<PAGE> 1
Registration No. 333-43639
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 5
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
----------------------------
NATIONWIDE VL SEPARATE ACCOUNT-C
(EXACT NAME OF TRUST)
----------------------------
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(EXACT NAME AND ADDRESS OF DEPOSITOR AND REGISTRANT)
PATRICIA R. HATLER
SECRETARY
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(NAME AND ADDRESS OF AGENT FOR SERVICE)
----------------------------
================================================================================
This Post-Effective Amendment amends the Registration Statement in respect to
the Prospectus.
It is proposed that this filing will become effective (check appropriate box).
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on September 20, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Title of Securities being registered: Corporate Flexible Premium Variable
Universal Life Insurance Policies
Approximate date of proposed offering: Continuously on and after September 20,
2000
[ ] Check box if it is proposed that this filing will become effective on (date)
at (time) pursuant to Rule 487.
================================================================================
<PAGE> 2
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
<S> <C>
1....................................................................Nationwide Life and Annuity Insurance Company
The Variable Account
2....................................................................Nationwide Life and Annuity Insurance Company
3....................................................................Custodian of Assets
4....................................................................Distribution of The Policies
5....................................................................The Variable Account
6....................................................................Not Applicable
7....................................................................Not Applicable
8....................................................................Not Applicable
9....................................................................Legal Proceedings
10....................................................................Information About The Policies; How The Cash
Value Varies; Right to Exchange for a Fixed
Benefit Policy; Reinstatement; Other Policy
Provisions
11 Investments of The Variable Account
12....................................................................The Variable Account
13....................................................................Policy Charges
Reinstatement
14....................................................................Underwriting and Issuance -
Premium Payments
Minimum Requirements for
Issuance of a Policy
15....................................................................Investments of the Variable
Account; Premium Payments
16....................................................................Underwriting and Issuance -
Allocation of Cash Value
17....................................................................Surrendering The Policy for Cash
18....................................................................Reinvestment
19....................................................................Not Applicable
20....................................................................Not Applicable
21....................................................................Policy Loans
22....................................................................Not Applicable
23....................................................................Not Applicable
24....................................................................Not Applicable
25....................................................................Nationwide Life and Annuity Insurance Company
26....................................................................Not Applicable
27....................................................................Nationwide Life and Annuity Insurance Company
28....................................................................Company Management
29....................................................................Company Management
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
N-8B-2 ITEM............................................................CAPTION IN PROSPECTUS
30.....................................................................Not Applicable
31.....................................................................Not Applicable
32.....................................................................Not Applicable
33.....................................................................Not Applicable
34.....................................................................Not Applicable
35.....................................................................Nationwide Life and Annuity Insurance
Company
36.....................................................................Not Applicable
37.....................................................................Not Applicable
38.....................................................................Distribution of The Policies
39.....................................................................Distribution of The Policies
40.....................................................................Not Applicable
41(a)..................................................................Distribution of The Policies
42.....................................................................Not Applicable
43.....................................................................Not Applicable
44.....................................................................How The Cash Value Varies
45.....................................................................Not Applicable
46.....................................................................How The Cash Value Varies
47.....................................................................Not Applicable
48.....................................................................Custodian of Assets
49.....................................................................Not Applicable
50.....................................................................Not Applicable
51.....................................................................Summary of The Policies;
Information About The Policies
52.....................................................................Substitution of Securities
53.....................................................................Taxation of The Company
54.....................................................................Not Applicable
55.....................................................................Not Applicable
56.....................................................................Not Applicable
57.....................................................................Not Applicable
58.....................................................................Not Applicable
59.....................................................................Financial Statements
</TABLE>
<PAGE> 4
SUPPLEMENT DATED SEPTEMBER 20, 2000, TO
PROSPECTUS DATED MAY 1, 2000, FOR
CORPORATE FLEXIBLE PREMIUM VARIABLE
UNIVERSAL LIFE INSURANCE POLICIES
ISSUED BY
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
THROUGH ITS
NATIONWIDE VL SEPARATE ACCOUNT-C
THIS SUPPLEMENT UPDATES CERTAIN INFORMATION CONTAINED IN YOUR PROSPECTUS. PLEASE
READ IT AND KEEP IT WITH YOUR PROSPECTUS FOR FUTURE REFERENCE.
1. AN APPLICATION HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("SEC") FOR AN ORDER PERMITTING THE SUBSTITUTION OF SHARES OF THE
UNDERLYING MUTUAL FUNDS IN COLUMN A ("EXISTING FUNDS") OF THE FOLLOWING
TABLE WITH SHARES OF THE UNDERLYING MUTUAL FUNDS IN COLUMN B ("REPLACEMENT
FUNDS"). UNTIL AN ORDER IS GRANTED BY THE SEC, BOTH INVESTMENT OPTIONS WILL
BE AVAILABLE TO ALL CONTRACT OWNERS AS UNDERLYING MUTUAL FUND OPTIONS. IF
AN ORDER IS GRANTED, INFORMATION WILL BE SENT TO ALL CONTRACT OWNERS
REGARDING THE "EXCHANGE DATE" ON WHICH THE EXISTING FUNDS WILL BE
ELIMINATED AS INVESTMENT OPTIONS AND SUBSTITUTED WITH THE REPLACEMENT
FUNDS.
<TABLE>
<CAPTION>
Column A Column B
Existing Funds Replacement Funds
<S> <C>
Nationwide Separate Account Trust ("NSAT") - Strong Opportunity Fund II, Inc.
Nationwide Strategic Value Fund
Warburg Pincus Trust - Value Portfolio Fidelity VIP - Equity-Income Portfolio: Service
Class
</TABLE>
2. THE "SURRENDER (REDEMPTION)" PROVISION ON PAGE 16 OF YOUR PROSPECTUS IS
AMENDED TO INCLUDE THE FOLLOWING:
Nationwide is required by state law to reserve the right to postpone
payment of assets in the fixed account for a period of up to six months
from the date of the surrender request.
3. "APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS" ON PAGE 42 OF YOUR
PROSPECTUS IS AMENDED TO READ:
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST ("AMT")
Neuberger Berman AMT is an open-end, diversified management investment
company that offers its portfolios in connection with variable annuity
contracts and variable life insurance policies, and certain qualified
plans. Prior to May 1, 2000, the portfolios invested through a two-tier
master/feeder structure, whereby each portfolio invested its assets in
another fund that served as a corresponding "master series;" the master
series invested in securities. Effective May 1, 2000, the portfolios
converted to a conventional one-tier structure, whereby each portfolio
holds its securities directly. Neuberger Berman Management Inc. is the
investment adviser.
GUARDIAN PORTFOLIO
Investment Objective: Long-term capital growth, with current income as
a secondary objective. The portfolio pursues these goals by investing
mainly in common stocks of large-capitalization companies.
<PAGE> 5
MID-CAP GROWTH PORTFOLIO
Investment Objective: Capital growth. The portfolio pursues this goal
by investing mainly in common stocks of mid-capitalization companies.
The managers look for fast-growing companies that are in new or rapidly
evolving industries and seek to reduce risk by diversifying among many
companies, industries and sectors.
PARTNERS PORTFOLIO
Investment Objective: Capital growth. The portfolio pursues its goal
by investing mainly in common stocks of mid- to large-capitalization
companies.
4. EFFECTIVE SEPTEMBER 25, 2000: MERGER OF VAN KAMPEN LIFE INVESTMENT TRUST -
MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO INTO THE UNIVERSAL
INSTITUTIONAL FUNDS, INC. - U.S. REAL ESTATE PORTFOLIO.
Effective September 25, pursuant to shareholder vote, all shares of Van
Kampen Life Investment Trust - Morgan Stanley Real Estate Securities
Portfolio were exchanged for shares of The Universal Institutional Funds,
Inc. - U.S. Real Estate Portfolio. Any assets invested in Van Kampen Life
Investment Trust - Morgan Stanley Real Estate Securities Portfolio at the
close of business on September 22, 2000 will be exchanged for shares of The
Universal Institutional Funds, Inc. - U.S. Real Estate Portfolio. The value
of the shares received in the exchange equals the value of the shares held
in the Van Kampen Life Investment Trust - Morgan Stanley Real Estate
Securities Portfolio as of the close of business on September 22, 2000.
This exchange of shares will not otherwise affect any contract rights.
Contract owners are free to reallocate assets located in The Universal
Institutional Funds, Inc. - U.S. Real Estate Portfolio pursuant to the
terms of the contract.
Following the exchange, contract owners who had assets in the Van Kampen
Life Investment Trust - Morgan Stanley Real Estate Securities Portfolio
will have assets in The Universal Institutional Funds, Inc. - U.S. Real
Estate Portfolio and the Van Kampen Life Investment Trust - Morgan Stanley
Real Estate Securities Portfolio will be terminated in accordance with
Delaware state law.
5. EFFECTIVE SEPTEMBER 25, 2000, ALL REFERENCES IN YOUR PROSPECTUS TO VAN
KAMPEN LIFE INVESTMENT TRUST - MORGAN STANLEY REAL ESTATE SECURITIES
PORTFOLIO ARE DELETED AND PAGE 1 OF YOUR PROSPECTUS IS AMENDED TO INCLUDE
THE FOLLOWING UNDERLYING MUTUAL FUND:
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
- U.S. Real Estate Portfolio
6. EFFECTIVE SEPTEMBER 25, 2000, THE "UNDERLYING MUTUAL FUND ANNUAL EXPENSES"
TABLE ON PAGES 7-10 OF YOUR PROSPECTUS IS AMENDED AS FOLLOWS:
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund average net assets, after expense
reimbursement)
<TABLE>
<CAPTION>
Total Underlying
Management Other 12b-1 Mutual Fund Expenses
Fees Expenses Fees
<S> <C> <C> <C> <C>
The Universal Institutional Funds, Inc. 0.75% 0.35% 0.00% 1.10%
-- U. S. Real Estate Portfolio
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before
it provides Nationwide with the daily net asset value. Nationwide then
deducts applicable variable account charges from the net asset value in
calculating the unit value of the corresponding sub-account. The management
fees and other expenses are more fully described in the prospectus for each
underlying mutual fund. Information relating to the underlying mutual funds
was provided by the underlying mutual funds and not independently verified
by Nationwide.
<PAGE> 6
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been
for such funds without fee waivers and expense reimbursements.
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund average net assets, before expense
reimbursement)
<TABLE>
<CAPTION>
Total Underlying
Management Other 12b-1 Mutual Fund Expenses
Fees Expenses Fees
<S> <C> <C> <C> <C>
The Universal Institutional Funds, Inc. 0.80% 0.35% 0.00% 1.15%
-- U. S. Real Estate Portfolio
</TABLE>
7. EFFECTIVE SEPTEMBER 25, 2000, "APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL
FUNDS" ON PAGE 42 OF YOUR PROSPECTUS IS AMENDED TO READ:
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
U. S. REAL ESTATE PORTFOLIO
Investment Objective: Long-term capital growth by investing principally
in a diversified portfolio of securities of companies operating in the
real estate industry ("Real Estate Securities"). Current income is a
secondary consideration. Real Estate Securities include equity
securities, including common stocks and convertible securities, as well
as non-convertible preferred stocks and debt securities of real estate
industry companies. A "real estate industry company" is a company that
derives at least 50% of its assets (marked to market), gross income or
net profits from the ownership, construction, management or sale of
residential, commercial or industrial real estate. Under normal market
conditions, at least 65% of the Fund's total assets will be invested in
Real Estate Securities, primarily equity securities of real estate
investment trusts. The Portfolio may invest up to 25% of its total
assets in securities issued by foreign issuers, some or all of which
may also be Real Estate Securities. Morgan Stanley Asset Management,
Inc. serves as the Fund's investment adviser.
8. EFFECTIVE OCTOBER 2, 2000, PAGE 1 OF YOUR PROSPECTUS IS AMENDED TO INCLUDE
THE FOLLOWING UNDERLYING MUTUAL FUNDS:
NATIONWIDE SEPARATE ACCOUNT TRUST
- Gartmore NSAT Emerging Markets Fund
- Gartmore NSAT Global Technology and Communications Fund
- Gartmore NSAT International Growth Fund
- Turner NSAT Growth Focus Fund
9. EFFECTIVE OCTOBER 2, 2000, THE FOLLOWING UNDERLYING MUTUAL FUNDS HAVE
CHANGED NAMES. ALL REFERENCES IN YOUR PROSPECTUS TO THE OLD NAME WILL BE
REPLACED WITH THE NEW NAME AS DESCRIBED BELOW:
<TABLE>
<CAPTION>
ALL REFERENCES TO... ARE REPLACED WITH...
<S> <C>
Nationwide Separate Account Trust ("NSAT") - NSAT - J.P. Morgan NSAT Balanced Fund
Nationwide Balanced Fund
NSAT - Nationwide Equity Income Fund NSAT - Federated NSAT Equity Income Fund
NSAT - Nationwide High Income Bond Fund NSAT - Federated NSAT High Income Bond Fund
NSAT - Nationwide Mid Cap Index Fund NSAT - Dreyfus NSAT Mid Cap Index Fund
NSAT - Nationwide Multi Sector Bond Fund NSAT - MAS NSAT Multi Sector Bond Fund
NSAT - Nationwide Strategic Growth Fund NSAT - Strong NSAT Mid Cap Growth Fund
</TABLE>
<PAGE> 7
10. EFFECTIVE OCTOBER 2, 2000, WADDELL & REED INVESTMENT MANAGEMENT COMPANY
WILL REPLACE FRANKLIN ADVISERS, INC. AS ONE OF THE SUBADVISERS OF THE
NATIONWIDE SEPARATE ACCOUNT TRUST - NATIONWIDE SMALL CAP GROWTH FUND. THERE
IS NO CHANGE IN THE FUND'S OBJECTIVE AS IS STATED IN THE PROSPECTUS DATED
MAY 1, 2000.
11. EFFECTIVE OCTOBER 2, 2000, THE "UNDERLYING MUTUAL FUND ANNUAL EXPENSES"
TABLE ON PAGES 7-10 OF YOUR PROSPECTUS IS AMENDED AS FOLLOWS:
<TABLE>
<CAPTION>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund average net assets, after expense
reimbursement)
Management Other 12b-1 Total Underlying
Fees Expenses Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
NSAT - Gartmore NSAT Emerging Markets Fund 0.87% 0.88% 0.00% 1.75%
NSAT - Gartmore NSAT Global Technology and 0.62% 0.73% 0.00% 1.35%
Communications Fund
NSAT - Gartmore NSAT International Growth 0.72% 0.88% 0.00% 1.60%
Fund
NSAT - Nationwide Small Cap Value Fund 0.88% 0.37% 0.00% 1.25%
NSAT - Turner NSAT Growth Focus Fund 0.59% 0.76% 0.00% 1.35%
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before
it provides Nationwide with the daily net asset value. Nationwide then
deducts applicable variable account charges from the net asset value in
calculating the unit value of the corresponding sub-account. The management
fees and other expenses are more fully described in the prospectus for each
underlying mutual fund. Information relating to the underlying mutual funds
was provided by the underlying mutual funds and not independently verified
by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been
for such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund average net assets, before expense
reimbursement)
Management Other 12b-1 Total Underlying
Fees Expenses Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
NSAT - Gartmore NSAT Emerging Markets Fund 1.15% 0.88% 0.00% 2.03%
NSAT - Gartmore NSAT Global Technology and 0.98% 0.73% 0.00% 1.71%
Communications Fund
NSAT - Gartmore NSAT International Growth 1.00% 0.88% 0.00% 1.88%
Fund
NSAT - Nationwide Small Cap Value Fund 0.90% 0.37% 0.00% 1.27%
NSAT - Turner NSAT Growth Focus Fund 0.90% 0.76% 0.00% 1.66%
</TABLE>
<PAGE> 8
12. EFFECTIVE OCTOBER 2, 2000, "APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL
FUNDS" ON PAGE 42 OF YOUR PROSPECTUS IS AMENDED TO READ:
NATIONWIDE SEPARATE ACCOUNT TRUST ("NSAT")
GARTMORE NSAT EMERGING MARKETS FUND
(subadviser: Gartmore Global Partners)
Investment Objective: Long term capital growth by investing primarily
in equity securities of companies located in emerging market
countries.
GARTMORE NSAT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND
(subadviser: Gartmore Global Partners)
Investment Objective: Long term capital appreciation by investing
primarily and at least 65% of its total assets in equity securities
issued by U.S. and foreign companies with business operations in
technology and communications and technology and communication related
industries.
GARTMORE NSAT INTERNATIONAL GROWTH FUND
(subadviser: Gartmore Global Partners)
Investment Objective: Long term capital growth by investing primarily
in equity securities of companies in Europe, Australia, the Far East
and other regions, including developing countries.
TURNER NSAT GROWTH FOCUS FUND (subadviser: Turner Investment Partners,
Inc.) Investment Objective: Long term capital appreciation by
investing primarily in U.S. common stocks, ADRs and foreign companies
that demonstrate strong earnings growth potential.
<PAGE> 9
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Corporate Flexible Premium Variable Universal Life Insurance Policies
Issued by Nationwide Life and Annuity Insurance Company
through its Nationwide VL Separate Account-C
The date of this prospectus is May 1, 2000.
This prospectus contains basic information you should know about the policies
before investing. Please read it and keep it for future reference
The following underlying mutual funds are available under the policies:
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
- American Century VP Income & Growth
- American Century VP International
- American Century VP Value
DREYFUS
- Dreyfus Investment Portfolios - European Equity Portfolio
- The Dreyfus Socially Responsible Growth Fund, Inc.
- Dreyfus Stock Index Fund
- Dreyfus Variable Investment Fund - Appreciation Portfolio (formerly,
Dreyfus Variable Investment Fund - Capital Appreciation Portfolio)
FEDERATED INSURANCE SERIES
- Federated Quality Bond Fund II
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
- VIP Equity-Income Portfolio: Service Class
- VIP Growth Portfolio: Service Class
- VIP High Income Portfolio: Service Class*
- VIP Overseas Portfolio: Service Class
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
- VIP II Contrafund Portfolio: Service Class
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
- VIP III Growth Opportunities Portfolio: Service Class
JANUS ASPEN SERIES
- Capital Appreciation Portfolio: Service Shares
- Global Technology Portfolio: Service Shares
- International Growth Portfolio: Service Shares
MORGAN STANLEY
UNIVERSAL INSTITUTIONAL FUNDS, INC. (FORMERLY, MORGAN STANLEY DEAN WITTER
UNIVERSAL FUNDS, INC.)
- Emerging Markets Debt Portfolio
- Mid Cap Growth Portfolio
VAN KAMPEN LIFE INVESTMENT TRUST
- Morgan Stanley Real Estate Securities Portfolio
NATIONWIDE SEPARATE ACCOUNT TRUST
- Capital Appreciation Fund
- Government Bond Fund
- Money Market Fund
- Total Return Fund
- Nationwide Balanced Fund* (subadviser: J.P. Morgan Investment Management,
Inc.)
- Nationwide Equity Income Fund (subadviser: Federated Investment
Counseling)
- Nationwide Global 50 Fund (formerly, Nationwide Global Equity Fund)
(subadviser: J.P. Morgan Investment Management Inc.)
- Nationwide High Income Bond Fund* (subadviser: Federated Investment
Counseling)
- Nationwide Mid Cap Index Fund (formerly, Nationwide Select Advisers Mid
Cap Fund) (subadviser: The Dreyfus Corporation)
- Nationwide Multi Sector Bond Fund* (subadviser: Miller, Anderson &
Sherrerd, LLP)
- Nationwide Small Cap Growth Fund (formerly, Nationwide Select Advisers
Small Cap Growth Fund) (subadviser: Franklin Advisers, Inc., Miller
Anderson & Sherrerd, LLP, Neuberger Berman, LLC.)
1
<PAGE> 10
- Nationwide Small Cap Value Fund (subadviser: The Dreyfus Corporation)
- Nationwide Small Company Fund (subadviser: The Dreyfus Corporation,
Neuberger Berman, LLC, Lazard Asset Management and Strong Capital
Management, Inc.)
- Nationwide Strategic Growth Fund (subadviser: Strong Capital Management
Inc.)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- AMT Guardian Portfolio*
- AMT Mid-Cap Growth Portfolio
- AMT Partners Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS
- Oppenheimer Aggressive Growth Fund/VA (formerly "Oppenheimer Capital
Appreciation Fund")
- Oppenheimer Capital Appreciation Fund/VA (formerly "Oppenheimer Growth
Fund")
- Oppenheimer Global Securities Fund/VA
- Oppenheimer Main Street Growth & Income Fund/VA (formerly "Oppenheimer
Growth & Income Fund")
STRONG OPPORTUNITY FUND II, INC.
VAN ECK WORLDWIDE INSURANCE TRUST
- Worldwide Emerging Markets Fund
- Worldwide Hard Assets Fund
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE FOR POLICIES ISSUED ON
OR AFTER SEPTEMBER 27, 1999:
WARBURG PINCUS TRUST
- International Equity Portfolio
- Global Post-Venture Capital Portfolio (formerly, Warburg Pincus Trust -
Post-Venture Capital Portfolio)
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE FOR POLICIES ISSUED ON
OR AFTER MAY 1, 2000:
NATIONWIDE SEPARATE ACCOUNT TRUST
- Nationwide Strategic Value Fund (subadviser: Strong Capital Management,
Inc./Schafer Capital Management, Inc.)
WARBURG PINCUS
- Value Portfolio (formerly, Growth & Income Portfolio)
*Invest in lower quality debt securities commonly referred to as junk bonds.
For general information or to obtain FREE copies of the:
- prospectus, annual report or semi-annual report for any underlying
mutual fund; and
- any required Nationwide forms,
1-800-547-7548
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE AND ANNUITY
INSURANCE COMPANY
P.O. BOX 182150
COLUMBUS, OHIO 43218-2150
Material incorporated by reference to this prospectus can be found on the SEC
website at:
www.sec.gov
Information about this and other Best of America Products can be found on the
world-wide web at:
www.bestofamerica.com
This policy is NOT:
- a bank deposit;
- endorsed by a bank or government agency;
- federally insured; or
- available in every state.
The life insurance policies offered by this prospectus are corporate flexible
premium variable universal life insurance policies. They are designed for use by
corporations and employers, to provide flexibility to vary the amount and
frequency of premium payments. A cash surrender value may be offered if the
policy is terminated during the lifetime of the insured.
The purpose of this policy is to provide life insurance protection for the
beneficiary named in the policy. No claim is made that the policy is in any way
similar or comparable to a systematic investment plan of a mutual fund.
2
<PAGE> 11
The death benefit and cash value of this policy may vary to reflect the
experience of the Nationwide VL Separate Account-C (the "variable account") or
the fixed account, depending on how premium payments are invested.
Investors assume certain risks when investing in the policies, including the
risk of losing money.
Nationwide Life and Annuity Insurance Company ("Nationwide") guarantees the
death benefit for as long as the policy is in force. The cash surrender value is
not guaranteed. The policy will lapse if the cash surrender value is
insufficient to cover policy charges.
Nationwide guarantees to keep the policy in force so long as minimum premium
requirements have been met.
Benefits described in this prospectus may not be available in every jurisdiction
- refer to your policy for specific benefit information.
THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE SUCH OFFERING MAY
NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
3
<PAGE> 12
GLOSSARY OF SPECIAL TERMS
ATTAINED AGE- The insured's age on the policy date, plus the number of full
years since the policy date.
ACCUMULATION UNIT- An accounting unit of measure used to calculate the cash
value of the variable account.
FIXED ACCOUNT- An investment option which is funded by the general account of
Nationwide.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
GUIDELINE LEVEL PREMIUM- The level annual premiums required to mature the policy
under guaranteed mortality and current expense charges with an annual effective
interest rate of 4%.
MATURITY DATE- The policy anniversary on or next following the insured's 100th
birthday.
NATIONWIDE- Nationwide Life and Annuity Insurance Company.
NET AMOUNT AT RISK- Net amount at risk is the death benefit minus the cash
value. On a monthly anniversary day, the net amount at risk is the death benefit
minus the cash value prior to subtraction of the base policy cost of insurance
charge.
NET PREMIUMS- Net premiums are equal to the actual premiums minus the percent of
premium charges. The percent of premium charges are shown on the policy data
page.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units are separately maintained.
TARGET PREMIUM- The level annual premium at which the sales load is reduced on a
current basis.
VALUATION PERIOD- Each day the New York Stock Exchange is open for business.
VARIABLE ACCOUNT- Nationwide VL Separate Account-C, a separate account of
Nationwide that contains variable account allocations. The variable account is
divided into sub-accounts, each of which invests in shares of a separate
underlying mutual fund.
4
<PAGE> 13
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
GLOSSARY OF SPECIAL TERMS.........................4
SUMMARY OF POLICY EXPENSES........................7
UNDERLYING MUTUAL FUND ANNUAL EXPENSES............7
SYNOPSIS OF THE POLICIES.........................10
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY....10
NATIONWIDE INVESTMENT SERVICES
CORPORATION......................................11
INVESTING IN THE POLICY..........................11
The Variable Account and Underlying Mutual Funds
The Fixed Account
INFORMATION ABOUT THE POLICIES...................13
Minimum Requirements for Policy Issuance
Premium Payments
Pricing
POLICY CHARGES...................................14
Sales Load
Premium Expense Charge
Monthly Cost of Insurance
Monthly Administrative Charge
Mortality and Expense Risk Charge
Income Tax
Reduction of Charges
SURRENDERING THE POLICY FOR CASH.................16
Surrender (Redemption)
Cash Surrender Value
Partial Surrenders
Income Tax Withholding
VARIATION IN CASH VALUE..........................17
POLICY PROVISIONS................................17
Policy Owner
Beneficiary
Changes in Existing Insurance Coverage
OPERATION OF THE POLICY..........................18
Allocation of Net Premium and Cash Value
How the Investment Experience is Determined
Net Investment Factor
Determining the Cash Value
Transfers
RIGHT TO REVOKE..................................20
POLICY LOANS.....................................21
Taking a Policy Loan
Effect on Investment Performance
Interest
Effect on Death Benefit and Cash Value
Repayment
ASSIGNMENT.......................................22
POLICY OWNER SERVICES............................22
Dollar Cost Averaging
DEATH BENEFIT INFORMATION........................22
Calculation of the Death Benefit
Changes in the Death Benefit Option
Proceeds Payable on Death
Incontestability
Error in Age
Suicide
Maturity Proceeds
RIGHT OF CONVERSION..............................25
GRACE PERIOD.....................................25
Reinstatement
TAX MATTERS......................................26
Policy Proceeds
Withholding
Federal Estate and Generation-Skipping
Transfers Taxes
Non-Resident Aliens
Taxation of Nationwide
Tax Changes
LEGAL CONSIDERATIONS.............................29
STATE REGULATION.................................30
REPORTS TO POLICY OWNERS.........................30
ADVERTISING......................................30
LEGAL PROCEEDINGS................................30
</TABLE>
5
<PAGE> 14
<TABLE>
<S> <C>
EXPERTS..........................................31
REGISTRATION STATEMENT...........................31
DISTRIBUTION OF THE POLICIES.....................31
ADDITIONAL INFORMATION ABOUT
NATIONWIDE..................................33
APPENDIX A: OBJECTIVES FOR UNDERLYING
MUTUAL FUNDS ...............................42
APPENDIX B: ILLUSTRATIONS OF CASH VALUES,
CASH SURRENDER VALUES, AND DEATH BENEFITS ..53
APPENDIX C: PERFORMANCE SUMMARY INFORMATION......63
</TABLE>
6
<PAGE> 15
SUMMARY OF POLICY EXPENSES
Nationwide deducts certain charges from the policy. Charges are made for
administrative and sales expenses, providing life insurance protection and
assuming the mortality and expense risks.
Nationwide deducts a sales load and a premium expense charge from premium
payments. The sales load is guaranteed never to exceed 5.5% of each premium
payment during the first 7 policy years and 2% thereafter. Currently, the sales
load is 3.0% of premium payment plus 2.5% of premiums up to the target premium
during the first 7 policy years, and 0% on all premiums thereafter (see "Sales
Load").
The premium expense charge is approximately 3.5% of premiums for all states (see
"Premium Expense Charge").
The mortality and expense risk charge is guaranteed not to exceed an annual
effective rate of 0.75% of the daily net assets of the variable account.
Currently, the annual effective rate will be 0.40% in policy years 1-4, 0.25% in
policy years 5-20, and 0.10% thereafter. Nationwide deducts the following
charges from the cash value of the policy:
- monthly cost of insurance;
- monthly cost of any additional benefits provided by riders to the policy;
and
- administrative expense charge.(1)
(1) Currently, the administrative expense charge is $5 per month. It is
guaranteed not to exceed $10 per month.
Nationwide does not deduct a surrender charge from the polices.
For more information about any policy charge, see "Policy Charges" in this
prospectus.
<TABLE>
<CAPTION>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund net assets, after expense
reimbursement)
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - 0.70% 0.00% 0.00% 0.70%
American Century VP Income & Growth
American Century Variable Portfolios, Inc. - 1.34% 0.00% 0.00% 1.34%
American Century VP International
American Century Variable Portfolios, Inc. - 1.00% 0.00% 0.00% 1.00%
American Century VP Value
Dreyfus Investment Portfolios - European Equity 1.00% 0.25% 0.00% 1.25%
Portfolio
The Dreyfus Socially Responsible Growth Fund, 0.75% 0.04% 0.00% 0.79%
Inc.
Dreyfus Stock Index Fund, Inc. 0.25% 0.01% 0.00% 0.26%
Dreyfus Variable Investment Fund - Appreciation 0.43% 0.35% 0.00% 0.78%
Portfolio (formerly, Dreyfus Variable Investment
Fund - Capital Appreciation Portfolio)
Federated Insurance Series - Federated Quality 0.00% 0.68% 0.00% 0.68%
Bond Fund II
Fidelity VIP Equity-Income Portfolio: Service 0.48% 0.08% 0.10% 0.66%
Class
Fidelity VIP Growth Portfolio: Service Class 0.58% 0.07% 0.10% 0.75%
Fidelity VIP High Income Portfolio: Service 0.58% 0.11% 0.10% 0.79%
Class
Fidelity VIP Overseas Portfolio: Service Class 0.73% 0.15% 0.10% 0.98%
Fidelity VIP II Contrafund Portfolio: Service 0.58% 0.07% 0.10% 0.75%
Class
Fidelity VIP III Growth Opportunities 0.58% 0.10% 0.10% 0.78%
Portfolio: Service Class
Janus Aspen Series - Capital Appreciation 0.65% 0.04% 0.25% 0.94%
Portfolio: Service Shares
</TABLE>
7
<PAGE> 16
<TABLE>
<CAPTION>
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
Janus Aspen Series - Global Technology 0.65% 0.13% 0.25% 1.03%
Portfolio: Service Shares
Janus Aspen Series - International Growth 0.65% 0.11% 0.25% 1.01%
Portfolio: Service Shares
NSAT Capital Appreciation Fund 0.60% 0.14% 0.00% 0.74%
NSAT Government Bond Fund 0.50% 0.15% 0.00% 0.65%
NSAT Money Market Fund 0.39% 0.15% 0.00% 0.54%
NSAT Total Return Fund 0.58% 0.14% 0.00% 0.72%
NSAT Nationwide Balanced Fund 0.75% 0.15% 0.00% 0.90%
NSAT Nationwide Equity Income Fund 0.80% 0.15% 0.00% 0.95%
NSAT Nationwide Global 50 Fund (formerly, NSAT 1.00% 0.20% 0.00% 1.20%
Nationwide Global Equity Fund)
NSAT Nationwide High Income Bond Fund 0.80% 0.15% 0.00% 0.95%
NSAT Nationwide Mid Cap Index Fund (formerly, 0.88% 0.15% 0.00% 1.03%
NSAT Nationwide Select Advisers Mid Cap Fund)
NSAT Nationwide Multi-Sector Bond Fund 0.75% 0.15% 0.00% 0.90%
NSAT Nationwide Small Cap Growth Fund (formerly, 1.10% 0.20% 0.00% 1.30%
NSAT Nationwide Select Advisers Small Cap Growth
Fund)
NSAT Nationwide Small Cap Value Fund 0.90% 0.15% 0.00% 1.05%
NSAT Nationwide Small Company Fund 0.98% 0.17% 0.00% 1.15%
NSAT Nationwide Strategic Growth Fund 0.90% 0.10% 0.00% 1.00%
NSAT Nationwide Strategic Value Fund 0.90% 0.10% 0.00% 1.00%
Neuberger Berman AMT - Guardian Portfolio 0.85% 0.15% 0.00% 1.00%
Neuberger Berman AMT - Mid-Cap Growth Portfolio 0.85% 0.15% 0.00% 1.00%
Neuberger Berman AMT - Partners Portfolio 0.80% 0.07% 0.00% 0.87%
Oppenheimer Variable Account Funds - Oppenheimer 0.66% 0.01% 0.00% 0.67%
Aggressive Growth Fund/VA
Oppenheimer Variable Account Funds - Oppenheimer 0.68% 0.02% 0.00% 0.70%
Capital Appreciation Fund/VA
Oppenheimer Variable Account Funds - Oppenheimer 0.67% 0.02% 0.00% 0.69%
Global Securities Fund/VA
Oppenheimer Variable Account Funds - Oppenheimer 0.73% 0.05% 0.00% 0.78%
Main Street Growth & Income Fund/VA
Strong Opportunity Fund II, Inc. 1.00% 0.14% 0.00% 1.14%
Universal Institutional Funds, Inc. - Emerging 0.45% 0.98% 0.00% 1.43%
Markets Debt Portfolio (formerly, Morgan Stanley
Dean Witter Universal Funds, Inc. - Emerging
Markets Debt Portfolio)
Universal Institutional Funds, Inc. - Mid Cap 0.00% 1.05% 0.00% 1.05%
Growth Portfolio
Van Eck Worldwide Insurance Trust - Worldwide 1.00% 0.34% 0.00% 1.34%
Emerging Markets Fund
Van Eck Worldwide Insurance Trust - Worldwide 1.00% 0.26% 0.00% 1.26%
Hard Assets Fund
Van Kampen Life Investment Trust - Morgan 0.97% 0.13% 0.00% 1.10%
Stanley Real Estate Securities Portfolio
Warburg Pincus Trust- Value Portfolio (formerly, 0.56% 0.44% 0.00% 1.00%
Warburg Pincus Trust - Growth & Income Portfolio)
</TABLE>
8
<PAGE> 17
<TABLE>
<CAPTION>
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
Warburg Pincus Trust - International Equity 1.00% 0.32% 0.00% 1.32%
Portfolio
Warburg Pincus Trust - Global Post-Venture 1.07% 0.33% 0.00% 1.40%
Capital Portfolio (formerly, Warburg Pincus
Trust - Post-Venture Capital Portfolio)
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
Federated Insurance Series - Federated Quality 0.60% 0.89% 0.25% 1.74%
Bond Fund II
Fidelity VIP Equity-Income Portfolio: Service 0.48% 0.09% 0.10% 0.67%
Class
Fidelity VIP Growth Portfolio: Service Class 0.58% 0.09% 0.10% 0.77%
Fidelity VIP Overseas Portfolio: Service Class 0.73% 0.18% 0.10% 1.01%
Fidelity VIP II Contrafund Portfolio: Service 0.58% 0.10% 0.10% 0.78%
Class
Fidelity VIP III Growth Opportunities Portfolio: 0.58% 0.11% 0.10% 0.79%
Service Class
NSAT Nationwide Balanced Fund 0.75% 0.25% 0.00% 1.00%
NSAT Nationwide Equity Income Fund 0.80% 0.29% 0.00% 1.09%
NSAT Nationwide Global 50 Fund (formerly, NSAT 1.00% 0.54% 0.00% 1.54%
Nationwide Global Equity Fund)
NSAT Nationwide High Income Bond Fund 0.80% 0.50% 0.00% 1.30%
NSAT Nationwide Mid Cap Index Fund (formerly, 0.88% 0.86% 0.00% 1.74%
NSAT Nationwide Select Advisers Mid Cap Fund)
NSAT Nationwide Multi-Sector Bond Fund 0.75% 0.27% 0.00% 1.02%
NSAT Nationwide Small Cap Growth Fund (formerly, 1.10% 1.30% 0.00% 2.40%
NSAT Nationwide Select Advisers Small Cap Growth
Fund)
NSAT Nationwide Small Cap Value Fund 0.90% 0.37% 0.00% 1.27%
NSAT Nationwide Strategic Growth Fund 0.90% 0.33% 0.00% 1.23%
NSAT Nationwide Strategic Value Fund 0.90% 0.32% 0.00% 1.22%
Neuberger Berman AMT Mid-Cap Growth Portfolio 0.93% 0.15% 0.00% 1.08%
Universal Institutional Funds, Inc. - Emerging 0.80% 0.98% 0.00% 1.78%
Markets Debt Portfolio (formerly, Morgan Stanley
Dean Witter Universal Funds, Inc. - Emerging
Markets Debt Portfolio)
Universal Institutional Funds, Inc. - Mid Cap 0.75% 7.31% 0.00% 8.06%
Growth Portfolio
</TABLE>
9
<PAGE> 18
<TABLE>
<CAPTION>
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
Van Eck Worldwide Insurance Trust - Worldwide 1.00% 0.54% 0.00% 1.54%
Emerging Markets Fund
Van Kampen Life Investment Trust - Morgan 1.00% 0.13% 0.00% 1.13%
Stanley Real Estate Securities Portfolio
Warburg Pincus Trust- Value Portfolio (formerly, 0.75% 0.59% 0.00% 1.34%
Warburg Pincus Trust - Growth & Income Portfolio)
Warburg Pincus Trust - Global Post-Venture 1.25% 0.33% 0.00% 1.58%
Capital Portfolio (formerly, Warburg Pincus
Trust - Post-Venture Capital Portfolio)
</TABLE>
SYNOPSIS OF THE POLICIES
The policy offered by this prospectus provides for life insurance coverage on
the insured. The death benefit and cash value of the policy may increase or
decrease to reflect the performance of the investment options chosen by the
policy owner (see "Death Benefit Information").
CASH SURRENDER VALUE
If the policy is terminated during the insured's lifetime, a cash surrender
value may be payable under the policy. However, there is no guaranteed cash
surrender value (see "Variation in Cash Value "). The policy will lapse without
value if the cash surrender value falls below what is needed to cover policy
charges.
PREMIUMS
The minimum initial premium for which a policy may be issued is equal to three
times the initial minimum monthly premium. The initial premium is shown on the
policy data page. Each premium payment must be at least $50.
Additional premium payments may be made at any time while the policy is in force
(see "Premium Payments").
TAXATION
The policies described in this prospectus meet the definition of "life
insurance" under Section 7702 of the Internal Revenue Code. Nationwide
will monitor compliance with the tests provided by Section 7702 to insure the
policies continue to receive this favored tax treatment (see "Tax Matters").
NONPARTICIPATING POLICIES
The policies are nonparticipating policies on which no dividends are payable.
The policies do not share in the profits or surplus earnings of Nationwide.
RIDERS
A rider may be added to the policy (availability varies by state).
Riders currently include:
- Additional Protection Rider;
- Change of Insured Rider; and
- Maturity Extension Rider.
POLICY CANCELLATION
Policy owners may return the policy for any reason within certain time periods
and Nationwide will refund the policy value or the amount required by law (see
"Right to Revoke").
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in
February 1981. It is a member of the Nationwide group with its home office at
One Nationwide Plaza, Columbus, Ohio 43215. Nationwide is a provider of life
insurance, annuities and retirement products.
CUSTODIAN OF ASSETS
Nationwide serves as the custodian of the assets of the variable account.
10
<PAGE> 19
OTHER CONTRACTS ISSUED BY NATIONWIDE
Nationwide does presently and will, from time to time, offer variable contracts
and policies with benefits which vary in accordance with the investment
experience of a separate account of Nationwide.
NATIONWIDE INVESTMENT SERVICES CORPORATION
The policies are distributed by Nationwide Investment Services Corporation
("NISC"), Two Nationwide Plaza, Columbus, Ohio 43215. (For policies issued in
the State of Michigan, all references to NISC shall mean Nationwide Investment
Svcs. Corporation.) NISC is a wholly owned subsidiary of Nationwide Life
Insurance Company.
INVESTING IN THE POLICY
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
Nationwide VL Separate Account-C is a separate account that invests in the
underlying mutual fund options listed in Appendix A. Nationwide established the
separate account on July 22,1997, pursuant to Ohio law. Although the separate
account is registered with the SEC as a unit investment trust pursuant to the
Investment Company Act of 1940 ("1940 Act"), the SEC does not supervise the
management of Nationwide or the variable account.
Income, gains, and losses credited to, or charged against the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's assets and in general are not chargeable with
liabilities incurred in any other business of Nationwide. Nationwide is
obligated to pay all amounts promised to policy owners under the policies.
The variable account is divided into sub-accounts. Policy owners elect to have
net premiums allocated among the sub-accounts and the fixed account at the time
of application.
Nationwide uses the assets of each sub-account to buy shares of the underlying
mutual funds based on policy owner instructions. A policy's investment
performance depends upon the performance of the underlying mutual fund options
chosen by the policy owner.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Underlying mutual funds in the variable account are NOT publicly traded mutual
funds. They are only available as investment options in variable life insurance
policies or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or retirement
plans.
The investment advisers of the underlying mutual funds may manage publicly
traded mutual funds with similar names and investment objectives. However the
underlying mutual funds are NOT directly related to any publicly traded mutual
fund. Policy owners should not compare the performance of a publicly traded fund
with the performance of underlying mutual funds participating in the variable
account. The performance of the underlying mutual funds could differ
substantially from that of any publicly traded funds.
Changes of Investment Policy
Nationwide may materially change the investment policy of the variable account.
Nationwide must inform policy owners and obtain all necessary regulatory
approvals. Any change must be submitted to the various state insurance
departments which may disapprove it if deemed detrimental to the interests of
the policy owners or if it renders Nationwide's operations hazardous to the
public. If a policy owner objects, the policy owner may elect to transfer all
sub-account cash value to the fixed account. No transfer charges will be
assessed. The policy owner has the later of 60 days (6 months in Pennsylvania)
from the date of the investment policy change or 60 days (6 months
11
<PAGE> 20
in Pennsylvania) from being informed of the change to make the transfer.
Voting Rights
Policy owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote policy owner shares at
special shareholder meetings based on policy owner instructions. However, if the
law changes allowing Nationwide to vote in its own right, it may elect to do so.
Policy owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholder's vote as soon as possible prior to
the shareholder meeting. Notification will contain proxy materials, and a form
to return to Nationwide with voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a policy owner may vote is determined by dividing the
cash value of the amount they have allocated to an underlying mutual fund by the
net asset value of that underlying mutual fund. Nationwide will designate a date
for this determination not more than 90 days before the shareholder meeting.
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the underlying mutual fund(s)
involved in the conflict.
Substitution of Securities
Nationwide may substitute, eliminate and/or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occur:
(1) shares of a current underlying mutual fund option are no longer available
for investment; or
(2) further investment in an underlying mutual fund option is inappropriate.
No substitution, elimination, and/or combination of shares may take place
without the prior approval of the SEC.
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks. Premium payments will be allocated
to the fixed account by election of the policy owner.
Under exemptive and exclusionary provisions, Nationwide's general account has
not been registered under the Securities Act of 1933 and has not been registered
as an investment company under the Investment Company Act of 1940. Accordingly,
neither the general account nor any interest therein is subject to the
provisions of these Acts. Nationwide has been advised that the staff of the SEC
has not reviewed the disclosures in this prospectus relating to the fixed
account. Disclosures regarding the general account may, however, be subject to
certain generally applicable provisions of the federal securities laws
concerning the accuracy and completeness of statements made in prospectuses.
12
<PAGE> 21
The investment income earned by the fixed account will be allocated to the
policies at varying rate(s) set by Nationwide. The guaranteed rate for any
premium payment will be effective for not less than twelve months. Nationwide
guarantees that the rate will not be less than an annual effective rate of 3.0%
per year.
Any interest in excess of 3.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The policy owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of an
annual effective rate of 3.0% for any given year.
New premium payments deposited to the contract which are allocated to the fixed
account may receive a different rate of interest than amounts transferred from
the sub-accounts to the fixed account and amounts maturing in the fixed account.
The fixed account is not available for policies issued in the State of Texas.
INFORMATION ABOUT THE POLICIES
MINIMUM REQUIREMENTS FOR POLICY ISSUANCE
This policy provides life insurance coverage with the flexibility to vary the
amount and frequency of premium payments. Minimum requirements for policy
issuance include:
- the insured must be 80 or younger;
- Nationwide may require satisfactory evidence of insurability (including a
medical exam); and
- a minimum specified amount of $50,000 ($100,000 in Pennsylvania and New
Jersey).
PREMIUM PAYMENTS
Each premium payment must be at least $50. The initial premium is payable in
full at Nationwide's home office or to an authorized agent of Nationwide.
Upon payment of the initial premium, temporary insurance may be provided.
Issuance of the continuing insurance coverage is dependent upon completion of
all underwriting requirements, payment of initial premium, and delivery of the
policy while the insured is still living.
Additional premium payments may be made at any time while the policy is in
force, subject to the following conditions:
- Nationwide may require satisfactory evidence of insurability before
accepting any additional premium payment which results in an increase in
the net amount at risk.
- Premium payments in excess of the premium limit established by the IRS to
qualify the policy as a contract for life insurance will be refunded.
- Nationwide may require policy indebtedness be repaid prior to accepting
any additional premium payments.
Additional premium payments or other changes to the policy may jeopardize the
policy's non-modified endowment status. Nationwide will monitor premiums paid
and other policy transactions and will notify the policy owner when non-modified
endowment contract status is in jeopardy.
PRICING
Premiums payments will not be priced, when the New York Stock Exchange is closed
or on the following nationally recognized holidays:
- New Year's Day - Independence Day
- Martin Luther King, Jr. Day - Labor Day
- Presidents' Day - Thanksgiving
- Good Friday - Christmas
- Memorial Day
Nationwide also will not price premium payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in
the variable account impracticable; or
13
<PAGE> 22
(3) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, policy value may be affected since the policy owner would not
have access to their account.
POLICY CHARGES
SALES LOAD
Nationwide deducts a sales load from each premium payment received. It is
guaranteed never to exceed 5.5% of each premium payment during the first 7
policy years and 2% thereafter. Currently, the sales load is 3% of the premium
payment plus 2.5% of premiums up to the target premium during the first 7 policy
years, and 0% of all premiums thereafter. The target premium is a premium based
upon the specified amount. It is the level annual premium amount at which the
sales load is reduced on a current basis.
PREMIUM EXPENSE CHARGE
Nationwide deducts a premium expense charge equal to 3.50% from all premium
payments. This charge reimburses Nationwide for administrative expenses on an
aggregate basis, including premium taxes imposed by various state and local
jurisdictions and for federal taxes imposed under Section 848 of the Internal
Revenue Code. Generally, these tax expenses consist of two components:
(1) a state premium tax rate of 2.25%; and
(2) a federal tax rate of 1.25%.
Nationwide expects to pay an average state premium tax rate of approximately
2.25% of premiums for all states. State tax rates can range from 0% to 4%. This
charge may be more or less than the amount actually assessed by the state in
which a particular policy owner lives.
The 1.25% federal tax component is designed to reimburse Nationwide for expenses
incurred from federal taxes imposed under Section 848 of the Internal Revenue
Code.
Nationwide does not expect to make a profit from these charges.
MONTHLY COST OF INSURANCE
The monthly cost of insurance charge for each policy month is determined by
multiplying the monthly cost of insurance rate by the net amount at risk. This
deduction is charged proportionately to the cash value in each sub-account and
the fixed account.
If death benefit Option 1 is in effect and there have been increases in the
specified amount, then the cash value will first be considered a part of the
initial specified amount. If the cash value exceeds the initial specified
amount, it will then be considered a part of the additional increases in
specified amount resulting from the increases in the order of the increases.
Monthly cost of insurance rates will be unisex and will not exceed those
guaranteed in the policy. Guaranteed cost of insurance rates are based on the
1980 Commissioners' Standard Ordinary Male Mortality Table, Age Last Birthday,
aggregate as to tobacco status (1980 CSO). Guaranteed cost of insurance rates
for policies issued on a substandard basis are based on appropriate percentage
multiples of the 1980 CSO.
The rate class of an insured may affect the cost of insurance rate. Nationwide
currently places insureds into both standard rate classes and substandard rate
classes that involve a higher mortality risk. In an otherwise identical policy,
an insured in the standard rate class will have a lower cost of insurance than
an insured in a rate class with higher mortality risks. Nationwide may also
issue certain policies on a "non-medical," guaranteed issue, or simplified issue
basis to certain categories of individuals. Due to the underwriting criteria
established for policies issued on a non-medical basis, actual rates will be
higher than the current cost of insurance rates being charged under policies
that are medically underwritten.
14
<PAGE> 23
MONTHLY ADMINISTRATIVE CHARGE
Nationwide deducts an administrative expense charge proportionately from the
cash value in each sub-account and the fixed account on a monthly basis. This
charge reimburses Nationwide for certain actual administrative expenses related
to maintenance of the policies including accounting and record keeping, and
periodic reporting to policy owners. Nationwide does not expect to recover any
amount in excess of aggregate maintenance expenses from this charge. Currently,
this charge is $5 per month in all policy years. On a guaranteed basis, this
charge is $10 per month in all policy years.
MORTALITY AND EXPENSE RISK CHARGE
Nationwide assumes certain risks for guaranteeing the mortality and expense
charges.
The mortality risk assumed under the policies is that the insured may not live
as long as expected. The expense risk assumed is that the actual expenses
incurred in issuing and administering the policies may be greater than expected.
In addition, Nationwide assumes risks associated with the non-recovery of policy
issue, underwriting and other administrative expenses due to policies that lapse
or are surrendered in the early policy years.
Nationwide deducts the mortality and expense risk charge from the variable
account on a daily basis. Mortality and expense risk deductions may vary from
policy to policy because they are charged proportionally to the cash value in
each sub-account. The mortality and expense risk charge compensates Nationwide
for assuming risks associated with mortality and administrative costs. This
charge is guaranteed not to exceed an annual effective rate of 0.75% of the
daily net assets of the variable account. Currently, this rate will be 0.40%
during policy years 1-4, 0.25% during policy years 5-20, and 0.10% thereafter.
To the extent that future levels of mortality and expenses are less than or
equal to those expected, Nationwide may realize a profit from this charge.
Unrecovered expenses are borne by Nationwide's general assets which may include
profits, if any, from mortality and expense risk charges.
INCOME TAX
No charge is assessed to policy owners for income taxes incurred by Nationwide
as a result of the operations of the sub-accounts. However, Nationwide reserves
the right to assess a charge for income taxes against the variable account if
income taxes are incurred.
REDUCTION OF CHARGES
The policy is available for purchase by individuals, corporations and other
groups. Nationwide may reduce or eliminate certain charges (sales load,
surrender charge, monthly administrative charge, monthly cost of insurance
charge, or other charges), where the size or nature of the group results in
savings in sales, underwriting, administrative or other costs, to Nationwide.
These charges may be reduced in certain group, sponsored arrangements or special
exchange programs made available by Nationwide, (including employees of
Nationwide and their families). Eligibility for reduction in charges and the
amount of any reduction is determined by a number of factors, including:
- the number of insureds;
- the total premium expected to be paid;
- total assets under management for the policy owner;
- the nature of the relationship among individual insureds;
- the purpose for which the policies are being purchased;
- the expected persistency of individual policies; and
- any other circumstances which are rationally related to the expected
reduction in expenses.
The extent and nature of reductions may change from time to time. The charge
structure may vary. Variations are determined in a manner not
15
<PAGE> 24
unfairly discriminatory to policy owners which reflects differences in costs of
services.
SURRENDERING THE POLICY FOR CASH
SURRENDER (REDEMPTION)
Policies may be surrendered for the cash surrender value any time while the
insured is living. The cancellation will be effective as of the date Nationwide
receives the policy accompanied by a signed, written request for cancellation.
Nationwide may require the policy owner's signature to be guaranteed by a member
firm of the New York, American, Boston, Midwest, Philadelphia or Pacific Stock
Exchanges, or by a commercial bank or a savings and loan, which is a member of
the Federal Deposit Insurance Corporation. In some cases, Nationwide may require
additional documentation of a customary nature.
CASH SURRENDER VALUE
The cash surrender value increases or decreases daily to reflect the investment
experience of the variable account and the daily crediting of interest in the
fixed account and the policy loan account.
The cash surrender value equals the policy's cash value, next computed after the
date Nationwide receives a proper written request for surrender and the policy,
minus any charges, indebtedness or other deductions due on that date, plus 3.5%,
5.5%, or 4.0% of the current premium if that date occurs during policy years
one, two or three, respectively.
PARTIAL SURRENDERS
After the policy has been in force for one year, the policy owner may request a
partial surrender.
Partial surrenders are permitted if they satisfy the following requirements:
(1) the minimum partial surrender is $500;
(2) partial surrenders may not reduce the specified amount to less than
$50,000;
(3) after the partial surrender, the cash surrender value is greater than
$500 or an amount equal to three times the current monthly deduction, if
higher; and
(4) after the partial surrender, the policy continues to qualify as life
insurance.
When a partial surrender is made, the cash value will be reduced by the amount
of the partial surrender. Further, the specified amount will be reduced by the
amount necessary to prevent any increase to the net amount at risk, unless the
partial surrender is treated as a preferred partial surrender.
Preferred Partial Surrenders
A partial surrender is considered a preferred partial surrender if the following
conditions are met:
(1) the surrender occurs before the 15th policy anniversary; and
(2) the surrender amount plus the amount of any previous preferred policy
surrenders in that same policy year does not exceed 10% of the cash
surrender value as of the beginning of the policy year.
Reduction of the Specified Amount
When a partial surrender is made, in addition to the cash value being reduced by
the amount of the partial surrender, the specified amount may also be reduced,
(except in the case of a preferred partial surrender). The reduction to the
specified amount will be made in the following order:
(1) against the most recent increase in the specified amount;
(2) against the next most recent increases in the specified amount in
succession; and
(3) against the specified amount under the original application.
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<PAGE> 25
INCOME TAX WITHHOLDING
Federal law requires Nationwide to withhold income tax from any portion of
surrender proceeds subject to tax. Nationwide will withhold income tax unless
the policy owner advises Nationwide, in writing, of his or her request not to
withhold. If a policy owner requests that taxes not be withheld, or if the taxes
withheld are insufficient, the policy owner may be liable for payment of an
estimated tax. Policy owners should consult a tax advisor. In certain
employer-sponsored life insurance arrangements, including equity split dollar
arrangements, participants may be required to report for income tax purposes,
one or more of the following:
(1) the value each year of the life insurance protection provided;
(2) an amount equal to any employer-paid premiums; or
(3) some or all of the amount by which the current value exceeds the
employer's interest in the policy.
Participants should consult with the sponsor or the administrator of the plan,
and/or with their personal tax or legal advisor, to determine the tax
consequences, if any, of their employer-sponsored life insurance arrangements.
VARIATION IN CASH VALUE
On any date during the policy year, the cash value equals the cash value on the
preceding valuation date, plus any net premium applied since the previous
valuation date, minus any partial surrenders, plus or minus any investment
results, and less any policy charges.
There is no guaranteed cash value. The cash value will vary with the investment
experience of the variable account and/or the daily crediting of interest in the
fixed account and policy loan account depending on the allocation of cash value
by the policy owner.
POLICY PROVISIONS
POLICY OWNER
While the insured is living, all rights in this policy are vested in the policy
owner named in the application or as subsequently changed, subject to
assignment, if any.
The policy owner may name a contingent policy owner or a new policy owner while
the insured is living. Any change must be in a written form satisfactory to
Nationwide and recorded at Nationwide's home office. Once recorded, the change
will be effective when signed. The change will not affect any payment made or
action taken by Nationwide before it was recorded. Nationwide may require that
the policy be submitted for endorsement before making a change.
If the policy owner is other than the insured, names no contingent policy owner,
and dies before the insured, the policy owner's rights in this policy belong to
the policy owner's estate.
BENEFICIARY
The beneficiary(ies) will be as named in the application or as subsequently
changed, subject to assignment, if any.
The policy owner may name a new beneficiary while the insured is living. Any
change must be in a written form satisfactory to Nationwide and recorded at
Nationwide's home office. Once recorded, the change will be effective when
signed. The change will not affect any payment made or action taken by
Nationwide before it was recorded.
If any beneficiary predeceases the insured, that beneficiary's interest passes
to any surviving beneficiary(ies), unless otherwise provided. Multiple
beneficiaries will be paid in equal shares, unless otherwise provided. If no
named beneficiary survives the insured, the death proceeds will be paid to the
policy owner or the policy owner's estate.
CHANGES IN EXISTING INSURANCE COVERAGE
The policy owner may request certain changes in the insurance coverage under the
policy.
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<PAGE> 26
Requests must be in writing and received by Nationwide. No change will
take effect unless the cash surrender value after the change is sufficient to
keep the policy in force for at least 3 months.
Specified Amount Increases
The policy owner may request an increase to the specified amount. Any increase
will be subject to the following conditions:
(1) the request must be applied for in writing;
(2) satisfactory evidence of insurability must be provided;
(3) the increase must be for a minimum of $10,000;
(4) the cash surrender value is sufficient to continue the policy in force
for at least 3 months; and
(5) age limits are the same as for a new issue.
Any approved increase will have an effective date of the monthly anniversary day
on or next following the date Nationwide approves the supplemental application.
Nationwide reserves the right to limit the number of specified amount increases
to one each policy year.
Specified Amount Decreases
After the first policy year, the policy owner may also request a decrease to the
specified amount. Any approved decrease will be effective on the monthly
anniversary day on or next following the date Nationwide receives the request.
Any such decrease shall reduce insurance in the following order:
(1) against insurance provided by the most recent increase;
(2) against the next most recent increases successively; and
(3) against insurance provided under the original application.
Nationwide reserves the right to limit the number of specified amount decreases
to one each policy year. Nationwide will refuse a request for a decrease which
would:
(1) reduce the specified amount to less than $50,000 ($100,000 in New Jersey
and Pennsylvania); or
(2) disqualify the policy as a contract for life insurance.
OPERATION OF THE POLICY
ALLOCATION OF NET PREMIUM AND CASH VALUE
Nationwide allocates premium payments to sub-accounts or the fixed account, as
instructed by policy owners. All percentage allocations must be in whole
numbers, and must be at least 1%. The sum of allocations must equal 100%. Future
premium allocations may be changed by giving written notice to Nationwide.
Premiums may be allocated to the sub-accounts during the period a policy owner
can cancel the policy, unless a specific state requires premiums to be allocated
to the NSAT Money Market Fund or the fixed account. At the expiration of this
period, these premiums are used to purchase shares of the underlying mutual
funds specified by the policy owner at net asset value for the respective
sub-account(s).
The policy owner may change the allocation of net premiums or may transfer cash
value from one sub-account to another. Changes are subject to the terms and
conditions imposed by each underlying mutual fund and those found in this
prospectus.
HOW THE INVESTMENT EXPERIENCE IS DETERMINED
The accumulation unit value for a valuation period is determined by multiplying
the accumulation unit value of each sub-account for the immediately preceding
valuation period by the net investment factor of the sub-account for the
subsequent valuation period. Though the number of accumulation units will not
change as a result of investment experience, the value of an accumulation unit
may increase or decrease from valuation period to valuation period. The number
of accumulation units will not change as a result of investment experience.
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<PAGE> 27
NET INVESTMENT FACTOR
The net investment factor for any valuation period is determined by dividing (a)
by (b) and subtracting (c) from the result where:
(a) is:
(1) the net asset value per share of the underlying mutual fund held
in the sub-account as of the end of the current valuation period;
and
(2) the per share amount of any dividend or income distributions made
by the underlying mutual fund (if the ex-dividend date occurs
during the current valuation period);
(b) is the net asset value per share of the underlying mutual fund determined
as of the end of the immediately preceding valuation period; and
(c) is a factor representing the daily mortality and expense risk charge
deducted from the variable account. Such factor 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 annual effective rate will be
0.40% during policy years 1-4, 0.25% during policy years 5-20, and 0.10%
thereafter.
The net investment factor may be greater or less than one; therefore, the value
of an accumulation unit may increase or decrease. Currently, Nationwide does not
maintain a tax reserve with respect to the policies since income with respect to
the underlying mutual funds is not taxable to Nationwide or the variable
account. Nationwide reserves the right to adjust the calculation of the net
investment factor to reflect a tax reserve should such income of other items
become taxable to Nationwide. It should be noted that changes in the net
investment factor may not be directly proportional to changes in the net asset
value of underlying mutual fund shares because of the deduction for mortality
and expense risk charge.
DETERMINING THE CASH VALUE
The cash value is the sum of the value of all variable account accumulation
units attributable to the policy plus amounts credited to the fixed account and
the policy loan account.
The number of accumulation units credited to each sub-account is determined by
dividing the net amount allocated to the sub-account by the accumulation unit
value for the sub-account for the valuation period during which the premium is
received by Nationwide. In the event part or all of the cash value is
surrendered or charges or deductions are made against the cash value, an
appropriate number of accumulation units from the variable account and an
appropriate amount from the fixed account will be deducted in the same
proportion that the policy owner's interest in the variable account and the
fixed account bears to the total cash value.
The cash value in the fixed account and the policy loan account is credited with
interest daily at an effective annual rate which Nationwide periodically
declares. The annual effective rate will never be less than 3% (for a
description of the annual effective credited rates, see "The Fixed Account" and
"Policy Loans"). Upon request, Nationwide will inform the policy owner of the
then applicable rates for each account.
TRANSFERS
The policy owner may transfer amounts between the fixed account and the variable
account without penalty or adjustment, subject to the following requirements:
- Nationwide reserves the right to limit such transfers to one per policy
year.
- transfers from the fixed account must be made within 45 days after the
end of an interest rate guarantee period (the period of time for which
the current interest rate is guaranteed by Nationwide).
- Nationwide reserves the right to restrict the amount transferred from the
fixed account to 20% of the portion of the cash value attributable to the
fixed account as of the
19
<PAGE> 28
end of the prior policy year. However, if the policy owner elects in
writing to Nationwide to transfer all of the cash value attributable to
the fixed account, the restriction for five successive policy years shall
be 20%, 25%, 33%, 50% and 100%, respectively.
- transfers to the fixed account may not be made prior to the first policy
anniversary or within 12 months subsequent to a prior transfer.
- Nationwide reserves the right to restrict the amount transferred to the
fixed account to 20% of that portion of the cash value attributable to
the variable account as of the close of business of the prior valuation
period.
- Nationwide reserves the right to refuse a transfer to the fixed account
if the cash value attributable to the fixed account is greater than or
equal to 30% of the cash value.
Transfer Requests
Nationwide will accept transfer requests in writing or over the telephone.
Nationwide will use reasonable procedures to confirm that telephone instructions
are genuine and will not be liable for following instructions it reasonably
determined to be genuine. Nationwide may withdraw the telephone exchange
privilege upon 30 days written notice to policy owners.
Market-Timing Firms
Some policy owners may use market-timing firms or other third parties to make
transfers on their behalf. Generally, in order to take advantage of perceived
market trends, market- timing firms will submit transfer requests on behalf of
multiple policy owners at the same time. Sometimes this can result in unusually
large transfers of funds. These large transfers might interfere with the ability
of Nationwide or the underlying mutual fund to process transactions. This can
potentially disadvantage policy owners not using market-timing firms. To avoid
this, Nationwide may modify the transfer rights of policy owners who use
market-timing firms (or other third parties) to initiate transfers on their
behalf.
The transfer rights of individual policy owners will not be modified in any way
when instructions are submitted directly by the policy owner, or by the policy
owner's representative (as authorized by the execution of a valid Nationwide
Limited Power of Attorney Form).
To protect policy owners, Nationwide may refuse transfer requests:
- submitted by any agent acting under a power of attorney on behalf
of more than one policy owner; or
- submitted on behalf of individual policy owners who have executed
pre-authorized exchange forms which are submitted by market-timing
firms (or other third parties) on behalf of more than one policy
owner at the same time.
Nationwide will not restrict transfer rights unless Nationwide believes it to be
necessary for the protection of all policy owners.
RIGHT TO REVOKE
A policy owner may cancel the policy by returning it by the latest of:
- 10 days after receiving the policy;
- 45 days after signing the application; or
- 10 days after Nationwide delivers a Notice of Right to Withdrawal.
The policy can be mailed to the registered representative who sold it, or
directly to Nationwide.
Returned policies are deemed void from the beginning. Nationwide will refund the
amount prescribed by the state in which the policy was issued within seven days
after it receives the policy. The refunded policy value will reflect the
deduction of any policy charges, unless otherwise required by law. This right
varies by state.
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<PAGE> 29
POLICY LOANS
TAKING A POLICY LOAN
The policy owner may take a policy loan at any time using the policy as
security. Maximum policy indebtedness is limited to 90% of the cash value of the
sub-accounts, plus 100% of the cash value in the fixed account, plus 100% of the
cash value in the policy loan account. Nationwide will not grant a loan for an
amount less than $500 (unless otherwise required by state law). Policy
indebtedness will be deducted from the death benefit, cash surrender value upon
surrender, or the maturity proceeds.
Any request for a policy loan must be in written form. The request must be
signed and, where permitted, the signature guaranteed by a member firm of the
New York, American, Boston, Midwest, Philadelphia or Pacific Stock Exchanges, or
by a commercial bank or a savings and loan which is a member of the Federal
Deposit Insurance Corporation. Certain policy loans may result in current
taxable income and tax penalties.
A policy owner considering the use of policy loans in connection with his or her
retirement income plan should consult his or her personal tax adviser regarding
potential tax consequences that may arise if necessary payments are not made to
keep the policy from lapsing. The amount of the payments necessary to prevent
the policy from lapsing will increase with age.
EFFECT ON INVESTMENT PERFORMANCE
When a loan is made, an amount equal to the amount of the loan is transferred
from the variable account to the policy loan account. If the assets relating to
a policy are held in more than one sub-account, withdrawals from the
sub-accounts will be made in proportion to the assets in each sub-account at the
time of the loan. Policy loans will be transferred from the fixed account only
when sufficient amounts are not available in the sub-accounts.
The amount taken out of the variable account will not be affected by the
variable account's investment experience while the loan is outstanding.
INTEREST
The annual effective loan interest rate is guaranteed not to exceed 3.75%. On a
current basis, the loan interest rate is 3.4% in policy years 1-4, 3.25% in
policy years 5-20, and 3.10% thereafter.
On a current and guaranteed basis, the cash value in the policy loan account is
credited with an annual effective rate of 3% in all policy years. Nationwide may
change the current interest crediting rate on the policy loans at any time at
its sole discretion.
If it is determined that such loans will be treated, as a result of the
differential between the interest crediting rate and the loan interest rate, as
taxable distributions under any applicable ruling, regulation, or court
decision, Nationwide retains the right to increase the net cost (by decreasing
the interest crediting rate) on all subsequent policy loans to an amount that
would result in the transaction being treated as a loan under federal tax law.
If this amount is not prescribed by such ruling, regulation, or court decision,
the amount will be that which Nationwide considers to be more likely to result
in the transaction being treated as a loan under federal tax law.
Amounts transferred to the policy loan account will earn interest daily from the
date of transfer. The earned interest is transferred from the policy loan
account to a variable account or the fixed account on each policy anniversary,
at the time a new loan is requested, or at the time of loan repayment. It will
be allocated according to the fund allocation factors in effect at the time of
the transfer.
Interest is charged daily and is payable at the end of each policy year or at
the time of loan repayment. Unpaid interest will be added to the existing policy
indebtedness as of the due date and will be charged interest at the same rate as
the rest of the indebtedness.
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<PAGE> 30
Whenever the total policy indebtedness exceeds the cash value, Nationwide will
send a notice to the policy owner and the assignee, if any. The policy will
terminate without value 61 days after the mailing of the notice unless a
sufficient repayment is made during that period. A repayment is sufficient if it
is large enough to reduce the total policy indebtedness to an amount equal to
the total cash value plus an amount sufficient to continue the policy in force
for 3 months.
EFFECT ON DEATH BENEFIT AND CASH VALUE
A policy loan, whether or not repaid, will have a permanent effect on the death
benefit and cash value because the investment results of the variable account or
the fixed account will apply only to the non-loaned portion of the cash value.
The longer the loan is outstanding, the greater the effect is likely to be.
Depending on the investment results of the variable account or the fixed account
while the loan is outstanding, the effect could be favorable or unfavorable.
REPAYMENT
All or part of the indebtedness may be repaid at any time while the policy is in
force during the insured's lifetime. Any payment intended as a premium payment,
rather than a loan repayment, must be identified as such. Loan repayments will
be credited to the sub-accounts and the fixed account in proportion to the
policy owner's underlying mutual fund allocation factors in effect at the time
of the repayment. Each repayment may not be less than $50. Nationwide reserves
the right to require that any loan repayments resulting from policy loans
transferred from the fixed account must be first allocated to the fixed account.
ASSIGNMENT
While the insured is living, the policy owner may assign his or her rights in
the policy. The assignment must be in writing, signed by the policy owner and
recorded at Nationwide's home office. Prior to being recorded, assignments will
not affect any payments made or actions taken by Nationwide. Nationwide is not
responsible for any assignment not submitted for recording, nor is Nationwide
responsible for the sufficiency or validity of any assignment. Assignments are
subject to any indebtedness owed to Nationwide before being recorded.
POLICY OWNER SERVICES
DOLLAR COST AVERAGING
Dollar Cost Averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from the fixed account and/or certain sub-accounts into other
sub-accounts. Nationwide does not guarantee that this program will result in
profit or protect policy owners from loss.
Policy owners direct Nationwide to automatically transfer specified amounts from
the fixed account, Federated Insurance Series - Federated Quality Bond Fund II,
Fidelity VIP High Income Portfolio, NSAT Government Bond Fund, NSAT Nationwide
High Income Bond Fund, and the NSAT Money Market Fund.
Transfers occur monthly or on another frequency if permitted by Nationwide.
Nationwide will process transfers until either the value in the originating
investment option is exhausted, or the policy owner instructs Nationwide in
writing to stop the transfers.
Transfers from the fixed account must be equal to or less than 1/30th of the
fixed account value at the time the program is requested.
Nationwide reserves the right to stop establishing new Dollar Cost Averaging
programs. Nationwide reserves the right to assess a processing fee for this
service.
DEATH BENEFIT INFORMATION
CALCULATION OF THE DEATH BENEFIT
At issue, the policy owner selects the specified amount and the death benefit
option. At issue, the policy owner also irrevocably elects either of the
following tests qualifying the policy as life insurance under Section 7702 of
the Internal
22
<PAGE> 31
Revenue Code: (1) guideline premium/cash value corridor test; or (2) the cash
value accumulation test.
While the policy is in force, the death benefit will never be less than the
specified amount. The death benefit may vary with the cash value of the policy,
which depends on investment performance.
The policy owner may choose one of three death benefit options.
OPTION 1: the death benefit will be the greater of the specified amount or the
applicable percentage of cash value. Under Option 1, the amount of the death
benefit will ordinarily not change for several years to reflect the investment
performance and may not change at all. If investment performance is favorable,
the amount of death benefit may increase. To see how and when investment
performance will begin to affect death benefits, see the illustrations in
Appendix B.
OPTION 2: the death benefit will be the greater of the specified amount plus the
cash value as of the date of death, or the applicable percentage of cash value
and will vary directly with the investment performance.
OPTION 3: the death benefit is the greater of: (i) the applicable percentage of
the cash value as of the date of death; or (ii) the sum of the specified amount
and the lesser of: (i) the maximum increase amount shown on the policy, or (ii)
the amount of all premium payments and interest accrued at the Option 3 interest
rate as shown in the policy, accumulated up to the date of death, less any
partial surrenders and applicable interest accrued at the Option 3 interest rate
as shown in the policy. Once elected, Option 3 is irrevocable.
<TABLE>
<CAPTION>
APPLICABLE PERCENTAGE OF CASH VALUE
GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST
Attained Percentage Attained Percentage Attained Percentage
Age of Cash Value Age of Cash Value Age of Cash Value
<S> <C> <C> <C> <C> <C>
0-40 250% 60 130% 80 105%
41 243% 61 128% 81 105%
42 236% 62 126% 82 105%
43 229% 63 124% 83 105%
44 222% 64 122% 84 105%
45 215% 65 120% 85 105%
46 209% 66 119% 86 105%
47 203% 67 118% 87 105%
48 197% 68 117% 88 105%
49 191% 69 116% 89 105%
50 185% 70 115% 90 105%
51 178% 71 113% 91 104%
52 171% 72 111% 92 103%
53 164% 73 109% 93 102%
54 157% 74 107% 94 101%
55 150% 75 105% 95 101%
56 146% 76 105% 96 101%
57 142% 77 105% 97 101%
58 138% 78 105% 98 101%
</TABLE>
23
<PAGE> 32
<TABLE>
<CAPTION>
Attained Percentage Attained Percentage Attained Percentage
Age of Cash Value Age of Cash Value Age of Cash Value
<S> <C> <C> <C> <C> <C>
59 134% 79 105% 99 101%
</TABLE>
In the event the policy owner has a substandard rating, the above percentages
will differ.
<TABLE>
<CAPTION>
APPLICABLE PERCENTAGE OF CASH VALUE
CASH VALUE ACCUMULATION TEST
Attained Percentage Attained Percentage Attained Percentage
Age of Cash Value Age of Cash Value Age of Cash Value
<S> <C> <C> <C> <C> <C>
16 708.43% 44 292.29% 72 141.69%
17 687.69% 45 283.37% 73 139.10%
18 667.85% 46 274.79% 74 136.66%
19 648.73% 47 266.55% 75 134.38%
20 630.14% 48 258.61% 76 133.56%
21 611.94% 49 250.98% 77 132.83%
22 594.06% 50 243.65% 78 132.18%
23 576.45% 51 236.59% 79 131.58%
24 559.07% 52 229.82% 80 131.04%
25 541.95% 53 223.34% 81 130.55%
26 525.08% 54 217.13% 82 130.12%
27 508.52% 55 211.19% 83 127.37%
28 492.32% 56 205.51% 84 124.75%
29 476.49% 57 200.06% 85 122.27%
30 461.08% 58 194.84% 86 119.90%
31 446.10% 59 189.84% 87 117.63%
32 431.57% 60 185.03% 88 115.44%
33 417.50% 61 180.43% 89 113.31%
34 403.89% 62 176.02% 90 112.35%
35 390.73% 63 171.81% 91 111.38%
36 378.03% 64 167.80% 92 110.38%
37 365.79% 65 163.98% 93 109.32%
38 354.01% 66 160.34% 94 108.18%
39 342.67% 67 156.86% 95 106.94%
40 331.77% 68 153.54% 96 105.62%
41 321.30% 69 150.37% 97 104.27%
42 311.24% 70 147.33% 98 102.99%
43 301.57% 71 144.44% 99 100.00%
</TABLE>
In the event the policy owner has a substandard rating, the above percentages
will differ.
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<PAGE> 33
CHANGES IN THE DEATH BENEFIT OPTION
After the first policy year, the policy owner may elect to change the death
benefit option under the policy from either Option 1 to Option 2, or from Option
2 to Option 1. Initial elections to Option 3 are irrevocable and may not be
changed.
Only one change of death benefit option is permitted per policy year. The
effective date of a change will be the monthly anniversary day following the
date the change is approved by Nationwide.
In order for any change in the death benefit option to become effective, the
cash surrender value after a change must be sufficient to keep the policy in
force for at least three months.
Nationwide will adjust the specified amount so that the net amount at risk
remains constant before and after the death benefit option changes. A change in
death benefit option will not be permitted if it results in the specified amount
being reduced to an amount in which the total premiums paid exceed the premium
limit required by state law to qualify the policy as a contract for life
insurance.
PROCEEDS PAYABLE ON DEATH
The actual death proceeds payable on the insured's death will be the death
benefit as described above, less any policy indebtedness and less any unpaid
policy charges. Under certain circumstances, the death proceeds may be adjusted
(see "Incontestability," "Error in Age," and "Suicide").
INCONTESTABILITY
Nationwide will not contest payment of the death proceeds based on the initial
specified amount after the policy has been in force during the insured's
lifetime for 2 years from the policy date. For any increase in specified amount
requiring evidence of insurability, Nationwide will not contest payment of the
death proceeds based on such an increase after it has been in force during the
insured's lifetime for 2 years from its effective date.
ERROR IN AGE
If the age of the insured has been misstated, the affected benefits will be
adjusted. The amount of the death benefit will be (1) multiplied by (2) and then
the result added to (3), where:
(1) is the amount of the death benefit at the time of the insured's death
reduced by the amount of the cash value at the time of the insured's
death;
(2) is the ratio of the monthly cost of insurance applied in the policy month
of death and the monthly cost of insurance that should have been applied
at the true age in the policy month of death; and
(3) is the cash value at the time of the insured's death.
SUICIDE
If the insured dies by suicide, while sane or insane, within two years from the
policy date, Nationwide will pay no more than the sum of the premiums paid, less
any indebtedness and partial surrenders. If the insured dies by suicide, while
sane or insane, within two years from the date an application is accepted for an
increase in the specified amount, Nationwide will pay no more than the amount
paid for the additional benefit.
MATURITY PROCEEDS
The maturity date is the policy anniversary on or next following the insured's
100th birthday. If the policy is still in force, maturity proceeds are payable
to the policy owner on the maturity date. Maturity proceeds are equal to the
amount of the policy's cash value, less any indebtedness.
RIGHT OF CONVERSION
The policy owner may at any time, upon written request to Nationwide within 24
months of the policy date, make an irrevocable, one-time election to transfer
all sub-account cash value to the fixed account. The right of conversion is
subject to state availability.
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<PAGE> 34
GRACE PERIOD
If the cash surrender value on a monthly anniversary day is not sufficient to
cover the current policy charges, a grace period of 61 days from the monthly
anniversary day will be allowed for the payment of a premium of at least three
times the current monthly deduction. Nationwide will send the policy owner a
notice at the start of the grace period, at the address in the application or
another address specified by the policy owner, stating the amount of premium
required. If sufficient premium is not received by Nationwide by the end of the
grace period, the policy will lapse without value. If death proceeds become
payable during the grace period, Nationwide will pay the death proceeds.
REINSTATEMENT
If the grace period ends and the policy owner has neither paid the required
premium nor surrendered the policy for its cash surrender value, the policy
owner may reinstate the policy by:
(1) submitting a written request at any time within 3 years after the end of
the grace period and prior to the maturity date;
(2) providing evidence of insurability satisfactory to Nationwide;
(3) paying sufficient premium to cover all policy charges that were due and
unpaid during the grace period;
(4) paying sufficient premium to keep the policy in force for 3 months from
the date of reinstatement; and
(5) paying or reinstating any indebtedness against the policy which existed
at the end of the grace period.
The effective date of a reinstated policy will be the monthly anniversary day on
or next following the date the application for reinstatement is approved by
Nationwide. If the policy is reinstated, the cash value on the date of
reinstatement, but prior to applying any premiums or loan repayments received,
will be set equal to the cash value at the end of the grace period.
Amounts will be allocated based on the fund allocation factors in effect at the
start of the grace period, unless the policy owner provides otherwise.
TAX MATTERS
POLICY PROCEEDS
Section 7702 of the Internal Revenue Code provides that if certain tests are
met, a policy will be treated as a life insurance policy for federal tax
purposes. Nationwide will monitor compliance with these tests. The policy should
thus receive the same federal income tax treatment as fixed benefit life
insurance. As a result, the death proceeds payable under a policy are excludable
from gross income of the beneficiary under Section 101 of the Internal Revenue
Code.
Section 7702A of the Internal Revenue Code defines modified endowment contracts
as those policies issued or materially changed on or after June 21, 1988 on
which the total premiums paid during the first seven years exceed the amount
that would have been paid if the policy provided for paid up benefits after
seven level annual premiums (see "Information about the Policies"). The Internal
Revenue Code states that taxation of surrenders, partial surrenders, loans,
collateral assignments and other pre-death distributions from modified endowment
contracts (other than certain distributions to terminally ill individuals) are
subject to federal income taxes in a manner similar to the way annuities are
taxed. Modified endowment contract distributions are defined by the Internal
Revenue Code as amounts not received as an annuity and are taxable to the extent
the cash value of the policy exceeds, at the time of distribution, the premiums
paid into the policy. A 10% tax penalty generally applies to the taxable portion
of such distributions unless the policy owner is over age 59 1/2 or disabled or
the distribution is part of an annuity to the policy owner as defined in the
Internal Revenue Code. Under certain circumstances, certain
26
<PAGE> 35
distributions made under a policy on the life of a "terminally ill individual",
as that term is defined in the Internal Revenue Code, are excludable from gross
income.
The policies offered by this prospectus may or may not be issued as modified
endowment contracts. Nationwide will monitor premiums paid and will notify the
policy owner when the policy's non-modified endowment status is in jeopardy. If
a policy is not a modified endowment contract, a cash distribution during the
first 15 years after a policy is issued which causes a reduction in death
benefits may still become fully or partially taxable to the policy owner
pursuant to Section 7702(f)(7) of the Internal Revenue Code. The policy owner
should carefully consider this potential effect and seek further information
before initiating any changes in the terms of the policy. Under certain
conditions, a policy may become a modified endowment as a result of a material
change or a reduction in benefits as defined by Section 7702A(c) of the Internal
Revenue Code. In addition to meeting the tests required under Section 7702,
Section 817(h) of the Internal Revenue Code requires that the investments of
separate accounts such as the variable account be adequately diversified.
Regulations under 817(h) provide that a variable life policy that fails to
satisfy the diversification standards will not be treated as life insurance
unless such failure was inadvertent, is corrected, and the policy owner or
Nationwide pays an amount to the IRS. The amount will be based on the tax that
would have been paid by the policy owner if the income, for the period the
policy was not diversified, had been received by the policy owner.
If the failure to diversify is not corrected in this manner, the policy owner
will be deemed the owner of the underlying securities and taxed on the earnings
of his or her account.
Representatives of the IRS have suggested, from time to time, that the number of
underlying mutual funds available or the number of transfer opportunities
available under a variable product may be relevant in determining whether the
product qualifies for the desired tax treatment. No formal guidance has been
issued in this area. Should the Secretary of the Treasury issue additional rules
or regulations limiting the number of underlying mutual funds, transfers between
underlying mutual funds, exchanges of underlying mutual funds or changes in
investment objectives of underlying mutual funds such that the policy would no
longer qualify as life insurance under Section 7702 of the Internal Revenue
Code, Nationwide will take whatever steps are available to remain in compliance.
Nationwide will monitor compliance with these regulations and, to the extent
necessary, will change the objectives or assets of the sub-account investments
to remain in compliance.
A total surrender or cancellation of the policy by lapse or the maturity of the
policy on its maturity date may have adverse tax consequences. If the amount
received by the policy owner plus total policy indebtedness exceeds the premiums
paid into the policy, the excess generally will be treated as taxable income,
regardless of whether or not the policy is a modified endowment contract.
WITHHOLDING
Distributions of income from a modified endowment contract are subject to
federal income tax withholding; however, the recipient may elect not to have the
withholding taken from the distribution. A distribution of income from a
modified endowment contract may be subject to mandatory back-up withholding
(which cannot be waived). The mandatory back-up withholding rate is 31% of the
income that is distributed and will arise of no taxpayer identification number
is provided to Nationwide, or if the IRS notifies Nationwide that back-up
withholding is required.
FEDERAL ESTATE AND GENERATION-SKIPPING TRANSFER TAXES
The federal estate tax is integrated with the federal gift tax under a unified
tax rate schedule. In general, in 1999, an estate of less than $625,000
(inclusive of certain pre-death gifts)
27
<PAGE> 36
will not incur a federal estate tax liability. In addition, an unlimited marital
deduction may be available for federal estate tax purposes, for certain amounts
that pass to the surviving spouse.
When the insured dies, the death benefit will generally be included in the
insured's federal gross estate if: (1) the proceeds were payable to or for the
benefit of the insured's estate; or (2) the insured held any "incident of
ownership" in the policy at death or at any time within three years of death. An
incident of ownership is, in general, any right that may be exercised by the
policy owner, such as the right to borrow on the policy, or the right to name a
new beneficiary.
If the policy owner (whether or not he or she is the insured) transfers
ownership of the policy to another person, such transfer may be subject to a
federal gift tax. In addition, if such policy owner transfers the policy to
someone two or more generations younger than the policy owner, the transfer may
be subject to the federal generation-skipping transfer tax ("GSTT"), the taxable
amount being the value of the policy.
Similarly, if the beneficiary is two or more generations younger than the
insured, the payment of the death proceeds at the death of the insured may be
subject to the GSTT. Pursuant to regulations recently promulgated by the U.S.
Secretary of the Treasury, Nationwide may be required to withhold a portion of
the death proceeds and pay them directly to the IRS as the GSTT liability.
The GSTT provisions generally apply to the same transfers that are subject to
estate or gift taxes.
The tax rate is a flat rate equal to the maximum estate tax rate (currently
55%), and there is a provision for an aggregate $1 million exemption. Due to the
complexity of these rules, the policy owner should consult with counsel and
other competent advisors regarding these taxes.
NON-RESIDENT ALIENS
Pre-death distributions from modified endowment contracts to nonresident aliens
("NRAs") are generally subject to federal income tax and tax withholding, at a
statutory rate of 30% of the amount of income that is distributed. Nationwide is
required to withhold such amount from the distribution and remit it to the IRS.
Distributions to certain NRAs may be subject to lower, or in certain instances
zero, tax and withholding rates, if the United States has entered into an
applicable treaty. However, in order to obtain the benefits of such treaty
provisions, the NRA must give to Nationwide sufficient proof of his or her
residency and citizenship in the form and manner prescribed by the IRS. In
addition, the NRA must obtain an individual taxpayer identification number from
the IRS, and furnish that number to Nationwide prior to the distribution. If
Nationwide does not have the proper proof of citizenship or residency and a
proper individual taxpayer identification number prior to any distribution,
Nationwide will be required to withhold 30% of the income, regardless of any
treaty provision.
A pre-death distribution may not be subject to withholding where the recipient
sufficiently establishes to Nationwide that such payment is effectively
connected to the recipient's conduct of a trade or business in the United States
and that such payment is includible in the recipient's gross income for United
States federal income tax purposes. Any such distributions may be subject to
back-up withholding at the statutory rate (currently 31%) if no taxpayer
identification number, or an incorrect taxpayer identification number, is
provided.
State and local estate, inheritance, income and other tax consequences of
ownership or receipt of policy proceeds depend on the circumstances of each
policy owner or beneficiary.
TAXATION OF NATIONWIDE
Nationwide is taxed as a life insurance company under the Internal Revenue Code.
Since the variable account is not a separate entity from
28
<PAGE> 37
Nationwide and its operations form a part of Nationwide, it will not be taxed
separately as a "regulated investment company" under Sub-chapter M of the
Internal Revenue Code. Investment income and realized capital gains on the
assets of the variable account are reinvested and taken into account in
determining the value of accumulation units. As a result, such investment income
and realized capital gains are automatically applied to increase reserves under
the policies.
Nationwide does not initially expect to incur any federal income tax liability
that would be chargeable to the variable account. Based upon these expectations,
no charge is currently being made against the variable account for federal
income taxes. If, however, Nationwide determines that on a separate company
basis such taxes may be incurred, it reserves the right to assess a charge for
such taxes against the variable account.
Nationwide may also incur state and local taxes (in addition to premium taxes)
in several states. At present, these taxes are not significant. If they
increase, however, charges for such taxes may be made.
TAX CHANGES
The foregoing discussion, which is based on Nationwide's understanding of
federal tax laws as they are currently interpreted by the IRS, is general and is
not intended as tax advice.
The Internal Revenue Code has been subjected to numerous amendments and changes,
and it is reasonable to believe that it will continue to be revised. The United
States Congress has, in the past, considered numerous legislative proposals
that, if enacted, could change the tax treatment of the policies. It is
reasonable to believe that such proposals, and future proposals, may be enacted
into law. In addition, the U.S. Treasury Department may amend existing
regulations, issue new regulations, or adopt new interpretations of existing law
that may be at variance with its current positions on these matters. In
addition, current state law (which is not discussed herein), and future
amendments to state law, may affect the tax consequences of the policy.
If the policy owner, insured, or beneficiary or other person receiving any
benefit or interest in or from the policy is not both a resident and citizen of
the United States, there may be a tax imposed by a foreign country, in addition
to any tax imposed by the United States. The foreign law (including regulations,
rulings, and case law) may change and impose additional taxes on the policy, the
death proceeds, or other distributions and/or ownership of the policy, or a
treaty may be amended and all or part of the favorable treatment may be
eliminated.
Any or all of the foregoing may change from time to time without any notice, and
the tax consequences arising out of a policy may be changed retroactively. There
is no way of predicting if, when, or to what extent any such change may take
place. No representation is made as to the likelihood of the continuation of
these current laws, interpretations, and policies.
The foregoing is a general explanation as to certain tax matters pertaining to
insurance policies. It is not intended to be legal or tax advice, and should not
take the place of your independent legal, tax and/or financial advisor.
LEGAL CONSIDERATIONS
On July 6, 1983, the U.S. Supreme Court held in Arizona Governing Committee v.
Norris that certain annuity benefits provided by employers' retirement and
fringe benefit programs may not vary between men and women on the basis of sex.
This decision applies only to benefits derived from premiums made on or after
August 1, 1983. The policies offered by this prospectus are based upon actuarial
tables which distinguish between men and women. Thus the policies provide
different benefits to men and women of the same age. Accordingly, employers and
employee organizations should consider, in consultation with legal counsel, the
impact of Norris on any employment related insurance or benefit program before
purchasing this policy.
29
<PAGE> 38
STATE REGULATION
Nationwide is subject to the laws of Ohio governing insurance companies and to
regulation by the Ohio Insurance Department. An annual statement in a prescribed
form is filed with the Insurance Department each year covering the operation of
Nationwide for the preceding year and its financial condition as of the end of
such year. Regulation by the Insurance Department includes periodic examination
to determine Nationwide's contract liabilities and reserves so that the
Insurance Department may certify the items are correct. Nationwide's books and
accounts are subject to review by the Insurance Department at all times and a
full examination of its operations is conducted periodically by the National
Association of Insurance Commissioners. Such regulation does not, however,
involve any supervision of management or investment practices or policies. In
addition, Nationwide is subject to regulation under the insurance laws of other
jurisdictions in which it may operate.
REPORTS TO POLICY OWNERS
Nationwide will mail to the policy owner at the last known address of record:
- an annual statement containing: the amount of the current death benefit,
cash value, cash surrender value, premiums paid, monthly charges
deducted, amounts invested in the fixed account and the sub-accounts, and
policy indebtedness;
- annual and semi-annual reports containing all applicable information and
financial statements or their equivalent, which must be sent to the
underlying mutual fund beneficial shareholders as required by the rules
under the Investment Company Act of 1940 for the variable account; and
- statements of significant transactions, such as changes in specified
amount, changes in death benefit options, changes in future premium
allocations, transfers among sub-accounts, premium payments, loans, loan
repayments, reinstatement and termination.
ADVERTISING
Nationwide is ranked and rated by independent financial rating services,
including Moody's, Standard & Poor's and A.M. Best Company. The purpose of these
ratings is to reflect the financial strength or claims-paying ability of
Nationwide. The ratings are not intended to reflect the investment experience or
financial strength of the variable account. Nationwide may advertise these
ratings from time to time. In addition, Nationwide may include in certain
advertisements, endorsements in the form of a list of organizations, individuals
or other parties which recommend Nationwide or the policies. Furthermore,
Nationwide may occasionally include in advertisements comparisons of currently
taxable and tax deferred investment programs, based on selected tax brackets, or
discussions of alternative investment vehicles and general economic conditions.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits relating to life insurance and annuity
pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
On October 29, 1998, Nationwide was named in a lawsuit filed in Ohio state court
related to the sale of deferred annuity products for use as investments in
tax-deferred contributory retirement plans (Mercedes Castillo v. Nationwide
Financial Services, Inc., Nationwide Life Insurance Company and Nationwide Life
and Annuity Insurance Company). On May 3, 1999, the complaint was amended to,
among other things, add Marcus Shore as a second plaintiff. The amended
complaint is brought as
30
<PAGE> 39
a class action on behalf of all persons who purchased individual deferred
annuity contracts or participated in group annuity contracts sold by Nationwide
and the other named Nationwide affiliates which were used to fund certain
tax-deferred retirement plans. The amended complaint seeks unspecified
compensatory and punitive damages. No class has been certified. On June 11,
1999, Nationwide and the other named defendants filed a motion to dismiss the
amended complaint. On March 8, 2000, the Court denied the motion to dismiss the
amended complaint filed by Nationwide and the other named defendants. Nationwide
intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, NISC, is not engaged in any litigation of any material
nature.
EXPERTS
The audited financial statements have been included herein in reliance upon the
reports of KPMG LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
REGISTRATION STATEMENT
A registration statement has been filed with the SEC under the Securities Act of
1933, as amended, with respect to the policies offered hereby. This prospectus
does not contain all the information set forth in the Registration Statement and
amendments thereto and exhibits filed as a part thereof, to all of which
reference is hereby made for further information concerning the variable
account, Nationwide, and the policies offered hereby. Statements contained in
this prospectus as to the content of policies and other legal instruments are
summaries. For a complete statement of the terms thereof, reference is made to
such instruments as filed.
DISTRIBUTION OF THE POLICIES
The policies will be sold by licensed insurance agents in those states where the
policies may lawfully be sold. Agents are registered representatives of broker
dealers registered under the Securities Exchange Act of 1934 who are member
firms of the National Association of Securities Dealers, Inc. ("NASD"). The
policies will be distributed by the general distributor, NISC. NISC was
organized as an Oklahoma corporation on March 19, 1974. NISC is a wholly owned
subsidiary of Nationwide Life Insurance Company and a member of the NASD.
NISC acts as general distributor for the following separate accounts, all of
which are separate investment accounts of Nationwide or its affiliates:
- Nationwide Variable Account
- Nationwide Variable Account-II
- Nationwide Variable Account-5
- Nationwide Variable Account-6
- Nationwide Variable Account-8
- Nationwide Variable Account-9
- Nationwide Variable Account-10
- Nationwide Variable Account-11
- Nationwide VLI Separate Account-2
- Nationwide VLI Separate Account-3
- Nationwide VLI Separate Account-4
- Nationwide VLI Separate Account-5
- Nationwide VA Separate Account-A
- Nationwide VA Separate Account-B
- Nationwide VA Separate Account-C
- Nationwide VL Separate Account-A
- Nationwide VL Separate Account-B
- Nationwide VL Separate Account-C
- Nationwide VL Separate Account-D
- Nationwide Multi-Flex Variable Account
- Nationwide DC Variable Account
- Nationwide DCVA-II
- NACo Variable Account
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<PAGE> 40
Gross first year commissions plus any expense allowance payments made by
Nationwide on the sale of these policies distributed by NISC will not exceed 55%
of target premium plus 5% of any excess premium payments in year one and 25% of
target premium plus 5% on the excess premium in years two through four. Gross
renewal commissions paid at the beginning of policy year five and beyond by
Nationwide will not exceed greater of 5% of target premium plus 5% on the excess
premium or an annual effective rate of 0.20%, paid quarterly, of the cash value
as of the end of the prior quarter. For single premium modified endowment
contracts issued on or after May 1, 1999, gross renewal commissions paid at the
beginning of policy year two and beyond will not exceed an annual rate of 0.20%,
paid quarterly, of the cash value as of the end of the prior quarter.
No underwriting commissions have been paid by Nationwide to NISC.
NATIONWIDE INVESTMENT SERVICES CORPORATION DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
<S> <C>
Joseph J. Gasper Chairman of the Board and Director
One Nationwide Plaza
Columbus, OH 43215
Dimon R. McFerson Chairman and Chief Executive Officer and Director
One Nationwide Plaza
Columbus, OH 43215
Richard A. Karas Vice Chairman and Director
One Nationwide Plaza
Columbus, OH 43215
Duane C. Meek President
One Nationwide Plaza
Columbus, OH 43215
Philip C. Gath Director
One Nationwide Plaza
Columbus, OH 43215
Susan A. Wolken Director
One Nationwide Plaza
Columbus, OH 43215
Robert A. Oakley Executive Vice President - Chief Financial Officer
One Nationwide Plaza
Columbus, OH 43215
Robert J. Woodward, Jr. Executive Vice President - Chief Investment Officer
One Nationwide Plaza
Columbus, OH 43215
Mark R. Thresher Senior Vice President and Treasurer
One Nationwide Plaza
Columbus, OH 43215
Barbara J. Shane Vice President - Compliance Officer
Two Nationwide Plaza
Columbus, OH 43215
Alan A. Todryk Vice President - Taxation
One Nationwide Plaza
Columbus, OH 43215
John F. Delaloye Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
</TABLE>
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<PAGE> 41
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
<S> <C>
Glenn W. Soden Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
E. Gary Berndt Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
Duane M. Campbell Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
Terry C. Smetzer Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
</TABLE>
ADDITIONAL INFORMATION ABOUT NATIONWIDE
The life insurance business, including annuities, is the only business in which
Nationwide is engaged.
Nationwide markets its policies through independent insurance brokers, general
agents, and registered representatives of registered NASD broker/dealer firms.
Nationwide serves as depositor for the following separate investment accounts,
each of which is a registered investment company:
- Nationwide VA Separate Account - A
- Nationwide VA Separate Account - B
- Nationwide VA Separate Account - C
- Nationwide VL Separate Account - A
- Nationwide VL Separate Account - B
- Nationwide VL Separate Account - C
- Nationwide VL Separate Account - D
Nationwide, in common with other insurance companies, is subject to regulation
and supervision by the regulatory authorities of the states in which it is
licensed to do business. A license from the state insurance department is a
prerequisite to the transaction of insurance business in that state. In general,
all states have statutory administrative powers. Such regulation relates, among
other things, to licensing of insurers and their agents, the approval of policy
forms, the methods of computing reserves, the form and content of statutory
financial statements, the amount of policyholders' and stockholders' dividends,
and the type of distribution of investments permitted.
Nationwide operates in the highly competitive field of life insurance. There are
approximately 2,300 stock, mutual and other types of insurers in the life
insurance business in the United States, and a large number of them compete with
the registrant in the sale of insurance policies.
As is customary in insurance company groups, employees are shared with the other
insurance companies in the group. In addition to its direct salaried employees,
Nationwide shares employees with Nationwide Life Insurance Company, Nationwide
Mutual Insurance Company and Nationwide Mutual Fire Insurance Company.
Nationwide does not presently own or lease any materially important physical
properties when its property holdings are viewed in relation to its total
assets. Nationwide shares its home office, other facilities and equipment with
Nationwide Mutual Insurance Company.
Company Management
Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance
Company, together with Nationwide Mutual Insurance Company, Nationwide Mutual
Fire
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<PAGE> 42
Insurance Company, Nationwide Property and Casualty Insurance Company and
Nationwide General Insurance Company and their affiliated companies comprise the
Nationwide group of companies. The companies listed above have substantially
common boards of directors and officers.
Nationwide Financial Services, Inc. ("NFS") is the sole shareholder of
Nationwide Insurance Company. Nationwide Life and Annuity Insurance Company is a
wholly-owned subsidiary of Nationwide Life Insurance Company. NFS serves as a
holding company for other financial institutions. Nationwide Life Insurance
Company is the sole owner of Nationwide Life and Annuity Insurance Company.
Each of the directors and officers listed below is a director or officer
respectively of at least one or more of the other major insurance affiliates of
the Nationwide group of companies. Messrs. McFerson, Gasper, Woodward and Ms.
Thomas are also trustees of one or more of the registered investment companies
distributed by NISC, a registered broker-dealer affiliated with the Nationwide
group of companies.
DIRECTORS OF NATIONWIDE
<TABLE>
<CAPTION>
DIRECTORS OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES
ADDRESS WITH DEPOSITOR PRINCIPAL OCCUPATION
<S> <C> <C>
Lewis J. Alphin Director Farm Owner and Operator, Bell Farms (1)
519 Bethel Church Road
Mount Olive, NC 28365-6107
A. I. Bell Director Farm Owner and Operator (1)
4121 North River Road West
Zanesville, OH 43701
Kenneth D. Davis Director Farm Owner and Operator (1)
7229 Woodmansee Road
Leesburg, OH 45135
Keith W. Eckel Director Partner, Fred W. Eckel Sons; President, Eckel
1647 Falls Road Farms, Inc. (1)
Clarks Summit, PA 18411
Willard J. Engel Director Retired General Manager, Lyon County Co-operative
301 East Marshall Street Oil Company (1)
Marshall, MN 56258
Fred C. Finney Director Owner and Operator, Moreland Fruit Farm; Operator,
1558 West Moreland Road Melrose Orchard (1)
Wooster, OH 44691
Joseph J. Gasper President and Chief President and Chief Operating Officer, Nationwide
One Nationwide Plaza Operating Officer and Life Insurance Company and Nationwide Life and
Columbus, OH 43215 Director Annuity Insurance Company (2)
Dimon R. McFerson Chairman and Chief Chairman and Chief Executive Officer- (2)
One Nationwide Plaza Executive Officer and
Columbus, OH 43215 Director
David O. Miller Chairman of the Board and President, Owen Potato Farm, Inc.; Partner, M&M
115 Sprague Drive Director Enterprises (1)
Hebron, OH 43025
Yvonne L. Montgomery Director Senior Vice President and General Manager, Public
Xerox Corporation Sector Worldwide/Document Solutions Group
Suite 200 Xerox Corporation (2)
1401 H Street NW
Washington, DC 20007
</TABLE>
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<PAGE> 43
<TABLE>
<CAPTION>
DIRECTORS OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS POSITIONS AND OFFICES
ADDRESS WITH DEPOSITOR PRINCIPAL OCCUPATION
<S> <C> <C>
Ralph M. Paige Director Executive Director Federation of Southern
Federation of Southern Cooperatives/Land Assistance Fund
Cooperatives/Land Assistance Fund
2769 Church Street
East Point, GA 30344
James F. Patterson Director Vice President, Pattersons, Inc.; President,
8765 Mulberry Road Patterson Farms, Inc. (1)
Chesterland, OH 44026
Arden L. Shisler Director President and Chief Executive Officer, K&B
1356 North Wenger Road Transport, Inc. (1)
Dalton, OH 44618
Robert L. Stewart Director Owner and Operator Sunnydale Farms and Mining (1)
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director Co-owner, Thomas Farms (2)
1767D Westwood Avenue
Alliance, OH 44601
</TABLE>
(1) Principal occupation for last 5 years.
(2) Prior to assuming this current position, held other executive management
positions with the same or affiliated companies.
Each of the directors is a director of the other major insurance affiliates of
the Nationwide group of companies except Mr. Gasper who is a director only of
Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance
Company. Messrs. McFerson and Gasper are directors of NISC, a registered
broker-dealer.
Messrs. McFerson, Miller, Patterson, and Shisler are directors of Nationwide
Financial Services, Inc. Mr. McFerson and Ms. Thomas are trustees of Nationwide
Mutual Funds, a registered investment company. Messrs. McFerson, Gasper and
Woodward are trustees of Nationwide Separate Account Trust and Nationwide Asset
Allocation Trust, registered investment companies. Mr. McFerson is trustee of
Financial Horizons Investment Trust and Nationwide Mutual Funds, registered
investment companies.
35
<PAGE> 44
EXECUTIVE OFFICERS OF NATIONWIDE
<TABLE>
<CAPTION>
OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS OFFICES OF THE DEPOSITOR
<S> <C>
Richard D. Headley Executive Vice President - Chief Information Technology Officer
One Nationwide Plaza
Columbus, OH 43215
Robert A. Oakley Executive Vice President - Chief Financial Officer
One Nationwide Plaza
Columbus, OH 43215
Robert J. Woodward, Jr. Executive Vice President - Chief Investment Officer
One Nationwide Plaza
Columbus, OH 43215
James E. Brock Senior Vice President - Corporate Development
One Nationwide Plaza
Columbus, OH 43215
Charles A. Bryan Senior Vice President - Chief Actuary - Property and Casualty
One Nationwide Plaza
Columbus, OH 43215
John R. Cook, Jr. Senior Vice President - Chief Communications Officer
One Nationwide Plaza
Columbus, OH 43215
David A. Diamond Senior Vice President - Corporate Controller
One Nationwide Plaza
Columbus, OH 43215
Philip C. Gath Senior Vice President - Chief Actuary - Nationwide Financial
One Nationwide Plaza
Columbus, OH 43215
Patricia R. Hatler Senior Vice President, General Counsel and Secretary
One Nationwide Plaza
Columbus, OH 43215
David K. Hollingsworth Senior Vice President
One Nationwide Plaza
Columbus, OH 43215
David R. Jahn Senior Vice President - Commercial Insurance
One Nationwide Plaza
Columbus, OH 43215
Donna A. James Senior Vice President - Chief Human Resources Officer
One Nationwide Plaza
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales - Financial Services
One Nationwide Plaza
Columbus, OH 43215
Gregory S. Lashutka Senior Vice President - Corporate Relations
One Nationwide Plaza
Columbus, OH 43215
Edwin P. McCausland, Jr. Senior Vice President - Fixed Income Securities
One Nationwide Plaza
Columbus, OH 43215
</TABLE>
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<PAGE> 45
EXECUTIVE OFFICERS OF NATIONWIDE
<TABLE>
<CAPTION>
OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS OFFICES OF THE DEPOSITOR
<S> <C>
Mark D. Phelan Senior Vice President - Technology Services
One Nationwide Plaza
Columbus, OH 43215
Douglas C. Robinette Senior Vice President - Claims and Financial Services
One Nationwide Plaza
Columbus, OH 43215
Mark R. Thresher Senior Vice President - Finance - Nationwide Financial
One Nationwide Plaza
Columbus, OH 43215
Richard M. Waggoner Senior Vice President - Operations
One Nationwide Plaza
Columbus, OH 43215
Susan A. Wolken Senior Vice President - Product Management and Nationwide
One Nationwide Plaza Financial Marketing
Columbus, OH 43215
</TABLE>
DIMON R. MCFERSON has been a Director since April 1988 and Chairman and Chief
Executive Officer since April 1996. He was elected Chief Executive Officer in
December 1992, and President and Chief Executive Officer in December 1993. He
was President and General Manager of Nationwide Mutual Insurance Company from
April 1988 to April 1991; President and Chief Operating Officer of Nationwide
Mutual Insurance Company from April 1991 to December 1992; and President and
Chief Executive Officer of Nationwide Mutual Insurance Company from December
1992 to April 1996. Mr. McFerson has been with Nationwide for 20 years.
JOSEPH J. GASPER has been President and Chief Operating Officer and Director of
Nationwide since April 1996. Previously, he was Executive Vice President -
Property/Casualty Operations of Nationwide Mutual Insurance Company from April
1995 to April 1996. He was Senior Vice President - Property/Casualty Operations
of Nationwide Mutual Insurance Company from September 1993 to April 1995. Prior
to that time, Mr. Gasper held numerous positions within Nationwide. Mr. Gasper
has been with Nationwide for 33 years.
LEWIS J. ALPHIN has been a Director of Nationwide since 1993. Mr. Alphin owns
and operates an 800-acre farm in Mt. Olive, NC. He taught agriculture business
at James Sprunt Community Collegy in Kenansville, NC for more than 22 years
before retiring in 1994. He is the former board chairman of the Cape Fear Farm
Credit Association, a member and former vice president, secretary/treasurer, and
director of the Duplin County Agribusiness Council, and a former board member of
the Southern States Cooperative (1986 to 1993). Mr. Alphin is a member of the
Duplin County Farm Bureau, the North Carolina Farm Bureau, ad the Farm Credit
Council. He is a member and former director of the Oak Wolfe Fire Department.
A. I. BELL has been a Director of Nationwide since April, 1998. Mr. Bell has
served as a state trustee of the Ohio Farm Bureau Federation from 1991 to 1998
and as president that last four years. He oversees the Bell family farm in
Zanesville, Ohio. The farm is the hub of a multi-family swine network, in
addition to grain and beef operations. Mr. Bell has represented the Ohio Farm
Bureau at state and national level activities, and has traveled internationally
representing Ohio agriculture. In 1995, he was introduced into The Ohio State
University Department of Animal Sciences Hall of Fame.
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JAMES E. BROCK has been Senior Vice President - Corporate Development since July
1997. Previously, he was Senior Vice President - Company Operations from
December 1996 to July 1997 and was also Senior Vice President - Life Company
Operations from April 1996 to July 1997. Mr. Brock was Senior Vice President -
Investment Products Operations from November 1990 to April 1996. Prior to that
time, Mr. Brock held several positions within Nationwide. Mr. Brock has been
with Nationwide for 30 years.
CHARLES A. BRYAN has been a Senior Vice President - Chief Actuary - Property and
Casualty since 1998. Prior to joining Nationwide, Mr. Bryan was president, Chief
Operating Officer of Direct Response Corporation from 1996 to 1998. Prior to
that time, Mr. Bryan was a partner with Ernst & Young.
JOHN R. COOK, JR. has been Senior Vice President - Chief Communications Officer
since May 1997. Previously, Mr. Cook was Senior Vice President - Chief
Communications Officer of USAA from July 1989 to May 1997. Mr. Cook has been
with Nationwide for 2 years.
KENNETH D. DAVIS has been a Director of Nationwide since April 1999. Mr. Davis
is the immediate past president of the Ohio Farm Bureau Federation. He served as
a member of the Ohio Farm Bureau Federation's board of trustees from 1989 until
1999. He served as first vice president of the board from 1994 until 1998. Mr.
Davis serves on the board of directors of his local rural electric cooperatives
and is a member of many agriculture organizations including the Ohio Corn
Growers, Ohio Cattlemen's and Ohio Soybean associations.
DAVID A. DIAMOND has been Senior Vice President - Corporate Controller since
August 1999. He was Vice President-Controller from August 1996 to August 1999.
Previously, he was Vice President - Controller from October 1993 to August 1996.
Prior to that time, Mr. Diamond held several positions within Nationwide. Mr.
Diamond has been with Nationwide for 11 years.
KEITH W. ECKEL has been a Director of Nationwide since April 1996. Mr. Eckel is
a partner of Fred W. Eckel Sons and president of Eckel Farms, Inc. in northeast
Pennsylvania. He received the Master Farmer award from Penn State University in
1982. Mr. Eckel is a member of the Pennsylvania Agricultural Land Preservation
Board. He is a former president of the Pennsylvania Farm Bureau, a position he
held for 15 years, and the Lackawanna County Cooperative Extension Association.
He has served as a board member and executive committee member of the American
Farm Bureau Federation. He is a former vice president of the Pennsylvania
Council of Cooperative Extension Associations and former board member of the
Pennsylvania Vegetable Growers Association.
WILLARD J. ENGEL has been a Director of Nationwide since 1994. Mr. Engel served
as general manager of Lyon County Co-Operative Oil Co. in Marshall, MN from 1975
to 1997, and occasionally serves on a consulting basis. He previously was a
division manager of the Truman Farmers Elevator. He is a former director of the
Western Co-op Transport in Montevideo, MN, a former director and legislative
committee chairman of the Northwest Petroleum Association in St. Paul, and a
former director of Farmland Industries in Kansas City.
FRED C. FINNEY has been a Director of Nationwide since 1992. Mr. Finney is the
owner and operator of the Moreland Fruit Farm and operator of Melrose Orchard in
Wooster, OH. He is past president of the Ohio Farm Bureau Federation, the Ohio
Fruit Growers Society, Wayne County Farm Bureau, and the Westwood Ruritan Club.
He is a member of the American Berry Cooperative.
PHILIP C. GATH has been Senior Vice President - Chief Actuary - Nationwide
Financial since May 1998. Previously, Mr. Gath was Vice President - Product
Manager
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<PAGE> 47
- Individual Variable Annuity from July 1997 to May 1998. Mr. Gath was Vice
President - Individual Life Actuary from August 1989 to July 1997. Prior to that
time, Mr. Gath held several positions within Nationwide. Mr. Gath has been with
Nationwide for 31 years.
PATRICIA R. HATLER has been Senior Vice President, General Counsel and Secretary
since April 2000. Previously, she was Senior Vice President and General Counsel
from July 1999 to April 2000. Prior to that time, she was General Counsel and
Corporate Secretary of Independence Blue Cross from 1983 to July 1999.
DAVID K. HOLLINGSWORTH has been Senior Vice President - Multi Channel and
Sponsor Relations since August 1999. Previously, he was Senior Vice President -
Marketing from June 1999 to August 1999. Prior to that time, has held numerous
positions within the Nationwide group of companies. Mr. Hollingsworth has been
with Nationwide for 25 years.
DAVID R. JAHN has been Senior Vice President - Commercial Insurance since March
1998. Previously, he was Vice President - Property/Casualty Operations and Vice
President - Resource Management from March 1996 to January 1998. Prior to that
time, Mr. Jahn has held numerous positions within the Nationwide group of
companies. Mr. Jahn has been with Nationwide for 28 years.
DONNA A. JAMES has been Senior Vice President - Chief Human Resources Officer
since May 1999. She was Senior Vice President - Human Resources from December
1997 to May 1999. Previously she was Vice President - Human Resources from July
1996 to December 1997. Prior to that time, Ms. James was Vice President -
Assistant to the CEO of Nationwide from March 1996 to July 1996. From May 1994
to March 1996 she was Associate Vice President - Assistant to the CEO for
Nationwide. Previously Ms. James held several positions within Nationwide. Ms.
James has been with Nationwide for 18 years.
RICHARD D. HEADLEY has been Executive Vice President - Chief Information
Technology Officer since May 1999. He was Senior Vice President - Chief
Information Technology Officer from October 1997 to May 1999. Previously, Mr.
Headley was Chairman and Chief Executive Officer of Banc One Services
Corporation from 1992 to October 1997. From January 1975 until 1992 Mr. Headley
held several positions with Banc One Corporation. Mr. Headly has been with
Nationwide for 2 years.
RICHARD A. KARAS has been Senior Vice President - Sales - Financial Services
since March 1993. Previously, he was Vice President - Sales - Financial Services
from February 1989 to March 1993. Prior to that time, Mr. Karas held several
positions within Nationwide. Mr. Karas has been with Nationwide for 35 years.
GREGORY S. LASHUTKA has been Senior Vice President - Corporate Relations since
January 2000. Previously, he was the Mayor of the City of Columbus (Ohio) from
January 1992 to December 1999. From January 1986 to December 1991, Mr. Lashutka
was a Partner with Squire, Sanders & Dempsey. From January 1978 to December
1985, he was City Attorney for the City of Columbus (Ohio).
EDWIN P. MCCAUSLAND, JR. has been Senior Vice President - Fixed Income
Securities since 1999. Mr. McCausland has 29 years of experience in insurance
investments beginning his career in 1970 with Connecticut Mutual Life Insurance
Company. He joined Phoenix Mutual Life Insurance Company in 1981 as second Vice
President of Bond Investments and rising to Vice President of Pension
Operations. He was Vice President and Managing Director of Mass Mutual Life
Insurance Company prior to joining Nationwide.
DAVID O. MILLER has been a Director of Nationwide since November 1996. Mr.
Miller has been Chairman of the Board since 1998. Mr. Miller is president of
Owen Potato Farm,
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<PAGE> 48
Inc. and a partner of M&M Enterprises in Licking County, OH. He is a director
and board chairman of the National Cooperative Business Association, director of
Cooperative Business International and the International Cooperative Alliance,
and serves on the educational executive committee of the National Council of
Farmer Cooperatives. He was president of the Ohio Farm Bureau Federation from
1981 to 1985 and was vice president for six years. Mr. Miller served a two year
term on the board of the American Farm Bureau Association. He is past president
of the Ohio Vegetable and Potato Growers Association, and was a director of
Landmark, Inc., a farm supply cooperative which is now part of
Indianapolis-based Countrymark.
YVONNE L. MONTGOMERY has been a Director of Nationwide since April, 1998. Ms.
Montgomery is senior vice president/general manager - Public Sector
Worldwide/Document Solutions Group for Xerox Corporation. A resident of
Washington, DC, Ms. Montgomery is in charge of providing an integrated,
industry-focused portfolio of document solutions and services to the public
sector worldwide. Ms. Montgomery joined Xerox in 1976 as a sales representative
and progressed through management positions, including vice president-field
operations and executive assistant to the chairman and CEO.
ROBERT A. OAKLEY has been Executive Vice President - Chief Financial Officer
since April 1995. Previously, he was Senior Vice President - Chief Financial
Officer from October 1993 to April 1995. Prior to that time, Mr. Oakley held
several positions within Nationwide. Mr. Oakley has been with Nationwide for 24
years.
RALPH M. PAIGE has been a Director of Nationwide since April 1999. Mr. Paige has
been the Executive Director of the Federation of Southern Cooperatives/Land
Assistance Fund since 1969. Mr. Paige also served as the National Field
Director/Georgia State Director from 1981 to 1984.
JAMES F. PATTERSON has been a Director of Nationwide since April 1989. Mr.
Patterson is president of Patterson Farms, Inc. and has operated Patterson Fruit
Farm in Chesterland, OH since 1964. Mr. Patterson is on the boards of The Ohio
State University Hospitals Health System in Cleveland, Geauga Hospital, Inc. and
the National Cooperative Business Association. He is past president of the Ohio
Farm Bureau Federation and former member of Cleveland Foundation's Lake and
Geauga Advisory Committees.
MARK D. PHELAN has been Senior Vice President - Technology Services since 1998.
His previous management experience includes five years (1977-1982) with the data
processing division's sales group at IBM Corporation. From 1982 through 1990,
Mr. Phelan served as director of AT&T's Consumer Communications Services Group
and he was subsequently promoted to sales vice president for the Eastern Region
of the Business Communications Services Division. In 1992, he became executive
vice president-sales and marketing for the Electronic Commerce Division of
Checkfree Corporation, a position he held for five years. From 1997 until 1998,
he was in private consulting.
DOUGLAS C. ROBINETTE has been Senior Vice President - Claims and Financial
Services since 1999. Previously, he was Senior Vice President - Marketing and
Product Management from May 1998 to 1999. Previously, Mr. Robinette was
Executive Vice President, Customer Services of Employers Insurance of Wausau
(Wausau), a member of the Nationwide group until December 1998, from September
1996 to May 1998. Prior to that time he was Executive Vice President, Finance
and Insurance Services of Wausau from May 1995 to September 1996. From November
1994 to May 1995 Mr. Robinette was Senior Vice President, Finance and Insurance
Services of Wausau. From May 1993 to November 1994 he was Senior Vice President,
Finance of Wausau. Prior to that time, Mr. Robinette held several positions
within the Nationwide group. Mr. Robinette has been with the Nationwide group
for 13 years.
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<PAGE> 49
ARDEN L. SHISLER has been a Director of Nationwide since 1984. Mr. Shisler is
president and chief executive officer of K&B Transport, Inc., a trucking firm in
Dalton, OH. He is a director of the National Cooperative Business Association in
Washington, DC. He is a former board member and vice president of the Ohio Farm
Bureau Federation and past president of the Ohio Agricultural Marketing
Association, an Ohio Farm Bureau Federation subsidiary. He is a member of the
Ohio Trucking Association, the Ohio Trucking Safety Council, the Wayne County
Farm Bureau, Cornerstone Community Church, the Advisory Committee of The Ohio
State University Agriculture Technical Institute and a board member of the
Wilderness Center.
ROBERT L. STEWART has been a Director of Nationwide since 1989. Mr. Stewart is
the owner and operator of Sunnydale Farms and Mining in Jewett, OH. He served on
the board of the Ohio Farm Bureau Federation and as president of the Ohio
Holstein Association board. Mr. Stewart was a director of the Ohio Agricultural
Stabilization and Conservation Service board and Landmark, Inc. a farm supply
cooperative which is now part of Indianapolis-based Countrymark.
NANCY C. THOMAS has been a Director of Nationwide since 1986. Mrs. Thomas is a
board member of Farm Credit Services' 4th District and serves on the advisory
board of Walsh University in North Canton, OH. She is a past president and
former director of the Ohio Agricultural Marketing Association and served on the
boards of the Ohio Farm Bureau Federation and Landmark, Inc., a farm supply
cooperative which is now part of Indianapolis-based Countrymark, and as the
Midwest regional representative on the American Farm Bureau women's committee.
MARK R. THRESHER has been Senior Vice President - Finance - Nationwide Financial
since May 1999. He was Vice President - Controller from August 1996 to May 1999.
He was Vice President and Treasurer from November 1996 to February 1997.
Previously, he was Vice President and Treasurer from June 1996 to November 1996.
Prior to joining Nationwide, Mr. Thresher served as a partner with KPMG LLP from
July 1988 to June 1996.
RICHARD M. WAGGONER has been Senior Vice President - Operations since May 1999.
Previously, he was President of Nationwide Services from May 1997 to May 1999.
Prior to that time, Mr. Waggoner has held numerous positions within the
Nationwide group of companies. Mr. Waggoner has been with Nationwide for 23
years.
SUSAN A. WOLKEN has been Senior Vice President - Product Management and
Nationwide Financial Marketing since May 1999. Previously, Ms. Wolken was Senior
Vice President - Life Company Operations from June 1997 to May 1999. She was
Senior Vice President - Enterprise Administration from July 1996 to June 1997.
Prior to that time, she was Senior Vice President - Human Resources from April
1995 to July 1996. From September 1993 to April 1995, Ms. Wolken was Vice
President - Human Resources. From October 1989 to September 1993 she was Vice
President - Individual Life and Health Operations. Ms. Wolken has been with
Nationwide for 25 years.
ROBERT J. WOODWARD, JR. has been Executive Vice President - Chief Investment
Officer since August 1995. Previously, he was Senior Vice President - Fixed
Income Investments from March 1991 to August 1995. Prior to that time, Mr.
Woodward held several positions within Nationwide. Mr. Woodward has been with
Nationwide for 35 years.
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APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investment
vehicles for variable annuity contracts and variable life insurance policies
issued by insurance companies.
There is no guarantee that the investment objectives will be met.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS.
American Century Variable Portfolios, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end investment management company
which offers its shares only as investment vehicles for variable annuity and
variable life insurance products of insurance companies. American Century
Variable Portfolios, Inc. is managed by American Century Investment Management,
Inc.
AMERICAN CENTURY VP INCOME & GROWTH
Investment Objective: Dividend growth, current income and capital
appreciation. The Fund seeks to achieve its investment objective by
investing in common stocks. The investment manager constructs the portfolio
to match the risk characteristics of the S&P 500 Stock Index and then
optimizes each portfolio to achieve the desired balance of risk and return
potential. This includes targeting a dividend yield that exceeds that of
the S&P 500. Such a management technique known as "portfolio optimization"
may cause the Fund to be more heavily invested in some industries than in
others. However, the Fund may not invest more than 25% of its total assets
in companies whose principal business activities are in the same industry.
AMERICAN CENTURY VP INTERNATIONAL
Investment Objective: To seek capital growth. The Fund will seek to achieve
its investment objective by investing primarily in securities of foreign
companies that meet certain fundamental and technical standards of
selection and, in the opinion of the investment manager, have potential for
appreciation. Under normal conditions, the Fund will invest at least 65% of
its assets in common stocks or other equity securities of issuers from at
least three countries outside the United States. While securities of United
States issuers may be included in the portfolio from time to time, it is
the primary intent of the manager to diversify investments across a broad
range of foreign issuers. Although the primary investment of the Fund will
be common stocks (defined to include depository receipts for common stock
and other equity equivalents), the Fund may also invest in other types of
securities consistent with the Fund's objective. When the manager believes
that the total capital growth potential of other securities equals or
exceeds the potential return of common stocks, the Fund may invest up to
35% of its assets in such other securities. There can be no assurance that
the Fund will achieve its objectives.
AMERICAN CENTURY VP VALUE
Investment Objective: The investment objective of the Fund is long-term
capital growth; income is a secondary objective. The equity securities in
which the Fund will invest will be primarily securities of well-established
companies with intermediate-to-large market capitalizations that are
believed by management to be undervalued at the time of purchase. Under
normal market conditions, the Fund expects to invest at least 80% of the
value of its total asset in equity securities, including common and
preferred stock, convertible preferred stock and convertible debt
obligations.
DREYFUS INVESTMENT PORTFOLIOS
Dreyfus Investment Portfolios (the "Fund") is an open-end, management investment
company known as a mutual fund. Shares are offered only to variable annuity and
variable life insurance separate accounts established by insurance companies to
fund variable annuity contracts and variable life insurance policies
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and to qualified pension and retirement plans. Individuals may not purchase
shares directly from the Fund. The Dreyfus Corporation serves as the Fund's
investment adviser.
EUROPEAN EQUITY PORTFOLIO
Investment Objective: The Portfolio seeks long-term capital growth. To
pursue this goal, the Portfolio generally invests at least 80% of its total
assets in stocks included within the universe of the 300 largest European
companies. The Portfolio may invest up to 10% of its total assets in the
stocks of non-European companies. The Portfolio's stock investments may
include common stocks, preferred stocks and convertible securities.
DREYFUS STOCK INDEX FUND, INC.
The Dreyfus Stock Index Fund, Inc. ("Fund") is an open-end, non-diversified,
management investment company incorporated under Maryland law on January 24,
1989 and commenced operations on September 29, 1989. The Fund offers its shares
only as investment vehicles for variable annuity and variable life insurance
products of insurance companies. The Dreyfus Corporation ("Dreyfus") serves as
the Fund's manager, while Mellon Equity Associates, an affiliate of Dreyfus,
serves as the Fund's index manager. Dreyfus is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation.
Investment Objective: To provide investment results that correspond to the
price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index. The Fund is neither sponsored by nor affiliated with Standard
& Poor's Corporation.
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus Variable Investment Fund ("Fund") is an open-end, management investment
company. It was organized as an unincorporated business trust under the laws of
the Commonwealth of Massachusetts on October 29, 1986 and commenced operations
on August 31, 1990. The Fund offers its shares only as investment vehicles for
variable annuity and variable life insurance products of insurance companies.
Dreyfus serves as the Fund's manager. Fayez Sarofim & Company serves as the
sub-adviser and provides day-to-day management of the portfolio.
APPRECIATION PORTFOLIO (FORMERLY, DREYFUS VARIABLE INVESTMENT FUND - CAPITAL
APPRECIATION PORTFOLIO)
Investment Objective: The Portfolio's primary investment objective is to provide
long-term capital growth consistent with the preservation of capital; current
income is a secondary investment objective. This Portfolio invests primarily in
the common stocks of domestic and foreign issuers.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
The Dreyfus Socially Responsible Growth Fund, Inc. is an open-end, diversified,
management investment company incorporated under Maryland law on July 20, 1992
and commenced operations on October 7, 1993. The Fund offers its share only as
investment vehicles for variable annuity and variable life insurance products of
insurance companies. Dreyfus serves as the Fund's investment adviser. NCM
Capital Management Group, Inc. serves as the Fund's sub-investment adviser and
provides day-to-day management of the Fund's portfolio.
Investment Objective: Capital growth through equity investment in companies
that, in the opinion of the Fund's advisers, not only meet traditional
investment standards, but which also show evidence that they conduct their
business in a manner that contributes to the enhancement of the quality of
life in America. Current income is secondary to the primary goal.
FEDERATED INSURANCE SERIES
Federated Insurance Series (the "Trust"), an Open-End Management Investment
Company, was established as a Massachusetts business trust, under a Declaration
of Trust dated September 15, 1993. The Trust offers its shares only as
investment vehicles for variable annuity
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and variable life insurance products of insurance companies. Federated
Investment Management Company serves as the investment adviser.
FEDERATED QUALITY BOND FUND II
Investment Objective: Current income by investing in investment grade
fixed income securities.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
The Fidelity Variable Insurance Products Fund (VIP) is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
November 13, 1981. Shares of VIP are purchased by insurance companies to fund
benefits under variable life insurance policies and variable annuity contracts.
Fidelity Management & Research Company ("FMR") is the manager for VIP and its
portfolios.
VIP EQUITY-INCOME PORTFOLIO: SERVICE CLASS
Investment Objective: Reasonable income by investing primarily in
income-producing equity securities. In choosing these securities FMR also
will consider the potential for capital appreciation. The Portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's 500 Composite Stock Price Index.
VIP GROWTH PORTFOLIO: SERVICE CLASS
Investment Objective: Capital appreciation. This Portfolio will invest in
the securities of both well-known and established companies, and smaller,
less well-known companies which may have a narrow product line or whose
securities are thinly traded. These latter securities will often involve
greater risk than may be found in the ordinary investment security. FMR's
analysis and expertise plays an integral role in the selection of
securities and, therefore, the performance of the Portfolio. Many
securities which FMR believes would have the greatest potential may be
regarded as speculative, and investment in the Portfolio may involve
greater risk than is inherent in other underlying mutual funds. It is also
important to point out that this Portfolio makes sense for you if you can
afford to ride out changes in the stock market because it invests primarily
in common stocks. FMR can also make temporary investments in securities
such as investment-grade bonds, high-quality preferred stocks and
short-term notes, for defensive purposes when it believes market conditions
warrant.
VIP HIGH INCOME PORTFOLIO: SERVICE CLASS
Investment Objective: High level of current income by investing primarily
in high-risk, lower-rated, high-yielding, fixed-income securities, while
also considering growth of capital. FMR will seek high current income
normally by investing the Portfolio's assets as follows:
- at least 65% in income-producing debt securities and preferred
stocks, including convertible securities; and
- up to 20% in common stocks and other equity securities when
consistent with the Portfolio's primary objective or acquired as
part of a unit combining fixed-income and equity securities
Higher yields are usually available on securities that are lower-rated or
that are unrated. Lower-rated securities are usually defined as Ba or lower
by Moody's Investor Service, Inc. ("Moody's"); BB or lower by Standard &
Poor's and may be deemed to be of a speculative nature. The Portfolio may
also purchase lower-quality bonds such as those rated Ca3 by Moody's or C-
by Standard & Poor's which provide poor protection for payment of principal
and interest (commonly referred to as "junk bonds"). For a further
discussion of lower-rated securities, please see the "Risks of Lower-Rated
Debt Securities" section of the Portfolio's prospectus.
VIP OVERSEAS PORTFOLIO: SERVICE CLASS
Investment Objective: Long-term capital growth primarily through
investments in foreign securities. This Portfolio provides a
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means for investors to diversify their own portfolios by participating in
companies and economies outside the United States.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
The Fidelity Variable Insurance Products Fund II (VIP II) is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on March 21, 1988. VIP II's shares are purchased by insurance companies to
fund benefits under variable life insurance policies and variable annuity
contracts. FMR is the manager of VIP II and its portfolios.
VIP II CONTRAFUND PORTFOLIO: SERVICE CLASS
Investment Objective: To seek capital appreciation by investing primarily
in companies that FMR believes to be undervalued due to an overly
pessimistic appraisal by the public. This strategy can lead to investments
in domestic or foreign companies, small and large, many of which may not be
well known. The Portfolio primarily invests in common stock and securities
convertible into common stock, but it has the flexibility to invest in any
type of security that may produce capital appreciation.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
The Fidelity Variable Insurance Products Fund III (VIP III) is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on July 14, 1994. VIP III's shares are purchased by insurance companies to
fund benefits under variable life insurance policies and variable annuity
contracts. FMR is the manager of VIP III and it's portfolios.
VIP III GROWTH OPPORTUNITIES PORTFOLIO: SERVICE CLASS
Investment Objective: Capital growth by investing primarily in common
stocks and securities convertible into common stocks. The Portfolio, under
normal conditions, will invest at least 65% of its total assets in
securities of companies that FMR believes have long-term growth potential.
Although the Portfolio invests primarily in common stock and securities
convertible into common stock, it has the ability to purchase other
securities, such as preferred stock and bonds that may produce capital
growth. The Portfolio may invest in foreign securities without limitation.
JANUS ASPEN SERIES
The Janus Aspen Series is an open-end management investment company whose shares
are offered in connection with investment in and payments under variable annuity
contracts and variable life insurance policies, as well as certain qualified
retirement plans. Janus Capital Corporation serves as investment adviser to each
Portfolio.
CAPITAL APPRECIATION PORTFOLIO: SERVICE SHARES
Investment Objective: Seeks long-term growth of capital by investing
primarily in common stocks selected for their growth potential. The
Portfolio may invest in companies of any size, from larger,
well-established companies to smaller, emerging growth companies.
GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES
Investment Objective: Seeks long-term growth of capital by investing
primarily in equity securities of U.S. and foreign companies selected for
their growth potential. Under normal circumstances, the Portfolio invests
at least 65% of its total assets in securities of companies that the
Portfolio manager believes will benefit significantly from advances or
improvements in technology.
INTERNATIONAL GROWTH PORTFOLIO: SERVICE SHARES
Investment Objective: Seeks long-term growth of capital by investing at
least 65% of its total assets in securities of issuers from at least five
different countries, excluding the United States. Although the Portfolio
intends to invest substantially all of its assets in issuers located
outside the
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United States, it may invest in U.S. issuers and it may at times invest
all of its assets in fewer than five countries, or even a single country.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end management
investment company created under the laws of Massachusetts. NSAT offers shares
in the mutual funds listed below, each with its own investment objectives.
Shares of NSAT will be sold primarily to separate accounts to fund the benefits
under variable life insurance policies and variable annuity contracts issued by
life insurance companies. The assets of NSAT are managed by Villanova Mutual
Fund Capital Trust ("VMF"), an indirect subsidiary of Nationwide Financial
Services, Inc.
CAPITAL APPRECIATION FUND
Investment Objective: Long-term capital appreciation.
GOVERNMENT BOND FUND
Investment Objective: As high a level of income as is consistent with the
preservation of capital by investing in a diversified portfolio of
securities issued or backed by the U.S. Government, its agencies or
instrumentalities.
MONEY MARKET FUND
Investment Objective: As high a level of current income as is considered
consistent with the preservation of capital and maintenance of liquidity.
TOTAL RETURN FUND
Investment Objective: To obtain a reasonable, long-term total return on
invested capital.
SUB-ADVISED NATIONWIDE FUNDS
NATIONWIDE BALANCED FUND
Subadviser: J.P. Morgan Investment Management, Inc.
Investment Objective: Primarily seeks above-average income compared to a
portfolio entirely invested in equity securities. The Fund's secondary
objective is to take advantage of opportunities for growth of capital and
income. The Fund seeks its objective primarily through investments in a
broad variety of securities, including equity securities, fixed-income
securities and short term obligations. Under normal market conditions, it
is anticipated that the Fund will invest at least 40% of the Fund's total
assets in equity securities and at least 25% in fixed-income senior
securities. The Fund's subadviser will have discretion to invest in the
full range of maturities of fixed-income securities. Generally, most of
the Fund's long-term debt investments will consist of "investment grade"
securities, but the Fund may invest up to 20% of its net assets in
non-convertible fixed-income securities rated below investment grade or
determined by the subadviser to be of comparable quality. These
securities are commonly known as junk bonds. In addition, the Fund may
invest an unlimited amount in convertible securities rated below
investment grade.
NATIONWIDE EQUITY INCOME FUND
Subadviser: Federated Investment Counseling
Investment Objective: Seeks above average income and capital appreciation
by investing at least 65% of its assets in income-producing equity
securities. Such equity securities include common stocks, preferred
stocks, and securities (including debt securities) that are convertible
into common stocks. The portion of the Fund's total assets invested in
each type of equity security will vary according to the Fund's
subadviser's assessment of market, economic conditions and outlook.
NATIONWIDE GLOBAL 50 FUND (FORMERLY, NATIONWIDE GLOBAL EQUITY FUND)
Subadviser: J. P. Morgan Investment Management Inc.
Investment Objective: To provide high total return from a globally
diversified portfolio of equity securities. Total return
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<PAGE> 55
will consist of income plus realized and unrealized capital gains and
losses. The Fund seeks its investment objective through country
allocation, stock selection and management of currency exposure. Under
normal market conditions, J.P. Morgan Investment Management Inc., intends
to keep the Fund essentially fully invested with at least 65% of the
value of its total assets in equity securities consisting of common
stocks and other securities with equity characteristics such as preferred
stocks, warrants, rights, convertible securities, trust certificates,
limited partnership interests and equity participations. The Fund's
primary equity instruments are the common stock of companies based in the
developed countries around the world. The assets of the Fund will
ordinarily be invested in the securities of at least five different
countries.
NATIONWIDE HIGH INCOME BOND FUND
Subadviser: Federated Investment Counseling
Investment Objective: Seeks to provide high current income by investing
primarily in a professionally managed, diversified portfolio of fixed
income securities. To meet its objective, the Fund intends to invest at
least 65% of its assets in lower-rated fixed income securities such as
preferred stocks, bonds, debentures, notes, equipment lease certificates
and equipment trust certificates which are rated BBB or lower by Standard
& Poor's or Fitch Investors Service or Baa or lower by Moody's (or if not
rated, are determined by the Fund's subadviser to be of a comparable
quality). Such investments are commonly referred to as "junk bonds." For
a further discussion of lower-rated securities, please see the "High
Yield Securities" section of the Fund's prospectus.
NATIONWIDE MID CAP INDEX FUND (FORMERLY NATIONWIDE SELECT ADVISERS MID
CAP FUND)
Subadviser: The Dreyfus Corporation
Investment Objective: Capital appreciation. The Fund seeks to match the
performance of the Standard & Poor's MidCap 400 Index. To pursue this
goal, the Fund generally is fully invested in all 400 stocks included in
this index in proportion to their weighting in the index, and in futures
whose performance is tied to the index. The Fund is neither sponsored by
nor affiliated with Standard & Poor's Corporation.
NATIONWIDE MULTI SECTOR BOND FUND
Subadviser: Miller, Anderson & Sherrerd, LLP
Investment Objective: Primarily seeks a high level of current income.
Capital appreciation is a secondary objective. The Fund seeks to achieve
its objectives by investing in a globally diverse portfolio of
fixed-income investments and by giving the subadviser broad discretion to
deploy the Fund's assets among certain segments of the fixed-income
market that the subadviser believes will best contribute to achievement
of the Fund's investment objectives. The Fund reserves the right to
invest predominantly in securities rated in medium or lower categories,
or as determined by the subadviser to be of comparable quality, commonly
referred to as "junk bonds." Although the subadviser has the ability to
invest up to 100% of the Fund's assets in lower-rated securities, the
subadviser does not anticipate investing in excess of 75% of the Fund's
assets in such securities.
NATIONWIDE SMALL CAP GROWTH FUND (FORMERLY, NATIONWIDE SELECT ADVISERS
SMALL CAP GROWTH FUND)
Subadvisers: Franklin Advisers, Inc., Miller Anderson & Sherrerd, LLP,
Neuberger Berman, LLC.
Investment Objective: Seeks capital growth by investing in a broadly
47
<PAGE> 56
diversified portfolio of equity securities issued by U.S. and foreign
companies with market capitalizations in the range of companies
represented by the Russell 2000, known as small cap companies. Under
normal market conditions, the Fund will invest at least 65% of its total
assets in the equity securities of small cap companies. The balance of
the Fund's assets may be invested in equity securities of larger cap
companies. The Fund may also invest in foreign securities.
NATIONWIDE SMALL CAP VALUE FUND
Subadviser: The Dreyfus Corporation
Investment Objective: The Fund intends to pursue its investment objective
by investing, under normal market conditions, at least 75% of the Fund's
total assets in equity securities of companies whose equity market
capitalizations at the time of investment are similar to the market
capitalizations of companies in the Russell 2000 Small Stock Index.
NATIONWIDE SMALL COMPANY FUND
Subadvisers: The Dreyfus Corporation, Neuberger Berman, LLC, Lazard Asset
Management and Strong Capital Management, Inc.
Investment Objective: Under normal market conditions, the Fund will
invest at least 65% of its total assets in equity securities of companies
whose equity market capitalizations at the time of investment are similar
to the market capitalizations of companies in the Russell 2000 Small
Stock Index.
NATIONWIDE STRATEGIC GROWTH FUND
Subadviser: Strong Capital Management Inc.
Investment Objective: Capital growth by investing primarily in equity
securities that the Fund's subadviser believes have above-average growth
prospects. The Fund will generally invest in companies whose earnings are
believed to be in a relatively strong growth trend, and to a lesser
extent, in companies in which significant further growth is not
anticipated but whose market value is thought to be undervalued. Under
normal market conditions, the Fund will invest at least 65% of its total
assets in equity securities, including common stocks, preferred stocks,
and securities convertible into common or preferred stocks, such as
warrants and convertible bonds. The Fund may invest up to 35% of its
total assets in debt obligations, including intermediate- to long-term
corporate or U.S. Government debt securities.
NATIONWIDE STRATEGIC VALUE FUND (NOT AVAILABLE FOR POLICIES ISSUED ON OR
AFTER MAY 1, 2000)
Subadviser: Strong Capital Management Inc./Schafer Capital Management
Inc.
Investment Objective: Primarily long-term capital appreciation; current
income is a secondary objective. The Fund seeks to meet its objectives by
investing in securities which are believed to offer the possibility of
increase in value, primarily common stocks of established companies
having a strong financial position and a low stock market valuation at
the time of purchase in relation to investment value. Other than
considered appropriate for cash reserves, the Fund will generally
maintain a fully invested position in common stocks of publicly held
companies, primarily in stocks of companies listed on a national
securities exchange or other equity securities (common stock or
securities convertible into common stock). Investments may also be made
in debt securities which are convertible into common stocks and in
warrants or other rights to purchase common stock, which in such case are
considered equity securities by the Fund. Strong Capital Management, Inc.
has subcontracted with Schafer Capital Management, Inc. to subadvise the
Fund.
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<PAGE> 57
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Neuberger Berman Advisers Management Trust ("NB AMT") is an open-end,
diversified management investment company consisting of several series. Shares
of the series of NB AMT are offered in connection with certain variable annuity
contracts and variable life insurance policies issued through life insurance
company separate accounts and are also offered directly to qualified pension and
retirement plans outside of the separate account context.
The Guardian, Partners and Mid-Cap Growth Portfolios of NB AMT invest all of
their investable assets in a corresponding series of Advisers Managers Trust
managed by Neuberger Berman Management Incorporated ("NB Management"). Each
series then invests in securities in accordance with an investment objective,
policies and limitations identical to those of the Portfolio. This
"master/feeder fund" structure is different from that of many other investment
companies which directly acquire and manage their own portfolios of securities.
(For more information regarding "master/feeder fund" structure, see "Special
Information Regarding Organization, Capitalization, and Other Matters" in the
underlying mutual fund prospectus.) The investment advisor is NB Management.
AMT GUARDIAN PORTFOLIO
Investment Objective: Capital appreciation and secondarily, current income.
The Portfolio and its corresponding series seek to achieve these objectives
by investing in common stocks of long-established, high-quality companies.
NB Management uses a value-oriented investment approach in selecting
securities, looking for low price-to-earnings ratios, strong balance
sheets, solid management, and consistent earnings.
AMT MID-CAP GROWTH PORTFOLIO
Investment Objective: Capital appreciation by investing in equity
securities of medium-sized companies that NB Management believes have the
potential for long-term, above-average capital appreciation. Medium-sized
companies have market capitalizations form $300 million to $10 billion at
the time of investment. The Portfolio and its corresponding series may
invest up to 10% of its net assets, measured at the time of investment, in
corporate debt securities that are below investment grade or, if unrated,
deemed by NB Management to be of comparable quality. Securities that are
below investment grade, as well as unrated securities, are often considered
to be speculative and usually entail greater risk. As a part of the
Portfolio's investment strategy, the Portfolio may invest up to 20% of its
net assets in securities of issuers organized and doing business
principally outside the United States. This limitation does not apply with
respect to foreign securities that are denominated in U.S. dollars.
AMT PARTNERS PORTFOLIO
Investment Objective: Capital growth by investing primarily in the common
stock of established companies. Its investment program seeks securities
believed to be undervalued based on fundamentals such as low
price-to-earnings ratios, consistent cash flows, and the company's track
record through all parts of the market cycle.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
The Oppenheimer Variable Account Funds are an open-end, diversified management
investment company organized as a Massachusetts business trust in 1984. Shares
of the Funds are sold to provide benefits under variable life insurance policies
and variable annuity contracts. OppenheimerFunds, Inc. is the investment
adviser.
OPPENHEIMER AGGRESSIVE GROWTH FUND/VA (FORMERLY "OPPENHEIMER CAPITAL
APPRECIATION FUND")
Investment Objective: Capital appreciation by investing in "growth type"
companies. Such companies are believed to have relatively favorable
long-term prospects for increasing demand for their goods or
49
<PAGE> 58
services, or to be developing new products, services or markets and
normally retain a relatively larger portion of their earnings for research,
development and investment in capital assets. The Fund may also invest in
cyclical industries in "special situations" that OppenheimerFunds, Inc.
believes present opportunities for capital growth.
OPPENHEIMER CAPITAL APPRECIATION FUND/VA (FORMERLY "OPPENHEIMER GROWTH
FUND")
Investment Objective: Capital appreciation by investing in securities of
well-known established companies. Such securities generally have a history
of earnings and dividends and are issued by seasoned companies (companies
which have an operating history of at least five years including
predecessors). Current income is a secondary consideration in the selection
of the Fund's portfolio securities.
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Investment Objective: To seek long-term capital appreciation by investing a
substantial portion of assets in securities of foreign issuers,
"growth-type" companies, cyclical industries and special appreciation
possibilities. These securities may be considered speculative.
OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA (FORMERLY "OPPENHEIMER
GROWTH & INCOME FUND")
Investment Objective: High total return, which stocks, preferred stocks,
convertible securities and warrants. Debt investments will include bonds,
participation includes growth in the value of its shares as well as current
income from quality and debt securities. In seeking its investment
objectives, the Fund may invest in equity and debt securities. Equity
investments will include common interests, asset-backed securities,
private-label mortgage-backed securities and CMOs, zero coupon securities
and U.S. debt obligations, and cash and cash equivalents. From time to
time, the Fund may focus on small to medium capitalization issuers, the
securities of which may be subject to greater price volatility than those
of larger capitalized issuers.
STRONG OPPORTUNITY FUND II, INC.
The Strong Opportunity Fund II, Inc. is a diversified, open-end management
company commonly called a mutual fund. The Strong Opportunity Fund II, Inc. was
incorporated in Wisconsin and may only be purchased by the separate accounts of
insurance companies for the purpose of funding variable annuity contracts and
variable life insurance policies. Strong Capital Management Inc. is the
investment adviser for the Fund.
Investment Objective: To seek capital appreciation through investment in a
diversified portfolio of equity securities.
UNIVERSAL INSTITUTIONAL FUNDS, INC. (FORMERLY, MORGAN STANLEY DEAN WITTER
UNIVERSAL FUNDS, INC.)
The Universal Institutional Funds, Inc. is a mutual fund designed to provide
investment vehicles for variable annuity contracts and variable life insurance
policies and for certain tax-qualified investors. Its Emerging Markets Debt
Portfolio is managed by Morgan Stanley Dean Witter Investment Management, Inc.
EMERGING MARKETS DEBT PORTFOLIO
Investment Objective: High total return by investing primarily in dollar
and non-dollar denominated fixed income securities of government and
government-related issuers located in emerging market countries, which
securities provide a high level of current income, while at the same time
holding the potential for capital appreciation if the perceived
creditworthiness of the issuer improves due to improving economic,
financial, political, social or other conditions in the country in which
the issuer is located.
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<PAGE> 59
MID CAP GROWTH PORTFOLIO
Investment Objective: Long-term capital growth by investing primarily in
common stocks and other equity securities of issuers with equity
capitalizations in the range of the companies represented in the Standard &
Poor's Rating Group ("S&P") MidCap 400 Index. Such range is generally $500
million to $6 billion but the range fluctuates over time with changes in
the equity market. Miller Anderson & Sherrerd, LLP is the Portfolio's
investment adviser.
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Worldwide Insurance Trust ("Van Eck Trust") is an open-end management
investment company organized as a business trust under the laws of the
Commonwealth of Massachusetts on January 7, 1987. Shares of Van Eck Trust are
offered only to separate accounts of insurance companies to fund the benefits of
variable life insurance policies and variable annuity contracts. The investment
advisor and manager is Van Eck Associates Corporation.
WORLDWIDE EMERGING MARKETS FUND
Investment Objective: Seeks long-term capital appreciation by investing
primarily in equity securities in emerging markets around the world. The
Fund emphasizes investment in countries that, compared to the world's major
economies, exhibit relatively low gross national product per capita, as
well as the potential for rapid economic growth.
WORLDWIDE HARD ASSETS FUND
Investment Objective: Long-term capital appreciation by investing primarily
in "Hard Asset Securities." For the Fund's purpose, "Hard Assets" are real
estate, energy, timber, and industrial and precious metals. Income is a
secondary consideration.
VAN KAMPEN LIFE INVESTMENT TRUST
Van Kampen Life Investment Trust is an open-end diversified management
investment company organized as a Delaware business trust. Shares are offered in
separate portfolios which are sold only to insurance companies to provide
funding for variable life insurance policies and variable annuity contracts. Van
Kampen Asset Management, Inc. serves as the Fund's investment adviser.
MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO
Investment Objective: Long-term capital growth by investing principally in
a diversified portfolio of securities of companies operating in the real
estate industry ("Real Estate Securities"). Current income is a secondary
consideration. Real Estate Securities include equity securities, including
common stocks and convertible securities, as well as non-convertible
preferred stocks and debt securities of real estate industry companies. A
"real estate industry company" is a company that derives at least 50% of
its assets (marked to market), gross income or net profits from the
ownership, construction, management or sale of residential, commercial or
industrial real estate. Under normal market conditions, at least 65% of the
Fund's total assets will be invested in Real Estate Securities, primarily
equity securities of real estate investment trusts. The Portfolio may
invest up to 25% of its total assets in securities issued by foreign
issuers, some or all of which may also be Real Estate Securities.
WARBURG PINCUS TRUST
The Warburg Pincus Trust is an open-end management investment company organized
in March 1995 as a business trust under the laws of The Commonwealth of
Massachusetts. The Trust offers its shares to insurance companies for allocation
to separate accounts for the purpose of funding variable annuity and variable
life contracts. The Portfolios are managed by Credit Suisse Asset Management,
LLC ("Credit Suisse").
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GLOBAL POST-VENTURE CAPITAL PORTFOLIO (FORMERLY, POST-VENTURE CAPITAL
PORTFOLIO) (NOT AVAILABLE FOR POLICIES ISSUED ON OR AFTER SEPTEMBER 27,
1999)
Investment Objective: Seeks long-term growth of capital by investing
primarily in equity securities of U.S. and foreign companies considered to
be in their post-venture capital stage of development. Under normal market
conditions, the Portfolio will invest at least 65% of its total assets in
equity securities of "post-venture capital companies." A post-venture
capital company is one that has received venture capital financing either:
(a) during the early stages of the company's existence or the early stages
of the development of a new product or service; or (b) as part of a
restructuring or recapitalization of the company. The Portfolio will invest
in at least three countries including the United States.
INTERNATIONAL EQUITY PORTFOLIO (NOT AVAILABLE FOR POLICIES ISSUED ON OR
AFTER SEPTEMBER 27, 1999)
Investment Objective: Long-term capital appreciation by investing primarily
in a broadly diversified portfolio of equity securities of companies,
wherever organized, that in the judgment of Credit Susisse have their
principal business activities and interests outside the United States. The
Portfolio will ordinarily invest substantially all of its assets, but no
less than 65% of its total assets, in common stocks, warrants and
securities convertible into or exchangeable for common stocks. The
Portfolio intends to invest principally in the securities of financially
strong companies with opportunities for growth within growing international
economies and markets through increased earning power and improved
utilization or recognition of assets.
VALUE PORTFOLIO (FORMERLY, GROWTH & INCOME PORTFOLIO) (NOT AVAILABLE FOR
POLICIES ISSUED ON OR AFTER MAY 1, 2000)
Investment Objective: Seeks total return by investing primarily in equity
securities of value companies that may or may not pay dividends.
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APPENDIX B: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES,
AND DEATH BENEFITS
The illustrations in this prospectus have been prepared to help show how values
under the policies change with investment performance. The illustrations
illustrate how cash values, cash surrender values and death benefits under a
policy would vary over time if the hypothetical gross investment rates of return
were a uniform annual effective rate of either 0%, 6% or 12%. If the
hypothetical gross investment rate of return averages 0%, 6% or 12% over a
period of years, but fluctuates above or below those averages for individual
years, the cash values, cash surrender values and death benefits may be
different. For hypothetical returns of 0% and 6%, the illustrations also
illustrate when the policies would go into default, at which time additional
premium payments would be required to continue the policy in force. The
illustrations also assume there is no policy indebtedness, no additional premium
payments are made, no cash values are allocated to the fixed account, and there
are no changes in the specified amount or death benefit option.
The amounts shown for the cash value, cash surrender value and death benefit as
of each policy anniversary reflect the fact that the net investment return on
the assets held in the sub-accounts is lower than the gross return. This is due
to the daily charges made against the assets of the sub-accounts for assuming
mortality and expense risks. Beginning in the fourth policy year, cash surrender
value equals cash value less indebtedness, or other deductions. In policy years
one, two and three only, cash surrender value equals cash value less
indebtedness or other deductions increased by 3.5%, 5.5% and 4.0%, respectively,
of the current premium. The guaranteed mortality and expense risk charges for
policy years one through four are equivalent to an annual effective rate of
0.75% of the daily net assets of the variable account. The current mortality and
expense risk charges for policy years one through four are equivalent to an
annual effective rate of 0.40% of the daily net assets of the variable account.
The current mortality and expense risk charges for policy years five through
twenty are equivalent to an annual effective rate of 0.25% of the daily net
assets of the variable account. The current mortality and expense risk charges
for policy years twenty-one and beyond are equivalent to an annual effective
rate of 0.10% of the daily net assets of the variable account. In addition, the
net investment returns also reflect the deduction of underlying mutual fund
investment advisory fees and other expenses which are equivalent to an annual
effective rate of 0.94% of the daily net assets of the variable account. This
effective rate is based on the average of the fund expenses, after expense
reimbursement, for all underlying mutual fund options available under the policy
as of December 31, 1999. Some underlying mutual funds are subject to expense
reimbursements and fee waivers. Absent expense reimbursements and fee waivers,
the annual effective rate would have been 1.02%. Nationwide anticipates that the
expense reimbursement and fee waiver arrangements will continue past the current
year. Should there be an increase or decrease in the expense reimbursements and
fee waivers of these underlying mutual funds, such change will be reflected in
the net asset value of the corresponding underlying mutual fund.
Considering current charges for mortality and expense risks and underlying
mutual fund expenses, gross annual rates of return of 0%, 6% and 12% correspond
to net investment experience at constant annual rates of -1.30%, 4.70% and
10.70% for policy years one through four, and rates of -1.15%, 4.85% and 10.85%
for policy years five through twenty, and rates of -1.00%, 5.00% and 11.00% for
policy years twenty-one and beyond. Considering guaranteed charges for mortality
and expense risks and underlying mutual fund expenses, gross annual rates of
return of 0%, 6% and 12% correspond to net investment experience at constant
annual rates of -1.65%, 4.35% and 10.35% for all policy years.
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<PAGE> 62
The illustrations also reflect the fact that Nationwide makes monthly charges
for providing insurance protection. Current values reflect current cost of
insurance charges and guaranteed values reflect the maximum cost of insurance
charges guaranteed in the policy. The values shown are for policies which are
issued as standard. Policies issued on a substandard basis would result in lower
cash values and death benefits than those illustrated.
The illustrations also reflect the fact that Nationwide deducts a sales load
from each premium payment received guaranteed not to exceed 5.5% of each premium
payment for the first seven policy years and 2% thereafter. On a current basis,
the sales load is 3.0% of premium payments plus 2.5% of premiums up to the
target premium during the first seven policy years, and 0% of all premiums
thereafter. Nationwide also deducts a tax expense charge of 3.5%, both current
and guaranteed, from all premium payments. The illustrations also reflect the
fact that Nationwide deducts a charge for state premium taxes at a rate of 2.25%
and for federal tax at a rate of 1.25% (imposed under Section 848 of the
Internal Revenue Code) of all premium payments.
In addition, the illustrations reflect the fact that Nationwide deducts a
monthly administrative charge at the beginning of each policy month. This
monthly administrative expense charge is currently $5.00 per month and
guaranteed not to exceed $10.00. The illustrations also reflect the fact that no
charges for federal or state income taxes are currently made against the
variable account. If such a charge is made in the future, it will require a
higher gross investment return than illustrated in order to produce the net
after-tax returns shown in the illustrations.
Upon request, Nationwide will furnish a comparable illustration based on the
proposed insured's age, smoking classification, rating classification and
premium payment requested.
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$100,000 ANNUAL PREMIUM FOR 7 YEARS $1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: REGULAR ISSUE / NON TOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 1
CURRENT VALUES
<TABLE>
<CAPTION>
PREMIUMS 0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
PLUS
POLICY INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 105,000 87,973 91,473 1,703,050 93,358 96,858 1,703,050 98,745 102,245 1,703,050
2 215,250 174,541 180,041 1,703,050 190,783 196,283 1,703,050 207,670 213,170 1,703,050
3 331,013 260,057 264,057 1,703,050 292,828 296,828 1,703,050 328,245 332,245 1,703,050
4 452,563 344,488 344,488 1,703,050 399,678 399,678 1,703,050 461,696 461,696 1,703,050
5 580,191 428,425 428,425 1,703,050 512,284 512,284 1,703,050 610,298 610,298 1,703,050
6 714,201 511,353 511,353 1,703,050 630,358 630,358 1,703,050 774,770 774,770 1,887,649
7 854,911 593,340 593,340 1,703,050 754,109 754,109 1,784,147 955,930 955,930 2,261,636
8 897,656 582,320 582,320 1,703,050 786,308 786,308 1,807,093 1,053,187 1,053,187 2,420,434
9 942,539 571,033 571,033 1,703,050 819,770 819,770 1,830,792 1,160,182 1,160,182 2,591,035
10 989,666 559,430 559,430 1,703,050 854,523 854,523 1,855,341 1,277,853 1,277,853 2,774,475
11 1,039,150 547,500 547,500 1,703,050 890,636 890,636 1,880,844 1,407,280 1,407,280 2,971,893
12 1,091,107 535,197 535,197 1,703,050 928,148 928,148 1,907,343 1,549,606 1,549,606 3,184,440
13 1,145,662 522,503 522,503 1,703,050 967,129 967,129 1,934,838 1,706,133 1,706,133 3,413,290
14 1,202,945 509,372 509,372 1,703,050 1,007,632 1,007,632 1,963,270 1,878,257 1,878,257 3,659,597
15 1,263,093 495,616 495,616 1,703,050 1,049,602 1,049,602 1,992,459 2,067,297 2,067,297 3,924,349
16 1,326,247 481,136 481,136 1,703,050 1,093,062 1,093,062 2,022,493 2,274,827 2,274,827 4,209,112
17 1,392,560 465,814 465,814 1,703,050 1,138,032 1,138,032 2,053,237 2,502,553 2,502,553 4,515,106
18 1,462,188 449,480 449,480 1,703,050 1,184,501 1,184,501 2,084,840 2,752,261 2,752,261 4,844,255
19 1,535,297 431,953 431,953 1,703,050 1,232,460 1,232,460 2,117,489 3,025,885 3,025,885 5,198,773
20 1,612,062 413,057 413,057 1,703,050 1,281,920 1,281,920 2,150,933 3,325,569 3,325,569 5,579,972
21 1,692,665 394,774 394,774 1,703,050 1,335,923 1,335,923 2,190,513 3,661,946 3,661,946 6,004,493
22 1,777,298 376,474 376,474 1,703,050 1,392,759 1,392,759 2,233,011 4,033,961 4,033,961 6,467,649
23 1,866,163 357,031 357,031 1,703,050 1,451,872 1,451,872 2,277,406 4,443,333 4,443,333 6,969,812
24 1,959,471 335,925 335,925 1,703,050 1,513,115 1,513,115 2,323,237 4,893,023 4,893,023 7,512,748
25 2,057,445 312,946 312,946 1,703,050 1,576,553 1,576,553 2,370,504 5,386,893 5,386,893 8,099,733
26 2,160,317 287,835 287,835 1,703,050 1,642,238 1,642,238 2,419,509 5,929,122 5,929,122 8,735,375
27 2,268,333 260,345 260,345 1,703,050 1,710,256 1,710,256 2,470,123 6,524,388 6,524,388 9,423,173
28 2,381,750 230,158 230,158 1,703,050 1,780,670 1,780,670 2,523,032 7,177,712 7,177,712 10,170,100
29 2,500,837 196,875 196,875 1,703,050 1,853,532 1,853,532 2,578,078 7,894,532 7,894,532 10,980,504
30 2,625,879 160,022 160,022 1,703,050 1,928,876 1,928,876 2,636,002 8,680,686 8,680,686 11,863,025
</TABLE>
(1) No policy loans and no partial withdrawals have been made.
(2) Current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values reflect a
premium charge of 9% of target premium and 6.5% of excess-of-target
premium for the first seven years and 3.5% of all premium from eighth year
and on.
(3) Net investment returns are calculated as the hypothetical gross investment
return less all charges and deductions shown in the prospectus appendix.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors, including the
investment allocations made by an owner, prevailing rates and rates of
inflation. The death benefit and cash value for a policy would be different from
those shown if the actual rates of return averaged 0%, 6%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by Nationwide or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
55
<PAGE> 64
$100,000 ANNUAL PREMIUM FOR 7 YEARS $1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: REGULAR ISSUE / NON TOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 1
GUARANTEED VALUES
<TABLE>
<CAPTION>
PREMIUMS 0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
PLUS
POLICY INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 105,000 81,804 85,304 1,703,050 86,939 90,439 1,703,050 92,079 95,579 1,703,050
2 215,250 162,060 167,560 1,703,050 177,411 182,911 1,703,050 193,381 198.881 1,703,050
3 331,013 240,818 244,818 1,703,050 271,628 275,628 1,703,050 304,952 308,952 1,703,050
4 452,563 318,117 318,117 1,703,050 369,810 369,810 1,703,050 427,954 427,954 1,703,050
5 580,191 393,976 393,976 1,703,050 472,176 472,176 1,703,050 563,678 563,678 1,703,050
6 714,201 468,422 468,422 1,703,050 578,979 578,979 1,703,050 713,577 713,577 1,738,559
7 854,911 541,443 541,443 1,703,050 690,462 690,462 1,703,050 877,092 877,092 2,075,111
8 897,656 522,801 522,801 1,703,050 711,259 711,259 1,703,050 955,774 955,774 2,196,559
9 942,539 503,355 503,355 1,703,050 732,313 732,313 1,703,050 1,041,054 1,041,054 2,324,986
10 989,666 482,981 482,981 1,703,050 753,591 753,591 1,703,050 1,133,421 1,133,421 2,460,884
11 1,039,150 461,562 461,562 1,703,050 775,077 775,077 1,703,050 1,233,415 1,233,415 2,604,726
12 1,091,107 438,986 438,986 1,703,050 796,765 796,765 1,703,050 1,341,636 1,341,636 2,757,063
13 1,145,662 415,134 415,134 1,703,050 818,655 818,655 1,703,050 1,458,738 1,458,738 2,918,351
14 1,202,945 389,865 389,865 1,703,050 840,742 840,742 1,703,050 1,585,421 1,585,421 3,089,034
15 1,263,093 362,988 362,988 1,703,050 863,001 863,001 1,703,050 1,722,402 1,722,402 3,269,635
16 1,326,247 334,244 334,244 1,703,050 885,376 885,376 1,703,050 1,870,394 1,870,394 3,460,790
17 1,392,560 303,295 303,295 1,703,050 907,785 907,785 1,703,050 2,030,107 2,030,107 3,662,719
18 1,462,188 269,748 269,748 1,703,050 930,136 930,136 1,703,050 2,202,267 2,202,267 3,876,209
19 1,535,297 233,157 233,157 1,703,050 952,337 952,337 1,703,050 2,387,626 2,387,626 4,102,180
20 1,612,062 193,032 193,032 1,703,050 974,303 974,303 1,703,050 2,587,009 2,587,009 4,340,743
21 1,692,665 148,890 148,890 1,703,050 995,985 995,985 1,703,050 2,801,365 2,801,365 4,593,398
22 1,777,298 100,208 100,208 1,703,050 1,017,350 1,017,350 1,703,050 3,031,751 3,031,751 4,860,806
23 1,866,163 46,413 46,413 1,703,050 1,038,375 1,038,375 1,703,050 3,279,349 3,279,349 5,143,987
24 1,959,471 0 0 0 1,059,009 1,059,009 1,703,050 3,545,373 3,545,373 5,443,566
25 2,057,445 0 0 0 1,079,135 1,079,135 1,703,050 3,830,967 3,830,967 5,760,242
26 2,160,317 0 0 0 1,098,577 1,098,577 1,703,050 4,137,162 4,137,162 6,095,281
27 2,268,333 0 0 0 1,117,090 1,117,090 1,703,050 4,464,907 4,464,907 6,448,664
28 2,381,750 0 0 0 1,134,370 1,134,370 1,703,050 4,814,977 4,814,977 6,822,341
29 2,500,837 0 0 0 1,150,082 1,150,082 1,703,050 5,188,199 5,188,199 7,216,267
30 2,625,879 0 0 0 1,163,924 1,163,924 1,703,050 5,585,598 5,585,598 7,633,278
</TABLE>
(1) No policy loans and no partial withdrawals have been made.
(2) Current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values reflect a
premium charge of 9% of target premium and 6.5% of excess-of-target
premium for the first seven years and 3.5% of all premium from eighth year
and on.
(3) Net investment returns are calculated as the hypothetical gross investment
return less all charges and deductions shown in the prospectus appendix.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors, including the
investment allocations made by an owner, prevailing rates and rates of
inflation. The death benefit and cash value for a policy would be different from
those shown if the actual rates of return averaged 0%, 6%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by Nationwide or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
56
<PAGE> 65
$100,000 ANNUAL PREMIUM FOR 7 YEARS $1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: REGULAR ISSUE / NON TOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 2
CURRENT VALUES
<TABLE>
<CAPTION>
PREMIUMS 0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
PLUS
POLICY INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 105,000 87,773 91,273 1,790,823 93,146 96,646 1,796,196 98,521 102,021 1,801,571
2 215,250 173,897 179,397 1,876,947 190,074 195,574 1,893,124 206,892 212,392 1,909,942
3 331,013 258,730 262,730 1,961,780 291,307 295,307 1,994,357 326,512 330,512 2,029,562
4 452,563 342,210 342,210 2,045,260 396,965 396,965 2,100,015 458,486 458,486 2,161,536
5 580,191 424,873 424,873 2,127,923 507,889 507,889 2,210,939 604,896 604,896 2,307,946
6 714,201 506,162 506,162 2,209,212 623,682 623,682 2,326,732 766,547 766,547 2,469,597
7 854,911 586,114 586,114 2,289,164 744,602 744,602 2,447,652 945,099 945,099 2,648,149
8 897,656 572,959 572,959 2,276,009 773,602 773,602 2,476,652 1,039,565 1,039,565 2,742,615
9 942,539 559,424 559,424 2,262,474 803,445 803,445 2,506,495 1,143,598 1,143,598 2,846,648
10 989,666 545,447 545,447 2,248,497 834,103 834,103 2,537,153 1,258,155 1,258,155 2,961,205
11 1,039,150 531,026 531,026 2,234,076 865,608 865,608 2,568,658 1,384,356 1,384,356 3,087,406
12 1,091,107 516,108 516,108 2,219,158 897,940 897,940 2,600,990 1,523,387 1,523,387 3,226,437
13 1,145,662 500,683 500,683 2,203,733 931,123 931,123 2,634,173 1,676,609 1,676,609 3,379,659
14 1,202,945 484,702 484,702 2,187,752 965,141 965,141 2,668,191 1,845,456 1,845,456 3,595,686
15 1,263,093 467,918 467,918 2,170,968 999,772 999,772 2,702,822 2,031,131 2,031,131 3,855,697
16 1,326,247 450,219 450,219 2,153,269 1,034,922 1,034,922 2,737,972 2,235,030 2,235,030 4,135,476
17 1,392,560 431,476 431,476 2,134,526 1,070,470 1,070,470 2,773,520 2,458,771 2,458,771 4,436,115
18 1,462,188 411,495 411,495 2,114,545 1,106,224 1,106,224 2,809,274 2,704,110 2,704,110 4,759,504
19 1,535,297 390,081 390,081 2,093,131 1,141,977 1,141,977 2,845,027 2,972,945 2,972,945 5,107,817
20 1,612,062 367,059 367,059 2,070,109 1,177,534 1,177,534 2,880,584 3,267,384 3,267,384 5,482,344
21 1,692,665 344,829 344,829 2,047,879 1,216,627 1,216,627 2,919,677 3,597,875 3,597,875 5,899,436
22 1,777,298 322,819 322,819 2,025,869 1,257,656 1,257,656 2,960,706 3,963,380 3,963,380 6,354,487
23 1,866,163 299,600 299,600 2,002,650 1,299,242 1,299,242 3,002,292 4,365,588 4,365,588 6,847,862
24 1,959,471 274,578 274,578 1,977,628 1,340,789 1,340,789 3,043,839 4,807,410 4,807,410 7,381,297
25 2,057,445 247,580 247,580 1,950,630 1,382,096 1,382,096 3,085,146 5,292,637 5,292,637 7,958,010
26 2,160,317 218,396 218,396 1,921,446 1,422,916 1,422,916 3,125,966 5,825,377 5,825,377 8,582,528
27 2,268,333 186,857 186,857 1,889,907 1,463,027 1,463,027 3,166,077 6,410,226 6,410,226 9,258,290
28 2,381,750 152,736 152,736 1,855,786 1,502,135 1,502,135 3,205,185 7,052,117 7,052,117 9,992,145
29 2,500,837 115,752 115,752 1,818,802 1,539,875 1,539,875 3,242,925 7,756,394 7,756,394 10,788,368
30 2,625,879 75,586 75,586 1,778,636 1,575,820 1,575,820 3,278,870 8,528,790 8,528,790 11,655,445
</TABLE>
(1) No policy loans and no partial withdrawals have been made.
(2) Current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values reflect a
premium charge of 9% of target premium and 6.5% of excess-of-target
premium for the first seven years and 3.5% of all premium from eighth year
and on.
(3) Net investment returns are calculated as the hypothetical gross investment
return less all charges and deductions shown in the prospectus appendix.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors, including the
investment allocations made by an owner, prevailing rates and rates of
inflation. The death benefit and cash value for a policy would be different from
those shown if the actual rates of return averaged 0%, 6%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by Nationwide or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
57
<PAGE> 66
$100,000 ANNUAL PREMIUM FOR 7 YEARS $1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: REGULAR ISSUE / NON TOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 2
GUARANTEED VALUES
<TABLE>
<CAPTION>
PREMIUMS 0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
PLUS
POLICY INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 105,000 81,397 84,897 1,784,447 86,507 90,007 1,789,557 91,622 95,122 1,794,672
2 215,250 160,805 166,305 1,863,855 176,027 181,527 1,879,077 191,863 197,363 1,894,913
3 331,013 238,224 242,224 1,941,274 268,655 272,655 1,971,705 301,563 305,563 2,004,613
4 452,563 313,634 313,634 2,016,684 364,469 364,469 2,067,519 421,632 421,632 2,124,682
5 580,191 386,984 386,984 2,090,034 463,519 463,519 2,166,569 553,033 553,033 2,256,083
6 714,201 458,221 458,221 2,161,271 565,854 565,854 2,268,904 696,829 696,829 2,399,879
7 854,911 527,226 527,226 2,230,276 671,457 671,457 2,374,507 854,117 854,117 2,557,167
8 897,656 504,400 504,400 2,207,450 685,455 685,455 2,388,505 925,885 925,885 2,628,935
9 942,539 480,584 480,584 2,183,634 698,646 698,646 2,401,696 1,003,506 1,003,506 2,706,556
10 989,666 455,657 455,657 2,158,707 710,854 710,854 2,413,904 1,087,432 1,087,432 2,790,482
11 1,039,150 429,519 429,519 2,132,569 721,913 721,913 2,424,963 1,178,176 1,178,176 2,881,226
12 1,091,107 402,083 402,083 2,105,133 731,666 731,666 2,434,716 1,276,319 1,276,319 2,979,369
13 1,145,662 373,266 373,266 2,076,316 739,949 739,949 2,442,999 1,382,506 1,382,506 3,085,556
14 1,202,945 342,971 342,971 2,046,021 746,576 746,576 2,449,626 1,497,424 1,497,424 3,200,474
15 1,263,093 311,048 311,048 2,014,098 751,295 751,295 2,454,345 1,621,779 1,621,779 3,324,829
16 1,326,247 277,281 277,281 1,980,331 753,776 753,776 2,456,826 1,756,271 1,756,271 3,459,321
17 1,392,560 241,388 241,388 1,944,438 753,600 753,600 2,456,650 1,901,602 1,901,602 3,604,652
18 1,462,188 203,055 203,055 1,906,105 750,295 750,295 2,453,345 2,058,504 2,058,504 3,761,554
19 1,535,297 161,957 161,957 1,865,007 743,349 743,349 2,446,399 2,227,763 2,227,763 3,930,813
20 1,612,062 117,768 117,768 1,820,818 732,226 732,226 2,435,276 2,410,246 2,410,246 4,113,296
21 1,692,665 70,238 70,238 1,773,288 716,436 716,436 2,419,486 2,606,976 2,606,976 4,310,026
22 1,777,298 19,135 19,135 1,722,185 695,483 695,483 2,398,533 2,819,099 2,819,099 4,522,149
23 1,866,163 0 0 0 668,867 668,867 2,371,917 3,047,821 3,047,821 4,780,812
24 1,959,471 0 0 0 635,975 635,975 2,339,025 3,294,192 3,294,192 5,057,903
25 2,057,445 0 0 0 595,982 595,982 2,299,032 3,559,154 3,559,154 5,351,545
26 2,160,317 0 0 0 547,845 547,845 2,250,895 3,843,516 3,843,516 5,662,652
27 2,268,333 0 0 0 490,283 490,283 2,193,333 4,147,989 4,147,989 5,990,941
28 2,381,750 0 0 0 421,790 421,790 2,124,840 4,473,203 4,473,203 6,338,081
29 2,500,837 0 0 0 340,739 340,739 2,043,789 4,819,925 4,819,925 6,704,034
30 2,625,879 0 0 0 245,623 245,623 1,948,673 5,189,106 5,189,106 7,091,432
</TABLE>
(1) No policy loans and no partial withdrawals have been made.
(2) Current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values reflect a
premium charge of 9% of target premium and 6.5% of excess-of-target
premium for the first seven years and 3.5% of all premium from eighth year
and on.
(3) Net investment returns are calculated as the hypothetical gross investment
return less all charges and deductions shown in the prospectus appendix.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors, including the
investment allocations made by an owner, prevailing rates and rates of
inflation. The death benefit and cash value for a policy would be different from
those shown if the actual rates of return averaged 0%, 6%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by Nationwide or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
58
<PAGE> 67
$38,872.05 ANNUAL PREMIUM FOR 20 YEARS $1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
UNISEX: REGULAR ISSUE / NON TOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 1
CURRENT VALUES
<TABLE>
<CAPTION>
PREMIUMS 0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
PLUS
POLICY INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 40,816 31,428 32,789 1,703,050 33,420 34,781 1,703,050 35,415 36,776 1,703,050
2 83,672 62,020 64,158 1,703,050 67,952 70,090 1,703,050 74,126 76,264 1,703,050
3 128,671 92,124 93,679 1,703,050 104,001 105,556 1,703,050 116,852 118,407 1,703,050
4 175,921 121,675 121,675 1,703,050 141,572 141,572 1,703,050 163,963 163,963 1,703,050
5 225,532 150,810 150,810 1,703,050 180,916 180,916 1,703,050 216,162 216,162 1,703,050
6 277,625 179,312 179,312 1,703,050 221,880 221,880 1,703,050 273,744 273,744 1,703,050
7 332,321 207,223 207,223 1,703,050 264,589 264,589 1,703,050 337,356 337,356 1,703,050
8 389,753 236,376 236,376 1,703,050 311,084 311,084 1,703,050 409,744 409,744 1,703,050
9 450,056 264,860 264,860 1,703,050 359,558 359,558 1,703,050 489,789 489,789 1,703,050
10 513,375 292,643 292,643 1,703,050 410,093 410,093 1,703,050 578,354 578,354 1,703,050
11 579,859 319,743 319,743 1,703,050 462,830 462,830 1,703,050 676,454 676,454 1,703,050
12 649,668 346,137 346,137 1,703,050 517,881 517,881 1,703,050 785,201 785,201 1,703,050
13 722,967 371,839 371,839 1,703,050 575,403 575,403 1,703,050 905,883 905,883 1,703,050
14 799,931 396,832 396,832 1,703,050 635,540 635,540 1,703,050 1,039,929 1,039,929 1,703,050
15 880,743 420,949 420,949 1,703,050 698,331 698,331 1,703,050 1,188,894 1,188,894 1,703,050
16 965,596 444,136 444,136 1,703,050 763,927 763,927 1,703,050 1,354,585 1,354,585 1,760,960
17 1,054,691 466,323 466,323 1,703,050 832,495 832,495 1,703,050 1,537,876 1,537,876 1,968,481
18 1,148,242 487,403 487,403 1,703,050 904,205 904,205 1,703,050 1,740,261 1,740,261 2,192,728
19 1,246,469 507,265 507,265 1,703,050 979,269 979,269 1,703,050 1,963,719 1,963,719 2,435,012
20 1,349,608 525,822 525,822 1,703,050 1,057,955 1,057,955 1,703,050 2,210,463 2,210,463 2,696,764
21 1,417,089 507,650 507,650 1,703,050 1,103,242 1,103,242 1,703,050 2,445,769 2,445,769 2,934,923
22 1,487,943 489,460 489,460 1,703,050 1,151,293 1,151,293 1,703,050 2,706,428 2,706,428 3,220,649
23 1,562,341 470,222 470,222 1,703,050 1,201,817 1,201,817 1,703,050 2,994,746 2,994,746 3,533,801
24 1,640,458 449,459 449,459 1,703,050 1,254,878 1,254,878 1,703,050 3,313,501 3,313,501 3,876,796
25 1,722,480 426,972 426,972 1,703,050 1,310,719 1,310,719 1,703,050 3,665,895 3,665,895 4,252,438
26 1,808,604 402,522 402,522 1,703,050 1,369,620 1,369,620 1,703,050 4,055,472 4,055,472 4,663,793
27 1,899,035 375,876 375,876 1,703,050 1,431,924 1,431,924 1,703,050 4,486,959 4,486,959 5,070,264
28 1,993,986 346,738 346,738 1,703,050 1,498,024 1,498,024 1,703,050 4,965,147 4,965,147 5,511,314
29 2,093,686 314,736 314,736 1,703,050 1,568,388 1,568,388 1,709,542 5,495,459 5,495,459 5,990,050
30 2,198,370 279,427 279,427 1,703,050 1,643,187 1,643,187 1,758,211 6,084,070 6,084,070 6,509,955
</TABLE>
(1) No policy loans and no partial withdrawals have been made.
(2) Current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values reflect a
premium charge of 9% of target premium and 6.5% of excess-of-target
premium for the first seven years and 3.5% of all premium from eighth year
and on.
(3) Net investment returns are calculated as the hypothetical gross investment
return less all charges and deductions shown in the prospectus appendix.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors, including the
investment allocations made by an owner, prevailing rates and rates of
inflation. The death benefit and cash value for a policy would be different from
those shown if the actual rates of return averaged 0%, 6%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by Nationwide or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
59
<PAGE> 68
$38,872.05 ANNUAL PREMIUM FOR 20 YEARS $1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
UNISEX: REGULAR ISSUE / NON TOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 1
GUARANTEED VALUES
<TABLE>
<CAPTION>
PREMIUMS 0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
PLUS
POLICY INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 40,816 26,824 28,185 1,703,050 28,661 30,022 1,703,050 30,501 31,862 1,703,050
2 83,672 52,697 54,835 1,703,050 58,028 60,166 1,703,050 63,587 65,725 1,703,050
3 128,671 77,615 79,170 1,703,050 88,127 89,682 1,703,050 99,529 101,084 1,703,050
4 175,921 101,562 101,562 1,703,050 118,968 118,968 1,703,050 138,616 138,616 1,703,050
5 225,532 124,491 124,491 1,703,050 150,537 150,537 1,703,050 181,143 181,143 1,703,050
6 277,625 146,355 146,355 1,703,050 182,822 182,822 1,703,050 227,450 227,450 1,703,050
7 332,321 167,051 167,051 1,703,050 215,756 215,756 1,703,050 277,868 277,868 1,703,050
8 389,753 187,859 187,859 1,703,050 250,741 250,741 1,703,050 334,322 334,322 1,703,050
9 450,056 207,306 207,306 1,703,050 286,353 286,353 1,703,050 395,916 395,916 1,703,050
10 513,375 225,315 225,315 1,703,050 322,570 322,570 1,703,050 463,221 463,221 1,703,050
11 579,859 241,825 241,825 1,703,050 359,391 359,391 1,703,050 536,917 536,917 1,703,050
12 649,668 256,787 256,787 1,703,050 396,839 396,839 1,703,050 617,810 617,810 1,703,050
13 722,967 270,151 270,151 1,703,050 434,947 434,947 1,703,050 706,835 706,835 1,703,050
14 799,931 281,850 281,850 1,703,050 473,746 473,746 1,703,050 805,072 805,072 1,703,050
15 880,743 291,773 291,773 1,703,050 513,242 513,242 1,703,050 913,753 913,753 1,703,050
16 965,596 299,746 299,746 1,703,050 553,407 553,407 1,703,050 1,034,301 1,034,301 1,703,050
17 1,054,691 305,536 305,536 1,703,050 594,186 594,186 1,703,050 1,168,388 1,168,388 1,703,050
18 1,148,242 308,874 308,874 1,703,050 635,524 635,524 1,703,050 1,318,023 1,318,023 1,703,050
19 1,246,469 309,463 309,463 1,703,050 677,378 677,378 1,703,050 1,484,436 1,484,436 1,840,701
20 1,349,608 306,989 306,989 1,703,050 719,734 719,734 1,703,050 1,666,799 1,666,799 2,033,495
21 1,417,089 264,049 264,049 1,703,050 723,297 723,297 1,703,050 1,826,399 1,826,399 2,191,678
22 1,487,943 216,881 216,881 1,703,050 724,500 724,500 1,703,050 2,000,852 2,000,852 2,381,014
23 1,562,341 164,942 164,942 1,703,050 723,014 723,014 1,703,050 2,191,549 2,191,549 2,586,027
24 1,640,458 107,535 107,535 1,703,050 718,405 718,405 1,703,050 2,400,002 2,400,002 2,808,003
25 1,722,480 43,694 43,694 1,703,050 710,068 710,068 1,703,050 2,627,846 2,627,846 3,048,302
26 1,808,604 0 0 0 697,192 697,192 1,703,050 2,876,845 2,876,845 3,308,372
27 1,899,035 0 0 0 678,715 678,715 1,703,050 3,150,375 3,150,375 3,559,924
28 1,993,986 0 0 0 653,272 653,272 1,703,050 3,451,282 3,451,282 3,830,923
29 2,093,686 0 0 0 619,182 619,182 1,703,050 3,782,939 3,782,939 4,123,403
30 2,198,370 0 0 0 574,510 574,510 1,703,050 4,149,425 4,149,425 4,439,884
</TABLE>
(1) No policy loans and no partial withdrawals have been made.
(2) Current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values reflect a
premium charge of 9% of target premium and 6.5% of excess-of-target
premium for the first seven years and 3.5% of all premium from eighth year
and on.
(3) Net investment returns are calculated as the hypothetical gross investment
return less all charges and deductions shown in the prospectus appendix.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors, including the
investment allocations made by an owner, prevailing rates and rates of
inflation. The death benefit and cash value for a policy would be different from
those shown if the actual rates of return averaged 0%, 6%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by Natiomwide or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
60
<PAGE> 69
$38,872.05 ANNUAL PREMIUM FOR 20 YEARS $1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
UNISEX: REGULAR ISSUE / NON TOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 2
CURRENT VALUES
<TABLE>
<CAPTION>
PREMIUMS 0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
PLUS
POLICY INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 40,816 32,715 31,663 1,734,404 33,341 34,702 1,736,391 35,331 36,692 1,738,381
2 83,672 61,784 63,922 1,764,834 67,692 69,830 1,770,742 73,840 75,978 1,776,890
3 128,671 91,641 93,196 1,794,691 103,448 105,003 1,806,498 116,222 117,777 1,819,272
4 175,921 120,853 120,853 1,823,903 140,591 140,591 1,843,641 162,801 162,801 1,865,851
5 225,532 149,534 149,534 1,852,584 179,335 179,335 1,882,385 214,216 214,216 1,917,266
6 277,625 177,455 177,455 1,880,505 219,487 219,487 1,922,537 270,684 270,684 1,973,734
7 332,321 204,648 204,648 1,907,698 261,142 261,142 1,964,192 332,772 332,772 2,035,822
8 389,753 232,923 232,923 1,935,973 306,280 306,280 2,009,330 403,104 403,104 2,106,154
9 450,056 260,346 260,346 1,963,396 353,035 353,035 2,056,085 480,414 480,414 2,183,464
10 513,375 286,860 286,860 1,989,910 401,416 401,416 2,104,466 565,382 565,382 2,268,432
11 579,859 312,469 312,469 2,015,519 451,493 451,493 2,154,543 658,821 658,821 2,361,871
12 649,668 337,125 337,125 2,040,175 503,286 503,286 2,206,336 761,576 761,576 2,464,626
13 722,967 360,823 360,823 2,063,873 556,864 556,864 2,259,914 874,632 874,632 2,577,682
14 799,931 383,520 383,520 2,086,570 612,255 612,255 2,315,305 999,034 999,034 2,702,084
15 880,743 404,972 404,972 2,108,022 669,283 669,283 2,372,333 1,135,729 1,135,729 2,838,779
16 965,596 425,075 425,075 2,128,125 727,902 727,902 2,430,952 1,285,908 1,285,908 2,988,958
17 1,054,691 443,702 443,702 2,146,752 788,045 788,045 2,491,095 1,450,868 1,450,868 3,153,918
18 1,148,242 460,666 460,666 2,163,716 849,573 849,573 2,552,623 1,631,975 1,631,975 3,335,025
19 1,246,469 475,776 475,776 2,178,826 912,335 912,335 2,615,385 1,830,738 1,830,738 3,533,788
20 1,349,608 488,863 488,863 2,191,913 976,195 976,195 2,679,245 2,048,848 2,048,848 3,751,898
21 1,417,089 465,425 465,425 2,168,475 1,005,323 1,005,323 2,708,373 2,252,198 2,252,198 3,955,248
22 1,487,943 442,220 442,220 2,145,270 1,035,892 1,035,892 2,738,942 2,477,693 2,477,693 4,180,743
23 1,562,341 417,818 417,818 2,120,868 1,066,502 1,066,502 2,769,552 2,726,227 2,726,227 4,429,277
24 1,640,458 391,624 391,624 2,094,674 1,096,528 1,096,528 2,799,578 2,999,665 2,999,665 4,702,715
25 1,722,480 363,466 363,466 2,066,516 1,125,745 1,125,745 2,828,795 3,300,516 3,300,516 5,003,566
26 1,808,604 333,134 333,134 2,036,184 1,153,877 1,153,877 2,856,927 3,631,521 3,631,521 5,334,571
27 1,899,035 300,458 300,458 2,003,508 1,180,671 1,180,671 2,883,721 3,995,761 3,995,761 5,698,811
28 1,993,986 265,211 265,211 1,968,261 1,205,804 1,205,804 2,908,854 4,396,589 4,396,589 6,099,639
29 2,093,686 227,112 227,112 1,930,162 1,228,876 1,228,876 2,931,926 4,837,662 4,837,662 6,540,712
30 2,198,370 185,842 185,842 1,888,892 1,249,427 1,249,427 2,952,477 5,322,996 5,322,996 7,026,046
</TABLE>
(1) No policy loans and no partial withdrawals have been made.
(2) Current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values reflect a
premium charge of 9% of target premium and 6.5% of excess-of-target
premium for the first seven years and 3.5% of all premium from eighth year
and on.
(3) Net investment returns are calculated as the hypothetical gross investment
return less all charges and deductions shown in the prospectus appendix.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors, including the
investment allocations made by an owner, prevailing rates and rates of
inflation. The death benefit and cash value for a policy would be different from
those shown if the actual rates of return averaged 0%, 6%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by Nationwide or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
61
<PAGE> 70
$38,872.05 ANNUAL PREMIUM FOR 20 YEARS $1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM / CASH VALUE CORRIDOR TEST
UNISEX: REGULAR ISSUE / NON TOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 2
GUARANTEED VALUES
<TABLE>
<CAPTION>
PREMIUMS 0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
PLUS
POLICY INTEREST CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH CONTRACT SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 40,816 26,677 28,038 1,729,727 28,504 29,865 1,731,554 30,335 31,696 1,733,385
2 83,672 52,257 54,395 1,755,307 57,543 59,681 1,760,593 63,054 65,192 1,766,104
3 128,671 76,725 78,280 1,779,775 87,104 88,659 1,790,154 98,361 99,916 1,801,411
4 175,921 100,048 100,048 1,803,098 117,159 117,159 1,820,209 136,467 136,467 1,839,517
5 225,532 122,159 122,159 1,825,209 147,639 147,639 1,850,689 177,566 177,566 1,880,616
6 277,625 142,992 142,992 1,846,042 178,474 178,474 1,881,524 221,871 221,871 1,924,921
7 332,321 162,415 162,415 1,865,465 209,522 209,522 1,912,572 269,545 269,545 1,972,595
8 389,753 181,670 181,670 1,884,720 242,087 242,087 1,945,137 322,302 322,302 2,025,352
9 450,056 199,249 199,249 1,902,299 274,638 274,638 1,977,688 378,980 378,980 2,082,030
10 513,375 215,043 215,043 1,918,093 307,033 307,033 2,010,083 439,831 439,831 2,142,881
11 579,859 228,961 228,961 1,932,011 339,141 339,141 2,042,191 505,152 505,152 2,208,202
12 649,668 240,929 240,929 1,943,979 370,843 370,843 2,073,893 575,286 575,286 2,278,336
13 722,967 250,875 250,875 1,953,925 402,013 402,013 2,105,063 650,613 650,613 2,353,663
14 799,931 258,710 258,710 1,961,760 432,504 432,504 2,135,554 731,532 731,532 2,434,582
15 880,743 264,296 264,296 1,967,346 462,108 462,108 2,165,158 818,427 818,427 2,521,477
16 965,596 267,426 267,426 1,970,476 490,536 490,536 2,193,586 911,649 911,649 2,614,699
17 1,054,691 267,829 267,829 1,970,879 517,417 517,417 2,220,467 1,011,510 1,011,510 2,714,560
18 1,148,242 265,201 265,201 1,968,251 542,324 542,324 2,245,374 1,118,315 1,118,315 2,821,365
19 1,246,469 259,225 259,225 1,962,275 564,796 564,796 2,267,846 1,232,380 1,232,380 2,935,430
20 1,349,608 249,586 249,586 1,952,636 584,348 584,348 2,287,398 1,354,053 1,354,053 3,057,103
21 1,417,089 199,908 199,908 1,902,958 562,239 562,239 2,265,289 1,443,314 1,443,314 3,146,364
22 1,487,943 146,691 146,691 1,849,741 534,698 534,698 2,237,748 1,537,032 1,537,032 3,240,082
23 1,562,341 89,722 89,722 1,792,772 501,212 501,212 2,204,262 1,635,372 1,635,372 3,338,422
24 1,640,458 28,703 28,703 1,731,753 461,156 461,156 2,164,206 1,738,422 1,738,422 3,441,472
25 1,722,480 0 0 0 413,695 413,695 2,116,745 1,846,089 1,846,089 3,549,139
26 1,808,604 0 0 0 357,768 357,768 2,060,818 1,958,078 1,958,078 3,661,128
27 1,899,035 0 0 0 292,086 292,086 1,995,136 2,073,869 2,073,869 3,776,919
28 1,993,986 0 0 0 215,123 215,123 1,918,173 2,192,710 2,192,710 3,895,760
29 2,093,686 0 0 0 125,243 125,243 1,828,293 2,313,718 2,313,718 4,016,768
30 2,198,370 0 0 0 20,919 20,919 1,723,969 2,436,112 2,436,112 4,139,162
</TABLE>
(1) No policy loans and no partial withdrawals have been made.
(2) Current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values reflect a
premium charge of 9% of target premium and 6.5% of excess-of-target
premium for the first seven years and 3.5% of all premium from eighth year
and on.
(3) Net investment returns are calculated as the hypothetical gross investment
return less all charges and deductions shown in the prospectus appendix.
The hypothetical investment rates of return shown above and elsewhere in this
prospectus are illustrative only and should not be deemed a representation of
past or future investment rates of return. Actual rates of return may be more or
less than those shown and will depend on a number of factors, including the
investment allocations made by an owner, prevailing rates and rates of
inflation. The death benefit and cash value for a policy would be different from
those shown if the actual rates of return averaged 0%, 6%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by Nationwide or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
62
<PAGE> 71
APPENDIX C: PERFORMANCE SUMMARY INFORMATION
The following performance tables display historical investment results of the
underlying mutual fund sub-accounts. This information may be useful in helping
potential investors in deciding which underlying mutual fund sub-accounts to
choose and in assessing the competence of the underlying mutual funds'
investment advisers. The performance figures shown should be considered in light
of the investment objectives and policies, characteristics and quality of the
underlying portfolios of the underlying mutual funds, and the market conditions
during the periods of time quoted. The performance figures should not be
considered as estimates or predictions of future performance. Investment return
and the principal value of the underlying mutual fund sub-accounts are not
guaranteed and will fluctuate so that a policy owner's units, when redeemed, may
be worth more or less than their original cost.
63
<PAGE> 72
<TABLE>
<CAPTION>
PERFORMANCE TABLES TOTAL RETURN
-------------------------------------------------------------------------------------------------------
Annual Percentage Change Non annualized Percentage Change
Fund Unit 1 mo 1 Yr 2 Yrs 3 Yrs. 5 yrs. Inception
Underlying Investment Inception Values 1997 1998 1999 To to to to to to
Options Date** 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Century VP 10/30/97 12.8% 0.00% 0.00% 26.36% 5.92% 17.55% 48.52% - - 160.01%
Income & Growth
American Century VP 05/02/94 15.96% 13.95% 18.16% 18.29% 20.73% 63.39% 93.27% 128.38% 190.81% 275.55%
International
American Century VP Value 05/01/96 9.26% 0.00% 25.58% 4.39% -1.03% -1.25% 3.08% 29.47% - 144.98%
Dreyfus Investment 04/30/99 12.92% 0.00% 0.00% 0.00% 15.73% 0.00% - - - 128.86%
Portfolios-European
Equity Portfolio
The Dreyfus Socially 10/06/93 14.44% 20.74% 27.92% 28.86% 8.50% 29.56% 66.95% 113.57% 245.62% 374.72%
Responsible Growth Fund,
Inc.
Dreyfus Stock Index Fund, 09/29/89 13.25% 22.04% 32.43% 27.70% 5.82% 20.12% 53.39% 103.15% 237.73% 500.27%
Inc,
Dreyfus Variable 04/05/93 12.24% 25.06% 27.55% 29.70% 2.42% 11.01% 43.98% 83.65% 205.42% 333.63%
Investment Fund-
Appreciation Portfolio
(formerly, Dreyfus
Variable Investment Fund
- Capital Appreciation
Portfolio)
Dreyfus Variable 10/31/97 11.83% 0.00% 0.00% 10.37% 5.73% 20.44% 32.92% - - 132.36%
Investment Fund-Mid-Cap
Index Portfolio
Federated Insurance 05/03/99 9.84% 0.00% 0.00% 0.00% -0.44% 0.00% - - - 98.43%
Series-Federated Quality
Bond Fund II
Fidelity VIP Equity 10/09/86 10.48% 13.82% 27.54% 11.10% 0.99% 5.83% 17.57% 49.96% 129.65% 522.61%
Income Portfolio: Service
Class
Fidelity VIP Growth 10/09/86 16.48% 14.24% 22.95% 38.82% 10.05% 36.74% 89.83% 133.41% 259.45% 921.28%
Portfolio: Service Class
Fidelity VIP High Income 09/19/85 9.69% 13.57% 17.11% -4.81% 2.23% 7.64% 2.48% 20.01% 63.70% 414.44%
Portfolio: Service Class
Fidelity VIP Overseas 01/28/87 13.49% 12.76% 11.11% 12.19% 11.58% 41.89% 59.19% 76.89% 117.84% 361.29%
Portfolio: Service Class
Fidelity VIP II 01/03/95 14.02% 20.82% 23.58% 29.42% 8.87% 23.65% 60.02% 97.76% - 332.32%
Contrafund Portfolio:
Service Class
Fidelity VIP III Growth 01/03/95 11.67% 17.80% 29.43% 24.01% 2.31% 3.77% 28.69% 66.57% - 258.97%
Opportunities Portfolio:
Service Class
NSAT Capital Appreciation 04/15/92 11.62% 25.63% 33.96% 29.45% -1.27% 3.86% 34.44% 80.12% 191.51% 331.35%
Fund
NSAT Government Bond Fund 11/08/82 10.37% 3.07% 9.23% 8.47% -0.80% -2.74% 5.51% 15.23% 40.45% 386.07%
NSAT Money Market Fund 11/10/81 10.78% 4.70% 4.85% 4.86% 0.42% 4.43% 9.50% 14.81% 26.54% 308.47%
NSAT Total Return Fund 11/08/82 10.81% 21.35% 28.91% 17.60% -0.11% 6.52% 25.26% 61.48% 151.96% 1150.96%
NSAT Nationwide Balanced 10/31/97 10.06% 0.00% 0.00% 7.64% -1.13% 0.47% 8.14% 109.64%
Fund
NSAT Nationwide Equity 10/31/97 12.49% 0.00% 0.00% 14.67% 5.01% 18.02% 35.33% - - 137.64%
Income Fund
NSAT Nationwide Global 50 10/31/97 12.70% 0.00% 0.00% 18.66% 6.95% 22.43% 45.27% - - 146.89%
Fund (formerly, NSAT
Nationwide Global Equity
Fund)
NSAT Nationwide High 10/31/97 10.33% 0.00% 0.00% 5.37% 0.94% 2.78% 8.31% - - 110.70%
Income Bond Fund
NSAT Nationwide Mid Cap 10/31/97
Index Fund (formerly NSAT
Nationwide Select
Advisers Mid Cap Fund)
NSAT Nationwide Multi 10/31/97 10.11% 0.00% 0.00% 2.19% 0.96% 1.15% 3.37% - - 104.37%
Sector Bond Fund
NSAT Nationwide Small Cap 05/03/99 20.45% 0.00% 0.00% 0.00% 27.77% 0.00% - - - 204.47%
Growth Fund (formerly,
NSAT Nationwide Select
Advisers Small Cap Growth
Fund)
NSAT Nationwide Small Cap 10/31/97 10.93% 0.00% 0.00% -3.45% 7.30% 27.33% 22.92% - - 120.87%
Value Fund
NSAT Nationwide Small 10/23/95 12.99% 22.33% 16.88% 0.61% 15.54% 43.45% 44.31% 68.69% - 235.84%
Company Fund
NSAT Nationwide Strategic 10/31/97 19.36% 0.00% 0.00% 14.14% 17.06% 84.02% 110.02% - - 214.50%
Growth Fund
NSAT Nationwide Strategic 10/37/97 8.77% 0.00% 0.00% -0.01% 0.31% -3.46% -3.47% - - 98.04%
Value Fund
Neuberger Berman AMT 11/03/97 10.69% 0.00% 0.00% 31.14% 3.56% 14.47% 50.14% - - 157.83%
Guardian Portfolio
Neuberger Berman AMT Mid 11/03/97 17.31% 0.00% 0.00% 38.73% 20.44% 53.28% 112.63% 249.05%
Cap Growth Portfolio
Neuberger Berman AMT 03/22/94 9.99% 29.05% 30.73% 3.79% 3.39% 6.94% 11.01% 45.10% 154.48% 247.91%
Partners Portfolio
Oppenheimer Variable 08/15/86 17.71% 19.75% 11.23% 11.91% 19.23% 82.87% 104.66% 127.65% 259.87% 989.70%
Account Funds -
Oppenheimer Aggressive
Growth Fund/VA
Oppenheimer Variable 04/03/85 15.04% 24.71% 26.19% 23.50% 14.83% 41.09% 74.27% 119.90% 273.15% 1032.92%
Account Funds -
Oppenheimer Capital
Appreciation Fund/VA
(formerly, Oppenheimer
Growth Fund)
PERFORMANCE TABLES TOTAL RETURN
-------------------------------
Annualized Percentage Change
3 Yrs. 5 yrs. Inception
Underlying Investment to to To
Options 12/31/99 12/31/99 12/31/99
<S> <C> <C> <C>
American Century VP 0 0 24.20%
Income & Growth
American Century VP 31.69% 23.80% 19.61%
International
American Century VP Value 8.99% 0.00% 10.67%
Dreyfus Investment 0.00% 0.00% 46.27%
Portfolios-European
Equity Portfolio
The Dreyfus Socially 28.78% 28.15% 23.60%
Responsible Growth Fund,
Inc.
Dreyfus Stock Index Fund, 26.65% 27.56% 17.00%
Inc,
Dreyfus Variable 22.46% 25.02% 19.59%
Investment Fund-
Appreciation Portfolio
(formerly, Dreyfus
Variable Investment Fund
- Capital Appreciation
Portfolio)
Dreyfus Variable 0.00% 0.00% 13.81%
Investment Fund-Mid-Cap
Index Portfolio
Federated Insurance 0.00% 0.00% -2.37%
Series-Federated Quality
Bond Fund II
Fidelity VIP Equity 14.46% 18.09% 13.32%
Income Portfolio: Service
Class
Fidelity VIP Growth 32.65% 29.16% 18.28%
Portfolio: Service Class
Fidelity VIP High Income 6.27% 10.36% 10.47%
Portfolio: Service Class
Fidelity VIP Overseas 20.94% 16.85% 10.45%
Portfolio: Service Class
Fidelity VIP II 25.52% 0.00% 27.20%
Contrafund Portfolio:
Service Class
Fidelity VIP III Growth 18.54% 0.00% 21.00%
Opportunities Portfolio:
Service Class
NSAT Capital Appreciation 21.67% 23.86% 16.81%
Fund
NSAT Government Bond Fund 4.84% 7.03% 8.20%
NSAT Money Market Fund 4.71% 4.82% 6.41%
NSAT Total Return Fund 17.32% 20.30% 15.32%
NSAT Nationwide Balanced 0.00% 0.00% 4.34%
Fund
NSAT Nationwide Equity 0.00% 0.00% 15.89%
Income Fund
NSAT Nationwide Global 50 0.00% 0.00% 19.42%
Fund (formerly, NSAT
Nationwide Global Equity
Fund)
NSAT Nationwide High 0.00% 0.00% 4.80%
Income Bond Fund
NSAT Nationwide Mid Cap
Index Fund (formerly NSAT
Nationwide Select
Advisers Mid Cap Fund)
NSAT Nationwide Multi 0.00% 0.00% 2.00%
Sector Bond Fund
NSAT Nationwide Small Cap 0.00% 0.00% 196.25%
Growth Fund (formerly,
NSAT Nationwide Select
Advisers Small Cap Growth
Fund)
NSAT Nationwide Small Cap 0.00% 0.00% 9.14%
Value Fund
NSAT Nationwide Small 19.04% 0.00% 22.74%
Company Fund
NSAT Nationwide Strategic 0.00% 0.00% 42.22%
Growth Fund
NSAT Nationwide Strategic 0.00% 0.00% -0.91%
Value Fund
Neuberger Berman AMT 0.00% 0.00% 23.55%
Guardian Portfolio
Neuberger Berman AMT Mid 0.00% 0.00% 52.62%
Cap Growth Portfolio
Neuberger Berman AMT 13.21% 20.54% 17.03%
Partners Portfolio
Oppenheimer Variable 31.55% 29.19% 18.69%
Account Funds -
Oppenheimer Aggressive
Growth Fund/VA
Oppenheimer Variable 30.04% 30.13% 17.16%
Account Funds -
Oppenheimer Capital
Appreciation Fund/VA
(formerly, Oppenheimer
Growth Fund)
</TABLE>
<PAGE> 73
<TABLE>
<CAPTION>
PERFORMANCE TABLES - TOTAL RETURN
--------------------------------------------------------------------------------------------------------
Annual Percentage Change Non annualized Percentage Change
Fund Unit 1 mo 1 Yr 2 Yrs 3 Yrs. 5 yrs.
Underlying Investment Inception Values 1997 1998 1999 To to to to to
Options Date** 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Variable 07/05/95 10.84% 31.99% 31.96% 4.28% 5.95% 21.22% 26.41% 66.82% -
Account Funds -
Oppenheimer Main Street
Growth & Income Fund/VA
(formerly, Oppenheimer
Growth & Income Fund)
Universal Institutional 06/16/97 8.72% 0.00% 0.00% -28.66% 6.09% 28.86% -8.07% - -
Funds, Inc. - Emerging
Markets Debt Portfolio
(formerly, Morgan Stanley
Dean Witter Universal
Funds, Inc. - Emerging
Markets Debt Portfolio)
Van Eck Worldwide 12/21/95 12.61% 26.32% -11.96% -34.39% 26.04% 99.48% 30.87% 15.23% -
Insurance Trust -
Worldwide Emerging
Markets Fund
Van Eck Worldwide 09/01/89 8.25% 17.59% -2.07% -31.24% 8.05% 20.52% -17.14% -18.86% 5.47
Insurance Trust -
Worldwide Hard Assets Fund
Van Kampen Life 07/03/95 8.59% 39.97% 20.99% -11.97% 3.48% -3.76% -15.29% 2.51% -
Investment Trust - Morgan
Stanley Real Estate
Securities Portfolio
Warburg Pincus Trust- 10/31/97 10.52% 0.00% 0.00% 11.68% 0.02% 5.82% 18.18% - -
Value Portfolio
(formerly, Warburg Pincus
Trust - Growth & Income
Portfolio)
Warburg Pincus Trust - 06/30/95 13.59% 9.54% -2.65% 4.93% 12.30% 52.82% 60.35% 56.09% -
International Equity
Portfolio
Warburg Pincus Trust - 09/30/96 14.76% 0.00% 12.88% 6.08% 21.63% 62.85% 72.76% 95.03% -
Global Post-Venture
Capital Portfolio
(formerly, Warburg Pincus
Trust - Post-Venture
Capital Portfolio)
PERFORMANCE TABLES - TOTAL RETURN
----------------------------------------------------
Non annualized
Percentage Change Annualized Percentage Change
Inception 3 Yrs. 5 yrs. Inception
Underlying Investment to to to To
Options 12/31/99 12/31/99 12/31/99 12/31/99
<S> <C> <C> <C> <C>
Oppenheimer Variable 275.27% 18.60% 0.00% 25.32%
Account Funds -
Oppenheimer Main Street
Growth & Income Fund/VA
(formerly, Oppenheimer
Growth & Income Fund)
Universal Institutional 92.44% 0.00% 0.00% -3.05%
Funds, Inc. - Emerging
Markets Debt Portfolio
(formerly, Morgan Stanley
Dean Witter Universal
Funds, Inc. - Emerging
Markets Debt Portfolio)
Van Eck Worldwide 144.09% 4.84% 0.00% 9.49%
Insurance Trust -
Worldwide Emerging
Markets Fund
Van Eck Worldwide 140.92% -6.73% 1.07% 3.38%
Insurance Trust -
Worldwide Hard Assets Fund
Van Kampen Life 155.13% 0.83% 0.00% 10.27%
Investment Trust - Morgan
Stanley Real Estate
Securities Portfolio
Warburg Pincus Trust- 122.70% 0.00% 0.00% 9.90%
Value Portfolio
(formerly, Warburg Pincus
Trust - Growth & Income
Portfolio)
Warburg Pincus Trust - 183.11% 16.00% 0.00% 14.39%
International Equity
Portfolio
Warburg Pincus Trust - 190.14% 24.94% 0.00% 21.86%
Global Post-Venture
Capital Portfolio
(formerly, Warburg Pincus
Trust - Post-Venture
Capital Portfolio)
</TABLE>
The preceding table displays three types of total return. Simply stated, total
return shows the percent change in unit values, with dividends and capital gains
reinvested, after the deduction of a 0.75% asset charge (and the deduction of
applicable investment advisory fees and other expenses of the underlying mutual
funds). The total return figures shown in the Annual Percentage Change and
Annualized Percentage Change columns represent annualized figures, i.e., they
show the rate of growth that would have produced the corresponding cumulative
return had performance been constant over the entire period quoted. The
Non-Annualized Percentage Change total return figures are not annual return
figures but instead represent the total percentage change in unit value over the
stated periods without annualization. THE TOTAL RETURN FIGURES DO NOT TAKE INTO
ACCOUNT THE SEVERAL OTHER POLICY CHARGES WHICH ARE DESCRIBED IN THE "POLICY
CHARGES" SECTION. THESE OTHER CHARGES INCLUDE DEDUCTIONS FROM PREMIUMS, COST OF
INSURANCE CHARGES, SURRENDER CHARGES AND A MONTHLY ADMINISTRATIVE CHARGE.
**The underlying mutual fund Inception Date is the date the underlying mutual
fund first became effective, which is not necessarily the same date the
underlying mutual fund was first made available through the variable account.
For those underlying mutual funds which have not been offered as sub-accounts
through the variable account for one of the quoted periods, the total return
figures will show the investment performance such underlying mutual funds would
have achieved (reduced by the 0.55% asset charge and Fund investment advisory
fees and expenses) had they been offered as sub-accounts through the variable
account for the period quoted. Certain underlying mutual funds are not as old as
some of the periods quoted, therefore, total return figures may not be available
for all of the periods shown.
The Janus Aspen Series - Capital Appreciation Portfolio: Service Shares, the
Janus Aspen Series Portfolio - Global Technology Portfolio: Service Shares and
the Janus Aspen Series - International Growth Portfolio: Service Shares were
added to the variable account effective January 27, 2000. Therefore, no
sub-account performance is available.
The Oppenheimer Variable Account Funds - Oppenheimer Global Securities Fund/VA,
the Strong Opportunity Fund II, Inc. and the Universal Institutional Funds, Inc.
- Mid Cap Growth Portfolio were added to the variable account effective May 1,
2000. Therefore, no sub-account performance is available.
64
<PAGE> 74
<PAGE> 1
Independent Auditors' Report
----------------------------
The Board of Directors of Nationwide Life and Annuity Insurance Company and
Contract Owners of Nationwide VL Separate Account-C:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VL Separate Account-C (comprised of the
sub-accounts listed in note 1(b)) (collectively, "the Account") as of December
31, 1999, and the related statement of operations and changes in contract
owners' equity for the year ended December 31, 1999 and the period May 1, 1998
(commencement of operations) through December 31, 1998. These financial
statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Account as of December
31, 1999, and the results of its operations and its changes in contract owners'
equity for the year ended December 31, 1999 and the period May 1, 1998
(commencement of operations) through December 31, 1998 in conformity with
generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 18, 2000
--------------------------------------------------------------------------------
<PAGE> 2
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Income & Growth (ACVPIncGr)
723,161 shares (cost $5,256,129) ................................................... $ 5,785,285
American Century VP - American Century VP International (ACVPInt)
259,483 shares (cost $2,279,655) ................................................... 3,243,532
American Century VP - American Century VP Value (ACVPValue)
53,079 shares (cost $312,373) ...................................................... 315,821
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
2,785 shares (cost $98,586) ........................................................ 108,801
Dreyfus Stock Index Fund (DryStkIx)
830,508 shares (cost $28,441,149) .................................................. 31,933,019
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
36,862 shares (cost $1,417,295) .................................................... 1,469,698
Dreyfus VIF - European Equity Portfolio (DryEuroEq)
18,465 shares (cost $288,105) ...................................................... 294,701
Fidelity VIP - Equity-Income Portfolio - Service Class (FidVIPEIS)
66,376 shares (cost $1,658,561) .................................................... 1,703,206
Fidelity VIP - Growth Portfolio - Service Class (FidVIPGrS)
181,425 shares (cost $8,298,921) ................................................... 9,942,107
Fidelity VIP - High Income Portfolio - Service Class (FidVIPHIS)
122,797 shares (cost $1,348,100) ................................................... 1,385,152
Fidelity VIP - Overseas Portfolio - Service Class (FidVIPOvS)
58,174 shares (cost $1,349,326) .................................................... 1,592,793
Fidelity VIP-II - Contrafund Portfolio - Service Class (FidVIPCon)
115,637 shares (cost $2,938,135) ................................................... 3,365,048
Fidelity VIP-III - Growth Opportunities Portfolio - Service Class (FidVIPGrOp)
108,122 shares (cost $2,439,121) ................................................... 2,499,787
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
8,967 shares (cost $65,649) ........................................................ 61,959
Nationwide SAT - Balanced Fund (NSATBal)
72,828 shares (cost $788,005) ...................................................... 750,860
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
82,003 shares (cost $2,246,094) .................................................... 2,108,290
Nationwide SAT - Equity Income Fund (NSATEqInc)
3,993 shares (cost $49,666) ........................................................ 54,029
Nationwide SAT - Global Equity Fund (NSATGlobEq)
79,979 shares (cost $1,037,981) .................................................... 1,110,914
Nationwide SAT - Government Bond Fund (NSATGvtBd)
1,373,738 shares (cost $15,062,651) ................................................ 14,822,636
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
17,724 shares (cost $172,397) ...................................................... 168,731
Nationwide SAT - Money Market Fund (NSATMyMkt)
18,625,223 shares (cost $18,625,223) ............................................... 18,625,223
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Nationwide SAT - Multi Sector Bond Fund (NSATMSecBd)
46,383 shares (cost $437,374) .................................................. 434,609
Nationwide SAT - Select Advisers Mid Cap Fund (NSATMidCap)
47,756 shares (cost $595,172) .................................................. 588,356
Nationwide SAT - Small Cap Growth Fund (NSATSmCapGr)
134,568 shares (cost $1,646,768) ............................................... 2,649,634
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
18,295 shares (cost $180,947) .................................................. 177,824
Nationwide SAT - Small Company Fund (NSATSmCo)
119,920 shares (cost $2,152,155) ............................................... 2,652,624
Nationwide SAT - Strategic Growth Fund (NSATStrGro)
45,624 shares (cost $824,398) .................................................. 932,551
Nationwide SAT - Strategic Value Fund (NSATStrVal)
74,463 shares (cost $686,682) .................................................. 700,697
Nationwide SAT - Total Return Fund (NSATTotRe)
7,565 shares (cost $144,965) ................................................... 142,294
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
52,017 shares (cost $784,997) .................................................. 824,464
Neuberger & Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr)
30,840 shares (cost $557,690) .................................................. 749,412
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
52,914 shares (cost $1,029,191) ................................................ 1,039,223
Oppenheimer VAF - Aggressive Growth Fund (OppAggGr)
47,282 shares (cost $3,158,836) ................................................ 3,891,784
Oppenheimer VAF - Growth Fund (OppGro)
56,671 shares (cost $2,340,115) ................................................ 2,824,476
Oppenheimer VAF - Growth & Income Fund (OppGrInc)
21,466 shares (cost $498,326) .................................................. 528,714
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
33,816 shares (cost $332,236) .................................................. 482,222
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
28,749 shares (cost $301,426) .................................................. 315,085
Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
36,090 shares (cost $441,693) .................................................. 446,439
Warburg Pincus Trust - Growth & Income Portfolio (WPGrInc)
32,459 shares (cost $406,095) .................................................. 385,936
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
25,965 shares (cost $317,697) .................................................. 433,620
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
33,744 shares (cost $502,928) .................................................. 649,900
-------------
Total investments ........................................................... 122,191,456
Accounts receivable .................................................................. -
-------------
Total assets ................................................................ 122,191,456
Accounts Payable ........................................................................ 9,645
-------------
Contract owners' equity (note 6) ........................................................ $ 122,181,811
=============
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
<PAGE> 4
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
TOTAL ACVPincGr ACVPint
----------------------------- ----------------------------- --------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 1,347,823 167,299 165 2,209 -
Mortality and expense charges (note 3)........... (268,225) (23,151) (8,955) (336) (6,057)
------------- ------------- ------------- ------------- -------------
Net investment activity........................ 1,079,598 144,148 (8,790) 1,873 (6,057)
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold............ 103,737,887 3,278,422 1,354,371 18,460 1,371,292
Cost of mutual fund shares sold.................. (99,106,410) (3,254,787) (1,249,864) (16,283) (1,113,862)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments............ 4,631,477 23,635 104,507 2,177 257,430
Change in unrealized gain (loss) on investments . 8,306,165 2,372,478 474,730 54,426 933,102
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments................. 12,937,642 2,396,113 579,237 56,603 1,190,532
------------- ------------- ------------- ------------- -------------
Reinvested capital gains......................... 1,145,941 23,462 - - -
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........... 15,163,181 2,563,723 570,447 58,476 1,184,475
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 87,966,089 24,823,406 3,408,223 375,552 1,786,884
Transfers between funds.......................... - - 1,403,101 33,816 31,974
Surrenders....................................... (5,053,930) - - - -
Policy loans (net of repayments) (note 4)........ - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c).............................. (2,792,788) (487,870) (59,929) (8,540) (76,149)
------------- ------------- ------------- ------------- -------------
Net equity transactions...................... 80,119,371 24,335,536 4,751,395 400,828 1,742,709
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 95,282,552 26,899,259 5,321,842 459,304 2,927,184
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........ 26,899,259 - 459,304 - 306,135
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. $ 122,181,811 26,899,259 5,781,146 459,304 3,233,319
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
ACVPint ACVPValue
-------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ - 1,471 -
Mortality and expense charges (note 3)........... (196) (979) (77)
-------------- -------------- -------------
Net investment activity........................ (196) 492 (77)
-------------- -------------- -------------
Proceeds from mutual fund shares sold............ - 531,207 960
Cost of mutual fund shares sold.................. - (559,656) (886)
-------------- -------------- -------------
Realized gain (loss) on investments............ - (28,449) 74
Change in unrealized gain (loss) on investments . 30,775 (1,755) 5,204
-------------- -------------- -------------
Net gain (loss) on investments................. 30,775 (30,204) 5,278
-------------- -------------- -------------
Reinvested capital gains......................... - 13,940 -
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........... 30,579 (15,772) 5,201
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 232,301 135,463 77,512
Transfers between funds.......................... 48,928 108,543 14,883
Surrenders....................................... - - -
Policy loans (net of repayments) (note 4)........ - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c).............................. (5,673) (8,529) (1,490)
-------------- -------------- -------------
Net equity transactions...................... 275,556 235,477 90,905
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 306,135 219,705 96,106
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD........ - 96,106 -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. 306,135 315,811 96,106
============== ============== =============
</TABLE>
<PAGE> 5
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
DrySRGro DryStkix DryCapAp
----------------------------- ----------------------------- --------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 13 13 258,829 16,440 7,948
Mortality and expense charges (note 3)........... (448) (5) (81,140) (4,323) (4,651)
------------- ------------- ------------- ------------- -------------
Net investment activity........................ (435) 8 177,689 12,117 3,297
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold............ 224,745 403 3,342,223 74,709 1,453,876
Cost of mutual fund shares sold.................. (218,557) (360) (2,441,535) (68,241) (1,373,176)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments............ 6,188 43 900,688 6,468 80,700
Change in unrealized gain (loss) on investments . 9,379 836 2,590,489 901,380 28,294
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments................. 15,567 879 3,491,177 907,848 108,994
------------- ------------- ------------- ------------- -------------
Reinvested capital gains......................... 3,622 287 210,845 4,384 5,329
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........... 18,754 1,174 3,879,711 924,349 117,620
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 243,046 4,085 12,869,361 1,344,322 968,279
Transfers between funds.......................... (154,045) 3,639 9,841,358 3,839,399 146,912
Surrenders....................................... - - - - -
Policy loans (net of repayments) (note 4)........ - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c).............................. (7,180) (628) (718,132) (65,383) (65,802)
------------- ------------- ------------- ------------- -------------
Net equity transactions...................... 81,821 7,096 21,992,587 5,118,338 1,049,389
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 100,575 8,270 25,872,298 6,042,687 1,167,009
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 8,270 - 6,042,687 - 300,742
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. $ 108,845 8,270 31,914,985 6,042,687 1,467,751
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
DryCapAp DryEuroEq
------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ 1,424 602 -
Mortality and expense charges (note 3)........... (168) (35) -
-------------- -------------- -------------
Net investment activity........................ 1,256 567 -
-------------- -------------- -------------
Proceeds from mutual fund shares sold............ 18,997 18 -
Cost of mutual fund shares sold.................. (16,543) (18) -
-------------- -------------- -------------
Realized gain (loss) on investments............ 2,454 - -
Change in unrealized gain (loss) on investments . 24,110 6,597 -
-------------- -------------- -------------
Net gain (loss) on investments................. 26,564 6,597 -
-------------- -------------- -------------
Reinvested capital gains......................... - 2,828 -
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........... 27,820 9,992 -
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 254,590 13,600 -
Transfers between funds.......................... 26,358 271,115 -
Surrenders....................................... - - -
Policy loans (net of repayments) (note 4)........ - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c).............................. (8,026) - -
-------------- -------------- -------------
Net equity transactions...................... 272,922 284,715 -
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 300,742 294,707 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - - -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. 300,742 294,707 -
============== ============== =============
</TABLE>
(Continued)
<PAGE> 6
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
FidVIPEIS FidVIPGrS FidVIPHiS
----------------------------- ----------------------------- -------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. $ 148 - 2,889 - 96,332
Mortality and expense charges (note 3)............ (1,161) (7) (19,541) (835) (8,494)
------------- ------------- ------------- ------------- -------------
Net investment activity......................... (1,013) (7) (16,652) (835) 87,838
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold............. 599,706 238 2,813,504 10,989 5,782,461
Cost of mutual fund shares sold................... (623,654) (216) (2,273,564) (10,235) (5,756,236)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments............. (23,948) 22 539,940 754 26,225
Change in unrealized gain (loss) on investments .. 43,792 853 1,464,627 178,559 (19,736)
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments.................. 19,844 875 2,004,567 179,313 6,489
------------- ------------- ------------- ------------- -------------
Reinvested capital gains.......................... 327 - 181,621 - 3,601
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations............ 19,158 868 2,169,536 178,478 97,928
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................. 44,304 3,459 4,819,460 877,191 2,599,667
Transfers between funds........................... 1,641,238 5,196 1,504,855 536,214 (2,163,505)
Surrenders........................................ - - - - -
Policy loans (net of repayments) (note 4) ........ - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................... (10,618) (369) (127,696) (15,006) (156,897)
------------- ------------- ------------- ------------- -------------
Net equity transactions....................... 1,674,924 8,286 6,196,619 1,398,399 279,265
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............... 1,694,082 9,154 8,366,155 1,576,877 377,193
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 9,154 - 1,576,877 - 957,639
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............... $ 1,703,236 9,154 9,943,032 1,576,877 1,334,832
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FidVIPHiS FidVIPOvS
-------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... - 10,719 -
Mortality and expense charges (note 3).............. (736) (3,409) (415)
-------------- -------------- -------------
Net investment activity........................... (736) 7,310 (415)
-------------- -------------- -------------
Proceeds from mutual fund shares sold............... 26,665 1,042,748 35,291
Cost of mutual fund shares sold..................... (25,810) (902,237) (31,093)
-------------- -------------- -------------
Realized gain (loss) on investments............... 855 140,511 4,198
Change in unrealized gain (loss) on investments .... 56,789 194,669 48,798
-------------- -------------- -------------
Net gain (loss) on investments.................... 57,644 335,180 52,996
-------------- -------------- -------------
Reinvested capital gains............................ - 17,288 -
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations.............. 56,908 359,778 52,581
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................... 797,529 359,166 322,715
Transfers between funds............................. 126,690 586,388 302,240
Surrenders.......................................... - (346,670) -
Policy loans (net of repayments) (note 4) .......... - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)................................. (23,488) (34,454) (9,108)
-------------- -------------- -------------
Net equity transactions......................... 900,731 564,430 615,847
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY................. 957,639 924,208 668,428
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .......... - 668,428 -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD................. 957,639 1,592,636 668,428
============== ============== =============
</TABLE>
<PAGE> 7
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
FidVIPCon FidVIPGrOp MSEmMkt
----------------------------- ----------------------------- -------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. $ 6,774 - 3,879 - 7,684
Mortality and expense charges (note 3)............ (10,620) (860) (5,343) (220) (556)
------------- ------------- ------------- ------------- -------------
Net investment activity......................... (3,846) (860) (1,464) (220) 7,128
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold............. 2,968,067 24,885 2,065,595 3,540 740,841
Cost of mutual fund shares sold................... (2,563,227) (23,083) (2,005,010) (3,522) (711,991)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments............. 404,840 1,802 60,585 18 28,850
Change in unrealized gain (loss) on investments .. 221,798 205,114 18,884 41,781 2,243
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments.................. 626,638 206,916 79,469 41,799 31,093
------------- ------------- ------------- ------------- -------------
Reinvested capital gains.......................... 49,679 - 7,581 - -
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations............ 672,471 206,056 85,586 41,579 38,221
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................. 1,834,169 1,010,459 1,137,493 39,353 116,046
Transfers between funds........................... (277,061) 83,425 1,413,659 315,460 (176,939)
Surrenders........................................ - - (480,497) - -
Policy loans (net of repayments) (note 4) ........ - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................... (134,004) (29,838) (71,145) (3,286) (6,107)
------------- ------------- ------------- ------------- -------------
Net equity transactions....................... 1,423,104 1,064,046 1,999,510 351,527 (67,000)
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............... 2,095,575 1,270,102 2,085,096 393,106 (28,779)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 1,270,102 - 393,106 - 90,735
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............... $ 3,365,677 1,270,102 2,478,202 393,106 61,956
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
MSEmMkt NSATBal
-------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. 10,770 23,069 579
Mortality and expense charges (note 3)............ (72) (2,415) (39)
-------------- -------------- -------------
Net investment activity......................... 10,698 20,654 540
-------------- -------------- -------------
Proceeds from mutual fund shares sold............. 3,311 547,597 10,977
Cost of mutual fund shares sold................... (3,263) (547,511) (10,455)
-------------- -------------- -------------
Realized gain (loss) on investments............. 48 86 522
Change in unrealized gain (loss) on investments .. (5,933) (38,013) 868
-------------- -------------- -------------
Net gain (loss) on investments.................. (5,885) (37,927) 1,390
-------------- -------------- -------------
Reinvested capital gains.......................... - 106 221
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations............ 4,813 (17,167) 2,151
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................. 76,358 440,636 64,453
Transfers between funds........................... 10,866 372,074 16,856
Surrenders........................................ - (92,593) -
Policy loans (net of repayments) (note 4) ........ - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................... (1,302) (33,872) (2,533)
-------------- -------------- -------------
Net equity transactions....................... 85,922 686,245 78,776
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............... 90,735 669,078 80,927
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ - 80,927 -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............... 90,735 750,005 80,927
============== ============== =============
</TABLE>
(Continued)
<PAGE> 8
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
NSATCapAp NSATEqinc NSATGLobEq
----------------------------- ----------------------------- -------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................... $ 11,330 864 373 - 757
Mortality and expense charges (note 3)......... (5,775) (308) (518) - (1,632)
------------- ------------- ------------- ------------- -------------
Net investment activity...................... 5,555 556 (145) - (875)
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold.......... 1,154,145 39,188 212,638 - 111,896
Cost of mutual fund shares sold................ (1,109,478) (35,989) (204,435) - (112,521)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments.......... 44,667 3,199 8,203 - (625)
Change in unrealized gain (loss) on investments (170,272) 32,468 4,363 - 72,567
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments............... (125,605) 35,667 12,566 - 71,942
------------- ------------- ------------- ------------- -------------
Reinvested capital gains....................... 154,726 11,909 44 - 34,111
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 34,676 48,132 12,465 - 105,178
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 1,295,042 469,254 45,293 - 394,087
Transfers between funds........................ 388,125 (26,553) 2,148 - 626,801
Surrenders..................................... - - - - -
Policy loans (net of repayments) (note 4) ..... - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................ (79,717) (19,108) (6,008) - (17,581)
------------- ------------- ------------- ------------- -------------
Net equity transactions.................... 1,603,450 423,593 41,433 - 1,003,307
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 1,638,126 471,725 53,898 - 1,108,485
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 471,725 - - - 2,480
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $ 2,109,851 471,725 53,898 - 1,110,965
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
NSATGLobEq NSATGvtBd
-------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................... 5 313,001 7,625
Mortality and expense charges (note 3)......... (3) (17,310) (306)
-------------- -------------- -------------
Net investment activity...................... 2 295,691 7,319
-------------- -------------- -------------
Proceeds from mutual fund shares sold.......... 43 5,092,894 1,249
Cost of mutual fund shares sold................ (37) (5,283,703) (1,246)
-------------- -------------- -------------
Realized gain (loss) on investments.......... 6 (190,809) 3
Change in unrealized gain (loss) on investments 365 (231,270) (8,745)
-------------- -------------- -------------
Net gain (loss) on investments............... 371 (422,079) (8,742)
-------------- -------------- -------------
Reinvested capital gains....................... 17 14,887 2,401
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 390 (111,501) 978
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 259 4,044,848 314,799
Transfers between funds........................ 1,883 10,618,629 195,168
Surrenders..................................... - (90,452) -
Policy loans (net of repayments) (note 4) ..... - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................ (52) (157,585) (6,117)
-------------- -------------- -------------
Net equity transactions.................... 2,090 14,415,440 503,850
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 2,480 14,303,939 504,828
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... - 504,828 -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ 2,480 14,808,767 504,828
============== ============== =============
</TABLE>
<PAGE> 9
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
NSATHIncBd NSATMyMkt NSATMSecBd
----------------------------- ----------------------------- --------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. $ 21,764 1,789 521,656 116,826 24,983
Mortality and expense charges (note 3)............ (1,034) (86) (43,048) (10,114) (1,562)
------------- ------------- ------------- ------------- -------------
Net investment activity......................... 20,730 1,703 478,608 106,712 23,421
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold............. 932,935 17,430 50,454,233 2,917,122 841,356
Cost of mutual fund shares sold................... (944,309) (16,738) (50,454,233) (2,917,122) (855,987)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments............. (11,374) 692 - - (14,631)
Change in unrealized gain (loss) on investments .. (6,600) 2,935 - - (3,411)
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments.................. (17,974) 3,627 - - (18,042)
------------- ------------- ------------- ------------- -------------
Reinvested capital gains.......................... 114 - - - -
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations............ 2,870 5,330 478,608 106,712 5,379
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................. 192,247 138,276 42,289,121 14,686,986 357,691
Transfers between funds........................... (153,800) 3,992 (30,435,129) (7,412,730) (234,720)
Surrenders........................................ - - (229,248) - -
Policy loans (net of repayments) (note 4) ........ - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................... (14,343) (2,423) (526,025) (200,727) (19,579)
------------- ------------- ------------- ------------- -------------
Net equity transactions....................... 24,104 139,845 11,098,719 7,073,529 103,392
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............... 26,974 145,175 11,577,327 7,180,241 108,771
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 145,175 - 7,180,241 - 325,786
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............... $ 172,149 145,175 18,757,568 7,180,241 434,557
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
NSATMSecBd NSATMidCap
-------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. 3,801 316 4
Mortality and expense charges (note 3)............ (203) (117) (3)
-------------- -------------- -------------
Net investment activity......................... 3,598 199 1
-------------- -------------- -------------
Proceeds from mutual fund shares sold............. 2,882 5,855 44
Cost of mutual fund shares sold................... (2,846) (5,621) (37)
-------------- -------------- -------------
Realized gain (loss) on investments............. 36 234 7
Change in unrealized gain (loss) on investments .. 646 (7,207) 390
-------------- -------------- -------------
Net gain (loss) on investments.................. 682 (6,973) 397
-------------- -------------- -------------
Reinvested capital gains.......................... 233 36,162 -
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations............ 4,513 29,388 398
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................. 291,490 22,145 314
Transfers between funds........................... 33,681 534,281 1,884
Surrenders........................................ - - -
Policy loans (net of repayments) (note 4) ........ - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................... (3,898) - (52)
-------------- -------------- -------------
Net equity transactions....................... 321,273 556,426 2,146
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............... 325,786 585,814 2,544
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ - 2,544 -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............... 325,786 588,358 2,544
============== ============== =============
</TABLE>
(Continued)
<PAGE> 10
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
NSATSmCapGr NSATSmCapV NSATSmCo
----------------------------- ----------------------------- --------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................... $ - - - - -
Mortality and expense charges (note 3).......... (71) - (4,239) (251) (4,937)
------------- ------------- ------------- ------------- -------------
Net investment activity....................... (71) - (4,239) (251) (4,937)
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold........... 15,367 - 2,760,638 749 1,138,531
Cost of mutual fund shares sold................. (14,874) - (2,545,807) (617) (1,004,382)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments........... 493 - 214,831 132 134,149
Change in unrealized gain (loss) on investments 1,002,866 - (51,260) 48,137 455,234
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments................ 1,003,359 - 163,571 48,269 589,383
------------- ------------- ------------- ------------- -------------
Reinvested capital gains........................ 100,381 - 85,300 - 101,040
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations.......... 1,103,669 - 244,632 48,018 685,486
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............................... 1,027,328 - 228,233 53,437 1,277,119
Transfers between funds......................... 518,641 - 334,145 488,017 295,719
Surrenders...................................... - - (1,189,906) - -
Policy loans (net of repayments) (note 4) ...... - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................. - - (27,322) (1,592) (82,718)
------------- ------------- ------------- ------------- -------------
Net equity transactions..................... 1,545,969 - (654,850) 539,862 1,490,120
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............. 2,649,638 - (410,218) 587,880 2,175,606
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...... - - 587,880 - 457,896
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............. $ 2,649,638 - 177,662 587,880 2,633,502
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
NSATSmCo NSATStrGro
-------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............................. - - -
Mortality and expense charges (note 3)............. (266) (609) -
-------------- -------------- -------------
Net investment activity.......................... (266) (609) -
-------------- -------------- -------------
Proceeds from mutual fund shares sold.............. 4,791 200,383 -
Cost of mutual fund shares sold.................... (4,712) (164,475) -
-------------- -------------- -------------
Realized gain (loss) on investments.............. 79 35,908 -
Change in unrealized gain (loss) on investments ... 45,235 108,153 -
-------------- -------------- -------------
Net gain (loss) on investments................... 45,314 144,061 -
-------------- -------------- -------------
Reinvested capital gains........................... - 47,618 -
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations............. 45,048 191,070 -
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.................................. 415,058 100,649 -
Transfers between funds............................ 12,398 647,351 -
Surrenders......................................... - - -
Policy loans (net of repayments) (note 4) ......... - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)................................ (14,608) (6,617) -
-------------- -------------- -------------
Net equity transactions........................ 412,848 741,383 -
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY................ 457,896 932,453 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... - - -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD................ 457,896 932,453 -
============== ============== =============
</TABLE>
<PAGE> 11
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
NSATStrVal NSATTotRe NBAMTGuard
----------------------------- ----------------------------- --------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 2,521 697 254 262 6,081
Mortality and expense charges (note 3)......... (791) (234) (440) (78) (5,563)
------------- ------------- ------------- ------------- -------------
Net investment activity...................... 1,730 463 (186) 184 518
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold.......... 649,774 5,193 474,916 975 2,794,209
Cost of mutual fund shares sold................ (613,244) (5,131) (456,195) (930) (2,473,838)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments.......... 36,530 62 18,721 45 320,371
Change in unrealized gain (loss) on investments (27,585) 41,599 (8,571) 5,900 (123,751)
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments............... 8,945 41,661 10,150 5,945 196,620
------------- ------------- ------------- ------------- -------------
Reinvested capital gains....................... 14,264 - 5,178 4,010 -
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 24,939 42,124 15,142 10,139 197,138
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 155,038 158,330 116,583 79,186 892,142
Transfers between funds........................ 246,688 87,690 (87,234) 15,559 (1,082,753)
Surrenders..................................... - - - - (329,847)
Policy loans (net of repayments) (note 4) ..... - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................ (9,632) (4,477) (5,554) (1,494) (50,939)
------------- ------------- ------------- ------------- -------------
Net equity transactions.................... 392,094 241,543 23,795 93,251 (571,397)
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 417,033 283,667 38,937 103,390 (374,259)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 283,667 - 103,390 - 1,198,660
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $ 700,700 283,667 142,327 103,390 824,401
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
NBAMTGuard NBAMTMCGr
-------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... - - -
Mortality and expense charges (note 3)......... (837) (6,075) (620)
-------------- -------------- -------------
Net investment activity...................... (837) (6,075) (620)
-------------- -------------- -------------
Proceeds from mutual fund shares sold.......... 7,799 3,339,559 4,507
Cost of mutual fund shares sold................ (7,186) (2,733,204) (4,091)
-------------- -------------- -------------
Realized gain (loss) on investments.......... 613 606,355 416
Change in unrealized gain (loss) on investments 163,218 (40,284) 232,006
-------------- -------------- -------------
Net gain (loss) on investments............... 163,831 566,071 232,422
-------------- -------------- -------------
Reinvested capital gains....................... - 33,171 -
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 162,994 593,167 231,802
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 795,893 744,249 440,392
Transfers between funds........................ 253,300 (501,434) 417,252
Surrenders..................................... - (1,114,722) -
Policy loans (net of repayments) (note 4) ..... - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................ (13,527) (53,045) (8,273)
-------------- -------------- -------------
Net equity transactions.................... 1,035,666 (924,952) 849,371
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 1,198,660 (331,785) 1,081,173
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... - 1,081,173 -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ 1,198,660 749,388 1,081,173
============== ============== =============
</TABLE>
(Continued)
<PAGE> 12
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
NBAMTPart OppAggGr OppGro
----------------------------- ----------------------------- --------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. $ 4,324 - - - 122
Mortality and expense charges (note 3)............ (3,280) (180) (4,564) (320) (2,821)
------------- ------------- ------------- ------------- -------------
Net investment activity......................... 1,044 (180) (4,564) (320) (2,699)
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold............. 1,151,119 2,278 1,169,499 857 882,266
Cost of mutual fund shares sold................... (1,133,731) (2,175) (805,309) (910) (781,544)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments............. 17,388 103 364,190 (53) 100,722
Change in unrealized gain (loss) on investments .. (10,091) 20,123 635,010 97,938 463,855
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments.................. 7,297 20,226 999,200 97,885 564,577
------------- ------------- ------------- ------------- -------------
Reinvested capital gains.......................... 7,690 - - - 1,339
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations............ 16,031 20,046 994,636 97,565 563,217
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................. 775,015 200,749 746,374 248,676 723,294
Transfers between funds........................... 45,388 26,446 2,078,986 174,349 1,439,574
Surrenders........................................ - - (397,205) - -
Policy loans (net of repayments) (note 4) ........ - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................... (39,833) (4,731) (46,574) (5,124) (25,735)
------------- ------------- ------------- ------------- -------------
Net equity transactions....................... 780,570 222,464 2,381,581 417,901 2,137,133
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............... 796,601 242,510 3,376,217 515,466 2,700,350
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 242,510 - 515,466 - 125,183
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............... $ 1,039,111 242,510 3,891,683 515,466 2,825,533
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
OppGro OppGrinc
-------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. - 4,341 -
Mortality and expense charges (note 3)............ (101) (3,022) (157)
-------------- -------------- -------------
Net investment activity......................... (101) 1,319 (157)
-------------- -------------- -------------
Proceeds from mutual fund shares sold............. 28,812 1,763,439 906
Cost of mutual fund shares sold................... (30,635) (1,623,537) (797)
-------------- -------------- -------------
Realized gain (loss) on investments............. (1,823) 139,902 109
Change in unrealized gain (loss) on investments .. 20,506 4,768 25,619
-------------- -------------- -------------
Net gain (loss) on investments.................. 18,683 144,670 25,728
-------------- -------------- -------------
Reinvested capital gains.......................... - 7,313 -
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations............ 18,582 153,302 25,571
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................. 86,295 171,347 104,537
Transfers between funds........................... 22,139 733,953 149,203
Surrenders........................................ - (782,790) -
Policy loans (net of repayments) (note 4) ........ - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c)............................... (1,833) (24,094) (2,412)
-------------- -------------- -------------
Net equity transactions....................... 106,601 98,416 251,328
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY............... 125,183 251,718 276,899
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ - 276,899 -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD............... 125,183 528,617 276,899
============== ============== =============
</TABLE>
<PAGE> 13
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
VEWrldEMkt VEWrldHAs VKMSRESec
----------------------------- ----------------------------- --------------
1999 1998 1999 1998 1999
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ - - 1,327 - 7,347
Mortality and expense charges (note 3)........... (1,393) (102) (701) (68) (997)
------------- ------------- ------------- ------------- -------------
Net investment activity........................ (1,393) (102) 626 (68) 6,350
------------- ------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold............ 502,179 2,077 357,028 1,076 1,051,015
Cost of mutual fund shares sold.................. (416,510) (1,987) (333,858) (1,070) (1,068,159)
------------- ------------- ------------- ------------- -------------
Realized gain (loss) on investments............ 85,669 90 23,170 6 (17,144)
Change in unrealized gain (loss) on investments . 134,693 15,293 15,698 (2,039) 4,238
------------- ------------- ------------- ------------- -------------
Net gain (loss) on investments................. 220,362 15,383 38,868 (2,033) (12,906)
------------- ------------- ------------- ------------- -------------
Reinvested capital gains......................... - - - - -
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........... 218,969 15,281 39,494 (2,101) (6,556)
------------- ------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 242,033 87,572 63,607 75,264 365,673
Transfers between funds.......................... (96,346) 32,251 135,707 10,866 82,451
Surrenders....................................... - - - - -
Policy loans (net of repayments) (note 4) ....... - - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c).............................. (15,612) (1,951) (6,389) (1,280) (16,453)
------------- ------------- ------------- ------------- -------------
Net equity transactions...................... 130,075 117,872 192,925 84,850 431,671
------------- ------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 349,044 133,153 232,419 82,749 425,115
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 133,153 - 82,749 - 14,393
------------- ------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. $ 482,197 133,153 315,168 82,749 439,508
============= ============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
VKMSRESec WPGrinc
-------------- ------------------------------
1998 1999 1998
-------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ - 3,241 2,979
Mortality and expense charges (note 3)........... (2) (1,366) (289)
-------------- -------------- -------------
Net investment activity........................ (2) 1,875 2,690
-------------- -------------- -------------
Proceeds from mutual fund shares sold............ 33 1,052,934 5,560
Cost of mutual fund shares sold.................. (30) (971,396) (5,306)
-------------- -------------- -------------
Realized gain (loss) on investments............ 3 81,538 254
Change in unrealized gain (loss) on investments . 508 (55,089) 34,931
-------------- -------------- -------------
Net gain (loss) on investments................. 511 26,449 35,185
-------------- -------------- -------------
Reinvested capital gains......................... - 5,836 -
-------------- -------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........... 509 34,160 37,875
-------------- -------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 311 394,540 373,642
Transfers between funds.......................... 13,626 (481,400) 59,416
Surrenders....................................... - - -
Policy loans (net of repayments) (note 4) ....... - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c).............................. (53) (21,207) (12,701)
-------------- -------------- -------------
Net equity transactions...................... 13,884 (108,067) 420,357
-------------- -------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 14,393 (73,907) 458,232
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - 458,232 -
-------------- -------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. 14,393 384,325 458,232
============== ============== =============
</TABLE>
<PAGE> 14
NATIONWIDE VL SEPARATE ACCOUNT-C
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEAR ENDED DECEMBER 31, 1999 AND FOR THE PERIOD MAY 1, 1998 (COMMENCEMENT OF
OPERATIONS) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
WPintEq WPPVenCap
----------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 3,563 1,012 - -
Mortality and expense charges (note 3)........... (1,380) (180) (1,176) (154)
------------- ------------- ------------- -------------
Net investment activity........................ 2,183 832 (1,176) (154)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold............ 404,610 3,488 386,218 1,938
Cost of mutual fund shares sold.................. (342,261) (3,431) (313,701) (1,774)
------------- ------------- ------------- -------------
Realized gain (loss) on investments............ 62,349 57 72,517 164
Change in unrealized gain (loss) on investments . 100,275 15,648 110,736 36,237
------------- ------------- ------------- -------------
Net gain (loss) on investments................. 162,624 15,705 183,253 36,401
------------- ------------- ------------- -------------
Reinvested capital gains......................... - - - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations........... 164,807 16,537 182,077 36,247
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners................................ 289,591 160,067 237,003 162,740
Transfers between funds.......................... (230,513) 51,953 25,075 24,240
Surrenders....................................... - - - -
Policy loans (net of repayments) (note 4) ....... - - - -
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c).............................. (15,580) (3,326) (14,132) (3,441)
------------- ------------- ------------- -------------
Net equity transactions...................... 43,498 208,694 247,946 183,539
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.............. 208,305 225,231 430,023 219,786
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 225,231 - 219,786 -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.............. $ 433,536 225,231 649,809 219,786
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 15
NATIONWIDE VL SEPARATE ACCOUNT-C
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide VL Separate Account-C (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
and Annuity 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.
On May 3, 1999, the Company (Depositor) transferred to the Account
100,000 shares of the Nationwide SAT - Small Cap Growth Fund for which
the Account was credited with 100,000 units of the Nationwide SAT -
Small Cap Growth Fund. The value of the units purchased by the Company
on May 3, 1999 was $1,000,000.
The Company offers Corporate 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)
Dreyfus VIF - European Equity Portfolio (DryEuroEq)
Federated Insurance Series - Quality Bond Fund II (FedQualBd)
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio - Service Class
(FidVIPEIS)
Fidelity VIP - Growth Portfolio - Service Class (FidVIPGrS)
Fidelity VIP - High Income Portfolio - Service Class (FidVIPHIS)
Fidelity VIP - Overseas Portfolio - Service Class (FidVIPOvS)
Portfolio of the Fidelity Variable Insurance Products Fund II
(Fidelity VIP-II);
Fidelity VIP-II - Contrafund Portfolio - Service Class
(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 (MSEmMkt)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Balanced Fund (NSATBal)
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Equity Income Fund (NSATEqInc)
(Continued)
<PAGE> 16
NATIONWIDE VL SEPARATE ACCOUNT-C
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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)
Nationwide SAT - Small Cap Growth Fund (NSATSmCapGr)
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 (OppAggGr)
(formerly Oppenheimer VAF - Capital Appreciation Fund)
Oppenheimer VAF - Growth Fund (OppGro)
Oppenheimer VAF - Growth & Income Fund (OppGrInc)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT);
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
Portfolio of the Van Kampen Life Investment Trust (Van Kampen
LIT);
Van Kampen 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, 1999, contract owners have invested in all of the above
funds except for Federated Insurance Series - Quality Bond Fund II. 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.
<PAGE> 17
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1999. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company which is taxed as a life insurance company
under the Internal Revenue Code.
The Company does not provide for income taxes within the Account.
Taxes are the responsibility of the contract owner upon termination
or withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(2) POLICY CHARGES
(a) Deductions from Premium
The Company deducts a charge for state premium taxes of 3.5% on all
premiums received to cover the payment of premium taxes. Additionally,
the Company deducts a front-end sales load not to exceed 5.5% 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 by
liquidating units. 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
The Company deducts a monthly administrative expense charge to recover
policy maintenance, accounting, record keeping and other administrative
expenses and is assessed against each contract by liquidating units.
Currently, this charge is $5.00 per month in all policy years. On a
guaranteed basis this charge is $10.00 per month in all policy years.
(3) Asset charges
For corporate flexible premium contracts, the Company deducts a charge from
the contract to cover mortality and expense risk charges related to
operations. This charge is guaranteed not to exceed an annual rate of .75%.
Currently, this rate is .40% during the first through fourth policy years,
.25% during the fifth through twentieth policy years, and .10% thereafter.
For the reduced fee tier corporate flexible premium contracts the current
rate is .10% for all policy years.
Nationwide may reduce or eliminate certain charges, where the size or
nature of the group results in savings in sales, underwriting,
administrative or other costs, to Nationwide. These charges may be reduced
in certain group, sponsored arrangements or special exchange programs made
available by Nationwide.
(4) 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. There were
no policy loans in the current year.
(Continued)
<PAGE> 18
NATIONWIDE VL SEPARATE ACCOUNT-C
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(5) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
<PAGE> 19
(7) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1999:
<TABLE>
<CAPTION>
ANNUAL
Contract owners' equity represented by: UNITS UNIT VALUE RETURN(b)
--------- ----------- -------
<S> <C> <C> <C> <C>
The BEST of AMERICA(R)
America's FUTURE Life Series(SM):
American Century VP - American
Century VP Income & Growth ................. 233,365 $ 12.803106 $ 2,987,797 18%
American Century VP - American
Century VP International ................... 181,283 15.960157 2,893,305 63%
American Century VP - American
Century VP Value ........................... 34,114 9.257533 315,811 (1)%
The Dreyfus Socially Responsible
Growth Fund, Inc. .......................... 7,538 14.439525 108,845 30%
Dreyfus Stock Index Fund ...................... 2,198,099 13.249543 29,123,807 20%
Dreyfus VIF -
Capital Appreciation Portfolio ............. 119,919 12.239522 1,467,751 11%
Dreyfus VIP -
European Equity Portfolio .................. 22,815 12.917253 294,707 29%(a)
Fidelity VIP - Equity-Income Portfolio -
Service Class .............................. 162,451 10.484615 1,703,236 6%
Fidelity VIP - Growth Portfolio -
Service Class .............................. 444,364 16.475102 7,320,942 37%
Fidelity VIP - High Income Portfolio -
Service Class .............................. 137,733 9.691447 1,334,832 8%
Fidelity VIP - Overseas Portfolio -
Service Class .............................. 118,048 13.491426 1,592,636 42%
Fidelity VIP-II - Contrafund Portfolio -
Service Class .............................. 240,062 14.020034 3,365,677 24%
Fidelity VIP-III - Growth Opportunities
Portfolio - Service Class .................. 212,333 11.671298 2,478,202 4%
Morgan Stanley -
Emerging Markets Debt Portfolio ............ 7,107 8.717559 61,956 29%
Nationwide SAT - Balanced Fund ................ 74,582 10.056111 750,005 0%
Nationwide SAT -
Capital Appreciation Fund .................. 181,521 11.623180 2,109,851 4%
Nationwide SAT - Equity Income Fund ........... 4,316 12.487973 53,898 18%
Nationwide SAT - Global Equity Fund ........... 87,461 12.702408 1,110,965 22%
Nationwide SAT - Government Bond Fund ......... 755,102 10.372218 7,832,083 (3)%
Nationwide SAT - High Income Bond Fund ........ 16,667 10.328712 172,149 3%
Nationwide SAT - Money Market Fund ............ 1,550,267 10.776865 16,707,018 4%
Nationwide SAT - Multi Sector Bond Fund ....... 41,704 10.106222 421,470 1%
Nationwide SAT -
Select Advisers Mid Cap Fund ............... 49,740 11.828670 588,358 20%
Nationwide SAT - Small Cap Growth Fund ........ 29,320 20.447188 599,512 104%(a)
Initial funding by depositor (see note 1a) .... 100,000 20.501257 2,050,126 105%(a)
Nationwide SAT - Small Cap Value Fund ......... 16,261 10.925665 177,662 27%
Nationwide SAT - Small Company Fund ........... 202,708 12.991606 2,633,502 43%
Nationwide SAT - Strategic Growth Fund ........ 48,159 19.361969 932,453 84%
Nationwide SAT - Strategic Value Fund ......... 79,877 8.772237 700,700 (3)%
</TABLE>
(Continued)
<PAGE> 20
NATIONWIDE VL SEPARATE ACCOUNT-C
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN(b)
--------- ----------- -------
<S> <C> <C> <C> <C>
Nationwide SAT - Total Return Fund .............. 13,172 10.805244 142,327 7%
Neuberger & Berman AMT -
Guardian Portfolio ........................... 49,845 10.690765 532,881 14%
Neuberger & Berman AMT -
Mid-Cap Growth Portfolio ..................... 43,280 17.314889 749,388 53%
Neuberger & Berman AMT -
Partners Portfolio ........................... 104,066 9.985118 1,039,111 7%
Oppenheimer VAF -
Aggressive Growth Fund ....................... 178,401 17.712996 3,160,016 83%
Oppenheimer VAF - Growth Fund ................... 127,994 15.039330 1,924,944 41%
Oppenheimer VAF -
Growth & Income Fund ......................... 48,784 10.835877 528,617 21%
Van Eck WIT -
Worldwide Emerging Markets Fund .............. 38,228 12.613718 482,197 99%
Van Eck WIT -
Worldwide Hard Assets Fund ................... 38,220 8.246159 315,168 21%
Van Kampen LIT - Morgan Stanley
Real Estate Securities Portfolio ............. 51,147 8.593033 439,508 (4)%
Warburg Pincus Trust -
Growth & Income Portfolio .................... 36,533 10.519954 384,325 6%
Warburg Pincus Trust -
International Equity Portfolio ............... 31,892 13.593893 433,536 53%
Warburg Pincus Trust -
Post Venture Capital Portfolio ............... 44,018 14.762349 649,809 63%
The BEST of AMERICA(R)
America's FUTURE Life Series(SM) Reduced Fee Tier:
American Century VP - American
Century VP Income & Growth ................... 242,505 11.518727 2,793,349 15%
American Century VP - American
Century VP International ..................... 21,260 15.993145 340,014 60%
Dreyfus Stock Index Fund ........................ 244,230 11.428481 2,791,178 14%
Fidelity VIP - Growth Portfolio -
Service Class ................................ 208,919 12.550748 2,622,090 26%
Nationwide SAT - Government Bond Fund ........... 705,360 9.890955 6,976,684 (1)%
Nationwide SAT - Money Market Fund .............. 197,969 10.357933 2,050,550 4%
Nationwide SAT - Multi Sector Bond Fund ......... 1,287 10.168791 13,087 2%
Neuberger & Berman AMT -
Guardian Portfolio ........................... 26,597 10.960631 291,520 10%
Oppenheimer VAF -
Aggressive Growth Fund ....................... 44,061 16.605768 731,667 64%
Oppenheimer VAF - Growth Fund ................... 68,065 13.231306 900,589 32%
======== =========== -------------
$ 122,181,811
=============
</TABLE>
(a) Non-annualized. These returns were computed for the periods 9/27/99 and
5/03/99 (effective dates) through 12/31/99 for the Dreyfus VIP - European
Equity Portfolio and Nationwide SAT - Small Cap Growth Fund, respectively.
(b) The annual return does not include contract charges satisfied by surrending
units.
--------------------------------------------------------------------------------
<PAGE> 75
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Life and Annuity Insurance Company:
We have audited the accompanying balance sheets of Nationwide Life and Annuity
Insurance Company, a wholly owned subsidiary of Nationwide Life Insurance
Company, as of December 31, 1999 and 1998, and the related statements of income,
shareholder's equity and cash flows for each of the years in the three-year
period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nationwide Life and Annuity
Insurance Company as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
Columbus, Ohio
January 28, 2000
<PAGE> 2
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Balance Sheets
($000's omitted, except per share amounts)
<TABLE>
<CAPTION>
December 31,
-------------------------------
Assets 1999 1998
------ --------------- ---------------
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $ 1,051,556 $ 904,946
Equity securities 5,659 20,853
Mortgage loans on real estate, net 330,068 268,894
Real estate, net 2,200 2,250
Policy loans 465 332
Short-term investments 706 2,277
--------------- ---------------
1,390,654 1,199,552
--------------- ---------------
Cash 4,280 2
Accrued investment income 13,906 11,645
Deferred policy acquisition costs 92,025 53,007
Reinsurance receivable from affiliate 91,667 -
Other assets 42,851 41,542
Assets held in separate accounts 2,127,080 1,533,690
--------------- ---------------
$ 3,762,463 $ 2,839,438
=============== ===============
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims $ 1,480,807 $ 1,163,829
Other liabilities 41,308 25,933
Liabilities related to separate accounts 2,127,080 1,533,690
--------------- ---------------
3,649,195 2,723,452
--------------- ---------------
Commitments and contingencies (notes 8 and 12)
Shareholder's equity:
Common stock, $40 par value. Authorized, issued and outstanding 66,000 shares 2,640 2,640
Additional paid-in capital 52,960 52,960
Retained earnings 59,536 50,331
Accumulated other comprehensive income (1,868) 10,055
--------------- ---------------
113,268 115,986
--------------- ---------------
$ 3,762,463 $ 2,839,438
=============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Income
($000's omitted)
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1999 1998 1997
------------- ------------- --------------
<S> <C> <C> <C>
Revenues:
Policy charges $44,793 $28,549 $11,244
Life insurance premiums 292 63 363
Net investment income 13,959 11,314 11,577
Realized gains (losses) on investments 5,208 696 (246)
Other income 1,059 1,165 1,057
------------- ------------- --------------
65,311 41,787 23,995
------------- ------------- --------------
Benefits and expenses:
Interest credited to policyholder account balances 8,548 4,881 3,948
Other benefits and claims 5,210 1,586 433
Amortization of deferred policy acquisition costs 13,592 4,348 1,402
Other operating expenses 24,185 8,952 1,860
------------- ------------- --------------
51,535 19,767 7,643
------------- ------------- --------------
Income before federal income tax expense 13,776 22,020 16,352
Federal income tax expense 4,571 7,501 5,749
------------- ------------- --------------
Net income $ 9,205 $14,519 $10,603
============= ============= ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Shareholder's Equity
Years ended December 31, 1999, 1998 and 1997
($000's omitted)
<TABLE>
<CAPTION>
Accumulated
Additional other Total
Common paid-in Retained comprehensive shareholder's
stock capital earnings income equity
------------ -------------- -------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
December 31, 1996 $2,640 $52,960 $25,209 $ 3,228 $ 84,037
Comprehensive income:
Net income - - 10,603 - 10,603
Net unrealized gains on securities
available-for-sale arising during the year - - - 3,940 3,940
---------------
Total comprehensive income 14,543
------------ -------------- -------------- ----------------- ---------------
December 31, 1997 2,640 52,960 35,812 7,168 98,580
Comprehensive income:
Net income - - 14,519 - 14,519
Net unrealized gains on securities
available-for-sale arising during the year - - - 2,887 2,887
---------------
Total comprehensive income 17,406
------------ -------------- -------------- ----------------- ---------------
December 31, 1998 2,640 52,960 50,331 10,055 115,986
Comprehensive income:
Net income - - 9,205 - 9,205
Net unrealized losses on securities
available-for-sale arising during the year - - - (11,923) (11,923)
---------------
Total comprehensive income (2,718)
------------ -------------- -------------- ----------------- ---------------
December 31, 1999 $2,640 $52,960 $59,536 $(1,868) $113,268
============ ============== ============== ================= ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Cash Flows
($000's omitted)
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------------------
1999 1998 1997
------------- ---------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 9,205 $ 14,519 $ 10,603
Adjustments to reconcile net income to net cash provided by
operating activities:
Interest credited to policyholder account balances 8,548 4,881 3,948
Capitalization of deferred policy acquisition costs (33,965) (29,216) (20,099)
Amortization of deferred policy acquisition costs 13,592 4,348 1,402
Amortization and depreciation 1,351 (479) 250
Realized (gains) losses on invested assets, net (5,208) (696) 246
Increase in accrued investment income (2,261) (867) (1,589)
Increase in policy liabilities and funds withheld
on coinsurance agreement with affiliate 160,246 139,991 228,898
Other, net 20,486 (29,802) 14,370
------------- ---------------- ---------------
Net cash provided by operating activities 171,994 102,679 238,029
------------- ---------------- ---------------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 137,210 117,228 95,366
Proceeds from sale of securities available-for-sale 73,864 17,403 30,431
Proceeds from repayments of mortgage loans on real estate 32,397 28,180 15,199
Proceeds from sale of real estate - 707 -
Proceeds from repayments of policy loans 109 99 67
Cost of securities available-for-sale acquired (375,642) (242,516) (267,899)
Cost of mortgage loans on real estate acquired (93,500) (78,180) (84,736)
Cost of real estate acquired - (3) (13)
Policy loans issued (242) (216) (155)
Short-term investments, net 1,571 16,691 (18,476)
------------- ---------------- ---------------
Net cash used in investing activities (224,233) (140,607) (230,216)
------------- ---------------- ---------------
Cash flows from financing activities:
Increase in investment product and universal life insurance
product account balances 192,893 74,828 6,952
Decrease in investment product and universal life insurance
product account balances (136,376) (42,061) (13,898)
------------- ---------------- ---------------
Net cash provided by (used in) financing activities 56,517 32,767 (6,946)
------------- ---------------- ---------------
Net increase (decrease) in cash 4,278 (5,161) 867
Cash, beginning of year 2 5,163 4,296
Cash, end of year $ 4,280 $ 2 $ 5,163
============= ================ ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements
December 31, 1999, 1998 and 1997
($000's omitted)
(1) ORGANIZATION AND DESCRIPTION OF BUSINESS
Nationwide Life and Annuity Insurance Company (the Company) is a wholly
owned subsidiary of Nationwide Life Insurance Company (NLIC).
The Company provides long-term savings and retirement products,
including variable annuities, fixed annuities and life insurance.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying financial statements have been prepared in accordance with
generally accepted accounting principles, which differ from statutory
accounting practices prescribed or permitted by regulatory authorities.
An Annual Statement, filed with the Department of Insurance of the
State of Ohio (the Department), is prepared on the basis of accounting
practices prescribed or permitted by the Department. Prescribed
statutory accounting practices include a variety of publications of the
National Association of Insurance Commissioners (NAIC), as well as
state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not
so prescribed. The Company has no material permitted statutory
accounting practices.
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosures of contingent assets and
liabilities as of the date of the financial statements and the reported
amounts of revenues and expenses for the reporting period. Actual
results could differ significantly from those estimates.
The most significant estimates include those used in determining
deferred policy acquisition costs, valuation allowances for mortgage
loans on real estate and real estate investments and the liability for
future policy benefits and claims. Although some variability is
inherent in these estimates, management believes the amounts provided
are adequate.
(a) VALUATION OF INVESTMENTS AND RELATED GAINS AND LOSSES
The Company is required to classify its fixed maturity securities
and equity securities as either held-to-maturity,
available-for-sale or trading. Fixed maturity securities are
classified as held-to-maturity when the Company has the positive
intent and ability to hold the securities to maturity and are
stated at amortized cost. Fixed maturity securities not classified
as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the
unrealized gains and losses, net of adjustments to deferred policy
acquisition costs and deferred federal income tax, reported as a
separate component of accumulated other comprehensive income in
shareholder's equity. The adjustment to deferred policy
acquisition costs represents the change in amortization of
deferred policy acquisition costs that would have been required as
a charge or credit to operations had such unrealized amounts been
realized. The Company has no fixed maturity securities classified
as held-to-maturity or trading as of December 31, 1999 or 1998.
<PAGE> 7
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based
on a review by portfolio managers. The measurement of impaired
loans is based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a
practical expedient, at the fair value of the collateral, if the
loan is collateral dependent. Loans in foreclosure and loans
considered to be impaired are placed on non-accrual status.
Interest received on non-accrual status mortgage loans on real
estate is included in interest income in the period received.
Real estate is carried at cost less accumulated depreciation and
valuation allowances. Impairment losses are recorded on long-lived
assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount.
Realized gains and losses on the sale of investments are
determined on the basis of specific security identification.
Estimates for valuation allowances and other than temporary
declines are included in realized gains and losses on investments.
(b) REVENUES AND BENEFITS
INVESTMENT PRODUCTS AND UNIVERSAL LIFE INSURANCE PRODUCTS:
Investment products consist primarily of individual variable and
fixed deferred annuities. Universal life insurance products
include universal life insurance, variable universal life
insurance, corporate owned life insurance and other
interest-sensitive life insurance policies. Revenues for
investment products and universal life insurance products consist
of net investment income, asset fees, cost of insurance, policy
administration and surrender charges that have been earned and
assessed against policy account balances during the period. Policy
benefits and claims that are charged to expense include interest
credited to policy account balances and benefits and claims
incurred in the period in excess of related policy account
balances.
TRADITIONAL LIFE INSURANCE PRODUCTS: Traditional life insurance
products include those products with fixed and guaranteed premiums
and benefits and consist primarily of certain annuities with life
contingencies. Premiums for traditional life insurance products
are recognized as revenue when due. Benefits and expenses are
associated with earned premiums so as to result in recognition of
profits over the life of the contract. This association is
accomplished by the provision for future policy benefits and the
deferral and amortization of policy acquisition costs.
(c) DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business, principally commissions,
certain expenses of the policy issue and underwriting department
and certain variable sales expenses have been deferred. For
investment products and universal life insurance products,
deferred policy acquisition costs are being amortized with
interest over the lives of the policies in relation to the present
value of estimated future gross profits from projected interest
margins, asset fees, cost of insurance, policy administration and
surrender charges. For years in which gross profits are negative,
deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs
are adjusted to reflect the impact of unrealized gains and losses
on fixed maturity securities available-for-sale as described in
note 2(a).
(d) SEPARATE ACCOUNTS
Separate account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. The investment income and gains or losses
of these accounts accrue directly to the contractholders. The
activity of the separate accounts is not reflected in the
statements of income and cash flows except for the fees the
Company receives.
<PAGE> 8
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(e) FUTURE POLICY BENEFITS
Future policy benefits for investment products in the accumulation
phase, universal life insurance and variable universal life
insurance policies have been calculated based on participants'
contributions plus interest credited less applicable contract
charges. The average interest rate credited on investment product
policy reserves was 4.5%, 5.1% and 5.1% for the years ended
December 31, 1999, 1998 and 1997, respectively.
(f) FEDERAL INCOME TAX
The Company files a consolidated federal income tax return with
Nationwide Mutual Insurance Company (NMIC). The members of the
consolidated tax return group have a tax sharing agreement which
provides, in effect, for each member to bear essentially the same
federal income tax liability as if separate tax returns were
filed.
The Company utilizes the asset and liability method of accounting
for income tax. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under this method, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce the
deferred tax assets to the amounts expected to be realized.
(g) REINSURANCE CEDED
Reinsurance revenues ceded and reinsurance recoveries on benefits
and expenses incurred are deducted from the respective income and
expense accounts. Assets and liabilities related to reinsurance
ceded are reported on a gross basis.
(h) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In March 1998, The American Institute of Certified Public
Accountant's Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The
SOP, which has been adopted prospectively as of January 1, 1999,
requires the capitalization of certain costs incurred in
connection with developing or obtaining internal use software.
Prior to the adoption of SOP 98-1, the Company expensed internal
use software related costs as incurred. The effect of adopting the
SOP was to increase net income for 1999 by $431.
In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). FAS 133 establishes accounting
and reporting standards for derivative instruments and for hedging
activities. Contracts that contain embedded derivatives, such as
certain investment and insurance contracts, are also addressed by
the Statement. FAS 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. In
July 1999 the FASB issued Statement No. 137 which delayed the
effective date of FAS 133 to fiscal years beginning after June 15,
2000. The Company plans to adopt this Statement in first quarter
2001 and is currently evaluating the impact on results of
operations and financial condition.
(i) RECLASSIFICATION
Certain items in the 1998 and 1997 financial statements have been
reclassified to conform to the 1999 presentation.
<PAGE> 9
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(3) INVESTMENTS
The amortized cost, gross unrealized gains and losses and estimated
fair value of securities available-for-sale as of December 31, 1999 and
1998 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
--------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
December 31, 1999:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 36,717 $ 2 $ (1,198) $ 35,521
Obligations of states and political subdivisions 302 - (7) 295
Debt securities issued by foreign governments 2,256 2 (22) 2,236
Corporate securities 773,869 2,208 (13,367) 762,710
Mortgage-backed securities 252,668 1,001 (2,875) 250,794
--------------- ------------- ------------- ---------------
Total fixed maturity securities 1,065,812 3,213 (17,469) 1,051,556
Equity securities 1,990 3,669 - 5,659
--------------- ------------- ------------- ---------------
$1,067,802 $6,882 $(17,469) $1,057,215
===========================================================
December 31, 1998:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 15,577 $ 232 $ (11) $ 15,798
Obligations of states and political subdivisions 332 1 - 333
Debt securities issued by foreign governments 4,015 23 - 4,038
Corporate securities 602,925 15,446 (358) 618,013
Mortgage-backed securities 261,225 5,605 (66) 266,764
--------------- ------------- ------------- ---------------
Total fixed maturity securities 884,074 21,307 (435) 904,946
Equity securities 15,323 5,530 - 20,853
--------------- ------------- ------------- ---------------
$899,397 $26,837 $(435) $925,799
=============== ============= ============= ===============
</TABLE>
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1999, by expected
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
------------ ---------------
<S> <C> <C>
Fixed maturity securities available-for-sale:
Due in one year or less $ 50,029 $ 49,799
Due after one year through five years 399,476 393,204
Due after five years through ten years 331,022 326,616
Due after ten years 285,285 281,937
------------ ---------------
$1,065,812 $1,051,556
============ ===============
</TABLE>
<PAGE> 10
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The components of unrealized gains (losses) on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
1999 1998
------------- --------------
<S> <C> <C>
Gross unrealized gains (losses) $(10,587) $26,402
Adjustment to deferred policy acquisition costs 7,714 (10,933)
Deferred federal income tax 1,006 (5,414)
------------- --------------
$ (1,868) $10,055
============= ==============
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale follows for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $ (35,128) $ 3,922 $ 9,177
Equity securities (1,861) 2,467 1,663
------------- ------------- -------------
$ (36,989) $ 6,389 $10,840
============= ============= =============
</TABLE>
Proceeds from the sale of securities available-for-sale during 1999,
1998 and 1997 were $73,864, $17,403 and $30,431, respectively. During
1999, gross gains of $297 ($509 and $825 in 1998 and 1997,
respectively) and gross losses of $37 (none and $1,124 in 1998 and
1997, respectively) were realized on those sales. See note 10.
The Company has no investments which were non-income producing for the
twelve month periods preceding December 31, 1999 and 1998.
Real estate is presented at cost less accumulated depreciation of $155
as of December 31, 1999 ($105 as of December 31, 1998). There was no
valuation allowance as of December 31, 1999 or 1998.
The recorded investment of mortgage loans on real estate considered to
be impaired as of December 31, 1999 was $881 ($890 as of December 31,
1998). No valuation allowance has been recorded for these loans as of
December 31, 1999 or 1998. During 1999, the average recorded investment
in impaired mortgage loans on real estate was approximately $885 ($178
in 1998) and there was no interest income recognized on those loans.
Interest income recognized on impaired loans was $15 in 1998, which is
equal to interest income recognized using a cash-basis method of income
recognition.
The valuation allowance account for mortgage loans on real estate was
$750 for the year ended December 31, 1999 and remains unchanged from
the previous two years.
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $66,160 $56,398 $53,491
Equity securities - - 375
Mortgage loans on real estate 23,475 21,124 14,862
Real estate 413 379 318
Short-term investments 1,580 1,361 899
Other 334 178 90
------------ ----------- -----------
Total investment income 91,962 79,440 70,035
Less:
Investment expenses 2,040 1,773 1,386
Net investment income ceded (note 11) 75,963 66,353 57,072
------------ ----------- -----------
Net investment income $13,959 $11,314 $11,577
============ =========== ===========
</TABLE>
<PAGE> 11
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
An analysis of realized gains (losses) on investments, net of valuation
allowances, by investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ----------- ------------
<S> <C> <C> <C>
Fixed maturity securities available-for-sale $ 260 $ 509 $(299)
Mortgage loans on real estate 7 - 53
Real estate and other 4,941 187 -
------------ ----------- ------------
$ 5,208 $ 696 $(246)
============ =========== ============
</TABLE>
Fixed maturity securities with an amortized cost of $3,540 and $3,562
as of December 31, 1999 and 1998, respectively, were on deposit with
various regulatory agencies as required by law.
(4) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments, principally interest
rate swaps, interest rate futures contracts and foreign currency swaps,
to manage market risk exposures associated with changes in interest
rates and foreign currency exchange rates. Provided they meet specific
criteria, interest rate swaps and futures are considered hedges and are
accounted for under the accrual method and deferral method,
respectively. The Company has no significant derivative positions that
are not considered hedges.
Interest rate swaps are primarily used to convert specific investment
securities from a fixed-rate to a floating-rate basis. Amounts
receivable or payable under these agreements are recognized as an
adjustment to net investment income consistent with the nature of the
hedged item. The changes in fair value of the interest rate swap
agreements are not recognized on the balance sheet, except for interest
rate swaps designated as hedges of fixed maturity securities
available-for-sale, for which changes in fair values are reported in
accumulated other comprehensive income.
Interest rate futures contracts are primarily used to hedge the risk of
adverse interest rate changes related to the Company's mortgage loan
commitments and anticipated purchases of fixed rate investments. Gains
and losses are deferred and, at the time of closing, reflected as an
adjustment to the carrying value of the related mortgage loans or
investments. The carrying value adjustments are amortized into net
investment income over the life of the related mortgage loans or
investments.
Foreign currency swaps are used to convert cash flows from specific
investments denominated in foreign currencies into U.S. dollars at
specified exchange rates. Gains and losses on foreign currency swaps
are recorded in earnings based on the related spot foreign exchange
rate at the end of the reporting period. Gains and losses on these
contracts offset those recorded as a result of translating the hedged
foreign currency denominated investments to U.S. dollars.
The following table summarizes the notional amount of derivative
financial instruments classified as hedges outstanding as of December
31, 1999. Prior to 1999 the Company's activities in derivatives were
not significant.
<TABLE>
<CAPTION>
Interest rate swaps
<S> <C>
Pay fixed/receive variable rate swaps hedging investments $ 1,585
Foreign currency swaps
Hedging foreign currency denominated investments $ 1,420
Interest rate futures contracts $ 2,483
</TABLE>
<PAGE> 12
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(5) FEDERAL INCOME TAX
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset as of December 31, 1999 and
1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 17,454 $ 16,670
Liabilities in separate accounts 15,603 12,477
Fixed maturity securities 3,905 -
Mortgage loans on real estate and real estate 266 263
------------ ------------
Total gross deferred tax assets 37,228 29,410
------------ ------------
Deferred tax liabilities:
Fixed maturity securities - 8,669
Deferred policy acquisition costs 15,624 8,103
Equity securities 1,284 1,935
Other 13,799 10,422
------------ ------------
Total gross deferred tax liabilities 30,707 29,129
------------ ------------
Net deferred tax asset $ 6,521 $ 281
============ ============
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion of the
total gross deferred tax assets will not be realized. All future
deductible amounts can be offset by future taxable amounts or recovery
of federal income tax paid within the statutory carryback period. The
Company has determined that valuation allowances are not necessary as
of December 31, 1999, 1998 and 1997 based on its analysis of future
deductible amounts.
The Company's current federal income tax liability was $1,860 and
$1,522 as of December 31, 1999 and 1998, respectively.
Federal income tax expense for the years ended December 31 was as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ----------- ------------
<S> <C> <C> <C>
Currently payable $ 4,391 $10,014 $2,458
Deferred tax expense (benefit) 180 (2,513) 3,291
------------ ----------- ------------
$ 4,571 $ 7,501 $5,749
============ =========== ============
</TABLE>
Total federal income tax expense for the years ended December 31, 1999,
1998 and 1997 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------- -------------------- --------------------
Amount % Amount % Amount %
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $4,822 35.0 $7,707 35.0 $5,723 35.0
Tax exempt interest and dividends
received deduction (255) (1.8) (223) (1.0) - -
Other, net 4 - 17 0.1 26 (0.2)
----------- -------- ----------- -------- ----------- --------
Total (effective rate of each year) $4,571 33.2 $7,501 34.1 $5,749 35.2
=========== ======== =========== ======== =========== ========
</TABLE>
Total federal income tax paid was $4,053, $9,298 and $9,566 during the
years ended December 31, 1999, 1998 and 1997, respectively.
<PAGE> 13
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(6) COMPREHENSIVE INCOME
Comprehensive Income includes net income as well as certain items that
are reported directly within separate components of shareholder's
equity that bypass net income. Currently, the Company's only component
of Other Comprehensive Income is unrealized gains (losses) on
securities available-for-sale. The related before and after federal tax
amounts are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- --------------
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-for-sale
arising during the period:
Gross $ (36,729) $ 6,898 $10,541
Adjustment to deferred policy acquisition costs 18,645 (1,947) (4,778)
Related federal income tax (expense) benefit 6,330 (1,733) (2,017)
------------- ------------- --------------
Net (11,754) 3,218 3,746
------------- ------------- --------------
Reclassification adjustment for net (gains) losses on
securities available-for-sale realized during the
period:
Gross (260) (509) 299
Related federal income tax expense (benefit) 91 178 (105)
------------- ------------- --------------
Net (169) (331) 194
------------- ------------- --------------
Total Other Comprehensive Income $ (11,923) $ 2,887 $ 3,940
============= ============= ==============
</TABLE>
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures summarize the carrying amount and estimated
fair value of the Company's financial instruments. Certain assets and
liabilities are specifically excluded from the disclosure requirements
of financial instruments. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
The fair value of a financial instrument is defined as the amount at
which the financial instrument could be exchanged in a current
transaction between willing parties. In cases where quoted market
prices are not available, fair value is based on estimates using
present value or other valuation techniques. Many of the Company's
assets and liabilities subject to the disclosure requirements are not
actively traded, requiring fair values to be estimated by management
using present value or other valuation techniques. These techniques are
significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. Although fair value estimates
are calculated using assumptions that management believes are
appropriate, changes in assumptions could cause these estimates to vary
materially. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases,
could not be realized in the immediate settlement of the instruments.
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from the disclosure requirements, estimated fair value of policy
reserves on life insurance contracts is provided to make the fair value
disclosures more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
<PAGE> 14
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
FIXED MATURITY AND EQUITY SECURITIES: The fair value for fixed
maturity securities is based on quoted market prices, where
available. For fixed maturity securities not actively traded, fair
value is estimated using values obtained from independent pricing
services or, in the case of private placements, is estimated by
discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the
investments. The fair value for equity securities is based on
quoted market prices. The carrying amount and fair value for fixed
maturity and equity securities exclude the fair value of
derivatives contracts designated as hedges of fixed maturity and
equity securities.
MORTGAGE LOANS ON REAL ESTATE: The fair value for mortgage loans
on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations.
Fair value for mortgages in default is the estimated fair value of
the underlying collateral.
POLICY LOANS, SHORT-TERM INVESTMENTS AND CASH: The carrying amount
reported in the balance sheets for these instruments approximates
their fair value.
SEPARATE ACCOUNT ASSETS AND LIABILITIES: The fair value of assets
held in separate accounts is based on quoted market prices. The
fair value of liabilities related to separate accounts is the
amount payable on demand, which is net of certain surrender
charges.
INVESTMENT CONTRACTS: The fair value for the Company's liabilities
under investment type contracts is disclosed using two methods.
For investment contracts without defined maturities, fair value is
the amount payable on demand. For investment contracts with known
or determined maturities, fair value is estimated using discounted
cash flow analysis. Interest rates used are similar to currently
offered contracts with maturities consistent with those remaining
for the contracts being valued.
POLICY RESERVES ON LIFE INSURANCE CONTRACTS: The estimated fair
value is the amount payable on demand. Also included are
disclosures for the Company's limited payment policies, which the
Company has used discounted cash flow analyses similar to those
used for investment contracts with known maturities to estimate
fair value.
COMMITMENTS TO EXTEND CREDIT: Commitments to extend credit have
nominal fair value because of the short-term nature of such
commitments. See note 8.
FUTURES CONTRACTS: The fair value for futures contracts is based
on quoted market prices.
INTEREST RATE AND FOREIGN CURRENCY SWAPS: The fair value for
interest rate and foreign currency swaps are calculated with
pricing models using current rate assumptions.
<PAGE> 15
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Carrying amount and estimated fair value of financial instruments
subject to disclosure requirements and policy reserves on life
insurance contracts were as follows as of December 31:
<TABLE>
<CAPTION>
1999 1998
------------------------------- -------------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $ 1,051,556 $ 1,051,556 $ 904,946 $ 904,946
Equity securities 5,659 5,659 20,853 20,853
Mortgage loans on real estate, net 330,068 324,610 268,894 276,387
Policy loans 465 465 332 332
Short-term investments 706 706 2,277 2,277
Cash 4,280 4,280 2 2
Assets held in separate accounts 2,127,080 2,127,080 1,533,690 1,533,690
Liabilities:
Investment contracts (1,335,787) (1,283,459) (1,153,930) (1,113,584)
Policy reserves on life insurance contracts (145,020) (145,370) (9,899) (10,517)
Liabilities related to separate accounts (2,127,080) (2,082,541) (1,533,690) (1,501,255)
Derivative financial instruments:
Interest rate swaps hedging assets 109 109 - -
Foreign currency swaps (18) (18) - -
Futures contracts 21 21 - -
</TABLE>
(8) RISK DISCLOSURES
The following is a description of the most significant risks facing
life insurers and how the Company mitigates those risks:
CREDIT RISK: The risk that issuers of securities owned by the Company
or mortgagors on mortgage loans on real estate owned by the Company
will default or that other parties which owe the Company money, will
not pay. The Company minimizes this risk by adhering to a conservative
investment strategy, by maintaining credit and collection policies and
by providing for any amounts deemed uncollectible.
INTEREST RATE RISK: The risk that interest rates will change and cause
a decrease in the value of an insurer's investments. This change in
rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent that
liabilities come due more quickly than assets mature, an insurer would
have to borrow funds or sell assets prior to maturity and potentially
recognize a gain or loss.
LEGAL/REGULATORY RISK: The risk that changes in the legal or regulatory
environment in which an insurer operates will result in increased
competition, reduced demand for a company's products, or create
additional expenses not anticipated by the insurer in pricing its
products. The Company mitigates this risk by operating throughout the
United States, thus reducing its exposure to any single jurisdiction,
and also by employing underwriting practices which identify and
minimize the adverse impact of this risk.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK: The Company is a
party to financial instruments with off-balance-sheet risk in the
normal course of business through management of its investment
portfolio. These financial instruments include commitments to extend
credit in the form of loans and derivative financial instruments. These
instruments involve, to varying degrees, elements of credit risk in
excess of amounts recognized on the balance sheets.
<PAGE> 16
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property represents
the collateral if the commitment is funded. The Company's policy for
new mortgage loans on real estate is to lend no more than 75% of
collateral value. Should the commitment be funded, the Company's
exposure to credit loss in the event of nonperformance by the borrower
is represented by the contractual amounts of these commitments less the
net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments.
Commitments on mortgage loans on real estate of $10,039 extending into
2000 were outstanding as of December 31, 1999.
SIGNIFICANT CONCENTRATIONS OF CREDIT RISK: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the
United States. The Company has a diversified portfolio with no more
than 30% (33% in 1998) in any geographic area and no more than 5% (6%
in 1998) with any one borrower as of December 31, 1999. As of December
31, 1999 22% (36% in 1998) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed apartment
building properties.
(9) PENSION PLAN AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least
one year of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company. Assets of the
Retirement Plan are invested in group annuity contracts of NLIC.
Pension costs charged to operations by the Company during the years
ended December 31, 1999, 1998 and 1997 were $127, $235 and $257,
respectively.
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years
of service with the Company after reaching age 40. Postretirement
health care benefit contributions are adjusted annually and contain
cost-sharing features such as deductibles and coinsurance. In addition,
there are caps on the Company's portion of the per-participant cost of
the postretirement health care benefits. These caps can increase
annually, but not more than three percent. The Company's policy is to
fund the cost of health care benefits in amounts determined at the
discretion of management. Plan assets are invested primarily in group
annuity contracts of NLIC.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation (APBO), however, certain affiliated
companies elected to amortize their initial transition obligation over
periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of December 31,
1999 and 1998 was $1,040 and $1,008, respectively, and the net periodic
postretirement benefit cost (NPPBC) for 1999, 1998 and 1997 was $177,
$130 and $94, respectively.
<PAGE> 17
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Information regarding the funded status of the pension plan as a whole
and the postretirement life and health care benefit plan as a whole as
of December 31, 1999 and 1998 follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $2,185,000 $ 2,033,800 $ 270,100 $ 237,900
Service cost 80,000 87,600 14,200 9,800
Interest cost 109,900 123,400 17,600 15,400
Actuarial (gain) loss (95,000) 123,200 (64,400) 15,600
Plan settlement in 1999/curtailment in 1998 (396,100) (107,200) - -
Benefits paid (72,400) (75,800) (11,000) (8,600)
Acquired companies - - 13,300 -
------------- ------------- ------------- -------------
Benefit obligation at end of year 1,811,400 2,185,000 239,800 270,100
------------- ------------- ------------- -------------
Change in plan assets:
Fair value of plan assets at beginning of year 2,541,900 2,212,900 77,900 69,200
Actual return on plan assets 161,800 300,700 3,500 5,000
Employer contribution 12,400 104,100 20,900 12,100
Plan settlement (396,100) - - -
Benefits paid (72,400) (75,800) (11,000) (8,400)
------------- ------------- ------------- -------------
Fair value of plan assets at end of year 2,247,600 2,541,900 91,300 77,900
------------- ------------- ------------- -------------
Funded status 436,200 356,900 (148,500) (192,200)
Unrecognized prior service cost 28,200 31,500 - -
Unrecognized net (gains) losses (402,000) (345,700) (46,700) 16,000
Unrecognized net (asset) obligation at transition (7,700) (11,000) 1,100 1,300
------------- ------------- ------------- -------------
Prepaid (accrued) benefit cost $ 54,700 $ 31,700 $ (194,100) $ (174,900)
============= ============= ============= =============
</TABLE>
Basis for measurements, funded status of the pension plan and
postretirement life and health care benefit plan:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Weighted average discount rate 7.00% 5.50% 7.80% 6.65%
Rate of increase in future compensation levels 5.25% 3.75% - -
Assumed health care cost trend rate:
Initial rate - - 15.00% 15.00%
Ultimate rate - - 5.50% 8.00%
Uniform declining period - - 5 Years 15 Years
</TABLE>
The net periodic pension cost for the pension plan as a whole for the
years ended December 31, 1999, 1998 and 1997 follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- --------------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 80,000 $ 87,600 $ 77,300
Interest cost on projected benefit obligation 109,900 123,400 118,600
Expected return on plan assets (160,300) (159,000) (139,000)
Recognized gains (9,100) (3,800) -
Amortization of prior service cost 3,200 3,200 3,200
Amortization of unrecognized transition obligation (asset) (1,400) 4,200 4,200
------------- -------------- --------------
$ 22,300 $ 55,600 $ 64,300
============= ============== ==============
</TABLE>
<PAGE> 18
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its
affiliation with Nationwide Insurance and employees of WSC ended
participation in the plan. A curtailment gain of $67,100 resulted
(consisting of a $107,200 reduction in the projected benefit
obligation, net of the write-off of the $40,100 remaining unamortized
transition obligation related to WSC). During 1999, the plan
transferred assets to settle its obligation related to WSC employees. A
settlement gain of $32.9 million was recognized.
Basis for measurements, net periodic pension cost for the pension plan:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Weighted average discount rate 6.08% 6.00% 6.50%
Rate of increase in future compensation levels 4.33% 4.25% 4.75%
Expected long-term rate of return on plan assets 7.33% 7.25% 7.25%
</TABLE>
The amount of NPPBC for the postretirement benefit plan as a whole for
the years ended December 31, 1999, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- -------------
<S> <C> <C> <C>
Service cost (benefits attributed to employee service
during the year) $14,200 $ 9,800 $ 7,000
Interest cost on accumulated postretirement benefit obligation 17,600 15,400 14,000
Actual return on plan assets (3,500) (5,000) (3,600)
Amortization of unrecognized transition obligation of affiliates 600 200 200
Net amortization and deferral (1,800) 1,200 (500)
------------- -------------- -------------
$27,100 $21,600 $17,100
============= ============== =============
</TABLE>
Actuarial assumptions used for the measurement of the accumulated
postretirement benefit obligation (APBO) and the NPPBC for the
postretirement benefit plan for 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
NPPBC:
Discount rate 6.65% 6.70% 7.25%
Long term rate of return on plan
assets, net of tax 7.15% 5.83% 5.89%
Assumed health care cost trend rate:
Initial rate 15.00% 12.00% 11.00%
Ultimate rate 5.50% 6.00% 6.00%
Uniform declining period 5 Years 12 Years 12 Years
</TABLE>
For the postretirement benefit plan as a whole, a one percentage point
increase or decrease in the assumed health care cost trend rate would
have no impact on the APBO as of December 31, 1999 and have no impact
on the NPPBC for the year ended December 31, 1999.
(10) SHAREHOLDER'S EQUITY, REGULATORY RISK-BASED CAPITAL, RETAINED EARNINGS
AND DIVIDEND RESTRICTIONS
Ohio, the Company's state of domicile, imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. The Company exceeds the
minimum risk-based capital requirements.
<PAGE> 19
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The statutory capital and surplus of the Company as reported to
regulatory authorities as of December 31, 1999, 1998 and 1997 was
$63,275, $70,135 and $74,820, respectively. The statutory net (loss)
income of the Company as reported to regulatory authorities for the
years ended December 31, 1999, 1998 and 1997 was $(305), $(3,371) and
$7,446, respectively.
The Company is limited in the amount of shareholder dividends it may
pay without prior approval by the Department. As of December 31, 1999,
the maximum amount available for dividend payment from the Company to
its shareholder without prior approval of the Department was $6,328.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and stockholder dividends
in the future.
(11) TRANSACTIONS WITH AFFILIATES
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1999, 1998 and 1997, the
Company made lease payments to NMIC and its subsidiaries of $660, $430
and $703, respectively.
Pursuant to a cost sharing agreement among NMIC and certain of its
direct and indirect subsidiaries, including the Company, NMIC provides
certain operational and administrative services, such as sales support,
advertising, personnel and general management services, to those
subsidiaries. Expenses covered by this agreement are subject to
allocation among NMIC, the Company and other affiliates. Measures used
to allocate expenses among companies include individual employee
estimates of time spent, special cost studies, salary expense,
commission expense and other methods agreed to by the participating
companies that are within industry guidelines and practices. In
addition, beginning in 1999 Nationwide Services Company, a subsidiary
of NMIC, provides computer, telephone, mail, employee benefits
administration, and other services to NMIC and certain of its direct
and indirect subsidiaries, including the Company, based on specified
rates for units of service consumed. For the years ended December 31,
1999, 1998 and 1997, the Company made payments to NMIC and Nationwide
Services Company totaling $5,150, $2,933, and $2,564, respectively. In
addition, the Company does not believe that expenses recognized under
these agreements are materially different than expenses that would have
been recognized had the Company operated on a stand-alone basis.
Effective December 31, 1996, the Company entered into an intercompany
reinsurance agreement with NLIC whereby certain inforce and
subsequently issued fixed individual deferred annuity contracts are
ceded on a 100% coinsurance with funds withheld basis. On December 31,
1997, the agreement was amended to a modified coinsurance basis. Under
modified coinsurance agreements, invested assets and liabilities for
future policy benefits are retained by the ceding company and net
investment earnings on the invested assets are paid to the assuming
company. Under terms of the Company's agreement, the investment risk
associated with changes in interest rates is borne by NLIC. Risk of
asset default is retained by the Company, although a fee is paid by
NLIC to the Company for the Company's retention of such risk. The
agreement will remain inforce until all contract obligations are
settled. Amounts ceded to NLIC in 1999 are included in NLIC's results
of operations for 1999 and include premiums of $258,468 ($241,503 and
$300,617 in 1998 and 1997, respectively), net investment income of
$75,963 ($66,353 and $57,072 in 1998 and 1997, respectively) and
benefits, claims and other expenses of $319,240 ($296,659 and $343,426
in 1998 and 1997, respectively). In consideration for the initial
inforce business reinsured, NLIC paid the Company $26,473 in commission
and expense allowances which were applied to the Company's deferred
policy acquisition costs as of December 31, 1996. No significant gain
or loss was recognized as a result of the agreement.
During 1999, the Company entered into an intercompany reinsurance
agreement with NLIC wherby certain life insurance contracts are ceded
on a 100% coinsurance basis. Amounts ceded to NLIC include premiums of
$87,696 and expenses of $3,150 during 1999 and policy reserves of
$91,667 as of December 31, 1999.
The ceding of risk does not discharge the original insurer from its
primary obligation to the contractholder. The Company believes that the
terms of the reinsurance agreements with affiliates are consistent in
all material respects with what the Company could have obtained with
unaffiliated parties.
<PAGE> 20
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
During 1997, the Company sold fixed maturity securities
available-for-sale at fair value of $27,253 to NLIC. The Company
recognized a $693 gain on the transactions.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC), an affiliate, under which
NCMC acts as common agent in handling the purchase and sale of
short-term securities for the respective accounts of the participants.
Amounts on deposit with NCMC were $706 and $2,277 as of December 31,
1999 and 1998, respectively, and are included in short-term investments
on the accompanying balance sheets.
(12) CONTINGENCIES
On October 29, 1998, the Company was named in a lawsuit filed in Ohio
state court related to the sale of deferred annuity products for use as
investments in tax-deferred contributory retirement plans (Mercedes
Castillo v. Nationwide Financial Services, Inc., Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company).
On May 3, 1999, the complaint was amended to, among other things, add
Marcus Shore as a second plaintiff. The amended complaint is brought as
a class action on behalf of all persons who purchased individual
deferred annuity contracts or participated in group annuity contracts
sold by the Company and the other named Company affiliates which were
used to fund certain tax-deferred retirement plans. The amended
complaint seeks unspecified compensatory and punitive damages. No class
has been certified. On June 11, 1999, the Company and the other named
defendants filed a motion to dismiss the amended complaint. On March 8,
2000, the court denied the motion to dismiss the amended complaint
filed by the Company and other named defendants. The Company intends to
defend this lawsuit vigorously.
(13) SEGMENT INFORMATION
The Company uses differences in products as the basis for defining its
reportable segments. The Company reports three product segments:
Variable Annuities, Fixed Annuities and Life Insurance.
The Variable Annuities segment consists of annuity contracts that
provide the customer with access to a wide range of investment options,
tax-deferred accumulation of savings, asset protection in the event of
an untimely death, and flexible payout options including a lump sum,
systematic withdrawal or a stream of payments for life. The Company's
variable annuity products consist almost entirely of flexible premium
deferred variable annuity contracts.
The Fixed Annuities segment consists of annuity contracts that generate
a return for the customer at a specified interest rate fixed for a
prescribed period, tax-deferred accumulation of savings, and flexible
payout options including a lump sum, systematic withdrawal or a stream
of payments for life. Such contracts consist of single premium deferred
annuities, flexible premium deferred annuities and single premium
immediate annuities. The Fixed Annuities segment includes the fixed
option under variable annuity contracts.
The Life Insurance segment consists of insurance products, including
variable universal life insurance and corporate-owned life insurance
products, that provide a death benefit and may also allow the customer
to build cash value on a tax-deferred basis.
In addition to the product segments, the Company reports corporate
revenue and expenses, investments and related investment income
supporting capital not specifically allocated to its product segments,
and all realized gains and losses on investments in a Corporate and
Other segment.
<PAGE> 21
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The following table summarizes the financial results of the Company's
business segments for the years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
Annuities Annuities Insurance and Other Total
--------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
1999:
Net investment income (1) $ (2,304) $ 8,550 $ 1,596 $ 6,117 $ 13,959
Other operating revenue 26,187 3,310 16,647 -- 46,144
----------- ----------- ----------- ----------- -----------
Total operating revenue (2) 23,883 11,860 18,243 6,117 60,103
----------- ----------- ----------- ----------- -----------
Interest credited to policyholder
account balances -- 6,561 1,987 -- 8,548
Amortization of deferred policy
acquisition costs 7,686 963 4,943 -- 13,592
Other benefits and expenses 13,593 7,378 8,424 -- 29,395
----------- ----------- ----------- ----------- -----------
Total expenses 21,279 14,902 15,354 -- 51,535
----------- ----------- ----------- ----------- -----------
Operating income (loss) before
federal income tax 2,604 (3,042) 2,889 6,117 8,568
Realized gains on investments -- -- -- 5,208 5,208
----------- ----------- ----------- ----------- -----------
Consolidated income (loss) before
federal tax expense $ 2,604 $ (3,042) $ 2,889 $ 11,325 $ 13,776
=========== =========== =========== =========== ===========
Assets as of year end $ 1,957,486 $ 1,352,324 $ 382,388 $ 70,265 $ 3,762,463
=========== =========== =========== =========== ===========
1998:
Net investment income (1) $ (1,417) $ 6,792 $ 408 $ 5,531 $ 11,314
Other operating revenue 18,209 3,182 8,386 -- 29,777
----------- ----------- ----------- ----------- -----------
Total operating revenue (2) 16,792 9,974 8,794 5,531 41,091
----------- ----------- ----------- ----------- -----------
Interest credited to policyholder
account balances -- 4,660 221 -- 4,881
Amortization of deferred policy
acquisition costs 3,466 508 374 -- 4,348
Other benefits and expenses 4,442 2,087 4,009 -- 10,538
----------- ----------- ----------- ----------- -----------
Total expenses -- 7,908 7,255 4,604 19,767
----------- ----------- ----------- ----------- -----------
Operating income before federal
income tax 8,884 2,719 4,190 5,531 21,324
Realized gains on investments -- -- -- 696 696
----------- ----------- ----------- ----------- -----------
Consolidated income before
federal tax expense $ 8,884 $ 2,719 $ 4,190 $ 6,227 $ 22,020
=========== =========== =========== =========== ===========
Assets as of year end $ 1,502,829 $ 1,162,040 $ 92,482 $ 82,087 $ 2,839,438
=========== =========== =========== =========== ===========
</TABLE>
<PAGE> 22
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
Annuities Annuities Insurance and Other Total
--------------- --------------- --------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
1997:
Net investment income (1) $ (873) $ 5,927 $ 166 $ 6,357 $ 11,577
Other operating revenue 10,823 1,825 16 - 12,664
--------------- --------------- --------------- ---------------- -------------
Total operating revenue (2) 9,950 7,752 182 6,357 24,241
--------------- --------------- --------------- ---------------- -------------
Interest credited to policyholder
account balances - 3,856 92 - 3,948
Amortization of deferred policy
acquisition costs 1,035 347 20 - 1,402
Other benefits and expenses 1,648 347 298 - 2,293
--------------- --------------- --------------- ---------------- -------------
Total expenses 2,683 4,550 410 - 7,643
--------------- --------------- --------------- ---------------- -------------
Operating income (loss) before
federal income tax 7,267 3,202 (228) 6,357 16,598
Realized losses on investments - - - (246) (246)
--------------- --------------- --------------- ---------------- -------------
Consolidated income (loss) before
federal tax expense $ 7,267 $ 3,202 $ (228) $ 6,111 $ 16,352
=============== =============== =============== ================ =============
Assets as of year end $ 925,021 $ 989,116 $ 2,228 $ 88,933 $2,005,298
=============== =============== =============== ================ =============
</TABLE>
----------
(1) The Company's method of allocating net investment income results in a
charge (negative net investment income) to the Variable Annuities segment
which is recognized in the Corporate and Other segment. The charge relates
to non-invested assets which support this segment on a statutory basis.
(2) Excludes realized gains and losses on investments.
The Company has no significant revenue from customers located outside of
the United States nor does the Company have any significant long-lived
assets located outside the United States.
<PAGE> 76
PART II - OTHER INFORMATION
CONTENTS OF REGISTRATION STATEMENT
This Form S-6 Post-Effective Amendment No. 5 comprises the following papers and
documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 107 pages.
Representations and Undertakings.
The Signatures.
Independent Auditor's Consent
The following exhibits required by Forms N-8B-2 and S-6:
<TABLE>
<CAPTION>
<S> <C>
1. Power of Attorney dated July 26, 2000. Attached hereto.
2. Resolution of the Depositor's Board of Directors Included with the Registration Statement on Form N-8B-2 for
authorizing the establishment of the Registrant, adopted the Nationwide VL Separate Account-C (File No. 811-6137),
and is hereby incorporated by reference.
3. Distribution Contracts Filed previously with Post-Effective Amendment No. 4
(333-43639) and hereby incorporated by reference.
4. Form of Security Filed previously in connection with this Registration
Statement (SEC File No. 333-43639) on April 20, 1998 and
hereby incorporated by reference.
5. Articles of Incorporation of Depositor Included with the Registration Statement on Form N-8B-2 for
the Nationwide VL Separate Account-C (File No. 811-6137),
and is hereby incorporated by reference.
6. Application form of Security Filed previously in connection with Registration Statement
(SEC File No. 333-43639) on January 2, 1998 and hereby
incorporated by reference.
7. Opinion of Counsel Filed previously in connection with Registration Statement
(SEC File No. 333-43639) on January 2, 1998 and hereby
incorporated by reference.
</TABLE>
<PAGE> 77
REPRESENTATIONS AND UNDERTAKINGS
The Registrant and Nationwide hereby make the following representations and
undertakings:
(a) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the
Investment Company Act of 1940 (the "Act"). The Registrant and Nationwide
elect to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the Act with
respect to the policies described in the prospectus. The policies have
been designed in such a way as to qualify for the exemptive relief from
various provisions of the Act afforded by Rule 6e-3(T).
(b) Paragraph (b)(13)(iii)(F) of Rule 6e-3(T) is being relied on for the
deduction of the mortality and expense risk charges ("risk charges")
assumed by Nationwide under the policies. Nationwide represents that the
risk charges are within the range of industry practice for comparable
policies and reasonable in relation to all of the risks assumed by the
issuer under the policies. Actuarial memoranda demonstrating the
reasonableness of these charges are maintained by Nationwide, and will be
made available to the Securities and Exchange Commission (the
"Commission") on request.
(c) Nationwide has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the separate account will benefit
the separate account and the policy owners and will keep and make
available to the Commission on request a memorandum setting forth the
basis for this representation.
(d) Nationwide represents that the separate account will invest only in
management investment companies which have undertaken to have a board of
directors, a majority of whom are not interested persons of Nationwide,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
(e) Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the Registrant hereby undertakes to file with the
Commission such supplementary and periodic information, documents, and
reports as may be prescribed by any rule or regulation of the Commission
heretofore or hereafter duly adopted pursuant to authority conferred in
that section.
(f) The fees and charges deducted under the policy in the aggregate are
reasonable in relation to the services rendered, the expenses expected to
be incurred, and the risks assumed by Nationwide.
<PAGE> 78
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Nationwide Life and Annuity Insurance Company and
Contract Owners of Nationwide VL Separate Account-C:
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the Prospectus.
KPMG LLP
Columbus, Ohio
April 27, 2000
<PAGE> 79
SIGNATURES
As required by the Securities Act of 1933, the Registrant, Nationwide VL
Separate Account-C, certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Post-Effective Amendment and has caused
this Post-Effective Amendment to be signed on its behalf in the City of
Columbus, and State of Ohio, on this 20th day of September, 2000.
NATIONWIDE VL SEPARATE ACCOUNT-C
---------------------------------------------
(Registrant)
(Seal) NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
---------------------------------------------
Attest: (Depositor)
By: /s/ GLENN W. SODEN By: /s/ STEVEN SAVINI, Esq.
---------------------------------- --------------------------------------------
Glenn W. Soden Steven Savini, Esq.
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment has been signed below by the following persons in the capacities
indicated on the 20th day of September, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
LEWIS J. ALPHIN Director
----------------------------------------
Lewis J. Alphin
A. I. BELL Director
----------------------------------------
A. I. Bell
NANCY C. BREIT Director
----------------------------------------
Nancy C. Breit
KENNETH D. DAVIS Director
----------------------------------------
Kenneth D. Davis
KEITH W. ECKEL Director
----------------------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
----------------------------------------
Willard J. Engel
FRED C. FINNEY Director
----------------------------------------
Fred C. Finney
JOSEPH J. GASPER President and Chief Operating
---------------------------------------- Officer and Director
Joseph J. Gasper
W.G. JURGENSEN Chief Executive Officer Elect
---------------------------------------- and Director
W.G. Jurgensen
DIMON R. MCFERSON Chairman and Chief Executive
---------------------------------------- Officer and Director
Dimon R. McFerson
DAVID O. MILLER Chairman of the Board and
---------------------------------------- Director
David O. Miller
YVONNE L. MONTGOMERY Director
----------------------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President and Chief
---------------------------------------- Financial Officer
Robert A. Oakley
RALPH M. PAIGE Director
----------------------------------------
Ralph M. Paige
JAMES F. PATTERSON Director
----------------------------------------
James F. Patterson
ARDEN L. SHISLER Director By /s/ STEVEN SAVINI
---------------------------------------- --------------------------------------
Arden L. Shisler Steven Savini
ROBERT L. STEWART Director Attorney-in-Fact
----------------------------------------
Robert L. Stewart
</TABLE>