same as an Enhanced Rate Dollar Cost Averaging program.
Contract owners that wish to utilize Dollar Cost Averaging from the fixed
account should first inquire whether any Enhanced Rate Dollar Cost Averaging
programs are available.
Enhanced Rate Dollar Cost Averaging
Nationwide may, from time to time, offer Enhanced Rate Dollar Cost Averaging
programs. Contract owners may participate in this program if their contract
value is $10,000 or more. Dollar Cost Averaging transfers for this program may
only be made from the fixed account. Such Enhanced Rate Dollar Cost Averaging
programs allow the contract owner to earn a higher rate of interest on assets in
the fixed account than would normally be credited when not participating in the
program. Each enhanced interest rate is guaranteed for as long as the
corresponding program is in effect. Nationwide will process transfers until
either amounts in the enhanced rate fixed account are exhausted, or the contract
owner instructs Nationwide in writing to stop the transfers. Nationwide is
required by state law to reserve the right to postpone payment of assets in the
fixed account for a period of up to six months from the date of the surrender
request. For this program only, when a written request to discontinue transfers
is received, Nationwide will automatically transfer the remaining amount in the
enhanced rate fixed account to the W&R Target Funds, Inc. - Money Market
Portfolio.
SYSTEMATIC WITHDRAWALS
Systematic withdrawals allow contract owners to receive a specified amount (of
at least $100) on a monthly, quarterly, semi-annual, or annual basis. Requests
for systematic withdrawals and requests to discontinue systematic withdrawals
must be in writing.
The withdrawals will be taken from the sub-accounts and the fixed account
proportionately unless Nationwide is instructed otherwise. Systematic
withdrawals are not available from the Guaranteed Term Options.
Nationwide will withhold federal income taxes from systematic withdrawals unless
otherwise instructed by the contract owner. The Internal Revenue Service may
impose a 10% penalty tax if the contract owner is under age 59 1/2 unless the
contract owner has made an irrevocable election of distributions of
substantially equal payments.
If the contract owner takes systematic withdrawals, the maximum amount that can
be withdrawn annually without a CDSC is the greatest of:
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(1) 10% of all purchase payments made to the contract as of the withdrawal
date;
(2) an amount withdrawn to meet minimum distribution requirements under
the Internal Revenue Code; or
(3) a percentage of the contract value based on the contract owner's age,
as shown in the table below:
PERCENTAGE OF
CONTRACT OWNER'S CONTRACT VALUE
AGE
Under age 59 1/2 5%
Age 59 1/2 through age 61 7%
Age 62 through age 64 8%
Age 65 through age 74 10%
Age 75 and over 13%
Contract value and contract owner's age are determined as of the date the
request for the withdrawal program is recorded by Nationwide's home office. For
joint owners, the older joint owner's age will be used.
If total amounts withdrawn in any contract year exceed the CDSC-free amount
described above, those amounts will only be eligible for the 10% of purchase
payment CDSC-free withdrawal privilege described in the "Contingent Deferred
Sales Charge" section. The total amount of CDSC for that contract year will be
determined in accordance with that provision.
The CDSC-free withdrawal privilege for systematic withdrawals is non-cumulative.
Free amounts not taken during any contract year cannot be taken as free amounts
in a subsequent contract year.
Nationwide reserves the right to stop establishing new systematic withdrawal
programs. Nationwide also reserves the right to assess a processing fee for this
service. Systematic withdrawals are not available before the end of the ten-day
free look period (see "Right to Revoke").
ANNUITY COMMENCEMENT DATE
The annuity commencement date is the date on which annuity payments are
scheduled to begin. The contract owner may change the annuity commencement date
before annuitization. This change must be in writing and approved by Nationwide.
ANNUITIZING THE CONTRACT
ANNUITIZATION DATE
The annuitization date is the date that annuity payments begin. It will be the
first day of a calendar month unless otherwise agreed, and must be at least 2
years after the contract is issued. If the contract is issued to fund a Tax
Sheltered Annuity, annuitization may occur during the first 2 years subject to
Nationwide's approval.
ANNUITIZATION
Annuitization is the period during which annuity payments are received. It is
irrevocable once payments have begun. Upon arrival of the annuitization date,
the annuitant must choose:
(1) an annuity payment option; and
(2) either a fixed payment annuity, variable payment annuity, or an available
combination.
Nationwide guarantees that each payment under a fixed payment annuity will be
the same throughout annuitization. Under a variable payment annuity, the amount
of each payment will vary with the performance of the underlying mutual funds
chosen by the contract owner.
FIXED PAYMENT ANNUITY
A fixed payment annuity is an annuity where the amount of the annuity payments
remains level.
The first payment under a fixed payment annuity is determined on the
annuitization date on an "age last birthday" basis by:
(1) deducting applicable premium taxes from the total contract value; then
(2) applying the contract value amount specified by the contract owner to the
fixed payment annuity table for the annuity payment option elected.
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Subsequent payments will remain level unless the annuity payment option elected
provides otherwise. Nationwide does not credit discretionary interest during
annuitization.
VARIABLE PAYMENT ANNUITY
A variable payment annuity is an annuity where the amount of the annuity
payments will vary depending on the performance of the underlying mutual funds
selected.
---------------------------------------------------------
A VARIABLE PAYMENT ANNUITY MAY NOT BE
ELECTED WHEN EXERCISING THE GUARANTEED
MINIMUM INCOME BENEFIT OPTION.
---------------------------------------------------------
The first payment under a variable payment annuity is determined on the
annuitization date on an "age last birthday" basis by:
(1) deducting applicable premium taxes from the total contract value; then
(2) applying the contract value amount specified by the contract owner to the
variable payment annuity table for the annuity payment option elected.
The dollar amount of the first payment is converted into a set number of annuity
units that will represent each monthly payment. This is done by dividing the
dollar amount of the first payment by the value of an annuity unit as of the
annuitization date. This number of annuity units remains fixed during
annuitization.
The second and subsequent payments are determined by multiplying the fixed
number of annuity units by the annuity unit value for the valuation period in
which the payment is due. The amount of the second and subsequent payments will
vary with the performance of the selected underlying mutual funds. Nationwide
guarantees that variations in mortality experience from assumptions used to
calculate the first payment will not affect the dollar amount of the second and
subsequent payments.
Assumed Investment Rate
An assumed investment rate is the percentage rate of return assumed to determine
the amount of the first payment under a variable payment annuity. Nationwide
uses the assumed investment rate of 3.5% to calculate the first annuity payment
and to calculate the investment performance of an underlying mutual fund in
order to determine subsequent payments under a variable payment annuity. An
assumed investment rate is the percentage rate of return required to maintain
level variable annuity payments. Subsequent variable annuity payments may be
more or less than the first payment based on whether actual investment
performance of the underlying mutual funds is higher or lower than the assumed
investment rate of 3.5%.
Value of an Annuity Unit
Annuity unit values for sub-accounts are determined by multiplying the net
investment factor for the valuation period for which the annuity unit is being
calculated by the immediately preceding valuation period's annuity unit value,
and multiplying the result by an interest factor to neutralize the assumed
investment rate of 3.5% per annum built into the variable payment annuity
purchase rate basis in the contracts.
Exchanges among Underlying Mutual Funds
Exchanges among underlying mutual funds during annuitization must be in writing.
Exchanges will occur on each anniversary of the annuitization date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Payments are made based on the annuity payment option selected, unless:
- the amount to be distributed is less than $5,000, in which case
Nationwide may make one lump sum payment of the contract value; or
- an annuity payment would be less than $50, in which case Nationwide
can change the frequency of payments to intervals that will result in
payments of at least $50. Payments will be made at least annually.
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GUARANTEED MINIMUM INCOME BENEFIT OPTIONS ("GMIB")
What is a GMIB?
A GMIB is a benefit which ensures the availability of a minimum amount when the
contract owner wishes to annuitize the contract. This minimum amount, referred
to as the Guaranteed Annuitization Value, may be used at specified times to
provide a guaranteed level of determinable lifetime annuity payments. The GMIB
may provide protection in the event of lower contract values that may result
from the investment performance of the contract.
How is the Guaranteed Annuitization Value Determined?
There are two options available at the time of application. The Guaranteed
Annuitization Value is determined differently based on which option the contract
owner elects.
Calculation Under GMIB Option 1
The Guaranteed Annuitization Value is equal to (a) - (b), but will never be
greater than 200% of all purchase payments, where:
(a) is the sum of all purchase payments, plus interest accumulated at a
compounded annual rate of 5% starting at the date of issue and ending on
the contract anniversary occurring immediately prior to the annuitant's
86th birthday;
(b) is the reduction to (a) due to surrenders made from the contract. All such
reductions will be proportionately the same as reductions to the contract
value caused by surrenders. For example, a surrender which reduces the
contract value by 25% will also reduce the Guaranteed Annuitization Value
by 25%.
Special Restrictions for GMIB Option 1
After the first contract year, if the value of the contract owner's fixed
account allocation becomes greater than 30% of the contract value in any
contract year due to:
(1) the application of additional purchase payments;
(2) surrenders; or
(3) transfers from the variable account,
then 0% interest will accrue in that contract year for purposes of calculating
the Guaranteed Annuitization Value.
If the contract owner's fixed account allocation becomes greater than 30% of the
contract value solely as a result of fluctuations in the value of the variable
account, then interest will continue to accrue for the purposes of the
Guaranteed Annuitization Value at 5% annually, subject to the other terms and
conditions outlined herein.
Calculation Under GMIB Option 2
The Guaranteed Annuitization Value will be equal to the highest contract value
on any contract anniversary occurring prior to the annuitant's 86th birthday,
less an adjustment for amounts surrendered, plus purchase payments received
after that contract anniversary.
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GMIB Illustrations for GMIB Option 1
The following charts illustrate the amount of income that will be provided to an
annuitant if the contract owner annuitizes the contract at the 7th, 10th or 15th
contract anniversary date, using the GMIB.
The illustrations assume the following:
- An initial purchase payment of $100,000 is made to the contract and
allocated to the variable account;
- There are no surrenders from the contract or transfers to the fixed account
(raising the fixed account value to greater than 30% of the contract
value);
- The contract is issued to a MALE at age 55, 65 or 70; and
- A Life Annuity with 120 Months Guaranteed Fixed Payment Annuity Option is
elected.
<TABLE>
<CAPTION>
7 Years in Accumulation
$140,710.04 for GMIB at Annuitization
Male Age at Issue Male Age at Annuitization GMIB Purchase Rate* Monthly GMIB
<S> <C> <C> <C>
55 62 $4.72 $664.15
65 72 $5.96 $838.63
70 77 $6.79 $955.42
</TABLE>
<TABLE>
<CAPTION>
10 Years in Accumulation
$162,889.46 for GMIB at Annuitization
Male Age at Issue Male Age at Annuitization GMIB Purchase Rate* Monthly GMIB
<S> <C> <C> <C>
55 65 $5.03 $819.33
65 75 $6.44 $1,049.01
70 80 $7.32 $1,192.35
</TABLE>
<TABLE>
<CAPTION>
15 Years in Accumulation
$200,000.00 for GMIB at Annuitization
Male Age at Issue Male Age at Annuitization GMIB Purchase Rate* Monthly GMIB
<S> <C> <C> <C>
55 70 $5.66 $1,132.00
65 80 $7.32 $1,464.00
70 85 $8.18 $1,636.00
</TABLE>
*Guaranteed Monthly Benefit per $1,000 applied
The illustrations should be used as a tool to assist an investor in determining
whether purchasing and exercising a GMIB option is right for them. The
guaranteed purchase rates assumed in the illustrations may not apply in some
states, or for contracts issued under an employer sponsored plan. Different
guaranteed purchase rates will apply for females, for males who annuitize at
ages other than the ages shown above, or for annuitizations under other annuity
payment options. Where different guaranteed purchase rates apply, GMIB amounts
shown above will be different. In all cases, the guaranteed purchase rates used
to calculate the GMIB will be the same as the purchase rates guaranteed in the
contract for fixed annuitizations without the GMIB.
The purchase rates available in connection with annuitization options under a
GMIB are minimum guaranteed purchase rates. Alternative purchase rates, which
may be more favorable, may apply to annuitizations which occur without a GMIB
option.
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When May the Guaranteed Annuitization Value be Used?
The contract owner may use the Guaranteed Annuitization Value by annuitizing the
contract during the thirty day period following any contract anniversary:
(1) after the contract has been in effect for seven years; AND
(2) the annuitant has attained age 60.
What Annuity Payment Options May Be Used With the Guaranteed Annuitization
Value?
The contract owner may elect any life contingent FIXED ANNUITY PAYMENT OPTION
calculated using the guaranteed annuity purchase rates set forth in the
contract. Such Fixed Annuity Payment Options include:
- Life Annuity;
- Joint and Last Survivor Annuity; and
- Life Annuity with 120 or 240 Monthly Payments Guaranteed.
Other GMIB Terms and Conditions
**PLEASE READ CAREFULLY**
- The GMIB must be elected at the time of application.
- The annuitant must be age 82 or younger at the time the contract is
issued.
- The GMIB is irrevocable and will remain for as long as the contract
remains in force.
-------------------------------------------------------------------------------
IMPORTANT CONSIDERATIONS TO KEEP IN MIND
REGARDING THE GMIB OPTION
While a GMIB does provide a Guaranteed Annuitization Value, A GMIB MAY NOT BE
APPROPRIATE FOR ALL INVESTORS and should be understood completely and analyzed
thoroughly before being elected.
- A GMIB DOES NOT in any way guarantee the performance of any underlying
mutual fund, or any other investment option available under the contract.
- Once elected, the GMIB is irrevocable, meaning that even if the investment
performance of underlying mutual funds or other available investment
options surpasses the minimum guarantees associated with the GMIB, the GMIB
charges will still be assessed.
- The GMIB in no way restricts or limits the rights of contract owners to
annuitize the contract at other times permitted under the contract, nor
will it in any way restrict the right to annuitize the contract using
contract values that may be higher than the Guaranteed Annuitization Value.
- Please take advantage of the guidance of a qualified financial adviser in
evaluating the GMIB options, and all other aspects of the contract.
- GMIB may not be approved in all state jurisdictions.
-------------------------------------------------------------------------------
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ANNUITY PAYMENT OPTIONS
Contract owners must elect an annuity payment option before the annuitization
date. The annuity payment options are:
(1) LIFE ANNUITY - An annuity payable periodically, but at least annually, for
the lifetime of the annuitant. Payments will end upon the annuitant's
death. For example, if the annuitant dies before the second annuity payment
date, the annuitant will receive only one annuity payment. The annuitant
will only receive two annuity payments if he or she dies before the third
annuity payment date, and so on.
(2) JOINT AND LAST SURVIVOR ANNUITY - An annuity payable periodically, but at
least annually, during the joint lifetimes of the annuitant and a
designated second individual. If one of these parties dies, payments will
continue for the lifetime of the survivor. As is the case under option 1,
there is no guaranteed number of payments. Payments end upon the death of
the last surviving party, regardless of the number of payments received.
(3) LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED - An annuity
payable monthly during the lifetime of the annuitant. If the annuitant dies
before all of the guaranteed payments have been made, payments will
continue to the end of the guaranteed period and will be paid to a designee
chosen by the annuitant at the time the annuity payment option was elected.
The designee may elect to receive the present value of the remaining
guaranteed payments in a lump sum. The present value will be computed as of
the date Nationwide receives the notice of the annuitant's death.
Not all of the annuity payment options may be available in all states. Contract
owners may request other options before the annuitization date. These options
are subject to Nationwide's approval.
No distribution for Non-Qualified Contracts will be made until an annuity
payment option has been elected. Individual Retirement Annuities and Tax
Sheltered Annuities are subject to the "minimum distribution" requirements set
forth in the plan, contract, and the Internal Revenue Code.
DEATH BENEFITS
DEATH OF CONTRACT OWNER - NON-QUALIFIED CONTRACTS
If the contract owner who is not the annuitant dies before the annuitization
date, the joint owner becomes the contract owner. If no joint owner is named,
the contingent owner becomes the contract owner. If no contingent owner is
named, the last surviving contract owner's estate becomes the contract owner.
If the contract owner and annuitant are the same, and the contract
owner/annuitant dies before the annuitization date, the contingent owner will
not have any rights in the contract unless the contingent owner is also the
beneficiary.
Distributions under Non-Qualified Contracts will be made pursuant to the
"Required Distributions for Non-Qualified Contracts" provision.
DEATH OF ANNUITANT - NON-QUALIFIED CONTRACTS
If the annuitant who is not a contract owner dies before the annuitization date,
a death benefit is payable to the beneficiary unless a contingent annuitant is
named. If a contingent annuitant is named, the contingent annuitant becomes the
annuitant and no death benefit is payable.
The beneficiary may elect to receive the death benefit:
(1) in a lump sum;
(2) as an annuity; or
(3) in any other manner permitted by law and approved by Nationwide.
The beneficiary must notify Nationwide of this election within 60 days of the
annuitant's death.
If no beneficiary survives the annuitant, the contingent beneficiary receives
the death benefit. Contingent beneficiaries will share the
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death benefit equally, unless otherwise specified.
If no beneficiaries or contingent beneficiaries survive the annuitant, the
contract owner or the last surviving contract owner's estate will receive the
death benefit.
If the contract owner is a Charitable Remainder Trust and the annuitant dies
before the annuitization date, the death benefit will accrue to the Charitable
Remainder Trust. Any designation in conflict with the Charitable Remainder
Trust's right to the death benefit will be void.
If the annuitant dies after the annuitization date, any benefit that may be
payable will be paid according to the selected annuity payment option.
DEATH OF CONTRACT OWNER/ANNUITANT
If a contract owner who is also the annuitant dies before the annuitization
date, a death benefit is payable according to the "Death of the Annuitant -
Non-Qualified Contracts" provision.
A joint owner will receive a death benefit if a contract owner/annuitant dies
before the annuitization date.
If the contract owner/annuitant dies after the annuitization date, any benefit
that may be payable will be paid according to the selected annuity payment
option.
DEATH BENEFIT PAYMENT
Contract owners may select one of three death benefits available under the
contract at the time of application (not all death benefit options may be
available in all states). If no selection is made at the time of application,
the death benefit will be the Five-Year Reset Death Benefit.
The death benefit value is determined as of the date Nationwide receives:
(1) proper proof of the annuitant's death;
(2) an election specifying the distribution method; and
(3) any state required form(s).
Five-Year Reset Death Benefit (Standard Contractual Death Benefit for all
contracts)
If the annuitant dies before the annuitization date, the death benefit will be
the greatest of:
(1) the contract value;
(2) the total of all purchase payments, less an adjustment for amounts
surrendered; or
(3) the contract value as of the most recent five year contract anniversary
before the annuitant's 86th birthday, less an adjustment for amounts
surrendered, plus purchase payments received after that five year
contract anniversary.
The adjustment for amounts surrendered will reduce items (2) and (3) above in
the same proportion that the contract value was reduced on the date(s) of the
partial surrender(s).
Optional One Year Enhanced Death Benefit (Available for contracts issued on or
after the later of January 2, 2001 or the date on which state insurance
authorities approve applicable contract modifications)
If the annuitant dies before the annuitization date, the death benefit will be
the greatest of:
(1) the contract value;
(2) the total of all purchase payments, less an adjustment for amounts
surrendered; or
(3) the highest contract value on any contract anniversary before the
annuitant's 86th birthday, less an adjustment for amounts subsequently
surrendered, plus purchase payments received after that contract
anniversary.
The adjustment for amounts surrendered will reduce items (2) and (3) above in
the same proportion that the contract value was reduced on the date(s) or the
partial surrender(s).
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Optional Greater of On-Year or 5% Enhanced Death Benefit (Available for
contracts issued on or after the later of January 2, 2001 or the date on which
state insurance authorities approve the optional death benefits listed above.)
If the annuitant dies before the annuitization date, the death benefit will be
the greatest of:
(1) the contract value;
(2) the total of all purchase payments, less an adjustment for amounts
surrendered;
(3) the highest contract value on any contract anniversary before the
annuitant's 86th birthday, less an adjustment for amounts subsequently
surrendered, plus purchase payments received after that contract
anniversary; or
(4) the 5% interest anniversary value.
The adjustment for amounts surrendered will reduced items (2) and (3) above in
the same proportion that the contract value was reduced on the date(s) of the
partial surrendered(s).
The 5% Interest Anniversary Value is equal to purchase payments minus amounts
surrendered, accumulated at 5% compound interest until the last contract
anniversary prior to the annuitant's 86th birthday. Such total accumulated
amount shall not exceed 200% of the net of purchase payments and amounts
surrendered. The adjustment for amounts subsequently surrendered after the most
recent contract anniversary will reduce the 5% Interest Anniversary Value in the
same proportion that the contract value was reduced on the date(s) of partial
surrender(s).
Optional One-Year Step Up Death Benefit (Available for contracts issued prior to
January 2, 2001 or on a date prior to which state insurance authorities approve
the optional death benefits listed above.)
If the annuitant dies before the annuitization date, the death benefit will be
the greatest of:
(1) the contract value;
(2) the total of all purchase payments, less an adjustment for amounts
surrendered; or
(3) the highest contract value on any contract anniversary before the
annuitant's 86th birthday, less an adjustment for amounts subsequently
surrendered, plus purchase payments received after that contract
anniversary.
The adjustment for amounts surrendered will reduce items (2) and (3) above in
the same proportion that the contract value was reduced on the date(s) of the
partial surrender(s).
5% Enhanced Death Benefit (Available for contracts issued prior to January 2,
2001 or on a date prior to which state insurance authorities approve the
contract modifications listed above)
If the annuitant dies before the annuitization date, the death benefit will be
the greater of:
(1) the contract value; or
(2) the total of all purchase payments, less any amounts surrendered,
accumulated at 5% simple interest from the date of each purchase
payment or surrender to the most recent contract anniversary prior to
the annuitant's 86th birthday, less an adjustment for amounts
subsequently surrendered, plus purchase payments received since that
contract anniversary.
The total accumulated amount will not exceed 200% of the net of purchase
payments and amounts surrendered. The adjustment for amounts subsequently
surrendered after the most recent contract anniversary will reduce the 5%
interest anniversary value in the same proportion that the contract value was
reduced on the date(s) of the partial surrender(s).
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 annuitization date and
before the entire
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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 annuitization 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;
(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 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 minimum
distribution and incidental benefit provisions set
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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.
REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ANNUITIES, SEP IRAS AND SIMPLE
IRAS
Distributions from an Individual Retirement Annuity, SEP IRA or Simple 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
Individual Retirement Annuity, SEP IRA or Simple 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 Individual Retirement Annuity, SEP IRA
or Simple 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
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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 Individual Retirement Annuity, SEP IRA or
Simple 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)(1) 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 Individual Retirement
Annuity, SEP IRA or Simple 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 Individual Retirement Annuities, SEP IRA
or Simple IRA.
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 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:
(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
The tax consequences of purchasing a contract described in this prospectus will
depend on:
- the type of contract purchased;
- the purposes for which the contract is purchased; and
- the personal circumstances of individual investors having interests in the
contracts.
See "Synopsis of the Contracts" for a brief description of the various types of
contracts and
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the different purposes for which the contracts may be purchased.
Existing tax rules are subject to change, and may affect individuals differently
depending on their situation. Nationwide does not guarantee the tax status of
any contracts or any transactions involving the contracts.
If the contract is purchased as an investment of certain retirement plans (such
as qualified retirement plans, Individual Retirement Accounts, and custodial
accounts as described in Sections 401, 408(a), and 403(b)(7) of the Internal
Revenue Code), tax advantages enjoyed by the contract owner and/or annuitant may
relate to participation in the plan rather than ownership of the annuity
contract. Such plans are permitted to purchase investments other than annuities
and retain tax-deferred status.
The following is a brief summary of some of the federal income tax
considerations related to the contracts. In addition to the federal income tax,
distributions from annuity contracts may be subject to state and local income
taxes. The tax rules across all states and localities are not uniform and
therefore will not be discussed in this prospectus. Tax rules that may apply to
contracts issued in U.S. territories such as Puerto Rico and Guam are also not
discussed. Nothing in this prospectus should be considered to be tax advice.
Contract owners and prospective contract owners are encouraged to consult a
financial consultant, tax advisor or legal counsel to discuss the taxation and
use of the contracts.
The Internal Revenue Code sets forth different income tax rules for the
following types of annuity contracts:
- Individual Retirement Annuities;
- SEP IRAs;
- Simple IRAs;
- Roth IRAs;
- Tax Sheltered Annuities; and
- "Non-Qualified Annuities."
Individual Retirement Annuities, SEP IRAs and Simple IRAs
Distributions from Individual Retirement Annuities, SEP IRAs and Simple IRAs are
generally taxed when received. If any of the amount contributed to the IRA was
nondeductible for federal income tax purposes, then a portion of each
distribution is excludable from income.
If distributions of income from an IRA are made prior to the date that the owner
attains the age of 59 1/2 years, the income is subject to both the regular
income tax and an additional penalty tax of 10%. (For Simple IRAs, the 10%
penalty is increased to 25% if the distribution is made during the 2 year period
beginning on the date that the individual first participated in the Simple IRA.)
The penalty tax can be avoided if the distribution is:
- made to a beneficiary on or after the death of the owner;
- attributable to the owner becoming disabled (as defined in the Internal
Revenue Code);
- part of a series of substantially equal periodic payments made not less
frequently than annually made for the life (or life expectancy) of the
owner, or the joint lives (or joint life expectancies) of the owner and his
or her designated beneficiary;
- used for qualified higher education expenses; or
- used for expenses attributable to the purchase of a home for a qualified
first-time buyer.
Roth IRAs
Distributions of earnings from Roth IRAs are taxable or non-taxable depending
upon whether they are "qualified distributions" or "nonqualified distributions."
A "qualified distribution" is one that satisfies the five-year rule and meets
one of the following requirements:
- it is made on or after the date on which the contract owner attains age 59
1/2;
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- it is made to a beneficiary (or the contract owner's estate) on or after
the death of the contract owner;
- it is attributable to the contract owner's disability; or
- it is used for expenses attributable to the purchase of a home for a
qualified first-time buyer.
The five year rule generally is satisfied if the distribution is not made within
the five taxable year period beginning with the first taxable year in which a
contribution is made to any Roth IRA established for the owner.
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.
Special rules apply for Roth IRAs that have proceeds received from an IRA prior
to January 1, 1999 if the owner elected the special 4-year income averaging
provisions that were in effect for 1998.
If non-qualified distributions of income from a Roth IRA are made prior to the
date that the owner attains the age of 59 1/2 years, the income is subject to
both the regular income tax and an additional penalty tax of 10%. The penalty
tax can be avoided if the distribution is:
- made to a beneficiary on or after the death of the owner;
- attributable to the owner becoming disabled as defined in the Internal
Revenue Code;
- part of a series of substantially equal periodic payments made not less
frequently than annually made for the life (or life expectancy) of the
owner, or the joint lives (or joint life expectancies) of the owner and his
or her designated beneficiary;
- for qualified higher education expenses; or
- used for expenses attributable to the purchase of a home for a qualified
first-time buyer.
If the contract owner dies before the contract is completely distributed, the
balance may 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
established pursuant to the Internal Revenue Code. The formula excludes from
income the amount invested in the contract divided by the number of anticipated
payments until the full investment in the contract is recovered. Thereafter all
distributions are fully taxable.
If a distribution of income is made from a Tax Sheltered Annuity prior to the
date that the owner attains the age of 59 1/2 years, the income is subject to
both the regular income tax and an additional penalty tax of 10%. The penalty
tax can be avoided if the distribution is:
- made to a beneficiary on or after the death of the owner;
- attributable to the owner becoming disabled as defined in the Internal
Revenue Code;
- part of a series of substantially equal periodic payments made not less
frequently than annually made for the life (or life expectancy) of the
owner, or the joint lives (or joint life expectancies) of the owner and his
or her designated beneficiary;
- for qualified higher education expenses;
- used for expenses attributable to the purchase of a home for a qualified
first-time buyer;or
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- made to the owner after separation from service with his or her employer
after age 55.
Non-Qualified Contracts - Natural Persons as Contract Owners
Generally, the income earned inside a Non-Qualified Annuity Contract that is
owned by a natural person is not taxable until it is distributed from the
contract.
Distributions before the annuitization 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 surrenders, any portion of the contract that is assigned or
pledged; or any portion of the contract that is transferred by gift. For these
purposes, a transfer by gift may occur upon annuitization if the contract owner
and the annuitant are not the same individual.
With respect to annuity distributions on or after the annuitization date, a
portion of each annuity payment is excludable from taxable income. The amount
excludable is based on the ratio between the contract owner's investment in the
contract and the expected return on the contract. Once the entire investment in
the contract is recovered, all distributions are fully includable 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 as a result of the annuitant's death no more payments are due
under the contract, then the unrecovered investment in the contract may be
deducted on his or her final tax return.
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 the same calendar year will be treated as one annuity contract.
A special rule applies to distributions from contracts that have investments
that were made prior to August 14, 1982. For those contracts, distributions that
are made prior to the annuitization date are treated first as a recovery of the
investment in the contract as of that date. A distribution in excess of the
amount of the investment in the contract as of August 14, 1982, will be treated
as taxable income.
The Internal Revenue Code imposes 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 is:
- the result of a contract owner's death;
- the result of a contract owner's disability, as defined in the Internal
Revenue Code;
- 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; or
- is allocable to an investment in the contract before August 14, 1982.
Non-Qualified Contracts - Non-Natural Persons as Contract Owners
The previous discussion related to the taxation of Non-Qualified Contracts owned
by individuals. Different rules (the so-called "non-natural persons" rules)
apply if the contract owner is not a natural person.
Generally, contracts owned by corporations, partnerships, trusts, and similar
entities are not treated as annuity contracts under the Internal Revenue Code.
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. The income is taxable as ordinary income, not capital gain.
The non-natural persons rules do not apply to all entity-owned contracts. A
contract that is owned by a non-natural person as an agent of an individual is
treated as owned by the individual. This would cause the contract to be
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treated as an annuity under the Internal Revenue Code, 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 persons rules also do not apply to contracts that are:
- acquired by the estate of a decedent by reason of the death of the decedent;
- issued in connection with certain qualified retirement plans and individual
retirement plans;
- purchased by an employer upon the termination of certain qualified
retirement plans.
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. If the distribution is from a Tax Sheltered Annuity,
it will be subject to mandatory 20% withholding that cannot be waived, unless:
- the distribution is made directly to another Tax Sheltered Annuity or IRA;
or
- the distribution satisfies the minimum distribution requirements imposed by
the Internal Revenue Code.
In addition, contract owners may not waive withholding if the distribution is
subject to mandatory back-up withholding (if no taxpayer identification number
is given or if the Internal Revenue Service notifies Nationwide that mandatory
back-up withholding is required). 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
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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 death benefit, distribution or other payment, and remit it
directly to the Internal Revenue Service.
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., Dollar Cost Averaging or salary
reduction programs). Instead, confirmation of recurring transactions
will appear in the contract's quarterly statements;
- semi-annual reports as of June 30 containing financial statements for
the variable account; and
- annual reports as of December 31 containing financial statements for
the variable account.
Contract owners should review statements and confirmations carefully. All errors
or
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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 will assume statements and confirmation
statements are correct.
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 contract and the other who was the owner of a variable annuity
contract, commenced a lawsuit in a federal court in Texas against Nationwide
Life Insurance Company and the American Century group of defendants (Robert
Young and David D. Distad v. Nationwide Life Insurance Company et al.). In this
lawsuit, plaintiffs sought to represent a class of variable life insurance
contract 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, motions to dismiss the complaint filed by Nationwide and
American Century. The remaining claims against Nationwide allege securities
fraud, common law fraud, civil conspiracy, and breach of contract. The District
Court, on December 2, 1998, issued an order denying plaintiffs' motion for class
certification and the appeals court declined to review the order denying class
certification upon interlocutory appeal. On June 11, 1999, the District Court
denied the plaintiffs' motion to amend their complaint and reconsider class
certification. In January 2000, Nationwide and American Century settled this
lawsuit now limited to the claims of the two named plaintiffs. On February 9,
2000, the court dismissed this lawsuit with prejudice.
On October 29, 1998, Nationwide was 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 Services, Inc., Nationwide Life Insurance Company and Nationwide Life
and Annuity Insurance Company). On May 3, 1999, the complaint was amended to,
among other things, add Marcus Shore as a second plaintiff. The amended
complaint is brought as a class action on behalf of all persons who purchased
individual deferred annuity contracts or participated in group annuity contracts
sold by Nationwide and the other named Nationwide affiliates which were used to
fund certain tax-deferred retirement plans. The amended complaint seeks
unspecified compensatory and punitive damages. No class has been certified. On
June 11, 1999, Nationwide and the other named defendants filed a motion to
dismiss the amended complaint. On March 8, 2000, the court denied the motion to
dismiss the amended complaint filed by Nationwide and other named defendants.
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, Waddell & Reed, Inc., is not engaged in any litigation
of any material nature.
52
<PAGE> 53
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY
ADVERTISING
A "yield" and "effective yield" may be advertised for the W&R Target Funds, Inc.
- Money Market Portfolio. "Yield" is a measure of the net dividend and interest
income earned over a specific seven-day period (which period will be stated in
the advertisement) expressed as a percentage of the offering price of the W&R
Target Funds, Inc. - Money Market Portfolio's units. Yield is an annualized
figure, which means that it is assumed that the W&R Target Funds, Inc. - Money
Market Portfolio generates the same level of net income over a 52-week period.
The "effective yield" is calculated similarly but includes the effect of assumed
compounding, calculated under rules prescribed by the SEC. The effective yield
will be slightly higher than yield due to this compounding effect.
Nationwide may advertise the performance of a sub-account in relation to the
performance of other variable annuity sub-accounts, underlying mutual fund
options with similar or different objectives, or the investment industry as a
whole. Other investments to which the sub-accounts may be compared include, but
are not limited to:
- precious metals;
- real estate;
- stocks and bonds;
- closed-end funds;
- bank money market deposit accounts and passbook savings;
- CDs; and
- the Consumer Price Index.
Market Indexes
The sub-accounts will be compared to certain market indexes, such as:
- S&P 500;
- Shearson/Lehman Intermediate Government/Corporate Bond Index;
- Shearson/Lehman Long-Term Government/Corporate Bond Index;
- Donoghue Money Fund Average;
- U.S. Treasury Note Index;
- Bank Rate Monitor National Index of 2 1/2 Year CD Rates; and
- Dow Jones Industrial Average.
Tracking & Rating Services; Publications
Nationwide's rankings and ratings are sometimes published by other services,
such as:
- Lipper Analytical Services, Inc.;
- CDA/Wiesenberger;
- Morningstar;
- Donoghue's;
- magazines such as:
- Money;
- Forbes;
- Kiplinger's Personal Finance Magazine;
- Financial World;
- Consumer Reports;
- Business Week;
- Time;
- Newsweek;
- National Underwriter; and
- News and World Report;
- LIMRA;
- Value;
- Best's Agent Guide;
- Western Annuity Guide;
- Comparative Annuity Reports;
- Wall Street Journal;
- Barron's;
- Investor's Daily;
- Standard & Poor's Outlook; and
- Variable Annuity Research & Data Service (The VARDS Report).
These rating services and publications rank the underlying mutual funds'
performance against other funds. These rankings may or may not include the
effects of sales charges or other fees.
Financial Rating Services
Nationwide is also ranked and rated by independent financial rating services,
among which are Moody's, Standard & Poor's and A.M. Best Company. Nationwide may
advertise these ratings. These ratings reflect Nationwide's financial strength
or claims-paying ability. The ratings are not intended to reflect the investment
53
<PAGE> 54
experience or financial strength of the variable account.
Some Nationwide advertisements and endorsements may include lists of
organizations, individuals or other parties that recommend Nationwide or the
contract. Furthermore, Nationwide may occasionally advertise comparisons of
currently taxable and tax deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles and general economic
conditions.
Historical Performance of the Sub-Accounts
Nationwide will advertise historical performance of the sub-accounts. Nationwide
may advertise for the sub-account's standardized average annual total return
("standardized return") calculated in a manner prescribed by the SEC, and
non-standardized average annual total return ("non-standardized return").
Standardized return shows the percentage rate of return of a hypothetical
initial investment of $1,000 for the most recent one, five and ten year periods
(or for a period covering the time the underlying mutual fund has been available
in the variable account if it has not been available for one of the prescribed
periods). This calculation reflects the standard 7 year CDSC schedule and the
charges that could be assessed to a contract if the maximum rider options for a
contract issued as a Tax Sheltered Annuity are chosen (2.70%). Standardized
return does not reflect the deduction of state premium taxes, which may be
imposed by certain states.
Non-standardized return is calculated similarly to standardized return except
non-standardized return assumes an initial investment of $25,000, with variable
account charges of 0.95%. No CDSC is reflected. An assumed initial investment of
$25,000 is used because that amount more accurately reflects the average
contract size.
Both methods of calculation reflect total return for the most recent one, five
and ten year periods (or for a period covering the time the underlying mutual
fund has been in existence). For those underlying mutual funds which have not
been available for one of the prescribed periods, the nonstandardized total
return illustrations will show the investment performance the underlying mutual
funds would have achieved had they been available in the variable account for
one of the periods. If the underlying mutual fund has been available in the
variable account for less than one year (or if the underlying mutual fund has
been effective for less than one year) standardized and non-standardized
performance is not annualized.
The standardized average annual total return and nonstandardized total return
quotations are calculated using data for the period ended December 31, 1999.
However, Nationwide generally provides performance information more frequently.
Information relating to performance of the sub-accounts is based on historical
earnings and does not represent or guarantee future results.
54
<PAGE> 55
SUB-ACCOUNT PERFORMANCE SUMMARY
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
The following underlying mutual fund options were added to the variable account
effective December 6, 2000. Therefore, no sub-account performance is available:
- W&R Target Funds, Inc. - Asset Strategy Portfolio
- W&R Target Funds, Inc. - Balanced Portfolio
- W&R Target Funds, Inc. - Bond Portfolio
- W&R Target Funds, Inc. - Core Equity Portfolio
- W&R Target Funds, Inc. - Growth Portfolio
- W&R Target Funds, Inc. - High Income Portfolio
- W&R Target Funds, Inc. - International Portfolio
- W&R Target Funds, Inc. - Limited-Term Bond Portfolio
- W&R Target Funds, Inc. - Money Market Portfolio
- W&R Target Funds, Inc. - Science and Technology Portfolio
- W&R Target Funds, Inc. - Small Cap Portfolio
55
<PAGE> 56
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
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
56
<PAGE> 57
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
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.
W&R TARGET FUNDS, INC.
The Fund is an open-end, diversified management company organized as a Maryland
corporation on December 2, 1986. The Fund sells its shares only to the separate
accounts of participating insurance companies to fund certain variable life
insurance policies and variable annuity contracts. Waddell &Reed Investment
Management Company is the Fund's investment advisor.
ASSET STRATEGY PORTFOLIO
Investment Objective: The Asset Strategy Portfolio seeks high total return
over the long-term. It seeks to achieve its goal by allocating its assets
among stocks, bonds and short-term instruments, both in the United States
and abroad.
BALANCED PORTFOLIO
Investment Objective: The Balanced Portfolio seeks as a primary goal,
current income, with a secondary goal of long-term appreciation of capital.
It invests primarily in a mix of stocks, fixed-income securities and cash,
depending on market conditions.
BOND PORTFOLIO
Investment Objective: The Bond Portfolio seeks a reasonable return with
emphasis on preservation of capital. It seeks to achieve its goal by
investing primarily in domestic debt securities, usually of investment
grade.
CORE EQUITY PORTFOLIO
Investment Objective: The Core Equity Portfolio seeks capital growth and
income. It seeks to achieve its goals by investing primarily in common
stocks of large U.S. and foreign companies that have a record of paying
regular dividends on common stock or have the potential for capital
appreciation, or are expected to resist market decline.
GROWTH PORTFOLIO
Investment Objective: The Growth Portfolio seeks capital growth, with a
secondary goal of current income. It seeks to achieve its goal by investing
primarily in common stocks of U.S. and foreign companies.
HIGH INCOME PORTFOLIO
Investment Objective: The High Income Portfolio seeks as a primary goal,
high current income with a secondary goal of capital growth. It seeks to
achieve its goals by investing primarily in high-yield, high-risk,
fixed-income securities of U.S. and foreign issuers, the risks of which are
consistent with the Portfolio's goals.
INTERNATIONAL PORTFOLIO
Investment Objective: The International Portfolio seeks as a primary goal,
long-term appreciation of capital, with a secondary goal of current income.
It seeks to achieve its goals by investing primarily in common stocks of
foreign companies that may have the potential for long-term growth.
LIMITED-TERM BOND PORTFOLIO
Investment Objective: The Limited-Term Bond Portfolio seeks a high level of
current income consistent with preservation of capital. It seeks to achieve
its goal by investing primarily in investment-grade debt securities of U.S.
issuers, including U.S. Government securities.
MONEY MARKET PORTFOLIO
Investment Objective: The Money Market Portfolio seeks current income
consistent with stability of principal. It seeks to achieve it goal by
investing in U.S. dollar-denominated high quality money market obligations
and instruments.
SCIENCE AND TECHNOLOGY PORTFOLIO
Investment Objective: The Science and Technology Portfolio seeks long-term
57
<PAGE> 58
capital growth. It seeks to achieve its goals by concentrating its
investments primarily in science and technology equity securities of U.S.
and foreign companies.
SMALL CAP PORTFOLIO
Investment Objective: The Small Cap Portfolio seeks capital growth. It
seeks to achieve its goal by investing primarily in common stocks of
companies that are relatively new or unseasoned, companies in their early
stages of development, or smaller companies positioned in new or in
emerging industries where the opportunity for rapid growth is above
average.
58
<PAGE> 59
(This Page Intentionally Left Blank)
<PAGE> 60
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
MODIFIED SINGLE PREMIUM DEFERRED 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 May 1, 2000. The
prospectus may be obtained from Nationwide Life Insurance Company by writing One
Nationwide Plaza, 01-05-P1, Columbus, Ohio 43215, or calling 1-800-848-6331, TDD
1-800-238-3035.
TABLE OF CONTENTS
PAGE
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
GENERAL INFORMATION AND HISTORY
The Nationwide Variable Account-9 is a separate investment account of Nationwide
Life Insurance Company ("Nationwide"). 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 group of companies. The Nationwide group of companies is
one of America's largest insurance and financial services family of companies,
with combined assets of over $120 billion as of December 31, 1999.
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 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
underlying mutual funds. Nationwide, or affiliates of Nationwide, may have
entered into agreements with either the investment adviser or distributor for
the underlying mutual funds. 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.
<PAGE> 61
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 Waddell &
Reed, Inc., 6300 Lamar Ave, Overland Park, Kansas 66202. No underwriting
commissions have been paid by Nationwide to Waddell & Reed, Inc.
CALCULATIONS OF PERFORMANCE
Any current yield quotations of the W&R Target Funds, Inc. - Money Market
Portfolio, 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 a 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 W&R
Target Funds, Inc. - Money Market Portfolio'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 W&R Target Funds, Inc. - Money Market Portfolio'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 W&R Target
Funds, Inc. - Money Market Portfolio 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 W&R Target Funds, Inc. - Money Market Portfolio '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 W&R Target Funds, Inc. - Money
Market Portfolio is not guaranteed or insured. Yields 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 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 deduction of a the standard 7 year CDSC schedule and the
deduction of all charges that could be made to a contract if all available
options were chosen as of December 31, 1999 (2.70%), except for premium taxes,
which may be imposed by certain states.
<PAGE> 62
Nonstandardized total return may also be advertised, and is calculated in a
manner similar to standardized average annual total return except the
nonstandardized total return is based on a hypothetical initial investment of
$25,000 and the deduction of charges for the base contract (0.95%). 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. If the
underlying mutual fund has been available in the variable account for less than
one year (or if the underlying mutual fund has been effective for less than one
year), standardized and non-standardized performance is not annualized.
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.
<PAGE> 63
<PAGE> 1
INDEPENDENT AUDITOR'S 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 (comprised of the
sub-accounts listed in note 1(b)) (collectively, "the Account") as of December
31, 1999, and the related statements of operations and changes in contract
owners' equity for each of the years in the two year period then ended. These
financial statements are the responsibility of the Account'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, 1999, 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 the Account as of December
31, 1999, and the results of its operations and its changes in contract owners'
equity for each of the years in the two year period then ended in conformity
with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 18, 2000
--------------------------------------------------------------------------------
<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Income & Growth (ACVPIncGr)
20,470,398 shares (cost $141,129,469) ........................................................... $ 163,763,182
American Century VP - American Century VP International (ACVPInt)
15,635,412 shares (cost $148,085,984) ........................................................... 195,442,653
American Century VP - American Century VP Value (ACVPValue)
6,446,407 shares (cost $41,615,144) ............................................................. 38,356,121
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
4,265,200 shares (cost $141,396,097) ............................................................ 166,641,352
Dreyfus Stock Index Fund (DryStkIx)
24,176,958 shares (cost $793,412,609) ........................................................... 929,604,033
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
4,147,534 shares (cost $150,423,775) ............................................................ 165,362,188
Dreyfus VIF - European Equities Fund (DryEuroEq)
133,706 shares (cost $1,933,535) ................................................................ 2,133,956
Federated Insurance Series: Federated Quality Bond Fund II (FedQualBd)
759,896 shares (cost $7,462,701) ................................................................ 7,446,981
Fidelity VIP - Equity-Income Portfolio - Service Class (FidVIPEIS)
14,110,995 shares (cost $352,931,972) ........................................................... 362,088,135
Fidelity VIP - Growth Portfolio - Service Class (FidVIPGrS)
11,101,677 shares (cost $493,273,277) ........................................................... 608,371,923
Fidelity VIP - High Income Portfolio - Service Class (FidVIPHIS)
17,406,110 shares (cost $194,757,686) ........................................................... 196,340,922
Fidelity VIP - Overseas Portfolio - Service Class (FidVIPOvS)
3,376,287 shares (cost $81,315,398) ............................................................. 92,442,726
Fidelity VIP-II - Contrafund Portfolio - Service Class (FidVIPConS)
14,598,621 shares (cost $348,059,935) ........................................................... 424,819,872
Fidelity VIP-III - Growth Opportunities Portfolio - Service Class (FidVIPGrOpS)
8,997,661 shares (cost $195,437,600) ............................................................ 208,025,933
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
971,414 shares (cost $6,883,230) ................................................................ 6,712,471
Nationwide SAT - Balanced Fund (NSATBal)
7,167,334 shares (cost $75,886,829) ............................................................. 73,895,215
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
13,299,689 shares (cost $344,987,726) ........................................................... 341,934,999
Nationwide SAT - Equity Income Fund (NSATEqInc)
1,987,264 shares (cost $22,714,475) ............................................................. 26,887,677
Nationwide SAT - Global Equity Fund (NSATGlobEq)
2,671,214 shares (cost $31,808,533) ............................................................. 37,103,163
Nationwide SAT - Government Bond Fund (NSATGvtBd)
22,403,002 shares (cost $256,706,042) ........................................................... 241,728,393
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
5,245,585 shares (cost $52,509,200) ............................................................. 49,937,971
Nationwide SAT - Money Market Fund (NSATMyMkt)
409,469,490 shares (cost $490,469,490) .......................................................... 409,469,490
Nationwide SAT - Multi Sector Bond Fund (NSATMSecBd)
6,330,981 shares (cost $61,931,231) ............................................................. 59,321,292
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Nationwide SAT - Select Advisers Mid Cap Fund (NSATMidCap)
1,196,560 shares (cost $13,198,495) ............................................................. 14,741,624
Nationwide SAT - Select Advisors Small Cap Growth Fund (NSATSmCapG)
723,847 shares (cost $10,978,328) ............................................................... 14,252,550
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
7,095,348 shares (cost $71,255,676) ............................................................. 68,966,784
Nationwide SAT - Small Company Fund (NSATSmCo)
4,613,567 shares (cost $85,795,793) ............................................................. 102,052,097
Nationwide SAT - Strategic Growth Fund (NSATStrGro)
4,272,208 shares (cost $67,679,805) ............................................................. 87,323,924
Nationwide SAT - Strategic Value Fund (NSATStrVal)
1,517,643 shares (cost $14,938,847) ............................................................. 14,281,023
Nationwide SAT - Total Return Fund (NSATTotRe)
27,127,557 shares (cost $503,344,518) ........................................................... 510,269,350
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
4,088,163 shares (cost $58,592,261) ............................................................. 64,797,389
Neuberger & Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr)
4,283,319 shares (cost $69,927,580) ............................................................. 104,084,651
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
6,496,851 shares (cost $124,991,275) ............................................................ 127,598,157
Oppenheimer VAF - Aggressive Growth Fund (OppAggGro)
1,789,956 shares (cost $109,187,224) ............................................................ 147,331,319
Oppenheimer VAF - Capital Appreciation Fund (OppCapAp)
3,467,910 shares (cost $131,621,275) ............................................................ 172,840,639
Oppenheimer VAF - Main Street Growth & Income Fund (OppGrInc)
5,749,471 shares (cost $125,186,474) ............................................................ 141,609,480
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
2,431,635 shares (cost $28,640,364) ............................................................. 34,675,121
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
618,705 shares (cost $6,514,021) ................................................................ 6,781,006
Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
1,709,941 shares (cost $23,106,619) ............................................................. 21,151,964
Victory VIF - Diversified Stock Fund - Class A (VVIFDStk)
397,644 shares (cost $3,840,250) ................................................................ 4,004,273
Victory VIF - Investment Quality Bond Fund - Class A (VVIFIQBd)
176,741 shares (cost $1,764,492) ................................................................ 1,732,060
Victory VIF - Small Company Opportunity Fund - Class A (VVIFSmCoOpp)
138,498 shares (cost $1,359,342) ................................................................ 1,371,129
Warburg Pincus Trust - Growth & Income Portfolio (WPGrInc)
1,549,407 shares (cost $18,232,245) ............................................................. 18,422,453
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
2,535,079 shares (cost $38,270,810) ............................................................. 42,335,823
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
1,121,991 shares (cost $16,592,355) ............................................................. 21,609,550
---------------
Total investments ............................................................................ 6,530,063,014
Accounts receivable .................................................................................. 103,046
---------------
Total assets ................................................................................ 6,530,166,060
Accounts payable ........................................................................................ -
---------------
Contract owners' equity (note 4) ........................................................................ $ 6,530,166,060
===============
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
<PAGE> 4
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Total ACVPincGr ACVPint
------------------------------ ------------------------------ --------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 67,063,331 20,037,926 13,740 220,567 -
Mortality and expense risk charges
(note 2)............................. (42,760,043) (12,179,624) (1,027,835) (182,750) (948,065)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. 24,303,288 7,858,302 (1,014,095) 37,817 (948,065)
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 2,014,782,794 147,138,081 5,909,912 299,469 178,233,023
Cost of mutual fund shares sold........ (1,929,367,144) (151,277,931) (4,451,364) (260,801) (156,687,528)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. 85,415,650 (4,139,850) 1,458,548 38,668 21,545,495
Change in unrealized gain (loss)
on investments....................... 529,140,404 121,513,304 18,056,144 4,570,573 46,969,672
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... 614,556,054 117,373,454 19,514,692 4,609,241 68,515,167
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... 115,192,705 27,066,537 - 9,256 -
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 754,052,047 152,298,293 18,500,597 4,656,314 67,567,102
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 3,413,685,206 2,421,579,829 95,493,563 34,231,141 64,810,675
Transfers between funds................ - - 7,831,668 7,880,597 13,920,028
Redemptions............................ (221,905,485) (66,628,531) (4,154,414) (1,021,174) (3,040,821)
Annuity benefits ...................... (1,253) - - - -
Contingent deferred sales charges
(note 2)............................. (4,399,205) (676,512) (78,156) (7,094) (57,293)
Adjustments to maintain reserves....... (62,185) 38,184 (3,119) (27,089) 3,134
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 3,187,317,078 2,354,312,970 99,089,542 41,056,381 75,635,723
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 3,941,369,125 2,506,611,263 117,590,139 45,712,695 143,202,825
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 2,588,796,935 82,185,672 46,170,274 457,579 52,242,163
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $6,530,166,060 2,588,796,935 163,760,413 46,170,274 195,444,988
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
ACVPint ACVPValue
-------------- -------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 26,394 227,207 28,096
Mortality and expense risk charges
(note 2)............................. (224,953) (304,797) (121,549)
-------------- -------------- --------------
Net investment activity.............. (198,559) (77,590) (93,453)
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 2,580,905 8,457,761 1,595,103
Cost of mutual fund shares sold........ (2,610,970) (9,146,919) (1,678,560)
-------------- -------------- --------------
Realized gain (loss) on investments.. (30,065) (689,158) (83,457)
Change in unrealized gain (loss)
on investments....................... 379,163 (3,132,639) (147,770)
-------------- -------------- --------------
Net gain (loss) on investments....... 349,098 (3,821,797) (231,227)
-------------- -------------- --------------
Reinvested capital gains............... 270,951 2,152,580 335,441
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 421,490 (1,746,807) 10,761
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 39,680,086 20,132,932 19,091,612
Transfers between funds................ 12,597,519 (324,126) 1,715,026
Redemptions............................ (1,031,134) (1,325,735) (518,275)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (7,206) (31,100) (7,315)
Adjustments to maintain reserves....... 31,510 (221) (218)
-------------- -------------- --------------
Net equity transactions............ 51,270,775 18,451,750 20,280,830
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 51,692,265 16,704,943 20,291,591
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 549,898 21,650,989 1,359,398
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 52,242,163 38,355,932 21,650,989
============== ============== ==============
</TABLE>
<PAGE> 5
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
DrySRGro DryStkix DryCapAp
------------------------------ ------------------------------ -------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 20,454 60,373 7,074,947 2,203,648 913,606
Mortality and expense risk charges
(note 2)............................. (874,709) (164,380) (5,915,703) (1,335,082) (1,156,439)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. (854,255) (104,007) 1,159,244 868,566 (242,833)
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 2,652,981 777,497 8,929,302 3,532,880 8,292,952
Cost of mutual fund shares sold........ (1,915,818) (725,553) (6,410,442) (3,554,666) (6,884,964)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. 737,163 51,944 2,518,860 (21,786) 1,407,988
Change in unrealized gain (loss)
on investments....................... 21,902,824 3,346,139 103,762,225 32,439,748 9,643,177
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... 22,639,987 3,398,083 106,281,085 32,417,962 11,051,165
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... 5,506,089 1,392,227 6,286,659 435,046 612,835
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 27,291,821 4,686,303 113,726,988 33,721,574 11,421,167
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 88,613,989 29,765,433 474,442,086 242,868,858 101,641,759
Transfers between funds................ 15,489,812 4,305,104 54,840,182 34,854,129 (277,522)
Redemptions............................ (3,496,257) (803,449) (24,356,262) (6,057,535) (4,721,764)
Annuity benefits ...................... - - - - -
Contingent deferred sales charges
(note 2)............................. (62,705) (4,582) (501,167) (83,383) (112,549)
Adjustments to maintain reserves....... (233) 66 827 30,385 (1,052)
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 100,544,606 33,262,572 504,425,666 271,612,454 96,528,872
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 127,836,427 37,948,875 618,152,654 305,334,028 107,950,039
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 38,805,599 856,724 311,454,663 6,120,635 57,411,990
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 166,642,026 38,805,599 929,607,317 311,454,663 165,362,029
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
DryCapAp DryEuroEq
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 296,317 4,319 -
Mortality and expense risk charges
(note 2)............................. (191,312) (2,462) -
-------------- -------------- --------------
Net investment activity.............. 105,005 1,857 -
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 692,754 654,656 -
Cost of mutual fund shares sold........ (632,372) (537,831) -
-------------- -------------- --------------
Realized gain (loss) on investments.. 60,382 116,825 -
Change in unrealized gain (loss)
on investments....................... 5,296,793 200,421 -
-------------- -------------- --------------
Net gain (loss) on investments....... 5,357,175 317,246 -
-------------- -------------- --------------
Reinvested capital gains............... 1,464 20,286 -
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 5,463,644 339,389 -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 37,281,447 526,129 -
Transfers between funds................ 14,756,161 1,278,795 -
Redemptions............................ (999,653) (10,356) -
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (11,014) - -
Adjustments to maintain reserves....... (10,617) (29) -
-------------- -------------- --------------
Net equity transactions............ 51,016,324 1,794,539 -
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 56,479,968 2,133,928 -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 932,022 - -
-------------- -------------- --------------
Contract owners' equity end of period.... 57,411,990 2,133,928 -
============== ============== ==============
</TABLE>
<PAGE> 6
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
FedQualBd FidVIPEIS FidVIPGrS
------------------------------ ------------------------------ --------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 3,121,196 217,564 246,130
Mortality and expense risk charges
(note 2)............................. (19,926) - (2,844,312) (991,992) (3,103,275)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. (19,926) - 276,884 (774,428) (2,857,145)
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 1,076,139 - 6,544,933 628,613 26,416,695
Cost of mutual fund shares sold........ (1,075,578) - (6,132,572) (599,673) (21,341,945)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. 561 - 412,361 28,940 5,074,750
Change in unrealized gain (loss)
on investments....................... (15,720) - 1,517,647 7,558,663 98,493,324
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... (15,159) - 1,930,008 7,587,603 103,568,074
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... - - 6,899,485 774,271 15,475,451
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... (35,085) - 9,106,377 7,587,446 116,186,380
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 5,376,015 - 178,867,332 175,676,909 306,170,035
Transfers between funds................ 2,358,597 - (7,116,225) 13,491,409 96,715,312
Redemptions............................ (251,679) - (15,062,722) (5,441,684) (19,374,716)
Annuity benefits ...................... - - - - -
Contingent deferred sales charges
(note 2)............................. (1,674) - (279,245) (54,879) (654,127)
Adjustments to maintain reserves....... 757 - (3,780) (2,947) (12,461)
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 7,482,016 - 156,405,360 183,668,808 382,844,043
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 7,446,931 - 165,511,737 191,256,254 499,030,423
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. - - 196,573,059 5,316,805 109,329,873
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 7,446,931 - 362,084,796 196,573,059 608,360,296
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
FidVIPGrS FidVIPHIS
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 27,645 9,984,261 609,157
Mortality and expense risk charges
(note 2)............................. (414,288) (1,459,555) (546,399)
-------------- -------------- --------------
Net investment activity.............. (386,643) 8,524,706 62,758
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 1,691,790 56,084,424 5,911,230
Cost of mutual fund shares sold........ (1,783,855) (63,235,509) (7,053,926)
-------------- -------------- --------------
Realized gain (loss) on investments.. (92,065) (7,151,085) (1,142,696)
Change in unrealized gain (loss)
on investments....................... 16,582,085 7,299,162 (5,732,014)
-------------- -------------- --------------
Net gain (loss) on investments....... 16,490,020 148,077 (6,874,710)
-------------- -------------- --------------
Reinvested capital gains............... 723,135 373,243 387,069
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 16,826,512 9,046,026 (6,424,883)
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 71,107,684 81,385,530 106,687,268
Transfers between funds................ 21,283,689 10,885,567 3,713,555
Redemptions............................ (1,868,105) (8,253,422) (3,477,421)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (25,533) (109,715) (19,045)
Adjustments to maintain reserves....... 198 (414) (220)
-------------- -------------- --------------
Net equity transactions............ 90,497,933 83,907,546 106,904,137
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 107,324,445 92,953,572 100,479,254
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 2,005,428 103,387,120 2,907,866
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 109,329,873 196,340,692 103,387,120
============== ============== ==============
</TABLE>
<PAGE> 7
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
FidVIPOvS FidVIPConS FidVIPGrOpS
------------------------------ ------------------------------ -------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 428,804 39,473 703,614 56,795 1,071,044
Mortality and expense risk charges
(note 2)............................. (466,539) (125,886) (2,565,841) (530,641) (1,576,394)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. (37,735) (86,413) (1,862,227) (473,846) (505,350)
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 169,388,211 4,459,537 1,391,017 389,637 22,825,558
Cost of mutual fund shares sold........ (158,069,751) (4,576,878) (1,110,585) (408,471) (20,001,471)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. 11,318,460 (117,341) 280,432 (18,834) 2,824,087
Change in unrealized gain (loss)
on investments....................... 10,631,802 489,713 58,793,652 17,909,633 700,174
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... 21,950,262 372,372 59,074,084 17,890,799 3,524,261
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... 691,619 116,340 5,159,836 417,852 2,093,404
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 22,604,146 402,299 62,371,693 17,834,805 5,112,315
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 31,661,483 21,535,431 210,779,869 95,817,883 111,530,050
Transfers between funds................ 13,663,206 3,800,935 32,806,150 13,757,369 (2,530,648)
Redemptions............................ (1,724,410) (383,762) (9,615,920) (2,362,374) (6,562,117)
Annuity benefits ...................... - - - - -
Contingent deferred sales charges
(note 2)............................. (34,214) (3,534) (187,997) (32,976) (125,543)
Adjustments to maintain reserves....... (5,141) 163 (1,122) (59,196) 2,854
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 43,560,924 24,949,233 233,780,980 107,120,706 102,314,596
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 66,165,070 25,351,532 296,152,673 124,955,511 107,426,911
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 26,272,538 921,006 128,667,017 3,711,506 100,601,545
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 92,437,608 26,272,538 424,819,690 128,667,017 208,028,456
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
FidVIPGrOpS MSEmMkt
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 67,013 790,752 387,439
Mortality and expense risk charges
(note 2)............................. (458,675) (47,240) (21,405)
-------------- -------------- --------------
Net investment activity.............. (391,662) 743,512 366,034
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 312,351 6,942,907 1,077,168
Cost of mutual fund shares sold........ (318,329) (7,221,261) (1,547,782)
-------------- -------------- --------------
Realized gain (loss) on investments.. (5,978) (278,354) (470,614)
Change in unrealized gain (loss)
on investments....................... 11,843,161 798,575 (967,487)
-------------- -------------- --------------
Net gain (loss) on investments....... 11,837,183 520,221 (1,438,101)
-------------- -------------- --------------
Reinvested capital gains............... 232,948 - -
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 11,678,469 1,263,733 (1,072,067)
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 79,527,836 2,576,386 3,872,593
Transfers between funds................ 8,581,600 (170,498) 313,112
Redemptions............................ (1,722,323) (205,541) (58,191)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (20,999) (2,930) (253)
Adjustments to maintain reserves....... (21,308) 4 (62)
-------------- -------------- --------------
Net equity transactions............ 86,344,806 2,197,421 4,127,199
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 98,023,275 3,461,154 3,055,132
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 2,578,270 3,251,340 196,208
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 100,601,545 6,712,494 3,251,340
============== ============== ==============
</TABLE>
(continued)
<PAGE> 8
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NSATBal NSATCapAp NSATEqInc
------------------------------ ------------------------------ -------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 2,113,096 683,468 1,872,928 750,851 70,825
Mortality and expense risk charges
(note 2)............................. (578,114) (176,388) (2,766,087) (789,249) (190,451)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. 1,534,982 507,080 (893,159) (38,398) (119,626)
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 953,859 181,876 20,410,418 2,717,344 662,257
Cost of mutual fund shares sold........ (907,065) (178,647) (17,291,814) (2,728,836) (533,418)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. 46,794 3,229 3,118,604 (11,492) 128,839
Change in unrealized gain (loss)
on investments....................... (2,325,487) 328,826 (18,009,623) 14,966,388 3,294,853
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... (2,278,693) 332,055 (14,891,019) 14,954,896 3,423,692
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... 10,762 115,971 22,036,681 5,341,096 10,580
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... (732,949) 955,106 6,252,503 20,257,594 3,314,646
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 40,680,546 33,253,731 186,868,647 150,374,491 10,827,322
Transfers between funds................ (2,694,018) 4,913,679 (33,840,307) 25,963,419 1,031,331
Redemptions............................ (2,544,229) (833,930) (12,585,838) (3,752,392) (1,057,143)
Annuity benefits ...................... - - - - -
Contingent deferred sales charges
(note 2)............................. (32,122) (8,225) (275,367) (30,248) (20,478)
Adjustments to maintain reserves....... 44,627 177 (12,885) 53,212 (31)
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 35,454,804 37,325,432 140,154,250 172,608,482 10,781,001
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 34,721,855 38,280,538 146,406,753 192,866,076 14,095,647
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 39,173,071 892,533 195,527,481 2,661,405 12,791,973
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 73,894,926 39,173,071 341,934,234 195,527,481 26,887,620
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
NSATEqInc NSATGlobEq
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 75,504 84,740 141,975
Mortality and expense risk charges
(note 2)............................. (66,726) (244,287) (76,522)
-------------- -------------- --------------
Net investment activity.............. 8,778 (159,547) 65,453
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 376,534 526,452 685,356
Cost of mutual fund shares sold........ (366,898) (401,585) (668,251)
-------------- -------------- --------------
Realized gain (loss) on investments.. 9,636 124,867 17,105
Change in unrealized gain (loss)
on investments....................... 869,248 4,354,472 936,891
-------------- -------------- --------------
Net gain (loss) on investments....... 878,884 4,479,339 953,996
-------------- -------------- --------------
Reinvested capital gains............... 137,183 1,182,461 98,132
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 1,024,845 5,502,253 1,117,581
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 10,836,292 15,224,818 12,466,313
Transfers between funds................ 736,897 2,201,223 1,290,714
Redemptions............................ (392,814) (854,333) (359,325)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (5,629) (8,941) (2,129)
Adjustments to maintain reserves....... (359) 8,686 35
-------------- -------------- --------------
Net equity transactions............ 11,174,387 16,571,453 13,395,608
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 12,199,232 22,073,706 14,513,189
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 592,741 15,026,672 513,483
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 12,791,973 37,100,378 15,026,672
============== ============== ==============
</TABLE>
<PAGE> 9
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NSATGvtBd NSATHIncBd NSATMyMkt
------------------------------ ------------------------------ -------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 11,115,708 4,068,221 3,747,180 1,175,418 13,994,349
Mortality and expense risk charges
(note 2)............................. (1,915,411) (617,861) (429,794) (140,356) (3,003,994)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. 9,200,297 3,450,360 3,317,386 1,035,062 10,990,355
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 19,852,089 6,875,359 17,841,203 1,434,798 914,095,013
Cost of mutual fund shares sold........ (20,364,218) (6,712,656) (18,615,221) (1,454,954) (914,095,013)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. (512,129) 162,703 (774,018) (20,156) -
Change in unrealized gain (loss)
on investments....................... (15,046,720) 96,330 (1,931,626) (637,940) -
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... (15,558,849) 259,033 (2,705,644) (658,096) -
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... 458,147 644,842 20,477 - -
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... (5,900,405) 4,354,235 632,219 376,966 10,990,355
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 155,714,369 135,535,861 26,877,564 26,481,762 513,201,591
Transfers between funds................ (31,118,681) (2,966,402) (4,776,516) 2,932,999 (270,070,521)
Redemptions............................ (12,549,617) (4,331,237) (2,757,819) (701,614) (35,394,012)
Annuity benefits ...................... - - - - -
Contingent deferred sales charges
(note 2)............................. (152,236) (23,933) (38,131) (4,542) (569,286)
Adjustments to maintain reserves....... (5,324) 1,128 1,005 (12) 66,186
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 111,888,511 128,215,417 19,306,103 28,708,593 207,233,958
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 105,988,106 132,569,652 19,938,322 29,085,559 218,224,313
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 135,739,661 3,170,009 29,999,540 913,981 191,311,362
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 241,727,767 135,739,661 49,937,862 29,999,540 409,535,675
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
NSATMyMkt NSATMSecBd
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 5,541,671 3,046,558 1,155,410
Mortality and expense risk charges
(note 2)............................. (1,078,918) (461,845) (177,722)
-------------- -------------- --------------
Net investment activity.............. 4,462,753 2,584,713 977,688
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 74,592,150 3,225,045 474,327
Cost of mutual fund shares sold........ (74,592,150) (3,438,764) (482,830)
-------------- -------------- --------------
Realized gain (loss) on investments.. - (213,719) (8,503)
Change in unrealized gain (loss)
on investments....................... - (1,852,549) (757,239)
-------------- -------------- --------------
Net gain (loss) on investments....... - (2,066,268) (765,742)
-------------- -------------- --------------
Reinvested capital gains............... - - 31,361
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 4,462,753 518,445 243,307
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 406,622,866 27,508,026 29,533,663
Transfers between funds................ (219,515,750) (1,144,670) 4,903,909
Redemptions............................ (13,347,779) (2,473,128) (761,323)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (133,217) (41,232) (7,092)
Adjustments to maintain reserves....... 36,549 (217) 78
-------------- -------------- --------------
Net equity transactions............ 173,662,669 23,848,779 33,669,235
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 178,125,422 24,367,224 33,912,542
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 13,185,940 34,953,838 1,041,296
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 191,311,362 59,321,062 34,953,838
============== ============== ==============
</TABLE>
<PAGE> 10
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NSATMidCap NSATSmCapG NSATSmCapV
------------------------------ ------------------------------ -------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 26,390 40,624 - - -
Mortality and expense risk charges
(note 2)............................. (100,293) (39,241) (17,275) - (447,536)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. (73,903) 1,383 (17,275) - (447,536)
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 1,719,925 1,063,903 5,179,636 - 26,947,959
Cost of mutual fund shares sold........ (1,627,057) (1,093,420) (4,606,174) - (24,503,029)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. 92,868 (29,517) 573,462 - 2,444,930
Change in unrealized gain (loss)
on investments....................... 1,139,778 397,911 3,274,222 - (2,252,934)
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... 1,232,646 368,394 3,847,684 - 191,996
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... 906,636 - 510,845 - 11,306,131
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 2,065,379 369,777 4,341,254 - 11,050,591
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 5,311,828 6,187,234 3,532,204 - 25,899,735
Transfers between funds................ 629,075 558,871 6,524,803 - 3,995,622
Redemptions............................ (506,127) (98,756) (67,415) - (1,693,497)
Annuity benefits ...................... - - - - -
Contingent deferred sales charges
(note 2)............................. (6,847) (2,133) (334) - (30,984)
Adjustments to maintain reserves....... 4,046 6 (77,860) - 16,893
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 5,431,975 6,645,222 9,911,398 - 28,187,769
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 7,497,354 7,014,999 14,252,652 - 39,238,360
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 7,244,061 229,062 - - 29,728,543
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 14,741,415 7,244,061 14,252,652 - 68,966,903
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
NSATSmCapV NSATSmCo
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. - - -
Mortality and expense risk charges
(note 2)............................. $ (139,281) (590,685) (214,785)
-------------- -------------- --------------
Net investment activity.............. (139,281) (590,685) (214,785)
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 2,135,282 98,840,506 1,735,242
Cost of mutual fund shares sold........ (2,330,458) (90,285,318) (1,907,541)
-------------- -------------- --------------
Realized gain (loss) on investments.. (195,176) 8,555,188 (172,299)
Change in unrealized gain (loss)
on investments....................... (40,635) 15,852,354 424,838
-------------- -------------- --------------
Net gain (loss) on investments....... (235,811) 24,407,542 252,539
-------------- -------------- --------------
Reinvested capital gains............... - 4,052,068 -
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... (375,092) 27,868,925 37,754
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 24,448,985 28,999,047 35,742,935
Transfers between funds................ 5,269,520 4,674,356 6,599,455
Redemptions............................ (761,878) (2,442,726) (919,776)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (10,195) (58,681) (7,264)
Adjustments to maintain reserves....... 49 967 6
-------------- -------------- --------------
Net equity transactions............ 28,946,481 31,172,963 41,415,356
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 28,571,389 59,041,888 41,453,110
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 1,157,154 43,011,425 1,558,315
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 29,728,543 102,053,313 43,011,425
============== ============== ==============
</TABLE>
<PAGE> 11
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NSATStrGro NSATStrVal NSATTotRe
------------------------------ ------------------------------ -------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 114,007 63,791 2,607,845
Mortality and expense risk charges
(note 2)............................. (279,828) (43,967) (135,462) (72,683) (3,940,689)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. (279,828) (43,967) (21,455) (8,892) (1,332,844)
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 7,402,907 487,613 5,077,140 1,450,301 5,635,213
Cost of mutual fund shares sold........ (5,535,789) (466,818) (5,576,119) (1,513,062) (4,896,728)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. 1,867,118 20,795 (498,979) (62,761) 738,485
Change in unrealized gain (loss)
on investments....................... 18,826,217 809,463 (536,035) (125,831) 2,068,214
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... 20,693,335 830,258 (1,035,014) (188,592) 2,806,699
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... 4,290,875 - 422,281 - 18,733,710
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 24,704,382 786,291 (634,188) (197,484) 20,207,565
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 22,842,076 7,304,155 5,369,174 12,996,713 236,961,792
Transfers between funds................ 32,390,564 441,689 (3,499,556) 616,493 (11,925,544)
Redemptions............................ (1,318,965) (118,200) (549,563) (291,210) (20,433,946)
Annuity benefits ...................... - - - - (1,253)
Contingent deferred sales charges
(note 2)............................. (31,712) (2,477) (11,600) (1,123) (403,251)
Adjustments to maintain reserves....... 881 (24) (138) (115) (74)
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 53,882,844 7,625,143 1,308,317 13,320,758 204,197,724
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 78,587,226 8,411,434 674,129 13,123,274 224,405,289
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 8,737,476 326,042 13,606,737 483,463 285,881,294
-------------- -------------- -------------- -------------- -------------
Contract owners' equity end of period.... $ 87,324,702 8,737,476 14,280,866 13,606,737 510,286,583
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
NSATTotRe NBAMTGuard
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 1,708,752 136,645 1,976
Mortality and expense risk charges
(note 2)............................. (1,383,759) (509,102) (150,013)
-------------- -------------- --------------
Net investment activity.............. 324,993 (372,457) (148,037)
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 467,344 11,010,636 3,798,426
Cost of mutual fund shares sold........ (439,529) (10,638,188) (3,492,087)
-------------- -------------- --------------
Realized gain (loss) on investments.. 27,815 372,448 306,339
Change in unrealized gain (loss)
on investments....................... 4,936,630 5,598,352 594,984
-------------- -------------- --------------
Net gain (loss) on investments....... 4,964,445 5,970,800 901,323
-------------- -------------- --------------
Reinvested capital gains............... 11,040,291 - -
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 16,329,729 5,598,343 753,286
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 262,212,521 30,029,433 24,467,744
Transfers between funds................ 8,063,395 (1,195,248) 7,388,132
Redemptions............................ (6,698,439) (1,949,424) (704,350)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (83,262) (43,794) (8,663)
Adjustments to maintain reserves....... (796) (171) (16)
-------------- -------------- --------------
Net equity transactions............ 263,493,419 26,840,796 31,142,847
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 279,823,148 32,439,139 31,896,133
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 6,058,146 32,358,200 462,067
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 285,881,294 64,797,339 32,358,200
============== ============== ==============
</TABLE>
<PAGE> 12
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NBAMTMCGr NBAMTPart OppAggGro
------------------------------ ------------------------------ -------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - 2,804 1,329,409 110,164 -
Mortality and expense risk charges
(note 2)............................. (486,685) (128,063) (1,181,540) (710,975) (562,098)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. (486,685) (125,259) 147,869 (600,811) (562,098)
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 9,847,995 2,635,124 14,525,051 11,129,126 66,676,730
Cost of mutual fund shares sold........ (8,329,873) (2,223,804) (15,847,800) (12,460,209) (54,000,617)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. 1,518,122 411,320 (1,322,749) (1,331,083) 12,676,113
Change in unrealized gain (loss)
on investments....................... 29,692,933 4,390,487 5,530,836 (3,000,603) 36,427,451
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... 31,211,055 4,801,807 4,208,087 (4,331,686) 49,103,564
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... 854,495 19,626 2,312,016 3,470,168 -
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 31,578,865 4,696,174 6,667,972 (1,462,329) 48,541,466
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 39,386,252 18,933,486 35,775,813 107,647,557 40,719,412
Transfers between funds................ 6,571,008 3,753,367 (18,685,095) (8,050,973) 32,955,048
Redemptions............................ (1,774,431) (610,060) (4,980,093) (2,536,518) (2,221,684)
Annuity benefits ...................... - - - - -
Contingent deferred sales charges
(note 2)............................. (37,463) (5,247) (115,843) (22,496) (49,415)
Adjustments to maintain reserves....... 623 10,095 (187) (1,292) 1,821
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 44,145,989 22,081,641 11,994,595 97,036,278 71,405,182
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 75,724,854 26,777,815 18,662,567 95,573,949 119,946,648
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 28,359,137 1,581,322 108,935,535 13,361,586 27,386,709
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 104,083,991 28,359,137 127,598,102 108,935,535 147,333,357
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
OppAggGro OppCapAp
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 9,456 188,198 37,971
Mortality and expense risk charges
(note 2)............................. (119,282) (871,318) (174,030)
-------------- -------------- --------------
Net investment activity.............. (109,826) (683,120) (136,059)
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 1,420,396 1,778,562 597,638
Cost of mutual fund shares sold........ (1,460,125) (1,466,097) (673,390)
-------------- -------------- --------------
Realized gain (loss) on investments.. (39,729) 312,465 (75,752)
Change in unrealized gain (loss)
on investments....................... 1,711,620 36,882,889 4,326,733
-------------- -------------- --------------
Net gain (loss) on investments....... 1,671,891 37,195,354 4,250,981
-------------- -------------- --------------
Reinvested capital gains............... 97,107 2,067,307 458,139
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 1,659,172 38,579,541 4,573,061
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 21,395,189 69,998,087 34,076,956
Transfers between funds................ 4,014,156 26,275,783 2,552,479
Redemptions............................ (398,429) (3,288,357) (796,810)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (3,886) (64,894) (15,293)
Adjustments to maintain reserves....... 66 822 (7)
-------------- -------------- --------------
Net equity transactions............ 25,007,096 92,921,441 35,817,325
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 26,666,268 131,500,982 40,390,386
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 720,441 41,340,619 950,233
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 27,386,709 172,841,601 41,340,619
============== ============== ==============
</TABLE>
<PAGE> 13
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
OppGrinc VEWrldEMkt VEWrldHAs
------------------------------ ------------------------------ -------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 256,716 15,499 - 10,120 32,691
Mortality and expense risk charges
(note 2)............................. (821,624) (226,980) (135,165) (30,563) (47,094)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. (564,908) (211,481) (135,165) (20,443) (14,403)
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 2,205,547 1,051,542 49,595,652 1,437,687 33,912,002
Cost of mutual fund shares sold........ (2,181,405) (1,137,377) (44,294,831) (1,801,946) (33,450,865)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. 24,142 (85,835) 5,300,821 (364,259) 461,137
Change in unrealized gain (loss)
on investments....................... 16,554,000 (156,268) 6,929,541 (898,926) 349,586
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... 16,578,142 (242,103) 12,230,362 (1,263,185) 810,723
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... 432,510 341,298 - 8,995 -
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 16,445,744 (112,286) 12,095,197 (1,274,633) 796,320
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 71,680,449 47,098,256 8,623,115 5,631,777 2,392,796
Transfers between funds................ 5,709,038 4,855,602 10,280,791 (119,473) 1,791,654
Redemptions............................ (3,803,771) (1,267,689) (1,025,890) (159,609) (245,453)
Annuity benefits ...................... - - - - -
Contingent deferred sales charges
(note 2)............................. (65,301) (14,711) (32,807) (976) (1,862)
Adjustments to maintain reserves....... 129 6 621 120 5
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 73,520,544 50,671,464 17,845,830 5,351,839 3,937,140
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 89,966,288 50,559,178 29,941,027 4,077,206 4,733,460
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 51,643,553 1,084,375 4,734,742 657,536 2,047,555
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 141,609,841 51,643,553 34,675,769 4,734,742 6,781,015
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
VEWrldHAs VKMSRESec
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 2,513 1,176,823 10,631
Mortality and expense risk charges
(note 2)............................. (13,210) (195,387) (114,486)
-------------- -------------- --------------
Net investment activity.............. (10,697) 981,436 (103,855)
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. 1,320,656 8,332,839 1,342,798
Cost of mutual fund shares sold........ (1,839,705) (9,623,986) (1,619,581)
-------------- -------------- --------------
Realized gain (loss) on investments.. (519,049) (1,291,147) (276,783)
Change in unrealized gain (loss)
on investments....................... (85,920) (722,279) (1,172,272)
-------------- -------------- --------------
Net gain (loss) on investments....... (604,969) (2,013,426) (1,449,055)
-------------- -------------- --------------
Reinvested capital gains............... 61,720 - 104,608
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... (553,946) (1,031,990) (1,448,302)
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 2,371,551 8,349,713 17,955,980
Transfers between funds................ 111,448 (3,211,414) 861,422
Redemptions............................ (100,995) (943,773) (416,792)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. (454) (21,748) (1,112)
Adjustments to maintain reserves....... (228) (165) (276)
-------------- -------------- --------------
Net equity transactions............ 2,381,322 4,172,613 18,399,222
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 1,827,376 3,140,623 16,950,920
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 220,179 18,011,188 1,060,268
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 2,047,555 21,151,811 18,011,188
============== ============== ==============
</TABLE>
<PAGE> 14
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
VVIFDStk VVIFIQBd VVIFSmCoOPP
------------------------------ ------------------------------ -------------
1999 1998 1999 1998 1999
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 13,921 - 31,107 - 6,490
Mortality and expense risk charges
(note 2)............................. (7,664) - (1,470) - (889)
-------------- -------------- -------------- -------------- -------------
Net investment activity.............. 6,257 - 29,637 - 5,601
-------------- -------------- -------------- -------------- -------------
Proceeds from mutual fund shares sold.. 79,603 - 18,422 - 291
Cost of mutual fund shares sold........ (82,834) - (18,483) - (310)
-------------- -------------- -------------- -------------- -------------
Realized gain (loss) on investments.. (3,231) - (61) - (19)
Change in unrealized gain (loss)
on investments....................... 164,023 - (32,432) - 11,787
-------------- -------------- -------------- -------------- -------------
Net gain (loss) on investments....... 160,792 - (32,493) - 11,768
-------------- -------------- -------------- -------------- -------------
Reinvested capital gains............... - - - - -
-------------- -------------- -------------- -------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 167,049 - (2,856) - 17,369
-------------- -------------- -------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 3,821,737 - 1,758,972 - 1,359,026
Transfers between funds................ 65,984 - - - -
Redemptions............................ (13,451) - (1,445) - -
Annuity benefits ...................... - - - - -
Contingent deferred sales charges
(note 2)............................. (305) - (43) - -
Adjustments to maintain reserves....... (3,436) - (22,296) - (5,256)
-------------- -------------- -------------- -------------- -------------
Net equity transactions............ 3,870,529 - 1,735,188 - 1,353,770
-------------- -------------- -------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 4,037,578 - 1,732,332 - 1,371,139
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. - - - - -
-------------- -------------- -------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 4,037,578 - 1,732,332 - 1,371,139
============== ============== ============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
VVIFSmCoOPP WPGrinc
-------------- ------------------------------
1998 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. - 173,949 108,063
Mortality and expense risk charges
(note 2)............................. - (178,005) (65,537)
-------------- -------------- --------------
Net investment activity.............. - (4,056) 42,526
-------------- -------------- --------------
Proceeds from mutual fund shares sold.. - 5,363,260 492,211
Cost of mutual fund shares sold........ - (5,013,179) (462,324)
-------------- -------------- --------------
Realized gain (loss) on investments.. - 350,081 29,887
Change in unrealized gain (loss)
on investments....................... - (232,251) 416,403
-------------- -------------- --------------
Net gain (loss) on investments....... - 117,830 446,290
-------------- -------------- --------------
Reinvested capital gains............... - 313,236 -
-------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... - 427,010 488,816
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... - 8,990,039 11,279,862
Transfers between funds................ - (3,279,579) 1,072,048
Redemptions............................ - (785,224) (178,134)
Annuity benefits ...................... - - -
Contingent deferred sales charges
(note 2)............................. - (8,341) (1,134)
Adjustments to maintain reserves....... - (17,238) (786)
-------------- -------------- --------------
Net equity transactions............ - 4,899,657 12,171,856
-------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... - 5,326,667 12,660,672
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. - 13,095,692 435,020
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... - 18,422,359 13,095,692
============== ============== ==============
</TABLE>
<PAGE> 15
NATIONWIDE VARIABLE ACCOUNT-9
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
WPIntEq WPPVenCap
------------------------------ ------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 323,682 82,563 - -
Mortality and expense risk charges
(note 2)............................. (245,117) (89,474) (102,042) (30,241)
-------------- -------------- -------------- --------------
Net investment activity.............. 78,565 (6,911) (102,042) (30,241)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold.. 158,927,167 2,101,509 20,338,944 1,184,605
Cost of mutual fund shares sold........ (149,550,425) (2,099,792) (17,967,401) (1,319,705)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.. 9,376,742 1,717 2,371,543 (135,100)
Change in unrealized gain (loss)
on investments....................... 4,764,159 (655,153) 4,746,233 268,939
-------------- -------------- -------------- --------------
Net gain (loss) on investments....... 14,140,901 (653,436) 7,117,776 133,839
-------------- -------------- -------------- --------------
Reinvested capital gains............... - - - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract
owners' equity resulting from
operations....................... 14,219,466 (660,347) 7,015,734 103,598
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 7,668,878 14,240,840 3,304,912 5,338,928
Transfers between funds................ 5,802,849 1,644,029 5,171,722 1,058,670
Redemptions............................ (1,105,825) (211,060) (382,170) (134,332)
Annuity benefits ...................... - - - -
Contingent deferred sales charges
(note 2)............................. (28,643) (2,448) (9,129) (810)
Adjustments to maintain reserves....... (44,309) (112) 86 15
-------------- -------------- -------------- --------------
Net equity transactions............ 12,292,950 15,671,249 8,085,421 6,262,471
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 26,512,416 15,010,902 15,101,155 6,366,069
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 15,824,159 813,257 6,508,542 142,473
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 42,336,575 15,824,159 21,609,697 6,508,542
============== ============== ============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 16
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
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)
Dreyfus VIF - European Equities Fund (DryEuroEq)
Federated Insurance Series: Federated Quality Bond Fund II
(FedQualBd)
Portfolios of the Fidelity Variable Insurance Products Fund (
Fidelity VIP);
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)
<PAGE> 17
Nationwide SAT - Multi Sector Bond Fund (NSATMSecBd)
Nationwide SAT - Select Advisers Mid Cap Fund (NSATMidCap)
Nationwide SAT - Select Advisors Small Cap Growth Fund
(NSATSmCapG)
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)
Oppenheimer VAF - Capital Appreciation Fund (OppCapAp)
(formerly Oppenheimer VAF - Growth Fund)
Oppenheimer VAF - Main Street Growth & Income Fund (OppGrInc)
(formerly Oppenheimer VAF - Growth & Income Fund)
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 Life Investment Trust (Van
Kampen LIT);
Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio
(VKMSRESec)
Portfolio of the Victory Variable Insurance Funds ( Victory VIF);
Victory VIF - Diversified Stock Fund - Class A (VVIFDStk)
Victory VIF - Investment Quality Bond Fund - Class A (VVIFIQBd)
Victory VIF - Small Company Opportunity Fund - Class A
(VVIFSmCoOpp)
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, 1999, 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.
(Continued)
<PAGE> 18
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(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, 1999. 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.
(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.
(f) Calculation of Annuity Reserves
Annuity reserves are computed for contracts in the variable payout
stage according to industry standard mortality tables. The assumed
investment return is 3.5 percent unless the annuitant elects otherwise,
in which case the rate may vary from 3.5 percent to 7 percent, as
regulated by the laws of the respective states. The mortality risk is
fully borne by the Company and may result in additional amounts being
transferred into the Account by the Company to cover greater longevity
of annuitants than expected. Conversely, if reserves exceed amounts
required, transfers may be made to the Company.
(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.
On BOA Future, BOA V and BOA Choice contracts, the contingent deferred
sales charge will not exceed 7% of the lesser of purchase payments or
the amount surrendered, such charge declining to 0% after the purchase
payment has been held in the contract for 84 months. On IVA contracts,
the contingent deferred sales charge will not exceed 6% of the lesser
of purchase payments or the amount surrendered, such charge declining
to 0% after the purchase payment has been held in the contract for 84
months. No sales charges are deducted on BOA Exclusive II contracts.
No sales charges are deducted on redemptions used to purchase units in
the fixed investment options of the company.
<PAGE> 19
(b) Mortality and Expense Risk Charges
The Company deducts a mortality and expense risk charge assessed
through the daily unit value calculation as follows:
For the BOA Future contract, this charge ranges from an annual rate of
.95% to a maximum of 2.65% if all permissible rider options are
utilized. For this contract, the rider options include: (a) reduced
purchase payment; (b) five year CDSC; (c) CDSC waiver; (d) death
benefit; (e) guaranteed minimum income benefit and (f) purchase payment
bonus.
For the BOA Exclusive II contract, this charge ranges from an annual
rate of 1.20% to a maximum of 1.90% if all permissible rider options
are utilized. For this contract, the rider options include: (a) death
benefit and (b) guaranteed minimum income benefit.
For the BOA V contract, this charge ranges from an annual rate of 1.10%
to a maximum of 1.70% if all permissible rider options are utilized.
For this contract, the rider options include: (a) five year CDSC; (b)
CDSC waiver and (c) death benefit.
For the BOA Choice contract, this charge ranges from an annual rate of
1.20% to a maximum of 1.70% if all permissible rider options are
utilized. For this contract, the rider options include: (a) death
benefit and (b) guaranteed minimum income benefit.
For the IVA contract, this charge ranges from an annual rate of 1.25%
to a maximum of 1.45% if the death benefit option is utilized.
The rider options and permissible combinations and related charges for
the foregoing are described in the applicable product prospectus.
The following table provides mortality and expense risk charges by
asset fee rate for the year ended December 31, 1999:
<TABLE>
<CAPTION>
TOTAL ACVPIncGr ACVPInt ACVPValue DrySRGro
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............. $ 21,757,026 530,318 491,566 169,162 435,760
1.00% ............. 14,345,607 320,932 302,747 83,416 294,442
1.05% ............. 2,884,191 53,209 53,182 21,258 52,669
1.10% ............. 336,355 19,660 3,060 625 32,335
1.15% ............. 88,576 4,321 1,274 193 5,557
1.20% ............. 686,547 23,828 16,105 11,432 17,405
1.25% ............. 131,921 5,332 3,969 3,047 2,554
1.30% ............. 27,305 1,049 307 1 2,523
1.35% ............. 1,720 146 14 - 48
1.40% ............. 2,453,510 68,402 74,241 15,312 30,250
1.45% ............. 13,227 146 375 14 496
1.50% ............. 26,101 383 1,200 215 505
1.55% ............. 1,890 - 3 114 5
1.60% ............. 301 - - - 5
1.65% ............. 4,975 82 21 6 141
1.70% ............. 695 7 1 - 12
1.75% ............. 94 20 - 2 2
1.80% ............. 2 - - - -
------------ ------------ ------------ ------------ ------------
Total .......... $ 42,760,043 1,027,835 948,065 304,797 874,709
============ ============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 20
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
DryStkix DryCapAp DryEuroEq FedQualBd FidVIPEIS
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 3,016,838 589,617 1,284 9,265 1,404,837
1.00% ............ 2,024,620 363,958 576 5,642 1,054,365
1.05% ............ 377,296 90,450 24 686 234,084
1.10% ............ 56,608 14,946 13 145 12,542
1.15% ............ 15,814 5,757 - 75 2,703
1.20% ............ 87,196 29,645 242 439 34,175
1.25% ............ 16,805 3,147 45 9 10,460
1.30% ............ 7,002 2,173 3 5 1,165
1.35% ............ 313 57 - - 24
1.40% ............ 305,698 55,571 275 3,590 86,918
1.45% ............ 1,705 314 - - 1,448
1.50% ............ 5,114 775 - 58 1,192
1.55% ............ 251 4 - - 210
1.60% ............ 71 - - - -
1.65% ............ 196 16 - 12 143
1.70% ............ 148 3 - - 46
1.75% ............ 28 6 - - -
1.80% ............ - - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 5,915,703 1,156,439 2,462 19,926 2,844,312
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FidVIPGrS FidVIPHIS FidVIPOvS FidVIPConS FidVIPGrOpS
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 1,493,811 745,195 242,387 1,313,821 747,075
1.00% ............ 1,070,697 456,701 131,511 875,110 619,622
1.05% ............ 186,137 142,636 34,707 141,335 100,891
1.10% ............ 32,456 5,464 974 28,621 4,981
1.15% ............ 9,401 1,244 251 4,870 636
1.20% ............ 80,167 13,927 9,541 67,792 24,590
1.25% ............ 12,973 3,815 2,593 7,593 3,367
1.30% ............ 1,883 167 35 2,627 129
1.35% ............ 130 13 10 56 5
1.40% ............ 209,213 89,860 44,059 120,968 74,271
1.45% ............ 1,510 115 72 391 52
1.50% ............ 2,173 393 385 2,165 664
1.55% ............ 231 17 3 122 95
1.60% ............ 73 - - - -
1.65% ............ 2,216 8 9 281 13
1.70% ............ 200 - 2 79 3
1.75% ............ 3 - - 10 -
1.80% ............ 1 - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 3,103,275 1,459,555 466,539 2,565,841 1,576,394
============ ============ ============ ============ ============
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
MSEmMkt NSATBal NSATCapAp NSATEqInc NSATGlobEq
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 27,299 309,458 1,481,740 92,487 120,101
1.00% ............ 10,632 207,599 933,311 76,651 78,975
1.05% ............ 3,619 38,488 161,644 13,852 18,186
1.10% ............ 79 2,657 23,382 325 1,292
1.15% ............ 25 500 10,326 128 233
1.20% ............ 2,260 4,301 36,734 3,120 4,014
1.25% ............ 44 666 5,016 159 1,475
1.30% ............ - 381 1,371 6 26
1.35% ............ - 44 125 - 1
1.40% ............ 3,278 13,748 110,388 3,561 19,763
1.45% ............ - 94 539 20 27
1.50% ............ - 166 610 113 140
1.55% ............ - - 115 - 54
1.60% ............ - - 63 - -
1.65% ............ 4 11 722 17 -
1.70% ............ - 1 1 6 -
1.75% ............ - - - 6 -
1.80% ............ - - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 47,240 578,114 2,766,087 190,451 244,287
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATGvtBd NSATHIncBd NSATMyMkt NSATMSecBd NSATMidCap
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 990,037 204,521 1,352,383 235,173 50,518
1.00% ............ 643,567 144,262 794,629 151,781 34,803
1.05% ............ 154,193 49,974 208,688 47,907 9,262
1.10% ............ 9,747 598 10,654 233 512
1.15% ............ 5,137 202 1,159 274 76
1.20% ............ 10,538 3,088 56,604 2,859 891
1.25% ............ 4,554 609 8,624 239 61
1.30% ............ 224 11 69 19 2
1.35% ............ 6 - 584 - -
1.40% ............ 96,366 26,223 566,291 23,247 4,046
1.45% ............ 433 118 1,006 24 -
1.50% ............ 583 132 3,134 28 27
1.55% ............ 9 5 - - 92
1.60% ............ 5 3 - - -
1.65% ............ 8 48 166 61 3
1.70% ............ - - 3 - -
1.75% ............ 4 - - - -
1.80% ............ - - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 1,915,411 429,794 3,003,994 461,845 100,293
============ ============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 22
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
NSATSmCapG NSATSmCapV NSATSmCo NSATStrGro NSATStrVal
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............. $ 8,888 254,795 307,391 158,226 82,767
1.00% ............. 4,485 127,478 192,099 77,342 35,717
1.05% ............. 1,287 33,249 35,675 12,673 12,621
1.10% ............. 44 2,654 1,852 2,093 156
1.15% ............. 8 618 452 430 63
1.20% ............. 622 4,811 4,691 7,476 742
1.25% ............. 211 1,208 1,319 2,035 153
1.30% ............. 2 60 96 60 1
1.35% ............. - 5 4 - -
1.40% ............. 1,371 22,257 46,795 18,687 2,893
1.45% ............. 87 139 32 207 127
1.50% ............. 270 260 277 547 222
1.55% ............. - - - 2 -
1.60% ............. - 2 - 4 -
1.65% ............. - - - 38 -
1.70% ............. - - 2 8 -
1.75% ............. - - - - -
1.80% ............. - - - - -
------------ ------------ ------------ ------------ ------------
Total .......... $ 17,275 447,536 590,685 279,828 135,462
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATTotRe NBAMTGuard NBAMTMCGr NBAMTPart OppAggGro
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............. $ 2,108,337 236,980 248,428 624,656 295,789
1.00% ............. 1,452,523 185,756 158,289 449,076 162,366
1.05% ............. 227,585 42,007 38,476 71,153 32,685
1.10% ............. 38,153 4,898 5,110 2,579 4,818
1.15% ............. 10,041 844 698 929 1,135
1.20% ............. 18,885 10,395 14,834 9,160 11,285
1.25% ............. 6,859 675 1,521 3,516 4,384
1.30% ............. 3,288 305 333 158 347
1.35% ............. 95 - 1 - 2
1.40% ............. 71,871 26,977 18,251 19,974 47,983
1.45% ............. 1,957 49 204 186 498
1.50% ............. 671 212 411 120 677
1.55% ............. 336 3 105 12 3
1.60% ............. - - - - -
1.65% ............. 31 1 17 21 101
1.70% ............. 51 - 7 - 25
1.75% ............. 5 - - - -
1.80% ............. 1 - - - -
------------ ------------ ------------ ------------ ------------
Total .......... $ 3,940,689 509,102 486,685 1,181,540 562,098
============ ============ ============ ============ ============
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
OppCapAp OppGrinc VEWrldEMkt VEWrldHAs VKMSRESec
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 453,566 404,018 73,513 25,572 116,110
1.00% ............ 293,967 285,168 35,483 12,580 57,784
1.05% ............ 51,851 65,935 9,350 3,386 11,719
1.10% ............ 6,885 3,782 420 141 260
1.15% ............ 1,555 1,173 69 28 74
1.20% ............ 19,500 18,378 3,124 1,337 3,074
1.25% ............ 3,703 5,683 713 161 109
1.30% ............ 1,025 295 21 37 22
1.35% ............ 32 5 - - -
1.40% ............ 38,023 35,301 12,356 3,827 6,216
1.45% ............ 96 598 105 8 -
1.50% ............ 958 835 11 17 19
1.55% ............ - 95 - - -
1.60% ............ 72 - - - -
1.65% ............ 70 282 - - -
1.70% ............ 9 75 - - -
1.75% ............ 6 1 - - -
1.80% ............ - - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 871,318 821,624 135,165 47,094 195,387
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
VVIFDStk VVIFIQBd VVIFSmCoOpp WPGrInc WPintEq
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ - - - 107,503 137,775
1.00% ............ - - - 50,145 61,839
1.05% ............ - - - 13,682 15,866
1.10% ............ - - - 129 177
1.15% ............ - - - 122 181
1.20% ............ 7,367 1,387 850 1,775 3,193
1.25% ............ 73 17 14 349 1,728
1.30% ............ - - - - 5
1.35% ............ - - - - -
1.40% ............ - - - 4,093 24,158
1.45% ............ - - - - 35
1.50% ............ 115 5 10 196 113
1.55% ............ - - - 4 -
1.60% ............ - - - - 3
1.65% ............ 109 61 15 - 44
1.70% ............ - - - 6 -
1.75% ............ - - - 1 -
1.80% ............ - - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 7,664 1,470 889 178,005 245,117
============ ============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 24
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
WPPVenCap
------------
0.95% ............ $ 58,059
1.00% ............ 22,961
1.05% ............ 10,614
1.10% ............ 295
1.15% ............ -
1.20% ............ 2,768
1.25% ............ 334
1.30% ............ 72
1.35% ............ -
1.40% ............ 6,938
1.45% ............ -
1.50% ............ -
1.55% ............ -
1.60% ............ -
1.65% ............ 1
1.70% ............ -
1.75% ............ -
1.80% ............ -
------------
Total ......... $ 102,042
============
The following table provides mortality and expense risk charges by
asset fee rate for the year ended December 31, 1998:
<TABLE>
<CAPTION>
TOTAL ACVPIncGr ACVPint ACVPValue DrySRGro
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 6,687,096 104,919 135,323 68,970 87,632
1.00% ............ 4,480,001 64,746 74,971 44,443 63,281
1.05% ............ 1,009,646 13,006 14,635 8,106 13,367
1.10% ............ 909 46 9 4 51
1.15% ............ 244 14 9 - 15
1.20% ............ 1,510 19 2 24 13
1.25% ............ 131 - - 2 15
1.30% ............ 50 - - - 6
1.35% ............ 37 - 4 - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 12,179,624 182,750 224,953 121,549 164,380
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
DryStkix DryCapAp FidVIPEIS FidVIPGrS FidVIPHIS
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 736,785 111,207 505,712 212,170 294,475
1.00% ............ 495,327 62,252 395,500 166,839 193,581
1.05% ............ 102,440 17,737 90,638 35,112 58,296
1.10% ............ 137 62 58 51 22
1.15% ............ 51 27 7 10 5
1.20% ............ 305 19 41 99 16
1.25% ............ 30 - 22 6 -
1.30% ............ 2 4 14 1 -
1.35% ............ 5 4 - - 4
------------ ------------ ------------ ------------ ------------
Total ......... $ 1,335,082 191,312 991,992 414,288 546,399
============ ============ ============ ============ ============
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
FidVIPOvS FidVIPCOnS FidVIPGrOpS MSEmMkt NSATBal
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 70,614 299,506 225,407 13,756 90,403
1.00% ............ 42,096 193,026 198,453 5,701 70,281
1.05% ............ 13,142 37,910 34,785 1,939 15,676
1.10% ............ - 67 23 - 11
1.15% ............ 2 15 - - 7
1.20% ............ 32 115 7 8 9
1.25% ............ - - - 1 -
1.30% ............ - 2 - - 1
1.35% ............ - - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 125,886 530,641 458,675 21,405 176,388
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATCapAp NSATEqinc NSATGlobEq NSATGvtBd NSATHIncBd
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 465,341 34,439 39,570 325,601 70,627
1.00% ............ 270,821 27,139 28,746 228,102 51,930
1.05% ............ 52,969 5,129 8,199 64,068 17,784
1.10% ............ 81 - 5 51 -
1.15% ............ 20 1 - 13 -
1.20% ............ 17 18 - 11 14
1.25% ............ - - 2 14 1
1.30% ............ - - - 1 -
1.35% ............ - - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 789,249 66,726 76,522 617,861 140,356
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATMyMkt NSATMSecBd NSATMidCap NSATSmCapV NSATSmCo
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 597,802 95,878 20,251 83,736 117,084
1.00% ............ 367,633 61,058 14,445 45,868 81,828
1.05% ............ 112,880 20,762 4,536 9,629 15,866
1.10% ............ 56 2 9 7 7
1.15% ............ 1 - - 4 -
1.20% ............ 530 20 - 35 -
1.25% ............ - 1 - 2 -
1.30% ............ - 1 - - -
1.35% ............ 16 - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 1,078,918 177,722 39,241 139,281 214,785
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATStrGro NSATStrVal NSATTotRe NBAMTGuard NBAMTMCGr
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 27,226 41,771 790,615 72,339 60,842
1.00% ............ 13,699 23,731 504,264 65,593 55,230
1.05% ............ 3,029 7,171 88,737 12,071 11,986
1.10% ............ 12 1 65 10 1
1.15% ............ - - 29 - -
1.20% ............ - 9 28 - 4
1.25% ............ - - 9 - -
1.30% ............ 1 - 8 - -
1.35% ............ - - 4 - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 43,967 72,683 1,383,759 150,013 128,063
============ ============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 26
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
NBAMTPart OppAggGro OppCapAp OppGrinc VEWrldEMkt
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 403,079 66,368 97,646 118,139 15,766
1.00% ............ 264,681 43,278 61,251 87,278 11,953
1.05% ............ 43,176 9,592 15,113 21,510 2,830
1.10% ............ 16 7 5 18 -
1.15% ............ 3 2 2 5 -
1.20% ............ 17 26 6 26 14
1.25% ............ 3 5 6 - -
1.30% ............ - 4 1 4 -
1.35% ............ - - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 710,975 119,282 174,030 226,980 30,563
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
VEWrldHAs VKMSRESec WPGrinc WPIntEq WPPVenCap
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
0.95% ............ $ 8,058 67,026 39,367 53,651 17,995
1.00% ............ 3,644 39,789 19,708 28,614 9,221
1.05% ............ 1,503 7,635 6,454 7,209 3,019
1.10% ............ 5 8 2 - -
1.15% ............ - 2 - - -
1.20% ............ - 26 - - -
1.25% ............ - - 6 - 6
1.30% ............ - - - - -
1.35% ............ - - - - -
------------ ------------ ------------ ------------ ------------
Total ......... $ 13,210 114,486 65,537 89,474 30,241
============ ============ ============ ============ ============
</TABLE>
(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> 27
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1999.
<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 .............................. 2,690,998 15.291612 41,149,697 17%
Non-tax Qualified .......................... 2,833,886 15.291612 43,334,685 17%
American Century VP -
American Century VP International:
Tax Qualified .............................. 2,425,184 19.282175 46,762,822 62%
Non-tax Qualified .......................... 2,784,977 19.282175 53,700,414 62%
American Century VP -
American Century VP Value:
Tax Qualified .............................. 954,736 10.498316 10,023,120 (2)%
Non-tax Qualified .......................... 1,026,271 10.498316 10,774,117 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified .............................. 2,847,028 16.794438 47,814,235 29%
Non-tax Qualified .......................... 2,125,519 16.794438 35,696,897 29%
Dreyfus Stock Index Fund:
Tax Qualified .............................. 14,498,220 15.692141 227,508,112 19%
Non-tax Qualified .......................... 15,265,955 15.692141 239,555,518 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified .............................. 2,549,775 14.595134 37,214,308 10%
Non-tax Qualified .......................... 3,204,478 14.595134 46,769,786 10%
Dreyfus VIF -
European Equity Fund:
Tax Qualified .............................. 41,766 12.898688 538,727 29%(a)
Non-tax Qualified .......................... 54,269 12.898688 699,999 29%(a)
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified .............................. 179,065 9.806807 1,756,056 (2)%(a)
Non-tax Qualified .......................... 169,575 9.806807 1,662,989 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified .............................. 7,672,595 12.021290 92,234,490 5%
Non-tax Qualified .......................... 7,100,475 12.021290 85,356,869 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified .............................. 7,650,757 18.830990 144,071,329 36%
Non-tax Qualified .......................... 7,754,684 18.830990 146,028,377 36%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified .............................. 4,486,911 10.262325 46,046,139 7%
Non-tax Qualified .......................... 4,783,500 10.262325 49,089,832 7%
</TABLE>
(Continued)
<PAGE> 28
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ............................... 1,153,906 15.589761 17,989,119 41%
Non-tax Qualified ........................... 1,895,187 15.589761 29,545,512 41%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ............................... 6,845,562 15.755094 107,852,473 23%
Non-tax Qualified ........................... 6,862,565 15.755094 108,120,357 23%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ............................... 3,626,724 13.235715 48,002,285 3%
Non-tax Qualified ........................... 3,948,998 13.235715 52,267,812 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax Qualified ............................... 177,847 9.477539 1,685,552 28%
Non-tax Qualified ........................... 212,802 9.477539 2,016,839 28%
Nationwide SAT - Balanced Fund:
Tax Qualified ............................... 1,986,315 10.834304 21,520,341 0%
Non-tax Qualified ........................... 1,732,414 10.834304 18,769,500 0%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ............................... 7,218,822 13.808913 99,684,085 3%
Non-tax Qualified ........................... 6,364,816 13.808913 87,891,190 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified ............................... 416,097 13.600816 5,659,259 17%
Non-tax Qualified ........................... 528,751 13.600816 7,191,445 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified ............................... 567,148 14.515197 8,232,265 22%
Non-tax Qualified ........................... 697,119 14.515197 10,118,820 22%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ............................... 6,202,151 10.583479 65,640,335 (3)%
Non-tax Qualified ........................... 5,468,943 10.583479 57,880,443 (3)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ............................... 1,052,700 10.938415 11,514,869 2%
Non-tax Qualified ........................... 1,171,631 10.938415 12,815,786 2%
Nationwide SAT - Money Market Fund:
Tax Qualified ............................... 8,459,558 10.909142 92,286,519 4%
Non-tax Qualified ........................... 7,978,115 10.909142 87,034,389 4%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified ............................... 1,525,742 10.313452 15,735,667 1%
Non-tax Qualified ........................... 1,426,549 10.313452 14,712,645 1%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ............................... 287,257 13.078919 3,757,011 20%
Non-tax Qualified ........................... 273,331 13.078919 3,574,874 20%
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT -
Select Advisers Small Cap Growth Fund:
Tax Qualified ............................... 123,064 20.372476 2,507,118 104%(a)
Non-tax Qualified ........................... 175,712 20.372476 3,579,689 104%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ............................... 1,560,795 11.943543 18,641,422 27%
Non-tax Qualified ........................... 1,724,288 11.943543 20,594,108 27%
Nationwide SAT - Small Company Fund:
Tax Qualified ............................... 1,832,595 13.720318 25,143,786 43%
Non-tax Qualified ........................... 1,989,069 13.720318 27,290,659 43%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ............................... 992,231 21.195607 21,030,938 83%
Non-tax Qualified ........................... 1,218,089 21.195607 25,818,136 83%
Nationwide SAT - Strategic Value Fund:
Tax Qualified ............................... 349,117 9.687523 3,382,079 (4)%
Non-tax Qualified ........................... 506,067 9.687523 4,902,536 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified ............................... 12,724,239 12.689484 161,464,027 6%
Non-tax Qualified ........................... 8,751,347 12.689484 111,050,078 6%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified ............................... 961,809 15.595438 14,999,833 14%
Non-tax Qualified ........................... 980,827 15.595438 15,296,427 14%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ............................... 1,006,419 24.609353 24,767,320 52%
Non-tax Qualified ........................... 1,117,405 24.609353 27,498,614 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ............................... 3,101,826 11.122733 34,500,782 6%
Non-tax Qualified ........................... 2,953,135 11.122733 32,846,932 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ............................... 1,788,303 19.295630 34,506,433 82%
Non-tax Qualified ........................... 1,959,307 19.295630 37,806,063 82%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ............................... 2,455,900 16.935851 41,592,756 40%
Non-tax Qualified ........................... 2,580,016 16.935851 43,694,767 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ............................... 2,722,872 12.826564 34,925,092 21%
Non-tax Qualified ........................... 2,648,768 12.826564 33,974,592 21%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified ............................... 710,892 11.409242 8,110,739 98%
Non-tax Qualified ........................... 942,982 11.409242 10,758,710 98%
</TABLE>
(Continued)
<PAGE> 30
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified .............................. 220,914 7.358645 1,625,628 20%
Non-tax Qualified .......................... 195,186 7.358645 1,436,304 20%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified .............................. 685,816 8.662065 5,940,583 (4)%
Non-tax Qualified .......................... 759,304 8.662065 6,577,141 (4)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified .............................. 378,228 12.124398 4,585,787 5%
Non-tax Qualified .......................... 450,717 12.124398 5,464,672 5%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified .............................. 686,977 14.993656 10,300,297 52%
Non-tax Qualified .......................... 890,352 14.993656 13,349,632 52%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax Qualified .............................. 336,738 16.833540 5,668,493 62%
Non-tax Qualified .......................... 423,065 16.833540 7,121,682 62%
Asset fee @ 1.00% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified .............................. 1,586,053 15.274980 24,226,928 17%
Non-tax Qualified .......................... 1,607,606 15.274980 24,556,149 17%
American Century VP -
American Century VP International:
Tax Qualified .............................. 1,533,035 19.261196 29,528,088 62%
Non-tax Qualified .......................... 1,546,288 19.261196 29,783,356 62%
American Century VP -
American Century VP Value:
Tax Qualified .............................. 468,087 10.486868 4,908,767 (2)%
Non-tax Qualified .......................... 477,945 10.486868 5,012,146 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified .............................. 1,646,571 16.776156 27,623,132 29%
Non-tax Qualified .......................... 1,408,453 16.776156 23,628,427 29%
Dreyfus Stock Index Fund:
Tax Qualified .............................. 10,096,625 15.675065 158,265,253 19%
Non-tax Qualified .......................... 9,009,878 15.675065 141,230,423 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified .............................. 1,765,804 14.579248 25,744,094 10%
Non-tax Qualified .......................... 1,673,895 14.579248 24,404,130 10%
Dreyfus VIF -
European Equity Fund:
Tax Qualified .............................. 22,852 12.897004 294,722 29%(a)
Non-tax Qualified .......................... 12,111 12.897004 156,196 29%(a)
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified .............................. 84,481 9.803523 828,211 (2)%(a)
Non-tax Qualified .......................... 137,958 9.803523 1,352,474 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified .............................. 5,052,392 12.008202 60,670,144 5%
Non-tax Qualified .......................... 5,482,699 12.008202 65,837,357 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified .............................. 5,450,461 18.810518 102,525,995 36%
Non-tax Qualified .......................... 4,942,338 18.810518 92,967,938 36%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified .............................. 2,467,569 10.251150 25,295,420 7%
Non-tax Qualified .......................... 2,678,471 10.251150 27,457,408 7%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified .............................. 754,434 15.572798 11,748,648 41%
Non-tax Qualified .......................... 703,108 15.572798 10,949,359 41%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified .............................. 4,360,828 15.737973 68,630,593 23%
Non-tax Qualified .......................... 4,271,544 15.737973 67,225,444 23%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified .............................. 2,904,875 13.221287 38,406,186 3%
Non-tax Qualified .......................... 2,903,624 13.221287 38,389,646 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax Qualified .............................. 82,636 9.467196 782,331 28%
Non-tax Qualified .......................... 69,175 9.467196 654,893 28%
Nationwide SAT - Balanced Fund:
Tax Qualified .............................. 1,274,299 10.822502 13,791,103 0%
Non-tax Qualified .......................... 1,025,400 10.822502 11,097,394 0%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified .............................. 4,491,316 13.793878 61,952,665 3%
Non-tax Qualified .......................... 3,382,879 13.793878 46,663,020 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified .............................. 328,594 13.586032 4,464,289 17%
Non-tax Qualified .......................... 411,828 13.586032 5,595,108 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified .............................. 331,568 14.499401 4,807,537 22%
Non-tax Qualified .......................... 402,444 14.499401 5,835,197 22%
Nationwide SAT -
Government Bond Fund:
Tax Qualified .............................. 3,887,245 10.571951 41,095,764 (3)%
Non-tax Qualified .......................... 3,354,315 10.571951 35,461,654 (3)%
</TABLE>
(Continued)
<PAGE> 32
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT -
High Income Bond Fund:
Tax Qualified .............................. 729,292 10.926498 7,968,608 2%
Non-tax Qualified .......................... 771,554 10.926498 8,430,383 2%
Nationwide SAT - Money Market Fund:
Tax Qualified .............................. 4,438,660 10.897217 48,369,041 4%
Non-tax Qualified .......................... 4,647,437 10.897217 50,644,129 4%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified .............................. 895,547 10.302225 9,226,127 1%
Non-tax Qualified .......................... 867,916 10.302225 8,941,466 1%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified .............................. 180,877 13.064679 2,363,100 20%
Non-tax Qualified .......................... 171,721 13.064679 2,243,480 20%
Nationwide SAT - Select Advisers
Small Cap Growth Fund:
Tax Qualified .............................. 78,533 20.365684 1,599,378 104%(a)
Non-tax Qualified .......................... 81,709 20.365684 1,664,060 104%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified .............................. 750,886 11.930542 8,958,477 27%
Non-tax Qualified .......................... 704,595 11.930542 8,406,200 27%
Nationwide SAT - Small Company Fund:
Tax Qualified .............................. 1,081,909 13.705373 14,827,966 43%
Non-tax Qualified .......................... 1,081,295 13.705373 14,819,551 43%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified .............................. 513,063 21.172544 10,862,849 83%
Non-tax Qualified .......................... 614,259 21.172544 13,005,426 83%
Nationwide SAT - Strategic Value Fund:
Tax Qualified .............................. 166,391 9.676976 1,610,162 (4)%
Non-tax Qualified .......................... 222,806 9.676976 2,156,088 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified .............................. 8,158,035 12.675660 103,408,478 6%
Non-tax Qualified .......................... 6,056,435 12.675660 76,769,311 6%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified .............................. 735,905 15.578481 11,464,282 14%
Non-tax Qualified .......................... 627,956 15.578481 9,782,601 14%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified .............................. 625,238 24.582570 15,369,957 52%
Non-tax Qualified .......................... 647,732 24.582570 15,922,917 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified .............................. 2,114,112 11.110632 23,489,120 6%
Non-tax Qualified .......................... 2,074,401 11.110632 23,047,906 6%
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified .............................. 992,375 19.274630 19,127,661 82%
Non-tax Qualified .......................... 1,028,055 19.274630 19,815,380 82%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified .............................. 1,696,031 16.917425 28,692,477 40%
Non-tax Qualified .......................... 1,605,365 16.917425 27,158,642 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified .............................. 1,667,923 12.812596 21,370,424 20%
Non-tax Qualified .......................... 1,778,201 12.812596 22,783,371 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified .............................. 357,687 11.396847 4,076,504 98%
Non-tax Qualified .......................... 359,944 11.396847 4,102,227 98%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified .............................. 116,193 7.350618 854,090 20%
Non-tax Qualified .......................... 100,478 7.350618 738,575 20%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified .............................. 385,417 8.652617 3,334,866 (4)%
Non-tax Qualified .......................... 264,581 8.652617 2,289,318 (4)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified .............................. 192,234 12.111181 2,328,181 5%
Non-tax Qualified .......................... 262,414 12.111181 3,178,143 5%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified .............................. 290,968 14.977312 4,357,919 52%
Non-tax Qualified .......................... 329,905 14.977312 4,941,090 52%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax Qualified .............................. 169,900 16.815230 2,856,908 62%
Non-tax Qualified .......................... 133,486 16.815230 2,244,598 62%
Asset fee @ 1.05% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified .............................. 198,463 15.258324 3,028,213 17%
Non-tax Qualified .......................... 322,820 15.258324 4,925,692 17%
American Century VP -
American Century VP International:
Tax Qualified .............................. 179,327 19.240268 3,450,300 62%
Non-tax Qualified .......................... 314,342 19.240268 6,048,024 62%
American Century VP -
American Century VP Value:
Tax Qualified .............................. 100,979 10.475442 1,057,800 (2)%
Non-tax Qualified .......................... 110,453 10.475442 1,157,044 (2)%
</TABLE>
(Continued)
<PAGE> 34
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ............................... 190,962 16.757880 3,200,118 29%
Non-tax Qualified ........................... 323,823 16.757880 5,426,587 29%
Dreyfus Stock Index Fund:
Tax Qualified ............................... 1,431,726 15.657978 22,417,934 19%
Non-tax Qualified ........................... 1,815,547 15.657978 28,427,795 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified ............................... 347,448 14.563385 5,060,019 10%
Non-tax Qualified ........................... 488,188 14.563385 7,109,670 10%
Dreyfus VIF - European Equity Fund:
Tax Qualified ............................... 888 12.895311 11,451 29%(a)
Non-tax Qualified ........................... 1,301 12.895311 16,777 29%(a)
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified ............................... 13,067 9.800240 128,060 (2)%(a)
Non-tax Qualified ........................... 13,067 9.800240 128,060 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ............................... 828,159 11.995103 9,933,853 5%
Non-tax Qualified ........................... 1,450,150 11.995103 17,394,699 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ............................... 624,895 18.790040 11,741,802 36%
Non-tax Qualified ........................... 990,036 18.790040 18,602,816 36%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified ............................... 763,280 10.239981 7,815,973 7%
Non-tax Qualified ........................... 837,266 10.239981 8,573,588 7%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ............................... 146,217 15.555856 2,274,531 41%
Non-tax Qualified ........................... 210,666 15.555856 3,277,090 41%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ............................... 509,735 15.720833 8,013,459 23%
Non-tax Qualified ........................... 791,505 15.720833 12,443,118 23%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ............................... 427,715 13.206894 5,648,787 3%
Non-tax Qualified ........................... 467,419 13.206894 6,173,153 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax Qualified ............................... 20,165 9.456874 190,698 28%
Non-tax Qualified ........................... 24,015 9.456874 227,107 28%
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Balanced Fund:
Tax Qualified ............................... 154,427 10.810714 1,669,466 0%
Non-tax Qualified ........................... 230,363 10.810714 2,490,389 0%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ............................... 619,838 13.778852 8,540,656 3%
Non-tax Qualified ........................... 696,071 13.778852 9,591,059 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified ............................... 59,154 13.571227 802,792 17%
Non-tax Qualified ........................... 81,119 13.571227 1,100,884 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified ............................... 72,658 14.483618 1,052,351 22%
Non-tax Qualified ........................... 93,078 14.483618 1,348,106 22%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ............................... 632,014 10.560422 6,674,335 (3)%
Non-tax Qualified ........................... 905,782 10.560422 9,565,440 (3)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ............................... 179,156 10.914588 1,955,414 2%
Non-tax Qualified ........................... 286,727 10.914588 3,129,507 2%
Nationwide SAT - Money Market Fund:
Tax Qualified ............................... 936,225 10.885293 10,191,083 4%
Non-tax Qualified ........................... 1,266,352 10.885293 13,784,613 4%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified ............................... 196,859 10.290997 2,025,875 0%
Non-tax Qualified ........................... 314,788 10.290997 3,239,482 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ............................... 42,315 13.050437 552,229 20%
Non-tax Qualified ........................... 46,779 13.050437 610,486 20%
Nationwide SAT - Select Advisers
Small Cap Growth Fund:
Tax Qualified ............................... 7,378 20.358893 150,208 104%(a)
Non-tax Qualified ........................... 26,356 20.358893 536,579 104%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ............................... 133,437 11.917534 1,590,240 26%
Non-tax Qualified ........................... 226,896 11.917534 2,704,041 26%
Nationwide SAT - Small Company Fund:
Tax Qualified ............................... 135,871 13.690433 1,860,133 43%
Non-tax Qualified ........................... 236,341 13.690433 3,235,611 43%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ............................... 64,464 21.149503 1,363,382 83%
Non-tax Qualified ........................... 96,599 21.149503 2,043,021 83%
Nationwide SAT - Strategic Value Fund:
Tax Qualified ............................... 38,395 9.666432 371,143 (4)%
Non-tax Qualified ........................... 82,657 9.666432 798,998 (4)%
</TABLE>
(Continued)
<PAGE> 36
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Total Return Fund:
Tax Qualified ............................. 1,030,024 12.661861 13,042,021 6%
Non-tax Qualified ......................... 1,055,012 12.661861 13,358,415 6%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified ............................. 89,533 15.561518 1,393,269 14%
Non-tax Qualified ......................... 196,408 15.561518 3,056,407 14%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ............................. 103,766 24.555839 2,548,061 52%
Non-tax Qualified ......................... 174,869 24.555839 4,294,055 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ............................. 278,907 11.098514 3,095,453 6%
Non-tax Qualified ......................... 352,606 11.098514 3,913,403 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ............................. 138,526 19.253639 2,667,130 82%
Non-tax Qualified ......................... 196,300 19.253639 3,779,489 82%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ............................. 256,505 16.898986 4,334,674 40%
Non-tax Qualified ......................... 294,848 16.898986 4,982,632 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ............................. 277,065 12.798619 3,546,049 20%
Non-tax Qualified ......................... 459,069 12.798619 5,875,449 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified ............................. 66,888 11.384426 761,481 98%
Non-tax Qualified ......................... 80,175 11.384426 912,746 98%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified ............................. 33,535 7.342607 246,234 20%
Non-tax Qualified ......................... 19,917 7.342607 146,243 20%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified ............................. 52,923 8.643190 457,424 (4)%
Non-tax Qualified ......................... 80,562 8.643190 696,313 (4)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified ............................. 21,640 12.098010 261,801 5%
Non-tax Qualified ......................... 101,514 12.098010 1,228,117 5%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified ............................. 69,477 14.961024 1,039,447 52%
Non-tax Qualified ......................... 84,777 14.961024 1,268,351 52%
</TABLE>
<PAGE> 37
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax Qualified............................... 39,482 16.796919 663,176 62%
Non-tax Qualified........................... 65,236 16.796919 1,095,764 62%
Asset fee @ 1.10% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified............................... 222,417 14.608384 3,249,153 17%
Non-tax Qualified........................... 29,546 14.608384 431,619 17%
American Century VP -
American Century VP International:
Tax Qualified............................... 41,404 19.569739 810,265 62%
Non-tax Qualified........................... 14,836 19.569739 290,337 62%
American Century VP -
American Century VP Value:
Tax Qualified............................... 11,136 11.060928 123,174 (2)%
Non-tax Qualified........................... 4,147 11.060928 45,870 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified............................... 465,748 16.447766 7,660,514 29%
Non-tax Qualified........................... 42,230 16.447766 694,589 29%
Dreyfus Stock Index Fund:
Tax Qualified............................... 779,350 14.867150 11,586,713 19%
Non-tax Qualified........................... 110,264 14.867150 1,639,311 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified............................... 194,676 13.657521 2,658,792 10%
Non-tax Qualified........................... 19,399 13.657521 264,942 10%
Dreyfus VIF - European Equity Fund:
Tax Qualified............................... 101 12.893630 1,302 29%(a)
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified............................... 2,380 9.796953 23,317 (2)%(a)
Non-tax Qualified........................... 3,679 9.796953 36,043 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified............................... 168,053 12.410474 2,085,617 5%
Non-tax Qualified........................... 60,188 12.410474 746,962 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified............................... 396,464 17.534950 6,951,976 36%
Non-tax Qualified........................... 82,691 17.534950 1,449,983 36%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified............................... 97,542 11.255695 1,097,903 7%
Non-tax Qualified........................... 12,538 11.255695 141,124 7%
</TABLE>
(Continued)
<PAGE> 38
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ................................ 16,652 17.171657 285,942 41%
Non-tax Qualified ............................ 7,383 17.171657 126,778 41%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ................................ 357,916 15.712599 5,623,791 23%
Non-tax Qualified ............................ 53,716 15.712599 844,018 23%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ................................ 60,701 12.683293 769,889 3%
Non-tax Qualified ............................ 18,169 12.683293 230,443 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax Qualified ................................ 1,189 14.580968 17,337 28%
Non-tax Qualified ............................ 167 14.580968 2,435 28%
Nationwide SAT - Balanced Fund:
Tax Qualified ................................ 32,797 10.651741 349,345 0%
Non-tax Qualified ............................ 9,454 10.651741 100,702 0%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ................................ 286,356 12.829034 3,673,671 3%
Non-tax Qualified ............................ 73,395 12.829034 941,587 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified ................................ 5,677 13.882376 78,810 17%
Non-tax Qualified ............................ 1,067 13.882376 14,812 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified ................................ 20,185 14.846771 299,682 22%
Non-tax Qualified ............................ 4,952 14.846771 73,521 22%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ................................ 163,660 9.515930 1,557,377 (3)%
Non-tax Qualified ............................ 38,632 9.515930 367,619 (3)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ................................ 9,774 10.552305 103,138 2%
Non-tax Qualified ............................ 1,849 10.552305 19,511 2%
Nationwide SAT - Money Market Fund:
Tax Qualified ................................ 181,296 10.468792 1,897,950 4%
Non-tax Qualified ............................ 44,218 10.468792 462,909 4%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified ................................ 2,820 10.290756 29,020 0%
Non-tax Qualified ............................ 1,818 10.290756 18,709 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ................................ 6,679 14.654661 97,878 20%
Non-tax Qualified ............................ 310 14.654661 4,543 20%
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Select Advisers
Small Cap Growth Fund:
Tax Qualified ................................ 1,653 20.352098 33,642 104%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ................................ 47,149 16.391038 772,821 26%
Non-tax Qualified ............................ 3,348 16.391038 54,877 26%
Nationwide SAT - Small Company Fund:
Tax Qualified ................................ 27,603 17.267747 476,642 42%
Non-tax Qualified ............................ 3,714 17.267747 64,132 42%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ................................ 34,606 23.148836 801,089 83%
Non-tax Qualified ............................ 7,117 23.148836 164,750 83%
Nationwide SAT - Strategic Value Fund:
Tax Qualified ................................ 3,117 12.489739 38,931 (4)%
Non-tax Qualified ............................ 419 12.489739 5,233 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified ................................ 502,732 12.684916 6,377,113 6%
Non-tax Qualified ............................ 114,438 12.684916 1,451,636 6%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified ................................ 58,521 14.648600 857,251 14%
Non-tax Qualified ............................ 5,523 14.648600 80,904 14%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ................................ 57,486 21.426404 1,231,718 52%
Non-tax Qualified ............................ 6,612 21.426404 141,671 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ................................ 32,593 12.591929 410,409 6%
Non-tax Qualified ............................ 6,025 12.591929 75,866 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ................................ 60,543 23.954947 1,450,304 82%
Non-tax Qualified ............................ 13,307 23.954947 318,768 82%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ................................ 89,709 18.556149 1,664,654 40%
Non-tax Qualified ............................ 17,465 18.556149 324,083 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ................................ 45,934 14.854438 682,324 20%
Non-tax Qualified ............................ 16,741 14.854438 248,678 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified ................................ 5,224 25.026598 130,739 98%
Non-tax Qualified ............................ 1,848 25.026598 46,249 98%
</TABLE>
(Continued)
<PAGE> 40
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified............................... 1,570 11.869689 18,635 20%
Non-tax Qualified........................... 44 11.869689 522 20%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified............................... 3,839 9.949557 38,196 (4)%
Non-tax Qualified........................... 223 9.949557 2,219 (4)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified............................... 2,110 12.499772 26,375 5%
Non-tax Qualified........................... 136 12.499772 1,700 5%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified............................... 2,131 17.529681 37,356 52%
Non-tax Qualified........................... 201 17.529681 3,523 52%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax Qualified............................... 1,939 20.760969 40,256 62%
Non-tax Qualified........................... 1,102 20.760969 22,879 62%
Asset fee @ 1.15% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified............................... 41,838 14.599165 610,800 17%
Non-tax Qualified........................... 872 14.599165 12,730 17%
American Century VP -
American Century VP International:
Tax Qualified............................... 13,984 19.557409 273,491 62%
Non-tax Qualified........................... 1,685 19.557409 32,954 62%
American Century VP -
American Century VP Value:
Tax Qualified............................... 780 11.053935 8,622 (2)%
Non-tax Qualified........................... 2,303 11.053935 25,457 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified............................... 73,377 16.437396 1,206,127 29%
Non-tax Qualified........................... 7,945 16.437396 130,595 29%
Dreyfus Stock Index Fund:
Tax Qualified............................... 191,388 14.857773 2,843,599 19%
Non-tax Qualified........................... 30,346 14.857773 450,874 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified............................... 66,469 13.648909 907,229 10%
Non-tax Qualified........................... 5,722 13.648909 78,099 10%
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified............................... 82 9.793677 803 (2)%(a)
Non-tax Qualified........................... 3,439 9.793677 33,680 (2)%(a)
</TABLE>
<PAGE> 41
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ................................. 30,049 12.402631 372,687 5%
Non-tax Qualified ............................. 9,774 12.402631 121,223 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ................................. 99,919 17.523903 1,750,971 36%
Non-tax Qualified ............................. 22,750 17.523903 398,669 36%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified ................................. 22,133 11.248584 248,965 7%
Non-tax Qualified ............................. 4,648 11.248584 52,283 7%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ................................. 3,415 17.160838 58,604 41%
Non-tax Qualified ............................. 252 17.160838 4,325 41%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ................................. 60,592 15.702687 951,457 23%
Non-tax Qualified ............................. 9,052 15.702687 142,141 23%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ................................. 9,541 12.675276 120,935 3%
Non-tax Qualified ............................. 5,617 12.675276 71,197 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax Qualified ................................. 110 14.571756 1,603 28%
Non-tax Qualified ............................. 191 14.571756 2,783 28%
Nationwide SAT - Balanced Fund:
Tax Qualified ................................. 6,878 10.645005 73,216 0%
Non-tax Qualified ............................. 443 10.645005 4,716 0%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ................................. 126,187 12.820934 1,617,835 3%
Non-tax Qualified ............................. 19,193 12.820934 246,072 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified ................................. 1,743 13.873607 24,182 17%
Non-tax Qualified ............................. 835 13.873607 11,584 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified ................................. 5,296 14.837408 78,579 22%
Non-tax Qualified ............................. 277 14.837408 4,110 22%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ................................. 71,434 9.509925 679,332 (3)%
Non-tax Qualified ............................. 15,177 9.509925 144,332 (3)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ................................. 958 10.545637 10,103 2%
Non-tax Qualified ............................. 428 10.545637 4,514 2%
</TABLE>
(Continued)
<PAGE> 42
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Money Market Fund:
Tax Qualified ................................ 14,690 10.462170 153,689 4%
Non-tax Qualified ............................ 3,569 10.462170 37,339 4%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified ................................ 1,562 10.284262 16,064 0%
Non-tax Qualified ............................ 2,287 10.284262 23,520 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ................................ 927 14.645409 13,576 20%
Non-tax Qualified ............................ 30 14.645409 439 20%
Nationwide SAT -
Select Advisers Small Cap Growth Fund:
Tax Qualified ................................ 346 20.345317 7,039 103%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ................................ 9,141 16.380692 149,736 26%
Non-tax Qualified ............................ 1,774 16.380692 29,059 26%
Nationwide SAT - Small Company Fund:
Tax Qualified ................................ 3,239 17.256864 55,895 42%
Non-tax Qualified ............................ 6,788 17.256864 117,140 42%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ................................ 5,918 23.134244 136,908 83%
Non-tax Qualified ............................ 626 23.134244 14,482 83%
Nationwide SAT - Strategic Value Fund:
Tax Qualified ................................ 1,129 12.481871 14,092 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified ................................ 109,816 12.676933 1,392,130 6%
Non-tax Qualified ............................ 30,070 12.676933 381,195 6%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified ................................ 11,569 14.639366 169,363 14%
Non-tax Qualified ............................ 1,080 14.639366 15,811 14%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ................................ 8,306 21.412911 177,856 52%
Non-tax Qualified ............................ 271 21.412911 5,803 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ................................ 12,897 12.583972 162,295 6%
Non-tax Qualified ............................ 416 12.583972 5,235 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ................................ 15,859 23.939845 379,662 81%
Non-tax Qualified ............................ 2,162 23.939845 51,758 81%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ................................ 22,240 18.544459 412,429 40%
Non-tax Qualified ............................ 6,950 18.544459 128,884 40%
</TABLE>
<PAGE> 43
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ................................ 13,715 14.845060 203,600 20%
Non-tax Qualified ............................ 3,367 14.845060 49,983 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified ................................ 1,298 25.010854 32,464 98%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified ................................ 749 11.862189 8,885 20%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified ................................ 955 9.943271 9,496 (4)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified ................................ 1,740 12.491882 21,736 5%
Non-tax Qualified ............................ 1,140 12.491882 14,241 5%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified ................................ 39 17.518646 683 52%
Non-tax Qualified ............................ 2,167 17.518646 37,963 52%
Asset fee @ 1.20% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified ................................ 390,363 14.495483 5,658,500 17%
Non-tax Qualified ............................ 453,751 14.495483 6,577,340 17%
American Century VP -
American Century VP International:
Tax Qualified ................................ 310,968 17.674116 5,496,085 62%
Non-tax Qualified ............................ 776,659 17.674116 13,726,761 62%
American Century VP -
American Century VP Value:
Tax Qualified ................................ 144,253 11.263216 1,624,753 (2)%
Non-tax Qualified ............................ 206,988 11.263216 2,331,351 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ................................ 211,081 16.397708 3,461,245 29%
Non-tax Qualified ............................ 352,551 16.397708 5,781,028 29%
Dreyfus Stock Index Fund:
Tax Qualified ................................ 1,214,481 14.736468 17,897,160 19%
Non-tax Qualified ............................ 2,733,494 14.736468 40,282,047 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified ................................ 248,570 13.442893 3,341,500 10%
Non-tax Qualified ............................ 529,646 13.442893 7,119,975 10%
Dreyfus VIF - European Equity Fund:
Tax Qualified ................................ 9,327 12.890242 120,227 29%(a)
Non-tax Qualified ............................ 14,047 12.890242 181,069 29%(a)
</TABLE>
(Continued)
<PAGE> 44
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified ................................ 37,796 9.790385 370,037 (2)%(a)
Non-tax Qualified ............................ 71,657 9.790385 701,550 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ................................ 490,730 12.440601 6,104,976 5%
Non-tax Qualified ............................ 1,018,907 12.440601 12,675,815 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ................................ 1,060,518 17.653733 18,722,102 36%
Non-tax Qualified ............................ 2,167,614 17.653733 38,266,479 36%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified ................................ 394,597 11.087928 4,375,263 7%
Non-tax Qualified ............................ 1,947,554 11.087928 21,594,339 7%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ................................ 228,568 15.900927 3,634,443 41%
Non-tax Qualified ............................ 472,612 15.900927 7,514,969 41%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ................................ 753,984 15.457984 11,655,073 23%
Non-tax Qualified ............................ 1,358,802 15.457984 21,004,340 23%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ................................ 300,684 12.785954 3,844,532 3%
Non-tax Qualified ............................ 782,813 12.785954 10,009,011 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax Qualified ................................ 21,613 14.572201 314,949 28%
Non-tax Qualified ............................ 44,276 14.572201 645,199 28%
Nationwide SAT - Balanced Fund:
Tax Qualified ................................ 104,760 10.735723 1,124,674 0%
Non-tax Qualified ............................ 158,605 10.735723 1,702,739 0%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ................................ 288,532 12.767993 3,683,975 3%
Non-tax Qualified ............................ 668,662 12.767993 8,537,472 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified ................................ 31,013 13.963829 433,060 17%
Non-tax Qualified ............................ 66,421 13.963829 927,491 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified ................................ 58,262 14.267173 831,234 21%
Non-tax Qualified ............................ 151,804 14.267173 2,165,814 21%
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT -
Government Bond Fund:
Tax Qualified ............................ 446,335 9.816007 4,381,227 (4)%
Non-tax Qualified ........................ 1,049,111 9.816007 10,298,081 (4)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ............................ 71,728 10.764664 772,128 2%
Non-tax Qualified ........................ 141,476 10.764664 1,522,942 2%
Nationwide SAT - Money Market Fund:
Tax Qualified ............................ 1,603,815 10.489614 16,823,400 4%
Non-tax Qualified ........................ 5,432,154 10.489614 56,981,199 4%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified ............................ 83,987 10.510552 882,750 0%
Non-tax Qualified ........................ 292,600 10.510552 3,075,388 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ............................ 26,844 14.644558 393,119 19%
Non-tax Qualified ........................ 56,268 14.644558 824,020 19%
Nationwide SAT -
Select Advisers Small Cap Growth Fund:
Tax Qualified ............................ 29,934 20.338511 608,813 103%(a)
Non-tax Qualified ........................ 40,321 20.338511 820,069 103%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ............................ 73,887 15.896867 1,174,572 26%
Non-tax Qualified ........................ 228,412 15.896867 3,631,035 26%
Nationwide SAT - Small Company Fund:
Tax Qualified ............................ 105,198 17.099098 1,798,791 42%
Non-tax Qualified ........................ 624,875 17.099098 10,684,799 42%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ............................ 96,278 22.750997 2,190,420 83%
Non-tax Qualified ........................ 201,108 22.750997 4,575,408 83%
Nationwide SAT - Strategic Value Fund:
Tax Qualified ............................ 16,167 11.949113 193,181 (4)%
Non-tax Qualified ........................ 23,436 11.949113 280,039 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified ............................ 347,616 12.646339 4,396,070 6%
Non-tax Qualified ........................ 697,017 12.646339 8,814,713 6%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified ............................ 127,606 13.976229 1,783,451 14%
Non-tax Qualified ........................ 282,638 13.976229 3,950,213 14%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ............................ 124,678 20.834304 2,597,579 52%
Non-tax Qualified ........................ 324,267 20.834304 6,755,877 52%
</TABLE>
(Continued)
<PAGE> 46
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ............................... 93,733 12.539993 1,175,411 6%
Non-tax Qualified ........................... 219,432 12.539993 2,751,676 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ............................... 87,884 23.512658 2,066,386 81%
Non-tax Qualified ........................... 858,422 23.512658 20,183,783 81%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ............................... 202,090 17.848621 3,607,028 40%
Non-tax Qualified ........................... 434,906 17.848621 7,762,472 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ............................... 231,091 14.609212 3,376,057 20%
Non-tax Qualified ........................... 615,542 14.609212 8,992,584 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified ............................... 48,845 23.947713 1,169,726 98%
Non-tax Qualified ........................... 117,449 23.947713 2,812,635 98%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified ............................... 37,006 12.649846 468,120 20%
Non-tax Qualified ........................... 53,488 12.649846 676,615 20%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified ............................... 41,224 10.253920 422,708 (5)%
Non-tax Qualified ........................... 113,232 10.253920 1,161,072 (5)%
Victory VIF - Diversified Stock Fund -
Class A:
Tax Qualified ............................... 69,363 10.060160 697,803 1%(a)
Non-tax Qualified ........................... 219,452 10.060160 2,207,722 1%(a)
Victory VIF - Investment Quality Bond
Fund - Class A:
Tax Qualified ............................... 21,371 9.930934 212,234 (1)%(a)
Non-tax Qualified ........................... 50,141 9.930934 497,947 (1)%(a)
Victory VIF - Small Company
Opportunity Fund - Class A:
Tax Qualified ............................... 2,419 9.896766 23,940 (1)%(a)
Non-tax Qualified ........................... 33,474 9.896766 331,284 (1)%(a)
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified .................................. 40,679 12.269490 499,111 5%
Non-tax Qualified ........................... 35,459 12.269490 435,064 5%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified ............................... 56,396 16.374564 923,460 52%
Non-tax Qualified ........................... 319,083 16.374564 5,224,845 52%
</TABLE>
<PAGE> 47
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax Qualified ................................ 23,863 20.579437 491,087 62%
Non-tax Qualified ............................ 51,497 20.579437 1,059,779 62%
Asset fee @ 1.25% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified ................................ 32,451 14.485724 470,076 17%
Non-tax Qualified ............................ 73,685 14.485724 1,067,381 17%
American Century VP -
American Century VP International:
Tax Qualified ................................ 16,086 17.662250 284,115 62%
Non-tax Qualified ............................ 39,926 17.662250 705,183 62%
American Century VP -
American Century VP Value:
Tax Qualified ................................ 10,844 11.255628 122,056 (2)%
Non-tax Qualified ............................ 28,843 11.255628 324,646 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ................................ 23,551 16.386683 385,923 28%
Non-tax Qualified ............................ 24,892 16.386683 407,897 28%
Dreyfus Stock Index Fund:
Tax Qualified ................................ 115,398 14.726559 1,699,415 19%
Non-tax Qualified ............................ 168,383 14.726559 2,479,702 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified ................................ 17,550 13.433832 235,764 10%
Non-tax Qualified ............................ 32,907 13.433832 442,067 10%
Dreyfus VIF - European Equity Fund:
Tax Qualified ................................ 2,408 12.888550 31,036 29%(a)
Non-tax Qualified ............................ 83 12.888550 1,070 29%(a)
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified ................................ 407 9.787093 3,983 (2)%(a)
Non-tax Qualified ............................ 441 9.787093 4,316 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ................................ 53,847 12.432231 669,438 5%
Non-tax Qualified ............................ 113,198 12.432231 1,407,304 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ................................ 67,791 17.641868 1,195,960 36%
Non-tax Qualified ............................ 131,571 17.641868 2,321,158 36%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified ................................ 21,064 11.080460 233,399 7%
Non-tax Qualified ............................ 37,233 11.080460 412,559 7%
</TABLE>
(Continued)
<PAGE> 48
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ................................. 6,292 15.890221 99,981 41%
Non-tax Qualified ............................. 47,996 15.890221 762,667 41%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ................................. 46,664 15.447579 720,846 23%
Non-tax Qualified ............................. 87,382 15.447579 1,349,840 23%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ................................. 21,257 12.777351 271,608 3%
Non-tax Qualified ............................. 33,643 12.777351 429,868 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax Qualified ................................. 164 14.562396 2,388 28%
Non-tax Qualified ............................. 315 14.562396 4,587 28%
Nationwide SAT - Balanced Fund:
Tax Qualified ................................. 3,364 10.728485 36,091 0%
Non-tax Qualified ............................. 12,442 10.728485 133,484 0%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ................................. 44,120 12.759401 562,945 3%
Non-tax Qualified ............................. 38,127 12.759401 486,478 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified ................................. 1,513 13.954430 21,113 17%
Non-tax Qualified ............................. 2,255 13.954430 31,467 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified ................................. 1,280 14.257588 18,250 21%
Non-tax Qualified ............................. 16,120 14.257588 229,832 21%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ................................. 31,768 9.809384 311,625 (4)%
Non-tax Qualified ............................. 45,842 9.809384 449,682 (4)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ................................. 2,505 10.757403 26,947 2%
Non-tax Qualified ............................. 9,925 10.757403 106,767 2%
Nationwide SAT - Money Market Fund:
Tax Qualified ................................. 114,913 10.482530 1,204,579 4%
Non-tax Qualified ............................. 84,738 10.482530 888,269 4%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified ................................. 182 10.503468 1,912 0%
Non-tax Qualified ............................. 3,903 10.503468 40,995 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ................................. 82 14.634711 1,200 19%
Non-tax Qualified ............................. 3,058 14.634711 44,753 19%
</TABLE>
<PAGE> 49
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Select Advisers
Small Cap Growth Fund:
Tax Qualified .................................. 681 20.331712 13,846 103%(a)
Non-tax Qualified .............................. 3,667 20.331712 74,556 103%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified .................................. 8,738 15.886176 138,813 26%
Non-tax Qualified .............................. 7,074 15.886176 112,379 26%
Nationwide SAT - Small Company Fund:
Tax Qualified .................................. 5,336 17.087592 91,179 42%
Non-tax Qualified .............................. 15,997 17.087592 273,350 42%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified .................................. 10,320 22.735718 234,633 82%
Non-tax Qualified .............................. 26,153 22.735718 594,607 82%
Nationwide SAT - Strategic Value Fund:
Non-tax Qualified .............................. 6,717 11.941061 80,208 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified .................................. 60,863 12.637807 769,175 6%
Non-tax Qualified .............................. 40,210 12.637807 508,166 6%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified .................................. 5,731 13.966839 80,044 13%
Non-tax Qualified .............................. 8,235 13.966839 115,017 13%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified .................................. 7,129 20.820318 148,428 52%
Non-tax Qualified .............................. 21,720 20.820318 452,217 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified .................................. 5,718 12.531553 71,655 6%
Non-tax Qualified .............................. 31,254 12.531553 391,661 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified .................................. 13,081 23.496887 307,363 81%
Non-tax Qualified .............................. 35,413 23.496887 832,095 81%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified .................................. 15,853 17.836627 282,764 40%
Non-tax Qualified .............................. 38,019 17.836627 678,131 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified .................................. 26,462 14.599387 386,329 20%
Non-tax Qualified .............................. 74,917 14.599387 1,093,742 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified .................................. 2,640 23.931619 63,179 98%
Non-tax Qualified .............................. 7,039 23.931619 168,455 98%
</TABLE>
(Continued)
<PAGE> 50
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified ................................ 57 12.641312 721 19%
Non-tax Qualified ............................ 695 12.641312 8,786 19%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified ................................ 1,283 10.247016 13,147 (5)%
Non-tax Qualified ............................ 557 10.247016 5,708 (5)%
Victory VIF - Diversified Stock Fund -
Class A:
Non-tax Qualified ............................ 4,891 10.057633 49,192 1%(a)
Victory VIF - Investment Quality
Bond Fund - Class A:
Non-tax Qualified ............................ 883 9.928452 8,767 (1)%(a)
Victory VIF - Small Company
Opportunity Fund - Class A:
Non-tax Qualified ............................ 772 9.894290 7,638 (1)%(a)
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified ................................ 3,436 12.261224 42,130 5%
Non-tax Qualified ............................ 1,916 12.261224 23,493 5%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified ................................ 18,145 16.363554 296,917 52%
Non-tax Qualified ............................ 7,363 16.363554 120,485 52%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax Qualified ................................ 3,938 20.565582 80,987 61%
Non-tax Qualified ............................ 175 20.565582 3,599 61%
Asset fee @ 1.30% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified ................................ 107,904 14.475981 1,562,016 16%
Non-tax Qualified ............................ 108,159 14.475981 1,565,708 16%
American Century VP -
American Century VP International:
Tax Qualified ................................ 72,753 17.650383 1,284,118 62%
Non-tax Qualified ............................ 110,844 17.650383 1,956,439 62%
American Century VP -
American Century VP Value:
Tax Qualified ................................ 12,775 11.248045 143,694 (2)%
Non-tax Qualified ............................ 28,730 11.248045 323,156 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ................................ 66,205 16.375662 1,084,151 28%
Non-tax Qualified ............................ 61,114 16.375662 1,000,782 28%
</TABLE>
<PAGE> 51
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Dreyfus Stock Index Fund:
Tax Qualified ............................. 684,723 14.716647 10,076,827 19%
Non-tax Qualified ......................... 1,041,506 14.716647 15,327,476 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified ............................. 124,739 13.424790 1,674,595 10%
Non-tax Qualified ......................... 114,009 13.424790 1,530,547 10%
Dreyfus VIF - European Equity Fund:
Tax Qualified ............................. 1,134 12.886864 14,614 29%(a)
Non-tax Qualified ......................... 3,490 12.886864 44,975 29%(a)
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified ............................. 19,483 9.783812 190,618 (2)%(a)
Non-tax Qualified ......................... 15,280 9.783812 149,497 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ............................. 173,109 12.423854 2,150,681 5%
Non-tax Qualified ......................... 182,235 12.423854 2,264,061 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ............................. 348,114 17.630000 6,137,250 36%
Non-tax Qualified ......................... 551,381 17.630000 9,720,847 36%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified ............................. 132,077 11.072984 1,462,487 7%
Non-tax Qualified ......................... 147,420 11.072984 1,632,379 7%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ............................. 86,682 15.879549 1,376,471 41%
Non-tax Qualified ......................... 124,203 15.879549 1,972,288 41%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ............................. 198,360 15.437189 3,062,121 23%
Non-tax Qualified ......................... 274,482 15.437189 4,237,231 23%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ............................. 89,914 12.768758 1,148,090 3%
Non-tax Qualified ......................... 105,265 12.768758 1,344,103 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax Qualified ............................. 3,978 14.552579 57,890 28%
Non-tax Qualified ......................... 6,216 14.552579 90,459 28%
Nationwide SAT - Balanced Fund:
Tax Qualified ............................. 17,631 10.721257 189,026 0%
Non-tax Qualified ......................... 45,688 10.721257 489,833 0%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ............................. 104,562 12.750810 1,333,250 3%
Non-tax Qualified ......................... 341,164 12.750810 4,350,117 3%
</TABLE>
(Continued)
<PAGE> 52
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Equity Income Fund:
Tax Qualified ............................. 7,226 13.945030 100,767 17%
Non-tax Qualified ......................... 19,226 13.945030 268,107 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified ............................. 46,323 14.247974 660,009 21%
Non-tax Qualified ......................... 71,266 14.247974 1,015,396 21%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ............................. 247,182 9.802780 2,423,071 (4)%
Non-tax Qualified ......................... 321,361 9.802780 3,150,231 (4)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ............................. 46,078 10.750149 495,345 2%
Non-tax Qualified ......................... 70,255 10.750149 755,252 2%
Nationwide SAT - Money Market Fund:
Tax Qualified ............................. 1,182,057 10.475448 12,382,577 3%
Non-tax Qualified ......................... 1,157,296 10.475448 12,123,194 3%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified ............................. 48,359 10.496386 507,595 0%
Non-tax Qualified ......................... 61,675 10.496386 647,365 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ............................. 2,041 14.624858 29,849 19%
Non-tax Qualified ......................... 8,874 14.624858 129,781 19%
Nationwide SAT - Select Advisers
Small Cap Growth Fund:
Tax Qualified ............................. 4,379 20.324927 89,003 103%(a)
Non-tax Qualified ......................... 8,148 20.324927 165,608 103%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ............................. 30,908 15.875478 490,679 26%
Non-tax Qualified ......................... 61,322 15.875478 973,516 26%
Nationwide SAT - Small Company Fund:
Tax Qualified ............................. 21,696 17.076087 370,483 42%
Non-tax Qualified ......................... 31,159 17.076087 532,074 42%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ............................. 57,952 22.720430 1,316,694 82%
Non-tax Qualified ......................... 103,969 22.720430 2,362,220 82%
Nationwide SAT - Strategic Value Fund:
Tax Qualified ............................. 8,003 11.933031 95,500 (4)%
Non-tax Qualified ......................... 9,946 11.933031 118,686 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified ............................. 180,091 12.629301 2,274,423 6%
Non-tax Qualified ......................... 176,065 12.629301 2,223,578 6%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified ............................. 61,265 13.957433 855,102 13%
Non-tax Qualified ......................... 40,640 13.957433 567,230 13%
</TABLE>
<PAGE> 53
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ............................... 29,312 20.806301 609,874 52%
Non-tax Qualified ........................... 44,345 20.806301 922,655 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ............................... 47,275 12.523110 592,030 6%
Non-tax Qualified ........................... 36,245 12.523110 453,900 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ............................... 45,369 23.481073 1,065,313 81%
Non-tax Qualified ........................... 63,400 23.481073 1,488,700 81%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ............................... 155,303 17.824624 2,768,218 40%
Non-tax Qualified ........................... 170,308 17.824624 3,035,676 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ............................... 75,394 14.589572 1,099,966 20%
Non-tax Qualified ........................... 111,371 14.589572 1,624,855 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified ............................... 11,607 23.915562 277,588 98%
Non-tax Qualified ........................... 22,452 23.915562 536,952 98%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified .................................. 21,175 12.632809 267,500 19%
Non-tax Qualified ........................... 15,744 12.632809 198,891 19%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified ............................... 3,301 10.240102 33,803 (5)%
Non-tax Qualified ........................... 10,725 10.240102 109,825 (5)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified ............................... 2,960 12.252980 36,269 5%
Non-tax Qualified ........................... 12,757 12.252980 156,311 5%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified ............................... 3,141 16.352558 51,363 51%
Non-tax Qualified ........................... 15,682 16.352558 256,441 51%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax Qualified ............................... 5,441 20.551766 111,822 61%
Non-tax Qualified ........................... 2,687 20.551766 55,223 61%
Asset fee @ 1.35% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified ............................... 21,978 14.562313 320,051 16%
Non-tax Qualified ........................... 41,898 14.562313 610,132 16%
</TABLE>
(Continued)
<PAGE> 54
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
American Century VP -
American Century VP International:
Tax Qualified ............................. 4,011 19.508116 78,247 62%
Non-tax Qualified ......................... 11,717 19.508116 228,577 62%
American Century VP -
American Century VP Value:
Tax Qualified ............................. 2,318 11.026014 25,558 (2)%
Non-tax Qualified ......................... 4,673 11.026014 51,525 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ............................. 24,037 16.395915 394,109 28%
Non-tax Qualified ......................... 17,768 16.395915 291,323 28%
Dreyfus Stock Index Fund:
Tax Qualified ............................. 65,993 14.820270 978,034 19%
Non-tax Qualified ......................... 129,850 14.820270 1,924,412 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified ............................. 987 13.614453 13,437 10%
Non-tax Qualified ......................... 9,554 13.614453 130,072 10%
Dreyfus VIF - European Equity Fund:
Tax Qualified ............................. 1,169 12.885161 15,063 29%(a)
Non-tax Qualified ......................... 520 12.885161 6,700 29%(a)
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified ............................. 1,186 9.780523 11,600 (2)%(a)
Non-tax Qualified ......................... 4,341 9.780523 42,457 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ............................. 16,260 12.371310 201,158 5%
Non-tax Qualified ......................... 53,639 12.371310 663,585 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ............................. 31,835 17.479679 556,466 35%
Non-tax Qualified ......................... 80,540 17.479679 1,407,813 35%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified ............................. 15,278 11.220168 171,422 7%
Non-tax Qualified ......................... 31,375 11.220168 352,033 7%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ............................. 16,878 17.117558 288,910 41%
Non-tax Qualified ......................... 15,165 17.117558 259,588 41%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ............................. 14,384 15.663065 225,298 22%
Non-tax Qualified ......................... 65,942 15.663065 1,032,854 22%
</TABLE>
<PAGE> 55
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ............................... 4,087 12.643267 51,673 3%
Non-tax Qualified ........................... 32,098 12.643267 405,824 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Non-tax Qualified ........................... 676 14.534982 9,826 28%
Nationwide SAT - Balanced Fund:
Tax Qualified ............................... 7,484 10.618109 79,466 0%
Non-tax Qualified ........................... 10,580 10.618109 112,340 0%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ............................... 30,426 12.788549 389,104 3%
Non-tax Qualified ........................... 21,206 12.788549 271,194 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified ............................... 898 13.838584 12,427 17%
Non-tax Qualified ........................... 3,836 13.838584 53,085 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified ............................... 5,540 14.799960 81,992 21%
Non-tax Qualified ........................... 8,676 14.799960 128,404 21%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ............................... 21,775 9.485894 206,555 (4)%
Non-tax Qualified ........................... 88,782 9.485894 842,177 (4)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ............................... 7,431 10.519004 78,167 2%
Non-tax Qualified ........................... 8,672 10.519004 91,221 2%
Nationwide SAT - Money Market Fund:
Tax Qualified ............................... 53,049 10.435669 553,602 3%
Non-tax Qualified ........................... 206,770 10.435669 2,157,783 3%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified ............................... 4,503 10.258279 46,193 0%
Non-tax Qualified ........................... 10,846 10.258279 111,261 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ............................... 1,785 14.608445 26,076 19%
Non-tax Qualified ........................... 1,200 14.608445 17,530 19%
Nationwide SAT - Select Advisers
Small Cap Growth Fund:
Tax Qualified ............................... 373 20.318124 7,579 103%(a)
Non-tax Qualified ........................... 63 20.318124 1,280 103%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ............................... 1,206 16.339365 19,705 26%
Non-tax Qualified ........................... 11,351 16.339365 185,468 26%
Nationwide SAT - Small Company Fund:
Tax Qualified ............................... 6,539 17.213333 112,558 42%
Non-tax Qualified ........................... 6,103 17.213333 105,053 42%
</TABLE>
(Continued)
<PAGE> 56
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ................................ 427 23.075929 9,853 82%
Non-tax Qualified ............................ 7,750 23.075929 178,838 82%
Nationwide SAT - Strategic Value Fund:
Non-tax Qualified ............................ 5,161 12.450334 64,256 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified ................................ 23,816 12.644908 301,151 5%
Non-tax Qualified ............................ 35,963 12.644908 454,749 5%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified ................................ 5,332 14.602403 77,860 13%
Non-tax Qualified ............................ 8,307 14.602403 121,302 13%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ................................ 3,548 21.358908 75,781 52%
Non-tax Qualified ............................ 7,645 21.358908 163,289 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ................................ 5,745 12.552194 72,112 6%
Non-tax Qualified ............................ 27,019 12.552194 339,148 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ................................ 1,068 23.879534 25,503 81%
Non-tax Qualified ............................ 1,635 23.879534 39,043 81%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ................................ 7,034 18.497677 130,113 40%
Non-tax Qualified ............................ 35,537 18.497677 657,352 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ................................ 4,550 14.807604 67,375 20%
Non-tax Qualified ............................ 11,754 14.807604 174,049 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified ................................ 4,785 24.947866 119,376 98%
Non-tax Qualified ............................ 5,229 24.947866 130,452 98%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified ................................ 362 11.832203 4,283 19%
Non-tax Qualified ............................ 3,217 11.832203 38,064 19%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified ................................ 439 9.918143 4,354 (5)%
Non-tax Qualified ............................ 2,722 9.918143 26,997 (5)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Non-tax Qualified ............................ 666 12.460330 8,299 5%
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified .............................. 631 17.474463 11,026 51%
Non-tax Qualified .......................... 3,077 17.474463 53,769 51%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax Qualified .............................. 1,481 20.695562 30,650 61%
Non-tax Qualified .......................... 1,853 20.695562 38,349 61%
Asset fee @ 1.40% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified .............................. 6,866 14.553111 99,922 16%
Non-tax Qualified .......................... 1,803 14.553111 26,239 16%
American Century VP -
American Century VP International:
Tax Qualified .............................. 5,609 19.495801 109,352 62%
Non-tax Qualified .......................... 2,055 19.495801 40,064 62%
American Century VP -
American Century VP Value:
Tax Qualified .............................. 5,362 11.019041 59,084 (2)%
Non-tax Qualified .......................... 2,563 11.019041 28,242 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified .............................. 2,832 16.385550 46,404 28%
Non-tax Qualified .......................... 4,225 16.385550 69,229 28%
Dreyfus Stock Index Fund:
Tax Qualified .............................. 58,371 14.810885 864,526 19%
Non-tax Qualified .......................... 14,182 14.810885 210,048 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified .............................. 19,504 13.605834 265,368 10%
Non-tax Qualified .......................... 3,244 13.605834 44,137 10%
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified .............................. 8 9.777237 78 (2)%(a)
Non-tax Qualified .......................... 174 9.777237 1,701 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified .............................. 12,284 12.363474 151,873 5%
Non-tax Qualified .......................... 7,210 12.363474 89,141 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified .............................. 33,817 17.468631 590,737 35%
Non-tax Qualified .......................... 11,807 17.468631 206,252 35%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified .............................. 1,729 11.213084 19,387 7%
Non-tax Qualified .......................... 5,530 11.213084 62,008 7%
</TABLE>
(Continued)
<PAGE> 58
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified .............................. 730 17.106743 12,488 40%
Non-tax Qualified .......................... 1,826 17.106743 31,237 40%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified .............................. 13,606 15.653161 212,977 22%
Non-tax Qualified .......................... 5,351 15.653161 83,760 22%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified .............................. 8,255 12.635267 104,304 3%
Non-tax Qualified .......................... 2,412 12.635267 30,476 3%
Nationwide SAT - Balanced Fund:
Tax Qualified .............................. 2,247 10.611396 23,844 (1)%
Non-tax Qualified .......................... 317 10.611396 3,364 (1)%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified .............................. 31,154 12.780450 398,162 3%
Non-tax Qualified .......................... 15,231 12.780450 194,659 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified .............................. 654 13.829829 9,045 17%
Non-tax Qualified .......................... 1,566 13.829829 21,658 17%
Nationwide SAT - Global Equity Fund:
Non-tax Qualified .......................... 1,502 14.790595 22,215 21%
Nationwide SAT -
Government Bond Fund:
Tax Qualified .............................. 5,335 9.479885 50,575 (4)%
Non-tax Qualified .......................... 2,731 9.479885 25,890 (4)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified .............................. 2,780 10.512337 29,224 2%
Non-tax Qualified .......................... 84 10.512337 883 2%
Nationwide SAT - Money Market Fund:
Tax Qualified .............................. 4,154 10.429048 43,322 3%
Non-tax Qualified .......................... 1,374 10.429048 14,330 3%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified .............................. 935 10.251777 9,585 0%
Non-tax Qualified .......................... 68 10.251777 697 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified .............................. 871 14.599208 12,716 19%
Nationwide SAT - Small Cap Value Fund:
Tax Qualified .............................. 1,066 16.329040 17,407 26%
Non-tax Qualified .......................... 1,813 16.329040 29,605 26%
Nationwide SAT - Small Company Fund:
Tax Qualified .............................. 1,566 17.202461 26,939 42%
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ................................ 2,853 23.061361 65,794 82%
Non-tax Qualified ............................ 540 23.061361 12,453 82%
Nationwide SAT - Strategic Value Fund:
Tax Qualified ................................ 2,417 12.442449 30,073 (4)%
Non-tax Qualified ............................ 981 12.442449 12,206 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified ................................ 53,495 12.636905 676,011 5%
Non-tax Qualified ............................ 17,353 12.636905 219,288 5%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified ................................ 1,157 14.593171 16,884 13%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ................................ 4,508 21.345408 96,225 52%
Non-tax Qualified ............................ 1,022 21.345408 21,815 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ................................ 4,022 12.544255 50,453 6%
Non-tax Qualified ............................ 752 12.544255 9,433 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ................................ 2,253 23.864429 53,767 81%
Non-tax Qualified ............................ 2,302 23.864429 54,936 81%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ................................ 11,468 18.485985 211,997 40%
Non-tax Qualified ............................ 6,224 18.485985 115,057 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ................................ 16,970 14.798240 251,126 20%
Non-tax Qualified ............................ 5,156 14.798240 76,300 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified ................................ 1,166 24.932117 29,071 97%
Non-tax Qualified ............................ 592 24.932117 14,760 97%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified ................................ 2,497 11.824722 29,526 19%
Non-tax Qualified ............................ 221 11.824722 2,613 19%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Tax Qualified ................................ 250 9.911855 2,478 (5)%
Non-tax Qualified ............................ 889 9.911855 8,812 (5)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified ................................ 4,826 12.452445 60,095 5%
</TABLE>
(Continued)
<PAGE> 60
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURNL(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified ................................ 451 17.463426 7,876 51%
Non-tax Qualified ............................ 202 17.463426 3,528 51%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax Qualified ................................ 980 20.682481 20,269 61%
Non-tax Qualified ............................ 179 20.682481 3,702 61%
Asset fee @ 1.45% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified ................................ 414 14.543892 6,021 16%
Non-tax Qualified ............................ 2,924 14.543892 42,526 16%
American Century VP -
American Century VP International:
Tax Qualified ................................ 2,509 19.483474 48,884 62%
Non-tax Qualified ............................ 3,787 19.483474 73,784 62%
American Century VP -
American Century VP Value:
Tax Qualified ................................ 1,405 11.012072 15,472 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ................................ 4,973 16.375184 81,434 28%
Non-tax Qualified ............................ 12,145 16.375184 198,877 28%
Dreyfus Stock Index Fund:
Tax Qualified ................................ 24,817 14.801530 367,330 19%
Non-tax Qualified ............................ 33,993 14.801530 503,148 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified ................................ 4,035 13.597232 54,865 10%
Non-tax Qualified ............................ 2,220 13.597232 30,186 10%
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified ................................ 52 9.773948 508 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ................................ 6,732 12.355641 83,178 5%
Non-tax Qualified ............................ 20,584 12.355641 254,329 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ................................ 11,174 17.457597 195,071 35%
Non-tax Qualified ............................ 11,399 17.457597 198,999 35%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified ................................ 1,302 11.205978 14,590 7%
Non-tax Qualified ............................ 1,902 11.205978 21,314 7%
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ............................... 1,185 17.095933 20,259 40%
Non-tax Qualified ........................... 320 17.095933 5,471 40%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ............................... 5,156 15.643260 80,657 22%
Non-tax Qualified ........................... 2,495 15.643260 39,030 22%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ............................... 848 12.627255 10,708 3%
Non-tax Qualified ........................... 635 12.627255 8,018 3%
Nationwide SAT - Balanced Fund:
Tax Qualified ............................... 3,235 10.604669 34,306 (1)%
Non-tax Qualified ........................... 1,697 10.604669 17,996 (1)%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ............................... 5,318 12.772360 67,923 3%
Non-tax Qualified ........................... 8,223 12.772360 105,027 3%
Nationwide SAT - Equity Income Fund:
Non-tax Qualified ........................... 230 13.821079 3,179 17%
Nationwide SAT - Global Equity Fund:
Tax Qualified ............................... 1,409 14.781243 20,827 21%
Non-tax Qualified ........................... 298 14.781243 4,405 21%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ............................... 2,805 9.473867 26,574 (4)%
Non-tax Qualified ........................... 25,195 9.473867 238,694 (4)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ............................... 1,761 10.505688 18,501 2%
Non-tax Qualified ........................... 522 10.505688 5,484 2%
Nationwide SAT - Money Market Fund:
Tax Qualified ............................... 17,714 10.422427 184,623 3%
Non-tax Qualified ........................... 9,674 10.422427 100,827 3%
Nationwide SAT -
Multi Sector Bond Fund:
Tax Qualified ............................... 332 10.245290 3,401 0%
Non-tax Qualified ........................... 414 10.245290 4,242 0%
Nationwide SAT - Select Advisers
Small Cap Growth Fund:
Tax Qualified ............................... 1,671 20.304522 33,929 103%(a)
Non-tax Qualified ........................... 199 20.304522 4,041 103%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ............................... 2,229 16.318704 36,374 26%
Non-tax Qualified ........................... 722 16.318704 11,782 26%
Nationwide SAT - Small Company Fund:
Tax Qualified ............................... 735 17.191574 12,636 42%
Non-tax Qualified ........................... 107 17.191574 1,839 42%
</TABLE>
(Continued)
<PAGE> 62
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ................................. 4,278 23.046789 98,594 82%
Non-tax Qualified ............................. 909 23.046789 20,950 82%
Nationwide SAT - Strategic Value Fund:
Tax Qualified ................................. 2,281 12.434581 28,363 (4)%
Non-tax Qualified ............................. 644 12.434581 8,008 (4)%
Nationwide SAT - Total Return Fund:
Tax Qualified ................................. 15,219 12.628895 192,199 5%
Non-tax Qualified ............................. 29,418 12.628895 371,517 5%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax Qualified ................................. 1,068 14.583938 15,576 13%
Non-tax Qualified ............................. 416 14.583938 6,067 13%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ................................. 1,230 21.331920 26,238 52%
Non-tax Qualified ............................. 1,717 21.331920 36,627 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ................................. 4,900 12.536312 61,428 6%
Non-tax Qualified ............................. 1,254 12.536312 15,721 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ................................. 1,448 23.849355 34,534 81%
Non-tax Qualified ............................. 24,213 23.849355 577,464 81%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ................................. 3,780 18.474301 69,833 40%
Non-tax Qualified ............................. 167 18.474301 3,085 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ................................. 6,006 14.788879 88,822 20%
Non-tax Qualified ............................. 5,080 14.788879 75,128 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Non-tax Qualified ............................. 15,963 24.916384 397,740 97%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified ................................. 175 11.817233 2,068 19%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified ................................. 576 17.452381 10,053 51%
Non-tax Qualified ............................. 160 17.452381 2,792 51%
</TABLE>
<PAGE> 63
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Asset fee @ 1.50% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified ................................ 3,663 14.534695 53,241 16%
Non-tax Qualified ............................ 6,265 14.534695 91,060 16%
American Century VP -
American Century VP International:
Tax Qualified ................................ 8,561 19.471172 166,693 62%
Non-tax Qualified ............................ 26,531 19.471172 516,590 62%
American Century VP -
American Century VP Value:
Tax Qualified ................................ 3,088 11.005082 33,984 (2)%
Non-tax Qualified ............................ 4,545 11.005082 50,018 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ................................ 4,710 16.364824 77,078 28%
Non-tax Qualified ............................ 6,899 16.364824 112,901 28%
Dreyfus Stock Index Fund:
Tax Qualified ................................ 23,916 14.792159 353,769 19%
Non-tax Qualified ............................ 161,203 14.792159 2,384,540 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified ................................ 4,670 13.588614 63,459 10%
Non-tax Qualified ............................ 13,830 13.588614 187,931 10%
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax Qualified ................................ 836 9.770666 8,168 (2)%(a)
Non-tax Qualified ............................ 709 9.770666 6,927 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ................................ 6,909 12.347825 85,311 5%
Non-tax Qualified ............................ 22,337 12.347825 275,813 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ................................ 14,697 17.446540 256,412 35%
Non-tax Qualified ............................ 48,559 17.446540 847,187 35%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified ................................ 5,498 11.198884 61,571 6%
Non-tax Qualified ............................ 5,829 11.198884 65,278 6%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ................................ 5,314 17.085125 90,790 40%
Non-tax Qualified ............................ 5,076 17.085125 86,724 40%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ................................ 13,326 15.633362 208,330 22%
Non-tax Qualified ............................ 46,095 15.633362 720,620 22%
</TABLE>
(Continued)
<PAGE> 64
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ................................ 1,253 12.619265 15,812 3%
Non-tax Qualified ............................ 10,842 12.619265 136,818 3%
Nationwide SAT - Balanced Fund:
Tax Qualified ................................ 1,182 10.597955 12,527 (1)%
Non-tax Qualified ............................ 5,274 10.597955 55,894 (1)%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ................................ 8,204 12.764281 104,718 3%
Non-tax Qualified ............................ 21,195 12.764281 270,539 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified ................................ 3,142 13.812331 43,398 17%
Non-tax Qualified ............................ 506 13.812331 6,989 17%
Nationwide SAT - Global Equity Fund:
Non-tax Qualified ............................ 2,864 14.771891 42,307 21%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ................................ 594 9.467860 5,624 (4)%
Non-tax Qualified ............................ 15,319 9.467860 145,038 (4)%
Nationwide SAT -
High Income Bond Fund:
Tax Qualified ................................ 1,397 10.499020 14,667 2%
Non-tax Qualified ............................ 4,971 10.499020 52,191 2%
Nationwide SAT - Money Market Fund:
Tax Qualified ................................ 27,321 10.415808 284,570 3%
Non-tax Qualified ............................ 71,293 10.415808 742,574 3%
Nationwide SAT -
Multi Sector Bond Fund:
Non-tax Qualified ............................ 510 10.238786 5,222 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ................................ 95 14.580726 1,385 19%
Non-tax Qualified ............................ 828 14.580726 12,073 19%
Nationwide SAT - Select Advisers
Small Cap Growth Fund:
Non-tax Qualified ............................ 15,068 20.297724 305,846 103%(a)
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ................................ 1,330 16.308373 21,690 26%
Non-tax Qualified ............................ 12,715 16.308373 207,361 26%
Nationwide SAT - Small Company Fund:
Tax Qualified ................................ 1,878 17.180698 32,265 42%
Non-tax Qualified ............................ 5,539 17.180698 95,164 42%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ................................ 2,548 23.032196 58,686 82%
Non-tax Qualified ............................ 14,951 23.032196 344,354 82%
</TABLE>
<PAGE> 65
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Strategic Value Fund:
Tax Qualified ................................. 6,036 12.426696 75,008 (5)%
Non-tax Qualified ............................. 415 12.426696 5,157 (5)%
Nationwide SAT - Total Return Fund:
Tax Qualified ................................. 4,117 12.620906 51,960 5%
Non-tax Qualified ............................. 13,709 12.620906 173,020 5%
Neuberger & Berman AMT -
Guardian Portfolio:
Non-tax Qualified ............................. 4,796 14.574691 69,900 13%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ................................. 2,024 21.318413 43,148 52%
Non-tax Qualified ............................. 5,716 21.318413 121,856 52%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ................................. 14 12.528364 175 6%
Non-tax Qualified ............................. 3,727 12.528364 46,693 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ................................. 1,951 23.834283 46,501 81%
Non-tax Qualified ............................. 21,397 23.834283 509,982 81%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ................................. 10,109 18.462618 186,639 40%
Non-tax Qualified ............................. 11,501 18.462618 212,339 40%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ................................. 6,327 14.779520 93,510 20%
Non-tax Qualified ............................. 11,838 14.779520 174,960 20%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Non-tax Qualified ............................. 338 24.900624 8,416 97%
Van Eck WIT -
Worldwide Hard Assets Fund:
Non-tax Qualified ............................. 296 11.809742 3,496 19%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Non-tax Qualified ............................. 414 9.899304 4,098 (5)%
Victory VIF - Diversified Stock Fund -
Class A:
Tax Qualified ................................. 1,414 10.045034 14,204 0%(a)
Non-tax Qualified ............................. 3,685 10.045034 37,016 0%(a)
Victory VIF - Investment Quality
Bond Fund - Class A:
Tax Qualified ................................. 390 9.916014 3,867 (1)%(a)
Victory VIF - Small Company
Opportunity Fund - Class A:
Tax Qualified ................................. 208 9.881888 2,055 (1)%(a)
Non-tax Qualified ............................. 638 9.881888 6,305 (1)%(a)
</TABLE>
(Continued)
<PAGE> 66
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified ................................. 88 12.436688 1,094 5%
Non-tax Qualified ............................. 3,500 12.436688 43,528 5%
Warburg Pincus Trust -
International Equity Portfolio:
Tax Qualified ................................. 455 17.441358 7,936 51%
Non-tax Qualified ............................. 1,102 17.441358 19,220 51%
Asset fee @ 1.55% rate:
American Century VP -
American Century VP International:
Non-tax Qualified ............................. 175 19.458849 3,405 62%
American Century VP -
American Century VP Value:
Tax Qualified ................................. 3,076 10.998104 33,830 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ................................. 90 16.354471 1,472 28%
Non-tax Qualified ............................. 90 16.354471 1,472 28%
Dreyfus Stock Index Fund:
Tax Qualified ................................. 2,465 14.782794 36,440 19%
Non-tax Qualified ............................. 1,115 14.782794 16,483 19%
Dreyfus VIF -
Capital Appreciation Portfolio:
Non-tax Qualified ............................. 337 13.580004 4,576 10%
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ................................. 2,679 12.339995 33,059 5%
Non-tax Qualified ............................. 3,242 12.339995 40,006 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ................................. 2,316 17.435504 40,381 35%
Non-tax Qualified ............................. 405 17.435504 7,061 35%
Fidelity VIP - High Income Portfolio -
Service Class:
Non-tax Qualified ............................. 718 11.191773 8,036 6%
Fidelity VIP - Overseas Portfolio -
Service Class:
Non-tax Qualified ............................. 190 17.074312 3,244 40%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ................................. 3,468 15.623458 54,182 22%
Non-tax Qualified ............................. 873 15.623458 13,639 22%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ................................. 3,980 12.611273 50,193 3%
</TABLE>
<PAGE> 67
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ................................ 4,822 12.756184 61,510 3%
Non-tax Qualified ............................ 1,555 12.756184 19,836 3%
Nationwide SAT - Global Equity Fund:
Tax Qualified ................................ 2,000 14.762540 29,525 21%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ................................ 139 9.461864 1,315 (4)%
Non-tax Qualified ............................ 426 9.461864 4,031 (4)%
Nationwide SAT -
High Income Bond Fund:
Non-tax Qualified ............................ 327 10.492359 3,431 2%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ................................ 2,028 14.571500 29,551 19%
Nationwide SAT - Strategic Growth Fund:
Non-tax Qualified ............................ 69 23.017640 1,588 82%
Nationwide SAT - Total Return Fund:
Tax Qualified ................................ 7,634 12.612898 96,287 5%
Non-tax Qualified ............................ 582 12.612898 7,341 5%
Neuberger & Berman AMT -
Guardian Portfolio:
Non-tax Qualified ............................ 1,377 14.565469 20,057 13%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ................................ 1,708 21.304943 36,389 52%
Non-tax Qualified ............................ 235 21.304943 5,007 52%
Neuberger & Berman AMT -
Partners Portfolio:
Non-tax Qualified ............................ 293 12.520433 3,668 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Non-tax Qualified ............................ 144 23.819210 3,430 81%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ................................ 3,469 14.770155 51,238 20%
Warburg Pincus Trust -
Growth & Income Portfolio:
Non-tax Qualified ............................ 366 12.428801 4,549 5%
Asset fee @ 1.60% rate:
American Century VP -
American Century VP International:
Non-tax Qualified ............................ 15 19.446544 292 61%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Non-tax Qualified ............................ 160 16.344103 2,615 28%
</TABLE>
(Continued)
<PAGE> 68
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Dreyfus Stock Index Fund:
Non-tax Qualified ............................ 1,231 14.773416 18,186 19%
Fidelity VIP - Growth Portfolio -
Service Class:
Non-tax Qualified ............................ 1,135 17.424460 19,777 35%
Nationwide SAT -
Capital Appreciation Fund:
Non-tax Qualified ............................ 1,104 12.748099 14,074 3%
Nationwide SAT -
Government Bond Fund:
Non-tax Qualified ............................ 213 9.455873 2,014 (4)%
Nationwide SAT -
High Income Bond Fund:
Non-tax Qualified ............................ 131 10.485712 1,374 2%
Nationwide SAT - Small Cap Value Fund:
Non-tax Qualified ............................ 68 16.287722 1,108 26%
Nationwide SAT - Strategic Growth Fund:
Non-tax Qualified ............................ 74 23.003080 1,702 82%
Oppenheimer VAF -
Capital Appreciation Fund:
Non-tax Qualified ............................ 1,078 18.439240 19,878 39%
Warburg Pincus Trust -
International Equity Portfolio:
Non-tax Qualified ............................ 78 17.419297 1,359 51%
Asset fee @ 1.65% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified ................................ 158 14.507084 2,292 16%
Non-tax Qualified ............................ 3,473 14.507084 50,383 16%
American Century VP -
American Century VP International:
Tax Qualified ................................ 1,878 19.434239 36,498 61%
Non-tax Qualified ............................ 469 19.434239 9,115 61%
American Century VP -
American Century VP Value:
Tax Qualified ................................ 3,221 10.984159 35,380 (2)%
Non-tax Qualified ............................ 1,409 10.984159 15,477 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ................................ 6,744 16.333747 110,155 28%
Non-tax Qualified ............................ 779 16.333747 12,724 28%
Dreyfus Stock Index Fund:
Tax Qualified ................................ 4,680 14.764046 69,096 19%
Non-tax Qualified ............................ 5,396 14.764046 79,667 19%
</TABLE>
<PAGE> 69
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified ................................. 75 13.562791 1,017 10%
Non-tax Qualified ............................. 234 13.562791 3,174 10%
Federated Insurance Series -
Federated Quality Bond Fund II:
Non-tax Qualified ............................. 594 9.760781 5,798 (2)%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ................................. 3,726 12.324339 45,920 5%
Non-tax Qualified ............................. 6,993 12.324339 86,184 5%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ................................. 23,480 17.413426 408,867 35%
Non-tax Qualified ............................. 30,916 17.413426 538,353 35%
Fidelity VIP - High Income Portfolio -
Service Class:
Tax Qualified ................................. 2,133 11.177582 23,842 6%
Non-tax Qualified ............................. 1,087 11.177582 12,150 6%
Fidelity VIP - Overseas Portfolio -
Service Class:
Tax Qualified ................................. 594 17.052691 10,129 40%
Non-tax Qualified ............................. 277 17.052691 4,724 40%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ................................. 1,471 15.603664 22,953 22%
Non-tax Qualified ............................. 12,941 15.603664 201,927 22%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ................................. 1,795 12.595275 22,609 2%
Non-tax Qualified ............................. 3,112 12.595275 39,196 2%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax Qualified ................................. 388 14.479873 5,618 27%
Nationwide SAT - Balanced Fund:
Tax Qualified ................................. 1,116 10.577794 11,805 (1)%
Non-tax Qualified ............................. 60 10.577794 635 (1)%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ................................. 8,335 12.740010 106,188 3%
Non-tax Qualified ............................. 11,336 12.740010 144,421 3%
Nationwide SAT - Equity Income Fund:
Tax Qualified ................................. 32 13.786084 441 17%
Non-tax Qualified ............................. 658 13.786084 9,071 17%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ................................. 10,206 9.449856 96,445 (4)%
</TABLE>
(Continued)
<PAGE> 70
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT -
High Income Bond Fund:
Non-tax Qualified ............................. 1,098 10.479056 11,506 1%
Nationwide SAT - Money Market Fund:
Tax Qualified ................................. 3,546 10.395950 36,864 3%
Non-tax Qualified ............................. 10,669 10.395950 110,914 3%
Nationwide SAT -
Multi Sector Bond Fund:
Non-tax Qualified ............................. 1,554 10.219313 15,881 0%
Nationwide SAT -
Select Advisers Mid Cap Fund:
Tax Qualified ................................. 120 14.553031 1,746 19%
Nationwide SAT - Small Cap Value Fund:
Tax Qualified ................................. 872 16.277398 14,194 26%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ................................. 228 22.988509 5,241 82%
Non-tax Qualified ............................. 428 22.988509 9,839 82%
Nationwide SAT - Strategic Value Fund:
Non-tax Qualified ............................. 195 12.403079 2,419 (5)%
Nationwide SAT - Total Return Fund:
Tax Qualified ................................. 495 12.596911 6,235 5%
Non-tax Qualified ............................. 1,567 12.596911 19,739 5%
Neuberger & Berman AMT -
Guardian Portfolio:
Non-tax Qualified ............................. 156 14.547000 2,269 13%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ................................. 271 21.277954 5,766 51%
Non-tax Qualified ............................. 256 21.277954 5,447 51%
Neuberger & Berman AMT -
Partners Portfolio:
Tax Qualified ................................. 380 12.504542 4,752 6%
Non-tax Qualified ............................. 845 12.504542 10,566 6%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified ................................. 3,311 23.789077 78,766 81%
Non-tax Qualified ............................. 2,068 23.789077 49,196 81%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ................................. 235 18.427568 4,330 39%
Non-tax Qualified ............................. 1,733 18.427568 31,935 39%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ................................. 17,731 14.751442 261,558 20%
Non-tax Qualified ............................. 1,074 14.751442 15,843 20%
</TABLE>
<PAGE> 71
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax Qualified ................................ 616 24.853443 15,310 97%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax Qualified ................................ 423 11.787279 4,986 19%
Victory VIF - Diversified Stock Fund -
Class A:
Non-tax Qualified ............................ 1,948 10.037475 19,553 0%(a)
Victory VIF - Investment Quality
Bond Fund - Class A:
Non-tax Qualified ............................ 750 9.908553 7,431 (1)%(a)
Victory VIF - Small Company
Opportunity Fund - Class A:
Non-tax Qualified ............................ 432 9.874460 4,266 (1)%(a)
Warburg Pincus Trust -
International Equity Portfolio:
Non-tax Qualified ............................ 531 17.408242 9,244 51%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Non-tax Qualified ............................ 23 20.617144 474 61%
Asset fee @ 1.70% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified ................................ 48 10.894734 523 9%
Non-tax Qualified ............................ 169 10.894734 1,841 9%
American Century VP -
American Century VP International:
Non-tax Qualified ............................ 48 15.314929 735 53%
American Century VP -
American Century VP Value:
Non-tax Qualified ............................ 49 8.780117 430 (12)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ................................ 256 11.868131 3,038 19%
Non-tax Qualified ............................ 330 11.868131 3,916 19%
Dreyfus Stock Index Fund:
Tax Qualified ................................ 2,986 10.794215 32,232 8%
Non-tax Qualified ............................ 508 10.794215 5,483 8%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified ................................ 584 10.184154 5,948 2%
Non-tax Qualified ............................ 38 10.184154 387 2%
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ................................ 305 9.309967 2,840 (7)%
Non-tax Qualified ............................ 459 9.309967 4,273 (7)%
</TABLE>
(Continued)
<PAGE> 72
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ................................ 5,243 12.322268 64,606 23%
Non-tax Qualified ............................ 474 12.322268 5,841 23%
Fidelity VIP - Overseas Portfolio -
Service Class:
Non-tax Qualified ............................ 254 13.058898 3,317 31%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ................................ 2,571 11.278366 28,997 13%
Non-tax Qualified ............................ 455 11.278366 5,132 13%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ................................ 122 9.869824 1,204 (1)%
Non-tax Qualified ............................ 68 9.869824 671 (1)%
Nationwide SAT - Balanced Fund:
Tax Qualified ................................ 77 9.481422 730 (5)%
Nationwide SAT -
Capital Appreciation Fund:
Non-tax Qualified ............................ 110 9.707627 1,068 (3)%
Nationwide SAT - Equity Income Fund:
Non-tax Qualified ............................ 102 10.778958 1,099 8%
Nationwide SAT - Money Market Fund:
Non-tax Qualified ............................ 599 10.209430 6,115 2%
Nationwide SAT - Select Advisers
Small Cap Growth Fund:
Non-tax Qualified ............................ 12 20.270503 243 103%(a)
Nationwide SAT - Small Cap Value Fund:
Non-tax Qualified ............................ 20 11.697140 234 17%
Nationwide SAT - Small Company Fund:
Non-tax Qualified ............................ 237 14.124755 3,348 41%
Nationwide SAT - Strategic Growth Fund:
Tax Qualified ................................ 5 14.658438 73 47%
Non-tax Qualified ............................ 121 14.658438 1,774 47%
Nationwide SAT - Total Return Fund:
Tax Qualified ................................ 298 9.851989 2,936 (1)%
Non-tax Qualified ............................ 146 9.851989 1,438 (1)%
Neuberger & Berman AMT -
Guardian Portfolio:
Non-tax Qualified ............................ 22 9.968645 219 0%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio:
Tax Qualified ................................ 19 15.264119 290 53%
Non-tax Qualified ............................ 99 15.264119 1,511 53%
</TABLE>
<PAGE> 73
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Neuberger & Berman AMT -
Partners Portfolio:
Non-tax Qualified .............................. 23 9.504551 219 (5)%
Oppenheimer VAF -
Aggressive Growth Fund:
Tax Qualified .................................. 429 16.070617 6,894 61%
Non-tax Qualified .............................. 15 16.070617 241 61%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified .................................. 485 12.759449 6,188 28%
Non-tax Qualified .............................. 176 12.759449 2,246 28%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified .................................. 2,487 10.784586 26,821 8%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Non-tax Qualified .............................. 16 15.596564 250 56%
Van Eck WIT -
Worldwide Hard Assets Fund:
Non-tax Qualified .............................. 23 9.987144 230 0%
Warburg Pincus Trust -
Growth & Income Portfolio:
Non-tax Qualified .............................. 125 9.340613 1,168 (7)%
Asset fee @ 1.75% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified .................................. 375 10.891060 4,084 9%
American Century VP -
American Century VP Value:
Tax Qualified .................................. 132 8.777154 1,159 (12)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified .................................. 194 11.864126 2,302 19%
Dreyfus Stock Index Fund:
Tax Qualified .................................. 820 10.790571 8,848 8%
Non-tax Qualified .............................. 1,372 10.790571 14,805 8%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax Qualified .................................. 192 10.180717 1,955 2%
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified .................................. 205 12.318116 2,525 23%
Non-tax Qualified .............................. 7,228 12.318116 89,035 23%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified .................................. 153 11.274564 1,725 13%
Non-tax Qualified .............................. 625 11.274564 7,047 13%
</TABLE>
(Continued)
<PAGE> 74
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ................................ 133 9.866489 1,312 (1)%
Nationwide SAT - Equity Income Fund:
Tax Qualified ................................ 191 10.775320 2,058 8%
Nationwide SAT -
Government Bond Fund:
Tax Qualified ................................ 235 9.731842 2,287 (3)%
Nationwide SAT - Money Market Fund:
Non-tax Qualified ............................ 3,456 10.205942 35,272 2%
Nationwide SAT - Small Company Fund:
Non-tax Qualified ............................ 1,202 14.120006 16,972 41%
Nationwide SAT - Total Return Fund:
Non-tax Qualified ............................ 1,503 9.848668 14,803 (2)%
Oppenheimer VAF -
Aggressive Growth Fund:
Non-tax Qualified ............................ 424 16.065210 6,812 61%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ................................ 183 12.755147 2,334 28%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Tax Qualified ................................ 41 10.780952 442 8%
Non-tax Qualified ............................ 504 10.780952 5,434 8%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio:
Non-tax Qualified ............................ 1,471 9.009528 13,253 (10)%
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax Qualified ................................ 53 9.337456 495 (7)%
Asset fee @ 1.80% rate:
American Century VP -
American Century VP Income & Growth:
Tax Qualified ................................ 2,334 10.887381 25,411 9%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax Qualified ................................ 2,591 11.860138 30,730 19%
Dreyfus Stock Index Fund:
Tax Qualified ................................ 3,195 10.786928 34,464 8%
Non-tax Qualified ............................ 1,636 10.786928 17,647 8%
Fidelity VIP - Equity-Income Portfolio -
Service Class:
Tax Qualified ................................ 646 9.303685 6,010 (7)%
Non-tax Qualified ............................ 3,863 9.303685 35,940 (7)%
</TABLE>
<PAGE> 75
NATIONWIDE VARIABLE ACCOUNT-9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Fidelity VIP - Growth Portfolio -
Service Class:
Tax Qualified ............................... 5,519 12.313961 67,961 23%
Non-tax Qualified ........................... 268 12.313961 3,300 23%
Fidelity VIP-II - Contrafund Portfolio -
Service Class:
Tax Qualified ............................... 378 11.270766 4,260 13%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class:
Tax Qualified ............................... 1,929 9.863165 19,026 (1)%
Non-tax Qualified ........................... 311 9.863165 3,067 (1)%
Nationwide SAT -
Capital Appreciation Fund:
Tax Qualified ............................... 3,065 9.701077 29,734 (3)%
Nationwide SAT - Small Company Fund:
Tax Qualified ............................... 308 14.115240 4,347 41%
Nationwide SAT - Strategic Value Fund:
Tax Qualified ............................... 995 8.542404 8,500 (15)%
Nationwide SAT - Total Return Fund:
Tax Qualified ............................... 30 9.845340 295 (2)%
Oppenheimer VAF -
Capital Appreciation Fund:
Tax Qualified ............................... 5,062 12.750840 64,545 28%
Non-tax Qualified ........................... 270 12.750840 3,443 28%
Oppenheimer VAF -
Main Street Growth & Income Fund:
Non-tax Qualified ........................... 1,312 10.777319 14,140 8%
Nationwide SAT -
Select Advisers Small Cap Growth Fund:
Initial funding by depositor ................ 100,000 20.501257 2,050,126 105%(a)
Victory VIF - Diversified Stock Fund -
Class A:
Initial funding by depositor ................ 100,000 10.120885 1,012,088 1%(a)
Victory VIF - Investment Quality
Bond Fund - Class A:
Initial funding by depositor ................ 100,000 10.020857 1,002,086 2%(a)
Victory VIF - Small Company
Opportunity Fund - Class A:
Initial funding by depositor ................ 100,000 9.956513 995,651 (4)%(a)
========= ========== --------------
Reserves for annuity contracts in payout phase:
Non-tax qualified ........................... 17,085
--------------
$6,530,166,060
==============
</TABLE>
(a) Non-annualized. The return was computed for the period 9/27/99, 5/03/99,
5/03/99, 7/01/99, 7/01/99 and 7/01/99 (effective dates) through 12/31/99
for Dreyfus VIF - European Equities Fund, Federated Insurance Series:
Federated Quality Bond Fund II, Nationwide SAT - Select Advisors Small Cap
Growth Fund, Victory VIF - Diversified Stock Fund - Class A, Victory VIF -
Investment Quality Bond Fund - Class A and Victory VIF - Small Company
Opportunity Fund - Class A, respectively.
(b) The annual return does not include contract charges satisfied by
surrendering units.
--------------------------------------------------------------------------------
<PAGE> 64
<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, 1999 and
1998, 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,
1999. 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.
Columbus, Ohio
January 28, 2000
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Balance Sheets
(in millions, except per share amounts)
<TABLE>
<CAPTION>
December 31,
-----------------------------
Assets 1999 1998
------ --------- ---------
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $15,294.0 $14,245.1
Equity securities 92.9 127.2
Mortgage loans on real estate, net 5,786.3 5,328.4
Real estate, net 254.8 243.6
Policy loans 519.6 464.3
Other long-term investments 73.8 44.0
Short-term investments 416.0 289.1
--------- ---------
22,437.4 20,741.7
--------- ---------
Cash 4.8 3.4
Accrued investment income 238.6 218.7
Deferred policy acquisition costs 2,554.1 2,022.2
Other assets 305.9 420.3
Assets held in separate accounts 67,135.1 50,935.8
--------- ---------
$92,675.9 $74,342.1
========= =========
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims $21,861.6 $19,767.1
Other liabilities 914.2 866.1
Liabilities related to separate accounts 67,135.1 50,935.8
--------- ---------
89,910.9 71,569.0
--------- ---------
Commitments and contingencies (notes 8 and 13)
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 766.1 914.7
Retained earnings 2,011.0 1,579.0
Accumulated other comprehensive income (15.9) 275.6
--------- ---------
2,765.0 2,773.1
--------- ---------
$92,675.9 $74,342.1
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Income
(in millions)
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Policy charges $ 895.5 $ 698.9 $ 545.2
Life insurance premiums 220.8 200.0 205.4
Net investment income 1,520.8 1,481.6 1,409.2
Realized (losses) gains on investments (11.6) 28.4 11.1
Other 66.1 66.8 46.5
-------- -------- --------
2,691.6 2,475.7 2,217.4
-------- -------- --------
Benefits and expenses:
Interest credited to policyholder account balances 1,096.3 1,069.0 1,016.6
Other benefits and claims 210.4 175.8 178.2
Policyholder dividends on participating policies 42.4 39.6 40.6
Amortization of deferred policy acquisition costs 272.6 214.5 167.2
Other operating expenses 463.4 419.7 384.9
-------- -------- --------
2,085.1 1,918.6 1,787.5
-------- -------- --------
Income before federal income tax expense 606.5 557.1 429.9
Federal income tax expense 201.4 190.4 150.2
-------- -------- --------
Net income $ 405.1 $ 366.7 $ 279.7
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
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, 1999, 1998 and 1997
(in millions)
<TABLE>
<CAPTION>
Accumulated
Additional other Total
Common paid-in Retained comprehensive shareholder's
stock capital earnings income equity
-------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
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
Comprehensive income:
Net income -- -- 405.1 -- 405.1
Net unrealized losses on securities
available-for-sale arising during
the year -- -- -- (315.0) (315.0)
--------
Total comprehensive income 90.1
--------
Capital contribution -- 26.4 87.9 23.5 137.8
--------
Dividends to shareholder -- (175.0) (61.0) -- (236.0)
------ -------- -------- ------ --------
December 31, 1999 $ 3.8 $ 766.1 $2,011.0 $(15.9) $2,765.0
====== ======== ======== ====== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Cash Flows
(in millions)
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 405.1 $ 366.7 $ 279.7
Adjustments to reconcile net income to net cash provided by operating
activities:
Interest credited to policyholder account balances 1,096.3 1,069.0 1,016.6
Capitalization of deferred policy acquisition costs (637.0) (584.2) (487.9)
Amortization of deferred policy acquisition costs 272.6 214.5 167.2
Amortization and depreciation 2.4 (8.5) (2.0)
Realized (gains) losses on invested assets, net 11.6 (28.4) (11.1)
Increase in accrued investment income (7.9) (8.2) (0.3)
Decrease (increase) in other assets 122.9 16.4 (12.7)
Decrease in policy liabilities (20.9) (8.3) (23.1)
Increase (decrease) in other liabilities 149.7 (34.8) 230.6
Other, net (8.6) (11.3) (10.9)
--------- --------- ---------
Net cash provided by operating activities 1,386.2 982.9 1,146.1
--------- --------- ---------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 2,307.9 1,557.0 993.4
Proceeds from sale of securities available-for-sale 513.1 610.5 574.5
Proceeds from repayments of mortgage loans on real estate 696.7 678.2 437.3
Proceeds from sale of real estate 5.7 103.8 34.8
Proceeds from repayments of policy loans and sale of other invested assets 40.9 23.6 22.7
Cost of securities available-for-sale acquired (3,724.9) (3,182.8) (2,828.1)
Cost of mortgage loans on real estate acquired (971.4) (829.1) (752.2)
Cost of real estate acquired (14.2) (0.8) (24.9)
Short-term investments, net (27.5) 69.3 (354.8)
Other, net (110.9) (88.4) (62.5)
--------- --------- ---------
Net cash used in investing activities (1,284.6) (1,058.7) (1,959.8)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from capital contributions -- -- 836.8
Cash dividends paid (188.5) (100.0) --
Increase in investment product and universal life insurance
product account balances 3,799.4 2,682.1 2,488.5
Decrease in investment product and universal life insurance
product account balances (3,711.1) (2,678.5) (2,379.8)
--------- --------- ---------
Net cash used in financing activities (100.2) (96.4) 945.5
--------- --------- ---------
Net increase (decrease) in cash 1.4 (172.2) 131.8
Cash, beginning of year 3.4 175.6 43.8
--------- --------- ---------
Cash, end of year $ 4.8 $ 3.4 $ 175.6
========= ========= =========
</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, 1999, 1998 and 1997
(1) Organization and Description of Business
Nationwide Life Insurance Company (NLIC) is a leading provider of
long-term savings and retirement products in the United States and is a
wholly owned subsidiary of Nationwide Financial Services, Inc. (NFS).
The Company develops and sells a diverse range of products including
variable annuities, fixed annuities and life insurance as well as
investment management and administrative services. NLIC markets its
products through a broad network of distribution channels, including
independent broker/dealers, national and regional brokerage firms,
financial institutions, pension plan administrators, life insurance
specialists, Nationwide Retirement Solutions sales representatives, and
Nationwide agents.
Wholly owned subsidiaries of NLIC include Nationwide Life and Annuity
Insurance Company (NLAIC), Nationwide Advisory Services, Inc., and
Nationwide Investment Services Corporation. NLIC and its subsidiaries
are collectively referred to as "the Company."
(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.
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. All significant intercompany
balances and transactions have been eliminated.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(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 accumulated other comprehensive income in
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, 1999 or 1998.
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.
(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.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(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. 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). 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.
(e) Separate Accounts
Separate account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. For all but $915.4 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 5.6%, 6.0% and 6.1% for the years ended
December 31, 1999, 1998 and 1997, 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 29% in 1999 (40%
in 1998 and 50% in 1997) of the Company's life insurance in force,
69% in 1999 (74% in 1998 and 77% in 1997) of the number of life
insurance policies in force, and 13% in 1999 (14% in 1998 and 27%
in 1997) 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.
(j) Recently Issued Accounting Pronouncements
In March 1998, The American Institute of Certified Public
Accountant's Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The
SOP, which has been adopted prospectively as of January 1, 1999,
requires the capitalization of certain costs incurred in
connection with developing or obtaining internal use software.
Prior to the adoption of SOP 98-1, the Company expensed internal
use software related costs as incurred. The effect of adopting the
SOP was to increase net income for 1999 by $8.3 million.
In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). FAS 133 establishes accounting
and reporting standards for derivative instruments and for hedging
activities. Contracts that contain embedded derivatives, such as
certain investment and insurance contracts, are also addressed by
the Statement. FAS 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. In
July 1999 the FASB issued Statement No. 137 which delayed the
effective date of FAS 133 to fiscal years beginning after June 15,
2000. The Company plans to adopt this Statement in first quarter
2001 and is currently evaluating the impact on results of
operations and financial condition.
(k) Reclassification
Certain items in the 1998 and 1997 consolidated financial
statements have been reclassified to conform to the 1999
presentation.
<PAGE> 10
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, 1999 and
1998 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
(in millions) cost gains losses fair value
--------- ------ ------- ---------
<S> <C> <C> <C> <C>
December 31, 1999:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 428.4 $ 23.4 $ (2.4) $ 449.4
Obligations of states and political subdivisions 0.8 -- -- 0.8
Debt securities issued by foreign governments 110.6 0.6 (0.8) 110.4
Corporate securities 11,414.7 118.9 (218.6) 11,315.0
Mortgage-backed securities 3,422.8 25.8 (30.2) 3,418.4
--------- ------ ------- ---------
Total fixed maturity securities 15,377.3 168.7 (252.0) 15,294.0
Equity securities 84.9 12.4 (4.4) 92.9
--------- ------ ------- ---------
$15,462.2 $181.1 $(256.4) $15,386.9
========= ====== ======= =========
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
========= ====== ======= =========
</TABLE>
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1999, 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) cost fair value
--------- ---------
<S> <C> <C>
Fixed maturity securities available for sale:
Due in one year or less $ 847.0 $ 847.0
Due after one year through five years 5,240.5 5,205.7
Due after five years through ten years 5,046.9 5,005.2
Due after ten years 4,242.9 4,236.1
--------- ---------
$15,377.3 $15,294.0
========= =========
</TABLE>
<PAGE> 11
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The components of unrealized (losses) gains on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998
------ -------
<S> <C> <C>
Gross unrealized (losses) gains $(75.3) $ 540.6
Adjustment to deferred policy acquisition costs 50.9 (116.6)
Deferred federal income tax 8.5 (148.4)
------ -------
$(15.9) $ 275.6
====== =======
</TABLE>
An analysis of the change in gross unrealized (losses) gains on
securities available-for-sale for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----- ------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(607.1) $52.6 $137.5
Equity securities (8.8) 4.2 (2.7)
------- ----- ------
$(615.9) $56.8 $134.8
======= ===== ======
</TABLE>
Proceeds from the sale of securities available-for-sale during 1999,
1998 and 1997 were $513.1 million, $610.5 million and $574.5 million,
respectively. During 1999, gross gains of $10.4 million ($9.0 million
and $9.9 million in 1998 and 1997, respectively) and gross losses of
$28.0 million ($7.6 million and $18.0 million in 1998 and 1997,
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 Company had $15.6 million of real estate investments at December
31, 1999 that were non-income producing the preceding twelve months.
During 1998 the Company had investments of $42.4 million that were
non-income producing, which consisted of $32.7 million of securities
available-for-sale and $9.7 million of real estate.
Real estate is presented at cost less accumulated depreciation of $24.8
million as of December 31, 1999 ($21.5 million as of December 31, 1998)
and valuation allowances of $5.5 million as of December 31, 1999 ($5.4
million as of December 31, 1998).
The recorded investment of mortgage loans on real estate considered to
be impaired was $3.7 million as of both December 31, 1999 and 1998. No
valuation allowance has been recorded for these loans as of December
31, 1999 or 1998. During 1999, the average recorded investment in
impaired mortgage loans on real estate was approximately $3.7 million
($9.1 million in 1998) and there was no interest income recognized on
those loans. Interest income recognized on impaired loans was $0.3
million in 1998 which is equal to interest income recognized using a
cash-basis method of income recognition.
<PAGE> 12
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) 1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Allowance, beginning of year $42.4 $42.5 $51.0
Additions (reductions) charged to operations 0.7 (0.1) (1.2)
Direct write-downs charged against the allowance -- -- (7.3)
Allowance on acquired mortgage loans 1.3 -- --
----- ----- -----
Allowance, end of year $44.4 $42.4 $42.5
===== ===== =====
</TABLE>
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $1,031.3 $ 982.5 $ 911.6
Equity securities 2.5 0.8 0.8
Mortgage loans on real estate 460.4 458.9 457.7
Real estate 28.8 40.4 42.9
Short-term investments 18.6 17.8 22.7
Other 26.5 30.7 21.0
-------- -------- --------
Total investment income 1,568.1 1,531.1 1,456.7
Less investment expenses 47.3 49.5 47.5
-------- -------- --------
Net investment income $1,520.8 $1,481.6 $1,409.2
======== ======== ========
</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) 1999 1998 1997
------- ----- -----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(25.0) $(0.7) $ 3.6
Equity securities 7.4 2.1 2.7
Mortgage loans on real estate (0.6) 3.9 1.6
Real estate and other 6.6 23.1 3.2
------ ----- -----
$(11.6) $28.4 $11.1
====== ===== =====
</TABLE>
Fixed maturity securities with an amortized cost of $9.1 million as of
December 31, 1999 and $6.5 million as of December 31, 1998 were on
deposit with various regulatory agencies as required by law.
(4) Derivative Financial Instruments
The Company uses derivative financial instruments, principally interest
rate swaps, interest rate futures contracts and foreign currency swaps,
to manage market risk exposures associated with changes in interest
rates and foreign currency exchange rates. Provided they meet specific
criteria, interest rate swaps and futures are considered hedges and are
accounted for under the accrual method and deferral method,
respectively. The Company has no significant derivative positions that
are not considered hedges.
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Interest rate swaps are primarily used to convert specific investment
securities and interest bearing policy liabilities from a fixed-rate to
a floating-rate basis. Amounts receivable or payable under these
agreements are recognized as an adjustment to net investment income or
interest credited to policyholder account balances consistent with the
nature of the hedged item. The changes in fair value of the interest
rate swap agreements are not recognized on the balance sheet, except
for interest rate swaps designated as hedges of fixed maturity
securities available-for-sale, for which changes in fair values are
reported in accumulated other comprehensive income.
Interest rate futures contracts are primarily used to hedge the risk of
adverse interest rate changes related to the Company's mortgage loan
commitments and anticipated purchases of fixed rate investments. Gains
and losses are deferred and, at the time of closing, reflected as an
adjustment to the carrying value of the related mortgage loans or
investments. The carrying value adjustments are amortized into net
investment income over the life of the related mortgage loans or
investments.
Foreign currency swaps are used to convert cash flows from specific
policy liabilities and investments denominated in foreign currencies
into U.S. dollars at specified exchange rates. Gains and losses on
foreign currency swaps are recorded in earnings based on the related
spot foreign exchange rate at the end of the reporting period. Gains
and losses on these contracts offset those recorded as a result of
translating the hedged foreign currency denominated liabilities and
investments to U.S. dollars.
The following table summarizes the notional amount of derivative
financial instruments classified as hedges outstanding as of December
31, 1999. Prior to 1999 the Company's activities in derivatives were
not significant.
<TABLE>
<CAPTION>
(in millions)
-------------
<S> <C>
Interest rate swaps
Pay fixed/receive variable rate swaps hedging investments $362.7
Pay variable/receive fixed rate swaps hedging investments $ 28.5
Other contracts hedging investments $ 19.1
Pay variable/receive fixed rate swaps hedging liabilities $577.2
Foreign currency swaps
Hedging foreign currency denominated investments $ 14.8
Hedging foreign currency denominated liabilities $577.2
Interest rate futures contracts $781.6
</TABLE>
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(5) Federal Income Tax
The tax effects of temporary differences that give rise to significant
components of the net deferred tax liability as of December 31, 1999
and 1998 are as follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Fixed maturity securities $ 5.3 $ --
Future policy benefits 149.5 207.7
Liabilities in separate accounts 373.6 319.9
Mortgage loans on real estate and real estate 18.5 17.5
Other assets and other liabilities 51.1 58.9
----- ------
Total gross deferred tax assets 598.0 604.0
Less valuation allowance (7.0) (7.0)
----- ------
Net deferred tax assets 591.0 597.0
----- ------
Deferred tax liabilities:
Deferred policy acquisition costs 724.4 568.7
Fixed maturity securities -- 212.2
Deferred tax on realized investment gains 34.7 34.8
Equity securities and other long-term investments 10.8 9.6
Other 26.5 21.6
------ ------
Total gross deferred tax liabilities 796.4 846.9
------ ------
Net deferred tax liability $205.4 $249.9
====== ======
</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, 1999, 1998 and 1997.
The Company's current federal income tax liability was $104.7 million
and $72.8 million as of December 31, 1999 and 1998, respectively.
Federal income tax expense for the years ended December 31 was as
follows:
(in millions) 1999 1998 1997
------ ------ ------
Currently payable $ 53.6 $186.1 $121.7
Deferred tax expense 147.8 4.3 28.5
------ ------ ------
$201.4 $190.4 $150.2
====== ====== ======
<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, 1999,
1998 and 1997 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ---------------- ----------------
(in millions) Amount % Amount % Amount %
------ ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $212.3 35.0 $195.0 35.0 $150.5 35.0
Tax exempt interest and dividends
received deduction (7.3) (1.2) (4.9) (0.9) -- --
Income tax credits (4.3) (0.7) -- -- -- --
Other, net 0.7 0.1 0.3 0.1 (0.3) (0.1)
------ ---- ------ ---- ------ ----
Total (effective rate of each year) $201.4 33.2 $190.4 34.2 $150.2 34.9
====== ==== ====== ==== ====== ====
</TABLE>
Total federal income tax paid was $29.8 million, $173.4 million and
$91.8 million during the years ended December 31, 1999, 1998 and 1997,
respectively.
(6) Comprehensive Income
Comprehensive Income includes net income as well as certain items that
are reported directly within separate components of shareholder's
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) 1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-for-sale
arising during the period:
Gross $(665.3) $ 58.2 $141.1
Adjustment to deferred policy acquisition costs 167.5 (12.9) (21.8)
Related federal income tax (expense) benefit 171.4 (15.9) (41.7)
------- ------ ------
Net (326.4) 29.4 77.6
------- ------ ------
Reclassification adjustment for net (gains) losses on
securities available-for-sale realized during the
period:
Gross 17.6 (1.4) (6.3)
Related federal income tax expense (benefit) (6.2) 0.5 2.2
------- ------ ------
Net 11.4 (0.9) (4.1)
------- ------ ------
Total Other Comprehensive Income $(315.0) $ 28.5 $ 73.5
======= ====== ======
</TABLE>
(7) 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 fixed
maturity and equity securities exclude the fair value of
derivatives contracts designated as hedges of fixed maturity and
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 8.
Futures contracts: The fair value for futures contracts is based
on quoted market prices.
Interest rate and foreign currency swaps: The fair value for
interest rate and foreign currency swaps are calculated with
pricing models using current rate assumptions.
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>
1999 1998
------------------------ -------------------------
Carrying Estimated Carrying Estimated
(in millions) amount fair value amount fair value
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $15,294.0 $15,294.0 $14,245.1 $14,245.1
Equity securities 92.9 92.9 128.5 128.5
Mortgage loans on real estate, net 5,786.3 5,745.5 5,328.4 5,527.6
Policy loans 519.6 519.6 464.3 464.3
Short-term investments 416.0 416.0 289.1 289.1
Cash 4.8 4.8 3.4 3.4
Assets held in separate accounts 67,135.1 67,135.1 50,935.8 50,935.8
Liabilities:
Investment contracts (16,977.7) (16,428.6) (15,468.7) (15,158.6)
Policy reserves on life insurance contracts (4,883.9) (4,607.9) (3,914.0) (3,768.9)
Liabilities related to separate accounts (67,135.1) (66,318.7) (50,935.8) (49,926.5)
Derivative financial instruments:
Interest rate swaps hedging assets 4.3 4.3 - -
Interest rate swaps hedging liabilities - (24.2) - -
Foreign currency swaps (11.8) (11.8) - -
Futures contracts 1.3 1.3 (1.3) (1.3)
</TABLE>
(8) 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.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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.
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 and derivative financial instruments. 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 $216.2 million
extending into 2000 were outstanding as of December 31, 1999. The
Company also had $28.0 million of commitments to purchase fixed
maturity securities outstanding as of December 31, 1999.
Notional amounts of derivative financial instruments, primarily
interest rate swaps, interest rate futures contracts and foreign
currency swaps, significantly exceed the credit risk associated with
these instruments and represent contractual balances on which
calculations of amounts to be exchanged are based. Credit exposure is
limited to the sum of the aggregate fair value of positions that have
become favorable to NLIC, including accrued interest receivable due
from counterparties. Potential credit losses are minimized through
careful evaluation of counterparty credit standing, selection of
counterparties from a limited group of high quality institutions,
collateral agreements and other contract provisions. At December 31,
1999, NLIC's credit risk from these derivative financial instruments
was $6.1 million.
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 23% (22% in 1998) in any geographic area and no more than 2% (2%
in 1998) with any one borrower as of December 31, 1999. As of December
31, 1999, 39% (42% in 1998) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed retail
properties.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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 $143.6 million and $187.9 million as of December 31,
1999 and 1998, 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.
(9) 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.
Pension cost (benefit) charged to operations by the Company during the
years ended December 31, 1999, 1998 and 1997 were $(8.3) million, $2.0
million and $7.5 million, respectively. The Company has recorded a
prepaid pension asset of $13.3 million and $5.0 million as of December
31, 1999 and 1998, respectively.
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,
1999 and 1998 was $49.6 million and $40.1 million, respectively, and
the net periodic postretirement benefit cost (NPPBC) for 1999, 1998 and
1997 was $4.9 million, $4.1 million and $3.0 million, respectively.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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, 1999 and 1998 follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
------------------ -----------------------
(in millions) 1999 1998 1999 1998
--------------------------------------------------------- -------- -------- ------- -------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $2,185.0 $2,033.8 $ 270.1 $ 237.9
Service cost 80.0 87.6 14.2 9.8
Interest cost 109.9 123.4 17.6 15.4
Actuarial (gain) loss (95.0) 123.2 (64.4) 15.6
Plan settlement in 1999/curtailment in 1998 (396.1) (107.2) -- --
Benefits paid (72.4) (75.8) (11.0) (8.6)
Acquired companies -- -- 13.3 --
-------- -------- ------- -------
Benefit obligation at end of year 1,811.4 2,185.0 239.8 270.1
-------- -------- ------- -------
Change in plan assets:
Fair value of plan assets at beginning of year 2,541.9 2,212.9 77.9 69.2
Actual return on plan assets 161.8 300.7 3.5 5.0
Employer contribution 12.4 104.1 20.9 12.1
Plan settlement (396.1) -- -- --
Benefits paid (72.4) (75.8) (11.0) (8.4)
-------- -------- ------- -------
Fair value of plan assets at end of year 2,247.6 2,541.9 91.3 77.9
-------- -------- ------- -------
Funded status 436.2 356.9 (148.5) (192.2)
Unrecognized prior service cost 28.2 31.5 -- --
Unrecognized net (gains) losses (402.0) (345.7) (46.7) 16.0
Unrecognized net (asset) obligation at transition (7.7) (11.0) 1.1 1.3
-------- -------- ------- -------
Prepaid (accrued) benefit cost $ 54.7 $ 31.7 $(194.1) $(174.9)
======== ======== ======= =======
</TABLE>
<PAGE> 21
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
---------------- -----------------------
1999 1998 1999 1998
---- ---- ------- ------
<S> <C> <C>
Weighted average discount rate 7.00% 5.50% 7.80% 6.65%
Rate of increase in future compensation levels 5.25% 3.75% -- --
Assumed health care cost trend rate:
Initial rate -- -- 15.00% 15.00%
Ultimate rate -- -- 5.50% 8.00%
Uniform declining period -- -- 5 Years 15 Years
</TABLE>
The net periodic pension cost for the pension plan as a whole for the
years ended December 31, 1999, 1998 and 1997 follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
-------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 80.0 $ 87.6 $ 77.3
Interest cost on projected benefit obligation 109.9 123.4 118.6
Expected return on plan assets (160.3) (159.0) (139.0)
Recognized gains (9.1) (3.8) --
Amortization of prior service cost 3.2 3.2 3.2
Amortization of unrecognized transition obligation (asset) (1.4) 4.2 4.2
------- ------- --------
$ 22.3 $ 55.6 $ 64.3
======= ======= ========
</TABLE>
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its
affiliation with Nationwide Insurance 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). During 1999, the
plan transferred assets to settle its obligation related to WSC
employees . A settlement gain of $32.9 million was recognized.
Basis for measurements, net periodic pension cost for the pension plan:
<TABLE>
<CAPTION>
1999 1998 1997
------ ----- -----
<S> <C> <C> <C>
Weighted average discount rate 6.08% 6.00% 6.50%
Rate of increase in future compensation levels 4.33% 4.25% 4.75%
Expected long-term rate of return on plan assets 7.33% 7.25% 7.25%
</TABLE>
<PAGE> 22
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, 1999, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----------- -----------
<S> <C> <C> <C>
Service cost (benefits attributed to employee service during the year) $14.2 $ 9.8 $ 7.0
Interest cost on accumulated postretirement benefit obligation 17.6 15.4 14.0
Actual return on plan assets (3.5) (5.0) (3.6)
Amortization of unrecognized transition obligation of affiliates 0.6 0.2 0.2
Net amortization and deferral (1.8) 1.2 (0.5)
----- ----- -----
$27.1 $21.6 $17.1
===== ===== =====
</TABLE>
Actuarial assumptions used for the measurement of the NPPBC for the
postretirement benefit plan for 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Discount rate 6.65% 6.70% 7.25%
Long term rate of return on plan
assets, net of tax 7.15% 5.83% 5.89%
Assumed health care cost trend rate:
Initial rate 15.00% 12.00% 11.00%
Ultimate rate 5.50% 6.00% 6.00%
Uniform declining period 5 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, 1999 and have no impact
on the NPPBC for the year ended December 31, 1999.
(10) 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, 1999, 1998
and 1997 was $1.35 billion, $1.32 billion and $1.13 billion,
respectively. The statutory net income of NLIC for the years ended
December 31, 1999, 1998 and 1997 was $276.2 million, $171.0 million and
$111.7 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, 1999
$40.2 million of dividends could be paid by NLIC without prior
approval.
<PAGE> 23
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.
(11) Transactions With Affiliates
During second quarter 1999 the Company entered into a modified
coinsurance arrangement to reinsure the 1999 operating results of an
affiliated company, Employers Life Insurance Company of Wausau (ELOW)
retroactive to January 1, 1999. In September 1999, NFS acquired ELOW
for $120.8 million and immediately merged ELOW into NLIC terminating
the modified coinsurance arrangement. Because ELOW was an affiliate,
the Company accounted for the merger similar to poolings-of-interests;
however, prior period financial statements were not restated due to
immateriality. The reinsurance and merger combined contributed $1.46
million to year to date net income.
The Company has a reinsurance agreement with NMIC whereby all of the
Company's accident and health business is ceded to NMIC on a modified
coinsurance basis. The agreement covers individual accident and health
business for all periods presented and group and franchise accident and
health business since July 1, 1999. Either party may terminate the
agreement on January 1 of any year with prior notice. Prior to July 1,
1999 group and franchise accident and health business and a block of
group life insurance policies were ceded to ELOW under a modified
coinsurance agreement. Under a modified coinsurance agreement, 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
the reinsurer. Risk of asset default is retained by the Company,
although a fee is paid to the Company for the retention of such risk.
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. Revenues ceded to NMIC and ELOW for the years
ended December 31, 1999, 1998 and 1997 were $193.0 million, $216.9
million, and $315.3 million, respectively, while benefits, claims and
expenses ceded were $216.9 million, $259.3 million, and $326.6 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 such agreement are subject to
allocation among NMIC and such subsidiaries. Measures used to allocate
expenses among companies include individual employee estimates of time
spent, special cost studies, salary expense, commission expense and
other methods agreed to by the participating companies that are within
industry guidelines and practices. In addition, beginning in 1999
Nationwide Services Company, a subsidiary of NMIC, provides computer,
telephone, mail, employee benefits administration, and other services
to NMIC and certain of its direct and indirect subsidiaries, including
the Company, based on specified rates for units of service consumed.
For the years ended December 31, 1999, 1998 and 1997, the Company made
payments to NMIC and Nationwide Services Company totaling $124.1
million, $95.0 million, and $85.8 million, respectively. In addition,
the Company does not believe that expenses recognized under these
agreements are materially different than expenses that would have been
recognized had the Company operated on a stand-alone basis.
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1999, 1998 and 1997, the
Company made lease payments to NMIC and its subsidiaries of $9.9
million, $8.0 million and $8.4 million, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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 1999 and
1998 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.
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 $411.7 million and $248.4 million as
of December 31, 1999 and 1998, respectively, and are included in
short-term investments on the accompanying consolidated balance sheets.
As part of certain restructuring activities that occurred prior to the
March 1997 IPO, the Company paid a dividend valued at $485.7 million to
Nationwide Corp. on January 1, 1997 consisting of the outstanding
shares of common stock of ELOW, National Casualty Company (NCC) and
West Coast Life Insurance Company (WCLIC). Also, on February 24, 1997,
the Company 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.
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, 1999 were $56.0
million, $60.0 million and $66.1 million, respectively.
(12) Bank Lines of Credit
NFS, NLIC and NMIC are parties to 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 any party. NFS, NLIC and
NMIC pay facility and usage fees to the financial institutions to
maintain the revolving credit facility. As of December 31, 1999 the
Company had no amounts outstanding under the agreement.
(13) Contingencies
On October 29, 1998, the Company was 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 Services, Inc., Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company).
On May 3, 1999, the complaint was amended to, among other things, add
Marcus Shore as a second plaintiff. The amended complaint is brought as
a class action on behalf of all persons who purchased individual
deferred annuity contracts or participated in group annuity contracts
sold by the Company and the other named Company affiliates which were
used to fund certain tax-deferred retirement plans. The amended
complaint seeks unspecified compensatory and punitive damages. No class
has been certified. On June 11, 1999, the Company and the other named
defendants filed a motion to dismiss the amended complaint. On March 8,
2000, the court denied the motion to dismiss the amended complaint
filed by the Company and other named defendants. The Company intends to
defend this lawsuit vigorously.
(14) 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.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The Variable Annuities segment consists of annuity contracts that
provide the customer with access to a wide range of investment options,
tax-deferred accumulation of savings, asset protection in the event of
an untimely death, and flexible payout options including a lump sum,
systematic withdrawal or a stream of payments for life. 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, tax-deferred accumulation of savings, and flexible
payout options including a lump sum, systematic withdrawal or a stream
of payments for life. 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, revenues
and expenses related to group annuity contracts sold to Nationwide
Insurance employee and agent benefit plans and all realized gains and
losses on investments in a Corporate and Other segment.
During 1999 the Company revised the allocation of net investment income
among its Life Insurance and Corporate and Other segments. Also,
certain amounts previously reported as other income were reclassified
to operating expense. Amounts reported for prior periods have been
restated to reflect these changes.
The following table summarizes the financial results of the Company's
business segments for the years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
(in millions) Annuities Annuities Insurance and Other Total
------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1999:
Net investment income (1) $ (41.5) $ 1,134.5 $ 253.1 $ 174.7 $ 1,520.8
Other operating revenue 668.2 43.4 393.0 77.8 1,182.4
--------- --------- -------- -------- ---------
Total operating revenue (2) 626.7 1,177.9 646.1 252.5 2,703.2
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 837.5 130.5 128.3 1,096.3
Amortization of deferred policy
acquisition costs 162.8 49.7 60.1 -- 272.6
Other benefits and expenses 173.6 113.5 334.7 94.4 716.2
--------- --------- -------- -------- ---------
Total expenses 336.4 1,000.7 525.3 222.7 2,085.1
--------- --------- -------- -------- ---------
Operating income before
federal income tax 290.3 177.2 120.8 29.8 618.1
Realized losses on investments -- -- -- (11.6) (11.6)
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 290.3 $ 177.2 $ 120.8 $ 18.2 $ 606.5
========= ========= ======== ======== =========
Assets as of year end $62,599.7 $17,134.8 $6,616.7 $6,324.7 $92,675.9
========= ========= ======== ======== =========
</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) Annuities Annuities Insurance and Other Total
------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1998:
Net investment income (1) $ (31.3) $ 1,116.6 $ 225.6 $ 170.7 $ 1,481.6
Other operating revenue 532.9 35.7 318.5 78.6 965.7
--------- --------- -------- -------- ---------
Total operating revenue (2) 501.6 1,152.3 544.1 249.3 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 159.3 104.2 293.5 78.1 635.1
--------- --------- -------- -------- ---------
Total expenses 283.2 977.0 455.3 203.1 1,918.6
--------- --------- -------- -------- ---------
Operating income before federal
income tax 218.4 175.3 88.8 46.2 528.7
Realized gains on investments -- -- -- 28.4 28.4
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 218.4 $ 175.3 $ 88.8 $ 74.6 $ 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) $ (26.8) $ 1,098.2 $ 184.9 $ 152.9 $ 1,409.2
Other operating revenue 413.9 43.2 283.4 56.6 797.1
--------- --------- -------- -------- ---------
Total operating revenue (2) 387.1 1,141.4 468.3 209.5 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
Benefits and expenses 148.4 108.7 283.5 63.1 603.7
--------- --------- -------- -------- ---------
Total expenses 236.2 971.9 401.6 177.8 1,787.5
--------- --------- -------- -------- ---------
Operating income before federal
income tax 150.9 169.5 66.7 31.7 418.8
Realized gains on investments -- -- -- 11.1 11.1
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 150.9 $ 169.5 $ 66.7 $ 42.8 $ 429.9
========= ========= ======== ======== =========
Assets as of year end $35,278.7 $14,436.3 $3,901.4 $6,174.3 $59,790.7
========= ========= ======== ======== =========
</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.
