<PAGE> 1
[NATIONWIDE LOGO]
NATIONWIDE(R)
VARIABLE
ACCOUNT
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1998
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PICTURE OF JOSEPH J. GASPER]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you the 1998 annual
report of the Nationwide Variable Account.
Equity markets again defied the odds in 1998 to tally a fourth straight year of
double-digit gains, as measured by the major indices. This surprise came
following the breathtaking correction during the third quarter that gave us a
broad double-digit retreat. Fixed income investments also provided respectable
returns in 1998, supported by the continued low inflationary environment and
favorable Federal Reserve actions.
The performance of the American economy continues strong into 1999. However, we
believe the persisting slump in Asia and recent difficulties in Latin America
will inevitably take their toll and dampen growth in the United States. This
moderation, we think, will be healthy for our economy and get us back to a more
sustainable growth level. We look for interest rates to continue within the
range of the recent past, and we expect inflation to remain subdued. Moreover,
we remain optimistic about long-term prospects for U.S. business activity;
holders of financial assets should continue to profit from the anticipated
favorable investment climate.
We are pleased you have chosen our Company to provide the investment products
and services to help you meet your retirement savings and financial planning
goals.
Joseph J. Gasper, President
February 16, 1999
3
<PAGE> 3
- --------------------------------------------------------------------------------
NATIONWIDE VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
December 31, 1998
<TABLE>
<CAPTION>
ASSETS:
Investments at market value:
American Century: Benham Short-Term Government Fund (ACBenSTGvt)
<S> <C>
318,360 shares (cost $3,023,746) ............................................. $ 3,037,155
American Century: Income & Growth Fund (ACIncGro)
239,477 shares (cost $6,466,421) ............................................. 7,004,694
American Century: Twentieth Century Growth Fund (ACTCGro)
496,230 shares (cost $11,178,870) ............................................ 13,477,614
American Century: Twentieth Century International Growth Fund (ACTCIntlGr)
92,684 shares (cost $888,476) ................................................ 887,911
American Century: Twentieth Century Ultra Fund (ACTCUltra)
523,376 shares (cost $15,463,890) ............................................ 17,485,992
Delaware Group Delchester High-Yield Bond Fund, Inc. -
Delchester Fund Institutional Class (DeHYBd)
185,894 shares (cost $1,183,704) ............................................. 1,093,058
Dreyfus A Bonds Plus, Inc. (DryABds)
149,493 shares (cost $2,174,658) ............................................. 2,092,907
Dreyfus Appreciation Fund, Inc. (DryApp)
17,044 shares (cost $655,061) ................................................ 717,021
Dreyfus Balanced Fund, Inc. (DryBal)
9,850 shares (cost $165,759) ................................................. 159,865
Dreyfus S&P 500 Index Fund (Dry500Ix)
342,009 shares (cost $10,241,491) ............................................ 12,445,691
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
87,714 shares (cost $974,509) ................................................ 1,077,129
Evergreen Income and Growth Fund - Class Y (EvIncGro)
62,239 shares (cost $1,302,771) .............................................. 1,281,509
Federated High Yield Trust (FedHiYld)
54,906 shares (cost $487,047) ................................................ 489,217
Federated Investment Series Funds, Inc. - Federated Bond Fund - Class F (FedBdFd)
121,397 shares (cost $1,216,998) ............................................. 1,205,468
Fidelity Advisor Balanced Fund - Class T (FABal)
24,900 shares (cost $484,215) ................................................ 465,377
Fidelity Advisor Equity Income Fund - Class T (FAEqInc)
60,237 shares (cost $1,512,578) .............................................. 1,708,317
Fidelity Advisor Growth Opportunities Fund - Class T (FAGrOpp)
145,021 shares (cost $6,129,380) ............................................. 7,285,842
</TABLE>
4
<PAGE> 4
<TABLE>
<CAPTION>
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
<S> <C>
249,871 shares (cost $3,168,604) ............................................. 2,831,038
Fidelity Asset Manager(TM) (FidAsMgr)
238,304 shares (cost $4,125,986) ............................................. 4,144,111
Fidelity Capital & Income Fund (FidCapInc)
130,527 shares (cost $1,210,400) ............................................. 1,211,289
Fidelity Equity-Income Fund (FidEqInc)
307,411 shares (cost $12,698,617) ............................................ 17,076,675
Fidelity Magellan(R) Fund (FidMgln)
188,315 shares (cost $16,971,067) ............................................ 22,752,212
Fidelity Puritan(R) Fund (FidPurtn)
716,357 shares (cost $13,049,557) ............................................ 14,377,276
Fidelity VIP - High Income Portfolio (FidVIPHI)
10,523 shares (cost $119,580) ................................................ 121,328
Franklin Mutual Series Fund Inc. - Mutual Shares Fund - Class 1 (FranMutSer)
9,538 shares (cost $202,331) ................................................. 185,899
Janus Fund (JanFund)
181,212 shares (cost $4,911,487) ............................................. 6,097,787
Janus Twenty Fund (Jan20Fd)
307,989 shares (cost $11,441,360) ............................................ 16,415,836
Janus Worldwide Fund (JanWrldwde)
147,751 shares (cost $6,154,382) ............................................. 6,997,491
Lazard Small Cap Portfolio - Open Shares (LazSmCap)
26 shares (cost $454) ........................................................ 454
MFS(R) World Governments Fund - Class A (MFSWdGvt)
71,179 shares (cost $784,874) ................................................ 751,652
Nationwide(R) Bond Fund - Class D (NWBdFd)
164,377 shares (cost $1,548,837) ............................................. 1,601,029
Nationwide(R) Fund - Class D (NWFund)
230,420 shares (cost $6,212,047) ............................................. 7,467,925
Nationwide(R) Growth Fund - Class D (NWGroFd)
206,739 shares (cost $2,971,890) ............................................. 3,543,500
Nationwide(R) Money Market Fund (NWMyMkt)
11,440,557 shares (cost $11,440,557) ......................................... 11,440,557
Nationwide(R) Intermediate U.S. Government Bond Fund - Class D(NWUSGvt)
49,384 shares (cost $523,959) ................................................ 517,051
Neuberger & Berman Genesis Trust (NBGenesTr)
30,745 shares (cost $673,006) ................................................ 625,352
Neuberger & Berman Guardian Trust (NBGuardTr)
334,515 shares (cost $8,494,757) ............................................. 7,499,825
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
99,401 shares (cost $991,117) ................................................ 981,091
Neuberger & Berman Partners Fund (NBPartFd)
365,841 shares (cost $9,830,942) ............................................. 9,328,945
</TABLE>
(Continued)
5
<PAGE> 5
<TABLE>
<CAPTION>
Oppenheimer Global Fund - Class A (OppGlob)
<S> <C>
170,554 shares (cost $7,334,345) ............................................ 7,265,612
Phoenix Balanced Fund Series - Class A (PhxBalFd)
45,951 shares (cost $754,993) ............................................... 795,880
Prestige International Fund - Class A (PrInt)
172 shares (cost $1,815) .................................................... 1,815
Prestige Small Cap Fund - Class A (PrSmCap)
42 shares (cost $454) ....................................................... 454
Strong Total Return Fund, Inc. (StTotRet)
58,723 shares (cost $1,684,593) ............................................. 2,024,753
Templeton Foreign Fund - Class I (TemForFd)
485,063 shares (cost $4,900,840) ............................................ 4,069,681
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
124,909 shares (cost $4,433,313) ............................................ 4,992,600
Warburg Pincus Global Fixed - Income Fund - Common Shares (WPGlFxInc)
14,142 shares (cost $148,345) ............................................... 149,910
------------
Total investments ........................................................ 227,183,795
Accounts receivable ............................................................. 42,466
------------
Total assets ............................................................. 227,226,261
Accounts payable ................................................................ 308
------------
Contract owners' equity (note 4) ................................................ $227,225,953
============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
6
<PAGE> 6
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
TOTAL ACBENSTGVT
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ........................ $ 3,196,414 2,943,209 162,608 177,782
Mortality, expense and administration
charges (note 2) .......................... (2,533,959) (1,849,500) (40,633) (42,118)
------------- ------------- ------------- -------------
Net investment activity ................... 662,455 1,093,709 121,975 135,664
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ....... 56,416,999 47,219,466 723,023 925,121
Cost of mutual fund shares sold ............. (48,174,169) (41,630,262) (721,176) (914,401)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ....... 8,242,830 5,589,204 1,847 10,720
Change in unrealized gain (loss)
on investments ............................ 14,063,893 6,076,074 17,698 (2,838)
------------- ------------- ------------- -------------
Net gain (loss) on investments ............ 22,306,723 11,665,278 19,545 7,882
------------- ------------- ------------- -------------
Reinvested capital gains .................... 11,574,852 13,114,383 - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 34,544,030 25,873,370 141,520 143,546
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ........................... 53,270,516 36,040,726 668,275 178,490
Transfers between funds ..................... - - 7,071 (53,232)
Redemptions ................................. (23,621,452) (12,768,924) (835,080) (517,635)
Annuity benefits ............................ (27,891) (17,520) (952) (938)
Annual contract maintenance charge (note 2).. (169,891) (108,625) (1,748) (1,865)
Contingent deferred sales charges (note 2) .. (324,873) (262,567) (1,752) (15,741)
Adjustments to maintain reserves ............ 788 9,849 290 301
------------- ------------- ------------- -------------
Net equity transactions ................... 29,127,197 22,892,939 (163,896) (410,620)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 63,671,227 48,766,309 (22,376) (267,074)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 163,554,726 114,788,417 3,059,798 3,326,872
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 227,225,953 163,554,726 3,037,422 3,059,798
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
ACINCGRO ACTCGRO
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ........................ $ 64,541 15,209 - -
Mortality, expense and administration
charges (note 2) .......................... (61,634) (12,374) (152,386) (134,498)
------------- ------------- ------------- -------------
Net investment activity ................... 2,907 2,835 (152,386) (134,498)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ....... 2,702,912 1,753,420 1,724,411 2,899,543
Cost of mutual fund shares sold ............. (2,527,718) (1,566,771) (1,226,965) (2,626,829)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ....... 175,194 186,649 497,446 272,714
Change in unrealized gain (loss)
on investments.......................... 627,403 (79,760) 968,585 768,718
------------- ------------- ------------- -------------
Net gain (loss) on investments ............ 802,597 106,889 1,466,031 1,041,432
------------- ------------- ------------- -------------
Reinvested capital gains .................... 275,147 150,836 2,228,156 1,546,715
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'.
equity resulting from operations ...... 1,080,651 260,560 3,541,801 2,453,649
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ........................... 2,774,469 589,787 646,577 482,037
Transfers between funds ..................... 1,481,828 869,824 (134,689) (543,754)
Redemptions ................................. (220,883) (14,946) (1,058,730) (1,535,818)
Annuity benefits ............................ - - (12,964) (4,775)
Annual contract maintenance charge (note 2) . (2,588) (224) (14,839) (16,461)
Contingent deferred sales charges (note 2) .. (5,005) (78) (6,993) (16,969)
Adjustments to maintain reserves ............ (981) (3) 3,397 9,189
------------- ------------- ------------- -------------
Net equity transactions ................. 4,026,840 1,444,360 (578,241) (1,626,551)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 5,107,491 1,704,920 2,963,560 827,098
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 1,896,251 191,331 10,517,144 9,690,046
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 7,003,742 1,896,251 13,480,704 10,517,144
============= ============= ============= =============
</TABLE>
(Continued)
7
<PAGE> 7
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
ACTCINTLGR ACTCULTRA
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ........................ $ 1,491 1,451 - 4,160
Mortality, expense and administration
charges (note 2) .......................... (10,515) (7,272) (183,975) (122,017)
------------- ------------- ------------- -------------
Net investment activity ................... (9,024) (5,821) (183,975) (117,857)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ....... 622,576 411,368 1,479,795 1,635,447
Cost of mutual fund shares sold ............. (562,613) (361,201) (1,263,460) (1,055,134)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ....... 59,963 50,167 216,335 580,313
Change in unrealized gain (loss) on investments 35,468 (27,035) 2,426,265 (936,614)
------------- ------------- ------------- -------------
Net gain (loss) on investments ............ 95,431 23,132 2,642,600 (356,301)
------------- ------------- ------------- -------------
Reinvested capital gains .................... 12,976 65,811 1,488,048 2,211,772
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ...... 99,383 83,122 3,946,673 1,737,614
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ........................... 282,424 154,962 3,883,377 3,371,633
Transfers between funds ..................... 47,185 (81,095) (311,089) (589,520)
Redemptions ................................. (38,282) (151,902) (1,084,444) (729,493)
Annuity benefits ............................ - - - -
Annual contract maintenance charge (note 2) . (677) (269) (14,129) (7,543)
Contingent deferred sales charges (note 2) .. (699) (6,228) (23,446) (23,504)
Adjustments to maintain reserves ............ 14 (16) 172 96
------------- ------------- ------------- -------------
Net equity transactions ................. 289,965 (84,548) 2,450,441 2,021,669
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 389,348 (1,426) 6,397,114 3,759,283
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 498,568 499,994 11,089,110 7,329,827
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 887,916 498,568 17,486,224 11,089,110
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
DEHYBD DRYABDS
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 123,276 116,418 115,918 109,727
Mortality, expense and administration
charges (note 2) ............................ (16,341) (16,476) (25,437) (23,480)
------------- ------------- ------------- -------------
Net investment activity ..................... 106,935 99,942 90,481 86,247
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 341,656 192,668 1,243,229 870,811
Cost of mutual fund shares sold ............... (327,084) (185,268) (1,219,521) (874,737)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 14,572 7,400 23,708 (3,926)
Change in unrealized gain (loss) on investments (151,204) 43,399 (120,982) 38,180
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. (136,632) 50,799 (97,274) 34,254
------------- ------------- ------------- -------------
Reinvested capital gains ...................... - - 32,247 21,033
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (29,697) 150,741 25,454 141,534
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 156,659 236,070 545,761 592,080
Transfers between funds ....................... (127,468) 143,298 (80,789) (506,273)
Redemptions ................................... (241,587) (144,393) (241,342) (228,961)
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (495) (393) (1,451) (1,091)
Contingent deferred sales charges (note 2) .... (1,713) (3,311) (3,165) (3,508)
Adjustments to maintain reserves .............. (83) 20 (408) 6
------------- ------------- ------------- -------------
Net equity transactions ................... (214,687) 231,291 218,606 (147,747)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... (244,384) 382,032 244,060 (6,213)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 1,340,246 958,214 1,848,441 1,854,654
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 1,095,862 1,340,246 2,092,501 1,848,441
============= ============= ============= =============
</TABLE>
8
<PAGE> 8
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
DRYAPP DRYBAL
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 3,740 - 3,036 -
Mortality, expense and administration
charges (note 2) ............................ (3,370) - (1,249) -
------------- ------------- ------------- -------------
Net investment activity ..................... 370 - 1,787 -
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 108,365 - 38,449 -
Cost of mutual fund shares sold ............... (104,926) - (38,148) -
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 3,439 - 301 -
Change in unrealized gain (loss) on
investments ................................. 61,961 - (5,894) -
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 65,400 - (5,593) -
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 1,147 - 8,351 -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 66,917 - 4,545 -
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 301,616 - 123,154 -
Transfers between funds ....................... 367,247 - 63,401 -
Redemptions ................................... (18,608) - (31,225) -
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (113) - (9) -
Contingent deferred sales charges (note 2) .... (36) - - -
Adjustments to maintain reserves .............. 273 - (50) -
------------- ------------- ------------- -------------
Net equity transactions ................... 650,379 - 155,271 -
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 717,296 - 159,816 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... - - - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 717,296 - 159,816 -
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
DRY500IX DRY3DCEN
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ........................ $ 120,795 76,946 - 1,186
Mortality, expense and administration
charges (note 2) .......................... (129,044) (65,774) (11,355) (7,462)
------------- ------------- ------------- -------------
Net investment activity ................... (8,249) 11,172 (11,355) (6,276)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ....... 2,847,389 2,535,120 277,680 479,349
Cost of mutual fund shares sold ............. (2,101,605) (2,054,865) (215,841) (427,821)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ....... 745,784 480,255 61,839 51,528
Change in unrealized gain (loss) on invest .. 1,493,487 604,315 68,617 39,050
------------- ------------- ------------- -------------
Net gain (loss) on investments ............ 2,239,271 1,084,570 130,456 90,578
------------- ------------- ------------- -------------
Reinvested capital gains .................... 2,453 117,343 106,354 53,383
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ...... 2,233,475 1,213,085 225,455 137,685
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ........................... 3,936,518 1,991,411 195,911 338,691
Transfers between funds ..................... 1,528 1,332,333 7,991 41,154
Redemptions ................................. (1,319,672) (182,233) (70,148) (125,882)
Annuity benefits ............................ - - - -
Annual contract maintenance charge (note 2) . (8,663) (2,126) (1,341) (358)
Contingent deferred sales charges (note 2) .. (28,571) (2,808) (2,211) (3,494)
Adjustments to maintain reserves ............ 51 420 1 33
------------- ------------- ------------- -------------
Net equity transactions ................... 2,581,191 3,136,997 130,203 250,144
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... 4,814,666 4,350,082 355,658 387,829
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 7,631,150 3,281,068 721,473 333,644
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 12,445,816 7,631,150 1,077,131 721,473
============= ============= ============= =============
</TABLE>
(Continued)
9
<PAGE> 9
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
EVINCGRO FEDHIYLD
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 53,014 46,100 10,742 -
Mortality, expense and administration
charges (note 2) ............................ (15,523) (12,752) (1,643) -
------------- ------------- ------------- -------------
Net investment activity ..................... 37,491 33,348 9,099 -
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 141,082 124,635 6,112 -
Cost of mutual fund shares sold ............... (121,276) (118,286) (6,420) -
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 19,806 6,349 (308) -
Change in unrealized gain (loss) on invest .... (202,823) 103,540 2,169 -
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. (183,017) 109,889 1,861 -
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 119,607 68,181 - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (25,919) 211,418 10,960 -
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 529,511 60,014 52,736 -
Transfers between funds ....................... (1,596) (27,145) 427,826 -
Redemptions ................................... (329,204) (50,285) (2,247) -
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (584) (423) (13) -
Contingent deferred sales charges (note 2) .... (286) (1,158) (46) -
Adjustments to maintain reserves .............. 3 10 162 -
------------- ------------- ------------- -------------
Net equity transactions ................... 197,844 (18,987) 478,418 -
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 171,925 192,431 489,378 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 1,109,581 917,150 - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 1,281,506 1,109,581 489,378 -
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FEDBDFD FABAL
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ................................... $ 63,263 21,641 11,502 3,087
Mortality, expense and administration
charges (note 2) ..................................... (11,793) (3,878) (4,942) (1,279)
----------- ----------- ----------- -----------
Net investment activity .............................. 51,470 17,763 6,560 1,808
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold .................. 87,912 36,495 463,667 20,257
Cost of mutual fund shares sold ........................ (85,985) (36,293) (435,638) (18,774)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .................. 1,927 202 28,029 1,483
Change in unrealized gain (loss) on investments......... (22,462) 11,825 (21,984) 2,888
----------- ----------- ----------- -----------
Net gain (loss) on investments ....................... (20,535) 12,027 6,045 4,371
----------- ----------- ----------- -----------
Reinvested capital gains ............................... - - 35,081 9,912
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ................. 30,935 29,790 47,686 16,091
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ...................................... 217,429 42,403 285,138 115,578
Transfers between funds ................................ 627,230 206,842 (26,713) 23,256
Redemptions ............................................ (41,428) (7,402) (15,263) (8,828)
Annuity benefits ....................................... - - - -
Annual contract maintenance charge (note 2) ............ (198) (21) (415) (76)
Contingent deferred sales charges (note 2) ............. (1) - (539) (348)
Adjustments to maintain reserves ....................... (3) (6) (12) (26)
----------- ----------- ----------- -----------
Net equity transactions .............................. 803,029 241,816 242,196 129,556
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY .................... 833,964 271,606 289,882 145,647
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD .............. 371,500 99,894 175,488 29,841
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD .................... $ 1,205,464 371,500 465,370 175,488
=========== =========== =========== ===========
</TABLE>
10
<PAGE> 10
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
FAEQINC FAGROPP
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 10,023 9,331 48,032 48,467
Mortality, expense and administration
charges (note 2) ............................ (18,599) (12,553) (78,505) (46,701)
------------- ------------- ------------- -------------
Net investment activity ..................... (8,576) (3,222) (30,473) 1,766
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 319,587 146,787 1,353,752 1,220,774
Cost of mutual fund shares sold ............... (238,766) (121,404) (1,094,861) (997,920)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 80,821 25,383 258,891 222,854
Change in unrealized gain (loss) on investments 55,249 113,836 732,635 375,374
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 136,070 139,219 991,526 598,228
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 71,848 67,192 251,548 246,460
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 199,342 203,189 1,212,601 846,454
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 451,869 197,077 1,711,707 1,354,651
Transfers between funds ....................... 35,389 169,371 (64,906) 633,126
Redemptions ................................... (185,723) (41,115) (359,563) (155,973)
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (1,384) (369) (5,519) (1,594)
Contingent deferred sales charges (note 2) .... (1,588) (1,252) (6,868) (4,894)
Adjustments to maintain reserves .............. (6) 23 44 78
------------- ------------- ------------- -------------
Net equity transactions ................... 298,557 323,735 1,274,895 1,825,394
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 497,899 526,924 2,487,496 2,671,848
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 1,210,420 683,496 4,798,392 2,126,544
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 1,708,319 1,210,420 7,285,888 4,798,392
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FAHIYLD FIDASMGR
--------------------------- ---------------------------
1998 1997 1998 1997
-------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 255,735 148,014 117,170 110,938
Mortality, expense and administration
charges (note 2) ............................ (38,336) (20,450) (49,446) (42,804)
------------- ------------- ------------- -------------
Net investment activity ..................... 217,399 127,564 67,724 68,134
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 1,050,322 321,627 896,828 821,473
Cost of mutual fund shares sold ............... (1,032,112) (303,939) (671,236) (677,732)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 18,210 17,688 225,592 143,741
Change in unrealized gain (loss) on investments (349,860) 5,965 (393,169) 197,082
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. (331,650) 23,653 (167,577) 340,823
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 31,024 51,990 626,712 205,712
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (83,227) 203,207 526,859 614,669
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 814,267 743,205 740,021 634,370
Transfers between funds ....................... (223,421) 829,565 (76,681) (301,774)
Redemptions ................................... (195,080) (78,562) (694,794) (313,159)
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (1,287) (449) (2,816) (2,060)
Contingent deferred sales charges (note 2) .... (3,651) (1,423) (16,506) (8,276)
Adjustments to maintain reserves .............. 446 (337) 21 43
------------- ------------- ------------- -------------
Net equity transactions ................... 391,274 1,491,999 (50,755) 9,144
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 308,047 1,695,206 476,104 623,813
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 2,492,698 797,492 3,668,034 3,044,221
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 2,800,745 2,492,698 4,144,138 3,668,034
============= ============= ============= =============
</TABLE>
11
(Continued)
<PAGE> 11
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
FIDCAPINC FIDEQINC
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 117,272 87,131 269,798 309,641
Mortality, expense and administration
charges (note 2) ............................ (16,266) (15,505) (229,390) (206,648)
------------- ------------- ------------- -------------
Net investment activity ..................... 101,006 71,626 40,408 102,993
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 139,878 119,208 3,943,497 2,893,495
Cost of mutual fund shares sold ............... (116,142) (102,280) (2,379,246) (1,851,804)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 23,736 16,928 1,564,251 1,041,691
Change in unrealized gain (loss) on investments (112,592) 66,754 (528,172) 2,069,323
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. (88,856) 83,682 1,036,079 3,111,014
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 32,589 - 735,781 658,912
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 44,739 155,308 1,812,268 3,872,919
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 1,897 - 1,203,569 1,025,601
Transfers between funds ....................... (8,199) (2,573) (1,030,099) 20,535
Redemptions ................................... (112,832) (97,708) (2,317,284) (1,703,965)
Annuity benefits .............................. (1,566) (1,097) (4,684) (3,737)
Annual contract maintenance charge (note 2) ... (1,764) (2,112) (17,633) (16,868)
Contingent deferred sales charges (note 2) .... (290) (281) (13,552) (14,857)
Adjustments to maintain reserves .............. 144 (550) (186) 293
------------- ------------- ------------- -------------
Net equity transactions ..................... (122,610) (104,321) (2,179,869) (692,998)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... (77,871) 50,987 (367,601) 3,179,921
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 1,289,328 1,238,341 17,444,026 14,264,105
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 1,211,457 1,289,328 17,076,425 17,444,026
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
FIDMGIN FIDPURTN
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 117,953 180,615 443,211 361,432
Mortality, expense and administration
charges (note 2) ............................ (234,858) (171,071) (173,935) (129,814)
------------- ------------- ------------- -------------
Net investment activity ..................... (116,905) 9,544 269,276 231,618
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 1,944,713 2,718,430 1,884,862 1,265,875
Cost of mutual fund shares sold ............... (1,734,936) (2,272,279) (1,482,526) (1,040,109)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 209,777 446,151 402,336 225,766
Change in unrealized gain (loss) on investment 4,084,520 1,660,947 177,749 821,043
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 4,294,297 2,107,098 580,085 1,046,809
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 884,756 753,138 1,012,923 536,381
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 5,062,148 2,869,780 1,862,284 1,814,808
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 4,957,504 2,893,931 2,895,054 3,077,343
Transfers between funds ....................... (286,839) (1,898,187) (942,420) (390,612)
Redemptions ................................... (1,512,760) (939,188) (1,263,833) (414,158)
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (16,887) (12,358) (9,022) (6,296)
Contingent deferred sales charges (note 2) .... (31,705) (27,286) (23,520) (12,075)
Adjustments to maintain reserves .............. 251 349 89 105
------------- ------------- ------------- -------------
Net equity transactions ................... 3,109,564 17,261 656,348 2,254,307
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 8,171,712 2,887,041 2,518,632 4,069,115
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 14,580,812 11,693,771 11,858,759 7,789,644
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 22,752,524 14,580,812 14,377,391 11,858,759
============= ============= ============= =============
</TABLE>
12
<PAGE> 12
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
FIDVIPHI FRANMUTSER
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ........................ $ 19,285 18,061 3,923 -
Mortality, expense and administration
charges (note 2) .......................... (2,858) (3,314) (1,297) -
------------- ------------- ------------- -------------
Net investment activity ................... 16,427 14,747 2,626 -
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ....... 146,537 39,981 34,211 -
Cost of mutual fund shares sold ............. (137,310) (37,078) (39,523) -
------------- ------------- ------------- -------------
Realized gain (loss) on investments ....... 9,227 2,903 (5,312) -
Change in unrealized gain (loss)
on investments ......................... (46,265) 20,298 (16,432) -
------------- ------------- ------------- -------------
Net gain (loss) on investments ............ (37,038) 23,201 (21,744) -
------------- ------------- ------------- -------------
Reinvested capital gains .................... 12,254 2,232 10,640 -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ...... (8,357) 40,180 (8,478) -
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ........................... - - 151,888 -
Transfers between funds ..................... (132,120) (4,194) 43,975 -
Redemptions ................................. (11,242) (32,145) (1,472) -
Annuity benefits ............................ - - - -
Annual contract maintenance charge (note 2) . (110) (222) (16) -
Contingent deferred sales charges (note 2) .. - (95) - -
Adjustments to maintain reserves ............ (4) (196) 96 -
------------- ------------- ------------- -------------
Net equity transactions ................... (143,476) (36,852) 194,471 -
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ......... (151,833) 3,328 185,993 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ... 273,172 269,844 - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ......... $ 121,339 273,172 185,993 -
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
JANFUND JAN20FD
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 13,196 26,556 42,176 16,202
Mortality, expense and administration
charges (note 2) ............................ (59,083) (36,518) (127,040) (64,389)
------------- ------------- ------------- -------------
Net investment activity ..................... (45,887) (9,962) (84,864) (48,187)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 630,648 441,921 2,274,301 2,411,435
Cost of mutual fund shares sold ............... (554,019) (403,087) (1,711,517) (2,113,928)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 76,629 38,834 562,784 297,507
Change in unrealized gain (loss) on
investments .................................. 1,321,824 (64,982) 5,023,354 127,847
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 1,398,453 (26,148) 5,586,138 425,354
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 144,449 543,614 91,123 734,575
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,497,015 507,504 5,592,397 1,111,742
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 1,312,739 1,003,807 3,053,816 1,839,757
Transfers between funds ....................... 123,452 441,173 2,754,222 185,607
Redemptions ................................... (273,851) (111,066) (867,882) (607,222)
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (3,757) (1,046) (8,378) (2,887)
Contingent deferred sales charges (note 2) .... (5,439) (1,859) (17,610) (17,382)
Adjustments to maintain reserves .............. 87 5 447 80
------------- ------------- ------------- -------------
Net equity transactions ................... 1,153,231 1,331,014 4,914,615 1,397,953
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 2,650,246 1,838,518 10,507,012 2,509,695
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 3,447,634 1,609,116 5,909,299 3,399,604
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 6,097,880 3,447,634 16,416,311 5,909,299
============= ============= ============= =============
</TABLE>
13
(Continued)
<PAGE> 13
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
JANWRLDWDE LAZSMCAP
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 27,824 19,023 - -
Mortality, expense and administration
charges (note 2) ............................ (73,506) (31,612) - -
------------- ------------- ------------- -------------
Net investment activity ..................... (45,682) (12,589) - -
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 1,326,534 584,448 - -
Cost of mutual fund shares sold ............... (1,091,427) (530,660) - -
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 235,107 53,788 - -
Change in unrealized gain (loss) on investments 896,338 (29,732) - -
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 1,131,445 24,056 - -
------------- ------------- ------------- -------------
Reinvested capital gains ...................... - 252,002 - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,085,763 263,469 - -
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 2,138,597 1,462,110 - -
Transfers between funds ....................... 111,111 1,864,319 454 -
Redemptions ................................... (301,152) (78,572) - -
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (5,392) (773) - -
Contingent deferred sales charges (note 2) .... (6,090) (1,044) - -
Adjustments to maintain reserves .............. 70 (145) 16 -
------------- ------------- ------------- -------------
Net equity transactions ................... 1,937,144 3,245,895 470 -
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 3,022,907 3,509,364 470 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 3,974,671 465,307 - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 6,997,578 3,974,671 470 -
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
MFSWDGVT NWBDFD
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 46,268 29,388 93,677 99,663
Mortality, expense and administration
charges (note 2) ............................ (9,446) (11,467) (20,893) (20,516)
------------- ------------- ------------- -------------
Net investment activity ..................... 36,822 17,921 72,784 79,147
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 254,224 436,153 536,549 485,789
Cost of mutual fund shares sold ............... (271,092) (460,939) (509,194) (527,157)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... (16,868) (24,786) 27,355 (41,368)
Change in unrealized gain (loss) on investments (1,563) (14,028) 2,462 78,384
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. (18,431) (38,814) 29,817 37,016
------------- ------------- ------------- -------------
Reinvested capital gains ...................... - 3,807 - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 18,391 (17,086) 102,601 116,163
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 53,676 35,762 373,966 218,598
Transfers between funds ....................... 10,990 (134,039) (106,283) (104,705)
Redemptions ................................... (84,094) (161,551) (479,980) (130,239)
Annuity benefits .............................. (2,578) (2,597) (214) (203)
Annual contract maintenance charge (note 2) ... (1,081) (1,293) (1,293) (1,055)
Contingent deferred sales charges (note 2) .... (962) (1,956) (972) (2,203)
Adjustments to maintain reserves .............. 273 156 59 8
------------- ------------- ------------- -------------
Net equity transactions ................... (23,776) (265,518) (214,717) (19,799)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... (5,385) (282,604) (112,116) 96,364
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 761,789 1,044,393 1,713,185 1,616,821
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 756,404 761,789 1,601,069 1,713,185
============= ============= ============= =============
</TABLE>
14
<PAGE> 14
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NWFUND NWGROFD
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 58,065 42,568 5,977 31,889
Mortality, expense and administration
charges (note 2) ............................ (79,929) (43,646) (53,844) (53,875)
------------- ------------- ------------- -------------
Net investment activity ..................... (21,864) (1,078) (47,867) (21,986)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 2,006,814 422,079 2,457,885 615,042
Cost of mutual fund shares sold ............... (1,061,945) (247,136) (1,632,831) (367,660)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 944,869 174,943 825,054 247,382
Change in unrealized gain (loss) on investments 168,811 627,149 (146,456) 124,155
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 1,113,680 802,092 678,598 371,537
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 351,018 218,982 224,429 533,665
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,442,834 1,019,996 855,160 883,216
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 2,518,633 613,432 390,995 163,823
Transfers between funds ....................... 286,664 548,513 (150,263) 2,896
Redemptions ................................... (1,272,428) (165,231) (1,950,035) (318,735)
Annuity benefits .............................. (1,645) (1,292) (1,563) (1,330)
Annual contract maintenance charge (note 2) ... (5,526) (1,864) (3,472) (2,546)
Contingent deferred sales charges (note 2) .... (5,815) (600) (4,096) (4,373)
Adjustments to maintain reserves .............. (970) (1,053) 524 396
------------- ------------- ------------- -------------
Net equity transactions ................... 1,518,913 991,905 (1,717,910) (159,869)
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 2,961,747 2,011,901 (862,750) 723,347
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 4,500,730 2,488,829 4,406,739 3,683,392
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 7,462,477 4,500,730 3,543,989 4,406,739
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
NWMYMKT NWUSGVT
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 461,473 427,521 14,221 2,659
Mortality, expense and administration
charges (note 2) ............................ (122,488) (111,984) (3,754) (600)
------------- ------------- ------------- -------------
Net investment activity ..................... 338,985 315,537 10,467 2,059
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 13,390,890 14,140,604 370,513 49,603
Cost of mutual fund shares sold ............... (13,390,890) (14,140,604) (365,796) (49,605)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... - - 4,717 (2)
Change in unrealized gain (loss) on investments - - (8,808) 1,852
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. - - (4,091) 1,850
------------- ------------- ------------- -------------
Reinvested capital gains ...................... - - 3,694 -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 338,985 315,537 10,070 3,909
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 6,108,738 4,503,576 292,897 34,673
Transfers between funds ....................... 188,506 (3,008,782) 147,064 (23,833)
Redemptions ................................... (2,839,314) (1,686,416) (7,884) (5,095)
Annuity benefits .............................. (1,725) (1,551) - -
Annual contract maintenance charge (note 2) ... (8,599) (7,909) (162) (40)
Contingent deferred sales charges (note 2) .... (48,336) (24,598) (105) (238)
Adjustments to maintain reserves .............. 1,133 309 796 (6)
------------- ------------- ------------- -------------
Net equity transactions ................... 3,400,403 (225,371) 432,606 5,461
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 3,739,388 90,166 442,676 9,370
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 7,765,550 7,675,384 75,160 65,790
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 11,504,938 7,765,550 517,836 75,160
============= ============= ============= =============
</TABLE>
15
(Continued)
<PAGE> 15
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NBGENESTR NBGUARD TR
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 3,629 - 43,561 43,637
Mortality, expense and administration
charges (note 2) ............................ (5,221) - (102,643) (90,339)
------------- ------------- ------------- -------------
Net investment activity ..................... (1,592) - (59,082) (46,702)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 46,166 - 1,421,419 852,547
Cost of mutual fund shares sold ............... (51,966) - (1,295,137) (629,818)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... (5,800) - 126,282 222,729
Change in unrealized gain (loss) on investments (47,655) - (1,131,594) (237,797)
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. (53,455) - (1,005,312) (15,068)
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 6,048 - 1,110,714 1,010,701
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (48,999) - 46,320 948,931
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 361,520 - 1,484,830 1,854,345
Transfers between funds ....................... 323,146 - (1,057,014) 13,046
Redemptions ................................... (10,080) - (595,129) (394,887)
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (57) - (5,098) (3,499)
Contingent deferred sales charges (note 2) .... (76) - (8,659) (9,677)
Adjustments to maintain reserves .............. 267 - (9) 88
------------- ------------- ------------- -------------
Net equity transactions ................... 674,720 - (181,079) 1,459,416
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 625,721 - (134,759) 2,408,347
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... - - 7,634,575 5,226,228
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 625,721 - 7,499,816 7,634,575
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
NBLTDMAT NBPARTFD
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 50,742 51,322 - 42,968
Mortality, expense and administration
charges (note 2) ............................ (11,240) (10,612) (112,673) (75,592)
------------- ------------- ------------- -------------
Net investment activity ..................... 39,502 40,710 (112,673) (32,624)
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 212,801 512,384 1,369,375 893,439
Cost of mutual fund shares sold ............... (213,183) (510,665) (1,169,514) (640,676)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... (382) 1,719 199,861 252,763
Change in unrealized gain (loss) on investments (12,717) 1,619 (542,191) (202,544)
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. (13,099) 3,338 (342,330) 50,219
------------- ------------- ------------- -------------
Reinvested capital gains ...................... - - 808,960 1,320,713
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 26,403 44,048 353,957 1,338,308
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 348,091 352,479 3,047,800 1,735,386
Transfers between funds ....................... (146,743) (302,390) (551,497) 616,650
Redemptions ................................... (31,227) (126,409) (922,110) (393,918)
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (396) (256) (7,349) (3,385)
Contingent deferred sales charges (note 2) .... (183) (3,195) (18,634) (12,603)
Adjustments to maintain reserves .............. 225 (2) (27) (5)
------------- ------------- ------------- -------------
Net equity transactions ................... 169,767 (79,773) 1,548,183 1,942,125
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 196,170 (35,725) 1,902,140 3,280,433
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 785,148 820,873 7,426,836 4,146,403
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 981,318 785,148 9,328,976 7,426,836
============= ============= ============= =============
</TABLE>
16
<PAGE> 16
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
OPPGLOB PHXBALFD
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 61,774 96,072 18,333 15,090
Mortality, expense and administration
charges (note 2) ............................ (85,201) (65,639) (9,786) (7,320)
------------- ------------- ------------- -------------
Net investment activity ..................... (23,427) 30,433 8,547 7,770
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 2,675,792 1,614,192 143,908 215,973
Cost of mutual fund shares sold ............... (2,232,654) (1,233,355) (144,310) (218,348)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 443,138 380,837 (402) (2,375)
Change in unrealized gain (loss) on investments (210,371) (186,375) 80,132 (8,166)
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 232,767 194,462 79,730 (10,541)
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 475,445 665,438 29,498 93,626
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 684,785 890,333 117,775 90,855
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 1,551,016 1,205,785 143,962 213,816
Transfers between funds ....................... (79,722) (95,415) (31,417) (146,863)
Redemptions ................................... (562,042) (404,533) (95,632) (24,836)
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (5,709) (3,916) (749) (292)
Contingent deferred sales charges (note 2) .... (12,575) (13,137) (1,821) (1,026)
Adjustments to maintain reserves .............. (5,842) 76 (7) -
------------- ------------- ------------- -------------
Net equity transactions ................... 885,126 688,860 14,336 40,799
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 1,569,911 1,579,193 132,111 131,654
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 5,695,782 4,116,589 663,764 532,110
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 7,265,693 5,695,782 795,875 663,764
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
PRINT PRSMCAP
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ - - - -
Mortality, expense and administration
charges (note 2) ............................ - - - -
------------- ------------- ------------- -------------
Net investment activity ..................... - - - -
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... - - - -
Cost of mutual fund shares sold ............... - - - -
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... - - - -
Change in unrealized gain (loss) on investments - - - -
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. - - - -
------------- ------------- ------------- -------------
Reinvested capital gains ...................... - - - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ - - - -
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. - - - -
Transfers between funds ....................... 1,815 - 454 -
Redemptions ................................... - - - -
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... - - - -
Contingent deferred sales charges (note 2) .... - - - -
Adjustments to maintain reserves .............. 1 - 12 -
------------- ------------- ------------- -------------
Net equity transactions ................... 1,816 - 466 -
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 1,816 - 466 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... - - - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 1,816 - 466 -
============= ============= ============= =============
</TABLE>
17
(Continued)
<PAGE> 17
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
STTOTRET TEMFORFD
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ 4,227 9,509 111,484 141,805
Mortality, expense and administration
charges (note 2) ............................ (22,635) (18,949) (59,378) (59,161)
------------- ------------- ------------- -------------
Net investment activity ..................... (18,408) (9,440) 52,106 82,644
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 377,041 383,941 1,293,020 662,819
Cost of mutual fund shares sold ............... (384,883) (343,668) (1,287,738) (572,838)
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... (7,842) 40,273 5,282 89,981
Change in unrealized gain (loss) on investments 473,589 (72,806) (678,199) (364,660)
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 465,747 (32,533) (672,917) (274,679)
------------- ------------- ------------- -------------
Reinvested capital gains ...................... 21,813 333,588 328,019 373,056
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 469,152 291,615 (292,792) 181,021
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 307,761 396,146 917,664 1,244,024
Transfers between funds ....................... (207,357) 39,129 (948,243) 175,787
Redemptions ................................... (154,396) (178,732) (423,401) (209,477)
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (1,357) (635) (3,898) (2,245)
Contingent deferred sales charges (note 2) .... (2,073) (4,415) (5,931) (6,278)
Adjustments to maintain reserves .............. 34 161 (65) (47)
------------- ------------- ------------- -------------
Net equity transactions ................... (57,388) 251,654 (463,874) 1,201,764
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 411,764 543,269 (756,666) 1,382,785
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 1,613,016 1,069,747 4,826,284 3,443,499
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 2,024,780 1,613,016 4,069,618 4,826,284
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
WPEMGRO WPGIFXINC
--------------------------- ---------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .......................... $ - - 3,459 -
Mortality, expense and administration
charges (note 2) ............................ (61,048) (49,041) (821) -
------------- ------------- ------------- -------------
Net investment activity ..................... (61,048) (49,041) 2,638 -
------------- ------------- ------------- -------------
Proceeds from mutual fund shares sold ......... 1,097,855 1,065,213 8,819 -
Cost of mutual fund shares sold ............... (912,250) (995,193) (8,789) -
------------- ------------- ------------- -------------
Realized gain (loss) on investments ......... 185,605 70,020 30 -
Change in unrealized gain (loss) on investments 95,404 399,868 1,566 -
------------- ------------- ------------- -------------
Net gain (loss) on investments .............. 281,009 469,888 1,596 -
------------- ------------- ------------- -------------
Reinvested capital gains ...................... - 263,613 - -
------------- ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 219,961 684,460 4,234 -
------------- ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 1,272,369 1,083,873 64,115 -
Transfers between funds ....................... (414,970) 57,962 81,989 -
Redemptions ................................... (547,689) (298,254) (400) -
Annuity benefits .............................. - - - -
Annual contract maintenance charge (note 2) ... (3,914) (1,806) (3) -
Contingent deferred sales charges (note 2) .... (13,328) (10,397) (25) -
Adjustments to maintain reserves .............. (10) (4) 53 -
------------- ------------- ------------- -------------
Net equity transactions ................... 292,458 831,374 145,729 -
------------- ------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 512,419 1,515,834 149,963 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 4,480,173 2,964,339 - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 4,992,592 4,480,173 149,963 -
============= ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
18
<PAGE> 18
- --------------------------------------------------------------------------------
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
(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:
<TABLE>
<CAPTION>
<S> <C>
American Century: Benham Short-Term Government Fund (ACBenSTGvt)
American Century: Income & Growth Fund (ACIncGro)
American Century: Twentieth Century Growth Fund (ACTCGro)
American Century: Twentieth Century International Growth Fund (ACTCIntlGr)
American Century: Twentieth Century Ultra Fund (ACTCUltra)
Delaware Group Delchester High-Yield Bond Fund, Inc. - Delchester Fund Institutional Class (DeHYBd)
Dreyfus A Bonds Plus, Inc. (DryABds)
Dreyfus Appreciation Fund, Inc. (DryApp)
Dreyfus Balanced Fund, Inc. (DryBal)
Dreyfus S&P 500 Index Fund (Dry500Ix)
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
Evergreen Income and Growth Fund - Class Y (EvIncGro)
Federated High Yield Trust (FedHiYld)
Federated Investment Series Funds, Inc. - Federated Bond Fund - Class F (FedBdFd)
Fidelity Advisor Balanced Fund - Class T (FABal)
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)
Fidelity Magellan(R) Fund (FidMgln)
Fidelity Puritan(R) Fund (FidPurtn)
</TABLE>
19
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C>
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)
Franklin Mutual Series Fund Inc. - Mutual Shares Fund - Class I (FranMutSer)
INVESCO Dynamics Fund (InvDynam)
Janus Fund (JanFund)
Janus Twenty Fund (Jan20Fd)
Janus Worldwide Fund (JanWrldwde)
Lazard Small Cap Portfolio - Open Shares (LazSmCap)
MFS(R) World Governments Fund - Class A (MFSWdGvt)
Nationwide(R) Bond Fund - Class D (NWBdFd) (managed for a fee by an affiliated investment advisor)
Nationwide(R) Fund - Class D (NWFund) (managed for a fee by an affiliated investment advisor)
Nationwide(R) Growth Fund - Class D (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) Intermediate U.S. Government Bond Fund - Class D (NWUSGvt)
(formerly Nationwide U.S. Government Income Fund)
(managed for a fee by an affiliated investment advisor)
Nationwide S&P 500(R) Index Fund - Class R (NWIndxFd)
(managed for a fee by an affiliated investment advisor)
Neuberger & Berman Genesis Trust (NBGenesTr)
(available only for contracts established prior to March 6, 1998)
Neuberger & Berman Guardian Trust (NBGuardTr)
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)
Prestige Balanced Fund - Class A (PrBal) (managed for a fee by an affiliated investment advisor)
Prestige International Fund - Class A (PrInt) (managed for a fee by an affiliated investment advisor)
Prestige Large Cap Growth Fund - Class A (PrLgCapGro)
(managed for a fee by an affiliated investment advisor)
Prestige Large Cap Value Fund - Class A (PrLgCapVal)
(managed for a fee by an affiliated investment advisor)
Prestige Small Cap Fund - Class A (PrSmCap) (managed for a fee by an affiliated investment advisor)
Strong Common Stock Fund, Inc. (StComStk)
Strong Total Return Fund, Inc. (StTotRet)
Templeton Foreign Fund - Class I (TemForFd)
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
Warburg Pincus Global Fixed-Income Fund - Common Shares (WPGlFxInc)
</TABLE>
At December 31, 1998, contract owners have not invested in all of the
above funds except for INVESCO Dynamics Fund, Nationwide S&P 500(R)
Index Fund - Class R, Prestige Balanced Fund - Class A, Prestige Large
Cap Growth Fund - Class A, Prestige Large Cap Value Fund - Class A and
Strong Common Stock Fund, Inc. 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.
20
<PAGE> 20
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1998. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company which is taxed as a life insurance company
under the Internal Revenue Code.
The Company does not provide for income taxes within the Account.
Taxes are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(2) 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 up to $30, dependent upon
contract type and issue date, 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.
21
<PAGE> 21
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31,
1998, for each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
ANNUAL
Contract owners' equity represented by: UNITS UNIT VALUE RETURN(B)
------- ---------- ---------
Contracts in accumulation phase:
American Century: Benham
Short-Term Government Fund:
<S> <C> <C> <C> <C>
Tax qualified ........................ 131,664 23.012292 $3,029,890 5%
American Century: Income & Growth Fund:
Tax qualified ........................ 397,026 17.640513 7,003,742 26%
American Century: Twentieth Century
Growth Fund:
Tax qualified ........................ 150,519 88.518097 13,323,655 35%
American Century: Twentieth Century
International Growth Fund:
Tax qualified ........................ 48,212 18.416900 887,916 17%
American Century: Twentieth Century
Ultra Fund:
Tax qualified ........................ 784,677 22.284614 17,486,224 33%
Delaware Group Delchester High-Yield
Bond Fund, Inc. - Delchester Fund
Institutional Class:
Tax qualified ........................ 73,489 14.911925 1,095,862 (3)%
Dreyfus A Bonds Plus, Inc.:
Tax qualified ........................ 174,256 12.008201 2,092,501 1%
Dreyfus Appreciation Fund, Inc.:
Tax qualified ........................ 56,370 12.724781 717,296 27%(a)
Dreyfus Balanced Fund, Inc.:
Tax qualified ........................ 14,859 10.755504 159,816 8%(a)
Dreyfus S&P 500 Index Fund:
Tax qualified ........................ 429,513 28.976575 12,445,816 26%
The Dreyfus Third Century Fund, Inc.:
Tax qualified ........................ 41,708 25.825514 1,077,131 28%
Evergreen Income and Growth
Fund - Class Y:
Tax qualified ........................ 75,243 17.031564 1,281,506 (2)%
Federated High Yield Trust:
Tax qualified ........................ 49,055 9.976102 489,378 0%
Federated Investment Series Funds, Inc. -
Federated Bond Fund - Class F:
Tax qualified ........................ 104,392 11.547474 1,205,464 4%
Fidelity Advisor Balanced Fund - Class T:
Tax qualified ........................ 31,056 14.984876 465,370 14%
Fidelity Advisor Equity Income
Fund - Class T:
Tax qualified ........................ 103,814 16.455574 1,708,319 5%
</TABLE>
22
<PAGE> 22
<TABLE>
<CAPTION>
Fidelity Advisor Growth Opportunities
Fund - Class T:
<S> <C> <C> <C> <C>
Tax qualified.............................. 391,088 18.629791 7,285,888 22%
Fidelity Advisor High Yield Fund - Class T:
Tax qualified.............................. 223,247 12.545500 2,800,745 (2)%
Fidelity Asset Manager(TM):
Tax qualified.............................. 240,850 17.206302 4,144,138 15%
Fidelity Capital & Income Fund:
Tax qualified.............................. 24,848 48.330455 1,200,915 3%
Fidelity Equity-Income Fund:
Tax qualified.............................. 216,592 78.774753 17,061,981 11%
Fidelity Magellan(R) Fund:
Tax qualified.............................. 775,189 29.350937 22,752,524 32%
Fidelity Puritan(R) Fund:
Tax qualified.............................. 631,678 22.760633 14,377,391 15%
Fidelity VIP - High Income Portfolio:
Tax qualified.............................. 5,077 23.899779 121,339 (6)%
Franklin Mutual Series Fund Inc. -
Mutual Shares Fund - Class I:
Tax qualified ............................. 18,848 9.868029 185,993 (1)%(a)
Janus Fund:
Tax qualified ............................. 303,830 20.070038 6,097,880 37%
Janus Twenty Fund:
Tax qualified ............................. 507,576 32.342568 16,416,311 71%
Janus Worldwide Fund:
Tax qualified ............................. 459,107 15.241714 6,997,578 24%
Lazard Small Cap Portfolio - Open Shares:
Tax qualified ............................. 45 10.448830 470 4%(a)
MFS(R) World Governments Fund - Class A:
Tax qualified ............................. 19,990 37.527462 750,174 3%
Nationwide(R) Bond Fund - Class D:
Tax qualified ............................. 36,470 43.667785 1,592,564 7%
Non-tax qualified ......................... 148 43.480582 6,435 7%
Nationwide(R) Fund - Class D:
Tax qualified ............................. 59,155 25.467347 7,422,021 29%
Non-tax qualified ......................... 176 30.686988 23,001 29%
Nationwide(R) Growth Fund - Class D:
Tax qualified ............................. 30,515 14.746202 3,501,480 22%
Non-tax qualified ......................... 218 21.157545 26,412 22%
Nationwide(R) Money Market Fund:
Tax qualified - Pre 12/25/82 .............. 32,588 26.532610 864,645 4%
Tax qualified ............................. 503,152 21.071063 10,601,947 4%
Non-tax qualified ......................... 841 26.700292 22,455 4%
Nationwide(R) Intermediate U.S.
Government Bond Fund - Class D:
Tax qualified ............................. 43,459 11.915504 517,836 7%
</TABLE>
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<TABLE>
<CAPTION>
Neuberger & Berman Genesis Trust
<S> <C> <C> <C> <C>
Tax qualified ............................. 67,525 9.266508 625,721 (7)%(a)
Neuberger & Berman Guardian Trust:
Tax qualified ............................. 436,072 17.198573 7,499,816 1%
Neuberger & Berman Limited Maturity
Bond Fund:
Tax qualified ............................. 81,393 12.056542 981,318 3%
Neuberger & Berman Partners Fund:
Tax qualified ............................. 374,224 24.928856 9,328,976 5%
Oppenheimer Global Fund - Class A:
Tax qualified ............................. 301,407 24.105920 7,265,693 11%
Phoenix Balanced Fund Series - Class A:
Tax qualified ............................. 47,793 16.652539 795,875 17%
Prestige International Fund - Class A:
Tax qualified ............................. 181 10.035113 1,816 0%(a)
Prestige Small Cap Fund - Class A:
Tax qualified ............................. 45 10.359298 466 4%(a)
Strong Total Return Fund, Inc.:
Tax qualified ............................. 75,602 26.782090 2,024,780 30%
Templeton Foreign Fund - Class I:
Tax qualified ............................. 318,666 12.770793 4,069,618 (6)%
Warburg Pincus Emerging Growth
Fund - Common Shares:
Tax qualified ............................. 338,034 14.769496 4,992,592 4%
Warburg Pincus Global Fixed-Income
Fund - Common Shares:
Tax qualified ............................. 14,079 10.651516 149,963 7%(a)
====== =========
Reserves for annuity contracts in payout phase:
Tax qualified ............................. 247,310
-------------
$ 227,225,953
=============
</TABLE>
(a) This investment option was not being utilized for the entire period.
Accordingly, the annual return was computed for such period as the
investment option was utilized.
(b) The annual return does not include contract charges satisfied by
surrendering units.
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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, 1998,
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, 1998, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our 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, 1998, 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 LLP
Columbus, Ohio
February 5, 1999
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NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE
PLAZA o 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
