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NATIONWIDE(R) VLI
SEPARATE ACCOUNT-2
JUNE 30, 1995
[THE BEST OF AMERICA LOGO]
['95 GRAPHIC]
SEMI-ANNUAL REPORT
IN COOPERATION WITH:
DREYFUS CORPORATION
FIDELITY INVESTMENTS
NATIONWIDE FINANCIAL SERVICES, INC.
NEUBERGER & BERMAN MANAGEMENT INCORPORATED
OPPENHEIMER MANAGEMENT CORPORATION
STRONG FUNDS
TWENTIETH CENTURY COMPANIES
VAN ECK ASSOCIATES CORPORATION
[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE:COLUMBUS, OHIO
VLOB-12P (6/95)
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[NATIONWIDE LOGO]
[PHOTO]
PRESIDENT'S MESSAGE
We are pleased to present the 1995 semi-annual report to the Nationwide VLI
Separate Account-2.
The first half of 1995 proved rewarding for both stock and bond fund
investors. During this period, stock funds as a group scored a gain of almost 17
percent while bond funds were ahead by over 9 percent, as measured by Lipper
Analytical Services, Inc.
The economy slowed during the second quarter in deference to the Federal
Reserve's goal of a "soft landing". In early July the Fed trimmed the federal
funds rate 25 basis points, the first easing by the Fed in almost three years.
This move provided additional fuel to the markets in the current quarter.
Continued low inflation, favorable corporate earnings and slow but sustainable
economic growth should support further advances in the equity and fixed income
markets for the remainder of the year and into 1996.
We extend our thanks that you have selected our investment products to help you
meet your financial planning and retirement needs.
/s/ PETER F. FRENZER
--------------------
Peter F. Frenzer, President
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
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CONTENTS
<TABLE>
<S> <C>
HOW TO READ THE SEMI-ANNUAL REPORT.................................................................................... 4
Explanation on how to read and understand the various financial reports
A FEW WORDS ABOUT OUR FUNDS........................................................................................... 6
Fund Objectives and Narratives written by the fund managers*
FUND PERFORMANCES..................................................................................................... 26
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY.......................................................... 30
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY............................................................................................ 32
NOTES TO FINANCIAL STATEMENTS......................................................................................... 33
SCHEDULES OF CHANGES IN UNIT VALUE.................................................................................... 36
</TABLE>
* The discussions refer to two stock market indexes. The Standard &Poor's 500
Index (S&P 500) is an unmanaged index of 500 U.S. common stocks and the
historical performance assumes the reinvestment of dividends. The Morgan
Stanley Capital International Europe, Australia, Far East (EAFE) index is an
unmanaged index of more than 900 companies from these regions. The EAFE Index
reflects the prices of these common stocks translated into U.S. dollars with
dividends reinvested net of any foreign taxes.
The performance figures quoted by the fund managers may not include the annual
mortality, expense and administration charges of the life insurance contract.
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HOW TO READ THE SEMI-ANNUAL REPORT
This Semi-Annual Report is sent to all customers who own a Nationwide life
insurance contract with all or some of the funds in the Nationwide VLI Separate
Account-2 (the Account). The Account is a separate account trust which invests
in twenty-four mutual funds from eight mutual fund houses. An explanation of the
funds and their objectives can be found on pages 6 through 25.
The Semi-Annual Report has three major financial sections.
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
This statement, found on page 30, lists all the funds in the Account, the number
of shares owned, the amount paid for the shares (i.e., cost) and their market
value on June 30, 1995. The market value of the assets change as the underlying
mutual fund shares change in value. As contract owners make exchanges between
the funds, the number of shares in each fund increases and decreases. When money
is deposited by contract owners, shares of the mutual funds are bought by the
Account. The total market value of the funds is equal to the Total investments.
Accounts receivable, if applicable, is an asset of the Account for money market
fund shares added to the contract owners' accounts, but not yet added to Total
investments. Total investments plus Accounts receivable equals Total assets.
Accounts payable, if applicable, is a liability of the Account for money market
fund shares deducted from the contract owners' accounts, but not yet deducted
from Total investments.
Total assets minus Accounts payable equals Contract owners' equity. For a
summary of Contract owners' equity by fund series turn to page 31.
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
These statements, found on page 32, show the activity in the Account from
January 1 to June 30, 1995, 1994 and 1993.
The Investment activity section shows the changes in unrealized gain or loss of
the mutual funds in the Account, realized gain or loss as shares of the funds
are bought and sold, and dividends and capital gains earnings from the
underlying mutual funds.
The Equity transactions section illustrates the purchase payments received by
the Account as new contracts are sold and funds deposited or withdrawn by
existing contract owners.
Expenses are the charges associated with the contract. Note 2 on page 34
outlines these charges.
Net change in contract owners' equity equals Investment activity plus Equity
transactions minus Expenses.
The Contract owners' equity at the beginning of the period plus the Net change
in contract owners' equity equals the Contract owners' equity at the end of the
period. Contract owners' equity at the end of the calendar year will equal the
Contract owners' equity at the beginning of the next year.
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SCHEDULES OF CHANGES IN UNIT VALUE
As a contract owner, you invest in the mutual funds offered in your life
insurance contract. However, you do not buy shares of the mutual fund. Instead,
the Account buys shares of the fund and you in turn purchase units of the
Account. Except for the units surrendered for the annual contract maintenance
charge, the number of units you own will not change unless you contribute to or
withdraw money from your account. The value of your contract can change based on
the value of the units you own. For example, if you purchase 100 units at $10
per unit, the value of your contract is $1,000. If the value of the units
increases to $12 per unit, your contract value increases to $1,200. Therefore,
to determine the value of your account, multiply the number of units of each
fund you own by the fund's unit value.
The Schedules of Changes in Unit Value show you the unit value at the beginning
of the period and at the end of the period. The percentage increase (decrease)
in unit value shows how it changed in value. This is computed by subtracting the
beginning unit value from the ending unit value and dividing the difference by
the beginning unit value. This can be used as a measure of the performance of
the funds over the three semi-annual periods reported.
As you review the following pages of the Semi-Annual Report, the Notes to
Financial Statements on page 33 will also help explain and clarify the various
statements and schedules.
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A FEW WORDS ABOUT OUR FUNDS
[DREYFUS LOGO]
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
OBJECTIVE - To attain long term superior growth through investment in companies
that are socially responsible in several aspects: employee relations, the
environment, product liability, weapons manufacturing, community relations,
women and minority hiring.
NARRATIVE BY DREYFUS CORPORATION
The first six months of 1995 have represented a period of new directions for the
Socially Responsible Growth Fund. Our firm, NCM Capital Management Group was
retained as sub-advisor August of 1994 and the fund was fully-transitioned to
our portfolio management style by December of 1994. In our letter to the
shareholders at that time we outlined our growth-oriented investment style and
the specific changes that the fund had undergone in the first half of the fiscal
year. Many of those changes are beginning to bear fruit as the returns for the
portfolio have begun an upward trend that we believe is indicative of the fund's
longer term prospects. In fact on a calendar year basis (since 12/31/94), the
Socially Responsible Growth Fund has been a top-rated socially-responsible fund
in terms of performance among actively-managed funds. However, the fund does
still trail the S&P 500+ index for the calendar year-to-date (17.76% vs. 20.19%
for the S&P 500), as would be expected, because of the broad transitioning of
the portfolio. Additionally, it is important to note that 1994 and the first
half of 1995 has been a period of much stock market volatility, making it a
particularly difficult time to transition a portfolio. However, we feel that
shareholders will be pleased with the recent improvement in performance.
The most salient issue confronting the equity markets in 1994 was the Federal
Reserve's vigilance in fighting inflation and overly expansive economic growth.
The Fed did this by raising interest rates an unprecedented seven times in a
12-month period. The hope was that by doing so businesses would seek to grow
their bottom lines via productivity enhancements and market share growth rather
than simply raising prices, as has been the case in previous economic cycles.
The volatility that ensued made for a difficult environment for money managers.
Despite this environment our management team made several portfolio changes that
have contributed to the fund's status as a top-rated socially-responsible fund
on a year-to-date basis. In other words, the recent positive trends are
indicative of the longer term prospects for the Socially Responsible Growth
Fund.
In terms of the economic sectors of the fund, we changed many of the weightings.
We cut the Basics sector weighting in half. Basics include chemicals, paper and
forest products, and metals. The pricing environment for these companies became
more negative as the Fed made it clear that inflation was going to be controlled
in this economic cycle. We reorganized our weighting in the Consumer Cyclical
sector as it became obvious that the consumer's high debt position was
preventing their participation in the economic expansion. We moved into names
that would be less sensitive to consumer spending. The most strategic change we
made was to further increase our weightings in the more traditional growth
sectors of the economy, namely Consumer Staples (which include foods and health
care) and Technology. These moves, in combination with the others did the most
to dramatically improve the fund's performance. Our weightings went from
significantly underweighted to market weighted in the Consumer Staples and from
market weighted to overweighted in Technology. Consequently, the average growth
rate of securities in the portfolio rose significantly, as did the trade-off of
average value for average unit of growth. In other words, we greatly improved
the risk/return trade-off of the average security in the portfolio.
+ "Standard & Poor's 500", "S&P 500(R)" are trademarks of the Standard & Poor's
Corporation and have been licensed for use.
The fund is not sponsared, endorsed, sold or promoted by Standard & Poor's
Corporation.
++ Formerly the Dreyfus Life and Annuity Index Fund.
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SOCIALLY RESPONSIBLE GROWTH FUND (CONT'D)
Other secondary sector adjustments we made were in the Financials and Utilities.
We feel that it is appropriate to focus the portfolio into areas that will
provide above average growth relative to the broad market averages and therefore
chose to reduce the weightings in these two areas. However, we did concentrate
the weightings into the stocks of aggressively growing stocks in both sectors.
In the Financial area we focused on fee-oriented businesses, which are less
likely to be impacted by changes in interest rates and in Utilities we are
focused on names that should experience good long term secular growth because of
technological or new product advancements.
Year-to-date there are many individual securities that have contributed nicely
to the positive performance trends of the fund. In the Consumer Cyclical sector,
Capital Cities ABC, Walt Disney, Nike, and Phillips Electronics have had
superior performance. These names represent secular growth stocks that will grow
regardless of the economic environment because of globally-oriented, diversified
operations. Among Consumer Staple stocks in the portfolio that have contributed
to performance, Coca-Cola, Colgate-Palmolive, IBP, Inc., Amgen, Medtronic, and
Merck are a few standouts. The food, beverage and household products companies
have benefited from more positive investor sentiment toward their long term,
globally-driven growth rates. The health care stocks benefited from an improved
outlook for their operations due to the collapse of the Clinton health care
reform initiative.
Stock selection in the Financial area contributed mightily to the fund's
positive results as did a more benign interest rate outlook. Advanta, a credit
card company, and banks such as Citicorp, Bank of New York, and Midlantic, and
specialty financial services companies such as Green Tree Financial, a provider
of mobile home financing, and Federal National Mortgage Corp. have performed
beautifully for the year-to-date period.
Our focus in the Technology sector was in stocks of companies with fairly
established market positions, superior technology, and outstanding management
teams. Individual issues such as 3Com, Applied Materials, Hewlett Packard,
Linear Technology, and Sun Microsystems, were all stellar performers. Each of
these companies stand to benefit not just from demand for a single product, but
a broad, diversified product offering with multiple down-stream beneficiaries.
These qualities lower the risk profile of the fund's technology weighting
relative to the typical technology stock and lowers the general level of
volatility in that sector.
Going forward we feel that the Federal Reserve's hold on the market will
persist; however, this time we expect that the Fed's action will benefit stocks
because rates will actually be reduced rather than raised, as the economy shows
signs of slowing. The Socially Responsible Growth Fund is well positioned to
benefit from such a trend. For the calendar year-to-date the fund is outpacing
most socially-responsible funds by an average of 4.0%. Additionally, the fund is
performing in-line with the average growth fund. Both relative performances are
notable given the strength of the overall market. We are confident that the fund
is positioned to achieve performance superior to funds that do not have our
socially-responsible charter. Now that the transition of fiscal 1995 is over, we
can get down to the business of providing superior returns to our shareholders
while honoring your socially-responsible investment objectives. We are confident
in the outlook for the fund and appreciative of the demonstrated confidence of
our shareholders. We take your socially-responsible directives seriously as we
endeavor to provide the maximum return on and return of shareholder capital.
DREYFUS STOCK INDEX FUND++
OBJECTIVE - To provide investment results that correspond to the price and yield
performance of the S&P 500.
NARRATIVE BY DREYFUS CORPORATION
The objective of the Stock Index Fund 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 Price
Index, better known as the S&P 500.
The manager generally selects stocks for the Fund's portfolio in the order of
their weightings in the S&P 500, beginning with the heaviest weighted stocks.
With respect to the Fund's assets invested in the stocks in the S&P 500, the
percentage of such assets invested in each stock is approximately the same as
the percentage it represents in the S&P 500.
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STOCK INDEX FUND (CONT'D)
The Fund will attempt to achieve a correlation between the performance of its
portfolio and that of the S&P 500 of at least 0.95, without taking into account
expenses. The Fund's ability to correlate its performance with the S&P 500 may
be affected by, among other things, changes in securities markets, the manner in
which the S&P 500 is calculated by Standard & Poor's Corporation, the timing of
purchases and redemptions, the size of the Fund's portfolio, and the size of
cash flow into and out of the Fund. There can be no assurance that the Fund's
investment objective will be achieved and an investment in the Fund involves
risks similar to those of investing in common stocks.
[FIDELITY INVESTMENT LOGO]
FIDELITY
INVESTMENTS
VARIABLE INSURANCE PRODUCTS FUND
EQUITY-INCOME PORTFOLIO
OBJECTIVE - To seek reasonable income by investing primarily in income-producing
equity securities.
AN INTERVIEW WITH BETTINA DOULTON, PORTFOLIO MANAGER
Q. BETTINA, HOW DID THE FUND PERFORM?
A. Although the fund did well relative to its peers, it slightly trailed the
performance of the Standard & Poor's 500 stock index for the six and 12-month
periods ended June 30, 1995. The index had total returns of 20.21% and 26.07%
for those periods, respectively. Because this recent stock market rally was
quite narrow -- led by a few sectors, namely technology, financials and the
large-cap and blue-chip stocks -- relatively few stock mutual funds have topped
the performance of the index thus far in 1995.
Q. THE STOCK MARKET SHOWED A RENEWED VIGOR OVER THE PAST SIX MONTHS. WHAT
ACCOUNTED FOR THIS?
A. The market's strength was driven by investors' belief that the Federal
Reserve Board would manage the economy to a soft landing -- steady, albeit
slower, economic growth and continued low inflation. If achieved, those
conditions are ideal for Corporate America to sustain strong profit growth.
During the six-month period, corporate earnings reports were excellent, which
provided the fuel for stock prices to move higher. Excluding the consistently
outstanding performance of the technology and financial sectors, the market has
been characterized by rapid industry rotation. Investors have spent the past six
months racing from one industry to the next, trying to stay one step ahead of
the crowd. Sometimes, the fund was in the right place at the right time, and
sometimes it wasn't.
Q. WHAT CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. Several of the fund's largest holdings have driven returns recently.
Highlights include Philip Morris. The stock has been rewarded for the company's
strong profit growth and free cash flow; both are attributable to terrific
results in the company's domestic and international tobacco businesses, which
more than offset mediocre results in its food division. Second in line is the
Federal National Mortgage Association (Fannie Mae). Although its stock price
suffered a significant setback last fall, it has since recovered as conditions
in the secondary mortgage market have turned more favorable. IBM was another
strong performer. The company has done an excellent job cutting costs and
cleaning up its balance sheet. In addition, global economic growth and wide
acceptance of the company's new products have contributed to accelerating
revenue growth. Finally, in the energy sector, energy service companies
Schlumberger and Halliburton performed well. Both benefited from improving
worldwide supply/demand dynamics for oil and corporate restructuring efforts.
Elsewhere in the energy sector, however, British Petroleum (BP) and Amerada Hess
have been somewhat disappointing in terms of stock performance. Both are
restructuring stories; BP's stock may just be taking a breather after making
significant gains, while Amerada Hess' turnaround may be just taking a bit
longer than investors had expected.
Q. YOU MORE THAN DOUBLED THE FUND'S STAKE IN FINANCIAL STOCKS; THEY WENT FROM
7.3% OF THE FUND SIX MONTHS AGO TO 17.9% ON JUNE 30 . . .
A. Recent purchases of bank stocks made up most of that increase. Along with the
diversified financial services companies such as American Express and Fannie
Mae, banks had a strong, if volatile, run. My only regret is not owning more of
them early in the period, when they began to outperform. Prices did fall in the
spring, however, which allowed me to buy stocks such as Chemical Banking and
BankAmerica
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EQUITY-INCOME PORTFOLIO (CONT'D)
off their highs. In the coming months, Iexpect the market to drive
bank stock valuations -- prices relative to earnings -- higher. That's because
earnings are becoming more consistent, the industry is consolidating, and
companies are using excess capital to repurchase shares of their own stocks.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. When interest rates fall, as they've done over the past few months, the
market usually rewards stocks with higher valuations. However, we have to keep
in mind that the economy has slowed, which could negatively affect corporate
earnings going forward. The 64-thousand-dollar question then becomes:will the
market's willingness to drive up valuations and look toward an economic
resurgence be enough to offset the negative effects of potential short-term
earnings disappointments? I'm afraid not. Companies that report
less-than-expected earnings growth in the coming months will most likely pay
dearly with falling stock prices. In light of this, I plan to focus intensely on
owning companies that trade at attractive valuations, offer good prospects for
higher earnings through 1996, and are working to enhance shareholder value.
GROWTH PORTFOLIO
OBJECTIVE - Seeks to achieve capital appreciation.
AN INTERVIEW WITH LARRY GREENBERG, PORTFOLIO MANAGER
Q. LARRY, HOW HAS THE FUND DONE OVER THE PAST SIX MONTHS?
A. Quite well. From December 31, 1994, through June 30, 1995, the fund beat the
Standard & Poor's 500 index, which returned 20.21%.
Q. WHAT MADE THE DIFFERENCE?
A. In the second half of 1994, growth stocks began outperforming cyclicals --
stocks in sectors like autos and steel that tend to rise or fall with the
economy. Since then, the economy has slowed and interest rates have been flat or
falling -- a perfect environment for growth stocks. My strategy was to
concentrate on those companies with the fastest earnings growth opportunities
for '95 and '96. This aggressive position, especially in technology, paid off
handsomely when growth stocks rebounded.
Q. IN FACT, OVER 50% OF THE FUND WAS IN TECHNOLOGY AT THE END OF JUNE. WHY SUCH
A HUGE BET?
A. Because on a stock-by-stock basis that's where I'm still finding what I
believe are the best growth opportunities. Technology stocks are benefiting from
strong corporate and consumer demand. Business is booming across all segments --
from PCs and software to semiconductors and networking. Plus, unlike a retailer,
which can only grow as fast as it can build bricks and mortar, a technology
company can grow at any rate. The fund has dozens of companies that are growing
sales well over 100% per year. Finally, despite the fastest sales and earnings
growth of any stocks in the market, many of these companies still have
attractive prices compared to other measures like earnings.
Q. WHERE DID YOU FIND THE BEST OPPORTUNITIES?
A. Across the board, I added new technology names, but I also made bigger
investments in the companies I have the most confidence in. For example, I
significantly boosted the fund's stake in both Intel, which makes
microprocessors like the Pentium chip that are the brains of PCs, and Micron
Technology, one of the few manufacturers of memory chips called DRAMs that go
inside PCs and other electronic equipment. Both stocks posted sizable gains for
the period. I also added to our stake in Applied Materials, the leading supplier
of semiconductor manufacturing equipment, whose sales grew more than 60% this
year. Our biggest investment is still Oracle, the leading provider of software
for client-server set-ups; it continued to benefit as more companies moved away
from mainframes toward PCs linked through networks.
Q. WERE THERE DISAPPOINTMENTS?
A. Sure. The stock price of Sybase, a competitor to Oracle, fell nearly 50% in
the last six months as it ran into problems launching a new product. One of our
biggest positions six months ago was Motorola; it started having some near-term
problems related to oversupply on its cellular handsets, so I cut back even
though the stock's long-term outlook remained attractive. Finally, some
retailers like Home Depot and Lowe's turned in disappointing short-term results
as heavy rains in California and the Southeast hurt business. But many of the
"hard good category killers"(or superstores) I focused on continued to grow
despite the slowdown in overall retail sales that we saw this spring.
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GROWTH PORTFOLIO (CONT'D)
Q. WHY DID YOU CUT BACK IN HEALTH CARE?
A. The fund's health care stake was 3.0% at the end of June, down from 7.7% six
months earlier. During the first half of 1994, uncertainty surrounding President
Clinton's plans for health care reform had hurt the sector. Then, last fall, the
stocks rallied as it became apparent that health care legislation wouldn't pass
anytime soon. But once the Republicans took charge in January, they cast another
cloud over the sector as they promised to re-examine programs like Medicare. So
I decided to watch from the sidelines.
Q. LOOKING AHEAD, WHAT SHOULD SHAREHOLDERS EXPECT?
A. In the past, technology stocks haven't done as well over the summer, as
European demand dries up and new product launches disappear. But this year,
since demand has been so strong, we may see no summer slowdown or one that's
much less pronounced. Nevertheless, shareholders should expect volatility
because the fund is aggressively invested in the fastest growing companies. If
either the technology sector or the market declines, the fund will suffer more
than other stock funds. But it's also in a good position to benefit more than
its peers from a long-term up market, which I believe is more likely.
HIGH INCOME PORTFOLIO
OBJECTIVE - Seeks to obtain a high level of current income by investing
primarily in high risk, lower-rated, high-yielding, fixed income securities,
while also considering growth of capital.
AN INTERVIEW WITH BARRY COFFMAN, PORTFOLIO MANAGER
Q. HOW HAS THE FUND PERFORMED, BARRY?
A. Although the fund did well relative to its peers, it trailed the performance
of the Merrill Lynch High Yield Index, which returned 12.75% and 14.88%,
respectively, for the six and 12-month periods ended June 30, 1995. The index
has a larger percentage of Ba-rated bonds than most high-yield mutual funds,
which tend to be more concentrated in B-rated bonds. Generally speaking,
Ba-rated bonds are more sensitive to changing interest rates, and therefore,
benefited more from the recent decline in interest rates than B-rated bonds. As
a result, very few high yield funds outperformed the index.
Q. WHAT FACTORS CONTRIBUTED TO THE FUND'S PERFORMANCE?
A. As I already mentioned, the fund's relatively low weighting in Ba-rated
securities was the primary reason for its underperformance relative to its
benchmark during the most recent period. On the positive side, we have
maintained a high weighting, compared to the benchmark, in deferred coupon
securities. These bonds sell at a deep discount because they do not pay current
interest for some period, usually three to five years. They generally have
longer durations -- which measures how sensitive their price is to changes in
interest rates -- and therefore, their prices are more volatile. We also avoided
most of the credit disasters that occurred in the market.
Q. WHAT INVESTMENTS HAVE DONE WELL IN THE PAST SIX MONTHS?
A. Revlon continued to benefit from an operational restructuring and the very
successful launch of two key new products: Color Stay lipstick and Age Defying
Makeup. Our Revlon position is concentrated in the most junior securities which
are most sensitive to changes in credit quality, which has been a recent plus.
Another strong performer was Big Flower Press, a large commercial printer of
advertising inserts, comics and television guides. The company was helped by the
strong growth in advertising and the synergies it gained from some recent
acquisitions. Finally, our concentration in casinos and hotels did relatively
well during the period.
Q. GIVEN THE MARKET'S STRENGTH SO FAR IN 1995, WAS IT DIFFICULT TO FIND
OPPORTUNITIES?
A. Not particularly. The new issues market was active and provided ample
opportunity to selectively add new names to the fund. One example was PanAmSat
Corp., which operates an international satellite communications system and
provides satellite services to the broadcasting and business communications
markets. It currently has two satellites operating and also has a large backlog
of contracted time from companies including ESPN and Viacom for two new
satellites it will be
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HIGH INCOME PORTFOLIO (CONT'D)
launching later this year. The company is participating in a joint venture to
provide Direct to Home (DTH) television broadcasting service to Latin America,
similar to the Direct TV service in the United States. Another new issue we
purchased was Stratosphere Corp., a Las Vegas-based casino owned by
industry-leader Grand Casino. These bonds are attractive in part, because in
addition to their 14.25% coupon, they pay additional interest based on a
percentage of the company's cash flow.
Q. WHAT INVESTMENTS DIDN'T FARE AS WELL?
A. The high-yield restaurant sector, in general, did not perform well during the
period due to competitive pressures and a slowing economy. One of our largest
holdings is Flagstar, the parent of Denny's and the largest franchisee of
Hardees. Although Denny's has benefited from an aggressive remodeling program,
Hardees has suffered due to aggressive price promotions from the major burger
chains. Another restaurant chain, American Restaurant Group, also underperformed
partly due to the concentration of its chains in California, where the economy
continues to be weaker than the rest of the country.
Q. WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
A. The probability of the soft landing scenario is increasing, which could
provide a favorable backdrop for the high-yield bond market. Slow economic
growth and low inflation could allow many companies in the high-yield market to
improve their credit quality. Absolute yields remain attractive, and absent a
sharp drop in interest rates from current levels, high-yield bonds could perform
well relative to other fixed-income investments. In my view, the key is to be
selective. I'm focusing on companies that are less cyclical, or sensitive to the
economy, and choosing companies that I think can perform well in a slow-growth
environment. In my view, the uncertainty in the marketplace should provide some
attractive opportunities.
OVERSEAS PORTFOLIO
OBJECTIVE - To seek long term growth of capital primarily through investments in
foreign securities.
AN INTERVIEW WITH JOHN HICKLING, PORTFOLIO MANAGER
Q. JOHN, HOW HAS THE FUND PERFORMED?
A. For the six months and one year ended June 30, 1995, the fund's performance
topped that of the Morgan Stanley EAFE index -- a broad measure of stocks in
Europe, Australia and the Far East. The index had total returns of 2.60% and
1.65% for the six and 12-month periods, respectively.
Q. WHAT WERE THE KEYS TO THE FUND'S PERFORMANCE OVER THE PAST SIX MONTHS?
A. First, I kept the fund fully invested through much of the period. Second,
some of the stocks I picked in Japan and Europe fared well. And finally, the
fund was able to benefit from new investments in emerging markets.
Q. WHY DID THE EAFE INDEX OFFER RELATIVELY LOW RETURNS?
A. While European markets have performed relatively well -- though not as well
as the U.S. market -- emerging markets and Japan have not. Japan was affected by
a number of factors that dampened investor enthusiasm: the Barings debacle, the
Kobe earthquake and the subway gas attack. The Japanese market also was hurt by
the strength of the yen versus the dollar. On the heels of Mexico's devaluation
of the peso in late 1994, emerging markets also struggled, although they appear
to have pretty much bottomed out.
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OVERSEAS PORTFOLIO (CONT'D)
Q. WHAT'S THE STORY BEHIND THE FUND'S INVESTMENTS IN JAPAN?
A. Even though Japan has the highest country representation in the fund, I've
kept the fund underweighted there, relative to the index. I've focused much of
the fund's Japanese investments in technology, including consumer electronic
companies Toshiba and Hitachi, and other manufacturers and exporters that are
poised to take advantage of economic activity both in Japan and globally. While
the technology sector has done well in the U.S., it has been weak in Japan, so I
found valuations to be attractive. The sector recently has shown some strong
gains. In addition, I've targeted some financial stocks. The Japanese market has
started to pick up a bit lately, and brokerage house Nomura Securities is poised
to take advantage because it has been cutting costs aggressively. In addition,
it appears trust banks such as Sumitomo Trust will be able to improve interest
margins -- the difference between what they charge for loans and what they pay
to depositors because of changing regulations.
Q. THE FUND IS OVERWEIGHTED IN EUROPE, RELATIVE TO THE INDEX. WHERE HAVE YOU
FOUND OPPORTUNITIES THERE?
A. Mainly in financial and consumer nondurable stocks, as well as interest
rate-sensitive issues -- because European bond markets have been rallying -- and
cyclicals -- those that tend to rise and fall with the economy. European stocks
have rallied lately, mainly on the strength of the technology sector. In the
short run, I've missed some opportunity there, because I found the tech stocks
to be too expensive and risky. Some of the appealing consumer non-durable names
have been Guinness, Cadbury-Schweppes, Bass and Nestle. Barclay's, National
Westminster, Swiss Bank and C.S. Holdings were among the fund's financial stock
investments. I've added investments in cyclical stocks because they became
cheap, such as paper companies Mo Och Domsjoe and Svenska Cellulosa; auto stocks
Volvo and Peugeot; and tire companies such as Michelin.
Q. WHAT ABOUT THE FUND'S EMERGING MARKET INVESTMENTS?
A. I've been more active there, because, as I said, I felt they had hit bottom,
and there were a lot of very interesting stocks. Among the stocks that have
caught my eye have been Hong Kong/ Shanghai Bank and Hong Kong Land Holdings;
Philippine Long Distance Telephone; the department store Mata Hari and cigarette
manufacturer Gudang Garam in Indonesia; Krung Thai Bank; Telecom Argentina; and
Mexican companies Bancomer, Telmex, Cemex and Grupo Carso.
Q. WHAT'S YOUR OUTLOOK GOING FORWARD?
A. Several factors are important to consider. First of all, it seems most stock
markets reflect the sentiment that any worldwide recession will stay pretty
shallow and that growth will resume. Of course, this is the best possible
scenario. At the same time, if the U.S. market stumbles, one would expect there
to be a drop in foreign markets. In such a scenario, I believe overseas markets
wouldn't drop as far as the U.S. because they haven't gained as much recently,
but it's impossible to say for sure. How the dollar does also will be important.
Going forward, I'll stay with my usual game plan, looking for opportunities in
any markets that appear to have excellent value.
VARIABLE INSURANCE PRODUCTS FUND II
ASSET MANAGER PORTFOLIO
OBJECTIVE - To seek high total return with reduced risk over the long-term by
allocating its assets among stocks, bonds and short term fixed income
securities.
AN INTERVIEW WITH ANDY OFFIT, PORTFOLIO MANAGER
Q. ANDY, HOW DID THE FUND PERFORM?
A. Asset Manager performed much better during the first half of 1995 than it did
during 1994, finishing the period with a solidly positive total return. That
said, the best place to be during the past six months would have been 100% in
the U.S. markets. Because Asset Manager invests a portion of its assets in
foreign stocks and bonds, and nearly all foreign markets trailed their domestic
counterparts, the fund's performance was no doubt disappointing to some
shareholders. Japan, with about 10% of the fund's assets, probably hurt the fund
most.
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<PAGE> 13
ASSET MANAGER PORTFOLIO (CONT'D)
Q. HOW WERE THE FUND'S ASSETS DISTRIBUTED AT THE END OF THE PERIOD?
A. On June 30, 1995, about 55% of the fund's assets was stocks, 30% bonds and
16% cash. That's a more aggressive asset allocation than the fund had six months
ago, when it was 37% stocks, 37% bonds and 26% cash. Having so much of the fund
tied up in bonds and cash early in the period was undoubtedly another factor
contributing to the fund's sluggish performance. Foreign holdings rose slightly
during the period from 27% of the fund's investments to about 30%. Investments
in emerging markets declined sharply to almost nothing, compared to 18% six
months ago.
Q. YOU TOOK OVER MANAGEMENT OF THE FUND FROM BOB BECKWITT IN FEBRUARY. HOW DOES
YOUR INVESTMENT STYLE DIFFER FROM HIS?
A. The similarities are much stronger than the differences, but differences do
exist. Number one, I'm more of a bottom-up investor than Bob is. In other words,
I'm more interested in finding individual companies that meet my investment
criteria than uncovering broad economic trends and trying to capitalize on them.
Number two, when I find an investment I like, I'm more apt to make a larger bet.
There's nothing worse than choosing a good security, watching it go up, and not
owning enough of it. These past several months, I've been concentrating more of
the fund's assets in the investments I believe in most. When I took over, there
were approximately 1,000 different companies represented in the fund; at the end
of June, there were only about 430. This has resulted in a higher turnover ratio
than the fund has had in the past.
Q. WHAT WERE SOME OF YOUR FAVORITE STOCKS?
A. IBM represents the fund's largest holding at about 2.5% of total assets, and
represents about one third of the fund's total investment in technology. IBM's
stock price has more than doubled since it bottomed out almost two years ago but
is still cheap at about nine times earnings. Chrysler and General Motors are two
more of the fund's largest investments. Both stocks have underperformed over the
past 18 months. Wall Street expectations are very low, and the stocks represent
excellent opportunities in a recovering U.S. economy. Among the newer names at
the top of the fund were several promising mid-cap stocks. They included defense
contractor Northrop Grumman, a cash-rich company in a consolidating industry;
U.S. Surgical, a former high-flying medical-supply company currently undergoing
an internal restructuring; and W.R. Grace, which is in the process of shedding
its health-care interests and refocusing on its core specialty-chemical
business.
Q. HOW DID YOU DISTRIBUTE THE FUND'S FIXED INCOME INVESTMENTS?
A. Overall, about 20% of the fund was made up of bonds with maturities of three
years or longer on June 30. About half of those were 10-year U.S. Treasury
bonds, in the current environment, they seem to offer the best balance between
yield and the potential for price gain, without the added risk of longer, term
bonds. Junk bonds, which carry Moody's or S&P credit ratings of BA or BB or
lower and offer a higher yield to compensate for the extra credit risk, were 7%
of the funds assets. I've reduced the fund's exposure recently as prices have
strengthened.
Q. WHAT'S THE OUTLOOK?
A. Domestic stocks had a terrific run during the first half of 1995, ending June
at an all time high; to assume they'll do as well in the second half would be
unreasonable. Foreign stocks, on the other hand, lagged their domestic
counterparts during the period, but could do better in the second half. Japan
looks especially promising. Among the positive signs are a more stable yen; a
high personal savings rate, which represents a vast reservoir of bottled up
consumer demand; and a market full of cheap stocks with attractive earnings.
Accordingly, I'll probably continue reducing exposure of U.S. stocks while
gradually adding more Japanese stocks. In fact, I expect to increase the fund's
overall investments in foreign stocks as long as underperforming overseas
markets remain attractive values.
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[NATIONWIDE FINANCIAL SERVICES, INC. LOGO]
NATIONWIDE(R) SEPARATE ACCOUNT TRUST
CAPITAL APPRECIATION FUND
OBJECTIVE - To obtain long-term growth.
NARRATIVE BY CHARLES BATH, FUND MANAGER
Warner-Lambert is currently the largest holding in the Capital Appreciation
Fund. Warner-Lambert is a very successful consumer products company with a
pharmaceutical division which has been struggling recently due to an important
patent expiration. However, the company has several new pharmaceutical products
which may be available in the next two to three years. For long-term
shareholders the current low valuation is an attractive opportunity to own an
improving diversified consumer products and health care company.
Chrysler Corporation is a large holding of the Fund which has recently been
involved in considerable controversy. The company's largest shareholder has made
and withdrawn an offer to buy the entire company. While somewhat unusual, these
events have highlighted the undervaluation of Chrysler's shares in the
marketplace. I have been baffled by the low valuation accorded Chrysler's
shares. The vastly improved balance sheet and strong competitive position as one
of the world's low cost producers of automobiles should lead to higher valuation
of the shares. Chrysler's management has taken several steps to reward
shareholders by repurchasing shares and raising the dividend. Hopefully,
long-term shareholders will benefit more by continued investment in Chrysler's
shares than is possible through the short-term opportunity provided by a
buy-out.
GOVERNMENT BOND FUND
OBJECTIVE - To provide as high a level of income as is consistent with the
preservation of capital.
NARRATIVE BY WAYNE FRISBEE, FUND MANAGER
In our Annual Report six months ago, we discussed the unusual fundamental value
then available in the bond market. During the first half of 1995 that value was
largely realized as bond market investors were rewarded for their patience after
what had been a very difficult prior year. Long-term interest rates dropped by
125 basis points during this period while rates on intermediate-term assets
dropped by even more. The rates on the five-year U.S. Treasury note, for
instance, fell from 7.83 percent to 5.97 percent.
The rally in the fixed-income markets was largely due to the perception in the
markets that the U.S. Federal Reserve would move away from a policy of
increasing short-term interest rates to slow an economy that had been growing
too fast and would begin to reduce rates to support an economy that was
obviously slowing. Continued reports of subdued inflation has also added
critical support to the market.
The Government Bond Fund reduced market exposure slightly as bond prices rose
while continuing to be invested in sectors of the government, agency, and
mortgage-backed markets perceived to be undervalued. Approximately one-third of
portfolio assets continue to be invested in the Collateralized Mortgage
Obligation (CMO) market. The additional yield on these conservatively-structured
investments continue to make them attractive portfolio holdings. The portfolio
will avoid the risks inherent in the more-risky "derivative" structures that
have received so much negative press coverage.
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<PAGE> 15
MONEY MARKET FUND
OBJECTIVE - To seek as high a level of current income as is considered
consistent with the preservation of capital and liquidity by investing primarily
in money market instruments.
NARRATIVE BY KAREN MADER, FUND MANAGER
On July 6, 1995, the Federal Reserve changed its previous course and lowered the
Federal Funds rate by 25 basis points to 5.75% from 6.00%. In doing so, the
Federal Reserve was expressing concern over a possible slowdown in the economy.
The last time such a cut was done was nearly three years ago in September of
1992. The Fed Funds rate is used to price money market instruments. As a result
yields on money market instruments are also lower. For example, in February
1995, the three month treasury bill had a yield of 6.13%. The current yield is
5.61%.
The Separate Account Money Market Fund continues to invest in only the highest
rated instruments. An internal credit review is completed on every company we
invest in. The Fund's yield remains competitive with the other funds included in
Donoghue's Taxable First Tier Money Market Group.
TOTAL RETURN FUND
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.
NARRATIVE BY JOHN M. SCHAFFNER, FUND MANAGER
Technology stocks have had very strong performance so far this year. Due to high
price volatility, above-average business risk, and generally low dividend
yields, the Total Return Fund's philosophy is to limit investments in this
sector. These limits involve buying only the strongest, best positioned
companies, buying only when the capital gain potential is well in excess of the
risk of loss, and to keep total exposure to a low percentage of Fund assets. The
Fund currently has about a 5% asset weighting in technology, after some recent
sales. The stocks held by the Fund have increased by such large percentages in
the first half of 1995 that even the relatively modest amount held by the Fund
has significantly helped performance. The Fund has more substantial asset
weightings in the Financial sector (about 12%) and Telecommunications (about
10%), both of which have had generally good performance in the first half. While
some individual issues have had negative results, there does not appear to be
any significant sector weaknesses in the Fund's holdings.
A number of attractive buying opportunities appeared during the first quarter,
and the Fund was able to establish new positions in Columbia/ HCA Healthcare,
Magna International and Premark International. The current level of cash remains
at 15%.
The Fund's strategy continues to be one of purchasing companies with clearly
visible business opportunities, at valuation levels that allow for future
improvement. Sales are being made when the fundamental outlook becomes less
clear than is satisfactory, or when valuation levels become uncomfortably high.
15
<PAGE> 16
[NEUBERGER & BERMAN MANAGEMENT INC. LOGO]
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
GROWTH PORTFOLIO
OBJECTIVE - The portfolio seeks capital growth through investments in common
stocks of companies that the investment adviser believes will have above average
potential for capital appreciation.
NARRATIVE BY MARK GOLDSTEIN, PORTFOLIO MANAGER
During the first half of 1995, the patience and discipline we displayed
throughout 1994 was rewarded. The stock selection philosophy and buy/sell
decision making created a Portfolio poised to take advantage of any coming
market strengths. Because many of the Portfolio's holdings are sensitive to
interest rates, in order to get the "pop" we felt this fund could achieve, we
looked for any one of the following market changes in 1995 ... 1) inflation
fears to steady, 2) bond yields to fall, 3) the economy's growth rate to slow,
or 4) corporate earnings growth to fall to single digits. All four occurred and
our returns have raced ahead of the market.
However, even with this favorable backdrop, it will still be the earnings growth
characteristics of the companies we own that will continue to drive stock
appreciation in the Portfolio. We are consistent in our commitment to crafting
our Portfolio with a growth rate ahead of the market and a price-to-earnings
ratio at the market. We will not overpay and believe strongly in our "growth at
a reasonable price" approach.
The strongest industry groups in the Portfolio for the first half of the year
were Technology, Financial Services, and Gaming. An example of an excellent
technology stock is Intel. It has positively affected the Portfolio's
performance as strong PCdemand, coupled with greater processing demand for the
individual units, led to strong overall need for microprocessors.
One of our Financial Services holdings, Citicorp, has continued to show growth
as it built upon the strength of its global consumer franchise. Furthermore,
the company announced a stock buyback in the second quarter showing its renewed
interest in enhancing shareholder value.
The Promus Companies responded favorably to the announcement of a breakup
between its gaming division, Harrah's Entertainment, and its hotel business,
Promus Hotels. This creates two premier management teams in their respective
businesses with clearly focused incentives. Additionally, Circus Circus
benefited from its decision to purchase Goldstrike Resorts.
Overall, we have been pleased with the quality and returns of our holdings this
year. Further, there is no shortage of buying opportunities, even in this record
high equity market. By investing in fast growing companies with entrepreneurial
managements and pristine balance sheets we hope to be able to continue to
provide the shareholder with excellent long-term returns.
LIMITED MATURITY BOND PORTFOLIO
OBJECTIVE - To provide the highest level of total return, consistent with
preservation of capital.
NARRATIVE BY THERESA HAVELL & DIDI WEINBLATT, PORTFOLIO MANAGERS
The last two years have seen extremely volatile interest rate swings in the
Fixed Income markets. The "bulls" ran away in the first three quarters of 1993
only to have the "bears" take over in 1994. By the beginning of 1995, the
"bears" were in full control. Specifically, yields on 2-year Treasury notes were
at 7.7%, while 30-year Treasury bonds stood at 7.9%. With economic growth, and
the threat of rising interest rates, many people predicted 1995 would be a
continuation of the weak 1994 bond market.
Instead, the bond market rallied, with 2-year Treasury note yields falling by
200 basis points from January, 1995 until June 30, 1995 and 30-year Treasury
bond yields declining by 135 basis points during this same time period. During
the last six months, the major question debated was not a matter of if the
Federal Reserve Board (Fed) would lower rates, but when. By the end of June, the
Fixed Income Market had anticipated a cut in interest rates by the Fed, and have
since received it. Fixed income markets in 1995 have had generous total returns,
year-to-date.
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LIMITED MATURITY BOND PORTFOLIO (CONT'D)
During the last few months, we have also seen the widening of corporate bond
spreads. By the end of 1994, with the economy at full-steam, corporate bond
spreads had narrowed to historically tight levels. But with the change of market
sentiment associated with a slower economy, we finally saw this alleviating and
corporate bond spreads widened. We took advantage of this buying opportunity,
and purchased bonds issued by General Motors, Xerox, International Paper and
AT&T, to name a few. We also continued to purchase mortgage-backed securities
issued by agencies of the U.S. Government.
Coming off the bear market of 1994, we entered 1995 at a relatively short
maturity of 2.0 years. Given the uncertainty of the environment, we felt it
prudent to stay close to neutral and kept the Portfolio maturity in the 2.0 to
2.4 year range. This conservative maturity generally detracted from portfolio
performance, while the sector and security selection added value. The net result
was to keep the portfolio return in-line with the generous return of the Merrill
Lynch 1-3 year Treasury Index.
By staying true to our discipline of only having high quality credits and not
attempting to predict the direction of rates we have protected shareholders from
the potential risks of fixed income investing. Our philosophy stresses the
preservation of principal and steady income production. Since inception, the AMT
Limited Maturity Bond Portfolio has provided these advantages as well as
competitive total returns.
PARTNERS PORTFOLIO
OBJECTIVE - The portfolio seeks capital growth through an investment approach
that is designed to increase capital with reasonable risk.
NARRATIVE BY MICHAEL KASSEN, PORTFOLIO MANAGER
The cautious optimism we showed for equity markets coming into 1994 has been met
by one of the greatest short term rallies in market history. We, like other
managers, have benefitted from this run-up, but we did it with selections we
made for the portfolio during last year. We have not been chasing the market,
but rather watching the value selections we made in months past become
recognized by the marketplace.
Two sectors of the market in particular led to our strong positive performance
over the first six months of 1995: Technology and Financial Services. While the
Portfolio was not overweighted in Technology, we maintained a significant
position in a number of excellent stocks; Semiconductors in particular were a
strong industry group. For example, our Portfolio did well with Texas
Instruments, National Semiconductor and Intel. The other notable stock in this
sector was Komag, the leading independent merchant of thin-film storage media to
the disk drive industry. Fundamentals throughout the Technology Industry remain
excellent, but we have cut back our exposure here given the extraordinary
strength of many of the stocks.
In the Financial Services sector, leading equities included the following: Exel
Ltd., a specialty property casualty writer based in Bermuda; First USA, a very
rapidly growing credit card issuer and processor; Countrywide Credit, the
leading mortgage originator; and Citicorp, whose international positioning and
growth prospects distinguish it from the average bank. While Financial Services
stocks have obviously benefitted from the strong bond market, we continue to
believe that this is an area that offers many interesting and reasonably priced
securities.
With broad market values spiraling upwards, one may wonder if true value equity
opportunities are still available. As it turns out, the price-to-earnings
multiple of the market has actually fallen from a year ago from 19.65 to 16.68.
This was made possible by earnings on the S&P 500 skyrocketing 44% over that
same period. As such, our fund managers continue to find excellent long-term
values.
For the coming quarter, we look for continuing strength from the equity markets
thanks to strong earnings reports and falling interest rates. Market sentiment
is very positive and we hope to continue to share in the rally.
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[OPPENHEIMER FUNDS LOGO]
OPPENHEIMER VARIABLE ACCOUNT FUNDS
OPPENHEIMER BOND FUND
OBJECTIVE - Primarily seeks a high level of current income from investments in
high yield fixed-income securities rated "Baa" or better by Moody's or "BBB" or
better by Standard & Poor's. Secondarily, the Fund seeks capital growth when
consistent with its primary objective of high current income.
NARRATIVE BY DAVID NEGRI, FUND MANAGER
In 1994, as the U.S. Federal Reserve undertook the most aggressive moves in its
history to raise interest rates, bond prices and bond mutual funds, including
this one, declined across the board. Over the past six months, however, U.S.
bond markets have improved greatly. And foreign markets although affected by the
devaluation of the Mexican peso in December, are starting to show signs of
recovery this year.
Although we don't anticipate a recession, a slower growth environment may cause
corporate issuers' earnings and cash flows to come under more pressure. As a
result, your manager has been taking a more defensive approach in this sector
and has increased investments in bonds with higher credit quality.
Attractive income opportunities in developed markets such as the U. K., Germany,
and Canada now offer good relative value compared with the U.S Government
market. Long-term, our outlook for selected high growth investment grade
emerging markets remains positive. We especially favor countries without the
financial imbalances that plagued Mexico prior to its devaluation -- for
example, Indonesia, Thailand and Poland.
The Fund's short average maturity helped relative performance last year, but has
slightly hindered performance so far this year as U.S. Treasuries rallied for
the first half of 1995. The average maturity of the Fund has been increased, but
the manager remains cautious as economic growth is expected to continue and will
likely push interest rates higher.
Looking back as demonstrated last year, the bond markets are subject to
fluctuations, and these shifts may sometimes be sharp. For the long term,
however, we believe that the outlook is excellent.
We thank you for your trust in allowing us to manage a portion of your
investments and we look forward to continuing to do our best to help you reach
your investment goals.
OPPENHEIMER GLOBAL SECURITIES FUND
OBJECTIVE - Seeks capital growth by investing in a diversified portfolio of
foreign and domestic stocks.
NARRATIVE BY GEORGE EVANS, FUND MANAGER
As the weakness of emerging markets in 1994 continued into the first half of
this year, the Fund's manager continued to reduce investments in these markets
and increase investments in areas that he feels present superior opportunities,
such as Europe and the U.S.
Your manager believes economic recovery is gaining steam across the continent
and the restructuring of European industry for global competitiveness has
proceeded at a remarkable pace. While many companies are dealing with the
pressures of the declining U.S. dollar, which makes U.S. goods cheaper abroad,
they are dealing with those pressures well. And as the dollar rises -- as your
manager believes it will as the U.S. trade deficit lessens and the need to
support the Mexican peso abates -- the strength of European industry should be
reflected in solid gains in sales, earnings, and stock prices of European
companies.
Elsewhere as capital inflows to many emerging markets diminish, offshore markets
should return to their historic pattern of differentiated performance, based on
the fundamentals of their economies, markets and individual companies. And in
your manager's view, based on extensive global investing experience, this
development has created outstanding opportunities for the Fund to find value at
attractive prices across many markets.
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OPPENHEIMER GLOBAL SECURITIES FUND (CONT'D)
For example, stock prices in most markets across Latin America have been
affected by the devaluation of the Mexican peso. In many of these countries,
your manager believes the downturn simply isn't justified. Chile and Argentina,
for instance, have well-managed economies with strong currencies. As that
becomes clear to investors, we expect these markets to rebound strongly. Of
course, foreign investments subject the Fund to greater expenses and risks such
as adverse currency fluctuation.
Looking ahead, your Fund manager believes that the potential for foreign markets
to outperform the U.S. over the long term remains intact even though holdings in
emerging markets are currently being reduced in favor of the larger more
developed markets of North America and Europe.
We appreciate your trust in the Oppenheimer Variable Account Funds' Global
Securities Fund, and we will continue to do our best to help meet your
investment objectives in the future.
OPPENHEIMER MULTIPLE STRATEGIES FUND
OBJECTIVE - Seeks a total investment return (including current income and
capital appreciation in the value of its shares) from investments in a
combination of stocks, bonds and "money market" securities. The current
allocation of the Fund's portfolio aims to take advantage of current economic
conditions while managing risk.
NARRATIVE BY RICHARD RUBINSTEIN, FUND MANAGER
The percentage of the Fund committed to stocks has remained constant. However,
there has been a slight reduction in the bond portion of the Fund's portfolio in
favor of cash.
In the equity portion of the portfolio, the manager's emphasis has been on
diversification, not so much by industry sector as by investment style. Because
the market is difficult to predict, your manager's approach allows for
investments in a broad range of stock styles including value, growth and
contrarian classifications that offer capital appreciation potential. Your
manager also invests in dividend paying and foreign stocks that offer the
possibility to reduce overall risk to the portfolio.
In bonds, as in stocks, your manager invests in a number of different bond
categories and is currently using a combination of U.S. government, foreign
government and high yield corporate bonds. While each category has certain
inherent risks and rewards, our diversified approach has allowed us to improve
yields and reduce risk.
Looking forward your manager expects stocks to continue to provide long-term
returns approaching their historical averages and feels the portfolio is
positioned to participate in those gains while relying on the bonds and cash in
the portfolio to temper any short-term volatility in the market.
We appreciate the confidence you have placed in Oppenheimer Variable Account
Funds' Multiple Strategies Fund, and we will continue to do our best to help you
reach your investment goals.
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[STRONG FUNDS LOGO]
STRONG VARIABLE INSURANCE PRODUCTS FUNDS
STRONG DISCOVERY FUND II, INC.
OBJECTIVE - To seek maximum capital appreciation through investments in a
diversified portfolio of securities.
NARRATIVE BY RICHARD STRONG, FUND MANAGER
The Strong Discovery Fund II is all about growth. We believe that investing in
the common stock of companies that are growing considerably faster than the
overall economy -- companies with a special product run by enlightened and
dedicated management -- will produce superior investment returns over time for
our shareholders.
Our task is to find those growth companies and own their stock at the most
opportune time. That, in a nutshell, is what drives our investment decisions.
MARKET SUMMARY
The first half of 1995 was a good period for equity investors. The benchmark S&P
500 Index rose a robust 20.21% during the first six months of the year, while
Strong Discovery II increased by 16.62%. While our Fund was a little slow out of
the blocks -- finishing the first quarter up a modest 4.60% -- the second
quarter saw a much more attractive gain of 11.49%.
As of June 30, 1995, the Fund was "fully invested." Of the Fund's $156.5 million
in net assets, nearly all were invested in stocks. The Fund was aggressively
positioned to take advantage of the bull market. At mid-year, the Fund's
diversified portfolio owned stock in a wide variety of domestic and foreign
concerns, from computer software (SAP AG) to copier dealers (Danka Business
Systems) to motorcycles (Harley-Davidson).
PREVAILING THEMES
While our team of investment professionals monitors economic trends across the
nation and world, four investment themes dominated our portfolio during the
first half of 1995:technology, consolidation, the continued deregulation of
radio and television, and financial services.
TECHNOLOGY. The worldwide technological revolution is having a dramatic effect
on the productivity and efficiency of business and industry. Consequently,
technology stocks were the biggest winners in the market's stellar performance
through the first half of 1995. We believe the advance of technology and its
positive impact on industry will persist. In our portfolio, computer software
manufacturers like the German firm SAP AG and McAfee Associations, a Santa
Clara, California firm that specializes in computer virus software, have
positioned their companies and products for prosperity.
CONSOLIDATION. Across a variety of individual industries, companies are
consolidating to increase efficiency and market share. This is a trend we see in
businesses as different as medical services and video rental. In the former
category, we particularly like Medpartners, of Birmingham, Alabama, and PhyCor,
of Nashville, Tennessee, operators of multi-specialty medical clinics. In the
latter category, the Movie Gallery, based in Dothan, Alabama, has been
strategically acquiring video stores from Texas to Illinois at a steady and
impressive clip.
DEREGULATION IN RADIO AND TELEVISION. Thanks to the continuing pro-deregulation
mood in Washington, some well-positioned and ambitious media companies have
been expanding their operations and growing their earnings at a convincing rate.
Evergreen Media, an Irving, Texas, radio station complex, and SFXBroadcasting
are two such properties that have made a contribution to the Fund's performance.
FINANCIAL SERVICES. Lower interest rates -- a concept that the Federal Reserve
has now embraced -- have benefited a number of our holdings in the financial
services sector. A good example of a company poised to capitalize on this trend
is Mercury Finance Co., of Northbrook, Illinois, which, among other credit
operations, purchases installment contracts from automobile dealers and retail
vendors.
OUR OUTLOOK
As the second half of the year began, the Federal Reserve, inspired by a general
slowdown in the nation's economy, cut short-term rates by one-quarter of a
percentage point (0.25%). The market responded favorably.
Our portfolio management team believes that inflation will remain under control,
that the Federal
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STRONG DISCOVER FUND II (CONT'D)
Reserve will likely continue to ratchet down interest rates through the second
half of 1995, and that the financial climate -- allowing for an occasional
correction -- will continue to be hospitable to investors.
And one final, personal note: I think U.S. industry, pretty much across the
board, is in the best shape I've seen in the nearly 30 years since I graduated
from business school. Overall, American companies are more efficient, more
productive, and more competitive than at any moment in my professional lifetime.
Which, at the risk of sounding repetitious, is good news for growth stocks.
Thank you for your continued confidence in the Strong Discovery Fund II. We look
forward to making your investment grow.
THE STRONG SPECIAL FUND II, INC.
OBJECTIVE - To seek capital appreciation through investments in a diversified
portfolio of equity securities.
NARRATIVE BY RICHARD WEISS & MARINA CARLSON, FUND MANAGERS
In pursuit of capital growth, the Strong Special Fund II invests at least 70% of
its total assets in equity securities. It currently emphasizes medium-sized
companies that the Fund's Advisor believes are under-researched and attractively
valued.
STOCKS PRICES RALLY IN FIRST HALF OF 1995
The first six months of 1995 brought good news for investors in U.S. stocks
despite the dollar's slide versus several global currencies and Mexico's
devaluation of the peso. Continued healthy corporate earnings and the explosive
rally in long bonds helped catapult stocks to record highs. Ironically, the
dollar's weakness -- and the turmoil in emerging markets that followed the
peso's devaluation -- led to a shift in global capital flows back to the U.S.
Investors in the U.S. market particularly favored traditional large-cap growth
stocks. As a result, while mid-cap stocks -- as measured by the S&P MidCap 400
- -- did well (up 17.62%), they tended to slightly lag the stocks of big
companies, as reflected in the S&P 500's 20.21% gain for the first six months of
1995.
A STRATEGY EMPHASIZING VALUE
Throughout the first half of 1995, we continued to stringently evaluate existing
and prospective holdings according to our analysis of their "private value,"
which is a fancy term for a simple concept ... basically, it means evaluating
companies as if we were a private buyer. We seek to determine how much we'd be
willing to pay to own the entire company. This gives us a disciplined way to
view the company's value and helps us impartially evaluate potential winners and
losers.
If we get an accurate private value, we generally have a good idea of where the
stock's going to trade for the year. We've discovered that most stocks usually
do not trade below 50% of private value, nor do they trade above the 80% mark.
Clearly, when we have a good idea of a company's trading range, we have a
tremendous advantage in determining the most appropriate time to buy or sell.
This analysis helped us identify several key additions to the portfolio, such as
Gaylord Entertainment (up 15.91%), and Toys `R' Us (up 11.43%). Stocks sold
because we believed they had become fully valued included Eli Lilly and Circus
Circus.
A FAVORABLE ENVIRONMENT FOR MID-CAP STOCKS
In the Fund's 1994 Annual Report, we stated, "should the Federal Reserve's
repeated rate hikes successfully curtail inflation without drastically slowing
economic growth, the market might then focus on the improving earnings picture,
especially for growth companies."
This appeared to be exactly what happened in early 1995. Weaker-than-expected
economic figures indicated a slowing economy and fueled a powerful long-bond
rally. While large-cap stocks felt the positive effects first, we believe the
focus may now shift to mid-cap stocks. Mid-caps were laggards through most of
the 1980s, and are currently attractive based on their relative value and their
expected growth rates. The increased valuations of large-cap issues given the
1995 rally simply makes the argument for mid-cap stocks even more compelling.
Therefore, we believe the stage may be set for a longer-term cycle, during which
mid-cap stocks should outperform large-cap issues. Currently, the market remains
vulnerable if the economy slips into a recession. However, given that many
American companies presently possess fairly healthy balance
21
<PAGE> 22
STRONG SPECIAL FUND II (CONT'D)
sheets, and the Federal Reserve's growing bias toward easing credit, we believe
any downturn would be relatively minor in comparison to the recessions of the
early 1980s.
Long term, we believe the market holds opportunity for investors with the
discipline to demand value as well as strong growth.
[TWENTIETH CENTURY MUTUAL FUNDS LOGO]
A MEMBER OF THE TWENTIETH CENTURY FAMILY OF MUTUAL FUNDS.
TCI BALANCED
OBJECTIVE - To seek capital growth and current income.
NARRATIVE BY TWENTIETH CENTURY COMPANIES, INC.
TCI Balanced compiled the second best result for a single six-month reporting
period in the fund's history. These gains reflected the strength of a powerful
market rally. TCI Balanced's benchmark index, a combination of the S&P 500 and
the Lehman Brothers Intermediate Government/ Corporate Index, turned in an
especially high 15.95% gain for the period.
The first six months of 1995 were remarkably good for investors, as the equity
and fixed income markets surged following a weak showing in 1994. TCI Balanced's
strategy, which combines an approximate 60% stake in growth stocks with a 40%
stake in high-quality government and corporate bonds, was able to benefit from
both markets. While the rally was tentative at first, the market eventually came
to favor growth stocks with evident earnings and revenue acceleration. These are
the type of companies that Twentieth Century routinely seeks for its equity
portfolios. The market was especially kind to stocks in a number of
technology-related industries during the last half of the period. With a
near-20% stake in technology stocks, TCI Balanced was able to participate in
this market trend.
The fund's underperformance of its benchmark owes to the fact that, over the
early part of the period, the market favored more conservative stocks and longer
maturity bonds. Many investors at that time gravitated toward more-seasoned
stocks in the face of uncertainty about the state of the economy. Responding to
rapidly falling interest rates, however, the fixed-income markets especially
favored bonds with aggressive interest-rate postures. The long-term government
bonds that posted one of their worst declines this century in 1994 rebounded
with 30% gains in the first six months of 1995. This trend did little to benefit
your fund: Seeking to avoid such extremes of performance, TCI Balanced focuses
on less-volatile short- and intermediate-term bonds. It therefore did not fully
share in either the highs or the lows of the bond market's recent gyrations.
Currently, we are investigating a number of investment opportunities abroad.
Many overseas stock markets have performed listlessly since 1993, and therefore
we believe the prices for a few firms are now fairly low relative to their
growth prospects. Among bonds, we expect to favor higher yielding and
credit-worthy corporate bonds, especially utilities and banking issues, over
government agency bonds. In the main, however, TCI Balanced will continue to
target accelerating growth in earnings and revenues for our stock holdings,
while limiting our bond holdings to straightforward, investment-grade issues
that offer reasonably good yields.
TCI Balanced continues to pursue the goal originally planned for it. This is to
provide investors with the opportunity to invest in a portfolio of growing
companies while using bonds to reduce share-price fluctuations along the way. We
remain confident that the fund has the potential to provide shareholders with a
long-term rate of return that will comfortably outpace the rate of inflation.
22
<PAGE> 23
TCI GROWTH
OBJECTIVE - To seek capital growth by investing in common stocks (including
securities convertible into common stocks) that meet certain fundamental and
technical standards of selection and, in the opinion of the fund's management,
have better than average potential for appreciation.
NARRATIVE BY TWENTIETH CENTURY COMPANIES, INC.
Responding to a potent rally in many different equity markets, TCI Growth posted
the second best performance for a six-month reporting period in the fund's
history. These results closely tracked the 20.14% return for the S&P 500, and
also outpaced the 17.46% gain for the average growth mutual fund over the
period, as measured by Lipper Analytical Services.
While the fund's ending performance was similar to that of the S&P 500, its path
to success was quite different. The S&P is a collection of 500 of the largest
U.S. companies from a broad variety of industries. TCI Growth, on the other
hand, is designed to single out stocks with earnings and revenue acceleration.
Sometimes, this acceleration can be found in many different industries. At other
times, the most impressive acceleration occurs in specific areas of the economy.
Recently, the management team has found the most compelling investment choices
in a broad range of stocks that come together under the umbrella heading of
technology. TCI Growth is currently more than 50% invested in this sector. The
remarkable growth posted by many of the stocks that fall under the technology
banner presents extraordinary long-term investment opportunity. When earnings
and revenue statements begin to show deceleration, these stocks immediately
become candidates to be sold.
The fund's exposure to technology stocks dictated the course of its performance
over the period. The fund's returns were crimped by a brief decline in the
prices of technology shares in early 1995. Weak economic numbers at that time
led some investors to believe that the growth of technology firms would slow.
The ensuing sell-off hurt fund performance, especially in comparison with a
surging S&P 500. As the year progressed, however, impressive earnings reports
for numerous technology issues sparked an industry-wide rally -- allowing the
fund to nearly catch up with the index in a relatively brief span at the end of
the period.
That sharp increase came despite flat performance for the fund's 10% or 11%
stake in international stocks. The fund is continuing to investigate global
investment opportunities, however, as improving interest-rate environments
should be beneficial for these issues in the future.
TCI Growth's return for the six-month period, while unusually strong, reaffirms
to us the potential of combining growth-oriented stocks with a disciplined
buying and selling process. We strongly believe that this strategy has the
potential to provide significant benefits to those investors investing to
achieve long-term financial goals.
TCI INTERNATIONAL
OBJECTIVE - To seek capital growth by investing primarily in an internationally
diversified portfolio of common stocks that are considered by management to have
prospects for appreciation.
NARRATIVE BY TWENTIETH CENTURY COMPANIES, INC.
The six-month period ended June 30, 1995 was a sluggish time for international
stocks. TCI International came through the period with a slight outperformance
of the fund's benchmark index, EAFE, which notched only a 2.6% gain.
For the past six months, international markets have produced some dramatic
swings in performance but little in the way of positive investment return. A
number of newsworthy events, including the devaluation of the Mexican peso, the
collapse of Barings Bank, and the Kobe earthquake in Japan combined to create
negative investor sentiment toward global investing in the year's first half.
Japan's market, which represented the fund's largest country weighting at the
beginning of the period, had to contend with economic weakness, natural
disasters, and a poor export climate. TCI International's emerging market
holdings also struggled to advance in the wake of the early year devaluation of
the peso.
Not all the news was bad, however. Many major European markets posted gains for
the period, which boosted fund performance. Further, some gains in these markets
were amplified when translated into dollar terms. This is because the dollar
weakened considerably over the period, making foreign holdings worth more in
dollars. These gains were possible for the fund because it typically engages in
minimal currency hedging, a practice that can limit international fund losses
when the dollar rises but also mutes gains when the dollar falls.
23
<PAGE> 24
TCI INTERNATIONAL (CONT'D)
The fund's most important feature, however, is its disciplined focus on stocks
that show accelerating growth in earnings and revenues. Especially if interest
rates stay flat or fall further, many superb foreign companies may be able to
achieve significant revenue and earnings acceleration. We are excited by these
opportunities, and we like to believe that, over the long term, the exporting of
Twentieth Century's long-held growth investing philosophy carries significant
investment potential.
[VAN ECK GLOBAL LOGO]
GOLD AND NATURAL RESOURCES FUND
OBJECTIVE - To seek long-term capital appreciation by investing in equity and
debt securities of companies engaged in the exploration, development, production
and distribution of gold and other natural resources, such as strategic and
other metals, minerals, forest products, oil, natural gas and coal.
NARRATIVE BY HARRY J. BINGHAM, FUND MANAGER
During the first half of the year, the gold price traded in a fairly narrow
range of $371-$398. During the early months of the year the principal monetary
focus was on the relationship of the dollar to the world's stronger currencies,
primarily the German mark and the Japanese yen. A renewed easing of U.S.
monetary policy to ensure a "soft landing" for a weakening economy and an
outpouring of U.S. dollars to support the Mexican peso combined to drive the
dollar sharply lower. On March 30th, however, the German Central Bank, in the
face of what were then rising inflationary pressures and general expectations of
a tightening of monetary policy, lowered short-term interest rates in an
apparent attempt to stabilize the dollar. Two weeks later Japan cut its discount
rate almost in half, and subsequently has further loosened monetary policy to
ease the pressure on Japanese financial institutions as well as to support the
dollar.
The early moves toward more expansionary monetary policies by Germany and Japan
were each followed by a rise in the gold price to over $390 an ounce. Gold sales
by producers, some calming of the currency markets and option expiration-related
trading appear to have capped the rally in late June. Longer term, however, the
deliberate weakening of the mark and the yen to support the dollar may have made
these currencies less attractive alternatives to gold as a hedge against dollar
holdings. Rising physical demand for both jewelry and investment from the Far
East and gradually rising European and North American demand, appear to have
established a higher trading range for gold in dollar terms even prior to
reassessment of global economic and monetary conditions.
North American gold shares were generally the best performers of the gold sector
during the first half of the year. Several companies representing the larger
North American holdings of your fund, including Placer Dome, Newmont Mining and
Barrick Gold, have expansion plans underway which should add significantly to
future gold and potential profitability. On average, as measured by the XAU
index, North American gold shares rose 9.9% during this period. North American
shares are currently over 60% of total net assets.
Australian shares, which account for about 17% of total net assets, fell on
average .48% during the first six months of the year. Several Australian
companies are adding underground operations at higher capital costs to their
open pit operations. Recent new discoveries, however, have benefited several of
the Fund's larger holdings, particularly Plutonic Resources and Newcrest Mining.
South African gold shares (a recent addition to the portfolio), which generally
are more sensitive to the effects of gold price changes on the quantity and
valuation of their reserves than to corporate developments, declined 19% in U.S.
dollar terms during the first six months of '95, as measured by the Johannesberg
Gold Shares Index. During the second quarter alone, however, these shares
stabilized more in line to the gold market and the increased probability that
labor contracts now being negotiated will be productivity oriented, thereby
enhancing the future profitability prospects of the mines. South African shares
currently comprise 10.6% of total portfolio holdings.
Demand for industrial metals by emerging markets has contributed to firm prices
for copper, nickel and other metals which are important to the diversified
mining holdings of the Fund. Despite weakening of crude oil prices, generally
favorable operating conditions led to good performance by the major integrated
oil companies in the portfolio. Rising demand for food products and low
stockpiles benefited the agricultural component of the Fund.
24
<PAGE> 25
GOLD AND NATURAL RESOURCES FUND (CONT'D)
Rising infrastructure and industrial production growth in many areas of the
world are likely to maintain high demand for natural resources in general. In
our opinion, continued turbulence in the foreign exchange markets and the
likelihood of rising inflationary pressures as credit use shifts to commodities
may well increase the investment demand and the price of gold.
WORLDWIDE BOND FUND+++
OBJECTIVE - To seek high total return through a flexible policy of investing
globally, primarily in debt securities.
NARRATIVE BY MADIS SENNER, FUND MANAGER
World bond markets achieved unusually strong performance during the first six
months of 1995. Returns were augmented for U.S. investors as the dollar declined
to post-World War II lows during the first six months. We are pleased to report
that the Van Eck Worldwide Bond Fund achieved exceptional performance
year-to-date for the period ended June 30.
Caution prevailed in the beginning of 1995 after a year of U.S. federal funds
rate increases, a resulting decline in world bond markets in 1994, and the
Mexican peso debacle in December 1994. Reflecting that caution, your portfolio
was weighted toward the stronger foreign bond markets and currencies such as the
German mark, the Japanese yen, and the Swiss franc, and durations were
temporarily lowered. We also bought U.S.-dollar denominated issues to benefit
from the post-November election rally in U.S. securities. Soon, investor
uncertainty began to recede as slowing economic growth in the U.S., Europe and
Japan suggested that the interest rate hikes may be coming to an end. At the end
of March, European rates began to decline, led by the German Bundesbank's
lowering of the discount rate from 4.5% to 4.0%, and the bond markets rallied
further. In local currency terms, virtually every major bond market worldwide
was up for the first six months of the year, led by the U.S. and Japan.
Meanwhile, embattled by uncertainty over U.S. fiscal policy, rising deficits and
the U.S.'s recent $20 billion support package for the Mexican peso, the dollar
rapidly declined against most foreign currencies, hitting post-World War II lows
in April, and ending the second quarter down over 10% versus the German mark and
approximately 15% against the Japanese yen. Expecting a dramatic fall in the
dollar, and given both strong deflationary pressures and a falling stock market
in Japan, we doubled the portfolio's Japanese position from approximately 6% of
total assets to almost 12%, purchasing long-term, 20-year bonds. We also
maintained a fairly heavy weighting toward Europe at over one-third of assets.
This positioning benefited the Fund as already solid returns were substantially
boosted by strong foreign currencies, and U.S. investors in foreign bonds reaped
the rewards. The Japanese bond market, up over 11% in local currency terms, rose
an almost unprecedented 31.6% in U.S. dollar terms. German bonds (6.9% of your
portfolio) gained 7.2% in marks, and over 20% in dollars, and French bonds (6.7%
of assets), up approximately 7% in local currency terms, rose almost 18% in
dollar terms.
THE OUTLOOK
Given a continued slowdown in economic growth and declining interest rates
throughout much of the world, (on July 6, the U.S. Federal Reserve Board lowered
the federal funds rate by .25% to 5.75%), bond markets overall should continue
to rally for several months. To position the portfolio to take full advantage,
we have been steadily increasing the average duration of the portfolio, which is
currently at 4.10 years. Our current outlook on the dollar has changed markedly,
and despite continuing negative pressures longer-term, we expect the dollar to
be steady-to-up near-term as it reaches a more equitable level against foreign
currencies. At this writing, we are approximately 50% invested in U.S.
dollar-denominated securities, with a total U.S. dollar exposure of almost 70%,
and we have decreased exposure to the "hard" or core foreign currencies. The
"peripheral" European markets, which had been battered in '94 and early '95,
have been rebounding and should continue to witness relative strength short-term
- -- we currently hold small positions in both Italy and Spain. Japan is
experiencing weak economic growth while its real interest rates are at very high
levels. These circumstances bode well for near-term performance and we are thus
maintaining the Japanese position.
Bond markets tend to perform well in periods of slowing economic growth. The
next several months should be positive for your Fund as the bond markets respond
to resulting lower interest rates. We continue to actively manage both the
portfolio's bond and currency (which plays a key role in global bond returns)
allocations, and maintain our policy of flexible management in an effort to
further take advantage of market fluctuations.
+++Formerly Global Bond Fund.
25
<PAGE> 26
FUND PERFORMANCES--THE BEST OF AMERICA(R)
LIFE PLANNING SERIES(SM)
FOR SINGLE PREMIUM CONTRACTS
ISSUED ON OR AFTER APRIL 16, 1990
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN:ASSUMING CONTRACT NOT SURRENDERED**
APPROXIMATE PERCENT CHANGE IN NET ASSETS WITH CAPITAL GAINS AND INCOME DIVIDENDS REINVESTED
- ------------------------------------------------------------------------------------------------------------------------------------
NON-ANNUALIZED PERCENT CHANGE+ ANNUALIZED PERCENT CHANGE***
INCEPTION 1 YR. TO 5 YR. TO INCEPTION TO 5 YR. TO INCEPTION TO
FUNDS+ DATE++ 06/30/95 06/30/95 06/30/95 06/30/95 06/30/95
-
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DREYFUS CORPORATION
Socially Responsible Growth Fund 10/06/93 19.31% NA* 25.92% NA* 14.22%
Stock Index Fund 09/29/89 24.28% 68.89% 68.89% 10.18% 9.54%
FIDELITY VIP FUND & VIP FUND II
Equity-Income Portfolio 10/09/86 22.68% 89.37% 146.26% 13.62% 10.88%
Growth Portfolio 10/09/86 35.80% 87.89% 193.70% 13.44% 13.14%
High Income Portfolio 09/19/85 10.53% 104.30% 155.58% 15.36% 10.07%
Overseas Portfolio 01/28/87 1.81% 18.28% 60.09% 3.41% 5.74%
Asset Manager Portfolio 09/06/89 4.67% 59.43% 65.39% 9.78% 9.04%
NATIONWIDE SEPARATE ACCOUNT TRUST
Capital Appreciation Fund 04/15/92 13.60% NA* 21.56% NA* 6.27%
Government Bond Fund 11/08/82 11.37% 49.39% 181.11% 8.36% 8.52%
Money Market Fund 11/10/81 3.83% 16.98% 117.29% 3.19% 5.85%
Total Return Fund 11/08/82 16.45% 70.30% 373.00% 11.24% 13.08%
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST
Growth Portfolio 09/10/84 27.68% 49.72% 226.88% 8.41% 11.58%
Limited Maturity Bond Portfolio 09/10/84 6.08% 30.27% 113.08% 5.43% 7.25%
Partners Portfolio 03/22/94 26.57% NA* 16.66% NA* 12.85%
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Bond Fund 04/30/85 9.30% 50.36% 135.15% 8.50% 8.77%
Global Securities Fund 11/12/90 - 0.68% NA* 48.20% NA* 8.86%
Multiple Strategies Fund 02/09/87 14.66% 53.78% 113.73% 8.99% 9.48%
STRONG VIP FUNDS
Strong Discovery Fund II, Inc. 05/08/92 22.04% NA* 41.06% NA* 11.56%
Strong Special Fund II, Inc. 05/08/92 14.55% NA* 63.33% NA* 16.88%
TCI PORTFOLIOS, INC.
TCI Balanced 05/01/91 15.06% NA* 36.65% NA* 7.79%
TCI Growth 11/20/87 25.97% 53.79% 120.72% 8.99% 10.96%
TCI International 05/01/94 0.11% NA* - 2.30% NA* - 1.98%
VAN ECK WORLDWIDE INSURANCE TRUST
Gold and Natural Resources Fund 09/01/89 2.62% 38.13% 30.58% 6.67% 4.68%
Worldwide Bond Fund+++ 09/01/89 17.20% 37.31% 42.14% 6.55% 6.22%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Performance information is not available for the fund for part or all of
the period indicated. See Fund Inception Date.
** SEC and NASD regulations require that any reporting of product performance
be accompanied by standardized data and other important disclosures on the
following page. Please review this information and a product prospectus
before investing.
*** Percent change in unit value price represents total return after the
deduction of a 1.30% asset charge for mortality and expense risk,
administrative charges and premium tax recovery.
+ Percent change in unit value price represents total return after the
deduction of a 1.30% asset charge for mortality and expense risk,
administrative charges and premium tax recovery. Numbers in these columns
represent the total percentage change in the unit value for the period
indicated. This is not an annual return figure.
++ Performance includes hypothetical performance for periods before the fund
was available in The BEST OF AMERICA, where applicable, applying contract
charges to actual fund NAV's to determine the performance the fund would
have achieved inside the separate account.
+ Funds are neither insured nor guaranteed by the U.S. Government. For the
- - Money Market Fund, there is no assurance that a stable $1 fund NAV (used to
calculate Unit Value) can be maintained. Figures quoted represent past
performance and returns can fluctuate.
+++ Formerly Global Bond Fund.
26
<PAGE> 27
FUND PERFORMANCES--THE BEST OF AMERICA(R) LIFE PLANNING SERIES(SM)
FOR SINGLE PREMIUM CONTRACTS ISSUED ON OR AFTER
APRIL 16, 1990 (CONT'D)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN:ASSUMING CONTRACT SURRENDERED
APPROXIMATE CONTRACT VALUE WITH CAPITAL GAINS AND INCOME DIVIDENDS REINVESTED
- -----------------------------------------------------------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS LIFE OF
FUNDS+ INCEPTION 06/30/94 06/30/90 06/30/85 FUND
- DATE++ TO 06/30/95 TO 06/30/95 TO 06/30/95 TO 06/30/95
AV CSV AV CSV AV CSV AV CSV
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DREYFUS CORPORATION
Socially Responsible Growth Fund 10/06/93 $58,885 $54,635 NA* NA* NA* NA* $61,501 $57,251
Stock Index Fund 09/29/89 61,374 57,124 $75,848 $72,098 NA* NA* 77,867 74,367
FIDELITY VIP FUND & VIP FUND II
Equity-Income Portfolio 10/09/86 60,590 56,340 88,936 85,186 NA* NA* 110,142 108,142
Growth Portfolio 10/09/86 61,431 57,181 80,543 76,793 NA* NA* 133,640 131,640
High Income Portfolio 09/19/85 54,531 50,281 97,259 93,509 NA* NA* 113,324 113,324
Overseas Portfolio 01/28/87 50,200 45,950 54,056 50,306 NA* NA* 69,547 67,547
Asset Manager Portfolio 09/06/89 57,632 47,382 75,140 71,930 NA* NA* 76,841 73,341
NATIONWIDE SEPARATE ACCOUNT TRUST
Capital Appreciation Fund 04/15/92 55,393 51,143 NA* NA* NA* NA* 57,842 53,842
Government Bond Fund 11/08/82 54,496 50,246 69,441 65,691 $97,850 $97,850 121,466 121,466
Money Market Fund 11/10/81 51,021 46,771 53,812 50,062 66,618 66,618 90,124 90,124
Total Return Fund 11/08/82 56,335 52,085 78,391 74,641 130,699 130,699 218,253 218,253
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST
Growth Portfolio 09/10/84 63,060 58,810 69,555 65,805 128,059 128,059 149,532 149,532
Limited Maturity Bond Portfolio 09/10/84 52,333 48,083 60,605 56,855 80,302 80,302 93,571 93,571
Partners Portfolio 03/22/94 62,512 58,262 NA* NA* NA* NA* 57,175 52,925
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Bond Fund 04/30/85 53,923 49,673 70,471 66,721 96,623 96,623 104,511 104,511
Global Securities Fund 11/12/90 48,984 44,734 NA* NA* NA* NA* 69,382 65,632
Multiple Strategies Fund 02/09/87 56,593 52,343 71,857 68,107 NA* NA* 96,602 94,602
STRONG VIP FUNDS
Strong Discovery Fund II, Inc. 05/08/92 60,258 56,008 NA* NA* NA* NA* 67,571 63,571
Strong Special Fund II, Inc. 05/08/92 56,535 52,285 NA* NA* NA* NA* 78,811 74,811
TCI PORTFOLIOS, INC.
TCI Balanced 05/01/91 56,784 52,534 NA* NA* NA* NA* 64,503 60,753
TCI Growth 11/20/87 62,200 57,950 71,583 67,833 NA* NA* 100,915 98,415
TCI International 05/01/94 49,353 45,103 NA* NA* NA* NA* 47,967 43,717
VAN ECK WORLDWIDE INSURANCE TRUST
Gold and Natural Resources Fund 09/01/89 50,616 46,366 63,814 60,064 NA* NA* 58,722 55,222
Worldwide Bond Fund+++ 09/01/89 57,856 53,606 63,907 60,157 NA* NA* 65,161 61,661
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This is neither an offer to sell, nor a solicitation to buy securities. This
material is authorized for distribution to prospective investors only when
preceded or accompanied by a current prospectus which contains more complete
information. You should read the prospectus carefully before investing. These
performance illustrations represent past fund performance based on a
hypothetical single premium of $50,000 for a 50-year-old male non-smoker.
Investment return and the principal value of such investments are not guaranteed
and will fluctuate so that an investor's shares/units, when redeemed, may be
worth more or less than their original cost. Past performance does not guarantee
future returns. The performance figures reflect a mortality and expense risk
charge, applicable cost of insurance charges, surrender charges, an annual
administrative charge, and applicable investment advisory fees. Please refer to
the current prospectus for details regarding these charges.
* Certain funds are less than 1, 5 or 10 years old, therefore such figures
are not available for these funds.
++ Performance includes hypothetical performance for periods before the fund
was available in THE BEST OF AMERICA, where applicable, applying contract
charges to actual fund NAV's to determine the performance the fund would
have achieved in the separate account.
+ Funds are neither insured nor guaranteed by the U.S. Government. For the
- - Money Market Fund, there is no assurance that a stable $1 fund NAV (used to
calculate Unit Value) can be maintained. Figures quoted represent past
performance and returns can fluctuate.
+++ Formerly Global Bond Fund.
AV means Accumulated Value. CSV means Cash Surrender Value.
27
<PAGE> 28
FUND PERFORMANCES--THE BEST OF AMERICA(R)
LIFE PLANNING SERIES(SM)
FOR FLEXIBLE PREMIUM CONTRACTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN:ASSUMING CONTRACT NOT SURRENDERED**
APPROXIMATE PERCENT CHANGE IN NET ASSETS WITH CAPITAL GAINS AND INCOME DIVIDENDS REINVESTED
- ------------------------------------------------------------------------------------------------------------------------------------
NON-ANNUALIZED PERCENT CHANGE+ ANNUALIZED PERCENT CHANGE ***
FUNDS+ INCEPTION 1 YR. TO 5 YR. TO INCEPTION TO 5 YR. TO INCEPTION TO
- DATE++ 06/30/95 06/30/95 06/30/95 06/30/95 06/30/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DREYFUS CORPORATION
Socially Responsible Growth Fund 10/06/93 19.91% NA* 27.02% NA* 14.79%
Stock Index Fund 09/29/89 24.91% 66.53% 73.86% 10.74% 10.09%
FIDELITY VIP FUND & VIP FUND II
Equity-Income Portfolio 10/09/86 23.30% 94.24% 157.44% 14.20% 11.45%
Growth Portfolio 10/09/86 36.49% 92.72% 207.02% 14.02% 13.72%
High Income Portfolio 09/19/85 11.09% 109.55% 168.62% 15.95% 10.63%
Overseas Portfolio 01/28/87 2.32% 21.32% 67.10% 3.94% 6.28%
Asset Manager Portfolio 09/06/89 5.20% 63.52% 70.35% 10.34% 9.59%
NATIONWIDE SEPARATE ACCOUNT TRUST
Capital Appreciation Fund 04/15/92 14.17% NA* 23.54% NA* 6.81%
Government Bond Fund 11/08/82 11.94% 53.23% 199.82% 8.91% 9.07%
Money Market Fund 11/10/81 4.36% 20.00% 132.94% 3.71% 6.40%
Total Return Fund 11/08/82 17.04% 74.67% 404.48% 11.80% 13.65%
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST
Growth Portfolio 09/10/84 28.32% 53.57% 245.38% 8.96% 12.15%
Limited Maturity Bond Portfolio 09/10/84 6.62% 33.62% 125.13% 5.97% 7.80%
Partners Portfolio 03/22/94 27.21% NA* 17.41% NA* 13.42%
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Bond Fund 04/30/85 9.85% 54.23% 147.62% 9.05% 9.33%
Global Securities Fund 11/12/90 - 0.18% NA* 51.70% NA* 9.41%
Multiple Strategies Fund 02/09/87 15.24% 57.73% 123.05% 9.54% 10.03%
STRONG VIP FUNDS
Strong Discovery Fund II, Inc. 05/08/92 22.66% NA* 43.32% NA* 12.12%
Strong Special Fund II, Inc. 05/08/92 15.12% NA* 65.94% NA* 17.47%
TCI PORTFOLIOS, INC.
TCI Balanced 05/01/91 15.64% NA* 39.56% NA* 8.33%
TCI Growth 11/20/87 26.61% 57.74% 129.43% 9.54% 11.53%
TCI International 05/01/94 0.62% NA* - 1.73% NA* - 1.49%
VAN ECK WORLDWIDE INSURANCE TRUST
Gold and Natural Resources Fund 09/01/89 3.14% 41.68% 34.50% 7.22% 5.21%
Worldwide Bond Fund+++ 09/01/89 17.80% 40.84% 46.41% 7.09% 6.76%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Performance information is not available for the fund for part or all of
the period indicated. See Fund Inception Date.
** SEC and NASD regulations require that any reporting of product performance
be accompanied by standardized data and other important disclosures. Please
review this information and a product prospectus before investing.
*** Percent change in unit value price represents total return after the
deduction of an .80% asset charge for mortality and expense risk,
administrative charges and premium tax recovery.
+ Percent change in unit value price represents total return after the
deduction of a .80% asset charge for mortality and expense risk,
administrative charges and premium tax recovery. Numbers in these columns
represent the total percentage change in the unit value for the period
indicated. This is not an annual return figure.
++ Performance includes hypothetical performance for periods before the fund
was available in The BEST OF AMERICA, where applicable, applying contract
charges to actual fund NAV's to determine the performance the fund would
have achieved inside the separate account.
+ Funds are neither insured nor guaranteed by the U.S. Government. For the
- - Money Market Fund, there is no assurance that a stable $1 fund NAV (used to
calculate Unit Value) can be maintained. Figures quoted represent past
performance and returns can fluctuate.
+++ Formerly Global Bond Fund.
28
<PAGE> 29
FUND PERFORMANCES--THE BEST OF AMERICA(R) LIFE PLANNING SERIES(SM)
FOR FLEXIBLE PREMIUM CONTRACTS (CONT'D)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN:ASSUMING CONTRACT SURRENDERED
APPROXIMATE CONTRACT VALUE WITH CAPITAL GAINS AND INCOME DIVIDENDS REINVESTED
- -----------------------------------------------------------------------------------------------------------------------------------
1 YEAR 5 YEARS 10 YEARS LIFE OF
FUNDS+ INCEPTION 06/30/94 06/30/90 06/30/85 FUND
- DATE++ TO 06/30/95 TO 06/30/95 TO 06/30/95 TO 06/30/95
AV CSV AV CSV AV CSV AV CSV
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DREYFUS CORPORATION
Socially Responsible Growth Fund 10/06/93 $9,602 $4,796 NA* NA* NA* NA* $20,170 $15,364
Stock Index Fund 09/29/89 10,061 5,255 $57,342 $53,978 NA* NA* 72,410 69,527
FIDELITY VIP FUND & VIP FUND II
Equity-Income Portfolio 10/09/86 9,945 5,139 64,219 60,854 NA* NA* 133,434 131,992
Growth Portfolio 10/09/86 11,041 6,235 66,965 63,601 NA* NA* 147,176 145,734
High Income Portfolio 09/19/85 8,860 4,054 60,891 57,527 NA* NA* 145,614 145,614
Overseas Portfolio 01/28/87 8,118 3,312 48,173 44,808 NA* NA* 100,501 99,059
Asset Manager Portfolio 09/06/89 8,379 3,573 52,003 48,639 NA* NA* 64,946 62,063
NATIONWIDE SEPARATE ACCOUNT TRUST
Capital Appreciation Fund 04/15/92 9,166 4,360 NA* NA* NA* NA* 37,909 34,064
Government Bond Fund 11/08/82 8,933 4,127 51,006 47,642 $126,962 $126,962 189,527 189,527
Money Market Fund 11/10/81 8,316 3,510 44,188 40,824 100,951 100,951 160,816 160,816
Total Return Fund 11/08/82 9,378 4,572 57,580 54,216 142,971 142,971 253,423 253,423
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST
Growth Portfolio 09/10/84 10,350 5,544 55,557 52,192 140,432 140,432 165,660 165,660
Limited Maturity Bond Portfolio 09/10/84 8,498 3,692 46,858 43,494 110,386 110,386 126,912 126,912
Partners Portfolio 03/22/94 10,262 5,456 NA* NA* NA* NA* 19,588 14,783
OPPENHEIMER VARIABLE ACCOUNT FUNDS
Bond Fund 04/30/85 8,760 3,954 51,168 47,804 127,897 127,897 141,096 141,096
Global Securities Fund 11/12/90 7,939 3,133 NA* NA* NA* NA* 53,641 50,277
Multiple Strategies Fund 02/09/87 9,233 4,427 54,470 51,106 NA* NA* 112,754 111,312
STRONG VIP FUNDS
Strong Discovery Fund II, Inc. 05/08/92 9,862 5,056 NA* NA* NA* NA* 41,332 37,487
Strong Special Fund II, Inc. 05/08/92 9,222 4,416 NA* NA* NA* NA* 43,332 39,488
TCI PORTFOLIOS, INC.
TCI Balanced 05/01/91 9,254 4,448 NA* NA* NA* NA* 49,781 46,417
TCI Growth 11/20/87 10,184 5,378 56,582 53,218 NA* NA* 107,060 105,138
TCI International 05/01/94 7,965 3,159 NA* NA* NA* NA* 17,252 12,446
VAN ECK WORLDWIDE INSURANCE TRUST
Gold and Natural Resources Fund 09/01/89 8,206 3,400 51,547 48,182 NA* NA* 61,415 58,532
Worldwide Bond Fund+++ 09/01/89 9,450 4,644 49,687 46,322 NA* NA* 59,843 56,960
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
This is neither an offer to sell, nor a solicitation to buy securities. This
material is authorized for distribution to prospective investors only when
preceded or accompanied by a current prospectus which contains more complete
information. You should read the prospectus carefully before investing. These
performance illustrations represent past fund performance based on a
hypothetical annual premium of $10,000 for a 45-year-old male non-smoker
preferred with a level death benefit and an initial specified amount of $495,941
(based on a guideline-level premium of $10,000 issued on a preferred basis).
Investment return and the principal value of such investments are not guaranteed
and will fluctuate so that an investor's shares/units, when redeemed, may be
worth more or less than their original cost. Past performance does not guarantee
future returns. The performance figures reflect a premium load, a mortality and
expense risk charge, applicable cost of insurance charges, surrender charges, a
monthly administrative charge, and applicable investment advisory fees. Please
refer to the current prospectus for details regarding these charges.
* Certain funds are less than 1, 5 or 10 years old, therefore such figures
are not available for these funds.
+ Performance includes hypothetical performance for periods before the fund
was available in THE BEST OF AMERICA, where applicable, applying contract
charges to actual fund NAV's to determine the performance the fund would
have achieved in the separate account.
+ Funds are neither insured nor guaranteed by the U.S. Government. For the
- - Money Market Fund, there is no assurance that a stable $1 fund NAV (used to
calculate Unit Value) can be maintained. Figures quoted represent past
performance and returns can fluctuate.
+++ Formerly Global Bond Fund.
AV means Accumulated Value. CSV means Cash Surrender Value.
29
<PAGE> 30
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1995
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
35,677 shares (cost $502,008)................................................................ $ 555,851
Dreyfus Stock Index Fund (DryStkIx)
149,251 shares (cost $2,125,026)............................................................. 2,289,504
Fidelity VIP-- Equity-Income Portfolio (FidEqInc)
1,156,792 shares (cost $18,152,418).......................................................... 19,538,224
Fidelity VIP-- Growth Portfolio (FidGro)
882,576 shares (cost $20,865,180)............................................................ 23,564,768
Fidelity VIP-- High Income Portfolio (FidHiInc)
607,567 shares (cost $6,566,513)............................................................. 6,798,678
Fidelity VIP-- Overseas Portfolio (FidOSeas)
687,321 shares (cost $10,953,373)............................................................ 11,127,734
Fidelity VIP-II-- Asset Manager Portfolio (FidAsMgr)
1,155,797 shares (cost $16,477,416).......................................................... 16,562,577
Nationwide SAT-- Capital Appreciation Fund (NWCapApp)
147,181 shares (cost $1,650,328)............................................................. 1,752,927
Nationwide SAT-- Government Bond Fund (NWGvtBd)
408,435 shares (cost $4,313,558)............................................................. 4,513,209
Nationwide SAT-- Money Market Fund (NWMyMkt)
23,503,124 shares (cost $23,503,124)......................................................... 23,503,124
Nationwide SAT-- Total Return Fund (NWTotRet)
1,298,392 shares (cost $13,171,338).......................................................... 14,412,151
Neuberger & Berman-- Growth Portfolio (NBGro)
276,213 shares (cost $5,898,234)............................................................. 6,604,256
Neuberger & Berman-- Limited Maturity Bond Portfolio (NBLtdMat)
187,083 shares (cost $2,614,025)............................................................. 2,637,870
Neuberger & Berman-- Partners Portfolio (NBPart)
102,990 shares (cost $1,137,723)............................................................. 1,209,105
Oppenheimer-- Bond Fund (OppBdFd)
269,705 shares (cost $3,012,624)............................................................. 3,107,004
Oppenheimer-- Global Securities Fund (OppGlSec)
376,776 shares (cost $5,751,370)............................................................. 5,606,431
Oppenheimer-- Multiple Strategies Fund (OppMult)
292,492 shares (cost $3,885,852)............................................................. 4,065,639
Strong VIP-- Strong Discovery Fund II (StDisc2)
310,591 shares (cost $3,255,229)............................................................. 3,646,343
Strong VIP-- Strong Special Fund II, Inc. (StSpec2)
631,878 shares (cost $9,227,312)............................................................. 9,724,610
TCI Portfolios-- TCI Balanced (TCIBal)
173,850 shares (cost $1,065,603)............................................................. 1,154,366
TCI Portfolios-- TCI Growth (TCIGro)
667,017 shares (cost $6,174,846)............................................................. 7,330,518
TCI Portfolios-- TCI International (TCIInt)
136,078 shares (cost $639,706)............................................................... 672,226
Van Eck-- Gold and Natural Resources Fund (VEGoldNR)
242,581 shares (cost $3,213,918)............................................................. 3,277,274
Van Eck-- Worldwide Bond Fund (VEWrldBd)
144,578 shares (cost $1,534,531)............................................................. 1,603,373
--------------
Total assets....................................................................... 175,257,762
ACCOUNTS PAYABLE..................................................................................... 658,062
--------------
CONTRACT OWNERS' EQUITY.............................................................................. $ 174,599,700
==============
</TABLE>
30
<PAGE> 31
<TABLE>
<CAPTION>
Contract owners' equity represented by:
UNITS UNIT VALUE
--------- ------------
<S> <C> <C> <C>
Single Premium contracts issued prior to April 16, 1990:
Fidelity VIP-- Equity-Income Portfolio............................ 12,577 $22.979257 $ 289,010
Fidelity VIP-- Growth Portfolio................................... 8,954 27.799908 248,920
Fidelity VIP-- High Income Portfolio.............................. 3,442 20.233170 69,643
Fidelity VIP-- Overseas Portfolio................................. 12,854 16.721140 214,934
Fidelity VIP-II-- Asset Manager Portfolio......................... 2,631 16.487824 43,379
Nationwide SAT-- Government Bond Fund............................. 5,256 18.325139 96,317
Nationwide SAT-- Money Market Fund................................ 10,634 13.972283 148,581
Nationwide SAT-- Total Return Fund................................ 1,198 19.994434 23,953
Neuberger & Berman-- Growth Portfolio............................. 4,919 21.344673 104,994
Neuberger & Berman-- Limited Maturity Bond Portfolio.............. 4,657 15.319418 71,343
Oppenheimer-- Global Securities Fund.............................. 1,671 11.465515 19,159
Strong VIP - Strong Special Fund II, Inc.......................... 269 16.539408 4,449
TCI Portfolios-- TCI Growth....................................... 8,966 23.239302 208,364
Van Eck-- Gold and Natural Resources Fund......................... 4,461 12.021566 53,628
Van Eck-- Worldwide Bond Fund..................................... 23 14.191081 326
Single Premium contracts issued on or after April 16, 1990:
The Dreyfus Socially Responsible Growth Fund, Inc................. 4,979 12.545345 62,463
Dreyfus Stock Index Fund.......................................... 16,324 12.012576 196,093
Fidelity VIP-- Equity-Income Portfolio............................ 477,183 18.895330 9,016,530
Fidelity VIP-- Growth Portfolio................................... 434,299 19.326531 8,393,493
Fidelity VIP-- High Income Portfolio.............................. 103,397 20.925576 2,163,642
Fidelity VIP-- Overseas Portfolio................................. 339,218 12.106783 4,106,839
Fidelity VIP-II-- Asset Manager Portfolio......................... 400,024 16.187619 6,475,436
Nationwide SAT-- Capital Appreciation Fund........................ 17,349 12.368746 214,585
Nationwide SAT-- Government Bond Fund............................. 199,897 15.272231 3,052,873
Nationwide SAT-- Money Market Fund................................ 1,078,755 11.784221 12,712,287
Nationwide SAT-- Total Return Fund................................ 124,897 17.329904 2,164,453
Neuberger & Berman-- Growth Portfolio............................. 161,169 15.136140 2,439,477
Neuberger & Berman-- Limited Maturity Bond Portfolio.............. 87,497 13.202504 1,155,179
Neuberger &Berman - Partners Portfolio............................ 36,944 12.053760 445,314
Oppenheimer-- Bond Fund........................................... 73,073 15.249529 1,114,329
Oppenheimer-- Global Securities Fund.............................. 106,933 11.395705 1,218,577
Oppenheimer-- Multiple Strategies Fund............................ 121,096 15.440766 1,869,815
Strong VIP-- Strong Discovery Fund II, Inc........................ 99,556 14.071406 1,400,893
Strong VIP-- Strong Special Fund II, Inc.......................... 196,583 16.355881 3,215,288
TCI Portfolios-- TCI Balanced..................................... 37,343 12.082582 451,200
TCI Portfolios-- TCI Growth....................................... 201,288 15.698876 3,159,995
TCI Portfolios-- TCI International Fund........................... 26,779 9.705231 259,896
Van Eck-- Gold and Natural Resources Fund......................... 121,584 13.347362 1,622,826
Van Eck-- Worldwide Bond Fund..................................... 43,099 13.932660 600,484
Multiple Payment contracts and Flexible Premium contracts:
The Dreyfus Socially Responsible Growth Fund, Inc................. 38,991 12.654359 493,406
Dreyfus Stock Index Fund.......................................... 172,759 12.117797 2,093,458
Fidelity VIP-- Equity-Income Portfolio............................ 529,069 19.341791 10,233,142
Fidelity VIP-- Growth Portfolio................................... 765,009 19.513847 14,928,269
Fidelity VIP-- High Income Portfolio.............................. 235,098 19.442081 4,570,794
Fidelity VIP-- Overseas Portfolio................................. 522,803 13.008547 6,800,907
Fidelity VIP-II-- Asset Manager Portfolio......................... 689,657 14.562658 10,043,239
Nationwide SAT-- Capital Appreciation Fund........................ 122,411 12.567376 1,538,385
Nationwide SAT-- Government Bond Fund............................. 96,243 14.175062 1,364,250
Nationwide SAT-- Money Market Fund................................ 871,327 11.447246 9,974,295
Nationwide SAT-- Total Return Fund................................ 744,534 16.418447 12,224,092
Neuberger & Berman-- Growth Portfolio............................. 273,996 14.817785 4,060,014
Neuberger & Berman-- Limited Maturity Bond Portfolio.............. 111,987 12.603864 1,411,469
Neuberger & Berman-- Partners Portfolio........................... 63,079 12.108828 763,813
Oppenheimer-- Bond Fund........................................... 138,835 14.366609 1,994,588
Oppenheimer-- Global Securities Fund.............................. 380,089 11.495563 4,369,337
Oppenheimer-- Multiple Strategies Fund............................ 145,272 15.116397 2,195,989
Strong VIP-- Strong Discovery Fund II, Inc........................ 157,079 14.296039 2,245,608
Strong VIP-- Strong Special Fund II, Inc.......................... 391,479 16.616903 6,505,169
TCI Portfolios-- TCI Balanced..................................... 57,280 12.276633 703,206
TCI Portfolios-- TCI Growth....................................... 268,187 14.775078 3,962,484
TCI Portfolios-- TCI International................................ 42,161 9.749626 411,054
Van Eck-- Gold and Natural Resources Fund......................... 109,606 14.606798 1,600,993
Van Eck-- Worldwide Bond Fund..................................... 77,145 12.998534 1,002,772
========= ========= ----------------
$ 174,599,700
================
</TABLE>
See accompanying notes to financial statements.
31
<PAGE> 32
<TABLE>
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1995 1994 1993
---------------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested capital gains and dividends........................ $ 3,640,521 2,028,420 588,192
---------------- ----------- -----------
Gain (loss) on investments:
Proceeds from redemption of mutual fund shares............. 71,285,062 92,331,535 48,569,916
Cost of mutual fund shares sold............................ (69,606,555) (92,582,661) (47,329,329)
---------------- ----------- -----------
Realized gain (loss) on investments........................ 1,678,507 (251,126) 1,240,587
Change in unrealized gain (loss) on investments............ 11,371,311 (4,138,950) 181,324
---------------- ----------- -----------
Net gain (loss) on investments............... 13,049,818 (4,390,076) 1,421,911
---------------- ----------- -----------
Net investment activity...................... 16,690,339 (2,361,656) 2,010,103
---------------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from contract owners............... 48,661,101 28,924,452 11,200,021
Surrenders (note 2d).......................................... (3,300,539) (535,565) (322,709)
Death benefits (note 4)....................................... (1,556) (14,327) (329,548)
Policy loans (net of repayments) (note 5)..................... (1,329,311) (1,298,389) (620,959)
---------------- ----------- -----------
Net equity transactions...................... 44,029,695 27,076,171 9,926,805
---------------- ----------- -----------
EXPENSES:
Deductions for surrender charges (note 2d).................... (149,264) (25,168) (14,227)
Redemptions to pay cost of insurance charges
and administrative charges (notes 2b and 2c)............... (6,204,277) (1,878,799) (521,252)
Deductions for asset charges (note 3)......................... (744,414) (369,309) (173,212)
---------------- ----------- -----------
Total expenses............................... (7,097,955) (2,273,276) (708,691)
---------------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY............................ 53,622,079 22,441,239 11,228,217
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD...................... 120,977,621 54,817,602 23,478,610
---------------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD............................ $ 174,599,700 77,258,841 34,706,827
================ =========== ===========
</TABLE>
32
<PAGE> 33
NATIONWIDE VLI SEPARATE ACCOUNT-2
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
The Nationwide VLI Separate Account--2 (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life Insurance
Company (the Company) on May 7, 1987. The Account has been registered as a unit
investment trust under the Investment Company Act of 1940.
(b) The Contracts
Prior to December 31, 1990, only single premium life insurance 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,
multiple payment life insurance contracts and flexible premium life insurance
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.
Contract owners may invest in the following:
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)(formerly Dreyfus Life and Annuity
Index Fund, Inc. (DLAI))
Portfolios of the Fidelity Variable Insurance Products Fund (Fidelity
VIP);
Fidelity VIP -- Equity-Income Portfolio (FidEqInc)
Fidelity VIP -- Growth Portfolio (FidGro)
Fidelity VIP -- High Income Portfolio (FidHiInc)
Fidelity VIP -- Overseas Portfolio (FidOSeas)
Portfolio of the Fidelity Variable Insurance Products Fund II (Fidelity
VIP-II)
Fidelity VIP-II -- Asset Manager Portfolio (FidAsMgr)
Funds of the Nationwide Separate Account Trust (Nationwide SAT) (managed
for a fee by an affiliated investment adviser);
Nationwide SAT -- Capital Appreciation Fund (NWCapApp)
Nationwide SAT -- Government Bond Fund (NWGvtBd)
Nationwide SAT -- Money Market Fund (NWMyMkt)
Nationwide SAT -- Total Return Fund (NWTotRet)
Portfolios of the Neuberger & Berman Advisers Management Trust (Neuberger
& Berman);
Neuberger & Berman -- Growth Portfolio (NBGro)
Neuberger & Berman -- Limited Maturity Bond Portfolio (NBLtdMat)
Neuberger & Berman -- Partners Portfolio (NBPart)
Funds of the Oppenheimer Variable Account Funds (Oppenheimer);
Oppenheimer -- Bond Fund (OppBdFd)
Oppenheimer -- Global Securities Fund (OppGlSec)
Oppenheimer -- Multiple Strategies Fund (OppMult)
Funds of the Strong Variable Insurance Products Funds (Strong VIP);
Strong VIP -- Strong Discovery Fund II, Inc. (StDisc2)
Strong VIP -- Strong Special Fund II, Inc. (StSpec2)
Portfolios of the TCI Portfolios, Inc. (TCI Portfolios);
TCI Portfolios -- TCI Balanced (TCIBal)
TCI Portfolios -- TCI Growth (TCIGro)
TCI Portfolios -- TCI International (TCIInt)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck) (formerly Van Eck
Investment Trust);
Van Eck -- Gold and Natural Resources Fund (VEGoldNR)
Van Eck -- Worldwide Bond Fund (VEWrldBd) (formerly Van Eck -- Global
Bond Fund (VEGlobBd))
33
<PAGE> 34
At June 30, 1995, contract owners have invested in all of the above funds.
The contract owners' equity is affected by the investment results of each fund
and certain policy charges (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 investments is based on the closing net asset value
per share at June 30, 1995. 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
The operations of the Account form a part of, and are taxed with, the
operations of the Company, which is taxed as a life insurance company under the
provisions of the Internal Revenue Code.
Currently, no charge is being made to the Account for Federal income
taxes, or reserves for such taxes, which may be attributed to the Account.
However, the Company reserves the right to make such charges in the future.
(2) POLICY CHARGES
(a) Deductions from Premiums
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. 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 $25 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.
(d) Surrenders
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.
34
<PAGE> 35
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, 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 single premium 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.
(4) DEATH BENEFITS
Death benefits result in a redemption of the contract value from the
Account and payment of the death benefit proceeds, less any outstanding policy
loans (and policy charges), to the legal beneficiary. The excess of the death
benefit proceeds over the contract value on the date of death 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) SCHEDULE I
Schedule I presents the components of the change in the unit values, which
are the basis for determining contract owners' equity. This schedule is
presented for each series, as applicable, in the following format:
- Beginning unit value - Jan. 1
- Reinvested dividends and capital gains
(This amount reflects the increase in the unit value due to
dividend and capital gain distributions from the underlying mutual
fund.)
- Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the fund.)
- Asset charges
(This amount reflects the decrease in the unit value due to the
charges discussed in note 3.)
- Ending unit value - June 30
- Percentage increase (decrease) in unit value.
35
<PAGE> 36
SCHEDULE I
NATIONWIDE VLI SEPARATE ACCOUNT-2
SINGLE PREMIUM CONTRACTS ISSUED PRIOR TO APRIL 16, 1990
SCHEDULES OF CHANGES IN UNIT VALUES
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
FIDEQINC FIDGRO FIDHIINC FIDOSEAS FIDASMGR NWGVTBD
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $19.708533 22.566466 18.151674 16.131866 15.607540 16.457035
- ------------------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains 1.270646 .124738 1.314664 .123427 .327932 .567391
- ------------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.101444 5.223440 .857975 .541974 .627910 1.382929
- ------------------------------------------------------------------------------------------------------------------------------------
Asset charges (.101366) (.114736) (.091143) (.076127) (.075558) (.082216)
- ------------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $22.979257 27.799908 20.233170 16.721140 16.487824 18.325139
- ------------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 17% 23% 11% 4% 6% 11%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 $18.583057 22.785679 18.612185 16.009316 16.778042 17.168348
- ------------------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains 1.166327 1.371061 1.706032 .082663 .804460 .512907
- ------------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.952605) (3.562376) (1.974875) .401701 (1.765981) (1.192841)
- ------------------------------------------------------------------------------------------------------------------------------------
Asset charges (.088472) (.105081) (.088053) (.077931) (.077183) (.079159)
- ------------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $18.708307 20.489283 18.255289 16.415749 15.739338 16.409255
- ------------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 1% (10)% (2)% 3% (6)% (4)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 $15.870837 19.270345 15.591886 11.777024 13.992516 15.826033
- ------------------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .236791 .428707 1.282532 .275295 .649736 .502085
- ------------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.529453 1.792292 .594715 1.965255 .579539 .654828
- ------------------------------------------------------------------------------------------------------------------------------------
Asset charges (.079465) (.094208) (.077840) (.061729) (.068799) (.077436)
- ------------------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $17.557616 21.397136 17.391293 13.955845 15.152992 16.905510
- ------------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 11% 11% 12% 19% 8% 7%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* This is not an annualized rate of return as it is the change for a six month
period and asset charges do not include the policy charges discussed in
note 2.
36
<PAGE> 37
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-2
SINGLE PREMIUM CONTRACTS ISSUED PRIOR TO APRIL 16, 1990
SCHEDULES OF CHANGES IN UNIT VALUES
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
NWMYMKT NWTOTRET NBGRO NBLTDMAT OPPGLSEC STSPEC2
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $13.652006 17.312690 17.608267 14.475203 11.358489 14.690448
- ------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .386170 .267742 .623265 .804090 .298934 .679350
- ------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 2.502165 3.204434 .110826 (.138949) 1.242208
- ------------------------------------------------------------------------------------------------------------------------
Asset charges (.065893) (.088163) (.091293) (.070701) (.052959) (.072598)
- ------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $13.972283 19.994434 21.344673 15.319418 11.465515 16.539408
- ------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 2% 15% 21% 6% 1% 13%
14%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 $13.267517 17.291720 18.709214 14.635617 12.162716 **
- ------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .209758 .213925 2.255334 .618309 .214436
- ------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 (.254032) (4.109140) (.786528) (.786150)
- ------------------------------------------------------------------------------------------------------------------------
Asset charges (.063203) (.081736) (.086505) (.068327) (.057276)
- ------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $13.414072 17.169877 16.768903 14.399071 11.533726
- ------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 1% (1)% (10)% (2)% (5)%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 $13.035884 15.738275 17.686598 13.856975 ** **
- ------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .177835 .191209 .409995 .569917
- ------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 .682577 (.268369) .065008
- ------------------------------------------------------------------------------------------------------------------------
Asset charges (.062059) (.075966) (.082202) (.066914)
- ------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $13.151660 16.536095 17.746022 14.424986
- ------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 1% 5% 0% 4%
2%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
TCIGRO VEGOLDNR VEWRLDBD
---------- ----------- ----------
<S> <C> <C> <C>
1995
Beginning unit value - Jan. 1 19.544976 11.677805 12.443161
- ---------------------------------------------------------------------------------
Reinvested dividends and capital gains .022491 .053202 .740605
- ---------------------------------------------------------------------------------
Unrealized gain (loss) 3.770258 .345164 1.071054
- ---------------------------------------------------------------------------------
Asset charges (.098423) (.054605) (.063739)
- ---------------------------------------------------------------------------------
Ending unit value - June 30 23.239302 12.021566 14.191081
- ---------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 19% 3% 14%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 19.964524 12.382561 12.729709
- ---------------------------------------------------------------------------------
Reinvested dividends and capital gains .002137 .035632 .051271
- ---------------------------------------------------------------------------------
Unrealized gain (loss) (1.407262) (.705563) (.636427)
- ---------------------------------------------------------------------------------
Asset charges (.093919) (.057741) (.058353)
- ---------------------------------------------------------------------------------
Ending unit value - June 30 18.465480 11.654889 12.086200
- ---------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (8)% (6)% (5)%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 18.270571 7.583732 11.923602
- ---------------------------------------------------------------------------------
Reinvested dividends and capital gains .000000 .008964 .637256
- ---------------------------------------------------------------------------------
Unrealized gain (loss) .881655 3.373091 (.314915)
- ---------------------------------------------------------------------------------
Asset charges (.087155) (.041579) (.056893)
- ---------------------------------------------------------------------------------
Ending unit value - June 30 19.065071 10.924208 12.189050
- ---------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 4% 44% 2%
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
</TABLE>
*This is not an annualized rate of return as it is the change for a six month
period and asset charges do not include the policy charges discussed in
note 2.
**This investment option was not being utilized.
37
<PAGE> 38
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-2
SINGLE PREMIUM CONTRACTS ISSUED ON OR AFTER APRIL 16, 1990
SCHEDULES OF CHANGES IN UNIT VALUES
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
DRYSRGRO DRYSTKIX FIDEQINC FIDGRO FIDHIINC FIDOSEAS
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $10.722275 10.088849 16.234159 15.715602 18.805616 11.700527
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .000000 .124498 1.046119 .086841 1.361583 .089493
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.897179 1.870747 1.729207 3.633331 .887489 .392249
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.074109) (.071518) (.114155) (.109243) (.129112) (.075486)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $12.545345 12.012576 18.895330 19.326531 20.925576 12.106783
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 17% 19% 16% 23% 11% 3%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 $10.702403 10.131165 15.360584 15.923752 19.350153 11.652241
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .000000 .053554 .963599 .957853 1.773098 .060146
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.078950) (.411491) (.786888) (2.487143) (2.051897) .292509
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.069293) (.064604) (.099989) (.100401) (.125175) (.077557)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $10.554160 9.708624 15.437306 14.294061 18.946179 11.927339
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (1)% (4)% 0% (10)% (2)% 2%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 ** ** $13.165400 13.515048 16.267831 8.602313
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .196195 .300564 1.337665 .201014
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.267110 1.254497 .618312 1.433877
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.090124) (.090336) (.111046) (.061642)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $14.538581 14.979773 18.112762 10.175562
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 10% 11% 11% 18%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FIDASMGR NWCAPAPP
---------- ---------
<S> <C> <C>
1995
Beginning unit value - Jan. 1 15.350115 11.312336
- -------------------------------------------------------------------
Reinvested dividends and capital gains .322418 .108505
- -------------------------------------------------------------------
Unrealized gain (loss) .616672 1.024583
- -------------------------------------------------------------------
Asset charges (.101586) (.076678)
- -------------------------------------------------------------------
Ending unit value - June 30 16.187619 12.368746
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 5% 9%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 16.559029 11.563943
- -------------------------------------------------------------------
Reinvested dividends and capital gains .793701 .072046
- -------------------------------------------------------------------
Unrealized gain (loss) (1.741649) (.647953)
- -------------------------------------------------------------------
Asset charges (.104152) (.073362)
- -------------------------------------------------------------------
Ending unit value - June 30 15.506929 10.914674
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (6)% (6)%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 13.859040 10.688742
- -------------------------------------------------------------------
Reinvested dividends and capital gains .643313 .081511
- -------------------------------------------------------------------
Unrealized gain (loss) .572383 (.021317)
- -------------------------------------------------------------------
Asset charges (.093157) (.068446)
- -------------------------------------------------------------------
Ending unit value - June 30 14.981579 10.680490
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 8% 0%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
</TABLE>
*This is not an annualized rate of return as it is the change for a six month
period and asset charges do not include the policy charges discussed in
note 2.
**This investment option was not being utilized.
38
<PAGE> 39
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-2
SINGLE PREMIUM CONTRACTS ISSUED ON OR AFTER APRIL 16, 1990
SCHEDULES OF CHANGES IN UNIT VALUES
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
NWGVTBD NWMYMKT NWTOTRET NBGRO NBLTDMAT NBPART
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $13.739287 11.534440 15.031721 12.508337 12.496729 10.018146
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .473075 .326029 .232165 .442496 .693794 .081860
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.153715 .000000 2.170685 2.273970 .095431 2.024613
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.093846) (.076248) (.104667) (.088663) (.083450) (.070859)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $15.272231 11.784221 17.329904 15.136140 13.202504 12.053760
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 11% 2% 15% 21% 6% 20%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 $14.383265 11.249231 15.066007 13.336899 12.679406 **
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .429138 .177692 .186146 1.607088 .535454
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.998269) .000000 (.220885) (2.926683) (.681077)
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.090679) (.073378) (.097367) (.084318) (.080944)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $13.723455 11.353545 14.933901 11.932986 12.452839
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (5)% 1% (1)% (11)% (2)%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 $13.305926 11.092030 13.761364 12.652864 12.047601 **
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .421572 .151212 .166964 .293188 .495297
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .549589 .000000 .595570 (.193030) .055639
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.089013) (.072326) (.090815) (.080402) (.079544)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $14.188074 11.170916 14.433083 12.672620 12.518993
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 7% 1% 5% 0% 4%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
OPPBDFD OPPGLSEC
---------- ----------
<S> <C> <C>
1995
Beginning unit value - Jan. 1 13.903136 11.309050
- ------------------------------------------------------------------
Reinvested dividends and capital gains .479016 .297396
- ------------------------------------------------------------------
Unrealized gain (loss) .961762 (.138644)
- ------------------------------------------------------------------
Asset charges (.094385) (.072097)
- ------------------------------------------------------------------
Ending unit value - June 30 15.249529 11.395705
- ------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 10% 1%
- ------------------------------------------------------------------
- ------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 14.362878 12.152136
- ------------------------------------------------------------------
Reinvested dividends and capital gains .293823 .214078
- ------------------------------------------------------------------
Unrealized gain (loss) (.590888) (.784285)
- ------------------------------------------------------------------
Asset charges (.091289) (.078233)
- ------------------------------------------------------------------
Ending unit value - June 30 13.974524 11.503696
- ------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (3)% (5)%
- ------------------------------------------------------------------
- ------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 12.872824 **
- ------------------------------------------------------------------
Reinvested dividends and capital gains .387442
- ------------------------------------------------------------------
Unrealized gain (loss) .704466
- ------------------------------------------------------------------
Asset charges (.086574)
- ------------------------------------------------------------------
Ending unit value - June 30 13.878158
- ------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 8%
- ------------------------------------------------------------------
- ------------------------------------------------------------------
</TABLE>
*This is not an annualized rate of return as it is the change for a six month
period and asset charges do not include the policy charges discussed in
note 2.
**This investment option was not being utilized.
39
<PAGE> 40
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-2
SINGLE PREMIUM CONTRACTS ISSUED ON OR AFTER APRIL 16, 1990
SCHEDULES OF CHANGES IN UNIT VALUES
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
OPPMULT STDISC2 STSPEC2 TCIBAL TCIGRO TCIINT
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $13.693997 12.144445 14.552799 10.801955 13.226279 9.392654
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .758506 .003939 .672374 .121402 .015219 .000000
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.082475 2.005443 1.229035 1.232108 2.548434 .372699
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.094212) (.082421) (.098327) (.072883) (.091056) (.060122)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $15.440766 14.071406 16.355881 12.082582 15.698876 9.705231
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 13% 16% 12% 12% 19% 3%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 $14.148115 13.003547 14.230663 10.876445 13.557427 **
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .314978 .015220 .039930 .118896 .001450
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.888226) (1.379822) .081375 (.393389) (.953975)
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.090508) (.080824) (.093185) (.070510) (.087199)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $13.484359 11.558121 14.258783 10.531442 12.517703
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (5)% (11)% 0% (3)% (8)%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 $12.362293 10.796269 11.518529 10.232336 12.451309 **
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .267614 .293719 .034198 .086081 .000000
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .655344 .204692 1.480068 .302441 .599391
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.082681) (.070893) (.079385) (.066446) (.081204)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $13.202570 11.223787 12.953410 10.554412 12.969496
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 7% 4% 12% 3% 4%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
VEGOLDNR VEWRLDBD
---------- ----------
<S> <C> <C>
1995
Beginning unit value - Jan. 1 12.988341 12.237880
- -----------------------------------------------------------------
Reinvested dividends and capital gains .059090 .727370
- -----------------------------------------------------------------
Unrealized gain (loss) .382974 1.053127
- -----------------------------------------------------------------
Asset charges (.083043) (.085717)
- -----------------------------------------------------------------
Ending unit value - June 30 13.347362 13.932660
- -----------------------------------------------------------------
Percentage increase (decrease)
in unit value* 3% 14%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
1994
Beginning unit value - Jan. 1 13.820369 12.563474
- -----------------------------------------------------------------
Reinvested dividends and capital gains .039716 .050533
- -----------------------------------------------------------------
Unrealized gain (loss) (.786345) (.627585)
- -----------------------------------------------------------------
Asset charges (.088112) (.078753)
- -----------------------------------------------------------------
Ending unit value - June 30 12.985628 11.907669
- -----------------------------------------------------------------
Percentage increase (decrease)
in unit value* (6)% (5)%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
1993
Beginning unit value - Jan. 1 8.494453 11.809827
- -----------------------------------------------------------------
Reinvested dividends and capital gains .010026 .630293
- -----------------------------------------------------------------
Unrealized gain (loss) 3.773394 (.311973)
- -----------------------------------------------------------------
Asset charges (.063677) (.077037)
- -----------------------------------------------------------------
Ending unit value - June 30 12.214196 12.051110
- -----------------------------------------------------------------
Percentage increase (decrease)
in unit value* 44% 2%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
</TABLE>
*This is not an annualized rate of return as it is the change for a six month
period and asset charges do not include the policy charges discussed in
note 2.
**This investment option was not being utilized.
40
<PAGE> 41
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-2
MULTIPLE PAYMENT CONTRACTS AND FLEXIBLE PREMIUM CONTRACTS
SCHEDULES OF CHANGES IN UNIT VALUES
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
DRYSRGRO DRYSTKIX FIDEQINC FIDGRO FIDHIINC FIDOSEAS
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $10.788547 10.151919 16.576413 15.828463 17.428943 12.540728
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .000000 .125508 1.068942 .087506 1.262495 .095965
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.911763 1.884713 1.768262 3.665672 .824368 .421705
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.045951) (.044343) (.071826) (.067794) (.073725) (.049851)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $12.654359 12.117797 19.341791 19.513847 19.442081 13.008547
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 17% 19% 17% 23% 12% 4%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 $10.715005 10.143796 15.606442 15.958341 17.844401 12.426854
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .000000 .053687 .979713 .960381 1.635883 .064174
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.079449) (.412760) (.800240) (2.496025) (1.893913) .311754
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.042741) (.039859) (.062595) (.061996) (.071122) (.050964)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $10.592815 9.744864 15.723320 14.360701 17.515249 12.751818
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (1)% (4)% 1% (10)% (2)% 3%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 ** ** $13.308899 13.476298 14.926526 9.128094
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .198662 .299849 1.227974 .213405
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.282693 1.253876 .569547 1.523518
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.056137) (.055500) (.062778) (.040303)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $14.734117 14.974523 16.661269 10.824714
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 11% 11% 12% 19%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FIDASMGR NWCAPAPP
---------- ----------
<S> <C> <C>
1995
Beginning unit value - Jan. 1 13.774855 11.465403
- -------------------------------------------------------------------
Reinvested dividends and capital gains .289466 .110173
- -------------------------------------------------------------------
Unrealized gain (loss) .554509 1.039681
- -------------------------------------------------------------------
Asset charges (.056172) (.047881)
- -------------------------------------------------------------------
Ending unit value - June 30 14.562658 12.567376
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 6% 10%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 14.785784 11.662121
- -------------------------------------------------------------------
Reinvested dividends and capital gains .709036 .072792
- -------------------------------------------------------------------
Unrealized gain (loss) (1.556782) (.654655)
- -------------------------------------------------------------------
Asset charges (.057299) (.045583)
- -------------------------------------------------------------------
Ending unit value - June 30 13.880739 11.034675
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (6)% (5)%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 12.312732 10.725293
- -------------------------------------------------------------------
Reinvested dividends and capital gains .571816 .081943
- -------------------------------------------------------------------
Unrealized gain (loss) .510052 (.020854)
- -------------------------------------------------------------------
Asset charges (.050994) (.042312)
- -------------------------------------------------------------------
Ending unit value - June 30 13.343606 10.744070
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 8% 0%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
</TABLE>
*This is not an annualized rate of return as it is the change for a six month
period and asset charges do not include the policy charges discussed in
note 2.
**This investment option was not being utilized.
41
<PAGE> 42
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-2
MULTIPLE PAYMENT CONTRACTS AND FLEXIBLE PREMIUM CONTRACTS
SCHEDULES OF CHANGES IN UNIT VALUES
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994
AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
NWGVTBD NWMYMKT NWTOTRET NBGRO NBLTDMAT NBPART
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $12.720514 11.176411 14.205723 12.214794 11.900389 10.038887
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .438811 .316243 .219815 .432461 .661221 .082096
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.069274 .000000 2.053852 2.223876 .091213 2.031600
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.053537) (.045408) (.060943) (.053346) (.048959) (.043755)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $14.175062 11.447246 16.418447 14.817785 12.603864 12.108828
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 11% 2% 16% 21% 6% 21%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 $13.250482 10.845265 14.167308 12.959107 12.014277 **
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .396083 .171513 .175370 1.562441 .507651
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.921057) .000000 (.208324) (2.847280) (.645773)
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.051463) (.043483) (.056410) (.050479) (.047253)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $12.674045 10.973295 14.077944 11.623789 11.828902
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (4)% 1% (1)% (10)% (2)%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 $12.196370 10.639809 12.875439 12.232618 11.358230 **
- -------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .387141 .145196 .156513 .283612 .467224
- -------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .504522 .000000 .558380 (.185679) .053179
- -------------------------------------------------------------------------------------------------------------------------
Asset charges (.050272) (.042642) (.052349) (.047894) (.046205)
- -------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $13.037761 10.742363 13.537983 12.282657 11.832428
- -------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 7% 1% 5% 0% 4%
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
OPPBDFD OPPGLSEC
---------- ----------
<S> <C> <C>
1995
Beginning unit value - Jan. 1 13.065574 11.379737
- -------------------------------------------------------------------
Reinvested dividends and capital gains .450916 .299595
- -------------------------------------------------------------------
Unrealized gain (loss) .904766 (.139069)
- -------------------------------------------------------------------
Asset charges (.054647) (.044700)
- -------------------------------------------------------------------
Ending unit value - June 30 14.366609 11.495563
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 10% 1%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 13.430475 12.167250
- -------------------------------------------------------------------
Reinvested dividends and capital gains .275349 .214589
- -------------------------------------------------------------------
Unrealized gain (loss) (.553440) (.786955)
- -------------------------------------------------------------------
Asset charges (.052595) (.048263)
- -------------------------------------------------------------------
Ending unit value - June 30 13.099789 11.546621
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (2)% (5)%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 11.976650 **
- -------------------------------------------------------------------
Reinvested dividends and capital gains .361143
- -------------------------------------------------------------------
Unrealized gain (loss) .656408
- -------------------------------------------------------------------
Asset charges (.049631)
- -------------------------------------------------------------------
Ending unit value - June 30 12.944570
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 8%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
</TABLE>
*This is not an annualized rate of return as it is the change for a six month
period and asset charges do not include the policy charges discussed in
note 2.
**This investment option was not being utilized.
42
<PAGE> 43
SCHEDULE I, CONTINUED
NATIONWIDE VLI SEPARATE ACCOUNT-2
MULTIPLE PAYMENT CONTRACTS AND FLEXIBLE PREMIUM CONTRACTS
SCHEDULES OF CHANGES IN UNIT VALUES
SIX MONTH PERIODS ENDED JUNE 30, 1995, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
OPPMULT STDISC2 STSPEC2 TCIBAL TCIGRO TCIINT
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $13.372968 12.307607 14.748256 10.948128 12.417011 9.412116
- ------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .741780 .003997 .682289 .123255 .014289 .000000
- ------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 1.058341 2.035906 1.247757 1.250767 2.396454 .374626
- ------------------------------------------------------------------------------------------------------------------------
Asset charges (.056692) (.051471) (.061399) (.045517) (.052676) (.037116)
- ------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $15.116397 14.296039 16.616903 12.276633 14.775078 9.749626
- ------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 13% 16% 13% 12% 19% 4%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 $13.747705 13.112678 14.350073 10.968814 12.664593 **
- ------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .306660 .015384 .040336 .120129 .001356
- ------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (.864902) (1.393758) .081622 (.397883) (.893383)
- ------------------------------------------------------------------------------------------------------------------------
Asset charges (.054183) (.050215) (.057908) (.043814) (.050179)
- ------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $13.135280 11.684089 14.414123 10.647246 11.722387
- ------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (4)% (11)% 0% (3)% (7)%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 $11.952042 10.832134 11.556788 10.267347 11.572833 **
- ------------------------------------------------------------------------------------------------------------------------
Reinvested dividends and capital gains .259244 .295297 .034383 .086539 .000000
- ------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .634606 .205899 1.487137 .304451 .558548
- ------------------------------------------------------------------------------------------------------------------------
Asset charges (.049252) (.043825) (.049073) (.041081) (.046503)
- ------------------------------------------------------------------------------------------------------------------------
Ending unit value - June 30 $12.796640 11.289505 13.029235 10.617256 12.084878
- ------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 7% 4% 13% 3% 4%
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
VEGOLDNR VEWRLDBD
---------- ----------
<S> <C> <C>
1995
Beginning unit value - Jan. 1 14.178501 11.388987
- -------------------------------------------------------------------
Reinvested dividends and capital gains .064634 .678268
- -------------------------------------------------------------------
Unrealized gain (loss) .419526 .980430
- -------------------------------------------------------------------
Asset charges (.055863) (.049151)
- -------------------------------------------------------------------
Ending unit value - June 30 14.606798 12.998534
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 3% 14%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
1994
Beginning unit value - Jan. 1 15.011706 11.633841
- -------------------------------------------------------------------
Reinvested dividends and capital gains .043222 .046884
- -------------------------------------------------------------------
Unrealized gain (loss) (.855909) (.581843)
- -------------------------------------------------------------------
Asset charges (.058966) (.044932)
- -------------------------------------------------------------------
Ending unit value - June 30 14.140053 11.053950
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (6)% (5)%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
1993
Beginning unit value - Jan. 1 9.180337 10.880964
- -------------------------------------------------------------------
Reinvested dividends and capital gains .010857 .581859
- -------------------------------------------------------------------
Unrealized gain (loss) 4.084910 (.287782)
- -------------------------------------------------------------------
Asset charges (.042404) (.043732)
- -------------------------------------------------------------------
Ending unit value - June 30 13.233700 11.131309
- -------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 44% 2%
- -------------------------------------------------------------------
- -------------------------------------------------------------------
</TABLE>
*This is not an annualized rate of return as it is the change for a six month
period and asset charges do not include the policy charges discussed in
note 2.
**This investment option was not being utilized.
43
<PAGE> 44
[THIS PAGE LEFT BLANK INTENTIONALLY]
44
<PAGE> 45
This report is for the information of contract owners with funds in the
Nationwide VLI Separate Account-2. It may also be used, from time to time, as
sales literature, but only when accompanied or preceded by the current
prospectus, which contains complete information about the contracts which
invest in the separate account, and their fees, charges and expenses. If this
report is used as sales literature after September 30, 1995, it must be
accompanied by the fund performance report reflecting performances for the most
recently completed calendar quarter. Prospective investors should read the
prospectus carefully before investing.
45
<PAGE> 46
[THIS PAGE LEFT BLANK INTENTIONALLY]
46
<PAGE> 47
[THIS PAGE LEFT BLANK INTENTIONALLY]
47
<PAGE> 48
<TABLE>
<S> <C>
NATIONWIDE LIFE INSURANCE COMPANY BULK RATE
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220 U.S. POSTAGE
P A I D
COLUMBUS, OHIO
PERMIT NO. 521
</TABLE>
