<PAGE> 1
Registration No. 33-35775
===============================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 11
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.
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 2000 pursuant to paragraph (b) of Rule 485 [ ] 60 days after
filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485
If appropriate check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities being registered: Multiple Payment Variable Life Insurance
Policies.
Approximate date of proposed offering: Continuously on and after May 1, 2000.
[ ] Check box if it is proposed that this filing will become effective on
(date) at (time) pursuant to Rule 487.
===============================================================================
<PAGE> 2
CROSS REFERENCE TO ITEMS REQUIRED
BY FORM N-8B-2
<TABLE>
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
33 ....................................................................Not Applicable
34 ....................................................................Not Applicable
35 ....................................................................Nationwide Life and Annuity Insurance
Company
36.....................................................................Not Applicable
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
N-8B-2 ITEM CAPTION IN PROSPECTUS
<S> <C>
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>
<PAGE> 4
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Multiple Payment Variable Life Insurance Policies
Issued by Nationwide Life and Annuity Insurance Company through its
Nationwide VL Separate Account-A
The date of this prospectus is May 1, 2000.
This prospectus contains basic information you should know about the policies
before investing. Please read it and keep it for future reference.
The following underlying mutual funds are available under the policies:
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
- - American Century VP Advantage
- - American Century VP Balanced
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
- - VIP Growth Portfolio
NATIONWIDE SEPARATE ACCOUNT TRUST
- - Capital Appreciation Fund
- - Total Return Fund
- - Government Bond Fund
- - Money Market Fund
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- - AMT Balanced Portfolio
For general information or to obtain FREE copies of the:
- - prospectus, annual report or semi-annual report for any underlying
mutual fund; and
- - any required Nationwide forms,
call:
1-800-533-5622
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 182150
COLUMBUS, OHIO 43218-2150
Material incorporated by reference to this prospectus can be found on the SEC
website at:
www.sec.gov
THIS POLICY IS NOT:
- - A BANK DEPOSIT;
- - ENDORSED BY A BANK OR GOVERNMENT AGENCY;
- - FEDERALLY INSURED; OR
- - AVAILABLE IN EVERY STATE.
The life insurance policies offered by this prospectus are multiple payment
variable life insurance policies. A cash surrender value may be offered if the
policy is terminated during the lifetime of the insured.
The purpose of this policy is to provide life insurance protection for the
beneficiary named in the policy. No claim is made that the policy is in any way
similar or comparable to a systematic investment plan of a mutual fund.
The death benefit and cash value of this policy may vary to reflect the
experience of the Nationwide VL Separate Account-A (the "variable account") or
the fixed account, depending on how premium payments are invested.
Investors assume certain risks when investing in the policies, including the
risk of losing money.
Nationwide guarantees the death benefit for as long as the policy is in force.
The cash surrender value is not guaranteed. The policy will lapse if the cash
surrender value is insufficient to cover policy charges. During the first five
policy years, the total premiums less any policy indebtedness must be greater
than or equal to the minimum premium requirement in order to keep the policy in
force.
Benefits described in this prospectus may not be available in every jurisdiction
- - refer to your policy for specific benefit information.
THIS PROSPECTUS IS NOT AN OFFERING IN ANY JURISDICTION WHERE SUCH OFFERING MAY
NOT LAWFULLY BE MADE. NO PERSON IS AUTHORIZED TO MAKE ANY REPRESENTATIONS IN
CONNECTION WITH
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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.
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<PAGE> 6
GLOSSARY OF SPECIAL TERMS
ATTAINED AGE- The insured's age on the policy date, plus the number of full
years since the policy date.
ACCUMULATION UNIT- An accounting unit of measure used to calculate the cash
value of the variable account.
FIXED ACCOUNT- An investment option which is funded by the general account of
Nationwide.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
GUIDELINE LEVEL PREMIUM- The level annual premiums required to mature the policy
under guaranteed mortality and expense charges with an interest rate of 4%. It
is calculated pursuant to the Internal Revenue Code.
GUIDELINE SINGLE PREMIUM- The single premium amount required to mature the
policy under guaranteed mortality and expense charges, and an interest rate of
6%. It is calculated pursuant to the Internal Revenue Code.
MATURITY DATE- The policy anniversary on or next following the insured's 95th
birthday.
NATIONWIDE- Nationwide Life and Annuity Insurance Company.
NET AMOUNT AT RISK- The death benefit minus the cash value. On a monthly
anniversary day, the net amount at risk is the death benefit minus the cash
value prior to subtraction of the base policy cost of insurance charge.
NET PREMIUMS- The actual premiums minus the percent of premium charges. The
percent of premium charges are shown on the policy data page.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and for which accumulation units are separately maintained.
UNSCHEDULED PREMIUM- Additional premium payments which may be allowed under
certain conditions.
VALUATION PERIOD- Each day the New York Stock Exchange is open.
VARIABLE ACCOUNT- Nationwide VL Separate Account-A, a separate account of
Nationwide Life and Annuity Insurance Company that contains variable account
allocations. The variable account is divided into sub-accounts, each of which
invests in shares of a separate underlying mutual fund.
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<PAGE> 7
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS..........................
SUMMARY OF POLICY EXPENSES.........................
UNDERLYING MUTUAL FUND ANNUAL EXPENSES.............
SYNOPSIS OF THE POLICIES...........................
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY......
NATIONWIDE INVESTMENT SERVICES
CORPORATION...................................
INVESTING IN THE POLICY............................
The Variable Account and Underlying Mutual Funds
The Fixed Account
INFORMATION ABOUT THE POLICIES.....................
Minimum Requirements for Policy Issuance
Premium Payments
Pricing
POLICY CHARGES.....................................
Sales Load
Tax Expense Charge
Surrender Charges
Monthly Cost of Insurance
Monthly Administrative Charge
Mortality and Expense Risk Charge
Income Tax
SURRENDERING THE POLICY FOR CASH...................
Surrender (Redemption)
Cash Surrender Value
Partial Surrenders
Income Tax Withholding
VARIATION IN CASH VALUE............................
POLICY PROVISIONS..................................
Policy Owner
Beneficiary
Changes in Existing Insurance Coverage
OPERATION OF THE POLICY............................
Allocation of Net Premium and Cash Value
How the Investment Experience is Determined
Net Investment Factor
Determining the Cash Value
Transfers
RIGHT TO REVOKE....................................
POLICY LOANS.......................................
Taking a Policy Loan
Effect on Investment Performance
Interest
Effect on Death Benefit and Cash Value
Repayment
ASSIGNMENT.........................................
POLICY OWNER SERVICES..............................
Dollar Cost Averaging
DEATH BENEFIT INFORMATION..........................
Calculation of the Death Benefit
Changes in the Death Benefit Option
Proceeds Payable on Death
Incontestability
Error in Age or Sex
Suicide
Maturity Proceeds
EXCHANGE RIGHTS....................................
GRACE PERIOD ......................................
First Five Policy Years
Policy Years Six and After
All Policy Years
Reinstatement
TAX MATTERS........................................
Policy Proceeds
Withholding
Federal Estate and Generation-Skipping
Transfers Taxes
Non-Resident Aliens
Taxation of Nationwide
Tax Changes
LEGAL CONSIDERATIONS...............................
STATE REGULATION...................................
REPORTS TO POLICY OWNERS...........................
ADVERTISING........................................
LEGAL PROCEEDINGS..................................
EXPERTS............................................
REGISTRATION STATEMENT.............................
DISTRIBUTION OF THE POLICIES.......................
ADDITIONAL INFORMATION ABOUT
NATIONWIDE....................................
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APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS....................
APPENDIX B: ILLUSTRATION OF SURRENDER CHARGES.........................
APPENDIX C: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES, AND
DEATH BENEFITS............................................
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SUMMARY OF POLICY EXPENSES
Nationwide deducts certain charges from the policy. Charges are made for
administrative and sales expenses, tax expenses, providing life insurance
protection and assuming the mortality and expense risks.
Nationwide deducts a sales load and a premium expense charge from premium
payments. The sales load is guaranteed never to exceed 3.5% of each premium
payment. The premium expense charge is approximately 3.5% of premiums for all
states (see "Sales Load" and "Premium Expense Charge").
Nationwide deducts the following charges from the cash value of the policy:
- - monthly cost of insurance;
- - monthly cost of any additional benefits provided by riders to the policy;
and
- - administrative expense charge(1).
For policies which are surrendered during the first nine policy years,
Nationwide deducts a surrender charge (see "Surrender Charges").
Nationwide deducts a mortality and expense risk charge from the sub-accounts of
the variable account.
The mortality and expense risk charge is deducted daily and is equal to an
annual rate of 0.80% of the daily net assets of the variable account.
(1) Currently, the administrative expense charge is $5 per month. It is
guaranteed not to exceed $7.50 per month.
For more information about any policy charge, see "Policy Charges" in this
prospectus.
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<PAGE> 10
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund net assets, after
expense reimbursement)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc - 1.00% 0.00% 0.00% 1.00%
American Century VP Advantage
------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc. - 0.90% 0.00% 0.00% 0.90%
American Century VP Balanced
------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 0.58% 0.07% 0.00% 0.65%
------------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund 0.60% 0.14% 0.00% 0.74%
------------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund 0.50% 0.15% 0.00% 0.65%
------------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund 0.39% 0.15% 0.00% 0.54%
------------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund 0.58% 0.14% 0.00% 0.72%
------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT - Balanced Portfolio 0.85% 0.17% 0.00% 1.02%
------------------------------------------------------------------------------------------------------------------
</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 in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
- -------------------------------------------------- ------------- ------------- -------------- ----------------------
Management Other Total Underlying
Fees Expenses 12b-1 Fees Mutual Fund Expenses
- -------------------------------------------------- ------------- ------------- -------------- ----------------------
<S> <C> <C> <C> <C>
Fidelity VIP Growth Portfolio 0.58% 0.08% 0.00% 0.66%
- -------------------------------------------------- ------------- ------------- -------------- ----------------------
</TABLE>
SYNOPSIS OF THE POLICIES
The policy offered by this prospectus provides for life insurance coverage on
the insured. The death benefit and cash value of the policy may increase or
decrease to reflect the performance of the investment options chosen by the
policy owner (see "Death Benefit Information").
CASH SURRENDER VALUE
If the policy is terminated during the insured's lifetime, a cash surrender
value may be payable under the policy. However, there is no guaranteed cash
surrender value (see "Variation in Cash Value "). The policy will lapse without
value if the cash surrender value falls below what is needed to cover policy
charges. During the first five policy years, the total premium payments less any
policy indebtedness must be greater than or equal to the minimum premium
requirement in order to keep the policy in force. The minimum premium is equal
to the monthly minimum premium multiplied by the number of completed policy
months. The minimum monthly premium is shown on the policy data page.
PREMIUMS
The minimum initial premium for which a policy may be issued is $2,000.
The policies are designed to generally permit the payment of the guideline
single premium in five annual installments for death benefit Option 1, and five
annual guideline level premiums under death benefit Option 2 (see "Premium
Payments").
TAXATION
The policies described in this prospectus meet the definition of "life
insurance" under Section 7702 of the Internal Revenue Code. Nationwide will
monitor compliance with the tests provided by Section 7702 to insure the
policies continue
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<PAGE> 11
to receive this favored tax treatment (see "Tax Matters").
NONPARTICIPATING POLICIES
The policies are nonparticipating policies on which no dividends are payable.
The policies do not share in the profits or surplus earnings of Nationwide.
POLICY CANCELLATION
Policy owners may return the policy for any reason within certain time periods
and Nationwide will refund the policy value or the amount required by law (see
"Right to Revoke").
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Nationwide is a stock life insurance company organized under the laws of the
State of Ohio in February 1981. It is a member of the Nationwide group of
companies with its home office at One Nationwide Plaza, Columbus, Ohio 43215.
Nationwide is a provider of life insurance, annuities and retirement products.
It is admitted to do business in 48 states and the District of Columbia.
CUSTODIAN OF ASSETS
Nationwide serves as the custodian of the assets of the variable account.
OTHER CONTRACTS ISSUED BY NATIONWIDE
Nationwide does presently and will, from time to time, offer variable contracts
and policies with benefits which vary in accordance with the investment
experience of a separate account of Nationwide.
NATIONWIDE INVESTMENT SERVICES CORPORATION
The policies are distributed by Nationwide Investment Services Corporation
("NISC"), Two Nationwide Plaza, Columbus, Ohio 43215. (For policies issued in
the State of Michigan, all references to NISC shall mean Nationwide Investment
Services Corporation.) NISC is a wholly owned subsidiary of Nationwide Life
Insurance Company, parent company to Nationwide.
INVESTING IN THE POLICY
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
Nationwide VL Separate Account-A is a separate account that invests in the
underlying mutual fund options listed in Appendix A. Nationwide established the
separate account on August 8, 1984, pursuant to Ohio law. Although the separate
account is registered with the SEC as a unit investment trust pursuant to the
Investment Company Act of 1940 ("1940 Act"), the SEC does not supervise the
management of Nationwide or the variable account.
Income, gains, and losses credited to, or charged against the variable account
reflect the variable account's own investment experience and not the investment
experience of Nationwide's other assets. The variable account's assets are held
separately from Nationwide's assets and are not chargeable with liabilities
incurred in any other business of Nationwide. Nationwide is obligated to pay all
amounts promised to policy owners under the policies.
The variable account is divided into sub-accounts. Policy owners elect to have
net premiums allocated among the sub-accounts and the fixed account at the time
of application.
Nationwide uses the assets of each sub-account to buy shares of the underlying
mutual funds based on policy owner instructions. A policy's investment
performance depends upon the performance of the underlying mutual fund options
chosen by the policy owner.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual funds should be read in
conjunction with this prospectus.
Underlying mutual funds in the variable account are NOT publicly traded mutual
funds. The underlying mutual fund options are available as investment options in
variable life insurance policies or variable annuity contracts issued by life
insurance companies or, in some cases, through participation in certain
qualified pension or retirement plans. However, the underlying mutual funds are
NOT directly related to any
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publicly traded mutual fund. Policy owners should not compare the performance of
a publicly traded fund with the performance of underlying mutual funds
participating in the variable account. The performance of the underlying mutual
funds could differ substantially from that of any publicly traded funds.
Changes of Investment Policy
Nationwide may materially change the investment policy of the variable account.
Nationwide must inform policy owners and obtain all necessary regulatory
approvals. Any change must be submitted to the various state insurance
departments which may disapprove it if deemed detrimental to the interests of
the policy owners or if it renders Nationwide's operations hazardous to the
public. If a policy owner objects, the policy may be converted to a
substantially comparable general account life insurance policy offered by
Nationwide. The policy owner has the later of 60 days (6 months in Pennsylvania)
from the date of the investment policy change or 60 days (6 months in
Pennsylvania) from being informed of the change to make the conversion.
Nationwide will not require evidence of insurability for this conversion.
The new policy will not be affected by the investment experience of any separate
account. The new policy will be for an amount of insurance not exceeding the
death benefit of the policy converted on the date of the conversion.
Voting Rights
Policy owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote policy owner shares at
special shareholder meetings based on policy owner instructions. However, if the
law changes allowing Nationwide to vote in its own right, it may elect to do so.
Policy owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholder's vote as soon as possible prior to
the shareholder meeting. Notification will contain proxy materials, and a form
to return to Nationwide with voting instructions. Nationwide will vote shares
for which no instructions are received in the same proportion as those that are
received.
The number of shares which a policy owner may vote is determined by dividing the
cash value of the amount they have allocated to an underlying mutual fund by the
net asset value of that underlying mutual fund. Nationwide will designate a date
for this determination not more than 90 days before the shareholder meeting.
Substitution of Securities
Nationwide may substitute, eliminate and/or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occur:
(1) shares of a current underlying mutual fund option are no longer
available for investment; or
(2) further investment in an underlying mutual fund option is
inappropriate.
No substitution, elimination, and/or combination of shares may take place
without the prior approval of the SEC.
Material Conflicts
The underlying mutual funds may be offered through separate accounts of other
insurance companies, as well as through other separate accounts of Nationwide.
Nationwide does not anticipate any disadvantages to this. However, it is
possible that a conflict may arise between the interests of the variable account
and one or more of the other separate accounts in which these underlying mutual
funds participate.
Material conflicts may occur due to a change in law affecting the operations of
variable life insurance policies and variable annuity contracts, or differences
in the voting instructions of the contract owners and those of other companies.
If a material conflict occurs, Nationwide will take whatever steps are necessary
to protect contract owners and variable annuity payees, including withdrawal of
the variable account from participation in the underlying mutual fund(s)
involved in the conflict.
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<PAGE> 13
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks. Premium payments will be allocated
to the fixed account by election of the policy owner.
Under exemptive and exclusionary provisions, Nationwide's general account has
not been registered under the Securities Act of 1933 and has not been registered
as an investment company under the Investment Company Act of 1940. Accordingly,
neither the general account nor any interest therein is subject to the
provisions of these Acts. Nationwide has been advised that the staff of the SEC
has not reviewed the disclosures in this prospectus relating to the fixed
account. Disclosures regarding the general account may, however, be subject to
certain generally applicable provisions of the federal securities laws
concerning the accuracy and completeness of statements made in prospectuses.
The investment income earned by the fixed account will be allocated to the
policies at varying rate(s) set by Nationwide. The guaranteed rate for any
premium payment will be effective for not less than twelve months. Nationwide
guarantees that the rate will not be less than 4.0% per year.
Any interest in excess of 4.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The policy owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of
4.0% for any given year.
New premium payments deposited to the contract which are allocated to the fixed
account may receive a different rate of interest than amounts transferred from
the sub-accounts to the fixed account and amounts maturing in the fixed account.
INFORMATION ABOUT THE POLICIES
MINIMUM REQUIREMENTS FOR POLICY ISSUANCE
The policies are designed to generally permit the payment of the guideline
single premium in five annual installments under death benefit Option 1 and five
annual guideline level premiums under death benefit Option 2. At issue, the
policy owner selects a scheduled premium level. This scheduled premium is used
to determine the initial specified amount. The minimum scheduled premium is
$2,000.
Policies may be issued to insureds with issue ages 75 or younger. Before issuing
any policy, Nationwide requires satisfactory evidence of insurability which may
include a medical examination.
PREMIUM PAYMENTS
Each premium payment must be at least equal to the monthly minimum premium. The
initial premium is payable in full at Nationwide's home office.
Upon payment of the initial premium, temporary insurance may be provided.
Issuance of the continuing insurance coverage is dependent upon completion of
all underwriting requirements, payment of initial premium, and delivery of the
policy while the insured is still living.
Additional premium payments may be made at any time while the policy is in
force, subject to the following conditions:
- - Nationwide may require satisfactory evidence of insurability before
accepting any additional premium payment which results in an increase in
the net amount at risk;
- - during the first five policy years, the total premium payments less any
policy indebtedness must be greater than or equal to the minimum premium
requirement in order to keep the policy in force. (The monthly minimum
premium is shown in the policy data page);
- - premium payments in excess of the premium limit established by the IRS to
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<PAGE> 14
qualify the policy as a contract for life insurance will be refunded; and
- - Nationwide may require policy indebtedness be repaid prior to accepting any
additional premium payments.
Additional premium payments or other changes to the policy may jeopardize the
policy's non-modified endowment status. Nationwide will monitor premiums paid
and other policy transactions and will notify the policy owner when non-modified
endowment contract status is in jeopardy.
Nationwide will send scheduled premium payment reminder notices to policy owners
according to the premium mode shown on the policy data page.
PRICING
Premiums will not be priced when the New York Stock Exchange is closed or on the
following nationally recognized holidays:
- - New Year's Day - Independence Day
- - Martin Luther King, Jr. - Labor Day
Day
- - Presidents' Day - Thanksgiving
- - Good Friday - Christmas
- - Memorial Day
Nationwide also will not price purchase payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities held in
the variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for the
protection of security holders.
Rules and regulations of the SEC will govern as to when the conditions described
in (2) and (3) exist. If Nationwide is closed on days when the New York Stock
Exchange is open, contract value may be affected since the contract owner would
not have access to their account.
POLICY CHARGES
SALES LOAD
Nationwide deducts a sales load from each premium payment received. It is
guaranteed never to exceed 3.5% of each premium payment and may be reduced by
Nationwide at its sole discretion.
The total sales load actually deducted from any policy will be equal to the sum
of this front-end sales load plus any sales surrender charge.
TAX EXPENSE CHARGE
Nationwide deducts a premium expense charge equal to 2.50% from all premium
payments. This charge reimburses Nationwide for administrative expenses on an
aggregate basis including premium taxes imposed by various state and local
jurisdictions.
State tax rates can range from 0% to 4%. This charge may be more or less than
the amount actually assessed by the state in which a particular policy owner
lives.
Nationwide does not expect to make a profit from this charge.
SURRENDER CHARGES
Nationwide deducts a surrender charge from the cash value of any policy
surrendered during the first nine years. The charge is deducted proportionally
from the cash value in each sub-account and the fixed account.
The initial surrender charge varies by issue age, sex, and underwriting
classification. The surrender charge is calculated based on the initial
specified amount. The following table illustrates the initial surrender charge
per $1,000 of initial specified amount for policies which are issued on a
standard basis (see Appendix B for specific examples). Special guaranteed
maximum surrender charges apply in Pennsylvania (see Appendix B).
11
<PAGE> 15
<TABLE>
<CAPTION>
----------- ----------- ----------- ------------ -------------
ISSUE MALE FEMALE MALE FEMALE
AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD
----------- ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
25 $5.878 $5.537 $6.680 $5.945
----------- ----------- ----------- ------------ -------------
35 7.260 6.712 8.559 7.373
----------- ----------- ----------- ------------ -------------
45 11.159 10.160 13.244 11.151
----------- ----------- ----------- ------------ -------------
55 15.275 13.375 18.373 14.686
----------- ----------- ----------- ------------ -------------
65 23.821 20.553 27.943 22.165
----------- ----------- ----------- ------------ -------------
</TABLE>
The surrender charge is comprised of two components:
- - an underwriting component; and
- - sales component.
The underwriting component varies by issue age in the following manner:
<TABLE>
<CAPTION>
- -------------------------------------------------------------
ISSUE CHARGE PER $1,000 OF
AGE INITIAL SPECIFIED AMOUNT
- -------------------------------------------------------------
<S> <C>
0-39 $3.50
- -------------------------------------------------------------
40-59 $5.00
- -------------------------------------------------------------
60-75 $6.50
- -------------------------------------------------------------
</TABLE>
The underwriting component is designed to cover the administrative expenses
associated with underwriting and issuing policies, including the costs of:
- - processing applications;
- - conducting medical exams;
- - determining insurability
and the insured's underwriting class; and
- - establishing policy records.
The remainder of the surrender charge that is not attributable to the
underwriting component represents the sales component. The purpose of the sales
component is to reimburse Nationwide for some of the expenses incurred in the
distribution of the policies.
The surrender charge may be insufficient to recover certain expenses related to
the sale of the policies. Unrecovered expenses are borne by Nationwide's general
assets which may include profits, if any, from mortality and expense risk
charges. Additional premiums and/or income earned on assets in the variable
account have no effect on these charges.
Reductions to Surrender Charges
Surrender charges are reduced in subsequent policy years as follows:
<TABLE>
<CAPTION>
- ---------------------- --------------------------------
COMPLETED SURRENDER CHARGE AS A % OF
POLICY YEARS INITIAL SURRENDER CHARGES
- ---------------------- --------------------------------
<S> <C>
0 100%
- ---------------------- --------------------------------
1 100%
- ---------------------- --------------------------------
2 100%
- ---------------------- --------------------------------
3 95%
- ---------------------- --------------------------------
4 90%
- ---------------------- --------------------------------
5 85%
- ---------------------- --------------------------------
6 80%
- ---------------------- --------------------------------
7 75%
- ---------------------- --------------------------------
8 50%
- ---------------------- --------------------------------
9+ 0%
- ---------------------- --------------------------------
</TABLE>
Special guaranteed maximum surrender charges apply in Pennsylvania
(see Appendix B).
MONTHLY COST OF INSURANCE
The monthly cost of insurance charge for each policy month is determined by
multiplying the monthly cost of insurance rate by the net amount at risk. This
deduction is charged proportionately to the cash value in each sub-account and
the fixed account.
If death benefit Option 1 is in effect and there have been increases in the
specified amount, then the cash value will first be considered a part of the
initial specified amount. If the cash value exceeds the initial specified
amount, it will then be considered a part of the additional increases in
specified amount resulting from the increases in the order of the increases.
Monthly cost of insurance rates will not exceed those guaranteed in the policy.
Guaranteed cost of insurance rates for policies issued on a simplified basis are
based on the 1980 Commissioner's Extended Term Mortality Table, Age Last
Birthday (1980 CET). Guaranteed cost of insurance rates for policies issued on a
preferred basis are based on the 1980 Commissioner's Standard Ordinary Mortality
Table, Age Last Birthday (1980 CSO). Guaranteed cost of insurance rates for
policies issued on a substandard basis are based on appropriate percentage
multiples of the 1980 CSO. These mortality tables are sex distinct. In addition,
separate mortality tables will be used for standard and non-tobacco.
For policies issued in Texas, guaranteed cost of insurance rates for
standard-simplified issues
12
<PAGE> 16
("special class-simplified" in Texas) are based on 130% of the 1980 CSO.
The rates for policies issued on a simplified or preferred basis will not exceed
the rates in the appropriate table. The cost of insurance rate per $1,000 of net
amount at risk is less for policies issued on a preferred basis as compared to a
simplified basis.
The rate class of an insured may affect the cost of insurance rate. Nationwide
currently places insureds into both standard rate classes and substandard rate
classes that involve a higher mortality risk. In an otherwise identical policy,
an insured in the standard rate class will have a lower cost of insurance than
an insured in a rate class with higher mortality risks. Nationwide may also
issue certain policies on a "simplified issue" basis to certain categories of
individuals. Due to the underwriting criteria established for policies issued on
a simplified issue basis, actual rates for healthy individuals will be higher
than the current cost of insurance rates being charged under otherwise identical
policies that are issued on a preferred basis.
MONTHLY ADMINISTRATIVE CHARGE
Nationwide deducts an administrative expense charge proportionately from the
cash value in each sub-account and the fixed account on a monthly basis. This
charge reimburses Nationwide for certain actual administrative expenses.
Nationwide does not expect to recover any amount in excess of aggregate
maintenance expenses from this charge. Currently, this charge is $5 per month.
Nationwide may, at its sole discretion, increase this charge. However,
Nationwide guarantees that this charge will never exceed $7.50 per month.
MORTALITY AND EXPENSE RISK CHARGE
Nationwide assumes certain risks for guaranteeing the mortality and expense
charges. The mortality risk assumed under the policies is that the insured may
not live as long as expected. The expense risk assumed is that the actual
expenses incurred in issuing and administering the policies may be greater than
expected. In addition, Nationwide assumes risks associated with the non-recovery
of policy issue, underwriting and other administrative expenses due to policies
that lapse or are surrendered in the early policy years.
Nationwide deducts the mortality and expense risk charge from the variable
account on a daily basis. Mortality and expense risk deductions will be charged
proportionally to the cash value in each sub-account. The mortality and expense
risk charge compensates Nationwide for assuming risks associated with mortality
and administrative costs. The charge is equivalent to an annual effective rate
of 0.80% of the daily net assets of the variable account. Policy owners receive
quarterly and annual statements, advising policy owners of the cancellation of
accumulation units for mortality and expense risk charges.
These charges are all guaranteed. Nationwide may realize a profit from these
charges. Unrecovered expenses are borne by Nationwide's general assets, which
may include profits, if any, from mortality and expense risk charges.
INCOME TAX
No charge is assessed to policy owners for income taxes incurred by Nationwide
as a result of the operations of the sub-accounts. However, Nationwide reserves
the right to assess a charge for income taxes against the variable account if
income taxes are incurred.
SURRENDERING THE POLICY FOR CASH
SURRENDER (REDEMPTION)
Policies may be surrendered for the cash surrender value any time while the
insured is living. The cancellation will be effective as of the date Nationwide
receives the policy accompanied by a signed, written request for cancellation.
In some cases, Nationwide may require additional documentation of a customary
nature.
CASH SURRENDER VALUE
The cash surrender value increases or decreases daily to reflect the investment
experience of the variable account and the daily crediting of interest in the
fixed account and the policy loan account.
13
<PAGE> 17
The cash surrender value equals the policy's cash value, next computed after the
date Nationwide receives a proper written request for surrender and the policy,
minus any charges, indebtedness or other deductions due on that date, which may
also include a surrender charge.
PARTIAL SURRENDERS
After the policy has been in force for five years, the policy owner may request
a partial surrender.
Partial surrenders are permitted if they satisfy the following requirements:
(1) the minimum partial surrender is $500;
(2) the maximum partial surrender in any policy year is limited to 10% of
the total premium payments; and
(3) after the partial surrender, the policy continues to qualify as life
insurance.
When a partial surrender is made, the cash value is reduced by the amount of the
partial surrender. Under death benefit Option 1, the specified amount is reduced
by the amount of the partial surrender, unless the death benefit is based on the
applicable percentage of cash value. In such a case, a partial surrender will
decrease the specified amount by the amount by which the partial surrender
exceeds the difference between the death benefit and specified amount.
Partial surrender amounts must be first deducted from the values in the
sub-accounts. Partial surrenders will be deducted from the fixed account only to
the extent that insufficient values are available in the sub-accounts.
Surrender charges will be waived for any partial surrenders which satisfy the
above conditions.
Certain partial surrenders may result in currently taxable income and tax
penalties (see "Tax Matters").
INCOME TAX WITHHOLDING
Federal law requires Nationwide to withhold income tax from any portion of
surrender proceeds subject to tax. Nationwide will withhold income tax unless
the policy owner advises Nationwide, in writing, of his or her request not to
withhold. If a policy owner requests that taxes not be withheld, or if the taxes
withheld are insufficient, the policy owner may be liable for payment of an
estimated tax. Policy owners should consult a tax adviser.
In certain employer-sponsored life insurance arrangements, including equity
split dollar arrangements, participants may be required to report for income tax
purposes, one or more of the following:
(1) the value each year of the life insurance protection provided;
(2) an amount equal to any employer-paid premiums; or
(3) some or all of the amount by which the current value exceeds the
employer's interest in the policy.
Participants should consult with the sponsor or the administrator of the plan,
and/or with their personal tax or legal adviser, to determine the tax
consequences, if any, of their employer-sponsored life insurance arrangements.
VARIATION IN CASH VALUE
On any date during the policy year, the cash value equals the cash value on the
preceding valuation date, plus any net premiums applied since the previous
valuation date, minus any partial surrenders, plus or minus any investment
results, and less any policy charges.
There is no guaranteed cash value. The cash value will vary with the investment
experience of the variable account and/or the daily crediting of interest in the
fixed account and policy loan account depending on the allocation of cash value
by the policy owner.
POLICY PROVISIONS
POLICY OWNER
While the insured is living, all rights in this policy are vested in the policy
owner named in the application or as subsequently changed, subject to
assignment, if any.
The policy owner may name a contingent policy owner or a new policy owner while
the insured is living. Any change must be in a written form satisfactory to
Nationwide and recorded at
14
<PAGE> 18
Nationwide's home office. Once recorded, the change will be effective when
signed. The change will not affect any payment made or action taken by
Nationwide before it was recorded. Nationwide may require that the policy be
submitted for endorsement before making a change.
If the policy owner is other than the insured, names no contingent policy owner,
and dies before the insured, the policy owner's rights in this policy belong to
the policy owner's estate.
BENEFICIARY
The beneficiary(ies) will be as named in the application or as subsequently
changed, subject to assignment, if any.
The policy owner may name a new beneficiary while the insured is living. Any
change must be in a written form satisfactory to Nationwide and recorded at
Nationwide's home office. Once recorded, the change will be effective when
signed. The change will not affect any payment made or action taken by
Nationwide before it was recorded.
If any beneficiary predeceases the insured, that beneficiary's interest passes
to any surviving beneficiary(ies), unless otherwise provided. Multiple
beneficiaries will be paid in equal shares, unless otherwise provided. If no
named beneficiary survives the insured, the death proceeds will be paid to the
policy owner or the policy owner's estate.
CHANGES IN EXISTING INSURANCE COVERAGE
The policy owner may request certain changes in the insurance coverage under the
policy. Requests must be in writing and received by Nationwide. No change will
take effect unless the cash surrender value after the change is sufficient to
keep the policy in force for at least 3 months.
Specified Amount Increases
After the fifth policy year, the policy owner may request an increase to the
specified amount. Any increase will be subject to the following conditions:
(1) the request must be applied for in writing;
(2) satisfactory evidence of insurability must be provided;
(3) the increase must be for a minimum of $10,000;
(4) the cash surrender value is sufficient to continue the policy in force
for at least 3 months; and
(5) age limits are the same as for a new issue.
Any approved increase will have an effective date of the monthly anniversary day
on or next following the date Nationwide approves the supplemental application.
Nationwide reserves the right to limit the number of specified amount increases
to one each policy year.
Specified Amount Decreases
After the fifth policy year, the policy owner may also request a decrease to the
specified amount. Any approved decrease will be effective on the monthly
anniversary day on or next following the date Nationwide receives the request.
Any such decrease shall reduce insurance in the following order:
(1) against insurance provided by the most recent increase;
(2) against the next most recent increases successively; and
(3) against insurance provided under the original application.
Nationwide reserves the right to limit the number of specified amount decreases
to one each policy year. Nationwide will refuse a request for a decrease which
would:
(1) reduce the specified amount to less than $10,000; or
(2) disqualify the policy as a contract for life insurance.
OPERATION OF THE POLICY
ALLOCATION OF NET PREMIUM AND CASH VALUE
Nationwide allocates premium payments to sub-accounts or the fixed account, as
instructed by policy owners. All percentage allocations must be in whole
numbers, and must be at least 1%. The sum of allocations must equal 100%. Future
15
<PAGE> 19
premium allocations may be changed by giving written notice to Nationwide.
Premiums allocated to a sub-account on the application are allocated to the NSAT
Money Market Fund during the period a policy owner may cancel the policy, unless
a specific state requires premiums to be allocated to the fixed account. At the
expiration of the cancellation period, these premiums are used to purchase
shares of the underlying mutual funds specified by the policy owner at net asset
value for the respective sub-account(s).
The policy owner may change the allocation of net premiums or may transfer cash
value from one sub-account to another. Changes are subject to the terms and
conditions imposed by each underlying mutual fund and those found in this
prospectus. Net premiums allocated to the fixed account at the time of
application may not be transferred from the fixed account prior to the first
policy anniversary (see "Transfers").
HOW THE INVESTMENT EXPERIENCE IS DETERMINED
The accumulation unit value for a valuation period is determined by multiplying
the accumulation unit value for each sub-account for the immediately preceding
valuation period by the net investment factor for the sub-account for the
subsequent valuation period. Though the number of accumulation units will not
change as a result of investment experience, the value of an accumulation unit
may increase or decrease from valuation period to valuation period.
NET INVESTMENT FACTOR
The net investment factor for any valuation period is determined by dividing (a)
by (b) and subtracting (c) from the result where:
(a) is:
(1) the net asset value per share of the underlying mutual fund
held in the sub-account as of the end of the current valuation
period; and
(2) the per share amount of any dividend or income distributions
made by the underlying mutual fund (if the ex-dividend date
occurs during the current valuation period);
(b) is the net asset value per share of the underlying mutual fund
determined as of the end of the immediately preceding valuation period;
and
(c) is a factor representing the daily mortality and expense risk charge
deducted from the variable account. This factor is equal to an annual
rate of 0.80% of the daily net assets of the variable account.
The net investment factor may be greater or less than one; therefore, the value
of an accumulation unit may increase or decrease. It should be noted that
changes in the net investment factor may not be directly proportional to changes
in the net asset value of underlying mutual fund shares, because of the
deduction for mortality and expense risk charge.
DETERMINING THE CASH VALUE
The cash value is the sum of the value of all variable account accumulation
units attributable to the policy plus amounts credited to the fixed account and
the policy loan account. Nationwide will determine the value of the assets in
the variable account at the end of each valuation period. The cash value will be
determined at least monthly.
The number of accumulation units credited to each sub-account is determined by
dividing the net amount allocated to the sub-account by the accumulation unit
value for the sub-account for the valuation period during which the premium is
received by Nationwide. In the event part or all of the cash value is
surrendered or charges or deductions are made against the cash value, an
appropriate number of accumulation units from the variable account and an
appropriate amount from the fixed account will be deducted in the same
proportion that the policy owner's interest in the variable account and the
fixed account bears to the total cash value.
The cash value in the fixed account and the policy loan account is credited with
interest daily at an effective annual rate which Nationwide periodically
declares. The annual effective rate will never be less than 4%. (For a
16
<PAGE> 20
description of the annual effective credited rates, see "The Fixed Account" and
"Policy Loans.") Upon request, Nationwide will inform the policy owner of the
then applicable rates for each account.
TRANSFERS
Policy owners can transfer allocations without penalty or adjustment subject to
the following conditions:
- - Nationwide reserves the right to restrict transfers
between the fixed account and the sub-accounts to one per policy year.
- - Transfers made to the fixed account may not be made in the first policy
year.
- - Nationwide reserves the right to restrict the amount transferred from
the fixed account each policy year (subject to state restrictions).
Policy owners who have entered into dollar cost averaging agreements
with Nationwide may transfer under the terms of that agreement.
- - Nationwide reserves the right to restrict the amount transferred to the
fixed account to 25% of the cash value.
- - Transfers from the fixed account must be made within 30 days after the
end of an interest rate guarantee period.
- - Transfers among the sub-accounts are limited to once per valuation
date.
Transfer Requests
Nationwide will accept transfer requests in writing or in those states that
allow, over the telephone. Nationwide will use reasonable procedures to confirm
that telephone instructions are genuine and will not be liable for following
instructions it reasonably determined to be genuine. Nationwide may withdraw the
telephone exchange privilege upon 30 days written notice to policy owners.
Market-Timing Firms
Some policy owners may use market-timing firms or other third parties to make
transfers on their behalf. Generally, in order to take advantage of perceived
market trends, market- timing firms will submit transfer requests on behalf of
multiple policy owners at the same time. Sometimes this can result in unusually
large transfers of funds. These large transfers might interfere with the ability
of Nationwide or the underlying mutual fund to process transactions. This can
potentially disadvantage policy owners not using market-timing firms. To avoid
this, Nationwide may modify the transfer rights of policy owners who use
market-timing firms (or other third parties) to initiate transfers on their
behalf.
The transfer rights of individual policy owners will not be modified in any way
when instructions are submitted directly by the policy owner, or by the policy
owner's representative (as authorized by the execution of a valid Nationwide
Limited Power of Attorney Form).
To protect policy owners, Nationwide may refuse transfer requests:
- - submitted by any agent acting under a power of attorney on behalf of
more than one policy owner; or
- - submitted on behalf of individual policy owners who have executed
pre-authorized exchange forms which are submitted by market-timing
firms (or other third parties) on behalf of more than one policy owner
at the same time.
- - Nationwide will not restrict transfer rights unless Nationwide believes
it to be necessary for the protection of all policy owners.
RIGHT TO REVOKE
A policy owner may cancel the policy by returning it by the latest of:
- - 10 days after receiving the policy;
- - 45 days after signing the application; or
- - 10 days after Nationwide delivers a Notice of Right of Withdrawal.
The policy can be mailed to the registered representative who sold it, or
directly to Nationwide.
Returned policies are deemed void from the beginning. Nationwide will refund the
amount
17
<PAGE> 21
prescribed by the state in which the policy was issued within seven days after
it receives the policy. The refunded policy value will reflect the deduction of
any policy charges, unless otherwise required by law. This right varies by
state.
POLICY LOANS
TAKING A POLICY LOAN
After the first policy year, the policy owner may take a policy loan using the
policy as security. Maximum policy indebtedness is limited to 90% of the cash
surrender value in the sub-accounts and 100% of the cash surrender value in the
fixed account less interest due on the next policy anniversary. Nationwide will
not grant a loan for an amount less than $1,000 ($200 in Connecticut). Policy
indebtedness will be deducted from the death benefit, cash surrender value upon
surrender, or the maturity proceeds.
Any request for a policy loan must be in written form. The request must be
signed and, where permitted, the signature guaranteed by a member firm of the
New York, American, Boston, Midwest, Philadelphia or Pacific Stock Exchanges, or
by a commercial bank or a savings and loan which is a member of the Federal
Deposit Insurance Corporation. Certain policy loans may result in currently
taxable income and tax penalties.
EFFECT ON INVESTMENT PERFORMANCE
When a loan is made, an amount equal to the amount of the loan is transferred
from the variable account to the policy loan account. If the assets relating to
a policy are held in more than one sub-account, withdrawals from sub-accounts
will be made in proportion to the assets in each sub-account at the time of the
loan. Policy loans will be transferred from the fixed account only when
sufficient amounts are not available in the sub-accounts.
The amount taken out of the variable account will not be affected by the
variable account's investment experience while the loan is outstanding.
INTEREST
The annual effective loan interest rate charged on policy loans is 6.0%.
On a current basis, the cash value in the policy loan account is credited with
an annual effective rate of 5.1%. Nationwide may change the current interest
crediting rate on the policy loans at any time at its sole discretion. However,
the crediting rate is guaranteed never to be lower than 5.1%.
Amounts transferred to the policy loan account will earn interest daily from the
date of transfer. The earned interest is transferred from the policy loan
account to a variable account or the fixed account on each policy anniversary,
or at the time of loan repayment. It will be allocated according to the fund
allocation factors in effect at the time of the transfer.
Interest is charged daily and is payable at the end of each policy year or at
the time of loan repayment. Unpaid interest will be added to the existing policy
indebtedness as of the due date and will be charged interest at the same rate as
the rest of the indebtedness.
Whenever the total policy indebtedness exceeds the cash value less any surrender
charges, Nationwide will send a notice to the policy owner and the assignee, if
any. The policy will terminate without value 61 days after the mailing of the
notice unless a sufficient repayment is made during that period. A repayment is
sufficient if it is large enough to reduce the total policy indebtedness to an
amount equal to the total cash value less any surrender charges plus an amount
sufficient to continue the policy in force for 3 months.
EFFECT ON DEATH BENEFIT AND CASH VALUE
A policy loan, whether or not repaid, will have a permanent effect on the death
benefit and cash value because the investment results of the variable account or
the fixed account will apply only to the non-loaned portion of the cash value.
The longer the loan is outstanding, the greater the effect is likely to be.
Depending on the investment results of the variable account or the fixed account
while the loan is outstanding, the effect could be favorable or unfavorable.
18
<PAGE> 22
REPAYMENT
All or part of the indebtedness may be repaid at any time while the policy is in
force during the insured's lifetime. Any payment intended as a premium payment,
rather than a loan repayment, must be identified as such. Loan repayments will
be credited to the sub-accounts and the fixed account in proportion to the
policy owner's underlying mutual fund allocation factors in effect at the time
of the repayment. Each repayment may not be less than $1,000 ($50 in
Connecticut). Nationwide reserves the right to require that any loan repayments
resulting from policy loans transferred from the fixed account must be first
allocated to the fixed account.
ASSIGNMENT
While the insured is living, the policy owner may assign his or her rights in
the policy. The assignment must be in writing, signed by the policy owner and
recorded at Nationwide's home office. Prior to being recorded, assignments will
not affect any payments made or actions taken by Nationwide. Nationwide is not
responsible for any assignment not submitted for recording, nor is Nationwide
responsible for the sufficiency or validity of any assignment. Assignments are
subject to any indebtedness owed to Nationwide before being recorded.
POLICY OWNER SERVICES
DOLLAR COST AVERAGING
Dollar cost averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from the fixed account and/or certain sub-accounts into other
sub-accounts. Nationwide does not guarantee that this program will result in
profit or protect policy owners from loss.
Policy owners direct Nationwide to automatically transfer specified amounts from
the fixed account and the following underlying mutual fund options: NSAT
Government Bond Fund and the NSAT Money Market Fund.
Transfers from the fixed account must be equal to or less than 1/30th of the
fixed account value at the time the program is requested.
Transfers occur monthly or on another frequency if permitted by Nationwide.
Nationwide will process transfers until either the value in the originating
investment option is exhausted, or the policy owner instructs Nationwide in
writing to stop the transfers.
Nationwide reserves the right to stop establishing new dollar cost averaging
programs. Nationwide reserves the right to assess a processing fee for this
service.
DEATH BENEFIT INFORMATION
CALCULATION OF THE DEATH BENEFIT
At issue, the policy owner selects a desired scheduled premium level. The
scheduled premium is used to determine the initial specified amount.
Under death benefit Option 1, the initial specified amount is determined by
treating the scheduled premium as 20% of the guideline single premium. Under
death benefit Option 2, the initial specified amount is determined by treating
the scheduled premium as the guideline level premium. For either death benefit
option, the initial specified amount will be set at a level such that payment of
the scheduled premiums will not result in the policy being classified as a
modified endowment contract (see "Tax Matters").
The following tables illustrate the initial specified amount that results from a
$2,000 scheduled premium payment.
<TABLE>
<CAPTION>
MALE NON-TOBACCO
- ------------------------------------------------------
ISSUE AGE OPTION 1 OPTION 2
- ------------------------------------------------------
- ------------------------------------------------------
<S> <C> <C>
30 $85,779 $75,378
- ------------------------------------------------------
35 $68,165 $61,559
- ------------------------------------------------------
40 $54,111 $50,082
- ------------------------------------------------------
45 $43,165 $40,605
- ------------------------------------------------------
50 $34,675 $32,791
- ------------------------------------------------------
55 $28,136 $26,852
- ------------------------------------------------------
60 $23,176 $22,867
- ------------------------------------------------------
65 $19,474 $19,474
- ------------------------------------------------------
</TABLE>
19
<PAGE> 23
<TABLE>
<CAPTION>
FEMALE NON-TOBACCO
- ------------------------------------------------------
ISSUE AGE OPTION 1 OPTION 2
- ------------------------------------------------------
- ------------------------------------------------------
<S> <C> <C>
30 $99,541 $93,577
- ------------------------------------------------------
35 $79,212 $76,497
- ------------------------------------------------------
40 $63,070 $62,320
- ------------------------------------------------------
45 $50,599 $50,633
- ------------------------------------------------------
50 $40,824 $40,958
- ------------------------------------------------------
55 $33,171 $32,949
- ------------------------------------------------------
60 $27,141 $26,301
- ------------------------------------------------------
65 $22,369 $22,168
- ------------------------------------------------------
</TABLE>
Generally, for a given scheduled premium, the initial specified amount is
greater for non-tobacco than standard and females than males. The specified
amount is shown in the policy.
While the policy is in force, the death benefit will never be less than the
specified amount. The death benefit may vary with the cash value of the policy,
which depends on investment performance.
The policy owner may choose one of two death benefit options.
OPTION 1: the death benefit will be the greater of the specified amount or the
applicable percentage of cash value. Under Option 1, the amount of the death
benefit will ordinarily not change for several years to reflect the investment
performance and may not change at all. If investment performance is favorable
the amount of death benefit may increase. To see how and when investment
performance will begin to affect death benefits, please see the illustrations in
Appendix C.
OPTION 2: the death benefit will be the greater of the specified amount plus the
cash value, or the applicable percentage of cash value and will vary directly
with the investment performance.
The term "applicable percentage" means:
(1) when the insured is attained age 40 or less at the beginning of a
policy year, and
(2) when the insured is above attained age 40, the percentage shown in the
"Applicable Percentage of Cash Value" table.
20
<PAGE> 24
APPLICABLE PERCENTAGE OF CASH VALUE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Attained Percentage Attained Percentage Attained Percentage
Age of Cash Value Age of Cash Value Age of Cash Value
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0-40 250% 60 130% 80 105%
- -----------------------------------------------------------------------------------------------------------
41 243% 61 128% 81 105%
- -----------------------------------------------------------------------------------------------------------
42 236% 62 126% 82 105%
- -----------------------------------------------------------------------------------------------------------
43 229% 63 124% 83 105%
- -----------------------------------------------------------------------------------------------------------
44 222% 64 122% 84 105%
- -----------------------------------------------------------------------------------------------------------
45 215% 65 120% 85 105%
- -----------------------------------------------------------------------------------------------------------
46 209% 66 119% 86 105%
- -----------------------------------------------------------------------------------------------------------
47 203% 67 118% 87 105%
- -----------------------------------------------------------------------------------------------------------
48 197% 68 117% 88 105%
- -----------------------------------------------------------------------------------------------------------
49 191% 69 116% 89 105%
- -----------------------------------------------------------------------------------------------------------
50 185% 70 115% 90 105%
- -----------------------------------------------------------------------------------------------------------
51 178% 71 113% 91 104%
- -----------------------------------------------------------------------------------------------------------
52 171% 72 111% 92 103%
- -----------------------------------------------------------------------------------------------------------
53 164% 73 109% 93 102%
- -----------------------------------------------------------------------------------------------------------
54 157% 74 107% 94 101%
- -----------------------------------------------------------------------------------------------------------
55 150% 75 105% 95 100%
- -----------------------------------------------------------------------------------------------------------
56 146% 76 105%
- -----------------------------------------------------------------------------------------------------------
57 142% 77 105%
- -----------------------------------------------------------------------------------------------------------
58 138% 78 105%
- -----------------------------------------------------------------------------------------------------------
59 134% 79 105%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
CHANGES IN THE DEATH BENEFIT OPTION
After the fifth policy year, the policy owner may change the death benefit
option under the policy. If the change is from Option 1 to Option 2, the
specified amount will be decreased by the amount of the cash value. If the
change is from Option 2 to Option 1, the specified amount will be increased by
the amount of the cash value. Nationwide reserves the right to require evidence
of insurability for either change.
The effective date of the change will be the monthly anniversary day on or next
following the date Nationwide approves the request for change. Only one change
of option is permitted per policy year. A change in death benefit option will
not be permitted if it results in the total premiums paid exceeding the then
current maximum premium limitations prescribed by the IRS to qualify the policy
as a life insurance contract.
PROCEEDS PAYABLE ON DEATH
The actual death proceeds payable on the insured's death will be the death
benefit as described above, less any policy indebtedness, and less any unpaid
policy charges. Under certain circumstances, the death proceeds may be adjusted
(see "Incontestability," "Error in Age or Sex," and "Suicide").
INCONTESTABILITY
Nationwide will not contest payment of the death proceeds based on the initial
specified amount after the policy has been in force during the insured's
lifetime for 2 years from the policy date. For any increase in specified amount
requiring evidence of insurability, Nationwide will not contest payment of the
death proceeds based on such an increase after it has been in force during the
insured's lifetime for 2 years from its effective date.
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<PAGE> 25
ERROR IN AGE OR SEX
If the age or sex of the insured has been misstated, the affected benefits will
be adjusted.
The amount of the death benefit will be (1) multiplied by (2) and then the
result added to (3), where:
(1) is the amount of the death benefit at the time of the insured's death
reduced by the amount of the cash value at the time of the insured's
death;
(2) is the ratio of the monthly cost of insurance applied in the policy
month of death and the monthly cost of insurance that should have been
applied at the true age and sex in the policy month of death; and
(3) is the cash value at the time of the insured's death.
SUICIDE
If the insured dies by suicide, while sane or insane, within two years from the
policy date, Nationwide will pay no more than the sum of the premiums paid, less
any indebtedness, and less any partial surrenders. If the insured dies by
suicide, while sane or insane, within two years from the date an application is
accepted for an increase in the specified amount, Nationwide will pay no more
than the amount paid for the additional benefit.
MATURITY PROCEEDS
The maturity date is the policy anniversary on or next following the insured's
95th birthday. If the policy is still in force, maturity proceeds are payable to
the policy owner on the maturity date. Maturity proceeds are equal to the amount
of the policy's cash value, less any indebtedness.
EXCHANGE RIGHTS
The policy owner may exchange the policy for a flexible premium adjustable life
insurance policy offered by Nationwide on the policy date. The benefits for the
new policy will not vary with the investment experience of a separate account.
The exchange must be elected within 24 months from the policy date. No evidence
of insurability will be required.
The policy owner and beneficiary under the new policy will be the same as those
under the exchanged policy on the effective date of the exchange. The new policy
will have a death benefit on the exchange date not more than the death benefit
of the original policy immediately prior to the exchange date. The new policy
will have the same policy date and issue age as the original policy. The initial
specified amount and any increases in specified amount will have the same rate
class as those of the original policy. Any indebtedness may be transferred to
the new policy.
The exchange may be subject to an equitable adjustment in rates and values to
reflect variances, if any, in the rates and values between the two policies.
After adjustment, if any excess is owed the policy owner, Nationwide will pay
the excess to the policy owner in cash. The exchange may be subject to federal
income tax withholding (see "Income Tax Withholding").
GRACE PERIOD
FIRST FIVE POLICY YEARS
This policy will not lapse during the first five policy years provided that on
each monthly anniversary day (1) is greater than or equal to (2) where:
(1) is the sum of all premiums paid to date minus any policy indebtedness;
and
(2) is the sum of monthly minimum premiums since the policy date including
the monthly minimum premium for the current monthly anniversary day.
If (1) is less than (2), a grace period of 61 days from the monthly anniversary
day will be allowed for the payment of sufficient premium to satisfy the minimum
premium requirement. If sufficient premium is not paid by the end of the grace
period, the policy will lapse. The policy will be terminated with the return of
any available cash surrender value. The cash surrender value will be calculated
as of the beginning of the grace period. The policy owner may also elect in
writing to have the policy placed on Extended Term Insurance.
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<PAGE> 26
POLICY YEARS SIX AND AFTER
If the cash surrender value on a monthly anniversary day is not sufficient to
cover the current monthly deduction for insurance costs, administrative expenses
and other benefits, a grace period of 61 days from the monthly anniversary day
will be allowed for the payment of sufficient premium to cover the current
monthly deduction plus an amount equal to three times the current monthly
deduction.
ALL POLICY YEARS
Nationwide will send a notice at the start of the grace period to the policy
owner's last known address. If the insured dies during the grace period,
Nationwide will pay the death proceeds.
REINSTATEMENT
If the grace period ends and the policy owner has neither paid the required
premium nor surrendered the policy for its cash surrender value, the policy
owner may reinstate the policy by:
(1) submitting a written request at any time within 3 years after the end
of the grace period and prior to the maturity date;
(2) providing evidence of insurability satisfactory to Nationwide;
(3) paying sufficient premium to cover all policy charges that were due and
unpaid during the grace period;
(4) paying sufficient premium to keep the policy in force for 3 months from
the date of reinstatement; and
(5) paying or reinstating any indebtedness against the policy which existed
at the end of the grace period.
The effective date of a reinstated policy will be the monthly anniversary day on
or next following the date the application for reinstatement is approved by
Nationwide. If the policy is reinstated, the cash value on the date of
reinstatement, but prior to applying any premiums or loan repayments received,
will be set equal to the lesser of:
(1) the cash value at the end of the grace period; or
(2) the surrender charge for the policy year in which the policy was
reinstated.
Unless the policy owner has provided otherwise, all amounts will be allocated
based on the underlying mutual fund allocation factors in effect at the start of
the grace period.
TAX MATTERS
POLICY PROCEEDS
Section 7702 of the Internal Revenue Code provides that if certain tests are
met, a policy will be treated as a life insurance policy for federal tax
purposes. Nationwide will monitor compliance with these tests. The policy should
thus receive the same federal income tax treatment as fixed benefit life
insurance. As a result, the death proceeds payable under a policy are excludable
from gross income of the beneficiary under Section 101 of the Internal Revenue
Code.
Section 7702A of the Internal Revenue Code defines modified endowment contracts
as those policies issued or materially changed on or after June 21, 1988 on
which the total premiums paid during the first seven years exceed the amount
that would have been paid if the policy provided for paid up benefits after
seven level annual premiums (see "Information about the Policies"). The Internal
Revenue Code states that taxation of surrenders, partial surrenders, loans,
collateral assignments and other pre-death distributions from modified endowment
contracts (other than certain distributions to terminally ill individuals) are
subject to federal income taxes in a manner similar to the way annuities are
taxed. Modified endowment contract distributions are defined by the Internal
Revenue Code as amounts not received as an annuity and are taxable to the extent
the cash value of the policy exceeds, at the time of distribution, the premiums
paid into the policy. A 10% tax penalty generally applies to the taxable portion
of such distributions unless the policy owner is over age 59 1/2 or disabled or
the distribution is part of an annuity to the policy owner as defined in the
Internal Revenue Code. Under certain circumstances, certain distributions made
under a policy on the life of a "terminally ill individual", as that term is
23
<PAGE> 27
defined in the Internal Revenue Code, are excludable from gross income.
The policies offered by this prospectus may or may not be issued as modified
endowment contracts. Nationwide will monitor premiums paid and will notify the
policy owner when the policy's non-modified endowment status is in jeopardy. If
a policy is not a modified endowment contract, a cash distribution during the
first 15 years after a policy is issued which causes a reduction in death
benefits may still become fully or partially taxable to the policy owner
pursuant to Section 7702(f)(7) of the Internal Revenue Code. The policy owner
should carefully consider this potential effect and seek further information
before initiating any changes in the terms of the policy. Under certain
conditions, a policy may become a modified endowment as a result of a material
change or a reduction in benefits as defined by Section 7702A(c) of the Internal
Revenue Code.
In addition to meeting the tests required under Section 7702, Section 817(h) of
the Internal Revenue Code requires that the investments of separate accounts
such as the variable account be adequately diversified. Regulations under 817(h)
provide that a variable life policy that fails to satisfy the diversification
standards will not be treated as life insurance unless such failure was
inadvertent, is corrected, and the policy owner or Nationwide pays an amount to
the IRS. The amount will be based on the tax that would have been paid by the
policy owner if the income, for the period the policy was not diversified, had
been received by the policy owner.
If the failure to diversify is not corrected in this manner, the policy owner
will be deemed the owner of the underlying securities and taxed on the earnings
of his or her account.
Representatives of the IRS have suggested, from time to time, that the number of
underlying mutual funds available or the number of transfer opportunities
available under a variable product may be relevant in determining whether the
product qualifies for the desired tax treatment. No formal guidance has been
issued in this area. Should the U.S. Secretary of the Treasury issue additional
rules or regulations limiting the number of underlying mutual funds, transfers
between underlying mutual funds, exchanges of underlying mutual funds or changes
in investment objectives of underlying mutual funds such that the policy would
no longer qualify as life insurance under Section 7702 of the Internal Revenue
Code, Nationwide will take whatever steps are available to remain in compliance.
Nationwide will monitor compliance with these regulations and, to the extent
necessary, will change the objectives or assets of the sub-account investments
to remain in compliance.
A total surrender or cancellation of the policy by lapse or the maturity of the
policy on its maturity date may have adverse tax consequences. If the amount
received by the policy owner plus total policy indebtedness exceeds the premiums
paid into the policy, the excess generally will be treated as taxable income,
regardless of whether or not the policy is a modified endowment contract.
WITHHOLDING
Distributions of income from a modified endowment contract are subject to
federal income tax withholding; however, the recipient may elect not to have the
withholding taken from the distribution. A distribution of income from a
modified endowment contract may be subject to mandatory back-up withholding
(which cannot be waived). The mandatory back-up withholding rate is 31% of the
income that is distributed and will arise if no Taxpayer Identification Number
is provided to Nationwide, or if the IRS notifies Nationwide that back-up
withholding is required.
FEDERAL ESTATE AND GENERATION-SKIPPING TRANSFER TAXES
The federal estate tax is integrated with the federal gift tax under a unified
tax rate schedule. In general, in 2000, 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.
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<PAGE> 28
When the insured dies, the death benefit will generally be included in the
insured's federal gross estate if: (1) the proceeds were payable to or for the
benefit of the insured's estate; or (2) the insured held any "incident of
ownership" in the policy at death or at any time within three years of death. An
incident of ownership is, in general, any right that may be exercised by the
policy owner, such as the right to borrow on the policy, or the right to name a
new Beneficiary.
If the policy owner (whether or not he or she is the insured) transfers
ownership of the policy to another person, such transfer may be subject to a
federal gift tax. In addition, if such policy owner transfers the policy to
someone two or more generations younger than the policy owner, the transfer may
be subject to the federal generation-skipping transfer tax ("GSTT"), the taxable
amount being the value of the policy.
Similarly, if the beneficiary is two or more generations younger than the
insured, the payment of the death proceeds at the death of the insured may be
subject to the GSTT. Pursuant to regulations recently promulgated by the U.S.
Secretary of the Treasury, Nationwide may be required to withhold a portion of
the death proceeds and pay them directly to the IRS as the GSTT liability.
The GSTT provisions generally apply to the same transfers that are subject to
estate or gift taxes.
The tax rate is a flat rate equal to the maximum estate tax rate (currently
55%), and there is a provision for an aggregate $1 million exemption. Due to the
complexity of these rules, the policy owner should consult with counsel and
other competent advisors regarding these taxes.
NON-RESIDENT ALIENS
Pre-death distributions from modified endowment contracts to nonresident aliens
("NRAs") are generally subject to federal income tax and tax withholding, at a
statutory rate of 30% of the amount of income that is distributed. Nationwide is
required to withhold such amount from the distribution and remit it to the IRS.
Distributions to certain NRAs may be subject to lower, or in certain instances
zero, tax and withholding rates, if the United States has entered into an
applicable treaty. However, in order to obtain the benefits of such treaty
provisions, the NRA must give to Nationwide sufficient proof of his or her
residency and citizenship in the form and manner prescribed by the IRS. In
addition, the NRA must obtain an individual Taxpayer Identification Number from
the IRS, and furnish that number to Nationwide prior to the distribution. If
Nationwide does not have the proper proof of citizenship or residency and a
proper individual Taxpayer Identification Number prior to any distribution,
Nationwide will be required to withhold 30% of the income, regardless of any
treaty provision.
A pre-death distribution may not be subject to withholding where the recipient
sufficiently establishes to Nationwide that such payment is effectively
connected to the recipient's conduct of a trade or business in the United States
and that such payment is includible in the recipient's gross income for United
States federal income tax purposes. Any such distributions may be subject to
back-up withholding at the statutory rate (currently 31%) if no Taxpayer
Identification Number, or an incorrect Taxpayer Identification Number, is
provided.
State and local estate, inheritance, income and other tax consequences of
ownership or receipt of policy proceeds depend on the circumstances of each
policy owner or beneficiary.
TAXATION OF NATIONWIDE
Nationwide is taxed as a life insurance company under the Internal Revenue Code.
Since the variable account is not a separate entity from Nationwide and its
operations form a part of Nationwide, it will not be taxed separately as a
"regulated investment company" under Sub-chapter M of the Internal Revenue Code.
Investment income and realized capital gains on the assets of the variable
account are reinvested and taken into account in determining the value of
accumulation units. As a result, such investment income and realized capital
gains are automatically applied to increase reserves under the policies.
Nationwide does not initially expect to incur any federal income tax liability
that would be chargeable to the variable account. Based upon
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<PAGE> 29
these expectations, no charge is currently being made against the variable
account for federal income taxes. If, however, Nationwide determines that on a
separate company basis such taxes may be incurred, it reserves the right to
assess a charge for such taxes against the variable account.
Nationwide may also incur state and local taxes (in addition to premium taxes)
in several states. At present, these taxes are not significant. If they
increase, however, charges for such taxes may be made.
TAX CHANGES
The foregoing discussion, which is based on Nationwide's understanding of
federal tax laws as they are currently interpreted by the IRS, is general and is
not intended as tax advice.
The Internal Revenue Code has been subjected to numerous amendments and changes,
and it is reasonable to believe that it will continue to be revised. The United
States Congress has, in the past, considered numerous legislative proposals
that, if enacted, could change the tax treatment of the policies. It is
reasonable to believe that such proposals, and future proposals, may be enacted
into law. In addition, the U.S. Treasury Department may amend existing
regulations, issue new regulations, or adopt new interpretations of existing law
that may be at variance with its current positions on these matters. In
addition, current state law (which is not discussed herein), and future
amendments to state law, may affect the tax consequences of the policy.
If the policy owner, insured, or beneficiary or other person receiving any
benefit or interest in or from the policy is not both a resident and citizen of
the United States, there may be a tax imposed by a foreign country, in addition
to any tax imposed by the United States. The foreign law (including regulations,
rulings, and case law) may change and impose additional taxes on the policy, the
death proceeds, or other distributions and/or ownership of the policy, or a
treaty may be amended and all or part of the favorable treatment may be
eliminated.
Any or all of the foregoing may change from time to time without any notice, and
the tax consequences arising out of a policy may be changed retroactively. There
is no way of predicting if, when, or to what extent any such change may take
place. No representation is made as to the likelihood of the continuation of
these current laws, interpretations, and policies.
The foregoing is a general explanation as to certain tax matters pertaining to
insurance policies. It is not intended to be legal or tax advice, and should not
take the place of your independent legal, tax and/or financial adviser.
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.
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
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<PAGE> 30
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 statements or their equivalent, which must be sent to the
underlying mutual fund beneficial shareholders as required by the rules
under the Investment Company Act of 1940 for the variable account; and
- - statements of significant transactions, such as changes in specified
amount, changes in death benefit options, changes in future premium
allocations, transfers among sub-accounts, premium payments, loans,
loan repayments, reinstatement and termination.
ADVERTISING
Nationwide is ranked and rated by independent financial rating services,
including Moody's, Standard & Poor's and A.M. Best Company. The purpose of these
ratings is to reflect the financial strength or claims-paying ability of
Nationwide. The ratings are not intended to reflect the investment experience or
financial strength of the variable account. Nationwide may advertise these
ratings from time to time. In addition, Nationwide may include in certain
advertisements, endorsements in the form of a list of organizations, individuals
or other parties which recommend Nationwide or the policies. Furthermore,
Nationwide may occasionally include in advertisements comparisons of currently
taxable and tax deferred investment programs, based on selected tax brackets, or
discussions of alternative investment vehicles and general economic conditions.
LEGAL PROCEEDINGS
Nationwide is a party to litigation and arbitration proceedings in the ordinary
course of its business, none of which is expected to have a material adverse
effect on Nationwide.
In recent years, life insurance companies have been named as defendants in
lawsuits, including class action lawsuits, relating to life insurance and
annuity pricing and sales practices. A number of these lawsuits have resulted in
substantial jury awards or settlements.
On October 29, 1998, Nationwide was 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). On May 3, 1999, the complaint was amended to,
among other things, add Marcus Shore as a second plaintiff. The amended
complaint is brought as a class action on behalf of all persons who purchased
individual deferred annuity contracts or participated in group annuity contracts
sold by Nationwide and the other named Nationwide affiliates which were used to
fund certain tax-deferred retirement plans. The amended complaint seeks
unspecified compensatory and punitive damages. No class has been certified. On
June 11, 1999, Nationwide and the other named defendants filed a motion to
dismiss the amended complaint. On March 8, 2000, the court denied the motion to
dismiss the amended complaint filed by Nationwide and other named defendants.
Nationwide intends to defend this lawsuit vigorously.
There can be no assurance that any litigation relating to pricing or sales
practices will not have a material adverse effect on Nationwide in the future.
The general distributor, NISC is not engaged in any litigation of any material
nature.
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<PAGE> 31
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.
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, NISC. NISC was
organized as an Oklahoma corporation on March 19, 1974. NISC is a wholly owned
subsidiary of Nationwide Life Insurance Company and a member of the NASD.
NISC 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 VLI Separate Account-2;
- - Nationwide VLI Separate Account-3;
- - Nationwide VLI Separate Account-4;
- - Nationwide VLI Separate Account-5;
- - Nationwide Variable Account;
- - Nationwide Variable Account-II;
- - Nationwide Variable Account-5;
- - Nationwide Variable Account-6;
- - Nationwide Variable Account-8;
- - Nationwide Variable Account-9;
- - Nationwide Variable Account-10;
- - Nationwide Variable Account-11;
- - 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;
- - NACo Variable Account;
- - Nationwide DC Variable Account; and the
- - Nationwide DCVA-II.
NISC also acts as principal underwriter for the following open-end management
investment companies:
- - Nationwide Mutual Funds;
- - Nationwide Separate Account Trust;
- - Financial Horizons Investment Trust; and
- - Nationwide Asset Allocation Trust.
Gross first year commissions plus any expense allowance payments paid by
Nationwide on the sale of these policies provided by the general distributor
will not exceed 26% of the scheduled premium plus 5% of any excess premium
payments. Gross renewal commissions paid by Nationwide will not exceed 5% of
actual premium payments.
No underwriting commissions have been paid by Nationwide to NISC.
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<TABLE>
<CAPTION>
NISC DIRECTORS AND OFFICERS
------------------------------------------------------------------------------------------------------------------
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
------------------------------------------------------------------------------------------------------------------
<S> <C>
Joseph J. Gasper Chairman of the Board and
One Nationwide Plaza Director
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Dimon R. McFerson Chairman and Chief Executive
One Nationwide Plaza Officer and Director
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Richard A. Karas Vice Chairman and Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Duane C. Meek President
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Philip C. Gath Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Susan A. Wolken Director
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Robert A. Oakley Executive Vice President -
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Robert J. Woodard Executive Vice President -
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Mark R. Thresher Senior Vice President and Treasurer
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Barbara J. Shane Vice President - Compliance Officer
Two Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Alan A. Todryk Vice President - Taxation
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
John F. Delaloye Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Glenn W. Soden Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
E. Gary Berndt Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Duane M. Campbell Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
Terry C. Smetzer Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
------------------------------------------------------------------------------------------------------------------
</TABLE>
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ADDITIONAL INFORMATION ABOUT NATIONWIDE
The life insurance business, including annuities, is the only business in which
Nationwide is engaged.
Nationwide markets its policies through independent insurance brokers, general
agents, and registered representatives of registered NASD broker/dealer firms.
Nationwide serves as depositor for the following investment accounts, each of
which is a registered investment company:
- - Nationwide VL Separate Account-A;
- - Nationwide VL Separate Account-B;
- - Nationwide VL Separate Account-C;
- - Nationwide VL Separate Account-D;
- - Nationwide VA Separate Account-A;
- - Nationwide VA Separate Account-B; and
- - Nationwide VA Separate Account-C.
Nationwide, in common with other insurance companies, is subject to regulation
and supervision by the regulatory authorities of the states in which it is
licensed to do business. A license from the state insurance department is a
prerequisite to the transaction of insurance business in that state. In general,
all states have statutory administrative powers. Such regulation relates, among
other things, to licensing of insurers and their agents, the approval of policy
forms, the methods of computing reserves, the form and content of statutory
financial statements, the amount of policyholders' and stockholders' dividends,
and the type of distribution of investments permitted.
Nationwide operates in the highly competitive field of life insurance. There are
approximately 2,300 stock, mutual and other types of insurers in the life
insurance business in the United States, and a large number of them compete with
the registrant in the sale of insurance policies.
As is customary in insurance company groups, employees are shared with the other
insurance companies in the group. In addition to its direct salaried employees,
Nationwide shares employees with Nationwide Mutual Insurance Company and
Nationwide Mutual Fire Insurance Company.
Nationwide does not presently own or lease any materially important physical
properties when its property holdings are viewed in relation to its total
assets. Nationwide shares home office, other facilities and equipment with
Nationwide Mutual Insurance Company.
Company Management
Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance
Company, together with Nationwide Mutual Insurance Company, Nationwide Mutual
Fire Insurance Company, Nationwide Property and Casualty Insurance Company and
Nationwide General Insurance Company and their affiliated companies comprise the
Nationwide group of companies. The companies listed above have substantially
common boards of directors and officers.
Nationwide Financial Services, Inc. ("NFS") is the sole shareholder of
Nationwide Life Insurance Company. NFS serves as a holding company for other
financial institutions. Nationwide Life Insurance Company is the sole owner of
Nationwide.
Each of the directors and officers listed below is a director or officer
respectively of at least one or more of the other major insurance affiliates of
the Nationwide group of companies. Messrs. McFerson, Gasper, Woodward and Ms.
Thomas are also trustees of one or more of the registered investment companies
distributed by NISC, a registered broker-dealer affiliated with the Nationwide
group of companies.
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<PAGE> 34
<TABLE>
<CAPTION>
DIRECTORS OF NATIONWIDE
- ------------------------------------- --------------------------- ----------------------------------------------------
DIRECTORS OF THE DEPOSITOR NAME AND
PRINCIPAL BUSINESS ADDRESS POSITIONS AND OFFICES
WITH DEPOSITOR PRINCIPAL OCCUPATION
- ------------------------------------- --------------------------- ----------------------------------------------------
<S> <C> <C>
Lewis J. Alphin Director Farm Owner and Operator, Bell Farms (1)
519 Bethel Church Road
Mount Olive, NC 28365-6107
- ------------------------------------- --------------------------- ----------------------------------------------------
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 56258
- ------------------------------------- --------------------------- ----------------------------------------------------
Fred C. Finney Director Owner and Operator, Moreland Fruit Farm; Operator,
1558 West Moreland Road 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 and
Columbus, OH 43215 Director Annuity 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
- ------------------------------------- --------------------------- ----------------------------------------------------
</TABLE>
31
<PAGE> 35
<TABLE>
<CAPTION>
- ------------------------------------- --------------------------- ----------------------------------------------------
Directors of the Depositor
Name and Principal Business
Address Positions and Offices
With Depositor Principal Occupation
- ------------------------------------- --------------------------- ----------------------------------------------------
<S> <C> <C>
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 and General Manager, Public
Xerox Corporation Sector Worldwide/Document Solutions Group
Suite 200 Xerox Corporation (2)
1401 H Street NW
Washington, DC 20007
- ------------------------------------- --------------------------- ----------------------------------------------------
Ralph M. Paige Director Executive Director Federation of Southern
Federation of Southern Cooperatives/Land Assistance Fund
Cooperatives/Land Assistance Fund
2769 Church Street
East Point, GA 30344
- ------------------------------------- --------------------------- ----------------------------------------------------
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 Co-owner, Thomas Farms (2)
1767D 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
the Nationwide group of companies except Mr. Gasper who is a director only of
the Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance
Company. Messrs. McFerson and Gasper are directors of Nationwide Investment
Serices Corporation, a registered broker-dealer.
Messrs. McFerson, Miller, Patterson, and Shisler are directors of Nationwide
Financial Services, Inc. Mr. McFerson and Ms. Thomas are trustees of Nationwide
Mutual Funds, a registered investment company. Messrs. McFerson, Gasper and
Woodward are trustees of Nationwide Separate Account Trust and Nationwide Asset
Allocation Trust, registered investment companies. Mr. McFerson is trustee of
Financial Horizons Investment Trust and Nationwide Mutual Funds, registered
investment companies.
32
<PAGE> 36
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF NATIONWIDE
- -------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE DEPOSITOR OFFICES OF THE DEPOSITOR
NAME AND PRINCIPAL BUSINESS ADDRESS
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Richard D. Headley Executive Vice President - Chief Information Technology Officer
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
- -------------------------------------------------------------------------------------------------------------------
Charles A. Bryan Senior Vice President - Chief Actuary - Property and Casualty
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
John R. Cook, Jr. Senior Vice President - Chief Communications Officer
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
David A. Diamond Senior Vice President - Corporate Controller
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Philip C. Gath Senior Vice President - Chief Actuary - Nationwide Financial
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Patricia R. Hatler Senior Vice President, General Counsel and Secretary
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
David K. Hollingsworth Senior Vice President
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
David R. Jahn Senior Vice President - Commercial Insurance
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Donna A. James Senior Vice President - Chief Human Resources Officer
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Richard A. Karas Senior Vice President - Sales - Financial Services
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Gregory S. Lashutka Senior Vice President - Corporate Relations
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Edwin P. McCausland, Jr. Senior Vice President - Fixed Income Securities
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE> 37
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF NATIONWIDE
- -------------------------------------------------------------------------------------------------------------------
Officers of the Depositor Offices of the Depositor
Name and Principal Business Address
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Mark D. Phelan Senior Vice President - Technology Services
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Douglas C. Robinette Senior Vice President - Claims and Financial Services
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Mark R. Thresher Senior Vice President - Finance - Nationwide Financial
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Richard M. Waggoner Senior Vice President - Operations
One Nationwide Plaza
Columbus, OH 43215
- -------------------------------------------------------------------------------------------------------------------
Susan A. Wolken Senior Vice President - Product Management and Nationwide
One Nationwide Plaza Financial Marketing
Columbus, OH 43215
</TABLE>
DIMON R. MCFERSON has been a Director since April 1988 and Chairman and Chief
Executive Officer since April 1996. He was elected Chief Executive Officer in
December 1992, and President and Chief Executive Officer in December 1993. He
was President and General Manager of Nationwide Mutual Insurance Company from
April 1988 to April 1991; President and Chief Operating Officer of Nationwide
Mutual Insurance Company from April 1991 to December 1992; and President and
Chief Executive Officer of Nationwide Mutual Insurance Company from December
1992 to April 1996. Mr. McFerson has been with Nationwide for 20 years.
JOSEPH J. GASPER has been President and Chief Operating Officer and Director of
Nationwide 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 33 years.
LEWIS J. ALPHIN has been a Director of Nationwide since 1993. Mr. Alphin owns
and operates an 800-acre farm in Mt. Olive, NC. He taught agriculture business
at James Sprunt Community Collegy in Kenansville, NC for more than 22 years
before retiring in 1994. He is the former board chairman of the Cape Fear Farm
Credit Association, a member and former vice president, secretary/treasurer, and
director of the Duplin County Agribusiness Council, and a former board member of
the Southern States Cooperative (1986 to 1993). Mr. Alphin is a member of the
Duplin County Farm Bureau, the North Carolina Farm Bureau, ad the Farm Credit
Council. He is a member and former director of the Oak Wolfe Fire Department.
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.
34
<PAGE> 38
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
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 30 years.
CHARLES A. BRYAN has been a Senior Vice President - Chief Actuary - Property and
Casualty since 1998. Prior to joining Nationwide, Mr. Bryan was president, Chief
Operating Officer of Direct Response Corporation from 1996 to 1998. Prior to
that time, Mr. Bryan was a partner with Ernst & Young.
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. Mr. Cook has been
with Nationwide for 2 years.
KENNETH D. DAVIS has been a Director of Nationwide since April 1999. Mr. Davis
is the immediate past president of the Ohio Farm Bureau Federation. He served as
a member of the Ohio Farm Bureau Federation's board of trustees from 1989 until
1999. He served as first vice president of the board from 1994 until 1998. Mr.
Davis serves on the board of directors of his local rural electric cooperatives
and is a member of many agriculture organizations including the Ohio Corn
Growers, Ohio Cattlemen's and Ohio Soybean associations.
DAVID A. DIAMOND has been Senior Vice President - Corporate Controller since
August 1999. He was Vice President-Controller from August 1996 to August 1999.
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 11 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. Mr. Eckel is a member of the Pennsylvania Agricultural Land Preservation
Board. He is a former president of the Pennsylvania Farm Bureau, a position he
held for 15 years, and the Lackawanna County Cooperative Extension Association.
He has served as a board member and executive committee member of the American
Farm Bureau Federation. He is a former vice president of the Pennsylvania
Council of Cooperative Extension Associations and former board member of the
Pennsylvania Vegetable Growers Association.
WILLARD J. ENGEL has been a Director of Nationwide since 1994. Mr. Engel served
as general manager of Lyon County Co-Operative Oil Co. in Marshall, MN from 1975
to 1997, and occasionally serves on a consulting basis. He previously was a
division manager of the Truman Farmers Elevator. He is a former director of the
Western Co-op Transport in Montevideo, MN, a former director and legislative
committee chairman of the Northwest Petroleum Association in St. Paul, and a
former director of Farmland Industries in Kansas City.
FRED C. FINNEY has been a Director of Nationwide since 1992. Mr. Finney is the
owner and operator of the Moreland Fruit Farm and operator of Melrose Orchard in
Wooster, OH. He is past president of the Ohio Farm Bureau Federation, the Ohio
Fruit Growers Society, Wayne County Farm Bureau, and the Westwood Ruritan Club.
He is a member of the American Berry Cooperative.
PHILIP C. GATH has been Senior Vice President - Chief Actuary - Nationwide
Financial since May 1998. Previously, Mr. Gath was Vice President - Product
Manager - Individual Variable Annuity from July 1997 to May 1998.
35
<PAGE> 39
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 31 years.
PATRICIA R. HATLER has been Senior Vice President, General Counsel and Secretary
since April 2000. Previously, she was Senior Vice President and General Counsel
from July 1999 to April 2000. Prior to that time, she was General Counsel and
Corporate Secretary of Independence Blue Cross from 1983 to July 1999.
DAVID K. HOLLINGSWORTH has been Senior Vice President - Multi Channel and
Sponsor Relations since August 1999. Previously, he was Senior Vice President -
Marketing from June 1999 to August 1999. Prior to that time, has held numerous
positions within the Nationwide group of companies. Mr. Hollingsworth has been
with Nationwide for 25 years.
DAVID R. JAHN has been Senior Vice President - Commercial Insurance since March
1998. Previously, he was Vice President - Property/Casualty Operations and Vice
President - Resource Management from March 1996 to January 1998. Prior to that
time, Mr. Jahn has held numerous positions within the Nationwide group of
companies. Mr. Jahn has been with Nationwide for 28 years.
DONNA A. JAMES has been Senior Vice President - Chief Human Resources Officer
since May 1999. She was Senior Vice President - Human Resources from December
1997 to May 1999. 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 of Nationwide from March 1996 to July 1996. From May 1994
to March 1996 she was Associate Vice President - Assistant to the CEO for
Nationwide. Previously Ms. James held several positions within Nationwide. Ms.
James has been with Nationwide for 18 years.
RICHARD D. HEADLEY has been Executive Vice President - Chief Information
Technology Officer since May 1999. He was Senior Vice President - Chief
Information Technology Officer from October 1997 to May 1999. Previously, Mr.
Headley was Chairman and Chief Executive Officer of Banc One Services
Corporation from 1992 to October 1997. From January 1975 until 1992 Mr. Headley
held several positions with Banc One Corporation. Mr. Headly has been with
Nationwide for 2 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 35 years.
GREGORY S. LASHUTKA has been Senior Vice President - Corporate Relations since
January 2000. Previously, he was the Mayor of the City of Columbus (Ohio) from
January 1992 to December 1999. From January 1986 to December 1991, Mr. Lashutka
was a Partner with Squire, Sanders & Dempsey. From January 1978 to December
1985, he was City Attorney for the City of Columbus (Ohio).
EDWIN P. MCCAUSLAND, JR. has been Senior Vice President - Fixed Income
Securities since 1999. Mr. McCausland has 29 years of experience in insurance
investments beginning his career in 1970 with Connecticut Mutual Life Insurance
Company. He joined Phoenix Mutual Life Insurance Company in 1981 as second Vice
President of Bond Investments and rising to Vice President of Pension
Operations. He was Vice President and Managing Director of Mass Mutual Life
Insurance Company prior to joining Nationwide.
DAVID O. MILLER has been a Director of Nationwide since November 1996. Mr.
Miller has been Chairman of the Board since 1998. Mr. Miller is president of
Owen Potato Farm, Inc. and a partner of M&M Enterprises in Licking County, OH.
He is a director and board chairman of the National Cooperative Business
36
<PAGE> 40
Association, director of Cooperative Business International and the
International Cooperative Alliance, and serves on the educational executive
committee of the National Council of Farmer Cooperatives. He was president of
the Ohio Farm Bureau Federation from 1981 to 1985 and was vice president for six
years. Mr. Miller served a two year term on the board of the American Farm
Bureau Association. He is past president of the Ohio Vegetable and Potato
Growers Association, and was a director of Landmark, Inc., a farm supply
cooperative which is now part of Indianapolis-based Countrymark.
YVONNE L. MONTGOMERY has been a Director of Nationwide since April, 1998. Ms.
Montgomery is senior vice president/general manager - Public Sector
Worldwide/Document Solutions Group for Xerox Corporation. A resident of
Washington, DC, Ms. Montgomery is in charge of providing an integrated,
industry-focused portfolio of document solutions and services to the public
sector worldwide. 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.
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 24
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.
JAMES F. PATTERSON has been a Director of Nationwide since April 1989. Mr.
Patterson is president of Patterson Farms, Inc. and has operated Patterson
Fruit Farm in Chesterland, OH since 1964. Mr. Patterson is on the boards of The
Ohio State University Hospitals Health System in Cleveland, Geauga Hospital,
Inc. and the National Cooperative Business Association. He is past president of
the Ohio Farm Bureau Federation and former member of Cleveland Foundation's
Lake and Geauga Advisory Committees.
MARK D. PHELAN has been Senior Vice President - Technology Services since 1998.
His previous management experience includes five years (1977-1982) with the data
processing division's sales group at IBM Corporation. From 1982 through 1990,
Mr. Phelan served as director of AT&T's Consumer Communications Services Group
and he was subsequently promoted to sales vice president for the Eastern Region
of the Business Communications Services Division. In 1992, he became executive
vice president-sales and marketing for the Electronic Commerce Division of
Checkfree Corporation, a position he held for five years. From 1997 until 1998,
he was in private consulting.
DOUGLAS C. ROBINETTE has been Senior Vice President - Claims and Financial
Services since 1999. Previously, he was Senior Vice President - Marketing and
Product Management from May 1998 to 1999. Previously, Mr. Robinette was
Executive Vice President, Customer Services of Employers Insurance of Wausau
(Wausau), a member of the Nationwide group until December 1998, from September
1996 to May 1998. Prior to that time he was Executive Vice President, Finance
and Insurance Services of Wausau from May 1995 to September 1996. From November
1994 to May 1995 Mr. Robinette was Senior Vice President, Finance and Insurance
Services of Wausau. From May 1993 to November 1994 he was Senior Vice President,
Finance of Wausau. Prior to that time, Mr. Robinette held several positions
within the Nationwide group. Mr. Robinette has been with the Nationwide group
for 13 years.
ARDEN L. SHISLER has been a Director of Nationwide since 1984. Mr. Shisler is
president and chief executive officer of K&B Transport, Inc., a trucking firm in
Dalton, OH. He is a
37
<PAGE> 41
director of the National Cooperative Business Association in
Washington, DC. He is a former board member and vice president of the Ohio Farm
Bureau Federation and past president of the Ohio Agricultural Marketing
Association, an Ohio Farm Bureau Federation subsidiary. He is a member of the
Ohio Trucking Association, the Ohio Trucking Safety Council, the Wayne County
Farm Bureau, Cornerstone Community Church, the Advisory Committee of The Ohio
State University Agriculture Technical Institute and a board member of the
Wilderness Center.
ROBERT L. STEWART has been a Director of Nationwide since 1989. Mr. Stewart is
the owner and operator of Sunnydale Farms and Mining in Jewett, OH. He served on
the board of the Ohio Farm Bureau Federation and as president of the Ohio
Holstein Association board. Mr. Stewart was a director of the Ohio Agricultural
Stabilization and Conservation Service board and Landmark, Inc. a farm supply
cooperative which is now part of Indianapolis-based Countrymark.
NANCY C. THOMAS has been a Director of Nationwide since 1986. Mrs. Thomas is a
board member of Farm Credit Services' 4th District and serves on the advisory
board of Walsh University in North Canton, OH. She is a past president and
former director of the Ohio Agricultural Marketing Association and served on the
boards of the Ohio Farm Bureau Federation and Landmark, Inc., a farm supply
cooperative which is now part of Indianapolis-based Countrymark, and as the
Midwest regional representative on the American Farm Bureau women's committee.
MARK R. THRESHER has been Senior Vice President - Finance - Nationwide Financial
since May 1999. He was Vice President - Controller from August 1996 to May 1999.
He was Vice President and Treasurer from November 1996 to February 1997.
Previously, he was Vice President and Treasurer from June 1996 to November 1996.
Prior to joining Nationwide, Mr. Thresher served as a partner with KPMG LLP from
July 1988 to June 1996.
RICHARD M. WAGGONER has been Senior Vice President - Operations since May 1999.
Previously, he was President of Nationwide Services from May 1997 to May 1999.
Prior to that time, Mr. Waggoner has held numerous positions within the
Nationwide group of companies. Mr. Waggoner has been with Nationwide for 23
years.
SUSAN A. WOLKEN has been Senior Vice President - Product Management and
Nationwide Financial Marketing since May 1999. Previously, Ms. Wolken was Senior
Vice President - Life Company Operations from June 1997 to May 1999. 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 25 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 35 years.
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<PAGE> 42
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investment
vehicles for variable annuity contracts and variable life insurance policies
issued by insurance companies.
There is no guarantee that the investment objectives will be met.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN
CENTURY(SM) FAMILY OF INVESTMENTS
American Century Variable Portfolios, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end investment management company
which offers its shares only as investment vehicles for variable annuity
contracts and variable life insurance products of insurance companies. American
Century Variable Portfolios, Inc. is managed by American Century Investment
Management, Inc.
AMERICAN CENTURY VP ADVANTAGE
Investment Objective: Current income and capital growth. The fund will seek
to achieve its objective by investing in three types of securities. The
fund's investment manager intends to invest approximately (i) 20% of the
fund's assets in securities of the United States government and its
agencies and instrumentalities and repurchase agreements collateralized by
such securities with a weighted average maturity of six months or less,
i.e., cash or cash equivalents; (ii) 40% of the fund's assets in fixed
income securities of the United States government and its agencies and
instrumentalities with a weighted average maturity of three to ten years;
and (iii) 40% of the fund's assets in equity securities that are considered
by management to have better-than-average prospects for appreciation.
Assets will be purchased or sold, as the case may be, as is necessary in
response to changes in market value to maintain the asset mix of the Fund's
portfolio at approximately 60% cash, cash equivalents and fixed income
securities and 40% equity securities. There can be no assurance that the
Fund will achieve its investment objective.
AMERICAN CENTURY VP BALANCED
Investment Objective: Capital growth and current income. The Fund will seek
to achieve its objective by maintaining approximately 60% of the assets of
the Fund in common stocks (including securities convertible into common
stocks and other equity equivalents) that are considered by management to
have better-than-average prospects for appreciation and approximately 40%
in fixed income securities. A minimum of 25% of the fixed income portion of
the Fund will be invested in fixed income senior securities. There can be
no assurance that the Fund will achieve its investment objective.
(Although the Statement of Additional Information concerning American Century
Variable Portfolios, Inc. refers to redemptions of securities in kind under
certain conditions, all surrendering or redeeming policy owners will receive
cash from Nationwide.)
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
The Fidelity Variable Insurance Products Fund (VIP) is an open-end, diversified,
management investment company organized as a Massachusetts business trust on
November 13, 1981. Shares of VIP are purchased by insurance companies to fund
benefits under variable life insurance policies and variable annuity contracts.
Fidelity Management & Research Company ("FMR") is the manager for VIP and it's
portfolios..
VIP GROWTH PORTFOLIO
Investment Objective: Seeks to achieve capital appreciation. This Portfolio
will invest in the securities of both well-known and established companies,
and smaller, less well-known companies which may have a narrow product line
or whose securities are thinly traded. These latter securities will often
involve greater risk than may be found in the ordinary investment security.
FMR's analysis and expertise plays an integral role in the selection of
securities and, therefore, the performance of the Portfolio. Many
securities which FMR believes would have
39
<PAGE> 43
the greatest potential may be regarded as speculative, and investment
in the Portfolio may involve greater risk than is inherent in other
mutual funds. It is also important to point out that the Portfolio
makes most sense for you if you can afford to ride out changes in the
stock market, because it invests primarily in common stocks. FMR also
can make temporary investments in securities such as investment-grade
bonds, high-quality preferred stocks and short term notes, for
defensive purposes when it believes market conditions warrant.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end management
investment company organized under the laws of Massachusetts. NSAT offers shares
in the Funds listed below, each with its own investment objectives. Shares of
NSAT will be sold only to life insurance company separate accounts to fund the
benefits under variable life insurance policies and variable annuity contracts
issued by life insurance companies. The assets of NSAT are managed by Villanova
Mutual Fund Capital Trust ("VMF"), an indirect subsidiary of Nationwide
Financial Services, Inc.
CAPITAL APPRECIATION FUND
Investment Objective: Long-term capital appreciation.
GOVERNMENT BOND FUND
Investment Objective: As high a level of income as is consistent with the
preservation of capital by investing in a diversified portfolio of
securities issued or backed by the U.S. Government, its agencies or
instrumentalities.
MONEY MARKET FUND
Investment Objective: As high a level of current income as is considered
consistent with the preservation of capital and maintenance of liquidity.
TOTAL RETURN FUND
Investment Objective: To obtain a reasonable, long-term total return on
invested capital.
NEUBERGER BERMAN ADVISERS MANAGEMENT
Neuberger Berman Advisers Management Trust is an open-end diversified management
investment company established as a Massachusetts business trust on December 14,
1983. Shares of the Trust are offered in connection with certain variable
annuity contracts and variable life insurance policies issued through life
insurance company separate accounts and are also offered directly to qualified
pension and retirement plans outside of the separate account context. The
investment adviser is Neuberger Berman Management Incorporated.
AMT BALANCED PORTFOLIO
Investment Objective: To provide long-term capital growth and reasonable
current income without undue risk to principal. The Balanced Portfolio will
seek to achieve its objective through investment of a portion of its assets
in common stocks and a portion of its assets in debt securities. The
Investment Adviser anticipates that the Balanced Portfolio's investments
will normally be managed so that approximately 60% of the Portfolio's total
assets will be invested in common stocks and the remaining assets will be
invested in debt securities. However, depending on the Investment Adviser's
views regarding current market trends, the common stock portion of the
Portfolio's investments may be adjusted downward to as low as 50% or upward
to as high as 70%. At least 25% of the Portfolio's assets will be invested
in fixed income senior securities.
40
<PAGE> 44
APPENDIX B: ILLUSTRATION OF SURRENDER CHARGES
EXAMPLE 1: A female non-tobacco, age 45, purchases a policy with a scheduled
premium of $2,000 yielding a specified amount of $50,599. She now wishes to
surrender the policy during the first policy year. By using the initial
surrender charge table reproduced below (also see "Surrender Charges"), the
total surrender charge per thousand multiplied by the specified amount expressed
in thousands equals the total surrender charge of $514.09 ($10.160 x 50.599 =
$514.09).
EXAMPLE 2: A male non-tobacco, age 35, purchases a policy with a scheduled
premium of $2,000 yielding a specified amount of $68,165. He now wants to
surrender the policy in the sixth policy year. The total initial surrender value
is calculated using the method illustrated above. (Specified amount in thousands
is $68.165 x 7.260 = $494.88 total first year surrender charge.) Because the
fifth policy year has been completed, the total initial surrender charge is
reduced by multiplying it by the applicable percentage factor from the
"Reductions to Surrender Charges" table below (also see "Reductions to Surrender
Charges"). In this case, $494.88 x 85% = $420.65, which is the amount Nationwide
deducts as a total surrender charge.
Initial surrender charge per $1,000 of initial specified amount for policies
which are issued on a standard basis.
<TABLE>
<CAPTION>
- ------------------------ --------------------- --------------------- ---------------------- ---------------------
ISSUE MALE FEMALE MALE FEMALE
AGE NON-TOBACCO NON-TOBACCO STANDARD STANDARD
- ------------------------ --------------------- --------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
25 $5.878 $5.537 $6.680 $5.945
- ------------------------ --------------------- --------------------- ---------------------- ---------------------
35 7.260 6.712 8.559 7.373
- ------------------------ --------------------- --------------------- ---------------------- ---------------------
45 11.159 10.160 13.244 11.151
- ------------------------ --------------------- --------------------- ---------------------- ---------------------
55 15.275 13.375 18.373 14.686
- ------------------------ --------------------- --------------------- ---------------------- ---------------------
65 23.821 20.553 27.943 22.165
- ------------------------ --------------------- --------------------- ---------------------- ---------------------
</TABLE>
Reductions to surrender charges.
<TABLE>
<CAPTION>
- ----------------------------- --------------------------- --------------------------- ---------------------------
SURRENDER CHARGE SURRENDER CHARGE
COMPLETED AS A % OF INITIAL COMPLETED AS A % OF INITIAL
POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES
- ----------------------------- --------------------------- --------------------------- ---------------------------
<S> <C> <C> <C>
0 100% 5 85%
- ----------------------------- --------------------------- --------------------------- ---------------------------
1 100% 6 80%
- ----------------------------- --------------------------- --------------------------- ---------------------------
2 100% 7 75%
- ----------------------------- --------------------------- --------------------------- ---------------------------
3 95% 8 50%
- ----------------------------- --------------------------- --------------------------- ---------------------------
4 90% 9+ 0%
- ----------------------------- --------------------------- --------------------------- ---------------------------
</TABLE>
41
<PAGE> 45
The current surrender charges are the same for all states. However, in
Pennsylvania the guaranteed maximum surrender charges are 8% higher than those
shown. In addition, the guaranteed maximum surrender charge in subsequent years
in Pennsylvania are reduced in the following manner:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
SURRENDER CHARGE SURRENDER CHARGE SURRENDER CHARGE
COMPLETED AS A % OF INITIAL COMPLETED AS A % OF INITIAL COMPLETED AS A % OF INITIAL
POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES POLICY YEARS SURRENDER CHARGES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0 100% 5 83% 10 46%
- ----------------------------------------------------------------------------------------------------------------------
1 98% 6 75% 11 37%
- ----------------------------------------------------------------------------------------------------------------------
2 95% 7 70% 12 28%
- ----------------------------------------------------------------------------------------------------------------------
3 92% 8 65% 13 14%
- ----------------------------------------------------------------------------------------------------------------------
4 88% 9 55% 14+ 0%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The illustrations of current values are the same for Pennsylvania. However, the
guaranteed maximum surrender charges are slightly higher in Pennsylvania. If
this policy is issued in Pennsylvania, please contact Nationwide's home office
for an illustration.
Nationwide has no plans to change the current surrender charges.
42
<PAGE> 46
APPENDIX C: ILLUSTRATIONS OF CASH VALUES, CASH SURRENDER VALUES,
AND DEATH BENEFITS
The illustrations in this prospectus have been prepared to help show how values
under the policies change with investment performance. The illustrations
illustrate how cash values, cash surrender values and death benefits under a
policy would vary over time if the hypothetical gross investment rates of return
were a uniform annual effective rate of either 0%, 6% or 12%. If the
hypothetical gross investment rate of return averages 0%, 6% or 12% over a
period of years, but fluctuates above or below those averages for individual
years, the cash values, cash surrender values and death benefits may be
different. For hypothetical returns of 0% and 6%, the illustrations also
illustrate when the policies would go into default, at which time additional
premium payments would be required to continue the policy in force. The
illustrations also assume there is no policy debt, no additional premium
payments are made, no cash values are allocated to the fixed account, and their
are no changes in the specified amount or death benefit option.
The amounts shown for the cash value, cash surrender value and death benefit as
of each policy anniversary reflect the fact that the net investment return on
the assets held in the sub-accounts is lower than the gross return. This is due
to the daily charges made against the assets of the sub-accounts for assuming
mortality and expense risks. The mortality and expense risk charges are
equivalent to an annual effective rate of .80% of the daily net assets of the
variable account. In addition, the net investment returns also reflect the
deduction of fund investment advisory fees and other expenses which are
equivalent to an annual effective rate of 0.75% (after expense reimbursement) of
the daily net assets of the variable account. Some underlying mutual funds are
subject to expense reimbursements and fee waivers. Absent expense reimbursements
and fee waivers, the annual effective rate would have been 0.75%. Nationwide
anticipates that the expense reimbursement and fee waiver arrangements will
continue past the current year. Should there be an increase or decrease in the
expense reimbursements and fee waivers of these underlying mutual funds, such
change will be reflected in the net asset value of the corresponding underlying
mutual fund.
Considering current charges for mortality and expense risks and fund expenses,
gross annual rates of return of 0%, 6% and 12% correspond to net investment
experience at constant annual rates of -1.50%, 4.50% and 10.50%.
The illustrations also reflect the fact that Nationwide makes monthly charges
for providing insurance protection. Current values reflect current cost of
insurance charges and guaranteed values reflect the maximum cost of insurance
charges guaranteed in the policy. The values shown are for policies which are
issued as standard (including non-tobacco). Policies issued on a substandard
basis would result in lower cash values and death benefits than those
illustrated.
In addition, the illustrations reflect the fact that Nationwide deducts a
monthly administrative charge at the beginning of each policy month. This
monthly administrative expense charge is $5 and is guaranteed not to exceed
$7.50. Current values reflect a current monthly administrative expense charge of
$5 and guaranteed values reflect the $7.50 maximum monthly administrative charge
under the policy. The illustrations also reflect the fact that no charges for
federal or state income taxes are currently made against the variable account.
If such a charge is made in the future, it will require a higher gross
investment return than illustrated in order to produce the net after-tax returns
shown in the illustrations.
Upon request, Nationwide will furnish a comparable illustration based on the
proposed insured's age, sex, smoking classification, rating classification and
premium payment requested.
43
<PAGE> 47
DEATH BENEFIT OPTION 1
$2,000 ANNUAL PREMIUM: $43,165 SPECIFIED AMOUNT
MALE: NON-TOBACCO: SIMPLIFIED ISSUE: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,000 2,100 1,671 1,189 43,165 1,776 1,294 43,165 1,882 1,400 43,165
2 2,000 4,305 3,314 2,832 43,165 3,629 3,147 43,165 3,956 3,475 43,165
3 2,000 6,620 4,930 4,448 43,165 5,561 5,080 43,165 6,244 5,763 43,165
4 2,000 9,051 6,520 6,062 43,165 7,578 7,121 43,165 8,769 8,312 43,165
5 2,000 11,604 8,081 7,647 43,165 9,682 9,248 43,165 11,555 11,122 43,165
6 0 12,184 7,755 7,346 43,165 9,906 9,497 43,165 12,549 12,140 43,165
7 0 12,793 7,421 7,036 43,165 10,130 9,745 43,165 13,639 13,254 43,165
8 0 13,433 7,077 6,716 43,165 10,352 9,991 43,165 14,837 14,475 43,165
9 0 14,105 6,724 6,483 43,165 10,573 10,332 43,165 16,153 15,913 43,165
10 0 14,810 6,357 6,357 43,165 10,790 10,790 43,165 17,601 17,601 43,165
15 0 18,901 4,293 4,293 43,165 11,788 11,788 43,165 27,419 27,419 43,165
20 0 24,124 1,573 1,573 43,165 12,424 12,424 43,165 43,700 43,700 53,315
25 0 30,788 (*) (*) (*) 12,121 12,121 43,165 69,987 69,987 81,185
30 0 39,295 (*) (*) (*) 9,520 9,520 43,165 112,321 112,321 120,183
35 0 50,151 (*) (*) (*) 1,656 1,656 43,165 181,129 181,129 190,185
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
44
<PAGE> 48
DEATH BENEFIT OPTION 1
$2,000 ANNUAL PREMIUM: $43,165 SPECIFIED AMOUNT
MALE: NON-TOBACCO: SIMPLIFIED ISSUE: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,000 2,100 1,578 1,096 43,165 1,680 1,199 43,165 1,783 1,302 43,165
2 2,000 4,305 3,125 2,643 43,165 3,429 2,947 43,165 3,745 3,263 43,165
3 2,000 6,620 4,642 4,160 43,165 5,248 4,766 43,165 5,904 5,422 43,165
4 2,000 9,051 6,128 5,671 43,165 7,141 6,684 43,165 8,282 7,825 43,165
5 2,000 11,604 7,584 7,151 43,165 9,114 8,680 43,165 10,906 10,472 43,165
6 0 12,184 7,145 6,735 43,165 9,192 8,783 43,165 11,713 11,304 43,165
7 0 12,793 6,687 6,302 43,165 9,253 8,868 43,165 12,590 12,204 43,165
8 0 13,433 6,207 5,846 43,165 9,293 8,931 43,165 13,542 13,180 43,165
9 0 14,105 5,700 5,459 43,165 9,306 9,065 43,165 14,575 14,334 43,165
10 0 14,810 5,162 5,162 43,165 9,288 9,288 43,165 15,698 15,698 43,165
15 0 18,901 1,838 1,838 43,165 8,541 8,541 43,165 23,071 23,071 43,165
20 0 24,124 (*) (*) (*) 5,812 5,812 43,165 35,129 35,129 43,165
25 0 30,788 (*) (*) (*) (*) (*) (*) 55,050 55,050 63,858
30 0 39,295 (*) (*) (*) (*) (*) (*) 86,609 86,609 92,671
35 0 50,151 (*) (*) (*) (*) (*) (*) 137,483 137,483 144,357
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
45
<PAGE> 49
DEATH BENEFIT OPTION 2
$2,000 ANNUAL PREMIUM: $40,605 SPECIFIED AMOUNT
MALE: NON-TOBACCO: SIMPLIFIED ISSUE: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,000 2,100 1,673 1,220 42,278 1,778 1,325 42,384 1,884 1,431 42,489
2 2,000 4,305 3,314 2,861 43,919 3,628 3,175 44,233 3,954 3,501 44,560
3 2,000 6,620 4,921 4,468 45,526 5,550 5,097 46,155 6,230 5,777 46,835
4 2,000 9,051 6,496 6,066 47,102 7,548 7,118 48,154 8,731 8,301 49,337
5 2,000 11,604 8,036 7,628 48,641 9,623 9,215 50,228 11,478 11,071 52,084
6 2,000 14,284 9,541 9,156 50,146 11,777 11,392 52,382 14,497 14,112 55,102
7 2,000 17,098 11,010 10,647 51,615 14,012 13,650 54,617 17,813 17,451 58,419
8 2,000 20,053 12,442 12,102 53,047 16,331 15,991 56,936 21,457 21,117 62,062
9 2,000 23,156 13,838 13,612 54,444 18,737 18,511 59,343 25,461 25,234 66,066
10 2,000 26,414 15,195 15,195 55,801 21,231 21,231 61,836 29,859 29,859 70,465
15 2,000 45,315 21,582 21,582 62,187 35,358 35,358 75,964 59,598 59,598 100,203
20 2,000 69,439 26,779 26,779 67,385 52,067 52,067 92,672 107,276 107,276 147,882
25 2,000 100,227 30,327 30,327 70,932 71,359 71,359 111,964 183,588 183,588 224,194
30 2,000 139,522 31,312 31,312 71,917 92,666 92,666 133,272 305,356 305,356 345,961
35 2,000 189,673 28,568 28,568 69,173 114,920 114,920 155,526 499,671 499,671 540,277
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
46
<PAGE> 50
DEATH BENEFIT OPTION 2
$2,000 ANNUAL PREMIUM: $40,605 SPECIFIED AMOUNT
MALE: NON-TOBACCO: SIMPLIFIED ISSUE: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 2,000 2,100 1,582 1,129 42,187 1,684 1,231 42,289 1,787 1,334 42,392
2 2,000 4,305 3,125 2,672 43,731 3,428 2,975 44,033 3,743 3,289 44,348
3 2,000 6,620 4,630 4,177 45,235 5,232 4,779 45,837 5,884 5,431 46,489
4 2,000 9,051 6,095 5,665 46,701 7,099 6,668 47,704 8,228 7,798 48,833
5 2,000 11,604 7,520 7,112 48,125 9,028 8,620 49,633 10,794 10,386 51,400
6 2,000 14,284 8,902 8,516 49,507 11,021 10,636 51,626 13,603 13,218 54,208
7 2,000 17,098 10,238 9,876 50,843 13,076 12,714 53,681 16,676 16,313 57,281
8 2,000 20,053 11,526 11,187 52,132 15,193 14,853 55,799 20,036 19,697 60,642
9 2,000 23,156 12,763 12,536 53,368 17,370 17,144 57,975 23,709 23,483 64,315
10 2,000 26,414 13,944 13,944 54,550 19,606 19,606 60,211 27,723 27,723 68,328
15 2,000 45,315 18,921 18,921 59,526 31,610 31,610 72,215 54,111 54,111 94,716
20 2,000 69,439 21,873 21,873 62,479 44,610 44,610 85,215 95,085 95,085 135,690
25 2,000 100,227 21,755 21,755 62,360 57,469 57,469 98,075 158,326 158,326 198,931
30 2,000 139,522 16,799 16,799 57,404 67,891 67,891 108,497 255,411 255,411 296,016
35 2,000 189,673 4,017 4,017 44,622 71,414 71,414 112,019 403,362 403,362 443,967
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
47
<PAGE> 51
DEATH BENEFIT OPTION 1
$5,000 ANNUAL PREMIUM: $114,019 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,000 5,250 4,298 3,025 114,019 4,565 3,293 114,019 4,833 3,561 114,019
2 5,000 10,763 8,526 7,254 114,019 9,328 8,055 114,019 10,162 8,889 114,019
3 5,000 16,551 12,684 11,412 114,019 14,295 13,023 114,019 16,037 14,765 114,019
4 5,000 22,628 16,775 15,566 114,019 19,480 18,272 114,019 22,522 21,313 114,019
5 5,000 29,010 20,793 19,648 114,019 24,888 23,742 114,019 29,675 28,530 114,019
6 0 30,460 20,097 19,016 114,019 25,607 24,525 114,019 32,370 31,288 114,019
7 0 31,983 19,382 18,364 114,019 26,334 25,316 114,019 35,329 34,311 114,019
8 0 33,582 18,644 17,690 114,019 27,068 26,114 114,019 38,581 37,626 114,019
9 0 35,261 17,886 17,250 114,019 27,811 27,175 114,019 42,160 41,523 114,019
10 0 37,024 17,098 17,098 114,019 28,555 28,555 114,019 46,097 46,097 114,019
15 0 47,254 12,658 12,658 114,019 32,294 32,294 114,019 72,813 72,813 114,019
20 0 60,309 6,803 6,803 114,019 35,667 35,667 114,019 117,021 117,021 142,765
25 0 76,971 (*) (*) (*) 37,655 37,655 114,019 188,506 188,506 218,667
30 0 98,237 (*) (*) (*) 35,905 35,905 114,019 303,905 303,905 325,179
35 0 125,378 (*) (*) (*) 25,759 25,759 114,019 491,641 491,641 516,223
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
48
<PAGE> 52
DEATH BENEFIT OPTION 1
$5,000 ANNUAL PREMIUM: $114,019 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,000 5,250 4,165 2,893 114,019 4,429 3,156 114,019 4,692 3,420 114,019
2 5,000 10,763 8,254 6,981 114,019 9,039 7,767 114,019 9,857 8,584 114,019
3 5,000 16,551 12,266 10,994 114,019 13,841 12,569 114,019 15,545 14,273 114,019
4 5,000 22,628 16,203 14,994 114,019 18,844 17,635 114,019 21,814 20,605 114,019
5 5,000 29,010 20,065 18,920 114,019 24,057 22,912 114,019 28,728 27,583 114,019
6 0 30,460 19,197 18,115 114,019 24,557 23,476 114,019 31,147 30,065 114,019
7 0 31,983 18,292 17,274 114,019 25,039 24,022 114,019 33,788 32,770 114,019
8 0 33,582 17,344 16,390 114,019 25,496 24,542 114,019 36,673 35,719 114,019
9 0 35,261 16,344 15,708 114,019 25,920 25,284 114,019 39,826 39,190 114,019
10 0 37,024 15,285 15,285 114,019 26,302 26,302 114,019 43,276 43,276 114,019
15 0 47,254 8,778 8,778 114,019 27,287 27,287 114,019 66,314 66,314 114,019
20 0 60,309 (*) (*) (*) 25,345 25,345 114,019 104,483 104,483 127,470
25 0 76,971 (*) (*) (*) 16,770 16,770 114,019 166,137 166,137 192,719
30 0 98,237 (*) (*) (*) (*) (*) (*) 264,541 264,541 283,058
35 0 125,378 (*) (*) (*) (*) (*) (*) 423,713 423,713 444,899
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
49
<PAGE> 53
DEATH BENEFIT OPTION 2
$5,000 ANNUAL PREMIUM: $103,521 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 45
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,000 5,250 4,313 3,157 107,834 4,580 3,425 108,101 4,848 3,693 108,369
2 5,000 10,763 8,545 7,390 112,066 9,347 8,192 112,868 10,180 9,025 113,702
3 5,000 16,551 12,696 11,541 116,217 14,305 13,149 117,826 16,043 14,888 119,565
4 5,000 22,628 16,767 15,669 120,288 19,463 18,366 122,984 22,493 21,396 126,015
5 5,000 29,010 20,750 19,711 124,272 24,822 23,782 128,343 29,582 28,542 133,103
6 5,000 35,710 24,650 23,668 128,171 30,393 29,411 133,914 37,376 36,394 140,898
7 5,000 42,746 28,462 27,538 131,984 36,180 35,256 139,701 45,945 45,021 149,467
8 5,000 50,133 32,186 31,319 135,707 42,190 41,323 145,711 55,366 54,500 158,887
9 5,000 57,889 35,822 35,245 139,344 48,433 47,856 151,954 65,727 65,150 169,249
10 5,000 66,034 39,365 39,365 142,886 54,912 54,912 158,433 77,117 77,117 180,638
15 5,000 113,287 56,148 56,148 159,669 91,733 91,733 195,254 154,255 154,255 257,776
20 5,000 173,596 70,150 70,150 173,671 135,657 135,657 239,179 278,346 278,346 381,867
25 5,000 250,567 80,391 80,391 183,912 187,059 187,059 290,580 477,700 477,700 581,221
30 5,000 348,804 84,916 84,916 188,437 245,176 245,176 348,697 797,182 797,182 900,704
35 5,000 474,182 81,221 81,221 184,742 308,270 308,270 411,791 1,309,263 1,309,263 1,412,784
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
50
<PAGE> 54
DEATH BENEFIT OPTION 2
$5,000 ANNUAL PREMIUM: $103,521 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 45
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 5,000 5,250 4,186 3,031 107,707 4,450 3,294 107,971 4,713 3,558 108,235
2 5,000 10,763 8,281 7,126 111,803 9,067 7,911 112,588 9,884 8,728 113,405
3 5,000 16,551 12,285 11,130 115,806 13,856 12,701 117,377 15,555 14,400 119,077
4 5,000 22,628 16,195 15,098 119,716 18,823 17,725 122,344 21,778 20,680 125,299
5 5,000 29,010 20,010 18,970 123,531 23,971 22,931 127,492 28,603 27,564 132,125
6 5,000 35,710 23,726 22,744 127,247 29,303 28,321 132,824 36,090 35,108 139,611
7 5,000 42,746 27,339 26,415 130,860 34,821 33,897 138,343 44,299 43,375 147,820
8 5,000 50,133 30,842 29,975 134,363 40,527 39,660 144,048 53,298 52,431 156,819
9 5,000 57,889 34,229 33,651 137,750 46,418 45,841 149,939 63,158 62,581 166,680
10 5,000 66,034 37,495 37,495 141,016 52,497 52,497 156,018 73,963 73,963 177,484
15 5,000 113,287 51,792 51,792 155,313 85,710 85,710 189,231 145,608 145,608 249,129
20 5,000 173,596 61,807 61,807 165,328 123,228 123,228 226,749 258,515 258,515 362,037
25 5,000 250,567 65,529 65,529 169,050 163,419 163,419 266,940 435,826 435,826 539,347
30 5,000 348,804 59,582 59,582 163,103 202,566 202,566 306,087 713,500 713,500 817,021
35 5,000 474,182 38,307 38,307 141,828 233,039 233,039 336,560 1,146,772 1,146,772 1,250,293
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
51
<PAGE> 55
DEATH BENEFIT OPTION 1
$20,000 ANNUAL PREMIUM: $301,625 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 55
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 17,246 12,639 301,625 18,318 13,711 301,625 19,392 14,784 301,625
2 20,000 43,050 34,218 29,611 301,625 37,437 32,830 301,625 40,785 36,178 301,625
3 20,000 66,203 50,937 46,329 301,625 57,415 52,807 301,625 64,419 59,812 301,625
4 20,000 90,513 67,401 63,024 301,625 78,293 73,916 301,625 90,540 86,163 301,625
5 20,000 116,038 83,596 79,449 301,625 100,104 95,958 301,625 119,413 115,266 301,625
6 0 121,840 80,906 76,989 301,625 103,165 99,249 301,625 130,500 126,583 301,625
7 0 127,932 78,117 74,431 301,625 106,271 102,585 301,625 142,715 139,029 301,625
8 0 134,329 75,201 71,746 301,625 109,404 105,948 301,625 156,179 152,723 301,625
9 0 141,045 72,145 69,841 301,625 112,561 110,257 301,625 171,043 168,739 301,625
10 0 148,097 68,954 68,954 301,625 115,755 115,755 301,625 187,493 187,493 301,625
15 0 189,014 49,393 49,393 301,625 131,395 131,395 301,625 300,823 300,823 348,954
20 0 241,235 19,138 19,138 301,625 144,329 144,329 301,625 486,304 486,304 520,345
25 0 307,884 (*) (*) (*) 150,363 150,363 301,625 788,319 788,319 827,735
30 0 392,947 (*) (*) (*) 140,942 140,942 301,625 1,271,902 1,271,902 1,335,497
35 0 501,511 (*) (*) (*) 91,006 91,006 301,625 2,036,854 2,036,854 2,138,697
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
52
<PAGE> 56
DEATH BENEFIT OPTION 1
$20,000 ANNUAL PREMIUM: $301,625 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 55
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 16,107 11,499 301,625 17,145 12,537 301,625 18,184 13,577 301,625
2 20,000 43,050 31,880 27,273 301,625 34,965 30,358 301,625 38,177 33,570 301,625
3 20,000 66,203 47,335 42,728 301,625 53,516 48,908 301,625 60,208 55,601 301,625
4 20,000 90,513 62,478 58,101 301,625 72,847 68,470 301,625 84,527 80,150 301,625
5 20,000 116,038 77,313 73,166 301,625 93,015 88,869 301,625 111,425 107,279 301,625
6 0 121,840 73,076 69,159 301,625 94,193 90,277 301,625 120,222 116,306 301,625
7 0 127,932 68,523 64,837 301,625 95,142 91,456 301,625 129,796 126,110 301,625
8 0 134,329 63,592 60,137 301,625 95,804 92,348 301,625 140,230 136,774 301,625
9 0 141,045 58,215 55,911 301,625 96,119 93,815 301,625 151,628 149,325 301,625
10 0 148,097 52,319 52,319 301,625 96,021 96,021 301,625 164,123 164,123 301,625
15 0 189,014 12,046 12,046 301,625 86,589 86,589 301,625 250,337 250,337 301,625
20 0 241,235 (*) (*) (*) 47,333 47,333 301,625 398,663 398,663 426,569
25 0 307,884 (*) (*) (*) (*) (*) (*) 638,828 638,828 670,769
30 0 392,947 (*) (*) (*) (*) (*) (*) 1,011,794 1,011,794 1,062,384
35 0 501,511 (*) (*) (*) (*) (*) (*) 1,573,016 1,573,016 1,651,667
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
53
<PAGE> 57
DEATH BENEFIT OPTION 2
$20,000 ANNUAL PREMIUM: $271,462 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 55
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 17,298 13,151 288,760 18,370 14,223 289,832 19,442 15,296 290,904
2 20,000 43,050 34,246 30,099 305,708 37,457 33,310 308,919 40,796 36,650 312,258
3 20,000 66,203 50,855 46,709 322,317 57,299 53,153 328,761 64,265 60,118 335,727
4 20,000 90,513 67,116 63,176 338,578 77,914 73,975 349,376 90,050 86,111 361,512
5 20,000 116,038 82,994 79,262 354,456 99,296 95,564 370,758 118,353 114,621 389,815
6 20,000 142,840 98,503 94,979 369,965 121,487 117,963 392,949 149,439 145,914 420,901
7 20,000 170,982 113,634 110,317 385,096 144,508 141,191 415,970 183,581 180,264 455,043
8 20,000 200,531 128,361 125,251 399,823 168,362 165,252 439,824 221,062 217,952 492,524
9 20,000 231,558 142,677 140,604 414,139 193,075 191,002 464,537 262,215 260,141 533,677
10 20,000 264,136 156,599 156,599 428,061 218,694 218,694 490,156 307,428 307,428 578,890
15 20,000 453,150 220,839 220,839 492,301 362,421 362,421 633,883 611,568 611,568 883,030
20 20,000 694,385 269,646 269,646 541,108 528,498 528,498 799,960 1,094,741 1,094,741 1,366,203
25 20,000 1,002,269 297,796 297,796 569,258 715,032 715,032 986,494 1,862,319 1,862,319 2,133,781
30 20,000 1,395,216 298,297 298,297 569,759 917,183 917,183 1,188,645 3,083,762 3,083,762 3,355,224
35 20,000 1,896,726 258,982 258,982 530,444 1,122,561 1,122,561 1,394,023 5,029,049 5,029,049 5,300,511
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
54
<PAGE> 58
DEATH BENEFIT OPTION 2
$20,000 ANNUAL PREMIUM: $271,462 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 55
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 16,210 12,063 287,672 17,247 13,100 288,709 18,285 14,139 289,747
2 20,000 43,050 31,952 27,805 303,414 35,022 30,876 306,484 38,219 34,072 309,681
3 20,000 66,203 47,218 43,071 318,680 53,335 49,189 324,797 59,956 55,809 331,418
4 20,000 90,513 61,989 58,049 333,451 72,181 68,242 343,643 83,654 79,715 355,116
5 20,000 116,038 76,238 72,506 347,700 91,550 87,818 363,012 109,481 105,749 380,943
6 20,000 142,840 89,938 86,414 361,400 111,428 107,903 382,890 137,619 134,095 409,081
7 20,000 170,982 103,059 99,742 374,521 131,797 128,480 403,259 168,266 164,949 439,728
8 20,000 200,531 115,551 112,441 387,013 152,620 149,510 424,082 201,620 198,510 473,082
9 20,000 231,558 127,364 125,291 398,827 173,857 171,783 445,319 237,898 235,825 509,360
10 20,000 264,136 138,455 138,455 409,917 195,468 195,468 466,930 277,344 277,344 548,806
15 20,000 453,150 181,584 181,584 453,046 307,734 307,734 579,196 532,612 532,612 804,074
20 20,000 694,385 196,954 196,954 468,416 418,925 418,925 690,387 917,807 917,807 1,189,269
25 20,000 1,002,269 169,899 169,899 441,361 509,435 509,435 780,897 1,493,080 1,493,080 1,764,542
30 20,000 1,395,216 81,828 81,828 353,290 549,586 549,586 821,048 2,351,116 2,351,116 2,622,578
35 20,000 1,896,726 (*) (*) (*) 486,060 486,060 757,522 3,623,823 3,623,823 3,895,285
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
55
<PAGE> 59
DEATH BENEFIT OPTION 1
$20,000 ANNUAL PREMIUM: $205,135 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 65
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 16,645 11,758 205,135 17,701 12,814 205,135 18,758 13,871 205,135
2 20,000 43,050 33,017 28,131 205,135 36,177 31,290 205,135 39,465 34,578 205,135
3 20,000 66,203 49,143 44,256 205,135 55,501 50,614 205,135 62,382 57,496 205,135
4 20,000 90,513 65,029 60,387 205,135 75,738 71,096 205,135 87,796 83,154 205,135
5 20,000 116,038 80,710 76,312 205,135 96,991 92,593 205,135 116,069 111,671 205,135
6 0 121,840 77,395 73,241 205,135 99,418 95,265 205,135 126,538 122,385 205,135
7 0 127,932 73,834 69,925 205,135 101,795 97,885 205,135 138,136 134,227 205,135
8 0 134,329 70,003 66,338 205,135 104,116 100,452 205,135 151,043 147,378 205,135
9 0 141,045 65,862 63,418 205,135 106,373 103,930 205,135 165,468 163,025 205,135
10 0 148,097 61,348 61,348 205,135 108,539 108,539 205,135 181,661 181,661 205,135
15 0 189,014 30,920 30,920 205,135 117,386 117,386 205,135 293,969 293,969 308,667
20 0 241,235 (*) (*) (*) 120,208 120,208 205,135 474,058 474,058 497,761
25 0 307,884 (*) (*) (*) 107,590 107,590 205,135 758,927 758,927 796,873
30 0 392,947 (*) (*) (*) 47,357 47,357 205,135 1,218,524 1,218,524 1,230,709
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
56
<PAGE> 60
DEATH BENEFIT OPTION 1
$20,000 ANNUAL PREMIUM: $205,135 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 65
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 14,230 9,343 205,135 15,214 10,328 205,135 16,202 11,315 205,135
2 20,000 43,050 28,144 23,257 205,135 31,031 26,145 205,135 34,044 29,157 205,135
3 20,000 66,203 41,777 36,891 205,135 47,543 42,656 205,135 53,805 48,918 205,135
4 20,000 90,513 55,164 50,522 205,135 64,856 60,214 205,135 75,819 71,177 205,135
5 20,000 116,038 68,334 63,937 205,135 83,094 78,697 205,135 100,492 96,094 205,135
6 0 121,840 62,097 57,943 205,135 82,032 77,879 205,135 106,803 102,650 205,135
7 0 127,932 55,116 51,207 205,135 80,353 76,444 205,135 113,610 109,701 205,135
8 0 134,329 47,214 43,549 205,135 77,903 74,238 205,135 120,984 117,319 205,135
9 0 141,045 38,178 35,734 205,135 74,497 72,054 205,135 129,034 126,590 205,135
10 0 148,097 27,769 27,769 205,135 69,925 69,925 205,135 137,916 137,916 205,135
15 0 189,014 (*) (*) (*) 18,507 18,507 205,135 205,673 205,673 215,956
20 0 241,235 (*) (*) (*) (*) (*) (*) 325,362 325,362 341,630
25 0 307,884 (*) (*) (*) (*) (*) (*) 505,449 505,449 530,722
30 0 392,947 (*) (*) (*) (*) (*) (*) 791,368 791,368 799,282
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
57
<PAGE> 61
DEATH BENEFIT OPTION 2
$20,000 ANNUAL PREMIUM: $194,739 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 65
CURRENT VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 16,573 11,934 211,311 17,621 12,983 212,360 18,671 14,032 213,410
2 20,000 43,050 32,689 28,050 227,427 35,805 31,166 230,544 39,048 34,409 233,787
3 20,000 66,203 48,339 43,700 243,077 54,560 49,922 249,299 61,291 56,652 256,030
4 20,000 90,513 63,488 59,081 258,226 73,868 69,461 268,607 85,547 81,141 280,286
5 20,000 116,038 78,126 73,951 272,865 93,736 89,561 288,475 112,008 107,833 306,747
6 20,000 142,840 92,247 88,304 286,985 114,173 110,230 308,912 140,884 136,941 335,623
7 20,000 170,982 105,798 102,087 300,537 135,144 131,433 329,883 172,364 168,652 367,102
8 20,000 200,531 118,773 115,294 313,512 156,656 153,177 351,395 206,698 203,219 401,436
9 20,000 231,558 131,149 128,829 325,887 178,700 176,381 373,439 244,149 241,830 438,888
10 20,000 264,136 142,874 142,874 337,613 201,240 201,240 395,978 284,977 284,977 479,716
15 20,000 453,150 192,576 192,576 387,315 322,885 322,885 517,624 554,333 554,333 749,071
20 20,000 694,385 220,318 220,318 415,057 452,791 452,791 647,530 970,524 970,524 1,165,262
25 20,000 1,002,269 217,526 217,526 412,265 581,357 581,357 776,096 1,613,629 1,613,629 1,808,368
30 20,000 1,395,216 173,599 173,599 368,338 693,275 693,275 888,014 2,610,356 2,610,356 2,805,095
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) CURRENT VALUES REFLECT CURRENT COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $5 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
58
<PAGE> 62
DEATH BENEFIT OPTION 2
$20,000 ANNUAL PREMIUM: $194,739 SPECIFIED AMOUNT
MALE: NON-TOBACCO: PREFERRED ISSUE: AGE 65
GUARANTEED VALUES
<TABLE>
<CAPTION>
0.00% HYPOTHETICAL 6.00% HYPOTHETICAL 12.00% HYPOTHETICAL
GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN GROSS INVESTMENT RETURN
ANNUAL NET NET NET NET NET NET
PREMIUMS PAID ACCUM SURR DEATH ACCUM SURR DEATH ACCUM SURR DEATH
YEAR AT 5% VALUE VALUE BENEFIT VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 20,000 21,000 14,089 9,450 208,828 15,058 10,419 209,797 16,030 11,391 210,768
2 20,000 43,050 27,502 22,863 222,240 30,300 25,661 225,039 33,219 28,580 227,957
3 20,000 66,203 40,213 35,574 234,951 45,698 41,060 240,437 51,650 47,012 246,389
4 20,000 90,513 52,188 47,781 246,926 61,213 56,807 255,952 71,405 66,999 266,144
5 20,000 116,038 63,376 59,201 258,115 76,787 72,612 271,526 92,556 88,381 287,294
6 20,000 142,840 73,708 69,765 268,447 92,338 88,395 287,077 115,158 111,215 309,897
7 20,000 170,982 83,097 79,386 277,835 107,761 104,050 302,500 139,256 135,545 333,995
8 20,000 200,531 91,429 87,949 286,167 122,921 119,442 317,659 164,871 161,392 359,609
9 20,000 231,558 98,595 96,275 293,333 137,676 135,356 332,414 192,025 189,705 386,763
10 20,000 264,136 104,503 104,503 299,242 151,896 151,896 346,635 220,762 220,762 415,500
15 20,000 453,150 113,030 113,030 307,768 211,043 211,043 405,782 391,195 391,195 585,933
20 20,000 694,385 75,773 75,773 270,511 232,666 232,666 427,405 610,524 610,524 805,263
25 20,000 1,002,269 (*) (*) (*) 178,177 178,177 372,915 875,543 875,543 1,070,282
30 20,000 1,395,216 (*) (*) (*) (*) (*) (*) 1,181,544 1,181,544 1,376,283
</TABLE>
(1) ASSUMES NO POLICY LOANS HAVE BEEN MADE.
(2) GUARANTEED VALUES REFLECT GUARANTEED COST OF INSURANCE CHARGES AND AN
ADMINISTRATIVE EXPENSE CHARGE OF $7.50 PER MONTH.
(3) NET INVESTMENT RETURNS ARE CALCULATED AS THE HYPOTHETICAL GROSS INVESTMENT
RETURN LESS ALL CHARGES AND DEDUCTIONS SHOWN IN THE PROSPECTUS APPENDIX.
(*) UNLESS ADDITIONAL PREMIUM IS PAID, THE POLICY WILL NOT STAY IN FORCE.
THE HYPOTHETICAL INVESTMENT RATES OF RETURN SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RATES OF RETURN. ACTUAL RATES OF RETURN MAY BE MORE OR
LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE
INVESTMENT ALLOCATIONS MADE BY AN OWNER, PREVAILING RATES AND RATES OF
INFLATION. THE DEATH BENEFIT AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM
THOSE SHOWN IF THE ACTUAL RATES OF RETURN AVERAGED 0%, 6% OR 12% OVER A PERIOD
OF YEARS BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR INDIVIDUAL POLICY
YEARS. NO REPRESENTATIONS CAN BE MADE BY NATIONWIDE OR THE TRUST THAT THESE
HYPOTHETICAL RATES OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER
ANY PERIOD OF TIME.
59
<PAGE> 63
<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 (comprised of the
sub-accounts listed in note 1(b)) (collectively, "the Account") as of December
31, 1999, and the related statements of operations and changes in contract
owners' equity for each of the years in the three year period then ended. These
financial statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Account as of December
31, 1999, and the results of its operations and its changes in contract owners'
equity for each of the years in the three year period then ended in conformity
with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 18, 2000
<PAGE> 2
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Advantage (ACVPAdv)
175 shares (cost $1,127) .............................................. $ 1,259
American Century VP - American Century VP Balanced (ACVPBal)
48,162 shares (cost $351,008) ......................................... 375,180
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
7,582 shares (cost $101,183) .......................................... 112,519
American Century VP - American Century VP Income & Growth (ACVPIncGr)
39,027 shares (cost $271,875) ......................................... 312,215
American Century VP - American Century VP International (ACVPInt)
411,083 shares (cost $3,388,794) ...................................... 5,138,541
American Century VP - American Century VP Value (ACVPValue)
301,635 shares (cost $2,038,832) ...................................... 1,794,729
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
2,971 shares (cost $109,924) .......................................... 116,063
Dreyfus Stock Index Fund (DryStkIx)
373,933 shares (cost $12,127,432) ..................................... 14,377,711
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
299,443 shares (cost $11,292,098) ..................................... 11,938,808
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
14,855 shares (cost $331,283) ......................................... 378,498
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
94,445 shares (cost $2,283,878) ....................................... 2,428,169
Fidelity VIP - Growth Portfolio (FidVIPGr)
33,903 shares (cost $1,594,701) ....................................... 1,862,269
Fidelity VIP - High Income Portfolio (FidVIPHI)
115,310 shares (cost $1,305,478) ...................................... 1,304,157
Fidelity VIP - Overseas Portfolio (FidVIPOv)
51,349 shares (cost $998,102) ......................................... 1,409,012
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
441,592 shares (cost $7,574,286) ...................................... 8,244,519
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
38,780 shares (cost $1,008,431) ....................................... 1,130,444
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
62,939 shares (cost $1,402,801) ....................................... 1,457,028
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
13,324 shares (cost $91,147) .......................................... 92,067
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
98,715 shares (cost $2,536,420) ....................................... 2,537,971
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Nationwide SAT - Government Bond Fund (NSATGvtBd)
450,774 shares (cost $5,072,682) ............................ 4,863,855
Nationwide SAT - Money Market Fund (NSATMyMkt)
2,004,894 shares (cost $2,004,894) .......................... 2,004,894
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
230,678 shares (cost $2,429,166) ............................ 2,242,194
Nationwide SAT - Small Company Fund (NSATSmCo)
69,766 shares (cost $1,175,390) ............................. 1,543,216
Nationwide SAT - Total Return Fund (NSATTotRe)
30,236 shares (cost $562,323) ............................... 568,732
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
840 shares (cost $13,119) ................................... 17,544
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
107,748 shares (cost $2,714,946) ............................ 4,015,778
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
675 shares (cost $10,476) ................................... 10,698
Neuberger & Berman AMT - Limited Maturity Bond (NBAMTLMat)
378,565 shares (cost $5,040,396) ............................ 5,012,199
Neuberger & Berman AMT - Partner's Portfolio (NBAMTPart)
213,303 shares (cost $4,093,519) ............................ 4,189,273
Oppenheimer VAF - Bond Fund (OppBdFd)
89,027 shares (cost $1,027,220) ............................. 1,025,587
Oppenheimer VAF - Global Securities Fund (OppGlSec)
37,549 shares (cost $942,600) ............................... 1,254,502
Oppenheimer VAF - Growth Fund (OppGro)
56,575 shares (cost $2,276,701) ............................. 2,819,702
Oppenheimer VAF - Multiple Stategies Fund (OppMult)
5 shares (cost $90) ......................................... 92
Strong Opportunity Fund II, Inc. (StOpp2)
187,909 shares (cost $4,127,659) ............................ 4,883,751
Strong VIF - Strong International Stock Fund II (StIntStk2)
56,088 shares (cost $706,400) ............................... 918,165
Van Eck WIT - Worldwide Bond Fund (VEWrldBd)
120 shares (cost $1,284) .................................... 1,285
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
32,699 shares (cost $384,238) ............................... 466,292
Van Kampen LIT -
Morgan Stanley Real Estate Securities Portfolio (VKMSRESec)
16,123 shares (cost $209,098) ............................... 199,440
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
43,530 shares (cost $618,114) ............................... 726,948
Warburg Pincus Trust - Small Company Growth Portfolio (WPSmCoGr)
135,864 shares (cost $2,061,671) ............................ 3,559,640
-----------
Total assets ............................................. 95,334,946
ACCOUNTS PAYABLE ..................................................... 16,443
-----------
CONTRACT OWNERS' EQUITY (NOTE 7) ..................................... $95,318,503
===========
</TABLE>
<PAGE> 4
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Total ACVPAdv
--------------------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
------------ ---------- ------- ----- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............. $ 1,543,056 646,514 8,040 259 9,771 5,992
Mortality and expense charges
(note 3) ...................... (467,727) (151,794) (795) (28) (71) (645)
------------ ---------- ------- ----- ------- -------
Net investment activity ....... 1,075,329 494,720 7,245 231 9,700 5,347
------------ ---------- ------- ----- ------- -------
Proceeds from mutual fund
shares sold ................... 60,541,280 35,415,399 33,699 517,544 1,525 377
Cost of mutual funds sold ........ (57,895,551) (35,903,585) (28,831) (387,125) (1,311) (315)
------------ ---------- ------- ----- ------- -------
Realized gain (loss)
on investments .............. 2,645,729 (488,186) 4,868 130,419 214 62
Change in unrealized gain (loss)
on investments ................ 7,719,292 3,222,056 29,307 (120,040) 27,703 22,147
------------ ---------- ------- ----- ------- -------
Net gain (loss) on investments 10,365,021 2,733,870 34,175 10,379 27,917 22,209
------------ ---------- ------- ----- ------- -------
Reinvested capital gains ......... 1,809,923 149,622 23,407 616 36,765 21,011
------------ ---------- ------- ----- ------- -------
Net change in contract
owners' equity resulting
from operations .......... 13,250,273 3,378,212 64,827 11,226 74,382 48,567
------------ ---------- ------- ----- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............... 38,247,054 47,374,274 14,070 194 1,158 2,047
Transfers between funds .......... -- -- -- -- -- --
Surrenders ....................... (2,523,443) (18,421) (23,075) (517,336) -- --
Death benefits (note 4) .......... -- (25,069) -- -- -- --
Policy loans (net of repayments)
(note 5) ...................... (2,095) (9,541) 13,620 -- -- --
Deductions for surrender charges
(note 2d) ..................... (1,788) -- (4,334) (7) -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............. (3,028,552) (1,853,909) (8,935) (262) (1,563) --
------------ ---------- ------- ----- ------- -------
Net equity transactions ..... 32,691,176 45,467,334 (8,654) (517,411) (405) 2,047
------------ ---------- ------- ----- ------- -------
Net change in contract owners' equity 45,941,449 48,845,546 56,173 (506,185) 73,977 50,614
Contract owners' equity
beginning of period .............. 49,377,054 531,508 475,335 507,448 433,471 382,857
------------ ---------- ------- ----- ------- -------
Contract owners' equity end of period $ 95,318,503 49,377,054 531,508 1,263 507,448 433,471
============ ========== ======= ===== ======= =======
ACVPBal
-------------------------------
1999 1998 1997
------- -------
<S> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............. 3,300 -- --
Mortality and expense charges
(note 3) ...................... (1,866) (923) --
------- -------
Net investment activity ....... 1,434 (923) --
------- -------
Proceeds from mutual fund
shares sold ................... 102,236 96,716 --
Cost of mutual funds sold ........ (100,010) (93,298) --
------- -------
Realized gain (loss)
on investments .............. 2,226 3,418 --
Change in unrealized gain (loss)
on investments ................ 8,524 15,647 --
------- -------
Net gain (loss) on investments 10,750 19,065 --
------- -------
Reinvested capital gains ......... 22,770 -- --
------- -------
Net change in contract
owners' equity resulting
from operations .......... 34,954 18,142 --
------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............... 220,936 267,848 --
Transfers between funds .......... (87,225) (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) ............. (12,365) (11,523) --
------- -------
Net equity transactions ..... 121,346 200,677 --
------- -------
Net change in contract owners' equity 156,300 218,819 --
Contract owners' equity
beginning of period .............. 218,819 -- --
------- -------
Contract owners' equity end of period 375,119 218,819 --
======= =======
</TABLE>
<PAGE> 5
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
ACVPCapAp ACVPIncGr ACVPInt
------------------------------- ---------------------- -------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
---------- ------- ------- -------- ------ ------ ---------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ................$ -- -- -- 2 -- -- -- -- --
Mortality and expense charges
(note 3) ......................... (117) (422) -- (1,162) -- -- (12,097) (134) --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
Net investment activity .......... (117) (422) -- (1,160) -- -- (12,097) (134) --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
Proceeds from mutual fund
shares sold ...................... 135,273 279,714 -- 32,615 -- -- 174,880 126,140 --
Cost of mutual funds sold ........... (125,379) (276,016) -- (30,090) -- -- (151,346) (131,696) --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
Realized gain (loss)
on investments ................. 9,894 3,698 -- 2,525 -- -- 23,534 (5,556) --
Change in unrealized gain (loss)
on investments ................... (3,922) 15,258 -- 40,340 -- -- 1,744,161 5,586 --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
Net gain (loss) on investments ... 5,972 18,956 -- 42,865 -- -- 1,767,695 30 --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
Reinvested capital gains ............ -- 130 -- -- -- -- -- -- --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
Net change in contract
owners' equity resulting
from operations ............. 5,855 18,664 -- 41,705 -- -- 1,755,598 (104) --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .................. 29,308 336,228 -- 260,281 -- -- 193,929 24,566 --
Transfers between funds ............. (46,988) (223,889) -- 16,645 -- -- 3,176,046 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) ................ (1,564) (5,109) -- (6,446) -- -- (43,651) (1,674) --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
Net equity transactions ........ (19,244) 107,230 -- 270,480 -- -- 3,326,324 57,035 --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
Net change in contract owners' equity.. (13,389) 125,894 -- 312,185 -- -- 5,081,922 56,931 --
Contract owners' equity
beginning of period ................. 125,894 -- -- -- -- -- 56,931 -- --
---------- ------- ------- -------- ------ ------ ---------- ------- -----
Contract owners' equity end of period..$ 112,505 125,894 -- 312,185 -- -- 5,138,853 56,931 --
========== ======= ======= ======== ====== ====== ========== ======= =====
</TABLE>
(Continued)
<PAGE> 6
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
ACVPValue DrySRGro DryStkIx
--------------------------- ------------------------ -------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
----------- ------- ---- ------- ------- ----- ---------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............. $ 1,140 16 -- 14 484 -- 119,373 50,776 --
Mortality and expense charges
(note 3) ...................... (6,307) (294) -- (2,333) (754) -- (60,870) (18,196) --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
Net investment activity ....... (5,167) (278) -- (2,319) (270) -- 58,503 32,580 --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
Proceeds from mutual fund
shares sold ................... 248,387 6,438 -- 964,522 6,526 -- 2,420,771 435,823 --
Cost of mutual funds sold ........ (269,793) (7,114) -- (855,935) (6,519) -- (2,055,892) (441,804) --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
Realized gain (loss)
on investments .............. (21,406) (676) -- 108,587 7 -- 364,879 (5,981) --
Change in unrealized gain (loss)
on investments ................ (245,409) 1,306 -- (30,786) 36,926 -- 1,474,439 775,840 --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
Net gain (loss) on investments (266,815) 630 -- 77,801 36,933 -- 1,839,318 769,859 --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
Reinvested capital gains ......... 10,801 184 -- 3,864 10,865 -- 107,483 9,613 --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
Net change in contract
owners' equity resulting
from operations .......... (261,181) 536 -- 79,346 47,528 -- 2,005,304 812,052 --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............... 47,204 114,633 -- 294,591 179,953 -- 3,585,926 2,697,202 --
Transfers between funds .......... 1,931,098 (6,576) -- (548,749) 98,530 -- 2,458,300 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) ............. (26,242) (4,585) -- (24,003) (10,961) -- (465,958) (226,241) --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
Net equity transactions ..... 1,952,060 103,472 -- (278,161) 267,522 -- 5,578,268 5,978,399 --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
Net change in contract owners' equity 1,690,879 104,008 -- (198,815) 315,050 -- 7,583,572 6,790,451 --
Contract owners' equity
beginning of period .............. 104,008 -- -- 315,050 -- -- 6,790,451 -- --
----------- ------- ---- ------- ------- ----- ---------- --------- ----
Contract owners' equity end of period $ 1,794,887 104,008 -- 116,235 315,050 -- 14,374,023 6,790,451 --
=========== ======= ==== ======= ======= ===== ========== ========= ====
</TABLE>
<PAGE> 7
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
DryCapAp DryGrInc FidVIPEI
----------------------------- ------------------------ -----------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
------------ --------- ---- -------- -------- ---- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............. $ 65,571 17,678 -- 2,658 1,650 -- 47,473 -- --
Mortality and expense charges
(note 3) ...................... (50,548) (8,408) -- (2,473) (866) -- (17,689) (7,345) --
------------ --------- ---- -------- -------- ---- --------- --------- -----
Net investment activity ....... 15,023 9,270 -- 185 784 -- 29,784 (7,345) --
------------ --------- ---- -------- -------- ---- --------- --------- -----
Proceeds from mutual fund
shares sold ................... 2,170,840 56,858 -- 258,487 5,500 -- 2,069,120 873,277 --
Cost of mutual funds sold ........ (1,803,486) (58,027) -- (221,590) (6,178) -- (1,874,177) (900,730) --
------------ --------- ---- -------- -------- ---- --------- --------- -----
Realized gain (loss)
on investments .............. 367,354 (1,169) -- 36,897 (678) -- 194,943 (27,453) --
Change in unrealized gain (loss)
on investments ................ 295,554 351,157 -- 10,416 36,799 -- (146,379) 290,670 --
------------ --------- ---- -------- -------- ---- --------- --------- -----
Net gain (loss) on investments 662,908 349,988 -- 47,313 36,121 -- 48,564 263,217 --
------------ --------- ---- -------- -------- ---- --------- --------- -----
Reinvested capital gains ......... 44,050 2 -- 11,459 96 -- 104,940 -- --
------------ --------- ---- -------- -------- ---- --------- --------- -----
Net change in contract
owners' equity resulting
from operations .......... 721,981 359,260 -- 58,957 37,001 -- 183,288 255,872 --
------------ --------- ---- -------- -------- ---- --------- --------- -----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............... 474,775 1,389,597 -- 150,957 339,972 -- 1,092,111 1,561,165 --
Transfers between funds .......... 7,806,115 1,576,343 -- (169,895) (1,551) -- (1,815,409) 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) ............. (335,284) (55,062) -- (24,688) (12,302) -- (122,693) (77,610) --
------------ --------- ---- -------- -------- ---- --------- --------- -----
Net equity transactions ..... 7,945,606 2,910,878 -- (43,626) 326,119 -- (845,991) 2,834,122 --
------------ --------- ---- -------- -------- ---- --------- --------- -----
Net change in contract owners' equity 8,667,587 3,270,138 -- 15,331 363,120 -- (662,703) 3,089,994 --
Contract owners' equity
beginning of period .............. 3,270,138 -- -- 363,120 -- -- 3,089,994 -- --
------------ --------- ---- -------- -------- ---- --------- --------- -----
Contract owners' equity end of period $ 11,937,725 3,270,138 -- 378,451 363,120 -- 2,427,291 3,089,994 --
============ ========= ==== ======== ======== ==== ========= ========= =====
</TABLE>
(Continued)
<PAGE> 8
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
FidVIPGr FidVIPHI FidVIPOv
----------------------------- ------------------------------ -------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
----------- -------- ------ --------- ------- ---- --------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 367 217 249 46,952 -- -- 13,167 -- --
Mortality and expense charges
(note 3) ........................ (5,323) (827) (65) (5,745) (1,101) -- (6,984) (2,118) --
----------- -------- ------ --------- ------- --- --------- ------- ----
Net investment activity ......... (4,956) (610) 184 41,207 (1,101) -- 6,183 (2,118) --
----------- -------- ------ --------- ------- --- --------- ------- ----
Proceeds from mutual fund
shares sold ..................... 807,316 40,958 9,806 803,286 1,614,239 -- 471,599 8,873 --
Cost of mutual funds sold .......... (698,481) (28,248) (6,287) (787,262) (1,742,660) -- (425,114) (9,390) --
----------- -------- ------ --------- ------- --- --------- ------- ----
Realized gain (loss)
on investments ................ 108,835 12,710 3,519 16,024 (128,421) -- 46,485 (517) --
Change in unrealized gain (loss)
on investments .................. 235,430 18,980 3,665 (22,830) 21,509 -- 367,565 43,345 --
----------- -------- ------ --------- ------- --- --------- ------- ----
Net gain (loss) on investments .. 344,265 31,690 7,184 (6,806) (106,912) -- 414,050 42,828 --
----------- -------- ------ --------- ------- --- --------- ------- ----
Reinvested capital gains ........... 23,057 5,679 1,112 1,755 -- -- 21,237 -- --
----------- -------- ------ --------- ------- --- --------- ------- ----
Net change in contract
owners' equity resulting
from operations ............ 362,366 36,759 8,480 36,156 (108,013) -- 441,470 40,710 --
----------- -------- ------ --------- ------- --- --------- ------- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 694,339 90,635 3,392 757,509 371,525 -- 184,473 555,121 --
Transfers between funds ............ 686,483 31,354 (117) 144,079 209,922 -- (9,242) 249,878 --
Surrenders ......................... (34,268) -- (10,177) (36,906) -- -- -- -- --
Death benefits (note 4) ............ -- -- -- -- (3,869) -- -- -- --
Policy loans (net of repayments)
(note 5) ........................ (2,372) 546 3,798 -- -- -- -- -- --
Deductions for surrender charges
(note 2d) ....................... (30) -- (1,911) (33) -- -- -- -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............... (37,486) (9,764) (1,302) (43,657) (22,819) -- (38,401) (14,893) --
----------- -------- ------ --------- ------- --- --------- ------- ----
Net equity transactions ....... 1,306,666 112,771 (6,317) 820,992 554,759 -- 136,830 790,106 --
----------- -------- ------ --------- ------- --- --------- ------- ----
Net change in contract owners' equity. 1,669,032 149,530 2,163 857,148 446,746 -- 578,300 830,816 --
Contract owners' equity
beginning of period ................ 192,030 42,500 40,337 446,746 -- -- 830,816 -- --
----------- -------- ------ --------- ------- --- --------- ------- ----
Contract owners' equity end of period. $ 1,861,062 192,030 42,500 1,303,894 446,746 -- 1,409,116 830,816 --
=========== ======== ====== ========= ======= === ========= ======= ====
</TABLE>
<PAGE> 9
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
FidVIPAM FidVIPCon
-------------------------------- ------------------------------
1999 1998 1997 1999 1998 1997
----------- --------- ---- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 135,270 -- -- 1,715 -- --
Mortality and expense charges
(note 3) ........................ (37,937) (9,891) -- (4,153) (834) --
----------- --------- ---- ------------------------------
Net investment activity ......... 97,333 (9,891) -- (2,438) (834) --
----------- --------- ---- ------------------------------
Proceeds from mutual fund
shares sold ..................... 1,068,648 163,186 -- 585,641 11,580 --
Cost of mutual funds sold .......... (1,054,965) (167,191) -- (498,073) (11,300) --
----------- --------- ---- ------------------------------
Realized gain (loss)
on investments ................ 13,683 (4,005) -- 87,568 280 --
Change in unrealized gain (loss)
on investments .................. 375,064 295,169 -- 77,538 44,475 --
----------- --------- ---- ------------------------------
Net gain (loss) on investments .. 388,747 291,164 -- 165,106 44,755 --
----------- --------- ---- ------------------------------
Reinvested capital gains ........... 171,342 -- -- 12,574 -- --
----------- --------- ---- ------------------------------
Net change in contract
owners' equity resulting
from operations ............ 657,422 281,273 -- 175,242 43,921 --
----------- --------- ---- ------------------------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 730,093 1,469,777 -- 356,418 227,675 --
Transfers between funds ............ 3,357,493 2,083,152 -- 333,223 54,742 --
Surrenders ......................... -- -- -- (20,198) -- --
Death benefits (note 4) ............ -- -- -- -- -- --
Policy loans (net of repayments)
(note 5) ........................ -- -- -- -- -- --
Deductions for surrender charges
(note 2d) ....................... -- -- -- (18) -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............... (253,196) (82,694) -- (31,743) (8,890) --
----------- --------- ---- ------------------------------
Net equity transactions ....... 3,834,390 3,470,235 -- 637,682 273,527 --
----------- --------- ---- ------------------------------
Net change in contract owners' equity. 4,491,812 3,751,508 -- 812,924 317,448 --
Contract owners' equity
beginning of period ................ 3,751,508 -- -- 317,448 -- --
----------- --------- ---- ------------------------------
Contract owners' equity end of period. $ 8,243,320 3,751,508 -- 1,130,372 317,448 --
=========== ========= ==== ========= ======= ======
</TABLE>
<TABLE>
<CAPTION>
FidVIPGrOp
--------------------------------
1999 1998 1997
----------- --------- ----
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 19,957 -- --
Mortality and expense charges
(note 3) ........................ (9,542) (4,084) --
----------- --------- ----
Net investment activity ......... 10,415 (4,084) --
----------- --------- ----
Proceeds from mutual fund
shares sold ..................... 1,576,669 8,736 --
Cost of mutual funds sold .......... (1,383,912) (8,768) --
----------- --------- ----
Realized gain (loss)
on investments ................ 192,757 (32) --
Change in unrealized gain (loss)
on investments .................. (162,857) 217,085 --
----------- --------- ----
Net gain (loss) on investments .. 29,900 217,053 --
----------- --------- ----
Reinvested capital gains ........... 37,311 -- --
----------- --------- ----
Net change in contract
owners' equity resulting
from operations ............ 77,626 212,969 --
----------- --------- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 313,176 496,204 --
Transfers between funds ............ (568,944) 1,030,094 --
Surrenders ......................... (19,041) -- --
Death benefits (note 4) ............ -- -- --
Policy loans (net of repayments)
(note 5) ........................ -- -- --
Deductions for surrender charges
(note 2d) ....................... (17) -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............... (58,419) (26,971) --
----------- --------- ----
Net equity transactions ....... (333,245) 1,499,327 --
----------- --------- ----
Net change in contract owners' equity. (255,619) 1,712,296 --
Contract owners' equity
beginning of period ................ 1,712,296 -- --
----------- --------- ----
Contract owners' equity end of period. $1,456,677 1,712,296 --
=========== ========= ====
</TABLE>
(Continued)
<PAGE> 10
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
MSEmMkt NSATCapAp
---------------------------------- -------------------------------------
1999 1998 1997 1999 1998 1997
-------- -------- ------ --------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ....................... $ 10,875 4,872 -- 15,503 9,739 37
Mortality and expense charges
(note 3) ................................ (405) (120) -- (14,315) (6,021) (8)
-------- -------- ------ --------- --------- ------
Net investment activity ................. 10,470 4,752 -- 1,188 3,718 29
-------- -------- ------ --------- --------- ------
Proceeds from mutual fund
shares sold ............................. 8,573 6,713 -- 1,356,673 212,711 97
Cost of mutual funds sold .................. (12,762) (7,026) -- (1,229,825) (219,787) (55)
-------- -------- ------ --------- --------- ------
Realized gain (loss)
on investments ........................ (4,189) (313) -- 126,848 (7,076) 42
Change in unrealized gain (loss)
on investments .......................... 12,256 (11,337) -- (201,392) 202,050 472
-------- -------- ------ --------- --------- ------
Net gain (loss) on investments .......... 8,067 (11,650) -- (74,544) 194,974 514
-------- -------- ------ --------- --------- ------
Reinvested capital gains ................... -- -- -- 164,424 62,464 192
-------- -------- ------ --------- --------- ------
Net change in contract
owners' equity resulting
from operations .................... 18,537 (6,898) -- 91,068 261,156 735
-------- -------- ------ --------- --------- ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ......................... 11,947 56,550 -- 941,252 378,599 181
Transfers between funds .................... 19,283 (2,968) -- (626,887) 1,683,884 6,557
Surrenders ................................. -- -- -- -- -- --
Death benefits (note 4) .................... -- -- -- -- -- --
Policy loans (net of repayments)
(note 5) ................................ -- -- -- 127 (5,169) 38
Deductions for surrender charges
(note 2d) ............................... -- -- -- -- -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ....................... (2,618) (1,770) -- (123,973) (72,485) --
-------- -------- ------ --------- --------- ------
Net equity transactions ............... 28,612 51,812 -- 190,519 1,984,829 6,776
-------- -------- ------ --------- --------- ------
Net change in contract owners' equity ........ 47,149 44,914 -- 281,587 2,245,985 7,511
Contract owners' equity
beginning of period ........................ 44,914 -- -- 2,255,024 9,039 1,528
-------- -------- ------ --------- --------- ------
Contract owners' equity end of period......... $ 92,063 44,914 -- 2,536,611 2,255,024 9,039
======== ======== ====== ========= ========= ======
NSATGvtBd
--------------------------------------
1999 1998 1997
--------- --------- ------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ....................... 196,567 37,511 827
Mortality and expense charges
(note 3) ................................ (19,276) (3,182) (25)
--------- --------- ------
Net investment activity ................. 177,291 34,329 802
--------- --------- ------
Proceeds from mutual fund
shares sold ............................. 862,487 1,076,570 7,321
Cost of mutual funds sold .................. (888,607) (1,071,059) (6,800)
--------- --------- ------
Realized gain (loss)
on investments ........................ (26,120) 5,511 521
Change in unrealized gain (loss)
on investments .......................... (209,750) 433 (59)
Net gain (loss) on investments .......... (235,870) 5,944 462
--------- --------- ------
Reinvested capital gains ................... 9,251 5,369 --
--------- --------- ------
Net change in contract
owners' equity resulting
from operations .................... (49,328) 45,642 1,264
--------- --------- ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ......................... 659,788 437,723 2,913
Transfers between funds .................... 3,231,179 685,162 (592)
Surrenders ................................. (5,818) -- (7,742)
Death benefits (note 4) .................... -- (4,142) --
Policy loans (net of repayments)
(note 5) ................................ -- -- 3,686
Deductions for surrender charges
(note 2d) ............................... (5) -- (1,454)
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ....................... (99,940) (50,895) (1,414)
--------- --------- ------
Net equity transactions ............... 3,785,204 1,067,848 (4,603)
--------- --------- ------
Net change in contract owners' equity ........ 3,735,876 1,113,490 (3,339)
Contract owners' equity
beginning of period ........................ 1,127,565 14,075 17,414
--------- --------- ------
Contract owners' equity end of period......... 4,863,441 1,127,565 14,075
========= ========= ======
</TABLE>
<PAGE> 11
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
NSATMyMkt NSATSmCapV NSATSmCo
------------------------------------ ---------------------- -------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
------------ ---------- ----- --------- ---- ---- --------- ------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 600,938 504,998 547 -- -- -- -- -- --
Mortality and expense charges
(note 3) ........................ (77,474) (51,084) (9) (6,397) -- -- (4,634) (667) --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
Net investment activity ......... 523,464 453,914 538 (6,397) -- -- (4,634) (667) --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
Proceeds from mutual fund
shares sold ..................... 32,567,550 26,194,791 11,959 35,459 -- -- 112,644 541,453 --
Cost of mutual funds sold .......... (32,567,550) (26,194,791) (11,959) (35,445) -- -- (99,242) (577,428) --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
Realized gain (loss)
on investments ................ -- -- -- 14 -- -- 13,402 (35,975) --
Change in unrealized gain (loss)
on investments .................. -- -- -- (186,972) -- -- 354,570 13,257 --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
Net gain (loss) on investments .. -- -- -- (186,958) -- -- 367,972 (22,718) --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
Reinvested capital gains ........... -- -- -- 319,121 -- -- 59,588 -- --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
Net change in contract
owners' equity resulting
from operations ............ 523,464 453,914 538 125,766 -- -- 422,926 (23,385) --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 21,641,752 31,739,658 482 64,122 -- -- 87,151 64,219 --
Transfers between funds ............ (28,428,363) (20,876,682) (10,338) 2,075,006 -- -- 846,022 179,980 --
Surrenders ......................... (1,702,126) (18,421) -- -- -- -- -- -- --
Death benefits (note 4) ............ -- -- -- -- -- -- -- (2,309) --
Policy loans (net of repayments)
(note 5) ........................ -- -- 2,385 -- -- -- -- -- --
Deductions for surrender charges
(note 2d) ....................... (1,512) -- -- -- -- -- -- -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............... (503,747) (826,847) (2,144) (22,728) -- -- (21,028) (10,293) --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
Net equity transactions ....... (8,993,996) 10,017,708 (9,615) 2,116,400 -- -- 912,145 231,597 --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
Net change in contract owners' equity. (8,470,532) 10,471,622 (9,077) 2,242,166 -- -- 1,335,071 208,212 --
Contract owners' equity
beginning of period ................ 10,472,744 1,122 10,199 -- -- -- 208,212 -- --
------------ ---------- ----- --------- ---- ---- --------- ------- ----
Contract owners' equity end of period. $ 2,002,212 10,472,744 1,122 2,242,166 -- -- 1,543,283 208,212 --
============ ========== ===== ========= ==== ==== ========= ======= ====
</TABLE>
(Continued)
<PAGE> 12
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
NSATTotRe NBAMTBal
-------------------------------------- ---------------------------------
1999 1998 1997 1999 1998 1997
---------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 2,824 1,289 213 213 266 175
Mortality and expense charges
(note 3) ........................ (2,352) (663) (25) (105) (101) (18)
---------- ------- ------ ------ ------ ------
Net investment activity ......... 472 626 188 108 165 157
---------- ------- ------ ------ ------ ------
Proceeds from mutual fund
shares sold ..................... 93,963 899,768 955 895 746 3,184
Cost of mutual funds sold .......... (85,579) (917,792) (635) (799) (705) (2,780)
---------- ------- ------ ------ ------ ------
Realized gain (loss)
on investments ................ 8,384 (18,024) 320 96 41 404
Change in unrealized gain (loss)
on investments .................. (2,352) 4,285 2,249 3,758 (667) 833
---------- ------- ------ ------ ------ ------
Net gain (loss) on investments .. 6,032 (13,739) 2,569 3,854 (626) 1,237
---------- ------- ------ ------ ------ ------
Reinvested capital gains ........... 20,383 7,210 642 316 1,868 450
---------- ------- ------ ------ ------ ------
Net change in contract
owners' equity resulting
from operations ............ 26,887 (5,903) 3,399 4,278 1,407 1,844
---------- ------- ------ ------ ------ ------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 191,756 53,247 3,373 1,603 962 1,682
Transfers between funds ............ 184,421 140,892 5,847 -- -- (1,357)
Surrenders ......................... -- -- -- -- -- (5,156)
Death benefits (note 4) ............ -- (3,805) -- -- -- --
Policy loans (net of repayments)
(note 5) ........................ 149 (4,918) 10 1 -- 3,703
Deductions for surrender charges
(note 2d) ....................... -- -- -- -- -- (969)
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............... (19,807) (14,505) (3,914) (1,104) (702) (161)
---------- ------- ------ ------ ------ ------
Net equity transactions ....... 356,519 170,911 5,316 500 260 (2,258)
---------- ------- ------ ------ ------ ------
Net change in contract owners' equity. 383,406 165,008 8,715 4,778 1,667 (414)
Contract owners' equity
beginning of period ................ 185,223 20,215 11,500 12,753 11,086 11,500
---------- ------- ------ ------ ------ ------
Contract owners' equity end of period. $ 568,629 185,223 20,215 17,531 12,753 11,086
========== ======= ====== ====== ====== ======
NBAMTGro
---------------------------
1999 1998 1997
--------- ------ ----
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... -- -- --
Mortality and expense charges
(note 3) ........................ (9,391) (213) --
--------- ------ ----
Net investment activity ......... (9,391) (213) --
--------- ------ ----
Proceeds from mutual fund
shares sold ..................... 110,523 451,671 --
Cost of mutual funds sold .......... (94,740) (589,586) --
--------- ------ ----
Realized gain (loss)
on investments ................ 15,783 (137,915) --
Change in unrealized gain (loss)
on investments .................. 1,286,265 14,568 --
--------- ------ ----
Net gain (loss) on investments .. 1,302,048 (123,347) --
--------- ------ ----
Reinvested capital gains ........... 6,121 -- --
--------- ------ ----
Net change in contract
owners' equity resulting
from operations ............ 1,298,778 (123,560) --
--------- ------ ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 143,803 179,067 --
Transfers between funds ............ 2,534,470 39,299 --
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) ............... (49,243) (6,812) --
--------- ------ ----
Net equity transactions ....... 2,629,030 211,554 --
--------- ------ ----
Net change in contract owners' equity. 3,927,808 87,994 --
Contract owners' equity
beginning of period ................ 87,994 -- --
--------- ------ ----
Contract owners' equity end of period. 4,015,802 87,994 --
========= ====== ====
</TABLE>
<PAGE> 13
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
NBAMTGuard NBAMTLMat NBAMTPart
----------------------- ----------------------------- -----------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
---------- ---- ---- --------- --------- ---- --------- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 11 -- -- 131,900 -- -- 35,979 96 --
Mortality and expense charges
(note 3) ........................ (49) -- -- (23,583) (6,625) -- (22,411) (7,845) --
---------- ---- ---- --------- --------- ---- --------- --------- ----
Net investment activity ......... (38) -- -- 108,317 (6,625) -- 13,568 (7,749) --
---------- ---- ---- --------- --------- ---- --------- --------- ----
Proceeds from mutual fund
shares sold ..................... 96,827 -- -- 503,526 600,881 -- 2,594,674 502,461 --
Cost of mutual funds sold .......... (94,341) -- -- (511,042) (594,456) -- (2,433,926) (576,869) --
---------- ---- ---- --------- --------- ---- --------- --------- ----
Realized gain (loss)
on investments ................ 2,486 -- -- (7,516) 6,425 -- 160,748 (74,408) --
Change in unrealized gain (loss)
on investments .................. 222 -- -- (66,054) 37,857 -- (54,411) 150,166 --
---------- ---- ---- --------- --------- ---- --------- --------- ----
Net gain (loss) on investments .. 2,708 -- -- (73,570) 44,282 -- 106,337 75,758 --
---------- ---- ---- --------- --------- ---- --------- --------- ----
Reinvested capital gains ........... -- -- -- -- -- -- 62,571 3,026 --
---------- ---- ---- --------- --------- ---- --------- --------- ----
Net change in contract
owners' equity resulting
from operations ............ 2,670 -- -- 34,747 37,657 -- 182,476 71,035 --
---------- ---- ---- --------- --------- ---- --------- --------- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 94,073 -- -- 1,274,019 1,297,068 -- 862,570 167,059 --
Transfers between funds ............ (82,703) -- -- 1,902,713 777,381 -- 200,005 2,868,038 --
Surrenders ......................... (3,047) -- -- (36,301) -- -- -- -- --
Death benefits (note 4) ............ -- -- -- -- -- -- -- (1,910) --
Policy loans (net of repayments)
(note 5) ........................ -- -- -- -- -- -- -- -- --
Deductions for surrender charges
(note 2d) ....................... (3) -- -- (32) -- -- -- -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............... (292) -- -- (185,788) (90,472) -- (102,438) (58,438) --
---------- ---- ---- --------- --------- ---- --------- --------- ----
Net equity transactions ....... 8,028 -- -- 2,954,611 1,983,977 -- 960,137 2,974,749 --
---------- ---- ---- --------- --------- ---- --------- --------- ----
Net change in contract owners' equity. 10,698 -- -- 2,989,358 2,021,634 -- 1,142,613 3,045,784 --
Contract owners' equity
beginning of period ................ -- -- -- 2,021,634 -- -- 3,045,784 -- --
---------- ---- ---- --------- --------- ---- --------- --------- ----
Contract owners' equity end of period. $ 10,698 -- -- 5,010,992 2,021,634 -- 4,188,397 3,045,784 --
========== ==== ==== ========= ========= ==== ========= ========= ====
</TABLE>
(Continued)
<PAGE> 14
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
OppBdFd OppGlSec
-------------------------------- ------------------------------
1999 1998 1997 1999 1998 1997
----------- ------- ---- --------- --------- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 26,045 322 -- 26,885 307 --
Mortality and expense charges
(note 3) ........................ (4,409) (1,236) -- (7,996) (5,205) --
----------- ------- ---- --------- --------- ----
Net investment activity ......... 21,636 (914) -- 18,889 (4,898) --
----------- ------- ---- --------- --------- ----
Proceeds from mutual fund
shares sold ..................... 731,543 9,221 -- 2,708,659 6,335 --
Cost of mutual funds sold .......... (761,185) (9,205) -- (2,479,501) (7,203) --
----------- ------- ---- --------- --------- ----
Realized gain (loss)
on investments ................ (29,642) 16 -- 229,158 (868) --
Change in unrealized gain (loss)
on investments .................. (9,806) 8,173 -- 187,521 124,381 --
----------- ------- ---- --------- --------- ----
Net gain (loss) on investments .. (39,448) 8,189 -- 416,679 123,513 --
----------- ------- ---- --------- --------- ----
Reinvested capital gains ........... 2,501 291 -- 75,339 1,156 --
----------- ------- ---- --------- --------- ----
Net change in contract
owners' equity resulting
from operations ............ (15,311) 7,566 -- 510,907 119,771 --
----------- ------- ---- --------- --------- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 315,191 478,200 -- 283,877 735 --
Transfers between funds ............ 262,522 37,657 -- (1,651,931) 2,090,084 --
Surrenders ......................... -- -- -- (46,603) -- --
Death benefits (note 4) ............ -- -- -- -- -- --
Policy loans (net of repayments)
(note 5) ........................ -- -- -- -- -- --
Deductions for surrender charges
(note 2d) ....................... -- -- -- (41) -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............... (42,010) (18,327) -- (38,534) (14,493) --
----------- ------- ---- --------- --------- ----
Net equity transactions ....... 535,703 497,530 -- (1,453,232) 2,076,326 --
----------- ------- ---- --------- --------- ----
Net change in contract owners' equity. 520,392 505,096 -- (942,325) 2,196,097 --
Contract owners' equity
beginning of period ................ 505,096 -- -- 2,196,097 -- --
----------- ------- ---- --------- --------- ----
Contract owners' equity end of period. $ 1,025,488 505,096 -- 1,253,772 2,196,097 --
=========== ======= ==== ========= ========= ====
OppGro
------------------------------
1999 1998 1997
--------- -------- ---
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... 850 100 --
Mortality and expense charges
(note 3) ........................ (8,547) (463) --
--------- -------- ---
Net investment activity ......... (7,697) (363) --
--------- -------- ---
Proceeds from mutual fund
shares sold ..................... 635,041 11,617 --
Cost of mutual funds sold .......... (528,498) (12,143) --
--------- -------- ---
Realized gain (loss)
on investments ................ 106,543 (526) --
Change in unrealized gain (loss)
on investments .................. 519,569 23,432 --
--------- -------- ---
Net gain (loss) on investments .. 626,112 22,906 --
--------- -------- ---
Reinvested capital gains ........... 9,340 1,201 --
--------- -------- ---
Net change in contract
owners' equity resulting
from operations ............ 627,755 23,744 --
--------- -------- ---
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 301,020 132,607 --
Transfers between funds ............ 1,809,925 29,263 --
Surrenders ......................... (42,848) -- --
Death benefits (note 4) ............ -- -- --
Policy loans (net of repayments)
(note 5) ........................ -- -- --
Deductions for surrender charges
(note 2d) ....................... (38) -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............... (53,902) (7,839) --
--------- -------- ---
Net equity transactions ....... 2,014,157 154,031 --
--------- -------- ---
Net change in contract owners' equity. 2,641,912 177,775 --
Contract owners' equity
beginning of period ................ 177,775 -- --
--------- -------- ---
Contract owners' equity end of period. 2,819,687 177,775 --
========= ======== ===
</TABLE>
<PAGE> 15
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
OppMult StOpp2
------------------------------ -----------------------------
1999 1998 1997 1999 1998 1997
---------- ------ ---- --------- --------- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 8,514 -- -- -- 5,700 --
Mortality and expense charges
(note 3) ........................ (560) (219) -- (23,329) (6,774) --
---------- ------ ---- --------- --------- ----
Net investment activity ......... 7,954 (219) -- (23,329) (1,074) --
---------- ------ ---- --------- --------- ----
Proceeds from mutual fund
shares sold ..................... 290,794 10,181 -- 2,249,012 20,340 --
Cost of mutual funds sold .......... (291,914) (10,741) -- (1,989,388) (24,221) --
---------- ------ ---- --------- --------- ----
Realized gain (loss)
on investments ................ (1,120) (560) -- 259,624 (3,881) --
Change in unrealized gain (loss)
on investments .................. (2,198) 2,201 -- 481,583 274,510 --
---------- ------ ---- --------- --------- ----
Net gain (loss) on investments .. (3,318) 1,641 -- 741,207 270,629 --
---------- ------ ---- --------- --------- ----
Reinvested capital gains ........... 12,316 -- -- 398,233 3,397 --
---------- ------ ---- --------- --------- ----
Net change in contract
owners' equity resulting
from operations ............ 16,952 1,422 -- 1,116,111 272,952 --
---------- ------ ---- --------- --------- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 68,158 11,946 -- 1,453,381 867,064 --
Transfers between funds ............ (158,215) 68,612 -- (346,567) 1,764,409 --
Surrenders ......................... -- -- -- (58,951) -- --
Death benefits (note 4) ............ -- -- -- -- -- --
Policy loans (net of repayments)
(note 5) ........................ -- -- -- -- -- --
Deductions for surrender charges
(note 2d) ....................... -- -- -- (52) -- --
Redemptions to pay cost of
insurance charges and
administrative charges
(notes 2b and 2c) ............... (6,024) (2,851) -- (133,131) (52,214) --
---------- ------ ---- --------- --------- ----
Net equity transactions ....... (96,081) 77,707 -- 914,680 2,579,259 --
---------- ------ ---- --------- --------- ----
Net change in contract owners' equity. (79,129) 79,129 -- 2,030,791 2,852,211 --
Contract owners' equity
beginning of period ................ 79,129 -- -- 2,852,211 -- --
---------- ------ ---- --------- --------- ----
Contract owners' equity end of period. $ -- 79,129 -- 4,883,002 2,852,211 --
========== ====== ==== ========= ========= ====
StDisc2
---------------------------
1999 1998 1997
------ ----- ----
<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 ..................... 7,564 96 --
Cost of mutual funds sold .......... (7,336) (92) --
------ ----- ----
Realized gain (loss)
on investments ................ 228 4 --
Change in unrealized gain (loss)
on investments .................. (708) 708 --
------ ----- ----
Net gain (loss) on investments .. (480) 712 --
------ ----- ----
Reinvested capital gains ........... -- -- --
------ ----- ----
Net change in contract
owners' equity resulting
from operations ............ (480) 701 --
------ ----- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 3,406 3,013 --
Transfers between funds ............ (7,577) 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) ............... (92) (215) --
------ ----- ----
Net equity transactions ....... (4,263) 4,042 --
------ ----- ----
Net change in contract owners' equity. (4,743) 4,743 --
Contract owners' equity
beginning of period ................ 4,743 -- --
------ ----- ----
Contract owners' equity end of period. -- 4,743 --
====== ===== ====
</TABLE>
(Continued)
<PAGE> 16
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
StIntStk2 VEWrldBd VEWrldEMkt
---------------------------- ------------------------- --------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
--------- ------ ---- ------ ------ ---- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 303 94 -- -- -- -- -- -- --
Mortality and expense charges
(note 3) ........................ (1,056) (138) -- (62) -- -- (192) -- --
--------- ------ ---- ------ ------ ---- ------- ---- ----
Net investment activity ......... (753) (44) -- (62) -- -- (192) -- --
--------- ------ ---- ------ ------ ---- ------- ---- ----
Proceeds from mutual fund
shares sold ..................... 58,412 2,255 -- 17,176 635,332 -- 159 214,660 --
Cost of mutual funds sold .......... (42,860) (2,481) -- (17,805) (637,007) -- (140) (233,229) --
--------- ------ ---- ------ ------ ---- ------- ---- ----
Realized gain (loss)
on investments ................ 15,552 (226) -- (629) (1,675) -- 19 (18,569) --
Change in unrealized gain (loss)
on investments .................. 213,980 (2,215) -- 1 -- -- 82,054 -- --
--------- ------ ---- ------ ------ ---- ------- ---- ----
Net gain (loss) on investments .. 229,532 (2,441) -- (628) (1,675) -- 82,073 (18,569) --
--------- ------ ---- ------ ------ ---- ------- ---- ----
Reinvested capital gains ........... -- -- -- -- -- -- -- -- --
--------- ------ ---- ------ ------ ---- ------- ---- ----
Net change in contract
owners' equity resulting
from operations ............ 228,779 (2,485) -- (690) (1,675) -- 81,881 (18,569) --
--------- ------ ---- ------ ------ ---- ------- ---- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 49,017 58,646 -- 10,054 2,790 -- 2,247 849 --
Transfers between funds ............ 593,187 (1,770) -- (7,451) 5,627 -- 382,171 25,876 --
Surrenders ......................... -- -- -- -- -- -- -- -- --
Death benefits (note 4) ............ -- -- -- -- (2,734) -- -- (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) ............... (5,151) (1,997) -- (624) (4,008) -- -- (7,267) --
--------- ------ ---- ------ ------ ---- ------- ---- ----
Net equity transactions ....... 637,053 54,879 -- 1,979 1,675 -- 384,418 18,569 --
--------- ------ ---- ------ ------ ---- ------- ---- ----
Net change in contract owners' equity. 865,832 52,394 -- 1,289 -- -- 466,299 -- --
Contract owners' equity
beginning of period ................ 52,394 -- -- -- -- -- -- -- --
--------- ------ ---- ------ ------ ---- ------- ---- ----
Contract owners' equity end of period. $ 918,226 52,394 -- 1,289 -- -- 466,299 -- --
========= ====== ==== ====== ====== ==== ======= ==== ====
</TABLE>
<PAGE> 17
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
VKMSRESec WPIntEq WPPVenCap
---------------------------- -------------------------- --------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
--------- ------- ---- ------- ------- ---- ------ ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ 22,119 31 -- 6,312 597 -- -- -- --
Mortality and expense charges
(note 3) ........................ (1,610) (673) -- (1,201) (322) -- (235) (150) --
--------- ------- ---- ------- ------- ---- ------ ------ ----
Net investment activity ......... 20,509 (642) -- 5,111 275 -- (235) (150) --
--------- ------- ---- ------- ------- ---- ------ ------ ----
Proceeds from mutual fund
shares sold ..................... 260,988 9,973 -- 253,619 6,992 -- 90,443 1,920 --
Cost of mutual funds sold .......... (267,305) (11,122) -- (232,082) (7,479) -- (77,024) (2,142) --
--------- ------- ---- ------- ------- ---- ------ ------ ----
Realized gain (loss)
on investments ................ (6,317) (1,149) -- 21,537 (487) -- 13,419 (222) --
Change in unrealized gain (loss)
on investments .................. (8,648) (1,009) -- 110,250 (1,416) -- (6,201) 6,202 --
--------- ------- ---- ------- ------- ---- ------ ------ ----
Net gain (loss) on investments .. (14,965) (2,158) -- 131,787 (1,903) -- 7,218 5,980 --
--------- ------- ---- ------- ------- ---- ------ ------ ----
Reinvested capital gains ........... -- 306 -- -- -- -- -- -- --
--------- ------- ---- ------- ------- ---- ------ ------ ----
Net change in contract
owners' equity resulting
from operations ............ 5,544 (2,494) -- 136,898 (1,628) -- 6,983 5,830 --
--------- ------- ---- ------- ------- ---- ------ ------ ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 156,608 274,090 -- 85,550 133,214 -- 11,383 40,664 --
Transfers between funds ............ (208,039) (1,813) -- 392,465 (6,311) -- (75,184) 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) ............... (14,519) (9,912) -- (8,418) (4,755) -- (1,781) (1,485) --
--------- ------- ---- ------- ------- ---- ------ ------ ----
Net equity transactions ....... (65,950) 262,365 -- 469,597 122,148 -- (65,582) 52,769 --
--------- ------- ---- ------- ------- ---- ------ ------ ----
Net change in contract owners' equity. (60,406) 259,871 -- 606,495 120,520 -- (58,599) 58,599 --
Contract owners' equity
beginning of period ................ 259,871 -- -- 120,520 -- -- 58,599 -- --
--------- ------- ---- ------- ------- ---- ------ ------ ----
Contract owners' equity end of period. $ 199,465 259,871 -- 727,015 120,520 -- -- 58,599 --
========= ======= ==== ======= ======= ==== ====== ====== ====
</TABLE>
(Continued)
<PAGE> 18
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, Continued
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
WPSmCoGr
--------------------------------
1999 1998 1997
----------- --------- ----
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............... $ -- -- --
Mortality and expense charges
(note 3) ........................ (12,964) (3,814) --
----------- --------- ----
Net investment activity ......... (12,964) (3,814) --
----------- --------- ----
Proceeds from mutual fund
shares sold ..................... 486,242 262,623 --
Cost of mutual funds sold .......... (424,025) (306,771) --
----------- --------- ----
Realized gain (loss)
on investments ................ 62,217 (44,148) --
Change in unrealized gain (loss)
on investments .................. 1,318,947 179,022 --
----------- --------- ----
Net gain (loss) on investments .. 1,381,164 134,874 --
----------- --------- ----
Reinvested capital gains ........... 97,160 -- --
----------- --------- ----
Net change in contract
owners' equity resulting
from operations ............ 1,465,360 131,060 --
----------- --------- ----
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 147,106 873,045 --
Transfers between funds ............ 496,518 535,743 --
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) ............... (65,602) (22,666) --
----------- --------- ----
Net equity transactions ....... 578,022 1,385,015 --
----------- --------- ----
Net change in contract owners' equity. 2,043,382 1,516,075 --
Contract owners' equity
beginning of period ................ 1,516,075 -- --
----------- --------- ----
Contract owners' equity end of period. $ 3,559,457 1,516,075 --
=========== ========= ====
</TABLE>
See accompanying notes to financial statements.
<PAGE> 19
NATIONWIDE VL SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999, 1998 AND 1997
(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.
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)
Portfolio of the Morgan Stanley Universal Funds, Inc. (Morgan
Stanley);
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
(Continued)
<PAGE> 20
NATIONWIDE VL SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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 Bond Fund (VEWrldBd)
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
Portfolio of the Van Kampen Life Investment Trust (Van Kampen LIT);
Van Kampen 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, 1999, policy owners have invested in all of the above
funds except for Strong VIF - Strong Discovery Fund II, Van Eck WIT -
Worldwide Hard Assets Fund, and Warburg Pincus Trust - Post Venture
Capital Portfolio. 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> 21
NATIONWIDE VL SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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, 1999. 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.
(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%.
(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
An administrative charge is assessed against each contract to recover
policy maintenance, accounting, record keeping and other
administrative expenses and is assessed against each contract by
liquidating units.
For multiple payment contracts, the Company currently deducts a
monthly administrative charge of $5 (may deduct up to $7.50, maximum).
For flexible premium contracts, the Company currently deducts a
monthly administrative charge of $12.50 during the first policy year
and $5 per month thereafter (may deduct up to $7.50, maximum).
Additionally, the Company deducts an increase charge of $2.04 per year
per $1,000 applied to any increase in the specified amount during the
first 12 months after the increase becomes effective.
(Continued)
<PAGE> 22
NATIONWIDE VL SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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.
The following table provides mortality and expense risk charges by
contract type for the period ended December 31, 1999:
<TABLE>
<CAPTION>
TOTAL ACVPAdv ACVPBal ACVPCapAp ACVPIncGr
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ 797 28 - - -
Corporate Universal
Variable Life ................ 466,930 - 1,866 117 1,162
------------ ------------ ------------ ------------ ------------
Total....................... $ 467,727 28 1,866 117 1,162
============ ============ ============ ============ ============
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
ACVPInt ACVPValue DrySRGro DryStkix DryCapAp
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ - - - - -
Corporate Universal
Variable Life ................ 12,097 6,307 2,333 60,870 50,548
------------ ------------ ------------ ------------ ------------
Total....................... $ 12,097 6,307 2,333 60,870 50,548
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
DryGrinc FidVIPEI FidVIPGr FidVIPHI FidVIPOv
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ - - 430 - -
Corporate Universal
Variable Life ................ 2,473 17,689 4,893 5,745 6,984
------------ ------------ ------------ ------------ ------------
Total....................... $ 2,473 17,689 5,323 5,745 6,984
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FidVIPAM FidVIPcon FidVIPGrOp MSEmMkt NSATCapAp
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ - - - - 39
Corporate Universal
Variable Life ................ 37,937 4,153 9,542 405 14,276
------------ ------------ ------------ ------------ ------------
Total....................... $ 37,937 4,153 9,542 405 14,315
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATGvtBd NSATMyMkt NSATSmCapv NSATSmCo NSATTotRe
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ 63 4 - - 128
Corporate Universal
Variable Life ................ 19,213 77,470 6,397 4,634 2,224
------------ ------------ ------------ ------------ ------------
Total....................... $ 19,276 77,474 6,397 4,634 2,352
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NBAMTBal NBAMTGro NBAMTGuard NBAMTLMat NBAMTPart
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ 105 - - - -
Corporate Universal
Variable Life ................ - 9,391 49 23,583 22,411
------------ ------------ ------------ ------------ ------------
Total....................... $ 105 9,391 49 23,583 22,411
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
OppBdFd OppGISec OppGro OppMult StOpp2
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ - - - - -
Corporate Universal
Variable Life ................ 4,409 7,996 8,547 560 23,329
------------ ------------ ------------ ------------ ------------
Total....................... $ 4,409 7,996 8,547 560 23,329
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
StintStk2 VEWrldBd VEWrldEMkt VKMSRESec WPIntEq
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ - - - - -
Corporate Universal
Variable Life ................ 1,056 192 62 1,610 1,201
------------ ------------ ------------ ------------ ------------
Total....................... $ 1,056 192 62 1,610 1,201
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
WPPVenCap WPSMCoGr
------------ ------------
<S> <C> <C>
Multiple Payment and
Flexible Premium.............. $ - -
Corporate Universal
Variable Life ................ 235 12,964
------------ ------------
Total....................... $ 235 12,964
============ ============
</TABLE>
(Continued)
<PAGE> 24
NATIONWIDE VL SEPARATE ACCOUNT-A
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ACVPValue DrySRGro DryStkix DryCapAp DryGrinc
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
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>
<TABLE>
<CAPTION>
FidVIPEI FidVIPGr FidVIPHI FidVIPOv FidVIPAM
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
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
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
FidVIPCon FidVIPGrOp MSEmMkt NSATCapAp NSATGvtBd
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
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
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATMyMkt NSATSmCo NSATTotRe NBAMTBal NBAMTGro
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ 8 - 130 101 -
Corporate Universal
Variable Life ................ 51,076 667 533 - 213
------------ ------------ ------------ ------------ ------------
Total....................... $ 51,084 667 663 101 213
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NBAMTLMat NBAMTPart OppBdFd OppGISec OppGro
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
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
============ ============ ============ ============ ============
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
OppMult StOpp2 StDisc2 StintStk2 VKMSRESec
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ - - - - -
Corporate Universal
Variable Life ................ 219 6,774 11 138 673
------------ ------------ ------------ ------------ ------------
Total....................... $ 219 6,774 11 138 673
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
WPintEq WPPVenCap WPSMCoGr
------------ ------------ ------------
<S> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ - - -
Corporate Universal
Variable Life ................ 322 150 3,814
------------ ------------ ------------
Total....................... $ 322 150 3,814
============ ============ ============
</TABLE>
The following table provides mortality, expense and administration charges
by contract type for the period ended December 31, 1997:
<TABLE>
<CAPTION>
TOTAL ACVPAdv FidVIPGr NSATCapAp NSATGvtBd
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ 795 645 65 8 25
------------ ------------ ------------ ------------ ------------
Total....................... $ 795 645 65 8 25
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATMyMkt NSATTotRe NBAMTBal
------------ ------------ ------------
<S> <C> <C> <C>
Multiple Payment and
Flexible Premium.............. $ 9 25 18
------------ ------------ ------------
Total....................... $ 9 25 18
============ ============ ============
</TABLE>
(4) DEATH BENEFITS
Death benefit proceeds result in a redemption of the contract value from
the Account and payment of those proceeds, less any outstanding policy
loans (and policy charges), to the legal beneficiary. For last survivor
flexible premium contracts, the proceeds are payable on the death of the
last surviving insured. In the event that the guaranteed death benefit
exceeds the contract value on the date of death, the excess is paid by the
Company's general account.
(5) 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.
(6) RELATED PARTY TRANSACTIONS
The Company performs various services on behalf of the Mutual Fund
Companies in which the Account invests and may receive fees for the
services performed. These services include, among other things, shareholder
communications, preparation, postage, fund transfer agency and various
other record keeping and customer service functions. These fees are paid to
an affiliate of the Company.
<PAGE> 26
NATIONWIDE VL SEPARATE ACCOUNT-A
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued
(7) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of Contract Owners' Equity at December 31, 1999:
<TABLE>
<CAPTION>
ANNUAL
Contract owners' equity represented by: UNITS UNIT VALUE RETURN*
------ ---------- --------
<S> <C> <C> <C> <C>
Multiple Payment Contracts and
Flexible Premium Contracts:
American Century VP -
American Century VP Advantage ...................... 60 $ 21.052310 $ 1,263 14%
Fidelity VIP - Growth Portfolio ...................... 1,261 46.242171 58,311 36%
Nationwide SAT -
Capital Appreciation Fund .......................... 165 32.761545 5,406 3%
Nationwide SAT - Government Bond Fund ................ 496 17.516435 8,688 (3)%
Nationwide SAT - Money Market Fund ................... 36 13.853330 499 4%
Nationwide SAT - Total Return Fund ................... 499 35.085217 17,508 6%
Neuberger & Berman - Balanced Portfolio .............. 636 27.565091 17,531 33%
Corporate Variable Universal Life Contracts:
(policy years 1 through 4):
American Century VP -
American Century VP Balanced ....................... 29,491 12.719779 375,119 9%
American Century VP -
American Century VP Capital Appreciation ........... 8,002 14.059550 112,505 64%
American Century VP -
American Century VP Income & Growth ................ 24,465 12.760482 312,185 17%
American Century VP -
American Century VP International .................. 267,865 19.184490 5,138,853 63%
American Century VP -
American Century VP Value .......................... 170,336 10.537331 1,794,887 (1)%
The Dreyfus Socially Responsible
Growth Fund, Inc. .................................. 6,856 16.953796 116,235 29%
Dreyfus Stock Index Fund ............................. 898,839 15.991766 14,374,023 20%
Dreyfus - Capital Appreciation Portfolio ............. 808,332 14.768344 11,937,725 11%
Dreyfus VIF - Growth and Income Portfolio ............ 29,245 12.940713 378,451 16%
Fidelity VIP - Equity-Income Portfolio ............... 198,742 12.213277 2,427,291 6%
Fidelity VIP - Growth Portfolio ...................... 94,119 19.153957 1,802,751 37%
Fidelity VIP - High Income Portfolio ................. 122,886 10.610601 1,303,894 8%
Fidelity VIP - Overseas Portfolio .................... 91,676 15.370612 1,409,116 42%
Fidelity VIP-II - Asset Manager Portfolio ............ 633,299 13.016474 8,243,320 10%
Fidelity VIP-II - Contrafund Portfolio ............... 69,405 16.286602 1,130,372 24%
Fidelity VIP-III -
Growth Opportunities Portfolio ..................... 107,601 13.537768 1,456,677 4%
</TABLE>
<PAGE> 27
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN*
------ ---------- --------
<S> <C> <C> <C> <C>
Morgan Stanley -
Emerging Markets Debt Portfolio .................... 10,459 8.802247 92,063 29%
Nationwide SAT -
Capital Appreciation Fund .......................... 180,019 14.060766 2,531,205 4%
Nationwide SAT - Government Bond Fund ................ 442,738 10.965295 4,854,753 (3)%
Nationwide SAT - Money Market Fund ................... 180,702 11.077427 2,001,713 4%
Nationwide SAT -
Small Capital Value Fund ........................... 205,906 10.889269 2,242,166 27%
Nationwide SAT - Small Company Fund .................. 108,697 14.198026 1,543,283 43%
Nationwide SAT - Total Return Fund ................... 42,859 12.858923 551,121 6%
Neuberger & Berman AMT -
Growth Portfolio ................................... 232,220 17.293092 4,015,802 49%
Neuberger & Berman AMT -
Guardian Portfolio ................................. 1,004 10.655149 10,698 14%
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio .................... 470,153 10.658215 5,010,992 1%
Neuberger & Berman AMT -
Partners Portfolio ................................. 371,291 11.280632 4,188,397 7%
Oppenheimer VAF - Bond Fund .......................... 94,715 10.827092 1,025,488 (2)%
Oppenheimer VAF -
Global Securities Fund ............................. 69,217 18.113638 1,253,772 58%
Oppenheimer VAF - Growth Fund ........................ 162,474 17.354695 2,819,687 41%
Strong - Opportunity Fund II, Inc. ................... 318,446 15.333847 4,883,002 34%
Strong VIP -
Strong International Stock Fund II ................. 60,360 15.212498 918,226 86%
Van Eck WIT - Worldwide Bond Fund .................... 121 10.656970 1,289 (8)%
Van Eck WIT -
Worldwide Emerging Markets Fund .................... 48,907 9.534407 466,299 99%
Van Kampen LIT -
Real Estate Securities Fund ........................ 21,721 9.183056 199,465 (4)%
Warburg Pincus Trust -
International Equity Portfolio ..................... 51,580 14.094893 727,015 53%
Warburg Pincus Trust -
Small Company Growth Portfolio ..................... 215,338 16.529628 3,559,457 68%
------- --------- ------------
$ 95,318,503
============
</TABLE>
* The annual return does not include contract charges satisfied by
surrendering units.
See accompanying notes to financial statements.
<PAGE> 64
<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, 1999 and 1998, 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, 1999. 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, 1999 and 1998, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
Columbus, Ohio
January 28, 2000
<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 1999 1998
------ --------------- ---------------
<S> <C> <C>
Investments:
Securities available-for-sale, at fair value:
Fixed maturity securities $ 1,051,556 $ 904,946
Equity securities 5,659 20,853
Mortgage loans on real estate, net 330,068 268,894
Real estate, net 2,200 2,250
Policy loans 465 332
Short-term investments 706 2,277
--------------- ---------------
1,390,654 1,199,552
--------------- ---------------
Cash 4,280 2
Accrued investment income 13,906 11,645
Deferred policy acquisition costs 92,025 53,007
Reinsurance receivable from affiliate 91,667 -
Other assets 42,851 41,542
Assets held in separate accounts 2,127,080 1,533,690
--------------- ---------------
$ 3,762,463 $ 2,839,438
=============== ===============
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims $ 1,480,807 $ 1,163,829
Other liabilities 41,308 25,933
Liabilities related to separate accounts 2,127,080 1,533,690
--------------- ---------------
3,649,195 2,723,452
--------------- ---------------
Commitments and contingencies (notes 8 and 12)
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 59,536 50,331
Accumulated other comprehensive income (1,868) 10,055
--------------- ---------------
113,268 115,986
--------------- ---------------
$ 3,762,463 $ 2,839,438
=============== ===============
</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,
---------------------------------------------
1999 1998 1997
------------- ------------- --------------
<S> <C> <C> <C>
Revenues:
Policy charges $44,793 $28,549 $11,244
Life insurance premiums 292 63 363
Net investment income 13,959 11,314 11,577
Realized gains (losses) on investments 5,208 696 (246)
Other income 1,059 1,165 1,057
------------- ------------- --------------
65,311 41,787 23,995
------------- ------------- --------------
Benefits and expenses:
Interest credited to policyholder account balances 8,548 4,881 3,948
Other benefits and claims 5,210 1,586 433
Amortization of deferred policy acquisition costs 13,592 4,348 1,402
Other operating expenses 24,185 8,952 1,860
------------- ------------- --------------
51,535 19,767 7,643
------------- ------------- --------------
Income before federal income tax expense 13,776 22,020 16,352
Federal income tax expense 4,571 7,501 5,749
------------- ------------- --------------
Net income $ 9,205 $14,519 $10,603
============= ============= ==============
</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, 1999, 1998 and 1997
($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, 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 year - - - 3,940 3,940
---------------
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 year - - - 2,887 2,887
---------------
Total comprehensive income 17,406
------------ -------------- -------------- ----------------- ---------------
December 31, 1998 2,640 52,960 50,331 10,055 115,986
Comprehensive income:
Net income - - 9,205 - 9,205
Net unrealized losses on securities
available-for-sale arising during the year - - - (11,923) (11,923)
---------------
Total comprehensive income (2,718)
------------ -------------- -------------- ----------------- ---------------
December 31, 1999 $2,640 $52,960 $59,536 $(1,868) $113,268
============ ============== ============== ================= ===============
</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,
----------------------------------------------
1999 1998 1997
------------- ---------------- ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 9,205 $ 14,519 $ 10,603
Adjustments to reconcile net income to net cash provided by
operating activities:
Interest credited to policyholder account balances 8,548 4,881 3,948
Capitalization of deferred policy acquisition costs (33,965) (29,216) (20,099)
Amortization of deferred policy acquisition costs 13,592 4,348 1,402
Amortization and depreciation 1,351 (479) 250
Realized (gains) losses on invested assets, net (5,208) (696) 246
Increase in accrued investment income (2,261) (867) (1,589)
Increase in policy liabilities and funds withheld
on coinsurance agreement with affiliate 160,246 139,991 228,898
Other, net 20,486 (29,802) 14,370
------------- ---------------- ---------------
Net cash provided by operating activities 171,994 102,679 238,029
------------- ---------------- ---------------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 137,210 117,228 95,366
Proceeds from sale of securities available-for-sale 73,864 17,403 30,431
Proceeds from repayments of mortgage loans on real estate 32,397 28,180 15,199
Proceeds from sale of real estate - 707 -
Proceeds from repayments of policy loans 109 99 67
Cost of securities available-for-sale acquired (375,642) (242,516) (267,899)
Cost of mortgage loans on real estate acquired (93,500) (78,180) (84,736)
Cost of real estate acquired - (3) (13)
Policy loans issued (242) (216) (155)
Short-term investments, net 1,571 16,691 (18,476)
------------- ---------------- ---------------
Net cash used in investing activities (224,233) (140,607) (230,216)
------------- ---------------- ---------------
Cash flows from financing activities:
Increase in investment product and universal life insurance
product account balances 192,893 74,828 6,952
Decrease in investment product and universal life insurance
product account balances (136,376) (42,061) (13,898)
------------- ---------------- ---------------
Net cash provided by (used in) financing activities 56,517 32,767 (6,946)
------------- ---------------- ---------------
Net increase (decrease) in cash 4,278 (5,161) 867
Cash, beginning of year 2 5,163 4,296
Cash, end of year $ 4,280 $ 2 $ 5,163
============= ================ ===============
</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, 1999, 1998 and 1997
($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 accumulated other comprehensive income in
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, 1999 or 1998.
<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 4.5%, 5.1% and 5.1% for the years ended
December 31, 1999, 1998 and 1997, 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) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In March 1998, The American Institute of Certified Public
Accountant's Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The
SOP, which has been adopted prospectively as of January 1, 1999,
requires the capitalization of certain costs incurred in
connection with developing or obtaining internal use software.
Prior to the adoption of SOP 98-1, the Company expensed internal
use software related costs as incurred. The effect of adopting the
SOP was to increase net income for 1999 by $431.
In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). FAS 133 establishes accounting
and reporting standards for derivative instruments and for hedging
activities. Contracts that contain embedded derivatives, such as
certain investment and insurance contracts, are also addressed by
the Statement. FAS 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. In
July 1999 the FASB issued Statement No. 137 which delayed the
effective date of FAS 133 to fiscal years beginning after June 15,
2000. The Company plans to adopt this Statement in first quarter
2001 and is currently evaluating the impact on results of
operations and financial condition.
(i) RECLASSIFICATION
Certain items in the 1998 and 1997 financial statements have been
reclassified to conform to the 1999 presentation.
<PAGE> 9
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(3) INVESTMENTS
The amortized cost, gross unrealized gains and losses and estimated
fair value of securities available-for-sale as of December 31, 1999 and
1998 were:
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Estimated
cost gains losses fair value
--------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
December 31, 1999:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 36,717 $ 2 $ (1,198) $ 35,521
Obligations of states and political subdivisions 302 - (7) 295
Debt securities issued by foreign governments 2,256 2 (22) 2,236
Corporate securities 773,869 2,208 (13,367) 762,710
Mortgage-backed securities 252,668 1,001 (2,875) 250,794
--------------- ------------- ------------- ---------------
Total fixed maturity securities 1,065,812 3,213 (17,469) 1,051,556
Equity securities 1,990 3,669 - 5,659
--------------- ------------- ------------- ---------------
$1,067,802 $6,882 $(17,469) $1,057,215
===========================================================
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
=============== ============= ============= ===============
</TABLE>
The amortized cost and estimated fair value of fixed maturity
securities available-for-sale as of December 31, 1999, 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 $ 50,029 $ 49,799
Due after one year through five years 399,476 393,204
Due after five years through ten years 331,022 326,616
Due after ten years 285,285 281,937
------------ ---------------
$1,065,812 $1,051,556
============ ===============
</TABLE>
<PAGE> 10
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The components of unrealized gains (losses) on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
1999 1998
------------- --------------
<S> <C> <C>
Gross unrealized gains (losses) $(10,587) $26,402
Adjustment to deferred policy acquisition costs 7,714 (10,933)
Deferred federal income tax 1,006 (5,414)
------------- --------------
$ (1,868) $10,055
============= ==============
</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>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $ (35,128) $ 3,922 $ 9,177
Equity securities (1,861) 2,467 1,663
------------- ------------- -------------
$ (36,989) $ 6,389 $10,840
============= ============= =============
</TABLE>
Proceeds from the sale of securities available-for-sale during 1999,
1998 and 1997 were $73,864, $17,403 and $30,431, respectively. During
1999, gross gains of $297 ($509 and $825 in 1998 and 1997,
respectively) and gross losses of $37 (none and $1,124 in 1998 and
1997, respectively) were realized on those sales. See note 10.
The Company has no investments which were non-income producing for the
twelve month periods preceding December 31, 1999 and 1998.
Real estate is presented at cost less accumulated depreciation of $155
as of December 31, 1999 ($105 as of December 31, 1998). There was no
valuation allowance as of December 31, 1999 or 1998.
The recorded investment of mortgage loans on real estate considered to
be impaired as of December 31, 1999 was $881 ($890 as of December 31,
1998). No valuation allowance has been recorded for these loans as of
December 31, 1999 or 1998. During 1999, the average recorded investment
in impaired mortgage loans on real estate was approximately $885 ($178
in 1998) and there was no interest income recognized on those loans.
Interest income recognized on impaired loans was $15 in 1998, which is
equal to interest income recognized using a cash-basis method of income
recognition.
The valuation allowance account for mortgage loans on real estate was
$750 for the year ended December 31, 1999 and remains unchanged from
the previous two years.
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ----------- -----------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $66,160 $56,398 $53,491
Equity securities - - 375
Mortgage loans on real estate 23,475 21,124 14,862
Real estate 413 379 318
Short-term investments 1,580 1,361 899
Other 334 178 90
------------ ----------- -----------
Total investment income 91,962 79,440 70,035
Less:
Investment expenses 2,040 1,773 1,386
Net investment income ceded (note 11) 75,963 66,353 57,072
------------ ----------- -----------
Net investment income $13,959 $11,314 $11,577
============ =========== ===========
</TABLE>
<PAGE> 11
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
An analysis of realized gains (losses) on investments, net of valuation
allowances, by investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ----------- ------------
<S> <C> <C> <C>
Fixed maturity securities available-for-sale $ 260 $ 509 $(299)
Mortgage loans on real estate 7 - 53
Real estate and other 4,941 187 -
------------ ----------- ------------
$ 5,208 $ 696 $(246)
============ =========== ============
</TABLE>
Fixed maturity securities with an amortized cost of $3,540 and $3,562
as of December 31, 1999 and 1998, respectively, were on deposit with
various regulatory agencies as required by law.
(4) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses derivative financial instruments, principally interest
rate swaps, interest rate futures contracts and foreign currency swaps,
to manage market risk exposures associated with changes in interest
rates and foreign currency exchange rates. Provided they meet specific
criteria, interest rate swaps and futures are considered hedges and are
accounted for under the accrual method and deferral method,
respectively. The Company has no significant derivative positions that
are not considered hedges.
Interest rate swaps are primarily used to convert specific investment
securities from a fixed-rate to a floating-rate basis. Amounts
receivable or payable under these agreements are recognized as an
adjustment to net investment income consistent with the nature of the
hedged item. The changes in fair value of the interest rate swap
agreements are not recognized on the balance sheet, except for interest
rate swaps designated as hedges of fixed maturity securities
available-for-sale, for which changes in fair values are reported in
accumulated other comprehensive income.
Interest rate futures contracts are primarily used to hedge the risk of
adverse interest rate changes related to the Company's mortgage loan
commitments and anticipated purchases of fixed rate investments. Gains
and losses are deferred and, at the time of closing, reflected as an
adjustment to the carrying value of the related mortgage loans or
investments. The carrying value adjustments are amortized into net
investment income over the life of the related mortgage loans or
investments.
Foreign currency swaps are used to convert cash flows from specific
investments denominated in foreign currencies into U.S. dollars at
specified exchange rates. Gains and losses on foreign currency swaps
are recorded in earnings based on the related spot foreign exchange
rate at the end of the reporting period. Gains and losses on these
contracts offset those recorded as a result of translating the hedged
foreign currency denominated investments to U.S. dollars.
The following table summarizes the notional amount of derivative
financial instruments classified as hedges outstanding as of December
31, 1999. Prior to 1999 the Company's activities in derivatives were
not significant.
<TABLE>
<CAPTION>
Interest rate swaps
<S> <C>
Pay fixed/receive variable rate swaps hedging investments $ 1,585
Foreign currency swaps
Hedging foreign currency denominated investments $ 1,420
Interest rate futures contracts $ 2,483
</TABLE>
<PAGE> 12
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(5) FEDERAL INCOME TAX
The tax effects of temporary differences that give rise to significant
components of the net deferred tax asset as of December 31, 1999 and
1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Deferred tax assets:
Future policy benefits $ 17,454 $ 16,670
Liabilities in separate accounts 15,603 12,477
Fixed maturity securities 3,905 -
Mortgage loans on real estate and real estate 266 263
------------ ------------
Total gross deferred tax assets 37,228 29,410
------------ ------------
Deferred tax liabilities:
Fixed maturity securities - 8,669
Deferred policy acquisition costs 15,624 8,103
Equity securities 1,284 1,935
Other 13,799 10,422
------------ ------------
Total gross deferred tax liabilities 30,707 29,129
------------ ------------
Net deferred tax asset $ 6,521 $ 281
============ ============
</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, 1999, 1998 and 1997 based on its analysis of future
deductible amounts.
The Company's current federal income tax liability was $1,860 and
$1,522 as of December 31, 1999 and 1998, respectively.
Federal income tax expense for the years ended December 31 was as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------ ----------- ------------
<S> <C> <C> <C>
Currently payable $ 4,391 $10,014 $2,458
Deferred tax expense (benefit) 180 (2,513) 3,291
------------ ----------- ------------
$ 4,571 $ 7,501 $5,749
============ =========== ============
</TABLE>
Total federal income tax expense for the years ended December 31, 1999,
1998 and 1997 differs from the amount computed by applying the U.S.
federal income tax rate to income before tax as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------------------- -------------------- --------------------
Amount % Amount % Amount %
-------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $4,822 35.0 $7,707 35.0 $5,723 35.0
Tax exempt interest and dividends
received deduction (255) (1.8) (223) (1.0) - -
Other, net 4 - 17 0.1 26 (0.2)
----------- -------- ----------- -------- ----------- --------
Total (effective rate of each year) $4,571 33.2 $7,501 34.1 $5,749 35.2
=========== ======== =========== ======== =========== ========
</TABLE>
Total federal income tax paid was $4,053, $9,298 and $9,566 during the
years ended December 31, 1999, 1998 and 1997, respectively.
<PAGE> 13
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
(6) COMPREHENSIVE INCOME
Comprehensive Income includes net income as well as certain items that
are reported directly within separate components of shareholder's
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>
1999 1998 1997
------------- ------------- --------------
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-for-sale
arising during the period:
Gross $ (36,729) $ 6,898 $10,541
Adjustment to deferred policy acquisition costs 18,645 (1,947) (4,778)
Related federal income tax (expense) benefit 6,330 (1,733) (2,017)
------------- ------------- --------------
Net (11,754) 3,218 3,746
------------- ------------- --------------
Reclassification adjustment for net (gains) losses on
securities available-for-sale realized during the
period:
Gross (260) (509) 299
Related federal income tax expense (benefit) 91 178 (105)
------------- ------------- --------------
Net (169) (331) 194
------------- ------------- --------------
Total Other Comprehensive Income $ (11,923) $ 2,887 $ 3,940
============= ============= ==============
</TABLE>
(7) 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. The carrying amount and fair value for fixed
maturity and equity securities exclude the fair value of
derivatives contracts designated as hedges of fixed maturity and
equity securities.
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 fair value because of the short-term nature of such
commitments. See note 8.
FUTURES CONTRACTS: The fair value for futures contracts is based
on quoted market prices.
INTEREST RATE AND FOREIGN CURRENCY SWAPS: The fair value for
interest rate and foreign currency swaps are calculated with
pricing models using current rate assumptions.
<PAGE> 15
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
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>
1999 1998
------------------------------- -------------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $ 1,051,556 $ 1,051,556 $ 904,946 $ 904,946
Equity securities 5,659 5,659 20,853 20,853
Mortgage loans on real estate, net 330,068 324,610 268,894 276,387
Policy loans 465 465 332 332
Short-term investments 706 706 2,277 2,277
Cash 4,280 4,280 2 2
Assets held in separate accounts 2,127,080 2,127,080 1,533,690 1,533,690
Liabilities:
Investment contracts (1,335,787) (1,283,459) (1,153,930) (1,113,584)
Policy reserves on life insurance contracts (145,020) (145,370) (9,899) (10,517)
Liabilities related to separate accounts (2,127,080) (2,082,541) (1,533,690) (1,501,255)
Derivative financial instruments:
Interest rate swaps hedging assets 109 109 - -
Foreign currency swaps (18) (18) - -
Futures contracts 21 21 - -
</TABLE>
(8) 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 and derivative financial instruments. These
instruments involve, to varying degrees, elements of credit risk in
excess of amounts recognized on the balance sheets.
<PAGE> 16
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
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 $10,039 extending into
2000 were outstanding as of December 31, 1999.
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 30% (33% in 1998) in any geographic area and no more than 5% (6%
in 1998) with any one borrower as of December 31, 1999. As of December
31, 1999 22% (36% in 1998) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed apartment
building properties.
(9) 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.
Pension costs charged to operations by the Company during the years
ended December 31, 1999, 1998 and 1997 were $127, $235 and $257,
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,
1999 and 1998 was $1,040 and $1,008, respectively, and the net periodic
postretirement benefit cost (NPPBC) for 1999, 1998 and 1997 was $177,
$130 and $94, 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, 1999 and 1998 follows:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $2,185,000 $ 2,033,800 $ 270,100 $ 237,900
Service cost 80,000 87,600 14,200 9,800
Interest cost 109,900 123,400 17,600 15,400
Actuarial (gain) loss (95,000) 123,200 (64,400) 15,600
Plan settlement in 1999/curtailment in 1998 (396,100) (107,200) - -
Benefits paid (72,400) (75,800) (11,000) (8,600)
Acquired companies - - 13,300 -
------------- ------------- ------------- -------------
Benefit obligation at end of year 1,811,400 2,185,000 239,800 270,100
------------- ------------- ------------- -------------
Change in plan assets:
Fair value of plan assets at beginning of year 2,541,900 2,212,900 77,900 69,200
Actual return on plan assets 161,800 300,700 3,500 5,000
Employer contribution 12,400 104,100 20,900 12,100
Plan settlement (396,100) - - -
Benefits paid (72,400) (75,800) (11,000) (8,400)
------------- ------------- ------------- -------------
Fair value of plan assets at end of year 2,247,600 2,541,900 91,300 77,900
------------- ------------- ------------- -------------
Funded status 436,200 356,900 (148,500) (192,200)
Unrecognized prior service cost 28,200 31,500 - -
Unrecognized net (gains) losses (402,000) (345,700) (46,700) 16,000
Unrecognized net (asset) obligation at transition (7,700) (11,000) 1,100 1,300
------------- ------------- ------------- -------------
Prepaid (accrued) benefit cost $ 54,700 $ 31,700 $ (194,100) $ (174,900)
============= ============= ============= =============
</TABLE>
Basis for measurements, funded status of the pension plan and
postretirement life and health care benefit plan:
<TABLE>
<CAPTION>
Pension Benefits Postretirement Benefits
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Weighted average discount rate 7.00% 5.50% 7.80% 6.65%
Rate of increase in future compensation levels 5.25% 3.75% - -
Assumed health care cost trend rate:
Initial rate - - 15.00% 15.00%
Ultimate rate - - 5.50% 8.00%
Uniform declining period - - 5 Years 15 Years
</TABLE>
The net periodic pension cost for the pension plan as a whole for the
years ended December 31, 1999, 1998 and 1997 follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- --------------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 80,000 $ 87,600 $ 77,300
Interest cost on projected benefit obligation 109,900 123,400 118,600
Expected return on plan assets (160,300) (159,000) (139,000)
Recognized gains (9,100) (3,800) -
Amortization of prior service cost 3,200 3,200 3,200
Amortization of unrecognized transition obligation (asset) (1,400) 4,200 4,200
------------- -------------- --------------
$ 22,300 $ 55,600 $ 64,300
============= ============== ==============
</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 Nationwide Insurance 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). During 1999, the plan
transferred assets to settle its obligation related to WSC employees. A
settlement gain of $32.9 million was recognized.
Basis for measurements, net periodic pension cost for the pension plan:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Weighted average discount rate 6.08% 6.00% 6.50%
Rate of increase in future compensation levels 4.33% 4.25% 4.75%
Expected long-term rate of return on plan assets 7.33% 7.25% 7.25%
</TABLE>
The amount of NPPBC for the postretirement benefit plan as a whole for
the years ended December 31, 1999, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------- -------------- -------------
<S> <C> <C> <C>
Service cost (benefits attributed to employee service
during the year) $14,200 $ 9,800 $ 7,000
Interest cost on accumulated postretirement benefit obligation 17,600 15,400 14,000
Actual return on plan assets (3,500) (5,000) (3,600)
Amortization of unrecognized transition obligation of affiliates 600 200 200
Net amortization and deferral (1,800) 1,200 (500)
------------- -------------- -------------
$27,100 $21,600 $17,100
============= ============== =============
</TABLE>
Actuarial assumptions used for the measurement of the accumulated
postretirement benefit obligation (APBO) and the NPPBC for the
postretirement benefit plan for 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
NPPBC:
Discount rate 6.65% 6.70% 7.25%
Long term rate of return on plan
assets, net of tax 7.15% 5.83% 5.89%
Assumed health care cost trend rate:
Initial rate 15.00% 12.00% 11.00%
Ultimate rate 5.50% 6.00% 6.00%
Uniform declining period 5 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, 1999 and have no impact
on the NPPBC for the year ended December 31, 1999.
(10) 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 certain levels, each of
which requires specified corrective action. The Company exceeds the
minimum risk-based capital requirements.
<PAGE> 19
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(a wholly owned subsidiary of Nationwide Life Insurance Company)
Notes to Financial Statements, Continued
The statutory capital and surplus of the Company as reported to
regulatory authorities as of December 31, 1999, 1998 and 1997 was
$63,275, $70,135 and $74,820, respectively. The statutory net (loss)
income of the Company as reported to regulatory authorities for the
years ended December 31, 1999, 1998 and 1997 was $(305), $(3,371) and
$7,446, respectively.
The Company is limited in the amount of shareholder dividends it may
pay without prior approval by the Department. As of December 31, 1999,
the maximum amount available for dividend payment from the Company to
its shareholder without prior approval of the Department was $6,328.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and stockholder dividends
in the future.
(11) TRANSACTIONS WITH AFFILIATES
The Company leases office space from NMIC and certain of its
subsidiaries. For the years ended December 31, 1999, 1998 and 1997, the
Company made lease payments to NMIC and its subsidiaries of $660, $430
and $703, 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. Measures used
to allocate expenses among companies include individual employee
estimates of time spent, special cost studies, salary expense,
commission expense and other methods agreed to by the participating
companies that are within industry guidelines and practices. In
addition, beginning in 1999 Nationwide Services Company, a subsidiary
of NMIC, provides computer, telephone, mail, employee benefits
administration, and other services to NMIC and certain of its direct
and indirect subsidiaries, including the Company, based on specified
rates for units of service consumed. For the years ended December 31,
1999, 1998 and 1997, the Company made payments to NMIC and Nationwide
Services Company totaling $5,150, $2,933, and $2,564, respectively. In
addition, the Company does not believe that expenses recognized under
these agreements are materially different than expenses that would have
been recognized had the Company operated on a stand-alone basis.
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. Amounts ceded to NLIC in 1999 are included in NLIC's results
of operations for 1999 and include premiums of $258,468 ($241,503 and
$300,617 in 1998 and 1997, respectively), net investment income of
$75,963 ($66,353 and $57,072 in 1998 and 1997, respectively) and
benefits, claims and other expenses of $319,240 ($296,659 and $343,426
in 1998 and 1997, respectively). 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.
During 1999, the Company entered into an intercompany reinsurance
agreement with NLIC wherby certain life insurance contracts are ceded
on a 100% coinsurance basis. Amounts ceded to NLIC include premiums of
$87,696 and expenses of $3,150 during 1999 and policy reserves of
$91,667 as of December 31, 1999.
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 reinsurance agreements with affiliates are consistent in
all material respects with what the Company could have obtained with
unaffiliated parties.
<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 $706 and $2,277 as of December 31,
1999 and 1998, respectively, and are included in short-term investments
on the accompanying balance sheets.
(12) CONTINGENCIES
On October 29, 1998, the Company was 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).
On May 3, 1999, the complaint was amended to, among other things, add
Marcus Shore as a second plaintiff. The amended complaint is brought as
a class action on behalf of all persons who purchased individual
deferred annuity contracts or participated in group annuity contracts
sold by the Company and the other named Company affiliates which were
used to fund certain tax-deferred retirement plans. The amended
complaint seeks unspecified compensatory and punitive damages. No class
has been certified. On June 11, 1999, the Company and the other named
defendants filed a motion to dismiss the amended complaint. On March 8,
2000, the court denied the motion to dismiss the amended complaint
filed by the Company and other named defendants. The Company intends to
defend this lawsuit vigorously.
(13) 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 access to a wide range of investment options,
tax-deferred accumulation of savings, asset protection in the event of
an untimely death, and flexible payout options including a lump sum,
systematic withdrawal or a stream of payments for life. 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, tax-deferred accumulation of savings, and flexible
payout options including a lump sum, systematic withdrawal or a stream
of payments for life. 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, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
Annuities Annuities Insurance and Other Total
--------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C>
1999:
Net investment income (1) $ (2,304) $ 8,550 $ 1,596 $ 6,117 $ 13,959
Other operating revenue 26,187 3,310 16,647 -- 46,144
----------- ----------- ----------- ----------- -----------
Total operating revenue (2) 23,883 11,860 18,243 6,117 60,103
----------- ----------- ----------- ----------- -----------
Interest credited to policyholder
account balances -- 6,561 1,987 -- 8,548
Amortization of deferred policy
acquisition costs 7,686 963 4,943 -- 13,592
Other benefits and expenses 13,593 7,378 8,424 -- 29,395
----------- ----------- ----------- ----------- -----------
Total expenses 21,279 14,902 15,354 -- 51,535
----------- ----------- ----------- ----------- -----------
Operating income (loss) before
federal income tax 2,604 (3,042) 2,889 6,117 8,568
Realized gains on investments -- -- -- 5,208 5,208
----------- ----------- ----------- ----------- -----------
Consolidated income (loss) before
federal tax expense $ 2,604 $ (3,042) $ 2,889 $ 11,325 $ 13,776
=========== =========== =========== =========== ===========
Assets as of year end $ 1,957,486 $ 1,352,324 $ 382,388 $ 70,265 $ 3,762,463
=========== =========== =========== =========== ===========
1998:
Net investment income (1) $ (1,417) $ 6,792 $ 408 $ 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 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
=========== =========== =========== =========== ===========
</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>
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 (loss) before
federal income tax 7,267 3,202 (228) 6,357 16,598
Realized losses on investments - - - (246) (246)
--------------- --------------- --------------- ---------------- -------------
Consolidated income (loss) 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>
- ----------
(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> 65
PART II - OTHER INFORMATION
CONTENTS OF REGISTRATION STATEMENT
This Post-Effective Amendment No. 11 to Form S-6 Registration Statement
comprises the following papers and documents:
The facing sheet.
Cross-reference to items required by Form N-8B-2.
The prospectus consisting of 107 pages.
Representations and Undertakings.
Independent Auditors' Consent.
Signatures.
The following exhibits required by Forms N-8B-2 and S-6:
<TABLE>
<S> <C>
1. Power of Attorney dated April 5, 2000 Attached hereto.
2. Resolution of the Depositor's Board of Directors Included with the Registration Statement on Form N-8B-2 for
authorizing the establishment of the Registrant, the Nationwide VL Separate Account-A (File No. 811-6137),
adopted. and hereby incorporated herein by reference.
3. Distribution Contracts Attached hereto.
4. Form of Security Included with Pre-Effective Amendment No. 1 and hereby
incorporated herein by reference.
5. Articles of Incorporation of Depositor Included with the Registration Statement on Form N-8B-2 for
the Nationwide VL Separate Account-A (File No. 811-6137),
and hereby incorporated herein by reference.
6. Application Form of Security Included with Pre-Effective Amendment No. 1 and hereby
incorporated herein by reference.
7. Opinion of Counsel Included with Pre-Effective Amendment No. 1 and hereby
incorporated herein by reference.
</TABLE>
<PAGE> 66
REPRESENTATIONS AND UNDERTAKINGS
The Registrant and Nationwide hereby make the following representations and
undertakings:
(a) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the
Investment Company Act of 1940 (the "1940 Act"). The Registrant and
Nationwide elect to be governed by Rule 6e-3(T)(b)(13)(i)(A) under the
1940 Act with respect to the policies described in the prospectus. The
policies have been designed in such a way as to qualify for the exemptive
relief from various provisions of the 1940 Act afforded by Rule 6e-3(T).
(b) Paragraph (b) (13) (iii) (F) of Rule 6e-3(T) is being relied on for the
deduction of the mortality and expense risk charges ("risk charges")
assumed by Nationwide under the policies. Nationwide represents that the
risk charges are within the range of industry practice for comparable
policies and reasonable in relation to all of the risks assumed by the
issuer under the policies. Actuarial memoranda demonstrating the
reasonableness of these charges are maintained by Nationwide, and will be
made available to the Securities and Exchange Commission (the
"Commission") on request.
(c) Nationwide has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the separate account will benefit
the separate account and the contractholders and will keep and make
available to the Commission on request a memorandum setting forth the
basis for this representation.
(d) Nationwide represents that the separate account will invest only in
management investment companies which have undertaken to have a board of
directors, a majority of whom are not interested persons of Nationwide,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses.
(e) Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the Registrant hereby undertakes to file with the
Commission such supplementary and periodic information, documents, and
reports as may be prescribed by any rule or regulation of the Commission
heretofore or hereafter duly adopted pursuant to authority conferred in
that section.
(f) Represent that the fees and charges deducted under the contract in the
aggregate are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by Nationwide.
<PAGE> 67
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 28, 2000
<PAGE> 68
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Nationwide VL Separate Account - A, certifies that it meets the requirements of
the Securities Act Rule 485(b) for effectiveness of the Post-Effective Amendment
No.11 and has duly caused this Post-Effective Amendment No.11 to be signed on
its behalf by the undersigned thereunto duly authorized and its seal to hereunto
affixed and attested, all in the City of Columbus, and State of Ohio, on this
28th day of April, 2000.
<TABLE>
<S> <C>
NATIONWIDE VL SEPARATE ACCOUNT-A
----------------------------------------------------------------------
(Registrant)
(Seal) NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
----------------------------------------------------------------------
Attest: (Depositor)
By: /s/ GLENN W. SODEN By: STEVEN SAVINI, ESQ.
- ---------------------------------------------- ----------------------------------------------------------------
Glenn W. Soden Steven Savini, Esq.
Assistant Secretary
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 11 has been signed below by the following persons in the
capacities indicated on the 28th day of April, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <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 Operating
- ---------------------------------------- Officer and Director
Joseph J. Gasper
DIMON R. MCFERSON Chairman and Chief Executive
- ---------------------------------------- Officer and Director
Dimon R. McFerson Chairman of the Board and
DAVID O. MILLER Director
- ----------------------------------------
David O. Miller
YVONNE L. MONTGOMERY Director
- ----------------------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President and Chief
- ---------------------------------------- Financial Officer
Robert A. Oakley
RALPH M. PAIGE Director
- ----------------------------------------
Ralph M. Paige
JAMES F. PATTERSON Director
- ----------------------------------------
James F. Patterson
ARDEN L. SHISLER Director By: /s/Steven Savini
- ---------------------------------------- --------------------------------------
Arden L. Shisler Steven Savini, Esq.
Attorney-in-Fact
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 PRESENT, 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, and if applicable, the Investment Company
Act of 1940, as amended, various Registration Statements and amendments thereto
for the registration under said Act(s) of Immediate or Deferred Variable Annuity
contracts in connection with MFS Variable Account, Nationwide Multi-Flex
Variable Account, Nationwide Variable Account, Nationwide Variable Account-11,
Nationwide Variable Account-3, Nationwide Variable Account-4, Nationwide
Variable Account-5, Nationwide Variable Account-6, Nationwide Fidelity Advisor
Variable Account, Nationwide Variable Account-8, Nationwide Variable Account-9,
Nationwide Variable Account-10, Nationwide Variable Account-11, Nationwide VA
Separate Account-A, Nationwide VA Separate Account-B, and Nationwide VA Separate
Account-C; 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 Separate 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, Nationwide VL Separate Account-B, Nationwide VL Separate
Account-C and Nationwide VL Separate Account-D, as well as any future separate
accounts established by said corporation for the purpose of registering variable
annuities, variable life insurance policies or market value adjustment products
with the U.S. Securities and Exchange Commission, hereby constitute and appoint
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, Steven R. Savini 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 granting 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 5th day of April, 2000.
/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 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 R. McFerson /s/ Nancy C. Thomas
- ------------------------------------- -------------------------------------
Dimon R. McFerson, Chairman and Chief Nancy C. Thomas, Director
Executive Officer and Director
<PAGE> 1
MARKETING COORDINATION AND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement entered into this 1st day of May, 2000, between Nationwide Life
and Annuity Insurance Company ("Nationwide"), and Nationwide Investment Services
Corporation ("NISC").
Nationwide proposes to develop, issue and administer, and NISC proposes to
provide the exclusive national distribution services for certain annuity and
life products (the "Products"). The parties hereby agree as follows:
A. ADMINISTRATION OF PRODUCTS
1. Appointment of Product Administration
Nationwide is hereby appointed Product Administrator for the
Products.
2. Duties of Nationwide
Nationwide will perform in a proper and timely manner, those
functions enumerated in the column marked "Nationwide" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
3. Duties of NISC
NISC will perform in a proper and timely manner, those
functions enumerated in the column marked "NISC" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
B. MARKETING COORDINATION AND SALES ADMINISTRATION
1. Distribution of Products
The Products will be distributed through registered
representatives of NASD broker-dealer firms, appointed by
Nationwide, who shall be duly qualified and licensed as agents
(the "Agents"), in accordance with applicable state insurance
authority.
2. NISC shall be the exclusive National Distributor of the
Products.
<PAGE> 2
3. Appointment and Termination of Agents
Appointment and termination of Agents shall be processed and
executed by Nationwide. NISC reserves the right to require
Nationwide to consult with it regarding licensing decisions.
4. Advertising
NISC shall not print, publish or distribute any advertisement,
circular or document relating to the Products or relating to
Nationwide unless such advertisement, circular or document has
been approved in writing by Nationwide. Such approval shall
not be unreasonably withheld, and shall be given promptly,
normally within five (5) business days. Neither Nationwide nor
any of its affiliates shall print, publish or distribute any
advertisement, circular or document relating to the Products
or relating to NISC unless such advertisement, circular or
document has been approved in writing by NISC. Such approval
shall not be unreasonably withheld, and shall be given
promptly, normally within five (5) business days. However,
nothing herein shall prohibit any person from advertising the
Products on a generic basis.
5. Marketing Conduct
The parties will jointly develop standards, practices and
procedures respecting the marketing of the Products. Such
standards, practices and procedures are intended to help
Nationwide meet its obligations as an issuer under the
securities laws, to assure compliance with state insurance
laws, and to help NISC meet its obligations under the
securities laws as National Distributor. These standards,
practices and procedures are subject to continuing review and
neither Nationwide nor NISC will object unreasonably to
changes to such standards, practices and procedures
recommended by the other to comply with the intent of this
provision.
6. Sales Material and Other Documents
a. Sales Material
1) Nationwide shall develop and prepare all
promotional material to be used in the
distribution of the Products, in
consultation with NISC.
2) Nationwide is responsible for the printing
and the expense of providing such
promotional material.
3) Nationwide is responsible for approval of
such promotional material by state insurance
regulators, where required.
<PAGE> 3
4) NISC and Nationwide agree to abide by the
Advertising and Sales Promotion Material
Guidelines, attached hereto as EXHIBIT B,
and incorporated herein by reference.
b. Prospectuses
1) Nationwide is responsible for the
preparation and regulatory clearance of any
required registration statements and
prospectuses for the Products.
2) Nationwide is responsible for the printing
of Product prospectuses in such quantities
as the parties agree are necessary to assure
sufficient supplies.
3) Nationwide is responsible for supplying
Agents with sufficient quantities of Product
prospectuses.
c. Contracts, Applications and Related Forms
1) Nationwide, in consultation with NISC, is
responsible for the design and printing of
adequate supplies of Product applications,
contracts, related forms, and such service
forms as the parties agree are necessary.
2) Nationwide is responsible for supplying
adequate quantities of all such forms to the
Agents.
7. Appointment of Agents
a. NISC will assist Nationwide in facilitating the
appointment of Agents by Nationwide.
b. Nationwide will forward all appointment forms and
applications to the appropriate states and maintain
all contacts with the states.
c. Nationwide will maintain appointment files on Agents,
and NISC will have access to such files as needed.
8. Licensing and Appointment Guide
Nationwide shall provide to NISC a Licensing and Appointment
Guide (as well periodic updates thereto), setting forth the
requirements for licensing and appointment, in such quantities
as NISC may reasonably require.
<PAGE> 4
9. Other
a. Product Training
Nationwide is responsible for any Product training
for the Agents.
b. Field Sales Material
1) Nationwide, in consultation with NISC, is
responsible for the development, printing
and distribution of non-public field sales
material to be used by Agents.
2) NISC shall have the right to review all
field sales materials and to require any
modification mandated by regulatory
requirements.
c. Production Reports
Nationwide will deliver to NISC the items listed in
Production Reports to be Provided, attached hereto as
EXHIBIT C, and incorporated herein by reference.
d. Customer Service
Each party will notify the other of all material
pertinent inquiries and complaints it receives, from
whatever source and to whomever directed, and will
consult with the other in responding to such
inquiries and complaints.
e. Records and Books
All books and records maintained by Nationwide in
connection with the offer and sale of variable
annuity interests funded by a Separate Account are
maintained and preserved in conformity with the
requirements of Rule 17a-3 and 17a-4 under the 1934
Exchange Act, to the extent such requirements are
applicable to the variable annuity operations.
All such books and records are maintained and held by
Nationwide on behalf of and as agent for NISC, whose
property they are and shall remain. Such books and
records are at all times subject to inspection by the
Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.
<PAGE> 5
C. GENERAL PROVISIONS
1. Waiver
The forbearance or neglect of either party to insist upon
strict compliance by the other with any of the provisions of
this Agreement, whether continuing or not, or to declare a
forfeiture of termination against the other, shall not be
construed as a waiver of any rights or privileges of the
forbearing party in the event of a further default or failure
of performance.
2. Limitations
Neither party shall have authority on behalf of the other to:
make, alter or discharge any contractual terms of the
Products; waive any forfeiture; extend the time of making any
contributions to the products; guarantee dividends; alter the
forms which either may prescribe; nor substitute other forms
in place of those prescribed by the other.
3. Binding Effect
This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective successors
and assigns, provided that neither party shall assign or
sub-contract this Agreement or any rights or obligations
hereunder without prior written consent of the other.
4. Indemnification
Each party ("Indemnifying Party") hereby agrees to release,
indemnify and hold harmless the other party, its officers,
directors, employers, agents, servants, predecessors or
successors from any claims or liability arising out of the
acts or omissions of the Indemnifying Party not authorized by
this Agreement, including the violation of any federal or
state law or regulation.
5. Notices
All notices, requests, demands and other communication under
this Agreement shall be in writing and shall be deemed to have
been given on the date of service if served personally on the
party to whom notice is to be given, or on the date of mailing
if sent postage prepaid by First Class Mail, Registered or
Certified mail, by overnight mail, properly addressed as
follows:
TO NATIONWIDE:
Nationwide Life Insurance Company
Michael C. Butler, Vice President-Sales
Three Nationwide Plaza
Columbus, Ohio 43215
<PAGE> 6
TO NISC:
Nationwide Investment Services Corporation
Barbara Shane, Vice President-Compliance Officer
Two Nationwide Plaza
Columbus, Ohio 43215
6. Governing Law
This Agreement shall be construed in accordance with and
governed by the laws of the State of Ohio.
7. Arbitration
The parties agree that misunderstandings or disputes arising
from this Agreement shall be decided by arbitration, conducted
upon request of either party before three arbitrators (unless
the parties agree on a single arbitrator) designated by the
American Arbitration Association, and in accordance with the
rules of such Association. The expenses of the arbitration
proceedings conducted hereunder shall be borne equally by both
parties.
8. Confidentiality
Any information, documents and materials, whether printed or
oral, furnished by either party or its agents or employees to
the other shall be held in confidence. No such information
shall be given to any third party, other than to such
sub-contractors of NISC as may be permitted herein, or under
requirements of a lawful authority, without the express
written consent of the other party.
D. TERM OF AGREEMENT
This Agreement, including the Exhibits attached hereto, shall remain in
full force and effect until terminated, and may be amended only by
mutual agreement of the parties in writing. Any decision by either
party to cease issuance or distribution of any specific Product shall
not effect a termination of the Agreement unless such termination is
mutually agreed upon, or unless notice is given pursuant to Section
E.2. hereof.
E. TERMINATION
1. Either party may terminate this Agreement for cause at any
time, upon written notice to the other, if the other knowingly
and willfully: (a) fails to comply with the laws or
regulations of any state or governmental agency or body having
jurisdiction over the sale of insurance or securities; (b)
misappropriates any money or property belonging to the other;
(c) subjects the other to any actual or potential liability
due to misfeasance, malfeasance, or nonfeasance; (d) commits
any fraud upon the other; (e) has an assignment for the
benefit of creditors; (f) incurs bankruptcy; or (g) commits a
material breach of this Agreement.
<PAGE> 7
2. Either party may terminate this Agreement, without regard to
cause, upon six months prior written notice to the other.
3. In the event of termination of this Agreement, the following
conditions shall apply:
a) The parties irrevocably acknowledge the continuing
right to use any Product trademark that might then be
associated with any Products, but only with respect
to all business in force at the time of termination.
b) In the event this Agreement is terminated the parties
will use their best efforts to preserve in force the
business issued pursuant to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first above written.
NATIONWIDE LIFE INSURANCE
COMPANY
By: __________________________
Michael C. Butler
Title: Vice President - Sales
NATIONWIDE INVESTMENT SERVICES
CORPORATION
By: ________________________
Barbara Shane
Title: Vice President - Compliance Officer
<PAGE> 8
EXHIBIT A
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
A. PRODUCT UNDERWRITING/ISSUE
NATIONWIDE NISC
- - Establishes underwriting criteria for - Consults with regard to new business
application processing and rejections. procedures and processing.
- - Reviews the completed application.
Applies underwriting/issue criteria to
application.
- - Notifies Agent and/or customer of
any error or missing data necessary to
underwrite application and establish
records for owner of Product ("Contract
Owner").
- - Prepares policy data page for
approved business and mails with policy
to Contract Owner.
- - Establishes and maintains all records
required for each Contract Owner, as
applicable.
- - Prepares and mails confirmation and
other statements to Contract Owners and
Agents, as required.
- - Prints, provides all forms ancillary
to issue of contract/policy forms for
Products.
- - Maintains supply of approved specimen
policy forms and all ancillary forms,
distributes same to Agents.
<PAGE> 9
B. BILLING AND COLLECTION
NATIONWIDE
- - Receives premium/purchase payments
and reconciles amount received with
remittance media.
- - Updates Contract Owner records to
reflect receipt of premium/purchase
payment and performs accounting/
investment allocation of each payment
received.
- - Deposits all cash received under the
Products in accordance with the terms
of the Products.
- - Balances, edits, endorses and prepares
daily deposit.
C. BANKING
NATIONWIDE
- - Balances, edits, endorses and prepares
daily deposit
- - Places deposits in depository account
- - Prepares daily cash journal summary
reports and maintains same for review
by NISC
<PAGE> 10
D. PRICING/VALUATION/ACCOUNTING/TRADING
NATIONWIDE NISC
- - Maintains and makes available, as - Cooperates in annual audit of
reasonably requested, records used separate account financials conducted
in determining "Net Amount Available for purposes of financial statement
for Investment." certification and publication.
- - Collects information needed in - Will clear and settle Mutual Fund
determining Variable Account unit trades on behalf of the separate
values from the Funds including daily accounts using the National Securities
net asset value, capital gains or Clearing Corporation FUND/Serv System.
dividend distributions, and the number
of Fund Shares acquired or sold during
the immediately preceding valuation
period.
- - Performs daily unit valuation
calculation.
<PAGE> 11
E. CONTRACT OWNER SERVICE/
RECORD MAINTENANCE
NATIONWIDE NISC
- - Receives and processes all Contract - Accommodates customer service
Owner service requests, including but function by providing any supporting
not limited to informational requests, information or documentation which may
beneficiary changes, and transfers of be in the control of NISC.
Contract Value among eligible
investment options.
- - Maintains daily records of all changes
made to Contract Owner accounts.
- - Researches and responds to all
Contract Owner/Agent inquiries.
- - Keeps all required Contract Owner
records.
- - Maintains adequate number of toll
free lines to service Contract Owner/
Agent inquiries.
F. DISBURSEMENTS (SURRENDERS,
DEATH CLAIMS, LOANS)
NATIONWIDE NISC
- - Receives and processes surrenders,
loans, and death claims in accordance
with established guidelines.
- - Prepares checks for surrenders,
loans, and death claims, and forwards
to Contract Owner or Beneficiary.
Prepares and mails confirmation
statement of disbursement to Contract
Owner/Beneficiary with copy to Agent.
<PAGE> 12
G. COMMISSIONS
NATIONWIDE NISC
- - Ascertains, on receipt of - Receives and performs record
applications, whether writing Agent is keeping for investment company
appropriately licensed. payments made under a 12b-1 Plan.
- - Pays commissions and other fees in
accordance with agreements relating to
same.
H. PROXY PROCESSING
NATIONWIDE NISC
- - Receives record date information from
Funds Receives proxy solicitation
materials from Funds.
- - Prepares Voting Instruction cards and
mails solicitation, if necessary.
- - Tabulates and votes all Fund Shares
in accordance with SEC requirements.
I. PERIODIC REPORTS TO CONTRACT OWNERS
NATIONWIDE NISC
- - Prepares and mails quarterly and
annual Statements of Account to Contract
Owners.
- - Prepares and mails all semi-annual
and annual reports of Variable Account(s)
to Contract Owners.
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J. REGULATORY/STATEMENT REPORTS
NATIONWIDE NISC
- - Prepares and files Separate Account - Prepares and files periodic FOCUS
Annual Statements. Reports with the NASDR and SEC,
as applicable.
- - Prepares and mails the appropriate, - Prepares and files annual audited
required IRS reports at the Contract financial statements with required
Owner level. Files same with required regulatory agencies.
regulatory agencies.
- - Prepares and files form N-SAR for
the Separate Account.
K. PREMIUM TAXES
NATIONWIDE NISC
- - Collects, pays and accounts for
premium taxes as appropriate.
- - Prepares and maintains all premium
tax records by state.
- - Maintains liabilities in General
Account ledger for accrual of premium
tax collected.
- - Integrates all company premium taxes
due and performs related accounting.
L. FINANCIAL AND MANAGEMENT REPORTS
NATIONWIDE NISC
- - Provides periodic reports in - Provides periodic reports in
accordance with the Schedule of Reports accordance with the Schedule of
to be prepared jointly by Nationwide and Reports to be prepared jointly by
NISC. (See EXHIBIT C) Nationwide and NISC. (See EXHIBIT C)
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M. AGENT LICENSE RECORDKEEPING
NATIONWIDE NISC
- - Receives, establishes, processes, - Maintains securities registrations
and maintains Agent appointment and assumes supervisory responsibility
records. for representatives of affiliated
sales and marketing companies involved
in the wholesale distribution of
Nationwide variable contract products.
- Maintains training, supervisory, and
other required records for and on
behalf of registered representatives
of NISC.
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EXHIBIT B
ADVERTISING AND SALES PROMOTION MATERIAL GUIDELINES
FOR APPROVAL BY NATIONWIDE AND NISC
In order to assure compliance with state and federal regulatory requirements and
to maintain control over the distribution of promotional materials dealing with
the Products, Nationwide and NISC require that all variable contract promotional
materials be reviewed and approved by both Nationwide and NISC prior to their
use. These guidelines are intended to provide appropriate regulatory and
distribution controls.
1. Sufficient lead time must be allowed in the submission of all
promotional material. Nationwide and NISC shall approve in writing all
promotional material. Such approval shall not be unreasonably withheld,
and shall be given promptly, normally within five (5) days.
2. All promotional material will be submitted in "draft" form to permit
any changes or corrections to be made prior to the printing.
3. Nationwide and NISC will provide each other with details as to each and
every use of all promotional material submitted. Approval for one use
will not constitute approval for any other use. Different standards of
review may apply when the same advertising material is intended for
different uses. The following information will be provided for each
item of promotional material:
a. In what jurisdiction(s) the material will be used.
b. Whether distribution will be to broker/dealer, entity,
participant, etc.
c. How the material will be used (e.g., brochure, mailing, web
site, etc.).
d. The projected date of initial use.
4. Each party will advise the other of the date it discontinues the use of
any material.
5. Any changes to previously approved promotional material must be
resubmitted, following these procedures. When approved material is to
be put to a different use, request for approval of the material for the
new use must be submitted.
6. Nationwide will assign a form number to each item of advertising and
sales promotional material. This number will appear on each piece of
advertising and sales promotional material. It will be used to aid in
necessary filings, and to maintain appropriate controls.
7. Nationwide and NISC will provide written approval for all material to
be used.
8. Nationwide will be responsible to effect necessary state filings.
9 NISC will coordinate SEC/NASD filings of sales and promotional
material.
10. All telephone communication and written correspondence regarding
promotional materials should be directed to Office of Product and
Market Compliance, Nationwide Life Insurance Company, One Nationwide
Plaza, Columbus, Ohio 43215
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EXHIBIT C
PRODUCTION REPORTS TO BE PROVIDED
Nationwide agrees to provide the following reports to NISC:
1. Daily Receipt Report: Indicates which Agents are generating sales
2. Daily Approval Report: Indicates which applications have been approved
3. Daily Activity Summary: Indicates top firms' sales and liquidation by month,
year-to-date as well as total assets by firm.
4. Dealer Activity Indicates top firms' sales and liquidation by month,
Summary by Territory: year-to-date
5. Summary of Sales by Indicates sales by territory/dealer/branch,
Territory and Dealer: including non-commissionable amounts and actual
commission payments, as well as chargebacks
(Internal use only)
6. Commission Report: Indicates commission paid and chargebacks, matched
to Commission checks.
In addition, Nationwide will provide reports detailing current appointments and
other information, as reasonably requested by NISC.
