<PAGE> 1
[LOGO]
NATIONWIDE(R)
VARIABLE
ACCOUNT
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1997
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
APO - 717 - X (12/97)
<PAGE> 2
[LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215 - 2220
[PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you the
1997 annual report of the Nationwide Variable Account.
Equity markets ended a volatile season to record the third straight
year of gains topping the 20 percent mark. Additionally, returns on
fixed income investments were buoyed by declining inflation, steady
Federal Reserve policy and the positive outlook for lower budget
deficits.
The U.S. economy continues to be strong into 1998. However, there is
still much uncertainty about what effect the Southeast Asian crisis
will have on our economy during this year. The obvious result, we
believe, will be a slowing of economic growth due to reduced
exports, restrained pricing flexibility and lower corporate profits.
We expect the Federal Reserve will continue to stay on the sidelines
as the Southeast Asian economic turmoil plays out. At the same time,
low inflation and low interest rates should continue to provide a
healthy environment for financial assets.
We are committed to our customers as our most valuable asset. Our
commitment to you is to continue to add value to our products and
services to help you achieve your financial planning and retirement
goals. As always, we welcome and encourage your feedback.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
3
<PAGE> 3
NATIONWIDE VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value:
American Century: Benham Short-Term Government Fund (ACBenSTGvt)
322,728 shares (cost $3,063,751) ..................................................... $ 3,059,462
American Century: Income & Growth Fund (ACIncGro)
78,031 shares (cost $1,985,279) ...................................................... 1,896,148
American Century: Twentieth Century Growth Fund (ACTCGro)
437,633 shares (cost $9,177,412) ..................................................... 10,507,571
American Century: Twentieth Century International Growth Fund (ACTCIntlGr)
60,876 shares (cost $534,608) ........................................................ 498,575
American Century: Twentieth Century Ultra Fund (ACTCUltra)
406,190 shares (cost $11,493,162) .................................................... 11,089,000
Delaware Group Delchester High-Yield Bond Fund, Inc. -
Delchester Fund Institutional Class (DeHYBd)
202,610 shares (cost $1,276,667) ..................................................... 1,337,226
Dreyfus A Bonds Plus, Inc. (DryABds)
125,915 shares (cost $1,809,206) ..................................................... 1,848,437
Dreyfus S&P 500 Index Fund (Dry500Ix)
265,889 shares (cost $6,920,293) ..................................................... 7,631,005
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
68,646 shares (cost $687,467) ........................................................ 721,470
Evergreen Income and Growth Fund - Class Y (EvIncGro)
46,367 shares (cost $928,011) ........................................................ 1,109,571
Federated Investment Series Funds, Inc. - Federated Bond Fund - Class F (FedBdFd)
36,894 shares (cost $360,585) ........................................................ 371,518
Fidelity Advisor Balanced Fund - Class T (FABal)
9,643 shares (cost $172,352) ......................................................... 175,498
Fidelity Advisor Equity Income Fund - Class T (FAEqInc)
46,988 shares (cost $1,069,908) ...................................................... 1,210,399
Fidelity Advisor Growth Opportunities Fund - Class T (FAGrOpp)
113,035 shares (cost $4,374,500) ..................................................... 4,798,327
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
198,168 shares (cost $2,480,669) ..................................................... 2,492,962
Fidelity Asset Manager(TM) (FidAsMgr)
199,890 shares (cost $3,256,694) ..................................................... 3,667,988
Fidelity Capital & Income Fund (FidCapInc)
128,863 shares (cost $1,176,433) ..................................................... 1,289,914
Fidelity Equity-Income Fund (FidEqInc)
332,832 shares (cost $12,537,481) .................................................... 17,443,710
Fidelity Magellan(R) Fund (FidMgln)
153,045 shares (cost $12,884,011) .................................................... 14,580,637
Fidelity Puritan(R) Fund (FidPurtn)
611,901 shares (cost $10,708,661) .................................................... 11,858,632
</TABLE>
4
<PAGE> 4
<TABLE>
<S> <C>
Fidelity VIP - High Income Portfolio (FidVIPHI)
20,130 shares (cost $225,352) ........................................................ 273,365
Janus Fund (JanFund)
138,458 shares (cost $3,583,124) ..................................................... 3,447,601
Janus Twenty Fund (Jan20Fd)
190,683 shares (cost $5,958,137) ..................................................... 5,909,259
Janus Worldwide Fund (JanWrldwde)
105,205 shares (cost $4,027,859) ..................................................... 3,974,631
MFS(R) World Governments Fund - Class A (MFSWdGvt)
69,856 shares (cost $788,900) ........................................................ 757,242
Nationwide(R) Bond Fund (NWBdFd)
179,767 shares (cost $1,663,450) ..................................................... 1,713,181
Nationwide(R) Fund (NWFund)
170,126 shares (cost $3,419,578) ..................................................... 4,506,644
Nationwide(R) Growth Fund (NWGroFd)
300,984 shares (cost $3,688,337) ..................................................... 4,406,402
Nationwide(R) Money Market Fund (NWMyMkt)
7,768,484 shares (cost $7,768,484) ................................................... 7,768,484
Nationwide(R) U.S. Government Income Fund (NWUSGvt)
7,277 shares (cost $73,266) .......................................................... 75,166
Neuberger & Berman Guardian Fund (NBGuard)
294,771 shares (cost $7,497,897) ..................................................... 7,634,559
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
78,435 shares (cost $782,440) ........................................................ 785,132
Neuberger & Berman Partners Fund (NBPartFd)
282,386 shares (cost $7,386,546) ..................................................... 7,426,740
Oppenheimer Global Fund - Class A (OppGlob)
138,920 shares (cost $5,554,092) ..................................................... 5,695,730
Phoenix Balanced Fund Series - Class A (PhxBalFd)
42,603 shares (cost $703,006) ........................................................ 663,762
Strong Total Return Fund, Inc. (StTotRet)
60,960 shares (cost $1,746,436) ...................................................... 1,613,008
Templeton Foreign Fund - Class I (TemForFd)
485,053 shares (cost $4,979,238) ..................................................... 4,826,279
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
118,616 shares (cost $4,016,254) ..................................................... 4,480,138
-----------
Total investments ................................................................. 163,545,373
Accounts receivable ........................................................................ 13,985
-----------
Total assets ...................................................................... 163,559,358
ACCOUNTS PAYABLE .............................................................................. 4,632
-----------
CONTRACT OWNERS' EQUITY (NOTE 4) .............................................................. $163,554,726
============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 5
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
TOTAL ACBenSTGvt
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. $ 2,943,209 2,538,255 177,782 227,106
Mortality, expense and administration
charges (note 2) ............................... (1,849,500) (1,250,216) (42,118) (55,192)
-------------- -------------- -------------- --------------
Net investment activity ........................ 1,093,709 1,288,039 135,664 171,914
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 47,219,466 32,882,395 925,121 1,811,725
Cost of mutual fund shares sold .................. (41,630,262) (30,480,861) (914,401) (1,849,476)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 5,589,204 2,401,534 10,720 (37,751)
Change in unrealized gain (loss) on investments .. 6,076,074 2,414,112 (2,838) (23,552)
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 11,665,278 4,815,646 7,882 (61,303)
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 13,114,383 5,820,660 - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 25,873,370 11,924,345 143,546 110,611
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 36,040,726 36,936,853 178,490 219,736
Transfers between funds .......................... - - (53,232) 76,052
Redemptions ...................................... (12,768,924) (11,033,070) (517,635) (1,489,133)
Annuity benefits ................................. (17,520) (22,282) (938) (934)
Annual contract maintenance charge (note 2) ...... (108,625) (82,641) (1,865) (2,716)
Contingent deferred sales charges (note 2) ....... (262,567) (162,303) (15,741) (24,112)
Adjustments to maintain reserves ................. 9,849 1,139 301 (1,096)
-------------- -------------- -------------- --------------
Net equity transactions ...................... 22,892,939 25,637,696 (410,620) (1,222,203)
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 48,766,309 37,562,041 (267,074) (1,111,592)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...... 114,788,417 77,226,376 3,326,872 4,438,464
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 163,554,726 114,788,417 3,059,798 3,326,872
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
ACIncGro ACTCGro
------------------------------ -------------------------------
1997 1996 1997 1996
------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................. 15,209 524 - 80,898
Mortality, expense and administration
charges (note 2) ............................... (12,374) (238) (134,498) (131,009)
------------- -------------- -------------- --------------
Net investment activity ........................ 2,835 286 (134,498) (50,111)
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 1,753,420 4,547 2,899,543 3,327,649
Cost of mutual fund shares sold .................. (1,566,771) (4,407) (2,626,829) (3,631,285)
------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 186,649 140 272,714 (303,636)
Change in unrealized gain (loss) on investments .. (79,760) (9,371) 768,718 1,519,093
------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 106,889 (9,231) 1,041,432 1,215,457
------------- -------------- -------------- --------------
Reinvested capital gains ......................... 150,836 11,052 1,546,715 108,746
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 260,560 2,107 2,453,649 1,274,092
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................ 589,787 30,775 482,037 546,891
Transfers between funds .......................... 869,824 159,628 (543,754) (531,981)
Redemptions ...................................... (14,946) - (1,535,818) (2,126,066)
Annuity benefits ................................. - - (4,775) (10,768)
Annual contract maintenance charge (note 2) ...... (224) (3) (16,461) (18,458)
Contingent deferred sales charges (note 2) ....... (78) - (16,969) (10,179)
Adjustments to maintain reserves ................. (3) (1,176) 9,189 (5,131)
------------- -------------- -------------- --------------
Net equity transactions ...................... 1,444,360 189,224 (1,626,551) (2,155,692)
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 1,704,920 191,331 827,098 (881,600)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...... 191,331 - 9,690,046 10,571,646
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............ 1,896,251 191,331 10,517,144 9,690,046
============= ============== ============== ==============
</TABLE>
6
<PAGE> 6
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ACTCIntlGr ACTCUltra
------------------------------ ------------------------------
1997 1996 1997 1996
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ 1,451 - 4,160 -
Mortality, expense and administration
charges (note 2) ................................. (7,272) (5,767) (122,017) (71,928)
-------------- -------------- -------------- --------------
Net investment activity .......................... (5,821) (5,767) (117,857) (71,928)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold .............. 411,368 425,002 1,635,447 706,950
Cost of mutual fund shares sold .................... (361,201) (404,052) (1,055,134) (499,670)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments .............. 50,167 20,950 580,313 207,280
Change in unrealized gain (loss) on investments .... (27,035) (19,547) (936,614) 90,742
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................... 23,132 1,403 (356,301) 298,022
-------------- -------------- -------------- --------------
Reinvested capital gains ........................... 65,811 51,779 2,211,772 411,800
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ............. 83,122 47,415 1,737,614 637,894
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................. 154,962 185,670 3,371,633 3,378,867
Transfers between funds ............................ (81,095) (28,602) (589,520) 447,098
Redemptions ........................................ (151,902) (3,375) (729,493) (392,197)
Annuity benefits ................................... - - - -
Annual contract maintenance charge (note 2) ........ (269) (161) (7,543) (3,604)
Contingent deferred sales charges (note 2) ......... (6,228) (145) (23,504) (15,448)
Adjustments to maintain reserves ................... (16) (135) 96 1,318
-------------- -------------- -------------- --------------
Net equity transactions ........................ (84,548) 153,252 2,021,669 3,416,034
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .............. (1,426) 200,667 3,759,283 4,053,928
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 499,994 299,327 7,329,827 3,275,899
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD .............. $ 498,568 499,994 11,089,110 7,329,827
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
DeHYBd DryABds
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... 116,418 85,291 109,727 73,586
Mortality, expense and administration
charges (note 2) ................................. (16,476) (11,099) (23,480) (15,178)
------------- -------------- -------------- --------------
Net investment activity .......................... 99,942 74,192 86,247 58,408
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold .............. 192,668 264,389 870,811 288,783
Cost of mutual fund shares sold .................... (185,268) (297,932) (874,737) (273,418)
------------- -------------- -------------- --------------
Realized gain (loss) on investments .............. 7,400 (33,543) (3,926) 15,365
Change in unrealized gain (loss) on investments .... 43,399 48,108 38,180 (28,436)
------------- -------------- -------------- --------------
Net gain (loss) on investments ................... 50,799 14,565 34,254 (13,071)
------------- -------------- -------------- --------------
Reinvested capital gains ........................... - - 21,033 -
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ............. 150,741 88,757 141,534 45,337
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................. 236,070 229,635 592,080 1,339,139
Transfers between funds ............................ 143,298 (148,730) (506,273) 935
Redemptions ........................................ (144,393) (10,114) (228,961) (102,373)
Annuity benefits ................................... - - - -
Annual contract maintenance charge (note 2) ........ (393) (262) (1,091) (321)
Contingent deferred sales charges (note 2) ......... (3,311) (193) (3,508) (1,874)
Adjustments to maintain reserves ................... 20 (215) 6 340
------------- -------------- -------------- --------------
Net equity transactions ........................ 231,291 70,121 (147,747) 1,235,846
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY .............. 382,032 158,878 (6,213) 1,281,183
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 958,214 799,336 1,854,654 573,471
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD .............. 1,340,246 958,214 1,848,441 1,854,654
============= ============== ============== ==============
</TABLE>
(Continued)
7
<PAGE> 7
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
Dry500Ix Dry3dCen
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................ $ 76,946 53,154 1,186 571
Mortality, expense and administration
charges (note 2) .................................. (65,774) (22,204) (7,462) (2,808)
-------------- -------------- -------------- --------------
Net investment activity ........................... 11,172 30,950 (6,276) (2,237)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............... 2,535,120 1,229,204 479,349 95,093
Cost of mutual fund shares sold ..................... (2,054,865) (1,059,622) (427,821) (76,566)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............... 480,255 169,582 51,528 18,527
Change in unrealized gain (loss) on investments ..... 604,315 64,429 39,050 (16,879)
-------------- -------------- -------------- --------------
Net gain (loss) on investments .................... 1,084,570 234,011 90,578 1,648
-------------- -------------- -------------- --------------
Reinvested capital gains ............................ 117,343 93,693 53,383 39,845
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations .............. 1,213,085 358,654 137,685 39,256
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................... 1,991,411 1,713,219 338,691 112,512
Transfers between funds ............................. 1,332,333 776,445 41,154 32,794
Redemptions ......................................... (182,233) (48,257) (125,882) (8,148)
Annuity benefits .................................... - - - -
Annual contract maintenance charge (note 2) ......... (2,126) (481) (358) (235)
Contingent deferred sales charges (note 2) .......... (2,808) (1,927) (3,494) (242)
Adjustments to maintain reserves .................... 420 48 33 6
-------------- -------------- -------------- --------------
Net equity transactions ......................... 3,136,997 2,439,047 250,144 136,687
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 4,350,082 2,797,701 387,829 175,943
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... 3,281,068 483,367 333,644 157,701
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $ 7,631,150 3,281,068 721,473 333,644
-============= ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
EvIncGro FeDBdFd
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................ 46,100 43,829 21,641 1,179
Mortality, expense and administration
charges (note 2) .................................. (12,752) (10,732) (3,878) (168)
------------- -------------- -------------- --------------
Net investment activity ........................... 33,348 33,097 17,763 1,011
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............... 124,635 90,034 36,495 228
Cost of mutual fund shares sold ..................... (118,286) (91,449) (36,293) (227)
------------- -------------- -------------- --------------
Realized gain (loss) on investments ............... 6,349 (1,415) 202 1
Change in unrealized gain (loss) on investments ..... 103,540 58,637 11,825 (893)
------------- -------------- -------------- --------------
Net gain (loss) on investments .................... 109,889 57,222 12,027 (892)
------------- -------------- -------------- --------------
Reinvested capital gains ............................ 68,181 - - -
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations .............. 211,418 90,319 29,790 119
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................... 60,014 68,887 42,403 10,437
Transfers between funds ............................. (27,145) 9,067 206,842 89,302
Redemptions ......................................... (50,285) (16,005) (7,402) -
Annuity benefits .................................... - - - -
Annual contract maintenance charge (note 2) ......... (423) (376) (21) (3)
Contingent deferred sales charges (note 2) .......... (1,158) (404) - -
Adjustments to maintain reserves .................... 10 26 (6) 39
------------- -------------- -------------- --------------
Net equity transactions ......................... (18,987) 61,195 241,816 99,775
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 192,431 151,514 271,606 99,894
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... 917,150 765,636 99,894 -
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... 1,109,581 917,150 371,500 99,894
============= ============== ============== ==============
</TABLE>
8
<PAGE> 8
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FABal FAEqInc
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................ $ 3,087 424 9,331 4,675
Mortality, expense and administration
charges (note 2) .................................. (1,279) (137) (12,553) (3,469)
-------------- -------------- -------------- --------------
Net investment activity ........................... 1,808 287 (3,222) 1,206
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............... 20,257 14,622 146,787 82,721
Cost of mutual fund shares sold ..................... (18,774) (15,104) (121,404) (81,561)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............... 1,483 (482) 25,383 1,160
Change in unrealized gain (loss) on investments ..... 2,888 258 113,836 26,654
-------------- -------------- -------------- --------------
Net gain (loss) on investments .................... 4,371 (224) 139,219 27,814
-------------- -------------- -------------- --------------
Reinvested capital gains ............................ 9,912 190 67,192 17,689
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations .............. 16,091 253 203,189 46,709
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................... 115,578 28,643 197,077 346,990
Transfers between funds ............................. 23,256 949 169,371 291,300
Redemptions ......................................... (8,828) - (41,115) (1,480)
Annuity benefits .................................... - - - -
Annual contract maintenance charge (note 2) ......... (76) - (369) (20)
Contingent deferred sales charges (note 2) .......... (348) - (1,252) (19)
Adjustments to maintain reserves .................... (26) (4) 23 16
-------------- -------------- -------------- --------------
Net equity transactions ......................... 129,556 29,588 323,735 636,787
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 145,647 29,841 526,924 683,496
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... 29,841 - 683,496 -
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $ 175,488 29,841 1,210,420 683,496
-============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
FAGrOpp FAHiYld
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................ 48,467 31,619 148,014 49,036
Mortality, expense and administration
charges (note 2) .................................. (46,701) (11,429) (20,450) (6,363)
------------- -------------- -------------- --------------
Net investment activity ........................... 1,766 20,190 127,564 42,673
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............... 1,220,774 259,241 321,627 411,083
Cost of mutual fund shares sold ..................... (997,920) (242,540) (303,939) (411,934)
------------- -------------- -------------- --------------
Realized gain (loss) on investments ............... 222,854 16,701 17,688 (851)
Change in unrealized gain (loss) on investments ..... 375,374 48,453 5,965 6,328
------------- -------------- -------------- --------------
Net gain (loss) on investments .................... 598,228 65,154 23,653 5,477
------------- -------------- -------------- --------------
Reinvested capital gains ............................ 246,460 84,317 51,990 3,761
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations .............. 846,454 169,661 203,207 51,911
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................... 1,354,651 1,166,900 743,205 549,115
Transfers between funds ............................. 633,126 825,046 829,565 205,361
Redemptions ......................................... (155,973) (33,117) (78,562) (8,317)
Annuity benefits .................................... - - - -
Annual contract maintenance charge (note 2) ......... (1,594) (200) (449) (157)
Contingent deferred sales charges (note 2) .......... (4,894) (1,783) (1,423) (302)
Adjustments to maintain reserves .................... 78 37 (337) (119)
------------- -------------- -------------- --------------
Net equity transactions ......................... 1,825,394 1,956,883 1,491,999 745,581
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 2,671,848 2,126,544 1,695,206 797,492
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... 2,126,544 - 797,492 -
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... 4,798,392 2,126,544 2,492,698 797,492
============= ============== ============== ==============
</TABLE>
(Continued)
9
<PAGE> 9
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FidAsMgr FidCapInc
------------------------------ ------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................ $ 110,938 103,229 87,131 108,809
Mortality, expense and administration
charges (note 2) .................................. (42,804) (34,887) (15,505) (16,861)
-------------- -------------- -------------- --------------
Net investment activity ........................... 68,134 68,342 71,626 91,948
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............... 821,473 529,976 119,208 340,631
Cost of mutual fund shares sold ..................... (677,732) (477,442) (102,280) (256,941)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............... 143,741 52,534 16,928 83,690
Change in unrealized gain (loss) on investments ..... 197,082 47,147 66,754 (55,028)
-------------- -------------- -------------- --------------
Net gain (loss) on investments .................... 340,823 99,681 83,682 28,662
-------------- -------------- -------------- --------------
Reinvested capital gains ............................ 205,712 130,557 - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations .............. 614,669 298,580 155,308 120,610
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................... 634,370 906,115 - 892
Transfers between funds ............................. (301,774) (238,183) (2,573) (19,968)
Redemptions ......................................... (313,159) (137,123) (97,708) (280,462)
Annuity benefits .................................... - - (1,097) (1,021)
Annual contract maintenance charge (note 2) ......... (2,060) (1,359) (2,112) (2,622)
Contingent deferred sales charges (note 2) .......... (8,276) (4,221) (281) (714)
Adjustments to maintain reserves .................... 43 (48) (550) 324
-------------- -------------- -------------- --------------
Net equity transactions ......................... 9,144 525,181 (104,321) (303,571)
-------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 623,813 823,761 50,987 (182,961)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... 3,044,221 2,220,460 1,238,341 1,421,302
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... $ 3,668,034 3,044,221 1,289,328 1,238,341
-============= ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
FidEqInc FidMgln
------------------------------ ------------------------------
1997 1996 1997 1996
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................................ 309,641 334,251 180,615 145,843
Mortality, expense and administration
charges (note 2) .................................. (206,648) (176,134) (171,071) (137,518)
------------- -------------- -------------- --------------
Net investment activity ........................... 102,993 158,117 9,544 8,325
------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............... 2,893,495 2,793,431 2,718,430 3,331,197
Cost of mutual fund shares sold ..................... (1,851,804) (1,765,517) (2,272,279) (2,829,565)
------------- -------------- -------------- --------------
Realized gain (loss) on investments ............... 1,041,691 1,027,914 446,151 501,632
Change in unrealized gain (loss) on investments ..... 2,069,323 635,621 1,660,947 (964,298)
------------- -------------- -------------- --------------
Net gain (loss) on investments .................... 3,111,014 1,663,535 2,107,098 (462,666)
------------- -------------- -------------- --------------
Reinvested capital gains ............................ 658,912 593,489 753,138 1,520,319
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations .............. 3,872,919 2,415,141 2,869,780 1,065,978
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................................... 1,025,601 1,125,283 2,893,931 4,354,101
Transfers between funds ............................. 20,535 514,925 (1,898,187) (2,225,713)
Redemptions ......................................... (1,703,965) (1,981,946) (939,188) (584,278)
Annuity benefits .................................... (3,737) (3,044) - -
Annual contract maintenance charge (note 2) ......... (16,868) (16,817) (12,358) (8,079)
Contingent deferred sales charges (note 2) .......... (14,857) (11,964) (27,286) (20,796)
Adjustments to maintain reserves .................... 293 474 349 1,683
------------- -------------- -------------- --------------
Net equity transactions ......................... (692,998) (373,089) 17,261 1,516,918
------------- -------------- -------------- --------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............... 3,179,921 2,042,052 2,887,041 2,582,896
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ......... 14,264,105 12,222,053 11,693,771 9,110,875
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............... 17,444,026 14,264,105 14,580,812 11,693,771
============= ============== ============== ==============
</TABLE>
10
<PAGE> 10
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
FiDPurtn FidVIPHI
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 361,432 227,708 18,061 33,607
Mortality, expense and administration
charges (note 2) ............................ (129,814) (81,242) (3,314) (4,459)
------------ ------------ ------------ ------------
Net investment activity ..................... 231,618 146,466 14,747 29,148
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 1,265,875 900,439 39,981 220,128
Cost of mutual fund shares sold ............... (1,040,109) (824,408) (37,078) (219,606)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 225,766 76,031 2,903 522
Change in unrealized gain (loss) on investments 821,043 55,936 20,298 4,464
------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 1,046,809 131,967 23,201 4,986
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 536,381 570,984 2,232 6,575
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,814,808 849,417 40,180 40,709
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 3,077,343 3,171,521 -- --
Transfers between funds ....................... (390,612) (290,667) (4,194) (129,328)
Redemptions ................................... (414,158) (274,189) (32,145) (85,944)
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... (6,296) (3,644) (222) (335)
Contingent deferred sales charges (note 2) .... (12,075) (7,982) (95) (65)
Adjustments to maintain reserves .............. 105 794 (196) 6
------------ ------------ ------------ ------------
Net equity transactions.................... 2,254,307 2,595,833 (36,852) (215,666)
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 4,069,115 3,445,250 3,328 (174,957)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 7,789,644 4,344,394 269,844 444,801
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.......... $ 11,858,759 7,789,644 273,172 269,844
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
JanFund Jan20Fd
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 26,556 12,161 16,202 18,788
Mortality, expense and administration
charges (note 2) ............................ (36,518) (9,962) (64,389) (28,235)
------------ ------------ ------------ ------------
Net investment activity ..................... (9,962) 2,199 (48,187) (9,447)
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 441,921 89,607 2,411,435 497,240
Cost of mutual fund shares sold ............... (403,087) (76,986) (2,113,928) (390,729)
------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 38,834 12,621 297,507 106,511
Change in unrealized gain (loss) on investments (64,982) (70,542) 127,847 (186,194)
------------ ------------ ------------ ------------
Net gain (loss) on investments .............. (26,148) (57,921) 425,354 (79,683)
------------ ------------ ------------ ------------
Reinvested capital gains ...................... 543,614 170,001 734,575 549,938
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 507,504 114,279 1,111,742 460,808
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 1,003,807 803,970 1,839,757 1,262,560
Transfers between funds ....................... 441,173 702,464 185,607 688,287
Redemptions ................................... (111,066) (11,138) (607,222) (139,312)
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... (1,046) (108) (2,887) (1,303)
Contingent deferred sales charges (note 2) .... (1,859) (382) (17,382) (3,587)
Adjustments to maintain reserves .............. 5 31 80 2,093
------------ ------------ ------------ ------------
Net equity transactions.................... 1,331,014 1,494,837 1,397,953 1,808,738
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 1,838,518 1,609,116 2,509,695 2,269,546
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 1,609,116 -- 3,399,604 1,130,058
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 3,447,634 1,609,116 5,909,299 3,399,604
============ ============ ============ ============
</TABLE>
(Continued)
11
<PAGE> 11
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
JanWrldwde MFSWdGvt
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 19,023 1,937 29,388 22,183
Mortality, expense and administration (31,612) (725) (11,467) (14,487)
charges (note 2) ............................ ---------- ---------- ---------- ----------
(12,589) 1,212 17,921 7,696
Net investment activity ..................... ---------- ---------- ---------- ----------
584,448 158,261 436,153 342,660
Proceeds from mutual fund shares sold ......... (530,660) (157,152) (460,939) (381,186)
Cost of mutual fund shares sold ............... ---------- ---------- ---------- ----------
53,788 1,109 (24,786) (38,526)
Realized gain (loss) on investments ......... (29,732) (23,496) (14,028) 64,504
Change in unrealized gain (loss) on investments ---------- ---------- ---------- ----------
24,056 (22,387) (38,814) 25,978
Net gain (loss) on investments .............. ---------- ---------- ---------- ----------
252,002 25,819 3,807 6,033
Reinvested capital gains ...................... ---------- ---------- ---------- ----------
Net increase (decrease) in contract owners' 263,469 4,644 (17,086) 39,707
equity resulting from operations ........ ---------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners 1,462,110 118,957 35,762 115,330
Transfers between funds ....................... 1,864,319 341,828 (134,039) (165,073)
Redemptions ................................... (78,572) -- (161,551) (159,881)
Annuity benefits .............................. -- -- (2,597) (2,645)
Annual contract maintenance charge (note 2) ... (773) (3) (1,293) (1,872)
Contingent deferred sales charges (note 2) .... (1,044) -- (1,956) (655)
Adjustments to maintain reserves .............. (145) (119) 156 21
---------- ---------- ---------- ----------
Net equity transactions.................... 3,245,895 460,663 (265,518) (214,775)
---------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 3,509,364 465,307 (282,604) (175,068)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 465,307 -- 1,044,393 1,219,461
---------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $3,974,671 465,307 761,789 1,044,393
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
NWBdFd NWFund
----------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 99,663 101,205 42,568 36,818
Mortality, expense and administration (20,516) (20,217) (43,646) (27,690)
charges (note 2) ............................ ---------- ---------- ---------- ----------
79,147 80,988 (1,078) 9,128
Net investment activity ..................... ---------- ---------- ---------- ----------
485,789 340,199 422,079 138,210
Proceeds from mutual fund shares sold ......... (527,157) (353,001) (247,136) (88,454)
Cost of mutual fund shares sold ............... ---------- ---------- ---------- ----------
(41,368) (12,802) 174,943 49,756
Realized gain (loss) on investments ......... 78,384 (55,076) 627,149 213,562
Change in unrealized gain (loss) on investments ---------- ---------- ---------- ----------
37,016 (67,878) 802,092 263,318
Net gain (loss) on investments .............. ---------- ---------- ---------- ----------
-- -- 218,982 149,374
Reinvested capital gains ...................... ---------- ---------- ---------- ----------
Net increase (decrease) in contract owners' 116,163 13,110 1,019,996 421,820
equity resulting from operations ........ ---------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners 218,598 385,228 613,432 168,174
Transfers between funds ....................... (104,705) (245,517) 548,513 118,657
Redemptions ................................... (130,239) (27,871) (165,231) (6,221)
Annuity benefits .............................. (203) (200) (1,292) (1,007)
Annual contract maintenance charge (note 2) ... (1,055) (961) (1,864) (1,455)
Contingent deferred sales charges (note 2) .... (2,203) (233) (600) (224)
Adjustments to maintain reserves .............. 8 9 (1,053) 294
---------- ---------- ---------- ----------
Net equity transactions.................... (19,799) 110,455 991,905 278,218
---------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 96,364 123,565 2,011,901 700,038
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 1,616,821 1,493,256 2,488,829 1,788,791
---------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 1,713,185 1,616,821 4,500,730 2,488,829
========== ========== ========== ==========
</TABLE>
12
<PAGE> 12
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
NWGroFd NWMyMkt
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 31,889 37,290 427,521 399,919
Mortality, expense and administration (53,875) (44,458) (111,984) (108,268)
charges (note 2) ............................ ----------- ----------- ----------- -----------
(21,986) (7,168) 315,537 291,651
Net investment activity ..................... ----------- ----------- ----------- -----------
615,042 595,060 14,140,604 10,486,315
Proceeds from mutual fund shares sold ......... (367,660) (396,338) (14,140,604) (10,486,315)
Cost of mutual fund shares sold ............... ----------- ----------- ----------- -----------
247,382 198,722 -- --
Realized gain (loss) on investments ......... 124,155 51,672 -- --
Change in unrealized gain (loss) on investments ----------- ----------- ----------- -----------
371,537 250,394 -- --
Net gain (loss) on investments .............. ----------- ----------- ----------- -----------
533,665 242,965 -- --
Reinvested capital gains ...................... ----------- ----------- ----------- -----------
Net increase (decrease) in contract owners' 883,216 486,191 315,537 291,651
equity resulting from operations ........ ----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners 163,823 234,644 4,503,576 4,557,491
Transfers between funds ....................... 2,896 156,837 (3,008,782) (4,773,897)
Redemptions ................................... (318,735) (406,105) (1,686,416) (1,642,884)
Annuity benefits .............................. (1,330) (1,115) (1,551) (1,548)
Annual contract maintenance charge (note 2) ... (2,546) (2,353) (7,909) (7,524)
Contingent deferred sales charges (note 2) .... (4,373) (2,588) (24,598) (12,111)
Adjustments to maintain reserves .............. 396 341 309 (112)
----------- ----------- ----------- -----------
Net equity transactions.................... (159,869) (20,339) (225,371) (1,880,585)
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 723,347 465,852 90,166 (1,588,934)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 3,683,392 3,217,540 7,675,384 9,264,318
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 4,406,739 3,683,392 7,765,550 7,675,384
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NWUSGvt NBGuard
----------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 2,659 596 43,637 44,627
Mortality, expense and administration (600) (133) (90,339) (45,782
charges (note 2) ............................ ----------- ----------- ----------- -----------
2,059 463 (46,702) (1,155
Net investment activity ..................... ----------- ----------- ----------- -----------
49,603 2,308 852,547 413,254
Proceeds from mutual fund shares sold ......... (49,605) (2,295) (629,818) (316,770
Cost of mutual fund shares sold ............... ----------- ----------- ----------- -----------
(2) 13 222,729 96,484
Realized gain (loss) on investments ......... 1,852 48 (237,797) 272,403
Change in unrealized gain (loss) on investments ----------- ----------- ----------- -----------
1,850 61 (15,068) 368,887
Net gain (loss) on investments .............. ----------- ----------- ----------- -----------
-- -- 1,010,701 239,815
Reinvested capital gains ...................... ----------- ----------- ----------- -----------
Net increase (decrease) in contract owners' 3,909 524 948,931 607,547
equity resulting from operations ........ ----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners 34,673 3,097 1,854,345 2,567,921
Transfers between funds ....................... (23,833) 62,393 13,046 432,199
Redemptions ................................... (5,095) (218) (394,887) (124,328
Annuity benefits .............................. -- -- -- --
Annual contract maintenance charge (note 2) ... (40) (6) (3,499) (1,188
Contingent deferred sales charges (note 2) .... (238) -- (9,677) (4,314
Adjustments to maintain reserves .............. (6) -- 88 440
----------- ----------- ----------- -----------
Net equity transactions.................... 5,461 65,266 1,459,416 2,870,730
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 9,370 65,790 2,408,347 3,478,277
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 65,790 -- 5,226,228 1,747,951
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... 75,160 65,790 7,634,575 5,226,228
=========== =========== =========== ===========
</TABLE>
(Continued)
13
<PAGE> 13
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
NBLtdMat NBPartFd
---------------------------- ----------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................... $ 51,322 64,419 42,968 32,492
Mortality, expense and administration
charges (note 2) ................................. (10,612) (13,935) (75,592) (32,837)
---------- ---------- ---------- ----------
Net investment activity .......................... 40,710 50,484 (32,624) (345)
---------- ---------- ---------- ----------
Proceeds from mutual fund shares sold .............. 512,384 907,042 893,439 234,164
Cost of mutual fund shares sold .................... (510,665) (904,453) (640,676) (193,062)
---------- ---------- ---------- ----------
Realized gain (loss) on investments .............. 1,719 2,589 252,763 41,102
Change in unrealized gain (loss) on investments .... 1,619 (16,333) (202,544) 214,725
---------- ---------- ---------- ----------
Net gain (loss) on investments ................... 3,338 (13,744) 50,219 255,827
---------- ---------- ---------- ----------
Reinvested capital gains ........................... -- -- 1,320,713 385,470
---------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ............. 44,048 36,740 1,338,308 640,952
---------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................................. 352,479 456,997 1,735,386 1,605,433
Transfers between funds ............................ (302,390) (105,744) 616,650 889,496
Redemptions ........................................ (126,409) (531,646) (393,918) (82,839)
Annuity benefits -- -- -- --
Annual contract maintenance charge (note 2) ........ (256) (230) (3,385) (1,688)
Contingent deferred sales charges (note 2) ......... (3,195) (22,311) (12,603) (3,238)
Adjustments to maintain reserves ................... (2) (302) (5) 1,265
---------- ---------- ---------- ----------
Net equity transactions ........................ (79,773) (203,236) 1,942,125 2,408,429
---------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY .............. (35,725) (166,496) 3,280,433 3,049,381
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........ 820,873 987,369 4,146,403 1,097,022
---------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD .............. $ 785,148 820,873 7,426,836 4,146,403
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
OppGlob PhxBalFd
---------------------------- ----------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ...................................... 96,072 52,770 15,090 13,623
Mortality, expense and administration
charges (note 2) ........................................ (65,639) (43,092) (7,320) (6,272)
---------- ---------- ---------- ----------
Net investment activity ................................. 30,433 9,678 7,770 7,351
---------- ---------- ---------- ----------
Proceeds from mutual fund shares sold ..................... 1,614,192 472,608 215,973 227,295
Cost of mutual fund shares sold ........................... (1,233,355) (455,144) (218,348) (206,471)
---------- ---------- ---------- ----------
Realized gain (loss) on investments ..................... 380,837 17,464 (2,375) 20,824
Change in unrealized gain (loss) on investments ........... (186,375) 328,475 (8,166) (44,493)
---------- ---------- ---------- ----------
Net gain (loss) on investments .......................... 194,462 345,939 (10,541) (23,669)
---------- ---------- ---------- ----------
Reinvested capital gains .................................. 665,438 137,384 93,626 55,938
---------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations .................... 890,333 493,001 90,855 39,620
---------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ......................................... 1,205,785 1,385,557 213,816 301,358
Transfers between funds ................................... (95,415) (94,161) (146,863) (37,418)
Redemptions ............................................... (404,533) (158,963) (24,836) (40,155)
Annuity benefits .......................................... -- -- -- --
Annual contract maintenance charge (note 2) ............... (3,916) (2,538) (292) (96)
Contingent deferred sales charges (note 2) ................ (13,137) (6,142) (1,026) (1,719)
Adjustments to maintain reserves .......................... 76 85 -- (3)
---------- ---------- ---------- ----------
Net equity transactions ............................... 688,860 1,123,838 40,799 221,967
---------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ..................... 1,579,193 1,616,839 131,654 261,587
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ............... 4,116,589 2,499,750 532,110 270,523
---------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ..................... 5,695,782 4,116,589 663,764 532,110
========== ========== ========== ==========
</TABLE>
14
<PAGE> 14
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
StTotRet TemForFd WPEmGro
------------------------- ------------------------- -------------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 9,509 13,647 141,805 80,441 -- --
Mortality, expense and administration
charges (note 2) ............................ (18,949) (11,311) (59,161) (28,515) (49,041) (15,475)
----------- ----------- ----------- ----------- ----------- -----------
Net investment activity ..................... (9,440) 2,336 82,644 51,926 (49,041) (15,475)
----------- ----------- ----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 383,941 273,516 662,819 199,143 1,065,213 378,440
Cost of mutual fund shares sold ............... (343,668) (217,249) (572,838) (178,360) (995,193) (364,174)
----------- ----------- ----------- ----------- ----------- -----------
Realized gain (loss) on investments ......... 40,273 56,267 89,981 20,783 70,020 14,266
Change in unrealized gain (loss) on investments (72,806) (104,974) (364,660) 217,950 399,868 64,015
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments .............. (32,533) (48,707) (274,679) 238,733 469,888 78,281
----------- ----------- ----------- ----------- ----------- -----------
Reinvested capital gains ...................... 333,588 157,730 373,056 49,305 263,613 6,092
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 291,615 111,359 181,021 339,964 684,460 68,898
----------- ----------- ----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 396,146 248,080 1,244,024 1,679,003 1,083,873 1,557,725
Transfers between funds ....................... 39,129 120,833 175,787 705,535 57,962 1,387,551
Redemptions ................................... (178,732) (24,476) (209,477) (45,681) (298,254) (48,828)
Annuity benefits .............................. -- -- -- -- -- --
Annual contract maintenance charge (note 2) ... (635) (400) (2,245) (786) (1,806) (277)
Contingent deferred sales charges (note 2) .... (4,415) (626) (6,278) (1,257) (10,397) (546)
Adjustments to maintain reserves .............. 161 22 (47) 71 (4) (184)
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions ................... 251,654 343,433 1,201,764 2,336,885 831,374 2,895,441
----------- ----------- ----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 543,269 454,792 1,382,785 2,676,849 1,515,834 2,964,339
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 1,069,747 614,955 3,443,499 766,650 2,964,339 --
----------- ----------- ----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 1,613,016 1,069,747 4,826,284 3,443,499 4,480,173 2,964,339
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 15
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide Variable Account (the Account) was established pursuant
to a resolution of the Board of Directors of Nationwide Life Insurance
Company (the Company) on March 3, 1976. The Account has been registered
as a unit investment trust under the Investment Company Act of 1940.
The Company offers Individual Deferred Variable Annuity Contracts
through the Account. As of December 25, 1982, only tax qualified
contracts are issued. The primary distribution for the contract is
through the Company for Individual Retirement Account rollovers;
however, other distributors may be utilized.
(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 contract charges.
With certain exceptions, contract owners in either the accumulation or
the payout phase may invest in the following:
American Century: Benham Short-Term Government Fund (ACBenSTGvt)
(formerly Twentieth Century Investors, Inc. - U.S. Governments
Short-Term (TCUSGvt))
American Century: Income & Growth Fund (ACIncGro)
American Century: Twentieth Century Growth Fund (ACTCGro)
(formerly Twentieth Century Investors, Inc. - Growth Investors
(TCGroInv))
American Century: Twentieth Century International Growth Fund
(ACTCIntlGr) (formerly Twentieth Century World Investors, Inc.-
International Equity (TCIntlEq))
American Century: Twentieth Century Ultra Fund (ACTCUltra)
(formerly Twentieth Century Investors, Inc. - Ultra Investors
(TCUltra))
Delaware Group Delchester High-Yield Bond Fund, Inc. -
Delchester Fund Institutional Class (DeHYBd)
Dreyfus A Bonds Plus, Inc. (DryABds)
Dreyfus S&P 500 Index Fund (Dry500Ix)
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
Evergreen Income and Growth Fund - Class Y (EvIncGro)
(formerly The Evergreen Total Return Fund - Class Y (EvTotRet))
Federated Investment Series Funds, Inc. - Federated Bond Fund -
Class F (FedBdFd)
Fidelity Advisor Balanced Fund - Class T (FABal)
(formerly Fidelity Advisor Income & Growth Fund - Class T
(FAIncGr))
Fidelity Advisor Equity Income Fund - Class T (FAEqInc)
Fidelity Advisor Growth Opportunities Fund - Class T (FAGrOpp)
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
Fidelity Asset Manager(TM) (FidAsMgr)
Fidelity Capital & Income Fund (FidCapInc)
(not available for additional purchase payments or exchanges
after May 1, 1991)
Fidelity Equity-Income Fund (FidEqInc)
16
<PAGE> 16
Fidelity Magellan(R) Fund (FidMgln)
Fidelity Puritan(R) Fund (FidPurtn)
Portfolio of the Fidelity Variable Insurance Products Fund
(Fidelity VIP); Fidelity VIP - High Income Portfolio (FidVIPHI)
(not available for additional purchase payments or exchanges
after December 1, 1993)
Janus Fund (JanFund)
Janus Twenty Fund (Jan20Fd)
Janus Worldwide Fund (JanWrldwde)
MFS(R) World Governments Fund - Class A (MFSWdGvt)
Nationwide(R) Bond Fund (NWBdFd) (managed for a fee by an
affiliated investment advisor)
Nationwide(R) Fund (NWFund) (managed for a fee by an affiliated
investment advisor)
Nationwide(R) Growth Fund (NWGroFd) (managed for a fee by an
affiliated investment advisor)
Nationwide(R) Money Market Fund
(NWMyMkt) (managed for a fee by an affiliated investment advisor)
Nationwide(R) U.S. Government Income Fund (NWUSGvt)
(managed for a fee by an affiliated investment advisor)
Neuberger & Berman Guardian Fund (NBGuard)
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
Neuberger & Berman Partners Fund (NBPartFd)
Oppenheimer Global Fund - Class A (OppGlob)
Phoenix Balanced Fund Series - Class A (PhxBalFd)
Strong Total Return Fund, Inc. (StTotRet)
Templeton Foreign Fund - Class I (TemForFd)
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
At December 31, 1997, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment
results of each fund, equity transactions by contract owners and
certain contract expenses (see note 2). The accompanying financial
statements include only contract owners' purchase payments pertaining
to the variable portions of their contracts and exclude any purchase
payments for fixed dollar benefits, the latter being included in the
accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1997. 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) Reclassifications
Certain 1996 amounts have been reclassified to conform with the current
period presentation.
17
<PAGE> 17
(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. For contracts issued prior to January 1, 1993, the contingent
deferred sales charge will be equal to 5% of the lesser of the total of all
purchase payments made within 96 months prior to the date of the request
for surrender or the amount surrendered. For contracts issued on or after
January 1, 1993, the Company will deduct a contingent deferred sales charge
not to exceed 7% of the lesser of purchase payments or the amount
surrendered, such charge declining 1% per year, to 0%, after the purchase
payment has been held in the contract for 84 months. No sales charges are
deducted on redemptions used to purchase units in the fixed investment
options of the Company.
The following contract charges are deducted by the Company: (a) an annual
contract maintenance charge of $30, with certain exceptions, which is
satisfied by surrendering units; and (b) for contracts issued prior to
January 1, 1993, a charge for mortality and expense risk assessed through
the daily unit value calculation equal to an annual rate of 0.80% and
0.50%, respectively; for contracts issued on or after January 1, 1993, a
mortality risk charge, an expense risk charge and an administration charge
assessed through the daily unit value calculation equal to an annual rate
of 0.80%, 0.45% and 0.05%, respectively.
(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.
18
<PAGE> 18
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1997,
for each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
ANNUAL
Contract owners' equity represented by: UNITS UNIT VALUE RETURN
------- ---------- -------
<S> <C> <C> <C> <C>
Contracts in accumulation phase:
American Century: Benham
Short-Term Government Fund:
Tax qualified 138,808 $ 21.986961 $ 3,051,966 5%
American Century: Income & Growth Fund:
Tax qualified 135,424 14.002308 1,896,249 33%
American Century: Twentieth Century
Growth Fund:
Tax qualified 158,492 65.572069 10,392,648 28%
American Century: Twentieth Century
International Growth Fund:
Tax qualified 31,799 15.678789 498,570 18%
American Century: Twentieth Century
Ultra Fund:
Tax qualified 660,821 16.780808 11,089,110 22%
Delaware Group Delchester High-Yield
Bond Fund, Inc. - Delchester Fund
Institutional Class:
Tax qualified 87,319 15.348845 1,340,246 13%
Dreyfus A Bonds Plus, Inc.:
Tax qualified 156,006 11.848519 1,848,440 8%
Dreyfus S&P 500 Index Fund:
Tax qualified 332,923 22.921661 7,631,148 31%
The Dreyfus Third Century Fund, Inc.:
Tax qualified 35,892 20.101260 721,474 28%
Evergreen Income and Growth
Fund - Class Y:
Tax qualified 63,791 17.394044 1,109,583 24%
Federated Investment Series Funds, Inc. -
Federated Bond Fund - Class F:
Tax qualified 33,538 11.076983 371,500 9%
Fidelity Advisor Balanced Fund - Class T:
Tax qualified 13,345 13.150098 175,488 21%
Fidelity Advisor Equity Income
Fund - Class T:
Tax qualified 84,318 14.355400 1,210,419 24%
Fidelity Advisor Growth Opportunities
Fund - Class T:
Tax qualified 315,184 15.224094 4,798,391 27%
</TABLE>
(Continued)
19
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C>
Fidelity Advisor High Yield Fund - Class T:
Tax qualified 195,236 12.767617 2,492,698 14%
Fidelity Asset Manager(TM):
Tax qualified 244,272 15.016191 3,668,035 21%
Fidelity Capital & Income Fund:
Tax qualified 27,378 46.743425 1,279,741 13%
Fidelity Equity-Income Fund:
Tax qualified 245,733 70.928467 17,429,465 28%
Fidelity Magellan(R) Fund:
Tax qualified 655,202 22.253917 14,580,811 25%
Fidelity Puritan(R) Fund:
Tax qualified 599,590 19.778111 11,858,758 21%
Fidelity VIP - High Income Portfolio:
Tax qualified 10,793 25.310146 273,172 16%
Janus Fund:
Tax qualified 235,485 14.640570 3,447,635 21%
Janus Twenty Fund:
Tax qualified 312,701 18.897600 5,909,298 28%
Janus Worldwide Fund:
Tax qualified 323,968 12.268712 3,974,670 19%
MFS(R) World Governments Fund - Class A:
Tax qualified 20,631 36.509244 753,222 (1)%
Nationwide(R) Bond Fund:
Tax qualified 41,735 40.827520 1,703,937 8%
Non-tax qualified 176 40.652493 7,155 8%
Nationwide(R) Fund:
Tax qualified 45,672 97.524886 4,454,157 38%
Non-tax qualified 314 101.582074 31,897 38%
Nationwide(R) Growth Fund:
Tax qualified 46,513 93.947252 4,369,769 25%
Non-tax qualified 229 99.196488 22,716 25%
Nationwide(R) Money Market Fund:
Tax qualified - Pre 12/25/82 43,632 25.582330 1,116,208 4%
Tax qualified 325,458 20.316392 6,612,132 4%
Non-tax qualified 844 25.744006 21,728 4%
Nationwide(R) U.S. Government
Income Fund:
Tax qualified 6,737 11.156351 75,160 8%
Neuberger & Berman Guardian Fund:
Tax qualified 448,443 17.024633 7,634,577 16%
Neuberger & Berman Limited Maturity
Bond Fund:
Tax qualified 67,262 11.672986 785,148 5%
</TABLE>
20
<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C>
Neuberger & Berman Partners Fund:
Tax qualified 312,513 23.764888 7,426,836 28%
Oppenheimer Global Fund - Class A:
Tax qualified 262,844 21.669822 5,695,783 20%
Phoenix Balanced Fund Series - Class A:
Tax qualified 46,629 14.235004 663,764 17%
Strong Total Return Fund, Inc.:
Tax qualified 78,495 20.549313 1,613,018 23%
Templeton Foreign Fund - Class I:
Tax qualified 354,769 13.604014 4,826,282 5%
Warburg Pincus Emerging Growth
Fund - Common Shares:
Tax qualified 316,835 14.140391 4,480,171 20%
======= =========
Reserves for annuity contracts in payout phase:
Tax qualified 211,551
------------
$163,554,726
============
</TABLE>
21
<PAGE> 21
Independent Auditors' Report
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of Nationwide Variable Account:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account as of December 31, 1997,
and the related statements of operations and changes in contract owners' equity
for each of the years in the two year period then ended. 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. Our procedures included
confirmation of securities owned as of December 31, 1997, 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 Nationwide Variable Account
as of December 31, 1997, and the results of its operations and its changes in
contract owners' equity for each of the years in the two year period then ended
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1998
22
<PAGE> 22
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
