<PAGE> 1
As filed with the Securities and Exchange Commission.
`33 Act Registration No. 2-51911
`40 Act Registration No. 811-2804
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Post-Effective Amendment No. 48 [x]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 49
NATIONWIDE DC 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 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
[ ] on (date), pursuant to paragraph (b) of Rule 485
[X] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date), pursuant to paragraph (a)(1) of Rule 485
================================================================================
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NATIONWIDE DC VARIABLE ACCOUNT
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM PAGE
Part A INFORMATION REQUIRED IN A PROSPECTUS
<S> <C>
Item 1. Cover page..................................................................... 3
Item 2. Definitions ................................................................... 5
Item 3. Synopsis or Highlights ........................................................ 14
Item 4. Condensed Financial Information................................................ 13
Item 5. General Description of Registrant, Depositor, and Portfolio Companies.......... 15
Item 6. Deductions and Expenses ....................................................... 16
Item 7. General Description of Variable Annuity Contracts.............................. 19
Item 8. Annuity Period ................................................................ 22
Item 9. Death Benefit ................................................................. 25
Item 10. Purchases and Contract Value .................................................. 18
Item 11. Redemptions ................................................................... 21
Item 12. Taxes ......................................................................... 26
Item 13. Legal Proceedings ............................................................. 28
Item 14. Table of Contents of the Statement of Additional Information................... 35
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page .................................................................... 79
Item 16. Table of Contents ............................................................. 79
Item 17. General Information and History................................................ 79
Item 18. Services ...................................................................... 79
Item 19. Purchase of Securities Being Offered........................................... 80
Item 20. Underwriters .................................................................. 80
Item 21. Calculation of Performance ................................................... 80
Item 22. Annuity Payments .............................................................. 81
Item 23. Financial Statements .......................................................... 82
Part C OTHER INFORMATION
Item 24. Financial Statements and Exhibits.............................................. 153
Item 25. Directors and Officers of the Depositor........................................ 155
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant ................................................................. 157
Item 27. Number of Contract Owners ..................................................... 169
Item 28. Indemnification ............................................................... 169
Item 29. Principal Underwriters ........................................................ 169
Item 30. Location of Accounts and Records............................................... 171
Item 31. Management Services ........................................................... 171
Item 32. Undertakings .................................................................. 171
</TABLE>
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NATIONWIDE LIFE INSURANCE COMPANY
Group Flexible Fund Retirement Contract
Issued by Nationwide Life Insurance Company through its
Nationwide DC Variable Account
The date of this prospectus is May 1, 1999.
- - --------------------------------------------------------------------------------
This prospectus contains basic information you should know about the contracts
before investing.
Please read it and keep it for future reference.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE AVAILABLE UNDER THE CONTRACTS:
o AIM Equity Funds, Inc. - AIM Constellation Fund - Institutional Class
o American Century: International Discovery Fund (formerly American
Century - Twentieth Century International Discovery Fund - Investor
Class)
o American Century: Income & Growth - Investor Class
o American Century: Growth (formerly American Century: Twentieth Century
Growth)
o American Century: Select (formerly American Century: Twentieth Century
Select)
o American Century: Ultra (formerly American Century: Twentieth Century
Ultra)
o Davis New York Venture Fund
o Dreyfus Appreciation Fund, Inc.
o Dreyfus Cash Management Fund - Class A
o Dreyfus Premier Midcap Stock Fund - Class A
o Dreyfus S&P 500 Index Fund
o Dreyfus Third Century Fund, Inc.
o Evergreen Income and Growth Fund (formerly Total Return Fund)
o Federated Bond Fund - Class F
o Federated U.S. Government Securities Fund: 2-5 Years: Institutional
Shares
o Fidelity Advisor Growth Opportunities Fund - Class A
o Fidelity Advisor High Yield Fund - Class T
o Fidelity Asset Manager(TM)
o Fidelity Equity-Income Fund
o Fidelity Growth & Income Fund Portfolio
o INVESCO Dynamics Fund
o INVESCO Industrial Income Fund (formerly Financial Industrial Income
Fund, Inc.)
o INVESCO Total Return Fund
o Janus Fund
o Janus Worldwide Fund
o Massachusetts Investors Growth Stock Fund - Class A
o MAS Funds Fixed Income Portfolio
o MFS(R) Growth Opportunities Fund - Class A
o MFS(R) High Income Fund - Class A
o Morgan Stanley Institutional Fund, Inc. - Equity Growth Portfolio -
Class B
o Nationwide(R) Bond Fund - Class D - Prime Shares
o Nationwide(R) Fund - Class D
o Nationwide(R) Growth Fund - Class D
o Nationwide(R) Money Market Fund
o Nationwide S&P 500(R) Index Fund - Class Y
o LifeDesigns Series
- The Aggressive Portfolio
- The Moderately Aggressive Portfolio
- The Moderate Portfolio
- The Moderately Conservative Portfolio
- The Conservative Portfolio
o Nationwide Separate Account Trust - Nationwide Small Company Fund
o Neuberger Berman Guardian Fund, Inc.
o Neuberger Berman Manhattan Fund, Inc.
o Neuberger Berman Partners Trust
o Oppenheimer Global Fund/VA - Class A
o Prestige Balanced Fund - Class Y
o Prestige International Fund - Class Y
o Prestige Large Cap Growth Fund - Class Y
o Prestige Large Cap Value Fund - Class Y
o Prestige Small Cap Fund - Class Y
o Putnam Investors Fund - Class A
o Putnam Voyager Fund - Class A
o SEI Index Funds - S&P 500 Index Portfolio
o Seligman Growth Fund, Inc. - Class A
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<PAGE> 4
o Templeton Foreign Fund - Class A
o T. Rowe Price International Stock Fund(R)
o Warburg Pincus Emerging Growth Fund
NOT AVAILABLE FOR NEW PLANS ESTABLISHED ON OR AFTER JUNE 30, 1998:
o Fidelity Contrafund
NOT AVAILABLE FOR NEW CONTRACTS ESTABLISHED ON OR AFTER OCTOBER 30, 1997:
o Fidelity Magellan(R) Fund
NOT AVAILABLE FOR NEW CONTRACTS ESTABLISHED ON OR AFTER JANUARY 1, 1994:
o The Bond Fund of America(SM), Inc.
o The Income Fund of America(R), Inc.
o The Growth Fund of America(R), Inc.
NOT AVAILABLE FOR NEW CONTRACTS ESTABLISHED ON OR AFTER AUGUST 1, 1993:
o Delaware Group Decatur Fund, Inc. - Decatur Income Fund
NOT AVAILABLE FOR NEW CONTRACTS ESTABLISHED ON OR AFTER JANUARY 1, 1987:
o Fidelity Capital & Income Fund (formerly Fidelity High Income Fund)
The Statement of Additional Information (dated May 1, 1999) which contains
additional information about the contracts and the Nationwide DC 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 31.
For general information or to obtain FREE copies of the:
o Statement of Additional Information;
o prospectus for any underlying mutual fund; and
o 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
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
The contracts described in this prospectus are marketed primarily to public
sector sponsors of non-qualified deferred compensation plans which qualify for
tax treatment under Section 457 of the Internal Revenue Code. Many such public
sector plan sponsors are members of national civic associations which provide
assistance to member entities in establishing non-qualified deferred
compensation plans and determining the investment options available under such
plans. Acting on the recommendation of these associations, many plan sponsors
have determined that their plans will permit investment in some, but not all, of
the underlying mutual fund options of the variable account. In such cases, the
offering prospectus for the variable account will reflect only those funds which
the contract owner/plan sponsor has determined to be available under the plan.
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.
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<PAGE> 5
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit 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 used to calculate the variable payment annuity
payments.
CONTRACT VALUE- The total 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.
GROUP FIXED CONTRACT- Nationwide's Group Fixed Fund Retirement contract or Group
Fixed Tax Deferred Annuity contract.
INITIAL TRANSFER- The initial amount transferred by a contract owner from an
investment product offered by a provider other than Nationwide. The initial
transfer is the initial purchase payment under a contract.
NATIONWIDE- Nationwide Life Insurance Company.
PARTICIPANT ACCOUNT- An account established by Nationwide for each participant.
All financial transactions affecting a participant under the contract, other
than the purchase and payment of an annuity from the general account of
Nationwide, are recorded in the participant's account.
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.
PARTICIPANT EFFECTIVE DATE- The first date accumulation units are credited to
the participant's account on behalf of the participant under the contract.
RETIRED PARTICIPANT- A participant who is receiving payments according to the
selected optional retirement income form.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units and annuity units are
separately maintained.
VALUATION PERIOD- Each day the New York Stock Exchange is open for business.
VARIABLE ACCOUNT- Nationwide DC 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.
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<PAGE> 6
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS.............................................. 3
SUMMARY OF CONTRACT EXPENSES........................................... 5
UNDERLYING MUTUAL FUND ANNUAL EXPENSES................................. 6
EXAMPLE ............................................................... 9
CONDENSED FINANCIAL INFORMATION........................................11
FINANCIAL STATEMENTS...................................................11
SYNOPSIS OF THE CONTRACTS..............................................12
NATIONWIDE LIFE INSURANCE COMPANY......................................13
NATIONWIDE INVESTMENT SERVICES CORPORATION ............................13
INVESTING IN THE CONTRACT........................ .....................13
The Variable Account and Underlying Mutual Funds
STANDARD ACCOUNT CHARGES AND DEDUCTIONS................................14
Contingent Deferred Sales Charge
Participant Account Maintenance Charge
Variable Account Annual Expense Fee
Premium Taxes
CONTRACT RIGHTS........................................................16
OPERATION OF THE CONTRACT..............................................16
Minimum Purchase Payments
Application of Purchase Payments
Allocation of Purchase Payments
Determining Variable Account Value - Valuing an Accumulation Unit
Determining Participant Account Value
Exchange Privilege
Transfer Requests
Experience Credits
MODIFICATION OF THE CONTRACT...........................................19
CONTRACT SUSPENSION AND TERMINATION....................................19
REDEMPTION OF PARTICIPANT ACCOUNTS.....................................19
RETIREMENT PERIOD......................................................20
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
Assumed Investment Rate
Value of an Annuity Unit
DEATH OF PARTICIPANT...................................................23
Participant Death Before Retirement
Death of Retired Participant
FEDERAL TAX CONSIDERATIONS.............................................24
Contracts Issued under the New York Model Plan
STATEMENTS AND REPORTS.................................................24
YEAR 2000 COMPLIANCE ISSUES............................................25
LEGAL PROCEEDINGS......................................................26
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY........................27
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION..............33
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS.....................34
APPENDIX B: CONDENSED FINANCIAL INFORMATION............................44
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<PAGE> 7
SUMMARY OF CONTRACT EXPENSES
All charges are subject to negotiation therefore the expenses described below
may vary from contract to contract. Please refer to the appropriate prospectus
provision for more details.
PARTICIPANT TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Charge
(as a percentage of purchase payments) ...................................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:
o premium taxes that may be imposed by the state in which the contract
was issued; or
o deductions for management fees and other expenses made by the
underlying mutual funds.
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<PAGE> 8
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS
AFTER EXPENSE REIMBURSEMENT)
<TABLE>
<CAPTION>
Management Other 12b-1 Total Mutual Fund
Fees Expenses Fees Expenses
<S> <C> <C> <C> <C>
AIM Equity Funds, Inc. - AIM Constellation 0.63% 0.00% 0.00% 0.63%
Fund - Institutional Class
American Century International Discovery 1.66% 0.00% 0.00% 1.66%
Fund, Inc. (formerly - Twentieth Century
International Discovery Fund, Inc.) -
Investor Class
American Century: Income & Growth - Investor 0.44% 0.00% 0.50% 0.94%
Class
American Century: Growth (formerly Twentieth 1.00% 0.00% 0.00% 1.00%
Century Growth)
American Century: Select (formerly Twentieth 1.00% 0.00% 0.00% 1.00%
Century Select)
American Century: Ultra (formerly Twentieth 1.00% 0.00% 0.00% 1.00%
Century Ultra)
The Bond Fund of America(SM), Inc. 0.32% 0.09% 0.25% 0.66%
Davis New York Venture Fund, Inc. 0.54% 0.14% 0.23% 0.91%
Delaware Group Decatur Fund, Inc.-Decatur 0.48% 0.22% 0.00% 0.70%
Income Fund
Dreyfus Appreciation Fund, Inc. 0.55% 0.34% 0.00% 0.89%
Dreyfus Premier Midcap Stock Fund - Class A 1.10% 0.00% 0.25% 1.35%
Dreyfus Cash Management - Class A 0.20% 0.00% 0.00% 0.20%
Dreyfus S&P 500 Index Fund 0.25% 0.25% 0.00% 0.50%
Dreyfus Third Century Fund, Inc. 0.75% 0.22% 0.00% 0.97%
Evergreen Income and Growth Fund (formerly 0.97% 0.28% 0.00% 1.25%
Total Return Fund)
Federated Bond Fund - Class F 0.65% 0.43% 0.00% 1.08%
Federated U.S. Government Securities Fund: 0.40% 0.14% 0.00% 0.54%
2-5 Years - Institutional Shares
Fidelity Advisor Growth Opportunities Fund - 0.46% 0.25% 0.25% 0.96%
Class A
Fidelity Advisor High Yield Fund - Class T 0.58% 0.24% 0.25% 1.07%
Fidelity Asset Manager(TM) 0.42% 0.17% 0.00% 0.59%
Fidelity Capital & Income Fund (formerly 0.58% 0.23% 0.00% 0.81%
Fidelity High Income Fund)
Fidelity Contrafund 0.45% 0.16% 0.00% 0.61%
Fidelity Equity-Income Fund 0.47% 0.20% 0.00% 0.67%
Fidelity Growth & Income Portfolio 0.49% 0.18% 0.00% 0.67%
Fidelity Magellan(R) Fund 0.42% 0.17% 0.00% 0.59%
The Growth Fund of America(R), Inc. 0.35% 0.11% 0.24% 0.70%
The Income Fund of America(R), Inc. 0.28% 0.07% 0.24% 0.59%
INVESCO Dynamics Fund 0.55% 0.28% 0.25% 1.08%
</TABLE>
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<PAGE> 9
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
Management Other 12b-1 Total Mutual Fund
Fees Expenses Fees Expenses
<S> <C> <C> <C> <C>
INVESCO Industrial Income Fund, Inc. 0.47% 0.18% 0.25% 0.90%
(formerly Financial Industrial Income Fund,
Inc.)
INVESCO Total Return Fund 0.58% 0.20% 0.25% 1.03%
Janus Fund 0.65% 0.19% 0.00% 0.84%
Janus Worldwide Fund 0.65% 0.24% 0.00% 0.89%
LifeDesigns Series - The Aggressive 0.50% 0.00% 0.00% 0.50%
Portfolio
LifeDesigns Series - The Conservative 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 0.50% 0.00% 0.00% .050%
Aggressive Portfolio
LifeDesigns Series - The Moderately 0.50% 0.00% 0.00% 0.50%
Conservative Portfolio
MAS Funds Fixed Income Portfolio 0.38% 0.10% 0.00% 0.48%
Massachusetts Investors Growth Stock Fund - 0.25% 0.22% 0.32% 0.79%
Class A
MFS(R) Growth Opportunities Fund - Class A 0.42% 0.21% 0.18% 0.81%
MFS(R) High Income Fund - Class A 0.44% 0.27% 0.30% 1.01%
Morgan Stanley Institutional Fund, Inc. - 0.60% 0.20% 0.25% 1.05%
Equity Growth Portfolio - Class B
Nationwide(R) Bond Fund - Class D 0.50% 0.30% 0.00% 0.80%
Nationwide(R) Fund - Class D 0.57% 0.12% 0.00% 0.69%
Nationwide(R) Growth Fund - Class D 0.58% 0.19% 0.00% 0.77%
Nationwide(R) Money Market Fund 0.40% 0.18% 0.00% 0.58%
Nationwide S&P 500(R) Index Fund - Class Y 0.13% 0.34% 0.00% 0.47%
NSAT - Nationwide Small Company Fund 1.00% 0.07% 0.00% 1.07%
Neuberger Berman Guardian Fund, Inc. 0.70% 0.09% 0.00% 0.79%
Neuberger Berman Manhattan Fund, Inc. 0.79% 0.15% 0.00% 0.94%
Neuberger Berman Partners Trust 0.85% 0.05% 0.00% 0.90%
Oppenheimer Global Fund/VA - Class A 0.69% 0.23% 0.22% 1.14%
Prestige Balanced Fund - Class Y 0.25% 0.70% 0.00% 0.95%
Prestige International Fund - Class Y 0.43% 0.82% 0.00% 1.25%
Prestige Large Cap Growth Fund - Class Y 0.35% 0.70% 0.00% 1.05%
Prestige Large Cap Value Fund - Class Y 0.30% 0.70% 0.00% 1.00%
Prestige Small Cap Fund - Class Y 0.50% 0.70% 0.00% 1.20%
Putnam Investors Fund - Class A 0.51% 0.19% 0.25% 0.95%
Putnam Voyager Fund - Class A 0.48% 0.23% 0.25% 0.40%
SEI Index Funds - S&P 500 Index Portfolio 0.40% 0.00% 0.00% 0.40%
</TABLE>
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<PAGE> 10
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
Management Other 12b-1 Total Mutual Fund
Fees Expenses Fees Expenses
<S> <C> <C> <C> <C>
Seligman Growth Fund, Inc. - Class A 0.70% 0.23% 0.23% 1.16%
T. Rowe Price International Stock Fund(R) 0.67% 0.18% 0.00% 0.85%
Templeton Foreign Fund - Class A 0.61% 0.26% 0.25% 1.12%
Warburg Pincus Emerging Growth Fund 0.90% 0.32% 0.00% 1.22%
</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 to calculate the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
Management Other 12b-1 Total Mutual Fund
Fees Expenses Fees Expenses
<S> <C> <C> <C> <C>
Federated Bond Fund - Class F 0.75% 0.20% 0.00% 0.95%
Federated U.S. Government Securities Fund: 2-5 Years - 0.40% 0.39% 0.00% 0.79%
Institutional Shares
Fidelity Advisor Growth Opportunities Fund - Class A 0.46% 0.26% 0.25% 0.97%
Fidelity Asset Manager 0.42% 0.18% 0.00% 0.60%
Fidelity Contrafund 0.45% 0.20% 0.00% 0.65%
Fidelity Growth & Income Portfolio 0.49% 0.20% 0.00% 0.69%
Fidelity Magellan(R) Fund 0.42% 0.17% 0.00% 0.59%
Nationwide S&P 500(R) Index Fund - Class Y 0.13% 0.61% 0.00% 0.74%
</TABLE>
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<PAGE> 11
EXAMPLE
The following chart shows the amount of 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 example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the maximum Variable Account Annual Expense
Fee (0.95%). Deductions for premium taxes are not reflected but may apply. The
example also reflects the Contract 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 Contract Maintenance Charge is reduced
accordingly.
The summary of contract expenses and example are to help contract owners
understand expenses associated with the contracts.
<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>
AIM Equity Funds, Inc. - AIM 67 101 139 243 17 51 89 193 17 51 89 193
Constellation Fund -
Institutional Class
American Century: 77 134 193 354 27 84 143 304 27 84 143 304
International Discovery Fund,
Inc. (formerly Twentieth
Century International
Discovery Fund, Inc.) -
Investor Class
American Century: Income & 67 103 142 250 17 53 92 200 17 59 92 200
Growth - Investor Class
American Century: Growth 70 113 159 284 20 63 109 234 20 63 109 234
(formerly Twentieth Century
Growth)
American Century: Select 70 113 159 284 20 63 109 234 20 63 109 234
(formerly Twentieth Century
Select)
American Century: Ultra 70 113 159 284 20 63 109 234 20 63 109 234
(formerly Twentieth Century
Ultra)
The Bond Fund of America(SM), 67 102 140 247 17 52 90 197 17 52 90 197
Inc.
Davis New York Venture Fund, 70 110 154 274 20 60 104 224 20 60 104 224
Inc.
Delaware Group Decatur Fund, 67 104 142 251 17 54 92 201 17 54 92 201
Inc. - Decatur Income Fund
Dreyfus Appreciation Fund, 69 110 153 272 19 60 103 222 19 60 103 222
Inc.
Dreyfus Premier Midcap Stock 74 124 177 322 24 74 127 272 24 74 127 272
Fund - Class A
Dreyfus Cash Management - 62 88 115 194 12 38 65 144 12 38 65 144
Class A
Dreyfus S&P 500 Index Fund 65 97 132 228 15 47 82 178 15 47 82 178
Dreyfus Third Century Fund, 70 112 157 281 20 62 107 231 20 62 107 231
Inc.
Evergreen Income and Growth 73 121 172 311 23 71 122 261 23 71 122 261
Fund (formerly Total Return
Fund)
Federated Bond Fund - Class F 71 116 163 293 21 66 113 243 21 66 113 243
</TABLE>
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<PAGE> 12
EXAMPLE (CONTINUED)
<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>
Federated U. S. Government 66 99 134 233 16 49 84 183 16 49 84 183
Securities Fund: 2-5 Years -
Institutional Shares
Fidelity Advisor Growth 70 112 156 280 20 62 106 230 20 62 106 230
Opportunities Fund - Class A
Fidelity Advisor High Yield 71 115 162 292 21 65 112 242 21 65 112 242
Fund - Class T
Fidelity Asset Manager(TM) 68 105 145 256 18 55 95 206 18 55 95 206
Fidelity Capital & Income 68 107 148 263 18 57 98 213 18 57 98 213
Fund (formerly Fidelity High
Income Fund)
Fidelity Contrafund 66 101 138 241 16 51 88 191 16 51 88 191
Fidelity Equity-Income Fund 67 103 141 248 17 53 91 198 17 53 91 198
Fidelity Growth & Income 67 103 141 248 17 53 91 198 17 53 91 198
Portfolio
Fidelity Magellan(R) Fund 66 100 137 239 16 50 87 189 16 50 87 189
The Growth Fund of America(R) 67 104 142 251 17 54 92 201 17 54 92 201
Inc.
The Income Fund of America(R) 66 100 153 273 19 60 103 223 19 60 103 223
INVESCO Dynamics Fund 71 116 163 293 21 66 113 243 21 66 113 243
INVESCO Industrial Income 69 110 153 273 19 60 103 223 19 60 103 223
Fund, Inc. (formerly
Financial Industrial Income
Fund, Inc.)
INVESCO Total Return Fund 71 114 160 287 21 64 110 237 21 64 110 237
Janus Fund 69 108 150 267 19 58 100 217 19 58 100 217
Janus Worldwide Fund 69 110 153 272 19 60 103 222 19 60 103 222
MAS Funds Fixed Income 65 97 131 226 15 47 81 176 15 47 81 176
Portfolio
Massachusetts Investors 68 107 147 261 18 57 97 211 18 57 97 211
Growth Stock Fund - Class A
MFS(R) Growth Opportunities 68 107 148 263 18 57 98 213 18 57 98 213
Fund - Class A
MFS(R) High Income Fund - Class 71 114 159 285 21 64 109 235 21 64 109 235
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) Bond Fund - Class 68 107 148 262 18 57 98 212 18 57 98 212
D
</TABLE>
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EXAMPLE (CONTINUED)
<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>
Nationwide(R) Fund - Class D 67 103 142 250 17 53 92 200 17 53 92 200
Nationwide(R) Growth Fund - 68 106 146 259 18 56 96 209 18 56 96 209
Class D
Nationwide(R) Money Market Fund 66 100 136 238 16 50 86 188 16 50 86 188
Nationwide S&P 500(R) Index 65 96 130 225 15 46 80 175 15 46 80 175
Fund - Class Y
NSAT - Nationwide Small 71 114 160 287 21 64 110 237 21 64 110 237
Company Fund
Neuberger Berman Guardian 68 107 147 261 18 57 97 211 18 57 97 211
Fund, Inc.
Neuberger Berman Manhattan 70 111 155 278 20 61 105 228 20 61 105 228
Fund, Inc.
Neuberger Berman Partners 68 107 148 262 18 57 98 212 18 57 98 212
Trust
Oppenheimer Global Fund/VA - 72 118 166 299 22 68 116 249 22 68 116 249
Class A
Prestige Balanced Fund - 70 112 156 279 20 62 106 229 20 62 106 229
Class Y
Prestige International Fund - 73 121 172 311 23 71 122 261 23 71 122 261
Class Y
Prestige Large Cap Growth 71 115 161 290 21 65 111 240 21 65 111 240
Fund - Class Y
Prestige Large Cap Value Fund 70 113 159 284 20 63 109 234 20 63 109 234
- - - Class Y
Prestige Small Cap Fund - 73 120 169 306 23 70 119 256 23 70 119 256
Class Y
Putnam Investors Fund - Class 70 112 156 279 20 62 106 229 20 62 106 229
A
Putnam Voyager Fund - Class A 70 112 156 280 20 62 106 230 20 62 106 230
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
T. Rowe Price International 69 108 151 268 19 58 101 218 19 58 101 218
Stock Fund(R)
Templeton Foreign Fund - 72 117 165 297 22 67 115 247 22 67 115 247
Class A
Warburg Pincus Emerging
Growth Fund
</TABLE>
CONDENSED FINANCIAL INFORMATION
The accumulation unit value for each sub-account 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 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.
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<PAGE> 14
SYNOPSIS OF THE CONTRACTS
Group Flexible Fund Retirement Contracts are designed for use in connection with
supplemental deferred compensation plans for employees of tax exempt entities.
The plans generally will qualify for favorable tax treatment under Sections 401,
403(b), or 457 of the Internal Revenue Code, but may also include other
non-qualified deferred compensation plans. Contracts are issued only to
employers who are exempt from taxation to fund deferred compensation plans.
Employees generally are not subject to federal income tax on amounts deferred
under these plans until distributions are received 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.
Plans established after August 20, 1996 by a state, or any political subdivision
of a state, must hold the assets and income of the plan in trust for the
exclusive benefit of the participants and beneficiaries of the plan. For this
purpose, custodial accounts and certain annuity contracts are treated as trusts.
Plans in existence on August 20, 1996 must be amended prior to January 1, 1999
to satisfy these trust and exclusive benefit requirements to continue to receive
favorable tax treatment.
For these Plans, Nationwide issues a single group contract to the contract
owner, covering all present and future participating employees. Nationwide
provides 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 sets forth the benefits to which the recipient is entitled. And if
legally required, Nationwide provides 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 contracts. 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.
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 contracts strive to provide each participant with:
o an initial retirement income payment, reflecting 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
o subsequent retirement income payments which will vary with the cost of
living changes during his or her retired lifetime.
Although the contracts strive to achieve their goals, there can be no assurance
that the contracts will achieve them.
Nationwide will apply purchase rates set forth in the contracts to accumulated
amounts in participant accounts. These accumulated amounts reflect the
investment performance of the underlying mutual funds selected by the
participant. Consequently, a participants' retirement income payments are
directly affected by their 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.
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<PAGE> 15
MINIMUM PURCHASE PAYMENTS
Purchase payments made at any time by or on behalf of any 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 contracts. However, Nationwide may deduct a Contingent Deferred Sales
Charge ("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 payment 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 per year (see "Participant Account Maintenance
Charge").
Nationwide can deduct a Variable Account Annual Expense Fee at a maximum of
0.95% of the daily average account value. Nationwide can assess this fee in
return for bearing certain risks and administrative expenses. This fee is
negotiable and varies from contract to contract to reflect unique plan
characteristics.
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 annuitzation 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. 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, 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. 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 July
10, 1974 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 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
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<PAGE> 16
obligated to pay all amounts promised to contract owners under the contracts.
The variable account is divided into sub-accounts. 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 and state insurance departments.
STANDARD ACCOUNT 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
re-negotiation of the 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
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<PAGE> 17
of a re-negotiated contract may decrease, but under no circumstances will they
increase.
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.
If part or all of the contract value representing participant accounts that have
been established under the contract and held in the variable account for less
than 16 years is surrendered, a CDSC, when it is applicable, can be assessed by
Nationwide. The CDSC will not exceed 5% of purchase payments surrendered.
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 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..
No CDSC will be assessed against distributions paid as:
o any life income payment option;
o 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 benefit payments; and
o a single-sum or periodic payment resulting from a participant's death.
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
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<PAGE> 18
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 VARIABLE 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 an 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;
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.
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
3.5%. This range is subject to change. The method used to assess premium tax
will be determined by Nationwide at its sole discretion in compliance with state
law.
If applicable, Nationwide will deduct premium taxes from the contract either at:
(1) the time the contract is surrendered;
(2) annuitization; or
(3) such other date as Nationwide becomes subject to premium taxes.
Premium taxes may be deducted from death benefit proceeds.
CONTRACTS 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.
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<PAGE> 19
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 prospective purchaser
will be informed of the reason for the delay. The purchase payment will be
returned unless the prospective purchaser specifically allows Nationwide to hold
the purchase payment until the application is completed.
Subsequent purchase payments will be priced based on the next available
accumulation unit value after the payment is received.
Purchase payments will not be priced when the New York Stock Exchange is closed
or on the following nationally recognized holidays:
o New Year's Day o Independence Day
o Martin Luther King, Jr. Day o Labor Day
o Presidents Day o Thanksgiving
o Good Friday o Christmas
o 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, contract value may be affected since the contract owner and
participant would not have access to their account.
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
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(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.
(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 which contract features a plan has
chosen.
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 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 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 of participant exchange privileges as a consequence of
agreements entered into to purchase mutual funds or other investments unrelated
to the contract. If the contract owner elects an exchange privilege, there is no
charge for exchanges.
TRANSFER REQUESTS
In addition to submitting exchange requests in writing, the participant also may
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.
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.
If Nationwide receives the transfer request before the end of a valuation date,
the transfer will receive the accumulation unit values of that date. However, if
Nationwide receives the transfer request after the close of business on a
valuation date, the transfer will receive the next valuation date's accumulation
unit value.
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<PAGE> 21
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.
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:
o Contingent Deferred Sales Charge
o Participant Account Maintenance Charge
o Variable Account Annual Expense Fee
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 the contract owner the value of the contract, in accordance
with the terms of the contract. This amount is subject to applicable charges
including CDSC.
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.
For partial redemptions, Nationwide will cancel accumulation units from the
sub-accounts. The requested dollar amount cannot exceed available accumulation
unit value. The contract owner
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<PAGE> 22
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
the 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 conditions described in
(2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, contract value could be affected since the contract owner and
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.
Nationwide is obligated to make payments under a variable payment annuity.
However, the amount
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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 funded 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
$3,500, 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.
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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:
o the mortality tables specified in the contract;
o the adjusted age of the retired participant;
o the type of retirement income payment option(s) selected; and
o 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 at least annually during a participant's lifetime for a
set period of 60, 120, 180, 240, 300 or 360 months, as elected. If the
participant 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 a designated
annuitant and a named beneficary. Payments will be made as long as either of
the two is living. If the annuitant 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 designated annuitant, payments will continue at
100% to the designated annuitant.
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
order to determine subsequent payments under a variable payment annuity. If not
prohibited by law, a contract owner may, at contract issuance, elect an
alternate 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
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maintain level variable annuity payments. Subsequent years' 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 Years' Payments
To determine the 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 the 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.
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
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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
Consult a financial adviser, legal counsel or tax adviser to discuss in detail
the taxation and the use of the contracts.
Nationwide does not guarantee the tax status of the contracts or any
transactions involving the contracts. 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:
o References to "annuity" payments throughout the prospectus are
modified to mean "benefit" payments.
o 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.
o All references to Life Retirement Income Forms A1, A2, B1 and
B2 throughout this prospectus shall mean Option 1, Option 2,
Option 3, and Option 4, respectively.
o All references to "CDSC" and "Contingent Deferred Sales
Charge" throughout this prospectus are deleted.
STATEMENTS AND REPORTS
Nationwide (or a designee) will provide each participant a Statement of Assets,
Liabilities and Contract Owners' Equity and a Statement of Operations and
Changes in Contract Owners' Equity for the variable account at least
semi-annually. Nationwide will also provide annual and semi-annual reports
containing all applicable information and financial statements or their
equivalent, which must be sent to the underlying mutual fund beneficial
shareholders as required by the rules under the Investment Company Act of 1940
for the variable account.
Additionally, each participant and retired participant will receive periodic
reports on the value of his or her account.
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.
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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.
YEAR 2000 COMPLIANCE ISSUES
Nationwide has developed and implemented a plan to address issues related to the
Year 2000. The problem relates to many existing computer systems using only two
digits to identify a year in a date field. These systems were designed and
developed without considering the impact of the upcoming change in the century.
If not corrected, many computer systems could fail or create erroneous results
when processing information dated after December 31, 1999. Like many
organizations, Nationwide is required to renovate or replace computer systems so
that the systems will function properly after December 31, 1999.
Nationwide has completed an inventory and assessment of all computer systems and
has implemented a plan to renovate or replace all applications that were
identified as not Year 2000 compliant. Nationwide has renovated all applications
that required renovation. Testing of the renovated programs included running
each application in a Year 2000 environment and was completed as planned during
1998. For applications being replaced, Nationwide had all replacement systems in
place and functioning as planned by year-end 1998. Conversions of existing
traditional life policies will continue through second quarter, 1999. In
addition, the shareholder services system that supports our mutual fund products
will be fully deployed in the first quarter of 1999.
Nationwide has completed an inventory and assessment of all vendor products and
has tested and certified that each vendor product is Year 2000 compliant. Any
vendor products that could not be certified as Year 2000 compliant were replaced
or eliminated in 1998.
Nationwide has also addressed issues associated with the exchange of electronic
data with external organizations. Nationwide has completed an inventory and
assessment of all business partners including electronic interfaces. Processes
have been put into place and programs initiated to process data irrespective of
the format by converting non-compliant data into a Year 2000 compliant format.
Systems supporting Nationwide's infrastructure such as telecommunications, voice
and networks will be compliant by March 1999. Nationwide's assessment of Year
2000 issues has also included non-information technology systems with embedded
computer chips. Nationwide's building systems such as fire, security, and
elevators and escalators supporting facilities in Columbus, Ohio have been
tested and are Year 2000 compliant.
In addition to resolving internal Year 2000 readiness issues, Nationwide is
surveying significant external organizations (business partners) to assess if
they will be Year 2000 compliant and be in a position to do business in the Year
2000 and beyond. Specifically, nationwide has contacted mutual fund
organizations that provide funds for our variable annuity and life products. The
same action will continue during the first quarter of 1999 with wholesale
producers. Nationwide continues its efforts to identify external risk factors
and is planning to develop contingency plans as part of its ongoing risk
management strategy.
Operating expenses in 1998 and 1997 included approximately $44.7 million and
$45.4 million, respectively, for technology projects, including costs related to
Year 2000. Nationwide anticipates spending approximately $5 million on Year 2000
activities in 1999. These expenses do not have an effect on the assets of the
variable account and are not charged through to the contract owner.
Management does not anticipate that the completion of Year 2000 renovation and
replacement activities will result in a reduction in operating expenses. Rather,
personnel and resources currently allocated to Year 2000
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issues will be assigned to other technology-related projects.
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 February 1997, Nationwide was named as a defendant in a lawsuit filed in New
York state court related to the sale of whole life policies on a "vanishing
premium" basis (John H. Snyder v. Nationwide Life Insurance Co.). In April 1998,
Nationwide was named as a defendant in a lawsuit filed in Ohio state court
similar to the Snyder case (David and Joan Mishler v. Nationwide Life Insurance
Co.). In August 1998, Nationwide Mutual Insurance Company and Nationwide and the
plaintiffs executed a stipulation of settlement and submitted it to the New York
state court for approval. On August 20, 1998, the court in the Snyder case
signed an order preliminarily approving a class for settlement purposes (which
would include the Mishler case) and scheduled a fairness hearing for December
17, 1998. At that hearing, the court reviewed the fairness and reasonableness of
the proposed settlement and issued a final order and judgment. The approved
settlement provides for dismissal of both the Snyder and Mishler cases, bars
class members from pursuing litigation against Nationwide Mutual Insurance
Company and its affiliates, including Nationwide and its subsidiaries, relating
to the allegations in the Snyder case, and provides class members with a
potential value of approximately $100 million in policy adjustments, discounted
premiums and discounted products.
In November 1997, two plaintiffs, one who was the owner of a variable life
insurance policy 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 seek to
represent a class of variable life insurance policy 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, Nationwide and
American Century's motions to dismiss the complaint. The remaining claims
against Nationwide allege securities fraud, common law fraud, civil conspiracy
and breach of contract. On December 2, 1998, the district court issued an order
denying plaintiffs' motion for class certification. On December 10, 1998, the
district court stayed the lawsuit pending plaintiffs' petition to the federal
appeals court for interlocutory review of the order denying class certification.
On December 14, 1998, plaintiffs filed their petition for interlocutory review,
on which the federal appeals court has not yet ruled. Nationwide intends to
defend the case vigorously.
On October 29, 1998, Nationwide and certain of its subsidiaries were 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). The
plaintiff in such lawsuit seeks to represent a national class of Nationwide's
customers and seeks unspecified compensatory and punitive damages.
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Nationwide currently is evaluating this lawsuit, which has not been certified as
a class. 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 a party to any litigation of any material
nature.
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY
ADVERTISING
A "yield" and "effective yield" may be advertised for the Nationwide Money
Market Fund, NSAT - Money Market Fund, and the Dreyfus Cash Management Fund -
Class A. "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:
o precious metals;
o real estate;
o stocks and bonds;
o closed-end funds;
o bank money market deposit accounts and passbook savings;
o CDs; and o the Consumer Price Index.
Market Indexes
The sub-accounts will be compared to certain market indexes, such as:
o S&P 500;
o Shearson/Lehman Intermediate Government/Corporate Bond Index;
o Shearson/Lehman Long-Term Government/Corporate Bond Index;
o Donoghue Money Fund Average;
o U.S. Treasury Note Index;
o Bank Rate Monitor National Index of 2-1/2 Year CD Rates; and
o Dow Jones Industrial Average.
Tracking & Rating Services; Publications
Nationwide's rankings and ratings are sometimes published by other services,
such as:
o Lipper Analytical Services, Inc.,
o CDA/Wiesenberger,
o Morningstar,
o Donoghue's,
o magazines such as:
-- Money;
-- Forbes;
-- Kiplinger's Personal Finance Magazine;
-- Financial World
-- Consumer Reports
-- Business Week;
-- Time;
-- Newsweek;
-- National Underwriter;
-- News and World Report;
o LIMRA;
o Value;
o Best's Agent Guide;
o Western Annuity Guide;
o Comparative Annuity Reports;
o Wall Street Journal;
o Barron's;
o Investor's Daily;
o Standard & Poor's Outlook; and
o 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.
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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 nonstandardized "total
return." Average annual total return shows the percentage rate of return of a
hypothetical initial investment of $1,000 for the most recent one, five and ten
year periods (or for a period covering the time the underlying mutual fund has
been available in the variable account if it has not been available for one of
the prescribed periods). This calculation reflects the deduction of all 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," shows the percentage rate of return of a hypothetical
initial investment of $10,000 for the most recent one, five and ten year periods
(or for a period covering the time the underlying mutual fund has been in
existence). For those underlying mutual funds which have not been available for
one of the prescribed periods, the nonstandardized total return illustrations
will show the investment performance the underlying mutual funds would have
achieved (reduced by the same charges except the CDSC) had they been available
in the variable account for one of the periods. The CDSC is not reflected
because the contracts are designed for long term investment. The CDSC, if
reflected, would decrease the level of performance shown. An initial investment
of $10,000 is assumed because that amount is closer to the size of a typical
contract than $1,000, which was used in calculating the standardized average
annual total return.
The standardized average annual total return and nonstandardized total return
quotations are calculated using data for the period ended December 31, 1998.
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.
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TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
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
</TABLE>
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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.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE AVAILABLE WHEN THE CONTRACTS ARE
ISSUED TO 457 DEFERRED COMPENSATION PLANS.
AIM EQUITY INDEX FUNDS, INC. - AIM CONSTELLATION FUND - INSTITUTIONAL CLASS
The investment objective of the Fund is to provide capital appreciation
primarily through investments in common stocks with emphasis on medium-sized
and smaller emerging growth companies. AIM Advisers, Inc. serves as the Fund's
investment adviser.
AMERICAN CENTURY: INTERNATIONAL DISCOVERY FUND (FORMERLY AMERICAN CENTURY -
TWENTIETH CENTURY INTERNATIONAL DISCOVERY FUND - 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.
AMERICAN CENTURY: INCOME & GROWTH - INVESTOR CLASS GROWTH
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: 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 Management, Inc. serves as the Fund's investment adviser.
AMERICAN CENTURY: SELECT (FORMERLY AMERICAN CENTURY: TWENTIETH CENTURY SELECT)
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. Common stocks chosen must have a record of paying or
having committed themselves to the payment of regular cash dividends, but growth
is the primary consideration, and the dividends may not be significant. American
Century Investment Management, Inc.
serves as the Fund's investment adviser.
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AMERICAN CENTURY: ULTRA (FORMERLY AMERICAN CENTURY: TWENTIETH CENTURY ULTRA)
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 Management, Inc. serves as the Fund's investment
adviser.
DAVIS NEW YORK VENTURE FUND, INC.
The investment objective of the Fund is growth of capital. It invests primarily
in common stocks, and securities convertible into common stocks. The Fund
invests in securities subject to the risk of price fluctuations reflecting both
market evaluations of the business involved and general changes in the equity
markets. It invests in securities of foreign issuers, which involve special risk
factors, and may hedge currency fluctuation risks related thereto. Davis
Selected Advisers, L.P., serves as the Fund's investment adviser.
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.
DREYSFUS CASH MANAGEMENT FUND - CLASS A
The investment objective of the Fund is to provide investors with as high a
level of current income as is consistent with the preservation of capital and
the maintenance of liquidity. 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.
DREYFUS S&P 500 INDEX FUND
The Fund's objective is to provide investment results that correspond to the
price and yield performance of publicly-traded common stocks in the aggregate,
as represented by the Standard & Poor's 500 Composite Stock Price Index. The
Dreyfus Corporation serves as the Fund's investment adviser.
DREYFUS THIRD CENTURY FUND, INC.
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 meet
traditional investment standards, but which also show evidence that they conduct
their business in a manner that contributes to the enhancement of the quality of
life in America. Current income is secondary to the primary goal. The Dreyfus
Corporation serves as the Fund's investment adviser.
EVERGREEN INCOME AND GROWTH FUND (FORMERLY EVERGREEN TOTAL RETURN FUND)
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.
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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 Advisers 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 Management 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 ASSET MANAGER(TM)
The investment objective of the Fund is a high total return with reduced risk
over the long term by allocating its assets among domestic and foreign stocks,
bonds, and short-term instruments. 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.
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 INDUSTRIAL INCOME FUND, INC. (FORMERLY FINANCIAL INDUSTRIAL INCOME FUND,
INC.)
The investment objective of the Fund is to seek the best possible current income
while following sound investment practices by investing in securities which will
provide a relatively high yield and stable return and which, over a period of
years, may also provide capital appreciation. Capital growth potential is a
secondary factor in the selection of portfolio securities of the Fund. The Fund
invests in common stocks, as well as convertible bond and
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<PAGE> 35
preferred stocks. 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.
JANUS FUND
The Janus Fund is a diversified fund that seeks long-term growth of capital by
investing primarily in common stocks of a large number of issuers of any size.
Janus Capital's fundamental analysis and selection process focuses on stocks
with earnings growth potential that may not be recognized by the market. Such
securities are selected solely for their capital growth potential; investment
income is not a consideration. Janus Capital Corporation serves as the Fund's
investment adviser.
JANUS WORLDWIDE FUND
The investment objective of the Fund is long-term growth of capital in a manner
consistent with preservation of capital The objective is pursued primarily
through investments in common stocks of foreign and domestic issuers. The Fund
may invest on a worldwide basis in companies and organizations of any size,
regardless of country or organization or place of principal business activity.
The Fund normally invests in issuers from at least five different countries.
Janus Capital Corporation serves as the Fund's investment adviser.
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. Nationwide Advisory
Services, Inc. ("NAS") 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 fixed income securities ("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. NAS
serves as the Fund's investment adviser.
- THE MODERATE PORTFOLIO
The investment objective of this Fund is to provide growth of capital by
investing primarily in Equity Funds, but will also
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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 time
horizon of at least 15 years or more; and more aggressive investors with an
investment time horizon of 5 to 10 years. NAS 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
objectives 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. NAS 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 and Bond Funds, with a smaller 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 as
more conservative investors with an investment time horizon of between 5
and 10 years. NAS serves as the Fund's investment adviser.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND - CLASS A
The investment objective of the Fund is long-term growth of capital and future
income rather than current income. Massachusetts Financial Services Company
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 to 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, L.L.P. serves as the Fund's investment adviser.
MFS(R) GROWTH OPPORTUNITIES FUND - CLASS A (FORMERLY MFS(R) CAPITAL DEVELOPMENT
FUND)
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.
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
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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 Dean Witter
Investment Management, Inc. serves as the Portfolio's investment adviser.
NATIONWIDE(R) BOND FUND - CLASS D
The invesment objective of the Fund is to seek as high a level of income as is
consistent with preservation of capital. The Fund invests primarily in
fixed-income securities and currently focuses on corporate debt investments and
U.S. Government mortgage-backed securities. Under normal market conditions, the
dollar-weighted average portfolio maturity of the Fund will be intermediate,
which is defined as being between six and ten years.
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. Nationwide Advisory Services,
Inc. serves as the Fund's investment adviser.
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. Nationwide Advisory Services, Inc. serves as the Fund's
investment adviser.
NATIONWIDE S&P 500(R) INDEX FUND - 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.
Nationwide Advisory Services, Inc. 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 Nationwide Advisory Services, Inc. The
Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the Fund.
NATIONWIDE SEPARATE ACCOUNT TRUST - NATIONWIDE SMALL COMPANY FUND
The investment objective of the Fund is long-term growth of capital by investing
primarily in equity securities of domestic and foreign companies with market
capitalizations of less than $1 billion at the time of purchase. The
subadvisers, Dreyfus Corporation, Neuberger & Berman, L.P., Lazard Asset
Management, Strong Capital Management, Inc. and Warburg Pincus Asset Management,
Inc., were chosen because they utilize a number of different investment styles
when investing in small company stocks. By utilizing different investment
styles, the Fund's adviser, Nationwide Advisory Services, Inc., hopes to
increase prospects for investment return and to reduce market risk and
volatility.
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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 MANHATTAN FUND, INC.
The Fund seeks capital appreciation without regard to income. It invests,
through its corresponding Portfolio, in securities believed to have the maximum
potential for long-term capital appreciation. It does not seek to invest in
securities that pay dividends or interest, and any such income is incidental.
The Portfolio expects to be almost fully invested in common stocks, often of
companies that may be temporarily out of favor in the market. Its aggressive
growth investment program involves greater risks and share price volatility than
programs that invest in more conservative securities. 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,
Inc. serves as the Fund's investment adviser.
OPPENHEIMER GLOBAL FUND/VA - 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, 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 - 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. Nationwide
Advisory Services, Inc. serves as the Fund's investment adviser and J.P. Morgan
Investment Management Inc. is the Fund's sub-adviser.
PRESTIGE INTERNATIONAL FUND - 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
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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). Nationwide Advisory Services, Inc. serves as
the Fund's investment adviser and Lazard Asset Management is the Fund's
sub-adviser.
PRESTIGE LARGE CAP GROWTH FUND - 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. Nationwide Advisory Services, Inc. serves as the Fund's
investment adviser and Goldman Sachs Asset Management is the Fund's sub-adviser.
PRESTIGE LARGE CAP VALUE FUND - 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 have
market capitalizations that range from $1.4 billion to $272 billion. Nationwide
Advisory Services, Inc. serves as the Fund's investment adviser and Brinson
Partners, Inc. is the Fund's sub-adviser.
PRESTIGE SMALL CAP FUND - 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. Nationwide
Advisory Services, Inc. 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 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 by the Fund's Investment Manager, Putnam
Management, 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.
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SEI INDEX FUNDS - S&P 500 INDEX PORTFOLIO
The S&P 500 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.
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.
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.
WARBURG PINCUS EMERGING GROWTH FUND
The investment objective of the Fund is maximum capital appreciation by
investing in equity securities of small-to-medium sized companies in the United
States with emerging or renewed growth potential. Warburg Pincus Asset
Management, Inc. serves as the Fund's investment adviser.
THE FOLLOWING UNDERLYING MUTUAL FUND IS NOT AVAILABLE TO NEW PLANS ESTABLISHED
ON OR AFTER JUNE 30, 1998:
FIDELITY CONTRAFUND
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 TO 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 TO ALL CONTRACT OWNERS
ON OR AFTER JANUARY 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.
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<PAGE> 41
THE GROWTH FUND OF AMERICA(R), INC.
The investment objective of the Fund is growth of capital. The realization of
current income will not be a consideration. The Fund seeks to achieve its
objective by investing in a diversified portfolio consisting primarily of common
stocks. However, assets may also be held in securities convertible into common
stocks, cash or cash equivalents, straight debt securities (including U.S.
Government securities), or nonconvertible preferred stocks. The Fund will
maintain at least 65% of the value of its total assets in growth-type securities
under normal market conditions.
THE INCOME FUND OF AMERICA(R), INC.
The investment objective is to emphasize current income while secondarily
striving to attain capital growth. The Fund believes that a portfolio with
relatively high current income can also generate growth of capital.
THE FOLLOWING UNDERLYING MUTUAL FUND IS NOT AVAILABLE FOR NEW CONTRACTS ISSUED
ON OR AFTER AUGUST 1, 1993:
DELAWARE GROUP DECATUR FUND, INC.-DECATUR INCOME FUND
The investment Objective of the Fund is to achieve the highest possible current
income by investing primarily in common stocks that provide the potential for
income and capital appreciation without undue risk to principal.
THE FOLLOWING UNDERLYING MUTUAL FUND IS NOT AVAILABLE FOR NEW CONTRACTS ISSUED
ON OR AFTER JANUARY 1, 1987:
FIDELITY CAPITAL & INCOME FUND (FORMERLY FIDELITY HIGH 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.
Effective on and after May 1, 1991, Nationwide shall no longer permit contract
owners or participants to make additional purchase payments or to exchange
contract values into the Fidelity Capital & Income Fund (formerly Fidelity High
Income Fund) sub-account. However, contract values held in the Fidelity Capital
& Income Fund (formerly Fidelity High Income Fund) sub-account as of May 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
participants directs Nationwide to invest in the Fidelity Capital & Income Fund
(formerly Fidelity High Income Fund) sub-account on and after May 1, 1991 shall
instead be automatically invested in the Nationwide Money Market Fund
sub-account.
Nationwide has determined that further investment in the Fidelity Capital &
Income Fund (formerly Fidelity High Income Fund) sub-account 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 variable account which were
purchased from February 1, 1991 to May 1, 1991 shall be paid by Nationwide from
surplus and shall not be paid, directly or indirectly, by contract owners,
participants or the variable account.
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APPENDIX B
The information shown below illustrates different accumulation unit values for
each tier (current as of December 31 of the preceding year.) Additional
information is maintained in the Statement of Additional Information for this
prospectus. A Statement of Additional Information, as well as specific
information concerning the accumulation unit values for any particular plan, may
be obtained by calling Nationwide at 1-800-545-4730 or by writing to P.O. Box
16766, Columbus, Ohio 43216.
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
TIER I*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE........................................0.95%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
AIM Equity Funds, Inc.- 2.309709 2.731993 0 1998
AIM Constellation Fund - 2.055366 2.309709 4,142,513 1997
Institutional Class 1.776138 2.055366 6,309,167 1996
1.316836 1.776138 3,214,050 1995
1.305850 1.316836 1,607,538 1994
1.120568 1.305850 1,341,351 1993
1.000000 1.120568 0 1992
American Century: Growth 5.842997 7.915964 9,702,654 1998
Fund (formerly
Twentieth Century 4.562802 5.842997 23,886,079 1997
Growth) 4.005400 4.562802 12,224,812 1996
3.359891 4.005400 37,335,163 1995
3.443124 3.359891 41,134,943 1994
3.350122 3.443124 51,977,134 1993
3.533694 3.350122 58,356,370 1992
2.110582 3.533694 53,923,483 1991
2.216085 2.110582 67,311,152 1990
1.562983 2.216085 49,896,477 1989
American Century: Select 2.058976 2.766712 50,420 1998
Fund (formerly
Twentieth Century 1.572461 2.058976 1,111,408 1997
Select) 1.331631 1.572461 41,014 1996
1.095899 1.331631 1,254,199 1995
1.202996 1.095899 194,231 1994
1.059075 1.202996 386,750 1993
1.118927 1.059075 383,487 1992
1.000000 1.118927 2,950 1991
</TABLE>
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CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
American Century: Ultra Fund 2.524538 3.364568 70,804,264 1998
(formerly
Twentieth Century 2.069865 2.524538 132,438,228 1997
Ultra) 1.835553 2.069865 70,399,683 1996
1.345904 1.835553 105,140,475 1995
1.409710 1.345904 88,713,416 1994
1.168340 1.409710 68,551,255 1993
1.164722 1.168340 33,483,411 1992
1.000000 1.164722 11,412 1991
The Bond Fund 2.332586 2.429862 4,103,842 1998
of America(SM), Inc. 2.155739 2.332586 5,345,075 1997
2.039710 2.155739 3,518,054 1996
1.741422 2.039710 7,434,474 1995
1.850918 1.741422 7,880,903 1994
1.637181 1.850918 8,560,956 1993
1.484255 1.637181 6,077,266 1992
1.238222 1.484255 5,128,071 1991
1.208717 1.238222 5,102,901 1990
1.109668 1.208717 3,105,875 1989
Davis New York 2.232520 2.537156 0 1998
Venture 1.686019 2.232520 199,664 1997
Fund, Inc. 1.345221 1.686019 1,180,098 1996
0.966146 1.345221 1,771,764 1995
0.994508 0.966146 720,917 1994
1.000000 0.994508 5,626 1993
Delaware Group 2.935219 3.200994 68,865 1998
Decatur Fund, Inc. - 2.280210 2.935219 96,261 1997
Decatur Income Fund 1.910384 2.280210 78,578 1996
Institutional Class 1.449372 1.910384 100,636 1995
1.473401 1.449372 104,006 1994
1.289480 1.473401 281,500 1993
1.196471 1.289480 162,528 1992
0.991871 1.196471 106,856 1991
1.142606 0.991871 16,158 1990
1.000000 1.142606 0 1989
Dreyfus 1.212149 1.266733 0 1998
Cash 1.159356 1.212149 231,535 1997
Management** - Class A 1.110383 1.159356 618,162 1996
1.057458 1.110383 2,561,760 1995
1.025704 1.057458 2,324,960 1994
1.003770 1.025704 25,763 1993
1.000000 1.003770 0 1992
</TABLE>
45
47 of 186
<PAGE> 44
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Dreyfus 3.532278 4.554448 42,486 1998
Third Century 2.756438 3.532278 10,221,038 1997
Fund, Inc. 2.238323 2.756438 3,824,949 1996
1.663803 2.238323 6,501,520 1995
1.814915 1.663803 6,965,653 1994
1.740666 1.814915 8,765,880 1993
1.723855 1.740666 9,137,872 1992
1.259983 1.723855 5,165,976 1991
1.228377 1.259983 4,118,236 1990
1.057519 1.228377 1,659,197 1989
Dreyfus S&P 500 Index 1.217658 2.683847 45,862 1998
Fund 1.000000 1.217658 15,653,811 1997
Evergreen 2.422617 2.380651 713,985 1998
Income and Growth 1.947502 2.422617 1,909,226 1997
Fund Class Y (formerly 1.741651 1.947502 1,146,375 1996
Evergreen Total 1.419467 1.741651 3,257,653 1995
Return Fund) 1.531292 1.419467 4,439,096 1994
1.368966 1.531292 7,948,202 1993
1.256090 1.368966 6,846,744 1992
1.031024 1.256090 7,328,719 1991
1.110904 1.031024 13,632,891 1990
0.959913 1.110904 10,256,138 1989
Federated U.S. 1.214470 1.300471 2,986,605 1998
Government 1.144380 1.214470 2,077,904 1997
Securities 1.115461 1.144380 1,214,422 1996
Fund: 2-5 Years - 0.991595 1.115461 1,877,483 1995
Institutional Shares 1.020623 0.991595 1,280,899 1994
1.000000 1.020623 696,793 1993
Fidelity Asset 1.517270 1.744805 3,453,740 1998
Manager(TM) 1.252704 1.517270 4,375,583 1997
1.121926 1.252704 2,611,685 1996
0.958564 1.121926 5,838,128 1995
1.036089 0.958564 3,916,306 1994
1.000000 1.036089 79,714 1993
Fidelity Capital 4.654233 4.829318 86,372 1998
& Income Fund (formerly 4.096488 4.654233 294,820 1997
Fidelity High Income Fund) 3.712491 4.096488 125,230 1996
3.210584 3.712491 463,343 1995
3.397953 3.210584 561,985 1994
2.746533 3.397953 925,953 1993
2.165417 2.746533 1,032,492 1992
1.684020 2.165417 1,471,867 1991
1.768220 1.684020 4,160,164 1990
1.843890 1.768220 4,943,976 1989
</TABLE>
46
48 of 186
<PAGE> 45
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Fidelity 2.509557 3.269491 67,920,295 1998
Contrafund 2.059778 2.509557 99,795,570 1997
1.705419 2.059778 56,288,590 1996
1.263308 1.705419 62,585,233 1995
1.289799 1.263308 40,927,857 1994
1.072342 1.289799 14,514,807 1993
1.000000 1.072342 186,872 1992
Fidelity 6.900916 7.691828 17,905,060 1998
Equity-Income 5.359692 6.900916 42,604,023 1997
Fund 4.471070 5.359692 18,493,235 1996
3.424310 4.471070 35,553,370 1995
3.448520 3.424310 34,056,352 1994
2.869860 3.448520 41,743,016 1993
2.526472 2.869860 36,410,831 1992
1.971024 2.526472 40,239,204 1991
2.314450 1.971024 65,533,870 1990
1.968876 2.314450 62,489,636 1989
Fidelity 2.581177 3.280585 1,124 1998
Growth & 2.001775 2.581177 3,435,213 1997
Income Portfolio 1.683805 2.001775 4,201,944 1996
1.255568 1.683805 4,155,413 1995
1.239420 1.255568 2,808,994 1994
1.046808 1.239420 1,219,293 1993
1.000000 1.046808 85,896 1992
Fidelity Magellan(R) 2.398961 3.175365 49,762,526 1998
Fund 1.913110 2.398961 95,356,893 1997
1.729361 1.913110 56,756,036 1996
1.275955 1.729361 92,049,788 1995
1.311856 1.275955 68,044,510 1994
1.062405 1.311856 43,203,753 1993
1.000000 1.062405 10,591,374 1992
The Growth 3.382686 4.415588 2,635,898 1998
Fund of 2.691979 3.382686 4,016,452 1997
America(R), Inc. 2.366626 2.691979 2,478,693 1996
1.840658 2.366626 6,716,573 1995
1.857739 1.840658 5,646,915 1994
1.638011 1.857739 5,353,392 1993
1.539692 1.638011 3,840,212 1992
1.144684 1.539692 1,551,711 1991
1.205372 1.144684 105,320 1990
1.000000 1.205372 0 1989
</TABLE>
47
49 of 186
<PAGE> 46
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
The Income 2.614863 2.835318 4,569,474 1998
Fund of 2.160929 2.614863 7,017,085 1997
America(R), Inc. 1.893327 2.160929 5,291,391 1996
1.480756 1.893327 8,645,811 1995
1.533299 1.480756 7,829,528 1994
1.357846 1.533299 7,258,704 1993
1.223786 1.357846 3,016,773 1992
0.998504 1.223786 631,336 1991
1.000000 0.998504 0 1990
INVESCO 2.102364 2.376817 7,930,211 1998
Industrial 1.678513 2.102364 10,884,376 1997
Income Fund, Inc. (formerly 1.451889 1.678513 7,428,110 1996
Financial Industrial Income 1.151056 1.451889 10,632,818 1995
Fund, Inc.) 1.208959 1.151056 8,239,738 1994
1.045472 1.208959 3,039,640 1993
1.000000 1.045472 17,289 1992
Janus Fund 1.948907 2.681244 28,922,213 1998
1.603290 1.948907 33,709,518 1997
1.353271 1.603290 15,851,766 1996
1.055481 1.353271 13,522,743 1995
1.077425 1.055481 7,345,306 1994
1.000000 1.077425 2,969,768 1993
Janus Worldwide Fund 1.000000 1.241260 931,009 1998
MAS Funds Fixed 1.335173 1.413926 2,982,430 1998
Income Portfolio 1.229760 1.335173 1,990,827 1997
1.156444 1.229760 718,247 1996
0.980782 1.156444 366,064 1995
1.000000 0.980782 31,751 1994
Massachusetts 15.968069 22.143725 164,187 1998
Investors Growth 10.880822 15.968069 450,089 1997
Stock Fund - 8.942612 10.880822 164,786 1996
Class A 7.034148 8.942612 551,377 1995
7.613442 7.034148 604,020 1994
6.714892 7.613442 891,831 1993
6.368639 6.714892 914,534 1992
4.352449 6.368639 1,056,566 1991
4.612779 4.352449 1,577,501 1990
3.430876 4.612779 1,393,742 1989
</TABLE>
48
50 of 186
<PAGE> 47
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
MFS(R) Growth 9.012670 11.531693 419,655 1998
Opportunities 7.380232 9.012670 3,078,940 1997
Fund - Class A 6.114190 7.380232 843,158 1996
4.589533 6.114190 3,824,999 1995
4.834037 4.589533 4,635,532 1994
4.200054 4.834037 9,303,110 1993
3.936838 4.200054 10,600,796 1992
3.246855 3.936838 13,413,614 1991
3.427388 3.246855 23,047,089 1990
2.692907 3.427388 24,300,466 1989
MFS(R) High 6.168371 6.172749 146,644 1998
Income 5.518160 6.168371 633,922 1997
Fund - 4.949752 5.518160 164,395 1996
Class A 4.265493 4.949752 806,763 1995
4.422523 4.265493 877,250 1994
3.739642 4.422523 1,068,154 1993
3.225557 3.739642 1,036,507 1992
2.186959 3.225557 1,186,991 1991
2.651605 2.186959 2,159,639 1990
2.731036 2.651605 2,739,257 1989
Nationwide(R) 2.166981 2.2325952 74,419 1998
Bond Fund - Class D 2.001472 2.166981 51,355 1997
1.991196 2.001472 26,395 1996
1.619166 1.991196 92,001 1995
1.778765 1.619166 51,492 1994
1.621957 1.778765 148,222 1993
1.516560 1.621957 197,350 1992
1.309926 1.516560 363,511 1991
1.222004 1.309926 420,858 1990
1.114209 1.222004 314,062 1989
Nationwide(R) 20.697282 26.722904 266,191 1998
Fund - Class D 14.964379 20.697282 3,635,254 1997
12.191058 14.964379 1,316,219 1996
9.468045 12.191058 2,905,460 1995
9.502760 9.468045 3,036,527 1994
8.985447 9.502760 3,690,273 1993
8.810680 8.985447 4,218,392 1992
6.830443 8.810680 3,906,633 1991
6.875188 6.830443 3,792,110 1990
5.187286 6.875188 2,756,965 1989
</TABLE>
49
51 of 186
<PAGE> 48
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Nationwide(R) 3.854877 4.725203 945,925 1998
Growth Fund - Class D 3.083008 3.854877 2,582,538 1997
2.667201 3.083008 1,156,065 1996
2.092009 2.667201 3,668,270 1995
2.081399 2.092009 3,759,425 1994
1.887524 2.081399 5,928,120 1993
1.792687 1.887524 5,747,753 1992
1.330199 1.792687 5,108,711 1991
1.452973 1.330199 7,279,598 1990
1.276112 1.452973 4,762,338 1989
Nationwide(R) 3.003821 3.126448 239,031 1998
Money Market 2.884848 3.003821 18,830,414 1997
Fund*** 2.774433 2.884848 7,935,176 1996
2.654661 2.774433 20,350,850 1995
2.583387 2.654661 18,028,497 1994
2.542721 2.583387 20,122,594 1993
2.487178 2.542721 22,067,362 1992
2.377082 2.487178 33,612,374 1991
2.224557 2.377082 48,721,235 1990
2.062504 2.224557 43,599,432 1989
Neuberger Berman 1.595471 1.617561 0 1998
Guardian Fund, Inc. 1.365700 1.595471 614,486 1997
1.169665 1.365700 0 1996
1.000000 1.696655 0 1995
Neuberger Berman 3.146989 3.628224 71,086 1998
Manhattan Fund, Inc. 2.458922 3.146989 39,662 1997
2.259932 2.458922 119,922 1996
1.741549 2.259932 394,751 1995
1.823796 1.741549 406,054 1994
1.673695 1.823796 317,549 1993
1.434738 1.673695 56,526 1992
1.106565 1.434738 7,124 1991
1.214940 1.106565 0 1990
1.000000 1.214940 0 1989
Putnam 18.110411 24.311753 571,765 1998
Investors 13.594501 18.110411 2,476,574 1997
Fund - 11.305164 13.594501 713,005 1996
Class A 8.297318 11.305164 3,422,356 1995
8.652501 8.297318 3,674,131 1994
7.410567 8.652501 4,311,483 1993
6.934213 7.410567 4,294,647 1992
5.445269 6.934213 4,745,398 1991
5.654203 5.445269 6,112,297 1990
4.262206 5.654203 5,893,052 1989
</TABLE>
50
52 of 186
<PAGE> 49
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Putnam Voyager 3.837109 4.715165 25,813,706 1998
Fund - Class A 3.074879 3.837109 35,911,119 1997
2.752130 3.074879 18,151,250 1996
1.982311 2.752130 21,036,155 1995
1.992379 1.982311 14,803,070 1994
1.698751 1.992379 11,820,145 1993
1.563079 1.698751 7,640,204 1992
1.049811 1.563079 4,622,048 1991
1.000000 1.049811 290,518 1990
SEI Index 3.905079 4.964488 259,012 1998
Funds - S&P 500 2.962497 3.905079 3,892,401 1997
Index Portfolio 2.439184 2.962497 524,069 1996
1.792835 2.439184 1,072,618 1995
1.792223 1.792835 722,997 1994
1.647325 1.792223 509,498 1993
1.548965 1.647325 257,368 1992
1.203412 1.548965 121,485 1991
1.254560 1.203412 509 1990
1.000000 1.254560 0 1989
Seligman 12.541848 16.801408 87,555 1998
Growth 10.720312 12.541848 227,045 1997
Fund, Inc. - 8.934609 10.720312 105,249 1996
Class A 7.020585 8.934609 277,527 1995
7.370495 7.020585 299,685 1994
6.989639 7.370495 513,220 1993
6.340967 6.989639 555,163 1992
4.611005 6.340967 685,494 1991
4.910683 4.611005 977,515 1990
3.714452 4.910683 916,525 1989
</TABLE>
51
53 of 186
<PAGE> 50
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
T. Rowe Price 1.843420 2.120702 7,543,129 1998
International 1.812062 1.843420 16,365,466 1997
Stock Fund(R) 1.577274 1.812062 8,220,403 1996
1.429428 1.577274 22,425,072 1995
1.454045 1.429428 18,673,315 1994
1.047655 1.454045 11,658,962 1993
1.095728 1.047655 4,370,293 1992
0.954695 1.095728 2,239,924 1991
1.000000 0.954695 441,232 1990
Templeton 1.874393 1.765910 0 1998
Foreign 1.774294 1.874393 43,044,777 1997
Fund - Class A 1.518092 1.774294 27,327,650 1996
1.378759 1.518092 32,915,364 1995
1.387073 1.378759 25,358,639 1994
1.023491 1.387073 6,636,629 1993
1.000000 1.023491 0 1992
</TABLE>
* For Plans converted to a Variable Account Annual Expense Fee of 0.95% of
average net assets on June 30, 1996.
** The 7-day yield on the Dreyfus Cash Management - Class A as of December 31,
1997 was 1.90%.
*** The 7-day yield on the Nationwide Money Market Fund as of December 31, 1997
was 3.74%.
**** Unit information is not available for the year 1995.
52
54 of 186
<PAGE> 51
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER IIa*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.90%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
American Century: Growth 5.846396 7.924525 3,294,508 1998
(formerly Twentieth Century 4.563176 5.846396 3,903,936 1997
Growth Fund) 4.005400 4.563176 4,398,109 1996
American Century: Ultra 2.526007 3.368207 19,448,936 1998
(formerly Twentieth Century 2.070035 2.526007 19,732,726 1997
Ultra) 1.835553 2.070035 18,056,950 1996
The Bond Fund 2.333980 2.432540 883,859 1998
of America(R), Inc. 2.155938 2.333980 844,897 1997
2.128763 2.155938 1,040,496 1996
Davis New York 2.233818 2.539900 137,969 1998
Venture Fund 1.686157 2.233818 199,664 1997
1.580715 1.686157 133,664 1996
Delaware Group 2.936925 3.204456 24,175 1998
Decatur Fund, Inc. - Decatur 2.280397 2.936925 15,400 1997
Income Fund 2.186556 2.280397 13,782 1996
Dreyfus 1.212863 1.268119 192,356 1998
Cash Management Fund - 1.159453 1.212863 231,535 1997
Class A 1.151569 1.159453 377,565 1996
Dreyfus S&P 500 Index Fund 1.218064 1.546121 6,127,205 1998
1.000000 1.218064 3,436,138 1997
Dreyfus 3.534332 4.559374 31,247 1998
Third Century Fund, Inc. 2.756663 3.534332 1,286,026 1997
2.699982 2.756663 967,536 1996
Evergreen 2.424026 2.383227 234,506 1998
Income and Growth 1.947661 2.424026 388,299 1997
Fund (formerly 1.875063 1.947661 470,751 1996
Evergreen Total Return
Fund)
Federated U.S. Government 1.215186 1.301894 748,333 1998
Securities Fund: 2-5 Years - 1.144477 1.215186 323,646 1997
Institutional Shares 1.140767 1.144477 342,284 1996
Fidelity Asset 1.518153 1.746693 666,704 1998
Manager(TM) 1.252806 1.518153 633,745 1997
1.214007 1.252806 671,795 1996
Fidelity Capital 4.656974 4.834602 26,735 1998
& Income Fund (formerly 4.096833 4.656974 36,724 1997
Fidelity High Income Fund) 4.015008 4.096833 77,649 1996
Fidelity 2.511017 3.273028 15,599,501 1998
Contrafund 2.059947 2.511017 15,968,503 1997
1.953469 2.059947 13,231,488 1996
Fidelity 6.904928 7.700147 6,047,814 1998
Equity-Income Fund 5.360130 6.904928 7,169,293 1997
5.110007 5.360130 6,443,316 1996
</TABLE>
53
55 of 186
<PAGE> 52
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Fidelity Magellan(R) 2.400356 3.178799 12,014,518 1998
Fund 1.913267 2.400356 11,589,048 1997
1.831563 1.913267 11,002,403 1996
The Growth 3.384653 4.420363 614,458 1998
Fund of America(R), Inc. 2.692199 3.384653 650,012 1997
2.519027 2.692199 553,730 1996
The Income 2.616384 2.838385 1,108,491 1998
Fund of America(R), Inc. 2.161106 2.616384 1,325,543 1997
2.072384 2.161106 1,137,681 1996
INVESCO 2.103587 2.379388 1,694,071 1998
Industrial Income Fund 1.678650 2.103587 1,917,268 1997
(formerly Financial 1.613178 1.678650 1,639,958 1996
Industrial Income Fund)
Janus Fund 1.950041 2.684144 6,455,407 1998
1.603421 1.950041 5,595,764 1997
1.550403 1.603421 4,109,624 1996
MAS Funds Fixed 1.335950 1.415456 320,011 1998
Income Portfolio 1.229861 1.335950 296,496 1997
1.215745 1.229861 193,871 1996
MFS(R) Growth 9.017913 11.544167 286,467 1998
Opportunities Fund-Class A 7.380837 9.017913 317,319 1997
7.065737 7.380837 361,634 1996
MFS(R) High 6.172004 6.179502 18,550 1998
Income Fund - Class A 5.518624 6.172004 25,730 1997
5.541012 5.518624 41,389 1996
Massachusetts 15.977352 22.167667 32,426 1998
Investors Growth 10.881713 15.977352 19,733 1997
Stock Fund - Class A 10.489691 10.881713 13,452 1996
Nationwide(R) 20.709316 26.751797 15,513 1998
Fund - Class D 14.965604 20.709316 509,179 1997
14.282052 14.965604 336,341 1996
Nationwide(R) 3.857119 4.730314 245,637 1998
Growth Fund - Class D 3.083261 3.857119 357,289 1997
2.916856 3.083261 386,199 1996
Nationwide(R) 3.005590 3.129869 0 1998
Money Market 2.885091 3.005590 6,441,740 1997
2.867462 2.885091 6,749,071 1996
Putnam 18.120944 24.338044 99,114 1998
Investors Fund - Class A 13.595614 18.120944 133,581 1997
13.246208 13.595614 153,709 1996
Putnam Voyager 3.839341 4.720266 5,838,788 1998
Fund - Class A 3.075131 3.839341 5,930,438 1997
3.055821 3.075131 5,117,342 1996
SEI Index Funds - S&P 3.907349 4.969856 76,739 1998
500 Index Portfolio 2.962740 3.907349 52,580 1997
2.823355 2.962740 71,085 1996
</TABLE>
54
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<PAGE> 53
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Seligman Growth Fund, Inc. 12.549144 16.819578 3,139 1998
- Class A 10.721190 12.549144 10,649 1997
10.356946 10.721190 17,582 1996
T. Rowe Price 1.844492 2.122997 1,638,194 1998
International Stock Fund(R) 1.812210 1.844492 1,859,130 1997
1.7255780 1.812210 1,718,457 1996
Templeton 1.875484 1.767822 0 1998
Foreign Fund - Class I 1.774439 1.875484 7,960,130 1997
1.678650 1.774439 6,594,135 1996
</TABLE>
* For Plans that converted from a Variable Account Annual Expense Fee of
0.95% of average net assets to a Variable Account Annual Expense Fee of
0.90% of average net assets on June 30, 1996.
** Unit information is not available for the year 1995.
55
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<PAGE> 54
CONDENSED FINANCIAL INFORMATION (CONTINUED)
TIER III*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.80%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
American Century Income & 1.000000 1.097595 109,503 1998
Growth Fund
American Century: Growth 5.853199 7.941675 3,767,251 1998
Fund (formerly 4.563925 5.853199 1,540,193 1997
Twentieth Century 4.555198 4.563925 1,586,526 1996
Growth Fund)
American Century: 1.000000 1.084264 83,975 1998
International Discovery
Fund
American Century: Ultra Fund 2.528946 3.375496 16,603,825 1998
(formerly Twentieth Century 2.070374 2.528946 11,990,091 1997
Ultra Fund) 2.055822 2.070374 9,866,856 1996
The Bond Fund 2.336766 2.437902 958,940 1998
of America(R), Inc. 2.156336 2.336766 379,522 1997
2.128822 2.156336 281,942 1996
Delaware Group 2.940341 3.211392 1,554 1998
Decatur Income Fund, 2.280770 2.940341 6,036 1997
Inc. - Decatur Income Fund 2.186573 2.280770 5,492 1996
Dreyfus Capital 1.000000 1.080133 524,887 1998
Appreciation Fund
Dreyfus Premier Midcap 1.000000 1.133283 10,469 1998
Stock - Class A
Dreyfus 3.538445 4.569241 5,543,237 1998
Third Century Fund, Inc. 2.757115 3.538445 912,241 1997
2.700004 2.757115 603,861 1996
Dreyfus S&P 500 Index 1.218878 1.548700 6,707,476 1998
Fund 1.000000 1.218878 2,297,690 1997
Evergreen Income and Growth 2.426846 2.388387 173,121 1998
Fund (formerly 1.947980 2.426846 79,190 1997
Evergreen Total Return Fund) 1.875078 1.947980 78,598 1996
Federated Bond Fund - Class F 1.000000 1.018687 55,483 1998
Federated U.S. Government 1.216616 1.304742 583,720 1998
Securities Fund: 2-5 Years - 1.144669 1.216616 188,738 1997
Institutional Shares 1.140779 1.144669 104,682 1996
Fidelity Advisor Growth 1.000000 1.089301 182,532 1998
Opportunities Fund - Class A
Fidelity Advisor High Yield 1.000000 1.064751 12,701 1998
Fund - Class T
Fidelity Asset 1.519919 1.750474 479,562 1998
Manager(TM) 1.253012 1.519919 299,273 1997
1.214017 1.253012 269,853 1996
Fidelity Capital 4.662457 4.845178 62,633 1998
& Income Fund (formerly 4.097522 4.662457 22,232 1997
Fidelity High Income Fund) 4.015052 4.097522 23,351 1996
</TABLE>
56
58 of 186
<PAGE> 55
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Fidelity 2.513939 3.280112 15,008,219 1998
Contrafund 2.060284 2.513939 9,637,261 1997
1.953485 2.060284 7,230,068 1996
Fidelity 6.912960 7.716814 4,932,169 1998
Equity-Income Fund 5.361008 6.912960 3,057,190 1997
5.110048 5.361008 2,555,440 1996
Fidelity Magellan(R) 2.403149 3.185678 8,905,129 1998
Fund 1.913580 2.403149 6,180,393 1997
1.831578 1.913580 5,622,628 1996
The Growth 3.388591 4.429930 516,513 1998
Fund of America(R), Inc. 2.692640 3.388591 496,036 1997
2.519048 2.692640 441,833 1996
The Income 2.619427 2.844529 945,389 1998
Fund of America(R), Inc. 2.161460 2.619427 490,571 1997
2.072401 2.161460 367,278 1996
INVESCO Dynamics 1.000000 1.172431 32,721 1998
Fund, Inc.
INVESCO Industrial Income 2.106034 2.384538 1,333,146 1998
Fund (formerly Financial 1.678925 2.106034 473,406 1997
Industrial Income Fund, Inc.) 1.613191 1.678925 309,576 1996
INVESCO Total Return Fund 1.000000 1.023668 53,415 1998
Janus Fund 1.952310 2.689953 8,036,789 1998
1.603684 1.952310 2,423,723 1997
1.550416 1.603684 1,634,700 1996
MAS Funds Fixed 1.337506 1.418521 552,980 1998
Income Portfolio 1.230062 1.337506 248,580 1997
1.215755 1.230062 87,227 1996
MFS(R) Growth 9.028407 11.569155 187,053 1998
Opportunities Fund - Class A 7.382046 9.028407 178,707 1997
7.065795 7.382046 181,406 1996
MFS(R) High Income Fund - 6.179271 6.193021 28,739 1998
Class A 5.519552 6.179271 6,564 1997
5.410180 5.519552 6,455 1996
Massachusetts 15.995935 22.215628 9,777 1998
Investors Growth 10.883496 15.995935 12,152 1997
Stock Fund - Class A 10.489775 10.883496 11,971 1996
Morgan Stanley Institutional 1.000000 1.106680 71,375 1998
Fund- Equity Growth
Portfolio - Class B
NSAT Nationwide Small 1.000000 1.022482 1,644,689 1998
Company Fund
Nationwide S&P 500 Index 1.000000 1.093550 299,188 1998
Fund-Class 4
Nationwide(R) 20.733404 26.809677 3,035,298 1998
Fund - Class D 14.968055 20.733404 329,293 1997
14.282168 14.968055 195,684 1996
</TABLE>
57
59 of 186
<PAGE> 56
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Nationwide(R) 3.861607 4.740553 308,068 1998
Growth Fund - Class D 3.083766 3.861607 93,047 1997
2.916880 3.083766 96,156 1996
Nationwide(R) 3.009129 3.136716 8,324,157 1998
Money Market 2.885576 3.009129 909,979 1997
2.867493 2.885576 901,408 1996
Neuberger & Berman Equity 1.000000 1.041831 40,394 1998
Trust Partners Trust
Oppenheimer Global Fund - 1.000000 1.106449 78,391 1998
Class A
Putnam Investors Fund - 18.142029 24.390710 75,040 1998
Class A 13.597842 18.142029 39,280 1997
13.246316 13.597842 38,905 1996
Putnam Voyager 3.843809 4.730485 5,319,237 1998
Fund - Class A 3.075635 3.843809 3,166,939 1997
3.055846 3.075635 2,559,117 1996
Seligman Growth Fund, Inc. - 12.563748 16.855977 16,244 1998
Class A 10.722947 12.563748 2,475 1997
10.357031 10.722947 2,396 1996
T. Rowe Price 1.846640 2.127594 1,798,986 1998
International Stock 1.812507 1.846640 1,036,525 1997
Fund(R) 1.725811 1.812507 931,357 1996
Templeton 1.877667 1.771651 21,282,916 1998
Foreign Fund - Class I 1.774730 1.877667 2,623,603 1997
1.678664 1.774730 2,061,896 1996
Warburg Pincus Emerging 1.000000 1.058940 26,076 1998
Markets Growth Fund
</TABLE>
* For Plans that converted from a Variable Account Annual Expense Fee of
0.95% of average net assets to a Variable Account Annual Expense Fee of
0.80% of average net assets on June 30, 1996.
** Unit information is not available for the year 1995.
58
60 of 186
<PAGE> 57
CONDENSED FINANCIAL INFORMATION
TIER IV*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.70%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
American Century: Growth 5.860011 7.958862 0 1998
Fund (formerly Twentieth 4.564673 5.860011 758,360 1997
Century Growth Fund) 4.555235 4.564673 735,112 1996
American Century Income & 1.000000 1.097739 30,419 1998
Growth Fund
American Century 1.000000 1.084406 50,207 1998
International Discovery Fund
American Century: Select Fund 2.064969 2.781702 0 1998
(formerly Twentieth Century 1.573105 2.064969 1,088,027 1997
Select Fund) 1.528629 1.573105 949,150 1996
American Century: Ultra Fund 2.531889 3.382800 0 1998
(formerly Twentieth Century 2.070713 2.531889 4,964,637 1997
Ultra Fund) 2.055839 2.070713 3,956,021 1996
The Bond Fund 2.339554 2.443271 0 1998
of America(R), Inc. 2.156734 2.339554 55,496 1997
2.128881 2.156734 46,844 1996
Dreyfus Capital 1.000000 1.080275 49,721 1998
Appreciation Fund
Dreyfus Premier Midcap 1.000000 1.133431 5,430 1998
Stock - Class A
Dreyfus S&P 500 Index 1.219691 1.551283 0 1998
Fund 1.000000 1.219691 1,092,654 1997
Dreyfus 3.542562 4.579129 1,526,223 1998
Third Century Fund, Inc. 2.757567 3.542562 428,452 1997
2.700026 2.757567 244,163 1996
Evergreen 2.429669 2.393558 0 1998
Income and Growth 1.948299 2.429669 21,853 1997
Fund (formerly 1.875094 1.948299 27,416 1996
Evergreen Total Return
Fund)
Federated Bond 1.000000 1.018821 219,340 1998
Fund Class F
Federated U.S. Government 1.218047 1.307593 0 1998
Securities Fund: 2-5 Years - 1.144861 1.218047 114,003 1997
Institutional Shares 1.140792 1.144861 104,637 1996
Fidelity Advisor Growth 1.000000 1.089444 11,123 1998
Opportunities Fund - Class A
Fidelity Advisor High Yield 1.000000 1.064934 5,110 1998
Fund - Class T
Fidelity Asset 1.521688 1.754263 0 1998
Manager(TM) 1.253217 1.521688 538,872 1997
1.214027 1.253217 456,745 1996
Fidelity Capital 4.667941 4.855767 0 1998
& Income Fund (formerly 4.098210 4.667941 22,307 1997
Fidelity High Income Fund) 4.015097 4.098210 22,770 1996
</TABLE>
59
61 of 186
<PAGE> 58
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Fidelity 2.516865 3.287212 0 1998
Contrafund 2.060621 2.516865 4,750,222 1997
1.953501 2.060621 3,683,606 1996
Fidelity 6.921001 7.733517 0 1998
Equity-Income Fund 5.361886 6.921001 2,389,431 1997
5.110090 5.361886 1,989,159 1996
Fidelity Magellan(R) 2.405944 3.192571 0 1998
Fund 1.913894 2.405944 3,706,622 1997
1.831593 1.913894 3,295,811 1996
The Growth 3.392534 4.439517 0 1998
Fund of America(R), Inc. 2.693081 3.392534 170,540 1997
2.519069 2.693081 158,421 1996
The Income 2.622475 2.850687 0 1998
Fund of America(R), Inc. 2.161814 2.622475 294,406 1997
2.072418 2.161814 246,997 1996
INVESCO Dynamics Fund 1.000000 1.172584 505 1998
INVESCO Industrial Income 2.108484 2.389699 0 1998
Fund (formerly Financial 1.679200 2.108484 473,795 1997
Industrial Income Fund) 1.613204 1.679200 346,238 1996
INVESCO Total Return Fund 1.000000 1.023803 72,756 1998
Janus Fund 1.954582 2.695775 0 1998
1.603947 1.954582 2,404,760 1997
1.550428 1.603947 1,696,374 1996
MAS Funds Fixed 1.339063 1.421594 1998
Income Portfolio 1.230264 1.339063 91,023 1997
1.215765 1.230264 27,573 1996
MFS(R) Growth 9.038914 11.594198 0 1998
Opportunities Fund - Class A 7.383255 9.038914 5,735 1997
7.065853 7.383255 7,294 1996
MFS(R) High Income Fund - 6.186539 6.206555 0 1998
Class A 5.520479 6.186539 105 1997
5.410240 5.520479 130 1996
Massachusetts 16.014540 22.263692 0 1998
Investors Growth 10.885279 16.014540 285 1997
Stock Fund - Class A 10.489862 10.885279 280 1996
Morgan Stanley Institutional 1.000000 1.106825 5,955 1998
Fund - Equity Growth
Portfolio - Class B
NAAT - The Aggressive 1.000000 1.152311 2,046,802 1998
Portfolio
NAAT - The Conservative 1.000000 1.110341 289,939 1998
Portfolio
NAAT - The Moderate 1.000000 1.145999 1,328,203 1998
Portfolio
</TABLE>
60
62 of 186
<PAGE> 59
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
NAAT - The Moderately 1.000000 1.143522 806,901 1998
Aggressive Portfolio
NAAT - The Moderately 1.000000 1.131933 473,517 1998
Conservative Portfolio
Nationwide(R) 20.757521 26.867683 803,944 1998
Fund - Class D 14.970505 20.757521 142,531 1997
14.282285 14.970505 54,398 1996
Nationwide(R) 3.866100 4.750814 0 1998
Growth Fund - Class D 3.084270 3.866100 339,294 1997
2.916904 3.084270 286,704 1996
Nationwide(R) 3.012668 3.143571 3,318,283 1998
Money Market 2.886060 3.012668 985,611 1997
2.867525 2.886060 1,141,686 1996
Nationwide S&P 500 1.000000 1.093694 22,552 1998
Index Fund
NSAT Nationwide Small 1.000000 1.023450 877,300 1998
Company Fund
Neuberger Berman 1.000000 1.041968 4,567 1998
Partners Trust
Oppenheimer Global Fund - 1.000000 1.106594 5,875 1998
Class A
Prestige Balanced Fund - 1.000000 1.061002 48,644 1998
Class 4
Prestige International Fund - 1.000000 1.092070 16,097 1998
Class 4
Prestige Large Cap Growth 1.000000 1.139564 52,478 1998
Fund - Class 4
Prestige Large Cap Value 1.000000 1.049429 7,620 1998
Fund - Class 4
Prestige Small Cap Fund - 1.000000 1.090386 31,273 1998
Class 4
Putnam Investors Fund - 18.163138 24.443490 0 1998
Class A 13.600069 18.163138 4,776 1997
13.246425 13.600069 4,735 1996
Putnam Voyager 3.848283 4.740725 0 1998
Fund - Class A 3.076140 3.848283 2,223,516 1997
3.055871 3.076140 1,979,411 1996
Seligman Growth Fund, Inc. - 12.578369 16.892454 0 1998
Class A 10.724703 12.578369 684 1997
10.357115 10.724703 684 1996
T. Rowe Price 1.848790 2.132200 0 1998
International Stock 1.812803 1.848790 783,958 1997
Fund(R) 1.725825 1.812803 881,585 1996
</TABLE>
61
63 of 186
<PAGE> 60
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Templeton 1.879853 1.775488 4,957,272 1998
Foreign Fund - Class A 1.775020 1.879853 1,763,615 1997
1.678677 1.775020 1,461,504 1996
Warburg Pincus Emerging 1.000000 1.059122 7,510 1998
Growth Fund
</TABLE>
* For Plans that converted from a Variable Account Annual Expense Fee of
0.95% of average net assets to a Variable Account Annual Expense Fee of
0.70% of average net assets on June 30, 1996.
** Unit information is not available for the year 1995.
62
64 of 186
<PAGE> 61
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER V*
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.65%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
AIM Equity Funds, Inc. - 2.318983 2.751200 3,022,273 1998
AIM Constellation Fund 2.057438 2.318983 2,389,104 1997
- Institutional Class 1.897355 2.057438 1,258,757 1996
American Century: Growth 5.866443 7.971577 8,602,720 1998
Fund (formerly Twentieth 4.567407 5.866443 6,244,941 1997
Century Growth Fund) 4.139808 4.567401 6,000,935 1996
American Century Select Fund 1.000000 2.768141 1,181,418 1998
American Century: Ultra Fund 2.534668 3.388204 35,694,678 1998
(formerly Twentieth Century 2.071951 2.534668 19,414,868 1997
Ultra Fund) 1.858002 2.071951 16,258,739 1996
The Bond Fund 2.342166 2.447231 1,599,096 1998
of America(R), Inc. 2.158056 2.342166 736,645 1997
2.057925 2.158056 471,875 1996
Decatur Income Fund - 1.000000 3.202651 169 1998
Institutional Class
Dreyfus S&P 500 Index Fund 1.000000 1.545632 5,191,876 1998
Dreyfus 3.546449 4.586444 2,794,245 1998
Third Century Fund, Inc. 2.759214 3.546449 2,302,999 1997
2.421004 2.759214 1,592,562 1996
Evergreen Income and Growth 2.432337 2.397384 431,682 1998
Fund (formerly 1.949465 2.432337 433,149 1997
Evergreen Total Return Fund) 1.797507 1.949465 494,994 1996
Federated U.S. Government 1.000000 1.301463 344,294 1998
Securities Fund: 2-5 Years -
Institutional Shares
Fidelity Capital & Income 4.673077 4.863557 85,411 1998
Fund (formerly Fidelity High 4.100654 4.673077 70,677 1997
Income Fund) 3.891882 4.100654 84,610 1996
Fidelity 2.519627 3.292464 16,051,389 1998
Contrafund 2.061853 2.519627 3,990,922 1997
1.834521 2.061853 1,600,079 1996
Fidelity Asset Manager 1.000000 1.745707 758,282 1998
Fidelity 6.928596 7.745874 11,315,425 1998
Equity-Income Fund 5.365090 6.928596 7,574,670 1997
4.792632 5.365090 6,613,425 1996
Fidelity Growth & 2.591531 3.303630 6,458,278 1998
Income Portfolio 2.003791 2.591531 3,435,213 1997
1.788691 2.003791 1,071,573 1996
Fidelity Magellan(R) 2.408585 3.197672 26,173,266 1998
Fund 1.915038 2.408585 16,840,881 1997
1.732300 1.915038 15,847,180 1996
</TABLE>
63
65 of 186
<PAGE> 62
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
The Growth Fund of America 1.000000 4.417868 397,583 1998
The Income Fund of America 1.000000 2.836785 403,926 1998
INVESCO Industrial Income 1.000000 2.378046 660,119 1998
Fund, Inc.
Janus Fund 1.000000 2.682628 4,344,666 1998
MAS Funds - Fixed Income 1.000000 1.414658 283,874 1998
Portfolio
MFS(R) Growth 9.048839 11.612729 2,162,443 1998
Opportunities Fund - Class A 7.387670 9.048839 1,999,203 1997
6.482021 7.387670 2,053,995 1996
MFS(R) High Income Fund - 6.193345 6.216512 664,163 1998
Class A 5.523771 6.193345 500,487 1997
5.237254 5.523771 466,255 1996
Massachusetts 16.032114 22.299259 262,889 1998
Investors Growth 10.891785 16.032114 271,730 1997
Stock Fund - Class A 9.620839 10.891785 270,135 1996
Nationwide(R) Bond Fund - 2.175755 2.342442 43,138 1998
Class D 2.003508 2.175755 51,355 1997
1.902228 2.003508 53,369 1996
Nationwide(R) 20.780295 26.910596 1,339,459 1998
Fund - Class D 14.979448 20.780295 721,864 1997
13.293866 14.979448 408,411 1996
Nationwide(R) 3.870345 4.758406 1,367,643 1998
Growth Fund - Class D 3.086114 3.870345 658,443 1997
2.801588 3.086114 517,548 1996
Nationwide(R) 3.015983 3.148614 4,349,555 1998
Money Market 2.887782 3.015983 3,131,282 1997
2.848502 2.887782 3,694,679 1996
Neuberger Berman 1.601873 1.628931 923,269 1998
Guardian Fund, Inc. 1.367075 1.601873 614,486 1997
1.203016 1.367075 109,076 1996
Putnam 18.183069 24.482535 2,271,192 1998
Investors Fund - Class A 13.608194 18.183069 1,771,233 1997
12.172007 13.608194 1,571,300 1996
Putnam Voyager 3.852510 4.748304 6,536,365 1998
Fund - Class A 3.077980 3.852510 1,528,999 1997
2.937103 3.077980 990,216 1996
SEI Index Funds - 3.920739 4.999357 8,122,338 1998
S&P 500 Index 2.965481 3.920739 3,689,771 1997
Portfolio 2.610748 2.965481 724,558 1996
</TABLE>
64
66 of 186
<PAGE> 63
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Seligman 12.592179 16.919446 108,084 1998
Growth Fund, Inc. - Class A 10.731114 12.592179 113,689 1997
9.693645 10.731114 121,166 1996
T. Rowe Price 1.850821 2.135609 5,964,541 1998
International Stock 1.813888 1.850821 4,875,751 1997
Fund(R) 1.686337 1.813888 5,512,814 1996
Templeton 1.881918 1.778328 1,352,884 1998
Foreign Fund - Class A 1.776082 1.881918 1,092,861 1997
1.628310 1.776082 168,098 1996
</TABLE>
* For Plans that converted from a Variable Account Annual Expense Fee of
0.95% of average net assets to a Variable Account Annual Expense Fee of
0.65% of average net assets on June 30, 1996.
** Unit information is not available for the year 1995.
65
67 of 186
<PAGE> 64
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER VI
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.60%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
American Century 1.000000 7.951067 194,830 1998
Growth Fund
American Century Ultra Fund 1.000000 3.379488 1,072,286 1998
The Bond Fund of America, 1.000000 2.440904 82,948 1998
Inc.
Delaware Group Decatur Fund, 1.000000 3.215194 6,112 1998
Inc. Decatur Income Fund
Institutional Class
Dreyfus S&P 500 Index Fund 1.000000 1.550532 1,251,281 1998
Evergreen Income and Growth 1.000000 2.391215 2,788 1998
Fund - Class Y
Federated U.S. Government 1.000000 1.306298 71,515 1998
Securities Fund: 2-5 Years -
Institutional Shares
Fidelity Asset Manager 1.000000 1.752545 53,124 1998
Fidelity Contrafund 1.000000 3.283991 979,826 1998
Fidelity Equity Income 1.000000 7.725951 170,677 1998
Fund
Fidelity Magellan Fund 1.000000 3.189445 683,273 1998
The Growth Fund of America 1.000000 4.435169 162,774 1998
The Income Fund of America 1.000000 2.847897 153,954 1998
INVESCO Industrial Income 1.000000 2.387360 90,551 1998
Fund, Inc.
Janus Fund 1.000000 2.693134 627,794 1998
MAS Funds - Fixed Income 1.000000 1.420201 118,670 1998
Portfolio
NAAT - The Aggressive 1.000000 1.154520 310,655 1998
Portfolio
NAAT - The Conservative 1.000000 1.112468 66,069 1998
Portfolio
NAAT - The Moderate 1.000000 1.148195 106,065 1998
Portfolio
NAAT - The Moderately 1.000000 1.145713 259,760 1998
Aggressive Port
NAAT - The Moderately 1.000000 1.134101 50,620 1998
Conservative Portfolio
Nationwide Growth Fund 1.000000 4.746163 1,583 1998
Prestige Large Cap Growth 1.000000 1.139173 2,573 1998
Fund - Class Y
Prestige Small Cap Fund - 1.000000 1.090529 4,696 1998
Class Y
Putnam Investors Fund - 1.000000 24.419553 4,084 1998
Class A
</TABLE>
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<PAGE> 65
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Putnam Voyager Fund - Class A 1.000000 4.736081 454,607 1998
T. Rowe Price International 1.000000 2.130112 126,263 1998
Stock Fund
</TABLE>
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<PAGE> 66
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER VII
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.55%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
American Century Income & 1.000000 1.097955 8,687 1998
Growth
American Century 1.000000 1.084619 6,011 1998
International Discovery Fund
The Bond Fund of America 1.000000 2.437786 82,138 1998
Dreyfus Appreciation 1.000000 1.080487 136,346 1998
Fund, Inc
Dreyfus Premier Midcap Stock 1.000000 1.133654 914 1998
- Class A
Dreyfus S&P 500 Index Fund 1.000000 1.549323 153,801 1998
The Dreyfus Third Century 1.000000 4.557584 1,265,956 1998
Fund, Inc.
Evergreen Income and Growth 1.000000 2.388169 91,000 1998
Fund - Class Y
Federated U.S. Government 1.000000 1.304613 62,224 1998
Securities Fund: 2-5 Years
Institutional Shares
Fidelity Advisor Growth 1.000000 1.089659 87,134 1998
Opportunities Fund - Class A
Fidelity Asset Manager 1.000000 1.750311 28,644 1998
Fidelity Contrafund 1.000000 3.279805 557,635 1998
Fidelity Equity Income Fund 1.000000 7.716109 99,286 1998
Fidelity Magellan Fund 1.000000 3.185381 308,121 1998
The Growth Fund of America 1.000000 4.429517 28,933 1998
The Income Fund of America 1.000000 2.844269 49,186 1998
INVESCO Dyanamics 1.000000 1.172815 14,593 1998
Fund, Inc.
INVESCO Industrial Income 1.000000 2.384319 158,514 1998
Fund, Inc.
INVESCO Total Return Fund 1.000000 1.024005 2,474 1998
MAS Funds - Fixed Income 1.000000 1.418390 15,856 1998
Portfolio
Massachusetts Investors 1.000000 22.213562 1,109 1998
Growth Stock Index Fund -
Class A
MFS Growth Opportunities 1.000000 11.568078 16,642 1998
Fund - Class A
MFS High Income 1.000000 6.192408 2,329 1998
Fund - Class A
Morgan Stanley Equity Growth 1.000000 1.107043 7,861 1998
Portfolio - Class B
Nationwide Fund - Class D 1.000000 26.741341 940,065 1998
Nationwide Growth Fund - 1.000000 4.740115 31,4895 1998
Class D
</TABLE>
68
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<PAGE> 67
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Nationwide Money 1.000000 3.136406 3,511,177 1998
Market Fund
Nationwide S&P 500 Index 1.000000 1.093909 112,981 1998
Fund - Class Y
NSAT Nationwide Small 1.000000 1.007001 528,402 1998
Company Fund
Oppenheimer Global Fund - 1.000000 1.106811 11,480 1998
Class A
Putnam Investors Fund - 1.000000 24.388433 10,786 1998
Class A
Seligman Growth Fund, Inc. 1.000000 16.854407 1,971 1998
Class A
T. Rowe Price International 1.000000 2.127397 85,069 1998
Stock Fund
Templeton Foreign Fund - 1.000000 1.767129 5,105,892 1998
Class A
Warburg Pincus Emerging 1.000000 1.059668 21,363 1998
Growth Fund
</TABLE>
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<PAGE> 68
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER VIII
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.45%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
NAAT - The Aggressive 1.00000 1.150582 211,944 1998
Portfolio
NAAT - The Conservative 1.000000 1.108677 80,765 1998
Portfolio
NAAT - The Moderate 1.000000 1.144281 80,286 1998
Portfolio
NAAT - The Moderately 1.000000 1.141807 155,701 1998
Aggressive Portfolio
NAAT - The Moderately 1.000000 1.130236 230,674 1998
Conservative Portfolio
Prestige Balanced Fund - 1.000000 1.061351 3,404 1998
Class Y
Prestige International Fund - 1.000000 1.092427 1,317 1998
Class Y
Prestige Large Cap Growth 1.000000 1.139937 1,307 1998
Fund - Class Y
Prestige Large Cap Value 1.000000 1.049773 2,293 1998
Fund - Class Y
Prestige Small Cap Fund - 1.000000 1.090743 946 1998
Class Y
</TABLE>
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<PAGE> 69
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER IX
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.40%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
American Century Income & 1.000000 1.098171 79,664 1998
Growth Fund
American Century Growth Fund 1.000000 7.923462 3,508 1998
American Century 1.000000 1.084832 26,496 1998
International Discovery Fund
Dreyfus Capital Appreciation 1.000000 1.080700 27,993 1998
Fund, Inc.
The Dreyfus Third Century 1.000000 4.558760 737,042 1998
Fund, Inc.
Federated Bond Fund - Class F 1.000000 1.019222 12 1998
INVESCO Dynamics Fund 1.000000 1.173045 818 1998
INVESCO Total Return Fund 1.000000 1.024207 44 1998
MFS Growth Opportunities Fund 1.000000 11.542612 4,519 1998
- Class A
Nationwide Fund - Class D 1.000000 26.748259 487,464 1998
Nationwide Money Market Fund 1.000000 3.130815 2,298,866 1998
Nationwide S&P 500 Index Fund 1.000000 1.094125 116,258 1998
NSAT Nationwide Small Company 1.000000 1.007261 384,544 1998
Fund
Oppenheimer Global Fund - 1.000000 1.107029 29,079 1998
Class A
Templeton Foreign Fund - 1.000000 1.767586 2,148,011 1998
Class A
Warburg Pincus Emerging 1.000000 1.059668 21,363 1998
Growth Fund
</TABLE>
71
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<PAGE> 70
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER X
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.35%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
The Dreyfus Third Century 1.000000 4.581408 276,300 1998
Fund, Inc.
Nationwide Fund - Class D 1.000000 26.881104 104,750 1998
Nationwide Money Market Fund 1.000000 3.142446 175,079 1998
NSAT Nationwide Small Company 1.000000 1.024134 18,482 1998
Fund
Templeton Foreign Fund 1.000000 1.776379 365,896 1998
</TABLE>
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<PAGE> 71
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER XI
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.30%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
American Century Income & 1.000000 1.098315 4,917 1998
Growth Fund
American Century Growth Fund 1.000000 7.952673 261,146 1998
American Century Ultra Fund 1.000000 3.380172 717,400 1998
Dreyfus Capital Appreciation 1.000000 1.080842 4,977 1998
Fund
The Dreyfus Third Century 1.000000 4.575570 144,811 1998
Fund, Inc.
Janus Fund 1.000000 2.693678 597,789 1998
Morgan Stanley Equity Growth 1.000000 1.107406 3,268 1998
Portfolio
Nationwide Fund 1.000000 26.846869 53,286 1998
Nationwide Money Market Fund 1.000000 3.138391 294,839 1998
NSAT Nationwide Small Company 1.000000 1.025150 19,929 1998
Fund
Oppenheimer Global Fund - 1.000000 1.107174 1,060 1998
Class A
Templeton Foreign Fund - 1.000000 1.774115 232,860 1998
Class A
</TABLE>
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<PAGE> 72
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER XII
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.25%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
NAAT - The Aggressive 1.000000 1.150978 68,325 1998
Portfolio
NAAT - The Conservative 1.000000 1.109060 83,356 1998
Portfolio
NAAT - The Moderate Portfolio 1.000000 1.144675 21,387 1998
NAAT - The Moderately 1.000000 1.142200 43,931 1998
Aggressive Portfolio
NAAT - The Moderately 1.000000 1.130626 6,709 1998
Conservative Portfolio
</TABLE>
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<PAGE> 73
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER XIII
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.20%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
NAAT - The Aggressive 1.000000 1.155315 11,063 1998
Portfolio
NAAT - The Conservative 1.000000 1.113236 14,242 1998
Portfolio
NAAT - The Moderate Portfolio 1.000000 1.148987 43 1998
NAAT - The Moderately 1.000000 1.146503 94,205 1998
Aggressive Portfolio
NAAT - The Moderately 1.000000 1.134884 7,860 1998
Conservative Portfolio
</TABLE>
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<PAGE> 74
CONDENSED FINANCIAL INFORMATION
(CONTINUED)
TIER XIV
VARIABLE ACCOUNT ANNUAL EXPENSE FEE.......................................0.15%
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
NAAT - The Aggressive 1.000000 1.155248 14,581 1998
Portfolio
NAAT - The Conservative 1.000000 1.113172 1,089 1998
Portfolio
NAAT - The Moderate Portfolio 1.000000 1.148920 8,670 1998
NAAT - The Moderately 1.000000 1.146437 17,344 1998
Aggressive Portfolio
NAAT - The Moderately 1.000000 1.134818 4,278 1998
Conservative Portfolio
</TABLE>
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<PAGE> 75
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1999
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS ISSUED
BY THE NATIONWIDE DC 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 in the prospectus
and should be read in conjunction with the prospectus dated May 1, 1999. 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
(TTD: 1-800-848-0833).
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
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
</TABLE>
GENERAL INFORMATION AND HISTORY
The Nationwide DC Variable Account ("variable account") is a separate investment
account of Nationwide Life Insurance Company ("Nationwide"). Nationwide is a
member of the Nationwide Insurance Enterprise and all of it'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 Insurance Enterprise. Nationwide is one of America's
largest insurance and financial services family of companies, with combined
assets of over $98.28 billion as of December 31, 1998.
SERVICES
Nationwide, which has responsibility for administration of the contracts and the
variable account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each contract owner
and the number and type of contract issued to each contract owner and records
with respect to 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 redemption of 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 of the underlying mutual funds. The
agreements relate to administrative services furnished by Nationwide or an
affiliate of Nationwide and provide for an annual fee based on the average
aggregate net assets of the variable account (and other separate accounts of
Nationwide or life insurance company subsidiaries of Nationwide) invested in
particular underlying mutual funds. These fees in no way affect the net asset
value of the underlying mutual funds or fees paid by the contract owner.
1
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<PAGE> 76
The audited financial statements have been included herein in reliance upon the
reports of KPMG LLP, independent certified public accountants, Two Nationwide
Plaza, Columbus, Ohio 43215, and upon the authority of said firm as experts in
accounting and auditing.
PURCHASE OF SECURITIES BEING OFFERED
The contracts will be sold by licensed insurance agents in the states where the
contracts may be lawfully sold. Agents are 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 the Nationwide's Group Fixed
Fund Retirement contract, the contract owner, or the participant if the plan so
provides, may exchange accumulation units between any sub-account and the
deposit fund of the Group Fixed Fund Retirement contract. Exchanges from the
deposit fund to any sub-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, 1998, 1997, and 1996, no underwriting commissions were paid
by Nationwide to NISC.
CALCULATION OF PERFORMANCE
Any current yield quotations of the Nationwide Money Market Fund, the Dreyfus
Cash Management Fund - Class A, and the Nationwide Separate Account Trust- Money
Market Fund subject to Rule 482 of the Securities Act of 1933, will 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 of capital changes, in the value of a hypothetical pre-existing
account having a balance of one accumulation units 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. At
December 31, 1998, the Nationwide Money Market Fund, the Dreyfus Cash Management
Fund - Class A, and NSAT-Money Market Fund seven-day current yield was 3.74%,
1.90%, and 3.87%, respectively. The Nationwide Money Market Fund, the Dreyfus
Cash Management Fund Class A, and NSAT Money Market Fund 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 underlying mutual fund,
and at December 31, 1998 were 3.80%, 1.91% and 3.95%, respectively.
The Nationwide Money Market Fund, the Dreyfus Cash Management Fund, Nationwide
Separate Account Trust- Money Market Fund Sub-Account yield and effective yield
will fluctuate daily. Actual yields will depend on factors such as the type of
instruments in the underlying mutual funds' portfolios, portfolio quality and
average maturity, changes in interest rates, and the underlying mutual funds'
expenses. Although each sub-account determines its yield on the basis of a seven
calendar day period, it may use a different time period on occasion. The yield
quotes may reflect the expense limitation described under "Investment Manager
and Other Services" in the underlying mutual funds' Statement of Additional
Information. 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 the Nationwide Money Market Fund Sub-Account, the Dreyfus
Cash Management Fund - Class A Sub-Account, Nationwide Separate Account Trust
Money Market Fund Sub-Account are 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-account's
standardized "average annual total return," calculated in a
2
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<PAGE> 77
manner prescribed by the SEC, and nonstandardized "total return." "Average
annual total return" illustrates 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 for the prescribed periods. THIS CALCULATION REFLECTS THE
DEDUCTION OF ALL APPLICABLE CHARGES MADE TO THE CONTRACTS EXCEPT FOR PREMIUM
TAXES, WHICH MAY BE IMPOSED BY CERTAIN STATES.
Nonstandardized "total return," calculated similar to standardized "average
annual total return," illustrates the percentage rate of return of a
hypothetical initial investment of $10,000 for the most recent one, five and ten
year periods, or for a period covering the time the underlying mutual fund
option has been in existence. For those underlying mutual fund options which
have not been held as sub-accounts for one of 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 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, 1998.
However, the Company generally provides performance quotations on a more
frequent basis, the results of which could reflect better or worse results than
shown below. The quotations and other comparative material advertised by the
Company are based upon historical earnings and are not intended to represent or
guarantee future results. A Contract Owner's Contract Value at redemption may be
more or less than the original cost.
ANNUITY PAYMENTS
See "Retirement Income Payments" located in the prospectus.
3
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<PAGE> 78
<PAGE> 1
- - --------------------------------------------------------------------------------
Independent Auditors' Report
----------------------------
TheBoard of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide DC Variable Account:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide DC Variable Account as of December 31,
1998, and the related statements of operations and changes in contract owners'
equity for each of the years in the two year period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1998, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nationwide DC Variable
Account as of December 31, 1998, and the results of its operations and its
changes in contract owners' equity for each of the years in the two year period
then ended in conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 5, 1999
- - --------------------------------------------------------------------------------
<PAGE> 2
================================================================================
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1998
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
AIM Equity Funds, Inc. - AIM Constellation Fund - Institutional Class (AIMCon)
263,200 shares (cost $7,413,238) .......................................... $ 8,314,474
American Century: Income & Growth Fund (ACIncGro)
8,751 shares (cost $252,715) .............................................. 255,963
American Century: Twentieth Century Growth Fund (ACTCGro)
7,549,979 shares (cost $173,502,107) ...................................... 205,057,427
American Century: Twentieth Century International Discovery Fund (ACTCIntDis)
18,884 shares (cost $174,069) ............................................. 180,719
American Century: Twentieth Century Select Fund (ACTCSel)
71,946 shares (cost $3,022,181) ........................................... 3,409,516
American Century: Twentieth Century Ultra Fund (ACTCUltra)
14,569,157 shares (cost $413,579,335) ..................................... 486,755,522
American Century VP - American Century VP Balanced (ACVPBal)
1,638 shares (cost $12,405) ............................................... 13,660
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
8,258 shares (cost $80,786) ............................................... 74,486
The Bond Fund of America(SM), Inc. (BdFdAm)
1,379,536 shares (cost $19,067,980) ....................................... 18,775,484
Davis New York Venture Fund, Inc. - Class A (DNYVenFd)
14,014 shares (cost $325,076) ............................................. 350,493
Delaware Group Decatur Fund, Inc. -
Decatur Income Fund Institutional Class (DeDecInc)
17,665 shares (cost $327,850) .............................................. 323,087
Dreyfus Appreciation Fund, Inc. (DryApp)
19,100 shares (cost $783,375) ............................................. 803,537
Dreyfus Cash Management - Class A (DryCsMgt)
243,926 shares (cost $243,926) ............................................ 243,926
Dreyfus Premier Midcap Stock - Class A (DryPreMCap)
1,146 shares (cost $18,034) ............................................... 19,054
Dreyfus S&P 500 Index Fund (Dry500Ix)
1,859,812 shares (cost $58,191,897) ....................................... 67,678,560
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
624 shares (cost $15,827) ................................................. 19,407
Dreyfus Stock Index Fund (DryStkIx)
3,783 shares (cost $97,040) ............................................... 123,028
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
4,603,101 shares (cost $47,080,177) ....................................... 56,526,083
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Evergreen Income and Growth Fund - Class Y (EvIncGro)
190,917 shares (cost $3,808,065) ............................................ 3,930,975
Federated Investment Series Fund, Inc. - Federated Bond Fund - Class F (FedBdFd)
28,324 shares (cost $282,308) ............................................... 281,255
Federated U.S. Government Securities Fund: 2-5 Years -
Institutional Shares (FedUSGvt)
572,243 shares (cost $6,185,458) ............................................. 6,243,174
Fidelity Advisor Growth Opportunities Fund - Class A (FAGrOppA)
6,154 shares (cost $304,000) ................................................ 306,517
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
1,679 shares (cost $19,187) ................................................. 19,028
Fidelity Asset Manager(TM) (FidAsMgr)
546,181 shares (cost $9,688,228) ............................................ 9,498,080
Fidelity Capital & Income Fund (FidCapInc)
136,360 shares (cost $1,257,492) ............................................ 1,265,424
Fidelity Contrafund (FidContr)
6,695,436 shares (cost $289,882,971) ........................................ 380,233,829
Fidelity Equity-Income Fund (FidEqInc)
5,618,084 shares (cost $231,095,999) ........................................ 312,084,541
Fidelity Growth & Income Portfolio (FidGrInc)
465,518 shares (cost $18,444,138) ........................................... 21,339,345
Fidelity Magellan(R) Fund (FidMgln)
2,577,582 shares (cost $215,781,095) ........................................ 311,423,426
Fidelity VIP Fund II - Asset Manager Portfolio (FidVIPAM)
2,717 shares (cost $43,205) ................................................. 49,340
Fidelity VIP Fund - Equity-Income Portfolio (FidVIPEI)
8,516 shares (cost $184,286) ................................................ 216,479
Fidelity VIP Fund - Growth Portfolio (FidVIPGr)
4,900 shares (cost $154,983) ................................................ 219,875
Fidelity VIP Fund - High Income Portfolio (FidVIPHI)
3,728 shares (cost $45,706) ................................................. 42,981
Fidelity VIP Fund - Overseas Portfolio (FidVIPOv)
6,799 shares (cost $125,995) ................................................ 136,323
The Growth Fund of America(R), Inc. (GroFdAm)
859,354 shares (cost $15,610,829) ........................................... 19,249,530
The Income Fund of America(R), Inc. (IncFdAm)
1,183,132 shares (cost $19,882,738) ......................................... 20,515,502
INVESCO Dynamics Fund, Inc. (InvDynam)
3,622 shares (cost $54,805) ................................................. 57,042
INVESCO Industrial Income Fund, Inc. (InvIndlnc)
1,873,975 shares (cost $26,053,975) ......................................... 28,222,069
INVESCO Total Return Fund (InvTotRet)
4,202 shares (cost $132,268) ................................................ 131,776
Janus Fund (JanFund)
3,906,245 shares (cost $104,578,466) ........................................ 131,445,159
(Continued)
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Janus Worldwide Fund (JanWrldwde)
24,384 shares (cost $1,122,605) .................................................... 1,154,847
MAS Funds - Fixed Income Portfolio (MASFIP)
525,805 shares (cost $6,302,778) ................................................... 6,157,174
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
657,359 shares (cost $7,708,502) ................................................... 10,458,576
MFS(R) Growth Opportunities Fund - Class A (MFSGrOpp)
2,236,191 shares (cost $29,085,559) ................................................ 35,667,242
MFS(R) High Income Fund - Class A (MFSHiInc)
1,042,583 shares (cost $5,743,632) ................................................. 5,338,024
Morgan Stanley Institutional Fund, Inc. - Equity Growth Portfolio - Class B (MSIEqGroB)
5,153 shares (cost $96,282) ........................................................ 97,796
NAAT - The Aggressive Portfolio (NAATAggr)
260,548 shares (cost $2,872,678) ................................................... 3,069,260
NAAT - The Conservative Portfolio (NAATCons)
54,044 shares (cost $574,834) ...................................................... 594,481
NAAT - The Moderate Portfolio (NAATMod)
153,133 shares (cost $1,623,148) ................................................... 1,770,213
NAAT - The Moderately Aggressive Portfolio (NAATModAgg)
135,990 shares (cost $1,474,071) ................................................... 1,576,125
NAAT - The Moderately Conservative Portfolio (NAATModCon)
77,264 shares (cost $821,572) ...................................................... 875,398
Nationwide(R) Bond Fund - Class D (NWBdFd)
29,149 shares (cost $277,398) ...................................................... 283,908
Nationwide(R) Fund - Class D (NWFund)
5,830,525 shares (cost $151,068,135) ............................................... 188,967,304
Nationwide(R) Growth Fund - Class D (NWGroFd)
802,597 shares (cost $11,723,118) .................................................. 13,756,506
Nationwide(R) Money Market Fund (NWMyMkt)
68,177,289 shares (cost $68,177,289) ............................................... 68,177,289
Nationwide(R) S&P 500 Index Fund - Class Y (NWIndxFdY)
55,739 shares (cost $584,093) ...................................................... 602,542
Nationwide(R)Separate Account Trust - Government Bond Fund (NSATGvtBd)
1,662 shares (cost $18,619) ........................................................ 19,433
Nationwide(R)Separate Account Trust - Money Market Fund (NSATMyMkt)
76,142 shares (cost $76,142) ....................................................... 76,142
Nationwide(R)Separate Account Trust - Small Company Fund (NSATSmCo)
221,029 shares (cost $3,254,966) ................................................... 3,538,678
Nationwide(R) Separate Account Trust - Total Return Fund (NSATTotRe)
8,021 shares (cost $118,035) ....................................................... 147,591
Neuberger & Berman Advisors Management Trust - Growth Portfolio (NBAMTGro)
1,331 shares (cost $33,357) ........................................................ 34,993
Neuberger & Berman Advisors Management Trust -
Limited Maturity Bond Portfolio (NBAMTLMat)
805 shares (cost $11,038) ........................................................... 11,128
Neuberger & Berman Advisors Management Trust - Partners Portfolio (NBAMTPart)
3,363 shares (cost $58,476) ........................................................ 63,654
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Neuberger & Berman Equity Funds - Guardian Fund (NBGuard)
67,119 shares (cost $1,551,245) ............................................ 1,504,803
Neuberger & Berman Equity Funds - Manhattan Fund (NBManhFd)
21,583 shares (cost $248,994) .............................................. 257,916
Neuberger & Berman Equity Trust - Partners Trust (NBPartTr)
2,597 shares (cost $46,916) ................................................ 46,923
NIF III - Prestige Balanced Fund - Class Y (PrBalY)
5,159 shares (cost $53,979) ................................................ 55,200
NIF III - Prestige International Fund - Class Y (PrIntY)
1,797 shares (cost $18,374) ................................................ 18,992
NIF III - Prestige Large Cap Growth Fund - Class Y (PrLgCapGrY)
5,540 shares (cost $60,384) ................................................ 64,265
NIF III - Prestige Large Cap Value Fund - Class Y (PrLgCpValY)
983 shares (cost $10,134) .................................................. 10,377
NIF III - Prestige Small Cap Fund - Class Y (PrSmCapY)
3,704 shares (cost $38,380) ................................................ 40,259
Oppenheimer Global Fund - Class A (OppGlob)
3,269 shares (cost $138,815) ............................................... 139,272
Putnam Investors Fund - Class A (PutInvFd)
5,000,754 shares (cost $51,029,196) ........................................ 74,111,177
Putnam Voyager Fund - Class A (PutVoyFd)
9,525,088 shares (cost $165,548,838) ....................................... 208,789,938
SEI Index Funds - S&P 500 Index Portfolio (SEI500Ix)
1,099,721 shares (cost $35,952,783) ........................................ 42,273,259
Seligman Growth Fund, Inc. - Class A (SelGroFd)
493,221 shares (cost $2,756,305) ........................................... 3,659,697
T. Rowe Price International Funds, Inc. - International Stock Fund(R)(TRIntStk)
2,434,040 shares (cost $35,530,590) ........................................ 36,486,256
Templeton Foreign Fund - Class I (TemForFd)
7,485,101 shares (cost $74,436,720) ........................................ 62,799,996
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
1,457 shares (cost $53,007) ................................................ 58,225
--------------
Total investments ....................................................... 2,868,590,955
Accounts receivable .............................................................. 2,559,444
--------------
Total assets ............................................................ 2,871,150,399
ACCOUNTS PAYABLE .................................................................... 138,219
--------------
CONTRACT OWNERS' EQUITY (NOTE 4) .................................................... $2,871,012,180
==============
</TABLE>
See accompanying notes to financial statements.
- - --------------------------------------------------------------------------------
<PAGE> 6
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
TOTAL AIMCON
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 20,651,143 20,895,878 -- --
Mortality and expense charges (note 2)......... (3,556,112) (8,777,426) (13,212) (83,193)
Administration charge (note 2):
Tier I ................................ (1,675,650) (4,398,894) (2,695) (55,661)
Tier II ............................... (484,483) (1,173,353) -- --
Tier III .............................. (168,929) (388,328) -- --
Tier IV ............................... (64,112) (149,483) -- --
Tier V ................................ (194,057) (420,645) (3,065) (6,404)
Variable account fee (notes 2 and 5)........... (13,750,583) -- (30,654) --
-------------- -------------- -------------- --------------
Net investment activity...................... 757,217 5,587,749 (49,626) (145,258)
Proceeds from mutual fund shares sold.......... 428,065,379 357,793,032 7,850,258 18,815,677
Cost of mutual fund shares sold................ (360,005,241) (303,606,933) (7,639,203) (15,735,318)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.......... 68,060,138 54,186,099 211,055 3,080,359
Change in unrealized gain (loss) on investments 292,964,663 102,369,350 1,124,581 (1,523,649)
-------------- -------------- -------------- --------------
Net gain (loss) on investments............... 361,024,801 156,555,449 1,335,636 1,556,710
-------------- -------------- -------------- --------------
Reinvested capital gains....................... 180,025,465 184,171,649 198,951 657,567
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 541,807,483 346,314,847 1,484,961 2,069,019
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 613,394,800 453,926,543 3,679,541 7,859,657
Transfers between funds ....................... -- -- (1,949,570) (1,122,286)
Redemptions.................................... (258,709,862) (251,618,723) (4,490,445) (14,772,202)
Annual contract maintenance charge (note 2).... (2,861) (2,992) -- --
Contingent deferred sales charges (note 2)..... (1,717) (14,054) -- (695)
Adjustments to maintain reserves............... 423,368 (293,934) 233 (797)
-------------- -------------- -------------- --------------
Net equity transactions.................... 355,103,728 201,996,840 (2,760,241) (8,036,323)
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 896,911,211 548,311,687 (1,275,280) (5,967,304)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... 1,974,100,969 1,425,789,282 9,590,157 15,557,461
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $ 2,871,012,180 1,974,100,969 8,314,877 9,590,157
============== ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
AIMWEIN ACINCGRO
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... -- -- 364 --
Mortality and expense charges (note 2)......... -- (9,318) -- --
Administration charge (note 2):
Tier I ................................ -- (8,386) -- --
Tier II ............................... -- -- -- --
Tier III .............................. -- -- -- --
Tier IV ............................... -- -- -- --
Tier V ................................ -- -- -- --
Variable account fee (notes 2 and 5)........... -- -- (61) --
-------------- -------------- -------------- --------------
Net investment activity...................... -- (17,704) 303 --
Proceeds from mutual fund shares sold.......... 407 2,988,919 1,365 --
Cost of mutual fund shares sold................ (450) (2,485,069) (1,364) --
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.......... (43) 503,850 1 --
Change in unrealized gain (loss) on investments -- (68,071) 3,248 --
-------------- -------------- -------------- --------------
Net gain (loss) on investments............... (43) 435,779 3,249 --
-------------- -------------- -------------- --------------
Reinvested capital gains....................... -- 57 4,510 --
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations......... (43) 418,132 8,062 --
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. -- 430,962 28,106 --
Transfers between funds ....................... -- (191,388) 219,798 --
Redemptions.................................... -- (2,774,113) -- --
Annual contract maintenance charge (note 2).... -- -- -- --
Contingent deferred sales charges (note 2)..... -- -- -- --
Adjustments to maintain reserves............... 43 (440) 39 --
-------------- -------------- -------------- --------------
Net equity transactions.................... 43 (2,534,979) 247,943 --
NET CHANGE IN CONTRACT OWNERS' EQUITY............ -- (2,116,847) 256,005 --
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... -- 2,116,847 -- --
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ -- -- 256,005 --
============== ============== ============== ==============
</TABLE>
<PAGE> 7
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
ACTCGRO ACTCINTDIS
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- -- -- --
Mortality and expense charges (note 2)......... (245,696) (642,882) -- --
Administration charge (note 2):
Tier I ................................ (98,801) (271,869) -- --
Tier II ............................... (35,121) (93,304) -- --
Tier III .............................. (10,512) (26,285) -- --
Tier IV ............................... (3,181) (7,827) -- --
Tier V ................................ (19,963) (48,240) -- --
Variable account fee (notes 2 and 5)........... (933,529) -- (91) --
------------- -------------- -------------- --------------
Net investment activity...................... (1,346,803) (1,090,407) (91) --
Proceeds from mutual fund shares sold.......... 18,769,032 16,716,393 13,419 --
Cost of mutual fund shares sold................ (15,992,186) (16,558,938) (13,089) --
------------- -------------- -------------- --------------
Realized gain (loss) on investments.......... 2,776,846 157,455 330 --
Change in unrealized gain (loss) on investments 16,196,046 10,717,229 6,649 --
------------- -------------- -------------- --------------
Net gain (loss) on investments............... 18,972,892 10,874,684 6,979 --
------------- -------------- -------------- --------------
Reinvested capital gains....................... 33,574,173 20,522,141 483 --
------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 51,200,262 30,306,418 7,371 --
------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 23,250,889 14,467,218 6,191 --
Transfers between funds ....................... 8,354,144 (6,426,109) 167,162 --
Redemptions.................................... (17,504,524) (12,448,292) -- --
Annual contract maintenance charge (note 2).... (5) (4) -- --
Contingent deferred sales charges (note 2)..... -- (700) -- --
Adjustments to maintain reserves............... 5,720 3,742 36 --
------------- -------------- -------------- --------------
Net equity transactions.................... 14,106,224 (4,404,145) 173,389 --
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 65,306,486 25,902,273 180,760 --
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... 139,756,024 113,853,751 -- --
------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $ 205,062,510 139,756,024 180,760 --
============= ============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
ACTCINTLGR ACTCSEL
-------------------------- -------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... -- -- 9,928 8,911
Mortality and expense charges (note 2)......... (2) -- (4,167) (9,710)
Administration charge (note 2):
Tier I ................................ (2) -- (122) (226)
Tier II ............................... -- -- -- --
Tier III .............................. -- -- -- --
Tier IV ............................... -- -- (1,613) (3,783)
Tier V ................................ -- -- -- --
Variable account fee (notes 2 and 5)........... -- -- (13,301) --
-------------- -------------- -------------- --------------
Net investment activity...................... (4) -- (9,275) (4,808)
Proceeds from mutual fund shares sold.......... 11,135 -- 487,141 105,754
Cost of mutual fund shares sold................ (10,717) -- (320,438) (82,007)
-------------- -------------- -------------- --------------
Realized gain (loss) on investments.......... 418 -- 166,703 23,747
Change in unrealized gain (loss) on investments -- -- 121,947 123,754
-------------- -------------- -------------- --------------
Net gain (loss) on investments............... 418 -- 288,650 147,501
-------------- -------------- -------------- --------------
Reinvested capital gains....................... -- -- 576,863 357,648
-------------- -------------- -------------- --------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 414 -- 856,238 500,341
-------------- -------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 10,713 -- 310,577 237,869
Transfers between funds ....................... -- -- 104,612 72,140
Redemptions.................................... (11,133) -- (156,908) (73,384)
Annual contract maintenance charge (note 2).... -- -- -- --
Contingent deferred sales charges (note 2)..... -- -- -- --
Adjustments to maintain reserves............... 6 -- 428 (255)
-------------- -------------- -------------- --------------
Net equity transactions.................... (414) -- 258,709 236,370
NET CHANGE IN CONTRACT OWNERS' EQUITY............ -- -- 1,114,947 736,711
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... -- -- 2,294,883 1,558,172
-------------- -------------- -------------- --------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ -- -- 3,409,830 2,294,883
============== ============== ============== ==============
(Continued)
</TABLE>
<PAGE> 8
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
ACTCULTRA ACVPBAL
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- 127,927 135 51
Mortality and expense charges (note 2)......... (590,177) (1,509,815) (12) (27)
Administration charge (note 2):
Tier I ................................ (289,702) (776,590) (11) (25)
Tier II ............................... (78,787) (199,798) -- --
Tier III .............................. (33,584) (80,544) -- --
Tier IV ............................... (8,689) (21,246) -- --
Tier V ................................ (27,632) (62,951) -- --
Variable account fee (notes 2 and 5)........... (2,343,288) -- (69) --
------------ ------------ ------------ ------------
Net investment activity...................... (3,371,859) (2,523,017) 43 (1)
Proceeds from mutual fund shares sold.......... 41,641,653 42,925,473 -- --
Cost of mutual fund shares sold................ (27,930,230) (28,943,858) -- --
------------ ------------ ------------ ------------
Realized gain (loss) on investments.......... 13,711,423 13,981,615 -- --
Change in unrealized gain (loss) on investments 63,370,686 (23,440,931) 445 529
------------ ------------ ------------ ------------
Net gain (loss) on investments............... 77,082,109 (9,459,316) 445 529
------------ ------------ ------------ ------------
Reinvested capital gains....................... 41,328,459 68,012,104 835 203
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 115,038,709 56,029,771 1,323 731
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 92,879,284 76,463,255 5,501 2,004
Transfers between funds ....................... (11,404,055) (3,905,194) -- --
Redemptions.................................... (44,419,854) (39,257,098) -- --
Annual contract maintenance charge (note 2).... (24) (24) -- --
Contingent deferred sales charges (note 2)..... (5) (1,699) -- --
Adjustments to maintain reserves............... 12,001 (69,090) (1) --
------------ ------------ ------------ ------------
Net equity transactions.................... 37,067,347 33,230,150 5,500 2,004
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 152,106,056 89,259,921 6,823 2,735
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... 334,663,456 245,403,535 6,841 4,106
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $ 486,769,512 334,663,456 13,664 6,841
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ACVPCAPAP BDFDAM
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... -- -- 1,072,397 831,172
Mortality and expense charges (note 2)......... (126) (383) (22,352) (59,085)
Administration charge (note 2):
Tier I ................................ (114) (345) (12,086) (33,669)
Tier II ............................... -- -- (3,155) (8,744)
Tier III .............................. -- -- (903) (2,293)
Tier IV ............................... -- -- (97) (201)
Tier V ................................ -- -- (970) (1,926)
Variable account fee (notes 2 and 5)........... (453) -- (96,999) --
------------ ------------ ------------ ------------
Net investment activity...................... (693) (728) 935,835 725,254
Proceeds from mutual fund shares sold.......... 18,530 47,270 6,379,676 5,280,682
Cost of mutual fund shares sold................ (23,743) (47,990) (6,310,382) (5,010,122)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.......... (5,213) (720) 69,294 270,560
Change in unrealized gain (loss) on investments (1,486) (3,222) (526,637) (62,236)
------------ ------------ ------------ ------------
Net gain (loss) on investments............... (6,699) (3,942) (457,343) 208,324
------------ ------------ ------------ ------------
Reinvested capital gains....................... 3,694 1,834 166,021 --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations......... (3,698) (2,836) 644,513 933,578
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 16,440 32,191 4,402,447 2,017,698
Transfers between funds ....................... (15,860) (33,826) 2,903,996 (215,164)
Redemptions.................................... (972) (1,115) (1,653,020) (1,811,719)
Annual contract maintenance charge (note 2).... (1) (12) (7) (8)
Contingent deferred sales charges (note 2)..... -- -- -- --
Adjustments to maintain reserves............... 1 (439) (453) (783)
------------ ------------ ------------ ------------
Net equity transactions.................... (392) (3,201) 5,652,963 (9,976)
NET CHANGE IN CONTRACT OWNERS' EQUITY............ (4,090) (6,037) 6,297,476 923,602
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... 78,567 84,604 12,478,178 11,554,576
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ 74,477 78,567 18,775,654 12,478,178
============ ============ ============ ============
</TABLE>
<PAGE> 9
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
DNYVENFD DEDECINC
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 3,675 2,454 8,519 7,552
Mortality and expense charges (note 2)......... (719) (20,053) (495) (1,261)
Administration charge (note 2):
Tier I ................................ -- (16,533) (345) (889)
Tier II ............................... (576) (1,346) (64) (157)
Tier III .............................. -- -- (19) (46)
Tier IV ............................... -- -- -- --
Tier V ................................ ------------ ------------ ------------ ------------
Variable account fee (notes 2 and 5)........... (2,375) -- (1,890) --
------------ ------------ ------------ ------------
Net investment activity...................... 5 (35,478) 5,706 5,199
Proceeds from mutual fund shares sold.......... 238,516 8,604,728 21,772 32,460
Cost of mutual fund shares sold................ (242,635) (7,453,575) (17,747) (26,970)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.......... (4,119) 1,151,153 4,025 5,490
Change in unrealized gain (loss) on investments 41,346 (200,770) (31,371) 14,342
------------ ------------ ------------ ------------
Net gain (loss) on investments............... 37,227 950,383 (27,346) 19,832
------------ ------------ ------------ ------------
Reinvested capital gains....................... 13,062 10,430 48,997 37,091
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 50,294 925,335 27,357 62,122
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 61,821 4,085,503 35,842 30,795
Transfers between funds ....................... (93,497) 2,267,457 (10,077) (2,219)
Redemptions.................................... (104,253) (9,056,278) (12,641) (31,221)
Annual contract maintenance charge (note 2).... -- -- -- --
Contingent deferred sales charges (note 2)..... -- -- -- --
Adjustments to maintain reserves............... (9,951) 8,950 1 --
------------ ------------ ------------ ------------
Net equity transactions.................... (145,880) (2,694,368) 13,125 (2,645)
NET CHANGE IN CONTRACT OWNERS' EQUITY............ (95,586) (1,769,033) 40,482 59,477
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... 446,013 2,215,046 282,605 223,128
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $ 350,427 446,013 323,087 282,605
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
DRYAPP DRYCSMGT
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 3,615 -- 13,275 54,849
Mortality and expense charges (note 2)......... -- -- (404) (5,071)
Administration charge (note 2):
Tier I ................................ -- -- -- (3,079)
Tier II ............................... -- -- (324) (1,320)
Tier III .............................. -- -- -- --
Tier IV ............................... -- -- -- --
Tier V ................................ ------------ ------------ ------------ ------------
Variable account fee (notes 2 and 5)........... (363) -- (1,506) --
------------ ------------ ------------ ------------
Net investment activity...................... 3,252 -- 11,041 45,379
Proceeds from mutual fund shares sold.......... 42,324 -- 188,098 6,117,696
Cost of mutual fund shares sold................ (41,547) -- (188,098) (6,117,696)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.......... 777 -- -- --
Change in unrealized gain (loss) on investments 20,162 -- -- --
------------ ------------ ------------ ------------
Net gain (loss) on investments............... 20,939 -- -- --
------------ ------------ ------------ ------------
Reinvested capital gains....................... 1,067 -- -- --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 25,258 -- 11,041 45,379
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 100,087 -- 7,000 662,604
Transfers between funds ....................... 678,208 -- 30,215 (165,420)
Redemptions.................................... -- -- (85,159) (1,416,011)
Annual contract maintenance charge (note 2).... -- -- -- --
Contingent deferred sales charges (note 2)..... -- -- -- --
Adjustments to maintain reserves............... 58 -- 13 (171)
------------ ------------ ------------ ------------
Net equity transactions.................... 778,353 -- (47,931) (918,998)
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 803,611 -- (36,890) (873,619)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... -- -- 280,820 1,154,439
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ 803,611 -- 243,930 280,820
============ ============ ============ ============
(Continued)
</TABLE>
<PAGE> 10
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
DRYPREMCAP DRY500IX
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- -- 654,039 284,069
Mortality and expense charges (note 2)......... -- -- (50,585) (35,171)
Administration charge (note 2):
Tier I ................................ -- -- (25,258) (14,618)
Tier II ............................... -- -- (9,470) (9,421)
Tier III .............................. -- -- (4,279) (3,048)
Tier IV ............................... -- -- (1,421) (830)
Tier V ................................ ------------ ------------ ------------ ------------
Variable account fee (notes 2 and 5)........... (11) -- (302,743) --
------------ ------------ ------------ ------------
Net investment activity...................... (11) -- 260,283 220,981
Proceeds from mutual fund shares sold.......... 41,198 -- 17,946,636 2,486,482
Cost of mutual fund shares sold................ (39,908) -- (17,009,081) (2,245,649)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.......... 1,290 -- 937,555 240,833
Change in unrealized gain (loss) on investments 1,020 -- 9,000,038 486,625
------------ ------------ ------------ ------------
Net gain (loss) on investments............... 2,310 -- 9,937,593 727,458
------------ ------------ ------------ ------------
Reinvested capital gains....................... -- -- 11,335 433,206
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 2,299 -- 10,209,211 1,381,645
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 9,972 -- 29,380,072 8,226,484
Transfers between funds ....................... 6,820 -- 12,761,627 10,392,894
Redemptions.................................... -- -- (4,088,081) (763,066)
Annual contract maintenance charge (note 2).... -- -- -- --
Contingent deferred sales charges (note 2)..... ------------ ------------ ------------ ------------
Adjustments to maintain reserves............... (36) -- 340,307 (170,387)
------------ ------------ ------------ ------------
Net equity transactions.................... 16,756 -- 38,393,925 17,685,925
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 19,055 -- 48,603,136 19,067,570
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... -- -- 19,067,570 --
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $ 19,055 -- 67,670,706 19,067,570
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
DRYSRGRO DRYSTKIX
-------------------------- --------------------------
1998 1997 1998 1997
- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 30 32 1,119 593
Mortality and expense charges (note 2)......... (18) (21) (102) (186)
Administration charge (note 2):
Tier I ................................ (16) (19) (29) (167)
Tier II ............................... -- -- -- --
Tier III .............................. -- -- (42) --
Tier IV ............................... -- -- -- --
Tier V ................................ ------------ ------------ ------------ ------------
Variable account fee (notes 2 and 5)........... (93) -- (592) --
------------ ------------ ------------ ------------
Net investment activity...................... (97) (8) 354 240
Proceeds from mutual fund shares sold.......... -- -- 6,423 21
Cost of mutual fund shares sold................ -- -- (3,045) (10)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.......... -- -- 3,378 11
Change in unrealized gain (loss) on investments 2,973 607 15,002 8,203
------------ ------------ ------------ ------------
Net gain (loss) on investments............... 2,973 607 18,380 8,214
------------ ------------ ------------ ------------
Reinvested capital gains....................... 700 251 221 1,314
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 3,576 850 18,955 9,768
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 6,922 5,227 28,266 8,847
Transfers between funds ....................... -- 2,835 29,929 16
Redemptions.................................... -- -- -- --
Annual contract maintenance charge (note 2).... ------------ ------------ ------------ ------------
Contingent deferred sales charges (note 2)..... ------------ ------------ ------------ ------------
Adjustments to maintain reserves............... 3 1 50 (3)
------------ ------------ ------------ ------------
Net equity transactions.................... 6,925 8,063 58,245 8,860
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 10,501 8,913 77,200 18,628
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... 8,913 -- 45,887 27,259
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ 19,414 8,913 123,087 45,887
============ ============ ============ ============
</TABLE>
<PAGE> 11
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
DRY3DCEN EVINCGRO
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- 62,610 187,498 204,120
Mortality and expense charges (note 2)......... (66,294) (145,644) (7,687) (21,764)
Administration charge (note 2):
Tier I ................................ (29,387) (65,097) (3,311) (9,480)
Tier II ............................... (7,533) (16,969) (1,433) (4,090)
Tier III .............................. (3,505) (7,994) (215) (587)
Tier IV ............................... (1,116) (2,467) (32) (102)
Tier V ................................ (4,678) (9,783) (533) (1,465)
Variable account fee (notes 2 and 5)........... (253,339) -- (22,752) --
------------ ------------ ------------ ------------
Net investment activity...................... (365,852) (185,344) 151,535 166,632
Proceeds from mutual fund shares sold.......... 3,901,389 3,259,863 799,273 847,065
Cost of mutual fund shares sold................ (2,492,822) (2,727,200) (673,270) (754,439)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.......... 1,408,567 532,663 126,003 92,626
Change in unrealized gain (loss) on investments 5,130,782 3,474,496 (718,235) 409,277
------------ ------------ ------------ ------------
Net gain (loss) on investments............... 6,539,349 4,007,159 (592,232) 501,903
------------ ------------ ------------ ------------
Reinvested capital gains....................... 5,487,821 2,817,470 373,288 285,501
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 11,661,318 6,639,285 (67,409) 954,036
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 12,820,383 9,162,128 266,376 314,114
Transfers between funds ....................... (958,671) 2,904,857 (684,318) (630,620)
Redemptions.................................... (3,146,178) (2,496,781) (214,308) (327,850)
Annual contract maintenance charge (note 2).... ------------ ------------ ------------ ------------
Contingent deferred sales charges (note 2)..... -- -- -- --
Adjustments to maintain reserves............... 875 (3,144) 17 44
------------ ------------ ------------ ------------
Net equity transactions.................... 8,716,409 9,567,060 (632,233) (644,312)
NET CHANGE IN CONTRACT OWNERS' EQUITY............ 20,377,727 16,206,345 (699,642) 309,724
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... 36,149,180 19,942,835 4,630,650 4,320,926
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ $ 56,526,907 36,149,180 3,931,008 4,630,650
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FEDGNMA FEDBDFD
-------------------------- --------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 10,016 49,431 1,432 --
Mortality and expense charges (note 2)......... (768) (3,754) -- --
Administration charge (note 2):
Tier I ................................ (691) (3,378) -- --
Tier II ............................... -- -- -- --
Tier III .............................. -- -- -- --
Tier IV ............................... -- -- -- --
Tier V ................................ -- -- -- --
Variable account fee (notes 2 and 5)........... -- -- (142) --
------------ ------------ ------------ ------------
Net investment activity...................... 8,557 42,299 1,290 --
Proceeds from mutual fund shares sold.......... 980,581 440,928 10,318 --
Cost of mutual fund shares sold................ (966,648) (428,095) (10,177) --
------------ ------------ ------------ ------------
Realized gain (loss) on investments.......... 13,933 12,833 141 --
Change in unrealized gain (loss) on investments (13,073) 493 (1,053) --
------------ ------------ ------------ ------------
Net gain (loss) on investments............... 860 13,326 (912) --
------------ ------------ ------------ ------------
Reinvested capital gains....................... -- -- -- --
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations......... 9,417 55,625 378 --
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners.............................. 13,861 97,632 12,564 --
Transfers between funds ....................... (57,803) 396,046 267,049 --
Redemptions.................................... (923,736) (299,846) -- --
Annual contract maintenance charge (note 2).... ------------ ------------ ------------ ------------
Contingent deferred sales charges (note 2)..... -- (165) -- --
Adjustments to maintain reserves............... (304) (5) 9 --
------------ ------------ ------------ ------------
Net equity transactions.................... (967,982) 193,662 279,622 --
NET CHANGE IN CONTRACT OWNERS' EQUITY............ (958,565) 249,287 280,000 --
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...... 958,565 709,278 -- --
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD............ -- 958,565 280,000 --
============ ============ ============ ============
(Continued)
</TABLE>
<PAGE> 12
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
FedUSGvt FAGrOppA
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 205,721 122,936 1,615 -
Mortality and expense charges (note 2). (4,822) (11,028) - -
Administration charge (note 2):
Tier I ........................ (2,999) (6,630) - -
Tier II ....................... (739) (1,877) - -
Tier III ...................... (199) (400) - -
Tier IV ....................... (94) (259) - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (27,060) - (126) -
------------ ------------ ------------ ------------
Net investment activity.............. 169,808 102,742 1,489 -
Proceeds from mutual fund shares sold.. 3,303,388 1,662,873 163 -
Cost of mutual fund shares sold........ (3,240,050) (1,668,080) (159) -
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 63,338 (5,207) 4 -
Change in unrealized gain (loss) on investments 31,242 33,840 2,517 -
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 94,580 28,633 2,521 -
------------ ------------ ------------ ------------
Reinvested capital gains............... - - 5,705 -
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 264,388 131,375 9,715 -
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 1,027,985 665,677 85,031 -
Transfers between funds ............... 3,085,149 36,017 211,185 -
Redemptions............................ (660,459) (329,946) - -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 838 (158) (35) -
------------ ------------ ------------ ------------
Net equity transactions............ 3,453,513 371,590 296,181 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 3,717,901 502,965 305,896 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 2,524,630 2,021,665 - -
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 6,242,531 2,524,630 305,896 -
============ ============ ============ ============
<CAPTION>
FAHiYld FidAsMgr
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 298 - 256,730 200,644
Mortality and expense charges (note 2). - - (12,311) (29,750)
Administration charge (note 2):
Tier I ........................ - - (7,018) (17,550)
Tier II ....................... - - (1,576) (3,833)
Tier III ...................... - - (658) (1,227)
Tier IV ....................... - - (578) (1,365)
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (2) - (49,954) -
------------ ------------- ------------- -------------
Net investment activity.............. 296 - 184,635 146,919
Proceeds from mutual fund shares sold.. 3,365 - 1,400,805 1,776,704
Cost of mutual fund shares sold........ (3,405) - (1,144,384) (1,379,459)
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. (40) - 256,421 397,245
Change in unrealized gain (loss) on investments (159) - (698,937) 219,715
------------ ------------- ------------- -------------
Net gain (loss) on investments....... (199) - (442,516) 616,960
------------ ------------- ------------- -------------
Reinvested capital gains............... 13 - 1,435,527 370,511
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 110 - 1,177,646 1,134,390
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 6,597 - 2,532,030 1,689,785
Transfers between funds ............... 12,339 - (151,020) (77,999)
Redemptions............................ - - (704,769) (1,129,423)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - (42)
Adjustments to maintain reserves....... (81) - 365 2,277
------------ ------------- ------------- -------------
Net equity transactions............ 18,855 - 1,676,606 484,598
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 18,965 - 2,854,252 1,618,988
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - 6,642,815 5,023,827
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 18,965 - 9,497,067 6,642,815
============ ============= ============= =============
</TABLE>
<PAGE> 13
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
FidCapInc FidContr
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 126,811 94,905 1,863,318 1,712,764
Mortality and expense charges (note 2). (2,324) (6,810) (450,698) (1,095,804)
Administration charge (note 2):
Tier I ........................ (730) (2,241) (255,752) (644,732)
Tier II ....................... (237) (657) (64,735) (155,250)
Tier III ...................... (298) (831) (26,384) (60,205)
Tier IV ....................... (63) (170) (8,436) (19,745)
Tier V ........................ (169) (506) (6,165) (10,700)
Variable account fee (notes 2 and 5)... (7,180) - (1,870,589) -
------------ ------------ ------------ ------------
Net investment activity.............. 115,810 83,690 (819,441) (273,672)
Proceeds from mutual fund shares sold.. 173,665 181,090 7,189,568 24,431,745
Cost of mutual fund shares sold........ (127,055) (133,415) (4,326,016) (15,172,449)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 46,610 47,675 2,863,552 9,259,296
Change in unrealized gain (loss) on investments (143,059) 43,602 55,803,182 11,711,270
------------ ------------ ------------ ------------
Net gain (loss) on investments....... (96,449) 91,277 58,666,734 20,970,566
------------ ------------ ------------ ------------
Reinvested capital gains............... 33,909 - 26,157,555 21,858,485
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners
equity resulting from operations. 53,270 174,967 84,004,848 42,555,379
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... - - 77,487,132 71,455,791
Transfers between funds ............... (96,294) (47,356) (11,104,263) 2,764,788
Redemptions............................ (65,869) (120,296) (20,740,068) (35,148,446)
Annual contract maintenance charge (note 2) - - (24) (12)
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (184) (69) 13,064 (25,659)
------------ ------------ ------------ ------------
Net equity transactions............ (162,347) (167,721) 45,655,841 39,046,462
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (109,077) 7,246 129,660,689 81,601,841
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 1,374,317 1,367,071 250,585,641 168,983,800
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 1,265,240 1,374,317 380,246,330 250,585,641
============ ============ ============ ============
<CAPTION>
FidEqinc FidGrinc
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 4,640,372 4,846,247 156,434 171,835
Mortality and expense charges (note 2). (506,185) (1,228,965) (21,607) (72,380)
Administration charge (note 2):
Tier I ........................ (221,393) (555,462) - (39,476)
Tier II ....................... (76,233) (182,609) - -
Tier III ...................... (23,869) (56,191) - -
Tier IV ....................... (11,688) (27,411) - -
Tier V ........................ (28,770) (66,404) (6,482) (8,555)
Variable account fee (notes 2 and 5)... (1,692,590) - (78,976) -
------------ ------------- ------------- -------------
Net investment activity.............. 2,079,644 2,729,205 49,369 51,424
Proceeds from mutual fund shares sold.. 43,609,506 7,591,614 2,491,096 15,556,109
Cost of mutual fund shares sold........ (22,032,336) (4,094,211) (1,954,895) (12,289,818)
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. 21,577,170 3,497,403 536,201 3,266,291
Change in unrealized gain (loss) on investments (3,426,262) 43,670,084 2,368,630 (795,078)
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 18,150,908 47,167,487 2,904,831 2,471,213
------------ ------------- ------------- -------------
Reinvested capital gains............... 12,941,873 10,700,332 912,942 617,392
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 33,172,425 60,597,024 3,867,142 3,140,029
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 57,359,101 49,555,826 10,539,635 8,903,236
Transfers between funds ............... (24,012,463) 7,627,274 194,224 1,906,025
Redemptions............................ (48,768,023) (16,944,810) (2,164,138) (15,606,356)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - (2,187) - -
Adjustments to maintain reserves....... 801 (2,091) 124 973
------------ ------------- ------------- -------------
Net equity transactions............ (15,420,584) 40,234,012 8,569,845 (4,796,122)
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 17,751,841 100,831,036 12,436,987 (1,656,093)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 294,333,089 193,502,053 8,902,461 10,558,554
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 312,084,930 294,333,089 21,339,448 8,902,461
============ ============= ============= =============
</TABLE>
(Continued)
<PAGE> 14
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
FidMgin FidVIPAM
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 1,642,041 2,776,362 1,218 832
Mortality and expense charges (note 2). (398,587) (1,029,833) (66) (152)
Administration charge (note 2):
Tier I ........................ (202,623) (554,264) (59) (137)
Tier II ....................... (44,270) (107,173) - -
Tier III ...................... (16,514) (39,771) - -
Tier IV ....................... (6,415) (15,441) - -
Tier V ........................ (22,365) (52,539) - -
Variable account fee (notes 2 and 5)... (1,495,579) - (280) -
------------ ------------ ------------ ------------
Net investment activity.............. (544,312) 977,341 813 543
Proceeds from mutual fund shares sold.. 21,671,959 17,843,381 2,675 -
Cost of mutual fund shares sold........ (15,120,252) (14,477,806) (2,284) -
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 6,551,707 3,365,575 391 -
Change in unrealized gain (loss) on investments 56,502,870 29,086,622 842 2,692
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 63,054,577 32,452,197 1,233 2,692
------------ ------------ ------------ ------------
Reinvested capital gains............... 12,423,793 11,739,123 3,653 2,086
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 74,934,058 45,168,661 5,699 5,321
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 45,406,273 41,946,309 8,531 9,177
Transfers between funds ............... (5,882,750) (12,805,250) - 95
Redemptions............................ (32,023,667) (22,357,376) (2,633) -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) (5) (1,445) - -
Adjustments to maintain reserves....... 5,882 (7,838) (1) -
------------ ------------ ------------ ------------
Net equity transactions............ 7,505,733 6,774,400 5,897 9,272
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 82,439,791 51,943,061 11,596 14,593
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 228,989,269 177,046,208 37,760 23,167
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $311,429,060 228,989,269 49,356 37,760
============ ============ ============ ============
<CAPTION>
FidVIPEI FidVIPGr
--------------------------- ----------------------------
1998 1997 1998 1997
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 2,576 1,638 694 565
Mortality and expense charges (note 2). (316) (656) (240) (540)
Administration charge (note 2):
Tier I ........................ (284) (591) (216) (486)
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (1,254) - (1,128) -
------------ ------------- ------------- -------------
Net investment activity.............. 722 391 (890) (461)
Proceeds from mutual fund shares sold.. 32,991 881 6,452 2,530
Cost of mutual fund shares sold........ (22,023) (609) (3,841) (1,696)
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. 10,968 272 2,611 834
Change in unrealized gain (loss) on investments 467 21,307 36,858 17,902
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 11,435 21,579 39,469 18,736
------------ ------------- ------------- -------------
Reinvested capital gains............... 9,167 8,234 18,160 2,531
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 21,324 30,204 56,739 20,806
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 43,053 46,876 35,276 33,185
Transfers between funds ............... (9,466) 67 - (1,451)
Redemptions............................ (7,379) (143) (5,371) (284)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 8 (21) 26 3
------------ ------------- ------------- -------------
Net equity transactions............ 26,216 46,779 29,931 31,453
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 47,540 76,983 86,670 52,259
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 168,954 91,971 133,237 80,978
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 216,494 168,954 219,907 133,237
============ ============= ============= =============
</TABLE>
<PAGE> 15
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
FidVIPHI FidVIPOv
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 3,277 1,817 2,978 1,845
Mortality and expense charges (note 2). (80) (173) (275) (679)
Administration charge (note 2):
Tier I ........................ (72) (156) (247) (611)
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (310) - (946) -
------------ ------------ ------------ ------------
Net investment activity.............. 2,815 1,488 1,510 555
Proceeds from mutual fund shares sold.. 8,878 20 59,366 1,605
Cost of mutual fund shares sold........ (9,385) (17) (49,880) (1,311)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. (507) 3 9,486 294
Change in unrealized gain (loss) on investments (7,529) 3,589 (3,645) 2,792
------------ ------------ ------------ ------------
Net gain (loss) on investments....... (8,036) 3,592 5,841 3,086
------------ ------------ ------------ ------------
Reinvested capital gains............... 2,082 225 8,777 7,326
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. (3,139) 5,305 16,128 10,967
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 9,559 16,116 18,183 37,048
Transfers between funds ............... (8,866) - (56,597) 9,863
Redemptions............................ - - (998) (581)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... - (2) (21) 2
------------ ------------ ------------ ------------
Net equity transactions............ 693 16,114 (39,433) 46,332
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (2,446) 21,419 (23,305) 57,299
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 45,432 24,013 159,596 102,297
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 42,986 45,432 136,291 159,596
============ ============ ============ ============
<CAPTION>
GroFdAm IncFdAm
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 70,297 83,852 945,621 802,807
Mortality and expense charges (note 2). (24,381) (57,706) (31,811) (86,189)
Administration charge (note 2):
Tier I ........................ (14,294) (34,281) (19,475) (55,580)
Tier II ....................... (3,521) (7,916) (5,215) (12,467)
Tier III ...................... (1,856) (4,327) (1,414) (3,364)
Tier IV ....................... (402) (1,003) (519) (1,297)
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (95,760) - (118,013) -
------------ ------------- ------------- -------------
Net investment activity.............. (69,917) (21,381) 769,174 643,910
Proceeds from mutual fund shares sold.. 2,326,943 1,428,368 2,414,779 3,825,869
Cost of mutual fund shares sold........ (1,849,031) (1,129,814) (1,789,136) (2,940,941)
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. 477,912 298,554 625,643 884,928
Change in unrealized gain (loss) on investments 2,260,735 937,071 (1,091,203) 357,933
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 2,738,647 1,235,625 (465,560) 1,242,861
------------ ------------- ------------- -------------
Reinvested capital gains............... 1,726,170 1,328,724 1,297,143 1,368,961
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 4,394,900 2,542,968 1,600,757 3,255,732
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 2,880,077 2,447,734 3,418,594 3,463,650
Transfers between funds ............... (558,934) (330,586) (1,370,792) (263,093)
Redemptions............................ (1,058,856) (846,573) (1,488,464) (3,321,842)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 286 (854) 116 170
------------ ------------- ------------- -------------
Net equity transactions............ 1,262,573 1,269,721 559,454 (121,115)
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 5,657,473 3,812,689 2,160,211 3,134,617
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 13,592,368 9,779,679 18,355,405 15,220,788
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 19,249,841 13,592,368 20,515,616 18,355,405
============ ============= ============= =============
</TABLE>
(Continued)
<PAGE> 16
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
InvDynam InvIndinc
----------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 605,912 503,142
Mortality and expense charges (note 2). - - (40,935) (102,486)
Administration charge (note 2):
Tier I ........................ - - (26,247) (68,066)
Tier II ....................... - - (6,522) (15,321)
Tier III ...................... - - (1,097) (2,187)
Tier IV ....................... - - (717) (1,625)
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (10) - (158,242) -
------------ ------------ ------------ ------------
Net investment activity.............. (10) - 372,152 313,457
Proceeds from mutual fund shares sold.. 6,997 - 1,979,934 2,918,824
Cost of mutual fund shares sold........ (7,179) - (1,412,824) (2,133,346)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. (182) - 567,110 785,478
Change in unrealized gain (loss) on investments 2,237 - (296,231) 1,085,683
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 2,055 - 270,879 1,871,161
------------ ------------ ------------ ------------
Reinvested capital gains............... 861 - 2,563,688 2,264,235
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 2,906 - 3,206,719 4,448,853
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 22,113 - 5,778,407 5,518,647
Transfers between funds ............... 32,022 - (2,075,401) (42,962)
Redemptions............................ - - (1,577,795) (3,356,403)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (11) - 335 (284)
------------ ------------ ------------ ------------
Net equity transactions............ 54,124 - 2,125,546 2,118,998
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 57,030 - 5,332,265 6,567,851
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - 22,890,103 16,322,252
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 57,030 - 28,222,368 22,890,103
============ ============ ============ ============
<CAPTION>
InvToTRet JanFund
----------------------------- ----------------------------
1998 1997 1998 1997
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 84 - 255,272 504,628
Mortality and expense charges (note 2). - - (123,418) (263,647)
Administration charge (note 2):
Tier I ........................ - - (73,139) (155,821)
Tier II ....................... - - (18,968) (40,695)
Tier III ...................... - - (5,896) (12,305)
Tier IV ....................... - - (3,446) (7,654)
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (48) - (572,068) -
------------ ------------- ------------- -------------
Net investment activity.............. 36 - (541,663) 24,506
Proceeds from mutual fund shares sold.. - - 5,913,478 1,817,544
Cost of mutual fund shares sold........ - - (4,178,412) (1,287,899)
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. - - 1,735,066 529,645
Change in unrealized gain (loss) on investments (492) - 27,025,929 (1,083,219)
------------ ------------- ------------- -------------
Net gain (loss) on investments....... (492) - 28,760,995 (553,574)
------------ ------------- ------------- -------------
Reinvested capital gains............... 2,113 - 3,109,129 10,329,860
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 1,657 - 31,328,461 9,800,792
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 33,134 - 30,660,731 22,193,127
Transfers between funds ............... 96,955 - 9,765,202 385,853
Redemptions............................ - - (6,044,122) (3,993,919)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (1) - 13,252 (6,804)
------------ ------------- ------------- -------------
Net equity transactions............ 130,088 - 34,395,063 18,578,257
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 131,745 - 65,723,524 28,379,049
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - 65,725,920 37,346,871
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 131,745 - 131,449,444 65,725,920
============ ============= ============= =============
</TABLE>
<PAGE> 17
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
Jan20Fd JanWrldwde
----------------------------- ----------------------------
1998 1997 1998 1997
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - 45 4,603 -
Mortality and expense charges (note 2). (96) (643) (52) -
Administration charge (note 2):
Tier I ........................ (86) (578) (46) -
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... - - (4,975) -
------------ ------------ ------------ ------------
Net investment activity.............. (182) (1,176) (470) -
Proceeds from mutual fund shares sold.. 234,631 571,046 280,474 -
Cost of mutual fund shares sold........ (218,097) (609,105) (276,630) -
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 16,534 (38,059) 3,844 -
Change in unrealized gain (loss) on investments 1,871 33,644 32,242 -
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 18,405 (4,415) 36,086 -
------------ ------------ ------------ ------------
Reinvested capital gains............... - 2,061 - -
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 18,223 (3,530) 35,616 -
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 66,106 215,002 1,224,932 -
Transfers between funds ............... 112,713 124,576 42,958 -
Redemptions............................ (213,496) (569,390) (148,660) -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (1) 4 778 -
------------ ------------ ------------ ------------
Net equity transactions............ (34,678) (229,808) 1,120,008 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (16,455) (233,338) 1,155,624 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 16,455 249,793 - -
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ - 16,455 1,155,624 -
============ ============ ============ ============
<CAPTION>
MASFIP MFSGrStk
----------------------------- -----------------------------
1998 1997 1998 1997
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 262,173 131,839 3,357 3,241
Mortality and expense charges (note 2). (5,269) (9,679) (13,218) (30,470)
Administration charge (note 2):
Tier I ........................ (2,984) (5,793) (3,786) (8,816)
Tier II ....................... (671) (1,213) (577) (1,116)
Tier III ...................... (494) (733) (217) (501)
Tier IV ....................... (117) (202) (3) (8)
Tier V ........................ - - (2,376) (5,527)
Variable account fee (notes 2 and 5)... (25,897) - (45,122) -
------------ ------------- ------------- -------------
Net investment activity.............. 226,741 114,219 (61,942) (43,197)
Proceeds from mutual fund shares sold.. 2,064,790 1,183,622 763,833 806,782
Cost of mutual fund shares sold........ (2,063,602) (1,164,040) (594,289) (796,449)
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. 1,188 19,582 169,544 10,333
Change in unrealized gain (loss) on investments (138,309) (6,279) 1,977,242 1,199,210
------------ ------------- ------------- -------------
Net gain (loss) on investments....... (137,121) 13,303 2,146,786 1,209,543
------------ ------------- ------------- -------------
Reinvested capital gains............... 141,173 34,732 835,048 1,104,545
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 230,793 162,254 2,919,892 2,270,891
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 2,337,578 892,120 938,045 560,733
Transfers between funds ............... 1,227,491 562,385 49,079 54,405
Redemptions............................ (408,984) (220,277) (652,945) (695,501)
Annual contract maintenance charge (note 2) - - (489) (486)
Contingent deferred sales charges (note 2) - - (185) (456)
Adjustments to maintain reserves....... 769 (131) 180 451
------------ ------------- ------------- -------------
Net equity transactions............ 3,156,854 1,234,097 333,685 (80,854)
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 3,387,647 1,396,351 3,253,577 2,190,037
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 2,659,273 1,262,922 7,205,011 5,014,974
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 6,046,920 2,659,273 10,458,588 7,205,011
============ ============= ============= =============
</TABLE>
(Continued)
<PAGE> 18
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
MFSGrOpp MFSHIInc
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 456,237 312,636
Mortality and expense charges (note 2). (50,612) (134,126) (7,916) (18,058)
Administration charge (note 2):
Tier I ........................ (7,564) (22,570) (768) (2,559)
Tier II ....................... (4,456) (11,636) (201) (655)
Tier III ...................... (2,056) (5,520) (148) (418)
Tier IV ....................... (38) (108) - (1)
Tier V ........................ (9,935) (25,510) (1,969) (4,109)
Variable account fee (notes 2 and 5)... (155,715) - (25,707) -
------------ ------------ ------------ ------------
Net investment activity.............. (230,376) (199,470) 419,528 286,836
Proceeds from mutual fund shares sold.. 4,941,954 4,369,685 7,726,052 2,220,329
Cost of mutual fund shares sold........ (3,473,271) (3,326,454) (7,645,469) (2,126,593)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 1,468,683 1,043,231 80,583 93,736
Change in unrealized gain (loss) on investments 2,631,079 846,207 (532,483) 19,624
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 4,099,762 1,889,438 (451,900) 113,360
------------ ------------ ------------ ------------
Reinvested capital gains............... 3,810,336 3,444,649 - -
------------ ------------ ------------ ------------
Net increase (decrease) in contract owner's
equity resulting from operations. 7,679,722 5,134,617 (32,372) 400,196
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 3,001,332 1,426,143 2,601,573 610,811
Transfers between funds ............... (315,367) (942,811) (223,014) (123,874)
Redemptions............................ (2,525,453) (3,228,399) (931,136) (708,681)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (192) (21,750) 2,885 (2,782)
---------- ------------ ------------ ------------
Net equity transactions............ 160,320 (2,766,817) 1,450,308 (224,526)
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 7,840,042 2,367,800 1,417,936 175,670
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 27,826,901 25,459,101 3,923,071 3,747,401
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 35,666,943 27,826,901 5,341,007 3,923,071
============ ============ ============ ============
<CAPTION>
MSIEqGroB NAATAggr
----------------------------- ----------------------------
1998 1997 1998 1997
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 95 - 507 -
Mortality and expense charges (note 2). - - (1,215) -
Administration charge (note 2):
Tier I ........................ - - (890) -
Tier II ....................... - - (141) -
Tier III ...................... - - (25) -
Tier IV ....................... - - (3) -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (45) - (13,433) -
------------ ------------- ------------- -------------
Net investment activity.............. 50 - (15,200) -
Proceeds from mutual fund shares sold.. 676 - 635,734 -
Cost of mutual fund shares sold........ (667) - (616,801) -
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. 9 - 18,933 -
Change in unrealized gain (loss) on investments 1,514 - 196,583 -
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 1,523 - 215,516 -
------------ ------------- ------------- -------------
Reinvested capital gains............... 3,097 - - -
------------ ------------- ------------- -------------
Net increase (decrease) in contract owner's
equity resulting from operations. 4,670 - 200,316 -
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 25,975 - 1,887,715 -
Transfers between funds ............... 67,174 - 1,152,077 -
Redemptions............................ - - (170,820) -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 82 - 47 -
------------ ------------- ------------- -------------
Net equity transactions............ 93,231 - 2,869,019 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 97,901 - 3,069,335 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - - -
------------- ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 97,901 - 3,069,335 -
============= ============= ============= =============
</TABLE>
<PAGE> 19
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NAATcons NAATMod
----------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 5,626 - 5,843 -
Mortality and expense charges (note 2). (201) - (108) -
Administration charge (note 2):
Tier I ........................ (28) - (62) -
Tier II ....................... (2) - (17) -
Tier III ...................... (100) - (7) -
Tier IV ....................... - - (3) -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (1,900) - (5,098) -
------------ ------------ ----------- ------------
Net investment activity.............. 3,395 - 548 -
Proceeds from mutual fund shares sold.. 576,645 - 336,223 -
Cost of mutual fund shares sold........ (567,041) - (348,924) -
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 9,604 - (12,701) -
Change in unrealized gain (loss) on investments 19,647 - 147,065 -
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 29,251 - 134,364 -
------------ ------------ ------------ ------------
Reinvested capital gains............... - - - -
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 32,646 - 134,912 -
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 195,908 - 1,292,678 -
Transfers between funds ............... 444,932 - 469,169 -
Redemptions............................ (78,995) - (126,526) -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (4) - 30 -
------------ ------------ ------------ ------------
Net equity transactions............ 561,841 - 1,635,351 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 594,487 - 1,770,263 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - - -
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 594,487 - 1,770,263 -
============ ============ ============ ============
<CAPTION>
NAATModAgg NAATModCon
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 5,390 - 5,191 -
Mortality and expense charges (note 2). (455) - (73) -
Administration charge (note 2):
Tier I ........................ (270) - (15) -
Tier II ....................... (61) - (1) -
Tier III ...................... (42) - (33) -
Tier IV ....................... (3) - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (6,084) - (2,642) -
------------ ------------- ------------- -------------
Net investment activity.............. (1,525) - 2,427 -
Proceeds from mutual fund shares sold.. 464,789 - 126,322 -
Cost of mutual fund shares sold........ (466,292) - (122,914) -
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. (1,503) - 3,408 -
Change in unrealized gain (loss) on investments 102,054 - 53,826 -
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 100,551 - 57,234 -
------------ ------------- ------------- -------------
Reinvested capital gains............... - - - -
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 99,026 - 59,661 -
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 1,191,358 - 345,421 -
Transfers between funds ............... 379,175 - 511,458 -
Redemptions............................ (93,431) - (41,109) -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 39 - 43 -
------------ ------------- ------------- -------------
Net equity transactions............ 1,477,141 - 815,813 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 1,576,167 - 875,474 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - - -
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 1,576,167 - 875,474 -
============ ============= ============= =============
</TABLE>
(Continued)
<PAGE> 20
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NWBdFd NWFund
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 8,729 8,172 1,275,418 690,370
Mortality and expense charges (note 2). (177) (641) (162,460) (266,484)
Administration charge (note 2):
Tier I ........................ - (76) (71,265) (123,555)
Tier II ....................... - - (20,611) (35,569)
Tier III ...................... - - (8,929) (14,919)
Tier IV ....................... - - (2,770) (3,750)
Tier V ........................ (53) (167) (10,712) (15,150)
Variable account fee (notes 2 and 5)... (874) - (793,939) -
------------ ------------ ------------ ------------
Net investment activity.............. 7,625 7,288 204,732 230,943
Proceeds from mutual fund shares sold.. 32,175 78,071 7,155,989 3,524,263
Cost of mutual fund shares sold........ (30,850) (82,229) (3,977,604) (2,432,914)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 1,325 (4,158) 3,178,385 1,091,349
Change in unrealized gain (loss) on investments 2,630 6,157 21,386,876 11,194,545
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 3,955 1,999 24,565,261 12,285,894
------------ ------------ ------------ ------------
Reinvested capital gains............... - - 7,428,131 3,686,826
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 11,580 9,287 32,198,124 16,203,663
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 173,475 22,759 59,228,416 15,483,476
Transfers between funds ............... (21,724) (33,788) 35,685,404 13,256,766
Redemptions............................ (840) (46,264) (13,470,684) (4,206,078)
Annual contract maintenance charge (note 2) - - (1,070) (1,088)
Contingent deferred sales charges (note 2) - - (1,062) (897)
Adjustments to maintain reserves....... (84) (12) 6,785 433
------------ ------------ ------------ ------------
Net equity transactions............ 150,827 (57,305) 81,447,789 24,532,612
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 162,407 (48,018) 113,645,913 40,736,275
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 111,736 159,754 75,327,367 34,591,092
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 274,143 111,736 188,973,280 75,327,367
============ ============ ============ ============
<CAPTION>
NWGroFd NWMyMkt
---------------------------- --------------------------
1998 1997 1998 1997
------------ ------------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 14,337 68,821 3,234,302 2,956,768
Mortality and expense charges (note 2). (18,865) (44,059) (103,945) (298,652)
Administration charge (note 2):
Tier I ........................ (6,715) (17,354) (33,864) (99,691)
Tier II ....................... (2,143) (5,594) (27,756) (78,281)
Tier III ...................... (475) (1,245) (3,371) (9,259)
Tier IV ....................... (992) (2,168) (2,320) (6,949)
Tier V ........................ (1,636) (3,087) (6,062) (17,169)
Variable account fee (notes 2 and 5)... (68,124) - (356,313) -
------------ ------------- ------------- -------------
Net investment activity.............. (84,613) (4,686) 2,700,671 2,446,767
Proceeds from mutual fund shares sold.. 3,211,852 888,498 125,064,177 90,261,974
Cost of mutual fund shares sold........ (2,238,411) (640,663) (125,064,177) (90,261,974)
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. 973,441 247,835 - -
Change in unrealized gain (loss) on investments 746,981 428,346 - -
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 1,720,422 676,181 - -
------------ ------------- ------------- -------------
Reinvested capital gains............... 688,315 1,209,332 - -
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 2,324,124 1,880,827 2,700,671 2,446,767
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 2,626,268 1,294,729 15,218,549 9,680,836
Transfers between funds ............... (14,054) (227,077) 7,542,179 (8,123,293)
Redemptions............................ (1,150,765) (510,560) (11,436,140) (6,330,019)
Annual contract maintenance charge (note 2) - - (14) (15)
Contingent deferred sales charges (note 2) - - - (2,230)
Adjustments to maintain reserves....... 93 95 17,615 25,609
------------ ------------- ------------- -------------
Net equity transactions............ 1,461,542 557,187 11,342,189 (4,749,112)
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 3,785,666 2,438,014 14,042,860 (2,302,345)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 9,970,932 7,532,918 56,626,599 58,928,944
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 13,756,598 9,970,932 70,669,459 56,626,599
============ ============= ============= =============
</TABLE>
<PAGE> 21
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NWindxFdY NSATGvtBd
----------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 1,092 - 932 825
Mortality and expense charges (note 2). - - (25) (67)
Administration charge (note 2):
Tier I ........................ - - (23) (60)
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (272) - (114) -
------------ ------------ ------------ ------------
Net investment activity.............. 820 - 770 698
Proceeds from mutual fund shares sold.. 12,991 - 98 2,513
Cost of mutual fund shares sold........ (12,980) - (91) (2,354)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 11 - 7 159
Change in unrealized gain (loss) on investments 18,449 - 413 270
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 18,460 - 420 429
------------ ------------ ------------ ------------
Reinvested capital gains............... - - 93 -
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 19,280 - 1,283 1,127
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 81,674 - 3,575 3,575
Transfers between funds ............... 507,742 - - -
Redemptions............................ (6,153) - (188) (2,506)
Annual contract maintenance charge (note 2) - - (12) (32)
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 91 - - (1)
------------ ------------ ------------ ------------
Net equity transactions............ 583,354 - 3,375 1,036
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 602,634 - 4,658 2,163
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - 14,781 12,618
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 602,634 - 19,439 14,781
============ ============ ============ ============
<CAPTION>
NSATMyMkt NSATSmCo
---------------------------- ------------------------------
1998 1997 1998 1997
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 1,928 1,378 - -
Mortality and expense charges (note 2). (25) (135) (1,113) -
Administration charge (note 2):
Tier I ........................ (22) (121) (458) -
Tier II ....................... - - (337) -
Tier III ...................... - - (85) -
Tier IV ....................... - - (17) -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (319) - (13,276) -
------------ ------------- ------------- -------------
Net investment activity.............. 1,562 1,122 (15,286) -
Proceeds from mutual fund shares sold.. 1,610 37,780 2,561,737 -
Cost of mutual fund shares sold........ (1,610) (37,780) (2,738,916) -
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. - - (177,179) -
Change in unrealized gain (loss) on investments - - 283,712 -
------------ ------------- ------------- -------------
Net gain (loss) on investments....... - - 106,533 -
------------ ------------- ------------- -------------
Reinvested capital gains............... - - - -
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 1,562 1,122 91,247 -
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 9,243 8,580 1,668,534 -
Transfers between funds ............... 56,989 (15,000) 1,950,841 -
Redemptions............................ - (22,757) (173,431) -
Annual contract maintenance charge (note 2) - (5) - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 12 (7) 1,142 -
------------ ------------- ------------- -------------
Net equity transactions............ 66,244 (29,189) 3,447,086 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 67,806 (28,067) 3,538,333 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 8,353 36,420 - -
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 76,159 8,353 3,538,333 -
============ ============= ============= =============
</TABLE>
(Continued)
<PAGE> 22
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NSATTotRe NBAMTGro
----------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 1,442 1,290 - -
Mortality and expense charges (note 2). (226) (444) (46) (114)
Administration charge (note 2):
Tier I ........................ (203) (399) (42) (103)
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (898) - (179) -
------------ ------------ ------------ ------------
Net investment activity.............. 115 447 (267) (217)
Proceeds from mutual fund shares sold.. 12,829 374 7,379 289
Cost of mutual fund shares sold........ (6,994) (234) (7,320) (224)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 5,835 140 59 65
Change in unrealized gain (loss) on investments 10,427 13,515 (2,595) 3,892
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 16,262 13,655 (2,536) 3,957
------------ ------------ ------------ ------------
Reinvested capital gains............... 5,748 4,114 7,561 1,560
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 22,125 18,216 4,758 5,300
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 8,798 27,743 9,567 6,212
Transfers between funds ............... - 36,972 - -
Redemptions............................ (12,584) (149) (7,559) (143)
Annual contract maintenance charge (note 2) (12) (4) - (10)
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 2 11 1 1
------------ ------------ ------------ ------------
Net equity transactions............ (3,796) 64,573 2,009 6,060
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 18,329 82,789 6,767 11,360
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 129,271 46,482 28,237 16,877
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 147,600 129,271 35,004 28,237
============ ============ ============ ============
<CAPTION>
NBAMTLMat NBAMTPart
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY: 554 441 142 47
Reinvested dividends .................. (15) (44) (63) (104)
Mortality and expense charges (note 2).
Administration charge (note 2): (13) (40) (56) (93)
Tier I ........................ - - - -
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ (65) - (325) -
Variable account fee (notes 2 and 5)... ------------ ------------- ------------- -------------
461 357 (302) (150)
Net investment activity..............
- 3,118 1,445 346
Proceeds from mutual fund shares sold.. - (3,150) (670) (161)
Cost of mutual fund shares sold........ ------------ ------------- ------------- -------------
- (32) 775 185
Realized gain (loss) on investments.. (144) 176 (3,210) 4,404
Change in unrealized gain (loss) on investments ------------ ------------- ------------- -------------
(144) 144 (2,435) 4,589
Net gain (loss) on investments....... ------------ ------------- ------------- -------------
- - 4,468 729
Reinvested capital gains............... ------------ ------------- ------------- -------------
Net increase (decrease) in contract owners' 317 501 1,731 5,168
equity resulting from operations. ------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from 2,375 4,298 30,030 6,119
contract owners...................... - (3,114) 3,872 3,543
Transfers between funds ............... - - (1,397) (167)
Redemptions............................ - - - -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - (1) (2)
Adjustments to maintain reserves....... ------------ ------------- ------------- -------------
2,375 1,184 32,504 9,493
Net equity transactions............
2,692 1,685 34,235 14,661
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 8,440 6,755 29,431 14,770
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ------------ ------------- ------------- -------------
11,132 8,440 63,666 29,431
CONTRACT OWNERS' EQUITY END OF PERIOD.... ============ ============= ============= =============
</TABLE>
<PAGE> 23
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NBGuard NBManhFd
----------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 8,655 4,553 - -
Mortality and expense charges (note 2). (1,980) (3,053) (217) (810)
Administration charge (note 2):
Tier I ........................ (393) - (195) (729)
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ (463) (916) - -
Variable account fee (notes 2 and 5)... (6,774) - (1,138) -
------------ ------------ ------------ ------------
Net investment activity.............. (955) 584 (1,550) (1,539)
Proceeds from mutual fund shares sold.. 1,760,387 453,514 4,438 223,724
Cost of mutual fund shares sold........ (2,068,736) (414,080) (4,754) (233,494)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. (308,349) 39,434 (316) (9,770)
Change in unrealized gain (loss) on investments 72,024 (121,548) 18,278 14,259
------------ ------------ ------------ ------------
Net gain (loss) on investments....... (236,325) (82,114) 17,962 4,489
------------ ------------ ------------ ------------
Reinvested capital gains............... 228,090 128,744 16,709 31,773
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. (9,190) 47,214 33,121 34,723
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 1,175,835 620,995 103,867 19,016
Transfers between funds ............... (425,526) 226,325 (255) (53,207)
Redemptions............................ (220,657) (60,295) (3,629) (170,571)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - (4) -
Adjustments to maintain reserves....... (850) 838 - (24)
------------ ------------ ------------ ------------
Net equity transactions............ 528,802 787,863 99,979 (204,786)
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 519,612 835,077 133,100 (170,063)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 984,329 149,252 124,816 294,879
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 1,503,941 984,329 257,916 124,816
============ ============ ============ ============
<CAPTION>
NBPartFd NBGuardTr
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. - 11,614 - -
Mortality and expense charges (note 2). (1,836) (4,937) (28) -
Administration charge (note 2):
Tier I ........................ (1,652) (4,443) (25) -
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... - - - -
------------ ------------- ------------- -------------
Net investment activity.............. (3,488) 2,234 (53) -
Proceeds from mutual fund shares sold.. 2,754,448 359,092 68,479 -
Cost of mutual fund shares sold........ (2,803,651) (298,999) (63,557) -
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. (49,203) 60,093 4,922 -
Change in unrealized gain (loss) on investments 210,691 (210,691) - -
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 161,488 (150,598) 4,922 -
------------ ------------- ------------- -------------
Reinvested capital gains............... - 356,973 - -
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 158,000 208,609 4,869 -
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 363,321 350,067 33,268 -
Transfers between funds ............... 245,865 1,620,917 27,513 -
Redemptions............................ (2,766,371) (180,319) (65,651) -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - (81) - -
Adjustments to maintain reserves....... 41 (49) 1 -
------------ ------------- ------------- -------------
Net equity transactions............ (2,157,144) 1,790,535 (4,869) -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (1,999,144) 1,999,144 - -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 1,999,144 - - -
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... - 1,999,144 - -
============ ============= ============= =============
</TABLE>
(Continued)
<PAGE> 24
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
NBPartTr PrBalY
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 101 -
Mortality and expense charges (note 2). - - - -
Administration charge (note 2):
Tier I ........................ - - - -
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (4) - (25) -
------------ ------------ ------------ ------------
Net investment activity.............. (4) - 76 -
Proceeds from mutual fund shares sold.. 14,303 - 1,150 -
Cost of mutual fund shares sold........ (14,138) - (1,099) -
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 165 - 51 -
Change in unrealized gain (loss) on investments 6 - 1,222 -
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 171 - 1,273 -
------------ ------------ ------------ ------------
Reinvested capital gains............... 120 - - -
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 287 - 1,349 -
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 4,656 - 27,624 -
Transfers between funds ............... 41,930 - 26,228 -
Redemptions............................ - - - -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (30) - 23 -
------------ ------------ ------------ ------------
Net equity transactions............ 46,556 - 53,875 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 46,843 - 55,224 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - - -
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 46,843 - 55,224 -
============ ============ ============ ============
<CAPTION>
PrintY PrLgCapGrY
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. - - - -
Mortality and expense charges (note 2). - - - -
Administration charge (note 2):
Tier I ........................ - - - -
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (12) - (32) -
------------ ------------- ------------- -------------
Net investment activity.............. (12) - (32) -
Proceeds from mutual fund shares sold.. 1,317 - 15,581 -
Cost of mutual fund shares sold........ (1,294) - (14,964) -
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. 23 - 617 -
Change in unrealized gain (loss) on investments 618 - 3,881 -
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 641 - 4,498 -
------------ ------------- ------------- -------------
Reinvested capital gains............... - - - -
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 629 - 4,466 -
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 3,159 - 21,069 -
Transfers between funds ............... 15,229 - 38,378 -
Redemptions............................ - - - -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 1 - 311 -
------------ ------------- ------------- -------------
Net equity transactions............ 18,389 - 59,758 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 19,018 - 64,224 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - - -
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 19,018 - 64,224 -
============ ============= ============= =============
</TABLE>
<PAGE> 25
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
PrLgCpValY PrSmCapY
----------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 25 - 25 -
Mortality and expense charges (note 2). - - - -
Administration charge (note 2):
Tier I ........................ - - - -
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ - - - -
Variable account fee (notes 2 and 5)... (6) - (17) -
------------ ------------ ------------ ------------
Net investment activity.............. 19 - 8 -
Proceeds from mutual fund shares sold.. - - 1,003 -
Cost of mutual fund shares sold........ - - (960) -
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. - - 43 -
Change in unrealized gain (loss) on investments 242 - 1,880 -
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 242 - 1,923 -
------------ ------------ ------------ ------------
Reinvested capital gains............... - - - -
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 261 - 1,931 -
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 997 - 6,201 -
Transfers between funds ............... 9,117 - 32,130 -
Redemptions............................ - - - -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... 29 - (9) -
------------ ------------ ------------ ------------
Net equity transactions............ 10,143 - 38,322 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 10,404 - 40,253 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - - -
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 10,404 - 40,253 -
============ ============ ============ ============
<CAPTION>
OppGlob PutInvFd
----------------------------- -----------------------------
1998 1997 1998 1997
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 382 - - 151,621
Mortality and expense charges (note 2). - - (85,320) (195,092)
Administration charge (note 2):
Tier I ........................ - - (14,831) (40,182)
Tier II ....................... - - (3,668) (9,409)
Tier III ...................... - - (942) (2,362)
Tier IV ....................... - - (62) (153)
Tier V ........................ - - (18,760) (40,310)
Variable account fee (notes 2 and 5)... (37) - (298,201) -
------------ ------------- ------------- -------------
Net investment activity.............. 345 - (421,784) (135,887)
Proceeds from mutual fund shares sold.. 5,723 - 6,828,788 4,687,426
Cost of mutual fund shares sold........ (6,015) - (4,492,724) (3,887,599)
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. (292) - 2,336,064 799,827
Change in unrealized gain (loss) on investments 456 - 13,802,953 6,208,349
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 164 - 16,139,017 7,008,176
------------ ------------- ------------- -------------
Reinvested capital gains............... 2,941 - 1,853,165 3,906,053
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 3,450 - 17,570,398 10,778,342
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 17,726 - 14,227,151 4,228,718
Transfers between funds ............... 118,096 - 2,036,253 483,737
Redemptions............................ - - (4,706,872) (4,259,983)
Annual contract maintenance charge (note 2) - - (837) (897)
Contingent deferred sales charges (note 2) - - (321) (3,177)
Adjustments to maintain reserves....... 36 - 1,034 (1,786)
------------ ------------- ------------- -------------
Net equity transactions............ 135,858 - 11,556,408 446,612
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 139,308 - 29,126,806 11,224,954
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - - 44,983,644 33,758,690
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 139,308 - 74,110,450 44,983,644
============ ============= ============= =============
</TABLE>
(Continued)
<PAGE> 26
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
PutVoyFd SEI500lx
----------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 362,899 150,459
Mortality and expense charges (note 2). (252,564) (555,728) (37,050) (54,468)
Administration charge (note 2):
Tier I ........................ (140,670) (309,069) (936) (10,682)
Tier II ....................... (37,138) (83,941) (341) (712)
Tier III ...................... (13,406) (30,283) - -
Tier IV ....................... (6,144) (14,092) - -
Tier V ........................ (3,642) (6,508) (10,675) (12,513)
Variable account fee (notes 2 and 5)... (1,017,243) - (151,150) -
------------ ------------ ------------ ------------
Net investment activity.............. (1,470,807) (999,621) 162,747 72,084
Proceeds from mutual fund shares sold.. 2,943,852 3,521,888 6,687,829 8,384,055
Cost of mutual fund shares sold........ (1,717,411) (2,454,300) (5,220,572) (6,905,964)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 1,226,441 1,067,588 1,467,257 1,478,091
Change in unrealized gain (loss) on investments 22,821,764 16,465,312 5,210,894 859,863
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 24,048,205 17,532,900 6,678,151 2,337,954
------------ ------------ ------------ ------------
Reinvested capital gains............... 13,977,317 8,147,769 365,867 101,303
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 36,554,715 24,681,048 7,206,765 2,511,341
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 51,708,613 40,104,364 21,490,017 9,263,710
Transfers between funds ............... (6,170,941) (7,100,256) 3,560,351 5,120,331
Redemptions............................ (11,182,910) (8,346,447) (5,241,962) (5,549,796)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) (4) - - -
Adjustments to maintain reserves....... 9,322 (16,760) 506 626
------------ ------------ ------------ ------------
Net equity transactions............ 34,364,080 24,640,901 19,808,912 8,834,871
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 70,918,795 49,321,949 27,015,677 11,346,212
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 137,879,063 88,557,114 15,258,034 3,911,822
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $208,797,858 137,879,063 42,273,711 15,258,034
============ ============ ============ ============
<CAPTION>
SelGroFd StComStk
----------------------------- ----------------------------
1998 1997 1998 1997
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 5,032 - - 700
Mortality and expense charges (note 2). (5,110) (13,883) - (27,052)
Administration charge (note 2):
Tier I ........................ (1,877) (5,127) - (24,346)
Tier II ....................... (192) (533) - -
Tier III ...................... (122) (319) - -
Tier IV ....................... (6) (16) - -
Tier V ........................ (770) (2,084) - -
Variable account fee (notes 2 and 5)... (17,203) - - -
------------ ------------- ------------- -------------
Net investment activity.............. (20,248) (21,962) - (50,698)
Proceeds from mutual fund shares sold.. 297,835 421,999 - 9,411,196
Cost of mutual fund shares sold........ (221,285) (373,415) - (8,332,762)
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. 76,550 48,584 - 1,078,434
Change in unrealized gain (loss) on investments 571,477 75,942 - (44,067)
------------ ------------- ------------- -------------
Net gain (loss) on investments....... 648,027 124,526 - 1,034,367
------------ ------------- ------------- -------------
Reinvested capital gains............... 331,423 331,508 - 121,492
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 959,202 434,072 - 1,105,161
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 145,949 172,142 - 3,697,972
Transfers between funds ............... (100,050) (199,396) - 658,529
Redemptions............................ (198,476) (202,858) - (9,645,678)
Annual contract maintenance charge (note 2) (366) (395) - -
Contingent deferred sales charges (note 2) (131) (79) - -
Adjustments to maintain reserves....... (79) (18) - 93
------------ ------------- ------------- -------------
Net equity transactions............ (153,153) (230,604) - (5,289,084)
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 806,049 203,468 - (4,183,923)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 2,853,544 2,650,076 - 4,183,923
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 3,659,593 2,853,544 - -
============ ============= ============= =============
</TABLE>
<PAGE> 27
NATIONWIDE DC VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
TRinTStk TemForFd
----------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 521,061 429,540 1,717,754 2,501,840
Mortality and expense charges (note 2). (52,439) (170,837) (132,310) (409,635)
Administration charge (note 2):
Tier I ........................ (21,726) (72,216) (77,451) (250,509)
Tier II ....................... (5,357) (16,170) (22,334) (65,577)
Tier III ...................... (1,917) (5,875) (5,316) (15,289)
Tier IV ....................... (951) (3,180) (2,176) (6,430)
Tier V ........................ (4,810) (15,793) (1,211) (2,329)
Variable account fee (notes 2 and 5)... (181,636) - (381,394) -
------------ ------------ ------------ ------------
Net investment activity.............. 252,225 145,469 1,095,562 1,752,071
Proceeds from mutual fund shares sold.. 31,774,044 21,375,609 26,694,944 15,858,573
Cost of mutual fund shares
sold.................................. (30,649,976) (18,182,586) (25,001,333) (14,325,078)
------------ ------------ ------------ ------------
Realized gain (loss) on investments.. 1,124,068 3,193,023 1,693,611 1,533,495
Change in unrealized gain (loss) on investments 2,514,226 (3,881,061) (11,318,099) (5,986,071)
------------ ------------ ------------ ------------
Net gain (loss) on investments....... 3,638,294 (688,038) (9,624,488) (4,452,576)
------------ ------------ ------------ ------------
Reinvested capital gains............... 828,961 1,181,235 5,054,162 6,603,142
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations. 4,719,480 638,666 (3,474,764) 3,902,637
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 9,017,358 10,867,253 16,189,377 22,039,949
Transfers between funds ............... (4,932,049) (6,714,250) (22,661,049) (1,002,242)
Redemptions............................ (2,532,969) (5,866,407) (7,971,478) (10,962,908)
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - (201)
Adjustments to maintain reserves....... 3,925 (6,971) (5,084) 1,523
------------ ------------ ------------ ------------
Net equity transactions............ 1,556,265 (1,720,375) (14,448,234) 10,076,121
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 6,275,745 (1,081,709) (17,922,998) 13,978,758
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD 30,214,234 31,295,943 80,718,997 66,740,239
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 36,489,979 30,214,234 62,795,999 80,718,997
============ ============ ============ ============
<CAPTION>
TemGlSmCo WPEMGRO
----------------------------- -----------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. - 9,088 - -
Mortality and expense charges (note 2). (201) (4,075) (10) -
Administration charge (note 2):
Tier I ........................ 393 (3,668) (9) -
Tier II ....................... - - - -
Tier III ...................... - - - -
Tier IV ....................... - - - -
Tier V ........................ (191) - - -
Variable account fee (notes 2 and 5)... - - (29) -
------------ ------------- ------------- -------------
Net investment activity.............. 1 1,345 (48) -
Proceeds from mutual fund shares sold.. - 1,438,698 51,701 -
Cost of mutual fund shares
sold.................................. - (1,386,525) (49,825) -
------------ ------------- ------------- -------------
Realized gain (loss) on investments.. - 52,173 1,876 -
Change in unrealized gain (loss) on investments - (7,129) 5,218 -
------------ ------------- ------------- -------------
Net gain (loss) on investments....... - 45,044 7,094 -
------------ ------------- ------------- -------------
Reinvested capital gains............... - 38,267 - -
------------ ------------- ------------- -------------
Net increase (decrease) in contract owners'
equity resulting from operations. 1 84,656 7,046 -
------------ ------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... - 232,849 5,190 -
Transfers between funds ............... - (115,482) 89,747 -
Redemptions............................ - (1,147,196) (43,768) -
Annual contract maintenance charge (note 2) - - - -
Contingent deferred sales charges (note 2) - - - -
Adjustments to maintain reserves....... (1) (193) 22 -
------------ ------------- ------------- -------------
Net equity transactions............ (1) (1,030,022) 51,191 -
NET CHANGE IN CONTRACT OWNERS' EQUITY.... - (945,366) 58,237 -
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD - 945,366 - -
------------ ------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... - - 58,237 -
============ ============= ============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 28
NATIONWIDE DC VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ORGANIZATION AND NATURE OF OPERATIONS
Nationwide DC Variable Account (the Account) was established by
resolution of the Board of Directors of Nationwide Life Insurance
Company (the Company) on July 10, 1974. The Account has been registered
as a unit investment trust under the Investment Company Act of 1940.
The Company offers group flexible fund retirement contracts through the
Account. The primary distribution for the contracts is through an
affiliated sales organization; however, other distributors may be
utilized.
(b) THE CONTRACTS
Participants in group flexible fund contracts may be invested in any of
the following funds:
AIM Equity Funds, Inc. - AIM Constellation Fund - Institutional
Class (AIMCon)
AIM Equity Funds, Inc. - AIM Weingarten Fund - Institutional Class
(AIMWein)
American Century: Income & Growth Fund (ACIncGro)
American Century: Twentieth Century Growth Fund (ACTCGro)
American Century: Twentieth Century International Discovery Fund
(ACTCIntDis)
American Century: Twentieth Century Select Fund (ACTCSel)
American Century: Twentieth Century Ultra Fund (ACTCUltra)
The Bond Fund of AmericaSM, Inc. (BdFdAm)
(not available for contracts issued on or after January 1, 1994)
Davis New York Venture Fund, Inc. - Class A (DNYVenFd)
Delaware Group Decatur Fund, Inc. - Decatur Income Fund
Institutional Class (DeDecInc)
(not available for contracts issued on or after August 1, 1993)
Dreyfus Appreciation Fund, Inc. (DryApp)
Dreyfus Cash Management - Class A (DryCsMgt)
Dreyfus Premier Midcap Stock - Class A (DryPreMCap)
Dreyfus S&P 500 Index Fund (Dry500Ix)
The Dreyfus Third Century Fund, Inc. (Dry3dCen)
Evergreen Income and Growth Fund - Class Y (EvIncGro)
(formerly The Evergreen Total Return Fund)
Federated Investment Series Funds, 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 Advisors High Yield Fund - Class T (FAHiYld)
Fidelity Asset ManagerTM (FidAsMgr)
<PAGE> 29
Fidelity Capital & Income Fund (FidCapInc) (formerly Fidelity High
Income Fund) (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 Growth & Income Portfolio (FidGrInc)
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)
The Growth Fund of America(R), Inc. (GroFdAm)
(not available for contracts issued on or after January 1, 1994)
The Income Fund of America(R), Inc. (IncFdAm)
(not available for contracts issued on or after January 1, 1994)
INVESCO Dynamics Fund, Inc. (InvDynam)
INVESCO Industrial Income Fund, Inc. (InvIndInc)
INVESCO Total Return Fund (InvTotRet)
Janus Fund (JanFund)
Janus Twenty Fund (Jan20Fd)
Janus Worldwide Fund (JanWrldwde)
MAS Funds - Fixed Income Portfolio (MASFIP)
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
MFS(R) Growth Opportunities Fund - Class A (MFSGrOpp)
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)
Funds of the Nationwide Investing Foundation II
(managed for a fee by an affiliated investment advisor)
Nationwide(R) Bond Fund - Class D (NWBdFd)
Nationwide(R) Fund - Class D (NWFund)
Nationwide(R) Growth Fund - Class D (NWGroFd)
Nationwide(R) Money Market Fund (NWMyMkt)
Nationwide(R) S&P 500 Index Fund - Class Y (NWIndxFdY)
Nationwide(R) SAT - Small Company Fund (NSATSmCo)
(managed for a fee by an affiliated investment advisor)
<PAGE> 30
Funds of the Nationwide Investing Foundation III (NIFIII)
(managed for a fee by an affiliated investment advisor)
NIF III - Prestige Balanced Fund - Class Y (PrBalY)
NIF III - Prestige International Fund - Class Y (PrIntY)
NIF III - Prestige Large Cap Growth Fund - Class Y (PrLgCapGrY)
NIF III - Prestige Large Cap Value Fund - Class Y (PrLgCpValY)
NIF III - Prestige Small Cap Fund - Class Y (PrSmCapY)
Neuberger & Berman Equity Funds(R) - Guardian Fund (NBGuard)
Neuberger & Berman Equity Funds(R) - Manhattan Fund (NBManhFd)
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)
Strong Common Stock Fund, Inc. (StComStk)
T. Rowe Price International Funds, Inc. - International Stock Fund
(R) (TRIntStk)
Templeton Foreign Fund - Class I (TemForFd)
Templeton Global Smaller Companies Fund, Inc.- Class I (TemGlSmCo)
Warburg Pincus Emerging Growth Fund - Common Shares (WPEmGro)
The following funds are available for investment only by Plans
established under Internal Revenue Code (IRC) Section 403(b).
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP)
(formerly TCI Portfolios, Inc.);
American Century VP - American Century VP Balanced (ACVPBal)
(formerly TCI Portfolios - TCI Balanced)
American Century VP - American Century VP Capital Appreciation
(ACVPCapAp) (formerly TCI Portfolios - TCI Growth)
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)
Portfolios of the Fidelity Variable Insurance Products Fund I & II
(Fidelity VIP); Fidelity VIP - Asset Manager Portfolio
(FidVIPAM) Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
Fidelity VIP - Growth Portfolio (FidVIPGr) Fidelity VIP - High
Income Portfolio (FidVIPHI) Fidelity VIP - Overseas Portfolio
(FidVIPOv)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Total Return Fund (NSATTotRe)
<PAGE> 31
Portfolios of the Neuberger & Berman Advisers Management Trust
(Neuberger & Berman AMT);
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
Neuberger & Berman AMT - Limited Maturity Bond Portfolio
(NBAMTLMat)
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
All of the above funds were being utilized as of December 31, 1998,
except AIM Equity Funds, Inc. AIM Weingarten Fund - Institutional Class
(AIMWein), Fidelity OTCPortfolio (FidOTC), Fidelity Puritan(R) Fund
(FidPurtn), Janus Twenty Fund (Jan20Fd), Nationwide SAT - Capital
Appreciation Fund (NSATCapAp), Strong Common Stock Fund, Inc.
(StComStk) and Templeton Global Smaller Companies Fund, Inc. - Class I
(TemGlSmCo).
The following funds were no longer available as of June 30, 1998:
American Century: Twentieth Century International Growth Fund
(ACTCIntlGr), The Institutional Shares of Federated GNMA Trust
(FedGNMA), Neuberger & Berman Guardian Trust (NBGuardTr) and Neuberger
& Berman Partners Fund (NBPartFd).
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, 1998. The cost of investments
sold is determined on the specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) FEDERAL INCOME TAXES
Operations of the Account form a part of, and are taxed with,
operations of the Company, which is taxed as a life insurance company
under the IRC. 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.
(2) EXPENSES
Net purchase payments received for contracts issued before July 1, 1980,
represent contributions by the contract owners less a sales charge by the
Company of not more than 5%, to cover sales expenses. The Company does not
deduct a sales charge from purchase payments for contracts issued after
July 1, 1980. However, if any part of the contract value representing
participant accounts that have been established under the contracts and
held in the Account for less than sixteen (16) years is surrendered, the
Company will, with certain exceptions, assess a contingent deferred sales
charge. This charge will be equal to not more than 5% of the lesser of all
purchase payments received on behalf of the surrendering participant or
contract owner prior to the date of the request for surrender, or the
amount surrendered. Sales charges or contingent deferred sales charges of
less than 5% reflect actual variations in expense (usually reduced agents'
commissions). 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.
The following contract charges are deducted by the Company on contracts
issued before July 1, 1980: (a) an annual contract maintenance charge of $8
assessed by surrendering units; (b) a charge for mortality and expense risk
assessed through the daily unit value calculation equal to an annual rate
of 0.95%; and (c) a charge on complete redemption, equal to the lesser of
$8 or 2% of the value of the account, except when such redemption occurs
within 31 days of the anniversary date of the contract.
<PAGE> 32
For contracts issued beginning July 1, 1980 through April 30, 1991,
contract charges include: (a) an annual contract maintenance charge of $12
or $15, based upon administrative services provided, assessed by
surrendering units; and (b) a charge for mortality and expense risk
assessed through the daily unit value calculation equal to an annual rate
of 0.95%.
For contracts issued on or after May 1, 1991, contract charges include a
mortality risk charge, an expense risk charge and an administration charge
assessed through the daily unit value calculation equal to an annual rate
of 0.35%, 0.15% and 0.45% respectively. Beginning November 1, 1996, the
administration charge was based upon the aggregate balance of assets held
under the contract by each contract owner as follows:
<TABLE>
<CAPTION>
Expense Administration
Tier Assets (Millions) Charge
--------- -------------- ------------
<S> <C> <C> <C>
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%
</TABLE>
The administration charge implemented on November 1, 1996 was based on the
June 30, 1996 asset balance. Thereafter, the administrative charge will be
determined using the December 31 asset balance and is effective at the next
expense tier on the following May 1.
For contracts issued beginning May 1, 1998 the Company will assess a charge
for a Variable Account Fee. 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 Account Fee, which is calculated as a percentage of assets and 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; (9) any recovery of any credits on initial
transfers; and (10) 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> 33
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1998.
<TABLE>
<CAPTION>
Asset
Charge Units Unit Value Amount
------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
AIM Equity Funds, Inc. - AIM Constellation
Fund - Institutional Class 0.65% 3,022,273 $ 2.751200$ 8,314,877
American Century:
Income & Growth Fund 0.80% 109,503 1.097595 120,190
0.70% 30,419 1.097739 33,392
0.55% 8,687 1.097955 9,538
0.40% 79,664 1.098171 87,485
0.30% 4,917 1.098315 5,400
American Century:
Twentieth Century Growth Fund 0.95% 9,702,654 7.915964 76,805,860
0.90% 3,294,508 7.924525 26,107,411
0.80% 3,767,251 7.941675 29,918,283
0.65% 8,602,720 7.971577 68,577,245
0.60% 194,830 7.951067 1,549,106
0.40% 3,508 7.923462 27,796
0.30% 261,146 7.952673 2,076,809
American Century: Twentieth Century
International Discovery Fund 0.80% 83,975 1.084264 91,051
0.70% 50,207 1.084406 54,445
0.55% 6,011 1.084619 6,520
0.40% 26,496 1.084832 28,744
American Century:
Twentieth Century Select Fund 0.95% 50,420 2.766712 139,498
0.65% 1,181,418 2.768141 3,270,332
American Century:
Twentieth Century Ultra Fund 0.95% 70,804,264 3.364568 238,225,761
0.90% 19,448,936 3.368207 65,508,042
0.80% 16,603,825 3.375496 56,046,145
0.65% 35,694,678 3.388204 120,940,851
0.60% 1,072,286 3.379488 3,623,778
0.30% 717,400 3.380172 2,424,935
American Century VP -
American Century VP Balanced 0.95% 7,892 1.731354 13,664
American Century VP - American Century VP
Capital Appreciation 0.95% 48,936 1.521919 74,477
The Bond Fund of AmericaSM, Inc. 0.95% 4,103,842 2.429862 9,971,770
0.90% 883,859 2.432540 2,150,022
0.80% 958,940 2.437902 2,337,802
0.65% 1,599,096 2.447231 3,913,357
0.60% 82,948 2.440904 202,468
0.55% 82,138 2.437786 200,235
Davis New York Venture Fund, Inc. - Class A 0.90% 137,969 2.539900 350,427
</TABLE>
(Continued)
<PAGE> 34
<TABLE>
<CAPTION>
Asset
Charge Units Unit Value Amount
------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Delaware Group Decatur Fund, Inc. -
Decatur Income Fund Institutional Class 0.95% 68,865 3.200994 220,436
0.90% 24,175 3.204456 77,468
0.80% 1,554 3.211392 4,991
0.65% 169 3.202651 541
0.60% 6,112 3.215194 19,651
Dreyfus Appreciation Fund, Inc. 0.80% 524,887 1.080133 566,948
0.70% 49,721 1.080275 53,712
0.55% 136,346 1.080487 147,320
0.40% 27,993 1.080700 30,252
0.30% 4,977 1.080842 5,379
Dreyfus Cash Management - Class A 0.90% 192,356 1.268119 243,930
Dreyfus Premier Midcap Stock -
Class A 0.80% 10,469 1.133283 11,864
0.70% 5,430 1.133431 6,155
0.55% 914 1.133654 1,036
Dreyfus S&P 500 Index Fund 0.95% 24,343,259 1.544833 37,606,270
0.90% 6,127,205 1.546121 9,473,400
0.80% 6,707,476 1.548700 10,387,868
0.65% 5,191,876 1.545632 8,024,730
0.60% 1,251,281 1.550532 1,940,151
0.55% 153,801 1.549323 238,287
The Dreyfus Socially Responsible
Growth Fund, Inc. 0.95% 7,611 2.550734 19,414
Dreyfus Stock Index Fund 0.95% 45,862 2.683847 123,087
The Dreyfus Third Century Fund, Inc. 0.95% 42,486 4.554448 193,500
0.90% 31,247 4.559374 142,467
0.80% 5,543,237 4.569241 25,328,385
0.70% 1,526,223 4.579129 6,988,772
0.65% 2,794,245 4.586444 12,815,648
0.55% 1,265,956 4.557584 5,769,701
0.40% 737,042 4.558760 3,359,998
0.35% 276,300 4.581408 1,265,843
0.30% 144,811 4.575570 662,593
Evergreen Income and Growth Fund - Class Y 0.95% 713,985 2.380651 1,699,749
0.90% 234,506 2.383227 558,881
0.80% 173,121 2.388387 413,480
0.65% 431,682 2.397384 1,034,908
0.60% 2,788 2.391215 6,667
0.55% 91,000 2.388169 217,323
Federated Investment Series Fund, Inc. -
Federated Bond Fund - Class F 0.80% 55,483 1.018687 56,520
0.70% 219,340 1.018821 223,468
0.40% 12 1.019222 12
</TABLE>
<PAGE> 35
<TABLE>
<CAPTION>
Asset
Charge Units Unit Value Amount
------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Federated U.S. Government Securities Fund:
2-5 Years - Institutional Shares 0.95% 2,986,605 1.300471 3,883,993
0.90% 748,333 1.301894 974,250
0.80% 583,720 1.304742 761,604
0.65% 344,294 1.301463 448,086
0.60% 71,515 1.306298 93,420
0.55% 62,224 1.304613 81,178
Fidelity Advisor Growth Opportunities Fund -
Class A 0.80% 182,532 1.089301 198,832
0.70% 11,123 1.089444 12,118
0.55% 87,134 1.089659 94,946
Fidelity Advisor High Yield Fund - Class T 0.80% 12,701 1.064751 13,523
0.70% 5,110 1.064934 5,442
Fidelity Asset ManagerTM 0.95% 3,453,740 1.744805 6,026,103
0.90% 666,704 1.746693 1,164,527
0.80% 479,562 1.750474 839,461
0.65% 758,282 1.745707 1,323,738
0.60% 53,124 1.752545 93,102
0.55% 28,644 1.750311 50,136
Fidelity Capital & Income Fund 0.95% 86,372 4.829318 417,118
0.90% 26,735 4.834602 129,253
0.80% 62,633 4.845178 303,468
0.65% 85,411 4.863557 415,401
Fidelity Contrafund 0.95% 67,920,295 3.269491 222,064,793
0.90% 15,599,501 3.273028 51,057,604
0.80% 15,008,219 3.280112 49,228,639
0.65% 16,051,389 3.292464 52,848,620
0.60% 979,826 3.283991 3,217,740
0.55% 557,635 3.279805 1,828,934
Fidelity Equity-Income Fund 0.95% 17,905,060 7.691828 137,722,642
0.90% 6,047,814 7.700147 46,569,057
0.80% 4,932,169 7.716814 38,060,631
0.65% 11,315,425 7.745874 87,647,856
0.60% 170,677 7.725951 1,318,642
0.55% 99,286 7.716109 766,102
Fidelity Growth & Income Portfolio 0.95% 1,124 3.280585 3,687
0.65% 6,458,278 3.303630 21,335,761
Fidelity Magellan(R)Fund 0.95% 49,762,526 3.175365 158,014,183
0.90% 12,014,518 3.178799 38,191,738
0.80% 8,905,129 3.185678 28,368,874
0.65% 26,173,266 3.197672 83,693,520
0.60% 683,273 3.189445 2,179,262
0.55% 308,121 3.185381 981,483
Fidelity VIP - Asset Manager Portfolio 0.95% 28,824 1.712317 49,356
Fidelity VIP - Equity-Income Portfolio 0.95% 104,557 2.070586 216,494
Fidelity VIP - Growth Portfolio 0.95% 83,821 2.623533 219,907
</TABLE>
(Continued)
<PAGE> 36
<TABLE>
<CAPTION>
Asset
Charge Units Unit Value Amount
------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Fidelity VIP - High Income Portfolio 0.95% 29,066 1.478924 42,986
Fidelity VIP - Overseas Portfolio 0.95% 95,628 1.425217 136,291
The Growth Fund of America(R), Inc. 0.95% 2,635,898 4.415588 11,639,040
0.90% 614,458 4.420363 2,716,127
0.80% 516,513 4.429930 2,288,116
0.65% 397,583 4.417868 1,756,469
0.60% 162,774 4.435169 721,930
0.55% 28,933 4.429517 128,159
The Income Fund of America(R), Inc. 0.95% 4,569,474 2.835318 12,955,912
0.90% 1,108,491 2.838385 3,146,324
0.80% 945,389 2.844529 2,689,186
0.65% 403,926 2.836785 1,145,851
0.60% 153,954 2.847897 438,445
0.55% 49,186 2.844269 139,898
INVESCO Dynamics Fund, Inc. 0.80% 32,721 1.172431 38,363
0.70% 505 1.172584 592
0.55% 14,593 1.172815 17,115
0.40% 818 1.173045 960
INVESCO Industrial Income Fund, Inc 0.95% 7,930,211 2.376817 18,848,660
0.90% 1,694,071 2.379388 4,030,852
0.80% 1,333,146 2.384538 3,178,937
0.65% 660,119 2.378046 1,569,793
0.60% 90,551 2.387360 216,178
0.55% 158,514 2.384319 377,948
INVESCO Total Return Fund 0.80% 53,415 1.023668 54,679
0.70% 72,756 1.023803 74,488
0.55% 2,474 1.024005 2,533
0.40% 44 1.024207 45
Janus Fund 0.95% 28,922,213 2.681244 77,547,510
0.90% 6,455,407 2.684144 17,327,242
0.80% 8,036,789 2.689953 21,618,585
0.65% 4,344,666 2.682628 11,655,123
0.60% 627,794 2.693134 1,690,733
0.30% 597,789 2.693678 1,610,251
Janus Worldwide Fund 0.95% 931,009 1.241260 1,155,624
MAS Funds - Fixed Income Portfolio 0.95% 2,982,430 1.413926 4,216,935
0.90% 320,011 1.415456 452,961
0.80% 552,980 1.418521 784,414
0.65% 283,874 1.414658 401,585
0.60% 118,670 1.420201 168,535
0.55% 15,856 1.418390 22,490
Massachusetts Investors Growth Stock
Fund - Class A 0.95% 164,187 22.143725 3,635,712
0.90% 32,426 22.167667 718,809
0.80% 9,777 22.215628 217,202
0.65% 262,889 22.299259 5,862,230
0.55% 1,109 22.213562 24,635
</TABLE>
<PAGE> 37
<TABLE>
<CAPTION>
Asset
Charge Units Unit Value Amount
------- --------- ---------- ------------
<S> <C> <C> <C> <C>
MFS(R)Growth Opportunities Fund - Class A 0.95% 419,655 11.531693 4,839,333
0.90% 286,467 11.544167 3,307,023
0.80% 187,053 11.569155 2,164,045
0.65% 2,162,443 11.612729 25,111,865
0.55% 16,642 11.568078 192,516
0.40% 4,519 11.542612 52,161
MFS(R)High Income Fund - Class A 0.95% 146,644 6.172749 905,197
0.90% 18,550 6.179502 114,630
0.80% 28,739 6.193021 177,981
0.65% 664,163 6.216512 4,128,777
0.55% 2,329 6.192408 14,422
Morgan Stanley Institutional Fund -
Equity Growth Portfolio - Class B 0.80% 71,375 1.106680 78,989
0.70% 5,955 1.106825 6,591
0.55% 7,861 1.107043 8,702
0.30% 3,268 1.107406 3,619
NAAT - The Aggressive Portfolio 0.70% 2,046,802 1.152311 2,358,552
0.60% 310,655 1.154520 358,657
0.45% 211,944 1.150582 243,859
0.25% 68,325 1.150978 78,641
0.20% 11,063 1.155315 12,781
0.15% 14,581 1.155248 16,845
NAAT - The Conservative Portfolio 0.70% 289,939 1.110341 321,931
0.60% 66,069 1.112468 73,500
0.45% 80,765 1.108677 89,542
0.25% 83,356 1.109060 92,447
0.20% 14,242 1.113236 15,855
0.15% 1,089 1.113172 1,212
NAAT - The Moderate Portfolio 0.70% 1,328,203 1.145999 1,522,119
0.60% 106,065 1.148195 121,783
0.45% 80,286 1.144281 91,870
0.25% 21,387 1.144675 24,481
0.20% 43 1.148987 49
0.15% 8,670 1.148920 9,961
NAAT - The Moderately Aggressive Portfolio 0.70% 806,901 1.143522 922,709
0.60% 259,760 1.145713 297,610
0.45% 155,701 1.141807 177,780
0.25% 43,931 1.142200 50,178
0.20% 94,205 1.146503 108,006
0.15% 17,344 1.146437 19,884
NAAT - The Moderately Conservative Portfolio 0.70% 473,517 1.131933 535,990
0.60% 50,620 1.134101 57,408
0.45% 230,674 1.130236 260,716
0.25% 6,709 1.130626 7,585
0.20% 7,860 1.134884 8,920
0.15% 4,278 1.134818 4,855
Nationwide(R)Bond Fund - Class D 0.95% 74,419 2.325952 173,095
0.65% 43,138 2.342442 101,048
</TABLE>
(Continued)
<PAGE> 38
<TABLE>
<CAPTION>
Asset
Charge Units Unit Value Amount
------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Nationwide(R)Fund - Class D 0.95% 266,191 26.722904 7,113,397
0.90% 15,513 26.751797 415,001
0.80% 3,035,298 26.809677 81,375,359
0.70% 803,944 26.867683 21,600,113
0.65% 1,339,459 26.910596 36,045,640
0.55% 940,065 26.741341 25,138,599
0.40% 487,464 26.748259 13,038,813
0.35% 104,750 26.881104 2,815,796
0.30% 53,286 26.846869 1,430,562
Nationwide(R)Growth Fund - Class D 0.95% 945,925 4.725203 4,469,688
0.90% 245,637 4.730314 1,161,940
0.80% 308,068 4.740553 1,460,413
0.65% 1,367,643 4.758406 6,507,801
0.60% 1,583 4.746163 7,513
0.55% 31,485 4.740115 149,243
Nationwide(R)Money Market Fund 0.95% 239,031 3.126448 747,318
0.80% 8,324,157 3.136716 26,110,516
0.70% 3,318,283 3.143571 10,431,258
0.65% 4,349,555 3.148614 13,695,070
0.55% 3,511,177 3.136406 11,012,477
0.40% 2,298,866 3.130815 7,197,324
0.35% 175,079 3.142446 550,176
0.30% 294,839 3.138391 925,320
Nationwide(R)S&P 500 Index Fund - Class Y 0.80% 299,188 1.093550 327,177
0.70% 22,552 1.093694 24,665
0.55% 112,981 1.093909 123,591
0.40% 116,258 1.094125 127,201
Nationwide SAT - Government Bond Fund 0.95% 10,280 1.890916 19,439
Nationwide SAT - Money Market Fund 0.95% 55,619 1.369307 76,159
Nationwide SAT - Small Company Fund 0.80% 1,644,689 1.022482 1,681,665
0.70% 877,300 1.023450 897,873
0.55% 528,402 1.007001 532,101
0.40% 384,544 1.007261 387,336
0.35% 18,482 1.024134 18,928
0.30% 19,929 1.025150 20,430
Nationwide SAT - Total Return Fund 0.95% 41,809 3.530330 147,600
Neuberger & Berman AMT - Growth Portfolio 0.95% 13,331 2.625747 35,004
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio 0.95% 9,009 1.235624 11,132
Neuberger & Berman AMT - Partners Portfolio 0.95% 28,300 2.249692 63,666
Neuberger & Berman Equity Funds -
Guardian Fund 0.65% 923,269 1.628931 1,503,941
Neuberger & Berman Equity Funds -
Manhattan Fund 0.95% 71,086 3.628224 257,916
</TABLE>
<PAGE> 39
<TABLE>
<CAPTION>
Asset
Charge Units Unit Value Amount
------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Neuberger & Berman Equity Trust -
Partners Trust 0.80% 40,394 1.041831 42,084
0.70% 4,567 1.041968 4,759
NIF III - Prestige Balanced Fund - Class Y 0.70% 48,644 1.061002 51,611
0.45% 3,404 1.061351 3,613
NIF III - Prestige International Fund - Class Y 0.70% 16,097 1.092070 17,579
0.45% 1,317 1.092427 1,439
NIF III - Prestige Large Cap Growth Fund - Class Y 0.70% 52,478 1.139564 59,802
0.60% 2,573 1.139713 2,932
0.45% 1,307 1.139937 1,490
NIF III - Prestige Large Cap Value Fund - Class Y 0.70% 7,620 1.049429 7,997
0.45% 2,293 1.049773 2,407
NIF III - Prestige Small Cap Fund - Class Y 0.70% 31,273 1.090386 34,100
0.60% 4,696 1.090529 5,121
0.45% 946 1.090743 1,032
Oppenheimer Global Fund - Class A 0.80% 78,391 1.106449 86,736
0.70% 5,875 1.106594 6,501
0.55% 11,480 1.106811 12,706
0.40% 29,079 1.107029 32,191
0.30% 1,060 1.107174 1,174
Putnam Investors Fund - Class A 0.95% 571,765 24.311753 13,900,609
0.90% 99,114 24.338044 2,412,241
0.80% 75,040 24.390710 1,830,279
0.65% 2,271,192 24.482535 55,604,538
0.60% 4,084 24.419553 99,729
0.55% 10,786 24.388433 263,054
Putnam Voyager Fund - Class A 0.95% 25,813,706 4.715165 121,715,883
0.90% 5,838,788 4.720266 27,560,632
0.80% 5,319,237 4.730485 25,162,571
0.65% 6,536,365 4.748304 31,036,648
0.60% 454,607 4.736081 2,153,056
0.30% 246,793 4.737037 1,169,068
SEI Index Funds - S&P 500 Index Portfolio 0.95% 259,012 4.964488 1,285,862
0.90% 76,739 4.969856 381,382
0.65% 8,122,338 4.999357 40,606,467
Seligman Growth Fund, Inc - Class A. 0.95% 87,555 16.801408 1,471,047
0.90% 3,139 16.819578 52,797
0.80% 16,244 16.855977 273,808
0.65% 108,084 16.919446 1,828,721
0.55% 1,971 16.854407 33,220
T. Rowe Price International Funds, Inc. -
International Stock Fund(R) 0.95% 7,543,129 2.120702 15,996,729
0.90% 1,638,194 2.122997 3,477,881
0.80% 1,798,986 2.127594 3,827,512
0.65% 5,964,541 2.135609 12,737,927
0.60% 126,263 2.130112 268,954
0.55% 85,069 2.127397 180,976
</TABLE>
(Continued)
<PAGE> 40
<TABLE>
<CAPTION>
Asset
Charge Units Unit Value Amount
------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Templeton Foreign Fund - Class I........ 0.80% 21,282,916 1.771651 37,705,897
0.70% 4,957,272 1.775488 8,801,577
0.65% 1,352,884 1.778328 2,405,871
0.55% 5,105,892 1.767129 9,022,770
0.40% 2,148,011 1.767586 3,796,794
0.35% 365,896 1.776379 649,970
0.30% 232,860 1.774115 413,120
Warburg Pincus Emerging Growth Fund..... 0.80% 26,076 1.058940 27,613
0.70% 7,510 1.059122 7,954
0.55% 30 1.059395 32
0.40% 21,363 1.059668 22,638
========== ======== ---------------
Total Contract Owners' Equity......... $ 2,871,012,180
=============
</TABLE>
<PAGE> 41
(5) VARIABLE ACCOUNT FEES
The following is a summary of the variable account fees for the period May
1, 1998 to December 31, 1998.
<TABLE>
<CAPTION>
Percentage TOTAL AIMCon ACIncGro ACTCGro ACTCIntDis ACTCSel
---------- -------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0.95%.................. $ 7,397,939 - - 432,181 - 677
0.90%.................. 1,552,242 - - 114,722 - -
0.80%.................. 1,761,689 - 32 131,500 60 -
0.70%.................. 703,354 - 11 34,413 17 9,993
0.65%.................. 2,195,122 30,654 - 213,832 - 2,631
0.60%.................. 53,652 - - 4,134 - -
0.55%.................. 50,669 - 1 - 2 -
0.45%.................. 483 - - - - -
0.40%.................. 14,043 - 17 - 12 -
0.35%.................. 7,735 - - - - -
0.30%.................. 13,468 - - 2,747 - -
0.25%.................. 77 - - - - -
0.20%.................. 87 - - - - -
0.15%.................. 23 - - - - -
-------------- ------------- ------------- -------------- ------------- -------------
Total variable account fees.... $ 13,750,583 30,654 61 933,529 91 13,301
============== ============= ============= ============== ============= =============
<CAPTION>
Percentage ACTCUltra ACVPBal ACVPCapAp BdFdAm
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
0.95%.................. $ 1,320,410 69 453 58,311
0.90%.................. 286,339 - - 9,993
0.80%.................. 276,726 - - 11,977
0.70%.................. 116,837 - - 1,707
0.65%.................. 330,443 - - 13,820
0.60%.................. 9,136 - - 671
0.55%.................. - - - 520
0.45%.................. - - - -
0.40%.................. - - - -
0.35%.................. - - - -
0.30%.................. 3,397 - - -
0.25%.................. - - - -
0.20%.................. - - - -
0.15%.................. - - - -
------------- ------------- ------------- -------------
Total variable account fees.... $ 2,343,288 69 453 96,999
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE DNYVenFd DeDecInc DryApp DryCsMgt DryPreMCap Dry500ix
---------- -------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0.95%.................. $ - 1,314 - - - 179,576
0.90%.................. 2,375 469 - 1,506 - 38,105
0.80%.................. - 50 272 - 9 51,283
0.70%.................. - - 21 - 2 21,700
0.65%.................. - - - - - 6,578
0.60%.................. - 57 - - - 4,926
0.55%.................. - - 69 - - 575
0.45%.................. - - - - - -
0.40%.................. - - 1 - - -
0.35%.................. - - - - - -
0.30%.................. - - - - - -
0.25%.................. - - - - - -
0.20%.................. - - - - - -
0.15%.................. - - - - - -
-------------- ------------- ------------- -------------- ------------- -------------
Total variable account fees.... $ 2,375 1,890 363 1,506 11 302,743
============== ============= ============= ============== ============= =============
<CAPTION>
PERCENTAGE DrySRGro DryStkIx Dry3dCen EvincGro
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
0.95%.................. $ 93 592 111,972 11,907
0.90%.................. - - 21,342 3,133
0.80%.................. - - 47,056 2,594
0.70%.................. - - 16,538 243
0.65%.................. - - 48,047 4,276
0.60%.................. - - - 19
0.55%.................. - - 3,941 580
0.45%.................. - - - -
0.40%.................. - - 1,626 -
0.35%.................. - - 1,929 -
0.30%.................. - - 888 -
0.25%.................. - - - -
0.20%.................. - - - -
0.15%.................. - - - -
------------- ------------- ------------- -------------
Total variable account fees.... $ 93 592 253,339 22,752
============= ============= ============= =============
</TABLE>
(Continued)
<PAGE> 42
<TABLE>
<CAPTION>
Percentage FedBdFd FedUSGvt FAGrOppA FAHiYld FidAsMgr FidCapinc
---------- -------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0.95%.................. $ - 17,408 - - 33,264 2,833
0.90%.................. - 4,641 - - 6,092 785
0.80%.................. 20 2,879 74 2 4,729 1,739
0.70%.................. 122 1,114 5 - 4,353 357
0.65%.................. - 392 - - 1,096 1,466
0.60%.................. - 412 - - 295 -
0.55%.................. - 214 47 - 125 -
0.45%.................. - - - - - -
0.40%.................. - - - - - -
0.35%.................. - - - - - -
0.30%.................. - - - - - -
0.25%.................. - - - - - -
0.20%.................. - - - - - -
0.15%.................. - - - - - -
-------------- ------------- ------------- -------------- ------------- -------------
Total variable account fees.... $ 142 27,060 126 2 49,954 7,180
============== ============= ============= ============== ============= =============
<CAPTION>
Percentage FidContr FidEqinc FidGrinc FidMgIn
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
0.95%.................. $ 1,215,102 856,817 6 874,985
0.90%.................. 221,520 239,879 - 168,196
0.80%.................. 227,243 212,892 - 135,532
0.70%.................. 96,924 97,436 - 63,336
0.65%.................. 97,319 279,471 78,970 245,645
0.60%.................. 8,114 3,696 - 5,539
0.55%.................. 4,367 2,399 - 2,346
0.45%.................. - - - -
0.40%.................. - - - -
0.35%.................. - - - -
0.30%.................. - - - -
0.25%.................. - - - -
0.20%.................. - - - -
0.15%.................. - - - -
------------- ------------- ------------- -------------
Total variable account fees.... $ 1,870,589 1,692,590 78,976 1,495,579
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Percentage FidViPAM FidVIPEi FidVIPGr FidVIPHi FidVIPOv GroFdAM
---------- -------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0.95%.................. $ 280 1,254 1,128 310 946 63,953
0.90%.................. - - - - - 11,386
0.80%.................. - - - - - 11,665
0.70%.................. - - - - - 5,185
0.65%.................. - - - - - 1,401
0.60%.................. - - - - - 1,848
0.55%.................. - - - - - 322
0.45%.................. - - - - - -
0.40%.................. - - - - - -
0.35%.................. - - - - - -
0.30%.................. - - - - - -
0.25%.................. - - - - - -
0.20%.................. - - - - - -
0.15%.................. - - - - - -
-------------- ------------- ------------- -------------- ------------- -------------
Total variable account fees.... $ 280 1,254 1,128 310 946 95,760
============== ============= ============= ============== ============= =============
<CAPTION>
Percentage IncFdAm InvDynam InvIndInc InvTotRet
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
0.95%.................. $ 81,679 - 113,019 -
0.90%.................. 14,390 - 20,467 -
0.80%.................. 15,273 7 16,842 11
0.70%.................. 4,072 - 4,991 36
0.65%.................. 965 - 1,319 -
0.60%.................. 1,269 - 649 -
0.55%.................. 365 2 955 1
0.45%.................. - - - -
0.40%.................. - 1 - -
0.35%.................. - - - -
0.30%.................. - - - -
0.25%.................. - - - -
0.20%.................. - - - -
0.15%.................. - - - -
------------- ------------- ------------- -------------
Total variable account fees.... $ 118,013 10 158,242 48
============= ============= ============= =============
</TABLE>
<PAGE> 43
<TABLE>
<CAPTION>
Percentage JanFund JanWrldwde MASFIP MFSGrStk MFSGrOpp MFSHiInc
---------- -------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0.95%.................. $ 377,229 4,975 17,870 18,036 28,401 4,223
0.90%.................. 68,428 - 1,542 3,589 17,313 557
0.80%.................. 79,708 - 4,126 1,182 10,274 1,002
0.70%.................. 31,973 - 1,381 33 3,685 48
0.65%.................. 8,909 - 343 22,223 95,579 19,837
0.60%.................. 3,836 - 576 - - -
0.55%.................. - - 59 59 463 40
0.45%.................. - - - - - -
0.40%.................. - - - - - -
0.35%.................. - - - - - -
0.30%.................. 1,985 - - - - -
0.25%.................. - - - - - -
0.20%.................. - - - - - -
0.15%.................. - - - - - -
-------------- ------------- ------------- -------------- ------------- -------------
Total variable account fees.... $ 572,068 4,975 25,897 45,122 155,715 25,707
============== ============= ============= ============== ============= =============
<CAPTION>
Percentage MSIEqGroB NAATAggr NAATCons NAATMod
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
0.95%.................. $ - 8,867 833 2,979
0.90%.................. - 1,276 213 342
0.80%.................. 42 739 414 234
0.70%.................. 2 2,119 293 1,382
0.65%.................. - - - -
0.60%.................. - 265 60 92
0.55%.................. 1 - - -
0.45%.................. - 129 53 51
0.40%.................. - - - -
0.35%.................. - - - -
0.30%.................. - - - -
0.25%.................. - 24 29 7
0.20%.................. - 7 5 6
0.15%.................. - 7 - 5
------------- ------------- ------------- -------------
Total variable account fees.... $ 45 13,433 1,900 5,098
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Percentage NAATModAgg NAATModCon NWBdFd NWFund NWGroFd NWMyMkt
---------- -------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0.95%.................. $ 3,177 236 431 349,136 27,559 118,861
0.90%.................. 781 995 - 63,997 5,191 34,229
0.80%.................. 732 235 - 161,432 7,591 103,080
0.70%.................. 978 508 - 53,812 6,532 29,650
0.65%.................. - 476 443 134,883 20,835 58,448
0.60%.................. 225 40 - - 21 1,191
0.55%.................. - - - 17,645 395 7,030
0.45%.................. 100 146 - - - -
0.40%.................. - - - 6,628 - 3,457
0.35%.................. - - - 4,393 - 233
0.30%.................. - - - 2,013 - 134
0.25%.................. 15 2 - - - -
0.20%.................. 67 2 - - - -
0.15%.................. 9 2 - - - -
-------------- ------------- ------------- -------------- ------------- -------------
Total variable account fees.... $ 6,084 2,642 874 793,939 68,124 356,313
============== ============= ============= ============== ============= =============
<CAPTION>
Percentage NWIndxFdY NSATGvtBd NSATMyMkt NSATSmCo
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
0.95%.................. $ - 114 319 5,534
0.90%.................. - - - 2,023
0.80%.................. 167 - - 3,523
0.70%.................. 6 - - 1,623
0.65%.................. - - - -
0.60%.................. - - - 6
0.55%.................. 37 - - 331
0.45%.................. - - - -
0.40%.................. 62 - - 209
0.35%.................. - - - 7
0.30%.................. - - - 20
0.25%.................. - - - -
0.20%.................. - - - -
0.15%.................. - - - -
------------- ------------- ------------- -------------
Total variable account fees.... $ 272 114 319 13,276
============= ============= ============= =============
</TABLE>
(Continued)
<PAGE> 44
<TABLE>
<CAPTION>
Percentage NSATTotRe NBAMTGro NBAMTLMat NBAMTPart NBGuard NBManhFd
---------- -------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0.95%.................. $ 898 179 65 325 - 1,138
0.90%.................. - - - - - -
0.80%.................. - - - - - -
0.70%.................. - - - - - -
0.65%.................. - - - - 6,774 -
0.60%.................. - - - - - -
0.55%.................. - - - - - -
0.45%.................. - - - - - -
0.40%.................. - - - - - -
0.35%.................. - - - - - -
0.30%.................. - - - - - -
0.25%.................. - - - - - -
0.20%.................. - - - - - -
0.15%.................. - - - - - -
-------------- ------------- ------------- -------------- ------------- -------------
Total variable account fees.... $ 898 179 65 325 6,774 1,138
============== ============= ============= ============== ============= =============
<CAPTION>
Percentage NBPartTr PrBalY PrintY PrLGCapGrY
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
0.95%.................. $ - - - -
0.90%.................. - - - -
0.80%.................. 3 - - -
0.70%.................. 1 24 11 30
0.65%.................. - - - -
0.60%.................. - - - 1
0.55%.................. - - - -
0.45%.................. - 1 1 1
0.40%.................. - - - -
0.35%.................. - - - -
0.30%.................. - - - -
0.25%.................. - - - -
0.20%.................. - - - -
0.15%.................. - - - -
------------- ------------- ------------- -------------
Total variable account fees.... $ 4 25 12 32
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Percentage PrLgCpValY PrSmCapY OppGlob PutInvFd PutVoyFd SEI500Ix
---------- -------------- ------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0.95%.................. $ - - - 71,426 654,777 5,234
0.90%.................. - - - 12,267 116,397 1,874
0.80%.................. - - 22 8,788 122,595 -
0.70%.................. 5 15 - 959 59,040 -
0.65%.................. - - - 203,814 57,277 144,042
0.60%.................. - 2 - 316 5,547 -
0.55%.................. - - 6 631 - -
0.45%.................. 1 - - - - -
0.40%.................. - - 9 - - -
0.35%.................. - - - - - -
0.30%.................. - - - - 1,610 -
0.25%.................. - - - - - -
0.20%.................. - - - - - -
0.15%.................. - - - - - -
-------------- ------------- ------------- -------------- ------------- -------------
Total variable account fees.... $ 6 17 37 298,201 1,017,243 151,150
============== ============= ============= ============== ============= =============
<CAPTION>
Percentage SelGroFd TRIntStk TemForFd WPEmGro
---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
0.95%.................. $ 8,281 91,497 214,800 -
0.90%.................. 305 18,134 37,449 -
0.80%.................. 1,280 19,355 84,679 19
0.70%.................. 96 6,512 23,222 1
0.65%.................. 7,160 44,998 10,756 -
0.60%.................. - 709 - -
0.55%.................. 81 431 6,629 -
0.45%.................. - - - -
0.40%.................. - - 2,012 9
0.35%.................. - - 1,173 -
0.30%.................. - - 674 -
0.25%.................. - - - -
0.20%.................. - - - -
0.15%.................. - - - -
------------- ------------- ------------- -------------
Total variable account fees.... $ 17,203 181,636 381,394 29
============= ============= ============= =============
</TABLE>
<PAGE> 79
<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, 1998 and
1997, 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,
1998. 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, 1998 and 1997, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1998, in conformity with generally accepted
accounting principles.
KPMG LLP
Columbus, Ohio
January 29, 1999
<PAGE> 2
<TABLE>
<CAPTION>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Balance Sheets
(in millions of dollars, except per share amounts)
December 31,
-----------------------
Assets 1998 1997
------ --------- ---------
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $14,245.1 $13,204.1
Equity securities 127.2 80.4
Mortgage loans on real estate, net 5,328.4 5,181.6
Real estate, net 243.6 311.4
Policy loans 464.3 415.3
Other long-term investments 44.0 25.2
Short-term investments 289.1 358.4
--------- ---------
20,741.7 19,576.4
--------- ---------
Cash 3.4 175.6
Accrued investment income 218.7 210.5
Deferred policy acquisition costs 2,022.2 1,665.4
Other assets 420.3 438.4
Assets held in separate accounts 50,935.8 37,724.4
--------- ---------
$74,342.1 $59,790.7
========= =========
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims $19,767.1 $18,702.8
Other liabilities 866.1 885.6
Liabilities related to separate accounts 50,935.8 37,724.4
--------- ---------
71,569.0 57,312.8
--------- ---------
Commitments and contingencies (notes 7 and 12)
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 914.7 914.7
Retained earnings 1,579.0 1,312.3
Accumulated other comprehensive income 275.6 247.1
--------- ---------
2,773.1 2,477.9
--------- ---------
$74,342.1 $59,790.7
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
<TABLE>
<CAPTION>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Income
(in millions of dollars)
Years ended December 31,
-----------------------------------
1998 1997 1996
-------- -------- ---------
<S> <C> <C> <C>
Revenues:
Policy charges $ 698.9 $ 545.2 $ 400.9
Life insurance premiums 200.0 205.4 198.6
Net investment income 1,481.6 1,409.2 1,357.8
Realized gains (losses) on investments 28.4 11.1 (0.3)
Other 66.8 46.5 35.9
-------- -------- --------
2,475.7 2,217.4 1,992.9
-------- -------- --------
Benefits and expenses:
Interest credited to policyholder account balances 1,069.0 1,016.6 982.3
Other benefits and claims 175.8 178.2 178.3
Policyholder dividends on participating policies 39.6 40.6 41.0
Amortization of deferred policy acquisition costs 214.5 167.2 133.4
Other operating expenses 419.7 384.9 342.4
-------- -------- --------
1,918.6 1,787.5 1,677.4
-------- -------- --------
Income from continuing operations before federal income tax expense 557.1 429.9 315.5
Federal income tax expense 190.4 150.2 110.9
-------- -------- --------
Income from continuing operations 366.7 279.7 204.6
Income from discontinued operations (less federal income tax expense
of $4.5 in 1996) -- -- 11.3
-------- -------- --------
Net income $ 366.7 $ 279.7 $ 215.9
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
<TABLE>
<CAPTION>
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, 1998, 1997 and 1996
(in millions of dollars)
Accumulated
Additional other Total
Common paid-in Retained comprehensive shareholder's
stock capital earnings income equity
----- ------- -------- ------ ------
<S> <C> <C> <C> <C> <C>
December 31, 1995 $ 3.8 $ 657.2 $1,583.2 $ 384.3 $2,628.5
Comprehensive income:
Net income -- -- 215.9 -- 215.9
Net unrealized losses on securities
available-for-sale arising during
the year -- -- -- (170.9) (170.9)
--------
Total comprehensive income 45.0
--------
Dividends to shareholder -- (129.3) (366.5) (39.8) (535.6)
------ ------- -------- ------- --------
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
====== ======= ======== ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
<TABLE>
<CAPTION>
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Cash Flows
(in millions of dollars)
Years ended December 31,
---------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 366.7 $ 279.7 $ 215.9
Adjustments to reconcile net income to net cash provided by operating
activities:
Interest credited to policyholder account balances 1,069.0 1,016.6 982.3
Capitalization of deferred policy acquisition costs (584.2) (487.9) (422.6)
Amortization of deferred policy acquisition costs 214.5 167.2 133.4
Amortization and depreciation (8.5) (2.0) 7.0
Realized gains on invested assets, net (28.4) (11.1) (0.3)
(Increase) decrease in accrued investment income (8.2) (0.3) 2.8
(Increase) decrease in other assets 16.4 (12.7) (38.9)
Decrease in policy liabilities (8.3) (23.1) (151.0)
(Decrease) increase in other liabilities (34.8) 230.6 191.4
Other, net (11.3) (10.9) (61.7)
--------- --------- ---------
Net cash provided by operating activities 982.9 1,146.1 858.3
--------- --------- ---------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 1,557.0 993.4 1,162.8
Proceeds from sale of securities available-for-sale 610.5 574.5 299.6
Proceeds from repayments of mortgage loans on real estate 678.2 437.3 309.0
Proceeds from sale of real estate 103.8 34.8 18.5
Proceeds from repayments of policy loans and sale of other invested assets 23.6 22.7 22.8
Cost of securities available-for-sale acquired (3,182.8) (2,828.1) (1,573.6)
Cost of mortgage loans on real estate acquired (829.1) (752.2) (972.8)
Cost of real estate acquired (0.8) (24.9) (7.9)
Policy loans issued and other invested assets acquired (88.4) (62.5) (57.7)
Short-term investments, net 69.3 (354.8) 28.0
--------- --------- ---------
Net cash used in investing activities (1,058.7) (1,959.8) (771.3)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from capital contributions -- 836.8 --
Cash dividends paid (100.0) -- (50.0)
Increase in investment product and universal life insurance
product account balances 2,682.1 2,488.5 1,781.8
Decrease in investment product and universal life insurance
product account balances (2,678.5) (2,379.8) (1,784.5)
--------- --------- ---------
Net cash (used in) provided by financing activities (96.4) 945.5 (52.7)
--------- --------- ---------
Net (decrease) increase in cash (172.2) 131.8 34.3
Cash, beginning of year 175.6 43.8 9.5
--------- --------- ---------
Cash, end of year $ 3.4 $ 175.6 $ 43.8
========= ========= =========
</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, 1998, 1997 and 1996
(1) Organization and Description of Business
----------------------------------------
Prior to January 27, 1997, Nationwide Life Insurance Company (NLIC) was
wholly owned by Nationwide Corporation (Nationwide Corp.). On that
date, Nationwide Corp. contributed the outstanding shares of NLIC's
common stock to Nationwide Financial Services, Inc. (NFS), a holding
company formed by Nationwide Corp. in November 1996 for NLIC and the
other companies within the Nationwide Insurance Enterprise that offer
or distribute long-term savings and retirement products. On March 11,
1997, NFS completed an initial public offering of its Class A common
stock.
During 1996 and 1997, Nationwide Corp. and NFS completed certain
transactions in anticipation of the initial public offering that
focused the business of NFS on long-term savings and retirement
products. On September 24, 1996, NLIC declared a dividend payable to
Nationwide Corp. on January 1, 1997 consisting of the outstanding
shares of common stock of certain subsidiaries that do not offer or
distribute long-term savings or retirement products. In addition,
during 1996, NLIC entered into two reinsurance agreements whereby all
of NLIC's accident and health and group life insurance business was
ceded to two affiliates effective January 1, 1996. These subsidiaries,
through December 31, 1996, and all accident and health and group life
insurance business have been accounted for as discontinued operations
for all periods presented. See notes 10 and 14. Additionally, NLIC paid
$900.0 million of dividends, $50.0 million to Nationwide Corp. on
December 31, 1996 and $850.0 million to NFS, which then made an
equivalent dividend to Nationwide Corp., on February 24, 1997.
NFS contributed $836.8 million to the capital of NLIC during March
1997.
Wholly owned subsidiaries of NLIC include Nationwide Life and Annuity
Insurance Company (NLAIC), Nationwide Advisory Services, Inc.,
Nationwide Investment Services Corporation and NWE, Inc. NLIC and its
subsidiaries are collectively referred to as "the Company."
The Company is a leading provider of long-term savings and retirement
products, including variable annuities, fixed annuities and life
insurance.
(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.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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. Operations that are classified
and reported as discontinued operations are not consolidated but
rather are reported as "Income from discontinued operations" in
the accompanying consolidated statements of income. All
significant intercompany balances and transactions have been
eliminated.
(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 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, 1998 or 1997.
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.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(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.
(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. 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. 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).
(e) Separate Accounts
-----------------
Separate account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. For all but $743.9 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 6.0%, 6.1% and 6.3% for the years ended
December 31, 1998, 1997 and 1996, 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 40% in 1998 (50%
in 1997 and 52% in 1996) of the Company's life insurance in force,
74% in 1998 (77% in 1997 and 78% in 1996) of the number of life
insurance policies in force, and 14% in 1998 (27% in 1997 and 40%
in 1996) 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. All of the Company's accident
and health and group life insurance business is ceded to
affiliates and is accounted for as discontinued operations. See
notes 10 and 14.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(j) Recently Issued Accounting Pronouncements
-----------------------------------------
On January 1, 1998 the Company adopted SFAS No. 131 - Disclosures
about Segments of an Enterprise and Related Information (SFAS
131). SFAS 131 supersedes SFAS No. 14 - Financial Reporting for
Segments of a Business Enterprise. SFAS 131 establishes standards
for public business enterprises to report information about
operating segments in annual financial statements and selected
information about operating segments in interim financial reports.
SFAS 131 also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The
adoption of SFAS 131 did not affect results of operations or
financial position, nor did it affect the manner in which the
Company defines its operating segments. The segment information
required for annual financial statements is included in note 13.
On January 1, 1998, the Company adopted SFAS No. 132 - Employers'
Disclosures about Pensions and Other Postretirement Benefits (SFAS
132). SFAS 132 revises employers' disclosures about pension and
other postretirement benefit plans. The Statement does not change
the measurement or recognition of benefit plans in the financial
statements. The revised disclosures required by SFAS 132 are
included in note 8.
In June 1998, the FASB issued SFAS No. 133 - Accounting for
Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133
establishes accounting and reporting standards for derivative
instruments and for hedging activities. Contracts that contain
embedded derivatives, such as certain insurance contracts, are
also addressed by the Statement. SFAS 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. The Statement is effective for fiscal years beginning
after June 15, 1999. It may be implemented earlier provided
adoption occurs as of the beginning of any fiscal quarter after
issuance. The Company plans to adopt this Statement in first
quarter 2000 and is currently evaluating the impact on results of
operations and financial condition.
In March 1998, The American Institute of Certified Public
Accountant's Accounting Standards Executive Committee issued
Statement of Position 98-1 - Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use (SOP 98-1). SOP
98-1 provides guidance intended to standardize accounting
practices for costs incurred to develop or obtain computer
software for internal use. Specifically, SOP 98-1 provides
guidance for determining whether computer software is for internal
use and when costs incurred for internal use software are to be
capitalized. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998. The Company does
not expect the adoption of SOP 98-1, which occurred on January 1,
1999, to have a material impact on the Company's financial
statements.
(k) Reclassification
----------------
Certain items in the 1997 and 1996 consolidated financial
statements have been reclassified to conform to the 1998
presentation.
<PAGE> 11
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, 1998 and
1997 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
(in millions of dollars) cost gains losses fair value
------------------------ ---- ----- ------ ----------
<S> <C> <C> <C> <C>
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
========= ====== ====== =========
December 31, 1997:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 305.1 $ 8.6 $ -- $ 313.7
Obligations of states and political subdivisions 1.6 -- -- 1.6
Debt securities issued by foreign governments 93.3 2.7 (0.2) 95.8
Corporate securities 8,698.7 355.5 (11.5) 9,042.7
Mortgage-backed securities 3,634.2 118.6 (2.5) 3,750.3
--------- ------ ------ ---------
Total fixed maturity securities 12,732.9 485.4 (14.2) 13,204.1
Equity securities 67.8 12.9 (0.3) 80.4
--------- ------ ------ ---------
$12,800.7 $498.3 $(14.5) $13,284.5
========= ====== ====== =========
</TABLE>
As of December 31, 1998 the Company had entered into S&P 500 futures
contracts with a notional amount of $20.0 million to reduce the risk of
changes in the fair market value of certain investments classified as
equity securities. These contracts had an unrealized loss of $1.3
million as of December 31, 1998 which is included in the recorded
amount of the equity securities and in accumulated other comprehensive
income, net of tax, similar to other unrealized gains and losses on
securities available-for-sale.
<PAGE> 12
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1998, 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 of dollars) cost fair value
---- ----------
<S> <C> <C>
Fixed maturity securities available for sale:
Due in one year or less $ 2,019.9 $ 2,048.0
Due after one year through five years 8,169.1 8,470.6
Due after five years through ten years 2,795.0 2,927.7
Due after ten years 737.3 798.8
--------- ---------
$13,721.3 $14,245.1
========= =========
</TABLE>
The components of unrealized gains on securities available-for-sale,
net, were as follows as of December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997
---- ----
<S> <C> <C>
Gross unrealized gains $ 540.6 $ 483.8
Adjustment to deferred policy acquisition costs (116.6) (103.7)
Deferred federal income tax (148.4) (133.0)
------- -------
$ 275.6 $ 247.1
======= =======
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale and fixed maturity securities
held-to-maturity follows for the years ended December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $52.6 $137.5 $(289.2)
Equity securities 4.2 (2.7) 8.9
----- ------ -------
$56.8 $134.8 $(280.3)
===== ====== =======
</TABLE>
Proceeds from the sale of securities available-for-sale during 1998,
1997 and 1996 were $610.5 million, $574.5 million and $299.6 million,
respectively. During 1998, gross gains of $9.0 million ($9.9 million
and $6.6 million in 1997 and 1996, respectively) and gross losses of
$7.6 million ($18.0 million and $6.9 million in 1997 and 1996,
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 recorded investment of mortgage loans on real estate considered to
be impaired as of December 31, 1998 was $3.7 million. No valuation
allowance has been recorded for these loans as of December 31, 1998.
The recorded investment of mortgage loans on real estate considered to
be impaired as of December 31, 1997 was $19.9 million which includes
$3.9 million of impaired mortgage loans on real estate for which the
related valuation allowance was $0.1 million and $16.0 million of
impaired mortgage loans on real estate for which there was no valuation
allowance. During 1998, the average recorded investment in impaired
mortgage loans on real estate was approximately $9.1 million ($31.8
million in 1997) and interest income recognized on those loans was $0.3
million ($1.0 million in 1997), which is equal to interest income
recognized using a cash-basis method of income recognition.
<PAGE> 13
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 of dollars) 1998 1997
---- ----
<S> <C> <C>
Allowance, beginning of year $42.5 $51.0
Reductions credited to operations (0.1) (1.2)
Direct write-downs charged against the allowance -- (7.3)
----- -----
Allowance, end of year $42.4 $42.5
===== =====
</TABLE>
Real estate is presented at cost less accumulated depreciation of $21.5
million as of December 31, 1998 ($45.1 million as of December 31, 1997)
and valuation allowances of $5.4 million as of December 31, 1998 ($11.1
million as of December 31, 1997).
Investments that were non-income producing for the twelve month period
preceding December 31, 1998 amounted to $42.4 million ($19.4 million
for 1997) and consisted of $32.7 million ($3.0 million in 1997) in
securities available-for-sale and $9.7 million ($16.4 million in 1997)
in real estate.
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $ 982.5 $ 911.6 $ 917.1
Equity securities 0.8 0.8 1.3
Mortgage loans on real estate 458.9 457.7 432.8
Real estate 40.4 42.9 44.3
Short-term investments 17.8 22.7 4.2
Other 30.7 21.0 4.0
-------- -------- --------
Total investment income 1,531.1 1,456.7 1,403.7
Less investment expenses 49.5 47.5 45.9
-------- -------- --------
Net investment income $1,481.6 $1,409.2 $1,357.8
======== ======== ========
</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 of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(0.7) $ 3.6 $(3.5)
Equity securities 2.1 2.7 3.2
Mortgage loans on real estate 3.9 1.6 (4.1)
Real estate and other 23.1 3.2 4.1
----- ----- -----
$28.4 $11.1 $(0.3)
===== ===== =====
</TABLE>
Fixed maturity securities with an amortized cost of $6.5 million and
$6.2 million as of December 31, 1998 and 1997, respectively, were on
deposit with various regulatory agencies as required by law.
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(4) Federal Income Tax
------------------
The Company's current federal income tax liability was $72.8 million
and $60.1 million as of December 31, 1998 and 1997, respectively.
The tax effects of temporary differences that give rise to significant
components of the net deferred tax liability as of December 31, 1998
and 1997 are as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997
---- ----
<S> <C> <C>
Deferred tax assets:
Future policy benefits $207.7 $200.1
Liabilities in Separate Accounts 319.9 242.0
Mortgage loans on real estate and real estate 17.5 19.0
Other assets and other liabilities 58.9 59.2
------ ------
Total gross deferred tax assets 604.0 520.3
Less valuation allowance (7.0) (7.0)
------ ------
Net deferred tax assets 597.0 513.3
------ ------
Deferred tax liabilities:
Deferred policy acquisition costs 568.7 480.5
Fixed maturity securities 212.2 193.3
Deferred tax on realized investment gains 34.8 40.1
Equity securities and other long-term investments 9.6 7.5
Other 21.6 22.2
------ ------
Total gross deferred tax liabilities 846.9 743.6
------ ------
Net deferred tax liability $249.9 $230.3
====== ======
</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, 1998, 1997 and 1996.
Federal income tax expense attributable to income from continuing
operations for the years ended December 31 was as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Currently payable $186.1 $121.7 $116.5
Deferred tax expense (benefit) 4.3 28.5 (5.6)
------ ------ ------
$190.4 $150.2 $110.9
====== ====== ======
</TABLE>
<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, 1998,
1997 and 1996 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(in millions of dollars) Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $195.0 35.0 $150.5 35.0 $110.4 35.0
Tax exempt interest and dividends
received deduction (4.9) (0.9) - 0.0 (0.2) (0.1)
Other, net 0.3 0.1 (0.3) (0.1) 0.7 0.3
------ ---- ------ ---- ------ ----
Total (effective rate of each year) $190.4 34.2 $150.2 34.9 $110.9 35.2
====== ==== ====== ==== ====== ====
</TABLE>
Total federal income tax paid was $173.4 million, $91.8 million and
$115.8 million during the years ended December 31, 1998, 1997 and 1996,
respectively.
(5) Comprehensive Income
--------------------
Pursuant to SFAS No. 130 - Reporting Comprehensive Income, which the
Company adopted January 1, 1998, the Consolidated Statements of
Shareholder's Equity include a new measure called "Comprehensive
Income". Comprehensive Income includes net income as well as certain
items that are reported directly within separate components of
shareholders' 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 of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Unrealized gains (losses) on securities
available-for-sale arising during the period:
Gross $ 58.2 $141.1 $(272.4)
Adjustment to deferred policy acquisition costs (12.9) (21.8) 57.0
Related federal income tax (expense) benefit (15.9) (41.7) 44.0
------ ------ ------
Net 29.4 77.6 (171.4)
------ ------ ------
Reclassification adjustment for net (gains) losses
on securities available-for-sale realized
during the period:
Gross (1.4) (6.3) 0.7
Related federal income tax expense (benefit) 0.5 2.2 (0.2)
------ ------ -------
Net (0.9) (4.1) 0.5
------ ------ -------
Total Other Comprehensive Income $ 28.5 $ 73.5 $(170.9)
====== ====== =======
</TABLE>
(6) 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
equity securities exclude the fair value of futures contracts
designated as hedges of 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 7.
Futures contracts: The fair value for futures contracts is based
on quoted market prices.
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>
1998 1997
------------------------- --------------------------
Carrying Estimated Carrying Estimated
(in millions of dollars) amount fair value amount fair value
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $14,245.1 $14,245.1 $13,204.1 $13,204.1
Equity securities 128.5 128.5 80.4 80.4
Mortgage loans on real estate, net 5,328.4 5,527.6 5,181.6 5,509.7
Policy loans 464.3 464.3 415.3 415.3
Short-term investments 289.1 289.1 358.4 358.4
Cash 3.4 3.4 175.6 175.6
Assets held in separate accounts 50,935.8 50,935.8 37,724.4 37,724.4
Liabilities:
Investment contracts 15,468.7 15,158.6 14,708.2 14,322.1
Policy reserves on life insurance contracts 3,914.0 3,768.9 3,345.4 3,182.4
Liabilities related to separate accounts 50,935.8 49,926.5 37,724.4 36,747.0
Futures contracts 1.3 1.3 -- --
</TABLE>
(7) 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.
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.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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. 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 $156.0 million
extending into 1999 were outstanding as of December 31, 1998. The
Company also had $40.0 million of commitments to purchase fixed
maturity securities outstanding as of December 31, 1998.
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 22% (20% in 1997) in any geographic area and no more than 2% (2%
in 1997) with any one borrower as of December 31, 1998. As of December
31, 1998, 42% (46% in 1997) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed retail
properties.
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 $187.9 million and $220.2 million as of December 31,
1998 and 1997, 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.
(8) 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 and
Employers Life Insurance Company of Wausau (ELICW).
Pension costs charged to operations by the Company during the years
ended December 31, 1998, 1997 and 1996 were $2.0 million, $7.5 million
and $7.4 million, respectively. The Company has recorded a prepaid
pension asset of $5.0 million as of December 31, 1998 and no prepaid or
accrued pension asset or expense as of December 31, 1997.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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,
1998 and 1997 was $40.1 million and $36.5 million, respectively, and
the net periodic postretirement benefit cost (NPPBC) for 1998, 1997 and
1996 was $4.1 million, $3.0 million and $3.3 million, respectively.
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, 1998 and 1997 follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
--------------------- -----------------------
(in millions of dollars) 1998 1997 1998 1997
--------------------------------------------------------- -------- -------- -------- -------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $2,033.8 $1,847.8 $237.9 $ 200.7
Service cost 87.6 77.3 9.8 7.0
Interest cost 123.4 118.6 15.4 14.0
Actuarial loss 123.2 60.0 15.6 24.4
Plan curtailment in 1998/merger in 1997 (107.2) 1.5 - -
Benefits paid (75.8) (71.4) (8.6) (8.2)
-------- -------- ------- -------
Benefit obligation at end of year 2,185.0 2,033.8 270.1 237.9
-------- -------- ------- -------
Change in plan assets:
Fair value of plan assets at beginning of year 2,212.9 1,947.9 69.2 63.0
Actual return on plan assets 300.7 328.1 5.0 3.6
Employer contribution 104.1 7.2 12.1 10.6
Plan merger - 1.1 - -
Benefits paid (75.8) (71.4) (8.4) (8.0)
-------- -------- ------- -------
Fair value of plan assets at end of year 2,541.9 2,212.9 77.9 69.2
-------- -------- ------- -------
Funded status 356.9 179.1 (192.2) (168.7)
Unrecognized prior service cost 31.5 34.7 - -
Unrecognized net (gains) losses (345.7) (330.7) 16.0 1.6
Unrecognized net (asset) obligation at transition (11.0) 33.3 1.3 1.5
-------- -------- ------- -------
Prepaid (accrued) benefit cost $ 31.7 $ (83.6) $(174.9) $(165.6)
======== ======== ======= =======
</TABLE>
<PAGE> 20
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
-------------------- -----------------------
1998 1997 1998 1997
-------- ------ -------- --------
<S> <C> <C> <C> <C>
Weighted average discount rate 5.50% 6.00% 6.65% 6.70%
Rate of increase in future compensation levels 3.75% 4.25% -- --
Assumed health care cost trend rate:
Initial rate -- -- 15.00% 12.13%
Ultimate rate -- -- 8.00% 6.12%
Uniform declining period -- -- 15 Years 12 Years
</TABLE>
The net periodic pension cost for the pension plan as a whole for the
years ended December 31, 1998, 1997 and 1996 follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
-------------------------------------------------------------------------------- ---- ----
<S> <C> <C>
Service cost (benefits earned during the period) $ 87.6 $ 77.3 $ 75.5
Interest cost on projected benefit obligation 123.4 118.6 105.5
Expected return on plan assets (159.0) (139.0) (116.1)
Recognized gains (3.8) - -
Amortization of prior service cost 3.2 3.2 3.2
Amortization of unrecognized transition obligation 4.2 4.2 4.1
------- ------- -------
$ 55.6 $ 64.3 $ 72.2
======= ======= =======
</TABLE>
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its
affiliation with the Nationwide Insurance Enterprise 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). The
Company anticipates that the plan will settle the obligation related to
WSC employees with a transfer of assets during 1999.
Basis for measurements, net periodic pension cost for the pension plan:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate 6.00% 6.50% 6.00%
Rate of increase in future compensation levels 4.25% 4.75% 4.25%
Expected long-term rate of return on plan assets 7.25% 7.25% 6.75%
</TABLE>
<PAGE> 21
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, 1998, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service cost (benefits attributed to employee service during the year) $ 9.8 $ 7.0 $ 6.5
Interest cost on accumulated postretirement benefit obligation 15.4 14.0 13.7
Actual return on plan assets (5.0) (3.6) (4.3)
Amortization of unrecognized transition obligation of affiliates 0.2 0.2 0.2
Net amortization and deferral 1.2 (0.5) 1.8
----- ----- -----
$21.6 $17.1 $17.9
===== ===== =====
</TABLE>
Actuarial assumptions used for the measurement of the accumulated
postretirement benefit obligation (APBO) and the NPPBC for the
postretirement benefit plan for 1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- ----
<S> <C> <C> <C>
NPPBC:
Discount rate 6.70% 7.25% 6.65%
Long term rate of return on plan
assets, net of tax 5.83% 5.89% 4.80%
Assumed health care cost trend rate:
Initial rate 12.00% 11.00% 11.00%
Ultimate rate 6.00% 6.00% 6.00%
Uniform declining period 12 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, 1998 and have no impact
on the NPPBC for the year ended December 31, 1998.
(9) 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, 1998, 1997
and 1996 was $1.32 billion, $1.13 billion and $1.00 billion,
respectively. The statutory net income of NLIC for the years ended
December 31, 1998, 1997 and 1996 was $171.0 million, $111.7 million and
$73.2 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, 1998,
the maximum amount available for dividend payment from the Company to
its shareholder without prior approval of the Department was $71.0
million.
<PAGE> 22
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.
(10) Transactions With Affiliates
----------------------------
As part of the restructuring described in note 1, NLIC paid a dividend
valued at $485.7 million to Nationwide Corp. on January 1, 1997
consisting of the outstanding shares of common stock of ELICW, National
Casualty Company (NCC) and West Coast Life Insurance Company (WCLIC).
Also, on February 24, 1997, NLIC 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.
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1998, 1997 and 1996, the
Company made lease payments to NMIC and its subsidiaries of $8.0
million, $8.4 million and $9.1 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 this agreement are subject to
allocation among NMIC, the Company and other affiliates. Amounts
allocated to the Company were $95.0 million, $85.8 million and $101.6
million in 1998, 1997 and 1996, respectively. The allocations are based
on techniques and procedures in accordance with insurance regulatory
guidelines. Measures used to allocate expenses among companies include
individual employee estimates of time spent, special cost studies,
salary expense, commissions expense and other methods agreed to by the
participating companies that are within industry guidelines and
practices. The Company believes these allocation methods are
reasonable. In addition, the Company does not believe that expenses
recognized under the inter-company agreements are materially different
than expenses that would have been recognized had the Company operated
on a stand alone basis. Amounts payable to NMIC from the Company under
the cost sharing agreement were $31.9 million and $20.5 million as of
December 31, 1998 and 1997, respectively.
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 1998 and
1997 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.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Intercompany reinsurance agreements exist between NLIC and,
respectively, NMIC and ELICW whereby all of NLIC's accident and health
and group life insurance business is ceded on a modified coinsurance
basis. NLIC entered into the reinsurance agreements during 1996 because
the accident and health and group life insurance business was unrelated
to the Company's long-term savings and retirement products.
Accordingly, the accident and health and group life insurance business
has been accounted for as discontinued operations for all periods
presented. Under modified coinsurance agreements, 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 ELICW or
NMIC, as the case may be. Risk of asset default is retained by the
Company, although a fee is paid by ELICW or NMIC, as the case may be,
to the Company for the Company's retention of such risk. The agreements
will remain in force until all policy obligations are settled. However,
with respect to the agreement between NLIC and NMIC, either party may
terminate the contract on January 1 of any year with prior notice. 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. Amounts ceded to NMIC and ELICW for the years ended December
31, 1998, 1997 and 1996 were:
<TABLE>
<CAPTION>
1998 1997 1996
------------------------------------------------------------------------------------
(in millions of dollars) NMIC ELICW NMIC ELICW NMIC ELICW
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Premiums $90.1 $106.3 $ 91.4 $199.8 $ 97.3 $224.2
Net investment income and other
revenue $11.1 $ 9.4 $ 10.7 $ 13.4 $ 10.9 $ 14.8
Benefits, claims and expenses $98.8 $160.5 $100.7 $225.9 $100.5 $246.6
</TABLE>
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 $248.4 million and $211.0 million as
of December 31, 1998 and 1997, respectively, and are included in
short-term investments on the accompanying consolidated balance sheets.
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, 1998 were $60.0
million, $66.1 million and $76.9 million, respectively.
(11) Bank Lines of Credit
--------------------
In August 1996, NLIC, along with NMIC, entered into 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 either NLIC or
NMIC. NLIC and NMIC pay facility and usage fees to the financial
institutions to maintain the revolving credit facility. All previously
existing line of credit agreements were canceled. In September 1997,
the credit agreement was amended to include NFS as a party to and
borrower under the agreement. As of December 31, 1998 the Company had
no amounts outstanding under the agreement.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(12) Contingencies
-------------
On October 29, 1998, the Company and certain of its affiliates were
named in a lawsuit filed in the Common Pleas Court of Franklin County,
Ohio 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).
The plaintiff in such lawsuit seeks to represent a national class of
the Company's customers and seeks unspecified compensatory and punitive
damages. The Company is currently evaluating this lawsuit, which is in
an early stage and has not been certified as a class. The Company
intends to defend this lawsuit vigorously.
(13) 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.
The Variable Annuities segment consists of annuity contracts that
provide the customer with the opportunity to invest in mutual funds
managed by independent investment managers and the Company, with
investment returns accumulating on a tax-deferred basis. 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, with returns accumulating on a tax-deferred basis.
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 (other than
the portion allocated to the Variable Annuities and Life Insurance
segments), revenues and expenses related to group annuity contracts
sold to Nationwide Insurance Enterprise employee and agent benefit
plans and all realized gains and losses on investments in a Corporate
and Other segment.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The following table summarizes the financial results of the Company's business
segments for the years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
(in millions of dollars) Annuities Annuities Insurance and Other Total
- - ------------------------------------ --------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
1998:
Net investment income (1) $ (31.3) $ 1,116.6 $ 231.6 $ 164.7 $ 1,481.6
Other operating revenue 560.8 35.7 319.6 49.6 965.7
--------- --------- -------- -------- ---------
Total operating revenue (2) 529.5 1,152.3 551.2 214.3 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 187.2 104.2 294.6 49.1 635.1
--------- --------- -------- -------- ---------
Total expenses 311.1 977.0 456.4 174.1 1,918.6
--------- --------- -------- -------- ---------
Operating income (loss) before
federal income tax 218.4 175.3 94.8 40.2 528.7
Realized gains on investments -- -- -- 28.4 28.4
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 218.4 $ 175.3 $ 94.8 $ 68.6 $ 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) $ (26.9) $ 1,098.2 $ 189.1 $ 148.8 $ 1,409.2
Other operating revenue 430.9 43.2 284.0 39.0 797.1
--------- --------- -------- -------- ---------
Total operating revenue (2) 404.0 1,141.4 473.1 187.8 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
Other benefits and expenses 165.3 108.7 284.1 45.6 603.7
--------- --------- -------- -------- ---------
Total expenses 253.1 971.9 402.2 160.3 1,787.5
--------- --------- -------- -------- ---------
Operating income before federal
income tax 150.9 169.5 70.9 27.5 418.8
Realized gains on investments -- -- -- 11.1 11.1
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 150.9 $ 169.5 $ 70.9 $ 38.6 $ 429.9
========= ========= ======== ======== =========
Assets as of year end $35,278.7 $14,436.3 $3,901.4 $6,174.3 $59,790.7
========= ========= ======== ======== =========
</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 of dollars) Annuities Annuities Insurance and Other Total
------------------------------------ ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1996:
Net investment income (1) $ (21.5) $ 1,050.6 $ 174.0 $ 154.7 $ 1,357.8
Other operating revenue 306.1 42.0 261.6 25.7 635.4
---------- ---------- --------- --------- ---------
Total operating revenue (2) 284.6 1,092.6 435.6 180.4 1,993.2
---------- ---------- --------- --------- ---------
Interest credited to policyholder
account balances -- 805.0 70.2 107.1 982.3
Amortization of deferred policy
acquisition costs 57.4 38.6 37.4 -- 133.4
Benefits and expenses 136.9 113.6 260.8 50.4 561.7
---------- ---------- --------- --------- ---------
Total expenses 194.3 957.2 368.4 157.5 1,677.4
---------- ---------- --------- --------- ---------
Operating income before federal
income tax 90.3 135.4 67.2 22.9 315.8
Realized losses on investments -- -- -- (0.3) (0.3)
---------- ---------- --------- --------- ---------
Consolidated income from
continuing operations before
federal tax expense $ 90.3 $ 135.4 $ 67.2 $ 22.6 $ 315.5
========== ========== ======== ======== =========
Assets as of year end $ 25,069.7 $ 13,994.7 $3,353.3 $5,348.5 $47,766.2
========== ========== ======== ======== =========
</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.
(14) Discontinued Operations
-----------------------
As discussed in note 1, NFS is a holding company for NLIC and certain
other companies within the Nationwide Insurance Enterprise that offer
or distribute long-term savings and retirement products. Prior to the
contribution by Nationwide Corp. of the outstanding common stock of
NLIC to NFS, NLIC effected certain transactions with respect to certain
subsidiaries and lines of business that were unrelated to long-term
savings and retirement products.
On September 24, 1996, NLIC's Board of Directors declared a dividend
payable to Nationwide Corp. on January 1, 1997 consisting of the
outstanding shares of common stock of three subsidiaries: ELICW, NCC
and WCLIC. ELICW writes group accident and health and group life
insurance business and maintains it offices in Wausau, Wisconsin. NCC
is a property and casualty company with offices in Scottsdale, Arizona
that serves as a fronting company for a property and casualty
subsidiary of NMIC. WCLIC writes high dollar term life insurance
policies and is located in San Francisco, California. ELICW, NCC and
WCLIC have been accounted for as discontinued operations in the
accompanying consolidated financial statements through December 31,
1996. The Company did not recognize any gain or loss on the disposal of
these subsidiaries.
<PAGE> 27
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Also, during 1996, NLIC entered into two reinsurance agreements whereby
all of NLIC's accident and health and group life insurance business was
ceded to ELICW and NMIC, effective January 1, 1996. See note 10 for a
complete discussion of the reinsurance agreements. The Company has
discontinued its accident and health and group life insurance business
and in connection therewith has entered into reinsurance agreements to
cede all existing and any future writings to other affiliated
companies. NLIC's accident and health and group life insurance business
is accounted for as discontinued operations for all periods presented.
The Company did not recognize any gain or loss on the disposal of the
accident and health and group life insurance business. The assets,
liabilities, results of operations and activities of discontinued
operations are distinguished physically, operationally and for
financial reporting purposes from the remaining assets, liabilities,
results of operations and activities of the Company.
A summary of the results of operations of discontinued operations for
the years ended December 31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C>
Revenues $ -- $ -- $ 668.9
Net income $ -- $ -- $ 11.3
</TABLE>
A summary of the assets and liabilities of discontinued operations as
of December 31, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
(in millions of dollars) 1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Assets, consisting primarily of investments $221.5 $247.3 $3,288.5
Liabilities, consisting primarily of policy benefits and claims $221.5 $247.3 $2,802.8
</TABLE>
<PAGE> 80
PART C. OTHER INFORMATION
<TABLE>
<S> <C> <C>
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Financial statements included in Prospectus. (Part A):
Condensed Financial Information. 13
(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). 82
Nationwide DC Variable Account:
Independent Auditors' Report. 82
Statement of Assets, Liabilities and Contract
Owners' Equity as of December 31, 1998 83
Statements of Operations and Changes in
Contract Owners' Equity for the years ended
December 31, 1998 and 1997. 87
Notes to Financial Statements. 109
Nationwide Life Insurance Company and subsidiaries:
Independent Auditors' Report. 126
Consolidated Balance Sheets as of December
31, 1998 and 1997. 127
Consolidated Statements of Income for the
years ended December 31, 1998, 1997 and
1996. 128
Consolidated Statements of Shareholder's 129
Equity for the years ended December 31, 1998, 1997 and
1996.
Consolidated Statements of Cash Flows for 130
the years ended December 31, 1998, 1997
and 1996.
Notes to Consolidated Financial Statements. 131
</TABLE>
153 of 186
<PAGE> 81
<TABLE>
<S> <C>
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of
Directors authorizing the establishment of
the Registrant - Filed previously with Registration Statement (File No. 2-51911) and
is hereby incorporated by reference.
(2) Not Applicable
(3) Underwriting or Distribution of contracts between the Registrant and Principal
Underwriter - Filed previously with Registration Statement (File No. 2-51911) and is
hereby incorporated by reference.
(4) The form of the variable annuity contract - Filed previously with Registration Statement (File No.
2-51911) and is hereby incorporated by reference.
(5) Variable Annuity Application - Filed previously with Registration Statement (File
No. 2-51911) and is hereby incorporated by reference.
(6) Articles of Incorporation of Depositor - Filed previously with Registration
Statement (File No. 2-51911) and is hereby incorporated by reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed previously with Registration Statement (File No. 2-51911)
and is hereby incorporated by reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
</TABLE>
154 of 186
<PAGE> 82
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
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
300 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
2859 Paces Ferry Road
Atlanta, GA 30339
Ralph M. Paige, Executive Director 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
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
</TABLE>
155 of 186
<PAGE> 83
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
1733A Westwood Avenue
Alliance, OH 44601
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
John R. Cook, Jr. Senior Vice President -
One Nationwide Plaza Chief Communications Officer
Columbus, OH 43215
Phillip C. Gath Senior Vice President -
One Nationwide Plaza Chief Actuary
Columbus, OH 43215
Richard D. Headley Senior Vice President - Chief
One Nationwide Plaza Information Technology
Columbus, OH 43215
Donna A. James Senior Vice President -
One Nationwide Plaza Human Resources
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Douglas C. Robinette Senior Vice President-
One Nationwide Plaza Marketing and Product
Columbus, OH 43215 Management
Susan A. Wolken Senior Vice President - Life
One Nationwide Plaza Company Operations
Columbus, OH 43215
Bruce C. Barnes Vice President - Technology
One Nationwide Plaza Strategy and Planning
Columbus, OH 43215
</TABLE>
156 of 186
<PAGE> 84
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Dennis W. Click Vice President - Secretary
One Nationwide Plaza
Columbus, OH 43215
David A. Diamond Vice President - Enterprise
One Nationwide Plaza Controller
Columbus, OH 43215
Matthew S. Easley Vice President -
One Nationwide Plaza Investment Life Actuarial
Columbus, OH 43215
R. Dennis Noice Vice President - Systems
One Nationwide Plaza
Columbus, OH 43215
Joseph P. Rath Vice President - Office of Product
One Nationwide Plaza and Market Compliance
Columbus, OH 43215
Mark R. Thresher Vice President - Finance and Treasurer
One Nationwide Plaza
Columbus, OH 43215
</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
157 of 186
<PAGE> 85
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
COMPANY STATE/ (SEE ATTACHED PRINCIPAL BUSINESS
COUNTRY OF CHART UNLESS
ORGANIZATION 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 Life Insurance Agency
Affiliate Agency of Ohio, Inc. Ohio Life Insurance Agency
AID Finance Services, Inc. Iowa Holding Company
ALLIED General Agency Company Iowa Managing General Agent and
Surplus Lines Broker (P&C)
ALLIED Group, Inc. Iowa Holding Company
ALLIED Group Insurance Marketing Iowa Direct Marketer (P&C)
Company
ALLIED Group Merchant Banking Iowa Broker-Dealer
Corporation
ALLIED Group Mortgage Company Iowa Mortgage Lender
ALLIED Life Brokerage Agency, Inc. Iowa Insurance Broker
ALLIED Life Financial Corporation Iowa Holding Company
ALLIED Life Insurance Company Iowa Insurance Company
ALLIED Property and Casualty Insurance Iowa Underwrites General P&C
Company Insurance
Allnations, Inc. Ohio Promotes international
cooperative insurance
organizations
AMCO Insurance Company Iowa Underwrites General P&C
Insurance
American Marine Underwriters, Inc. Florida Underwriting Manager
Auto Direkt Insurance Company Germany Insurance Company
CalFarm Insurance Company California Stock Corporation
Caliber Funding Corporation Delaware Stock Corporation
Colonial County Mutual Insurance Texas Insurance Company
Company
Colonial Insurance Company of Wisconsin Insurance Company
Wisconsin
Columbus Insurance Brokerage and Germany Insurance Broker
Service GmbH
Cooperative Service Company Nebraska Insurance Agency
</TABLE>
158 of 186
<PAGE> 86
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
COMPANY STATE/ (SEE ATTACHED PRINCIPAL BUSINESS
COUNTRY OF CHART UNLESS
ORGANIZATION OTHERWISE
INDICATED)
<S> <C> <C> <C>
Depositors Insurance Company Iowa Underwrites P&C insurance
*Employers Life Insurance Company of Wisconsin Life Insurance Company
Wausau
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
of Alabama, Inc.
Financial Horizons Distributors Agency Ohio Insurance Agency
of Ohio, Inc.
Financial Horizons Distributors Agency Oklahoma Insurance Agency
of Oklahoma, Inc.
Financial Horizons Distributors Agency Texas Insurance Agency
of Texas, Inc.
*Financial Horizons Investment Trust Massachusetts Investment Company
Financial Horizons Securities Oklahoma Broker-Dealer
Corporation
GatesMcDonald Health Plus, Inc. Ohio Managed Care Organization
Gates, McDonald & Company Ohio Cost Control
Gates, McDonald & Company of Nevada Nevada Self-insurance administration,
claims examinations and data
processing services
Gates, McDonald & Company of New York, New York Workers' compensation claims
Inc. administration
MedPro Solutions, Inc. Massachusetts Third-party administration
services for workers'
compensation, automobile injury
and disability claims
Insurance Intermediaries, Inc. Ohio Insurance Broker and Insurance
Agency
Irvin L. Schwartz and Associates, Inc. Ohio Insurance Agency
Landmark Financial Services of New New York Life Insurance Agency
York, Inc.
</TABLE>
159 of 186
<PAGE> 87
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
COMPANY STATE/ (SEE ATTACHED PRINCIPAL BUSINESS
COUNTRY OF CHART UNLESS
ORGANIZATION OTHERWISE
INDICATED)
<S> <C> <C> <C>
Leben Direkt Insurance Company Germany Life Insurance Company
Lone Star General Agency, Inc. Texas Insurance Agency
Midwest Printing Services, Inc. Iowa General Printing Services
Morley & Associates Oregon Insurance Broker
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, Great Britain Insurance Company
Ltd.
National Deferred Compensation, Inc. Ohio Administers deferred
compensation plans for public
employees
**National Premium and Benefit Delaware Insurance Administrative
Administration Company Services
Nationwide Advisory Services, Inc. Ohio Investment Management and
Administrative Services
**Nationwide Agency, Inc. Ohio Insurance Agency
Nationwide Agribusiness Insurance Iowa Insurance Company
Company
Nationwide Asset Allocation Trust Massachusetts Investment Company
Nationwide Cash Management Company Ohio Investment Securities Agent
Nationwide Community Urban Ohio Special purpose real estate
Redevelopment Corporation corporation
Nationwide Corporation Ohio Holding Company
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
Nationwide Financial Services Bermuda Life Insurance Company
(Bermuda) Ltd.
Nationwide Financial Services Capital Delaware Statutory Business Trust
Trust
</TABLE>
160 of 186
<PAGE> 88
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
COMPANY STATE/ (SEE ATTACHED PRINCIPAL BUSINESS
COUNTRY OF CHART UNLESS
ORGANIZATION OTHERWISE
INDICATED)
<S> <C> <C> <C>
Nationwide Financial Services Capital Delaware Statutory Business Trust
Trust II
Nationwide Financial Services, Inc. Delaware Holding Company
Nationwide General Insurance Company Ohio Insurance Company
Nationwide Global Holdings, Inc. Ohio Holding Company for
International Operations
Nationwide Health Plans, Inc. Ohio Health Maintenance Organization
*Nationwide Indemnity Company Ohio Reinsurance Company
Nationwide Insurance Company of California Underwriter
America
Nationwide Insurance Company of Florida Ohio Insurance Company
Nationwide Insurance Enterprise Ohio Membership Non-Profit
Foundation Corporation
Nationwide Services Company, LCC Ohio Shared services functions
Nationwide Insurance Golf Charities, Ohio Membership Non-Profit
Inc. Corporation
Nationwide International Underwriters California Underwriting Manager
Nationwide Investing Foundation Michigan Provide investors with
continuous source of investment
*Nationwide Investing Foundation II Massachusetts Common Law Trust
Nationwide Investment Services Oklahoma Registered Broker-Dealer in
Corporation deferred compensation market
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
**Nationwide Life and Annuity Insurance Ohio Life Insurance Company
Company
**Nationwide Life Insurance Company Ohio Life Insurance Company
Nationwide Lloyds Texas Property Insurance
</TABLE>
161 of 186
<PAGE> 89
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
COMPANY STATE/ (SEE ATTACHED PRINCIPAL BUSINESS
COUNTRY OF CHART UNLESS
ORGANIZATION OTHERWISE
INDICATED)
<S> <C> <C> <C>
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 Investment Company
Nationwide Mutual Insurance Company Ohio Mutual Insurance Company
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
of Ohio contracts to members of the
National Education Association
in the state of Ohio
Nationwide Retirement Solutions, Inc. Oklahoma Market variable annuity
of Oklahoma contracts to members of the
National Education Association
in the state of Oklahoma
</TABLE>
162 of 186
<PAGE> 90
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
COMPANY STATE/ (SEE ATTACHED PRINCIPAL BUSINESS
COUNTRY OF CHART UNLESS
ORGANIZATION OTHERWISE
INDICATED)
<S> <C> <C>
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
of Wyoming contracts to members of the
National Education Association
in the state of Wyoming
Nationwide Retirement Solutions Massachusetts Market and administer deferred
Insurance Agency Inc. compensation plans for public
employees
*Nationwide Separate Account Trust Massachusetts Investment Company
Nationwide Trust Company, FSB United States of America Federal Savings Bank
Neckura Holding Company Germany Administrative services for
Neckura Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life Insurance Company
Workers' compensation
Nevada Independent Companies- Nevada administrative services
Construction
Nevada Independent Companies-Health and Nevada Workers' compensation
Nonprofit administrative services
Nevada Workers' compensation
Nevada Independent Companies- administrative services
Hospitality and Entertainment
Nevada Workers' compensation
Nevada Independent Companies- administrative services
Manufacturing
NFS Distributors, Inc. Delaware Holding Company
NWE, Inc. Ohio Special Investments
PanEuroLife Luxembourg Life Insurance
Pension Associates, Inc. Wisconsin Pension plan administration
Portland Investment Services, Inc. Oregon NASD Registered Broker-Dealer
Premier Agency, Inc. Iowa Insurance Agency
Riverview Agency, Inc. Texas Stock Corporation
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
</TABLE>
163 of 186
<PAGE> 91
<TABLE>
<CAPTION>
NO. VOTING
SECURITIES
COMPANY STATE/ (SEE ATTACHED PRINCIPAL BUSINESS
COUNTRY OF CHART UNLESS
ORGANIZATION OTHERWISE
INDICATED)
<S> <C> <C> <C>
Scottsdale Surplus Lines Insurance Arizona Excess and Surplus Lines
Company Insurance Company
SVM Sales GmbH, Neckura Germany Sales support for Neckura
Insurance Group Insurance Group
Union Bond and Trust Company Oregon Oregon state bank with trust
powers
Villanova Capital, Inc. Delaware Holding Company
Villanova Mutual Fund Capital Trust Delaware Business Trust
Villanova SA Capital Trust Delaware Business Trust
**Wausau Preferred Health Insurance Wisconsin Insurance and Reinsurance
Company Company
Western Heritage Insurance Company Arizona Excess and Surplus Lines
Insurance Company
</TABLE>
164 of 186
<PAGE> 92
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
(SEE ATTACHED CHART) UNLESS
STATE OTHERWISE INDICATED
OF ORGANIZATION
COMPANY PRINCIPAL BUSINESS
<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 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account 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 VA Separate Account-Q 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 Fidelity Advisor Ohio Nationwide Life Separate Issuer of Annuity Contracts
Variable Account Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
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
</TABLE>
165 of 186
<PAGE> 93
<TABLE>
<CAPTION>
NO. VOTING SECURITIES
(SEE ATTACHED CHART) UNLESS
STATE OTHERWISE INDICATED
OF ORGANIZATION
COMPANY PRINCIPAL BUSINESS
<S> <C> <C> <C>
* Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance Policies
Account-A Separate Account
Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance Policies
Account-B Separate Account
* Nationwide VL Separate Ohio Nationwide Life and Annuity Issuer of Life Insurance Policies
Account-C Separate Account
Nationwide VL Separate Account-D Ohio Nationwide Life and Annuity Issuer of Life Insurance Policies
Separate Account
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance Policies
Account
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance Policies
Account
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance Policies
Account
Nationwide VLI Separate Account-4 Ohio Nationwide Life Separate Issuer of Life Insurance Policies
Account
* Nationwide VLI Separate Account-5 Ohio Nationwide Life Separate Issuer of Life Insurance Policies
Account
</TABLE>
166 of 186
<PAGE> 94
<TABLE>
<CAPTION>
(left side)
<S> <C> <C> <C>
- - ------------------------
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
- - ------------------------
-------------------------------------------------------------------------------------------------------------------------
| | |
- - --------------------------- --------------------------- ----------------------------
| ALLIED LIFE | | ALLIED | | AID FINANCE |
| FINANCIAL | | GROUP, INC. | | SERVICES, INC. |
| CORPORATION | | (AGI) | | (AID FINANCE) |
| (ALFC) | | | | |
|Common Stock: 850 | |Common Stock: 850 Shares | |Common Stock: 10,000 |
|------------ Shares | |------------ | |------------ Shares |
| |---| | |---| | |
| Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- |
|Casualty- | | |Casualty- | | |Casualty- |
|100% $47,286,429 | | |100% $1,049,237,226| | |100% $19,545,634 |
- - --------------------------- | --------------------------- | ----------------------------
| | |
- - --------------------------- | --------------------------- | ----------------------------
| ALLIED GROUP | | | AMCO | | | ALLIED |
| MERCHANT BANKING | | | INSURANCE COMPANY | | | GROUP INSURANCE |
| CORPORATION | | | (AMCO) | | | MARKETING COMPANY |
|Common Stock: 10,000 | | |Common Stock: 155,991 | | |Common Stock: 20,000 |
|------------ Shares | | |------------ Shares | | |------------ Shares |
| |---| |----| |---| | |
| Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | | ---- |
| | | | | | | |Aid Finance- |
|AFLC-100% $100,000 | | | |AGI-100% $95,925,450| | |100% $16,059,469 |
- - --------------------------- | | --------------------------- | ----------------------------
| | |
- - --------------------------- | | --------------------------- | ----------------------------
| ALLIED LIFE | | | | WESTERN | | | DEPOSITORS |
| BROKERAGE | | | | HERITAGE INSURANCE | | | INSURANCE COMPANY |
| AGENCY, INC. | | | | COMPANY | | | (DEPOSITORS) |
|Common Stock: 500,000 | | | |Common Stock: 4,776,076 | | |Common Stock: 199,991 |
|------------ Shares | | | |------------ Shares | | |------------ Shares |
| |---| |----| | |---| |
| Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | | ---- |
|AFLC-100% $442,695 | | | |AMCO-100% $11,686,037| | |AGI-100% $15,251,842 |
- - --------------------------- | | --------------------------- | ----------------------------
| | |
- - --------------------------- | | --------------------------- | ----------------------------
| ALLIED LIFE | | | | ALLIED | | | ALLIED PROPERTY |
| INSURANCE | | | | GENERAL AGENCY | | | AND CASUALTY |
| COMPANY | | | | COMPANY | | | INSURANCE COMPANY |
|Common Stock: 250,000 | | | |Common Stock: 5,000 | | |Common Stock: 156,822 |
|------------ Shares | | | |------------ Shares | | |------------ Shares |
| |---| |----| | |---| |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|AFLC-100% $41,732,343| |AMCO-100% $135,342 | | |AGI-100% $33,018,634 |
- - --------------------------- --------------------------- | ----------------------------
|
--------------------------- | ----------------------------
| PREMIER | | | ALLIED |
| AGENCY, | | | GROUP MORTGAGE |
| INC. | | | COMPANY |
|Common Stock: 100,000 | | |Common Stock: 9,500 |
|------------ Shares | | |------------ Shares |
| |---|---| |
| Cost | | | Cost |
| ---- | | | ---- |
|AGI-100% $100,000 | | |AGI-100% $213,976 |
--------------------------- | ----------------------------
|
| ----------------------------
| | MIDWEST |
| | PRINTING SERVICES |
| | LTD. |
| |Common Stock: 10,000 |
| |------------ Shares |
|---| |
| Cost |
| ---- |
|AFLC-100% $610,000 |
----------------------------
</TABLE>
<PAGE> 95
<TABLE>
<CAPTION>
NATIONWIDE INSURANCE ENTERPRISE(R) (middle)
<S> <C> <C>
------------------------------------------ ------------------------------------------
| | | |
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |============================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
| | | |
------------------------------------------ ------------------------------------------
| || | |
| || |--------------------------------------------------------------------| |--------------------------
- - --| || |
|| |--------------------------------------------------------------|----------------
|| | |
|| -------------------------------- | -------------------------------- --------------------------------
|| | | | | NATIONWIDE GENERAL | | NECKURA HOLDING |
|| | | | | INSURANCE COMPANY | | COMPANY (NECKURA) |
|| | NATIONWIDE LLOYDS | | | | | |
|| | | | |Common Stock: 20,000 | |Common Stock: 10,000 |
||==| | |---|------------ Shares | |--|------------ Shares |
|| | A TEXAS LLOYDS | | | | | | |
|| | | | | Cost | | | Cost |
|| | | | | ---- | | | ---- |
|| | | | |Casualty-100% $5,944,422 | | |Casualty-100% $87,943,140 |
|| -------------------------------- | -------------------------------- | --------------------------------
|| | |
|| -------------------------------- | -------------------------------- | --------------------------------
|| | FARMLAND MUTUAL | | | NATIONWIDE PROPERTY | | | NECKURA |
|| | INSURANCE COMPANY | | | AND CASUALTY | | | INSURANCE COMPANY |
|| |Guaranty Fund | | | INSURANCE COMPANY | | | |
|| |------------ | | |Common Stock: 60,000 | |--|Common Stock: 6,000 |
||==|Certificate |---| |---|------------ Shares | | |------------ Shares |
|----------- Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | |Neckura- ---- |
|Casualty $500,000 | | | |Casualty-100% $6,000,000 | | |100% DM 6,000,000 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| F & B, INC. | | | | COLONIAL INSURANCE | | | NECKURA LIFE |
| | | | | COMPANY OF WISCONSIN | | | INSURANCE COMPANY |
|Common Stock: 1 Share | | | | (COLONIAL) | | | |
|------------ |---- |---|Common Stock: 1,750 | |--|Common Stock: 4,000 |
| Cost | | | |------------ Shares | | |------------ Shares |
| ---- | | | | Cost | | | Cost |
|Farmland | | | | ---- | | | ---- |
|Mutual-100% $10 | | | |Casualty-100% $41,750,000 | | |Neckura-100% DM 15,825,681 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| COOPERATIVE SERVICE | | | | SCOTTSDALE | | | NECKURA GENERAL |
| COMPANY | | | | INSURANCE COMPANY | | | INSURANCE COMPANY |
|Common Stock: 600 Shares | | | | (SIC) | | | |
|------------ | | | |Common Stock: 30,136 | | |Common Stock: 1,500 |
| Cost |---- |---|------------ Shares | ---- |--|------------ Shares |
| ---- | | | Cost | | | | Cost |
|Farmland $3,506,173 | | | ---- | | | | ---- |
|Mutual-100% | | |Casualty-100% $150,000,000 | | | |Neckura-100% DM 1,656,925 |
-------------------------------- | -------------------------------- | | --------------------------------
| | |
-------------------------------- | -------------------------------- | | --------------------------------
| NATIONWIDE AGRIBUSINESS | | | SCOTTSDALE | | | | COLUMBUS INSURANCE |
| INSURANCE COMPANY | | | SURPLUS LINES | | | | BROKERAGE AND SERVICE |
|Common Stock: 1,000,000 | | | INSURANCE COMPANY | | | | GmbH |
|------------ Shares | | | Common Stock: 10,000 | | | |Common Stock: 1 Share |
| |--------| | ------------ Shares | ---| |--|------------ |
| Cost | | | | | | | |
|Casualty-99.9% ---- | | | Cost | | | | Cost |
|Other Capital: $26,714,335 | | | ---- | | | | ---- |
|------------- | | | SIC-100% $6,000,000 | | | |Neckura-100% DM 51,639 |
|Casualty-Ptd. $ 713,576 | | | | | | | |
-------------------------------- | -------------------------------- | | --------------------------------
| | |
-------------------------------- | -------------------------------- | | --------------------------------
| NATIONAL CASUALTY | | | NATIONAL PREMIUM & | | | | LEBEN DIREKT |
| COMPANY | | | BENEFIT ADMINISTRATION | | | | INSURANCE COMPANY |
| (NC) | | | COMPANY | | | | |
|Common Stock: 100 Shares | | |Common Stock: 10,000 | | | |Common Stock: 4,000 Shares |
|------------ |--------| |------------ Shares |----| |--|------------ |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|Casualty-100% $67,442,439 | |Scottsdale-100% $10,000 | | |Neckura-100% DM 4,000,000 |
-------------------------------- -------------------------------- | --------------------------------
| |
-------------------------------- -------------------------------- | --------------------------------
| NCC OF AMERICA, LTD. | | SVM SALES | | | AUTO DIREKT |
| (INACTIVE) | | GmbH | | | INSURANCE COMPANY |
| | | | | | |
| | |Common Stock: 50 Shares | | |Common Stock: 1500 Shares |
| | |------------ |------------|------------ |
| | | Cost | | Cost |
|NC-100% | | ---- | | ---- |
| | |Neckura-100% DM 50,000 | |Neckura-100% DM 1,643,149 |
| | | | | |
| | | | | |
-------------------------------- -------------------------------- --------------------------------
</TABLE>
<PAGE> 96
<TABLE>
<CAPTION>
(right side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE INSURANCE |
| ENTERPRISE 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 | | | Cost | | | Shares Cost |
| | ---- | | | ---- | | | ------ ---- |
| |Casualty-100% $8,800,000 | | |Casualty-100% $1,000 | | |Casualty 12,992,922 $751,352,485|
| | | | | | | |Fire 649,510 24,007,936|
| | | | | | | | (See Page 2) |
| -------------------------------- | -------------------------------- | ----------------------------------
| | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | NATIONWIDE | | | INSURANCE | | | ALLNATIONS, INC. |
| | INDEMNITY COMPANY | | | INTERMEDIARIES, INC. | | |Common Stock: 10,330 Shares |
| | | | | | | |------------- Cost |
|-----|Common Stock: 28,000 | |----|Common Stock: 1,615 | |--------| ---- |
| |------------ Shares | | |------------ Shares | | |Casualty-18.6% $88,320 |
| | Cost | | | Cost | | |Fire-18.6% $88,463 |
| | ---- | | | ---- | | |Preferred Stock 1466 Shares |
| |Casualty-100% $294,529,000 | | |Casualty-100% $1,615,000 | | |--------------- Cost |
| | | | | | | | ---- |
| | | | | | | |Casualty-6.8% $100,000 |
| | | | | | | |Fire-6.8% $100,000 |
| -------------------------------- | -------------------------------- | ----------------------------------
| | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | LONE STAR | | | NATIONWIDE CASH | | | PENSION ASSOCIATES |
| | GENERAL AGENCY, INC. | | | MANAGEMENT COMPANY | | | OF WAUSAU, INC. |
| | | | |Common Stock: 100 Shares | | |Common Stock: 1,000 Shares |
------|Common Stock: 1,000 | |----|------------ | |--------|------------- |
| |------------ Shares | | | Cost | | | Cost |
| | Cost | | | ---- | | | ---- |
| | ---- | | |Casualty-90% $9,000 | | | |
| |Casualty-100% $5,000,000 | | |NW Adv. Serv. 1,000 | | |Casualty-100% $2,839,392 |
| -------------------------------- | -------------------------------- | ----------------------------------
| || | |
| -------------------------------- | -------------------------------- | ----------------------------------
| | COLONIAL COUNTY MUTUAL | | | NATIONWIDE INSURANCE | | | AMERCIAN MARINE |
| | INSURANCE COMPANY | | | COMPANY OF FLORIDA | | | UNDERWRITERS, INC. |
| | | | |Common Stock: 10,000 | | |Common Stock: 20 Shares |
| |Surplus Debentures | | |------------- Shares | | |------------- |
| |------------------ | |----| | |--------| Cost |
| | Cost | | | Cost | | ---- |
| | ---- | | | ---- | | |
| |Colonial $500,000 | | |Casualty-100% $300,000,000 | |Casualty-100% $5,020 |
| |Lone Star 150,000 | | | | | |
| -------------------------------- | -------------------------------- ----------------------------------
| |
| -------------------------------- | --------------------------------
| | TIG COUNTRYWIDE | | | WAUSAU INTERNATIONAL |
| | INSURANCE COMPANY | | | UNDERWRITERS |
| |Common Stock 12,000 | | | |
| |------------ Shares | | |Common Stock: 1,000 Shares |
|-----| | -----|------------ |
| | Cost | | | Cost |
| | ---- | | | ---- |
| |Casualty-100% $215,273,000 | | |Casualty-100% $10,000 |
| | | | | |
| -------------------------------- | | |
| | --------------------------------
| |
| -------------------------------- | --------------------------------
| | NATIONWIDE INSURANCE | | | NATIONWIDE |
| | ENTERPRISE SERVICES, LTD. | | | ARENA LLC |
| | | | | |
| |Single Member Limited | | | |
|.....|Liability Company | |....| |
| | | |
| | | |
|Casualty-100% | |Casualty-90% |
| | | |
-------------------------------- --------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1998
</TABLE>
Page 1
<PAGE> 97
<TABLE>
<CAPTION>
(Left Side)
<S> <C> <C> <C> <C> <C> <C>
|----------------------------------|-----------------------------------|-------------------------------
| | |
----------------------------- ----------------------------- -----------------------------
| NATIONWIDE LIFE INSURANCE | | NATIONWIDE | | NATIONWIDE FINANCIAL |
| COMPANY (NW LIFE) | | FINANCIAL SERVICES | | INSTITUTION DISTRIBUTORS |
| | | CAPITAL TRUST | | AGENCY, INC. (NFIDAI) |
| Common Stock: 3,814,779 | | Preferred Stock: | | Common Stock: 1,000 |
| ------------ Shares | | --------------- | | ------------ Shares |
| | | | | |
| NFS--100% | | NFS--100% | | NFS--100% |
----------------|------------ ----------------------------- ---------------||------------
| ||
- - ----------------------------- | ----------------------------- ----------------------------- || ----------------------------
| NATIONWIDE LIFE AND | | | NATIONWIDE | | FINANCIAL HORIZONS | || | |
| ANNUITY INSURANCE COMPANY | | | ADVISORY SERVICES, INC. | | DISTRIBUTORS AGENCY | || | |
| | | | (NW ADV. SERV.) | | OF ALABAMA, INC. | || | |
| Common Stock: 66,000 | | | Common Stock: 7,676 | | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--|--| ------------ Shares |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OHIO, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life -100% $58,070,003 | | | NW Life -100% $5,996,261 | || | NFIDAI -100% $100 | || | |
- - ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| || ||
- - ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| NWE, INC. | | | NATIONWIDE | || | LANDMARK FINANCIAL | || | |
| | | | INVESTORS SERVICES, INC. | || | SERVICES OF | || | |
| | | | | || | NEW YORK, INC. | || | |
| Common Stock: 100 | | | Common Stock: 5 Shares | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | ------------ |--|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF OKLAHOMA, INC. |
| Cost | | | Cost | || | Cost | || | |
| ---- | | | ---- | || | ---- | || | |
| NW Life -100% $35,971,375 | | | NW Adv. Serv. -100% $5,000| || | NFIDAI -100% $10,100 | || | |
- - ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| || ||
- - ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| NATIONWIDE INVESTMENT | | | FINANCIAL HORIZONS | || | FINANCIAL HORIZONS | || | |
| SERVICES CORPORATION | | | INVESTMENT TRUST | || | SECURITIES CORP. | || | |
| | | | | || | | || | |
| Common Stock: 5,000 | | | | || | Common Stock: 10,000 | || | FINANCIAL HORIZONS |
| ------------ Shares |--| | |==|| | ------------ Shares |--||==| DISTRIBUTORS AGENCY |
| | | | | || | | || | OF TEXAS, INC. |
| Cost | | | | || | Cost | || | |
| ---- | | | | || | ---- | || | |
| NW Life -100% $529,728 | | | COMMON LAW TRUST | || | NFIDAI -100% $153,000 | || | |
- - ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| || ||
- - ----------------------------- | ----------------------------- || ----------------------------- || ----------------------------
| NATIONWIDE REALTY | | | NATIONWIDE | || | AFFILIATE AGENCY, INC. | || | |
| INVESTORS, LTD. | | | INVESTING | || | | || | |
| | | | FOUNDATION | || | | || | |
| Units: | | | | || | Common Stock: 100 | || | AFFILIATE |
| ------ |..| | |==|| | ------------ Shares |--||==| AGENCY OF |
| | | | | || | | | OHIO, INC. |
| | | | | || | Cost | | |
| NW Life -90% | | | | || | ---- | | |
| NW Mutual-10% | | | COMMON LAW TRUST | || | NFIDAI -100% $100 | | |
- - ----------------------------- | ----------------------------- || ----------------------------- ----------------------------
| ||
- - ----------------------------- | ----------------------------- || -----------------------------
| NATIONWIDE | | | NATIONWIDE | || | NATIONWIDE |
| PROPERTIES, LTD. | | | INVESTING | || | INVESTING |
| | | | FOUNDATION II | || | FOUNDATION III |
| Units: |..| | | || | |
| ------ | | |==||==| |
| | | | || | |
| | | | || | | ----------------------
| NW Life -97.6% | | | || | | | MORLEY RESEARCH |
| NW Mutual -2.4% | | COMMON LAW TRUST | || | OHIO BUSINESS TRUST | | ASSOCIATES, LTD. |
- - ----------------------------- ----------------------------- || ----------------------------- | |
|| |Common Stock: 1,000 |
----------------------------- || ----------------------------- |------------- Shares|------
| NATIONWIDE | || | NATIONWIDE | | Cost |
| SEPARATE ACCOUNT | || | ASSET ALLOCATION TRUST | | ---- |
| TRUST | || | | |Morley-100% $1,000|
| | || | | ----------------------
| |==||==| |
| | | |
| | | |
| | | MASSACHUSETTS |
| COMMON LAW TRUST | | BUSINESS TRUST |
----------------------------- -----------------------------
</TABLE>
<PAGE> 98
<TABLE>
<CAPTION>
(Center)
NATIONWIDE INSURANCE ENTERPRISE (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 $751,352,485 |
|Fire 649,510 24,007,936 |
-------------------|---------------------
|--------------------------------------------------------------
---------------|-------------
| NATIONWIDE FINANCIAL |
| SERVICES, INC. (NFS) |
| |
|Common Stock: Control: |
|------------ ------- |
| |
| |
|Class A Public--100% |
|Class B NW Corp--100% |
---------------|-------------
|
- - -----------------|-------------------------------|-------------------|--------------------------------|-----------------------------
| | | |
-------------|--------------- --------------|-------------- | ---------------|-------------
| MORLEY FINANCIAL | | THE 401(k) COMPANIES, INC.| | | NATIONWIDE RETIREMENT |
| SERVICES, INC. (MORLEY) | | (401(k)) | | | SOLUTIONS, INC. |
|Common Stock: 82,343 | |Common Stock: Control: | | |Common Stock: 236,494 |
|---|------------- Shares | |------------- ------- |--| | |------------- Shares |
| | | |Class A Other-100% | | | | |
| |NFS-100% | |Class B NFS -100% | | | |NRS-100% |
| ----------------------------- ----------------------------- | | ---------------|-------------
| | | |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | MORLEY & | | 401(k) INVESTMENT | | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | ASSOCIATES, INC. | | SERVICES, INC. | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF NEW |
| | | | | | | | ALABAMA | | | MEXICO |
| |Common Stock: 3,500 | | Common Stock: 1,000,000 | | | | Common Stock: 10,000 | | | Common Stock: 1,000 |
|---|------------- Shares | | ------------- Shares |--| | | ------------- Shares |--|--| ------------- Shares |
| | Cost | | Cost | | | | Cost | | | Cost |
| | ---- | | ---- | | | | ---- | | | ---- |
| |Morley-100% $1,000 | |401(k)-100% $7,800 | | | |NRS-100% $1,000 | | |NRS-100% $1,000 |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | | |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | MORLEY CAPITAL | | 401(k) INVESTMENT | | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | MANAGEMENT | | ADVISORS, INC. | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | | ARIZONA | | | SO. DAKOTA |
| |Common Stock: 500 | |Common Stock: 1,000 | | | |Common Stock: 1,000 | | |Common Stock: 1,000 |
|---|------------- Shares | |------------- Shares |--| | |------------- Shares |--|--|------------- Shares |
| | Cost | | Cost | | | | Cost | | | Cost |
| | ---- | | ---- | | | | ---- | | | ---- |
| |Morley-100% $5,000 | |401(k)-100% $1,000 | | | |NRS-100% $1,000 | | |NRS-100% $1,000 |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | | |
| ----------------------------- ----------------------------- | | ----------------------------- | ---------------------------
| | UNION BOND | | 401(k) ICOMPANY | | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | & TRUST COMPANY | | | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | | ARKANSAS | | | WYOMING |
| |Common Stock: 2,000 | |Common Stock: 855,000 | | | |Common Stock: 50,000 | | |Common Stock: 500 |
|---|------------- Shares | |------------- Shares |--| | |------------- Shares |--|--|------------- Shares |
| | Cost | | Cost | | | Cost | | | Cost |
| | ---- | | ---- | | | ---- | | | ---- |
| |Morley-100% $50,000 | |401(k)-100% $1,000 | | |NRS-100% $500 | | |NRS-100% $500 |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | PORTLAND INVESTMENT | | NATIONWIDE TRUST | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | SERVICES, INC. | | COMPANY, FSB | | | SOLUTIONS, INS. AGENCY, | | | SOLUTIONS, INC. OF |
| | | | | | | INC. | | | OHIO |
| |Common Stock: 1,000 | |Common Stock: 2,800,000 | | |Common Stock: 1,000 | | | |
|---|------------- Shares | |------------- Shares |-----| |------------- Shares |--|==| |
| | Cost | | Cost | | | Cost | | | |
| | ---- | | ---- | | | ---- | | | |
| |Morley-100% $25,000 | |NFS-100% $3,500,000 | | |NRS -100% $1,000 | | | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | |
| ----------------------------- ----------------------------- | ---------------------------- | ---------------------------
| | EXCALIBER FUNDING | | NATIONWIDE FINANCIAL | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | CORPORATION | | SERVICES CAPITAL TRUST II | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | MONTANA | | | OKLAHOMA |
| |Common Stock: 1,000 | | | | |Common Stock: 500 | | | |
|---|------------- Shares | | |-----| |------------- Shares |--|==| |
| | Cost | | | | | Cost | | | |
| | ---- | | | | | ---- | | | |
| |Morley-100% $1,000 | |NFS-100% | | |NRS-100% $500 | | | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | |
| ----------------------------- ----------------------------- | ----------------------------- | ---------------------------
| | CALIBER FUNDING | | NFS DISTRIBUTORS INC. | | | NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT |
| | CORPORATION | | | | | SOLUTIONS, INC. OF | | | SOLUTIONS, INC. OF |
| | | | | | | NEVADA | | | TEXAS |
| | | | | | | Common Stock: 1,000 | | | |
|---| | | |-----| | ------------- Shares |--|==| |
| | | | | Cost | | |
| | | | | ---- | | |
|Morley-100% | |NFS-100% | | NRS-100% $1,000 | | |
----------------------------- ----------------------------- ----------------------------- ---------------------------
</TABLE>
<PAGE> 99
<TABLE>
<CAPTION>
(Right)
<S> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------|--------------------|---------------------------------------|
| | |
| ---------------|---------------- --------------|----------------
| | EMPLOYERS LIFE INSURANCE CO. | | GATES MCDONALD |
| | OF WAUSAU (ELIOW) | | & COMPANY (GATES) |
| | | | |
| |Common Stock: 250,000 | |Common Stock: 254 |
| |--|------------- Shares | |--|------------- Shares |
| | | | | | |
| | | Cost | | | Cost |
| | | ---- | | | ---- |
| | |NW CORP. -100% $126,509,480 | | |NW CORP. -100% $25,683,532 |
| | -------------------------------- | -------------------------------
- - ------------ | | |
| -------------------------------- | | -------------------------------- | --------------------------------
| | NATIONWIDE TRUST | | | | WAUSAU PREFERRED | | | HEALTHCARE |
| | COMPANY | | | | HEALTH INSURANCE CO. | | | FIRST, INC. |
| | | | | | | | | |
| |Common Stock: 2,800,000 | | | |Common Stock: 200 | | | |
|--|------------- Shares | | |--|------------- Shares | |--| |
| | | | | | | | |
| | Cost | | | Cost | | | Cost |
| | ---- | | | ---- | | | ---- |
| |NFS-100% $3,500,000 | | |ELIOW -100% $57,413,193 | | |Gates-100% $6,700,000 |
| -------------------------------- | -------------------------------- | --------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------
| | NATIONWIDE FINANCIAL | | | NATIONWIDE GLOBAL | | | GATES MCDONALD & COMPANY |
| | SERVICES (BERMUDA) INC. | | | HOLDINGS, INC. (NGH) | | | OF NEW YORK, INC. |
| | | | | | | | |
| |Common Stock: 250,000 | | |Common Stock: 1 | | |Common Stock: 3 |
|--|------------- Shares | |-----|------------- Share | |--|------------- Shares |
| | | | | | | | |
| | Cost | | | Cost | | | Cost |
| | ---- | | | ---- | | | ---- |
| |NFS-100% $3,500,000 | | |NW CORP.-100% $7,000,000 | | |Gates-100% $106,947 |
| -------------------------------- | -------------------------------- | -------------------------------
| | | |
| -------------------------------- | -------------------------------- | -------------------------------
| | NATIONWIDE DEFERRED | | | NATIONWIDE GLOBAL HOLDINGS | | | GATES MCDONALD & COMPANY |
| | COMPENSATION, INC. | | | -HONG KONG, LIMITED | | | OF NEVADA |
| | | | | | | | |
| | | | |Common Stock: 2 | | |Common Stock: 40 |
|--| | | |------------- Shares | |--|------------- Shares |
| | | | | | | | |
| | | | | | | | Cost |
| | | | | | | | ---- |
| |NFS-100% | | |NGH-100% | | |Gates-100% $93,750 |
| -------------------------------- | -------------------------------- | -------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------
| | IRVIN L. SCHWARTZ | | | NATIONWIDE | | | GATES McDONALD |
| | AND ASSOCIATES, INC. | | | HEALTH PLANS, INC. (NHP) | | | HEALTH PLUS, INC. |
| | | | | | | | |
| |Common Stock: Control | | |Common Stock: 100 | | |Common Stock: 200 |
|--|------------- ------- | |-----|------------- Shares |--| |--|------------- Shares |
| | | | | | | |
| | | | Cost | | | Cost |
|Class A Other-100% | | | ---- | | | ---- |
|Class B NFS -100% | | |NW CORP.-100% $14,603,732 | | |Gates-100% $2,000,000 |
-------------------------------- | -------------------------------- | -------------------------------
| |
-------------------------------- | -------------------------------- |
| MRM INVESTMENTS, INC. | | | NATIONWIDE MANAGEMENT | |
| | | | SYSTEMS, INC. | |
| | | | | |
|Common Stock: 1 | | |Common Stock: 100 | |
|------------- Share |--| |------------- Shares |--|
| | | | |
| Cost | | Cost | |
| ---- | | ---- | |
|NW CORP.-100% $7,000,000 | |NHP Inc.-100% $25,149 | |
-------------------------------- -------------------------------- |
|
-------------------------------- |
| NATIONWIDE | |
| AGENCY, INC. | |
| | |
|Common Stock: 100 | |
|------------ Shares |--|
| |
| Cost |
| ---- |
|NHP Inc.-99% $116,077 |
--------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1998
Page 2
</TABLE>
<PAGE> 100
ITEM 27. NUMBER OF CONTRACT OWNERS
The number of Contract Owners of Contracts as of January 31, 1999 was
3,880.
ITEM 28. INDEMNIFICATION
Provision is made in Nationwide's Amended and Restated Code of
Regulations and expressly authorized by the General Corporation Law of
the State of Ohio, for indemnification by the 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") serves
as principal underwriter and general distributor for the
Nationwide DC Variable Account and the NACo Variable
Account.
169 of 186
<PAGE> 101
(b) NATIONWIDE INVESTMENT SERVICES CORPORATION
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS POSITIONS AND OFFICES WITH UNDERWRITER
<S> <C>
Joseph J. Gasper Chairman of the Board
One Nationwide Plaza
Columbus, Ohio 43215
Richard A. Karas Director and Vice Chairman
One Nationwide Plaza
Columbus, Ohio 43215
Dimon R. McFerson Director, Chairman and Chief Executive Officer
One Nationwide Plaza
Columbus, Ohio 43215
Timothy E. Murphy President
One Nationwide Plaza
Columbus, Ohio 43215
Robert A. Oakley Executive Vice President -
One Nationwide Plaza Chief Financial Officer
Columbus, Ohio 43215
Robert J. Woodward, Jr. Executive Vice President -
One Nationwide Plaza Chief Investment Officer
Columbus, Ohio 43215
Dennis W. Click Vice President and Secretary
One Nationwide Plaza
Columbus, Ohio 43215
Joseph P. Rath Director and Vice President - Office of Product and
One Nationwide Plaza Market Compliance
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
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>
170 of 186
<PAGE> 102
<TABLE>
<CAPTION>
(c) NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
<S> <C> <C> <C> <C>
Nationwide N/A N/A N/A N/A
Investment
Services
Corporation
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
John Davis
Nationwide Life Insurance Company
One Nationwide Plaza
Columbus, OH 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; and
(c) Deliver any Statement of Additional Information and any
financial statements required to be made available under this
Form promptly upon written or oral request.
(d) Represent that any contract offered by the prospectus and
which is issued pursuant to Section 403(b) of the Internal
Revenue Code, is issued by the Registrant in reliance upon,
and in compliance with, the Securities and Exchange
Commission's no-action letter to the American Council of Life
Insurance (publicly available November 28, 1988) which permits
withdrawal restrictions to the extent necessary to comply with
Internal Revenue Code Section 403(b)(11).
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.
171 of 186
<PAGE> 103
Offered by
Nationwide Life Insurance Company
NATIONWIDE LIFE INSURANCE COMPANY
Group Flexible Fund Retirement Contracts
PROSPECTUS
May 1, 1999
172 of 186
<PAGE> 104
NATIONWIDE LIFE INSURANCE COMPANY
GROUP FLEXIBLE FUND RETIREMENT CONTRACTS
ISSUED THROUGH THE NATIONWIDE DC VARIABLE ACCOUNT
(Supplement Dated May 1, 1999 to Prospectus Dated May 1, 1999)
THIS SUPPLEMENT UPDATES CERTAIN INFORMATION CONTAINED IN THE PROSPECTUS AND
SHOULD BE KEPT FOR FUTURE REFERENCE. THIS SUPPLEMENT IS FOR USE ONLY WITH
CONTRACTS ISSUED PURSUANT TO SECTION 403(B) OF THE INTERNAL REVENUE CODE
("TAX-SHELTERED ANNUITY CONTRACTS").
1. The section entitled "SUMMARY OF CONTRACT EXPENSES" in the prospectus is
amended by including the following underlying mutual fund options available
only for Tax-Sheltered Annuity Contracts.
SUMMARY OF CONTRACT EXPENSES
<TABLE>
<S> <C>
PARTICIPANT TRANSACTION EXPENSES
Maximum Contingent Deferred Sales Charge......................................................... 5 %
(as a percentage of purchase payments)
ANNUAL CONTRACT MAINTENANCE CHARGE(1)..................................................................... $15
VARIABLE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
Mortality and Expense Risk Fee................................................................... 0.50 %
Administration Charge............................................................................ 0.45 %
Total Variable Account Annual Expenses........................................................... 0.95 %
UNDERLYING MUTUAL FUND ANNUAL EXPENSES(2)
(as a percentage of underlying mutual fund average net assets)
</TABLE>
<TABLE>
<CAPTION>
Other Total Underlying
Management Fees Expenses Mutual Fund Expenses
<S> <C> <C> <C>
American Century Variable Portfolios, Inc. - American Century 0.97% 0.00% 0.97%
VP Balanced
American Century Variable Portfolios, Inc. - American Century 1.00% 1.00% 1.00%
VP Capital Appreciation
Dreyfus Socially Responsible Growth Fund, Inc. 0.75% 0.05% 0.80%
Dreyfus Stock Index Fund 0.25% 0.01% 0.26%
Fidelity VIP Equity Income Portfolio(4) 0.49% 0.08% 0.57%
Fidelity VIP Growth Portfolio(4) 0.59% 0.07% 0.66%
Fidelity VIP High Income Portfolio(3) 0.58% 0.12% 0.70%
Fidelity VIP Overseas Portfolio(4) 0.74% 0.15% 0.89%
Fidelity VIP II Asset Manager Portfolio(4) 0.54% 0.09% 0.63%
Neuberger Berman AMT Growth Portfolio 0.83% 0.09% 0.92%
Neuberger Berman AMT Limited Maturity Bond Portfolio 0.65% 0.11% 0.76%
Neuberger Berman AMT Partners Portfolio 0.78% 0.06% 0.84%
NSAT Capital Appreciation Fund 0.60% 0.07% 0.67%
NSAT Government Bond Fund 0.50% 0.07% 0.57%
NSAT Money Market Fund 0.40% 0.06% 0.46%
NSAT Total Return Fund 0.59% 0.06% 0.65%
</TABLE>
(1) The Annual Contract Maintenance Charge will also be assessed on the
date that amounts held with respect to a participant are fully
withdrawn from the contract.
(2) The underlying mutual fund expenses shown above are assessed at the
underlying mutual fund level and are not direct charges against
variable account assets or reductions from contract values. These
underlying mutual fund expenses are taken into consideration in
computing each underlying mutual fund's net asset value, which is the
share price used to calculate the variable account's unit value. None
of the above underlying mutual fund options are subject to 12b-1 fees.
(3) The Fidelity VIP High Income Portfolio may invest in lower quality debt
securities commonly referred to as junk bonds.
(4) The investment advisers for the indicated underlying mutual funds have
voluntarily agreed to reimburse a portion of the management fees and/or
other expenses resulting in a reduction of total expenses. Absent any
partial reimbursement, "Management Fees" and "Other Expenses" would
have been 0.49% and 0.08% for Fidelity VIP Equity Income Portfolio,
0.59% and 0.09% for Fidelity VIP Growth Portfolio, 0.74% and 0.17% for
Fidelity VIP Overseas Portfolio, 0.54% and 0.10% for Fidelity VIP II
Asset Manager Portfolio.
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<PAGE> 105
EXAMPLE
The following chart shows the amount of expenses (in dollars) that would be
incurred under this contract assuming a $1,000 investment, 5% annual return, and
no change in expenses. These dollar figures are illustrative only and should not
be considered a representation of past or future expenses. Actual expenses may
be greater or less than those shown below.
<TABLE>
<CAPTION>
If you surrender your Contract If you do not surrender your If you annuitize your
at the end of the applicable Contract at the end of the Contract
time period applicable time period at the end of the applicable
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 Variable 70 112 157 281 20 62 107 231 20 62 107 231
Portfolios, Inc. - American
Century VP Balanced
American Century Variable 70 113 159 284 20 63 109 234 20 63 109 234
Portfolios, Inc. - American
Century VP Capital
Appreciation
Dreyfus Socially responsible 68 107 148 262 18 57 98 212 18 57 98 212
Growth Fund, Inc.
Dreyfux Stock Index Fund 63 90 118 201 13 40 68 151 13 40 68 151
Fidelity VIP Equity Income 66 100 135 236 16 50 85 186 16 50 85 186
Portfolio
Fidelity VIP Growth Portfolio 67 102 140 247 17 52 90 197 17 52 90 197
Fidelity VIP High Income 67 104 142 251 17 54 92 201 17 54 92 201
Portfolio
Fidelity VIP Overseas 69 110 153 272 19 60 103 222 19 60 103 222
Portfolio
Fidelity VIP II Asset Manager 68 105 145 256 18 55 95 206 18 55 95 206
Portfolio
Neuberger Berman AMT Growth 70 111 154 275 20 61 104 225 20 61 104 225
Portfolio
Neuberger Berman AMT Limited 68 106 146 258 18 56 96 208 18 56 96 208
Maturity Bond Portfolio
Neuberger Berman AMT Partners 69 108 150 267 19 58 100 217 19 58 100 217
Portfolio
NSAT - Capital Appreciation 67 103 141 248 17 53 91 198 17 53 91 198
Fund
NSAT Government Bond Portfolio 66 100 135 236 16 50 85 186 16 50 85 186
NSAT - Money Market Fund 65 96 129 224 15 46 79 174 15 46 79 174
NSAT - Total Return Fund 67 102 140 245 17 52 90 195 17 52 90 195
</TABLE>
The Example should not be considered a representation of past or future
expenses. Actual expenses may be greater or lesser than those shown.
The purpose of the Summary of Contract Expenses and Example is to assist the
participant in understanding the various costs and expenses that a participant
will bear directly or indirectly when investing in the contract. The table
reflects expenses of the variable account as well as the underlying mutual fund
investment options. For a more detailed explanation of these expenses, see
"Variable Account Charges and Other Deductions" in the prospectus. In addition
to the expenses shown above, deductions for premium taxes may also be
applicable, depending upon the jurisdiction in which the contract is sold (see
"Premium Taxes" in the prospectus).
174 of 186
<PAGE> 106
2. The section entitled "CONDENSED FINANCIAL INFORMATION" in the prospectus is
amended by adding the following information about the underlying mutual fund
options available for Tax-Sheltered Annuity Contracts.
CONDENSED FINANCIAL INFORMATION
Accumulation unit values (for an accumulation unit
outstanding throughout the period)
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUMULATION UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
American Century 1.509759 1.731354 7,892 1998
Variable Portfolios, 1.316124 1.509759 4,531 1997
Inc. - American 1.184177 1.316124 3,120 1996
Century VP 0.986992 1.184177 1,504 1995
Balanced 1.000000 0.986992 0 1994
American Century 1.570313 1.521919 48,936 1998
Variable Portfolios 1.638699 1.570313 50,033 1997
Inc. - American 1.729155 1.638699 51,629 1996
Century VP 1.331537 1.729155 50,891 1995
Capital 1.360119 1.331537 38,898 1994
Appreciation 1.244720 1.360119 33,128 1993
1.273681 1.244720 21,051 1992
0.906306 1.273681 10,348 1991
1.000000 0.906306 4,711 1990
Dreyfus Stock 2.113257 2.683847 45,862 1998
Index Fund 1.604580 2.113257 21,714 1997
1.322035 1.604580 16,988 1996
0.975745 1.322035 5,213 1995
1.000000 0.975745 782 1994
Dreyfus Socially 1.990292 2.550734 7,611 1998
Responsible 1.564429 1.990292 4,478 1997
Growth Fund 1.302837 1.564429 0 1996
0.977428 1.302837 0 1995
1.000000 0.977428 0 1994
Fidelity VIP 1.898743 2.623533 83,821 1998
Growth Portfolio 1.552351 1.898743 70,171 1997
1.366323 1.552351 52,165 1996
1.018963 1.366323 29,541 1995
1.000000 1.018963 7,026 1994
Fidelity VIP 1.872610 2.070586 104,557 1998
Equity Income 1.475687 1.872610 90,224 1997
Portfolio 1.303642 1.475687 62,324 1996
0.974175 1.303642 37,796 1995
1.000000 0.974175 5,699 1994
</TABLE>
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<PAGE> 107
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUEAT UNIT VALUE ACCUM. UNITS
BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
Fidelity VIP 1.560592 1.478924 29,066 1998
High Income 1.338939 1.560592 29,112 1997
Portfolio 1.185437 1.338939 17,934 1996
0.992271 1.185437 10,485 1995
1.000000 0.992271 1,484 1994
Fidelity VIP 1.276107 1.425217 95,628 1998
Overseas Portfolio 1.154842 1.276107 125,065 1997
1.029809 1.154842 88,581 1996
0.947883 1.029809 55,723 1995
1.000000 0.947883 10,984 1994
Fidelity VIP II 1.502515 1.712317 28,824 1998
Asset Manager 1.257222 1.502515 25,131 1997
Portfolio 1.107535 1.257222 18,427 1996
0.955979 1.107535 10,482 1995
1.000000 0.955979 2,037 1994
Neuberger 2.294545 2.625747 13,331 1998
Berman AMT 1.795607 2.294545 12,306 1997
Growth Portfolio 1.661013 1.795607 9,399 1996
1.272940 1.661013 24,304 1995
1.352530 1.272940 17,238 1994
1.278609 1.352530 12,520 1993
1.178398 1.278609 8,757 1992
0.917001 1.178398 4,358 1991
1.000000 0.917001 0 1990
Neuberger 1.194950 1.235624 9,009 1998
Berman AMT 1.130160 1.194950 7,063 1997
Limited Maturity 1.093904 1.130160 5,977 1996
Bond Portfolio 0.995462 1.093904 2,860 1995
1.000000 0.995462 597 1994
Neuberger 2.179432 2.249692 28,300 1998
Berman AMT 1.676351 2.179432 13,504 1997
Partners Portfolio 1.306186 1.676351 8,811 1996
0.966223 1.306186 5,923 1995
1.000000 0.966223 3,237 1994
</TABLE>
176 of 186
<PAGE> 108
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF
UNIT VALUE UNIT VALUE ACCUM. UNITS
AT BEGINNING AT END OUTSTANDING AT THE
FUND OF PERIOD OF PERIOD END OF THE PERIOD YEAR
<S> <C> <C> <C> <C>
NSAT Government 1.752816 1.890916 10,280 1998
Bond Fund 1.613565 1.752816 8,433 1997
1.574158 1.613565 7,820 1996
1.338281 1.574158 5,714 1995
1.396125 1.338281 971 1994
1.286974 1.396125 632 1993
1.204500 1.286974 1,660 1992
1.041986 1.204500 527 1991
1.000000 1.041986 0 1990
NSAT Capital 2.011485 1998
Appreciation Fund 1.509879 2.011485 0 1997
1.208468 1.509879 0 1996
1.000000 1.208468 0 1995
NSAT Money 1.313205 1.369307 55,619 1998
Market Fund 1.259556 1.313205 6,361 1997
1.209790 1.259556 28,915 1996
1.155984 1.209790 14,512 1995
1.123427 1.155984 2,543 1994
1.103814 1.123427 0 1993
1.077714 1.103814 0 1992
1.028111 1.077714 0 1991
1.000000 1.028111 0 1990
NSAT Total 3.018448 3.530330 41,809 1998
Return Fund 2.354356 3.018448 42,827 1997
(formerly 1.950853 2.354356 19,743 1996
"Common 1.525590 1.950853 11,766 1995
Stock Fund") 1.523742 1.525590 3,996 1994
1.386859 1.523742 845 1993
1.294230 1.386859 500 1992
0.943464 1.294230 69 1991
1.000000 0.943464 0 1990
</TABLE>
177 of 186
<PAGE> 109
3. The section entitled "PARTICIPANT ACCOUNT MAINTENANCE CHARGE" in the
prospectus is amended by adding the following paragraph:
For Tax-Sheltered Annuity Contracts, Nationwide will make a maximum charge
of $15 per participant per year to reimburse Nationwide for certain
administrative expenses relating to the maintenance of individual
participant records and the mailing of periodic statements to participants.
The Contract Maintenance Charges, which are guaranteed never to increase,
are designed only to help Nationwide offset such administrative expenses,
and such charges will not exceed Nationwide's actual administration
expenses under the contracts.
4. The section entitled "SYNOPSIS OF THE CONTRACTS" in the prospectus is
amended by adding the following new section:
PARTICIPANT RIGHTS UNDER TAX-SHELTERED ANNUITY CONTRACTS
Participant rights under the contract are set forth in the plan, if
any, and are described more fully in the Certificate of Participation issued to
each participant by Nationwide. The Certificate describes the rights and
benefits to which the participant is entitled under the contract. The term
contract owner, as used throughout the contract, refers to the purchaser and the
holder of the contract. However, the contract owner's rights are limited by the
plan, if any, the Internal Revenue Code and applicable regulations. Participant
accounts held under the contract shall be non-forfeitable at all times. No
amounts payable under the contract with respect to a participant may be sold,
assigned, discounted, or pledged as collateral for a loan or as a security for
the performance of an obligation or for any other purpose to any person other
than Nationwide. In addition, to the extent permitted by law, no such sum shall
in any way be subject to legal process requiring the payment of any claim
against the payee. Nationwide will accept direction only from the participant
except as otherwise specifically provided in the plan, if any. Nationwide shall
be entitled to rely on any action taken or omitted by the participant, pursuant
to the terms of the contract.
5. The section entitled "CONTRACT SUSPENSION AND TERMINATION" in the
prospectus is amended by deleting the last sentence of that section.
6. The section entitled "APPLICATION OF PURCHASE PAYMENTS" in the prospectus
is amended by adding the following paragraph at the end:
With respect to Tax-Sheltered Annuity Contracts, purchase payments for
each participant may not exceed the contract's allowable portion of the lesser
of the maximum exclusion allowance under Internal Revenue Code Section 403(b),
or the elective deferral limits set forth in Internal Revenue Code Section
402(g), except for amounts eligible for rollover, transfer or exchange treatment
under the Internal Revenue Code. In no event may the purchase payments exceed
the limits described in Internal Revenue Code Section 415. The amount of the
purchase payments and earnings thereon in excess of the limits set forth in
Internal Revenue Code Section 402(g) ("excess deferrals") shall be returned in
accordance with that section to the participant upon written request, without
application of the Contingent Deferred Sales Charge, if any, and in accordance
with the plan, if any. Nationwide may change the required minimum annual
purchase payment to any amount which does not violate the applicable provisions
of the Internal Revenue Code.
7. The section entitled "REDEMPTION OF PARTICIPANT ACCOUNTS" in the prospectus
is amended by adding the following paragraph at the end:
178 of 186
<PAGE> 110
With respect to Tax-Sheltered Annuity Contracts, Section 403(b)(11) of the
Internal Revenue Code prohibits redemptions of purchase payments made
pursuant to a salary reduction agreement (within the meaning of
402(g)(3)(C) of the Internal Revenue Code) before the person reaches age
59-1/2, separates from service, dies, becomes disabled (within the meaning
of Internal Revenue Code Section 72(m)(7)), or faces a financial hardship
as defined by the plan, or, if no plan is specified, as used in Section
403(b)(11)(B) of the Internal Revenue Code and applicable regulations. This
prohibition applies to purchase payments made in years beginning after
December 31, 1988, to earnings on those purchase payments, and to earnings
on amounts held as of December 31, 1988. Hardship redemptions are limited
to the amount of purchase payments attributable to participant elective
contributions and earnings on purchase payments held as of December 31,
1988, and may be subject to a 10% tax penalty. The value of contracts
issued pursuant to Section 403(b) may be transferred to other contracts of
other carriers. However, the exchange, under Section 1035 of the Internal
Revenue Code, of a contract which had an accumulated value prior to January
1, 1989, for a new contract may subject the pre-1989 value to the limits of
Section 403(b)(11). Nationwide issues this contract in reliance upon, and
in compliance with, a Securities and Exchange Commission industry-wide
no-action letter (publicly available November 28, 1988) which permits
withdrawal restrictions to the extent necessary to comply with Section
403(b)(11).
8. The section entitled "RETIREMENT PERIOD" in the prospectus is amended by
Including the following section:
REQUIRED DISTRIBUTION FOR TAX-SHELTERED ANNUITY CONTRACTS
The entire interest of a participant under a contract issued pursuant to
Internal Revenue Code Section 403(b) accruing after December 31, 1986,
will, notwithstanding anything else contained herein, be distributed to the
participant under the Optional Retirement Income Form selected over:
A. the life of the participant or the lives of the participant and
the participant's designated beneficiary; or
B. a period not extending beyond the life expectancy of the
participant or the life expectancy of the participant and the
participant's designated beneficiary.
If the participant's entire interest is to be distributed in equal or
substantially equal payments over a period described in A or B, such
payments will commence no later than the first day of April following the
calendar year In which the participant attains age 70-1/2 (the Required
Beginning Date). In the case of a governmental plan or church plan (as
defined in Internal Revenue Code Section 89(i)(4)), the Required Beginning
Date will be the later of the dates determined under the preceding sentence
or April 1 of the calendar year following the calendar year in which the
participant retires. Payments commencing on the Required Beginning Date
will not be less than the lesser of the quotient obtained by dividing the
entire interest of the participant by the life expectancy of the
participant, or the joint and last survivor expectancy of the participant
and the participant's designated beneficiary (whichever is applicable).
Life expectancy and joint and last survivor expectancy are computed by the
use of return multiples contained in Section 1.72-9 of the Treasury
Regulations.
All Optional Retirement Income Forms described in the prospectus must
comply with the minimum Distribution and incidental death benefit provision
of Internal Revenue Code Section 401(a)(9) and applicable regulations.
9. The section entitled " PARTICIPANT DEATH BEFORE RETIREMENT" in the
prospectus is deleted in its entirety and replaced with the following:
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<PAGE> 111
DEATH BENEFIT BEFORE RETIREMENT
If the participant dies before his or her retirement income commences,
generally the entire participant account value must be distributed within
five years after the participant's death. There are two exceptions: (1) if
payments are to be made to the participant's designated beneficiary and the
distributions begin within one year of the participant's death, payments
may be extended over the life (or a period not exceeding the life
expectancy) of the beneficiary; and (2) if the beneficiary is the surviving
spouse and the distributions begin by the time the participant would have
reached age 70-1/2, payments may be made over the life (or a period not
exceeding life expectancy) of the surviving spouse.
10. References throughout the Prospectus to the "GROUP FIXED FUND RETIREMENT
CONTRACT" are hereby changed to "GROUP FIXED TAX DEFERRED ANNUITY
CONTRACT."
11. "Appendix A: Objectives for Underlying Mutual Funds" in the prospectus is
amended in its entirety by the following underlying mutual funds. These
underlying mutual funds are available only to serve as the underlying
investment for variable annuity contracts and variable life insurance
policies issued through separate accounts of life insurance companies which
may or may not be affiliated. A full description of the underlying mutual
funds, their investment policies and restrictions, risks, charges and
expenses and all other aspects of their operation is contained in the
prospectuses of the underlying mutual funds, which should be read in
conjunction with this prospectus before investing.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN
CENTURY(SM) FAMILY OF INVESTMENTS
American Century Variable Products, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end management investment
company, designed only to provide investment vehicles for variable annuity
and variable life insurance products of insurance companies. American
Century Variable Portfolios, Inc. is managed by American Century Investment
Management, Inc.
-AMERICAN CENTURY VP BALANCED
Investment Objective: Capital growth and current income. The Fund will
seek to achieve its objective by maintaining approximately 60% of the
assets of the Fund in common stocks (including securities convertible
into common stocks and other equity equivalents) that are considered by
management to have better-than-average prospects for appreciation and
approximately 40% in fixed income senior securities. There can be no
assurance that the Fund will achieve its investment objective.
180 of 186
<PAGE> 112
-AMERICAN CENTURY VP CAPITAL APPRECIATION
Investment Objective: Capital growth. The Fund will seek to achieve its
objective by investing in common stocks (including securities
convertible into common stocks and other equity equivalents) that meet
certain fundamental and technical standards of selection and have, in
the opinion of the Fund's investment manager, better than average
potential for appreciation. The Fund tries to stay fully invested in
such securities, regardless of the movement of stock prices generally.
The Fund may invest in cash and cash equivalents temporarily or when it
is unable to find common stocks meeting its criteria of selection. It
may purchase securities only of companies that have a record of at
least three years continuous operation. There can be no assurance that
the Fund will achieve its investment objective
DREYFUS STOCK INDEX FUND, INC.
The Dreyfus Stock Index Fund, Inc. is an open-end, non-diversified,
management investment company. It was incorporated under Maryland law on
January 24, 1989, and commenced operations on September 29, 1989. The
Dreyfus Corporation ("Dreyfus") serves as the Fund's manager, while Mellon
Equity Associates, an affiliate of Dreyfus, serves as the Fund's index
manager.
Investment Objective: To provide investment results that correspond to
the price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index. The Fund is neither sponsored by nor affiliated with
Standard & Poor's Corporation.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
The Dreyfus Socially Responsible Growth Fund, Inc. is an open-end,
diversified, management investment company. It was incorporated under
Maryland law on July 20, 1992, and commenced operations on October 7, 1993.
The Dreyfus Corporation serves as the Fund's investment adviser and
provides day-to-day management of the Fund's portfolio.
Investment Objective: 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 meet traditional investment standards
but which also show evidence that they conduct their business in a
manner that contributes to the enhancement of the quality of life in
America. Current income is secondary to the primary goal.
FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND ("VIP")
The Fund is an open-end, diversified, management investment company
organized as a Massachusetts business trust on November 13, 1981. The
Fund's shares are purchased by insurance companies to fund benefits under
variable insurance and annuity policies. Fidelity Management & Research
Company ("FMR") is the Fund's manager.
-VIP EQUITY-INCOME PORTFOLIO
Investment Objective: To seek reasonable income by investing primarily
in income-producing equity securities. In choosing these securities FMR
also will consider the potential for capital appreciation. The
Portfolio's goal is to achieve a yield which exceeds the composite
yield on the securities comprising the Standard & Poor's 500 Composite
Stock Price Index.
-VIP GROWTH PORTFOLIO
Investment Objective: Seeks to achieve capital appreciation. This
Portfolio will invest in the securities of both well-known and
established companies, and smaller, less well-known companies which may
have a narrow product line or whose securities are thinly traded. These
latter securities will often involve greater risk than may be found in
ordinary investment security. FMR's analysis and expertise plays an
integral role in the selection of securities and, therefore, the
performance of the portfolio. Many securities which FMR believes would
have the greatest potential may be regarded as speculative, and
investment in the Portfolio may involve greater risk than is inherent
in other underlying mutual funds. It is also important to point out
that the Portfolio makes most sense for you if you can afford to ride
out changes in the stock market, because it invests primarily in common
stocks. FMR also can make temporary investments in
181 of 186
<PAGE> 113
securities such as investment-grade bonds, high quality preferred
stocks and short-term notes, for defensive purposes when it believes
market conditions warrant.
-VIP HIGH INCOME PORTFOLIO
Investment Objective: Seeks to obtain a high level of current income by
investing primarily in high-risk, lower-rated, high-yielding, fixed
income securities, while also considering growth capital. The Portfolio
manager will seek high current income normally by investing the
Portfolio's assets as follows:
o at least 65% in income-producing debt securities and preferred
stocks, including convertible securities
o up to 20% in common stocks and other equity securities when
consistent with the Portfolio's primary objective or acquired
as part of a unit combining fixed-income and equity securities
Higher yields are usually available on securities that are lower-rated
or that are unrated. Lower-rated securities are usually defined as Ba
or lower by Moody's; BB or lower by Standard & Poor's and may be deemed
to be of a speculative nature. The Portfolio may also purchase
lower-quality bonds such as those rated Ca3 by Moody's or C- by
Standard & Poor's which provide poor protection for payment of
principal and interest (commonly referred to as "junk bonds"). For a
further discussion of lower-rated securities, please see the "Risks of
Lower-Rated Debt Securities" section of the Portfolio's prospectus.
-VIP OVERSEAS PORTFOLIO
Investment Objective: To seek long term growth of capital primarily
through investments in foreign securities. The Overseas Portfolio
provides a means for investors to diversify their own portfolios by
participating in companies and economics outside of the United States.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II ("VIP II")
The Variable Insurance Products Fund II is an open-end, diversified, management
investment company organized as a Massachusetts business trust on March 21,
1988. The Fund's shares are purchased by insurance companies to fund benefits
under variable insurance and annuity policies. Fidelity Management & Research
Company ("FMR") is the Fund's manager.
-VIP II ASSET MANAGER PORTFOLIO
Investment Objective: To seek high total return with reduced risk over
the long-term by allocating its assets among domestic and foreign
stocks, bonds and short-term fixed income instruments.
NATIONWIDE SEPARATE ACCOUNT TRUST (NSAT)
Nationwide Separate Account Trust (NSAT) is a diversified and open-end
management investment company created under the laws of Massachusetts. The NSAT
offers shares in the four separate mutual funds listed below, each with its own
investment objectives. Currently, shares of the NSAT will be sold only to life
insurance company separate accounts to fund the benefits under variable life
insurance policies or variable annuity contracts issued by life insurance
companies. The assets of the NSAT are managed by Nationwide Advisory Services,
Inc., One Nationwide Plaza, Columbus, Ohio 43215, a wholly-owned subsidiary of
Nationwide Life Insurance Company.
- - -CAPITAL APPRECIATION FUND
Investment Objective: The Fund is designed for investors who are
interested in long-term growth. The Fund seeks to meet its objective
primarily through a diversified portfolio of the common stock of
companies which the investment manager determines have a
better-than-average potential for sustained capital growth over the
long term.
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-GOVERNMENT BOND FUND
Investment Objective: To provide as high a level of income as is
consistent with the preservation of capital. It seeks to achieve its
objective by investing in a diversified portfolio of securities issued
or backed by the U.S. Government, its agencies or instrumentalities.
-MONEY MARKET FUND
Investment Objective: To seek as high a level of income as is
considered consistent with the preservation of capital and liquidity by
investing primarily in money market instruments.
-TOTAL RETURN FUND
Investment Objective: To obtain a reasonable long-term total return
(i.e., earnings growth plus potential dividend yield) on invested
capital from a flexible combination of current return and capital gains
through investments in common stocks, convertible issues, money market
instruments and bonds with a primary emphasis on common stocks.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Neuberger Berman Advisers Management Trust is an open-end diversified management
investment company established as a Massachusetts business trust on December 14,
1983. Shares of the Trust are offered in connection with a certain variable
annuity contracts and variable life insurance policies issued through life
insurance company separate accounts and are also offered directly to qualified
pension and retirement plans outside of the separate account context. The
investment adviser is Neuberger Berman Management Incorporated.
-AMT GROWTH PORTFOLIO
Investment Objective: The Portfolio seeks capital growth through
investments in common stocks of companies that the investment adviser
believes will have above average earnings or otherwise provide
investors with above average potential for capital appreciation. To
maximize this potential, the investment adviser may utilize, from time
to time, securities convertible into common stocks, warrants and
options to purchase such stocks.
-AMT LIMITED MATURITY BOND PORTFOLIO
Investment Objective: To provide the high level of current income,
consistent with low risk to principal and liquidity. As a secondary
objective, it also seeks to enhance its total return through capital
appreciation when market factors, such as falling interest rates and
rising bond prices, indicate that capital appreciation may be available
without significant risk to principal. It seeks to achieve its
objectives through investments in a diversified portfolio of limited
maturity debt securities.
-AMT PARTNERS PORTFOLIO
Investment Objective: To seek capital growth. This Portfolio will seek
to achieve its objective by investing primarily in the common stock of
established companies. Its investment program seeks securities believed
to be undervalued based on fundamentals such as low price-to-earnings
ratios, consistent cash flows, and support from asset values. The
objective of the Partners Portfolio is not fundamental and can be
changed by the Trustees of the Trust without shareholder approval.
Shareholders will, however, receive at least 30 days prior notice
thereof. There is no assurance the investment objective will be met.
12. The section entitled "FEDERAL TAX CONSIDERATIONS" in the prospectus is
amended by adding the following paragraphs at the end:
Recent changes to the Internal Revenue Code permit the rollover of most
distributions from qualified plans to other qualified plans, Individual
Retirement Accounts, or Individual Retirement Annuities. Most distributions
from Tax Sheltered Annuities may be rolled over to other Tax Sheltered
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<PAGE> 115
Annuities, Individual Retirement Accounts or Individual Retirement
Annuities. Distributions which may not be rolled over are those which are:
1. one of series of substantially equal annual (or more frequent)
payments made: a) over the life (or life expectancy) of the
employee, b) the joint lives (or joint life expectancies) of the
employee and the employee's designated beneficiary, or c) for a
specified period of ten years or more; and
2. a required minimum distribution
Any distribution eligible for rollover will be subject to federal tax
withholding at a 20 percent rate unless the distribution is transferred
directly to a Qualified Plan, Individual Retirement Account, or Individual
Retirement Annuity.
You should consult your financial or tax consultant to discuss in detail your
particular tax situation and the use of the contracts.
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<PAGE> 116
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of Nationwide DC Variable Account:
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Services" in the Statement of Additional Information.
KPMG LLP
Columbus, Ohio
April 29, 1999
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<PAGE> 117
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, NATIONWIDE DC VARIABLE ACCOUNT, and the Depositor,
Nationwide Life Insurance Company have caused this Post-Effective Amendment to
be signed on their behalf in the City of Columbus, and State of Ohio, on this
29th day of April, 1999.
NATIONWIDE DC VARIABLE ACCOUNT
-------------------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
-------------------------------------------------
(Depositor)
By/s/JOSEPH P. RATH
-------------------------------------------------
Joseph P. Rath
Vice President- Product and Market Compliance
As required by the Securities Act of 1933, this Post-Effective Amendment has
been signed by the following persons in the capacities indicated on the 29th day
of April, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <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
- - ----------------------------------------- Officer and Director
Joseph J. Gasper
DIMON R. McFERSON Chairman and Chief Executive
- - ----------------------------------------- Officer and Director
Dimon R. McFerson
DAVID O. MILLER Chairman of the Board and
- - ----------------------------------------- Director
David O. Miller
YVONNE L. MONTGOMERY Director
- - -----------------------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President - Chief
- - ----------------------------------------- Financial Officer
Robert A. Oakley
RALPH M. PAIGE Director
- - -----------------------------------------
Ralph M. Paige
JAMES F. PATTERSON Director
- - -----------------------------------------
James F. Patterson
ARDEN L. SHISLER Director By /s/ JOSEPH P. RATH
- - ----------------------------------------- ------------------------------------
Arden L. Shisler Joseph P. Rath
Attorney-in-Fact
ROBERT L. STEWART Director
- - -----------------------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- - -----------------------------------------
Nancy C. Thomas
</TABLE>
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