<PAGE> 1
'98
NATIONWIDE(R) VARIABLE ACCOUNT - II
DECEMBER 31, 1998
[THE BEST OF AMERICA(R) LOGO]
ANNUAL REPORT
[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO OF JOSEPH J. GASPER]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you the 1998 annual
report of the Nationwide Variable Account-II.
Equity markets again defied the odds in 1998 to tally a fourth straight year of
double-digit gains, as measured by the major indices. This surprise came
following the breathtaking correction during the third quarter that gave us a
broad double-digit retreat. Fixed income investments also provided respectable
returns in 1998, supported by the continued low inflationary environment and
favorable Federal Reserve actions.
The performance of the American economy continues strong into 1999. However, we
believe the persisting slump in Asia and recent difficulties in Latin America
will inevitably take their toll and dampen growth in the United States. This
moderation, we think, will be healthy for our economy and get us back to a more
sustainable growth level. We look for interest rates to continue within the
range of the recent past, and we expect inflation to remain subdued. Moreover,
we remain optimistic about long-term prospects for U.S. business activity;
holders of financial assets should continue to profit from the anticipated
favorable investment climate.
We are pleased you have chosen our Company to provide the investment products
and services to help you meet your retirement savings and financial planning
goals.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
February 16, 1999
3
<PAGE> 3
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Balanced (ACVPBal)
24,984,966 shares (cost $190,756,295) ................................. $ 208,374,617
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
27,823,053 shares (cost $277,807,389) 250,963,941
American Century VP Income & Growth (ACVPIncGr)
5,709,110 shares (cost $34,930,762) ................................... 38,707,768
American Century VP - American Century VP International (ACVPInt)
38,320,974 shares (cost $281,911,111) ................................. 292,005,825
American Century VP - American Century VP Value (ACVPValue)
10,228,464 shares (cost $70,690,312) .................................. 68,837,561
American VI Series - Growth Fund (AVISGro)
593,794 shares (cost $24,347,204) ..................................... 31,132,606
American VI Series - High-Yield Bond Fund (AVISHiYld)
197,661 shares (cost $2,826,142) ...................................... 2,628,890
American VI Series - U.S. Government/AAA-Rated Securities Fund (AVISGvt)
396,291 shares (cost $4,410,275) ...................................... 4,482,056
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
8,538,487 shares (cost $237,250,934) .................................. 265,376,179
Dreyfus Stock Index Fund (DryStkIx)
52,976,258 shares (cost $1,395,628,578) ............................... 1,722,787,919
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
4,630,292 shares (cost $153,742,536) .................................. 167,199,862
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
3,555,974 shares (cost $76,690,000) ................................... 80,471,698
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
106,939,269 shares (cost $2,068,776,990) .............................. 2,718,396,211
Fidelity VIP - Growth Portfolio (FidVIPGr)
61,825,003 shares (cost $2,036,600,808) ............................... 2,774,087,868
Fidelity VIP - High Income Portfolio (FidVIPHI)
63,292,085 shares (cost $776,014,269) ................................. 729,757,734
Fidelity VIP - Overseas Portfolio (FidVIPOv)
28,866,621 shares (cost $559,532,122) ................................. 578,775,761
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
62,696,568 shares (cost $942,679,555) ................................. 1,138,569,676
</TABLE>
4
<PAGE> 4
<TABLE>
<S> <C>
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
50,110,361 shares (cost $887,363,469) ................................. 1,224,697,230
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
6,940,901 shares (cost $139,001,337) .................................. 158,807,810
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
1,431,487 shares (cost $9,455,686) .................................... 8,732,068
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
26,262,417 shares (cost $585,599,581) ................................. 698,317,658
Nationwide SAT - Government Bond Fund (NSATGvtBd)
37,800,382 shares (cost $440,372,627) ................................. 441,886,466
Nationwide SAT - Money Market Fund (NSATMyMkt)
975,757,697 shares (cost $975,757,697) ................................ 975,757,697
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
1,436,294 shares (cost $13,054,983) ................................... 13,630,430
Nationwide SAT - Small Company Fund (NSATSmCo)
17,578,192 shares (cost $273,509,275) ................................. 281,426,849
Nationwide SAT - Total Return Fund (NSATTotRe)
66,939,068 shares (cost $920,336,374) ................................. 1,231,678,853
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
18,427,382 shares (cost $471,929,009) ................................. 484,455,880
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
2,735,564 shares (cost $36,637,640) ................................... 37,860,204
Neuberger & Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat)
12,929,046 shares (cost $177,217,512) ................................. 178,679,416
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
35,130,413 shares (cost $669,344,481) ................................. 665,018,717
Oppenheimer VAF - Bond Fund (OppBdFd)
27,474,513 shares (cost $324,228,724) ................................. 338,486,000
Oppenheimer VAF - Global Securities Fund (OppGlSec)
24,564,354 shares (cost $469,720,671) ................................. 542,135,299
Oppenheimer VAF - Growth Fund (OppGro)
1,734,324 shares (cost $57,683,239) ................................... 63,597,652
Oppenheimer VAF - Multiple Strategies Fund (OppMult)
19,503,709 shares (cost $292,442,547) ................................. 332,538,233
Strong Opportunity Fund II, Inc. (StOpp2)
36,204,565 shares (cost $696,008,998) ................................. 786,363,158
Strong VIF - Strong Discovery Fund II (StDisc2)
13,750,240 shares (cost $160,852,259) ................................. 174,903,056
Strong VIF - Strong International Stock Fund II (StIntStk2)
4,245,694 shares (cost $40,375,762) ................................... 37,277,194
</TABLE>
(Continued)
5
<PAGE> 5
<TABLE>
<S> <C>
Van Eck WIT - Worldwide Bond Fund (VEWrldBd)
8,098,069 shares (cost $92,706,860) ................................... 99,444,284
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
4,914,872 shares (cost $32,134,508) ................................... 34,993,890
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
6,942,747 shares (cost $74,086,315) ................................... 63,873,268
Van Kampen American Capital LIT -
Morgan Stanley Real Estate Securities Portfolio (MSRESec)
11,597,104 shares (cost $181,924,838) ................................. 159,576,147
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
20,718,167 shares (cost $243,432,886) ................................. 227,692,653
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
1,883,351 shares (cost $21,778,605) ................................... 22,185,876
Warburg Pincus Trust - Small Company Growth Portfolio (WPSmCoGr)
20,046,401 shares (cost $323,913,551) ................................. 320,942,882
--------------
Total assets ....................................................... 20,677,515,042
ACCOUNTS PAYABLE ............................................................... 4,840,634
--------------
CONTRACT OWNERS' EQUITY (NOTE 4) ............................................... $ 20,672,674,408
==============
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 6
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
TOTAL ACVPBal
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 315,567,353 296,368,036 3,098,368 1,574,816
Mortality, expense and administration
charges (note 2):
BOA .......................................... (145,540,567) (126,406,070) (1,354,760) (1,191,850)
BOA Vision ................................... (114,290,967) (83,760,749) (1,180,401) (875,039)
BOA Enterprise ............................... (199,407) (118,491) (2,018) (876)
--------------- -------------- -------------- --------------
Net investment activity ........................ 55,536,412 86,082,726 561,189 (492,949)
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 9,502,638,819 6,440,464,106 48,804,378 33,424,138
Cost of mutual fund shares sold .................. (8,727,995,326) (5,862,745,516) (37,362,868) (24,057,900)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 774,643,493 577,718,590 11,441,510 9,366,238
Change in unrealized gain (loss) on investments .. 440,618,096 1,250,486,745 (5,900,979) 5,524,757
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 1,215,261,589 1,828,205,335 5,540,531 14,890,995
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... 1,177,995,583 616,932,003 19,212,723 6,097,662
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 2,448,793,584 2,531,220,064 25,314,443 20,495,708
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 2,214,889,447 3,614,758,515 22,317,530 31,207,874
Transfers between funds .......................... - - 8,865,047 (4,226,209)
Redemptions ...................................... (1,806,663,808) (1,198,352,163) (16,523,412) (10,189,550)
Annuity benefits ................................. (1,988,285) (1,097,690) (9,922) (2,437)
Annual contract maintenance charge (note 2) ...... (8,003,092) (7,187,524) (76,599) (70,234)
Contingent deferred sales charges (note 2) ....... (23,748,555) (18,196,002) (246,178) (187,816)
Adjustments to maintain reserves ................. (406,310) (692,928) (1,729) (30,715)
--------------- -------------- -------------- --------------
Net equity transactions ...................... 374,079,397 2,389,232,208 14,324,737 16,500,913
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 2,822,872,981 4,920,452,272 39,639,180 36,996,621
Contract owners' equity beginning of period ...... 17,849,801,427 12,929,349,155 168,733,833 131,737,212
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $20,672,674,408 17,849,801,427 208,373,013 168,733,833
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
ACVPCapAp ACVPincGr
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ - - 181,416 -
Mortality, expense and administration
charges (note 2):
BOA .......................................... (2,818,233) (4,037,524) (95,126) -
BOA Vision ................................... (857,721) (1,103,836) (75,918) -
BOA Enterprise ............................... (1,256) (1,623) (117) -
-------------- -------------- -------------- --------------
Net investment activity ........................ (3,677,210) (5,142,983) 10,255 -
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 114,736,720 226,050,085 25,325,017 -
Cost of mutual fund shares sold .................. (136,788,804) (249,168,854) (26,300,565) -
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ (22,052,084) (23,118,769) (975,548) -
Change in unrealized gain (loss) on investments .. (264,722) 2,545,749 3,777,007 -
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. (22,316,806) (20,573,020) 2,801,459 -
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 15,700,848 8,369,061 - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... (10,293,168) (17,346,942) 2,811,714 -
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 23,389,103 46,091,043 2,843,288 -
Transfers between funds .......................... (66,469,516) (101,140,496) 34,214,351 -
Redemptions ...................................... (34,901,415) (38,900,571) (1,148,357) -
Annuity benefits ................................. (44,914) (49,144) - -
Annual contract maintenance charge (note 2) ...... (233,324) (323,047) (4,110) -
Contingent deferred sales charges (note 2) ....... (447,727) (640,085) (9,116) -
Adjustments to maintain reserves ................. 65,167 1,134 6,300 -
-------------- -------------- -------------- --------------
Net equity transactions ...................... (78,642,626) (94,961,166) 35,902,356 -
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ (88,935,794) (112,308,108) 38,714,070 -
Contract owners' equity beginning of period ...... 339,991,098 452,299,206 - -
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 251,055,304 339,991,098 38,714,070 -
============== ============== ============== ==============
</TABLE>
(Continued)
7
<PAGE> 7
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
ACVPint ACVPValue
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 1,241,910 1,256,182 491,657 77,961
Mortality, expense and administration
charges (note 2):
BOA .......................................... (1,733,033) (1,015,749) (427,970) (236,395)
BOA Vision ................................... (1,962,632) (1,073,332) (588,525) (228,347)
BOA Enterprise ............................... (2,034) (1,174) (1,181) (559)
--------------- -------------- -------------- --------------
Net investment activity ........................ (2,455,789) (834,073) (526,019) (387,340)
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 361,873,253 134,023,354 49,075,920 32,856,963
Cost of mutual fund shares sold .................. (348,435,933) (112,395,449) (49,213,498) (27,872,971)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 13,437,320 21,627,905 (137,578) 4,983,992
Change in unrealized gain (loss) on investments .. 4,337,447 (1,464,913) (3,517,470) 1,666,087
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 17,774,767 20,162,992 (3,655,048) 6,650,079
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... 12,749,123 2,422,638 5,869,944 151,154
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 28,068,101 21,751,557 1,688,877 6,413,893
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 27,075,201 40,115,028 15,060,446 18,394,894
Transfers between funds .......................... 76,963,986 39,235,433 (9,597,717) 44,252,062
Redemptions ...................................... (21,143,253) (8,333,537) (6,581,279) (1,702,361)
Annuity benefits ................................. (13,625) (1,590) (21,465) -
Annual contract maintenance charge (note 2) ...... (79,895) (50,442) (19,679) (7,615)
Contingent deferred sales charges (note 2) ....... (250,396) (133,437) (100,776) (15,377)
Adjustments to maintain reserves ................. (18,968) 1,318 (51,138) (157)
--------------- -------------- -------------- --------------
Net equity transactions ...................... 82,533,050 70,832,773 (1,311,608) 60,921,446
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 110,601,151 92,584,330 377,269 67,335,339
Contract owners' equity beginning of period ...... 181,376,626 88,792,296 68,407,922 1,072,583
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 291,977,777 181,376,626 68,785,191 68,407,922
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
AVISGro AVISHiYld
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 104,724 144,798 252,109 253,822
Mortality, expense and administration
charges (note 2):
BOA .......................................... (365,360) (329,103) (39,297) (38,276)
BOA Vision ................................... - - - -
BOA Enterprise ............................... - - - -
-------------- -------------- -------------- --------------
Net investment activity ........................ (260,636) (184,305) 212,812 215,546
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 7,115,941 6,487,233 1,134,719 736,561
Cost of mutual fund shares sold .................. (3,771,756) (3,240,097) (1,075,993) (655,361)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 3,344,185 3,247,136 58,726 81,200
Change in unrealized gain (loss) on investments .. 1,042,218 21,117 (303,262) (32,967)
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 4,386,403 3,268,253 (244,536) 48,233
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 4,170,092 3,172,499 36,591 33,142
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 8,295,859 6,256,447 4,867 296,921
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 511,282 597,163 116,063 75,598
Transfers between funds .......................... (964,009) (973,320) (107,348) 264,205
Redemptions ...................................... (3,204,144) (2,781,554) (566,909) (409,603)
Annuity benefits ................................. (444) (946) (5,289) (1,226)
Annual contract maintenance charge (note 2) ...... (14,895) (16,365) (1,991) (2,453)
Contingent deferred sales charges (note 2) ....... (9,981) (10,780) (3,772) (1,609)
Adjustments to maintain reserves ................. 578 998 (2,332) 271
-------------- -------------- -------------- --------------
Net equity transactions ...................... (3,681,613) (3,184,804) (571,578) (74,817)
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 4,614,246 3,071,643 (566,711) 222,104
Contract owners' equity beginning of period ...... 26,518,943 23,447,300 3,193,216 2,971,112
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 31,133,189 26,518,943 2,626,505 3,193,216
============== ============== ============== ==============
</TABLE>
8
<PAGE> 8
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
AVISGvt DrySRGro
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 270,372 369,310 409,775 623,680
Mortality, expense and administration
charges (note 2):
BOA .......................................... (60,816) (72,106) (1,451,837) (927,006)
BOA Vision ................................... - - (1,439,799) (837,713)
BOA Enterprise ............................... - - (2,748) (1,418)
--------------- -------------- -------------- --------------
Net investment activity ........................ 209,556 297,204 (2,484,609) (1,142,457)
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 1,748,263 1,786,834 143,677,649 79,140,012
Cost of mutual fund shares sold .................. (1,871,313) (1,861,559) (117,379,825) (67,423,514)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ (123,050) (74,725) 26,297,824 11,716,498
Change in unrealized gain (loss) on investments .. 209,910 140,996 14,964,682 12,405,500
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 86,860 66,271 41,262,506 24,121,998
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... - - 9,504,871 4,861,060
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 296,416 363,475 48,282,768 27,840,601
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 143,640 127,889 34,640,924 50,107,726
Transfers between funds .......................... (143,468) (309,384) 17,779,620 36,729,046
Redemptions ...................................... (894,059) (1,207,471) (16,450,256) (14,091,480)
Annuity benefits ................................. (3,938) (536) (5,152) (4,381)
Annual contract maintenance charge (note 2) ...... (3,913) (4,847) (112,389) (67,753)
Contingent deferred sales charges (note 2) ....... (3,582) (4,252) (243,228) (365,621)
Adjustments to maintain reserves ................. (1,962) 51 1,747 2,732
--------------- -------------- -------------- --------------
Net equity transactions ...................... (907,282) (1,398,550) 35,611,266 72,310,269
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ (610,866) (1,035,075) 83,894,034 100,150,870
Contract owners' equity beginning of period ...... 5,090,894 6,125,969 181,485,180 81,334,310
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 4,480,028 5,090,894 265,379,214 181,485,180
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
DryStkix DryCapAp
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 18,675,816 13,324,202 862,672 72,902
Mortality, expense and administration
charges (note 2):
BOA .......................................... (7,978,285) (4,928,324) (524,245) (12,311)
BOA Vision ................................... (10,844,564) (6,128,921) (571,382) (24,419)
BOA Enterprise ............................... (17,348) (8,919) (873) (17)
-------------- -------------- -------------- --------------
Net investment activity ........................ (164,381) 2,258,038 (233,828) 36,155
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 443,376,469 196,995,162 74,053,794 5,083,147
Cost of mutual fund shares sold .................. (301,499,093) (145,321,824) (68,960,812) (5,096,505)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 141,877,376 51,673,338 5,092,982 (13,358)
Change in unrealized gain (loss) on investments .. 179,528,535 113,272,914 13,393,944 63,381
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 321,405,911 164,946,252 18,486,926 50,023
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 3,418,338 30,917,521 14,955 6,103
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 324,659,868 198,121,811 18,268,053 92,281
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 214,991,310 302,375,457 15,138,079 3,431,579
Transfers between funds .......................... 190,453,913 185,055,283 130,801,206 6,774,363
Redemptions ...................................... (101,442,520) (44,011,999) (6,949,302) (246,314)
Annuity benefits ................................. (151,728) (20,897) - -
Annual contract maintenance charge (note 2) ...... (444,587) (248,202) (22,248) (468)
Contingent deferred sales charges (note 2) ....... (1,522,122) (796,708) (81,927) (2,852)
Adjustments to maintain reserves ................. (10,118) 1,320 (907) (701)
-------------- -------------- -------------- --------------
Net equity transactions ...................... 301,874,148 442,354,254 138,884,901 9,955,607
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 626,534,016 640,476,065 157,152,954 10,047,888
Contract owners' equity beginning of period ...... 1,096,238,216 455,762,151 10,047,888 -
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $1,722,772,232 1,096,238,216 167,200,842 10,047,888
============== ============== ============== ==============
</TABLE>
(Continued)
9
<PAGE> 9
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
DryGrinc FidVIPEI
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 691,042 403,974 36,741,162 31,564,284
Mortality, expense and administration
charges (note 2):
BOA .......................................... (350,592) (148,142) (20,689,256) (18,215,213)
BOA Vision ................................... (598,700) (237,804) (15,778,209) (11,859,942)
BOA Enterprise ............................... (3,387) (1,115) (15,123) (9,194)
--------------- -------------- -------------- --------------
Net investment activity ........................ (261,637) 16,913 258,574 1,479,935
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 30,513,353 7,332,820 360,627,004 137,267,016
Cost of mutual fund shares sold .................. (28,500,253) (6,945,321) (227,981,252) (91,126,170)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 2,013,100 387,499 132,645,752 46,140,846
Change in unrealized gain (loss) on investments .. 3,889,051 (107,097) (11,150,576) 306,220,297
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 5,902,151 280,402 121,495,176 352,361,143
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... 1,182,628 3,333,581 130,755,312 158,698,207
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 6,823,142 3,630,896 252,509,062 512,539,285
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 20,276,212 31,096,853 244,737,638 395,432,535
Transfers between funds .......................... 2,527,467 21,834,332 (147,382,926) (6,514,287)
Redemptions ...................................... (4,679,160) (1,113,904) (223,884,295) (152,832,877)
Annuity benefits ................................. - - (277,211) (151,789)
Annual contract maintenance charge (note 2) ...... (24,697) (5,976) (1,076,592) (987,195)
Contingent deferred sales charges (note 2) ....... (79,324) (21,429) (2,878,268) (2,099,197)
Adjustments to maintain reserves ................. (1,898) 558 (72,439) (20,082)
--------------- -------------- -------------- --------------
Net equity transactions ...................... 18,018,600 51,790,434 (130,834,093) 232,827,108
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 24,841,742 55,421,330 121,674,969 745,366,393
Contract owners' equity beginning of period ...... 55,629,567 208,237 2,596,523,771 1,851,157,378
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 80,471,309 55,629,567 2,718,198,740 2,596,523,771
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
FidVIPGr FidVIPHI
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 10,166,752 11,151,243 62,256,993 47,561,883
Mortality, expense and administration
charges (note 2):
BOA .......................................... (20,216,127) (17,002,784) (5,314,746) (5,147,050)
BOA Vision ................................... (10,214,372) (7,588,917) (5,818,593) (4,584,647)
BOA Enterprise ............................... (14,330) (8,279) (5,086) (3,838)
-------------- -------------- -------------- --------------
Net investment activity ........................ (20,278,077) (13,448,737) 51,118,568 37,826,348
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 582,531,833 361,048,888 423,878,325 311,819,193
Cost of mutual fund shares sold .................. (421,522,045) (231,057,958) (424,592,843) (295,085,798)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 161,009,788 129,990,930 (714,518) 16,733,395
Change in unrealized gain (loss) on investments .. 330,693,565 186,810,844 (127,578,300) 45,290,142
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 491,703,353 316,801,774 (128,292,818) 62,023,537
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 265,940,840 49,915,087 39,559,131 5,878,435
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 737,366,116 353,268,124 (37,615,119) 105,728,320
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 181,501,856 253,081,701 84,716,749 139,864,147
Transfers between funds .......................... 58,879,586 (129,238,876) (63,945,106) (19,876,856)
Redemptions ...................................... (194,431,314) (141,496,031) (79,994,258) (51,389,595)
Annuity benefits ................................. (254,430) (128,135) (64,108) (44,670)
Annual contract maintenance charge (note 2) ...... (1,169,401) (1,099,317) (250,706) (245,933)
Contingent deferred sales charges (note 2) ....... (2,499,712) (2,350,994) (968,813) (744,127)
Adjustments to maintain reserves ................. (85,859) (37,457) 34,738 12,025
-------------- -------------- -------------- --------------
Net equity transactions ...................... 41,940,726 (21,269,109) (60,471,504) 67,574,991
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 779,306,842 331,999,015 (98,086,623) 173,303,311
Contract owners' equity beginning of period ...... 1,994,796,761 1,662,797,746 827,837,454 654,534,143
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $2,774,103,603 1,994,796,761 729,750,831 827,837,454
============== ============== ============== ==============
</TABLE>
10
<PAGE> 10
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
FidVIPOv FidVIPAM
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 11,424,188 9,616,272 34,225,218 32,069,538
Mortality, expense and administration
charges (note 2):
BOA .......................................... (5,767,471) (6,016,329) (10,568,738) (9,994,932)
BOA Vision ................................... (2,267,521) (2,010,362) (4,231,809) (3,404,754)
BOA Enterprise ............................... (762) (497) (2,407) (1,229)
--------------- -------------- -------------- --------------
Net investment activity ........................ 3,388,434 1,589,084 19,422,264 18,668,623
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 448,515,931 325,866,496 111,473,351 64,155,222
Cost of mutual fund shares sold .................. (408,495,774) (271,581,444) (90,494,053) (50,691,840)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 40,020,157 54,285,052 20,979,298 13,463,382
Change in unrealized gain (loss) on investments .. (11,007,004) (34,908,260) (3,096,910) 61,763,112
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 29,013,153 19,376,792 17,882,388 75,226,494
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... 33,671,290 38,173,687 102,675,653 80,445,621
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 66,072,877 59,139,563 139,980,305 174,340,738
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 35,783,097 59,588,290 83,198,673 111,981,451
Transfers between funds .......................... (47,526,193) (49,688,118) (45,694,699) (50,915,784)
Redemptions ...................................... (59,779,420) (45,181,274) (117,229,468) (79,250,445)
Annuity benefits ................................. (122,919) (81,666) (210,178) (154,671)
Annual contract maintenance charge (note 2) ...... (315,146) (348,798) (577,324) (604,024)
Contingent deferred sales charges (note 2) ....... (694,542) (640,146) (1,488,964) (1,221,254)
Adjustments to maintain reserves ................. (2,419) (19,734) (21,188) 20,989
--------------- -------------- -------------- --------------
Net equity transactions ...................... (72,657,542) (36,371,446) (82,023,148) (20,143,738)
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ (6,584,665) 22,768,117 57,957,157 154,197,000
Contract owners' equity beginning of period ...... 585,358,058 562,589,941 1,080,601,131 926,404,131
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 578,773,393 585,358,058 1,138,558,288 1,080,601,131
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
FidVIPCon FidVIPGrOp
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 6,336,699 4,746,178 757,412 -
Mortality, expense and administration
charges (note 2):
BOA .......................................... (6,038,275) (4,517,986) (623,486) (60,777)
BOA Vision ................................... (7,641,255) (5,308,985) (837,609) (90,378)
BOA Enterprise ............................... (5,816) (3,863) (1,084) (205)
-------------- -------------- -------------- --------------
Net investment activity ........................ (7,348,647) (5,084,656) (704,767) (151,360)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 156,614,980 79,785,498 46,907,717 13,987,376
Cost of mutual fund shares sold .................. (103,037,324) (62,047,221) (43,276,275) (13,645,097)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 53,577,656 17,738,277 3,631,442 342,279
Change in unrealized gain (loss) on investments .. 165,270,018 115,299,306 17,973,839 1,832,634
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 218,847,674 133,037,583 21,605,281 2,174,913
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 46,619,997 12,543,472 2,632,909 -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 258,119,024 140,496,399 23,533,423 2,023,553
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 117,785,191 205,780,604 34,421,791 14,171,862
Transfers between funds .......................... 21,712,329 60,354,302 61,633,353 32,032,277
Redemptions ...................................... (69,506,982) (35,225,735) (8,308,180) (564,541)
Annuity benefits ................................. (85,161) (26,879) (8,900) -
Annual contract maintenance charge (note 2) ...... (362,629) (255,108) (28,889) (2,292)
Contingent deferred sales charges (note 2) ....... (1,098,841) (633,851) (90,979) (5,479)
Adjustments to maintain reserves ................. (190,380) 19,885 20,282 1,844
-------------- -------------- -------------- --------------
Net equity transactions ...................... 68,253,527 230,013,218 87,638,478 45,633,671
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 326,372,551 370,509,617 111,171,901 47,657,224
Contract owners' equity beginning of period ...... 898,176,376 527,666,759 47,657,224 -
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $1,224,548,927 898,176,376 158,829,125 47,657,224
============== ============== ============== ==============
</TABLE>
(Continued)
11
<PAGE> 11
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
MSEmMkt NSATCapAp
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 896,541 215,622 4,224,848 2,726,088
Mortality, expense and administration
charges (note 2):
BOA .......................................... (58,296) (15,348) (3,700,716) (1,856,637)
BOA Vision ................................... (62,351) (17,202) (3,266,685) (1,437,155)
BOA Enterprise ............................... (123) (104) (21,628) (6,787)
--------------- -------------- -------------- --------------
Net investment activity ........................ 775,771 182,968 (2,764,181) (574,491)
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 34,386,517 9,201,428 133,708,074 62,546,657
Cost of mutual fund shares sold .................. (37,579,962) (9,604,273) (90,629,019) (46,273,238)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ (3,193,445) (402,845) 43,079,055 16,273,419
Change in unrealized gain (loss) on investments .. (588,871) (134,747) 63,140,856 40,948,774
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. (3,782,316) (537,592) 106,219,911 57,222,193
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... - 93,569 19,370,613 7,703,943
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... (3,006,545) (261,055) 122,826,343 64,351,645
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 1,603,596 3,095,151 79,993,702 79,512,984
Transfers between funds .......................... 2,595,520 5,390,535 176,934,765 95,314,794
Redemptions ...................................... (600,107) (69,221) (44,265,008) (14,345,113)
Annuity benefits ................................. - - (8,859) (292)
Annual contract maintenance charge (note 2) ...... (2,449) (458) (187,439) (90,956)
Contingent deferred sales charges (note 2) ....... (8,579) (349) (603,195) (235,192)
Adjustments to maintain reserves ................. 3,560 (7,793) 31,933 8,193
--------------- -------------- -------------- --------------
Net equity transactions ...................... 3,591,541 8,407,865 211,895,899 160,164,418
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 584,996 8,146,810 334,722,242 224,516,063
Contract owners' equity beginning of period ...... 8,146,810 - 363,605,489 139,089,426
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 8,731,806 8,146,810 698,327,731 363,605,489
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
NSATGvtBd NSATMyMkt
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 20,283,271 17,136,024 49,803,790 46,200,443
Mortality, expense and administration
charges (note 2):
BOA .......................................... (3,112,323) (2,631,037) (7,311,860) (6,719,210)
BOA Vision ................................... (1,819,228) (1,049,731) (5,795,865) (5,441,823)
BOA Enterprise ............................... (4,150) (1,876) (7,805) (7,890)
-------------- -------------- -------------- --------------
Net investment activity ........................ 15,347,570 13,453,380 36,688,260 34,031,520
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 207,789,615 91,300,089 3,220,375,906 2,446,735,002
Cost of mutual fund shares sold .................. (193,984,368) (88,341,190) (3,220,375,906) (2,446,735,002)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 13,805,247 2,958,899 - -
Change in unrealized gain (loss) on investments .. (6,851,480) 4,971,271 - -
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 6,953,767 7,930,170 - -
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 2,132,513 - - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 24,433,850 21,383,550 36,688,260 34,031,520
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 39,548,416 36,656,330 264,092,504 574,163,215
Transfers between funds .......................... 121,987,540 (6,550,198) 69,584,573 (398,798,940)
Redemptions ...................................... (43,099,055) (32,967,846) (235,028,324) (176,620,083)
Annuity benefits ................................. (24,316) (22,811) (33,165) (29,991)
Annual contract maintenance charge (note 2) ...... (162,551) (161,508) (329,944) (338,131)
Contingent deferred sales charges (note 2) ....... (471,441) (449,182) (3,229,365) (2,442,204)
Adjustments to maintain reserves ................. (20,225) 2,293 124,919 11,382
-------------- -------------- -------------- --------------
Net equity transactions ...................... 117,758,368 (3,492,922) 95,181,198 (4,054,752)
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 142,192,218 17,890,628 131,869,458 29,976,768
Contract owners' equity beginning of period ...... 299,681,912 281,791,284 839,446,497 809,469,729
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 441,874,130 299,681,912 971,315,955 839,446,497
============== ============== ============== ==============
</TABLE>
12
<PAGE> 12
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NSATSmCapV NSATSmCo
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ - - - -
Mortality, expense and administration
charges (note 2):
BOA .......................................... (31,885) - (1,700,513) (1,428,117)
BOA Vision ................................... (35,054) - (2,059,122) (1,497,619)
BOA Enterprise ............................... (83) - (8,482) (8,023)
--------------- -------------- -------------- --------------
Net investment activity ........................ (67,022) - (3,768,117) (2,933,759)
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 43,832,595 - 261,860,480 136,575,863
Cost of mutual fund shares sold .................. (42,411,426) - (254,018,492) (116,663,809)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 1,421,169 - 7,841,988 19,912,054
Change in unrealized gain (loss) on investments .. 575,447 - (2,212,959) 4,818,936
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 1,996,616 - 5,629,029 24,730,990
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... - - - 7,911,895
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 1,929,594 - 1,860,912 29,709,126
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 859,632 - 36,933,858 68,338,674
Transfers between funds .......................... 11,542,676 - (26,891,714) 46,335,002
Redemptions ...................................... (691,704) - (20,592,877) (12,078,315)
Annuity benefits ................................. - - (24,125) (1,773)
Annual contract maintenance charge (note 2) ...... (1,173) - (105,259) (76,406)
Contingent deferred sales charges (note 2) ....... (8,593) - (293,623) (198,899)
Adjustments to maintain reserves ................. 87 - (19,321) 9,979
--------------- -------------- -------------- --------------
Net equity transactions ...................... 11,700,925 - (10,993,061) 102,328,262
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 13,630,519 - (9,132,149) 132,037,388
Contract owners' equity beginning of period ...... - - 290,550,223 158,512,835
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 13,630,519 - 281,418,074 290,550,223
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
NSATTotRe NBAMTGro
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 12,035,844 12,556,764 - -
Mortality, expense and administration
charges (note 2):
BOA .......................................... (8,914,235) (6,944,503) (4,492,337) (4,438,181)
BOA Vision ................................... (6,595,435) (3,970,444) (1,605,250) (1,315,545)
BOA Enterprise ............................... (44,307) (24,485) (2,546) (1,945)
-------------- -------------- -------------- --------------
Net investment activity ........................ (3,518,133) 1,617,332 (6,100,133) (5,755,671)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 98,753,814 36,066,433 232,023,189 177,857,355
Cost of mutual fund shares sold .................. (54,160,507) (22,601,600) (234,618,122) (151,296,684)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 44,593,307 13,464,833 (2,594,933) 26,560,671
Change in unrealized gain (loss) on investments .. 82,128,581 139,386,896 (55,314,235) 47,617,333
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 126,721,888 152,851,729 (57,909,168) 74,178,004
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 48,037,783 32,893,745 124,274,598 32,577,604
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 171,241,538 187,362,806 60,265,297 100,999,937
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 144,141,140 234,728,766 28,776,863 44,470,540
Transfers between funds .......................... (18,161,876) 82,492,350 (34,982,287) (3,323,065)
Redemptions ...................................... (98,751,498) (51,176,329) (46,230,014) (39,592,901)
Annuity benefits ................................. (194,097) (152,880) (83,808) (60,735)
Annual contract maintenance charge (note 2) ...... (517,264) (390,286) (257,911) (269,972)
Contingent deferred sales charges (note 2) ....... (1,246,430) (714,965) (499,129) (523,316)
Adjustments to maintain reserves ................. 49,874 38,731 (42,003) 12,128
-------------- -------------- -------------- --------------
Net equity transactions ...................... 25,319,849 264,825,387 (53,318,289) 712,679
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 196,561,387 452,188,193 6,947,008 101,712,616
Contract owners' equity beginning of period ...... 1,035,147,551 582,959,358 477,494,040 375,781,424
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $1,231,708,938 1,035,147,551 484,441,048 477,494,040
============== ============== ============== ==============
</TABLE>
(Continued)
13
<PAGE> 13
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NBAMTGuard NBAMTLMat
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ - - 11,658,274 11,734,100
Mortality, expense and administration
charges (note 2):
BOA .......................................... (101,891) - (1,461,067) (1,495,421)
BOA Vision ................................... (175,876) - (1,044,829) (1,132,335)
BOA Enterprise ............................... (340) - (942) (568)
--------------- -------------- -------------- --------------
Net investment activity ........................ (278,107) - 9,151,436 9,105,776
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 27,174,222 - 67,231,619 57,634,002
Cost of mutual fund shares sold .................. (30,893,655) - (69,328,641) (58,656,885)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ (3,719,433) - (2,097,022) (1,022,883)
Change in unrealized gain (loss) on investments .. 1,222,564 - (1,610,865) 1,972,323
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. (2,496,869) - (3,707,887) 949,440
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... - - - -
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... (2,774,976) - 5,443,549 10,055,216
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 2,669,820 - 23,144,819 56,406,502
Transfers between funds .......................... 40,976,322 - (13,621,857) (64,818,071)
Redemptions ...................................... (2,970,574) - (24,447,184) (16,675,074)
Annuity benefits ................................. - - (19,554) (15,225)
Annual contract maintenance charge (note 2) ...... (4,885) - (61,292) (65,787)
Contingent deferred sales charges (note 2) ....... (35,504) - (209,330) (209,825)
Adjustments to maintain reserves ................. (191) - 5,646 372
--------------- -------------- -------------- --------------
Net equity transactions ...................... 40,634,988 - (15,208,752) (25,377,108)
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 37,860,012 - (9,765,203) (15,321,892)
Contract owners' equity beginning of period ...... - - 188,450,178 203,772,070
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 37,860,012 - 178,684,975 188,450,178
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
NBAMTPart OppBdFd
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 3,116,604 1,231,708 4,888,363 14,915,295
Mortality, expense and administration
charges (note 2):
BOA .......................................... (4,534,910) (3,649,443) (1,946,480) (1,630,280)
BOA Vision ................................... (5,859,017) (4,169,214) (2,306,525) (1,603,881)
BOA Enterprise ............................... (9,661) (6,318) (2,200) (864)
-------------- -------------- -------------- --------------
Net investment activity ........................ (7,286,984) (6,593,267) 633,158 11,680,270
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 323,653,191 239,929,783 72,961,916 30,992,706
Cost of mutual fund shares sold .................. (285,611,423) (184,398,144) (68,091,867) (30,503,439)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 38,041,768 55,531,639 4,870,049 489,267
Change in unrealized gain (loss) on investments .. (112,673,667) 71,315,949 6,100,995 5,495,496
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. (74,631,899) 126,847,588 10,971,044 5,984,763
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 98,173,016 18,968,301 4,423,968 738,909
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 16,254,133 139,222,622 16,028,170 18,403,942
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 106,356,098 178,218,856 38,178,922 55,252,898
Transfers between funds .......................... (179,019,279) 138,729,962 20,835,559 19,335,126
Redemptions ...................................... (54,732,674) (32,375,861) (27,001,741) (16,712,535)
Annuity benefits ................................. (14,950) (1,195) (62,643) (54,502)
Annual contract maintenance charge (note 2) ...... (238,809) (163,783) (96,177) (89,653)
Contingent deferred sales charges (note 2) ....... (785,338) (453,932) (362,728) (268,113)
Adjustments to maintain reserves ................. (732) 1,670 1,178 (3,694)
-------------- -------------- -------------- --------------
Net equity transactions ...................... (128,435,684) 283,955,717 31,492,370 57,459,527
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ (112,181,551) 423,178,339 47,520,540 75,863,469
Contract owners' equity beginning of period ...... 777,189,563 354,011,224 290,966,291 215,102,822
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 665,008,012 777,189,563 338,486,831 290,966,291
============== ============== ============== ==============
</TABLE>
14
<PAGE> 14
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
OppGISec OppGro
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 10,856,886 4,353,191 188,351 -
Mortality, expense and administration
charges (note 2):
BOA .......................................... (3,496,341) (2,979,200) (275,168) (18,845)
BOA Vision ................................... (3,604,162) (2,689,657) (239,248) (22,068)
BOA Enterprise ............................... (1,733) (1,095) (731) (42)
--------------- -------------- -------------- --------------
Net investment activity ........................ 3,754,650 (1,316,761) (326,796) (40,955)
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 125,576,767 76,448,017 17,011,520 738,091
Cost of mutual fund shares sold .................. (88,844,140) (62,463,469) (17,085,617) (732,690)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 36,732,627 13,984,548 (74,097) 5,401
Change in unrealized gain (loss) on investments .. (21,261,831) 60,986,819 6,064,468 (150,054)
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 15,470,796 74,971,367 5,990,371 (144,653)
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... 40,867,407 - 2,272,563 -
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 60,092,853 73,654,606 7,936,138 (185,608)
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 51,559,320 90,024,052 16,030,396 5,815,873
Transfers between funds .......................... (20,304,286) 43,312,410 26,102,066 10,665,183
Redemptions ...................................... (37,751,898) (23,014,747) (2,687,765) (104,041)
Annuity benefits ................................. (42,320) (4,941) (3,335) -
Annual contract maintenance charge (note 2) ...... (192,525) (173,863) (13,027) (799)
Contingent deferred sales charges (note 2) ....... (520,846) (394,896) (30,325) (619)
Adjustments to maintain reserves ................. (20,237) (691,837) 31,362 125
--------------- -------------- -------------- --------------
Net equity transactions ...................... (7,272,792) 109,056,178 39,429,372 16,375,722
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 52,820,061 182,710,784 47,365,510 16,190,114
Contract owners' equity beginning of period ...... 489,322,678 306,611,894 16,190,114 -
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 542,142,739 489,322,678 63,555,624 16,190,114
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
OppMult StOpp2
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 3,212,145 10,986,747 1,848,130 2,534,711
Mortality, expense and administration
charges (note 2):
BOA .......................................... (2,450,308) (2,272,557) (6,768,918) (5,943,611)
BOA Vision ................................... (2,206,025) (1,628,568) (3,890,877) (3,119,935)
BOA Enterprise ............................... (2,886) (1,491) (5,469) (2,861)
-------------- -------------- -------------- --------------
Net investment activity ........................ (1,447,074) 7,084,131 (8,817,134) (6,531,696)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 41,801,113 8,146,767 193,720,998 148,226,419
Cost of mutual fund shares sold .................. (33,330,835) (6,105,557) (137,667,518) (109,705,183)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 8,470,278 2,041,210 56,053,480 38,521,236
Change in unrealized gain (loss) on investments .. (9,193,583) 22,703,778 (62,980,528) 53,401,226
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. (723,305) 24,744,988 (6,927,048) 91,922,462
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... 18,630,439 9,159,579 101,358,207 57,079,292
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 16,460,060 40,988,698 85,614,025 142,470,058
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 36,934,558 67,724,310 61,374,281 89,723,233
Transfers between funds .......................... (27,844,235) 15,591,000 (62,713,711) (29,207,063)
Redemptions ...................................... (33,380,272) (20,273,082) (60,899,142) (40,126,673)
Annuity benefits ................................. (41,603) (8,967) (63,802) (34,707)
Annual contract maintenance charge (note 2) ...... (137,253) (128,063) (360,713) (341,773)
Contingent deferred sales charges (note 2) ....... (425,530) (313,339) (814,460) (633,525)
Adjustments to maintain reserves ................. (12,023) 2,876 3,809 (51,000)
-------------- -------------- -------------- --------------
Net equity transactions ...................... (24,906,358) 62,594,735 (63,473,738) 19,328,492
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ (8,446,298) 103,583,433 22,140,287 161,798,550
Contract owners' equity beginning of period ...... 340,972,204 237,388,771 764,227,770 602,429,220
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 332,525,906 340,972,204 786,368,057 764,227,770
============== ============== ============== ==============
</TABLE>
(Continued)
15
<PAGE> 15
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
StDisc2 StintStk2
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ - - 531,928 1,173,377
Mortality, expense and administration
charges (note 2):
BOA .......................................... (1,451,734) (1,607,469) (263,007) (440,839)
BOA Vision ................................... (935,260) (996,834) (348,046) (479,748)
BOA Enterprise ............................... (477) (520) (326) (503)
--------------- -------------- -------------- --------------
Net investment activity ........................ (2,387,471) (2,604,823) (79,451) 252,287
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 81,516,149 123,823,006 52,143,627 39,269,990
Cost of mutual fund shares sold .................. (73,384,284) (138,054,663) (61,140,929) (40,207,464)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 8,131,865 (14,231,657) (8,997,302) (937,474)
Change in unrealized gain (loss) on investments .. 1,124,195 35,647,182 6,694,716 (9,982,351)
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 9,256,060 21,415,525 (2,302,586) (10,919,825)
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... 2,856,579 - - 1,762,973
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 9,725,168 18,810,702 (2,382,037) (8,904,565)
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 13,493,166 22,742,374 4,412,210 16,108,665
Transfers between funds .......................... (28,949,271) (42,069,763) (10,811,583) (22,926,232)
Redemptions ...................................... (14,296,989) (12,584,675) (3,576,372) (4,298,166)
Annuity benefits ................................. (10,191) (9,675) (4,776) (1,862)
Annual contract maintenance charge (note 2) ...... (92,275) (105,512) (17,559) (23,552)
Contingent deferred sales charges (note 2) ....... (225,995) (239,340) (55,830) (69,910)
Adjustments to maintain reserves ................. (15,647) 2,840 (5,143) 5,043
--------------- -------------- -------------- --------------
Net equity transactions ...................... (30,097,202) (32,263,751) (10,059,053) (11,206,014)
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ (20,372,034) (13,453,049) (12,441,090) (20,110,579)
Contract owners' equity beginning of period ...... 195,266,423 208,719,472 49,718,321 69,828,900
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 174,894,389 195,266,423 37,277,231 49,718,321
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
VEWrldBd VEWrldEMkt
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 874,183 3,428,399 606,759 154,979
Mortality, expense and administration
charges (note 2):
BOA .......................................... (780,003) (866,795) (339,625) (699,280)
BOA Vision ................................... (569,654) (470,930) (355,352) (592,796)
BOA Enterprise ............................... (230) (130) (728) (1,071)
-------------- -------------- -------------- --------------
Net investment activity ........................ (475,704) 2,090,544 (88,946) (1,138,168)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 69,501,826 36,100,931 93,885,231 85,151,405
Cost of mutual fund shares sold .................. (64,533,774) (37,747,713) (142,305,956) (84,005,535)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ 4,968,052 (1,646,782) (48,420,725) 1,145,870
Change in unrealized gain (loss) on investments .. 6,347,948 311,663 27,275,773 (24,512,682)
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 11,316,000 (1,335,119) (21,144,952) (23,366,812)
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... - - 539,341 -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 10,840,296 755,425 (20,694,557) (24,504,980)
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 5,953,441 13,446,356 8,718,923 39,216,218
Transfers between funds .......................... (2,334,954) (16,903,125) (25,081,916) 58,762,770
Redemptions ...................................... (12,034,561) (9,117,586) (5,537,310) (7,729,327)
Annuity benefits ................................. (11,719) (11,204) (2,591) (1,090)
Annual contract maintenance charge (note 2) ...... (39,304) (44,515) (24,163) (31,176)
Contingent deferred sales charges (note 2) ....... (134,345) (111,505) (76,401) (109,502)
Adjustments to maintain reserves ................. (57,710) 3,411 (41,405) (6,833)
-------------- -------------- -------------- --------------
Net equity transactions ...................... (8,659,152) (12,738,168) (22,044,863) 90,101,060
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ 2,181,144 (11,982,743) (42,739,420) 65,596,080
Contract owners' equity beginning of period ...... 97,264,864 109,247,607 77,776,313 12,180,233
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 99,446,008 97,264,864 35,036,893 77,776,313
============== ============== ============== ==============
</TABLE>
16
<PAGE> 16
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
VEWrldHAs MSRESec
-------------------------------- -------------------------------
1998 1997 1998 1997
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 711,661 2,942,339 393,097 6,929,835
Mortality, expense and administration
charges (note 2):
BOA .......................................... (800,231) (1,330,754) (1,314,258) (1,477,443)
BOA Vision ................................... (438,740) (670,086) (1,509,947) (1,377,066)
BOA Enterprise ............................... (892) (1,080) (2,421) (2,322)
--------------- -------------- -------------- --------------
Net investment activity ........................ (528,202) 940,419 (2,433,529) 4,073,004
--------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 110,716,383 180,226,702 109,606,337 87,738,533
Cost of mutual fund shares sold .................. (157,079,801) (178,928,373) (107,603,836) (67,567,070)
--------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ (46,363,418) 1,298,329 2,002,501 20,171,463
Change in unrealized gain (loss) on investments .. (5,019,280) (10,420,493) (34,053,106) (8,041,235)
--------------- -------------- -------------- --------------
Net gain (loss) on investments ................. (51,382,698) (9,122,164) (32,050,605) 12,130,228
--------------- -------------- -------------- --------------
Reinvested capital gains ......................... 17,475,241 3,986,394 3,868,070 22,876,677
--------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... (34,435,659) (4,195,351) (30,616,064) 39,079,909
--------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 6,023,164 16,547,301 22,405,804 63,961,156
Transfers between funds .......................... (25,954,967) (24,931,349) (84,189,451) 26,781,688
Redemptions ...................................... (8,770,856) (11,775,774) (16,396,178) (11,168,996)
Annuity benefits ................................. (8,819) (2,890) (23,453) (1,202)
Annual contract maintenance charge (note 2) ...... (51,034) (76,665) (65,816) (56,589)
Contingent deferred sales charges (note 2) ....... (112,511) (187,910) (213,235) (156,322)
Adjustments to maintain reserves ................. (61,663) (7,728) (13,239) 4,138
--------------- -------------- -------------- --------------
Net equity transactions ...................... (28,936,686) (20,435,015) (78,495,568) 79,363,873
--------------- -------------- -------------- --------------
Net change in contract owners' equity ............ (63,372,345) (24,630,366) (109,111,632) 118,443,782
Contract owners' equity beginning of period ...... 127,190,392 151,820,758 268,677,705 150,233,923
--------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 63,818,047 127,190,392 159,566,073 268,677,705
=============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
WPintEq WPPVenCap
------------------------------- -------------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................. $ 1,248,393 2,335,080 - 2,289
Mortality, expense and administration
charges (note 2):
BOA .......................................... (1,543,369) (1,892,289) (124,501) (135,993)
BOA Vision ................................... (2,099,581) (2,323,574) (121,909) (167,588)
BOA Enterprise ............................... (1,148) (1,546) (383) (252)
-------------- -------------- -------------- --------------
Net investment activity ........................ (2,395,705) (1,882,329) (246,793) (301,544)
-------------- -------------- -------------- --------------
Proceeds from mutual fund shares sold ............ 175,012,080 94,815,826 41,505,314 46,674,220
Cost of mutual fund shares sold .................. (175,381,602) (87,661,494) (41,036,519) (44,520,920)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments ............ (369,522) 7,154,332 468,795 2,153,300
Change in unrealized gain (loss) on investments .. 16,362,407 (34,790,695) 652,131 (396,347)
-------------- -------------- -------------- --------------
Net gain (loss) on investments ................. 15,992,885 (27,636,363) 1,120,926 1,756,953
-------------- -------------- -------------- --------------
Reinvested capital gains ......................... - 16,160,192 - -
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... 13,597,180 (13,358,500) 874,133 1,455,409
-------------- -------------- -------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 24,541,336 69,542,854 2,630,810 6,835,129
Transfers between funds .......................... (77,448,000) (17,704,103) 5,896,486 (463,676)
Redemptions ...................................... (19,392,829) (16,226,024) (1,865,017) (2,561,771)
Annuity benefits ................................. (14,068) (8,123) - -
Annual contract maintenance charge (note 2) ...... (86,940) (95,572) (6,719) (5,950)
Contingent deferred sales charges (note 2) ....... (269,510) (245,953) (22,616) (29,935)
Adjustments to maintain reserves ................. (7,444) 4,927 (184) 975
-------------- -------------- -------------- --------------
Net equity transactions ...................... (72,677,455) 35,268,006 6,632,760 3,774,772
-------------- -------------- -------------- --------------
Net change in contract owners' equity ............ (59,080,275) 21,909,506 7,506,893 5,230,181
Contract owners' equity beginning of period ...... 286,776,025 264,866,519 14,678,793 9,448,612
-------------- -------------- -------------- --------------
Contract owners' equity end of period ............ $ 227,695,750 286,776,025 22,185,686 14,678,793
============== ============== ============== ==============
</TABLE>
(Continued)
17
<PAGE> 17
NATIONWIDE VARIABLE ACCOUNT-II
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
WPSmCoGr
--------------------------------
1998 1997
--------------- --------------
<S> <C> <C>
Investment activity:
Reinvested dividends ............................. $ - -
Mortality, expense and administration
charges (note 2):
BOA .......................................... (2,148,938) (2,040,961)
BOA Vision ................................... (2,437,919) (2,229,554)
BOA Enterprise ............................... (4,146) (3,912)
--------------- --------------
Net investment activity ........................ (4,591,003) (4,274,427)
--------------- --------------
Proceeds from mutual fund shares sold ............ 234,905,719 206,418,883
Cost of mutual fund shares sold .................. (206,336,848) (190,696,238)
--------------- --------------
Realized gain (loss) on investments ............ 28,568,871 15,722,645
Change in unrealized gain (loss) on investments .. (37,572,573) 32,994,104
--------------- --------------
Net gain (loss) on investments ................. (9,003,702) 48,716,749
--------------- --------------
Reinvested capital gains ......................... - -
--------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations ........... (13,594,705) 44,442,322
--------------- --------------
Equity transactions:
Purchase payments received from
contract owners ................................ 35,864,595 78,705,384
Transfers between funds .......................... (60,145,996) 21,336,792
Redemptions ...................................... (24,045,876) (17,829,181)
Annuity benefits ................................. (16,707) (4,658)
Annual contract maintenance charge (note 2) ...... (131,597) (116,486)
Contingent deferred sales charges (note 2) ....... (375,448) (332,255)
Adjustments to maintain reserves ................. (8,986) 12,595
--------------- --------------
Net equity transactions ...................... (48,860,015) 81,772,191
--------------- --------------
Net change in contract owners' equity ............ (62,454,720) 126,214,513
Contract owners' equity beginning of period ...... 383,397,113 257,182,600
--------------- --------------
Contract owners' equity end of period ............ $ 320,942,393 383,397,113
=============== ==============
</TABLE>
See accompanying notes to financial statements.
18
<PAGE> 18
NATIONWIDE VARIABLE ACCOUNT-II
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide Variable Account-II (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
Insurance Company (the Company) on October 7, 1981. The Account has
been registered as a unit investment trust under the Investment Company
Act of 1940.
The Company offers tax qualified and non-tax qualified Individual
Deferred Variable Annuity Contracts, and Individual Modified Single
Premium Deferred Variable Annuity Contracts through the Account. The
primary distribution for the contracts is through the brokerage
community; however, other distributors are utilized.
(b) The Contracts
Only contracts without a 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 expenses.
With certain exceptions, contract owners in either the accumulation or
the payout phase may invest in the following:
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP);
American Century VP - American Century VP Balanced (ACVPBal)
American Century VP - American Century VP Capital Appreciation
(ACVPCapAp)
American Century VP - American Century VP Income & Growth
(ACVPIncGr)
American Century VP - American Century VP International
(ACVPInt)
American Century VP - American Century VP Value (ACVPValue)
Funds of the American Variable Insurance Series (American VI
Series) (available only for contracts issued on or after May 1,
1987 and before September 1, 1989);
American VISeries - Growth Fund (AVISGro)
American VISeries - High-Yield Bond Fund (AVISHiYld)
American VISeries - U.S. Government/AAA-Rated Securities Fund
(AVISGvt)
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)
Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF);
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
Fidelity VIP - Growth Portfolio (FidVIPGr)
Fidelity VIP - High Income Portfolio (FidVIPHI)
Fidelity VIP - Overseas Portfolio (FidVIPOv)
Portfolios of the Fidelity Variable Insurance Products Fund II
(Fidelity VIP-II);
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
Portfolio of the Fidelity Variable Insurance Products Fund III
(Fidelity VIP-III);
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
19
<PAGE> 19
Portfolio of the Morgan Stanley Universal Funds, Inc. (Morgan
Stanley);
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Small Cap Value
Fund (NSATSmCapV) Nationwide SAT - Small Company Fund (NSATSmCo)
Nationwide SAT - Total Return Fund (NSATTotRe)
Portfolios of the Neuberger & Berman Advisers Management Trust
(Neuberger &Berman AMT);
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
Neuberger & Berman AMT - Limited Maturity Bond Portfolio
(NBAMTLMat)
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
Funds of the Oppenheimer Variable Account Funds (Oppenheimer VAF);
Oppenheimer VAF - Bond Fund (OppBdFd)
Oppenheimer VAF - Global Securities Fund (OppGlSec)
Oppenheimer VAF - Growth Fund (OppGro)
Oppenheimer VAF - Multiple Strategies Fund (OppMult)
Strong Opportunity Fund II, Inc. (StOpp2)
Funds of the Strong Variable Insurance Funds, Inc. (Strong VIF);
Strong VIF - Strong Discovery Fund II (StDisc2)
Strong VIF - Strong International Stock Fund II (StIntStk2)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT);
Van Eck WIT - Worldwide Bond Fund (VEWrldBd)
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
Portfolio of the Van Kampen American Capital Life Investment
Trust (Van Kampen American Capital LIT);
Van Kampen American Capital LIT - Morgan Stanley Real Estate
Securities Portfolio (MSRESec)
Portfolios of the Warburg Pincus Trust;
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
Warburg Pincus Trust - Small Company Growth Portfolio (WPSmCoGr)
At December 31, 1998, 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.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
20
<PAGE> 20
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1998. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company which is taxed as a life insurance company
under the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments received
from the contract owners. However, if any part of the contract value of
such contracts is surrendered the Company will, with certain exceptions,
deduct from a contract owner's contract value a contingent deferred sales
charge. For contracts issued prior to December 15, 1988, 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
December 15, 1988, 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) for The
BEST OF AMERICA(R) contracts, an annual contract maintenance charge of up
to $30, dependent on contract type and issue date, which is satisfied by
surrendering units; and (b) for The BEST OF AMERICA(R) contracts issued
prior to December 15, 1988, 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 The BEST OF AMERICA(R) contracts
issued on or after December 15, 1988, 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; for The BEST OF AMERICA(R) America's Vision AnnuitySM
contracts, 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 0.15%, respectively; and for
The BEST OF AMERICA(R) Nationwide Insurance Enterprise Annuity contracts, a
mortality risk charge assessed through the daily unit value calculation
equal to an annual rate of 0.80%.
(3) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
21
<PAGE> 21
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1998,
for each series, in both the accumulation and payout phases.
<TABLE>
<CAPTION>
ANNUAL
Contract owners' equity represented by: UNITS UNIT VALUE RETURN(b)
--------- ----------- ---------
<S> <C> <C> <C> <C>
Contracts in accumulation phase:
The BEST OF AMERICA(R) contracts:
American Century VP -
American Century VP Balanced:
Tax qualified 3,311,879 $ 18.677491 $ 61,857,590 14%
Non-tax qualified 2,684,128 18.677491 50,132,777 14%
American Century VP -
American Century VP Capital Appreciation:
Tax qualified 5,691,252 21.832994 124,257,071 (3)%
Non-tax qualified 3,199,790 21.832994 69,860,996 (3)%
American Century VP -
American Century VP Income & Growth:
Tax qualified 851,923 10.825822 9,222,767 8%(a)
Non-tax qualified 1,195,005 10.825822 12,936,911 8%(a)
American Century VP -
American Century VP International:
Tax qualified 4,804,748 16.121219 77,458,395 17%
Non-tax qualified 3,904,415 16.121219 62,943,929 17%
American Century VP -
American Century VP Value:
Tax qualified 1,289,505 13.057214 16,837,343 3%
Non-tax qualified 1,042,979 13.057214 13,618,400 3%
American VI Series - Growth Fund:
Tax qualified 371,663 42.056137 15,630,710 34%
Non-tax qualified 368,482 42.056137 15,496,929 34%
American VI Series -
High-Yield Bond Fund:
Tax qualified 62,435 25.475118 1,590,539 (1)%
Non-tax qualified 38,541 25.475118 981,837 (1)%
American VI Series - U.S. Government/
AAA-Rated Securities Fund:
Tax qualified 129,959 21.026607 2,732,597 7%
Non-tax qualified 81,141 21.026607 1,706,120 7%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified 3,208,339 27.580026 88,486,073 28%
Non-tax qualified 1,734,954 27.580026 47,850,076 28%
Dreyfus Stock Index Fund:
Tax qualified 16,760,500 27.352140 458,435,542 27%
Non-tax qualified 11,496,653 27.352140 314,458,062 27%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified 3,218,773 13.099410 42,164,027 29%
Non-tax qualified 3,158,512 13.099410 41,374,644 29%
Dreyfus VIF -
Growth and Income Portfolio:
Tax qualified 1,530,286 12.641927 19,345,764 10%
Non-tax qualified 1,010,647 12.641927 12,776,526 10%
</TABLE>
22
<PAGE> 22
<TABLE>
<S> <C> <C> <C> <C>
Fidelity VIP - Equity-Income Portfolio:
Tax qualified 23,119,147 39.068090 903,220,916 10%
Non-tax qualified 17,190,931 39.068090 671,616,839 10%
Fidelity VIP - Growth Portfolio:
Tax qualified 17,532,628 64.597153 1,132,557,853 38%
Non-tax qualified 11,328,287 64.597153 731,775,089 38%
Fidelity VIP - High Income Portfolio:
Tax qualified 6,464,105 26.926873 174,058,134 (6)%
Non-tax qualified 6,457,997 26.926873 173,893,665 (6)%
Fidelity VIP - Overseas Portfolio:
Tax qualified 11,283,013 20.307878 229,134,051 11%
Non-tax qualified 9,318,467 20.307878 189,238,291 11%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified 18,785,187 27.616728 518,785,400 14%
Non-tax qualified 10,977,395 27.616728 303,159,732 14%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified 15,609,123 20.836167 325,234,294 28%
Non-tax qualified 11,340,649 20.836167 236,295,656 28%
Fidelity VIP-III -
Growth Opportunities Portfolio:
Tax qualified 2,942,745 13.446025 39,568,223 23%
Non-tax qualified 2,183,868 13.446025 29,364,344 23%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax qualified 417,556 6.934889 2,895,705 (29)%
Non-tax qualified 283,779 6.934889 1,967,976 (29)%
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified 6,725,123 30.616503 205,899,749 28%
Non-tax qualified 5,812,770 30.616503 177,966,690 28%
Nationwide SAT -
Government Bond Fund:
Tax qualified 4,202,514 35.250995 148,142,800 7%
Non-tax qualified 3,353,428 35.157882 117,899,426 7%
Nationwide SAT - Money Market Fund:
Tax qualified 10,938,889 23.891623 261,347,812 4%
Non-tax qualified 12,513,821 23.891623 298,975,494 4%
Nationwide SAT - Small Cap Value Fund:
Tax qualified 405,997 8.528787 3,462,662 (15)%(a)
Non-tax qualified 600,393 8.528787 5,120,624 (15)%(a)
Nationwide SAT - Small Company Fund:
Tax qualified 4,961,782 15.971964 79,249,403 0%
Non-tax qualified 3,151,728 15.971964 50,339,286 0%
Nationwide SAT - Total Return Fund:
Tax qualified 4,459,090 93.358149 416,292,389 17%
Non-tax qualified 3,296,114 90.954119 299,795,145 17%
Neuberger & Berman AMT Growth Portfolio:
Tax qualified 4,739,527 43.203987 204,766,463 14%
Non-tax qualified 3,535,046 43.203987 152,728,081 14%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax qualified 928,355 9.282422 8,617,383 (7)%(a)
Non-tax qualified 782,161 9.282422 7,260,348 (7)%(a)
</TABLE>
23
(Continued)
<PAGE> 23
<TABLE>
<S> <C> <C> <C> <C>
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio:
Tax qualified 3,027,892 18.227259 55,190,172 3%
Non-tax qualified 2,828,271 18.227259 51,551,628 3%
Neuberger & Berman AMT
Partners Portfolio:
Tax qualified 7,610,496 22.992724 174,986,034 3%
Non-tax qualified 5,337,515 22.992724 122,724,009 3%
Oppenheimer VAF - Bond Fund:
Tax qualified 4,366,241 19.729274 86,142,765 5%
Non-tax qualified 3,654,118 19.729274 72,093,095 5%
Oppenheimer VAF -
Global Securities Fund:
Tax qualified 9,503,851 18.054116 171,583,628 13%
Non-tax qualified 5,697,473 18.054116 102,862,838 13%
Oppenheimer VAF - Growth Fund:
Tax qualified 1,553,053 12.762568 19,820,945 22%
Non-tax qualified 1,122,440 12.762568 14,325,217 22%
Oppenheimer VAF -
Multiple Strategies Fund:
Tax qualified 4,734,705 21.978211 104,060,346 5%
Non-tax qualified 3,383,989 21.978211 74,374,024 5%
Strong Opportunity Fund II, Inc.:
Tax qualified 10,757,453 29.241637 314,565,536 12%
Non-tax qualified 6,829,157 29.241637 199,695,730 12%
Strong VIF - Strong Discovery Fund II:
Tax qualified 3,330,945 18.773240 62,532,630 6%
Non-tax qualified 2,561,304 18.773240 48,083,975 6%
Strong VIF -
Strong International Stock Fund II:
Tax qualified 1,115,317 8.937224 9,967,838 (6)%
Non-tax qualified 824,150 8.937224 7,365,613 (6)%
Van Eck WIT - Worldwide Bond Fund:
Tax qualified 1,824,058 16.424717 29,959,636 11%
Non-tax qualified 1,736,777 16.424717 28,526,071 11%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified 1,862,823 5.716175 10,648,222 (35)%
Non-tax qualified 1,394,148 5.716175 7,969,194 (35)%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax qualified 1,976,563 10.743036 21,234,287 (32)%
Non-tax qualified 1,953,375 10.743036 20,985,178 (32)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio:
Tax qualified 2,429,141 15.615675 37,932,676 (13)%
Non-tax qualified 2,423,893 15.615675 37,850,725 (13)%
Warburg Pincus Trust -
International Equity Portfolio:
Tax qualified 4,923,915 11.608185 57,157,716 4%
Non-tax qualified 3,738,519 11.608185 43,397,420 4%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified 531,483 11.952364 6,352,478 5%
Non-tax qualified 448,154 11.952364 5,356,500 5%
</TABLE>
24
<PAGE> 24
<TABLE>
<S> <C> <C> <C> <C>
Warburg Pincus Trust -
Small Company Growth Portfolio:
Tax qualified 5,715,162 15.294249 87,409,111 (4)%
Non-tax qualified 4,595,026 15.294249 70,277,472 (4)%
The BEST OF AMERICA(R) Nationwide Insurance
Enterprise Annuity contracts:
American Century VP -
American Century VP Balanced:
Tax qualified 10,841 15.003357 162,651 15%
Non-tax qualified 12,689 15.003357 190,378 15%
American Century VP -
American Century VP Capital Appreciation:
Tax qualified 6,953 8.734621 60,732 (3)%
Non-tax qualified 11,266 8.734621 98,404 (3)%
American Century VP -
American Century VP Income & Growth:
Tax qualified 109 10.862433 1,184 9%(a)
Non-tax qualified 2,432 10.862433 26,417 9%(a)
American Century VP -
American Century VP International:
Tax qualified 4,492 16.294485 73,195 18%
Non-tax qualified 11,501 16.294485 187,403 18%
American Century VP -
American Century VP Value:
Tax qualified 997 13.191239 13,152 4%
Non-tax qualified 10,800 13.191239 142,465 4%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified 12,450 20.314721 252,918 28%
Non-tax qualified 8,800 20.314721 178,770 28%
Dreyfus Stock Index Fund:
Tax qualified 73,693 21.564450 1,589,149 27%
Non-tax qualified 57,396 21.564450 1,237,713 27%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified 8,555 13.196658 112,897 29%
Non-tax qualified 11,092 13.196658 146,377 29%
Dreyfus VIF Growth and Income Portfolio:
Tax qualified 19,404 12.771671 247,822 11%
Non-tax qualified 14,677 12.771671 187,450 11%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified 63,894 17.117556 1,093,709 11%
Non-tax qualified 58,459 17.117556 1,000,675 11%
Fidelity VIP - Growth Portfolio:
Tax qualified 67,118 18.598337 1,248,283 38%
Non-tax qualified 72,186 18.598337 1,342,540 38%
Fidelity VIP - High Income Portfolio:
Tax qualified 20,159 12.725625 256,536 (5)%
Non-tax qualified 29,302 12.725625 372,886 (5)%
Fidelity VIP - Overseas Portfolio:
Tax qualified 1,306 14.574887 19,035 12%
Non-tax qualified 3,352 14.574887 48,855 12%
</TABLE>
25
(Continued)
<PAGE> 25
<TABLE>
<S> <C> <C> <C> <C>
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified 9,570 16.357953 156,546 14%
Non-tax qualified 13,208 16.357953 216,056 14%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified 25,061 19.503885 488,787 29%
Non-tax qualified 21,809 19.503885 425,360 29%
Fidelity VIP-III -
Growth Opportunities Portfolio:
Tax qualified 5,578 13.545866 75,559 24%
Non-tax qualified 9,045 13.545866 122,522 24%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax qualified 50 6.986517 349 (29)%
Non-tax qualified 126 6.986517 880 (29)%
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified 89,909 23.165130 2,082,754 29%
Non-tax qualified 83,268 23.165130 1,928,914 29%
Nationwide SAT -
Government Bond Fund:
Tax qualified 38,202 12.382040 473,019 8%
Non-tax qualified 35,508 12.382040 439,661 8%
Nationwide SAT - Money Market Fund:
Tax qualified 47,932 11.457526 549,182 4%
Non-tax qualified 57,997 11.457526 664,502 4%
Nationwide SAT - Small Cap Value Fund:
Tax qualified 672 8.557673 5,751 (14)%(a)
Non-tax qualified 1,602 8.557673 13,709 (14)%(a)
Nationwide SAT - Small Company Fund:
Tax qualified 21,106 16.217601 342,289 0%
Non-tax qualified 32,785 16.217601 531,694 0%
Nationwide SAT - Total Return Fund:
Tax qualified 175,958 19.086420 3,358,408 17%
Non-tax qualified 165,625 19.086420 3,161,188 17%
Neuberger & Berman AMT -
Growth Portfolio:
Tax qualified 8,454 15.832511 133,848 15%
Non-tax qualified 13,157 15.832511 208,308 15%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax qualified 1,169 9.313837 10,888 (7)%(a)
Non-tax qualified 10,424 9.313837 97,087 (7)%(a)
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio:
Tax qualified 2,556 11.550378 29,523 4%
Non-tax qualified 6,843 11.550378 79,039 4%
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified 27,924 18.285622 510,608 3%
Non-tax qualified 25,730 18.285622 470,489 3%
Oppenheimer VAF - Bond Fund:
Tax qualified 17,438 12.279322 214,127 6%
Non-tax qualified 19,590 12.279322 240,552 6%
</TABLE>
26
<PAGE> 26
<TABLE>
<S> <C> <C> <C> <C>
Oppenheimer VAF -
Global Securities Fund:
Tax qualified 7,037 16.204214 114,029 13%
Non-tax qualified 5,896 16.204214 95,540 13%
Oppenheimer VAF - Growth Fund:
Tax qualified 7,443 12.857366 95,697 23%
Non-tax qualified 2,581 12.857366 33,185 23%
Oppenheimer VAF -
Multiple Strategies Fund:
Tax qualified 14,316 14.521876 207,895 6%
Non-tax qualified 16,138 14.521876 234,354 6%
Strong Opportunity Fund II, Inc.:
Tax qualified 19,114 17.394278 332,474 13%
Non-tax qualified 19,791 17.394278 344,250 13%
Strong VIF - Strong Discovery Fund II:
Tax qualified 756 12.307345 9,304 6%
Non-tax qualified 3,184 12.307345 39,187 6%
Strong VIF -
Strong International Stock Fund II:
Tax qualified 3,271 9.029694 29,536 (6)%
Non-tax qualified 704 9.029694 6,357 (6)%
Van Eck WIT - Worldwide Bond Fund:
Tax qualified 1,169 11.685439 13,660 12%
Non-tax qualified 1,060 11.685439 12,387 12%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified 6,729 5.774938 38,860 (35)%
Non-tax qualified 4,464 5.774938 25,779 (35)%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax qualified 1,662 8.651833 14,379 (32)%
Non-tax qualified 9,030 8.651833 78,126 (32)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio:
Tax qualified 5,144 15.607765 80,286 (12)%
Non-tax qualified 11,844 15.607765 184,858 (12)%
Warburg Pincus Trust -
International Equity Portfolio:
Tax qualified 3,803 11.456500 43,569 5%
Non-tax qualified 3,149 11.456500 36,077 5%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified 411 12.075066 4,963 6%
Non-tax qualified 3,383 12.075066 40,850 6%
Warburg Pincus Trust -
Small Company Growth Portfolio:
Tax qualified 11,973 13.935312 166,847 (4)%
Non-tax qualified 24,274 13.935312 338,266 (4)%
The BEST OF AMERICA(R) America's Vision
Annuity(SM) contracts:
American Century VP -
American Century VP Balanced:
Tax qualified 2,324,877 17.180551 39,942,668 14%
Non-tax qualified 3,259,024 17.180551 55,991,828 14%
</TABLE>
27
(Continued)
<PAGE> 27
<TABLE>
<S> <C> <C> <C> <C>
American Century VP -
American Century VP Capital Appreciation:
Tax qualified 2,096,618 11.105046 23,283,039 (4)%
Non-tax qualified 2,997,998 11.105046 33,292,906 (4)%
American Century VP -
American Century VP Income & Growth:
Tax qualified 660,409 10.818483 7,144,624 8%(a)
Non-tax qualified 867,235 10.818483 9,382,167 8%(a)
American Century VP -
American Century VP International:
Tax qualified 3,867,971 16.049229 62,077,952 17%
Non-tax qualified 5,549,022 16.049229 89,057,525 17%
American Century VP -
American Century VP Value:
Tax qualified 1,368,433 13.030493 17,831,357 3%
Non-tax qualified 1,555,893 13.030493 20,274,053 3%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified 2,233,140 25.996040 58,052,797 28%
Non-tax qualified 2,713,732 25.996040 70,546,286 28%
Dreyfus Stock Index Fund:
Tax qualified 14,729,959 27.128900 399,607,585 26%
Non-tax qualified 20,136,222 27.128900 546,273,553 26%
Dreyfus VIF -
Capital Appreciation Portfolio:
Tax qualified 2,552,942 13.079978 33,392,425 28%
Non-tax qualified 3,823,437 13.079978 50,010,472 28%
Dreyfus VIF -
Growth and Income Portfolio:
Tax qualified 1,631,617 12.616052 20,584,565 10%
Non-tax qualified 2,166,223 12.616052 27,329,182 10%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified 21,218,396 22.453988 476,437,609 10%
Non-tax qualified 29,521,717 22.453988 662,880,279 10%
Fidelity VIP - Growth Portfolio:
Tax qualified 14,762,454 25.487577 376,259,183 38%
Non-tax qualified 20,736,972 25.487577 528,535,171 38%
Fidelity VIP - High Income Portfolio:
Tax qualified 10,344,737 14.405141 149,017,395 (6)%
Non-tax qualified 16,093,648 14.405141 231,831,269 (6)%
Fidelity VIP - Overseas Portfolio:
Tax qualified 4,021,152 15.553060 62,541,218 11%
Non-tax qualified 6,251,077 15.553060 97,223,376 11%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified 8,121,780 16.832250 136,707,831 13%
Non-tax qualified 10,607,282 16.832250 178,544,422 13%
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified 13,726,215 20.762500 284,990,539 28%
Non-tax qualified 18,136,001 20.762500 376,548,721 28%
Fidelity VIP-III -
Growth Opportunities Portfolio:
Tax qualified 2,717,672 13.426082 36,487,687 23%
Non-tax qualified 3,950,006 13.426082 53,033,104 23%
</TABLE>
28
<PAGE> 28
<TABLE>
<S> <C> <C> <C> <C>
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax qualified 168,941 6.924574 1,169,844 (29)%
Non-tax qualified 389,490 6.924574 2,697,052 (29)%
Nationwide SAT -
Capital Appreciation Fund:
Tax qualified 4,940,669 27.075632 133,771,736 28%
Non-tax qualified 6,517,824 27.075632 176,474,204 28%
Nationwide SAT -
Government Bond Fund:
Tax qualified 5,568,798 13.264325 73,866,347 7%
Non-tax qualified 7,612,211 13.264325 100,970,841 7%
Nationwide SAT - Money Market Fund:
Tax qualified 14,205,644 11.927856 169,442,876 4%
Non-tax qualified 20,133,168 11.927856 240,145,529 4%
Nationwide SAT - Small Cap Value Fund:
Tax qualified 192,359 8.523007 1,639,477 (15)%(a)
Non-tax qualified 397,547 8.523007 3,388,296 (15)%(a)
Nationwide SAT - Small Company Fund:
Tax qualified 4,237,223 15.920417 67,458,357 0%
Non-tax qualified 5,235,907 15.920417 83,357,823 0%
Nationwide SAT - Total Return Fund:
Tax qualified 10,125,826 22.849095 231,365,960 16%
Non-tax qualified 12,095,557 22.849095 276,372,531 16%
Neuberger & Berman AMT -
Growth Portfolio:
Tax qualified 2,485,942 19.155589 47,619,683 14%
Non-tax qualified 4,103,790 19.155589 78,610,515 14%
Neuberger & Berman AMT -
Guardian Portfolio:
Tax qualified 1,202,225 9.276124 11,151,988 (7)%(a)
Non-tax qualified 1,155,905 9.276124 10,722,318 (7)%(a)
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio:
Tax qualified 2,286,137 12.016412 27,471,164 3%
Non-tax qualified 3,686,363 12.016412 44,296,857 3%
Neuberger & Berman AMT -
Partners Portfolio:
Tax qualified 6,708,322 22.890094 153,554,121 3%
Non-tax qualified 9,288,228 22.890094 212,608,412 3%
Oppenheimer VAF - Bond Fund:
Tax qualified 5,838,014 13.161293 76,835,813 5%
Non-tax qualified 7,806,181 13.161293 102,739,435 5%
Oppenheimer VAF -
Global Securities Fund:
Tax qualified 7,043,429 16.529444 116,423,965 13%
Non-tax qualified 9,123,582 16.529444 150,807,738 13%
Oppenheimer VAF - Growth Fund:
Tax qualified 959,141 12.743636 12,222,944 22%
Non-tax qualified 1,331,146 12.743636 16,963,640 22%
Oppenheimer VAF -
Multiple Strategies Fund:
Tax qualified 4,320,161 16.281980 70,340,775 5%
Non-tax qualified 5,100,007 16.281980 83,038,212 5%
</TABLE>
29
(Continued)
<PAGE> 29
<TABLE>
<S> <C> <C> <C> <C>
Strong Opportunity Fund II, Inc.:
Tax qualified 5,406,908 21.434632 115,895,083 12%
Non-tax qualified 7,229,174 21.434632 154,954,684 12%
Strong VIF - Strong Discovery Fund II:
Tax qualified 1,694,881 15.507147 26,282,769 6%
Non-tax qualified 2,442,361 15.507147 37,874,051 6%
Strong VIF -
Strong International Stock Fund II:
Tax qualified 905,955 8.908351 8,070,565 (6)%
Non-tax qualified 1,324,589 8.908351 11,799,904 (6)%
Van Eck WIT - Worldwide Bond Fund:
Tax qualified 1,351,072 13.016609 17,586,376 11%
Non-tax qualified 1,789,762 13.016609 23,296,632 11%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified 1,171,528 5.704452 6,682,925 (35)%
Non-tax qualified 1,694,210 5.704452 9,664,540 (35)%
Van Eck WIT -
Worldwide Hard Assets Fund:
Tax qualified 870,452 8.796887 7,657,268 (32)%
Non-tax qualified 1,571,084 8.796887 13,820,648 (32)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio:
Tax qualified 3,044,098 15.560452 47,367,541 (13)%
Non-tax qualified 2,317,641 15.560452 36,063,542 (13)%
Warburg Pincus Trust -
International Equity Portfolio:
Tax qualified 4,110,213 11.567145 47,543,430 4%
Non-tax qualified 6,861,319 11.567145 79,365,872 4%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified 416,468 11.927880 4,967,580 5%
Non-tax qualified 458,029 11.927880 5,463,315 5%
Warburg Pincus Trust -
Small Company Growth Portfolio:
Tax qualified 4,139,966 15.240137 63,093,649 (4)%
Non-tax qualified 6,531,391 15.240137 99,539,294 (4)%
=========== ===========
Reserves for annuity contracts in
payout phase:
Tax qualified 3,839,879
Non-tax qualified 9,491,453
-----------
$ 20,672,674,408
================
</TABLE>
(a) This investment option was not being utilized for the entire period.
Accordingly, the annual return was computed for such period as the
investment option was utilized.
(b) The annual return does not include contract charges satisfied by
surrendering units.
30
<PAGE> 30
Independent Auditors' Report
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of Nationwide Variable Account-II:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account-II as of December 31,
1998, and the related statements of operations and changes in contract owners'
equity for each of the years in the two year period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nationwide Variable
Account-II as of December 31, 1998, and the results of its operations and its
changes in contract owners' equity for each of the years in the two year period
then ended in conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 5, 1999
31
<PAGE> 31
<TABLE>
<S> <C>
NATIONWIDE LIFE INSURANCE COMPANY Bulk Rate
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220 U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
</TABLE>
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
