<PAGE> 1
As filed with the Securities and Exchange Commission.
'33 Act Registration No. 33-33425
'40 Act Registration No. 811-5999
- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 21 [X]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 22 [X]
NACO VARIABLE ACCOUNT
(Exact Name of Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
DENNIS W. CLICK, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Name and Address of Agent for Service)
This Post-Effective Amendment amends the Registration Statement in respect of
the Prospectus and the Statement of Additional Information.
It is proposed that this filing will become effective (check appropriate space)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000, pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
================================================================================
<PAGE> 2
NACO VARIABLE ACCOUNT
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM CAPTION
<S> <C>
PART A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page.................................................................................Cover Page
Item 2. Definitions.................................................................Glossary of Special Terms
Item 3. Synopsis or Highlights......................................................Synopsis of the Contracts
Item 4. Condensed Financial Information.......................................Condensed Financial Information
Item 5. General Description of Registrant, Depositor, and Portfolio
Companies ..........................Nationwide Life Insurance Company; Investing in the Contract
Item 6. Deductions and Expenses...............................................Standard Charges and Deductions
Item 7. General Description of Variable
Annuity Contracts.......................................Contract Ownership; Operation of the Contract
Item 8. Annuity Period...............................................................Annuitizing the Contract
Item 9. Death Benefit and Distributions........................................................Death Benefits
Item 10. Purchases and Contract Value................................................Operation of the Contract
Item 11. Redemptions....................................................................Surrender (Redemption)
Item 12. Taxes ....................................................................Federal Tax Considerations
Item 13. Legal Proceedings...................................................................Legal Proceedings
Item 14. Table of Contents of the Statement of Additional
Information.........................Table of Contents of the Statement of Additional Information
PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page.................................................................................Cover Page
Item 16. Table of Contents...................................................................Table of Contents
Item 17. General Information and History.......................................General Information and History
Item 18. Services.....................................................................................Services
Item 19. Purchase of Securities Being Offered.............................Purchase of Securities Being Offered
Item 20. Underwriters.............................................................................Underwriters
Item 21. Calculation of Performance Information.....................................Calculation of Performance
Item 22. Annuity Payments.....................................................................Annuity Payments
Item 23. Financial Statements.............................................................Financial Statements
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits.............................................................Item 24
Item 25. Directors and Officers of the Depositor.......................................................Item 25
Item 26. Persons Controlled by or Under Common Control with
the Depositor or Registrant..............................................................Item 26
Item 27. Number of Contract Owners.....................................................................Item 27
Item 28. Indemnification...............................................................................Item 28
Item 29. Principal Underwriter.........................................................................Item 29
Item 30. Location of Accounts and Records..............................................................Item 30
Item 31. Management Services...........................................................................Item 31
Item 32. Undertakings..................................................................................Item 32
</TABLE>
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY
Deferred Variable Annuity Contracts
Issued by Nationwide Life Insurance Company through its NACo Variable Account
The date of this prospectus is May 1, 2000.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Variable annuities are complex investment products with unique benefits and
advantages that may be particularly useful to many investors in meeting
long-term savings and retirement needs. There are, however, costs and charges
associated with some of these unique benefits - costs and charges that do not
exist or are not present with other investment products. With help from
financial consultants or advisers, investors are encouraged to compare and
contrast the costs and benefits of the variable annuity described in this
prospectus with those of other investment products, including other variable
annuity or variable life insurance products offered by Nationwide Life Insurance
Company and its affiliates. This process will aid in determining whether the
purchase of the contract described in this prospectus is consistent with an
individual's goals, risk tolerance, time horizon, marital status, tax situation,
and other personal characteristics and needs.
THIS PROSPECTUS CONTAINS BASIC INFORMATION YOU SHOULD KNOW ABOUT THE CONTRACTS
BEFORE INVESTING. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE
REFERENCE.
- --------------------------------------------------------------------------------
The following underlying mutual funds are available under the contracts:
- American Century: Income & Growth - Investor Class
- American Century: Ultra - Investor Class
- American Century: Value - Investor Class
- The Brown Capital Management - Small Company Fund
- Dreyfus Appreciation Fund, Inc.
- Dreyfus Premier Midcap Stock Fund - Class A \
- The Dreyfus Premier Third Century Fund, Inc. - Class Z
- Federated Bond Fund - Class F
- Federated U.S. Government Securities Fund: 2-5 Years
- Institutional Shares
- Fidelity Advisor Growth Opportunities Fund - Class A
- Fidelity Advisor High Yield Fund - Class T
- Fidelity Equity - Income Fund -
- Fidelity OTC Portfolio
- Fidelity Puritan Fund
- INVESCO Dynamics Fund
- INVESCO Total Return Fund
- Life Designs Series
- The Aggressive Portfolio
- The Moderately Aggressive Portfolio
- The Moderate
- Portfolio
- The Moderately Conservative Portfolio
- The Conservative Portfolio
- MAS Funds Fixed Income Portfolio
- MFS(R) High Income Fund - Class A
- Morgan
- Stanley Institutional Fund, Inc.
- Equity Growth Portfolio - Class B
- Nationwide(R) Fund - Class D
- Nationwide(R) Money Market Fund - Prime Shares
- Nationwide S&P 500(R) Index Fund
- Institutional Service Class (formerly, Class Y)
- Nationwide Separate Account Trust
- Nationwide Income Fund
- Nationwide Separate Account Trust
- Nationwide Small Company Fund (subadvisers: The Dreyfus Corporation,
Neuberger Berman, L.P., Lazard Asset Management, Strong Capital Management,
Inc. and Credit Suisse Asset Management, LLC)
- Neuberger Berman Guardian Fund, Inc.
- Neuberger Berman Partners Trust
- Oppenheimer Global Fund - Class A
1
<PAGE> 4
- Prestige Balanced Fund - Institutional Service Class (formerly, Class Y)
- Prestige International Fund - Institutional Service Class (formerly, Class
Y)
- Prestige Large Cap Growth Fund - Institutional Service Class (formerly,
Class Y)
- Prestige Large Cap Value Fund - Institutional Service Class (formerly,
Class Y)
- Prestige Small Cap Fund - Institutional Service Class (formerly, Class Y)
- Putnam International Growth Fund - Class A
- Putnam Investors Fund - Class A
- Putnam Voyager Fund - Class A
- SEI Index Funds - S&P 500 Index Portfolio
- Seligman Growth Fund, Inc. - Class A
- Short-Term Investments Trust - Treasury Portfolio - Institutional Class
- T. Rowe Price International Stock Fund(R)
- Templeton Foreign Fund - Class A
NOT AVAILABLE FOR NEW CONTRACTS ISSUED ON OR AFTER MAY 1, 2000:
- American Century: International Discovery - Investor Class
- Warburg Pincus Emerging Growth Fund - Common Class
NOT AVAILABLE FOR NEW PLANS ESTABLISHED ON OR AFTER JUNE 30, 1998
- Fidelity Contrafund(R)
NOT AVAILABLE FOR NEW CONTRACTS ISSUED ON OR AFTER OCTOBER 1, 1997
- Fidelity Magellan(R) FunD
NOT AVAILABLE FOR NEW CONTRACTS ISSUED ON OR AFTER MAY 1, 1997
- American Century: Growth - Investor Class
- Massachusetts Investors Growth Stock Fund - Class A
NOT AVAILABLE FOR ALL CONTRACTS ISSUED ON OR AFTER JULY 1, 1994
- The Bond Fund of America(SM), Inc.
- The Investment Company of America(R), Inc.
NOT AVAILABLE FOR NEW CONTRACTS ISSUED ON OR AFTER OCTOBER 1, 1993
- Evergreen Income and Growth Fund - Class Y
- MFS(R) Growth Opportunities Fund - Class A
- Nationwide(R) Growth Fund - Class D
NOT AVAILABLE FOR OWNERS WHOSE PREDECESSOR NATIONWIDE DC VARIABLE ACCOUNT
CONTRACT WAS ISSUED ON OR AFTER JANUARY 1, 1987
- Fidelity Capital & Income Fund
The Statement of Additional Information ( dated May 1, 2000) which contains
additional information about the contracts and the NACo Variable Account has
been filed with the U.S. Securities and Exchange Commission ("SEC") and is
incorporated herein by reference. The table of contents for the Statement of
Additional Information is on page 34.
For general information or to obtain FREE copies of the:
- Statement of Additional Information;
- prospectus, annual report or semi-annual report for any underlying mutual
fund; and
- required Nationwide forms,
call: 1-800-545-4730
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE INSURANCE COMPANY
P.O. BOX 16766
COLUMBUS, OHIO 43216
The Statement of Additional Information and other material incorporated by
reference can be found on the SEC website at:
WWW.SEC.GOV
THIS ANNUITY IS NOT:
- - A BANK DEPOSIT - FEDERALLY INSURED
- - ENDORSED BY A BANK - AVAILABLE IN
OR GOVERNMENT AGENCY EVERY STATE
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
2
<PAGE> 5
Guarantees under the contracts are the sole responsibility of Nationwide.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC, NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
3
<PAGE> 6
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the contract
value allocated to the variable account before the annuitization date.
ALLOCATED CONTRACT- Contract under which Nationwide maintains individual
accounts on behalf of each participant.
ANNUITIZATION DATE- The date on which annuity payments begin.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
begin. This date may be changed by the contract owner with Nationwide's consent.
ANNUITY UNIT- An accounting unit of measure used to calculate the variable
annuity payments.
CONTRACT VALUE- The total value of all accumulation units in a contract.
CONTRACT YEAR- Each year the contract is in force beginning with the date the
contract is issued.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
MEMBER COUNTY- A county which is a member of the National Association of
Counties ("NACo") or an entity approved by the President of NACo for
participation under the NACo program.
NACO PROGRAM- The deferred compensation program established and administered
pursuant to Section 457 of the Internal Revenue Code for the benefit of member
counties.
NATIONWIDE- Nationwide Life Insurance Company.
PARTICIPANT ACCOUNT YEAR- For each participant, the participant account year is
each one-year period starting with either the date accumulation units were first
credited to the participant's account, or an anniversary of that date.
SUB-ACCOUNTS- Divisions of the variable account which accumulation units and
annuity units are separately maintained - each sub-account corresponds to a
single underlying mutual fund.
UNALLOCATED CONTRACT- A contract where Nationwide maintains one single plan
contract, as opposed to maintaining individual participant accounts.
VALUATION PERIOD- Each day the New York Stock Exchange is open.
VARIABLE ACCOUNT- NACo Variable Account, a separate account of Nationwide that
contains variable account allocations. The variable account is divided into
sub-accounts, each of which invests in shares of a separate underlying mutual
fund.
4
<PAGE> 7
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS.........................4
SUMMARY OF STANDARD CONTRACT
EXPENSES.....................................6
UNDERLYING MUTUAL FUND
ANNUAL EXPENSES..............................7
EXAMPLE..........................................10
CONDENSED FINANCIAL INFORMATION..................13
FINANCIAL STATEMENTS.............................13
SYNOPSIS OF THE CONTRACTS........................13
NATIONWIDE LIFE INSURANCE COMPANY................14
NATIONWIDE INVESTMENT SERVICES
CORPORATION.................................14
INVESTING IN THE CONTRACT........................14
The Variable Account and Underlying
Mutual Funds
CHARGES AND DEDUCTIONS...........................15
Participant Account Maintenance Charge
Variable Account Annual Expense Fee
Contingent Deferred Sales Charge
Premium Taxes
CONTRACT RIGHTS..................................18
OPERATION OF THE CONTRACT........................18
Minimum Purchase Payments
Application of Purchase Payments
Allocation of Purchase Payments
Determining Variable Account Value -
Valuing an Accumulation Unit
Determining the Participant Account Value
Exchange Privilege
Experience Credits
MODIFICATION OF THE CONTRACT.....................21
CONTRACT SUSPENSION AND TERMINATION..............21
REDEMPTION OF PARTICIPANT ACCOUNTS...............21
RETIREMENT PERIOD................................22
Additional Purchase Payment Before
Beginning Retirement Income Payments
Retirement Income Payments
Election of Retirement Income Form and Date
Retirement Income Forms
Determination of Life Income Payments
Alternate Assumed Investment Rate
DEATH OF PARTICIPANT.............................25
Participant Death Before Retirement
Death of Retired Participant
FEDERAL TAX CONSIDERATIONS.......................26
Contracts Issued under the New York
Model Plan
STATEMENTS AND REPORTS...........................27
LEGAL PROCEEDINGS................................27
ADVERTISING AND SUB-ACCOUNT
PERFORMANCE SUMMARY.........................28
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL
INFORMATION.................................34
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL
FUNDS.......................................35
APPENDIX B: CONDENSED FINANCIAL
INFORMATION.................................45
5
<PAGE> 8
SUMMARY OF CONTRACT EXPENSES
All charges are subject to negotiation therefore the expenses described below
vary from contract to contract. Please refer to the appropriate prospectus
provision for more details.
PARTICIPANT TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of the daily net
assets of the variable account)................. 5%
MAXIMUM PARTICIPANT ACCOUNT
MAINTENANCE CHARGE..............................$50
MAXIMUM VARIABLE ACCOUNT ANNUAL
EXPENSE FEE(1)
(as a percentage of average
account value)............................0.95% per annum
(1) The maximum Variable Account Annual Expense Fee does not include:
- premium taxes that may be imposed by the state in which the contract was
issued; or
- deductions for management fees and other expenses made by the underlying
mutual funds.
6
<PAGE> 9
<TABLE>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS, AFTER EXPENSE REIMBURSEMENT)
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Growth - Investor Class 1.00% 0.00% 0.00% 1.00%
- --------------------------------------------------------------------------------------------------------------------
American Century: Income & Growth - Investor Class 0.68% 0.00% 0.00% 0.68%
- --------------------------------------------------------------------------------------------------------------------
American Century: International Discovery - Investor 1.59% 0.00% 0.00% 1.59%
Class
- --------------------------------------------------------------------------------------------------------------------
American Century: Ultra - Investor Class 1.00% 0.00% 0.00% 1.00%
- --------------------------------------------------------------------------------------------------------------------
American Century: Value - Investor Class 1.00% 0.00% 0.00% 1.00%
- --------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), Inc. 0.32% 0.12% 0.25% 0.69%
- --------------------------------------------------------------------------------------------------------------------
The Brown Capital Management - Small Company Fund 0.65% 0.85% 0.00% 1.50%
- --------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 0.28% 0.36% 0.25% 0.89%
- --------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Midcap Stock Fund - Class A 1.10% 0.00% 0.25% 1.35%
- --------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third Century Fund, Inc.- Class Z 0.75% 0.10% 0.11% 0.96%
- --------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund - Class Y 0.99% 0.22% 0.00% 1.21%
- --------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 0.64% 0.45% 0.00% 1.09%
- --------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years - 0.40% 0.00% 0.15% 0.55%
Institutional Shares
- --------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund - Class A 0.43% 0.24% 0.25% 0.92%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - Class T 0.58% 0.21% 0.25% 1.04%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 0.58% 0.24% 0.00% 0.82%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund (R) 0.45% 0.20% 0.00% 0.65%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 0.47% 0.20% 0.00% 0.67%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 0.43% 0.19% 0.00% 0.62%
- --------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 0.50% 0.25% 0.00% 0.75%
- --------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 0.44% 0.20% 0.00% 0.64%
- --------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 0.52% 0.27% 0.25% 1.04%
- --------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 0.56% 0.23% 0.25% 1.04%
- --------------------------------------------------------------------------------------------------------------------
The Investment Company of America(R), Inc. 0.24% 0.08% 0.23% 0.55%
- --------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Aggressive Portfolio 0.50% 0.00% 0.00% 0.50%
- --------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Moderately Aggressive 0.50% 0.00% 0.00% 0.50%
Portfolio
- --------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Moderate Portfolio 0.50% 0.00% 0.00% 0.50%
- --------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Moderately Conservative 0.50% 0.00% 0.00% 0.50%
Portfolio
- --------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Conservative Portfolio 0.50% 0.00% 0.00% 0.50%
- --------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 0.38% 0.11% 0.00% 0.49%
- --------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 0.33% 0.00% 0.35% 0.68%
- --------------------------------------------------------------------------------------------------------------------
MFS(R) Growth Opportunities Fund - Class A 0.42% 0.00% 0.19% 0.61%
- --------- -----------------------------------------------------------------------------------------------------------
MFS(R) High Income Fund - Class A 0.44% 0.00% 0.30% 0.74%
- --------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional Fund, Inc. - Equity 0.60% 0.20% 0.25% 1.05%
Growth Portfolio - Class B
- --------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - Class D 0.50% 0.33% 0.00% 0.83%
- --------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund - Class D 0.58% 0.22% 0.00% 0.80%
- --------------------------------------------------------------------------------------------------------------------
Nationwide Money Market Fund - Prime Shares 0.40% 0.21% 0.00% 0.61%
- --------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index Fund - Institutional Service 0.13% 0.35% 0.00% 0.48%
Class (formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account Trust - Nationwide Income 0.45% 0.30% 0.00% 0.75%
Fund
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nationwide Separate Account Trust - Nationwide Small 0.98% 0.17% 0.00% 1.15%
Company Fund
- --------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, Inc. 0.70% 0.12% 0.00% 0.82%
- --------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Trust 0.85% 0.06% 0.00% 0.91%
- --------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - Class A 0.69% 0.26% 0.21% 1.16%
- --------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Institutional Service Class 0.75% 0.20% 0.00% 0.95%
(formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Prestige International Fund - Institutional Service 0.85% 0.40% 0.00% 1.25%
Class (formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Institutional Service 0.80% 0.25% 0.00% 1.05%
Class (formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Institutional Service 0.75% 0.25% 0.00% 1.00%
Class (formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Institutional Service Class 0.95% 0.25% 0.00% 1.20%
(formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Putnam International Growth Fund - Class A 0.64% 0.38% 0.25% 1.27%
- --------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 0.47% 0.17% 0.25% 0.89%
- --------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 0.47% 0.18% 0.25% 0.90%
- --------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 Index Portfolio 0.00% 0.40% 0.00% 0.40%
- --------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 0.70% 0.22% 0.24% 1.16%
- --------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - 0.06% 0.03% 0.00% 0.09%
Institutional Class
- --------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 0.67% 0.15% 0.00% 0.82%
- --------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 0.61% 0.27% 0.25% 1.13%
- --------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund - Common Class 0.90% 0.33% 0.00% 1.23%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
8
<PAGE> 11
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Brown Company Management - Small Company Fund 1.00% 0.85% 0.00% 1.85%
- --------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 0.75% 0.47% 0.00% 1.22%
- --------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years - 0.40% 0.39% 0.00% 0.79%
Institutional Shares
- --------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R) Index Fund - Institutional Service 0.13% 0.54% 0.00% 0.67%
Class (formerly, "Class Y")
- --------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account Trust - Nationwide Income 0.45% 0.44% 0.00% 0.89%
Fund
- --------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Institutional Service Class 0.75% 2.56% 0.00% 3.31%
(formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Prestige International Fund - Institutional Service 0.85% 5.45% 0.00% 6.30%
Class (formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Institutional Service 0.80% 2.66% 0.00% 3.46%
Class (formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Institutional Service 0.75% 3.46% 0.00% 4.21%
Class (formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Institutional Service Class 0.95% 3.92% 0.00% 4.87%
(formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 Index Portfolio 0.03% 0.41% 0.00% 0.44%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
EXAMPLE
The following chart shows the expenses (in dollars) that would be incurred under
the contracts assuming a $1,000 investment, 5% annual return, and no change in
expenses. These dollar figures are illustrative only and should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown below.
The chart reflects expenses of both the variable account and the underlying
mutual funds. A CDSC of 5% of total purchase payments and the maximum Variable
Account Annual Expense Fee of 0.95% are assumed. In addition, the chart reflects
a Participant Account Maintenance Charge, expressed as a percentage of average
account value. Since the average contract value is greater than $1,000, the
expense effect of the Participant Account Maintenance Charge is reduced
accordingly. Deductions for premium taxes are not reflected but may apply.
For those contracts that have a different CDSC schedule, a lower Variable
Account Annual Expense Fee, and/or a lower or no Participant Account Charge, the
actual expenses are reduced.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your contract If you do not surrender your If you annuitize your contract
at the end of the applicable contract at the end of the at the end of the applicable
time period applicable time period time period
- --------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Century: Income & 70 113 159 284 20 63 109 234 20 63 109 234
Growth - Investor Class
- --------------------------------------------------------------------------------------------------------------------------
American Century: Growth - 67 103 141 249 17 53 91 199 17 53 91 199
Investor Class
- --------------------------------------------------------------------------------------------------------------------------
American Century: 77 132 190 347 27 82 140 297 27 82 140 297
International Discovery -
Investor Class
- --------------------------------------------------------------------------------------------------------------------------
American Century: Ultra - 70 113 159 284 20 63 109 234 20 63 109 234
Investor Class
- --------------------------------------------------------------------------------------------------------------------------
American Century: Value - 70 113 159 284 20 63 109 234 20 63 109 234
Investor Class
- --------------------------------------------------------------------------------------------------------------------------
The Brown Capital Management 76 129 185 337 26 79 135 287 26 79 135 287
- - Small Company Fund
- --------------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), 67 103 142 250 17 53 92 200 17 53 92 200
Inc.
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, 69 110 153 272 19 60 103 222 19 60 103 222
Inc.
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Midcap Stock 74 124 177 322 244 74 127 272 24 74 127 272
Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third 70 112 156 280 20 62 106 230 20 62 106 230
Century Fund, Inc. - Class Z
- --------------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth 73 120 170 307 23 70 120 257 23 70 120 257
Fund - Class Y
- --------------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 71 116 163 294 21 66 113 244 21 66 113 244
- --------------------------------------------------------------------------------------------------------------------------
Federated U.S. Government 66 99 134 234 16 49 84 184 16 49 84 184
Securities Fund: 2-5 Years -
Institutional Shares
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 70 111 154 275 20 61 104 225 20 61 104 225
Opportunities Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield 71 115 161 289 21 65 111 239 21 65 111 239
Fund - Class T
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your contract If you do not surrender your If you annuitize your contract
at the end of the applicable contract at the end of the at the end of the applicable
time period applicable time period time period
- --------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity Capital & Income Fund 69 108 149 264 19 58 99 214 19 58 99 214
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund(R) 67 102 140 245 17 52 90 195 17 52 90 195
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Equity - Income Fund 67 103 141 248 17 53 91 198 17 53 91 198
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 66 101 138 242 16 51 88 192 16 51 88 192
- --------------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 68 105 145 257 18 55 95 207 18 55 95 207
- --------------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 67 102 139 244 17 52 89 194 17 52 89 194
- --------------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 71 115 161 289 21 65 111 239 21 65 111 239
- --------------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 71 115 161 289 21 65 111 239 21 65 111 239
- --------------------------------------------------------------------------------------------------------------------------
The Investment Company of 66 99 134 234 16 49 84 184 16 49 84 184
America(R), Inc.
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 97 132 228 15 47 82 178 15 47 82 178
Aggressive Portfolio
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 97 132 228 15 47 82 178 15 47 82 178
Moderately Aggressive
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 97 132 228 15 47 82 178 15 47 82 178
Moderate Portfolio
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 97 132 228 15 47 82 178 15 47 82 178
Moderately Conservative
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 65 97 132 228 15 47 82 178 15 47 82 178
Conservative Portfolio
- --------------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income 65 97 131 227 15 47 81 177 15 47 81 177
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 67 103 141 249 17 53 91 199 17 53 91 199
Growth Stock Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
MFS(R) Growth Opportunities 66 101 138 241 16 51 88 191 16 51 88 191
Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
MFS(R) High Income Fund - Class 68 105 145 256 18 55 95 206 18 55 95 206
A
- --------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional 71 115 161 290 21 65 111 240 21 65 111 240
Fund, Inc. - Equity Growth
Portfolio - Class B
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R) Fund - Class D 69 108 149 266 19 58 99 216 19 58 99 216
- --------------------------------------------------------------------------------------------------------------------------
Nationwide(R) Growth Fund - 68 107 148 262 18 57 98 212 18 57 98 212
Class D
- --------------------------------------------------------------------------------------------------------------------------
Nationwide Money Market Fund 66 101 138 241 16 51 88 191 16 51 88 191
- -Prime Shares
- --------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index 65 97 131 226 15 47 81 176 15 47 81 176
Fund - Institutional Service
Class (formerly, "Class Y")
- --------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 68 105 145 257 18 55 95 207 18 55 95 207
Trust - Nationwide Income
Fund
- --------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 72 118 167 300 22 68 117 250 22 68 117 250
Trust - Nationwide Small
Company Fund
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian 69 108 149 264 19 58 99 214 19 58 99 214
Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners 70 110 154 274 20 60 104 224 20 60 104 224
Trust
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your contract If you do not surrender your If you annuitize your contract
at the end of the applicable contract at the end of the at the end of the applicable
time period applicable time period time period
- --------------------------------------------------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Global Fund - 72 118 167 301 22 68 117 251 22 68 117 251
Class A
- --------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 70 112 156 279 20 62 106 229 20 62 106 229
Institutional Service Class
(formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------------
Prestige International Fund - 73 121 172 311 23 71 122 261 23 71 122 261
Institutional Service Class
(formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 71 115 161 290 21 65 111 240 21 65 111 240
Fund - Institutional Service
Class (formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund 70 113 159 284 20 63 109 234 20 63 109 234
- - Institutional Service Class
(formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - 73 120 169 306 23 70 119 256 23 70 119 256
Institutional Service Class
(formerly, Class Y)
- --------------------------------------------------------------------------------------------------------------------------
Putnam International Growth 73 122 173 313 23 72 123 263 23 72 123 263
Fund - Class A
- --------------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class 69 110 153 272 19 60 103 222 19 60 103 222
A
- --------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 69 110 153 273 19 60 103 223 19 60 103 223
- --------------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 64 94 126 217 14 44 76 167 14 44 76 167
Index Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - 72 118 167 301 22 68 117 251 22 68 117 251
Class A
- --------------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust 61 84 109 181 11 34 59 131 11 34 59 131
- - Treasury Portfolio -
Institutional Class
- --------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International 69 108 149 264 19 58 99 214 19 58 99 214
Stock Fund(R)
- --------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - 72 117 166 298 22 67 116 248 22 67 116 248
Class A
- --------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging 73 121 171 309 23 71 121 259 23 71 121 259
Growth Fund - Common Class
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
CONDENSED FINANCIAL INFORMATION
The accumulation unit value for each underlying mutual fund reflects changes in
the value of the underlying mutual fund and the deduction of the Variable
Account Annual Expense Fee. For specific accumulation unit value information for
each class of the underlying mutual funds, please refer to Appendix B.
FINANCIAL STATEMENTS
Financial Statements for the variable account and Nationwide are located in the
Statement of Additional Information. A current Statement of Additional
Information may be obtained without charge by contacting Nationwide's home
office at the telephone number located on page 2 of this prospectus.
SYNOPSIS OF THE CONTRACTS
The contracts are group flexible fund retirement contracts. The contracts are
designed for use in deferred compensation plans adopted by member counties under
the NACo program. The plans generally will qualify for favorable tax treatment
under Sections 401 or 457 of the Internal Revenue Code.
Nationwide issues a single group contract to the contract owner, which covers
all present and future participating employees. Nationwide will provide a
certificate to the contract owner to deliver to each retired participant or
other person for whom a Retirement Income Form is purchased. The certificate
will set forth the benefits to which the recipient is entitled. Additionally, if
legally required, Nationwide will provide a certificate to the contract owner
for delivery to any other person required by law to receive a certificate.
Nationwide establishes an account for each participant under the contract. The
account contains values and reflects activity for each participant. Plan
participants generally receive tax deferral on amounts deposited into the plan
and are taxed when amounts are distributed from the plan.
Plans established for the benefit of any organization that is exempt from
federal income tax under Section 457 of the Internal Revenue Code with the
exception of government plans, remain the sole property of the contract owner,
subject to the claims of the contract owner's general creditors. Consequently,
all amounts deferred to the plan, all income and property attributable to such
amounts remain the property of the contract owner until such amounts are made
available to participants in the plan or to the participants' beneficiaries.
Purchase payments are normally submitted monthly, but the schedule may be
adjusted to fit the contract owner's payroll practices. Purchase payments made
by or on behalf of each participant must be at least $20 per month.
The contract strives to provide each participant with:
- - an initial Retirement Income Payment, which will reflect cost of living
changes during pre-retirement years (without requiring increased purchase
payments to keep pace with cost of living increases during those years);
and
- - subsequent Retirement Income Payments which will vary with the cost of
living changes during his or her retired lifetime.
Although the contract strives to achieve its goals, there can be no assurance
that the contracts will achieve them.
Nationwide will apply purchase rates set forth in the contract to accumulated
amounts in participant accounts. These accumulated amounts will reflect the
investment performance of the underlying mutual funds selected by the
participant. Consequently, a participant's Retirement Income Payments will be
directly affected by his or her investment choices under the contract.
Historically, the value of a diversified portfolio of common stocks held for an
extended period of time has tended to rise during periods of inflation. However,
there is no exact correlation and for some periods, the prices of securities
have declined while the cost of living was rising.
13
<PAGE> 16
MINIMUM PURCHASE PAYMENTS
Purchase payments for each participant must be at least $20 per month.
CHARGES AND EXPENSES
Nationwide does not deduct a sales charge from purchase payments upon deposit
into the contract. However, Nationwide may deduct a CDSC if any amount is
withdrawn from the contract. This CDSC reimburses Nationwide for sales expenses.
The amount of the CDSC will not exceed 5% of purchase payments surrendered.
Nationwide may assess a Participant Account Maintenance Charge. This charge
varies from contract to contract and will not be assessed unless specifically
agreed upon by the contract owner and Nationwide. The maximum Participant
Account Maintenance Charge is $50 (see "Participant Account Maintenance
Charge").
Nationwide can deduct a Variable Account Annual Expense Fee at a maximum rate of
0.95% of average account value. Nationwide can assess this fee in return for
bearing certain risks and administrative expenses. The Variable Account Annual
Expense Fee is negotiable and varies from contract to contract to reflect unique
plan characteristics. This fee does not reflect deductions made by the
underlying mutual funds (see "Variable Account Annual Expense Fee").
The CDSC, Participant Account Maintenance Charge, and Variable Account Annual
Expense Fee, when negotiated, may be decreased upon notice to the contract owner
(see "Modification of the Contract").
RETIREMENT INCOME PAYMENTS
Retirement income payments begin on the annuitization date. Payments are based
on the retirement income form chosen (see "Retirement Income Payments" and
"Retirement Income Forms").
TAXATION
How the contracts are taxed depends on the type of contract issued and the
purpose for which the contract is issued. Nationwide will charge against the
contract any premium taxes levied by any governmental authority (see "Federal
Tax Considerations" and "Premium Taxes").
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in March,
1929. Nationwide is a member of the Nationwide group of companies with its home
office at One Nationwide Plaza, Columbus, Ohio 43215. Nationwide is a provider
of life insurance, annuities and retirement products. It is admitted to do
business in all states, the District of Columbia and Puerto Rico.
NATIONWIDE INVESTMENT SERVICES CORPORATION
The contracts are underwritten and distributed by Nationwide Investment Services
Corporation ("NISC"), Two Nationwide Plaza, Columbus, Ohio 43215. (For contracts
issued in the State of Michigan, all references to NISC shall mean Nationwide
Investment Svcs. Corporation.) NISC is a wholly owned subsidiary of Nationwide.
INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
The variable account is a separate account that invests in the underlying mutual
funds listed in Appendix A. Nationwide established the variable account on
September 7, 1988, pursuant to Ohio law. Although the variable account is
registered with the SEC as a unit investment trust pursuant to the Investment
Company Act of 1940 ("1940 Act"), the SEC does not supervise it or the
management of Nationwide.
Income, gains, and losses credited to, or charged against, the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other
14
<PAGE> 17
assets. The variable account's assets are held separately from Nationwide's
assets and are not chargeable with liabilities incurred in any other business of
Nationwide. Nationwide is obligated to pay all amounts promised to contract
owners under the contracts.
The variable account is divided into sub-accounts, each corresponding to a
single underlying mutual fund. Nationwide uses the assets of each sub-account to
buy shares of the underlying mutual funds based on contract owner instructions.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Voting Rights
Contract owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote contract owner shares at
special shareholder meetings based on contract owner instructions. However, if
the law changes and Nationwide is allowed to vote in its own right, it may elect
to do so.
Contract owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholders' vote as soon as possible before
the shareholder meeting. Notification will contain proxy materials and a form
with which to give Nationwide voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a contract owner may vote is determined by dividing
the cash value of the amount they have allocated to an underlying mutual fund by
the net asset value of that underlying mutual fund. Nationwide will designate a
date for this determination not more than 90 days before the shareholder
meeting.
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the underlying mutual fund(s)
involved in the conflict.
Substitution of Securities
Nationwide may substitute, eliminate, or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occurs:
1) shares of a current underlying mutual fund are no longer available for
investment; or
2) further investment in an underlying mutual fund is inappropriate.
No substitution, elimination, or combination of shares may take place without
the prior approval of the SEC.
CHARGES AND DEDUCTIONS
The charges and fees described in this section vary from contract to contract,
depending on plan characteristics and the particular needs and preferences of
contract owners. Generally, the charges and fees are negotiable. This
flexibility allows Nationwide and the contract owner to custom design a charge
structure that meets the financial goals of both the contract owners and
Nationwide.
While a contract is in effect, a circumstance may arise that would require a
renegotiation of the
15
<PAGE> 18
contract terms. In this situation, charges and fees will not be higher than
those in effect before the re-negotiation. In other words, the charges and fees
of a renegotiated contract may decrease, but under no circumstances will they
increase.
PARTICIPANT ACCOUNT MAINTENANCE CHARGE
Nationwide may assess a Participant Account Maintenance Charge to reimburse it
for administrative expenses involved in issuing and maintaining the contracts.
The maximum Participant Account Maintenance Charge is $50. Nationwide will not
assess this charge unless it is negotiated and contractually agreed upon by
Nationwide and the contract owner.
Generally, by negotiating a higher Participant Account Maintenance Charge, a
contract owner can expect to lower other charges that are assessed in connection
with the contract. Conversely, a contract owner that negotiates a lower
Participant Account Maintenance Charge can expect to incur higher charges
elsewhere in the expense structure.
If a Participant Account Maintenance Charge is negotiated, it will be assessed
against each applicable participant in the plan. Nationwide will deduct the
charge from each participant's account on the participant anniversary, which is
the anniversary of the date accumulation units were first credited to the
participant's account. Each year's deduction will compensate Nationwide for
expenses incurred during the previous year. The deduction will occur during both
the accumulation and annuity payment periods.
The Participant Account Maintenance Charge is made by canceling a number of
accumulation units during both the accumulation and annuity periods, equal in
value to the applicable charge. If a participant account includes more than one
sub-account, the deduction will be allocated among sub-accounts on the basis of
relative values at the time the deduction is made.
On the date that a full withdrawal is taken from a participant's account,
Nationwide will deduct a pro-rated Participant Account Maintenance Charge. The
amount of the charge will be 1/12 of the applicable Participant Account
Maintenance Charge, multiplied by the number of whole or partial months between
the last participant anniversary (or participant effective date during the first
year of a participant account) and the withdrawal date.
The deduction for the Participant Account Maintenance Charge will be taken
proportionately from each sub-account based on relative value at the time the
deduction is made.
This contract may be used by a plan in conjunction with other investment
options, such as Nationwide's Group Fixed Fund Retirement Contract. In this
case, the deduction for the Participant Account Maintenance Charge may be
reduced so that the combined total of the Participant Account Maintenance Charge
and any similar charges imposed under other investment options does not exceed
the Participant Account Maintenance Charge negotiated for this contract. The
charge will be deducted proportionately from the sub-accounts and amounts held
in the other investment options based on the relative values at the time the
deduction is made.
THE PARTICIPANT ACCOUNT MAINTENANCE CHARGE WILL NOT BE ASSESSED UNLESS
NEGOTIATED BETWEEN NATIONWIDE AND THE CONTRACT OWNER.
VARIABLE ACCOUNT ANNUAL EXPENSE FEE
Nationwide can deduct a Variable Account Annual Expense Fee up to a maximum rate
of 0.95% of average account value in exchange for assuming various risks and
administrative expenses associated with the contracts. This fee is subject to
negotiation and can vary for each contract to reflect unique plan
characteristics.
The following factors may be considered in negotiating the amount of this fee:
1) plan size;
2) the number of eligible employees;
3) the number of plan participants;
4) demographics of the plan participants;
5) general economic conditions;
16
<PAGE> 19
6) the varying costs associated with the underlying mutual funds that are
offered in the contract;
7) the type of contract (e.g. allocated vs. unallocated);
8) distribution costs;
9) any recovery of credits on initial transfers; and
10) other factors Nationwide deems relevant.
CONTINGENT DEFERRED SALES CHARGE
No sales charge is deducted from purchase payments when amounts are deposited
into the contracts. However, if any part of the contract is surrendered,
Nationwide will deduct a CDSC when applicable. The CDSC is used to cover sales
expenses, including commissions, production of sales material, and other
promotional expenses. If expenses are greater than the CDSC, Nationwide will
make up any shortfall from its general account.
Regardless of the CDSC schedule chosen, no CDSC will be assessed against
distributions paid as:
- a life income payment option;
- a designated period payment option of 5 or more years for a participant
who has a minimum of 5 participant account years before the beginning of
the benefit payments; and
- a single-sum or periodic payment resulting from a participant's death.
Contracts Issued Beginning July 1, 1985 and Before May 1, 1998
If the contract owner terminates the contract in accordance with the section
entitled "Suspension and Termination" and directs Nationwide to withdraw all or
part of the contract value, Nationwide will assess a CDSC from each
participant's account as indicated below. For purposes of calculating the CDSC,
withdrawals are considered to come first from the oldest purchase payment made
to the contract, then the next oldest purchase payment, and so forth. Earnings
are not subject to the CDSC, however, earnings may not be distributed prior to
the distribution of all purchase payments.
The following CDSC schedule applies to contracts issued beginning July 1, 1985
and before the later of May 1, 1998 or the date on which state insurance
authorities approve contract modifications.
- -------------------------------------------------
Number of Completed
Years of Participation
CDSC Percentage (Beginning July 1,
1985)*
- -------------------------------------------------
4% 1 through 12
- -------------------------------------------------
3% 13
- -------------------------------------------------
2% 14
- -------------------------------------------------
1% 15
- -------------------------------------------------
0% 16 and after
- -------------------------------------------------
*The "Number of Completed Years of Participation" is determined beginning with
the participant's first deferral into the contract.
In any event, no CDSC will be assessed against withdrawals taken on or after
January 1, 2001 for contracts issued beginning July 1, 1985 and before the later
of May 1, 1998 or the date on which state insurance authorities approve contract
modifications.
When a CDSC of less than 4% is negotiated and assessed, the reduced charge may
reflect actual variations in expenses, usually resulting from reduced expenses
to Nationwide in connection with case acquisition costs, plan start-up expenses,
commissions and marketing expenses. Nationwide will not apply any deductions in
a discriminatory manner.
Contracts Issued On or After May 1, 1998
For contracts issued on or after the later of May 1, 1998 or the date on which
state insurance authorities approve contract modifications, a CDSC may be
negotiated and assessed.
The total CDSC assessed to any participant will never exceed 5% (or a lesser
percentage, if applicable) of the total purchase payments made on behalf of the
participant for the 16 years before the surrender date.
When a CDSC of less than 5% is negotiated and assessed, the reduced charge may
reflect actual
17
<PAGE> 20
variations in expenses, usually resulting from reduced expenses to Nationwide in
connection with case acquisition costs, plan start-up expenses, commissions and
marketing expenses. Nationwide will not apply any deductions in a discriminatory
manner.
PREMIUM TAXES
Nationwide may charge against the contract value any premium taxes levied by a
state or other government entity. Premium tax rates currently range from 0% to
5.0%. This range is subject to change. The method used to assess premium tax
will be determined by Nationwide at its sole discretion in compliance with state
law.
If applicable, Nationwide will deduct premium taxes from the contract either at:
(1) the time the contract is surrendered;
(2) annuitization; or
(3) such earlier date as Nationwide becomes subject to premium taxes.
Premium taxes may be deducted from death benefit proceeds.
CONTRACT RIGHTS
The contract owner owns the contract for the exclusive benefit of the plan's
participants and beneficiaries. Contractual rights may be exercised by the
contract owner subject to those rights specifically reserved in the plan
documents for participants, either as a group or as individuals. The contract
owner may not take any action inconsistent with the rights of the plan's
participants. The contract may not be assigned.
OPERATION OF THE CONTRACT
MINIMUM PURCHASE PAYMENTS
Purchase payments for each participant must be at least $20 per month. Payments
must be made no less frequently than monthly, unless Nationwide agrees
otherwise.
APPLICATION OF PURCHASE PAYMENTS
Initial purchase payments allocated to sub-accounts will be priced at the
accumulation unit value determined no later than 2 business days after receipt
of an order to purchase if the application and all necessary information are
complete. If the application is not complete, Nationwide may retain a purchase
payment for up to 5 business days while attempting to complete it. If the
application is not completed within 5 business days, the participant will be
informed of the reason for the delay. The purchase payment will be returned
unless the participant specifically allows Nationwide to hold the purchase
payment until the application is completed.
Subsequent purchase payments will be priced based on the next available
accumulation unit value after the payment is received.
Purchase payments will not be priced when the New York Stock Exchange is closed
or on the following nationally recognized holidays:
- - New Year's Day - Independence Day
- - Martin Luther King, Jr. Day - Labor Day
- - Presidents' Day - Thanksgiving
- - Good Friday - Christmas
- - Memorial Day
Nationwide also will not price purchase payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in the
variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for the protection
of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, account value may be affected since the contract owner will
not have access to their account.
18
<PAGE> 21
When permissible under state insurance law, Nationwide may credit up to 8% of an
initial transfer into the contract. An initial transfer is the amount
transferred into the contract from a non-Nationwide investment product. It
serves as the initial purchase payment under the contract. This credit will
reimburse the contract owner for any exit penalty assessed by the previous
provider. Nationwide will recover this credit by reducing service agent and/or
broker compensation or through the negotiation of an increased Participant
Account Maintenance Charge or Variable Account Annual Expense Fee.
ALLOCATION OF PURCHASE PAYMENTS
Nationwide allocates purchase payments to each participant's account as
instructed by the contract owner. Shares of the underlying mutual funds
allocated to the sub-accounts are purchased at net asset value, then converted
into accumulation units. The contract owner, or the participant if the plan so
permits, may change allocations among sub-accounts for future purchase payments.
However, no change may be made that would result in an amount less than 1% of
the purchase payments being allocated to any sub-account for any participant.
Nationwide will accept these changes as frequently as permitted by the plan. An
allocation change will not affect the allocation of purchase payments before the
change.
DETERMINING VARIABLE ACCOUNT VALUE - VALUING AN ACCUMULATION UNIT
Purchase payments or transfers allocated to sub-accounts are accounted for in
accumulation units. Accumulation unit values (for each sub-account) are
determined by calculating the net investment factor for the underlying mutual
funds for the current valuation period and multiplying that result with the
accumulation unit values determined on the previous valuation period.
Nationwide uses the net investment factor as a way to calculate the investment
performance of a sub-account from valuation period to valuation period. For each
sub-account, the net investment factor shows the investment performance of the
underlying mutual fund in which a particular sub-account invests, including the
charges assessed against that sub-account for a valuation period.
The net investment factor for any particular sub-account is determined by
dividing (a) by (b), and then subtracting (c) from the result, where:
(a) is:
(1) the net asset value of the underlying mutual fund as of the end of
the current valuation period; and
(2) the per share amount of any dividend or income distributions made by
the underlying mutual fund (if the ex-dividend date occurs during
the current valuation period);
(b) is the net asset value of the underlying mutual fund determined as of the
end of the preceding valuation period; and
(c) is a factor representing the daily variable account charges, which may
include charges for contract options chosen by the contract owner. The
factor is equal to an annual rate ranging from 0.00% to 0.95% of the
daily net assets of the variable account, depending on unique plan
characteristics.
Based on the change in the net investment factor, the value of an accumulation
unit may increase or decrease. Changes in the net investment factor may not be
directly proportional to changes in the net asset value of the underlying mutual
fund shares because of the deduction of variable account charges.
Though the number of accumulation units will not change as a result of
investment experience, the value of an accumulation unit may increase or
decrease from valuation period to valuation period.
DETERMINING THE PARTICIPANT ACCOUNT VALUE
A participant's account value is equal to the sum of the value of all
accumulation units credited to the participant's account. The number of
accumulation units credited to each participant
19
<PAGE> 22
account for each sub-account is determined by dividing the amount allocated to
that sub-account for that participant by the accumulation unit value for that
sub-account for the valuation period the purchase payment was received.
The value of a participant's account on any day can be determined by multiplying
the total number of accumulation units credited to the participant's account for
each sub-account by the current accumulation unit value for that sub-account.
Each participant and the contract owner will be advised periodically of the
number of accumulation units credited to his or her account for each
sub-account, the current accumulation unit values, and the total value of his or
her account. These reports are for informational purposes only and do not mean
that a participant has any rights in his or her account beyond those provided
for in the plan.
EXCHANGE PRIVILEGE
The contract owner, or the participant if the plan so provides, may exchange
amounts among the sub-accounts as frequently as permitted by the plan, subject
to the limits and rules set by each underlying mutual fund. Certain plans may
impose limitations on participant exchange privileges as a consequence of
agreements entered into to purchase mutual funds or other investments unrelated
to the contract.
For those plans funded by this contract and Nationwide's Group Fixed Fund
Retirement Contract, the contract owner, or the participant if the plan so
provides, may exchange values between any sub-account and the Group Fixed Fund
Retirement Contract. Exchanges from the Nationwide Group Fixed Fund Retirement
Contract to any sub-account will be subject to the limitations of the Nationwide
Group Fixed Fund Retirement Contract. Exchanges will be effective when received
in good order at Nationwide's home office.
If Nationwide receives the exchange request before the end of a valuation date,
the exchange will receive the accumulation unit values of that date. However, if
Nationwide receives the exchange request after the close of business on a
valuation date, the exchange will receive the next valuation date's accumulation
unit value.
Certain plans may select investment options, unrelated to the annuity contract,
that may impose limitations affecting the exchange privileges associated with
the investment options available in the annuity contract.
One such investment option that may be chosen is the Morley Stable Value
Retirement Fund. Although the Morley Stable Value Retirement Fund may be
purchased by plans as an investment option outside the variable annuity contract
described in this prospectus, the Morley Stable Value Retirement Fund may impose
restrictions on amounts that may be directly transferred to options which are
considered "competing investment options."
Competing investment options include the Nationwide Money Market Fund - Prime
Shares, the Federated U.S. Government Securities Fund: 2-5 Years: Institutional
Shares, Short-Term Investments Trust - Treasury Portfolio - Institutional Class
and the Nationwide Fixed Account Option. If the Morley Stable Value Retirement
Fund is available in your Plan, amounts withdrawn from the Morley Stable Value
Retirement Fund may not be transferred to a "competing investment option" for a
period of at least 90 days.
The Morley Stable Value Retirement Fund is operated by Morley Capital
Management, Inc. and advised by Union Bond and Trust; both entities are
wholly-owned subsidiaries of Nationwide Financial Services, Inc.
There is no charge assessed for any exchanges.
EXCHANGE REQUESTS
In addition to submitting exchange requests in writing, the participant may also
make exchanges by telephone and the internet, provided that the contract owner
executes documents agreeing to certain restrictions applicable to these
privileges. Telephone and internet exchange requests must be received by
Nationwide by the close of the New York Stock Exchange in order to receive that
day's closing sub-account price.
20
<PAGE> 23
Nationwide will use reasonable procedures to confirm that telephone and internet
instructions are genuine and will not be liable for following telephone or
internet instructions that it reasonably determined to be genuine. Nationwide
may withdraw the telephone and/or internet exchange privilege upon 30 days
written notice to contract owners and participants.
EXPERIENCE CREDITS
Depending on the state in which the contract was issued, the contracts are
either participating or non-participating. Contract owners of participating
contracts have the right to receive any surplus distributed by Nationwide. A
surplus distribution will occur if Nationwide's Board of Directors determines
that charges and fees assessed under the contracts were higher than necessary to
maintain the contracts. Nationwide will distribute any surplus by purchasing
additional accumulation units and crediting them to participant accounts. To
date, Nationwide has not made any surplus distributions to participant accounts
and Nationwide does not guarantee that there will be a surplus distribution in
the future. Non-participating contracts do not have the right to receive surplus
distributions.
MODIFICATION OF THE CONTRACT
The following charges may be decreased if negotiated, upon notice to the
contract owner:
- Contingent Deferred Sales Charge
- Participant Account Maintenance Charge
- Variable Account Annual Expense Fee
No modifications may be made prior to the first contract anniversary.
Nationwide may change any other provision of the contract by giving notice to
contract owners not less than 90 days before the change is to be effective.
CONTRACT SUSPENSION AND TERMINATION
Nationwide may suspend the contract at any time upon written notice to contract
owners if:
a) the contract owner fails to remit to Nationwide any purchase payment
specified in the plan; or
b) Nationwide rejects a plan amendment submitted by the contract owner that
Nationwide determines would adversely affect the contract's financial
experience.
The contract owner may suspend the contract at any time upon 90 days written
notice to Nationwide. Suspension will become effective on the 91st day after
Nationwide receives the notice. If a contract is suspended, Nationwide will not
accept new purchase payments, except by mutual consent. All other contract terms
will continue to apply.
Once the suspension is effective, the contract owner may, upon 30 days written
notice to Nationwide, terminate the contract. Termination will become effective
on the 31st day after Nationwide receives the notice. Upon termination,
Nationwide will pay to the contract owner:
1) the redemption value of participant accounts, less any applicable CDSC;
and
2) the balance of the annual payment amounts in Nationwide's General Account
transferred to make Retirement Income Payments under Retirement Income
Forms B1 and B2.
REDEMPTION OF PARTICIPANT ACCOUNTS
The contract owner's right to redeem participant accounts, either fully or
partially, will be governed by the terms of the plan.
If the plan so permits, the contract owner may redeem a participant account,
fully or partially, at any time before Retirement Income Payments begin under
Option B1 or B2 (see "Retirement Income Forms"). A partial redemption will not
affect requirements to make future purchase payments to that participant account
or that participant's retirement date.
For partial redemptions, Nationwide will cancel accumulation units from the
sub-accounts. The
21
<PAGE> 24
requested dollar amount cannot exceed available accumulation unit value. The
contract owner must instruct Nationwide how the redemption should be taken from
the sub-accounts. If no instruction is given, the redemption will be taken
proportionately from each sub-account based on the value of each sub-account at
the time of the redemption.
Instead of a lump sum distribution of a full or partial redemption, the contract
owner (or participant, if permitted by the plan) may elect to have the
redemption paid pursuant to Retirement Income Form A1 or A2, subject to the
minimums applicable to these options.
If the contract owner terminates the contract, all participant accounts under
that contract will be redeemed as permitted by the plan. A CDSC may apply.
However, absent contract termination, no CDSC will apply to full or partial
redemptions.
Nationwide will pay all redemption amounts to the contract owner. The contract
owner is obligated to distribute these amounts to the participant. The contract
owner and Nationwide may agree to have Nationwide pay these amounts directly to
the participant.
Nationwide will pay any redemption amounts within 7 days of receiving the
redemption request. However, Nationwide may suspend or postpone payment when:
(1) the New York Stock Exchange is closed;
(2) trading on the New York Stock Exchange is restricted;
(3) an emergency is declared by the SEC making disposal or valuation of
securities held in the variable account impracticable; or
(4) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, contract value may be affected since the contract owner and/or
participant would not have access to their account.
Participant account value upon full surrender may be more or less than the total
of all purchase payments.
RETIREMENT PERIOD
ADDITIONAL PURCHASE PAYMENT BEFORE BEGINNING RETIREMENT INCOME PAYMENTS
The contract owner may make one additional purchase payment to each
participant's account in order to increase Retirement Income Payments. The
contract owner must notify Nationwide of this election in the documentation
electing the Retirement Income Form and retirement date (see "Election of
Retirement Income Form and Date"). The purchase payment must be made by the last
business day before Retirement Income Payments begin. This purchase payment is
subject to any applicable premium taxes.
The annuity rates under the contract apply to the entire value, including any
such additional purchase payment that does not exceed 5 times the purchase
payments allocated to a participant's account before the date of notice is
given. Any amount in excess of this amount may be applied at annuity rates
currently offered to this type of contract.
RETIREMENT INCOME PAYMENTS
The distribution period is the period during which a participant account is paid
out in installments. Since the distribution period usually occurs after a
participant retires, it is also referred to as the retirement period.
Nationwide will pay all retirement distributions to the contract owner. The
contract owner is obligated to distribute these amounts to the participant. The
contract owner and Nationwide may agree to have Nationwide pay these amounts
directly to the participant.
Upon retirement, a participant's account value can be used to purchase either a
fixed dollar annuity, a variable payment annuity, or an available combination of
both.
22
<PAGE> 25
Nationwide is obligated to make payments under a variable payment annuity.
However, the amount of each payment is not guaranteed. Variable payment amounts
will reflect the investment performance of the sub-accounts, but will not be
affected by adverse mortality experience or by increased expenses.
A fixed dollar annuity provides for payments that are guaranteed as to dollar
amount during the distribution period. Upon retirement, the participant's
account value is used to purchase a contract fund by Nationwide's general
account. Once this contract has been purchased, the participant's account will
no longer vary with the investment performance of the underlying mutual funds.
To determine the amount of the first fixed dollar annuity payment, the value is
applied to the applicable annuity table based on the distribution schedule
elected. The fixed payment annuity can be distributed in any of the forms listed
under the provision "Retirement Income Forms." Specifically, they can be
distributed as:
1) payments for a designated period;
2) payments of a designated amount;
3) life income with payment certain; or
4) joint and survivor life income.
Fixed dollar annuities are available under a plan upon the contract owner's
election.
ELECTION OF RETIREMENT INCOME FORM AND DATE
The contract provides for Retirement Income Payments to begin on the date and
under the retirement options set forth in the plan. At least one month before
Retirement Income Payments are set to begin, the contract owner may elect one of
the retirement income options set forth in this prospectus. Nationwide must
receive this election in writing. The plan may restrict changes in the
retirement income option elected.
If, at retirement, the present value of a participant's account is less than
$5,000, Nationwide may make a lump sum distribution instead of periodic
payments.
RETIREMENT INCOME FORMS
Retirement distributions may take any of the following forms, as permitted by
the plan:
AMOUNT AND PERIOD CERTAIN OPTIONS
Option A1: Payments for a Designated Period
Payments will be made monthly for a set number of years not to exceed 30
years. The amount of each payment will vary with the performance of the
underlying mutual funds in which the participant account invests.
Nationwide calculates each payment by multiplying (a) by (b), where:
(a) is the accumulation unit value on the day the payment is made; and
(b) is the number of accumulation units applied under this option
divided by the number of payments selected.
Once the amount of the payment is calculated, Nationwide will cancel
available accumulation units to equal the dollar amount of that payment.
Exchanges between the investment options are permitted subject to the
limitations set forth in the Group Fixed Fund Retirement Contract.
Exchanges may cause the number of accumulation units to change,
necessitating a recalculation of the payment amount.
If the period selected under this option is less than 5 years, and the
participant has less than 5 participant account years, a CDSC will be
assessed against each payment.
Option A2: Payments of a Designated Amount
Payments will be made monthly in equal installments of a set amount (not
less than $25 per month) until no accumulation units remain in the
participant account. The participant's account is adjusted each valuation
date to reflect investment results. Nationwide will cancel accumulation
units up to the designated dollar amount of the payment.
Exchanges between the investment options are permitted subject to the
limitations set forth in the Group Fixed Fund Retirement Contract.
23
<PAGE> 26
If election of this option results in a payment period of less than 5
years, and the participant has less than 5 Participant Account Years, a
CDSC will be assessed against each payment.
LIFE INCOME OPTIONS
For the following options, payments will be determined annually and will remain
level throughout the year. Each year, on the anniversary of the beginning of
Retirement Income Payments, a new monthly payment will be determined. That new
payment will remain level for that year.
Nationwide will use the retired participant's adjusted age to determine each
year's set monthly payment. This adjusted age may not be the same as the retired
participant's actual age.
Life income options are based on:
- the mortality tables specified in the contract;
- the adjusted age of the retired participant;
- the type of Retirement Income Payment option(s) selected; and
- in the case of variable payments, the investment performance of the
specific sub-accounts elected.
Option B1: Life Income with Payment Certain
Payments will be made monthly during an individual's lifetime for a set
period of 60, 120, 180, 240, 300 or 360 months, as elected. If the
individual dies before the end of the selected period, level payments will
continue to the beneficiary during the remainder of the selected period.
Unless prohibited by the plan, the beneficiary may elect at any time to
receive the present value of the remaining number of payments in a single
payment, calculated using the same assumed investment rate used previously.
Nationwide will cancel accumulation units up to the designated dollar
amount of each payment.
Option B2: Joint and Survivor Life Income
Payments will be made monthly during the joint lifetime of the participant
and a beneficiary. Payments will be made as long as either of the two is
living. If the participant predeceases the beneficiary, payments will
continue to be paid to the beneficiary at 100%, 75%, 66 2/3% or 50% of the
original payment amount as elected until the beneficiary's death. If the
beneficiary predeceases the participant, payments will continue at 100% to
the participant.
Nationwide will cancel accumulation units up to the designated dollar
amount of each payment.
Other Options
Alternate distribution methods may be used with Nationwide's consent.
Frequency of Payment
The retired participant, with the contract owner's consent, may receive payments
under any option annually, semi-annually, or quarterly instead of monthly. Any
change in frequency of payments must be on the anniversary of the beginning of
Retirement Income Payments.
Withdrawal
If allowed by the plan, any amount remaining under option A1 or A2 may be
withdrawn. If that amount is at least $5,000, the withdrawn amount may be
applied to option B1 or B2, subject to minimum payment requirements.
DETERMINATION OF LIFE INCOME PAYMENTS
The amount of annuity payments will vary depending on the performance of the
underlying mutual funds selected.
Assumed Investment Rate
An assumed investment rate is the percentage rate of return assumed to determine
the amount of the first payment under a variable payment annuity. Nationwide
uses the assumed investment rate of 3.5% to calculate the first annuity payment
and to calculate the investment performance of an underlying mutual fund in
24
<PAGE> 27
order to determine subsequent payments under a variable payment annuity. If not
prohibited by law, a contract owner may, at contract issuance, elect an
alternated assumed investment rate of 5% per annum. The choice of assumed
investment rate affects the pattern of Retirement Income Payments. An assumed
investment rate is the percentage rate of return required to maintain level
variable annuity payments. Subsequent variable annuity payments may be more or
less than the first payment based on whether actual investment performance is
higher or lower than the assumed investment rate.
Value of an Annuity Unit
Annuity unit values for sub-accounts are determined by multiplying the net
investment factor for the valuation period for which the annuity unit is being
calculated by the immediately preceding valuation period's annuity unit value,
and multiplying the result by an interest factor to neutralize the assumed
investment rate built into the variable payment annuity purchase rate basis in
the contracts.
First Year's Payments
To determine the monthly payment that will be distributed monthly for the first
year after retirement, Nationwide first determines the participant's account
value as of the retirement date. This value is found by multiplying the number
of accumulation units in each sub-account for that participant's account by the
accumulation unit value for that sub-account on the last business day of the
second calendar week before the date the first payment will be made.
Based on the participant's account value, Nationwide then determines the amount
of each monthly payment. The monthly payment amount is found by dividing the
accumulation unit value of that sub-account in the participant's account by the
amount required to provide $1 per month (the purchase rate).
Once the monthly payment amount is found, Nationwide multiplies the payment by
12 to get the total payment for the year. Then Nationwide cancels the number of
accumulation units from the participant's account to equal the total payments
for the year. The accumulation units will be canceled from each sub-account in
the same proportion that new purchase payments are allocated. The value is then
transferred to Nationwide's general account from which monthly payments are
made.
The total annual amount is calculated so that if there are no partial
redemptions, and no underlying mutual fund dividends are taken in cash, the
monthly payments will be level as long as the net investment factor equals the
assumed investment rate plus an amount equal to the annual administrative
charge. Payments in subsequent years will vary depending on how the
sub-accounts' performance compares to the assumed investment rate.
Second and Subsequent Years' Payments
On each anniversary of the beginning of Retirement Income Payments, the second
year's monthly payment amount will be calculated. The calculation will be
performed in the same manner as the first year's payment, except that the
current participant account value will be used. Similarly, accumulation units
will be cancelled and the value will be transferred to Nationwide's general
account, from which monthly payments will be made. Subsequent years' payments
will be calculated in the same fashion on each anniversary date.
DEATH OF PARTICIPANT
PARTICIPANT DEATH BEFORE RETIREMENT
If a participant dies before beginning Retirement Income Payments, a death
benefit equal to the participant's account value is payable as set forth in the
plan. The death benefit will be paid when Nationwide:
1) receives and verifies the participant's death; and
2) verifies beneficiary designations.
25
<PAGE> 28
If the plan so provides, the beneficiary may receive the death benefit:
1) as a lump sum; or
2) in the form of a Retirement Income Form contained in the contract,
subject to applicable minimums. Retirement Income Payments may be fixed,
variable, or a combination of both.
DEATH OF RETIRED PARTICIPANT
If a retired participant dies while receiving payments, any payment due will be
determined according to the Retirement Income Form elected. The calculation of
the net present value of any remaining payments under a period certain option
will be based on the same assumed investment rated used in determining the
payments before the retired participant's death.
The participant account will be reduced by the number of accumulation units not
required to provide further payments during the remainder of a period certain,
if any, or to a contingent retired participant. Depending on Nationwide's
obligation under the contract, the accumulation units will either remain in the
variable account or be transferred to Nationwide's general account.
FEDERAL TAX CONSIDERATIONS
Tax advantages that may be associated with the contracts described in this
prospectus will depend on:
- - the type of contract purchased; and
- - the purposes for which the contract is purchased.
Nationwide does not guarantee the tax status of the contracts or any
transactions involving the contracts. If the contract is purchased as the
investment or funding medium for certain retirement plans, tax advantages
enjoyed by the contract owner and/or annuitant may relate to participation in
the plan rather than ownership of the annuity contract.
The contracts are treated as a trust under rules similar to Internal Revenue
Code Section 401(f).
Under existing federal income tax law, Nationwide is not required to pay taxes
on the variable account's investment income when it is credited to contract
owners. Nationwide is taxed as a life insurance company under Part One,
Subchapter L of the Internal Revenue Code.
Contract owners would normally be taxed on income and capital gains earned under
the contract, whether or not taken in cash. However, the contracts are issued
only to organizations exempt from federal income tax.
Distributions will normally contain purchase payments that were not previously
included in the participant's gross income. Upon distribution, these amounts
should be included in the gross income of the recipient.
The contract owner is responsible for ensuring that the plan is established and
administered in accordance with the provisions set forth in the Internal Revenue
Code.
CONTRACTS ISSUED UNDER THE NEW YORK MODEL PLAN
In order to sell the contracts to governmental employers in the state of New
York, the following amendments must be made to the contract:
- References to "annuity" payments throughout the prospectus are modified
to mean "benefit" payments.
- The "Suspension and Termination" provision is amended to allow a
participant to "freeze" his or her account and maintain the account on
deposit with Nationwide even though the contract was terminated. The
contract owner will continue to own the account, subject to the claims of
its general creditors.
- All references to Life Income Options B1 and B2 throughout this
prospectus are deleted.
- All references to "CDSC" and "Contingent Deferred Sales Charge"
throughout this prospectus are deleted.
26
<PAGE> 29
STATEMENTS AND REPORTS
Nationwide will mail contract owners statements and reports. Therefore, contract
owners should promptly notify Nationwide of any address change.
Participants should review these reports carefully. All errors or corrections
must be reported to Nationwide immediately to assure proper crediting to the
contract. Unless Nationwide is notified within 30 days of receipt of the report,
Nationwide will assume all transactions are correct.
Nationwide will provide contract owners with the variable account's prospectus
to make available to participants. The contract owner may, under the terms of
the plan, be required to provide additional information to participants, such as
changes in the plan, changes in the tax status of the plan, or the financial
condition of the contract owner as it relates to obligations under the plan.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits relating to life insurance and annuity
pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
In November 1997, two plaintiffs, one who was the owner of a variable life
insurance contract and the other who was the owner of a variable annuity
contract, commenced a lawsuit in a federal court in Texas against Nationwide and
the American Century group of defendants (Robert Young and David D. Distad v.
Nationwide Life Insurance Company et al.). In this lawsuit, plaintiffs sought to
represent a class of variable life insurance contract owners and variable
annuity contract owners whom they claim were allegedly misled when purchasing
these variable contracts into believing that the performance of their underlying
mutual fund option managed by American Century, whose shares may only be
purchased by insurance companies, would track the performance of a mutual fund,
also managed by American Century, whose shares are publicly traded. The amended
complaint seeks unspecified compensatory and punitive damages. On April 27,
1998, the District Court denied, in part, and granted, in part, motions to
dismiss the complaint filed by Nationwide and American Century. The remaining
claims against Nationwide allege securities fraud, common law fraud, civil
conspiracy, and breach of contract. The District Court, on December 2, 1998,
issued an order denying plaintiffs' motion for class certification and the
appeals court declined to review the order denying class certification upon
interlocutory appeal. On June 11, 1999, the District Court denied the
plaintiffs' motion to amend their complaint and reconsider class certification.
In January 2000 Nationwide and American Century settled this lawsuit now limited
to the claims of the two named plaintiffs. On February 9, 2000 the court
dismissed this lawsuit with prejudice.
On October 29, 1998, Nationwide was named in a lawsuit filed in Ohio state court
related to the sale of deferred annuity products for use as investments in
tax-deferred contributory retirement plans (Mercedes Castillo v. Nationwide
Financial Services, Inc., Nationwide Life Insurance Company and Nationwide Life
and Annuity Insurance Company). On May 3, 1999, the complaint was amended to,
among other things, add Marcus Shore as a second plaintiff. The amended
complaint is brought as a class action on behalf of all persons who purchased
individual deferred annuity contracts or participated in group annuity contracts
sold by Nationwide and the other named Nationwide affiliates which were used to
fund certain tax-deferred retirement plans. The amended complaint seeks
unspecified compensatory and punitive damages. No class has been certified. On
June 11, 1999, Nationwide and the other named defendants filed a motion to
dismiss the amended complaint. On March 8, 2000, the Court denied the motion to
dismiss the amended complaint filed by Nationwide and the
27
<PAGE> 30
other named defendants. Nationwide intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, NISC, is not engaged in any litigation of any material
nature.
ADVERTISING AND SUB-ACCOUNT
PERFORMANCE SUMMARY
ADVERTISING
A "yield" and "effective yield" may be advertised for the NSAT- Money Market
Fund and the Short-Term Investments Trust - Treasury Portfolio. "Yield" is a
measure of the net dividend and interest income earned over a specific seven-day
period (which period will be stated in the advertisement) expressed as a
percentage of the offering price of the fund's units. Yield is an annualized
figure, which means that it is assumed that funds generate the same level of net
income over a 52-week period. The "effective yield" is calculated similarly but
includes the effect of assumed compounding, calculated under rules prescribed by
the SEC. The effective yield will be slightly higher than yield due to this
compounding effect.
Nationwide may advertise the performance of a sub-account in relation to the
performance of other variable annuity sub-accounts, underlying mutual fund
options with similar or different objectives, or the investment industry as a
whole. Other investments to which the sub-accounts may be compared include, but
are not limited to:
- precious metals;
- real estate;
- stocks and bonds;
- closed-end funds;
- bank money market deposit accounts and passbook savings;
- CDs; and
- the Consumer Price Index.
Market Indexes
The sub-accounts will be compared to certain market indexes, such as:
- S&P 500;
- Shearson/Lehman Intermediate Government/Corporate Bond Index;
- Shearson/Lehman Long-Term Government/Corporate Bond Index;
- Donoghue Money Fund Average;
- U.S. Treasury Note Index;
- Bank Rate Monitor National Index of 2 1/2 Year CD Rates; and
- Dow Jones Industrial Average.
Tracking & Rating Services; Publications
Nationwide's rankings and ratings are sometimes published by other services,
such as:
- Lipper Analytical Services, Inc.;
- CDA/Wiesenberger;
- Morningstar;
- Donoghue's;
- magazines such as:
> Money;
> Forbes;
> Kiplinger's Personal Finance Magazine;
> Financial World;
> Consumer Reports;
> Business Week;
> Time;
> Newsweek;
> National Underwriter;and
> News and World Report;
- LIMRA;
- Value;
- Best's Agent Guide;
- Western Annuity Guide;
- Comparative Annuity Reports;
- Wall Street Journal;
- Barron's;
- Investor's Daily;
- Standard & Poor's Outlook; and
- Variable Annuity Research & Data Service (The VARDS Report).
These rating services and publications rank the underlying mutual funds'
performance against other funds. These rankings may or may not include the
effects of sales charges or other fees.
28
<PAGE> 31
Financial Rating Services
Nationwide is also ranked and rated by independent financial rating services,
among which are Moody's, Standard & Poor's and A.M. Best Company. Nationwide may
advertise these ratings. These ratings reflect Nationwide's financial strength
or claims-paying ability. The ratings are not intended to reflect the investment
experience or financial strength of the variable account.
Some Nationwide advertisements and endorsements may include lists of
organizations, individuals or other parties that recommend Nationwide or the
contract. Furthermore, Nationwide may occasionally advertise comparisons of
currently taxable and tax deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles and general economic
conditions.
Historical Performance of the Sub-Accounts
Nationwide will advertise historical performance of the sub-accounts. Nationwide
may advertise for the sub-account's standardized average annual total return,
calculated in a manner prescribed by the SEC, and non-standardized average
annual total return ("non-standardized return").
Standardized average annual total return shows the percentage rate of return of
a hypothetical initial investment of $1,000 for the most recent one, five and
ten year periods (or for a period covering the time the underlying mutual fund
has been available in the variable account if it has not been available for one
of the prescribed periods). Any calculation will reflect the standard 7-year
CDSC schedule and the deduction of all charges that could be made to the
contracts, except for premium taxes, which may be imposed by certain states.
Non-standardized return, calculated similar to standardized average annual total
return, shows the percentage rate of return of a hypothetical initial investment
of $10,000 for the most recent one, five and ten year periods (or for a period
covering the time the underlying mutual fund has been in existence). For those
underlying mutual funds which have not been available for one of the prescribed
periods, the non-standardized return illustrations will show the investment
performance the underlying mutual funds would have achieved (reduced by the same
charges except the CDSC) had they been available in the variable account for one
of the periods. The CDSC is not reflected because the contracts are designed for
long term investment. The CDSC, if reflected, would decrease the level of
performance shown. An initial investment of $10,000 is assumed because that
amount is closer to the size of a typical contract than $1,000, which was used
in calculating the standardized average annual total return.
If the underlying mutual fund has been available in the variable account for
less than one year (or if the underlying mutual fund has been effective for less
than one year), standardized and non-standardized performance is not annualized.
The standardized average annual total return and non-standardized total return
quotations are calculated using data for the period ended December 31, 1999.
However, Nationwide generally provides performance information more frequently.
Information relating to performance of the sub-accounts is based on historical
earnings and does not represent or guarantee future results.
29
<PAGE> 32
SUB-ACCOUNT PERFORMANCE SUMMARY
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
10 Years
or Date Fund
Available in Date Fund
the Variable Available in
1 Year 5 Years Account the Variable
Sub-Account Option to 12/31/99 to 12/31/99 to 12/31/99 Account
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Income & Growth - Investor Class 6.84% N/A 10.84% 11/13/98
-------------------------------------------------------------------------------------------------------------------
American Century: Growth-Investor Class 23.41% 21.41% 14.11% 06/17/91
-------------------------------------------------------------------------------------------------------------------
American Century: International Discovery - Investor 76.76% N/A 70.53% 11/13/98
Class
-------------------------------------------------------------------------------------------------------------------
American Century: Ultra-Investor Class 30.13% 24.55% 15.55% 10/01/93
-------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), Inc. -8.50% 1.79% 2.58% 06/17/91
-------------------------------------------------------------------------------------------------------------------
The Brown Capital Management - Small Company Fund N/A N/A 23.35% 06/25/99
-------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. -1.07% N/A 1.93% 11/13/98
-------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Midcap Stock Fund - Class A -0.41% N/A 7.63% 11/13/98
-------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third Century Fund, Inc. - Class Z 18.93% 25.18% 10.43% 06/17/91
-------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund - Class Y 5.27% 9.44% 4.62% 06/17/91
-------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F -13.07% N/A -14.03% 11/13/98
-------------------------------------------------------------------------------------------------------------------
Federated U.S. Government Securities Fund: 2-5 Years -11.14% -0.47% -2.50% 07/01/92
- Institutional Shares
-------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund - Class A -6.90% N/A -1.12% 11/13/98
-------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - Class T -2.67% N/A -1.69% 11/13/98
-------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 2.13% 5.92% 7.15% 06/17/91
-------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund(R) 13.89% 22.39% 15.87% 10/01/93
-------------------------------------------------------------------------------------------------------------------
Fidelity Equity - Income Fund -3.86% 14.92% 11.76% 06/17/91
-------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 12.87% 21.06% 13.25% 10/01/93
-------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 60.90% 30.26% 26.74% 09/01/94
-------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund -7.96% 9.78% 6.77% 09/01/94
-------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 60.17% N/A 68.76% 11/13/98
-------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund -12.15% N/A -12.81% 11/13/98
-------------------------------------------------------------------------------------------------------------------
The Investment Company of America(R), Inc. 5.45% 18.53% 12.06% 07/01/92
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Aggressive Portfolio 13.01% N/A 12.27% 01/20/98
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Moderately Aggressive 8.21% N/A 9.32% 01/20/98
Portfolio
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Moderate Portfolio 3.80% N/A 7.17% 01/20/98
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Moderately Conservative -1.24% N/A 3.73% 01/20/98
Portfolio
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Conservative Portfolio -7.21% N/A -0.66% 01/20/98
-------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio -11.45% 1.95% 0.05% 09/01/94
-------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 27.44% 30.28% 18.64% 06/17/91
-------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A 21.57% 23.12% 13.26% 06/17/91
-------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A -4.02% 3.75% 0.99% 08/03/93
-------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional Fund, Inc. - Equity 28.06% N/A 31.04% 11/13/98
Growth Portfolio - Class B
-------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D -11.09% 18.93% 10.51% 06/17/91
-------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund - Class D 5.54% 16.98% 11.81% 06/17/91
-------------------------------------------------------------------------------------------------------------------
Nationwide Money Market Fund- Prime Shares -6.32% 2.07% -3.18% 06/17/91
-------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index Fund - Institutional 8.66% N/A 12.08% 11/13/98
Service Class (formerly, "Class Y")
-------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE> 33
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
10 Years
or Date Fund
Available in Date Fund
the Variable Available in
1 Year 5 Years Account the Variable
Sub-Account Option to 12/31/99 to 12/31/99 to 12/31/99 Account
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nationwide Separate Account Trust - Nationwide N/A N/A -4.53% 06/25/99
Income Fund
------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account Trust - Nationwide Small 32.66% N/A 5.80% 11/03/97
Company Fund
------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, Inc. -2.57% 9.83% 6.73% 09/01/94
------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Trust -3.32% N/A -3.73% 11/13/98
------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - Class A 46.98% N/A 47.88% 11/13/98
------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Institutional Service Class -1.75% N/A -0.53% 11/13/98
(formerly, Class Y)
------------------------------------------------------------------------------------------------------------------
Prestige International Fund - Institutional Service 10.23% N/A 13.33% 11/13/98
Class (formerly, Class Y)
------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Institutional 23.56% N/A 30.71% 11/13/98
Service Class (formerly, Class Y)
------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Institutional -15.24% N/A -13.44% 11/13/98
Service Class (formerly, Class Y)
------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Institutional Service 7.64% N/A 10.82% 11/13/98
Class (formerly, Class Y)
------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 18.92% 26.76% 15.99% 06/17/91
------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 44.66% 25.84% 18.83% 06/17/91
------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 Index Portfolio 9.67% N/A 19.94% 05/01/96
------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 19.04% 21.19% 12.85% 06/17/91
------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - -5.94% -1.61% -2.72% 07/01/92
Institutional Class
------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 23.33% 9.40% 5.48% 09/01/94
------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 27.90% 6.71% 3.43% 09/01/94
------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund - Common Class 30.47% N/A 37.19% 11/13/98
------------------------------------------------------------------------------------------------------------------
</TABLE>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
10 Years
to 12/31/99
1 Year 5 Years or Life of Date Fund
Sub-Account Option to 12/31/99 to 12/31/99 Fund Effective
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century: Income & Growth - Investor Class 16.84% 26.83% 20.56% 12/17/90
-------------------------------------------------------------------------------------------------------------------
American Century: Growth-Investor Class 33.41% 25.74% 16.90% 06/30/71
-------------------------------------------------------------------------------------------------------------------
American Century: International Discovery - Investor 86.76% 29.13% 26.39% 04/04/94
Class
-------------------------------------------------------------------------------------------------------------------
American Century: Ultra-Investor Class 40.13% 28.50% 23.27% 11/02/81
-------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), Inc. 1.32% 7.17% 7.37% 05/28/74
-------------------------------------------------------------------------------------------------------------------
The Brown Capital Management - Small Company Fund 42.66% 24.18% 7/23/92
-------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 8.93% 24.92% 15.72% 01/18/84
-------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Midcap Stock Fund - Class A 9.59% 22.04% 17.55% 04/06/94
-------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third Century Fund, Inc. - Class Z 28.93% 28.69% 16.94% 03/29/72
-------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth Fund - Class Y 15.27% 14.09% 9.46% 08/31/78
-------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F -3.26% 6.69% 8.43% 05/20/87
-------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 34
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
10 Years
to 12/31/99
1 Year 5 Years or Life of Date Fund
Sub-Account Option to 12/31/99 to 12/31/99 Fund Effective
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federated U.S. Government Securities Fund: 2-5 Years -1.47% 5.28% 5.54% 02/18/83
- Institutional Shares
-------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunities Fund - Class A 3.10% 19.98% 17.01% 11/18/87
-------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield Fund - Class T 7.33% 9.85% 12.43% 01/05/87
-------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 12.13% 11.02% 11.84% 11/01/77
-------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund(R) 22.89% 26.24% 21.22% 05/17/67
-------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 6.14% 18.98% 13.43% 05/16/66
-------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 22.87% 25.05% 17.80% 05/02/63
-------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 70.90% 34.13% 21.705 02/31/84
-------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 1.89% 14.37% 11.99% 04/16/47
-------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 70.17% 31.86% 22.90% 09/01/67
-------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund -2.29% 14.23% 11.32% 09/22/87
-------------------------------------------------------------------------------------------------------------------
The Investment Company of America(R), Inc. 15.45% 22.56% 14.92% 01/01/34
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Aggressive Portfolio 23.01% N/A 20.49% 01/20/98
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Moderately Aggressive 18.21% N/A 17.41% 01/20/98
Portfolio
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Moderate Portfolio 13.80% N/A 14.50% 01/20/98
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Moderately Conservative 8.76% N/A 11.67% 01/20/98
Portfolio
-------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The Conservative Portfolio 2.79% N/A 6.91% 01/20/98
-------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio -1.55% 7.25% 7.49% 11/14/84
-------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth Stock Fund - Class A 37.44% 34.04% 20.77% 01/01/35
-------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - Class A 31.57% 27.02% 16.04% 09/09/70
-------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 5.98% 8.95% 9.46% 02/17/78
-------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional Fund, Inc. - Equity 38.06% N/A 28.50% 01/02/96
Growth Portfolio - Class B
-------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D -1.17% 22.77% 14.41% 05/11/33
-------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund - Class D 15.54% 21.15% 14.15% 02/27/61
-------------------------------------------------------------------------------------------------------------------
Nationwide Money Market Fund - Prime Shares 3.68% 4.09% 3.85% 01/04/99
-------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index Fund - Institutional 18.66% N/A 27.55% 10/30/98
Service Class (formerly, Class Y)
-------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account Trust - Nationwide Income -2.94% N/A 1.56% 01/20/98
Fund
-------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account Trust - Nationwide Small 42.66% N/A 22.06% 10/23/95
Company Fund
-------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, Inc. 7.43% 14.22% 12.52% 06/01/50
-------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Trust 6.68% 19.19% 13.60% 01/20/75
-------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - Class A 56.98% N/A 12/22/69
-------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - Institutional Service Class 8.25% N/A 13.57% 10/30/98
(formerly, Class Y)
-------------------------------------------------------------------------------------------------------------------
Prestige International Fund - Institutional Service 20.23% N/A 22.58% 10/30/98
Class (formerly, Class Y)
-------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - Institutional 33.56% N/A 45.22% 10/30/98
Service Class (formerly, Class Y)
-------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - Institutional Service -5.54% N/A -0.12% 10/30/98
Class (formerly, Class Y)
-------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - Institutional Service Class 17.64% N/A 23.35% 10/30/98
(formerly, Class Y)
-------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE> 35
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
10 Years
to 12/31/99
1 Year 5 Years or Life of Date Fund
Sub-Account Option to 12/31/99 to 12/31/99 Fund Effective
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Putnam Investors Fund - Class A 28.92% 30.45% 18.68% 12/01/25
-------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 54.66% 29.76% 20.93% 04/01/69
-------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 Index Portfolio 19.67% 27.08% 16.83% 07/31/85
-------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - Class A 29.04% 25.30% 16.01% 04/01/37
-------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - Treasury Portfolio - 4.00% 4.48% 4.30% 04/12/84
Institutional Class
-------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock Fund(R) 33.33% 14.62% 10.33% 05/09/80
-------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 37.90% 12.05% 10.26% 10/05/82
-------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth Fund - Common Class 40.47% 22.77% 17.16% 01/21/88
-------------------------------------------------------------------------------------------------------------------
</TABLE>
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A, were added to the variable account effective May 1,
2000. Therefore, no year-end sub-account performance is available.
33
<PAGE> 36
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History..................................1
Services.........................................................1
Purchase of Securities Being Offered.............................2
Underwriters.....................................................2
Calculations of Performance......................................2
Annuity Payments.................................................3
Financial Statements.............................................4
34
<PAGE> 37
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
A summary of the investment objective for each underlying mutual fund is listed
below.
There is no guarantee that the investment objectives will be met.
AMERICAN CENTURY: INCOME & GROWTH - INVESTOR CLASS
The investment objective of the Fund is to seek dividend growth, current income
and capital appreciation by investing in common stocks. The Fund may buy
securities convertible into common stock, such as convertible bonds, convertible
preferred stocks or warrants. The Fund may also, for liquidity purposes, invest
in high-quality money market instruments with remaining maturities of one year
or less. The Fund may also enter into repurchase agreements, collateralized by
U.S. government securities, with banks or broker-dealers deemed to present
minimal credit risk. American Century Investment Management, Inc. serves as the
Fund's investment adviser.
AMERICAN CENTURY: ULTRA - INVESTOR CLASS
The investment objective of the Fund is capital growth by investing primarily in
common stocks that are considered by management to have better-than-average
prospects for appreciation. It is management's intention that the portfolio will
generally consist of common stocks of medium-sized and smaller companies.
American Century Investment Services, Inc. serves as the Fund's investment
adviser.
AMERICAN CENTURY: VALUE - INVESTOR CLASS
The investment objective of the Fund is to seek long-term capital growth. Income
is a secondary objective. Under normal market conditions, the Fund managers
intend to keep at least 65% of the Fund's assets invested in U.S. equity
securities of medium to large companies. American Century Investment Management,
Inc. serves as the Fund's investment adviser.
THE BROWN CAPITAL MANAGEMENT - SMALL COMPANY FUND
The investment objective of the Fund is to seek capital appreciation principally
through investment in equity securities of companies with operating revenues of
$250 million or less at the time of the initial investment. Current income is of
secondary importance.
DREYFUS APPRECIATION FUND, INC.
The primary investment objective of the Fund is to provide long-term capital
growth consistent with the preservation of capital. Current income is a
secondary investment objective. The Fund seeks to meet its objectives by
investing primarily in the common stocks of domestic and foreign issuers. The
Dreyfus Corporation serves as the Fund's investment adviser.
DREYFUS PREMIER MIDCAP STOCK FUND - CLASS A
The investment objective of the Fund is to seek total investment returns
(including capital appreciation and income) which consistently outperform the
Standard & Poor's 400 MidCap Index. The Fund attempts to maintain a diversified
holding in common stocks of medium capitalization companies (firms with a market
value between $200 million and $5 billion). The Dreyfus Corporation serves as
the Fund's investment adviser.
35
<PAGE> 38
THE DREYFUS PREMIER THIRD CENTURY FUND, INC. - CLASS Z
The Fund's primary goal is to provide capital growth through equity investment
in companies that, in the opinion of the Fund's management, not only to meet
traditional investment standards, but which also show evidence that they conduct
their business in a manner that contributes to the enhancement of the quality of
life of America. Current income is secondary to the primary goal. The Dreyfus
Corporation serves as the Fund's investment adviser.
FEDERATED BOND FUND - CLASS F
The investment objective of the Fund is to provide as high a level of current
income as is consistent with the preservation of capital. The Fund invests
primarily in a professionally managed, diversified portfolio of bonds. Under
normal circumstances, at least 65% of the Fund's net assets will be invested in
investment grade securities, including repurchase agreements collateralized by
investment grade securities. The Fund may invest in corporate debt obligations,
U.S. Government obligations, municipal securities, asset-backed securities,
adjustable rate mortgage securities, collateralized mortgage obligations, and
other securities which are deemed to be consistent with the Fund's investment
objectives. Federated Investment Management Company serves as the Fund's
investment adviser.
FEDERATED U.S. GOVERNMENT SECURITIES FUND: 2-5 YEARS - INSTITUTIONAL SHARES
The investment objective of the Fund is current income. The Fund pursues this
investment objective by investing in U.S. government securities with remaining
maturities of five years or less. Federated Investment Management Company serves
as the Fund's investment adviser.
FIDELITY ADVISOR GROWTH OPPORTUNITIES FUND - CLASS A
The investment objective of the Fund is to pursue capital growth that exceeds
market performance through investments in growth, cyclical, and value stocks.
Fidelity Management & Research Company serves as the Fund's investment adviser.
FIDELITY ADVISOR HIGH YIELD FUND - CLASS T
The Fidelity Advisor High Yield Fund is a bond fund designed to meet the needs
of the long-term investor, seeking above-average monthly income and potential
capital growth by investing in lower-rated, high-yielding, fixed income
securities. Fidelity Management & Research Company serves as the Fund's
investment adviser.
FIDELITY EQUITY-INCOME FUND
The investment objective of the Fund is to obtain reasonable income from a
portfolio consisting primarily of income-producing equity securities. The Fund
seeks a yield which exceeds the composite yield on the securities comprising the
Standard & Poor's Composite Index of 500 Stocks. In pursuing this objective, the
Fund will also consider the potential for capital appreciation. Fidelity
Management & Research Company serves as the Fund's investment adviser.
FIDELITY OTC PORTFOLIO
The investment objective of the Fund is to seek capital appreciation by
investing primarily in securities traded on the over-the counter (OTC)
securities market. Securities traded on the OTC include, among others,
industrial corporations, financial services institutions, public utilities, and
transportation companies, common and preferred stocks, securities convertible
into common stock, warrants and similar rights, and debt securities, and
obligations of the federal government. The fund does not place any weight on
dividend and interest income unless it believes this income will have a
favorable influence on the market value of a security. Fidelity Management &
Research Company serves as the Fund's investment adviser.
FIDELITY PURITAN FUND
The investment objective of the Fund seeks to obtain as much income as possible,
consistent
36
<PAGE> 39
with the preservation and conservation of capital, by investing in a broadly
diversified portfolio of securities, including common stocks, preferred stocks,
and bonds. While emphasis on income is an important objective, this does not
preclude growth in capital since some securities offering a better than average
yield may also possess some growth possibilities. Fidelity Management & Research
Company serves as the Fund's investment adviser.
INVESCO DYNAMICS FUND
The investment objective of the Fund is to seek appreciation of capital through
aggressive investment policies. The Fund invests primarily in common stocks of
U.S. companies traded on national securities exchanges and over-the-counter. The
Fund also has the flexibility to invest in preferred stocks and convertible or
straight issues of debentures, as well as foreign securities. INVESCO Funds
Group, Inc. serves as the Fund's investment adviser.
INVESCO TOTAL RETURN FUND
The investment objective of the Fund is to seek to achieve a high total return
on investment through capital appreciation and current income by investing in a
combination of equity securities (consisting of common stocks and, to a lesser
degree, securities convertible into common stock) and fixed income securities.
The equity securities purchased by the Fund generally will be issued by
companies which are listed on a national securities exchange and which usually
pay regular dividends. This Fund seeks reasonably consistent total returns over
a variety of market cycles. INVESCO Funds Group, Inc. serves as the Fund's
investment adviser. INVESCO Capital Management, Inc. serves as the Fund's
sub-adviser.
LIFEDESIGNS SERIES
LifeDesigns Series consists of five separate nondiversified funds, each of which
is a separately managed nondiversified portfolio with its own investment
objective and policies. The objective of each of the Portfolios which is
fundamental, is to maximize total investment return (i.e. capital growth and
income) subject to investment restrictions and asset allocation policies. The
Portfolios will maximize total investment return as is specifically detailed in
the following objectives which are non-fundamental and can be changed without
approval of a Portfolio's shareholders.
THE AGGRESSIVE PORTFOLIO
The investment objective of this Fund is to provide growth of capital by
investing in underlying funds which invest primarily in equity securities
("Equity Funds"). This Fund is generally appropriate for investors seeking
higher returns over an investment time horizon of at least 15 years and
having a higher tolerance for market fluctuations. Villanova SA Capital
Trust ("VSA") serves as the Fund's investment adviser.
THE CONSERVATIVE PORTFOLIO
The investment objective of this Fund is to provide primarily income and,
secondarily, long term growth of capital. This Fund will seek to meet its
objectives by primarily investing in a combination of the Nationwide
Contract (a fixed interest contract) and fixed income securities ("Bond
Funds"), with a similar investment in Equity Funds. This Fund is generally
appropriate for investors seeking low fluctuations in principal over an
investment time horizon of less than 5 years, as well more conservative
investors with an investment time horizon of between 5 and 10 years. VSA
serves as the Fund's investment adviser.
THE MODERATE PORTFOLIO
The investment objective of this Fund is to provide growth of capital and
income by investing primarily in Equity Funds, but will also invest a
significant percentage of its assets in the Nationwide Contract and in Bond
Funds. This Fund is generally appropriate for moderate investors seeking
moderate returns over an investment time horizon of between 10 and 15
years; conservative investors with an investment
37
<PAGE> 40
time horizon of at least 15 years or more; and more aggressive investors
with an investment time horizon of 5 to 10 years. VSA serves as the Fund's
investment adviser.
THE MODERATELY AGGRESSIVE PORTFOLIO
The investment objective of this Fund is to provide growth of capital by
investing primarily in Equity Funds. However, the Fund attempts to reduce
its volatility by also investing in the Nationwide Contract and Proprietary
Funds which also invest primarily in Bond Funds. This Fund is generally
appropriate for moderate investors seeking high returns over an investment
time horizon of 15 years or for more aggressive investors with an
investment time horizon of 10 to 15 years. VSA serves as the Fund's
investment adviser.
THE MODERATELY CONSERVATIVE PORTFOLIO
The investment objective of this Fund is to provide primarily income and,
secondarily, long term growth of capital. This Fund will seek to meet its
objective by generally investing half of its assets in Equity Funds with
the remainder in the Nationwide Contract and Bond Funds. This Fund is
generally appropriate for moderate investors seeking lower fluctuations in
principal combined with some of the upside potential of equity investments
over an investment time horizon of between 5 and 10 years. This Fund is
also generally appropriate for conservative investors with an investment
time horizon of between 10 and 15 years and more aggressive investors with
an investment time horizon of less than 5 years. VSA serves as the Fund's
investment adviser.
MAS FUNDS FIXED INCOME PORTFOLIO
The investment objective of the Fund is to achieve above-average total return
over a market cycle of three of five years, consistent with reasonable risk, by
investing in a diversified portfolio of U. S. government securities, corporate
bonds (including bonds rated below investment grade commonly referred to as
"junk bonds"), foreign fixed-income securities and mortgage-backed securities of
domestic issuers and other fixed-income securities. The portfolio's average
weighted maturity will ordinarily be greater than five years. Miller, Anderson &
Sherrerd, LLP serves as the Fund's investment adviser.
MFS(R) HIGH INCOME FUND - CLASS A
The investment objective of the Fund is high current income by investing
primarily in a professionally managed diversified portfolio of fixed income
securities, some of which may involve equity features. Securities offering the
high current income sought by this Fund are ordinarily in the lower rating
categories of recognized rating agencies or are unrated and generally involve
greater volatility of price and risk of principal and income than securities in
the high rating categories. Capital growth, if any, is a consideration
incidental to the investment objective of high current income. Massachusetts
Financial Services Company serves as the Fund's investment adviser.
MORGAN STANLEY INSTITUTIONAL FUND, INC. - EQUITY GROWTH PORTFOLIO - CLASS B
The investment objective of the Portfolio is to seek long-term capital
appreciation by investing in growth-oriented equity securities of medium and
large capitalization companies. Equity securities include common and preferred
stocks, convertible securities and rights and warrants to purchase common
stocks. Under normal circumstances, the Portfolio will invest at least 65% of
the value of its total assets in equity securities. Morgan Stanley Asset
Management, Inc. serves as the Portfolio's investment adviser.
NATIONWIDE(R) FUND - CLASS D
The investment objective of the Fund is to seek total return through a flexible
combination of current income and capital appreciation. The Fund invests
primarily in common stocks, but also in convertible securities, other equity
securities, bonds and money market obligations. Villanova Mutual Fund Capital
Trust serves as the Fund's investment adviser.
38
<PAGE> 41
NATIONWIDE(R) MONEY MARKET FUND - PRIME SHARES
The investment objective of the Fund is to seek as high a level of current
income as is consistent with the preservation of capital and maintenance of
liquidity. The Fund invests in high-quality money market instruments maturing in
397 days or less. Villanova Mutual Fund Capital Trust serves as the Fund's
investment adviser.
NATIONWIDE S&P 500(R) INDEX FUND -
INSTITUTIONAL SERVICE CLASS (FORMERLY, CLASS Y)
The investment objective of the Fund is to provide investment results that
correspond to the price and yield performance of publicly traded common stocks
as represented by the Standard & Poor's 500 Composite Stock Price Index (the
"Index"). The Fund attempts to be fully invested at all times in stocks that
comprise the Index and stock index futures, and in any event, at least 80% of
the Fund's net assets will be invested in stocks comprising the Index. Villanova
Mutual Fund Capital Trust serves as the Fund's investment adviser and The
Dreyfus Corporation is the Fund's sub-adviser.
"S&P 500(R)" has been licensed for use by Villanova Mutual Fund Capital Trust.
The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the Fund.
NATIONWIDE SEPARATE ACCOUNT TRUST - NATIONWIDE INCOME FUND
The Fund seeks to provide as high a level of income as is consistent with
reasonable concern for safety of principal. Under normal conditions, the Fund
invests primarily in investment grade corporate bonds and U.S. Government
Securities. Villanova Mutual Fund Capital Trust serves as the Funds' adviser.
The Fund is subadvised by NCM Capital Management Group, Inc. and Smith Graham &
Co. Asset Managers L.P.
NATIONWIDE SEPARATE ACCOUNT TRUST - NATIONWIDE SMALL COMPANY FUND
Subadvisers: The Dreyfus Corporation, Neuberger Berman, LLC., Lazard Asset
Management and Strong Capital Management, Inc.
Investment Objective: Under normal market conditions, the Fund will invest at
least 65% of its total assets in equity securities of companies whose equity
market capitalizations at the time of investment are similar to the market
capitalizations of companies in the Russell 2000 Small Stock Index.
NEUBERGER BERMAN GUARDIAN FUND, INC.
The Fund seeks capital appreciation through investments generally in
dividend-paying issues of established companies that its investment officers
believe are well managed. The emphasis of the Fund's investments is on common
stock. The Fund diversifies its holdings among different industries and
different companies in light of conditions prevailing at any given time. Current
income is a secondary objective. Neuberger Berman Management Incorporated serves
as the Fund's investment adviser.
NEUBERGER BERMAN PARTNERS TRUST
The investment objective of the Fund is to seek capital growth. The Fund invests
using a value-oriented approach to the selection of individual securities. The
Fund manager seeks capital growth through an investment approach that is
designed to increase capital with reasonable risk. Neuberger Berman Management
Incorporated serves as the Fund's investment adviser.
OPPENHEIMER GLOBAL FUND - CLASS A
The investment objective of the Fund is to seek capital appreciation. The Fund
emphasizes investment in foreign and domestic securities considered by the
Fund's investment manager to have appreciation possibilities, primarily common
stocks or securities having investment characteristics of common stocks (such as
convertible securities) of "growth-type" companies. As a matter of fundamental
policy,
39
<PAGE> 42
under normal market conditions, the Fund will invest its total assets in
securities of issuers traded in markets in at least three different countries
(which may include the United States). The portfolio may also emphasize
securities of cyclical industries and "special situations" when the Fund's
manager believes that they present opportunities for capital growth.
OppenheimerFunds, Inc. serves as the Fund's investment adviser.
PRESTIGE BALANCED FUND - INSTITUTIONAL SERVICE CLASS (FORMERLY, CLASS Y)
The investment objective of the Fund is to provide a high total return from a
diversified portfolio of equity and fixed income securities. The Fund seeks to
provide a total return that approaches the total return of the universe of
equity securities of large and medium sized companies and that exceeds the
return typical of a portfolio of fixed income securities. Under normal market
conditions, the Fund will invest approximately 60% of its assets in equity
securities and 40% in fixed income securities. The equity securities will
primarily be securities of large and medium sized companies included in the
Standard & Poor's 500 Composite Stock Price Index, and the fixed income
securities will cover a range of fixed income sectors and securities, including
government, corporate, asset-backed and mortgage-backed securities. Villanova
Mutual Fund Capital Trust serves as the Fund's investment adviser and J.P.
Morgan Investment Management Inc. is the Fund's sub-adviser.
PRESTIGE INTERNATIONAL FUND - INSTITUTIONAL SERVICE CLASS (FORMERLY, CLASS Y)
The investment objective of the Fund is capital appreciation. The Fund seeks to
accomplish its investment objective by investing primarily in equity securities
of non-United States companies that, in the opinion of its subadviser, are
inexpensively priced relative to the return on total capital or equity. The Fund
invests primarily in equity securities of non-United States companies. Under
normal market conditions, the Fund will invest at least 80% of the value of its
total assets in the equity securities of companies within at least three
different countries (not including the United States). Villanova Mutual Fund
Capital Trust serves as the Fund's investment adviser and Lazard Asset
Management is the Fund's sub-adviser.
PRESTIGE LARGE CAP GROWTH FUND - INSTITUTIONAL SERVICE CLASS
(FORMERLY, CLASS Y)
The investment objective of the Fund is long-term capital appreciation. The Fund
seeks to achieve its investment objective from a broadly diversified portfolio
of equity securities of large capitalization companies that are expected to have
better prospects for earnings growth than the growth rate of the general
domestic economy. Dividend income is a secondary objective. A large
capitalization company is a company with a market capitalization and industry
characteristics that are similar to companies in the Russell 1000(R) Growth
Index, which currently have market capitalizations that range from $1.4 billion
to $272 billion. Villanova Mutual Fund Capital Trust serves as the Fund's
investment adviser and Goldman Sachs Asset Management is the Fund's sub-adviser.
PRESTIGE LARGE CAP VALUE FUND - INSTITUTIONAL SERVICE CLASS (FORMERLY, CLASS Y)
The investment objective of the Fund is to maximize total return, consisting of
both capital appreciation and current income. The Fund seeks to achieve its
investment objective by investing in U.S. equity securities that are currently
undervalued as determined by its subadviser. Under normal market conditions,
substantially all, but in no event less than 65% of the Fund's total assets will
be invested in equity securities of large capitalization U.S. companies,
including foreign companies whose securities are traded in the United States and
who comply with U.S. accounting standards. A large capitalization company is a
company with a market capitalization and industry characteristics that are
similar to companies in the Russell 1000(R) Value Index, which currently
40
<PAGE> 43
have market capitalizations that range from $1.4 billion to $272 billion.
Villanova Mutual Fund Capital Trust serves as the Fund's investment adviser and
Brinson Partners, Inc. is the Fund's sub-adviser.
PRESTIGE SMALL CAP FUND - INSTITUTIONAL SERVICE CLASS (FORMERLY, CLASS Y)
The investment objective of the Fund is long-term capital appreciation. The Fund
seeks to accomplish its investment objective from a broadly diversified
portfolio of equity securities issued by U.S. companies that have small market
capitalizations. Under normal market conditions, the Fund will invest at least
65% of its total assets in equity securities of companies whose market
capitalizations at the time of investment do not exceed 110% of the largest
company in the Russell 2000(R) Small Stock Index; these companies currently have
market capitalizations that range from $222 million to $1.4 billion. Villanova
Mutual Fund Capital Trust serves as the Fund's investment adviser and INVESCO
Management & Research, Inc. serves as the Fund's sub-adviser, providing daily
portfolio management for the Fund.
PUTNAM INTERNATIONAL GROWTH FUND - CLASS A
The investment objective of the Fund is to seek capital appreciation by
investing mostly in common stocks of companies outside the United States. The
investment adviser, Putnam Investment Management, Inc. ("Putnam Management")
first selects countries and industries that it believes are attractive. Putnam
Management then seeks stock offering opportunity for gain. Putnam Management
primarily invests in mid-size and large companies, although it may invest in
companies of any size. Although emphasis is based upon developed countries,
investments may also be made in companies located in developing markets, also
known as emerging markets.
PUTNAM INVESTORS FUND - CLASS A
The investment objective of the Fund is long-term growth of capital and any
increased income resulting from such growth. The Fund is designed for investors
seeking long-term growth of capital from a portfolio consisting primarily of
common stocks. The Fund's management emphasizes investment in quality growth
stocks. Putnam Investment Management, Inc., serves as the Fund's investment
adviser.
PUTNAM VOYAGER FUND - CLASS A
The investment objective of the Fund is capital appreciation. The Fund invests
primarily in common stocks believed to have potential for capital appreciation
significantly greater than the market average. The Fund is designed for
investors willing to assume above-average risk in return for above-average
capital growth potential. Putnam Investment Management, Inc. serves as the
Fund's investment adviser.
SEI INDEX FUNDS - S & P 500 INDEX PORTFOLIO
The S & P Index Portfolio seeks to provide investment results that correspond to
the aggregate price and dividend performance of the securities in the Standard &
Poor's 500 Composite Stock Price Index which is comprised of 500 selected common
stocks, most of which are listed on the New York Stock Exchange. The investment
objective is a fundamental policy of the Portfolio. There can be no assurance
that the Portfolio will achieve its investment objective. SEI Fund Management
serves as the Fund's investment adviser.
SELIGMAN GROWTH FUND, INC. - CLASS A
The investment objective of the Fund is longer-term growth in capital value and
an increase in future income. Fund assets have been invested primarily in common
stocks with the inherent investment risks tempered by portfolio diversification.
J & W Seligman & Co., Incorporated serves as the Fund's investment adviser.
SHORT-TERM INVESTMENTS TRUST - TREASURY PORTFOLIO - INSTITUTIONAL CLASS
The investment objective of the Portfolio is the maximization of current income
to the extent consistent with the preservation of capital and maintenance of
liquidity. The Portfolio seeks to achieve its objective by investing in a
portfolio
41
<PAGE> 44
consisting of direct obligations of the U.S. Treasury and repurchase agreements
secured by such obligations. The instruments purchased by the Portfolio will
have maturities of 397 days or less. AIM Advisers, Inc. serves as the Fund's
investment adviser.
T. ROWE PRICE INTERNATIONAL STOCK FUND(R)
The Fund's objective is long-term growth of capital through investments
primarily in common stocks of established, non-U.S. Companies. T. Rowe Price
Associates, Inc. serves as the Fund's investment adviser.
TEMPLETON FOREIGN FUND - CLASS A
The investment objective of the Fund is long-term capital growth through a
flexible policy of investing in stocks and debt obligations of companies and
governments outside the United States. Any income realized will be incidental.
Templeton Investment Counsel, Inc. serves as the Fund's investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUND IS NOT AVAILABLE FOR NEW PLANS ESTABLISHED
ON OR AFTER JUNE 30, 1998:
FIDELITY CONTRAFUND(R)
The investment objective of the Fund is capital appreciation by investing in
securities that its manager believes are undervalued due to an overly
pessimistic appraisal by the public. Although the Fund will usually be invested
primarily in common stocks and securities convertible into common stock, the
percentage of its assets invested in other securities may vary. Fidelity
Management & Research Company serves as the Fund's investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUND IS NOT AVAILABLE FOR NEW CONTRACTS ISSUED
ON OR AFTER OCTOBER 1, 1997:
FIDELITY MAGELLAN(R) FUND
The investment objective of the Fund is capital appreciation by investing
primarily in common stock and securities convertible into common stock. The Fund
may also invest in foreign securities, which involves additional risks. The Fund
may also invest in stock index futures and options both of which can be volatile
investments. Fidelity Management & Research Company serves as the Fund's
investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE FOR NEW CONTRACTS ISSUED
ON OR AFTER MAY 1, 1997:
AMERICAN CENTURY: GROWTH (FORMERLY, AMERICAN CENTURY - TWENTIETH CENTURY GROWTH)
The investment objective of the Fund is capital growth through investment in
securities which the management considers to have better-than-average prospects
for appreciation. It is management's intention that the portfolio will generally
consist of common stocks of large established companies. American Century
Investment Services, Inc. serves as the Fund's investment adviser.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND - CLASS A
The investment objective of the Fund is the long-term growth of capital and
future income rather than current income. Massachusetts Financial Services
Company serves as the Fund's investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUNDS MAY NOT BE AVAILABLE TO ALL ISSUED
CONTRACTS ON OR AFTER JULY 1, 1994:
THE BOND FUND OF AMERICA(SM), INC.
The Fund's investment objective is to provide as high a level of current income
as is consistent with the preservation of capital. The Fund invests
substantially all of its assets in marketable corporate debt securities, U.S.
Government securities, mortgage-related securities, other asset-backed
securities and cash or money market instruments. Normally, at least 65% of the
Fund's assets will be invested in bonds. Capital Research and Management Company
serves as the Fund's investment adviser.
42
<PAGE> 45
THE INVESTMENT COMPANY OF AMERICA(R), INC.
The investment objectives are long-term growth of capital and income. The Fund
strives to accomplish these objectives through constant supervision, careful
selection and broad diversification. In the selection of securities for
investment, the possibilities of appreciation and potential dividends are given
more weight than current yield. The Fund ordinarily invests principally in
common stocks. However, assets may also be held in securities convertible into
common stocks, straight debt securities (rated in the top three quality
categories by Standard & Poor's Corporation or Moody's Investor Service, Inc. or
determined to be of equivalent quality by Capital Research and Management
Company), cash equivalent quality by Capital Research and Management Company),
cash or cash equivalents, U.S. Government securities, or nonconvertible
preferred stocks. Massachusetts Financial Services Company serves as the Fund's
investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE FOR NEW CONTRACTS ISSUED
ON OR AFTER OCTOBER 1, 1993:
EVERGREEN INCOME AND GROWTH FUND - CLASS Y
The investment objective of the Fund is current income and capital appreciation.
The Fund invests primarily in common and preferred stocks, securities
convertible into or exchangeable for common stocks, and fixed income securities.
The Fund's objective is to maximize the "total return" on its portfolio of
investments. Evergreen Asset Management Corp. serves as the Fund's investment
adviser.
MFS(R) GROWTH OPPORTUNITIES FUND - CLASS A
The investment objective of the Fund is growth of capital. Dividend income, if
any, is incidental to the objective of capital growth. To achieve this
objective, a flexible approach toward types of companies as well as types of
securities is maintained by the Fund, depending upon the economic environment
and the relative attractiveness of the various securities markets. Massachusetts
Financial Services Company serves as the Fund's investment adviser.
NATIONWIDE(R) GROWTH FUND - CLASS D
The investment objective of the Fund is to seek long term capital appreciation
by investing primarily in equity securities of companies of all sizes. Major
emphasis in the selection of securities is placed on companies which have
capable management, and are in fields where social and economic trends,
technological developments, and new processes or products indicate a potential
for greater-than-average growth. Villanova Mutual Fund Capital Trust serves as
the Fund's investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE FOR OWNERS WHOSE
PREDECESSOR NATIONWIDE DCVA CONTRACT WAS ISSUED ON OR AFTER JANUARY 1, 1987:
FIDELITY CAPITAL & INCOME FUND
The investment objective of the Fund is to seek to provide a combination of
income and capital growth by investing primarily in debt instruments and common
and preferred stocks, with a focus on lower-quality debt securities and
securities of companies with uncertain financial positions. Fidelity Management
& Research Company serves as the Fund's investment adviser.
Effective on and after July 1, 1991, Nationwide will no longer permit contract
owners or participants to make additional purchase payments or to exchange
contract values into the Fidelity Capital & Income Fund. However, contract
values held in the Fidelity Capital & Income Fund as of July 1, 1991 may
continue to be invested in that sub-account. Unless Nationwide is notified
otherwise, any purchase payments or exchanges which the contract owner or
participant directs Nationwide to invest in the Fidelity Capital & Income Fund
on and after July 1, 1991 will instead be automatically invested in the
Nationwide Money Market Fund.
Nationwide has determined that further investment in the Fidelity Capital &
Income
43
<PAGE> 46
Fund is not in the best interests of the contract owners and participants in
view of the Fund's adoption, effective for shares purchased on and after
February 1, 1991, of a redemption fee equal to 1.5% of the net asset value of
any Fund shares redeemed which are held less than twelve months. Any redemption
fees which the Fund may assess against Fund shares held by Nationwide in the
NACo Variable Account which were purchased from February 1, 1991 to July 1, 1991
will be paid by Nationwide from surplus and will not be paid, directly or
indirectly, by contract owners, participants or the NACo Variable Account.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE FOR NEW CONTRACTS ISSUED
ON OR AFTER MAY 1, 2000:
AMERICAN CENTURY - INTERNATIONAL DISCOVERY - INVESTOR CLASS
The investment objective of the Fund is capital growth by investing primarily in
an internationally diversified portfolio of equity securities of issuers that
meet certain fundamental and technical standards of selection (relating
primarily to acceleration of earnings and revenues). The Fund will invest its
assets primarily in equity securities of small foreign issuers (those issuers
having, at the time of investment, a market capitalization of less than U.S. $1
billion or a public float of less than U.S. $500 million). The "public float" of
an issuer is defined as the aggregate market value of the issuer's outstanding
securities held by non-affiliates of the issuer. The Fund may invest up to 50%
of its assets in securities of issuers in emerging market countries. DUE TO THE
SIGNIFICANT RISKS ASSOCIATED WITH THE FUND'S INVESTMENT STRATEGY, AN INVESTMENT
IN THE FUND MAY NOT BE APPROPRIATE FOR ALL INVESTORS. American Century
Investment Management, Inc. serves as the Fund's investment adviser.
WARBURG PINCUS EMERGING GROWTH FUND - COMMON CLASS
The investment objective of the Fund is to seek maximum capital appreciation by
investing in equity securities of small- to medium- sized companies in the
United States with emerging or renewed growth potential. Credit Suisse Asset
Management, LLC serves as the Fund's investment adviser.
44
<PAGE> 47
APPENDIX B: CONDENSED FINANCIAL INFORMATION
The condensed financial information shown in the following tables shows the
accumulation unit values for an accumulation unit outstanding throughout the
period.
Variable Account Annual Expense Fee of 0.95% of average net assets
<TABLE>
<CAPTION>
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
<S> <C> <C> <C> <C> <C>
American Century: Growth - 7.915964 10.560508 33.41% 5,707,048 1999
Investor Class
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
5.842997 7.915964 35.48% 6,270,208 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
4.562802 5.842997 28.06% 17,611,062 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
4.005400 4.562802 13.92% 15,929,074 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.359891 4.005400 19.21% 37,362,979 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.443124 3.359891 -2.42% 38,748,520 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.350122 3.443124 2.78% 41,912,416 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.533694 3.350122 -5.19% 43,106,409 1992
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.571846 3.533694 37.40% 31,955,054 1991
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
American Century: Ultra - 2.316089 3.245463 40.13% 65,151,483 1999
Investor Class
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.737833 2.316089 33.27% 59,827,396 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.424846 1.737833 21.97% 125,555,220 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.263551 1.424846 12.77% 51,280,940 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
0.926489 1.263551 36.38% 79,405,506 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
0.970411 0.926489 -4.53% 59,484,505 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 0.970411 -2.96% 21,036,904 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
The Bond Fund of America(SM), Inc. 2.429862 2.461916 1.32% 2,893,175 1999
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.332586 2.429862 4.17% 3,149,438 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.155739 2.332586 8.20% 6,366,974 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.039710 2.155739 5.69% 3,393,296 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.741422 2.039710 17.13% 6,578,720 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.850918 1.741422 -5.92% 5,740,929 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.637181 1.850918 13.06% 5,644,051 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.484255 1.637181 10.30% 4,185,113 1992
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.338732 1.484255 10.87% 3,262,200 1991*
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
The Brown Capital Management - 1.000000 1.333508 33.35% 373,898 1999
Small Company Fund
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Dreyfus Appreciation Fund, Inc. 1.079920 1.176338 8.93% 4,345,914 1999
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 1.079920 7.99% 0 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Dreyfus Premier Midcap Stock 1.133060 1.241686 9.59% 389,835 1999
Fund - Class A
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 1.133060 13.31% 0 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
</TABLE>
45
<PAGE> 48
<TABLE>
<CAPTION>
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION ACCUMULATION
OF PERIOD PERIOD UNIT VALUE UNITS OUTSTANDING
AT THE END OF THE
PERIOD
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
<S> <C> <C> <C> <C> <C>
The Dreyfus Premier Third 4.554448 5.872109 28.93% 16,766,182 1999
Century Fund, Inc. - Class Z
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.532278 4.554448 28.94% 172 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.756438 3.532278 28.15% 14,863,803 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.238323 2.756438 23.15% 5,449,596 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.663803 2.238323 34.53% 9,402,637 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.814915 1.663803 -8.33% 9,817,673 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.740666 1.814915 4.27% 10,291,485 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.723855 1.740666 0.98% 8,918,980 1992
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.503652 1.723855 14.64% 4,654,790 1991*
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Evergreen Income and Growth Fund 2.380651 2.744107 15.27% 449,769 1999
- - Class Y
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.422617 2.380651 -1.73% 569,094 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.947502 2.422617 24.40% 1,666,312 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.741651 1.947502 11.82% 1,070,229 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.419467 1.741651 22.70% 2,635,928 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.531292 1.419467 -7.30% 3,343,918 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.368966 1.531292 11.86% 10,220,011 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.256090 1.368966 8.99% 8,701,160 1992
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.146614 1.256090 9.55% 7,977,105 1991*
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Federated U.S. Government 1.394078 1.373628 -1.47% 3,148,641 1999
Securities Fund: 2-5 Years -
Institutional Shares
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.301886 1.394078 7.08% 3,088,503 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.226751 1.301886 6.12% 3,296,152 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.195751 1.226751 2.59% 1,296,431 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.062969 1.195751 12.49% 2,344,091 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.094086 1.062969 -2.84% 1,802,090 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.031362 1.094086 6.08% 1,501,568 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 1.031362 3.14% 359,089 1992
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Fidelity Advisor Growth 1.089087 1.122853 3.10% 2,131,628 1999
Opportunities Fund - Class A
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 1.089087 8.91% 0 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Fidelity Advisor High Yield Fund 1.064478 1.142492 7.33% 918,451 1999
- - Class T
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 1.064478 6.45% 0 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Fidelity Capital & Income Fund 4.829318 5.414988 12.13% 157,277 1999
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
4.654233 4.829318 3.76% 187,924 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
4.096488 4.654233 13.26% 570,207 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.712491 4.096488 10.34% 294,263 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.210584 3.712491 15.63% 818,785 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.397953 3.210584 -5.51% 900,127 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.746533 3.397953 23.72% 1,009,928 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.165417 2.746533 26.84% 1,100,291 1992
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.972198 2.165417 9.80% 1,260,909 1991*
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
</TABLE>
46
<PAGE> 49
<TABLE>
<CAPTION>
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
<S> <C> <C> <C> <C> <C>
Fidelity Contrafund(R) 2.522162 3.124830 23.89% 84,298,429 1999
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.935931 2.522162 30.28% 79,731,135 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.588961 1.935931 21.84% 165,606,687 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.315600 1.588961 20.78% 63,488,282 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
0.974545 1.315600 38.84% 86,483,728 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
0.994981 0.974545 -4.77% 59,048,072 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 0.994981 -0.50% 17,300,194 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Fidelity Equity-Income Fund 7.691828 8.164209 6.14% 18,191,499 1999
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
6.900916 7.691828 11.46% 20,055,246 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
5.359692 6.900916 28.76% 51,141,002 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
4.471070 5.359692 19.87% 21,843,280 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.424310 4.471070 30.57% 41,090,717 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
3.448520 3.424310 -0.70% 37,439,255 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.869860 3.448520 20.16% 30,564,448 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.526472 2.869860 13.59% 25,417,028 1992
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.283309 2.526472 10.65% 24,200,256 1991*
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Fidelity Magellan(R)Fund 2.389171 2.935682 22.87% 36,026,007 1999
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.804998 2.389171 32.36% 33,527,719 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.439440 1.804998 25.40% 68,868,962 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.301185 1.439440 10.63% 35,450,214 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
0.960039 1.301185 35.53% 63,751,788 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
0.987051 0.960039 -2.74% 43,410,162 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 0.987051 -129% 9,307,585 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Fidelity OTC Portfolio 2.544511 4.348555 70.90% 12,343,613 1999
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.829868 2.544511 39.05% 7,583,243 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.680710 1.829868 8.87% 17,193,114 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.371346 1.680710 22.56% 4,002,730 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.001544 1.371346 36.92% 3,611,136 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 1.001544 0.15% 414,031 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
Fidelity Puritan Fund 1.843889 1.878662 1.89% 11,531,186 1999
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.596539 1.843889 15.49% 10,568,994 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.317344 1.596539 21.19% 19,817,717 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.154955 1.317344 14.06% 8,701,486 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
0.959935 1.154955 20.32% 11,375,851 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 0.959935 -4.01% 3,191,039 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
The Investment Company of 2.773161 3.201730 15.45% 16,605,220 1999
America(R), Inc.
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
2.277283 2.773161 21.77% 15,826,712 1998
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.771097 2.277283 28.58% 31,651,569 1997
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.498194 1.771097 18.22% 14,871,400 1996
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.157835 1.498194 29.40% 21,189,283 1995
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.167040 1.157835 -0.79% 15,911,747 1994
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.055548 1.167040 10.56% 9,316,764 1993
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
1.000000 1.055548 5.55% 1,904,764 1992
- ---------------------------------- ---------------------- --------------------- -------------------- --------------------- ---------
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESCO Dynamics Fund 1.172201 1.994791 70.17% 15,490,146 1999
1.000000 1.172201 17.22% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 1.023467 1.000023 -2.29% 1,169,616 1999
1.000000 1.023467 2.35% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 1.413926 1.391983 -1.55% 1,710,525 1999
1.335173 1.413926 5.90% 1,989,011 1998
1.229760 1.335173 8.57% 2,016,658 1997
1.156444 1.229760 6.34% 554,865 1996
0.980782 1.156444 17.91% 461,663 1995
1.000000 0.980782 -1.92% 16,059 1994
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - 11.531693 15.172145 31.57% 620,939 1999
Class A 9.012670 11.531693 27.95% 657,789 1998
7.380232 9.012670 22.12% 1,768,566 1997
6.114190 7.380232 20.71% 1,022,657 1996
4.589533 6.114190 33.22% 2,209,754 1995
4.834037 4.589533 -5.06% 2,656,048 1994
4.200054 4.834037 15.09% 6,486,767 1993
3.936838 4.200054 6.69% 6,897,026 1992
3.656615 3.936838 7.66% 7,710,706 1991(*)
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 6.172749 6.542182 5.98% 1,154,155 1999
6.168371 6.172749 0.07% 1,376,013 1998
5.518160 6.168371 11.78% 2,328,945 1997
4.949752 5.518160 11.48% 1,009,326 1996
4.265493 4.949752 16.04% 1,898,625 1995
4.422523 4.265493 -3.55% 1,736,718 1994
3.739642 4.422523 18.26% 1,666,484 1993
3.225557 3.739642 15.94% 1,036,199 1992
2.894993 3.225557 11.42% 817,803 1991(*)
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth 22.143725 30.435351 37.44% 291,339 1999
Stock Fund - Class A 15.968069 22.143725 38.68% 310,155 1998
10.880822 15.968069 46.75% 801,488 1997
8.942612 10.880822 21.67% 491,538 1996
7.034148 8.942612 27.13% 877,034 1995
7.613442 7.034148 -7.61% 876,723 1994
6.714892 7.613442 13.38% 837,196 1993
6.368639 6.714892 5.44% 711,003 1992
5.100857 6.368639 24.85% 559,059 1991
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
48
<PAGE> 51
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R)Fund - Class D 26.722904 26.409607 -1.17% 7,641,979 1999
20.697282 26.722904 29.11% 36 1998
14.964379 20.697282 38.31% 4,299,707 1997
12.191058 14.964379 22.75% 1,456,965 1996
9.468045 12.191058 28.76% 2,755,666 1995
9.502760 9.468045 -0.37% 2,754,540 1994
8.985447 9.502760 5.76% 2,950,704 1993
8.810680 8.985447 1.98% 3,032,348 1992
7.837093 8.810680 12.42% 2,238,323 1991(*)
- --------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund - Class D 4.725203 5.459300 15.54% 608,149 1999
3.854877 4.725203 22.58% 679,189 1998
3.083008 3.854877 25.04% 1,987,181 1997
2.667201 3.083008 15.59% 1,157,824 1996
2.092009 2.667201 27.49% 2,409,384 1995
2.081399 2.092009 0.51% 2,602,594 1994
1.887524 2.081399 10.27% 6,293,504 1993
1.792687 1.887524 5.29% 5,507,203 1992
1.498853 1.792687 19.60% 4,283,563 1991(*)
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund - 3.126448 3.241560 3.68% 28,870,336 1999
Prime Shares(*) 3.003821 3.126448 4.08% 0 1998
2.884848 3.003821 4.12% 5,808,984 1997
2.774433 2.884848 3.98% 6,821,937 1996
2.654661 2.774433 4.51% 15,458,252 1995
2.583387 2.654661 2.76% 14,664,113 1994
2.542721 2.583387 1.60% 15,887,549 1993
2.487178 2.542721 2.23% 17,431,451 1992
2.433806 2.487178 2.19% 20,546,392 1991
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index Fund - 1.093335 1.297364 18.66% 6,347,979 1999
Institutional Service Class 1.000000 1.093335 9.33% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 1.060654 1.148147 8.25% 601,624 1999
Institutional Service Class 1.000000 1.060654 6.07% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige International Fund - 1.091712 1.312511 20.23% 266,519 1999
Institutional Service Class 1.000000 1.091712 9.17% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - 1.139190 1.521478 33.56% 1,613,687 1999
Institutional Service Class 1.000000 1.139190 13.92% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE> 52
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prestige Large Cap Value Fund - 1.049084 0.990976 -5.54% 500,299 1999
Institutional Service Class 1.000000 1.049084 4.91% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - 1.090028 1.282305 17.64% 639,055 1999
Institutional Service Class 1.000000 1.090028 9.00% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 0.961847 1.372165 42.66% 4,210,485 1999
Trust - Nationwide Small 0.961325 0.961847 0.05% 0 1998
Company Fund 1.000000 0.961325 -3.87% 0 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 1.000000 1.004737 0.47% 76,327 1999
Trust - Nationwide Income Fund
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.149592 1.414142 23.01% 3,343,311 1999
Aggressive Portfolio 1.000000 1.149592 14.96% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.107721 1.138660 2.79% 1,407816 1999
Conservative Portfolio 1.000000 1.107721 10.77% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.143295 1.301106 13.80% 3,402,725 1999
Moderate Portfolio 1.000000 1.143295 14.33% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.140824 1.348570 18.21% 3,687,537 1999
Moderately Aggressive Portfolio 1.000000 1.140824 14.08% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.129262 1.228184 8.76% 1,438,273 1999
Moderatly Conservative Portfolio 1.000000 1.129262 12.93% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, 1.729738 1.858329 7.43% 8,085,725 1999
Inc. 1.706116 1.729738 1.38% 9,040,807 1998
1.460410 1.706116 16.82% 23,446,031 1997
1.250781 1.460410 16.76% 6,973,153 1996
0.955773 1.250781 30.87% 7,940,457 1995
1.000000 0.955773 -4.42% 907,272 1994
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Trust 1.041626 1.111167 6.68% 172,552 1999
1.000000 1.041626 4.16% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - Class A 1.106231 1.736568 56.98% 2,423,388 1999
1.000000 1.106231 10.62% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
50
<PAGE> 53
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Putnam Investors Fund - Class A 24.311753 31.341504 28.92% 2,614,963 1999
18.110411 24.311753 34.24% 2,421,935 1998
13.594501 18.110411 33.22% 3,305,277 1997
11.305164 13.594501 20.25% 1,545,059 1996
8.297318 11.305164 36.25% 2,260,621 1995
8.652501 8.297318 -4.10% 2,145,377 1994
7.410567 8.652501 16.76% 1,975,963 1993
6.934213 7.410567 6.87% 1,682,860 1992
6.383603 6.934213 8.63% 1,597,104 1991(*)
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 4.715165 7.292508 54.66% 28,160,360 1999
3.837109 4.715165 22.88% 27,161,675 1998
3.074879 3.837109 24.79% 52,162,678 1997
2.752130 3.074879 11.73% 22,936,312 1996
1.982311 2.752130 38.83% 27,203,903 1995
1.992379 1.982311 -0.51% 19,751,850 1994
1.698751 1.992379 17.28% 12,946,038 1993
1.563079 1.698751 8.68% 5,917,563 1992
1.256187 1.563079 24.43% 1,655,847 1991(*)
- -----------------------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 Index 1.0909266 2.284904 19.67% 37,302,650 1999
Portfolio 1.501834 1.909266 27.13% 28,576,205 1998
1.139331 1.501834 31.82% 38,540,683 1997
1.000000 1.139331 13.93% 4,129,102 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - 16.801408 21.680777 29.04% 363,615 1999
Class A 12.541848 16.801408 33.96% 352,047 1998
10.720312 12.541848 16.99% 772,926 1997
8.934609 10.720312 19.99% 381,977 1996
7.020585 8.934609 27.26% 616,776 1995
7.370495 7.020585 -4.75% 582,039 1994
6.989639 7.370495 5.45% 538,601 1993
6.340967 6.989639 10.23% 364,304 1992
5.483042 6.340967 15.65% 308,224 1991(*)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE> 54
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Short-Term Investments Trust - 1.276562 1.327776 4.01% 3,245,4659 1999
Treasury Portfolio - 1.222017 1.276562 4.46% 1,766,084 1998
Institutional Class(**) 1.168909 1.222017 4.54% 3,399,331 1997
1.119630 1.168909 4.40% 1,151,812 1996
1.066889 1.119630 4.94% 1,524,715 1995
1.034183 1.066889 3.16% 1,223,255 1994
1.012172 1.034183 2.17% 500,957 1993
1.000000 1.012172 1.22% 246,584 1992
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - Class A 1.209836 1.668314 37.09% 34,231,502 1999
1.284158 1.209836 -5.79% 0 1998
1.215580 1.284158 5.64% 18,596,589 1997
1.040054 1.215580 16.88% 13,461,397 1996
0.944596 1.040054 10.11% 16,316,118 1995
1.000000 0.944596 -5.54% 6,972,585 1994
- -----------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International 1.379298 1.839019 33.33% 9,450,213 1999
Stock Fund(R) 1.198954 1.379298 15.04% 9,434,812 1998
1.178559 1.198954 1.73% 23,881,713 1997
1.025854 1.178559 14.89% 9,304,599 1996
0.929695 1.025854 10.34% 10,412,582 1995
1.000000 0.929695 -7.03% 4,482,375 1994
- -----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth 1.139928 1.601232 40.47% 615,114 1999
Fund - Common Class 1.000000 1.139928 13.99% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) Period from July 1, 1991 (the date participant accounts of the NACo program
were transferred from the Nationwide DC Variable Account to the NACo
Variable Account and the NACo Variable Account began operations exclusive
to the NACo program).
(**) The 7-day yield on the Short-Term Investment Trust - Treasury Portfolio -
Institutional Class as of December 31, 1999 was 3.80%.
The Brown Capital Management - Small Company Fund and the NSAT - Nationwide
Income Fund were added to the variable account October 1, 1999. Therefore, the
Condensed Financial Information reflects the period from October 1, 1999 to
December 31, 1999.
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A, were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
52
<PAGE> 55
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.90% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Growth - 7.926529 10.579885 33.47% 3,347,303 1999
Investor Class 5.847874 7.926529 35.55% 3,210,215 1998
4.564331 5.847874 28.12% 2,972,496 1997
4.258167 4.564331 7.19% 6,416,724 1996
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Ultra - 2.319181 3.251418 40.20% 30,085,075 1999
Investor Class 1.739283 2.319181 33.34% 25,526,505 1998
1.425323 1.739283 22.03% 17,512,296 1997
1.349699 1.425323 5.60% 17,364,360 1996
- -----------------------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), 2.433154 2.466496 1.37% 1,583,478 1999
Inc. 2.334569 2.433154 4.22% 1,615,501 1998
2.156482 2.334569 8.26% 838,935 1997
2.019231 2.156482 6.80% 1,041,402 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth 2.383829 2.749144 15.32% 236,494 1999
Fund - Class Y 2.424638 2.383829 -1.68% 288,461 1998
1.948154 2.424638 24.46% 164,209 1997
1.797369 1.948154 8.39% 267,437 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Federated U.S. Government 1.395957 1.376174 -1.42% 1,609,939 1999
Securities Fund: 2-5 Years - 1.302984 1.395957 7.14% 1,498,243 1998
Institutional Shares 1.227166 1.302984 6.18% 485,556 1997
1.179520 1.227166 4.04% 431,282 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 4.835829 5.425025 12.18% 63,602 1999
4.658156 4.835829 3.81% 59,194 1998
4.097872 4.658156 13.67% 50,755 1997
3.859929 4.097872 6.16% 76,382 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund(R) 2.525528 3.130565 23.96% 40,184,712 1999
1.937547 2.525528 30.35% 34,985,707 1998
1.589493 1.937547 21.90% 23,258,606 1997
1.428112 1.589493 11.30% 22,719,185 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 7.702094 8.179193 6.19% 10,324,567 1999
6.906673 7.702094 11.52% 10,047,811 1998
5.361485 6.906673 28.82% 6,412,368 1997
4.790401 5.361485 11.92% 7,437,534 1996
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE> 56
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Magellan(R)Fund 2.392359 2.941068 22.94% 16,600,165 1999
1.806504 2.392359 32.43% 13,728,148 1998
1.439922 1.806504 25.46% 9,967,418 1997
1.327329 1.439922 8.48% 12,036,679 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 2.547908 4.356533 70.98% 6,382,037 1999
1.831396 2.547908 39.12% 3,156,471 1998
1.681272 1.831396 8.93% 2,364,115 1997
1.509365 1.681272 11.39% 1,269,335 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 1.846350 1.882110 1.94% 5,616,280 1999
1.597871 1.846350 15.55% 5,207,051 1998
1.317785 1.597871 21.25% 2,540,462 1997
1.202745 1.317785 9.56% 3,037,801 1996
- -----------------------------------------------------------------------------------------------------------------------------------
The Investment Company of 2.776862 3.207605 15.51% 8,076,180 1999
America(R), Inc. 2.279183 2.776862 21.84% 6,890,273 1998
1.771690 2.279183 28.64% 5,422,918 1997
1.588880 1.771690 11.51% 5,329,249 1996
- -----------------------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income Portfolio 1.415813 1.394539 -1.50% 761,207 1999
1.336288 1.415813 5.95% 991,972 1998
1.230172 1.336288 8.63% 274,281 1997
1.148924 1.230172 7.07% 236,446 1996
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities Fund - 11.547088 15.199990 31.63% 336,193 1999
Class A 9.020195 11.547088 28.01% 366,180 1998
7.382705 9.020195 22.18% 235,276 1997
6.921487 7.382705 6.66% 323,628 1996
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - Class A 6.181070 6.554308 6.04% 530,540 1999
6.173570 6.181070 0.12% 516,943 1998
5.520025 6.173570 11.84% 244,788 1997
5.086868 5.520025 8.52% 244,640 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors Growth 22.173275 30.491188 37.51% 148,153 1999
Stock Fund - Class A 15.981395 22.173275 38.74% 143,669 1998
10.884466 15.981395 46.83% 111,799 1997
10.146619 10.884466 7.27% 155,643 1996
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
54
<PAGE> 57
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R)Growth Fund - 4.731510 5.469318 15.59% 418,385 1999
Class D 3.858094 4.731510 22.64% 408,603 1998
3.084040 3.858094 25.10% 360,606 1997
2.839932 3.084040 8.60% 507,782 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, 1.732048 1.861741 7.49% 3,862,738 1999
Inc. 1.707540 1.732048 1.44% 4,341,380 1998
1.460899 1.707540 16.88% 3,222,201 1997
1.325880 1.460899 10.18% 2,513,725 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 24.344197 31.399010 28.98% 1,097,069 1999
18.125525 24.344197 34.31% 897,593 1998
13.599051 18.125525 33.29% 329,877 1997
12.145782 13.599051 11.97% 371,840 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 4.721461 7.305890 54.74% 12,707,716 1999
3.840312 4.721461 22.94% 10,644,754 1998
3.075909 3.840312 24.85% 7,200,296 1997
3.068900 3.075909 0.23% 7,518,991 1996
- -----------------------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 Index 1.911811 2.289108 19.74% 15,887,411 1999
Portfolio 1.503085 1.911811 27.19% 12,293,095 1998
1.139711 1.503085 31.88% 5,223,019 1997
1.000000 1.139711 13.97% 1,547,081 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - 16.823830 21.720557 29.11% 196,213 1999
Class A 12.552317 16.823830 34.03% 174,614 1998
10.723901 12.552317 17.05% 80,990 1997
9.776056 10.723901 9.70% 90,771 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Short-Term Investments - Trust - 1.278283 1.330237 4.06% 1,054,742 1999
Treasury Portfolio - 1.223047 1.278283 4.52% 1,030,158 1998
Institutional Class(*) 1.169304 1.223047 4.60% 203,199 1997
1.135916 1.169304 2.94% 201,261 1996
- -----------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International 1.381139 1.842393 33.40% 4,231,419 1999
Stock Fund(R) 1.199955 1.381139 15.10% 3,948,203 1998
1.178953 1.199955 1.78% 3,056,840 1997
1.108680 1.178953 6.34% 3,705,323 1996
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 7-day yield on the Short-Term Investment Trust - Treasury Portfolio -
Institutional Class as of December 31, 1999 was 3.85%.
The American Century: Value - Investor Class, DEM Equity Fund - Institutional
Shares, and the Putnam International Growth Portfolio - Class A were effective
May 1, 2000. Therefore, no Condensed Financial Information is available.
55
<PAGE> 58
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.80% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Income & 1.097995 1.284360 17.02% 3,764,884 1999
Growth - Investor Class 1.000000 1.097995 9.76% 76,300 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Growth - 7.947702 10.618746 33.61% 2,936,941 1999
Investor Class 5.857641 7.947702 35.68% 2,832,513 1998
4.567388 5.857641 28.25% 1,491,035 1997
4.258179 4.567388 7.26% 3,952,718 1996
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: International 1.084264 2.028049 87.04% 2,162,693 1999
Discovery - Investor Class 1.000000 1.084264 8.43% 103,189 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Ultra - 2.325375 3.263360 40.34% 24,412,865 1999
Investor Class 1.742188 2.325375 33.47% 20,465,127 1998
1.426278 1.742188 22.15% 9,471,388 1997
1.349702 1.426278 5.67% 11,724,488 1996
- -----------------------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), 2.439748 2.475675 1.47% 845,978 1999
Inc. 2.338535 2.439748 4.33% 954,957 1998
2.157968 2.338535 8.37% 597,695 1997
2.019264 2.157968 6.87& 737,276 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 1.080133 1.178335 9.09% 1,675,249 1999
1.000000 1.080133 8.01% 60,330 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Midcap Stock 1.133283 1.243793 9.75% 189,449 1999
Fund - Class A 1.000000 1.133283 13.33% 6,837 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third 4.572707 5.904491 29.12% 6,853,289 1999
Century Fund, Inc. - Class Z 3.541129 4.572707 29.13% 6,657,158 1998
2.759207 3.541129 28.34% 917,688 1997
2.450473 2.759207 12.60% 1,075,140 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth 2.390198 2.759246 15.44% 121,424 1999
Fund - Class Y 2.428687 2.390198 -1.58% 111,941 1998
1.949458 2.428687 24.58% 130,014 1997
1.797374 1.949458 8.46% 303,775 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 1.018687 0.986932 -3.12% 391,834 1999
1.000000 1.018687 1.87% 77,098 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE> 59
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Federated U.S. Government 1.399720 1.381277 -1.32% 966,135 1999
Securities Fund: 2-5 Years - 1.305179 1.399720 7.24% 1,061,815 1998
Institutional Shares 1.227995 1.305179 6.29% 241,356 1997
1.179523 1.227995 4.11% 184,497 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 1.089301 1.124760 3.26% 1,065,003 1999
Opportunities Fund - Class A 1.000000 1.089301 8.93% 32,561 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield 1.064751 1.144516 7.49% 288,717 1999
Fund - Class T 1.000000 1.064751 6.48% 395 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 4.848865 5.445140 12.30% 54,447 1999
4.666006 4.848865 3.92% 60,278 1998
4.100640 4.666006 13.79% 120,784 1997
3.859939 4.100640 6.24% 203,017 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund(R) 2.532274 3.142065 24.08% 28,730,584 1999
1.940782 2.532274 30.48% 26,018,143 1998
1.590557 1.940782 22.02% 12,620,829 1997
1.428116 1.590557 11.37% 13,966,075 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 7.722666 8.209245 6.30% 6,514,414 1999
6.918202 7.722666 11.63% 6,525,557 1998
5.365074 6.918202 28.95% 5,904,892 1997
4.790414 5.365074 12.00% 6,668,170 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 2.398748 2.951871 23.06% 12,975,760 1999
1.809520 2.398748 32.56% 11,284,101 1998
1.440886 1.809520 25.58% 5,726,530 1997
1.327332 1.440886 8.56% 6,812,829 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 2.554714 4.372532 71.16% 4,962,923 1999
1.834455 2.554714 39.26% 2,759,385 1998
1.682398 1.834455 9.04% 1,302,436 1997
1.509369 1.682398 11.46% 886,668 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 1.851282 1.889025 2.04% 3,553,477 1999
1.600539 1.851282 15.67% 3,223,535 1998
1.318667 1.600539 21.38% 1,283,945 1997
1.202749 1.318667 9.64% 1,390,626 1996
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
57
<PAGE> 60
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESCO Dynamics Fund 1.172431 1.998173 70.43% 5,368,795 1999
1.000000 1.172431 17.24% 38,248 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 1.023668 1.001721 -2.14% 515,739 1999
1.000000 1.023668 2.37% 9,067 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Investment Company of 2.784278 3.219387 15.63% 5,292,541 1999
America(R), Inc. 2.282988 2.784278 21.96% 4,926,029 1998
1.772876 2.282988 28.77% 2,356,594 1997
1.588884 1.772876 11.58% 2,306,070 1996
- -----------------------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income 1.419597 1.399665 -1.40% 471,750 1999
Portfolio 1.338520 1.419597 6.06% 261,209 1998
1.230995 1.338520 8.73% 94,434 1997
1.148928 1.230995 7.14% 116,525 1996
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities 11.577941 15.255834 31.77% 184,281 1999
Fund Class A 9.035263 11.577941 28.14% 190,471 1998
7.387651 9.035263 22.30% 197,549 1997
6.921506 7.387651 6.73% 330,931 1996
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - 6.197734 6.578610 6.15% 274,998 1999
Class A 6.183974 6.197734 0.22% 346,946 1998
5.523753 6.183974 11.95% 233,869 1997
5.086882 5.523753 8.59% 252,930 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 22.232493 30.603169 37.65% 130,090 1999
Growth Stock Fund - Class A 16.008079 22.232493 38.88% 125,998 1998
10.891758 16.008079 46.97% 78,577 1997
10.146647 10.891758 7.34% 136,164 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional 1.106680 1.530130 38.26% 393,751 1999
Fund, Inc. - Equity Growth 1.000000 1.106680 10.67% 11,853 1998
Portfolio - Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D 26.830004 26.555267 -1.02% 3,639,165 1999
20.749126 26.830004 29.31% 3,247,615 1998
14.979404 20.749126 38.52% 355,149 1997
13.111665 14.979404 14.24% 289,479 1996
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE> 61
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R)Growth Fund - 4.744149 5.489411 15.71% 267,313 1999
Class D 3.864536 4.744149 22.76% 280,426 1998
3.086105 3.864536 25.22% 89,839 1997
2.839940 3.086105 8.67% 133,215 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund - 3.139103 3.259610 3.84% 9,606,399 1999
Prime Shares(*) 3.011419 3.139103 4.24% 6,949,105 1998
2.887772 3.011419 4.28% 1,219,186 1997
2.810841 2.887772 2.74% 1,754,115 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index Fund - 1.093550 1.299566 18.84% 2,766,474 1999
Institutional Service Class 1.000000 1.093550 9.36% 64,039 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 0.963521 1.376614 42.87% 1,760,003 1999
Trust - Nationwide Small Company 0.961555 0.963521 -3.65% 1,340,017 1998
Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian Fund, 1.736676 1.868582 7.60% 2,782,043 1999
Inc. 1.710392 1.736676 1.54% 2,886,123 1998
1.461877 1.710392 17.00% 1,596,621 1997
1.325883 1.461877 10.26% 1,655,042 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners Trust 1.041831 1.113054 6.84% 82,850 1999
1.000000 1.041831 4.18% 6 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - Class A 1.106449 1.739511 57.22% 772,544 1999
1.000000 1.106449 10.64% 2,237 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - Class A 24.409212 31.514335 29.11% 574,562 1999
18.155790 24.409212 34.44% 549,318 1998
13.608156 18.155790 33.42% 233,708 1997
12.145815 13.608156 12.02% 239,486 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 4.734076 7.332728 54.89% 8,329,118 1999
3.846728 4.734076 23.07% 7,755,689 1998
3.077970 3.846728 24.98% 3,817,279 1997
3.068905 3.077970 0.30% 4,941,310 1996
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE> 62
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SEI Index Funds - S&P 500 1.916911 2.297509 19.85% 11,667,253 1999
Index Portfolio 1.505589 1.916911 27.32% 8,439,537 1998
1.140471 1.505589 32.01% 3,491,065 1997
1.000000 1.140471 14.05% 1,023,459 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - 6.868765 21.800337 29.23% 95,801 1999
Class A 2.573280 16.868765 34.16% 90,887 1998
0.731082 12.573280 17.17% 61,083 1997
9.776083 10.731082 9.77% 107,031 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust - 1.281729 1.335169 4.17% 840,048 1999
Treasury Portfolio - 1.225108 1.281729 4.62% 320,548 1998
Institutional Class(**) 1.170093 1.225108 4.70% 331,148 1997
1.135919 1.170093 3.01% 394,386 1996
- -----------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International 1.384829 1.849161 33.53% 3,274,763 1999
Stock Fund(R) 1.201960 1.384829 15.21% 3,133,125 1998
1.179742 1.201960 1.88% 1,722,849 1997
1.108683 1.179742 6.41% 2,213,126 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - 1.514689 1.677518 38.10% 13,904,517 1999
Class A 1.287377 1.214689 -5.65% 13,917,762 1998
1.216800 1.287377 5.80% 2,363,601 1997
1.114642 1.216800 9.17% 2,314,772 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth 1.140152 1.603948 40.68% 216,315 1999
Fund - Common Class 1.000000 1.140152 14.02% 5,986 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 7-day yield on the Nationwide(R) Money Market Fund - Prime Shares as of
December 31, 1999 was 4.51%.
(**) The 7-day yield on the Short-Term Investment Trust - Treasury Portfolio -
Institutional Class as of December 31, 1999 was 3.95%.
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
60
<PAGE> 63
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.70% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Income & 1.097739 1.285813 17.13% 1,505,535 1999
Growth - Investor Class 1.000000 1.097739 9.77% 36,320 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: International 1.084406 2.030338 87.23% 1,190,455 1999
Discovery - Investor Class 1.000000 1.084406 8.44% 43,124 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Brown Capital Management - 1.000000 1.335232 33.52% 32,466 1999
Small Company Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, Inc. 1.080275 1.179669 9.20% 891,896 1999
1.000000 1.080275 8.03% 52,910 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Midcap Stock 1.133431 1.245200 9.86% 66,860 1999
Fund - Class A 1.000000 1.133431 13.34% 23,028 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third 4.584920 5.926178 29.25% 3,581,927 1999
Century Fund, Inc. - Class Z 3.547042 4.584920 29.26% 3,080,222 1998
2.761054 3.547042 28.47% 724,635 1997
2.450480 2.761054 12.67% 2,645,579 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 1.018821 0.988049 -3.02% 114,902 1999
1.000000 1.018821 1.88% 1,037 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 1.089444 1.126033 3.36% 279,072 1999
Opportunities Fund - Class A 1.000000 1.089444 8.94% 1,223 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield 1.064934 1.145866 7.60% 218,567 1999
- - Class T 1.000000 1.064934 6.49% 116 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 1.172584 2.000430 70.60% 2,683,126 1999
1.000000 1.172584 17.26% 3,535 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 1.023803 1.002855 -2.05% 139,419 1999
1.000000 1.023803 2.38% 1,276 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.152311 1.421032 23.32% 1,421,322 1999
Aggressive Portfolio 1.000000 1.152311 15.23% 819,842 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.110341 1.144210 3.05% 551,322 1999
Conservative Portfolio 1.000000 1.110341 11.03% 382,730 1998
- ------------------------------------------------ --------------------- -------------------- ------------------------- ------------
</TABLE>
61
<PAGE> 64
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LifeDesigns Series - The 1.145999 1.307445 14.09% 2,040,355 1999
Moderate Portfolio 1.000000 1.145999 14.60% 1,312,884 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.143522 1.355141 18.51% 1,865,891 1999
Moderately Aggressive 1.000000 1.143522 14.35% 1,127,941 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.131933 1.234169 9.03% 714,817 1999
Moderatly Conservative 1.000000 1.131933 13.19% 455,658 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional 1.106825 1.531860 38.40% 189,694 1999
Fund, Inc. - Equity Growth 1.000000 1.106825 10.68% 0 1998
Portfolio - Class B 1.000000 1.106825 10.68% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D 26.901646 26.652820 -0.92% 1,451,429 1999
0.783760 26.901646 29.44% 1,298,643 1998
4.989429 20.783760 38.66% 218,220 1997
3.111701 14.989429 14.32% 664,951 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market 3.147557 3.271683 3.94% 4,804,733 1999
Fund - Prime Shares(*) 3.016489 3.147557 4.35% 3,320,018 1998
2.889720 3.016489 4.39% 1,244,833 1997
2.810849 2.889720 2.81% 6,170,419 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index 1.093694 1.301036 18.96% 1,260,851 1999
Fund Institutional Service 1.000000 1.093694 9.37% 97,706 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 1.000000 1.006039 0.60% 35,556 1999
Trust - Nationwide Income
Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 0.964638 1.379587 43.02% 885,218 1999
Trust - Nationwide Small
Company Fund 0.961707 0.964638 0.30% 589,435 1998
1.000000 0.961707 -3.83% 0
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners 1.041968 1.114314 6.94% 29,128 1999
Trust 1.000000 1.041968 4.20% 46,617 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 1.061002 1.151398 8.52% 289,882 1999
Institutional Service Class 1.000000 1.061002 6.10% 67,659 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 7-day yield on the Nationwide(R) Money Market Fund - Prime Shares as of
December 31, 1999 was 4.61%.
62
<PAGE> 65
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prestige International Fund - 1.092070 1.316225 20.53% 120,441 1999
Institutional Service Class 1.000000 1.092070 9.21% 2,686 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund - 1.139564 1.525781 33.89% 592,875 1999
Institutional Service Class 1.000000 1.139564 13.96% 39,909 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - 1.049429 0.993783 -5.30% 184,328 1999
Institutional Service Class 1.000000 1.049429 4.94% 858 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - 1.090386 1.285935 17.93% 370,694 1999
Institutional Service Class 1.000000 1.090386 9.04% 7,654 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - 1.106594 1.741477 57.37% 526,744 1999
Class A 1.000000 1.106594 10.66% 942 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - 1.217936 1.683681 38.24% 7,963,049 1999
Class A 1.289527 1.217936 -5.55% 7,746,564 1998
1.217615 1.289527 6.08% 1,164,252 1997
1.114645 1.217615 9.06% 5,552,808 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging Growth 1.140301 1.605761 40.28% 92,452 1999
Fund - Common Class 1.000000 1.140301 14.03% 882 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The American Century: Value - Investor Class, DEM Equity Fund - Institutional
Shares, and the Putnam International Growth Portfolio - Class A were effective
May 1, 2000. Therefore, no Condensed Financial Information is available.
63
<PAGE> 66
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.65% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Growth - 7.975584 10.671975 33.81% 1,320,330 1999
Investor Class 5.869391 7.975584 35.88% 1,377,500 1998
4.776599 5.869391 22.88% 2,322,606 1997
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Ultra - 2.333533 3.279718 40.55% 11,013,444 1999
Investor Class 1.745683 2.333533 33.67% 9,983,888 1998
1.474619 1.745683 18.38% 19,969,711 1997
- -----------------------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), 2.448428 2.488240 1.63% 596,763 1999
Inc. 2.343312 2.448428 4.49% 722,007 1998
2.185294 2.343312 7.23% 753,555 1997
- -----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third 4.588748 5.934089 29.32% 0 1999
Century Fund, Inc. 3.548231 4.588748 29.32% 0 1998
2.913941 3.548231 21.77% 2,219,012 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth 2.398586 2.773083 15.61% 103,645 1999
Fund - Class Y 2.433557 2.398586 -1.44% 125,423 1998
1.949492 2.433557 24.83% 297,366 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Federated U.S. Government 1.404671 1.388259 -1.17% 605,238 1999
Securities Fund: 2-5 Years - 1.307818 1.404671 7.41% 558,667 1998
Institutional Shares 1.238301 1.307818 5.61% 579,571 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 4.866016 5.472662 12.47% 121,306 1999
4.675440 4.866016 4.08% 142,236 1998
4.139531 4.675440 21.95% 61,610 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund(R) 2.541159 3.157817 24.27% 12,905,080 1999
1.944675 2.541159 30.67% 11,832,023 1998
1.597582 1.944675 21.73% 19,667,377 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 7.749762 8.250412 6.46% 4,029,550 1999
6.932074 7.749762 11.80% 4,532,595 1998
5.639098 6.932074 22.93% 8,086,997 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 2.407162 2.966668 23.24% 5,649,149 1999
1.813149 2.407162 32.76% 5,041,523 1998
1.494160 1.813149 21.35% 6,992,191 1997
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
64
<PAGE> 67
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity OTC Portfolio 2.563678 4.394446 71.41% 2,949,108 1999
1.838136 2.563678 39.47% 1,453,622 1998
1.604136 1.838136 14.59% 2,776,451 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Puritan Fund 1.857778 1.898498 2.19% 1,302,794 1999
1.603749 1.857778 15.84% 1,260,820 1998
1.388317 1.603749 15.52% 2,031,661 1997
- -----------------------------------------------------------------------------------------------------------------------------------
The Investment Company of 2.794045 3.235527 15.80% 2,061,483 1999
America(R), Inc. 2.287566 2.794045 22.14% 1,858,205 1998
1.890348 2.287566 21.01% 2,872,363 1997
- -----------------------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income 1.424580 1.406687 -1.26% 302,278 1999
Portfolio 1.341206 1.424580 6.22% 278,580 1998
1.248067 1.341206 7.46% 277,396 1997
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities 11.618570 15.332326 31.96% 176,097 1999
Fund - Class A 9.053391 11.618570 28.33% 180,839 1998
7.676856 9.053391 17.90% 212,160 1997
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - .219656 6.611862 6.31% 217,273 1999
Class A 6.196477 6.219656 0.37% 253,885 1998
5.615972 6.196477 10.34% 418,967 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 22.310477 30.756553 37.86% 65,612 1999
Growth Stock Fund - Class A 16.040180 22.310477 39.09% 64,922 1998
12.126811 16.040180 32.27% 117,830 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D 26.924106 26.688417 -0.88% 0 1999
20.790728 26.924106 29.50% 0 1998
16.412492 20.790728 26.68% 569,519 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund - 4.760794 5.516934 15.88% 87,937 1999
Class D 3.872287 4.760794 22.95% 88,677 1998
3.194767 3.872287 21.21% 269,417 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market 3.150207 3.276085 4.00% 0 1999
Fund - Class D 3.017508 3.150207 4.40% 0 1998
2.930108 3.017508 2.98% 3,269,252 1997
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
65
<PAGE> 68
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Neuberger Berman Guardian 1.742771 1.877955 7.76% 1,247,986 1999
Fund, Inc. 1.713822 1.742771 1.69% 1,466,182 1998
1.527855 1.713822 12.17% 4,309,283 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - 24.494833 31.672308 29.30% 344,475 1999
Class A 18.192202 24.494833 34.64% 297,345 1998
14.574047 18.192202 24.83% 377,276 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 4.750689 7.369487 55.12% 4,498,006 1999
3.854445 4.750689 23.25% 4,199,459 1998
3.048108 3.854445 26.45% 6,307,757 1997
- -----------------------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 1.923629 2.309019 20.03% 6,630,666 1999
Index Portfolio 1.508603 1.923629 27.51% 5,122,867 1998
1.234422 1.508603 22.21% 5,095,657 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - 16.927940 21.909617 29.43% 64,846 1999
Class A 12.598501 16.927940 34.36% 52,182 1998
11.006405 12.598501 14.47% 124,591 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Short-Term Investments 1.286263 1.341918 4.33% 886,018 1999
Trust - Treasury Portfolio - 1.227585 1.286263 4.78% 891,584 1998
Institutional Class(*) 1.188793 1.227585 3.26% 238,580 1997
- -----------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International 1.38969 1.858432 33.73% 1,470,871 1999
Stock Fund(R) 1.204372 1.389689 15.39% 1,610,019 1998
1.193159 1.204372 0.94% 4,374,310 1997
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 7-day yield on the Short-Term Investment Trust - Treasury Portfolio -
Institutional Class as of December 31, 1999 was 4.10%.
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
66
<PAGE> 69
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.60% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Growth - 7.920734 10.603876 33.87% 78,744 1999
Investor Class 6.767825 7.920734 17.04% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Ultra - 2.317484 3.258789 40.26% 1,424,061 1999
Investor Class 1.961685 2.317848 18.14% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Bond Fund of America,(SM) 2.431483 2.472263 1.68% 28,883 1999
Inc. 2.365187 2.431483 2.80% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Inestment Company of 2.774834 3.214887 15.86% 214,097 1999
America,(R)Inc. 2.519405 2.774834 10.14% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth 2.382088 2.755385 15.67% 1,466 1999
Fund - Class Y 2.262917 2.382088 5.27% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Federated U.S. Securities 1.395318 1.379708 -1.12% 69,872 1999
Fund: 2-5 Years - 1.398557 1.395318 -0.23% 0 1998
Institutional Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income 4.833614 5.438956 12.52% 10 1999
Fund 4.467362 4.833614 8.20% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund(R) 2.523680 3.137664 24.33% 2,269,071 1999
2.110428 2.523680 19.58% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 7.696470 8.197774 6.51% 292,888 1999
7.136396 7.696470 7.85% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 2.390610 2.947739 23.30% 885,057 1999
2.025853 2.390610 18.01% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 2.546041 4.366394 71.50% 267,530 1999
2.068458 2.546041 23.09% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
67
<PAGE> 70
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Puritan Fund 1.845002 1.886386 2.24% 220,190 1999
1.719035 1.845002 7.33% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.150285 1.419952 23.44% 468,988 1999
Aggressive Portfolio 1.000000 1.150285 12.61% 296,908 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.108390 1.143342 3.15% 158,183 1999
Conservative Portfolio 1.000000 1.108390 3.28% 97,738 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.143985 1.306453 14.20% 501,161 1999
Moderate Portfolio 1.000000 1.143985 8.54% 193,617 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.141512 1.354111 18.62% 542,336 1999
Moderatly Aggressive 1.000000 1.141512 10.06% 169,925 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.129944 1.233233 9.14% 341,251 1999
Moderately Conservative 1.000000 1.129944 5.88% 135,133 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities 11.538640 15.234453 32.03% 10,104 1999
Fund - Class A 9.732573 11.538640 18.56% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund 6.178240 6.571139 6.36% 13,293 1999
5.851804 6.178240 5.58% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 22.157064 30.560318 37.93% 2,844 1999
Growth Stock Fund - Class A 18.840534 22.157064 17.60% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
MAS Funds - Fixed Income 1.414780 1.397708 -1.21% 43,773 1999
Portfolio 1.385468 1.414780 2.12% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund - 4.728053 5.481731 15.94% 11,832 1999
Class D 4.338826 4.728053 8.97% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 1.061142 1.152701 8.63% 120,626 1999
Institutional Service Class 1.000000 1.061142 6.11% 38 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
68
<PAGE> 71
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Prestige International Fund 1.092213 1.317714 20.65% 53,042 1999
- - Institutional Service Class 1.000000 1.092213 9.22% 19,996 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 1.139713 1.527506 34.03% 260,721 1999
Fund - Institutional Service 1.000000 1.139713 13.97% 22,783 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 1.049566 0.994908 -5.21% 72,468 1999
Fund - Institutional Service 1.000000 1.049566 4.96% 24,426 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - 1.090529 1.287390 18.05% 75,172 1999
Institutional Service Class 1.000000 1.090529 9.05% 33,702 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian 1.730781 1.865967 7.81% 84,823 1999
Fund, Inc. 1.569836 1.730781 10.25% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - 24.326397 31.470234 29.37% 47,678 1999
Class A 20.494260 24.326397 18.70% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 4.718004 7.222438 55.20% 567,839 1999
3.966883 4.718004 18.93% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
SEI Index Fund - S&P 500 1.910418 2.294307 20.09% 842,011 1999
Index Portfolio 1.705240 1.910418 12.03% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - 16.811535 21.769825 29.49% 6,797 1999
Class A 14.612994 16.811535 15.05% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Short-Term Investments Trust 1.277858 1.333653 4.37% 38,201 1999
- - Treasury Portfolio - 1.268735 1.277858 0.72% 0 1998
Institutional Class(*)
- -----------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International 1.380129 1.846569 33.80% 175,403 1999
Stock Fund(R) 1.275533 1.380129 8.20% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
69
<PAGE> 72
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.55% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Income & 1.097955 1.287995 17.31% 1,346,025 1999
Growth - Investor Class 1.000000 1.097955 9.80% 39,351 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: 1.084619 2.033777 87.51% 989,006 1999
International Discovery - 1.000000 1.084619 8.46% 7,164 1998
Investor Class
- -----------------------------------------------------------------------------------------------------------------------------------
The Brown Capital Management 1.000000 1.336268 33.63% 25,458 1999
- - Small Company Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, 1.080487 1.181672 9.36% 490,711 1999
Inc. 1.000000 1.080487 8.05% 20,457 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Mid-Cap 1.133654 1.247314 10.03% 24,267 1999
Stock Fund - Class A 1.000000 1.133654 13.37% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third 4.557584 5.899679 29.45% 2,380,281 1999
Century Fund, Inc. - Class Z 3.532278 4.557584 16.12% 2,140,647 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 1.019021 0.989728 -2.87% 40,642 1999
1.000000 1.019021 1.90% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 1.089659 1.127945 3.51% 445,084 1999
Opportunities Fund - Class A 1.000000 1.089659 8.97% 5,256 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield 1.065207 1.147891 7.76% 222,740 1999
Fund - Class T 1.000000 1.065207 6.52% 2,276 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 1.172815 2.003821 70.86% 2,158,406 1999
1.000000 1.172815 17.28% 5,449 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 1.024005 1.004559 -1.90% 124,380 1999
1.000000 1.024005 2.40% 2,742 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional 1.107043 1.534459 38.61% 120,451 1999
Fund, Inc. - Equity Growth 1.000000 1.107043 10.70% 0 1998
Portfolio - Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - 26.741341 26.533779 -0.78% 987,329 1999
Class D 0.697282 26.741341 8.90% 904,019 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
70
<PAGE> 73
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R)Money Market 3.129626 3.257959 4.10% 4,615,246 1999
Fund - Prime Shares 3.003821 3.129626 0.69% 2,277,564 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index 1.093909 1.303244 19.14% 990,021 1999
Fund - Institutional Service 1.000000 1.093909 9.39% 4,693 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 0.962506 1.378605 42.23% 599,934 1999
Trust - Nationwide Small 0.961325 0.962506 13.36% 494,950 1998
Company Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 1.000000 1.006821 0.68% 27,725 1999
Trust - Nationwide Income
Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners 1.042174 1.116206 7.10% 15,285 1999
Trust 1.000000 1.042174 4.22% 1,093 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - 1.106811 1.744429 57.61% 335,264 1999
Class A 1.000000 1.106811 10.68% 6,579 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - 1.210671 1.676147 38.45% 5,358,056 1999
Class A 1.284158 1.210671 1.23% 5,316,578 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging 1.140526 1.608485 41.03% 106,549 1999
Growth Fund - Common Class 1.000000 1.140526 14.05% 8,854 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 7-day yield on the Nationwide(R) Money Market Fund - Prime Shares as of
December 31, 1999 was 4.71%.
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
71
<PAGE> 74
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.50% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Growth - 7.922098 10.616300 34.01% 348,206 1999
Investor Class 5.842997 7.922098 17.05% 359,828 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Ultra - 2.317883 3.262606 40.76% 3,817,930 1999
Investor Class 1.737833 2.317883 18.16% 3,364,116 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Bond Fund of America(SM), 2.431945 2.475221 1.78% 142,109 1999
Inc. 2.332586 2.431945 2.82% 268,515 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Evergreen Income and Growth 2.382498 2.758615 15.79% 10,371 1999
Fund Class Y 2.262924 2.382498 5.28% 32,633 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Federated U.S. Government 1.395671 1.381446 -1.02% 268,509 1999
Securities Fund: 2-5 Years - 1.301886 1.395671 -0.21% 281,752 1998
Institutional Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income Fund 4.834839 5.445808 12.64% 15,652 1999
4.654233 4.834839 8.22% 15,722 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund(R) 2.524114 3.141341 24.45% 4,921,532 1999
1.935931 2.524114 19.60% 6,920,209 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Equity-Income Fund 7.697797 8.207390 6.62% 1,097,064 1999
6.900916 7.697797 7.87% 2,032,139 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R)Fund 2.391021 2.951194 23.43% 1,981,615 1999
1.800499 2.391021 18.03% 2,481,152 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 2.546479 4.371504 71.67% 551,902 1999
1.829868 2.546479 23.11% 554,256 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Puritan(R)Fund 1.845320 1.888599 2.35% 434,568 1999
1.596539 1.845320 7.35% 1,058,070 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Investment Company of 2.775312 3.218656 15.97% 772,247 1999
America(R), Inc. 2.277283 2.775312 10.16% 1,244,473 1998
- -----------------------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income 1.415024 1.399348 -1.11% 35,380 1999
Portfolio 1.335173 1.415024 2.13% 100,650 1998
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities 11.540626 15.252302 32.16% 17,247 1999
Fund - Class A 9.012670 11.540626 18.58% 63,546 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
72
<PAGE> 75
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MFS(R)High Income Fund - 6.179806 6.579417 6.47% 32,140 1999
Class A 6.168371 6.179806 5.60% 106,230 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 22.160876 30.596117 38.06% 11,080 1999
Growth Stock Fund - Class A 15.968069 22.160876 17.62% 22,289 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund - 4.728868 5.488156 16.06% 22,141 1999
Class D 3.854877 4.728868 8.99% 31,217 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian 1.731080 1.868155 7.92% 155,894 1999
Fund, Inc. 1.706116 1.731080 10.27% 658,443 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - 24.330583 31.507110 29.50% 63,483 1999
Class A 18.110411 24.330583 18.72% 60,549 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - 4.718816 7.331012 55.36% 1,195,483 1999
Class A 3.837109 4.718816 18.95% 1,141,130 1998
- -----------------------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 1.910747 2.296996 20.21% 905,209 1999
Index Portfolio 1.501834 1.910747 12.05% 2,027,825 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. - 16.814429 21.795334 29.62% 13,411 1999
Class A 12.541848 16.814429 15.06% 24,055 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Short-Term Investments 1.278181 1.335333 4.48% 97,670 1999
Trust - Treasury Portfolio - 1.268839 1.278181 0.72% 86,239 1998
Institutional Class*
- -----------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price International 1.380367 1.848732 33.93% 558,351 1999
Stock Fund(R) 1.198954 1.380367 8.22% 1,224,755 1998
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 7-day yield on the Short-Term Investment Trust - Treasury Portfolio -
Institutional Class as of December 31, 1999 was 4.25%.
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
73
<PAGE> 76
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.45% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LifeDesigns Series - The 1.150582 1.422449 23.63% 267,677 1999
Aggressive Portfolio 1.000000 1.150582 12.64% 211,746 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.108677 1.145355 3.31% 475,616 1999
Conservative Portfolio 1.000000 1.108677 3.30% 207,470 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.144281 1.308751 14.37% 192,070 1999
Moderate Portfolio 1.000000 1.144281 8.56% 114,698 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.141807 1.356493 18.80% 268,877 1999
Moderately Aggressive 1.000000 1.141807 10.09% 154,400 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.130263 1.235402 9.30% 149,629 1999
Moderately Conservative 1.000000 1.130236 5.91% 55,915 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 1.061351 1.154658 8.79% 64,569 1999
Institutional Service Class 1.000000 1.061351 6.14% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige International Fund - 1.092427 1.319950 20.83% 31,972 1999
Institutional Service Class 1.000000 1.092427 9.24% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth Fund 1.139937 1.530097 34.23% 213,341 1999
- - Institutional Service Class 1.000000 1.139937 13.99% 6,708 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value Fund - 1.049773 0.996598 -5.07% 54,869 1999
Institutional Service Class 1.000000 1.049773 4.98% 7,855 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - 1.090743 1.289575 18.23% 33,279 1999
Institutional Service Class 1.000000 1.090743 9.07% 17,596 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
74
<PAGE> 77
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.40% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Income & 1.098171 1.290181 17.48% 665,280 1999
Growth - Investor Class 1.000000 1.098171 9.82% 636 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Growth - 7.987376 10.714474 34.14% 2,202,427 1999
Investor Class 6.822454 7.987376 17.07% 2,228,401 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: 1.084832 2.037221 87.79% 640,107 1999
International Discovery - 1.000000 1.084832 8.48% 456,421 1998
Investor Class
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Ultra - 2.336984 3.292778 40.90% 26,111,703 1999
Investor Class 1.977521 2.336984 18.18% 23,187,750 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Bond Fund of 2.452190 2.498335 1.88% 928,066 1999
America(SM), Inc. 2.384516 2.452190 2.84% 861,657 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Brown Capital 1.000000 1.337304 33.73% 15,085 1999
Management - Small Company
Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, 1.080700 1.183678 9.53% 388,056 1999
Inc. 1.000000 1.080700 8.07% 7,474 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier 1.133877 1.249431 10.19% 23,734 1999
Mid-Cap Stock Fund - Class A 1.000000 1.133877 13.39% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third 4.558760 5.910051 29.64% 1,240,608 1999
Century Fund, Inc. - Class Z 3.924756 4.558760 16.15% 1,100,730 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Evergreen Income and 2.402138 2.784137 15.90% 209,219 1999
Growth Fund - Class Y 2.281191 2.402138 5.30% 242,926 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - 1.019222 0.991409 -2.73% 6,385 1999
Class F 1.000000 1.019222 1.92% 170,453 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Federated U.S. Government 1.406762 1.393823 -0.92% 1,337,680 1999
Securities Fund: 2-5 Years 1.409546 1.406762 -0.20% 1,119,202 1998
- - Institutional Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High 1.065479 1.149917 7.92% 99,159 1999
Yield Fund - Class T 1.000000 1.065479 6.55% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 1.089873 1.129860 3.67% 169,301 1999
Opportunities Fund - Class A 1.000000 1.089873 8.99% 930 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Capital & Income 4.873259 5.494599 12.75% 52,147 1999
Fund 4.502465 4.873259 8.24% 53,798 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund(R) 2.544916 3.170395 24.58% 23,252,402 1999
2.127466 2.544916 19.62% 21,126,009 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
75
<PAGE> 78
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fidelity Equity-Income Fund 7.761233 8.283304 6.73% 6,835,046 1999
7.194005 7.761233 7.88% 7,558,249 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Magellan(R) Fund 2.410721 2.978484 23.55% 8,920,260 1999
2.042205 2.410721 18.05% 7,449,476 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity OTC Portfolio 2.567467 4.411934 71.84% 7,250,642 1999
2.085159 2.567467 23.13% 3,023,192 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Puritan(R) Fund 1.860527 1.906066 2.45% 2,155,469 1999
1.732912 1.860527 7.36% 2,399,715 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 1.173045 2.007217 71.11% 1,566,514 1999
1.000000 1.173045 17.30% 278,971 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 1.024207 1.006265 -1.75% 158,067 1999
1.000000 1.024207 2.42% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Investment Company of 2.798178 3.248420 16.09% 3,687,311 1999
America(SM), Inc. 2.539739 2.798178 10.18% 3,259,397 1998
- -----------------------------------------------------------------------------------------------------------------------------------
MAS Funds Fixed Income 1.426689 1.412296 -1.01% 502,118 1999
Portfolio 1.396656 1.426689 2.15% 616,144 1998
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)Growth Opportunities 11.635755 15.393394 32.29% 175,440 1999
Fund - Class A 9.811163 11.635755 18.60% 203,691 1998
- -----------------------------------------------------------------------------------------------------------------------------------
MFS(R)High Income Fund - 6.228913 6.638365 6.57% 359,951 1999
Class A 65.897786 6.228913 5.61% 451,743 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Massachusetts Investors 22.343460 30.879021 38.20% 117,408 1999
Growth Stock Fund - Class A 18.992597 22.343460 17.64% 120,267 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley 1.107260 1.537062 38.82% 89,552 1999
Institutional Fund, Inc. - 1.000000 1.107260 10.73% 10,064 1998
Equity Growth Portfolio -
Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D 26.748259 26.580493 -0.63% 524,819 1999
24.556168 26.748259 8.93% 481,772 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund - 4.767838 5.538916 16.17% 250,812 1999
Class D 4.373852 4.767838 9.01% 255,124 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
76
<PAGE> 79
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nationwide(R) Money Market 3.154895 3.289218 4.26% 3,933,354 1999
Fund - Prime Shares(*) 3.132336 3.154895 0.72% 2,708,726 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index 1.094125 1.305455 19.31% 337,529 1999
Fund - Institutional 1.000000 1.094125 9.41% 19,071 1998
Service Class
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate 0.966626 1.386578 43.45% 609,880 1999
Account Trust - Nationwide 0.852488 0.966626 13.39% 454,960 1998
Small Company Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate 1.000000 1.007603 0.76% 342 1999
Account Trust - Nationwide
Income Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Guardian 1.745353 1.885443 8.03% 3,518,487 1999
Fund, Inc. 1.582515 1.745353 10.29% 4,117,644 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners 1.042379 1.118102 7.26% 33,245 1999
Trust 1.000000 1.042379 4.24% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - 1.107029 1.747386 57.84% 121,171 1999
Class A 1.000000 1.107029 10.70% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - 4.531046 31.798454 29.63% 772,650 1999
Class A 0.659673 24.531046 18.74% 684,364 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - 4.757715 7.398826 55.51% 7,728,408 1999
Class A 3.998917 4.757715 18.98% 7,057,963 1998
- -----------------------------------------------------------------------------------------------------------------------------------
SEI Index Funds - S&P 500 1.926474 2.318217 20.33% 11,925,048 1999
Index Portfolio 1.718989 1.926474 12.07% 9,208,478 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Seligman Growth Fund, Inc. 6.952971 21.996878 29.75% 147,489 1999
- - Class A 4.730941 16.952971 15.08% 145,547 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Short-Term Investments 1.288338 1.347297 4.58% 1,777,684 1999
Trust - Treasury Portfolio 1.278704 1.288338 0.75% 763,114 1998
- - Institutional Class(**)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 7-day yield on the Nationwide(R) Money Market Fund - Prime Shares as of
December 31, 1999 was 4.92%.
(**) The 7-day yield on the Short-Term Investment Trust - Treasury Portfolio -
Institutional Class as of December 31, 1999 was 4.36%.
77
<PAGE> 80
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
T. Rowe Price 1.391746 1.865834 34.06% 4,485,126 1999
International Stock Fund(R) 1.285834 1.391746 8.24% 4,818,444 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - 1.210984 1.679093 38.66% 1999
Class A 1.195919 1.210984 1.26% 1,884,614 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging 1.140750 1.611214 41.24% 76,822 1999
Growth Fund - Common Class 1.000000 1.140750 14.08% 224 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
78
<PAGE> 81
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.30% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Growth - 7.988751 10.727027 34.28% 0 1999
Investor Class 6.822472 7.988751 17.09% 207,682 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Ultra - 2.337386 3.296635 41.04% 0 1999
Investor Class 1.977526 2.337386 18.20% 1,622,498 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, 1.080842 1.185017 9.64% 0 1999
Inc. 1.000000 1.080842 8.08% 116 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Third Century 4.559545 5.916975 29.77% 0 1999
Fund, Inc. - Class Z 3.924766 4.559545 16.17% 132,409 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 1.090017 1.131139 3.77% 0 1999
Opportunities Fund - Class A 1.000000 1.090017 9.00% 6 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional 1.107406 1.538799 38.96% 0 1999
Fund, Inc. - Equity Growth 1.000000 1.107406 10.74% 6 1998
Portfolio - Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D 26.752871 26.611682 0.53% 0 1999
24.556235 26.752871 8.95% 163,349 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Growth Fund - 4.768660 5.545409 16.29% 0 1999
Class D 4.373864 4.768660 9.03% 72,274 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market Fund 3.131607 3.268216 4.36% 0 1999
- - Prime Shares(*) 3.108685 3.131607 0.74% 289,513 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index Fund 1.094268 1.306932 19.43% 0 1999
- - Institutional Service Class 1.000000 1.094268 9.43% 81 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 0.962923 1.382645 43.59% 0 1999
Trust - Nationwide Small 0.849078 0.962923 13.41% 19,582 1998
Company Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Investors Fund - 24.535266 31.835715 29.75% 0 1999
Class A 20.659729 24.535266 18.76% 141,978 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Putnam Voyager Fund - Class A 4.758533 7.407490 55.67% 0 1999
3.998928 4.758533 19.00% 935,379 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 7-day yield on the Nationwide(R) Money Market Fund - Prime Shares as of
December 31, 1999 was 5.02%.
79
<PAGE> 82
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Templeton Foreign Fund - 1.211193 1.681061 38.79% 0 1999
Class A 1.195922 1.211193 1.28% 572,528 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The American Century: Value - Investor Class, DEM Equity Fund - Institutional
Shares, and the Putnam International Growth Portfolio - Class A were effective
May 1, 2000. Therefore, no Condensed Financial Information is available.
80
<PAGE> 83
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.25% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: 1.085045 2.040671 88.07% 148,209 1999
International Discovery - 1.000000 1.085045 8.50% 0 1998
Investor Class
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: Income & 1.098387 1.292371 17.66% 240,890 1999
Growth - Investor Class 1.000000 1.098387 9.84% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Brown Capital Management 1.000000 1.338341 33.83% 1 1999
- - Small Company Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, 1.080913 1.185687 9.69% 29,313 1999
Inc. 1.000000 1.080913 8.09% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third 4.559937 5.920440 29.84% 304,659 1999
Century Fund, Inc.- Class Z 3.924771 4.559937 16.18% 340,211 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 1.090088 1.131779 3.82% 6,25 1999
Opportunities Fund - Class A 1.000000 1.090088 9.01% 1,714 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield 1.065752 1.151943 8.09% 475 1999
Fund - Class T 1.000000 1.065752 6.58% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 1.173275 2.010619 71.37% 361,646 1999
1.000000 1.173275 17.33% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 1.024409 1.007975 -1.60% 594 1999
1.000000 1.024409 2.44% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.150978 1.425785 23.88% 353,524 1999
Aggressive Portfolio 1.021462 1.150978 12.68% 144,398 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.109060 1.148044 3.52% 81,415 1999
Conservative Portfolio 1.073218 1.109060 3.34% 85,045 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.144675 1.311822 14.60% 144,588 1999
Moderate Portfolio 1.054023 1.144675 8.60% 17,475 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
81
<PAGE> 84
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LifeDesigns Series - The 1.142200 1.359675 19.04% 467,219 1999
Moderately Aggressive 1.037190 1.142200 10.12% 138,659 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.130626 1.238302 9.52% 50,892 1999
Moderately Conservative 1.067213 1.130626 5.94% 104,938 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional 1.107478 1.539669 39.02% 31,522 1999
Fund, Inc. - Equity Growth 1.000000 1.107478 10.75% 0 1998
Portfolio - Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D 26.755178 26.627289 -0.48% 94,899 1999
24.556268 26.755178 8.95% 104,524 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market 3.132003 3.270268 4.41% 1,148,857 1999
Fund - Prime Shares(*) 3.108813 3.132003 0.75% 662,386 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index 1.094340 1.307671 19.49% 61,214 1999
Fund - Institutional Service 1.000000 1.094340 9.43% 76,493 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 0.963006 1.383455 43.66% 19,107 1999
Trust - Nationwide Small 0.849079 0.963006 13.42% 84,982 1998
Company Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 1.061629 1.157273 9.01% 110,352 1999
Institutional Service Class 1.000000 1.061629 6.16% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige International Fund 1.092713 1.322937 21.07% 38,590 1999
- - Institutional Service 1.000000 1.092713 9.27% 0 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 1.140236 1.533558 34.49% 84,791 1999
Fund - Institutional Service 1.000000 1.140236 14.02% 0 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value 1.050049 0.998856 -4.88% 90,414 1999
Fund - Institutional 1.000000 1.050049 5.00% 0 1998
Service lass
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - 1.091029 1.292494 18.47% 76,601 1999
Institutional Service Class 1.000000 1.091029 9.10% 3,784 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - 1.211297 1.682045 38.86% 644,504 1999
Class A 1.195923 1.211297 1.29% 599,440 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 7-day yield on the Nationwide(R) Money Market Fund - Prime Shares as of
December 31, 1999 was 5.07%.
82
<PAGE> 85
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
83
<PAGE> 86
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.15% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century: Income & 1.098531 1.293832 17.78% 1,150,122 1999
Growth - Investor Class 1.000000 1.098531 9.85% 51,660 1998
- -----------------------------------------------------------------------------------------------------------------------------------
American Century: 1.085187 2.042975 88.26% 2,129,791 1999
International Discover - 1.000000 1.085187 8.52% 25,538 1998
Investor Class
- -----------------------------------------------------------------------------------------------------------------------------------
The Brown Capital Management 1.000000 1.339033 33.90% 40,366 1999
- - Small Company Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Appreciation Fund, 1.081055 1.187029 9.80% 870,689 1999
Inc. 1.000000 1.081055 8.11% 86,357 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Dreyfus Premier Midcap Stock 1.134248 1.252967 10.47% 85,523 1999
Fund - Class A 1.000000 1.134248 13.42% 4,299 1998
- -----------------------------------------------------------------------------------------------------------------------------------
The Dreyfus Premier Third 4.602327 5.981450 29.97% 2,405,418 1999
Century Fund, Inc. - Class Z 3.960586 4.602327 16.20% 2,316,305 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Federated Bond Fund - Class F 1.019557 0.994218 -2.49% 66,416 1999
1.000000 1.019557 1.96% 19,138 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor Growth 1.090231 1.133060 3.93% 166,910 1999
Opportunities Fund - 1.000000 1.090231 9.02% 38,722 1998
Class A
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Advisor High Yield 1.065933 1.153294 8.20% 88,793 1999
Fund - Class T 1.000000 1.065933 6.59% 55,862 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Dynamics Fund 1.173429 2.012890 71.54% 3,801,659 1999
1.000000 1.173429 17.34% 2,672 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO Total Return Fund 1.024544 1.009116 -1.51% 231,417
1.000000 1.024544 2.45% 12,945 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.151176 1.427456 24.00% 0 1999
Aggressive Portfolio 1.021464 1.151176 12.70% 1,783 1998
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
84
<PAGE> 87
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LifeDesigns Series - The 1.142397 1.361269 19.16% 0 1999
Moderately Aggressive 1.037193 1.142397 10.14% 3,674 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.130821 1.239754 9.63% 11,257 1999
Moderately Conservative 1.067215 1.130821 5.69% 1,110 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Institutional 1.107624 1.541410 39.16% 218,285 1999
Fund, Inc. - Equity Growth 1.000000 1.107624 10.76% 2,580 1998
Portfolio - Class B
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Fund - Class D 27.003819 26.901637 -0.38% 942,318 1999
24.780269 27.003819 8.97% 1,044,190 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide(R)Money Market 3.132794 3.274374 4.52% 4,761,747 1999
Fund-Prime Shares(*) 3.109069 3.132794 0.76% 3,344,001 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide S&P 500(R)Index 1.094484 1.309150 19.61% 931,890 1999
Fund - Institutional Service 1.000000 1.094484 9.45% 25,400 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 0.963171 1.385075 43.80% 336,343 1999
Trust - Nationwide Small 0.849082 0.963171 13.44% 313,865 1998
Company Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Separate Account 1.000000 1.008908 0.89% 1,638 1999
Trust - Nationwide Income
Fund
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman Partners 1.042722 1.121268 7.53% 11,932 1999
Trust 1.000000 1.042722 4.27% 10 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Fund - 1.107392 1.752325 58.24% 608,170 1999
Class A 1.000000 1.107392 10.74% 1,884 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Templeton Foreign Fund - 1.107392 1.699394 39.00% 4,179,286 1999
Class A 1.289527 1.1007392 1.30% 4,225,950 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Emerging 1.141124 1.615771 41.59% 114,151 1999
Growth Fund - Common Class 1.000000 1.141124 14.11% 2,964 1998
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
85
<PAGE> 88
(*) The 7-day yield on the Nationwide(R) Money Market Fund - Prime Shares as of
December 31, 1999 was 5.17%.
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
86
<PAGE> 89
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.10% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LifeDesigns Series - The 1.151275 1.428292 24.06% 4,175 1999
Aggressive Portfolio 1.021466 1.151275 12.71% 2,524 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.109347 1.150064 3.67% 7,541 1999
Conservative Portfolio 1.073223 1.109347 3.37% 4,359 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.144971 1.314130 14.77% 19,122 1999
Moderate Portfolio 1.054027 1.144971 8.63% 9,964 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.142495 1.362067 19.22% 28,922 1999
Moderately Aggressive 1.037195 1.142495 10.15% 19,416 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 1.061839 1.159238 9.17% 729 1999
Institutional Service Class 1.000000 1.061839 6.18% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige International Fund 1.092928 1.325181 21.25% 18,596 1999
- - Institutional Service Class 1.000000 1.092928 9.29% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 1.140460 1.539159 34.96% 2 1999
Fund - Institutional Service 1.000000 1.140460 14.05% 0 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value 1.050256 1.000552 -4.73% 2 1999
Fund - Institutional Service 1.000000 1.050256 5.03% 0 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - 1.091244 1.294687 18.64% 2,697 1999
Institutional Service Class 1.000000 1.091244 9.12% 0 1998
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
87
<PAGE> 90
<TABLE>
<CAPTION>
Variable Account Annual Expense Fee of 0.00% of average net assets
- -----------------------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENTAGE CHANGE NUMBER OF ACCUMULATION YEAR
VALUE AT BEGINNING VALUE AT END OF IN ACCUMULATION UNITS OUTSTANDING AT
OF PERIOD PERIOD UNIT VALUE THE END OF THE PERIOD
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LifeDesigns Series - The 1.157296 1.437196 24.19% 827,625 1999
Aggressive Portfolio 1.000000 1.157296 15.73% 691,326 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.115144 1.157231 3.77% 133,739 1999
Conservative Portfolio 1.000000 1.115144 11.51% 114,219 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.150956 1.322320 14.89% 505,429 1999
Moderate Portfolio 1.000000 1.150956 15.10% 257,772 1998
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.148468 1.370557 19.34% 514,292 1999
Moderately Aggressive 1.000000 1.148468 14.85% 401,494 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
LifeDesigns Series - The 1.136829 1.248211 9.80% 170,427 1999
Moderately Conservative 1.000000 1.136829 13.68% 112,759 1998
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Balanced Fund - 1.061978 1.160549 9.28% 15,466 1999
Institutional Service Class 1.000000 1.061978 6.20% 25 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige International Fund 1.093071 1.326680 21.37% 3,878 1999
- - Institutional Service Class 1.000000 1.093071 9.31% 70 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Growth 1.140610 1.537896 34.83% 461,957 1999
Fund - Institutional Service 1.000000 1.140610 14.06% 2,886 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Large Cap Value 1.050394 1.001685 -4.64% 92,218 1999
Fund - Institutional Service 1.000000 1.050394 5.04% 3,334 1998
Class
- -----------------------------------------------------------------------------------------------------------------------------------
Prestige Small Cap Fund - 1.091387 1.296152 18.76% 80,612 1999
Institutional Service Class 1.000000 1.091387 9.14% 6,727 1998
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The American Century: Value - Investor Class, and the Putnam International
Growth Portfolio - Class A were effective May 1, 2000. Therefore, no Condensed
Financial Information is available.
88
<PAGE> 91
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
ISSUED BY THE NACO VARIABLE ACCOUNT OF NATIONWIDE LIFE INSURANCE COMPANY
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth the prospectus and
should be read in conjunction with the prospectus dated May 1, 2000. The
prospectus may be obtained from Nationwide Life Insurance Company, P.O. Box
16766, One Nationwide Plaza, Columbus, Ohio 43216, or by calling 1-800-545-4730,
(T.T.Y. 1-800-848-0833).
TABLE OF CONTENTS
Page
General Information and History...........................................1
Services..................................................................1
Purchase of Securities Being Offered .....................................2
Underwriters .............................................................2
Calculation of Performance ...............................................2
Annuity Payments..........................................................3
Financial Statements......................................................4
GENERAL INFORMATION AND HISTORY
The NACo variable account is a separate investment account of Nationwide Life
Insurance Company ("Nationwide"). Nationwide is a member of the Nationwide group
of companies and all of Nationwide's common stock is owned by Nationwide
Financial Services, Inc. ("NFS"), a holding company. NFS has two classes of
common stock outstanding with different voting rights enabling Nationwide
Corporation (the holder of all of the outstanding Class B Common Stock) to
control NFS. Nationwide Corporation is a holding company as well. All of its
common stock is held by Nationwide Mutual Insurance Company (95.24%) and
Nationwide Mutual Fire Insurance Company (4.76%), the ultimate controlling
persons of Nationwide group of companies. Nationwide group of companies is one
of America's largest insurance and financial services family of companies, with
combined assets of over $120 billion as of December 31, 1999.
SERVICES
Nationwide has responsibility for administration of the contracts and the
variable account, maintaining records, including name, address, taxpayer
identification number, and other pertinent information for each contract owner
and the number and type of contracts issued to each such contract owner and the
contract value of each contract.
All assets of the variable account are held in custody for safekeeping by
Nationwide. The assets of each sub-account will be kept physically segregated
and held separate and apart from assets of other sub-accounts and from assets of
any other firm, person, or corporation. Nationwide will maintain a record of all
purchases and redemptions for shares of the underlying mutual fund held in each
sub-account.
Nationwide, or affiliates of Nationwide, may have entered into agreements with
either the investment adviser or distributor for several of the underlying
mutual funds. The agreements relate to administrative services furnished by
Nationwide or an affiliate of Nationwide and provide for an annual fee based on
the average aggregate net assets of the variable account (and other separate
accounts of Nationwide or life insurance company subsidiaries of Nationwide)
invested in particular underlying mutual funds.
1
<PAGE> 92
These fees in no way affect the net asset value of the underlying mutual funds
or fees paid by the contract owner.
The audited financial statements and schedules have been included herein in
reliance upon the reports of KPMG LLP, independent certified public accountants,
Two Nationwide Plaza, Columbus, Ohio 43215, and upon the authority of said firm
as experts in accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The contracts will be sold by licensed insurance agents in the states where the
contracts may be lawfully sold. Such agents will be registered representatives
of broker-dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc.
For those plans which provide this contract and Nationwide's Group Fixed Fund
Retirement Contracts, the contract owner, or the participant if the plan so
provides, may exchange accumulation units between any sub-account of the
variable account and the deposit fund of the Group Fixed Fund Retirement
Contract. Exchanges from the deposit fund to any sub-account of the variable
account will be subject to the limitations of the Group Fixed Fund Retirement
Contract. Exchanges will be effective when received in good order at
Nationwide's home office.
UNDERWRITERS
The contracts, which are offered continuously, are distributed by Nationwide
Investment Services Corporation ("NISC"), Two Nationwide Plaza, Columbus, Ohio
43215. NISC is a wholly owned subsidiary of Nationwide. During the fiscal years
ended December 31, 1999, 1998, and 1997, no underwriting commissions were paid
by Nationwide to NISC.
CALCULATION OF PERFORMANCE
Any current yield quotations of the Nationwide Money Market Fund Prime Shares
and the Short-Term Investments Trust Treasury Portfolio Institutional Class
sub-accounts, subject to Rule 482 of the Securities Act of 1933, shall consist
of a seven calendar day historical yield, carried at least to the nearest
hundredth of a percent. The yield will be calculated by determining the net
change, exclusive capital changes, in the value of a hypothetical pre-existing
account having a balance of one accumulation unit at the beginning of the base
period, subtracting a hypothetical charge reflecting deductions from contract
owner accounts, and dividing the net change in account value by the value of the
account at the beginning of the period to obtain a base period return, and
multiplying the base period return by (365/7) or (366/7) in a leap year. As of
December 31, 1999, the Nationwide Money Market Fund Prime Shares and the
Short-Term Investments Trust Treasury Portfolio - Institutional Class
Sub-Accounts seven-day current yield were 4.36% and 3.80% respectively. The
Nationwide Money Market Fund Prime Shares and the Short-Term Investments Trust
Treasury Portfolio Institutional Class sub-accounts' seven-day effective yield
is computed similarly but includes the effect of assumed compounding on an
annualized basis of the current yield quotations of the sub-accounts, and for
the period ending December 31, 1999 were 4.46% and 3.88% respectively.
The yield and effective yield will fluctuate daily. Actual yields will depend on
factors such as the type of instruments in the sub-accounts' portfolios,
portfolio quality and average maturity, changes in interest rates, and the
sub-accounts' expenses. Although the sub-account determines its yield on the
basis of a seven calendar day period, it may use a different time period on
occasion. There is no assurance that the yields quoted on any given occasion
will remain in effect for any period of time and there is no guarantee that the
net asset values will remain constant. It should be noted that a contract
owner's investment in Nationwide Money Market Fund and the Short Term Investment
Trust Treasury Portfolio sub-account is
2
<PAGE> 93
not guaranteed or insured. Yields of other money market funds may not be
comparable if a different base period or another method of calculation is used.
Nationwide may, from time to time, advertise several types of historical
performance of the sub-accounts. Nationwide may advertise for the sub-accounts
standardized "average annual total return," calculated in a manner prescribed by
the SEC, and nonstandardized "total return". "Average annual total return" will
show the percentage rate of return of a hypothetical initial investment of
$1,000 for the most recent one, five and ten year periods, or for a period
covering the time the underlying mutual fund option has been available in the
variable account if the underlying mutual fund option has not been available in
the variable account for any of the prescribed periods. THIS CALCULATION
REFLECTS THE DEDUCTION OF ALL APPLICABLE CHARGES MADE TO THE CONTRACTS EXCEPT
FOR PREMIUM TAXES, WHICH MAY BE IMPOSED BY CERTAIN STATES.
Nonstandardized "total return," calculated similar to standardized "average
annual total return," illustrates the percentage rate of return of a
hypothetical initial investment of $10,000 for the most recent one, five and ten
year periods, or for a period covering the time the underlying mutual fund
option has been in existence. For those underlying mutual fund options which
have not been held as sub-accounts for one of the prescribed periods, the
nonstandardized total return illustrations will show the investment performance
such underlying mutual fund options would have achieved (reduced by the same
charges except the Participant Account Maintenance Charge and CDSC) had such
underlying mutual fund options been available in the variable account for the
periods quoted. THE CDSC IS NOT REFLECTED BECAUSE THE CONTRACTS ARE DESIGNED FOR
LONG TERM INVESTMENT. THE CDSC, IF REFLECTED, WOULD DECREASE THE LEVEL OF
PERFORMANCE SHOWN. AN INITIAL INVESTMENT OF $10,000 IS ASSUMED BECAUSE THAT
AMOUNT MORE CLOSELY APPROXIMATES THE SIZE OF A TYPICAL CONTRACT THAN DOES THE
$1,000 ASSUMPTION USED IN CALCULATING THE STANDARDIZED AVERAGE ANNUAL TOTAL
RETURN QUOTATIONS.
The standardized average annual total return and nonstandardized total return
quotations reflected below are calculated as described in this section using
underlying mutual fund performance for the period ended December 31, 1999.
However, Nationwide generally provides performance quotations on a more frequent
basis, the results of which could reflect better or worse results than show
below. The quotations and other comparative material advertised by Nationwide
are based upon historical earnings and are not intended to represent or
guarantee future results. A contract owner's contract value at redemption may be
more or less than the original cost.
If the underlying mutual fund has been available in the variable account for
less than one year (or if the underlying mutual fund has been effective for less
than one year) standardized and non-standardized performance is non-annualized.
ANNUITY PAYMENTS
See "Distribution of Participant Accounts (Retirement Period)" located in the
prospectus.
3
<PAGE> 94
<PAGE> 1
Independent Auditors' Report
---------------------------
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of NACo Variable Account:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of NACo Variable Account (comprised of the sub-accounts
listed in note 1(b)) (collectively, "the Account") as of December 31, 1999, and
the related statements of operations and changes in contract owners' equity for
each of the years in the two year period then ended. These financial statements
are the responsibility of the Account'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 include confirmation of securities owned as of December 31, 1999, by
correspondence with the transfer agents of the underlying mutual funds. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Account as of December
31, 1999, and the results of its operations and its changes in contract owners'
equity for each of the years in the two year period then ended in conformity
with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 18, 2000
<PAGE> 2
================================================================================
NACo VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
December 31, 1999
<TABLE>
<CAPTION>
Assets:
Investments at market value:
<S> <C> <C>
American Century: Income & Growth Fund (ACIncGro)
327,908 shares (cost $10,035,374) ................................................................. $ 11,165,271
American Century: Twentieth Century Growth Fund (ACTCGro)
5,237,248 shares (cost $118,688,077) .............................................................. 169,058,369
American Century: Twentieth Century International Discovery Fund
(ACTCIntDis) 860,837 shares (cost $13,733,472).................................................... 14,771,961
American Century: Twentieth Century Ultra Fund, Inc. (ACTCUltra)
11,536,275 shares (cost $359,586,142) ............................................................. 528,130,674
The Bond Fund of AmericaSM, Inc. (BdFdAm)
1,336,676 shares (cost $18,321,658) ............................................................... 17,350,054
Brown Capital Management - Small Company Fund (BrnCapSmCo)
17,398 shares (cost $451,080) ..................................................................... 499,311
Dreyfus Appreciation Fund, Inc. (DryApp)
112,258 shares (cost $4,894,398) .................................................................. 5,133,536
Dreyfus Premier Midcap Stock - Class A (DryPreMCap)
26,939 shares (cost $442,651) ..................................................................... 485,983
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
6,821,850 shares (cost $71,028,724) ............................................................... 99,257,922
Evergreen Income and Growth Fund - Class Y (EvIncGro)
139,498 shares (cost $2,839,391) .................................................................. 3,121,958
Federated Investment Series Fund, Inc. -
Federated Bond Fund - Class F (FedBdFd)
68,649 shares (cost $620,427) ..................................................................... 619,218
Federated U.S. Government Securities Fund: 2-5 Years -
Institutional shares (FedUSGvt)
1,067,372 shares (cost $11,418,196) ............................................................... 11,047,299
Fidelity Advisor Growth Opportunities Fund - Class A (FAGrOppA)
52,029 shares (cost $2,579,667) ................................................................... 2,401,661
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
92,669 shares (cost $1,050,420) ................................................................... 1,053,650
Fidelity Capital & Income Fund (FidCapInc)
272,398 shares (cost $2,471,759) .................................................................. 2,530,580
Fidelity Contrafund (FidContr)
10,272,213 shares (cost $475,808,705) ............................................................. 616,538,251
Fidelity Equity-Income Fund (FidEqInc)
7,249,331 shares (cost $302,312,986) .............................................................. 387,694,230
Fidelity Magellan(R)Fund (FidMgln)
1,790,739 shares (cost $169,929,993) .............................................................. 244,668,721
Fidelity OTC Portfolio (FidOTC)
2,231,997 shares (cost $103,539,104) .............................................................. 151,708,846
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
Fidelity Puritan(R) Fund (FidPurtn)
2,457,388 shares (cost $45,838,681) ............................................................... 46,764,093
INVESCO Dynamics Fund, Inc. (InvDynam)
1,235,300 shares (cost $26,311,702) ............................................................... 31,944,860
INVESCO Total Return Fund (InvTotRet)
40,561 shares (cost $1,283,988) ................................................................... 1,174,643
The Investment Company of America(R)(InvCoAm)
3,633,045 shares (cost $94,489,767) ............................................................... 117,928,625
MAS Funds - Fixed Income Portfolio (MASFIP)
491,085 shares (cost $5,782,229) .................................................................. 5,347,920
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
1,152,714 shares (cost $14,414,835) ............................................................... 23,434,670
MFS(R)Growth Opportunities Fund - Class A (MFSGrOpp)
1,214,157 shares (cost $15,597,079) ............................................................... 23,153,980
MFS(R)High Income Fund - Class A (MFSHiInc)
3,399,270 shares (cost $17,379,866) ............................................................... 16,962,358
Morgan Stanley Institutional Fund, Inc. -
Equity Growth Portfolio - Class B (MSIEqGroB)
64,286 shares (cost $1,452,773) ................................................................... 1,600,720
NAAT - The Aggressive Portfolio (NAATAggr)
339,690 shares (cost $3,857,956) .................................................................. 4,765,847
NAAT - The Conservative Portfolio (NAATCons)
147,609 shares (cost $1,595,839) .................................................................. 1,613,362
NAAT - The Moderate Portfolio (NAATMod)
346,302 shares (cost $3,897,803) .................................................................. 4,456,903
NAAT - The Moderately Aggressive Portfolio (NAATModAgg)
375,878 shares (cost $4,254,933) .................................................................. 5,006,699
NAAT - The Moderately Conservative Portfolio (NAATModCon)
148,133 shares (cost $1,672,252) .................................................................. 1,777,601
Nationwide(R) Fund - Class D (NWFund)
6,780,029 shares (cost $183,437,918) .............................................................. 203,400,863
Nationwide(R) Growth Fund - Class D (NWGroFd)
524,480 shares (cost $6,930,999) .................................................................. 9,136,441
Nationwide(R)Money Market Fund (NWMyMkt)
94,350,161 shares (cost $94,350,161) .............................................................. 94,350,161
Nationwide(R) S&P 500 Index Fund - Class Y (NWIndxFdY)
644,314 shares (cost $7,601,951) .................................................................. 8,266,553
Nationwide(R) Separate Account Trust - Income Fund (NSATInc)
8,006 shares (cost $78,092) ....................................................................... 76,857
Nationwide(R) Separate Account Trust - Small Company Fund (NSATSmCo)
262,616 shares (cost $4,514,677) .................................................................. 5,809,076
Neuberger & Berman Equity Funds (R)- Guardian Fund (NBGuard)
1,991,499 shares (cost $48,520,175) ............................................................... 36,842,740
Neuberger & Berman Equity Trust (R)- Partners Trust (NBPartTr)
10,703 shares (cost $203,818) ..................................................................... 192,440
Prestige Balanced Fund - Class Y (PrBalY)
61,843 shares (cost $681,557) ..................................................................... 693,880
Prestige International Fund - Class Y (PrIntY)
27,851 shares (cost $306,910) ..................................................................... 351,475
</TABLE>
(Continued)
<PAGE> 4
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, CONTINUED
<S> <C> <C>
Prestige Large Cap Growth Fund - Class Y (PrLgCapGrY)
160,043 shares (cost $2,093,597) .................................................................. 2,469,457
Prestige Large Cap Value Fund - Class Y (PrLgCpValY)
50,016 shares (cost $545,652) ..................................................................... 498,662
Prestige Small Cap Fund - Class Y (PrSmCapY)
64,488 shares (cost $711,855) ..................................................................... 823,506
Oppenheimer Global Fund - Class A (OppGlob)
67,729 shares (cost $3,800,795) ................................................................... 4,236,454
Putnam Investors Fund - Class A (PutInvFd)
9,059,511 shares (cost $112,433,642) .............................................................. 173,489,632
Putnam Voyager Fund - Class A (PutVoyFd)
14,938,988 shares (cost $277,404,396) ............................................................. 462,511,081
SEI Index Funds - S&P 500 Index Portfolio (SEI500lx)
4,293,871 shares (cost $145,660,479) .............................................................. 195,371,131
Seligman Growth Fund, Inc. - Class A (SelGroFd)
2,243,519 shares (cost $15,138,303) ............................................................... 19,339,134
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class (AIMTreas)
10,600,232 shares (cost $10,600,232) .............................................................. 10,600,232
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) (TRIntStk)
2,295,778 shares (cost $37,100,072) ............................................................... 43,688,649
Templeton Foreign Fund - Class I (TemForFd)
5,130,396 shares (cost $51,029,491) ............................................................... 57,563,043
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
19,842 shares (cost $962,346) ..................................................................... 989,304
-------------
Total investments .............................................................................. 3,883,870,547
Accounts receivable ..................................................................................... 93,361
-------------
Total assets ................................................................................... 3,883,963,908
Accounts payable ........................................................................................... 18,314
-------------
Contract owners' equity (note 4) ...........................................................................$ 3,883,945,594
=============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
Years Ended December 31,1999 and 1998
Total ACIncGro
---------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
Investment activity:
<S> <C> <C> <C> <C>
Reinvested dividends ................... $ 26,546,750 22,484,700 79,286 444
Mortality and expense charges (note 2) . -- (3,554,254) -- --
Administration charges (note 2):
Tier I ......................... -- (1,559,810) -- --
Tier II ........................ -- (515,929) -- --
Tier III ....................... -- (265,349) -- --
Tier IV ........................ -- (97,218) -- --
Tier V ......................... -- (147,275) -- --
Variable account fee (notes 2 and 5) ... (24,765,341) (13,305,516) (39,403) (81)
--------------- --------------- --------------- ---------------
Net investment activity ............. 1,781,409 3,039,349 39,883 363
Proceeds from mutual fund shares sold .. 523,300,317 392,315,249 596,336 26,345
Cost of mutual fund shares sold ........ (437,839,290) (333,148,949) (571,759) (27,018)
--------------- --------------- --------------- ---------------
Realized gain (loss) on investments .... 85,461,027 59,166,300 24,577 (673)
Change in unrealized gain (loss)
on investments ...................... 396,438,611 270,062,812 1,127,920 1,976
--------------- --------------- --------------- ---------------
Net gain (loss) on investments ...... 481,899,638 329,229,112 1,152,497 1,303
--------------- --------------- --------------- ---------------
Reinvested capital gains ............... 282,934,864 171,173,889 8,847 5,502
--------------- --------------- --------------- ---------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 766,615,911 503,442,350 1,201,227 7,168
--------------- --------------- --------------- ---------------
Equity transactions:
Purchase payments received from
contract owners ..................... 544,310,028 514,486,655 4,466,796 37,805
Transfers between funds ................ -- -- 5,774,285 180,005
Redemptions ............................ (212,060,207) (203,846,704) (501,303) (708)
Adjustments to maintain reserves ....... 179,831 23,483 (8) --
--------------- --------------- --------------- ---------------
Net equity transactions ........... 332,429,652 310,663,434 9,739,770 217,102
Net change in contract owners' equity .... 1,099,045,563 814,105,784 10,940,997 224,270
Contract owners' equity beginning
of year ................................ 2,784,900,031 1,970,794,247 224,270 --
--------------- --------------- --------------- ---------------
Contract owners' equity end of year ...... $ 3,883,945,594 2,784,900,031 11,165,267 224,270
=============== =============== =============== ===============
<CAPTION>
ACTCGro ACTCIntDis
---------------------------------- ----------------------------------
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
Investment activity:
<S> <C> <C> <C> <C>
Reinvested dividends ................... $ -- -- -- --
Mortality and expense charges (note 2) . -- (179,957) -- --
Administration charges (note 2):
Tier I ......................... -- (70,783) -- --
Tier II ........................ -- (32,079) -- --
Tier III ....................... -- (13,379) -- --
Tier IV ........................ -- (6,026) -- --
Tier V ......................... -- (7,154) -- --
Variable account fee (notes 2 and 5) ... (1,127,812) (641,402) (20,653) (135)
--------------- --------------- --------------- ---------------
Net investment activity ............. (1,127,812) (950,780) (20,653) (135)
Proceeds from mutual fund shares sold .. 7,116,475 9,205,534 47,628,795 2,273,724
Cost of mutual fund shares sold ........ (5,315,417) (7,522,277) (44,335,389) (2,261,430)
--------------- --------------- --------------- ---------------
Realized gain (loss) on investments .... 1,801,058 1,683,257 3,293,406 12,294
Change in unrealized gain (loss)
on investments ...................... 23,069,667 12,866,693 1,031,800 6,690
--------------- --------------- --------------- ---------------
Net gain (loss) on investments ...... 24,870,725 14,549,950 4,325,206 18,984
--------------- --------------- --------------- ---------------
Reinvested capital gains ............... 19,148,648 21,486,036 729,314 3,509
--------------- --------------- --------------- ---------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 42,891,561 35,085,206 5,033,867 22,358
--------------- --------------- --------------- ---------------
Equity transactions:
Purchase payments received from
contract owners ..................... 5,630,899 5,994,480 1,668,676 2,225
Transfers between funds ................ (2,485,298) (4,507,553) 7,551,114 664,695
Redemptions ............................ (7,868,891) (8,736,631) (249,277) --
Adjustments to maintain reserves ....... 34,064 13,926 78,434 (6)
--------------- --------------- --------------- ---------------
Net equity transactions ........... (4,689,226) (7,235,778) 9,048,947 666,914
Net change in contract owners' equity .... 38,202,335 27,849,428 14,082,814 689,272
Contract owners' equity beginning
of year ................................ 130,887,729 103,038,301 689,272 --
--------------- --------------- --------------- ---------------
Contract owners' equity end of year ...... $ 169,090,064 130,887,729 14,772,086 689,272
=============== =============== =============== ===============
</TABLE>
(Continued)
<PAGE> 6
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
ACTCUltra BdFdAm
----------------------------- --------------------------
1999 1998 1999 1998
------------- ------------ ----------- -----------
Investment activity:
<S> <C> <C> <C> <C>
Reinvested dividends ................... $ -- -- 1,242,830 1,142,666
Mortality and expense charges (note 2) . -- (392,873) -- (26,239)
Administration charges (note 2):
Tier I ......................... -- (166,590) -- (11,627)
Tier II ........................ -- (57,840) -- (4,000)
Tier III ....................... -- (26,042) -- (2,008)
Tier IV ........................ -- (11,622) -- (734)
Tier V ......................... -- (18,904) -- (941)
Variable account fee (notes 2 and 5) ... (3,202,805) (1,538,264) (144,668) (97,237)
------------- ------------ ----------- -----------
Net investment activity ............. (3,202,805) (2,212,135) 1,098,162 999,880
Proceeds from mutual fund shares sold .. 26,699,409 28,751,606 5,028,641 6,087,628
Cost of mutual fund shares sold ........ (15,747,781) (18,930,198) (5,220,887) (6,005,142)
------------- ------------ ----------- -----------
Realized gain (loss) on investments .... 10,951,628 9,821,408 (192,246) 82,486
Change in unrealized gain (loss)
on investments ...................... 125,102,740 41,854,943 (655,033) (569,892)
------------- ------------ ----------- -----------
Net gain (loss) on investments ...... 136,054,368 51,676,351 (847,279) (487,406)
------------- ------------ ----------- -----------
Reinvested capital gains ............... 15,366,761 28,290,273 -- 175,242
------------- ------------ ----------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 148,218,324 77,754,489 250,883 687,716
------------- ------------ ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ..................... 72,944,856 63,214,714 1,955,027 2,990,754
Transfers between funds ................ (2,041,171) (3,939,620) (2,177,331) 1,549,434
Redemptions ............................ (25,431,572) (21,108,615) (1,125,943) (1,649,497)
Adjustments to maintain reserves ....... 9,140 18,989 (266) (1,180)
------------- ------------ ----------- -----------
Net equity transactions ........... 45,481,253 38,185,468 (1,348,513) 2,889,511
Net change in contract owners' equity .... 193,699,577 115,939,957 (1,097,630) 3,577,227
Contract owners' equity beginning
of year ................................ 334,432,418 218,492,461 18,447,060 14,869,833
------------- ------------ ----------- -----------
Contract owners' equity end of year ....... $ 528,131,995 334,432,418 17,349,430 18,447,060
============= ============ =========== ===========
<CAPTION>
BrnCapSmCo DryApp
------------------- ----------------------
1999 1998 1999 1998
-------- -------- ---------- --------
Investment activity:
<S> <C> <C> <C> <C>
Reinvested dividends ................... $ -- - 25,354 1,129
Mortality and expense charges (note 2) . -- - -- --
Administration charges (note 2):
Tier I ......................... -- - -- --
Tier II ........................ -- - -- --
Tier III ....................... -- - -- --
Tier IV ........................ -- - -- --
Tier V ......................... -- - -- --
Variable account fee (notes 2 and 5) ... (333) - (20,046) (82)
-------- -------- ---------- --------
Net investment activity ............. (333) - 5,308 1,047
Proceeds from mutual fund shares sold .. 207,941 - 624,261 15,886
Cost of mutual fund shares sold ........ (211,353) - (595,895) (16,044)
-------- -------- ---------- --------
Realized gain (loss) on investments .... (3,412) - 28,366 (158)
Change in unrealized gain (loss)
on investments ...................... 48,230 - 233,919 5,218
-------- -------- ---------- --------
Net gain (loss) on investments ...... 44,818 - 262,285 5,060
-------- - ---------- --------
Reinvested capital gains ............... 27,315 - 33,450 333
-------- -------- ---------- --------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 71,800 - 301,043 6,440
-------- -------- ---------- --------
Equity transactions:
Purchase payments received from
contract owners ..................... 46,448 - 3,085,983 8,602
Transfers between funds ................ 383,838 - 1,836,194 231,592
Redemptions ............................ (2,777) - (335,556) (712)
Adjustments to maintain reserves ....... (37) - (20) 62
-------- -------- ---------- --------
Net equity transactions ........... 427,472 - 4,586,601 239,544
Net change in contract owners' equity .... 499,272 - 4,887,644 245,984
Contract owners' equity beginning
of year ................................ -- - 245,984 --
-------- -------- ---------- --------
Contract owners' equity end of year ...... $499,272 - 5,133,628 245,984
======== ======== ========== ========
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
DryPreMCap Dry3dCen
-------------------- --------------------------
1999 1998 1999 1998
--------- ------- ----------- -----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ -- -- -- --
Mortality and expense charges (note 2) . -- -- -- (94,256)
Administration charges (note 2):
Tier I ......................... -- -- -- (40,950)
Tier II ........................ -- -- -- (14,527)
Tier III ....................... -- -- -- (5,212)
Tier IV ........................ -- -- -- (3,161)
Tier V ......................... -- -- -- (4,202)
Variable account fee (notes 2 and 5) ... (1,898) (1) (497,195) (326,513)
Net investment activity ............. (1,898) (1) (497,195) (488,821)
Proceeds from mutual fund shares sold .. 709,972 629 4,010,352 4,950,188
Cost of mutual fund shares sold ........ (695,225) (624) (2,536,557) (3,505,619)
--------- ------- ----------- -----------
Realized gain (loss) on investments .... 14,747 5 1,473,795 1,444,569
Change in unrealized gain (loss)
on investments ...................... 42,817 516 12,837,989 7,872,216
--------- ------- ----------- -----------
Net gain (loss) on investments ...... 57,564 521 14,311,784 9,316,785
--------- ------- ----------- -----------
Reinvested capital gains ............... 11,891 -- 8,333,008 7,036,470
--------- ------- ----------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 67,557 520 22,147,597 15,864,434
--------- ------- ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ..................... 273,453 4,062 12,071,965 11,631,807
Transfers between funds ................ 140,050 34,143 (1,520,857) (2,330,389)
Redemptions ............................ (33,802) -- (5,601,111) (5,586,763)
Adjustments to maintain reserves ....... (11) -- 7,090 2,387
--------- ------- ----------- -----------
Net equity transactions ........... 379,690 38,205 4,957,087 3,717,042
Net change in contract owners' equity .... 447,247 38,725 27,104,684 19,581,476
Contract owners' equity beginning
of year ................................ 38,725 -- 72,154,189 52,572,713
--------- ------- ----------- -----------
Contract owners' equity end of year ...... $ 485,972 38,725 99,258,873 72,154,189
========= ======= =========== ===========
<CAPTION>
EvIncGro FedBdFd
------------------------ ----------------------
1999 1998 1999 1998
---------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 154,336 155,447 40,648 351
Mortality and expense charges (note 2) . -- (6,617) -- --
Administration charges (note 2):
Tier I ......................... -- (2,761) -- --
Tier II ........................ -- (830) -- --
Tier III ....................... -- (380) -- --
Tier IV ........................ -- (272) -- --
Tier V ......................... -- (359) -- --
Variable account fee (notes 2 and 5) ... (24,881) (18,456) (3,582) (39)
Net investment activity ............. 129,455 125,772 37,066 312
Proceeds from mutual fund shares sold .. 693,805 881,407 3,828,161 2,020
Cost of mutual fund shares sold ........ (626,974) (748,521) (3,880,638) (2,007)
---------- ---------- ---------- --------
Realized gain (loss) on investments .... 66,831 132,886 (52,477) 13
Change in unrealized gain (loss)
on investments ...................... 204,223 (596,560) (3,007) 1,798
---------- ---------- ---------- --------
Net gain (loss) on investments ...... 271,054 (463,674) (55,484) 1,811
---------- ---------- ---------- --------
Reinvested capital gains ............... 54,449 306,142 -- --
---------- ---------- ---------- --------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 454,958 (31,760) (18,418) 2,123
---------- ---------- ---------- --------
Equity transactions:
Purchase payments received from
contract owners ..................... 120,351 148,998 182,281 2,112
Transfers between funds ................ (540,995) (441,510) 289,084 268,603
Redemptions ............................ (184,560) (446,480) (106,567) --
Adjustments to maintain reserves ....... 69 (8) (18) (1)
---------- ---------- ---------- --------
Net equity transactions ........... (605,135) (739,000) 364,780 270,714
Net change in contract owners' equity .... (150,177) (770,760) 346,362 272,837
Contract owners' equity beginning
of year ................................ 3,272,145 4,042,905 272,837 --
---------- ---------- ---------- --------
Contract owners' equity end of year ...... $3,121,968 3,272,145 619,199 272,837
========== ========== ========== ========
</TABLE>
(Continued)
<PAGE> 8
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
FedUSGvt FAGrOppA
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
Investment activity:
<S> <C> <C> <C> <C>
Reinvested dividends ................... $ 536,759 332,531 22,694 359
Mortality and expense charges (note 2) . -- (7,646) -- --
Administration charges (note 2):
Tier I ......................... -- (3,257) -- --
Tier II ........................ -- (1,064) -- --
Tier III ....................... -- (399) -- --
Tier IV ........................ -- (291) -- --
Tier V ......................... -- (392) -- --
Variable account fee (notes 2 and 5) ... (90,999) (40,914) (9,180) (9)
------------ ------------ ------------ ------------
Net investment activity ............. 445,760 278,568 13,514 350
Proceeds from mutual fund shares sold .. 8,705,464 8,151,240 300,254 44
Cost of mutual fund shares sold ........ (8,894,755) (8,018,807) (295,240) (47)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... (189,291) 132,433 5,014 (3)
Change in unrealized gain (loss)
on investments ...................... (407,684) 3,827 (179,430) 1,423
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... (596,975) 136,260 (174,416) 1,420
------------ ------------ ------------ ------------
Reinvested capital gains ............... -- -- 219,142 1,268
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... (151,215) 414,828 58,240 3,038
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 2,043,150 1,472,004 1,607,253 35,636
Transfers between funds ................ (119,229) 4,957,619 790,645 48,957
Redemptions ............................ (1,361,890) (506,258) (142,109) --
Adjustments to maintain reserves ....... 583 (132) (27) 2
------------ ------------ ------------ ------------
Net equity transactions ........... 562,614 5,923,233 2,255,762 84,595
Net change in contract owners' equity .... 411,399 6,338,061 2,314,002 87,633
Contract owners' equity beginning
of year ................................ 10,635,768 4,297,707 87,633 --
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 11,047,167 10,635,768 2,401,635 87,633
============ ============ ============ ============
FAHiYld FidCapInc
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
Investment activity:
<S> <C> <C> <C> <C>
Reinvested dividends ................... $ 56,076 1,437 213,942 246,552
Mortality and expense charges (note 2) . -- -- -- (4,504)
Administration charges (note 2):
Tier I ......................... -- -- -- (1,630)
Tier II ........................ -- -- -- (466)
Tier III ....................... -- -- -- (651)
Tier IV ........................ -- -- -- (216)
Tier V ......................... -- -- -- (146)
Variable account fee (notes 2 and 5) ... (4,343) (4) (19,794) (13,938)
------------ ------------ ------------ ------------
Net investment activity ............. 51,733 1,433 194,148 225,001
Proceeds from mutual fund shares sold .. 9,225,774 -- 330,023 270,209
Cost of mutual fund shares sold ........ (9,223,148) -- (237,631) (184,125)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... 2,626 -- 92,392 86,084
Change in unrealized gain (loss)
on investments ...................... 3,933 (703) (90,807) (271,370)
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... 6,559 (703) 1,585 (185,286)
------------ ------------ ------------ ------------
Reinvested capital gains ............... -- -- 102,346 67,370
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 58,292 730 298,079 107,085
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 290,515 40,397 (229) --
Transfers between funds ................ 699,340 21,397 (171,135) (164,193)
Redemptions ............................ (57,008) -- (112,538) (84,204)
Adjustments to maintain reserves ....... (107) (10) (1,709) (323)
------------ ------------ ------------ ------------
Net equity transactions ........... 932,740 61,784 (285,611) (248,720)
Net change in contract owners' equity .... 991,032 62,514 12,468 (141,635)
Contract owners' equity beginning
of year ................................ 62,514 -- 2,516,385 2,658,020
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 1,053,546 62,514 2,528,853 2,516,385
============ ============ ============ ============
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
FidContr FidEqInc
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 2,454,061 2,236,508 5,536,617 5,838,731
Mortality and expense charges (note 2) . -- (567,716) -- (623,980)
Administration charges (note 2):
Tier I ......................... -- (257,062) -- (255,098)
Tier II ........................ -- (84,899) -- (88,544)
Tier III ....................... -- (40,425) -- (58,706)
Tier IV ........................ -- (16,521) -- (13,364)
Tier V ......................... -- (20,187) -- (29,581)
Variable account fee (notes 2 and 5) ... (4,246,797) (2,165,720) (3,150,562) (2,091,065)
------------- ------------- ------------- -------------
Net investment activity ............. (1,792,736) (916,022) 2,386,055 2,678,393
Proceeds from mutual fund shares sold .. 11,653,668 15,434,546 38,397,876 26,824,126
Cost of mutual fund shares sold ........ (6,089,703) (9,424,899) (16,376,645) (11,951,004)
------------- ------------- ------------- -------------
Realized gain (loss) on investments .... 5,563,965 6,009,647 22,021,231 14,873,122
Change in unrealized gain (loss)
on investments ...................... 23,497,302 66,478,467 (35,317,697) 6,919,838
------------- ------------- ------------- -------------
Net gain (loss) on investments ...... 29,061,267 72,488,114 (13,296,466) 21,792,960
------------- ------------- ------------- -------------
Reinvested capital gains ............... 89,253,904 31,423,956 34,520,178 16,288,417
------------- ------------- ------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 116,522,435 102,996,048 23,609,767 40,759,770
------------- ------------- ------------- -------------
Equity transactions:
Purchase payments received from
contract owners ..................... 82,805,250 79,879,267 39,142,310 52,962,098
Transfers between funds ................ (9,183,736) (17,451,214) (41,041,314) (28,286,291)
Redemptions ............................ (30,247,831) (29,789,009) (25,500,837) (27,397,650)
Adjustments to maintain reserves ....... 11,674 12,693 25,353 29,492
------------- ------------- ------------- -------------
Net equity transactions ........... 43,385,357 32,651,737 (27,374,488) (2,692,351)
Net change in contract owners' equity .... 159,907,792 135,647,785 (3,764,721) 38,067,419
Contract owners' equity beginning
of year ................................ 456,635,655 320,987,870 391,476,242 353,408,823
------------- ------------- ------------- -------------
Contract owners' equity end of year ...... $ 616,543,447 456,635,655 387,711,521 391,476,242
============= ============= ============= =============
<CAPTION>
FidMgIn FidOTC
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 1,216,009 930,422 -- --
Mortality and expense charges (note 2) . -- (222,583) -- (56,312)
Administration charges (note 2):
Tier I ......................... -- (105,291) -- (23,953)
Tier II ........................ -- (32,343) -- (7,847)
Tier III ....................... -- (16,644) -- (3,832)
Tier IV ........................ -- (5,847) -- (1,682)
Tier V ......................... -- (6,842) -- (2,788)
Variable account fee (notes 2 and 5) ... (1,704,233) (847,662) (604,568) (210,461)
------------- ------------- ------------- -------------
Net investment activity ............. (488,224) (306,790) (604,568) (306,875)
Proceeds from mutual fund shares sold .. 7,167,833 9,672,893 10,613,809 15,450,608
Cost of mutual fund shares sold ........ (3,782,036) (6,581,476) (6,697,393) (13,562,267)
------------- ------------- ------------- -------------
Realized gain (loss) on investments .... 3,385,797 3,091,417 3,916,416 1,888,341
Change in unrealized gain (loss)
on investments ...................... 22,537,167 32,004,034 39,741,704 8,846,107
------------- ------------- ------------- -------------
Net gain (loss) on investments ...... 25,922,964 35,095,451 43,658,120 10,734,448
------------- ------------- ------------- -------------
Reinvested capital gains ............... 18,323,094 7,068,356 9,273,940 2,313,154
------------- ------------- ------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 43,757,834 41,857,017 52,327,492 12,740,727
------------- ------------- ------------- -------------
Equity transactions:
Purchase payments received from
contract owners ..................... 31,113,784 25,865,178 19,026,005 10,449,632
Transfers between funds ................ 6,095,136 (3,113,052) 38,990,782 (3,408,227)
Redemptions ............................ (12,342,741) (12,944,049) (5,924,138) (3,999,975)
Adjustments to maintain reserves ....... 6,235 (71,487) 3,219 966
------------- ------------- ------------- -------------
Net equity transactions ........... 24,872,414 9,736,590 52,095,868 3,042,396
Net change in contract owners' equity .... 68,630,248 51,593,607 104,423,360 15,783,123
Contract owners' equity beginning
of year ................................ 176,040,685 124,447,078 47,287,448 31,504,325
------------- ------------- ------------- -------------
Contract owners' equity end of year ...... $ 244,670,933 176,040,685 151,710,808 47,287,448
============= ============= ============= =============
</TABLE>
(Continued)
<PAGE> 10
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
FidPurtn InvDynam
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 1,491,733 1,252,746 -- --
Mortality and expense charges (note 2) . -- (56,845) -- --
Administration charges (note 2):
Tier I ......................... -- (27,997) -- --
Tier II ........................ -- (8,254) -- --
Tier III ....................... -- (3,757) -- --
Tier IV ........................ -- (1,311) -- --
Tier V ......................... -- (1,765) -- --
Variable account fee (notes 2 and 5) ... (390,268) (221,557) (44,068) (95)
------------ ------------ ------------ ------------
Net investment activity ............. 1,101,465 931,260 (44,068) (95)
Proceeds from mutual fund shares sold .. 4,628,657 2,131,440 10,736,763 1,301,233
Cost of mutual fund shares sold ........ (3,737,817) (1,598,513) (10,048,155) (1,266,821)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... 890,840 532,927 688,608 34,412
Change in unrealized gain (loss)
on investments ...................... (3,391,079) 1,030,514 5,616,157 17,001
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... (2,500,239) 1,563,441 6,304,765 51,413
------------ ------------ ------------ ------------
Reinvested capital gains ............... 2,286,159 2,946,910 1,099,118 2,534
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 887,385 5,441,611 7,359,815 53,852
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 8,533,678 9,462,437 6,238,534 10,168
Transfers between funds ................ (2,979,275) 103,927 18,726,120 327,335
Redemptions ............................ (3,507,673) (2,850,985) (763,887) (5,593)
Adjustments to maintain reserves ....... 756 (192) (2,309) (2)
------------ ------------ ------------ ------------
Net equity transactions ........... 2,047,486 6,715,187 24,198,458 331,908
Net change in contract owners' equity .... 2,934,871 12,156,798 31,558,273 385,760
Contract owners' equity beginning
of year ................................ 43,829,300 31,672,502 385,760 --
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 46,764,171 43,829,300 31,944,033 385,760
============ ============ ============ ============
<CAPTION>
InvTotRet InvCoAm
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 23,552 18 1,635,831 1,361,576
Mortality and expense charges (note 2) . -- -- -- (127,492)
Administration charges (note 2):
Tier I ......................... -- -- -- (61,970)
Tier II ........................ -- -- -- (20,869)
Tier III ....................... -- -- -- (8,660)
Tier IV ........................ -- -- -- (2,452)
Tier V ......................... -- -- -- (3,596)
Variable account fee (notes 2 and 5) ... (5,189) (6) (877,592) (480,021)
------------ ------------ ------------ ------------
Net investment activity ............. 18,363 12 758,239 656,516
Proceeds from mutual fund shares sold .. 577,480 902 3,456,134 5,236,900
Cost of mutual fund shares sold ........ (575,369) (922) (2,002,594) (3,162,290)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... 2,111 (20) 1,453,540 2,074,610
Change in unrealized gain (loss)
on investments ...................... (109,718) 372 3,149,675 5,634,104
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... (107,607) 352 4,603,215 7,708,714
------------ ------------ ------------ ------------
Reinvested capital gains ............... 42,694 169 10,017,728 8,097,523
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... (46,550) 533 15,379,182 16,462,753
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 596,853 7,759 14,401,863 14,349,438
Transfers between funds ................ 622,840 18,364 173,915 (404,166)
Redemptions ............................ (25,158) -- (6,531,962) (8,056,668)
Adjustments to maintain reserves ....... (70) 3 3,307 1,469
------------ ------------ ------------ ------------
Net equity transactions ........... 1,194,465 26,126 8,047,123 5,890,073
Net change in contract owners' equity .... 1,147,915 26,659 23,426,305 22,352,826
Contract owners' equity beginning
of year ................................ 26,659 -- 94,504,873 72,152,047
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 1,174,574 26,659 117,931,178 94,504,873
============ ============ ============ ============
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
MASFIP MFSGrStk
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 385,496 271,659 -- 5,594
Mortality and expense charges (note 2) . -- (5,072) -- (23,366)
Administration charges (note 2):
Tier I ......................... -- (2,754) -- (9,627)
Tier II ........................ -- (559) -- (3,392)
Tier III ....................... -- (163) -- (2,067)
Tier IV ........................ -- (129) -- (592)
Tier V ......................... -- (216) -- (1,051)
Variable account fee (notes 2 and 5) ... (47,703) (26,138) (149,912) (83,926)
----------- ----------- ----------- -----------
Net investment activity ............. 337,793 236,628 (149,912) (118,427)
Proceeds from mutual fund shares sold .. 2,629,141 1,963,455 1,234,577 1,175,245
Cost of mutual fund shares sold ........ (2,790,986) (1,950,478) (767,050) (920,701)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .... (161,845) 12,977 467,527 254,544
Change in unrealized gain (loss)
on investments ...................... (265,945) (162,941) 4,409,901 3,371,434
----------- ----------- ----------- -----------
Net gain (loss) on investments ...... (427,790) (149,964) 4,877,428 3,625,978
----------- ----------- ----------- -----------
Reinvested capital gains ............... -- 144,946 1,718,393 1,391,598
----------- ----------- ----------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... (89,997) 231,610 6,445,909 4,899,149
----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ..................... 966,791 1,773,192 1,169,203 1,282,347
Transfers between funds ................ (881,490) 1,608,708 (670,476) (398,976)
Redemptions ............................ (653,714) (303,932) (994,772) (1,113,949)
Adjustments to maintain reserves ....... 398 644 615 331
----------- ----------- ----------- -----------
Net equity transactions ........... (568,015) 3,078,612 (495,430) (230,247)
Net change in contract owners 'equity .... (658,012) 3,310,222 5,950,479 4,668,902
Contract owners' equity beginning
of year ................................ 6,005,900 2,695,678 17,484,415 12,815,513
----------- ----------- ----------- -----------
Contract owners' equity end of year ...... $ 5,347,888 6,005,900 23,434,894 17,484,415
=========== =========== =========== ===========
<CAPTION>
MFSGrOpp MFSHiInc
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... -- -- 1,668,293 1,505,064
Mortality and expense charges (note 2) . -- (28,712) -- (27,020)
Administration charges (note 2):
Tier I ......................... -- (12,308) -- (11,010)
Tier II ........................ -- (4,337) -- (3,623)
Tier III ....................... -- (2,562) -- (2,066)
Tier IV ........................ -- (769) -- (722)
Tier V ......................... -- (1,026) -- (1,503)
Variable account fee (notes 2 and 5) ... $ (155,377) (98,246) (144,126) (98,576)
----------- ----------- ----------- -----------
Net investment activity ............. (155,377) (147,960) 1,524,167 1,360,544
Proceeds from mutual fund shares sold .. 1,927,230 1,304,849 13,511,879 10,536,849
Cost of mutual fund shares sold ........ (1,294,574) (897,706) (14,762,009) (10,475,518)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .... 632,656 407,143 (1,250,130) 61,331
Change in unrealized gain (loss)
on investments ...................... 3,066,321 1,993,542 839,491 (1,449,403)
----------- ----------- ----------- -----------
Net gain (loss) on investments ...... 3,698,977 2,400,685 (410,639) (1,388,072)
----------- ----------- ----------- -----------
Reinvested capital gains ............... 2,084,199 2,047,635 -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 5,627,799 4,300,360 1,113,528 (27,528)
----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ..................... 228,670 247,604 2,254,254 4,666,502
Transfers between funds ................ (555,154) (265,357) (3,961,948) 1,600,902
Redemptions ............................ (1,371,884) (1,018,457) (1,330,787) (1,732,097)
Adjustments to maintain reserves ....... 7,068 152 (1,799) (6,328)
----------- ----------- ----------- -----------
Net equity transactions ........... (1,691,300) (1,036,058) (3,040,280) 4,528,979
Net change in contract owners' equity .... 3,936,499 3,264,302 (1,926,752) 4,501,451
Contract owners' equity beginning
of year ................................ 19,223,547 15,959,245 18,888,749 14,387,298
----------- ----------- ----------- -----------
Contract owners' equity end of year ...... $23,160,046 19,223,547 16,961,997 18,888,749
=========== =========== =========== ===========
</TABLE>
(Continued)
<PAGE> 12
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
<TABLE>
<CAPTION>
MSIEqGroB NAATAggr
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 34 17 1,828 205
Mortality and expense charges (note 2) . -- -- -- (473)
Administration charges (note 2):
Tier I ......................... -- -- -- (175)
Tier II ........................ -- -- -- (97)
Tier III ....................... -- -- -- (7)
Tier IV ........................ -- -- -- (6)
Tier V ......................... -- -- -- (39)
Variable account fee (notes 2 and 5) ... (3,644) (6) (14,688) (7,076)
----------- ----------- ----------- -----------
Net investment activity ............. (3,610) 11 (12,860) (7,668)
Proceeds from mutual fund shares sold .. 455,884 748 755,809 320,989
Cost of mutual fund shares sold ........ (415,751) (742) (717,368) (312,762)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .... 40,133 6 38,441 8,227
Change in unrealized gain (loss)
on investments ...................... 147,635 311 729,945 177,946
----------- ----------- ----------- -----------
Net gain (loss) on investments ...... 187,768 317 768,386 186,173
----------- ----------- ----------- -----------
Reinvested capital gains ............... 89,414 555 102,825 --
----------- ----------- ----------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 273,572 883 858,351 178,505
----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ..................... 623,872 2,067 2,255,196 1,743,904
Transfers between funds ................ 711,190 24,165 (650,259) 636,159
Redemptions ............................ (35,017) -- (198,781) (61,114)
Adjustments to maintain reserves ....... (193) 10 305 3,646
----------- ----------- ----------- -----------
Net equity transactions ........... 1,299,852 26,242 1,406,461 2,322,595
Net change in contract owners' equity .... 1,573,424 27,125 2,264,812 2,501,100
Contract owners' equity beginning
of year ................................ 27,125 -- 2,501,100 --
----------- ----------- ----------- -----------
Contract owners' equity end of year ...... $ 1,600,549 27,125 4,765,912 2,501,100
=========== =========== =========== ===========
<CAPTION>
NAATCons NAATMod
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 45,727 2,928 39,602 7,009
Mortality and expense charges (note 2) . -- (21) -- (144)
Administration charges (note 2):
Tier I ......................... -- (2) -- (89)
Tier II ........................ -- (1) -- (22)
Tier III ....................... -- -- -- (2)
Tier IV ........................ -- -- -- (1)
Tier V ......................... -- (5) -- (3)
Variable account fee (notes 2 and 5) ... (7,478) (1,737) (18,117) (5,378)
----------- ----------- ----------- -----------
Net investment activity ............. 38,249 1,162 21,485 1,370
Proceeds from mutual fund shares sold .. 1,387,770 507,051 614,197 223,358
Cost of mutual fund shares sold ........ (1,347,433) (505,316) (581,873) (231,762)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .... 40,337 1,735 32,324 (8,404)
Change in unrealized gain (loss)
on investments ...................... (27,984) 45,507 411,811 147,289
----------- ----------- ----------- -----------
Net gain (loss) on investments ...... 12,353 47,242 444,135 138,885
----------- ----------- ----------- -----------
Reinvested capital gains ............... 13,965 -- 45,894 --
----------- ----------- ----------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 64,567 48,404 511,514 140,255
----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ..................... 656,632 305,707 1,931,773 1,468,718
Transfers between funds ................ 135,732 694,651 41,219 740,919
Redemptions ............................ (233,525) (58,899) (213,076) (164,560)
Adjustments to maintain reserves ....... 99 (26) 78 69
----------- ----------- ----------- -----------
Net equity transactions ........... 558,938 941,433 1,759,994 2,045,146
Net change in contract owners' equity .... 623,505 989,837 2,271,508 2,185,401
Contract owners' equity beginning
of year ................................ 989,837 -- 2,185,401 --
----------- ----------- ----------- -----------
Contract owners' equity end of year ...... $ 1,613,342 989,837 4,456,909 2,185,401
=========== =========== =========== ===========
</TABLE>
<PAGE> 13
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
<TABLE>
<CAPTION>
NAATModAgg NAATModCon
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 26,343 6,488 29,889 6,383
Mortality and expense charges (note 2) . -- (519) -- (80)
Administration charges (note 2):
Tier I ......................... -- (353) -- (32)
Tier II ........................ -- (42) -- (22)
Tier III ....................... -- (31) -- (7)
Tier IV ........................ -- (1) -- --
Tier V ......................... -- (6) -- (1)
Variable account fee (notes 2 and 5) ... (16,958) (6,720) (8,036) (3,025)
------------ ------------ ------------ ------------
Net investment activity ............. 9,385 (1,184) 21,853 3,216
Proceeds from mutual fund shares sold .. 464,206 269,868 947,020 521,818
Cost of mutual fund shares sold ........ (436,124) (272,261) (892,360) (530,663)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... 28,082 (2,393) 54,660 (8,845)
Change in unrealized gain (loss)
on investments ...................... 611,898 139,867 49,372 55,977
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... 639,980 137,474 104,032 47,132
------------ ------------ ------------ ------------
Reinvested capital gains ............... 74,776 -- 17,005 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 724,141 136,290 142,890 50,348
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 2,199,590 1,713,467 640,598 388,620
Transfers between funds ................ (77,702) 560,385 196,994 570,000
Redemptions ............................ (145,030) (104,241) (182,747) (29,257)
Adjustments to maintain reserves ....... 236 49 124 42
------------ ------------ ------------ ------------
Net equity transactions ........... 1,977,094 2,169,660 654,969 929,405
Net change in contract owners' equity .... 2,701,235 2,305,950 797,859 979,753
Contract owners' equity beginning
of year ................................ 2,305,950 -- 979,753 --
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 5,007,185 2,305,950 1,777,612 979,753
============ ============ ============ ============
<CAPTION>
NWFund NWGroFd
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 1,583,187 1,347,907 15,858 10,180
Mortality and expense charges (note 2) . -- (181,761) -- (13,561)
Administration charges (note 2):
Tier I ......................... -- (81,359) -- (5,900)
Tier II ........................ -- (24,501) -- (2,556)
Tier III ....................... -- (13,841) -- (869)
Tier IV ........................ -- (5,294) -- (216)
Tier V ......................... -- (7,330) -- (547)
Variable account fee (notes 2 and 5) ... (1,279,088) (809,923) (69,781) (45,450)
------------ ------------ ------------ ------------
Net investment activity ............. 304,099 223,898 (53,923) (58,919)
Proceeds from mutual fund shares sold .. 17,490,609 7,999,054 974,804 954,882
Cost of mutual fund shares sold ........ (8,676,908) (4,247,844) (561,068) (616,307)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... 8,813,701 3,751,210 413,736 338,575
Change in unrealized gain (loss)
on investments ...................... (23,742,471) 22,649,562 (197,730) 942,443
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... (14,928,770) 26,400,772 216,006 1,281,018
------------ ------------ ------------ ------------
Reinvested capital gains ............... 12,958,953 7,747,144 1,117,169 443,703
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... (1,665,718) 34,371,814 1,279,252 1,665,802
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 56,931,486 52,495,182 321,897 344,800
Transfers between funds ................ (30,043,076) 33,595,689 (282,597) (524,581)
Redemptions ............................ (16,329,316) (15,086,070) (786,142) (551,408)
Adjustments to maintain reserves ....... 12,870 12,173 241 93
------------ ------------ ------------ ------------
Net equity transactions ........... 10,571,964 71,016,974 (746,601) (731,096)
Net change in contract owners' equity .... 8,906,246 105,388,788 532,651 934,706
Contract owners' equity beginning
of year ................................ 194,495,092 89,106,304 8,603,832 7,669,126
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $203,401,338 194,495,092 9,136,483 8,603,832
============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 14
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
<TABLE>
<CAPTION>
NWMyMkt NWIndxFdY
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 3,276,959 2,595,204 38,415 775
Mortality and expense charges (note 2) . -- (81,562) -- --
Administration charges (note 2):
Tier I ......................... -- (30,154) -- --
Tier II ........................ -- (9,901) -- --
Tier III ....................... -- (5,455) -- --
Tier IV ........................ -- (3,463) -- --
Tier V ......................... -- (5,380) -- --
Variable account fee (notes 2 and 5) ... (401,097) (276,482) (27,057) (144)
------------ ------------ ------------ ------------
Net investment activity ............. 2,875,862 2,182,807 11,358 631
Proceeds from mutual fund shares sold .. 85,409,232 64,733,660 3,945,891 203,591
Cost of mutual fund shares sold ........ (85,409,232) (64,733,660) (3,711,433) (200,931)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... -- -- 234,458 2,660
Change in unrealized gain (loss)
on investments ...................... -- -- 655,789 8,813
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... -- -- 890,247 11,473
------------ ------------ ------------ ------------
Reinvested capital gains ............... -- -- 12,833 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 2,875,862 2,182,807 914,438 12,104
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 8,997,309 8,935,086 4,732,299 20,822
Transfers between funds ................ 29,856,570 15,995,607 2,592,634 281,573
Redemptions ............................ (8,784,569) (10,347,103) (287,309) (10)
Adjustments to maintain reserves ....... 15,383 4,712 (21) (1)
------------ ------------ ------------ ------------
Net equity transactions ........... 30,084,693 14,588,302 7,037,603 302,384
Net change in contract owners' equity .... 32,960,555 16,771,109 7,952,041 314,488
Contract owners' equity beginning
of year ................................ 61,394,874 44,623,765 314,488 --
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 94,355,429 61,394,874 8,266,529 314,488
============ ============ ============ ============
<CAPTION>
NSATInc NSATSmCo
----------------------- ----------------------------
1999 1998 1999 1998
------------ --------- ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 1,016 - -- --
Mortality and expense charges (note 2) . -- - -- (1,123)
Administration charges (note 2):
Tier I ......................... -- - -- (449)
Tier II ........................ -- - -- (280)
Tier III ....................... -- - -- (45)
Tier IV ........................ -- - -- (26)
Tier V ......................... -- - -- (41)
Variable account fee (notes 2 and 5) ... (125) - (24,011) (10,968)
------------ --------- ------------ ------------
Net investment activity ............. 891 - (24,011) (12,932)
Proceeds from mutual fund shares sold .. 17,396 - 2,975,466 4,312,495
Cost of mutual fund shares sold ........ (17,523) - (2,539,664) (4,520,280)
------------ --------- ------------ ------------
Realized gain (loss) on investments .... (127) - 435,802 (207,785)
Change in unrealized gain (loss)
on investments ...................... (1,234) - 1,023,121 271,278
------------ --------- ------------ ------------
Net gain (loss) on investments ...... (1,361) - 1,458,923 63,493
------------ --------- ------------ ------------
Reinvested capital gains ............... -- - 223,101 --
------------ --------- ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... (470) - 1,658,013 50,561
------------ --------- ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 57,179 - 1,632,522 1,991,575
Transfers between funds ................ 31,744 - (412,557) 1,247,455
Redemptions ............................ (11,596) - (248,800) (111,457)
Adjustments to maintain reserves ....... (47) - 1,018 762
------------ --------- ------------ ------------
Net equity transactions ........... 77,280 - 972,183 3,128,335
Net change in contract owners' equity .... 76,810 - 2,630,196 3,178,896
Contract owners' equity beginning
of year ................................ -- - 3,178,896 --
------------ --------- ------------ ------------
Contract owners' equity end of year ...... $ 76,810 - 5,809,092 3,178,896
============ ========= ============ ============
</TABLE>
<PAGE> 15
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
<TABLE>
<CAPTION>
NBGuard NBPartTr
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 293,138 226,684 1,776 --
Mortality and expense charges (note 2) . -- (71,447) -- --
Administration charges (note 2):
Tier I ......................... -- (30,092) -- --
Tier II ........................ -- (10,176) -- --
Tier III ....................... -- (4,330) -- --
Tier IV ........................ -- (2,006) -- --
Tier V ......................... -- (3,918) -- --
Variable account fee (notes 2 and 5) ... (294,361) (216,169) (1,126) (40)
------------ ------------ ------------ ------------
Net investment activity ............. (1,223) (111,454) 650 (40)
Proceeds from mutual fund shares sold .. 7,561,425 8,180,376 299,539 22,832
Cost of mutual fund shares sold ........ (7,902,981) (7,161,975) (290,368) (23,331)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... (341,556) 1,018,401 9,171 (499)
Change in unrealized gain (loss)
on investments ...................... (5,263,063) (6,007,812) (11,074) (304)
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... (5,604,619) (4,989,411) (1,903) (803)
------------ ------------ ------------ ------------
Reinvested capital gains ............... 8,385,434 5,801,836 11,681 1,489
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 2,779,592 700,971 10,428 646
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 7,600,357 12,761,883 92,804 2,516
Transfers between funds ................ (9,809,292) (10,226,488) 44,497 46,543
Redemptions ............................ (2,780,586) (4,244,239) (5,016) (11)
Adjustments to maintain reserves ....... 1,093 586 (30) 34
------------ ------------ ------------ ------------
Net equity transactions ........... (4,988,428) (1,708,258) 132,255 49,082
Net change in contract owners' equity .... (2,208,836) (1,007,287) 142,683 49,728
Contract owners' equity beginning
of year ................................ 39,051,746 40,059,033 49,728 --
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 36,842,910 39,051,746 192,411 49,728
============ ============ ============ ============
<CAPTION>
PrBalY PrIntY
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... 12,608 237 1,377 --
Mortality and expense charges (note 2) . -- -- -- --
Administration charges (note 2):
Tier I ......................... -- -- -- --
Tier II ........................ -- -- -- --
Tier III ....................... -- -- -- --
Tier IV ........................ -- -- -- --
Tier V ......................... -- -- -- --
Variable account fee (notes 2 and 5) ... $ (2,544) (51) (1,161) (1)
------------ ------------ ------------ ------------
Net investment activity ............. 10,064 186 216 (1)
Proceeds from mutual fund shares sold .. 155,370 1,152 97,352 5,631
Cost of mutual fund shares sold ........ (146,954) (1,165) (93,961) (5,607)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... 8,416 (13) 3,391 24
Change in unrealized gain (loss)
on investments ...................... 10,761 1,562 44,514 51
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... 19,177 1,549 47,905 75
------------ ------------ ------------ ------------
Reinvested capital gains ............... 11,885 -- 2,912 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 41,126 1,735 51,033 74
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 338,487 1,222 164,295 1,775
Transfers between funds ................ 258,120 68,896 134,239 23,003
Redemptions ............................ (15,706) -- (22,941) (10)
Adjustments to maintain reserves ....... (8) -- (14) 8
------------ ------------ ------------ ------------
Net equity transactions ........... 580,893 70,118 275,579 24,776
Net change in contract owners' equity .... 622,019 71,853 326,612 24,850
Contract owners' equity beginning
of year ................................ 71,853 -- 24,850 --
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 693,872 71,853 351,462 24,850
============ ============ ============ ============
</TABLE>
(Continued)
<PAGE> 16
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
<TABLE>
<CAPTION>
PrLgCapGrY PrLgCpValY
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ -- -- 2,314 9
Mortality and expense charges (note 2) . -- -- -- --
Administration charges (note 2):
Tier I ......................... -- -- -- --
Tier II ........................ -- -- -- --
Tier III ....................... -- -- -- --
Tier IV ........................ -- -- -- --
Tier V ......................... -- -- -- --
Variable account fee (notes 2 and 5) ... (4,278) (20) (1,385) (1)
----------- ----------- ----------- -----------
Net investment activity ............. (4,278) (20) 929 8
Proceeds from mutual fund shares sold .. 165,811 791 368,146 --
Cost of mutual fund shares sold ........ (146,040) (780) (348,884) --
----------- ----------- ----------- -----------
Realized gain (loss) on investments .... 19,771 11 19,262 --
Change in unrealized gain (loss)
on investments ...................... 373,062 2,799 (47,325) 336
----------- ----------- ----------- -----------
Net gain (loss) on investments ...... 392,833 2,810 (28,063) 336
----------- ----------- ----------- -----------
Reinvested capital gains ............... 29,828 -- 1,857 --
----------- ----------- ----------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 418,383 2,790 (25,277) 344
----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ..................... 1,251,518 3,245 341,541 2,581
Transfers between funds ................ 766,588 76,348 153,612 35,362
Redemptions ............................ (49,414) -- (9,498) --
Adjustments to maintain reserves ....... 300 1 (4) (2)
----------- ----------- ----------- -----------
Net equity transactions ........... 1,968,992 79,594 485,651 37,941
Net change in contract owners' equity .... 2,387,375 82,384 460,374 38,285
Contract owners' equity beginning
of year ................................ 82,384 -- 38,285 --
----------- ----------- ----------- -----------
Contract owners' equity end of year ...... $ 2,469,759 82,384 498,659 38,285
=========== =========== =========== ===========
<CAPTION>
PrSmCapY OppGlob
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 813 20 19,606 2
Mortality and expense charges (note 2) . -- -- -- --
Administration charges (note 2):
Tier I ......................... -- -- -- --
Tier II ........................ -- -- -- --
Tier III ....................... -- -- -- --
Tier IV ........................ -- -- -- --
Tier V ......................... -- -- -- --
Variable account fee (notes 2 and 5) ... (2,430) (8) (6,322) (5)
----------- ----------- ----------- -----------
Net investment activity ............. (1,617) 12 13,284 (3)
Proceeds from mutual fund shares sold .. 245,712 18,993 3,497,183 43,412
Cost of mutual fund shares sold ........ (237,932) (18,520) (3,188,553) (43,036)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .... 7,780 473 308,630 376
Change in unrealized gain (loss)
on investments ...................... 109,939 1,713 435,420 240
----------- ----------- ----------- -----------
Net gain (loss) on investments ...... 117,719 2,186 744,050 616
----------- ----------- ----------- -----------
Reinvested capital gains ............... 6,257 -- 225,701 16
----------- ----------- ----------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 122,359 2,198 983,035 629
----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received from
contract owners ..................... 380,003 5,868 665,551 457
Transfers between funds ................ 257,358 66,889 2,609,843 11,799
Redemptions ............................ (11,989) -- (34,860) --
Adjustments to maintain reserves ....... (130) 807 (8,867) --
----------- ----------- ----------- -----------
Net equity transactions ........... 625,242 73,564 3,231,667 12,256
Net change in contract owners' equity .... 747,601 75,762 4,214,702 12,885
Contract owners' equity beginning
of year ................................ 75,762 -- 12,885 --
----------- ----------- ----------- -----------
Contract owners' equity end of year ...... $ 823,363 75,762 4,227,587 12,885
=========== =========== =========== ===========
</TABLE>
<PAGE> 17
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
<TABLE>
<CAPTION>
PutInvFd PutVoyFd
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ -- -- -- --
Mortality and expense charges (note 2) . -- (115,931) -- (360,379)
Administration charges (note 2):
Tier I ......................... -- (58,129) -- (166,907)
Tier II ........................ -- (13,427) -- (51,949)
Tier III ....................... -- (8,862) -- (23,873)
Tier IV ........................ -- (2,260) -- (10,379)
Tier V ......................... -- (4,242) -- (13,276)
Variable account fee (notes 2 and 5) ... (1,158,952) (541,453) (2,640,091) (1,329,097)
------------- ------------- ------------- -------------
Net investment activity ............. (1,158,952) (744,304) (2,640,091) (1,955,860)
Proceeds from mutual fund shares sold .. 15,099,135 10,353,759 11,593,200 9,123,281
Cost of mutual fund shares sold ........ (7,452,216) (6,878,135) (5,527,484) (4,595,683)
------------- ------------- ------------- -------------
Realized gain (loss) on investments .... 7,646,919 3,475,624 6,065,716 4,527,598
Change in unrealized gain (loss)
on investments ...................... 31,186,349 20,401,849 116,878,810 28,840,575
------------- ------------- ------------- -------------
Net gain (loss) on investments ...... 38,833,268 23,877,473 122,944,526 33,368,173
------------- ------------- ------------- -------------
Reinvested capital gains ............... 1,154,607 3,061,748 40,028,816 18,635,623
------------- ------------- ------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 38,828,923 26,194,917 160,333,251 50,047,936
------------- ------------- ------------- -------------
Equity transactions:
Purchase payments received from
contract owners ..................... 26,679,984 25,610,793 49,976,641 54,734,164
Transfers between funds ................ (4,431,547) 17,906,156 (6,529,541) (9,047,899)
Redemptions ............................ (10,759,047) (6,468,507) (19,686,207) (17,706,573)
Adjustments to maintain reserves ....... 3,049 2,712 13,236 (5,847)
------------- ------------- ------------- -------------
Net equity transactions ........... 11,492,439 37,051,154 23,774,129 27,973,845
Net change in contract owners' equity .... 50,321,362 63,246,071 184,107,380 78,021,781
Contract owners' equity beginning
of year ................................ 123,169,328 59,923,257 278,412,506 200,390,725
------------- ------------- ------------- -------------
Contract owners' equity end of year ...... $ 173,490,690 123,169,328 462,519,886 278,412,506
============= ============= ============= =============
<CAPTION>
SEI500Ix SelGroFd
------------------------------ ------------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 2,140,352 1,115,872 -- 19,069
Mortality and expense charges (note 2) . -- (118,601) -- (17,703)
Administration charges (note 2):
Tier I ......................... -- (54,008) -- (7,977)
Tier II ........................ -- (14,709) -- (2,228)
Tier III ....................... -- (9,909) -- (1,141)
Tier IV ........................ -- (3,207) -- (500)
Tier V ......................... -- (4,702) -- (871)
Variable account fee (notes 2 and 5) ... (1,295,145) (559,451) (126,036) (65,691)
------------- ------------- ------------- -------------
Net investment activity ............. 845,207 351,285 (126,036) (77,042)
Proceeds from mutual fund shares sold .. 7,656,976 8,951,655 1,769,612 2,458,366
Cost of mutual fund shares sold ........ (4,574,101) (6,238,921) (1,193,918) (1,726,231)
------------- ------------- ------------- -------------
Realized gain (loss) on investments .... 3,082,875 2,712,734 575,694 732,135
Change in unrealized gain (loss)
on investments ...................... 24,729,121 17,933,741 1,975,698 1,539,014
------------- ------------- ------------- -------------
Net gain (loss) on investments ...... 27,811,996 20,646,475 2,551,392 2,271,149
------------- ------------- ------------- -------------
Reinvested capital gains ............... 1,300,894 1,080,072 1,914,709 1,235,654
------------- ------------- ------------- -------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 29,958,097 22,077,832 4,340,065 3,429,761
------------- ------------- ------------- -------------
Equity transactions:
Purchase payments received from
contract owners ..................... 46,461,584 42,935,941 2,109,342 1,956,041
Transfers between funds ................ 4,892,197 13,539,167 (351,642) 185,492
Redemptions ............................ (11,652,311) (10,807,421) (899,596) (1,137,875)
Adjustments to maintain reserves ....... 5,320 7,989 (18) 593
------------- ------------- ------------- -------------
Net equity transactions ........... 39,706,790 45,675,676 858,086 1,004,251
Net change in contract owners' equity .... 69,664,887 67,753,508 5,198,151 4,434,012
Contract owners' equity beginning
of year ................................ 125,708,542 57,955,034 14,140,971 9,706,959
------------- ------------- ------------- -------------
Contract owners' equity end of year ...... $ 195,373,429 125,708,542 19,339,122 14,140,971
============= ============= ============= =============
</TABLE>
(Continued)
<PAGE> 18
NACo VARIABLE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT owners' equity, Continued
STATEMENTS OF OPERATIONS, Continued
Years Ended December 31,1999 and 1998
<TABLE>
<CAPTION>
AIMTreas TRIntStk
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 392,579 262,395 282,280 473,012
Mortality and expense charges (note 2) . -- (7,334) -- (49,478)
Administration charges (note 2):
Tier I ......................... -- (2,250) -- (20,181)
Tier II ........................ -- (591) -- (6,757)
Tier III ....................... -- (618) -- (3,664)
Tier IV ........................ -- (880) -- (1,371)
Tier V ......................... -- (260) -- (2,722)
Variable account fee (notes 2 and 5) ... (61,649) (27,489) (272,582) (167,284)
------------ ------------ ------------ ------------
Net investment activity ............. 330,930 222,973 9,698 221,555
Proceeds from mutual fund shares sold .. 60,710,144 46,105,295 50,140,732 62,175,381
Cost of mutual fund shares sold ........ (60,710,144) (46,105,295) (45,641,069) (62,694,538)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... -- -- 4,499,663 (519,157)
Change in unrealized gain (loss)
on investments ...................... -- -- 4,796,699 4,166,469
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... -- -- 9,296,362 3,647,312
------------ ------------ ------------ ------------
Reinvested capital gains ............... 758 -- 1,975,961 752,519
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 331,688 222,973 11,282,021 4,621,386
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 809,318 969,868 5,807,566 7,432,534
Transfers between funds ................ 4,486,143 4,082,704 (4,582,998) (4,653,084)
Redemptions ............................ (1,197,853) (3,214,916) (2,258,002) (2,634,045)
Adjustments to maintain reserves ....... (52,248) (977) 822 (2,418)
------------ ------------ ------------ ------------
Net equity transactions ........... 4,045,360 1,836,679 (1,032,612) 142,987
Net change in contract owners' equity .... 4,377,048 2,059,652 10,249,409 4,764,373
Contract owners' equity beginning
of year ................................ 6,222,259 4,162,607 33,439,363 28,674,990
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 10,599,307 6,222,259 43,688,772 33,439,363
============ ============ ============ ============
<CAPTION>
TemForFd WPEmGro
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 1,557,532 1,127,070 -- --
Mortality and expense charges (note 2) . -- (82,947) -- --
Administration charges (note 2):
Tier I ......................... -- (37,085) -- --
Tier II ........................ -- (13,197) -- --
Tier III ....................... -- (5,742) -- --
Tier IV ........................ -- (1,897) -- --
Tier V ......................... -- (3,279) -- --
Variable account fee (notes 2 and 5) ... (296,367) (231,294) (2,845) (5)
------------ ------------ ------------ ------------
Net investment activity ............. 1,261,165 751,629 (2,845) (5)
Proceeds from mutual fund shares sold .. 24,294,781 13,169,841 1,966,205 7,464
Cost of mutual fund shares sold ........ (25,937,851) (12,461,664) (1,827,117) (7,086)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .... (1,643,070) 708,177 139,088 378
Change in unrealized gain (loss)
on investments ...................... 15,393,167 (7,117,392) 25,825 1,134
------------ ------------ ------------ ------------
Net gain (loss) on investments ...... 13,750,097 (6,409,215) 164,913 1,512
------------ ------------ ------------ ------------
Reinvested capital gains ............... 469,240 3,316,187 103,811 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... 15,480,502 (2,341,399) 265,879 1,507
------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received from
contract owners ..................... 7,467,413 12,117,782 318,652 819
Transfers between funds ................ (4,161,776) (12,861,305) 420,373 19,262
Redemptions ............................ (2,873,818) (3,786,740) (37,167) (16)
Adjustments to maintain reserves ....... 5,659 (2,974) (46) (5)
------------ ------------ ------------ ------------
Net equity transactions ........... 437,478 (4,533,237) 701,812 20,060
Net change in contract owners' equity .... 15,917,980 (6,874,636) 967,691 21,567
Contract owners' equity beginning
of year ................................ 41,645,492 48,520,128 21,567 --
------------ ------------ ------------ ------------
Contract owners' equity end of year ...... $ 57,563,472 41,645,492 989,258 21,567
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 19
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
(1) Summary of Significant Accounting Policies
(a) Organization and Nature of Operations
NACo Variable Account (NACoVA) was established pursuant to a resolution
of the Board of Directors of Nationwide Life Insurance Company (the
Company) on September 7, 1988, and has been registered as a unit
investment trust under the Investment Company Act of 1940. The NACoVA
was introduced for exclusive use by Member Counties for deferred
compensation Plans adopted under the National Association of Counties
(NACo) Program.
The Company offers group flexible fund retirement contracts through the
NACoVA. The primary distribution for the contracts is through an
affiliated sales organization.
(b) The Contracts
The Group Flexible Retirement Contracts (the Contract) are offered for
purchase in connection with deferred compensation Plans adopted by
Member Counties under the NACo Program. Participants in the contracts
may invest in any of the following fund sub-accounts:
American Century: Income & Growth Fund (ACIncGro)
American Century: Twentieth Century Growth Fund (ACTCGro)
(not available for contracts issued on or after May 1, 1997)
American Century: Twentieth Century International Discovery Fund
(ACTCIntDis)
American Century: Twentieth Century Ultra Fund, Inc. (ACTCUltra)
The Bond Fund of AmericaSM, Inc. (BdFdAm)
(only available for certain contracts issued beginning
July 1, 1994)
Brown Capital Management - Small Company Fund (BrnCapSmCo)
Dreyfus Appreciation Fund, Inc. (DryApp)
Dreyfus Premier Midcap Stock - Class A (DryPreMCap)
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
Evergreen Income and Growth Fund - Class Y (EvIncGro)
(not available for contracts issued on or after October 1, 1993)
Federated Investment Series Fund, Inc. - Federated Bond Fund -
Class F (FedBdFd)
Federated U.S. Government Securities Fund: 2-5 Years -
Institutional Shares (FedUSGvt)
Fidelity Advisor Growth Opportunities Fund - Class A (FAGrOppA)
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
Fidelity Capital & Income Fund (FidCapInc)
(not available for contracts issued on or after January 1, 1987)
Fidelity Contrafund (FidContr) (not available for contracts
issued on or after June 30, 1998)
Fidelity Equity-Income Fund (FidEqInc)
Fidelity Magellan(R) Fund (FidMgln) (not available for contracts
issued on or after October 1, 1997)
Fidelity OTC Portfolio (FidOTC)
Fidelity Puritan(R) Fund (FidPurtn)
INVESCO Dynamics Fund, Inc. (InvDynam)
INVESCO Total Return Fund (InvTotRet)
<PAGE> 20
NACo VARIABLE ACCOUNT
NOTEES TO FINANCIAL STATEMENTS, Continued
The Investment Company of America(R) (InvCoAm)
(only available for certain contracts issued beginning
July 1, 1994)
MAS Funds - Fixed Income Portfolio (MASFIP)
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
(not available for contracts issued on or after May 1, 1997)
MFS(R) Growth Opportunities Fund - Class A (MFSGrOpp)
(not available for contracts issued on or after October 1, 1993)
MFS(R) High Income Fund - Class A (MFSHiInc)
Morgan Stanley Institutional Fund, Inc. - Equity Growth Portfolio
- Class B (MSIEqGroB)
Portfolios of the Nationwide Asset Allocation Trust (NAAT)
(managed for a fee by an affiliated investment advisor)
NAAT - The Aggressive Portfolio (NAATAggr)
NAAT - The Conservative Portfolio (NAATCons)
NAAT - The Moderate Portfolio (NAATMod)
NAAT - The Moderately Aggressive Portfolio (NAATModAgg)
NAAT - The Moderately Conservative Portfolio (NAATModCon)
Nationwide(R) Mutual Funds
(managed for a fee by an affiliated investment advisor)
Nationwide(R) Fund - Class D (NWFund)
Nationwide(R) Growth Fund - Class D (NWGroFd)
(not available for contracts issued on or after
October 1, 1993)
Nationwide(R) Money Market Fund (NWMyMkt)
Nationwide(R) S&P 500 Index Fund - Class Y (NWIndxFdY)
Prestige Balanced Fund - Class Y (PrBalY)
Prestige International Fund - Class Y (PrIntY)
Prestige Large Cap Growth Fund - Class Y (PrLgCapGrY)
Prestige Large Cap Value Fund - Class Y (PrLgCpValY)
Prestige Small Cap Fund - Class Y (PrSmCapY)
Nationwide(R) Separate Account Trust - Income Fund (NSATInc)
(managed for a fee by an affiliated investment advisor)
Nationwide(R) Separate Account Trust - Small Company Fund
(NSATSmCo) (managed for a fee by an affiliated investment
advisor)
Neuberger & Berman Equity Funds(R) - Guardian Fund (NBGuard)
Neuberger & Berman Equity Trust(R) - Partners Trust (NBPartTr)
Oppenheimer Global Fund - Class A (OppGlob)
Putnam Investors Fund - Class A (PutInvFd)
Putnam Voyager Fund - Class A (PutVoyFd)
SEI Index Funds - S&P 500 Index Portfolio (SEI500Ix)
Seligman Growth Fund, Inc. - Class A (SelGroFd)
Short-Term Investments Trust - Treasury Portfolio -
Institutional Class (AIMTreas)
T. Rowe Price International Funds, Inc. - International Stock
Fund(R) (TRIntStk)
Templeton Foreign Fund - Class I (TemForFd)
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
All of the above funds were being utilized as of December 31, 1999.
<PAGE> 21
The contract owners' equity is affected by the investment results of
each fund, equity transactions by contract owners and certain expenses
(see note 2). The accompanying financial statements include only
contract owners' purchase payments pertaining to the variable portions
of their contracts and exclude any purchase payments for fixed dollar
benefits, the latter being included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1999. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the NACoVA 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 assets in this account are held pursuant to
contracts with entities which are exempt from federal income tax.
Because of this exemption, no taxes need be provided for investment
income or realized and unrealized capital gains. Annuity payouts and
withdrawal payments are taxable as wages when received by the
participants.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(f) Annuity Payout Reserves
Annuity reserves are computed for contracts in the variable payout
stage according to industry standard mortality tables. The assumed
investment return is 3.5 percent unless the annuitant elects otherwise,
in which case the rate may vary from 3.5 percent to 7 percent, as
regulated by the laws of the respective states. The mortality risk is
fully borne by the Company and may result in additional amounts being
transferred into the Account by the Company to cover greater longevity
of annuitants than expected. Conversely, if reserves exceed amounts
required, transfers may be made to the Company.
(2) Expenses
No deduction for a sales charge is made from the purchase payments for
these contracts. However, if an owner terminates the contract and directs
the Company to withdraw all or part of the contract value held in the
Account for less than sixteen (16) years, the Company will, with certain
exceptions, assess a contingent deferred sales charge by deducting an
amount from each participant's account. This charge will be equal to not
more than 4% in the first year, declining to 1% in the fifteenth year, of
the lesser of all purchase payments made on behalf of a participant prior
to the date of withdrawal, or the amount withdrawn. No sales charges are
deducted on redemptions used to purchase units in the fixed investment
options of the Company. Sales charges may be reduced or eliminated upon
negotiated conversion of the contracts to other investment programs offered
by the Company or its affiliates.
<PAGE> 22
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Prior to May 1, 1998 the following charges were deducted by the Company: a
mortality risk charge, an expense risk charge and an administration charge
which are assessed through the daily unit value calculation. The morality
risk charge and the expense risk charge are equal to an annual rate of
0.10% and 0.40% respectively. The administration charge was based upon the
aggregate balance of assets held under the Contract by each Member County,
as follows:
Expense Administration
Tier Assets (Millions) Charge
--------- -------------- ------------
I Up to $10 .45%
II Over $10 to $25 .40%
III Over $25 to $50 .30%
IV Over $50 to $150 .20%
V Over $150 .15%
The administration charge was determined using the December 31 asset
balance and became effective on the following May 1.
Beginning May 1, 1998 under the terms of the Contracts, the Company assumes
various risks and incurs administrative expenses associated with the
issuance of the Contracts. For the Company's contractual promise to accept
these risks and expenses, the Contracts provide for the deduction of a
Variable Account Fee, which is calculated as a percentage of assets and is
deducted on each valuation date from amounts held in the Account. On an
annual basis, the maximum Variable Account Fee is 0.95% of the average
account value.
As with all other charges, this fee is subject to negotiation and may vary
from one contract to another reflecting the unique characteristics of
different contracts when considered as a whole. In negotiating the amount
of the fee, the Company may consider factors which may reduce expenses
incurred by the Company. These factors might include, but are not limited
to: (1) the size of the contract; (2) the number of eligible employees; (3)
the number of contract participants; (4) demographics of contract
participants; (5) general economic conditions; (6) the varying costs
associated with the inclusion of underlying mutual fund options; (7) the
type of contract issued (for example, whether the contract is issued as an
allocated contract or unallocated contract); (8) costs associated with
distribution of the contract; and (9) any other factors which the Company
deems relevant (see summary of variable account fees at Note 5).
Contract owners may negotiate an exchange privilege with the Company. The
exchange privilege provides for transfers of units among the various
investment options for each participant's account. The number of transfers
allowed, and any administrative charges associated therewith, are subject
to negotiation between the contract owner and the Company.
(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.
<PAGE> 23
(4) Components of contract owners' equity
The following is a summary of contract owners' equity at December 31, 1999.
<TABLE>
<CAPTION>
Asset Annual
Charge Units Unit Value Amount Return(b)
------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
American Century: Income &
Growth Fund ............................. 0.80% 3,764,884 $ 1.284360 $ 4,835,466 17%
0.70% 1,505,535 1.285813 1,935,836 17%
0.55% 1,348,025 1.287995 1,736,249 17%
0.40% 665,280 1.290181 858,332 17%
0.25% 240,890 1.292371 311,319 18%
0.15% 1,150,122 1.293832 1,488,065 18%
American Century:
Twentieth Century Growth Fund ........... 0.95% 5,707,048 10.560508 60,269,326 33%
0.90% 3,347,303 10.579885 35,414,081 33%
0.80% 2,936,941 10.618746 31,186,630 34%
0.65% 1,320,330 10.671975 14,090,529 34%
0.60% 78,744 10.603876 834,992 34%
0.50% 348,206 10.616300 3,696,659 34%
0.40% 2,202,427 10.714474 23,597,847 34%
American Century: Twentieth Century
International Discovery Fund ............ 0.80% 2,162,693 2.028049 4,386,047 87%
0.70% 1,190,455 2.030338 2,417,026 87%
0.55% 989,006 2.033777 2,011,418 88%
0.40% 640,107 2.037221 1,304,039 88%
0.25% 148,209 2.040671 302,446 88%
0.15% 2,129,791 2.042975 4,351,110 88%
American Century:
Twentieth Century Ultra Fund ............ 0.95% 65,151,483 3.245463 211,446,727 40%
0.90% 30,085,075 3.251418 97,819,154 40%
0.80% 24,412,865 3.263360 79,667,967 40%
0.65% 11,013,444 3.279718 36,120,991 41%
0.60% 1,424,061 3.258789 4,640,714 41%
0.50% 3,817,930 3.262606 12,456,401 41%
0.40% 26,111,703 3.292778 85,980,041 41%
The Bond Fund Of America(SM), Inc. ......... 0.95% 2,893,175 2.461916 7,122,754 1%
0.90% 1,583,478 2.466496 3,905,642 1%
0.80% 845,978 2.475675 2,094,367 1%
0.65% 596,763 2.488240 1,484,890 2%
0.60% 28,883 2.472263 71,406 2%
0.50% 142,109 2.475221 351,751 2%
0.40% 928,066 2.498335 2,318,620 2%
Brown Capital Management -
Small Company Fund ...................... 0.80% 260,522 1.334542 347,678 33%(a)
0.70% 32,466 1.335232 43,350 34%(a)
0.55% 25,458 1.336268 34,019 34%(a)
0.40% 15,085 1.337304 20,173 34%(a)
0.25% 1 1.338341 1 34%(a)
0.15% 40,366 1.339033 54,051 34%(a)
Dreyfus Appreciation Fund, Inc. ............ 0.80% 1,675,249 1.178335 1,974,005 9%
0.70% 891,896 1.179669 1,052,142 9%
0.55% 490,711 1.181672 579,859 9%
0.40% 388,056 1.183678 459,333 10%
0.25% 29,313 1.185687 34,756 10%
0.15% 870,689 1.187029 1,033,533 10%
</TABLE>
(continued)
<PAGE> 24
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
Asset Annual
Charge Units Unit Value Amount Return(b)
------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Dreyfus Premier Midcap Stock -
Class A ................................. 0.80% 189,449 1.243793 235,635 10%
0.70% 66,860 1.245200 83,254 10%
0.55% 24,267 1.247314 30,269 10%
0.40% 23,734 1.249431 29,654 10%
0.30% 2 1.250844 3 10%
0.15% 85,523 1.252967 107,157 10%
The Dreyfus Third Century Fund, Inc. ....... 0.80% 6,853,289 5.904491 40,465,183 29%
0.70% 3,581,927 5.926178 21,227,137 29%
0.55% 2,380,281 5.899679 14,042,894 29%
0.40% 1,240,608 5.910051 7,332,057 30%
0.25% 304,659 5.920440 1,803,715 30%
0.15% 2,405,418 5.981450 14,387,887 30%
Evergreen Income and Growth
Fund - Class Y .......................... 0.95% 449,769 2.744107 1,234,214 15%
0.90% 236,494 2.749144 650,156 15%
0.80% 121,424 2.759246 335,039 15%
0.65% 103,645 2.773083 287,416 16%
0.60% 1,466 2.755385 4,039 16%
0.50% 10,371 2.758615 28,610 16%
0.40% 209,219 2.784137 582,494 16%
Federated Investment Series
Funds, Inc. - Federated Bond
Fund - Class F .......................... 0.80% 391,834 0.986932 386,714 3%
0.70% 114,902 0.988049 113,529 3%
0.55% 40,682 0.989728 40,264 3%
0.40% 6,385 0.991409 6,330 3%
0.25% 6,374 0.993094 6,330 3%
0.15% 66,416 0.994218 66,032 2%
Federated U.S. Government
Securities Fund: 2-5 Years -
Institutional Shares .................... 0.95% 3,148,641 1.373628 4,325,061 1%
0.90% 1,609,939 1.376174 2,215,556 1%
0.80% 966,135 1.381277 1,334,500 1%
0.65% 605,238 1.388259 840,227 1%
0.60% 69,872 1.379708 96,403 1%
0.50% 268,509 1.381446 370,931 1%
0.40% 1,337,680 1.393823 1,864,489 1%
Fidelity Advisor Growth Opportunities
Fund - Class A .......................... 0.80% 1,065,003 1.124760 1,197,873 3%
0.70% 279,072 1.126033 314,244 3%
0.55% 445,084 1.127945 502,030 4%
0.40% 169,301 1.129860 191,286 4%
0.25% 6,258 1.131779 7,083 4%
0.15% 166,910 1.133060 189,119 4%
Fidelity Advisor High Yield Fund -
Class T ................................. 0.80% 288,717 1.144516 330,441 7%
0.70% 218,567 1.145866 250,448 8%
0.55% 222,740 1.147891 255,681 8%
0.40% 99,159 1.149917 114,025 8%
0.25% 475 1.151943 547 8%
0.15% 88,793 1.153294 102,404 8%
</TABLE>
<PAGE> 25
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, Continued
<TABLE>
<CAPTION>
Asset Annual
Charge Units Unit Value Amount Return(b)
------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Fidelity Capital & Income Fund ............. 0.95% 157,277 5.414988 851,653 12%
0.90% 63,602 5.425025 345,042 12%
0.80% 54,447 5.445140 296,472 12%
0.65% 121,306 5.472662 663,867 12%
0.60% 10 5.438956 54 13%
0.50% 15,652 5.445808 85,238 13%
0.40% 52,147 5.494599 286,527 13%
Fidelity Contrafund ........................ 0.95% 84,298,429 3.124830 263,418,260 24%
0.90% 40,184,712 3.130565 125,800,853 24%
0.80% 28,730,584 3.142065 90,273,362 24%
0.65% 12,905,080 3.157817 40,751,881 24%
0.60% 2,269,071 3.137664 7,119,582 24%
0.50% 4,921,532 3.141341 15,460,210 24%
0.40% 23,252,402 3.170395 73,719,299 25%
Fidelity Equity-Income Fund ................ 0.95% 18,191,499 8.164209 148,519,200 6%
0.90% 10,324,567 8.179193 84,446,626 6%
0.80% 6,514,414 8.209245 53,478,421 6%
0.65% 4,029,550 8.250412 33,245,448 6%
0.60% 292,888 8.197774 2,401,030 7%
0.50% 1,097,064 8.207390 9,004,032 7%
0.40% 6,835,046 8.283304 56,616,764 7%
Fidelity Magellan(R)Fund ................... 0.95% 36,026,007 2.935682 105,760,900 23%
0.90% 16,600,165 2.941068 48,822,214 23%
0.80% 12,975,760 2.951871 38,302,770 23%
0.65% 5,649,149 2.966668 16,759,150 23%
0.60% 885,057 2.947739 2,608,917 23%
0.50% 1,981,615 2.951194 5,848,130 23%
0.40% 8,920,260 2.978484 26,568,852 24%
Fidelity OTC Portfolio ..................... 0.95% 12,343,613 4.348555 53,676,880 71%
0.90% 6,382,037 4.356533 27,803,555 71%
0.80% 4,962,923 4.372532 21,700,540 71%
0.65% 2,949,108 4.394446 12,959,696 71%
0.60% 267,530 4.366394 1,168,141 71%
0.50% 551,902 4.371504 2,412,642 72%
0.40% 7,250,642 4.411934 31,989,354 72%
Fidelity Puritan(R)Fund .................... 0.95% 11,531,186 1.878662 21,663,201 2%
0.90% 5,616,280 1.882110 10,570,457 2%
0.80% 3,553,477 1.889025 6,712,607 2%
0.65% 1,302,794 1.898498 2,473,352 2%
0.60% 220,190 1.886386 415,363 2%
0.50% 434,568 1.888599 820,725 2%
0.40% 2,155,469 1.906066 4,108,466 2%
INVESCO Dynamics Fund, Inc. ................ 0.80% 5,368,795 1.998173 10,727,781 70%
0.70% 2,683,126 2.000430 5,367,406 71%
0.55% 2,158,406 2.003821 4,325,059 71%
0.40% 1,566,514 2.007217 3,144,334 71%
0.25% 361,646 2.010619 727,132 71%
0.15% 3,801,659 2.012890 7,652,321 72%
</TABLE>
(continued)
<PAGE> 26
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
Asset Annual
Charge Units Unit Value Amount Return(b)
------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
INVESCO Total Return Fund .................. 0.80% 515,739 1.001721 516,627 2%
0.70% 139,419 1.002855 139,817 2%
0.55% 124,380 1.004559 124,947 2%
0.40% 158,067 1.006265 159,057 2%
0.25% 594 1.007975 599 2%
0.15% 231,417 1.009116 233,527 2%
The Investment Company
of America(R) ........................... 0.95% 16,605,220 3.201730 53,165,431 15%
0.90% 8,076,180 3.207605 25,905,195 16%
0.80% 5,292,541 3.219387 17,038,738 16%
0.65% 2,061,483 3.235527 6,669,984 16%
0.60% 214,097 3.214887 688,298 16%
0.50% 772,247 3.218656 2,485,597 16%
0.40% 3,687,311 3.248420 11,977,935 16%
MAS Funds - Fixed Income Portfolio ......... 0.95% 1,710,525 1.391983 2,381,022 2%
0.90% 761,207 1.394539 1,061,533 2%
0.80% 471,750 1.399665 660,292 1%
0.65% 302,278 1.406687 425,211 1%
0.60% 43,773 1.397708 61,182 1%
0.50% 35,380 1.399348 49,509 1%
0.40% 502,118 1.412296 709,139 1%
Massachusetts Investors Growth
Stock Fund - Class A .................... 0.95% 291,339 30.435351 8,867,005 37%
0.90% 148,153 30.491188 4,517,361 38%
0.80% 130,090 30.603169 3,981,166 38%
0.65% 65,612 30.756553 2,017,999 38%
0.60% 2,844 30.560318 86,914 38%
0.50% 11,080 30.596117 339,005 38%
0.40% 117,408 30.879021 3,625,444 38%
MFS(R)Growth Opportunities Fund -
Class A ................................. 0.95% 620,939 15.172145 9,420,977 32%
0.90% 336,193 15.199990 5,110,130 32%
0.80% 184,281 15.255834 2,811,360 32%
0.65% 176,097 15.332326 2,699,977 32%
0.60% 10,104 15.234453 153,929 32%
0.50% 17,247 15.252302 263,056 32%
0.40% 175,440 15.393394 2,700,617 32%
MFS(R)High Income Fund - Class A ............ 0.95% 1,154,155 6.542182 7,550,692 6%
0.90% 530,540 6.554308 3,477,323 6%
0.80% 274,998 6.578610 1,809,105 6%
0.65% 217,273 6.611862 1,436,579 6%
0.60% 13,293 6.571139 87,350 6%
0.50% 32,140 6.579417 211,462 6%
0.40% 359,951 6.638365 2,389,486 7%
Morgan Stanley Institutional
Fund, Inc. - Equity Growth
Portfolio - Class B ..................... 0.80% 393,751 1.530130 602,490 38%
0.70% 189,694 1.531860 290,585 38%
0.55% 120,451 1.534459 184,827 39%
0.40% 89,552 1.537062 137,647 39%
0.25% 31,522 1.539669 48,533 39%
0.15% 218,285 1.541410 336,467 39%
</TABLE>
<PAGE> 27
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
Asset Annual
Charge Units Unit Value Amount Return(b)
------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
NAAT - The Aggressive Portfolio ............ 0.70% 1,421,322 1.421032 2,019,744 23%
0.60% 468,988 1.419952 665,940 23%
0.45% 267,677 1.422449 380,757 24%
0.25% 353,524 1.425785 504,049 24%
0.10% 4,175 1.428292 5,963 24%
0.00% 827,625 1.437196 1,189,459 24%
NAAT - The Conservative Portfolio .......... 0.70% 551,322 1.144210 630,828 3%
0.60% 158,183 1.143342 180,857 3%
0.45% 475,616 1.145355 544,749 3%
0.25% 81,415 1.148044 93,468 4%
0.10% 7,541 1.150064 8,673 4%
0.00% 133,739 1.157231 154,767 4%
NAAT - The Moderate Portfolio .............. 0.70% 2,040,355 1.307445 2,667,652 14%
0.60% 501,161 1.306453 654,743 14%
0.45% 192,070 1.308751 251,372 14%
0.25% 144,588 1.311822 189,674 15%
0.10% 19,122 1.314130 25,129 15%
0.00% 505,429 1.322320 668,339 15%
NAAT - The Moderately Aggressive
Portfolio ............................... 0.70% 1,865,891 1.355141 2,528,545 19%
0.60% 542,336 1.354111 734,383 19%
0.45% 268,877 1.356493 364,730 19%
0.25% 467,219 1.359675 635,266 19%
0.10% 28,922 1.362067 39,394 19%
0.00% 514,292 1.370557 704,867 19%
NAAT - The Moderately Conservative
Portfolio ............................... 0.70% 714,817 1.234169 882,205 9%
0.60% 341,251 1.233233 420,842 9%
0.45% 149,629 1.235402 184,852 9%
0.25% 50,892 1.238302 63,020 10%
0.15% 11,257 1.240481 13,964 10%
0.00% 170,427 1.248211 212,729 10%
Nationwide(R)Fund - Class D ................ 0.95% 2,020 26.409607 53,347 1%
0.80% 3,639,165 26.555267 96,638,998 1%
0.70% 1,451,429 26.652820 38,684,676 1%
0.55% 987,329 26.533779 26,197,569 1%
0.40% 524,819 26.580493 13,949,948 1%
0.25% 94,899 26.627289 2,526,903 0%
0.15% 942,318 26.901637 25,349,897 0%
Nationwide(R)Growth Fund - Class D ......... 0.95% 608,149 5.459300 3,320,068 16%
0.90% 418,385 5.469318 2,288,281 16%
0.80% 267,313 5.489411 1,467,391 16%
0.65% 87,937 5.516934 485,143 16%
0.60% 11,832 5.481731 64,860 16%
0.50% 22,141 5.488156 121,513 16%
0.40% 250,812 5.538916 1,389,227 16%
Nationwide(R)Money Market Fund ............. 0.80% 9,606,399 3.259610 31,313,114 4%
0.70% 4,804,733 3.271683 15,719,563 4%
0.55% 4,615,246 3.257959 15,036,282 4%
0.40% 3,933,354 3.289218 12,937,659 4%
0.25% 1,148,857 3.270268 3,757,070 4%
0.15% 4,761,747 3.274374 15,591,741 5%
</TABLE>
(continued)
<PAGE> 28
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
Asset Annual
Charge Units Unit Value Amount Return(b)
------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Nationwide(R)S&P 500 Index Fund -
Class Y ................................. 0.80% 2,766,474 1.299566 3,595,216 19%
0.70% 1,260,851 1.301036 1,640,413 19%
0.55% 990,021 1.303244 1,290,239 19%
0.40% 337,529 1.305455 440,629 19%
0.25% 61,214 1.307671 80,048 19%
0.15% 931,890 1.309150 1,219,984 20%
Nationwide(R)SAT - Income Fund ............. 0.80% 10,893 1.005518 10,953 1%(a)
0.70% 35,556 1.006039 35,771 1%(a)
0.55% 27,725 1.006821 27,914 1%(a)
0.40% 342 1.007603 345 1%(a)
0.25% 173 1.008386 174 1%(a)
0.15% 1,638 1.008908 1,653 1%(a)
Nationwide(R)SAT -
Small Company Fund ...................... 0.80% 1,760,003 1.376614 2,422,845 43%
0.70% 885,218 1.379587 1,221,235 43%
0.55% 599,934 1.378605 827,072 43%
0.40% 609,880 1.386578 845,646 43%
0.25% 19,107 1.383455 26,434 44%
0.15% 336,343 1.385075 465,860 44%
Neuberger & Berman Equity Funds(R)-
Guardian Fund ........................... 0.95% 8,085,725 1.858329 15,025,937 7%
0.90% 3,862,738 1.861741 7,191,418 7%
0.80% 2,782,043 1.868582 5,198,475 8%
0.65% 1,247,986 1.877955 2,343,662 8%
0.60% 84,823 1.865967 158,277 8%
0.50% 155,894 1.868155 291,234 8%
0.40% 3,518,487 1.885443 6,633,907 8%
Neuberger & Berman Equity Trust(R)-
Partners Trust .......................... 0.80% 82,850 1.113054 92,217 7%
0.70% 29,128 1.114314 32,458 7%
0.55% 15,285 1.116206 17,061 7%
0.40% 33,245 1.118102 37,171 7%
0.25% 112 1.120001 125 7%
0.15% 11,932 1.121268 13,379 8%
Prestige Balanced Fund -
Class Y ................................. 0.70% 289,882 1.151398 333,770 9%
0.60% 120,626 1.152701 139,046 9%
0.45% 64,569 1.154658 74,555 9%
0.25% 110,352 1.157273 127,707 9%
0.10% 729 1.159238 845 9%
0.00% 15,466 1.160549 17,949 9%
Prestige International Fund -
Class Y ................................. 0.70% 120,441 1.316225 158,527 21%
0.60% 53,042 1.317714 69,894 21%
0.45% 31,972 1.319950 42,201 21%
0.25% 38,590 1.322937 51,052 21%
0.10% 18,596 1.325181 24,643 21%
0.00% 3,878 1.326680 5,145 21%
</TABLE>
<PAGE> 29
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
Asset Annual
Charge Units Unit Value Amount Return(b)
------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Prestige Large Cap Growth Fund -
Class Y ................................. 0.70% 592,875 1.525781 904,597 34%
0.60% 260,721 1.527506 398,253 34%
0.45% 213,341 1.530097 326,432 34%
0.25% 84,791 1.533558 130,032 34%
0.10% 2 1.536159 3 35%
0.00% 461,957 1.537896 710,442 35%
Prestige Large Cap Value Fund -
Class Y ................................. 0.70% 184,328 0.993783 183,182 5%
0.60% 72,468 0.994908 72,099 5%
0.45% 54,869 0.996598 54,682 5%
0.25% 90,414 0.998856 90,311 5%
0.10% 2 1.000552 2 5%
0.00% 98,218 1.001685 98,383 5%
Prestige Small Cap Fund -
Class Y ................................. 0.70% 370,694 1.285935 476,688 18%
0.60% 75,172 1.287390 96,776 18%
0.45% 33,279 1.289575 42,916 18%
0.25% 76,601 1.292494 99,006 18%
0.10% 2,697 1.294687 3,492 19%
0.00% 80,612 1.296152 104,485 19%
Oppenheimer Global Fund -
Class A ................................. 0.80% 772,544 1.739511 1,343,849 57%
0.70% 526,744 1.741477 917,313 57%
0.55% 335,264 1.744429 584,844 58%
0.40% 121,171 1.747386 211,733 58%
0.25% 59,495 1.750348 104,137 58%
0.15% 608,170 1.752325 1,065,711 58%
Putnam Investors Fund - Class A ............ 0.95% 2,614,963 31.341504 81,956,873 29%
0.90% 1,097,069 31.399010 34,446,881 29%
0.80% 574,562 31.514335 18,106,939 29%
0.65% 344,475 31.672308 10,910,318 29%
0.60% 47,678 31.470234 1,500,438 29%
0.50% 63,483 31.507110 2,000,166 29%
0.40% 772,650 31.798454 24,569,075 30%
Putnam Voyager Fund - Class A .............. 0.95% 28,160,360 7.292508 205,359,651 55%
0.90% 12,706,716 7.305890 92,833,869 55%
0.80% 8,329,118 7.332728 61,075,157 55%
0.65% 4,498,006 7.369487 33,147,997 55%
0.60% 567,839 7.322438 4,157,966 55%
0.50% 1,195,483 7.331012 8,764,100 55%
0.40% 7,728,408 7.398826 57,181,146 56%
SEI Index Funds -
S&P 500 Index Portfolio ................. 0.95% 37,302,650 2.284919 85,233,534 20%
0.90% 15,887,411 2.289108 36,368,000 20%
0.80% 11,667,253 2.297509 26,805,619 20%
0.65% 6,630,666 2.309019 15,310,334 20%
0.60% 842,011 2.294307 1,931,832 20%
0.50% 905,209 2.296996 2,079,261 20%
0.40% 11,925,048 2.318217 27,644,849 20%
</TABLE>
(continued)
<PAGE> 30
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
Asset Annual
Charge Units Unit Value Amount Return(b)
------- ---------- ---------- ------------ --------
<S> <C> <C> <C> <C> <C>
Seligman Growth Fund, Inc. -
Class A ................................. 0.95% 363,615 21.680777 7,883,456 29%
0.90% 196,213 21.720557 4,261,856 29%
0.80% 95,801 21.800337 2,088,494 29%
0.65% 64,846 21.909617 1,420,751 29%
0.60% 6,797 21.769825 147,970 29%
0.50% 13,411 21.795334 292,297 30%
0.40% 147,489 21.996878 3,244,298 30%
Short-Term Investments Trust -
Treasury Portfolio -
Institutional Class ..................... 0.95% 3,245,459 1.327776 4,309,243 4%
0.90% 1,054,742 1.330237 1,403,057 4%
0.80% 840,048 1.335169 1,121,606 4%
0.65% 886,018 1.341918 1,188,964 4%
0.60% 38,201 1.333653 50,947 4%
0.50% 97,670 1.335333 130,422 4%
0.40% 1,777,684 1.347297 2,395,068 5%
T. Rowe Price International Funds,
Inc. - International Stock Fund(R) ...... 0.95% 9,450,213 1.839019 17,379,121 33%
0.90% 4,231,419 1.842393 7,795,937 33%
0.80% 3,274,763 1.849161 6,055,564 34%
0.65% 1,470,871 1.858432 2,733,514 34%
0.60% 175,403 1.846569 323,894 34%
0.50% 558,351 1.848732 1,032,241 34%
0.40% 4,485,126 1.865834 8,368,501 34%
Templeton Foreign Fund - Class I ........... 0.80% 13,904,517 1.677518 23,325,078 38%
0.70% 7,963,049 1.683681 13,407,234 38%
0.55% 5,358,056 1.676147 8,980,889 38%
0.40% 2,182,090 1.679093 3,663,932 39%
0.25% 644,504 1.682045 1,084,085 39%
0.15% 4,179,286 1.699394 7,102,254 39%
Warburg Pincus Emerging Growth
Fund Common Shares ...................... 0.80% 216,315 1.603948 346,958 41%
0.70% 92,452 1.605761 148,456 41%
0.55% 106,549 1.608485 171,382 41%
0.40% 76,822 1.611214 123,777 41%
0.25% 8,825 1.613947 14,243 41%
0.15% 114,151 1.615771 184,442 42%
======= ======== ---------------
Total Contract Owners' Equity $ 3,883,945,594
===============
<FN>
(a) These investment options were not being utilized for the entire year. Accordingly, the annual return was
computed for such period as the investment option was utilized. These investment options became available to
the Account on October 1, 1999.
(b) The annual return does not include contract charges satisfied by surrendering units.
</TABLE>
<PAGE> 31
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
(5) Variable account fees
The following is a summary of variable account fees for the year ended December 31, 1999.
Percentage TOTAL ACIncGro ACTCGro ACTCIntDis ACTCUltra BdFdAm BrnCapSmCo
- ------------ ----------- --------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
0.95% ..................$10,890,030 -- 491,265 -- 1,549,183 69,900 --
0.90% .................. 4,841,447 -- 259,161 -- 664,056 35,946 --
0.80% .................. 4,613,599 21,423 205,291 8,235 487,482 17,747 162
0.70% .................. 652,245 8,513 -- 4,575 -- -- 84
0.65% .................. 1,294,722 -- 77,076 -- 181,377 10,345 --
0.60% .................. 57,788 -- 1,278 -- 6,725 121 --
0.55% .................. 339,905 6,121 -- 3,182 -- -- 56
0.50% .................. 298,119 -- 15,485 -- 47,338 1,874 --
0.45% .................. 8,019 -- -- -- -- -- --
0.40% .................. 1,644,990 1,589 77,961 2,822 265,281 8,735 19
0.30% .................. 5,336 21 295 -- 1,363 -- --
0.25% .................. 23,710 459 -- 305 -- -- --
0.15% .................. 95,348 1,277 -- 1,534 -- -- 12
0.10% .................. 83 -- -- -- -- -- --
---------- ---------- ----------- ----------- ----------- --------- ---------
Total variable
account fees ......... $24,765,341 39,403 1,127,812 20,653 3,202,805 144,668 333
=========== ========== =========== =========== =========== ========= =========
<CAPTION>
Percentage DryApp DryPreMCap Dry3dCen
- ------------ ----------- ----------- -----------
<S> <C> <C> <C>
0.95% .................. $ -- -- --
0.90% .................. -- -- --
0.80% .................. 9,826 1,127 269,449
0.70% .................. 5,547 453 118,330
0.65% .................. -- -- --
0.60% .................. -- -- --
0.55% .................. 2,325 101 63,960
0.50% .................. -- -- --
0.45% .................. -- -- --
0.40% .................. 1,134 55 23,287
0.30% .................. 14 -- 211
0.25% .................. 92 -- 4,008
0.15% .................. 1,108 162 17,950
0.10% .................. -- -- --
--------- --------- ---------
Total variable
account fees ......... $ 20,046 1,898 497,195
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Percentage EvIncGro FedBdFd FedUSGvt FAGrOppA FAHiYld FidCapInc FidContr
- ------------ ----------- ----------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
0.95% ................ $ 11,951 -- 44,313 -- -- $ 8,339 2,134,753
0.90% ................ 6,035 -- 21,003 -- -- 3,010 939,017
0.80% ................ 2,546 2,619 11,593 4,958 1,516 2,351 617,471
0.70% ................ -- 183 -- 1,744 1,095 -- --
0.65% ................ 1,830 -- 5,590 -- -- 4,555 224,209
0.60% ................ 7 -- 163 -- -- -- 11,065
0.55% ................ -- 546 -- 1,856 1,518 -- --
0.50% ................ 234 -- 1,464 -- -- 416 68,444
0.45% ................ -- -- -- -- -- -- --
0.40% ................ 2,278 134 6,873 483 80 1,123 251,838
0.30% ................ -- -- -- 2 -- -- --
0.25% ................ -- 22 -- 10 -- -- --
0.15% ................ -- 78 -- 127 134 -- --
0.10% ................ -- -- -- -- -- -- --
--------- ---------- --------- --------- --------- --------- ---------
Total variable
account fees ........ $ 24,881 3,582 90,999 9,180 4,343 $ 19,794 4,246,797
========= ========== ========= ========= ========= ========= =========
<CAPTION>
Percentage FidEqInc FidMgIn FidOTC
- ------------ ----------- ----------- -----------
<S> <C> <C> <C>
0.95% ................ $ 1,456,461 864,499 281,904
0.90% ................ 752,426 366,006 123,670
0.80% ................ 430,578 261,002 91,383
0.70% ................ -- -- --
0.65% ................ 224,300 92,687 38,167
0.60% ................ 4,054 4,144 1,540
0.55% ................ -- -- --
0.50% ................ 48,471 25,714 7,257
0.45% ................ -- -- --
0.40% ................ 234,272 90,181 60,647
0.30% ................ -- -- --
0.25% ................ -- -- --
0.15% ................ -- -- --
0.10% ................ -- -- --
--------- --------- ---------
Total variable
account fees ........ $3,150,562 1,704,233 604,568
========= ========= =======
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, Continued
Percentage FidPurtn InvDynam InvTotRet InvCoAm MASFIP MFSGrStk MFSGrOpp MFSHiInc MSIEqGroB NAATAggr
- ------------ ----------- -------- --------- ------- ------ ------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.95% .......... $203,497 -- -- 458,333 25,095 69,134 73,917 75,640 -- --
0.90% .......... 93,004 -- -- 201,863 11,446 32,146 37,605 30,842 -- --
0.80% .......... 54,858 20,326 3,542 122,618 4,692 24,802 18,637 15,592 2,223 --
0.70% .......... -- 10,064 501 -- -- -- -- -- 539 9,765
0.65% .......... 15,732 -- -- 39,381 2,802 10,395 14,173 9,619 -- --
0.60% .......... 707 -- -- 1,105 105 127 223 148 -- 2,945
0.55% .......... -- 6,420 486 -- -- -- -- -- 460 --
0.50% .......... 5,020 -- -- 12,319 250 1,743 1,650 1,334 -- --
0.45% .......... -- -- -- -- -- -- -- -- -- 1,303
0.40% .......... 17,450 3,817 483 41,973 3,313 11,565 9,172 10,951 219 --
0.30% .......... -- 2 -- -- -- -- -- -- -- --
0.25% .......... -- 418 -- -- -- -- -- -- 17 673
0.15% .......... -- 3,021 177 -- -- -- -- -- 186 --
0.10% .......... -- -- -- -- -- -- -- -- -- 2
----------- ------ ----- ------- ------ ------- ------- ------- ----- ------
Total variable
account fees ..... $ 390,268 44,068 5,189 877,592 47,703 149,912 155,377 144,126 3,644 14,688
=========== ====== ===== ======= ====== ======= ======= ======= ===== ======
<CAPTION>
Percentage NAATCons NAATMod NAATModAgg NAATModCon NWFund NWGroFd NWMyMkt NWIndxFdY NSATInc NSATSmCo
- ------------ ----------- -------- ---------- ---------- ------ ------- ------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.95% .......... $ -- -- -- -- 298 31,105 -- -- -- --
0.90% .......... -- -- -- -- -- 18,886 -- -- -- --
0.80% .......... -- -- -- -- 759,547 11,013 194,617 14,338 38 12,792
0.70% .......... 3,453 14,185 11,968 5,592 269,976 -- 86,357 7,005 52 4,988
0.65% .......... -- -- -- -- -- 2,865 -- -- -- --
0.60% .......... 952 2,644 2,848 1,539 -- 104 -- -- -- --
0.55% .......... -- -- -- -- 145,305 -- 56,705 3,411 34 3,378
0.50% .......... -- -- -- -- -- 674 -- -- -- --
0.45% .......... 2,762 1,071 1,075 753 -- -- -- -- -- --
0.40% .......... -- -- -- -- 55,076 5,120 38,884 938 -- 2,310
0.30% .......... -- -- -- -- 1,102 14 564 -- -- 4
0.25% .......... 304 186 1,036 152 6,946 -- 6,012 251 -- 79
0.15% .......... -- -- -- -- 40,838 -- 17,958 1,114 1 460
0.10% .......... 7 31 31 -- -- -- -- -- -- --
- ------------ ----------- -------- -------- -------- --------- ------- ------- -------- ------ -------
Total variable
account fees .....$ 7,478 18,117 16,958 8,036 1,279,088 69,781 401,097 27,057 125 24,011
=========== ======== ======== ======== ========= ======= ======== ======== ====== ======
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, Continued
Percentage NBGuard NBPartTr PrBalY PrIntY PrLgCapGrY PrLgCpValY PrSmCapY OppGlob PutInvFd PutVoyFd
---------- ------- -------- ------ ------ ---------- ---------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.95% ......... $ 143,904 -- -- -- -- -- -- -- 637,729 1,380,052
0.90% ......... 64,716 -- -- -- -- -- -- -- 244,016 564,931
0.80% ......... 40,323 402 -- -- -- -- -- 2,658 125,149 347,694
0.70% ......... -- 262 1,566 651 2,400 726 1,755 2,104 -- --
0.65% ......... 15,915 -- -- -- -- -- -- -- 58,812 151,395
0.60% ......... 261 -- 581 348 1,296 429 417 -- 2,297 5,697
0.55% ......... -- 403 -- -- -- -- -- 951 -- --
0.50% ......... 2,083 -- -- -- -- -- -- -- 8,363 30,969
0.45% ......... -- -- 213 107 432 146 157 -- -- --
0.40% ......... 27,159 54 -- -- -- -- -- 226 81,771 158,543
0.30% ......... -- -- -- -- -- -- -- 1 815 810
0.25% ......... -- -- 184 45 150 83 100 28 -- --
0.15% ......... -- 5 -- -- -- -- -- 354 -- --
0.10% ......... -- -- -- 10 -- 1 1 -- -- --
-------- -------- -------- ------ --------- --------- -------- ------ --------- --------
Total variable
account fees ... $ 294,361 1,126 2,544 1,161 4,278 1,385 2,430 6,322 1,158,952 2,640,091
========= ======== ======== ====== ========= ========= ======== ======= ========= =========
<CAPTION>
Percentage SEI500Ix SelGroFd AIMTreas TRIntStk TemForFd WPEmGro
- ---------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
0.95% ......... $ 658,477 60,995 27,845 131,441 -- --
0.90% ......... 273,304 30,690 12,214 55,454 -- --
0.80% ......... 176,277 14,505 5,846 37,885 155,115 1,351
0.70% ......... -- -- -- -- 77,099 713
0.65% ......... 80,995 7,320 9,595 15,587 -- --
0.60% ......... 3,114 226 100 478 -- --
0.55% ......... -- -- -- -- 42,231 456
0.50% ......... 10,553 1,342 558 4,564 -- --
0.45% ......... -- -- -- -- -- --
0.40% ......... 92,425 10,958 5,491 27,173 10,890 237
0.30% ......... -- -- -- -- 118 --
0.25% ......... -- -- -- -- 2,135 15
0.15% ......... -- -- -- -- 8,779 73
0.10% ......... -- -- -- -- -- --
-------- -------- -------- -------- -------- -------
Total variable
account fees ... $1,295,145 126,036 61,649 272,582 296,367 2,845
========== ======== ======== ======== ======== =======
</TABLE>
(Continued)
<PAGE> 34
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, Continued
The following is a summary of variable account fees for the period May 1, 1998 to December 31, 1998.
Percentage TOTAL ACIncGro ACTCGro ACTCIntDis ACTCUltra BdFdAm DryApp DryPreMCap Dry3dCen EvIncGro
- ---------- ----- --------- -------- ---------- --------- ------ ------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.95% .........$ 6,585,520 -- 291,751 -- 759,586 48,961 -- -- 140,954 9,437
0.90% ......... 2,627,146 -- 140,063 -- 302,906 23,071 -- -- 57,233 4,039
0.80% ......... 1,994,050 39 108,208 59 218,855 10,944 30 1 63,645 1,495
0.70% ......... 692,150 26 35,014 25 72,777 4,882 32 -- 28,547 1,025
0.65% ......... 961,637 -- 45,760 -- 124,179 6,454 -- -- 22,436 1,793
0.60% ......... 763 -- -- -- -- -- -- -- -- --
0.55% ......... 37,994 14 -- 1 4,718 -- 9 -- 6,650 --
0.50% ......... 41,007 -- 1,755 -- -- 423 -- -- -- 50
0.45% ......... 54,298 -- -- -- 53,860 -- -- -- -- --
0.40% ......... 282,706 -- 18,239 47 -- 2,502 2 -- 2,530 617
0.30% ......... 7,558 -- 612 -- 1,383 -- -- -- 215 --
0.25% ......... 2,468 -- -- -- -- -- -- -- 472 --
0.20% ......... 18,215 2 -- 3 -- -- 9 -- 3,831 --
0.15% ......... 4 -- -- -- -- -- -- -- -- --
---------- --------- -------- --------- --------- ------ -------- --------- ------- ------
Total variable
account fees ...$13,305,516 81 641,402 135 1,538,264 97,237 82 1 326,513 18,456
=========== ========= ======== ========= ========= ====== ======== ========= ======= ======
<CAPTION>
Percentage FedBdFd FedUSGvt FAGrOppA FAHiYld FidCapInc FidContr FidEqInc FidMgIn FidOTC FidPurtn
- ---------- ------- -------- -------- ------- --------- -------- -------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.95% .........$ -- 19,714 -- -- 6,051 1,125,435 978,414 451,976 103,690 113,951
0.90% ......... -- 8,478 -- -- 1,794 444,624 425,805 162,898 39,859 51,253
0.80% ......... 23 5,953 3 -- 2,081 298,523 312,268 129,279 30,080 30,852
0.70% ......... 1 1,704 -- -- 2,390 102,142 122,006 34,728 10,397 8,562
0.65% ......... -- 3,102 -- -- 1,369 129,942 187,833 48,548 19,507 10,664
0.60% ......... -- -- -- -- -- -- -- -- -- --
0.55% ......... -- -- 2 1 -- -- -- -- -- --
0.50% ......... -- 240 -- -- 50 10,615 10,019 3,626 867 1,237
0.45% ......... -- -- -- -- -- -- -- -- -- --
0.40% ......... 13 1,723 -- -- 203 54,439 54,720 16,607 6,061 5,038
0.30% ......... -- -- -- -- -- -- -- -- -- --
0.25% ......... -- -- -- -- -- -- -- -- -- --
0.20% ......... 2 -- 4 3 -- -- -- -- -- --
0.15% ......... -- -- -- -- -- -- -- -- -- --
---------- -------- -------- ------- -------- --------- -------- -------- ------ --------
Total variable
account fees ...$ 39 40,914 9 4 13,938 2,165,720 2,091,065 847,662 210,461 221,557
========== ======== ======== ======== ======== ========= ========= ======== ======= ========
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, Continued
Percentage InvDynam InvTotRet InvCoAm MASFIP MFSGrStk MFSGrOpp MFSHiInc MSIEqGroB NAATAggr NAATCons
- ---------- -------- --------- ------- ------ -------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.95% ......... $ -- -- 261,313 14,823 39,089 45,624 50,190 -- 2,542 709
0.90% ......... -- -- 102,917 5,931 17,056 23,186 19,064 -- 1,134 224
0.80% ......... 15 3 64,000 2,164 14,382 14,053 12,776 2 565 74
0.70% ......... 3 1 17,363 678 2,997 4,916 3,950 -- 913 416
0.65% ......... -- -- 22,042 1,540 8,276 8,810 9,234 -- 1,495 107
0.60% ......... -- -- -- -- -- -- -- -- 244 83
0.55% ......... 3 1 -- -- -- -- -- -- -- --
0.50% ......... -- -- 2,190 93 305 451 411 -- -- --
0.45% ......... -- -- -- -- -- -- -- -- 132 93
0.40% ......... 74 -- 10,196 909 1,821 1,206 2,951 4 -- --
0.30% ......... -- -- -- -- -- -- -- -- -- --
0.25% ......... -- -- -- -- -- -- -- -- 51 --
0.20% ......... -- 1 -- -- -- -- -- -- -- 31
0.15% ......... -- -- -- -- -- -- -- -- -- --
------- --------- ------- ------ ------- ------- ------- ------- ------ -----
Total variable
account fees ... $ 95 6 480,021 26,138 83,926 98,246 98,576 6 7,076 1,737
======= ========= ======= ====== ======= ======= ======= ======= ====== =====
<CAPTION>
Percentage NAATMod NAATModAgg NAATModCon NWFund NWGroFd NWMyMkt NWIndxFdY NSATSmCo NBGuard NBPartTr
- ---------- ------- ---------- ---------- ------ ------- ------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.95% ......... $ 2,960 3,575 1,364 352,279 20,220 99,303 -- 3,959 105,386 --
0.90% ......... 458 536 310 133,584 11,298 49,646 -- 2,442 42,598 --
0.80% ......... 317 623 613 175,591 6,348 50,606 68 2,154 30,545 --
0.70% ......... 1,163 1,052 375 63,159 3,461 24,629 58 1,044 8,382 36
0.65% ......... 210 654 176 49,597 2,479 34,448 -- 636 20,994 --
0.60% ......... 190 128 112 -- -- -- -- -- -- --
0.55% ......... -- -- -- 16,710 -- 4,921 -- 309 -- 1
0.50% ......... -- -- -- -- 92 -- -- -- 772 --
0.45% ......... 73 101 37 -- -- -- -- -- -- --
0.40% ......... -- -- -- 6,433 1,423 9,983 7 347 7,492 3
0.30% ......... -- -- -- 1,673 129 363 -- 7 -- --
0.25% ......... 6 47 38 922 -- 658 8 25 -- --
0.20% ......... -- 1 -- 9,975 -- 1,925 3 45 -- --
0.15% ......... 1 3 -- -- -- -- -- -- -- --
------- --------- -------- -------- ------- ------- --------- ------- ------- --------
Total variable
account fees ... $ 5,378 6,720 3,025 809,923 45,450 276,482 144 10,968 216,169 40
======= ========= ======== ======== ======= ======= ======== ====== ======= =======
</TABLE>
(Continued)
<PAGE> 36
<TABLE>
<CAPTION>
NACo VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, Continued
Percentage PrBalY PrIntY PrLgCapGrY PrLgCpValY PrSmCapY OppGlob PutInvFd PutVoyFd SEI500Ix SelGroFd
- ---------- ------ ------ ---------- ---------- -------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.95% ......... $ -- -- -- -- -- -- 299,060 715,316 291,873 32,833
0.90% ......... -- -- -- -- -- -- 99,102 254,919 108,987 14,122
0.80% ......... -- -- -- -- -- 5 70,035 173,289 80,858 8,033
0.70% ......... 51 1 19 -- 1 -- 18,059 60,859 21,698 2,478
0.65% ......... -- -- -- -- -- -- 38,689 87,003 34,323 5,845
0.60% ......... -- -- -- -- 6 -- -- -- -- --
0.55% ......... -- -- -- -- -- -- -- -- -- --
0.50% ......... -- -- -- -- -- -- 895 3,233 2,270 249
0.45% ......... -- -- 1 1 -- -- -- -- -- --
0.40% ......... -- -- -- -- -- -- 14,344 32,851 19,442 2,131
0.30% ......... -- -- -- -- -- -- 1,269 1,627 -- --
0.25% ......... -- -- -- -- 1 -- -- -- -- --
0.20% ......... -- -- -- -- -- -- -- -- -- --
0.15% ......... -- -- -- -- -- -- -- -- -- --
------ ------ -------- ------ --------- ------ -------- -------- -------- --------
Total variable
account fees ... $ 51 1 20 1 8 5 541,453 1,329,097 559,451 65,691
====== ====== ======== ======= ========= ====== ======== ========= ======== ========
<CAPTION>
Percentage AIMTreas TRIntStk TemForFd WPEmGro
- ---------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
0.95% ......... $12,180 80,016 100,986 --
0.90% ......... 5,583 30,625 41,401 --
0.80% ......... 2,162 23,257 49,172 2
0.70% ......... 3,559 8,452 18,118 1
0.65% ......... 2,505 18,120 12,867 --
0.60% ......... -- -- -- --
0.55% ......... -- -- 4,652 2
0.50% ......... 81 1,083 -- --
0.45% ......... -- -- -- --
0.40% ......... 1,419 5,731 1,198 --
0.30% ......... -- -- 280 --
0.25% ......... -- -- 240 --
0.20% ......... -- -- 2,380 --
0.15% ......... -- -- -- --
------- ------- ------- -------
Total variable
account fees ... $27,489 167,284 231,294 5
======= ======= ======= =======
</TABLE>
<PAGE> 95
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Nationwide Life
Insurance Company and subsidiaries (collectively the Company), a wholly owned
subsidiary of Nationwide Financial Services, Inc., as of December 31, 1999 and
1998, and the related consolidated statements of income, shareholder's equity
and cash flows for each of the years in the three-year period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide Life
Insurance Company and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.
Columbus, Ohio
January 28, 2000
<PAGE> 2
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Balance Sheets
(in millions, except per share amounts)
<TABLE>
<CAPTION>
December 31,
-----------------------------
Assets 1999 1998
------ --------- ---------
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $15,294.0 $14,245.1
Equity securities 92.9 127.2
Mortgage loans on real estate, net 5,786.3 5,328.4
Real estate, net 254.8 243.6
Policy loans 519.6 464.3
Other long-term investments 73.8 44.0
Short-term investments 416.0 289.1
--------- ---------
22,437.4 20,741.7
--------- ---------
Cash 4.8 3.4
Accrued investment income 238.6 218.7
Deferred policy acquisition costs 2,554.1 2,022.2
Other assets 305.9 420.3
Assets held in separate accounts 67,135.1 50,935.8
--------- ---------
$92,675.9 $74,342.1
========= =========
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims $21,861.6 $19,767.1
Other liabilities 914.2 866.1
Liabilities related to separate accounts 67,135.1 50,935.8
--------- ---------
89,910.9 71,569.0
--------- ---------
Commitments and contingencies (notes 8 and 13)
Shareholder's equity:
Common stock, $1 par value. Authorized 5.0 million shares;
3.8 million shares issued and outstanding 3.8 3.8
Additional paid-in capital 766.1 914.7
Retained earnings 2,011.0 1,579.0
Accumulated other comprehensive income (15.9) 275.6
--------- ---------
2,765.0 2,773.1
--------- ---------
$92,675.9 $74,342.1
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Income
(in millions)
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Policy charges $ 895.5 $ 698.9 $ 545.2
Life insurance premiums 220.8 200.0 205.4
Net investment income 1,520.8 1,481.6 1,409.2
Realized (losses) gains on investments (11.6) 28.4 11.1
Other 66.1 66.8 46.5
-------- -------- --------
2,691.6 2,475.7 2,217.4
-------- -------- --------
Benefits and expenses:
Interest credited to policyholder account balances 1,096.3 1,069.0 1,016.6
Other benefits and claims 210.4 175.8 178.2
Policyholder dividends on participating policies 42.4 39.6 40.6
Amortization of deferred policy acquisition costs 272.6 214.5 167.2
Other operating expenses 463.4 419.7 384.9
-------- -------- --------
2,085.1 1,918.6 1,787.5
-------- -------- --------
Income before federal income tax expense 606.5 557.1 429.9
Federal income tax expense 201.4 190.4 150.2
-------- -------- --------
Net income $ 405.1 $ 366.7 $ 279.7
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1999, 1998 and 1997
(in millions)
<TABLE>
<CAPTION>
Accumulated
Additional other Total
Common paid-in Retained comprehensive shareholder's
stock capital earnings income equity
-------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
December 31, 1996 $ 3.8 $ 527.9 $1,432.6 $173.6 $2,137.9
Comprehensive income:
Net income -- -- 279.7 -- 279.7
Net unrealized gains on securities
available-for-sale arising during
the year -- -- -- 73.5 73.5
--------
Total comprehensive income 353.2
--------
Capital contribution -- 836.8 -- -- 836.8
--------
Dividend to shareholder -- (450.0) (400.0) -- (850.0)
------ -------- -------- ------ --------
December 31, 1997 3.8 914.7 1,312.3 247.1 2,477.9
Comprehensive income:
Net income -- -- 366.7 -- 366.7
Net unrealized gains on securities
available-for-sale arising during
the year -- -- -- 28.5 28.5
--------
Total comprehensive income 395.2
--------
Dividend to shareholder -- -- (100.0) -- (100.0)
------ -------- -------- ------ --------
December 31, 1998 3.8 914.7 1,579.0 275.6 2,773.1
Comprehensive income:
Net income -- -- 405.1 -- 405.1
Net unrealized losses on securities
available-for-sale arising during
the year -- -- -- (315.0) (315.0)
--------
Total comprehensive income 90.1
--------
Capital contribution -- 26.4 87.9 23.5 137.8
--------
Dividends to shareholder -- (175.0) (61.0) -- (236.0)
------ -------- -------- ------ --------
December 31, 1999 $ 3.8 $ 766.1 $2,011.0 $(15.9) $2,765.0
====== ======== ======== ====== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Cash Flows
(in millions)
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 405.1 $ 366.7 $ 279.7
Adjustments to reconcile net income to net cash provided by operating
activities:
Interest credited to policyholder account balances 1,096.3 1,069.0 1,016.6
Capitalization of deferred policy acquisition costs (637.0) (584.2) (487.9)
Amortization of deferred policy acquisition costs 272.6 214.5 167.2
Amortization and depreciation 2.4 (8.5) (2.0)
Realized (gains) losses on invested assets, net 11.6 (28.4) (11.1)
Increase in accrued investment income (7.9) (8.2) (0.3)
Decrease (increase) in other assets 122.9 16.4 (12.7)
Decrease in policy liabilities (20.9) (8.3) (23.1)
Increase (decrease) in other liabilities 149.7 (34.8) 230.6
Other, net (8.6) (11.3) (10.9)
--------- --------- ---------
Net cash provided by operating activities 1,386.2 982.9 1,146.1
--------- --------- ---------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 2,307.9 1,557.0 993.4
Proceeds from sale of securities available-for-sale 513.1 610.5 574.5
Proceeds from repayments of mortgage loans on real estate 696.7 678.2 437.3
Proceeds from sale of real estate 5.7 103.8 34.8
Proceeds from repayments of policy loans and sale of other invested assets 40.9 23.6 22.7
Cost of securities available-for-sale acquired (3,724.9) (3,182.8) (2,828.1)
Cost of mortgage loans on real estate acquired (971.4) (829.1) (752.2)
Cost of real estate acquired (14.2) (0.8) (24.9)
Short-term investments, net (27.5) 69.3 (354.8)
Other, net (110.9) (88.4) (62.5)
--------- --------- ---------
Net cash used in investing activities (1,284.6) (1,058.7) (1,959.8)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from capital contributions -- -- 836.8
Cash dividends paid (188.5) (100.0) --
Increase in investment product and universal life insurance
product account balances 3,799.4 2,682.1 2,488.5
Decrease in investment product and universal life insurance
product account balances (3,711.1) (2,678.5) (2,379.8)
--------- --------- ---------
Net cash used in financing activities (100.2) (96.4) 945.5
--------- --------- ---------
Net increase (decrease) in cash 1.4 (172.2) 131.8
Cash, beginning of year 3.4 175.6 43.8
--------- --------- ---------
Cash, end of year $ 4.8 $ 3.4 $ 175.6
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(1) Organization and Description of Business
Nationwide Life Insurance Company (NLIC) is a leading provider of
long-term savings and retirement products in the United States and is a
wholly owned subsidiary of Nationwide Financial Services, Inc. (NFS).
The Company develops and sells a diverse range of products including
variable annuities, fixed annuities and life insurance as well as
investment management and administrative services. NLIC markets its
products through a broad network of distribution channels, including
independent broker/dealers, national and regional brokerage firms,
financial institutions, pension plan administrators, life insurance
specialists, Nationwide Retirement Solutions sales representatives, and
Nationwide agents.
Wholly owned subsidiaries of NLIC include Nationwide Life and Annuity
Insurance Company (NLAIC), Nationwide Advisory Services, Inc., and
Nationwide Investment Services Corporation. NLIC and its subsidiaries
are collectively referred to as "the Company."
(2) Summary of Significant Accounting Policies
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles, which differ
from statutory accounting practices prescribed or permitted by
regulatory authorities. Annual Statements for NLIC and NLAIC, filed
with the Department of Insurance of the State of Ohio (the Department),
are prepared on the basis of accounting practices prescribed or
permitted by the Department. Prescribed statutory accounting practices
include a variety of publications of the National Association of
Insurance Commissioners (NAIC), as well as state laws, regulations and
general administrative rules. Permitted statutory accounting practices
encompass all accounting practices not so prescribed. The Company has
no material permitted statutory accounting practices.
In preparing the consolidated financial statements, management is
required to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosures of contingent
assets and liabilities as of the date of the consolidated financial
statements and the reported amounts of revenues and expenses for the
reporting period. Actual results could differ significantly from those
estimates.
The most significant estimates include those used in determining
deferred policy acquisition costs, valuation allowances for mortgage
loans on real estate and real estate investments and the liability for
future policy benefits and claims. Although some variability is
inherent in these estimates, management believes the amounts provided
are adequate.
(a) Consolidation Policy
The consolidated financial statements include the accounts of NLIC
and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(b) Valuation of Investments and Related Gains and Losses
The Company is required to classify its fixed maturity securities
and equity securities as either held-to-maturity,
available-for-sale or trading. Fixed maturity securities are
classified as held-to-maturity when the Company has the positive
intent and ability to hold the securities to maturity and are
stated at amortized cost. Fixed maturity securities not classified
as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the
unrealized gains and losses, net of adjustments to deferred policy
acquisition costs and deferred federal income tax, reported as a
separate component of accumulated other comprehensive income in
shareholder's equity. The adjustment to deferred policy
acquisition costs represents the change in amortization of
deferred policy acquisition costs that would have been required as
a charge or credit to operations had such unrealized amounts been
realized. The Company has no fixed maturity securities classified
as held-to-maturity or trading as of December 31, 1999 or 1998.
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based
on a review by portfolio managers. The measurement of impaired
loans is based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a
practical expedient, at the fair value of the collateral, if the
loan is collateral dependent. Loans in foreclosure and loans
considered to be impaired are placed on non-accrual status.
Interest received on non-accrual status mortgage loans on real
estate is included in interest income in the period received.
Real estate is carried at cost less accumulated depreciation and
valuation allowances. Other long-term investments are carried on
the equity basis, adjusted for valuation allowances. Impairment
losses are recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the
assets' carrying amount.
Realized gains and losses on the sale of investments are
determined on the basis of specific security identification.
Estimates for valuation allowances and other than temporary
declines are included in realized gains and losses on investments.
(c) Revenues and Benefits
Investment Products and Universal Life Insurance Products:
Investment products consist primarily of individual and group
variable and fixed deferred annuities. Universal life insurance
products include universal life insurance, variable universal life
insurance, corporate owned life insurance and other
interest-sensitive life insurance policies. Revenues for
investment products and universal life insurance products consist
of net investment income, asset fees, cost of insurance, policy
administration and surrender charges that have been earned and
assessed against policy account balances during the period. Policy
benefits and claims that are charged to expense include interest
credited to policy account balances and benefits and claims
incurred in the period in excess of related policy account
balances.
Traditional Life Insurance Products: Traditional life insurance
products include those products with fixed and guaranteed premiums
and benefits and consist primarily of whole life insurance,
limited-payment life insurance, term life insurance and certain
annuities with life contingencies. Premiums for traditional life
insurance products are recognized as revenue when due. Benefits
and expenses are associated with earned premiums so as to result
in recognition of profits over the life of the contract. This
association is accomplished by the provision for future policy
benefits and the deferral and amortization of policy acquisition
costs.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(d) Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
certain expenses of the policy issue and underwriting department
and certain variable sales expenses have been deferred. For
investment products and universal life insurance products,
deferred policy acquisition costs are being amortized with
interest over the lives of the policies in relation to the present
value of estimated future gross profits from projected interest
margins, asset fees, cost of insurance, policy administration and
surrender charges. For years in which gross profits are negative,
deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs
are adjusted to reflect the impact of unrealized gains and losses
on fixed maturity securities available-for-sale as described in
note 2(b). For traditional life insurance products, these deferred
policy acquisition costs are predominantly being amortized with
interest over the premium paying period of the related policies in
proportion to the ratio of actual annual premium revenue to the
anticipated total premium revenue. Such anticipated premium
revenue was estimated using the same assumptions as were used for
computing liabilities for future policy benefits.
(e) Separate Accounts
Separate account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. For all but $915.4 million of separate
account assets, the investment income and gains or losses of these
accounts accrue directly to the contractholders. The activity of
the separate accounts is not reflected in the consolidated
statements of income and cash flows except for the fees the
Company receives.
(f) Future Policy Benefits
Future policy benefits for investment products in the accumulation
phase, universal life insurance and variable universal life
insurance policies have been calculated based on participants'
contributions plus interest credited less applicable contract
charges. The average interest rate credited on investment product
policy reserves was 5.6%, 6.0% and 6.1% for the years ended
December 31, 1999, 1998 and 1997, respectively.
Future policy benefits for traditional life insurance policies
have been calculated by the net level premium method using
interest rates varying from 6.0% to 10.5% and estimates of
mortality, morbidity, investment yields and withdrawals which were
used or which were being experienced at the time the policies were
issued, rather than the assumptions prescribed by state regulatory
authorities.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(g) Participating Business
Participating business represents approximately 29% in 1999 (40%
in 1998 and 50% in 1997) of the Company's life insurance in force,
69% in 1999 (74% in 1998 and 77% in 1997) of the number of life
insurance policies in force, and 13% in 1999 (14% in 1998 and 27%
in 1997) of life insurance statutory premiums. The provision for
policyholder dividends is based on current dividend scales and is
included in "Future policy benefits and claims" in the
accompanying consolidated balance sheets.
(h) Federal Income Tax
The Company files a consolidated federal income tax return with
Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Nationwide Corp. The members of the consolidated
tax return group have a tax sharing arrangement which provides, in
effect, for each member to bear essentially the same federal
income tax liability as if separate tax returns were filed.
The Company utilizes the asset and liability method of accounting
for income tax. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under this method, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce the
deferred tax assets to the amounts expected to be realized.
(i) Reinsurance Ceded
Reinsurance premiums ceded and reinsurance recoveries on benefits
and claims incurred are deducted from the respective income and
expense accounts. Assets and liabilities related to reinsurance
ceded are reported on a gross basis.
(j) Recently Issued Accounting Pronouncements
In March 1998, The American Institute of Certified Public
Accountant's Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The
SOP, which has been adopted prospectively as of January 1, 1999,
requires the capitalization of certain costs incurred in
connection with developing or obtaining internal use software.
Prior to the adoption of SOP 98-1, the Company expensed internal
use software related costs as incurred. The effect of adopting the
SOP was to increase net income for 1999 by $8.3 million.
In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). FAS 133 establishes accounting
and reporting standards for derivative instruments and for hedging
activities. Contracts that contain embedded derivatives, such as
certain investment and insurance contracts, are also addressed by
the Statement. FAS 133 requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. In
July 1999 the FASB issued Statement No. 137 which delayed the
effective date of FAS 133 to fiscal years beginning after June 15,
2000. The Company plans to adopt this Statement in first quarter
2001 and is currently evaluating the impact on results of
operations and financial condition.
(k) Reclassification
Certain items in the 1998 and 1997 consolidated financial
statements have been reclassified to conform to the 1999
presentation.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(3) Investments
The amortized cost, gross unrealized gains and losses and estimated
fair value of securities available-for-sale as of December 31, 1999 and
1998 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
(in millions) cost gains losses fair value
--------- ------ ------- ---------
<S> <C> <C> <C> <C>
December 31, 1999:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 428.4 $ 23.4 $ (2.4) $ 449.4
Obligations of states and political subdivisions 0.8 -- -- 0.8
Debt securities issued by foreign governments 110.6 0.6 (0.8) 110.4
Corporate securities 11,414.7 118.9 (218.6) 11,315.0
Mortgage-backed securities 3,422.8 25.8 (30.2) 3,418.4
--------- ------ ------- ---------
Total fixed maturity securities 15,377.3 168.7 (252.0) 15,294.0
Equity securities 84.9 12.4 (4.4) 92.9
--------- ------ ------- ---------
$15,462.2 $181.1 $(256.4) $15,386.9
========= ====== ======= =========
December 31, 1998:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 255.9 $ 13.0 $ -- $ 268.9
Obligations of states and political subdivisions 1.6 -- -- 1.6
Debt securities issued by foreign governments 106.5 4.5 -- 111.0
Corporate securities 9,899.6 423.2 (18.7) 10,304.1
Mortgage-backed securities 3,457.7 104.2 (2.4) 3,559.5
--------- ------ ------- ---------
Total fixed maturity securities 13,721.3 544.9 (21.1) 14,245.1
Equity securities 110.4 18.3 (1.5) 127.2
--------- ------ ------- ---------
$13,831.7 $563.2 $ (22.6) $14,372.3
========= ====== ======= =========
</TABLE>
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1999, by expected
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
(in millions) cost fair value
--------- ---------
<S> <C> <C>
Fixed maturity securities available for sale:
Due in one year or less $ 847.0 $ 847.0
Due after one year through five years 5,240.5 5,205.7
Due after five years through ten years 5,046.9 5,005.2
Due after ten years 4,242.9 4,236.1
--------- ---------
$15,377.3 $15,294.0
========= =========
</TABLE>
<PAGE> 11
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The components of unrealized (losses) gains on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998
------ -------
<S> <C> <C>
Gross unrealized (losses) gains $(75.3) $ 540.6
Adjustment to deferred policy acquisition costs 50.9 (116.6)
Deferred federal income tax 8.5 (148.4)
------ -------
$(15.9) $ 275.6
====== =======
</TABLE>
An analysis of the change in gross unrealized (losses) gains on
securities available-for-sale for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----- ------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(607.1) $52.6 $137.5
Equity securities (8.8) 4.2 (2.7)
------- ----- ------
$(615.9) $56.8 $134.8
======= ===== ======
</TABLE>
Proceeds from the sale of securities available-for-sale during 1999,
1998 and 1997 were $513.1 million, $610.5 million and $574.5 million,
respectively. During 1999, gross gains of $10.4 million ($9.0 million
and $9.9 million in 1998 and 1997, respectively) and gross losses of
$28.0 million ($7.6 million and $18.0 million in 1998 and 1997,
respectively) were realized on those sales. In addition, gross gains of
$15.1 million and gross losses of $0.7 million were realized in 1997
when the Company paid a dividend to NFS, which then made an equivalent
dividend to Nationwide Corp., consisting of securities having an
aggregate fair value of $850.0 million.
The Company had $15.6 million of real estate investments at December
31, 1999 that were non-income producing the preceding twelve months.
During 1998 the Company had investments of $42.4 million that were
non-income producing, which consisted of $32.7 million of securities
available-for-sale and $9.7 million of real estate.
Real estate is presented at cost less accumulated depreciation of $24.8
million as of December 31, 1999 ($21.5 million as of December 31, 1998)
and valuation allowances of $5.5 million as of December 31, 1999 ($5.4
million as of December 31, 1998).
The recorded investment of mortgage loans on real estate considered to
be impaired was $3.7 million as of both December 31, 1999 and 1998. No
valuation allowance has been recorded for these loans as of December
31, 1999 or 1998. During 1999, the average recorded investment in
impaired mortgage loans on real estate was approximately $3.7 million
($9.1 million in 1998) and there was no interest income recognized on
those loans. Interest income recognized on impaired loans was $0.3
million in 1998 which is equal to interest income recognized using a
cash-basis method of income recognition.
<PAGE> 12
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Allowance, beginning of year $42.4 $42.5 $51.0
Additions (reductions) charged to operations 0.7 (0.1) (1.2)
Direct write-downs charged against the allowance -- -- (7.3)
Allowance on acquired mortgage loans 1.3 -- --
----- ----- -----
Allowance, end of year $44.4 $42.4 $42.5
===== ===== =====
</TABLE>
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $1,031.3 $ 982.5 $ 911.6
Equity securities 2.5 0.8 0.8
Mortgage loans on real estate 460.4 458.9 457.7
Real estate 28.8 40.4 42.9
Short-term investments 18.6 17.8 22.7
Other 26.5 30.7 21.0
-------- -------- --------
Total investment income 1,568.1 1,531.1 1,456.7
Less investment expenses 47.3 49.5 47.5
-------- -------- --------
Net investment income $1,520.8 $1,481.6 $1,409.2
======== ======== ========
</TABLE>
An analysis of realized gains (losses) on investments, net of valuation
allowances, by investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----- -----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(25.0) $(0.7) $ 3.6
Equity securities 7.4 2.1 2.7
Mortgage loans on real estate (0.6) 3.9 1.6
Real estate and other 6.6 23.1 3.2
------ ----- -----
$(11.6) $28.4 $11.1
====== ===== =====
</TABLE>
Fixed maturity securities with an amortized cost of $9.1 million as of
December 31, 1999 and $6.5 million as of December 31, 1998 were on
deposit with various regulatory agencies as required by law.
(4) Derivative Financial Instruments
The Company uses derivative financial instruments, principally interest
rate swaps, interest rate futures contracts and foreign currency swaps,
to manage market risk exposures associated with changes in interest
rates and foreign currency exchange rates. Provided they meet specific
criteria, interest rate swaps and futures are considered hedges and are
accounted for under the accrual method and deferral method,
respectively. The Company has no significant derivative positions that
are not considered hedges.
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Interest rate swaps are primarily used to convert specific investment
securities and interest bearing policy liabilities from a fixed-rate to
a floating-rate basis. Amounts receivable or payable under these
agreements are recognized as an adjustment to net investment income or
interest credited to policyholder account balances consistent with the
nature of the hedged item. The changes in fair value of the interest
rate swap agreements are not recognized on the balance sheet, except
for interest rate swaps designated as hedges of fixed maturity
securities available-for-sale, for which changes in fair values are
reported in accumulated other comprehensive income.
Interest rate futures contracts are primarily used to hedge the risk of
adverse interest rate changes related to the Company's mortgage loan
commitments and anticipated purchases of fixed rate investments. Gains
and losses are deferred and, at the time of closing, reflected as an
adjustment to the carrying value of the related mortgage loans or
investments. The carrying value adjustments are amortized into net
investment income over the life of the related mortgage loans or
investments.
Foreign currency swaps are used to convert cash flows from specific
policy liabilities and investments denominated in foreign currencies
into U.S. dollars at specified exchange rates. Gains and losses on
foreign currency swaps are recorded in earnings based on the related
spot foreign exchange rate at the end of the reporting period. Gains
and losses on these contracts offset those recorded as a result of
translating the hedged foreign currency denominated liabilities and
investments to U.S. dollars.
The following table summarizes the notional amount of derivative
financial instruments classified as hedges outstanding as of December
31, 1999. Prior to 1999 the Company's activities in derivatives were
not significant.
<TABLE>
<CAPTION>
(in millions)
-------------
<S> <C>
Interest rate swaps
Pay fixed/receive variable rate swaps hedging investments $362.7
Pay variable/receive fixed rate swaps hedging investments $ 28.5
Other contracts hedging investments $ 19.1
Pay variable/receive fixed rate swaps hedging liabilities $577.2
Foreign currency swaps
Hedging foreign currency denominated investments $ 14.8
Hedging foreign currency denominated liabilities $577.2
Interest rate futures contracts $781.6
</TABLE>
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(5) Federal Income Tax
The tax effects of temporary differences that give rise to significant
components of the net deferred tax liability as of December 31, 1999
and 1998 are as follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Fixed maturity securities $ 5.3 $ --
Future policy benefits 149.5 207.7
Liabilities in separate accounts 373.6 319.9
Mortgage loans on real estate and real estate 18.5 17.5
Other assets and other liabilities 51.1 58.9
----- ------
Total gross deferred tax assets 598.0 604.0
Less valuation allowance (7.0) (7.0)
----- ------
Net deferred tax assets 591.0 597.0
----- ------
Deferred tax liabilities:
Deferred policy acquisition costs 724.4 568.7
Fixed maturity securities -- 212.2
Deferred tax on realized investment gains 34.7 34.8
Equity securities and other long-term investments 10.8 9.6
Other 26.5 21.6
------ ------
Total gross deferred tax liabilities 796.4 846.9
------ ------
Net deferred tax liability $205.4 $249.9
====== ======
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion of the
total gross deferred tax assets will not be realized. Nearly all future
deductible amounts can be offset by future taxable amounts or recovery
of federal income tax paid within the statutory carryback period. There
has been no change in the valuation allowance for the years ended
December 31, 1999, 1998 and 1997.
The Company's current federal income tax liability was $104.7 million
and $72.8 million as of December 31, 1999 and 1998, respectively.
Federal income tax expense for the years ended December 31 was as
follows:
(in millions) 1999 1998 1997
------ ------ ------
Currently payable $ 53.6 $186.1 $121.7
Deferred tax expense 147.8 4.3 28.5
------ ------ ------
$201.4 $190.4 $150.2
====== ====== ======
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Total federal income tax expense for the years ended December 31, 1999,
1998 and 1997 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---------------- ---------------- ----------------
(in millions) Amount % Amount % Amount %
------ ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $212.3 35.0 $195.0 35.0 $150.5 35.0
Tax exempt interest and dividends
received deduction (7.3) (1.2) (4.9) (0.9) -- --
Income tax credits (4.3) (0.7) -- -- -- --
Other, net 0.7 0.1 0.3 0.1 (0.3) (0.1)
------ ---- ------ ---- ------ ----
Total (effective rate of each year) $201.4 33.2 $190.4 34.2 $150.2 34.9
====== ==== ====== ==== ====== ====
</TABLE>
Total federal income tax paid was $29.8 million, $173.4 million and
$91.8 million during the years ended December 31, 1999, 1998 and 1997,
respectively.
(6) Comprehensive Income
Comprehensive Income includes net income as well as certain items that
are reported directly within separate components of shareholder's
equity that bypass net income. Currently, the Company's only component
of Other Comprehensive Income is unrealized gains (losses) on
securities available-for-sale. The related before and after federal tax
amounts are as follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-for-sale
arising during the period:
Gross $(665.3) $ 58.2 $141.1
Adjustment to deferred policy acquisition costs 167.5 (12.9) (21.8)
Related federal income tax (expense) benefit 171.4 (15.9) (41.7)
------- ------ ------
Net (326.4) 29.4 77.6
------- ------ ------
Reclassification adjustment for net (gains) losses on
securities available-for-sale realized during the
period:
Gross 17.6 (1.4) (6.3)
Related federal income tax expense (benefit) (6.2) 0.5 2.2
------- ------ ------
Net 11.4 (0.9) (4.1)
------- ------ ------
Total Other Comprehensive Income $(315.0) $ 28.5 $ 73.5
======= ====== ======
</TABLE>
(7) Fair Value of Financial Instruments
The following disclosures summarize the carrying amount and estimated
fair value of the Company's financial instruments. Certain assets and
liabilities are specifically excluded from the disclosure requirements
of financial instruments. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The fair value of a financial instrument is defined as the amount at
which the financial instrument could be exchanged in a current
transaction between willing parties. In cases where quoted market
prices are not available, fair value is to be based on estimates using
present value or other valuation techniques. Many of the Company's
assets and liabilities subject to the disclosure requirements are not
actively traded, requiring fair values to be estimated by management
using present value or other valuation techniques. These techniques are
significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. Although fair value estimates
are calculated using assumptions that management believes are
appropriate, changes in assumptions could cause these estimates to vary
materially. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases,
could not be realized in the immediate settlement of the instruments.
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from the disclosure requirements, estimated fair value of policy
reserves on life insurance contracts is provided to make the fair value
disclosures more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
Fixed maturity and equity securities: The fair value for fixed
maturity securities is based on quoted market prices, where
available. For fixed maturity securities not actively traded, fair
value is estimated using values obtained from independent pricing
services or, in the case of private placements, is estimated by
discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the
investments. The fair value for equity securities is based on
quoted market prices. The carrying amount and fair value for fixed
maturity and equity securities exclude the fair value of
derivatives contracts designated as hedges of fixed maturity and
equity securities.
Mortgage loans on real estate, net: The fair value for mortgage
loans on real estate is estimated using discounted cash flow
analyses, using interest rates currently being offered for similar
loans to borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations.
Fair value for mortgage loans in default is the estimated fair
value of the underlying collateral.
Policy loans, short-term investments and cash: The carrying amount
reported in the consolidated balance sheets for these instruments
approximates their fair value.
Separate account assets and liabilities: The fair value of assets
held in separate accounts is based on quoted market prices. The
fair value of liabilities related to separate accounts is the
amount payable on demand, which is net of certain surrender
charges.
Investment contracts: The fair value for the Company's liabilities
under investment type contracts is disclosed using two methods.
For investment contracts without defined maturities, fair value is
the amount payable on demand. For investment contracts with known
or determined maturities, fair value is estimated using discounted
cash flow analysis. Interest rates used are similar to currently
offered contracts with maturities consistent with those remaining
for the contracts being valued.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Policy reserves on life insurance contracts: Included are
disclosures for individual life insurance, universal life
insurance and supplementary contracts with life contingencies for
which the estimated fair value is the amount payable on demand.
Also included are disclosures for the Company's limited payment
policies, which the Company has used discounted cash flow analyses
similar to those used for investment contracts with known
maturities to estimate fair value.
Commitments to extend credit: Commitments to extend credit have
nominal fair value because of the short-term nature of such
commitments. See note 8.
Futures contracts: The fair value for futures contracts is based
on quoted market prices.
Interest rate and foreign currency swaps: The fair value for
interest rate and foreign currency swaps are calculated with
pricing models using current rate assumptions.
Carrying amount and estimated fair value of financial instruments
subject to disclosure requirements and policy reserves on life
insurance contracts were as follows as of December 31:
<TABLE>
<CAPTION>
1999 1998
------------------------ -------------------------
Carrying Estimated Carrying Estimated
(in millions) amount fair value amount fair value
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $15,294.0 $15,294.0 $14,245.1 $14,245.1
Equity securities 92.9 92.9 128.5 128.5
Mortgage loans on real estate, net 5,786.3 5,745.5 5,328.4 5,527.6
Policy loans 519.6 519.6 464.3 464.3
Short-term investments 416.0 416.0 289.1 289.1
Cash 4.8 4.8 3.4 3.4
Assets held in separate accounts 67,135.1 67,135.1 50,935.8 50,935.8
Liabilities:
Investment contracts (16,977.7) (16,428.6) (15,468.7) (15,158.6)
Policy reserves on life insurance contracts (4,883.9) (4,607.9) (3,914.0) (3,768.9)
Liabilities related to separate accounts (67,135.1) (66,318.7) (50,935.8) (49,926.5)
Derivative financial instruments:
Interest rate swaps hedging assets 4.3 4.3 - -
Interest rate swaps hedging liabilities - (24.2) - -
Foreign currency swaps (11.8) (11.8) - -
Futures contracts 1.3 1.3 (1.3) (1.3)
</TABLE>
(8) Risk Disclosures
The following is a description of the most significant risks facing
life insurers and how the Company mitigates those risks:
Credit Risk: The risk that issuers of securities owned by the Company
or mortgagors on mortgage loans on real estate owned by the Company
will default or that other parties, including reinsurers, which owe the
Company money, will not pay. The Company minimizes this risk by
adhering to a conservative investment strategy, by maintaining
reinsurance and credit and collection policies and by providing for any
amounts deemed uncollectible.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Interest Rate Risk: The risk that interest rates will change and cause
a decrease in the value of an insurer's investments. This change in
rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent that
liabilities come due more quickly than assets mature, an insurer would
have to borrow funds or sell assets prior to maturity and potentially
recognize a gain or loss.
Legal/Regulatory Risk: The risk that changes in the legal or regulatory
environment in which an insurer operates will result in increased
competition, reduced demand for a company's products, or create
additional expenses not anticipated by the insurer in pricing its
products. The Company mitigates this risk by offering a wide range of
products and by operating throughout the United States, thus reducing
its exposure to any single product or jurisdiction, and also by
employing underwriting practices which identify and minimize the
adverse impact of this risk.
Financial Instruments with Off-Balance-Sheet Risk: The Company is a
party to financial instruments with off-balance-sheet risk in the
normal course of business through management of its investment
portfolio. These financial instruments include commitments to extend
credit in the form of loans and derivative financial instruments. These
instruments involve, to varying degrees, elements of credit risk in
excess of amounts recognized on the consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property represents
the collateral if the commitment is funded. The Company's policy for
new mortgage loans on real estate is to lend no more than 75% of
collateral value. Should the commitment be funded, the Company's
exposure to credit loss in the event of nonperformance by the borrower
is represented by the contractual amounts of these commitments less the
net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments.
Commitments on mortgage loans on real estate of $216.2 million
extending into 2000 were outstanding as of December 31, 1999. The
Company also had $28.0 million of commitments to purchase fixed
maturity securities outstanding as of December 31, 1999.
Notional amounts of derivative financial instruments, primarily
interest rate swaps, interest rate futures contracts and foreign
currency swaps, significantly exceed the credit risk associated with
these instruments and represent contractual balances on which
calculations of amounts to be exchanged are based. Credit exposure is
limited to the sum of the aggregate fair value of positions that have
become favorable to NLIC, including accrued interest receivable due
from counterparties. Potential credit losses are minimized through
careful evaluation of counterparty credit standing, selection of
counterparties from a limited group of high quality institutions,
collateral agreements and other contract provisions. At December 31,
1999, NLIC's credit risk from these derivative financial instruments
was $6.1 million.
Significant Concentrations of Credit Risk: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the
United States. The Company has a diversified portfolio with no more
than 23% (22% in 1998) in any geographic area and no more than 2% (2%
in 1998) with any one borrower as of December 31, 1999. As of December
31, 1999, 39% (42% in 1998) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed retail
properties.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Reinsurance: The Company has entered into a reinsurance contract to
cede a portion of its general account individual annuity business to
The Franklin Life Insurance Company (Franklin). Total recoveries due
from Franklin were $143.6 million and $187.9 million as of December 31,
1999 and 1998, respectively. The contract is immaterial to the
Company's results of operations. The ceding of risk does not discharge
the original insurer from its primary obligation to the policyholder.
Under the terms of the contract, Franklin has established a trust as
collateral for the recoveries. The trust assets are invested in
investment grade securities, the market value of which must at all
times be greater than or equal to 102% of the reinsured reserves.
(9) Pension Plan and Postretirement Benefits Other Than Pensions
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least
one year of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company. Assets of the
Retirement Plan are invested in group annuity contracts of NLIC.
Pension cost (benefit) charged to operations by the Company during the
years ended December 31, 1999, 1998 and 1997 were $(8.3) million, $2.0
million and $7.5 million, respectively. The Company has recorded a
prepaid pension asset of $13.3 million and $5.0 million as of December
31, 1999 and 1998, respectively.
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years
of service with the Company after reaching age 40. Postretirement
health care benefit contributions are adjusted annually and contain
cost-sharing features such as deductibles and coinsurance. In addition,
there are caps on the Company's portion of the per-participant cost of
the postretirement health care benefits. These caps can increase
annually, but not more than three percent. The Company's policy is to
fund the cost of health care benefits in amounts determined at the
discretion of management. Plan assets are invested primarily in group
annuity contracts of NLIC.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation (APBO), however, certain affiliated
companies elected to amortize their initial transition obligation over
periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of December 31,
1999 and 1998 was $49.6 million and $40.1 million, respectively, and
the net periodic postretirement benefit cost (NPPBC) for 1999, 1998 and
1997 was $4.9 million, $4.1 million and $3.0 million, respectively.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Information regarding the funded status of the pension plan as a whole
and the postretirement life and health care benefit plan as a whole as
of December 31, 1999 and 1998 follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
------------------ -----------------------
(in millions) 1999 1998 1999 1998
--------------------------------------------------------- -------- -------- ------- -------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $2,185.0 $2,033.8 $ 270.1 $ 237.9
Service cost 80.0 87.6 14.2 9.8
Interest cost 109.9 123.4 17.6 15.4
Actuarial (gain) loss (95.0) 123.2 (64.4) 15.6
Plan settlement in 1999/curtailment in 1998 (396.1) (107.2) -- --
Benefits paid (72.4) (75.8) (11.0) (8.6)
Acquired companies -- -- 13.3 --
-------- -------- ------- -------
Benefit obligation at end of year 1,811.4 2,185.0 239.8 270.1
-------- -------- ------- -------
Change in plan assets:
Fair value of plan assets at beginning of year 2,541.9 2,212.9 77.9 69.2
Actual return on plan assets 161.8 300.7 3.5 5.0
Employer contribution 12.4 104.1 20.9 12.1
Plan settlement (396.1) -- -- --
Benefits paid (72.4) (75.8) (11.0) (8.4)
-------- -------- ------- -------
Fair value of plan assets at end of year 2,247.6 2,541.9 91.3 77.9
-------- -------- ------- -------
Funded status 436.2 356.9 (148.5) (192.2)
Unrecognized prior service cost 28.2 31.5 -- --
Unrecognized net (gains) losses (402.0) (345.7) (46.7) 16.0
Unrecognized net (asset) obligation at transition (7.7) (11.0) 1.1 1.3
-------- -------- ------- -------
Prepaid (accrued) benefit cost $ 54.7 $ 31.7 $(194.1) $(174.9)
======== ======== ======= =======
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Basis for measurements, funded status of the pension plan and
postretirement life and health care benefit plan:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
---------------- -----------------------
1999 1998 1999 1998
---- ---- ------- ------
<S> <C> <C>
Weighted average discount rate 7.00% 5.50% 7.80% 6.65%
Rate of increase in future compensation levels 5.25% 3.75% -- --
Assumed health care cost trend rate:
Initial rate -- -- 15.00% 15.00%
Ultimate rate -- -- 5.50% 8.00%
Uniform declining period -- -- 5 Years 15 Years
</TABLE>
The net periodic pension cost for the pension plan as a whole for the
years ended December 31, 1999, 1998 and 1997 follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
-------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 80.0 $ 87.6 $ 77.3
Interest cost on projected benefit obligation 109.9 123.4 118.6
Expected return on plan assets (160.3) (159.0) (139.0)
Recognized gains (9.1) (3.8) --
Amortization of prior service cost 3.2 3.2 3.2
Amortization of unrecognized transition obligation (asset) (1.4) 4.2 4.2
------- ------- --------
$ 22.3 $ 55.6 $ 64.3
======= ======= ========
</TABLE>
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its
affiliation with Nationwide Insurance and employees of WSC ended
participation in the plan. A curtailment gain of $67.1 million resulted
(consisting of a $107.2 million reduction in the projected benefit
obligation, net of the write-off of the $40.1 million remaining
unamortized transition obligation related to WSC). During 1999, the
plan transferred assets to settle its obligation related to WSC
employees . A settlement gain of $32.9 million was recognized.
Basis for measurements, net periodic pension cost for the pension plan:
<TABLE>
<CAPTION>
1999 1998 1997
------ ----- -----
<S> <C> <C> <C>
Weighted average discount rate 6.08% 6.00% 6.50%
Rate of increase in future compensation levels 4.33% 4.25% 4.75%
Expected long-term rate of return on plan assets 7.33% 7.25% 7.25%
</TABLE>
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The amount of NPPBC for the postretirement benefit plan as a whole for
the years ended December 31, 1999, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----------- -----------
<S> <C> <C> <C>
Service cost (benefits attributed to employee service during the year) $14.2 $ 9.8 $ 7.0
Interest cost on accumulated postretirement benefit obligation 17.6 15.4 14.0
Actual return on plan assets (3.5) (5.0) (3.6)
Amortization of unrecognized transition obligation of affiliates 0.6 0.2 0.2
Net amortization and deferral (1.8) 1.2 (0.5)
----- ----- -----
$27.1 $21.6 $17.1
===== ===== =====
</TABLE>
Actuarial assumptions used for the measurement of the NPPBC for the
postretirement benefit plan for 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Discount rate 6.65% 6.70% 7.25%
Long term rate of return on plan
assets, net of tax 7.15% 5.83% 5.89%
Assumed health care cost trend rate:
Initial rate 15.00% 12.00% 11.00%
Ultimate rate 5.50% 6.00% 6.00%
Uniform declining period 5 Years 12 Years 12 Years
</TABLE>
For the postretirement benefit plan as a whole, a one percentage point
increase or decrease in the assumed health care cost trend rate would
have no impact on the APBO as of December 31, 1999 and have no impact
on the NPPBC for the year ended December 31, 1999.
(10) Shareholder's Equity, Regulatory Risk-Based Capital, Retained Earnings
and Dividend Restrictions
Ohio, NLIC's and NLAIC's state of domicile, imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within certain levels, each of
which requires specified corrective action. NLIC and NLAIC each exceed
the minimum risk-based capital requirements.
The statutory capital and surplus of NLIC as of December 31, 1999, 1998
and 1997 was $1.35 billion, $1.32 billion and $1.13 billion,
respectively. The statutory net income of NLIC for the years ended
December 31, 1999, 1998 and 1997 was $276.2 million, $171.0 million and
$111.7 million, respectively.
The Company is limited in the amount of shareholder dividends it may
pay without prior approval by the Department. As of December 31, 1999
$40.2 million of dividends could be paid by NLIC without prior
approval.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
In addition, the payment of dividends by NLIC may also be subject to
restrictions set forth in the insurance laws of New York that limit the
amount of statutory profits on NLIC's participating policies (measured
before dividends to policyholders) that can inure to the benefit of the
Company and its shareholder.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and shareholder dividends
in the future.
(11) Transactions With Affiliates
During second quarter 1999 the Company entered into a modified
coinsurance arrangement to reinsure the 1999 operating results of an
affiliated company, Employers Life Insurance Company of Wausau (ELOW)
retroactive to January 1, 1999. In September 1999, NFS acquired ELOW
for $120.8 million and immediately merged ELOW into NLIC terminating
the modified coinsurance arrangement. Because ELOW was an affiliate,
the Company accounted for the merger similar to poolings-of-interests;
however, prior period financial statements were not restated due to
immateriality. The reinsurance and merger combined contributed $1.46
million to year to date net income.
The Company has a reinsurance agreement with NMIC whereby all of the
Company's accident and health business is ceded to NMIC on a modified
coinsurance basis. The agreement covers individual accident and health
business for all periods presented and group and franchise accident and
health business since July 1, 1999. Either party may terminate the
agreement on January 1 of any year with prior notice. Prior to July 1,
1999 group and franchise accident and health business and a block of
group life insurance policies were ceded to ELOW under a modified
coinsurance agreement. Under a modified coinsurance agreement, invested
assets are retained by the ceding company and investment earnings are
paid to the reinsurer. Under the terms of the Company's agreements, the
investment risk associated with changes in interest rates is borne by
the reinsurer. Risk of asset default is retained by the Company,
although a fee is paid to the Company for the retention of such risk.
The ceding of risk does not discharge the original insurer from its
primary obligation to the policyholder. The Company believes that the
terms of the modified coinsurance agreements are consistent in all
material respects with what the Company could have obtained with
unaffiliated parties. Revenues ceded to NMIC and ELOW for the years
ended December 31, 1999, 1998 and 1997 were $193.0 million, $216.9
million, and $315.3 million, respectively, while benefits, claims and
expenses ceded were $216.9 million, $259.3 million, and $326.6 million,
respectively.
Pursuant to a cost sharing agreement among NMIC and certain of its
direct and indirect subsidiaries, including the Company, NMIC provides
certain operational and administrative services, such as sales support,
advertising, personnel and general management services, to those
subsidiaries. Expenses covered by such agreement are subject to
allocation among NMIC and such subsidiaries. Measures used to allocate
expenses among companies include individual employee estimates of time
spent, special cost studies, salary expense, commission expense and
other methods agreed to by the participating companies that are within
industry guidelines and practices. In addition, beginning in 1999
Nationwide Services Company, a subsidiary of NMIC, provides computer,
telephone, mail, employee benefits administration, and other services
to NMIC and certain of its direct and indirect subsidiaries, including
the Company, based on specified rates for units of service consumed.
For the years ended December 31, 1999, 1998 and 1997, the Company made
payments to NMIC and Nationwide Services Company totaling $124.1
million, $95.0 million, and $85.8 million, respectively. In addition,
the Company does not believe that expenses recognized under these
agreements are materially different than expenses that would have been
recognized had the Company operated on a stand-alone basis.
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1999, 1998 and 1997, the
Company made lease payments to NMIC and its subsidiaries of $9.9
million, $8.0 million and $8.4 million, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The Company also participates in intercompany repurchase agreements
with affiliates whereby the seller will transfer securities to the
buyer at a stated value. Upon demand or a stated period, the securities
will be repurchased by the seller at the original sales price plus a
price differential. Transactions under the agreements during 1999 and
1998 were not material. The Company believes that the terms of the
repurchase agreements are materially consistent with what the Company
could have obtained with unaffiliated parties.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC), an affiliate, under which
NCMC acts as a common agent in handling the purchase and sale of
short-term securities for the respective accounts of the participants.
Amounts on deposit with NCMC were $411.7 million and $248.4 million as
of December 31, 1999 and 1998, respectively, and are included in
short-term investments on the accompanying consolidated balance sheets.
As part of certain restructuring activities that occurred prior to the
March 1997 IPO, the Company paid a dividend valued at $485.7 million to
Nationwide Corp. on January 1, 1997 consisting of the outstanding
shares of common stock of ELOW, National Casualty Company (NCC) and
West Coast Life Insurance Company (WCLIC). Also, on February 24, 1997,
the Company paid a dividend to NFS, and NFS paid an equivalent dividend
to Nationwide Corp., consisting of securities having an aggregate fair
value of $850.0 million. The Company recognized a gain of $14.4 million
on the transfer of securities.
Certain annuity products are sold through three affiliated companies,
which are also subsidiaries of NFS. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1999 were $56.0
million, $60.0 million and $66.1 million, respectively.
(12) Bank Lines of Credit
NFS, NLIC and NMIC are parties to a $600.0 million revolving credit
facility which provides for a $600.0 million loan over a five year term
on a fully revolving basis with a group of national financial
institutions. The credit facility provides for several and not joint
liability with respect to any amount drawn by any party. NFS, NLIC and
NMIC pay facility and usage fees to the financial institutions to
maintain the revolving credit facility. As of December 31, 1999 the
Company had no amounts outstanding under the agreement.
(13) Contingencies
On October 29, 1998, the Company was named in a lawsuit filed in Ohio
state court related to the sale of deferred annuity products for use as
investments in tax-deferred contributory retirement plans (Mercedes
Castillo v. Nationwide Financial Services, Inc., Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company).
On May 3, 1999, the complaint was amended to, among other things, add
Marcus Shore as a second plaintiff. The amended complaint is brought as
a class action on behalf of all persons who purchased individual
deferred annuity contracts or participated in group annuity contracts
sold by the Company and the other named Company affiliates which were
used to fund certain tax-deferred retirement plans. The amended
complaint seeks unspecified compensatory and punitive damages. No class
has been certified. On June 11, 1999, the Company and the other named
defendants filed a motion to dismiss the amended complaint. On March 8,
2000, the court denied the motion to dismiss the amended complaint
filed by the Company and other named defendants. The Company intends to
defend this lawsuit vigorously.
(14) Segment Information
The Company uses differences in products as the basis for defining its
reportable segments. The Company reports three product segments:
Variable Annuities, Fixed Annuities and Life Insurance.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The Variable Annuities segment consists of annuity contracts that
provide the customer with access to a wide range of investment options,
tax-deferred accumulation of savings, asset protection in the event of
an untimely death, and flexible payout options including a lump sum,
systematic withdrawal or a stream of payments for life. The Company's
variable annuity products consist almost entirely of flexible premium
deferred variable annuity contracts.
The Fixed Annuities segment consists of annuity contracts that generate
a return for the customer at a specified interest rate fixed for a
prescribed period, tax-deferred accumulation of savings, and flexible
payout options including a lump sum, systematic withdrawal or a stream
of payments for life. Such contracts consist of single premium deferred
annuities, flexible premium deferred annuities and single premium
immediate annuities. The Fixed Annuities segment includes the fixed
option under variable annuity contracts.
The Life Insurance segment consists of insurance products, including
variable universal life insurance and corporate-owned life insurance
products, that provide a death benefit and may also allow the customer
to build cash value on a tax-deferred basis.
In addition to the product segments, the Company reports corporate
revenue and expenses, investments and related investment income
supporting capital not specifically allocated to its product segments,
revenues and expenses of its investment advisor subsidiary, revenues
and expenses related to group annuity contracts sold to Nationwide
Insurance employee and agent benefit plans and all realized gains and
losses on investments in a Corporate and Other segment.
During 1999 the Company revised the allocation of net investment income
among its Life Insurance and Corporate and Other segments. Also,
certain amounts previously reported as other income were reclassified
to operating expense. Amounts reported for prior periods have been
restated to reflect these changes.
The following table summarizes the financial results of the Company's
business segments for the years ended December 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
(in millions) Annuities Annuities Insurance and Other Total
------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1999:
Net investment income (1) $ (41.5) $ 1,134.5 $ 253.1 $ 174.7 $ 1,520.8
Other operating revenue 668.2 43.4 393.0 77.8 1,182.4
--------- --------- -------- -------- ---------
Total operating revenue (2) 626.7 1,177.9 646.1 252.5 2,703.2
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 837.5 130.5 128.3 1,096.3
Amortization of deferred policy
acquisition costs 162.8 49.7 60.1 -- 272.6
Other benefits and expenses 173.6 113.5 334.7 94.4 716.2
--------- --------- -------- -------- ---------
Total expenses 336.4 1,000.7 525.3 222.7 2,085.1
--------- --------- -------- -------- ---------
Operating income before
federal income tax 290.3 177.2 120.8 29.8 618.1
Realized losses on investments -- -- -- (11.6) (11.6)
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 290.3 $ 177.2 $ 120.8 $ 18.2 $ 606.5
========= ========= ======== ======== =========
Assets as of year end $62,599.7 $17,134.8 $6,616.7 $6,324.7 $92,675.9
========= ========= ======== ======== =========
</TABLE>
<PAGE> 26
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
(in millions) Annuities Annuities Insurance and Other Total
------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1998:
Net investment income (1) $ (31.3) $ 1,116.6 $ 225.6 $ 170.7 $ 1,481.6
Other operating revenue 532.9 35.7 318.5 78.6 965.7
--------- --------- -------- -------- ---------
Total operating revenue (2) 501.6 1,152.3 544.1 249.3 2,447.3
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 828.6 115.4 125.0 1,069.0
Amortization of deferred policy
acquisition costs 123.9 44.2 46.4 -- 214.5
Other benefits and expenses 159.3 104.2 293.5 78.1 635.1
--------- --------- -------- -------- ---------
Total expenses 283.2 977.0 455.3 203.1 1,918.6
--------- --------- -------- -------- ---------
Operating income before federal
income tax 218.4 175.3 88.8 46.2 528.7
Realized gains on investments -- -- -- 28.4 28.4
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 218.4 $ 175.3 $ 88.8 $ 74.6 $ 557.1
========= ========= ======== ======== =========
Assets as of year end $47,668.7 $15,215.7 $5,187.6 $6,270.1 $74,342.1
========= ========= ======== ======== =========
1997:
Net investment income (1) $ (26.8) $ 1,098.2 $ 184.9 $ 152.9 $ 1,409.2
Other operating revenue 413.9 43.2 283.4 56.6 797.1
--------- --------- -------- -------- ---------
Total operating revenue (2) 387.1 1,141.4 468.3 209.5 2,206.3
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 823.4 78.5 114.7 1,016.6
Amortization of deferred policy
acquisition costs 87.8 39.8 39.6 -- 167.2
Benefits and expenses 148.4 108.7 283.5 63.1 603.7
--------- --------- -------- -------- ---------
Total expenses 236.2 971.9 401.6 177.8 1,787.5
--------- --------- -------- -------- ---------
Operating income before federal
income tax 150.9 169.5 66.7 31.7 418.8
Realized gains on investments -- -- -- 11.1 11.1
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 150.9 $ 169.5 $ 66.7 $ 42.8 $ 429.9
========= ========= ======== ======== =========
Assets as of year end $35,278.7 $14,436.3 $3,901.4 $6,174.3 $59,790.7
========= ========= ======== ======== =========
</TABLE>
- ----------
(1) The Company's method of allocating net investment income results in
a charge (negative net investment income) to the Variable Annuities
segment which is recognized in the Corporate and Other segment. The
charge relates to non-invested assets which support this segment on
a statutory basis.
(2) Excludes realized gains and losses on investments.
The Company has no significant revenue from customers located outside
of the United States nor does the Company have any significant
long-lived assets located outside the United States.
<PAGE> 96
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Financial statements included in
Prospectus (Part A):
Condensed Financial Information
(2) Financial statements included in Part B:
Those financial statements required by Item 23 to be included
in Part B have been incorporated therein by reference to the
Prospectus (Part A).
NACo Variable Account:
Independent Auditors' Report.
Statements of Assets, Liabilities
and Contract Owners' Equity as of
December 31, 1999.
Statements of Operations for the years ended December 31,
1999, and 1998.
Statements of Changes in Contract Owners' Equity for the
years ended December 31, 1999 and 1998.
Notes to Financial Statements.
. Nationwide Life Insurance Company and Subsidiaries:
Independent Auditors' Report.
Consolidated Balance Sheets as of December 31, 1999 and 1998.
Consolidated Statements of Income for the years ended
December 31, 1999, 1998 and 1997.
Consolidated Statements of Shareholder's Equity for the years
ended December 31, 1999, 1998 and 1997.
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
<PAGE> 97
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of Directors authorizing the
establishment of the Registrant, adopted September 7, 1988 - Filed
previously with pre-effective Amendment No. 1 to the registration
statement (File No. 33-33425), and hereby incorporated by reference.
(2) Not Applicable
(3) Attached hereto.
(4) The form of the variable annuity contract - Filed previously with
pre-effective Amendment No.1 to the registration statement (file No.
33-33425), and hereby incorporated by reference.
(5) Variable Annuity Application - Filed previously with pre-effective
Amendment No.1 to the registration statement (file No. 33-33425), and
hereby incorporated by reference.
(6) Articles of Incorporation of Depositor. - Filed previously with
pre-effective Amendment No. 1 to the registration statement (File No.
33-33425), and hereby incorporated by reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed previously with pre-effective Amendment No.
1 to the registration statement (File No. 33-33425), and hereby
incorporated by reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Performance Advertising Calculation Schedule - Filed previously with
pre-effective Amendment No. 1 to the registration statement (File No.
33-33425), and hereby incorporated by reference.
<PAGE> 98
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olive, NC 28365-6107
A. I. Bell Director
4121 North River Road West
Zanesville, OH 43701
Kenneth D. Davis Director
7229 Woodmansee Road
Leesburg, OH 45135
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
301 East Marshall Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Dimon R. McFerson Chairman and Chief Executive Officer
One Nationwide Plaza and Director
Columbus, OH 43215
David O. Miller Chairman of the Board and Director
115 Sprague Drive
Hebron, OH 43025
Yvonne L. Montgomery Director
Xerox Corporation
Suite 200
1401 H Street NW
Washington, DC 20005-2110
Ralph M. Paige Director
Federation of Southern
Cooperatives/Land Assistance Fund
2769 Church Street
East Point, GA 30344
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
</TABLE>
<PAGE> 99
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
1767D Westwood Avenue
Alliance, OH 44601
Richard D. Headley Executive Vice President - Chief
One Nationwide Plaza Information Technology Officer
Columbus, OH 43215
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
Robert J. Woodward, Jr. Executive Vice President
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
James E. Brock Senior Vice President - Corporate
One Nationwide Plaza Development
Columbus, OH 43215
Charles A. Bryan Senior Vice President -
One Nationwide Plaza Chief Actuary - Property and Casualty
Columbus, OH 43215
John R. Cook, Jr. Senior Vice President -
One Nationwide Plaza Chief Communications Officer
Columbus, OH 43215
David A. Diamond Senior Vice President -
One Nationwide Plaza Corporate Controller
Columbus, OH 43215
Philip C. Gath Senior Vice President -
One Nationwide Plaza Chief Actuary - Nationwide Financial
Columbus, OH 43215
Patricia R. Hatler Senior Vice President,
One Nationwide Plaza General Counsel and Secretary
Columbus, OH 43215
</TABLE>
<PAGE> 100
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
David K. Hollingsworth Senior Vice President
One Nationwide Plaza
Columbus, OH 43215
David R. Jahn Senior Vice President -
One Nationwide Plaza Commercial Insurance
Columbus, OH 43215
Donna A James Senior Vice President - Chief Human
One Nationwide Plaza Resources Officer
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Gregory S. Lashutka Senior Vice President -
One Nationwide Plaza Corporate Relations
Columbus, OH 43215
Edwin P. McCausland, Jr. Senior Vice President -
One Nationwide Plaza Fixed Income Securities
Columbus, OH 43215
Mark D. Phelan Senior Vice President -
One Nationwide Plaza Technology Services
Columbus, OH 43215
Douglas C. Robinette Senior Vice President -
One Nationwide Plaza Claims and Finance Services
Columbus, OH 43215
Mark R. Thresher Senior Vice President -
One Nationwide Plaza Finance - Nationwide Financial
Columbus, OH 43215
Richard M. Waggoner Senior Vice President -
One Nationwide Plaza Operations
Columbus, OH 43215
Susan A. Wolken Senior Vice President - Product
One Nationwide Plaza Management and Nationwide
Columbus, OH 43215 Financial Marketing
</TABLE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT.
* Subsidiaries for which separate financial statements are filed
** Subsidiaries included in the respective consolidated financial
statements
*** Subsidiaries included in the respective group financial
statements filed for unconsolidated subsidiaries
**** other subsidiaries
<PAGE> 101
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The 401(k) Companies, Inc. Texas Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
The 401(k) Company Texas Third-party administrator for 401(k)
plans
- -----------------------------------------------------------------------------------------------------------------------------------
401(k) Investment Advisors, Inc. Texas Investment advisor registered with the
SEC
- -----------------------------------------------------------------------------------------------------------------------------------
401(k) Investments Services, Inc. Texas NASD registered broker-dealer
- -----------------------------------------------------------------------------------------------------------------------------------
Affiliate Agency, Inc. Delaware Insurance agency marketing life
insurance & annuity products through
financial institutions
- -----------------------------------------------------------------------------------------------------------------------------------
Affiliate Agency of Ohio, Inc. Ohio Insurance agency marketing life
insurance & annuity products through
financial institutions
- -----------------------------------------------------------------------------------------------------------------------------------
AID Finance Services, Inc. Iowa Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIED General Agency Company Iowa Managing general agent and surplus
lines broker for property & casualty
insurance products
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIED Group, Inc. Iowa Property & casualty holding company
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIED Group Insurance Marketing Iowa Direct marketer for property and
Company casualty insurance products
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIED Group Merchant Banking Iowa Broker-Dealer
Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIED Property and Casualty Insurance Iowa Underwrites general property &
Company casualty insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Allnations, Inc. Ohio Promotes international cooperative
insurance organizations
- -----------------------------------------------------------------------------------------------------------------------------------
AMCO Insurance Company Iowa Underwrites general property &
casualty insurance
- -----------------------------------------------------------------------------------------------------------------------------------
American Marine Underwriters, Inc. Florida Underwriting manager for ocean cargo
and bulk insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Auto Direkt Insurance Company Germany Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
Cal-Ag Insurance services, Inc. California Captive insurance brokerage firm
- -----------------------------------------------------------------------------------------------------------------------------------
CalFarm Insurance Agency California Former marketing company for
traditional agent producers of CalFarm
Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
CalFarm Insurance Company California Multi-line insurance company
- -----------------------------------------------------------------------------------------------------------------------------------
Caliber Funding Delaware A limited purpose corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Colonial County Mutual Insurance Texas Insurance Company
Company
- -----------------------------------------------------------------------------------------------------------------------------------
Columbus Insurance Brokerage and Germany General service insurance broker
Service GmbH
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 102
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cooperative Service Company Nebraska Insurance agency that sells and
services commercial insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Depositors Insurance Company Iowa Underwrites property & casualty
insurance
- -----------------------------------------------------------------------------------------------------------------------------------
eNationwide, LLC Ohio A limited liability company to provide
administrative services to
Nationwide's direct operations
- -----------------------------------------------------------------------------------------------------------------------------------
Excaliber Funding Corporation Delaware Limited purpose corporation
- -----------------------------------------------------------------------------------------------------------------------------------
F&B, Inc. Iowa Insurance Agency
- -----------------------------------------------------------------------------------------------------------------------------------
Farmland Mutual Insurance Company Iowa Mutual Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Horizons Distributors Agency Alabama Insurance agency marketing life
of Alabama, Inc. insurance and annuity products through
financial institutions
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Horizons Distributors Agency Ohio Insurance marketing life insurance and
of Ohio, Inc. annuity products through financial
institutions
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Horizons Distributors Agency Oklahoma Insurance marketing life insurance and
of Oklahoma, Inc. annuity products through financial
institutions
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Horizons Distributors Agency Texas Insurance marketing life insurance and
of Texas, Inc. annuity products through financial
institutions
- -----------------------------------------------------------------------------------------------------------------------------------
*Financial Horizons Investment Trust Massachusetts Diversified, open-end investment
company
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Horizons Securities Oklahoma Limited broker-dealer doing business
Corporation solely in the financial institution
market
- -----------------------------------------------------------------------------------------------------------------------------------
GatesMcDonald Health Plus Inc. Ohio Managed Care Organization
- -----------------------------------------------------------------------------------------------------------------------------------
Gates, McDonald & Company Ohio Services employers for managing
workers' and unemployment compensation
matters
- -----------------------------------------------------------------------------------------------------------------------------------
Gates, McDonald & Company of Nevada Nevada Self-insurance administration, claims
examinations and data processing
services
- -----------------------------------------------------------------------------------------------------------------------------------
Gates, McDonald & Company of New York Workers' compensation/self-insured
New York, Inc. claims administration services to
employers with exposure in New York
- -----------------------------------------------------------------------------------------------------------------------------------
Insurance Intermediaries, Inc. Ohio Insurance agency providing commercial
property & casualty brokerage services
- -----------------------------------------------------------------------------------------------------------------------------------
Irvin L. Schwartz and Associates, Inc. Ohio Insurance Agency
- -----------------------------------------------------------------------------------------------------------------------------------
Landmark Financial Services of New New York Insurance agency marketing life
York, Inc. insurance and annuity products through
financial institutions
- -----------------------------------------------------------------------------------------------------------------------------------
Leben Direkt Insurance Company Germany Life insurance through direct mail
</TABLE>
<PAGE> 103
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lone Star General Agency, Inc. Texas General agent to market non-standard
automobile and motorcycle insurance
for Colonial Mutual Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
MedProSolutions, Inc. Massachusetts Provides third-party administration
services for workers compensation,
automobile injury and disability claim
- -----------------------------------------------------------------------------------------------------------------------------------
Midwest Printing Services, Ltd. Iowa General printing services
- -----------------------------------------------------------------------------------------------------------------------------------
Morley & Associates, Inc. Oregon Insurance brokerage
- -----------------------------------------------------------------------------------------------------------------------------------
Morley Capital Management, Inc. Oregon Investment adviser and stable value
money management
- -----------------------------------------------------------------------------------------------------------------------------------
Morley Financial Services, Inc. Oregon Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Morley Research Associates, Ltd. Delaware Credit research consulting
- -----------------------------------------------------------------------------------------------------------------------------------
**MRM Investments, Inc. Ohio Owns and operates a recreational ski
facility
- -----------------------------------------------------------------------------------------------------------------------------------
**National Casualty Company Wisconsin Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
National Casualty Company of America, England Insurance Company
Ltd.
- -----------------------------------------------------------------------------------------------------------------------------------
National Deferred Compensation, Inc. Ohio Administers deferred compensation
plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
**National Premium and Benefit Delaware Provides third-party administration
Administration Company services
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Advisory Services, Inc. Ohio Registered broker-dealer providing
investment management and
administrative services
- -----------------------------------------------------------------------------------------------------------------------------------
**Nationwide Agency, Inc. Ohio Insurance Agency
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Agribusiness Insurance Iowa Provides property & casualty insurance
Company primarily to agricultural business
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Arena, LLC Ohio A limited liability company related to
arena development
- -----------------------------------------------------------------------------------------------------------------------------------
*Nationwide Asset Allocation Trust Ohio Diversified open-end investment compan
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Assurance Company Wisconsin Underwrites non-standard automobile
and motorcycle insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Cash Management Company Ohio Investment Securities Agent
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 104
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nationwide Corporation Ohio Holding company for entities
affiliated with Nationwide Mutual
Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Exclusive Distribution Ohio A limited liability company providing
Company, LLC agency support services to Nationwide
exclusive agents
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Assignment Company Ohio An assignment company to administer
structured settlement business
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Institution New Mexico Insurance Agency
Distributors Agency, Inc. of New Mexico
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Institution Massachusetts Insurance Agency
Distributors Agency, Inc. of
Massachusetts
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Services Bermuda Long-term insurer which issued
(Bermuda) Ltd. variable annuity and variable life
products to persons outside the U.S. &
Bermuda
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Services Capital Delaware Trust which issues and sells
Trust securities & uses proceeds to acquire
debentures
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Services Capital Delaware Trust which issues and sells
Trust II securities & uses proceeds to acquire
debentures
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Services, Inc. Delaware Holding Company for entities
associated with Nationwide Mutual
Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Foundation Ohio Not-for profit corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide General Insurance Company Ohio Primarily provides automobile and fire
insurance to select customers
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Global Finance, LLC Ohio Act as a support company for
Nationwide Global Holdings, Inc. & its
international capitalization efforts
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Global Funds Cayman Islands Exempted company with limited
liability for purpose of issuing
investment shares to segregated asset
accounts of Nationwide Financial
Services (Bermuda) Ltd. and to
non-U.S. resident investors
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Global Holdings, Inc. Ohio Holding Company for Nationwide
Insurance Enterprise international
operations
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Global Holdings, Inc.-NGH Grand Duchy of Analyze European market of life
Luxembourg Branch Luxembourg insurance
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 105
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nationwide Global Holdings-Hong Kong, Hong Kong Primarily a holding company for
Limited Nationwide Global Holdings, Inc. Asian
operations
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Global Holdings-NGH Brasil Brazil Holding company
Participacoes LTDA
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Health Plans, Inc. Ohio Health insuring organization
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Home Mortgage Company Iowa Mortgage lendor
- -----------------------------------------------------------------------------------------------------------------------------------
*Nationwide Indemnity Company Ohio Reinsurance company assuming business
from Nationwide Mutual Insurance
Company and other insurers within the
Nationwide Insurance Enterprise
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Insurance Company of America Wisconsin Independent agency personal lines
underwriter of property & casualty
insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Insurance Company of Florida Ohio Transacts general insurance business
except life insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Insurance Golf Ohio Not-for-profit corporation
Charities, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide International Underwriters California Special risks, excess & surplus lines
underwriting manager
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Investing Foundation Michigan Provide investors with continuous
source of investment under management
of trustees
- -----------------------------------------------------------------------------------------------------------------------------------
*Nationwide Investing Foundation II Massachusetts Diversified, open-end investment
company
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Investment Services Oklahoma Registered broker-dealer
Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
- -----------------------------------------------------------------------------------------------------------------------------------
**Nationwide Life and Annuity Ohio Life Insurance Company
Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
**Nationwide Life Insurance Company Ohio Life Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Lloyds Texas Commercial property insurance in Texas
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Management Systems, Inc. Ohio Preferred provider organization,
products and related services
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Mutual Fire Insurance Ohio Mutual Insurance Company
Company
- -----------------------------------------------------------------------------------------------------------------------------------
*Nationwide Mutual Funds Ohio Diversified, open-end investment
company
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Mutual Insurance Company Ohio Mutual Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 106
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nationwide Properties, Ltd. Ohio Develop, own and operate real estate
and real estate investments
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Realty Investors, Inc. Ohio Develop, own and operate real estate
and real estate investments
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Delaware Market and administer deferred
compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Alabama Market and administer deferred
of Alabama compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Arizona Market and administer deferred
of Arizona compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Arkansas Market and administer deferred
of Arkansas compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Montana Market and administer deferred
of Montana compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Nevada Market and administer deferred
of Nevada compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. New Mexico Market and administer deferred
of New Mexico compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Ohio Market variable annuity contracts to
of Ohio members of the National Education
Association in the state of Ohio
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Oklahoma Market variable annuity contracts to
of Oklahoma members of the National Education
Association in the state of Oklahoma
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. South Dakota Market and administer deferred
of South Dakota compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Texas Market and administer deferred
of Texas compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Retirement Solutions, Inc. Wyoming Market variable annuity contracts to
of Wyoming members of the National Education
Association in the state of Wyoming
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 107
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Nationwide Retirement Solutions Massachusetts Market and administer deferred
Insurance Agency Inc. compensation plans for public employees
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Seguradora S.A. Brazil Engage in elementary, health & life
insurance; private open pension and
wealth concession plans
- -----------------------------------------------------------------------------------------------------------------------------------
*Nationwide Separate Account Trust Massachusetts Diversified, open-end investment
company
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Services Company, LLC. Ohio Single member limited liability
company performing shared services
functions for the Nationwide Insurance
Enterprise
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Trust Company, FSB United States Federal savings bank chartered by the
Office of Thrift Supervision in U.S.
Department of Treasury to exercise
custody & fiduciary powers
- -----------------------------------------------------------------------------------------------------------------------------------
Neckura Holding Company Germany Administrative services for Neckura
Insurance Group
- -----------------------------------------------------------------------------------------------------------------------------------
Neckura Insurance Company Germany Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
Neckura Life Insurance Company Germany Life and health insurance company
- -----------------------------------------------------------------------------------------------------------------------------------
Nevada Independent Nevada Workers' compensation administrative
Companies-Construction services to Nevada employers in the
construction industry
- -----------------------------------------------------------------------------------------------------------------------------------
Nevada Independent Companies-Health Nevada Workers' compensation administrative
and Nonprofit services to Nevada employers in health
& nonprofit industries
- -----------------------------------------------------------------------------------------------------------------------------------
Nevada Independent Companies- Nevada Workers' compensation administrative
Hospitality and Entertainment services to Nevada employers in the
hospitality & entertainment industries
- -----------------------------------------------------------------------------------------------------------------------------------
Nevada Independent Companies- Nevada Workers' compensation administrative
Manufacturing, Transportation and services to Nevada employers in the
Distribution manufacturing, transportation and
distribution industries
- -----------------------------------------------------------------------------------------------------------------------------------
NFS Distributors, Inc. Delaware Holding company for Nationwide
Financial Services, Inc. distribution
companies
- -----------------------------------------------------------------------------------------------------------------------------------
NGH Luxembourg, S.A Luxembourg Acts primarily as holding company for
Nationwide Global Holdings, Inc.
European operations
- -----------------------------------------------------------------------------------------------------------------------------------
NGH Netherlands, B.V. The Netherlands Holding company for other overseas
companies
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 108
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NGH UK, Ltd. United Kingdom Assist Nationwide Global Holdings,
Inc. with European operations and
marketing
- -----------------------------------------------------------------------------------------------------------------------------------
Northpointe Capital LLC Delaware Limited liability company for
investments
- -----------------------------------------------------------------------------------------------------------------------------------
PanEuroLife Luxembourg Life Insurance company providing
individual life insurance primarily in
the UK, Belgium and France
- -----------------------------------------------------------------------------------------------------------------------------------
Pension Associates, Inc. Wisconsin Pension plan administration and record
keeping services
- -----------------------------------------------------------------------------------------------------------------------------------
Portland Investment Services, Inc. Oregon NASD registered broker-dealer
- -----------------------------------------------------------------------------------------------------------------------------------
Premier Agency, Inc. Iowa Insurance Agency
- -----------------------------------------------------------------------------------------------------------------------------------
Riverview Agency, Inc. Texas Has a pending application to become a
licensed insurance agency with the
Texas Department of Insurance
- -----------------------------------------------------------------------------------------------------------------------------------
Scottsdale Indemnity Company Ohio Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
Scottsdale Insurance Company Ohio Insurance Company
- -----------------------------------------------------------------------------------------------------------------------------------
Scottsdale Surplus Lines Insurance Arizona Provides excess and surplus lines
Company insurance coverage on a non-admitted
basis
- -----------------------------------------------------------------------------------------------------------------------------------
SVM Sales GmbH, Neckura Insurance Group Germany Recruits and supervises external sales
partners who obtain new business for
the Neckura Group as well as to offer
financial services
- -----------------------------------------------------------------------------------------------------------------------------------
Union Bond & Trust Company Oregon Oregon state bank with trust powers
- -----------------------------------------------------------------------------------------------------------------------------------
Villanova Capital, Inc. Delaware Holding Company
- -----------------------------------------------------------------------------------------------------------------------------------
Villanova Mutual Fund Capital Trust Delaware Trust designed to act as a registered
investment advisor
- -----------------------------------------------------------------------------------------------------------------------------------
Villanova SA Capital Trust Delaware Trust designed to act as a registered
investment advisor
- -----------------------------------------------------------------------------------------------------------------------------------
Western Heritage Insurance Company Arizona Underwrites excess and surplus lines
of property and casualty insurance
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 109
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide DC Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide DCVA-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-9 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
* Nationwide Variable Account-10 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
Nationwide Variable Account-11 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 110
<TABLE>
<CAPTION>
(left side)
<S> <C> <C> <C>
- ------------------------
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
- ------------------------
-------------------------------------------------------------------------------------------------------------------------
| |
- --------------------------- --------------------------- ----------------------------
| ALLIED GROUP | | ALLIED | | |
| MERCHANT BANKING | | GROUP, INC. | | |
| CORPORATION | | (AGI) | | NATIONWIDE LLOYDS |
| | | | | |
|Common Stock: 10,000 | |-------|Common Stock: 850 Shares |---| | |
|------------ Shares | | |------------ | | | A TEXAS LLOYDS |================================
| | | | | | | |
| Cost | | | Cost | | | |
| ---- | | | ---- | | | |
|Casualty- | | |Casualty- | | | |
|100% $150,055 | | |100% $243,344,521 | | | |
- --------------------------- | --------------------------- | ----------------------------
| |
- --------------------------- | --------------------------- | ----------------------------
| NATIONWIDE INSURANCE | | | AMCO | | | DEPOSITORS |
| COMPANY OF AMERICA | | | INSURANCE COMPANY | | | INSURANCE COMPANY |
| | | | (AMCO) | | | (DEPOSITORS) |
|Common Stock: 12,000 | | |Common Stock: 500,000 | | |Common Stock: 300,000 |
|------------ Shares | | |------------ Shares | | |------------ Shares |
| |---| | |---|---| |
| Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- |
| | | | | | | |
|AGI-100% $215,273,000 | | |AGI-100% $147,425,540| | |AGI 100% $22,251,842 |
- --------------------------- | --------------------------- | ----------------------------
| | |
- --------------------------- | --------------------------- | ----------------------------
| AID FINANCE | | | ALLIED | | | ALLIED PROPERTY |
| SERVICES, INC. | | | GENERAL AGENCY | | | AND CASUALTY |
| (AID FINANCE) | | | COMPANY | | | INSURANCE COMPANY |
|Common Stock: 10,000 | | |Common Stock: 5,000 | | |Common Stock: 300,000 |
|------------ Shares | | |------------ Shares | | |------------ Shares |
| |---| | | |---| |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|AGI-100% $19,545,634| |AMCO-100% $135,342 | | |AGI-100% $47,018,643 |
- --------------------------- --------------------------- | ----------------------------
| |
- --------------------------- --------------------------- | ----------------------------
| ALLIED | | MIDWEST | | | NATIONWIDE |
| GROUP INSURANCE | | PRINTING SERVICES, | | | HOME MORTGAGE |
| MARKETING COMPANY | | LTD. | | | COMPANY (NHMC) |
| | |Common Stock: 10,000 | | | |
|Common Stock: 20,000 | |------------ Shares | | |Common Stock: 54,348 |
|------------ Shares | | |---|---|------------ Shares |
| | | | | | |
| | | | | | |
| | | | | | |
| Cost | | Cost | | | |
| ---- | | ---- | | | |
| Aid | |AGI-100% $610,000 | | |AGI-80% |
| Finance-100% $16,059,469| --------------------------- | ----------------------------
- -------------------------- | |
--------------------------- | ----------------------------
| PREMIER | | | AGMC |
| AGENCY, | | | REINSURANCE, LTD. |
| INC. | | | |
|Common Stock: 100,000 | | |Common Stock: 11,000 |
|------------ Shares | | |------------ Shares |
| |---| | |
| Cost | | Cost |
| ---- | | ---- |
|AGI-100% $100,000 | |NHMC-100% $11,000 |
--------------------------- ----------------------------
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
NATIONWIDE(R) (middle)
<S> <C> <C>
------------------------------------------ ------------------------------------------
| | | |
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |==============================================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
| | | |
------------------------------------------ ------------------------------------------
| || | |
- --| || |--------------------------------------------------------------------| |-----------------------
|| |
|| |--------------------------------------------------------------|-------------------
|| | |
|| -------------------------------- | -------------------------------- -----------------------------------
|| | FARMLAND MUTUAL | | | NATIONWIDE GENERAL | | NECKURA HOLDING |
|| | INSURANCE COMPANY | | | INSURANCE COMPANY | | COMPANY (NECKURA) |
|| |Guaranty Fund | | | | | |
=====||==|------------ |---| | |Common Stock: 20,000 | |Common Stock: 10,000 |
|Certificate | | |---|------------ Shares | |--|------------ Shares |
|----------- | | | | | | | |
| Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | | ---- |
|Casualty $500,000 | | | |Casualty-100% $5,944,422 | | |Casualty-100% $142,943,140 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| F & B, INC. | | | | NATIONWIDE PROPERTY | | | NECKURA |
| | | | | AND CASUALTY | | | INSURANCE COMPANY |
|Common Stock: 1 Share | | | | INSURANCE COMPANY | | | |
|------------ | | | |Common Stock: 60,000 | |--|Common Stock: 6,000 |
| |---| |---|------------ Shares | | |------------ Shares |
| Cost | | | | | | | |
| ---- | | | | Cost | | | Cost |
|Farmland | | | | ---- | | | ---- |
|Mutual-100% $10 | | | |Casualty-100% $6,000,000 | | |Neckura-100% DM 6,000,000 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| COOPERATIVE SERVICE | | | | NATIONWIDE ASSURANCE | | | NECKURA LIFE |
| COMPANY | | | | COMPANY | | | INSURANCE COMPANY |
|Common Stock: 600 Shares | | | | | | | |
|------------ |---- |---|Common Stock: 1,750 | |--|Common Stock: 4,000 |
| | | |------------ Shares | | |------------ Shares |
| Cost | | | | |
| ---- | | | Cost | | | Cost |
|Farmland | | | ---- | | | ---- |
|Mutual-100% $3,506,173 | | |Casualty-100% $41,750,000 | | |Neckura-100% DM 15,825,681|
-------------------------------- | -------------------------------- | --------------------------------
| |
-------------------------------- | -------------------------------- | --------------------------------
| SCOTTSDALE | | | NATIONWIDE AGRIBUSINESS | | | COLUMBUS INSURANCE |
| INSURANCE COMPANY | | | INSURANCE COMPANY | | | BROKERAGE AND SERVICE |
| (SIC) | | | | | | GmbH |
|Common Stock: 30,136 | | |Common Stock: 1,000,000 | | |Common Stock: 1 Share |
|---|------------ Shares |--------|---|------------ Shares | |--|------------ |
| | | | | | | | |
| | | | | Cost | | | Cost |
| | Cost | | | ---- | | | ---- |
| | ---- | | |Casualty-99.9% $26,714,335 | | |Neckura-100% DM 51,639 |
| |Casualty-100% $150,000,500 | | |Other Capital | | | |
| | | | |------------- | | | |
| | | | |Casualty-Ptd. $713,576 | | | |
| -------------------------------- | ------------------------------- | --------------------------------
| | |
| -------------------------------- | -------------------------------- | --------------------------------
| | SCOTTSDALE | | | NATIONAL CASUALTY | | | LEBEN DIREKT |
| | SURPLUS LINES | | | COMPANY | | | INSURANCE COMPANY |
| | INSURANCE COMPANY | | | (NC) | | | |
| |Common Stock: 10,000 | | | Common Stock: 100 Shares | | |Common Stock: 4,000 Shares |
|---|------------ Shares | ----| ------------- | |--|------------ |
| | | | | | | |
| | Cost | | Cost | | | Cost |
| | ---- | | ---- | | | ---- |
| |SIC-100% $6,000,000 | |Casualty-100% $67,442,439 | | |Neckura-100% DM 4,000,000 |
| | | | | | | |
| -------------------------------- -------------------------------- | --------------------------------
| | |
| -------------------------------- -------------------------------- | --------------------------------
| | NATIONAL PREMIUM & | | NCC OF AMERICAN, LTD. | | | AUTO DIREKT |
| | BENEFIT ADMINISTRATION | | (INACTIVE) | | | INSURANCE COMPANY |
| | COMPANY | | | | | |
| |Common Stock: 10,000 | | | | |Common Stock: 1500 Shares |
|---|------------ Shares | | | |--|------------ |
| | | | | | | |
| | Cost | | | | | Cost |
| | ---- | | | | | ---- |
| |SIC-100% $10,000 | |NC-100% | | |Neckura-100% DM 1,643,149 |
| -------------------------------- -------------------------------- | --------------------------------
| |
| -------------------------------- -------------------------------- | --------------------------------
| | WESTERN . | | SUN DIRECT | | | SVM SALES |
| | HERITAGE INSURANCE | | VERSICHERUNGS - | | | GmbH |
| | COMPANY | | AKTIENGESCLISCHAFT | | | |
| |Common Stock: 4,776,076 | |Common Stock: 1 Share | | |Common Stock: 50 Shares |
|---|------------ Shares | |------------ |------------| |
| | | | | |
| Cost | | Cost | | Cost |
| ---- | | ---- | | ---- |
|SIC-100% $57,000,000 | |Neckura-100% $9,600,000 | |Neckura-100% DM 50,000 |
| | | EURO | | |
-------------------------------- -------------------------------- --------------------------------
</TABLE>
<PAGE> 112
<TABLE>
<CAPTION>
(right side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE |
| FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
------------------------
- ---------------------------------------------------------------------------------------------------------------------|
|
- --------------------------------------------------------------------------------------------------------------- |
| | | |
| | | |
-------------------------------- -------------------------------- | -------------------------------------
| SCOTTSDALE | | NATIONWIDE | | | NATIONWIDE |
| INDEMNITY COMPANY | | COMMUNITY URBAN | | | CORPORATION |
| | | REDEVELOPMENT | | | |
| | | CORPORATION | | |Common Stock: Control: |
|Common Stock: 50,000 | |Common Stock: 10 Shares | | |------------ ------- |
|-----|------------ Shares | |----|------------ | | |$13,642,432 100% |
| | | | | Cost | | | Shares Cost |
| | Cost | | | ---- | | | ------ ---- |
| | ---- | | |Casualty-100% $1,000 | | |Casualty 12,992,922 $1,008,497,908 |
| |Casualty-100% $8,800,000 | | | | | |Fire 649,510 36,862,514 |
| | | | | | | | (See Page 2) |
| -------------------------------- | -------------------------------- | -------------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | NATIONWIDE | | | NATIONWIDE CASH | | | ALLNATIONS, INC. |
| | INDEMNITY COMPANY | | | MANAGEMENT COMPANY | | |Common Stock: 12,167 Shares |
| | | | | | | |------------- Cost |
|-----|Common Stock: 28,000 | |----|Common Stock: 100 Shares | |-----| ---- |
| |------------ Shares | | |------------ | | |Casualty-18.6% $90,630 |
| | | | | Cost | | |Fire-18.6% $90,722 |
| | Cost | | | ---- | | |Preferred Stock 1,466 Shares |
| | ---- | | |Casualty-100% $11,226 | | |--------------- Cost |
| |Casualty-100% $594,529,000 | | | | | | ---- |
| | | | | | | |Casualty-6.8% $100,000 |
| | | | | | | |Fire-6.8% $100,000 |
| -------------------------------- | -------------------------------- | -------------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | LONE STAR | | | NATIONWIDE INSURANCE | | | CALFARM INSURANCE |
| | GENERAL AGENCY, INC. | | | COMPANY OF FLORIDA | | | COMPANY |
| | | | | | | |Common Stock: 49,800 Shares |
------|Common Stock: 1,000 | |----|Common Stock: 10,000 Shares| |-----|------------- |
| |------------ Shares | | |------------ | | |
| | | | | Cost | | |
| | Cost | | | ---- | | |
| | ---- | | |Casualty-100% $300,000,000 | |Casualty-100% |
| |Casualty-100% $5,000,000 | | | | | |
| -------------------------------- | -------------------------------- -------------------------------------
| || | |
| -------------------------------- | -------------------------------- -------------------------------------
| | COLONIAL COUNTY | | | NATIONWIDE INTERNATIONAL | | CALFARM INSURANCE |
| | MUTUAL INSURANCE | | | UNDERWRITERS | | AGENCY |
| | COMPANY | | |Common Stock: 1,000 Shares | | |
| | | |----|------------ | | |
| | | | | | | |
| | | | | Cost | |Common Stock: 1,000 shares |
| |Surplus Debentures: | | | ---- | |------------- |
| |------------------- | | |Casualty-100% $10,000 | | |
| | Cost | | -------------------------------- | |
| | ---- | | | |
| |Colonial $500,000 | | -------------------------------- |CalFarm Insurance |
| |Lone Star 150,000 | | | NATIONWIDE | |Company - 100% |
| -------------------------------- | | ARENA LLC | -------------------------------------
| | | | |
| -------------------------------- | | | -------------------------------------
| | NATIONWIDE SERVICES | | | | | CAL-AG INSURANCE |
| | COMPANY, LLC | | | | | SERVICES |
| | | | | | | |
| |Single Member Limited | |....| | |Common Stock: 1,000 Shares |
|.....|Liability Company | | | | |------------ |
| | | | | | | |
| | | | |Casualty-90% | |CalFarm Insurance |
| |Casualty-100% | | | | |Agency-100% |
| | | | -------------------------------- -------------------------------------
| -------------------------------- |
| | --------------------------------
| | | NATIONWIDE |
| -------------------------------- | | EXCLUSIVE DISTRIBUTION |
| | AMERICAN MARINE | | | COMPANY, LLC (NEDCO) |
| | UNDERWRITERS, INC. | | | |
| | | | | Single Member Limited |
| |Common Stock: 20 Shares | |....| Liability Compnany |
|-----|------------ | | | |
| | Cost | | | |
| | ---- | | |Casualty-100% |
| |Casualty-100% $5,020 | | | |
| | | | --------------------------------
| -------------------------------- | |
| | --------------------------------
| --------------------------------- | | INSURANCE |
| | eNATIONWIDE, LLC | | | INTERMEDIARIES, INC |
| | | | | |
| | Single Member Limited | | |Common Stock 1,615 Shares |
| | Liability Company | |----|------------ |
| | | | Cost |
|.....| | | ---- |
| | |Casualty-100% $1,615,000 |
| | | |
|Casualty-100% | --------------------------------
| |
---------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1999
</TABLE>
Page 1
<PAGE> 113
<TABLE>
<CAPTION>
(Left Side)
<S> <C> <C> <C> <C> <C> <C>
|----------------------------------|-----------------------------------|-----------------------------
| | |
----------------------------- ----------------------------- -----------------------------
| NATIONWIDE LIFE INSURANCE | | NATIONWIDE | | NATIONWIDE TRUST |
| COMPANY (NW LIFE) | | FINANCIAL SERVICES | | COMPANY, FSB |
| | | CAPITAL TRUST | | Common Stock: 2,800,000 |
| Common Stock: 3,814,779 | | Preferred Stock: | | ------------ Shares |
| ------------ Shares | | --------------- | | Cost |
| | | | | ---- |
| NFS--100% | | NFS--100% | | NFS--100% $3,000,000 |
----------------|------------ ----------------------------- -----------------------------
|
| ||--------------------------
- ----------------------------- | ----------------------------- -----------------------------
| NATIONWIDE LIFE AND | | | NATIONWIDE | | NATIONWIDE FINANCIAL |
| ANNUITY INSURANCE COMPANY | | | ADVISORY SERVICES, INC | | INSTITUTION DISTRIBUTORS |
| | | | (NW ADV. SERV.) | | AGENCY, INC. (NFIDAI) |
| Common Stock: 66,000 | | | Common Stock: 7,676 | | |
| ------------ Shares |--|--| ------------ Shares |==== | |
| | | | | || | |
| Cost | | | Cost | || | Common Stock: 1,000 Shares|
| ---- | | | ---- | || | ------------ |
| NW Life-100% $58,070,003 | | | NW Life-100% $5,996,261 | || | NFSDI-100% |
- ----------------------------- | ----------------------------- || --------------|--||----------
| || | ||
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE INVESTMENT | | | NATIONWIDE MUTUAL | || | FINANCIAL HORIZONS | | || | |
| SERVICES CORPORATION | | | FUNDS | || | DISTRIBUTORS AGENCY | | || | |
| | | | | || | OF ALABAMA, INC. | | || | |
| Common Stock: 5,000 | | | OHIO BUSINESS TRUST | || | | | || | FLORIDA |
| ------------ Shares | | | | || | Common Stock: 10,000 | | || | RECORDS |===
| |--| | |==|| | ------------ Shares |-- || | ADMINISTRATOR |
| | | | | || | | | || | |
| Cost | | | | || | Cost | | || | |
| ---- | | | | || | ---- | | || | |
| NW Life-100% $529,728 | | | | || | NFIDAI-100% $100 | | || | |
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| || | ||
- ----------------------------- | ----------------------------- || ------------------------------| || -----------------------
| NATIONWIDE FINANCIAL | | | NATIONWIDE | || | LANDMARK FINANCIAL | | || | |
| ASSIGNMENT | | | SEPARATE ACCOUNT | || | SERVICES OF | | || | |
| COMPANY | | | TRUST | || | NEW YORK, INC. | | || | |
| | | | | || | | | || | |
| | | | | || | Common Stock: 10,000 | | || | FINANCIAL HORIZONS |
| |--| | MASSACHUSETTS |==|| | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | BUSINESS TRUST | || | | | || | OF OHIO, INC. |
| | | | | || | Cost | | || | |
| | | | | || | ---- | | || | |
| NW Life-100% | | | | || | NFIDAI-100% $10,100 | | || | |
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| || | ||
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE REALTY | | | NATIONWIDE | || | FINANCIAL HORIZONS | | || | |
| INVESTORS, LTD. | | | GLOBAL FUND | || | SECURITIES CORP. | | || | |
| | | | | || | | | || | |
| Units: | | | CAYMAN ISLANDS | || | Common Stock: 10,000 | | || | FINANCIAL HORIZONS |
| ------ |--| | EXEMPTED LLC |==|| | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | | || | | | || | OF OKLAHOMA, INC |
| | | | | || | Cost | | || | |
| NW Life-90% | | | | || | ---- | | || | |
| NW Mutual-10% | | | | || | NFIDAI-100% $153,000 | | || | |
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| || | ||
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE | | | NATIONWIDE | || | AFFILIATE AGENCY, INC. | | || | |
| PROPERTIES, LTD. | | | ASSET ALLOCATION TRUST | || | | | || | |
| | | | | || | | | || | |
| Units: |--| | | || | Common Stock: 100 | | || | FINANCIAL HORIZONS |
| ------ | | OHIO BUSINESS TRUST |==== | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | | | | || | OF TEXAS, INC |
| | | | | Cost | | || | |
| NW Life-97.6% | | | | ---- | | || | |
| NW Mutual-2.4% | | | | NFIDAI-100% $100 | | || | |
- ----------------------------- ----------------------------- ----------------------------- | || -----------------------
| ||
----------------------------- | || -----------------------
| NATIONWIDE FINANCIAL | | || | |
| INSTITUTION DISTRIBUTORS | | || | |
| INS. AGENCY, INC. | | || | |
| OF MASS. | | || | AFFILIATE |
| |-- ====| AGENCY OF |
|Common Stock: 100 Shares | | | OHIO, INC |
|------------ | | | |
| | | | |
|NFIDAI-100% | | | |
----------------------------- | -----------------------
----------------------------- |
| NATIONWIDE FINANCIAL | |
| INSTITUTION DISTRIBUTORS | |
| INS. AGENCY, INC. | |
| OF NEW MEXICO |--
| |
|Common Stock: 100 Shares |
|------------ |
| |
|NFIDAI-100% |
-----------------------------
</TABLE>
<PAGE> 114
<TABLE>
<CAPTION>
(Center)
NATIONWIDE(R)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------- --------------------------------------------------
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |================================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | | (FIRE) |
- -------------------------------------------------- | --------------------------------------------------
|
-----------------------------------------
| NATIONWIDE CORPORATION (NW CORP) |
| Common Stock: Control: |
| ------------ ------- |
| 13,642,432 100% |
| Shares Cost |
| ------ ---- |
|Casualty 12,992,922 $1,008,497,908 |
|Fire 649,510 36,862,514 |
-------------------|---------------------
|--------------------------------------------------------------
---------------|-------------
| NATIONWIDE FINANCIAL |
| SERVICES, INC. (NFS) |
| |
|Common Stock: Control: |
|------------ ------- |
| |
| |
|Class A Public--100% |
|Class B NW Corp--100% |
---------------|-------------
|
- -----------|-------------------------|--------------------------|-----------------------------|----------------------|--------------
| | | | |
- -----------|------------ ------------|-------------- -----------|------------- ---------------|--------- ------------|--------------
|NFS DISTRIBUTORS, INC.| | IRVIN L. SCHWARTZ | | NATIONWIDE FINANCIAL | |VILLANOVA CAPITAL, INC.| | NATIONWIDE FINANCIAL |
| (NFSDI) | | AND ASSOCIATES, INC. | |SERVICES (BERMUDA) INC.| |Common Stock: 958,750 | | SERVICES CAPITAL |
| | |Common Stock: Control: | |Common Stock: 250,000 | |------------- Shares | | TRUST II |
| | |------------- -------- | |------------- Shares | |NFS-96% | | |
| | |Class A Other-100%| | Cost | |Preferred Stock:500,000| | |
|NFS-100% | |Class B NFS -100%| | ---- | |--------------- Shares | | |
| | | | |NFS-100% $3,500,000 | |NFS-100% | | NFS-100% |
- -----------|------------ --------------------------- ------------------------- ---------------|--------- -------------------------
| | |
- -----------|---------------------------- -----------------------------|-----------------------|
- -----------|------------ --------------|----------- ------------|------------ --------------|---------- ------------|-------------
| NATIONAL DEFERRED | | NATIONWIDE RETIREMENT | | VILLANOVA S.A. CAPITAL| | MORLEY FINANCIAL | | VILLANOVA MUTUAL FUND |
| COMPENSATION, INC. | | SOLUTIONS, INC. (NRS)| | TRUST (VSA) | |SERVICES, INC. (MORLEY)| | CAPITAL TRUST (VMF) |
| | |Common Stock: 236,494 | | | |Common Stock: 82,343 | | |
| | |------------- Shares | | | |------------ Shares | | |
| | | | | | | | | |
|NFSDI-100% | | | | | |VILLANOVA CAPITAL, INC.| | |
| | |NFSDI-100% | |DELAWARE BUSINESS TRUST| |-100% | |DELAWARE BUSINESS TRUST|
- ----------||------------ -------------------|------ ---------------------|--- ---------------------|--- -------------------------
|| | | |
|| | | -----
|| ---------------------------- | ------------------------- | ------------------------- | ------------------------
|| | NATIONWIDE RETIREMENT | | |NATIONWIDE RETIREMENT | | | NATIONWIDE | | | MORLEY & |
|| |SOLUTIONS, INC. OF ALABAMA| | | SOLUTIONS, INC. OF | | |INVESTORS SERVICES, INC.| | | ASSOCIATES, INC. |
|| | | | | NEW MEXICO | | | | | | |
|| |Common Stock: 10,000 | | | Common Stock: 1,000 | | | Common Stock: 5 Shares | | | Common Stock: 3,500 |
|| |------------- Shares |--|--| ------------- Shares | |--|------------- | |--| ------------- Shares |
============ | Cost | | | Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- | | | ---- |
|NRS-100% $1,000 | | |NRS-100% $1,000 | | |VSA-100% $5,000 | | |Morley-100% $1,000|
---------------------------- | -------------------------- | -------------------------- | ------------------------
| | |
---------------------------- | -------------------------- | -------------------------- | -----------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | | VILLANOVA VALUE | | | EXCALIBER FUNDING |
|SOLUTIONS, INC. OF ARIZONA| | | SOLUTIONS, INC. OF | | | INVESTOR, LLC | | | CORPORATION |
| | | | SO. DAKOTA | | | | | | |
|Common Stock: 1,000 | | |Common Stock: 1,000 | | | | | |Common Stock: 1,000 |
|------------- Shares |--|--|------------- Shares | ...| | |--|------------- Shares |
| Cost | | | Cost | | | | | Cost |
| ---- | | | ---- | | | | | ---- |
|NRS-100% $1,000 | | |NRS-100% $1,000 | | VSA-100% | | |Morley-100% $1,000 |
---------------------------- | -------------------------- -------------------------- | -----------------------
| |
---------------------------- | -------------------------- -------------------------- | ------------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | MORLEY CAPITAL | | | CALIBER FUNDING |
| SOLUTIONS, INC. OF | | | SOLUTIONS, INC. | | MANAGEMENT | | | CORPORATION |
| ARKANSAS | | | OF WYOMING | | | | | |
|Common Stock: 50,000 |-----|Common Stock: 500 Shares| |Common Stock: 500 Shares| | | |
|------------- Shares | | |------------- | |------------- |--|--| |
| Cost | | | Cost | | Cost | | | |
| ---- | | | ---- | | ---- | | | |
|NRS-100% $500 | | |NRS-100% $500 | |Morley-100% $5,000 | | |Morley-100% |
---------------------------- | -------------------------- -------------------------- | ------------------------
| |
---------------------------- | -------------------------- -------------------------- | ------------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | UNION BOND | | | MORLEY RESEARCH |
| SOLUTIONS, INS. | | | SOLUTIONS, INC. | | & TRUST COMPANY | | | ASSOCIATES, LTD. |
| AGENCY, INC. | | | OF OHIO | | | | | |
|Common Stock: 1,000 | | | | |Common Stock: 2,000 | | | Common Stock: 1,000 |
|------------- Shares |--|==| | |------------- Shares |--|--| ------------- Shares |
| | | | | | | | | |
| Cost | | | | | Cost | | | Cost |
| ---- | | | | | ---- | | | ---- |
|NRS-100% $1,000 | | | | | Morley-100% $50,000 | | |Morley-100% $1,000 |
---------------------------- | -------------------------- -------------------------- | ------------------------
| |
---------------------------- | -------------------------- -------------------------- |
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | PORTLAND INVESTMENT | |
|SOLUTIONS, INC. OF MONTANA| | | SOLUTIONS, INC. OF | | SERVICES, INC. | |
| | | | OKLAHOMA | | | |
|Common Stock: 500 | | | | | Common Stock: 1,000 | |
|------------- Shares |--|==| | | ------------- Shares |--
| Cost | | | | | Cost |
| ---- | | | | | ---- |
|NRS-100% $500 | | | | | Morley-100% $25,000 |
---------------------------- | -------------------------- --------------------------
|
---------------------------- | --------------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT|
| SOLUTIONS, INC. OF NEVADA| | | SOLUTIONS, INC. |
| | | | OF TEXAS |
|Common Stock: 1,000 |-- ==| |
|------------- Shares | | |
| Cost | | |
| ---- | | |
|NRS-100% $1,000 | | |
---------------------------- --------------------------
</TABLE>
<PAGE> 115
<TABLE>
<CAPTION>
(Right)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
------------------------------- | ---------------------------- -----------------------------
| GATES MCDONALD | | | NATIONWIDE | | NATIONWIDE GLOBAL |
| & COMPANY (GATES) | | |HEALTH PLANS, INC. (NHP) | | HOLDINGS, INC. (NGH) |
| | | | | | |
- ------------------- --|Common Stock: 254 Shares | |--|Common Stock: 100 Shares | |Common Stock: 1 Share |
| | | |------------ | || |------------ | --|------------ |
| ---------------|-------------- | | Cost | || | Cost || | Cost |
| | | | | ---- | || | ---- || | ---- |
| | THE 401(k) COMPANIES, INC. | | |NW Corp.-100% $25,683,532 | || | || | |
| | (401(k)) | | |------------------------------ || |NW Corp.-100% $14,603,732|| |NW Corp.-100% $257,000,000|
| | | | || --------------------------- | -----------------------------
| |Common Stock: Control | | |------------------------------ || ----------------------------| -----------------------------
||--|------------- ------- | | | MEDPROSOLUTIONS, INC. | || | NATIONWIDE MANAGEMENT || | NATIONWIDE GLOBAL |
|| |Class A Other-100% | --| | |--| SYSTEMS, INC. || | HOLDINGS, INC. - |
|| |Class B NFS-100% | | | Cost | || | || | LUXEMBOURG BRANCH |
|| | | | | ---- | || |Common Stock: 100 Shares || | (BRANCH) |
|| ------------------------------ | |Gates-100% $6,700,000 | || |------------- || | |
|| | | | || | Cost ||--| |
|| | | | || | ---- || |Endowment Capital - |
|| ------------------------------ | ------------------------------- || |NHP Inc.-100% $25,149 || | $1,000,000 |
|| | 401(k) INVESTMENT | | || ----------------------------| --------------|--------------
|| | SERVICES, INC. | | |------------------------------ || ----------------------------| --------------|--------------
|| | | | | GATES MCDONALD & | || | NATIONWIDE || | NGH LUXEMBOURG S.A. |
|| |Common Stock: 1,000,000 | | | COMPANY OF NEW YORK, INC. | || | AGENCY, INC. || | (LUX SA) |
|| |------------ Shares | --| | |--| || | |
||--| | | |Common Stock: 3 Shares | | |Common Stock: 100 Shares || |Common Stock: 5894 Shares |
|| | Cost | | |------------ | | |------------ || -|------------ |
|| | ---- | | | Cost | | | Cost || || Cost |
|| |401(k)-100% $7,800 | | | ---- | | | ---- || || ---- |
|| ------------------------------ | |Gates-100% $106,947 | | |NHP Inc.-99% $116,077 || ||BRANCH.-99.98% $115,470,723|
|| | ------------------------------- | ----------------------------| |-----------------------------
|| ------------------------------ | | | |
|| | 401(k) INVESTMENT | | ------------------------------- | ----------------------------| |-----------------------------
|| | ADVISORS, INC. | | | GATES MCDONALD & | | |NATIONWIDE GLOBAL HOLDINGS|| || PAN EURO LIFE |
|| | | | | COMPANY OF NEVADA | | | -HONG KONG, LIMITED || || |
|| |Common Stock: 1,000 Shares | --| | | | || ||Common Stock: 1,300,000 |
||--|------------ | | |Common Stock: 40 Shares | | |Common Stock: 2 Shares || ||------------ Shares |
|| | Cost | | |------------ | | |------------ Cost -- -- |
|| | ---- | | | Cost | | | ---- || || Cost |
|| |401(k)-100% $1,000 | | | ---- | | |NGH-50% || || ---- |
|| ------------------------------ | |Gates-100% $93,750 | | |Casualty--50% || ||LUX SA-90% 3,817,832,685|
|| | ------------------------------- | ----------------------------| || LUF |
|| ------------------------------ | | | |-----------------------------
|| | 401(k) COMPANY | | ------------------------------- | ----------------------------| |-----------------------------
|| | | | | GATES MCDONALD | | | NGH || ||NATIONWIDE GLOBAL HOLDINGS |
|| |Common Stock: 855,000 Shares| | | HEALTH PLUS, INC. | | | NETHERLANDS B.V. || ||- NGH BRASIL PARTICIPACOES,|
|| | | --| | | | || || LTDA (NGH BRASIL) |
|| | Cost | | |Common Stock: 200 Shares | | |Common Stock: 40 Shares || || |
||--| ---- | | |------------ | | |------------ -- -- Shares Cost |
|| |401(k)-100% $1,000 | | | Cost | | | Cost || | ------ ---- |
|| ------------------------------ | | ---- | | | ---- || |LUX SA 6,164,899 R6,164,899|
|| | |Gates-100% $2,000,000 | | |NGH-100% NLG 52,500 || |NGH 1 R1 |
|| ------------------------------ | ------------------------------- | ----------------------------| --------------|--------------
|| | | | | | |
|===| | | ------------------------------- | ----------------------------| --------------|--------------
| | RIVERVIEW AGENCY, INC. | | |NEVADA INDEPENDENT COMPANIES-| | | NATIONWIDE || | NATIONWIDE |
| | | | |MANUFACTURING TRANSPORTATION | | | SERVICES SP. Z.O.O. || | SEGURADORA S.A. |
| | | | | AND DISTRIBUTION | | | || | |
| | | --| | | |Common Stock: 80 Shares || | Shares Cost |
| | | | |Common Stock: 1,000 Shares | | |------------ Cost -- | ------ ---- |
| ------------------------------ | |------------ | | | ---- || |NGH |
| | |Gates-100% | | |NGH-100% 4,000 PLN || |BRASIL 9,999,999 R9,999,999|
| ------------------------------ | ------------------------------- | --------------------------- | |LUX SA 1 R1 |
| | | | | | -----------------------------
| | PENSION ASSOCIATES, INC. | | ------------------------------- | ----------------------------| -----------------------------
| | | | | NEVADA INDEPENDENT | | | MRM INVESTMENTS, INC. || | NATIONWIDE GLOBAL |
- ----| Common Stock: 1,000 Shares | | | COMPANIES-HEALTH AND PROFIT | | | || | FINANCE, LLC |
| | --| | ---|Common Stock: 1 Share || | Single Member Limited |
| Cost | | |Common Stock: 1,000 Shares | |------------ || | Liability Company |
| ---- | | |------------ | | Cost |...| |
| NFS-100% $2,839,392 | | | | | ---- | | |
------------------------------ | |Gates-100% | |NW Corp.-100% $7,000,000 | |NGH-100% |
| ------------------------------- ---------------------------- -----------------------------
|
| -------------------------------
| | NEVADA INDEPENDENT |
| | COMPANIES-CONSTRUCTION |
--| |
| |Common Stock: 1,000 Shares |
| |------------ |
| | |
| |Gates-100% |
| -------------------------------
|
| -------------------------------
| | NEVADA INDEPENDENT |
| | COMPANIES-HOSPITALITY AND | Subsidiary Companies - Solid Line
--| ENTERTAINMENT | Contractual Association - Double Line
| | Limited Liability Company - Dotted Line
|Common Stock: 1,000 Shares |
|Gates-100% | December 31, 1999
-------------------------------
Page 2
</TABLE>
<PAGE> 116
Item 27. Number of Contract Owners
The number of contract owners as of February 29, 2000 was 3,252.
Item 28. Indemnification
Provision is made in Nationwide's Amended Code of Regulations and
expressly authorized by the General Corporation Law of the State of
Ohio, for indemnification by Nationwide of any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative by reason of the fact that such person
is or was a director, officer or employee of Nationwide, against
expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, to the extent and
under the circumstances permitted by the General Corporation Law of
the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors, officers
or persons controlling Nationwide pursuant to the foregoing
provisions, Nationwide has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable.
Item 29. PRINCIPAL UNDERWRITER
(a) Nationwide Investment Services Corporation ("NISC") acts as
principal underwriter and general distributor for the Nationwide
Multi-Flex Variable Account, Nationwide Variable Account,
Nationwide Variable Account-II, Nationwide Variable Account-5,
Nationwide Variable Account-6, Nationwide Variable Account-8,
Nationwide Variable Account-9, Nationwide Variable Account-10,
Nationwide Variable Account-11, Nationwide VA Separate Account-A,
Nationwide VA Separate Account-B, Nationwide VA Separate
Account-C, Nationwide VL Separate Account-A, Nationwide VL
Separate Account-B, Nationwide VL Separate Account-C, Nationwide
VL Separate Account-D, Nationwide VLI Separate Account-2,
Nationwide VLI Separate Account-3, Nationwide VLI Separate
Account-4, Nationwide VLI Separate Account-5, Nationwide DC
Variable Account, Nationwide DCVA-II, and the NACo Variable
Account, all of which are separate investment accounts of
Nationwide or its affiliates.
<PAGE> 117
<TABLE>
<CAPTION>
(b) NATIONWIDE INVESTMENT SERVICES CORPORATION
DIRECTORS AND OFFICERS
- -------------------------------------------------------------------------------------------------------------
NAME AND BUSINESS ADDRESS POSITIONS AND OFFICES WITH UNDERWRITER
- -------------------------------------------------------------------------------------------------------------
<S> <C>
Joseph J. Gasper Chairman of the Board and Director
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Richard A. Karas Vice Chairman and Director
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Dimon R. McFerson Chairman and Chief Executive Officer - Nationwide
One Nationwide Plaza Insurance Enterprise and Director
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Timothy E. Murphy President
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Robert A. Oakley Executive Vice President - Chief Financial Officer
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Robert J. Woodward, Jr. Executive Vice President - Chief Investment Officer
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Dennis W. Click Vice President and Secretary
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Joseph P. Rath Vice President - Compliance
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Barbara J. Shane Vice President - Compliance Officer
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Mark R. Thresher Vice President and Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Gary E. Berndt Assistant Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Duane M. Campbell Assistant Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Terry C. Smetzer Assistant Treasurer
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Phillip C. Gath Director
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
Susan A. Wolken Director
One Nationwide Plaza
Columbus, Ohio 43215
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 118
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(c)NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
Nationwide N/A N/A N/A N/A
Investment
Services
Corporation
</TABLE>
Item 30. Location of Accounts and Records
John Davis
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 43215
Item 31. Management Services
Not Applicable
Item 32. Undertakings
The Registrant hereby undertakes to:
(a) File a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than 16
months old for so long as payments under the variable annuity
contracts may be accepted;
(b) Include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can
check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included
in the prospectus that the applicant can remove to send for a
Statement of Additional Information;
(c) Deliver any Statement of Additional Information and any financial
statements required to be made available under this Form promptly
upon written or oral request; and
(d) Represent that any contract offered by the prospectus and which
is issued pursuant to Section 403(b) of the Code, is issued by
the Registrant in reliance upon, and in compliance with, the
Securities and Exchange Commission's no-action letter to the
American Council of Life Insurance (publicly available November
28, 1988) which permits withdrawal restrictions to the extent
necessary to comply with Internal Revenue Code Section
403(b)(11).
The Depositor hereby represents:
(a) That the fees and charges deducted under the contract in the
aggregate are reasonable in relation to the services rendered,
the expenses expected to be incurred, and the risks assumed by
Nationwide.
<PAGE> 119
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of NACo Variable Account:
We consent to the use of our reports included herein and to the references to
our firm under the heading "Services" in the Statement of Additional
Information.
KPMG LLP
Columbus, Ohio
April 28, 2000
<PAGE> 120
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, NACo VARIABLE ACCOUNT, certifies that it meets the
requirements of the Securities Act Rule 485(b) for effectiveness of the
Post-Effective Amendment No. 21 and has caused this Post-Effective Amendment to
the Registration Statement to be signed on its behalf in the City of Columbus,
and State of Ohio, on this 28th day of April, 2000.
NACo VARIABLE ACCOUNT
-----------------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
-----------------------------------------------
(Depositor)
By /s/ STEVEN SAVINI, ESQ.
-----------------------------------------------
STEVEN SAVINI, ESQ.
Vice President - Product and Market Compliance
As required by the Securities Act of 1933, this Post-Effective Amendment No. 21
has been signed by the following persons in the capacities indicated on the 28th
day of April, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
LEWIS J. ALPHIN Director
- ----------------------------------------
Lewis J. Alphin
A. I. BELL Director
- ----------------------------------------
A. I. Bell
KENNETH D. DAVIS Director
- ----------------------------------------
Kenneth D. Davis
KEITH W. ECKEL Director
- ----------------------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- ----------------------------------------
Willard J. Engel
FRED C. FINNEY Director
- ----------------------------------------
Fred C. Finney
JOSEPH J. GASPER President and Chief Operating
- ----------------------------------------
Joseph J. Gasper Officer and Director
DIMON R. MCFERSON Chairman and Chief Executive
- ----------------------------------------
Dimon R. McFerson Officer and Director
DAVID O. MILLER Chairman of the Board and
- ----------------------------------------
David O. Miller Director
YVONNE L. MONTGOMERY Director
- ----------------------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President and Chief
- ----------------------------------------
Robert A. Oakley Financial Officer
RALPH M. PAIGE Director
- ----------------------------------------
Ralph M. Paige
JAMES F. PATTERSON Director
- ----------------------------------------
James F. Patterson
ARDEN L. SHISLER Director
- ----------------------------------------
Arden L. Shisler
ROBERT L. STEWART Director
- ----------------------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- ----------------------------------------
Nancy C. Thomas
By /s/ STEVEN SAVINI, ESQ.
----------------------------------------
STEVEN SAVINI, ESQ.
Attorney-in-Fact
</TABLE>
<PAGE> 1
MARKETING COORDINATION AND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement entered into this 1st day of May, 2000, between Nationwide Life
Insurance Company ("Nationwide"), and Nationwide Investment Services Corporation
("NISC").
Nationwide proposes to develop, issue and administer, and NISC proposes to
provide the exclusive national distribution services for certain annuity and
life products (the "Products"). The parties hereby agree as follows:
A. ADMINISTRATION OF PRODUCTS
1. Appointment of Product Administration
Nationwide is hereby appointed Product Administrator for the
Products.
2. Duties of Nationwide
Nationwide will perform in a proper and timely manner, those
functions enumerated in the column marked "Nationwide" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
3. Duties of NISC
NISC will perform in a proper and timely manner, those
functions enumerated in the column marked "NISC" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
B. MARKETING COORDINATION AND SALES ADMINISTRATION
1. Distribution of Products
The Products will be distributed through registered
representatives of NASD broker-dealer firms, appointed by
Nationwide, who shall be duly qualified and licensed as agents
(the "Agents"), in accordance with applicable state insurance
authority.
2. NISC shall be the exclusive National Distributor of the
Products.
<PAGE> 2
3. Appointment and Termination of Agents
Appointment and termination of Agents shall be processed and
executed by Nationwide. NISC reserves the right to require
Nationwide to consult with it regarding licensing decisions.
4. Advertising
NISC shall not print, publish or distribute any advertisement,
circular or document relating to the Products or relating to
Nationwide unless such advertisement, circular or document has
been approved in writing by Nationwide. Such approval shall
not be unreasonably withheld, and shall be given promptly,
normally within five (5) business days. Neither Nationwide nor
any of its affiliates shall print, publish or distribute any
advertisement, circular or document relating to the Products
or relating to NISC unless such advertisement, circular or
document has been approved in writing by NISC. Such approval
shall not be unreasonably withheld, and shall be given
promptly, normally within five (5) business days. However,
nothing herein shall prohibit any person from advertising the
Products on a generic basis.
5. Marketing Conduct
The parties will jointly develop standards, practices and
procedures respecting the marketing of the Products. Such
standards, practices and procedures are intended to help
Nationwide meet its obligations as an issuer under the
securities laws, to assure compliance with state insurance
laws, and to help NISC meet its obligations under the
securities laws as National Distributor. These standards,
practices and procedures are subject to continuing review and
neither Nationwide nor NISC will object unreasonably to
changes to such standards, practices and procedures
recommended by the other to comply with the intent of this
provision.
6. Sales Material and Other Documents
a. Sales Material
1) Nationwide shall develop and prepare all
promotional material to be used in the
distribution of the Products, in
consultation with NISC.
2) Nationwide is responsible for the printing
and the expense of providing such
promotional material.
3) Nationwide is responsible for approval of
such promotional material by state insurance
regulators, where required.
<PAGE> 3
4) NISC and Nationwide agree to abide by the
Advertising and Sales Promotion Material
Guidelines, attached hereto as EXHIBIT B,
and incorporated herein by reference.
b. Prospectuses
1) Nationwide is responsible for the
preparation and regulatory clearance of any
required registration statements and
prospectuses for the Products.
2) Nationwide is responsible for the printing
of Product prospectuses in such quantities
as the parties agree are necessary to assure
sufficient supplies.
3) Nationwide is responsible for supplying
Agents with sufficient quantities of Product
prospectuses.
c. Contracts, Applications and Related Forms
1) Nationwide, in consultation with NISC, is
responsible for the design and printing of
adequate supplies of Product applications,
contracts, related forms, and such service
forms as the parties agree are necessary.
2) Nationwide is responsible for supplying
adequate quantities of all such forms to the
Agents.
7. Appointment of Agents
a. NISC will assist Nationwide in facilitating the
appointment of Agents by Nationwide.
b. Nationwide will forward all appointment forms and
applications to the appropriate states and maintain
all contacts with the states.
c. Nationwide will maintain appointment files on Agents,
and NISC will have access to such files as needed.
8. Licensing and Appointment Guide
Nationwide shall provide to NISC a Licensing and Appointment
Guide (as well periodic updates thereto), setting forth the
requirements for licensing and appointment, in such quantities
as NISC may reasonably require.
<PAGE> 4
9. Other
a. Product Training
Nationwide is responsible for any Product training
for the Agents.
b. Field Sales Material
1) Nationwide, in consultation with NISC, is
responsible for the development, printing
and distribution of non-public field sales
material to be used by Agents.
2) NISC shall have the right to review all
field sales materials and to require any
modification mandated by regulatory
requirements.
c. Production Reports
Nationwide will deliver to NISC the items listed in
Production Reports to be Provided, attached hereto as
EXHIBIT C, and incorporated herein by reference.
d. Customer Service
Each party will notify the other of all material
pertinent inquiries and complaints it receives, from
whatever source and to whomever directed, and will
consult with the other in responding to such
inquiries and complaints.
e. Records and Books
All books and records maintained by Nationwide in
connection with the offer and sale of variable
annuity interests funded by a Separate Account are
maintained and preserved in conformity with the
requirements of Rule 17a-3 and 17a-4 under the 1934
Exchange Act, to the extent such requirements are
applicable to the variable annuity operations.
All such books and records are maintained and held by
Nationwide on behalf of and as agent for NISC, whose
property they are and shall remain. Such books and
records are at all times subject to inspection by the
Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.
<PAGE> 5
C. GENERAL PROVISIONS
1. Waiver
The forbearance or neglect of either party to insist upon
strict compliance by the other with any of the provisions of
this Agreement, whether continuing or not, or to declare a
forfeiture of termination against the other, shall not be
construed as a waiver of any rights or privileges of the
forbearing party in the event of a further default or failure
of performance.
2. Limitations
Neither party shall have authority on behalf of the other to:
make, alter or discharge any contractual terms of the
Products; waive any forfeiture; extend the time of making any
contributions to the products; guarantee dividends; alter the
forms which either may prescribe; nor substitute other forms
in place of those prescribed by the other.
3. Binding Effect
This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective successors
and assigns, provided that neither party shall assign or
sub-contract this Agreement or any rights or obligations
hereunder without prior written consent of the other.
4. Indemnification
Each party ("Indemnifying Party") hereby agrees to release,
indemnify and hold harmless the other party, its officers,
directors, employers, agents, servants, predecessors or
successors from any claims or liability arising out of the
acts or omissions of the Indemnifying Party not authorized by
this Agreement, including the violation of any federal or
state law or regulation.
5. Notices
All notices, requests, demands and other communication under
this Agreement shall be in writing and shall be deemed to have
been given on the date of service if served personally on the
party to whom notice is to be given, or on the date of mailing
if sent postage prepaid by First Class Mail, Registered or
Certified mail, by overnight mail, properly addressed as
follows:
TO NATIONWIDE:
Nationwide Life Insurance Company
Michael C. Butler, Vice President-Sales
Three Nationwide Plaza
Columbus, Ohio 43215
<PAGE> 6
TO NISC:
Nationwide Investment Services Corporation.
Barbara Shane, Vice President-Compliance Officer
Two Nationwide Plaza
Columbus, Ohio 43215
6. Governing Law
This Agreement shall be construed in accordance with and
governed by the laws of the State of Ohio.
7. Arbitration
The parties agree that misunderstandings or disputes arising
from this Agreement shall be decided by arbitration, conducted
upon request of either party before three arbitrators (unless
the parties agree on a single arbitrator) designated by the
American Arbitration Association, and in accordance with the
rules of such Association. The expenses of the arbitration
proceedings conducted hereunder shall be borne equally by both
parties.
8. Confidentiality
Any information, documents and materials, whether printed or
oral, furnished by either party or its agents or employees to
the other shall be held in confidence. No such information
shall be given to any third party, other than to such
sub-contractors of NISC as may be permitted herein, or under
requirements of a lawful authority, without the express
written consent of the other party.
D. TERM OF AGREEMENT
This Agreement, including the Exhibits attached hereto, shall remain in
full force and effect until terminated, and may be amended only by
mutual agreement of the parties in writing. Any decision by either
party to cease issuance or distribution of any specific Product shall
not effect a termination of the Agreement unless such termination is
mutually agreed upon, or unless notice is given pursuant to Section
E.2. hereof.
E. TERMINATION
1. Either party may terminate this Agreement for cause at any
time, upon written notice to the other, if the other knowingly
and willfully: (a) fails to comply with the laws or
regulations of any state or governmental agency or body having
jurisdiction over the sale of insurance or securities; (b)
misappropriates any money or property belonging to the other;
(c) subjects the other to any actual or potential liability
due to misfeasance, malfeasance, or nonfeasance; (d) commits
any fraud upon the other; (e) has an assignment for the
benefit of creditors; (f) incurs bankruptcy; or (g) commits a
material breach of this Agreement.
<PAGE> 7
2. Either party may terminate this Agreement, without regard to
cause, upon six months prior written notice to the other.
3. In the event of termination of this Agreement, the following
conditions shall apply:
a) The parties irrevocably acknowledge the continuing
right to use any Product trademark that might then be
associated with any Products, but only with respect
to all business in force at the time of termination.
b) In the event this Agreement is terminated the parties
will use their best efforts to preserve in force the
business issued pursuant to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first above written.
NATIONWIDE LIFE INSURANCE
COMPANY
By: __________________________
Michael C. Butler
Title: Vice President - Sales
NATIONWIDE INVESTMENT SERVICES
CORPORATION
By: ________________________
Barbara Shane
Title: Vice President - Compliance Officer
<PAGE> 8
EXHIBIT A
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
A. PRODUCT UNDERWRITING/ISSUE
NATIONWIDE NISC
- - Establishes underwriting criteria for - Consults with regard to new business
application processing and rejections. procedures and processing.
- - Reviews the completed application.
Applies underwriting/issue criteria to
application.
- - Notifies Agent and/or customer of
any error or missing data necessary to
underwrite application and establish
records for owner of Product ("Contract
Owner").
- - Prepares policy data page for
approved business and mails with policy
to Contract Owner.
- - Establishes and maintains all records
required for each Contract Owner, as
applicable.
- - Prepares and mails confirmation and
other statements to Contract Owners and
Agents, as required.
- - Prints, provides all forms ancillary
to issue of contract/policy forms for
Products.
- - Maintains supply of approved specimen
policy forms and all ancillary forms,
distributes same to Agents.
<PAGE> 9
B. BILLING AND COLLECTION
NATIONWIDE
- - Receives premium/purchase
payments and reconciles amount
received with remittance media.
- - Updates Contract Owner records to
reflect receipt of premium/purchase
payment and performs accounting/
investment allocation of each
payment received.
- - Deposits all cash received under the
Products in accordance with the
terms of the Products.
C. BANKING
NATIONWIDE
- - Balances, edits, endorses and prepares daily deposit.
- - Places deposits in depository account.
- - Prepares daily cash journal summary reports and
maintains same for review by NISC.
<PAGE> 10
D. PRICING/VALUATION/ACCOUNTING/TRADING
NATIONWIDE NISC
- - Maintains and makes available, as - Cooperates in annual audit of separate
reasonably requested, records used in account financials conducted for purposes
determining "Net Amount Available for of financial statement certification and
Investment." publication.
- - Collects information needed in - Will clear and settle Mutual Fund
determining Variable Account unit trades on behalf of the separate accounts
values from the Funds including using the National Securities Clearing
daily net asset value, capital Corporation FUND/Serv System.
gains or dividend distributions,
and the number of Fund Shares
acquired or sold during the
immediately preceding valuation
period.
- - Performs daily unit valuation
calculation.
<PAGE> 11
E. CONTRACT OWNER SERVICE/
RECORD MAINTENANCE
NATIONWIDE NISC
- - Receives and processes all - Accommodates customer service function
Contract Owner service requests, by providing any supporting information
including but not limited to or documentation which may be in the
informational requests, beneficiary control of NISC.
changes, and transfers of Contract
Value among eligible investment
options.
- - Maintains daily records of all
changes made to Contract Owner
accounts.
- - Researches and responds to all
Contract Owner/Agent inquiries.
- - Keeps all required Contract Owner
records.
- - Maintains adequate number of toll
free lines to service Contract Owner/
Agent inquiries.
F. DISBURSEMENTS (SURRENDERS,
DEATH CLAIMS, LOANS)
NATIONWIDE NISC
- - Receives and processes surrenders,
loans, and death claims in accordance
with established guidelines.
- - Prepares checks for surrenders,
loans, and death claims, and forwards
to Contract Owner or Beneficiary.
Prepares and mails confirmation
statement of disbursement to Contract
Owner/Beneficiary with copy to Agent.
<PAGE> 12
G. COMMISSIONS
NATIONWIDE NISC
- - Ascertains, on receipt of - Receives and performs record keeping
applications, whether writing Agent for investment company payments made
is appropriately licensed. under a 12b-1 Plan.
- - Pays commissions and other fees
in accordance with agreements
relating to same.
H. PROXY PROCESSING
NATIONWIDE NISC
- - Receives record date information
from Funds Receives proxy
solicitation materials from Funds.
- - Prepares Voting Instruction cards
and mails solicitation, if necessary.
- - Tabulates and votes all Fund Shares
in accordance with SEC requirements.
I. PERIODIC REPORTS TO CONTRACT OWNERS
NATIONWIDE NISC
- - Prepares and mails quarterly and
annual Statements of Account to
Contract Owners.
- - Prepares and mails all semi-annual
and annual reports of Variable
Account(s) to Contract Owners.
<PAGE> 13
J. REGULATORY/STATEMENT REPORTS
NATIONWIDE NISC
- - Prepares and files Separate Account - Prepares and files periodic FOCUS
Annual Statements. Reports with the NASDR and SEC, as
applicable.
- - Prepares and mails the appropriate, - Prepares and files annual audited
required IRS reports at the Contract financial statements with required
Owner level. Files same with required regulatory agencies.
regulatory agencies.
- - Prepares and files form N-SAR for
the Separate Account.
K. PREMIUM TAXES
NATIONWIDE NISC
- - Collects, pays and accounts for
premium taxes as appropriate.
- - Prepares and maintains all premium
tax records by state.
- - Maintains liabilities in General
Account ledger for accrual of premium
tax collected.
- - Integrates all company premium taxes
due and performs related accounting.
L. FINANCIAL AND MANAGEMENT REPORTS
NATIONWIDE NISC
- - Provides periodic reports in - Provides periodic reports in accordance
accordance with the Schedule of with the Schedule of Reports to be
Reports to be prepared jointly by prepared jointly by Nationwide and NISC.
Nationwide and NISC. (See EXHIBIT C) (See EXHIBIT C)
<PAGE> 14
M. AGENT LICENSE RECORDKEEPING
NATIONWIDE NISC
- - Receives, establishes, processes, - Maintains securities registrations and
and maintains Agent appointment assumes supervisory responsibility for
records. representatives of affiliated sales and
marketing companies involved in the
wholesale distribution of Nationwide
variable contract products.
- Maintains training, supervisory, and
other required records for and on behalf
of registered representatives of NISC.
<PAGE> 15
EXHIBIT B
ADVERTISING AND SALES PROMOTION MATERIAL GUIDELINES
FOR APPROVAL BY NATIONWIDE AND NISC
In order to assure compliance with state and federal regulatory requirements and
to maintain control over the distribution of promotional materials dealing with
the Products, Nationwide and NISC require that all variable contract promotional
materials be reviewed and approved by both Nationwide and NISC prior to their
use. These guidelines are intended to provide appropriate regulatory and
distribution controls.
1. Sufficient lead time must be allowed in the submission of all
promotional material. Nationwide and NISC shall approve in writing all
promotional material. Such approval shall not be unreasonably withheld,
and shall be given promptly, normally within five (5) days.
2. All promotional material will be submitted in "draft" form to permit
any changes or corrections to be made prior to the printing.
3. Nationwide and NISC will provide each other with details as to each and
every use of all promotional material submitted. Approval for one use
will not constitute approval for any other use. Different standards of
review may apply when the same advertising material is intended for
different uses. The following information will be provided for each
item of promotional material:
a. In what jurisdiction(s) the material will be used.
b. Whether distribution will be to broker/dealer, entity,
participant, etc.
c. How the material will be used (e.g., brochure, mailing, web
site, etc.)
d. The projected date of initial use.
4. Each party will advise the other of the date it discontinues the use of
any material.
5. Any changes to previously approved promotional material must be
resubmitted, following these procedures. When approved material is to
be put to a different use, request for approval of the material for the
new use must be submitted.
6. Nationwide will assign a form number to each item of advertising and
sales promotional material. This number will appear on each piece of
advertising and sales promotional material. It will be used to aid in
necessary filings, and to maintain appropriate controls.
7. Nationwide and NISC will provide written approval for all material to
be used.
8. Nationwide will be responsible to effect necessary state filings.
9 NISC will coordinate SEC/NASD filings of sales and promotional
material.
10. All telephone communication and written correspondence regarding
promotional materials should be directed to Office of Product and
Market Compliance, Nationwide Life Insurance Company, One Nationwide
Plaza, Columbus, Ohio 43215
