<PAGE> 1
Nationwide(R) VLI
Separate Account-4
June 30, 1998
The BEST
of AMERICA(R)
America's FUTURE Life Series(SM)
'98
Semi-Annual Report
- --------------------------------------------------------------------------------
[LOGO]
Nationwide Life Insurance Company
Home Office: Columbus, Ohio
VLOB-0161 (6/98)
<PAGE> 2
[LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to present the 1998
semi-annual report of the Nationwide VLI Separate Account-4.
The bull market continued its run in the first half of 1998. Most of
the gains came in the first quarter with more modest returns or small
losses for the second half of the period. At this writing, a market
correction that began in the second quarter continues to provide a good
deal of day-to-day volatility. Much of the capriciousness of the market
is due to uncertainty about the economic outcome in Asia. However, we
think the correction will be of limited magnitude and duration and will
provide a healthy respite before further market advances.
We believe that existing economic and market fundamentals provide an
ongoing favorable environment for financial assets. Interest rates
remain low; inflation is nearly nonexistent; corporate earnings, albeit
slowing, remain positive, and U.S. economic growth appears to be on a
modest but sustainable track.
Against this backdrop, we believe our variable insurance products
continue to provide the versatile investment vehicle you need to
respond to changing market conditions. We are committed to the
continual evaluation of our products and services to ensure that we
remain responsive to your long-term financial planning and
retirement-savings needs.
/s/ JOSEPH J. GASPER
---------------------
Joseph J. Gasper, President
August 17, 1998
2
<PAGE> 3
NATIONWIDE VLI SEPARATE ACCOUNT-4
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
American Century VP- American Century VP Income & Growth (ACVPIncGr)
1,850 shares (cost $11,463) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,672
American Century VP- American Century VP International (ACVPInt)
41,160 shares (cost $322,709) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,930
American Century VP- American Century VP Value (ACVPValue)
14,985 shares (cost $104,142) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,898
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
6,743 shares (cost $192,435) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199,326
Dreyfus Stock Index Fund (DryStkIx)
75,479 shares (cost $2,248,918) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,265,884
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
2,332 shares (cost $76,815) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,513
Fidelity VIP- Equity-Income Portfolio - Service Class (FidVIPEI)
25,786 shares (cost $648,119) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 648,764
Fidelity VIP- Growth Portfolio - Service Class (FidVIPGr)
8,391 shares (cost $313,698) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321,294
Fidelity VIP- High Income Portfolio - Service Class (FidVIPHI)
30,331 shares (cost $382,777) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 382,781
Fidelity VIP- Overseas Portfolio - Service Class (FidVIPOv)
5,700 shares (cost $118,183) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117,487
Fidelity VIP-II - Contrafund Portfolio - Service Class (FidVIPCon)
27,430 shares (cost $585,801) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602,088
Fidelity VIP-III - Growth Opportunities Portfolio - Service Class (FidVIPGrOp)
11,439 shares (cost 231,762) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233,809
Morgan Stanley - Emerging Markets Debt Portfolio (VKMSEmMkt)
2,296 shares (cost $22,147) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,352
Nationwide SAT- Balanced Fund (NSATBal)
9,000 shares (cost $96,089) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,939
Nationwide SAT- Capital Appreciation Fund (NSATCapAp)
20,007 shares (cost $494,333) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503,975
Nationwide SAT- Equity Income Fund (NSATEqInc)
271 shares (cost $2,935) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,987
Nationwide SAT- Global Equities Fund (NSATGlobEq)
3,175 shares (cost $36,303) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,221
Nationwide SAT- Government Bond Fund (NSATGvtBd)
24,391 shares (cost $281,064) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280,497
Nationwide SAT- High Income Bond Fund (NSATHIncBd)
5,626 shares (cost $58,781) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,346
Nationwide SAT- Money Market Fund (NSATMyMkt)
10,027,648 shares (cost $10,027,648) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,027,648
</TABLE>
(Continued)
3
<PAGE> 4
<TABLE>
<S> <C>
Nationwide SAT- Multi Sector Bond Fund (NSATMSecBd)
18,894 shares (cost $191,656) .................................................................. 190,072
Nationwide SAT- Select Advisers Mid Cap Fund (NSATMidCap)
3,191 shares (cost $33,994) .................................................................... 34,308
Nationwide SAT- Small Cap Value Fund (NSATSmCapV)
5,749 shares (cost $59,479) .................................................................... 58,579
Nationwide SAT- Small Company Fund (NSATSmCo)
15,966 shares (cost $270,635) .................................................................. 268,551
Nationwide SAT- Strategic Growth Fund (NSATStrGro)
9,221 shares (cost $100,219) ................................................................... 103,919
Nationwide SAT- Strategic Value Fund (NSATStrVal)
3,502 shares (cost $37,740) .................................................................... 36,530
Nationwide SAT- Total Return Fund (NSATTotRe)
42,258 shares (cost $788,521) .................................................................. 790,232
Neuberger & Berman AMT- Guardian Portfolio (NBAMTGuard)
1,518 shares (cost $21,220) .................................................................... 21,807
Neuberger & Berman AMT- Mid-Cap Growth Portfolio (NBAMTMCGr)
9,548 shares (cost $136,820) ................................................................... 140,168
Neuberger & Berman AMT- Partners Portfolio (NBAMTPart)
49,080 shares (cost $961,180) .................................................................. 944,798
Oppenheimer VAF - Aggressive Growth Fund (OppAggGro)
1,998 shares (cost $89,988) .................................................................... 93,594
Oppenheimer VAF - Growth Fund (OppGro)
9,528 shares (cost $319,033) ................................................................... 329,776
Oppenheimer VAF - Growth & Income Fund (OppGrInc)
27,468 shares (cost $597,933) .................................................................. 607,587
Van Eck WIT- Worldwide Emerging Markets Fund (VEWrldEMkt)
5,017 shares (cost $46,701) .................................................................... 41,893
Van Eck WIT- Worldwide Hard Assets Fund (VEWrldHAs)
375 shares (cost $4,554) ....................................................................... 4,333
Van Kampen American Capital LIT-
Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
8,716 shares (cost $130,506) ................................................................... 129,089
Warburg Pincus Trust - Growth & Income Portfolio (WPGrInc)
28,106 shares (cost $318,546) .................................................................. 326,306
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
12,763 shares (cost $154,552) .................................................................. 151,623
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
3,013 shares (cost $36,389) .................................................................... 37,720
-----------
Total investments ........................................................................... 20,632,296
Accounts receivable ................................................................................ 56,479
-----------
Total assets ................................................................................ 20,688,775
ACCOUNTS PAYABLE ..................................................................................... 2,493,258
-----------
CONTRACT OWNERS' EQUITY (NOTE 7) ..................................................................... $18,195,517
===========
</TABLE>
See accompanying notes to financial statements.
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4
<PAGE> 5
NATIONWIDE VLI SEPARATE ACCOUNT-4
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL ACVPINCGR ACVPINT ACVPVALUE
----- --------- ------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ 83,937 -- 355 168
Mortality and expense charges (note 3) ............ (14,192) (16) (165) (51)
------------ ------- -------- -------
Net investment income ........................... 69,745 (16) 190 117
------------ ------- -------- -------
Proceeds from mutual fund shares sold ............. 2,519,975 273 64,097 534
Cost of mutual fund shares sold ................... (2,517,456) (269) (61,854) (545)
------------ ------- -------- -------
Realized gain (loss) on investments ............. 2,519 4 2,243 (11)
Change in unrealized gain (loss) on investments ... 76,508 207 8,220 (2,244)
------------ ------- -------- -------
Net gain (loss) on investments .................. 79,027 211 10,463 (2,255)
------------ ------- -------- -------
Reinvested capital gains .......................... 12,598 -- 3,645 1,997
------------ ------- -------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 161,370 195 14,298 (141)
------------ ------- -------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 18,500,157 1,661 132,213 32,868
Transfers between funds ........................... (1,152) 9,171 83,098 33,857
Surrenders ........................................ -- -- -- --
Policy loans (net of repayments) (note 5) ......... (23,672) -- -- --
Deductions for surrender charges (note 2d) ........ -- -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................... (441,186) (678) (2,933) (1,189)
------------ ------- -------- -------
Net equity transactions ..................... 18,034,147 10,154 212,378 65,536
------------ ------- -------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 18,195,517 10,349 226,676 65,395
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... -- -- -- --
------------ ------- -------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $ 18,195,517 10,349 226,676 65,395
============ ======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
DRYSRGRO DRYSTKIX DRYCAPAP FIDVIPEI
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ -- 4,686 -- --
Mortality and expense charges (note 3) ............ (131) (522) (64) (329)
-------- -------- ------- --------
Net investment income ........................... (131) 4,164 (64) (329)
-------- -------- ------- --------
Proceeds from mutual fund shares sold ............. 1,346 265 320 598
Cost of mutual fund shares sold ................... (1,257) (248) (307) (584)
-------- -------- ------- --------
Realized gain (loss) on investments ............. 89 17 13 14
Change in unrealized gain (loss) on investments.... 6,892 16,966 1,699 645
-------- -------- ------- --------
Net gain (loss) on investments .................. 6,981 16,983 1,712 659
-------- -------- ------- --------
Reinvested capital gains .......................... -- 2,002 -- --
-------- -------- ------- --------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 6,850 23,149 1,648 330
-------- -------- ------- --------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................. 87,657 206,258 36,429 133,058
Transfers between funds ........................... 70,981 568,680 27,018 416,247
Surrenders ........................................ -- -- -- --
Policy loans (net of repayments) (note 5) ......... -- -- -- --
Deductions for surrender charges (note 2d) ........ -- -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................... (3,968) (16,990) (2,171) (12,521)
-------- -------- ------- --------
Net equity transactions ..................... 154,670 757,948 61,276 536,784
-------- -------- ------- --------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 161,520 781,097 62,924 537,114
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... -- -- -- --
-------- -------- ------- --------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $161,520 781,097 62,924 537,114
======== ======== ======= ========
</TABLE>
5
<PAGE> 6
NATIONWIDE VLI SEPARATE ACCOUNT-4
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
FIDVIPGR FIDVIPHI FIDVIPOV FIDVIPCON
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ -- -- -- --
Mortality and expense charges (note 3) ............. (172) (247) (96) (257)
--------- -------- ------- --------
Net investment income ............................ (172) (247) (96) (257)
--------- -------- ------- --------
Proceeds from mutual fund shares sold .............. 148 203 743 931
Cost of mutual fund shares sold .................... (140) (198) (725) (902)
--------- -------- ------- --------
Realized gain (loss) on investments .............. 8 5 18 29
Change in unrealized gain (loss) on investments .... 7,596 4 (696) 16,287
--------- -------- ------- --------
Net gain (loss) on investments ................... 7,604 9 (678) 16,316
--------- -------- ------- --------
Reinvested capital gains ........................... -- -- -- --
--------- -------- ------- --------
Net increase (decrease) in contract owners'
equity resulting from operations ............. 7,432 (238) (774) 16,059
--------- -------- ------- --------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................. 57,519 199,669 29,968 124,447
Transfers between funds ............................ 187,661 153,686 70,326 352,366
Surrenders ......................................... -- -- -- --
Policy loans (net of repayments) (note 5) .......... -- -- -- --
Deductions for surrender charges (note 2d) ......... -- -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ................................ (6,160) (7,813) (3,532) (8,898)
--------- -------- ------- --------
Net equity transactions ........................ 239,020 345,542 96,762 467,915
--------- -------- ------- --------
NET CHANGE IN CONTRACT OWNERS' EQUITY ................. 246,452 345,304 95,988 483,974
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........... -- -- -- --
--------- -------- ------- --------
CONTRACT OWNERS' EQUITY END OF PERIOD ................. $ 246,452 345,304 95,988 483,974
========= ======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
FIDVIPGROP VKMSEMMKT NSATBAL NSATCAPAP
---------- --------- ------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ -- -- 629 718
Mortality and expense charges (note 3) ............. (105) (13) (54) (242)
-------- ------- ------- --------
Net investment income ............................ (105) (13) 575 476
-------- ------- ------- --------
Proceeds from mutual fund shares sold .............. 386 669 203 258
Cost of mutual fund shares sold .................... (377) (670) (202) (245)
-------- ------- ------- --------
Realized gain (loss) on investments .............. 9 (1) 1 13
Change in unrealized gain (loss) on investments .... 2,047 (791) (151) 9,642
-------- ------- ------- --------
Net gain (loss) on investments ................... 2,056 (792) (150) 9,655
-------- ------- ------- --------
Reinvested capital gains ........................... -- -- -- --
-------- ------- ------- --------
Net increase (decrease) in contract owners'
equity resulting from operations ............. 1,951 (805) 425 10,131
-------- ------- ------- --------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................. 41,926 9,498 42,101 116,824
Transfers between funds ............................ 102,131 5,908 33,676 255,494
Surrenders ......................................... -- -- -- --
Policy loans (net of repayments) (note 5) .......... -- -- -- --
Deductions for surrender charges (note 2d) ......... -- -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ................................ (3,512) (406) (896) (12,442)
Net equity transactions ........................ 140,545 15,000 74,881 359,876
NET CHANGE IN CONTRACT OWNERS' EQUITY ................. 142,496 14,195 75,306 370,007
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........... -- -- -- --
-------- ------- ------- --------
CONTRACT OWNERS' EQUITY END OF PERIOD ................. $142,496 14,195 75,306 370,007
======== ======= ======= ========
</TABLE>
6
<PAGE> 7
NATIONWIDE VLI SEPARATE ACCOUNT-4
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NSATEQINC NSATGLOBEQ NSATGVTBD NSATHINCBD
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ 5 163 3,794 818
Mortality and expense charges (note 3) ............ (1) (23) (148) (35)
------ ------ ------- ------
Net investment income .......................... 4 140 3,646 783
------ ------ ------- ------
Proceeds from mutual fund shares sold ............. -- 345 702 400
Cost of mutual fund shares sold ................... -- (343) (708) (401)
------ ------ ------- ------
Realized gain (loss) on investments ............ -- 2 (6) (1)
Change in unrealized gain (loss) on investments ... 52 (82) (566) (435)
------ ------ ------- ------
Net gain (loss) on investments ................. 52 (80) (572) (436)
------ ------ ------- ------
Reinvested capital gains .......................... -- -- -- --
------ ------ ------- ------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 56 60 3,074 347
------ ------ ------- ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 258 9,873 136,989 21,117
Transfers between funds ........................... 2,605 17,116 56,866 14,484
Surrenders ........................................ -- -- -- --
Policy loans (net of repayments) (note 5) ......... -- -- -- --
Deductions for surrender charges (note 2d) ........ -- -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) .............................. (142) (982) (2,105) (543)
------ ------ ------- ------
Net equity transactions ...................... 2,721 26,007 191,750 35,058
------ ------ ------- ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 2,777 26,067 194,824 35,405
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... -- -- -- --
------ ------ ------- ------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $2,777 26,067 194,824 35,405
====== ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
NSATMYMKT NSATMSECBD NSATMIDCAP NSATSMCAPV
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ 68,985 1,830 56 --
Mortality and expense charges (note 3) ............ (9,850) (93) (10) (29)
----------- ------- ------ ------
Net investment income .......................... 59,135 1,737 46 (29)
----------- ------- ------ ------
Proceeds from mutual fund shares sold ............. 2,437,959 -- 128 110
Cost of mutual fund shares sold ................... (2,437,959) -- (127) (109)
----------- ------- ------ ------
Realized gain (loss) on investments ............ -- -- 1 1
Change in unrealized gain (loss) on investments ... -- (1,585) 314 (900)
----------- ------- ------ ------
Net gain (loss) on investments ................. -- (1,585) 315 (899)
----------- ------- ------ ------
Reinvested capital gains .......................... -- -- -- --
----------- ------- ------ ------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 59,135 152 361 (928)
----------- ------- ------ ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 16,224,265 89,421 3,481 9,892
Transfers between funds ........................... (4,830,482) 27,886 20,118 36,023
Surrenders ........................................ -- -- -- --
Policy loans (net of repayments) (note 5) ......... (23,672) -- -- --
Deductions for surrender charges (note 2d) ........ -- -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) .............................. (299,120) (1,343) (517) (948)
----------- ------- ------ ------
Net equity transactions ...................... 11,070,991 115,964 23,082 44,967
----------- ------- ------ ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 11,130,126 116,116 23,443 44,039
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... -- -- -- --
----------- ------- ------ ------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $11,130,126 116,116 23,443 44,039
=========== ======= ====== ======
</TABLE>
7
<PAGE> 8
NATIONWIDE VLI SEPARATE ACCOUNT-4
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NSATSMCO NSATSTRGRO NSATSTRVAL NSATTOTRE
-------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ -- -- 56 1,463
Mortality and expense charges (note 3) ............ (176) (69) (17) (375)
--------- ------- ------- --------
Net investment income ........................... (176) (69) 39 1,088
--------- ------- ------- --------
Proceeds from mutual fund shares sold ............. 249 495 176 1,425
Cost of mutual fund shares sold ................... (235) (495) (177) (1,322)
--------- ------- ------- --------
Realized gain (loss) on investments ............. 14 -- (1) 103
Change in unrealized gain (loss) on investments ... (2,085) 3,699 (1,210) 1,711
--------- ------- ------- --------
Net gain (loss) on investments .................. (2,071) 3,699 (1,211) 1,814
--------- ------- ------- --------
Reinvested capital gains .......................... -- -- -- --
--------- ------- ------- --------
Net increase (decrease) in contract owners'
equity resulting from operations ............ (2,247) 3,630 (1,172) 2,902
--------- ------- ------- --------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 114,502 47,047 6,006 200,078
Transfers between funds ........................... 111,643 21,161 27,850 389,047
Surrenders ........................................ -- -- -- --
Policy loans (net of repayments) (note 5) ......... -- -- -- --
Deductions for surrender charges (note 2d) ........ -- -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................... (5,726) (1,536) (611) (17,284)
--------- ------- ------- --------
Net equity transactions ....................... 220,419 66,672 33,245 571,841
--------- ------- ------- --------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 218,172 70,302 32,073 574,743
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... -- -- -- --
--------- ------- ------- --------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $ 218,172 70,302 32,073 574,743
========= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
NBAMTGUARD NBAMTMCGR NBAMTPART OPPAGGGRO
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. $ -- -- 114 26
Mortality and expense charges (note 3) ............ (5) (73) (373) (77)
------- -------- -------- -------
Net investment income ........................... (5) (73) (259) (51)
------- -------- -------- -------
Proceeds from mutual fund shares sold ............. 32 660 449 778
Cost of mutual fund shares sold ................... (33) (649) (481) (750)
------- -------- -------- -------
Realized gain (loss) on investments ............. (1) 11 (32) 28
Change in unrealized gain (loss) on investments ... 587 3,348 (16,383) 3,606
------- -------- -------- -------
Net gain (loss) on investments .................. 586 3,359 (16,415) 3,634
------- -------- -------- -------
Reinvested capital gains .......................... -- -- 3,599 270
------- -------- -------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ............ 581 3,286 (13,075) 3,853
------- -------- -------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 490 19,431 156,876 49,498
Transfers between funds ........................... 18,476 96,198 442,815 20,016
Surrenders ........................................ -- -- -- --
Policy loans (net of repayments) (note 5) ......... -- -- -- --
Deductions for surrender charges (note 2d) ........ -- -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................... (285) (2,423) (10,126) (2,435)
------- -------- -------- -------
Net equity transactions ....................... 18,681 113,206 589,565 67,079
------- -------- -------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 19,262 116,492 576,490 70,932
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... -- -- -- --
------- -------- -------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $19,262 116,492 576,490 70,932
======= ======== ======== =======
</TABLE>
8
<PAGE> 9
NATIONWIDE VLI SEPARATE ACCOUNT-4
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
FOR THE PERIOD FEBRUARY 18, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
OPPGRO OPPGRINC VEWRLDEMKT VEWRLDHAS
--------- -------- ---------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ...................................... $ 8 29 -- --
Mortality and expense charges (note 3) .................... (104) (101) (17) (4)
--------- -------- ------- ------
Net investment income ................................... (96) (72) (17) (4)
--------- -------- ------- ------
Proceeds from mutual fund shares sold ..................... 71 118 -- --
Cost of mutual fund shares sold ........................... (74) (113) -- --
--------- -------- ------- ------
Realized gain (loss) on investments ..................... (3) 5 -- --
Change in unrealized gain (loss) on investments ........... 10,744 9,654 (4,808) (222)
--------- -------- ------- ------
Net gain (loss) on investments .......................... 10,741 9,659 (4,808) (222)
--------- -------- ------- ------
Reinvested capital gains .................................. 101 645 -- --
--------- -------- ------- ------
Net increase (decrease) in contract owners'
equity resulting from operations .................... 10,746 10,232 (4,825) (226)
--------- -------- ------- ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ......................................... 42,315 44,812 8,374 1,094
Transfers between funds ................................... 209,071 447,343 33,368 2,125
Surrenders ................................................ -- -- -- --
Policy loans (net of repayments) (note 5) ................. -- -- -- --
Deductions for surrender charges (note 2d) ................ -- -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ....................................... (3,534) (1,405) (764) (272)
--------- -------- ------- ------
Net equity transactions ............................... 247,852 490,750 40,978 2,947
--------- -------- ------- ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ....................... 258,598 500,982 36,153 2,721
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................. -- -- -- --
--------- -------- ------- ------
CONTRACT OWNERS' EQUITY END OF PERIOD ....................... $ 258,598 500,982 36,153 2,721
========= ======== ======= ======
</TABLE>
<TABLE>
<CAPTION>
VKMSRESEC WPGRINC WPINTEQ WPPVENCAP
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ...................................... $ 34 -- -- --
Mortality and expense charges (note 3) .................... (67) (13) (54) (14)
------- -------- ------- -------
Net investment income ................................... (33) (13) (54) (14)
------- -------- ------- -------
Proceeds from mutual fund shares sold ..................... 3,901 45 766 192
Cost of mutual fund shares sold ........................... (3,954) (44) (757) (202)
------- -------- ------- -------
Realized gain (loss) on investments ..................... (53) 1 9 (10)
Change in unrealized gain (loss) on investments ........... (1,417) 7,761 (2,929) 1,331
------- -------- ------- -------
Net gain (loss) on investments .......................... (1,470) 7,762 (2,920) 1,321
------- -------- ------- -------
Reinvested capital gains .................................. 339 -- -- --
------- -------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations .................... (1,164) 7,749 (2,974) 1,307
------- -------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ......................................... 52,502 2,432 6,576 732
Transfers between funds ................................... 44,871 311,397 79,382 29,169
Surrenders ................................................ -- -- -- --
Policy loans (net of repayments) (note 5) ................. -- -- -- -
Deductions for surrender charges (note 2d) ................ -- -- -- -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ....................................... (1,904) (566) (2,168) (338)
------- -------- ------- -------
Net equity transactions ............................... 95,469 313,263 83,790 29,563
------- -------- ------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ....................... 94,305 321,012 80,816 30,870
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ................. -- -- -- --
------- -------- ------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ....................... $94,305 321,012 80,816 30,870
======= ======== ======= =======
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
9
<PAGE> 10
NATIONWIDE VLI SEPARATE ACCOUNT-4
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide VLI Separate Account-4 (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
Insurance Company (the Company) on December 3, 1997. The Account has
been registered as a unit investment trust under the Investment Company
Act of 1940.
The Company offers Flexible Premium Variable Life Insurance Policies
through the Account.
(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 policy charges, and note 3 for asset
charges.
Contract owners may invest in the following:
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP);
American Century VP - American Century VP Income & Growth
(ACVPIncGr)
American Century VP - American Century VP International
(ACVPInt)
American Century VP - American Century VP Value
(ACVPValue)
The Dreyfus Socially Responsible Growth Fund, Inc.
(DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)
Portfolio of the Dreyfus Variable Investment Fund (Dreyfus
VIF); Dreyfus VIF - Capital Appreciation Portfolio
(DryCapAp)
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio - Service Class
(FidVIPEI)
Fidelity VIP - Growth Portfolio - Service Class (FidVIPGr)
Fidelity VIP - High Income Portfolio - Service Class
(FidVIPHI)
Fidelity VIP - Overseas Portfolio - Service Class
(FidVIPOv)
Portfolio of the Fidelity Variable Insurance Products Fund
II (Fidelity VIP-II); Fidelity VIP-II - Contrafund
Portfolio - Service Class (FidVIPCon)
Portfolio of the Fidelity Variable Insurance Products Fund
III (Fidelity VIP-III); Fidelity VIP-III - Growth
Opportunities Portfolio - Service Class (FidVIPGrOp)
Portfolio of the Morgan Stanley Universal Funds, Inc.
(Morgan Stanley); Morgan Stanley - Emerging Markets Debt
Portfolio (VKMSEmMkt)
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)
10
<PAGE> 11
Nationwide SAT - Multi Sector Bond Fund (NSATMSecBd)
Nationwide SAT - Select Advisers Mid Cap Fund
(NSATMidCap)
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 - Growth Fund (OppGro)
Oppenheimer VAF - Growth & Income Fund (OppGrInc)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck
WIT);
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
Portfolio of the Van Kampen American Capital Life Investment
Trust (Van Kampen American Capital LIT); Van Kampen
American Capital LIT - Morgan Stanley Real Estate
Securities Portfolio (VKMSRESec)
Portfolios of the Warburg Pincus Trust;
Warburg Pincus Trust - Growth & Income Portfolio (WPGrInc)
Warburg Pincus Trust - International Equity Portfolio
(WPIntEq)
Warburg Pincus Trust - Post Venture Capital Portfolio
(WPPVenCap)
At June 30, 1998, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment
results of each fund, equity transactions by contract owners and
certain contract expenses (see note 2).
The accompanying financial statements include only contract owners'
purchase payments pertaining to the variable portions of their
contracts and exclude any purchase payments for fixed dollar benefits,
the latter being included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at June 30, 1998. The cost of investments
sold is determined on 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.
<PAGE> 12
(2) POLICY CHARGES
(a) Deductions from Premium
On flexible premium life insurance contracts, the Company deducts a
charge for state premium taxes not to exceed 2.5% of all premiums
received to cover the payment of these premium taxes. Additionally, the
Company deducts a front-end sales load of up to 3.5% from each premium
payment received. The Company may at its sole discretion reduce this
sales loading.
(b) Cost of Insurance
A cost of insurance charge is assessed monthly against each contract.
The amount of the charge is based upon age, sex, rate class and net
amount at risk (death benefit less total contract value).
(c) Administrative Charges
For flexible premium contracts, the Company currently deducts a monthly
administrative charge of $10.00 during the first policy year and $5 per
month thereafter (may deduct up to $7.50, maximum) to recover policy
maintenance, accounting, record keeping and other administrative
expenses.
The above charges are assessed against each contract by liquidating
units.
(d) Surrender Charges
Policy surrenders result in a redemption of the contract value from the
Account and payment of the surrender proceeds to the contract owner or
designee. The surrender proceeds consist of the contract value, less
any outstanding policy loans, and less a surrender charge, if
applicable. The amount of the charge is based upon a specified
percentage of the initial surrender charge which varies by issue age,
sex and rate class. For flexible premium contracts, the charge is 100%
of the initial surrender charge in the first year, declining to 30% of
the initial surrender charge in the eighth year.
No surrender charge is assessed on any contract surrendered after the
eighth year.
The Company may waive the surrender charge for certain contracts in
which the sales expenses normally associated with the distribution of a
contract are not incurred. No charges were deducted from the initial
funding, or from earnings thereon.
(3) ASSET CHARGES
The Company deducts a charge equal to an annual effective rate multiplied
by the Cash Value attributable to the Variable Account. The annual
effective rate is 0.60% for the first $25,000 of Cash Value attributable to
the Variable Account, 0.30% for the next $225,000 of Cash Value
attributable to the Variable Account and 0.10% for all Cash Value
attributable to the Variable Account in excess of $250,000. This charge is
assessed monthly against each contract by liquidating units.
(4) DEATH BENEFITS
Death benefits result in a redemption of the contract value from the
Account and payment of the death benefit proceeds, less any outstanding
policy loans and policy charges, to the legal beneficiary. The excess of
the death benefit proceeds over the contract value on the date of death is
paid by the Company's general account.
(5) POLICY LOANS (NET OF REPAYMENTS)
Contract provisions allow contract owners to borrow 90% of a policy's cash
surrender value. Interest is charged on the outstanding loan and is due and
payable in advance on the policy anniversary.
At the time the loan is granted, the amount of the loan is transferred from
the Account to the Company's general account as collateral for the
outstanding loan. Collateral amounts in the general account are credited
with the stated rate of interest in effect at the time the loan is made,
subject to a guaranteed minimum rate. Interest credited is paid by the
Company's general account to the Account. Loan repayments result in a
transfer of collateral including interest back to the Account.
12
<PAGE> 13
(6) 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.
13
<PAGE> 14
(7) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at June 30, 1998.
<TABLE>
<CAPTION>
PERIOD
Contract owners' equity represented by: UNITS UNIT VALUE RETURN
----- ---------- ------
<S> <C> <C> <C> <C>
The BEST of AMERICA(R)
America's FUTURE Life Series(SM):
American Century VP - American
Century VP Income & Growth ........................ 881 $11.747054 $ 10,349 17%(a)
American Century VP - American
Century VP International .......................... 18,090 12.530473 226,676 25%(a)
American Century VP - American
Century VP Value .................................. 6,175 10.590220 65,395 6%(a)
The Dreyfus Socially Responsible
Growth Fund, Inc .................................. 13,644 11.838204 161,520 18%(a)
Dreyfus Stock Index Fund ............................ 66,473 11.750590 781,097 18%(a)
Dreyfus VIF -
Capital Appreciation Portfolio .................... 5,212 12.072983 62,924 21%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class ..................................... 48,594 11.053100 537,114 11%(a)
Fidelity VIP - Growth Portfolio -
Service Class ..................................... 20,698 11.907054 246,452 19%(a)
Fidelity VIP - High Income Portfolio -
Service Class ..................................... 32,951 10.479316 345,304 5%(a)
Fidelity VIP - Overseas Portfolio -
Service Class ..................................... 8,282 11.589920 95,988 16%(a)
Fidelity VIP-II - Contrafund Portfolio -
Service Class ..................................... 41,438 11.679483 483,974 17%(a)
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class ......................... 12,800 11.132490 142,496 11%(a)
Morgan Stanley -
Emerging Markets Debt Portfolio ................... 1,476 9.617372 14,195 (4)%(a)
Nationwide SAT - Balanced Fund ....................... 7,049 10.683287 75,306 7%(a)
Nationwide SAT -
Capital Appreciation Fund .......................... 31,022 11.927232 370,007 19%(a)
Nationwide SAT - Equity Income Fund .................. 255 10.888731 2,777 9%(a)
Nationwide SAT - Global Equity Fund .................. 2,282 11.422871 26,067 14%(a)
Nationwide SAT - Government Bond Fund ................ 18,734 10.399507 194,824 4%(a)
Nationwide SAT - High Income Bond Fund ............... 3,356 10.549727 35,405 5%(a)
Nationwide SAT - Money Market Fund ................... 1,084,559 10.262352 11,130,126 3%(a)
Nationwide SAT - Multi Sector Bond Fund .............. 11,382 10.201708 116,116 2%(a)
Nationwide SAT -
Select Advisers Mid Cap Fund ...................... 2,158 10.863196 23,443 9%(a)
Nationwide SAT - Small Cap Value Fund ............... 4,231 10.408582 44,039 4%(a)
Nationwide SAT - Small Company Fund ................. 20,559 10.611985 218,172 6%(a)
Nationwide SAT - Strategic Growth Fund .............. 6,369 11.038199 70,302 10%(a)
</TABLE>
14
(a) This investment option was not being utilized for the entire period.
<PAGE> 15
<TABLE>
<CAPTION>
PERIOD
Contract owners' equity represented by: UNITS UNIT VALUE RETURN
----- ---------- ------
<S> <C> <C> <C> <C>
Nationwide SAT - Strategic Value Fund ...... 3,112 10.306219 32,073 3%(a)
Nationwide SAT - Total Return Fund ......... 50,079 11.476720 574,743 15%(a)
Neuberger & Berman AMT -
Guardian Portfolio ....................... 1,409 13.670918 19,262 37%(a)
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio ................. 9,241 12.605954 116,492 26%(a)
Neuberger & Berman AMT -
Partners Portfolio ....................... 54,401 10.597040 576,490 6%(a)
Oppenheimer VAF -
Aggressive Growth Fund ................... 6,042 11.739804 70,932 17%(a)
Oppenheimer VAF-Growth Fund ................ 22,096 11.703375 258,598 17%(a)
Oppenheimer VAF -
Growth & Income Fund ..................... 44,301 11.308591 500,982 13%(a)
Van Eck WIT -
Worldwide Emerging Markets Fund .......... 4,680 7.724914 36,153 (23)%(a)
Van Eck WIT -
Worldwide Hard Assets Fund ............... 314 8.666521 2,721 (13)%(a)
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio ..................... 9,914 9.512323 94,305 (5)%(a)
Warburg Pincus Trust -
Growth & Income Portfolio ................ 28,562 11.239112 321,012 12%(a)
Warburg Pincus Trust -
International Equity Portfolio ........... 7,136 11.325078 80,816 13%(a)
Warburg Pincus Trust -
Post Venture Capital Portfolio ........... 2,727 11.320072 30,870 13%(a)
===== ========= ===========
$18,195,517
===========
</TABLE>
(a) This investment option was not being utilized for the entire period.
- --------------------------------------------------------------------------------
15
<PAGE> 16
<TABLE>
<S> <C>
NATIONWIDE LIFE INSURANCE COMPANY Bulk Rate
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OHIO 43215-2220 U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
Nationwide(R) is a registered federal service mark of Nationwide Mutual Insurance Company
</TABLE>
