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Nationwide(R) VL
Separate Account-D
June 30, 2000
[THE BEST OF AMERICA(R) AMERICA'S FUTURE LIFE SERIES(SM) LOGO]
2000
SEMI-ANNUAL REPORT
[NATIONWIDE(R) LOGO]
Nationwide Life and Annuity Insurance Company
Home Office: Columbus, Ohio
VLOB-0233-B (06/00)
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[NATIONWIDE(R) LOGO]
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life and Annuity Insurance Company are pleased
to bring you the 2000 semi-annual report of the Nationwide VL
Separate Account-D.
During the first half of 2000 fixed income and equity markets
took a hiatus from their recent advances. It appears the Federal
Reserve's interest rate hikers are accomplishing the intended
purpose. Recent economic statistics show some moderation in the
areas of home and vehicles sales because of the higher interest
costs. And, there are other favorable indications that the Fed
may yet "glide" the economy to a soft landing. Inflation remains
low. Sustained increases in worker productivity continue to
dampen pricing pressures of an increasingly tight labor pool.
Corporate profitability growth remains viable. An improving
global economy bodes well for U.S. exporting businesses. While
all this provides a positive backdrop, we expect the markets will
continue jittery and volatile during the second half of the year
as uncertainty over further Fed actions persists. However, we
believe patient investors in financial assets will be amply
rewarded when we move beyond this temporary respite.
Nationwide Life was a forerunner in the variable annuity and
variable life insurance business. We continue to develop new and
innovative investment products to better meet your financial
planning and retirement needs. And, we are equally committed to
providing you, our valued customer, the exceptional level of
customer service you expect and deserve.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
August 16, 2000
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[THIS PAGE LEFT BLANK INTENTIONALLY]
4
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HOW TO READ THE SEMI-ANNUAL REPORT
This semi-annual report is a presentation of the variable account as a whole and
only describes the underlying contracts and products of the variable account in
general terms. Please note the variable account may have more than one variable
product available. Such products may have different underlying mutual funds
available than those available in your contract. Therefore, not all funds listed
in this report may be available in your contract. Please refer to your most
recent account statement for specific information about your investment in the
Nationwide VL Separate Account-D. Rules and regulations of the United States
Securities and Exchange Commission and recognized conventions of Generally
Accepted Accounting Principals prescribe the format and content of this report.
We also invite you to call our service center at 1-877-351-8808 if you have
questions about your account, or you may access your account using our voice
response unit. And, please visit our web-site at www.bestofamerica.com for
additional information about your contract and to learn more about other
products and services offered by Nationwide Financial.
THE ANNUAL REPORT HAS FOUR MAJOR FINANCIAL SECTIONS:
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNER'S EQUITY
This statement begins on page 6 and lists all of the underlying mutual funds of
the variable account, the number of shares owned, the amount paid for the shares
and their market value as of the close of business on June 30, 2000. The mutual
funds are listed in alphabetical order. The market value of the assets changes
as the underlying mutual funds change in value. As contract owners make exchange
transactions between the funds, the number of shares increases or decreases
accordingly. When money is deposited or withdrawn by a contract owner, shares
are correspondingly purchased or redeemed. The total market value of the funds
is equal to the TOTAL INVESTMENTS of the variable account.
ACCOUNTS RECEIVABLE, if applicable, represents an asset of the variable account
for money market fund shares purchased by contract owners and reinvested
dividend shares added to contract owners' accounts, but not yet added to Total
investments. Total investments plus Accounts receivable equal TOTAL ASSETS of
the variable account.
ACCOUNTS PAYABLE, if applicable, is a liability of the variable account for
money market fund shares redeemed by contract owners' but not yet deducted from
Total investments.
Total assets minus Accounts payable equals CONTRACT OWNERS' EQUITY. A summary of
CONTRACT OWNERS' EQUITY by funds series may be found on page 15. This summary
also includes investment return for the reporting period for each fund series.
STATEMENTS OF OPERATIONS AND STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
These statements begin on page 7 and present the financial activity of each
underlying mutual fund sub-account of the variable account, for the periods
indicated.
The INVESTMENT ACTIVITY section shows income to the variable account for
reinvested dividends and capital gain distributions paid by the underlying
mutual funds. Also shown are the mortality, expense and administration charges
which are assessed through the daily unit value calculation and which represent
an expense to the variable account and its contract owners. This section also
shows the realized gain or loss as mutual fund shares are sold, and the change
in unrealized gain or loss, which represents the changes in market value of the
underlying fund shares.
The EQUITY TRANSACTIONS section illustrates the receipt of purchase payments, as
new contracts are sold or additional payments made to existing contracts. Also
presented are deductions from the variable account when the contract owners
withdraw money.
The sum of the above two sections represents the NET CHANGE IN CONTRACT OWNERS'
EQUITY which when added to the beginning Contract owners' equity equals Contract
owners' equity at the end of the reporting period.
NOTES TO FINANCIAL STATEMENTS, beginning on page 11, provide further disclosures
about the variable account and its underlying contract provisions.
5
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NATIONWIDE VL SEPARATE ACCOUNT-D
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
Dreyfus VIF - Quality Bond Portfolio (DryVQualBd)
97,844 shares (cost $1,068,793) ............................................................... $ 1,075,305
Fidelity VIP - Equity-Income Portfolio - Service Class (FidVEqInS)
237,096 shares (cost $5,498,549) .............................................................. 5,417,637
Fidelity VIP - Overseas Portfolio: Service Class (FidVOvSeS)
34,068 shares (cost $783,356) ................................................................. 797,879
Fidelity VIP-II - Contrafund Portfolio - Service Class (FidVConS)
76,889 shares (cost $1,971,459) ............................................................... 1,924,541
Fidelity VIP-III - Balanced Portfolio - Service Class (FidVBalS)
95,754 shares (cost $1,440,822) ............................................................... 1,439,178
INVESCO VIF - Blue Chip Growth Fund (IVBCGr)
50,124 shares (cost $827,597) ................................................................. 1,032,562
INVESCO VIF - Dynamics Fund (IVDynm)
8,503 shares (cost $139,389) .................................................................. 182,639
INVESCO VIF - Equity Income Fund (IVEIn)
47,975 shares (cost $998,012) ................................................................. 1,024,740
INVESCO VIF - Total Return Fund (IVTotRtn)
45,482 shares (cost $721,983) ................................................................. 680,863
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
51,900 shares (cost $1,379,695) ............................................................... 1,342,141
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
111,622 shares (cost $1,066,342) .............................................................. 995,669
Nationwide SAT - Money Market Fund (NSATMMkt)
16,207 shares (cost $16,207) .................................................................. 16,207
Nationwide SAT - Strategic Value Fund (NSATStrVal)
68,887 shares (cost $674,669) ................................................................. 637,201
----------
Total investments .......................................................................... 16,566,562
Accounts receivable ................................................................................. 231
----------
Total assets ............................................................................... 16,566,793
ACCOUNTS PAYABLE ....................................................................................... -
----------
CONTRACT OWNERS' EQUITY (NOTE 5) ....................................................................... $ 16,566,793
==========
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
6
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NATIONWIDE VL SEPARATE ACCOUNT-D
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Total DryVQualBd
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 85,514 30 23,757 16
Mortality and expense risk charges (note 3) ..... (31,471) (88) (2,740) (4)
------------ ------------ ------------ ------------
Net investment income ........................ 54,043 (58) 21,017 12
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ........... 2,619,156 5,247 17,367 201
Cost of mutual fund shares sold ................. (2,618,045) (5,404) (17,617) (203)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 1,111 (157) (250) (2)
Change in unrealized gain (loss) on investments . (114,309) 6,439 12,096 15
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... (113,198) 6,282 11,846 13
------------ ------------ ------------ ------------
Reinvested capital gains ........................ 55,136 -- -- --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (4,019) 6,224 32,863 26
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 12,512,960 226,651 376,008 4,349
Transfers between funds ......................... -- -- 117,199 4,245
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................ (196,738) (21,082) (16,815) (602)
------------ ------------ ------------ ------------
Net equity transactions .................... 12,316,222 205,569 476,392 7,993
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 12,312,203 211,793 509,255 8,019
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 4,254,580 -- 566,055 --
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 16,566,783 211,793 1,075,310 8,019
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FidVEqInS FidVOvSeS
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ -- -- 8,519 --
Mortality and expense risk charges (note 3) ..... (7,344) -- (2,110) (7)
------------ ------------ ------------ ------------
Net investment income ........................ (7,344) -- 6,409 (7)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ........... 25,557 -- 14,509 361
Cost of mutual fund shares sold ................. (25,206) -- (12,490) (365)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 351 -- 2,019 (4)
Change in unrealized gain (loss) on investments . (80,912) -- (94,371) 289
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... (80,561) -- (92,352) 285
------------ ------------ ------------ ------------
Reinvested capital gains ........................ -- -- 55,136 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (87,905) -- (30,807) 278
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. (6,559) -- 265,220 7,832
Transfers between funds ......................... 5,530,401 -- 78,133 7,429
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................ (18,262) -- (14,351) (1,082)
------------ ------------ ------------ ------------
Net equity transactions .................... 5,505,580 -- 329,002 14,180
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 5,417,675 -- 298,195 14,458
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... -- -- 499,687 --
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. 5,417,675 -- 797,882 14,458
============ ============ ============ ============
</TABLE>
(Continued)
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NATIONWIDE VL SEPARATE ACCOUNT-D
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
FidVConS FidVBalS
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ -- -- -- --
Mortality and expense risk charges (note 3) ..... (2,496) -- (1,857) --
----------- ----------- ----------- -----------
Net investment income ........................ (2,496) -- (1,857) --
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ........... 8,763 -- 6,482 --
Cost of mutual fund shares sold ................. (9,166) -- (6,661) --
----------- ----------- ----------- -----------
Realized gain (loss) on investments .......... (403) -- (179) --
Change in unrealized gain (loss) on investments . (46,917) -- (1,645) --
----------- ----------- ----------- -----------
Net gain (loss) on investments ............... (47,320) -- (1,824) --
----------- ----------- ----------- -----------
Reinvested capital gains ........................ -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (49,816) -- (3,681) --
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. (9,927) -- (4,435) --
Transfers between funds ......................... 1,990,572 -- 1,451,931 --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................ (6,279) -- (4,632) --
----------- ----------- ----------- -----------
Net equity transactions .................... 1,974,366 -- 1,442,864 --
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 1,924,550 -- 1,439,183 --
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... -- -- -- --
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 1,924,550 -- 1,439,183 --
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
IVBCGr IVDynm
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ -- -- -- --
Mortality and expense risk charges (note 3) ..... (2,415) (18) (414) (18)
----------- ----------- ----------- -----------
Net investment income ........................ (2,415) (18) (414) (18)
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ........... 18,703 986 6,512 968
Cost of mutual fund shares sold ................. (14,808) (1,034) (4,545) (1,006)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .......... 3,895 (48) 1,967 (38)
Change in unrealized gain (loss) on investments . 108,663 2,031 20,265 1,669
----------- ----------- ----------- -----------
Net gain (loss) on investments ............... 112,558 1,983 22,232 1,631
----------- ----------- ----------- -----------
Reinvested capital gains ........................ -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 110,143 1,965 21,818 1,614
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 309,390 22,215 60,551 21,585
Transfers between funds ......................... 78,133 21,226 -- 19,104
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................ (18,960) (3,030) (7,156) (2,959)
----------- ----------- ----------- -----------
Net equity transactions .................... 368,563 40,411 53,395 37,730
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 478,706 42,376 75,213 39,344
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 553,858 -- 107,423 --
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. 1,032,564 42,376 182,636 39,344
=========== =========== =========== ===========
</TABLE>
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NATIONWIDE VL SEPARATE ACCOUNT-D
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
IVEIn IVHiYld
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ -- -- -- --
Mortality and expense risk charges (note 3) ..... (2,542) (40) -- --
----------- ----------- ----------- -----------
Net investment income ........................ (2,542) (40) -- --
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ........... 22,926 2,271 13 357
Cost of mutual fund shares sold ................. (22,382) (2,332) (13) (361)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .......... 544 (61) -- (4)
Change in unrealized gain (loss) on investments . 19,290 2,405 -- 30
----------- ----------- ----------- -----------
Net gain (loss) on investments ............... 19,834 2,344 -- 26
----------- ----------- ----------- -----------
Reinvested capital gains ........................ -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 17,292 2,304 -- 26
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 381,597 49,307 -- 7,786
Transfers between funds ......................... 78,133 44,575 -- 7,429
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................ (23,726) (6,780) -- (1,080)
----------- ----------- ----------- -----------
Net equity transactions .................... 436,004 87,102 -- 14,135
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 453,296 89,406 -- 14,161
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 571,449 -- -- --
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 1,024,745 89,406 -- 14,161
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
IVTotRtn NSATCapAp
-------------------------- --------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ -- -- 1,889 --
Mortality and expense risk charges (note 3) ..... (1,746) -- (3,296) --
----------- ----------- ----------- -----------
Net investment income ........................ (1,746) -- (1,407) --
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ........... 11,881 -- 22,871 --
Cost of mutual fund shares sold ................. (13,154) -- (26,153) --
----------- ----------- ----------- -----------
Realized gain (loss) on investments .......... (1,273) -- (3,282) --
Change in unrealized gain (loss) on investments . (16,208) -- 27,405 --
----------- ----------- ----------- -----------
Net gain (loss) on investments ............... (17,481) -- 24,123 --
----------- ----------- ----------- -----------
Reinvested capital gains ........................ -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (19,227) -- 22,716 --
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 265,120 -- 483,559 --
Transfers between funds ......................... 78,133 -- 156,266 --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................ (11,636) -- (19,609) --
----------- ----------- ----------- -----------
Net equity transactions .................... 331,617 -- 620,216 --
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 312,390 -- 642,932 --
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 368,481 -- 699,217 --
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. 680,871 -- 1,342,149 --
=========== =========== =========== ===========
</TABLE>
(Continued)
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NATIONWIDE VL SEPARATE ACCOUNT-D
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
NSATHIncBd NSATMMkt NSATStrVal
------------------------ ------------------------ ------------------------
2000 1999 2000 1999 2000 1999
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 45,051 -- 3,685 14 2,613 --
Mortality and expense risk charges (note 3) ..... (2,575) -- (246) (2) (1,690) --
---------- ---------- ---------- ---------- ---------- ----------
Net investment income ........................ 42,476 -- 3,439 12 923 --
---------- ---------- ---------- ---------- ---------- ----------
Proceeds from mutual fund shares sold ........... 17,699 -- 2,434,273 103 11,600 --
Cost of mutual fund shares sold ................. (19,122) -- (2,434,273) (103) (12,455) --
---------- ---------- ---------- ---------- ---------- ----------
Realized gain (loss) on investments .......... (1,423) -- -- -- (855) --
Change in unrealized gain (loss) on investments . (50,623) -- -- -- (11,352) --
---------- ---------- ---------- ---------- ---------- ----------
Net gain (loss) on investments ............... (52,046) -- -- -- (12,207) --
---------- ---------- ---------- ---------- ---------- ----------
Reinvested capital gains ........................ -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (9,570) -- 3,439 12 (11,284) --
---------- ---------- ---------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 362,672 -- 9,787,983 113,577 241,781 --
Transfers between funds ......................... 117,199 -- (9,754,233) (104,009) 78,133 --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ............................ (15,021) -- (30,362) (5,550) (9,929) --
---------- ---------- ---------- ---------- ---------- ----------
Net equity transactions .................... 464,850 -- 3,388 4,018 309,985 --
---------- ---------- ---------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 455,280 -- 6,827 4,029 298,701 --
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 540,527 -- 9,380 -- 338,503 --
---------- ---------- ---------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 995,807 -- 16,207 4,029 637,204 --
========== ========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
10
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NATIONWIDE VL SEPARATE ACCOUNT-D
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide VL Separate Account-D (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
and Annuity Insurance Company (the Company) on May 22, 1998. The
Account has been registered as a unit investment trust under the
Investment Company Act of 1940.
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:
Funds of the Deutsche Asset Management VIT Funds (DAS);
DAS VIT Funds - Deutsche EAFE Equity Index Fund
DAS VIT Funds - Deutsche Equity 500 Index Fund
DAS VIT Funds - Deutsche Small Cap Index Fund
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGr)
Dreyfus Stock Index Fund (DryStkIx)
Dreyfus Premier MId Cap Stock - Class A (DryPreMCap)
Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF);
Dreyfus VIF - Appreciation Portfolio (DryVApp)
Dreyfus VIF - Disciplined Stock Portfolio (DryVDspStk)
Dreyfus VIF - International Value Portfolio (DryVIntVal)
Dreyfus VIF - Limited Term High Income Portfolio (DryVLmtHI)
Dreyfus VIF - Mid-Cap Stock Portfolio
Dreyfus VIF - Quality Bond Portfolio (DryVQualBd)
Dreyfus VIF - Small Company Stock Portfolio (DryVSmCoSt)
Fund of the Fidelity Advisor Funds (Fidelity Advisor);
Fidelity Advisor - Overseas Fund - Class A
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Growth Portfolio (FidVGr)
Fidelity VIP - High Income Portfolio (FidVHiIn)
Portfolios of the Fidelity Variable Insurance Products Fund:
Service Class (Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio: Service Class
(FidVEqInS)
Fidelity VIP - Growth Portfolio: Service Class (FidVGrS)
Fidelity VIP - High Income Portfolio: Service Class (FidVHiInS)
Fidelity VIP - Overseas Portfolio: Service Class (FidVOvSeS)
Portfolio of the Fidelity Variable Insurance Products Fund II
(Fidelity VIP-II);
Fidelity VIP-II - Contrafund Portfolio (FidVCon)
Portfolios of the Fidelity Variable Insurance Products Fund II
(Fidelity VIP-II);
Fidelity VIP-II - Asset Manager Growth Portfolio: Service Class
(FidVAMGrS)
Fidelity VIP-II - Asset Manager Portfolio: Service Class
(FidVAMS)
Fidelity VIP-II - Contrafund Portfolio: Service Class (FidVConS)
(Continued)
11
<PAGE> 11
NATIONWIDE VL SEPARATE ACCOUNT-D
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Portfolios of the Fidelity Variable Insurance Products Fund III:
Service Class (Fidelity VIP-III);
Fidelity VIP-III - Balanced Portfolio: Service Class (FidVBalS)
Fidelity VIP-III - Growth and Income Portfolio: Service Class
(FidVGrInS)
Fidelity VIP-III - Growth Opportunities Portfolio: Service Class
(FidVGrOpS)
Fidelity VIP-III - Mid Cap Portfolio: Service Class (FidVMCapS)
Funds of the Goldman Sachs Variable Insurance Trust (Goldman
Sachs);
Goldman Sachs - Aggressive Growth
Goldman Sachs - Balanced Strategy
Goldman Sachs - Capital Growth Fund
Goldman Sachs - Conservative Strategy
Goldman Sachs - Core International Equity Fund
Goldman Sachs - Core Large Cap Fund
Goldman Sachs - Core Small Cap Fund
Goldman Sachs - Core U.S. Equity Fund
Goldman Sachs - Global Income Fund
Goldman Sachs - Growth and Income Fund
Goldman Sachs - Growth and Income Strategy
Goldman Sachs - Growth Strategy Portfolio
Goldman Sachs - Mid Cap Fund
Funds of the INVESCO Variable Investment Funds, Inc. (INVESCO
VIF);
INVESCO VIF - Blue Chip Growth Fund (IVBCGr)
INVESCO VIF - Dynamics Fund (IVDynm)
INVESCO VIF - Equity Income Fund (IVEIn)
INVESCO VIF - Health Sciences Fund (IVHlthSci)
INVESCO VIF - High Yield Fund (IVHiYld)
INVESCO VIF - Real Estate Opportunity Fund (IVRealEsOp)
INVESCO VIF - Small Company Growth Fund (IVSmCoGr)
INVESCO VIF - Technology Fund (IVTech)
INVESCO VIF - Total Return Fund (IVTotRtn)
INVESCO VIF - Utilities Fund (IVUtility)
Portfolios of the Morgan Stanley Universal Funds, Inc. (Morgan
Stanley);
Morgan Stanley - Emerging Markets Debt Portfolio (MESmMkt)
Morgan Stanley - Equity Growth Portfolio
Morgan Stanley - Fixed Income Portfolio
Morgan Stanley - Global Equity Portfolio
Morgan Stanley - High Yield Portfolio
Morgan Stanley - International Magnum Portfolio
Morgan Stanley - Mid Cap Growth Portfolio
Morgan Stanley - Mid Cap Value Portfolio
Morgan Stanley - US Real Estate Portfolio
Morgan Stanley - Value Portfolio
12
<PAGE> 12
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Balanced Fund (NSATBal)
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Equity Income Fund (NSATEqInc)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
Nationwide SAT - Mid Cap Index Fund (NSATMidCap)
Nationwide SAT - Money Market Fund (NSATMMkt)
Nationwide SAT - Multi-Sector Bond Fund (NSATMSecBd)
Nationwide SAT - Nationwide Global 50 Fund (NSATGlob50)
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 (NSATTotRtn)
Funds of the Salomon Brothers Variable Funds (SBV);
SBV - Capital Fund
SBV - High Yield Bond Fund
SBV - Investors Fund
SBV - Strategic Bond Fund
SBV - Total Return Fund
At June 30, 2000, contract owners have invested in all of the above
funds except for DAS VIT Funds - Deutsche EAFE Equity Index Fund, DAS
VIT Funds - Deutsche Equity 500 Index Fund, DAS VIT Funds - Deutsche
Small Cap Index Fund, The Dreyfus Socially Responsible Growth Fund,
Inc., Dreyfus Stock Index Fund, Dreyfus Premier Mid Cap Stock - Class
A, Dreyfus VIF - Appreciation Portfolio, Dreyfus VIF - Disciplined
Stock Portfolio, Dreyfus VIF - International Value Portfolio, Dreyfus
VIF - Limited Term High Income Portfolio, Dreyfus VIF - Mid-Cap Stock
Portfolio, Dreyfus VIF - Small Company Stock Portfolio, Fidelity
Advisor - Overseas Fund - Class A, Fidelity VIP - Growth Portfolio,
Fidelity VIP - High Income Portfolio, Fidelity VIP - Growth Portfolio:
Service Class, Fidelity VIP-II - Contrafund Portfolio, Fidelity VIP-II
- Asset Manager Growth Portfolio: Service Class, Fidelity VIP-II -
Asset Manager Portfolio: Service Class, Fidelity VIP-III - Growth and
Income Portfolio: Service Class, Fidelity VIP-III - Growth
Opportunities Portfolio: Service Class, Fidelity VIP-III - Mid Cap
Portfolio: Service Class, Goldman Sachs - Aggressive Growth, Goldman
Sachs - Balanced Strategy, Goldman Sachs - Capital Growth Fund, Goldman
Sachs - Conservative Strategy, Goldman Sachs - Core International
Equity Fund, Goldman Sachs - Core Large Cap Fund, Goldman Sachs - Core
Small Cap Fund, Goldman Sachs - Core U.S. Equity Fund, Goldman Sachs -
Global Income Fund, Goldman Sachs - Growth and Income Fund, Goldman
Sachs, Growth and Income Strategy, Goldman Sachs - Growth Strategy
Portfolio, Goldman Sachs, Mid Cap Fund, INVESCO VIF - Health Science
Fund, INVESCO VIF - High Yield Fund, INVESCO VIF - Real Estate
Opportunity Fund, INVESCO VIF - Small Company Growth Fund, INVESCO VIF
- Technology Fund, INVESCO VIF - Utilities Fund, Morgan Stanley -
Emerging Markets Debt Portfolio, Morgan Stanley - Equity Growth
Portfolio, Morgan Stanley - Fixed Income Portfolio, Morgan Stanley -
Global Equity Portfolio, Morgan Stanley - High Yield Portfolio, Morgan
Stanley International Magnum Portfolio, Morgan Stanley - Mid Cap Growth
Portfolio, Morgan Stanley - Mid Cap Value Portfolio, Morgan Stanley -
U.S. Real Estate Portfolio, Morgan Stanley - Value Portfolio,
Nationwide SAT - Balanced Fund, Nationwide SAT - Equity Income Fund,
Nationwide SAT - Government Bond Fund, Nationwide SAT - Mid Cap Index
Fund, Nationwide SAT - Multi Sector Bond Fund, Nationwide SAT -
Nationwide Global 50 Fund, Nationwide SAT - Small Cap Value Fund,
Nationwide SAT - Small Company Fund, Nationwide SAT - Strategic Growth
Fund, Nationwide SAT - Total Return Fund, SBV - Capital Fund, SBV -
High Yield Bond Fund, SBV - Investor Fund, SBV - Strategic Bond Fund,
and SBV - Total Return Fund. The contract owners' equity is affected by
the investment results of each fund, equity transaction by contract
owners and certain contract expenses (see note 2).
(Continued)
13
<PAGE> 13
NATIONWIDE VL SEPARATE ACCOUNT-D
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The accompanying financial statements include only contract owners'
purchase payments pertaining to the variable portions of their
contracts and exclude any purchase payments for fixed dollar benefits,
the latter being included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at June 30, 2000. 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 not to exceed 3.5%
of all premiums received to cover the payment of these premium taxes.
Additionally, the Company deducts a front-end sales load of up to 5.5%
from each premium payment received.
(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 currently deducts a monthly administrative charge of $5 in
all policy years. This charge is subject to change but will not exceed
$10 per policy year.
(3) ASSET CHARGES
The Company deducts a charge from the contract to cover mortality and
expense risk charges related to operations, and to recover policy
maintenance charges. This charge is guaranteed not to exceed an annual
effective rate of .75%. The annual rate is currently .60% during the first
through fourth policy years, .40% during the fifth through twentieth policy
years, and .25% thereafter. This charge is assessed against each contract
through the daily unit value calculation.
(4) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
14
<PAGE> 14
(5) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at June 30, 2000:
<TABLE>
<CAPTION>
PERIOD
Contract owners' equity represented by: UNITS UNIT VALUE RETURN*
--------- ----------- ---------
<S> <C> <C> <C> <C>
Dreyfus VIF - Quality Bond Portfolio 104,350 $ 10.304836 $ 1,075,310 3%
Fidelity VIP - Equity Income Portfolio 532,580 10.172510 5,417,675 (3)%
Fidelity VIP - Overseas Portfolio 61,824 12.905707 797,882 (5)%
Fidelity VIP-II - Contrafund Portfolio 159,141 12.093366 1,924,550 (2)%
Fidelity VIP-III - Balanced Portfolio 139,664 10.304610 1,439,183 0%
INVESCO VIF - Blue Chip Growth Fund 72,836 14.176693 1,032,574 11%
INVESCO VIF - Dynamics Fund 10,566 17.285289 182,636 13%
INVESCO VIF - Equity-Income Fund 89,125 11.497844 1,024,745 1%
INVESCO VIF - Total Return Fund 74,545 9.133694 680,871 (4)%
Nationwide SAT - Capital Appreciation Fund 128,838 10.417336 1,342,149 0%
Nationwide SAT - High Income Bond Fund 99,142 10.044247 995,807 (2)%
Nationwide SAT - Money Market Fund 1,517 10.683609 16,207 3%
Nationwide SAT - Strategic Value Fund 67,121 9.493366 637,204 (2)%
======== ========= ----------
$ 16,566,793
==========
</TABLE>
* The period return does not include contract charges satisfied by surrendering
units.
15
<PAGE> 15
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY --------------
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220 Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
--------------
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
