<PAGE> 1
2000
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Nationwide(R) Variable Account - 10
June 30, 2000
[THE BEST OF AMERICA - LOGO]
SEMI-ANNUAL REPORT
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[NATIONWIDE - LOGO]
Nationwide Life Insurance Company
Home Office: Columbus, Ohio
APO-4740(06/00)
<PAGE> 2
[NATIONWIDE - LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO OF PRESIDENT]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you the 2000
semi-annual report of the Nationwide Variable Account-10.
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, President
Joseph J. Gasper, President
August 16, 2000
2
<PAGE> 3
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 under- lying 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 Variable Account-10. 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 1-877-377-7701 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 4 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 14. 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 6 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 10, provide further disclosures
about the variable account and its underlying contract provisions.
3
<PAGE> 4
NATIONWIDE VARIABLE ACCOUNT-10
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
Investments at market value:
<S> <C>
American Century VP - American Century VP Income & Growth (ACVPIncGr)
544 shares (cost $4,406) .................................................... $ 4,172
American Century VP - American Century VP International (ACVPInt)
1,251 shares (cost $15,572) ................................................. 14,466
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGr)
423 shares (cost $16,460) ................................................... 16,945
Dreyfus Stock Index Fund (DryStkIx)
495 shares (cost $19,072) ................................................... 18,812
Fidelity VIP - Equity-Income Portfolio - Service Class (FidVEqInS)
21 shares (cost $500) ....................................................... 477
Fidelity VIP - Growth Portfolio - Service Class (FidVGrS)
919 shares (cost $46,762) ................................................... 47,246
Fidelity VIP - High Income Portfolio - Service Class (FidVHiInS)
437 shares (cost $4,309) .................................................... 4,375
Fidelity VIP - Overseas Portfolio - Service Class (FidVOvSeS)
162 shares (cost $3,970) .................................................... 3,804
Fidelity VIP-II - Contrafund Portfolio - Service Class (FidVConS)
531 shares (cost $13,362) ................................................... 13,289
Fidelity VIP-III - Growth Opportunity Portfolio - Service Class (FidVGrOpS)
154 shares (cost $3,034) .................................................... 3,167
Janus Aspen Series - Capital Appreciation Portfolio - Service Class (JanACapApS)
705 shares (cost $21,832) ................................................... 22,146
Janus Aspen Series - International Growth Portfolio - Service Class (JanAIntGrS)
65 shares (cost $2,431) ..................................................... 2,547
Janus Aspen Series - Global Technology Portfolio - Service Class (JanAGlTchS)
54 shares (cost $500) ....................................................... 527
Nationwide SAT - Balanced Fund (NSATBal)
417 shares (cost $4,337) .................................................... 4,350
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
43 shares (cost $1,000) ..................................................... 1,110
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
Nationwide SAT - Nationwide Global 50 Fund (NSATGlob50)
115 shares (cost $1,535) .................................................... 1,571
Nationwide SAT - Money Market Fund (NSATMMkt)
599,107 shares (cost $599,107) .............................................. 599,107
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
414 shares (cost $4,490) .................................................... 4,468
Nationwide SAT - Small Company Fund (NSATSmCo)
155 shares (cost $4,006) .................................................... 3,700
Nationwide SAT - Strategic Growth Fund (NSATStrGro)
1,639 shares (cost $40,295) ................................................. 35,188
Nationwide SAT - Strategic Value Fund (NSATStrVal)
431 shares (cost $4,320) .................................................... 3,989
Nationwide SAT - Total Return Fund (NSATTotRtn)
25 shares (cost $501) ....................................................... 492
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
248 shares (cost $3,934) .................................................... 4,055
Neuberger & Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr)
207 shares (cost $5,305) .................................................... 5,670
Oppenheimer Aggressive Growth Fund/VA (OppAggGrVA)
181 shares (cost $20,191) ................................................... 17,515
Oppenheimer Capital Appreciation Fund/VA (OppCapApVA)
331 shares (cost $16,633) ................................................... 16,931
Oppenheimer Main Street Growth & Income Fund/VA (OppMGrInVA)
525 shares (cost $12,299) ................................................... 12,249
Strong Opportunity Fund II, Inc. (StOpp2)
143 shares (cost $3,862) .................................................... 3,864
Van Eck WIT - Worldwide Emerging Markets Fund (VEWwEmgMkt)
105 shares (cost $1,330) .................................................... 1,317
Warburg Pincus Trust - Value Portfolio (WPValue)
350 shares (cost $4,310) .................................................... 4,061
--------
Total investments ........................................................ 871610
Accounts receivable ............................................................... 4
--------
Total assets ............................................................. 871,614
ACCOUNTS PAYABLE ..................................................................... -
--------
CONTRACT OWNERS' EQUITY (NOTE 4) ..................................................... $871,614
========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
NATIONWIDE VARIABLE ACCOUNT-10
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY
-----------------------
STATEMENTS OF OPERATIONS
-----------------------
SIX MONTH PERIOD ENDED JUNE 30,2000
(UNAUDITED)
<TABLE>
<CAPTION>
Total ACVPIncGr ACVPInt DrySRGr
----- --------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 4,069 - 1 -
Mortality and expense risk charges
(note 2) ..................................... (1,761) (15) (32) (26)
--------- ----- ------ ------
Net investment activity ...................... 2,308 (15) (31) (26)
--------- ----- ------ ------
Proceeds from mutual fund shares sold ........... 457,663 16 32 25
Cost of mutual fund shares sold ................. (451,602) (16) (33) (24)
--------- ----- ------ ------
Realized gain (loss) on investments .......... 6,061 - (1) 1
Change in unrealized gain (loss)
on investments ............................... (8,028) (233) (1,105) 485
--------- ----- ------ ------
Net gain (loss) on investments ............... (1,967) (233) (1,106) 486
--------- ----- ------ ------
Reinvested capital gains ........................ 2,591 - 18 -
--------- ----- ------ ------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 2,932 (248) (1,119) 460
--------- ----- ------ ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 836,341 1 42 1
Transfers between funds ......................... - 4,417 15,544 16,484
Surrenders ...................................... (28,245) - - -
--------- ----- ------ ------
Net equity transactions .................... 808,096 4,418 15,586 16,485
--------- ----- ------ ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 811,028 4,170 14,467 16,945
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 60,586 - - -
--------- ----- ------ ------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 871,614 4,170 14,467 16,945
========= ===== ====== ======
<CAPTION>
DryStkIx FidVEqInS FidVGrS FidVHiInS
-------- --------- ------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ 65 - 8 -
Mortality and expense risk charges
(note 2) ..................................... (50) - (121) (5)
------ --- ------ -----
Net investment activity ...................... 15 - (113) (5)
------ --- ------ -----
Proceeds from mutual fund shares sold ........... 49 1 3,746 6
Cost of mutual fund shares sold ................. (47) (1) (4,410) (6)
------ --- ------ -----
Realized gain (loss) on investments .......... 2 - (664) -
Change in unrealized gain (loss)
on investments ............................... (259) (22) 486 67
------ --- ------ -----
Net gain (loss) on investments ............... (257) (22) (178) 67
------ --- ------ -----
Reinvested capital gains ........................ 10 - 900 -
------ --- ------ -----
Net increase (decrease) in contract owners'
equity resulting from operations ........ (232) (22) 609 62
------ --- ------ -----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 3 502 37 -
Transfers between funds ......................... 19,044 - 46,633 4,313
Surrenders ...................................... - - - -
------ --- ------ -----
Net equity transactions .................... 19,047 502 46,670 4,313
------ --- ------ -----
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 18,815 480 47,279 4,375
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - - - -
------ --- ------ -----
CONTRACT OWNERS' EQUITY END OF PERIOD ............. 18,815 480 47,279 4,375
====== === ====== =====
</TABLE>
6
<PAGE> 7
NATIONWIDE VARIABLE ACCOUNT-10
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
-----------------------------------
STATEMENTS OF OPERATIONS, CONTINUED
-----------------------------------
SIX MONTH PERIOD ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
FidVOvSeS FidVConS FidVGrOpS JanACapAp
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 14 18 - 9
Mortality and expense risk charges
(note 2) ..................................... (15) (50) (8) (33)
------- ------ ----- ------
Net investment activity ...................... (1) (32) (8) (24)
------- ------ ----- ------
Proceeds from mutual fund shares sold ........... 1,950 9,710 9 11,395
Cost of mutual fund shares sold ................. (2,217) (11,105) (9) (10,837)
------- ------ ----- ------
Realized gain (loss) on investments .......... (267) (1,395) - 558
Change in unrealized gain (loss)
on investments ............................... (164) (72) 133 315
------- ------ ----- ------
Net gain (loss) on investments ............... (431) (1,467) 133 873
------- ------ ----- ------
Reinvested capital gains ........................ 93 652 - -
------- ------ ----- ------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (339) (847) 125 849
------- ------ ----- ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 20 486 - 1
Transfers between funds ......................... 4,116 13,641 3,043 21,296
Surrenders ...................................... - - - -
------- ------ ----- ------
Net equity transactions .................... 4,136 14,127 3,043 21,297
------- ------ ----- ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 3,797 13,280 3,168 22,146
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - - - -
------- ------ ----- ------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 3,797 13,280 3,168 22,146
======= ====== ===== ======
<CAPTION>
JanAIntGrS JanAGlTchS NSATBal NSATCapAp
---------- ---------- ------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ - - 28 2
Mortality and expense risk charges
(note 2) ..................................... (15) (5) (5) (2)
------- ------ ----- ------
Net investment activity ...................... (15) (5) 23 -
------- ------ ----- ------
Proceeds from mutual fund shares sold ........... 23,889 5 6 3
Cost of mutual fund shares sold ................. (22,318) (5) (6) (3)
------- ------ ----- ------
Realized gain (loss) on investments .......... 1,571 - - -
Change in unrealized gain (loss)
on investments ............................... 28 117 14 110
------- ------ ----- ------
Net gain (loss) on investments ............... 1,599 117 14 110
------- ------ ----- ------
Reinvested capital gains ........................ - - - -
------- ------ ----- ------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,584 112 37 110
------- ------ ----- ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 499 503 1 -
Transfers between funds ......................... (1,556) 1,935 4,314 998
Surrenders ...................................... - - - -
------- ------ ----- ------
Net equity transactions .................... (1,057) 2,438 4,315 998
------- ------ ----- ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 527 2,550 4,352 1,108
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - - - -
------- ------ ----- ------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. 527 2,550 4,352 1,108
======= ====== ===== ======
</TABLE>
(Continued)
7
<PAGE> 8
NATIONWIDE VARIABLE ACCOUNT-10
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
-----------------------------------
STATEMENTS OF OPERATIONS, CONTINUED
-----------------------------------
SIX MONTH PERIOD ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
NSATGlob50 NSATMMkt NSATSmCapV NSATSmCo
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 12 3,880 - 1
Mortality and expense risk charges
(note 2) ..................................... (4) (951) (8) (13)
-------- ------- ----- -----
Net investment activity ...................... 8 2,929 (8) (12)
-------- ------- ----- -----
Proceeds from mutual fund shares sold ........... 5 339,279 8 14
Cost of mutual fund shares sold ................. (5) (339,279) (8) (15)
-------- ------- ----- -----
Realized gain (loss) on investments .......... - - - (1)
Change in unrealized gain (loss)
on investments ............................... 37 1 (21) (305)
-------- ------- ----- -----
Net gain (loss) on investments ............... 37 1 (21) (306)
-------- ------- ----- -----
Reinvested capital gains ........................ - - - -
-------- ------- ----- -----
Net increase (decrease) in contract owners'
equity resulting from operations ........ 45 2,930 (29) (318)
-------- ------- ----- -----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. - 833,661 82 -
Transfers between funds ......................... 1,529 (269,835) 4,418 4,011
Surrenders ...................................... - (28,245) - -
-------- ------- ----- -----
Net equity transactions .................... 1,529 535,581 4,500 4,011
-------- ------- ----- -----
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 1,574 538,511 4,471 3,693
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - 60,586 - -
-------- ------- ----- -----
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 1,574 599,097 4,471 3,693
======== ======= ===== =====
<CAPTION>
NSATStrGro NSATStrVal NSATTotRtn NBAMTGuard
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ - 11 1 -
Mortality and expense risk charges
(note 2) ..................................... (169) (5) - (16)
-------- ------- ----- -----
Net investment activity ...................... (169) 6 1 (16)
-------- ------- ----- -----
Proceeds from mutual fund shares sold ........... 12,891 6 1 16
Cost of mutual fund shares sold ................. (10,249) (6) (1) (15)
-------- ------- ----- -----
Realized gain (loss) on investments .......... 2,642 - - 1
Change in unrealized gain (loss)
on investments ............................... (5,106) (330) (8) 121
-------- ------- ----- -----
Net gain (loss) on investments ............... (2,464) (330) (8) 122
-------- ------- ----- -----
Reinvested capital gains ........................ - - - -
-------- ------- ----- -----
Net increase (decrease) in contract owners'
equity resulting from operations ........ (2,633) (324) (7) 106
-------- ------- ----- -----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. - 2 495 1
Transfers between funds ......................... 37,819 4,314 - 3,948
Surrenders ...................................... - - - -
-------- ------- ----- -----
Net equity transactions .................... 37,819 4,316 495 3,949
-------- ------- ----- -----
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 35,186 3,992 488 4,055
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - - - -
-------- ------- ----- -----
CONTRACT OWNERS' EQUITY END OF PERIOD ............. 35,186 3,992 488 4,055
======== ======= ===== =====
</TABLE>
8
<PAGE> 9
NATIONWIDE VARIABLE ACCOUNT-10
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
-----------------------------------
STATEMENTS OF OPERATIONS, CONTINUED
-----------------------------------
SIX MONTH PERIOD ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
NBAMTMCGr OppAggGrVA OppCapApVA
--------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ - - 7
Mortality and expense risk charges
(note 2) ..................................... (9) (81) (63)
------- ------ ------
Net investment activity ...................... (9) (81) (56)
------- ------ ------
Proceeds from mutual fund shares sold ........... 10 43,348 11,182
Cost of mutual fund shares sold ................. (11) (40,254) (10,661)
------- ------ ------
Realized gain (loss) on investments .......... (1) 3,094 521
Change in unrealized gain (loss)
on investments ............................... 366 (2,674) 299
------- ------ ------
Net gain (loss) on investments ............... 365 420 820
------- ------ ------
Reinvested capital gains ........................ - 398 361
------- ------ ------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 356 737 1,125
------- ------ ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. - - -
Transfers between funds ......................... 5,311 16,774 15,806
Surrenders ...................................... - - -
------- ------ ------
Net equity transactions .................... 5,311 16,774 15,806
------- ------ ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 5,667 17,511 16,931
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - - -
------- ------ ------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 5,667 17,511 16,931
======= ====== ======
<CAPTION>
OppMGrInVA StOpp2 VEWwEmgMkt WPValue
---------- ------ ---------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ 12 - - -
Mortality and expense risk charges
(note 2) ..................................... (43) (8) (4) (5)
------ ----- ----- -----
Net investment activity ...................... (31) (8) (4) (5)
------ ----- ----- -----
Proceeds from mutual fund shares sold ........... 42 9 4 6
Cost of mutual fund shares sold ................. (42) (9) (4) (6)
------ ----- ----- -----
Realized gain (loss) on investments .......... - - - -
Change in unrealized gain (loss)
on investments ............................... (49) 2 (13) (248)
------ ----- ----- -----
Net gain (loss) on investments ............... (49) 2 (13) (248)
------ ----- ----- -----
Reinvested capital gains ........................ 159 - - -
------ ----- ----- -----
Net increase (decrease) in contract owners'
equity resulting from operations ........ 79 (6) (17) (253)
------ ----- ----- -----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. - 4 - -
Transfers between funds ......................... 12,169 3,870 1,334 4,310
Surrenders ...................................... - - - -
------ ----- ----- -----
Net equity transactions .................... 12,169 3,874 1,334 4,310
------ ----- ----- -----
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 12,248 3,868 1,317 4,057
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - - - -
------ ----- ----- -----
CONTRACT OWNERS' EQUITY END OF PERIOD ............. 12,248 3,868 1,317 4,057
====== ===== ===== =====
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
NATIONWIDE VARIABLE ACCOUNT - 10
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide Variable Account-10 (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
Insurance Company (the Company) on March 31, 1999. The Account has been
registered as a unit investment trust under the Investment Company Act
of 1940.
The Company offers tax qualified and non-tax qualified Individual
Deferred Variable Annuity Contracts through the Account. The primary
distribution for the contracts is through the brokerage community;
however, other distributors are utilized.
(b) The Contracts
Only contracts without a sales charge, but with certain other fees are
offered for purchase. See note 2 for a discussion of contract expenses.
Contract owners in either the accumulation or payout phase may invest
in the following:
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP);
American Century VP - American Century VP Income & Growth
(ACVPIncGr)
American Century VP - American Century VP International
(ACVPInt)
American Century VP - American Century VP Value (ACVPValue)
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGr)
Dreyfus Stock Index Fund (DryStkIx)
Portfolio of the Dreyfus Investment Portfolios (Dreyfus IP);
Dreyfus IP - European Equity Portfolio (DryEuroEq)
Portfolio of the Dreyfus Variable Investment Fund (Dreyfus VIF);
Dreyfus VIF - Appreciation Portfolio (DryVApp)
Federated Insurance Series - Quality Bond Fund II (FedQualBd2)
Portfolios of the Fidelity Variable Insurance Products Fund
(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)
Portfolios of the Fidelity Variable Insurance Products Fund II
(Fidelity VIP-II);
Fidelity VIP-II - Contrafund Portfolio: Service Class
(FidVConS)
Portfolio of the Fidelity Variable Insurance Products Fund III
(Fidelity VIP-III);
Fidelity VIP-III - Growth Opportunities Portfolio: Service
Class (FidVGrOpS)
Portfolios of the Janus Aspen Series;
Janus Aspen - Capital Appreciation Portfolio - Service Class
(JanACapApS)
Janus Aspen - International Growth Portfolio - Service Class
(JanAIntGrS)
Janus Aspen - Global Technology Portfolio - Service Class
(JanAGlTchS)
10
<PAGE> 11
Portfolios of the Morgan Stanley Universal Funds, Inc. (Morgan
Stanley);
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
Morgan Stanley - Mid Cap Growth Portfolio (MSMidCapGr)
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 - Nationwide Global 50 Fund (NSATGlob50)
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 Small Cap Growth Fund (NSATSmCapG)
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
Nationwide SAT - Small Company Fund (NSATSmCo)
Nationwide SAT - Strategic Growth Fund (NSATStrGro)
Nationwide SAT - Strategic Value Fund (NSATStrVal)
Nationwide SAT - Total Return Fund (NSATTotRtn)
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 Aggressive Growth Fund/VA (OppAggGrVA)
Oppenheimer Capital Appreciation Fund/VA (OppCapApVA)
Oppenheimer Global Securities Fund/VA (OppGlSecVA)
Oppenheimer Main Street Growth & Income Fund/VA (OppMGrInVA)
Strong Opportunity Fund II, Inc. (StOpp2)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT);
Van Eck WIT - Worldwide Emerging Markets Fund (VEWwEmgMkt)
Van Eck WIT - Worldwide Hard Assets Fund (VEWwHrdAst)
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 - Global Post - Venture Capital Portfolio
(WPGlPVenCp)
Warburg Pincus Trust - International Equity Portfolio
(WPIntEq)
Warburg Pincus Trust - Value Portfolio (WPValue)
At June 30, 2000, contract owners have invested in all of the above
funds except for American Century VP - American Century VP Value,
Dreyfus IP - European Equity Portfolio, Dreyfus VIF - Appreciation
Portfolio, Federated Insurance Series - Quality Bond Fund II, Morgan
Stanley - Emerging Markets Debt Portfolio, Morgan Stanley - Mid Cap
Growth Portfolio, Nationwide SAT - Government Bond Fund, Nationwide SAT
- High Income Bond Fund, Nationwide SAT - Mid Cap Index Fund,
Nationwide SAT - Multi Sector Bond Fund, Nationwide SAT - Nationwide
Small Cap Growth Fund, Neuberger & Berman AMT - Partners Portfolio,
Oppenheimer VAF - Global Securities Fund, Van Eck WIT - Worldwide Hard
Asset Fund, Van Kampen LIT - Morgan Stanley Real Estate Securities
Portfolio, Warburg Pincus Trust - Global Post - Venture Capital
Portfolio, and Warburg Pincus Trust - International Equity Portfolio.
The contract owners' equity is affected by the investment result of
each fund, equity transactions by contract owners and certain contract
expenses (see note 2).
(Continued)
11
<PAGE> 12
NATIONWIDE VARIABLE ACCOUNT-10
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.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual fund 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.
(f) Calculation of Annuity Reserves
Annuity reserves are computed for contracts in the variable payout
stage according to industry standard mortality tables. The assumed
investment return is 3.5 percent unless the annuitant elects otherwise,
in which case the rate may vary from 3.5 percent to 7 percent, as
regulated by the laws of the respective states. The mortality risk is
fully borne by the Company and may result in additional amounts being
transferred into the Account by the Company to cover greater longevity
of annuitants than expected. Conversely, if reserves exceed amounts
required, transfers may be made to the Company.
12
<PAGE> 13
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments received
from the contract owners. However, if any part of the contract value of
such contracts is surrendered, the company will, with certain exceptions,
deduct from a contract owner's contract value a contingent deferred sales
charge not to exceed 8% of purchase payments surrendered. After 5 years,
such charge will decline 1% per year, to 0%, after the purchase payment has
been held in the contract for 13 years. No sales charges are deducted on
redemptions used to purchase units in the fixed investment options of the
Company.
The Company deducts a mortality and expense risk charge assessed through
the daily unit value calculation equal to an annual rate of 1.40%.
(3) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
(Continued)
13
<PAGE> 14
(4) 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(b)
------- ----------- ---------
<S> <C> <C> <C> <C>
American Century VP - International ...... 1,059 $ 13.661142 $ 14,467 (7)%
American Century VP - Income & Growth..... 384 10.858084 4,170 (4)%
The Dreyfus Socially Responsible
Growth Fund, Inc. ..................... 1,387 12.217306 16,945 2%
Dreyfus Stock Index Fund ................. 1,666 11.293696 18,815 (1)%
Fidelity VIP - Equity-Income Service...... 48 10.000152 480 (3)%
Fidelity VIP - Growth Service ............ 3,697 12.788473 47,279 4%
Fidelity VIP - High Income Service ....... 447 9.787168 4,375 (6)%
Fidelity VIP - Overseas Service .......... 325 11.683816 3,797 (6)%
Fidelity VIP-II - Contrafund Service...... 1,152 11.528099 13,280 (2)%
Fidelity VIP-III -
Growth Opportunities Service .......... 312 10.152577 3,168 (4)%
Janus Aspen Series
Capital Appreciation Portfolio ........ 2,302 9.620409 22,146 (4)%(a)
Janus Aspen Series
Global Technology Portfolio ........... 54 9.752095 527 (2)%(a)
Janus Aspen Series
International Growth Portfolio ........ 253 10.079107 2,550 1%(a)
Nationwide SAT - Balanced Fund ........... 424 10.264621 4,352 2%
Nationwide SAT -
Capital Appreciation Fund ............. 106 10.456340 1,108 0%
Nationwide SAT - Global 50 Fund .......... 140 11.240008 1,574 (1)%
Nationwide SAT - Money Market Fund ....... 58,149 10.302795 599,097 2%
Nationwide SAT - Small Cap Value Fund..... 365 12.249841 4,471 10%
Nationwide SAT - Small Company Fund....... 262 14.096176 3,693 7%
Nationwide SAT - Strategic Growth Fund.... 2,371 14.839965 35,186 4%
Nationwide SAT - Strategic Value Fund..... 377 10.589683 3,992 (2)%
Nationwide SAT - Total Return Fund ....... 44 11.093680 488 3%
Neuberger & Berman AMT Guardian .......... 339 11.963020 4,055 3%
Neuberger & Berman AMT Midcap Growth...... 341 16.619046 5,667 12%
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
PERIOD
UNITS UNIT VALUE RETURN(b)
------- --------- ---------
<S> <C> <C> <C> <C>
Oppenheimer VAF - Aggressive Growth....... 1,002 17.476451 17,511 20%
Oppenheimer VAF - Capital Appreciation.... 1,212 13.969453 16,931 9%
Oppenheimer VAF - Growth & Income ........ 1,106 11.074463 12,248 (1)%
Strong VIP -
Strong Opportunity Fund II, Inc........ 402 9.621242 3,868 (4)%(a)
Van Eck WIT -
Worldwide Emerging Markets ............ 97 13.581684 1,317 (13)%
Warburg Pincus Trust - Value Portfolio.... 419 9.683049 4,057 (3)%
=== ========== --------- ====
$ 871,614
=========
</TABLE>
(a) The return was computed for the period 05/01/00 through 06/30/00 for Janus
Aspen Series - Capital Appreciation Portfolio, Janus Aspen Series - Global
Technology Portfolio, Janus Aspen Series - International Growth Portfolio
and Strong VIP - Strong Opportunity Fund II, Inc.
(b) The period return does not include contract charges satisfied by
surrendering units.
15
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220 ---------------
Bulk Rate
U.s. Postage
PAID
Columbus, Ohio
Permit No. 521
---------------
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
