<PAGE> 1
Registration No. 333-27123
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 3
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 SEPTEMBER 27, 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: Corporate Flexible Premium Variable
Universal Life Insurance Policies
Approximate date of proposed public offering: Continuously on and after
SEPTEMBER 27, 1999
[ ] Check box if it is proposed that this filing will become effective on
(date) at (time) pursuant to Rule 487.
===============================================================================
1 of 124
<PAGE> 2
<TABLE>
<CAPTION>
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
N-8B-2 ITEM CAPTION IN PROSPECTUS
<S> <C>
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
</TABLE>
2 of 124
<PAGE> 3
<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
<S> <C>
33................................................................................Not Applicable
34................................................................................Not Applicable
35................................................................................Nationwide Life and Annuity
Insurance Company
36................................................................................Not Applicable
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
</TABLE>
3 of 124
<PAGE> 4
SUPPLEMENT DATED SEPTEMBER 27, 1999 TO
PROSPECTUS DATED MAY 1, 1999 FOR
CORPORATE FLEXIBLE PREMIUM VARIABLE UNIVERSAL LIFE INSURANCE POLICIES
ISSUED BY
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
THROUGH ITS
NATIONWIDE VL SEPARATE ACCOUNT - A
THIS SUPPLEMENT UPDATES CERTAIN INFORMATION CONTAINED IN YOUR PROSPECTUS. PLEASE
READ IT AND KEEP IT WITH YOUR PROSPECTUS FOR FUTURE REFERENCE.
1. EFFECTIVE JULY 6, 1999, ALL REFERENCES TO WARBURG PINCUS ASSET
MANAGEMENT, INC. IN YOUR PROSPECTUS CHANGED TO:
Credit Suisse Asset Management, LLC
2. THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NO LONGER AVAILABLE AS
INVESTMENT OPTIONS FOR POLICIES ISSUED ON OR AFTER SEPTEMBER 27, 1999:
American Century Variable Portfolios, Inc. - American Century VP
Capital Appreciation
Strong Variable Insurance Funds, Inc. - Strong Discovery Fund II, Inc.
Strong Variable Insurance Funds, Inc. - International Stock Fund II
Warburg Pincus Trust - International Equity Portfolio
Warburg Pincus Trust - Post-Venture Capital Portfolio
CURRENT POLICIES ARE NOT AFFECTED BY THIS CHANGE.
3. EFFECTIVE SEPTEMBER 1, 1999 "APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL
FUNDS" LOCATED ON PAGES 41 THROUGH 49 OF YOUR PROSPECTUS IS AMENDED AS
FOLLOWS:
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end
management investment company created under the laws of Massachusetts. NSAT
offers shares in the mutual funds listed below, each with its own
investment objectives. Shares of NSAT will be sold primarily to separate
accounts to fund the benefits under variable life insurance policies and
variable annuity contracts issued by life insurance companies. Effective
September 1, 1999, the investment advisory services previously performed by
Nationwide Advisory Services ("NAS") were transferred to Villanova Mutual
Fund Capital Trust ("VMF"), an affiliate of NAS and an indirect subsidiary
of Nationwide Financial Services, Inc. The portfolio managers and
subadvisers for each of the Funds continue to manage the Funds after the
transfer to VMF.
<PAGE> 5
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Corporate Flexible Premium Variable Universal 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 Balanced
- - American Century VP Capital Appreciation
- - American Century VP Income & Growth
- - American Century VP International
- - American Century VP Value
DREYFUS
- - Dreyfus Stock Index Fund, Inc
- - The Dreyfus Socially Responsible Growth
Fund, Inc.
DREYFUS VARIABLE INVESTMENT FUND
- - Capital Appreciation Portfolio
- - Growth & Income Portfolio*
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
- - VIP Equity-Income Portfolio
- - VIP Growth Portfolio
- - VIP High Income Portfolio*
- - VIP Overseas Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
- - VIP II Asset Manager Portfolio
- - VIP II Contrafund Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS
FUND III
- - VIP III Growth Opportunities Portfolio
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
- - Emerging Markets Debt Portfolio
NATIONWIDE SEPARATE ACCOUNT TRUST
- - Capital Appreciation Fund
- - Government Bond Fund
- - Money Market Fund
- - Total Return Fund
- - Nationwide Small Cap Value Fund (subadviser: The Dreyfus Corporation)
- - Nationwide Small Company Fund
(subadvisers: The Dreyfus Corporation, Neuberger Berman, LLC, Lazard
Asset Management, Strong Capital Management, Inc. and Warburg Pincus
Asset Management, Inc.)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- - AMT Limited Maturity Bond Portfolio
- - AMT Growth Portfolio
- - AMT Guardian Portfolio
- - AMT Partners Portfolio
OPPENHEIMER VARIABLE ACCOUNTS FUNDS
- - Oppenheimer Bond Fund/VA
- - Oppenheimer Global Securities Fund/VA
- - Oppenheimer Capital Appreciation Fund/ VA (formerly "Oppenheimer Growth
Fund")
- - Oppenheimer Multiple Strategies Fund/VA
STRONG OPPORTUNITY FUND II, INC. (FORMERLY STRONG SPECIAL FUND II, INC.)
STRONG VARIABLE INSURANCE FUNDS, INC.
- - Strong Discovery Fund II, Inc.
- - International Stock Fund II
VAN ECK WORLDWIDE INSURANCE TRUST
- - Worldwide Bond Fund
- - Worldwide Emerging Markets Fund
- - Worldwide Hard Assets Fund
VAN KAMPEN LIFE INVESTMENT TRUST
- - Morgan Stanley Real Estate Securities Portfolio
WARBURG PINCUS TRUST
- - International Equity Portfolio
- - Post-Venture Capital Portfolio
- - Small Company Growth Portfolio
*These underlying mutual funds invest in lower quality debt securities commonly
referred to as junk bonds.
1
<PAGE> 6
To obtain copies of any underlying mutual fund prospectus, please call:
1-800-547-7548
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
Information about this and other Best of America Products can be found on the
world-wide web at:
www.bestofamerica.com
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 flexible premium
variable universal life insurance policies. They provide flexibility with the
amount and frequency of premium payments. A cash surrender value may be offered
if the policy is terminated during the lifetime of the insured.
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 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 of money.
Nationwide guarantees the death benefit will never be less than the specified
amount 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.
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 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> 7
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 premium, in accordance with the
Internal Revenue code, required to mature the policy under guaranteed mortality
and current expense charges, and an interest rate of 4%.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units are separately maintained.
MATURITY DATE- The policy anniversary on or next following the insured's 100th
birthday.
NATIONWIDE - Nationwide Life and Annuity Insurance Company.
NET AMOUNT AT RISK- The death benefit at the beginning of the policy month minus
the cash value calculated at the beginning of the policy month prior to the
deduction of the base cost of insurance charge.
NET PREMIUMS- Net premiums are equal to the actual premiums minus the percent of
premium charges. The percent of premium charges are shown on the policy data
page.
SPECIFIED AMOUNT- The dollar amount used to determine the death benefit under a
policy.
VALUATION PERIOD- Each day the New York Stock Exchange is open for business.
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> 8
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS.......................................3
SUMMARY OF POLICY EXPENSES......................................6
UNDERLYING MUTUAL FUND ANNUAL EXPENSES..........................7
SYNOPSIS OF THE POLICIES........................................9
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY...................9
NATIONWIDE ADVISORY SERVICES, INC...............................9
INVESTING IN THE POLICY........................................10
The Variable Account and Underlying Mutual Funds
Changes of Investment Policy
Voting Rights
Substitution of Securities
Material Conflicts
The Fixed Account
INFORMATION ABOUT THE POLICIES.................................12
Minimum Requirements for Policy Issuance
Premium Payments
Pricing
POLICY CHARGES.................................................12
Sales Load
Premium Expense Charge
Monthly Cost of Insurance
Monthly Administrative Charge
Mortality and Expense Risk Charge
Income Tax
Reduction of Charges
SURRENDERING THE POLICY FOR CASH...............................14
Surrender (Redemption)
Cash Surrender Value
Partial Surrenders
Preferred Partial Surrenders
Reduction of the Specified Amount
Income Tax Withholding
VARIATION IN CASH VALUE........................................16
Error in Age or Sex
POLICY PROVISIONS..............................................16
Policy Owner
Beneficiary
Changes in Existing Insurance Coverage
OPERATION OF THE POLICY........................................17
Allocation of Net Premium and Cash Value
How the Investment Experience is Determined
Net Investment Factor
Determining the Cash Value
Transfers
RIGHT TO REVOKE................................................19
POLICY LOANS...................................................19
Taking a Policy Loan
Effect on Investment Performance
Interest
Effect on Death Benefit and Cash Value
Repayment
ASSIGNMENT.....................................................21
POLICY OWNER SERVICES..........................................21
Dollar Cost Averaging
DEATH BENEFIT INFORMATION......................................21
Calculation of the Death Benefit
Changes in the Death Benefit
Proceeds Payable on Death
Incontestability
Suicide
Maturity Proceeds
RIGHT OF CONVERSION............................................24
GRACE PERIOD...................................................24
Grace Period
Reinstatement
TAX MATTERS....................................................25
Policy Proceeds
Withholding
Federal Estate and Generation-Skipping
Transfers Taxes
Non-Resident Aliens
Taxation of Nationwide
Tax Changes
LEGAL CONSIDERATIONS...........................................28
YEAR 2000 COMPLIANCE ISSUES....................................28
STATE REGULATION...............................................29
REPORTS TO POLICY OWNERS.......................................29
ADVERTISING....................................................30
4
<PAGE> 9
LEGAL PROCEEDINGS..............................................30
EXPERTS........................................................30
REGISTRATION STATEMENTS........................................30
LEGAL OPINIONS.................................................31
DISTRIBUTION OF THE POLICIES...................................31
ADDITIONAL INFORMATION ABOUT
NATIONWIDE................................................33
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS.............41
APPENDIX B: ILLUSTRATIONS OF CASH VALUE, CASH SURRENDER VALUES,
AND DEATH BENEFITS............................................47
APPENDIX C: PERFORMANCE TABLES.................................65
5
<PAGE> 10
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 for state premium
taxes from premium payments.
The sales load is guaranteed never to exceed 5.5% of each premium payment
received during the first seven years and 2% thereafter. Currently, the sales
load is 3% of the premium payment plus 2.5% of premiums up to the target premium
during the first seven policy years, and 0% on all premiums thereafter (see
"Sales Load").
The charge for state premium tax is approximately 3.5% of all premiums (see
"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) mortality and expense risk charge(2).
(1) Currently, the administrative expense charge is $5 per month. It is
guaranteed not to exceed $10 per month.
(2)Currently, the mortality and expense risk charge is equal to an annual
effective rate of 0.60% in the first four policy years, 0.40% in the fifth
through twentieth policy years, and 0.25% thereafter.
There are no surrender charges.
For more information about any policy charge, see "Policy Charges" in this
prospectus.
6
<PAGE> 11
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund net assets, after expense
reimbursement)
<TABLE>
<CAPTION>
-----------------------------------------------------------
MANAGEMENT OTHER 12b -1 TOTAL MUTUAL
FEES EXPENSES FEES FUND EXPENSES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc.-American 0.97% 0.00% 0.00% 0.97%
Century VP Balanced
- -------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.-American 1.00% 0.00% 0.00% 1.00%
Century VP Capital Appreciation
- -------------------------------------------------------------------------------------------------------------------
American Century Variable Products, Inc.-American 0.70% 0.00% 0.00% 0.70%
Century VP Income & Growth
- -------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.-American 1.47% 0.00% 0.00% 1.47%
Century VP International
- -------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc.-American 1.00% 0.00% 0.00% 1.00%
Century VP Value
- -------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth Fund 0.75% 0.05% 0.00% 0.80%
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index Fund, Inc. 0.25% 0.01% 0.00% 0.26%
- ------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund-Capital Appreciation 0.75% 0.05% 0.00% 0.80%
Portfolio
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund- Growth & Income 0.75% 0.03% 0.00% 0.78%
Portfolio.
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 0.49% 0.08% 0.00% 0.57%
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 0.59% 0.07% 0.00% 0.66%
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 0.58% 0.12% 0.00% 0.70%
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 0.74% 0.15% 0.00% 0.89%
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio 0.54% 0.09% 0.00% 0.63%
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 0.59% 0.07% 0.00% 0.66%
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio 0.59% 0.11% 0.00% 0.70%
- -----------------------------------------------------------------------------------------------------------------
Morgan Stanley Dean Witter Universal Funds, 0.27% 1.25% 0.00% 1.52%
Inc.-Emerging Markets Debt Portfolio
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT-Growth Portfolio 0.83% 0.09% 0.00% 0.92%
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT-Guardian Portfolio 0.85% 0.15% 0.00% 1.00%
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT-Limited Maturity Bond Portfolio 0.65% 0.11% 0.00% 0.76%
- -----------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT-Partners Portfolio 0.78% 0.06% 0.00% 0.84%
- -----------------------------------------------------------------------------------------------------------------
NSAT-Capital Appreciation Fund 0.60% 0.07% 0.00% 067%
- -----------------------------------------------------------------------------------------------------------------
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-Nationwide Small Cap Value Fund 0.90% 0.15% 0.00% 1.05%
- -----------------------------------------------------------------------------------------------------------------
NSAT-Nationwide Small Company Fund 1.00% 0.07% 0.00% 1.07%
- -----------------------------------------------------------------------------------------------------------------
NSAT-Total Return Fund 0.59% 0.06% 0.00% 0.65%
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer VAF-Bond Fund/VA 0.72% 0.02% 0.00% 0.74%
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer VAF-Global Securities Fund/VA 0.68% 0.06% 0.00% 0.74%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 12
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
MANAGEMENT FEES OTHER 12b -1 TOTAL MUTUAL
FEES EXPENSES FEES FUND EXPENSES
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oppenheimer VAF-Multiple Strategies/VA 0.72% 0.04% 0.00% 0.76%
- -----------------------------------------------------------------------------------------------------------------
Oppenheimer VAF-Oppenheimer Capital Appreciation 0.72% 0.03% 0.00% 0.75%
Fund/VA (formerly Growth Fund)
- -----------------------------------------------------------------------------------------------------------------
Strong Opportunity Fund II, Inc. 1.00% 0.16% 0.00% 1.16%
- -----------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. - Discovery 1.00% 0.18% 0.00% 1.18%
Fund II, Inc.
- -----------------------------------------------------------------------------------------------------------------
Strong Variable Insurance Funds, Inc. - International 1.00% 0.62% 0.00% 1.62%
Stock Fund II
- -----------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Worldwide Bond Fund 1.00% 0.15% 0.00% 1.15%
- -----------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Worldwide Emerging 1.00% 0.50% 0.00% 01.50%
Markets Fund
- -----------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust-Worldwide Hard 1.00% 0.16% 0.00% 1.16%
Assets Fund
- -----------------------------------------------------------------------------------------------------------------
Van Kampen Life Investment Trust - Morgan Stanley 1.20% 0.00% 0.00% 1.20%
Real Estate Securities Portfolio
- -----------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-International Equity Portfolio 1.00% 0.33% 0.00% 1.33%
- -----------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Post-Venture Capital Portfolio 1.08% 0.32% 0.00% 1.40%
- -----------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust-Small Company Growth Portfolio 0.90% 0.24% 0.00% 1.14%
- -----------------------------------------------------------------------------------------------------------------
</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 12b-1 Total Mutual Fund
Fees Expenses Fees Expenses
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
<S> <C> <C> <C> <C>
Fidelity VIP Equity Income Portfolio 0.49% 0.09% 0.00% 0.58%
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
Fidelity VIP Growth Portfolio 0.59% 0.09% 0.00% 0.68%
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
Fidelity VIP Overseas Portfolio 0.74% 0.17% 0.00% 0.91%
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
Fidelity VIP II Asset Manager Portfolio 0.54% 0.10% 0.00% 0.64%
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
Fidelity VIP II Contrafund Portfolio 0.59% 0.11% 0.00% 0.70%
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
Fidelity VIP III Growth Opportunities Portfolio 0.59% 0.12% 0.00% 0.71%
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
Morgan Stanley Dean Witter Universal Funds, Inc. - 0.80% 1.25% 0.00% 2.05%
Emerging Markets Debt Portfolio
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
NSAT - Nationwide Small Cap Value Fund 0.90% 0.43% 0.00% 1.33%
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
Van Eck Worldwide Insurance Trust - Worldwide Hard 1.00% 0.20% 0.00% 1.20%
Assets Fund
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
Van Eck Worldwide Insurance Trust - Worldwide 1.00% 0.61% 0.00% 1.61%
Emerging Markets Fund
- ---------------------------------------------------- -------------- --------------- --------- ----------------------
</TABLE>
8
<PAGE> 13
SYNOPSIS OF THE POLICIES
The policies offered by this prospectus are designed for use by corporations and
employers, to provide life insurance coverage and flexibility to vary the
frequency and amount of premium payments. 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.
PREMIUMS
The minimum initial premium for which a policy may be issued is equal to three
monthly deductions. The initial premium is shown on the policy data page. Each
premium payment must be at least equal to the minimum monthly premium.
Additional premium payments may be made at any time while the policy is in
force, subject to certain restrictions (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 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.
RIDERS
A rider may be added to the policy (availability varies by state).
Riders currently include:
- - Additional Protection Rider; and
- - Change of Insured Rider.
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 Ohio in
February 1981, 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 Life Insurance Company 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.
9
<PAGE> 14
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.
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.
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Policy owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholder's vote as soon as possible before
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 policy owners and those of other companies. If
a material conflict occurs, Nationwide will take whatever steps are necessary to
protect policy owners, including withdrawal of the variable account from
participation in the 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. The investment income earned by
the fixed account will be allocated to the policy at varying rate(s) set by
Nationwide. 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 general applicable provisions of the federal securities law
concerning the accuracy and completeness of statements made in prospectuses.
Premiums will be allocated to the fixed account by election of the policy owner.
The guaranteed rate for any premiums 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.
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New premiums deposited to the policy and 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 ISSUANCE OF A POLICY
This policy provides life insurance coverage with the flexibility to vary the
amount and frequency of premium payments. Minimum requirements for policy
issuance include:
- - the insured must be age 80 or younger;
- - Nationwide may require satisfactory evidence of insurability (including
a medical exam); and
- - a minimum specified amount $50,000 ($100,000 in Pennsylvania and New
Jersey).
Premium Payments
Each premium payment must be at least $50. The initial premium is payable in
full at Nationwide's home office or to an authorized agent of Nationwide.
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.
- - Premium payments in excess of the premium limit established by the IRS
to 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.
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 premium 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, policy
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 not
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to exceed 5.5% of each premium payment during the first seven policy years and
2% thereafter. Currently, the sales load is reduced to 3% of the premium payment
plus 2.5% of premiums up to the target premium during the first seven policy
years, and 0% on all premiums thereafter. The target premium is located on the
policy data page.
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 3.50% 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 and for federal taxes imposed under Section 848 of the Internal
Revenue Code. Generally, these tax expenses to Nationwide consist of two
components:
(1) a state premium tax rate of 2.25%; and
(2) a federal tax rate of 1.25%.
Nationwide expects to pay an average state premium tax rate of approximately
2.25% of premiums for all states. 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.
The 1.25% federal tax component is designed to reimburse Nationwide for expenses
incurred from federal taxes imposed under Section 848 of the Internal Revenue
Code.
Nationwide does not expect to make a profit from these charges.
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. The
net amount at risk is the difference between the death benefit and the policy's
cash value, each calculated at the beginning of the policy month. 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 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.
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 "non medical" basis to certain categories of
individuals. Due to the underwriting criteria established for policies issued on
a non medical basis, actual rates will be higher than the current cost of
insurance rates being charged under policies that are medically underwritten.
MONTHLY ADMINISTRATIVE CHARGE
Nationwide deducts an administrative expense charge proportionately to the cash
value in each sub-account and the fixed account on a monthly basis. This charge
reimburses Nationwide for certain actual expenses related to maintenance of the
policies including accounting and record keeping, and periodic reporting to
policy owners. Nationwide does not expect to recover any amount in excess of
aggregate maintenance expenses from this charge. Currently, this charge is $5
per month in all policy years. On a
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guaranteed basis, this charge is $10 per month in all policy years.
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.
This charge is guaranteed not to exceed an annual effective rate of 0.75% of the
daily net assets of the variable account. Currently, the rate is 0.60% during
the first through fourth policy years, 0.40% during the fifth through twentieth
policy years, and 0.25% thereafter. Policy owners receive quarterly and annual
statements, advising policy owners of the cancellation of accumulation units for
mortality and expense risk charges.
All charges are guaranteed. Nationwide may realize a profit from policy
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.
REDUCTION OF CHARGES
The policy is available for purchase by individuals, corporations and other
groups. Nationwide may reduce or eliminate certain charges (sales load,
surrender charge, monthly administrative charge, monthly cost of insurance
charge, or other charges), where the size or nature of the group results in
savings in sales, underwriting, administrative or other costs, to Nationwide.
These charges may be reduced in certain group, sponsored arrangements or special
exchange programs made available by Nationwide, (including employees of
Nationwide and their families).
Eligibility for reduction in charges and the amount of any reduction is
determined by a number of factors, including:
- - the number of insureds;
- - the total premium expected to be paid;
- - total assets under management for the policy owner;
- - the nature of the relationship among individual insureds;
- - the purpose for which the policies are being purchased;
- - the expected persistency of individual policies; and
- - any other circumstances which are rationally related to the expected
reduction in expenses.
The extent and nature of reductions may change from time to time. The charge
structure may vary. Variations are determined in a manner not unfairly
discriminatory to policy owners which reflects differences in costs of services.
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.
Nationwide may require the policy owner's signature to be 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. In some cases, Nationwide may require
additional documentation of a customary nature.
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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.
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, plus 3% of
the current years premium in excess of the target premium if that date occurs
during the first two policy years.
Partial Surrenders
After the policy has been in force for one year, 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) partial surrenders may not reduce the specified amount to less than
$50,000;
3) after a partial surrender, the cash surrender value is greater than $500
or an amount equal to three times the current monthly deduction if
higher; and
4) after the partial surrender, the policy continues to qualify as life
insurance.
When a partial surrender is made, the cash value will be reduced by the amount
of the partial surrender. Further, the specified amount will be reduced by the
amount necessary to prevent any increase to the net amount at risk, unless the
partial surrender is treated as a preferred partial surrender.
PREFERRED PARTIAL SURRENDERS
A partial surrender is considered a preferred partial surrender if the following
conditions are met:
(1) the surrender occurs before the 15th policy anniversary; and
(2) the surrender amount plus the amount of any previous preferred policy
surrenders in that same policy year does not exceed 10% of the cash
surrender value as of the beginning of the policy year.
REDUCTION OF THE SPECIFIED AMOUNT
When a partial surrender is made, in addition to the cash value being reduced by
the amount of the partial surrender, the specified amount may also be reduced,
(except in the case of a preferred partial surrender.) The reduction to the
specified amount will be made in the following order:
(1) against the most recent increase in the specified amount;
(2) against the next most recent increases in the specified amount in
succession; and
(3) against the specified amount under the original application.
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.
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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 premium applied since the previous
valuation date, minus any partial surrenders, plus or minus any investment
results, minus any surrender charge for decreases in specified amount, 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.
ERROR IN AGE
If the insured's age 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 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
3. is the cash value at the time of the insured's death. 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 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 and 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.
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Specified Amount Increases
After the first 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
unless the policy owner requests a different date. Nationwide reserves the right
to limit the number of specified amount increases to one each policy year.
Specified Amount Decreases
After the first 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 $50,000 ($100,000 in New
Jersey and Pennsylvania); 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. Shares of the underlying mutual funds allocated to
the sub-accounts are purchased at net asset value, than converted into
accumulation units. All percentage allocations must be in whole numbers, and
must be at least 1%. The sum of allocations must equal 100%. Future premium
allocations may be changed by giving written notice to Nationwide.
Premiums allocated to sub-accounts on the application will be allocated to the
NSAT-Money Market Fund during the period that a policy owner can cancel the
policy, unless specific state require premiums to be allocated to the fixed
account. At the expiration of this 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
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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. The number of accumulation units will not
change as a result of investment experience.
NET INVESTMENT FACTOR
Net investment factor 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. This
factor is guaranteed not to exceed an annual effective rate of 0.75% of the
daily net assets of the variable account. Currently, the rate is 0.60%
during the first through fourth policy years, 0.40% during the fifth
through twentieth policy years, and 0.25% thereafter.
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.
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 3%. (For a
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
The policy owner may transfer amounts between the fixed account and the variable
account without penalty or adjustment, subject to the following requirements:
- - Nationwide reserves the right to limit such transfers to one per policy
year.
- - Transfers from the fixed account must be made within 45 days after the end
of an interest rate guarantee period (the period of time for which the
current interest rate is guaranteed by Nationwide).
- - Nationwide reserves the right to restrict the amount transferred from the
fixed account to 20% of the portion of the cash value attributable to the
fixed account as of the end of the prior policy year. However, if the
policy owner elects in writing to Nationwide to transfer all of the cash
value
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attributable to the fixed account, the restriction for five successive
policy years shall be 20%, 25%, 33%, 50% and 100%, respectively.
- - Transfers to the fixed account may not be made prior to the first policy
anniversary or within 12 months subsequent to a prior transfer.
- - Nationwide reserves the right to restrict the amount transferred to the
fixed account to 20% of that portion of the cash value attributable to the
variable account as of the close of business of the prior valuation period.
- - Nationwide reserves the right to refuse a transfer to the fixed account if
the cash value attributable to the fixed account is greater than or equal
to 30% of the cash value.
Transfer Requests
Nationwide will accept transfer requests in writing or 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 prescribed by the state in which the policy was issued within seven days
after it receives the policy. This right varies by state.
POLICY LOANS
TAKING A POLICY LOAN
The policy owner may take a policy loan at any time while the policy is in
force. Maximum
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policy indebtedness is limited to 90% of the cash value of the variable account,
plus 100% of the cash value in the fixed account, plus 100% of the value in the
policy loan account.
Nationwide will not grant a loan for an amount less than $500. 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.
A policy owner considering the use of policy loans in connection with his or her
retirement income plan should consult his or her personal tax adviser regarding
potential tax consequences that may arise if necessary payments are not made to
keep the policy from lapsing. The amount of the payments necessary to prevent
the policy from lapsing will increase with age.
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
On a current and guaranteed basis, cash value allocated to the policy loan
account is credited with interest at an annual effective rate of 3.0% in policy
years two and after. The interest rate is guaranteed not to exceed 3.75% per
year for all policy loans. Currently, the rate is 3.6% in policy years one
through four, 3.4% in policy years five through twenty, and 3.25% thereafter.
If it is determined that such loans will be treated, as a result of the
differential between the interest crediting rate and the loan interest rate, as
taxable distributions under any applicable ruling, regulation, or court
decision, Nationwide retains the right to increase the net cost (by decreasing
the interest crediting rate) on all subsequent policy loans to an amount that
would result in the transaction being treated as a loan under federal tax law.
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,
at the time a new loan is requested 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, 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 years.
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
20
<PAGE> 25
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.
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 loan repayment,
rather than a premium payment, 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 $50. 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 certain sub-accounts and the fixed account 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: Fidelity VIP
High Income Portfolio; NSAT Government Bond Fund; Neuberger Berman AMT - Limited
Maturity Bond Portfolio; 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 the specified amount, death benefit option,
and definition of life insurance (Guideline Premium/Cash Value Corridor Test or
the Cash Value Accumulation Test) pursuant to Section 7702 of the Internal
Revenue Code.
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 three death benefit options:
OPTION 1: The death benefit will be the greater of the specified amount or the
applicable percentage of cash value. The amount of the
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<PAGE> 26
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.
OPTION 2: The death benefit will be the greater of the specified amount plus the
cash value as of the date of death, or the applicable percentage of cash value
and will vary directly with investment performance.
OPTION 3: Option 3 is irrevocable once elected. The death benefit is the greater
of:
(a) the applicable percentage of the cash value (see Table below) as of
the date of death; or
(b) the specified amount plus the lesser of either:
(i) the maximum increase amount shown on the policy, or
(ii) the amount of all premium payments and interest accrued at the
Option 3 interest rate as shown in the policy, accumulated up to
the date of death, less any partial surrenders and applicable
interest accrued at the Option 3 interest rate as shown in the
policy.
The "Applicable Percentage" for the Guideline Premium/Cash Value Corridor Test
is set forth in the table below:
<TABLE>
<CAPTION>
APPLICABLE PERCENTAGE OF CASH VALUE - GUIDELINE PREMIUM/CASH VALUE CORRIDOR TEST
- ----------------------------------------------------------------------------------------------------------
ATTAINED AGE PERCENTAGE OF ATTAINED AGE PERCENTAGE OF ATTAINED AGE PERCENTAGE OF
CASH VALUE CASH VALUE CASH VALUE
- ----------------------------------------------------------------------------------------------------------
<S> <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% 95 101%
- ----------------------------------------------------------------------------------------------------------
56 146% 76 105% 96 101%
- ----------------------------------------------------------------------------------------------------------
57 142% 77 105% 97 101%
- ----------------------------------------------------------------------------------------------------------
58 138% 78 105% 98 101%
- ----------------------------------------------------------------------------------------------------------
59 134% 79 105% 99 101%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 27
The "Applicable Percentage" for the Cash Value Accumulation Test is set forth in
the table below:
<TABLE>
<CAPTION>
APPLICABLE PERCENTAGE OF CASH VALUE - CASH VALUE ACCUMULATION TEST
- ----------------------------------------------------------------------------------------------------------
ATTAINED AGE PERCENTAGE OF ATTAINED AGE PERCENTAGE OF ATTAINED AGE PERCENTAGE OF
CASH VALUE CASH VALUE CASH VALUE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
44 292.29% 72 141.69%
- ----------------------------------------------------------------------------------------------------------
45 283.37% 73 139.10%
- ----------------------------------------------------------------------------------------------------------
18 667.85% 46 274.79% 74 136.66%
- ----------------------------------------------------------------------------------------------------------
19 648.73% 47 266.55% 75 134.38%
- ----------------------------------------------------------------------------------------------------------
20 630.14% 48 258.61% 76 133.56%
- ----------------------------------------------------------------------------------------------------------
21 611.94% 49 250.98% 77 132.83%
- ----------------------------------------------------------------------------------------------------------
22 594.06% 50 243.65% 78 132.18%
- ----------------------------------------------------------------------------------------------------------
23 576.45% 51 236.59% 79 131.58%
- ----------------------------------------------------------------------------------------------------------
24 559.07% 52 229.82% 80 131.04%
- ----------------------------------------------------------------------------------------------------------
25 541.95% 53 223.34% 81 130.55%
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
26 525.08% 54 217.13% 82 130.12%
- ----------------------------------------------------------------------------------------------------------
27 508.52% 55 211.19% 83 127.37%
- ----------------------------------------------------------------------------------------------------------
28 492.32% 56 205.51% 84 124.75%
- ----------------------------------------------------------------------------------------------------------
29 476.49% 57 200.06% 85 122.27%
- ----------------------------------------------------------------------------------------------------------
30 461.08% 58 194.84% 86 119.90%
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
31 446.10% 59 189.84% 87 117.63%
- ----------------------------------------------------------------------------------------------------------
32 431.57% 60 185.03% 88 115.44%
- ----------------------------------------------------------------------------------------------------------
33 417.50% 61 180.43% 89 113.31%
- ----------------------------------------------------------------------------------------------------------
34 403.89% 62 176.02% 90 112.35%
- ----------------------------------------------------------------------------------------------------------
35 390.73% 63 171.81% 91 111.38%
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
36 378.03% 64 167.80% 92 110.38%
- ----------------------------------------------------------------------------------------------------------
37 365.79% 65 163.98% 93 109.32%
- ----------------------------------------------------------------------------------------------------------
38 354.01% 66 160.34% 94 108.18%
- ----------------------------------------------------------------------------------------------------------
39 342.67% 67 156.86% 95 106.94%
- ----------------------------------------------------------------------------------------------------------
40 331.77% 68 153.54% 96 105.62%
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
41 321.30% 69 150.37% 97 104.27%
- ----------------------------------------------------------------------------------------------------------
42 311.24% 70 147.33% 98 102.99%
- ----------------------------------------------------------------------------------------------------------
43 301.57% 71 144.44% 99 100.00%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
In the event the policy owner has a substandard rating, the above percentages
will differ.
23
<PAGE> 28
CHANGES IN THE DEATH BENEFIT OPTION
After the first policy year, the policy owner may elect to change the death
benefit option under the policy from either Option 1 to Option 2, or from Option
2 to Option 1. Initial elections of Option 3 are irrevocable therefore changes
to or from Option 3 are not permitted. Only one change of death benefit option
is permitted per policy year. The effective date of a change will be the monthly
anniversary day following the date the change is approved by Nationwide.
In order for a death benefit change to become effective, the cash surrender
value after the change must be sufficient to keep the policy in force for at
least three months.
Nationwide will adjust the specified amount to keep the net amount at risk
constant. A change in death benefit option will not be permitted if it results
in the specified amount being reduced to an amount where the total premiums paid
exceed limits set by state laws to qualify the policy as a contract for life
insurance.
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," 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.
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. 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
100th 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.
RIGHT OF CONVERSION
The policy owner may make an irrevocable election to transfer all sub-account
cash value to the fixed account. This election must be made within 2 years of
the policy date. The right of conversion is subject to state availability.
GRACE PERIOD
If the cash surrender value on a monthly anniversary day is not sufficient to
cover the current policy charges, a grace period of 61 days from the monthly
anniversary day will be allowed for the payment of a premium equal to three
times the current monthly deduction. Nationwide will send a notice at the start
of the grace period to the policy owner's address as indicated on the
application or the last address specified. If the required premium is not paid
by the end of the grace period, the policy will terminate without value. 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;
24
<PAGE> 29
2. providing evidence of insurability satisfactory to Nationwide;
3. paying sufficient premium to cover all policy charges 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 cash value at the end of the grace period.
Amounts allocated to underlying mutual funds at the start of the grace period
will be reinstated, unless the policy owner provides otherwise.
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. 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 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
25
<PAGE> 30
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 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 of 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.
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
26
<PAGE> 31
the U.S. Treasury Department, 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 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.
27
<PAGE> 32
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 advise, 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 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.
28
<PAGE> 33
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 charged to Nationwide Life Insurance Company ("NWLIC"),
parent company of Nationwide, in 1998 and 1997 included approximately $44.7
million and $45.4 million, respectively, for technology projects, including
costs related to Year 2000. Nationwide anticipates spending approximately $5
million on Year 2000 activities in 1999. These expenses have no affect on the
assets of the variable account and are not charged through to the policy 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.
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
29
<PAGE> 34
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.
The general distributor, Nationwide Advisory Services, Inc. is not engaged in
any litigation of any material nature.
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.
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 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.
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<PAGE> 35
LEGAL OPINIONS
Legal matters in connection with the policies described herein are being passed
upon by Dietrich, Reynolds & Koogler, LLP, 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, Nationwide Advisory
Services, Inc. ("NAS"). NAS is a wholly owned subsidiary of Nationwide and a
member of the NASD. NAS was organized as an Ohio corporation on April 8, 1965.
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
- - Nationwide DCVA-II
- - Nationwide Variable Account-II
- - Nationwide VLI Separate Account-3
- - Nationwide VLI Separate Account-4
- - Nationwide VLI Separate Account-5
- - Nationwide Variable Account
- - 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; and
- - Nationwide Asset Allocation Trust.
Gross first year commissions plus any expense allowance payments made by
Nationwide on the sale of these policies distributed by NAS, will not exceed 40%
of the target premium plus 5% of any excess premium payments in year one and 25%
of the target premium plus 5% on the excess premium in years two through four.
Gross renewal commissions paid at the beginning of policy year five and beyond
by Nationwide will not exceed the greater of 25% of the target premium plus 5%
on the excess premium and an annual effective rate of 0.50% paid quarterly of
the cash value as of the end of the prior quarter in years two through four. For
single premium modified endowment contracts, gross renewal commissions paid at
the beginning of policy year two and beyond by Nationwide will not exceed an
annual effective rate of 0.20%, paid quarterly, of the cash value as of the end
of the prior quarter.
No underwriting commissions were paid by Nationwide to NAS.
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<PAGE> 36
NATIONWIDE ADVISORY SERVICES, INC. DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
NAME AND POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
<S> <C>
Joseph J. Gasper President and Director
One Nationwide Plaza
Columbus, OH 43215
Dimon R. McFerson Chairman and
One Nationwide Plaza Chief Executive Officer and Director
Columbus, OH 43215
Robert A. Oakley Executive Vice President - Chief Financial
One Nationwide Plaza Officer and Director
Columbus, OH 43215
Paul J. Hondros
One Nationwide Plaza Director
Columbus, OH 43215
Susan A. Wolken Director
One Nationwide Plaza
Columbus, OH 43215
Robert J. Woodward, Jr. Executive Vice President - Chief Investment
One Nationwide Plaza Officer and Director
Columbus, OH 43215
Edwin P. Mc Causland, Jr. Senior Vice President-Fixed Income
One Nationwide Plaza Securities
Columbus, OH 43215
Charles S. Bath
One Nationwide Plaza Vice President - Investments
Columbus, OH 43215
Dennis W. Click Vice President and Secretary
One Nationwide Plaza
Columbus, OH 43215
William G. Goslee
One Nationwide Plaza Vice President
Columbus, OH 43215
James F. Laird, Jr. Vice President and General
One Nationwide Plaza Manager
Columbus, OH 43215
Joseph P. Rath Vice President - Office of Product and
One Nationwide Plaza Market Compliance
Columbus, OH 43215
Alan A. Todryk Vice President - Taxation
One Nationwide Plaza
Columbus, OH 43215
Christopher A. Cray Treasurer
One Nationwide Plaza
Columbus, OH 43215
</TABLE>
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<PAGE> 37
NATIONWIDE ADVISORY SERVICES, INC. DIRECTORS AND OFFICERS (CONTINUED)
<TABLE>
<CAPTION>
NAME AND POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
<S> <C>
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
</TABLE>
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 separate investment accounts,
each of which is a registered investment company:
- - 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 Variable Account-9,
- - Nationwide Variable Account -10,
- - MFS Variable Account,
- - Nationwide Multi-Flex Variable Account,
- - Nationwide VLI Separate Account,
- - Nationwide VL Separate Account-A,
- - Nationwide VLI Separate Account-3,
- - Nationwide VLI Separate Account-4,
- - Nationwide VLI Separate Account-5,
- - NACo Variable Account,
- - Nationwide DC Variable Account and the
- - Nationwide DCVA-II.
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,
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<PAGE> 38
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
Nationwide. 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 Life and Annuity Insurance Company.
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
Nationwide. Messrs. McFerson, Gasper, Woodward, and Ms. Thomas are also trustees
of one or more of the registered investment companies distributed by Nationwide
Advisory Services, a registered broker-dealer affiliated with Nationwide.
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<PAGE> 39
<TABLE>
<CAPTION>
DIRECTORS OF NATIONWIDE
DIRECTORS OF THE DEPOSITOR NAME AND POSITIONS AND OFFICES WITH
PRINCIPAL BUSINESS ADDRESS 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, OH 45135
- ----------------------------------------- ---------------------------- ---------------------------------------------------
Keith W. Eckel Director Partner, Fred W. Eckel Sons; President, Eckel
1647 Falls Road Farms, Inc. (1)
Clarks Summit, PA 18411
- ----------------------------------------- ---------------------------- ---------------------------------------------------
Willard J. Engel Director Retired General Manager, Lyon County Co-operative
301 East Marshall Street 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, Nationwide
One Nationwide Plaza Operating Officer and Life Insurance Company and Nationwide Life
Columbus, OH 43215 Director Insurance Company (2)
- ----------------------------------------- ---------------------------- ---------------------------------------------------
Dimon R. McFerson Chairman and Chief Chairman and Chief Executive Officer- (2)
One Nationwide Plaza Executive Officer and
Columbus, OH 43215 Director
- ----------------------------------------- ---------------------------- ---------------------------------------------------
David O. Miller Chairman of the Board and President, Owen Potato Farm, Inc.; Partner, M&M
115 Sprague Drive Director 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
2769 Church Street Federation of Southern Cooperatives/Land
East Point, Ga 30344 Assistance Fund
- ----------------------------------------- ---------------------------- ---------------------------------------------------
James F. Patterson Director Vice President, Pattersons, Inc.; President,
8765 Mulberry Road Patterson Farms, Inc. (1)
Chesterland, OH 44026
- ----------------------------------------- ---------------------------- ---------------------------------------------------
Arden L. Shisler Director President and Chief Executive Officer, K&B
1356 North Wenger Road 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.
Each of the directors is a director of the other major insurance affiliates of
Nationwide, 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.
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<PAGE> 40
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
Nationwide Mutual Funds, a registered investment company. Mr. Engel is a
director of Western Cooperative Transport.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF NATIONWIDE
- -------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS OFFICES OF THE DEPOSITOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Dennis W. Click Vice President - Secretary
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Robert A. Oakley Executive Vice President-Chief Financial Officer
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Robert J. Woodward, Jr. Executive Vice President-Chief Investment Officer
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
James E. Brock Senior Vice President - Corporate Development
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
John R. Cook, Jr. Senior Vice President - Chief Communications Officer
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Phillip C. Gath Senior Vice President and Chief Actuary - Nationwide Financial
One Nationwide Plaza Services of the Nationwide Insurance Enterprise
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Richard D. Headley Senior Vice President - Chief Information Technology Officer of
One Nationwide Plaza the Nationwide Insurance Enterprise
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Donna A. James Senior Vice President - Human Resources of the Nationwide
One Nationwide Plaza Insurance Enterprise
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Richard A. Karas Senior Vice President - Sales and Financial Services
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Doublas C. Robinette Senior Vice President - Marketing and Product Management
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Susan A. Wolken Senior Vice President - Life Company Operations
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE> 41
EXECUTIVE OFFICERS OF NATIONWIDE (CONTINUED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS OFFICES OF THE DEPOSITOR
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Bruce C. Barnes Vice President - Technology Strategy and Planning
One Nationwide Plaza
Columbus, OH 43215
- ------------------------------------------------------------------------------------------------------------------
David A. Diamond Vice President - Enterprise Controller of Nationwide Financial
One Nationwide Plaza Services
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Matthew S. Easley Vice President - Investment Life Actuarial
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
R. Dennis Noice Vice President Systems - Nationwide Financial Services
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Joseph P. Rath Vice President-Office of Product and Market Compliance
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Mark R. Thresher Vice President - Finance and Treasurer
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
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 - Company Operations from
December 1996 to July 1997 and was also Senior Vice President - Life Company
37
<PAGE> 42
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 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,
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<PAGE> 43
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 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
39
<PAGE> 44
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
Nationwide, 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.
40
<PAGE> 45
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.
(formerly "TCI Portfolios, Inc.") was organized as a Maryland corporation in
1987. It is a diversified, open-end management company, designed only to
provide investment vehicles for variable annuity and variable life insurance
products of insurance companies. A member of the American Century(SM) Family of
Investments, American Century Variable Portfolios, Inc. is managed by American
Century Investment Management, Inc.
- - 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. There can be no assurance that the Fund will achieve its
investment objective.
- - AMERICAN CENTURY VP CAPITAL APPRECIATION
Investment Objective: Capital growth. The Fund will seek to achieve its
objective by investing in common stocks (including securities convertible into
common stocks and other equity equivalents) that meet certain fundamental and
technical standards of selection and have, in the opinion of the Fund's
investment manager, better than average potential for appreciation. The Fund
tries to stay fully invested in such securities, regardless of the movement of
stock prices generally. The Fund may invest in cash and cash equivalents
temporarily or when it is unable to find common stocks meeting its criteria of
selection. It may purchase securities only of companies that have a record of at
least three years continuous operation. There can be no assurance that the Fund
will achieve its investment objective.
- - AMERICAN CENTURY VP INCOME & GROWTH
Investment Objective: Dividend growth, current income and capital appreciation.
The Fund seeks to achieve its investment objective by investing in common
stocks. The investment manager constructs the portfolio to match the risk
characteristics of the S & P 500 Stock Index and then optimizes each portfolio
to achieve the desired balance of risk and return potential. This includes
targeting a dividend yield that exceeds that of the S & P 500 Stock Index. Such
a management technique known as "portfolio optimization" may cause the Fund to
be more heavily invested in some industries than in others. However, the Fund
may not invest more than 25% of its total assets in companies whose principal
business activities are in the same industry.
- - AMERICAN CENTURY VP INTERNATIONAL
Investment Objective: To seek capital growth. The Fund will seek to achieve its
investment objective by investing primarily in securities of foreign companies
that meet certain fundamental and technical standards of selection and, in the
opinion of the investment manager, have potential for appreciation. Under normal
conditions, the Fund will invest at least 65% of its assets in common stocks or
other equity securities of issuers from at least three countries outside the
United States. Securities of United States issuers may be included in the
portfolio from time to time. Although the primary investment of the Fund will be
common stocks
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(defined to include depository receipts for common stocks), the Fund may also
invest in other types of securities consistent with the Fund's objective. When
the manager believes that the total return potential of other securities equals
or exceeds the potential return of common stocks, the Fund may invest up to 35%
of its assets in such other securities. There can be no assurance that the Fund
will achieve its objectives.
- - AMERICAN CENTURY VP VALUE
Investment Objective: The investment objective of the Fund is long-term capital
growth; income is a secondary objective. Under normal market conditions, the
Fund expects to invest at least 80% of the value of its total asset in equity
securities, including common and preferred stock, convertible preferred stock
and convertible debt obligations. The equity securities in which the Fund will
invest will be primarily securities of well-established companies with
intermediate-to-large market capitalizations that are believed by management to
be undervalued at the time of purchase.
(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 the Company.)
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND
The Dreyfus Socially Responsible Growth Fund is an open-end, diversified,
management investment company. It was incorporated under Maryland law on July
20, 1992, and commenced operations on October 7, 1993. The Dreyfus Corporation
("Dreyfus") serves as the Fund's investment advisor. NCM Capital Management
Group, Inc. serves as the Fund's sub-investment adviser and provides day-to-day
management of the Fund's portfolio.
Investment Objective: The Fund's primary goal is to provide capital growth
through equity investment in companies that, in the opinion of the Fund's
management, not only meet traditional investment standards, but which also show
evidence that they conduct their business in a manner that contributes to the
enhancement of the quality of life in America. Current income is secondary to
the primary goal.
DREYFUS STOCK INDEX FUND, INC.
Dreyfus Stock Index Fund, Inc. is an open-end, non-diversified, management
investment company. It was incorporated under Maryland law on January 24, 1989,
and commenced operations on September 29, 1989. Mellon Equity Associates serves
as the Fund's index fund manager. As of May 1, 1994, Dreyfus Life and Annuity
Index Fund began doing business as Dreyfus Stock Index Fund.
Investment Objective: To provide investment results that correspond to the
price and yield performance of publicly traded common stocks in the aggregate,
as represented by the Standard & Poor's 500 Composite Stock Price Index. The
Fund is neither sponsored by nor affiliated with Standard & Poor's Corporation.
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus Variable Investment Fund (the "Fund") is an open-end, management
investment company. It was organized as an unincorporated business trust under
the laws of the Commonwealth of Massachusetts on October 29,1986 and commenced
operations August 31, 1990. The Fund offers its shares only as investment
vehicles for variable annuity and variable life insurance products of insurance
companies. Dreyfus serves as the Fund's manager. Dreyfus is a wholly-owned
subsidiary of Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon
Bank Corporation.
- - CAPITAL APPRECIATION PORTFOLIO
Investment Objective: The Portfolio's primary investment objective is to provide
long-term capital growth consistent with the preservation of capital; current
income is a secondary investment objective. This Portfolio invests primarily in
the common stocks of domestic and foreign issuers.
- - GROWTH AND INCOME PORTFOLIO
Investment Objective: To provide long-term capital growth, current income and
growth of income, consistent with reasonable investment risk. The Portfolio
invests in equity securities,
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debt securities and money market instruments of domestic and foreign issuers.
The proportion of the Portfolio's assets invested in each type of security will
vary from time to time in accordance with Dreyfus' assessment of economic
conditions and investment opportunities. In purchasing equity securities,
Dreyfus will invest in common stocks, preferred stocks and securities
convertible into common stocks, particularly those which offer opportunities for
capital appreciation and growth of earnings, while paying current dividends. The
Portfolio will generally invest in investment-grade debt obligations, except
that it may invest up to 35% of the value of its net assets in convertible debt
securities rated not lower than Caa by Moody's Investor Service, Inc. or CCC by
Standard & Poor's Ratings Group, Fitch Investors Service, L.P. or Duff & Phelps
Credit Rating Co., or if unrated, deemed to be of comparable quality by Dreyfus.
These securities are considered to have predominantly speculative
characteristics with respect to capacity to pay interest and repay principal and
are considered to be of poor standing. See "Investment Considerations and
Risks-Lower Rated Securities" in the Portfolio's prospectuses.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
Fidelity Variable Insurance Products Fund ("VIP") is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
November 13, 1981. VIP's shares are purchased by insurance companies to fund
benefits under variable insurance and annuity policies. Fidelity Management &
Research Company ("FMR") is VIP's manager.
- - VIP EQUITY-INCOME PORTFOLIO
Investment Objective: To seek reasonable income by investing primarily in
income-producing equity securities. In choosing these securities FMR also will
consider the potential for capital appreciation. The Portfolio's goal is to
achieve a yield which exceeds the composite yield on the securities comprising
the Standard & Poor's 500 Composite Stock Price Index.
- - 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
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.
- - VIP HIGH INCOME PORTFOLIO
Investment Objective: Seeks to obtain a high level of current income by
investing primarily in high-risk, high-yielding, lower-rated, fixed-income
securities, while also considering growth of capital. The portfolio's manager
will seek high current income normally by investing the Portfolio's assets as
follows:
- - at least 65% in income-producing debt securities and preferred stocks,
including convertible securities, zero coupon securities, and mortgage-backed
and asset-backed securities.
- - up to 20% in common stocks and other equity securities when consistent with
the Portfolio's primary objective or acquired as part of a unit combining
fixed-income and equity securities.
Higher yields are usually available on securities that are lower-rated or that
are unrated. Lower-rated securities are usually defined as Ba or
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lower by Moody's; BB or lower by Standard & Poor's and may be deemed to be of a
speculative nature. The Portfolio may also purchase lower-quality bonds such as
those rated Ca3 by Moody's or C- by Standard & Poor's which provide poor
protection for payment of principal and interest (commonly referred to as "junk
bonds"). For a further discussion of lower-rated securities, please see the
"Risks of Lower-Rated Debt Securities" section of the Portfolio's prospectus.
- - VIP OVERSEAS PORTFOLIO
Investment Objective: To seek long term growth of capital primarily through
investments in foreign securities. The Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States. FIDELITY VARIABLE INSURANCE PRODUCTS
FUND II Fidelity Variable Insurance Products Fund II ("VIP II") is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on March 21, 1988. VIP II shares are purchased by insurance companies to
fund benefits under variable insurance and annuity policies. FMR is the manager
of VIP II.
- - VIP II ASSET MANAGER PORTFOLIO
Investment Objective: To seek to obtain high total return with reduced risk over
the long-term by allocating its assets among domestic and foreign stocks, bonds
and short-term fixed income instruments.
- - VIP II CONTRAFUND PORTFOLIO
Investment Objective: To seek capital appreciation by investing primarily in
companies that the fund manager believes to be undervalued due to an overly
pessimistic appraisal by the public. This strategy can lead to investments in
domestic or foreign companies, small and large, many of which may not be well
known. The fund primarily invests in common stock and securities convertible
into common stock, but it has the flexibility to invest in any type of security
that may produce capital appreciation.
FIDELITY VARIABLE INSURANCE PRODUCTS
FUND III
VIP III is an open-end, diversified, management investment company organized as
a Massachusetts business trust on July 14, 1994. VIP III's name was changed from
Fidelity Advisor Annuity Fund to Variable Insurance Products Fund III on
December 30, 1996. VIP III shares are purchased by insurance companies to fund
benefits under variable life insurance and annuity contracts. Fidelity
Management & Research Company ("FMR") is the manager of VIP III.
- - VIP III GROWTH OPPORTUNITIES PORTFOLIO
Investment Objective: To provide capital growth by investing primarily in common
stocks and securities convertible into common stocks. The Portfolio, under
normal conditions, will invest at least 65% of its total assets in securities of
companies that FMR believes have long-term growth potential. Although the
Portfolio invests primarily in common stock and securities convertible into
common stock, it has the ability to purchase other securities, such as preferred
stock and bonds, that may produce capital growth. The Portfolio may invest in
foreign securities without limitation.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.
Morgan Stanley Dean Witter Universal Funds, Inc. (the "Fund") is a mutual fund
designed to provide investment vehicles for variable annuity contracts and
variable life insurance policies and for certain tax-qualified investors. The
Fund is an open-end management investment company, or mutual fund. At present it
offers 17 separate investment portfolios, each with a distinct investment
objective.
- - EMERGING MARKETS DEBT PORTFOLIO
Investment Objective: The Portfolio seeks high total return by investing
primarily in dollar- and non-dollar denominated Fixed Income Securities of
government and private-sector issuers located in emerging market countries, in
order to provide a high level of current income, while at the same time holding
the potential for capital appreciation if the perceived
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creditworthiness of the issuer improves due to improving economic, financial,
political, social or other conditions in the country in which the issuer is
located.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end management
investment company created under the laws of Massachusetts. NSAT offers shares
in the six separate Mutual Funds listed below, each with its own investment
objectives. Currently, shares of NSAT will be sold only to life insurance
company separate accounts to fund the benefits under variable life insurance
policies or variable annuity contracts issued by life insurance companies. The
assets of NSAT are managed by Nationwide Advisory Services, Inc. ("NAS"), Three
Nationwide Plaza, Columbus, Ohio 43215, a wholly-owned subsidiary of Nationwide
Life Insurance Company.
- - NSAT - CAPITAL APPRECIATION FUND
Investment Objective: The Capital Appreciation Fund seeks long-term capital
appreciation.
- - NSAT - GOVERNMENT BOND FUND
Investment Objective: To provide as high a level of income as is consistent with
capital preservation through investing primarily in bonds and securities issued
or backed by the U.S. Government, its agencies or instrumentalities.
- - NSAT - MONEY MARKET FUND
Investment Objective: The Fund seeks as high a level of current income as is
consistent with the preservation of capital and maintenance of liquidity.
- - NSAT - NATIONWIDE SMALL CAP VALUE FUND
Subadviser: The Dreyfus Corporation
Investment Objective: Capital appreciation through investment in a diversified
portfolio of equity securities of companies with a median market capitalization
of approximately $1 billion. The Fund intends to pursue its investment objective
by investing, under normal market conditions, at least 75% of the Fund's total
assets in equity securities of companies whose equity market capitalizations at
the time of investment are similar to the market capitalizations of companies in
the Russell 2000 Small Stock Index. The Fund will invest in equity securities of
domestic and foreign issuers characterized as "value" companies according to
criteria established by The Dreyfus Corporation, the Fund's subadviser.
- - NSAT -NATIONWIDE SMALL COMPANY FUND
Investment Objective Under normal market conditions, the Fund will invest at
least 65% of its total assets in equity securities of investment are similar to
the market capitalizations of companies in the Russell 2000 Small Stock Index.
NAS, the Fund's adviser, has contracted with a group of sub-advisers, each of
which will manage a portion of the Fund's portfolio. These sub-advisers are
Dreyfus, Neuberger Berman, LLC, Lazard Asset Management, Strong Capital
Management, Inc. and Warburg Pincus Asset Management, Inc. The sub-advisers were
chosen because they utilize a number of different investment styles when
investing in small company stocks. By utilizing a number of investment styles,
NAS hopes to increase prospects for investment return and to reduce market risk
and volatility.
- - NSAT - TOTAL RETURN FUND
Investment Objective: The investment objective of the Fund is to obtain a
reasonable, long-term total return on invested capital.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
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.
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- - AMT GROWTH PORTFOLIO
Investment Objective: The Portfolio seeks capital growth through investments in
common stocks of companies that the investment adviser believes will have above
average earnings or otherwise provide investors with above average potential for
capital appreciation. To maximize this potential, the investment adviser may
also utilize, from time to time, securities convertible into common stocks,
warrants and options to purchase such stocks.
- - AMT GUARDIAN PORTFOLIO
Investment Objective: Capital appreciation and secondarily, current income. The
Portfolio and its corresponding series seek to achieve these objectives by
investing in common stocks of long-established, high-quality companies.
Neuberger & Berman Management uses a value-oriented investment approach in
selecting securities, looking for low price-to-earnings ratios, strong balance
sheets, solid management, and consistent earnings.
- - AMT LIMITED MATURITY BOND PORTFOLIO
Investment Objective: To provide the high level of current income, consistent
with low risk to principal and liquidity. As a secondary objective, it also
seeks to enhance its total return through capital appreciation when market
factors, such as falling interest rates and rising bond prices, indicate that
capital appreciation may be available without significant risk to principal. It
seeks to achieve its objectives through investments in a diversified portfolio
of limited maturity debt securities. The Portfolio invests in securities which
are at least investment grade and does not invest in junk bonds.
- - AMT PARTNERS PORTFOLIO
Investment Objective: To seek capital growth. This Portfolio will seek to
achieve its objective by investing primarily in the common stock of established
companies. Its investment program seeks securities believed to be undervalued
based on fundamentals such as low price-to-earnings ratios, consistent cash
flows, and support from asset values. The objective of the Partners Portfolio is
not fundamental and can be changed by the Trustees of the Trust without
shareholder approval. Shareholders will, however, receive at least 30 days prior
notice thereof. There is no assurance the investment objective will be met.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
The Oppenheimer Variable Account Funds is an open-ended, diversified management
investment company organized as a Massachusetts business trust in 1984. Shares
of the Funds are sold only to provide benefits under variable life insurance
policies and variable annuity contracts. OppenheimerFunds, Inc. is the Funds'
investment advisor.
- - OPPENHEIMER BOND FUND/VA
Investment Objective: Seeks a high level of current income by investing at least
65% of its total assets in investment grade debt securities, U.S. government
securities and money market instruments. Investment grade debt securities would
include those rated in one of the four highest ranking categories by any
nationally-recognized rating organization or if unrated or split-rated (rated
investment grade and below investment grade by different rating organizations),
determined by OppenheimerFunds, Inc. to be of comparable quality. The Fund may
invest up to 35% of its total assets in debt securities rated less than
investment grade when consistent with the Fund's investment objectives. The Fund
seeks capital growth as a secondary objective when consistent with its primary
objective.
- - OPPENHEIMER GLOBAL SECURITIES FUND/VA
Investment Objective: To seek long-term capital appreciation by investing a
substantial portion of assets in securities of foreign issuers, "growth-type"
companies, cyclical industries and special situations which are considered to
have appreciation possibilities. Current income is not an objective. These
securities may be considered to be speculative.
- - OPPENHEIMER CAPITAL APPREICATION FUND/VA (FORMERLY OPPENHEIMER GROWTH FUND)
Investment Objective: The Fund seeks to achieve capital appreciation by
investing in
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securities of well-known established companies. In seeking its objective of
capital appreciation, the Fund will emphasize investments in securities of
well-known and established companies. Such securities generally have a history
of earnings and dividends and are issued by seasoned companies (having an
operating history of at least five years including predecessors). Current income
is a secondary consideration in the selection of the Fund's portfolio
securities.
- - OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
Investment Objective: To seek a total investment return (which includes current
income and capital appreciation in the value of its shares) from investments in
common stocks and other equity securities, bonds and other debt securities, and
"money market" securities.
STRONG OPPORTUNITY FUND II, INC. (FORMERLY STRONG SPECIAL FUND II, INC.)
The Strong Opportunity Fund II, Inc. is a diversified, open-end management
company commonly called a Mutual Fund. The Strong Opportunity Fund II, Inc. was
incorporated in Wisconsin and may only be purchased by the separate accounts of
insurance companies for the purpose of funding variable annuity contracts and
variable life insurance policies. Strong Capital Management Inc. is the
investment advisor for the Fund.
Investment Objective: To seek capital appreciation through investments in a
diversified portfolio of equity securities.
STRONG VARIABLE INSURANCE FUNDS, INC.
Strong Variable Insurance Funds, Inc. ("Corporation") is an open-end management
investment company, commonly referred to as a Mutual Fund. Incorporated in the
State of Wisconsin, the Corporation has been authorized to issue shares of
common stock and series and classes of series of common stock. The International
Stock Fund II and The Strong Discovery Fund II, Inc. ("Funds") are offered by
the Corporation to insurance company separate accounts for the purpose of
funding variable life insurance policies and variable annuity contracts. Strong
Capital Management, Inc. is the investment advisor to the Funds.
- - DISCOVERY FUND II, INC.
Investment Objective: To seek maximum capital appreciation through investments
in a diversified portfolio of securities. The Fund normally emphasizes
investment in equity securities and may invest up to 100% of its total assets in
equity securities including common stocks, preferred stocks and securities
convertible into common or preferred stocks. Although the Fund normally
emphasizes investment in equity securities, the Fund has the flexibility to
invest in any type of security that the Advisor believes has the potential for
capital appreciation including up to 100% of its total assets in debt
obligations, including intermediate to long-term corporate or U.S. government
debt securities.
- - INTERNATIONAL STOCK FUND II
Investment Objective: To seek capital growth by investing primarily in the
equity securities of issuers located outside the United States.
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Worldwide Insurance Trust is an open-end management investment company
organized as a "business trust" under the laws of the Commonwealth of
Massachusetts on January 7, 1987. Shares of the Trust are offered only to
separate accounts of various insurance companies to fund benefits of variable
insurance and annuity policies.
The assets of the Trust are managed by Van Eck Associates Corporation.
- - WORLDWIDE BOND FUND
Investment Objective: To seek high total return through a flexible policy of
investing globally, primarily in debt securities. The Fund does not invest in
junk bonds.
- - WORLDWIDE EMERGING MARKETS FUND
Investment Objective: Seeks long-term capital appreciation by investing
primarily in equity securities in emerging markets around the world. The Fund
specifically emphasizes investment in countries that, compared to the world's
major economies, exhibit relatively low
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gross national product per capita, as well as the potential for rapid economic
growth.
- - WORLDWIDE HARD ASSETS FUND
Investment Objective: To seek long-term capital appreciation by investing
globally, primarily in "Hard Assets Securities." Hard assets are tangible,
finite assets, asuch as real estate, energy, timber, and industrial and precious
metals. Income is a secondary consideration.
VAN KAMPEN LIFE INVESTMENT TRUST
The Van Kampen Life Investment Trust is an open-end diversified management
investment company organized as a Massachusetts business trust on June 3, 1985.
The Trust offers shares in separate funds which are sold only to insurance
companies to provide funding for variable life insurance policies and variable
annuity contracts. Van Kampen Asset Management, Inc. serves as the Fund's
investment adviser.
- - MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO
Investment Objective: To seek long-term capital growth by investing in a
portfolio of securities of companies operating in the real estate industry
("Real Estate Securities"). Current income is a secondary consideration. Real
Estate Securities include equity securities, common stocks and convertible
securities, as well as non-convertible preferred stocks and debt securities of
real estate industry companies. A "real estate industry company" is a company
that derives at least 50% of its assets (marked to market), gross income or net
profits from the ownership, construction, management or sale of residential,
commercial or industrial real estate. Under normal market conditions, at least
65% of the Fund's total assets will be invested in Real Estate Securities,
primarily equity securities of real estate investment trusts. The Fund may
invest up to 25% of its total assets in securities issued by foreign issuers,
some or all of which may also be Real Estate Securities. There can be no
assurance that the Fund will achieve its investment objective.
WARBURG PINCUS TRUST
The Warburg Pincus Trust ("Trust") is an open-end management investment company
organized in March 1995 as a business trust under the laws of The Commonwealth
of Massachusetts. The Trust offers its shares to insurance companies for
allocation to separate accounts for the purpose of funding variable annuity and
variable life contracts. Trust portfolios are managed by Warburg, Pincus Asset
Management, Inc. ("Warburg").
- - INTERNATIONAL EQUITY PORTFOLIO
Investment Objective: To seek long-term capital appreciation by investing
primarily in a broadly diversified portfolio of equity securities of companies,
wherever organized, that in the judgment of Warburg have their principal
business activities and interests outside the United States. The Portfolio will
ordinarily invest substantially all of its assets, but no less than 65% of its
total assets, in common stocks, warrants and securities convertible into or
exchangeable for common stocks. The Portfolio intends to invest principally in
the securities of financially strong companies with opportunities for growth
within growing international economies and markets through increased earning
power and improved utilization or recognition of assets.
- - POST-VENTURE CAPITAL PORTFOLIO
Investment Objective: The Portfolio seeks long-term growth of capital by
investing primarily in equity securities of issuers in their post-venture
capital stage of development and pursues an aggressive investment strategy.
Under normal market conditions, the Portfolio will invest at least 65% of its
total assets in equity securities of "post-venture capital companies." A
post-venture capital company is one that has received venture capital financing
either (a) during the early stages of the company's existence or the early
stages of the development of a new product or service or (b) as a part of a
restructuring or recapitalization of the company. The Portfolio may invest up to
10% of its assets in venture capital and other investment funds.
- - SMALL COMPANY GROWTH PORTFOLIO
Investment Objective: To seek capital growth by investing in a portfolio of
equity securities of small-sized domestic companies. The Portfolio
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ordinarily will invest at least 65% of its total assets in common stocks or
warrants of small-sized companies (i.e., companies having stock market
capitalizations of between $25 million and $1 billion at the time of purchase)
that represent attractive opportunities for capital growth. The Portfolio
intends to invest primarily in companies whose securities are traded on domestic
stock exchanges or in the over-the-counter market. The Portfolio's investments
will be made on the basis of their equity characteristics and securities ratings
generally will not be a factor in the selection process.
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APPENDIX B: ILLUSTRATIONS OF CASH VALUE, 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 indebtedness, no additional premium
payments are made, no cash values are allocated to the fixed account, and there
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. Beginning in the fourth policy year, cash surrender
value equals cash value less indebtedness, or other deductions. In policy years
one, two and three only, cash surrender value equals cash value less
indebtedness or other deductions increased by 5%, 5.5%, and 4% respectively, of
the current premium. The guaranteed mortality and expense risk charges for
policy years one through four are equivalent to an annual effective rate of
0.75% of the daily net asset value of the variable account. The current
mortality and expense risk charges for policy years one through four are
equivalent to an annual effective rate of 0.40% of the daily net assets of the
variable account. The current mortality and expense risk charges for policy
years five through twenty are equivalent to an annual effective rate of 0.25% of
the daily net assets of the variable account. The current mortality and expense
risk charges for policy years twenty-one and beyond are equivalent to an annual
effective rate of 0.10% of the daily net assets of the variable account. In
addition, the net investment returns also reflect the deduction of underlying
mutual fund investment advisory fees and other expenses which are equivalent to
an annual effective rate of 0.90% of the daily net assets of the variable
account. This effective rate is based on the average of the fund expenses, after
expense reimbursement, for all mutual fund options available under the Policy as
of March 13, 1999. 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 0.95%. 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 underlying
mutual fund expenses, gross annual rates of return of 0%, 6% and 12% correspond
to net investment experience at constant annual rates of -1.30, 4.70% and 10.70%
for policy years one through four, and rates of -1.15%, 4.85% and 10.85%, for
policy years five through twenty, and rates of -1.00%, 5.00% and 11.00%, for
policy years twenty-one and beyond. Considering guaranteed charges for mortality
and expense risks and underlying mutual fund expenses, gross annual rates of
return of 0%, 6% and 12% correspond to net investment experience at constant
annual rates of -1.65%, 4.35% and 10.35%, for all policy years.
50
<PAGE> 55
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. Policies issued on a substandard basis would result in lower
cash values and death benefits than those illustrated.
The illustrations also reflect the fact that Nationwide deducts a sales load
from each premium payment received guaranteed not to exceed 5.5% of each premium
payment for the first seven policy years and 2% thereafter. On a current basis,
the sales load is 3% of the premium payment plus 2.5% of premiums up to the
target premium during the first seven policy years, and 0% on all premiums
thereafter. Nationwide also deducts a tax expense charge of 3.5%, both current
and guaranteed, from all premium payments. The illustrations also reflect the
fact that Nationwide deducts a charge for state premium taxes at a rate of 2.25%
and for federal tax at a rate of 1.25% (imposed under Section 848 of the
Internal Revenue Code) of all premium payments.
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 currently $5.00 per month and
guaranteed not to exceed $10.00. 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, smoking classification, rating classification and
premium payment requested.
51
<PAGE> 56
$100,000 ANNUAL PREMIUM FOR FIRST 7 YEARS
$1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: REGULAR ISSUE/NONTOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 1
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 105,000 87,786 89,929 1,703,050 93,212 95,354 1,703,050 98,639 100,782 1,703,050
2 215,250 173,990 176,133 1,703,050 190,334 192,477 1,703,050 207,332 209,475 1,703,050
3 331,013 258,969 258,969 1,703,050 291,904 291,904 1,703,050 327,522 327,522 1,703,050
4 452,563 342,694 342,694 1,703,050 398,092 398,092 1,703,050 460,407 460,407 1,703,050
5 580,191 425,967 425,967 1,703,050 510,080 510,080 1,703,050 608,516 608,516 1,703,050
6 714,201 508,108 508,108 1,703,050 627,380 627,380 1,703,050 772,363 772,363 1,881,786
7 854,911 589,184 589,184 1,703,050 750,216 750,216 1,774,935 952,732 952,732 2,254,069
8 897,656 577,278 577,278 1,703,050 781,428 781,428 1,795,878 1,049,061 1,049,061 2,410,953
9 942,539 565,129 565,129 1,703,050 813,828 813,828 1,817,521 1,154,975 1,154,975 2,579,406
10 989,666 552,688 552,688 1,703,050 847,440 847,440 1,839,962 1,271,389 1,271,389 2,760,439
11 1,039,150 539,943 539,943 1,703,050 882,327 882,327 1,863,298 1,399,358 1,399,358 2,955,163
12 1,091,107 526,847 526,847 1,703,050 918,524 918,524 1,887,568 1,539,999 1,539,999 3,164,698
13 1,145,662 513,383 513,383 1,703,050 956,098 956,098 1,912,769 1,694,584 1,694,584 3,390,184
14 1,202,945 499,505 499,505 1,703,050 995,094 995,094 1,938,841 1,864,473 1,864,473 3,632,740
15 1,263,093 485,021 485,021 1,703,050 1,035,455 1,035,455 1,965,603 2,050,949 2,050,949 3,893,316
16 1,326,247 469,833 469,833 1,703,050 1,077,198 1,077,198 1,993,140 2,255,544 2,255,544 4,173,433
17 1,392,560 453,822 453,822 1,703,050 1,120,339 1,120,339 2,021,316 2,479,917 2,479,917 4,474,266
18 1,462,188 436,818 436,818 1,703,050 1,164,863 1,164,863 2,050,275 2,725,803 2,725,803 4,797,686
19 1,535,297 418,637 418,637 1,703,050 1,210,755 1,210,755 2,080,198 2,995,078 2,995,078 5,145,844
20 1,612,062 399,103 399,103 1,703,050 1,258,023 1,258,023 2,110,837 3,289,824 3,289,824 5,519,995
21 1,692,665 380,192 380,192 1,703,050 1,309,635 1,309,635 2,147,409 3,620,457 3,620,457 5,936,464
22 1,777,298 361,292 361,292 1,703,050 1,363,911 1,363,911 2,186,758 3,985,915 3,985,915 6,390,617
23 1,866,163 341,267 341,267 1,703,050 1,420,297 1,420,297 2,227,878 4,387,832 4,387,832 6,882,754
24 1,959,471 319,592 319,592 1,703,050 1,478,645 1,478,645 2,270,311 4,829,068 4,829,068 7,414,551
25 2,057,445 296,056 296,056 1,703,050 1,539,010 1,539,010 2,314,055 5,313,360 5,313,360 7,989,169
26 2,160,317 270,400 270,400 1,703,050 1,601,437 1,601,437 2,359,397 5,844,752 5,844,752 8,611,073
27 2,268,333 242,377 242,377 1,703,050 1,666,004 1,666,004 2,406,210 6,427,770 6,427,770 9,283,628
28 2,381,750 211,669 211,669 1,703,050 1,732,764 1,732,764 2,455,153 7,067,266 7,067,266 10,013,609
29 2,500,837 177,875 177,875 1,703,050 1,801,760 1,801,760 2,506,068 7,768,491 7,768,491 10,805,194
30 2,625,879 140,522 140,522 1,703,050 1,873,019 1,873,019 2,559,668 8,537,076 8,537,076 11,666,768
</TABLE>
(1) no policy loans and no partial withdrawals have been made.
(2) current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values
reflect a premium charge of 9% of target premium and 6.5% of
excess-of-target premium for the first 7 years and 3.5% of all premium
from eighth year and on.
(3) net investment returns are calculated as the hypothetical gross
investment return less all charges and deductions shown in the
prospectus appendix.
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
52
<PAGE> 57
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%, and 12% over a period of years but also
fluctuated above or below those averages for individual policy years. No
representation can be made by the company 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> 58
$100,000 ANNUAL PREMIUM FOR FIRST 7 YEARS
$1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 1
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 105,000 83,858 86,000 1,703,050 89,106 91,248 1,703,050 94,357 96,500 1,703,050
2 215,250 166,199 168,342 1,703,050 181,945 184,087 1,703,050 198,326 200,468 1,703,050
3 331,013 247,061 247,061 1,703,050 278,717 278,717 1,703,050 312,964 312,964 1,703,050
4 452,563 326,469 326,469 1,703,050 379,626 379,626 1,703,050 439,449 439,449 1,703,050
5 580,191 404,454 404,454 1,703,050 484,902 484,902 1,703,050 579,107 579,107 1,703,050
6 714,201 481,028 481,028 1,703,050 594,775 594,775 1,703,050 733,316 733,316 1,786,652
7 854,911 556,200 556,200 1,703,050 709,497 709,497 1,703,050 901,980 901,980 2,133,995
8 897,656 539,922 539,922 1,703,050 733,836 733,836 1,703,050 986,652 986,652 2,267,525
9 942,539 523,086 523,086 1,703,050 758,771 758,771 1,703,050 1,078,886 1,078,886 2,409,476
10 989,666 505,593 505,593 1,703,050 784,294 784,294 1,703,050 1,179,290 1,179,290 2,560,475
11 1,039,150 487,328 487,328 1,703,050 810,395 810,395 1,711,393 1,288,511 1,288,511 2,721,077
12 1,091,107 468,181 468,181 1,703,050 837,069 837,069 1,720,176 1,407,260 1,407,260 2,891,919
13 1,145,662 448,065 448,065 1,703,050 864,327 864,327 1,729,172 1,536,345 1,536,345 3,073,611
14 1,202,945 426,821 426,821 1,703,050 892,141 892,141 1,738,248 1,676,566 1,676,566 3,266,621
15 1,263,093 404,256 404,256 1,703,050 920,467 920,467 1,747,323 1,828,760 1,828,760 3,471,536
16 1,326,247 380,153 380,153 1,703,050 949,252 949,252 1,756,400 1,993,813 1,993,813 3,689,153
17 1,392,560 354,265 354,265 1,703,050 978,442 978,442 1,765,306 2,172,670 2,172,670 3,919,931
18 1,462,188 326,231 326,231 1,703,050 1,007,955 1,007,955 1,774,101 2,366,221 2,366,221 4,164,785
19 1,535,297 295,662 295,662 1,703,050 1,037,711 1,037,711 1,782,892 2,575,413 2,575,413 4,424,817
20 1,612,062 262,148 262,148 1,703,050 1,067,657 1,067,657 1,791,422 2,801,292 2,801,292 4,700,289
21 1,692,665 225,251 225,251 1,703,050 1,097,750 1,097,750 1,799,981 3,044,996 3,044,996 4,992,880
22 1,777,298 184,506 184,506 1,703,050 1,127,968 1,127,968 1,808,472 3,307,782 3,307,782 5,303,367
23 1,866,163 139,405 139,405 1,703,050 1,158,308 1,158,308 1,816,922 3,591,044 3,591,044 5,632,912
24 1,959,471 89,294 89,294 1,703,050 1,188,748 1,188,748 1,825,203 3,896,216 3,896,216 5,982,250
25 2,057,445 33,297 33,297 1,703,050 1,219,230 1,219,230 1,833,235 4,224,700 4,224,700 6,352,259
26 2,160,317 (*) (*) (*) 1,249,651 1,249,651 1,841,110 4,577,785 4,577,785 6,744,450
27 2,268,333 (*) (*) (*) 1,279,878 1,279,878 1,848,528 4,956,693 4,956,693 7,158,952
28 2,381,750 (*) (*) (*) 1,309,724 1,309,724 1,855,748 5,362,403 5,362,403 7,597,989
29 2,500,837 (*) (*) (*) 1,339,039 1,339,039 1,862,469 5,796,012 5,796,012 8,061,673
30 2,625,879 (*) (*) (*) 1,367,727 1,367,727 1,869,136 6,258,808 6,258,808 8,553,287
</TABLE>
(1) no policy loans and no partial withdrawals have been made.
(2) guaranteed values reflect guaranteed cost of insurance charges and a
monthly $10.00 administrative expense charge all the time. Guaranteed
values reflect a premium charge of 9% of premium for the first 7 years
and 5.5% of premium from eighth year and on.
(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.
54
<PAGE> 59
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%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by the company 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> 60
$100,000 ANNUAL PREMIUM FOR FIRST 7 YEARS
$1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: REGULAR ISSUE/NONTOBACCO PREFERRED, AGE 45
DEATH BENEFIT OPTION 2
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 105,000 87,587 89,730 1,790,637 93,000 95,143 1,796,050 98,415 100,558 1,801,465
2 215,250 173,348 175,491 1,876,398 189,626 191,769 1,892,676 206,555 208,698 1,909,605
3 331,013 257,648 257,648 1,960,698 290,389 290,389 1,993,439 325,795 325,795 2,028,845
4 452,563 340,430 340,430 2,043,480 395,392 395,392 2,098,442 457,208 457,208 2,160,258
5 580,191 422,441 422,441 2,125,491 505,707 505,707 2,208,757 603,133 603,133 2,306,183
6 714,201 502,957 502,957 2,206,007 620,742 620,742 2,323,792 764,156 764,156 2,467,206
7 854,911 582,021 582,021 2,285,071 740,741 740,741 2,443,791 941,909 941,909 2,644,959
8 897,656 568,009 568,009 2,271,059 768,746 768,746 2,471,796 1,035,437 1,035,437 2,738,487
9 942,539 553,650 553,650 2,256,700 797,516 797,516 2,500,566 1,138,373 1,138,373 2,841,423
10 989,666 538,882 538,882 2,241,932 827,019 827,019 2,530,069 1,251,650 1,251,650 2,954,700
11 1,039,150 523,701 523,701 2,226,751 857,281 857,281 2,560,331 1,376,362 1,376,362 3,079,412
12 1,091,107 508,057 508,057 2,211,107 888,277 888,277 2,591,327 1,513,665 1,513,665 3,216,715
13 1,145,662 491,938 491,938 2,194,988 920,027 920,027 2,623,077 1,664,887 1,664,887 3,367,937
14 1,202,945 475,298 475,298 2,178,348 952,509 952,509 2,655,559 1,831,439 1,831,439 3,568,376
15 1,263,093 457,889 457,889 2,160,939 985,495 985,495 2,688,545 2,014,515 2,014,515 3,824,154
16 1,326,247 439,600 439,600 2,142,650 1,018,886 1,018,886 2,721,936 2,215,474 2,215,474 4,099,292
17 1,392,560 420,303 420,303 2,123,353 1,052,554 1,052,554 2,755,604 2,435,861 2,435,861 4,394,780
18 1,462,188 399,807 399,807 2,102,857 1,086,303 1,086,303 2,789,353 2,677,377 2,677,377 4,712,452
19 1,535,297 377,915 377,915 2,080,965 1,119,918 1,119,918 2,822,968 2,941,868 2,941,868 5,054,423
20 1,612,062 354,459 354,459 2,057,509 1,153,198 1,153,198 2,856,248 3,231,375 3,231,375 5,421,925
21 1,692,665 331,815 331,815 2,034,865 1,189,821 1,189,821 2,892,871 3,556,134 3,556,134 5,830,993
22 1,777,298 309,431 309,431 2,012,481 1,228,216 1,228,216 2,931,266 3,915,097 3,915,097 6,277,075
23 1,866,163 285,878 285,878 1,988,928 1,266,997 1,266,997 2,970,047 4,309,873 4,309,873 6,760,466
24 1,959,471 260,563 260,563 1,963,613 1,305,557 1,305,557 3,008,607 4,743,268 4,743,268 7,282,813
25 2,057,445 233,317 233,317 1,936,367 1,343,688 1,343,688 3,046,738 5,218,954 5,218,954 7,847,220
26 2,160,317 203,933 203,933 1,906,983 1,381,135 1,381,135 3,084,185 5,740,903 5,740,903 8,458,073
27 2,268,333 172,244 172,244 1,875,294 1,417,665 1,417,665 3,120,715 6,313,561 6,313,561 9,118,676
28 2,381,750 138,026 138,026 1,841,076 1,452,977 1,452,977 3,156,027 6,941,693 6,941,693 9,835,685
29 2,500,837 101,002 101,002 1,804,052 1,486,695 1,486,695 3,189,745 7,630,457 7,630,457 10,613,203
30 2,625,879 60,857 60,857 1,763,907 1,518,384 1,518,384 3,221,434 8,385,385 8,385,385 11,459,468
</TABLE>
(1) no policy loans and no partial withdrawals have been made.
(2) current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values
reflect a premium charge of 9% of target premium and 6.5% of ex-
cess-of-target premium for the first 7 years and 3.5% of all premium
from eighth year and on.
(3) net investment returns are calculated as the hypothetical gross
investment return less all charges and deductions shown in the
prospectus appendix.
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
56
<PAGE> 61
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%, and 12% over a period of years but also
fluctuated above or below those averages for individual policy years. No
representation can be made by the company 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> 62
$100,000 ANNUAL PREMIUM FOR FIRST 7 YEARS
$1,703,050 SPECIFIED AMOUNT
CASH VALUE ACCUMULATION TEST
UNISEX: NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 2
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 105,000 83,557 85,700 1,786,607 88,787 90,930 1,791,837 94,020 96,163 1,797,070
2 215,250 165,271 167,414 1,868,321 180,921 183,063 1,883,971 197,201 199,344 1,900,251
3 331,013 245,138 245,138 1,948,188 276,510 276,510 1,979,560 310,447 310,447 2,013,497
4 452,563 323,137 323,137 2,026,187 375,652 375,652 2,078,702 434,740 434,740 2,137,790
5 580,191 399,247 399,247 2,102,297 478,447 478,447 2,181,497 571,159 571,159 2,274,209
6 714,201 473,415 473,415 2,176,465 584,965 584,965 2,288,015 720,863 720,863 2,423,913
7 854,911 545,570 545,570 2,248,620 695,263 695,263 2,398,313 885,107 885,107 2,588,157
8 897,656 526,118 526,118 2,229,168 714,448 714,448 2,417,498 964,905 964,905 2,667,955
9 942,539 505,932 505,932 2,208,982 733,374 733,374 2,436,424 1,051,785 1,051,785 2,754,835
10 989,666 484,904 484,904 2,187,954 751,909 751,909 2,454,959 1,146,349 1,146,349 2,849,399
11 1,039,150 462,912 462,912 2,165,962 769,892 769,892 2,472,942 1,249,240 1,249,240 2,952,290
12 1,091,107 439,851 439,851 2,142,901 787,177 787,177 2,490,227 1,361,187 1,361,187 3,064,237
13 1,145,662 415,652 415,652 2,118,702 803,645 803,645 2,506,695 1,483,028 1,483,028 3,186,078
14 1,202,945 390,163 390,163 2,093,213 819,081 819,081 2,522,131 1,615,599 1,615,599 3,318,649
15 1,263,093 363,198 363,198 2,066,248 833,230 833,230 2,536,280 1,759,783 1,759,783 3,462,833
16 1,326,247 334,557 334,557 2,037,607 845,804 845,804 2,548,854 1,916,534 1,916,534 3,619,584
17 1,392,560 304,026 304,026 2,007,076 856,484 856,484 2,559,534 2,086,887 2,086,887 3,789,937
18 1,462,188 271,273 271,273 1,974,323 864,816 864,816 2,567,866 2,271,839 2,271,839 3,998,663
19 1,535,297 235,970 235,970 1,939,020 870,321 870,321 2,573,371 2,472,261 2,472,261 4,247,592
20 1,612,062 197,810 197,810 1,900,860 872,516 872,516 2,575,566 2,689,005 2,689,005 4,511,881
21 1,692,665 156,505 156,505 1,859,555 870,914 870,914 2,573,964 2,922,935 2,922,935 4,792,736
22 1,777,298 111,789 111,789 1,814,839 865,022 865,022 2,568,072 3,175,182 3,175,182 5,090,769
23 1,866,163 63,414 63,414 1,766,464 854,341 854,341 2,557,391 3,447,084 3,447,084 5,407,096
24 1,959,471 11,048 11,048 1,714,098 838,260 838,260 2,541,310 3,740,017 3,740,017 5,742,422
25 2,057,445 (*) (*) (*) 815,993 815,993 2,519,043 4,055,327 4,055,327 6,097,589
26 2,160,317 (*) (*) (*) 786,536 786,536 2,489,586 4,394,251 4,394,251 6,474,050
27 2,268,333 (*) (*) (*) 748,671 748,671 2,451,721 4,757,963 4,757,963 6,871,926
28 2,381,750 (*) (*) (*) 700,900 700,900 2,403,950 5,147,401 5,147,401 7,293,353
29 2,500,837 (*) (*) (*) 641,662 641,662 2,344,712 5,563,620 5,563,620 7,738,439
30 2,625,879 (*) (*) (*) 569,479 569,479 2,272,529 6,007,855 6,007,855 8,210,335
</TABLE>
(1) no policy loans and no partial withdrawals have been made.
(2) guaranteed values reflect guaranteed cost of insurance charges and a
monthly $10.00 administrative expense charge all the time. Guaranteed
values reflect a premium charge of 9% of premium for the first 7 years
and 5.5% of premium from eighth year and on.
(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.
58
<PAGE> 63
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%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by the company or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
59
<PAGE> 64
$38,872.05 ANNUAL PREMIUM FOR 20 YEARS
$1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM AND CORRIDOR TEST
UNISEX: GUARANTEED ISSUE/NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 1
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 40,816 31,065 31,374 1,703,050 33,063 33,372 1,703,050 35,063 35,372 1,703,050
2 83,672 60,300 60,609 1,703,050 66,205 66,514 1,703,050 72,355 72,663 1,703,050
3 128,671 87,990 87,990 1,703,050 99,708 99,708 1,703,050 112,409 112,409 1,703,050
4 175,921 114,855 114,855 1,703,050 134,318 134,318 1,703,050 156,280 156,280 1,703,050
5 225,532 141,515 141,515 1,703,050 170,769 170,769 1,703,050 205,142 205,142 1,703,050
6 277,625 167,891 167,891 1,703,050 209,040 209,040 1,703,050 259,399 259,399 1,703,050
7 332,321 193,822 193,822 1,703,050 249,065 249,065 1,703,050 319,495 319,495 1,703,050
8 389,753 220,728 220,728 1,703,050 292,471 292,471 1,703,050 387,752 387,752 1,703,050
9 450,056 246,871 246,871 1,703,050 337,607 337,607 1,703,050 463,166 463,166 1,703,050
10 513,375 272,461 272,461 1,703,050 384,776 384,776 1,703,050 546,767 546,767 1,703,050
11 579,859 297,401 297,401 1,703,050 434,002 434,002 1,703,050 639,430 639,430 1,703,050
12 649,668 321,318 321,318 1,703,050 485,066 485,066 1,703,050 741,944 741,944 1,703,050
13 722,967 344,184 344,184 1,703,050 538,075 538,075 1,703,050 855,521 855,521 1,703,050
14 799,931 365,931 365,931 1,703,050 593,117 593,117 1,703,050 981,530 981,530 1,703,050
15 880,743 386,483 386,483 1,703,050 650,293 650,293 1,703,050 1,121,547 1,121,547 1,703,050
16 965,596 405,708 405,708 1,703,050 709,684 709,684 1,703,050 1,277,385 1,277,385 1,703,050
17 1,054,691 423,596 423,596 1,703,050 771,496 771,496 1,703,050 1,450,526 1,450,526 1,856,673
18 1,148,242 439,981 439,981 1,703,050 835,849 835,849 1,703,050 1,641,423 1,641,423 2,068,193
19 1,246,469 454,691 454,691 1,703,050 902,907 902,907 1,703,050 1,851,857 1,851,857 2,296,303
20 1,349,608 467,579 467,579 1,703,050 972,901 972,901 1,703,050 2,083,849 2,083,849 2,542,296
21 1,417,089 443,589 443,589 1,703,050 1,008,939 1,008,939 1,703,050 2,302,456 2,302,456 2,762,947
22 1,487,943 419,516 419,516 1,703,050 1,047,290 1,047,290 1,703,050 2,544,383 2,544,383 3,027,816
23 1,562,341 395,360 395,360 1,703,050 1,088,104 1,088,104 1,703,050 2,812,159 2,812,159 3,318,348
24 1,640,458 371,121 371,121 1,703,050 1,131,538 1,131,538 1,703,000 3,108,589 3,108,589 3,637,049
25 1,722,480 346,116 346,116 1,703,050 1,177,473 1,177,473 1,703,050 3,436,508 3,436,508 3,986,349
26 1,808,604 318,911 318,911 1,703,050 1,225,583 1,225,583 1,703,050 3,798,740 3,798,740 4,368,551
27 1,899,035 289,234 289,234 1,703,050 1,276,107 1,276,107 1,703,050 4,199,685 4,199,685 4,745,645
28 1,993,986 256,754 256,754 1,703,050 1,329,318 1,329,318 1,703,050 4,643,768 4,643,768 5,154,582
29 2,093,686 221,055 221,055 1,703,050 1,385,539 1,385,539 1,703,050 5,135,998 5,135,998 5,598,238
30 2,198,370 181,622 181,622 1,703,050 1,445,151 1,445,151 1,703,050 5,682,084 5,682,084 6,079,830
</TABLE>
(1) no policy loans and no partial withdrawals have been made.
(2) current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values
reflect a premium charge of 9% of target premium and 6.5% of ex-
cess-of-target premium for the first 7 years and 3.5% of all premium
from eighth year and on.
(3) net investment returns are calculated as the hypothetical gross
investment return less all charges and deductions shown in the
prospectus appendix.
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
60
<PAGE> 65
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%, and 12% over a period of years but also
fluctuated above or below those averages for individual policy years. No
representation can be made by the company or the trust that these hypothetical
rates of return can be achieved for any one year or sustained over any period of
time.
61
<PAGE> 66
$38,872.05 ANNUAL PREMIUM FOR 20 YEARS
$1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM AND CORRIDOR TEST
UNISEX: NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 1
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 40,816 28,953 29,262 1,703,050 30,875 31,184 1,703,050 32,800 33,109 1,703,050
2 83,672 57,073 57,382 1,703,050 62,724 63,033 1,703,050 68,613 68,921 1,703,050
3 128,671 84,353 84,353 1,703,050 95,578 95,578 1,703,050 107,746 107,746 1,703,050
4 175,921 110,772 110,772 1,703,050 129,455 129,455 1,703,050 150,531 150,531 1,703,050
5 225,532 136,312 136,312 1,703,050 164,381 164,381 1,703,050 197,344 197,344 1,703,050
6 277,625 160,923 160,923 1,703,050 200,353 200,353 1,703,050 248,576 248,576 1,703,050
7 332,321 184,546 184,546 1,703,050 237,363 237,363 1,703,050 304,661 304,661 1,703,050
8 389,753 208,457 208,457 1,703,050 276,821 276,821 1,703,050 367,594 367,594 1,703,050
9 450,056 231,213 231,213 1,703,050 317,349 317,349 1,703,050 436,577 436,577 1,703,050
10 513,375 252,752 252,752 1,703,050 358,956 358,956 1,703,050 512,278 512,278 1,703,050
11 579,859 273,002 273,002 1,703,050 401,647 401,647 1,703,050 595,456 595,456 1,703,050
12 649,668 291,904 291,904 1,703,050 445,454 445,454 1,703,050 687,005 687,005 1,703,050
13 722,967 309,430 309,430 1,703,050 490,449 490,449 1,703,050 787,984 787,984 1,703,050
14 799,931 325,482 325,482 1,703,050 536,655 536,655 1,703,050 899,565 899,565 1,703,050
15 880,743 339,936 339,936 1,703,050 584,092 584,092 1,703,050 1,023,110 1,023,110 1,703,050
16 965,596 352,654 352,654 1,703,050 632,791 632,791 1,703,050 1,160,217 1,160,217 1,703,050
17 1,054,691 363,484 363,484 1,703,050 682,799 682,799 1,703,050 1,312,778 1,312,778 1,703,050
18 1,148,242 372,177 372,177 1,703,050 734,119 734,119 1,703,050 1,481,780 1,481,780 1,867,043
19 1,246,469 378,481 378,481 1,703,050 786,796 786,796 1,703,050 1,667,181 1,667,181 2,067,304
20 1,349,608 382,144 382,144 1,703,050 840,927 840,927 1,703,050 1,870,592 1,870,592 2,282,123
21 1,417,089 345,962 345,962 1,703,050 857,475 857,475 1,703,050 2,053,501 2,053,501 2,464,201
22 1,487,943 306,230 306,230 1,703,050 873,030 873,030 1,703,050 2,253,775 2,253,775 2,681,993
23 1,562,341 262,469 262,469 1,703,050 887,447 887,447 1,703,050 2,473,052 2,473,052 2,918,201
24 1,640,458 214,065 214,065 1,703,050 900,528 900,528 1,703,050 2,713,114 2,713,114 3,174,343
25 1,722,480 160,197 160,197 1,703,050 911,986 911,986 1,703,050 2,975,894 2,975,894 3,452,036
26 1,808,604 99,762 99,762 1,703,050 921,424 921,424 1,703,050 3,263,480 3,263,480 3,753,002
27 1,899,035 31,330 31,330 1,703,050 928,322 928,322 1,703,050 3,579,619 3,579,619 4,044,969
28 1,993,986 (*) (*) (*) 931,993 931,993 1,703,050 3,927,578 3,927,578 4,359,611
29 2,093,686 (*) (*) (*) 931,653 931,653 1,703,050 4,311,237 4,311,237 4,699,248
30 2,198,370 (*) (*) (*) 926,448 926,448 1,703,050 4,735,269 4,735,269 5,066,738
</TABLE>
(1) no policy loans and no partial withdrawals have been made.
(2) guaranteed values reflect guaranteed cost of insurance charges and a
monthly $10.00 administrative expense charge all the time. Guaranteed
values reflect a premium charge of 9% of premium for the first 7 years
and 5.5% of premium from eighth year and on.
(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.
62
<PAGE> 67
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%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by the company or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
63
<PAGE> 68
$38,872.05 ANNUAL PREMIUM FOR 20 YEARS
$1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM AND CORRIDOR TEST
UNISEX: GUARANTEED ISSUE/NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 2
CURRENT VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 40,816 30,986 31,295 1,734,036 32,978 33,287 1,736,028 34,973 35,282 1,738,023
2 83,672 60,014 60,323 1,763,064 65,889 66,198 1,768,939 72,008 72,317 1,775,058
3 128,671 87,338 87,338 1,790,388 98,961 98,961 1,802,011 111,557 111,557 1,814,607
4 175,921 113,695 113,695 1,816,745 132,934 132,934 1,835,984 154,641 154,641 1,857,691
5 225,532 139,716 139,716 1,842,766 168,533 168,533 1,871,583 202,386 202,386 1,905,436
6 277,625 165,335 165,335 1,868,385 205,733 205,733 1,908,783 255,154 255,154 1,958,204
7 332,321 190,373 190,373 1,893,423 244,418 244,418 1,947,468 313,281 313,281 2,016,331
8 389,753 216,165 216,165 1,919,215 286,080 286,080 1,989,130 378,860 378,860 2,081,910
9 450,056 240,978 240,978 1,944,028 329,026 329,026 2,032,076 450,742 450,742 2,153,792
10 513,375 265,043 265,043 1,968,093 373,543 373,543 2,076,593 529,834 529,834 2,232,884
11 579,859 288,231 288,231 1,991,281 419,562 419,562 2,122,612 616,757 616,757 2,319,807
12 649,668 310,068 310,068 2,013,118 466,650 466,650 2,169,700 711,828 711,828 2,414,878
13 722,967 330,488 330,488 2,033,538 514,774 514,774 2,217,824 815,829 815,829 2,518,879
14 799,931 349,381 349,381 2,052,431 563,846 563,846 2,266,896 929,572 929,572 2,632,622
15 880,743 366,614 366,614 2,069,664 613,756 613,756 2,316,806 1,053,936 1,053,936 2,756,986
16 965,596 381,985 381,985 2,085,035 664,310 664,310 2,367,360 1,189,813 1,189,813 2,892,863
17 1,054,691 395,450 395,450 2,098,500 715,471 715,471 2,418,521 1,338,361 1,338,361 3,041,411
18 1,148,242 406,756 406,756 2,109,806 766,977 766,977 2,470,027 1,500,632 1,500,632 3,203,682
19 1,246,469 415,641 415,641 2,118,691 818,548 818,548 2,521,598 1,677,783 1,677,783 3,380,833
20 1,349,608 421,878 421,878 2,124,928 869,918 869,918 2,572,968 1,871,123 1,871,123 3,574,173
21 1,417,089 391,612 391,612 2,094,662 885,762 885,762 2,588,812 2,046,617 2,046,617 3,749,667
22 1,487,943 361,693 361,693 2,064,743 902,373 902,373 2,605,423 2,241,108 2,241,108 3,944,158
23 1,562,341 332,117 332,117 2,035,167 919,787 919,787 2,622,837 2,456,653 2,456,653 4,159,703
24 1,640,458 302,881 302,881 2,005,931 938,044 938,044 2,641,094 2,695,531 2,695,531 4,398,581
25 1,722,480 273,121 273,121 1,976,171 956,298 956,298 2,659,348 2,959,354 2,959,354 4,662,404
26 1,808,604 241,108 241,108 1,944,158 972,756 972,756 2,675,806 3,248,976 3,248,976 4,952,026
27 1,899,035 206,654 206,654 1,909,704 987,111 987,111 2,690,161 3,566,960 3,566,960 5,270,010
28 1,993,986 169,532 169,532 1,872,582 998,999 998,999 2,702,049 3,916,109 3,916,109 5,619,159
29 2,093,686 129,462 129,462 1,832,512 1,007,977 1,007,977 2,711,027 4,299,461 4,299,461 6,002,511
30 2,198,370 86,095 86,095 1,789,145 1,013,512 1,013,512 2,716,562 4,720,314 4,720,314 6,423,364
</TABLE>
(1) no policy loans and no partial withdrawals have been made.
(2) current values reflect current cost of insurance charges and a monthly
$5.00 administrative expense charge all the time. Current values reflect a
premium charge of 9% of target premium and 6.5% of excess-of-target
premium for the first 7 years and 3.5% of all premium from eighth year and
on.
(3) net investment returns are calculated as the hypothetical gross
investment return less all charges and deductions shown in the
prospectus appendix.
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
64
<PAGE> 69
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%, and 12% over a period of years but also
fluctuated above or below those averages for individual policy years. No
representation can be made by the company or the trust that these hypothetical
rates of return can be achieved for any one year or sustained over any period of
time.
65
<PAGE> 70
$38,872.05 ANNUAL PREMIUM FOR 20 YEARS
$1,703,050 SPECIFIED AMOUNT
GUIDELINE PREMIUM AND CORRIDOR TEST
UNISEX: NONTOBACCO, AGE 45
DEATH BENEFIT OPTION 2
GUARANTEED VALUES
<TABLE>
<CAPTION>
0% HYPOTHETICAL 6% HYPOTHETICAL 12% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
PREMIUMS
PAID PLUS CASH CASH CASH
POLICY INTEREST CASH SURRENDER DEATH CASH SURRENDER DEATH CASH SURRENDER DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 40,816 28,842 29,151 1,731,892 30,757 31,066 1,733,807 32,676 32,984 1,735,726
2 83,672 56,738 57,047 1,759,788 62,354 62,663 1,765,404 68,206 68,514 1,771,256
3 128,671 83,669 83,669 1,786,719 94,791 94,791 1,797,841 106,847 106,847 1,809,897
4 175,921 109,598 109,598 1,812,648 128,052 128,052 1,831,102 148,865 148,865 1,851,915
5 225,532 134,493 134,493 1,837,543 162,121 162,121 1,865,171 194,554 194,554 1,897,604
6 277,625 158,285 158,285 1,861,335 196,943 196,943 1,899,993 244,199 244,199 1,947,249
7 332,321 180,889 180,889 1,883,939 232,447 232,447 1,935,497 298,099 298,099 2,001,149
8 389,753 203,545 203,545 1,906,595 269,957 269,957 1,973,007 358,065 358,065 2,061,115
9 450,056 224,777 224,777 1,927,827 308,002 308,002 2,011,052 423,074 423,074 2,126,124
10 513,375 244,489 244,489 1,947,539 346,480 346,480 2,049,530 493,519 493,519 2,196,569
11 579,859 262,569 262,569 1,965,619 385,268 385,268 2,088,318 569,812 569,812 2,272,862
12 649,668 278,923 278,923 1,981,973 424,257 424,257 2,127,307 652,426 652,426 2,355,476
13 722,967 293,494 293,494 1,996,544 463,366 463,366 2,166,416 741,920 741,920 2,444,970
14 799,931 306,138 306,138 2,009,188 502,423 502,423 2,205,473 838,817 838,817 2,541,867
15 880,743 316,682 316,682 2,019,732 541,212 541,212 2,244,262 943,661 943,661 2,646,711
16 965,596 324,936 324,936 2,027,986 579,491 579,491 2,282,541 1,057,028 1,057,028 2,760,078
17 1,054,691 330,695 330,695 2,033,745 616,987 616,987 2,320,037 1,179,537 1,179,537 2,882,587
18 1,148,242 333,637 333,637 2,036,687 653,292 653,292 2,356,342 1,311,742 1,311,742 3,014,792
19 1,246,469 333,444 333,444 2,036,494 687,980 687,980 2,391,030 1,454,253 1,454,253 3,157,303
20 1,349,608 329,819 329,819 2,032,869 720,618 720,618 2,423,668 1,607,756 1,607,756 3,310,806
21 1,417,089 286,351 286,351 1,989,401 712,454 712,454 2,415,504 1,732,516 1,732,516 3,435,566
22 1,487,943 239,507 239,507 1,942,557 699,715 699,715 2,402,765 1,865,750 1,865,750 3,568,800
23 1,562,341 189,039 189,039 1,892,089 681,893 681,893 2,384,943 2,008,006 2,008,006 3,711,056
24 1,640,458 134,614 134,614 1,837,664 658,361 658,361 2,361,411 2,159,793 2,159,793 3,862,843
25 1,722,480 75,763 75,763 1,778,813 628,322 628,322 2,331,372 2,321,523 2,321,523 4,024,573
26 1,808,604 11,844 11,844 1,714,894 590,757 590,757 2,293,807 2,493,459 2,493,459 4,196,509
27 1,899,035 (*) (*) (*) 544,434 544,434 2,247,484 2,675,713 2,675,713 4,378,763
28 1,993,986 (*) (*) (*) 487,839 487,839 2,190,889 2,868,176 2,868,176 4,571,226
29 2,093,686 (*) (*) (*) 419,396 419,396 2,122,446 3,070,731 3,070,731 4,773,781
30 2,198,370 (*) (*) (*) 337,611 337,611 2,040,661 3,283,401 3,283,401 4,986,451
</TABLE>
(1) no policy loans and no partial withdrawals have been made.
(2) guaranteed values reflect guaranteed cost of insurance charges and a
monthly $10.00 administrative expense charge all the time. Guaranteed
values reflect a premium charge of 9% of premium for the first
7 years and 5.5% of premium from eighth year and on.
(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.
66
<PAGE> 71
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%, and 12% over a period
of years but also fluctuated above or below those averages for individual policy
years. No representation can be made by the company or the trust that these
hypothetical rates of return can be achieved for any one year or sustained over
any period of time.
67
<PAGE> 72
APPENDIX C: PERFORMANCE TABLE
The following performance tables display historical investment results of the
underlying mutual fund sub-accounts. This information may be useful in helping
potential investors in deciding which underlying mutual fund sub-accounts to
choose and in assessing the competence of the underlying mutual funds'
investment advisers. The performance figures shown should be considered in light
of the investment objectives and policies, characteristics and quality of the
underlying portfolios of the underlying mutual funds, and the market conditions
during the periods of time quoted. The performance figures should not be
considered as estimates or predictions of future performance. Investment return
and the principal value of the underlying mutual fund sub-accounts are not
guaranteed and will fluctuate so that a policy owner's units, when redeemed, may
be worth more or less than their original cost.
68
<PAGE> 73
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Annual Non annualized
Percentage Change Percentage Change
- ------------------------------------------------------------------------------------------------------------------------------
Fund Unit 1 mo 1 Yr 2 Yrs 3 Yrs. 5 yrs.Inception
Underlying Investment Options Inception Values 1995 1996 1997 to to to to to to
- ------------------------------------------------------------------------------------------------------------------------------
Date 12/31/98 12/31/98 12/31/98 12/31/98 12/31/98 12/31/98 12/31/98
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Century VP Balanced 05/02/91 11.60 10.00 11.36 14.94 4.18 14.91 32.06 47.09 76.58 119.86
- ------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital 11/20/87 8.58 30.12 -5.04 -3.98 10.60 -2.89 -6.22 -11.46 13.02 121.98
App
- ------------------------------------------------------------------------------------------------------------------------------
American Century VP Inc & 10/30/97 10.87 N/A N/A N/A 5.91 25.92 25.92 N/A N/A 35.57
Growth
- ------------------------------------------------------------------------------------------------------------------------------
American Century VP 05/01/94 11.74 11.37 13.54 17.75 5.33 17.87 38.87 57.59 N/A 65.91
International
- ------------------------------------------------------------------------------------------------------------------------------
American Century VP Value 05/01/96 10.67 N/A N/A 25.14 -0.51 4.03 18.69 N/A N/A 45.45
- ------------------------------------------------------------------------------------------------------------------------------
Dreyfus Soc. Resp. Growth 10/06/93 13.30 32.55 24.63 27.11 4.29 29.24 65.66 104.74 177.55 194.62
- ------------------------------------------------------------------------------------------------------------------------------
Dreyfus Stock Index 09/29/89 11.12 60.73 19.86 15.34 4.37 10.98 25.56 53.42 N/A 142.39
- ------------------------------------------------------------------------------------------------------------------------------
Dreyfus Capital Appreciation 05/05/93 13.09 33.56 20.32 27.48 7.84 28.42 64.30 96.96 164.99 183.97
- ------------------------------------------------------------------------------------------------------------------------------
Dreyfus VIF Growth & Income 05/02/94 13.31 35.76 21.61 31.96 5.71 27.25 64.91 104.23 177.62 303.22
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity Asst. Mgmt. 09/06/89 11.76 16.08 13.74 19.75 4.06 14.19 33.53 55.53 68.29 190.91
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity Contrafund 01/03/95 13.16 N/A 20.39 23.21 12.09 29.01 62.65 91.38 N/A 165.26
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity Equity Inc. 10/09/86 11.53 34.09 13.42 27.15 3.06 10.79 31.50 59.78 127.68 373.70
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity Growth Opportunities 01/03/95 13.99 34.36 13.84 22.56 8.47 38.45 80.34 93.17 157.55 546.19
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity Growth 10/09/86 13.04 N/A 17.38 28.98 5.32 23.68 56.22 87.26 N/A 146.32
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity High Inc. 09/19/85 9.85 19.71 13.17 16.79 -0.67 -5.04 0.00 25.51 46.81 268.19
- ------------------------------------------------------------------------------------------------------------------------------
Fidelity Overseas 01/28/87 10.82 8.86 12.36 10.72 2.13 11.91 24.57 39.23 53.03 144.46
- ------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Mkt 06/16/97 6.83 N/A N/A N/A -2.39 -28.91 -28.91 N/A N/A -28.65
- ------------------------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation 04/15/92 11.54 30.75 8.32 28.04 12.96 14.66 38.94 59.03 96.08 491.35
- ------------------------------------------------------------------------------------------------------------------------------
NSAT Govt. Bond 11/08/82 9.32 N/A N/A N/A 4.70 30.68 30.68 N/A N/A 37.32
- ------------------------------------------------------------------------------------------------------------------------------
NSAT Money Mkt. 11/10/81 10.55 10.11 3.52 5.94 0.08 3.61 8.55 13.63 24.00 167.28
- ------------------------------------------------------------------------------------------------------------------------------
NSAT Small Capital Value 10/31/97 10.55 35.45 28.59 30.27 2.31 3.43 20.06 73.27 N/A 127.97
- ------------------------------------------------------------------------------------------------------------------------------
NSAT Small Company Fund 10/23/95
- ------------------------------------------------------------------------------------------------------------------------------
NSAT Tot. Return 11/08/82 13.54 28.39 25.19 33.49 5.17 28.99 69.27 115.57 172.24 211.62
- ------------------------------------------------------------------------------------------------------------------------------
11.27 17.86 2.71 8.85 0.24 8.09 17.25 20.84 36.80 275.13
- ------------------------------------------------------------------------------------------------------------------------------
N/B AMT Growth 09/10/84 10.61 4.88 4.34 4.48 0.35 4.48 9.16 13.90 23.18 178.18
- ------------------------------------------------------------------------------------------------------------------------------
N/B AMT Guardian 11/03/97 8.56 N/A N/A N/A 4.56 -3.79 -3.79 N/A N/A -5.46
- ------------------------------------------------------------------------------------------------------------------------------
N/B AMT Bond 09/10/84 9.90 N/A 21.90 16.47 7.96 0.25 8.34 42.35 N/A 62.59
- ------------------------------------------------------------------------------------------------------------------------------
N/B AMT Partners 03/22/94 12.07 28.13 20.92 28.46 3.40 17.19 43.79 82.05 134.01 921.26
- ------------------------------------------------------------------------------------------------------------------------------
OPPEN Bond 04/30/85 11.04 16.12 4.01 8.44 0.34 6.00 13.65 19.55 35.13 220.76
- ------------------------------------------------------------------------------------------------------------------------------
OPPEN Global Securities 11/12/90 11.48 1.48 16.91 21.51 5.99 13.25 32.85 60.89 52.77 145.11
- ------------------------------------------------------------------------------------------------------------------------------
OPPEN Growth Fund 04/03/85 12.30 35.63 24.28 25.76 9.52 23.07 53.12 92.36 161.43 597.99
- ------------------------------------------------------------------------------------------------------------------------------
OPPEN Multiple Strategies 02/09/87 10.78 20.45 14.63 16.35 1.48 5.86 17.48 41.17 65.50 236.55
- ------------------------------------------------------------------------------------------------------------------------------
STRONG Discovery 05/08/92 10.18 34.25 0.05 10.56 8.37 6.46 15.49 17.75 48.45 94.83
- ------------------------------------------------------------------------------------------------------------------------------
STRONG International 10/20/95 8.16 N/A 9.55 -14.17 4.84 -5.49 -14.88 -11.13 N/A -8.94
- ------------------------------------------------------------------------------------------------------------------------------
STRONG Special 05/08/92 11.41 24.88 17.26 24.52 4.57 12.69 33.50 64.54 111.29 203.46
- ------------------------------------------------------------------------------------------------------------------------------
VAN ECK Worldwide. Bond 09/01/89 4.78 N/A 25.89 -12.27 0.64 -34.62 -50.49 -27.79 N/A -28.53
- ------------------------------------------------------------------------------------------------------------------------------
VAN ECK Wldwide. Emerging Mkt 12/27/95 11.61 16.43 1.75 1.62 1.51 11.91 19.35 15.72 31.96 73.02
- ------------------------------------------------------------------------------------------------------------------------------
VAN ECK Wldwide. Hard Assets 09/01/89 6.21 10.17 17.18 -2.41 -2.40 -31.48 -43.98 -21.65 -18.44 13.17
- ------------------------------------------------------------------------------------------------------------------------------
Van Kampen Am Cap Real Estate 07/03/95 9.54 N/A 39.48 20.57 1.04 -12.28 -9.79 47.51 N/A 59.23
- ------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Inter Equity 06/30/95 9.22 N/A 9.16 -2.99 0.86 4.56 5.31 10.72 N/A 18.36
- ------------------------------------------------------------------------------------------------------------------------------
Warburg Post Venture Capital 09/30/96 10.31 N/A N/A 12.49 9.41 5.71 15.28 N/A N/A 15.84
- ------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Co. 06/30/95 9.82 N/A 13.05 14.79 7.53 -3.58 1.44 25.12 N/A 55.94
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------
Annualized Percentage
Change
- ---------------------------------------------------------------------
3 yrs 5 yrs. Inception
Underlying Investment Options to to to
- -------------------------------------------------------------------
12/31/98 12/31/98 12/31/98
- ---------------------------------------------------------------------
<S> <C> <C> <C>
American Century VP Balanced 13.73 12.04 10.83
- -------------------------------------------------------------------
American Century VP Capital -3.97 2.48 7.44
App
- -------------------------------------------------------------------
American Century VP Inc & N/A N/A 29.72
Growth
- -------------------------------------------------------------------
American Century VP 16.37 N/A 11.47
International
- -------------------------------------------------------------------
American Century VP Value N/A N/A 15.10
- -------------------------------------------------------------------
Dreyfus Soc. Resp. Growth 26.98 22.65 20.73
- -------------------------------------------------------------------
Dreyfus Stock Index 15.34 N/A 20.92
- -------------------------------------------------------------------
Dreyfus Capital Appreciation 25.35 21.52 22.07
- -------------------------------------------------------------------
Dreyfus VIF Growth & Income 26.87 22.66 16.26
- -------------------------------------------------------------------
Fidelity Asst. Mgmt. 15.86 10.97 12.13
- -------------------------------------------------------------------
Fidelity Contrafund 24.15 N/A 27.68
- -------------------------------------------------------------------
Fidelity Equity Inc. 16.91 17.89 13.57
- -------------------------------------------------------------------
Fidelity Growth Opportunities 24.54 20.83 16.49
- -------------------------------------------------------------------
Fidelity Growth 23.26 N/A 25.34
- -------------------------------------------------------------------
Fidelity High Inc. 7.87 7.98 10.31
- -------------------------------------------------------------------
Fidelity Overseas 11.66 8.88 7.78
- -------------------------------------------------------------------
Morgan Stanley Emerging Mkt N/A N/A -19.70
- -------------------------------------------------------------------
NSAT Capital Appreciation 16.72 14.42 13.23
- -------------------------------------------------------------------
NSAT Govt. Bond N/A N/A 31.49
- -------------------------------------------------------------------
NSAT Money Mkt. 4.35 4.40 7.11
- -------------------------------------------------------------------
NSAT Small Capital Value 20.11 N/A 18.84
- -------------------------------------------------------------------
NSAT Small Company Fund
- -------------------------------------------------------------------
NSAT Tot. Return 29.18 22.18 18.46
- -------------------------------------------------------------------
6.51 6.47 8.53
- -------------------------------------------------------------------
N/B AMT Growth 4.43 4.26 6.15
- -------------------------------------------------------------------
N/B AMT Guardian N/A N/A -4.70
- -------------------------------------------------------------------
N/B AMT Bond 12.49 N/A 16.47
- -------------------------------------------------------------------
N/B AMT Partners 22.10 18.54 15.48
- -------------------------------------------------------------------
OPPEN Bond 6.13 6.21 8.90
- -------------------------------------------------------------------
OPPEN Global Securities 17.18 8.85 11.65
- -------------------------------------------------------------------
OPPEN Growth Fund 24.37 21.19 15.19
- -------------------------------------------------------------------
OPPEN Multiple Strategies 12.18 10.60 10.75
- -------------------------------------------------------------------
STRONG Discovery 5.60 8.22 10.56
- -------------------------------------------------------------------
STRONG International -3.86 N/A -2.89
- -------------------------------------------------------------------
STRONG Special 18.06 16.14 18.18
- -------------------------------------------------------------------
VAN ECK Worldwide. Bond -10.29 N/A -10.50
- -------------------------------------------------------------------
VAN ECK Wldwide. Emerging Mkt 4.99 5.70 6.05
- -------------------------------------------------------------------
VAN ECK Wldwide. Hard Assets -7.81 -3.99 1.33
- -------------------------------------------------------------------
Van Kampen Am Cap Real Estate 13.83 N/A 14.25
- -------------------------------------------------------------------
Warburg Pincus Inter Equity 3.45 N/A 4.93
- -------------------------------------------------------------------
Warburg Post Venture Capital N/A N/A 6.75
- -------------------------------------------------------------------
Warburg Pincus Small Co. 7.76 N/A 13.54
- -------------------------------------------------------------------
</TABLE>
*TOTAL RETURN SHOWS THE PERCENT CHANGE IN UNIT VALUES, WITH DIVIDENDS AND
CAPITAL GAINS REINVESTED, AFTER THE DEDUCTION OF A GUARANTEED MORTALITY AND
EXPENSE RISK CHARGE AND THE DEDUCTION OF APPLICABLE INVESTMENT ADVISORY
FEES AND OTHER EXPENSES OF THE UNDERLYING MUTUAL FUNDS.
THE TOTAL RETURN FIGURES DO NOT TAKE INTO ACCOUNT THE SEVERAL OTHER POLICY
CHARGES WHICH ARE DESCRIBED IN THE "POLICY CHARGES" SECTION. THESE OTHER
CHARGES INCLUDE DEDUCTIONS FROM PREMIUMS, COST OF INSURANCE CHARGES, AND
A MONTHLY ADMINISTRATIVE CHARGE.
<PAGE> 74
NOTES TO FUND PERFORMANCE TABLE
The preceding table displays three types of total return: (1) Annual Percentage
Change; (2) Cumulative Non-Annualized Percentage Change; and (3) Average
Annualized Percentage Change. Total return shows the percent change in unit
values, with dividends and capital gains reinvested, after the deduction of
guaranteed mortality and expense risk charge at the rate of 0.75% per annum of
daily net asset value of the variable account and the deduction of applicable
investment advisory fees and other expenses of the underlying mutual funds. The
total return figures shown in the Annual Percentage Change and Average
Annualized Percentage Change columns represent annualized figures, i.e., that is
the rate of growth that would have produced the corresponding cumulative return
had performance been constant over the entire period quoted. The Annual
Percentage Change reflects the rate of return on an annual percentage basis
during the 1996, 1997 and 1998 calendar years. The Average Annualized Percentage
Change reflects the annual percentage rate of return over 3 and 5 year periods,
or from underlying mutual fund inception. The Cumulative Non-Annualized
Percentage Change total return figures are not annual return figures but instead
represent the total percentage change in unit value over the stated periods
without annualization. THE TOTAL RETURN FIGURES DO NOT TAKE INTO ACCOUNT THE
SEVERAL OTHER POLICY CHARGES WHICH ARE DESCRIBED IN THE "POLICY CHARGES"
SECTION. THESE OTHER CHARGES INCLUDE DEDUCTIONS FROM PREMIUMS, COST OF INSURANCE
CHARGES, SURRENDER CHARGES AND A MONTHLY ADMINISTRATIVE CHARGE.
The underlying mutual fund Inception Date is the date the underlying mutual fund
first became effective, which is not necessarily the same date the underlying
mutual fund was first made available through the variable account. For those
underlying mutual funds which have not been offered as sub-accounts through the
variable account for one of the quoted periods, the total return figures will
show the investment performance such underlying mutual funds would have achieved
(reduced by the guaranteed mortality and expense risk charge and underlying
mutual fund investment advisory fees and expenses) had they been offered as
sub-accounts through the variable account for the period quoted. Certain
underlying mutual funds are not as old as some of the periods quoted, therefore,
total return figures may not be available for all of the periods shown.
THE PRECEDING FUND PERFORMANCE TABLE DISPLAYS HISTORICAL INVESTMENT RESULTS OF
THE UNDERLYING MUTUAL FUNDS. THIS INFORMATION MAY BE USEFUL IN HELPING POTENTIAL
INVESTORS IN DECIDING WHICH UNDERLYING MUTUAL FUNDS TO CHOOSE AND IN ASSESSING
THE COMPETENCE OF THE UNDERLYING MUTUAL FUNDS' INVESTMENT ADVISERS. THE
PERFORMANCE FIGURES SHOWN SHOULD BE CONSIDERED IN LIGHT OF THE INVESTMENT
OBJECTIVES AND POLICIES, CHARACTERISTICS AND QUALITY OF THE UNDERLYING
PORTFOLIOS OF THE UNDERLYING MUTUAL FUNDS, AND THE MARKET CONDITIONS DURING THE
PERIODS OF TIME QUOTED. THE PERFORMANCE FIGURES SHOULD NOT BE CONSIDERED AS
ESTIMATES OR PREDICTIONS OF FUTURE PERFORMANCE. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF THE UNDERLYING MUTUAL FUNDS ARE NOT GUARANTEED AND WILL
FLUCTUATE SO THAT A POLICY OWNER'S UNITS, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
70
<PAGE> 75
<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> 76
<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> 77
PART II - OTHER INFORMATION
CONTENTS OF REGISTRATION STATEMENT
This Form S-6 Post-Effective Amendment comprises the following papers and
documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 120 pages.
Representations and Undertakings.
Signatures.
Independent Auditors' Consent
The following exhibits required by Forms N-8B-2 and S-6:
<TABLE>
<S> <C>
1. Power of Attorney dated April 1, 1999. Attached hereto.
2. Resolution of the Depositor's Board of Directors Included with the Registration Statement on Form
authorizing the establishment of the Registrant, N-8B-2 for the Nationwide VL Separate Account-A (File No.
adopted 811-6137), and is hereby incorporated herein by reference.
3. Distribution Contracts Filed previously with initial registration on May 14, 1997,
and is hereby incorporated by reference herein.
4. Form of Security Filed previously with initial registration on May 14, 1997,
and is hereby incorporated by reference herein.
5. Articles of Incorporation of Depositor Filed previously with initial registration on May 14, 1997,
and is hereby incorporated by reference herein.
6. Application form of Security Attached hereto.
7. Opinion of Counsel Filed previously with initial registration on May 14, 1997,
and is hereby incorporated by reference herein.
</TABLE>
<PAGE> 78
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 "Act"). The Registrant and Nationwide
elect to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the Act with
respect to the policies described in the prospectus. The policies have
been designed in a way as to qualify for the exemptive relief from
various provisions of the 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 ("SEC") 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 SEC 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 the company,
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
SEC such supplementary and periodic information, documents, and reports
as may be prescribed by any rule or regulation of the SEC heretofore or
hereafter duly adopted pursuant to authority conferred in that section.
(f) The fees and charges deducted under the policy in the aggregate are
reasonable in relation to the services rendered, the expenses expected to
be incurred, and the risks assumed by Nationwide.
<PAGE> 79
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> 80
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
Securities Act Rule 485 for effectiveness of this Post-Effective Amendment and
has duly caused this Post-Effective Amendment to be signed on its behalf by the
undersigned thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Columbus, and State of Ohio, on this 23rd day of
September, 1999.
<TABLE>
<S> <C>
NATIONWIDE VL SEPARATE ACCOUNT-A
-------------------------------------------
(Registrant)
(Seal) NATIONWIDE LIFE AND ANNUITY
Attest: INSURANCE COMPANY
------------------------------------------
(Depositor)
GLENN W. SODEN By: JOSEPH P. RATH
- ----------------------- -----------------------------------------
Glenn W. Soden Joseph P. Rath
Assistant Secretary Vice President - Office of Product and
Market Compliance
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment has been signed below by the following persons in the capacities
indicated on the 23rd day of September 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
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
- -------------------------------------------------
Joseph J. Gasper Operating Office and Director
DIMON R. McFERSON Chairman and Chief Executive Officer
- -------------------------------------------------
Dimon R. McFerson and Director
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-
- -------------------------------------------------
Robert A. Oakley Chief Financial Officer
RALPH M. PAIGE Director
- -------------------------------------------------
Ralph M. Paige
JAMES F. PATTERSON Director By/s/JOSEPH P. RATH
- ------------------------------------------------- ----------------------------
James F. Patterson Joseph P. Rath
ARDEN L. SHISLER Director Attorney-in-Fact
- -------------------------------------------------
Arden L. Shisler
ROBERT L. STEWART Director
- -------------------------------------------------
Robert L. Stewart
NANCY C. THOMAS Director
- -------------------------------------------------
Nancy C. Thomas
</TABLE>
<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
