<PAGE> 1
As filed with the Securities and Exchange Commission.
'33 Act File No. 2-58043
'40 Act File No. 811-2716
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Post-Effective Amendment No. 36 [x]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 37 [x]
NATIONWIDE VARIABLE ACCOUNT
(Exact Name of Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
DENNIS W. CLICK, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216-6609
(Name and Address of Agent for Service)
This Post-Effective Amendment amends the Registration Statement in
respect of the Prospectus, Statement of Additional Information and Financial
Statements.
It is proposed that this filing will become effective (check appropriate
space)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
================================================================================
<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM CAPTION
<S> <C>
PART A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page.........................................................................Cover Page
Item 2. Definitions.........................................................Glossary of Special terms
Item 3. Synopsis or Highlights..............................................Synopsis of the Contracts
Item 4. Condensed Financial Information...............................Condensed Financial Information
Item 5. General Description of Registrant, Depositor, and Portfolio
Companies....................Nationwide Life Insurance Company; Investing in the Contract
Item 6. Deductions and Expenses.......................................Standard Charges and Deductions
Item 7. General Description of Variable
Annuity Contracts...........................Contract Ownership; Operation of the Contract
Item 8. Annuity Period.......................................................Annuitizing the Contract
Item 9. Death Benefit and Distributions................................................Death Benefits
Item 10. Purchases and Contract Value.......................................Operation of the Contract
Item 11. Redemptions...........................................................Surrender (Redemption)
Item 12. Taxes..............................................................Federal Tax Consideration
Item 13. Legal Proceedings..........................................................Legal Proceedings
Item 14. Table of Contents of the Statement of Additional
Information.................Table of Contents of the Statement of Additional Information
PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page........................................................................Cover Page
Item 16. Table of Contents..........................................................Table of Contents
Item 17. General Information and History..............................General Information and History
Item 18. Services............................................................................Services
Item 19. Purchase of Securities Being Offered....................Purchase of Securities Being Offered
Item 20. Underwriters....................................................................Underwriters
Item 21. Calculation of Performance Data...................................Calculation of Performance
Item 22. Annuity Payments............................................................Annuity Payments
Item 23. Financial Statements....................................................Financial Statements
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits....................................................Item 24
Item 25. Directors and Officers of the Depositor..............................................Item 25
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant..............................................................Item 26
Item 27. Number of Contract Owners............................................................Item 27
Item 28. Indemnification......................................................................Item 28
Item 29. Principal Underwriter................................................................Item 29
Item 30. Location of Accounts and Records.....................................................Item 30
Item 31. Management Services..................................................................Item 31
Item 32. Undertakings.........................................................................Item 32
</TABLE>
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY
Deferred Variable Annuity Contracts
Issued by Nationwide Life Insurance Company through its Nationwide Variable
Account
The date of this prospectus is May 1, 2000.
- --------------------------------------------------------------------------------
Variable annuities are complex investment products with unique benefits and
advantages that may be particularly useful to many investors in meeting
long-term savings and retirement needs. There are, however, costs and charges
associated with some of these unique benefits - costs and charges that do not
exist or are not present with other investment products. With help from
financial consultants or advisers, investors are encouraged to compare and
contrast the costs and benefits of the variable annuity described in this
prospectus with those of other investment products, including other variable
annuity or variable life insurance products offered by Nationwide Life Insurance
Company and its affiliates. This process will aid in determining whether the
purchase of the contract described in this prospectus is consistent with an
individual's goals, risk tolerance, time horizon, marital status, tax situation,
and other personal characteristics and needs.
THIS PROSPECTUS CONTAINS BASIC INFORMATION YOU SHOULD KNOW ABOUT THE CONTRACTS
BEFORE INVESTING. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE
REFERENCE.
- --------------------------------------------------------------------------------
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE AVAILABLE UNDER THE CONTRACTS:
FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993:
- American Century: Short Term Government (formerly American Century:
Benham Short-Term Government)
- American Century: Income & Growth
- American Century: Growth (formerly American Century: Twentieth Century
Growth)
- American Century: International Growth (formerly American Century:
Twentieth Century International Growth)
- American Century: Ultra (formerly American Century: Twentieth Century
Ultra)
- Delchester Fund-Institutional Class
- Dreyfus A Bonds Plus, Inc.
- Dreyfus Appreciation Fund, Inc.
- Dreyfus Balanced Fund, Inc.
- Dreyfus S & P 500 Index Fund
- Dreyfus Premier Third Century Fund, Inc. - Class Z (formerly, Dreyfus
Third Century Fund, Inc.)
- Evergreen Income and Growth Fund
- Federated Bond Fund - Class F
- Federated High Yield Trust*
- Fidelity Advisor Balanced Fund - Class T
- Fidelity Advisor Equity Income Fund - Class T
- Fidelity Advisor Growth Opportunities Fund - Class T
- Fidelity Advisor High Yield Fund - Class T*
- Fidelity Asset Manager(TM)
- Fidelity Equity-Income Fund
- Fidelity Magellan(R) Fund
- Fidelity Puritan Fund
- Fidelity VIP High Income Portfolio* (additional purchase payments or
exchanges may not be made to this Fund on or after December 1, 1993).
- Franklin Mutual Series Fund, Inc. - Mutual Shares Fund: Class A
- INVESCO Dynamics Fund
- Janus Fund
- Janus Twenty Fund
- Janus Worldwide Fund
- Lazard Small Cap Portfolio - Open Shares
- MFS(R)Global Governments Fund - Class A (formerly MFS(R)World Governments
Fund)
- Nationwide(R)Bond Fund - Class D
- Nationwide(R)Fund - Class D
- Nationwide(R)Growth Fund - Class D
- Nationwide(R)Money Market Fund - Prime Shares
1
<PAGE> 4
- Nationwide S&P 500(R)Index Fund - Service Class (sub-adviser: The Dreyfus
Corporation)
- Nationwide(R)Intermediate U.S. Government Bond Fund - Class D
- Neuberger Berman Guardian Fund, Inc.
- Neuberger Berman Limited Maturity Bond Fund
- Neuberger Berman Partners Fund, Inc.
- Oppenheimer Global Fund/VA
- Phoenix Balanced Fund Series
- Prestige Balanced Fund - Class A
- Prestige International Fund - Class A
- Prestige Large Cap Growth Fund - Class A
- Prestige Large Cap Value Fund - Class A
- Prestige Small Cap Fund - Class A
- Strong Common Stock Fund, Inc.
- Strong Total Return Fund, Inc.
- Templeton Foreign Fund - Class A
- Warburg Pincus Emerging Growth Fund
- Warburg Pincus Global Fixed Income Fund
*These securities may invest in lower quality debt securities commonly referred
to as junk bonds.
FOR PLANS ESTABLISHED PRIOR TO MARCH 6, 1998
- Neuberger Berman Equity Trust(R) - Neuberger Berman Genesis Trust
FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993
- American Century: Short Term Government (formerly American Century:
Benham Short-Term Government)
- American Century: Growth (formerly American Century: Twentieth Century
Growth)
- Fidelity Capital & Income Fund(1)
- Fidelity Equity - Income Fund
- Fidelity VIP High Income Portfolio(2)
- MFS(R)Global Governments Fund - Class A (formerly MFS(R)World Governments
Fund)
- Nationwide(R) Money Market Fund - Prime Shares
(1) Additional purchase payments or exchanges may not be made to this Fund on
or after May 1, 1991. Not available for contracts which were issued on or
after May 1, 1987.
(2) Additional purchase payments or exchanges may not be made to this Fund on
or after December 1, 1993.
Purchase payments not invested in the underlying mutual fund options of the
Nationwide Variable Account may be allocated to the fixed account.
The Statement of Additional Information (dated May 1, 2000) which contains
additional information about the contracts and the variable account, has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated
herein by reference. The table of contents for the Statement of Additional
Information is on page 48.
For general information or to obtain FREE copies of the:
- Statement of Additional Information;
- prospectus, annual report or semi-annual report for any underlying mutual
fund; and
- required Nationwide forms,
call: 1-800-848-6331
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE INSURANCE COMPANY
P.O. BOX 16609
COLUMBUS, OHIO 43216-6609
The Statement of Additional Information and other material incorporated by
reference can be found on the SEC website at:
www.sec.gov
THIS ANNUITY IS NOT:
- - A BANK DEPOSIT - FEDERALLY INSURED
- - ENDORSED BY A BANK - AVAILABLE IN
OR GOVERNMENT AGENCY EVERY STATE
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
2
<PAGE> 5
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
3
<PAGE> 6
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the contract
value allocated to the variable account before the annuitization date.
ANNUITIZATION DATE- The date on which annuity payments begin.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
begin. This date may be changed by the contract owner with Nationwide's consent.
ANNUITY UNIT- An accounting unit used to calculate the variable payment annuity
payments.
CONTRACT VALUE- The total of all accumulation units in a contract and any amount
held in the fixed account.
CONTRACT YEAR- Each year the contract is in force beginning with the date the
contract is issued.
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
FIXED ACCOUNT- An investment option that is funded by the general account of
Nationwide.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
INDIVIDUAL RETIREMENT ACCOUNT- An account that qualifies for favorable tax
treatment under Section 408(a) of the Internal Revenue Code, but does not
include Roth IRAs.
INDIVIDUAL RETIREMENT ANNUITY- An annuity contract that qualifies for favorable
tax treatment under Section 408(b) of the Internal Revenue Code, but does not
include Roth IRAs or Simple IRAs.
NATIONWIDE- Nationwide Life Insurance Company.
NON-QUALIFIED CONTRACT- A contract which does not qualify for favorable tax
treatment as a Qualified Plan, Individual Retirement Annuity, Roth IRA, SEP IRA,
Simple IRA, or Tax Sheltered Annuity.
QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
Section 401 or 403(a) of the Internal Revenue Code.
ROTH IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408A of the Internal Revenue Code.
SIMPLE IRA- An Individual Retirement Account as defined by Section 408(a) or an
Individual Retirement Annuity as defined by Section 408(b) of the Internal
Revenue Code to which the only contributions that can be made are contributions
under a SIMPLE Plan and rollovers or transfers from another SIMPLE IRA.
SIMPLE PLAN- The Savings Incentive Match Plan for Employees of Small Employers.
This plan is a written arrangement established under Section 408(p) of the
Internal Revenue Code which provides a simplified tax-favored retirement plan
for Small Employers. In a SIMPLE Plan, each employee may choose whether to have
the Small Employer make payments as contributions under the SIMPLE Plan or to
receive these payments directly in cash. A Small Employer that chooses to
establish a SIMPLE Plan must make either matching contributions or non-elective
contributions. All contributions under a SIMPLE Plan are made to SIMPLE IRAs.
SMALL EMPLOYER- An employer that had no more than 100 employees who earned
$5,000 or more in compensation during the preceding calendar year.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units and annuity units are
separately maintained.
TAX SHELTERED ANNUITY- An annuity that qualifies for favorable tax treatment
under Section 403(b) of the Internal Revenue Code.
TWO-YEAR PERIOD- The Two-Year Period begins on the first day in which
contributions made by a Small Employer are deposited into the individual
employee's SIMPLE IRA.
4
<PAGE> 7
VALUATION PERIOD- Each day the New York Stock Exchange is open for business.
VARIABLE ACCOUNT- Nationwide Variable Account, a separate account of Nationwide
that contains variable account allocations. The variable account is divided into
sub-accounts, each of which invests in shares of a separate underlying mutual
fund.
5
<PAGE> 8
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS..........................
SUMMARY OF STANDARD CONTRACT
EXPENSES (FOR CONTRACTS ISSUED ON OR AFTER
JANUARY 1, 1993) .............................
UNDERLYING MUTUAL FUND ANNUAL
EXPENSES (FOR CONTRACTS ISSUED ON OR AFTER
JANUARY 1, 1993) .............................
EXAMPLE (FOR CONTRACTS ISSUED ON OR AFTER
JANUARY 1, 1993) .............................
SUMMARY OF STANDARD CONTRACT
EXPENSES (FOR CONTRACTS ISSUED PRIOR TO
JANUARY 1, 1993) .............................
UNDERLYING MUTUAL FUND ANNUAL .....................
EXPENSES (FOR CONTRACTS ISSUED PRIOR TO
JANUARY 1, 1993) .............................
EXAMPLE (FOR CONTRACTS ISSUED PRIOR TO
JANUARY 1, 1993) .............................
SYNOPSIS OF THE CONTRACTS..........................
FINANCIAL STATEMENTS...............................
CONDENSED FINANCIAL INFORMATION....................
NATIONWIDE LIFE INSURANCE COMPANY..................
NATIONWIDE INVESTMENT SERVICES
CORPORATION...................................
TYPES OF CONTRACTS.................................
Individual Retirement Accounts
Simplified Employee Pension IRAs
SIMPLE IRAs
Roth IRAs
Qualified Contracts
INVESTING IN THE CONTRACT..........................
The Variable Account and Underlying Mutual Funds
The Fixed Account
CHARGES AND DEDUCTIONS.............................
Mortality and Expense Risk Charge
Contingent Deferred Sales Charge
Elimination of CDSC
Contract Maintenance Charge
Administration Charge
Premium Taxes
CONTRACT OWNERSHIP.................................
Annuitant
Beneficiary and Contingent Beneficiary
OPERATION OF THE CONTRACT..........................
Pricing
Allocation of Purchase Payments
Determining the Contract Value
Transfers Prior to Annuitization
Transfers Among Sub-Accounts
Transfers After Annuitization
Transfer Requests
RIGHT TO REVOKE....................................
SURRENDER (REDEMPTION).............................
Surrenders Under a Qualified Plan
LOAN PRIVILEGE.....................................
Minimum and Maximum Loan Amounts
Loan Processing Fee
How Loan Requests are Processed
Interest
Loan Repayment
Distributions and Annuity Payments
Transferring the Contract
Grace Period and Loan Default
CONTRACT OWNER SERVICES............................
Asset Rebalancing
Dollar Cost Averaging
Systematic Withdrawals
ANNUITY COMMENCEMENT DATE..........................
ANNUITIZING THE CONTRACT...........................
Annuitization Date
Annuitization
Fixed Payment Annuity
Variable Payment Annuity
Assumed Investment Rate
Value of an Annuity Unit
Exchanges Among Underlying Mutual Funds
6
<PAGE> 9
Frequency and Amount of Annuity Payments
Annuity Payment Options
DEATH BENEFITS.....................................
Death of Contract Owner
Death of Annuitant
Death of Contract Owner/Annuitant
How the Death Benefit Value is Determined
Death Benefit Payment
REQUIRED DISTRIBUTIONS.............................
Required Distributions for Qualified Plans
Required Distributions for Individual Retirement Accounts
Required Distributions for Roth IRAs
FEDERAL TAX CONSIDERATIONS.........................
Federal Income Taxes
Withholding
Non-Resident Aliens
Federal Estate, Gift, and Generation Skipping Transfer Taxes
Charge for Tax
Diversification
Tax Changes
STATEMENTS AND REPORTS.............................
LEGAL PROCEEDINGS..................................
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY....
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS.
APPENDIX B: CONDENSED FINANCIAL INFORMATION........
7
<PAGE> 10
SUMMARY OF CONTRACT EXPENSES
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
The expenses listed below are charged to all contracts issued on or after
January 1, 1993, unless the contract owner meets an available exception.
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of
purchase payments surrendered)..................7%(1)
Range of CDSC over time:
NUMBER OF COMPLETED YEARS FROM CDSC
DATE OF PURCHASE PAYMENT PERCENTAGE
- --------------------------------------------------------
0 7%
- --------------------------------------------------------
1 6%
- --------------------------------------------------------
2 5%
- --------------------------------------------------------
3 4%
- --------------------------------------------------------
4 3%
- --------------------------------------------------------
5 2%
- --------------------------------------------------------
6 1%
- --------------------------------------------------------
7 0%
- --------------------------------------------------------
(1) Starting with the second year after a purchase payment has been made, 10%
of that purchase payment may be withdrawn without imposition of a CDSC.
The CDSC is waived:
(a) for first year withdrawals of up to 10% of purchase payments for
Individual Retirement Account rollover contracts; or
(b) for any amount withdrawn from this contract required to meet minimum
distribution requirements under the Internal Revenue Code.
This free withdrawal privilege is non-cumulative. Free amounts not taken during
any given contract year cannot be taken as free amounts in a subsequent contract
year (see "Contingent Deferred Sales Charge").
Withdrawals may be restricted for contracts issued pursuant to the terms of a
Qualified Plan.
MAXIMUM ANNUAL CONTRACT
MAINTENANCE CHARGE.............................$30(2)
VARIABLE ACCOUNT CHARGES(3)
(as a percentage of average account value)
Mortality and Expense Risk Charge.............1.25%
Administration Charge.........................0.05%
Total Variable Account Charges...........1.30%
(2) The Contract Maintenance Charge is deducted annually from all contracts on
each contract anniversary.
(3) These charges apply only to sub-account allocations. They do not apply to
allocations made to the fixed account. They are charged on a daily basis
at the annual rate noted above.
8
<PAGE> 11
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Management Fees Other Expenses 12b-1 Total Mutual
Fees Fund Expenses
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Short Term Government (formerly Benham 0.59% 0.00% 0.00% 0.59%
Short-Term Government)
- ----------------------------------------------------------------------------------------------------------------------
American Century: Income & Growth 0.68% 0.00% 0 00% 0.68%
- ----------------------------------------------------------------------------------------------------------------------
American Century: Growth (formerly Twentieth Century Growth) 1.00% 0.00% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------------
American Century: International Growth (formerly Twentieth 1.27% 0.00% 0.00% 1.27%
Century International Growth)
- ----------------------------------------------------------------------------------------------------------------------
American Century: Ultra (formerly Twentieth Century Ultra) 1.00% 0.00% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------------
Delchester Fund-Institutional Class 0.65% 0.05% 0.00% 0.70%
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. 0.65% 0.31% 0.00% 0.96%
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 0.28% 0.36% 0.25% 0.89%
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, Inc. 0.60% 0.15% 0.22% 0.97%
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus S & P 500 Index Fund (formerly Peoples Index Fund(R), 0.25% 0.25% 0.00% 0.50%
Inc.)
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third Century Fund, Inc. - Class Z 0.75% 0.22% 0.00% 0.97%
(formerly Dreyfus Third Century Fund, Inc.)
- ----------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 0.97% 0.28% 0.00% 1.25%
- ----------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 0.65% 0.45% 0.00% 1.09%
- ----------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 0.54% 0.34% 0.00% 0.88%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced Fund - Class T 0.43% 0.23% 0.50% 1.14%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Equity Income Fund - Class T 0.48% 0.23% 0.50% 1.18%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund - Class T 0.43% 0.19% 0.50% 1.11%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - Class T 0.58% 0.21% 0.25% 1.04%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager 0.53% 0.22% 0.00% 0.75%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 0.47% 0.20% 0.00% 0.67%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 0.43% 0.19% 0.00% 0.62%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 0.44% 0.20% 0.00% 0.64%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 0.58% 0.11% 0.00% 0.69%
- ----------------------------------------------------------------------------------------------------------------------
Franklin Mutual Series Fund Inc. - Mutual Shares Fund: 0.56% 0.21% 0.35% 1.12%
Class A
- ----------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 0.52% 0.27% 0.25% 1.04%
- ----------------------------------------------------------------------------------------------------------------------
Janus Fund 0.65% 0.20% 0.00% 0.85%
- ----------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 0.65% 0.23% 0.00% 0.88%
- ----------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 0.65% 0.24% 0.00% 0.89%
- ----------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio - Open Shares 0.75% 0.09% 0.25% 1.09%
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Global Governments Fund - Class A (formerly MFS(R) World 0.75% 0.00% 0.23% 1.98%
Governments Fund)
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R)Bond Fund - Class D 0.50% 0.33% 0.00% 0.83%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D 0.56% 0.17% 0.00% 0.73%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund - Class D 0.58% 0.22% 0.00% 0.80%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market - Prime Shares 0.40% 0.21% 0.00% 0.61%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R)Intermediate U.S. Government Bond Fund - Class D 0.50% 0.29% 0.00% 0.79%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index Fund - Service Class 0.13% 0.35% 0.15% 0.63%
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity Trust(R)- Neuberger Berman Genesis 1.12% 0.11% 0.00% 1.23%
Trust
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, Inc. 0.70% 0.12% 0.00% 0.82%
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited Maturity Bond Fund 0.52% 0.18% 0.00% 0.70%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Neuberger Berman Partners Fund, Inc. 0.71% 0.11% 0.00% 0.82%
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund/VA: Class A 0.69% 0.26% 0.21% 1.16%
- ----------------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund Series 0.53% 0.19% 0.25% 0.97%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Class A 0.75% 0.10% 0.25% 1.10%
- ----------------------------------------------------------------------------------------------------------------------
Prestige International Fund - Class A 0.85% 0.20% 0.25% 1.30%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Class A 0.80% 0.15% 0.25% 1.20%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Class A 0.75% 0.15% 0.25% 1.15%
- ----------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Class A 0.95% 0.15% 0.25% 1.35%
- ----------------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund 1.00% 0.17% 0.00% 1.17%
- ----------------------------------------------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 0.80% 0.14% 0.00% 0.94%
- ----------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund- Class A 0.46% 0.23% 0.25% 0.94%
- ----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund 0.90% 0.33% 0.00% 1.23%
- ----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed Income Fund 0.43% 0.52% 0.00% 0.95%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Delchester Fund - Institutional Class 0.65% 0.49% 0.00% 1.14%
- --------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 0.75% 0.47% 0.00% 1.22%
- --------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 0.75% 0.40% 0.00% 1.15%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Equity Income Fund - Class T 0.43% 0.23% 0.50% 1.16%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities - Class T 0.46% 0.43% 0.25% 1.14%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager 0.42% 0.18% 0.00% 0.60%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Magellan 0.42% 0.18% 0.00% 0.60%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Puritan 0.44% 0.21% 0.00% 0.65%
- --------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index Fund - Service Class 0.13% 0.66% 0.24% 1.03%
- --------------------------------------------------------------------------------------------------------------------
Nationwide Intermediate U.S. Government Bond Fund - 0.50% 0.78% 0.00% 0.78%
Class D
- --------------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited Maturity Bond Fund 0.54% 0.18% 0.00% 0.72%
- --------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Class A 0.75% 2.44% 0.25% 3.44%
- --------------------------------------------------------------------------------------------------------------------
Prestige International Fund - Class A 0.85% 1.77% 0.25% 2.87%
- --------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Inc. - Class A 0.80% 0.64% 0.25% 1.69%
- --------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Class A 0.75% 0.87% 0.25% 1.87%
- --------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Class A 0.95% 1.04% 0.25% 2.24%
- --------------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed Income Fund 1.00% 0.53% 0.00% 1.53%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
EXAMPLE
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
The following chart shows the expenses (in dollars) that would be incurred under
this contract assuming a $1,000 investment, 5% annual return, and no change in
expenses. These dollar figures are illustrative only and should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown below.
The example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the standard 7 year CDSC schedule and the
maximum amount of variable account charges that could be assessed to a contract
(1.30%). The contract maintenance charge is expressed as a percentage of the
average contract account size for existing contracts. Since the average contract
account size is greater than $1,000, the expense effect of the contract
maintenance charge is reduced accordingly. Deductions for premium taxes are not
reflected but may apply.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
YR. YRS. YRS. YRS. YR. YRS. YRS. YRS. YR. YRS. YRS. YRS.
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Century: Short Term 91 109 137 237 21 64 110 237 * 64 110 237
Government (formerly Benham
Short-Term Government)
- ---------------------------------------------------------------------------------------------------------------------
American Century: Income & 92 112 142 247 22 67 115 247 * 67 115 247
Growth
- ---------------------------------------------------------------------------------------------------------------------
American Century: Growth 95 122 159 281 25 77 132 281 * 77 132 281
(formerly Twentieth Century
Growth)
- ---------------------------------------------------------------------------------------------------------------------
American Century: International 98 131 173 309 28 86 146 309 * 86 146 309
Growth (formerly Twentieth
Century International Growth)
- ---------------------------------------------------------------------------------------------------------------------
American Century: Ultra 95 122 159 281 25 77 132 281 * 77 132 281
(formerly Twentieth Century
Ultra)
- ---------------------------------------------------------------------------------------------------------------------
Delchester Fund-Inst'l 92 113 143 249 22 68 116 249 * 68 116 249
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus 95 121 156 276 25 76 129 276 * 76 129 276
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 94 119 153 270 24 74 126 270 * 74 126 270
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, Inc. 94 120 155 273 24 75 128 273 * 75 128 273
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus S & P 500 Index Fund 90 106 132 228 20 61 105 228 * 61 105 228
(Formerly Peoples Index Fund,
Inc.)
- ---------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third Century 95 121 157 278 25 76 130 278 * 76 130 278
Fund, Inc. - Class Z (formerly,
Dreyfus Third Century Fund, Inc.
- ---------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 98 130 172 307 28 85 145 307 * 85 145 307
- ---------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 96 125 164 290 26 80 137 290 * 80 137 290
- ---------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 94 118 153 268 24 73 126 268 * 73 126 268
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced Fund 97 129 170 304 27 84 143 304 * 84 143 304
- - Class T
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Fund Equity 98 130 172 307 28 85 145 307 * 85 145 307
Income Fund -
Class T
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
EXAMPLE (CONTINUED)
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
YR. YRS. YRS. YRS. YR. YRS. YRS. YRS. YR. YRS. YRS. YRS.
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Advisor Fund Growth 94 120 155 274 24 75 128 274 * 75 128 274
Opportunities Fund - Class T
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield 96 124 163 288 26 79 136 288 * 79 136 288
Fund - Class T
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 91 109 137 237 21 64 110 237 * 64 110 237
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 92 112 141 246 22 67 114 246 * 67 114 246
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Magellan Fund 91 109 137 237 21 64 110 237 * 64 110 237
- ---------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 91 110 139 242 21 65 112 242 * 65 112 242
- ---------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income 92 112 143 248 22 67 116 248 * 67 116 248
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Franklin Mutual Series Fund 96 125 164 291 26 80 137 291 * 80 137 291
Inc.- Mutual Shares Fund: Class
A
- ---------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 96 125 163 289 26 80 136 289 * 80 136 289
- ---------------------------------------------------------------------------------------------------------------------
Janus Fund 93 117 150 264 23 72 123 264 * 72 123 264
- ---------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 94 118 152 266 24 73 125 266 * 73 125 266
- ---------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 94 119 153 270 24 74 126 270 * 74 126 270
- ---------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio - 96 125 164 290 26 80 137 290 80 137 290
Open Shares
- ---------------------------------------------------------------------------------------------------------------------
MFS(R)Global Governments Fund - 99 133 177 317 29 88 150 317 * 88 150 317
Class A (formerly MFS(R) World
Governments Fund)
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - Class D 93 116 148 260 23 71 121 260 * 71 121 260
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - Class D 92 112 143 248 22 67 116 248 * 67 116 248
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund - Class 93 115 147 257 23 70 120 257 * 70 120 257
D
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund - 91 109 137 236 21 64 110 236 * 64 110 236
Prime Shares
- ---------------------------------------------------------------------------------------------------------------------
Nationwide(R) Intermediate U.S. 93 115 147 257 23 70 120 257 * 70 120 257
Government Bond Fund - Class D
- ---------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index Fund 91 110 138 239 21 65 111 239 * 65 111 239
- - Service Class
- ---------------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity Trust(R) 98 129 171 305 28 84 144 305 * 84 144 305
- - Neuberger Berman Genesis Trust
- ---------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, 93 116 149 262 23 71 122 262 * 71 122 262
Inc.
- ---------------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited 92 113 143 249 22 68 116 249 * 68 116 249
Maturity Bond Fund
- ---------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Fund, 93 116 149 262 23 71 122 262 * 71 122 262
Inc.
- ---------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund/VA 97 127 166 295 27 82 139 295 * 82 139 295
- ---------------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund Series 95 121 157 278 25 76 130 278 * 16 130 278
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
EXAMPLE (CONTINUED)
(FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
YR. YRS. YRS. YRS. YR. YRS. YRS. YRS. YR. YRS. YRS. YRS.
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Prestige Balanced Fund - Class A 96 125 164 291 26 80 137 291 * 80 137 291
- ---------------------------------------------------------------------------------------------------------------------
Prestige International Fund - 98 132 175 312 28 87 148 312 * 87 148 312
Class A
- ---------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund 97 128 169 302 27 83 142 302 * 83 142 302
- - Class A
- ---------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - 97 127 167 297 27 82 140 297 * 82 140 297
Class A
- ---------------------------------------------------------------------------------------------------------------------
Prestige Small Cap - Fund 99 133 177 317 29 88 150 317 * 88 150 317
Class A
- ---------------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund 97 128 168 299 27 83 141 299 * 83 141 299
- ---------------------------------------------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 94 120 156 275 24 75 129 275 * 75 129 275
- ---------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 96 126 165 293 26 81 138 293 * 81 138 293
- ---------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth 97 129 170 304 27 84 143 304 * 84 143 304
Fund
- ---------------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed 95 121 156 276 25 76 129 276 * 76 129 276
Income Fund
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*The contracts sold under this prospectus do not permit annuitization during the
first two contract years.
13
<PAGE> 16
SUMMARY OF CONTRACT EXPENSES
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
The expenses listed below are charged to all contracts issued prior to January
1, 1993, unless the contract owner meets an available exception.
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of
purchase payments surrendered)..................5%(1)
(1) After the first year from the date of any purchase payment, the contract
owner may withdraw 5% of that purchase payment without imposition of a
CDSC.
MAXIMUM ANNUAL CONTRACT MAINTENANCE CHARGE.....$30(2)
VARIABLE ACCOUNT CHARGES(3)
(as a percentage of average account value)
Mortality and Expense Risk Charges............1.30%
Total Variable Account Charges...........1.30%
(2) The contract maintenance charge is deducted annually from all contracts on
each contract anniversary.
(3) These charges apply only to sub-account allocations. They do not apply to
allocations made to the fixed account. They are charged on a daily basis
at the annual rate noted above.
14
<PAGE> 17
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Total Mutual
Management Other Fund
Fees Expenses 12b-1 Fees Expenses
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Short Term Government (formerly 0.59% 0.00% 0.00% 0.59%
Benham Short-Term Government)
- ----------------------------------------------------------------------------------------------------------------------
American Century: Growth (formerly Twentieth Century 1.00% 0.00% 0.00% 1.00%
Growth)
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 0.58% 0.24% 0.00% 0.82%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 0.58% 0.11% 0.00% 0.69%
- ----------------------------------------------------------------------------------------------------------------------
MFS(R) Global Governments Fund - Class A (formerly, 0.75% 0.00% 0.23% 0.98%
MFS(R) World Governments Fund)
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - Class D 0.50% 0.33% 0.00% 0.83%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - Class D 0.56% 0.17% 0.00% 0.73%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund - Class D 0.58% 0.22% 0.00% 0.80%
- ----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market - Prime Shares 0.40% 0.21% 0.00% 0.61%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
15
<PAGE> 18
EXAMPLE
(FOR CONTRACTS ISSUED PRIOR TO JANUARY 1, 1993)
The following chart shows the expenses (in dollars) that would be incurred under
this contract assuming a $1,000 investment, 5% annual return, and no change in
expenses. These dollar figures are illustrative only and should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown below.
The example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the standard 7 year CDSC schedule and the
maximum amount of variable account charges that could be assessed to a contract
(1.30%). The contract maintenance charge is expressed as a percentage of the
average contract account size for existing contracts. Since the average contract
account size is greater than $1,000, the expense effect of the contract
maintenance charge is reduced accordingly. Deductions for premium taxes are not
reflected but may apply.
The summary of contract expenses and example are to help contract owners
understand the expenses associated with the contract.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER IF YOU ANNUITIZE YOUR
CONTRACT AT THE END OF THE YOUR CONTRACT AT THE END OF CONTRACT AT THE END OF THE
APPLICABLE TIME PERIOD THE APPLICABLE TIME PERIOD APPLICABLE TIME PERIOD
- ---------------------------------------------------------------------------------------------------------------
1 3 5 10 1 3 5 10 1 3 5 10
YR. YRS. YRS. YRS. YR. YRS. YRS. YRS. YR. YRS. YRS. YRS.
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Century: 75 125 179 281 25 77 132 281 * 77 132 281
Growth (formerly
Twentieth Century
Growth)
- ---------------------------------------------------------------------------------------------------------------
American Century: 71 112 158 237 21 64 110 237 * 64 110 237
Short Term Government
(formerly Benham
Short-Term Government)
- ---------------------------------------------------------------------------------------------------------------
Fidelity Capital & 71 111 157 236 21 64 110 236 * 64 110 236
Income Fund
- ---------------------------------------------------------------------------------------------------------------
Fidelity VIP High 71 111 157 236 21 64 110 236 * 64 110 236
Income Portfolio
- ---------------------------------------------------------------------------------------------------------------
MFS(R) Global 72 117 166 255 22 69 119 255 * 69 119 255
Governments Fund -
Class A (formerly,
MFS(R) World Government
Fund)
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Money 69 106 148 217 19 58 100 217 * 58 100 217
Market Fund - Prime
Shares
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund 70 109 153 228 20 61 105 228 * 61 105 228
- - Class D
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - 70 111 156 234 20 63 109 234 * 63 109 234
Class D
- ---------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth 71 111 157 236 21 64 110 236 * 64 110 236
Fund - Class D
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
*The contracts sold under this prospectus do not permit annuitization during the
first two contract years.
16
<PAGE> 19
SYNOPSIS OF THE CONTRACTS
The contracts described in this prospectus are deferred variable annuity
contracts. Contracts issued prior to January 1, 1993 were issued to the trustees
of Qualified Plans as Qualified Contracts. Currently (and at all times after
January 1, 1993), the contracts are issued to custodians of Individual
Retirement Accounts for the benefit of Individual Retirement Account holders.
Contracts issued after January 1, 1993 do not qualify for tax-deferral under
federal tax rules governing Non-Qualified Annuities or Individual Retirement
Annuities. Such contracts are, however, issued to custodians of Individual
Retirement Accounts for the benefit of Individual Retirement Account holders.
Such account holders will be the annuitant under these contracts. Annuity
payments under the contracts are deferred until a selected later date.
For more detailed information with regard to the differences in contract types,
please see "Types of Contracts" later in the prospectus.
CHARGES AND EXPENSES
Nationwide deducts a mortality risk charge equal to an annual rate of 0.80% of
the daily net assets of the variable account for mortality risk assumed by
Nationwide (see "Mortality Risk Charge").
Nationwide deducts an expense risk charge equal to an annual rate of 0.45%
(0.50% for contracts issued prior to January 1, 1993) of the daily net assets of
the variable account as compensation for Nationwide's risk in undertaking not to
increase administrative charges on the contracts regardless of the actual
administrative costs (see "Expense Risk Charge").
Nationwide does not deduct a sales charge from purchase payments made for these
contracts. However, if any part of the contract value is surrendered, Nationwide
will, with certain exceptions, deduct a CDSC not to exceed 7% of purchase
payments surrendered. For contracts issued before January 1, 1993, Nationwide
will deduct a CDSC not to exceed 5% of purchase payments surrendered. This
charge, when applicable, is imposed to permit Nationwide to recover sales
expenses which have been advanced by Nationwide (see "Contingent Deferred Sales
Charge").
On each contract anniversary, Nationwide will deduct a contract maintenance
charge of $30 from the contract value.
For contracts issued on or after January 1, 1993, Nationwide will assess an
administration charge equal to an annual rate of 0.05% of the daily net assets
of the variable account.
These charges are to reimburse Nationwide for administrative expenses related to
the issuance and maintenance of the contracts (see "Contract Maintenance Charge"
and "Administration Charge").
ANNUITY PAYMENTS
Annuity payments begin on the annuitization date. The payments will be based on
the annuity payment option chosen at the time of application (see "Annuity
Payment Options").
TAXATION
How the contracts are taxed depends on the type of contract issued and the
purpose for which the contract is purchased. Nationwide will charge against the
contract any premium taxes levied by any governmental authority (see "Federal
Tax Considerations" and "Premium Taxes").
TEN DAY FREE LOOK
Contract owners may return the contract for any reason within ten days of
receipt and Nationwide will refund the contract value or the amount required by
law (see "Right to Revoke").
FINANCIAL STATEMENTS
Financial statements for the variable account and Nationwide are located in the
Statement of Additional Information. A current Statement of Additional
Information may be obtained without charge by contacting Nationwide's home
office at the telephone number listed on page 2 of this prospectus.
17
<PAGE> 20
CONDENSED FINANCIAL INFORMATION
The value of an accumulation unit is determined on the basis of changes in the
per share value of the underlying mutual funds and the assessment of a variable
account charge which may vary from contract to contract (for more information on
the calculation of accumulation unit values, see "Determining Variable Account
Value - Valuing an Accumulation Unit"). Please refer to Appendix B for
information regarding each class of accumulation units.
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in March,
1929, with its home office at One Nationwide Plaza, Columbus, Ohio 43215.
Nationwide is a provider of life insurance, annuities and retirement products.
It is admitted to do business in all states, the District of Columbia and Puerto
Rico.
NATIONWIDE INVESTMENT SERVICES CORPORATION
The contracts are distributed by the general distributor, Nationwide Investment
Services Corporation. ("NISC"), Three Nationwide Plaza, Columbus, Ohio 43215.
(For contracts issued in the State of Michigan, all references to NISC shall
mean Nationwide Investment Svcs. Corporation.) NISC is a wholly owned subsidiary
of Nationwide.
TYPES OF CONTRACTS
The following is a general description of the types of annuity contracts, and is
intended to provide only general information of the various types of contracts;
it is not intended to be comprehensive. The eligibility requirements, tax
benefits, limitations, and other features of these contracts differ one from the
other.
Individual Retirement Accounts (IRAs)
Individual Retirement Accounts are contracts that are issued by insurance
companies and satisfy the following requirements:
- - the contract is not transferable by the owner;
- - the premiums are not fixed;
- - the annual premium cannot exceed $2,000 (although rollovers of greater
amounts from qualified plans, tax-sheltered annuities and other IRAs can be
received);
- - certain minimum distribution requirements must be satisfied after the owner
attains the age of 70 1/2;
- - the entire interest of the owner in the contract is nonforfeitable; and
- - after the death of the owner, additional distribution requirements may be
imposed to ensure distribution of the entire balance in the contract within
the statutory period of time.
Depending on the circumstance of the owner, all or a portion of the
contributions made to the account may be deducted for federal income tax
purposes.
Failure to make the mandatory distributions can result in an additional penalty
tax of 50% of the excess of the amount required to be distributed over the
amount that was actually distributed.
IRAs may receive rollover contribution from other IRAs, from Tax Sheltered
Annuities, and from qualified retirement plans, including 401(k) plans.
For further details regarding IRAs, please refer to the disclosure statement
provided when the IRA was established.
18
<PAGE> 21
Simplified Employee Pension IRAs (SEP IRAs)
A SEP IRA is a written plan established by an employer for the benefit of
employees, which permits the employer to make contributions to an IRA
established for the benefit of each employee.
An employee may make deductible contributions to a SEP IRA in the same way, and
with the same restrictions and limitations, as for a IRA. In addition, the
employer may make contributions to the SEP IRA, subject to dollar and percentage
limitations imposed by both the Internal Revenue Code and the written plan.
A SEP IRA plan must satisfy the following requirements:
- - minimum participation rules;
- - top-heavy contribution rules;
- - nondiscriminatory allocation rules; and
- - requirements regarding a written allocation formula.
In addition, the plan cannot restrict withdrawals of non-elective contributions,
and must restrict withdrawals of elective contributions before March 15th of the
following year.
SIMPLE IRAs
A SIMPLE IRA is an individual retirement annuity which is funded exclusively by
a qualified salary reduction arrangement and satisfies the following:
- - vesting requirements,
- - participation requirements; and
- - administrative requirements.
The funds contributed to a SIMPLE IRA cannot be commingled with funds in IRAs or
SEP IRAs.
A SIMPLE IRA cannot receive rollover distributions except from another SIMPLE
IRA.
Roth IRAs
Roth IRA contracts are contracts that are issued by insurance companies and
satisfy the following requirements:
- - the contract is not transferable by the owner;
- - the premiums are not fixed;
- - the annual premium cannot exceed $2,000 (although rollovers of greater
amounts from other Roth IRAs and IRAs can be received);
- - the entire interest of the owner in the contract is nonforfeitable; and
- - after the death of the owner, certain distribution requirements may be
imposed to ensure distribution of the entire balance in the contract within
the statutory period of time.
A Roth IRA can receive a rollover from an IRA; however, the amount rolled over
from the IRA to the Roth IRA is required to be included in the owner's federal
gross income at the time of the rollover, and will be subject to federal income
tax.
There are income limitations on eligibility to participate in a Roth IRA and
additional income limitations for eligibility to roll over amounts from an IRA
to a Roth IRA. For further details regarding Roth IRAs, please refer to the
disclosure statement provided when the Roth IRA was established.
19
<PAGE> 22
INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
Nationwide Variable Account is a variable account that invests in the underlying
mutual funds listed in Appendix A. Nationwide established the variable account
on March 3, 1976, pursuant to Ohio law. Although the variable account is
registered with the SEC as a unit investment trust pursuant to the Investment
Company Act of 1940 ("1940 Act"), the SEC does not supervise the management of
Nationwide or the variable account.
Income, gains, and losses credited to, or charged against, the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's assets and are not chargeable with liabilities
incurred in any other business of Nationwide. Nationwide is obligated to pay all
amounts promised to contract owners under the contracts.
The variable account is divided into sub-accounts, each corresponding to a
single underlying mutual fund. Nationwide uses the assets of each sub-account to
buy shares of the underlying mutual funds based on contract owner instructions.
The sub-account contains shares attributable to accumulation units under
Individual Retirement Accounts, Roth IRAs, SEP IRAs, Tax Sheltered Annuities,
and Qualified contracts.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Underlying mutual funds in the variable account are NOT publicly traded mutual
funds. They are only available as investment options in variable life insurance
policies or variable annuity contracts issued by life insurance companies, or in
some cases, through participation in certain qualified pension or retirement
plans.
The investment advisers of the underlying mutual funds may manage publicly
traded mutual funds with similar names and investment objectives. However, the
underlying mutual funds are NOT directly related to any publicly traded mutual
fund. Contract owners should not compare the performance of a publicly traded
fund with the performance of underlying mutual funds participating in the
variable account. The performance of the underlying mutual funds could differ
substantially from that of any publicly traded funds.
Voting Rights
Contract owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote contract owner shares at
special shareholder meetings based on contract owner instructions. However, if
the law changes and Nationwide is allowed to vote in its own right, it may elect
to do so.
Contract owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholders' vote as soon as possible before
the shareholder meeting. Notification will contain proxy materials and a form
with which to give Nationwide voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a contract owner may vote is determined by dividing
the cash value of the amount they have allocated to an underlying mutual fund by
the net asset value of that underlying mutual fund. Nationwide will designate a
date for this determination not more than 90 days before the shareholder
meeting.
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the
20
<PAGE> 23
interests of the variable account and one or more of the other separate accounts
in which these underlying mutual funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the underlying mutual fund(s)
involved in the conflict.
For contracts issued after January 1, 1993, the underlying mutual fund options
offered are also available to the general public. (Based on Nationwide's
marketing plan for the contracts, Nationwide does not anticipate any
disadvantages to this.) There is, however, a possibility that a material
conflict may arise between those with interests in the contracts, the variable
account and the various individuals and entities holding shares of the funds. A
conflict may occur due to a number of reasons, including a change in law
affecting the operations of variable annuity separate accounts or differences in
the voting instructions of the owners and others maintaining a voting interest
in the underlying mutual funds. In the event of conflict, Nationwide will take
any steps necessary to protect those with interests in the contracts.
Substitution of Securities
Nationwide may substitute, eliminate, or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occurs:
1) shares of a current underlying mutual fund are no longer available for
investment; or
2) further investment in an underlying mutual fund is inappropriate.
No substitution, elimination, or combination of shares may take place without
the prior approval of the SEC.
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks. The general account is not subject
to the same laws as the variable account and the SEC has not reviewed material
in this prospectus relating to the fixed account. However, information relating
to the fixed account is subject to federal securities laws relating to accuracy
and completeness of prospectus disclosure.
Purchase payments will be allocated to the fixed account by election of the
contract owner.
The investment income earned by the fixed account will be allocated to the
contracts at varying guaranteed interest rate(s) depending on the following
categories of fixed account allocations:
- - New Money Rate - The rate credited on the fixed account allocation when the
contract is purchased or when subsequent purchase payments are made.
Subsequent purchase payments may receive different New Money Rates than the
rate when the contract was issued, since the New Money Rate is subject to
change based on market conditions.
- - Variable Account to Fixed Rate - Allocations transferred from any of the
underlying investment options in the variable account to the fixed account
may receive a different rate. The rate may be lower than the New Money
Rate. There may be limits on the amount and frequency of movements from the
variable account to the fixed account.
- - Renewal Rate - The rate available for maturing fixed account allocations
which are entering a new guarantee period. The contract owner will be
notified of this rate in a letter issued with the quarterly statements when
any of the money in the contract owner's fixed account matures. At that
time, the contract owner will have an
21
<PAGE> 24
opportunity to leave the money in the fixed account and receive the
Renewal Rate or the contract owner can move the money to any of the
other underlying mutual fund options.
- - Dollar Cost Averaging Rate - From time to time, Nationwide may offer a more
favorable rate for an initial purchase payment into a new contract when
used in conjunction with a dollar cost averaging program.
All of these rates are subject to change on a daily basis; however, once applied
to the fixed account, the interest rates are guaranteed until the end of the
calendar quarter during the12 month anniversary in which the fixed account
allocation occurs.
Credited interest rates are annualized rates - the effective yield of interest
over a one-year period. Interest is credited to each contract on a daily basis.
As a result, the credited interest rate is compounded daily to achieve the
stated effective yield.
Any interest in excess of 3.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The contract owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of
3.0% for any given year.
Nationwide guarantees that the fixed account contract value will not be less
than the amount of the purchase payments allocated to the fixed account, plus
interest credited as described above, less any applicable charges including
CDSC.
CHARGES AND DEDUCTIONS
MORTALITY AND EXPENSE RISK CHARGE
Nationwide deducts a mortality and expense risk charge from the variable
account.
The amount is computed on a daily basis, and is equal to an annual rate of 1.25%
(1.30% for contracts issued prior to January 1, 1993) of the daily net assets of
the variable account.
The mortality risk charge is equal to an annual rate of 0.80% of the daily net
assets of the variable account. By guaranteeing the contract's annuity rate,
Nationwide assumes the mortality risk. These guarantees cannot change regardless
of the death rates of persons receiving annuity payments or of the general
population. Nationwide expects to generate a profit from this charge.
The expense risk charge is equal to an annual rate of 0.45% (0.50% for contracts
issued prior to January 1, 1993) of the daily net assets of the variable
account. By guaranteeing the contract's annuity rate, Nationwide assumes the
expense risk. These guarantees cannot change regardless of its annual expenses.
Nationwide expects to generate profit from this charge. If the mortality and
expense charge is insufficient to cover actual expenses, the loss is borne by
Nationwide.
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
No deduction for a sales charge is made from the purchase payments for this
contract. However, if any part of the contract value of such contracts is
surrendered, Nationwide will, with certain exceptions, deduct a CDSC (see
"Elimination of CDSC"). The CDSC will not exceed the lesser of 7% of purchase
payments surrendered.
The CDSC, when it is applicable, will be used to cover expenses relating to the
sale of the contract, including commissions paid to sales personnel, the costs
of preparation of sales literature and other promotional activity. Nationwide
attempts to recover its distribution costs relating to the sale of the contract
from the CDSC. Any shortfall will be made up from the general account of
Nationwide, which may indirectly include portions of the mortality risk charge
and expense risk charge since Nationwide expects to generate a profit through
these charges. Gross distribution allowances which may be paid on the sale of
these contracts are not more than 5.25% of the purchase payments.
If part or all of the contract value is surrendered, a CDSC will be deducted by
Nationwide. For purposes of the CDSC, surrenders under a contract come first
from the purchase payments which have been on deposit under the contract for the
longest time period. (For tax purposes, a surrender is usually treated as a
withdrawal of earnings first.)
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For contracts issued on or after January 1, 1993, the CDSC will apply in the
amounts set forth below. In no event will any CDSC be made against any values
which have been held under the contract for at least 7 years, or to commencement
of an annuity payout under contracts which have been in effect for at least two
years or upon the death of the annuitant.
- -------------------------------------------------------
NUMBER OF YEARS FROM DATE OF CDSC PERCENTAGE
PURCHASE PAYMENT
- -------------------------------------------------------
0 7%
- -------------------------------------------------------
1 6%
- -------------------------------------------------------
2 5%
- -------------------------------------------------------
3 4%
- -------------------------------------------------------
4 3%
- -------------------------------------------------------
5 2%
- -------------------------------------------------------
6 1%
- -------------------------------------------------------
7 0%
- -------------------------------------------------------
Starting with the second year after a purchase payment has been made under the
contract, 10% of that purchase payment may be withdrawn each year without
imposition of the CDSC. This free withdrawal privilege is non-cumulative and
will not exceed 10% of the purchase payment in any year. The CDSC is waived:
a) for first year withdrawals of up to 10% of purchase payments for
Individual Retirement Account rollover contracts; or
b) for any amount withdrawn from this contract in order to meet minimum
distribution requirements under the Internal Revenue Code.
Withdrawals may be restricted for contracts issued pursuant to the terms of a
Qualified Plan. No sales charges are deducted on redemption proceeds that are
transferred to the fixed account option of this annuity. The contract owner may
be subject to a tax penalty if withdrawals are taken prior to age 59 1/2.
For contracts issued before January 1, 1993 a CDSC will be deducted by
Nationwide equal to 5% of the lesser of the total of all purchase payments made
within 8 years prior to the date of the request for surrender, or the amount
surrendered. In no event will any CDSC be made against any values which have
been held under the contract for at least 8 years. Certain partial surrenders
may be requested for which no CDSC will be assessed. For any purchase payments
made, the contract owner (or annuitant, if applicable) may, after the first year
from the date of each such purchase payment, withdraw without a CDSC, up to 5%
of that purchase payment for each year that the purchase payment has remained on
deposit (less the amount of such purchase payment previously surrendered free of
charge).
ELIMINATION OF CDSC
For contracts sold pursuant to Qualified Plans established on or after January
1, 1993, as described in Section 401 of the Code, SEP-IRA contracts sold on or
after January 1, 1993, and Roth IRAs, Nationwide will waive the CDSC when:
1) the plan participant experiences a case of hardship (as defined for
purposes of Internal Revenue Code Section 401(k));
2) the plan participant becomes disabled (within the meaning of Internal
Revenue Code Section 72(m)(7));
3) the plan participant attains age 59 1/2 and has participated in the
contract for at least 5 years, as determined from the contract
anniversary date;
4) the plan participant has participated in the contract for at least 15
years as determined from the contract anniversary date;
5) the plan participant dies; or
6) the plan participant annuitizes after 2 years in the contract.
For Individual Retirement Accounts, Nationwide will waive the CDSC when:
1) the designated annuitant dies; or
2) the contract owner annuitizes after 2 years in the contract.
When a contract is exchanged for another contract issued by Nationwide or any of
its affiliate insurance companies, of the type and class which Nationwide
determined is eligible for such exchange, Nationwide will waive the CDSC on the
first contract.
In no event will elimination of the CDSC be permitted where such elimination
would be
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unfairly discriminatory to any person, or where it is prohibited by law.
CONTRACT MAINTENANCE CHARGE
Each year on the contract anniversary (and on the date of surrender in any year
in which the entire contract value is surrendered), Nationwide deducts a
contract maintenance charge of $30 from the contract value. This charge
reimburses Nationwide for administrative expenses relating to the issuance and
maintenance of the contract. For contracts issued pursuant to Qualified Plans
described in Section 401 of the Internal Revenue Code, established on or after
January 1, 1993 and SEP-IRA contracts established on or after January 1, 1993
and before August 1, 1994, the contract maintenance charge varies from $30 to
$0. Underwriting considerations include the size of the group, the average
participant account balance transferred to Nationwide, if any, and
administrative savings. For contracts issued to Qualified Plans described in
Section 401 of the Internal Revenue Code and SEP-IRA contracts established on or
after August 1, 1994, the contract maintenance charge varies from $12 to $0.
Variances are based on internal underwriting guidelines. The contract
maintenance charge will be allocated between the fixed account and variable
account in the same percentages as the purchase payment investment allocations
are to the fixed account and variable account.
ADMINISTRATION CHARGE
Nationwide deducts an administration charge from the variable account. This
amount is computed on a daily basis, and is equal to an annual rate of 0.05% of
the daily net assets of the variable account for contracts issued after January
1, 1993. The administration charge is designed only to reimburse Nationwide for
administrative expenses. Nationwide will monitor this charge to ensure that it
does not exceed annual administration expenses.
PREMIUM TAXES
Nationwide will charge against the contract value any premium taxes levied by a
state or other government entity. Premium tax rates currently range from 0% to
5.0%. This range is subject to change. The method used to assess premium tax
will be determined by Nationwide at its sole discretion in compliance with state
law.
If applicable, Nationwide will deduct premium taxes from the contract either at:
(1) the time the contract is surrendered;
(2) annuitization; or
(3) such other date as Nationwide becomes subject to premium taxes.
Premium taxes may be deducted from death benefit proceeds.
CONTRACT OWNERSHIP
The contract owner has all rights under the contract, including the right to
designate and change any designations of the contract owner, annuitant,
contingent annuitant, beneficiary, contingent beneficiary, annuity payment
option, and annuity commencement date. Contract rights may be exercised by the
annuitant if the contract owner has authorized the annuitant to exercise such
rights. Purchasers who name someone other than themselves as the contract owner
will have no rights under the contract.
Contract owners of Non-Qualified contracts may name a new contract owner at any
time before the annuitization date. Any change of contract owner automatically
revokes any prior contract owner designation. Changes in contract ownership may
result in federal income taxation and may be subject to state and federal gift
taxes.
A change in contract ownership must be submitted in writing and recorded at
Nationwide's home office. Once recorded, the change will be effective as of the
date signed. However, the change will not affect any payments made or actions
taken by Nationwide before it was recorded.
The contract owner may also request a change in the annuitant, contingent
annuitant, beneficiary, or contingent beneficiary before the annuitization date.
These changes must be:
- on a Nationwide form;
- signed by the contract owner; and
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<PAGE> 27
- received at Nationwide's home office before the annuitization date.
Nationwide must review and approve any change requests. If the contract owner is
not a natural person and there is a change of the annuitant, distributions will
be made as if the contract owner died at the time of the change.
ANNUITANT
The annuitant is the person designated to receive annuity payments during
annuitization of the contract and upon whose continuation of life any annuity
payment involving life contingencies depends. This person must be age 78 or
younger at the time of contract issuance, unless Nationwide approves a request
for an annuitant of greater age. The annuitant may be changed prior to the
annuitization date with the consent of Nationwide.
Although not the contract owner, the annuitant may exercise contract rights if
authorized by the holder of the contract (an Individual Retirement Account or
Qualified Plan trustee(s)).
BENEFICIARY AND CONTINGENT BENEFICIARY
The beneficiary is the person who is entitled to the death benefit if the
annuitant dies before the annuitization date and there is no joint owner. The
contract owner can name more than one beneficiary. Multiple beneficiaries will
share the death benefit equally, unless otherwise specified.
If no beneficiary(ies) survive the annuitant, the contingent beneficiaries
receive the death benefit. Contingent beneficiaries will share the death benefit
equally, unless otherwise specified.
If no beneficiaries or contingent beneficiaries survive the annuitant, the
contract owner or the last surviving contract owner's estate will receive the
death benefit.
The contract owner may change the beneficiary or contingent beneficiary during
the annuitant's lifetime by submitting a written request to Nationwide. Once
recorded, the change will be effective as of the date it was signed, whether or
not the annuitant was living at the time it was recorded. The change will not
affect any action taken by Nationwide before the change was recorded.
OPERATION OF THE CONTRACT
The cumulative total of all purchase payments under contracts issued by
Nationwide on the life of any one annuitant cannot exceed $1,000,000 without
Nationwide's prior consent.
PRICING
Initial purchase payments allocated to sub-accounts will be priced at the
accumulation unit value determined no later than 2 business days after receipt
of an order to purchase if the application and all necessary information are
complete. If the application is not complete, Nationwide may retain a purchase
payment for up to 5 business days while attempting to complete it. If the
application is not completed within 5 business days, the prospective purchaser
will be informed of the reason for the delay. The purchase payment will be
returned unless the prospective purchaser specifically allows Nationwide to hold
the purchase payment until the application is completed.
Subsequent purchase payments will be priced based on the next available
accumulation unit value after the payment is received.
Purchase payments will not be priced when the New York Stock Exchange is closed
or on the following nationally recognized holidays:
- - New Year's Day - Independence Day
- - Martin Luther King, Jr. Day - Labor Day
- - Presidents' Day - Thanksgiving
- - Good Friday - Christmas
- - Memorial Day
Nationwide also will not price purchase payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in
the variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist.
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<PAGE> 28
If Nationwide is closed on days when the New York Stock Exchange is open,
contract value may be affected since the contract owner would not have access to
their account.
ALLOCATION OF PURCHASE PAYMENTS
Nationwide allocates purchase payments to the sub-accounts and the fixed account
as instructed by the contract owner. Shares of the underlying mutual funds
allocated to the sub-accounts are purchased at net asset value, then converted
into accumulation units. Contract owners can change allocations or make
exchanges among the sub-accounts or the fixed account. However, no change may be
made that would result in an amount less than 1% of the purchase payments being
allocated to any sub-account for any contract owner. Certain transactions may be
subject to conditions imposed by the underlying mutual funds, as well as those
set forth in the contract.
DETERMINING THE CONTRACT VALUE
The contract value is:
1) the value of amounts allocated to the sub-accounts of the variable
account; and
2) amounts allocated to the fixed account.
If part or all of the contract value is surrendered, or charges are assessed
against the whole contract value, Nationwide will deduct a proportionate amount
from each sub-account and the fixed account based on current cash values.
Determining Variable Account Value - Valuing an Accumulation Unit
Purchase payments or transfers allocated to sub-accounts are accounted for in
accumulation units. Accumulation unit values (for each sub-account) are
determined by calculating the net investment factor for the underlying mutual
funds for the current valuation period and multiplying that result with the
accumulation unit values determined on the previous valuation period.
Nationwide uses the net investment factor as a way to calculate the investment
performance of a sub-account from valuation period to valuation period. For each
sub-account, the net investment factor shows the investment performance of the
underlying mutual fund in which a particular sub-account invests, including the
charges assessed against that sub-account for a valuation period.
The net investment factor for any particular sub-account is determined by
dividing (a) by (b), and then subtracting (c) from the result, where:
(a) is:
(1) the net asset value of the underlying mutual fund as of the end of
the current valuation period; and
(2) the per share amount of any dividend or income distributions made by
the underlying mutual fund (if the ex-dividend date occurs during
the current valuation period);
(b) is the net asset value of the underlying mutual fund determined as of the
end of the preceding valuation period; and
(c) is a factor representing the daily variable account charges. The factor
is equal to an annual rate of 1.30% of the daily net assets of the
variable account.
Based on the net investment factor, the value of an accumulation unit may
increase or decrease. Changes in the net investment factor may not be directly
proportional to changes in the net asset value of the underlying mutual fund
shares because of the deduction of variable account charges.
Though the number of accumulation units will not change as a result of
investment experience, the value of an accumulation unit may increase or
decrease from valuation period to valuation period.
Determining Fixed Account Value
Nationwide determines the value of the fixed account by:
1) adding all amounts allocated to the fixed account, minus amounts
previously transferred or withdrawn; and
2) adding any interest earned on the amounts allocated.
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TRANSFERS PRIOR TO ANNUITIZATION
Transfers from the Fixed Account to the Variable Account
Fixed account allocations may be transferred to the variable account only upon
reaching the end of an interest rate guarantee period. Normally, Nationwide will
permit 100% of such fixed account allocations to be transferred to the variable
account; however Nationwide may, under certain economic conditions and at its
discretion, limit the maximum transferable amount. Under no circumstances will
the maximum transferable amount be less than 10% of the fixed account allocation
reaching the end of an interest rate guarantee period. Transfers of the fixed
account allocations must be made within 45 days after reaching the end of an
interest rate guarantee period.
Contract owners who use dollar cost averaging may transfer from the fixed
account to the variable account under the terms of that program (see "Dollar
Cost Averaging").
Transfers to the Fixed Account
Variable account allocations may be transferred to the fixed account at any
time. Normally, Nationwide will not restrict transfers from the variable account
to the fixed account, however, Nationwide may establish a maximum transfer limit
from the variable account to the fixed account. Except as noted below, under no
circumstances will the transfer limit be less than 10% of the current value of
the variable account, less any transfers made in the 12 months preceding the
date the transfer is requested, but not including transfers made prior to the
imposition of the transfer limit. However, where permitted by state law,
Nationwide reserves the right to refuse transfers or purchase payments to the
fixed account from the variable account when the fixed account value is greater
than or equal to 30% of the contract value at the time the purchase payment is
made or the transfer is requested.
Amounts transferred to the variable account will receive the accumulation unit
value next determined after the transfer request is received.
Transfers Among the Sub-Accounts
Allocations may be transferred among the sub-accounts once per valuation period.
TRANSFERS AFTER ANNUITIZATION
After annuitization, transfers may only be made on the anniversary of the
annuitization date.
TRANSFER REQUESTS
Nationwide will accept transfer requests in writing or over the telephone.
Nationwide will use reasonable procedures to confirm that telephone instructions
are genuine and will not be liable for following telephone instructions that it
reasonably determined to be genuine. Nationwide may withdraw the telephone
exchange privilege upon 30 days written notice to contract owners.
For transfers involving the variable account, Nationwide determines contract
value as of the date the completed transfer request is received.
Interest Rate Guarantee Period
The interest rate guarantee period is the period of time that the fixed account
interest rate is guaranteed to remain the same. Within 45 days of the end of an
interest rate guarantee period, transfers may be made from the fixed account to
the variable account. Nationwide will determine the amount that may be
transferred and will declare this amount at the end of the guarantee period.
This amount will not be less than 10% of the amount in the fixed account that is
maturing.
For new purchase payments allocated to the fixed account, or transfers to the
fixed account from the variable account this period begins on the date of
deposit or transfer and ends on the one year anniversary of the deposit or
transfer. The guaranteed interest rate period may last for up to 3 months beyond
the 1 year anniversary because guaranteed terms end on the last day of a
calendar quarter.
During an interest rate guarantee period, transfers cannot be made from the
fixed account, and amounts transferred to the fixed account must remain on
deposit.
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Market Timing Firms
Some contract owners may use market timing firms or other third parties to make
transfers on their behalf. Generally, in order to take advantage of perceived
market trends, market timing firms will submit transfer or exchange requests on
behalf of multiple contract owners at the same time. Sometimes this can result
in unusually large transfers of funds. These large transfers might interfere
with the ability of Nationwide or the underlying mutual fund to process
transactions. This can potentially disadvantage contract owners not using market
timing firms. To avoid this, Nationwide may modify transfer and exchange rights
of contract owners who use market timing firms (or other third parties) to
transfer or exchange funds on their behalf.
The exchange and transfer rights of individual contract owners will not be
modified in any way when instructions are submitted directly by the contract
owner, or by the contract owner's representative (as authorized by the execution
of a valid Nationwide Limited Power of Attorney Form).
To protect contract owners, Nationwide may refuse exchange and transfer
requests:
- - submitted by any agent acting under a power of attorney on behalf of more
than one contract owner; or
- - submitted on behalf of individual contract owners who have executed
pre-authorized exchange forms which are submitted by market timing firms
(or other third parties) on behalf of more than one contract owner at the
same time.
Nationwide will not restrict exchange rights unless Nationwide believes it to be
necessary for the protection of all contract owners.
RIGHT TO REVOKE
Contract owners have a ten day "free look" to examine the contract. The contract
may be returned to Nationwide's home office for any reason within ten days of
receipt and Nationwide will refund the contract value or another amount required
by law. The refunded contract value will reflect the deduction of any contract
charges, unless otherwise required by law. All IRA and Roth IRA refunds will be
a return of purchase payments. State and/or federal law may provide additional
free look privileges.
Liability of the variable account under this provision is limited to the
contract value in each sub-account on the date of revocation. Any additional
amounts refunded to the contract owner will be paid by Nationwide.
SURRENDER (REDEMPTION)
Contract owners may surrender some or all of their contract value before the
earlier of the annuitization date or the annuitant's death. Surrender requests
must be in writing and Nationwide may require additional information. When
taking a full surrender, the contract must accompany the written request.
Nationwide may require a signature guarantee.
Nationwide will pay any amount surrendered from the sub-accounts within 7 days.
However, Nationwide may suspend or postpone payment when it is unable to price a
purchase payment or transfer.
Partial Surrenders (Partial Redemption)
Nationwide will surrender accumulation units from the sub-accounts and an amount
from the fixed account. The amount withdrawn from each investment option will be
in proportion to the value in each option at the time of the surrender request.
A CDSC may apply. The contract owner may direct Nationwide to deduct the CDSC
either from:
a) the amount requested; or
b) the contract value remaining after the contract owner has received the
amount requested.
If the contract owner does not make a specific election, any applicable CDSC
will be taken from the contract value remaining after the contract owner has
received the amount requested.
Full Surrenders (Full Redemptions)
The contract value upon full surrender may be more or less than the total of all
purchase
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payments made to the contract. The contract value will reflect variable account
charges, a contract maintenance charge, underlying mutual fund charges and the
investment performance of the underlying mutual funds. A CDSC may apply.
SURRENDERS UNDER A QUALIFIED PLAN
The contract surrender provisions may be modified pursuant to the plan terms and
Internal Revenue Code provisions when the contract is issued to fund a Qualified
Plan.
LOAN PRIVILEGE
Loans are available only for contracts issued on or before January 1, 1993.
The loan privilege is ONLY available to owners of Qualified Contracts. These
contract owners can take loans from the contract value beginning 30 days after
the contract is issued up to the annuitization date. Loans are subject to the
terms of the contract, the plan, and the Internal Revenue Code. Nationwide may
modify the terms of a loan to comply with changes in applicable law.
MINIMUM AND MAXIMUM LOAN AMOUNTS
Contract owners may borrow a minimum of $1,000, unless Nationwide is required by
law to allow a lesser minimum amount. Each loan must individually satisfy the
contract minimum amount.
Nationwide will calculate the maximum nontaxable loan amount based upon
information provided by the participant or the employer. Loans may be taxable if
a participant has additional loans from other plans. The total of all
outstanding loans must not exceed the following limits:
- -------------------------------------------------------
CONTRACT MAXIMUM OUTSTANDING LOAN
VALUES BALANCE ALLOWED
- -------------------------------------------------------
NON-ERISA PLANS up to up to 80% of contract
$20,000 value (not more than
$10,000)
- -------------------------------------------------------
$20,000 up to 50% of contract
and over value (not more than
$50,000*)
- -------------------------------------------------------
ERISA PLANS All up to 50% of contract
value (not more than
$50,000*)
- -------------------------------------------------------
*The $50,000 limits will be reduced by the highest outstanding balance owed
during the previous 12 months.
LOAN PROCESSING FEE
Nationwide may charge a Loan Processing Fee at the time each new loan is
processed. If assessed it compensates Nationwide for expenses related to
administering and processing loans. Loans are not available in all states. In
addition, some states may not allow Nationwide to assess a Loan Processing Fee.
HOW LOAN REQUESTS ARE PROCESSED
All loans are made from the collateral fixed account. Nationwide transfers
accumulation units in proportion to the assets in each sub-account to the
collateral fixed account until the requested amount is reached. If there are not
enough accumulation units available in the contract to reach the requested loan
amount, Nationwide next transfers contract value from the fixed account. No CDSC
will be deducted on transfers related to loan processing.
INTEREST
The outstanding loan balance in the collateral fixed account is credited with
interest until the loan is repaid in full. The interest rate will be 2.25% less
than the loan interest rate fixed by Nationwide. It is guaranteed never to fall
below 3.0%.
Specific loan terms are disclosed at the time of loan application or issuance.
LOAN REPAYMENT
Loans must be repaid in five years. However, if the loan is used to purchase the
contract owner's principal residence, the contract owner has 15 years to repay
the loan.
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<PAGE> 32
Contract owners must identify loan repayments as loan repayments or they will be
treated as purchase payments and will not reduce the outstanding loan. Payments
must be substantially level and made at least quarterly.
Loan repayments will consist of principal and interest in amounts set forth in
the loan agreement. Repayments are allocated to the sub-accounts in accordance
with the contract, unless Nationwide and the contract owner have agreed to amend
the contract at a later date on a case by case basis.
DISTRIBUTIONS AND ANNUITY PAYMENTS
Distributions made from the contract while a loan is outstanding will be reduced
by the amount of the outstanding loan plus accrued interest if:
- the contract is surrendered;
- the contract owner/annuitant dies;
- the contract owner who is not the annuitant dies prior to annuitization;
or
- annuity payments begin.
TRANSFERRING THE CONTRACT
Nationwide reserves the right to restrict any transfer of the contract while the
loan is outstanding.
GRACE PERIOD AND LOAN DEFAULT
If a loan payment is not made when due, interest will continue to accrue. A
grace period may be available (please refer to the terms of the loan agreement).
If a loan payment is not made by the end of the applicable grace period, the
entire loan will be treated as a deemed distribution and will be taxable to the
borrower. This deemed distribution may also be subject to an early withdrawal
tax penalty by the Internal Revenue Service.
After default, interest will continue to accrue on the loan. Defaulted amounts,
plus interest, are deducted from the contract value when the participant is
eligible for a distribution of at least that amount. Additional loans are not
available while a previous loan is in default.
CONTRACT OWNER SERVICES
ASSET REBALANCING
Asset rebalancing is the automatic reallocation of contract values to the
sub-accounts on a predetermined percentage basis. Asset rebalancing is not
available for assets held in the fixed account. Requests for asset rebalancing
must be on a Nationwide form.
Asset rebalancing occurs every three months or on another frequency if permitted
by Nationwide. If the last day of the three-month period falls on a Saturday,
Sunday, recognized holiday, or any other day when the New York Stock Exchange is
closed, asset rebalancing will occur on the next business day.
Asset rebalancing may be subject to employer limitations or restrictions for
contracts issued to a Qualified Plan. Contract owners should consult a financial
adviser to discuss the use of asset rebalancing.
Nationwide reserves the right to stop establishing new asset rebalancing
programs. Nationwide also reserves the right to assess a processing fee for this
service.
DOLLAR COST AVERAGING
Dollar cost averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from certain sub-accounts and the fixed account into other
sub-accounts. Nationwide does not guarantee that this program will result in
profit or protect contract owners from loss.
Contract owners direct Nationwide to automatically transfer specified amounts
from the fixed account and the Money Market Fund to any other underlying mutual
fund.
Dollar Cost Averaging from the Fixed Account
Transfers from the fixed account must be equal to or less than 1/30th of the
fixed account value at the time the program is requested. A dollar cost
averaging program which transfers amounts from the fixed account to the variable
account is not the same as an enhanced rate dollar cost averaging program.
Contract owners that wish to utilize dollar cost averaging from the fixed
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account should first inquire as to whether any enhanced rate dollar cost
averaging programs are available.
Enhanced Rate Dollar Cost Averaging Program
Nationwide may, from time to time, offer enhanced rate dollar cost averaging
programs. Dollar cost averaging transfers for this program may only be made from
the fixed account. Such enhanced rate dollar cost averaging programs allow the
contract owner to earn a higher rate of interest on assets in the fixed account
than would normally be credited when not participating in the program. Each
enhanced interest rate is guaranteed for as long as the corresponding program is
in effect. Nationwide will process transfers until either amounts in the
enhanced rate fixed account are exhausted, or the contract owner instructs
Nationwide in writing to stop the transfers. For this program only, when a
written request to discontinue transfers is received, Nationwide will
automatically transfer the remaining amount in the enhanced rate fixed account
to the NSAT Money Market Fund.
Transfers occur monthly or on another frequency if permitted by Nationwide.
Nationwide will process transfers until either the value in the originating
investment option is exhausted, or the contract owner instructs Nationwide in
writing to stop the transfers.
Nationwide reserves the right to stop establishing new dollar cost averaging
programs. Nationwide also reserves the right to assess a processing fee for this
service.
SYSTEMATIC WITHDRAWALS
Systematic withdrawals allow contract owners (or annuitants if authorized) to
receive a specified amount (of at least $100) on a monthly, quarterly,
semi-annual, or annual basis. Requests for systematic withdrawals and requests
to discontinue systematic withdrawals must be in writing.
The withdrawals will be taken from the sub-accounts and the fixed account
proportionately unless Nationwide is instructed otherwise.
If the contract owner takes systematic withdrawals, the maximum amount that can
be withdrawn annually without a CDSC is the greater of:
1) 10% of all purchase payments made to the contract as of the withdrawal
date; or
2) an amount withdrawn to meet minimum distribution requirements under the
Internal Revenue Code.
The CDSC-free withdrawal privilege for systematic withdrawals is non-cumulative.
Free amounts not taken during any contract year cannot be taken as free amounts
in a subsequent contract year.
Nationwide will withhold federal income taxes from systematic withdrawals unless
otherwise instructed by the contract owner. The Internal Revenue Service may
impose a 10% penalty tax if the contract owner is under age 59 1/2 unless the
contract owner has made an irrevocable election of distributions of
substantially equal payments.
Nationwide reserves the right to stop establishing new systematic withdrawal
programs. Nationwide also reserves the right to assess a processing fee for this
service. Systematic withdrawals are not available before the end of the ten-day
free look period (see "Right to Revoke").
ANNUITY COMMENCEMENT DATE
The annuity commencement date is the date on which annuity payments are
scheduled to begin. The contract owner may change the annuity commencement date
before annuitization. This change must be in writing and approved by Nationwide.
ANNUITIZING THE CONTRACT
ANNUITIZATION DATE
The annuitization date is the date that annuity payments begin. It will be the
first day of a calendar month unless otherwise agreed, and must be at least 2
years after the contract is issued. If the contract is issued to fund a
Qualified Plan or Tax Sheltered Annuity annuitization may occur during the first
2 years subject to Nationwide's approval.
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ANNUITIZATION
Annuitization is the period during which annuity payments are received. It is
irrevocable once payments have begun. Upon arrival of the annuitization date,
the annuitant must choose:
(1) an annuity payment option; and
(2) either a fixed payment annuity, variable payment annuity, or an available
combination.
Nationwide guarantees that each payment under a fixed payment annuity will be
the same throughout annuitization. Under a variable payment annuity, the amount
of each payment will vary with the performance of the underlying mutual funds
chosen by the contract owner.
FIXED PAYMENT ANNUITY
A fixed payment annuity is an annuity where the amount of the annuity payment
remains level.
The first payment under a fixed payment annuity is determined on the
annuitization date on an "age last birthday" basis by:
1) deducting applicable premium taxes from the total contract value; then
2) applying the contract value amount specified by the contract owner to the
fixed payment annuity table for the annuity payment option elected.
Subsequent payments will remain level unless the annuity payment option elected
provides otherwise. Nationwide does not credit discretionary interest during
annuitization.
VARIABLE PAYMENT ANNUITY
A variable payment annuity is an annuity where the amount of the annuity
payments will vary depending on the performance of the underlying mutual funds
selected.
The first payment under a variable payment annuity is determined on the
annuitization date on an "age last birthday" basis by:
1) deducting applicable premium taxes from the total contract value; then
2) applying the contract value amount specified by the contract owner to the
variable payment annuity table for the annuity payment option elected.
The dollar amount of the first payment is converted into a set number of annuity
units that will represent each monthly payment. This is done by dividing the
dollar amount of the first payment by the value of an annuity unit as of the
annuitization date. This number of annuity units remains fixed during
annuitization.
The second and subsequent payments are determined by multiplying the fixed
number of annuity units by the annuity unit value for the valuation period in
which the payment is due. The amount of the second and subsequent payments will
vary with the performance of the selected underlying mutual funds. Nationwide
guarantees that variations in mortality experience from assumptions used to
calculate the first payment will not affect the dollar amount of the second and
subsequent payments.
ASSUMED INVESTMENT RATE
An assumed investment rate is the percentage rate of return assumed to determine
the amount of the first payment under a variable payment annuity. Nationwide
uses the assumed investment rate of 3.5% to calculate the first annuity payment.
The assumed investment rate of 3.5% is the percentage rate of return required to
maintain level variable annuity payments. Subsequent variable annuity payments
may be more or less than the first based on whether actual investment
performance is higher or lower than the assumed investment rate of 3.5%.
VALUE OF AN ANNUITY UNIT
Annuity unit values for sub-accounts are determined by multiplying the net
investment factor for the valuation period for which the annuity unit is being
calculated by the immediately preceding valuation period's annuity unit value,
and multiplying the result by an interest factor to neutralize the assumed
investment rate of 3.5% per annum built into the variable payment annuity
purchase rate basis in the contracts.
EXCHANGES AMONG UNDERLYING MUTUAL FUNDS
Exchanges among underlying mutual funds during annuitization must be in writing.
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Exchanges will occur on each anniversary of the annuitization date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Payments are made based on the annuity payment option selected, unless:
- the amount to be distributed is less than $500, in which case Nationwide
may make one lump sum payment of the contract value; or
- an annuity payment would be less than $20, in which case Nationwide can
change the frequency of payments to intervals that will result in
payments of at least $20. Payments will be made at least annually.
ANNUITY PAYMENT OPTIONS
Contract owners must elect an annuity payment option before the annuitization
date. The annuity payment options are:
(1) LIFE ANNUITY - An annuity payable periodically, but at least annually, for
the lifetime of the annuitant. Payments will end upon the annuitant's
death. For example, if the annuitant dies before the second annuity payment
date, the annuitant will receive only one annuity payment. The annuitant
will only receive two annuity payments if he or she dies before the third
annuity payment date, and so on.
(2) JOINT AND LAST SURVIVOR ANNUITY - An annuity payable periodically, but at
least annually, during the joint lifetimes of the annuitant and a
designated second individual. If one of these parties dies, payments will
continue for the lifetime of the survivor. As is the case under option 1,
there is no guaranteed number of payments. Payments end upon the death of
the last surviving party, regardless of the number of payments received.
(3) LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED - An annuity
payable monthly during the lifetime of the annuitant. If the annuitant dies
before all of the guaranteed payments have been made, payments will
continue to the end of the guaranteed period and will be paid to a designee
chosen by the annuitant at the time the annuity payment option was elected.
The designee may elect to receive the present value of the remaining
guaranteed payments in a lump sum. The present value will be computed as of
the date Nationwide receives the notice of the annuitant's death.
Not all of the annuity payment options may be available in all states. Contract
owners may request other options before the annuitization date. These options
are subject to Nationwide's approval.
No distribution for Non-Qualified contracts will be made until an annuity
payment option has been elected. Qualified contracts, IRAs, SEP IRAs and Tax
Sheltered Annuities are subject to the "minimum distribution" requirements set
forth in the plan, contract, and the Internal Revenue Code.
DEATH BENEFITS
DEATH OF CONTRACT OWNER
If the contract owner and the annuitant are not the same person and the contract
owner dies prior to the annuitization date, then the annuitant becomes the
contract owner. In such event, the entire interest in the contract value, less
any applicable deductions (which may include a CDSC), must be distributed in
accordance with the appropriate "Required Distributions" section.
DEATH OF ANNUITANT
If the contract owner and annuitant are not the same person, and the annuitant
dies prior to the annuitization date, then the contingent annuitant becomes the
annuitant and no death benefit is payable. In the event there is no living
contingent annuitant, then, upon the annuitant's death, a death benefit will be
payable to the beneficiary, the contingent beneficiary, the contract owner, or
the contract owner's estate, as specified in the "beneficiary" section.
DEATH OF CONTRACT OWNER/ANNUITANT
If any contract owner and the annuitant are the same person, and such person
dies before the annuitization date, a death benefit will be payable to the
beneficiary, contingent beneficiary, or the last surviving
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contract owner's estate, as specified in the "Beneficiary" section and in
accordance with the appropriate "Required Distributions" section.
HOW THE DEATH BENEFIT VALUE IS DETERMINED
The beneficiary may elect to receive the death benefit:
(1) in a lump sum;
(2) as an annuity; or
(3) in any other manner permitted by law and approved by Nationwide.
The beneficiary must notify Nationwide of this election within 60 days of the
annuitant's death.
If the annuitant dies after the annuitization date, any benefit that may be
payable will be paid according to the selected annuity payment option.
The death benefit value is determined as of the date Nationwide receives:
(1) proper proof of the annuitant's death;
(2) an election specifying the distribution method; and
(3) any state required form(s).
DEATH BENEFIT PAYMENT
For contracts issued on or after the later of May 1, 1998 or a date on which
state insurance authorities approve applicable contract modifications:
- - If the annuitant dies on or after his or her 75th birthday and prior to the
annuitization date, the dollar amount of the death benefit will be equal to
the contract value, if the contract owner has:
1) requested an annuity commencement date later than the first day of the
calendar month after the annuitant's 75th birthday; and
2) Nationwide approved the request.
- - If the annuitant dies prior to his or her 75th birthday and prior to the
annuitization date, the dollar amount of the death benefit will be the
greater of:
1) the contract value; or
2) the sum of all purchase payments, less an adjustment for amounts
surrendered.
The adjustment for amounts surrendered will reduce item (2) above in the same
proportion that the contract value was reduced on the date(s) of the partial
surrender(s).
If the annuitant dies after the annuitization date, any payment that may be
payable will be determined according to the selected annuity payment option.
For contracts issued prior to May 1, 1998 or a date prior to approval of
applicable contract modifications by state insurance authorities:
- - If the annuitant dies on or after his or her 75th birthday and prior to the
annuitization date, the dollar amount of the death benefit will be equal to
the contract value, if the contract owner has:
1) requested an annuity commencement date later than the first day of the
calendar month after the annuitant's 75th birthday; and
2) Nationwide approved the request.
- - If the annuitant dies prior to his or her 75th birthday and prior to the
annuitization date, the dollar amount of the death benefit will be the
greater of:
1) the contract value; or
2) the sum of all purchase payments, less any amounts surrendered.
If the annuitant dies after the annuitization date, any payment that may be
payable will be determined according to the selected annuity payment option.
REQUIRED DISTRIBUTIONS
REQUIRED DISTRIBUTIONS FOR QUALIFIED PLANS
Distributions from Qualified Contracts will be made according to the Minimum
Distribution and Incidental Benefit ("MDIB") provisions of Section 401(a)(9) of
the Internal Revenue Code. Distributions will be made to the annuitant according
to the selected annuity payment option over a period not longer than:
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a) the life of the annuitant or the joint lives of the annuitant and the
annuitant's designated beneficiary; or
b) a period not longer than the life expectancy of the annuitant or the
joint life expectancies of the annuitant and the annuitant's designated
beneficiary.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another Tax Sheltered Annuity of the annuitant.
If the annuitant's entire interest in a Qualified Plan or Tax Sheltered Annuity
will be distributed in equal or substantially equal payments over a period
described in a) or b), the payments will begin on the required beginning date.
The required beginning date is the later of:
a) April 1 of the calendar year following the calendar year in which the
annuitant reaches age 70 1/2; or
b) the annuitant's retirement date.
Provision b) does not apply to any employee who is a 5% owner (as defined in
Section 416 of the Internal Revenue Code) with respect to the plan year ending
in the calendar year when the employee attains the age of 70 1/2.
Distributions commencing on the required distribution date must satisfy MDIB
provisions set forth in the Internal Revenue Code. Those provisions require that
distribution cannot be less than the amount determined by dividing the
annuitant's interest in the Tax Sheltered Annuity by the end of the previous
calendar year by:
a) the annuitant's life expectancy, or if applicable;
b) the joint and survivor life expectancy of the annuitant and the annuitant's
beneficiary.
The life expectancies and joint life expectancies are determined by reference to
Treasury Regulation 1.72-9.
If the annuitant dies before distributions begin, the interest in the Qualified
Contract or Tax Sheltered Annuity must be distributed by December 31 of the
calendar year in which the fifth anniversary of the annuitant's death occurs
unless:
a) the annuitant names his or her surviving spouse as the beneficiary and
the spouse chooses to receive distribution of the contract in
substantially equal payments over his or her life (or a period not longer
than his or her life expectancy) and beginning no later than December 31
of the year in which the annuitant would have attained age 70 1/2; or
b) the annuitant names a beneficiary other than his or her surviving spouse
and the beneficiary elects to receive distribution of the contract in
substantially equal payments over his or her life (or a period not longer
than his or her life expectancy) beginning no later than December 31 of
the year following the year in which the annuitant dies.
If the annuitant dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule used before the annuitant's
death.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
REQUIRED DISTRIBUTIONS FOR INDIVIDUAL RETIREMENT ACCOUNTS
Distributions from an IRA or SEP IRA must begin no later than April 1 of the
calendar year following the calendar year in which the contract owner reaches
age 70 1/2. Distribution may be paid in a lump sum or in substantially equal
payments over:
a) the contract owner's life or the lives of the contract owner and his or
her spouse or designated beneficiary; or
b) a period not longer than the life expectancy of the contract owner or the
joint life expectancy of the contract owner and the contract owner's
designated beneficiary.
If the contract owner dies before distributions begin, the interest in the IRA
or SEP IRA must be distributed by December 31 of the calendar
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year in which the fifth anniversary of the contract owner's death occurs,
unless:
a) the contract owner names his or her surviving spouse as the beneficiary
and such spouse chooses to:
1) treat the contract as an Individual Retirement Annuity or SEP IRA
established for his or her benefit; or
2) receive distribution of the contract in substantially equal payments
over his or her life (or a period not longer than his or her life
expectancy) and beginning no later than December 31 of the year in
which the contract owner would have reached age 70 1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and such beneficiary elects to receive a distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year of the contract owner's
death.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another Individual Retirement Annuity, SEP IRA or
Individual Retirement Account of the contract owner.
If the contract owner dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule being used before the
contract owner's death. However, a surviving spouse who is the beneficiary under
the annuity payment option may treat the contract as his or her own, in the same
manner as is described in section (a)(1) of this provision.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
A portion of each distribution will be included in the recipient's gross income
and taxed at ordinary income tax rates. The portion of a distribution which is
taxable is based on the ratio between the amount by which non-deductible
purchase payments exceed prior non-taxable distributions and total account
balances at the time of the distribution. The owner of an Individual Retirement
Annuity or SEP IRA must annually report the amount of non-deductible purchase
payments, the amount of any distribution, the amount by which non-deductible
purchase payments for all years exceed non-taxable distributions for all years,
and the total balance of all Individual Retirement Annuities.
Individual Retirement Annuity or SEP IRA distributions will not receive the
favorable tax treatment of a lump sum distribution from a Qualified Plan. If the
contract owner dies before the entire interest in the contract has been
distributed, the balance will also be included in his or her gross estate.
REQUIRED DISTRIBUTIONS FOR ROTH IRAS
The rules for Roth IRAs do not require distributions to begin during the
contract owner's lifetime.
When the contract owner dies, the interest in the Roth IRA must be distributed
by December 31 of the calendar year in which the fifth anniversary of his or her
death occurs, unless:
a) the contract owner names his or her surviving spouse as the beneficiary
and the spouse chooses to:
1) treat the contract as a Roth IRA established for his or her benefit;
or
2) receive distribution of the contract in substantially equal payments
over his or her life (or a period not longer than his or her life
expectancy) and beginning no later than December 31 of the year
following the year in which the contract owner would have reached
age 70 1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and the beneficiary chooses to receive distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than
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December 31 of the year following the year in which the contract owner
dies.
Distributions from Roth IRAs may be either taxable or nontaxable, depending upon
whether they are "qualified distributions" or "non-qualified distributions" (see
"Federal Tax Considerations").
FEDERAL TAX CONSIDERATIONS
FEDERAL INCOME TAXES
The tax consequences of purchasing a contract described in this prospectus will
depend on:
- - the type of contract purchased;
- - the purposes for which the contract is purchased; and
- - the personal circumstances of individual investors having interests in the
contracts.
See "Synopsis of the Contracts" for a brief description of the various types of
contracts and the different purposes for which the contracts may be purchased.
Existing tax rules are subject to change, and may affect individuals differently
depending on their situation. Nationwide does not guarantee the tax status of
any contracts or any transactions involving the contracts.
If the contract is purchased as an investment of certain retirement plans (such
as qualified retirement plans, Individual Retirement Accounts, and custodial
accounts as described in Sections 401, 408(a), and 403(b)(7) of the Internal
Revenue Code), tax advantages enjoyed by the contract owner and/or annuitant may
relate to participation in the plan rather than ownership of the annuity
contract. Such plans are permitted to purchase investments other than annuities
and retain tax-deferred status.
The following is a brief summary of some of the federal income tax
considerations related to the contracts. In addition to the federal income tax,
distributions from annuity contracts may be subject to state and local income
taxes. The tax rules across all states and localities are not uniform and
therefore will not be discussed in this prospectus. Tax rules that may apply to
contracts issued in U.S. territories such as Puerto Rico and Guam are also not
discussed. Nothing in this prospectus should be considered to be tax advice.
Contract owners and prospective contract owners are encouraged to consult a
financial consultant, tax advisor or legal counsel to discuss the taxation and
use of the contracts.
The Internal Revenue Code sets forth different income tax rules for the
following types of annuity contracts:
- - IRAs
- - SEP IRAs;
- - SIMPLE IRAs; and
- - Roth IRAs.
IRAs, SEP IRAs and SIMPLE IRAs
Distributions from IRAs, SEP IRAs and SIMPLE IRAs are generally taxed when
received. If any of the amount contributed to the IRA was nondeductible for
federal income tax purposes, then a portion of each distribution is excludable
from income.
If distributions of income from an IRA are made prior to the date that the owner
attains the age of 59 1/2 years, the income is subject to both the regular
income tax and an additional penalty tax of 10%. (For SIMPLE IRAs, the 10%
penalty is increased to 25% if the distribution is made during the 2 year period
beginning on the date that the individual first participated in the SIMPLE IRA.)
The penalty tax can be avoided if the distribution is:
- - made to a beneficiary on or after the death of the owner;
- - attributable to the owner becoming disabled (as defined in the Internal
Revenue Code);
- - part of a series of substantially equal periodic payments made not less
frequently than annually made for the life (or life expectancy) of the
owner, or the joint lives (or joint life expectancies) of the owner and his
or her designated beneficiary;
- - used for qualified higher education expenses; or
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- - used for expenses attributable to the purchase of a home for a qualified
first-time buyer.
Roth IRAs
Distributions of earnings from Roth IRAs are taxable or nontaxable depending
upon whether they are "qualified distributions" or "non-qualified
distributions." A "qualified distribution" is one that satisfies the five-year
rule and meets one of the following requirements:
- - it is made on or after the date on which the contract owner attains age 59
1/2;
- - it is made to a beneficiary (or the contract owner's estate) on or after
the death of the contract owner;
- - it is attributable to the contract owner's disability; or
- - it is used for expenses attributable to the purchase of a home for a
qualified first-time buyer.
The five year rule generally is satisfied if the distribution is not made within
the five taxable year period beginning with the first taxable year in which a
contribution is made to any Roth IRA established for the owner.
A qualified distribution is not included in gross income for federal income tax
purposes.
A non-qualified distribution is not includible in gross income to the extent
that the distribution, when added to all previous distributions, does not exceed
that total amount of contributions made to the Roth IRA. Any non-qualified
distribution in excess of the aggregate amount of contributions will be included
in the contract owner's gross income in the year that is distributed to the
contract owner.
Special rules apply for Roth IRAs that have proceeds received from a traditional
IRA prior to January 1, 1999 if the owner elected the special 4-year income
averaging provisions that were in effect for 1998.
If non-qualified distributions of income from a Roth IRA are made prior to the
date that the owner attains the age of 59 1/2 years, the income is subject to
both the regular income tax and an additional penalty tax of 10%. The penalty
tax can be avoided if the distribution is:
- - made to a beneficiary on or after the death of the owner;
- - attributable to the owner becoming disabled as defined in the Internal
Revenue Code;
- - part of a series of substantially equal periodic payments made not less
frequently than annually made for the life (or life expectancy) of the
owner, or the joint lives (or joint life expectancies) of the owner and his
or her designated beneficiary;
- - for qualified higher education expenses; or
- - used for expenses attributable to the purchase of a home for a qualified
first-time buyer.
If the contract owner dies before the contract is completely distributed, the
balance may be included in the contract owner's gross estate for tax purposes.
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WITHHOLDING
Pre-death distributions from the contracts are subject to federal income tax.
Nationwide will withhold the tax from the distributions unless the contract
owner requests otherwise.
Contract owners may not waive withholding if the
distribution is subject to mandatory back-up withholding (if no taxpayer
identification number is given or if the Internal Revenue Service notifies
Nationwide that mandatory back-up withholding is required). Mandatory back-up
withholding rates are 31% of income that is distributed.
NON-RESIDENT ALIENS
Generally, a pre-death distribution from a contract to a non-resident alien is
subject to federal income tax at a rate of 30% of the amount of income that is
distributed. Nationwide is required to withhold this amount and send it to the
Internal Revenue Service. Some distributions to non-resident aliens may be
subject to a lower (or no) tax if a treaty applies. In order to obtain the
benefits of such a treaty, the non-resident alien must:
1) provide Nationwide with proof of residency and citizenship (in accordance
with Internal Revenue Service requirements); and
2) provide Nationwide with an individual taxpayer identification number.
If the non-resident alien does not meet the above conditions, Nationwide will
withhold 30% of income from the distribution.
Another way to avoid the 30% withholding is for the non-resident alien to
provide Nationwide with sufficient evidence that:
1) the distribution is connected to the non-resident alien's conduct of
business in the United States; and
2) the distribution is includible in the non-resident alien's gross income
for United States federal income tax purposes.
Note that these distributions may be subject to back-up withholding, currently
31%, if a correct taxpayer identification number is not provided.
FEDERAL ESTATE, GIFT, AND GENERATION SKIPPING TRANSFER TAXES
The following transfers may be considered a gift for federal gift tax purposes:
- a transfer of the contract from one contract owner to another; or
- a distribution to someone other than a contract owner.
Upon the contract owner's death, the value of the contract may subject to estate
taxes, even if all or a portion of the value is also subject to federal income
taxes.
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Section 2612 of the Internal Revenue Code may require Nationwide to determine
whether a death benefit or other distribution is a "direct skip" and the amount
of the resulting generation skipping transfer tax, if any. A direct skip is when
property is transferred to, or a death benefit or other distribution is made to:
a) an individual who is two or more generations younger than the contract
owner; or
b) certain trusts, as described in Section 2613 of the Internal Revenue Code
(generally, trusts that have no beneficiaries who are not 2 or more
generations younger than the contract owner).
If the contract owner is not an individual, then for this purpose ONLY,
"contract owner" refers to any person:
- - who would be required to include the contract, death benefit, distribution,
or other payment in his or her federal gross estate at his or her death; or
- - who is required to report the transfer of the contract, death benefit,
distribution, or other payment for federal gift tax purposes.
If a transfer is a direct skip, Nationwide will deduct the amount of the
transfer tax from the death benefit, distribution or other payment, and remit it
directly to the Internal Revenue Service.
TAX CHANGES
The foregoing tax information is based on Nationwide's understanding of federal
tax laws. It is NOT intended as tax advice. All information is subject to change
without notice. For more details, contact your personal tax and/or financial
advisor.
STATEMENTS AND REPORTS
Nationwide will mail contract owners statements and reports. Therefore, contract
owners should promptly notify Nationwide of any address change.
These mailings will contain:
- statements showing the contract's quarterly activity;
- confirmation statements showing transactions that affect the contract's
value. Confirmation statements will not be sent for recurring
transactions (i.e., dollar cost averaging or salary reduction programs).
Instead, confirmation of recurring transactions will appear in the
contract's quarterly statements;
- semi-annual reports as of June 30 containing financial statements for the
variable account; and
- annual reports as of December 31 containing financial statements for the
variable account.
Contract owners should review statements and confirmations carefully. All errors
or corrections must be reported to Nationwide
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immediately to assure proper crediting to the contract. Unless Nationwide is
notified within 30 days of receipt of the statement, Nationwide will assume
statements and confirmation statements are correct.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance and
annuity pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
In November 1997, two plaintiffs, one who was the owner of a variable life
insurance contract and the other who was the owner of a variable annuity
contract, commenced a lawsuit in a federal court in Texas against Nationwide and
the American Century group of defendants (Robert Young and David D. Distad v.
Nationwide Life Insurance Company et al.). In this lawsuit, plaintiffs sought to
represent a class of variable life insurance contract owners and variable
annuity contract owners whom they claim were allegedly misled when purchasing
these variable contracts into believing that the performance of their underlying
mutual fund option managed by American Century, whose shares may only be
purchased by insurance companies, would track the performance of a mutual fund,
also managed by American Century, whose shares are publicly traded. The amended
complaint seeks unspecified compensatory and punitive damages. On April 27,
1998, the District Court denied, in part, and granted, in part, motions to
dismiss the complaint filed by Nationwide and American Century. The remaining
claims against Nationwide allege securities fraud, common law fraud, civil
conspiracy, and breach of contract. The District Court, on December 2, 1998,
issued an order denying plaintiffs' motion for class certification and the
appeals court declined to review the order denying class certification upon
interlocutory appeal. On June 11, 1999, the District Court denied the
plaintiffs' motion to amend their complaint and reconsider class certification.
In January 2000, Nationwide and American Century settled this lawsuit now
limited to the claims of the two named plaintiffs. On February 9, 2000 the court
dismissed this lawsuit with prejudice.
On October 29, 1998, Nationwide was named in a lawsuit filed in Ohio state court
related to the sale of deferred annuity products for use as investments in
tax-deferred contributory retirement plans (Mercedes Castillo v. Nationwide
Financial Services, Inc., Nationwide Life Insurance Company and Nationwide Life
and Annuity Insurance Company). On May 3, 1999, the complaint was amended to,
among other things, add Marcus Shore as a second plaintiff. The amended
complaint is brought as a class action on behalf of all persons who purchased
individual deferred annuity contracts or participated in group annuity contracts
sold by Nationwide and the other named Nationwide affiliates which were used to
fund certain tax-deferred retirement plans. The amended complaint seeks
unspecified compensatory and punitive damages. No class has been certified. On
June 11, 1999, Nationwide and the other named defendants filed a motion to
dismiss the amended complaint. On March 8, 2000, the court denied the motion to
dismiss the amended complaint filed by Nationwide and other named defendants.
Nationwide intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, NISC, is not engaged in any material litigation of any
nature.
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY
A "yield" and "effective yield" may be advertised for Money Market Fund. "Yield"
is a measure of the net dividend and interest income earned over a specific
seven-day period (which period will be stated in the advertisement) expressed as
a percentage of the offering price
42
<PAGE> 44
of the Money Market Fund's units. Yield is an annualized figure, which means
that it is assumed that the Money Market Fund generates the same level of net
income over a 52-week period. The "effective yield" is calculated similarly but
includes the effect of assumed compounding, calculated under rules prescribed by
the SEC. The effective yield will be slightly higher than yield due to this
compounding effect.
Nationwide may advertise the performance of a sub-account in relation to the
performance of other variable annuity sub-accounts, underlying mutual fund
options with similar or different objectives, or the investment industry as a
whole. Other investments to which the sub-accounts may be compared include, but
are not limited to:
- precious metals;
- real estate;
- stocks and bonds;
- closed-end funds;
- bank money market deposit accounts and passbook savings;
- CDs; and
- the Consumer Price Index.
Market Indexes
The sub-accounts will be compared to certain market indexes, such as:
- S&P 500;
- Shearson/Lehman Intermediate Government/Corporate Bond Index;
- Shearson/Lehman Long-Term Government/Corporate Bond Index;
- Donoghue Money Fund Average;
- U.S. Treasury Note Index;
- Bank Rate Monitor National Index of 2 1/2 Year CD Rates; and
- Dow Jones Industrial Average.
Tracking & Rating Services; Publications
Nationwide's rankings and ratings are sometimes published by other services,
such as:
- Lipper Analytical Services, Inc.;
- CDA/Wiesenberger;
- Morningstar;
- Donoghue's;
- magazines such as:
- Money;
- Forbes;
- Kiplinger's Personal Finance Magazine;
- Financial World;
- Consumer Reports;
- Business Week;
- Time;
- Newsweek;
- National Underwriter; and
- News and World Report;
- LIMRA;
- Value;
- Best's Agent Guide;
- Western Annuity Guide;
- Comparative Annuity Reports;
- Wall Street Journal;
- Barron's;
- Investor's Daily;
- Standard & Poor's Outlook; and
- Variable Annuity Research & Data Service (The VARDS Report).
These rating services and publications rank the underlying mutual funds'
performance against other funds. These rankings may or may not include the
effects of sales charges or other fees.
Financial Rating Services
Nationwide is also ranked and rated by independent financial rating services,
among which are Moody's, Standard & Poor's and A.M. Best Company. Nationwide may
advertise these ratings. These ratings reflect Nationwide's financial strength
or claims-paying ability. The ratings are not intended to reflect the investment
experience or financial strength of the variable account.
Some Nationwide advertisements and endorsements may include lists of
organizations, individuals or other parties that recommend Nationwide or the
contract. Furthermore, Nationwide may occasionally advertise comparisons of
currently taxable and tax deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles and general economic
conditions.
43
<PAGE> 45
Historical Performance of the Sub-Accounts
Nationwide will advertise historical performance of the sub-accounts. Nationwide
may advertise for the sub-account's standardized "average annual total return,"
calculated in a manner prescribed by the SEC, and nonstandardized "total
return." Average annual total return shows the percentage rate of return of a
hypothetical initial investment of $1,000 for the most recent one, five and ten
year periods (or for a period covering the time the underlying mutual fund has
been available in the variable account if it has not been available for one of
the prescribed periods). This calculation reflects the standard 7-year CDSC
schedule and the deduction of all charges that could be made to the contracts,
except for premium taxes, which may be imposed by certain states.
Nonstandardized "total return," calculated similar to standardized "average
annual total return," shows the percentage rate of return of a hypothetical
initial investment of $10,000 for the most recent one, five and ten year periods
(or for a period covering the time the underlying mutual fund has been in
existence). For those underlying mutual funds which have not been available for
one of the prescribed periods, the nonstandardized total return illustrations
will show the investment performance the underlying mutual funds would have
achieved (reduced by the same charges except the CDSC) had they been available
in the variable account for one of the periods. The CDSC is not reflected
because the contracts are designed for long term investment. The CDSC, if
reflected, would decrease the level of performance shown. An initial investment
of $10,000 is assumed because that amount is closer to the size of a typical
contract than $1,000, which was used in calculating the standardized average
annual total return.
The standardized average annual total return and nonstandardized total return
quotations are calculated using data for the period ended December 31, 1999. If
the underlying mutual fund has been available in the variable account for less
than one year (or if the underlying mutual fund has been effective for less than
one year), standardized and non-standardized return is not annualized.
However, Nationwide generally provides performance information more frequently.
Information relating to performance of the sub-accounts is based on historical
earnings and does not represent or guarantee future results.
44
<PAGE> 46
UNDERLYING MUTUAL FUND PERFORMANCE SUMMARY
NON-STANDARDIZED TOTAL RETURN
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
10 Years To
1 Year To 5 Years To 12/31/99 or Date Fund
Sub-Account Options 12/31/99 12/31/99 Life of Fund Effective
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Short-Term Government (formerly 0.22% 4.02% 3.90% 12/15/82
Benham Short-Term Government)
- -------------------------------------------------------------------------------------------------------------------
American Century: Income & Growth 16.12% 26.14% 19.52% 12/17/90
- -------------------------------------------------------------------------------------------------------------------
American Century: Growth (formerly Twentieth 32.63% 25.07% 16.28% 10/31/58
Century Growth)
- -------------------------------------------------------------------------------------------------------------------
American Century: International Growth (formerly 62.01% 22.70% 17.80% 05/01/91
Twentieth Century International Growth)
- -------------------------------------------------------------------------------------------------------------------
American Century: Ultra (formerly Twentieth 39.33% 27.83% 22.68% 11/02/81
Century Ultra)
- -------------------------------------------------------------------------------------------------------------------
Delchester Fund-Institutional Class -4.77% 5.31% 7.18% 08/20/70
- -------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. 0.14% 5.52% 5.84% 06/25/76
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 8.24% 24.29% 15.10% 01/31/84
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, Inc. 8.47% 12.95% 10.67% 09/30/92
- -------------------------------------------------------------------------------------------------------------------
Dreyfus S & P 500 Index Fund 18.39% 26.00% 15.74% 01/02/90
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third Century Fund, Inc. - Class Z 28.17% 28.04% 16.31% 03/29/72
(formerly, Dreyfus Third Century Fund, Inc.)
- -------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 14.55% 13.46% 8.85% 08/31/78
- -------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F -3.91% 6.06% 7.84% 05/20/87
- -------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 0.37% 7.78% 9.05% 08/23/84
- -------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced Fund - Class T 2.84% 11.08% 9.78% 01/31/87
- -------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Equity Income Fund - Class T 1.57% 16.30% 15.15% 09/30/92
- -------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund - Class 2.23% 19.23% 16.35% 11/30/87
T
- -------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - Class T 6.65% 9.21% 11.79% 01/31/87
- -------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 11.81% 14.77% 12.04% 12/28/88
- -------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 5.46% 18.35% 12.82% 05/16/66
- -------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 22.14% 24.40% 17.15% 05/02/63
- -------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 1.22% 13.74% 11.38% 04/16/47
- -------------------------------------------------------------------------------------------------------------------
Franklin Mutual Series Fund, Inc. - Mutual Shares 12.84% 15.89% 12.51% 01/31/68
Fund: Class A
- -------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 69.27% 31.19% 22.29%
- -------------------------------------------------------------------------------------------------------------------
Janus Fund 44.92% 29.25% 18.73% 12/31/85
- -------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 62.46% 43.14% 25.05% 04/26/85
- -------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 61.94% 28.98% 23.30% 05/15/91
- -------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio - Open Shares -0.15% 2.56% 5.54%
- -------------------------------------------------------------------------------------------------------------------
MFS(R) World Governments Fund - Class A (formerly -5.06% 2.55% 4.68% 02/25/81
MFS(R) World Governments Fund)
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund -4.35% 6.08% 5.56% 03/01/80
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund -1.83% 22.14% 13.76% 05/30/33
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund 14.82% 20.51% 13.52% 02/27/61
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund - Prime Shares 30.02% 3.43% 3.15% 03/01/80
- -------------------------------------------------------------------------------------------------------------------
Nationwide(R) Intermediate U.S. Government Bond Fund -3.54% 5.66% 4.44% 02/28/92
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 47
NON-STANDARDIZED TOTAL RETURN (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
10 Years To
1 Year To 5 Years To 12/31/99 or Date Fund
Sub-Account Options 12/31/99 12/31/99 Life of Fund Effective
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide S&P 500(R) Index Fund - Class R 17.69% N/A 25.96% 10/30/98(1)
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity Trust(R) - Neuberger Berman 2.36% 14.90% 11.10% 09/26/88
Genesis Trust
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, Inc. 6.75% 13.60% 11.92% 06/01/50
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited Maturity Bond Fund 0.02% 3.96% 4.37% 06/09/86
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Fund, Inc. 6.10% 18.66% 13.02% 07/16/68
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund/VA 56.12% 22.57% 14.42% 12/08/69
- -----------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund Series 9.02% 14.05% 10.13% 01/30/81
- -----------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Class A 7.42% N/A 12.29% 11/02/981
- -----------------------------------------------------------------------------------------------------------------
Prestige International Fund - Class A 19.18% N/A 21.50% 11/02/981
- -----------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Class A 32.65% N/A 44.42% 11/02/981
- -----------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Class A -6.40% N/A -1.41% 11/02/981
- -----------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Fund Class A 16.78% N/A 22.32% 11/02/981
- -----------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund 38.23% 22.43% 19.87% 12/29/89
- -----------------------------------------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 57.37% 28.65% 17.28% 12/30/81
- -----------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 37.10% 11.39% 9.56% 10/05/82
- -----------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund 39.69% 22.12% 16.58% 01/31/88
- -----------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed Income Fund -1.21% 5.60% 5.50% 11/01/90
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
10 Years or
Date Fund
Available in Date Fund
Variable Added to
1 Year To 5 Years To Account Variable
Sub-Account Options 12/31/99 12/31/99 To 12/31/99 Account
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Short-Term Government -9.30% 0.95% 1.42% 04/30/84
(formerly Benham Short-Term Government)
- -----------------------------------------------------------------------------------------------------------------
American Century: Income & Growth 6.42% N/A 21.46% 10/31/96
- -----------------------------------------------------------------------------------------------------------------
American Century: Growth (formerly Twentieth 22.93% 22.78% 14.34% 01/28/83
Century Growth)
- -----------------------------------------------------------------------------------------------------------------
American Century: International Growth 52.31% N/A 22.25% 02/01/95
(formerly Twentieth Century International
Growth)
- -----------------------------------------------------------------------------------------------------------------
American Century: Ultra (formerly Twentieth 29.63% 25.74% 16.85% 10/15/93
Century Ultra)
- -----------------------------------------------------------------------------------------------------------------
Delchester Fund-Institutional Class -13.95% 2.49% 1.94% 12/31/92
- -----------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. -9.38% 2.65% -0.15% 01/31/94
- -----------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. -1.46% N/A 12.55% 01/05/98
- -----------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, Inc. -1.23% N/A 2.65% 01/05/98
- -----------------------------------------------------------------------------------------------------------------
Dreyfus S & P 500 Index Fund 8.69% 24.00% 17.02% 01/04/93
- -----------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third Century Fund, Inc. - Class 18.47% 26.04% 16.18% 01/04/93
Z (formerly, Dreyfus Third Century Fund, Inc.)
- -----------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund 4.85% 11.00% 7.44% 01/04/93
- -----------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F -13.15% N/A -1.44% 11/01/96
- -----------------------------------------------------------------------------------------------------------------
Federated High Yield Trust -9.17% N/A -7.00% 12/31/97
- -----------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced Fund - Class T -6.86% N/A 7.41% 12/18/95
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
46
<PAGE> 48
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN (CONTINUED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
10 Years or
Date Fund
Available in
Variable Date Fund Added
1 Year To 5 Years To Account to Variable
Sub-Account Options 12/31/99 12/31/99 To 12/31/99 Account
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Advisor Equity Income Fund - Class T -8.05% N/A 9.85% 12/18/95
- ----------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund - -7.44% N/A 13.74% 12/18/95
Class T
- ----------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - Class T -3.05% N/A 3.42% 12/18/95
- ----------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager(TM) 2.11% 12.28% 7.90% 10/15/93
- ----------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund -4.24% 16.20% 10.72% 03/16/83
- ----------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 12.44% 22.28% 17.93% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund -8.38% 11.32% 10.43% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Franklin Mutual Series Fund, Inc. - Mutual 3.14% N/A -0.07% 01/05/98
Shares Fund: Class A
- ----------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 59.57% N/A 62.93% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Janus Fund 35.22% N/A 26.67% 12/18/95
- ----------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 52.76% 41.23% 27.42% 10/15/93
- ----------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund 52.24% N/A 28.79% 11/01/96
- ----------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio - Open Shares -9.65% N/A -6.54% 11-02-98
- ----------------------------------------------------------------------------------------------------------------
MFS(R) World Governments Fund - Class A (formerly -14.22% -0.51% 7.53% 02/15/83
MFS(R) World Governments Fund)
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund -13.56% 3.29% 3.33% 01/29/81
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund -11.21% 20.10% 11.73% 01/29/81
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund 5.12% 18.29% 11.44% 01/29/81
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Money Market Fund - Prime Shares -6.68% 0.23% 0.49% 01/29/81
- ----------------------------------------------------------------------------------------------------------------
Nationwide(R) Intermediate U.S. Government Bond -12.80% N/A 0.79% 12/18/95
Fund
- ----------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index Fund - Class R 7.99% N/A 6.10% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity Trust(R) - Neuberger -7.32% N/A -8.24% 01/05/98
Berman Genesis Trust
- ----------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, Inc. -2.95% 11.28% 8.15% 01/31/94
- ----------------------------------------------------------------------------------------------------------------
Neuberger Berman Limited Maturity Bond Fund -9.49% 0.89% -0.45% 09/30/93
- ----------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Fund, Inc. -3.60% 16.58% 12.74% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund/VA 46.42% 20.12% 18.80% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund Series -0.68% 11.56% 7.69% 01/31/94
- ----------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Class A -2.28% N/A -3.46% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Prestige International Fund - Class A 9.48% N/A 7.74% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Class A 22.95% N/A 21.18% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Class A -15.47% N/A -14.30% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Fund Class A 7.08% N/A 9.17% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Strong Common Stock Fund 28.53% N/A 31.01% 11/02/98
- ----------------------------------------------------------------------------------------------------------------
Strong Total Return Fund, Inc. 47.67% 26.41% 20.61% 01/04/93
- ----------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 27.40% N/A 9.04% 02/01/95
- ----------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund 29.97% N/A 15.92% 12/18/95
- ----------------------------------------------------------------------------------------------------------------
Warburg Pincus Global Fixed Income Fund -10.64% N/A -2.97% 01/05/98
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Nationwide S&P 500(R) Index Fund, Prestige Balanced Fund, Prestige
International Fund, Prestige Large Cap Growth Fund, Prestige Large Cap Value
Fund and Prestige Small Cap Fund were added to the variable account on December
23, 1998. Therefore, no performance information is available.
47
<PAGE> 49
TABLE OF CONTENTS: STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History.............................................1
Services....................................................................1
Purchase of Securities Being Offered........................................1
Underwriters................................................................2
Calculation of Performance..................................................2
Annuity Payments............................................................3
Financial Statements........................................................4
48
<PAGE> 50
APPENDIX A: OBJECTIVES FOR THE UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investments
for variable annuity contracts and variable life insurance policies issued by
insurance companies.
There is no guarantee that the investment objectives will be met.
(AVAILABLE FOR CONTRACTS ISSUED ON OR AFTER JANUARY 1, 1993)
For contracts issued on or after January 1, 1993, variable account purchase
payments may be allocated only to the sub-accounts which consist of shares of
the underlying mutual fund options listed below:
AMERICAN CENTURY: SHORT-TERM GOVERNMENT (FORMERLY BENHAM SHORT-TERM GOVERNMENT)
Investment Objective: To seek current income and limited price volatility by
maintaining an average weighted portfolio maturity of four years or less. The
fund invests in securities of the United States government and its agencies.
American Century Investment Management, Inc. serves as the fund's investment
adviser.
AMERICAN CENTURY: INCOME & GROWTH
Investment Objective: Seeks dividend growth, current income and capital
appreciation by investing in common stocks. The fund may buy securities
convertible into common stock, such as convertible bonds, convertible preferred
stocks or warrants. The fund may also, for liquidity purposes, invest in
high-quality money market instruments with remaining maturities of one year or
less. The fund may also enter into repurchase agreements, collateralized by U.S.
government securities, with banks or broker-dealers deemed to present minimal
credit risk. American Century Investment Management, Inc. serves as the fund's
investment adviser.
AMERICAN CENTURY: GROWTH (FORMERLY TWENTIETH CENTURY GROWTH)
Investment Objective: Seeks capital growth through investment in securities
which the management considers to have better than average prospects for
appreciation of value. The fund's investment approach identifies companies with
accelerating earnings and revenues. As part of its strategy, the fund remains
essentially fully invested in stocks at all times. American Century Investment
Management, Inc. serves as the fund's investment adviser.
AMERICAN CENTURY: INTERNATIONAL GROWTH (FORMERLY TWENTIETH CENTURY INTERNATIONAL
GROWTH)
Investment Objective: Seeks capital growth by investing in an international
portfolio of common stocks, primarily in developed markets; stocks considered by
the investment manager to have prospects for appreciation. The fund will invest
primarily in common stocks (defined to include depository receipts for common
stocks) and other equity equivalents of such companies. American Century
Investment Management, Inc. serves as the fund's investment adviser.
AMERICAN CENTURY: ULTRA (FORMERLY TWENTIETH CENTURY ULTRA)
Investment Objective: The investment objective of the fund is to seek capital
growth by investing primarily in common stocks that are considered by
management to have better-than-average prospects for appreciation. American
Century Investment Management, Inc. serves as the fund's investment adviser.
DELCHESTER FUND-INSTITUTIONAL CLASS
Investment Objective: Seeks to provide high current income by investing
principally in corporate bonds, and also in U.S. Government securities and
commercial paper. This fund invests primarily in high-yield securities (junk
bonds) and greater risks may be involved with an investment in the fund than an
investment in a mutual fund comprised primarily of investment grade bonds.
Delaware Management Company, Inc. serves as the fund's investment adviser.
DREYFUS A BONDS PLUS, INC.
Investment Objective: The fund's goal is to provide the maximum amount of
current income
49
<PAGE> 51
to the extent consistent with the preservation of capital and the maintenance of
liquidity. The fund invests principally in debt obligations of corporations, the
U.S. Government and its agencies and instrumentalities, and major U.S. banking
institutions. The fund's investment objective cannot be changed without approval
by the holders of a majority (as defined in the Investment Company Act of 1940)
of the Fund's outstanding voting shares. There can be no assurance that the
fund's investment objective will be achieved. The Dreyfus Corporation serves as
the fund's investment adviser.
DREYFUS APPRECIATION FUND, INC.
Investment Objective: To provide long-term capital growth consistent with the
preservation of capital. Current income is a secondary investment objective. The
fund seeks to meet its objective by investing primarily in the common stocks of
domestic and foreign issuers. The Dreyfus Corporation serves as the fund's
investment adviser.
DREYFUS BALANCED FUND, INC.
Investment Objective: To provide long-term capital growth and current income,
consistent with reasonable investment risk. The fund is managed as a balanced
fund and invests in equity and debt securities, the proportion of which will
vary from time to time in accordance the fund manager's assessment of economic
conditions and investment opportunities. The Dreyfus Corporation serves as the
fund's investment adviser.
DREYFUS S & P 500 INDEX FUND
Investment Objective: Seeks to provide investment results that correspond to the
price and yield performance of publicly-traded common stocks in the aggregate,
as represented by the Standard & Poor's 500 Composite Stock Price Index. The
fund's investment objective cannot be changed without approval by the holders of
a majority of the Fund's outstanding voting shares. The Dreyfus Corporation
serves as the fund's investment adviser.
DREYFUS PREMIER THIRD CENTURY FUND, INC. - CLASS Z (FORMERLY, DREYFUS THIRD
CENTURY FUND, INC.)
Investment Objective: Primarily seeks to provide capital growth through equity
investment in companies that, in the opinion of the fund's management, not only
meet traditional investment standards but which also show evidence that they
conduct their business, in a manner that contributes to the enhancement of the
quality of life in America. Current income is secondary to the primary goal. The
Dreyfus Corporation serves as the fund's investment adviser.
EVERGREEN INCOME AND GROWTH FUND (FORMERLY THE EVERGREEN TOTAL RETURN FUND)
Investment Objective: Seeks to achieve a return consisting of current income and
capital appreciation in the value of its shares. The emphasis on current income
and capital appreciation will be relatively equal although, over time, changes
in the outlook for market conditions and the level of interest rates will cause
the fund to vary its emphasis between these two elements in its search for the
optimum return for its shareholders. The fund seeks to achieve its investment
objective through investments in common stocks, preferred stocks, securities
convertible into or exchangeable for common stocks and fixed income securities.
The fund may also write covered call options. Evergreen Asset Management Corp.
serves as the Fund's investment adviser.
FEDERATED BOND FUND - CLASS F
Investment Objective: To provide as high a level of current income as is
consistent with the preservation of capital. The fund invests primarily in a
professionally managed, diversified portfolio of bonds. Under normal
circumstances, at least 65% of the fund's net assets will be invested in
investment grade securities, including repurchase agreements collateralized by
investment grade securities. The fund may invest in corporate debt obligations,
U.S. Government obligations, municipal securities, asset-backed securities,
adjustable rate mortgage securities, collateralized mortgage obligations, and
other
50
<PAGE> 52
securities which are deemed to be consistent with the fund's investment
objective. Federated Investment Management Company serves as the fund's
investment adviser.
FEDERATED HIGH YIELD TRUST
Investment Objective: Seeks high current income by investing primarily in a
professionally managed, diversified portfolio of fixed income securities. Such
securities are expected to be lower-rated corporate debt obligations commonly
referred to as "junk bonds." Investments of this type are subject to a greater
risk of loss of principal and interest than investments in higher rated
securities. The Trust's investment adviser will endeavor to limit these risks
through diversifying the portfolio and through careful credit analysis of
individual issuers. Federated Investment Management Company serves as the fund's
investment adviser.
FIDELITY ADVISOR BALANCED FUND - CLASS T
Investment Objective: Seeks income and growth potential by investing in
securities including U.S. government and corporate bonds, and a diversified
selection of common stocks. Fidelity Management & Research Company serves as the
fund's investment adviser.
FIDELITY ADVISOR EQUITY INCOME FUND - CLASS T
Investment Objective: Seeks to obtain reasonable income from a portfolio
consisting primarily of income-producing equity securities, with a secondary
emphasis on growth potential. Fidelity Management & Research Company serves as
the fund's investment adviser.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND - CLASS T
Investment Objective: Pursues capital growth that exceeds market performance
through investments in growth, cyclical, and value stocks, and securities
convertible to common stocks. Fidelity Management & Research Company serves as
the fund's investment adviser.
FIDELITY ADVISOR HIGH YIELD FUND - CLASS T
Investment Objective: A bond fund designed to meet the needs of the long-term
investor, seeking above-average monthly income and potential capital growth by
investing in lower-rated, high-yielding, fixed income securities. Fidelity
Management & Research Company serves as the fund's investment adviser.
FIDELITY ASSET MANAGER(TM)
Investment Objective: Seeks high total return with reduced risk over the long
term by allocating its assets among stocks, bonds and short-term instruments.
Fidelity Management & Research Company serves as the fund's investment adviser.
FIDELITY EQUITY-INCOME FUND
Investment Objective: Seeks to obtain reasonable income from a portfolio
consisting primarily of income-producing equity securities. The fund seeks a
yield which exceeds the composite yield on the securities comprising the
Standard & Poor's 500 Composite Stock Price index. In addition, consistent with
the above objective, in managing its portfolio, the fund will consider the
potential for achieving capital appreciation. Fidelity Management & Research
Company serves as the fund's investment adviser.
FIDELITY MAGELLAN(R) FUND
Investment Objective: Seeks capital appreciation by investing primarily in
common stock and securities convertible into common stock. Up to 20% of the
fund's assets may also be invested in debt securities of all types and qualities
issued by foreign and domestic issuers if the fund's management believes that
doing so will result in capital appreciation. No emphasis is placed on dividend
income except when the fund's management believes that this income will have a
favorable influence on the market value of the security. Because the fund has no
limitation on the quality of debt securities in which it may invest, the debt
securities in its portfolio may be of poor quality and may present the risk of
default or may be in default. Fidelity Management & Research Company serves as
the fund's investment adviser.
FIDELITY PURITAN FUND
Investment Objective: Seeks to obtain as much income as possible, consistent
with the preservation and conservation of capital, by
51
<PAGE> 53
investing in a broadly diversified portfolio of high-yielding securities,
including common stocks, preferred stocks, and bonds. While emphasis on income
is an important objective, this does not preclude growth in capital since some
securities offering a better than average yield may also possess some growth
possibilities. Fidelity Management & Research Company serves as the fund's
investment adviser.
FIDELITY VIP HIGH INCOME PORTFOLIO
Investment Objective: Seeks to obtain a high level of current income by
investing primarily in high-risk, lower rated, high-yielding, fixed-income
securities, while also considering growth of capital. The fund's manager will
seek high current income normally by investing the Portfolio's assets as
follows:
- - at least 80% in income-producing debt securities and preferred stocks,
including convertible securities; and
- - up to 20% in common stocks and other equity securities when consistent with
the portfolio's primary objective or acquired as part of a unit combining
fixed-income and equity securities.
Higher yields are usually available on securities that are lower-rated or that
are unrated. Lower-rated securities are usually defined as Ba or lower by
Moody's; BB or lower by Standard & Poor's and may be deemed to be of a
speculative nature. The portfolio may also purchase lower-quality bonds such as
those rated Ca3 by Moody's or C- by Standard & Poor's which provide poor
protection for payment of principal and interest (commonly referred to as "junk
bonds"). For a further discussion of lower-rated securities, please see the
"Risks of Lower-Rated Debt Securities" section of the Portfolio's prospectus.
Fidelity Management & Research Company serves as the fund's investment adviser.
FRANKLIN MUTUAL SERIES FUND, INC. - MUTUAL SHARES FUND: CLASS A
Investment Objective: Seeks capital appreciation, which may occasionally be
short-term. Income is a secondary objective. The fund seeks to meet its
objectives by primarily investing in common stock, preferred stock and corporate
debt securities which may be convertible into common stock. Franklin Mutual
serves as the fund's investment adviser.
INVESCO DYNAMICS FUND
Investment Objective: To seek appreciation of capital through aggressive
investment policies. The fund invests - primarily in common stocks of U.S.
companies traded on national securities exchanges and over-the-counter. The fund
also has the flexibility to invest in preferred stocks and convertible or
straight issues of debentures, as well as foreign securities. INVESCO Fund
Group, Inc. serves as the fund's investment adviser. INVESCO Trust Company
serves as the fund's sub-adviser.
JANUS FUND
Investment Objective: Seeks long-term growth of capital by investing primarily
in common stocks of a large number of issuers of any size. Generally this fund
emphasizes issuers with larger market capitalizations. Janus Capital Corporation
serves as the Fund's investment adviser.
JANUS TWENTY FUND
Investment Objective: Seeks growth of capital in a manner consistent with the
preservation of capital. Under normal conditions, the fund will concentrate its
investments in a core position of 20-30 common stocks. However, the percentage
of the fund's assets invested in common stocks will vary, depending upon its
investment adviser's opinion of prevailing market, financial and economic
conditions. Consequently, the fund may at times hold substantial positions in
cash, or interest bearing securities. Janus Capital Corporation serves as the
fund's investment adviser.
JANUS WORLDWIDE FUND
Investment Objective: To seek long-term growth of capital in a manner consistent
with the preservation of capital. The objective is pursued primarily through
investments in common stocks of foreign and domestic issuers. The fund may
invest on a worldwide basis in companies and organizations of any size,
regardless of
52
<PAGE> 54
country of organization or place of principal business activity. The fund
normally invests in issuers from at least five different countries. Janus
Capital Corporation serves as the fund's investment adviser.
LAZARD SMALL CAP PORTFOLIO - OPEN SHARES
Investment Objective: To seek capital appreciation through investing primarily
in equity securities of companies with market capitalizations under $1 billion
that are believed by the investment adviser to be inexpensively priced relative
to the return on total capital or equity. Lazard Asset Management serves as the
fund's investment adviser.
MFS(R) GLOBAL GOVERNMENTS FUND - CLASS A (FORMERLY MFS(R)WORLD GOVERNMENTS FUND)
Investment Objective: To seek not only preservation, but also growth of capital,
together with moderate current income through a professionally managed
internationally diversified portfolio consisting primarily of debt securities
and, to a lesser extent, equity securities. The fund is designed for investors
who wish to diversify their investments beyond the United States and who are
prepared to accept the risks entailed in such investments which may be higher
than those associated with certain U.S. investments. Massachusetts Financial
Services Company serves as the fund's investment adviser.
NATIONWIDE BOND FUND - CLASS D
Investment Objective: Seeks as high a level of income as is consistent with
preservation of capital. The fund invests primarily in fixed-income securities
and currently focuses on corporate debt investments and U.S. Government
mortgage-backed securities. Under normal market conditions, the dollar-weighted
average portfolio maturity of the fund will be intermediate, which is defined as
being between six and ten years. Villanova Mutual Fund Capital Trust ("VMF") is
the fund's investment advisor. VMF is an indirect subsidiary of Nationwide
Financial Services, Inc.
NATIONWIDE FUND - CLASS D
Investment Objective: Seeks total return through a flexible combination of
current income and capital appreciation. The fund invests primarily in common
stocks, but also in convertible securities, other equity securities, bonds and
money market obligations. VMF is the fund's investment adviser.
NATIONWIDE GROWTH FUND - CLASS D
Investment Objective: Seeks long-term capital appreciation. The fund invests
primarily in equity securities of companies of all sizes. Major emphasis in the
selection of securities is placed on companies which have capable management,
and are in fields where social and economic trends, technological developments,
and new processes or products indicate a potential for greater-than-average
growth. VMF is the fund's investment adviser.
NATIONWIDE MONEY MARKET FUND - PRIME SHARES
Investment Objective: Seeks as high a level of current income as is consistent
with the preservation of capital and maintenance of liquidity. The fund invests
in high-quality money market instruments maturing in 397 days or less. VMF is
the fund's investment adviser.
NATIONWIDE(R) INTERMEDIATE U.S. GOVERNMENT BOND FUND - CLASS D
Investment Objective: Seeks as high a level of current income as is consistent
with the preservation of capital. The fund invests in securities of the U.S.
Government and its agencies and instrumentalities. The average duration of the
Fund will be between three and a half and six years. VMF is the fund's
investment adviser.
NATIONWIDE S&P 500(R) INDEX FUND - SERVICE CLASS
Investment Objective: To provide investment results that correspond to the price
and yield performance of publicly traded common stocks as represented by the
Standard & Poor's 500 Composite Stock Price Index (the "Index"). The Fund
attempts to be fully invested at all times in stocks that comprise the Index and
stock index
53
<PAGE> 55
futures, and in any event, at least 80% of the Fund's net assets will be
invested in stocks comprising the Index. VMF serves as the fund's investment
adviser and The Dreyfus Corporation is the fund's sub-adviser.
"S&P(R)" has been licensed for use by Nationwide Advisory Services, Inc. The
fund is not sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the fund.
NEUBERGER BERMAN EQUITY TRUST(R) - NEUBERGER BERMAN GENESIS TRUST
Investment Objective: Seeks capital appreciation by investing primarily in
stocks of companies with small market capitalizations (usually up to $1.5
billion). The portfolio manager seeks to buy the stocks of strong companies with
a history of solid performance and a proven management team, which are selling
at attractive prices. Neuberger Berman Management Incorporated serves as the
fund's investment adviser. THIS FUND IS NOT AVAILABLE FOR PLANS ESTABLISHED ON
OR AFTER MARCH 6, 1998.
NEUBERGER BERMAN GUARDIAN FUND, INC.
Investment Objective: Seeks capital appreciation through investments generally
in dividend-paying issues of established companies that its investment officers
believe are well managed. The emphasis of the fund's investments is on common
stock. The fund diversifies its holdings among different industries and
different companies in light of conditions prevailing at any given time. Current
income is a secondary objective. Neuberger Berman Management Incorporated serves
as the fund's investment adviser. THIS FUND IS NOT AVAILABLE FOR PLANS
ESTABLISHED ON OR AFTER MARCH 6, 1998
NEUBERGER BERMAN LIMITED MATURITY BOND FUND
Investment Objective: Seeks highest current income consistent with low risk to
principal and liquidity. The fund invests in a diversified portfolio of short-to
intermediate-term debt securities and other debt securities with special
features producing similar price characteristics. Total return is a secondary
objective. Neuberger Berman Management Incorporated serves as the fund's
investment adviser.
NEUBERGER BERMAN PARTNERS FUND, INC.
Investment Objective: Seeks capital growth. The fund invests in securities
solely on the basis of management's evaluation of their investment merit and
potential for growth using a value-oriented approach to the selection of
individual securities. The fund's management believes that the fund is an
attractive investment vehicle for conservative investors who are interested in
long-term appreciation from stock investments, but who have a low tolerance for
risk. Neuberger Berman Management Incorporated serves as the fund's investment
adviser.
OPPENHEIMER GLOBAL FUND/VA
Investment Objective: Seeks capital appreciation. The fund emphasizes investment
in foreign and domestic securities considered by the Fund's investment manager
to have appreciation possibilities, primarily common stocks or securities having
investment characteristics of common stocks (such as convertible securities) of
"growth-type" companies. As a matter of fundamental policy, under normal market
conditions, the fund will invest its total assets in securities of issuers
traded in markets in at least three different countries (which may include the
United States). The portfolio may also emphasize securities of cyclical
industries and "special situations" when the Fund's manager believes that they
present opportunities for capital growth. The remainder of the fund's invested
assets will be invested in securities for liquidity purposes. OppenheimerFunds,
Inc. serves as the fund's investment adviser.
PHOENIX BALANCED FUND SERIES
Investment Objective: The fund seeks reasonable income, long-term capital growth
and conservation of capital. It is intended that the fund will invest in common
stocks and fixed income securities, with emphasis on income-producing securities
which appear to have some potential for capital enhancement. Phoenix Investment
Counsel serves as the fund's investment adviser.
54
<PAGE> 56
PRESTIGE BALANCED FUND - CLASS A
Investment Objective: To provide a high total return from a diversified
portfolio of equity and fixed income securities. The fund seeks to provide a
total return that approaches the total return typical of a portfolio of fixed
income securities. Under normal market conditions, the Fund will invest
approximately 60% of its asset in equity securities and 40% in fixed income
securities. The equity securities will primarily be securities of large and
medium sized companies included in the Standard & Poor's 500 Composite Stock
Price Index, and the fixed income securities will cover a range of fixed income
sectors and securities, including government, corporate, asset-backed and
mortgage-backed securities. VMF serves as the Fund's investment adviser and J.P.
Morgan Investment Management Inc. is the fund's sub-adviser.
PRESTIGE INTERNATIONAL FUND - CLASS A
Investment Objective: Capital appreciation. The fund seeks to accomplish its
investment objective by investing primarily in equity securities of non- United
States companies that, in the opinion of its subadviser, are inexpensively
priced relative to the return on total capital or equity. The fund invests
primarily in equity securities of non-United State companies. Under normal
market conditions, the Fund will invest at least 80% of the value of its total
assets in the equity securities of companies within at least three different
countries (not including the United States). VMF serves as the Fund's investment
adviser and Lazard Asset Management is the Fund's sub-adviser.
PRESTIGE LARGE CAP GROWTH FUND - CLASS A
Investment Objective: Long-term capital appreciation. The fund seeks to achieve
its investment objective from a broadly diversified portfolio of equity
securities of large capitalization companies that are expected to have better
prospects of earnings growth than the growth rate of the general domestic
economy. Dividend income is a secondary objective. A large capitalization
company is a company with a market capitalization and industry characteristics
that are similar to companies in Russell 1000(R) Growth Index, which currently
have market capitalizations that range from $14 billion to $272 billion. VMF
serves as the fund's investment adviser and Goldman Sachs Asset Management is
the Fund's sub-adviser.
PRESTIGE LARGE CAP VALUE FUND - CLASS A
Investment Objective: To maximize total return, consisting of both capital
appreciation and current income. The fund seeks to achieve its investment
objective by investing in U.S. equity securities that are currently undervalued
as determined by its subadviser. Under normal market conditions, substantially
all, but in no event less than 65% of the Fund's total assets will be invested
in equity securities of large capitalization U.S. companies, including foreign
companies whose securities are traded in the United States and who comply with
U.S. accounting standards. A large capitalization company is a company with a
market capitalization and industry characteristics that are similar to companies
in the Russell 1000(R) Value Index, which currently have market capitalizations
that range from $1.4 billion to $272 billion. VMF serves as the fund's
investment adviser and Brinson Partners, Inc. is the fund's sub-adviser.
PRESTIGE SMALL CAP FUND - CLASS A
Investment Objective: Long-term capital appreciation. The fund seeks to
accomplish its investment objective from a broadly diversified portfolio of
equity securities issued by U.S. companies that have small market
capitalizations. Under normal market conditions, the fund will invest at least
65% of its total assets in equity securities of companies whose market
capitalizations at the time of investment do not exceed 110% of the largest
company in the Russell 2000(R) Small Stock Index; these companies currently have
market capitalizations that range from $222 million to $1.4 billion. VMF serves
as the Fund's investment adviser and INVESCO Management & Research, Inc. serves
as the fund's sub-adviser, providing daily portfolio management for the fund.
55
<PAGE> 57
STRONG COMMON STOCK FUND, INC.
Investment Objective: To seek capital growth by investing in a diversified
portfolio of equity securities which, in the opinion of the Fund's investment
adviser, possess the potential for price appreciation. Strong Capital
Management, Inc. serves as the Fund's investment adviser.
STRONG TOTAL RETURN FUND, INC.
Investment Objective: Seeks a combination of income and capital appreciation
which will produce the highest total return while assuming reasonable risks.
"Reasonable risks" refers to the advisor's judgment that the risks of investing
in the securities in the Total Return Fund's portfolio are no greater than
normal. The Total Return Fund invests in common stocks and other equity-type
securities; corporate bonds, debentures, and notes; and short-term money market
instruments. Common stocks may be either growth or income oriented. Other
equity-type securities are limited to convertible bonds, preferred stocks,
warrants, and convertible preferred shares. Short-term money market instruments
include U.S. Treasury obligations, bank certificates of deposit, commercial
paper, and variable-rate master demand notes (floating-rate debt instruments
without a fixed maturity). The Total Return Fund may also invest in debt
securities issued or guaranteed by the U.S. government and its agencies or
instrumentalities. Strong Capital Management, Inc. serves as the fund's
investment adviser.
TEMPLETON FOREIGN FUND - CLASS A
Investment Objective: Seeks long-term capital growth through a flexible policy
of investing in stocks and debt obligations of companies and governments outside
the United States. Any income realized will be incidental. Templeton Investment
Counsel, Inc. serves as the Fund's investment adviser.
WARBURG PINCUS EMERGING GROWTH FUND
Investment Objective: Seeks maximum capital appreciation by investing in equity
securities of small- to medium-sized companies in the United States with
emerging or renewed growth potential. Credit Suisse Asset Management, LLC,
serves as the Fund's investment adviser.
WARBURG PINCUS GLOBAL FIXED INCOME FUND
Investment Objective: Seeks to maximize total investment return consistent with
prudent investment management, consisting of a combination of interest income,
currency gains and capital appreciation. The Fund will pursue its objective by
investing in a portfolio principally consisting of investment grade fixed income
securities of governmental and corporate issuers denominated in various
currencies, including U.S. dollars. Credit Suisse Asset Management, LLC, serves
as the fund's investment adviser.
(AVAILABLE FOR CONTRACTS ISSUED ON OR AFTER DECEMBER 25, 1982 AND BEFORE JANUARY
1, 1993)
For contracts issued on or after December 25, 1982, and before January 1, 1993
variable account purchase payments may be allocated only to the sub-accounts
which consist of shares of the underlying mutual fund options listed below:
AMERICAN CENTURY: SHORT-TERM GOVERNMENT (FORMERLY BENHAM SHORT-TERM GOVERNMENT)
Investment Objective: To seek current income and limited price volatility by
maintaining an average weighted portfolio maturity of four years or less. U.S.
Governments invests in securities of the United States government and its
agencies. American Century Investment Management, Inc. serves as the fund's
investment adviser.
AMERICAN CENTURY: GROWTH (FORMERLY TWENTIETH CENTURY GROWTH)
Investment Objective: To seek capital growth through investment in securities
which the management considers to have better than average prospects for
appreciation of value. The fund's investment approach identifies - companies
with accelerating earnings and revenues. As part of it strategy, the fund
remains essentially fully - invested in stocks at all times. American Century
Investment Management, Inc. serves as the fund's investment - adviser.
56
<PAGE> 58
FIDELITY CAPITAL & INCOME FUND
Investment Objective: Seeks to provide a combination of income and capital
growth by investing primarily in debt instruments and common and preferred
stocks, with a focus on lower-quality debt securities of companies with
uncertain financial positions. Fidelity Management & Research Company serves as
the fund's investment adviser.
FIDELITY EQUITY-INCOME FUND
Investment Objective: Seeks to obtain reasonable income from a portfolio
consisting primarily of income-producing equity securities. The fund seeks a
yield which exceeds the composite yield on the securities comprising the
Standard & Poor's 500 Composite Stock Price index. In addition, consistent with
the above objective, in managing its portfolio, the fund will consider the
potential for achieving capital appreciation. Fidelity Management & Research
Company serves as the fund's investment adviser.
FIDELITY VIP HIGH INCOME PORTFOLIO
Investment Objective: Seeks to obtain a high level of current income by
investing primarily in high-risk, lower rated, high-yielding, fixed-income
securities, while also considering growth of capital. The fund's manager will
seek high current income normally by investing the Portfolio's assets as
follows:
- - at least 80% in income-producing debt securities and preferred stocks,
including convertible securities; and
- - up to 20% in common stocks and other equity securities when consistent with
the portfolio's primary objective or acquired as part of a unit combining
fixed-income and equity securities.
Higher yields are usually available on securities that are lower-rated or that
are unrated. Lower-rated securities are usually defined as Ba or lower by
Moody's; BB or lower by Standard & Poor's and may be deemed to be of a
speculative nature. The portfolio may also purchase lower-quality bonds such as
those rated Ca3 by Moody's or C- by Standard & Poor's which provide poor
protection for payment of principal and interest (commonly referred to as "junk
bonds"). For a further discussion of lower-rated securities, please see the
"Risks of Lower-Rated Debt Securities" section of the Portfolio's prospectus.
Fidelity Management & Research Company serves as the fund's investment adviser.
MFS(R) GLOBAL GOVERNMENTS FUND - CLASS A (FORMERLY MFS(R)WORLD GOVERNMENTS FUND)
Investment Objective: To seek not only preservation, but also growth of capital,
together with moderate current income through a professionally managed
internationally diversified portfolio consisting primarily of debt securities
and, to a lesser extent, equity securities. The fund is designed for investors
who wish to diversify their investments beyond the United States and who are
prepared to accept the risks entailed in such investments which may be higher
than those associated with certain U.S. investments. Massachusetts Financial
Services Company serves as the Fund's investment adviser.
NATIONWIDE MONEY MARKET FUND - PRIME SHARES
Investment Objective: Seeks as high a level of current income as is consistent
with the preservation of capital and maintenance of liquidity. The fund invests
in high-quality money market instruments maturing in 397 days or less. VMF
serves as the fund's investment adviser.
57
<PAGE> 59
APPENDIX B: CONDENSED FINANCIAL INFORMATION
Accumulation unit values for an accumulation unit outstanding throughout the
period.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Short 23.012292 23.132624 0.52% 87,493 1999
-------------------------------------------------------------------------------------------
Term Government 21.986961 23.012292 4.66% 131,664 1998
-------------------------------------------------------------------------------------------
(formerly Benham Short 21.012508 21.986961 4.64% 138,808 1997
-------------------------------------------------------------------------------------------
Term Government) 20.449954 21.012508 2.75% 157,941 1996
-------------------------------------------------------------------------------------------
18.748399 20.449954 9.08% 216,620 1995
-------------------------------------------------------------------------------------------
19.087872 18.748399 -1.78% 183,649 1994
-------------------------------------------------------------------------------------------
18.563845 19.087872 2.82% 182,484 1993
-------------------------------------------------------------------------------------------
18.018283 18.563845 3.03% 177,970 1992
-------------------------------------------------------------------------------------------
16.352445 18.018283 10.19% 191,264 1991
-------------------------------------------------------------------------------------------
15.400806 16.352445 6.18% 188,328 1990
- -----------------------------------------------------------------------------------------------------------------------
American Century: Income 17.640513 20.537578 16.42% 534,684 1999
-------------------------------------------------------------------------------------------
& Growth 14.002308 17.640513 25.98% 397,026 1998
10.551440 14.002308 32.71% 135,424 1997
-------------------------------------------------------------------------------------------
10.000000 10.551440 5.51% 18,133 1996
- -----------------------------------------------------------------------------------------------------------------------
American Century: 88.518097 117.667874 32.93% 153,919 1999
Growth (formerly 65.572069 88.518097 34.99% 150,519 1998
-------------------------------------------------------------------------------------------
Twentieth Century Growth) 51.389039 65.572069 27.60% 158,492 1997
-------------------------------------------------------------------------------------------
45.274141 51.389039 13.51% 186,518 1996
-------------------------------------------------------------------------------------------
38.113717 45.274141 18.79% 231,124 1995
-------------------------------------------------------------------------------------------
39.197771 38.113717 -2.77% 324,141 1994
-------------------------------------------------------------------------------------------
38.275689 39.197771 2.41% 335,369 1993
-------------------------------------------------------------------------------------------
40.518750 38.275689 -5.54% 404,811 1992
-------------------------------------------------------------------------------------------
24.287059 40.518750 66.83% 410,440 1991
-------------------------------------------------------------------------------------------
25.592676 24.287059 -5.10% 401,940 1990
- -----------------------------------------------------------------------------------------------------------------------
American Century: 18.416900 29.892733 62.31% 67,212 1999
-------------------------------------------------------------------------------------------
International Growth 15.678789 18.416900 17.46% 48,212 1998
-------------------------------------------------------------------------------------------
(formerly Twentieth 13.268469 15.678789 18.17% 31,799 1997
-------------------------------------------------------------------------------------------
Century International 11.748911 13.268469 12.93% 7,683 1996
-------------------------------------------------------------------------------------------
Growth) 10.000000 11.748911 17.49% 25,477 1995
- -----------------------------------------------------------------------------------------------------------------------
American Century: Ultra 22.284614 31.115121 39.63% 958,510 1999
-------------------------------------------------------------------------------------------
(formerly Twentieth 16.780808 22.284614 32.80% 784,677 1998
-------------------------------------------------------------------------------------------
Century Ultra) 13.807925 16.780808 21.53% 660,821 1997
-------------------------------------------------------------------------------------------
12.289075 13.807925 12.36% 530,842 1996
-------------------------------------------------------------------------------------------
9.043121 12.289075 35.89% 266,570 1995
-------------------------------------------------------------------------------------------
9.505758 9.043121 -4.87% 116,020 1994
-------------------------------------------------------------------------------------------
10.000000 9.505758 -4.94% 2,713 1993
- -----------------------------------------------------------------------------------------------------------------------
Delchester Fund Inst'l 14.911925 14.244875 -4.47% 79,605 1999
-------------------------------------------------------------------------------------------
15.348845 14.911925 -2.85% 73,489 1998
-------------------------------------------------------------------------------------------
13.618147 15.348845 12.71% 87,319 1997
-------------------------------------------------------------------------------------------
12.257125 13.618147 11.10% 70,363 1996
-------------------------------------------------------------------------------------------
10.867271 12.257125 12.79% 65,214 1995
-------------------------------------------------------------------------------------------
11.511092 10.867271 -5.59% 43,997 1994
-------------------------------------------------------------------------------------------
10.000000 11.511092 15.11% 15,953 1993
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE> 60
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dreyfus Appreciation Fund, 12.724781 13.811292 8.54% 156,211 1999
-------------------------------------------------------------------------------------------
Inc. - Q 10.000000 12.724781 27.25% 56,730 1998
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus Balanced Fund, 10.755504 11.699291 8.77% 29,698 1999
-------------------------------------------------------------------------------------------
Inc. - Q 10.000000 10.755504 7.56% 14,859 1998
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus A Bonds Plus, Inc. 12.008201 12.061566 0.44% 160,276 1999
-------------------------------------------------------------------------------------------
11.848519 12.008201 1.35% 14,859 1998
-------------------------------------------------------------------------------------------
10.958199 11.848519 8.12% 156,006 1997
-------------------------------------------------------------------------------------------
10.819193 10.958199 1.28% 169,248 1996
-------------------------------------------------------------------------------------------
9.110600 10.819193 18.75% 53,005 1995
-------------------------------------------------------------------------------------------
10.000000 9.110600 -8.89% 15,283 1994
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus S & P 500 Index 28.976575 34.392545 18.69% 692,394 1999
-------------------------------------------------------------------------------------------
Fund 22.921661 28.976575 26.42% 429,513 1998
-------------------------------------------------------------------------------------------
17.509385 22.921661 30.91% 332,923 1997
-------------------------------------------------------------------------------------------
14.505515 17.509385 20.71% 187,389 1996
-------------------------------------------------------------------------------------------
10.749166 14.505515 34.95% 33,323 1995
-------------------------------------------------------------------------------------------
10.819026 10.749166 -0.65% 12,668 1994
-------------------------------------------------------------------------------------------
10.000000 10.819026 8.19% 585 1993
- -----------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third 25.825514 33.178138 28.47% 59,207 1999
Century Fund, Inc. - Class
Z (formerly, Dreyfus Third
Century Fund, Inc.)
-------------------------------------------------------------------------------------------
20.101260 25.825514 28.48% 41,708 1998
-------------------------------------------------------------------------------------------
15.742432 20.101260 27.69% 35,892 1997
-------------------------------------------------------------------------------------------
12.829548 15.742432 22.70% 21,194 1996
-------------------------------------------------------------------------------------------
9.570659 12.829548 34.05% 12,292 1995
-------------------------------------------------------------------------------------------
10.477293 9.570659 -8.65% 7,325 1994
-------------------------------------------------------------------------------------------
10.000000 10.477293 4.77% 2,583 1993
- -----------------------------------------------------------------------------------------------------------------------
Evergreen Income and 17.031564 19.561585 14.85% 72,494 1999
-------------------------------------------------------------------------------------------
Growth Fund (formerly 17.394044 17.031564 -2.08% 75,243 1998
-------------------------------------------------------------------------------------------
Evergreen Total Return 14.032960 17.394044 23.95% 63,791 1997
-------------------------------------------------------------------------------------------
Fund) 12.594984 14.032960 11.42% 65,357 1996
-------------------------------------------------------------------------------------------
10.301799 12.594984 22.26% 60,789 1995
-------------------------------------------------------------------------------------------
11.153183 10.301799 -7.63% 51,305 1994
-------------------------------------------------------------------------------------------
10.000000 11.153183 11.53% 32,321 1993
- -----------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - 11.547474 11.130751 -3.61% 139,182 1999
-------------------------------------------------------------------------------------------
Class F 11.076983 11.547474 4.25% 104,392 1998
-------------------------------------------------------------------------------------------
10.117861 11.076983 9.48% 33,538 1997
-------------------------------------------------------------------------------------------
10.000000 10.117861 1.18% 9,873 1996
- -----------------------------------------------------------------------------------------------------------------------
Federated High Yield Trust 9.976102 10.042770 0.67% 49,637 1999
-------------------------------------------------------------------------------------------
- - Q 10.000000 9.976102 -0.24% 49,055 1998
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Balanced 14.984876 15.455350 3.14% 86,087 1999
-------------------------------------------------------------------------------------------
Fund - Class T 13.150098 14.984876 13.95% 31,056 1998
-------------------------------------------------------------------------------------------
10.890814 13.150098 20.74% 13,345 1997
-------------------------------------------------------------------------------------------
10.177458 10.890814 7.01% 2,740 1996
-------------------------------------------------------------------------------------------
10.000000 10.177458 1.77% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE> 61
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Advisor Equity 16.455574 16.762859 1.87% 122,013 1999
-------------------------------------------------------------------------------------------
Income Fund - Class T 14.355400 16.455574 14.63% 103,814 1998
-------------------------------------------------------------------------------------------
11.552736 14.355400 24.26% 84,318 1997
-------------------------------------------------------------------------------------------
10.213719 11.552736 13.11% 59,163 1996
-------------------------------------------------------------------------------------------
10.000000 10.213719 2.14% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 18.629791 19.101353 2.53% 488,519 1999
-------------------------------------------------------------------------------------------
Opportunities Fund - 15.224094 18.629791 22.37% 391,088 1998
-------------------------------------------------------------------------------------------
Class - T 11.997760 15.224094 26.89% 315,184 1997
-------------------------------------------------------------------------------------------
10.325686 11.997760 16.19% 177,245 1996
-------------------------------------------------------------------------------------------
10.000000 10.325686 3.26% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High 12.545500 13.417364 6.95% 219,180 1999
Yield
-------------------------------------------------------------------------------------------
Fund - Class T 12.767617 12.545500 -1.74% 22,247 1998
-------------------------------------------------------------------------------------------
11.241941 12.767617 13.57% 195,236 1997
-------------------------------------------------------------------------------------------
10.057673 11.241941 11.77% 70,939 1996
-------------------------------------------------------------------------------------------
10.000000 10.057673 0.58% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Asset Manager 17.206302 19.290540 12.11% 290,579 1999
-------------------------------------------------------------------------------------------
15.016191 17.206302 14.58% 240,850 1998
-------------------------------------------------------------------------------------------
12.442308 15.016191 20.57% 244,272 1997
-------------------------------------------------------------------------------------------
11.183603 12.442308 11.25% 244,667 1996
-------------------------------------------------------------------------------------------
9.589367 11.183603 16.63% 198,546 1995
-------------------------------------------------------------------------------------------
10.415849 9.589367 -7.93% 150,536 1994
-------------------------------------------------------------------------------------------
10.000000 10.415849 4.16% 3,292 1993
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income 48.330455 54.000183 11.73% 17,840 1999
-------------------------------------------------------------------------------------------
Fund 46.743425 48.330455 3.40% 24,848 1998
-------------------------------------------------------------------------------------------
41.287772 46.743425 13.21% 27,378 1997
-------------------------------------------------------------------------------------------
37.550944 41.287772 9.95% 29,770 1996
-------------------------------------------------------------------------------------------
32.589111 37.550944 15.23% 37,608 1995
-------------------------------------------------------------------------------------------
34.612981 32.589111 -5.85% 47,236 1994
-------------------------------------------------------------------------------------------
28.076548 34.612981 23.28% 59,521 1993
-------------------------------------------------------------------------------------------
22.214568 28.076548 26.39% 67,342 1992
-------------------------------------------------------------------------------------------
17.337275 22.214568 28.13% 73,366 1991
-------------------------------------------------------------------------------------------
18.269034 17.337275 -5.10% 100,081 1990
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Equity - Income 78.774753 83.313397 5.76% 193,545 1999
-------------------------------------------------------------------------------------------
Fund 70.928467 78.774753 11.06% 216,592 1998
-------------------------------------------------------------------------------------------
55.285184 70.928467 28.30% 245,733 1997
-------------------------------------------------------------------------------------------
46.285491 55.285184 19.44% 257,747 1996
-------------------------------------------------------------------------------------------
35.576037 46.285491 30.10% 263,736 1995
-------------------------------------------------------------------------------------------
35.955883 35.576037 -1.06% 306,544 1994
-------------------------------------------------------------------------------------------
30.029661 35.955883 19.73% 305,774 1993
-------------------------------------------------------------------------------------------
26.531856 30.029661 13.18% 285,928 1992
-------------------------------------------------------------------------------------------
20.772673 26.531856 27.72% 294,858 1991
-------------------------------------------------------------------------------------------
24.479712 20.772673 -15.14% 330,860 1990
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
60
<PAGE> 62
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Magellan(R) Fund 29.350937 35.935860 22.44% 1,080,953 1999
-------------------------------------------------------------------------------------------
22.253917 29.350937 31.89% 775,189 1998
-------------------------------------------------------------------------------------------
17.810611 22.253917 24.95% 655,202 1997
-------------------------------------------------------------------------------------------
16.158074 17.810611 10.23% 6,562 1996
-------------------------------------------------------------------------------------------
11.964387 16.158074 35.05% 63,859 1995
-------------------------------------------------------------------------------------------
12.346838 11.964387 -3.10% 07,064 1994
-------------------------------------------------------------------------------------------
10.000000 12.346838 23.47% 9,100 1993
- -----------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 22.760633 23.106868 1.52% 637,179 1999
-------------------------------------------------------------------------------------------
19.778111 22.760633 15.08% 631,678 1998
-------------------------------------------------------------------------------------------
16.377974 19.778111 20.76% 99,590 1997
-------------------------------------------------------------------------------------------
14.410892 16.377974 13.65% 75,617 1996
-------------------------------------------------------------------------------------------
12.020413 14.410892 19.89% 01,466 1995
-------------------------------------------------------------------------------------------
11.972512 12.020413 0.40% 61,179 1994
-------------------------------------------------------------------------------------------
10.000000 11.972512 19.73% 4,320 1993
- -----------------------------------------------------------------------------------------------------------------------
Fidelity VIP High 23.899779 25.512888 6.75% 4,175 1999
-------------------------------------------------------------------------------------------
Income Portfolio 25.310146 23.899779 -5.57% 5,077 1998
-------------------------------------------------------------------------------------------
21.793257 25.310146 16.14% 0,793 1997
-------------------------------------------------------------------------------------------
19.364421 21.793257 12.54% 2,382 1996
-------------------------------------------------------------------------------------------
16.267014 19.364421 19.04% 2,970 1995
-------------------------------------------------------------------------------------------
16.739460 16.267014 -2.82% 4,151 1994
-------------------------------------------------------------------------------------------
14.073333 16.739460 18.94% 2,931 1993
-------------------------------------------------------------------------------------------
11.587552 14.073333 21.45% 2,842 1992
-------------------------------------------------------------------------------------------
10.000000 11.587552 15.88% 0,365 1991
- -----------------------------------------------------------------------------------------------------------------------
Franklin Mutual Series 9.868029 11.164707 13.14% 26,055 1999
-------------------------------------------------------------------------------------------
Franklin Mutual Series 10.000000 9.868029 -1.32% 18,848 1998
-------------------------------------------------------------------------------------------
Franklin Mutual Series
- -----------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 10.504025 17.811356 69.57% 198,949 1999
-------------------------------------------------------------------------------------------
- - Q 10.000000 10.504025 5.04% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Janus Fund 20.070038 29.145619 45.22% 595,937 1999
-------------------------------------------------------------------------------------------
14.640570 20.070038 37.09% 303,830 1998
-------------------------------------------------------------------------------------------
12.087447 14.640570 21.12% 35,485 1997
-------------------------------------------------------------------------------------------
10.239338 12.087447 18.05% 33,123 1996
-------------------------------------------------------------------------------------------
10.000000 10.239338 2.39% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund 32.342568 52.641837 62.76% 995,837 1999
--------- --------- ------ ------- ----
-------------------------------------------------------------------------------------------
18.897600 32.342568 71.15% 507,576 1998
-------------------------------------------------------------------------------------------
14.762398 18.897600 28.01% 12,701 1997
-------------------------------------------------------------------------------------------
11.699046 14.762398 26.18% 30,288 1996
-------------------------------------------------------------------------------------------
8.701036 11.699046 34.46% 6,594 1995
-------------------------------------------------------------------------------------------
9.451097 8.701036 -7.94% 6,135 1994
-------------------------------------------------------------------------------------------
10.000000 9.451097 -5.49% 1,020 1993
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE> 63
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Worldwide Fund 15.241714 24.727791 62.24% 769,694 1999
-------------------------------------------------------------------------------------------
12.268712 15.241714 24.23% 459,107 1998
-------------------------------------------------------------------------------------------
10.317427 12.268712 18.91% 23,968 1997
-------------------------------------------------------------------------------------------
10.000000 10.317427 3.17% 5,099 1996
- -----------------------------------------------------------------------------------------------------------------------
Lazard Small Cap Portfolio 10.448830 10.464373 0.15% 17,391 1999
-------------------------------------------------------------------------------------------
- - Open Shares - Q 10.000000 10.448830 4.49% 45 1998
- -----------------------------------------------------------------------------------------------------------------------
MFS(R) Global 37.527462 35.741694 -4.76% 14,393 1999
-------------------------------------------------------------------------------------------
Governments Fund - Q 36.509244 37.527462 2.79% 19,990 1998
-------------------------------------------------------------------------------------------
36.879814 36.509244 -1.00% 0,631 1997
-------------------------------------------------------------------------------------------
35.454983 36.879814 4.02% 8,013 1996
-------------------------------------------------------------------------------------------
31.104159 35.454983 13.99% 4,015 1995
-------------------------------------------------------------------------------------------
33.728667 31.104159 -7.78% 9,642 1994
-------------------------------------------------------------------------------------------
28.864451 33.728667 16.85% 5,016 1993
-------------------------------------------------------------------------------------------
28.856612 28.864451 0.03% 48,580 1992
-------------------------------------------------------------------------------------------
25.777493 28.856612 11.94% 39,397 1991
-------------------------------------------------------------------------------------------
22.152081 25.777493 16.37% 44,525 1990
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - 43.667785 41.898652 -4.05% 37,478 1999
-------------------------------------------------------------------------------------------
Class D - Q 40.827520 43.667785 6.96% 36,470 1998
-------------------------------------------------------------------------------------------
37.842928 40.827520 7.89% 41,735 1997
-------------------------------------------------------------------------------------------
37.782872 37.842928 0.16% 42,476 1996
-------------------------------------------------------------------------------------------
30.832258 37.782872 22.54% 38,843 1995
-------------------------------------------------------------------------------------------
33.991130 30.832258 -9.29% 35,282 1994
-------------------------------------------------------------------------------------------
31.104546 33.991130 9.28% 35,392 1993
-------------------------------------------------------------------------------------------
29.186916 31.104546 6.57% 21,409 1992
-------------------------------------------------------------------------------------------
25.300143 29.186916 15.36% 18,724 1991
-------------------------------------------------------------------------------------------
23.686756 25.300143 6.81% 16,600 1990
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Bond Fund - 43.480582 41.719901 -4.05% 73 1999
-------------------------------------------------------------------------------------------
Class D - NQ 40.652493 43.480582 6.96% 148 1998
-------------------------------------------------------------------------------------------
37.680696 40.652493 7.89% 176 1997
-------------------------------------------------------------------------------------------
37.620900 37.680696 0.16% 194 1996
-------------------------------------------------------------------------------------------
30.700082 37.620900 22.54% 622 1995
-------------------------------------------------------------------------------------------
33.845410 30.700082 -9.29% 657 1994
-------------------------------------------------------------------------------------------
30.971200 33.845410 9.28% 676 1993
-------------------------------------------------------------------------------------------
29.061793 30.971200 6.57% 836 1992
-------------------------------------------------------------------------------------------
25.191682 29.061793 15.36% 1,030 1997
-------------------------------------------------------------------------------------------
23.585215 25.191682 6.81% 1,070 1990
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
62
<PAGE> 64
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R) Fund - 125.467347 123.552516 -1.53% 69,097 1999
-------------------------------------------------------------------------------------------
Class D - Q 97.524886 125.467347 28.65% 59,155 1998
-------------------------------------------------------------------------------------------
70.764576 97.524886 37.82% 45,672 1997
-------------------------------------------------------------------------------------------
57.857937 70.764576 22.31% 34,681 1996
-------------------------------------------------------------------------------------------
45.095466 57.857937 28.30% 30,473 1995
-------------------------------------------------------------------------------------------
45.422888 45.095466 -0.72% 32,311 1994
-------------------------------------------------------------------------------------------
43.104048 45.422888 5.38% 32,770 1993
-------------------------------------------------------------------------------------------
42.418147 43.104048 1.62% 30,648 1992
-------------------------------------------------------------------------------------------
33.001868 42.418147 28.53% 28,864 1991
-------------------------------------------------------------------------------------------
33.337339 33.001868 -1.01% 27,869 1990
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - 130.686988 128.692505 -1.53% 149 1999
-------------------------------------------------------------------------------------------
Class D - NQ 101.582074 130.686988 28.65% 176 1998
-------------------------------------------------------------------------------------------
73.708492 101.582074 37.82% 314 1997
-------------------------------------------------------------------------------------------
60.264917 73.708492 22.31% 314 1996
-------------------------------------------------------------------------------------------
46.971513 60.264917 28.30% 258 1995
-------------------------------------------------------------------------------------------
47.312558 46.971513 -0.72% 259 1994
-------------------------------------------------------------------------------------------
44.897247 47.312558 5.38% 260 1993
-------------------------------------------------------------------------------------------
44.182806 44.897247 1.62% 261 1992
-------------------------------------------------------------------------------------------
34.374796 44.482806 28.53% 753 1991
-------------------------------------------------------------------------------------------
34.724214 34.374796 -1.01% 1,169 1990
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth 114.746202 132.098827 15.12% 26,654 1999
-------------------------------------------------------------------------------------------
Fund - Class D - Q 93.947252 114.746202 22.14% 30,515 1998
-------------------------------------------------------------------------------------------
75.405663 93.947252 24.59% 46,513 1997
-------------------------------------------------------------------------------------------
65.471148 75.405663 15.17% 48,441 1996
-------------------------------------------------------------------------------------------
51.535806 65.471148 27.04% 48,841 1995
-------------------------------------------------------------------------------------------
51.458079 51.535806 0.15% 48,009 1994
-------------------------------------------------------------------------------------------
46.832151 51.458079 9.88% 48,190 1993
-------------------------------------------------------------------------------------------
44.639577 46.832151 4.91% 48,853 1992
-------------------------------------------------------------------------------------------
33.241418 44.639577 34.29% 42,168 1991
-------------------------------------------------------------------------------------------
36.439953 33.241418 -8.78% 43,789 1990
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth 121.157545 139.479726 15.12% 208 1999
-------------------------------------------------------------------------------------------
Fund - Class D - NQ 99.196488 121.157545 22.14% 218 1998
-------------------------------------------------------------------------------------------
79.618909 99.196488 24.59% 229 1997
-------------------------------------------------------------------------------------------
69.129314 79.618909 15.17% 230 1996
-------------------------------------------------------------------------------------------
54.415339 69.129314 27.04% 120 1995
-------------------------------------------------------------------------------------------
54.333269 54.415339 0.15% 121 1994
-------------------------------------------------------------------------------------------
49.448867 54.333269 9.88% 126 1993
-------------------------------------------------------------------------------------------
47.133788 49.448867 4.91% 397 1992
-------------------------------------------------------------------------------------------
35.098768 47.133788 34.29% 568 1991
-------------------------------------------------------------------------------------------
38.476025 35.098768 -8.78% 580 1990
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
63
<PAGE> 65
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R) Money 26.532610 27.412298 3.32% 27,248 1999
-------------------------------------------------------------------------------------------
Market Fund - Prime 25.582330 26.532610 3.71% 32,255 1997
-
-------------------------------------------------------------------------------------------
Shares - Pre 12/25/82 - Q 24.656210 25.582330 3.76% 43,632 1996
-
-------------------------------------------------------------------------------------------
23.787066 24.656210 3.61% 49,431 1995
-
-------------------------------------------------------------------------------------------
22.850271 23.797066 4.14% 49,996 1994
-
-------------------------------------------------------------------------------------------
22.315407 88.850271 2.40% 56,127 1993
-
-------------------------------------------------------------------------------------------
22.04209 22.315407 1.24% 68,074 1992
-
-------------------------------------------------------------------------------------------
21.636991 22.042019 1.87% 92,318 1991
-
-------------------------------------------------------------------------------------------
20.752553 21.636991 4.26% 118,625 1990
-
-------------------------------------------------------------------------------------------
19.490217 20.752553 6.48% 139,482 1989
-
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money 21.071063 21.769674 3.32% 621,449 1999
-------------------------------------------------------------------------------------------
Market Fund - Prime 19.580907 20.316392 3.76% 32,458 1997
-------------------------------------------------------------------------------------------
Shares - Q 18.898613 19.580907 3.61% 327,248 1996
-------------------------------------------------------------------------------------------
18.146709 18.898613 4.14% 424,693 1995
-------------------------------------------------------------------------------------------
17.721943 18.146709 2.40% 326,464 1994
-------------------------------------------------------------------------------------------
17.504831 17.721943 1.24% 294,859 1993
-
-------------------------------------------------------------------------------------------
17.183173 17.504831 1.87% 303,845 1992
-------------------------------------------------------------------------------------------
16.480790 17.183176 4.26% 450,748 1991
-------------------------------------------------------------------------------------------
15.478296 16.480790 6.48% 548,549 1990
-------------------------------------------------------------------------------------------
14.401492 15.478296 7.48% 568,349 1989
-
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Money 26.700292 27.585541 3.32% 838 1999
-------------------------------------------------------------------------------------------
Market Fund - Prime 25.744006 26.700292 3.71% 841 1998
-------------------------------------------------------------------------------------------
Shares - NQ 24.812035 25.744006 3.76% 844 1997
-------------------------------------------------------------------------------------------
23.947460 24.812035 3.61% 1,317 1996
-------------------------------------------------------------------------------------------
22.994681 23.947460 4.14% 1,323 1995
-------------------------------------------------------------------------------------------
22.456439 22.994681 2.40% 1,329 1994
-------------------------------------------------------------------------------------------
22.181323 22.456439 1.24% 1,335 1993
-------------------------------------------------------------------------------------------
21.773734 22.181323 1.87% 2,211 1992
-------------------------------------------------------------------------------------------
20.883706 21.773734 4.26% 3,526 1991
-------------------------------------------------------------------------------------------
19.613392 20.883706 6.48% 3,539 1990
- -----------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) 10.015679 11.817107 17.99% 17,851 1999
Index Fund - Service Class
- -Q
-------------------------------------------------------------------------------------------
10.000000 10.015679 0.16% 0 19981
-------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Nationwide(R) Intermediate 11.915504 11.529833 -3.24% 38,138 1999
U.S. Government Bond Fund
- - Class D - Q
-------------------------------------------------------------------------------------------
11.156351 11.915504 6.80% 43,459 1998
-------------------------------------------------------------------------------------------
10.324818 11.156351 8.05% 6,737 1997
-------------------------------------------------------------------------------------------
10.124709 10.324818 1.98% 6,372 1996
-------------------------------------------------------------------------------------------
10.000000 10.124709 1.25% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Neuberger Berman Equity 9.266508 9.512964 2.66% 71,239 1999
-------------------------------------------------------------------------------------------
Trust(R) Neuberger Berman 11.915504 9.266508 -7.33% 67,525 1998
Genesis Trust - Q
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
64
<PAGE> 66
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Neuberger Berman 17.198573 18.411034 7.05% 379,737 1999
-------------------------------------------------------------------------------------------
Guardian Fund 17.024633 17.198573 1.02% 436,072 1998
-------------------------------------------------------------------------------------------
14.625126 17.024633 16.41% 448,443 1997
-------------------------------------------------------------------------------------------
12.571028 14.625126 16.34% 357,346 1996
-------------------------------------------------------------------------------------------
9.640402 12.571028 30.40% 139,046 1995
-------------------------------------------------------------------------------------------
10.000000 9.640402 -3.60% 25,549 1994
- -----------------------------------------------------------------------------------------------------------------------
Neuberger Berman 12.056542 12.095451 0.32% 19,912 1999
-------------------------------------------------------------------------------------------
Limited Maturity Bond 11.672986 12.056542 3.29% 81,393 1998
-------------------------------------------------------------------------------------------
Fund 11.068501 11.672986 5.46% 67,262 1997
-------------------------------------------------------------------------------------------
10.735070 11.068501 3.11% 74,163 1996
-------------------------------------------------------------------------------------------
9.833352 10.735070 9.17% 91,976 1995
-------------------------------------------------------------------------------------------
9.995028 9.833352 -1.62% 89,231 1994
-------------------------------------------------------------------------------------------
10.000000 9.995028 -0.05% 423 1993
- -----------------------------------------------------------------------------------------------------------------------
Neuberger Berman 24.928856 26.523895 6.40% 311,323 1999
-------------------------------------------------------------------------------------------
Partners Fund 23.764888 24.928856 4.90% 374,224 1998
-------------------------------------------------------------------------------------------
18.631249 23.764888 27.55% 312,513 1997
-------------------------------------------------------------------------------------------
14.924653 18.631249 24.84% 222,551 1996
-------------------------------------------------------------------------------------------
11.183371 14.924653 33.45% 73,504 1995
-------------------------------------------------------------------------------------------
11.548721 11.183371 -3.16% 38,329 1994
-------------------------------------------------------------------------------------------
10.000000 11.548721 15.49% 9,926 1993
- -----------------------------------------------------------------------------------------------------------------------
Oppenheimer Global 24.105920 37.706431 56.42% 315,244 1999
-------------------------------------------------------------------------------------------
Fund/VA - Class A 21.669822 24.105920 11.24% 301,407 1998
-------------------------------------------------------------------------------------------
18.022572 21.669822 20.24% 262,844 1997
-------------------------------------------------------------------------------------------
15.538850 18.022572 15.98% 228,413 1996
-------------------------------------------------------------------------------------------
13.503390 15.538850 15.07% 160,871 1995
-------------------------------------------------------------------------------------------
14.119303 13.503390 -4.36% 87,590 1994
-------------------------------------------------------------------------------------------
10.000000 14.119303 41.19% 5,128 1993
- -----------------------------------------------------------------------------------------------------------------------
Phoenix Balanced Fund 16.652539 18.203902 9.32% 58,295 1999
-------------------------------------------------------------------------------------------
Series - Q 14.235004 16.652539 16.98% 47,793 1998
-------------------------------------------------------------------------------------------
12.187868 14.235004 16.80% 46,629 1997
-------------------------------------------------------------------------------------------
11.373217 12.187868 7.16% 43,659 1996
-------------------------------------------------------------------------------------------
9.338434 11.373217 21.79% 23,786 1995
-------------------------------------------------------------------------------------------
10.000000 9.338434 -6.62% 9,028 1994
- -----------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund 10.034647 10.809720 7.72% 355 1999
-------------------------------------------------------------------------------------------
- Class A- Q 10.000000 10.034647 0.35% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Prestige International 10.035113 11.989686 19.48% 4,361 1999
Fund
--------------------------------------------------------------------------------------------
Class A - Q 10.000000 10.035113 0.35% 181 19981
- -----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 10.084070 13.394083 32.82% 1,471 1999
-------------------------------------------------------------------------------------------
Fund Class A- Q 10.000000 10.084070 0.84% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value 10.229636 9.619068 -5.97% 109 1999
-------------------------------------------------------------------------------------------
Fund Class A - Q 10.000000 10.229636 2.30% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund 10.359298 12.128362 17.08% 8,135 1999
-------------------------------------------------------------------------------------------
Class A - Q 10.000000 10.359298 3.59% 45 1998
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
65
<PAGE> 67
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION PERCENT NUMBER OF
UNIT VALUE UNIT VALUE CHANGE IN ACCUMULATION
AT BEGINNING AT END ACCUMULATION UNITS AT END
FUND OF PERIOD OF PERIOD UNIT VALUE OF THE PERIOD YEAR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Strong Common Stock Fund, 10.418119 14.432187 38.53% 69,558 1999
Inc. - Q
-------------------------------------------------------------------------------------------
10.000000 10.418119 4.18% 0 1998
- -----------------------------------------------------------------------------------------------------------------------
Strong Total Return 26.782090 42.228152 57.67% 115,792 1999
-------------------------------------------------------------------------------------------
Fund, Inc. 20.549313 26.782090 30.33% 75,602 1998
-------------------------------------------------------------------------------------------
16.766964 20.549313 22.56% 78,495 1997
-------------------------------------------------------------------------------------------
14.893186 16.766964 12.58% 63,801 1996
-------------------------------------------------------------------------------------------
11.881033 14.893186 25.35% 41,291 1995
-------------------------------------------------------------------------------------------
12.205201 11.881033 -2.66% 19,727 1994
-------------------------------------------------------------------------------------------
10.000000 12.205201 22.05% 3,939 1993
- -----------------------------------------------------------------------------------------------------------------------
Templeton Foreign 12.770793 17.547470 37.40% 334,228 1999
-------------------------------------------------------------------------------------------
Fund - Class A 13.604014 12.770793 -6.12% 318,666 1998
-------------------------------------------------------------------------------------------
12.923758 13.604014 5.26% 354,769 1997
-------------------------------------------------------------------------------------------
11.097523 12.923758 16.46% 266,477 1996
-------------------------------------------------------------------------------------------
10.000000 11.097523 10.98% 69,083 1995
- -----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging 14.769496 20.672241 39.97 288,739 1999
-------------------------------------------------------------------------------------------
Growth Fund 14.140391 14.769496 4.45% 338,034 1998
-------------------------------------------------------------------------------------------
11.814248 14.140391 19.69% 316,835 1997
-------------------------------------------------------------------------------------------
10.895016 11.814248 8.44% 250,912 1996
-------------------------------------------------------------------------------------------
10.000000 10.895016 8.95% 0 1995
- -----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Global 10.651516 10.554122 -0.91% 5,420 1999
-------------------------------------------------------------------------------------------
Fixed Income Fund - Q 10.000000 10.651516 6.52% 14,079 1998
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
66
<PAGE> 68
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED
BY NATIONWIDE VARIABLE ACCOUNT
NATIONWIDE LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the prospectus
and should be read in conjunction with the prospectus dated May 1, 2000. The
prospectus may be obtained from Nationwide Life Insurance Company by writing P.
O. Box 16609, Columbus, Ohio 43216-6609, or calling 1-800-848-6631, TDD
1-800-238-3035.
TABLE OF CONTENTS
PAGE
General Information and History.........................1
Services................................................1
Purchase of Securities Being Offered....................1
Underwriters............................................2
Calculation of Performance..............................2
Annuity Payments........................................3
Financial Statements....................................4
GENERAL INFORMATION AND HISTORY
Nationwide Variable Account is a separate investment account of Nationwide Life
Insurance Company ("Nationwide"). Nationwide's common stock is owned by
Nationwide Financial Services, Inc. ("NFS"), a holding company. NFS has two
classes of common stock outstanding with different voting rights enabling
Nationwide Corporation (the holder of all of the outstanding Class B Common
Stock) to control NFS. Nationwide Corporation is a holding company as well. All
of its common stock is held by Nationwide Mutual Insurance Company (95.24%) and
Nationwide Mutual Fire Insurance Company (4.76%), the ultimate controlling
persons of Nationwide group of companies. The Nationwide group of companies is
one of America's largest insurance and financial services family of companies,
with combined assets of over $120 billion as of December 31, 1999.
SERVICES
Nationwide, which has responsibility for administration of the contracts and the
variable account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each contract owner
and the number and type of contract issued to each such contract owner and
records with respect to the contract value of each contract.
Nationwide is the custodian of the assets of the variable account. Nationwide
will maintain a record of all purchases and redemptions of shares of the
underlying mutual fund options. Nationwide, or affiliates of Nationwide may have
entered into agreements with either the investment adviser or distributor for
several of the underlying mutual funds. The agreements relate to administrative
services furnished by Nationwide or an affiliate of Nationwide and provide for
an annual fee based on the average aggregate net assets of the variable account
(and other separate accounts of Nationwide or life insurance company
subsidiaries of Nationwide) invested in particular underlying mutual funds.
These fees in no way affect the net asset value of the underlying mutual funds
or fees paid by the contract owner.
The audited financial statements have been included herein in reliance upon the
reports of KPMG LLP, independent certified public accountants, Two Nationwide
Plaza, Columbus, Ohio 43215, and upon the authority of said firm as experts in
accounting and auditing.
1
<PAGE> 69
PURCHASE OF SECURITIES BEING OFFERED
The contracts will be sold by licensed insurance agents in the states where the
contracts may be lawfully sold. Agents will be registered representatives of
broker-dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc. ("NASD").
The contract owner may, on written request, transfer up to 100% of the contract
value from the variable account to the fixed account. However, Nationwide
reserves the right to restrict transfers from the variable account to 25% of
contract value in any 12 month period. Transfers must be made prior to the
earlier of the annuitization date or the death of the designated annuitant.
However, no such transfers will be permitted prior to the first contract
anniversary, or within 12 months of any prior transfer. Contract owners may at
the maturity of an Interest Rate Guarantee Period transfer a portion of the
contract value of the fixed account to the variable account.
Such portion will be determined by Nationwide at its sole discretion, but will
not be less than 10% of the total value of the portion of the fixed account that
is maturing, and will be declared upon the expiration date of the then current
Interest Rate Guarantee Period. The Interest Rate Guarantee Period expires on
the final day of a calendar quarter; therefore the Interest Rate Guarantee
Period for deposits or transfers in the fixed account may continue for up to
three months after a one year period has expired. Transfers under this provision
must be made within 30 days after the expiration date of the guarantee period.
Contract owners who have entered into a Dollar Cost Averaging agreement with
Nationwide may transfer from the fixed account to the variable account under the
terms of that agreement.
UNDERWRITERS
The contracts, which are offered continuously, are distributed by Nationwide
Investment Services Corporation ("NISC"), Two Nationwide Plaza, Columbus, Ohio
43215, a wholly owned subsidiary of Nationwide. During the fiscal years ended
December 31, 1999, 1998 and 1997 no underwriting commissions were paid by
Nationwide to NISC.
CALCULATION OF PERFORMANCE
A "yield" and "effective yield" may be advertised for the Nationwide Money
Market Fund. "Yield" is a measure of the net dividend and interest income earned
over a specific seven-day period (which period will be stated in the
advertisement) expressed as a percentage of the offering price of the Nationwide
Money Market Fund's units. Yield is an annualized figure, which means that it is
assumed that the Nationwide Money Market Fund generates the same level of net
income over a 52-week period. At December 31, 1999, the Nationwide Money Market
Fund's seven-day current unit value yield was 4.10%. The "effective yield" is
calculated similarly but includes the effect of assumed compounding, calculated
under rules prescribed by the SEC. The effective yield will be slightly higher
than yield due to this compounding effect. At December 31, 1999, the seven-day
effective yield was 4.09%.
Nationwide may also from time to time advertise the performance of a sub-account
of the Variable Account relative to the performance of other variable annuity
sub-accounts or underlying mutual fund options with similar or different
objectives, or the investment industry as a whole. Other investments to which
the sub-accounts may be compared include, but are not limited to: precious
metals; real estate; stocks and bonds; closed-end funds; CDs; bank money market
deposit accounts and passbook savings; and the Consumer Price Index.
The sub-accounts may also be compared to certain market indexes, which may
include, but are not limited to: S&P 500; Shearson/Lehman Intermediate
Government/Corporate Bond Index; Shearson/Lehman Long-Term Government/Corporate
Bond Index; Donoghue Money Fund Average; U.S. Treasury Note Index; Bank Rate
Monitor National Index of 2 1/2 Year CD Rates; and Dow Jones Industrial Average.
Normally these rankings and ratings are published by independent tracking
services and publications of general interest including, but not limited to:
Lipper Analytical Services, Inc., CDA/Wiesenberger, Morningstar, Donoghue's,
magazines such as Money, Forbes, Kiplinger's Personal Finance Magazine,
Financial World, Consumer Reports, Business Week, Time, Newsweek, National
Underwriter, U.S. News and World Report; rating services such as LIMRA, Value,
Best's Agent Guide, Western Annuity Guide, Comparative Annuity
68
<PAGE> 70
Reports; and other publications such as the Wall Street Journal, Barron's,
Investor's Daily, and Standard & Poor's Outlook. In addition, Variable Annuity
Research & Data Service (The VARDS Report) is an independent rating service that
ranks over 500 variable annuity funds based upon total return performance. These
rating services and publications rank the performance of the underlying Mutual
Fund options against all underlying mutual funds over specified periods and
against underlying mutual funds in specified categories. The rankings may or may
not include the effects of sales charges or other fees.
Nationwide is also ranked and rated by independent financial rating services,
among which are Moody's, Standard & Poor's and A.M. Best Company. The purpose of
these ratings is to reflect the financial strength or claims-paying ability of
Nationwide. The ratings are not intended to reflect the investment experience or
financial strength of the Variable Account. Nationwide may advertise these
ratings from time to time. In addition, Nationwide may include in certain
advertisements, endorsements in the form of a list of organizations, individuals
or other parties which recommend Nationwide or the contracts. Furthermore,
Nationwide may occasionally include in advertisements comparisons of currently
taxable and tax deferred investment programs, based on selected tax brackets, or
discussions of alternative investment vehicles and general economic conditions.
Nationwide may, from time to time, advertise several types of historical
performance of the sub-accounts. Nationwide may advertise for the sub-account's
standardized "average annual total return," calculated in a manner prescribed by
the SEC, and nonstandardized "total return." "Average annual total return"
illustrates the percentage rate or return of a hypothetical initial investment
of $1,000 for the most recent one, five and ten year periods, or for a period
covering the time the underlying mutual fund has been available in the variable
account if the underlying mutual fund option has not been available for the
prescribed periods. THIS CALCULATION REFLECTS THE DEDUCTION OF ALL APPLICABLE
CHARGES MADE TO THE CONTRACTS EXCEPT FOR PREMIUM TAXES, WHICH MAY BE IMPOSED BY
CERTAIN STATES.
Nonstandardized "total return," calculated similar to standardized "average
annual total return," illustrates the percentage rate of return of a
hypothetical initial investment of $10,000 for the most recent one, five and ten
year periods, or for a period covering the time the underlying mutual fund
option has been in existence. For those underlying mutual fund options which
have not been held as sub-accounts for one of the prescribed periods, the
nonstandardized total return illustrations will show the investment performance
such underlying mutual fund options would have achieved (reduced by the same
charges except the CDSC) had such underlying mutual fund options been available
in the variable account for the periods quoted. THE CDSC IS NOT REFLECTED
BECAUSE THE CONTRACTS ARE DESIGNED FOR LONG TERM INVESTMENT. THE CDSC, IF
REFLECTED, WOULD DECREASE THE LEVEL OF PERFORMANCE SHOWN. AN INITIAL INVESTMENT
OF $10,000 IS ASSUMED BECAUSE THAT AMOUNT MORE CLOSELY APPROXIMATES THE SIZE OF
A TYPICAL CONTRACT THAN DOES THE $1,000 ASSUMPTION USED IN CALCULATING THE
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS.
The standardized average annual total return and nonstandardized total return
quotations reflected below are calculated as described in this section using
underlying mutual fund performance for the periods ended December 31, 1999.
However, Nationwide generally provides performance quotations on a more frequent
basis, the results of which could reflect better or worse results than shown
below. The quotations and other comparative material advertised by Nationwide
are based upon historical earnings and are not intended to represent or
guarantee future results. A contract owner's contract value at redemption may be
more or less than the original cost.
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity Payments" located in the prospectus.
3
<PAGE> 71
<PAGE> 1
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 (comprised of the
sub-accounts listed in note 1(b)) (collectively, the Account) as of December 31,
1999, 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 Accounts 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, 1999, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Account as of December
31, 1999, and the results of its operations and its changes in contract owners
equity for each of the years in the two year period then ended in conformity
with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 18, 2000
<PAGE> 2
================================================================================
NATIONWIDE VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
December 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value:
American Century: Benham Short-Term Government Fund (ACBenSTGvt)
220,320 shares (cost $2,082,934) .........................................$ 2,031,355
American Century: Income & Growth Fund (ACIncGro)
322,498 shares (cost $9,276,159) ......................................... 10,981,053
American Century: Twentieth Century Growth Fund (ACTCGro)
566,913 shares (cost $14,294,132) ........................................ 18,299,951
American Century: Twentieth Century International Growth Fund (ACTCIntlGr)
134,208 shares (cost $1,416,537) ......................................... 2,009,092
American Century: Twentieth Century Ultra Fund (ACTCUltra)
651,457 shares (cost $20,987,488) ........................................ 29,823,713
Delaware Group Delchester High-Yield Bond Fund, Inc. -
Delchester Fund Institutional Class (DeHYBd)
220,882 shares (cost $1,356,266) ......................................... 1,130,915
Dreyfus A Bonds Plus, Inc. (DryABds)
144,237 shares (cost $2,063,566) ......................................... 1,932,781
Dreyfus Appreciation Fund, Inc. (DryApp)
47,141 shares (cost $2,016,065) .......................................... 2,155,770
Dreyfus Balanced Fund, Inc. (DryBal)
21,988 shares (cost $357,585) ............................................ 347,190
Dreyfus S&P 500 Index Fund (Dry500Ix)
554,953 shares (cost $19,537,791) ........................................ 23,813,040
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
135,008 shares (cost $1,689,367) ......................................... 1,964,361
Evergreen Income and Growth Fund - Class Y (EvIncGro)
63,364 shares (cost $1,354,222) .......................................... 1,418,087
Federated High Yield Trust (FedHiYld)
60,295 shares (cost $530,333) ............................................ 498,039
Federated Investment Series Funds, Inc. - Federated Bond Fund - Class F
(FedBdFd) 171,757 shares (cost $1,670,670) ............................... 1,549,246
Fidelity Advisor Balanced Fund - Class T (FABal)
72,905 shares (cost $1,364,625) .......................................... 1,330,516
Fidelity Advisor Equity Income Fund - Class T (FAEqInc)
78,424 shares (cost $2,114,044) .......................................... 2,045,289
Fidelity Advisor Growth Opportunities Fund - Class T (FAGrOpp)
199,987 shares (cost $9,020,612) ......................................... 9,331,386
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
258,869 shares (cost $3,155,462) ....................................... $ 2,943,338
Fidelity Asset Manager(TM) (FidAsMgr)
304,964 shares (cost $5,374,309) ....................................... 5,605,247
Fidelity Capital & Income Fund (FidCapInc)
104,874 shares (cost $987,905) ......................................... 974,281
Fidelity Equity-Income Fund (FidEqInc)
301,699 shares (cost $13,779,479) ...................................... 16,134,874
Fidelity Magellan(R) Fund (FidMgln)
284,272 shares (cost $29,737,067) ...................................... 38,840,103
Fidelity Puritan(R) Fund (FidPurtn)
773,684 shares (cost $14,537,156) ...................................... 14,723,211
Fidelity VIP - High Income Portfolio (FidVIPHI)
9,418 shares (cost $109,105) ........................................... 106,512
Franklin Mutual Series Fund Inc. - Mutual Shares Fund - Class I (FranMutSer)
14,260 shares (cost $298,039) .......................................... 290,626
INVESCO Dynamics Fund, Inc. (InvDynam)
136,971 shares (cost $2,804,087) ....................................... 3,542,081
Janus Fund (JanFund)
394,296 shares (cost $13,953,091) ...................................... 17,368,748
Janus Twenty Fund (Jan20Fd)
628,329 shares (cost $33,888,409) ...................................... 52,421,524
Janus Worldwide Fund (JanWrldwde)
249,016 shares (cost $12,020,545) ...................................... 19,032,313
Lazard Small Cap Portfolio - Open Shares (LazSmCap)
11,020 shares (cost $188,153) .......................................... 181,948
MFS - World Governments Fund - Class A (MFSWdGvt)
53,856 shares (cost $576,880) .......................................... 506,786
Nationwide(R) Bond Fund - Class D (NWBdFd)
176,603 shares (cost $1,667,041) ....................................... 1,575,299
Nationwide(R) Fund - Class D (NWFund)
285,936 shares (cost $8,546,699) ....................................... 8,578,089
Nationwide(R) Growth Fund - Class D (NWGroFd)
204,855 shares (cost $3,199,103) ....................................... 3,568,578
Nationwide(R) S&P 500 Index Fund - Class R (NWIndxFdR)
16,472 shares (cost $189,713) .......................................... 210,844
Nationwide(R) Money Market Fund (NWMyMkt)
14,322,801 shares (cost $14,322,801) ................................... 14,322,801
Nationwide(R) Intermediate U.S. Government Bond Fund - Class D(NWUSGvt)
45,286 shares (cost $460,063) .......................................... 439,722
Neuberger & Berman Genesis Trust (NBGenesTr)
32,117 shares (cost $641,458) .......................................... 675,749
Neuberger & Berman Guardian Trust (NBGuardTr)
377,257 shares (cost $8,986,571) ....................................... 6,979,255
</TABLE>
(Continued)
<PAGE> 4
NATIONWIDE VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, CONTINUED
<TABLE>
<S> <C> <C>
Neuberger & Berman Limited Maturity Bond Fund (NBLtdMat)
153,772 shares (cost $1,499,320) ...................................... $ 1,450,073
Neuberger & Berman Partners Fund (NBPartFd)
344,061 shares (cost $9,261,625) ...................................... 8,257,474
Oppenheimer Global Fund - Class A (OppGlob)
190,157 shares (cost $8,682,529) ...................................... 11,894,310
Phoenix Balanced Fund Series - Class A (PhxBalFd)
60,096 shares (cost $1,006,346) ....................................... 1,060,693
Prestige Balanced Fund - Class A (PrBal)
342 shares (cost $3,745) .............................................. 3,841
Prestige International Fund - Class A (PrInt)
4,153 shares (cost $48,885) ........................................... 52,290
Prestige Large Cap Growth Fund - Class A (PrLgCpGro)
1,279 shares (cost $16,998) ........................................... 19,700
Prestige Large Cap Value Fund - Class A (PrLgCpVal)
105 shares (cost $1,104) .............................................. 1,046
Prestige Small Cap Fund - Class A (PrSmCap)
7,732 shares (cost $88,891) ........................................... 98,664
Strong Common Stock Fund, Inc. (StComStk)
39,803 shares (cost $942,721) ......................................... 1,003,424
Strong Total Return Fund, Inc. (StTotRet)
103,813 shares (cost $3,608,348) ...................................... 4,889,592
Templeton Foreign Fund - Class I (TemForFd)
522,700 shares (cost $5,198,492) ...................................... 5,864,693
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
119,711 shares (cost $4,603,033) ...................................... 5,968,809
Warburg Pincus Global Fixed - Income Fund - Common Shares (WPGlFxInc)
5,731 shares (cost $60,232) ........................................... 57,133
-----------
Total investments ................................................. 360,305,455
Accounts receivable ............................................................... 1,397
-----------
Total assets ...................................................... 360,306,852
Accounts payable .................................................................. 31,070
-----------
Contract owners' equity (note 4) .................................................. $360,275,782
===========
</TABLE>
See accompanying notes to financial statements.
================================================================================
<PAGE> 5
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,1999 AND 1998
<TABLE>
<CAPTION>
Total ACBenSTGvt
------------------------------ --------------------------
1999 1998 1999 1998
------------- ----------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 3,745,866 3,196,414 151,561 162,608
Mortality, expense and administration
charges (note 2) ............................. (3,667,684) (2,533,959) (37,774) (40,633)
------------- ----------- --------- ---------
Net investment activity ...................... 78,182 662,455 113,787 121,975
------------- ----------- --------- ---------
Proceeds from mutual fund shares sold ........... 65,558,218 56,416,999 1,382,393 723,023
Cost of mutual fund shares sold ................. (55,831,639) (48,174,169) (1,416,408) (721,176)
------------- ----------- --------- ---------
Realized gain (loss) on investments .......... 9,726,579 8,242,830 (34,015) 1,847
Change in unrealized gain (loss) on investments . 37,877,938 14,063,893 (64,989) 17,698
------------- ----------- --------- ---------
Net gain (loss) on investments ............... 47,604,517 22,306,723 (99,004) 19,545
------------- ----------- --------- ---------
Reinvested capital gains ........................ 20,213,428 11,574,852 - -
------------- ----------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 67,896,127 34,544,030 14,783 141,520
------------- ----------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 89,714,200 53,270,516 167,093 668,275
Transfers between funds ......................... - - (97,603) 7,071
Redemptions ..................................... (23,847,262) (23,621,452) (1,053,119) (835,080)
Annuity benefits ................................ (26,949) (27,891) (940) (952)
Annual contract maintenance charge (note 2) ..... (261,269) (169,891) (1,463) (1,748)
Contingent deferred sales charges (note 2) ...... (391,816) (324,873) (34,837) (1,752)
Adjustments to maintain reserves ................ (33,202) 788 (448) 290
------------- ----------- --------- ---------
Net equity transactions .................... 65,153,702 29,127,197 (1,021,317) (163,896)
------------- ----------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 133,049,829 63,671,227 (1,006,534) (22,376)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 227,225,953 163,554,726 3,037,422 3,059,798
------------- ----------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 360,275,782 227,225,953 2,030,888 3,037,422
============= =========== ========= =========
<CAPTION>
ACIncGro ACTCGro
--------------------------- ---------------------------
1999 1998 1999 1998
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 99,016 64,541 - -
Mortality, expense and administration
charges (note 2) ............................. (116,439) (61,634) (198,570) (152,386)
---------- --------- ---------- ----------
Net investment activity ...................... (17,423) 2,907 (198,570) (152,386)
---------- --------- ---------- ----------
Proceeds from mutual fund shares sold ........... 1,896,243 2,702,912 2,520,566 1,724,411
Cost of mutual fund shares sold ................. (1,646,395) (2,527,718) (1,546,812) (1,226,965)
---------- --------- ---------- ----------
Realized gain (loss) on investments .......... 249,848 175,194 973,754 497,446
Change in unrealized gain (loss) on investments . 1,166,622 627,403 1,707,076 968,585
---------- --------- ---------- ----------
Net gain (loss) on investments ............... 1,416,470 802,597 2,680,830 1,466,031
---------- --------- ---------- ----------
Reinvested capital gains ........................ 18,019 275,147 2,063,722 2,228,156
---------- --------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,417,066 1,080,651 4,545,982 3,541,801
---------- --------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 2,978,474 2,774,469 1,590,054 646,577
Transfers between funds ......................... (53,752) 1,481,828 189,443 (134,689)
Redemptions ..................................... (351,090) (220,883) (1,465,483) (1,058,730)
Annuity benefits ................................ - - (15,993) (12,964)
Annual contract maintenance charge (note 2) ..... (7,497) (2,588) (15,697) (14,839)
Contingent deferred sales charges (note 2) ...... (5,905) (5,005) (9,269) (6,993)
Adjustments to maintain reserves ................ 76 (981) 4,665 3,397
---------- --------- ---------- ----------
Net equity transactions .................... 2,560,306 4,026,840 277,720 (578,241)
---------- --------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 3,977,372 5,107,491 4,823,702 2,963,560
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 7,003,742 1,896,251 13,480,704 10,517,144
---------- --------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $10,981,114 7,003,742 18,304,406 13,480,704
========== ========= ========== ==========
</TABLE>
(Continued)
<PAGE> 6
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
ACTCIntlGr ACTCUltra
-------------------------- -------------------------
1999 1998 1999 1998
----------- ------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 792 1,491 - -
Mortality, expense and administration
charges (note 2) ............................. (16,275) (10,515) (289,122) (183,975)
----------- ------- ---------- ----------
Net investment activity ...................... (15,483) (9,024) (289,122) (183,975)
----------- ------- ---------- ----------
Proceeds from mutual fund shares sold ........... 724,215 622,576 2,707,592 1,479,795
Cost of mutual fund shares sold ................. (581,513) (562,613) (1,932,118) (1,263,460)
----------- ------- ---------- ----------
Realized gain (loss) on investments .......... 142,702 59,963 775,474 216,335
Change in unrealized gain (loss) on investments . 593,121 35,468 6,814,122 2,426,265
----------- ------- ---------- ----------
Net gain (loss) on investments ............... 735,823 95,431 7,589,596 2,642,600
----------- ------- ---------- ----------
Reinvested capital gains ........................ 103,146 12,976 864,560 1,488,048
----------- ------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 823,486 99,383 8,165,034 3,946,673
----------- ------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 428,105 282,424 6,583,564 3,883,377
Transfers between funds ......................... (38,930) 47,185 (1,139,291) (311,089)
Redemptions ..................................... (87,756) (38,282) (1,224,869) (1,084,444)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (1,654) (677) (20,319) (14,129)
Contingent deferred sales charges (note 2) ...... (2,075) (699) (26,644) (23,446)
Adjustments to maintain reserves ................ 58 14 456 172
----------- ------- ---------- ----------
Net equity transactions .................... 297,748 289,965 4,172,897 2,450,441
----------- ------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 1,121,234 389,348 12,337,931 6,397,114
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 887,916 498,568 17,486,224 11,089,110
----------- ------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 2,009,150 887,916 29,824,155 17,486,224
=========== ======= ========== ==========
<CAPTION>
DeHYBd DryABds
------------------------ ------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 123,348 123,276 125,940 115,918
Mortality, expense and administration
charges (note 2) ............................. (15,346) (16,341) (27,148) (25,437)
--------- --------- --------- ---------
Net investment activity ...................... 108,002 106,935 98,792 90,481
--------- --------- --------- ---------
Proceeds from mutual fund shares sold ........... 219,274 341,656 755,271 1,243,229
Cost of mutual fund shares sold ................. (242,560) (327,084) (797,023) (1,219,521)
--------- --------- --------- ---------
Realized gain (loss) on investments .......... (23,286) 14,572 (41,752) 23,708
Change in unrealized gain (loss) on investments . (134,705) (151,204) (49,034) (120,982)
--------- --------- --------- ---------
Net gain (loss) on investments ............... (157,991) (136,632) (90,786) (97,274)
--------- --------- --------- ---------
Reinvested capital gains ........................ - - - 32,247
--------- --------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (49,989) (29,697) 8,006 25,454
--------- --------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 305,176 156,659 416,301 545,761
Transfers between funds ......................... (144,207) (127,468) (396,674) (80,789)
Redemptions ..................................... (71,301) (241,587) (181,145) (241,342)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (559) (495) (1,599) (1,451)
Contingent deferred sales charges (note 2) ...... (1,009) (1,713) (4,613) (3,165)
Adjustments to maintain reserves ................ (10) (83) 403 (408)
--------- --------- --------- ---------
Net equity transactions .................... 88,090 (214,687) (167,327) 218,606
--------- --------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 38,101 (244,384) (159,321) 244,060
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 1,095,862 1,340,246 2,092,501 1,848,441
--------- --------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $1,133,963 1,095,862 1,933,180 2,092,501
========= ========= ========= =========
</TABLE>
<PAGE> 7
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
DryApp DryBal
-------------------------- ----------------------
1999 1998 1999 1998
----------- ------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 10,805 3,740 7,004 3,036
Mortality, expense and administration
charges (note 2) ............................. (22,685) (3,370) (3,386) (1,249)
----------- ------- ------- -------
Net investment activity ...................... (11,880) 370 3,618 1,787
----------- ------- ------- -------
Proceeds from mutual fund shares sold ........... 334,760 108,365 105,989 38,449
Cost of mutual fund shares sold ................. (302,057) (104,926) (111,064) (38,148)
----------- ------- ------- -------
Realized gain (loss) on investments .......... 32,703 3,439 (5,075) 301
Change in unrealized gain (loss) on investments . 77,744 61,961 (4,500) (5,894)
----------- ------- ------- -------
Net gain (loss) on investments ............... 110,447 65,400 (9,575) (5,593)
----------- ------- ------- -------
Reinvested capital gains ........................ 14,262 1,147 30,801 8,351
----------- ------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 112,829 66,917 24,844 4,545
----------- ------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 1,120,026 301,616 167,111 123,154
Transfers between funds ......................... 268,875 367,247 12,770 63,401
Redemptions ..................................... (61,137) (18,608) (16,459) (31,225)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (1,336) (113) (285) (9)
Contingent deferred sales charges (note 2) ...... (776) (36) (608) -
Adjustments to maintain reserves ................ 1,699 273 257 (50)
----------- ------- ------- -------
Net equity transactions .................... 1,327,351 650,379 162,786 155,271
----------- ------- ------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 1,440,180 717,296 187,630 159,816
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 717,296 - 159,816 -
----------- ------- ------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 2,157,476 717,296 347,446 159,816
=========== ======= ======= =======
<CAPTION>
Dry500Ix Dry3dCen
------------------------- ------------------------
1999 1998 1999 1998
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 173,479 120,795 - -
Mortality, expense and administration
charges (note 2) ............................. (233,441) (129,044) (18,115) (11,355)
---------- ---------- --------- ---------
Net investment activity ...................... (59,962) (8,249) (18,115) (11,355)
---------- ---------- --------- ---------
Proceeds from mutual fund shares sold ........... 2,358,016 2,847,389 375,085 277,680
Cost of mutual fund shares sold ................. (1,459,171) (2,101,605) (296,561) (215,841)
---------- ---------- --------- ---------
Realized gain (loss) on investments .......... 898,845 745,784 78,524 61,839
Change in unrealized gain (loss) on investments . 2,071,050 1,493,487 172,373 68,617
---------- ---------- --------- ---------
Net gain (loss) on investments ............... 2,969,895 2,239,271 250,897 130,456
---------- ---------- --------- ---------
Reinvested capital gains ........................ 277,023 2,453 160,139 106,354
---------- ---------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 3,186,956 2,233,475 392,921 225,455
---------- ---------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 7,439,433 3,936,518 689,809 195,911
Transfers between funds ......................... 1,823,273 1,528 (117,085) 7,991
Redemptions ..................................... (1,042,505) (1,319,672) (75,336) (70,148)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (19,905) (8,663) (1,871) (1,341)
Contingent deferred sales charges (note 2) ...... (20,042) (28,571) (1,220) (2,211)
Adjustments to maintain reserves ................ 166 51 29 1
---------- ---------- --------- ---------
Net equity transactions .................... 8,180,420 2,581,191 494,326 130,203
---------- ---------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 11,367,376 4,814,666 887,247 355,658
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 12,445,816 7,631,150 1,077,131 721,473
---------- ---------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $23,813,192 12,445,816 1,964,378 1,077,131
========== ========== ========= =========
</TABLE>
(Continued)
<PAGE> 8
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
EvIncGro FedHiYld
-------------------------- ----------------------
1999 1998 1999 1998
----------- --------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 66,966 53,014 43,451 10,742
Mortality, expense and administration
charges (note 2) ............................. (17,674) (15,523) (6,405) (1,643)
----------- --------- ------- -------
Net investment activity ...................... 49,292 37,491 37,046 9,099
----------- --------- ------- -------
Proceeds from mutual fund shares sold ........... 242,571 141,082 454,839 6,112
Cost of mutual fund shares sold ................. (214,601) (121,276) (459,193) (6,420)
----------- --------- ------- -------
Realized gain (loss) on investments .......... 27,970 19,806 (4,354) (308)
Change in unrealized gain (loss) on investments . 85,128 (202,823) (34,463) 2,169
----------- --------- ------- -------
Net gain (loss) on investments ............... 113,098 (183,017) (38,817) 1,861
----------- --------- ------- -------
Reinvested capital gains ........................ 25,558 119,607 - -
----------- --------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 187,948 (25,919) (1,771) 10,960
----------- --------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 181,434 529,511 155,180 52,736
Transfers between funds ......................... (160,727) (1,596) (131,704) 427,826
Redemptions ..................................... (70,401) (329,204) (12,620) (2,247)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (1,050) (584) (242) (13)
Contingent deferred sales charges (note 2) ...... (619) (286) (184) (46)
Adjustments to maintain reserves ................ 7 3 456 162
----------- --------- ------- -------
Net equity transactions .................... (51,356) 197,844 10,886 478,418
----------- --------- ------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 136,592 171,925 9,115 489,378
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 1,281,506 1,109,581 489,378 -
----------- --------- ------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 1,418,098 1,281,506 498,493 489,378
=========== ========= ======= =======
<CAPTION>
FedBdFd FABal
------------------------ -------------------------
1999 1998 1999 1998
--------- --------- --------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 102,995 63,263 22,784 11,502
Mortality, expense and administration
charges (note 2) ............................. (18,422) (11,793) (11,737) (4,942)
--------- --------- --------- -------
Net investment activity ...................... 84,573 51,470 11,047 6,560
--------- --------- --------- -------
Proceeds from mutual fund shares sold ........... 458,722 87,912 239,744 463,667
Cost of mutual fund shares sold ................. (482,630) (85,985) (254,691) (435,638)
--------- --------- --------- -------
Realized gain (loss) on investments .......... (23,908) 1,927 (14,947) 28,029
Change in unrealized gain (loss) on investments . (109,895) (22,462) (15,270) (21,984)
--------- --------- --------- -------
Net gain (loss) on investments ............... (133,803) (20,535) (30,217) 6,045
--------- --------- --------- -------
Reinvested capital gains ........................ - - 49,976 35,081
--------- --------- --------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (49,230) 30,935 30,806 47,686
--------- --------- --------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 519,407 217,429 973,573 285,138
Transfers between funds ......................... (25,840) 627,230 (70,703) (26,713)
Redemptions ..................................... (98,914) (41,428) (66,271) (15,263)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (719) (198) (1,130) (415)
Contingent deferred sales charges (note 2) ...... (1,002) (1) (1,134) (539)
Adjustments to maintain reserves ................ 34 (3) (6) (12)
--------- --------- --------- -------
Net equity transactions .................... 392,966 803,029 834,329 242,196
--------- --------- --------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 343,736 833,964 865,135 289,882
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 1,205,464 371,500 465,370 175,488
--------- --------- --------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $1,549,200 1,205,464 1,330,505 465,370
========= ========= ========= =======
</TABLE>
<PAGE> 9
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
FAEqInc FAGrOpp
-------------------------- ------------------------
1999 1998 1999 1998
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 11,115 10,023 66,016 48,032
Mortality, expense and administration
charges (note 2) ............................. (24,189) (18,599) (110,141) (78,505)
----------- --------- --------- ---------
Net investment activity ...................... (13,074) (8,576) (44,125) (30,473)
----------- --------- --------- ---------
Proceeds from mutual fund shares sold ........... 470,946 319,587 750,181 1,353,752
Cost of mutual fund shares sold ................. (369,273) (238,766) (555,496) (1,094,861)
----------- --------- --------- ---------
Realized gain (loss) on investments .......... 101,673 80,821 194,685 258,891
Change in unrealized gain (loss) on investments . (264,494) 55,249 (845,688) 732,635
----------- --------- --------- ---------
Net gain (loss) on investments ............... (162,821) 136,070 (651,003) 991,526
----------- --------- --------- ---------
Reinvested capital gains ........................ 211,430 71,848 900,042 251,548
----------- --------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 35,535 199,342 204,914 1,212,601
----------- --------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 582,052 451,869 2,517,631 1,711,707
Transfers between funds ......................... (215,278) 35,389 (189,059) (64,906)
Redemptions ..................................... (61,176) (185,723) (470,392) (359,563)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (2,401) (1,384) (9,262) (5,519)
Contingent deferred sales charges (note 2) ...... (1,758) (1,588) (8,286) (6,868)
Adjustments to maintain reserves ................ (6) (6) (60) 44
----------- --------- --------- ---------
Net equity transactions .................... 301,433 298,557 1,840,572 1,274,895
----------- --------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 336,968 497,899 2,045,486 2,487,496
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 1,708,319 1,210,420 7,285,888 4,798,392
----------- --------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 2,045,287 1,708,319 9,331,374 7,285,888
=========== ========= ========= =========
<CAPTION>
FAHiYld FidAsMgr
------------------------ ------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 221,385 255,735 153,886 117,170
Mortality, expense and administration
charges (note 2) ............................. (37,448) (38,336) (62,792) (49,446)
--------- --------- --------- ---------
Net investment activity ...................... 183,937 217,399 91,094 67,724
--------- --------- --------- ---------
Proceeds from mutual fund shares sold ........... 1,055,487 1,050,322 547,891 896,828
Cost of mutual fund shares sold ................. (1,168,248) (1,032,112) (486,585) (671,236)
--------- --------- --------- ---------
Realized gain (loss) on investments .......... (112,761) 18,210 61,306 225,592
Change in unrealized gain (loss) on investments . 125,442 (349,860) 212,814 (393,169)
--------- --------- --------- ---------
Net gain (loss) on investments ............... 12,681 (331,650) 274,120 (167,577)
--------- --------- --------- ---------
Reinvested capital gains ........................ - 31,024 212,824 626,712
--------- --------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 196,618 (83,227) 578,038 526,859
--------- --------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 591,358 814,267 1,304,975 740,021
Transfers between funds ......................... (367,666) (223,421) (138,610) (76,681)
Redemptions ..................................... (273,085) (195,080) (274,660) (694,794)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (2,284) (1,287) (3,895) (2,816)
Contingent deferred sales charges (note 2) ...... (2,121) (3,651) (4,736) (16,506)
Adjustments to maintain reserves ................ (2,747) 446 176 21
--------- --------- --------- ---------
Net equity transactions .................... (56,545) 391,274 883,250 (50,755)
--------- --------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 140,073 308,047 1,461,288 476,104
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 2,800,745 2,492,698 4,144,138 3,668,034
--------- --------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $2,940,818 2,800,745 5,605,426 4,144,138
========= ========= ========= =========
</TABLE>
(Continued)
<PAGE> 10
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
FidCapInc FidEqInc
-------------------------- -------------------------
1999 1998 1999 1998
----------- --------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 92,610 117,272 233,896 269,798
Mortality, expense and administration
charges (note 2) ............................. (14,582) (16,266) (218,755) (229,390)
----------- --------- ---------- ----------
Net investment activity ...................... 78,028 101,006 15,141 40,408
----------- --------- ---------- ----------
Proceeds from mutual fund shares sold ........... 379,568 139,878 3,397,056 3,943,497
Cost of mutual fund shares sold ................. (355,475) (116,142) (1,867,367) (2,379,246)
----------- --------- ---------- ----------
Realized gain (loss) on investments .......... 24,093 23,736 1,529,689 1,564,251
Change in unrealized gain (loss) on investments . (14,514) (112,592) (2,022,662) (528,172)
----------- --------- ---------- ----------
Net gain (loss) on investments ............... 9,579 (88,856) (492,973) 1,036,079
----------- --------- ---------- ----------
Reinvested capital gains ........................ 40,370 32,589 1,446,910 735,781
----------- --------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 127,977 44,739 969,078 1,812,268
----------- --------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. - 1,897 1,545,727 1,203,569
Transfers between funds ......................... (123,285) (8,199) (1,091,107) (1,030,099)
Redemptions ..................................... (238,589) (112,832) (2,329,777) (2,317,284)
Annuity benefits ................................ (1,625) (1,566) (5,247) (4,684)
Annual contract maintenance charge (note 2) ..... (1,525) (1,764) (18,301) (17,633)
Contingent deferred sales charges (note 2) ...... (146) (290) (11,982) (13,552)
Adjustments to maintain reserves ................ (386) 144 189 (186)
----------- --------- ---------- ----------
Net equity transactions .................... (365,556) (122,610) (1,910,498) (2,179,869)
----------- --------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. (237,579) (77,871) (941,420) (367,601)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 1,211,457 1,289,328 17,076,425 17,444,026
----------- --------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 973,878 1,211,457 16,135,005 17,076,425
=========== ========= ========== ==========
<CAPTION>
FidMgIn FidPurtn
------------------------- -------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 186,247 117,953 473,978 443,211
Mortality, expense and administration
charges (note 2) ............................. (396,210) (234,858) (193,771) (173,935)
---------- ---------- ---------- ----------
Net investment activity ...................... (209,963) (116,905) 280,207 269,276
---------- ---------- ---------- ----------
Proceeds from mutual fund shares sold ........... 1,663,128 1,944,713 2,724,132 1,884,862
Cost of mutual fund shares sold ................. (1,134,531) (1,734,936) (2,380,613) (1,482,526)
---------- ---------- ---------- ----------
Realized gain (loss) on investments .......... 528,597 209,777 343,519 402,336
Change in unrealized gain (loss) on investments . 3,321,891 4,084,520 (1,141,665) 177,749
---------- ---------- ---------- ----------
Net gain (loss) on investments ............... 3,850,488 4,294,297 (798,146) 580,085
---------- ---------- ---------- ----------
Reinvested capital gains ........................ 2,703,524 884,756 726,332 1,012,923
---------- ---------- ---------- ----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 6,344,049 5,062,148 208,393 1,862,284
---------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 10,193,949 4,957,504 3,005,029 2,895,054
Transfers between funds ......................... 1,114,670 (286,839) (2,047,732) (942,420)
Redemptions ..................................... (1,510,513) (1,512,760) (794,957) (1,263,833)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (23,202) (16,887) (10,523) (9,022)
Contingent deferred sales charges (note 2) ...... (31,378) (31,705) (14,389) (23,520)
Adjustments to maintain reserves ................ 4,877 251 (1) 89
---------- ---------- ---------- ----------
Net equity transactions .................... 9,748,403 3,109,564 137,427 656,348
---------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 16,092,452 8,171,712 345,820 2,518,632
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 22,752,524 14,580,812 14,377,391 11,858,759
---------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $38,844,976 22,752,524 14,723,211 14,377,391
========== ========== ========== ==========
</TABLE>
<PAGE> 11
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
FidVIPHI FranMutSer
-------------------------- ----------------------
1999 1998 1999 1998
----------- ------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 11,245 19,285 4,394 3,923
Mortality, expense and administration
charges (note 2) ............................. (1,576) (2,858) (3,723) (1,297)
----------- ------- ------- -------
Net investment activity ...................... 9,669 16,427 671 2,626
----------- ------- ------- -------
Proceeds from mutual fund shares sold ........... 24,023 146,537 158,518 34,211
Cost of mutual fund shares sold ................. (22,141) (137,310) (161,602) (39,523)
----------- ------- ------- -------
Realized gain (loss) on investments .......... 1,882 9,227 (3,084) (5,312)
Change in unrealized gain (loss) on investments . (4,341) (46,265) 9,018 (16,432)
----------- ------- ------- -------
Net gain (loss) on investments ............... (2,459) (37,038) 5,934 (21,744)
----------- ------- ------- -------
Reinvested capital gains ........................ 420 12,254 20,109 10,640
----------- ------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 7,630 (8,357) 26,714 (8,478)
----------- ------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. - - 89,498 151,888
Transfers between funds ......................... (22,367) (132,120) 27,444 43,975
Redemptions ..................................... - (11,242) (37,866) (1,472)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (77) (110) (623) (16)
Contingent deferred sales charges (note 2) ...... - - (531) -
Adjustments to maintain reserves ................ (9) (4) 267 96
----------- ------- ------- -------
Net equity transactions .................... (22,453) (143,476) 78,189 194,471
----------- ------- ------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. (14,823) (151,833) 104,903 185,993
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 121,339 273,172 185,993 -
----------- ------- ------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 106,516 121,339 290,896 185,993
=========== ======= ======= =======
<CAPTION>
InvDynam JanFund
------------------------ -------------------------
1999 1998 1999 1998
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ - - - 13,196
Mortality, expense and administration
charges (note 2) ............................. (14,436) - (136,357) (59,083)
--------- --------- ---------- ---------
Net investment activity ...................... (14,436) - (136,357) (45,887)
--------- --------- ---------- ---------
Proceeds from mutual fund shares sold ........... 177,186 - 1,467,695 630,648
Cost of mutual fund shares sold ................. (145,218) - (948,993) (554,019)
--------- --------- ---------- ---------
Realized gain (loss) on investments .......... 31,968 - 518,702 76,629
Change in unrealized gain (loss) on investments . 737,993 - 2,229,356 1,321,824
--------- --------- ---------- ---------
Net gain (loss) on investments ............... 769,961 - 2,748,058 1,398,453
--------- --------- ---------- ---------
Reinvested capital gains ........................ 127,810 - 1,754,780 144,449
--------- --------- ---------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 883,335 - 4,366,481 1,497,015
--------- --------- ---------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 751,995 - 4,413,201 1,312,739
Transfers between funds ......................... 2,002,769 - 3,096,905 123,452
Redemptions ..................................... (92,753) - (585,095) (273,851)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (384) - (9,108) (3,757)
Contingent deferred sales charges (note 2) ...... (2,881) - (11,511) (5,439)
Adjustments to maintain reserves ................ 1,470 - 200 87
--------- --------- ---------- ---------
Net equity transactions .................... 2,660,216 - 6,904,592 1,153,231
--------- --------- ---------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 3,543,551 - 11,271,073 2,650,246
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - - 6,097,880 3,447,634
--------- --------- ---------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $3,543,551 - 17,368,953 6,097,880
========= ========= ========== =========
</TABLE>
(Continued)
<PAGE> 12
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Jan20Fd JanWrldwde
---------------------------- --------------------------
1999 1998 1999 1998
------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 110,311 42,176 6,195 27,824
Mortality, expense and administration
charges (note 2) ............................. (409,436) (127,040) (144,113) (73,506)
------------ ---------- ---------- ---------
Net investment activity ...................... (299,125) (84,864) (137,918) (45,682)
------------ ---------- ---------- ---------
Proceeds from mutual fund shares sold ........... 3,443,884 2,274,301 805,632 1,326,534
Cost of mutual fund shares sold ................. (1,567,343) (1,711,517) (502,006) (1,091,427)
------------ ---------- ---------- ---------
Realized gain (loss) on investments .......... 1,876,541 562,784 303,626 235,107
Change in unrealized gain (loss) on investments . 13,558,639 5,023,354 6,168,659 896,338
------------ ---------- ---------- ---------
Net gain (loss) on investments ............... 15,435,180 5,586,138 6,472,285 1,131,445
------------ ---------- ---------- ---------
Reinvested capital gains ........................ 2,382,851 91,123 300,343 -
------------ ---------- ---------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 17,518,906 5,592,397 6,634,710 1,085,763
------------ ---------- ---------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 15,989,396 3,053,816 4,872,858 2,138,597
Transfers between funds ......................... 4,959,838 2,754,222 1,138,194 111,111
Redemptions ..................................... (2,382,467) (867,882) (590,624) (301,152)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (25,581) (8,378) (11,238) (5,392)
Contingent deferred sales charges (note 2) ...... (54,887) (17,610) (9,166) (6,090)
Adjustments to maintain reserves ................ 1,173 447 520 70
------------ ---------- ---------- ---------
Net equity transactions .................... 18,487,472 4,914,615 5,400,544 1,937,144
------------ ---------- ---------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 36,006,378 10,507,012 12,035,254 3,022,907
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 16,416,311 5,909,299 6,997,578 3,974,671
------------ ---------- ---------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 52,422,689 16,416,311 19,032,832 6,997,578
============ ========== ========== =========
<CAPTION>
LazSmCap MFSWdGvt
----------------------- -----------------------
1999 1998 1999 1998
------- -------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 188 - 38,704 46,268
Mortality, expense and administration
charges (note 2) ............................. (634) - (8,112) (9,446)
------- -------- ------- -------
Net investment activity ...................... (446) - 30,592 36,822
------- -------- ------- -------
Proceeds from mutual fund shares sold ........... 72,252 - 306,136 254,224
Cost of mutual fund shares sold ................. (70,119) - (330,879) (271,092)
------- -------- ------- -------
Realized gain (loss) on investments .......... 2,133 - (24,743) (16,868)
Change in unrealized gain (loss) on investments . (6,204) - (36,873) (1,563)
------- -------- ------- -------
Net gain (loss) on investments ............... (4,071) - (61,616) (18,431)
------- -------- ------- -------
Reinvested capital gains ........................ 6,007 - - -
------- -------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,490 - (31,024) 18,391
------- -------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 95,307 - 58,963 53,676
Transfers between funds ......................... 85,026 454 (138,762) 10,990
Redemptions ..................................... - - (122,666) (84,094)
Annuity benefits ................................ - - (2,456) (2,578)
Annual contract maintenance charge (note 2) ..... (9) - (910) (1,081)
Contingent deferred sales charges (note 2) ...... - - (1,236) (962)
Adjustments to maintain reserves ................ (298) 16 (319) 273
------- -------- ------- -------
Net equity transactions .................... 180,026 470 (207,386) (23,776)
------- -------- ------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 181,516 470 (238,410) (5,385)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 470 - 756,404 761,789
------- -------- ------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $181,986 470 517,994 756,404
======= ======== ======= =======
</TABLE>
<PAGE> 13
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NWBdFd NWFund
-------------------------- ------------------------
1999 1998 1999 1998
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 95,233 93,677 65,302 58,065
Mortality, expense and administration
charges (note 2) ............................. (20,947) (20,893) (109,757) (79,929)
----------- --------- --------- ---------
Net investment activity ...................... 74,286 72,784 (44,455) (21,864)
----------- --------- --------- ---------
Proceeds from mutual fund shares sold ........... 630,227 536,549 1,690,158 2,006,814
Cost of mutual fund shares sold ................. (628,048) (509,194) (1,037,842) (1,061,945)
----------- --------- --------- ---------
Realized gain (loss) on investments .......... 2,179 27,355 652,316 944,869
Change in unrealized gain (loss) on investments . (143,935) 2,462 (1,224,488) 168,811
----------- --------- --------- ---------
Net gain (loss) on investments ............... (141,756) 29,817 (572,172) 1,113,680
----------- --------- --------- ---------
Reinvested capital gains ........................ - - 523,109 351,018
----------- --------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (67,470) 102,601 (93,518) 1,442,834
----------- --------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 464,741 373,966 3,211,265 2,518,633
Transfers between funds ......................... (177,367) (106,283) (778,608) 286,664
Redemptions ..................................... (241,981) (479,980) (1,208,864) (1,272,428)
Annuity benefits ................................ (18) (214) (152) (1,645)
Annual contract maintenance charge (note 2) ..... (1,330) (1,293) (12,189) (5,526)
Contingent deferred sales charges (note 2) ...... (2,347) (972) (6,961) (5,815)
Adjustments to maintain reserves ................ (1,974) 59 (17,167) (970)
----------- --------- --------- ---------
Net equity transactions .................... 39,724 (214,717) 1,187,324 1,518,913
----------- --------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. (27,746) (112,116) 1,093,806 2,961,747
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 1,601,069 1,713,185 7,462,477 4,500,730
----------- --------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 1,573,323 1,601,069 8,556,283 7,462,477
=========== ========= ========= =========
<CAPTION>
NWGroFd NWIndxFdR
------------------------ ----------------------
1999 1998 1999 1998
--------- --------- ------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 6,354 5,977 777 -
Mortality, expense and administration
charges (note 2) ............................. (46,039) (53,844) (1,327) -
--------- --------- ------- ---------
Net investment activity ...................... (39,685) (47,867) (550) -
--------- --------- ------- ---------
Proceeds from mutual fund shares sold ........... 980,126 2,457,885 4,536 -
Cost of mutual fund shares sold ................. (686,099) (1,632,831) (4,303) -
--------- --------- ------- ---------
Realized gain (loss) on investments .......... 294,027 825,054 233 -
Change in unrealized gain (loss) on investments . (202,135) (146,456) 21,131 -
--------- --------- ------- ---------
Net gain (loss) on investments ............... 91,892 678,598 21,364 -
--------- --------- ------- ---------
Reinvested capital gains ........................ 442,086 224,429 341 -
--------- --------- ------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 494,293 855,160 21,155 -
--------- --------- ------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 496,793 390,995 175,404 -
Transfers between funds ......................... (71,634) (150,263) 15,317 -
Redemptions ..................................... (886,886) (1,950,035) (1,003) -
Annuity benefits ................................ (141) (1,563) - -
Annual contract maintenance charge (note 2) ..... (4,494) (3,472) (10) -
Contingent deferred sales charges (note 2) ...... (3,288) (4,096) (19) -
Adjustments to maintain reserves ................ (18,658) 524 103 -
--------- --------- ------- ---------
Net equity transactions .................... (488,308) (1,717,910) 189,792 -
--------- --------- ------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 5,985 (862,750) 210,947 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 3,543,989 4,406,739 - -
--------- --------- ------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $3,549,974 3,543,989 210,947 -
========= ========= ======= =========
</TABLE>
(Continued)
<PAGE> 14
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NWMyMkt NWUSGvt
---------------------------- -----------------------
1999 1998 1999 1998
------------ ---------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 542,690 461,473 27,163 14,221
Mortality, expense and administration
charges (note 2) ............................. (154,492) (122,488) (6,715) (3,754)
------------ ---------- ------- -------
Net investment activity ...................... 388,198 338,985 20,448 10,467
------------ ---------- ------- -------
Proceeds from mutual fund shares sold ........... 16,488,282 13,390,890 758,992 370,513
Cost of mutual fund shares sold ................. (16,488,282) (13,390,890) (788,734) (365,796)
------------ ---------- ------- -------
Realized gain (loss) on investments .......... - - (29,742) 4,717
Change in unrealized gain (loss) on investments . - - (13,433) (8,808)
------------ ---------- ------- -------
Net gain (loss) on investments ............... - - (43,175) (4,091)
------------ ---------- ------- -------
Reinvested capital gains ........................ - - 1,715 3,694
------------ ---------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 388,198 338,985 (21,012) 10,070
------------ ---------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 6,833,790 6,108,738 612,619 292,897
Transfers between funds ......................... (1,084,885) 188,506 (477,996) 147,064
Redemptions ..................................... (3,242,473) (2,839,314) (191,094) (7,884)
Annuity benefits ................................ (377) (1,725) - -
Annual contract maintenance charge (note 2) ..... (10,508) (8,599) (431) (162)
Contingent deferred sales charges (note 2) ...... (73,053) (48,336) (193) (105)
Adjustments to maintain reserves ................ (16,045) 1,133 (4) 796
------------ ---------- ------- -------
Net equity transactions .................... 2,406,449 3,400,403 (57,099) 432,606
------------ ---------- ------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 2,794,647 3,739,388 (78,111) 442,676
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 11,504,938 7,765,550 517,836 75,160
------------ ---------- ------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 14,299,585 11,504,938 439,725 517,836
============ ========== ======= =======
<CAPTION>
NBGenesTr NBGuardTr
----------------------- -------------------------
1999 1998 1999 1998
------- ------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 3,514 3,629 56,088 43,561
Mortality, expense and administration
charges (note 2) ............................. (9,160) (5,221) (93,699) (102,643)
------- ------- --------- ---------
Net investment activity ...................... (5,646) (1,592) (37,611) (59,082)
------- ------- --------- ---------
Proceeds from mutual fund shares sold ........... 325,288 46,166 2,233,501 1,421,419
Cost of mutual fund shares sold ................. (380,896) (51,966) (2,271,244) (1,295,137)
------- ------- --------- ---------
Realized gain (loss) on investments .......... (55,608) (5,800) (37,743) 126,282
Change in unrealized gain (loss) on investments . 81,946 (47,655) (1,012,384) (1,131,594)
------- ------- --------- ---------
Net gain (loss) on investments ............... 26,338 (53,455) (1,050,127) (1,005,312)
------- ------- --------- ---------
Reinvested capital gains ........................ - 6,048 1,578,197 1,110,714
------- ------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 20,692 (48,999) 490,459 46,320
------- ------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 203,802 361,520 1,262,107 1,484,830
Transfers between funds ......................... (115,862) 323,146 (1,868,774) (1,057,014)
Redemptions ..................................... (56,722) (10,080) (389,152) (595,129)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (598) (57) (5,549) (5,098)
Contingent deferred sales charges (note 2) ...... (1,250) (76) (9,654) (8,659)
Adjustments to maintain reserves ................ 1,911 267 12,098 (9)
------- ------- --------- ---------
Net equity transactions .................... 31,281 674,720 (998,924) (181,079)
------- ------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 51,973 625,721 (508,465) (134,759)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 625,721 - 7,499,816 7,634,575
------- ------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $677,694 625,721 6,991,351 7,499,816
======= ======= ========= =========
</TABLE>
<PAGE> 15
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NBLtdMat NBPartFd
-------------------------- ------------------------
1999 1998 1999 1998
----------- ------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 79,478 50,742 89,413 -
Mortality, expense and administration
charges (note 2) ............................. (16,850) (11,240) (114,287) (112,673)
----------- ------- --------- ---------
Net investment activity ...................... 62,628 39,502 (24,874) (112,673)
----------- ------- --------- ---------
Proceeds from mutual fund shares sold ........... 589,165 212,801 2,342,834 1,369,375
Cost of mutual fund shares sold ................. (612,091) (213,183) (2,220,647) (1,169,514)
----------- ------- --------- ---------
Realized gain (loss) on investments .......... (22,926) (382) 122,187 199,861
Change in unrealized gain (loss) on investments . (39,222) (12,717) (502,155) (542,191)
----------- ------- --------- ---------
Net gain (loss) on investments ............... (62,148) (13,099) (379,968) (342,330)
----------- ------- --------- ---------
Reinvested capital gains ........................ - - 955,799 808,960
----------- ------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 480 26,403 550,957 353,957
----------- ------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 761,986 348,091 1,159,627 3,047,800
Transfers between funds ......................... (234,865) (146,743) (2,302,271) (551,497)
Redemptions ..................................... (57,835) (31,227) (459,594) (922,110)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (701) (396) (10,544) (7,349)
Contingent deferred sales charges (note 2) ...... (314) (183) (9,682) (18,634)
Adjustments to maintain reserves ................ 321 225 30 (27)
----------- ------- --------- ---------
Net equity transactions .................... 468,592 169,767 (1,622,434) 1,548,183
----------- ------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 469,072 196,170 (1,071,477) 1,902,140
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 981,318 785,148 9,328,976 7,426,836
----------- ------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 1,450,390 981,318 8,257,499 9,328,976
=========== ======= ========= =========
<CAPTION>
OppGlob PhxBalFd
------------------------- ------------------------
1999 1998 1999 1998
---------- --------- --------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 61,855 61,774 21,606 18,333
Mortality, expense and administration
charges (note 2) ............................. (108,929) (85,201) (11,945) (9,786)
---------- --------- --------- -------
Net investment activity ...................... (47,074) (23,427) 9,661 8,547
---------- --------- --------- -------
Proceeds from mutual fund shares sold ........... 2,303,088 2,675,792 78,572 143,908
Cost of mutual fund shares sold ................. (2,056,611) (2,232,654) (72,900) (144,310)
---------- --------- --------- -------
Realized gain (loss) on investments .......... 246,477 443,138 5,672 (402)
Change in unrealized gain (loss) on investments . 3,280,514 (210,371) 13,459 80,132
---------- --------- --------- -------
Net gain (loss) on investments ............... 3,526,991 232,767 19,131 79,730
---------- --------- --------- -------
Reinvested capital gains ........................ 715,136 475,445 60,704 29,498
---------- --------- --------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 4,195,053 684,785 89,496 117,775
---------- --------- --------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 1,227,953 1,551,016 202,683 143,962
Transfers between funds ......................... (348,998) (79,722) 8,440 (31,417)
Redemptions ..................................... (430,714) (562,042) (33,653) (95,632)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (7,116) (5,709) (1,030) (749)
Contingent deferred sales charges (note 2) ...... (7,553) (12,575) (665) (1,821)
Adjustments to maintain reserves ................ (7,592) (5,842) 50 (7)
---------- --------- --------- -------
Net equity transactions .................... 425,980 885,126 175,825 14,336
---------- --------- --------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 4,621,033 1,569,911 265,321 132,111
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 7,265,693 5,695,782 795,875 663,764
---------- --------- --------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $11,886,726 7,265,693 1,061,196 795,875
========== ========= ========= =======
</TABLE>
(Continued)
<PAGE> 16
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
PrBal PrInt PrLgCpGro
-------------------- ------------------ ------------------
1999 1998 1999 1998 1999 1998
-------- ------- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 42 - 17 - - -
Mortality, expense and administration
charges (note 2) ............................. (18) - (116) - (57) -
-------- ------- ------ ----- ------ ------
Net investment activity ...................... 24 - (99) - (57) -
-------- ------- ------ ----- ------ ------
Proceeds from mutual fund shares sold ........... 746 - 3,276 - 1,499 -
Cost of mutual fund shares sold ................. (753) - (3,226) - (1,519) -
-------- ------- ------ ----- ------ ------
Realized gain (loss) on investments .......... (7) - 50 - (20) -
Change in unrealized gain (loss) on investments . 96 - 3,405 - 2,702 -
-------- ------- ------ ----- ------ ------
Net gain (loss) on investments ............... 89 - 3,455 - 2,682 -
-------- ------- ------ ----- ------ ------
Reinvested capital gains ........................ 65 - 422 - 204 -
-------- ------- ------ ----- ------ ------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 178 - 3,778 - 2,829 -
-------- ------- ------ ----- ------ ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 4,356 - 7,086 - 13,026 -
Transfers between funds ......................... - - 39,644 1,815 5,224 -
Redemptions ..................................... (692) - - - (1,378) -
Annuity benefits ................................ - - - - - -
Annual contract maintenance charge (note 2) ..... - - (2) - - -
Contingent deferred sales charges (note 2) ...... - - - - - -
Adjustments to maintain reserves ................ (5) - (35) 1 20 -
-------- ------- ------ ----- ------ ------
Net equity transactions .................... 3,659 - 46,693 1,816 16,892 -
-------- ------- ------ ----- ------ ------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 3,837 - 50,471 1,816 19,721 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - - 1,816 - - -
-------- ------- ------ ----- ------ ------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 3,837 - 52,287 1,816 19,721 -
======== ======= ====== ===== ====== ======
<CAPTION>
PrLgCpVal
-----------------
1999 1998
----- -------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 4 -
Mortality, expense and administration
charges (note 2) ............................. (3) -
----- -------
Net investment activity ...................... 1 -
----- -------
Proceeds from mutual fund shares sold ........... 3 -
Cost of mutual fund shares sold ................. (3) -
----- -------
Realized gain (loss) on investments .......... - -
Change in unrealized gain (loss) on investments . (58) -
----- -------
Net gain (loss) on investments ............... (58) -
----- -------
Reinvested capital gains ........................ 4 -
----- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (53) -
----- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 1,100 -
Transfers between funds ......................... - -
Redemptions ..................................... - -
Annuity benefits ................................ - -
Annual contract maintenance charge (note 2) ..... - -
Contingent deferred sales charges (note 2) ...... - -
Adjustments to maintain reserves ................ - -
----- -------
Net equity transactions .................... 1,100 -
----- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 1,047 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... - -
----- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $1,047 -
===== =======
</TABLE>
<PAGE> 17
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
PrSmCap STComStk StTotRet
---------------------- ----------------------- -----------------------
1999 1998 1999 1998 1999 1998
---------- ------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 4 - - - - 4,227
Mortality, expense and administration
charges (note 2) ............................. (226) - (5,395) - (38,412) (22,635)
---------- ------- --------- -------- --------- ---------
Net investment activity ...................... (222) - (5,395) - (38,412) (18,408)
---------- ------- --------- -------- --------- ---------
Proceeds from mutual fund shares sold ........... 1,495 - 60,427 - 213,377 377,041
Cost of mutual fund shares sold ................. (1,454) - (57,029) - (158,861) (384,883)
---------- ------- --------- -------- --------- ---------
Realized gain (loss) on investments .......... 41 - 3,398 - 54,516 (7,842)
Change in unrealized gain (loss) on investments . 9,774 - 60,703 - 941,083 473,589
---------- ------- --------- -------- --------- ---------
Net gain (loss) on investments ............... 9,815 - 64,101 - 995,599 465,747
---------- ------- --------- -------- --------- ---------
Reinvested capital gains ........................ 769 - 114,677 - 694,656 21,813
---------- ------- --------- -------- --------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 10,362 - 173,383 - 1,651,843 469,152
---------- ------- --------- -------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 45,455 - 403,570 - 1,173,612 307,761
Transfers between funds ......................... 42,914 454 431,123 - 335,991 (207,357)
Redemptions ..................................... (544) - (4,495) - (291,607) (154,396)
Annuity benefits ................................ - - - - - -
Annual contract maintenance charge (note 2) ..... 0 - (114) - (2,266) (1,357)
Contingent deferred sales charges (note 2) ...... - - (44) - (2,761) (2,073)
Adjustments to maintain reserves ................ 11 12 451 - 90 34
---------- ------- --------- -------- --------- ---------
Net equity transactions .................... 87,836 466 830,491 - 1,213,059 (57,388)
---------- ------- --------- -------- --------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 98,198 466 1,003,874 - 2,864,902 411,764
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 466 - - - 2,024,780 1,613,016
---------- ------- --------- -------- --------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 98,664 466 1,003,874 - 4,889,682 2,024,780
========== ======= ========= ======== ========= =========
<CAPTION>
TemForFd
-----------------------
1999 1998
--------- ---------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 154,634 111,484
Mortality, expense and administration
charges (note 2) ............................. (60,463) (59,378)
--------- ---------
Net investment activity ...................... 94,171 52,106
--------- ---------
Proceeds from mutual fund shares sold ........... 2,870,259 1,293,020
Cost of mutual fund shares sold ................. (3,044,788) (1,287,738)
--------- ---------
Realized gain (loss) on investments .......... (174,529) 5,282
Change in unrealized gain (loss) on investments . 1,497,360 (678,199)
--------- ---------
Net gain (loss) on investments ............... 1,322,831 (672,917)
--------- ---------
Reinvested capital gains ........................ 46,781 328,019
--------- ---------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,463,783 (292,792)
--------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 818,678 917,664
Transfers between funds ......................... (235,418) (948,243)
Redemptions ..................................... (244,205) (423,401)
Annuity benefits ................................ - -
Annual contract maintenance charge (note 2) ..... (4,517) (3,898)
Contingent deferred sales charges (note 2) ...... (3,244) (5,931)
Adjustments to maintain reserves ................ 161 (65)
--------- ---------
Net equity transactions .................... 331,455 (463,874)
--------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 1,795,238 (756,666)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 4,069,618 4,826,284
--------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $5,864,856 4,069,618
========= =========
</TABLE>
(Continued)
<PAGE> 18
NATIONWIDE VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
WPEmGro WPGIFxInc
-------------------------- ------------------------
1999 1998 1999 1998
----------- --------- -------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ......................... $ - - 3,381 3,459
Mortality, expense and administration
charges (note 2) ............................. (59,051) (61,048) (982) (821)
----------- --------- -------- -------
Net investment activity ...................... (59,051) (61,048) 2,399 2,638
----------- --------- -------- -------
Proceeds from mutual fund shares sold ........... 1,515,362 1,097,855 248,010 8,819
Cost of mutual fund shares sold ................. (1,258,934) (912,250) (248,689) (8,789)
----------- --------- -------- -------
Realized gain (loss) on investments .......... 256,428 185,605 (679) 30
Change in unrealized gain (loss) on investments . 806,488 95,404 (4,664) 1,566
----------- --------- -------- -------
Net gain (loss) on investments ............... 1,062,916 281,009 (5,343) 1,596
----------- --------- -------- -------
Reinvested capital gains ........................ 637,805 - - -
----------- --------- -------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,641,670 219,961 (2,944) 4,234
----------- --------- -------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 873,907 1,272,369 33,961 64,115
Transfers between funds ......................... (1,067,817) (414,970) (122,983) 81,989
Redemptions ..................................... (460,638) (547,689) (706) (400)
Annuity benefits ................................ - - - -
Annual contract maintenance charge (note 2) ..... (5,091) (3,914) (130) (3)
Contingent deferred sales charges (note 2) ...... (5,813) (13,328) (30) (25)
Adjustments to maintain reserves ................ 72 (10) 72 53
----------- --------- -------- -------
Net equity transactions .................... (665,380) 292,458 (89,816) 145,729
----------- --------- -------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 976,290 512,419 (92,760) 149,963
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 4,992,592 4,480,173 149,963 -
----------- --------- -------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 5,968,882 4,992,592 57,203 149,963
=========== ========= ======== =======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 19
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(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)
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)
(Continued)
<PAGE> 20
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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) (managed for a fee by an affiliated investment advisor)
Nationwide(R) S&P 500 Index Fund - Class R (NWIndxFdR)
(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 (PrLgCpGro)
(managed for a fee by an affiliated investment advisor)
Prestige Large Cap Value Fund - Class A (PrLgCpVal)
(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)
<PAGE> 21
At December 31, 1999, 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, 1999. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company which is taxed as a life insurance company
under the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(f) Calculation of Annuity Reserves
Annuity reserves are computed for contracts in the variable payout
stage according to industry standard mortality tables. The assumed
investment return is 3.5 percent unless the annuitant elects otherwise,
in which case the rate may vary from 3.5 percent to 7 percent, as
regulated by the laws of the respective states. The mortality risk is
fully borne by the Company and may result in additional amounts being
transferred into the Account by the Company to cover greater longevity
of annuitants than expected. Conversely, if reserves exceed amounts
required, transfers may be made to the Company.
(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 owners 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.
(Continued)
<PAGE> 22
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1999,
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 ........................ 87,493 $ 23.132624 $ 2,023,943 1%
American Century: Income & Growth Fund:
Tax qualified ........................ 534,684 20.537578 10,981,114 16%
American Century: Twentieth Century
Growth Fund:
Tax qualified ........................ 153,919 117.667874 18,111,321 33%
American Century: Twentieth Century
International Growth Fund:
Tax qualified ........................ 67,212 29.892733 2,009,150 62%
American Century: Twentieth Century
Ultra Fund:
Tax qualified ........................ 958,510 31.115121 29,824,155 40%
Delaware Group Delchester High-Yield
Bond Fund, Inc.- Delchester Fund
Institutional Class:
Tax qualified ........................ 79,605 14.244875 1,133,963 (4)%
Dreyfus A Bonds Plus, Inc.:
Tax qualified ........................ 160,276 12.061566 1,933,180 0%
Dreyfus Appreciation Fund, Inc.:
Tax qualified ........................ 156,211 13.811292 2,157,476 9%
Dreyfus Balanced Fund, Inc.:
Tax qualified ........................ 29,698 11.699291 347,446 9%
Dreyfus S&P 500 Index Fund:
Tax qualified ........................ 692,394 34.392545 23,813,192 19%
The Dreyfus Third Century Fund, Inc.:
Tax qualified ........................ 59,207 33.178138 1,964,378 28%
Evergreen Income and Growth
Fund - Class Y:
Tax qualified ........................ 72,494 19.561585 1,418,098 15%
Federated High Yield Trust:
Tax qualified ........................ 49,637 10.042770 498,493 1%
Federated Investment Series Funds, Inc.-
Federated Bond Fund - Class F:
Tax qualified ........................ 139,182 11.130751 1,549,200 (4)%
Fidelity Advisor Balanced Fund - Class T:
Tax qualified ........................ 86,087 15.455350 1,330,505 3%
Fidelity Advisor Equity Income
Fund - Class T:
Tax qualified ........................ 122,013 16.762859 2,045,287 2%
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
Annual
Units Unit Value Return*
---------- ------------ ---------
<S> <C> <C> <C> <C>
Fidelity Advisor Growth Opportunities
Fund - Class T:
Tax qualified ............................ 488,519 19.101353 9,331,374 3%
Fidelity Advisor High Yield Fund - Class T:
Tax qualified ............................ 219,180 13.417364 2,940,818 7%
Fidelity Asset Manager(TM):
Tax qualified ............................ 290,579 19.290540 5,605,426 12%
Fidelity Capital & Income Fund:
Tax qualified ............................ 17,840 54.000183 963,363 12%
Fidelity Equity-Income Fund:
Tax qualified ............................ 193,545 83.313397 16,124,891 6%
Fidelity Magellan(R) Fund:
Tax qualified ............................ 1,080,953 35.935860 38,844,976 22%
Fidelity Puritan(R) Fund:
Tax qualified ............................ 637,179 23.106868 14,723,211 2%
Fidelity VIP - High Income Portfolio:
Tax qualified ............................ 4,175 25.512888 106,516 7%
Franklin Mutual Series Fund Inc.-
Mutual Shares Fund - Class I:
Tax qualified ............................ 26,055 11.164707 290,896 13%
INVESCO Dynamics Fund, Inc.:
Tax qualified ............................ 198,949 17.811356 3,543,551 70%
Janus Fund:
Tax qualified ............................ 595,937 29.145619 17,368,953 45%
Janus Twenty Fund:
Tax qualified ............................ 995,837 52.641837 52,422,689 63%
Janus Worldwide Fund:
Tax qualified ............................ 769,694 24.727791 19,032,832 62%
Lazard Small Cap Portfolio - Open Shares:
Tax qualified ............................ 17,391 10.464373 181,986 0%
MFS(R) World Governments Fund - Class A:
Tax qualified ............................ 14,393 35.741694 514,430 (5)%
Nationwide(R) Bond Fund - Class D:
Tax qualified ............................ 37,478 41.898652 1,570,278 (4)%
Non-tax qualified ........................ 73 41.719031 3,045 (4)%
Nationwide(R) Fund - Class D:
Tax qualified ............................ 69,097 123.552516 8,537,108 (2)%
Non-tax qualified ........................ 149 128.692505 19,175 (2)%
Nationwide(R) Growth Fund - Class D:
Tax qualified ............................ 26,654 132.098827 3,520,962 15%
Non-tax qualified ........................ 208 139.479726 29,012 15%
Nationwide(R) S&P 500 Index Fund - Class R:
Tax qualified ............................ 17,851 11.817107 210,947 18%
Nationwide(R) Money Market Fund:
Tax qualified - Pre 12/25/82 ............. 621,449 21.769674 13,528,742 3%
Tax qualified ............................ 27,248 27.412298 746,930 3%
Non-tax qualified ........................ 838 27.585541 23,117 3%
</TABLE>
(Continued)
<PAGE> 24
NATIONWIDE VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, Continued
<TABLE>
<CAPTION>
Annual
Units Unit Value Return*
-------- ---------- ---------
<S> <C> <C> <C> <C>
Nationwide(R) Intermediate U.S.
Government Bond Fund - Class D:
Tax qualified ........................... 38,138 11.529833 439,725 (3)%
Neuberger & Berman Genesis Trust
Tax qualified ........................... 71,239 9.512964 677,694 3%
Neuberger & Berman Guardian Trust:
Tax qualified ........................... 379,737 18.411034 6,991,351 7%
Neuberger & Berman Limited Maturity
Bond Fund:
Tax qualified ........................... 119,912 12.095451 1,450,390 0%
Neuberger & Berman Partners Fund:
Tax qualified ........................... 311,323 26.523895 8,257,499 6%
Oppenheimer Global Fund - Class A:
Tax qualified ........................... 315,244 37.706431 11,886,726 56%
Phoenix Balanced Fund Series - Class A:
Tax qualified ........................... 58,295 18.203902 1,061,196 9%
Prestige Balanced Fund - Class A:
Tax qualified ........................... 355 10.809720 3,837 8%
Prestige International Fund - Class A:
Tax qualified ........................... 4,361 11.989686 52,287 19%
Prestige Large Cap Growth Fund - Class A:
Tax qualified ........................... 1,471 13.394083 19,703 33%
Prestige Large Cap Value Fund - Class A:
Tax qualified ........................... 109 9.619068 1,048 (6)%
Prestige Small Cap Fund - Class A:
Tax qualified ........................... 8,135 12.128362 98,664 17%
Strong Common Stock Fund, Inc.
Tax qualified ........................... 69,558 14.432187 1,003,874 39%
Strong Total Return Fund, Inc.:
Tax qualified ........................... 115,792 42.228152 4,889,682 58%
Templeton Foreign Fund - Class I:
Tax qualified ........................... 334,228 17.547470 5,864,856 37%
Warburg Pincus Emerging Growth
Fund - Common Shares:
Tax qualified ........................... 288,739 20.672241 5,968,882 40%
Warburg Pincus Global Fixed-Income
Fund - Common Shares:
Tax qualified ........................... 5,420 10.554122 57,203 (1)%
========== =========
Reserves for annuity contracts in payout phase:
Tax qualified ........................... 225,036
-------------
$ 360,275,782
=============
</TABLE>
* The annual return does not include contract charges satisfied by
surrendering units.
<PAGE> 72
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Nationwide Life
Insurance Company and subsidiaries (collectively the Company), a wholly owned
subsidiary of Nationwide Financial Services, Inc., as of December 31, 1999 and
1998, and the related consolidated statements of income, shareholder's equity
and cash flows for each of the years in the three-year period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide Life
Insurance Company and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.
Columbus, Ohio
January 28, 2000
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Balance Sheets
(in millions, except per share amounts)
<TABLE>
<CAPTION>
December 31,
-----------------------------
Assets 1999 1998
------ --------- ---------
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $15,294.0 $14,245.1
Equity securities 92.9 127.2
Mortgage loans on real estate, net 5,786.3 5,328.4
Real estate, net 254.8 243.6
Policy loans 519.6 464.3
Other long-term investments 73.8 44.0
Short-term investments 416.0 289.1
--------- ---------
22,437.4 20,741.7
--------- ---------
Cash 4.8 3.4
Accrued investment income 238.6 218.7
Deferred policy acquisition costs 2,554.1 2,022.2
Other assets 305.9 420.3
Assets held in separate accounts 67,135.1 50,935.8
--------- ---------
$92,675.9 $74,342.1
========= =========
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims $21,861.6 $19,767.1
Other liabilities 914.2 866.1
Liabilities related to separate accounts 67,135.1 50,935.8
--------- ---------
89,910.9 71,569.0
--------- ---------
Commitments and contingencies (notes 8 and 13)
Shareholder's equity:
Common stock, $1 par value. Authorized 5.0 million shares;
3.8 million shares issued and outstanding 3.8 3.8
Additional paid-in capital 766.1 914.7
Retained earnings 2,011.0 1,579.0
Accumulated other comprehensive income (15.9) 275.6
--------- ---------
2,765.0 2,773.1
--------- ---------
$92,675.9 $74,342.1
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Income
(in millions)
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Policy charges $ 895.5 $ 698.9 $ 545.2
Life insurance premiums 220.8 200.0 205.4
Net investment income 1,520.8 1,481.6 1,409.2
Realized (losses) gains on investments (11.6) 28.4 11.1
Other 66.1 66.8 46.5
-------- -------- --------
2,691.6 2,475.7 2,217.4
-------- -------- --------
Benefits and expenses:
Interest credited to policyholder account balances 1,096.3 1,069.0 1,016.6
Other benefits and claims 210.4 175.8 178.2
Policyholder dividends on participating policies 42.4 39.6 40.6
Amortization of deferred policy acquisition costs 272.6 214.5 167.2
Other operating expenses 463.4 419.7 384.9
-------- -------- --------
2,085.1 1,918.6 1,787.5
-------- -------- --------
Income before federal income tax expense 606.5 557.1 429.9
Federal income tax expense 201.4 190.4 150.2
-------- -------- --------
Net income $ 405.1 $ 366.7 $ 279.7
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1999, 1998 and 1997
(in millions)
<TABLE>
<CAPTION>
Accumulated
Additional other Total
Common paid-in Retained comprehensive shareholder's
stock capital earnings income equity
-------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
December 31, 1996 $ 3.8 $ 527.9 $1,432.6 $173.6 $2,137.9
Comprehensive income:
Net income -- -- 279.7 -- 279.7
Net unrealized gains on securities
available-for-sale arising during
the year -- -- -- 73.5 73.5
--------
Total comprehensive income 353.2
--------
Capital contribution -- 836.8 -- -- 836.8
--------
Dividend to shareholder -- (450.0) (400.0) -- (850.0)
------ -------- -------- ------ --------
December 31, 1997 3.8 914.7 1,312.3 247.1 2,477.9
Comprehensive income:
Net income -- -- 366.7 -- 366.7
Net unrealized gains on securities
available-for-sale arising during
the year -- -- -- 28.5 28.5
--------
Total comprehensive income 395.2
--------
Dividend to shareholder -- -- (100.0) -- (100.0)
------ -------- -------- ------ --------
December 31, 1998 3.8 914.7 1,579.0 275.6 2,773.1
Comprehensive income:
Net income -- -- 405.1 -- 405.1
Net unrealized losses on securities
available-for-sale arising during
the year -- -- -- (315.0) (315.0)
--------
Total comprehensive income 90.1
--------
Capital contribution -- 26.4 87.9 23.5 137.8
--------
Dividends to shareholder -- (175.0) (61.0) -- (236.0)
------ -------- -------- ------ --------
December 31, 1999 $ 3.8 $ 766.1 $2,011.0 $(15.9) $2,765.0
====== ======== ======== ====== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Cash Flows
(in millions)
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 405.1 $ 366.7 $ 279.7
Adjustments to reconcile net income to net cash provided by operating
activities:
Interest credited to policyholder account balances 1,096.3 1,069.0 1,016.6
Capitalization of deferred policy acquisition costs (637.0) (584.2) (487.9)
Amortization of deferred policy acquisition costs 272.6 214.5 167.2
Amortization and depreciation 2.4 (8.5) (2.0)
Realized (gains) losses on invested assets, net 11.6 (28.4) (11.1)
Increase in accrued investment income (7.9) (8.2) (0.3)
Decrease (increase) in other assets 122.9 16.4 (12.7)
Decrease in policy liabilities (20.9) (8.3) (23.1)
Increase (decrease) in other liabilities 149.7 (34.8) 230.6
Other, net (8.6) (11.3) (10.9)
--------- --------- ---------
Net cash provided by operating activities 1,386.2 982.9 1,146.1
--------- --------- ---------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 2,307.9 1,557.0 993.4
Proceeds from sale of securities available-for-sale 513.1 610.5 574.5
Proceeds from repayments of mortgage loans on real estate 696.7 678.2 437.3
Proceeds from sale of real estate 5.7 103.8 34.8
Proceeds from repayments of policy loans and sale of other invested assets 40.9 23.6 22.7
Cost of securities available-for-sale acquired (3,724.9) (3,182.8) (2,828.1)
Cost of mortgage loans on real estate acquired (971.4) (829.1) (752.2)
Cost of real estate acquired (14.2) (0.8) (24.9)
Short-term investments, net (27.5) 69.3 (354.8)
Other, net (110.9) (88.4) (62.5)
--------- --------- ---------
Net cash used in investing activities (1,284.6) (1,058.7) (1,959.8)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from capital contributions -- -- 836.8
Cash dividends paid (188.5) (100.0) --
Increase in investment product and universal life insurance
product account balances 3,799.4 2,682.1 2,488.5
Decrease in investment product and universal life insurance
product account balances (3,711.1) (2,678.5) (2,379.8)
--------- --------- ---------
Net cash used in financing activities (100.2) (96.4) 945.5
--------- --------- ---------
Net increase (decrease) in cash 1.4 (172.2) 131.8
Cash, beginning of year 3.4 175.6 43.8
--------- --------- ---------
Cash, end of year $ 4.8 $ 3.4 $ 175.6
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(1) Organization and Description of Business
Nationwide Life Insurance Company (NLIC) is a leading provider of
long-term savings and retirement products in the United States and is a
wholly owned subsidiary of Nationwide Financial Services, Inc. (NFS).
The Company develops and sells a diverse range of products including
variable annuities, fixed annuities and life insurance as well as
investment management and administrative services. NLIC markets its
products through a broad network of distribution channels, including
independent broker/dealers, national and regional brokerage firms,
financial institutions, pension plan administrators, life insurance
specialists, Nationwide Retirement Solutions sales representatives, and
Nationwide agents.
Wholly owned subsidiaries of NLIC include Nationwide Life and Annuity
Insurance Company (NLAIC), Nationwide Advisory Services, Inc., and
Nationwide Investment Services Corporation. NLIC and its subsidiaries
are collectively referred to as "the Company."
(2) Summary of Significant Accounting Policies
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles, which differ
from statutory accounting practices prescribed or permitted by
regulatory authorities. Annual Statements for NLIC and NLAIC, filed
with the Department of Insurance of the State of Ohio (the Department),
are prepared on the basis of accounting practices prescribed or
permitted by the Department. Prescribed statutory accounting practices
include a variety of publications of the National Association of
Insurance Commissioners (NAIC), as well as state laws, regulations and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosures of contingent
assets and liabilities as of the date of the consolidated financial
statements and the reported amounts of revenues and expenses for the
reporting period. Actual results could differ significantly from those
estimates.
The most significant estimates include those used in determining
deferred policy acquisition costs, valuation allowances for mortgage
loans on real estate and real estate investments and the liability for
future policy benefits and claims. Although some variability is
inherent in these estimates, management believes the amounts provided
are adequate.
(a) Consolidation Policy
The consolidated financial statements include the accounts of NLIC
and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(b) Valuation of Investments and Related Gains and Losses
The Company is required to classify its fixed maturity securities
and equity securities as either held-to-maturity,
available-for-sale or trading. Fixed maturity securities are
classified as held-to-maturity when the Company has the positive
intent and ability to hold the securities to maturity and are
stated at amortized cost. Fixed maturity securities not classified
as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the
unrealized gains and losses, net of adjustments to deferred policy
acquisition costs and deferred federal income tax, reported as a
separate component of accumulated other comprehensive income in
shareholder's equity. The adjustment to deferred policy
acquisition costs represents the change in amortization of
deferred policy acquisition costs that would have been required as
a charge or credit to operations had such unrealized amounts been
realized. The Company has no fixed maturity securities classified
as held-to-maturity or trading as of December 31, 1999 or 1998.
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based
on a review by portfolio managers. The measurement of impaired
loans is based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a
practical expedient, at the fair value of the collateral, if the
loan is collateral dependent. Loans in foreclosure and loans
considered to be impaired are placed on non-accrual status.
Interest received on non-accrual status mortgage loans on real
estate is included in interest income in the period received.
Real estate is carried at cost less accumulated depreciation and
valuation allowances. Other long-term investments are carried on
the equity basis, adjusted for valuation allowances. Impairment
losses are recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the
assets' carrying amount.
Realized gains and losses on the sale of investments are
determined on the basis of specific security identification.
Estimates for valuation allowances and other than temporary
declines are included in realized gains and losses on investments.
(c) Revenues and Benefits
Investment Products and Universal Life Insurance Products:
Investment products consist primarily of individual and group
variable and fixed deferred annuities. Universal life insurance
products include universal life insurance, variable universal life
insurance, corporate owned life insurance and other
interest-sensitive life insurance policies. Revenues for
investment products and universal life insurance products consist
of net investment income, asset fees, cost of insurance, policy
administration and surrender charges that have been earned and
assessed against policy account balances during the period. Policy
benefits and claims that are charged to expense include interest
credited to policy account balances and benefits and claims
incurred in the period in excess of related policy account
balances.
Traditional Life Insurance Products: Traditional life insurance
products include those products with fixed and guaranteed premiums
and benefits and consist primarily of whole life insurance,
limited-payment life insurance, term life insurance and certain
annuities with life contingencies. Premiums for traditional life
insurance products are recognized as revenue when due. Benefits
and expenses are associated with earned premiums so as to result
in recognition of profits over the life of the contract. This
association is accomplished by the provision for future policy
benefits and the deferral and amortization of policy acquisition
costs.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(d) Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
certain expenses of the policy issue and underwriting department
and certain variable sales expenses have been deferred. For
investment products and universal life insurance products,
deferred policy acquisition costs are being amortized with
interest over the lives of the policies in relation to the present
value of estimated future gross profits from projected interest
margins, asset fees, cost of insurance, policy administration and
surrender charges. For years in which gross profits are negative,
deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs
are adjusted to reflect the impact of unrealized gains and losses
on fixed maturity securities available-for-sale as described in
note 2(b). For traditional life insurance products, these deferred
policy acquisition costs are predominantly being amortized with
interest over the premium paying period of the related policies in
proportion to the ratio of actual annual premium revenue to the
anticipated total premium revenue. Such anticipated premium
revenue was estimated using the same assumptions as were used for
computing liabilities for future policy benefits.
(e) Separate Accounts
Separate account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. For all but $915.4 million of separate
account assets, the investment income and gains or losses of these
accounts accrue directly to the contractholders. The activity of
the separate accounts is not reflected in the consolidated
statements of income and cash flows except for the fees the
Company receives.
(f) Future Policy Benefits
Future policy benefits for investment products in the accumulation
phase, universal life insurance and variable universal life
insurance policies have been calculated based on participants'
contributions plus interest credited less applicable contract
charges. The average interest rate credited on investment product
policy reserves was 5.6%, 6.0% and 6.1% for the years ended
December 31, 1999, 1998 and 1997, respectively.
Future policy benefits for traditional life insurance policies
have been calculated by the net level premium method using
interest rates varying from 6.0% to 10.5% and estimates of
mortality, morbidity, investment yields and withdrawals which were
used or which were being experienced at the time the policies were
issued, rather than the assumptions prescribed by state regulatory
authorities.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(g) Participating Business
Participating business represents approximately 29% in 1999 (40%
in 1998 and 50% in 1997) of the Company's life insurance in force,
69% in 1999 (74% in 1998 and 77% in 1997) of the number of life
insurance policies in force, and 13% in 1999 (14% in 1998 and 27%
in 1997) of life insurance statutory premiums. The provision for
policyholder dividends is based on current dividend scales and is
included in "Future policy benefits and claims" in the
accompanying consolidated balance sheets.
(h) Federal Income Tax
The Company files a consolidated federal income tax return with
Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Nationwide Corp. The members of the consolidated
tax return group have a tax sharing arrangement which provides, in
effect, for each member to bear essentially the same federal
income tax liability as if separate tax returns were filed.
The Company utilizes the asset and liability method of accounting
for income tax. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under this method, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce the
deferred tax assets to the amounts expected to be realized.
(i) Reinsurance Ceded
Reinsurance premiums ceded and reinsurance recoveries on benefits
and claims incurred are deducted from the respective income and
expense accounts. Assets and liabilities related to reinsurance
ceded are reported on a gross basis.
(j) Recently Issued Accounting Pronouncements
In March 1998, The American Institute of Certified Public
Accountant's Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The
SOP, which has been adopted prospectively as of January 1, 1999,
requires the capitalization of certain costs incurred in
connection with developing or obtaining internal use software.
Prior to the adoption of SOP 98-1, the Company expensed internal
use software related costs as incurred. The effect of adopting the
SOP was to increase net income for 1999 by $8.3 million.
In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). FAS 133 establishes accounting
and reporting standards for derivative instruments and for hedging
activities. Contracts that contain embedded derivatives, such as
certain investment and insurance contracts, are also addressed by
the Statement. FAS 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. In
July 1999 the FASB issued Statement No. 137 which delayed the
effective date of FAS 133 to fiscal years beginning after June 15,
2000. The Company plans to adopt this Statement in first quarter
2001 and is currently evaluating the impact on results of
operations and financial condition.
(k) Reclassification
Certain items in the 1998 and 1997 consolidated financial
statements have been reclassified to conform to the 1999
presentation.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(3) Investments
The amortized cost, gross unrealized gains and losses and estimated
fair value of securities available-for-sale as of December 31, 1999 and
1998 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
(in millions) cost gains losses fair value
--------- ------ ------- ---------
<S> <C> <C> <C> <C>
December 31, 1999:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 428.4 $ 23.4 $ (2.4) $ 449.4
Obligations of states and political subdivisions 0.8 -- -- 0.8
Debt securities issued by foreign governments 110.6 0.6 (0.8) 110.4
Corporate securities 11,414.7 118.9 (218.6) 11,315.0
Mortgage-backed securities 3,422.8 25.8 (30.2) 3,418.4
--------- ------ ------- ---------
Total fixed maturity securities 15,377.3 168.7 (252.0) 15,294.0
Equity securities 84.9 12.4 (4.4) 92.9
--------- ------ ------- ---------
$15,462.2 $181.1 $(256.4) $15,386.9
========= ====== ======= =========
December 31, 1998:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 255.9 $ 13.0 $ -- $ 268.9
Obligations of states and political subdivisions 1.6 -- -- 1.6
Debt securities issued by foreign governments 106.5 4.5 -- 111.0
Corporate securities 9,899.6 423.2 (18.7) 10,304.1
Mortgage-backed securities 3,457.7 104.2 (2.4) 3,559.5
--------- ------ ------- ---------
Total fixed maturity securities 13,721.3 544.9 (21.1) 14,245.1
Equity securities 110.4 18.3 (1.5) 127.2
--------- ------ ------- ---------
$13,831.7 $563.2 $ (22.6) $14,372.3
========= ====== ======= =========
</TABLE>
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1999, by expected
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
(in millions) cost fair value
--------- ---------
<S> <C> <C>
Fixed maturity securities available for sale:
Due in one year or less $ 847.0 $ 847.0
Due after one year through five years 5,240.5 5,205.7
Due after five years through ten years 5,046.9 5,005.2
Due after ten years 4,242.9 4,236.1
--------- ---------
$15,377.3 $15,294.0
========= =========
</TABLE>
<PAGE> 11
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The components of unrealized (losses) gains on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998
------ -------
<S> <C> <C>
Gross unrealized (losses) gains $(75.3) $ 540.6
Adjustment to deferred policy acquisition costs 50.9 (116.6)
Deferred federal income tax 8.5 (148.4)
------ -------
$(15.9) $ 275.6
====== =======
</TABLE>
An analysis of the change in gross unrealized (losses) gains on
securities available-for-sale for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----- ------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(607.1) $52.6 $137.5
Equity securities (8.8) 4.2 (2.7)
------- ----- ------
$(615.9) $56.8 $134.8
======= ===== ======
</TABLE>
Proceeds from the sale of securities available-for-sale during 1999,
1998 and 1997 were $513.1 million, $610.5 million and $574.5 million,
respectively. During 1999, gross gains of $10.4 million ($9.0 million
and $9.9 million in 1998 and 1997, respectively) and gross losses of
$28.0 million ($7.6 million and $18.0 million in 1998 and 1997,
respectively) were realized on those sales. In addition, gross gains of
$15.1 million and gross losses of $0.7 million were realized in 1997
when the Company paid a dividend to NFS, which then made an equivalent
dividend to Nationwide Corp., consisting of securities having an
aggregate fair value of $850.0 million.
The Company had $15.6 million of real estate investments at December
31, 1999 that were non-income producing the preceding twelve months.
During 1998 the Company had investments of $42.4 million that were
non-income producing, which consisted of $32.7 million of securities
available-for-sale and $9.7 million of real estate.
Real estate is presented at cost less accumulated depreciation of $24.8
million as of December 31, 1999 ($21.5 million as of December 31, 1998)
and valuation allowances of $5.5 million as of December 31, 1999 ($5.4
million as of December 31, 1998).
The recorded investment of mortgage loans on real estate considered to
be impaired was $3.7 million as of both December 31, 1999 and 1998. No
valuation allowance has been recorded for these loans as of December
31, 1999 or 1998. During 1999, the average recorded investment in
impaired mortgage loans on real estate was approximately $3.7 million
($9.1 million in 1998) and there was no interest income recognized on
those loans. Interest income recognized on impaired loans was $0.3
million in 1998 which is equal to interest income recognized using a
cash-basis method of income recognition.
<PAGE> 12
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Allowance, beginning of year $42.4 $42.5 $51.0
Additions (reductions) charged to operations 0.7 (0.1) (1.2)
Direct write-downs charged against the allowance -- -- (7.3)
Allowance on acquired mortgage loans 1.3 -- --
----- ----- -----
Allowance, end of year $44.4 $42.4 $42.5
===== ===== =====
</TABLE>
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $1,031.3 $ 982.5 $ 911.6
Equity securities 2.5 0.8 0.8
Mortgage loans on real estate 460.4 458.9 457.7
Real estate 28.8 40.4 42.9
Short-term investments 18.6 17.8 22.7
Other 26.5 30.7 21.0
-------- -------- --------
Total investment income 1,568.1 1,531.1 1,456.7
Less investment expenses 47.3 49.5 47.5
-------- -------- --------
Net investment income $1,520.8 $1,481.6 $1,409.2
======== ======== ========
</TABLE>
An analysis of realized gains (losses) on investments, net of valuation
allowances, by investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----- -----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(25.0) $(0.7) $ 3.6
Equity securities 7.4 2.1 2.7
Mortgage loans on real estate (0.6) 3.9 1.6
Real estate and other 6.6 23.1 3.2
------ ----- -----
$(11.6) $28.4 $11.1
====== ===== =====
</TABLE>
Fixed maturity securities with an amortized cost of $9.1 million as of
December 31, 1999 and $6.5 million as of December 31, 1998 were on
deposit with various regulatory agencies as required by law.
(4) Derivative Financial Instruments
The Company uses derivative financial instruments, principally interest
rate swaps, interest rate futures contracts and foreign currency swaps,
to manage market risk exposures associated with changes in interest
rates and foreign currency exchange rates. Provided they meet specific
criteria, interest rate swaps and futures are considered hedges and are
accounted for under the accrual method and deferral method,
respectively. The Company has no significant derivative positions that
are not considered hedges.
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Interest rate swaps are primarily used to convert specific investment
securities and interest bearing policy liabilities from a fixed-rate to
a floating-rate basis. Amounts receivable or payable under these
agreements are recognized as an adjustment to net investment income or
interest credited to policyholder account balances consistent with the
nature of the hedged item. The changes in fair value of the interest
rate swap agreements are not recognized on the balance sheet, except
for interest rate swaps designated as hedges of fixed maturity
securities available-for-sale, for which changes in fair values are
reported in accumulated other comprehensive income.
Interest rate futures contracts are primarily used to hedge the risk of
adverse interest rate changes related to the Company's mortgage loan
commitments and anticipated purchases of fixed rate investments. Gains
and losses are deferred and, at the time of closing, reflected as an
adjustment to the carrying value of the related mortgage loans or
investments. The carrying value adjustments are amortized into net
investment income over the life of the related mortgage loans or
investments.
Foreign currency swaps are used to convert cash flows from specific
policy liabilities and investments denominated in foreign currencies
into U.S. dollars at specified exchange rates. Gains and losses on
foreign currency swaps are recorded in earnings based on the related
spot foreign exchange rate at the end of the reporting period. Gains
and losses on these contracts offset those recorded as a result of
translating the hedged foreign currency denominated liabilities and
investments to U.S. dollars.
The following table summarizes the notional amount of derivative
financial instruments classified as hedges outstanding as of December
31, 1999. Prior to 1999 the Company's activities in derivatives were
not significant.
<TABLE>
<CAPTION>
(in millions)
-------------
<S> <C>
Interest rate swaps
Pay fixed/receive variable rate swaps hedging investments $362.7
Pay variable/receive fixed rate swaps hedging investments $ 28.5
Other contracts hedging investments $ 19.1
Pay variable/receive fixed rate swaps hedging liabilities $577.2
Foreign currency swaps
Hedging foreign currency denominated investments $ 14.8
Hedging foreign currency denominated liabilities $577.2
Interest rate futures contracts $781.6
</TABLE>
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(5) Federal Income Tax
The tax effects of temporary differences that give rise to significant
components of the net deferred tax liability as of December 31, 1999
and 1998 are as follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Fixed maturity securities $ 5.3 $ --
Future policy benefits 149.5 207.7
Liabilities in separate accounts 373.6 319.9
Mortgage loans on real estate and real estate 18.5 17.5
Other assets and other liabilities 51.1 58.9
----- ------
Total gross deferred tax assets 598.0 604.0
Less valuation allowance (7.0) (7.0)
----- ------
Net deferred tax assets 591.0 597.0
----- ------
Deferred tax liabilities:
Deferred policy acquisition costs 724.4 568.7
Fixed maturity securities -- 212.2
Deferred tax on realized investment gains 34.7 34.8
Equity securities and other long-term investments 10.8 9.6
Other 26.5 21.6
------ ------
Total gross deferred tax liabilities 796.4 846.9
------ ------
Net deferred tax liability $205.4 $249.9
====== ======
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion of the
total gross deferred tax assets will not be realized. Nearly all future
deductible amounts can be offset by future taxable amounts or recovery
of federal income tax paid within the statutory carryback period. There
has been no change in the valuation allowance for the years ended
December 31, 1999, 1998 and 1997.
The Company's current federal income tax liability was $104.7 million
and $72.8 million as of December 31, 1999 and 1998, respectively.
Federal income tax expense for the years ended December 31 was as
follows:
(in millions) 1999 1998 1997
------ ------ ------
Currently payable $ 53.6 $186.1 $121.7
Deferred tax expense 147.8 4.3 28.5
------ ------ ------
$201.4 $190.4 $150.2
====== ====== ======
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Total federal income tax expense for the years ended December 31, 1999,
1998 and 1997 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ---------------- ----------------
(in millions) Amount % Amount % Amount %
------ ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $212.3 35.0 $195.0 35.0 $150.5 35.0
Tax exempt interest and dividends
received deduction (7.3) (1.2) (4.9) (0.9) -- --
Income tax credits (4.3) (0.7) -- -- -- --
Other, net 0.7 0.1 0.3 0.1 (0.3) (0.1)
------ ---- ------ ---- ------ ----
Total (effective rate of each year) $201.4 33.2 $190.4 34.2 $150.2 34.9
====== ==== ====== ==== ====== ====
</TABLE>
Total federal income tax paid was $29.8 million, $173.4 million and
$91.8 million during the years ended December 31, 1999, 1998 and 1997,
respectively.
(6) Comprehensive Income
Comprehensive Income includes net income as well as certain items that
are reported directly within separate components of shareholder's
equity that bypass net income. Currently, the Company's only component
of Other Comprehensive Income is unrealized gains (losses) on
securities available-for-sale. The related before and after federal tax
amounts are as follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-for-sale
arising during the period:
Gross $(665.3) $ 58.2 $141.1
Adjustment to deferred policy acquisition costs 167.5 (12.9) (21.8)
Related federal income tax (expense) benefit 171.4 (15.9) (41.7)
------- ------ ------
Net (326.4) 29.4 77.6
------- ------ ------
Reclassification adjustment for net (gains) losses on
securities available-for-sale realized during the
period:
Gross 17.6 (1.4) (6.3)
Related federal income tax expense (benefit) (6.2) 0.5 2.2
------- ------ ------
Net 11.4 (0.9) (4.1)
------- ------ ------
Total Other Comprehensive Income $(315.0) $ 28.5 $ 73.5
======= ====== ======
</TABLE>
(7) Fair Value of Financial Instruments
The following disclosures summarize the carrying amount and estimated
fair value of the Company's financial instruments. Certain assets and
liabilities are specifically excluded from the disclosure requirements
of financial instruments. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The fair value of a financial instrument is defined as the amount at
which the financial instrument could be exchanged in a current
transaction between willing parties. In cases where quoted market
prices are not available, fair value is to be based on estimates using
present value or other valuation techniques. Many of the Company's
assets and liabilities subject to the disclosure requirements are not
actively traded, requiring fair values to be estimated by management
using present value or other valuation techniques. These techniques are
significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. Although fair value estimates
are calculated using assumptions that management believes are
appropriate, changes in assumptions could cause these estimates to vary
materially. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases,
could not be realized in the immediate settlement of the instruments.
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from the disclosure requirements, estimated fair value of policy
reserves on life insurance contracts is provided to make the fair value
disclosures more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
Fixed maturity and equity securities: The fair value for fixed
maturity securities is based on quoted market prices, where
available. For fixed maturity securities not actively traded, fair
value is estimated using values obtained from independent pricing
services or, in the case of private placements, is estimated by
discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the
investments. The fair value for equity securities is based on
quoted market prices. The carrying amount and fair value for fixed
maturity and equity securities exclude the fair value of
derivatives contracts designated as hedges of fixed maturity and
equity securities.
Mortgage loans on real estate, net: The fair value for mortgage
loans on real estate is estimated using discounted cash flow
analyses, using interest rates currently being offered for similar
loans to borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations.
Fair value for mortgage loans in default is the estimated fair
value of the underlying collateral.
Policy loans, short-term investments and cash: The carrying amount
reported in the consolidated balance sheets for these instruments
approximates their fair value.
Separate account assets and liabilities: The fair value of assets
held in separate accounts is based on quoted market prices. The
fair value of liabilities related to separate accounts is the
amount payable on demand, which is net of certain surrender
charges.
Investment contracts: The fair value for the Company's liabilities
under investment type contracts is disclosed using two methods.
For investment contracts without defined maturities, fair value is
the amount payable on demand. For investment contracts with known
or determined maturities, fair value is estimated using discounted
cash flow analysis. Interest rates used are similar to currently
offered contracts with maturities consistent with those remaining
for the contracts being valued.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Policy reserves on life insurance contracts: Included are
disclosures for individual life insurance, universal life
insurance and supplementary contracts with life contingencies for
which the estimated fair value is the amount payable on demand.
Also included are disclosures for the Company's limited payment
policies, which the Company has used discounted cash flow analyses
similar to those used for investment contracts with known
maturities to estimate fair value.
Commitments to extend credit: Commitments to extend credit have
nominal fair value because of the short-term nature of such
commitments. See note 8.
Futures contracts: The fair value for futures contracts is based
on quoted market prices.
Interest rate and foreign currency swaps: The fair value for
interest rate and foreign currency swaps are calculated with
pricing models using current rate assumptions.
Carrying amount and estimated fair value of financial instruments
subject to disclosure requirements and policy reserves on life
insurance contracts were as follows as of December 31:
<TABLE>
<CAPTION>
1999 1998
------------------------ -------------------------
Carrying Estimated Carrying Estimated
(in millions) amount fair value amount fair value
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $15,294.0 $15,294.0 $14,245.1 $14,245.1
Equity securities 92.9 92.9 128.5 128.5
Mortgage loans on real estate, net 5,786.3 5,745.5 5,328.4 5,527.6
Policy loans 519.6 519.6 464.3 464.3
Short-term investments 416.0 416.0 289.1 289.1
Cash 4.8 4.8 3.4 3.4
Assets held in separate accounts 67,135.1 67,135.1 50,935.8 50,935.8
Liabilities:
Investment contracts (16,977.7) (16,428.6) (15,468.7) (15,158.6)
Policy reserves on life insurance contracts (4,883.9) (4,607.9) (3,914.0) (3,768.9)
Liabilities related to separate accounts (67,135.1) (66,318.7) (50,935.8) (49,926.5)
Derivative financial instruments:
Interest rate swaps hedging assets 4.3 4.3 - -
Interest rate swaps hedging liabilities - (24.2) - -
Foreign currency swaps (11.8) (11.8) - -
Futures contracts 1.3 1.3 (1.3) (1.3)
</TABLE>
(8) Risk Disclosures
The following is a description of the most significant risks facing
life insurers and how the Company mitigates those risks:
Credit Risk: The risk that issuers of securities owned by the Company
or mortgagors on mortgage loans on real estate owned by the Company
will default or that other parties, including reinsurers, which owe the
Company money, will not pay. The Company minimizes this risk by
adhering to a conservative investment strategy, by maintaining
reinsurance and credit and collection policies and by providing for any
amounts deemed uncollectible.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Interest Rate Risk: The risk that interest rates will change and cause
a decrease in the value of an insurer's investments. This change in
rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent that
liabilities come due more quickly than assets mature, an insurer would
have to borrow funds or sell assets prior to maturity and potentially
recognize a gain or loss.
Legal/Regulatory Risk: The risk that changes in the legal or regulatory
environment in which an insurer operates will result in increased
competition, reduced demand for a company's products, or create
additional expenses not anticipated by the insurer in pricing its
products. The Company mitigates this risk by offering a wide range of
products and by operating throughout the United States, thus reducing
its exposure to any single product or jurisdiction, and also by
employing underwriting practices which identify and minimize the
adverse impact of this risk.
Financial Instruments with Off-Balance-Sheet Risk: The Company is a
party to financial instruments with off-balance-sheet risk in the
normal course of business through management of its investment
portfolio. These financial instruments include commitments to extend
credit in the form of loans and derivative financial instruments. These
instruments involve, to varying degrees, elements of credit risk in
excess of amounts recognized on the consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property represents
the collateral if the commitment is funded. The Company's policy for
new mortgage loans on real estate is to lend no more than 75% of
collateral value. Should the commitment be funded, the Company's
exposure to credit loss in the event of nonperformance by the borrower
is represented by the contractual amounts of these commitments less the
net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments.
Commitments on mortgage loans on real estate of $216.2 million
extending into 2000 were outstanding as of December 31, 1999. The
Company also had $28.0 million of commitments to purchase fixed
maturity securities outstanding as of December 31, 1999.
Notional amounts of derivative financial instruments, primarily
interest rate swaps, interest rate futures contracts and foreign
currency swaps, significantly exceed the credit risk associated with
these instruments and represent contractual balances on which
calculations of amounts to be exchanged are based. Credit exposure is
limited to the sum of the aggregate fair value of positions that have
become favorable to NLIC, including accrued interest receivable due
from counterparties. Potential credit losses are minimized through
careful evaluation of counterparty credit standing, selection of
counterparties from a limited group of high quality institutions,
collateral agreements and other contract provisions. At December 31,
1999, NLIC's credit risk from these derivative financial instruments
was $6.1 million.
Significant Concentrations of Credit Risk: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the
United States. The Company has a diversified portfolio with no more
than 23% (22% in 1998) in any geographic area and no more than 2% (2%
in 1998) with any one borrower as of December 31, 1999. As of December
31, 1999, 39% (42% in 1998) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed retail
properties.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Reinsurance: The Company has entered into a reinsurance contract to
cede a portion of its general account individual annuity business to
The Franklin Life Insurance Company (Franklin). Total recoveries due
from Franklin were $143.6 million and $187.9 million as of December 31,
1999 and 1998, respectively. The contract is immaterial to the
Company's results of operations. The ceding of risk does not discharge
the original insurer from its primary obligation to the policyholder.
Under the terms of the contract, Franklin has established a trust as
collateral for the recoveries. The trust assets are invested in
investment grade securities, the market value of which must at all
times be greater than or equal to 102% of the reinsured reserves.
(9) Pension Plan and Postretirement Benefits Other Than Pensions
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least
one year of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company. Assets of the
Retirement Plan are invested in group annuity contracts of NLIC.
Pension cost (benefit) charged to operations by the Company during the
years ended December 31, 1999, 1998 and 1997 were $(8.3) million, $2.0
million and $7.5 million, respectively. The Company has recorded a
prepaid pension asset of $13.3 million and $5.0 million as of December
31, 1999 and 1998, respectively.
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years
of service with the Company after reaching age 40. Postretirement
health care benefit contributions are adjusted annually and contain
cost-sharing features such as deductibles and coinsurance. In addition,
there are caps on the Company's portion of the per-participant cost of
the postretirement health care benefits. These caps can increase
annually, but not more than three percent. The Company's policy is to
fund the cost of health care benefits in amounts determined at the
discretion of management. Plan assets are invested primarily in group
annuity contracts of NLIC.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation (APBO), however, certain affiliated
companies elected to amortize their initial transition obligation over
periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of December 31,
1999 and 1998 was $49.6 million and $40.1 million, respectively, and
the net periodic postretirement benefit cost (NPPBC) for 1999, 1998 and
1997 was $4.9 million, $4.1 million and $3.0 million, respectively.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Information regarding the funded status of the pension plan as a whole
and the postretirement life and health care benefit plan as a whole as
of December 31, 1999 and 1998 follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
------------------ -----------------------
(in millions) 1999 1998 1999 1998
--------------------------------------------------------- -------- -------- ------- -------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $2,185.0 $2,033.8 $ 270.1 $ 237.9
Service cost 80.0 87.6 14.2 9.8
Interest cost 109.9 123.4 17.6 15.4
Actuarial (gain) loss (95.0) 123.2 (64.4) 15.6
Plan settlement in 1999/curtailment in 1998 (396.1) (107.2) -- --
Benefits paid (72.4) (75.8) (11.0) (8.6)
Acquired companies -- -- 13.3 --
-------- -------- ------- -------
Benefit obligation at end of year 1,811.4 2,185.0 239.8 270.1
-------- -------- ------- -------
Change in plan assets:
Fair value of plan assets at beginning of year 2,541.9 2,212.9 77.9 69.2
Actual return on plan assets 161.8 300.7 3.5 5.0
Employer contribution 12.4 104.1 20.9 12.1
Plan settlement (396.1) -- -- --
Benefits paid (72.4) (75.8) (11.0) (8.4)
-------- -------- ------- -------
Fair value of plan assets at end of year 2,247.6 2,541.9 91.3 77.9
-------- -------- ------- -------
Funded status 436.2 356.9 (148.5) (192.2)
Unrecognized prior service cost 28.2 31.5 -- --
Unrecognized net (gains) losses (402.0) (345.7) (46.7) 16.0
Unrecognized net (asset) obligation at transition (7.7) (11.0) 1.1 1.3
-------- -------- ------- -------
Prepaid (accrued) benefit cost $ 54.7 $ 31.7 $(194.1) $(174.9)
======== ======== ======= =======
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of the pension plan and
postretirement life and health care benefit plan:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
---------------- -----------------------
1999 1998 1999 1998
---- ---- ------- ------
<S> <C> <C>
Weighted average discount rate 7.00% 5.50% 7.80% 6.65%
Rate of increase in future compensation levels 5.25% 3.75% -- --
Assumed health care cost trend rate:
Initial rate -- -- 15.00% 15.00%
Ultimate rate -- -- 5.50% 8.00%
Uniform declining period -- -- 5 Years 15 Years
</TABLE>
The net periodic pension cost for the pension plan as a whole for the
years ended December 31, 1999, 1998 and 1997 follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
-------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 80.0 $ 87.6 $ 77.3
Interest cost on projected benefit obligation 109.9 123.4 118.6
Expected return on plan assets (160.3) (159.0) (139.0)
Recognized gains (9.1) (3.8) --
Amortization of prior service cost 3.2 3.2 3.2
Amortization of unrecognized transition obligation (asset) (1.4) 4.2 4.2
------- ------- --------
$ 22.3 $ 55.6 $ 64.3
======= ======= ========
</TABLE>
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its
affiliation with Nationwide Insurance and employees of WSC ended
participation in the plan. A curtailment gain of $67.1 million resulted
(consisting of a $107.2 million reduction in the projected benefit
obligation, net of the write-off of the $40.1 million remaining
unamortized transition obligation related to WSC). During 1999, the
plan transferred assets to settle its obligation related to WSC
employees . A settlement gain of $32.9 million was recognized.
Basis for measurements, net periodic pension cost for the pension plan:
<TABLE>
<CAPTION>
1999 1998 1997
------ ----- -----
<S> <C> <C> <C>
Weighted average discount rate 6.08% 6.00% 6.50%
Rate of increase in future compensation levels 4.33% 4.25% 4.75%
Expected long-term rate of return on plan assets 7.33% 7.25% 7.25%
</TABLE>
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The amount of NPPBC for the postretirement benefit plan as a whole for
the years ended December 31, 1999, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----------- -----------
<S> <C> <C> <C>
Service cost (benefits attributed to employee service during the year) $14.2 $ 9.8 $ 7.0
Interest cost on accumulated postretirement benefit obligation 17.6 15.4 14.0
Actual return on plan assets (3.5) (5.0) (3.6)
Amortization of unrecognized transition obligation of affiliates 0.6 0.2 0.2
Net amortization and deferral (1.8) 1.2 (0.5)
----- ----- -----
$27.1 $21.6 $17.1
===== ===== =====
</TABLE>
Actuarial assumptions used for the measurement of the NPPBC for the
postretirement benefit plan for 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Discount rate 6.65% 6.70% 7.25%
Long term rate of return on plan
assets, net of tax 7.15% 5.83% 5.89%
Assumed health care cost trend rate:
Initial rate 15.00% 12.00% 11.00%
Ultimate rate 5.50% 6.00% 6.00%
Uniform declining period 5 Years 12 Years 12 Years
</TABLE>
For the postretirement benefit plan as a whole, a one percentage point
increase or decrease in the assumed health care cost trend rate would
have no impact on the APBO as of December 31, 1999 and have no impact
on the NPPBC for the year ended December 31, 1999.
(10) Shareholder's Equity, Regulatory Risk-Based Capital, Retained Earnings
and Dividend Restrictions
Ohio, NLIC's and NLAIC's state of domicile, imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. NLIC and NLAIC each exceed
the minimum risk-based capital requirements.
The statutory capital and surplus of NLIC as of December 31, 1999, 1998
and 1997 was $1.35 billion, $1.32 billion and $1.13 billion,
respectively. The statutory net income of NLIC for the years ended
December 31, 1999, 1998 and 1997 was $276.2 million, $171.0 million and
$111.7 million, respectively.
The Company is limited in the amount of shareholder dividends it may
pay without prior approval by the Department. As of December 31, 1999
$40.2 million of dividends could be paid by NLIC without prior
approval.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
In addition, the payment of dividends by NLIC may also be subject to
restrictions set forth in the insurance laws of New York that limit the
amount of statutory profits on NLIC's participating policies (measured
before dividends to policyholders) that can inure to the benefit of the
Company and its shareholder.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and shareholder dividends
in the future.
(11) Transactions With Affiliates
During second quarter 1999 the Company entered into a modified
coinsurance arrangement to reinsure the 1999 operating results of an
affiliated company, Employers Life Insurance Company of Wausau (ELOW)
retroactive to January 1, 1999. In September 1999, NFS acquired ELOW
for $120.8 million and immediately merged ELOW into NLIC terminating
the modified coinsurance arrangement. Because ELOW was an affiliate,
the Company accounted for the merger similar to poolings-of-interests;
however, prior period financial statements were not restated due to
immateriality. The reinsurance and merger combined contributed $1.46
million to year to date net income.
The Company has a reinsurance agreement with NMIC whereby all of the
Company's accident and health business is ceded to NMIC on a modified
coinsurance basis. The agreement covers individual accident and health
business for all periods presented and group and franchise accident and
health business since July 1, 1999. Either party may terminate the
agreement on January 1 of any year with prior notice. Prior to July 1,
1999 group and franchise accident and health business and a block of
group life insurance policies were ceded to ELOW under a modified
coinsurance agreement. Under a modified coinsurance agreement, invested
assets are retained by the ceding company and investment earnings are
paid to the reinsurer. Under the terms of the Company's agreements, the
investment risk associated with changes in interest rates is borne by
the reinsurer. Risk of asset default is retained by the Company,
although a fee is paid to the Company for the retention of such risk.
The ceding of risk does not discharge the original insurer from its
primary obligation to the policyholder. The Company believes that the
terms of the modified coinsurance agreements are consistent in all
material respects with what the Company could have obtained with
unaffiliated parties. Revenues ceded to NMIC and ELOW for the years
ended December 31, 1999, 1998 and 1997 were $193.0 million, $216.9
million, and $315.3 million, respectively, while benefits, claims and
expenses ceded were $216.9 million, $259.3 million, and $326.6 million,
respectively.
Pursuant to a cost sharing agreement among NMIC and certain of its
direct and indirect subsidiaries, including the Company, NMIC provides
certain operational and administrative services, such as sales support,
advertising, personnel and general management services, to those
subsidiaries. Expenses covered by such agreement are subject to
allocation among NMIC and such subsidiaries. Measures used to allocate
expenses among companies include individual employee estimates of time
spent, special cost studies, salary expense, commission expense and
other methods agreed to by the participating companies that are within
industry guidelines and practices. In addition, beginning in 1999
Nationwide Services Company, a subsidiary of NMIC, provides computer,
telephone, mail, employee benefits administration, and other services
to NMIC and certain of its direct and indirect subsidiaries, including
the Company, based on specified rates for units of service consumed.
For the years ended December 31, 1999, 1998 and 1997, the Company made
payments to NMIC and Nationwide Services Company totaling $124.1
million, $95.0 million, and $85.8 million, respectively. In addition,
the Company does not believe that expenses recognized under these
agreements are materially different than expenses that would have been
recognized had the Company operated on a stand-alone basis.
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1999, 1998 and 1997, the
Company made lease payments to NMIC and its subsidiaries of $9.9
million, $8.0 million and $8.4 million, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The Company also participates in intercompany repurchase agreements
with affiliates whereby the seller will transfer securities to the
buyer at a stated value. Upon demand or a stated period, the securities
will be repurchased by the seller at the original sales price plus a
price differential. Transactions under the agreements during 1999 and
1998 were not material. The Company believes that the terms of the
repurchase agreements are materially consistent with what the Company
could have obtained with unaffiliated parties.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC), an affiliate, under which
NCMC acts as a common agent in handling the purchase and sale of
short-term securities for the respective accounts of the participants.
Amounts on deposit with NCMC were $411.7 million and $248.4 million as
of December 31, 1999 and 1998, respectively, and are included in
short-term investments on the accompanying consolidated balance sheets.
As part of certain restructuring activities that occurred prior to the
March 1997 IPO, the Company paid a dividend valued at $485.7 million to
Nationwide Corp. on January 1, 1997 consisting of the outstanding
shares of common stock of ELOW, National Casualty Company (NCC) and
West Coast Life Insurance Company (WCLIC). Also, on February 24, 1997,
the Company paid a dividend to NFS, and NFS paid an equivalent dividend
to Nationwide Corp., consisting of securities having an aggregate fair
value of $850.0 million. The Company recognized a gain of $14.4 million
on the transfer of securities.
Certain annuity products are sold through three affiliated companies,
which are also subsidiaries of NFS. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1999 were $56.0
million, $60.0 million and $66.1 million, respectively.
(12) Bank Lines of Credit
NFS, NLIC and NMIC are parties to a $600.0 million revolving credit
facility which provides for a $600.0 million loan over a five year term
on a fully revolving basis with a group of national financial
institutions. The credit facility provides for several and not joint
liability with respect to any amount drawn by any party. NFS, NLIC and
NMIC pay facility and usage fees to the financial institutions to
maintain the revolving credit facility. As of December 31, 1999 the
Company had no amounts outstanding under the agreement.
(13) Contingencies
On October 29, 1998, the Company was named in a lawsuit filed in Ohio
state court related to the sale of deferred annuity products for use as
investments in tax-deferred contributory retirement plans (Mercedes
Castillo v. Nationwide Financial Services, Inc., Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company).
On May 3, 1999, the complaint was amended to, among other things, add
Marcus Shore as a second plaintiff. The amended complaint is brought as
a class action on behalf of all persons who purchased individual
deferred annuity contracts or participated in group annuity contracts
sold by the Company and the other named Company affiliates which were
used to fund certain tax-deferred retirement plans. The amended
complaint seeks unspecified compensatory and punitive damages. No class
has been certified. On June 11, 1999, the Company and the other named
defendants filed a motion to dismiss the amended complaint. On March 8,
2000, the court denied the motion to dismiss the amended complaint
filed by the Company and other named defendants. The Company intends to
defend this lawsuit vigorously.
(14) Segment Information
The Company uses differences in products as the basis for defining its
reportable segments. The Company reports three product segments:
Variable Annuities, Fixed Annuities and Life Insurance.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The Variable Annuities segment consists of annuity contracts that
provide the customer with access to a wide range of investment options,
tax-deferred accumulation of savings, asset protection in the event of
an untimely death, and flexible payout options including a lump sum,
systematic withdrawal or a stream of payments for life. The Company's
variable annuity products consist almost entirely of flexible premium
deferred variable annuity contracts.
The Fixed Annuities segment consists of annuity contracts that generate
a return for the customer at a specified interest rate fixed for a
prescribed period, tax-deferred accumulation of savings, and flexible
payout options including a lump sum, systematic withdrawal or a stream
of payments for life. Such contracts consist of single premium deferred
annuities, flexible premium deferred annuities and single premium
immediate annuities. The Fixed Annuities segment includes the fixed
option under variable annuity contracts.
The Life Insurance segment consists of insurance products, including
variable universal life insurance and corporate-owned life insurance
products, that provide a death benefit and may also allow the customer
to build cash value on a tax-deferred basis.
In addition to the product segments, the Company reports corporate
revenue and expenses, investments and related investment income
supporting capital not specifically allocated to its product segments,
revenues and expenses of its investment advisor subsidiary, revenues
and expenses related to group annuity contracts sold to Nationwide
Insurance employee and agent benefit plans and all realized gains and
losses on investments in a Corporate and Other segment.
During 1999 the Company revised the allocation of net investment income
among its Life Insurance and Corporate and Other segments. Also,
certain amounts previously reported as other income were reclassified
to operating expense. Amounts reported for prior periods have been
restated to reflect these changes.
The following table summarizes the financial results of the Company's
business segments for the years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
(in millions) Annuities Annuities Insurance and Other Total
------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1999:
Net investment income (1) $ (41.5) $ 1,134.5 $ 253.1 $ 174.7 $ 1,520.8
Other operating revenue 668.2 43.4 393.0 77.8 1,182.4
--------- --------- -------- -------- ---------
Total operating revenue (2) 626.7 1,177.9 646.1 252.5 2,703.2
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 837.5 130.5 128.3 1,096.3
Amortization of deferred policy
acquisition costs 162.8 49.7 60.1 -- 272.6
Other benefits and expenses 173.6 113.5 334.7 94.4 716.2
--------- --------- -------- -------- ---------
Total expenses 336.4 1,000.7 525.3 222.7 2,085.1
--------- --------- -------- -------- ---------
Operating income before
federal income tax 290.3 177.2 120.8 29.8 618.1
Realized losses on investments -- -- -- (11.6) (11.6)
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 290.3 $ 177.2 $ 120.8 $ 18.2 $ 606.5
========= ========= ======== ======== =========
Assets as of year end $62,599.7 $17,134.8 $6,616.7 $6,324.7 $92,675.9
========= ========= ======== ======== =========
</TABLE>
<PAGE> 26
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
(in millions) Annuities Annuities Insurance and Other Total
------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1998:
Net investment income (1) $ (31.3) $ 1,116.6 $ 225.6 $ 170.7 $ 1,481.6
Other operating revenue 532.9 35.7 318.5 78.6 965.7
--------- --------- -------- -------- ---------
Total operating revenue (2) 501.6 1,152.3 544.1 249.3 2,447.3
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 828.6 115.4 125.0 1,069.0
Amortization of deferred policy
acquisition costs 123.9 44.2 46.4 -- 214.5
Other benefits and expenses 159.3 104.2 293.5 78.1 635.1
--------- --------- -------- -------- ---------
Total expenses 283.2 977.0 455.3 203.1 1,918.6
--------- --------- -------- -------- ---------
Operating income before federal
income tax 218.4 175.3 88.8 46.2 528.7
Realized gains on investments -- -- -- 28.4 28.4
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 218.4 $ 175.3 $ 88.8 $ 74.6 $ 557.1
========= ========= ======== ======== =========
Assets as of year end $47,668.7 $15,215.7 $5,187.6 $6,270.1 $74,342.1
========= ========= ======== ======== =========
1997:
Net investment income (1) $ (26.8) $ 1,098.2 $ 184.9 $ 152.9 $ 1,409.2
Other operating revenue 413.9 43.2 283.4 56.6 797.1
--------- --------- -------- -------- ---------
Total operating revenue (2) 387.1 1,141.4 468.3 209.5 2,206.3
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 823.4 78.5 114.7 1,016.6
Amortization of deferred policy
acquisition costs 87.8 39.8 39.6 -- 167.2
Benefits and expenses 148.4 108.7 283.5 63.1 603.7
--------- --------- -------- -------- ---------
Total expenses 236.2 971.9 401.6 177.8 1,787.5
--------- --------- -------- -------- ---------
Operating income before federal
income tax 150.9 169.5 66.7 31.7 418.8
Realized gains on investments -- -- -- 11.1 11.1
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 150.9 $ 169.5 $ 66.7 $ 42.8 $ 429.9
========= ========= ======== ======== =========
Assets as of year end $35,278.7 $14,436.3 $3,901.4 $6,174.3 $59,790.7
========= ========= ======== ======== =========
</TABLE>
- ----------
(1) The Company's method of allocating net investment income results in
a charge (negative net investment income) to the Variable Annuities
segment which is recognized in the Corporate and Other segment. The
charge relates to non-invested assets which support this segment on
a statutory basis.
(2) Excludes realized gains and losses on investments.
The Company has no significant revenue from customers located outside
of the United States nor does the Company have any significant
long-lived assets located outside the United States.
<PAGE> 73
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) All financial statements are included in Parts A and
B of the Registration Statement:
(1) Financial statements included in Prospectus.
(Part A):
Condensed Financial Information.
in Part B:
Those financial statements required by Item 23 to
be included in Part B have been incorporated
therein by reference to the Prospectus (Part A).
Nationwide Variable Account:
Independent Auditors' Report.
Statement of Assets, Liabilities and Contract
Owners' Equity as of December 31, 1999.
Statement of Operations for the years
ended December 31, 1999 and 1998.
Statement of Changes in Contract
Owners' Equity for the years ended
December 31, 1999 and 1998.
Notes to Financial Statements.
Nationwide Life Insurance Company and Subsidiaries:
Independent Auditors' Report.
Consolidated Balance Sheets as of December
31, 1999 and 1998.
Consolidated Statements of Income for the
years ended December 31, 1999, 1998 and
1997.
Consolidated Statements of Shareholder's Equity
for the years ended December 31, 1999, 1998 and
1997.
Consolidated Statements of Cash Flows for the
years ended December 31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
(b) Exhibits
(1) Resolution of the Depositor's
Board of Directors authorizing the
establishment of the Registrant *
(2) Not Applicable
(3) Underwriting or Distribution of
contracts between the Registrant
and Principal Underwriter Attached hereto
<PAGE> 74
(4) The form of the variable annuity contract *
(5) Variable Annuity Application *
(6) Articles of Incorporation of
Depositor *
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel *
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
*Filed previously with this Registration
Statement (No. 2 - 58043) and hereby
incorporated reference.
<PAGE> 75
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olive, NC 28365-6107
A. I. Bell Director
4121 North River Road West
Zanesville, OH 43701
Kenneth D. Davis Director
7229 Woodmansee Road
Leesburg, OH 45135
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
301 East Marshall Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Dimon R. McFerson Chairman and Chief Executive Officer
One Nationwide Plaza and Director
Columbus, OH 43215
David O. Miller Chairman of the Board and Director
115 Sprague Drive
Hebron, OH 43025
Yvonne L. Montgomery Director
Xerox Corporation
Suite 200
1401 H Street NW
Washington, DC 20005-2110
Ralph M. Paige Director
Federation of Southern
Cooperatives/Land Assistance Fund
2769 Church Street
East Point, GA 30344
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
<PAGE> 76
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
1767D Westwood Avenue
Alliance, OH 44601
Richard D. Headley Executive Vice President - Chief
One Nationwide Plaza Information Technology Officer
Columbus, OH 43215
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
Robert J. Woodward, Jr. Executive Vice President
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
James E. Brock Senior Vice President - Corporate
One Nationwide Plaza Development
Columbus, OH 43215
Charles A. Bryan Senior Vice President -
One Nationwide Plaza Chief Actuary - Property and Casualty
Columbus, OH 43215
John R. Cook, Jr. Senior Vice President -
One Nationwide Plaza Chief Communications Officer
Columbus, OH 43215
David A. Diamond Senior Vice President -
One Nationwide Plaza Corporate Controller
Columbus, OH 43215
Philip C. Gath Senior Vice President -
One Nationwide Plaza Chief Actuary - Nationwide Financial
Columbus, OH 43215
Patricia R. Hatler Senior Vice President,
One Nationwide Plaza General Counsel and Secretary
Columbus, OH 43215
<PAGE> 77
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
David K. Hollingsworth Senior Vice President
One Nationwide Plaza
Columbus, OH 43215
David R. Jahn Senior Vice President -
One Nationwide Plaza Commercial Insurance
Columbus, OH 43215
Donna A James Senior Vice President - Chief Human
One Nationwide Plaza Resources Officer
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Gregory S. Lashutka Senior Vice President -
One Nationwide Plaza Corporate Relations
Columbus, OH 43215
Edwin P. McCausland, Jr. Senior Vice President -
One Nationwide Plaza Fixed Income Securities
Columbus, OH 43215
Mark D. Phelan Senior Vice President -
One Nationwide Plaza Technology Services
Columbus, OH 43215
Douglas C. Robinette Senior Vice President -
One Nationwide Plaza Claims and Finance Services
Columbus, OH 43215
Mark R. Thresher Senior Vice President -
One Nationwide Plaza Finance - Nationwide Financial
Columbus, OH 43215
Richard M. Waggoner Senior Vice President -
One Nationwide Plaza Operations
Columbus, OH 43215
Susan A. Wolken Senior Vice President - Product
One Nationwide Plaza Management and Nationwide
Columbus, OH 43215 Financial Marketing
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated financial
statements
*** Subsidiaries included in the respective group financial
statements filed for unconsolidated subsidiaries
**** other subsidiaries
<PAGE> 78
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------- ---------------- ------------- ------------------------------------
<S> <C> <C> <C>
The 401(k) Companies, Inc. Texas Holding Company
The 401(k) Company Texas Third-party administrator for 401(k)
plans
401(k) Investment Advisors, Inc. Texas Investment advisor registered with the
SEC
401(k) Investments Services, Inc. Texas NASD registered broker-dealer
Affiliate Agency, Inc. Delaware Insurance agency marketing life
insurance & annuity products through
financial institutions
Affiliate Agency of Ohio, Inc. Ohio Insurance agency marketing life
insurance & annuity products through
financial institutions
AID Finance Services, Inc. Iowa Holding Company
ALLIED General Agency Company Iowa Managing general agent and surplus
lines broker for property & casualty
insurance products
ALLIED Group, Inc. Iowa Property & casualty holding company
ALLIED Group Insurance Marketing Iowa Direct marketer for property and
Company casualty insurance products
ALLIED Group Merchant Banking Iowa Broker-Dealer
Corporation
ALLIED Property and Casualty Insurance Iowa Underwrites general property &
Company casualty insurance
Allnations, Inc. Ohio Promotes international cooperative
insurance organizations
AMCO Insurance Company Iowa Underwrites general property &
casualty insurance
American Marine Underwriters, Inc. Florida Underwriting manager for ocean cargo
and bulk insurance
Auto Direkt Insurance Company Germany Insurance Company
Cal-Ag Insurance services, Inc. California Captive insurance brokerage firm
CalFarm Insurance Agency California Former marketing company for
traditional agent producers of CalFarm
Insurance Company
CalFarm Insurance Company California Multi-line insurance company
Caliber Funding Delaware A limited purpose corporation
Colonial County Mutual Insurance Texas Insurance Company
Company
Columbus Insurance Brokerage and Germany General service insurance broker
Service GmbH
</TABLE>
<PAGE> 79
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------- ---------------- ------------- ------------------------------------
<S> <C> <C> <C>
Cooperative Service Company Nebraska Insurance agency that sells and
services commercial insurance
Depositors Insurance Company Iowa Underwrites property & casualty
insurance
eNationwide, LLC Ohio A limited liability company to provide
administrative services to
Nationwide's direct operations
Excaliber Funding Corporation Delaware Limited purpose corporation
F&B, Inc. Iowa Insurance Agency
Farmland Mutual Insurance Company Iowa Mutual Insurance Company
Financial Horizons Distributors Alabama Insurance agency marketing life
Agency of Alabama, Inc. insurance and annuity products through
financial institutions
Financial Horizons Distributors Ohio Insurance marketing life insurance and
Agency of Ohio, Inc. annuity products through financial
institutions
Financial Horizons Distributors Oklahoma Insurance marketing life insurance and
Agency of Oklahoma, Inc. annuity products through financial
institutions
Financial Horizons Distributors Texas Insurance marketing life insurance and
Agency of Texas, Inc. annuity products through financial
institutions
*Financial Horizons Investment Trust Massachusetts Diversified, open-end investment
company
Financial Horizons Securities Oklahoma Limited broker-dealer doing business
Corporation solely in the financial institution
market
GatesMcDonald Health Plus Inc. Ohio Managed Care Organization
Gates, McDonald & Company Ohio Services employers for managing
workers' and unemployment compensation
matters
Gates, McDonald & Company of Nevada Nevada Self-insurance administration, claims
examinations and data processing
services
Gates, McDonald & Company of New York, New York Workers' compensation/self-insured
Inc. claims administration services to
employers with exposure in New York
Insurance Intermediaries, Inc. Ohio Insurance agency providing commercial
property & casualty brokerage services
Irvin L. Schwartz and Associates, Inc. Ohio Insurance Agency
Landmark Financial Services of New New York Insurance agency marketing life
York, Inc. insurance and annuity products through
financial institutions
Leben Direkt Insurance Company Germany Life insurance through direct mail
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------- ---------------- ------------- ------------------------------------
<S> <C> <C> <C>
Lone Star General Agency, Inc. Texas General agent to market non-standard
automobile and motorcycle insurance
for Colonial Mutual Insurance Company
MedProSolutions, Inc. Massachusetts Provides third-party administration
services for workers compensation,
automobile injury and disability claims
Midwest Printing Services, Ltd. Iowa General printing services
Morley & Associates, Inc. Oregon Insurance brokerage
Morley Capital Management, Inc. Oregon Investment adviser and stable value
money management
Morley Financial Services, Inc. Oregon Holding Company
Morley Research Associates, Ltd. Delaware Credit research consulting
**MRM Investments, Inc. Ohio Owns and operates a recreational ski
facility
**National Casualty Company Wisconsin Insurance Company
National Casualty Company of America, England Insurance Company
Ltd.
National Deferred Compensation, Inc. Ohio Administers deferred compensation
plans for public employees
**National Premium and Benefit Delaware Provides third-party administration
Administration Company services
Nationwide Advisory Services, Inc. Ohio Registered broker-dealer providing
investment management and
administrative services
**Nationwide Agency, Inc. Ohio Insurance Agency
Nationwide Agribusiness Insurance Iowa Provides property & casualty insurance
Company primarily to agricultural business
Nationwide Arena, LLC Ohio A limited liability company related to
arena development
*Nationwide Asset Allocation Trust Ohio Diversified open-end investment company
Nationwide Assurance Company Wisconsin Underwrites non-standard automobile
and motorcycle insurance
Nationwide Cash Management Company Ohio Investment Securities Agent
</TABLE>
<PAGE> 81
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------- ---------------- ------------- ------------------------------------
<S> <C> <C> <C>
Nationwide Corporation Ohio Holding company for entities
affiliated with Nationwide Mutual
Insurance Company
Nationwide Exclusive Distribution Ohio A limited liability company providing
Company, LLC agency support services to Nationwide
exclusive agents
Nationwide Financial Assignment Ohio An assignment company to administer
Company structured settlement business
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
Nationwide Financial Institution New Mexico Insurance Agency
Distributors Agency, Inc. of
New Mexico
Nationwide Financial Institution Massachusetts Insurance Agency
Distributors Agency, Inc. of
Massachusetts
Nationwide Financial Services Bermuda Long-term insurer which issued
(Bermuda) Ltd. variable annuity and variable life
products to persons outside the U.S. &
Bermuda
Nationwide Financial Services Capital Delaware Trust which issues and sells
Trust securities & uses proceeds to acquire
debentures
Nationwide Financial Services Capital Delaware Trust which issues and sells
Trust II securities & uses proceeds to acquire
debentures
Nationwide Financial Services, Inc. Delaware Holding Company for entities
associated with Nationwide Mutual
Insurance Company
Nationwide Foundation Ohio Not-for profit corporation
Nationwide General Insurance Company Ohio Primarily provides automobile and fire
insurance to select customers
Nationwide Global Finance, LLC Ohio Act as a support company for
Nationwide Global Holdings, Inc. & its
international capitalization efforts
Nationwide Global Funds Cayman Islands Exempted company with limited
liability for purpose of issuing
investment shares to segregated asset
accounts of Nationwide Financial
Services (Bermuda) Ltd. and to
non-U.S. resident investors
Nationwide Global Holdings, Inc. Ohio Holding Company for Nationwide
Insurance Enterprise international
operations
Nationwide Global Holdings, Inc.-NGH Grand Duchy of Analyze European market of life
Luxembourg Branch Luxembourg insurance
</TABLE>
<PAGE> 82
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------- ---------------- ------------- ------------------------------------
<S> <C> <C> <C>
Nationwide Global Holdings-Hong Kong, Hong Kong Primarily a holding company for
Limited Nationwide Global Holdings, Inc. Asian
operations
Nationwide Global Holdings-NGH Brasil Brazil Holding company
Participacoes LTDA
Nationwide Health Plans, Inc. Ohio Health insuring organization
Nationwide Home Mortgage Company Iowa Mortgage lendor
*Nationwide Indemnity Company Ohio Reinsurance company assuming business
from Nationwide Mutual Insurance
Company and other insurers within the
Nationwide Insurance Enterprise
Nationwide Insurance Company of America Wisconsin Independent agency personal lines
underwriter of property & casualty
insurance
Nationwide Insurance Company of Florida Ohio Transacts general insurance business
except life insurance
Nationwide Insurance Golf Charities, Ohio Not-for-profit corporation
Inc.
Nationwide International Underwriters California Special risks, excess & surplus lines
underwriting manager
Nationwide Investing Foundation Michigan Provide investors with continuous
source of investment under management
of trustees
*Nationwide Investing Foundation II Massachusetts Diversified, open-end investment
company
Nationwide Investment Services Oklahoma Registered broker-dealer
Corporation
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
**Nationwide Life and Annuity Ohio Life Insurance Company
Insurance Company
**Nationwide Life Insurance Company Ohio Life Insurance Company
Nationwide Lloyds Texas Commercial property insurance in Texas
Nationwide Management Systems, Inc. Ohio Preferred provider organization,
products and related services
Nationwide Mutual Fire Insurance Ohio Mutual Insurance Company
Company
*Nationwide Mutual Funds Ohio Diversified, open-end investment
company
Nationwide Mutual Insurance Company Ohio Mutual Insurance Company
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------- ---------------- ------------- ------------------------------------
<S> <C> <C> <C>
Nationwide Properties, Ltd. Ohio Develop, own and operate real estate
and real estate investments
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
Nationwide Realty Investors, Inc. Ohio Develop, own and operate real estate
and real estate investments
Nationwide Retirement Solutions, Inc. Delaware Market and administer deferred
compensation plans for public employees
Nationwide Retirement Solutions, Inc. Alabama Market and administer deferred
of Alabama compensation plans for public employees
Nationwide Retirement Solutions, Inc. Arizona Market and administer deferred
of Arizona compensation plans for public employees
Nationwide Retirement Solutions, Inc. Arkansas Market and administer deferred
of Arkansas compensation plans for public employees
Nationwide Retirement Solutions, Inc. Montana Market and administer deferred
of Montana compensation plans for public employees
Nationwide Retirement Solutions, Inc. Nevada Market and administer deferred
of Nevada compensation plans for public employees
Nationwide Retirement Solutions, Inc. New Mexico Market and administer deferred
of New Mexico compensation plans for public employees
Nationwide Retirement Solutions, Inc. Ohio Market variable annuity contracts to
of Ohio members of the National Education
Association in the state of Ohio
Nationwide Retirement Solutions, Inc. Oklahoma Market variable annuity contracts to
of Oklahoma members of the National Education
Association in the state of Oklahoma
Nationwide Retirement Solutions, Inc. South Dakota Market and administer deferred
of South Dakota compensation plans for public employees
Nationwide Retirement Solutions, Inc. Texas Market and administer deferred
of Texas compensation plans for public employees
Nationwide Retirement Solutions, Inc. Wyoming Market variable annuity contracts to
of Wyoming members of the National Education
Association in the state of Wyoming
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------- ---------------- ------------- ------------------------------------
<S> <C> <C> <C>
Nationwide Retirement Solutions Massachusetts Market and administer deferred
Insurance Agency Inc. compensation plans for public employees
Nationwide Seguradora S.A. Brazil Engage in elementary, health & life
insurance; private open pension and
wealth concession plans
*Nationwide Separate Account Trust Massachusetts Diversified, open-end investment
company
Nationwide Services Company, LLC. Ohio Single member limited liability
company performing shared services
functions for the Nationwide Insurance
Enterprise
Nationwide Trust Company, FSB United States Federal savings bank chartered by the
Office of Thrift Supervision in U.S.
Department of Treasury to exercise
custody & fiduciary powers
Neckura Holding Company Germany Administrative services for Neckura
Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life and health insurance company
Nevada Independent Nevada Workers' compensation administrative
Companies-Construction services to Nevada employers in the
construction industry
Nevada Independent Companies-Health Nevada Workers' compensation administrative
and Nonprofit services to Nevada employers in health
& nonprofit industries
Nevada Independent Companies- Nevada Workers' compensation administrative
Hospitality and Entertainment services to Nevada employers in the
hospitality & entertainment industries
Nevada Independent Companies- Nevada Workers' compensation administrative
Manufacturing, Transportation and services to Nevada employers in the
Distribution manufacturing, transportation and
distribution industries
NFS Distributors, Inc. Delaware Holding company for Nationwide
Financial Services, Inc. distribution
companies
NGH Luxembourg, S.A Luxembourg Acts primarily as holding company for
Nationwide Global Holdings, Inc.
European operations
NGH Netherlands, B.V. The Netherlands Holding company for other overseas
companies
</TABLE>
<PAGE> 85
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------- ---------------- ------------- ------------------------------------
<S> <C> <C> <C>
NGH UK, Ltd. United Kingdom Assist Nationwide Global Holdings,
Inc. with European operations and
marketing
Northpointe Capital LLC Delaware Limited liability company for
investments
PanEuroLife Luxembourg Life Insurance company providing
individual life insurance primarily in
the UK, Belgium and France
Pension Associates, Inc. Wisconsin Pension plan administration and record
keeping services
Portland Investment Services, Inc. Oregon NASD registered broker-dealer
Premier Agency, Inc. Iowa Insurance Agency
Riverview Agency, Inc. Texas Has a pending application to become a
licensed insurance agency with the
Texas Department of Insurance
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
Scottsdale Surplus Lines Insurance Arizona Provides excess and surplus lines
Company insurance coverage on a non-admitted
basis
SVM Sales GmbH, Neckura Insurance Germany Recruits and supervises external sales
Group partners who obtain new business for
the Neckura Group as well as to offer
financial services
Union Bond & Trust Company Oregon Oregon state bank with trust powers
Villanova Capital, Inc. Delaware Holding Company
Villanova Mutual Fund Capital Trust Delaware Trust designed to act as a registered
investment advisor
Villanova SA Capital Trust Delaware Trust designed to act as a registered
investment advisor
Western Heritage Insurance Company Arizona Underwrites excess and surplus lines
of property and casualty insurance
</TABLE>
<PAGE> 86
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
-------------------------- ---------------- ------------- -------------------------------
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DC Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
Nationwide DCVA-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-9 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-10 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
Nationwide Variable Account-11 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
</TABLE>
<PAGE> 87
<TABLE>
<CAPTION>
(left side)
<S> <C> <C> <C>
- ------------------------
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
- ------------------------
-------------------------------------------------------------------------------------------------------------------------
| |
- --------------------------- --------------------------- ----------------------------
| ALLIED GROUP | | ALLIED | | |
| MERCHANT BANKING | | GROUP, INC. | | |
| CORPORATION | | (AGI) | | NATIONWIDE LLOYDS |
| | | | | |
|Common Stock: 10,000 | |-------|Common Stock: 850 Shares |---| | |
|------------ Shares | | |------------ | | | A TEXAS LLOYDS |================================
| | | | | | | |
| Cost | | | Cost | | | |
| ---- | | | ---- | | | |
|Casualty- | | |Casualty- | | | |
|100% $150,055 | | |100% $243,344,521 | | | |
- --------------------------- | --------------------------- | ----------------------------
| |
- --------------------------- | --------------------------- | ----------------------------
| NATIONWIDE INSURANCE | | | AMCO | | | DEPOSITORS |
| COMPANY OF AMERICA | | | INSURANCE COMPANY | | | INSURANCE COMPANY |
| | | | (AMCO) | | | (DEPOSITORS) |
|Common Stock: 12,000 | | |Common Stock: 500,000 | | |Common Stock: 300,000 |
|------------ Shares | | |------------ Shares | | |------------ Shares |
| |---| | |---|---| |
| Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- |
| | | | | | | |
|AGI-100% $215,273,000 | | |AGI-100% $147,425,540| | |AGI 100% $22,251,842 |
- --------------------------- | --------------------------- | ----------------------------
| | |
- --------------------------- | --------------------------- | ----------------------------
| AID FINANCE | | | ALLIED | | | ALLIED PROPERTY |
| SERVICES, INC. | | | GENERAL AGENCY | | | AND CASUALTY |
| (AID FINANCE) | | | COMPANY | | | INSURANCE COMPANY |
|Common Stock: 10,000 | | |Common Stock: 5,000 | | |Common Stock: 300,000 |
|------------ Shares | | |------------ Shares | | |------------ Shares |
| |---| | | |---| |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|AGI-100% $19,545,634| |AMCO-100% $135,342 | | |AGI-100% $47,018,643 |
- --------------------------- --------------------------- | ----------------------------
| |
- --------------------------- --------------------------- | ----------------------------
| ALLIED | | MIDWEST | | | NATIONWIDE |
| GROUP INSURANCE | | PRINTING SERVICES, | | | HOME MORTGAGE |
| MARKETING COMPANY | | LTD. | | | COMPANY (NHMC) |
| | |Common Stock: 10,000 | | | |
|Common Stock: 20,000 | |------------ Shares | | |Common Stock: 54,348 |
|------------ Shares | | |---|---|------------ Shares |
| | | | | | |
| | | | | | |
| | | | | | |
| Cost | | Cost | | | |
| ---- | | ---- | | | |
| Aid | |AGI-100% $610,000 | | |AGI-80% |
| Finance-100% $16,059,469| --------------------------- | ----------------------------
- -------------------------- | |
--------------------------- | ----------------------------
| PREMIER | | | AGMC |
| AGENCY, | | | REINSURANCE, LTD. |
| INC. | | | |
|Common Stock: 100,000 | | |Common Stock: 11,000 |
|------------ Shares | | |------------ Shares |
| |---| | |
| Cost | | Cost |
| ---- | | ---- |
|AGI-100% $100,000 | |NHMC-100% $11,000 |
--------------------------- ----------------------------
</TABLE>
<PAGE> 88
<TABLE>
<CAPTION>
NATIONWIDE(R) (middle)
<S> <C> <C>
------------------------------------------ ------------------------------------------
| | | |
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |==============================================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
| | | |
------------------------------------------ ------------------------------------------
| || | |
- --| || |--------------------------------------------------------------------| |-----------------------
|| |
|| |--------------------------------------------------------------|-------------------
|| | |
|| -------------------------------- | -------------------------------- -----------------------------------
|| | FARMLAND MUTUAL | | | NATIONWIDE GENERAL | | NECKURA HOLDING |
|| | INSURANCE COMPANY | | | INSURANCE COMPANY | | COMPANY (NECKURA) |
|| |Guaranty Fund | | | | | |
=====||==|------------ |---| | |Common Stock: 20,000 | |Common Stock: 10,000 |
|Certificate | | |---|------------ Shares | |--|------------ Shares |
|----------- | | | | | | | |
| Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | | ---- |
|Casualty $500,000 | | | |Casualty-100% $5,944,422 | | |Casualty-100% $142,943,140 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| F & B, INC. | | | | NATIONWIDE PROPERTY | | | NECKURA |
| | | | | AND CASUALTY | | | INSURANCE COMPANY |
|Common Stock: 1 Share | | | | INSURANCE COMPANY | | | |
|------------ | | | |Common Stock: 60,000 | |--|Common Stock: 6,000 |
| |---| |---|------------ Shares | | |------------ Shares |
| Cost | | | | | | | |
| ---- | | | | Cost | | | Cost |
|Farmland | | | | ---- | | | ---- |
|Mutual-100% $10 | | | |Casualty-100% $6,000,000 | | |Neckura-100% DM 6,000,000 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| COOPERATIVE SERVICE | | | | NATIONWIDE ASSURANCE | | | NECKURA LIFE |
| COMPANY | | | | COMPANY | | | INSURANCE COMPANY |
|Common Stock: 600 Shares | | | | | | | |
|------------ |---- |---|Common Stock: 1,750 | |--|Common Stock: 4,000 |
| | | |------------ Shares | | |------------ Shares |
| Cost | | | | |
| ---- | | | Cost | | | Cost |
|Farmland | | | ---- | | | ---- |
|Mutual-100% $3,506,173 | | |Casualty-100% $41,750,000 | | |Neckura-100% DM 15,825,681|
-------------------------------- | -------------------------------- | --------------------------------
| |
-------------------------------- | -------------------------------- | --------------------------------
| SCOTTSDALE | | | NATIONWIDE AGRIBUSINESS | | | COLUMBUS INSURANCE |
| INSURANCE COMPANY | | | INSURANCE COMPANY | | | BROKERAGE AND SERVICE |
| (SIC) | | | | | | GmbH |
|Common Stock: 30,136 | | |Common Stock: 1,000,000 | | |Common Stock: 1 Share |
|---|------------ Shares |--------|---|------------ Shares | |--|------------ |
| | | | | | | | |
| | | | | Cost | | | Cost |
| | Cost | | | ---- | | | ---- |
| | ---- | | |Casualty-99.9% $26,714,335 | | |Neckura-100% DM 51,639 |
| |Casualty-100% $150,000,500 | | |Other Capital | | | |
| | | | |------------- | | | |
| | | | |Casualty-Ptd. $713,576 | | | |
| -------------------------------- | ------------------------------- | --------------------------------
| | |
| -------------------------------- | -------------------------------- | --------------------------------
| | SCOTTSDALE | | | NATIONAL CASUALTY | | | LEBEN DIREKT |
| | SURPLUS LINES | | | COMPANY | | | INSURANCE COMPANY |
| | INSURANCE COMPANY | | | (NC) | | | |
| |Common Stock: 10,000 | | | Common Stock: 100 Shares | | |Common Stock: 4,000 Shares |
|---|------------ Shares | ----| ------------- | |--|------------ |
| | | | | | | |
| | Cost | | Cost | | | Cost |
| | ---- | | ---- | | | ---- |
| |SIC-100% $6,000,000 | |Casualty-100% $67,442,439 | | |Neckura-100% DM 4,000,000 |
| | | | | | | |
| -------------------------------- -------------------------------- | --------------------------------
| | |
| -------------------------------- -------------------------------- | --------------------------------
| | NATIONAL PREMIUM & | | NCC OF AMERICAN, LTD. | | | AUTO DIREKT |
| | BENEFIT ADMINISTRATION | | (INACTIVE) | | | INSURANCE COMPANY |
| | COMPANY | | | | | |
| |Common Stock: 10,000 | | | | |Common Stock: 1500 Shares |
|---|------------ Shares | | | |--|------------ |
| | | | | | | |
| | Cost | | | | | Cost |
| | ---- | | | | | ---- |
| |SIC-100% $10,000 | |NC-100% | | |Neckura-100% DM 1,643,149 |
| -------------------------------- -------------------------------- | --------------------------------
| |
| -------------------------------- -------------------------------- | --------------------------------
| | WESTERN . | | SUN DIRECT | | | SVM SALES |
| | HERITAGE INSURANCE | | VERSICHERUNGS - | | | GmbH |
| | COMPANY | | AKTIENGESCLISCHAFT | | | |
| |Common Stock: 4,776,076 | |Common Stock: 1 Share | | |Common Stock: 50 Shares |
|---|------------ Shares | |------------ |------------| |
| | | | | |
| Cost | | Cost | | Cost |
| ---- | | ---- | | ---- |
|SIC-100% $57,000,000 | |Neckura-100% $9,600,000 | |Neckura-100% DM 50,000 |
| | | EURO | | |
-------------------------------- -------------------------------- --------------------------------
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
(right side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE |
| FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
------------------------
- ---------------------------------------------------------------------------------------------------------------------|
|
- --------------------------------------------------------------------------------------------------------------- |
| | | |
| | | |
-------------------------------- -------------------------------- | -------------------------------------
| SCOTTSDALE | | NATIONWIDE | | | NATIONWIDE |
| INDEMNITY COMPANY | | COMMUNITY URBAN | | | CORPORATION |
| | | REDEVELOPMENT | | | |
| | | CORPORATION | | |Common Stock: Control: |
|Common Stock: 50,000 | |Common Stock: 10 Shares | | |------------ ------- |
|-----|------------ Shares | |----|------------ | | |$13,642,432 100% |
| | | | | Cost | | | Shares Cost |
| | Cost | | | ---- | | | ------ ---- |
| | ---- | | |Casualty-100% $1,000 | | |Casualty 12,992,922 $1,008,497,908 |
| |Casualty-100% $8,800,000 | | | | | |Fire 649,510 36,862,514 |
| | | | | | | | (See Page 2) |
| -------------------------------- | -------------------------------- | -------------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | NATIONWIDE | | | NATIONWIDE CASH | | | ALLNATIONS, INC. |
| | INDEMNITY COMPANY | | | MANAGEMENT COMPANY | | |Common Stock: 12,167 Shares |
| | | | | | | |------------- Cost |
|-----|Common Stock: 28,000 | |----|Common Stock: 100 Shares | |-----| ---- |
| |------------ Shares | | |------------ | | |Casualty-18.6% $90,630 |
| | | | | Cost | | |Fire-18.6% $90,722 |
| | Cost | | | ---- | | |Preferred Stock 1,466 Shares |
| | ---- | | |Casualty-100% $11,226 | | |--------------- Cost |
| |Casualty-100% $594,529,000 | | | | | | ---- |
| | | | | | | |Casualty-6.8% $100,000 |
| | | | | | | |Fire-6.8% $100,000 |
| -------------------------------- | -------------------------------- | -------------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | LONE STAR | | | NATIONWIDE INSURANCE | | | CALFARM INSURANCE |
| | GENERAL AGENCY, INC. | | | COMPANY OF FLORIDA | | | COMPANY |
| | | | | | | |Common Stock: 49,800 Shares |
------|Common Stock: 1,000 | |----|Common Stock: 10,000 Shares| |-----|------------- |
| |------------ Shares | | |------------ | | |
| | | | | Cost | | |
| | Cost | | | ---- | | |
| | ---- | | |Casualty-100% $300,000,000 | |Casualty-100% |
| |Casualty-100% $5,000,000 | | | | | |
| -------------------------------- | -------------------------------- -------------------------------------
| || | |
| -------------------------------- | -------------------------------- -------------------------------------
| | COLONIAL COUNTY | | | NATIONWIDE INTERNATIONAL | | CALFARM INSURANCE |
| | MUTUAL INSURANCE | | | UNDERWRITERS | | AGENCY |
| | COMPANY | | |Common Stock: 1,000 Shares | | |
| | | |----|------------ | | |
| | | | | | | |
| | | | | Cost | |Common Stock: 1,000 shares |
| |Surplus Debentures: | | | ---- | |------------- |
| |------------------- | | |Casualty-100% $10,000 | | |
| | Cost | | -------------------------------- | |
| | ---- | | | |
| |Colonial $500,000 | | -------------------------------- |CalFarm Insurance |
| |Lone Star 150,000 | | | NATIONWIDE | |Company - 100% |
| -------------------------------- | | ARENA LLC | -------------------------------------
| | | | |
| -------------------------------- | | | -------------------------------------
| | NATIONWIDE SERVICES | | | | | CAL-AG INSURANCE |
| | COMPANY, LLC | | | | | SERVICES |
| | | | | | | |
| |Single Member Limited | |....| | |Common Stock: 1,000 Shares |
|.....|Liability Company | | | | |------------ |
| | | | | | | |
| | | | |Casualty-90% | |CalFarm Insurance |
| |Casualty-100% | | | | |Agency-100% |
| | | | -------------------------------- -------------------------------------
| -------------------------------- |
| | --------------------------------
| | | NATIONWIDE |
| -------------------------------- | | EXCLUSIVE DISTRIBUTION |
| | AMERICAN MARINE | | | COMPANY, LLC (NEDCO) |
| | UNDERWRITERS, INC. | | | |
| | | | | Single Member Limited |
| |Common Stock: 20 Shares | |....| Liability Compnany |
|-----|------------ | | | |
| | Cost | | | |
| | ---- | | |Casualty-100% |
| |Casualty-100% $5,020 | | | |
| | | | --------------------------------
| -------------------------------- | |
| | --------------------------------
| --------------------------------- | | INSURANCE |
| | eNATIONWIDE, LLC | | | INTERMEDIARIES, INC |
| | | | | |
| | Single Member Limited | | |Common Stock 1,615 Shares |
| | Liability Company | |----|------------ |
| | | | Cost |
|.....| | | ---- |
| | |Casualty-100% $1,615,000 |
| | | |
|Casualty-100% | --------------------------------
| |
---------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1999
</TABLE>
Page 1
<PAGE> 90
<TABLE>
<CAPTION>
(Left Side)
<S> <C> <C> <C> <C> <C> <C>
|----------------------------------|-----------------------------------|-----------------------------
| | |
----------------------------- ----------------------------- -----------------------------
| NATIONWIDE LIFE INSURANCE | | NATIONWIDE | | NATIONWIDE TRUST |
| COMPANY (NW LIFE) | | FINANCIAL SERVICES | | COMPANY, FSB |
| | | CAPITAL TRUST | | Common Stock: 2,800,000 |
| Common Stock: 3,814,779 | | Preferred Stock: | | ------------ Shares |
| ------------ Shares | | --------------- | | Cost |
| | | | | ---- |
| NFS--100% | | NFS--100% | | NFS--100% $3,000,000 |
----------------|------------ ----------------------------- -----------------------------
|
| ||--------------------------
- ----------------------------- | ----------------------------- -----------------------------
| NATIONWIDE LIFE AND | | | NATIONWIDE | | NATIONWIDE FINANCIAL |
| ANNUITY INSURANCE COMPANY | | | ADVISORY SERVICES, INC | | INSTITUTION DISTRIBUTORS |
| | | | (NW ADV. SERV.) | | AGENCY, INC. (NFIDAI) |
| Common Stock: 66,000 | | | Common Stock: 7,676 | | |
| ------------ Shares |--|--| ------------ Shares |==== | |
| | | | | || | |
| Cost | | | Cost | || | Common Stock: 1,000 Shares|
| ---- | | | ---- | || | ------------ |
| NW Life-100% $58,070,003 | | | NW Life-100% $5,996,261 | || | NFSDI-100% |
- ----------------------------- | ----------------------------- || --------------|--||----------
| || | ||
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE INVESTMENT | | | NATIONWIDE MUTUAL | || | FINANCIAL HORIZONS | | || | |
| SERVICES CORPORATION | | | FUNDS | || | DISTRIBUTORS AGENCY | | || | |
| | | | | || | OF ALABAMA, INC. | | || | |
| Common Stock: 5,000 | | | OHIO BUSINESS TRUST | || | | | || | FLORIDA |
| ------------ Shares | | | | || | Common Stock: 10,000 | | || | RECORDS |===
| |--| | |==|| | ------------ Shares |-- || | ADMINISTRATOR |
| | | | | || | | | || | |
| Cost | | | | || | Cost | | || | |
| ---- | | | | || | ---- | | || | |
| NW Life-100% $529,728 | | | | || | NFIDAI-100% $100 | | || | |
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| || | ||
- ----------------------------- | ----------------------------- || ------------------------------| || -----------------------
| NATIONWIDE FINANCIAL | | | NATIONWIDE | || | LANDMARK FINANCIAL | | || | |
| ASSIGNMENT | | | SEPARATE ACCOUNT | || | SERVICES OF | | || | |
| COMPANY | | | TRUST | || | NEW YORK, INC. | | || | |
| | | | | || | | | || | |
| | | | | || | Common Stock: 10,000 | | || | FINANCIAL HORIZONS |
| |--| | MASSACHUSETTS |==|| | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | BUSINESS TRUST | || | | | || | OF OHIO, INC. |
| | | | | || | Cost | | || | |
| | | | | || | ---- | | || | |
| NW Life-100% | | | | || | NFIDAI-100% $10,100 | | || | |
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| || | ||
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE REALTY | | | NATIONWIDE | || | FINANCIAL HORIZONS | | || | |
| INVESTORS, LTD. | | | GLOBAL FUND | || | SECURITIES CORP. | | || | |
| | | | | || | | | || | |
| Units: | | | CAYMAN ISLANDS | || | Common Stock: 10,000 | | || | FINANCIAL HORIZONS |
| ------ |--| | EXEMPTED LLC |==|| | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | | || | | | || | OF OKLAHOMA, INC |
| | | | | || | Cost | | || | |
| NW Life-90% | | | | || | ---- | | || | |
| NW Mutual-10% | | | | || | NFIDAI-100% $153,000 | | || | |
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| || | ||
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE | | | NATIONWIDE | || | AFFILIATE AGENCY, INC. | | || | |
| PROPERTIES, LTD. | | | ASSET ALLOCATION TRUST | || | | | || | |
| | | | | || | | | || | |
| Units: |--| | | || | Common Stock: 100 | | || | FINANCIAL HORIZONS |
| ------ | | OHIO BUSINESS TRUST |==== | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | | | | || | OF TEXAS, INC |
| | | | | Cost | | || | |
| NW Life-97.6% | | | | ---- | | || | |
| NW Mutual-2.4% | | | | NFIDAI-100% $100 | | || | |
- ----------------------------- ----------------------------- ----------------------------- | || -----------------------
| ||
----------------------------- | || -----------------------
| NATIONWIDE FINANCIAL | | || | |
| INSTITUTION DISTRIBUTORS | | || | |
| INS. AGENCY, INC. | | || | |
| OF MASS. | | || | AFFILIATE |
| |-- ====| AGENCY OF |
|Common Stock: 100 Shares | | | OHIO, INC |
|------------ | | | |
| | | | |
|NFIDAI-100% | | | |
----------------------------- | -----------------------
----------------------------- |
| NATIONWIDE FINANCIAL | |
| INSTITUTION DISTRIBUTORS | |
| INS. AGENCY, INC. | |
| OF NEW MEXICO |--
| |
|Common Stock: 100 Shares |
|------------ |
| |
|NFIDAI-100% |
-----------------------------
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
(Center)
NATIONWIDE(R)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------- --------------------------------------------------
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |================================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | | (FIRE) |
- -------------------------------------------------- | --------------------------------------------------
|
-----------------------------------------
| NATIONWIDE CORPORATION (NW CORP) |
| Common Stock: Control: |
| ------------ ------- |
| 13,642,432 100% |
| Shares Cost |
| ------ ---- |
|Casualty 12,992,922 $1,008,497,908 |
|Fire 649,510 36,862,514 |
-------------------|---------------------
|--------------------------------------------------------------
---------------|-------------
| NATIONWIDE FINANCIAL |
| SERVICES, INC. (NFS) |
| |
|Common Stock: Control: |
|------------ ------- |
| |
| |
|Class A Public--100% |
|Class B NW Corp--100% |
---------------|-------------
|
- -----------|-------------------------|--------------------------|-----------------------------|----------------------|--------------
| | | | |
- -----------|------------ ------------|-------------- -----------|------------- ---------------|--------- ------------|--------------
|NFS DISTRIBUTORS, INC.| | IRVIN L. SCHWARTZ | | NATIONWIDE FINANCIAL | |VILLANOVA CAPITAL, INC.| | NATIONWIDE FINANCIAL |
| (NFSDI) | | AND ASSOCIATES, INC. | |SERVICES (BERMUDA) INC.| |Common Stock: 958,750 | | SERVICES CAPITAL |
| | |Common Stock: Control: | |Common Stock: 250,000 | |------------- Shares | | TRUST II |
| | |------------- -------- | |------------- Shares | |NFS-96% | | |
| | |Class A Other-100%| | Cost | |Preferred Stock:500,000| | |
|NFS-100% | |Class B NFS -100%| | ---- | |--------------- Shares | | |
| | | | |NFS-100% $3,500,000 | |NFS-100% | | NFS-100% |
- -----------|------------ --------------------------- ------------------------- ---------------|--------- -------------------------
| | |
- -----------|---------------------------- -----------------------------|-----------------------|
- -----------|------------ --------------|----------- ------------|------------ --------------|---------- ------------|-------------
| NATIONAL DEFERRED | | NATIONWIDE RETIREMENT | | VILLANOVA S.A. CAPITAL| | MORLEY FINANCIAL | | VILLANOVA MUTUAL FUND |
| COMPENSATION, INC. | | SOLUTIONS, INC. (NRS)| | TRUST (VSA) | |SERVICES, INC. (MORLEY)| | CAPITAL TRUST (VMF) |
| | |Common Stock: 236,494 | | | |Common Stock: 82,343 | | |
| | |------------- Shares | | | |------------ Shares | | |
| | | | | | | | | |
|NFSDI-100% | | | | | |VILLANOVA CAPITAL, INC.| | |
| | |NFSDI-100% | |DELAWARE BUSINESS TRUST| |-100% | |DELAWARE BUSINESS TRUST|
- ----------||------------ -------------------|------ ---------------------|--- ---------------------|--- -------------------------
|| | | |
|| | | -----
|| ---------------------------- | ------------------------- | ------------------------- | ------------------------
|| | NATIONWIDE RETIREMENT | | |NATIONWIDE RETIREMENT | | | NATIONWIDE | | | MORLEY & |
|| |SOLUTIONS, INC. OF ALABAMA| | | SOLUTIONS, INC. OF | | |INVESTORS SERVICES, INC.| | | ASSOCIATES, INC. |
|| | | | | NEW MEXICO | | | | | | |
|| |Common Stock: 10,000 | | | Common Stock: 1,000 | | | Common Stock: 5 Shares | | | Common Stock: 3,500 |
|| |------------- Shares |--|--| ------------- Shares | |--|------------- | |--| ------------- Shares |
============ | Cost | | | Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- | | | ---- |
|NRS-100% $1,000 | | |NRS-100% $1,000 | | |VSA-100% $5,000 | | |Morley-100% $1,000|
---------------------------- | -------------------------- | -------------------------- | ------------------------
| | |
---------------------------- | -------------------------- | -------------------------- | -----------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | | VILLANOVA VALUE | | | EXCALIBER FUNDING |
|SOLUTIONS, INC. OF ARIZONA| | | SOLUTIONS, INC. OF | | | INVESTOR, LLC | | | CORPORATION |
| | | | SO. DAKOTA | | | | | | |
|Common Stock: 1,000 | | |Common Stock: 1,000 | | | | | |Common Stock: 1,000 |
|------------- Shares |--|--|------------- Shares | ...| | |--|------------- Shares |
| Cost | | | Cost | | | | | Cost |
| ---- | | | ---- | | | | | ---- |
|NRS-100% $1,000 | | |NRS-100% $1,000 | | VSA-100% | | |Morley-100% $1,000 |
---------------------------- | -------------------------- -------------------------- | -----------------------
| |
---------------------------- | -------------------------- -------------------------- | ------------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | MORLEY CAPITAL | | | CALIBER FUNDING |
| SOLUTIONS, INC. OF | | | SOLUTIONS, INC. | | MANAGEMENT | | | CORPORATION |
| ARKANSAS | | | OF WYOMING | | | | | |
|Common Stock: 50,000 |-----|Common Stock: 500 Shares| |Common Stock: 500 Shares| | | |
|------------- Shares | | |------------- | |------------- |--|--| |
| Cost | | | Cost | | Cost | | | |
| ---- | | | ---- | | ---- | | | |
|NRS-100% $500 | | |NRS-100% $500 | |Morley-100% $5,000 | | |Morley-100% |
---------------------------- | -------------------------- -------------------------- | ------------------------
| |
---------------------------- | -------------------------- -------------------------- | ------------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | UNION BOND | | | MORLEY RESEARCH |
| SOLUTIONS, INS. | | | SOLUTIONS, INC. | | & TRUST COMPANY | | | ASSOCIATES, LTD. |
| AGENCY, INC. | | | OF OHIO | | | | | |
|Common Stock: 1,000 | | | | |Common Stock: 2,000 | | | Common Stock: 1,000 |
|------------- Shares |--|==| | |------------- Shares |--|--| ------------- Shares |
| | | | | | | | | |
| Cost | | | | | Cost | | | Cost |
| ---- | | | | | ---- | | | ---- |
|NRS-100% $1,000 | | | | | Morley-100% $50,000 | | |Morley-100% $1,000 |
---------------------------- | -------------------------- -------------------------- | ------------------------
| |
---------------------------- | -------------------------- -------------------------- |
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | PORTLAND INVESTMENT | |
|SOLUTIONS, INC. OF MONTANA| | | SOLUTIONS, INC. OF | | SERVICES, INC. | |
| | | | OKLAHOMA | | | |
|Common Stock: 500 | | | | | Common Stock: 1,000 | |
|------------- Shares |--|==| | | ------------- Shares |--
| Cost | | | | | Cost |
| ---- | | | | | ---- |
|NRS-100% $500 | | | | | Morley-100% $25,000 |
---------------------------- | -------------------------- --------------------------
|
---------------------------- | --------------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT|
| SOLUTIONS, INC. OF NEVADA| | | SOLUTIONS, INC. |
| | | | OF TEXAS |
|Common Stock: 1,000 |-- ==| |
|------------- Shares | | |
| Cost | | |
| ---- | | |
|NRS-100% $1,000 | | |
---------------------------- --------------------------
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
(Right)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
------------------------------- | ---------------------------- -----------------------------
| GATES MCDONALD | | | NATIONWIDE | | NATIONWIDE GLOBAL |
| & COMPANY (GATES) | | |HEALTH PLANS, INC. (NHP) | | HOLDINGS, INC. (NGH) |
| | | | | | |
- ------------------- --|Common Stock: 254 Shares | |--|Common Stock: 100 Shares | |Common Stock: 1 Share |
| | | |------------ | || |------------ | --|------------ |
| ---------------|-------------- | | Cost | || | Cost || | Cost |
| | | | | ---- | || | ---- || | ---- |
| | THE 401(k) COMPANIES, INC. | | |NW Corp.-100% $25,683,532 | || | || | |
| | (401(k)) | | |------------------------------ || |NW Corp.-100% $14,603,732|| |NW Corp.-100% $257,000,000|
| | | | || --------------------------- | -----------------------------
| |Common Stock: Control | | |------------------------------ || ----------------------------| -----------------------------
||--|------------- ------- | | | MEDPROSOLUTIONS, INC. | || | NATIONWIDE MANAGEMENT || | NATIONWIDE GLOBAL |
|| |Class A Other-100% | --| | |--| SYSTEMS, INC. || | HOLDINGS, INC. - |
|| |Class B NFS-100% | | | Cost | || | || | LUXEMBOURG BRANCH |
|| | | | | ---- | || |Common Stock: 100 Shares || | (BRANCH) |
|| ------------------------------ | |Gates-100% $6,700,000 | || |------------- || | |
|| | | | || | Cost ||--| |
|| | | | || | ---- || |Endowment Capital - |
|| ------------------------------ | ------------------------------- || |NHP Inc.-100% $25,149 || | $1,000,000 |
|| | 401(k) INVESTMENT | | || ----------------------------| --------------|--------------
|| | SERVICES, INC. | | |------------------------------ || ----------------------------| --------------|--------------
|| | | | | GATES MCDONALD & | || | NATIONWIDE || | NGH LUXEMBOURG S.A. |
|| |Common Stock: 1,000,000 | | | COMPANY OF NEW YORK, INC. | || | AGENCY, INC. || | (LUX SA) |
|| |------------ Shares | --| | |--| || | |
||--| | | |Common Stock: 3 Shares | | |Common Stock: 100 Shares || |Common Stock: 5894 Shares |
|| | Cost | | |------------ | | |------------ || -|------------ |
|| | ---- | | | Cost | | | Cost || || Cost |
|| |401(k)-100% $7,800 | | | ---- | | | ---- || || ---- |
|| ------------------------------ | |Gates-100% $106,947 | | |NHP Inc.-99% $116,077 || ||BRANCH.-99.98% $115,470,723|
|| | ------------------------------- | ----------------------------| |-----------------------------
|| ------------------------------ | | | |
|| | 401(k) INVESTMENT | | ------------------------------- | ----------------------------| |-----------------------------
|| | ADVISORS, INC. | | | GATES MCDONALD & | | |NATIONWIDE GLOBAL HOLDINGS|| || PAN EURO LIFE |
|| | | | | COMPANY OF NEVADA | | | -HONG KONG, LIMITED || || |
|| |Common Stock: 1,000 Shares | --| | | | || ||Common Stock: 1,300,000 |
||--|------------ | | |Common Stock: 40 Shares | | |Common Stock: 2 Shares || ||------------ Shares |
|| | Cost | | |------------ | | |------------ Cost -- -- |
|| | ---- | | | Cost | | | ---- || || Cost |
|| |401(k)-100% $1,000 | | | ---- | | |NGH-50% || || ---- |
|| ------------------------------ | |Gates-100% $93,750 | | |Casualty--50% || ||LUX SA-90% 3,817,832,685|
|| | ------------------------------- | ----------------------------| || LUF |
|| ------------------------------ | | | |-----------------------------
|| | 401(k) COMPANY | | ------------------------------- | ----------------------------| |-----------------------------
|| | | | | GATES MCDONALD | | | NGH || ||NATIONWIDE GLOBAL HOLDINGS |
|| |Common Stock: 855,000 Shares| | | HEALTH PLUS, INC. | | | NETHERLANDS B.V. || ||- NGH BRASIL PARTICIPACOES,|
|| | | --| | | | || || LTDA (NGH BRASIL) |
|| | Cost | | |Common Stock: 200 Shares | | |Common Stock: 40 Shares || || |
||--| ---- | | |------------ | | |------------ -- -- Shares Cost |
|| |401(k)-100% $1,000 | | | Cost | | | Cost || | ------ ---- |
|| ------------------------------ | | ---- | | | ---- || |LUX SA 6,164,899 R6,164,899|
|| | |Gates-100% $2,000,000 | | |NGH-100% NLG 52,500 || |NGH 1 R1 |
|| ------------------------------ | ------------------------------- | ----------------------------| --------------|--------------
|| | | | | | |
|===| | | ------------------------------- | ----------------------------| --------------|--------------
| | RIVERVIEW AGENCY, INC. | | |NEVADA INDEPENDENT COMPANIES-| | | NATIONWIDE || | NATIONWIDE |
| | | | |MANUFACTURING TRANSPORTATION | | | SERVICES SP. Z.O.O. || | SEGURADORA S.A. |
| | | | | AND DISTRIBUTION | | | || | |
| | | --| | | |Common Stock: 80 Shares || | Shares Cost |
| | | | |Common Stock: 1,000 Shares | | |------------ Cost -- | ------ ---- |
| ------------------------------ | |------------ | | | ---- || |NGH |
| | |Gates-100% | | |NGH-100% 4,000 PLN || |BRASIL 9,999,999 R9,999,999|
| ------------------------------ | ------------------------------- | --------------------------- | |LUX SA 1 R1 |
| | | | | | -----------------------------
| | PENSION ASSOCIATES, INC. | | ------------------------------- | ----------------------------| -----------------------------
| | | | | NEVADA INDEPENDENT | | | MRM INVESTMENTS, INC. || | NATIONWIDE GLOBAL |
- ----| Common Stock: 1,000 Shares | | | COMPANIES-HEALTH AND PROFIT | | | || | FINANCE, LLC |
| | --| | ---|Common Stock: 1 Share || | Single Member Limited |
| Cost | | |Common Stock: 1,000 Shares | |------------ || | Liability Company |
| ---- | | |------------ | | Cost |...| |
| NFS-100% $2,839,392 | | | | | ---- | | |
------------------------------ | |Gates-100% | |NW Corp.-100% $7,000,000 | |NGH-100% |
| ------------------------------- ---------------------------- -----------------------------
|
| -------------------------------
| | NEVADA INDEPENDENT |
| | COMPANIES-CONSTRUCTION |
--| |
| |Common Stock: 1,000 Shares |
| |------------ |
| | |
| |Gates-100% |
| -------------------------------
|
| -------------------------------
| | NEVADA INDEPENDENT |
| | COMPANIES-HOSPITALITY AND | Subsidiary Companies - Solid Line
--| ENTERTAINMENT | Contractual Association - Double Line
| | Limited Liability Company - Dotted Line
|Common Stock: 1,000 Shares |
|Gates-100% | December 31, 1999
-------------------------------
Page 2
</TABLE>
<PAGE> 93
Item 27. NUMBER OF CONTRACT OWNERS
The number of contract owners as of January 31, 2000 was 11,954,
all of which were qualified contract owners.
Item 28. INDEMNIFICATION
Provision is made in Nationwide's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State
of Ohio, for indemnification by Nationwide of any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason
of the fact that such person is or was a director, officer or
employee of Nationwide, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action,
suit or proceeding, to the extent and under the circumstances
permitted by the General Corporation Law of the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors,
officers or persons controlling Nationwide pursuant to the
foregoing provisions, Nationwide has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) Nationwide Investment Services Corporation ("NISC") acts
as principal underwriter and general distributor for the
Nationwide Multi-Flex Variable Account, Nationwide Variable
Account-II, Nationwide Variable Account-5, Nationwide
Variable Account-6, Nationwide Variable Account-8,
Nationwide Variable Account-9, Nationwide Variable Account
-10, Nationwide Variable Account-11, Nationwide VA Separate
Account-A, Nationwide VA Separate Account-B, Nationwide VA
Separate Account-C, Nationwide VL Separate Account-A,
Nationwide VL Separate Account-B, Nationwide VL Separate
Account-C, Nationwide VL Separate Account -D, Nationwide VLI
Separate Account-2, Nationwide VLI Separate Account-3,
Nationwide VLI Separate Account-4, Nationwide VLI Separate
Account -5, Nationwide Variable Account, NACo Variable
Account; Nationwide DC Variable Account; and the Nationwide
DCVA-II, all of which are separate investment accounts of
Nationwide or its affiliates.
<PAGE> 94
(b) NISC
DIRECTORS AND OFFICERS
-------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
-------------------------------------------------------------------------------
Joseph J. Gasper Chairman of the Board and
One Nationwide Plaza Director
Columbus, OH 43215
-------------------------------------------------------------------------------
Dimon R. McFerson Chairman and Chief Executive
One Nationwide Plaza Officer and Director
Columbus, OH 43215
-------------------------------------------------------------------------------
Richard A. Karas Vice Chairman and Director
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
Duane C. Meek President
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
Philip C. Gath Director
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
Susan A. Wolken Director
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
Robert A. Oakley Executive Vice President -
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
-------------------------------------------------------------------------------
Robert J. Woodward, Jr. Executive Vice President -
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
-------------------------------------------------------------------------------
Mark R. Thresher Senior Vice President and Treasurer
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
Barbara J. Shane Vice President - Compliance Officer
Two Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
Alan A. Todryk Vice President - Taxation
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
John F. Delaloye Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
Glenn W. Soden Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
E. Gary Berndt Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
<PAGE> 95
NISC
DIRECTORS AND OFFICERS
-------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
-------------------------------------------------------------------------------
Duane M. Campbell Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
Terry C. Smetzer Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
-------------------------------------------------------------------------------
<PAGE> 96
<TABLE>
<CAPTION>
(c) NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
<S> <C> <C> <C> <C>
Nationwide N/A N/A N/A N/A
Investment
Services
Corporation.
</TABLE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
John Davis
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43216
Item 31. MANAGEMENT SERVICES
Not Applicable
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than 16 months old for so long as payments
under the variable annuity contracts may be accepted;
(b) include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of
Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under
this form promptly upon written or oral request.
Nationwide hereby represents that the fees and charges deducted
under the contract in the aggregate are reasonable in relation to
the services rendered, the expenses expected to be incurred, and
the risks assumed by Nationwide.
The Registrant hereby represents that any contract offered by the
prospectus and which is issued pursuant to Section 403(b) of the
Internal Revenue Code is issued by the Registrant in reliance
upon, and in compliance with, the Securities and Exchange
Commission's no-action letter to the American Council of Life
Insurance (publicly available November 28, 1988) which permits
withdrawal restrictions to the extent necessary to comply with
Internal Revenue Code Section 403(b)(11).
<PAGE> 97
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide Variable Account:
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Services" in the Statement of Additional Information.
KPMG LLP
Columbus, Ohio
April 28, 2000
<PAGE> 98
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT certifies that it meets the
requirements of Rule 485(b) under the Securities Act of 1933 for effectiveness
of the Post-Effective Amendment No. 36 and has caused this Post-Effective
Amendment to be signed on its behalf in the City of Columbus, and State of Ohio,
on this 28th day of April, 2000.
NATIONWIDE VARIABLE ACCOUNT
----------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
----------------------------------------
(Depositor)
By/s/ STEVEN SAVINI, ESQ.
----------------------------------------
Steven Savini, Esq.
As required by the Securities Act of 1933, this Post-Effective Amendment No. 36
has been signed by the following persons in the capacities indicated on the 28th
day of April, 2000.
SIGNATURE TITLE
LEWIS J. ALPHIN Director
- ----------------------------------------
Lewis J. Alphin
A. I. BELL Director
- ----------------------------------------
A. I. Bell
KENNETH D. DAVIS Director
- ----------------------------------------
Kenneth D. Davis
KEITH W. ECKEL Director
- ----------------------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- ----------------------------------------
Willard J. ENGEL
Fred C. FINNE Director
- ----------------------------------------
Fred C. Finney
Joseph J. GASPER President and Chief Operating
- ----------------------------------------
Joseph J. Gasper Officer and Director
Dimon R. MCFERSON Chairman and Chief Executive
- ----------------------------------------
Dimon R. McFerson Officer and Director
David O. MILLER Chairman of the Board and
- ----------------------------------------
David O. Miller Director
Yvonne L. MONTGOMERY Director
- ----------------------------------------
Yvonne L. Montgomery
Robert A. OAKLEY Executive Vice President - Chief
- ----------------------------------------
Robert A. Oakley Financial Officer
Ralph M. PAIGE Director
- ----------------------------------------
Ralph M. Paige
James F. PATTERSON Director
- ----------------------------------------
James F. Patterson
Arden L. SHISLER Director
- ----------------------------------------
Arden L. Shisler
Robert L. STEWART Director
- ----------------------------------------
Robert L. Stewart
Nancy C. THOMAS Director
- ----------------------------------------
Nancy C. Thomas
By /s/ STEVEN SAVINI
----------------------------------
Steven Savini
Attorney-in-Fact
<PAGE> 1
MARKETING COORDINATION AND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement entered into this 1st day of May, 2000, between Nationwide Life
Insurance Company ("Nationwide"), and Nationwide Investment Services Corporation
("NISC").
Nationwide proposes to develop, issue and administer, and NISC proposes to
provide the exclusive national distribution services for certain annuity and
life products (the "Products"). The parties hereby agree as follows:
A. ADMINISTRATION OF PRODUCTS
1. Appointment of Product Administration
Nationwide is hereby appointed Product Administrator for the
Products.
2. Duties of Nationwide
Nationwide will perform in a proper and timely manner, those
functions enumerated in the column marked "Nationwide" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
3. Duties of NISC
NISC will perform in a proper and timely manner, those
functions enumerated in the column marked "NISC" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
B. MARKETING COORDINATION AND SALES ADMINISTRATION
1. Distribution of Products
The Products will be distributed through registered
representatives of NASD broker-dealer firms, appointed by
Nationwide, who shall be duly qualified and licensed as agents
(the "Agents"), in accordance with applicable state insurance
authority.
2. NISC shall be the exclusive National Distributor of the
Products.
<PAGE> 2
3. Appointment and Termination of Agents
Appointment and termination of Agents shall be processed and
executed by Nationwide. NISC reserves the right to require
Nationwide to consult with it regarding licensing decisions.
4. Advertising
NISC shall not print, publish or distribute any advertisement,
circular or document relating to the Products or relating to
Nationwide unless such advertisement, circular or document has
been approved in writing by Nationwide. Such approval shall
not be unreasonably withheld, and shall be given promptly,
normally within five (5) business days. Neither Nationwide nor
any of its affiliates shall print, publish or distribute any
advertisement, circular or document relating to the Products
or relating to NISC unless such advertisement, circular or
document has been approved in writing by NISC. Such approval
shall not be unreasonably withheld, and shall be given
promptly, normally within five (5) business days. However,
nothing herein shall prohibit any person from advertising the
Products on a generic basis.
5. Marketing Conduct
The parties will jointly develop standards, practices and
procedures respecting the marketing of the Products. Such
standards, practices and procedures are intended to help
Nationwide meet its obligations as an issuer under the
securities laws, to assure compliance with state insurance
laws, and to help NISC meet its obligations under the
securities laws as National Distributor. These standards,
practices and procedures are subject to continuing review and
neither Nationwide nor NISC will object unreasonably to
changes to such standards, practices and procedures
recommended by the other to comply with the intent of this
provision.
6. Sales Material and Other Documents
a. Sales Material
1) Nationwide shall develop and prepare all
promotional material to be used in the
distribution of the Products, in
consultation with NISC.
2) Nationwide is responsible for the printing
and the expense of providing such
promotional material.
3) Nationwide is responsible for approval of
such promotional material by state insurance
regulators, where required.
<PAGE> 3
4) NISC and Nationwide agree to abide by the
Advertising and Sales Promotion Material
Guidelines, attached hereto as EXHIBIT B,
and incorporated herein by reference.
b. Prospectuses
1) Nationwide is responsible for the
preparation and regulatory clearance of any
required registration statements and
prospectuses for the Products.
2) Nationwide is responsible for the printing
of Product prospectuses in such quantities
as the parties agree are necessary to assure
sufficient supplies.
3) Nationwide is responsible for supplying
Agents with sufficient quantities of Product
prospectuses.
c. Contracts, Applications and Related Forms
1) Nationwide, in consultation with NISC, is
responsible for the design and printing of
adequate supplies of Product applications,
contracts, related forms, and such service
forms as the parties agree are necessary.
2) Nationwide is responsible for supplying
adequate quantities of all such forms to the
Agents.
7. Appointment of Agents
a. NISC will assist Nationwide in facilitating the
appointment of Agents by Nationwide.
b. Nationwide will forward all appointment forms and
applications to the appropriate states and maintain
all contacts with the states.
c. Nationwide will maintain appointment files on Agents,
and NISC will have access to such files as needed.
8. Licensing and Appointment Guide
Nationwide shall provide to NISC a Licensing and Appointment
Guide (as well periodic updates thereto), setting forth the
requirements for licensing and appointment, in such quantities
as NISC may reasonably require.
<PAGE> 4
9. Other
a. Product Training
Nationwide is responsible for any Product training
for the Agents.
b. Field Sales Material
1) Nationwide, in consultation with NISC, is
responsible for the development, printing
and distribution of non-public field sales
material to be used by Agents.
2) NISC shall have the right to review all
field sales materials and to require any
modification mandated by regulatory
requirements.
c. Production Reports
Nationwide will deliver to NISC the items listed in
Production Reports to be Provided, attached hereto as
EXHIBIT C, and incorporated herein by reference.
d. Customer Service
Each party will notify the other of all material
pertinent inquiries and complaints it receives, from
whatever source and to whomever directed, and will
consult with the other in responding to such
inquiries and complaints.
e. Records and Books
All books and records maintained by Nationwide in
connection with the offer and sale of variable
annuity interests funded by a Separate Account are
maintained and preserved in conformity with the
requirements of Rule 17a-3 and 17a-4 under the 1934
Exchange Act, to the extent such requirements are
applicable to the variable annuity operations.
All such books and records are maintained and held by
Nationwide on behalf of and as agent for NISC, whose
property they are and shall remain. Such books and
records are at all times subject to inspection by the
Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.
<PAGE> 5
C. GENERAL PROVISIONS
1. Waiver
The forbearance or neglect of either party to insist upon
strict compliance by the other with any of the provisions of
this Agreement, whether continuing or not, or to declare a
forfeiture of termination against the other, shall not be
construed as a waiver of any rights or privileges of the
forbearing party in the event of a further default or failure
of performance.
2. Limitations
Neither party shall have authority on behalf of the other to:
make, alter or discharge any contractual terms of the
Products; waive any forfeiture; extend the time of making any
contributions to the products; guarantee dividends; alter the
forms which either may prescribe; nor substitute other forms
in place of those prescribed by the other.
3. Binding Effect
This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective successors
and assigns, provided that neither party shall assign or
sub-contract this Agreement or any rights or obligations
hereunder without prior written consent of the other.
4. Indemnification
Each party ("Indemnifying Party") hereby agrees to release,
indemnify and hold harmless the other party, its officers,
directors, employers, agents, servants, predecessors or
successors from any claims or liability arising out of the
acts or omissions of the Indemnifying Party not authorized by
this Agreement, including the violation of any federal or
state law or regulation.
5. Notices
All notices, requests, demands and other communication under
this Agreement shall be in writing and shall be deemed to have
been given on the date of service if served personally on the
party to whom notice is to be given, or on the date of mailing
if sent postage prepaid by First Class Mail, Registered or
Certified mail, by overnight mail, properly addressed as
follows:
TO NATIONWIDE:
Nationwide Life Insurance Company
Michael C. Butler, Vice President-Sales
Three Nationwide Plaza
Columbus, Ohio 43215
<PAGE> 6
TO NISC:
Nationwide Investment Services Corporation.
Barbara Shane, Vice President-Compliance Officer
Two Nationwide Plaza
Columbus, Ohio 43215
6. Governing Law
This Agreement shall be construed in accordance with and
governed by the laws of the State of Ohio.
7. Arbitration
The parties agree that misunderstandings or disputes arising
from this Agreement shall be decided by arbitration, conducted
upon request of either party before three arbitrators (unless
the parties agree on a single arbitrator) designated by the
American Arbitration Association, and in accordance with the
rules of such Association. The expenses of the arbitration
proceedings conducted hereunder shall be borne equally by both
parties.
8. Confidentiality
Any information, documents and materials, whether printed or
oral, furnished by either party or its agents or employees to
the other shall be held in confidence. No such information
shall be given to any third party, other than to such
sub-contractors of NISC as may be permitted herein, or under
requirements of a lawful authority, without the express
written consent of the other party.
D. TERM OF AGREEMENT
This Agreement, including the Exhibits attached hereto, shall remain in
full force and effect until terminated, and may be amended only by
mutual agreement of the parties in writing. Any decision by either
party to cease issuance or distribution of any specific Product shall
not effect a termination of the Agreement unless such termination is
mutually agreed upon, or unless notice is given pursuant to Section
E.2. hereof.
E. TERMINATION
1. Either party may terminate this Agreement for cause at any
time, upon written notice to the other, if the other knowingly
and willfully: (a) fails to comply with the laws or
regulations of any state or governmental agency or body having
jurisdiction over the sale of insurance or securities; (b)
misappropriates any money or property belonging to the other;
(c) subjects the other to any actual or potential liability
due to misfeasance, malfeasance, or nonfeasance; (d) commits
any fraud upon the other; (e) has an assignment for the
benefit of creditors; (f) incurs bankruptcy; or (g) commits a
material breach of this Agreement.
<PAGE> 7
2. Either party may terminate this Agreement, without regard to
cause, upon six months prior written notice to the other.
3. In the event of termination of this Agreement, the following
conditions shall apply:
a) The parties irrevocably acknowledge the continuing
right to use any Product trademark that might then be
associated with any Products, but only with respect
to all business in force at the time of termination.
b) In the event this Agreement is terminated the parties
will use their best efforts to preserve in force the
business issued pursuant to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first above written.
NATIONWIDE LIFE INSURANCE
COMPANY
By: __________________________
Michael C. Butler
Title: Vice President - Sales
NATIONWIDE INVESTMENT SERVICES
CORPORATION
By: ________________________
Barbara Shane
Title: Vice President - Compliance Officer
<PAGE> 8
EXHIBIT A
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
A. PRODUCT UNDERWRITING/ISSUE
NATIONWIDE NISC
- - Establishes underwriting criteria for - Consults with regard to new business
application processing and rejections. procedures and processing.
- - Reviews the completed application.
Applies underwriting/issue criteria to
application.
- - Notifies Agent and/or customer of
any error or missing data necessary to
underwrite application and establish
records for owner of Product ("Contract
Owner").
- - Prepares policy data page for
approved business and mails with policy
to Contract Owner.
- - Establishes and maintains all records
required for each Contract Owner, as
applicable.
- - Prepares and mails confirmation and
other statements to Contract Owners and
Agents, as required.
- - Prints, provides all forms ancillary
to issue of contract/policy forms for
Products.
- - Maintains supply of approved specimen
policy forms and all ancillary forms,
distributes same to Agents.
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B. BILLING AND COLLECTION
NATIONWIDE
- - Receives premium/purchase
payments and reconciles amount
received with remittance media.
- - Updates Contract Owner records to
reflect receipt of premium/purchase
payment and performs accounting/
investment allocation of each
payment received.
- - Deposits all cash received under the
Products in accordance with the
terms of the Products.
C. BANKING
NATIONWIDE
- - Balances, edits, endorses and prepares daily deposit.
- - Places deposits in depository account.
- - Prepares daily cash journal summary reports and
maintains same for review by NISC.
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D. PRICING/VALUATION/ACCOUNTING/TRADING
NATIONWIDE NISC
- - Maintains and makes available, as - Cooperates in annual audit of separate
reasonably requested, records used in account financials conducted for purposes
determining "Net Amount Available for of financial statement certification and
Investment." publication.
- - Collects information needed in - Will clear and settle Mutual Fund
determining Variable Account unit trades on behalf of the separate accounts
values from the Funds including using the National Securities Clearing
daily net asset value, capital Corporation FUND/Serv System.
gains or dividend distributions,
and the number of Fund Shares
acquired or sold during the
immediately preceding valuation
period.
- - Performs daily unit valuation
calculation.
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E. CONTRACT OWNER SERVICE/
RECORD MAINTENANCE
NATIONWIDE NISC
- - Receives and processes all - Accommodates customer service function
Contract Owner service requests, by providing any supporting information
including but not limited to or documentation which may be in the
informational requests, beneficiary control of NISC.
changes, and transfers of Contract
Value among eligible investment
options.
- - Maintains daily records of all
changes made to Contract Owner
accounts.
- - Researches and responds to all
Contract Owner/Agent inquiries.
- - Keeps all required Contract Owner
records.
- - Maintains adequate number of toll
free lines to service Contract Owner/
Agent inquiries.
F. DISBURSEMENTS (SURRENDERS,
DEATH CLAIMS, LOANS)
NATIONWIDE NISC
- - Receives and processes surrenders,
loans, and death claims in accordance
with established guidelines.
- - Prepares checks for surrenders,
loans, and death claims, and forwards
to Contract Owner or Beneficiary.
Prepares and mails confirmation
statement of disbursement to Contract
Owner/Beneficiary with copy to Agent.
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G. COMMISSIONS
NATIONWIDE NISC
- - Ascertains, on receipt of - Receives and performs record keeping
applications, whether writing Agent for investment company payments made
is appropriately licensed. under a 12b-1 Plan.
- - Pays commissions and other fees
in accordance with agreements
relating to same.
H. PROXY PROCESSING
NATIONWIDE NISC
- - Receives record date information
from Funds Receives proxy
solicitation materials from Funds.
- - Prepares Voting Instruction cards
and mails solicitation, if necessary.
- - Tabulates and votes all Fund Shares
in accordance with SEC requirements.
I. PERIODIC REPORTS TO CONTRACT OWNERS
NATIONWIDE NISC
- - Prepares and mails quarterly and
annual Statements of Account to
Contract Owners.
- - Prepares and mails all semi-annual
and annual reports of Variable
Account(s) to Contract Owners.
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J. REGULATORY/STATEMENT REPORTS
NATIONWIDE NISC
- - Prepares and files Separate Account - Prepares and files periodic FOCUS
Annual Statements. Reports with the NASDR and SEC, as
applicable.
- - Prepares and mails the appropriate, - Prepares and files annual audited
required IRS reports at the Contract financial statements with required
Owner level. Files same with required regulatory agencies.
regulatory agencies.
- - Prepares and files form N-SAR for
the Separate Account.
K. PREMIUM TAXES
NATIONWIDE NISC
- - Collects, pays and accounts for
premium taxes as appropriate.
- - Prepares and maintains all premium
tax records by state.
- - Maintains liabilities in General
Account ledger for accrual of premium
tax collected.
- - Integrates all company premium taxes
due and performs related accounting.
L. FINANCIAL AND MANAGEMENT REPORTS
NATIONWIDE NISC
- - Provides periodic reports in - Provides periodic reports in accordance
accordance with the Schedule of with the Schedule of Reports to be
Reports to be prepared jointly by prepared jointly by Nationwide and NISC.
Nationwide and NISC. (See EXHIBIT C) (See EXHIBIT C)
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M. AGENT LICENSE RECORDKEEPING
NATIONWIDE NISC
- - Receives, establishes, processes, - Maintains securities registrations and
and maintains Agent appointment assumes supervisory responsibility for
records. representatives of affiliated sales and
marketing companies involved in the
wholesale distribution of Nationwide
variable contract products.
- Maintains training, supervisory, and
other required records for and on behalf
of registered representatives of NISC.
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EXHIBIT B
ADVERTISING AND SALES PROMOTION MATERIAL GUIDELINES
FOR APPROVAL BY NATIONWIDE AND NISC
In order to assure compliance with state and federal regulatory requirements and
to maintain control over the distribution of promotional materials dealing with
the Products, Nationwide and NISC require that all variable contract promotional
materials be reviewed and approved by both Nationwide and NISC prior to their
use. These guidelines are intended to provide appropriate regulatory and
distribution controls.
1. Sufficient lead time must be allowed in the submission of all
promotional material. Nationwide and NISC shall approve in writing all
promotional material. Such approval shall not be unreasonably withheld,
and shall be given promptly, normally within five (5) days.
2. All promotional material will be submitted in "draft" form to permit
any changes or corrections to be made prior to the printing.
3. Nationwide and NISC will provide each other with details as to each and
every use of all promotional material submitted. Approval for one use
will not constitute approval for any other use. Different standards of
review may apply when the same advertising material is intended for
different uses. The following information will be provided for each
item of promotional material:
a. In what jurisdiction(s) the material will be used.
b. Whether distribution will be to broker/dealer, entity,
participant, etc.
c. How the material will be used (e.g., brochure, mailing, web
site, etc.)
d. The projected date of initial use.
4. Each party will advise the other of the date it discontinues the use of
any material.
5. Any changes to previously approved promotional material must be
resubmitted, following these procedures. When approved material is to
be put to a different use, request for approval of the material for the
new use must be submitted.
6. Nationwide will assign a form number to each item of advertising and
sales promotional material. This number will appear on each piece of
advertising and sales promotional material. It will be used to aid in
necessary filings, and to maintain appropriate controls.
7. Nationwide and NISC will provide written approval for all material to
be used.
8. Nationwide will be responsible to effect necessary state filings.
9 NISC will coordinate SEC/NASD filings of sales and promotional
material.
10. All telephone communication and written correspondence regarding
promotional materials should be directed to Office of Product and
Market Compliance, Nationwide Life Insurance Company, One Nationwide
Plaza, Columbus, Ohio 43215
