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[NATIONWIDE(R) LOGO]
NATIONWIDE(R)
VARIABLE
ACCOUNT-4
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1999
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
APO-1882-W (12/99)
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[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[JOSEPH J. GASPER PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you the 1999 annual
report of the Nationwide Variable Account-4.
During 1999 equity investments extended their spirited advance to a fifth
consecutive year. The S&P 500 was the laggard of the major indices with a
year-over-year change of a respectable 19.53%. The NASDAQ topped the list at
over 85% with the other indices falling into line nearer the lower end of the
range. Fixed earnings investments did not fare as well in the current
environment of rising interest rates.
The U.S. economy remains strong, inflation remains docile and the available
labor pool is incessantly tight. Against this good-news-bad-news backdrop, the
Federal Reserve is increasingly concerned that recent productivity gains will
subside and ignite wage inflation. To date, the Fed has hiked short-term
interest rates a quarter percentage point on four occasions since last June.
Prospectively, they may well become more aggressive in their preemptive efforts
to dampen economic growth and avoid a new round of inflation.
We believe some caution may be warranted at this juncture. Certain market
sectors are well extended and may inevitably retreat to less lofty valuation
levels. However, we remain bullish for the long-term prospects of financial
assets. Your variable insurance contract provides an excellent resource to help
you achieve your long-term retirement savings and financial planning objectives.
We appreciate your trust in our company and in our investment products, and we
welcome and encourage your feedback.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
February 10, 2000
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NATIONWIDE VARIABLE ACCOUNT-4
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
December 31, 1999
ASSETS:
Investments at market value:
Greenwich SSF - Intermediate High Grade Portfolio (GSSFIHiGr)
1,573 shares (cost $16,742) .................................. $ 15,241
Greenwich SSF - Total Return Portfolio (GSSFTotRt)
11,213 shares (cost $197,671) ................................ 225,831
Smith Barney VAF - The Income and Growth Portfolio (SBVAFIncGro)
994,187 shares (cost $13,967,927) ............................ 10,906,228
Smith Barney VAF - The Reserve Account Portfolio (SBVAFResAcct)
5,605 shares (cost $46,549) .................................. 42,656
Smith Barney VAF - The U.S. Government/High Quality Securities
Portfolio (SBVAFUSGovHQ)
71,118 shares (cost $850,244) ................................ 755,985
Travelers Series Fund Inc. - Smith Barney International Equity
Portfolio (TSFSBIntEq)
10,594 shares (cost $151,451) ................................ 243,349
Travelers Series Fund Inc. - Smith Barney Large Cap Value
Portfolio (TSFSBLgCapVal)
9,064 shares (cost $183,337) ................................. 176,837
Travelers Series Fund Inc. - Smith Barney Money Market
Portfolio (TSFSBMMkt)
135,307 shares (cost $135,307) ............................... 135,307
-----------
Total investments .......................................... 12,501,434
Accounts receivable .............................................. 548
----------
Total assets ................................................ 12,501,982
Accounts payable ................................................... 36,898
-----------
Contract owners' equity $12,465,084
===========
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Annual
Contract owners' equity represented by: Units Unit Value Return*
------- ---------- -------
Contracts in accumulation phase:
Greenwich SSF - Intermediate High
Grade Portfolio:
Non-tax qualified ................ 1,363 $11.175182 $ 15,232 (5)%
Greenwich SSF - Total Return
Portfolio:
Non-tax qualified ................ 12,558 17.965910 225,616 20%
Smith Barney VAF - The Income and
Growth Portfolio:
Tax qualified .................... 69,881 29.942972 2,092,445 (4)%
Non-tax qualified ................ 287,325 29.942972 8,603,364 (4)%
Smith Barney VAF - The Reserve
Account Portfolio:
Tax qualified .................... 224 13.874598 3,108 2%
Non-tax qualified ................ 2,850 13.874598 39,543 2%
Smith Barney VAF - The U.S.
Government/High Quality Securities
Portfolio:
Tax qualified .................... 3,629 16.204257 58,805 1%
Non-tax qualified ................ 42,827 16.204257 693,980 1%
Travelers Series Fund Inc. -
Smith Barney International Equity
Portfolio:
Non-tax qualified ................ 11,801 20.621439 243,354 66%
Travelers Series Fund Inc. -
Smith Barney Large Cap Value
Portfolio:
Tax qualified .................... 5,401 15.129147 81,713 (1)%
Non-tax qualified ................ 6,282 15.129147 95,041 (1)%
Travelers Series Fund Inc. -
Smith Barney Money Market Portfolio:
Non-tax qualified .............. 11,647 11.642365 135,599 3%
======= =========
Reserves for annuity contracts in
payout phase:
Tax qualified .................. 6,198
Non-tax qualified .............. 171,086
-----------
$12,465,084
===========
* The annual return does not include contract charges satisfied by surrendering
units.
See accompanying notes to financial statements.
________________________________________________________________________________
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________________________________________________________________________________
NATIONWIDE VARIABLE ACCOUNT-4
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Total GSSFIHiGr GSSFTotRt SBVAFIncGro
----------------------- ---------------- ----------------- ---------------------
1999 1998 1999 1998 1999 1998 1999 1998
----------- ---------- ------- ------- ------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ................... $ 242,020 522,753 2,419 2,008 7,223 6,084 222,144 396,148
Mortality, expense and administration
charges (note 2) ..................... (190,062) (230,174) (307) (616) (3,318) (3,321) (168,124) (194,599)
----------- ---------- ------- ------- ------- -------- ---------- ----------
Net investment activity .............. 51,958 292,579 2,112 1,392 3,905 2,763 54,020 201,549
----------- ---------- ------- ------- ------- -------- ---------- ----------
Proceeds from mutual fund shares sold .. 3,415,514 7,199,070 16,378 88,531 105,839 36,905 2,620,083 4,605,228
Cost of mutual fund shares sold ........ (3,893,540) (6,677,696) (18,093) (84,883) (89,355) (32,408) (3,069,184) (4,221,818)
----------- ---------- ------- ------- ------- -------- ---------- ----------
Realized gain (loss) on investments .. (478,026) 521,374 (1,715) 3,648 16,484 4,497 (449,101) 383,410
Change in unrealized gain (loss) on
investments .......................... (2,247,223) (3,366,100) (1,892) (2,274) 17,934 (6,123) (2,427,983) (3,069,801)
----------- ---------- ------- ------- ------- -------- ---------- ----------
Net gain (loss) on investments ....... (2,725,249) (2,844,726) (3,607) 1,374 34,418 (1,626) (2,877,084) (2,686,391)
----------- ---------- ------- ------- ------- -------- ---------- ----------
Reinvested capital gains ............... 2,408,668 4,181,528 - - 10,901 7,312 2,393,212 4,050,640
----------- ---------- ------- ------- ------- -------- ---------- ----------
Net increase (decrease) in contract
owners' equity resulting from
operations ..................... (264,623) 1,629,381 (1,495) 2,766 49,224 8,449 (429,852) 1,565,798
----------- ---------- ------- ------- ------- -------- ---------- ----------
Equity transactions:
Purchase payments received from
contract owners ...................... 1,326 282,588 - - 330 16,490 330 258,292
Transfers between funds ................ - - (16,062) - (12,156) 4,320 (205,631) (4,561)
Redemptions ............................ (2,820,553) (6,225,562) - (87,790) (63,185) (33,691) (2,166,514) (4,268,099)
Annuity benefits ....................... (30,860) (23,894) - - - - (29,377) (22,349)
Annual contract maintenance charge
(note 2) ............................. (8,375) (10,342) (8) (35) (125) (124) (7,389) (8,909)
Contingent deferred sales charges
(note 2) ............................. (1,434) (4,773) - (61) - (15) (728) (3,363)
Adjustments to maintain reserves ....... (36,483) (6,113) (5) (2) (200) (26) (35,943) (6,136)
----------- ---------- ------- ------- ------- -------- ---------- ----------
Net equity transactions ............ (2,896,379) (5,988,096) (16,075) (87,888) (75,336) (13,046) (2,445,252) (4,055,125)
----------- ---------- ------- ------- ------- -------- ---------- ----------
Net change in contract owners' equity .... (3,161,002) (4,358,715) (17,570) (85,122) (26,112) (4,597) (2,875,104) (2,489,327)
Contract owners' equity beginning of
period ................................. 15,626,086 19,984,801 32,802 117,924 251,728 256,325 13,745,003 16,234,330
----------- ---------- ------- ------- ------- -------- ---------- ----------
Contract owners' equity end of period .... $12,465,084 15,626,086 15,232 32,802 225,616 251,728 10,869,899 13,745,003
=========== ========== ======= ======= ======= ======== =========== ==========+
</TABLE>
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NATIONWIDE VARIABLE ACCOUNT-4
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
SBVAFResAcct SBVAFUSGovHQ TSFSBIntEq TSFSBLgCapVal
----------------- ------------------- ----------------- -----------------
1999 1998 1999 1998 1999 1998 1999 1998
-------- ------- -------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ...................... $ - 2,677 2,850 90,126 699 - 2,124 7,532
Mortality, expense and administration
charges (note 2) ........................ (629) (1,049) (11,053) (15,411) (2,722) (3,656) (2,720) (6,774)
-------- ------- -------- --------- ------- -------- ------- --------
Net investment activity ................. (629) 1,628 (8,203) 74,715 (2,023) (3,656) (596) 758
-------- ------- -------- --------- ------- -------- ------- --------
Proceeds from mutual fund shares sold ..... 15,182 41,763 266,312 878,250 82,943 225,762 59,715 630,495
Cost of mutual fund shares sold ........... (22,681) (65,936) (334,704) (947,448) (68,499) (183,352) (41,962) (449,715)
-------- ------- -------- --------- ------- -------- ------- --------
Realized gain (loss) on investments ..... (7,499) (24,173) (68,392) (69,198) 14,444 42,410 17,753 180,780
Change in unrealized gain (loss) on
investments ............................. 8,893 20,737 85,689 (122,990) 89,397 (23,713) (19,261) (161,936)
-------- ------- -------- --------- ------- -------- ------- --------
Net gain (loss) on investments .......... 1,394 (3,436) 17,297 (192,188) 103,841 18,697 (1,508) 18,844
-------- ------- -------- --------- ------- -------- ------- --------
Reinvested capital gains .................. - - - 104,744 - - 4,555 18,832
-------- ------- -------- --------- ------- -------- ------- --------
Net increase (decrease) in contract
owners' equity resulting from
operations ........................ 765 (1,808) 9,094 (12,729) 101,818 15,041 2,451 38,434
-------- ------- -------- --------- ------- -------- ------- --------
Equity transactions:
Purchase payments received from
contract owners ........................ - 2,000 336 495 330 495 - 4,816
Transfers between funds ................... - (18,538) (32,232) (75,949) - 42,867 - 109,815
Redemptions ............................... (14,376) (22,036) (191,994) (552,423) (80,268) (180,804) (56,702) (623,289)
Annuity benefits .......................... - - (1,483) (1,545) - - - -
Annual contract maintenance charge
(note 2) ................................ (70) (124) (443) (697) (75) (91) (115) (148)
Contingent deferred sales charges
(note 2) ................................ (105) - (386) (866) - (118) - (350)
Adjustments to maintain reserves .......... 2 (5) (5) 3 6 1 (79) 37
-------- ------- -------- --------- ------- -------- ------- --------
Net equity transactions ............... (14,549) (38,703) (226,207) (630,982) (80,007) (137,650) (56,896) (509,119)
-------- ------- -------- --------- ------- -------- ------- --------
Net change in contract owners' equity ....... (13,784) (40,511) (217,113) (643,711) 21,811 (122,609) (54,445) (470,685)
Contract owners' equity beginning of
period .................................... 56,435 96,946 973,092 1,616,803 221,543 344,152 231,199 701,884
-------- ------- -------- --------- ------- -------- ------- --------
Contract owners' equity end of period ....... $ 42,651 56,435 755,979 973,092 243,354 221,543 176,754 231,199
======== ======= ======== ========= ======= ======== ======= ========
(Continued)
</TABLE>
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NATIONWIDE VARIABLE ACCOUNT-4
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31,1999 AND 1998
TSFSBMMkt
-----------------------
1999 1998
--------- --------
Investment activity:
Reinvested dividends ...................... $ 4,561 18,178
Mortality, expense and administration
charges (note 2) ........................ (1,189) (4,748)
--------- --------
Net investment activity ................. 3,372 13,430
--------- --------
Proceeds from mutual fund shares sold ..... 249,062 692,136
Cost of mutual fund shares sold ........... (249,062) (692,136)
--------- --------
Realized gain (loss) on investments ..... - -
Change in unrealized gain (loss) on
investments ............................. - -
--------- --------
Net gain (loss) on investments .......... - -
--------- --------
Reinvested capital gains .................. - -
--------- --------
Net increase (decrease) in contract
owners' equity resulting from
operations ........................ 3,372 13,430
--------- --------
Equity transactions:
Purchase payments received from
contract owners ........................ - -
Transfers between funds ................... 266,081 (57,954)
Redemptions ............................... (247,514) (457,430)
Annuity benefits .......................... - -
Annual contract maintenance charge
(note 2) ................................ (150) (214)
Contingent deferred sales charges
(note 2) ................................ (215) -
Adjustments to maintain reserves .......... (259) 15
--------- --------
Net equity transactions ............... 17,943 (515,583)
--------- --------
Net change in contract owners' equity ....... 21,315 (502,153)
Contract owners' equity beginning of
period .................................... 114,284 616,437
--------- --------
Contract owners' equity end of period ....... $ 135,599 114,284
========= ========
See accompanying notes to financial statements.
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NATIONWIDE VARIABLE ACCOUNT-4
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
(1) Summary of Significant Accounting Policies
(a) Organization and Nature of Operations
Nationwide Variable Account-4 (the Account) was established pursuant to
a resolution of the Board of Directors of Nationwide Life Insurance
Company (the Company) on October 7, 1987, and commenced operations on
July 10, 1989. The Account has been registered as a unit investment
trust under the Investment Company Act of 1940.
The Company offers tax qualified and non-tax qualified Individual
Deferred Variable Annuity Contracts through the Account. The primary
distribution for the contracts is through the brokerage community.
Presently, the contracts are not actively marketed.
(b) The Contracts
Only contracts without a front-end sales charge, but with a contingent
deferred sales charge and certain other fees, are offered for purchase.
See note 2 for a discussion of contract expenses.
Contract owners in either the accumulation or the payout phase may
invest in the following:
Portfolios of the Greenwich Street Series Fund (Greenwich SSF);
Greenwich SSF - Intermediate High Grade Portfolio (GSSFIHiGr)
Greenwich SSF - Total Return Portfolio (GSSFTotRt)
Portfolios of the Smith Barney Variable Account Funds
(Smith Barney VAF);
Smith Barney VAF - The Income and Growth Portfolio (SBVAFIncGro)
Smith Barney VAF - The Reserve Account Portfolio (SBVAFResAcct)
Smith Barney VAF - The U.S. Government/High Quality Securities
Portfolio (SBVAFUSGovHQ)
Portfolios of the Travelers Series Fund Inc.;
Travelers Series Fund Inc. - Smith Barney International Equity
Portfolio (TSFSBIntEq)
Travelers Series Fund Inc. - Smith Barney Large Cap Value Portfolio
(TSFSBLgCapVal)
Travelers Series Fund Inc. - Smith Barney Money Market Portfolio
(TSFSBMMkt)
At December 31, 1999, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment results
of each fund, equity transactions by contract owners and certain
contract expenses (see note 2). The accompanying financial statements
include only contract owners' purchase payments pertaining to the
variable portions of their contracts and exclude any purchase payments
for fixed dollar benefits, the latter being included in the accounts of
the Company.
A contract owner may choose from among a number of different underlying
mutual fund options. The underlying mutual fund options are not
available to the general public directly. The underlying mutual funds
are available as investment options in variable life insurance policies
or variable annuity contracts issued by life insurance companies or, in
some cases, through participation in certain qualified pension or
retirement plans.
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds may
be similar to, and may in fact be modeled after, publicly traded mutual
funds, the underlying mutual funds are not otherwise directly related to
any publicly traded mutual fund. Consequently, the investment
performance of publicly traded mutual funds and any corresponding
underlying mutual funds may differ substantially.
(Continued)
9
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NATIONWIDE VARIABLE ACCOUNT-4
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1999. The cost of investments
sold is determined on a specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, operations
of the Company which is taxed as a life insurance company under the
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) Calculation of Annuity Reserves
Annuity reserves are computed for contracts in the variable payout stage
according to industry standard mortality tables. The assumed investment
return is 3.5 percent unless the annuitant elects otherwise, in which
case the rate may vary from 3.5 percent to 7 percent, as regulated by
the laws of the respective states. The mortality risk is fully borne by
the Company and may result in additional amounts being transferred into
the Account by the Company to cover greater longevity of annuitants than
expected. Conversely, if reserves exceed amounts required, transfers may
be made to the Company.
(2) Expenses
The Company does not deduct a sales charge from purchase payments
received from the contract owners. However, if any part of the contract
value of such contracts is surrendered, the Company will, with certain
exceptions, deduct from a contract owner's contract value a contingent
deferred sales charge not to exceed 7% of the lesser of purchase
payments or the amount surrendered, such charge declining 1% per year,
to 0%, after the purchase payment has been held in the contract for 84
months. No sales charges are deducted on redemptions used to purchase
units in the fixed investment options of the Company.
The following contract charges are deducted by the Company: (a) an
annual contract maintenance charge of up to $30, dependent upon contract
type and issue date, which is satisfied by surrendering units; and (b) a
mortality risk charge, an expense risk charge and an administration
charge assessed through the daily unit value calculation equal to an
annual rate of 0.80%, 0.45% and 0.05%, respectively.
________________________________________________________________________________
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Independent Auditors' Report
----------------------------
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide Variable Account-4:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account-4 (comprised of the
sub-accounts listed in note 1(b)) (collectively, "the Account") as of December
31, 1999, and the related statements of operations and changes in contract
owners' equity for each of the years in the two year period then ended. These
financial statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1999, 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 the Account as of December
31, 1999, and the results of its operations and its changes in contract owners'
equity for each of the years in the two year period then ended in conformity
with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 18, 2000
________________________________________________________________________________
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NATIONWIDE LIFE INSURANCE COMPANY
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