<PAGE> 1
Nationwide(R) VLI
Separate Account-2
June 30, 1998
[LOGO]
'98
SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
[LOGO]
Nationwide Life Insurance Company
Home Office: Columbus, Ohio
VLOB--12--V (6/98)
<PAGE> 2
[LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to present the 1998
semi-annual report of the Nationwide VLI Separate Account-2.
The bull market continued its run in the first half of 1998. Most of the gains
came in the first quarter with more modest returns or small losses for the
second half of the period. At this writing, a market correction that began in
the second quarter continues to provide a good deal of day-to-day volatility.
Much of the capriciousness of the market is due to uncertainty about the
economic outcome in Asia. However, we think the correction will be of limited
magnitude and duration and will provide a healthy respite before further market
advances.
We believe that existing economic and market fundamentals provide an ongoing
favorable environment for financial assets. Interest rates remain low; inflation
is nearly nonexistent; corporate earnings, albeit slowing, remain positive, and
U.S. economic growth appears to be on a modest but sustainable track.
Against this backdrop, we believe our variable insurance products continue to
provide the versatile investment vehicle you need to respond to changing market
conditions. We are committed to the continual evaluation of our products and
services to ensure that we remain responsive to your long-term financial
planning and retirement-savings needs.
/s/ JOSEPH J. GASPER
--------------------
Joseph J. Gasper, President
August 17, 1998
3
<PAGE> 3
================================================================================
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Balanced (ACVPBal)
638,326 shares (cost $5,039,217) ........................................ $ 5,259,805
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
1,265,879 shares (cost $13,292,139) ..................................... 11,772,671
American Century VP - American Century VP Income & Growth (ACVPIncGr)
39,399 shares (cost $244,372) ........................................... 248,608
American Century VP - American Century VP International (ACVPInt)
1,621,037 shares (cost $12,876,277) ..................................... 13,033,134
American Century VP - American Century VP Value (ACVPValue)
389,320 shares (cost $2,810,980) ........................................ 2,647,374
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
325,343 shares (cost $8,645,305) ........................................ 9,617,134
Dreyfus Stock Index Fund (DryStkIx)
2,147,243 shares (cost $56,274,465) ..................................... 64,460,240
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
115,719 shares (cost $3,840,703) ........................................ 3,896,262
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
91,016 shares (cost $2,077,391) ......................................... 1,971,411
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
3,282,200 shares (cost $67,088,903) ..................................... 82,612,966
Fidelity VIP - Growth Portfolio (FidVIPGr)
2,486,709 shares (cost $86,912,687) ..................................... 95,290,674
Fidelity VIP - High Income Portfolio (FidVIPHI)
2,446,184 shares (cost $30,939,083) ..................................... 30,895,310
Fidelity VIP - Overseas Portfolio (FidVIPOv)
1,119,812 shares (cost $22,351,032) ..................................... 23,090,523
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
1,817,591 shares (cost $27,751,244) ..................................... 31,353,447
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
1,803,389 shares (cost $31,816,198) ..................................... 39,584,392
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
195,261 shares (cost $3,846,387) ........................................ 3,991,126
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
39,844 shares (cost $400,430) ........................................... 370,549
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
1,251,673 shares (cost $29,651,394) ..................................... 31,529,640
Nationwide SAT - Government Bond Fund (NSATGvtBd)
858,482 shares (cost $9,901,210) ........................................ 9,872,542
Nationwide SAT - Money Market Fund (NSATMyMkt)
44,447,140 shares (cost $44,447,140) .................................... 44,447,140
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
9,864 shares (cost $101,589) ............................................ 100,517
</TABLE>
4
<PAGE> 4
<TABLE>
<S> <C>
Nationwide SAT - Small Company Fund (NSATSmCo)
982,222 shares (cost $16,558,159) ....................................... 16,520,968
Nationwide SAT - Total Return Fund (NSATTotRe)
4,998,914 shares (cost $74,729,290) ..................................... 93,479,698
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
773,176 shares (cost $19,642,154) ....................................... 20,349,995
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
10,949 shares (cost $158,650) ........................................... 157,343
Neuberger & Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat)
398,103 shares (cost $5,484,780) ........................................ 5,402,260
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
1,901,834 shares (cost $37,799,268) ..................................... 36,610,313
Oppenheimer VAF - Bond Fund (OppBdFd)
962,172 shares (cost $11,565,981) ....................................... 11,536,443
Oppenheimer VAF - Global Securities Fund (OppGlSec)
967,764 shares (cost $18,409,852) ....................................... 21,000,473
Oppenheimer VAF - Growth Fund (OppGro)
64,816 shares (cost $2,164,670) ......................................... 2,243,291
Oppenheimer VAF - Multiple Strategies Fund (OppMult)
818,194 shares (cost $12,767,490) ....................................... 14,007,487
Strong Opportunity Fund II, Inc. (StOpp2)
1,409,479 shares (cost $26,638,015) ..................................... 30,642,065
Strong VIF - Strong Discovery Fund II (StDisc2)
653,618 shares (cost $7,827,045) ........................................ 8,346,700
Strong VIF - Strong International Stock Fund II (StIntStk2)
209,781 shares (cost $2,145,908) ........................................ 2,066,339
Van Eck WIT - Worldwide Bond Fund (VEWrldBd)
273,666 shares (cost $2,988,486) ........................................ 3,081,481
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
249,511 shares (cost $2,676,543) ........................................ 2,083,417
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
486,102 shares (cost $6,420,938) ........................................ 5,614,477
Van Kampen American Capital LIT -
Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
522,318 shares (cost $8,472,797) ........................................ 7,735,524
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
952,459 shares (cost $11,058,509) ....................................... 11,315,211
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
66,154 shares (cost $845,215) ........................................... 828,251
Warburg Pincus Trust - Small Company Growth Portfolio (WPSmCoGr)
936,121 shares (cost $15,949,098) ....................................... 16,166,811
-------------
Total investments .................................................... 815,234,012
Accounts receivable ....................................................... 466,905
-------------
Total assets ......................................................... 815,700,917
ACCOUNTS PAYABLE ................................................................... -
-------------
CONTRACT OWNERS' EQUITY (NOTE 7) $ 815,700,917
=============
</TABLE>
See accompanying notes to financial statements.
================================================================================
5
<PAGE> 5
================================================================================
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL ACVPBAL
------------------------------------------- -----------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------ ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........... $ 8,712,917 6,598,185 4,149,513 73,602 32,123 23,296
Mortality and expense charges
(note 3): .................... (3,308,897) (2,031,589) (1,315,797) (17,983) (12,305) (8,412)
------------- ------------ ------------ --------- --------- ---------
Net investment activity ...... 5,404,020 4,566,596 2,833,716 55,619 19,818 14,884
------------- ------------ ------------ --------- --------- ---------
Proceeds from mutual fund
shares sold .................. 346,442,595 178,546,434 116,343,494 398,417 733,516 77,288
Cost of mutual funds sold ...... (325,822,763) (169,848,226) (111,224,578) (384,342) (596,324) (65,616)
------------- ------------ ------------ --------- --------- ---------
Realized gain (loss) on
investments ................ 20,619,832 8,698,208 5,118,916 14,075 137,192 11,672
Change in unrealized gain (loss)
on investments ............... 11,837,526 25,785,917 (1,126,037) 38,521 (33,179) 7,335
------------- ------------ ------------ --------- --------- ---------
Net gain (loss) on investments 32,457,358 34,484,125 3,992,879 52,596 104,013 19,007
------------- ------------ ------------ --------- --------- ---------
Reinvested capital gains ....... 38,188,195 13,736,609 8,292,180 456,397 126,771 48,768
------------- ------------ ------------ --------- --------- ---------
Net change in contract
owner's equity resulting
from operations .......... 76,049,573 52,787,330 15,118,775 564,612 250,602 82,659
------------- ------------ ------------ --------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ......... 120,409,700 98,790,341 73,416,698 979,546 408,858 566,583
Surrenders ..................... (8,014,830) (4,997,122) (2,048,468) (12,549) (13,352) (8,341)
Death benefits (note 4) ........ (672,575) (389,210) (161,113) (12,669) (21,630) (150)
Policy loans (net of repayments)
(note 5) ..................... (8,069,812) (4,913,143) (3,157,787) (25,563) (31,216) (30,227)
Deductions for surrender charges
(note 2d) .................... (986,904) (565,766) (280,868) (1,546) (1,510) (1,144)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (21,601,557) (15,856,317) (10,343,299) (19,712) (11,537) (5,804)
------------- ------------ ------------ --------- --------- ---------
Net equity transactions .... 81,064,022 72,068,783 57,425,163 907,507 329,613 520,917
------------- ------------ ------------ --------- --------- ---------
NET CHANGE IN CONTRACT
OWNERS' EQUITY ................. 157,113,595 124,856,113 72,543,938 1,472,119 580,215 603,576
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............ 658,587,322 409,169,174 237,069,643 3,711,460 2,648,246 1,528,781
------------- ------------ ------------ --------- --------- ---------
CONTRACT OWNERS' EQUITY
END OF PERIOD .................. $ 815,700,917 534,025,287 309,613,581 5,183,579 3,228,461 2,132,357
============= ============ ============ ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
ACVPCAPAP
--------------------------------------
1998 1997 1996
---------- ----------- ----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........... -- -- --
Mortality and expense charges
(note 3): .................... (55,863) (49,949) (54,840)
---------- ----------- ----------
Net investment activity ...... (55,863) (49,949) (54,840)
Proceeds from mutual fund
shares sold .................. 4,530,068 10,989,347 8,553,968
Cost of mutual funds sold ...... (4,963,656) (12,470,634) (7,652,865)
---------- ----------- ----------
Realized gain (loss) on
investments ................ (433,588) (1,481,287) 901,103
Change in unrealized gain (loss)
on investments ............... (98,390) 776,851 (2,065,166)
---------- ----------- ----------
Net gain (loss) on investments (531,978) (704,436) (1,164,063)
---------- ----------- ----------
Reinvested capital gains ....... 626,544 235,182 1,326,119
---------- ----------- ----------
Net change in contract
owner's equity resulting
from operations .......... 38,703 (519,203) 107,216
---------- ----------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ......... 100,295 84,154 1,462,219
Surrenders ..................... (152,685) (143,897) (85,127)
Death benefits (note 4) ........ (833) (170) (6,729)
Policy loans (net of repayments)
(note 5) ..................... (125,436) (123,469) (94,789)
Deductions for surrender charges
(note 2d) .................... (18,801) (16,292) (11,672)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (195,713) (173,679) (109,799)
---------- ----------- ----------
Net equity transactions .... (393,173) (373,353) 1,154,103
---------- ----------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY ................. (354,470) (892,556) 1,261,319
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............ 12,118,077 11,978,588 10,476,806
---------- ----------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD .................. 11,763,607 11,086,032 11,738,125
========== =========== ==========
</TABLE>
6
<PAGE> 6
================================================================================
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ACVPINCGR ACVPINT
------------------------ -----------------------------------------
1998 1997 1996 1998 1997 1996
--------- ---- ---- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............ $ -- -- -- 48,574 39,611 27,668
Mortality and expense charges
(note 3): ..................... (288) -- -- (46,064) (18,536) (7,601)
--------- ---- ---- ----------- ---------- ----------
Net investment activity ....... (288) -- -- 2,510 21,075 20,067
--------- ---- ---- ----------- ---------- ----------
Proceeds from mutual fund
shares sold ................... 290,487 -- -- 15,617,159 7,057,562 1,084,058
Cost of mutual funds sold ....... (290,790) -- -- (14,405,140) (6,470,361) (1,028,718)
--------- ---- ---- ----------- ---------- ----------
Realized gain (loss) on
investments ................. (303) -- -- 1,212,019 587,201 55,340
Change in unrealized gain (loss)
on investments ................ 4,236 -- -- 218,959 30,923 16,439
--------- ---- ---- ----------- ---------- ----------
Net gain (loss) on investments 3,933 -- -- 1,430,978 618,124 71,779
--------- ---- ---- ----------- ---------- ----------
Reinvested capital gains ........ -- -- -- 498,648 76,392 9,223
--------- ---- ---- ----------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ........... 3,645 -- -- 1,932,136 715,591 101,069
--------- ---- ---- ----------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners .......... 244,934 -- -- 4,760,062 1,317,591 795,482
Surrenders ...................... -- -- -- (74,430) (14,771) (2,993)
Death benefits (note 4) ......... -- -- -- (11,587) -- --
Policy loans (net of repayments)
(note 5) ...................... -- -- -- (52,106) (28,820) (9,009)
Deductions for surrender charges
(note 2d) ..................... -- -- -- (9,165) (1,672) (410)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............. -- -- -- (97,701) (52,553) (20,610)
--------- ---- ---- ----------- ---------- ----------
Net equity transactions ..... 244,934 -- -- 4,515,073 1,219,775 762,460
--------- ---- ---- ----------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................. 248,579 -- -- 6,447,209 1,935,366 863,529
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............. -- -- -- 6,586,196 3,438,047 1,108,729
--------- ---- ---- ----------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ................... $ 248,579 -- -- 13,033,405 5,373,413 1,972,258
========= ==== ==== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ACVPVALUE
----------------------------------
1998 1997 1996
---------- --------- ----
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............ 14,238 1,245 --
Mortality and expense charges
(note 3): ..................... (9,936) (1,403) --
---------- --------- ----
Net investment activity ....... 4,302 (158) --
---------- --------- ----
Proceeds from mutual fund
shares sold ................... 2,479,537 274,048 --
Cost of mutual funds sold ....... (2,351,215) (259,254) --
---------- --------- ----
Realized gain (loss) on
investments ................. 128,322 14,794 --
Change in unrealized gain (loss)
on investments ................ (191,778) 35,310 --
---------- --------- ----
Net gain (loss) on investments (63,456) 50,104 --
---------- --------- ----
Reinvested capital gains ........ 169,984 2,540 --
---------- --------- ----
Net change in contract
owner's equity resulting
from operations ........... 110,830 52,486 --
---------- --------- ----
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners .......... 860,516 1,060,635 --
Surrenders ...................... (43,636) -- --
Death benefits (note 4) ......... -- -- --
Policy loans (net of repayments)
(note 5) ...................... (20,713) -- --
Deductions for surrender charges
(note 2d) ..................... (5,373) -- --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............. (3,488) -- --
---------- --------- ----
Net equity transactions ..... 787,306 1,060,635 --
---------- --------- ----
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................. 898,136 1,113,121 --
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............. 1,715,117 9,129 --
---------- --------- ----
CONTRACT OWNERS' EQUITY
END OF PERIOD ................... 2,613,253 1,122,250 --
========== ========= ====
</TABLE>
7
<PAGE> 7
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
DRYSRGRO DRYSTKIX
----------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996
----------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............ $ -- -- -- 394,083 194,348 81,147
Mortality and expense charges
(note 3): ..................... (36,017) (16,456) (6,436) (231,915) (92,673) (29,950)
----------- ---------- --------- ---------- ---------- ---------
Net investment activity ....... (36,017) (16,456) (6,436) 162,168 101,675 51,197
----------- ---------- --------- ---------- ---------- ---------
Proceeds from mutual fund
shares sold ................... 8,770,733 2,909,748 718,421 13,290,398 4,331,924 609,559
Cost of mutual funds sold ....... (8,106,177) (2,776,946) (622,598) (9,737,886) (3,548,409) (487,073)
----------- ---------- --------- ---------- ---------- ---------
Realized gain (loss) on
investments ................. 664,556 132,802 95,823 3,552,512 783,515 122,486
Change in unrealized gain (loss)
on investments ................ 745,098 476,820 13,448 4,563,240 3,160,589 387,462
----------- ---------- --------- ---------- ---------- ---------
Net gain (loss) on investments 1,409,654 609,622 109,271 8,115,752 3,944,104 509,948
----------- ---------- --------- ---------- ---------- ---------
Reinvested capital gains ........ -- -- -- 97,930 -- --
----------- ---------- --------- ---------- ---------- ---------
Net change in contract
owner's equity resulting
from operations ........... 1,373,637 593,166 102,835 8,375,850 4,045,779 561,145
----------- ---------- --------- ---------- ---------- ---------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners .......... 1,211,880 1,462,069 653,154 13,488,706 10,881,675 3,770,426
Surrenders ...................... (74,911) (41,533) (1,562) (286,427) (128,386) (10,245)
Death benefits (note 4) ......... (926) -- -- (390,115) (39,008) (192)
Policy loans (net of repayments)
(note 5) ...................... (83,393) (38,087) (10,862) (409,581) (133,804) (74,060)
Deductions for surrender charges
(note 2d) ..................... (9,224) (4,702) (214) (35,269) (14,536) (1,405)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............. (55,835) (34,449) (14,311) (478,514) (230,834) (80,342)
----------- ---------- --------- ---------- ---------- ---------
Net equity transactions ..... 987,591 1,343,298 626,205 11,888,800 10,335,107 3,604,182
----------- ---------- --------- ---------- ---------- ---------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................. 2,361,228 1,936,464 729,040 20,264,650 14,380,886 4,165,327
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............. 7,215,240 2,949,723 1,083,874 43,989,896 15,484,934 4,676,200
----------- ---------- --------- ---------- ---------- ---------
CONTRACT OWNERS' EQUITY
END OF PERIOD ................... $ 9,576,468 4,886,187 1,812,914 64,254,546 29,865,820 8,841,527
=========== ========== ========= ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
DRYCAPAP
----------------------------
1998 1997 1996
---------- ---- -----
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............ 345 -- --
Mortality and expense charges
(note 3): ..................... (7,936) -- --
---------- ---- ----
Net investment activity ....... (7,591) -- --
---------- ---- ----
Proceeds from mutual fund
shares sold ................... 10,071,068 -- --
Cost of mutual funds sold ....... (9,782,670) -- --
---------- ---- ----
Realized gain (loss) on
investments ................. 288,398 -- --
Change in unrealized gain (loss)
on investments ................ 59,122 -- --
---------- ---- ----
Net gain (loss) on investments 347,520 -- --
---------- ---- ----
Reinvested capital gains ........ 1,151 -- --
---------- ---- ----
Net change in contract
owner's equity resulting
from operations ........... 341,080 -- --
---------- ---- ----
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners .......... 3,120,275 -- --
Surrenders ...................... (8,948) -- --
Death benefits (note 4) ......... -- -- --
Policy loans (net of repayments)
(note 5) ...................... (4,391) -- --
Deductions for surrender charges
(note 2d) ..................... (1,102) -- --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............. (2,876) -- --
---------- ---- ----
Net equity transactions ..... 3,102,958 -- --
---------- ---- ----
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................. 3,444,038 -- --
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............. 431,596 -- --
---------- ---- ----
CONTRACT OWNERS' EQUITY
END OF PERIOD ................... 3,875,634 -- --
========== ==== ====
</TABLE>
8
<PAGE> 8
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
DRYGRINC FIDVIPEI
-------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
---------- ------- ---- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. $ 8,240 3,397 -- 997,915 783,723 46,329
Mortality and expense charges
(note 3): ....................... (7,149) (808) -- (359,708) (226,025) (161,967)
---------- ------- ---- ---------- ---------- ----------
Net investment activity ......... 1,091 2,589 -- 638,207 557,698 (115,638)
---------- ------- ---- ---------- ---------- ----------
Proceeds from mutual fund
shares sold ..................... 2,125,660 734,728 -- 2,422,015 2,187,621 4,217,426
Cost of mutual funds sold ......... (2,061,669) (714,298) -- (1,533,056) (1,661,421) (3,359,665)
---------- ------- ---- ---------- ---------- ----------
Realized gain (loss) on
investments ................... 63,991 20,430 -- 888,959 526,200 857,761
Change in unrealized gain (loss)
on investments .................. (27,858) 4,117 -- 2,123,447 2,550,290 (474,758)
---------- ------- ---- ---------- ---------- ----------
Net gain (loss) on investments .. 36,133 24,547 -- 3,012,406 3,076,490 383,003
---------- ------- ---- ---------- ---------- ----------
Reinvested capital gains .......... 29,897 1,225 -- 3,551,403 3,940,387 1,328,108
---------- ------- ---- ---------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ............. 67,121 28,361 -- 7,202,016 7,574,575 1,595,473
---------- ------- ---- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 693,027 421,107 -- 9,479,863 8,834,333 7,726,294
Surrenders ........................ (25,517) -- -- (573,862) (534,187) (76,556)
Death benefits (note 4) ........... -- -- -- (1,981) (31,441) (2,813)
Policy loans (net of repayments)
(note 5) ........................ (5,687) -- -- (605,617) (340,317) (308,591)
Deductions for surrender charges
(note 2d) ....................... (3,142) -- -- (70,662) (60,480) (10,497)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (1,467) -- -- (2,765,688) (2,040,084) (1,337,079)
---------- ------- ---- ---------- ---------- ----------
Net equity transactions ....... 657,214 421,107 -- 5,462,053 5,827,824 5,990,758
---------- ------- ---- ---------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 724,335 449,468 -- 12,664,069 13,402,399 7,586,231
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 1,202,853 -- -- 69,728,573 44,818,783 28,506,797
---------- ------- ---- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... $1,927,188 449,468 -- 82,392,642 58,221,182 36,093,028
========== ======= ==== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FIDVIPGR
------------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. 398,089 370,457 95,668
Mortality and expense charges
(note 3): ....................... (381,285) (254,124) (186,684)
---------- ---------- ----------
Net investment activity ......... 16,804 116,333 (91,016)
---------- ---------- ----------
Proceeds from mutual fund
shares sold ..................... 29,018,085 29,878,672 22,867,484
Cost of mutual funds sold ......... (25,477,997) (27,393,746) (23,422,240)
---------- ---------- ----------
Realized gain (loss) on
investments ................... 3,540,088 2,484,926 (554,756)
Change in unrealized gain (loss)
on investments .................. 425,707 3,124,958 1,890,715
---------- ---------- ----------
Net gain (loss) on investments .. 3,965,795 5,609,884 1,335,959
---------- ---------- ----------
Reinvested capital gains .......... 10,413,177 1,658,235 2,415,616
---------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ............. 14,395,776 7,384,452 3,660,559
---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 8,952,047 5,250,341 11,240,743
Surrenders ........................ (785,432) (464,563) (174,503)
Death benefits (note 4) ........... (28,916) (24,698) (14,084)
Policy loans (net of repayments)
(note 5) ........................ (549,848) (552,330) (257,181)
Deductions for surrender charges
(note 2d) ....................... (96,714) (52,597) (23,926)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (1,651,805) (1,312,297) (906,321)
---------- ---------- ----------
Net equity transactions ....... 5,839,332 2,843,856 9,864,728
---------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 20,235,108 10,228,308 13,525,287
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 74,962,498 53,895,576 33,131,418
---------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... 95,197,606 64,123,884 46,656,705
========== ========== ==========
</TABLE>
9
<PAGE> 9
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FIDVIPHI FIDVIPOV
-------------------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. $ 1,930,736 1,246,428 778,006 372,727 285,975 145,650
Mortality and expense charges
(note 3): ....................... (124,734) (80,934) (51,187) (102,878) (82,408) (64,369)
------------ ---------- ---------- ---------- ---------- ----------
Net investment activity ......... 1,806,002 1,165,494 726,819 269,849 203,567 81,281
------------ ---------- ---------- ---------- ---------- ----------
Proceeds from mutual fund
shares sold ..................... 4,053,136 6,574,913 5,784,527 14,455,861 3,210,172 2,130,877
Cost of mutual funds sold ......... (3,792,211) (6,245,963) (5,477,560) (13,197,934) (2,676,739) (2,047,564)
------------ ---------- ---------- ---------- ---------- ----------
Realized gain (loss) on
investments ................... 260,925 328,950 306,967 1,257,927 533,433 83,313
Change in unrealized gain (loss)
on investments .................. (2,153,392) (323,477) (475,040) 386,106 981,703 542,923
------------ ---------- ---------- ---------- ---------- ----------
Net gain (loss) on investments .. (1,892,467) 5,473 (168,073) 1,644,033 1,515,136 626,236
------------ ---------- ---------- ---------- ---------- ----------
Reinvested capital gains .......... 1,226,822 154,053 152,219 1,098,565 1,135,234 160,215
------------ ---------- ---------- ---------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ............. 1,140,357 1,325,020 710,965 3,012,447 2,853,937 867,732
------------ ---------- ---------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 6,608,088 3,890,660 2,283,950 2,193,341 4,404,678 2,965,966
Surrenders ........................ (139,130) (86,946) (35,730) (218,321) (197,540) (50,516)
Death benefits (note 4) ........... (6,340) (18,850) (1,077) (5,293) (9,400) (1,984)
Policy loans (net of repayments)
(note 5) ........................ (192,807) (165,207) (89,708) (231,665) (145,652) (127,873)
Deductions for surrender charges
(note 2d) ....................... (17,132) (9,844) (4,899) (26,883) (22,365) (6,926)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (1,777,126) (1,366,914) (879,366) (780,983) (634,759) (518,809)
------------ ---------- ---------- ---------- ---------- ----------
Net equity transactions ....... 4,475,553 2,242,899 1,273,170 930,196 3,394,962 2,259,858
------------ ---------- ---------- ---------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 5,615,910 3,567,919 1,984,135 3,942,643 6,248,899 3,127,590
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 25,162,314 17,054,239 9,953,685 19,093,154 16,202,132 11,522,573
------------ ---------- ---------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... $ 30,778,224 20,622,158 11,937,820 23,035,797 22,451,031 14,650,163
============ ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FIDVIPAM
------------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. 894,977 787,310 678,218
Mortality and expense charges
(note 3): ....................... (142,762) (109,092) (94,904)
---------- ---------- ----------
Net investment activity ......... 752,215 678,218 583,314
---------- ---------- ----------
Proceeds from mutual fund
shares sold ..................... 1,593,036 1,295,655 1,531,968
Cost of mutual funds sold ......... (1,298,529) (1,217,135) (1,526,788)
---------- ---------- ----------
Realized gain (loss) on
investments ................... 294,507 78,520 5,180
Change in unrealized gain (loss)
on investments .................. (1,236,595) (299,457) (140,933)
---------- ---------- ----------
Net gain (loss) on investments .. (942,088) (220,937) (135,753)
---------- ---------- ----------
Reinvested capital gains .......... 2,684,931 1,974,948 559,232
---------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ............. 2,495,058 2,432,229 1,006,793
---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 1,439,623 1,499,298 996,395
Surrenders ........................ (627,160) (288,598) (141,046)
Death benefits (note 4) ........... (1,045) (50,760) 10
Policy loans (net of repayments)
(note 5) ........................ 3,401 (145,897) (265,228)
Deductions for surrender charges
(note 2d) ....................... (77,225) (32,675) (19,339)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (232,307) (177,668) (148,954)
---------- ---------- ----------
Net equity transactions ....... 505,287 803,700 421,838
---------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 3,000,345 3,235,929 1,428,631
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 28,264,549 22,315,298 18,514,436
---------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... 31,264,894 25,551,227 19,943,067
========== ========== ==========
</TABLE>
10
<PAGE> 10
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FIDVIPCON FIDVIPGROP
------------------------------------------- ------------------------
1998 1997 1996 1998 1997 1996
------------ ---------- --------- --------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. $ 208,958 131,312 -- 20,203 -- --
Mortality and expense charges
(note 3): ....................... (145,059) (77,620) (21,276) (11,337) -- --
------------ ---------- --------- --------- ---- ----
Net investment activity ......... 63,899 53,692 (21,276) 8,866 -- --
------------ ---------- --------- --------- ---- ----
Proceeds from mutual fund
shares sold ..................... 1,380,112 984,338 505,323 997,348 -- --
Cost of mutual funds sold ......... (962,695) (797,289) (464,510) (958,638) -- --
------------ ---------- --------- --------- ---- ----
Realized gain (loss) on
investments ................... 417,417 187,049 40,813 38,710 -- --
Change in unrealized gain (loss)
on investments .................. 3,079,468 1,493,873 273,555 116,037 -- --
------------ ---------- --------- --------- ---- ----
Net gain (loss) on investments .. 3,496,885 1,680,922 314,368 154,747 -- --
------------ ---------- --------- --------- ---- ----
Reinvested capital gains .......... 1,537,336 347,039 28,665 70,230 -- --
------------ ---------- --------- --------- ---- ----
Net change in contract
owner's equity resulting
from operations ............. 5,098,120 2,081,653 321,757 233,843 -- --
------------ ---------- --------- --------- ---- ----
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 6,402,896 7,159,944 3,731,995 2,682,598 -- --
Surrenders ........................ (234,804) (282,329) (15,231) (17,235) -- --
Death benefits (note 4) ........... (17,032) (8,666) (2,439) (9,221) -- --
Policy loans (net of repayments)
(note 5) ........................ (276,399) (148,228) (12,361) (3,587) -- --
Deductions for surrender charges
(note 2d) ....................... (28,913) (31,965) (2,088) (2,122) -- --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (195,246) (128,236) (49,319) (7,621) -- --
------------ ---------- --------- --------- ---- ----
Net equity transactions ....... 5,650,502 6,560,520 3,650,557 2,642,812 -- --
------------ ---------- --------- --------- ---- ----
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 10,748,622 8,642,173 3,972,314 2,876,655 -- --
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 28,807,807 13,658,616 2,692,695 1,109,019 -- --
------------ ---------- --------- --------- ---- ----
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... $ 39,556,429 22,300,789 6,665,009 3,985,674 -- --
============ ========== ========= ========= ==== ====
</TABLE>
<TABLE>
<CAPTION>
MSEMMKT
----------------------
1998 1997 1996
------- ---- ----
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. -- -- --
Mortality and expense charges
(note 3): ....................... (1,414) -- --
------- ---- ----
Net investment activity ......... (1,414) -- --
------- ---- ----
Proceeds from mutual fund
shares sold ..................... 1,007,212 -- --
Cost of mutual funds sold ......... (990,693) -- --
------- ---- ----
Realized gain (loss) on
investments ................... 16,519 -- --
Change in unrealized gain (loss)
on investments .................. (32,273) -- --
------- ---- ----
Net gain (loss) on investments .. (15,754) -- --
------- ---- ----
Reinvested capital gains .......... -- -- --
------- ---- ----
Net change in contract
owner's equity resulting
from operations ............. (17,168) -- --
------- ---- ----
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 135,616 -- --
Surrenders ........................ -- -- --
Death benefits (note 4) ........... (9) -- --
Policy loans (net of repayments)
(note 5) ........................ (2,802) -- --
Deductions for surrender charges
(note 2d) ....................... -- -- --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (535) -- --
------- ---- ----
Net equity transactions ....... 132,270 -- --
------- ---- ----
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 115,102 -- --
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 251,886 -- --
------- ---- ----
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... 366,988 -- --
======= ==== ====
</TABLE>
11
<PAGE> 11
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
NSATCAPAP NSATGVTBD
------------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996
------------ ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............ $ 121,805 62,199 31,284 277,274 234,376 158,974
Mortality and expense charges
(note 3): ..................... (111,697) (42,582) (15,200) (51,167) (37,537) (28,115)
------------ ----------- ---------- ----------- ---------- ----------
Net investment activity ....... 10,108 19,617 16,084 226,107 196,839 130,859
------------ ----------- ---------- ----------- ---------- ----------
Proceeds from mutual fund
shares sold ................... 24,884,337 4,921,781 544,969 11,696,556 1,635,728 1,009,523
Cost of mutual funds sold ....... (22,114,759) (4,156,194) (419,736) (11,614,793) (1,543,241) (956,843)
------------ ----------- ---------- ----------- ---------- ----------
Realized gain (loss) on
investments ................. 2,769,578 765,587 125,233 81,763 92,487 52,680
Change in unrealized gain (loss)
on investments ................ 1,558,683 1,117,587 161,201 20,571 (114,153) (285,025)
------------ ----------- ---------- ----------- ---------- ----------
Net gain (loss) on investments 4,328,261 1,883,174 286,434 102,334 (21,666) (232,345)
------------ ----------- ---------- ----------- ---------- ----------
Reinvested capital gains ........ -- -- -- -- -- --
------------ ----------- ---------- ----------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ........... 4,338,369 1,902,791 302,518 328,441 175,173 (101,486)
------------ ----------- ---------- ----------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners .......... 6,323,233 4,336,180 942,629 1,639,555 1,514,145 632,974
Surrenders ...................... (158,780) (84,113) (13,481) (122,655) (50,832) (21,261)
Death benefits (note 4) ......... (5,133) (1,034) -- (2,663) -- (183)
Policy loans (net of repayments)
(note 5) ...................... (360,416) (168,059) 9,054 (253,465) (89,293) (107,818)
Deductions for surrender charges
(note 2d) ..................... (19,551) (9,523) (1,848) (15,103) (5,755) (2,915)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............. (407,187) (124,916) (24,462) (739,318) (635,462) (396,634)
------------ ----------- ---------- ----------- ---------- ----------
Net equity transactions ..... 5,372,166 3,948,535 911,892 506,351 732,803 104,163
------------ ----------- ---------- ----------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................. 9,710,535 5,851,326 1,214,410 834,792 907,976 2,677
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............. 21,752,456 8,227,786 2,862,000 9,022,990 6,680,010 5,308,833
------------ ----------- ---------- ----------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ................... $ 31,462,991 14,079,112 4,076,410 9,857,782 7,587,986 5,311,510
============ =========== ========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
NSATMYMKT
--------------------------------------------
1998 1997 1996
------------ ----------- -----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............ 1,169,613 945,560 616,338
Mortality and expense charges
(note 3): ..................... (195,090) (171,737) (133,797)
------------ ----------- -----------
Net investment activity ....... 974,523 773,823 482,541
------------ ----------- -----------
Proceeds from mutual fund
shares sold ................... 102,312,184 54,608,919 36,357,577
Cost of mutual funds sold ....... (102,312,184) (54,608,919) (36,357,577)
------------ ----------- -----------
Realized gain (loss) on
investments ................. -- -- --
Change in unrealized gain (loss)
on investments ................ -- -- --
------------ ----------- -----------
Net gain (loss) on investments -- -- --
------------ ----------- -----------
Reinvested capital gains ........ -- -- --
------------ ----------- -----------
Net change in contract
owner's equity resulting
from operations ........... 974,523 773,823 482,541
------------ ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners .......... 6,293,192 3,112,549 4,079,336
Surrenders ...................... (1,363,346) (1,232,956) (641,487)
Death benefits (note 4) ......... -- (4,912) (94,443)
Policy loans (net of repayments)
(note 5) ...................... (701,509) (1,053,158) (794,417)
Deductions for surrender charges
(note 2d) ..................... (167,875) (139,593) (87,955)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............. (2,586,581) (2,402,224) (2,038,782)
------------ ----------- -----------
Net equity transactions ..... 1,473,881 (1,720,294) 422,252
------------ ----------- -----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................. 2,448,404 (946,471) 904,793
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............. 44,437,799 38,274,668 24,994,494
------------ ----------- -----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ................... 46,886,203 37,328,197 25,899,287
============ =========== ===========
</TABLE>
12
<PAGE> 12
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
NSATSMCAPV NSATSMCO
------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996
-------- ---- ---- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. $ -- -- -- -- -- 2,724
Mortality and expense charges
(note 3): ....................... (9) -- -- (63,165) (27,466) (6,372)
-------- ---- ---- ----------- ---------- ----------
Net investment activity ......... (9) -- -- (63,165) (27,466) (3,648)
-------- ---- ---- ----------- ---------- ----------
Proceeds from mutual fund
shares sold ..................... 57,189 -- -- 4,403,010 3,734,111 1,982,754
Cost of mutual funds sold ......... (58,378) -- -- (4,280,792) (3,472,617) (1,880,901)
-------- ---- ---- ----------- ---------- ----------
Realized gain (loss) on
investments ................... (1,189) -- -- 122,218 261,494 101,853
Change in unrealized gain (loss)
on investments .................. (1,071) -- -- 746,208 500,619 25,002
-------- ---- ---- ----------- ---------- ----------
Net gain (loss) on investments .. (2,260) -- -- 868,426 762,113 126,855
-------- ---- ---- ----------- ---------- ----------
Reinvested capital gains .......... -- -- -- -- -- --
-------- ---- ---- ----------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ............. (2,269) -- -- 805,261 734,647 123,207
-------- ---- ---- ----------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 102,772 -- -- 2,323,502 2,003,326 1,709,071
Surrenders ........................ -- -- -- (143,659) (26,751) (2,836)
Death benefits (note 4) ........... -- -- -- (17,515) -- --
Policy loans (net of repayments)
(note 5) ........................ -- -- -- (127,488) (54,998) (1,052)
Deductions for surrender charges
(note 2d) ....................... -- -- -- (17,689) (3,029) (389)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... -- -- -- (19,908) (15,310) (2,191)
-------- ---- ---- ----------- ---------- ----------
Net equity transactions ....... 102,772 -- -- 1,997,243 1,903,238 1,702,603
-------- ---- ---- ----------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 100,503 -- -- 2,802,504 2,637,885 1,825,810
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... -- -- -- 13,679,771 5,910,217 347,744
-------- ---- ---- ----------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... $100,503 -- -- 16,482,275 8,548,102 2,173,554
======== ==== ==== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
NSATTOTRE
-------------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. 475,135 452,129 278,271
Mortality and expense charges
(note 3): ....................... (358,937) (199,255) (109,769)
----------- ----------- -----------
Net investment activity ......... 116,198 252,874 168,502
----------- ----------- -----------
Proceeds from mutual fund
shares sold ..................... 13,264,954 5,567,493 333,379
Cost of mutual funds sold ......... (7,824,001) (3,928,091) (284,558)
----------- ----------- -----------
Realized gain (loss) on
investments ................... 5,440,953 1,639,402 48,821
Change in unrealized gain (loss)
on investments .................. 5,583,635 7,047,780 1,690,119
----------- ----------- -----------
Net gain (loss) on investments .. 11,024,588 8,687,182 1,738,940
----------- ----------- -----------
Reinvested capital gains .......... -- -- --
----------- ----------- -----------
Net change in contract
owner's equity resulting
from operations ............. 11,140,786 8,940,056 1,907,442
----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 18,143,806 15,885,073 9,265,237
Surrenders ........................ (992,942) (387,800) (127,751)
Death benefits (note 4) ........... (83,810) (74,026) (13,630)
Policy loans (net of repayments)
(note 5) ........................ (994,765) (556,317) (256,518)
Deductions for surrender charges
(note 2d) ....................... (122,265) (43,906) (17,516)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (8,484,508) (5,785,492) (3,431,219)
----------- ----------- -----------
Net equity transactions ....... 7,465,516 9,037,532 5,418,603
----------- ----------- -----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 18,606,302 17,977,588 7,326,045
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 74,640,126 42,378,675 22,230,340
----------- ----------- -----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... 93,246,428 60,356,263 29,556,385
=========== =========== ===========
</TABLE>
13
<PAGE> 13
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
NBAMTGRO NBAMTGUARD
-------------------------------------------- ------------------------
1998 1997 1996 1998 1997 1996
------------ ---------- ---------- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ -- -- 3,554 -- -- --
Mortality and expense charges
(note 3): ........................ (88,537) (60,656) (47,528) (26) -- --
------------ ---------- ---------- ------- ---- ----
Net investment activity .......... (88,537) (60,656) (43,974) (26) -- --
------------ ---------- ---------- ------- ---- ----
Proceeds from mutual fund
shares sold ...................... 17,314,434 4,346,545 4,691,223 1,458 -- --
Cost of mutual funds sold .......... (18,622,980) (4,423,589) (3,806,560) (1,527) -- --
------------ ---------- ---------- ------- ---- ----
Realized gain (loss) on
investments .................... (1,308,546) (77,044) 884,663 (69) -- --
Change in unrealized gain (loss)
on investments ................... (585,856) 930,941 (1,205,965) (1,307) -- --
------------ ---------- ---------- ------- ---- ----
Net gain (loss) on investments ... (1,894,402) 853,897 (321,302) (1,376) -- --
------------ ---------- ---------- ------- ---- ----
Reinvested capital gains ........... 4,778,935 1,172,597 831,750 -- -- --
------------ ---------- ---------- ------- ---- ----
Net change in contract
owner's equity resulting
from operations .............. 2,795,996 1,965,838 466,474 (1,402) -- --
------------ ---------- ---------- ------- ---- ----
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............. 1,215,115 (64,103) 914,713 160,006 -- --
Surrenders ......................... (181,476) (145,321) (175,469) -- -- --
Death benefits (note 4) ............ (3,257) (9,223) (4,336) -- -- --
Policy loans (net of repayments)
(note 5) ......................... (853,967) (213,837) (105,143) -- -- --
Deductions for surrender charges
(note 2d) ........................ (22,346) (16,453) (24,059) -- -- --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ................ (184,523) (108,131) (49,699) (1,263) -- --
------------ ---------- ---------- ------- ---- ----
Net equity transactions ........ (30,454) (557,068) 556,007 158,743 -- --
------------ ---------- ---------- ------- ---- ----
NET CHANGE IN CONTRACT
OWNERS' EQUITY ..................... 2,765,542 1,408,770 1,022,481 157,341 -- --
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ................ 17,545,164 12,724,238 9,084,435 -- -- --
------------ ---------- ---------- ------- ---- ----
CONTRACT OWNERS' EQUITY
END OF PERIOD ...................... $ 20,310,706 14,133,008 10,106,916 157,341 -- --
============ ========== ========== ======= ==== ====
</TABLE>
<TABLE>
<CAPTION>
NBAMTLMAT
---------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... 365,591 166,562 269,872
Mortality and expense charges
(note 3): ........................ (28,663) (13,242) (15,007)
--------- --------- ---------
Net investment activity .......... 336,928 153,320 254,865
--------- --------- ---------
Proceeds from mutual fund
shares sold ...................... 1,816,971 394,973 749,565
Cost of mutual funds sold .......... (1,867,186) (398,687) (756,694)
--------- --------- ---------
Realized gain (loss) on
investments .................... (50,215) (3,714) (7,129)
Change in unrealized gain (loss)
on investments ................... (169,138) (69,819) (255,708)
--------- --------- ---------
Net gain (loss) on investments ... (219,353) (73,533) (262,837)
--------- --------- ---------
Reinvested capital gains ........... -- -- --
--------- --------- ---------
Net change in contract
owner's equity resulting
from operations .............. 117,575 79,787 (7,972)
--------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............. (163,038) 1,002,138 (221,678)
Surrenders ......................... (81,322) (15,510) (5,236)
Death benefits (note 4) ............ -- (7,982) --
Policy loans (net of repayments)
(note 5) ......................... (303,704) (23,033) (15,728)
Deductions for surrender charges
(note 2d) ........................ (10,014) (1,756) (718)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ................ (48,776) (39,484) (25,831)
--------- --------- ---------
Net equity transactions ........ (606,854) 914,373 (269,191)
--------- --------- ---------
NET CHANGE IN CONTRACT
OWNERS' EQUITY ..................... (489,279) 994,160 (277,163)
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ................ 5,891,455 2,771,458 3,114,967
--------- --------- ---------
CONTRACT OWNERS' EQUITY
END OF PERIOD ...................... 5,402,176 3,765,618 2,837,804
========= ========= =========
</TABLE>
14
<PAGE> 14
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
NBAMTPART OPPBDFD
------------------------------------------- ----------------------------------------
1998 1997 1996 1998 1997 1996
------------ ---------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. $ 123,869 38,636 10,660 177,251 207,936 135,033
Mortality and expense charges
(note 3): ....................... (149,612) (63,266) (21,146) (46,258) (28,435) (20,053)
------------ ---------- --------- ---------- --------- ---------
Net investment activity ......... (25,743) (24,630) (10,486) 130,993 179,501 114,980
------------ ---------- --------- ---------- --------- ---------
Proceeds from mutual fund
shares sold ..................... 8,935,619 6,548,053 1,342,872 8,819,212 1,333,678 369,049
Cost of mutual funds sold ......... (7,365,832) (5,452,852) (1,100,513) (8,665,115) (1,264,643) (358,720)
------------ ---------- --------- ---------- --------- ---------
Realized gain (loss) on
investments ................... 1,569,787 1,095,201 242,359 154,097 69,035 10,329
Change in unrealized gain (loss)
on investments .................. (3,799,608) 414,144 64,200 (117,816) (105,073) (158,746)
------------ ---------- --------- ---------- --------- ---------
Net gain (loss) on investments .. (2,229,821) 1,509,345 306,559 36,281 (36,038) (148,417)
------------ ---------- --------- ---------- --------- ---------
Reinvested capital gains .......... 3,901,869 594,994 133,254 160,413 20,983 2,481
------------ ---------- --------- ---------- --------- ---------
Net change in contract
owner's equity resulting
from operations ............. 1,646,305 2,079,709 429,327 327,687 164,446 (30,956)
------------ ---------- --------- ---------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 7,539,397 5,982,681 3,000,357 2,531,359 956,859 469,104
Surrenders ........................ (347,798) (70,250) (52,813) (152,557) (44,287) (18,604)
Death benefits (note 4) ........... (3,394) -- -- (976) -- --
Policy loans (net of repayments)
(note 5) ........................ (854,379) (79,239) (84,693) (47,429) (56,812) (76,310)
Deductions for surrender charges
(note 2d) ....................... (42,826) (7,954) (7,241) (18,785) (5,014) (2,551)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (236,276) (148,125) (59,787) (54,145) (30,273) (9,635)
------------ ---------- --------- ---------- --------- ---------
Net equity transactions ....... 6,054,724 5,677,113 2,795,823 2,257,467 820,473 362,004
------------ ---------- --------- ---------- --------- ---------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 7,701,029 7,756,822 3,225,150 2,585,154 984,919 331,048
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 28,728,327 10,650,358 2,860,017 8,824,474 5,969,243 4,061,755
------------ ---------- --------- ---------- --------- ---------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... $ 36,429,356 18,407,180 6,085,167 11,409,628 6,954,162 4,392,803
============ ========== ========= ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
OPPGLSEC
-----------------------------------------
1998 1997 1996
---------- ---------- ---------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. 389,267 139,580 --
Mortality and expense charges
(note 3): ....................... (84,767) (51,046) (30,984)
---------- ---------- ---------
Net investment activity ......... 304,500 88,534 (30,984)
---------- ---------- ---------
Proceeds from mutual fund
shares sold ..................... 2,440,838 1,071,784 401,007
Cost of mutual funds sold ......... (1,633,051) (841,648) (412,925)
---------- ---------- ---------
Realized gain (loss) on
investments ................... 807,787 230,136 (11,918)
Change in unrealized gain (loss)
on investments .................. (471,370) 1,457,606 542,039
---------- ---------- ---------
Net gain (loss) on investments .. 336,417 1,687,742 530,121
---------- ---------- ---------
Reinvested capital gains .......... 1,465,275 -- --
---------- ---------- ---------
Net change in contract
owner's equity resulting
from operations ............. 2,106,192 1,776,276 499,137
---------- ---------- ---------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 2,834,330 2,460,565 1,508,973
Surrenders ........................ (173,421) (81,415) (30,277)
Death benefits (note 4) ........... (12,596) (1,612) (3,858)
Policy loans (net of repayments)
(note 5) ........................ (157,096) (149,869) (53,424)
Deductions for surrender charges
(note 2d) ....................... (21,354) (9,218) (4,151)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (142,346) (87,749) (52,355)
---------- ---------- ---------
Net equity transactions ....... 2,327,517 2,130,702 1,364,908
---------- ---------- ---------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 4,433,709 3,906,978 1,864,045
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 16,552,365 9,914,447 5,956,604
---------- ---------- ---------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... 20,986,074 13,821,425 7,820,649
========== ========== =========
</TABLE>
15
<PAGE> 15
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
OPPGRO OPPMULT
----------------------- -------------------------------------------
1998 1997 1996 1998 1997 1996
---------- ---- ---- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............. $ 9,433 -- -- 116,421 184,869 164,398
Mortality and expense charges
(note 3): ...................... (5,614) -- -- (60,451) (43,446) (27,431)
---------- ---- ---- ---------- ---------- ---------
Net investment activity ........ 3,819 -- -- 55,970 141,423 136,967
---------- ---- ---- ---------- ---------- ---------
Proceeds from mutual fund
shares sold .................... 209,040 -- -- 1,191,372 340,657 381,332
Cost of mutual funds sold ........ (198,084) -- -- (910,992) (291,730) (332,673)
---------- ---- ---- ---------- ---------- ---------
Realized gain (loss) on
investments .................. 10,956 -- -- 280,380 48,927 48,659
Change in unrealized gain (loss)
on investments ................. 75,252 -- -- (200,068) 278,587 (9,507)
---------- ---- ---- ---------- ---------- ---------
Net gain (loss) on investments 86,208 -- -- 80,312 327,514 39,152
---------- ---- ---- ---------- ---------- ---------
Reinvested capital gains ......... 113,813 -- -- 675,242 329,608 125,621
---------- ---- ---- ---------- ---------- ---------
Net change in contract
owner's equity resulting
from operations .............. 203,840 -- -- 811,524 798,545 301,740
---------- ---- ---- ---------- ---------- ---------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ........... 1,441,481 -- -- 1,296,724 2,288,619 1,591,089
Surrenders ....................... (13,335) -- -- (330,613) (68,513) (208,783)
Death benefits (note 4) .......... -- -- -- (1,705) (21,748) (3,549)
Policy loans (net of repayments)
(note 5) ....................... (12,852) -- -- (68,611) (90,139) (89,234)
Deductions for surrender charges
(note 2d) ...................... (1,642) -- -- (40,710) (7,757) (28,627)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (1,318) -- -- (65,263) (38,977) (27,922)
---------- ---- ---- ---------- ---------- ---------
Net equity transactions ...... 1,412,334 -- -- 789,822 2,061,485 1,232,974
---------- ---- ---- ---------- ---------- ---------
NET CHANGE IN CONTRACT
OWNERS' EQUITY ................... 1,616,174 -- -- 1,601,346 2,860,030 1,534,714
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD .............. 618,849 -- -- 12,354,982 7,967,395 5,079,024
---------- ---- ---- ---------- ---------- ---------
CONTRACT OWNERS' EQUITY
END OF PERIOD .................... $2,235,023 -- -- 13,956,328 10,827,425 6,613,738
========== ==== ==== ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
STOPP2
--------------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............. 9,466 53,781 56,661
Mortality and expense charges
(note 3): ...................... (128,013) (79,380) (57,921)
---------- ---------- ----------
Net investment activity ........ (118,547) (25,599) (1,260)
---------- ---------- ----------
Proceeds from mutual fund
shares sold .................... 1,744,010 683,567 598,896
Cost of mutual funds sold ........ (1,137,988) (503,547) (514,479)
---------- ---------- ----------
Realized gain (loss) on
investments .................. 606,022 180,020 84,417
Change in unrealized gain (loss)
on investments ................. (677,163) 18,015 235,450
---------- ---------- ----------
Net gain (loss) on investments (71,141) 198,035 319,867
---------- ---------- ----------
Reinvested capital gains ......... 3,488,003 1,736,733 467,556
---------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ............ 3,298,315 1,909,169 786,163
---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ........... 2,605,777 2,102,165 1,690,672
Surrenders ....................... (241,367) (153,010) (85,716)
Death benefits (note 4) .......... (8,701) (49,308) (6,685)
Policy loans (net of repayments)
(note 5) ....................... (246,461) (252,769) (109,280)
Deductions for surrender charges
(note 2d) ...................... (29,721) (17,324) (11,753)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (144,972) (96,574) (45,137)
---------- ---------- ----------
Net equity transactions ...... 1,934,555 1,533,180 1,432,101
---------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY ................... 5,232,870 3,442,349 2,218,264
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD .............. 25,405,845 17,186,084 11,461,544
---------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD .................... 30,638,715 20,628,433 13,679,808
========== ========== ==========
</TABLE>
16
<PAGE> 16
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
STDISC2 STINTSTK2
------------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996
----------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ..................... $ -- -- 429,451 22,650 35,008 2,608
Mortality and expense charges
(note 3): .............................. (36,399) (28,774) (27,276) (9,083) (14,424) (3,064)
----------- --------- --------- --------- --------- ---------
Net investment activity ................ (36,399) (28,774) 402,175 13,567 20,584 (456)
----------- --------- --------- --------- --------- ---------
Proceeds from mutual fund
shares sold ............................ 1,582,087 2,411,045 742,018 3,049,320 585,246 578,983
Cost of mutual funds sold ................ (1,281,933) (2,890,676) (587,266) (3,173,020) (587,763) (561,880)
----------- --------- --------- --------- --------- ---------
Realized gain (loss) on
investments .......................... 300,154 (479,631) 154,752 (123,700) (2,517) 17,103
Change in unrealized gain (loss)
on investments ......................... 180,568 847,810 (1,384,191) 242,382 86,114 50,267
----------- --------- --------- --------- --------- ---------
Net gain (loss) on investments 480,722 368,179 (1,229,439) 118,682 83,597 67,370
----------- --------- --------- --------- --------- ---------
Reinvested capital gains ................. 120,028 -- 645,525 -- 54,007 --
----------- --------- --------- --------- --------- ---------
Net change in contract
owner's equity resulting
from operations .................... 564,351 339,405 (181,739) 132,249 158,188 66,914
----------- --------- --------- --------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ................... 463,511 412,467 976,976 (8,969) 312,147 1,082,000
Surrenders ............................... (113,497) (75,896) (24,547) (20,530) (35,084) --
Death benefits (note 4) .................. (1,071) -- (3,385) (5,991) -- --
Policy loans (net of repayments)
(note 5) ............................... (100,992) (34,090) (62,911) (20,946) (11,071) (274)
Deductions for surrender charges
(note 2d) .............................. (13,975) (8,593) (3,366) (2,528) (3,972) --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ...................... (36,131) (17,847) (12,803) (1,125) (1,884) (1,220)
----------- --------- --------- --------- --------- ---------
Net equity transactions 197,845 276,041 869,964 (60,089) 260,136 1,080,506
----------- --------- --------- --------- --------- ---------
NET CHANGE IN CONTRACT
OWNERS' EQUITY ........................... 762,196 615,446 688,225 72,160 418,324 1,147,420
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ...................... 7,545,548 6,749,968 5,422,985 1,986,172 1,829,534 98,424
----------- --------- --------- --------- --------- ---------
CONTRACT OWNERS' EQUITY
END OF PERIOD ............................ $ 8,307,744 7,365,414 6,111,210 2,058,332 2,247,858 1,245,844
=========== ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
VEWRLDBD
-----------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ..................... 24,030 73,945 54,317
Mortality and expense charges
(note 3): .............................. (12,836) (9,798) (9,413)
--------- --------- ---------
Net investment activity ................ 11,194 64,147 44,904
--------- --------- ---------
Proceeds from mutual fund
shares sold ............................ 444,657 229,920 509,823
Cost of mutual funds sold ................ (427,670) (250,660) (472,210)
--------- --------- ---------
Realized gain (loss) on
investments .......................... 16,987 (20,740) 37,613
Change in unrealized gain (loss)
on investments ......................... 50,573 (72,466) (131,870)
--------- --------- ---------
Net gain (loss) on investments 67,560 (93,206) (94,257)
--------- --------- ---------
Reinvested capital gains ................. -- -- --
--------- --------- ---------
Net change in contract
owner's equity resulting
from operations .................... 78,754 (29,059) (49,353)
--------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ................... 506,327 164,573 18,321
Surrenders ............................... (11,858) (12,762) (4,639)
Death benefits (note 4) .................. (3,254) -- --
Policy loans (net of repayments)
(note 5) ............................... (16,172) (9,854) (9,845)
Deductions for surrender charges
(note 2d) .............................. (1,460) (1,445) (636)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ...................... (5,901) (3,098) (2,424)
--------- --------- ---------
Net equity transactions 467,682 137,414 777
--------- --------- ---------
NET CHANGE IN CONTRACT
OWNERS' EQUITY ........................... 546,436 108,355 (48,576)
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ...................... 2,529,206 2,252,638 2,038,261
--------- --------- ---------
CONTRACT OWNERS' EQUITY
END OF PERIOD ............................ 3,075,642 2,360,993 1,989,685
========= ========= =========
</TABLE>
17
<PAGE> 17
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
VEWRLDEMKT VEWRLDHAS
--------------------------------------- -------------------------------------------
1998 1997 1996 1998 1997 1996
----------- ---------- ---- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............. $ 20,182 1,791 -- 35,945 118,188 58,970
Mortality and expense charges
(note 3): ...................... (10,596) (7,884) -- (31,604) (31,937) (29,634)
----------- ---------- ---- ---------- ---------- ----------
Net investment activity ........ 9,586 (6,093) -- 4,341 86,251 29,336
----------- ---------- ---- ---------- ---------- ----------
Proceeds from mutual fund
shares sold .................... 2,681,020 1,863,605 -- 5,254,538 5,827,653 10,321,467
Cost of mutual funds sold ........ (3,524,085) (1,733,276) -- (6,923,358) (5,874,786) (9,595,039)
----------- ---------- ---- ---------- ---------- ----------
Realized gain (loss) on
investments .................. (843,065) 130,329 -- (1,668,820) (47,133) 726,428
Change in unrealized gain (loss)
on investments ................. 222,177 143,497 -- (120,061) (207,265) (498,194)
----------- ---------- ---- ---------- ---------- ----------
Net gain (loss) on investments.. (620,888) 273,826 -- (1,788,881) (254,398) 228,234
----------- ---------- ---- ---------- ---------- ----------
Reinvested capital gains ......... 17,939 -- -- 882,647 160,126 57,828
----------- ---------- ---- ---------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ............ (593,363) 267,733 -- (901,893) (8,021) 315,398
----------- ---------- ---- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ........... 303,957 3,077,647 -- 404,298 494,300 2,199,102
Surrenders ....................... (9,087) -- -- (52,118) (67,109) (16,765)
Death benefits (note 4) .......... (4,921) -- -- (2,347) -- --
Policy loans (net of repayments)
(note 5) ....................... (10,202) -- -- (58,205) (69,095) (45,138)
Deductions for surrender charges
(note 2d) ...................... (1,119) -- -- (6,418) (7,598) (2,299)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (5,654) -- -- (84,904) (63,084) (38,203)
----------- ---------- ---- ---------- ---------- ----------
Net equity transactions ...... 272,974 3,077,647 -- 200,306 287,414 2,096,697
----------- ---------- ---- ---------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... (320,389) 3,345,380 -- (701,587) 279,393 2,412,095
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 2,399,674 3,215 -- 6,316,203 6,317,004 3,528,626
----------- ---------- ---- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... $ 2,079,285 3,348,595 -- 5,614,616 6,596,397 5,940,721
=========== ========= ==== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
VKMSRESEC
----------------------------------------
1998 1997 1996
---------- ---------- --------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............. 12,298 7,696 416
Mortality and expense charges
(note 3): ...................... (33,996) (19,904) (2,273)
---------- ---------- --------
Net investment activity ........ (21,698) (12,208) (1,857)
---------- ---------- --------
Proceeds from mutual fund
shares sold .................... 2,812,518 2,759,500 374,839
Cost of mutual funds sold ........ (2,907,348) (2,432,318) (355,961)
---------- ---------- --------
Realized gain (loss) on
investments .................. (94,830) 327,182 18,878
Change in unrealized gain (loss)
on investments ................. (425,117) (58,090) 23,294
---------- ---------- --------
Net gain (loss) on investments.. (519,947) 269,092 42,172
---------- ---------- --------
Reinvested capital gains ......... 121,016 15,555 --
---------- ---------- --------
Net change in contract
owner's equity resulting
from operations ............ (420,629) 272,439 40,315
---------- ---------- --------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ........... 666,162 1,698,145 513,113
Surrenders ....................... (61,824) (46,802) (35)
Death benefits (note 4) .......... (10,901) -- --
Policy loans (net of repayments)
(note 5) ....................... (28,419) (42,029) (8,079)
Deductions for surrender charges
(note 2d) ...................... (7,613) (5,299) (5)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (29,860) (29,105) (1,063)
---------- ---------- --------
Net equity transactions ...... 527,545 1,574,910 503,931
---------- ---------- --------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 106,916 1,847,349 544,246
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 7,628,431 3,193,794 309,601
---------- ---------- --------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... 7,735,347 5,041,143 853,847
========= ========= =======
</TABLE>
18
<PAGE> 18
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1998, 1997 AND 1996 (UNAUDITED)
<TABLE>
<CAPTION>
WPINTEQ WPPVENCAP
-------------------------------------------- ---------------------------------
1998 1997 1996 1998 1997 1996
----------- ---------- ---------- ---------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. $ -- -- -- -- -- --
Mortality and expense charges
(note 3): ....................... (46,915) (42,304) (22,443) (3,714) (873) --
----------- ---------- ---------- ---------- -------- ----
Net investment activity ......... (46,915) (42,304) (22,443) (3,714) (873) --
----------- ---------- ---------- ---------- -------- ----
Proceeds from mutual fund
shares sold ..................... 7,454,530 4,153,535 3,532,697 3,485,129 792,783 --
Cost of mutual funds sold ......... (7,745,663) (3,929,688) (3,345,428) (3,402,821) (791,269) --
----------- ---------- ---------- ---------- -------- ----
Realized gain (loss) on
investments ................... (291,133) 223,847 187,269 82,308 1,514 --
Change in unrealized gain (loss)
on investments .................. 1,610,483 1,166,086 163,172 (15,371) 8,744 --
----------- ---------- ---------- ---------- -------- ----
Net gain (loss) on investments .. 1,319,350 1,389,933 350,441 66,937 10,258 --
----------- ---------- ---------- ---------- -------- ----
Reinvested capital gains .......... -- -- -- -- -- --
----------- ---------- ---------- ---------- -------- ----
Net change in contract
owner's equity resulting
from operations ............. 1,272,435 1,347,629 327,998 63,223 9,385 --
----------- ---------- ---------- ---------- -------- ----
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 197,051 1,360,675 4,254,091 (9,777) 280,489 --
Surrenders ........................ (30,817) (181,688) (1,102) (59) -- --
Death benefits (note 4) ........... (7,841) (14,742) (1,586) -- -- --
Policy loans (net of repayments)
(note 5) ........................ (121,860) (41,895) (15,998) 4,461 -- --
Deductions for surrender charges
(note 2d) ....................... (3,795) (20,570) (151) (7) -- --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (16,044) (34,298) (35,172) (493) -- --
----------- ---------- ---------- ---------- -------- ----
Net equity transactions ....... 16,694 1,067,482 4,200,082 (5,875) 280,489 --
----------- ---------- ---------- ---------- -------- ----
NET CHANGE IN CONTRACT
OWNERS' EQUITY ..................... 1,289,129 2,415,111 4,528,080 57,348 289,874 --
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ................ 9,978,378 8,390,121 1,686,277 766,675 -- --
----------- ---------- ---------- ---------- -------- ----
CONTRACT OWNERS' EQUITY
END OF PERIOD ...................... $11,267,507 10,805,232 6,214,357 824,023 289,874 --
=========== ========== ========== ========== ======== ====
</TABLE>
<TABLE>
<CAPTION>
WPSMCOGR
-------------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. -- -- --
Mortality and expense charges
(note 3): ....................... (69,420) (35,310) (20,745)
---------- ---------- ----------
Net investment activity ......... (69,420) (35,310) (20,745)
---------- ---------- ----------
Proceeds from mutual fund
shares sold ..................... 8,087,280 3,573,614 3,440,622
Cost of mutual funds sold ......... (7,533,905) (3,643,513) (2,969,418)
---------- ---------- ----------
Realized gain (loss) on
investments ................... 553,375 (69,899) 471,204
Change in unrealized gain (loss)
on investments .................. 111,285 415,932 (127,555)
---------- ---------- ----------
Net gain (loss) on investments .. 664,660 346,033 343,649
---------- ---------- ----------
Reinvested capital gains .......... -- -- --
---------- ---------- ----------
Net change in contract
owner's equity resulting
from operations ............. 595,240 310,723 322,904
---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received
from contract owners ............ 246,616 2,734,358 2,597,411
Surrenders ........................ (136,722) (20,921) (15,816)
Death benefits (note 4) ........... (10,532) -- --
Policy loans (net of repayments)
(note 5) ........................ (149,141) (64,559) (51,090)
Deductions for surrender charges
(note 2d) ....................... (16,835) (2,369) (2,168)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............... (38,444) (31,274) (18,046)
---------- ---------- ----------
Net equity transactions ....... (105,058) 2,615,235 2,510,291
---------- ---------- ----------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................... 490,182 2,925,958 2,833,195
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............... 15,632,197 7,325,010 3,427,718
---------- ---------- ----------
CONTRACT OWNERS' EQUITY
END OF PERIOD ..................... 16,122,379 10,250,968 6,260,913
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 19
NATIONWIDE VLI SEPARATE ACCOUNT-2
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998, 1997 AND 1996
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
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.
The Company offers Modified Single Premium and Flexible Premium
Variable Life Insurance Policies through the Account. The primary
distribution for the contracts is through the brokerage community;
however, other distributors may be utilized.
(b) The Contracts
Prior to December 31, 1990, only contracts without a front-end sales
charge, but with a contingent deferred sales charge and certain other
fees, were offered for purchase. Beginning December 31, 1990,
contracts with a front-end sales charge, a contingent deferred sales
charge and certain other fees, are offered for purchase. See note 2
for a discussion of policy charges, and note 3 for asset charges.
Contract owners may invest in the following:
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP) (formerly TCI Portfolios, Inc.);
American Century VP - American Century VP Balanced (ACVPBal)
(formerly TCI Portfolios - TCI Balanced)
American Century VP - American Century VP Capital
Appreciation (ACVPCapAp) (formerly TCI Portfolios - TCI
Growth)
American Century VP - American Century VP Income & Growth
(ACVPIncGr)
American Century VP - American Century VP International
(ACVPInt) (formerly TCI Portfolios - TCI International)
American Century VP - American Century VP Value (ACVPValue)
(formerly TCI Portfolios - TCI Value)
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
Dreyfus Stock Index Fund (DryStkIx)
Portfolios of the Dreyfus Variable Investment Fund (Dreyfus
VIF);
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
Fidelity Advisor High Yield Fund - Class T (FAHiYld)
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
Fidelity VIP - Growth Portfolio (FidVIPGr)
Fidelity VIP - High Income Portfolio (FidVIPHI)
Fidelity VIP - Overseas Portfolio (FidVIPOv)
Portfolios of the Fidelity Variable Insurance Products Fund II
(Fidelity VIP-II);
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
Portfolio of the Fidelity Variable Insurance Products Fund III
Fidelity VIP-III);
Fidelity VIP-III - Growth Opportunities Portfolio
(FidVIPGrOp)
20
<PAGE> 20
Portfolio of the Morgan Stanley Universal Funds, Inc. (Morgan
Stanley);
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
Nationwide SAT - Small Company Fund (NSATSmCo)
Nationwide SAT - Total Return Fund (NSATTotRe)
Portfolios of the Neuberger & Berman Advisers Management Trust
(Neuberger & Berman AMT);
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
Neuberger & Berman AMT - Limited Maturity Bond Portfolio
(NBAMTLMat)
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
Funds of the Oppenheimer Variable Account Funds (Oppenheimer
VAF);
Oppenheimer VAF - Aggressive Growth Fund (OppAggGro)
(formerly Oppenheimer VAF - Capital Appreciation Fund)
Oppenheimer VAF - Bond Fund (OppBdFd)
Oppenheimer VAF - Global Securities Fund (OppGlSec)
Oppenheimer VAF - Growth Fund (OppGro)
Oppenheimer VAF - Multiple Strategies Fund (OppMult)
Strong Opportunity Fund II, Inc. (StOpp2) (formerly Strong
Special Fund II)
Funds of the Strong Variable Insurance Funds, Inc. (Strong VIF);
Strong VIF - Strong Discovery Fund II (StDisc2)
Strong VIF - Strong International Stock Fund II (StIntStk2)
Funds of the Van Eck Worldwide Insurance Trust (Van Eck WIT);
Van Eck WIT - Worldwide Bond Fund (VEWrldBd)
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
(formerly Van Eck WIT - Gold and Natural Resources Fund)
Portfolio of the Van Kampen American Capital Life Investment
Trust (Van Kampen American Capital LIT);
Van Kampen American Capital LIT - Morgan Stanley Real Estate
Securities Portfolio (VKMSRESec) (formerly Van Kampen
American Capital LIT - Real Estate Securities Fund)
Portfolios of the Warburg Pincus Trust;
Warburg Pincus Trust - International Equity Portfolio
(WPIntEq)
Warburg Pincus Trust - Post Venture Capital Portfolio
(WPPVenCap)
Warburg Pincus Trust - Small Company Growth Portfolio
(WPSmCoGr)
At June 30, 1998, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment
results of each fund, equity transactions by contract owners and
certain contract expenses (see notes 2 and 3). The accompanying
financial statements include only contract owners' purchase payments
pertaining to the variable portions of their contracts and exclude any
purchase payments for fixed dollar benefits, the latter being included
in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the
closing net asset value per share at June 30, 1998. 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.
21
<PAGE> 21
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company, which is taxed as a life insurance company
under the provisions of the Internal Revenue Code.
The Company does not provide for income taxes within the Account.
Taxes are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities,
if any, at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
(f) Reclassifications
Certain 1996 amounts have been reclassified to conform with the
current period presentation.
(2) POLICY CHARGES
(a) Deductions from Premiums
For single premium contracts, no deduction is made from any premium at
the time of payment. On multiple payment contracts and flexible
premium contracts, the Company deducts a charge for state premium
taxes equal to 2.5% of all premiums received to cover the payment of
these premium taxes. The Company also deducts a sales load from each
premium payment received not to exceed 3.5% of each premium payment.
On last survivor flexible premium contracts, the Company deducts a
charge for state premium taxes equal to 3.5% 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 5% of
each premium payment during the first ten years and 1.5% of each
premium payment thereafter.
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).
For last survivor flexible premium contracts, the monthly cost of
insurance is determined in a manner that reflects the anticipated
mortality of the two insureds and the fact that the death benefit is
not payable until the death of the second insured policyholder.
(c) Administrative Charges
An administrative charge is assessed against each contract to recover
policy maintenance, accounting, record keeping and other
administrative expenses and is assessed against each contract by
liquidating units.
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).
22
<PAGE> 22
For flexible premium contracts, the Company currently deducts a
monthly administrative charge of $12.50 during the first policy year
and $5 per month thereafter (may deduct up to $7.50, maximum).
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.
For modified single premium contracts, the monthly charge is equal to
an annual rate of .30% multiplied by the policy's cash value. For
policy years 11 and later, this monthly charge is reduced to an annual
rate of 0.15% of the policy's cash value. The monthly charge is
subject to a $10 minimum.
For last survivor flexible premium contracts, the Company deducts a
monthly administrative charge equal to the sum of the policy charge
and the basic coverage charge. For policy years one through ten the
policy charge is $10. Additionally, there is a $0.04 per $1000 basic
coverage charge (not less than $20 or more than $80 per policy). For
policy years eleven and after, the policy charge is $5. Additionally,
there is a $0.02 per $1000 basic coverage charge (not less than $10 or
more than $40 per policy). Additionally, the Company deducts a monthly
increase charge of $2.40 per $1000 applied to any increase in the
specified amount during the first 12 months after the increase becomes
effective. The charge may be raised to $3.60 per $1000 of increase per
year at the Company's discretion.
(d) Surrender Charges
Policy surrenders result in a redemption of the contract value from
the Account and payment of the surrender proceeds to the contract
owner or designee. The surrender proceeds consist of the contract
value, less any outstanding policy loans, and less a surrender charge,
if applicable. The charge is determined according to contract type.
For single premium contracts, the charge is determined based upon a
specified percentage of the original purchase payment. For single
premium contracts issued prior to April 16, 1990, the charge is 8% in
the first year and declines to 0% after the ninth year. For single
premium contracts issued on or after April 16, 1990, the charge is
8.5% in the first year, and declines to 0% after the ninth year.
For multiple payment contracts and flexible premium contracts, the
amount charged is based upon a specified percentage of the initial
surrender charge, which varies by issue age, sex and rate class. The
charge is 100% of the initial surrender charge in the first year,
declining to 0% after the ninth year.
For modified single premium contracts, the amount charged is based on
the original purchase payment. The charge is 10% in the first year,
declining to 0% in the ninth year.
For last survivor flexible premium contracts, the charge is 100% of
the initial surrender charge, declining to 0% in the fourteenth year
if the average issue age is 74 or less. The charge is 100% of the
initial surrender charge, declining to 0% in the ninth year if the
average issue age is 75 or greater. For last survivor flexible payment
contracts, the initial surrender charge is comprised of two
components, an underwriting surrender charge and a sales surrender
charge.
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.
For modified single premium contracts, the Company deducts an annual rate
of .90% charged against the cash value of the contracts. This charge is
assessed monthly against each contract by liquidating units.
23
<PAGE> 23
For last survivor flexible premium contracts, the Company deducts an annual
rate of .80% in policy years one through ten. This charge is assessed
monthly by liquidating units. In policy years eleven and greater, the
Company deducts an annual rate of .80% if the cash value of the contract is
less than $100,000. If the cash value is greater than or equal to $100,000,
the Company reduces the annual asset fee rate to .30%.
(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. For last
survivor flexible premium contracts, the proceeds are payable on the death
of the last surviving insured. 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 and modified 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,
flexible premium, modified single and last survivor flexible premium
contracts, 6% interest is due and payable in advance on the policy
anniversary when there is a loan outstanding on the policy.
At the time the loan is granted, the amount of the loan is transferred from
the Account to the Company's general account as collateral for the
outstanding loan. Collateral amounts in the general account are credited
with the stated rate of interest in effect at the time the loan is made,
subject to a guaranteed minimum rate. Loan repayments result in a transfer
of collateral, including interest, back to the Account.
(6) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
24
<PAGE> 24
(7) Components of Contract owners' equity
The following is a summary of contract owners' equity at June 30, 1998, for
each product in the accumulation phase.
Contract owners' equity represented by:
<TABLE>
<CAPTION>
Period
Units Unit Value Return
------ ----------- ------
<S> <C> <C> <C> <C>
Single Premium contracts issued prior to
April 16, 1990:
American Century VP - American Century
VP Capital Appreciation .............. 6,470 $ 23.143544 $149,739 0%
Dreyfus Stock Index Fund ................ 14,844 25.666593 380,995 17%
Dreyfus VIF -
Capital Appreciation Portfolio ....... 882 12.267560 10,820 20%
Fidelity VIP - Equity-Income Portfolio .. 6,582 41.677100 274,319 10%
Fidelity VIP - Growth Portfolio ......... 4,551 49.858250 226,905 19%
Fidelity VIP - High Income Portfolio .... 3,532 29.777470 105,174 4%
Fidelity VIP - Overseas Portfolio ....... 4,991 25.064844 125,099 15%
Fidelity VIP-II - Asset Manager Portfolio 1,198 26.682218 31,965 9%
Fidelity VIP-II - Contrafund Portfolio .. 689 19.040008 13,119 16%
Nationwide SAT -
Capital Appreciation Fund ............ 2,361 28.914781 68,268 19%
Nationwide SAT -
Government Bond Fund ................. 1,487 22.310412 33,176 4%
Nationwide SAT - Money Market Fund ...... 9,796 15.840484 155,173 2%
Nationwide SAT - Total Return Fund ...... 4,474 39.127646 175,057 14%
Neuberger & Berman AMT -
Growth Portfolio ..................... 4,932 36.537187 180,201 15%
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio ...... 5,909 17.727098 104,749 2%
Strong Opportunity Fund II, Inc. ........ 454 30.056674 13,646 13%
Van Eck WIT - Worldwide Bond Fund ....... 8 15.323384 123 3%
Van Eck WIT -
Worldwide Hard Assets Fund ........... 5,510 12.613372 69,500 (14)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio ................. 4,125 17.100930 70,541 (5)%
Warburg Pincus Trust -
International Equity Portfolio ....... 1,787 12.697118 22,690 13%
Single Premium contracts issued on or
after April 16, 1990:
American Century VP -
American Century VP Balanced ......... 47,696 18.582289 886,301 14%
</TABLE>
(Continued)
25
<PAGE> 25
<TABLE>
<CAPTION>
Period
Units Unit Value Return
------ ----------- ------
<S> <C> <C> <C> <C>
American Century VP - American Century
VP Capital Appreciation .............. 113,931 15.470767 1,762,600 0%
American Century VP - American Century
VP Income & Growth ................... 2,231 10.090569 22,512 1%(a)
American Century VP -
American Century VP International..... 209,657 17.128016 3,591,008 25%
American Century VP -
American Century VP Value ............ 31,901 13.282058 423,711 5%
The Dreyfus Socially Responsible
Growth Fund, Inc. .................... 25,810 25.412480 655,896 18%
Dreyfus Stock Index Fund ................ 264,882 25.244163 6,686,724 17%
Dreyfus VIF -
Capital Appreciation Portfolio ....... 45,130 12.226374 551,776 20%
Dreyfus VIF -
Growth and Income Portfolio .......... 16,382 12.121015 198,566 6%
Fidelity VIP - Equity-Income Portfolio .. 508,090 33.912448 17,230,576 10%
Fidelity VIP - Growth Portfolio ......... 379,901 34.299648 13,030,471 18%
Fidelity VIP - High Income Portfolio .... 165,180 30.474959 5,033,854 4%
Fidelity VIP - Overseas Portfolio ....... 266,825 17.958492 4,791,775 15%
Fidelity VIP-II - Asset Manager Portfolio 265,598 25.922913 6,885,074 9%
Fidelity VIP-II - Contrafund Portfolio .. 251,576 18.841802 4,740,145 16%
Fidelity VIP-III -
Growth Opportunities Portfolio ....... 63,251 12.092490 764,862 11%
Morgan Stanley -
Emerging Markets Debt Portfolio ...... 4,459 9.374790 41,802 (4)%
Nationwide SAT -
Capital Appreciation Fund ............ 87,739 28.293541 2,482,447 19%
Nationwide SAT -
Government Bond Fund ................. 246,603 18.399394 4,537,346 3%
Nationwide SAT - Money Market Fund ...... 919,798 13.218739 12,158,570 2%
Nationwide SAT - Small Cap Value Fund ... 3,282 9.218651 30,256 (8)%(a)
Nationwide SAT - Small Company Fund ..... 61,644 16.894949 1,041,472 5%
Nationwide SAT - Total Return Fund ...... 141,040 33.559400 4,733,218 14%
Neuberger & Berman AMT -
Growth Portfolio ..................... 119,113 25.639045 3,053,944 15%
Neuberger & Berman AMT -
Guardian Portfolio ................... 670 9.701808 6,500 (3)%(a)
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio ...... 132,725 15.117957 2,006,531 2%
Neuberger & Berman AMT -
Partners Portfolio ................... 222,498 23.543943 5,238,480 5%
Oppenheimer VAF - Bond Fund ............. 84,554 18.497246 1,564,016 3%
</TABLE>
(Continued)
26
<PAGE> 26
<TABLE>
<CAPTION>
Period
Units Unit Value Return
------ ----------- ------
<S> <C> <C> <C> <C>
Oppenheimer VAF -
Global Securities Fund .............. 106,883 17.876035 1,910,644 11%
Oppenheimer VAF - Growth Fund .......... 6,326 12.126241 76,711 16%
Oppenheimer VAF -
Multiple Strategies Fund ............ 121,306 23.024448 2,793,004 6%
Strong Opportunity Fund II, Inc. ....... 125,186 29.412835 3,682,075 13%
Strong VIF - Strong Discovery Fund II... 61,796 18.978727 1,172,809 7%
Strong VIF -
Strong International Stock Fund II... 33,140 10.094659 334,537 6%
Van Eck WIT - Worldwide Bond Fund ...... 49,868 14.887223 742,396 3%
Van Eck WIT -
Worldwide Emerging Markets Fund ..... 25,392 6.748931 171,369 (23)%
Van Eck WIT -
Worldwide Hard Assets Fund .......... 147,178 13.858121 2,039,611 (14)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio ................ 85,990 16.922894 1,455,200 (5)%
Warburg Pincus Trust -
International Equity Portfolio ...... 126,372 12.564872 1,587,848 13%
Warburg Pincus Trust -
Post Venture Capital Portfolio ...... 10,672 12.788874 136,483 12%
Warburg Pincus Trust -
Small Company Growth Portfolio ...... 157,885 16.611322 2,622,679 4%
Multiple Payment contracts and
Flexible Premium contracts:
American Century VP -
American Century VP Balanced ........ 194,443 19.165966 3,726,688 14%
American Century VP - American Century
VP Capital Appreciation ............. 638,722 14.780622 9,440,708 0%
American Century VP - American Century
VP Income & Growth .................. 16,809 10.098876 169,752 1%(a)
American Century VP -
American Century VP International ... 478,209 17.466243 8,352,515 25%
American Century VP -
American Century VP Value ........... 129,783 13.383185 1,736,910 5%
The Dreyfus Socially Responsible
Growth Fund, Inc. ................... 317,554 26.020390 8,262,879 18%
Dreyfus Stock Index Fund ............... 1,969,301 25.849746 50,905,931 17%
Dreyfus VIF -
Capital Appreciation Portfolio ...... 229,916 12.285237 2,824,573 20%
Dreyfus VIF -
Growth and Income Portfolio ......... 118,667 12.213307 1,449,317 6%
Fidelity VIP - Equity-Income Portfolio.. 1,688,967 35.237987 59,515,797 10%
</TABLE>
(Continued)
27
<PAGE> 27
<TABLE>
<CAPTION>
Period
Units Unit Value Return
------ ----------- ------
<S> <C> <C> <C> <C>
Fidelity VIP - Growth Portfolio ........... 2,230,873 35.155247 78,426,891 19%
Fidelity VIP - High Income Portfolio ...... 759,256 28.742182 21,822,674 4%
Fidelity VIP - Overseas Portfolio ......... 880,136 19.587603 17,239,755 15%
Fidelity VIP-II - Asset Manager Portfolio.. 975,581 23.672944 23,094,874 9%
Fidelity VIP-II - Contrafund Portfolio .... 1,622,562 19.125611 31,032,490 16%
Fidelity VIP-III -
Growth Opportunities Portfolio ......... 220,981 12.150728 2,685,080 11%
Morgan Stanley -
Emerging Markets Debt Portfolio ........ 32,597 9.419998 307,064 (4)%
Nationwide SAT -
Capital Appreciation Fund .............. 903,007 29.181890 26,351,451 19%
Nationwide SAT -
Government Bond Fund ................... 254,512 17.335612 4,412,121 4%
Nationwide SAT - Money Market Fund ........ 2,026,014 13.036881 26,412,903 2%
Nationwide SAT - Small Cap Value Fund ..... 3,990 9.226260 36,813 (8)%(a)
Nationwide SAT - Small Company Fund ....... 801,458 17.123187 13,723,515 6%
Nationwide SAT - Total Return Fund ........ 2,561,854 32.274487 82,682,524 14%
Neuberger & Berman AMT -
Growth Portfolio ....................... 638,900 25.479039 16,278,558 15%
Neuberger & Berman AMT -
Guardian Portfolio ..................... 10,243 9.709796 99,457 (3)%(a)
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio ........ 180,704 14.650523 2,647,408 2%
Neuberger & Berman AMT -
Partners Portfolio ..................... 1,151,928 24.008666 27,656,255 6%
Oppenheimer VAF - Bond Fund ............... 505,922 17.689611 8,949,563 4%
Oppenheimer VAF -
Global Securities Fund ................. 980,620 18.305105 17,950,352 12%
Oppenheimer VAF - Growth Fund ............. 157,197 12.184646 1,915,390 17%
Oppenheimer VAF -
Multiple Strategies Fund ............... 445,668 22.881279 10,197,454 7%
Strong Opportunity Fund II, Inc. .......... 853,057 30.333638 25,876,322 13%
Strong VIF - Strong Discovery Fund II ..... 350,945 19.573146 6,869,098 7%
Strong VIF -
Strong International Stock Fund II ..... 144,191 10.231122 1,475,236 6%
Van Eck WIT - Worldwide Bond Fund ......... 150,540 14.098956 2,122,457 3%
Van Eck WIT -
Worldwide Emerging Markets Fund ........ 253,008 6.800411 1,720,558 (23)%
Van Eck WIT -
Worldwide Hard Assets Fund ............. 216,934 15.394994 3,339,698 (14)%
</TABLE>
(Continued)
28
<PAGE> 28
<TABLE>
<CAPTION>
Period
Units Unit Value Return
------ ----------- ------
<S> <C> <C> <C> <C>
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio ............................. 311,962 17.177811 5,358,824 (5)%
Warburg Pincus Trust -
International Equity Portfolio ................... 660,912 12.754223 8,429,419 13%
Warburg Pincus Trust -
Post Venture Capital Portfolio ................... 45,775 12.886267 589,869 13%
Warburg Pincus Trust -
Small Company Growth Portfolio ................... 721,851 16.861654 12,171,602 4%
Modified Single Premium contracts and
Last Survivor Flexible Premium contracts:
American Century VP -
American Century VP Balanced ..................... 39,406 14.479787 570,590 14%
American Century VP - American Century
VP Capital Appreciation .......................... 46,135 8.899100 410,560 1%
American Century VP - American Century
VP Income & Growth ............................... 5,569 10.112181 56,315 1%(a)
American Century VP -
American Century VP International ................ 68,052 16.015424 1,089,882 25%
American Century VP -
American Century VP Value ........................ 33,413 13.546581 452,632 6%
The Dreyfus Socially Responsible
Growth Fund, Inc. ................................ 38,691 16.998616 657,693 18%
Dreyfus Stock Index Fund ............................ 350,810 17.903982 6,280,896 18%
Dreyfus VIF -
Capital Appreciation Portfolio ................... 39,456 12.379986 488,465 21%
Dreyfus VIF -
Growth and Income Portfolio ...................... 22,593 12.362440 279,305 6%
Fidelity VIP - Equity-Income Portfolio............ .. 351,603 15.278454 5,371,950 11%
Fidelity VIP - Growth Portfolio ..................... 228,641 15.366179 3,513,339 19%
Fidelity VIP - High Income Portfolio ................ 285,767 13.355363 3,816,522 5%
Fidelity VIP - Overseas Portfolio ................... 63,709 13.799744 879,168 16%
Fidelity VIP-II - Asset Manager Portfolio............ 86,216 14.533040 1,252,981 9%
Fidelity VIP-II - Contrafund Portfolio .............. 231,283 16.303294 3,770,675 17%
Fidelity VIP-III -
Growth Opportunities Portfolio ................... 43,753 12.244460 535,732 11%
Morgan Stanley -
Emerging Markets Debt Portfolio .................. 1,909 9.492781 18,122 (4)%
Nationwide SAT -
Capital Appreciation Fund ........................ 137,499 18.624315 2,560,825 19%
Nationwide SAT -
Government Bond Fund ............................. 71,854 12.179402 875,139 4%
Nationwide SAT - Money Market Fund .................. 730,601 11.168280 8,159,557 3%
</TABLE>
(Continued)
29
<PAGE> 29
<TABLE>
<CAPTION>
Period
Units Unit Value Return
------ ----------- ------
<S> <C> <C> <C> <C>
Nationwide SAT - Small Cap Value Fund ... 3,619 9.238441 33,434 (8)%(a)
Nationwide SAT - Small Company Fund ..... 131,029 13.106167 1,717,288 6%
Nationwide SAT - Total Return Fund ...... 332,674 17.000513 5,655,629 15%
Neuberger & Berman AMT -
Growth Portfolio ..................... 54,189 14.726294 798,003 16%
Neuberger & Berman AMT -
Guardian Portfolio ................... 5,285 9.722600 51,384 (3)%(a)
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio ...... 56,134 11.463419 643,488 3%
Neuberger & Berman AMT -
Partners Portfolio ................... 221,440 15.961980 3,534,621 6%
Oppenheimer VAF - Bond Fund ............. 74,127 12.088030 896,049 4%
Oppenheimer VAF -
Global Securities Fund ............... 75,609 14.880212 1,125,078 12%
Oppenheimer VAF - Growth Fund ........... 19,784 12.278697 242,922 17%
Oppenheimer VAF -
Multiple Strategies Fund ............. 70,345 13.730478 965,870 7%
Strong Opportunity Fund II, Inc. ........ 69,628 15.319586 1,066,672 13%
Strong VIF - Strong Discovery Fund II.... 22,422 11.856060 265,837 8%
Strong VIF -
Strong International Stock Fund II ... 26,760 9.288438 248,559 7%
Van Eck WIT - Worldwide Bond Fund ....... 18,923 11.132779 210,666 3%
Van Eck WIT -
Worldwide Emerging Markets Fund ...... 27,218 6.883600 187,358 (23)%
Van Eck WIT -
Worldwide Hard Assets Fund ........... 19,350 8.568839 165,807 (13)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio ................. 53,847 15.799983 850,782 (5)%
Warburg Pincus Trust -
International Equity Portfolio ....... 111,620 10.997580 1,227,550 13%
Warburg Pincus Trust -
Post Venture Capital Portfolio ....... 7,488 13.043642 97,671 13%
Warburg Pincus Trust -
Small Company Growth Portfolio ....... 111,508 11.910337 1,328,098 5%
======= ========= ---------
$ 815,700,917
=============
</TABLE>
(a) This investment option was not being utilized for the entire period.
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