<PAGE> 1
Nationwide(R) VLI
Separate Account-4
December 31, 1998
[THE BEST OF AMERICA LOGO]
America's FUTURE Life Series(SM)
'98
ANNUAL REPORT
[NATIONWIDE LOGO]
Nationwide Life Insurance Company
Home Office: Columbus, Ohio
VLOB-0161-A (12/98)
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO OF JOSEPH J. GASPER]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you the 1998 annual
report of the Nationwide VLI Separate Account-4.
Equity markets again defied the odds in 1998 to tally a fourth straight year of
double-digit gains, as measured by the major indices. This surprise came
following the breathtaking correction during the third quarter that gave us a
broad double-digit retreat. Fixed income investments also provided respectable
returns in 1998, supported by the continued low inflationary environment and
favorable Federal Reserve actions.
The performance of the American economy continues strong into 1999. However, we
believe the persisting slump in Asia and recent difficulties in Latin America
will inevitably take their toll and dampen growth in the United States. This
moderation, we think, will be healthy for our economy and get us back to a more
sustainable growth level. We look for interest rates to continue within the
range of the recent past, and we expect inflation to remain subdued. Moreover,
we remain optimistic about long-term prospects for U.S. business activity;
holders of financial assets should continue to profit from the anticipated
favorable investment climate.
We are pleased you have chosen our Company to provide the investment products
and services to help you meet your retirement savings and financial planning
goals.
/s/ Joseph J. Gasper
---------------------
Joseph J. Gasper, President
February 16, 1999
3
<PAGE> 3
NATIONWIDE VLI SEPARATE ACCOUNT-4
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1998
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Income & Growth (ACVPIncGr)
182,077 shares (cost $1,109,477) .......................................... $ 1,234,484
American Century VP - American Century VP International (ACVPInt)
325,182 shares (cost $2,318,120) .......................................... 2,477,888
American Century VP - American Century VP Value (ACVPValue)
93,159 shares (cost $598,683) ............................................. 626,960
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
44,142 shares (cost $1,263,578) ........................................... 1,371,933
Dreyfus Stock Index Fund (DryStkIx)
442,059 shares (cost $12,920,739) ......................................... 14,375,758
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
42,881 shares (cost $1,397,683) ........................................... 1,548,425
Fidelity VIP - Equity-Income Portfolio - Service Class (FidVIPEI)
227,239 shares (cost $5,320,426) .......................................... 5,769,608
Fidelity VIP - Growth Portfolio - Service Class (FidVIPGr)
79,605 shares (cost $3,087,212) ........................................... 3,567,896
Fidelity VIP - High Income Portfolio - Service Class (FidVIPHI)
306,210 shares (cost $3,487,179) .......................................... 3,524,474
Fidelity VIP - Overseas Portfolio - Service Class (FidVIPOv)
53,655 shares (cost $1,006,403) ........................................... 1,074,716
Fidelity VIP-II - Contrafund Portfolio - Service Class (FidVIPCon)
194,290 shares (cost $4,096,142) .......................................... 4,744,555
Fidelity VIP-III - Growth Opportunities Portfolio - Service Class (FidVIPGrOp)
105,845 shares (cost $2,156,825) .......................................... 2,419,625
Morgan Stanley - Emerging Markets Debt Portfolio (VKMSEmMkt)
25,820 shares (cost $164,824) ............................................. 157,501
Nationwide SAT - Balanced Fund (NSATBal)
69,134 shares (cost $708,627) ............................................. 731,433
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
237,441 shares (cost $5,844,303) .......................................... 6,313,569
Nationwide SAT - Equity Income Fund (NSATEqInc)
21,275 shares (cost $229,007) ............................................. 244,028
Nationwide SAT - Global Equities Fund (NSATGlobEq)
42,042 shares (cost $455,810) ............................................. 493,998
Nationwide SAT - Government Bond Fund (NSATGvtBd)
401,958 shares (cost $4,783,321) .......................................... 4,698,885
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
96,723 shares (cost $963,155) ............................................. 971,097
Nationwide SAT - Money Market Fund (NSATMyMkt)
21,598,475 shares (cost $21,598,475) ...................................... 21,598,475
</TABLE>
4
<PAGE> 4
<TABLE>
<S> <C>
Nationwide SAT - Multi Sector Bond Fund (NSATMSecBd)
93,944 shares (cost $921,749) ............................................. 922,530
Nationwide SAT - Select Advisers Mid Cap Fund (NSATMidCap)
27,354 shares (cost $268,890) ............................................. 298,705
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
108,781 shares (cost $913,731) ............................................ 1,032,333
Nationwide SAT - Small Company Fund (NSATSmCo)
100,590 shares (cost $1,477,476) .......................................... 1,610,450
Nationwide SAT - Strategic Growth Fund (NSATStrGro)
36,588 shares (cost $379,237) ............................................. 428,084
Nationwide SAT - Strategic Value Fund (NSATStrVal)
34,188 shares (cost $302,102) ............................................. 345,983
Nationwide SAT - Total Return Fund (NSATTotRe)
450,747 shares (cost $8,009,908) .......................................... 8,293,744
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
53,552 shares (cost $658,273) ............................................. 741,159
Neuberger & Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr)
73,728 shares (cost $1,019,587) ........................................... 1,195,872
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
219,668 shares (cost $3,903,184) .......................................... 4,158,317
Oppenheimer VAF - Aggressive Growth Fund (OppAggGro)
25,508 shares (cost $988,141) ............................................. 1,143,545
Oppenheimer VAF - Growth Fund (OppGro)
55,781 shares (cost $1,790,387) ........................................... 2,045,484
Oppenheimer VAF - Growth & Income Fund (OppGrInc)
79,472 shares (cost $1,547,267) ........................................... 1,627,592
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
40,617 shares (cost $270,845) ............................................. 289,192
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
16,765 shares (cost $156,341) ............................................. 154,239
Van Kampen American Capital LIT -
Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
52,116 shares (cost $689,806) ............................................. 717,112
Warburg Pincus Trust - Growth & Income Portfolio (WPGrInc)
62,712 shares (cost $714,061) ............................................. 719,931
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
54,415 shares (cost $567,694) ............................................. 598,018
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
15,798 shares (cost $156,142) ............................................. 186,103
------------
Total investments ...................................................... 104,453,701
Accounts receivable ............................................................. 3,536,003
------------
Total assets ........................................................... 107,989,704
ACCOUNTS PAYABLE ................................................................... -
------------
CONTRACT OWNERS' EQUITY (NOTE 7) ................................................... $107,989,704
============
</TABLE>
See accompanying notes to financial statements.
5
<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
December 31, 1998
<TABLE>
<CAPTION>
Total ACVPIncGr ACVPInt ACVPValue
----- --------- ------- ---------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................................... $ 795,996 5,125 355 169
Mortality and expense charges (note 3) ................. (7,523) (86) (173) (44)
-------------- --------- --------- -------
Net investment income ................................ 788,473 5,039 182 125
-------------- --------- --------- -------
Proceeds from mutual fund shares sold .................. 61,803,110 60,422 613,620 216,392
Cost of mutual fund shares sold ........................ (62,074,770) (58,667) (614,510) (220,562)
-------------- --------- --------- -------
Realized gain (loss) on investments .................. (271,660) 1,755 (890) (4,170)
Change in unrealized gain (loss) on investments ........ 6,208,890 125,007 159,768 28,277
-------------- --------- --------- -------
Net gain (loss) on investments ....................... 5,937,230 126,762 158,878 24,107
-------------- --------- --------- -------
Reinvested capital gains ............................... 597,466 - 3,644 1,997
-------------- --------- --------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ................. 7,323,169 131,801 162,704 26,229
-------------- --------- --------- -------
Equity transactions:
Purchase payments received from
contract owners ...................................... 106,894,981 168,731 489,914 218,019
Transfers between funds ................................ - 959,762 1,905,042 409,201
Surrenders ............................................. (205,540) (64) - (20)
Death benefits - - - -
Policy loans (net of repayments) (note 5) .............. (1,093,563) - (2,833) (1,893)
Deductions for surrender charges (note 2d) ............. (2,405) (1) - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) .................................... (4,765,148) (23,721) (73,254) (23,676)
Deductions for asset charges (note 3) .................. (161,790) (1,072) (2,800) (900)
-------------- --------- --------- -------
Net equity transactions ............................ 100,666,535 1,103,635 2,316,069 600,731
-------------- --------- --------- -------
Net change in contract owners' equity .................. 107,989,704 1,235,436 2,478,773 626,960
Contract owners' equity beginning of period ............ - - - -
-------------- --------- --------- -------
Contract owners' equity end of period .................. $ 107,989,704 1,235,436 2,478,773 626,960
============== ========= ========= =======
</TABLE>
<TABLE>
<CAPTION>
DrySRGro DryStkIx DryCapAp FidVIPEI
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................................... 2,114 64,671 7,616 -
Mortality and expense charges (note 3) ................. (96) (1,001) (108) (402)
--------- ---------- --------- ---------
Net investment income ................................ 2,018 63,670 7,508 (402)
--------- ---------- --------- ---------
Proceeds from mutual fund shares sold .................. 292,403 2,855,607 191,690 1,186,510
Cost of mutual fund shares sold ........................ (279,293) (2,928,820) (192,584) (1,221,597)
--------- ---------- --------- ---------
Realized gain (loss) on investments .................. 13,110 (73,213) (894) (35,087)
Change in unrealized gain (loss) on investments ........ 108,355 1,455,019 150,742 449,182
--------- ---------- --------- ---------
Net gain (loss) on investments ....................... 121,465 1,381,806 149,848 414,095
--------- ---------- --------- ---------
Reinvested capital gains ............................... 47,900 12,311 - -
--------- ---------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ................. 171,383 1,457,787 157,356 413,693
--------- ---------- --------- ---------
Equity transactions:
Purchase payments received from
contract owners ...................................... 544,259 3,047,695 381,182 1,622,388
Transfers between funds ................................ 721,262 10,358,645 1,070,054 3,964,871
Surrenders ............................................. (97) (430) (44) (401)
Death benefits ......................................... - - - -
Policy loans (net of repayments) (note 5) .............. (1,497) (9,416) (289) (6,242)
Deductions for surrender charges (note 2d) ............. (1) (5) (1) (5)
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) .................................... (61,633) (463,310) (58,099) (217,638)
Deductions for asset charges (note 3) .................. (1,748) (16,396) (1,734) (7,304)
--------- ---------- --------- ---------
Net equity transactions ............................ 1,200,545 12,916,783 1,391,069 5,355,669
--------- ---------- --------- ---------
Net change in contract owners' equity .................. 1,371,928 14,374,570 1,548,425 5,769,362
Contract owners' equity beginning of period ............ - - - -
--------- ---------- --------- ---------
Contract owners' equity end of period .................. 1,371,928 14,374,570 1,548,425 5,769,362
========= ========== ========= =========
</TABLE>
6
<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
December 31, 1998
<TABLE>
<CAPTION>
FidVIPGr FidVIPHI FidVIPOv FidVIPCon
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .................................... $ - - - -
Mortality and expense charges (note 3) .................. (249) (245) (75) (330)
-------------- --------- --------- ---------
Net investment income ................................. (249) (245) (75) (330)
-------------- --------- --------- ---------
Proceeds from mutual fund shares sold ................... 759,197 848,212 528,529 974,276
Cost of mutual fund shares sold ......................... (750,697) (901,996) (553,402) (947,452)
-------------- --------- --------- ---------
Realized gain (loss) on investments ................... 8,500 (53,784) (24,873) 26,824
Change in unrealized gain (loss) on investments ......... 480,684 37,295 68,313 648,413
-------------- --------- --------- ---------
Net gain (loss) on investments ........................ 489,184 (16,489) 43,440 675,237
-------------- --------- --------- ---------
Reinvested capital gains ................................ - - - -
-------------- --------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations .................. 488,935 (16,734) 43,365 674,907
-------------- --------- --------- ---------
Equity transactions:
Purchase payments received from
contract owners ....................................... 742,777 685,592 233,314 1,117,315
Transfers between funds ................................. 2,489,085 2,964,332 835,812 3,133,469
Surrenders .............................................. (1,445) - (16) (165)
Death benefits .......................................... - - - -
Policy loans (net of repayments) (note 5) ............... (5,968) (1,581) (1,574) (2,052)
Deductions for surrender charges (note 2d) .............. (17) - - (2)
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................................... (140,842) (103,400) (34,849) (173,162)
Deductions for asset charges (note 3) ................... (4,630) (3,733) (1,337) (5,764)
-------------- --------- --------- ---------
Net equity transactions ............................. 3,078,960 3,541,210 1,031,350 4,069,639
-------------- --------- --------- ---------
Net change in contract owners' equity ................... 3,567,895 3,524,476 1,074,715 4,744,546
Contract owners' equity beginning of period ............. - - - -
-------------- --------- --------- ---------
Contract owners' equity end of period ................... $ 3,567,895 3,524,476 1,074,715 4,744,546
============== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
FidVIPGrOp VKMSEmMkt NSATBal NSATCapAp
---------- --------- ------- ---------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .................................... - 18,594 9,854 14,834
Mortality and expense charges (note 3) .................. (168) (11) (51) (440)
--------- ------- ------- ---------
Net investment income ................................. (168) 18,583 9,803 14,394
--------- ------- ------- ---------
Proceeds from mutual fund shares sold ................... 309,151 268,442 316,297 703,904
Cost of mutual fund shares sold ......................... (296,203) (301,322) (315,924) (686,965)
--------- ------- ------- ---------
Realized gain (loss) on investments ................... 12,948 (32,880) 373 16,939
Change in unrealized gain (loss) on investments ......... 262,800 (7,323) 22,806 469,266
--------- ------- ------- ---------
Net gain (loss) on investments ........................ 275,748 (40,203) 23,179 486,205
--------- ------- ------- ---------
Reinvested capital gains ................................ - - 2,184 174,093
--------- ------- ------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations .................. 275,580 (21,620) 35,166 674,692
--------- ------- ------- ---------
Equity transactions:
Purchase payments received from
contract owners ....................................... 584,874 41,423 87,905 1,531,297
Transfers between funds ................................. 1,646,479 144,407 640,480 4,379,971
Surrenders .............................................. (36) - - (118)
Death benefits .......................................... - - - -
Policy loans (net of repayments) (note 5) ............... 29 - (2,200) 731
Deductions for surrender charges (note 2d) .............. - - - (1)
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................................... (84,140) (6,534) (28,998) (265,208)
Deductions for asset charges (note 3) ................... (3,172) (166) (914) (7,790)
--------- ------- ------- ---------
Net equity transactions ............................. 2,144,034 179,130 696,273 5,638,882
--------- ------- ------- ---------
Net change in contract owners' equity ................... 2,419,614 157,510 731,439 6,313,574
Contract owners' equity beginning of period ............. - - - -
--------- ------- ------- ---------
Contract owners' equity end of period ................... 2,419,614 157,510 731,439 6,313,574
========= ======= ======= =========
</TABLE>
(Continued)
7
<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
December 31, 1998
<TABLE>
<CAPTION>
NSATEqInc NSATGlobEq NSATGvtBd NSATHIncBd
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................................... $ 896 1,950 83,382 22,707
Mortality and expense charges (note 3) ................. (17) (34) (327) (68)
-------------- ------- --------- -------
Net investment income ................................ 879 1,916 83,055 22,639
-------------- ------- --------- -------
Proceeds from mutual fund shares sold .................. 18,085 57,978 1,043,507 206,929
Cost of mutual fund shares sold ........................ (17,928) (57,852) (1,033,771) (213,860)
-------------- ------- --------- -------
Realized gain (loss) on investments .................. 157 126 9,736 (6,931)
Change in unrealized gain (loss) on investments ........ 15,021 38,188 (84,436) 7,941
-------------- ------- --------- -------
Net gain (loss) on investments ....................... 15,178 38,314 (74,700) 1,010
-------------- ------- --------- -------
Reinvested capital gains ............................... 2,636 3,213 22,403 -
-------------- ------- --------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ................. 18,693 43,443 30,758 23,649
-------------- ------- --------- -------
Equity transactions:
Purchase payments received from
contract owners .................................... 28,736 96,340 480,508 116,422
Transfers between funds .............................. 202,838 374,760 4,241,272 850,224
Surrenders ........................................... - (20) (58) -
Death benefits ....................................... - - - -
Policy loans (net of repayments) (note 5) ............ - (199) (822) -
Deductions for surrender charges (note 2d) ........... - - (1) -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) .................................. (5,984) (19,705) (51,451) (18,455)
Deductions for asset charges (note 3) ................ (269) (621) (2,298) (823)
-------------- ------- --------- -------
Net equity transactions ............................ 225,321 450,555 4,667,150 947,368
-------------- ------- --------- -------
Net change in contract owners' equity .................. 244,014 493,998 4,697,908 971,017
Contract owners' equity beginning of period ............ - - - -
-------------- ------- --------- -------
Contract owners' equity end of period .................. $ 244,014 493,998 4,697,908 971,017
============== ======= ========= =======
</TABLE>
<TABLE>
<CAPTION>
NSATMyMkt NSATMSecBd NSATMidCap NSATSmCapV
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................................... 506,347 20,456 782 -
Mortality and expense charges (note 3) ................. (1,751) (64) (21) (72)
---------- ------- ------- ---------
Net investment income ................................ 504,596 20,392 761 (72)
---------- ------- ------- ---------
Proceeds from mutual fund shares sold .................. 44,230,768 678,560 48,915 119,432
Cost of mutual fund shares sold ........................ (44,230,768) (682,489) (51,817) (127,976)
---------- ------- ------- ---------
Realized gain (loss) on investments .................. - (3,929) (2,902) (8,544)
Change in unrealized gain (loss) on investments ........ - 781 29,815 118,603
---------- ------- ------- ---------
Net gain (loss) on investments ....................... - (3,148) 26,913 110,059
---------- ------- ------- ---------
Reinvested capital gains ............................... - 691 - -
---------- ------- ------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ................. 504,596 17,935 27,674 109,987
---------- ------- ------- ---------
Equity transactions:
Purchase payments received from
contract owners ...................................... 88,272,542 238,773 38,598 186,610
Transfers between funds ................................ (60,507,727) 687,922 239,349 774,453
Surrenders ............................................. (201,196) - - -
Death benefits ......................................... - - - -
Policy loans (net of repayments) (note 5) .............. (1,000,116) (427) - (2,782)
Deductions for surrender charges (note 2d) ............. (2,354) - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) .................................... (1,866,745) (20,588) (6,590) (34,791)
Deductions for asset charges (note 3) .................. (63,919) (1,082) (314) (1,140)
---------- ------- ------- ---------
Net equity transactions ............................ 24,630,485 904,598 271,043 922,350
---------- ------- ------- ---------
Net change in contract owners' equity .................. 25,135,081 922,533 298,717 1,032,337
Contract owners' equity beginning of period ............ - - - -
---------- ------- ------- ---------
Contract owners' equity end of period .................. 25,135,081 922,533 298,717 1,032,337
========== ======= ======= =========
</TABLE>
8
<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 December 31, 1998
<TABLE>
<CAPTION>
NSATSmCo NSATStrGro NSATStrVal NSATTotRe
-------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .................................. $ - - 1,052 27,487
Mortality and expense charges (note 3) (112) (30) (24) (578)
-------------- ------- ------- ---------
Net investment income ............................... (112) (30) 1,028 26,909
-------------- ------- ------- ---------
Proceeds from mutual fund shares sold ................. 303,745 150,535 81,326 1,201,208
Cost of mutual fund shares sold ....................... (310,124) (150,564) (89,165) (1,222,228)
-------------- ------- ------- ---------
Realized gain (loss) on investments ................. (6,379) (29) (7,839) (21,020)
Change in unrealized gain (loss) on investments ....... 132,974 48,847 43,881 283,836
-------------- ------- ------- ---------
Net gain (loss) on investments ...................... 126,595 48,818 36,042 262,816
-------------- ------- ------- ---------
Reinvested capital gains .............................. - - - 321,440
-------------- ------- ------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ................ 126,483 48,788 37,070 611,165
-------------- ------- ------- ---------
Equity transactions:
Purchase payments received from
contract owners ..................................... 360,233 106,807 26,097 2,620,309
Transfers between funds ............................... 1,192,844 294,315 290,790 5,463,668
Surrenders ............................................ (43) - - (81)
Death benefits ........................................ - - - -
Policy loans (net of repayments) (note 5) ............. (2,442) (514) 368 (4,594)
Deductions for surrender charges (note 2d) ............ (1) - - (1)
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ................................... (64,333) (20,594) (7,966) (385,652)
Deductions for asset charges (note 3) ................. (2,292) (715) (385) (10,992)
-------------- ------- ------- ---------
Net equity transactions ........................... 1,483,966 379,299 308,904 7,682,657
-------------- ------- ------- ---------
Net change in contract owners' equity ................. 1,610,449 428,087 345,974 8,293,822
Contract owners' equity beginning of period ........... - - - -
-------------- ------- ------- ---------
Contract owners' equity end of period ................. $ 1,610,449 428,087 345,974 8,293,822
============== ======= ======= =========
</TABLE>
<TABLE>
<CAPTION>
NBAMTGuard NBAMTMCGr NBAMTPart OppAggGro
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .................................. - - 114 26
Mortality and expense charges (note 3) ................ (83) (52) (290) (80)
--------- ------- --------- ---------
Net investment income ............................... (83) (52) (176) (54)
--------- ------- --------- ---------
Proceeds from mutual fund shares sold ................. 117,578 140,913 862,257 120,154
Cost of mutual fund shares sold ....................... (123,077) (137,009) (875,740) (118,908)
--------- ------- --------- ---------
Realized gain (loss) on investments ................. (5,499) 3,904 (13,483) 1,246
Change in unrealized gain (loss) on investments ....... 82,886 176,285 255,133 155,404
--------- ------- --------- ---------
Net gain (loss) on investments ...................... 77,387 180,189 241,650 156,650
--------- ------- --------- ---------
Reinvested capital gains .............................. - - 3,599 270
--------- ------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ................ 77,304 180,137 245,073 156,866
--------- ------- --------- ---------
Equity transactions:
Purchase payments received from
contract owners ..................................... 246,176 57,715 831,946 298,181
Transfers between funds ............................... 891,240 560,630 3,231,525 753,401
Surrenders ............................................ (2) (20) (16) (318)
Death benefits ........................................ - - - -
Policy loans (net of repayments) (note 5) ............. (318) (140) (174) (2,146)
Deductions for surrender charges (note 2d) ............ - - - (4)
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ................................... (17,719) (55,646) (144,625) (60,958)
Deductions for asset charges (note 3) ................. (807) (1,530) (5,414) (1,492)
--------- ------- --------- ---------
Net equity transactions ........................... 1,118,570 561,009 3,913,242 986,664
--------- ------- --------- ---------
Net change in contract owners' equity ................. 1,195,874 741,146 4,158,315 1,143,530
Contract owners' equity beginning of period ........... - - - -
--------- ------- --------- ---------
Contract owners' equity end of period ................. 1,195,874 741,146 4,158,315 1,143,530
========= ======= ========= =========
</TABLE>
(Continued)
9
<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
December 31, 1998
<TABLE>
<CAPTION>
OppGro OppGrInc VEWrldEMkt VEWrldHAs
------ -------- ---------- ---------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .................................... $ 8 29 - -
Mortality and expense charges (note 3) .................. (142) (113) (20) (11)
-------------- --------- ------- -------
Net investment income ................................. (134) (84) (20) (11)
-------------- --------- ------- -------
Proceeds from mutual fund shares sold ................... 412,555 698,919 70,482 46,572
Cost of mutual fund shares sold ......................... (391,820) (718,580) (84,625) (49,623)
-------------- --------- ------- -------
Realized gain (loss) on investments ................... 20,735 (19,661) (14,143) (3,051)
Change in unrealized gain (loss) on investments ......... 255,097 80,325 18,347 (2,102)
-------------- --------- ------- -------
Net gain (loss) on investments ........................ 275,832 60,664 4,204 (5,153)
-------------- --------- ------- -------
Reinvested capital gains ................................ 101 645 - -
-------------- --------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations .................. 275,799 61,225 4,184 (5,164)
-------------- --------- ------- -------
Equity transactions:
Purchase payments received from
contract owners ....................................... 522,163 284,513 90,144 23,363
Transfers between funds ................................. 1,352,464 1,343,627 207,921 144,721
Surrenders .............................................. (369) (418) - -
Death benefits .......................................... - - - -
Policy loans (net of repayments) (note 5) ............... (10,091) (16,228) 410 235
Deductions for surrender charges (note 2d) .............. (4) (5) - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................................... (91,465) (43,383) (13,062) (8,707)
Deductions for asset charges (note 3) ................... (3,006) (1,749) (402) (203)
-------------- --------- ------- -------
Net equity transactions ............................. 1,769,692 1,566,357 285,011 159,409
-------------- --------- ------- -------
Net change in contract owners' equity ................... 2,045,491 1,627,582 289,195 154,245
Contract owners' equity beginning of period ............. - - - -
-------------- --------- ------- -------
Contract owners' equity end of period ................... $ 2,045,491 1,627,582 289,195 154,245
============== ========= ======= =======
</TABLE>
<TABLE>
<CAPTION>
VKMSRESec WPGrInc WPIntEq WPPVenCap
--------- ------- ------- ---------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends .................................... 34 4,521 2,873 -
Mortality and expense charges (note 3) .................. (50) (50) (42) (13)
------- ------- ------- -------
Net investment income ................................. (16) 4,471 2,831 (13)
------- ------- ------- -------
Proceeds from mutual fund shares sold ................... 357,742 345,457 277,515 87,326
Cost of mutual fund shares sold ......................... (388,797) (337,050) (301,573) (89,432)
------- ------- ------- -------
Realized gain (loss) on investments ................... (31,055) 8,407 (24,058) (2,106)
Change in unrealized gain (loss) on investments ......... 27,306 5,870 30,323 29,961
------- ------- ------- -------
Net gain (loss) on investments ........................ (3,749) 14,277 6,265 27,855
------- ------- ------- -------
Reinvested capital gains ................................ 339 - - -
------- ------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations .................. (3,426) 18,748 9,096 27,842
------- ------- ------- -------
Equity transactions:
Purchase payments received from
contract owners ....................................... 233,023 76,711 114,374 48,012
Transfers between funds ................................. 517,845 655,643 495,343 118,060
Surrenders .............................................. - - - (163)
Death benefits .......................................... - - - -
Policy loans (net of repayments) (note 5) ............... (834) (17,477) (891) 404
Deductions for surrender charges (note 2d) .............. - - - (2)
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................................... (28,277) (13,090) (19,101) (7,797)
Deductions for asset charges (note 3) ................... (1,214) (607) (798) (258)
------- ------- ------- -------
Net equity transactions ............................. 720,543 701,180 588,927 158,256
------- ------- ------- -------
Net change in contract owners' equity ................... 717,117 719,928 598,023 186,098
Contract owners' equity beginning of period ............. - - - -
------- ------- ------- -------
Contract owners' equity end of period 717,117 719,928 598,023 186,098
........................................................ ======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 10
NATIONWIDE VLI SEPARATE ACCOUNT-4
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
(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)
Nationwide SAT - Multi Sector Bond Fund (NSATMSecBd)
Nationwide SAT - Select Advisers Mid Cap Fund (NSATMidCap)
11
<PAGE> 11
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 December 31, 1998, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment
results of each fund, equity transactions by contract owners and
certain contract expenses (see note 2). The accompanying financial
statements include only contract owners' purchase payments pertaining
to the variable portions of their contracts and exclude any purchase
payments for fixed dollar benefits, the latter being included in the
accounts of the Company.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1998. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company which is taxed as a life insurance company
under the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or
withdrawal.
12
<PAGE> 12
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(2) 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 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
For America's FUTURE Life Series, 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.
For Corporate Variable Universal Life Series, the Company deducts on a
daily basis from the assets of the Variable Account, a charge to provide
for mortality and expense risks. This charge is guaranteed not to exceed an
annual effective rate of 0.75% of the daily net assets of the Variable
Account. On a current basis this rate will be 0.40% during the first
through fourth Policy Years, 0.25% during the fifth through twentieth
Policy Years, and 0.10% thereafter. This charge is assessed through the
daily unit value calculation.
13
<PAGE> 13
(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. There were no death benefits paid in
the current year.
(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.
(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.
14
<PAGE> 14
(7) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 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 97,382 $ 12.686493 $ 1,235,436 27%
American Century VP - American
Century VP International 206,063 11.875895 2,447,183 19%
American Century VP - American
Century VP Value 59,424 10.481205 622,835 5%
The Dreyfus Socially Responsible
Growth Fund, Inc. 105,696 12.938078 1,367,503 29%
Dreyfus Stock Index Fund 1,025,141 12.821142 13,143,478 28%
Dreyfus VIF -
Capital Appreciation Portfolio 110,355 13.021619 1,437,001 30%
Fidelity VIP - Equity-Income Portfolio -
Service Class 511,915 11.154137 5,709,970 12%
Fidelity VIP - Growth Portfolio -
Service Class 255,829 13.937692 3,565,666 39%
Fidelity VIP - High Income Portfolio -
Service Class 368,689 9.557602 3,523,783 (4)%
Fidelity VIP - Overseas Portfolio -
Service Class 92,817 11.263759 1,045,468 13%
Fidelity VIP-II - Contrafund Portfolio -
Service Class 362,774 12.993755 4,713,796 30%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class 193,229 12.450522 2,405,802 25%
Morgan Stanley -
Emerging Markets Debt Portfolio 21,992 7.162164 157,510 (28)%
Nationwide SAT - Balanced Fund 67,360 10.806799 727,946 8%
Nationwide SAT -
Capital Appreciation Fund 485,064 12.996420 6,304,095 30%
Nationwide SAT - Equity Income Fund 21,000 11.513398 241,781 15%
Nationwide SAT - Global Equity Fund 41,464 11.913908 493,998 19%
Nationwide SAT - Government Bond Fund 166,631 10.890820 1,814,748 9%
Nationwide SAT - High Income Bond Fund 79,031 10.579676 836,122 6%
Nationwide SAT - Money Market Fund 2,000,515 10.527225 21,059,872 5%
Nationwide SAT - Multi Sector Bond Fund 74,773 10.260092 767,178 3%
Nationwide SAT - Select Advisers Mid Cap Fund 26,958 11.080816 298,717 11%
Nationwide SAT - Small Cap Value Fund 106,497 9.693575 1,032,337 (3)%
Nationwide SAT - Small Company Fund 159,205 10.100944 1,608,121 1%
Nationwide SAT - Strategic Growth Fund 36,919 11.459357 423,068 15%
</TABLE>
(Continued)
15
<PAGE> 15
<TABLE>
<S> <C> <C> <C> <C>
Nationwide SAT - Strategic Value Fund 34,463 10.038994 345,974 0%
Nationwide SAT - Total Return Fund 702,365 11.807411 8,293,112 18%
Neuberger & Berman AMT -
Guardian Portfolio 55,695 13.166703 733,320 32%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio 85,802 13.928381 1,195,083 39%
Neuberger & Berman AMT -
Partners Portfolio 375,069 10.420882 3,908,550 4%
Oppenheimer VAF -
Aggressive Growth Fund 100,709 11.236019 1,131,568 12%
Oppenheimer VAF - Growth Fund 164,300 12.399968 2,037,315 24%
Oppenheimer VAF -
Growth & Income Fund 139,668 10.470163 1,462,347 5%
Van Eck WIT -
Worldwide Emerging Markets Fund 43,904 6.586990 289,195 (34)%
Van Eck WIT -
Worldwide Hard Assets Fund 22,344 6.903203 154,245 (31)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio 81,141 8.837916 717,117 (12)%
Warburg Pincus Trust -
Growth & Income Portfolio 49,891 11.212895 559,423 12%
Warburg Pincus Trust -
International Equity Portfolio 56,767 10.534701 598,023 5%
Warburg Pincus Trust -
Post Venture Capital Portfolio 16,634 10.651002 177,169 7%
The BEST of AMERICA(R)
Corporate Variable Universal Life Series(SM):
American Century VP - American
Century VP International 3,234 9.768200 31,590 (2)%
American Century VP - American
Century VP Value 440 9.374321 4,125 (6)%
The Dreyfus Socially Responsible
Growth Fund, Inc. 397 11.144998 4,425 11%
Dreyfus Stock Index Fund 111,613 11.030001 1,231,092 10%
Dreyfus VIF -
Capital Appreciation Portfolio 10,106 11.025485 111,424 10%
Fidelity VIP - Equity-Income Portfolio -
Service Class 5,995 9.906965 59,392 (1)%
Fidelity VIP - Growth Portfolio -
Service Class 185 12.048634 2,229 20%
Fidelity VIP - High Income Portfolio -
Service Class 77 9.003329 693 (10)%
Fidelity VIP - Overseas Portfolio -
Service Class 3,076 9.508092 29,247 (5)%
</TABLE>
16
<PAGE> 16
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fidelity VIP-II - Contrafund Portfolio -
Service Class 2,712 11.338370 30,750 13%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class 1,228 11.247664 13,812 12%
Nationwide SAT - Balanced Fund 349 10.009481 3,493 0%
Nationwide SAT -
Capital Appreciation Fund 847 11.191056 9,479 12%
Nationwide SAT - Equity Income Fund 211 10.581467 2,233 6%
Nationwide SAT - Government Bond Fund 270,361 10.664112 2,883,160 7%
Nationwide SAT - High Income Bond Fund 13,423 10.049520 134,895 0%
Nationwide SAT - Money Market Fund 394,891 10.319833 4,075,209 3%
Nationwide SAT - Multi Sector Bond Fund 15,549 9.991296 155,355 0%
Nationwide SAT - Small Company Fund 257 9.056852 2,328 (9)%
Nationwide SAT - Strategic Growth Fund 477 10.521882 5,019 5%
Nationwide SAT - Total Return Fund 70 10.144232 710 1%
Neuberger & Berman AMT -
Guardian Portfolio 838 9.338993 7,826 (7)%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio 70 11.296584 791 13%
Neuberger & Berman AMT -
Partners Portfolio 26,750 9.337008 249,765 (7)%
Oppenheimer VAF -
Aggressive Growth Fund 1,235 9.685930 11,962 (3)%
Oppenheimer VAF - Growth Fund 767 10.659314 8,176 7%
Oppenheimer VAF -
Growth & Income Fund 18,485 8.938847 165,235 (11)%
Warburg Pincus Trust -
Growth & Income Portfolio 16,145 9.941469 160,505 (1)%
Warburg Pincus Trust -
Post Venture Capital Portfolio 985 9.065227 8,929 (9)%
======= ========= -------------
$ 107,989,704
=============
</TABLE>
* This investment option was not being utilized for the entire period.
Accordingly, the period return was computed for such period as the investment
option was utilized and does not include contract charges satisfied by
surrendering units.
17
<PAGE> 17
Independent Auditors' Report
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of Nationwide VLI Separate Account-4:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VLI Separate Account-4 as of December 31,
1998, and the related statement of operations and changes in contract owners'
equity for the period February 18, 1998 (commencement of operations) through
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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. Our procedures included
confirmation of securities owned as of December 31, 1998, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nationwide VLI Separate
Account-4 as of December 31, 1998, and the results of its operations and its
changes in contract owners' equity for the period February 18, 1998
(commencement of operations) through December 31, 1998, in conformity with
generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 5, 1999
18
<PAGE> 18
[THIS PAGE LEFT BLANK INTENTIONALLY]
19
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220
Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
