<PAGE> 1
Registration No. 33-35775
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO.9
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON FORM N-8B-2
----------
NATIONWIDE VL SEPARATE ACCOUNT-A
(Exact Name of Trust)
----------
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(Exact Name and Address of Depositor and Registrant)
DENNIS W. CLICK
SECRETARY
ONE NATIONWIDE PLAZA
COLUMBUS, OHIO 43215
(Name and address of Agent for Service)
----------
This Post-Effective Amendment amends the Registration Statement in respect to
the Prospectus and the Financial Statements.
It is proposed that this filing will become effective (check appropriate
box):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1999 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) (1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
If appropriate check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities being registered: Multiple Payment Variable Life Insurance
Policies.
Approximate date of proposed offering: Continuously on and after May 1, 1999.
[ ] Check box if it is proposed that this filing will become effective on (date)
at (time) pursuant to Rule 487.
================================================================================
1 of 111
<PAGE> 2
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
N-8B-2 ITEM CAPTION IN PROSPECTUS
1.................................Nationwide Life and Annuity Insurance Company
The Variable Account
2.................................Nationwide Life and Annuity Insurance Company
3.................................Custodian of Assets
4.................................Distribution of The Policies
5.................................The Variable Account
6.................................Not Applicable
7.................................Not Applicable
8.................................Not Applicable
9.................................Legal Proceedings
10.................................Information About The Policies; How The Cash
Value Varies; Right to Exchange for a Fixed
Benefit Policy; Reinstatement; Other Policy
Provisions
11.................................Investments of The Variable Account
12.................................The Variable Account
13.................................Policy Charges
Reinstatement
14.................................Underwriting and Issuance - Premium Payments
Minimum Requirements for Issuance of a Policy
15.................................Investments of the Variable Account; Premium
Payments
16.................................Underwriting and Issuance - Allocation of
Cash Value
17.................................Surrendering The Policy for Cash
18.................................Reinvestment
19.................................Not Applicable
20.................................Not Applicable
21.................................Policy Loans
22.................................Not Applicable
23.................................Not Applicable
24.................................Not Applicable
25.................................Nationwide Life and Annuity Insurance Company
26.................................Not Applicable
27.................................Nationwide Life and Annuity Insurance Company
28.................................Company Management
29.................................Company Management
30.................................Not Applicable
31.................................Not Applicable
32.................................Not Applicable
33.................................Not Applicable
34.................................Not Applicable
35.................................Nationwide Life and Annuity Insurance Company
36.................................Not Applicable
2 of 111
<PAGE> 3
N-8B-2 ITEM CAPTION IN PROSPECTUS
37.................................Not Applicable
38.................................Distribution of The Policies
39.................................Distribution of The Policies
40.................................Not Applicable
41(a)..............................Distribution of The Policies
42.................................Not Applicable
43.................................Not Applicable
44.................................How The Cash Value Varies
45.................................Not Applicable
46.................................How The Cash Value Varies
47.................................Not Applicable
48.................................Custodian of Assets
49.................................Not Applicable
50.................................Not Applicable
51.................................Summary of The Policies;
Information About The Policies
52.................................Substitution of Securities
53.................................Taxation of The Company
54.................................Not Applicable
55.................................Not Applicable
56.................................Not Applicable
57.................................Not Applicable
58.................................Not Applicable
59.................................Financial Statements
3 of 111
<PAGE> 4
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Multiple Payment Variable Life Insurance Policies
Issued by Nationwide Life and Annuity Insurance Company
through its Nationwide VL Separate Account-A
The date of this prospectus is May 1, 1999
This prospectus contains basic information you should know about the policies
before investing. Please read it and keep it for future reference.
The following underlying mutual funds are available under the policies:
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
- American Century VP Advantage
- American Century VP Balanced
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
- VIP Growth Portfolio
NATIONWIDE SEPARATE ACCOUNT TRUST
- Capital Appreciation Fund
- Total Return Fund
- Government Bond Fund
- Money Market Fund
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- AMT Balanced Portfolio
To obtain copies of any underlying mutual fund prospectus, please call:
1-800-533-5622
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 182150
COLUMBUS, OHIO 43218-2150
Material incorporated by reference to this prospectus can be found on the SEC
website at:
www.sec.gov
THIS POLICY IS NOT:
- A BANK DEPOSIT;
- ENDORSED BY A BANK OR GOVERNMENT AGENCY;
- FEDERALLY INSURED; OR
- AVAILABLE IN EVERY STATE.
The life insurance policies offered by this prospectus are multiple payment
variable life insurance policies. A cash surrender value may be offered if the
policy is terminated during the lifetime of the insured.
The purpose of this policy is to provide life insurance protection for the
beneficiary named in the policy. No claim is made that the policy is in any way
similar or comparable to a systematic investment plan of a mutual fund.
The death benefit and cash value of this policy may vary to reflect the
experience of the Nationwide VL Separate Account-A (the "variable account") or
the fixed account, depending on how premium payments are invested.
Investors assume certain risks when investing in the policies, including the
risk of losing money.
Nationwide guarantees the death benefit for as long as the policy is in force.
The cash surrender value is not guaranteed. The policy will lapse if the cash
surrender value is insufficient to cover policy charges. During the first five
policy years, the total premiums less any policy indebtedness must be greater
than or equal to the minimum premium requirement in order to keep the policy in
force.
Benefits described in this prospectus may not be available in every jurisdiction
- - refer to your policy for specific benefit information.
THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE SUCH OFFERING MAY
NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH
1
<PAGE> 5
THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE
SEC PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
2
<PAGE> 6
GLOSSARY OF SPECIAL TERMS
ATTAINED AGE - The insured's age on the policy date, plus the number of full
years since the policy date.
ACCUMULATION UNIT - An accounting unit of measure used to calculate the cash
value of the variable account.
FIXED ACCOUNT - An investment option which is funded by the general account of
Nationwide.
GENERAL ACCOUNT - All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
GUIDELINE LEVEL PREMIUM - The level annual premiums required to mature the
policy under guaranteed mortality and expense charges with an interest rate of
4%. It is calculated pursuant to the Internal Revenue Code.
GUIDELINE SINGLE PREMIUM - The single premium amount required to mature the
policy under guaranteed mortality and expense charges, and an interest rate of
6%. It is calculated pursuant to the Internal Revenue Code.
MATURITY DATE - The policy anniversary on or next following the insured's 95th
birthday.
NATIONWIDE - Nationwide Life and Annuity Insurance Company.
NET AMOUNT AT RISK - The death benefit minus the cash value. On a monthly
anniversary day, the net amount at risk is the death benefit minus the cash
value prior to subtraction of the base policy cost of insurance charge.
NET PREMIUMS - The actual premiums minus the percent of premium charges. The
percent of premium charges are shown on the policy data page.
SUB-ACCOUNTS - Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units are separately maintained.
UNSCHEDULED PREMIUM - Additional premium payments which may be allowed under
certain conditions.
VALUATION PERIOD - Each day the New York Stock Exchange is open.
VARIABLE ACCOUNT - Nationwide VL Separate Account-A, a separate account of
Nationwide Life and Annuity Insurance Company that contains variable account
allocations. The variable account is divided into sub-accounts, each of which
invests in shares of a separate underlying mutual fund.
3
<PAGE> 7
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS.................................................... 3
SUMMARY OF POLICY EXPENSES................................................... 6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES....................................... 7
SYNOPSIS OF THE POLICIES..................................................... 7
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY................................ 8
NATIONWIDE ADVISORY SERVICES, INC............................................ 8
INVESTING IN THE POLICY...................................................... 8
The Variable Account and Underlying Mutual Funds
The Fixed Account
INFORMATION ABOUT THE POLICIES............................................... 10
Minimum Requirements for Policy Issuance
Premium Payments
Pricing
POLICY CHARGES............................................................... 11
Sales Load
Premium Expense Charge
Surrender Charges
Monthly Cost of Insurance
Monthly Administrative Charge
Mortality and Expense Risk Charge
Income Tax
SURRENDERING THE POLICY FOR CASH............................................. 13
Surrender (Redemption)
Cash Surrender Value
Partial Surrenders
Income Tax Withholding
VARIATION IN CASH VALUE...................................................... 14
POLICY PROVISIONS............................................................ 14
Policy Owner
Beneficiary
Changes in Existing Insurance Coverage
OPERATION OF THE POLICY...................................................... 15
Allocation of Net Premium and Cash Value
How the Investment Experience is Determined
Net Investment Factor
Determining the Cash Value
Transfers
RIGHT TO REVOKE.............................................................. 17
POLICY LOANS................................................................. 18
Taking a Policy Loan
Effect on Investment Performance
Interest
Effect on Death Benefit and Cash Value
Repayment
ASSIGNMENT................................................................... 19
POLICY OWNER SERVICES........................................................ 19
Dollar Cost Averaging
DEATH BENEFIT INFORMATION.................................................... 19
Calculation of the Death Benefit
Changes in the Death Benefit Option
Proceeds Payable on Death
Incontestability
Error in Age or Sex
Suicide
Maturity Proceeds
EXCHANGE RIGHTS.............................................................. 22
GRACE PERIOD ................................................................ 22
First Five Policy Years
Policy Years Six and After
All Policy Years
Reinstatement
TAX MATTERS.................................................................. 23
Policy Proceeds
Withholding
Federal Estate and Generation-Skipping
Transfers Taxes
Non-Resident Aliens
Taxation of Nationwide
Tax Changes
LEGAL CONSIDERATIONS......................................................... 26
YEAR 2000 COMPLIANCE ISSUES.................................................. 26
STATE REGULATION............................................................. 27
REPORTS TO POLICY OWNERS..................................................... 28
ADVERTISING.................................................................. 28
LEGAL PROCEEDINGS............................................................ 28
EXPERTS...................................................................... 28
REGISTRATION STATEMENT....................................................... 28
LEGAL OPINIONS............................................................... 29
DISTRIBUTION OF THE POLICIES................................................. 29
4
<PAGE> 8
ADDITIONAL INFORMATION ABOUT NATIONWIDE...................................... 31
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS........................... 38
APPENDIX B: ILLUSTRATION OF SURRENDER CHARGES................................ 40
APPENDIX C: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES,
AND DEATH BENEFITS...................................................... 41
5
<PAGE> 9
SUMMARY OF POLICY EXPENSES
Nationwide deducts certain charges from the policy. Charges are made for
administrative and sales expenses, tax expenses, providing life insurance
protection and assuming the mortality and expense risks.
Nationwide deducts a sales load and a premium expense charge from premium
payments. The sales load is guaranteed never to exceed 3.5% of each premium
payment. The premium expense charge is approximately 3.5% of premiums for all
states (see "Sales Load" and "Premium Expense Charge").
Nationwide deducts the following charges from the cash value of the policy:
- monthly cost of insurance
- monthly cost of any additional benefits provided by riders to the policy
- administrative expense charge(1)
For policies which are surrendered during the first nine policy years,
Nationwide deducts a surrender charge (see "Surrender Charges").
Nationwide deducts a mortality and expense risk charge from the sub-accounts of
the variable account.
The mortality and expense risk charge is deducted daily and is equal to an
annual rate of 0.80% of the daily net assets of the variable account.
(1) Currently, the administrative expense charge is $5 per month. It is
guaranteed not to exceed $7.50 per month.
For more information about any policy charge, see "Policy Charges" in this
prospectus.
6
<PAGE> 10
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund net assets,
after expense reimbursement)
<TABLE>
<CAPTION>
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - 1.00% 0.00% 0.00% 1.00%
American Century VP Advantage
American Century Variable Portfolios, Inc. - 0.97% 0.00% 0.00% 0.97%
American Century VP Balanced
Fidelity VIP Growth Portfolio 0.59% 0.07% 0.00% 0.66%
NSAT Capital Appreciation Fund 0.60% 0.07% 0.00% 0.67%
NSAT Government Bond Fund 0.50% 0.07% 0.00% 0.57%
NSAT Money Market Fund 0.40% 0.06% 0.00% 0.46%
NSAT Total Return Fund 0.59% 0.06% 0.00% 0.65%
Neuberger Berman AMT - Balanced Portfolio 0.85% 0.18% 0.00% 1.03%
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value to calculate the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
<S> <C> <C> <C> <C>
Fidelity VIP Growth Portfolio 0.59% 0.09% 0.00% 0.68%
</TABLE>
SYNOPSIS OF THE POLICIES
The policy offered by this prospectus provides for life insurance coverage on
the insured. The death benefit and cash value of the policy may increase or
decrease to reflect the performance of the investment options chosen by the
policy owner (see "Death Benefit Information").
CASH SURRENDER VALUE
If the policy is terminated during the insured's lifetime, a cash surrender
value may be payable under the policy. However, there is no guaranteed cash
surrender value (see "Variation in Cash Value "). The policy will lapse without
value if the cash surrender value falls below what is needed to cover policy
charges. During the first five policy years, the total premium payments less any
policy indebtedness must be greater than or equal to the minimum premium
requirement in order to keep the policy in force. The minimum premium is equal
to the monthly minimum premium multiplied by the number of completed policy
months. The minimum monthly premium is shown on the policy data page.
PREMIUMS
The minimum initial premium for which a policy may be issued is $2,000.
The policies are designed to generally permit the payment of the guideline
single premium in five annual installments for death benefit Option 1, and five
annual guideline level premiums under death benefit Option 2 (see "Premium
Payments").
TAXATION
The policies described in this prospectus meet the definition of "life
insurance" under Section 7702 of the Internal Revenue Code. Nationwide will
monitor compliance with the tests provided by Section 7702 to insure the
policies continue
7
<PAGE> 11
to receive this favored tax treatment (see "Tax Matters").
NONPARTICIPATING POLICIES
The policies are nonparticipating policies on which no dividends are payable.
The policies do not share in the profits or surplus earnings of Nationwide.
POLICY CANCELLATION
Policy owners may return the policy for any reason within certain time periods
and Nationwide will refund the policy value or the amount required by law (see
"Right to Revoke").
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Nationwide is a stock life insurance company organized under the laws of the
State of Ohio in February 1981. It is a member of the "Nationwide Insurance
Enterprise" with its Home Office at One Nationwide Plaza, Columbus, Ohio 43215.
Nationwide is a provider of life insurance, annuities and retirement products.
It is admitted to do business in 48 states and the District of Columbia.
CUSTODIAN OF ASSETS
Nationwide serves as the custodian of the assets of the variable account.
OTHER CONTRACTS ISSUED BY NATIONWIDE
Nationwide does presently and will, from time to time, offer variable contracts
and policies with benefits which vary in accordance with the investment
experience of a separate account of Nationwide.
NATIONWIDE ADVISORY SERVICES, INC.
The policies are distributed by Nationwide Advisory Services, Inc., Three
Nationwide Plaza, Columbus, Ohio 43215. NAS is a wholly owned subsidiary of
Nationwide Life Insurance Company, parent company to Nationwide.
INVESTING IN THE POLICY
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
Nationwide VL Separate Account-A is a separate account that invests in the
underlying mutual fund options listed in Appendix A. Nationwide established the
separate account on August 8, 1984, pursuant to Ohio law. Although the separate
account is registered with the SEC as a unit investment trust pursuant to the
Investment Company Act of 1940 ("1940 Act"), the SEC does not supervise the
management of Nationwide or the variable account.
Income, gains, and losses credited to, or charged against the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's assets and are not chargeable with liabilities
incurred in any other business of Nationwide. Nationwide is obligated to pay all
amounts promised to policy owners under the policies.
The variable account is divided into sub-accounts. Policy owners elect to have
net premiums allocated among the sub-accounts and the fixed account at the time
of application.
Nationwide uses the assets of each sub-account to buy shares of the underlying
mutual funds based on policy owner instructions. A policy's investment
performance depends upon the performance of the underlying mutual fund options
chosen by the policy owner.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Underlying mutual funds in the variable account are NOT publicly traded mutual
funds. The underlying mutual fund options 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.
8
<PAGE> 12
However the underlying mutual funds are NOT directly related to any publicly
traded mutual fund. Policy owners should not compare the performance of a
publicly traded fund with the performance of underlying mutual funds
participating in the variable account. The performance of the underlying mutual
funds could differ substantially from that of any publicly traded funds.
Changes of Investment Policy
Nationwide may materially change the investment policy of the variable account.
Nationwide must inform policy owners and obtain all necessary regulatory
approvals. Any change must be submitted to the various state insurance
departments which may disapprove it if deemed detrimental to the interests of
the policy owners or if it renders Nationwide's operations hazardous to the
public. If a policy owner objects, the policy may be converted to a
substantially comparable general account life insurance policy offered by
Nationwide. The policy owner has the later of 60 days (6 months in Pennsylvania)
from the date of the investment policy change or 60 days (6 months in
Pennsylvania) from being informed of the change to make the conversion.
Nationwide will not require evidence of insurability for this conversion.
The new policy will not be affected by the investment experience of any separate
account. The new policy will be for an amount of insurance not exceeding the
death benefit of the policy converted on the date of the conversion.
Voting Rights
Policy owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote policy owner shares at
special shareholder meetings based on policy owner instructions. However, if the
law changes allowing Nationwide to vote in its own right, it may elect to do so.
Policy owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholder's vote as soon as possible prior to
the shareholder meeting. Notification will contain proxy materials, and a form
to return to Nationwide with voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a policy owner may vote is determined by dividing the
cash value of the amount they have allocated to an underlying mutual fund by the
net asset value of that underlying mutual fund. Nationwide will designate a date
for this determination not more than 90 days before the shareholder meeting.
Substitution of Securities
Nationwide may substitute, eliminate and/or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occur:
1) shares of a current underlying mutual fund option are no longer available for
investment; or
2) further investment in an underlying mutual fund option is inappropriate.
No substitution, elimination, and/or combination of shares may take place
without the prior approval of the SEC and state insurance departments.
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the
9
<PAGE> 13
underlying mutual fund(s) involved in the conflict.
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks. Premium payments will be allocated
to the fixed account by election of the policy owner.
Under exemptive and exclusionary provisions, Nationwide's general account has
not been registered under the Securities Act of 1933 and has not been registered
as an investment company under the Investment Company Act of 1940. Accordingly,
neither the general account nor any interest therein is subject to the
provisions of these Acts. Nationwide has been advised that the staff of the SEC
has not reviewed the disclosures in this prospectus relating to the fixed
account. Disclosures regarding the general account may, however, be subject to
certain generally applicable provisions of the federal securities laws
concerning the accuracy and completeness of statements made in prospectuses.
The investment income earned by the fixed account will be allocated to the
policies at varying rate(s) set by Nationwide. The guaranteed rate for any
premium payment will be effective for not less than twelve months. Nationwide
guarantees that the rate will not be less than 4.0% per year.
Any interest in excess of 4.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The policy owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of
4.0% for any given year.
New premium payments deposited to the contract which are allocated to the fixed
account may receive a different rate of interest than amounts transferred from
the sub-accounts to the fixed account and amounts maturing in the fixed account.
INFORMATION ABOUT THE POLICIES
MINIMUM REQUIREMENTS FOR POLICY ISSUANCE
The policies are designed to generally permit the payment of the guideline
single premium in five annual installments under death benefit Option 1 and five
annual guideline level premiums under death benefit Option 2. At issue, the
policy owner selects a scheduled premium level. This scheduled premium is used
to determine the initial specified amount. The minimum scheduled premium is
$2,000.
Policies may be issued to insureds with issue ages 75 or younger. Before issuing
any policy, Nationwide requires satisfactory evidence of insurability which may
include a medical examination.
PREMIUM PAYMENTS
Each premium payment must be at least equal to the monthly minimum premium. The
initial premium is payable in full at Nationwide's home office.
Upon payment of the initial premium, temporary insurance may be provided.
Issuance of the continuing insurance coverage is dependent upon completion of
all underwriting requirements, payment of initial premium, and delivery of the
policy while the insured is still living.
Additional premium payments may be made at any time while the policy is in
force, subject to the following conditions:
- Nationwide may require satisfactory evidence of insurability before
accepting any additional premium payment which results in an increase in
the net amount at risk.
- During the first five policy years, the total premium payments less any
policy indebtedness must be greater than or equal to the minimum premium
requirement in order to keep the policy in force. (The monthly minimum
premium is shown in the policy data page.)
- Premium payments in excess of the premium limit established by the IRS to
10
<PAGE> 14
qualify the policy as a contract for life insurance will be refunded.
- Nationwide may require policy indebtedness be repaid prior to accepting
any additional premium payments.
Additional premium payments or other changes to the policy may jeopardize the
policy's non-modified endowment status. Nationwide will monitor premiums paid
and other policy transactions and will notify the policy owner when non-modified
endowment contract status is in jeopardy.
Nationwide will send scheduled premium payment reminder notices to policy owners
according to the premium mode shown on the policy data page.
PRICING
Premiums will not be priced when the New York Stock Exchange is closed or on the
following nationally recognized holidays:
- New Year's Day - Independence Day
- Martin Luther King, Jr. Day - Labor Day
- Presidents' Day - Thanksgiving
- Good Friday - Christmas
- Memorial Day
Nationwide also will not price purchase payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in
the variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, contract value may be affected since the contract owner would
not have access to their account.
POLICY CHARGES
SALES LOAD
Nationwide deducts a sales load from each premium payment received. It is
guaranteed never to exceed 3.5% of each premium payment and may be reduced by
Nationwide at its sole discretion.
The total sales load actually deducted from any policy will be equal to the sum
of this front-end sales load plus any sales surrender charge.
PREMIUM EXPENSE CHARGE
Nationwide deducts a premium expense charge equal to 2.50% from all premium
payments. This charge reimburses Nationwide for administrative expenses on an
aggregate basis including premium taxes imposed by various state and local
jurisdictions.
State tax rates can range from 0% to 4%. This charge may be more or less than
the amount actually assessed by the state in which a particular policy owner
lives.
Nationwide does not expect to make a profit from this charge.
SURRENDER CHARGES
Nationwide deducts a surrender charge from the cash value of any policy
surrendered during the first nine years. The charge is deducted proportionally
from the cash value in each sub-account and the fixed account.
The initial surrender charge varies by issue age, sex, and underwriting
classification. The surrender charge is calculated based on the initial
specified amount. The following table illustrates the initial surrender charge
per $1,000 of initial specified amount for policies which are issued on a
standard basis (see Appendix B for specific examples). Special guaranteed
maximum surrender charges apply in Pennsylvania (see Appendix B).
11
<PAGE> 15
ISSUE MALE FEMALE MALE FEMALE
AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD
25 $ 5.878 $ 5.537 $ 6.680 $ 5.945
35 7.260 6.712 8.559 7.373
45 11.159 10.160 13.244 11.151
55 15.275 13.375 18.373 14.686
65 23.821 20.553 27.943 22.165
The surrender charge is comprised of two components:
- an underwriting component; and
- sales component.
The underwriting component varies by issue age in the following manner:
ISSUE CHARGE PER $1,000 OF
AGE INITIAL SPECIFIED AMOUNT
0-39 $3.50
40-59 $5.00
60-75 $6.50
The underwriting component is designed to cover the administrative expenses
associated with underwriting and issuing policies, including the costs of:
- processing applications;
- conducting medical exams;
- determining insurability and the insured's underwriting class; and
- establishing policy records.
The remainder of the surrender charge that is not attributable to the
underwriting component represents the sales component. The purpose of the sales
component is to reimburse Nationwide for some of the expenses incurred in the
distribution of the policies.
The surrender charge may be insufficient to recover certain expenses related to
the sale of the policies. Unrecovered expenses are borne by Nationwide's general
assets which may include profits, if any, from mortality and expense risk
charges. Additional premiums and/or income earned on assets in the variable
account have no effect on these charges.
Reductions to Surrender Charges
Surrender charges are reduced in subsequent policy years as follows:
COMPLETED SURRENDER CHARGE AS A % OF
POLICY YEARS INITIAL SURRENDER CHARGES
0 100%
1 100%
2 100%
3 95%
4 90%
5 85%
6 80%
7 75%
8 50%
9+ 0%
Special guaranteed maximum surrender charges apply in Pennsylvania
(see Appendix B).
MONTHLY COST OF INSURANCE
The monthly cost of insurance charge for each policy month is determined by
multiplying the monthly cost of insurance rate by the net amount at risk. This
deduction is charged proportionately to the cash value in each sub-account and
the fixed account.
If death benefit Option 1 is in effect and there have been increases in the
specified amount, then the cash value will first be considered a part of the
initial specified amount. If the cash value exceeds the initial specified
amount, it will then be considered a part of the additional increases in
specified amount resulting from the increases in the order of the increases.
Monthly cost of insurance rates will not exceed those guaranteed in the policy.
Guaranteed cost of insurance rates for policies issued on a simplified basis are
based on the 1980 Commissioners Extended Term Mortality Table, Age Last Birthday
(1980 CET). Guaranteed cost of insurance rates for policies issued on a
preferred basis are based on the 1980 Commissioners Standard Ordinary Mortality
Table, Age Last Birthday (1980 CSO). Guaranteed cost of insurance rates for
policies issued on a substandard basis are based on appropriate percentage
multiples of the 1980 CSO. These mortality tables are sex distinct. In addition,
separate mortality tables will be used for standard and non-tobacco.
For policies issued in Texas, guaranteed cost of insurance rates for
standard-simplified issues
12
<PAGE> 16
("special class-simplified" in Texas) are based on 130% of the 1980 CSO.
The rates for policies issued on a simplified or preferred basis will not exceed
the rates in the appropriate table. The cost of insurance rate per $1,000 of net
amount at risk is less for policies issued on a preferred basis as compared to a
simplified basis.
The rate class of an insured may affect the cost of insurance rate. Nationwide
currently places insureds into both standard rate classes and substandard rate
classes that involve a higher mortality risk. In an otherwise identical policy,
an insured in the standard rate class will have a lower cost of insurance than
an insured in a rate class with higher mortality risks. Nationwide may also
issue certain policies on a "simplified issue" basis to certain categories of
individuals. Due to the underwriting criteria established for policies issued on
a simplified issue basis, actual rates for healthy individuals will be higher
than the current cost of insurance rates being charged under otherwise identical
policies that are issued on a preferred basis.
MONTHLY ADMINISTRATIVE CHARGE
Nationwide deducts an administrative expense charge proportionately from the
cash value in each sub-account and the fixed account on a monthly basis. This
charge reimburses Nationwide for certain actual administrative expenses.
Nationwide does not expect to recover any amount in excess of aggregate
maintenance expenses from this charge. Currently, this charge is $5 per month.
Nationwide may, at its sole discretion, increase this charge. However,
Nationwide guarantees that this charge will never exceed $7.50 per month.
MORTALITY AND EXPENSE RISK CHARGE
Nationwide assumes certain risks for guaranteeing the mortality and expense
charges. The mortality risk assumed under the policies is that the insured may
not live as long as expected. The expense risk assumed is that the actual
expenses incurred in issuing and administering the policies may be greater than
expected. In addition, Nationwide assumes risks associated with the non-recovery
of policy issue, underwriting and other administrative expenses due to policies
that lapse or are surrendered in the early policy years.
Nationwide deducts the mortality and expense risk charge from the variable
account on a daily basis. Mortality and expense risk deductions will be charged
proportionally to the cash value in each sub-account. The mortality and expense
risk charge compensates Nationwide for assuming risks associated with mortality
and administrative costs. The charge is equivalent to an annual effective rate
of 0.80% of the daily net assets of the variable account. Policy owners receive
quarterly and annual statements, advising policy owners of the cancellation of
accumulation units for mortality and expense risk charges.
These charges are all guaranteed. Nationwide may realize a profit from these
charges. Unrecovered expenses are borne by Nationwide's general assets, which
may include profits, if any, from mortality and expense risk charges.
INCOME TAX
No charge is assessed to policy owners for income taxes incurred by Nationwide
as a result of the operations of the sub-accounts. However, Nationwide reserves
the right to assess a charge for income taxes against the variable account if
income taxes are incurred.
SURRENDERING THE POLICY FOR CASH
SURRENDER (REDEMPTION)
Policies may be surrendered for the cash surrender value any time while the
insured is living. The cancellation will be effective as of the date Nationwide
receives the policy accompanied by a signed, written request for cancellation.
In some cases, Nationwide may require additional documentation of a customary
nature.
CASH SURRENDER VALUE
The cash surrender value increases or decreases daily to reflect the investment
experience of the variable account and the daily crediting of interest in the
fixed account and the policy loan account.
13
<PAGE> 17
The cash surrender value equals the policy's cash value, next computed after the
date Nationwide receives a proper written request for surrender and the policy,
minus any charges, indebtedness or other deductions due on that date, which may
also include a surrender charge.
PARTIAL SURRENDERS
After the policy has been in force for five years, the policy owner may request
a partial surrender.
Partial surrenders are permitted if they satisfy the following requirements:
(1) the minimum partial surrender is $500;
(2) the maximum partial surrender in any policy year is limited to 10% of
the total premium payments; and
(3) after the partial surrender, the policy continues to qualify as life
insurance.
When a partial surrender is made, the cash value is reduced by the amount of the
partial surrender. Under death benefit Option 1, the specified amount is reduced
by the amount of the partial surrender, unless the death benefit is based on the
applicable percentage of cash value. In such a case, a partial surrender will
decrease the specified amount by the amount by which the partial surrender
exceeds the difference between the death benefit and specified amount.
Partial surrender amounts must be first deducted from the values in the
sub-accounts. Partial surrenders will be deducted from the fixed account only to
the extent that insufficient values are available in the sub-accounts.
Surrender charges will be waived for any partial surrenders which satisfy the
above conditions.
Certain partial surrenders may result in currently taxable income and tax
penalties (see "Tax Matters").
INCOME TAX WITHHOLDING
Federal law requires Nationwide to withhold income tax from any portion of
surrender proceeds subject to tax. Nationwide will withhold income tax unless
the policy owner advises Nationwide, in writing, of his or her request not to
withhold. If a policy owner requests that taxes not be withheld, or if the taxes
withheld are insufficient, the policy owner may be liable for payment of an
estimated tax. Policy owners should consult a tax advisor.
In certain employer-sponsored life insurance arrangements, including equity
split dollar arrangements, participants may be required to report for income tax
purposes, one or more of the following:
(1) the value each year of the life insurance protection provided;
(2) an amount equal to any employer-paid premiums; or
(3) some or all of the amount by which the current value exceeds the
employer's interest in the policy.
Participants should consult with the sponsor or the administrator of the plan,
and/or with their personal tax or legal advisor, to determine the tax
consequences, if any, of their employer-sponsored life insurance arrangements.
VARIATION IN CASH VALUE
On any date during the policy year, the cash value equals the cash value on the
preceding valuation date, plus any net premiums applied since the previous
valuation date, minus any partial surrenders, plus or minus any investment
results, and less any policy charges.
There is no guaranteed cash value. The cash value will vary with the investment
experience of the variable account and/or the daily crediting of interest in the
fixed account and policy loan account depending on the allocation of cash value
by the policy owner.
POLICY PROVISIONS
POLICY OWNER
While the insured is living, all rights in this policy are vested in the policy
owner named in the application or as subsequently changed, subject to
assignment, if any.
The policy owner may name a contingent policy owner or a new policy owner while
the insured is living. Any change must be in a written form satisfactory to
Nationwide and recorded at
14
<PAGE> 18
Nationwide's home office. Once recorded, the change will be effective when
signed. The change will not affect any payment made or action taken by
Nationwide before it was recorded. Nationwide may require that the policy be
submitted for endorsement before making a change.
If the policy owner is other than the insured, names no contingent policy owner,
and dies before the insured, the policy owner's rights in this policy belong to
the policy owner's estate.
BENEFICIARY
The beneficiary(ies) will be as named in the application or as subsequently
changed, subject to assignment, if any.
The policy owner may name a new beneficiary while the insured is living. Any
change must be in a written form satisfactory to Nationwide and recorded at
Nationwide's home office. Once recorded, the change will be effective when
signed. The change will not affect any payment made or action taken by
Nationwide before it was recorded.
If any beneficiary predeceases the insured, that beneficiary's interest passes
to any surviving beneficiary(ies), unless otherwise provided. Multiple
beneficiaries will be paid in equal shares, unless otherwise provided. If no
named beneficiary survives the insured, the death proceeds will be paid to the
policy owner or the policy owner's estate.
CHANGES IN EXISTING INSURANCE COVERAGE
The policy owner may request certain changes in the insurance coverage under the
policy. Requests must be in writing and received by Nationwide. No change will
take effect unless the cash surrender value after the change is sufficient to
keep the policy in force for at least 3 months.
Specified Amount Increases
After the fifth policy year, the policy owner may request an increase to the
specified amount. Any increase will be subject to the following conditions:
1. the request must be applied for in writing;
2. satisfactory evidence of insurability must be provided;
3. the increase must be for a minimum of $10,000;
4. the cash surrender value is sufficient to continue the policy in force
for at least 3 months; and
5. age limits are the same as for a new issue.
Any approved increase will have an effective date of the monthly anniversary day
on or next following the date Nationwide approves the supplemental application.
Nationwide reserves the right to limit the number of specified amount increases
to one each policy year.
Specified Amount Decreases
After the fifth policy year, the policy owner may also request a decrease to the
specified amount. Any approved decrease will be effective on the monthly
anniversary day on or next following the date Nationwide receives the request.
Any such decrease shall reduce insurance in the following order:
1. against insurance provided by the most recent increase;
2. against the next most recent increases successively; and
3. against insurance provided under the original application.
Nationwide reserves the right to limit the number of specified amount decreases
to one each policy year. Nationwide will refuse a request for a decrease which
would:
1. reduce the specified amount to less than $10,000; or
2. disqualify the policy as a contract for life insurance.
OPERATION OF THE POLICY
ALLOCATION OF NET PREMIUM AND CASH VALUE
Nationwide allocates premium payments to sub-accounts or the fixed account, as
instructed by policy owners. All percentage allocations must be in whole
numbers, and must be at least 5%. The sum of allocations must equal 100%. Future
15
<PAGE> 19
premium allocations may be changed by giving written notice to Nationwide.
Premiums allocated to a sub-account on the application are allocated to the NSAT
Money Market Fund during the period a policy owner may cancel the policy, unless
a specific state requires premiums to be allocated to the fixed account. At the
expiration of the cancellation period, these premiums are used to purchase
shares of the underlying mutual funds specified by the policy owner at net asset
value for the respective sub-account(s).
The policy owner may change the allocation of net premiums or may transfer cash
value from one sub-account to another. Changes are subject to the terms and
conditions imposed by each underlying mutual fund and those found in this
prospectus. Net premiums allocated to the fixed account at the time of
application may not be transferred from the fixed account prior to the first
policy anniversary (see "Transfers").
HOW THE INVESTMENT EXPERIENCE IS DETERMINED
The accumulation unit value for a valuation period is determined by multiplying
the accumulation unit value for each sub-account for the immediately preceding
valuation period by the net investment factor for the sub-account for the
subsequent valuation period. Though the number of accumulation units will not
change as a result of investment experience, the value of an accumulation unit
may increase or decrease from valuation period to valuation period.
NET INVESTMENT FACTOR
The net investment factor for any valuation period is determined by dividing (a)
by (b) and subtracting (c) from the result where:
(a) is:
(1) the net asset value per share of the underlying mutual fund held in the
sub-account as of the end of the current valuation period; and
(2) the per share amount of any dividend or income distributions made by
the underlying mutual fund (if the ex-dividend date occurs during the
current valuation period).
(b) is the net asset value per share of the underlying mutual fund determined as
of the end of the immediately preceding valuation period.
(c) is a factor representing the daily mortality and expense risk charge
deducted from the variable account. This factor is equal to an annual rate
of 0.80% of the daily net assets of the variable account.
The net investment factor may be greater or less than one; therefore, the value
of an accumulation unit may increase or decrease. It should be noted that
changes in the net investment factor may not be directly proportional to changes
in the net asset value of underlying mutual fund shares, because of the
deduction for mortality and expense risk charge.
DETERMINING THE CASH VALUE
The cash value is the sum of the value of all variable account accumulation
units attributable to the policy plus amounts credited to the fixed account and
the policy loan account. Nationwide will determine the value of the assets in
the variable account at the end of each valuation period. The cash value will be
determined at least monthly.
The number of accumulation units credited to each sub-account is determined by
dividing the net amount allocated to the sub-account by the accumulation unit
value for the sub-account for the valuation period during which the premium is
received by Nationwide. In the event part or all of the cash value is
surrendered or charges or deductions are made against the cash value, an
appropriate number of accumulation units from the variable account and an
appropriate amount from the fixed account will be deducted in the same
proportion that the policy owner's interest in the variable account and the
fixed account bears to the total cash value.
The cash value in the fixed account and the policy loan account is credited with
interest daily at an effective annual rate which Nationwide periodically
declares. The annual effective rate will never be less than 4%. (For a
16
<PAGE> 20
description of the annual effective credited rates, see "The Fixed Account" and
"Policy Loans.") Upon request, Nationwide will inform the policy owner of the
then applicable rates for each account.
TRANSFERS
Policy owners can transfer allocations without penalty or adjustment subject to
the following conditions:
- Nationwide reserves the right to restrict transfers between the fixed
account and the sub-accounts to one per policy year.
- Transfers made to the fixed account may not be made in the first policy
year.
- Nationwide reserves the right to restrict the amount transferred from the
fixed account each policy year (subject to state restrictions). Policy
owners who have entered into Dollar Cost Averaging agreements with
Nationwide may transfer under the terms of that agreement.
- Nationwide reserves the right to restrict the amount transferred to the
fixed account to 25% of the cash value.
- Transfers from the fixed account must be made within 30 days after the
end of an interest rate guarantee period.
- Transfers among the sub-accounts are limited to once per valuation date.
Transfer Requests
Nationwide will accept transfer requests in writing or in those states that
allow, over the telephone. Nationwide will use reasonable procedures to confirm
that telephone instructions are genuine and will not be liable for following
instructions it reasonably determined to be genuine. Nationwide may withdraw the
telephone exchange privilege upon 30 days written notice to policy owners.
Market-Timing Firms
Some policy owners may use market-timing firms or other third parties to make
transfers on their behalf. Generally, in order to take advantage of perceived
market trends, market- timing firms will submit transfer requests on behalf of
multiple policy owners at the same time. Sometimes this can result in unusually
large transfers of funds. These large transfers might interfere with the ability
of Nationwide or the underlying mutual fund to process transactions. This can
potentially disadvantage policy owners not using market-timing firms. To avoid
this, Nationwide may modify the transfer rights of policy owners who use
market-timing firms (or other third parties) to initiate transfers on their
behalf.
The transfer rights of individual policy owners will not be modified in any way
when instructions are submitted directly by the policy owner, or by the policy
owner's representative (as authorized by the execution of a valid Nationwide
Limited Power of Attorney Form).
To protect policy owners, Nationwide may refuse transfer requests:
- submitted by any agent acting under a power of attorney on behalf of more
than one policy owner; or
- submitted on behalf of individual policy owners who have executed
pre-authorized exchange forms which are submitted by market-timing firms
(or other third parties) on behalf of more than one policy owner at the
same time.
- Nationwide will not restrict transfer rights unless Nationwide believes
it to be necessary for the protection of all policy owners.
RIGHT TO REVOKE
A policy owner may cancel the policy by returning it by the latest of:
- 10 days after receiving the policy;
- 45 days after signing the application; or
- 10 days after Nationwide delivers a Notice of Right of Withdrawal.
The policy can be mailed to the registered representative who sold it, or
directly to Nationwide.
Returned policies are deemed void from the beginning. Nationwide will refund the
amount
17
<PAGE> 21
prescribed by the state in which the policy was issued within seven days
after it receives the policy. The refunded policy value will reflect the
deduction of any policy charges, unless otherwise required by law. This right
varies by state.
POLICY LOANS
TAKING A POLICY LOAN
After the first policy year, the policy owner may take a policy loan using the
policy as security. Maximum policy indebtedness is limited to 90% of the cash
surrender value in the sub-accounts and 100% of the cash surrender value in the
fixed account less interest due on the next policy anniversary. Nationwide will
not grant a loan for an amount less than $1,000 ($200 in Connecticut). Policy
indebtedness will be deducted from the death benefit, cash surrender value upon
surrender, or the maturity proceeds.
Any request for a policy loan must be in written form. The request must be
signed and, where permitted, the signature guaranteed by a member firm of the
New York, American, Boston, Midwest, Philadelphia or Pacific Stock Exchanges, or
by a commercial bank or a savings and loan which is a member of the Federal
Deposit Insurance Corporation. Certain policy loans may result in currently
taxable income and tax penalties.
EFFECT ON INVESTMENT PERFORMANCE
When a loan is made, an amount equal to the amount of the loan is transferred
from the variable account to the policy loan account. If the assets relating to
a policy are held in more than one sub-account, withdrawals from sub-accounts
will be made in proportion to the assets in each sub-account at the time of the
loan. Policy loans will be transferred from the fixed account only when
sufficient amounts are not available in the sub-accounts.
The amount taken out of the variable account will not be affected by the
variable account's investment experience while the loan is outstanding.
INTEREST
The annual effective loan interest rate charged on policy loans is 6.0%.
On a current basis, the cash value in the policy loan account is credited with
an annual effective rate of 5.1%. Nationwide may change the current interest
crediting rate on the policy loans at any time at its sole discretion. However,
the crediting rate is guaranteed never to be lower than 5.1%.
Amounts transferred to the policy loan account will earn interest daily from the
date of transfer. The earned interest is transferred from the policy loan
account to a variable account or the fixed account on each policy anniversary,
or at the time of loan repayment. It will be allocated according to the fund
allocation factors in effect at the time of the transfer.
Interest is charged daily and is payable at the end of each policy year or at
the time of loan repayment. Unpaid interest will be added to the existing policy
indebtedness as of the due date and will be charged interest at the same rate as
the rest of the indebtedness.
Whenever the total policy indebtedness exceeds the cash value less any surrender
charges, Nationwide will send a notice to the policy owner and the assignee, if
any. The policy will terminate without value 61 days after the mailing of the
notice unless a sufficient repayment is made during that period. A repayment is
sufficient if it is large enough to reduce the total policy indebtedness to an
amount equal to the total cash value less any surrender charges plus an amount
sufficient to continue the policy in force for 3 months.
EFFECT ON DEATH BENEFIT AND CASH VALUE
A policy loan, whether or not repaid, will have a permanent effect on the death
benefit and cash value because the investment results of the variable account or
the fixed account will apply only to the non-loaned portion of the cash value.
The longer the loan is outstanding, the greater the effect is likely to be.
Depending on the investment results of the variable account or the fixed account
while the loan is outstanding, the effect could be favorable or unfavorable.
18
<PAGE> 22
REPAYMENT
All or part of the indebtedness may be repaid at any time while the policy is in
force during the insured's lifetime. Any payment intended as a premium payment,
rather than a loan repayment, must be identified as such. Loan repayments will
be credited to the sub-accounts and the fixed account in proportion to the
policy owner's underlying mutual fund allocation factors in effect at the time
of the repayment. Each repayment may not be less than $1,000 ($50 in
Connecticut). Nationwide reserves the right to require that any loan repayments
resulting from policy loans transferred from the fixed account must be first
allocated to the fixed account.
ASSIGNMENT
While the insured is living, the policy owner may assign his or her rights in
the policy. The assignment must be in writing, signed by the policy owner and
recorded at Nationwide's home office. Prior to being recorded, assignments will
not affect any payments made or actions taken by Nationwide. Nationwide is not
responsible for any assignment not submitted for recording, nor is Nationwide
responsible for the sufficiency or validity of any assignment. Assignments are
subject to any indebtedness owed to Nationwide before being recorded.
POLICY OWNER SERVICES
DOLLAR COST AVERAGING
Dollar Cost Averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from the fixed account and/or certain sub-accounts into other
sub-accounts. Policy owners may participate in this program if their policy
value is at least $15,000. Nationwide does not guarantee that this program will
result in profit or protect policy owners from loss.
Policy owners direct Nationwide to automatically transfer specified amounts from
the fixed account and the following underlying mutual fund options: NSAT
Government Bond Fund and the NSAT Money Market Fund.
The minimum monthly transfer is $100. Transfers from the fixed account must be
equal to or less than 1/30th of the fixed account value at the time the program
is requested.
Transfers occur monthly or on another frequency if permitted by Nationwide.
Nationwide will process transfers until either the value in the originating
investment option is exhausted, or the policy owner instructs Nationwide in
writing to stop the transfers.
Nationwide reserves the right to stop establishing new Dollar Cost Averaging
programs. Nationwide reserves the right to assess a processing fee for this
service.
DEATH BENEFIT INFORMATION
CALCULATION OF THE DEATH BENEFIT
At issue, the policy owner selects a desired scheduled premium level. The
scheduled premium is used to determine the initial specified amount.
Under death benefit Option 1, the initial specified amount is determined by
treating the scheduled premium as 20% of the guideline single premium. Under
death benefit Option 2, the initial specified amount is determined by treating
the scheduled premium as the guideline level premium. For either death benefit
option, the initial specified amount will be set at a level such that payment of
the scheduled premiums will not result in the policy being classified as a
modified endowment contract (see "Tax Matters").
The following tables illustrate the initial specified amount that results from a
$2,000 scheduled premium payment.
MALE NON-TOBACCO
ISSUE AGE OPTION 1 OPTION 2
30 $85,779 $75,378
35 $68,165 $61,559
40 $54,111 $50,082
45 $43,165 $40,605
50 $34,675 $32,791
55 $28,136 $26,852
60 $23,176 $22,867
65 $19,474 $19,474
19
<PAGE> 23
FEMALE NON-TOBACCO
ISSUE AGE OPTION 1 OPTION 2
30 $99,541 $93,577
35 $79,212 $76,497
40 $63,070 $62,320
45 $50,599 $50,633
50 $40,824 $40,958
55 $33,171 $32,949
60 $27,141 $26,301
65 $22,369 $22,168
Generally, for a given scheduled premium, the initial specified amount is
greater for non-tobacco than standard and females than males. The specified
amount is shown in the policy.
While the policy is in force, the death benefit will never be less than the
specified amount. The death benefit may vary with the cash value of the policy,
which depends on investment performance.
The policy owner may choose one of two death benefit options.
OPTION 1: the death benefit will be the greater of the specified amount or the
applicable percentage of cash value. Under Option 1, the amount of the death
benefit will ordinarily not change for several years to reflect the investment
performance and may not change at all. If investment performance is favorable
the amount of death benefit may increase. To see how and when investment
performance will begin to affect death benefits, please see the illustrations in
Appendix C.
OPTION 2: the death benefit will be the greater of the specified amount plus the
cash value, or the applicable percentage of cash value and will vary directly
with the investment performance.
The term "applicable percentage" means:
1) when the insured is attained age 40 or less at the beginning of a policy
year, and
2) when the insured is above attained age 40, the percentage shown in the
"Applicable Percentage of Cash Value" table.
20
<PAGE> 24
APPLICABLE PERCENTAGE OF CASH VALUE
<TABLE>
<CAPTION>
Attained Percentage Attained Percentage Attained Percentage
Age of Cash Value Age of Cash Value Age of Cash Value
<S> <C> <C> <C> <C> <C> <C>
0-40 250% 60 130% 80 105%
41 243% 61 128% 81 105%
42 236% 62 126% 82 105%
43 229% 63 124% 83 105%
44 222% 64 122% 84 105%
45 215% 65 120% 85 105%
46 209% 66 119% 86 105%
47 203% 67 118% 87 105%
48 197% 68 117% 88 105%
49 191% 69 116% 89 105%
50 185% 70 115% 90 105%
51 178% 71 113% 91 104%
52 171% 72 111% 92 103%
53 164% 73 109% 93 102%
54 157% 74 107% 94 101%
55 150% 75 105% 95 100%
56 146% 76 105%
57 142% 77 105%
58 138% 78 105%
59 134% 79 105%
</TABLE>
CHANGES IN THE DEATH BENEFIT OPTION
After the fifth policy year, the policy owner may change the death benefit
option under the policy. If the change is from Option 1 to Option 2, the
specified amount will be decreased by the amount of the cash value. If the
change is from Option 2 to Option 1, the specified amount will be increased by
the amount of the cash value. Nationwide reserves the right to require evidence
of insurability for either change.
The effective date of the change will be the monthly anniversary day on or next
following the date Nationwide approves the request for change. Only one change
of option is permitted per policy year. A change in death benefit option will
not be permitted if it results in the total premiums paid exceeding the then
current maximum premium limitations prescribed by the IRS to qualify the policy
as a life insurance contract.
PROCEEDS PAYABLE ON DEATH
The actual death proceeds payable on the insured's death will be the death
benefit as described above, less any policy indebtedness, and less any unpaid
policy charges. Under certain circumstances, the death proceeds may be adjusted
(see "Incontestability," "Error in Age or Sex," and "Suicide").
INCONTESTABILITY
Nationwide will not contest payment of the death proceeds based on the initial
specified amount after the policy has been in force during the insured's
lifetime for 2 years from the policy date. For any increase in specified amount
requiring evidence of insurability, Nationwide will not contest payment of the
death proceeds based on such an increase after it has been in force during the
insured's lifetime for 2 years from its effective date.
21
<PAGE> 25
ERROR IN AGE OR SEX
If the age or sex of the insured has been misstated, the affected benefits will
be adjusted.
The amount of the death benefit will be (1) multiplied by (2) and then the
result added to (3), where:
(1) is the amount of the death benefit at the time of the insured's death
reduced by the amount of the cash value at the time of the insured's
death;
(2) is the ratio of the monthly cost of insurance applied in the policy
month of death and the monthly cost of insurance that should have been
applied at the true age and sex in the policy month of death; and
(3) is the cash value at the time of the insured's death.
SUICIDE
If the insured dies by suicide, while sane or insane, within two years from the
policy date, Nationwide will pay no more than the sum of the premiums paid, less
any indebtedness, and less any partial surrenders. If the insured dies by
suicide, while sane or insane, within two years from the date an application is
accepted for an increase in the specified amount, Nationwide will pay no more
than the amount paid for the additional benefit.
MATURITY PROCEEDS
The maturity date is the policy anniversary on or next following the insured's
95th birthday. If the policy is still in force, maturity proceeds are payable to
the policy owner on the maturity date. Maturity proceeds are equal to the amount
of the policy's cash value, less any indebtedness.
EXCHANGE RIGHTS
The policy owner may exchange the policy for a flexible premium adjustable life
insurance policy offered by Nationwide on the policy date. The benefits for the
new policy will not vary with the investment experience of a separate account.
The exchange must be elected within 24 months from the policy date. No evidence
of insurability will be required.
The policy owner and beneficiary under the new policy will be the same as those
under the exchanged policy on the effective date of the exchange. The new policy
will have a death benefit on the exchange date not more than the death benefit
of the original policy immediately prior to the exchange date. The new policy
will have the same policy date and issue age as the original policy. The initial
specified amount and any increases in specified amount will have the same rate
class as those of the original policy. Any indebtedness may be transferred to
the new policy.
The exchange may be subject to an equitable adjustment in rates and values to
reflect variances, if any, in the rates and values between the two policies.
After adjustment, if any excess is owed the policy owner, Nationwide will pay
the excess to the policy owner in cash. The exchange may be subject to federal
income tax withholding (see "Income Tax Withholding").
GRACE PERIOD
FIRST FIVE POLICY YEARS
This policy will not lapse during the first five policy years provided that on
each monthly anniversary day (1) is greater than or equal to (2) where:
1) is the sum of all premiums paid to date minus any policy indebtedness;
and
2) is the sum of monthly minimum premiums since the policy date including
the monthly minimum premium for the current monthly anniversary day.
If (1) is less than (2), a grace period of 61 days from the monthly anniversary
day will be allowed for the payment of sufficient premium to satisfy the minimum
premium requirement. If sufficient premium is not paid by the end of the grace
period, the policy will lapse. The policy will be terminated with the return of
any available cash surrender value. The cash surrender value will be calculated
as of the beginning of the grace period. The policy owner may also elect in
writing to have the policy placed on Extended Term Insurance.
22
<PAGE> 26
POLICY YEARS SIX AND AFTER
If the cash surrender value on a monthly anniversary day is not sufficient to
cover the current monthly deduction for insurance costs, administrative expenses
and other benefits, a grace period of 61 days from the monthly anniversary day
will be allowed for the payment of sufficient premium to cover the current
monthly deduction plus an amount equal to three times the current monthly
deduction.
ALL POLICY YEARS
Nationwide will send a notice at the start of the grace period to the policy
owner's last known address. If the insured dies during the grace period,
Nationwide will pay the death proceeds.
REINSTATEMENT
If the grace period ends and the policy owner has neither paid the required
premium nor surrendered the policy for its cash surrender value, the policy
owner may reinstate the policy by:
1. submitting a written request at any time within 3 years after the end of
the grace period and prior to the maturity date;
2. providing evidence of insurability satisfactory to Nationwide;
3. paying sufficient premium to cover all policy charges that were due and
unpaid during the grace period;
4. paying sufficient premium to keep the policy in force for 3 months from
the date of reinstatement; and
5. paying or reinstating any indebtedness against the policy which existed
at the end of the grace period.
The effective date of a reinstated policy will be the monthly anniversary day on
or next following the date the application for reinstatement is approved by
Nationwide. If the policy is reinstated, the cash value on the date of
reinstatement, but prior to applying any premiums or loan repayments received,
will be set equal to the lesser of:
1. the cash value at the end of the grace period; or
2. the surrender charge for the policy year in which the policy was
reinstated.
Unless the policy owner has provided otherwise, all amounts will be allocated
based on the underlying mutual fund allocation factors in effect at the start of
the grace period.
TAX MATTERS
POLICY PROCEEDS
Section 7702 of the Internal Revenue Code provides that if certain tests are
met, a policy will be treated as a life insurance policy for federal tax
purposes. Nationwide will monitor compliance with these tests. The policy should
thus receive the same federal income tax treatment as fixed benefit life
insurance. As a result, the death proceeds payable under a policy are excludable
from gross income of the beneficiary under Section 101 of the Internal Revenue
Code.
Section 7702A of the Internal Revenue Code defines modified endowment contracts
as those policies issued or materially changed on or after June 21, 1988 on
which the total premiums paid during the first seven years exceed the amount
that would have been paid if the policy provided for paid up benefits after
seven level annual premiums (see "Information about the Policies"). The Internal
Revenue Code states that taxation of surrenders, partial surrenders, loans,
collateral assignments and other pre-death distributions from modified endowment
contracts (other than certain distributions to terminally ill individuals) are
subject to federal income taxes in a manner similar to the way annuities are
taxed. Modified endowment contract distributions are defined by the Internal
Revenue Code as amounts not received as an annuity and are taxable to the extent
the cash value of the policy exceeds, at the time of distribution, the premiums
paid into the policy. A 10% tax penalty generally applies to the taxable portion
of such distributions unless the policy owner is over age 59 1/2 or disabled or
the distribution is part of an annuity to the policy owner as defined in the
Internal Revenue Code. Under certain circumstances, certain distributions made
under a policy on the life of a "terminally ill individual", as that term is
23
<PAGE> 27
defined in the Internal Revenue Code, are excludable from gross income.
The policies offered by this prospectus may or may not be issued as modified
endowment contracts. Nationwide will monitor premiums paid and will notify the
policy owner when the policy's non-modified endowment status is in jeopardy. If
a policy is not a modified endowment contract, a cash distribution during the
first 15 years after a policy is issued which causes a reduction in death
benefits may still become fully or partially taxable to the policy owner
pursuant to Section 7702(f)(7) of the Internal Revenue Code. The policy owner
should carefully consider this potential effect and seek further information
before initiating any changes in the terms of the policy. Under certain
conditions, a policy may become a modified endowment as a result of a material
change or a reduction in benefits as defined by Section 7702A(c) of the Internal
Revenue Code.
In addition to meeting the tests required under Section 7702, Section 817(h) of
the Internal Revenue Code requires that the investments of separate accounts
such as the variable account be adequately diversified. Regulations under 817(h)
provide that a variable life policy that fails to satisfy the diversification
standards will not be treated as life insurance unless such failure was
inadvertent, is corrected, and the policy owner or Nationwide pays an amount to
the IRS. The amount will be based on the tax that would have been paid by the
policy owner if the income, for the period the policy was not diversified, had
been received by the policy owner.
If the failure to diversify is not corrected in this manner, the policy owner
will be deemed the owner of the underlying securities and taxed on the earnings
of his or her account.
Representatives of the IRS have suggested, from time to time, that the number of
underlying mutual funds available or the number of transfer opportunities
available under a variable product may be relevant in determining whether the
product qualifies for the desired tax treatment. No formal guidance has been
issued in this area. Should the U.S. Secretary of the Treasury issue additional
rules or regulations limiting the number of underlying mutual funds, transfers
between underlying mutual funds, exchanges of underlying mutual funds or changes
in investment objectives of underlying mutual funds such that the policy would
no longer qualify as life insurance under Section 7702 of the Internal Revenue
Code, Nationwide will take whatever steps are available to remain in compliance.
Nationwide will monitor compliance with these regulations and, to the extent
necessary, will change the objectives or assets of the sub-account investments
to remain in compliance.
A total surrender or cancellation of the policy by lapse or the maturity of the
policy on its maturity date may have adverse tax consequences. If the amount
received by the policy owner plus total policy indebtedness exceeds the premiums
paid into the policy, the excess generally will be treated as taxable income,
regardless of whether or not the policy is a modified endowment contract.
WITHHOLDING
Distributions of income from a modified endowment contract are subject to
federal income tax withholding; however, the recipient may elect not to have the
withholding taken from the distribution. A distribution of income from a
modified endowment contract may be subject to mandatory back-up withholding
(which cannot be waived). The mandatory back-up withholding rate is 31% of the
income that is distributed and will arise if no Taxpayer Identification Number
is provided to Nationwide, or if the IRS notifies Nationwide that back-up
withholding is required.
FEDERAL ESTATE AND GENERATION-SKIPPING TRANSFER TAXES
The federal estate tax is integrated with the federal gift tax under a unified
tax rate schedule. In general, in 1999, an estate of less than $625,000
(inclusive of certain pre-death gifts) will not incur a federal estate tax
liability. In addition, an unlimited marital deduction may be available for
federal estate tax purposes, for certain amounts that pass to the surviving
spouse.
24
<PAGE> 28
When the insured dies, the death benefit will generally be included in the
insured's federal gross estate if: (1) the proceeds were payable to or for the
benefit of the insured's estate; or (2) the insured held any "incident of
ownership" in the policy at death or at any time within three years of death. An
incident of ownership is, in general, any right that may be exercised by the
policy owner, such as the right to borrow on the policy, or the right to name a
new Beneficiary.
If the policy owner (whether or not he or she is the insured) transfers
ownership of the policy to another person, such transfer may be subject to a
federal gift tax. In addition, if such policy owner transfers the policy to
someone two or more generations younger than the policy owner, the transfer may
be subject to the federal generation-skipping transfer tax ("GSTT"), the taxable
amount being the value of the policy.
Similarly, if the beneficiary is two or more generations younger than the
insured, the payment of the death proceeds at the death of the insured may be
subject to the GSTT. Pursuant to regulations recently promulgated by the U.S.
Secretary of the Treasury, Nationwide may be required to withhold a portion of
the death proceeds and pay them directly to the IRS as the GSTT liability.
The GSTT provisions generally apply to the same transfers that are subject to
estate or gift taxes.
The tax rate is a flat rate equal to the maximum estate tax rate (currently
55%), and there is a provision for an aggregate $1 million exemption. Due to the
complexity of these rules, the policy owner should consult with counsel and
other competent advisors regarding these taxes.
NON-RESIDENT ALIENS
Pre-death distributions from modified endowment contracts to nonresident aliens
("NRAs") are generally subject to federal income tax and tax withholding, at a
statutory rate of 30% of the amount of income that is distributed. Nationwide is
required to withhold such amount from the distribution and remit it to the IRS.
Distributions to certain NRAs may be subject to lower, or in certain instances
zero, tax and withholding rates, if the United States has entered into an
applicable treaty. However, in order to obtain the benefits of such treaty
provisions, the NRA must give to Nationwide sufficient proof of his or her
residency and citizenship in the form and manner prescribed by the IRS. In
addition, the NRA must obtain an individual Taxpayer Identification Number from
the IRS, and furnish that number to Nationwide prior to the distribution. If
Nationwide does not have the proper proof of citizenship or residency and a
proper individual Taxpayer Identification Number prior to any distribution,
Nationwide will be required to withhold 30% of the income, regardless of any
treaty provision.
A pre-death distribution may not be subject to withholding where the recipient
sufficiently establishes to Nationwide that such payment is effectively
connected to the recipient's conduct of a trade or business in the United States
and that such payment is includible in the recipient's gross income for United
States federal income tax purposes. Any such distributions may be subject to
back-up withholding at the statutory rate (currently 31%) if no Taxpayer
Identification Number, or an incorrect Taxpayer Identification Number, is
provided.
State and local estate, inheritance, income and other tax consequences of
ownership or receipt of policy proceeds depend on the circumstances of each
policy owner or beneficiary.
TAXATION OF NATIONWIDE
Nationwide is taxed as a life insurance company under the Internal Revenue Code.
Since the variable account is not a separate entity from Nationwide and its
operations form a part of Nationwide, it will not be taxed separately as a
"regulated investment company" under Sub-chapter M of the Internal Revenue Code.
Investment income and realized capital gains on the assets of the variable
account are reinvested and taken into account in determining the value of
accumulation units. As a result, such investment income and realized capital
gains are automatically applied to increase reserves under the policies.
Nationwide does not initially expect to incur any federal income tax liability
that would be chargeable to the variable account. Based upon
25
<PAGE> 29
these expectations, no charge is currently being made against the variable
account for federal income taxes. If, however, Nationwide determines that on a
separate company basis such taxes may be incurred, it reserves the right to
assess a charge for such taxes against the variable account.
Nationwide may also incur state and local taxes (in addition to premium taxes)
in several states. At present, these taxes are not significant. If they
increase, however, charges for such taxes may be made.
TAX CHANGES
The foregoing discussion, which is based on Nationwide's understanding of
federal tax laws as they are currently interpreted by the IRS, is general and is
not intended as tax advice.
The Internal Revenue Code has been subjected to numerous amendments and changes,
and it is reasonable to believe that it will continue to be revised. The United
States Congress has, in the past, considered numerous legislative proposals
that, if enacted, could change the tax treatment of the policies. It is
reasonable to believe that such proposals, and future proposals, may be enacted
into law. In addition, the U.S. Treasury Department may amend existing
regulations, issue new regulations, or adopt new interpretations of existing law
that may be at variance with its current positions on these matters. In
addition, current state law (which is not discussed herein), and future
amendments to state law, may affect the tax consequences of the policy.
If the policy owner, insured, or beneficiary or other person receiving any
benefit or interest in or from the policy is not both a resident and citizen of
the United States, there may be a tax imposed by a foreign country, in addition
to any tax imposed by the United States. The foreign law (including regulations,
rulings, and case law) may change and impose additional taxes on the policy, the
death proceeds, or other distributions and/or ownership of the policy, or a
treaty may be amended and all or part of the favorable treatment may be
eliminated.
Any or all of the foregoing may change from time to time without any notice, and
the tax consequences arising out of a policy may be changed retroactively. There
is no way of predicting if, when, or to what extent any such change may take
place. No representation is made as to the likelihood of the continuation of
these current laws, interpretations, and policies.
The foregoing is a general explanation as to certain tax matters pertaining to
insurance policies. It is not intended to be legal or tax advice, and should not
take the place of your independent legal, tax and/or financial advisor.
LEGAL CONSIDERATIONS
On July 6, 1983, the U.S. Supreme Court held in Arizona Governing Committee v.
Norris that certain annuity benefits provided by employers' retirement and
fringe benefit programs may not vary between men and women on the basis of sex.
This decision applies only to benefits derived from premiums made on or after
August 1, 1983. The policies offered by this prospectus are based upon actuarial
tables which distinguish between men and women. Thus the policies provide
different benefits to men and women of the same age. Accordingly, employers and
employee organizations should consider, in consultation with legal counsel, the
impact of Norris on any employment related insurance or benefit program before
purchasing this policy.
YEAR 2000 COMPLIANCE ISSUES
Nationwide has developed and implemented a plan to address issues related to the
Year 2000. The problem relates to many existing computer systems using only two
digits to identify a year in a date field. These systems were designed and
developed without considering the impact of the upcoming change in the century.
If not corrected, many computer systems could fail or create erroneous results
when processing information dated after December 31, 1999. Like many
organizations, Nationwide is required to renovate or replace many computer
systems so that the systems will function properly after December 31, 1999.
Nationwide has completed an inventory and assessment of all computer systems and
has implemented a plan to renovate or replace all
26
<PAGE> 30
applications that were identified as not Year 2000 compliant. Nationwide has
renovated all applications that required renovation. Testing of the renovated
programs included running each application in a Year 2000 environment and was
completed as planned during 1998. For applications being replaced, Nationwide
had all replacement systems in place and functioning as planned by year-end
1998. Conversions of existing traditional life policies will continue through
second quarter, 1999. In addition, the shareholder services system that support
our mutual fund products will be fully deployed in the first quarter of 1999.
Nationwide has completed an inventory and assessment of all vendor products and
has tested and certified that each vendor product is Year 2000 compliant. Any
vendor products that could not be certified as Year 2000 compliant were replaced
or eliminated in 1998.
Nationwide has also addressed issues associated with the exchange of electronic
data with external organizations. Nationwide has completed an inventory and
assessment of all business partners including electronic interfaces. Processes
have been put in place and programs initiated to process data irrespective of
the format by converting non-compliant data into a Year 2000 compliant format.
Systems supporting Nationwide's infrastructure such as telecommunications, voice
and networks will be compliant by March 1999. Nationwide's assessment of Year
2000 issues has also included non-information technology systems with embedded
computer chips. Nationwide's building systems such as fire, security, elevators
and escalators supporting facilities in Columbus, Ohio have been tested and are
Year 2000 compliant.
In addition to resolving internal Year 2000 readiness issues, Nationwide is
surveying significant external organizations (business partners) to assess if
they will be Year 2000 compliant and be in a position to do business in the Year
2000 and beyond. Specifically, Nationwide has contacted mutual fund
organizations that provide funds for our variable annuity and life products. The
same action will continue during the first quarter of 1999 with wholesale
producers. Nationwide continues its efforts to identify external risk factors
and is planning to develop contingency plans as part of its ongoing risk
management strategy.
Operating expenses in 1998 and 1997 for Nationwide Life Insurance Company
("NLIC"), parent company to Nationwide, included approximately $44.7 million and
$45.4 million, respectively, for technology projects, including costs related to
Year 2000. NLIC anticipates spending approximately $5 million on Year 2000
activities in 1999. These expenses do not have an effect on the assets of the
variable account and are not charged through to the contract owner.
Management does not anticipate that the completion of Year 2000 renovation and
replacement activities will result in a reduction in operating expenses. Rather,
personnel and resources currently allocated to Year 2000 issues will be assigned
to other technology-related projects.
STATE REGULATION
Nationwide is subject to the laws of Ohio governing insurance companies and to
regulation by the Ohio Insurance Department. An annual statement in a prescribed
form is filed with the Insurance Department each year covering the operation of
Nationwide for the preceding year and its financial condition as of the end of
such year. Regulation by the Insurance Department includes periodic examination
to determine Nationwide's contract liabilities and reserves so that the
Insurance Department may certify the items are correct. Nationwide's books and
accounts are subject to review by the Insurance Department at all times and a
full examination of its operations is conducted periodically by the National
Association of Insurance Commissioners. Such regulation does not, however,
involve any supervision of management or investment practices or policies. In
addition, Nationwide is subject to regulation under the insurance laws of other
jurisdictions in which it may operate.
27
<PAGE> 31
REPORTS TO POLICY OWNERS
Nationwide will mail to the policy owner at the last known address of record:
- an annual statement containing: the amount of the current death benefit,
cash value, cash surrender value, premiums paid, monthly charges
deducted, amounts invested in the fixed account and the sub-accounts, and
policy indebtedness;
- annual and semi-annual reports containing all applicable information and
financial statements or their equivalent, which must be sent to the
underlying mutual fund beneficial shareholders as required by the rules
under the Investment Company Act of 1940 for the variable account; and
- statements of significant transactions, such as changes in specified
amount, changes in death benefit options, changes in future premium
allocations, transfers among sub-accounts, premium payments, loans, loan
repayments, reinstatement and termination.
ADVERTISING
Nationwide is ranked and rated by independent financial rating services,
including Moody's, Standard & Poor's and A.M. Best Company. The purpose of these
ratings is to reflect the financial strength or claims-paying ability of
Nationwide. The ratings are not intended to reflect the investment experience or
financial strength of the variable account. Nationwide may advertise these
ratings from time to time. In addition, Nationwide may include in certain
advertisements, endorsements in the form of a list of organizations, individuals
or other parties which recommend Nationwide or the policies. Furthermore,
Nationwide may occasionally include in advertisements comparisons of currently
taxable and tax deferred investment programs, based on selected tax brackets, or
discussions of alternative investment vehicles and general economic conditions.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance and
annuity pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
On October 29, 1998, Nationwide and certain of its subsidiaries were named in a
lawsuit filed in Ohio state court related to the sale of deferred annuity
products for use as investments in tax-deferred contributory retirement plans
(Mercedes Castillo v. Nationwide Financial Services, Inc., Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company). The
plaintiff in such lawsuit seeks to represent a national class of Nationwide's
customers and seeks unspecified compensatory and punitive damages. Nationwide
currently is evaluating this lawsuit, which has not been certified as a class.
Nationwide intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, Nationwide Advisory Services, Inc., is not engaged in
any litigation of any material nature.
EXPERTS
The audited financial statements have been included herein in reliance upon the
reports of KPMG LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
policies offered hereby. This prospectus
28
<PAGE> 32
does not contain all the information set forth in the Registration Statement and
amendments thereto and exhibits filed as a part thereof, to all of which
reference is hereby made for further information concerning the variable
account, Nationwide, and the policies offered hereby. Statements contained in
this prospectus as to the content of policies and other legal instruments are
summaries. For a complete statement of the terms thereof, reference is made to
such instruments as filed.
LEGAL OPINIONS
Legal matters in connection with the policies described herein are being passed
upon by Dietrich, Reynolds & Koogler, One Nationwide Plaza, Columbus, Ohio
43215. All the members of such firm are employed by the Nationwide Mutual
Insurance Company.
DISTRIBUTION OF THE POLICIES
The policies will be sold by licensed insurance agents in those states where the
policies may lawfully be sold. Agents are registered representatives of broker
dealers registered under the Securities Exchange Act of 1934 who are member
firms of the National Association of Securities Dealers, Inc. ("NASD"). The
policies will be distributed by the general distributor, NAS. NAS was organized
as an Ohio corporation on April 8, 1965. NAS is a wholly owned subsidiary of
Nationwide Life Insurance Company and a member of the NASD.
NAS acts as general distributor for the following separate accounts, all of
which are separate investment accounts of Nationwide or its affiliates:
- Nationwide Multi-Flex Variable Account
- MFS Variable Account
- Nationwide VLI Separate Account-2
- Nationwide VLI Separate Account-3
- Nationwide VLI Separate Account-4
- Nationwide VLI Separate Account-5
- Nationwide Variable Account
- Nationwide Variable Account-II
- Nationwide Variable Account-5
- Nationwide Variable Account-6
- Nationwide Variable Account-9
- Nationwide Variable Account-10
- Nationwide VA Separate Account-A
- Nationwide VA Separate Account-B
- Nationwide VA Separate Account-C
- Nationwide VL Separate Account-A
- Nationwide VL Separate Account-B
- Nationwide VL Separate Account-C
- Nationwide VL Separate Account-D.
NAS also acts as principal underwriter for the following open-end management
investment companies:
- Nationwide Mutual Funds;
- Nationwide Separate Account Trust;
- Financial Horizons Investment Trust; and
- Nationwide Asset Allocation Trust.
Gross first year commissions plus any expense allowance payments paid by
Nationwide on the sale of these policies provided by the general distributor
will not exceed 26% of the scheduled premium plus 5% of any excess premium
payments. Gross renewal commissions paid by Nationwide will not exceed 5% of
actual premium payments.
No underwriting commissions have been paid by Nationwide to NAS.
29
<PAGE> 33
NATIONWIDE ADVISORY SERVICES, INC. DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
- --------------------------------------------------------------------------------
Joseph J. Gasper President and Director
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Dimon R. McFerson Chairman of the Board of Directors and
One Nationwide Plaza Chairman and Chief Executive Officer and
Columbus, OH 43215 Director
- --------------------------------------------------------------------------------
Robert A. Oakley Executive Vice President -
One Nationwide Plaza Chief Financial Officer and Director
Columbus, OH 43215
- --------------------------------------------------------------------------------
Susan A. Wolken Director
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Paul J. Hondros Director
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Robert J. Woodward, Jr. Executive Vice President -
One Nationwide Plaza Chief Investment Officer and Director
Columbus, OH 43215
- --------------------------------------------------------------------------------
Edwin P. McCausland, Jr. Senior Vice President-Fixed Income Securities
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Charles S. Bath Vice President - Investments
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Alan A. Todryk Vice President - Taxation
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Dennis W. Click Vice President and Secretary
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
William G. Goslee Vice President
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
James F. Laird, Jr. Vice President and General Manager
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Joseph P. Rath Vice President - Compliance
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Christopher A. Cray Treasurer
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Elizabeth A. Davin Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
David E. Simaitis Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Patricia J. Smith Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
30
<PAGE> 34
ADDITIONAL INFORMATION ABOUT NATIONWIDE
The life insurance business, including annuities, is the only business in which
Nationwide is engaged.
Nationwide markets its policies through independent insurance brokers, general
agents, and registered representatives of registered NASD broker/dealer firms.
Nationwide serves as depositor for the following investment accounts, each of
which is a registered investment company:
- Nationwide VL Separate Account-A;
- Nationwide VL Separate Account-B;
- Nationwide VL Separate Account-C;
- Nationwide VL Separate Account-D;
- Nationwide VA Separate Account-A;
- Nationwide VA Separate Account-B; and
- Nationwide VA Separate Account-C.
Nationwide, in common with other insurance companies, is subject to regulation
and supervision by the regulatory authorities of the states in which it is
licensed to do business. A license from the state insurance department is a
prerequisite to the transaction of insurance business in that state. In general,
all states have statutory administrative powers. Such regulation relates, among
other things, to licensing of insurers and their agents, the approval of policy
forms, the methods of computing reserves, the form and content of statutory
financial statements, the amount of policyholders' and stockholders' dividends,
and the type of distribution of investments permitted.
Nationwide operates in the highly competitive field of life insurance. There are
approximately 2,300 stock, mutual and other types of insurers in the life
insurance business in the United States, and a large number of them compete with
the registrant in the sale of insurance policies.
As is customary in insurance company groups, employees are shared with the other
insurance companies in the group. In addition to its direct salaried employees,
Nationwide shares employees with Nationwide Mutual Insurance Company and
Nationwide Mutual Fire Insurance Company.
Nationwide does not presently own or lease any materially important physical
properties when its property holdings are viewed in relation to its total
assets. Nationwide shares home office, other facilities and equipment with
Nationwide Mutual Insurance Company.
Company Management
Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance
Company, together with Nationwide Mutual Insurance Company, Nationwide Mutual
Fire Insurance Company, Nationwide Property and Casualty Insurance Company and
Nationwide General Insurance Company and their affiliated companies comprise the
Nationwide Insurance Enterprise. The companies listed above have substantially
common boards of directors and officers.
Nationwide Financial Services, Inc. ("NFS") is the sole shareholder of
Nationwide Life Insurance Company. NFS serves as a holding company for other
financial institutions. Nationwide Life Insurance Company is the sole owner of
Nationwide.
Each of the directors and officers listed below is a director or officer
respectively of at least one or more of the other major insurance affiliates of
the Nationwide Insurance Enterprise. Messrs. McFerson, Gasper, Woodward and Ms.
Thomas are also trustees of one or more of the registered investment companies
distributed by NAS, a registered broker-dealer affiliated with the Nationwide
Insurance Enterprise.
31
<PAGE> 35
<TABLE>
<CAPTION>
DIRECTORS OF NATIONWIDE
- ----------------------------------------------------------------------------------------------------------
DIRECTORS OF THE DEPOSITOR
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR PRINCIPAL OCCUPATION
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lewis J. Alphin Director Farm Owner and Operator (1)
519 Bethel Church Road
Mount Olive, NC 28365
- ----------------------------------------------------------------------------------------------------------
A. I. Bell Director Farm Owner and Operator (1)
4121 North River Road West
Zanesville, OH 43701
- ----------------------------------------------------------------------------------------------------------
Kenneth D. Davis Director Farm Owner and Operator (1)
7229 Woodmansee Road
Leesburg, Ohio 45135
- ----------------------------------------------------------------------------------------------------------
Keith W. Eckel Director Partner, Fred W. Eckel Sons;
1647 Falls Road President, Eckel Farms, Inc. (1)
Clarks Summit, PA 18411
- ----------------------------------------------------------------------------------------------------------
Willard J. Engel Director Retired General Manager,
301 East Marshall Street Lyon County Co-operative Oil Company (1)
Marshall, MN 44691
- ----------------------------------------------------------------------------------------------------------
Fred C. Finney Director Owner and Operator, Moreland Fruit Farm;
1558 West Moreland Road Operator, Melrose Orchard (1)
Wooster, OH 44691
- ----------------------------------------------------------------------------------------------------------
Joseph J. Gasper President and Chief President and Chief Operating Officer,
One Nationwide Plaza Operating Officer Nationwide Life Insurance Company and
Columbus, OH 43215 and Director Nationwide Life and Annuity Insurance Company (2)
- ----------------------------------------------------------------------------------------------------------
Dimon R. McFerson Chairman and Chief Chairman and Chief Executive Officer (2)
One Nationwide Plaza Executive Officer
Columbus, OH 43215 and Director
- ----------------------------------------------------------------------------------------------------------
David O. Miller Chairman of the Board President, Owen Potato Farm, Inc.;
115 Sprague Drive and Director Partner, M&M Enterprises (1)
Hebron, OH 43025
- ----------------------------------------------------------------------------------------------------------
Yvonne L. Montgomery Director Senior Vice President-General Manager Southern
Suite 1600 Customer Operations for U.S. Customer Operations,
2859 Paces Ferry Road Xerox Corporation (2)
Atlanta, GA 30339
- ----------------------------------------------------------------------------------------------------------
Ralph M. Paige Director Executive Director Federation of Southern
2769 Church Street Cooperatives/Land Assistance Fund
East Point, Ga 30344
- ----------------------------------------------------------------------------------------------------------
James F. Patterson Director Vice President, Pattersons, Inc.;
8765 Mulberry Road President, Patterson Farms, Inc. (1)
Chesterland, OH 44026
- ----------------------------------------------------------------------------------------------------------
Arden L. Shisler Director President and Chief Executive Officer,
1356 North Wenger Road K&B Transport, Inc. (1)
Dalton, OH 44618
- ----------------------------------------------------------------------------------------------------------
Robert L. Stewart Director Owner and Operator Sunnydale Farms and Mining (1)
88740 Fairview Road
Jewett, OH 43986
- ----------------------------------------------------------------------------------------------------------
Nancy C. Thomas Director Farm Owner and Operator, Da-Ma-Lor Farms (1)
1733A Westwood Avenue
Alliance, OH 44601
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Principal occupation for last 5 years.
(2) Prior to assuming this current position, held other executive management
positions with the same or affiliated companies.
32
<PAGE> 36
Each of the directors is a director of the other major insurance affiliates of
the Nationwide Insurance Enterprise, except Mr. Gasper who is a director only of
Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance
Company. Messrs. McFerson and Gasper are directors of Nationwide Advisory
Services, Inc., a registered broker-dealer.
Messrs. McFerson, Miller, Patterson, and Shisler are directors of Nationwide
Financial Services, Inc. Mr. McFerson and Ms. Thomas are trustees of Nationwide
Mutual Funds, a registered investment company. Messrs. McFerson, Gasper and
Woodward are trustees of Nationwide Separate Account Trust and Nationwide Asset
Allocation Trust, registered investment companies. Mr. McFerson is trustee of
Financial Horizons Investment Trust and Nationwide Mutual Funds, registered
investment companies. Mr. Engel is a director of Western Cooperative Transport.
EXECUTIVE OFFICERS OF NATIONWIDE
- --------------------------------------------------------------------------------
OFFICERS OF THE DEPOSITOR OFFICES OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS
- --------------------------------------------------------------------------------
Dennis W. Click Vice President - Secretary
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Robert A. Oakley Executive Vice President -
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
- --------------------------------------------------------------------------------
Robert J. Woodward, Jr. Executive Vice President -
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
- --------------------------------------------------------------------------------
James E. Brock Senior Vice President -
One Nationwide Plaza Corporate Development
Columbus, OH 43215
- --------------------------------------------------------------------------------
John R. Cook, Jr. Senior Vice President -
One Nationwide Plaza Chief Communications Officer
Columbus, OH 43215
- --------------------------------------------------------------------------------
Phillip C. Gath Senior Vice President and Chief Actuary
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Richard D. Headley Senior Vice President -
One Nationwide Plaza Chief Information Technology Officer
Columbus, OH 43215
- --------------------------------------------------------------------------------
Donna A. James Senior Vice President - Human Resources
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Richard A. Karas Senior Vice President -
One Nationwide Plaza Sales and Financial Services
Columbus, OH 43215
- --------------------------------------------------------------------------------
Douglas C. Robinette Senior Vice President -
One Nationwide Plaza Marketing and Product Management
Columbus, OH 43215
- --------------------------------------------------------------------------------
Susan A. Wolken Senior Vice President -
One Nationwide Plaza Life Company Operations
Columbus, OH 43215
- --------------------------------------------------------------------------------
33
<PAGE> 37
EXECUTIVE OFFICERS OF NATIONWIDE
- --------------------------------------------------------------------------------
OFFICERS OF THE DEPOSITOR OFFICES OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS
- --------------------------------------------------------------------------------
Bruce C. Barnes Vice President -
One Nationwide Plaza Technology Strategy and Planning
Columbus, OH 43215
- --------------------------------------------------------------------------------
David A. Diamond Vice President - Enterprise Controller
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Matthew S. Easley Vice President -
One Nationwide Plaza Investment Life Actuarial
Columbus, OH 43215
- --------------------------------------------------------------------------------
R. Dennis Noice Vice President - Systems
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
Joseph P. Rath Vice President -
One Nationwide Plaza Office of Product and Market Compliance
Columbus, OH 43215
- --------------------------------------------------------------------------------
Mark R. Thresher Vice President - Finance and Treasurer
One Nationwide Plaza
Columbus, OH 43215
- --------------------------------------------------------------------------------
JOSEPH J. GASPER has been President and Chief Operating Officer of Nationwide
and Director since April 1996. Previously, he was Executive Vice President -
Property/Casualty Operations of Nationwide Mutual Insurance Company from April
1995 to April 1996. He was Senior Vice President - Property/Casualty Operations
of Nationwide Mutual Insurance Company from September 1993 to April 1995. Prior
to that time, Mr. Gasper held numerous positions within Nationwide. Mr. Gasper
has been with Nationwide for 32 years.
BRUCE C. BARNES has been Vice President - Technology Strategy and Planning since
May 1998. Previously, Mr. Barnes was Vice President - Information Systems from
February 1997 to May 1998. Mr. Barnes was Vice President - Life Systems from May
1996 to May 1998. Previously, he was Vice President - Investment Product Systems
from April 1995 to May 1996. Prior to that time, Mr. Barnes was Vice President -
Individual Investment Products/Common Systems from May 1994 to April 1995 and
Associate Vice President - Individual Investment Products/Common Systems from
May 1992 to May 1994. Mr. Barnes was Vice President - Information Services of
PHP Benefits Systems, Inc. from January 1987 to January 1992. Mr. Barnes has
been with Nationwide for 7 years.
A. I. BELL has been a Director of Nationwide since April, 1998. Mr. Bell has
served as a state trustee of the Ohio Farm Bureau Federation from 1991 to 1998
and as president that last four years. He oversees the Bell family farm in
Zanesville, Ohio. The farm is the hub of a multi-family swine network, in
addition to grain and beef operations. Mr. Bell has represented the Ohio Farm
Bureau at state and national level activities, and has traveled internationally
representing Ohio agriculture. In 1995, he was introduced into The Ohio State
University Department of Animal Sciences Hall of Fame.
JAMES E. BROCK has been Senior Vice President - Corporate Development since July
1997. Previously, he was Senior Vice President -
34
<PAGE> 38
Company Operations from December 1996 to July 1997 and was also Senior Vice
President - Life Company Operations from April 1996 to July 1997. Mr. Brock was
Senior Vice President - Investment Products Operations from November 1990 to
April 1996. Prior to that time, Mr. Brock held several positions within
Nationwide. Mr. Brock has been with Nationwide for 29 years.
DENNIS W. CLICK has been Vice President - Secretary since December 1997.
Previously, he was Vice President - Assistant Secretary from December 1996 to
December 1997. Mr. Click was Vice President - Assistant Secretary from August
1994 to December 1997. Mr. Click was Associate Vice President and Assistant
Secretary from August 1989 to August 1994. Prior to that time, he held several
positions within Nationwide. Mr. Click has been with Nationwide for 38 years.
JOHN R. COOK, JR. has been Senior Vice President - Chief Communications Officer
since May 1997. Previously, Mr. Cook was Senior Vice President - Chief
Communications Officer of USAA from July 1989 to May 1997.
KENNETH D. DAVIS has been a Director of Nationwide since April 1999. Mr. Davis
has been Chairman of the Board of South Central Power Company since August 1979,
and currently oversees the Davis family farm located in Leesburg, Ohio. Mr.
Davis served as Director of the Farm Bureau Bancorp from October 1998 to March
1998. In addition, Mr. Davis has served in various officer positions with the
Ohio Farm Bureau Federation since December 1989, with his most recent position
as Trustee and President, a position he held from March 1998 to March 1999. Mr.
Davis also held officer positions with the Highland County Farm Bureau from June
1997 to September 1997, including Trustee and President from September 1984 to
September 1997.
DAVID A. DIAMOND has been Vice President Enterprise Controller since August
1996. Previously, he was Vice President Controller from October 1993 to August
1996. Prior to that time, Mr. Diamond held several positions within Nationwide.
Mr. Diamond has been with Nationwide for 10 years.
MATTHEW S. EASLEY has been Vice President - Investment Life Actuarial since June
1998. Mr. Easley was Vice President - Marketing and Administrative Services from
December 1996 to June 1998. Mr. Easley was Vice President - Life Marketing and
Administrative Services from May 1996 to June 1998. Mr. Easley was Vice
President - Annuity and Pension Actuarial from August 1989 to May 1996. Prior to
that time, Mr. Easley held several positions within Nationwide. Mr. Easley has
been with Nationwide for 16 years.
KEITH W. ECKEL has been a Director of Nationwide since April 1996. Mr. Eckel is
a partner of Fred W. Eckel Sons and president of Eckel Farms, Inc., in northeast
Pennsylvania. He received the Master Farmer award from Penn State University in
1982. He is a former president of the Pennsylvania Farm Bureau, a position he
held for 15 years, and the Lackawanna County Cooperative Extension Association.
Mr. Eckel has served as a board member and executive committee member of the
American Farm Bureau. He is a former vice president of the Pennsylvania Council
of Cooperative Extension Associations, and former board member of the
Pennsylvania Vegetable Grower's Association.
PHILIP C. GATH has been
35
<PAGE> 39
Senior Vice President - Chief Actuary since May 1998. Previously, Mr. Gath was
Vice President - Product Manager - Individual Variable Annuity from July 1997 to
May 1998. Mr. Gath was Vice President - Individual Life Actuary from August 1989
to July 1997. Prior to that time, Mr. Gath held several positions within
Nationwide. Mr. Gath has been with Nationwide for 30 years.
RICHARD D. HEADLEY has been Senior Vice President - Chief Information Technology
Officer since October 1997. Previously, Mr. Headley was Chairman and Chief
Executive Officer of Banc One Services Corporation from 1992 to October 1997.
From January 1975 until 1992 Mr. Headley held several positions with Banc One
Corporation.
DONNA A. JAMES has been Senior Vice President - Human Resources since December
1997. Previously, she was Vice President - Human Resources from July 1996 to
December 1997. Prior to that time Ms. James was Vice President - Assistant to
the CEO from March 1996 to July 1996. From May 1994 to March 1996 she was
Associate Vice President - Assistant to the CEO. Prior to that time Ms. James
held several positions within Nationwide. Ms. James has been with Nationwide for
17 years.
RICHARD A. KARAS has been Senior Vice President - Sales - Financial Services
since March 1993. Previously, he was Vice President - Sales - Financial Services
from February 1989 to March 1993. Prior to that time, Mr. Karas held several
positions within Nationwide. Mr. Karas has been with Nationwide for 34 years.
DAVID O. MILLER has been a Director of Nationwide since November 1996. Mr.
Miller has been a farm owner and land developer since 1962. He is the President
of the Owen Potato Farm Inc. and is a partner of M&M Enterprises in Licking
County, Ohio. He is Chairman of the Board of the Wausau Insurance Companies and
serves on the board of directors of several companies of the Nationwide group.
He is also a director of the National Cooperative Business Association.
YVONNE L. MONTGOMERY has been a Director since April, 1998. Ms. Montgomery is
senior vice president/general manager of southern customer operations for United
States Customer Operations for Xerox Corporation. A resident of Atlanta,
Georgia, Ms. Montgomery oversees eight customer business units across the
southern United States as well as all business and marketing functions in the
regions. Ms. Montgomery joined Xerox in 1976 as a sales representative and
progressed through management positions, including Vice President - Field
Operations, and Executive Assistant to the Chairman and CEO.
R. DENNIS NOICE has been Vice President - Systems since April 1998. Previously,
he was Vice President - Retail Operations from March 1997 to April 1998. Prior
to that time, Mr. Noice was Vice President - Individual Investment Products from
October 1989 to March 1997. Prior to that time, Mr. Noice held several positions
within Nationwide. Mr. Noice has been with Nationwide for 27 years.
ROBERT A. OAKLEY has been Executive Vice President - Chief Financial Officer
since April 1995. Previously, he was Senior
36
<PAGE> 40
Vice President - Chief Financial Officer from October 1993 to April 1995. Prior
to that time, Mr. Oakley held several positions within Nationwide. Mr. Oakley
has been with Nationwide for 23 years.
RALPH M. PAIGE has been a Director of Nationwide since April 1999. Mr. Paige has
been the Executive Director of the Federation of Southern Cooperatives/Land
Assistance Fund since 1969. Mr. Paige also served as the National Field
Director/Georgia State Director from 1981 to 1984.
JOSEPH P. RATH has been Vice President - Product and Market Compliance since
April 1997. Previously, he was Vice President - Associate General Counsel from
October 1988 to April 1997. Prior to that time, Mr. Rath held several positions
within Nationwide. Mr. Rath has been with Nationwide for 22 years.
DOUGLAS C. ROBINETTE has been Senior Vice President - Marketing and Product
Management since May 1998. Previously, Mr. Robinette was Executive Vice
President, Customer Services of Employers Insurance of Wausau (Wausau), a member
of the Nationwide group until December 1998, from September 1996 to May 1998.
Prior to that time he was Executive Vice President, Finance and Insurance
Services of Wausau from May 1995 to September 1996. From November 1994 to May
1995 Mr. Robinette was Senior Vice President, Finance and Insurance Services of
Wausau. From May 1993 to November 1994 he was Senior Vice President, Finance of
Wausau. Prior to that time, Mr. Robinette held several positions within the
Nationwide group. Mr. Robinette has been with the Nationwide group for 12 years.
MARK R. THRESHER has been Vice President - Controller since August 1996. He was
Vice President and Treasurer from November 1996 to February 1997. Previously, he
was Vice President and Treasurer from June 1996 to August 1996. Prior to joining
the Nationwide Insurance Enterprise, Mr. Thresher served as a partner with KPMG
LLP.
SUSAN A. WOLKEN has been Senior Vice President - Life Company Operations since
June 1997. Previously, she was Senior Vice President - Enterprise Administration
from July 1996 to June 1997. Prior to that time, she was Senior Vice President -
Human Resources from April 1995 to July 1996. From September 1993 to April 1995
Ms. Wolken was Vice President - Human Resources. From October 1989 to September
1993 she was Vice President - Individual Life and Health Operations. Ms. Wolken
has been with Nationwide for 24 years.
ROBERT J. WOODWARD, JR. has been Executive Vice President - Chief Investment
Officer since August 1995. Previously, he was Senior Vice President - Fixed
Income Investments from March 1991 to August 1995. Prior to that time, Mr.
Woodward held several positions within Nationwide. Mr. Woodward has been with
Nationwide for 34 years.
37
<PAGE> 41
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investment
vehicles for variable annuity contracts and variable life insurance policies
issued by insurance companies.
There is no guarantee that the investment objectives will be met.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
American Century Variable Portfolios, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end investment management company
which offers its shares only as investment vehicles for variable annuity
contracts and variable life insurance products of insurance companies. American
Century Variable Portfolios, Inc. is managed by American Century Investment
Management, Inc.
AMERICAN CENTURY VP ADVANTAGE
Investment Objective: Current income and capital growth. The fund will seek
to achieve its objective by investing in three types of securities. The
fund's investment manager intends to invest approximately (i) 20% of the
fund's assets in securities of the United States government and its agencies
and instrumentalities and repurchase agreements collateralized by such
securities with a weighted average maturity of six months or less, i.e.,
cash or cash equivalents; (ii) 40% of the fund's assets in fixed income
securities of the United States government and its agencies and
instrumentalities with a weighted average maturity of three to ten years;
and (iii) 40% of the fund's assets in equity securities that are considered
by management to have better-than-average prospects for appreciation. Assets
will be purchased or sold, as the case may be, as is necessary in response
to changes in market value to maintain the asset mix of the Fund's portfolio
at approximately 60% cash, cash equivalents and fixed income securities and
40% equity securities. There can be no assurance that the Fund will achieve
its investment objective.
AMERICAN CENTURY VP BALANCED
Investment Objective: Capital growth and current income. The Fund will seek
to achieve its objective by maintaining approximately 60% of the assets of
the Fund in common stocks (including securities convertible into common
stocks and other equity equivalents) that are considered by management to
have better-than-average prospects for appreciation and approximately 40% in
fixed income securities. A minimum of 25% of the fixed income portion of the
Fund will be invested in fixed income senior securities. There can be no
assurance that the Fund will achieve its investment objective.
(Although the Statement of Additional Information concerning American Century
Variable Portfolios, Inc. refers to redemptions of securities in kind under
certain conditions, all surrendering or redeeming policy owners will receive
cash from Nationwide.)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
The Fidelity Variable Insurance Products Fund (VIP) is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
November 13, 1981. Shares of VIP are purchased by insurance companies to fund
benefits under variable life insurance policies and variable annuity contracts.
Fidelity Management & Research Company ("FMR") is the manager for VIP and it's
portfolios..
VIP GROWTH PORTFOLIO
Investment Objective: Seeks to achieve capital appreciation. This Portfolio
will invest in the securities of both well-known and established companies,
and smaller, less well-known companies which may have a narrow product line
or whose securities are thinly traded. These latter securities will often
involve greater risk than may be found in the ordinary investment security.
FMR's analysis and expertise plays an integral role in the selection of
securities and, therefore, the performance of the Portfolio. Many securities
which FMR believes would have
38
<PAGE> 42
the greatest potential may be regarded as speculative, and investment in the
Portfolio may involve greater risk than is inherent in other mutual funds.
It is also important to point out that the Portfolio makes most sense for
you if you can afford to ride out changes in the stock market, because it
invests primarily in common stocks. FMR also can make temporary investments
in securities such as investment-grade bonds, high-quality preferred stocks
and short term notes, for defensive purposes when it believes market
conditions warrant.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end management
investment company organized under the laws of Massachusetts. NSAT offers shares
in the Funds listed below, each with its own investment objectives. Shares of
NSAT will be sold only to life insurance company separate accounts to fund the
benefits under variable life insurance policies and variable annuity contracts
issued by life insurance companies. The assets of NSAT are managed by NAS, of
Three Nationwide Plaza, Columbus, Ohio 43215, a wholly-owned subsidiary of
Nationwide Life Insurance Company.
CAPITAL APPRECIATION FUND
Investment Objective: Long-term capital appreciation.
GOVERNMENT BOND FUND
Investment Objective: As high a level of income as is consistent with the
preservation of capital by investing in a diversified portfolio of
securities issued or backed by the U.S. Government, its agencies or
instrumentalities.
MONEY MARKET FUND
Investment Objective: As high a level of current income as is considered
consistent with the preservation of capital and maintenance of liquidity.
TOTAL RETURN FUND
Investment Objective: To obtain a reasonable, long-term total return on
invested capital.
NEUBERGER BERMAN ADVISERS MANAGEMENT
Neuberger Berman Advisers Management Trust is an open-end diversified management
investment company established as a Massachusetts business trust on December 14,
1983. Shares of the Trust are offered in connection with certain variable
annuity contracts and variable life insurance policies issued through life
insurance company separate accounts and are also offered directly to qualified
pension and retirement plans outside of the separate account context. The
investment adviser is Neuberger Berman Management Incorporated.
AMT BALANCED PORTFOLIO
Investment Objective: To provide long-term capital growth and reasonable
current income without undue risk to principal. The Balanced Portfolio will
seek to achieve its objective through investment of a portion of its assets
in common stocks and a portion of its assets in debt securities. The
Investment Adviser anticipates that the Balanced Portfolio's investments
will normally be managed so that approximately 60% of the Portfolio's total
assets will be invested in common stocks and the remaining assets will be
invested in debt securities. However, depending on the Investment Adviser's
views regarding current market trends, the common stock portion of the
Portfolio's investments may be adjusted downward to as low as 50% or upward
to as high as 70%. At least 25% of the Portfolio's assets will be invested
in fixed income senior securities.
39
<PAGE> 43
APPENDIX B: ILLUSTRATION OF SURRENDER CHARGES
EXAMPLE 1: A female non-tobacco, age 45, purchases a policy with a scheduled
premium of $2,000 yielding a specified amount of $50,599. She now wishes to
surrender the policy during the first policy year. By using the initial
surrender charge table reproduced below (also see "Surrender Charges"), the
total surrender charge per thousand multiplied by the specified amount expressed
in thousands equals the total surrender charge of $514.09 ($10.160 x 50.599 =
$514.09).
EXAMPLE 2: A male non-tobacco, age 35, purchases a policy with a scheduled
premium of $2,000 yielding a specified amount of $68,165. He now wants to
surrender the policy in the sixth policy year. The total initial surrender value
is calculated using the method illustrated above. (Specified amount in thousands
is $68.165 x 7.260 = 494.88 total first year surrender charge.) Because the
fifth policy year has been completed, the total initial surrender charge is
reduced by multiplying it by the applicable percentage factor from the
"Reductions to Surrender Charges" table below (also see "Reductions to Surrender
Charges"). In this case, $494.88 x 85% = $420.65, which is the amount Nationwide
deducts as a total surrender charge.
Initial surrender charge per $1,000 of initial specified amount for policies
which are issued on a standard basis.
ISSUE MALE FEMALE MALE FEMALE
AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD
25 $ 5.878 $ 5.537 $ 6.680 $ 5.945
35 7.260 6.712 8.559 7.373
45 11.159 10.160 13.244 11.151
55 15.275 13.375 18.373 14.686
65 23.821 20.553 27.943 22.165
Reductions to surrender charges.
SURRENDER CHARGE SURRENDER CHARGE
COMPLETED AS A % OF INITIAL COMPLETED AS A % OF INITIAL
POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES
0 100% 5 85%
1 100% 6 80%
2 100% 7 75%
3 95% 8 50%
4 90% 9+ 0%
40
<PAGE> 44
The current surrender charges are the same for all states. However, in
Pennsylvania the guaranteed maximum surrender charges are 8% higher than those
shown. In addition, the guaranteed maximum surrender charge in subsequent years
in Pennsylvania are reduced in the following manner:
<TABLE>
<CAPTION>
SURRENDER CHARGE SURRENDER CHARGE SURRENDER CHARGE
COMPLETED AS A % OF INITIAL COMPLETED AS A % OF INITIAL COMPLETED AS A % OF INITIAL
POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES
<S> <C> <C> <C> <C> <C>
0 100% 5 83% 10 46%
1 98% 6 75% 11 37%
2 95% 7 70% 12 28%
3 92% 8 65% 13 14%
4 88% 9 55% 14+ 0%
</TABLE>
The illustrations of current values are the same for Pennsylvania. However, the
guaranteed maximum surrender charges are slightly higher in Pennsylvania. If
this policy is issued in Pennsylvania, please contact Nationwide's home office
for an illustration.
Nationwide has no plans to change the current surrender charges.
41
<PAGE> 45
APPENDIX C: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES, AND DEATH
BENEFITS
The illustrations in this prospectus have been prepared to help show how values
under the policies change with investment performance. The illustrations
illustrate how cash values, cash surrender values and death benefits under a
policy would vary over time if the hypothetical gross investment rates of return
were a uniform annual effective rate of either 0%, 6% or 12%. If the
hypothetical gross investment rate of return averages 0%, 6% or 12% over a
period of years, but fluctuates above or below those averages for individual
years, the cash values, cash surrender values and death benefits may be
different. For hypothetical returns of 0% and 6%, the illustrations also
illustrate when the policies would go into default, at which time additional
premium payments would be required to continue the policy in force. The
illustrations also assume there is no policy debt, no additional premium
payments are made, no cash values are allocated to the fixed account, and their
are no changes in the specified amount or death benefit option.
The amounts shown for the cash value, cash surrender value and death benefit as
of each policy anniversary reflect the fact that the net investment return on
the assets held in the sub-accounts is lower than the gross return. This is due
to the daily charges made against the assets of the sub-accounts for assuming
mortality and expense risks. The mortality and expense risk charges are
equivalent to an annual effective rate of .80% of the daily net assets of the
variable account. In addition, the net investment returns also reflect the
deduction of fund investment advisory fees and other expenses which are
equivalent to an annual effective rate of 0.75% (after expense reimbursement) of
the daily net assets of the variable account. Some underlying mutual funds are
subject to expense reimbursements and fee waivers. Absent expense reimbursements
and fee waivers, the annual effective rate would have been 0.75%. Nationwide
anticipates that the expense reimbursement and fee waiver arrangements will
continue past the current year. Should there be an increase or decrease in the
expense reimbursements and fee waivers of these underlying mutual funds, such
change will be reflected in the net asset value of the corresponding underlying
mutual fund.
Considering current charges for mortality and expense risks and fund expenses,
gross annual rates of return of 0%, 6% and 12% correspond to net investment
experience at constant annual rates of -1.50%, 4.50% and 10.50%.
The illustrations also reflect the fact that Nationwide makes monthly charges
for providing insurance protection. Current values reflect current cost of
insurance charges and guaranteed values reflect the maximum cost of insurance
charges guaranteed in the policy. The values shown are for policies which are
issued as standard (including non-tobacco). Policies issued on a substandard
basis would result in lower cash values and death benefits than those
illustrated.
In addition, the illustrations reflect the fact that Nationwide deducts a
monthly administrative charge at the beginning of each policy month. This
monthly administrative expense charge is $5 and is guaranteed not to exceed
$7.50. Current values reflect a current monthly administrative expense charge of
$5 and guaranteed values reflect the $7.50 maximum monthly administrative charge
under the policy. The illustrations also reflect the fact that no charges for
federal or state income taxes are currently made against the variable account.
If such a charge is made in the future, it will require a higher gross
investment return than illustrated in order to produce the net after-tax returns
shown in the illustrations.
Upon request, Nationwide will furnish a comparable illustration based on the
proposed insured's age, sex, smoking classification, rating classification and
premium payment requested.
42
<PAGE> 46
DEATH BENEFIT OPTION 1
$2,000 ANNUAL PREMIUM: $43,165 SPECIFIED AMOUNT
MALE: NON-TOBACCO: SIMPLIFIED ISSUE: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,000 2,100 1,671 1,189 43,165 1,776 1,294 43,165 1,882 1,400 43,165
2 2,000 4,305 3,314 2,832 43,165 3,629 3,147 43,165 3,956 3,475 43,165
3 2,000 6,620 4,930 4,448 43,165 5,561 5,080 43,165 6,244 5,763 43,165
4 2,000 9,051 6,520 6,062 43,165 7,578 7,121 43,165 8,769 8,312 43,165
5 2,000 11,604 8,081 7,647 43,165 9,682 9,248 43,165 11,555 11,122 43,165
6 0 12,184 7,755 7,346 43,165 9,906 9,497 43,165 12,549 12,140 43,165
7 0 12,793 7,421 7,036 43,165 10,130 9,745 43,165 13,639 13,254 43,165
8 0 13,433 7,077 6,716 43,165 10,352 9,991 43,165 14,837 14,475 43,165
9 0 14,105 6,724 6,483 43,165 10,573 10,332 43,165 16,153 15,913 43,165
10 0 14,810 6,357 6,357 43,165 10,790 10,790 43,165 17,601 17,601 43,165
15 0 18,901 4,293 4,293 43,165 11,788 11,788 43,165 27,419 27,419 43,165
20 0 24,124 1,573 1,573 43,165 12,424 12,424 43,165 43,700 43,700 53,315
25 0 30,788 (*) (*) (*) 12,121 12,121 43,165 69,987 69,987 81,185
30 0 39,295 (*) (*) (*) 9,520 9,520 43,165 112,321 112,321 120,183
35 0 50,151 (*) (*) (*) 1,656 1,656 43,165 181,129 181,129 190,185
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
43
<PAGE> 47
DEATH BENEFIT OPTION 1
$2,000 ANNUAL PREMIUM: $43,165 SPECIFIED AMOUNT
MALE: NON-TOBACCO: SIMPLIFIED ISSUE: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,000 2,100 1,578 1,096 43,165 1,680 1,199 43,165 1,783 1,302 43,165
2 2,000 4,305 3,125 2,643 43,165 3,429 2,947 43,165 3,745 3,263 43,165
3 2,000 6,620 4,642 4,160 43,165 5,248 4,766 43,165 5,904 5,422 43,165
4 2,000 9,051 6,128 5,671 43,165 7,141 6,684 43,165 8,282 7,825 43,165
5 2,000 11,604 7,584 7,151 43,165 9,114 8,680 43,165 10,906 10,472 43,165
6 0 12,184 7,145 6,735 43,165 9,192 8,783 43,165 11,713 11,304 43,165
7 0 12,793 6,687 6,302 43,165 9,253 8,868 43,165 12,590 12,204 43,165
8 0 13,433 6,207 5,846 43,165 9,293 8,931 43,165 13,542 13,180 43,165
9 0 14,105 5,700 5,459 43,165 9,306 9,065 43,165 14,575 14,334 43,165
10 0 14,810 5,162 5,162 43,165 9,288 9,288 43,165 15,698 15,698 43,165
15 0 18,901 1,838 1,838 43,165 8,541 8,541 43,165 23,071 23,071 43,165
20 0 24,124 (*) (*) (*) 5,812 5,812 43,165 35,129 35,129 43,165
25 0 30,788 (*) (*) (*) (*) (*) (*) 55,050 55,050 63,858
30 0 39,295 (*) (*) (*) (*) (*) (*) 86,609 86,609 92,671
35 0 50,151 (*) (*) (*) (*) (*) (*) 137,483 137,483 144,357
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
44
<PAGE> 48
DEATH BENEFIT OPTION 2
$2,000 ANNUAL PREMIUM: $40,605 SPECIFIED AMOUNT
MALE: NON-TOBACCO: SIMPLIFIED ISSUE: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,000 2,100 1,673 1,220 42,278 1,778 1,325 42,384 1,884 1,431 42,489
2 2,000 4,305 3,314 2,861 43,919 3,628 3,175 44,233 3,954 3,501 44,560
3 2,000 6,620 4,921 4,468 45,526 5,550 5,097 46,155 6,230 5,777 46,835
4 2,000 9,051 6,496 6,066 47,102 7,548 7,118 48,154 8,731 8,301 49,337
5 2,000 11,604 8,036 7,628 48,641 9,623 9,215 50,228 11,478 11,071 52,084
6 2,000 14,284 9,541 9,156 50,146 11,777 11,392 52,382 14,497 14,112 55,102
7 2,000 17,098 11,010 10,647 51,615 14,012 13,650 54,617 17,813 17,451 58,419
8 2,000 20,053 12,442 12,102 53,047 16,331 15,991 56,936 21,457 21,117 62,062
9 2,000 23,156 13,838 13,612 54,444 18,737 18,511 59,343 25,461 25,234 66,066
10 2,000 26,414 15,195 15,195 55,801 21,231 21,231 61,836 29,859 29,859 70,465
15 2,000 45,315 21,582 21,582 62,187 35,358 35,358 75,964 59,598 59,598 100,203
20 2,000 69,439 26,779 26,779 67,385 52,067 52,067 92,672 107,276 107,276 147,882
25 2,000 100,227 30,327 30,327 70,932 71,359 71,359 111,964 183,588 183,588 224,194
30 2,000 139,522 31,312 31,312 71,917 92,666 92,666 133,272 305,356 305,356 345,961
35 2,000 189,673 28,568 28,568 69,173 114,920 114,920 155,526 499,671 499,671 540,277
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
45
<PAGE> 49
DEATH BENEFIT OPTION 2
$2,000 ANNUAL PREMIUM: $40,605 SPECIFIED AMOUNT
MALE: NON-TOBACCO: SIMPLIFIED ISSUE: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,000 2,100 1,582 1,129 42,187 1,684 1,231 42,289 1,787 1,334 42,392
2 2,000 4,305 3,125 2,672 43,731 3,428 2,975 44,033 3,743 3,289 44,348
3 2,000 6,620 4,630 4,177 45,235 5,232 4,779 45,837 5,884 5,431 46,489
4 2,000 9,051 6,095 5,665 46,701 7,099 6,668 47,704 8,228 7,798 48,833
5 2,000 11,604 7,520 7,112 48,125 9,028 8,620 49,633 10,794 10,386 51,400
6 2,000 14,284 8,902 8,516 49,507 11,021 10,636 51,626 13,603 13,218 54,208
7 2,000 17,098 10,238 9,876 50,843 13,076 12,714 53,681 16,676 16,313 57,281
8 2,000 20,053 11,526 11,187 52,132 15,193 14,853 55,799 20,036 19,697 60,642
9 2,000 23,156 12,763 12,536 53,368 17,370 17,144 57,975 23,709 23,483 64,315
10 2,000 26,414 13,944 13,944 54,550 19,606 19,606 60,211 27,723 27,723 68,328
15 2,000 45,315 18,921 18,921 59,526 31,610 31,610 72,215 54,111 54,111 94,716
20 2,000 69,439 21,873 21,873 62,479 44,610 44,610 85,215 95,085 95,085 135,690
25 2,000 100,227 21,755 21,755 62,360 57,469 57,469 98,075 158,326 158,326 198,931
30 2,000 139,522 16,799 16,799 57,404 67,891 67,891 108,497 255,411 255,411 296,016
35 2,000 189,673 4,017 4,017 44,622 71,414 71,414 112,019 403,362 403,362 443,967
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
46
<PAGE> 50
DEATH BENEFIT OPTION 1
$5,000 ANNUAL PREMIUM: $114,019 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,000 5,250 4,298 3,025 114,019 4,565 3,293 114,019 4,833 3,561 114,019
2 5,000 10,763 8,526 7,254 114,019 9,328 8,055 114,019 10,162 8,889 114,019
3 5,000 16,551 12,684 11,412 114,019 14,295 13,023 114,019 16,037 14,765 114,019
4 5,000 22,628 16,775 15,566 114,019 19,480 18,272 114,019 22,522 21,313 114,019
5 5,000 29,010 20,793 19,648 114,019 24,888 23,742 114,019 29,675 28,530 114,019
6 0 30,460 20,097 19,016 114,019 25,607 24,525 114,019 32,370 31,288 114,019
7 0 31,983 19,382 18,364 114,019 26,334 25,316 114,019 35,329 34,311 114,019
8 0 33,582 18,644 17,690 114,019 27,068 26,114 114,019 38,581 37,626 114,019
9 0 35,261 17,886 17,250 114,019 27,811 27,175 114,019 42,160 41,523 114,019
10 0 37,024 17,098 17,098 114,019 28,555 28,555 114,019 46,097 46,097 114,019
15 0 47,254 12,658 12,658 114,019 32,294 32,294 114,019 72,813 72,813 114,019
20 0 60,309 6,803 6,803 114,019 35,667 35,667 114,019 117,021 117,021 142,765
25 0 76,971 (*) (*) (*) 37,655 37,655 114,019 188,506 188,506 218,667
30 0 98,237 (*) (*) (*) 35,905 35,905 114,019 303,905 303,905 325,179
35 0 125,378 (*) (*) (*) 25,759 25,759 114,019 491,641 491,641 516,223
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
47
<PAGE> 51
DEATH BENEFIT OPTION 1
$5,000 ANNUAL PREMIUM: $114,019 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,000 5,250 4,165 2,893 114,019 4,429 3,156 114,019 4,692 3,420 114,019
2 5,000 10,763 8,254 6,981 114,019 9,039 7,767 114,019 9,857 8,584 114,019
3 5,000 16,551 12,266 10,994 114,019 13,841 12,569 114,019 15,545 14,273 114,019
4 5,000 22,628 16,203 14,994 114,019 18,844 17,635 114,019 21,814 20,605 114,019
5 5,000 29,010 20,065 18,920 114,019 24,057 22,912 114,019 28,728 27,583 114,019
6 0 30,460 19,197 18,115 114,019 24,557 23,476 114,019 31,147 30,065 114,019
7 0 31,983 18,292 17,274 114,019 25,039 24,022 114,019 33,788 32,770 114,019
8 0 33,582 17,344 16,390 114,019 25,496 24,542 114,019 36,673 35,719 114,019
9 0 35,261 16,344 15,708 114,019 25,920 25,284 114,019 39,826 39,190 114,019
10 0 37,024 15,285 15,285 114,019 26,302 26,302 114,019 43,276 43,276 114,019
15 0 47,254 8,778 8,778 114,019 27,287 27,287 114,019 66,314 66,314 114,019
20 0 60,309 (*) (*) (*) 25,345 25,345 114,019 104,483 104,483 127,470
25 0 76,971 (*) (*) (*) 16,770 16,770 114,019 166,137 166,137 192,719
30 0 98,237 (*) (*) (*) (*) (*) (*) 264,541 264,541 283,058
35 0 125,378 (*) (*) (*) (*) (*) (*) 423,713 423,713 444,899
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
48
<PAGE> 52
DEATH BENEFIT OPTION 2
$5,000 ANNUAL PREMIUM: $103,521 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,000 5,250 4,313 3,157 107,834 4,580 3,425 108,101 4,848 3,693 108,369
2 5,000 10,763 8,545 7,390 112,066 9,347 8,192 112,868 10,180 9,025 113,702
3 5,000 16,551 12,696 11,541 116,217 14,305 13,149 117,826 16,043 14,888 119,565
4 5,000 22,628 16,767 15,669 120,288 19,463 18,366 122,984 22,493 21,396 126,015
5 5,000 29,010 20,750 19,711 124,272 24,822 23,782 128,343 29,582 28,542 133,103
6 5,000 35,710 24,650 23,668 128,171 30,393 29,411 133,914 37,376 36,394 140,898
7 5,000 42,746 28,462 27,538 131,984 36,180 35,256 139,701 45,945 45,021 149,467
8 5,000 50,133 32,186 31,319 135,707 42,190 41,323 145,711 55,366 54,500 158,887
9 5,000 57,889 35,822 35,245 139,344 48,433 47,856 151,954 65,727 65,150 169,249
10 5,000 66,034 39,365 39,365 142,886 54,912 54,912 158,433 77,117 77,117 180,638
15 5,000 113,287 56,148 56,148 159,669 91,733 91,733 195,254 154,255 154,255 257,776
20 5,000 173,596 70,150 70,150 173,671 135,657 135,657 239,179 278,346 278,346 381,867
25 5,000 250,567 80,391 80,391 183,912 187,059 187,059 290,580 477,700 477,700 581,221
30 5,000 348,804 84,916 84,916 188,437 245,176 245,176 348,697 797,182 797,182 900,704
35 5,000 474,182 81,221 81,221 184,742 308,270 308,270 411,791 1,309,263 1,309,263 1,412,784
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
49
<PAGE> 53
DEATH BENEFIT OPTION 2
$5,000 ANNUAL PREMIUM: $103,521 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,000 5,250 4,186 3,031 107,707 4,450 3,294 107,971 4,713 3,558 108,235
2 5,000 10,763 8,281 7,126 111,803 9,067 7,911 112,588 9,884 8,728 113,405
3 5,000 16,551 12,285 11,130 115,806 13,856 12,701 117,377 15,555 14,400 119,077
4 5,000 22,628 16,195 15,098 119,716 18,823 17,725 122,344 21,778 20,680 125,299
5 5,000 29,010 20,010 18,970 123,531 23,971 22,931 127,492 28,603 27,564 132,125
6 5,000 35,710 23,726 22,744 127,247 29,303 28,321 132,824 36,090 35,108 139,611
7 5,000 42,746 27,339 26,415 130,860 34,821 33,897 138,343 44,299 43,375 147,820
8 5,000 50,133 30,842 29,975 134,363 40,527 39,660 144,048 53,298 52,431 156,819
9 5,000 57,889 34,229 33,651 137,750 46,418 45,841 149,939 63,158 62,581 166,680
10 5,000 66,034 37,495 37,495 141,016 52,497 52,497 156,018 73,963 73,963 177,484
15 5,000 113,287 51,792 51,792 155,313 85,710 85,710 189,231 145,608 145,608 249,129
20 5,000 173,596 61,807 61,807 165,328 123,228 123,228 226,749 258,515 258,515 362,037
25 5,000 250,567 65,529 65,529 169,050 163,419 163,419 266,940 435,826 435,826 539,347
30 5,000 348,804 59,582 59,582 163,103 202,566 202,566 306,087 713,500 713,500 817,021
35 5,000 474,182 38,307 38,307 141,828 233,039 233,039 336,560 1,146,772 1,146,772 1,250,293
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
50
<PAGE> 54
DEATH BENEFIT OPTION 1
$20,000 ANNUAL PREMIUM: $301,625 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 55
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 17,246 12,639 301,625 18,318 13,711 301,625 19,392 14,784 301,625
2 20,000 43,050 34,218 29,611 301,625 37,437 32,830 301,625 40,785 36,178 301,625
3 20,000 66,203 50,937 46,329 301,625 57,415 52,807 301,625 64,419 59,812 301,625
4 20,000 90,513 67,401 63,024 301,625 78,293 73,916 301,625 90,540 86,163 301,625
5 20,000 116,038 83,596 79,449 301,625 100,104 95,958 301,625 119,413 115,266 301,625
6 0 121,840 80,906 76,989 301,625 103,165 99,249 301,625 130,500 126,583 301,625
7 0 127,932 78,117 74,431 301,625 106,271 102,585 301,625 142,715 139,029 301,625
8 0 134,329 75,201 71,746 301,625 109,404 105,948 301,625 156,179 152,723 301,625
9 0 141,045 72,145 69,841 301,625 112,561 110,257 301,625 171,043 168,739 301,625
10 0 148,097 68,954 68,954 301,625 115,755 115,755 301,625 187,493 187,493 301,625
15 0 189,014 49,393 49,393 301,625 131,395 131,395 301,625 300,823 300,823 348,954
20 0 241,235 19,138 19,138 301,625 144,329 144,329 301,625 486,304 486,304 520,345
25 0 307,884 (*) (*) (*) 150,363 150,363 301,625 788,319 788,319 827,735
30 0 392,947 (*) (*) (*) 140,942 140,942 301,625 1,271,902 1,271,902 1,335,497
35 0 501,511 (*) (*) (*) 91,006 91,006 301,625 2,036,854 2,036,854 2,138,697
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
51
<PAGE> 55
DEATH BENEFIT OPTION 1
$20,000 ANNUAL PREMIUM: $301,625 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 55
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 16,107 11,499 301,625 17,145 12,537 301,625 18,184 13,577 301,625
2 20,000 43,050 31,880 27,273 301,625 34,965 30,358 301,625 38,177 33,570 301,625
3 20,000 66,203 47,335 42,728 301,625 53,516 48,908 301,625 60,208 55,601 301,625
4 20,000 90,513 62,478 58,101 301,625 72,847 68,470 301,625 84,527 80,150 301,625
5 20,000 116,038 77,313 73,166 301,625 93,015 88,869 301,625 111,425 107,279 301,625
6 0 121,840 73,076 69,159 301,625 94,193 90,277 301,625 120,222 116,306 301,625
7 0 127,932 68,523 64,837 301,625 95,142 91,456 301,625 129,796 126,110 301,625
8 0 134,329 63,592 60,137 301,625 95,804 92,348 301,625 140,230 136,774 301,625
9 0 141,045 58,215 55,911 301,625 96,119 93,815 301,625 151,628 149,325 301,625
10 0 148,097 52,319 52,319 301,625 96,021 96,021 301,625 164,123 164,123 301,625
15 0 189,014 12,046 12,046 301,625 86,589 86,589 301,625 250,337 250,337 301,625
20 0 241,235 (*) (*) (*) 47,333 47,333 301,625 398,663 398,663 426,569
25 0 307,884 (*) (*) (*) (*) (*) (*) 638,828 638,828 670,769
30 0 392,947 (*) (*) (*) (*) (*) (*) 1,011,794 1,011,794 1,062,384
35 0 501,511 (*) (*) (*) (*) (*) (*) 1,573,016 1,573,016 1,651,667
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
52
<PAGE> 56
DEATH BENEFIT OPTION 2
$20,000 ANNUAL PREMIUM: $271,462 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 55
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 17,298 13,151 288,760 18,370 14,223 289,832 19,442 15,296 290,904
2 20,000 43,050 34,246 30,099 305,708 37,457 33,310 308,919 40,796 36,650 312,258
3 20,000 66,203 50,855 46,709 322,317 57,299 53,153 328,761 64,265 60,118 335,727
4 20,000 90,513 67,116 63,176 338,578 77,914 73,975 349,376 90,050 86,111 361,512
5 20,000 116,038 82,994 79,262 354,456 99,296 95,564 370,758 118,353 114,621 389,815
6 20,000 142,840 98,503 94,979 369,965 121,487 117,963 392,949 149,439 145,914 420,901
7 20,000 170,982 113,634 110,317 385,096 144,508 141,191 415,970 183,581 180,264 455,043
8 20,000 200,531 128,361 125,251 399,823 168,362 165,252 439,824 221,062 217,952 492,524
9 20,000 231,558 142,677 140,604 414,139 193,075 191,002 464,537 262,215 260,141 533,677
10 20,000 264,136 156,599 156,599 428,061 218,694 218,694 490,156 307,428 307,428 578,890
15 20,000 453,150 220,839 220,839 492,301 362,421 362,421 633,883 611,568 611,568 883,030
20 20,000 694,385 269,646 269,646 541,108 528,498 528,498 799,960 1,094,741 1,094,741 1,366,203
25 20,000 1,002,269 297,796 297,796 569,258 715,032 715,032 986,494 1,862,319 1,862,319 2,133,781
30 20,000 1,395,216 298,297 298,297 569,759 917,183 917,183 1,188,645 3,083,762 3,083,762 3,355,224
35 20,000 1,896,726 258,982 258,982 530,444 1,122,561 1,122,561 1,394,023 5,029,049 5,029,049 5,300,511
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
53
<PAGE> 57
DEATH BENEFIT OPTION 2
$20,000 ANNUAL PREMIUM: $271,462 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 55
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 16,210 12,063 287,672 17,247 13,100 288,709 18,285 14,139 289,747
2 20,000 43,050 31,952 27,805 303,414 35,022 30,876 306,484 38,219 34,072 309,681
3 20,000 66,203 47,218 43,071 318,680 53,335 49,189 324,797 59,956 55,809 331,418
4 20,000 90,513 61,989 58,049 333,451 72,181 68,242 343,643 83,654 79,715 355,116
5 20,000 116,038 76,238 72,506 347,700 91,550 87,818 363,012 109,481 105,749 380,943
6 20,000 142,840 89,938 86,414 361,400 111,428 107,903 382,890 137,619 134,095 409,081
7 20,000 170,982 103,059 99,742 374,521 131,797 128,480 403,259 168,266 164,949 439,728
8 20,000 200,531 115,551 112,441 387,013 152,620 149,510 424,082 201,620 198,510 473,082
9 20,000 231,558 127,364 125,291 398,827 173,857 171,783 445,319 237,898 235,825 509,360
10 20,000 264,136 138,455 138,455 409,917 195,468 195,468 466,930 277,344 277,344 548,806
15 20,000 453,150 181,584 181,584 453,046 307,734 307,734 579,196 532,612 532,612 804,074
20 20,000 694,385 196,954 196,954 468,416 418,925 418,925 690,387 917,807 917,807 1,189,269
25 20,000 1,002,269 169,899 169,899 441,361 509,435 509,435 780,897 1,493,080 1,493,080 1,764,542
30 20,000 1,395,216 81,828 81,828 353,290 549,586 549,586 821,048 2,351,116 2,351,116 2,622,578
35 20,000 1,896,726 (*) (*) (*) 486,060 486,060 757,522 3,623,823 3,623,823 3,895,285
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
54
<PAGE> 58
DEATH BENEFIT OPTION 1
$20,000 ANNUAL PREMIUM: $205,135 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 65
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 16,645 11,758 205,135 17,701 12,814 205,135 18,758 13,871 205,135
2 20,000 43,050 33,017 28,131 205,135 36,177 31,290 205,135 39,465 34,578 205,135
3 20,000 66,203 49,143 44,256 205,135 55,501 50,614 205,135 62,382 57,496 205,135
4 20,000 90,513 65,029 60,387 205,135 75,738 71,096 205,135 87,796 83,154 205,135
5 20,000 116,038 80,710 76,312 205,135 96,991 92,593 205,135 116,069 111,671 205,135
6 0 121,840 77,395 73,241 205,135 99,418 95,265 205,135 126,538 122,385 205,135
7 0 127,932 73,834 69,925 205,135 101,795 97,885 205,135 138,136 134,227 205,135
8 0 134,329 70,003 66,338 205,135 104,116 100,452 205,135 151,043 147,378 205,135
9 0 141,045 65,862 63,418 205,135 106,373 103,930 205,135 165,468 163,025 205,135
10 0 148,097 61,348 61,348 205,135 108,539 108,539 205,135 181,661 181,661 205,135
15 0 189,014 30,920 30,920 205,135 117,386 117,386 205,135 293,969 293,969 308,667
20 0 241,235 (*) (*) (*) 120,208 120,208 205,135 474,058 474,058 497,761
25 0 307,884 (*) (*) (*) 107,590 107,590 205,135 758,927 758,927 796,873
30 0 392,947 (*) (*) (*) 47,357 47,357 205,135 1,218,524 1,218,524 1,230,709
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
55
<PAGE> 59
DEATH BENEFIT OPTION 1
$20,000 ANNUAL PREMIUM: $205,135 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 65
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 14,230 9,343 205,135 15,214 10,328 205,135 16,202 11,315 205,135
2 20,000 43,050 28,144 23,257 205,135 31,031 26,145 205,135 34,044 29,157 205,135
3 20,000 66,203 41,777 36,891 205,135 47,543 42,656 205,135 53,805 48,918 205,135
4 20,000 90,513 55,164 50,522 205,135 64,856 60,214 205,135 75,819 71,177 205,135
5 20,000 116,038 68,334 63,937 205,135 83,094 78,697 205,135 100,492 96,094 205,135
6 0 121,840 62,097 57,943 205,135 82,032 77,879 205,135 106,803 102,650 205,135
7 0 127,932 55,116 51,207 205,135 80,353 76,444 205,135 113,610 109,701 205,135
8 0 134,329 47,214 43,549 205,135 77,903 74,238 205,135 120,984 117,319 205,135
9 0 141,045 38,178 35,734 205,135 74,497 72,054 205,135 129,034 126,590 205,135
10 0 148,097 27,769 27,769 205,135 69,925 69,925 205,135 137,916 137,916 205,135
15 0 189,014 (*) (*) (*) 18,507 18,507 205,135 205,673 205,673 215,956
20 0 241,235 (*) (*) (*) (*) (*) (*) 325,362 325,362 341,630
25 0 307,884 (*) (*) (*) (*) (*) (*) 505,449 505,449 530,722
30 0 392,947 (*) (*) (*) (*) (*) (*) 791,368 791,368 799,282
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
56
<PAGE> 60
DEATH BENEFIT OPTION 2
$20,000 ANNUAL PREMIUM: $194,739 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 65
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 16,573 11,934 211,311 17,621 12,983 212,360 18,671 14,032 213,410
2 20,000 43,050 32,689 28,050 227,427 35,805 31,166 230,544 39,048 34,409 233,787
3 20,000 66,203 48,339 43,700 243,077 54,560 49,922 249,299 61,291 56,652 256,030
4 20,000 90,513 63,488 59,081 258,226 73,868 69,461 268,607 85,547 81,141 280,286
5 20,000 116,038 78,126 73,951 272,865 93,736 89,561 288,475 112,008 107,833 306,747
6 20,000 142,840 92,247 88,304 286,985 114,173 110,230 308,912 140,884 136,941 335,623
7 20,000 170,982 105,798 102,087 300,537 135,144 131,433 329,883 172,364 168,652 367,102
8 20,000 200,531 118,773 115,294 313,512 156,656 153,177 351,395 206,698 203,219 401,436
9 20,000 231,558 131,149 128,829 325,887 178,700 176,381 373,439 244,149 241,830 438,888
10 20,000 264,136 142,874 142,874 337,613 201,240 201,240 395,978 284,977 284,977 479,716
15 20,000 453,150 192,576 192,576 387,315 322,885 322,885 517,624 554,333 554,333 749,071
20 20,000 694,385 220,318 220,318 415,057 452,791 452,791 647,530 970,524 970,524 1,165,262
25 20,000 1,002,269 217,526 217,526 412,265 581,357 581,357 776,096 1,613,629 1,613,629 1,808,368
30 20,000 1,395,216 173,599 173,599 368,338 693,275 693,275 888,014 2,610,356 2,610,356 2,805,095
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
57
<PAGE> 61
DEATH BENEFIT OPTION 2
$20,000 ANNUAL PREMIUM: $194,739 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 65
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 14,089 9,450 208,828 15,058 10,419 209,797 16,030 11,391 210,768
2 20,000 43,050 27,502 22,863 222,240 30,300 25,661 225,039 33,219 28,580 227,957
3 20,000 66,203 40,213 35,574 234,951 45,698 41,060 240,437 51,650 47,012 246,389
4 20,000 90,513 52,188 47,781 246,926 61,213 56,807 255,952 71,405 66,999 266,144
5 20,000 116,038 63,376 59,201 258,115 76,787 72,612 271,526 92,556 88,381 287,294
6 20,000 142,840 73,708 69,765 268,447 92,338 88,395 287,077 115,158 111,215 309,897
7 20,000 170,982 83,097 79,386 277,835 107,761 104,050 302,500 139,256 135,545 333,995
8 20,000 200,531 91,429 87,949 286,167 122,921 119,442 317,659 164,871 161,392 359,609
9 20,000 231,558 98,595 96,275 293,333 137,676 135,356 332,414 192,025 189,705 386,763
10 20,000 264,136 104,503 104,503 299,242 151,896 151,896 346,635 220,762 220,762 415,500
15 20,000 453,150 113,030 113,030 307,768 211,043 211,043 405,782 391,195 391,195 585,933
20 20,000 694,385 75,773 75,773 270,511 232,666 232,666 427,405 610,524 610,524 805,263
25 20,000 1,002,269 (*) (*) (*) 178,177 178,177 372,915 875,543 875,543 1,070,282
30 20,000 1,395,216 (*) (*) (*) (*) (*) (*) 1,181,544 1,181,544 1,376,283
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS
INVESTMENT RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS
APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
58
<PAGE> 62
<PAGE> 1
Independent Auditors' Report
----------------------------
The Board of Directors of Nationwide Life and Annuity Insurance Company and
Contract Owners of Nationwide VL Separate Account-A:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VL Separate Account-A 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 included
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 VL Separate
Account-A 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
<PAGE> 2
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
December 31, 1998
<TABLE>
<CAPTION>
ASSETS:
Investments at market value:
American Century VP - American Century VP Advantage (ACVPAdv)
<S> <C> <C>
73,117 shares (cost $387,261).................................... $ 507,433
American Century VP - American Century VP Balanced (ACVPBal)
26,320 shares (cost $203,864).................................... 219,511
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
13,980 shares (cost $110,839).................................... 126,097
American Century VP - American Century VP International (ACVPInt)
7,480 shares (cost $51,409) .................................... 56,995
American Century VP - American Century VP Value (ACVPValue)
15,487 shares (cost $102,922).................................... 104,229
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
10,150 shares (cost $278,532).................................... 315,458
Dreyfus Stock Index Fund (DryStkIx)
209,328 shares (cost $6,031,508)................................. 6,807,347
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
90,733 shares (cost $2,925,226).................................. 3,276,382
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
16,078 shares (cost $327,055).................................... 363,854
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
121,794 shares (cost $2,805,332)................................. 3,096,002
Fidelity VIP - Growth Portfolio (FidVIPGr)
4,482 shares (cost $168,986)..................................... 201,125
Fidelity VIP - High Income Portfolio (FidVIPHI)
38,853 shares (cost $426,465).................................... 447,974
Fidelity VIP - Overseas Portfolio (FidVIPOv)
41,510 shares (cost $788,922).................................... 832,268
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
207,022 shares (cost $3,464,350)................................. 3,759,520
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
13,011 shares (cost $273,524).................................... 317,999
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
74,997 shares (cost $1,498,855).................................. 1,715,939
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
7,377 shares (cost $56,335)...................................... 44,998
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
85,026 shares (cost $2,057,893).................................. 2,260,835
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Nationwide SAT - Government Bond Fund (NSATGvtBd)
<S> <C> <C>
96,946 shares (cost $1,132,377).................................... 1,133,300
Nationwide SAT - Money Market Fund (NSATMyMkt)
10,498,485 shares (cost $10,498,485)............................... 10,498,485
Nationwide SAT - Small Company Fund (NSATSmCo)
13,038 shares (cost $195,477)...................................... 208,733
Nationwide SAT - Total Return Fund (NSATTotRe)
10,090 shares (cost $176,901)...................................... 185,661
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
146,708 shares (cost $1,989,653)................................... 2,027,510
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
3,368 shares (cost $73,987)........................................ 88,555
Neuberger & Berman AMT - Limited Maturity Bond (NBAMTLMat)
781 shares (cost $12,086).......................................... 12,753
Neuberger & Berman AMT - Partner's Portfolio (NBAMTPart)
161,275 shares (cost $2,902,761)................................... 3,052,927
Oppenheimer VAF - Bond Fund (OppBdFd)
41,079 shares (cost $497,916)...................................... 506,090
Oppenheimer VAF - Global Securities Fund (OppGlSec)
99,716 shares (cost $2,076,362).................................... 2,200,742
Oppenheimer VAF - Growth Fund (OppGro)
4,856 shares (cost $154,641)....................................... 178,073
Oppenheimer VAF - Multiple Stategies Fund (OppMult)
4,654 shares (cost $77,151)........................................ 79,352
Strong Opportunity Fund II, Inc. (StOpp2)
131,567 shares (cost $2,583,131)................................... 2,857,641
Strong VIF - Strong Discovery Fund II (StDisc2)
373 shares (cost $4,038)........................................... 4,746
Strong VIF - Strong International Stock Fund II (StIntStk2)
5,979 shares (cost $54,708)........................................ 52,492
Van Kampen American Capital LIT -
Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
18,923 shares (cost $261,385)...................................... 260,376
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
10,988 shares (cost $122,174)...................................... 120,758
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
4,982 shares (cost $52,489)........................................ 58,691
Warburg Pincus Trust - Small Company Growth Portfolio (WPSmCoGr)
94,847 shares (cost $1,339,482).................................... 1,518,505
---------
Total assets.................................................... 49,499,356
Accounts payable............................................................ 122,302
---------
Contract owners' equity..................................................... $ 49,377,054
===========
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Annual
Contract owners' equity represented by: Units Unit Value Return*
------ ---------- -------
Multiple Payment Contracts and Flexible Premium Contracts:
<S> <C> <C> <C> <C>
American Century - Advantage........................ 486 $ 18.492009 $ 8,987 16%
American Century - Advantage
Initial Funding by Depositor (note 1a)............ 25,000 19.938436 498,461 17%
Fidelity VIP - Growth Portfolio..................... 1,569 33.916141 53,214 38%
Nationwide SAT - Capital Appreciation Fund.......... 158 31.669989 5,004 29%
Nationwide SAT - Government Bond Fund............... 664 18.081576 12,006 8%
Nationwide SAT - Money Market Fund.................. 78 13.319323 1,039 4%
Nationwide SAT - Total Return Fund.................. 499 33.070880 16,502 17%
Neuberger & Berman - Balanced Portfolio............. 613 20.803745 12,753 11%
Corporate Variable Universal Life Contracts:
(policy years 1 through 4):
American Century Portfolios, Inc. - Balanced........ 18,820 11.626919 218,819 15%
American Century Portfolios, Inc. -
Capital Appreciation.............................. 14,644 8.596963 125,894 (3)%
American Century Portfolios, Inc. -
International..................................... 4,839 11.765055 56,931 18%
American Century Portfolios, Inc. - Value........... 9,728 10.691622 104,008 4%
The Dreyfus Socially Responsible
Growth Fund, Inc.................................. 24,028 13.111780 315,050 29%
Dreyfus - Stock Index Fund.......................... 509,049 13.339484 6,790,451 27%
Dreyfus - Capital Appreciation Portfolio............ 245,320 13.330093 3,270,138 29%
Dreyfus - Growth and Income Portfolio............... 32,602 11.137968 363,120 11%
Fidelity VIP - Equity-Income Portfolio.............. 267,408 11.555353 3,089,994 11%
Fidelity VIP - Growth Portfolio..................... 9,901 14.020364 138,816 39%
Fidelity VIP - High Income Portfolio................ 45,265 9.869575 446,746 (5)%
Fidelity VIP - Overseas Portfolio................... 76,632 10.841633 830,816 12%
Fidelity VIP-II - Asset Manager Portfolio........... 318,265 11.787372 3,751,508 14%
Fidelity VIP-II - Contrafund Portfolio.............. 24,074 13.186342 317,448 29%
Fidelity VIP-III -
Growth Opportunities Portfolio.................... 131,097 13.061294 1,712,296 24%
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Morgan Stanley -
Emerging Markets Debt Portfolio................... 6,562 6.844561 44,914 (29)%
Nationwide SAT - Capital Appreciation Fund........ 165,868 13.565122 2,250,020 29%
Nationwide SAT - Government Bond Fund............. 98,753 11.296453 1,115,559 8%
Nationwide SAT - Money Market Fund................ 985,202 10.628993 10,471,705 5%
Nationwide SAT - Small Company Fund............... 20,994 9.917667 208,212 0%
Nationwide SAT - Total Return Fund................ 13,948 12.096435 168,721 17%
Neuberger & Berman - Growth Portfolio............. 7,607 11.567509 87,994 15%
Neuberger & Berman -
Limited Maturity Bond Portfolio................. 191,330 10.566217 2,021,634 4%
Neuberger & Berman - Partners Portfolio........... 288,166 10.569546 3,045,784 4%
Oppenheimer - Bond Fund........................... 45,668 11.060180 505,096 6%
Oppenheimer - Global Securities Fund.............. 190,998 11.498009 2,196,097 13%
Oppenheimer - Growth Fund......................... 14,424 12.324954 177,775 23%
Oppenheimer - Multiple Strategies Fund............ 7,326 10.801052 79,129 6%
Strong - Opportunity Fund II...................... 249,437 11.434594 2,852,211 13%
Strong VIP - Strong Discovery Fund II............. 465 10.200413 4,743 7%
Strong VIP - International Stock Fund II.......... 6,409 8.175124 52,394 (5)%
Van Kampen American Capital LIT
Real Estate Securities Fund..................... 27,181 9.560744 259,871 (12)%
Warburg Pincus Trust International
Equity Portfolio................................ 13,041 9.241653 120,520 5%
Warburg Pincus Trust Post Venture
Capital Portfolio............................... 5,675 10.325823 58,599 6%
Warburg Pincus Trust Small Company
Growth Portfolio................................ 154,150 9.835063 1,516,075 (3)%
======= ======== ---------
$ 49,377,054
==========
</TABLE>
* The annual return does not include contract charges satisfied by surrendering
units.
See accompanying notes to financial statements.
<PAGE> 6
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
TOTAL ACVPADV
--------------------------------------------- ----------------------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 646,514 8,040 10,646 9,771 5,992 8,663
Mortality and expense charges
(note 3)................... (151,794) (795) (722) (71) (645) (587)
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... 494,720 7,245 9,924 9,700 5,347 8,076
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 35,415,399 33,699 16,003 1,525 377 -
Cost of mutual funds sold.... (35,903,585) (28,831) (14,209) (1,311) (315) -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... (488,186) 4,868 1,794 214 62 -
Change in unrealized gain (loss)
on investments............. 3,222,056 29,307 8,266 27,703 22,147 7,086
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments 2,733,870 34,175 10,060 27,917 22,209 7,086
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... 149,622 23,407 21,139 36,765 21,011 16,600
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ 3,378,212 64,827 41,123 74,382 48,567 31,762
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 47,374,274 14,070 24,097 1,158 2,047 2,411
Transfers between funds...... - - - - - -
Surrenders................... (18,421) (23,075) (6,042) - - (6)
Death benefits (note 4)...... (25,069) - - - - -
Policy loans (net of repayments)
(note 5)................... (9,541) 13,620 3,498 - - -
Deductions for surrender charges
(note 2d).................. - (4,334) - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (1,853,909) (8,935) (12,114) (1,563) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 45,467,334 (8,654) 9,439 (405) 2,047 2,405
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 48,845,546 56,173 50,562 73,977 50,614 34,167
CONTRACT OWNERS' EQUITY BEGINNING
531,508 475,335 424,773 433,471 382,857 348,690
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 49,377,054 531,508 475,335 507,448 433,471 382,857
============== ============== ============== ============== ============= ==============
<CAPTION>
ACVPBAL
-----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - -
Mortality and expense charges
(note 3)................... (923) - -
-------------- -------------- --------------
Net investment activity.... (923) - -
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 96,716 - -
Cost of mutual funds sold.... (93,298) - -
-------------- -------------- --------------
Realized gain (loss)
on investments........... 3,418 - -
Change in unrealized gain (loss)
on investments............. 15,647 - -
-------------- -------------- --------------
Net gain (loss) on investments 19,065 - -
-------------- -------------- --------------
Reinvested capital gains..... - - -
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 18,142 - -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 267,848 - -
Transfers between funds...... (55,648) - -
Surrenders................... - - -
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charges
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (11,523) - -
-------------- -------------- --------------
Net equity transactions.. 200,677 - -
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 218,819 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - -
CONTRACT OWNERS' EQUITY -------------- -------------- --------------
END OF PERIOD................ $ 218,819 - -
============== ============== ==============
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
ACVPCAPAP ACVPINT
--------------------------------------------- ----------------------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - - - - -
Mortality and expense charges
(note 3)................... (422) - - (134) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (422) - - (134) - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 279,714 - - 126,140 - -
Cost of mutual funds sold.... (276,016) - - (131,696) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... 3,698 - - (5,556) - -
Change in unrealized gain (loss)
on investments............. 15,258 - - 5,586 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments 18,956 - - 30 - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... 130 - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ 18,664 - - (104) - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 336,228 - - 24,566 - -
Transfers between funds...... (223,889) - - 34,693 - -
Surrenders................... - - - - - -
Death benefits (note 4)...... - - - (550) - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (5,109) - - (1,674) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 107,230 - - 57,035 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 125,894 - - 56,931 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - - - -
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 125,894 - - 56,931 - -
============== ============== ============== ============== ============= ==============
<CAPTION>
ACVPVALUE
----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 16 - -
Mortality and expense charges
(note 3)................... (294) - -
-------------- -------------- --------------
Net investment activity.... (278) - -
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 6,438 - -
Cost of mutual funds sold.... (7,114) - -
-------------- -------------- --------------
Realized gain (loss)
on investments........... (676) - -
Change in unrealized gain (loss)
on investments............. 1,306 - -
-------------- -------------- --------------
Net gain (loss) on investments 630 - -
-------------- -------------- --------------
Reinvested capital gains..... 184 - -
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 536 - -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 114,633 - -
Transfers between funds...... (6,576) - -
Surrenders................... - - -
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charges
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (4,585) - -
-------------- -------------- --------------
Net equity transactions.. 103,472 - -
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 104,008 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - -
CONTRACT OWNERS' EQUITY -------------- -------------- --------------
END OF PERIOD................ $
104,008 - -
============== ============== ==============
(Continued)
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
DRYSRGRO DRYSTKIX
---------------------------------------------- -----------------------------------------------
1998 1997 1996 1998 1997 1996
-------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 484 - - 50,776 - -
Mortality and expense charges
(note 3)................... (754) - - (18,196) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (270) - - 32,580 - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 6,526 - - 435,823 - -
Cost of mutual funds sold.... (6,519) - - (441,804) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... 7 - - (5,981) - -
Change in unrealized gain (loss)
on investments............. 36,926 - - 775,840 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments 36,933 - - 769,859 - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... 10,865 - - 9,613 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ 47,528 - - 812,052 - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 179,953 - - 2,697,202 - -
Transfers between funds...... 98,530 - - 3,507,438 - -
Surrenders................... - - - - - -
Death benefits (note 4)...... - - - - - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (10,961) - - (226,241) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 267,522 - - 5,978,399 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 315,050 - - 6,790,451 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - - - -
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 315,050 - - 6,790,451 - -
============== ============== ============== ============== ============= ==============
<CAPTION>
DRYCAPAP
---------------------------------------------
1998 1997 1996
------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ 17,678 - -
Mortality and expense charges
(note 3)................... (8,408) - -
------------- -------------- --------------
Net investment activity.... 9,270 - -
------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 56,858 - -
Cost of mutual funds sold.... (58,027) - -
------------- -------------- --------------
Realized gain (loss)
on investments........... (1,169) - -
Change in unrealized gain (loss)
on investments............. 351,157 - -
-------------- -------------- --------------
Net gain (loss) on investments 349,988 - -
------------- -------------- --------------
Reinvested capital gains..... 2 - -
------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 359,260 - -
------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 1,389,597 - -
Transfers between funds...... 1,576,343 - -
Surrenders................... - - -
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charges
(note 2d)................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (55,062) - -
-------------- -------------- --------------
Net equity transactions.. 2,910,878 - -
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 3,270,138 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD................... - - -
CONTRACT OWNERS' EQUITY -------------- -------------- --------------
END OF PERIOD................ $ 3,270,138 - -
============== ============== ==============
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
DRYGRINC FIDVIPEI
--------------------------------------------- ---------------------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 1,650 - - - - -
Mortality and expense charges
(note 3)................... (866) - - (7,345) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... 784 - - (7,345) - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 5,500 - - 873,277 - -
Cost of mutual funds sold.... (6,178) - - (900,730) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... (678) - - (27,453) - -
Change in unrealized gain (loss)
on investments............. 36,799 - - 290,670 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments 36,121 - - 263,217 - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... 96 - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ 37,001 - - 255,872 - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 339,972 - - 1,561,165 - -
Transfers between funds...... (1,551) - - 1,354,321 - -
Surrenders................... - - - - - -
Death benefits (note 4)...... - - - (3,754) - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (12,302) - - (77,610) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 326,119 - - 2,834,122 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 363,120 - - 3,089,994 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD..................... - - - - - -
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 363,120 - - 3,089,994 - -
============== ============== ============== ============== ============= ==============
<CAPTION>
FIDVIPGR
----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 217 249 97
Mortality and expense charges
(note 3)................... (827) (65) (60)
-------------- -------------- --------------
Net investment activity.... (610) 184 37
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 40,958 9,806 4,688
Cost of mutual funds sold.... (28,248) (6,287) (3,562)
-------------- -------------- --------------
Realized gain (loss)
on investments........... 12,710 3,519 1,126
Change in unrealized gain (loss)
on investments............. 18,980 3,665 1,552
-------------- -------------- --------------
Net gain (loss) on investments 31,690 7,184 2,678
-------------- -------------- --------------
Reinvested capital gains..... 5,679 1,112 2,450
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 36,759 8,480 5,165
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 90,635 3,392 5,481
Transfers between funds...... 31,354 (117) -
Surrenders................... - (10,177) (2,960)
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... 546 3,798 (724)
Deductions for surrender charges
(note 2d).................. - (1,911) -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (9,764) (1,302) (1,828)
-------------- -------------- --------------
Net equity transactions.. 112,771 (6,317) (31)
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 149,530 2,163 5,134
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD..................... 42,500 40,337 35,203
CONTRACT OWNERS' EQUITY -------------- -------------- --------------
END OF PERIOD................ $ 192,030 42,500 40,337
============== ============== ==============
</TABLE>
(Continued)
<PAGE> 10
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
FIDVIPHI FIDVIPOV
--------------------------------------------- ----------------------------------------------
1998 1997 1996 1998 1997 1996
-------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - - - - -
Mortality and expense charges
(note 3)................... (1,101) - - (2,118) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (1,101) - - (2,118) - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 1,614,239 - - 8,873 - -
Cost of mutual funds sold.... (1,742,660) - - (9,390) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... (128,421) - - (517) - -
Change in unrealized gain (loss)
on investments............. 21,509 - - 43,345 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments (106,912) - - 42,828 - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... - - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ (108,013) - - 40,710 - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 371,525 - - 555,121 - -
Transfers between funds...... 209,922 - - 249,878 - -
Surrenders................... - - - - - -
Death benefits (note 4)...... (3,869) - - - - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (22,819) - - (14,893) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 554,759 - - 790,106 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 446,746 - - 830,816 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - - - -
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 446,746 - - 830,816 - -
============== ============== ============== ============== ============= ==============
<CAPTION>
FIDVIPAM
---------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - -
Mortality and expense charges
(note 3)................... (9,891) - -
-------------- -------------- --------------
Net investment activity.... (9,891) - -
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 163,186 - -
Cost of mutual funds sold.... (167,191) - -
-------------- -------------- --------------
Realized gain (loss)
on investments........... (4,005) - -
Change in unrealized gain (loss)
on investments............. 295,169 - -
-------------- -------------- --------------
Net gain (loss) on investments 291,164 - -
-------------- -------------- --------------
Reinvested capital gains..... - - -
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 281,273 - -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 1,469,777 - -
Transfers between funds...... 2,083,152 - -
Surrenders................... - - -
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charges
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (82,694) - -
-------------- -------------- --------------
Net equity transactions.. 3,470,235 - -
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 3,751,508 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - -
CONTRACT OWNERS' EQUITY -------------- -------------- --------------
END OF PERIOD................ $ 3,751,508 - -
============== ============== ==============
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
FIDVIPCON FIDVIPGROP
--------------------------------------------- ----------------------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - - - - -
Mortality and expense charges
(note 3)................... (834) - - (4,084) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (834) - - (4,084) - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 11,580 - - 8,736 - -
Cost of mutual funds sold.... (11,300) - - (8,768) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... 280 - - (32) - -
Change in unrealized gain (loss)
on investments............. 44,475 - - 217,085 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments 44,755 - - 217,053 - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... - - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ 43,921 - - 212,969 - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 227,675 - - 496,204 - -
Transfers between funds...... 54,742 - - 1,030,094 - -
Surrenders................... - - - - - -
Death benefits (note 4)...... - - - - - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (8,890) - - (26,971) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 273,527 - - 1,499,327 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 317,448 - - 1,712,296 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - - - -
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 317,448 - - 1,712,296 - -
============== ============== ============== ============== ============= ==============
<CAPTION>
MSEMMKT
---------------------------------------------
1998 1997 1996
------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ 4,872 - -
Mortality and expense charges
(note 3)................... (120) - -
------------- -------------- --------------
Net investment activity.... 4,752 - -
------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 6,713 - -
Cost of mutual funds sold.... (7,026) - -
------------- -------------- --------------
Realized gain (loss)
on investments........... (313) - -
Change in unrealized gain (loss)
on investments............. (11,337) - -
------------- -------------- --------------
Net gain (loss) on investments (11,650) - -
------------- -------------- --------------
Reinvested capital gains..... - - -
------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ (6,898) - -
------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 56,550 - -
Transfers between funds...... (2,968) - -
Surrenders................... - - -
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charge
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (1,770) - -
------------- -------------- --------------
Net equity transactions.. 51,812 - -
------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 44,914 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - -
CONTRACT OWNERS' EQUITY ------------- -------------- --------------
END OF PERIOD................ $ 44,914 - -
============== ============== ==============
</TABLE>
(Continued)
<PAGE> 12
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
NSATCAPAP NSATGVTBD
---------------------------------------------- ----------------------------------------------
1998 1997 1996 1998 1997 1996
-------------- -------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 9,739 37 21 37,511 827 991
Mortality and expense charges
(note 3)................... (6,021) (8) (2) (3,182) (25) (26)
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... 3,718 29 19 34,329 802 965
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 212,711 97 194 1,076,570 7,321 1,316
Cost of mutual funds sold.... (219,787) (55) (138) (1,071,059) (6,800) (1,277)
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... (7,076) 42 56 5,511 521 39
Change in unrealized gain (loss)
on investments............. 202,050 472 205 433 (59) (447)
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments 194,974 514 261 5,944 462 (408)
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... 62,464 192 45 5,369 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ 261,156 735 325 45,642 1,264 557
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 378,599 181 224 437,723 2,913 6,917
Transfers between funds...... 1,683,884 6,557 - 685,162 (592) -
Surrenders................... - - (7) - (7,742) (31)
Death benefits (note 4)...... - - - (4,142) - -
Policy loans (net of repayments)
(note 5)................... (5,169) 38 (162) - 3,686 (67)
Deductions for surrender charges
(note 2d).................. - - - - (1,454) -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (72,485) - - (50,895) (1,414) (4,512)
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 1,984,829 6,776 55 1,067,848 (4,603) 2,307
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 2,245,985 7,511 380 1,113,490 (3,339) 2,864
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... 9,039 1,528 1,148 14,075 17,414 14,550
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 2,255,024 9,039 1,528 1,127,565 14,075 17,414
============== ============== ============== ============== ============= ==============
<CAPTION>
NSATMYMKT
----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 504,998 547 374
Mortality and expense charges
(note 3)................... (51,084) (9) (10)
-------------- -------------- --------------
Net investment activity.... 453,914 538 364
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 26,194,791 11,959 4,261
Cost of mutual funds sold.... (26,194,791) (11,959) (4,261)
-------------- -------------- --------------
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........ 453,914 538 364
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 31,739,658 482 4,753
Transfers between funds...... (20,876,682) (10,338) -
Surrenders................... (18,421) - -
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - 2,385 4,827
Deductions for surrender charges
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (826,847) (2,144) (1,666)
-------------- -------------- --------------
Net equity transactions.. 10,017,708 (9,615) 7,914
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 10,471,622 (9,077) 8,278
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... 1,122 10,199 1,921
CONTRACT OWNERS' EQUITY -------------- -------------- --------------
END OF PERIOD................ $ 10,472,744 1,122 10,199
============== ============== ==============
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
NSATSMCO NSATTOTRE
--------------------------------------------- ----------------------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------- ------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - - 1,289 213 210
Mortality and expense charges
(note 3)................... (667) - - (663) (25) (18)
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (667) - - 626 188 192
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 541,453 - - 899,768 955 2,697
Cost of mutual funds sold.... (577,428) - - (917,792) (635) (2,201)
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... (35,975) - - (18,024) 320 496
Change in unrealized gain (loss)
on investments............. 13,257 - - 4,285 2,249 1,047
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments (22,718) - - (13,739) 2,569 1,543
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... - - - 7,210 642 431
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ (23,385) - - (5,903) 3,399 2,166
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 64,219 - - 53,247 3,373 3,930
Transfers between funds...... 179,980 - - 140,892 5,847 -
Surrenders................... - - - - - (1,618)
Death benefits (note 4)...... (2,309) - - (3,805) - -
Policy loans (net of repayments)
(note 5)................... - - - (4,918) 10 (92)
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (10,293) - - (14,505) (3,914) (3,947)
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 231,597 - - 170,911 5,316 (1,727)
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 208,212 - - 165,008 8,715 439
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - 20,215 11,500 11,061
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 208,212 - - 185,223 20,215 11,500
============== ============== ============== ============== ============= ==============
<CAPTION>
NBAMTBAL
----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 266 175 290
Mortality and expense charges
(note 3)................... (101) (18) (19)
-------------- -------------- --------------
Net investment activity.... 165 157 271
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 746 3,184 2,847
Cost of mutual funds sold.... (705) (2,780) (2,770)
-------------- -------------- --------------
Realized gain (loss)
on investments........... 41 404 77
Change in unrealized gain (loss)
on investments............. (667) 833 (1,177)
-------------- -------------- --------------
Net gain (loss) on investments (626) 1,237 (1,100)
-------------- -------------- --------------
Reinvested capital gains..... 1,868 450 1,613
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 1,407 1,844 784
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 962 1,682 381
Transfers between funds...... - (1,357) -
Surrenders................... - (5,156) (1,420)
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - 3,703 (284)
Deductions for surrender charges
(note 2d).................. - (969) -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (702) (161) (161)
-------------- -------------- --------------
Net equity transactions.. 260 (2,258) (1,484)
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 1,667 (414) (700)
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... 11,086 11,500 12,200
CONTRACT OWNERS' EQUITY -------------- -------------- --------------
END OF PERIOD................ $ 12,753 11,086 11,500
============== ============== ==============
</TABLE>
(Continued)
<PAGE> 14
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
NBAMTGRO NBAMTLMAT
--------------------------------------------- ---------------------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - - - - -
Mortality and expense charges
(note 3)................... (213) - - (6,625) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (213) - - (6,625) - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 451,671 - - 600,881 - -
Cost of mutual funds sold.... (589,586) - - (594,456) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... (137,915) - - 6,425 - -
Change in unrealized gain (loss)
on investments............. 14,568 - - 37,857 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments (123,347) - - 44,282 - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... - - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ (123,560) - - 37,657 - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 179,067 - - 1,297,068 - -
Transfers between funds...... 39,299 - - 777,381 - -
Surrenders................... - - - - - -
Death benefits (note 4)...... - - - - - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (6,812) - - (90,472) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 211,554 - - 1,983,977 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 87,994 - - 2,021,634 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - - - -
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 87,994 - - 2,021,634 - -
============== ============== ============== ============== ============= ==============
<CAPTION>
NBAMTPART
----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 96 - -
Mortality and expense charges
(note 3)................... (7,845) - -
-------------- -------------- --------------
Net investment activity.... (7,749) - -
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 502,461 - -
Cost of mutual funds sold.... (576,869) - -
-------------- -------------- --------------
Realized gain (loss)
on investments........... (74,408) - -
Change in unrealized gain (loss)
on investments............. 150,166 - -
-------------- -------------- --------------
Net gain (loss) on investment 75,758 - -
-------------- -------------- --------------
Reinvested capital gains..... 3,026 - -
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 71,035 - -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 167,059 - -
Transfers between funds...... 2,868,038 - -
Surrenders................... - - -
Death benefits (note 4)...... (1,910) - -
Policy loans (net of repayments)
(note 5)................... - --
Deductions for surrender charges
(note 2d).................. - --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (58,438) --
-------------- -------------- --------------
Net equity transactions.. 2,974,749 --
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 3,045,784 --
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - --
CONTRACT OWNERS' EQUITY -------------- -------------- --------------
END OF PERIOD................ $ 3,045,784 --
============== ============== ==============
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
OPPBDFD OPPGLSEC
--------------------------------------------- ---------------------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 322 - - 307 - -
Mortality and expense charges
(note 3)................... (1,236) - - (5,205) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (914) - - (4,898) - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 9,221 - - 6,335 - -
Cost of mutual funds sold.... (9,205) - - (7,203) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... 16 - - (868) - -
Change in unrealized gain (loss)
on investments............. 8,173 - - 124,381 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments 8,189 - - 123,513 - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... 291 - - 1,156 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ 7,566 - - 119,771 - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 478,200 - - 735 - -
Transfers between funds...... 37,657 - - 2,090,084 - -
Surrenders................... - - - - - -
Death benefits (note 4)...... - - - - - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (18,327) - - (14,493) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 497,530 - - 2,076,326 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 505,096 - - 2,196,097 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - - - -
CONTRACT OWNERS' EQUITY -------------- -------------- -------------- -------------- ------------- --------------
END OF PERIOD................ $ 505,096 - - 2,196,097 - -
============== ============== ============== ============== ============= ==============
<CAPTION>
OPPGRO
---------------------------------------------
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 100 - -
Mortality and expense charges
(note 3)................... (463) - -
-------------- -------------- --------------
Net investment activity.... (363) - -
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 11,617 - -
Cost of mutual funds sold.... (12,143) - -
-------------- -------------- --------------
Realized gain (loss)
on investments........... (526) - -
Change in unrealized gain (loss)
on investments............. 23,432 - -
-------------- -------------- --------------
Net gain (loss) on investments 22,906 - -
-------------- -------------- --------------
Reinvested capital gains..... 1,201 - -
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 23,744 - -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 132,607 - -
Transfers between funds...... 29,263 - -
Surrenders................... - - -
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charges
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (7,839) - -
-------------- -------------- --------------
Net equity transactions.. 154,031 - -
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 177,775 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - -
CONTRACT OWNERS' EQUITY -------------- -------------- --------------
END OF PERIOD................ $ 177,775 - -
============== ============== ==============
</TABLE>
(Continued)
<PAGE> 16
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
OPPMULT STOPP2
--------------------------------------------- ---------------------------------------------
1998 1997 1996 1998 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - - 5,700 - -
Mortality and expense charges
(note 3)................... (219) - - (6,774) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (219) - - (1,074) - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 10,181 - - 20,340 - -
Cost of mutual funds sold.... (10,741) - - (24,221) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... (560) - - (3,881) - -
Change in unrealized gain (loss)
on investments............. 2,201 - - 274,510 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments 1,641 - - 270,629 - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... - - - 3,397 - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ 1,422 - - 272,952 - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 11,946 - - 867,064 - -
Transfers between funds...... 68,612 - - 1,764,409 - -
Surrenders................... - - - - - -
Death benefits (note 4)...... - - - - - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (2,851) - - (52,214) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 77,707 - - 2,579,259 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 79,129 - - 2,852,211 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
CONTRACT OWNERS' EQUITY
END OF PERIOD................ $ 79,129 - - 2,852,211 - -
============== ============== ============== ============== ============= ==============
<CAPTION>
STDISC2
----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - -
Mortality and expense charges
(note 3)................... (11) - -
-------------- -------------- --------------
Net investment activity.... (11) - -
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 96 - -
Cost of mutual funds sold.... (92) - -
-------------- -------------- --------------
Realized gain (loss)
on investments........... 4 - -
Change in unrealized gain (loss)
on investments............. 708 - -
-------------- -------------- --------------
Net gain (loss) on investments 712 - -
-------------- -------------- --------------
Reinvested capital gains..... - - -
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 701 - -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 3,013 - -
Transfers between funds...... 1,244 - -
Surrenders................... - - -
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charges
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (215) - -
-------------- -------------- --------------
Net equity transactions.. 4,042 - -
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 4,743 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - -
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY
END OF PERIOD................ $ 4,743 - -
============== ============== ==============
</TABLE>
<PAGE> 17
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
STINTSTK2 VWBF
--------------------------------------------- ----------------------------------------------
1998 1997 1996 1998 1997 1996
-------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 94 - - - - -
Mortality and expense charges
(note 3)................... (138) - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (44) - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 2,255 - - 635,332 - -
Cost of mutual funds sold.... (2,481) - - (637,007) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... (226) - - (1,675) - -
Change in unrealized gain (loss)
on investments............. (2,215) - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments (2,441) - - (1,675) - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... - - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ (2,485) - - (1,675) - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 58,646 - - 2,790 - -
Transfers between funds...... (1,770) - - 5,627 - -
Surrenders................... - - - - - -
Death benefits (note 4)...... - - - (2,734) - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (1,997) - - (4,008) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 54,879 - - 1,675 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 52,394 - - - - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
CONTRACT OWNERS' EQUITY
END OF PERIOD................ $ 52,394 - - - - -
============== ============== ============== ============== ============= ==============
<CAPTION>
VWEM
----------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - -
Mortality and expense charges
(note 3)................... - - -
-------------- -------------- --------------
Net investment activity.... - - -
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 214,660 - -
Cost of mutual funds sold.... (233,229) - -
-------------- -------------- --------------
Realized gain (loss)
on investments........... (18,569) - -
Change in unrealized gain (loss)
on investments............. - - -
-------------- -------------- --------------
Net gain (loss) on investments (18,569) - -
-------------- -------------- --------------
Reinvested capital gains..... - - -
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ (18,569) - -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 849 - -
Transfers between funds...... 25,876 - -
Surrenders................... - - -
Death benefits (note 4)...... (889) - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charges
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (7,267) - -
-------------- -------------- --------------
Net equity transactions.. 18,569 - -
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... - - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - -
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY
END OF PERIOD................ $ - - -
============== ============== ==============
</TABLE>
(Continued)
<PAGE> 18
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
VKACRESEC WPINTEQ
---------------------------------------------- ---------------------------------------------
1998 1997 1996 1998 1997 1996
-------------- -------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ 31 - - 597 - -
Mortality and expense charges
(note 3)................... (673) - - (322) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net investment activity.... (642) - - 275 - -
-------------- -------------- -------------- -------------- ------------- --------------
Proceeds from mutual fund
shares sold................ 9,973 - - 6,992 - -
Cost of mutual funds sold.... (11,122) - - (7,479) - -
-------------- -------------- -------------- -------------- ------------- --------------
Realized gain (loss)
on investments........... (1,149) - - (487) - -
Change in unrealized gain (loss)
on investments............. (1,009) - - (1,416) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net gain (loss) on investments (2,158) - - (1,903) - -
-------------- -------------- -------------- -------------- ------------- --------------
Reinvested capital gains..... 306 - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
Net change in contract
owners' equity resulting
from operations........ (2,494) - - (1,628) - -
-------------- -------------- -------------- -------------- ------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 274,090 - - 133,214 - -
Transfers between funds...... (1,813) - - (6,311) - -
Surrenders................... - - - - - -
Death benefits (note 4)...... - - - - - -
Policy loans (net of repayments)
(note 5)................... - - - - - -
Deductions for surrender charges
(note 2d).................. - - - - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (9,912) - - (4,755) - -
-------------- -------------- -------------- -------------- ------------- --------------
Net equity transactions.. 262,365 - - 122,148 - -
-------------- -------------- -------------- -------------- ------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 259,871 - - 120,520 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - - - - -
-------------- -------------- -------------- -------------- ------------- --------------
CONTRACT OWNERS' EQUITY
END OF PERIOD................ $ 259,871 - - 120,520 - -
============== ============== ============== ============== ============= ==============
<CAPTION>
WPPVENCAP
---------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - -
Mortality and expense charges
(note 3)................... (150) - -
-------------- -------------- --------------
Net investment activity.... (150) - -
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 1,920 - -
Cost of mutual funds sold.... (2,142) - -
-------------- -------------- --------------
Realized gain (loss)
on investments........... (222) - -
Change in unrealized gain (loss)
on investments............. 6,202 - -
-------------- -------------- --------------
Net gain (loss) on investments 5,980 - -
-------------- -------------- --------------
Reinvested capital gains..... - - -
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 5,830 - -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 40,664 - -
Transfers between funds...... 13,590 - -
Surrenders................... - - -
Death benefits (note 4)...... - - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charges
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (1,485) - -
-------------- -------------- --------------
Net equity transactions.. 52,769 - -
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 58,599 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - -
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY
END OF PERIOD................ $ 58,599 - -
============== ============== ==============
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, 1996
WPSMCOGR
----------------------------------------------
1998 1997 1996
------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........ $ - - -
Mortality and expense charges
(note 3)................... (3,814) - -
-------------- -------------- --------------
Net investment activity.... (3,814) - -
-------------- -------------- --------------
Proceeds from mutual fund
shares sold................ 262,623 - -
Cost of mutual funds sold.... (306,771) - -
-------------- -------------- --------------
Realized gain (loss)
on investments........... (44,148) - -
Change in unrealized gain (loss)
on investments............. 179,022 - -
-------------- -------------- --------------
Net gain (loss) on investments 134,874 - -
-------------- -------------- --------------
Reinvested capital gains..... - - -
-------------- -------------- --------------
Net change in contract
owners' equity resulting
from operations........ 131,060 - -
-------------- -------------- --------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners............ 873,045 - -
Transfers between funds...... 535,743 - -
Surrenders................... - - -
Death benefits (note 4)...... (1,107) - -
Policy loans (net of repayments)
(note 5)................... - - -
Deductions for surrender charges
(note 2d).................. - - -
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c).......... (22,666) - -
-------------- -------------- --------------
Net equity transactions.. 1,385,015 - -
-------------- -------------- --------------
NET CHANGE IN CONTRACT
OWNERS' EQUITY............... 1,516,075 - -
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.................... - - -
-------------- -------------- --------------
CONTRACT OWNERS' EQUITY
END OF PERIOD................ $ 1,516,075 - -
============== ============== ==============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 20
NATIONWIDE VL SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS
December 31, 1998, 1997 and 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) ORGANIZATION AND NATURE OF OPERATIONS
Nationwide VL Separate Account-A (the Account) was established pursuant
to a resolution of the Board of Directors of Nationwide Life and
Annuity Insurance Company (the Company) on August 8, 1984. The Account
has been registered as a unit investment trust under the Investment
Company Act of 1940. On August 21, 1991, the Company (Depositor)
transferred to the Account, 50,000 shares of the American Century VP -
American Century VP Advantage fund for which the Account was credited
with 25,000 accumulation units. The value of the accumulation units
purchased by the Company on August 21, 1991 was $250,000.
The Company offers Single Premium, Multiple Payment, Flexible Premium
and Corporate Flexible Premium Variable Life Insurance Policies through
the Account. The primary distribution for the contracts is through
banks and other financial institutions; however, other distributors may
be utilized.
(b) THE CONTRACTS
Only contracts with a front-end sales charge, a contingent deferred
sales charge and certain other fees, have been offered for purchase.
Additionally, contracts without a front-end sales charge, but with a
contingent deferred sales charge and certain other fees, have been
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);
American Century VP - American Century VP Advantage (ACVPAdv)
American Century VP - American Century VP Balanced (ACVPBal)
American Century VP - American Century VP Capital Appreciation
(ACVPCapAp)
American Century VP - American Century VP Income & Growth
(ACVPIncGr)
American Century VP - American Century VP International (ACVPInt)
American Century VP - American Century VP Value (ACVPValue)
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)
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)
Portfolios of the Fidelity Variable Insurance Products Fund III
(Fidelity VIP-III);
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
<PAGE> 21
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 - Balanced Portfolio (NBAMTBal)
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
Neuberger & Berman AMT - Limited Maturity Bond (NBAMTLMat)
Neuberger & Berman AMT - Partner's Portfolio (NBAMTPart)
Funds of the Oppenheimer Variable Account Funds (Oppenheimer VAF);
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)
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 Hard Assets Fund (VWHA)
Van Eck WIT - Worldwide Bond Fund (VWBF)
Van Eck WIT - Worldwide Emerging Markets Fund (VWEM)
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)
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, policy owners have invested in all of the above
funds except for American Century VP - American Century VP Income &
Growth, Nationwide SAT - Small Cap Value Fund, Neuberger & Berman AMT -
Guardian Portfolio, Van Eck WIT - Worldwide Hard Assets Fund, Van Eck
WIT - Worldwide Bond Fund, and Van Eck WIT Worldwide Emerging Markets
Fund. The contract owners' equity is affected by the investment results
of each fund, equity transactions by contract owners and certain policy
charges (see notes 2 and 3). The accompanying financial statements
include only contract owners' purchase payments pertaining to the
variable portions of their contracts and exclude any purchase payments
for fixed dollar investment options, 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.
<PAGE> 22
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. The cost of investments
sold is determined on the 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) 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 sales charge not to exceed 3.5% of each premium
payment. The Company also deducts a state premium tax charge of 2.5% of
all premiums received.
For corporate flexible premium contracts, the Company deducts a sales
charge never to exceed 5.5% during the first seven policy years and 2%
thereafter. The Company also deducts a tax expense charge not to exceed
3.5% and a state premium tax charge of 2.25% of all premiums received.
(b) COST OF INSURANCE
A cost of insurance charge is assessed monthly against each contract by
liquidating units. The amount of the charge is based upon age, sex,
rate class and net amount at risk (death benefit less total contract
value).
(c) ADMINISTRATIVE CHARGES
For multiple payment contracts, the Company currently deducts a monthly
administrative charge of $5 (may deduct up to $7.50, maximum) to
recover policy maintenance, accounting, record keeping and other
administrative expenses.
For flexible premium contracts, the Company currently deducts a monthly
administrative charge of $12.50 during the first policy year and $5 per
month thereafter (may deduct up to $7.50, maximum) to recover policy
maintenance, accounting, record keeping and other administrative
expenses. Additionally, the Company deducts an increase charge of $2.04
per year per $1,000 applied to any increase in the specified amount
during the first 12 months after the increase becomes effective.
<PAGE> 23
For single premium contracts, the Company deducts an annual
administrative charge which is determined as follows:
Purchase payments totaling less than $25,000 - $90/year
Purchase payments totaling $25,000 or more - $50/year
The above charges are assessed against each contract by liquidating
units.
No charges were deducted from the initial funding, or from the
earnings thereon.
For corporate flexible premium contracts, the Company deducts a monthly
administrative charge of $5 on a current basis and $10 on a guaranteed
basis in all policy years.
(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 multiple payment contracts and flexible premium contracts, the
amount charged is determined 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 single premium contracts, the charge is determined based upon a
specified percentage of the original purchase payment. The charge is
8.5% in the first year, and declines to 0% after the ninth year.
For corporate flexible premium contracts, there are no surrender
charges.
(3) ASSET CHARGES
For multiple payment contracts and flexible premium contracts, the Company
deducts charges from the contract to cover mortality and expense risk
charges related to operations, and to recover policy maintenance charges.
The charge is equal to an annual rate of .80%, with certain exceptions.
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. The charge is
equal to an annual rate of 1.30% during the first ten policy years, and
1.00% thereafter. At this time no single premium contracts are in force.
For corporate flexible 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 charges. This charge is
guaranteed not to exceed an annual effective rate of .75%. On a current
basis, the annual rate will be .60% during the first through fourth policy
years, .40% during the fifth through twentieth policy years, and .25%
thereafter.
The above charges are assessed through the daily unit value calculation. No
charges are deducted from the initial funding, or from earnings thereon.
The following table provides mortality and expense risk charges by contract
type for the period ended December 31, 1998:
<TABLE>
<CAPTION>
TOTAL ACVPAdv ACVPBal ACVPCapAp ACVPint
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ 865 71 - - -
Corporate Universal
Variable Life ................ 150,929 - 923 422 134
------------ ------------ ------------ ------------ ------------
Total....................... $ 151,794 71 923 422 134
============ ============ ============ ============ ============
ACVPValue DrySRGro DryStkix DryCapAp DryGrinc
------------ ------------ ------------ ------------ ------------
Multiple Payment and
Flexible Premium.............. $ - - - - -
Corporate Universal
Variable Life ................ 294 754 18,196 8,408 866
------------ ------------ ------------ ------------ ------------
Total....................... $ 294 754 18,196 8,408 866
============ ============ ============ ============ ============
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
FidVIPEI FidVIPGr FidVIPHI FidVIPOv FidVIPAM
------------ ------------ ------------ ------------ ------------
Multiple Payment and
<S> <C> <C> <C> <C> <C>
Flexible Premium.............. $ - 420 - - -
Corporate Universal
Variable Life ................ 7,345 407 1,101 2,118 9,891
------------ ------------ ------------ ------------ ------------
Total....................... $ 7,345 827 1,101 2,118 9,891
============ ============ ============ ============ ============
FidVIPCon FidVIPGrOp MSEmMkt NSATCapAp NSATGvtBd
------------ ------------ ------------ ------------ ------------
Multiple Payment and
Flexible Premium.............. $ - - - 40 95
Corporate Universal
Variable Life ................ 834 4,084 120 5,981 3,087
------------ ------------ ------------ ------------ ------------
Total....................... $ 834 4,084 120 6,021 3,182
============ ============ ============ ============ ============
NSATMyMkt NSATSmCo NSATTotRe NBAMTBal NBAMTGro
------------ ------------ ------------ ------------ ------------
Multiple Payment and
Flexible Premium.............. $ 8 - 130 101 -
Corporate Universal
Variable Life ................ 51,076 667 533 - 213
------------ ------------ ------------ ------------ ------------
Total....................... $ 51,084 667 663 101 213
============ ============ ============ ============ ============
NBAMTLMat NBAMTPart OppBdFd OppGlSec OppGro
------------ ------------ ------------ ------------ ------------
Multiple Payment and
Flexible Premium.............. $ - - - - -
Corporate Universal
Variable Life ................ 6,625 7,845 1,236 5,205 463
------------ ------------ ------------ ------------ ------------
Total....................... $ 6,625 7,845 1,236 5,205 463
============ ============ ============ ============ ============
OppMult StOpp2 StDisc2 StIntStk2 VKMSRESec
------------ ------------ ------------ ------------ ------------
Multiple Payment and
Flexible Premium.............. $ - - - - -
Corporate Universal
Variable Life ................ 219 6,774 11 138 673
------------ ------------ ------------ ------------ ------------
Total....................... $ 219 6,774 11 138 673
============ ============ ============ ============ ============
WPIntEq WPPVenCap WPSMCoGr
------------ ------------ ------------
Multiple Payment and
Flexible Premium.............. $ - - -
Corporate Universal
Variable Life ................ 322 150 3,814
------------ ------------ ------------
Total....................... $ 322 150 3,814
============ ============ ============
</TABLE>
(4) POLICY LOANS (NET OF REPAYMENTS)
Contract provisions allow contract owners to borrow up to 90% of a policy's
cash surrender value. On each policy anniversary following the initial
loan, interest is due and payable to the Company.
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.
(5) 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.
<PAGE> 63
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Life and Annuity Insurance Company:
We have audited the accompanying balance sheets of Nationwide Life and Annuity
Insurance Company, a wholly owned subsidiary of Nationwide Life Insurance
Company, as of December 31, 1998 and 1997, and the related statements of income,
shareholder's equity and cash flows for each of the years in the three-year
period ended December 31, 1998. 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. 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 Life and Annuity
Insurance Company as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1998, in conformity with generally accepted accounting
principles.
KPMG LLP
Columbus, Ohio
January 29, 1999
<PAGE> 2
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Balance Sheets
($000's omitted, except per share amounts)
<TABLE>
<CAPTION>
December 31,
Assets 1998 1997
---- ----
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $ 904,946 $ 796,919
Equity securities 20,853 14,767
Mortgage loans on real estate, net 268,894 218,852
Real estate, net 2,250 2,824
Policy loans 332 215
Short-term investments 2,277 18,968
---------- ----------
1,199,552 1,052,545
---------- ----------
Cash 2 5,163
Accrued investment income 11,645 10,778
Deferred policy acquisition costs 53,007 30,087
Other assets 41,542 15,624
Assets held in separate accounts 1,533,690 891,101
---------- ----------
$2,839,438 $2,005,298
========== ==========
Liabilities and Shareholder's Equity
Future policy benefits and claims $1,163,829 $ 986,191
Other liabilities 25,933 29,426
Liabilities related to separate accounts 1,533,690 891,101
---------- ----------
2,723,452 1,906,718
---------- ----------
Commitments and contingencies (note 7 and 11)
Shareholder's equity:
Common stock, $40 par value. Authorized, issued and outstanding 66,000 shares 2,640 2,640
Additional paid-in capital 52,960 52,960
Retained earnings 50,331 35,812
Accumulated other comprehensive income 10,055 7,168
---------- ----------
115,986 98,580
---------- ----------
$2,839,438 $2,005,298
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Income
($000's omitted)
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Revenues:
Policy charges $ 28,549 $ 11,244 $ 6,656
Life insurance premiums 63 363 246
Net investment income 11,314 11,577 51,045
Realized gains (losses) on investments 696 (246) (3)
Other income 1,165 1,057 --
-------- -------- --------
41,787 23,995 57,944
-------- -------- --------
Benefits and expenses:
Interest credited to policyholder account balances 4,881 3,948 34,711
Other benefits and claims 1,586 433 813
Amortization of deferred policy acquisition costs 4,348 1,402 7,380
Other operating expenses 8,952 1,860 7,247
-------- -------- --------
19,767 7,643 50,151
-------- -------- --------
Income before federal income tax expense 22,020 16,352 7,793
Federal income tax expense 7,501 5,749 2,707
-------- -------- --------
Net income $ 14,519 $ 10,603 $ 5,086
======== ======== ========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Shareholder's Equity
Years ended December 31, 1998, 1997 and 1996
($000's omitted)
<TABLE>
<CAPTION>
Accumulated
Additional other Total
Common paid-in Retained comprehensive shareholder's
stock capital earnings income equity
----- ------- -------- ------ ------
<S> <C> <C> <C> <C> <C>
December 31, 1995 $ 2,640 $ 52,960 $ 20,123 $ 4,454 $ 80,177
Comprehensive income:
Net income -- -- 5,086 -- 5,086
Net unrealized losses on securities
available-for-sale arising during the -- -- -- (1,226) (1,226)
year
---------
Total comprehensive income 3,860
--------- --------- --------- --------- ---------
December 31, 1996 2,640 52,960 25,209 3,228 84,037
Comprehensive income:
Net income -- -- 10,603 -- 10,603
Net unrealized gains on securities
available-for-sale arising during the -- -- -- 3,940 3,940
year
---------
Total comprehensive income 14,543
--------- --------- --------- --------- ---------
December 31, 1997 2,640 52,960 35,812 7,168 98,580
Comprehensive income:
Net income -- -- 14,519 -- 14,519
Net unrealized gains on securities
available-for-sale arising during the -- -- -- 2,887 2,887
year
---------
Total comprehensive income 17,406
--------- --------- --------- --------- ---------
December 31, 1998 $ 2,640 $ 52,960 $ 50,331 $ 10,055 $ 115,986
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Statements of Cash Flows
($000's omitted)
<TABLE>
<CAPTION>
Years ended December 31,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 14,519 $ 10,603 $ 5,086
Adjustments to reconcile net income to net cash provided by
operating activities:
Interest credited to policyholder account balances 4,881 3,948 34,711
Capitalization of deferred policy acquisition costs (29,216) (20,099) (19,987)
Amortization of deferred policy acquisition costs 4,348 1,402 7,380
Commission and expense allowances under coinsurance
agreement with affiliate -- -- 26,473
Amortization and depreciation (479) 250 1,721
Realized (gains) losses on invested assets, net (696) 246 3
Increase in accrued investment income (867) (1,589) (725)
(Increase) decrease in other assets (25,919) 21,858 (32,539)
Increase (decrease) in policy liabilities and funds withheld
on coinsurance agreement with affiliate 139,991 228,898 (7,101)
(Decrease) increase in other liabilities (3,883) (7,488) 23,198
--------- --------- ---------
Net cash provided by operating activities 102,679 238,029 38,220
--------- --------- ---------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 117,228 95,366 73,966
Proceeds from sale of securities available-for-sale 17,403 30,431 2,480
Proceeds from repayments of mortgage loans on real estate 28,180 15,199 10,975
Proceeds from sale of real estate 707 -- --
Proceeds from repayments of policy loans 99 67 23
Cost of securities available-for-sale acquired (242,516) (267,899) (179,671)
Cost of mortgage loans on real estate acquired (78,180) (84,736) (57,395)
Cost of real estate acquired (3) (13) --
Policy loans issued (216) (155) (55)
Short-term investments, net 16,691 (18,476) 4,352
--------- --------- ---------
Net cash used in investing activities (140,607) (230,216) (145,325)
--------- --------- ---------
Cash flows from financing activities:
Increase in investment product and universal life insurance
product account balances 74,828 6,952 200,575
Decrease in investment product and universal life insurance
product account balances (42,061) (13,898) (89,174)
--------- --------- ---------
Net cash provided by (used in) financing activities 32,767 (6,946) 111,401
--------- --------- ---------
Net (decrease) increase in cash (5,161) 867 4,296
Cash, beginning of year 5,163 4,296 --
--------- --------- ---------
Cash, end of year $ 2 $ 5,163 $ 4,296
========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements
December 31, 1998, 1997 and 1996
($000's omitted)
(1) Organization and Description of Business
Nationwide Life and Annuity Insurance Company (the Company) is a wholly
owned subsidiary of Nationwide Life Insurance Company (NLIC).
The Company provides long-term savings and retirement products,
including variable annuities, fixed annuities and life insurance.
(2) Summary of Significant Accounting Policies
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying financial statements have been prepared in accordance with
generally accepted accounting principles, which differ from statutory
accounting practices prescribed or permitted by regulatory authorities.
An Annual Statement, filed with the Department of Insurance of the
State of Ohio (the Department), is prepared on the basis of accounting
practices prescribed or permitted by the Department. Prescribed
statutory accounting practices include a variety of publications of the
National Association of Insurance Commissioners (NAIC), as well as
state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass all accounting practices not
so prescribed. The Company has no material permitted statutory
accounting practices.
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosures of contingent assets and
liabilities as of the date of the financial statements and the reported
amounts of revenues and expenses for the reporting period. Actual
results could differ significantly from those estimates.
The most significant estimates include those used in determining
deferred policy acquisition costs, valuation allowances for mortgage
loans on real estate and real estate investments and the liability for
future policy benefits and claims. Although some variability is
inherent in these estimates, management believes the amounts provided
are adequate.
(a) Valuation of Investments and Related Gains and Losses
The Company is required to classify its fixed maturity securities
and equity securities as either held-to-maturity,
available-for-sale or trading. Fixed maturity securities are
classified as held-to-maturity when the Company has the positive
intent and ability to hold the securities to maturity and are
stated at amortized cost. Fixed maturity securities not classified
as held-to-maturity and all equity securities are classified as
available-for-sale and are stated at fair value, with the
unrealized gains and losses, net of adjustments to deferred policy
acquisition costs and deferred federal income tax, reported as a
separate component of shareholder's equity. The adjustment to
deferred policy acquisition costs represents the change in
amortization of deferred policy acquisition costs that would have
been required as a charge or credit to operations had such
unrealized amounts been realized. The Company has no fixed
maturity securities classified as held-to-maturity or trading as
of December 31, 1998 or 1997.
<PAGE> 7
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Mortgage loans on real estate are carried at the unpaid principal
balance less valuation allowances. The Company provides valuation
allowances for impairments of mortgage loans on real estate based
on a review by portfolio managers. The measurement of impaired
loans is based on the present value of expected future cash flows
discounted at the loan's effective interest rate or, as a
practical expedient, at the fair value of the collateral, if the
loan is collateral dependent. Loans in foreclosure and loans
considered to be impaired are placed on non-accrual status.
Interest received on non-accrual status mortgage loans on real
estate is included in interest income in the period received.
Real estate is carried at cost less accumulated depreciation and
valuation allowances. Impairment losses are recorded on long-lived
assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount.
Realized gains and losses on the sale of investments are
determined on the basis of specific security identification.
Estimates for valuation allowances and other than temporary
declines are included in realized gains and losses on investments.
(b) Revenues and Benefits
Investment Products and Universal Life Insurance Products:
Investment products consist primarily of individual variable and
fixed deferred annuities. Universal life insurance products
include universal life insurance, variable universal life
insurance, corporate owned life insurance and other
interest-sensitive life insurance policies. Revenues for
investment products and universal life insurance products consist
of net investment income, asset fees, cost of insurance, policy
administration and surrender charges that have been earned and
assessed against policy account balances during the period. Policy
benefits and claims that are charged to expense include interest
credited to policy account balances and benefits and claims
incurred in the period in excess of related policy account
balances.
Traditional Life Insurance Products: Traditional life insurance
products include those products with fixed and guaranteed premiums
and benefits and consist primarily of certain annuities with life
contingencies. Premiums for traditional life insurance products
are recognized as revenue when due. Benefits and expenses are
associated with earned premiums so as to result in recognition of
profits over the life of the contract. This association is
accomplished by the provision for future policy benefits and the
deferral and amortization of policy acquisition costs.
(c) Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
certain expenses of the policy issue and underwriting department
and certain variable sales expenses have been deferred. For
investment products and universal life insurance products,
deferred policy acquisition costs are being amortized with
interest over the lives of the policies in relation to the present
value of estimated future gross profits from projected interest
margins, asset fees, cost of insurance, policy administration and
surrender charges. For years in which gross profits are negative,
deferred policy acquisition costs are amortized based on the
present value of gross revenues. Deferred policy acquisition costs
are adjusted to reflect the impact of unrealized gains and losses
on fixed maturity securities available-for-sale as described in
note 2(a).
(d) Separate Accounts
Separate account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. The investment income and gains or losses
of these accounts accrue directly to the contractholders. The
activity of the separate accounts is not reflected in the
statements of income and cash flows except for the fees the
Company receives.
<PAGE> 8
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(e) Future Policy Benefits
Future policy benefits for investment products in the accumulation
phase, universal life insurance and variable universal life
insurance policies have been calculated based on participants'
contributions plus interest credited less applicable contract
charges. The average interest rate credited on investment product
policy reserves was 5.1%, 5.1% and 5.6% for the years ended
December 31, 1998, 1997 and 1996, respectively.
(f) Federal Income Tax
The Company files a consolidated federal income tax return with
Nationwide Mutual Insurance Company (NMIC). The members of the
consolidated tax return group have a tax sharing agreement which
provides, in effect, for each member to bear essentially the same
federal income tax liability as if separate tax returns were
filed.
The Company utilizes the asset and liability method of accounting
for income tax. Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. Under this method, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized
in income in the period that includes the enactment date.
Valuation allowances are established when necessary to reduce the
deferred tax assets to the amounts expected to be realized.
(g) Reinsurance Ceded
Reinsurance revenues ceded and reinsurance recoveries on benefits
and expenses incurred are deducted from the respective income and
expense accounts. Assets and liabilities related to reinsurance
ceded are reported on a gross basis.
(h) Statements of Cash Flows
The Company routinely invests its available cash balances in
highly liquid, short-term investments with affiliated companies.
See note 10. As such, the Company had no cash balance as of
December 31, 1995.
(i) Recently Issued Accounting Pronouncements
On January 1, 1998 the Company adopted SFAS No. 131 - Disclosures
about Segments of an Enterprise and Related Information (SFAS
131). SFAS 131 supersedes SFAS No. 14 - Financial Reporting for
Segments of a Business Enterprise. SFAS 131 establishes standards
for public business enterprises to report information about
operating segments in annual financial statements and selected
information about operating segments in interim financial reports.
SFAS 131 also establishes standards for related disclosures about
products and services, geographic areas, and major customers. The
adoption of SFAS 131 did not affect results of operations or
financial position, nor did it affect the manner in which the
Company defines its operating segments. The segment information
required for annual financial statements is included in note 12.
On January 1, 1998, the Company adopted SFAS No. 132 - Employers'
Disclosures about Pensions and Other Postretirement Benefits. SFAS
132 revises employers' disclosures about pension and other
postretirement benefit plans. The Statement does not change the
measurement or recognition of benefit plans in the financial
statements. The revised disclosures required by SFAS 132 are
included in note 8.
<PAGE> 9
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
In June 1998, the FASB issued SFAS No. 133 - Accounting for
Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133
establishes accounting and reporting standards for derivative
instruments and for hedging activities. Contracts that contain
embedded derivatives, such as certain insurance contracts, are
also addressed by the Statement. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at
fair value. The Statement is effective for fiscal years beginning
after June 15, 1999. It may be implemented earlier provided
adoption occurs as of the beginning of any fiscal quarter after
issuance. The Company plans to adopt this Statement in first
quarter 2000 and is currently evaluating the impact on results of
operations and financial condition.
In March 1998, The American Institute of Certified Public
Accountant's Accounting Standards Executive Committee issued
Statement of Position 98-1 - Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use (SOP 98-1). SOP
98-1 provides guidance intended to standardize accounting
practices for costs incurred to develop or obtain computer
software for internal use. Specifically, SOP 98-1 provides
guidance for determining whether computer software is for internal
use and when costs incurred for internal use software are to be
capitalized. SOP 98-1 is effective for financial statements for
fiscal years beginning after December 15, 1998. The Company does
not expect the adoption of SOP 98-1, which occurred on January 1,
1999, to have a material impact on the Company's financial
statements.
(j) Reclassification
Certain items in the 1997 and 1996 financial statements have been
reclassified to conform to the 1998 presentation.
(3) Investments
The amortized cost, gross unrealized gains and losses and estimated
fair value of securities available-for-sale as of December 31, 1998 and
1997 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
---- ----- ------ ----------
<S> <C> <C> <C> <C>
December 31, 1998:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 15,577 $ 232 $ (11) $ 15,798
Obligations of states and political subdivisions 332 1 -- 333
Debt securities issued by foreign governments 4,015 23 -- 4,038
Corporate securities 602,925 15,446 (358) 618,013
Mortgage-backed securities 261,225 5,605 (66) 266,764
--------- --------- --------- ---------
Total fixed maturity securities 884,074 21,307 (435) 904,946
Equity securities 15,323 5,530 -- 20,853
--------- --------- --------- ---------
$ 899,397 $ 26,837 $ (435) $ 925,799
========= ========= ========= =========
December 31, 1997:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 5,923 $ 109 $ (27) $ 6,005
Obligations of states and political subdivisions 267 5 -- 272
Debt securities issued by foreign governments 6,077 57 (1) 6,133
Corporate securities 482,478 10,964 (509) 492,933
Mortgage-backed securities 285,224 6,458 (106) 291,576
--------- --------- --------- ---------
Total fixed maturity securities 779,969 17,593 (643) 796,919
Equity securities 11,704 3,063 -- 14,767
--------- --------- --------- ---------
$ 791,673 $ 20,656 $ (643) $ 811,686
========= ========= ========= =========
</TABLE>
<PAGE> 10
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1998, by expected
maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Amortized Estimated
cost fair value
---- ----------
<S> <C> <C>
Fixed maturity securities available-for-sale:
Due in one year or less $121,769 $122,931
Due after one year through five years 606,626 621,349
Due after five years through ten years 126,215 130,402
Due after ten years 29,464 30,264
-------- --------
$884,074 $904,946
======== ========
</TABLE>
The components of unrealized gains on securities available-for-sale,
net, were as follows as of December 31:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Gross unrealized gains $ 26,402 $ 20,013
Adjustment to deferred policy acquisition costs (10,933) (8,985)
Deferred federal income tax (5,414) (3,860)
-------- --------
$ 10,055 $ 7,168
======== ========
</TABLE>
An analysis of the change in gross unrealized gains (losses) on
securities available-for-sale follows for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $ 3,922 $ 9,177 $ (8,764)
Equity securities 2,467 1,663 249
-------- -------- --------
$ 6,389 $ 10,840 $ (8,515)
======== ======== ========
</TABLE>
Proceeds from the sale of securities available-for-sale during 1998,
1997 and 1996 were $17,403, $30,431 and $2,480, respectively. During
1998, gross gains of $509 ($825 and $181 in 1997 and 1996,
respectively) and gross losses of $0 ($1,124 and none in 1997 and 1996,
respectively) were realized on those sales. See note 10.
The recorded investment of mortgage loans on real estate considered to
be impaired as of December 31, 1998 was $890 (none as of December 31,
1997). No valuation allowance has been recorded for these loans as of
December 31, 1998. During 1998, the average recorded investment in
impaired mortgage loans on real estate was approximately $178 ($386 in
1997) and interest income recognized on those loans was $15 (none in
1997), which is equal to interest income recognized using a cash-basis
method of income recognition.
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Allowance, beginning of year $ 750 $ 934
Reductions credited to operations -- (53)
Direct write-downs charged against the allowance -- (131)
----- -----
Allowance, end of year $ 750 $ 750
===== =====
</TABLE>
<PAGE> 11
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Real estate is presented at cost less accumulated depreciation of $105
as of December 31, 1998 ($153 as of December 31, 1997). There was a
valuation allowance of $229 as of December 31, 1997.
The Company has no investments which were non-income producing for the
twelve month periods preceding December 31, 1998 and 1997.
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $56,398 $53,491 $40,552
Equity securities -- 375 598
Mortgage loans on real estate 21,124 14,862 9,991
Real estate 379 318 214
Short-term investments 1,361 899 507
Other 178 90 57
------- ------- -------
Total investment income 79,440 70,035 51,919
Less:
Investment expenses 1,773 1,386 874
Net investment income ceded (note 9) 66,353 57,072 --
------- ------- -------
Net investment income $11,314 $11,577 $51,045
======= ======= =======
</TABLE>
An analysis of realized gains (losses) on investments, net of valuation
allowances, by investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Fixed maturity securities available-for-sale $ 509 $(299) $ 181
Mortgage loans on real estate -- 53 (184)
Real estate and other 187 -- --
----- ----- -----
$ 696 $(246) $ (3)
===== ===== =====
</TABLE>
Fixed maturity securities with an amortized cost of $3,562 and $3,383
as of December 31, 1998 and 1997, respectively, were on deposit with
various regulatory agencies as required by law.
<PAGE> 12
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(4) Federal Income Tax
The Company's current federal income tax liability was $1,522 and $806
as of December 31, 1998 and 1997, respectively.
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset (liability) as of December 31,
1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 16,670 $ 13,168
Liabilities in Separate Accounts 12,477 8,080
Mortgage loans on real estate and real estate 263 336
Other assets and other liabilities -- 48
-------- --------
Total gross deferred tax assets 29,410 21,632
-------- --------
Deferred tax liabilities:
Fixed maturity securities 8,669 7,186
Deferred policy acquisition costs 8,103 6,159
Equity securities 1,935 1,072
Other 10,422 7,892
-------- --------
Total gross deferred tax liabilities 29,129 22,309
-------- --------
$ 281 $ (677)
======== ========
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion of the
total gross deferred tax assets will not be realized. All future
deductible amounts can be offset by future taxable amounts or recovery
of federal income tax paid within the statutory carryback period. The
Company has determined that valuation allowances are not necessary as
of December 31, 1998, 1997 and 1996 based on its analysis of future
deductible amounts.
Federal income tax expense for the years ended December 31 was as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Currently payable $ 10,014 $ 2,458 $ 9,612
Deferred tax (benefit) expense (2,513) 3,291 (6,905)
-------- -------- --------
$ 7,501 $ 5,749 $ 2,707
======== ======== ========
</TABLE>
Total federal income tax expense for the years ended December 31, 1998,
1997 and 1996 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1998 1997 1996
Amount % Amount % Amount %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $ 7,707 35.0 $ 5,723 35.0 $ 2,728 35.0
Tax exempt interest and dividends
received deduction (223) (1.0) -- (0.0) (175) (2.3)
Other, net 17 0.1 26 (0.2) 154 2.0
------- ------ ------- ------ ------- ------
Total (effective rate of each year) $ 7,501 34.1 $ 5,749 35.2 $ 2,707 34.7
======= ====== ======= ====== ======= ======
</TABLE>
Total federal income tax paid was $9,298, $9,566 and $2,335 during the
years ended December 31, 1998, 1997 and 1996, respectively.
<PAGE> 13
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(5) Comprehensive Income
Pursuant to SFAS No. 130 - Reporting Comprehensive Income, which the
Company adopted January 1, 1998, the Consolidated Statements of
Shareholder's Equity include a new measure called "Comprehensive
Income". Comprehensive Income includes net income as well as certain
items that are reported directly within separate components of
shareholders' equity that bypass net income. Currently, the Company's
only component of Other Comprehensive Income is unrealized gains
(losses) on securities available-for-sale. The related before and after
federal tax amounts are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-
for-sale arising during the period:
Gross $ 6,898 $ 10,541 $ (8,334)
Adjustment to deferred policy acquisition costs (1,947) (4,778) 6,628
Related federal income tax (expense) benefit (1,733) (2,017) 362
-------- -------- --------
Net 3,218 3,746 (1,344)
-------- -------- --------
Reclassification adjustment for net (gains) losses on
securities available-for-sale realized during the
period:
Gross (509) 299 (181)
Related federal income tax expense (benefit) 178 (105) 63
-------- -------- --------
Net (331) 194 118
-------- -------- --------
Total Other Comprehensive Income $ 2,887 $ 3,940 $ (1,226)
======== ======== ========
</TABLE>
(6) Fair Value of Financial Instruments
The following disclosures summarize the carrying amount and estimated
fair value of the Company's financial instruments. Certain assets and
liabilities are specifically excluded from the disclosure requirements
of financial instruments. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
The fair value of a financial instrument is defined as the amount at
which the financial instrument could be exchanged in a current
transaction between willing parties. In cases where quoted market
prices are not available, fair value is based on estimates using
present value or other valuation techniques. Many of the Company's
assets and liabilities subject to the disclosure requirements are not
actively traded, requiring fair values to be estimated by management
using present value or other valuation techniques. These techniques are
significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. Although fair value estimates
are calculated using assumptions that management believes are
appropriate, changes in assumptions could cause these estimates to vary
materially. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases,
could not be realized in the immediate settlement of the instruments.
Although insurance contracts, other than policies such as annuities
that are classified as investment contracts, are specifically exempted
from the disclosure requirements, estimated fair value of policy
reserves on life insurance contracts is provided to make the fair value
disclosures more meaningful.
The tax ramifications of the related unrealized gains and losses can
have a significant effect on fair value estimates and have not been
considered in the estimates.
<PAGE> 14
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The following methods and assumptions were used by the Company in
estimating its fair value disclosures:
Fixed maturity and equity securities: The fair value for fixed
maturity securities is based on quoted market prices, where
available. For fixed maturity securities not actively traded, fair
value is estimated using values obtained from independent pricing
services or, in the case of private placements, is estimated by
discounting expected future cash flows using a current market rate
applicable to the yield, credit quality and maturity of the
investments. The fair value for equity securities is based on
quoted market prices.
Mortgage loans on real estate: The fair value for mortgage loans
on real estate is estimated using discounted cash flow analyses,
using interest rates currently being offered for similar loans to
borrowers with similar credit ratings. Loans with similar
characteristics are aggregated for purposes of the calculations.
Fair value for mortgages in default is the estimated fair value of
the underlying collateral.
Policy loans, short-term investments and cash: The carrying amount
reported in the balance sheets for these instruments approximates
their fair value.
Separate account assets and liabilities: The fair value of assets
held in separate accounts is based on quoted market prices. The
fair value of liabilities related to separate accounts is the
amount payable on demand, which is net of certain surrender
charges.
Investment contracts: The fair value for the Company's liabilities
under investment type contracts is disclosed using two methods.
For investment contracts without defined maturities, fair value is
the amount payable on demand. For investment contracts with known
or determined maturities, fair value is estimated using discounted
cash flow analysis. Interest rates used are similar to currently
offered contracts with maturities consistent with those remaining
for the contracts being valued.
Policy reserves on life insurance contracts: The estimated fair
value is the amount payable on demand. Also included are
disclosures for the Company's limited payment policies, which the
Company has used discounted cash flow analyses similar to those
used for investment contracts with known maturities to estimate
fair value.
Commitments to extend credit: Commitments to extend credit have
nominal value because of the short-term nature of such
commitments. See note 7.
Carrying amount and estimated fair value of financial instruments
subject to disclosure requirements and policy reserves on life
insurance contracts were as follows as of December 31:
<TABLE>
<CAPTION>
1998 1997
------------------------- --------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $ 904,946 $ 904,946 $ 796,919 $ 796,919
Equity securities 20,853 20,853 14,767 14,767
Mortgage loans on real estate, net 268,894 276,387 218,852 229,881
Policy loans 332 332 215 215
Short-term investments 2,277 2,277 18,968 18,968
Cash 2 2 5,163 5,163
Assets held in separate accounts 1,533,690 1,533,690 891,101 891,101
Liabilities:
Investment contracts 1,153,930 1,113,584 980,263 950,105
Policy reserves on life insurance contracts 9,899 10,517 5,928 6,076
Liabilities related to separate accounts 1,533,690 1,501,255 891,101 868,056
</TABLE>
<PAGE> 15
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(7) Risk Disclosures
The following is a description of the most significant risks facing
life insurers and how the Company mitigates those risks:
Credit Risk: The risk that issuers of securities owned by the Company
or mortgagors on mortgage loans on real estate owned by the Company
will default or that other parties which owe the Company money, will
not pay. The Company minimizes this risk by adhering to a conservative
investment strategy, by maintaining credit and collection policies and
by providing for any amounts deemed uncollectible.
Interest Rate Risk: The risk that interest rates will change and cause
a decrease in the value of an insurer's investments. This change in
rates may cause certain interest-sensitive products to become
uncompetitive or may cause disintermediation. The Company mitigates
this risk by charging fees for non-conformance with certain policy
provisions, by offering products that transfer this risk to the
purchaser, and/or by attempting to match the maturity schedule of its
assets with the expected payouts of its liabilities. To the extent that
liabilities come due more quickly than assets mature, an insurer would
have to borrow funds or sell assets prior to maturity and potentially
recognize a gain or loss.
Legal/Regulatory Risk: The risk that changes in the legal or regulatory
environment in which an insurer operates will result in increased
competition, reduced demand for a company's products, or create
additional expenses not anticipated by the insurer in pricing its
products. The Company mitigates this risk by operating throughout the
United States, thus reducing its exposure to any single jurisdiction,
and also by employing underwriting practices which identify and
minimize the adverse impact of this risk.
Financial Instruments with Off-Balance-Sheet Risk: The Company is a
party to financial instruments with off-balance-sheet risk in the
normal course of business through management of its investment
portfolio. These financial instruments include commitments to extend
credit in the form of loans. These instruments involve, to varying
degrees, elements of credit risk in excess of amounts recognized on the
balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property represents
the collateral if the commitment is funded. The Company's policy for
new mortgage loans on real estate is to lend no more than 75% of
collateral value. Should the commitment be funded, the Company's
exposure to credit loss in the event of nonperformance by the borrower
is represented by the contractual amounts of these commitments less the
net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments.
Commitments on mortgage loans on real estate of $9,500 extending into
1999 were outstanding as of December 31, 1998.
Significant Concentrations of Credit Risk: The Company grants mainly
commercial mortgage loans on real estate to customers throughout the
United States. The Company has a diversified portfolio with no more
than 33% (29% in 1997) in any geographic area and no more than 6% (3%
in 1997) with any one borrower as of December 31, 1998. As of December
31, 1998 36% (37% in 1997) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed apartment
building properties.
<PAGE> 16
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(8) Pension Plan and Postretirement Benefits Other Than Pensions
The Company is a participant, together with other affiliated companies,
in a pension plan covering all employees who have completed at least
one year of service. The Company funds pension costs accrued for direct
employees plus an allocation of pension costs accrued for employees of
affiliates whose work efforts benefit the Company. Assets of the
Retirement Plan are invested in group annuity contracts of NLIC and
Employers Life Insurance Company of Wausau (ELICW).
Pension costs charged to operations by the Company during the years
ended December 31, 1998, 1997 and 1996 were $235, $257 and $189,
respectively.
In addition to the defined benefit pension plan, the Company, together
with other affiliated companies, participates in life and health care
defined benefit plans for qualifying retirees. Postretirement life and
health care benefits are contributory and generally available to full
time employees who have attained age 55 and have accumulated 15 years
of service with the Company after reaching age 40. Postretirement
health care benefit contributions are adjusted annually and contain
cost-sharing features such as deductibles and coinsurance. In addition,
there are caps on the Company's portion of the per-participant cost of
the postretirement health care benefits. These caps can increase
annually, but not more than three percent. The Company's policy is to
fund the cost of health care benefits in amounts determined at the
discretion of management. Plan assets are invested primarily in group
annuity contracts of NLIC.
The Company elected to immediately recognize its estimated accumulated
postretirement benefit obligation (APBO), however, certain affiliated
companies elected to amortize their initial transition obligation over
periods ranging from 10 to 20 years.
The Company's accrued postretirement benefit expense as of December 31,
1998 and 1997 was $1,008 and $891, respectively, and the net periodic
postretirement benefit cost (NPPBC) for 1998, 1997 and 1996 was $130,
$94 and $78, respectively.
<PAGE> 17
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Information regarding the funded status of the pension plan as a whole
and the postretirement life and health care benefit plan as a whole as
of December 31, 1998 and 1997 follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 2,033,800 $ 1,847,800 $ 237,900 $ 200,700
Service cost 87,600 77,300 9,800 7,000
Interest cost 123,400 118,600 15,400 14,000
Actuarial loss 123,200 60,000 15,600 24,400
Plan curtailment in 1998/merger in 1997 (107,200) 1,500 -- --
Benefits paid (75,800) (71,400) (8,600) (8,200)
----------- ----------- ----------- -----------
Benefit obligation at end of year 2,185,000 2,033,800 270,100 237,900
----------- ----------- ----------- -----------
Change in plan assets:
Fair value of plan assets at beginning of year 2,212,900 1,947,900 69,200 63,000
Actual return on plan assets 300,700 328,100 5,000 3,600
Employer contribution 104,100 7,200 12,100 10,600
Plan merger -- 1,100 -- --
Benefits paid (75,800) (71,400) (8,400) (8,000)
----------- ----------- ----------- -----------
Fair value of plan assets at end of year 2,541,900 2,212,900 77,900 69,200
----------- ----------- ----------- -----------
Funded status 356,900 179,100 (192,200) (168,700)
Unrecognized prior service cost 31,500 34,700 -- --
Unrecognized net (gains) losses (345,700) (330,700) 16,000 1,600
Unrecognized net (asset) obligation at transition (11,000) 33,300 1,300 1,500
----------- ----------- ----------- -----------
Prepaid (accrued) benefit cost $ 31,700 $ (83,600) $ (174,900) $ (165,600)
=========== =========== =========== ===========
</TABLE>
Basis for measurements, funded status of the pension plan and
postretirement life and health care benefit plan:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average discount rate 5.50% 6.00% 6.65% 6.70%
Rate of increase in future compensation levels 3.75% 4.25% -- --
Assumed health care cost trend rate:
Initial rate -- -- 15.00% 12.13%
Ultimate rate -- -- 8.00% 6.12%
Uniform declining period -- -- 15 Years 12 Years
</TABLE>
The net periodic pension cost for the pension plan as a whole for the
years ended December 31, 1998, 1997 and 1996 follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 87,600 $ 77,300 $ 75,500
Interest cost on projected benefit obligation 123,400 118,600 105,500
Expected return on plan assets (159,000) (139,000) (116,100)
Recognized gains (3,800) -- --
Amortization of prior service cost 3,200 3,200 3,200
Amortization of unrecognized transition obligation 4,200 4,200 4,100
--------- --------- ---------
$ 55,600 $ 64,300 $ 72,200
========= ========= =========
</TABLE>
<PAGE> 18
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
Effective December 31, 1998, Wausau Service Corporation (WSC) ended its
affiliation with the Nationwide Insurance Enterprise and employees of
WSC ended participation in the plan. A curtailment gain of $67,100
resulted (consisting of a $107,200 reduction in the projected benefit
obligation, net of the write-off of the $40,100 remaining unamortized
transition obligation related to WSC). The Company anticipates that the
plan will settle the obligation related to WSC employees with a
transfer of assets during 1999.
Basis for measurements, net periodic pension cost for the
pension plan:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate 6.00% 6.50% 6.00%
Rate of increase in future compensation levels 4.25% 4.75% 4.25%
Expected long-term rate of return on plan assets 7.25% 7.25% 6.75%
</TABLE>
The amount of NPPBC for the postretirement benefit plan as a whole for
the years ended December 31, 1998, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Service cost (benefits attributed to employee service
during the year) $ 9,800 $ 7,000 $ 6,500
Interest cost on accumulated postretirement benefit obligation 15,400 14,000 13,700
Actual return on plan assets (5,000) (3,600) (4,300)
Amortization of unrecognized transition obligation of affiliates 200 200 200
Net amortization and deferral 1,200 (500) 1,800
-------- -------- --------
$21,600 $ 17,100 $ 17,900
======== ======== ========
</TABLE>
Actuarial assumptions used for the measurement of the accumulated
postretirement benefit obligation (APBO) and the NPPBC for the
postretirement benefit plan for 1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
NPPBC:
Discount rate 6.70% 7.25% 6.65%
Long term rate of return on plan
assets, net of tax 5.83% 5.89% 4.80%
Assumed health care cost trend rate:
Initial rate 12.00% 11.00% 11.00%
Ultimate rate 6.00% 6.00% 6.00%
Uniform declining period 12 Years 12 Years 12 Years
</TABLE>
For the postretirement benefit plan as a whole, a one percentage point
increase or decrease in the assumed health care cost trend rate would
have no impact on the APBO as of December 31, 1998 and have no impact
on the NPPBC for the year ended December 31, 1998.
(9) Shareholder's Equity, Regulatory Risk-Based Capital, Retained Earnings
and Dividend Restrictions
Ohio, the Company's state of domicile, imposes minimum risk-based
capital requirements that were developed by the NAIC. The formulas for
determining the amount of risk-based capital specify various weighting
factors that are applied to financial balances or various levels of
activity based on the perceived degree of risk. Regulatory compliance
is determined by a ratio of the company's regulatory total adjusted
capital, as defined by the NAIC, to its authorized control level
risk-based capital, as defined by the NAIC. Companies below specific
trigger points or ratios are classified within
<PAGE> 19
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
certain levels, each of which requires specified corrective action. The
Company exceeds the minimum risk-based capital requirements.
The statutory capital and surplus of the Company as reported to
regulatory authorities as of December 31, 1998, 1997 and 1996 was
$70,135, $74,820 and $71,390, respectively. The statutory net (loss)
income of the Company as reported to regulatory authorities for the
years ended December 31, 1998, 1997 and 1996 was $(3,371), $7,446 and
$670, respectively.
The Company is limited in the amount of shareholder dividends it may
pay without prior approval by the Department. As of December 31, 1998,
the maximum amount available for dividend payment from the Company to
its shareholder without prior approval of the Department was $7,013.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and stockholder dividends
in the future.
(10) Transactions With Affiliates
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1998, 1997 and 1996, the
Company made lease payments to NMIC and its subsidiaries of $430, $703
and $410, respectively.
Pursuant to a cost sharing agreement among NMIC and certain of its
direct and indirect subsidiaries, including the Company, NMIC provides
certain operational and administrative services, such as sales support,
advertising, personnel and general management services, to those
subsidiaries. Expenses covered by this agreement are subject to
allocation among NMIC, the Company and other affiliates. Amounts
allocated to the Company were $2,933, $2,564 and $2,682 in 1998, 1997
and 1996, respectively. The allocations are based on techniques and
procedures in accordance with insurance regulatory guidelines. Measures
used to allocate expenses among companies include individual employee
estimates of time spent, special cost studies, salary expense,
commissions expense and other methods agreed to by the participating
companies that are within industry guidelines and practices. The
Company believes these allocation methods are reasonable. In addition,
the Company does not believe that expenses recognized under the
inter-company agreements are materially different than expenses that
would have been recognized had the Company operated on a stand alone
basis. Amounts payable to NMIC from the Company under the cost sharing
agreement were $2,750 and $4,981 as of December 31, 1998 and 1997,
respectively.
Effective December 31, 1996, the Company entered into an intercompany
reinsurance agreement with NLIC whereby certain inforce and
subsequently issued fixed individual deferred annuity contracts are
ceded on a 100% coinsurance with funds withheld basis. On December 31,
1997, the agreement was amended to a modified coinsurance basis. Under
modified coinsurance agreements, invested assets and liabilities for
future policy benefits are retained by the ceding company and net
investment earnings on the invested assets are paid to the assuming
company. Under terms of the Company's agreement, the investment risk
associated with changes in interest rates is borne by NLIC. Risk of
asset default is retained by the Company, although a fee is paid by
NLIC to the Company for the Company's retention of such risk. The
agreement will remain inforce until all contract obligations are
settled. The ceding of risk does not discharge the original insurer
from its primary obligation to the contractholder. The Company believes
that the terms of the modified coinsurance agreement are consistent in
all material respects with what the Company could have obtained with
unaffiliated parties. Amounts ceded to NLIC in 1998 are included in
NLIC's results of operations for 1998 and include premiums of $241,503,
net investment income of $66,353 and benefits, claims and other
expenses of $296,659. In consideration for the initial inforce business
reinsured, NLIC paid the Company $26,473 in commission and expense
allowances which were applied to the Company's deferred policy
acquisition costs as of December 31, 1996. No significant gain or loss
was recognized as a result of the agreement.
<PAGE> 20
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
During 1997, the Company sold fixed maturity securities
available-for-sale at fair value of $27,253 to NLIC. The Company
recognized a $693 gain on the transactions.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC), an affiliate, under which
NCMC acts as common agent in handling the purchase and sale of
short-term securities for the respective accounts of the participants.
Amounts on deposit with NCMC were $2,277 and $18,968 as of December 31,
1998 and 1997, respectively, and are included in short-term investments
on the accompanying balance sheets.
(11) Contingencies
On October 29, 1998, the Company and certain of its affiliates were
named in a lawsuit filed in the Common Pleas Court of Franklin County,
Ohio related to the sale of deferred annuity products for use as
investments in tax-deferred contributory retirement plans (Mercedes
Castillo v. Nationwide Financial Services, Inc., Nationwide Life
Insurance Company and Nationwide Life and Annuity Insurance Company).
The plaintiff in such lawsuit seeks to represent a national class of
the Company's customers and seeks unspecified compensatory and punitive
damages. The Company is currently evaluating this lawsuit, which is in
an early stage and has not been certified as a class. The Company
intends to defend this lawsuit vigorously.
(12) Segment Information
The Company uses differences in products as the basis for defining its
reportable segments. The Company reports three product segments:
Variable Annuities, Fixed Annuities and Life Insurance.
The Variable Annuities segment consists of annuity contracts that
provide the customer with the opportunity to invest in mutual funds
managed by independent investment managers and the Company, with
investment returns accumulating on a tax-deferred basis. The Company's
variable annuity products consist almost entirely of flexible premium
deferred variable annuity contracts.
The Fixed Annuities segment consists of annuity contracts that generate
a return for the customer at a specified interest rate, fixed for a
prescribed period, with returns accumulating on a tax-deferred basis.
Such contracts consist of single premium deferred annuities, flexible
premium deferred annuities and single premium immediate annuities. The
Fixed Annuities segment includes the fixed option under variable
annuity contracts.
The Life Insurance segment consists of insurance products, including
variable universal life insurance and corporate-owned life insurance
products, that provide a death benefit and may also allow the customer
to build cash value on a tax-deferred basis.
In addition to the product segments, the Company reports corporate
revenue and expenses, investments and related investment income
supporting capital not specifically allocated to its product segments,
and all realized gains and losses on investments in a Corporate and
Other segment.
<PAGE> 21
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The following table summarizes the financial results of the Company's
business segments for the years ended December 31, 1998, 1997 and 1996.
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
Annuities Annuities Insurance and Other Total
--------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
1998:
Net investment income (1) $ (1,417) $ 6,792 $ 4098 $ 5,531 $ 11,314
Other operating revenue 18,209 3,182 8,386 -- 29,777
----------- ----------- ----------- ----------- -----------
Total operating revenue (2) 16,792 9,974 8,794 5,531 41,091
----------- ----------- ----------- ----------- -----------
Interest credited to policyholder
account balances -- 4,660 221 -- 4,881
Amortization of deferred policy
acquisition costs 3,466 508 374 -- 4,348
Other benefits and expenses 4,442 2,087 4,009 -- 10,538
----------- ----------- ----------- ----------- -----------
Total expenses 7,908 7,255 4,604 -- 19,767
----------- ----------- ----------- ----------- -----------
Operating income (loss) before
federal income tax 8,884 2,719 4,190 5,531 21,324
Realized gains on investments -- -- -- 696 696
----------- ----------- ----------- ----------- -----------
Consolidated income before
federal tax expense $ 8,884 $ 2,719 $ 4,190 $ 6,227 $ 22,020
=========== =========== =========== =========== ===========
Assets as of year end $ 1,502,829 $ 1,162,040 $ 92,482 $ 82,087 $ 2,839,438
=========== =========== =========== =========== ===========
1997:
Net investment income (1) $ (873) $ 5,927 $ 166 $ 6,357 $ 11,577
Other operating revenue 10,823 1,825 16 -- 12,664
----------- ----------- ----------- ----------- -----------
Total operating revenue (2) 9,950 7,752 182 6,357 24,241
----------- ----------- ----------- ----------- -----------
Interest credited to policyholder
account balances -- 3,856 92 -- 3,948
Amortization of deferred policy
acquisition costs 1,035 347 20 -- 1,402
Other benefits and expenses 1,648 347 298 -- 2,293
----------- ----------- ----------- ----------- -----------
Total expenses 2,683 4,550 410 -- 7,643
----------- ----------- ----------- ----------- -----------
Operating income before federal
income tax 7,267 3,202 (228) 6,357 16,598
Realized losses on investments -- -- -- (246) (246)
----------- ----------- ----------- ----------- -----------
Consolidated income before
federal tax expense $ 7,267 $ 3,202 $ (228) $ 6,111 $ 16,352
=========== =========== =========== =========== ===========
Assets as of year end $ 925,021 $ 989,116 $ 2,228 $ 88,933 $ 2,005,298
=========== =========== =========== =========== ===========
</TABLE>
<PAGE> 22
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
Annuities Annuities Insurance and Other Total
--------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
1996:
Net investment income (1) $ (849) $ 50,197 $ 149 $ 1,548 $ 51,045
Other operating revenue 5,440 1,445 16 1 6,902
----------- ----------- ----------- ----------- -----------
Total operating revenue (2) 4,591 51,642 165 1,549 57,947
----------- ----------- ----------- ----------- -----------
Interest credited to policyholder
account balances -- 34,711 -- -- 34,711
Amortization of deferred policy
acquisition costs 1,473 5,888 19 -- 7,380
Benefits and expenses 2,024 5,889 147 -- 8,060
----------- ----------- ----------- ----------- -----------
Total expenses 3,497 46,488 166 -- 50,151
----------- ----------- ----------- ----------- -----------
Operating income before federal
income tax 1,094 5,154 (1) 1,549 7,796
Realized losses on investments -- -- -- (3) (3)
----------- ----------- ----------- ----------- -----------
Consolidated income before
federal tax expense $ 1,094 $ 5,154 $ (1) $ 1,546 $ 7,793
=========== =========== =========== =========== ===========
Assets as of year end $ 503,111 $ 787,682 $ 2,597 $ 73,031 $ 1,366,421
=========== =========== =========== =========== ===========
</TABLE>
(1) The Company's method of allocating net investment income
results in a charge (negative net investment income) to the
Variable Annuities segment which is recognized in the
Corporate and Other segment. The charge relates to
non-invested assets which support this segment on a statutory
basis.
(2) Excludes realized gains and losses on investments.
The Company has no significant revenue from customers located outside
of the United States nor does the Company have any significant
long-lived assets located outside the United States.
<PAGE> 64
PART II - OTHER INFORMATION
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment No. 9 to Form S-6 Registration Statement comprises
the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 104 pages.
Representations and Undertakings.
Independent Auditors' Consent.
Signatures.
The following exhibits required by Forms N-8B-2 and S-6:
1.Power of Attorney dated April 1, 1999 Attached hereto.
2. Resolution of the Depositor's Included with the Registration
Board of Directors authorizing Statement on Form N-8B-2 for the
the establishment of the Nationwide VL Separate Account-A
Registrant, adopted. (File No. 811-6137), and hereby
incorporated herein by reference.
3. Distribution Contracts Included with the
Registration Statement on Form
N-8B-2 for the Nationwide VL
Separate Account-A (File No.
811-6137), and hereby incorporated
herein by reference.
4. Form of Security Included with Pre-Effective
Amendment No. 1 and hereby
incorporated herein by reference.
5. Articles of Incorporation of Depositor Included with the Registration
Statement on Form N-8B-2 for the
Nationwide VL Separate Account-A
(File No. 811-6137), and hereby
incorporated herein by reference.
6. Application form of Security Included with Pre-Effective
Amendment No. 1 and hereby
incorporated herein by reference.
7. Opinion of Counsel Included with Pre-Effective
Amendment No. 1 and hereby
incorporated herein by reference.
<PAGE> 65
REPRESENTATIONS AND UNDERTAKINGS
The Registrant and Nationwide hereby make the following representations and
undertakings:
(a) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940 (the "1940 Act"). The Registrant and Nationwide elect to
be governed by Rule 6e-3(T)(b)(13)(i)(A) under the 1940 Act with respect to
the policies described in the prospectus. The policies have been designed in
such a way as to qualify for the exemptive relief from various provisions of
the 1940 Act afforded by Rule 6e-3(T).
(b) Paragraph (b) (13) (iii) (F) of Rule 6e-3(T) is being relied on for the
deduction of the mortality and expense risk charges ("risk charges") assumed
by Nationwide under the policies. Nationwide represents that the risk
charges are within the range of industry practice for comparable policies
and reasonable in relation to all of the risks assumed by the issuer under
the policies. Actuarial memoranda demonstrating the reasonableness of these
charges are maintained by Nationwide, and will be made available to the
Securities and Exchange Commission (the "Commission") on request.
(c) Nationwide has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the separate account will benefit the
separate account and the contractholders and will keep and make available to
the Commission on request a memorandum setting forth the basis for this
representation.
(d) Nationwide represents that the separate account will invest only in
management investment companies which have undertaken to have a board of
directors, a majority of whom are not interested persons of Nationwide,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
(e) Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the Registrant hereby undertakes to file with the
Commission such supplementary and periodic information, documents, and
reports as may be prescribed by any rule or regulation of the Commission
heretofore or hereafter duly adopted pursuant to authority conferred in that
section.
(f) Represent that the fees and charges deducted under the contract in the
aggregate are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by Nationwide.
<PAGE> 66
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Nationwide Life and Annuity Insurance Company and
Contract Owners of Nationwide VL Separate Account-A:
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
KPMG LLP
Columbus, Ohio
April 29, 1999
<PAGE> 67
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Nationwide VL Separate Account - A, certifies that it meets the requirements of
the Securities Act Rule 485(b) for effectiveness of the Post-Effective Amendment
No.9 and has duly caused this Post-Effective Amendment No.9 to be signed on its
behalf by the undersigned thereunto duly authorized and its seal to hereunto
affixed and attested, all in the City of Columbus, and State of Ohio, on this
29th day of April, 1999.
NATIONWIDE VL SEPARATE ACCOUNT-A
---------------------------------------------
(Registrant)
(Seal) NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
---------------------------------------------
Attest: (Depositor)
By: /s/ GLENN W. SODEN By: /s/ JOSEPH P. RATH
- ------------------------------------- --------------------------------------
Glenn W. Soden Joseph P. Rath
Assistant Secretary Vice President - Office of Product
and Market Compliance
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No.9 has been signed below by the following persons in the capacities
indicated on the 29th day of April, 1999.
SIGNATURE TITLE
LEWIS J. ALPHIN Director
- --------------------------
Lewis J. Alphin
A. I. BELL Director
- --------------------------
A. I. Bell
KENNETH D. DAVIS Director
- --------------------------
Kenneth D. Davis
KEITH W. ECKEL Director
- --------------------------
Keith W. Eckel
WILLARD J. ENGEL Director
- --------------------------
Willard J. Engel
FRED C. FINNEY Director
- --------------------------
Fred C. Finney
JOSEPH J. GASPER President and Chief Operating
- -------------------------- Officer and Director
Joseph J. Gasper
DIMON R. MCFERSON Chairman and Chief Executive
- -------------------------- Officer and Director
Dimon R. McFerson
DAVID O. MILLER Chairman of the Board and
- -------------------------- Director
David O. Miller
YVONNE L. MONTGOMERY Director
- --------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President and
- -------------------------- Chief Financial Officer
Robert A. Oakley
RALPH M. PAIGE Director
- --------------------------
Ralph M. Paige
JAMES F. PATTERSON Director
- --------------------------
James F. Patterson
ARDEN L. SHISLER Director By /s/ JOSEPH P. RATH
- -------------------------- -------------------------
Arden L. Shisler Joseph P. Rath
Attorney-in-Fact
ROBERT L. STEWART Director
- --------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- --------------------------
Nancy C. Thomas
<PAGE> 1
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each of the undersigned as directors
and/or officers of NATIONWIDE LIFE INSURANCE COMPANY, and NATIONWIDE LIFE AND
ANNUITY INSURANCE COMPANY, both Ohio corporations, which have filed or will file
with the U.S. Securities and Exchange Commission under the provisions of the
Securities Act of 1933, as amended, various Registration Statements and
amendments thereto for the registration under said Act of Individual Deferred
Variable Annuity Contracts in connection with MFS Variable Account, Nationwide
Variable Account, Nationwide Variable Account-II, Nationwide Variable Account-3,
Nationwide Variable Account-4, Nationwide Variable Account-5, Nationwide
Variable Account-6, Nationwide Fidelity Advisor Variable Account, Nationwide
Multi-Flex Variable Account, Nationwide Variable Account-8, Nationwide Variable
Account-9, Nationwide Variable Account-10, Nationwide VA Separate Account-A,
Nationwide VA Separate Account-B, Nationwide VA Separate Account-C and
Nationwide VA Separate Account-Q; and the registration of fixed interest rate
options subject to a market value adjustment offered under some or all of the
aforementioned individual Variable Annuity Contracts in connection with
Nationwide Multiple Maturity Separate Account and Nationwide Multiple Maturity
Account-A, and the registration of Group Flexible Fund Retirement Contracts in
connection with Nationwide DC Variable Account, Nationwide DCVA-II, and NACo
Variable Account; and the registration of Group Common Stock Variable Annuity
Contracts in connection with Separate Account No. 1; and the registration of
variable life insurance policies in connection with Nationwide VLI Separate
Account, Nationwide VLI Separate Account-2, Nationwide VLI Separate Account-3,
Nationwide VLI Separate Account-4, Nationwide VLI Separate Account-5, Nationwide
VL Separate Account-A and Nationwide VL Separate Account-B, Nationwide VL
Separate Account-C, Nationwide VL Separate Account-D, hereby constitutes and
appoints Dimon Richard McFerson, Joseph J. Gasper, Robert J. Woodward, Jr.,
Philip C. Gath Richard A. Karas, Edwin P. McCausland, Jr., Douglas C. Robinette,
Susan A. Wolken, Mark B. Koogler, Joseph P. Rath, and Mark R. Thresher, and each
of them with power to act without the others, his/her attorney, with full power
of substitution and resubstitution, for and in his/her name, place and stead, in
any and all capacities, to approve, and sign such Registration Statements and
any and all amendments thereto, with power to affix the corporate seal of said
corporation thereto and to attest said seal and to file the same, with all
exhibits thereto and other documents in connection therewith, with the U.S.
Securities and Exchange Commission, hereby gaining unto said attorneys, and each
of them, full power and authority to do and perform all and every act and thing
requisite to all intents and purposes as he/she might or could do in person,
hereby ratifying and confirming that which said attorneys, or any of them, may
lawfully do or cause to be done by virtue hereof. This instrument may be
executed in one or more counterparts.
IN WITNESS WHEREOF, the undersigned have herewith set their names and seals
as of this 1st day of April, 1999.
/s/ Lewis J. Alphin /s/ David O. Miller
- ------------------------------------- -------------------------------------
Lewis J. Alphin, Director David O. Miller, Chairman of the
Board, Director
/s/ A. I. Bell /s/ Yvonne L. Montgomery
- ------------------------------------- -------------------------------------
A. I. Bell, Director Yvonne L. Montgomery, Director
/s/ Kenneth D. Davis /s/ Robert A. Oakley
- ------------------------------------- -------------------------------------
Kenneth D. Davis, Director Robert A. Oakley, Executive Vice
President and Chief Financial Officer
/s/ Keith W. Eckel /s/ Ralph M. Paige
- ------------------------------------- -------------------------------------
Keith W. Eckel, Director Ralph M. Paige, Director
/s/ Willard J. Engel /s/ James F. Patterson
- ------------------------------------- -------------------------------------
Willard J. Engel, Director James F. Patterson, Director
/s/ Fred C. Finney /s/ Arden L. Shisler
- ------------------------------------- -------------------------------------
Fred C. Finney, Director Arden L. Shisler, Director
/s/ Joseph J. Gasper /s/ Robert L. Stewart
- ------------------------------------- -------------------------------------
Joseph J. Gasper, President and Robert L. Stewart, Director
Chief Operating Officer and Director
/s/ Dimon Richard McFerson /s/ Nancy C. Thomas
- ------------------------------------- -------------------------------------
Dimon Richard McFerson, Chairman and Nancy C. Thomas, Director
Chief Executive Officer and Director
