<PAGE> 1
NATIONWIDE(R) VLI
SEPARATE ACCOUNT
SEMI-ANNUAL REPORT
JUNE 30, 2000
INVESTMENT/LIFE(R)
VAN KAMPEN/
NATIONWIDE LIFE INSURANCE COMPANY
VLO-185-AD (06/00)
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you
the 2000 semi-annual report of the Nationwide VLI Separate
Account.
During the first half of 2000 fixed income and equity markets
took a hiatus from their recent advances. It appears the Federal
Reserve's interest rate hikers are accomplishing the intended
purpose. Recent economic statistics show some moderation in the
areas of home and vehicles sales because of the higher interest
costs. And, there are other favorable indications that the Fed
may yet "glide" the economy to a soft landing. Inflation remains
low. Sustained increases in worker productivity continue to
dampen pricing pressures of an increasingly tight labor pool.
Corporate profitability growth remains viable. An improving
global economy bodes well for U.S. exporting businesses. While
all this provides a positive backdrop, we expect the markets will
continue jittery and volatile during the second half of the year
as uncertainty over further Fed actions persists. However, we
believe patient investors in financial assets will be amply
rewarded when we move beyond this temporary respite.
Nationwide Life was a forerunner in the variable annuity and
variable life insurance business. We continue to develop new and
innovative investment products to better meet your financial
planning and retirement needs. And, we are equally committed to
providing you, our valued customer, the exceptional level of
customer service you expect and deserve.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
August 16, 2000
3
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[THIS PAGE LEFT BLANK INTENTIONALLY]
4
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HOW TO READ THE SEMI-ANNUAL REPORT
This semi-annual report is a presentation of the variable account as a whole and
only describes the underlying contracts and products of the variable account in
general terms. Please note the variable account may have more than one variable
product available. Such products may have different under- lying mutual funds
available than those available in your contract. Therefore, not all funds listed
in this report may be available in your contract. Please refer to your most
recent account statement for specific information about your investment in the
Nationwide VLI Separate Account. Rules and regulations of the United States
Securities and Exchange Commission and recognized conventions of Generally
Accepted Accounting Principals prescribe the format and content of this report.
We also invite you to call our service center at 1-800-547-7548 if you have
questions about your account, or you may access your account using our voice
response unit. And, please visit our web-site at www.bestofamerica.com for
additional information about your contract and to learn more about other
products and services offered by Nationwide Financial.
THE ANNUAL REPORT HAS FOUR MAJOR FINANCIAL SECTIONS:
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNER'S EQUITY
This statement begins on page 6 and lists all of the underlying mutual funds of
the variable account, the number of shares owned, the amount paid for the shares
and their market value as of the close of business on June 30, 2000. The mutual
funds are listed in alphabetical order. The market value of the assets changes
as the underlying mutual funds change in value. As contract owners make exchange
transactions between the funds, the number of shares increases or decreases
accord- ingly. When money is deposited or withdrawn by a contract owner, shares
are correspondingly purchased or redeemed. The total market value of the funds
is equal to the TOTAL INVESTMENTS of the variable account.
ACCOUNTS RECEIVABLE, if applicable, represents an asset of the variable account
for money market fund shares purchased by contract owners and reinvested
dividend shares added to contract owners' accounts, but not yet added to Total
investments. Total investments plus Accounts receivable equal TOTAL ASSETS of
the variable account.
ACCOUNTS PAYABLE, if applicable, is a liability of the variable account for
money market fund shares redeemed by contract owners' but not yet deducted from
Total investments.
Total assets minus Accounts payable equals Contract owners' equity. A summary of
CONTRACT OWNERS' EQUITY by funds series may be found on page 7. This summary
also includes investment return for the reporting period for each fund series.
STATEMENTS OF OPERATIONS AND STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
These statements begin on page 8 and present the financial activity of each
underlying mutual fund sub-account of the variable account, for the periods
indicated.
The INVESTMENT ACTIVITY section shows income to the variable account for
reinvested dividends and capital gain distributions paid by the underlying
mutual funds. Also shown are the mortality, expense and administration charges
which are assessed through the daily unit value calculation and which represent
an expense to the variable account and its contract owners. This section also
shows the realized gain or loss as mutual fund shares are sold, and the change
in unrealized gain or loss, which represents the changes in market value of the
underlying fund shares.
The EQUITY TRANSACTIONS section illustrates the receipt of purchase payments, as
new contracts are sold or additional payments made to existing contracts. Also
presented are deductions from the variable account when the contract owners
withdraw money.
The sum of the above two sections represents the NET CHANGE IN CONTRACT OWNERS'
EQUITY which when added to the beginning Contract owners' equity equals Contract
owners' equity at the end of the reporting period.
NOTES TO FINANCIAL STATEMENTS, beginning on page 11, provide further disclosures
about the variable account and its underlying contract provisions.
5
<PAGE> 5
NATIONWIDE VLI SEPARATE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in Van Kampen Life Investment Trust, at market value:
Asset Allocation Fund
2,271,304 shares (cost $25,929,995) ................................................................ $ 24,734,498
Domestic Income Fund
165,878 shares (cost $1,366,693) ................................................................... 1,230,813
Emerging Growth Fund
152,309 shares (cost $6,504,112) ................................................................... 7,845,417
Enterprise Fund
1,669,516 shares (cost $30,488,664) ................................................................ 42,188,670
Global Equity Fund
98,572 shares (cost $1,378,347) .................................................................... 1,583,066
Government Fund
4,501,174 shares (cost $39,951,651) ................................................................ 38,845,135
Money Market Fund
6,843,100 shares (cost $6,843,100) ................................................................. 6,843,100
Morgan Stanley Real Estate Securities Portfolio
25,607 shares (cost $354,715) ...................................................................... 344,676
----------
Total investments ............................................................................... 123,615,375
Accounts receivable -
----------
Total assets .................................................................................... 123,615,375
ACCOUNTS PAYABLE ............................................................................................ 707
----------
CONTRACT OWNERS' EQUITY ..................................................................................... $ 123,614,668
=============
</TABLE>
6
<PAGE> 6
<TABLE>
<CAPTION>
PERIOD
Contract owners' equity represented by: UNITS UNIT VALUE RETURN*
-------- ---------- -------
<S> <C> <C> <C> <C>
Single Premium contracts issued prior
to April 16, 1990 (policy years 1 through 10):
Emerging Growth Fund............................... 61 $ 49.256896 $ 3,005 11%
Government Fund.................................... 181 22.266646 4,030 4%
Single Premium contracts issued prior.................
to April 16, 1990 (policy years 11 and thereafter):
Asset Allocation Fund.............................. 683,733 35.766629 24,454,825 1%
Domestic Income Fund............................... 56,252 21.122058 1,188,158 0%
Emerging Growth Fund............................... 155,683 50.188331 7,813,470 11%
Enterprise Fund.................................... 698,476 59.926129 41,856,963 6%
Global Equity Fund................................. 77,531 20.348787 1,577,662 (5)%
Government Fund.................................... 1,709,524 22.689476 38,788,204 4%
Money Market Fund.................................. 358,617 19.069001 6,838,468 2%
Morgan Stanley Real Estate
Securities Portfolio............................ 19,651 17.539695 344,673 14%
Single Premium contracts issued
on or after April 16, 1990:
Asset Allocation Fund.............................. 4,832 29.798100 143,984 0%
Domestic Income Fund............................... 2,108 20.244962 42,676 0%
Emerging Growth Fund............................... 599 48.404406 28,994 11%
Enterprise Fund.................................... 2,268 54.699632 124,059 6%
Global Equity Fund................................. 276 19.625357 5,417 (6)%
Government Fund.................................... 3,200 16.620853 53,187 4%
Money Market Fund.................................. 376 13.673111 5,141 2%
Multiple Payment and
Flexible Premium contracts:
Asset Allocation Fund.............................. 4,974 27.318123 135,880 1%
Enterprise Fund.................................... 4,313 47.732874 205,872 6%
======== ========= -------------
$ 123,614,668
=============
</TABLE>
* The period return does not include contract charges satisfied by surrendering
units.
See accompanying notes to financial statements.
7
<PAGE> 7
NATIONWIDE VLI SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
SIX MONTH PERIODS ENDED JUNE 30, 2000, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
-----------------------------------------------
2000 1999 1998
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................... $ 3,798,631 3,454,721 715,078
Mortality and expense charges (note 3) .. (315,405) (299,305) (325,514)
------------- ------------- -------------
Net investment activity ............... 3,483,224 3,155,414 389,564
------------- ------------- -------------
Proceeds from mutual fund shares sold ... 19,501,334 11,822,267 15,248,208
Cost of mutual fund shares sold ......... (15,259,919) (10,391,104) (13,621,860)
------------- ------------- -------------
Realized gain (loss) on investments ... 4,241,415 1,431,163 1,626,348
Change in unrealized gain (loss)
on investments ........................ (8,850,531) (8,122,354) 7,052,946
------------- ------------- -------------
Net gain (loss) on investments ........ (4,609,116) (6,691,191) 8,679,294
------------- ------------- -------------
Reinvested capital gains ................ 6,261,569 5,475,769 1,152,786
------------- ------------- -------------
Net change in contract owners'
equity resulting from operations . 5,135,677 1,939,992 10,221,644
------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payment received from
contract owners ....................... 50,145 34,607 103,122
Transfers between funds ................. -- -- --
Surrenders .............................. (6,963,398) (5,061,144) (4,516,416)
Death benefits (note 4) ................. (1,362,630) (696,850) (1,709,102)
Policy loans (net of repayments) (note 5) 533,379 987,738 541,236
Deductions for surrender charges
(note 2d) ............................. -- (10,061) --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................... (672,917) (589,000) (583,918)
------------- ------------- -------------
Net Equity Transactions ............ (8,415,421) (5,334,710) (6,165,078)
------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ...... (3,279,744) (3,394,718) 4,056,566
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD ................................ 126,894,412 124,866,267 119,254,731
------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ...... $ 123,614,668 121,471,549 123,311,297
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
-----------------------------------------------
2000 1999 1998
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................... 960,568 935,397 28,407
Mortality and expense charges (note 3) .. (63,985) (68,217) (73,528)
------------- ------------- -------------
Net investment activity ............... 896,583 867,180 (45,121)
------------- ------------- -------------
Proceeds from mutual fund shares sold ... 2,371,629 2,594,934 1,635,617
Cost of mutual fund shares sold ......... (2,408,005) (2,502,817) (1,501,272)
------------- ------------- -------------
Realized gain (loss) on investments ... (36,376) 92,117 134,345
Change in unrealized gain (loss)
on investments ........................ (2,650,489) (3,408,234) 1,303,810
------------- ------------- -------------
Net gain (loss) on investments ........ (2,686,865) (3,316,117) 1,438,155
------------- ------------- -------------
Reinvested capital gains ................ 1,991,699 2,818,636 767,858
------------- ------------- -------------
Net change in contract owners'
equity resulting from operations . 201,417 369,699 2,160,892
------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payment received from
contract owners ....................... 9,644 9,564 51,441
Transfers between funds ................. (563,619) (33,557) --
Surrenders .............................. (783,510) (1,459,322) (709,440)
Death benefits (note 4) ................. (490,583) (16,776) (180,870)
Policy loans (net of repayments) (note 5) (183,506) (218,439) 89,260
Deductions for surrender charges
(note 2d) ............................. -- (2,901) --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................... (83,775) (101,194) (94,956)
------------- ------------- -------------
Net equity transactions ............ (2,095,349) (1,822,625) (844,565)
------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ...... (1,893,932) (1,452,927) 1,316,327
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD ................................ 26,628,621 28,452,523 26,542,347
------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ...... 24,734,689 26,999,597 27,858,674
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
DOMESTIC INCOME FUND
-----------------------------------------------
2000 1999 1998
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................... 103,587 104,790 5,786
Mortality and expense charges (note 3) .. (3,274) (4,128) (6,389)
------------- ------------- -------------
Net investment activity ............... 100,313 100,662 (603)
------------- ------------- -------------
Proceeds from mutual fund shares sold ... 91,472 370,517 119,986
Cost of mutual fund shares sold ......... (95,078) (357,658) (117,715)
------------- ------------- -------------
Realized gain (loss) on investments ... (3,606) 12,859 2,271
Change in unrealized gain (loss)
on investments ........................ (94,410) (167,964) 82,391
------------- ------------- -------------
Net gain (loss) on investments ........ (98,016) (155,105) 84,662
------------- ------------- -------------
Reinvested capital gains ................ -- -- --
------------- ------------- -------------
Net change in contract owners'
equity resulting from operations . 2,297 (54,443) 84,059
------------- ------------- -------------
EQUITY TRANSACTIONS:
Purchase payment received from
contract owners ....................... 109 (1,982) 259,689
Transfers between funds ................. (42,297) (22,182) --
Surrenders .............................. -- (150,238) --
Death benefits (note 4) ................. (13,431) (114,882) --
Policy loans (net of repayments) (note 5) (4,628) (3,073) (26,947)
Deductions for surrender charges
(note 2d) ............................. -- (299) --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................... (7,490) (23,216) (14,208)
------------- ------------- -------------
Net equity transactions ............ (67,737) (315,872) 218,534
------------- ------------- -------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ...... (65,440) (370,315) 302,593
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD ................................ 1,296,274 1,817,529 1,970,248
------------- ------------- -------------
CONTRACT OWNERS' EQUITY END OF PERIOD ...... 1,230,834 1,447,214 2,272,841
============= ============= =============
</TABLE>
8
<PAGE> 8
NATIONWIDE VLI SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
SIX MONTH PERIODS ENDED JUNE 30, 2000, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
EMERGING GROWTH FUND ENTERPRISE FUND
----------------------------------------- -----------------------------------------
2000 1999 1998 2000 1999 1998
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................... $ -- -- 870 75,243 112,795 30,666
Mortality and expense charges (note 3) .. (19,219) (7,551) (6,001) (108,429) (90,940) (92,852)
----------- ----------- ----------- ----------- ----------- -----------
Net investment activity ............... (19,219) (7,551) (5,131) (33,186) 21,855 (62,186)
----------- ----------- ----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ... 4,480,804 1,875,031 1,729,822 4,095,786 2,204,980 3,435,562
Cost of mutual fund shares sold ......... (2,320,693) (1,439,003) (1,477,008) (2,019,933) (1,432,971) (2,464,313)
----------- ----------- ----------- ----------- ----------- -----------
Realized gain (loss) on investments ... 2,160,111 436,028 252,814 2,075,853 772,009 971,249
Change in unrealized gain (loss)
on investments ........................ (1,366,317) 182,184 195,332 (3,841,436) (1,158,906) 4,397,245
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments ........ 793,794 618,212 448,146 (1,765,583) (386,897) 5,368,494
----------- ----------- ----------- ----------- ----------- -----------
Reinvested capital gains ................ 22,717 -- -- 4,246,342 2,657,133 376,105
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract owners'
equity resulting from operations . 797,292 610,661 443,015 2,447,573 2,292,091 5,682,413
----------- ----------- ----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payment received from
contract owners ....................... 36,869 158 217,004 5,788 34,568 (11,396)
Transfers between funds ................. 337,982 115,788 -- 73,797 (139,926) --
Surrenders .............................. (302,638) -- -- (3,061,331) (1,342,218) (1,442,827)
Death benefits (note 4) ................. -- (5,049) (78,748) (203,802) (18,865) (559,647)
Policy loans (net of repayments) (note 5) 27,026 (173,079) (59,637) (3,797) (30,420) 332,770
Deductions for surrender charges
(note 2d) ............................. -- -- -- -- (2,668) --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................... (23,690) (14,926) (11,426) (275,053) (140,376) (140,375)
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions ............ 75,549 (77,108) 67,193 (3,464,398) (1,639,905) (1,821,475)
----------- ----------- ----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ...... 872,841 533,553 510,208 (1,016,825) 652,186 3,860,938
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD ................................ 6,972,628 3,036,214 2,046,452 43,203,719 37,398,585 33,589,123
----------- ----------- ----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ...... $ 7,845,469 3,569,767 2,556,660 42,186,894 38,050,771 37,450,061
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
GLOBAL EQUITY FUND
-----------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................... 2,019 3,293 13,847
Mortality and expense charges (note 3) .. (4,047) (2,772) (2,731)
----------- ----------- -----------
Net investment activity ............... (2,028) 521 11,116
----------- ----------- -----------
Proceeds from mutual fund shares sold ... 309,008 198,485 303,232
Cost of mutual fund shares sold ......... (236,394) (201,578) (297,041)
----------- ----------- -----------
Realized gain (loss) on investments ... 72,614 (3,093) 6,191
Change in unrealized gain (loss)
on investments ........................ (159,424) 122,203 170,414
----------- ----------- -----------
Net gain (loss) on investments ........ (86,810) 119,110 176,605
----------- ----------- -----------
Reinvested capital gains ................ 811 -- --
----------- ----------- -----------
Net change in contract owners'
equity resulting from operations . (88,027) 119,631 187,721
----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payment received from
contract owners ....................... 473 3 103,672
Transfers between funds ................. 133,143 (111,750) --
Surrenders .............................. (305,566) -- (158,360)
Death benefits (note 4) ................. -- (10,076) (45,481)
Policy loans (net of repayments) (note 5) 53,878 (17,116) (7,620)
Deductions for surrender charges
(note 2d) ............................. -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................... (21,486) (7,056) (7,046)
----------- ----------- -----------
Net equity transactions ............ (139,558) (145,995) (114,835)
----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ...... (227,585) (26,364) 72,886
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD ................................ 1,810,664 1,230,474 1,217,018
----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ...... 1,583,079 1,204,110 1,289,904
=========== =========== ===========
</TABLE>
(Continued)
9
<PAGE> 9
NATIONWIDE VLI SEPARATE ACCOUNT
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
SIX MONTH PERIODS ENDED JUNE 30, 2000, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
GOVERNMENT FUND MONEY MARKET FUND
----------------------------------------- -----------------------------------------
2000 1999 1998 2000 1999 1998
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................... $ 2,453,361 2,097,895 462,730 189,237 175,600 171,875
Mortality and expense charges (note 3) .. (98,045) (104,720) (125,204) (17,590) (20,042) (17,708)
----------- ----------- ----------- ----------- ----------- -----------
Net investment activity ............... 2,355,316 1,993,175 337,526 171,645 155,558 154,167
----------- ----------- ----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ... 3,093,250 1,630,817 4,490,724 4,998,313 2,873,382 3,201,053
Cost of mutual fund shares sold ......... (3,106,439) (1,498,122) (4,235,603) (4,998,313) (2,873,382) (3,201,053)
----------- ----------- ----------- ----------- ----------- -----------
Realized gain (loss) on investments ... (13,189) 132,695 255,121 -- -- --
Change in unrealized gain (loss)
on investments ........................ (781,139) (3,707,666) 950,686 -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments ........ (794,328) (3,574,971) 1,205,807 -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Reinvested capital gains ................ -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract owners'
equity resulting from operations . 1,560,988 (1,581,796) 1,543,333 171,645 155,558 154,167
----------- ----------- ----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payment received from
contract owners ....................... (3,678) (8,344) (878,188) 803 632 501,959
Transfers between funds ................. (440,231) (237,874) -- 509,366 436,411 --
Surrenders .............................. (2,084,839) (1,093,130) (1,682,350) (416,349) (1,016,236) (523,439)
Death benefits (note 4) ................. (606,836) (306,175) (844,356) (33,064) (225,028) --
Policy loans (net of repayments) (note 5) 692,344 572,595 310,598 (38,334) 857,553 (108,232)
Deductions for surrender charges
(note 2d) ............................. -- (2,173) -- -- (2,020) --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................... (194,155) (228,542) (239,691) (64,394) (71,286) (73,261)
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions ............ (2,637,395) (1,303,643) (3,333,987) (41,972) (19,973) (202,973)
----------- ----------- ----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ...... (1,076,407) (2,885,439) (1,790,654) 129,673 135,585 (48,806)
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD ................................ 39,921,828 44,870,031 46,274,622 6,713,936 7,682,960 6,952,567
----------- ----------- ----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ...... $38,845,421 41,984,592 44,483,968 6,843,609 7,818,545 6,903,761
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
MORGAN STANLEY
REAL ESTATE SECURITIES PORTFOLIO
-----------------------------------------
2000 1999 1998
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................... 14,616 24,951 897
Mortality and expense charges (note 3) .. (816) (937) (1,101)
----------- ----------- -----------
Net investment activity ............... 13,800 24,014 (204)
----------- ----------- -----------
Proceeds from mutual fund shares sold ... 61,072 74,121 332,212
Cost of mutual fund shares sold ......... (75,064) (85,573) (327,855)
----------- ----------- -----------
Realized gain (loss) on investments ... (13,992) (11,452) 4,357
Change in unrealized gain (loss)
on investments ........................ 42,684 16,029 (46,932)
----------- ----------- -----------
Net gain (loss) on investments ........ 28,692 4,577 (42,575)
----------- ----------- -----------
Reinvested capital gains ................ -- -- 8,823
----------- ----------- -----------
Net change in contract owners'
equity resulting from operations . 42,492 28,591 (33,956)
----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payment received from
contract owners ....................... 137 9 (141,059)
Transfers between funds ................. (8,141) (6,910) --
Surrenders .............................. (9,165) -- --
Death benefits (note 4) ................. (14,914) -- --
Policy loans (net of repayments) (note 5) (9,604) (283) 11,044
Deductions for surrender charges
(note 2d) ............................. -- -- --
Redemptions to pay cost of insurance
charges and administration charges
(notes 2b and 2c) ..................... (2,874) (2,405) (2,955)
----------- ----------- -----------
Net equity transactions ............ (44,561) (9,589) (132,970)
----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ...... (2,069) 19,002 (166,926)
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD ................................ 346,742 377,951 662,354
----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ...... 344,673 396,953 495,428
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 10
NATIONWIDE VLI SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000, 1999 AND 1998
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide VLI Separate Account (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
Insurance Company (the Company) on August 8, 1984. The Account has been
registered as a unit investment trust under the Investment Company Act
of 1940.
The Company offers modified single premium, multiple payment and
flexible premium variable life insurance contracts through the Account.
The primary distribution for the contracts is through the brokerage
community; however, other distributors may be utilized.
(b) The Contracts
Prior to December 31, 1990, only contracts without a front-end sales
charge, but with a contingent deferred sales charge and certain other
fees, were offered for purchase. Beginning December 31, 1990, contracts
with a front-end sales charge, a contingent deferred sales charge and
certain other fees, are offered for purchase. See note 2 for a
discussion of policy charges and note 3 for asset charges.
Contract owners may invest in the following funds:
Funds of the Van Kampen Life Investment Trust (Van Kampen LIT)
(formerly Van Kampen American Capital Life Investment Trust);
Van Kampen LIT - Asset Allocation Fund
Van Kampen LIT - Domestic Income Fund
Van Kampen LIT - Emerging Growth Fund
Van Kampen LIT - Enterprise Fund
Van Kampen LIT - Global Equity Fund
Van Kampen LIT - Government Fund
Van Kampen LIT - Money Market Fund
Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio
At June 30, 2000, contract owners have invested in all of the above
funds.
The contract owners' equity is affected by the investment results of
each fund, equity transactions by contract owners and certain policy
charges (see notes 2 and 3). The accompanying financial statements
include only contract owners' purchase payments pertaining to the
variable portions of their contracts and exclude any purchase payments
for fixed dollar benefits, the latter being included in the accounts of
the Company.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
(Continued)
11
<PAGE> 11
NATIONWIDE VLI SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(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 June 30, 2000. Fund purchases and sales
are accounted for on the trade date (date the order to buy or sell is
executed). The cost of investments sold is determined on a specific
identification basis, and dividends (which include capital gain
distributions) are accrued as of 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 provisions of the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(2) POLICY CHARGES
(a) Deductions from Premiums
For single premium contracts, no deduction is made from any premium at
the time of payment. On multiple payment contracts and flexible premium
contracts, the Company deducts a charge for state premium taxes equal
to 2.5% of all premiums received to cover the payment of these premium
taxes. For multiple and flexible premium contracts, the Company also
deducts a sales load from each premium payment received not to exceed
3.5% of each premium payment. The Company may at its sole discretion
reduce this sales loading.
(b) Cost of Insurance
A cost of insurance charge is assessed monthly against each contract by
liquidating units. The amount of the charge is based upon age, sex,
rate class and net amount at risk (death benefit less total contract
value).
(c) Administrative Charges
For single premium contracts, the Company deducts an annual
administrative charge which is determined as follows:
Contracts issued prior to April 16, 1990:
Purchase payments totalling less than $25,000 - $10/month
Purchase payments totalling $25,000 or more - none
Contracts issued on or after April 16, 1990:
Purchase payments totalling less than $25,000 - $90/year ($65/year
in New York)
Purchase payments totalling $25,000 or more - $50/year
For multiple payment contracts the Company currently deducts a monthly
administrative charge of $5 (may deduct up to $7.50, maximum) to
recover policy maintenance, accounting, record keeping and other
administrative expenses.
For flexible premium contracts, the Company currently deducts a monthly
administrative charge of $12.50 during the first policy year and $5 per
month thereafter (may deduct up to $7.50, maximum) to recover policy
maintenance, accounting, record keeping and other administrative
expenses. Additionally, the Company deducts an increase charge of $2.04
per year per $1,000 applied to any increase in the specified amount
during the first 12 months after the increase becomes effective.
The above charges are assessed against each contract by liquidating
units.
12
<PAGE> 12
(d) Surrender Charges
Policy surrenders result in a redemption of the contract value from the
Account and payment of the surrender proceeds to the contract owner or
designee. The surrender proceeds consist of the contract value, less
any outstanding policy loans, and less a surrender charge, if
applicable. The charge is determined according to contract type.
For single premium contracts, the charge is determined based upon a
specified percentage of the original purchase payment. For single
premium contracts issued prior to April 16, 1990, the charge is 8% in
the first year and declines to 0% after the ninth year. For single
premium contracts issued on or after April 16, 1990, the charge is 8.5%
in the first year and declines to 0% after the ninth year.
For multiple payment contracts and flexible premium contracts, the
amount charged is based upon a specified percentage of the initial
surrender charge, which varies by issue age, sex and rate class. The
charge is 100% of the initial surrender charge in the first year, with
certain exceptions, declining to 0% after the ninth year.
The Company may waive the surrender charge for certain contracts in
which the sales expenses normally associated with the distribution of a
contract are
not incurred.
(3) ASSET CHARGES
For single premium contracts, the Company deducts a charge from the
contract to cover mortality and expense risk charges related to operations,
and to recover policy maintenance and premium tax charges. For contracts
issued prior to April 16, 1990, the charge is equal to an annual rate of
.95% during the first ten policy years, and .50% thereafter. A reduction of
charges on these contracts is possible in policy years six through ten for
those contracts achieving certain investment performance criteria; for
contracts issued on or after April 16, 1990, the charge is equal to an
annual rate of 1.30% during the first ten policy years, and 1.00%
thereafter.
For multiple payment contracts and flexible premium contracts, the Company
deducts a charge equal to an annual rate of .80%, with certain exceptions,
to cover mortality and expense risk charges related to operations.
The above charges are assessed through the daily unit value calculation.
The following table provides mortality and expense risk charges by contract
type for the six month period ended June 30, 2000:
<TABLE>
<CAPTION>
ASSET DOMESTIC EMERGING
ALLOCATION INCOME GROWTH ENTERPRISE
TOTAL FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ 33 - - 14 -
Single Premium contracts issued
on or after April 16, 1990.... 2,826 1,008 299 203 869
Multiple Payment and Flexible
Premium contracts............. 1,331 530 - - 801
Reduced Fee on Single
Premium contracts issued
prior to April 16, 1990....... 311,215 62,447 2,975 19,002 106,759
------------ ------------ ------------ ------------ ------------
Total....................... $ 315,405 63,985 3,274 19,219 108,429
============ ============ ============ ============ ============
</TABLE>
(Continued)
13
<PAGE> 13
NATIONWIDE VLI SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
GLOBAL MONEY REAL ESTATE
EQUITY GOVERNMENT MARKET SECURITIES
FUND FUND FUND PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ - 19 - -
Single Premium contracts issued
on or after April 16, 1990.... 38 373 36 -
Multiple Payment and Flexible
Premium contracts............. - - - -
Reduced Fee on Single
Premium contracts issued
prior to April 16, 1990....... 4,009 97,653 17,554 816
------------ ------------ ------------ ------------
Total....................... $ 4,047 98,045 17,590 816
============ ============ ============ ============
</TABLE>
The following table provides mortality and expense risk charges by contract
type for the six month period ended June 30, 1999:
<TABLE>
<CAPTION>
ASSET DOMESTIC EMERGING
ALLOCATION INCOME GROWTH ENTERPRISE
TOTAL FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ 70 - - 21 -
Single Premium contracts issued
on or after April 16, 1990.... 3,642 1,952 351 44 878
Multiple Payment and Flexible
Premium contracts............. 1,098 477 - - 621
Reduced Fee on Single
Premium contracts issued
prior to April 16, 1990....... 294,495 65,788 3,777 7,486 89,441
------------ ------------ ------------ ------------ ------------
Total....................... $ 299,305 68,217 4,128 7,551 90,940
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
GLOBAL MONEY REAL ESTATE
EQUITY GOVERNMENT MARKET SECURITIES
FUND FUND FUND PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ - 49 - -
Single Premium contracts issued
on or after April 16, 1990.... 37 172 197 11
Multiple Payment and Flexible
Premium contracts............. - - - -
Reduced Fee on Single
Premium contracts issued
prior to April 16, 1990....... 2,735 104,499 19,843 926
------------ ------------ ------------ ------------
Total....................... $ 2,772 104,720 20,040 937
============ ============ ============ ============
</TABLE>
14
<PAGE> 14
The following table provides mortality and expense risk charges by contract
type for the six month period ended June 30, 1998:
<TABLE>
<CAPTION>
ASSET DOMESTIC EMERGING
ALLOCATION INCOME GROWTH ENTERPRISE
TOTAL FUND FUND FUND FUND
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ 30,436 8,140 381 5 3,865
Single Premium contracts issued
on or after April 16, 1990.... 4,752 1,343 1,114 478 1,441
Multiple Payment and Flexible
Premium contracts............. 1,009 443 - - 566
Reduced Fee on Single
Premium contracts issued
prior to April 16, 1990....... 289,317 63,602 4,894 5,518 86,980
------------ ------------ ------------ ------------ ------------
Total....................... $ 325,514 73,528 6,389 6,001 92,852
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
GLOBAL MONEY REAL ESTATE
EQUITY GOVERNMENT MARKET SECURITIES
FUND FUND FUND PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ - 17,829 216 -
Single Premium contracts issued
on or after April 16, 1990.... 48 307 11 10
Multiple Payment and Flexible
Premium contracts............. - - - -
Reduced Fee on Single
Premium contracts issued
prior to April 16, 1990....... 2,683 107,068 17,481 1,091
------------ ------------ ------------ ------------
Total....................... $ 2,731 125,204 17,708 1,101
============ ============ ============ ============
</TABLE>
(4) DEATH BENEFITS
Death benefit proceeds result in a redemption of the contract value from
the Account and payment of those proceeds, less any outstanding policy
loans (and policy charges), to the legal beneficiary. For last survivor
flexible premium contracts, the proceeds are payable on the death of the
last surviving insured. In the event that the guaranteed death benefit
exceeds the contract value on the date of death, the excess is paid by the
Company's general account.
(5) POLICY LOANS (NET OF REPAYMENTS)
Contract provisions allow contract owners to borrow up to 90% (50% during
first year of single premium contracts) of a policy's cash surrender value.
For single premium contracts issued prior to April 16, 1990, 6.5% interest
is due and payable annually in advance. For single premium contracts issued
on or after April 16, 1990, multiple payment contracts and flexible premium
contracts, 6% interest is due and payable in advance on the policy
anniversary when there is a loan outstanding on the policy.
At the time the loan is granted, the amount of the loan is transferred from
the Account to the Company's general account as collateral for the
outstanding loan. Collateral amounts in the general account are credited
with the stated rate of interest in effect at the time the loan is made,
subject to a guaranteed minimum rate. Loan repayments result in a transfer
of collateral, including interest, back to the Account.
(6) 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.
15
<PAGE> 15
--------------
NATIONWIDE LIFE INSURANCE COMPANY Bulk Rate
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220 U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
--------------
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
