<PAGE> 1
Nationwide(R) VLI
Separate Account-2
December 31, 1998
The Best of America(R) [GRAPHIC]
Life Planning Series(R)[GRAPHIC]
'98
ANNUAL REPORT
[Logo]
Nationwide Life Insurance Company
Home Office: Columbus, Ohio
<PAGE> 2
[Logo]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215 - 2220
[Photo of Joseph J. Gasper]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you the 1998 annual
report of the Nationwide VLI Separate Account-2.
Equity markets again defied the odds in 1998 to tally a fourth straight year of
double-digit gains, as measured by the major indices. This surprise came
following the breathtaking correction during the third quarter that gave us a
broad double-digit retreat. Fixed income investments also provided respectable
returns in 1998, supported by the continued low inflationary environment and
favorable Federal Reserve actions.
The performance of the American economy continues strong into 1999. However, we
believe the persisting slump in Asia and recent difficulties in Latin America
will inevitably take their toll and dampen growth in the United States. This
moderation, we think, will be healthy for our economy and get us back to a more
sustainable growth level. We look for interest rates to continue within the
range of the recent past, and we expect inflation to remain subdued. Moreover,
we remain optimistic about long-term prospects for U.S. business activity;
holders of financial assets should continue to profit from the anticipated
favorable investment climate.
We are pleased you have chosen our Company to provide the investment products
and services to help you meet your retirement savings and financial planning
goals.
/s/ Joseph J. Gasper
--------------------
Joseph J. Gasper, President
February 16, 1999
3
<PAGE> 3
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value:
American Century VP - American Century VP Balanced (ACVPBal)
667,058 shares (cost $5,343,930) ...................................... $ 5,563,263
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
1,285,611 shares (cost $13,112,689) ................................... 11,596,209
American Century VP - American Century VP Income & Growth (ACVPIncGr)
227,927 shares (cost $1,413,839) ...................................... 1,545,347
American Century VP - American Century VP International (ACVPInt)
1,806,789 shares (cost $13,291,133) ................................... 13,767,730
American Century VP - American Century VP Value (ACVPValue)
403,199 shares (cost $2,677,987) ...................................... 2,713,527
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
388,872 shares (cost $11,240,402) ..................................... 12,086,156
Dreyfus Stock Index Fund (DryStkIx)
2,430,963 shares (cost $68,540,273) ................................... 79,054,923
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
129,312 shares (cost $4,499,999) ...................................... 4,669,456
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
97,841 shares (cost $2,176,879) ....................................... 2,214,133
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
3,288,235 shares (cost $68,688,982) ................................... 83,586,925
Fidelity VIP - Growth Portfolio (FidVIPGr)
2,610,901 shares (cost $98,245,877) ................................... 117,151,133
Fidelity VIP - High Income Portfolio (FidVIPHI)
2,372,894 shares (cost $29,208,547) ................................... 27,359,471
Fidelity VIP - Overseas Portfolio (FidVIPOv)
1,108,508 shares (cost $21,869,861) ................................... 22,225,589
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
1,776,182 shares (cost $27,388,181) ................................... 32,255,471
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
2,039,961 shares (cost $38,346,102) ................................... 49,856,648
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
257,373 shares (cost $5,282,575) ...................................... 5,888,693
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
55,772 shares (cost $371,601) ......................................... 340,210
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
1,553,137 shares (cost $38,080,554) ................................... 41,297,903
Nationwide SAT - Government Bond Fund (NSATGvtBd)
1,202,610 shares (cost $14,267,240) ................................... 14,058,510
Nationwide SAT - Money Market Fund (NSATMyMkt)
44,571,880 shares (cost $44,571,880) .................................. 44,571,880
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
88,617 shares (cost $809,334) ......................................... 840,976
</TABLE>
4
<PAGE> 4
<TABLE>
<S> <C>
Nationwide SAT - Small Company Fund (NSATSmCo)
1,093,214 shares (cost $17,223,078) ............................ 17,502,348
Nationwide SAT - Total Return Fund (NSATTotRe)
5,388,073 shares (cost $83,326,583) ............................ 99,140,546
Neuberger &Berman AMT - Growth Portfolio (NBAMTGro)
932,473 shares (cost $22,947,521) .............................. 24,514,709
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
62,015 shares (cost $804,621) .................................. 858,282
Neuberger &Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat)
363,249 shares (cost $5,022,473) ............................... 5,020,101
Neuberger &Berman AMT - Partners Portfolio (NBAMTPart)
1,847,861 shares (cost $36,287,150) ............................ 34,980,006
Oppenheimer VAF - Bond Fund (OppBdFd)
1,003,501 shares (cost $12,261,046) ............................ 12,363,132
Oppenheimer VAF - Global Securities Fund (OppGlSec)
957,560 shares (cost $18,773,976) .............................. 21,133,338
Oppenheimer VAF - Growth Fund (OppGro)
164,365 shares (cost $5,914,563) ............................... 6,027,268
Oppenheimer VAF - Multiple Strategies Fund (OppMult)
833,758 shares (cost $13,141,814) .............................. 14,215,574
Strong Opportunity Fund II, Inc. (StOpp2)
1,429,116 shares (cost $27,438,063) ............................ 31,040,403
Strong VIF - Strong Discovery Fund II (StDisc2)
656,556 shares (cost $8,140,634) ............................... 8,351,399
Strong VIF - Strong International Stock Fund II (StIntStk2)
226,407 shares (cost $2,171,645) ............................... 1,987,856
Van Eck WIT - Worldwide Bond Fund (VEWrldBd)
288,886 shares (cost $3,540,727) ............................... 3,547,526
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
260,082 shares (cost $1,743,623) ............................... 1,851,783
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
448,922 shares (cost $4,172,279) ............................... 4,130,087
Van Kampen American Capital LIT -
Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
475,308 shares (cost $7,366,326) ............................... 6,540,232
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
845,293 shares (cost $9,714,262) ............................... 9,289,767
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
93,442 shares (cost $1,035,844) ................................ 1,100,743
Warburg Pincus Trust - Small Company Growth Portfolio (WPSmCoGr)
948,154 shares (cost $15,361,244) .............................. 15,179,948
------------
Total investments ........................................... 891,419,201
Accounts receivable .................................................. 2,737,278
------------
Total assets ................................................ 894,156,479
ACCOUNTS PAYABLE ........................................................ -
------------
CONTRACT OWNERS' EQUITY (NOTE 7) ........................................ $894,156,479
============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 5
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
Total ACVPBal
-------------------------------------- ---------------------
1998 1997 1996 1998 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ........... $ 11,649,564 9,547,366 6,387,808 73,602 32,123
Mortality and expense charges
(note 3) ..................... (6,238,523) (4,642,993) (2,983,466) (38,972) (27,654)
------------- ------------ ------------ ---------- ---------
Net investment activity ........ 5,411,041 4,904,373 3,404,342 34,630 4,469
------------- ------------ ------------ ---------- ---------
Proceeds from mutual fund
shares sold .................. 760,513,313 443,749,426 275,979,207 1,247,480 2,604,070
Cost of mutual funds sold ...... (729,684,314) (409,583,997) (266,008,543) (1,152,261) (2,212,633)
------------- ------------ ------------ ---------- ---------
Realized gain (loss) on
investments ................ 30,828,999 34,165,429 9,970,664 95,219 391,437
Change in unrealized gain (loss)
on investments ............... 26,818,372 31,280,650 12,175,328 37,264 (79,247)
------------- ------------ ------------ ---------- ---------
Net gain (loss) on investments . 57,647,371 65,446,079 22,145,992 132,483 312,190
------------- ------------ ------------ ---------- ---------
Reinvested capital gains ....... 43,742,310 19,594,720 10,584,883 456,397 126,772
------------- ------------ ------------ ---------- ---------
Net change in contract
owners' equity resulting
from operations .......... 106,800,722 89,945,172 36,135,217 623,510 443,431
------------- ------------ ------------ ---------- ---------
Equity transactions:
Purchase payments received
from contract owners ......... 213,764,519 218,381,791 174,104,282 617,960 560,697
Transfers between funds ........ -- -- -- 1,045,491 402,250
Surrenders ..................... (20,881,099) (11,960,967) (6,124,049) (139,847) (201,818)
Death benefits (note 4) ........ (1,636,729) (664,672) (730,700) (12,665) (18,479)
Policy loans (net of repayments)
(note 5) ..................... (15,272,227) (9,898,715) (6,468,023) (97,880) (62,819)
Deductions for surrender charges
(note 2d) .................... (2,374,941) (1,603,674) (721,263) (16,788) (27,058)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (44,274,845) (34,553,252) (24,075,896) (164,907) (31,708)
Deductions for asset charges
(note 3) .................... (556,243) (227,535) (20,037) (3,475) (1,282)
------------- ------------ ------------ ---------- ---------
Net equity transactions .... 128,768,435 159,472,976 135,964,314 1,227,889 619,783
------------- ------------ ------------ ---------- ---------
Net change in contract
owners' equity ............... 235,569,157 249,418,148 172,099,531 1,851,399 1,063,214
Contract owners' equity
beginning of period .......... 658,587,322 409,169,174 237,069,643 3,711,460 2,648,246
------------- ------------ ------------ ---------- ---------
Contract owners' equity
end of period ................ $ 894,156,479 658,587,322 409,169,174 5,562,859 3,711,460
============= =========== =========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
ACVPBal ACVPCapAp
----------- -----------------------------------------
1996 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ........... 37,120 -- -- --
Mortality and expense charges
(note 3) ..................... (19,284) (82,384) (104,781) (103,669)
----------- ----------- ----------- -----------
Net investment activity ........ 17,836 (82,384) (104,781) (103,669)
Proceeds from mutual fund
shares sold .................. 308,084 5,476,348 32,724,781 29,396,492
Cost of mutual funds sold ...... (253,217) (6,203,432) (32,719,977) (28,812,207)
Realized gain (loss) on
investments ................ 54,867 (727,084) 4,804 584,285
Change in unrealized gain (loss)
on investments ............... 104,799 (95,403) (649,578) (2,360,038)
----------- ----------- ----------- -----------
Net gain (loss) on investments . 159,666 (822,487) (644,774) (1,775,753)
----------- ----------- ----------- -----------
Reinvested capital gains ....... 48,770 626,545 235,181 1,326,118
----------- ----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations .......... 226,272 (278,326) (514,374) (553,304)
----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ......... 293,943 2,567,119 2,396,050 1,943,037
Transfers between funds ........ 705,211 (1,460,314) (731,351) 854,921
Surrenders ..................... (50,854) (537,440) (294,647) (333,226)
Death benefits (note 4) ........ (142) (1,791) (279) (6,887)
Policy loans (net of repayments)
(note 5) ..................... (33,101) (208,014) (317,723) (76,974)
Deductions for surrender charges
(note 2d) .................... (5,989) (63,643) (39,505) (39,246)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (15,745) (533,669) (354,495) (285,952)
Deductions for asset charges
(note 3) .................... (130) (7,346) (4,187) (587)
----------- ----------- ----------- -----------
Net equity transactions .... 893,193 (245,098) 653,863 2,055,086
----------- ----------- ----------- -----------
Net change in contract
owners' equity ............... 1,119,465 (523,424) 139,489 1,501,782
Contract owners' equity
beginning of period .......... 1,528,781 12,118,077 11,978,588 10,476,806
----------- ----------- ----------- -----------
Contract owners' equity
end of period ................ 2,648,246 11,594,653 12,118,077 11,978,588
=========== =========== =========== ===========
</TABLE>
6
<PAGE> 6
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
ACVPIncGr ACVPInt
------------------------------------------ --------------------------
1998 1997 1996 1998 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ........... $ 7,293 -- -- 48,574 39,611
Mortality and expense charges
(note 3) ..................... (7,590) -- -- (100,304) (43,589)
---------- ------------ ------------ ----------- -----------
Net investment activity ........ (297) -- -- (51,730) (3,978)
---------- ------------ ------------ ----------- -----------
Proceeds from mutual fund
shares sold .................. 579,403 -- -- 26,953,998 12,528,472
Cost of mutual funds sold ...... (585,659) -- -- (26,717,868) (11,671,277)
---------- ------------ ------------ ----------- -----------
Realized gain (loss) on
investments ................ (6,256) -- -- 236,130 857,195
Change in unrealized gain (loss)
on investments ............... 131,508 -- -- 538,699 (221,309)
---------- ------------ ------------ ----------- -----------
Net gain (loss) on investments . 125,252 -- -- 774,829 635,886
---------- ------------ ------------ ----------- -----------
Reinvested capital gains ....... -- -- -- 498,647 76,392
---------- ------------ ------------ ----------- -----------
Net change in contract
owners' equity resulting
from operations .......... 124,955 -- -- 1,221,746 708,300
---------- ------------ ------------ ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ......... 115,227 -- -- 1,075,296 827,281
Transfers between funds ........ 1,333,797 -- -- 5,394,451 1,897,413
Surrenders ..................... (9,343) -- -- (91,333) (37,650)
Death benefits (note 4) ........ (1) -- -- (11,988) --
Policy loans (net of repayments)
(note 5) ..................... (3,122) -- -- (25,253) (123,364)
Deductions for surrender charges
(note 2d) .................... (970) -- -- (7,357) (5,048)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (14,226) -- -- (371,602) (116,507)
Deductions for asset charges
(note 3) .................... (677) -- -- (8,943) (2,276)
---------- ------------ ------------ ----------- -----------
Net equity transactions .... 1,420,685 -- -- 5,953,271 2,439,849
---------- ------------ ------------ ----------- -----------
Net change in contract
owners' equity ............... 1,545,640 -- -- 7,175,017 3,148,149
Contract owners' equity
beginning of period .......... -- -- -- 6,586,196 3,438,047
---------- ------------ ------------ ----------- -----------
Contract owners' equity
end of period ................ $1,545,640 -- -- 13,761,213 6,586,196
========== ============ ============ =========== ===========
</TABLE>
<TABLE>
<CAPTION>
ACVPInt ACVPValue
----------- --------------------------------------
1996 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............... 27,668 14,238 1,245 --
Mortality and expense charges
(note 3) ......................... (20,991) (19,998) (7,498) (42)
---------- ---------- ---------- ----------
Net investment activity ............ 6,677 (5,760) (6,253) (42)
---------- ---------- ---------- ---------
Proceeds from mutual fund
shares sold ...................... 2,744,824 3,978,821 2,118,031 --
Cost of mutual funds sold .......... (2,625,412) (4,072,379) (1,966,550) --
---------- ---------- ---------- ---------
Realized gain (loss) on
investments .................... 119,412 (93,558) 151,481 --
Change in unrealized gain (loss)
on investments ................... 131,744 7,367 28,166 (54)
---------- ---------- ---------- ----------
Net gain (loss) on investments ..... 251,156 (86,191) 179,647 (54)
---------- ---------- ---------- ----------
Reinvested capital gains ........... 9,222 169,984 2,540 --
---------- ---------- ---------- ----------
Net change in contract
owners' equity resulting
from operations .............. 267,055 78,033 175,934 (96)
---------- ---------- ---------- ----------
Equity transactions:
Purchase payments received
from contract owners ............. 440,016 402,104 111,600 64
Transfers between funds ............ 1,731,900 705,143 1,429,037 9,189
Surrenders ......................... (30,514) (64,948) (4,196) (19)
Death benefits (note 4) ............ -- (2) -- --
Policy loans (net of repayments)
(note 5) ......................... (14,420) (39,222) (2,706) --
Deductions for surrender charges
(note 2d) ........................ (3,594) (5,005) (563) (2)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ................ (60,957) (76,187) (2,525) (7)
Deductions for asset charges
(note 3) ........................ (168) (1,783) (593) --
---------- ---------- ---------- ----------
Net equity transactions ........ 2,062,263 920,100 1,530,054 9,225
---------- ---------- ---------- ----------
Net change in contract
owners' equity ................... 2,329,318 998,133 1,705,988 9,129
Contract owners' equity
beginning of period .............. 1,108,729 1,715,117 9,129 --
---------- ---------- ---------- ----------
Contract owners' equity
end of period .................... 3,438,047 2,713,250 1,715,117 9,129
========== ========== ========== ==========
</TABLE>
7
<PAGE> 7
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
DrySRGro DryStkix
----------------------------------------- ----------------------------------------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ........... $ 18,491 24,764 6,374 840,788 488,743 212,732
Mortality and expense charges
(note 3) ..................... (76,955) (44,201) (18,622) (508,329) (258,618) (93,077)
------------ ----------- ----------- ----------- ----------- -----------
Net investment activity ........ (58,464) (19,437) (12,248) 332,459 230,125 119,655
------------ ----------- ----------- ----------- ----------- -----------
Proceeds from mutual fund
shares sold .................. 30,530,607 6,036,906 3,195,875 34,044,658 12,995,115 4,656,338
Cost of mutual funds sold ...... (29,068,944) (5,411,329) (2,863,782) (26,882,152) (10,012,154) (3,763,242)
------------ ----------- ----------- ----------- ----------- -----------
Realized gain (loss) on
investments ................ 1,461,663 625,577 332,093 7,162,506 2,982,961 893,096
Change in unrealized gain (loss)
on investments ............... 619,023 301,151 (119,764) 6,892,116 2,734,985 553,288
------------ ----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments . 2,080,686 926,728 212,329 14,054,622 5,717,946 1,446,384
------------ ----------- ----------- ----------- ----------- -----------
Reinvested capital gains ....... 429,304 192,785 114,244 156,109 1,196,951 240,306
------------ ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations .......... 2,451,526 1,100,076 314,325 14,543,190 7,145,022 1,806,345
------------ ----------- ----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ......... 2,646,682 1,226,366 387,401 8,792,308 6,007,824 2,423,394
Transfers between funds ........ 1,547,337 2,303,963 1,261,823 15,454,943 16,661,441 7,060,289
Surrenders ..................... (808,738) (145,994) (23,790) (489,388) (380,643) (115,515)
Death benefits (note 4) ........ (3,645) (6,412) (126) (395,851) (33,328) (2,844)
Policy loans (net of repayments)
(note 5) ..................... (431,011) (107,480) (35,903) (500,204) (210,457) (108,558)
Deductions for surrender charges
(note 2d) .................... (101,807) (19,574) (2,802) (44,357) (51,035) (13,605)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (448,348) (82,935) (34,935) (2,263,707) (618,664) (240,014)
Deductions for asset charges
(note 3) .................... (6,861) (2,493) (144) (45,324) (15,198) (758)
------------ ----------- ----------- ----------- ----------- -----------
Net equity transactions .... 2,393,609 3,165,441 1,551,524 20,508,420 21,359,940 9,002,389
------------ ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity ............... 4,845,135 4,265,517 1,865,849 35,051,610 28,504,962 10,808,734
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 ................ $ 12,060,375 7,215,240 2,949,723 79,041,506 43,989,896 15,484,934
============ ========= ========= ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DryCapAp
------------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Investment activity:
Reinvested dividends ........... 24,846 4,780 --
Mortality and expense charges
(note 3) ..................... (27,124) (1,877) --
----------- ----------- -----
Net investment activity ........ (2,278) 2,903 --
----------- ----------- -----
Proceeds from mutual fund
shares sold .................. 20,319,146 3,153,711 --
Cost of mutual funds sold ...... (19,666,415) (3,172,025) --
----------- ----------- -----
Realized gain (loss) on
investments ................ 652,731 (18,314) --
Change in unrealized gain (loss)
on investments ............... 173,020 (3,579) --
----------- ----------- -----
Net gain (loss) on investments . 825,751 (21,893) --
----------- ----------- -----
Reinvested capital gains ....... 1,151 400 --
----------- ----------- -----
Net change in contract
owners' equity resulting
from operations .......... 824,624 (18,590) --
----------- ----------- -----
Equity transactions:
Purchase payments received
from contract owners ......... 502,552 26,933 --
Transfers between funds ........ 3,058,005 425,397 --
Surrenders ..................... (44,456) (1,058) --
Death benefits (note 4) ........ (4) -- --
Policy loans (net of repayments)
(note 5) ..................... (18,317) (33) --
Deductions for surrender charges
(note 2d) .................... (5,020) (142) --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (77,478) (762) --
Deductions for asset charges
(note 3) .................... (2,418) (149) --
----------- ----------- -----
Net equity transactions .... 3,412,864 450,186 --
----------- ----------- -----
Net change in contract
owners' equity ............... 4,237,488 431,596 --
Contract owners' equity
beginning of period .......... 431,596 -- --
----------- ----------- -----
Contract owners' equity
end of period ................ 4,669,084 431,596 --
========= ======= =====
</TABLE>
8
<PAGE> 8
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
DryGrinc FidVIPEI
------------------------------------------- -------------------------------------------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ........... $ 17,968 8,082 -- 997,915 783,723 46,329
Mortality and expense charges
(note 3) ..................... (15,042) (5,230) -- (614,949) (498,094) (338,519)
----------- ------------ ------------ ------------ ------------ ------------
Net investment activity ........ 2,926 2,852 -- 382,966 285,629 (292,190)
----------- ------------ ------------ ------------ ------------ ------------
Proceeds from mutual fund
shares sold .................. 2,469,056 2,254,831 -- 6,996,930 6,293,311 6,728,246
Cost of mutual funds sold ...... (2,437,658) (2,197,145) -- (4,750,633) (4,356,281) (5,352,183)
----------- ------------ ------------ ------------ ------------ ------------
Realized gain (loss) on
investments ................ 31,398 57,686 -- 2,246,297 1,937,030 1,376,063
Change in unrealized gain (loss)
on investments ............... 115,375 (78,166) -- 1,497,328 7,168,421 2,155,544
----------- ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments . 146,773 (20,480) -- 3,743,625 9,105,451 3,531,607
----------- ------------ ------------ ------------ ------------ ------------
Reinvested capital gains ....... 29,897 70,270 -- 3,551,403 3,940,387 1,328,108
----------- ------------ ------------ ------------ ------------ ------------
Net change in contract
owners' equity resulting
from operations .......... 179,596 52,642 -- 7,677,994 13,331,467 4,567,525
----------- ------------ ------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received
from contract owners ......... 1,960,370 186,196 -- 10,207,531 11,073,470 8,100,500
Transfers between funds ........ 533,213 972,727 -- 2,383,113 7,046,924 8,008,996
Surrenders ..................... (701,730) (2,948) -- (904,020) (1,110,322) (532,338)
Death benefits (note 4) ........ (2) -- -- (80,375) (73,247) (146,188)
Policy loans (net of repayments)
(note 5) ..................... (801,908) (3,749) -- (597,978) (781,383) (504,548)
Deductions for surrender charges
(note 2d) .................... (90,325) (395) -- (83,892) (148,867) (62,696)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (66,760) (1,204) -- (4,711,838) (4,404,162) (3,117,070)
Deductions for asset charges
(note 3) .................... (1,341) (416) -- (54,830) (24,090) (2,195)
----------- ------------ ------------ ------------ ------------ ------------
Net equity transactions .... 831,517 1,150,211 -- 6,157,711 11,578,323 11,744,461
----------- ------------ ------------ ------------ ------------ ------------
Net change in contract
owners' equity ............... 1,011,113 1,202,853 -- 13,835,705 24,909,790 16,311,986
Contract owners' equity
beginning of period .......... 1,202,853 -- -- 69,728,573 44,818,783 28,506,797
----------- ------------ ------------ ------------ ------------ ------------
Contract owners' equity
end of period ................ $ 2,213,966 1,202,853 -- 83,564,278 69,728,573 44,818,783
=========== ============ ============ =========== ========== ===========
</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) ..................... (759,610) (560,322) (401,774)
------------ ------------ ------------
Net investment activity ........ (361,521) (189,865) (306,106)
------------ ------------ ------------
Proceeds from mutual fund
shares sold .................. 85,473,779 46,683,280 40,156,823
Cost of mutual funds sold ...... (75,903,979) (40,913,295) (40,192,712)
------------ ------------ ------------
Realized gain (loss) on
investments ................ 9,569,800 5,769,985 (35,889)
Change in unrealized gain (loss)
on investments ............... 10,952,975 5,352,235 2,985,844
------------ ------------ ------------
Net gain (loss) on investments . 20,522,775 11,122,220 2,949,955
------------ ------------ ------------
Reinvested capital gains ....... 10,413,177 1,658,235 2,415,616
------------ ------------ ------------
Net change in contract
owners' equity resulting
from operations .......... 30,574,431 12,590,590 5,059,465
------------ ------------ ------------
Equity transactions:
Purchase payments received
from contract owners ......... 11,800,595 12,214,633 9,003,984
Transfers between funds ........ 6,611,922 1,631,518 10,555,655
Surrenders ..................... (1,541,170) (1,311,193) (794,363)
Death benefits (note 4) ........ (54,733) (86,298) (141,589)
Policy loans (net of repayments)
(note 5) ..................... (593,726) (970,109) (722,540)
Deductions for surrender charges
(note 2d) .................... (161,482) (175,799) (93,557)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (4,387,847) (2,800,521) (2,100,258)
Deductions for asset charges
(note 3) .................... (67,729) (25,899) (2,639)
------------ ------------ ------------
Net equity transactions .... 11,605,830 8,476,332 15,704,693
------------ ------------ ------------
Net change in contract
owners' equity ............... 42,180,261 21,066,922 20,764,158
Contract owners' equity
beginning of period .......... 74,962,498 53,895,576 33,131,418
------------ ------------ ------------
Contract owners' equity
end of period ................ 117,142,759 74,962,498 53,895,576
=========== ========== ============
</TABLE>
(Continued)
9
<PAGE> 9
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
FidVIPHI FidVIPOv
--------------------------- ----------------------------------------
1998 1997 1996 1998 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ......................... $ 1,930,736 1,246,428 778,006 372,727 285,975
Mortality and expense charges
(note 3) ................................... (211,621) (183,573) (124,686) (167,806) (153,477)
------------ ----------- ----------- ----------- -----------
Net investment activity ...................... 1,719,115 1,062,855 653,320 204,921 132,498
------------ ----------- ----------- ----------- -----------
Proceeds from mutual fund
shares sold ................................ 16,168,581 10,300,446 8,573,109 23,614,905 13,404,627
Cost of mutual funds sold .................... $(16,734,695) (9,520,272) (8,171,739) (22,518,443) (11,354,404)
------------ ----------- ----------- ----------- -----------
Realized gain (loss) on
investments .............................. (566,114) 780,174 401,370 1,096,462 2,050,223
Change in unrealized gain (loss)
on investments ............................. (3,958,695) 1,203,652 323,859 2,343 (1,243,832)
------------ ----------- ----------- ----------- -----------
Net gain (loss) on investments ............... (4,524,809) 1,983,826 725,229 1,098,805 806,391
------------ ----------- ----------- ----------- -----------
Reinvested capital gains ..................... 1,226,822 154,053 152,219 1,098,564 1,135,234
------------ ----------- ----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ........................ (1,578,872) 3,200,734 1,530,768 2,402,290 2,074,123
------------ ----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ....................... 5,333,328 6,155,268 3,975,355 3,170,855 3,466,918
Transfers between funds ...................... 1,830,834 2,316,320 3,971,432 (323,986) (393,971)
Surrenders ................................... (481,342) (255,542) (197,286) (367,369) (496,949)
Death benefits (note 4) ...................... (9,509) (22,399) (47,017) (33,198) (56,932)
Policy loans (net of repayments)
(note 5) ................................... (379,699) (282,232) (141,523) (393,533) (309,770)
Deductions for surrender charges
(note 2d) .................................. (54,547) (34,262) (23,236) (41,687) (66,629)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .......................... (2,449,174) (2,961,119) (1,967,104) (1,268,155) (1,319,172)
Deductions for asset charges
(note 3) .................................. (18,869) (8,693) (835) (14,962) (6,596)
------------ ----------- ----------- ----------- -----------
Net equity transactions .................. 3,771,022 4,907,341 5,569,786 727,965 816,899
------------ ----------- ----------- ----------- -----------
Net change in contract
owners' equity ............................. 2,192,150 8,108,075 7,100,554 3,130,255 2,891,022
Contract owners' equity
beginning of period ........................ 25,162,314 17,054,239 9,953,685 19,093,154 16,202,132
------------ ----------- ----------- ----------- -----------
Contract owners' equity
end of period .............................. $ 27,354,464 25,162,314 17,054,239 22,223,409 19,093,154
============ =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FidVIPOv FidVIPAM
----------- -----------------------------------------
1996 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ........... 145,650 894,977 787,310 678,218
Mortality and expense charges
(note 3) ..................... (127,996) (239,207) (219,940) (188,497)
----------- ----------- ----------- -----------
Net investment activity ........ 17,654 655,770 567,370 489,721
----------- ----------- ----------- -----------
Proceeds from mutual fund
shares sold .................. 5,292,727 3,554,904 2,514,749 2,233,648
Cost of mutual funds sold ...... (4,778,968) (2,948,897) (2,201,452) (2,187,742)
----------- ----------- ----------- -----------
Realized gain (loss) on
investments ................ 513,759 606,007 313,297 45,906
Change in unrealized gain (loss)
on investments ............... 921,192 28,492 1,651,903 1,506,448
----------- ----------- ----------- -----------
Net gain (loss) on investments . 1,434,951 634,499 1,965,200 1,552,354
----------- ----------- ----------- -----------
Reinvested capital gains ....... 160,215 2,684,931 1,974,948 559,232
----------- ----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations .......... 1,612,820 3,975,200 4,507,518 2,601,307
----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ......... 3,165,767 2,483,246 2,672,468 2,754,552
Transfers between funds ........ 1,580,583 115,769 284,292 (571,349)
Surrenders ..................... (251,317) (1,327,378) (659,510) (268,409)
Death benefits (note 4) ........ (4,564) (17,947) (43,658) (13,007)
Policy loans (net of repayments)
(note 5) ..................... (278,183) (195,419) (323,969) (349,545)
Deductions for surrender charges
(note 2d) .................... (29,599) (149,118) (88,424) (31,612)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ............ (1,115,155) (874,287) (389,701) (319,982)
Deductions for asset charges
(note 3) .................... (793) (21,328) (9,765) (1,093)
----------- ----------- ----------- -----------
Net equity transactions .... 3,066,739 13,538 1,441,733 1,199,555
----------- ----------- ----------- -----------
Net change in contract
owners' equity ............... 4,679,559 3,988,738 5,949,251 3,800,862
Contract owners' equity
beginning of period .......... 11,522,573 28,264,549 22,315,298 18,514,436
----------- ----------- ----------- -----------
Contract owners' equity
end of period ................ 16,202,132 32,253,287 28,264,549 22,315,298
=========== =========== =========== ===========
</TABLE>
10
<PAGE> 10
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<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) ....................... (316,241) (184,659) (75,488) (35,749) (4,822) --
------------ ------------ ------------ ------------ ------------ -------
Net investment activity ........ (107,283) (53,347) (75,488) (15,546) (4,822) --
------------ ------------ ------------ ------------ ------------ -------
Proceeds from mutual fund
shares sold .................... 5,270,262 2,972,056 1,863,525 6,596,939 1,418,908 --
Cost of mutual funds sold ........ (3,518,595) (2,266,444) (1,717,849) (6,370,749) (1,383,237) --
------------ ------------ ------------ ------------ ------------ -------
Realized gain (loss) on
investments .................. 1,751,667 705,612 145,676 226,190 35,671 --
Change in unrealized gain (loss)
on investments ................. 6,821,820 3,432,249 1,232,338 577,416 28,661 --
------------ ------------ ------------ ------------ ------------ -------
Net gain (loss) on investments . 8,573,487 4,137,861 1,378,014 803,606 64,332 --
------------ ------------ ------------ ------------ ------------ -------
Reinvested capital gains ......... 1,537,336 347,039 28,665 70,230 -- --
------------ ------------ ------------ ------------ ------------ -------
Net change in contract
owners' equity resulting
from operations ............ 10,003,540 4,431,553 1,331,191 858,290 59,510 --
------------ ------------ ------------ ------------ ------------ -------
Equity transactions:
Purchase payments received
from contract owners ........... 7,814,633 4,330,090 2,045,437 3,299,608 43,645 --
Transfers between funds .......... 7,442,220 7,341,211 7,865,892 3,732,648 1,013,974 --
Surrenders ....................... (1,418,496) (274,806) (71,750) (1,598,688) (2,852) --
Death benefits (note 4) .......... (122,001) (39,015) (2,305) (9,225) -- --
Policy loans (net of repayments)
(note 5) ......................... (1,095,851) (292,640) (45,090) (1,157,827) (2,231) --
Deductions for surrender charges
(note 2d) ...................... (175,050) (36,845) (8,450) (205,666) (382) --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (1,378,370) (300,404) (148,335) (136,692) (2,262) --
Deductions for asset charges
(note 3) ......................... (28,197) (9,953) (669) (3,187) (383) --
------------ ------------ ------------ ------------ ------------ -------
Net equity transactions ...... 11,038,888 10,717,638 9,634,730 3,920,971 1,049,509 --
------------ ------------ ------------ ------------ ------------ -------
Net change in contract
owners' equity ................. 21,042,428 15,149,191 10,965,921 4,779,261 1,109,019 --
Contract owners' equity
beginning of period ............ 28,807,807 13,658,616 2,692,695 1,109,019 -- --
------------ ------------ ------------ ------------ ------------ -------
Contract owners' equity
end of period .................. $ 49,850,235 28,807,807 13,658,616 5,888,280 1,109,019 --
============ ============ ============ ============ ============ =======
</TABLE>
<TABLE>
<CAPTION>
MSEmMkt
-----------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Investment activity:
Reinvested dividends ............. 37,885 11,378 --
Mortality and expense charges
(note 3) ....................... (2,400) (1,095) --
------------ ------------ ------------
Net investment activity ........ 35,485 10,283 --
------------ ------------ ------------
Proceeds from mutual fund
shares sold .................... 2,208,004 1,348,011 --
Cost of mutual funds sold ........ (2,302,818) (1,367,276) --
------------ ------------ ------------
Realized gain (loss) on
investments .................. (94,814) (19,265) --
Change in unrealized gain (loss)
on investments ................. (33,784) 2,383 --
------------ ------------ ------------
Net gain (loss) on investments . (128,598) (16,882) --
------------ ------------ ------------
Reinvested capital gains ......... -- 4,938 --
------------ ------------ ------------
Net change in contract
owners' equity resulting
from operations ............ (93,113) (1,661) --
------------ ------------ ------------
Equity transactions:
Purchase payments received
from contract owners ........... 398,199 10,188 --
Transfers between funds .......... 133,381 247,359 --
Surrenders ....................... (214,691) (617) --
Death benefits (note 4) .......... (9) -- --
Policy loans (net of repayments)
(note 5) ......................... (92,787) (2,742) --
Deductions for surrender charges
(note 2d) ...................... (27,689) (83) --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (14,797) (471) --
Deductions for asset charges
(note 3) ......................... (214) (87) --
------------ ------------ ------------
Net equity transactions ...... 181,393 253,547 --
------------ ------------ ------------
Net change in contract
owners' equity ................. 88,280 251,886 --
Contract owners' equity
beginning of period ............ 251,886 -- --
------------ ------------ ------------
Contract owners' equity
end of period .................. 340,166 251,886 --
============ ============ ============
</TABLE>
(continued)
11
<PAGE> 11
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
NSATCapAp NSATGvtBd
------------------------------------------ --------------------------------------------
1998 1997 1996 1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................ $ 246,198 157,773 73,189 635,908 492,781 350,275
Mortality and expense charges
(note 3) .......................... (258,178) (130,365) (51,198) (111,282) (68,282) (55,348)
------------ ------------ ------------ ------------ ------------ ------------
Net investment activity ........... (11,980) 27,408 21,991 524,626 424,499 294,927
------------ ------------ ------------ ------------ ------------ ------------
Proceeds from mutual fund
shares sold ....................... 41,145,976 22,800,149 4,082,806 43,945,372 10,818,170 1,915,031
Cost of mutual funds sold ........... (37,562,739) (19,539,881) (3,277,635) (43,540,184) (10,417,945) (1,819,552)
------------ ------------ ------------ ------------ ------------ ------------
Realized gain (loss) on
investments ..................... 3,583,237 3,260,268 805,171 405,188 400,225 95,479
Change in unrealized gain (loss)
on investments .................... 2,897,785 41,944 (2,277) (159,490) (140,391) (232,150)
------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments .... 6,481,022 3,302,212 802,894 245,698 259,834 (136,671)
------------ ------------ ------------ ------------ ------------ ------------
Reinvested capital gains ............ 1,139,693 463,551 234,567 67,018 -- --
------------ ------------ ------------ ------------ ------------ ------------
Net change in contract
owners' equity resulting
from operations ............... 7,608,735 3,793,171 1,059,452 837,342 684,333 158,256
------------ ------------ ------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received
from contract owners .............. 4,921,929 2,643,340 912,101 1,866,413 1,870,588 1,418,942
Transfers between funds ............. 9,212,515 8,096,052 3,597,889 3,757,206 1,527,412 960,557
Surrenders .......................... (339,981) (225,077) (86,470) (140,551) (132,876) (70,278)
Death benefits (note 4) ............. (12,217) (5,534) (4,969) (50,211) (6,196) (173)
Policy loans (net of repayments)
(note 5) ............................ (247,383) (353,707) (21,622) (220,482) (245,452) (210,723)
Deductions for surrender charges
(note 2d) ......................... (30,979) (30,177) (10,184) (15,200) (17,815) (8,277)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ................. (1,558,711) (385,883) (80,008) (989,812) (1,333,897) (876,800)
Deductions for asset charges (note 3) (23,020) (7,515) (403) (9,922) (3,117) (327)
------------ ------------ ------------ ------------ ------------ ------------
Net equity transactions ......... 11,922,153 9,731,499 4,306,334 4,197,441 1,658,647 1,212,921
------------ ------------ ------------ ------------ ------------ ------------
Net change in contract
owners' equity .................... 19,530,888 13,524,670 5,365,786 5,034,783 2,342,980 1,371,177
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 ..................... $ 41,283,344 21,752,456 8,227,786 14,057,773 9,022,990 6,680,010
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATMyMkt
--------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Investment activity:
Reinvested dividends ................ 2,517,296 2,001,810 1,504,594
Mortality and expense charges
(note 3) .......................... (414,977) (359,665) (292,093)
------------ ------------ ------------
Net investment activity ........... 2,102,319 1,642,145 1,212,501
------------ ------------ ------------
Proceeds from mutual fund
shares sold ....................... 213,040,345 122,915,553 94,947,088
Cost of mutual funds sold ........... (213,040,345) (122,915,553) (94,947,088)
------------ ------------ ------------
Realized gain (loss) on
investments ..................... -- -- --
Change in unrealized gain (loss)
on investments .................... -- -- --
------------ ------------ ------------
Net gain (loss) on investments .... -- -- --
------------ ------------ ------------
Reinvested capital gains ............ -- -- --
------------ ------------ ------------
Net change in contract
owners' equity resulting
from operations ............... 2,102,319 1,642,145 1,212,501
------------ ------------ ------------
Equity transactions:
Purchase payments received
from contract owners .............. 87,844,599 117,478,803 109,975,355
Transfers between funds ............. (81,357,019) (103,571,498) (89,998,126)
Surrenders .......................... (1,151,432) (2,413,548) (1,011,391)
Death benefits (note 4) ............. (5,841) (37,820) (89,256)
Policy loans (net of repayments)
(note 5) ............................ (233,125) (1,758,491) (2,054,004)
Deductions for surrender charges
(note 2d) ......................... (117,086) (323,598) (119,117)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) ................. (3,968,229) (4,837,509) (4,633,914)
Deductions for asset charges (note 3) (37,000) (15,353) (1,874)
------------ ------------ ------------
Net equity transactions ......... 974,867 4,520,986 12,067,673
------------ ------------ ------------
Net change in contract
owners' equity .................... 3,077,186 6,163,131 13,280,174
Contract owners' equity
beginning of period ............... 44,437,799 38,274,668 24,994,494
------------ ------------ ------------
Contract owners' equity
end of period ..................... 47,514,985 44,437,799 38,274,668
============ ============ ============
</TABLE>
12
<PAGE> 12
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
NSATSmCapV NSATSmCo
---------------------------------- -----------------------------------------
1998 1997 1996 1998 1997 1996
----------- ---------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............. $ -- -- -- -- -- 13,336
Mortality and expense charges
(note 3) ....................... (3,508) -- -- (115,584) (251,559) (205,531)
----------- ---------- -------- ----------- ----------- -----------
Net investment activity ........ (3,508) -- -- (115,584) (251,559) (192,195)
----------- ---------- -------- ----------- ----------- -----------
Proceeds from mutual fund
shares sold .................... 1,549,129 -- -- 12,262,712 16,417,304 5,132,176
Cost of mutual funds sold ........ (1,489,413) -- -- (13,098,101) (14,437,205) (4,970,227)
----------- ---------- -------- ----------- ----------- -----------
Realized gain (loss) on
investments .................. 59,716 -- -- (835,389) 1,980,099 161,949
Change in unrealized gain (loss)
on investments ................. 31,642 -- -- 1,062,670 (943,075) 154,021
----------- ---------- -------- ----------- ----------- -----------
Net gain (loss) on investments . 91,358 -- -- 227,281 1,037,024 315,970
----------- ---------- -------- ----------- ----------- -----------
Reinvested capital gains ......... -- -- -- -- 371,914 32,269
----------- ---------- -------- ----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ............ 87,850 -- -- 111,697 1,157,379 156,044
----------- ---------- -------- ----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ........... 495,836 -- -- 2,534,601 2,031,832 885,089
Transfers between funds .......... 742,114 -- -- 2,008,259 5,027,832 4,719,727
Surrenders ....................... (342,834) -- -- (175,480) (161,763) (120,346)
Death benefits (note 4) .......... (1) -- -- (24,329) (40,234) --
Policy loans (net of repayments)
(note 5) ........................ (92,219) -- -- (112,094) (171,323) (16,070)
Deductions for surrender charges
(note 2d) ...................... (44,169) -- -- (19,078) (21,689) (14,174)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (5,642) -- -- (497,764) (47,754) (45,634)
Deductions for asset charges
(note 3) ...................... (313) -- -- (10,306) (4,726) (2,163)
----------- ---------- -------- ----------- ----------- -----------
Net equity transactions ...... 752,772 -- -- 3,703,809 6,612,175 5,406,429
----------- ---------- -------- ----------- ----------- -----------
Net change in contract
owners' equity ................. 840,622 -- -- 3,815,506 7,769,554 5,562,473
Contract owners' equity
beginning of period ............ -- -- -- 13,679,771 5,910,217 347,744
----------- ---------- -------- ----------- ----------- -----------
Contract owners' equity
end of period .................. $ 840,622 -- -- 17,495,277 13,679,771 5,910,217
=========== ========== ======== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NSATTotRe
-----------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Investment activity:
Reinvested dividends ............. 923,892 906,286 619,079
Mortality and expense charges
(note 3) ....................... (673,496) (342,466) (121,638)
----------- ----------- -----------
Net investment activity ........ 250,396 563,820 497,441
----------- ----------- -----------
Proceeds from mutual fund
shares sold .................... 17,758,523 7,806,204 3,735,825
Cost of mutual funds sold ........ (10,907,631) (5,268,505) (2,818,736)
----------- ----------- -----------
Realized gain (loss) on
investments .................. 6,850,892 2,537,699 917,089
Change in unrealized gain (loss)
on investments ................. 2,647,189 8,597,412 2,952,680
----------- ----------- -----------
Net gain (loss) on investments . 9,498,081 11,135,111 3,869,769
----------- ----------- -----------
Reinvested capital gains ......... 3,859,922 2,381,668 1,608,453
----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ............ 13,608,399 14,080,599 5,975,663
----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ........... 18,994,728 21,089,542 12,792,421
Transfers between funds .......... 6,079,393 12,507,830 10,467,352
Surrenders ....................... (1,330,528) (993,966) (370,512)
Death benefits (note 4) .......... (120,757) (73,080) (155,928)
Policy loans (net of repayments)
(note 5) ........................ (809,785) (1,397,247) (479,238)
Deductions for surrender charges
(note 2d) ...................... (122,860) (133,267) (43,637)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (11,763,303) (12,793,173) (8,037,584)
Deductions for asset charges
(note 3) ...................... (60,051) (25,787) (202)
----------- ----------- -----------
Net equity transactions ...... 10,866,837 18,180,852 14,172,672
----------- ----------- -----------
Net change in contract
owners' equity ................. 24,475,236 32,261,451 20,148,335
Contract owners' equity
beginning of period ............ 74,640,126 42,378,675 22,230,340
----------- ----------- -----------
Contract owners' equity
end of period .................. 99,115,362 74,640,126 42,378,675
=========== =========== ===========
</TABLE>
(Continued)
13
<PAGE> 13
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<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) ....................... (153,887) (131,622) (100,683) (4,780) -- --
------------ ------------ ------------ ------------ -------- --------
Net investment activity ........ (153,887) (131,622) (97,129) (4,780) -- --
------------ ------------ ------------ ------------ -------- --------
Proceeds from mutual fund
shares sold .................... 28,296,554 11,391,328 9,167,114 1,186,919 -- --
Cost of mutual funds sold ........ (30,054,251) (10,218,717) (8,250,417) (1,243,303) -- --
------------ ------------ ------------ ------------ -------- --------
Realized gain (loss) on
investments .................. (1,757,697) 1,172,611 916,697 (56,384) -- --
Change in unrealized gain (loss)
on investments ................. 273,491 1,144,227 (851,158) 53,662 -- --
------------ ------------ ------------ ------------ -------- --------
Net gain (loss) on investments . (1,484,206) 2,316,838 65,539 (2,722) -- --
------------ ------------ ------------ ------------ -------- --------
Reinvested capital gains ......... 4,778,935 1,172,597 831,750 -- -- --
------------ ------------ ------------ ------------ -------- --------
Net change in contract
owners' equity resulting
from operations ............ 3,140,842 3,357,813 800,160 (7,502) -- --
------------ ------------ ------------ ------------ -------- --------
Equity transactions:
Purchase payments received
from contract owners ........... 3,124,257 2,009,831 1,703,348 149,649 -- --
Transfers between funds .......... 3,739,437 498,211 1,821,036 831,617 -- --
Surrenders ....................... (1,015,843) (419,539) (351,632) (64,538) -- --
Death benefits (note 4)........... (13,565) (7,880) (88,967) (1) -- --
Policy loans (net of repayments)
(note 5) ......................... (1,132,396) (305,567) (67,474) (25,325) -- --
Deductions for surrender charges
(note 2d) ...................... (120,721) (56,250) (41,414) (8,207) -- --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (741,732) (249,631) (134,631) (17,066) -- --
Deductions for asset charges
(note 3) ......................... (13,721) (6,062) (623) (426) -- --
------------ ------------ ------------ ------------ -------- --------
Net equity transactions ...... 3,825,716 1,463,113 2,839,643 865,703 -- --
------------ ------------ ------------ ------------ -------- --------
Net change in contract
owners' equity ................. 6,966,558 4,820,926 3,639,803 858,201 -- --
Contract owners' equity
beginning of period ............ 17,545,164 12,724,238 9,084,435 -- -- --
------------ ------------ ------------ ------------ -------- --------
Contract owners' equity
end of period .................. $ 24,511,722 17,545,164 12,724,238 858,201 -- --
============ ============ ============ ============ ======== ========
</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) ....................... (42,729) (37,669) (27,176)
------------ ------------ ------------
Net investment activity ........ 322,862 128,893 242,696
------------ ------------ ------------
Proceeds from mutual fund
shares sold .................... 3,525,682 1,060,839 1,636,406
Cost of mutual funds sold ........ (3,557,763) (1,087,427) (1,665,764)
------------ ------------ ------------
Realized gain (loss) on
investments .................. (32,081) (26,588) (29,358)
Change in unrealized gain (loss)
on investments ................. (88,989) 99,993 (133,639)
------------ ------------ ------------
Net gain (loss) on investments . (121,070) 73,405 (162,997)
------------ ------------ ------------
Reinvested capital gains ......... -- -- --
------------ ------------ ------------
Net change in contract
owners' equity resulting
from operations ............ 201,792 202,298 79,699
------------ ------------ ------------
Equity transactions:
Purchase payments received
from contract owners ........... 1,227,568 568,335 346,310
Transfers between funds .......... (1,104,263) 2,560,467 (538,197)
Surrenders ....................... (340,366) (49,744) (119,696)
Death benefits (note 4)........... (168,478) (6,820) --
Policy loans (net of repayments)
(note 5) ......................... (490,348) (50,416) (37,533)
Deductions for surrender charges
(note 2d) ...................... (43,208) (6,669) (14,097)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (151,014) (95,419) (59,859)
Deductions for asset charges
(note 3) ......................... (3,810) (2,035) (136)
------------ ------------ ------------
Net equity transactions ...... (1,073,919) 2,917,699 (423,208)
------------ ------------ ------------
Net change in contract
owners' equity ................. (872,127) 3,119,997 (343,509)
Contract owners' equity
beginning of period ............ 5,891,455 2,771,458 3,114,967
------------ ------------ ------------
Contract owners' equity
end of period .................. 5,019,328 5,891,455 2,771,458
============ ============ ============
</TABLE>
14
<PAGE> 14
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<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 10,660 177,251 444,589 303,136
Mortality and expense charges
(note 3) ....................... (254,428) (171,233) (62,373) (91,564) (64,328) (46,310)
------------ ------------ ------------ ------------ ------------ ------------
Net investment activity ........ (130,559) (132,597) (51,713) 85,687 380,261 256,826
------------ ------------ ------------ ------------ ------------ ------------
Proceeds from mutual fund
shares sold .................... 16,262,946 14,044,895 3,866,535 25,959,216 6,493,858 965,110
Cost of mutual funds sold ........ (15,129,583) (11,426,520) (3,344,085) (25,616,936) (6,309,717) (925,841)
------------ ------------ ------------ ------------ ------------ ------------
Realized gain (loss) on
investments .................. 1,133,363 2,618,375 522,450 342,280 184,141 39,269
Change in unrealized gain (loss)
on investments ................. (3,917,798) 1,495,768 897,631 13,809 7,331 (111,019)
------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments . (2,784,435) 4,114,143 1,420,081 356,089 191,472 (71,750)
------------ ------------ ------------ ------------ ------------ ------------
Reinvested capital gains ......... 3,901,869 594,994 133,254 160,413 20,983 2,481
------------ ------------ ------------ ------------ ------------ ------------
Net change in contract
owners' equity resulting
from operations ............ 986,875 4,576,540 1,501,622 602,189 592,716 187,557
------------ ------------ ------------ ------------ ------------ ------------
Equity transactions:
Purchase payments received
from contract owners ........... 5,722,483 3,058,953 1,291,043 1,446,313 1,185,778 736,203
Transfers between funds .......... 2,646,725 11,362,270 5,427,919 2,081,829 1,429,093 1,298,812
Surrenders ....................... (676,703) (291,383) (115,788) (168,318) (151,014) (117,770)
Death benefits (note 4) .......... (11,051) -- (550) (24,489) (6,177) --
Policy loans (net of repayments)
(note 5) ......................... (1,178,884) (215,128) (140,654) (23,153) (97,629) (148,996)
Deductions for surrender charges
(note 2d) ...................... (78,170) (39,067) (13,637) (19,765) (20,247) (13,870)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (1,174,585) (364,291) (159,092) (348,809) (74,240) (34,156)
Deductions for asset charges
(note 3) ...................... (22,686) (9,925) (522) (8,164) (3,049) (292)
------------ ------------ ------------ ------------ ------------ ------------
Net equity transactions ..... 5,227,129 13,501,429 6,288,719 2,935,444 2,262,515 1,719,931
------------ ------------ ------------ ------------ ------------ ------------
Net change in contract
owners' equity ................. 6,214,004 18,077,969 7,790,341 3,537,633 2,855,231 1,907,488
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 .................. $ 34,942,331 28,728,327 10,650,358 12,362,107 8,824,474 5,969,243
============ ============ ============ ============ ============ ============
</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) ....................... (147,592) (115,087) (73,271)
------------ ------------ ------------
Net investment activity ........ 241,675 24,493 (73,271)
------------ ------------ ------------
Proceeds from mutual fund
shares sold .................... 4,690,056 2,123,253 1,410,941
Cost of mutual funds sold ........ (3,335,880) (1,585,760) (1,363,666)
------------ ------------ ------------
Realized gain (loss) on
investments .................. 1,354,176 537,493 47,275
Change in unrealized gain (loss)
on investments ................. (702,629) 1,880,371 1,197,144
------------ ------------ ------------
Net gain (loss) on investments . 651,547 2,417,864 1,244,419
------------ ------------ ------------
Reinvested capital gains ......... 1,465,275 -- --
------------ ------------ ------------
Net change in contract
owners' equity resulting
from operations ............ 2,358,497 2,442,357 1,171,148
------------ ------------ ------------
Equity transactions:
Purchase payments received
from contract owners ........... 2,591,457 2,244,408 1,618,641
Transfers between funds .......... 1,052,407 2,806,084 1,527,191
Surrenders ....................... (390,303) (332,828) (109,366)
Death benefits (note 4) .......... (12,688) (1,951) (4,893)
Policy loans (net of repayments)
(note 5) ......................... (265,465) (260,746) (101,645)
Deductions for surrender charges
(note 2d) ...................... (46,476) (44,624) (12,881)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (696,092) (209,063) (129,866)
Deductions for asset charges
(note 3) ...................... (13,160) (5,719) (486)
------------ ------------ ------------
Net equity transactions ..... 2,219,680 4,195,561 2,786,695
------------ ------------ ------------
Net change in contract
owners' equity ................. 4,578,177 6,637,918 3,957,843
Contract owners' equity
beginning of period ............ 16,552,365 9,914,447 5,956,604
------------ ------------ ------------
Contract owners' equity
end of period .................. 21,130,542 16,552,365 9,914,447
============ ============ ============
</TABLE>
(Continued)
15
<PAGE> 15
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
OppGro OppMult
------------------------------------- ------------------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- ------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............. $ 9,433 -- -- 116,421 401,123 325,992
Mortality and expense charges
(note 3) ....................... (26,246) (2,691) -- (104,971) (88,369) (60,231)
----------- ----------- ------- ----------- ----------- -----------
Net investment activity ........ (16,813) (2,691) -- 11,450 312,754 265,761
----------- ----------- ------- ----------- ----------- -----------
Proceeds from mutual fund
shares sold .................... 5,173,603 346,058 -- 1,906,489 1,256,650 669,520
Cost of mutual funds sold ........ (4,835,421) (340,426) -- (1,502,365) (1,026,967) (587,875)
----------- ----------- ------- ----------- ----------- -----------
Realized gain (loss) on
investments .................. 338,182 5,632 -- 404,124 229,683 81,645
Change in unrealized gain (loss)
on investments ................. 109,336 3,346 -- (366,305) 697,954 393,561
----------- ----------- ------- ----------- ----------- -----------
Net gain (loss) on investments . 447,518 8,978 -- 37,819 927,637 475,206
----------- ----------- ------- ----------- ----------- -----------
Reinvested capital gains ......... 113,813 -- -- 675,242 329,608 125,621
----------- ----------- ------- ----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ............ 544,518 6,287 -- 724,511 1,569,999 866,588
----------- ----------- ------- ----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ........... 1,452,830 32,403 -- 3,243,119 1,361,025 882,926
Transfers between funds .......... 4,492,087 586,430 -- 706,703 1,935,508 1,713,791
Surrenders ....................... (576,151) (2,135) -- (1,061,880) (189,727) (334,495)
Death benefits (note 4) .......... (5) -- -- (182,084) (18,581) (5,755)
Policy loans (net of repayments)
(note 5) ......................... (312,911) (3,203) -- (1,005,743) (138,576) (127,191)
Deductions for surrender charges
(note 2d) ...................... (73,520) (286) -- (126,681) (25,438) (39,395)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (116,339) (433) -- (435,809) (102,354) (67,708)
Deductions for asset charges
(note 3) .................... (2,340) (214) -- (9,359) (4,269) (390)
----------- ----------- ------- ----------- ----------- -----------
Net equity transactions ........ 4,863,651 612,562 -- 1,128,266 2,817,588 2,021,783
----------- ----------- ------- ----------- ----------- -----------
Net change in contract
owners' equity ................. 5,408,169 618,849 -- 1,852,777 4,387,587 2,888,371
Contract owners' equity
beginning of period ............ 618,849 -- -- 12,354,982 7,967,395 5,079,024
----------- ----------- ------- ----------- ----------- -----------
Contract owners' equity
end of period .................. $ 6,027,018 618,849 -- 14,207,759 12,354,982 7,967,395
=========== =========== ======= =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
StOpp2
-----------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Investment activity:
Reinvested dividends ............. 71,635 79,875 104,072
Mortality and expense charges
(note 3) ....................... (220,760) (185,205) (132,256)
----------- ----------- -----------
Net investment activity ........ (149,125) (105,330) (28,184)
----------- ----------- -----------
Proceeds from mutual fund
shares sold .................... 3,215,306 3,417,734 2,078,877
Cost of mutual funds sold ........ (2,191,788) (2,305,866) (1,767,607)
----------- ----------- -----------
Realized gain (loss) on
investments .................. 1,023,518 1,111,868 311,270
Change in unrealized gain (loss)
on investments ................. (1,078,872) 1,866,652 1,442,512
----------- ----------- -----------
Net gain (loss) on investments . (55,354) 2,978,520 1,753,782
----------- ----------- -----------
Reinvested capital gains ......... 3,488,003 1,736,733 467,556
----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ............ 3,283,524 4,609,923 2,193,154
----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ........... 5,452,015 3,291,881 2,757,995
Transfers between funds .......... 470,365 1,720,221 1,427,887
Surrenders ....................... (1,037,130) (584,361) (225,124)
Death benefits (note 4) .......... (143,979) (46,618) (8,328)
Policy loans (net of repayments)
(note 5) ......................... (1,307,454) (446,793) (266,027)
Deductions for surrender charges
(note 2d) ...................... (121,009) (78,349) (26,514)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (946,709) (237,366) (127,661)
Deductions for asset charges
(note 3) .................... (19,684) (8,777) (842)
----------- ----------- -----------
Net equity transactions ........ 2,346,415 3,609,838 3,531,386
----------- ----------- -----------
Net change in contract
owners' equity ................. 5,629,939 8,219,761 5,724,540
Contract owners' equity
beginning of period ............ 25,405,845 17,186,084 11,461,544
----------- ----------- -----------
Contract owners' equity
end of period .................. 31,035,784 25,405,845 17,186,084
=========== =========== ===========
</TABLE>
16
<PAGE> 16
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
StDisc2 StlntStk2
------------------------------------------ ----------------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............. $ -- -- 523,958 22,725 35,008 5,657
Mortality and expense charges
(note 3) ....................... (58,150) (62,162) (56,198) (15,028) (16,592) (8,901)
----------- ----------- ----------- ----------- ----------- -----------
Net investment activity ........ (58,150) (62,162) 467,760 7,697 18,416 (3,244)
----------- ----------- ----------- ----------- ----------- -----------
Proceeds from mutual fund
shares sold .................... 4,234,899 6,947,379 1,458,502 4,328,033 1,180,714 1,503,391
Cost of mutual funds sold ........ (3,682,201) (7,014,226) (1,298,009) (4,573,810) (1,254,173) (1,466,992)
----------- ----------- ----------- ----------- ----------- -----------
Realized gain (loss) on
investments .................. 552,698 (66,847) 160,493 (245,777) (73,459) 36,399
Change in unrealized gain (loss)
on investments ................. (128,321) 897,855 (1,253,670) 138,162 (320,243) (2,354)
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments . 424,377 831,008 (1,093,177) (107,615) (393,702) 34,045
----------- ----------- ----------- ----------- ----------- -----------
Reinvested capital gains ......... 120,028 -- 645,525 -- 54,007 --
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ............ 486,255 768,846 20,108 (99,918) (321,279) 30,801
----------- ----------- ----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ........... 686,440 1,157,860 1,076,505 1,319,108 396,577 134,707
Transfers between funds .......... 154,482 (800,200) 485,660 (186,236) 159,418 1,618,370
Surrenders ....................... (128,257) (159,830) (123,465) (444,664) (39,345) (21,946)
Death benefits (note 4) .......... (23,649) (17,470) (5,438) (5,993) -- --
Policy loans (net of repayments)
(note 5) ......................... (104,497) (79,472) (84,412) (462,567) (28,189) (23,320)
Deductions for surrender charges
(note 2d) ...................... (15,109) (21,429) (14,541) (56,530) (5,275) (2,585)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (244,196) (50,118) (27,103) (61,036) (4,583) (4,827)
Deductions for asset charges
(note 3) ...................... (5,185) (2,607) (331) (1,340) (686) (90)
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions ....... 320,029 26,734 1,306,875 100,742 477,917 1,700,309
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity ................. 806,284 795,580 1,326,983 824 156,638 1,731,110
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 .................. $ 8,351,832 7,545,548 6,749,968 1,986,996 1,986,172 1,829,534
=========== =========== =========== =========== =========== ===========
</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) ....................... (26,599) (20,793) (19,810)
----------- ----------- -----------
Net investment activity ........ (2,569) 53,152 34,507
----------- ----------- -----------
Proceeds from mutual fund
shares sold .................... 7,510,962 1,289,613 851,361
Cost of mutual funds sold ........ (7,101,791) (1,326,687) (817,166)
----------- ----------- -----------
Realized gain (loss) on
investments .................. 409,171 (37,074) 34,195
Change in unrealized gain (loss)
on investments ................. (35,624) 23,130 (31,601)
----------- ----------- -----------
Net gain (loss) on investments . 373,547 (13,944) 2,594
----------- ----------- -----------
Reinvested capital gains ......... -- -- --
----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ............ 370,978 39,208 37,101
----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ........... 173,889 303,361 291,664
Transfers between funds .......... 663,078 89,247 (8,294)
Surrenders ....................... (47,678) (109,226) (58,485)
Death benefits (note 4) .......... (35,715) -- --
Policy loans (net of repayments)
(note 5) ......................... (21,466) (20,191) (33,856)
Deductions for surrender charges
(note 2d) ...................... (5,615) (14,645) (6,888)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (77,084) (10,312) (6,755)
Deductions for asset charges
(note 3) ...................... (2,372) (874) (110)
----------- ----------- -----------
Net equity transactions ....... 647,037 237,360 177,276
----------- ----------- -----------
Net change in contract
owners' equity ................. 1,018,015 276,568 214,377
Contract owners' equity
beginning of period ............ 2,529,206 2,252,638 2,038,261
----------- ----------- -----------
Contract owners' equity
end of period .................. 3,547,221 2,529,206 2,252,638
=========== =========== ===========
</TABLE>
(Continued)
17
<PAGE> 17
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<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) ....................... (14,186) (10,449) (15) (38,345) (54,934) (45,454)
----------- ----------- ----------- ----------- ----------- -----------
Net investment activity ........ 5,996 (8,658) (15) (2,400) 63,254 13,516
----------- ----------- ----------- ----------- ----------- -----------
Proceeds from mutual fund
shares sold .................... 4,758,410 3,744,118 -- 13,571,199 19,348,273 20,434,481
Cost of mutual funds sold ........ (6,579,731) (3,668,967) -- (17,132,731) (18,769,875) (19,926,482)
----------- ----------- ----------- ----------- ----------- -----------
Realized gain (loss) on
investments .................. (1,821,321) 75,151 -- (3,561,532) 578,398 507,999
Change in unrealized gain (loss)
on investments ................. 923,464 (815,392) -- 644,209 (898,401) 173,786
----------- ----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments . (897,857) (740,241) -- (2,917,323) (320,003) 681,785
----------- ----------- ----------- ----------- ----------- -----------
Reinvested capital gains ......... 17,939 -- -- 882,647 160,126 57,828
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ............ (873,922) (748,899) (15) (2,037,076) (96,623) 753,129
----------- ----------- ----------- ----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ........... 701,612 585,373 27 1,602,107 840,495 555,530
Transfers between funds .......... (173,962) 2,650,105 3,213 (1,198,538) (282,076) 1,779,241
Surrenders ....................... (41,678) (8,373) (7) (132,778) (171,081) (65,411)
Death benefits (note 4) .......... (4,922) -- -- (3,026) (99) --
Policy loans (net of repayments)
(note 5) ......................... (80,091) (71,376) -- (200,964) (124,185) (132,561)
Deductions for surrender charges
(note 2d) ...................... (5,094) (1,123) (1) (13,168) (22,938) (7,704)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (68,777) (8,419) (2) (199,756) (142,112) (93,537)
Deductions for asset charges
(note 3) ......................... (1,265) (829) -- (3,419) (2,182) (309)
----------- ----------- ----------- ----------- ----------- -----------
Net equity transactions ...... 325,823 3,145,358 3,230 (149,542) 95,822 2,035,249
----------- ----------- ----------- ----------- ----------- -----------
Net change in contract
owners' equity ................. (548,099) 2,396,459 3,215 (2,186,618) (801) 2,788,378
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 .................. $ 1,851,575 2,399,674 3,215 4,129,585 6,316,203 6,317,004
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
VKMSRESec
----------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Investment activity:
Reinvested dividends ............. 12,298 193,749 33,201
Mortality and expense charges
(note 3) ....................... (52,029) (47,059) (16,174)
----------- ----------- -----------
Net investment activity ........ (39,731) 146,690 17,027
----------- ----------- -----------
Proceeds from mutual fund
shares sold .................... 4,635,925 8,117,619 2,711,361
Cost of mutual funds sold ........ (5,200,298) (7,257,679) (2,487,998)
----------- ----------- -----------
Realized gain (loss) on
investments .................. (564,373) 859,940 223,363
Change in unrealized gain (loss)
on investments ................. (513,939) (625,237) 303,132
----------- ----------- -----------
Net gain (loss) on investments . (1,078,312) 234,703 526,495
----------- ----------- -----------
Reinvested capital gains ......... 121,016 641,054 15,620
----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ............ (997,027) 1,022,447 559,142
----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ........... 1,337,143 827,543 110,695
Transfers between funds .......... (908,402) 2,852,464 2,319,779
Surrenders ....................... (163,286) (100,507) (41,251)
Death benefits (note 4) .......... (22,389) -- --
Policy loans (net of repayments)
(note 5) ......................... (78,704) (85,370) (50,080)
Deductions for surrender charges
(note 2d) ...................... (19,126) (13,476) (4,858)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (232,710) (65,828) (9,078)
Deductions for asset charges
(note 3) ......................... (4,639) (2,636) (156)
----------- ----------- -----------
Net equity transactions ...... (92,113) 3,412,190 2,325,051
----------- ----------- -----------
Net change in contract
owners' equity ................. (1,089,140) 4,434,637 2,884,193
Contract owners' equity
beginning of period ............ 7,628,431 3,193,794 309,601
----------- ----------- -----------
Contract owners' equity
end of period .................. 6,539,291 7,628,431 3,193,794
=========== =========== ===========
</TABLE>
18
<PAGE> 18
NATIONWIDE VLI SEPARATE ACCOUNT-2
STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
WPIntEq WPPVenCap
------------------------------------------ --------------------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............. $ 50,333 79,669 106,181 -- 70 --
Mortality and expense charges
(note 3) ....................... (72,995) (79,873) (46,519) (6,193) (3,334) --
----------- ----------- ----------- ----------- ----------- --------------
Net investment activity ........ (22,662) (204) 59,662 (6,193) (3,264) --
----------- ----------- ----------- ----------- ----------- --------------
Proceeds from mutual fund
shares sold .................... 9,538,799 7,769,039 6,857,480 4,879,898 1,898,871 --
Cost of mutual funds sold ........ (9,941,358) (7,238,368) (6,604,093) (4,873,755) (1,856,944) --
----------- ----------- ----------- ----------- ----------- --------------
Realized gain (loss) on
investments .................. (402,559) 530,671 253,387 6,143 41,927 --
Change in unrealized gain (loss)
on investments ................. 929,287 (1,377,503) (5,493) 66,492 (1,622) --
----------- ----------- ----------- ----------- ----------- --------------
Net gain (loss) on investments . 526,728 (846,832) 247,894 72,635 40,305 --
----------- ----------- ----------- ----------- ----------- --------------
Reinvested capital gains ......... -- 551,360 47,244 -- -- --
----------- ----------- ----------- ----------- ----------- --------------
Net change in contract
owners' equity resulting
from operations ............ 504,066 (295,676) 354,800 66,442 37,041 --
----------- ----------- ----------- ----------- ----------- --------------
Equity transactions:
Purchase payments received
from contract owners ........... 1,111,024 1,506,986 1,046,656 105,973 70,984 --
Transfers between funds .......... (1,578,624) 674,324 5,515,236 180,265 668,066 --
Surrenders ....................... (168,491) (113,178) (47,964) (1,367) (2,034) --
Death benefits (note 4) .......... (7,848) (16,165) (1,774) (1) -- --
Policy loans (net of repayments)
(note 5) ......................... (259,475) (84,201) (65,730) 4,787 (5,947) --
Deductions for surrender charges
(note 2d) ...................... (18,111) (15,174) (5,649) (7) (273) --
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (265,303) (65,212) (91,320) (21,553) (897) --
Deductions for asset charges
(note 3) ...................... (6,508) (3,447) (411) (552) (265) --
----------- ----------- ----------- ----------- ----------- --------------
Net equity transactions ...... (1,193,336) 1,883,933 6,349,044 267,545 729,634 --
----------- ----------- ----------- ----------- ----------- --------------
Net change in contract
owners' equity ................. (689,270) 1,588,257 6,703,844 333,987 766,675 --
Contract owners' equity
beginning of period ............ 9,978,378 8,390,121 1,686,277 766,675 -- --
----------- ----------- ----------- ----------- ----------- --------------
Contract owners' equity
end of period .................. $ 9,289,108 9,978,378 8,390,121 1,100,662 766,675 --
=========== =========== =========== =========== =========== ==============
</TABLE>
<TABLE>
<CAPTION>
WPSmCoGr
------------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Investment activity:
Reinvested dividends ............. -- -- --
Mortality and expense charges
(note 3) ....................... (106,735) (99,826) (49,642)
----------- ----------- -----------
Net investment activity ........ (106,735) (99,826) (49,642)
----------- ----------- -----------
Proceeds from mutual fund
shares sold .................... 11,652,539 13,210,500 7,405,511
Cost of mutual funds sold ........ (11,657,359) (11,590,838) (6,950,257)
----------- ----------- -----------
Realized gain (loss) on
investments .................. (4,820) 1,619,662 455,254
Change in unrealized gain (loss)
on investments ................. (287,723) 18,436 (150,978)
----------- ----------- -----------
Net gain (loss) on investments . (292,543) 1,638,098 304,276
----------- ----------- -----------
Reinvested capital gains ......... -- -- --
----------- ----------- -----------
Net change in contract
owners' equity resulting
from operations ............ (399,278) 1,538,272 254,634
----------- ----------- -----------
Equity transactions:
Purchase payments received
from contract owners ........... 2,471,813 2,516,266 1,034,674
Transfers between funds .......... (1,849,405) 4,654,236 2,826,415
Surrenders ....................... (200,485) (128,687) (63,271)
Death benefits (note 4) .......... (10,544) -- --
Policy loans (net of repayments)
(note 5) ......................... 19,268 (162,099) (96,502)
Deductions for surrender charges
(note 2d) ...................... (20,649) (17,254) (7,452)
Redemptions to pay cost of
insurance charges and
administration charges
(notes 2b and 2c) .............. (454,770) (88,146) (50,847)
Deductions for asset charges
(note 3) ...................... (9,517) (5,401) (359)
----------- ----------- -----------
Net equity transactions ...... (54,289) 6,768,915 3,642,658
----------- ----------- -----------
Net change in contract
owners' equity ................. (453,567) 8,307,187 3,897,292
Contract owners' equity
beginning of period ............ 15,632,197 7,325,010 3,427,718
----------- ----------- -----------
Contract owners' equity
end of period .................. 15,178,630 15,632,197 7,325,010
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
19
<PAGE> 19
NATIONWIDE VLI SEPARATE ACCOUNT-2
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 AND 1996
(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 Single Premium, Modified Single Premium, Flexible
Premium and Last Survivor 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 December 31, 1998, contract owners have invested in all of the above
funds except for Fidelity Advisor High Yield Fund Class T and
Oppenheimer VAF - Aggressive Growth Fund. 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.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
21
<PAGE> 21
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1998. Fund purchases and
sales are accounted for on the trade date (date the order to buy or
sell is executed). The cost of investments sold is determined on a
specific identification basis, and dividends (which include capital
gain distributions) are accrued as of the ex-dividend date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company, which is taxed as a life insurance company
under the provisions of the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(f) Reclassifications
Certain 1997 and 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.
22
<PAGE> 22
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).
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.
23
<PAGE> 23
(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.
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%.
The following table provides mortality and expense risk charges by contract
type for the period ended December 31, 1998:
<TABLE>
<CAPTION>
TOTAL ACVPBal ACVCapAp ACVPincGr ACVPint
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ 19,963 - 1,274 - -
Single Premium contracts issued
on or after April 16, 1990.... 1,519,080 10,112 21,146 2,536 34,065
Multiple Payment and Flexible
Premium contracts............. 4,699,480 28,860 59,964 5,054 66,239
------------ ------------ ------------ ------------ ------------
Total....................... $ 6,238,523 38,972 82,384 7,590 100,304
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ACVPValue DrySRGro DryStkix DryCapAp DryGrinc
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ - - 3,655 102 -
Single Premium contracts issued
on or after April 16, 1990.... 4,104 9,572 112,048 10,336 2,255
Multiple Payment and Flexible
Premium contracts............. 15,894 67,383 392,626 16,686 12,787
------------ ------------ ------------ ------------ ------------
Total....................... $ 19,998 76,955 508,329 27,124 15,042
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FidVIPEI FidVIPGr FidVIPHI FidVIPOv FidVIPAM
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ 2,438 2,343 842 1,068 296
Single Premium contracts issued
on or after April 16, 1990.... 194,440 188,365 49,966 53,993 86,061
Multiple Payment and Flexible
Premium contracts............. 418,071 568,902 160,813 112,745 152,850
------------ ------------ ------------ ------------ ------------
Total....................... $ 614,949 759,610 211,621 167,806 239,207
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FidVIPCon FidVIPGrOp MSEmMkt NSATCapAp NSATGvtBd
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ 128 - - 654 305
Single Premium contracts issued
on or after April 16, 1990.... 71,967 10,876 635 43,608 65,744
Multiple Payment and Flexible
Premium contracts............. 244,146 24,873 1,765 213,916 45,233
------------ ------------ ------------ ------------ ------------
Total....................... $ 316,241 35,749 2,400 258,178 111,282
============ ============ ============ ============ ============
</TABLE>
24
<PAGE> 24
<TABLE>
<CAPTION>
NSATMyMkt NSATSmCapV NSATSmCo NSATTotRe NBAMTGro
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ 1,358 - - 1,584 1,581
Single Premium contracts issued
on or after April 16, 1990.... 137,439 3,094 13,672 58,566 43,543
Multiple Payment and Flexible
Premium contracts............. 276,180 414 101,912 613,346 108,763
------------ ------------ ------------ ------------ ------------
Total....................... $ 414,977 3,508 115,584 673,496 153,887
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NBAMTGuard NBAMTLMat NBAMTPart OppBdFd OppGlSec
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ - 930 - - -
Single Premium contracts issued
on or after April 16, 1990.... 553 14,562 50,988 20,073 20,102
Multiple Payment and Flexible
Premium contracts............. 4,227 27,237 203,440 71,491 127,490
------------ ------------ ------------ ------------ ------------
Total....................... $ 4,780 42,729 254,428 91,564 147,592
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
OppGro OppMult StOpp2 StDisc2 StintStk2
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ - - 120 - -
Single Premium contracts issued
on or after April 16, 1990.... 4,182 31,490 41,028 13,873 4,013
Multiple Payment and Flexible
Premium contracts............. 22,064 73,481 179,612 44,277 11,015
------------ ------------ ------------ ------------ ------------
Total....................... $ 26,246 104,971 220,760 58,150 15,028
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
VEWrldBd VEWrldEMkt VEWrldHAs VKMSRESec WPintEq
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ 39 - 486 575 185
Single Premium contracts issued
on or after April 16, 1990.... 11,374 1,792 17,613 13,117 13,450
Multiple Payment and Flexible
Premium contracts............. 15,186 12,394 20,246 38,337 59,360
------------ ------------ ------------ ------------ ------------
Total....................... $ 26,599 14,186 38,345 52,029 72,995
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
WPPVenCap WPSMCoGr
------------ ------------
<S> <C> <C>
Single Premium contracts Issued
prior to April 16, 1990....... $ - -
Single Premium contracts issued
on or after April 16, 1990.... 3,460 29,267
Multiple Payment and Flexible
Premium contracts............. 2,733 77,468
------------ ------------
Total....................... $ 6,193 106,735
============ ============
</TABLE>
(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.
25
<PAGE> 25
(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.
26
<PAGE> 26
(7) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1998,
for each product in the accumulation phase.
<TABLE>
<CAPTION>
Contract owners' equity represented by: ANNUAL
UNITS UNIT VALUE RETURN(b)
----- ---------- ---------
Single Premium contracts issued prior to
April 16, 1990:
<S> <C> <C> <C> <C>
American Century VP - American Century
VP Capital Appreciation ............................. 6,437 $22.339504 $143,799 (3)%
Dreyfus Stock Index Fund ............................... 14,798 27.871347 412,440 27%
Dreyfus VIF -
Capital Appreciation Portfolio ...................... 876 13.168334 11,535 29%
Fidelity VIP - Equity-Income Portfolio ................. 6,566 41.890019 275,050 11%
Fidelity VIP - Growth Portfolio ........................ 4,551 58.102055 264,422 38%
Fidelity VIP - High Income Portfolio ................... 3,510 27.054068 94,960 (5)%
Fidelity VIP - Overseas Portfolio ...................... 4,966 24.255551 120,453 12%
Fidelity VIP-II - Asset Manager Portfolio .............. 1,193 27.955691 33,351 14%
Fidelity VIP-II - Contrafund Portfolio ................. 684 21.098746 14,432 29%
Nationwide SAT -
Capital Appreciation Fund ........................... 2,354 31.356408 73,813 29%
Nationwide SAT -
Government Bond Fund ................................ 1,481 23.252862 34,437 8%
Nationwide SAT - Money Market Fund ..................... 9,477 16.171326 153,256 4%
Nationwide SAT - Total Return Fund ..................... 4,462 40.062865 178,761 17%
Neuberger &Berman AMT -
Growth Portfolio .................................... 4,910 36.321304 178,338 14%
Neuberger &Berman AMT -
Limited Maturity Bond Portfolio ..................... 5,842 17.967444 104,966 3%
Strong Opportunity Fund II, Inc. ....................... 452 29.946506 13,536 12%
Van Eck WIT - Worldwide Bond Fund ...................... 264 16.631673 4,391 12%
Van Eck WIT -
Worldwide Hard Assets Fund .......................... 5,479 9.998900 54,784 (32)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio ................................ 4,103 15.812545 64,879 (12)%
Warburg Pincus Trust -
International Equity Portfolio ...................... 1,777 11.754581 20,888 4%
Single Premium contracts issued on or
after April 16, 1990:
American Century VP -
American Century VP Balanced ........................ 43,205 18.685028 807,287 14%
</TABLE>
(Continued)
27
<PAGE> 27
<TABLE>
<S> <C> <C> <C> <C>
American Century VP - American Century
VP Capital Appreciation .............. 113,249 14.906965 1,688,199 (3)%
American Century VP - American Century
VP Income & Growth ................... 18,703 10.826437 202,487 8%(a)
American Century VP -
American Century VP International .... 168,629 16.127264 2,719,524 17%
American Century VP -
American Century VP Value ............ 25,086 13.059452 327,609 3%
The Dreyfus Socially Responsible
Growth Fund, Inc. .................... 27,695 27.592332 764,170 28%
Dreyfus Stock Index Fund ................ 326,895 27.364353 8,945,270 27%
Dreyfus VIF -
Capital Appreciation Portfolio ....... 62,982 13.101026 825,129 29%
Dreyfus VIF -
Growth and Income Portfolio .......... 14,240 12.644103 180,052 10%
Fidelity VIP - Equity-Income Portfolio .. 456,214 34.025630 15,522,969 10%
Fidelity VIP - Growth Portfolio ......... 376,885 39.900577 15,037,929 38%
Fidelity VIP - High Income Portfolio .... 144,326 27.638937 3,989,017 (6)%
Fidelity VIP - Overseas Portfolio ....... 248,471 17.348011 4,310,478 11%
Fidelity VIP-II - Asset Manager
Portfolio ............................. 253,412 27.112311 6,870,585 14%
Fidelity VIP-II - Contrafund Portfolio .. 275,660 20.842351 5,745,402 28%
Fidelity VIP-III -
Growth Opportunities Portfolio ....... 64,568 13.447707 868,292 23%
Morgan Stanley -
Emerging Markets Debt Portfolio ...... 7,315 6.935753 50,735 (29)%
Nationwide SAT -
Capital Appreciation Fund ............ 113,664 30.628674 3,481,378 28%
Nationwide SAT -
Government Bond Fund ................. 274,184 19.142839 5,248,660 8%
Nationwide SAT - Money Market Fund ...... 814,530 13.470763 10,972,341 4%
Nationwide SAT - Small Cap Value Fund ... 28,961 8.529271 247,016 (15)%(a)
Nationwide SAT - Small Company Fund ..... 68,318 15.976308 1,091,469 0%
Nationwide SAT - Total Return Fund ...... 136,311 34.300994 4,675,603 17%
Neuberger &Berman AMT -
Growth Portfolio ..................... 136,629 25.442656 3,476,205 14%
Neuberger & Berman AMT -
Guardian Portfolio ................... 4,760 9.282948 44,187 (7)%(a)
Neuberger &Berman AMT -
Limited Maturity Bond Portfolio ...... 76,004 15.295923 1,162,551 3%
Neuberger &Berman AMT -
Partners Portfolio ................... 176,971 23.001381 4,070,577 3%
Oppenheimer VAF - Bond Fund ............. 84,868 18.882225 1,602,497 5%
</TABLE>
28
<PAGE> 28
<TABLE>
<S> <C> <C> <C> <C>
Oppenheimer VAF -
Global Securities Fund ............ 88,848 18.062180 1,604,789 13%
Oppenheimer VAF - Growth Fund ........ 26,155 12.764150 333,846 22%
Oppenheimer VAF -
Multiple Strategies Fund .......... 110,357 22.780548 2,513,993 5%
Strong Opportunity Fund II, Inc. ..... 111,969 29.253391 3,275,473 12%
Strong VIF - Strong Discovery
Fund II ............................ 58,970 18.780910 1,107,510 6%
Strong VIF -
Strong International Stock
Fund II ......................... 35,834 8.939643 320,343 (6)%
Van Eck WIT - Worldwide Bond Fund .... 56,294 16.129801 908,011 11%
Van Eck WIT -
Worldwide Emerging Markets Fund ... 25,018 5.717162 143,032 (35)%
Van Eck WIT -
Worldwide Hard Assets Fund ........ 128,220 10.966233 1,406,090 (32)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio .............. 67,042 15.620311 1,047,217 (13)%
Warburg Pincus Trust -
International Equity Portfolio .... 92,476 11.611647 1,073,799 4%
Warburg Pincus Trust -
Post Venture Capital Portfolio .... 23,108 11.954408 276,242 5%
Warburg Pincus Trust -
Small Company Growth Portfolio .... 152,727 15.298780 2,336,537 (4)%
Multiple Payment contracts and
Flexible Premium contracts:
American Century VP -
American Century VP Balanced ...... 215,629 19.320541 4,166,069 15%
American Century VP - American Century
VP Capital Appreciation ........... 649,478 14.277913 9,273,190 (3)%
American Century VP - American Century
VP Income & Growth ................ 73,815 10.862660 801,827 9%(a)
American Century VP -
American Century VP International . 568,779 16.487231 9,377,591 18%
American Century VP -
American Century VP Value ......... 140,522 13.192098 1,853,780 4%
The Dreyfus Socially Responsible
Growth Fund, Inc. ................. 359,871 28.323603 10,192,843 28%
Dreyfus Stock Index Fund ............. 2,166,290 28.091438 60,854,201 27%
Dreyfus VIF -
Capital Appreciation Portfolio .... 257,361 13.197284 3,396,466 29%
Dreyfus VIF -
Growth and Income Portfolio ....... 125,274 12.772496 1,600,062 11%
Fidelity VIP - Equity-Income Portfolio 1,726,955 35.444796 61,211,568 11%
</TABLE>
(Continued)
29
<PAGE> 29
<TABLE>
<S> <C> <C> <C> <C>
Fidelity VIP - Growth Portfolio ......... 2,346,630 40.998916 96,209,286 38%
Fidelity VIP - High Income Portfolio .... 737,225 26.133234 19,266,073 (5)%
Fidelity VIP - Overseas Portfolio ....... 871,214 18.969496 16,526,490 12%
Fidelity VIP-II - Asset Manager
Portfolio ............................. 961,754 24.821550 23,872,225 14%
Fidelity VIP-II - Contrafund Portfolio .. 1,826,890 21.209617 38,747,637 29%
Fidelity VIP-III -
Growth Opportunities Portfolio ....... 315,036 13.546531 4,267,645 24%
Morgan Stanley -
Emerging Markets Debt Portfolio ...... 34,905 6.986851 243,876 (29)%
Nationwide SAT -
Capital Appreciation Fund ............ 1,058,148 31.669989 33,511,536 29%
Nationwide SAT -
Government Bond Fund ................. 414,068 18.081576 7,487,002 8%
Nationwide SAT - Money Market Fund ...... 1,953,963 13.319323 26,025,464 4%
Nationwide SAT - Small Cap Value Fund ... 50,840 8.557853 435,081 (14)%(a)
Nationwide SAT - Small Company Fund ..... 879,309 16.233001 14,273,824 0%
Nationwide SAT - Total Return Fund ...... 2,650,483 33.070880 87,653,805 17%
Neuberger &Berman AMT -
Growth Portfolio ..................... 767,489 25.347646 19,454,039 15%
Neuberger & Berman AMT -
Guardian Portfolio ................... 71,761 9.314041 668,385 (7)%(a)
Neuberger &Berman AMT -
Limited Maturity Bond Portfolio ...... 195,748 14.860392 2,908,892 4%
Neuberger &Berman AMT -
Partners Portfolio ................... 1,151,452 23.514569 27,075,898 3%
Oppenheimer VAF - Bond Fund ............. 532,098 18.103341 9,632,752 6%
Oppenheimer VAF -
Global Securities Fund ............... 980,014 18.542353 18,171,766 13%
Oppenheimer VAF - Growth Fund ........... 342,717 12.857977 4,406,647 23%
Oppenheimer VAF -
Multiple Strategies Fund ............. 460,679 22.696024 10,455,582 6%
Strong Opportunity Fund II, Inc. ........ 874,006 30.245312 26,434,584 13%
Strong VIF - Strong Discovery Fund II ... 360,468 19.418031 6,999,579 6%
Strong VIF -
Strong International Stock Fund II ... 149,776 9.083353 1,360,468 (6)%
Van Eck WIT - Worldwide Bond Fund ....... 154,980 15.314274 2,373,406 12%
Van Eck WIT -
Worldwide Emerging Markets Fund ...... 253,188 5.775322 1,462,242 (35)%
Van Eck WIT -
Worldwide Hard Assets Fund ........... 206,325 12.213208 2,519,890 (32)%
</TABLE>
30
<PAGE> 30
<TABLE>
<S> <C> <C> <C> <C>
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio ................. 287,075 15.895654 4,563,245 (12)%
Warburg Pincus Trust -
International Equity Portfolio ....... 579,078 11.816371 6,842,600 5%
Warburg Pincus Trust -
Post Venture Capital Portfolio ....... 64,081 12.075838 773,832 6%
Warburg Pincus Trust -
Small Company Growth Portfolio ....... 731,702 15.568525 11,391,521 (4)%
Modified Single Premium contracts and
Last Survivor Flexible Premium contracts:
American Century VP -
American Century VP Balanced ......... 40,224 14.655512 589,503 16%
American Century VP - American Century
VP Capital Appreciation .............. 56,709 8.631172 489,465 (2)%
American Century VP - American Century
VP Income & Growth ................... 49,568 10.920877 541,326 9%(a)
American Century VP -
American Century VP International .... 109,633 15.178805 1,664,098 19%
American Century VP -
American Century VP Value ............ 39,670 13.407134 531,861 5%
The Dreyfus Socially Responsible
Growth Fund, Inc. .................... 59,391 18.577940 1,103,362 29%
Dreyfus Stock Index Fund ................ 451,985 19.535151 8,829,595 28%
Dreyfus VIF -
Capital Appreciation Portfolio ....... 32,649 13.352746 435,954 30%
Dreyfus VIF -
Growth and Income Portfolio .......... 33,423 12.980656 433,852 12%
Fidelity VIP - Equity-Income Portfolio .. 424,796 15.430209 6,554,691 12%
Fidelity VIP - Growth Portfolio ......... 312,967 17.992701 5,631,122 39%
Fidelity VIP - High Income Portfolio .... 328,441 12.192188 4,004,414 (4)%
Fidelity VIP - Overseas Portfolio ....... 94,348 13.418281 1,265,988 13%
Fidelity VIP-II - Asset Manager
Portfolio ............................ 96,546 15.299714 1,477,126 15%
Fidelity VIP-II - Contrafund Portfolio .. 294,323 18.152724 5,342,764 30%
Fidelity VIP-III -
Growth Opportunities Portfolio ....... 54,891 13.706120 752,343 25%
Morgan Stanley -
Emerging Markets Debt Portfolio ...... 6,444 7.069376 45,555 (28)%
Nationwide SAT -
Capital Appreciation Fund ............ 207,778 20.293858 4,216,617 30%
Nationwide SAT -
Government Bond Fund ................. 100,956 12.754801 1,287,674 9%
Nationwide SAT - Money Market Fund ...... 904,630 11.456534 10,363,924 5%
</TABLE>
(Continued)
31
<PAGE> 31
<TABLE>
<S> <C> <C> <C> <C>
Nationwide SAT - Small Cap Value
Fund ............................... 18,425 8.603810 158,525 (14)%(a)
Nationwide SAT - Small Company Fund .. 170,740 12.475012 2,129,984 1%
Nationwide SAT - Total Return Fund ... 377,762 17.490359 6,607,193 18%
Neuberger &Berman AMT -
Growth Portfolio .................. 95,390 14.709510 1,403,140 16%
Neuberger & Berman AMT -
Guardian Portfolio ................ 15,552 9.364011 145,629 (6)%(a)
Neuberger &Berman AMT -
Limited Maturity Bond Portfolio ... 72,201 11.674617 842,919 4%
Neuberger &Berman AMT -
Partners Portfolio ................ 241,826 15.696640 3,795,856 4%
Oppenheimer VAF - Bond Fund .......... 90,724 12.420731 1,126,858 7%
Oppenheimer VAF -
Global Securities Fund ............ 89,467 15.133929 1,353,987 14%
Oppenheimer VAF - Growth Fund ........ 98,891 13.009524 1,286,525 24%
Oppenheimer VAF -
Multiple Strategies Fund .......... 90,548 13.674340 1,238,184 7%
Strong Opportunity Fund II, Inc. ..... 85,559 15.336685 1,312,191 14%
Strong VIF - Strong Discovery
Fund II ............................ 20,724 11.809640 244,743 7%
Strong VIF -
Strong International Stock
Fund II ......................... 36,980 8.279751 306,185 (5)%
Van Eck WIT - Worldwide Bond Fund .... 21,531 12.141253 261,413 13%
Van Eck WIT -
Worldwide Emerging Markets Fund ... 41,962 5.869611 246,301 (34)%
Van Eck WIT -
Worldwide Hard Assets Fund ........ 21,804 6.825397 148,821 (31)%
Van Kampen American Capital LIT -
Morgan Stanley Real Estate
Securities Portfolio .............. 58,853 14.679798 863,950 (12)%
Warburg Pincus Trust -
International Equity Portfolio .... 132,142 10.230064 1,351,821 5%
Warburg Pincus Trust -
Post Venture Capital Portfolio .... 4,122 12.272697 50,588 7%
Warburg Pincus Trust -
Small Company Growth Portfolio .... 131,376 11.041376 1,450,572 (3)%
======= ========= ========= ==
$894,156,479
=============
</TABLE>
(a) This investment option was not being utilized for the entire period.
Accordingly, the annual return was computed for such period as the
investment option was utilized.
(b) The annual return does not include contract charges satisfied by
surrendering units.
32
<PAGE> 32
Independent Auditors' Report
The Board of Directors of Nationwide Life Insurance Company and Contract Owners
of Nationwide VLI Separate Account-2:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VLI Separate Account-2 as of December 31,
1998, and the related statements of operations and changes in contract owners'
equity for each of the years in the three year period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures include
confirmation of securities owned as of December 31, 1998, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nationwide VLI Separate
Account-2 as of December 31, 1998, and the results of its operations and its
changes in contract owners' equity for each of the years in the three year
period then ended in conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 5, 1999
33
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34
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35
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NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA -- COLUMBUS, OHIO 43215-2220
Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
