<PAGE> 1
As filed with the Securities and Exchange Commission.
'33 Act File No. 33-86408
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
POST EFFECTIVE AMENDMENT NO. 11
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 11
NATIONWIDE VA SEPARATE ACCOUNT- B
(Exact Name of Registrant)
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
(Name of Depositor)
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (614) 249-7111
PATRICIA R. HATLER, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Name and Address of Agent for Service)
This Post-Effective amendment amends the Registration Statement in respect of
the Prospectus, Statement of Additional Information, and the Financial
Statements.
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on September 20, 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
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
===============================================================================
<PAGE> 2
NATIONWIDE VA SEPARATE ACCOUNT-B
REFERENCE TO ITEMS REQUIRED BY FORM N-4
<TABLE>
<CAPTION>
N-4 ITEM CAPTION
<S> <C>
PART A INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page.................................................................................Cover Page
Item 2. Definitions.................................................................Glossary of Special Terms
Item 3. Synopsis or Highlights......................................................Synopsis of the Contracts
Item 4. Condensed Financial Information.......................................Condensed Financial Information
Item 5. General Description of Registrant, Depositor, and Portfolio
Companies ..........................Nationwide Life Insurance Company; Investing in the Contract
Item 6. Deductions and Expenses...............................................Standard Charges and Deductions
Item 7. General Description of Variable
Annuity Contracts.......................................Contract Ownership; Operation of the Contract
Item 8. Annuity Period...............................................................Annuitizing the Contract
Item 9. Death Benefit and Distributions........................................................Death Benefits
Item 10. Purchases and Contract Value................................................Operation of the Contract
Item 11. Redemptions....................................................................Surrender (Redemption)
Item 12. Taxes ....................................................................Federal Tax Considerations
Item 13. Legal Proceedings...................................................................Legal Proceedings
Item 14. Table of Contents of the Statement of Additional
Information.........................Table of Contents of the Statement of Additional Information
PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 15. Cover Page.................................................................................Cover Page
Item 16. Table of Contents...................................................................Table of Contents
Item 17. General Information and History.......................................General Information and History
Item 18. Services.....................................................................................Services
Item 19. Purchase of Securities Being Offered.............................Purchase of Securities Being Offered
Item 20. Underwriters.............................................................................Underwriters
Item 21. Calculation of Performance Information.....................................Calculation of Performance
Item 22. Annuity Payments.....................................................................Annuity Payments
Item 23. Financial Statements.............................................................Financial Statements
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits.............................................................Item 24
Item 25. Directors and Officers of the Depositor.......................................................Item 25
Item 26. Persons Controlled by or Under Common Control with
the Depositor or Registrant..............................................................Item 26
Item 27. Number of Contract Owners.....................................................................Item 27
Item 28. Indemnification...............................................................................Item 28
Item 29. Principal Underwriter.........................................................................Item 29
Item 30. Location of Accounts and Records..............................................................Item 30
Item 31. Management Services...........................................................................Item 31
Item 32. Undertakings..................................................................................Item 32
</TABLE>
<PAGE> 3
SUPPLEMENT DATED SEPTEMBER 20, 2000, TO
PROSPECTUS DATED MAY 1, 2000, FOR
MODIFIED SINGLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
THROUGH ITS
NATIONWIDE VA SEPARATE ACCOUNT - B
THIS SUPPLEMENT UPDATES CERTAIN INFORMATION CONTAINED IN YOUR PROSPECTUS. PLEASE
READ IT AND KEEP IT WITH YOUR PROSPECTUS FOR FUTURE REFERENCE.
1. AN APPLICATION HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC") FOR AN ORDER PERMITTING THE SUBSTITUTION OF SHARES
OF THE UNDERLYING MUTUAL FUNDS IN COLUMN A ("EXISTING FUNDS") OF THE
FOLLOWING TABLE WITH SHARES OF THE UNDERLYING MUTUAL FUNDS IN COLUMN B
("REPLACEMENT FUNDS"). UNTIL AN ORDER IS GRANTED BY THE SEC, BOTH
INVESTMENT OPTIONS WILL BE AVAILABLE TO ALL CONTRACT OWNERS AS
UNDERLYING MUTUAL FUND OPTIONS. IF AN ORDER IS GRANTED, INFORMATION
WILL BE SENT TO ALL CONTRACT OWNERS REGARDING THE "EXCHANGE DATE" ON
WHICH THE EXISTING FUNDS WILL BE ELIMINATED AS INVESTMENT OPTIONS AND
SUBSTITUTED WITH THE REPLACEMENT FUNDS.
<TABLE>
<CAPTION>
Column A Column B
Existing Funds Replacement Funds
<S> <C>
Strong Variable Insurance Funds, Inc. - Strong Strong Opportunity Fund II, Inc.
Discovery Fund II, Inc.
</TABLE>
2. THE "SURRENDER (REDEMPTION)" PROVISION ON PAGE 22 OF YOUR PROSPECTUS IS
AMENDED TO INCLUDE THE FOLLOWING:
NATIONWIDE IS REQUIRED BY STATE LAW TO RESERVE THE RIGHT TO POSTPONE
PAYMENT OF ASSETS IN THE FIXED ACCOUNT FOR A PERIOD OF UP TO SIX MONTHS
FROM THE DATE OF THE SURRENDER REQUEST.
3. "APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS" ON PAGE 44 OF YOUR
PROSPECTUS IS AMENDED TO READ:
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST ("AMT")
Neuberger Berman AMT is an open-end, diversified management investment
company that offers its portfolios in connection with variable annuity
contracts and variable life insurance policies, and certain qualified
plans. Prior to May 1, 2000, the portfolios invested through a two-tier
master/feeder structure, whereby each portfolio invested its assets in
another fund that served as a corresponding "master series;" the master
series invested in securities. Effective May 1, 2000, the portfolios
converted to a conventional one-tier structure, whereby each portfolio
holds its securities directly. Neuberger Berman Management Inc. is the
investment adviser.
GROWTH PORTFOLIO
Investment Objective: Capital growth. The portfolio pursues this goal
by investing mainly in the common stocks of mid-capitalization
companies. The managers look for fast-growing companies that are in new
or rapidly evolving industries and seek to reduce risk by diversifying
among many companies, industries and sectors.
<PAGE> 4
GUARDIAN PORTFOLIO
Investment Objective: Long-term capital growth, with current income as
a secondary objective. The portfolio pursues these goals by investing
mainly in common stocks of large-capitalization companies.
LIMITED MATURITY BOND PORTFOLIO
Investment Objective: The highest available current income consistent
with liquidity and low risk to principal; total return is a secondary
objective. The portfolio pursues these goals by investing mainly in
investment-grade bonds and other debt securities from U.S. government
and corporate issuers.
PARTNERS PORTFOLIO
Investment Objective: Capital growth. The portfolio pursues its goal by
investing mainly in common stocks of mid- to large-capitalization
companies.
4. EFFECTIVE SEPTEMBER 25, 2000: MERGER OF VAN KAMPEN LIFE INVESTMENT
TRUST - MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO INTO THE
UNIVERSAL INSTITUTIONAL FUNDS, INC. - U.S. REAL ESTATE PORTFOLIO.
Effective September 25, pursuant to shareholder vote, all shares of Van
Kampen Life Investment Trust - Morgan Stanley Real Estate Securities
Portfolio were exchanged for shares of The Universal Institutional
Funds, Inc. - U.S. Real Estate Portfolio. Any assets invested in Van
Kampen Life Investment Trust - Morgan Stanley Real Estate Securities
Portfolio at the close of business on September 22, 2000 will be
exchanged for shares of The Universal Institutional Funds, Inc. - U.S.
Real Estate Portfolio. The value of the shares received in the exchange
equals the value of the shares held in the Van Kampen Life Investment
Trust - Morgan Stanley Real Estate Securities Portfolio as of the close
of business on September 22, 2000. This exchange of shares will not
otherwise affect any contract rights. Contract owners are free to
reallocate assets located in The Universal Institutional Funds, Inc. -
U.S. Real Estate Portfolio pursuant to the terms of the contract.
Following the exchange, contract owners who had assets in the Van
Kampen Life Investment Trust - Morgan Stanley Real Estate Securities
Portfolio will have assets in The Universal Institutional Funds, Inc. -
U.S. Real Estate Portfolio and the Van Kampen Life Investment Trust -
Morgan Stanley Real Estate Securities Portfolio will be terminated in
accordance with Delaware state law.
5. EFFECTIVE SEPTEMBER 25, 2000, ALL REFERENCES IN YOUR PROSPECTUS TO VAN
KAMPEN LIFE INVESTMENT TRUST - MORGAN STANLEY REAL ESTATE SECURITIES
PORTFOLIO ARE DELETED AND PAGE 1 OF YOUR PROSPECTUS IS AMENDED TO
INCLUDE THE FOLLOWING UNDERLYING MUTUAL FUND:
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
- U.S. Real Estate Portfolio
6. EFFECTIVE SEPTEMBER 25, 2000, THE "UNDERLYING MUTUAL FUND ANNUAL
EXPENSES" TABLE ON PAGE 8 OF YOUR PROSPECTUS IS AMENDED AS FOLLOWS:
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund average net assets, after
expense reimbursement)
<TABLE>
<CAPTION>
Total Underlying
Management Other 12b-1 Mutual Fund
Fees Expenses Fees Expenses
<S> <C> <C> <C> <C>
The Universal Institutional Funds, Inc. 0.75% 0.35% 0.00% 1.10%
-- U. S. Real Estate Portfolio
</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
<PAGE> 5
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.
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund average net assets, before
expense reimbursement)
<TABLE>
<CAPTION>
Total Underlying
Management Other 12b-1 Mutual Fund
Fees Expenses Fees Expenses
<S> <C> <C> <C> <C>
The Universal Institutional Funds, Inc. 0.80% 0.35% 0.00% 1.15%
-- U. S. Real Estate Portfolio
</TABLE>
7. EFFECTIVE SEPTEMBER 25, 2000, THE "EXAMPLE" CHART ON PAGE 11 OF YOUR
PROSPECTUS IS AMENDED AS FOLLOWS:
The following chart shows the expenses (in dollars) that would be
incurred under this contract assuming a $1,000 investment, 5% annual
return, and no change in expenses. These dollar figures are
illustrative only and should not be considered a representation of past
or future expenses. Actual expenses may be greater or less than those
shown below.
The example reflects expenses of both the variable account and the
underlying mutual funds. The example reflects the maximum amount of
variable account charges that could be assessed to a contract (1.45%).
Deductions for premium taxes are not reflected but may apply.
<TABLE>
<CAPTION>
If you surrender your If you do not surrender your If you annuitize your contract
contract at the end of the contract at the end of the at the end of the applicable
applicable time period applicable time period time period
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Universal 27 82 140 298 27 82 140 298 * 82 140 298
Institutional
Funds, Inc. --
U. S. Real
Estate Portfolio
</TABLE>
* The contracts sold under this prospectus do not permit annuitization
during the first two contract years.
8. EFFECTIVE SEPTEMBER 25, 2000, "APPENDIX A: OBJECTIVES FOR UNDERLYING
MUTUAL FUNDS" ON PAGE 44 OF YOUR PROSPECTUS IS AMENDED TO READ:
THE UNIVERSAL INSTITUTIONAL FUNDS, INC.
U. S. REAL ESTATE PORTFOLIO
Investment Objective: Long-term capital growth by investing principally
in a diversified portfolio of securities of companies operating in the
real estate industry ("Real Estate Securities"). Current income is a
secondary consideration. Real Estate Securities include equity
securities, including common stocks and convertible securities, as well
as non-convertible preferred stocks and debt securities of real estate
industry companies. A "real estate industry company" is a company that
<PAGE> 6
derives at least 50% of its assets (marked to market), gross income or
net profits from the ownership, construction, management or sale of
residential, commercial or industrial real estate. Under normal market
conditions, at least 65% of the Fund's total assets will be invested in
Real Estate Securities, primarily equity securities of real estate
investment trusts. The Portfolio may invest up to 25% of its total
assets in securities issued by foreign issuers, some or all of which
may also be Real Estate Securities. Morgan Stanley Asset Management,
Inc. serves as the Fund's investment adviser.
9. EFFECTIVE OCTOBER 2, 2000, PAGE 1 OF YOUR PROSPECTUS IS AMENDED TO
INCLUDE THE FOLLOWING UNDERLYING MUTUAL FUNDS:
NATIONWIDE SEPARATE ACCOUNT TRUST
- Gartmore NSAT Emerging Markets Fund
- Gartmore NSAT Global Technology and Communications Fund
- Gartmore NSAT International Growth Fund
- Turner NSAT Growth Focus Fund
10. EFFECTIVE OCTOBER 2, 2000, THE FOLLOWING UNDERLYING MUTUAL FUNDS HAVE
CHANGED NAMES. ALL REFERENCES IN YOUR PROSPECTUS TO THE OLD NAME WILL
BE REPLACED WITH THE NEW NAME AS DESCRIBED BELOW:
<TABLE>
<CAPTION>
ALL REFERENCES TO... ARE REPLACED WITH...
<S> <C>
NSAT - Nationwide Mid Cap Index Fund NSAT - Dreyfus NSAT Mid Cap Index Fund
NSAT - Nationwide Multi Sector Bond Fund NSAT - MAS NSAT Multi Sector Bond Fund
NSAT - Nationwide Strategic Growth Fund NSAT - Strong NSAT Mid Cap Growth Fund
</TABLE>
11. EFFECTIVE OCTOBER 2, 2000, WADDELL & REED INVESTMENT MANAGEMENT COMPANY
WILL REPLACE FRANKLIN ADVISERS, INC. AS ONE OF THE SUBADVISERS OF THE
NATIONWIDE SEPARATE ACCOUNT TRUST - NATIONWIDE SMALL CAP GROWTH FUND.
THERE IS NO CHANGE IN THE FUND'S OBJECTIVE AS IS STATED IN THE
PROSPECTUS DATED MAY 1, 2000.
12. EFFECTIVE OCTOBER 2, 2000, THE "UNDERLYING MUTUAL FUND ANNUAL EXPENSES"
TABLE ON PAGE 8 OF YOUR PROSPECTUS IS AMENDED AS FOLLOWS:
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund average net assets, after expense
reimbursement)
<TABLE>
<CAPTION>
Total Underlying
Management Other 12b-1 Mutual Fund
Fees Expenses Fees Expenses
<S> <C> <C> <C> <C>
NSAT - Gartmore NSAT Emerging Markets Fund 0.87% 0.88% 0.00% 1.75%
NSAT - Gartmore NSAT Global Technology and 0.62% 0.73% 0.00% 1.35%
Communications Fund
NSAT - Gartmore NSAT International Growth 0.72% 0.88% 0.00% 1.60%
Fund
NSAT - Nationwide Small Cap Value Fund 0.88% 0.37% 0.00% 1.25%
NSAT - Turner NSAT Growth Focus Fund 0.59% 0.76% 0.00% 1.35%
</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
<PAGE> 7
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.
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(as a percentage of underlying mutual fund average net assets, before expense
reimbursement)
<TABLE>
<CAPTION>
Total Underlying
Management Other 12b-1 Mutual Fund
Fees Expenses Fees Expenses
<S> <C> <C> <C> <C>
NSAT - Gartmore NSAT Emerging Markets Fund 1.15% 0.88% 0.00% 2.03%
NSAT - Gartmore NSAT Global Technology and 0.98% 0.73% 0.00% 1.71%
Communications Fund
NSAT - Gartmore NSAT International Growth 1.00% 0.88% 0.00% 1.88%
Fund
NSAT - Nationwide Small Cap Value Fund 0.90% 0.37% 0.00% 1.27%
NSAT - Turner NSAT Growth Focus Fund 0.90% 0.76% 0.00% 1.66%
</TABLE>
13. EFFECTIVE OCTOBER 2, 2000, THE "EXAMPLE" CHART ON PAGE 11 OF YOUR
PROSPECTUS IS AMENDED AS FOLLOWS:
The following chart shows the expenses (in dollars) that would be
incurred under this contract assuming a $1,000 investment, 5% annual
return, and no change in expenses. These dollar figures are
illustrative only and should not be considered a representation of past
or future expenses. Actual expenses may be greater or less than those
shown below.
The example reflects expenses of both the variable account and the
underlying mutual funds. The example reflects the maximum amount of
variable account charges that could be assessed to a contract (1.45%).
Deductions for premium taxes are not reflected but may apply.
<TABLE>
<CAPTION>
If you surrender your If you do not surrender your If you annuitize your contract
contract at the end of the contract at the end of the at the end of the applicable
applicable time period applicable time period time period
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
----- ------ ------ ------- ----- ----- ------ ------- ----- ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NSAT - Gartmore 91 139 181 308 28 85 145 308 * 85 145 308
NSAT Emerging
Markets Fund
NSAT - Gartmore 87 127 161 266 24 73 125 266 * 73 125 266
NSAT Global
Technology and
Communications Fund
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
If you surrender your If you do not surrender your If you annuitize your contract
contract at the end of the contract at the end of the at the end of the applicable
applicable time period applicable time period time period
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NSAT - Gartmore
NSAT International
Growth Fund 89 135 174 292 26 81 138 292 * 81 138 292
NSAT - Nationwide
Small Cap Value
Fund 28 87 148 313 28 87 148 313 * 87 148 313
NSAT - Turner NSAT
Growth Focus Fund 87 127 161 266 24 73 125 266 * 73 125 266
</TABLE>
*The contracts sold under this prospectus do not permit annuitization
during the first two contract years.
14. EFFECTIVE OCTOBER 2, 2000, "APPENDIX A: OBJECTIVES FOR UNDERLYING
MUTUAL FUNDS" ON PAGE 44 OF YOUR PROSPECTUS IS AMENDED TO READ:
NATIONWIDE SEPARATE ACCOUNT TRUST ("NSAT")
GARTMORE NSAT EMERGING MARKETS FUND
(subadviser: Gartmore Global Partners)
Investment Objective: Long term capital growth by investing primarily
in equity securities of companies located in emerging market countries.
GARTMORE NSAT GLOBAL TECHNOLOGY AND COMMUNICATIONS FUND
(subadviser: Gartmore Global Partners)
Investment Objective: Long term capital appreciation by investing
primarily and at least 65% of its total assets in equity securities
issued by U.S. and foreign companies with business operations in
technology and communications and technology and communication related
industries.
GARTMORE NSAT INTERNATIONAL GROWTH FUND
(subadviser: Gartmore Global Partners)
Investment Objective: Long term capital growth by investing primarily
in equity securities of companies in Europe, Australia, the Far East
and other regions, including developing countries.
TURNER NSAT GROWTH FOCUS FUND
(subadviser: Turner Investment Partners, Inc.)
Investment Objective: Long term capital appreciation by investing
primarily in U.S. common stocks, ADRs and foreign companies that
demonstrate strong earnings growth potential.
<PAGE> 9
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Modified Single Premium Deferred Variable Annuity Contracts
Issued by Nationwide Life and Annuity Insurance Company
through its Nationwide VA Separate Account-B
The date of this prospectus is May 1, 2000.
Variable annuities are complex investment products with unique benefits and
advantages that may be particularly useful to many investors in meeting
long-term savings and retirement needs. There are, however, costs and charges
associated with some of these unique benefits - costs and charges that do not
exist or are not present with other investment products. With help from
financial consultants or advisers, investors are encouraged to compare and
contrast the costs and benefits of the variable annuity described in this
prospectus with those of other investment products, including other variable
annuity or variable life insurance products offered by Nationwide Life and
Annuity Insurance Company and its affiliates. This process will aid in
determining whether the purchase of the contract described in this prospectus is
consistent with an individual's goals, risk tolerance, time horizon, marital
status, tax situation, and other personal characteristics and needs.
THIS PROSPECTUS CONTAINS BASIC INFORMATION YOU SHOULD KNOW ABOUT THE CONTRACTS
BEFORE INVESTING. PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR FUTURE
REFERENCE.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE AVAILABLE UNDER THE CONTRACTS:
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
- American Century VP Balanced
- American Century VP Income & Growth
- American Century VP International
- American Century VP Value
DREYFUS
- Dreyfus Investment Portfolios - European Equity Portfolio
- The Dreyfus Socially Responsible Growth Fund, Inc.
- Dreyfus Stock Index Fund, Inc.
- Dreyfus Variable Investment Fund- Appreciation Portfolio
(formerly, Dreyfus Variable Investment Fund- Capital
Appreciation Portfolio)
- Dreyfus Variable Investment Fund- Growth & Income Portfolio*
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
- VIP Equity-Income Portfolio
- VIP Growth Portfolio
- VIP High Income Portfolio*
- VIP Overseas Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
- VIP II Asset Manager Portfolio
- VIP II Contrafund(R) Portfolio
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
- VIP III Growth Opportunities Portfolio
JANUS ASPEN SERIES
- Capital Appreciation Portfolio: Service Shares
- Global Technology Portfolio: Service Shares
- International Growth Portfolio: Service Shares
MORGAN STANLEY
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (FORMERLY, MORGAN STANLEY DEAN WITTER
UNIVERSAL FUNDS, INC.)
- Emerging Markets Debt Portfolio
VAN KAMPEN LIFE INVESTMENT TRUST
- Morgan Stanley Real Estate Securities Portfolio
NATIONWIDE SEPARATE ACCOUNT TRUST
- Capital Appreciation Fund
- Government Bond Fund
- Money Market Fund
- Total Return Fund
- Nationwide Mid Cap Index Fund (sub-adviser: The Dreyfus
Corporation)
1
<PAGE> 10
- Nationwide Multi Sector Bond Fund (sub-adviser: Miller,
Anderson & Sherrerd, LLP)
- Nationwide Small Cap Growth Fund (sub-advisers: Franklin
Advisers, Inc., Miller, Anderson & Sherrered, LLP, Neuberger
Berman, LLC)
- Nationwide Small Cap Value Fund (sub-adviser: The Dreyfus
Corporation)
- Nationwide Small Company Fund (sub-advisers: The Dreyfus
Corporation, Neuberger Berman, LLC., Lazard Asset Management
and Strong Capital Management, Inc.)
- Nationwide Strategic Growth Fund (sub-adviser: Strong Capital
Management, Inc.)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- AMT Growth Portfolio
- AMT Guardian Portfolio
- AMT Limited Maturity Bond Portfolio
- AMT Partners Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS
- Oppenheimer Aggressive Growth Fund/VA
- Oppenheimer Bond Fund/VA
- Oppenheimer Capital Appreciation Fund/VA (formerly Oppenheimer
Growth Fund)
- Oppenheimer Global Securities Fund/VA
- Oppenheimer Main Street Growth & Income Fund/VA
- Oppenheimer Multiple Strategies Fund/VA
STRONG OPPORTUNITY FUND II, INC. (FORMERLY "STRONG SPECIAL FUNDS II. INC.")
VAN ECK WORLDWIDE INSURANCE TRUST
- Worldwide Bond Fund*
- Worldwide Emerging Markets Fund*
- Worldwide Hard Assets Fund
WARBURG PINCUS TRUST
- Small Company Growth Portfolio
*These underlying mutual funds may invest in lower quality debt securities
commonly referred to as junk bonds.
THE FOLLOWING UNDERLYING MUTUAL FUNDS ARE NOT AVAILABLE IN CONNECTION WITH
CONTRACTS FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR AFTER
SEPTEMBER 27, 1999:
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
- American Century VP Capital Appreciation
STRONG VARIABLE INSURANCE FUNDS, INC.
- Strong Discovery Fund II, Inc.
- International Stock Fund II*
WARBURG PINCUS TRUST
- Global Post-Venture Capital Portfolio (formerly, Post-Venture
Capital Portfolio)
- International Equity Portfolio
The Statement of Additional Information (dated May 1, 2000) which contains
additional information about the contracts and the variable account, has been
filed with the Securities and Exchange Commission ("SEC") and is incorporated
herein by reference. The table of contents for the Statement of Additional
Information is on page 43.
For general information or to obtain FREE copies of the:
- Statement of Additional Information;
- prospectus annual report or semi-annual report for any
underlying mutual fund; or
- required Nationwide forms,
call: 1-800-243-6295
TDD 1-800-238-3035
or write:
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 182356
COLUMBUS, OHIO 43218-2356
The Statement of Additional Information and other material incorporated by
reference can be found on the SEC website at:
www.sec.gov
Information about this and other Best of America products can be found at:
www.bestofamerica.com
2
<PAGE> 11
THIS ANNUITY IS NOT:
- A BANK DEPOSIT;
- FEDERALLY INSURED;
- ENDORSED BY A BANK OR GOVERNMENT AGENCY; OR
- AVAILABLE IN EVERY STATE.
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
These contracts are offered to customers of various financial institutions and
brokerage firms. No financial institution or brokerage firm is responsible for
the guarantees under the contracts. Guarantees under the contracts are the sole
responsibility of Nationwide.
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.
3
<PAGE> 12
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT- An accounting unit of measure used to calculate the contract
value allocated to the variable account before the annuitization date.
ANNUITIZATION DATE- The date on which annuity payments begin.
ANNUITY COMMENCEMENT DATE- The date on which annuity payments are scheduled to
begin. This date may be changed by the contract owner with Nationwide's consent.
ANNUITY UNIT- An accounting unit used to calculate the variable payment annuity
payments.
CONTRACT VALUE- The total value of all accumulation units in a contract.
CONTRACT YEAR- Each year the contract is in force beginning with the date the
contract is issued.
ERISA- The Employee Retirement Income Security Act of 1974, as amended.
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.
INDIVIDUAL RETIREMENT ACCOUNT- An account that qualifies for favorable tax
treatment under Section 408(a) of the Internal Revenue Code, but does not
include Roth IRAs.
INDIVIDUAL RETIREMENT ANNUITY- An annuity contract that qualifies for favorable
tax treatment under Section 408(b) of the Internal Revenue Code, but does not
include Roth IRAs.
NATIONWIDE- Nationwide Life and Annuity Insurance Company.
NON-QUALIFIED CONTRACT- A contract which does not qualify for favorable tax
treatment as a Qualified Plan, Individual Retirement Annuity, Roth IRA, SEP IRA,
or Tax Sheltered Annuity.
QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
Section 401 of the Internal Revenue Code.
ROTH IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408A of the Internal Revenue Code.
SEP IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408(k) of the Internal Revenue Code.
SUB-ACCOUNTS- Divisions of the variable account for which accumulation units and
annuity units are separately maintained - each sub-account corresponds to a
single underlying mutual fund.
TAX SHELTERED ANNUITY- An annuity that qualifies for favorable tax treatment
under Section 403(b) of the Internal Revenue Code.
VALUATION PERIOD- Each day the New York Stock Exchange is open for business.
VARIABLE ACCOUNT- Nationwide VA Separate Account-B, a separate account of
Nationwide 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.
4
<PAGE> 13
TABLE OF CONTENTS
GLOSSARY OF SPECIAL TERMS..........................
SUMMARY OF CONTRACT
EXPENSES......................................
UNDERLYING MUTUAL FUND ANNUAL EXPENSES.............
EXAMPLE............................................
SYNOPSIS OF THE CONTRACTS..........................
FINANCIAL STATEMENTS...............................
CONDENSED FINANCIAL INFORMATION....................
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY......
NATIONWIDE INVESTMENT SERVICES
CORPORATION...................................
TYPES OF CONTRACTS.................................
INVESTING IN THE CONTRACT..........................
The Variable Account and Underlying
Mutual Funds
STANDARD CHARGES AND DEDUCTIONS....................
Mortality and Expense Risk Charges
Administration Charge
Premium Taxes
CONTRACT OWNERSHIP.................................
Joint Ownership
Contingent Ownership
Annuitant
Beneficiary and Contingent Beneficiary
OPERATION OF THE CONTRACT..........................
Minimum Initial and Subsequent Purchase
Payments
Pricing
Allocation of Purchase Payments
Determining the Contract Value
Transfers
RIGHT TO REVOKE....................................
SURRENDER (REDEMPTION).............................
Surrenders Under a Qualified Contract or
Tax Sheltered Annuity
LOAN PRIVILEGE.....................................
Minimum and Maximum Loan Amounts
Loan Processing Fee
How Loan Requests are Processed
Interest
Loan Repayment
Distributions and Annuity Payments
Transferring the Contract
Grace Period and Loan Default
ASSIGNMENT.........................................
CONTRACT OWNER SERVICES............................
Asset Rebalancing
Dollar Cost Averaging
Systematic Withdrawals
ANNUITY COMMENCEMENT DATE..........................
ANNUITIZING THE CONTRACT...........................
Annuitization Date
Annuitization
Fixed Payment Annuity
Variable Payment Annuity
Assumed Investment Rate
Value of an Annuity Unit
Exchanges among Underlying Mutual Funds
Frequency and Amount of Annuity Payments
Annuity Payment Options
DEATH BENEFITS.....................................
Death of Contract Owner - Non-Qualified Contracts
Death of Annuitant - Non-Qualified Contracts
Death of Contract Owner/Annuitant
How the Death Benefit Value is Determined
Death Benefit Payment
REQUIRED DISTRIBUTIONS.............................
Required Distributions for Non-Qualified Contracts
Required Distributions for Qualified Plans
and Tax Sheltered Annuities
Required Distributions for IRAs and SEP IRAs
Required Distributions for Roth IRAs
FEDERAL TAX CONSIDERATIONS.........................
Federal Income Taxes
Qualified Plans IRAs, SEP IRAs, and Tax Sheltered Annuities
Roth IRAs
Withholding
Non-Resident Aliens
5
<PAGE> 14
Federal Estate, Gift, and Generation
Skipping Transfer Taxes
Puerto Rico
Charge for Tax
Diversification
Tax Changes
STATEMENTS AND REPORTS.............................
LEGAL PROCEEDINGS..................................
ADVERTISING AND SUB-ACCOUNT PERFORMANCE
SUMMARY ADVERTISING
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION
APPENDIX A: OBJECTIVES FOR UNDERLYING
MUTUAL FUNDS.
APPENDIX B: CONDENSED FINANCIAL
INFORMATION...................................
6
<PAGE> 15
SUMMARY OF CONTRACT EXPENSES
The expenses listed below are charged to all contracts unless the contract owner
meets an available exception.
VARIABLE ACCOUNT CHARGES(1)
(as a percentage of average account value)
Mortality and Expense Risk Charges............1.25%
Administration Charge(2)......................0.20%
Total Variable Account Charges...........1.45%
(1) These expenses are charged on a daily basis at the annual rate noted above.
(2) The administration charge is deducted to reimburse Nationwide for expenses
related to the issuance and maintenance of the contracts.
7
<PAGE> 16
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS, AFTER
EXPENSE REIMBURSEMENT)
<TABLE>
<CAPTION>
MANAGEMENT OTHER 12b-1 TOTAL MUTUAL
FEES EXPENSES FEES FUND EXPENSES
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc.-American 0.90% 0.00% 0.00% 0.90%
Century VP Balanced
American Century Variable Portfolios, Inc.-American 1.00% 0.00% 0.00% 1.00%
Century VP Capital Appreciation
American Century Variable Portfolios, Inc.-American 0.70% 0.00% 0.00% 0.70%
Century VP Income & Growth
American Century Variable Portfolios, Inc.-American 1.34% 0.00% 0.00% 1.34%
Century VP International
American Century Variable Portfolios, Inc.-American 1.00% 0.00% 0.00% 1.00%
Century VP Value
Dreyfus Investment Portfolios - European Equity 1.00% 0.25% 0.00% 1.25%
Portfolio
The Dreyfus Socially Responsible Growth Fund, Inc. 0.75% 0.04% 0.00% 0.79%
Dreyfus Stock Index Fund, Inc. 0.25% 0.01% 0.00% 0.26%
Dreyfus Variable Investment Fund- Appreciation 0.43% 0.35% 0.00% 0.78%
Portfolio (formerly, Dreyfus Variable Investment Fund
- Capital Appreciation Portfolio)
Dreyfus Variable Investment Fund- Growth & Income 0.75% 0.04% 0.00% 0.79%
Portfolio
Fidelity VIP Equity-Income Portfolio 0.48% 0.08% 0.00% 0.56%
Fidelity VIP Growth Portfolio 0.58% 0.07% 0.00% 0.65%
Fidelity VIP High Income Portfolio 0.58% 0.11% 0.00% 0.69%
Fidelity VIP Overseas Portfolio 0.73% 0.14% 0.00% 0.87%
Fidelity VIP II Asset Manager Portfolio 0.53% 0.09% 0.00% 0.62%
Fidelity VIP II Contrafund(R)Portfolio 0.58% 0.07% 0.00% 0.65%
Fidelity VIP III Growth Opportunities Portfolio 0.58% 0.10% 0.00% 0.68%
Janus Aspen Series - Capital Appreciation Portfolio: 0.65% 0.04% 0.25% 0.94%
Service Shares
Janus Aspen Series - Global Technology Portfolio: 0.65% 0.13% 0.25% 1.03%
Service Shares
Janus Aspen Series - International Growth Portfolio: 0.65% 0.11% 0.25% 1.01%
Service Shares
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%
NSAT - Nationwide Mid Cap Index Fund 0.88% 0.15% 0.00% 1.03%
NSAT - Nationwide Multi Sector Bond Fund 0.75% 0.15% 0.00% 0.90%
NSAT - Nationwide Small Cap Growth Fund 1.10% 0.20% 0.00% 1.30%
NSAT - Nationwide Small Cap Value Fund 0.90% 0.15% 0.00% 1.05%
NSAT - Nationwide Small Company Fund 0.98% 0.17% 0.00% 1.15%
NSAT - Nationwide Strategic Growth Fund 0.90% 0.10% 0.00% 1.00%
Neuberger Berman AMT - Growth Portfolio 0.84% 0.08% 0.00% 0.92%
Neuberger Berman AMT - Guardian Portfolio 0.85% 0.15% 0.00% 1.00%
Neuberger Berman AMT - Limited Maturity Bond Portfolio 0.65% 0.11% 0.00% 0.76%
Neuberger Berman AMT - Partners Portfolio 0.80% 0.07% 0.00% 0.87%
</TABLE>
8
<PAGE> 17
UNDERLYING MUTUAL FUND ANNUAL EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
MANAGEMENT OTHER 12b-1 TOTAL MUTUAL
FEES EXPENSES FEES FUND EXPENSES
<S> <C> <C> <C> <C>
Oppenheimer Variable Account Funds - Oppenheimer 0.66% 0.01% 0.00% 0.67%
Aggressive Growth Fund/VA
Oppenheimer Variable Account Funds - Oppenheimer Bond 0.72% 0.01% 0.00% 0.73%
Fund/VA
Oppenheimer Variable Account Funds - Oppenheimer 0.68% 0.02% 0.00% 0.70%
Capital Appreciation Fund/VA (formerly Oppenheimer
Growth Fund)
Oppenheimer Variable Account Funds - Oppenheimer 0.67% 0.02% 0.00% 0.69%
Global Securities Fund/VA
Oppenheimer Variable Account Funds - Oppenheimer Main 0.73% 0.05% 0.00% 0.78%
Street Growth & Income Fund/VA
Oppenheimer Variable Account Funds - Oppenheimer 0.72% 0.01% 0.00% 0.73%
Multiple Strategies Fund/VA
Strong Opportunity Fund II, Inc. 1.00% 0.14% 0.00% 1.14%
Strong Variable Insurance Funds, Inc.- Discovery Fund 1.00% 0.14% 0.00% 1.14%
II, Inc.
Strong Variable Insurance Funds, Inc.-International 1.00% 0.16% 0.00% 1.16%
Stock Fund II
The Universal Institutional Funds, Inc.-Emerging 0.45% 0.98% 0.00% 1.43%
Markets Debt Portfolio (formerly, Morgan Stanley Dean
Witter Universal Funds, Inc.-Emerging Markets Debt
Portfolio)
Van Eck Worldwide Insurance Trust- Worldwide Bond Fund 1.00% 0.22% 0.00% 1.22%
Van Eck Worldwide Insurance Trust- Worldwide Emerging 1.00% 0.34% 0.00% 1.34%
Markets Fund
Van Eck Worldwide Insurance Trust- Worldwide Hard 1.00% 0.26% 0.00% 1.26%
Assets Fund
Van Kampen Life Investment Trust- Morgan Stanley Real 0.97% 0.13% 0.00% 1.10%
Estate Securities Portfolio
Warburg Pincus Trust- International Equity Portfolio 1.00% 0.32% 0.00% 1.32%
Warburg Pincus Trust - Global Post-Venture Capital 1.07% 0.33% 0.00% 1.40%
Portfolio (formerly, Warburg Pincus Trust -
Post-Venture Capital Portfolio)
Warburg Pincus Trust- Small Company Growth Portfolio 0.90% 0.24% 0.00% 1.14%
</TABLE>
The expenses shown above are deducted by the underlying mutual fund before it
provides Nationwide with the daily net asset value. Nationwide then deducts
applicable variable account charges from the net asset value 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.
9
<PAGE> 18
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
Management Other 12b-1 Total Mutual
Fees Expenses Fees Fund Expenses
<S> <C> <C> <C> <C>
Fidelity VIP Equity-Income Portfolio 0.48% 0.09% 0.00% 0.57%
Fidelity VIP Growth Portfolio 0.58% 0.08% 0.00% 0.66%
Fidelity VIP Overseas Portfolio 0.73% 0.18% 0.00% 0.91%
Fidelity VIP II Asset Manager Portfolio 0.53% 0.10% 0.00% 0.63%
Fidelity VIP II Contrafund(R) Portfolio 0.58% 0.09% 0.00% 0.67%
Fidelity VIP III Growth Opportunities Portfolio 0.58% 0.11% 0.00% 0.69%
NSAT- Nationwide Small Cap Value Fund 0.90% 0.37% 0.00% 1.27%
The Universal Institutional Funds, Inc. - Emerging 0.80% 0.98% 0.00% 1.78%
Markets Debt Portfolio (formerly, Morgan Stanley Dean
Witter Universal Funds, Inc. - Emerging Markets Debt
Portfolio)
Van Eck Worldwide Insurance Trust - Worldwide Emerging 1.00% 0.54% 0.00% 1.54%
Markets Fund
Van Eck Worldwide Insurance Trust - Worldwide Hard 1.00% 0.26% 0.00% 1.26%
Assets Fund
</TABLE>
10
<PAGE> 19
EXAMPLE
The following chart shows the expenses (in dollars) that would be incurred under
this contract assuming a $1,000 investment, 5% annual return, and no change in
expenses. These dollar figures are illustrative only and should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown below.
The example reflects expenses of both the variable account and the underlying
mutual funds. The example reflects the maximum amount of variable account
charges that could be assessed to a contract (1.45%).
Deductions for premium taxes are not reflected but may apply.
<TABLE>
<CAPTION>
If you surrender your contract If you do not surrender your If you annuitize your
at the end of the applicable contract at the end of the contract at the end of the
time period applicable time period applicable time period
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Century Variable 25 76 130 277 25 76 130 277 * 76 130 277
Portfolios, Inc.- American
Century VP Balanced
American Century Variable 26 79 135 287 26 79 135 287 * 79 135 287
Portfolios, Inc.- American
Century VP Capital
Appreciation
American Century Variable 23 70 119 256 23 70 119 256 * 70 119 256
Portfolios, Inc.- American
Century VP Income & Growth
American Century Variable 29 90 153 322 29 90 153 322 * 90 153 322
Portfolios, Inc.- American
Century VP International
American Century Variable 26 79 135 287 26 79 135 287 * 79 135 287
Portfolios, Inc.- American
Century VP Value
Dreyfus Investment Portfolios 28 87 148 313 28 87 148 313 * 87 148 313
- European Equity Portfolio
The Dreyfus Socially 24 72 124 265 24 72 124 265 * 72 124 265
Responsible Growth Fund, Inc.
Dreyfus Stock Index Fund, Inc. 18 56 96 208 18 56 96 208 * 56 96 208
Dreyfus Variable Investment 23 72 123 264 23 72 123 264 * 72 123 264
Fund- Appreciation Portfolio
(formerly, Dreyfus Variable
Investment Fund - Capital
Appreciation Portfolio)
Dreyfus Variable Investment 24 72 124 265 24 72 124 265 * 72 124 265
Fund- Growth & Income
Portfolio
Fidelity VIP Equity-Income 21 65 112 241 21 65 112 241 * 65 112 241
Portfolio
Fidelity VIP Growth Portfolio 22 68 117 250 22 68 117 250 * 68 117 250
Fidelity VIP High Income 22 69 119 255 22 69 119 255 * 69 119 255
Portfolio
Fidelity VIP Overseas 24 75 128 274 24 75 128 274 * 75 128 274
Portfolio
</TABLE>
11
<PAGE> 20
<TABLE>
<CAPTION>
EXAMPLE (CONTINUED)
If you surrender your contract If you do not surrender your If you annuitize your
at the end of the applicable contract at the end of the contract at the end of the
time period applicable time period applicable time period
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fidelity VIP II Asset Manager 22 67 115 247 22 67 115 247 * 67 115 247
Portfolio
Fidelity VIP II Contrafund(R) 22 68 117 250 22 68 117 250 * 68 117 250
Portfolio
Fidelity VIP III Growth 22 69 118 254 22 69 118 254 * 69 118 254
Opportunities Portfolio
Janus Aspen Series - Capital 22 69 119 255 22 69 119 255 * 69 119 255
Appreciation Portfolio:
Service Shares
Janus Aspen Series - Global 23 72 123 264 23 72 123 264 * 72 123 264
Technology Portfolio: Service
Shares
Janus Aspen Series - 23 71 122 262 23 71 122 262 * 71 122 262
International Growth
Portfolio: Service Shares
NSAT - Capital Appreciation 23 71 121 260 23 71 121 260 * 71 121 260
Fund
NSAT - Government Bond Fund 22 68 117 250 22 68 117 250 * 68 117 250
NSAT - Money Market Fund 21 65 111 239 21 65 111 239 * 65 111 239
NSAT - Total Return Fund 23 70 120 258 23 70 120 258 * 70 120 258
NSAT - Nationwide Mid Cap 26 80 137 290 26 80 137 290 * 80 137 290
Index Fund
NSAT - Nationwide Multi 25 76 130 277 25 76 130 277 * 76 130 277
Sector Bond Fund
NSAT - Nationwide Small Cap 29 88 151 318 29 88 151 318 * 88 151 318
Growth Fund
NSAT - Nationwide Small Cap 26 81 138 292 26 81 138 292 * 81 138 292
Value Fund
NSAT - Nationwide Small 27 84 143 303 27 84 143 303 * 84 143 303
Company Fund
NSAT - Nationwide Strategic 26 79 135 287 26 79 135 287 * 79 135 287
Growth Fund
Neuberger Berman AMT-Growth 25 77 131 279 25 77 131 279 * 77 131 279
Portfolio
Neuberger Berman AMT- 26 79 135 287 26 79 135 287 * 79 135 287
Guardian Portfolio
Neuberger Berman AMT-Limited 23 71 122 262 23 71 122 262 * 71 122 262
Maturity Bond Portfolio
Neuberger Berman AMT- 24 75 128 274 24 75 128 274 * 75 128 274
Partners Portfolio
Oppenheimer Variable Account 22 69 118 253 22 69 118 253 * 69 118 253
Funds - Oppenheimer
Aggressive Growth Fund/VA
Oppenheimer Variable Account 23 71 121 259 23 71 121 259 * 71 121 259
Funds - Oppenheimer Bond
Fund/VA
</TABLE>
12
<PAGE> 21
EXAMPLE (CONTINUED)
<TABLE>
<CAPTION>
If you surrender your contract If you do not surrender your If you annuitize your
at the end of the applicable contract at the end of the contract at the end of the
time period applicable time period applicable time period
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs 5 Yrs. 10 Yrs. 1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oppenheimer Variable Account 23 70 119 256 23 70 119 256 * 70 119 256
Funds - Oppenheimer Capital
Appreciation Fund/VA
(formerly, Oppenheimer
Variable Account Funds -
Oppenheimer Growth Fund)
Oppenheimer Variable Account 22 69 119 255 22 69 119 255 * 69 119 255
Funds - Oppenheimer Global
Securities Fund/VA
Oppenheimer Variable Account 23 72 123 264 23 72 123 264 * 72 123 264
Funds - Oppenheimer Main
Street Growth & Income Fund/VA
Oppenheimer Variable Account 23 71 121 259 23 71 121 259 * 71 121 259
Funds - Oppenheimer Multiple
Strategies Fund/VA
Strong Opportunity Fund II, 27 83 142 302 27 83 142 302 * 83 142 302
Inc.
Strong Variable Insurance 27 83 142 302 27 83 142 302 * 83 142 302
Funds, Inc.- Discovery Fund
II, Inc.
Strong Variable Insurance 27 84 143 304 27 84 143 304 * 84 143 304
Funds, Inc. - International
Stock Fund II
The Universal Institutional 30 93 157 331 30 93 157 331 * 93 157 331
Funds, Inc.- Emerging Markets
Debt Portfolio (formerly,
Morgan Stanley Dean Witter
Universal Funds, Inc.-
Emerging Markets Debt
Portfolio)
Van Eck Worldwide Insurance 28 86 146 310 28 86 146 310 * 86 146 310
Trust - Worldwide Bond Fund
Van Eck Worldwide Insurance 29 90 153 322 29 90 153 322 * 90 153 322
Trust - Worldwide Emerging
Markets Fund
Van Eck Worldwide Insurance 28 87 149 314 28 87 149 314 * 87 149 314
Trust - Worldwide Hard Assets
Fund
Van Kampen Life Investment 27 82 140 298 27 82 140 298 * 82 140 298
Trust - Morgan Stanley Real
Estate Securities Portfolio
Warburg Pincus 29 89 152 320 29 89 152 320 * 89 152 320
Trust-International Equity
Portfolio
Warburg Pincus Trust - Global 30 92 156 328 30 92 156 328 * 92 156 328
Post-Venture Capital
Portfolio (formerly, Warburg
Pincus Trust - Post-Venture
Capital Portfolio)
Warburg Pincus Trust - Small 27 83 142 302 27 83 142 302 * 83 142 302
Company Growth Portfolio
</TABLE>
*The contracts sold under this prospectus do not permit annuitization during the
first two contract years.
13
<PAGE> 22
SYNOPSIS OF THE CONTRACTS
The contracts described in this prospectus are modified single purchase payment
contracts. The contracts may be issued as either individual or group contracts.
In those states where contracts are issued as group contracts, references
throughout this prospectus to "contract owner" will also mean "participant"
unless the plan otherwise permits or requires the contract owner to exercise
contract rights under authority of the plan terms.
The contracts can be categorized as:
- Non-Qualified;
- Individual Retirement Annuities;
- Roth IRAs;
- SEP IRAs;
- Tax Sheltered Annuities; and
- Qualified.
For more detailed information with regard to the differences in contract
types, please see "Types of Contracts" later in this prospectus.
MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS
<TABLE>
<CAPTION>
MINIMUM INITIAL MINIMUM
CONTRACT PURCHASE SUBSEQUENT
TYPE PAYMENT PAYMENTS
<S> <C> <C>
Non-Qualified $15,000 $1,000
IRA $15,000 $1,000
Roth IRA $15,000 $1,000
SEP IRA $15,000 $1,000
Tax Sheltered $15,000 $1,000
Annuity
Qualified $15,000 $1,000
</TABLE>
CHARGES AND EXPENSES
Nationwide does not deduct a sales charge from purchase payments upon deposit
into or withdrawal from the contract.
Nationwide deducts a Mortality and Expense Risk Charge equal to an annual rate
of 1.25% of the daily net assets of the variable account. Nationwide assesses
these charges in return for bearing certain mortality and administrative risks.
Nationwide deducts an Administration Charge equal to an annual rate of 0.20% of
the daily net assets of the variable account. This charge reimburses Nationwide
for administrative expenses related to issuance and maintenance of the
contracts.
ANNUITY PAYMENTS
Annuity payments begin on the annuitization date. The payments will be based on
the annuity payment option chosen at the time of application (see "Annuity
Payment Options").
TAXATION
How the contracts are taxed depends on the type of contract issued. Nationwide
will charge against the contract any premium taxes levied by any governmental
authority (see "Federal Tax Considerations" and "Premium Taxes").
TEN DAY FREE LOOK
Contract owners may return the contract for any reason within ten days of
receipt and Nationwide will refund the contract value or the amount required by
law (see "Right to Revoke").
FINANCIAL STATEMENTS
Financial statements for the variable account and Nationwide are located in the
Statement of Additional Information. A current Statement of Additional
Information may be obtained, without charge, by contacting Nationwide's home
office at the telephone number listed on page 2 of this prospectus.
CONDENSED FINANCIAL INFORMATION
The value of an accumulation unit is determined on the basis of changes in the
per share value of the underlying mutual funds and the assessment of a variable
account charge which may vary from contract to contract (for more information on
the calculation of accumulation unit values, see "Determining Variable Account
Value - Valuing an Accumulation Unit"). Please refer to Appendix B for
information regarding each class of accumulation units.
14
<PAGE> 23
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in
February, 1981, with its home office at One Nationwide Plaza, Columbus, Ohio
43215. Nationwide is a provider of life insurance products, annuities and
retirement products.
NATIONWIDE INVESTMENT SERVICES CORPORATION
The contracts are distributed by the general distributor, Nationwide Investment
Services Corporation ("NISC") Two Nationwide Plaza, Columbus, Ohio 43215. (For
contracts issued in the State of Michigan, all references to NISC shall mean
Nationwide Investment Svcs. Corporation.) NISC is a wholly owned subsidiary of
Nationwide.
TYPES OF CONTRACTS
The contracts described in this prospectus are classified according to the tax
treatment they are subject to under the Internal Revenue Code. The following is
a general description of the various types of contracts. Eligibility
requirements, tax benefits (if any), limitations, and other features of the
contracts will differ depending on the type of contract.
Non-Qualified Annuity Contract
A Non-Qualified Annuity Contract is a contract that does not qualify for certain
tax benefits under the Internal Revenue Code, and which is not a IRA, a Roth
IRA, a SEP IRA, a Simple IRA, or a Tax Sheltered Annuity.
Upon the death of the owner of a Non-Qualified Annuity Contract, mandatory
distribution requirements are imposed to ensure distribution of the entire
balance in the contract within a required statutory period.
Non-Qualified Annuity contracts that are owned by natural persons allow for the
deferral of taxation on the income earned in the contract until it is
distributed or deemed to be distributed.
Individual Retirement Annuities (IRAs)
Individual Retirement Annuities are contracts that are issued by insurance
companies and satisfy the following requirements:
- the contract is not transferable by the owner;
- the premiums are not fixed;
- the annual premium cannot exceed $2,000 (although rollovers of
greater amounts from qualified plans, tax-sheltered annuities
and other IRAs can be received);
- certain minimum distribution requirements must be satisfied
after the owner attains the age of 70 1/2;
- the entire interest of the owner in the contract is
nonforfeitable; and
- after the death of the owner, additional distribution
requirements may be imposed to ensure distribution of the
entire balance in the contract within the statutory period of
time.
Depending on the circumstance of the owner, all or a portion of the
contributions made to the account may be deducted for federal income tax
purposes.
Failure to make the mandatory distributions can result in an additional penalty
tax of 50% of the excess of the amount required to be distributed over the
amount that was actually distributed.
IRAs may receive rollover contributions from other Individual Retirement
Accounts and Individual Retirement Annuities, from Tax Sheltered Annuities, and
from qualified retirement plans, including 401(k) plans.
For further details regarding IRAs, please refer to the disclosure statement
provided when the IRA was established.
Roth IRAs
Roth IRA contracts are contracts that are issued by insurance companies and
satisfy the following requirements:
- the contract is not transferable by the owner;
15
<PAGE> 24
- the premiums are not fixed;
- the annual premium cannot exceed $2000 (although rollovers of
greater amounts from other Roth IRAs and Traditional IRAs can
be received);
- the entire interest of the owner in the contract is
nonforfeitable; and
- after the death of the owner, certain distribution
requirements may be imposed to ensure distribution of the
entire balance in the contract within the statutory period of
time.
A Roth IRA can receive a rollover from a IRA; however, the amount rolled over
from the IRA to the Roth IRA is required to be included in the owner's federal
gross income at the time of the rollover, and will be subject to federal income
tax.
There are income limitations on eligibility to participate in a Roth IRA and
additional income limitations for eligibility to roll over amounts from a IRA to
a Roth IRA. For further details regarding Roth IRAs, please refer to the
disclosure statement provided when the Roth IRA was established.
Simplified Employee Pension IRAs (SEP IRAs)
A SEP IRA is a written plan established by an employer for the benefit of
employees, which permits the employer to make contributions to an IRA
established for the benefit of each employee.
An employee may make deductible contributions to a SEP IRA in the same way, and
with the same restrictions and limitations, as for an IRA. In addition, the
employer may make contributions to the SEP IRA, subject to dollar and percentage
limitations imposed by both the Internal Revenue Code and the written plan.
A SEP IRA plan must satisfy the following requirements:
- minimum participation rules;
- top-heavy contribution rules;
- nondiscriminatory allocation rules; and
- requirements regarding a written allocation formula.
In addition, the plan cannot restrict withdrawals of non-elective contributions,
and must restrict withdrawals of elective contributions before March 15th of the
following year.
Tax Sheltered Annuities
Certain tax-exempt organizations (described in section 501(c)(3) of the Internal
Revenue Code) and public school systems may establish a plan under which annuity
contracts can be purchased for their employees. These annuity contracts are
often referred to as Tax Sheltered Annuities.
Purchase payments made to Tax Sheltered Annuities are excludible from the income
of the employee, up to statutory maximum amounts. These amounts should be set
forth in the plan adopted by the employer.
The owner's interest in the contract is nonforfeitable (except for failure to
pay premiums) and cannot be transferred. Certain minimum distribution
requirements must be satisfied after the owner attains the age of 70 1/2, and
after the death of the owner, additional distribution requirements may be
imposed to ensure distribution of the entire balance in the contract within the
statutory period of time.
Qualified Plans
Contracts that are owned by Qualified Plans are not intended to confer tax
benefits on the beneficiaries of the plan; they are used as investment vehicles
for the plan. The income tax consequences to the beneficiary of a Qualified Plan
are controlled by the operation of the plan, not by operation of the assets in
which the plan invests.
Beneficiaries of Qualified Plans should contact their employer and/or trustee of
the plan to obtain and review the plan, trust, summary plan description and
other documents for the tax and other consequences of being a participant in a
qualified plan.
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<PAGE> 25
INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
The variable account was established as Financial Horizons VA Separate Account-2
by Nationwide on March 6, 1991 pursuant to Ohio Law. By resolution of the Board
of Directors, the variable account's name was changed to Nationwide VA Separate
Account-B. Although the variable 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 contract owners under the contracts.
The variable account is divided into sub-accounts, each corresponding to a
single underlying mutual fund. Nationwide uses the assets of each sub-account to
buy shares of the underlying mutual funds based on contract owner instructions.
There are two sub-accounts for each underlying mutual fund. One sub-account
contains shares attributable to accumulation units under Non-Qualified
Contracts. The other contains shares attributable to accumulation units under
Qualified Contracts, Individual Retirement Annuities, Roth IRAs, SEP IRAs, and
Tax Sheltered Annuities.
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. They are only 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.
The investment advisers of the underlying mutual funds may manage publicly
traded mutual funds with similar names and investment objectives. However, the
underlying mutual funds are NOT directly related to any publicly traded mutual
fund. Contract 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.
Voting Rights
Contract owners who have allocated assets to the underlying mutual funds are
entitled to certain voting rights. Nationwide will vote contract owner shares at
special shareholder meetings based on contract owner instructions. However, if
the law changes and Nationwide is allowed to vote in its own right, it may elect
to do so.
Contract owners with voting interests in an underlying mutual fund will be
notified of issues requiring the shareholders' vote as soon as possible before
the shareholder meeting. Notification will contain proxy materials and a form
with which to give Nationwide 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 contract 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.
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
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<PAGE> 26
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.
Substitution of Securities
Nationwide may substitute, eliminate, or combine shares of another underlying
mutual fund for shares already purchased or to be purchased in the future if
either of the following occurs:
1) shares of a current underlying mutual fund are no longer available
for investment; or
2) further investment in an underlying mutual fund is inappropriate.
No substitution, elimination, or combination of shares may take place without
the prior approval of the SEC.
STANDARD CHARGES AND DEDUCTIONS
The maximum commissions payable on the sale of a contract described in this
prospectus is 1.5% of purchase payments.
MORTALITY AND EXPENSE RISK CHARGES
Nationwide deducts mortality and expense risk charges from the variable account.
This amount is computed on a daily basis, and is equal to an annual rate of
1.25% of the daily net assets of the variable account.
The mortality risk charge of 0.80% compensates Nationwide for guaranteeing the
annuity rate of the contracts. This guarantee ensures that the annuity rates
will not change regardless of the death rates of annuity payees or the general
population.
The expense risk charge of 0.45% compensates Nationwide for guaranteeing that
administration charges will not increase regardless of actual expenses.
If the mortality and expense risk charges are insufficient to cover actual
expenses, the loss is borne by Nationwide.
ADMINISTRATION CHARGE
Nationwide deducts an administration charge equal on an annual basis of 0.20% of
the daily net assets of the variable account. This charge is designed to
reimburse Nationwide for administrative expenses related to the issuance and
maintenance of the contracts.
PREMIUM TAXES
Nationwide will charge against the contract value any premium taxes levied by a
state or other government entity. Premium tax rates currently range from 0% to
5.0%. This range is subject to change. The method used to assess premium tax
will be determined by Nationwide at its sole discretion in compliance with state
law.
If applicable, Nationwide will deduct premium taxes from the contract either at:
(1) the time the contract is surrendered;
(2) annuitization; or
(3) such other date as Nationwide becomes subject to premium taxes.
Premium taxes may be deducted from death benefit proceeds.
CONTRACT OWNERSHIP
The contract owner has all rights under the contract including the right to
designate and change any designations of the contract owner, contingent owner,
annuitant, contingent annuitant, beneficiary, contingent beneficiary, annuity
payment option, and annuity commencement date. Purchasers who name someone other
than themselves as the contract owner will have no rights under the contract.
Contract owners of Non-Qualified Contracts may name a new contract owner at any
time before the annuitization date. Any change of contract owner automatically
revokes any prior contract owner
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<PAGE> 27
designation. Changes in contract ownership may result in federal income taxation
and may be subject to state and federal gift taxes.
A change in contract ownership must be submitted in writing and recorded at
Nationwide's home office. Once recorded, the change will be effective as of the
date signed. However, the change will not affect any payments made or actions
taken by Nationwide before it was recorded.
The contract owner may also request a change in the annuitant, contingent
annuitant, contingent owner, beneficiary, or contingent beneficiary before the
annuitization date. These changes must be:
- on a Nationwide form;
- signed by the contract owner; and
- received at Nationwide's home office before the annuitization
date.
Nationwide must review and approve any change requests. If the contract owner is
not a natural person and there is a change of the annuitant, distributions will
be made as if the contract owner died at the time of the change.
On the annuitization date, the annuitant will become the contract owner.
JOINT OWNERSHIP
Joint owners each own an undivided interest in the contract.
Contract owners can name a joint owner at any time before annuitization subject
to the following conditions:
- joint owners can only be named for Non-Qualified Contracts;
- joint owners must be spouses at the time joint ownership is
requested, unless state law requires Nationwide to allow
non-spousal joint owners;
- the exercise of any ownership right in the contract will
generally require a written request signed by both joint
owners;
- an election in writing signed by both contract owners must be
made to authorize Nationwide to allow the exercise of
ownership rights independently by either joint owner; and
- Nationwide will not be liable for any loss, liability, cost,
or expense for acting in accordance with the instructions of
either joint owner.
CONTINGENT OWNERSHIP
The contingent owner is entitled to certain benefits under the contract, if a
contract owner who is NOT the annuitant dies before the annuitization date, and
there is no surviving joint owner.
The contract owner may name or change a contingent owner at any time before the
annuitization date. To change the contingent owner, a written request must be
submitted to Nationwide. Once Nationwide has recorded the change, it will be
effective as of the date it was signed, whether or not the contract owner was
living at the time it was recorded. The change will not affect any action taken
by Nationwide before the change was recorded.
ANNUITANT
The annuitant is the person who will receive annuity payments and upon whose
continuation of life any annuity payment involving life contingencies depends.
This person must be age 85 or younger at the time of contract issuance, unless
Nationwide approves a request for an annuitant of greater age. The annuitant may
be changed before the annuitization date with Nationwide's consent.
BENEFICIARY AND CONTINGENT BENEFICIARY
The beneficiary is the person who is entitled to the death benefit if the
annuitant dies before the annuitization date and there is no joint owner. The
contract owner can name more than one beneficiary. Multiple beneficiaries will
share the death benefit equally, unless otherwise specified.
The contract owner may change the beneficiary or contingent beneficiary during
the annuitant's lifetime by submitting a written request to Nationwide. Once
recorded, the change will be effective as of the date it was signed, whether or
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<PAGE> 28
not the annuitant was living at the time it was recorded. The change will not
affect any action taken by Nationwide before the change was recorded.
OPERATION OF THE CONTRACT
MINIMUM INITIAL AND SUBSEQUENT PURCHASE PAYMENTS
<TABLE>
<CAPTION>
MINIMUM INITIAL MINIMUM
CONTRACT PURCHASE PAYMENT SUBSEQUENT
TYPE PAYMENTS
<S> <C> <C>
Non-Qualified $15,000 $1,000
IRA $15,000 $1,000
Roth IRA $15,000 $1,000
SEP IRA $15,000 $1,000
Tax Sheltered $15,000 $1,000
Annuity
Qualified $15,000 $1,000
</TABLE>
PRICING
Initial purchase payments allocated to sub-accounts will be priced at the
accumulation unit value determined no later than 2 business days after receipt
of an order to purchase if the application and all necessary information are
complete. If the application is not complete, Nationwide may retain a purchase
payment for up to 5 business days while attempting to complete it. If the
application is not completed within 5 business days, the prospective purchaser
will be informed of the reason for the delay. The purchase payment will be
returned unless the prospective purchaser specifically allows Nationwide to hold
the purchase payment until the application is completed.
Subsequent purchase payments will be priced based on the next available
accumulation unit value after the payment is received. The cumulative total of
all purchase payments under contracts issued by Nationwide on the life of any
one annuitant cannot exceed $1,000,000 without Nationwide's prior consent.
Purchase payments will not be priced when the New York Stock Exchange is closed
or on the following nationally recognized holidays:
- New Year's Day - Independence Day
- Martin Luther King, Jr. Day - Labor Day
- Presidents' Day - Thanksgiving
- Good Friday - Christmas
- Memorial Day
Nationwide also will not price purchase payments if:
(1) trading on the New York Stock Exchange is restricted;
(2) an emergency exists making disposal or valuation of securities
held in the variable account impracticable; or
(3) the SEC, by order, permits a suspension or postponement for
the protection of security holders.
Rules and regulations of the SEC will govern as to when 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 will not have access to
their account.
ALLOCATION OF PURCHASE PAYMENTS
Nationwide allocates purchase payments to underlying mutual funds allocated to
the sub-accounts as instructed by the contract owner. Shares of the sub-accounts
are purchased at net asset value, then converted into accumulation units.
Contract owners can change allocations or make exchanges among the sub-accounts.
However, no change may be made that would result in an amount less than 1% of
the purchase payments being allocated to any sub-account for any contract owner.
Certain transactions may be subject to conditions imposed by the underlying
mutual funds, as well as those set forth in the contract.
DETERMINING THE CONTRACT VALUE
The contract value is the value of amounts allocated to the sub-accounts of the
variable account. Nationwide will deduct a proportionate amount of any contract
charges from each sub-account based on current cash values.
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<PAGE> 29
Determining Variable Account Value - Valuing an Accumulation Unit
Purchase payments or transfers allocated to sub-accounts are accounted for in
accumulation units. Accumulation unit values (for each sub-account) are
determined by calculating the net investment factor for the underlying mutual
funds for the current valuation period and multiplying that result with the
accumulation unit values determined on the previous valuation period.
Nationwide uses the net investment factor as a way to calculate the investment
performance of a sub-account from valuation period to valuation period. For each
sub-account, the net investment factor shows the investment performance of the
underlying mutual fund in which a particular sub-account invests, including the
charges assessed against that sub-account for a valuation period.
The net investment factor for any particular sub-account is determined by
dividing (a) by (b), and then subtracting (c) from the result, where
(a) is:
(1) the net asset value of the underlying mutual fund 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 of the underlying mutual fund determined as of
the end of the preceding valuation period.
(c) is a factor representing the daily variable account. The factor is
equal to an annual rate of 1.45% of the daily net assets of the
variable account.
Based on the net investment factor, the value of an accumulation unit may
increase or decrease. Changes in the net investment factor may not be directly
proportional to changes in the net asset value of the underlying mutual fund
shares because of the deduction of variable account charges.
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.
TRANSFERS
Transfer Requests
Nationwide will accept transfer requests in writing or over the telephone.
Nationwide will use reasonable procedures to confirm that telephone instructions
are genuine and will not be liable for following telephone instructions that it
reasonably determined to be genuine. Nationwide may withdraw the telephone
exchange privilege upon 30 days written notice to contract owners.
Transfers among the sub-accounts are permitted 12 times per year.
After annuitization, transfers may only be made on the anniversary of the
annuitization date.
Amounts transferred to the variable account will receive the accumulation unit
value next determined after the transfer request is received.
Market Timing Firms
Some contract 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 or exchange requests on
behalf of multiple contract 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 contract owners not using market
timing firms. To avoid this, Nationwide may modify transfer and exchange rights
of contract owners who use market timing firms (or other third parties) to
transfer or exchange funds on their behalf.
The exchange and transfer rights of individual contract owners will not be
modified in any way when instructions are submitted directly by the contract
owner, or by the contract owner's representative (as authorized by the execution
of
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<PAGE> 30
a valid Nationwide Limited Power of Attorney Form).
To protect contract owners, Nationwide may refuse exchange and transfer
requests:
- submitted by any agent acting under a power of attorney on behalf of
more than one contract owner; or
- submitted on behalf of individual contract 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 contract
owner at the same time.
Nationwide will not restrict exchange rights unless Nationwide believes it to be
necessary for the protection of all contract owners.
RIGHT TO REVOKE
Contract owners have a ten day "free look" to examine the contract. The contract
may be returned to Nationwide's home office for any reason within ten days of
receipt and Nationwide will refund the contract value or another amount required
by law. The refunded contract value will reflect the deduction of any contract
charges unless otherwise required by law. All IRA and Roth IRA refunds will be a
return of purchase payments. State and/or federal law may provide additional
free look privileges.
Liability of the variable account under this provision is limited to the
contract value in each sub-account on the date of revocation. Any additional
amounts refunded to the contract owner will be paid by Nationwide.
SURRENDER (REDEMPTION)
Contract owners may surrender some or all of their contract value before the
earlier of the annuitization date or the annuitant's death. Surrender requests
must be in writing and Nationwide may require additional information. When
taking a full surrender, the contract must accompany the written request.
Nationwide may require a signature guarantee.
Nationwide will pay any amounts surrendered from the sub-accounts within 7 days.
However, Nationwide may suspend or postpone payment when it is unable to price a
purchase payment or transfer.
Partial Surrenders (Partial Redemptions)
Nationwide will surrender accumulation units from the sub-accounts. The amount
withdrawn from each investment option will be in proportion to the value in each
option at the time of the surrender request.
Full Surrenders (Full Redemptions)
The contract value upon full surrender may be more or less than the total of all
purchase payments made to the contract. The contract value will reflect variable
account charges, underlying mutual fund charges and the investment performance
of the underlying mutual funds.
SURRENDERS UNDER A QUALIFIED CONTRACT OR TAX SHELTERED ANNUITY
Contract owners of a Qualified Contract or Tax Sheltered Annuity may surrender
part or all of their contract value before the earlier of the annuitization date
or the annuitant's death, except as provided below:
A. Contract value attributable to contributions made under a qualified cash or
deferred arrangement (within the meaning of Internal Revenue Code Section
402(g)(3)(A)), a salary reduction agreement (within the meaning of Internal
Revenue Code Section 402(g)(3)(C)), or transfers from a Custodial Account
(described in Section 403(b)(7) of the Internal Revenue Code), may be
surrendered only:
1. when the contract owner reaches age 59 1/2, separates from
service, dies, or becomes disabled (within the meaning of
Internal Revenue Code Section 72(m)(7)); or
2. in the case of hardship (as defined for purposes of Internal
Revenue Code Section 401(k)), provided that any such hardship
surrender may NOT include any income earned on salary
reduction contributions.
B. The surrender limitations described in Section A also apply to:
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<PAGE> 31
1. salary reduction contributions to Tax Sheltered Annuities made
for plan years beginning after December 31, 1988;
2. earnings credited to such contracts after the last plan year
beginning before January 1, 1989, on amounts attributable to
salary reduction contributions; and
3. all amounts transferred from 403(b)(7) Custodial Accounts
(except that earnings and employer contributions as of
December 31, 1988 in such Custodial Accounts may be withdrawn
in the case of hardship).
C. Any distribution other than the above, including a ten day free look
cancellation of the contract (when available) may result in taxes,
penalties, and/or retroactive disqualification of a Qualified Contract or
Tax Sheltered Annuity.
In order to prevent disqualification of a Tax Sheltered Annuity after a ten day
free look cancellation, Nationwide will transfer the proceeds to another Tax
Sheltered Annuity upon proper direction by the contract owner.
These provisions explain Nationwide's understanding of current withdrawal
restrictions. These restrictions may change.
Distributions pursuant to Qualified Domestic Relations Orders will not violate
the restrictions stated above.
When the contract is issued to fund a Qualified Plan, the surrender provisions
may be modified to meet the terms of the plan and applicable tax provisions.
LOAN PRIVILEGE
The loan privilege is ONLY available to owners of Qualified Contracts or Tax
Sheltered Annuities. These contract owners can take loans from the contract
value beginning 30 days after the contract is issued up to the annuitization
date. Loans are subject to the terms of the contract, the plan, and the Internal
Revenue Code. Nationwide may modify the terms of a loan to comply with changes
in applicable law.
MINIMUM AND MAXIMUM LOAN AMOUNTS
Contract owners may borrow a minimum of $1,000, unless Nationwide is required by
law to allow a lesser minimum amount. Each loan must individually satisfy the
contract minimum amount.
Nationwide will calculate the maximum nontaxable loan amount based upon
information provided by the participant or the employer. Loans may be taxable if
a participant has additional loans from other plans. The total of all
outstanding loans must not exceed the following limits:
<TABLE>
<CAPTION>
CONTRACT MAXIMUM OUTSTANDING LOAN
VALUES BALANCE ALLOWED
<S> <C>
NON-ERISA PLANS up to up to 80% of contract
$20,000 value (not more than
$10,000)
$20,000 up to 50% of contract
and over value (not more than
$50,000*)
ERISA PLANS All up to 50% of contract
value (not more than
$50,000*)
</TABLE>
*The $50,000 limits will be reduced by the highest outstanding balance owed
during the previous 12 months.
For salary reduction Tax Sheltered Annuities, loans may be secured only by the
contract value.
LOAN PROCESSING FEE
Nationwide may charge a loan processing fee at the time each new loan is
processed. If assessed, it compensates Nationwide for expenses related to
administering and processing loans. Loans are not available in all states. In
addition, some states may not allow Nationwide to assess a loan processing fee.
HOW LOAN REQUESTS ARE PROCESSED
All loans are made from the collateral fixed account. Nationwide transfers
accumulation units in proportion to the assets in each sub-account to the
collateral fixed account until the requested amount is reached.
INTEREST
The outstanding loan balance in the collateral fixed account is credited with
interest until the loan is repaid in full. The interest rate will be 2.25% less
than the loan interest rate fixed by
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<PAGE> 32
Nationwide. The interest rate is guaranteed never to fall below 3.0%.
Specific loan terms are disclosed at the time of loan application or issuance.
LOAN REPAYMENT
Loans must be repaid in five years. However, if the loan is used to purchase the
contract owner's principal residence, the contract owner has 15 years to repay
the loan.
Contract owners must identify loan repayments as loan repayments or they will be
treated as purchase payments and will not reduce the outstanding loan. Payments
must be substantially level and made at least quarterly.
Loan repayments will consist of principal and interest in amounts set forth in
the loan agreement. Repayments are allocated to the sub-accounts in accordance
with the contract, unless Nationwide and the contract owner have agreed to amend
the contract at a later date on a case by case basis.
DISTRIBUTIONS AND ANNUITY PAYMENTS
Distributions made from the contract while a loan is outstanding will be reduced
by the amount of the outstanding loan plus accrued interest if:
- the contract is surrendered;
- the contract owner/annuitant dies;
- the contract owner who is not the annuitant dies prior to annuitization; or
- annuity payments begin.
TRANSFERRING THE CONTRACT
Nationwide reserves the right to restrict any transfer of the contract while the
loan is outstanding.
GRACE PERIOD AND LOAN DEFAULT
If a loan payment is not made when due, interest will continue to accrue. A
grace period may be available (please refer to the terms of the loan agreement).
If a loan payment is not made by the end of the applicable grace period, the
entire loan will be treated as a deemed distribution and will be taxable to the
borrower. This deemed distribution may also be subject to an early withdrawal
tax penalty by the Internal Revenue Service.
After default, interest will continue to accrue on the loan. Defaulted amounts,
plus interest, are deducted from the contract value when the participant is
eligible for a distribution of at least that amount. Additional loans are not
available while a previous loan is in default.
ASSIGNMENT
Contract rights are personal to the contract owner and may not be assigned
without Nationwide's written consent. IRAs, SEP IRAs, Roth IRAs, Tax Sheltered
Annuities, and Qualified Contracts may not be assigned, pledged or otherwise
transferred except where allowed by law.
A Non-Qualified Contract owner may assign some or all rights under the contract.
An assignment must occur before annuitization while the annuitant is alive. Once
proper notice of assignment is recorded by Nationwide's home office, the
assignment will become effective as of the date the written request was signed.
Nationwide is not responsible for the validity or tax consequences of any
assignment. Nationwide is not liable for any payment or settlement made before
the assignment is recorded. Assignments will not be recorded until Nationwide
receives sufficient direction from the contract owner and the assignee regarding
the proper allocation of contract rights.
Amounts pledged or assigned will be treated as distributions and will be
included in gross income to the extent that the cash value exceeds the
investment in the contract for the taxable year in which it was pledged or
assigned. Amounts assigned may be subject to a tax penalty equal to 10% of the
amount included in gross income.
Assignment of the entire contract value may cause the portion of the contract
value exceeding the total investment in the contract and previously taxed
amounts to be included in gross income for federal income tax purposes each year
that the assignment is in effect.
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<PAGE> 33
CONTRACT OWNER SERVICES
ASSET REBALANCING
Asset rebalancing is the automatic reallocation of contract values to the
sub-accounts on a predetermined percentage basis. Requests for asset rebalancing
must be on a Nationwide form.
Asset rebalancing occurs every three months or on another frequency if permitted
by Nationwide. If the last day of the three-month period falls on a Saturday,
Sunday, recognized holiday, or any other day when the New York Stock Exchange is
closed, asset rebalancing will occur on the next business day.
Asset rebalancing may be subject to employer limitations or restrictions for
contracts issued to a Qualified Plan or Tax Sheltered Annuity plan. Contract
owners should consult a financial adviser to discuss the use of asset
rebalancing.
Nationwide reserves the right to stop establishing new asset rebalancing
programs. Nationwide also reserves the right to assess a processing fee for this
service.
DOLLAR COST AVERAGING
Dollar cost averaging is a long-term transfer program that allows you to make
regular, level investments over time. It involves the automatic transfer of a
specified amount from certain sub-accounts into other sub-accounts. Nationwide
does not guarantee that this program will result in profit or protect contract
owners from loss.
Contract owners direct Nationwide to automatically transfer specified amounts
from the Fidelity VIP High Income Portfolio, NSAT Government Bond Fund,
Neuberger Berman AMT Limited Maturity Bond Portfolio, and the NSAT Money Market
Fund to any other underlying mutual fund.
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 contract owner instructs Nationwide in
writing to stop the transfers.
Nationwide reserves the right to stop establishing new dollar cost averaging
programs. Nationwide also reserves the right to assess a processing fee for this
service.
SYSTEMATIC WITHDRAWALS
Systematic withdrawals allow contract owners to receive a specified amount (of
at least $100) on a monthly, quarterly, semi-annual, or annual basis. Requests
for systematic withdrawals and requests to discontinue systematic withdrawals
must be in writing.
The withdrawals will be taken from the sub-accounts proportionately unless
Nationwide is instructed otherwise.
Nationwide will withhold federal income taxes from systematic withdrawals unless
otherwise instructed by the contract owner. The Internal Revenue Service may
impose a 10% penalty tax if the contract owner is under age 59 1/2 unless the
contract owner has made an irrevocable election of distributions of
substantially equal payments.
If the contract owner takes systematic withdrawals, the maximum amount that can
be withdrawn annually without a CDSC is the greater of:
1) 10% of all purchase payments made to the contract as of the
withdrawal date; or
2) an amount withdrawn to meet minimum distribution requirements
under the Internal Revenue Code.
The CDSC-free withdrawal privilege for systematic withdrawals is non-cumulative.
Free amounts not taken during any contract year cannot be taken as free amounts
in a subsequent contract year.
Nationwide reserves the right to stop establishing new systematic withdrawal
programs. Nationwide also reserves the right to assess a processing fee for this
service. Systematic withdrawals are not available before the end of the ten-day
free look period (see "Right to Revoke").
ANNUITY COMMENCEMENT DATE
The annuity commencement date is the date on which annuity payments are
scheduled to begin. The contract owner may change the annuity commencement date
before annuitization. This
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change must be in writing and approved by Nationwide.
ANNUITIZING THE CONTRACT
ANNUITIZATION DATE
The annuitization date is the date that annuity payments begin. It will be the
first day of a calendar month unless otherwise agreed, and must be at least 2
years after the contract is issued. If the contract is issued to fund a
Qualified Plan or Tax Sheltered Annuity plan, annuitization may occur during the
first 2 years subject to Nationwide's approval.
ANNUITIZATION
Annuitization is the period during which annuity payments are received. It is
irrevocable once payments have begun. Upon arrival of the annuitization date,
the annuitant must choose:
(1) an annuity payment option; and
(2) either a fixed payment annuity, variable payment annuity, or
an available combination.
Nationwide guarantees that each payment under a fixed payment annuity will be
the same throughout annuitization. Under a variable payment annuity, the amount
of each payment will vary with the performance of the underlying mutual funds
chosen by the contract owner.
FIXED PAYMENT ANNUITY
A fixed payment annuity is an annuity where the amount of the annuity payment
remains level.
The first payment under a fixed payment annuity is determined on the
annuitization date on an "age last birthday" basis by:
1) deducting applicable premium taxes from the total contract
value; then
2) applying the contract value amount specified by the contract
owner to the fixed payment annuity table for
the annuity payment option elected.
Subsequent payments will remain level unless the annuity payment option elected
provides otherwise. Nationwide does not credit discretionary interest during
annuitization.
VARIABLE PAYMENT ANNUITY
A variable payment annuity is an annuity where the amount of the annuity
payments will vary depending on the performance of the underlying mutual funds
selected.
The first payment under a variable payment annuity is determined on the
annuitization date on an "age last birthday" basis by:
1) deducting applicable premium taxes from the total contract
value; then
2) applying the contract value amount specified by the contract
owner to the variable payment annuity table for the annuity
payment option elected.
The dollar amount of the first payment is converted into a set number of annuity
units that will represent each monthly payment. This is done by dividing the
dollar amount of the first payment by the value of an annuity unit as of the
annuitization date. This number of annuity units remains fixed during
annuitization.
The second and subsequent payments are determined by multiplying the fixed
number of annuity units by the annuity unit value for the valuation period in
which the payment is due. The amount of the second and subsequent payments will
vary with the performance of the selected underlying mutual funds. Nationwide
guarantees that variations in mortality experience from assumptions used to
calculate the first payment will not affect the dollar amount of the second and
subsequent payments.
ASSUMED INVESTMENT RATE
An assumed investment rate is the percentage rate of return assumed to determine
the amount of the first payment under a variable payment annuity. Nationwide
uses the assumed investment rate of 3.5% to calculate the first annuity payment.
The assumed investment rate of 3.5% is the percentage rate of return required to
maintain level variable annuity payments. Subsequent variable annuity payments
may be more or less than the first based on whether actual investment
performance is higher or lower than the assumed investment rate of 3.5%.
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VALUE OF AN ANNUITY UNIT
Annuity unit values for sub-accounts are determined by multiplying the net
investment factor for the valuation period for which the annuity unit is being
calculated by the immediately preceding valuation period's annuity unit value,
and multiplying the result by an interest factor to neutralize the assumed
investment rate of 3.5% per annum built into the variable payment annuity
purchase rate basis in the contracts.
EXCHANGES AMONG UNDERLYING MUTUAL FUNDS
Exchanges among underlying mutual funds during annuitization must be in writing.
Exchanges will occur on each anniversary of the annuitization date.
FREQUENCY AND AMOUNT OF ANNUITY PAYMENTS
Payments are made based on the annuity payment option selected, unless:
- the amount to be distributed is less than $5,000, in which
case Nationwide may make one lump sum payment of the contract
value; or
- an annuity payment would be less than $50, in which case
Nationwide can change the frequency of payments to intervals
that will result in payments of at least $50. Payments will be
made at least annually.
ANNUITY PAYMENT OPTIONS
Contract owners must elect an annuity payment option before the annuitization
date. The annuity payment options are:
(1) LIFE ANNUITY - An annuity payable periodically, but at least annually,
for the lifetime of the annuitant. Payments will end upon the
annuitant's death. For example, if the annuitant dies before the second
annuity payment date, the annuitant will receive only one annuity
payment. The annuitant will only receive two annuity payments if he or
she dies before the third annuity payment date, and so on.
(2) JOINT AND LAST SURVIVOR ANNUITY - An annuity payable periodically, but
at least annually, during the joint lifetimes of the annuitant and a
designated second individual. If one of these parties dies, payments
will continue for the lifetime of the survivor. As is the case under
option 1, there is no guaranteed number of payments. Payments end upon
the death of the last surviving party, regardless of the number of
payments received.
(3) LIFE ANNUITY WITH 120 OR 240 MONTHLY PAYMENTS GUARANTEED - An annuity
payable monthly during the lifetime of the annuitant. If the annuitant
dies before all of the guaranteed payments have been made, payments
will continue to the end of the guaranteed period and will be paid to a
designee chosen by the annuitant at the time the annuity payment option
was elected.
The designee may elect to receive the present value of the remaining
guaranteed payments in a lump sum. The present value will be computed
as of the date Nationwide receives the notice of the annuitant's death.
Not all of the annuity payment options may be available in all states. Contract
owners may request other options before the annuitization date. These options
are subject to Nationwide's approval.
No distribution for Non-Qualified Contracts will be made until an annuity
payment option has been elected. Qualified Contracts, IRAs, SEP IRAs, and Tax
Sheltered Annuities are subject to the "minimum distribution" requirements set
forth in the plan, contract, and the Internal Revenue Code.
DEATH BENEFITS
DEATH OF CONTRACT OWNER - NON-QUALIFIED CONTRACTS
If the contract owner who is not the annuitant dies before the annuitization
date, the joint owner becomes the contract owner. If no joint owner is named,
the contingent owner becomes the contract owner. If no contingent owner is
named, the last surviving contract owner's estate becomes the contract owner.
If a contract owner and annuitant are the same, and the contact owner/annuitant
dies before the
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annuitization date, the contingent owner will not have any rights in the
contract unless the contingent owner is also the beneficiary.
Distributions under Non-Qualified Contracts will be made pursuant to the
"Required Distributions for Non-Qualified Contracts" provision.
DEATH OF ANNUITANT - NON-QUALIFIED CONTRACTS
If the annuitant who is not the contract owner dies before the annuitization
date, a death benefit is payable to the beneficiary unless a contingent
annuitant is named. If a contingent annuitant is named, the contingent annuitant
becomes the annuitant and no death benefit is payable.
If no beneficiary(ies) survive the annuitant, the contingent beneficiary(ies)
receives the death benefit. Contingent beneficiaries will share the death
benefit equally, unless otherwise specified.
If no beneficiaries or contingent beneficiaries survive the annuitant, the
contract owner or the last surviving contract owner's estate will receive the
death benefit.
The beneficiary must notify Nationwide of this election within 60 days of the
annuitant's death.
DEATH OF CONTRACT OWNER/ANNUITANT
If a contract owner who is also the annuitant dies before the annuitization
date, a death benefit is payable according to the "Death of the Annuitant -
Non-Qualified Contracts" provision.
If the contract owner/annuitant dies after the annuitization date, any benefit
that may be payable will be paid according to the selected annuity payment
option.
HOW THE DEATH BENEFIT VALUE IS DETERMINED
The death benefit value is determined as of the date the home office receives:
1) proper proof of the annuitant's death;
2) an election specifying the distribution method; and
3) any state required forms(s).
If the annuitant dies after the annuitization date, payment will be determined
according to the selected annuity payment option.
The beneficiary may elect to receive the death benefit:
1) in a lump sum;
2) as an annuity; or
3) in any other manner permitted by law and approved by Nationwide.
The beneficiary must notify Nationwide of this election within 60 days of the
annuitant's death.
DEATH BENEFIT PAYMENT
FOR ALL CONTRACTS ISSUED ON OR AFTER THE LATER OF MAY 1, 1998 OR THE DATE ON
WHICH STATE INSURANCE AUTHORITIES APPROVED APPLICABLE CONTRACT MODIFICATIONS:
If the annuitant dies prior to his or her 86th birthday, the dollar amount of
the death benefit will be the greatest of:
1) the contract value;
2) the sum of all purchase payments, less an adjustment for amounts
surrendered; or
3) the contract value as of the most recent five-year contract
anniversary, less an adjustment for amounts surrendered since the
most recent five-year contract anniversary.
If the annuitant dies on or after his or her 86th birthday but before the
annuitization date, the dollar amount of the death benefit will be equal to the
contract value.
The adjustment for amounts surrendered will reduce items (2) and (3) above in
the same proportion that the contract value was reduced on the dates(s) of the
partial surrender(s).
FOR CONTRACTS ISSUED PRIOR TO MAY 1, 1998 OR A DATE PRIOR TO THE DATE STATE
INSURANCE AUTHORITIES APPROVED APPLICABLE CONTRACT MODIFICATIONS:
If the annuitant dies prior to his or her 86th birthday, the dollar amount of
the death benefit will be the greatest of:
1) the contract value;
2) the sum of all purchase payments, less any amounts surrendered; or
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3) the contract value as of the most recent five-year contract
anniversary, less any amounts surrendered since the most recent
five-year contract anniversary.
If the annuitant dies on or after his or her 86th birthday but before the
annuitization date, the dollar amount of the death benefit will be equal to the
contract value.
REQUIRED DISTRIBUTIONS
REQUIRED DISTRIBUTIONS FOR NON-QUALIFIED CONTRACTS
Internal Revenue Code Section 72(s) requires Nationwide to make certain
distributions when a contract owner dies. The following distributions will be
made according to those requirements:
1) If any contract owner dies on or after the annuitization date
and before the entire interest in the contract has been
distributed, then the remaining interest must be distributed at
least as rapidly as the distribution method in effect on the
contract owner's death.
2) If any contract owner dies before the annuitization date, then the entire
interest in the contract (consisting of either the death benefit or the
contract value reduced by charges set forth elsewhere in the contract)
will be distributed within 5 years of the contract owner's death,
provided however:
a) any interest payable to or for the benefit of a natural person
(referred to herein as a "designated beneficiary"), may be
distributed over the life of the designated beneficiary or
over a period not longer than the life expectancy of the
designated beneficiary. Payments must begin within one year of
the contract owner's death unless otherwise permitted by
federal income tax regulations; or
b) if the designated beneficiary is the surviving spouse of the
deceased contract owner, the spouse can choose to become the
contract owner instead of receiving a death benefit. Any
distributions required under these distribution rules will be
made upon that spouse's death.
In the event that the contract owner is not a natural person (e.g., a trust or
corporation), then, for purposes of these distribution provisions:
a) the death of the annuitant will be treated as the death of a
contract owner;
b) any change of annuitant will be treated as the death of a
contract owner; and
c) in either case, the appropriate distribution will be made upon
the death or change, as the case may be.
These distribution provisions do not apply to any contract exempt from Section
72(s) of the Internal Revenue Code by reason of Section 72(s)(5) or any other
law or rule.
The designated beneficiary must elect a method of distribution and notify
Nationwide of this election within 60 days of the contract owner's death.
REQUIRED DISTRIBUTIONS FOR QUALIFIED PLANS AND TAX SHELTERED ANNUITIES
Distributions from Qualified Plans or Tax Sheltered Annuities will be made
according to the Minimum Distribution and Incidental Benefit ("MDIB") provisions
of Section 401(a)(9) of the Internal Revenue Code. Distributions will be made to
the annuitant according to the selected annuity payment option over a period not
longer than:
a) the life of the annuitant or the joint lives of the annuitant
and the annuitant's designated beneficiary; or
b) a period not longer than the life expectancy of the annuitant
or the joint life expectancies of the annuitant and the
annuitant's designated beneficiary.
For Tax Sheltered Annuities, required distributions do not have to be withdrawn
from this contract if they are being withdrawn from another Tax Sheltered
Annuity of the annuitant.
If the annuitant's entire interest in a Qualified Plan or Tax Sheltered Annuity
will be distributed in equal or substantially equal payments over a period
described in a) or b), the
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payments will begin on the required beginning date. The required beginning date
is the later of:
a) April 1 of the calendar year following the calendar year in
which the annuitant reaches age 70 1/2; or
b) the annuitant's retirement date.
Provision b) does not apply to any employee who is a 5% owner (as defined in
Section 416 of the Internal Revenue Code) with respect to the plan year ending
in the calendar year when the employee attains the age of 70 1/2.
Distributions commencing on the required distribution date must satisfy MDIB
provisions set forth in the Internal Revenue Code. Those provisions require that
distribution cannot be less than the amount determined by dividing the
annuitant's interest in the tax sheltered annuity by the end of the previous
calendar year by:
a) the annuitant's life expectancy, or if applicable;
b) the joint and survivor life expectancy of the annuitant and
the annuitant's beneficiary.
The life expectancies and joint life expectancies are determined by reference to
Treasury Regulation 1.72-9.
If the annuitant dies before distributions begin, the interest in the Qualified
Plan or Tax Sheltered Annuity must be distributed by December 31 of the calendar
year in which the fifth anniversary of the annuitant's death occurs unless:
a) the annuitant names his or her surviving spouse as the
beneficiary and the spouse chooses to receive distribution of
the contract in substantially equal payments over his or her
life (or a period not longer than his or her life expectancy)
and beginning no later than December 31 of the year in which
the annuitant would have attained age 70 1/2; or
b) the annuitant names a beneficiary other than his or her
surviving spouse and the beneficiary elects to receive
distribution of the contract in substantially equal payments
over his or her life (or a period not longer than his or her
life expectancy) beginning no later than December 31 of the
year following the year in which the annuitant dies.
If the annuitant dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule used before the annuitant's
death.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
REQUIRED DISTRIBUTIONS FOR IRAS AND SEP IRAS
Distributions from an IRA or SEP IRA must begin no later than April 1 of the
calendar year following the calendar year in which the contract owner reaches
age 70 1/2. Distribution may be paid in a lump sum or in substantially equal
payments over:
a) the contract owner's life or the lives of the contract owner
and his or her spouse or designated beneficiary; or
b) a period not longer than the life expectancy of the contract
owner or the joint life expectancy of the contract owner and
the contract owner's designated beneficiary.
If the contract owner dies before distributions begin, the interest in the IRA
or SEP IRA must be distributed by December 31 of the calendar year in which the
fifth anniversary of the contract owner's death occurs, unless:
a) the contract owner names his or her surviving spouse as the
beneficiary and such spouse chooses to:
1) treat the contract as an IRA or SEP IRA established
for his or her benefit; or
2) receive distribution of the contract in substantially
equal payments over his or her life (or a period not
longer than his or her life expectancy) and beginning
no later than December 31
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of the year in which the contract owner would have
reached age 70 1/2; or
b) the contract owner names a beneficiary other than his or her
surviving spouse and such beneficiary elects to receive a
distribution of the contract in substantially equal payments
over his or her life (or a period not longer than his or her
life expectancy) beginning no later than December 31 of the
year following the year of the contract owner's death.
IRA or SEP IRA distributions will not receive the favorable tax treatment of a
lump sum distribution from a Qualified Plan Required distributions do not have
to be withdrawn from this contract if they are being withdrawn from another IRA
or SEP IRA of the contract owner.
If the contract owner dies after distributions have begun, distributions must
continue at least as rapidly as under the schedule being used before the
contract owner's death. However, a surviving spouse who is the beneficiary under
the annuity payment option may treat the contract as his or her own, in the same
manner as is described in section (a)(1) of this provision.
If distribution requirements are not met, a penalty tax of 50% is levied on the
difference between the amount that should have been distributed for that year
and the amount that actually was distributed for that year.
A portion of each distribution will be included in the recipient's gross income
and taxed at ordinary income tax rates. The portion of a distribution which is
taxable is based on the ratio between the amount by which non-deductible
purchase payments exceed prior non-taxable distributions and total account
balances at the time of the distribution. The owner of an IRA or SEP IRA must
annually report the amount of non-deductible purchase payments, the amount of
any distribution, the amount by which non-deductible purchase payments for all
years exceed non-taxable distributions for all years, and the total balance of
all IRAs.
IRA or SEP IRA distributions will not receive the favorable tax treatment of a
lump sum distribution from a Qualified Plan.
If the contract owner dies before the entire interest in the contract has been
distributed, the balance will also be included in his or her gross estate.
REQUIRED DISTRIBUTIONS FOR ROTH IRAS
The rules for Roth IRAs do not require distributions to begin during the
contract owner's lifetime.
When the contract owner dies, the interest in the Roth IRA must be distributed
by December 31 of the calendar year in which the fifth anniversary of his or her
death occurs, unless:
a) the contract owner names his or her surviving spouse as the beneficiary
and the spouse chooses to:
1) treat the contract as a Roth IRA established for his or her
benefit; or
2) receive distribution of the contract in substantially equal
payments over his or her life (or a period not longer than his
or her life expectancy) and beginning no later than December
31 of the year following the year in which the contract owner
would have reached age 70 1/2; or
b) the contract owner names a beneficiary other than his or her surviving
spouse and the beneficiary chooses to receive distribution of the
contract in substantially equal payments over his or her life (or a
period not longer than his or her life expectancy) beginning no later
than December 31 of the year following the year in which the contract
owner dies.
Distributions from Roth IRAs may be either taxable or nontaxable, depending upon
whether they are "qualified distributions" or "non-qualified distributions."
FEDERAL TAX CONSIDERATIONS
FEDERAL INCOME TAXES
The tax consequences of purchasing a contract described in this prospectus will
depend on:
- the type of contract purchased;
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- the purposes for which the contract is purchased; and
- the personal circumstances of individual investors having
interests in the contracts.
See "Synopsis of the Contracts" for a brief description of the various types of
contracts and the different purposes for which the contracts may be purchased.
Existing tax rules are subject to change, and may affect individuals differently
depending on their situation. Nationwide does not guarantee the tax status of
any contracts or any transactions involving the contracts.
If the contract is purchased as an investment of certain retirement plans (such
as qualified retirement plans, Individual Retirement Accounts, and custodial
accounts as described in Sections 401, 408(a), and 403(b)(7) of the Internal
Revenue Code), tax advantages enjoyed by the contract owner and/or annuitant may
relate to participation in the plan rather than ownership of the annuity
contract. Such plans are permitted to purchase investments other than annuities
and retain tax-deferred status.
The following is a brief summary of some of the federal income tax
considerations related to the contracts. In addition to the federal income tax,
distributions from annuity contracts may be subject to state and local income
taxes. The tax rules across all states and localities are not uniform and
therefore will not be discussed in this prospectus. Tax rules that may apply to
contracts issued in U.S. territories such as Puerto Rico and Guam are also not
discussed. Nothing in this prospectus should be considered to be tax advice.
Contract owners and prospective contract owners are encouraged to consult a
financial consultant, tax advisor or legal counsel to discuss the taxation and
use of the contracts.
The Internal Revenue Code sets forth different income tax rules for the
following types of annuity contracts:
- Individual Retirement Annuities;
- SEP IRAs;
- Roth IRAs;
- Tax Sheltered Annuities; and
- "Non-Qualified Annuities."
Individual Retirement Annuities and SEP IRAs
Distributions from Individual Retirement Annuities and SEP IRAs are generally
taxed when received. If any of the amount contributed to the IRA was
nondeductible for federal income tax purposes, then a portion of each
distribution is excludable from income.
If distributions of income from an IRA are made prior to the date that the owner
attains the age of 59 1/2 years, the income is subject to both the regular
income tax and an additional penalty tax of 10%. The penalty tax can be avoided
if the distribution is:
- made to a beneficiary on or after the death of the owner;
- attributable to the owner becoming disabled (as defined in the
Internal Revenue Code);
- part of a series of substantially equal periodic payments made
not less frequently than annually made for the life (or life
expectancy) of the owner, or the joint lives (or joint life
expectancies) of the owner and his or her designated
beneficiary;
- used for qualified higher education expenses; or
- used for expenses attributable to the purchase of a home for a
qualified first-time buyer.
Roth IRAs
Distributions of earnings from Roth IRAs are taxable or nontaxable depending
upon whether they are "qualified distributions" or "non-qualified
distributions." A "qualified distribution" is one that satisfies the five-year
rule and meets one of the following requirements:
- it is made on or after the date on which the contract owner
attains age 59 1/2;
- it is made to a beneficiary (or the contract owner's estate)
on or after the death of the contract owner;
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- it is attributable to the contract owner's disability; or
- it is used for expenses attributable to the purchase of a home
for a qualified first-time buyer.
The five year rule generally is satisfied if the distribution is not made within
the five taxable year period beginning with the first taxable year in which a
contribution is made to any Roth IRA established for the owner.
A qualified distribution is not included in gross income for federal income tax
purposes.
A non-qualified distribution is not includible in gross income to the extent
that the distribution, when added to all previous distributions, does not exceed
that total amount of contributions made to the Roth IRA. Any non-qualified
distribution in excess of the aggregate amount of contributions will be included
in the contract owner's gross income in the year that is distributed to the
contract owner.
Special rules apply for Roth IRAs that have proceeds received from a traditional
IRA prior to January 1, 1999 if the owner elected the special 4-year income
averaging provisions that were in effect for 1998.
If non-qualified distributions of income from a Roth IRA are made prior to the
date that the owner attains the age of 59 1/2 years, the income is subject to
both the regular income tax and an additional penalty tax of 10%. The penalty
tax can be avoided if the distribution is:
- made to a beneficiary on or after the death of the owner;
- attributable to the owner becoming disabled as defined in the
Internal Revenue Code;
- part of a series of substantially equal periodic payments made
not less frequently than annually made for the life (or life
expectancy) of the owner, or the joint lives (or joint life
expectancies) of the owner and his or her designated
beneficiary;
- for qualified higher education expenses; or
- used for expenses attributable to the purchase of a home for a
qualified first-time buyer.
If the contract owner dies before the contract is completely distributed, the
balance may be included in the contract owner's gross estate for tax purposes.
Tax Sheltered Annuities
Distributions from Tax Sheltered Annuities are generally taxed when received. A
portion of each distribution is excludable from income based on a formula
established pursuant to the Internal Revenue Code. The formula excludes from
income the amount invested in the contract divided by the number of anticipated
payments until the full investment in the contract is recovered. Thereafter all
distributions are fully taxable.
If a distribution of income is made from a Tax Sheltered Annuity prior to the
date that the owner attains the age of 59 1/2 years, the income is subject to
both the regular income tax and an additional penalty tax of 10%. The penalty
tax can be avoided if the distribution is:
- made to a beneficiary on or after the death of the owner;
- attributable to the owner becoming disabled as defined in the
Internal Revenue Code;
- part of a series of substantially equal periodic payments made
not less frequently than annually made for the life (or life
expectancy) of the owner, or the joint lives (or joint life
expectancies) of the owner and his or her designated
beneficiary;
- for qualified higher education expenses;
- used for expenses attributable to the purchase of a home for a
qualified first-time buyer; or
- made to the owner after separation from service with his or
her employer after age 55.
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Non-Qualified Contracts - Natural Persons as Contract Owners
Generally, the income earned inside a Non-Qualified Annuity Contract that is
owned by a natural person is not taxable until it is distributed from the
contract.
Distributions before the annuitization date are taxable to the contract owner to
the extent that the cash value of the contract exceeds the contract owner's
investment at the time of the distribution. Distributions, for this purpose,
include partial surrenders, any portion of the contract that is assigned or
pledged; or any portion of the contract that is transferred by gift. For these
purposes, a transfer by gift may occur upon annuitization if the contract owner
and the annuitant are not the same individual.
With respect to annuity distributions on or after the annuitization date, a
portion of each annuity payment is excludable from taxable income. The amount
excludable is based on the ratio between the contract owner's investment in the
contract and the expected return on the contract. Once the entire investment in
the contract is recovered, all distributions are fully includable in income. The
maximum amount excludable from income is the investment in the contract. If the
annuitant dies before the entire investment in the contract has been excluded
from income, and as a result of the annuitant's death no more payments are due
under the contract, then the unrecovered investment in the contract may be
deducted on his or her final tax return.
In determining the taxable amount of a distribution, all annuity contracts
issued after October 21, 1988 by the same company to the same contract owner
during the same calendar year will be treated as one annuity contract.
A special rule applies to distributions from contracts that have investments
that were made prior to August 14, 1982. For those contracts, distributions that
are made prior to the annuitization date are treated first as a recovery of the
investment in the contract as of that date. A distribution in excess of the
amount of the investment in the contract as of August 14, 1982, will be treated
as taxable income.
The Internal Revenue Code imposes a penalty tax if a distribution is made before
the contract owner reaches age 59 1/2. The amount of the penalty is 10% of the
portion of any distribution that is includible in gross income. The penalty tax
does not apply if the distribution is:
- the result of a contract owner's death;
- the result of a contract owner's disability, as defined in the
Internal Revenue Code;
- one of a series of substantially equal periodic payments made
over the life (or life expectancy) of the contract owner or
the joint lives (or joint life expectancies) of the contract
owner and the beneficiary selected by the contract owner to
receive payment under the annuity payment option selected by
the contract owner; or
- is allocable to an investment in the contract before August 14, 1982.
Non-Qualified Contracts - Non-Natural Persons as Contract Owners
The previous discussion related to the taxation of Non-Qualified Contracts owned
by individuals. Different rules (the so-called "non-natural persons" rules)
apply if the contract owner is not a natural person.
Generally, contracts owned by corporations, partnerships, trusts, and similar
entities are not treated as annuity contracts under the Internal Revenue Code.
Therefore, income earned under a Non-Qualified Contract that is owned by a
non-natural person is taxed as ordinary income during the taxable year that it
is earned. Taxation is not deferred, even if the income is not distributed out
of the contract. The income is taxable as ordinary income, not capital gain.
The non-natural persons rules do not apply to all entity-owned contracts. A
contract that is owned by a non-natural person as an agent of an individual is
treated as owned by the individual. This would cause the contract to be treated
as an annuity under the Internal Revenue Code, allowing tax deferral. However,
this exception does not apply when the non-natural person is an employer that
holds the contract under a non-qualified deferred compensation arrangement for
one or more employees.
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The non-natural persons rules also do not apply to contracts that are:
- acquired by the estate of a decedent by reason of the death of
the decedent;
- issued in connection with certain qualified retirement plans
and individual retirement plans;
- purchased by an employer upon the termination of certain
qualified retirement plans.
WITHHOLDING
Pre-death distributions from the contracts are subject to federal income tax.
Nationwide will withhold the tax from the distributions unless the contract
owner requests otherwise. If the distribution is from a Tax Sheltered Annuity,
it will be subject to mandatory 20% withholding that cannot be waived, unless:
- the distribution is made directly to another Tax Sheltered
Annuity or an IRA; or
- the distribution satisfies the minimum distribution
requirements imposed by the Internal Revenue Code.
In addition, contract owners may not waive withholding if the distribution is
subject to mandatory back-up withholding (if no taxpayer identification number
is given or if the Internal Revenue Service notifies Nationwide that mandatory
back-up withholding is required). Mandatory back-up withholding rates are 31% of
income that is distributed.
NON-RESIDENT ALIENS
Generally, a pre-death distribution from a contract to a non-resident alien is
subject to federal income tax at a rate of 30% of the amount of income that is
distributed. Nationwide is required to withhold this amount and send it to the
Internal Revenue Service. Some distributions to non-resident aliens may be
subject to a lower (or no) tax if a treaty applies. In order to obtain the
benefits of such a treaty, the non-resident alien must:
1) provide Nationwide with proof of residency and citizenship (in
accordance with Internal Revenue Service requirements); and
2) provide Nationwide with an individual taxpayer identification
number.
If the non-resident alien does not meet the above conditions, Nationwide will
withhold 30% of income from the distribution.
Another way to avoid the 30% withholding is for the non-resident alien to
provide Nationwide with sufficient evidence that:
1) the distribution is connected to the non-resident alien's
conduct of business in the United States; and
2) the distribution is includible in the non-resident alien's
gross income for United States federal income tax purposes.
Note that these distributions may be subject to back-up withholding, currently
31%, if a correct taxpayer identification number is not provided.
FEDERAL ESTATE, GIFT, AND GENERATION SKIPPING TRANSFER TAXES
The following transfers may be considered a gift for federal gift tax purposes:
- a transfer of the contract from one contract owner to another;
or
- a distribution to someone other than a contract owner.
Upon the contract owner's death, the value of the contract may subject to estate
taxes, even if all or a portion of the value is also subject to federal income
taxes.
Section 2612 of the Internal Revenue Code may require Nationwide to determine
whether a death benefit or other distribution is a "direct skip" and the amount
of the resulting generation skipping transfer tax, if any. A direct skip is when
property is transferred to, or a death benefit or other distribution is made to:
a) an individual who is two or more generations younger than the
contract owner; or
b) certain trusts, as described in Section 2613 of the Internal
Revenue Code (generally, trusts that have no beneficiaries who
are
35
<PAGE> 44
not 2 or more generations younger than the contract owner).
If the contract owner is not an individual, then for this purpose ONLY,
"contract owner" refers to any person:
- who would be required to include the contract, death benefit,
distribution, or other payment in his or her federal gross
estate at his or her death; or
- who is required to report the transfer of the contract, death
benefit, distribution, or other payment for federal gift tax
purposes.
If a transfer is a direct skip, Nationwide will deduct the amount of the
transfer tax from the death benefit, distribution or other payment, and remit it
directly to the Internal Revenue Service.
CHARGE FOR TAX
Nationwide is not required to maintain a capital gain reserve liability on
Non-Qualified Contracts. If tax laws change requiring a reserve, Nationwide may
implement and adjust a tax charge.
DIVERSIFICATION
Internal Revenue Code Section 817(h) contains rules on diversification
requirements for variable annuity contracts. A variable annuity contract that
does not meet these diversification requirements will not be treated as an
annuity, unless:
- the failure to diversify was accidental;
- the failure is corrected; and
- a fine is paid to the Internal Revenue Service.
The amount of the fine will be the amount of tax that would have been paid by
the contract owner if the income, for the period the contract was not
diversified, had been received by the contract owner.
If the violation is not corrected, the contract owner will be considered the
owner of the underlying securities and will be taxed on the earnings of his or
her contract. Nationwide believes that the investments underlying this contract
meet these diversification requirements.
TAX CHANGES
The foregoing tax information is based on Nationwide's understanding of federal
tax laws. It is NOT intended as tax advice. All information is subject to change
without notice. For more details, contact your personal tax and/or financial
advisor.
STATEMENTS AND REPORTS
Nationwide will mail contract owners statements and reports. Therefore, contract
owners should promptly notify Nationwide of any address change.
These mailings will contain:
- statements showing the contract's quarterly activity;
- confirmation statements showing transactions that affect the
contract's value. Confirmation statements will not be sent for
recurring transactions (i.e., dollar cost averaging or salary
reduction programs). Instead, confirmation of recurring
transactions will appear in the contract's quarterly
statements;
- semi-annual reports as of June 30 containing financial
statements for the variable account; and
- annual reports as of December 31 containing financial
statements for the variable account.
Contract owners should review statements and confirmations carefully. All errors
or corrections must be reported to Nationwide immediately to assure proper
crediting to the contract. Unless Nationwide is notified within 30 days of
receipt of the statement, Nationwide will assume statements and confirmation
statements are correct.
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
36
<PAGE> 45
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.
ADVERTISING AND SUB-ACCOUNT PERFORMANCE SUMMARY ADVERTISING
A "yield" and "effective yield" may be advertised for the NSAT Money Market
Fund. "Yield" is a measure of the net dividend and interest income earned over a
specific seven-day period (which period will be stated in the advertisement)
expressed as a percentage of the offering price of the NSAT Money Market Fund's
units. Yield is an annualized figure, which means that it is assumed that the
NSAT Money Market Fund generates the same level of net income over a 52-week
period. The "effective yield" is calculated similarly but includes the effect of
assumed compounding, calculated under rules prescribed by the SEC. The effective
yield will be slightly higher than yield due to this compounding effect.
Nationwide may advertise the performance of a sub-account in relation to the
performance of other variable annuity sub-accounts, underlying mutual fund
options with similar or different objectives, or the investment industry as a
whole. Other investments to which the sub-accounts may be compared include, but
are not limited to:
- precious metals;
- real estate;
- stocks and bonds;
- closed-end funds;
- bank money market deposit accounts and
passbook savings;
- CDs; and
- the Consumer Price Index.
Market Indexes
The sub-accounts will be compared to certain market indexes, such as:
- S&P 500;
- Shearson/Lehman Intermediate Government/Corporate Bond Index;
- Shearson/Lehman Long-Term Government/Corporate Bond Index;
- Donoghue Money Fund Average;
- U.S. Treasury Note Index;
- Bank Rate Monitor National Index of 2 1/2 Year CD Rates; and
- Dow Jones Industrial Average.
Tracking & Rating Services; Publications
Nationwide's rankings and ratings are sometimes published by other services,
such as:
- Lipper Analytical Services, Inc.;
- CDA/Wiesenberger;
- Morningstar;
- Donoghue's;
- magazines such as:
- Money;
37
<PAGE> 46
- Forbes;
- Kiplinger's Personal Finance Magazine;
- Financial World;
- Consumer Reports;
- Business Week;
- Time;
- Newsweek;
- National Underwriter; and
- News and World Report;
- LIMRA;
- Value;
- Best's Agent Guide;
- Western Annuity Guide;
- Comparative Annuity Reports;
- Wall Street Journal;
- Barron's;
- Investor's Daily;
- Standard & Poor's Outlook; and
- Variable Annuity Research & Data Service (The VARDS Report).
These rating services and publications rank the underlying mutual funds'
performance against other funds. These rankings may or may not include the
effects of sales charges or other fees.
Financial Rating Services
Nationwide is also ranked and rated by independent financial rating services,
among which are Moody's, Standard & Poor's and A.M. Best Company. Nationwide may
advertise these ratings. These ratings reflect Nationwide's financial strength
or claims-paying ability. The ratings are not intended to reflect the investment
experience or financial strength of the variable account.
Some Nationwide advertisements and endorsements may include lists of
organizations, individuals or other parties that recommend Nationwide or the
contract. Furthermore, Nationwide may occasionally advertise comparisons of
currently taxable and tax deferred investment programs, based on selected tax
brackets, or discussions of alternative investment vehicles and general economic
conditions.
Historical Performance of the Sub-Accounts
Nationwide will advertise historical performance of the sub-accounts. Nationwide
may advertise for the sub-account's standardized "average annual total return,"
calculated in a manner prescribed by the SEC, and nonstandardized "total
return." Average annual total return shows the percentage rate of return of a
hypothetical initial investment of $1,000 for the most recent one, five and ten
year periods (or for a period covering the time the underlying mutual fund has
been available in the variable account if it has not been available for one of
the prescribed periods). This calculation reflects the maximum charges that
could be assessed to a contract (1.45%). It does not take into consideration
premium taxes, which may be imposed by certain states.
Nonstandardized "total return," calculated similar to standardized "average
annual total return," shows the percentage rate of return of a hypothetical
initial investment of $25,000 for the most recent one, five and ten year periods
(or for a period covering the time the underlying mutual fund has been in
existence). For those underlying mutual funds which have not been available for
one of the prescribed periods, the nonstandardized total return illustrations
will show the investment performance the underlying mutual funds would have
achieved (reduced by the same charges) had they been available in the variable
account for one of the periods. An initial investment of $25,000 is assumed
because that amount is closer to the size of a typical contract than $1,000,
which was used in calculating the standardized average annual total return.
The standardized average annual total return and nonstandardized total return
quotations are calculated using data for the period ended December 31, 1999. If
the underlying mutual fund has been available in the variable account for less
than a year (or has been effective for less than one year) standardized and
non-standardized returns are not annualized. However, Nationwide generally
provides performance information more frequently. Information relating to
performance of the sub-accounts is based on historical earnings and does not
represent or guarantee future results.
38
<PAGE> 47
SUB-ACCOUNT PERFORMANCE SUMMARY
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
10 Years or Date
1 Year to 5 Years to Fund Available in Date Fund Added to
Sub-Account Options 12/31/99 12/31/99 Variable Account to Variable Account
12/31/99
<S> <C> <C> <C> <C>
American Century Variable Portfolios, 8.46% N/A 11.58% 02-01-96
Inc.- American Century VP Balanced
American Century Variable Portfolios, 62.14% N/A 8.92% 02-01-96
Inc.- American Century VP Capital
Appreciation
American Century Variable Portfolios, 16.31% N/A 14.75% 05-01-98
Inc. - American Century VP Income &
Growth
American Century Variable Portfolios, 61.67% N/A 25.94% 02-01-96
Inc.- American Century VP International
American Century Variable Portfolios, -2.99% N/A 8.29% 12-23-96
Inc.- American Century VP Value
The Dreyfus Socially Responsible 28.20% N/A 24.53% 02-01-96
Growth Fund, Inc.
Dreyfus Stock Index Fund, Inc. 18.86% N/A 23.61% 02-01-96
Dreyfus Variable Investment Fund- 9.84% N/A 15.81% 07-14-97
Appreciation Portfolio (formerly,
Dreyfus Variable Investment Fund -
Capital Appreciation Portfolio)
Dreyfus Variable Investment Fund - 15.19% N/A 13.14% 12-23-96
Growth & Income Portfolio
Fidelity VIP Equity-Income Portfolio 4.79% N/A 12.67% 02-01-96
Fidelity VIP Growth Portfolio 35.45% N/A 26.46% 02-01-96
Fidelity VIP High Income Portfolio 6.59% N/A 6.48% 02-01-96
Fidelity VIP Overseas Portfolio 40.56% N/A 17.42% 02-01-96
Fidelity VIP II Asset Manager Portfolio 9.48% N/A 13.26% 02-01-96
Fidelity VIP II Contrafund(R) Portfolio 22.45% N/A 23.28% 02-01-96
Fidelity VIP III Growth Opportunities 2.76% N/A 13.92% 07-14-97
Portfolio
NSAT- Capital Appreciation Fund 2.77% N/A 20.53% 02-01-96
NSAT- Government Bond Fund -3.76% N/A 3.24% 02-01-96
NSAT- Money Market Fund 3.33% N/A 3.59% 01-31-96
NSAT-Total Return Fund 5.39% N/A 16.55% 02-01-96
NSAT - Nationwide Small Cap Value Fund 25.98% N/A 4.34% 05-01-98
NSAT- Nationwide Small Company Fund 41.93% N/A 19.16% 02-01-96
Neuberger Berman AMT - Growth Portfolio 48.22% N/A 22.98% 02-01-96
Neuberger Berman AMT - Guardian 13.27% N/A 2.99% 05-01-98
Portfolio
Neuberger Berman AMT-Limited Maturity 0.01% N/A 2.58% 02-01-96
Bond Portfolio
Neuberger Berman AMT-Partners Portfolio 5.81% N/A 14.90% 02-01-96
Oppenheimer Variable Account Funds - -2.95% N/A 3.21% 02-01-96
Oppenheimer Bond Fund/VA
Oppenheimer Variable Account Funds - 39.60% N/A 26.30% 07-14-97
Oppenheimer Capital Appreciation
Fund/VA (formerly, Oppenheimer
Variable Account Funds - Oppenheimer
Growth Fund)
Oppenheimer Variable Account Funds - 56.19% N/A 24.80% 02-01-96
Oppenheimer Global Securities Fund/VA
</TABLE>
39
<PAGE> 48
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN (CONTINUED)
<TABLE>
<CAPTION>
10 Years or Date
1 Year to 5 Years to Fund Available in Date Fund Added to
Sub-Account Options 12/31/99 12/31/99 Variable Account to Variable Account
12/31/99
<S> <C> <C> <C> <C>
Oppenheimer Variable Account Funds - 10.18% N/A 10.71% 02-01-96
Oppenheimer Multiple Strategies Fund/VA
Strong Opportunity Fund II, Inc. 32.95% N/A 20.62% 02-01-96
Strong Variable Insurance Funds, Inc.- 3.57% N/A 4.55% 02-01-96
Discovery Fund II, Inc.
Strong Variable Insurance Funds, Inc.- 84.49% N/A 11.74% 02-01-96
International Stock II
The Universal Institutional Funds, 27.50% N/A -4.96% 07-14-97
Inc.- Emerging Markets Debt Portfolio
(formerly, Morgan Stanley Dean Witter
Universal Funds, Inc.- Emerging
Markets Debt Portfolio)
Van Eck Worldwide Insurance Trust- -9.16% N/A 0.95% 02-01-96
Worldwide Bond Fund
Van Eck Worldwide Insurance Trust- 97.39% N/A 3.97% 12-23-96
Worldwide Emerging Markets Fund
Van Eck Worldwide Insurance Trust- 19.25% N/A -5.65% 02-01-96
Worldwide Hard Assets Fund
Van Kampen Life Investment Trust- -4.77% N/A 8.03% 02-01-96
Morgan Stanley Real Estate Securities
Portfolio
Warburg Pincus Trust - Global 61.13% N/A 24.11% 12-23-96
Post-Venture Capital Portfolio
(formerly, Warburg Pincus Trust -
Post-Venture Capital Portfolio)
Warburg Pincus Trust- International 51.21% N/A 12.41% 02-01-96
Equity Portfolio
Warburg Pincus Trust-Small Company 66.63% N/A 20.02% 02-01-96
Growth Portfolio
</TABLE>
40
<PAGE> 49
NON-STANDARDIZED TOTAL RETURN
<TABLE>
<CAPTION>
10 Years to
1 Year to 5 Years to 12/31/99 or Date Fund
Sub-Account Options 12/31/99 12/31/99 Life of Fund Effective
<S> <C> <C> <C> <C> <C>
American Century Variable Portfolios, Inc.- 8.46% 13.27% 9.86% 05-01-91
American Century VP Balanced
American Century Variable Portfolios, Inc.- 62.14% 12.68% 9.79% 11-20-87
American Century VP Capital Appreciation
American Century Variable Portfolios, Inc. - 16.31% N/A 22.91% 10-30-97
American Century VP Income & Growth
American Century Variable Portfolios, Inc.- 61.67% 22.50% 18.33% 05-01-94
American Century VP International
American Century Variable Portfolios, Inc.- -2.29% N/A 9.50% 05-01-96
American Century VP Value
The Dreyfus Socially Responsible Growth Fund, 28.20% 26.81% 22.31% 10-06-93
Inc.
Dreyfus Stock Index Fund, Inc. 18.86% 26.23% 16.00% 09-29-89
Dreyfus Variable Investment Fund - Appreciation 9.84% 23.72% 18.33% 04-05-93
Portfolio (formerly, Dreyfus Variable
Investment Fund- Capital Appreciation
Portfolio)
Dreyfus Variable Investment 15.19% 22.30% 18.80% 05-02-94
Fund - Growth & Income Portfolio
Fidelity VIP Equity-Income Portfolio 4.79% 16.77% 12.78% 10-09-86
Fidelity VIP Growth Portfolio 35.45% 27.87% 17.06% 10-09-86
Fidelity VIP High Income Portfolio 6.59% 9.26% 10.81% 09-19-85
Fidelity VIP Overseas Portfolio 40.56% 15.67% 9.82% 01-28-87
Fidelity VIP II Asset Manager Portfolio 9.48% 13.96% 11.52% 09-06-89
Fidelity VIP II Contrafund(R) Portfolio 22.45% N/A 25.91% 01-03-95
Fidelity VIP III Growth Opportunities Portfolio 2.76% N/A 19.78% 01-03-95
The Universal Institutional Funds, Inc.- 27.50% N/A -4.07% 06-16-97
Emerging Markets Debt Portfolio (formerly,
Morgan Stanley Dean Witter Universal Funds,
Inc. - Emerging Markets Debt Portfolio)
NSAT- Capital Appreciation Fund 2.77% 22.56% 15.59% 04-15-92
NSAT- Government Bond Fund -3.76% 5.91% 6.11% 11-08-82
NSAT- Money Market Fund 3.33% 3.70% 3.48% 11-10-81
NSAT-Total Return Fund 5.39% 19.04% 13.13% 11-08-82
NSAT - Nationwide Small Cap Value Fund 25.98% N/A 8.01% 10-31-97
NSAT- Nationwide Small Company Fund 41.93% N/A 21.44% 10-23-95
Neuberger Berman AMT- Growth Portfolio 48.22% 24.54% 13.94% 09-10-84
Neuberger Berman AMT - Guardian Portfolio 13.27% N/A 22.27% 11-03-97
Neuberger Berman AMT-Limited Maturity Bond 0.01% 4.00% 4.33% 09-10-84
Portfolio
Neuberger Berman AMT- Partners Portfolio 5.81% 19.28% 15.79% 03-22-94
Oppenheimer Variable Account Funds - -2.95% 5.55% 6.20% 04-30-85
Oppenheimer Bond Fund/VA
Oppenheimer Variable Account Funds - 39.60% 28.78% 16.75% 04-30-85
Oppenheimer Capital Appreciation Fund/VA
(formerly Oppenheimer Growth Fund)
Oppenheimer Variable Account Funds - 56.19% 19.91% 15.11% 11-12-90
Oppenheimer Global Securities Fund/VA
</TABLE>
41
<PAGE> 50
<TABLE>
<CAPTION>
10 Years to
1 Year to 5 Years to 12/31/99 or Date Fund
Sub-Account Options 12/31/99 12/31/99 Life of Fund Effective
<S> <C> <C> <C> <C> <C>
Oppenheimer Variable Account Funds - 10.18% 12.74% 9.23% 02-09-87
Oppenheimer Multiple Strategies Fund/VA
Strong Opportunity Fund II, Inc. 32.95% 21.58% 19.28% 05-08-92
Strong Variable Insurance Funds, Inc.- 3.57% 9.74% 8.95% 05-08-92
Discovery Fund II, Inc.
Strong Variable Insurance Funds, Inc.- 84.49% N/A 12.55% 10-20-95
International Stock II
Van Eck Worldwide Insurance Trust- Worldwide -9.16% 3.53% 3.91% 09-01-89
Bond Fund
Van Eck Worldwide Insurance Trust- Worldwide 97.39% N/A 8.38% 12-27-95
Emerging Markets Fund
Van Eck Worldwide Insurance Trust- Worldwide 19.25% 0.01% 1.56% 09-01-89
Hard Assets Fund
Van Kampen Life Investment Trust- Morgan -4.77% N/A 8.89% 07-03-95
Stanley Real Estate Securities Portfolio
Warburg Pincus Trust- International Equity 51.21% N/A 12.99% 06-30-95
Portfolio
Warburg Pincus Trust - Global Post-Venture 61.13% N/A 20.64% 09-30-96
Capital Portfolio (formerly, Warburg Pincus
Trust - Post-Venture Capital Portfolio)
Warburg Pincus Trust-Small Company Growth 66.63% N/A 22.94% 06-30-95
Portfolio
</TABLE>
Dreyfus Investment Portfolios - European Equity Portfolio, Janus Aspen Series -
Capital Appreciation Portfolio: Service Shares, Janus Aspen Series - Global
Technology Portfolio: Service Shares, Janus Aspen Series - International Growth
Portfolio: Service Shares, NSAT - Nationwide Mid Cap Index Fund, NSAT -
Nationwide Multi-Sector Bond Fund, NSAT - Nationwide Small Cap Growth Fund, NSAT
- Nationwide Strategic Growth Fund, Oppenheimer Variable Account Funds -
Oppenheimer Aggressive Growth Fund/VA, and Oppenheimer Variable Account Funds -
Oppenheimer Main Street Growth & Income Fund/VA, were added to the variable
account effective May 1, 2000. Therefore, no sub-account performance is
available.
42
<PAGE> 51
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History......................................1
Services.............................................................1
Purchase of Securities Being Offered.................................1
Underwriters.........................................................2
Calculation of Performance...........................................2
Annuity Payments.....................................................3
Financial Statements.................................................4
43
<PAGE> 52
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investments
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., 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 and
variable life insurance products of insurance companies. American Century
Variable Portfolios, Inc. is managed by American Century Investment Management,
Inc.
AMERICAN CENTURY VP BALANCED
Investment Objective: Capital growth and current income. The Fund will seek
to achieve its objective by maintaining approximately 60% of the assets of
the Fund in common stocks (including securities convertible into common
stocks and other equity equivalents) that are considered by management to
have better-than-average prospects for appreciation and approximately 40%
in fixed income securities. 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.
AMERICAN CENTURY VP CAPITAL APPRECIATION (NOT AVAILABLE IN CONNECTION WITH
CONTRACTS FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR
AFTER SEPTEMBER 27, 1999)
Investment Objective: Capital growth. The Fund will seek to achieve its
objective by investing in common stocks (including securities convertible
into common stocks and other equity equivalents) that meet certain
fundamental and technical standards of selection and have, in the opinion
of the Fund's investment manager, better than average potential for
appreciation. The Fund tries to stay fully invested in such securities,
regardless of the movement of stock prices generally.
The Fund may invest in cash and cash equivalents temporarily or when it is
unable to find common stocks meeting its criteria of selection. It may
purchase securities only of companies that have a record of at least three
years continuous operation. There can be no assurance that the Fund will
achieve its investment objective.
AMERICAN CENTURY VP INCOME & GROWTH
Investment Objective: Dividend growth, current income and capital
appreciation. The Fund seeks to achieve its investment objective by
investing in common stocks. The investment manager constructs the portfolio
to match the risk characteristics of the S&P 500 Stock Index and then
optimizes each portfolio to achieve the desired balance of risk and return
potential. This includes targeting a dividend yield that exceeds that of
the S&P 500. Such a management technique known as "portfolio optimization"
may cause the Fund to be more heavily invested in some industries than in
others. However, the Fund may not invest more than 25% of its total assets
in companies whose principal business activities are in the same industry.
AMERICAN CENTURY VP INTERNATIONAL
Investment Objective: To seek capital growth. The Fund will seek to achieve
its investment objective by investing primarily in securities of foreign
companies that meet certain fundamental and technical standards of
selection and, in the opinion of the investment manager, have potential for
appreciation. Under normal conditions, the Fund will invest at least 65% of
its assets in common stocks or other equity securities of issuers from at
least three countries outside the United States. While securities of United
States issuers may be included in the portfolio from time to time, it is
the primary intent of the manager to diversify
44
<PAGE> 53
investments across a broad range of foreign issuers. Although the primary
investment of the Fund will be common stocks (defined to include depository
receipts for common stock and other equity equivalents), the Fund may also
invest in other types of securities consistent with the Fund's objective.
When the manager believes that the total capital growth potential of other
securities equals or exceeds the potential return of common stocks, the
Fund may invest up to 35% of its assets in such other securities. There can
be no assurance that the Fund will achieve its objectives.
AMERICAN CENTURY VP VALUE
Investment Objective: The investment objective of the Fund is long-term
capital growth; income is a secondary objective. The equity securities in
which the Fund will invest will be primarily securities of well-established
companies with intermediate-to-large market capitalizations that are
believed by management to be undervalued at the time of purchase. Under
normal market conditions, the Fund expects to invest at least 80% of the
value of its total asset in equity securities, including common and
preferred stock, convertible preferred stock and convertible debt
obligations.
DREYFUS INVESTMENT PORTFOLIOS
Dreyfus Investment Portfolios (the "Fund") is an open-end, management investment
company known as a mutual fund. Shares are offered only to variable annuity and
variable life insurance separate accounts established by insurance companies to
fund variable annuity contracts and variable life insurance policies and to
qualified pension and retirement plans. Individuals may not purchase shares
directly from the Fund. The Dreyfus Corporation serves as the Fund's investment
adviser.
EUROPEAN EQUITY PORTFOLIO
Investment Objective: The Portfolio seeks long-term capital growth. To
pursue this goal, the Portfolio generally invests at least 80% of its total
assets in stocks included within the universe of the 300 largest European
companies. The Portfolio may invest up to 10% of its total assets in the
stocks of non-European companies. The Portfolio's stock investments may
include common stocks, preferred stocks and convertible securities.
THE DREYFUS SOCIALLY RESPONSIBLE GROWTH FUND, INC.
The Dreyfus Socially Responsible Growth Fund, Inc. is an open-end, diversified,
management investment company incorporated under Maryland law on July 20, 1992
and commenced operations on October 7, 1993. The Fund offers its share only as
investment vehicles for variable annuity and variable life insurance products of
insurance companies. The Dreyfus Corporation serves as the Fund's investment
adviser. NCM Capital Management Group, Inc. serves as the Fund's sub-investment
adviser and provides day-to-day management of the Fund's portfolio.
Investment Objective: Capital growth through equity investment in companies
that, in the opinion of the Fund's advisers, not only meet traditional
investment standards, but which also show evidence that they conduct their
business in a manner that contributes to the enhancement of the quality of
life in America. Current income is secondary to the primary goal.
DREYFUS STOCK INDEX FUND, INC.
The Dreyfus Stock Index Fund, Inc. ("Fund") is an open-end, non-diversified,
management investment company incorporated under Maryland law on January 24,
1989 and commenced operations on September 29, 1989. The Fund offers its shares
only as investment vehicles for variable annuity and variable life insurance
products of insurance companies. The Dreyfus Corporation ("Dreyfus") serves as
the Fund's manager, while Mellon Equity Associates, an affiliate of Dreyfus,
serves as the Fund's index manager. Dreyfus is a wholly-owned subsidiary of
Mellon Bank, N.A., which is a wholly-owned subsidiary of Mellon Bank
Corporation.
Investment Objective: To provide investment results that correspond to the
price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock
Price Index. The Fund is
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<PAGE> 54
neither sponsored by nor affiliated with Standard & Poor's Corporation.
DREYFUS VARIABLE INVESTMENT FUND
Dreyfus Variable Investment Fund ("Fund") is an open-end, management investment
company. It was organized as an unincorporated business trust under the laws of
the Commonwealth of Massachusetts on October 29, 1986 and commenced operations
on August 31, 1990. The Fund offers its shares only as investment vehicles for
variable annuity and variable life insurance products of insurance companies.
Dreyfus serves as the Fund's manager. Fayez Sarofim & Company serves as the
Capital Appreciation Portfolio's subadviser and provides day-to-day management
of this Portfolio.
APPRECIATION PORTFOLIO (FORMERLY, CAPITAL APPRECIATION PORTFOLIO)
Investment Objective: The Portfolio's primary investment objective is to
provide long-term capital growth consistent with the preservation of
capital; current income is a secondary investment objective. This Portfolio
invests primarily in the common stocks of domestic and foreign issuers.
GROWTH & INCOME PORTFOLIO
Investment Objective: To provide long-term capital growth, current income
and growth of income, consistent with reasonable investment risk. The
Portfolio invests in equity securities, debt securities and money market
instruments of domestic and foreign issuers. The proportion of the
Portfolio's assets invested in each type of security will vary from time to
time in accordance with Dreyfus' assessment of economic conditions and
investment opportunities. In purchasing equity securities, Dreyfus will
invest in common stocks, preferred stocks and securities convertible into
common stocks, particularly those which offer opportunities for capital
appreciation and growth of earnings, while paying current dividends. The
Portfolio will generally invest in investment-grade debt obligations,
except that it may invest up to 35% of the value of its net assets in
convertible debt securities rated not lower than Caa by Moody's Investor
Service, Inc. or CCC by Standard & Poor's Ratings Group, Fitch Investors
Service, L.P. or Duff & Phelps Credit Rating Co., or if unrated, deemed to
be of comparable quality by Dreyfus. These securities are considered to
have predominantly speculative characteristics with respect to capacity to
pay interest and repay principal and are considered to be of poor standing.
See "Investment Considerations and Risks-Lower Rated Securities" in the
Portfolio's prospectuses.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
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 its
portfolios.
VIP EQUITY-INCOME PORTFOLIO
Investment Objective: Reasonable income by investing primarily in
income-producing equity securities. In choosing these securities FMR also
will consider the potential for capital appreciation. The Portfolio's goal
is to achieve a yield which exceeds the composite yield on the securities
comprising the Standard & Poor's 500 Composite Stock Price Index.
VIP GROWTH PORTFOLIO
Investment Objective: Capital appreciation. This Portfolio will invest in
the securities of both well-known and established companies, and smaller,
less well-known companies which may have a narrow product line or whose
securities are thinly traded. These latter securities will often involve
greater risk than may be found in the ordinary investment security. FMR's
analysis and expertise plays an integral role in the selection of
securities and, therefore, the performance of the Portfolio. Many
securities which FMR believes would have the greatest potential may be
regarded as speculative, and investment in the Portfolio
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<PAGE> 55
may involve greater risk than is inherent in other underlying mutual funds.
It is also important to point out that this 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 can also make temporary investments
in securities such as investment-grade bonds, high-quality preferred stocks
and short-term notes, for defensive purposes when it believes market
conditions warrant.
VIP HIGH INCOME PORTFOLIO
Investment Objective: High level of current income by investing primarily
in high-risk, lower-rated, high-yielding, fixed-income securities, while
also considering growth of capital. FMR will seek high current income
normally by investing the Portfolio's assets as follows:
- at least 65% in income-producing debt securities and preferred
stocks, including convertible securities; and
- up to 20% in common stocks and other equity securities when
consistent with the Portfolio's primary objective or acquired as part
of a unit combining fixed-income and equity securities.
Higher yields are usually available on securities that are lower-rated or
that are unrated. Lower-rated securities are usually defined as Ba or lower
by Moody's Investor Services, Inc. ("Moody's"); BB or lower by Standard &
Poor's and may be deemed to be of a speculative nature. The Portfolio may
also purchase lower-quality bonds such as those rated Ca3 by Moody's or C-
by Standard & Poor's which provide poor protection for payment of principal
and interest (commonly referred to as "junk bonds"). For a further
discussion of lower-rated securities, please see the "Risks of Lower-Rated
Debt Securities" section of the Portfolio's prospectus.
VIP OVERSEAS PORTFOLIO
Investment Objective: Long-term capital growth primarily through
investments in foreign securities. This Portfolio provides a means for
investors to diversify their own portfolios by participating in companies
and economies outside of the United States.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
The Fidelity Variable Insurance Products Fund II (VIP II) is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on March 21, 1988. VIP II's shares are purchased by insurance companies to
fund benefits under variable life insurance policies and variable annuity
contracts. FMR is the manager of VIP II and its portfolios.
VIP II ASSET MANAGER PORTFOLIO
Investment Objective: To seek high total return with reduced risk over the
long-term by allocating its assets among domestic and foreign stocks, bonds
and short-term fixed income instruments.
VIP II CONTRAFUND(R) PORTFOLIO
Investment Objective: To seek capital appreciation by investing primarily
in companies that the FMR believes to be undervalued due to an overly
pessimistic appraisal by the public. This strategy can lead to investments
in domestic or foreign companies, small and large, many of which may not be
well known. The Portfolio primarily invests in common stock and securities
convertible into common stock, but it has the flexibility to invest in any
type of security that may produce capital appreciation.
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
The Fidelity Variable Insurance Products Fund III (VIP III) is an open-end,
diversified, management investment company organized as a Massachusetts business
trust on July 14, 1994. VIP III's shares are purchased by insurance companies to
fund benefits under variable life insurance policies and variable annuity
contracts. FMR is the manager of VIP III and its portfolios.
VIP III GROWTH OPPORTUNITIES PORTFOLIO
Investment Objective: Capital growth by investing primarily in common
stocks and securities convertible into common stocks. The Portfolio, under
normal conditions, will
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<PAGE> 56
invest at least 65% of its total assets in securities of companies that FMR
believes have long-term growth potential. Although the Portfolio invests
primarily in common stock and securities convertible into common stock, it
has the ability to purchase other securities, such as preferred stock and
bonds, that may produce capital growth. The Portfolio may invest in foreign
securities without limitation.
JANUS ASPEN SERIES
The Janus Aspen Series is an open-end management investment company whose shares
are offered in connection with investment in and payments under variable annuity
contracts and variable life insurance policies, as well as certain qualified
retirement plans. Janus Capital Corporation serves as investment adviser to each
Portfolio.
CAPITAL APPRECIATION PORTFOLIO: SERVICE SHARES
Investment Objective: Seeks long-term growth of capital by investing
primarily in common stocks selected for their growth potential. The
Portfolio may invest in companies of any size, from larger,
well-established companies to smaller, emerging growth companies.
GLOBAL TECHNOLOGY PORTFOLIO: SERVICE SHARES
Investment Objective: Seeks long-term growth of capital by investing
primarily in equity securities of U.S. and foreign companies selected for
their growth potential. Under normal circumstances, the portfolio invests
at least 65% of its total assets in securities of companies that the
portfolio manager believes will benefit significantly from advances or
improvements in technology.
INTERNATIONAL GROWTH PORTFOLIO: SERVICE SHARES
Investment Objective: Seeks long-term growth of capital by investing at
least 65% of its total assets in securities of issuers from at least five
different countries, excluding the United States. Although the Portfolio
intends to invest substantially all of its assets in issuers located
outside the United States, it may invest in U.S. issuers and it may at
times invest all of its assets in fewer than five countries, or even a
single country.
NATIONWIDE SEPARATE ACCOUNT TRUST
Nationwide Separate Account Trust ("NSAT") is a diversified open-end management
investment company created under the laws of Massachusetts. NSAT offers shares
in the mutual funds listed below, each with its own investment objectives.
Shares of NSAT will be sold primarily to separate accounts to fund the benefits
under variable life insurance policies and variable annuity contracts issued by
life insurance companies. 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 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.
SUBADVISED NATIONWIDE FUNDS
NATIONWIDE MID CAP INDEX FUND
Subadviser: The Dreyfus Corporation
Investment Objective: Capital appreciation. The Fund seeks to match the
performance of the Standard & Poor's MidCap 400 Index. To pursue this
goal, the Fund generally is fully invested in all 400 stocks included in
this index in proportion to their weighting in the index, and in futures
whose performance is tied
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<PAGE> 57
to the index. The Fund is neither sponsored by nor affiliated with
Standard & Poor's Corporation.
NATIONWIDE MULTI SECTOR BOND FUND
Subadviser: Miller, Anderson & Sherrerd, LLP
Investment Objective: Primarily seeks a high level of current income.
Capital appreciation is a secondary objective. The Fund seeks to achieve
its objectives by investing in a globally diverse portfolio of
fixed-income investments and by giving the subadviser broad discretion to
deploy the Fund's assets among certain segments of the fixed-income
market that the subadviser believes will best contribute to achievement
of the Fund's investment objectives. The Fund reserves the right to
invest predominantly in securities rated in medium or lower categories,
or as determined by the subadviser to be of comparable quality, commonly
referred to as "junk bonds." Although the subadviser has the ability to
invest up to 100% of the Fund's assets in lower-rated securities, the
subadviser does not anticipate investing in excess of 75% of the Fund's
assets in such securities.
NATIONWIDE SMALL CAP GROWTH FUND
Subadvisers: Franklin Advisers, Inc., Miller, Anderson & Sherrerd, LLP,
Neuberger Berman, LLC.
Investment Objective: Seeks capital growth by investing in a broadly
diversified portfolio of equity securities issued by U.S. and foreign
companies with market capitalizations in the range of companies
represented by the Russell 2000, known has small cap companies. Under
normal market conditions, the Fund will invest at least 65% of its total
assets in the equity securities of small cap companies. The balance of
the Fund's assets may be invested in equity securities of larger cap
companies.
NATIONWIDE SMALL CAP VALUE FUND
Subadviser:The Dreyfus Corporation
Investment Objective: Capital appreciation through investment in a
diversified portfolio of equity securities of companies with a median
market capitalization of approximately $1 billion. The Fund intends to
pursue its investment objective by investing, under normal market
conditions, at least 75% of the Fund's total assets in equity securities
of companies whose equity market capitalizations at the time of
investment are similar to the market capitalizations of companies in the
Russell 2000 Small Stock Index. The Fund will invest in equity securities
of domestic and foreign issuers characterized as "value" companies
according to criteria established by The Dreyfus Corporation, the Fund's
subadviser.
NATIONWIDE SMALL COMPANY FUND
Subadvisers: The Dreyfus Corporation, Neuberger Berman, LLC., Lazard
Asset Management and Strong Capital Management, Inc.
Investment Objective: Under normal market conditions, the Fund will
invest at least 65% of its total assets in equity securities of companies
whose equity market capitalizations at the time of investment are similar
to the market capitalizations of companies in the Russell 2000 Small
Stock Index.
NATIONWIDE STRATEGIC GROWTH FUND
Subadviser: Strong Capital Management Inc.
Investment Objective: Capital growth by investing primarily in equity
securities that the Fund's subadviser believes have above-average growth
prospects. The Fund will generally invest in companies whose earnings are
believed to be in a relatively strong growth trend, and to a lesser
extent, in companies in which significant further growth is not
anticipated but whose market value is thought to be undervalued. Under
normal market conditions, the Fund will invest
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at least 65% of its total assets in equity securities, including common
stocks, preferred stocks, and securities convertible into common or
preferred stocks, such as warrants and convertible bonds. The Fund may
invest up to 35% of its total assets in debt obligations, including
intermediate- to long-term corporate or U.S. Government debt securities.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Neuberger and Berman Advisers Management Trust ("Neuberger Berman AMT") is an
open-end, diversified management investment company consisting of several
series. Shares of the series of Neuberger Berman AMT 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 Guardian and Partners Portfolios of Neuberger Berman AMT invest all of their
investable assets in a corresponding series of Advisers Managers Trust managed
by Neuberger Berman Management Incorporated ("Neuberger Berman Management").
Each series then invests in securities in accordance with an investment
objective, policies and limitations identical to those of the Portfolio. This
"master/feeder fund" structure is different from that of many other investment
companies which directly acquire and manage their own portfolios of securities.
(For more information regarding "master/feeder fund" structure, see "Special
Information Regarding Organization, Capitalization and Other Matters" in the
underlying mutual fund prospectus.) The investment advisor for all the
portfolios is Neuberger Berman Management.
AMT GROWTH PORTFOLIO
Investment Objective: Seeks capital growth through investments in common
stocks of companies that the investment adviser believes will have above
average earnings or otherwise provide investors with above average
potential for capital appreciation. To maximize this potential, the
investment adviser may also utilize, from time to time, securities
convertible into common stocks, warrants and options to purchase such
stocks.
AMT GUARDIAN PORTFOLIO
Investment Objective: Capital appreciation and secondarily, current income.
The Portfolio and its corresponding series seek to achieve these objectives
by investing in common stocks of long-established, high-quality companies.
N&B Management uses a value-oriented investment approach in selecting
securities, looking for low price-to-earnings ratios, strong balance
sheets, solid management, and consistent earnings.
AMT LIMITED MATURITY BOND PORTFOLIO
Investment Objective: To provide high level of current income, consistent
with low risk to principal and liquidity. As a secondary objective, it also
seeks to enhance its total return through capital appreciation when market
factors, such as falling interest rates and rising bond prices, indicate
that capital appreciation may be available without significant risk to
principal. It seeks to achieve its objectives through investments in a
diversified portfolio of limited maturity debt securities.
AMT PARTNERS PORTFOLIO
Investment Objective: Capital growth by investing primarily in the common
stock of established companies. Its investment program seeks securities
believed to be undervalued based on fundamentals such as low
price-to-earnings ratios, consistent cash flows, and the company's track
record through all parts of the market cycle.
OPPENHEIMER VARIABLE ACCOUNT FUNDS
The Oppenheimer Variable Account Funds are an open-end, diversified
management investment company organized as a Massachusetts business trust in
1984. Shares of the Funds are sold only to provide benefits under variable
life insurance policies and variable annuity contracts. OppenheimerFunds,
Inc. is investment adviser.
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OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
Investment Objective: Capital appreciation by investing in "growth type"
companies. Such companies are believed to have relatively favorable
long-term prospects for increasing demand for their goods or services, or
to be developing new products, services or markets and normally retain a
relatively larger portion of their earnings for research, development and
investment in capital assets. The Fund may also invest in cyclical
industries in "special situations" that OppenheimerFunds, Inc. believes
present opportunities for capital growth.
OPPENHEIMER BOND FUND/VA
Investment Objective: Primarily seeks a high level of current income by
investing at least 65% of its total assets in investment grade debt
securities, U.S. government securities and money market instruments.
Investment grade debt securities would include those rated in one of the
four highest ranking categories by any nationally recognized rating
organization or if unrated or split-rated (rated investment grade and below
investment grade by different rating organizations), determined by
OppenheimerFunds, Inc. to be of comparable quality. The Fund may invest up
to 35% of its total assets in debt securities rated less than investment
grade when consistent with the Fund's investment objectives. The Fund seeks
capital growth as a secondary objective when consistent with its primary
objective.
OPPENHEIMER CAPITAL APPRECIATION FUND/VA (FORMERLY OPPENHEIMER GROWTH FUND)
Investment Objective: Capital appreciation by investing in securities of
well-known established companies. Such securities generally have a history
of earnings and dividends and are issued by seasoned companies (companies
which have an operating history of at least five years including
predecessors). Current income is a secondary consideration in the selection
of the Fund's portfolio securities.
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Investment Objective: To seek long-term capital appreciation by investing a
substantial portion of assets in securities of foreign issuers,
"growth-type" companies, cyclical industries and special situations which
are considered to have appreciation possibilities. Current income is not an
objective. These securities may be considered to be speculative.
OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
Investment Objective: High total return, which stocks, preferred stocks,
convertible securities and warrants. Debt investments will include bonds,
participation includes growth in the value of its shares as well as current
income from quality and debt securities. In seeking its investment
objectives, the Fund may invest in equity and debt securities. Equity
investments will include common interests, asset-backed securities,
private-label mortgage-backed securities and CMOs, zero coupon securities
and U.S. debt obligations, and cash and cash equivalents. From time to
time, the Fund may focus on small to medium capitalization issuers, the
securities of which may be subject to greater price volatility than those
of larger capitalized issuers.
OPPENHEIMER MULTIPLE STRATEGIES FUND/VA
Investment Objective: To seek a total investment return (which includes
current income and capital appreciation in the value of its shares) from
investments in common stocks and other equity securities, bonds and other
debt securities, and "money market" securities.
STRONG OPPORTUNITY FUND II, INC. (FORMERLY "STRONG SPECIAL FUND II, INC.")
Strong Opportunity Fund II, Inc. is a diversified, open-end management company
commonly called a Mutual Fund. Strong Opportunity Fund II, Inc. was incorporated
in Wisconsin and may only be purchased by the separate accounts of insurance
companies for the purpose of funding variable annuity contracts and variable
life
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insurance policies. Strong Capital Management Inc. is the investment advisor for
the Fund.
Investment Objective: To seek capital appreciation through investments in a
diversified portfolio of equity securities.
STRONG VARIABLE INSURANCE FUNDS, INC. (NOT AVAILABLE IN CONNECTION WITH
CONTRACTS FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR AFTER
SEPTEMBER 27, 1999)
Strong Variable Insurance Funds, Inc. ("Corporation") is an open-end management
investment company commonly referred to as a mutual fund. Incorporated in the
State of Wisconsin, the Corporation has been authorized to issue shares of
common stock and series and classes of series of common stock. The International
Stock Fund II and The Strong Discovery Fund II, Inc. ("Funds") are offered by
the Corporation to insurance company separate accounts for the purpose of
funding variable life insurance policies and variable annuity contracts. Strong
Capital Management, Inc. is the investment advisor to the Funds.
DISCOVERY FUND II, INC.
Investment Objective: To seek maximum capital appreciation through
investments in a diversified portfolio of securities. The Fund normally
emphasizes investment in equity securities and may invest up to 100% of its
total assets in equity securities including common stocks, preferred stocks
and securities convertible into common or preferred stocks. Although the
Fund normally emphasizes investment in equity securities, the Fund has the
flexibility to invest in any type of security that the Advisor believes has
the potential for capital appreciation including up to 100% of its total
assets in debt obligations, including intermediate to long-term corporate
or U.S. government debt securities.
INTERNATIONAL STOCK FUND II
Investment Objective: To seek capital growth by investing primarily in the
equity securities of issuers located outside the United States.
THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (FORMERLY, MORGAN STANLEY DEAN WITTER
UNIVERSAL FUNDS, INC.)
The Universal Institutional Funds, Inc. is a mutual fund designed to provide
investment vehicles for variable annuity contracts and variable life insurance
policies and for certain tax-qualified investors. Its Emerging Markets Debt
Portfolio is managed by Morgan Stanley Dean Witter Investment Management, Inc.
EMERGING MARKETS DEBT PORTFOLIO
Investment Objective: High total return by investing primarily in dollar
and non-dollar denominated fixed income securities of government and
government-related issuers located in emerging market countries, which
securities provide a high level of current income, while at the same time
holding the potential for capital appreciation if the perceived
creditworthiness of the issuer improves due to improving economic,
financial, political, social or other conditions in the country in which
the issuer is located.
VAN ECK WORLDWIDE INSURANCE TRUST
Van Eck Worldwide Insurance Trust ("Van Eck Trust") is an open-end management
investment company organized as a business trust under the laws of the
Commonwealth of Massachusetts on January 7, 1987. Shares of Van Eck Trust are
offered only to separate accounts of various insurance companies to fund the
benefits of life insurance policies and variable annuity contracts. The
investment advisor and manager is Van Eck Associates Corporation.
WORLDWIDE BOND FUND
Investment Objective: To seek high total return through a flexible policy
of investing globally, primarily in debt securities.
WORLDWIDE EMERGING MARKETS FUND
Investment Objective: Seeks long-term capital appreciation by investing
primarily in equity securities in emerging markets around the world. The
Fund specifically emphasizes investment in countries that, compared to the
world's major economies, exhibit relatively low gross national product per
capita, as well as the potential for rapid economic growth.
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WORLDWIDE HARD ASSETS FUND
Investment Description: Seeks long-term capital appreciation by investing,
primarily in "Hard Assets Securities." For the Fund's purpose, "Hard
Assets" are real estate, energy, timber, and industrial and precious
metals. Income is a secondary consideration.
VAN KAMPEN LIFE INVESTMENT TRUST
Van Kampen Life Investment Trust is an open-end diversified management
investment company organized as a Delaware business trust. Shares are offered in
separate portfolios which are sold only to insurance companies to provide
funding for variable life insurance policies and variable annuity contracts. Van
Kampen Asset Management, Inc. serves as the Portfolio's investment adviser.
MORGAN STANLEY REAL ESTATE SECURITIES PORTFOLIO
Investment Objective: Long-term capital growth by investing principally in
a diversified portfolio of securities of companies operating in the real
estate industry ("Real Estate Securities"). Current income is a secondary
consideration. Real Estate Securities include equity securities, including
common stocks and convertible securities, as well as non-convertible
preferred stocks and debt securities of real estate industry companies. A
"real estate industry company" is a company that derives at least 50% of
its assets (marked to market), gross income or net profits from the
ownership, construction, management or sale of residential, commercial or
industrial real estate. Under normal market conditions, at least 65% of the
Portfolio's total assets will be invested in Real Estate Securities,
primarily equity securities of real estate investment trusts. The Portfolio
may invest up to 25% of its total assets in securities issued by foreign
issuers, some or all of which may also be Real Estate Securities.
WARBURG PINCUS TRUST
The Warburg Pincus Trust is an open-end management investment company organized
in March 1995 as a business trust under the laws of The Commonwealth of
Massachusetts. The Trust offers its shares to insurance companies for allocation
to separate accounts for the purpose of funding variable annuity and variable
life contracts. The Portfolios are managed by Credit Suisse Asset Management,
LLC.
GLOBAL POST-VENTURE CAPITAL PORTFOLIO (FORMERLY, POST-VENTURE CAPITAL
PORTFOLIO) (NOT AVAILABLE IN CONNECTION WITH CONTRACTS FOR WHICH GOOD ORDER
APPLICATIONS ARE (OR WERE) RECEIVED ON OR AFTER SEPTEMBER 27, 1999)
Investment Objective: Seeks long-term growth of capital by investing
primarily in equity securities of U.S. and foreign companies considered to
be in their post-venture capital stage of development. Under normal market
conditions, the Portfolio will invest at least 65% of its total assets in
equity securities of "post-venture capital companies." A post-venture
capital company is one that has received venture capital financing either:
(a) during the early stages of the company's existence or the early stages
of the development of a new product or service; or (b) as part of a
restructuring or recapitalization of the company. The Portfolio will invest
in at least three countries including the United States.
INTERNATIONAL EQUITY PORTFOLIO (NOT AVAILABLE IN CONNECTION WITH CONTRACTS
FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR AFTER
SEPTEMBER 27, 1999)
Investment Objective: Long-term capital appreciation by investing primarily
in a broadly diversified portfolio of equity securities of companies,
wherever organized, that in the judgment of Warburg have their principal
business activities and interests outside the United States. The Portfolio
will ordinarily invest substantially all of its assets, but no less than
65% of its total assets, in common stocks, warrants and securities
convertible into or exchangeable for common stocks. The Portfolio intends
to invest principally in the securities of financially strong companies
with opportunities for growth within growing
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international economies and markets through increased earning power and
improved utilization or recognition of assets.
SMALL COMPANY GROWTH PORTFOLIO
Investment Objective: Capital growth by investing in a portfolio of equity
securities of small-sized domestic companies. The Portfolio ordinarily will
invest at least 65% of its total assets in common stocks or warrants of
small-sized companies (i.e., companies having stock market capitalizations
of between $25 million and $1 billion at the time of purchase) that
represent attractive opportunities for capital growth. The Portfolio
intends to invest primarily in companies whose securities are traded on
domestic stock exchanges or in the over-the-counter market. The Portfolio's
investments will be made on the basis of their equity characteristics and
securities ratings generally will not be a factor in the selection process.
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APPENDIX B: CONDENSED FINANCIAL INFORMATION
Accumulation unit values for an accumulation unit outstanding throughout the
period.
<TABLE>
<CAPTION>
PERCENT CHANGE NUMBER OF
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT IN ACCUMULATION
VALUE AT END OF VALUE AT END OF ACCUMULATION UNIT UNITS AT END YEAR
PERIOD PERIOD VALUE OF PERIOD
<S> <C> <C> <C> <C> <C>
American Century Variable 14.156329 15.354284 8.46% 82,782 1999
Portfolios, Inc.- 12.156329 14.156329 14.09% 88,999 1998
American Century VP 10.871600 12.407611 14.13% 43,518 1997
Balanced-Q 10.000000 10.871600 8.72% 13,228 1996
American Century Variable 14.156329 15.354284 8.46% 189,028 1999
Portfolios, Inc.- 12.407611 14.156329 14.09% 192,338 1998
American Century VP 10.871600 12.407611 14.13% 82,722 1997
Balanced-NQ 10.000000 10.871600 8.72% 35,163 1996
American Century Variable 8.614847 13.968271 62.14% 81,461 1999
Portfolios, Inc.- 8.934300 8.614847 -3.58% 53,093 1998
American Century VP 9.371161 8.934300 -4.66% 51,907 1997
Capital Appreciation-Q 10.000000 9.371161 -6.29% 46,612 1996
American Century Variable 8.614847 13.968271 62.14% 180,077 1999
Portfolios, Inc.- 8.934300 8.614847 -3.58% 123,997 1998
American Century VP 9.371161 8.934300 -4.66% 97,412 1997
Capital Appreciation- NQ 10.000000 9.371161 -6.29% 83,063 1996
American Century Variable 10.814821 12.578672 16.31% 81,894 1999
Portfolios, Inc. - 10.000000 10.814821 8.15% 48,895 1998**
American Century VP
Income & Growth - Q
American Century Variable 10.814821 12.578672 16.31% 175,785 1999
Portfolios, Inc. - 10.000000 10.814821 8.15% 180,254 1998**
American Century VP
Income & Growth - NQ
American Century Variable 15.247438 24.650510 61.67% 308,447 1999
Portfolios, Inc.- 13.027680 15.247438 17.04% 263,771 1998
American Century VP 11.142834 13.027680 16.92% 111,405 1997
International-Q 10.000000 11.142834 11.43% 27,097 1996
American Century Variable 15.247438 24.650510 61.67% 669,655 1999
Portfolios, Inc.- 13.027680 15.247438 17.04% 631,540 1998
American Century VP 11.142834 13.027680 16.92% 266,987 1997
International-NQ 10.000000 11.142834 11.43% 77,343 1996
American Century Variable 13.017145 12.719374 -2.29% 45,365 1999
Portfolio, Inc. Inc.- 12.602262 13.017145 3.29% 62,022 1998
American Century VP 10.142228 12.602262 24.26% 19,668 1997
Value-Q 10.000000 10.142228 1.42% 0 1996*
American Century Variable 13.017145 12.719374 -2.29% 121,969 1999
Portfolio, Inc. Inc.- 12.602262 13.017145 3.29% 189,388 1998
American Century VP 10.142228 12.602262 24.26% 114,608 1997
Value-NQ 10.000000 10.142228 1.42% 0 1996*
The Dreyfus Socially 18.402864 23.591580 28.20% 132,996 1999
Responsible Growth Fund, 14.432845 18.402864 27.51% 131,385 1998
Inc.-Q 11.402663 14.432845 26.57% 105,131 1997
10.000000 11.402663 14.03% 10,096 1996
The Dreyfus Socially 18.402864 23.591580 28.20% 186,945 1999
Responsible Growth Fund, 14.432845 18.402864 27.51% 164,801 1998
Inc.-NQ 11.402663 14.432845 26.57% 127,251 1997
10.000000 11.402663 14.03% 29,501 1996
</TABLE>
55
<PAGE> 64
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
PERCENT CHANGE NUMBER OF
ACCUMULATION UNIT ACCUMULATION UNIT IN ACCUMULATION
UNDERLYING MUTUAL FUND VALUE AT END OF VALUE AT END OF ACCUMULATION UNIT UNITS AT END YEAR
PERIOD PERIOD VALUE OF PERIOD
<S> <C> <C> <C> <C> <C>
Dreyfus Stock Index 19.279341 22.914747 18.86% 961,845 1999
Fund, Inc.-Q 15.258148 19.279341 26.35% 1,097,971 1998
11.644617 15.258148 31.03% 355,678 1997
10.000000 11.644617 16.45% 64,418 1996
Dreyfus Stock Index 19.279341 22.914747 18.86% 1,695,985 1999
Fund, Inc.-NQ 15.258148 19.279341 26.35% 1,707,874 1998
11.644617 15.258148 31.03% 704,237 1997
10.000000 11.644617 16.45% 189,227 1996
Dreyfus Variable 13.070279 14.356471 9.84% 110,872 1999
Investment Fund- 10.184856 13.070279 28.33% 129,414 1998
Appreciation Portfolio-Q(1) 10.000000 10.184856 1.85% 1,527 1997*
Dreyfus Variable 13.070279 14.356471 9.84% 249,980 1999
Investment Fund- 10.184856 13.070279 28.33% 243,945 1998
Appreciation 10.000000 10.184856 1.85% 35,595 1997*
Portfolio-NQ(1)
Dreyfus Variable 12.603139 14.517630 15.19% 107,460 1999
Investment Fund Growth & 11.437343 12.603139 10.19% 122,527 1998
Income Portfolio -Q 9.986593 11.437343 14.53% 43,110 1997
10.000000 9.986593 -0.13% 0 1996*
Dreyfus Variable 12.603139 14.517630 15.19% 159,751 1999
Investment Fund- Growth 11.437343 12.603139 10.19% 151,537 1998
& Income Portfolio-NQ 9.986593 11.437343 14.53% 64,938 1997
10.000000 9.986593 -0.13% 0 1996*
Fidelity VIP Equity- 15.220240 15.949005 4.79% 635,675 1999
Income Portfolio-Q 13.835418 15.220240 10.01% 1,277,079 1998
10.958584 13.835418 26.25% 629,906 1997
10.000000 10.958584 9.59% 320,026 1996
Fidelity VIP 15.220240 15.949005 4.79% 1,462,720 1999
Equity-Income 13.835418 15.220240 10.01% 1,944,054 1998
Portfolio-NQ 10.958584 13.835418 26.25% 1,499,279 1997
10.000000 10.958584 9.59% 682,976 1996
Fidelity VIP Growth 18.497774 25.054513 35.45% 597,032 1999
Portfolio-Q 13.455923 18.497774 37.47% 670,173 1998
11.057399 13.455923 21.69% 594,211 1997
10.000000 11.057399 10.57% 230,586 1996
Fidelity VIP Growth 18.497774 25.054513 35.45% 1,206,843 1999
Portfolio-NQ 13.455923 18.497774 37.47% 1,007,812 1998
11.057399 13.455923 21.69% 1,228,768 1997
10.000000 11.057399 10.57% 910,947 1996
Fidelity VIP High Income 11.993921 12.783993 6.59% 817,781 1999
Portfolio-Q 12.721046 11.993921 -5.72% 946,162 1998
10.970108 12.721046 15.96% 538,510 1997
10.000000 10.970108 9.70% 291,879 1996
Fidelity VIP High Income 11.993921 12.783993 6.59% 1,453,586 1999
Portfolio-NQ 12.721046 11.993921 -5.72% 1,718,358 1998
10.970108 12.721046 15.96% 1,050,615 1997
10.000000 10.970108 9.70% 245,978 1996
Fidelity VIP Overseas 13.334585 18.743279 40.56% 159,451 1999
Portfolio-Q 12.000570 13.334585 11.12% 148,300 1998
10.915770 12.000570 9.94% 125,092 1997
10.000000 10.915770 9.16% 36,697 1996
</TABLE>
(1) Formerly, Dreyfus Variable Investment Fund - Capital Appreciation Portfolio.
56
<PAGE> 65
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
PERCENT NUMBER OF
ACCUMULATION UNIT ACCUMULATION UNIT CHANGE IN ACCUMULATION
UNDERLYING MUTUAL FUND VALUE AT END OF VALUE AT END OF ACCUMULATION UNITS AT END YEAR
PERIOD PERIOD UNIT VALUE OF PERIOD
<S> <C> <C> <C> <C> <C>
Fidelity VIP Overseas 13.334585 18.743279 40.56% 275,154 1999
Portfolio-NQ 12.000570 13.334585 11.12% 278,110 1998
10.915770 12.000570 9.94% 176,490 1997
10.000000 10.915770 9.16% 95,229 1996
Fidelity VIP II Asset 14.869310 16.279126 9.48% 212,828 1999
Manager Portfolio-Q 13.114181 14.869310 13.38% 192,670 1998
11.029343 13.114181 18.90% 95,815 1997
10.000000 11.029343 10.29% 38,401 1996
Fidelity VIP II Asset 14.869310 16.279126 9.48% 527,408 1999
Manager Portfolio-NQ 13.114181 14.869310 13.38% 454,481 1998
11.029343 13.114181 18.90% 273,771 1997
10.000000 11.029343 10.29% 63,564 1996
Fidelity VIP II 18.517428 22.675266 22.45% 451,477 1999
Contrafund(R) Portfolio-Q 14.455907 18.517428 28.10% 770,623 1998
11.815914 14.455907 22.34% 625,349 1997
10.000000 11.815914 18.16% 255,409 1996
Fidelity VIP II 18.517428 22.675266 22.45% 1,056,444 1999
Contrafund(R) Portfolio-NQ 14.455907 18.517428 28.10% 1,288,311 1998
11.815914 14.455907 22.34% 862,290 1997
10.000000 11.815914 18.16% 400,821 1996
Fidelity VIP III Growth 13.416112 13.786395 2.76% 267,657 1999
Opportunities Portfolio-Q 10.924397 13.416112 22.81% 292,587 1998
10.000000 10.924397 9.24% 57,285 1997*
Fidelity VIP III Growth 13.416112 13.786395 2.76% 1,222,441 1999
Opportunities Portfolio-NQ 10.924397 13.416112 22.81% 1,310,788 1998
10.000000 10.924397 9.24% 213,473 1997*
NSAT- Capital 20.201552 20.760238 2.77% 252,002 1999
Appreciation Fund-Q 15.772381 20.201552 28.08% 622,770 1998
11.889746 15.772381 32.66% 122,279 1997
10.000000 11.889746 19.00% 89,481 1996
NSAT- Capital 20.201552 20.760238 2.77% 448,548 1999
Appreciation Fund-NQ 15.772381 20.201552 28.08% 843,858 1998
11.889746 15.772381 32.66% 168,800 1997
10.000000 11.889746 19.00% 71,846 1996
NSAT- Government Bond 11.772852 11.329778 -3.76% 440,246 1999
Fund-Q 10.968839 11.772852 7.33% 463,915 1998
10.149155 10.968893 8.08% 112,607 1997
10.000000 10.149155 1.49% 30,956 1996
NSAT- Government Bond 11.772852 11.329778 -3.76% 933,705 1999
Fund-NQ 10.968893 11.772852 7.33% 816,488 1998
10.149155 10.968893 8.08% 244,780 1997
10.000000 10.149155 1.49% 97,767 1996
NSAT- Money Market Fund-Q(1) 11.112968 11.482780 3.33% 3,422,604 1999
10.711730 11.112968 3.75% 1,007,530 1998
10.326243 10.711730 3.73% 638,508 1997
10.000000 10.326243 3.26% 283,411 1996
NSAT- Money Market 11.112968 11.482780 3.33% 4,992,397 1999
Fund-NQ(1) 10.711730 11.112968 3.75% 3,595,023 1998
10.326243 10.711730 3.73% 2,073,349 1997
10.000000 10.326243 3.26% 628,692 1996
</TABLE>
(1) The 7-day yield on the Money Market Fund as of December 31, 1999 was 3.92%.
57
<PAGE> 66
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
PERCENT NUMBER OF
ACCUMULATION UNIT ACCUMULATION UNIT CHANGE IN ACCUMULATION
UNDERLYING MUTUAL FUND VALUE AT END OF VALUE AT END OF ACCUMULATION UNIT UNITS AT END YEAR
PERIOD PERIOD VALUE OF PERIOD
<S> <C> <C> <C> <C> <C>
NSAT- Total Return Fund-Q 17.276235 18.207860 5.39% 298,396 1999
14.846819 17.276235 16.36% 285,960 1998
11.639579 14.846819 27.55% 157,002 1997
10.000000 11.639579 16.40% 32,415 1996
NSAT- Total Return Fund-NQ 17.276235 18.207860 5.39% 477,503 1999
14.846819 17.276235 16.36% 477,772 1998
11.639579 14.846819 27.55% 229,416 1997
10.000000 11.639579 16.40% 57,403 1996
NSAT - Nationwide Small 8.520115 10.734023 25.98% 38,232 1999
Cap Value Fund - Q 10.000000 8.520115 -14.80% 17,530 1998*
NSAT - Nationwide Small 8.520115 10.734023 25.98% 103,753 1999
Cap Value Fund - NQ 10.000000 8.520115 -14.80% 40,753 1998*
NSAT- Nationwide Small 13.989917 19.856438 41.93% 186,506 1999
Company Fund-Q 14.053920 13.989917 -0.46% 207,507 1998
12.152247 14.053920 15.65% 140,739 1997
10.000000 12.152247 21.52% 49,485 1996
NSAT- Nationwide Small 13.989917 19.856438 41.93% 395,269 1999
Company Fund-NQ 14.053920 13.989917 -0.46% 419,008 1998
12.152247 14.053920 15.65% 283,747 1997
10.000000 12.152247 21.52% 69,854 1996
Neuberger Berman 15.154915 22.462268 48.22% 88,327 1999
AMT- Growth 13.311087 15.154915 13.85% 54,978 1998
Portfolio-Q 10.469935 13.311087 27.14% 39,613 1997
10.000000 10.469935 4.70% 7,597 1996
Neuberger Berman AMT- 15.154915 22.462268 48.22% 216,935 1999
Growth Portfolio-NQ 13.311087 15.154915 13.85% 160,168 1998
10.469935 13.311087 27.14% 67,289 1997
10.000000 10.469935 4.70% 50,629 1996
Neuberger Berman AMT 9.272982 10.503255 13.27% 56,195 1999
Guardian Portfolio - Q 10.000000 9.272982 -7.27% 20,062 1998**
Neuberger Berman AMT 9.272982 10.503255 13.27% 109,084 1999
Guardian Portfolio - NQ 10.000000 9.272982 -7.27% 54,518 1998**
Neuberger Berman AMT- 11.048525 11.049212 0.01% 163,757 1999
Limited Maturity Bond 10.739513 11.048525 2.88% 250,457 1998
Portfolio-Q 10.209208 10.739513 5.19% 232,553 1997
10.000000 10.209208 2.09% 123,635 1996
Neuberger Berman AMT- 11.048585 11.049212 0.01% 337,696 1999
Limited Maturity Bond 10.739513 11.048585 2.88% 555,854 1998
Portfolio-NQ 10.209208 10.739513 5.19% 369,140 1997
10.000000 10.209208 2.09% 274,872 1996
Neuberger Berman AMT- 16.270918 17.216794 5.81% 232,129 1999
Partners Portfolio-Q 15.843430 16.270918 2.70% 613,192 1998
12.248582 15.843430 29.35% 551,365 1997
10.000000 12.248582 22.49% 177,265 1996
</TABLE>
58
<PAGE> 67
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
PERCENT NUMBER OF
ACCUMULATION UNIT ACCUMULATION UNIT CHANGE IN ACCUMULATION
UNDERLYING MUTUAL FUND VALUE AT END OF VALUE AT END OF ACCUMULATION UNITS AT END YEAR
PERIOD PERIOD UNIT VALUE OF PERIOD
<S> <C> <C> <C> <C> <C>
Neuberger Berman AMT- 16.270918 17.216794 5.81% 524,280 1999
Partners Portfolio-NQ 15.843430 16.270918 2.70% 898,907 1998
12.248582 15.843430 29.35% 607,558 1997
10.000000 12.248582 22.49% 214,292 1996
Oppenheimer Variable 11.659886 11.316334 -2.95% 186,021 1999
Account Funds -Oppenheimer 11.077843 11.659886 5.25% 212,964 1998
Bond Fund/VA-Q 10.288722 11.077843 7.67% 102,577 1997
10.000000 10.288722 2.89% 55,343 1996
Oppenheimer Variable 11.659886 11.316334 -2.95% 564,545 1999
Account Funds - 11.077843 11.659886 5.25% 706,823 1998
Oppenheimer Bond 10.288722 11.077843 7.67% 281,567 1997
Fund/VA -NQ 10.000000 10.288722 2.89% 152,075 1996
Oppenheimer Variable 12.734164 17.777418 39.60% 234,519 1999
Account Funds -Oppenheimer 10.420499 12.734164 22.20% 42,851 1998
Capital Appreciation 10.000000 10.420499 4.20% 7,039 1997*
Fund/VA (formerly
Oppenheimer Growth Fund) -Q
Oppenheimer Variable 12.734164 17.777418 39.60% 334,271 1999
Account Funds -Oppenheimer 10.420499 12.734164 22.20% 67,557 1998
Capital Appreciation 10.000000 10.420499 4.20% 6,625 1997*
Fund/VA (formerly
Oppenheimer Growth Fund) -Q
Oppenheimer Variable 15.232440 23.791512 56.19% 159,473 1999
Account Funds -Oppenheimer 13.545830 15.232440 12.45% 273,864 1998
Global Securities Fund/VA -Q 11.201956 13.545830 20.92% 96,027 1997
10.000000 11.201956 12.02% 40,161 1996
Oppenheimer Variable 15.232440 23.791512 56.19% 295,526 1999
Account Funds -Oppenheimer 13.545830 15.232440 12.45% 378,435 1998
Global Securities Fund/VA 11.201956 13.545830 20.92% 226,937 1997
-NQ 10.000000 11.201956 12.02% 75,124 1996
Oppenheimer Variable 13.513276 14.888567 10.18% 79,147 1999
Account Funds -Oppenheimer 12.513276 13.513276 5.11% 92,773 1998
Multiple Strategies Fund/VA 11.129020 12.856596 15.52% 56,867 1997
-Q 10.000000 11.129020 11.29% 6,127 1996
Oppenheimer Variable 13.513276 14.888567 10.18% 274,831 1999
Account Funds -Oppenheimer 12.856596 13.513276 5.11% 273,564 1998
Multiple Strategies Fund/VA 11.129020 12.856596 15.52% 193,943 1997
-NQ 10.000000 11.129020 11.29% 34,052 1996
Strong Variable Insurance 11.491081 11.900815 3.57% 29,325 1999
Funds, Inc.- Discovery Fund 10.870948 11.491081 5.70% 26,911 1998
II, Inc.-Q 9.903046 10.870948 9.77% 27,509 1997
10.000000 9.903046 -0.97% 27,130 1996
Strong Variable Insurance 11.491081 11.900815 3.57% 68,288 1999
Funds, Inc.- Discovery Fund 10.870948 11.491081 5.70% 72,179 1998
II, Inc.-NQ 9.903046 10.870948 9.77% 73,785 1997
10.000000 9.903046 -0.97% 55,312 1996
Strong Variable Insurance 8.367348 15.437256 84.49% 39,778 1999
Funds, Inc.- International 8.916485 8.367348 -6.16% 45,767 1998
Stock Fund II-Q 10.462103 8.916485 -14.77% 88,170 1997
10.000000 10.462103 4.62% 61,841 1996
</TABLE>
59
<PAGE> 68
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
PERCENT NUMBER OF
ACCUMULATION UNIT ACCUMULATION UNIT CHANGE IN ACCUMULATION
UNDERLYING MUTUAL FUND VALUE AT END OF VALUE AT END OF ACCUMULATION UNITS AT END YEAR
PERIOD PERIOD UNIT VALUE OF PERIOD
<S> <C> <C> <C> <C> <C>
Strong Variable Insurance 8.367348 15.437256 84.49% 104,813 1999
Funds, Inc.- International 8.916485 8.367348 -6.16% 118,596 1998
Stock Fund II-NQ 10.462103 8.916485 -14.77% 236,119 1997
10.000000 10.462103 4.62% 154,841 1996
Strong Opportunity Fund II, 15.660253 20.820776 32.95% 134,958 1999
Inc.-Q 13.995266 15.660253 11.90% 160,731 1998
11.319705 13.995266 23.64% 436,276 1997
10.000000 11.319705 13.20% 312,712 1996
Strong Opportunity Fund II, 15.660253 20.820776 32.95% 389,494 1999
Inc.-NQ 13.995266 15.660253 11.90% 459,632 1998
11.319705 13.995266 23.64% 513,631 1997
10.000000 11.319705 13.20% 302,280 1996
The Universal Institutional 6.919419 8.822360 27.50% 4,911 1999
Funds, Inc. - Emerging 9.803540 6.919419 -29.42% 30,554 1998
Markets Debt Portfolio - Q(1) 10.000000 9.803540 -1.96% 1,079 1997*
The Universal Institutional 6.919419 8.822360 27.50% 16,937 1999
Funds, Inc. - Emerging 9.803540 6.919419 -29.42% 18,313 1998
Markets Debt Portfolio - NQ(1) 10.000000 9.803540 -1.96% 9,814 1997*
Van Eck Worldwide Insurance 11.425229 10.378690 -9.16% 50,966 1999
Trust -Worldwide Bond Fund-Q 10.281856 11.425229 11.12% 54,874 1998
10.189870 10.281856 0.90% 52,244 1997
10.000000 10.189870 1.90% 39,599 1996
Van Eck Worldwide Insurance 11.425229 10.378690 -9.16% 95,952 1999
Trust- Worldwide Bond Fund-NQ 10.281856 11.425229 11.12% 137,465 1998
10.189870 10.281856 0.90% 135,652 1997
10.000000 10.189870 1.90% 36,398 1996
Van Eck Worldwide 5.598612 11.248273 97.39% 62,813 1999
Insurance Trust- Worldwide 8.778805 5.598612 -35.09% 37,152 1998
Emerging Markets Fund-Q 10.077496 8.778805 -12.89% 65,901 1997
10.000000 10.077496 0.77% 0 1996*
Van Eck Worldwide Insurance 5.698612 11.248273 97.39% 163,791 1999
Trust- Worldwide Emerging 8.778805 5.698612 -35.09% 150,812 1998
Markets Fund-NQ 10.077496 8.778805 -12.89% 109,850 1997
10.000000 10.077496 0.77% 750 1996*
Van Eck Worldwide Insurance 6.678951 7.964538 19.25% 36,070 1999
Trust- Worldwide Hard Assets 9.817789 6.678951 -31.97% 27,382 1998
Fund-Q 10.132333 9.817789 -3.10% 36,777 1997
10.000000 10.132333 1.32% 22,227 1996
Van Eck Worldwide Insurance 6.678951 7.964538 19.25% 83,623 1999
Trust- Worldwide Hard 9.817789 6.678951 -31.97% 104.447 1998
Assets-NQ 10.132333 9.817789 -3.10% 110,634 1997
10.000000 10.132333 1.32% 48,531 1996
Van Kampen Life 14.207613 13.529402 -4.77% 77,061 1999
Investment Trust- Morgan 16.312466 14.207613 -12.90% 126,607 1998
Stanley Real Estate 13.626341 16.312466 19.71% 143,467 1997
Securities Portfolio-Q 10.000000 13.626341 36.26% 63,345 1996
</TABLE>
(1) Formerly, Morgan Stanley Dean Witter Universal Funds, Inc. - Emerging
Markets Debt Portfolio.
60
<PAGE> 69
CONDENSED FINANCIAL INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
PERCENT NUMBER OF
ACCUMULATION UNIT ACCUMULATION UNIT CHANGE IN ACCUMULATION
UNDERLYING MUTUAL FUND VALUE AT END OF VALUE AT END OF ACCUMULATION UNITS AT END YEAR
PERIOD PERIOD UNIT VALUE OF PERIOD
<S> <C> <C> <C> <C> <C>
Van Kampen Life Investment 14.207613 13.529402 -4.77% 208,374 1999
Trust- Morgan Stanley Real 16.312466 14.207613 -12.90% 335,131 1998
Estate Securities 13.626341 16.312466 19.71% 312,287 1997
Portfolio-NQ 10.000000 13.626341 36.26% 65,843 1996
Warburg Pincus Trust- 11.915674 19.199834 61.13% 20,260 1999
Global Post-Venture Capital 11.351955 11.915674 4.97% 20,180 1998
Portfolio-Q(1) 10.163437 11.351955 11.69% 7,811 1997
10.000000 10.163437 1.63% 0 1996*
Warburg Pincus Trust- 11.915674 19.199834 61.13% 58,112 1999
Global Post-Venture Capital 11.351955 11.915674 4.97% 54,244 1998
Portfolio-NQ(1) 10.163437 11.351955 11.69% 37,566 1997
10.000000 10.163437 1.63% 726 1996*
Warburg Pincus 10.451107 15.803207 51.21% 105,810 1999
Trust-International Equity 10.066530 10.451107 3.82% 190,052 1998
Portfolio-Q 10.450529 10.066530 -3.67% 224,358 1997
10.000000 10.450529 4.51% 113,387 1996
Warburg Pincus Trust- 10.451107 15.803207 51.21% 237,602 1999
International Equity 10.066530 10.451107 3.82% 442,442 1998
Portfolio-NQ 10.450529 10.066530 -3.67% 501,764 1997
10.000000 10.450529 4.51% 278,224 1996
Warburg Pincus Trust- Small 12.254943 20.420490 66.63% 179,183 1999
Company Growth Portfolio-Q 12.800371 12.254943 -4.26% 187,796 1998
11.231071 12.800371 13.97% 182,340 1997
10.000000 11.231071 12.31% 104,843 1996
Warburg Pincus Trust- Small 12.254943 20.420490 66.63% 554,475 1999
Company Growth Portfolio-NQ 12.800371 12.254943 -4.26% 707,671 1998
11.231071 12.800371 13.97% 496,268 1997
10.000000 11.231071 12.31% 314,236 1996
</TABLE>
(1) Formerly, Warburg Pincus Trust - Post-Venture Capital Portfolio.
*The Dreyfus Variable Investment Fund- Appreciation Portfolio (formerly,
Dreyfus Variable Investment Fund - Capital Appreciation Portfolio), Fidelity
VIP III Growth Opportunities Portfolio, The Universal Institutional Funds,
Inc.-Emerging Markets Debt Portfolio (formerly, Morgan Stanley Dean Witter
Universal Funds, Inc. - Emerging Markets Debt Portfolio), and Oppenheimer VAF-
Oppenheimer Capital Appreciation Fund/VA (formerly Oppenheimer Growth Fund)
were added July 14, 1997. Consequently, the Condensed Financial Information
reflects accumulation unit values for the accumulation units outstanding for
the period from July 14, 1997 to December 31, 1997. The American Century
Variable Portfolios, Inc. - American Century VP Value, Dreyfus Variable
Investment Fund - Growth & Income Portfolio, Van Eck Worldwide Insurance Trust
- Worldwide Emerging Markets Fund, and Warburg Pincus Trust - Global
Post-Venture Capital Portfolio (formerly, Warburg Pincus Trust - Post-Venture
Capital Portfolio) were added December 23, 1996. Consequently, the Condensed
Financial Information reflects accumulation unit values for the accumulation
units outstanding for the period from December 23, 1996 to December 31, 1996.
**The American Century Variable Portfolios, Inc.-American Century VP Income &
Growth, NSAT-Nationwide Small Cap Value Fund and Neuberger Berman AMT-Guardian
Portfolio were added to the variable account on May 1, 1998. Consequently, the
Condensed Financial Information reflects the reporting period from May 1, 1998
through December 31, 1998.
61
<PAGE> 70
Dreyfus Investment Portfolios - European Equity Portfolio, Janus Aspen Series -
Capital Appreciation Portfolio: Service Shares, Janus Aspen Series - Global
Technology Portfolio: Service Shares, Janus Aspen Series - International Growth
Portfolio: Service Shares, NSAT - Nationwide Mid Cap Index Fund, NSAT -
Nationwide Multi-Sector Bond Fund, NSAT - Nationwide Small Cap Growth Fund, NSAT
- Nationwide Strategic Growth Fund, Oppenheimer Variable Account Funds -
Oppenheimer Aggressive Growth Fund/VA, and Oppenheimer Variable Account Funds -
Oppenheimer Main Street Growth & Income Fund/VA, were added to the variable
account effective May 1, 2000. Therefore, no Condensed Financial Information is
available.
62
<PAGE> 71
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED
BY NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY THROUGH ITS
NATIONWIDE VA SEPARATE ACCOUNT-B
This Statement of Additional Information is not a prospectus. It contains
information in addition to and more detailed than set forth in the prospectus
and should be read in conjunction with the prospectus dated May 1, 2000. The
prospectus may be obtained from Nationwide Life and Annuity Insurance Company by
writing P.O. Box 16609, Columbus, Ohio 43216-6609, or calling 1-800-848-6331,
TDD 1-800-238-3035.
TABLE OF CONTENTS
PAGE
General Information and History....................................1
Services...........................................................1
Purchase of Securities Being Offered...............................1
Underwriters.......................................................2
Calculation of Performance.........................................2
Annuity Payments...................................................3
Financial Statements...............................................4
GENERAL INFORMATION AND HISTORY
The Nationwide VA Separate Account-B (formerly Financial Horizons VA Separate
Account-2) is a separate investment account of Nationwide Life and Annuity
Insurance Company ("Nationwide ") (formerly Financial Horizons Life Insurance
Company). All of Nationwide's common stock is owned by Nationwide Life Insurance
Company which is owned by Nationwide Financial Services, Inc.("NFS"), a holding
company. NFS has two classes of common stock outstanding with different voting
rights enabling Nationwide Corporation (the holder of all of the outstanding
Class B Common Stock) to control NFS. Nationwide Corporation is a holding
company, as well. All of the common stock is held by Nationwide Mutual Insurance
Company (95.24%) and Nationwide Mutual Fire Insurance Company (4.76%), the
ultimate controlling persons of Nationwide group of companies. The Nationwide
group of companies is one of America's largest insurance and financial services
family of companies, with combined assets of over $120 billion as of December
31, 1999.
SERVICES
Nationwide, which has responsibility for administration of the contracts and the
variable account, maintains records of the name, address, taxpayer
identification number, and other pertinent information for each contract owner
and the number and type of contract issued to each contract owner and records
with respect to the contract value of each contract.
Nationwide is the custodian of the assets of the variable account. Nationwide
will maintain a record of all purchases and redemptions of shares of the
underlying mutual funds. Nationwide, or subsidiaries of Nationwide may have
entered into agreements with either the investment adviser or distributor for
several of the underlying mutual funds. The agreements relate to administrative
services furnished by Nationwide or an affiliate of Nationwide and provide for
an annual fee based on the average aggregate net assets of the variable account
(and other separate accounts of Nationwide or life insurance company
subsidiaries of Nationwide) invested in particular underlying mutual funds.
These fees in no way affect the net asset value of the underlying mutual funds
or fees paid by the contract owner.
The audited financial statements have been included herein in reliance upon the
reports of KPMG LLP, independent certified public accountants, Two Nationwide
Plaza, Columbus, Ohio 43215, and upon the authority of said firm as experts in
accounting and auditing.
6
<PAGE> 72
PURCHASE OF SECURITIES BEING OFFERED
The contracts are sold by licensed insurance agents in the states where the
contracts may be lawfully sold. Agents are registered representatives of
broker-dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc. ("NASD").
UNDERWRITERS
The contracts, which are offered continuously, are distributed by Nationwide
Investment Services Corporation ("NISC"), Two Nationwide Plaza, Columbus, Ohio
43215, an affiliate of Nationwide. No underwriting commissions have been paid by
Nationwide to NISC.
CALCULATION OF PERFORMANCE
Any current yield quotations of the NSAT- Money Market Fund, subject to Rule 482
of the Securities Act of 1933, will consist of a seven calendar day historical
yield, carried at least to the nearest hundredth of a percent. The yield will be
calculated by determining the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one
accumulation unit at the beginning of the base period, subtracting a
hypothetical charge reflecting deductions from contract owner accounts, and
dividing the net change in account value by the value of the account at the
beginning of the period to obtain a base period return, and multiplying the base
period return by (365/7) or (366/7) in a leap year. At December 31, 1999, the
NSAT- Money Market Fund's seven-day current unit value yield was 3.92% The NSAT-
Money Market Fund's effective yield is computed similarly, but includes the
effect of assumed compounding on an annualized basis of the current unit value
yield quotations of the NSAT- Money Market Fund. At December 31, 1999 the NSAT-
Money Market Fund's seven-day effective yield was 4.00%.
The NSAT- Money Market Fund's yield and effective yield will fluctuate daily.
Actual yields will depend on factors such as the type of instruments in the
Fund's portfolio, portfolio quality and average maturity, changes in interest
rates, and the Fund's expenses. Although the NSAT- Money Market Fund determines
its yield on the basis of a seven day period, it may use a different time period
on occasion. The yield quotes may reflect the expense limitation described
"Investment Manager and Other Services" in the NSAT- Money Market Fund's
Statement of Additional Information. There is no assurance that the yields
quoted on any given occasion will remain in effect for any period of time and
there is no guarantee that the net asset values will remain constant. It should
be noted that a contract owner's investment in the NSAT- Money Market Fund is
not guaranteed or insured. Yields of other money market funds may not be
comparable if a different base period or another method of calculation is used.
All performance advertising will include quotations of standardized average
annual total return, calculated in accordance with a standard method prescribed
by rules of the SEC. Standardized average annual total return is found by taking
a hypothetical $1,000 investment in each of the sub-accounts' units on the first
day of the period at the offering price, which is the accumulation unit value
per unit ("initial investment") and computing the ending redeemable value
("redeemable value") of that investment at the end of the period. The redeemable
value is then divided by the initial investment and this quotient is taken to
the Nth root (N represents the number of years in the period) and 1 is
subtracted from the result which is then expressed as a percentage, carried to
at least the nearest hundredth of a percent. Standardized average annual total
return reflects the deduction of a 1.45% mortality risk and expense Risk Charge
and Administration Charge. No deduction is made for premium taxes which may be
assessed by certain states. Nonstandardized total return may also be advertised,
and is calculated in a manner similar to standardized average annual total
return except the nonstandardized total return is based on a hypothetical
initial investment of $25,000. An assumed initial investment of $25,000 will be
used because that figure more closely approximates the size of a typical
contract than does the $1,000 figure used in calculating the standardized
average annual total return quotations.
7
<PAGE> 73
The standardized average annual total return and nonstandardized average annual
total return quotations will be current to the last day of the calendar quarter
preceding the date on which an advertisement is submitted for publication. The
standardized average annual return will be based on rolling calendar quarters
and will cover periods of one, five, and ten years, or a period covering the
time the underlying mutual fund has been available in the variable account if
the underlying mutual fund has not been available for one of the prescribed
periods. Nonstandardized average annual total return will based on rolling
calendar quarters and will cover periods of one, five and ten years, or a period
covering the time the underlying mutual fund has been in existence.
Quotations of average annual total return and total return are based upon
historical earnings and will fluctuate. Any quotation of performance, is not a
guarantee of future performance. Factors affecting a sub-account's performance
include general market conditions, operating expenses and investment management.
A contract owner's account when redeemed may be more or less than the original
cost.
ANNUITY PAYMENTS
See "Frequency and Amount of Annuity Payments" located in the Prospectus.
8
<PAGE> 74
<PAGE> 1
--------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors of Nationwide Life and Annuity Insurance Company and
Contract Owners of Nationwide VA Separate Account-B:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide VA Separate Account-B (comprised of the
sub-accounts listed in note 1(b)) (collectively, "the Account") as of December
31, 1999, and the related statements of operations and changes in contract
owners' equity for each of the years in the two year period then ended. These
financial statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the transfer agents of the underlying mutual funds. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Account as of December
31, 1999, and the results of its operations and its changes in contract owners'
equity for each of the years in the two year period then ended in conformity
with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 18, 2000
--------------------------------------------------------------------------------
<PAGE> 2
--------------------------------------------------------------------------------
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at market value:
American Century VP - American Century VP Balanced (ACVPBal)
535,753 shares (cost $4,113,475) ........................................... $ 4,173,515
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
246,170 shares (cost $2,912,899) ........................................... 3,653,168
American Century VP - American Century VP Income & Growth (ACVPIncGr)
404,868 shares (cost $2,899,307) ........................................... 3,238,941
American Century VP - American Century VP International (ACVPInt)
1,931,291 shares (cost $20,196,461) ........................................ 24,141,133
American Century VP - American Century VP Value (ACVPValue)
358,786 shares (cost $2,373,024) ........................................... 2,134,776
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
193,187 shares (cost $6,583,627) ........................................... 7,547,809
Dreyfus Stock Index Fund (DryStkIx)
1,583,950 shares (cost $55,887,642) ........................................ 60,902,889
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
129,936 shares (cost $5,190,443) ........................................... 5,180,563
Dreyfus VIF - Growth and Income Portfolio (DryGrInc)
152,247 shares (cost $3,286,969) ........................................... 3,879,246
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
1,299,973 shares (cost $34,329,471) ........................................ 33,422,296
Fidelity VIP - Growth Portfolio (FidVIPGr)
822,614 shares (cost $39,017,250) .......................................... 45,186,208
Fidelity VIP - High Income Portfolio (FidVIPHI)
2,567,324 shares (cost $28,467,184) ........................................ 29,036,435
Fidelity VIP - Overseas Portfolio (FidVIPOv)
296,912 shares (cost $7,569,856) ........................................... 8,147,255
Fidelity VIP-II - Asset Manager Portfolio (FidVIPAM)
645,435 shares (cost $11,102,030) .......................................... 12,050,267
Fidelity VIP-II - Contrafund Portfolio (FidVIPCon)
1,169,537 shares (cost $29,452,994) ........................................ 34,092,009
</TABLE>
(Continued)
<PAGE> 3
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, Continued
<TABLE>
<S> <C>
Fidelity VIP-III - Growth Opportunities Portfolio (FidVIPGrOp)
884,356 shares (cost $19,905,045) .......................................... 20,472,834
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
27,893 shares (cost $196,174) .............................................. 192,744
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
565,679 shares (cost $15,719,221) .......................................... 14,543,616
Nationwide SAT - Government Bond Fund (NSATGvtBd)
1,442,691 shares (cost $16,393,706) ........................................ 15,566,639
Nationwide SAT - Money Market Fund (NSATMyMkt)
96,590,473 shares (cost $96,590,473) ....................................... 96,590,473
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
156,796 shares (cost $1,598,946) ........................................... 1,524,059
Nationwide SAT - Small Company Fund (NSATSmCo)
522,926 shares (cost $9,823,119) ........................................... 11,567,127
Nationwide SAT - Total Return Fund (NSATTotRe)
750,993 shares (cost $14,512,135) .......................................... 14,126,183
Neuberger &Berman AMT - Growth Portfolio (NBAMTGro)
183,977 shares (cost $5,702,226) ........................................... 6,856,826
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
109,525 shares (cost $1,666,576) ........................................... 1,735,974
Neuberger &Berman AMT - Limited Maturity Bond Portfolio (NBAMTLMat)
418,480 shares (cost $5,675,288) ........................................... 5,540,672
Neuberger &Berman AMT - Partners Portfolio (NBAMTPart)
663,549 shares (cost $12,396,891) .......................................... 13,032,110
Oppenheimer VAF - Bond Fund (OppBdFd)
737,300 shares (cost $8,805,253) ........................................... 8,493,691
Oppenheimer VAF - Global Securities Fund (OppGlSec)
324,883 shares (cost $9,331,250) ........................................... 10,854,325
Oppenheimer VAF - Growth Fund (OppGro)
202,880 shares (cost $8,925,555) ........................................... 10,111,551
Oppenheimer VAF - Multiple Strategies Fund (OppMult)
301,845 shares (cost $5,069,103) ........................................... 5,270,205
Strong Opportunity Fund II, Inc. (StOpp2)
420,147 shares (cost $9,432,616) ........................................... 10,919,612
Strong VIF - Strong Discovery Fund II (StDisc2)
102,081 shares (cost $1,021,440) ........................................... 1,161,683
Strong VIF - Strong International Stock Fund II (StIntStk2)
136,347 shares (cost $1,658,335) ........................................... 2,231,999
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
Van Eck WIT - Worldwide Bond Fund (VEWrldBd)
142,640 shares (cost $1,588,333) ........................................... 1,524,825
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
179,980 shares (cost $2,187,350) ........................................... 2,566,510
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
86,979 shares (cost $919,484) .............................................. 953,288
Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio (MSRESec)
312,189 shares (cost $4,055,382) ........................................... 3,861,780
Warburg Pincus Trust - International Equity Portfolio (WPIntEq)
324,950 shares (cost $5,014,062) ........................................... 5,426,664
Warburg Pincus Trust - Post Venture Capital Portfolio (WPPVenCap)
78,125 shares (cost $1,097,391) ............................................ 1,504,695
Warburg Pincus Trust - Small Company Growth Portfolio (WPSmCoGr)
571,807 shares (cost $10,022,936) .......................................... 14,981,353
-----------
Total investments ....................................................... 558,397,948
Accounts receivable .............................................................. 294,217
-----------
Total assets ............................................................ 558,692,165
ACCOUNTS PAYABLE .................................................................... 19,666
-----------
CONTRACT OWNERS' EQUITY (NOTE 4) .................................................... $ 558,672,499
===========
</TABLE>
See accompanying notes to financial statements.
--------------------------------------------------------------------------------
<PAGE> 5
--------------------------------------------------------------------------------
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
STATEMENT OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
TOTAL ACVPBal
-------------------------------- ---------------------------
1999 1998 1999 1998
--------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 12,209,397 7,818,099 84,936 33,348
Mortality, expense and
administration charges (note 2)...... (7,811,199) (5,643,109) (62,221) (39,181)
-------------- -------------- ---------- ----------
Net investment activity.............. 4,398,198 2,174,990 22,715 (5,833)
-------------- -------------- ---------- ----------
Proceeds from mutual fund
shares sold.......................... 1,813,953,387 724,145,392 1,532,098 1,370,465
Cost of mutual fund shares sold......... (1,757,424,692) (716,278,224) (1,666,613) (1,340,497)
-------------- -------------- ---------- ----------
Realized gain (loss) on investments.. 56,528,695 7,867,168 (134,515) 29,968
Change in unrealized gain (loss)
on investments....................... 6,717,970 16,445,711 (147,565) 124,972
-------------- -------------- ---------- ----------
Net gain (loss) on investments....... 63,246,665 24,312,879 (282,080) 154,940
-------------- -------------- ---------- ----------
Reinvested capital gains............... 14,782,161 13,663,741 586,056 206,788
-------------- -------------- ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations...... 82,427,024 40,151,610 326,691 355,895
-------------- -------------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 78,276,261 241,794,992 374,539 1,611,751
Transfers between funds................ - - (9,888) 866,011
Redemptions............................ (106,692,804) (49,104,065) (500,529) (417,463)
Annuity benefits ...................... (19,404) (3,683) - -
Adjustments to maintain reserves....... 294,335 (13,743) (64) 169
-------------- -------------- ---------- ----------
Net equity transactions............ (28,141,612) 192,673,501 (135,942) 2,060,468
-------------- -------------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 54,285,412 232,825,111 190,749 2,416,363
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 504,387,087 271,561,976 3,982,699 1,566,336
-------------- -------------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 558,672,499 504,387,087 4,173,448 3,982,699
============== ============== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ACVPCapAp ACVPIncGr
--------------------------- ---------------------------
1999 1998 1999 1998
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. - - 600 13,971
Mortality, expense and
administration charges (note 2)...... (36,197) (23,230) (40,673) (9,285)
--------- ---------- ---------- ----------
Net investment activity.............. (36,197) (23,230) (40,073) 4,686
--------- ---------- ---------- ----------
Proceeds from mutual fund
shares sold.......................... 6,617,383 1,861,327 3,541,056 3,462,801
Cost of mutual fund shares sold......... (5,926,294) (2,002,979) (3,237,874) (3,421,020)
--------- ---------- ---------- ----------
Realized gain (loss) on investments.. 691,089 (141,652) 303,182 41,781
Change in unrealized gain (loss)
on investments....................... 658,964 125,669 164,310 175,325
--------- ---------- ---------- ----------
Net gain (loss) on investments....... 1,350,053 (15,983) 467,492 217,106
--------- ---------- ---------- ----------
Reinvested capital gains............... - 77,047 - -
--------- ---------- ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations...... 1,313,856 37,834 427,419 221,792
--------- ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 104,184 538,949 429,821 586,130
Transfers between funds................ 1,069,815 (186,436) 867,863 1,836,457
Redemptions............................ (386,137) (172,970) (964,403) (164,220)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... 67 10 2,354 (1,953)
--------- ---------- ---------- ----------
Net equity transactions............ 787,929 179,553 335,635 2,256,414
--------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 2,101,785 217,387 763,054 2,478,206
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 1,551,448 1,334,061 2,478,206 -
--------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 3,653,233 1,551,448 3,241,260 2,478,206
========= ========== ============== ==========
</TABLE>
<PAGE> 6
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
ACVPint ACVPValue
------------------------------ ---------------------------
1999 1998 1999 1998
--------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - 39,772 22,101 12,481
Mortality, expense and administration
charges (note 2)..................... (244,975) (159,363) (40,228) (39,441)
-------------- ------------ ---------- ----------
Net investment activity.............. (244,975) (119,591) (18,127) (26,960)
-------------- ------------ ---------- ----------
Proceeds from mutual fund shares sold.. 127,078,667 31,356,628 5,753,466 3,069,812
Cost of mutual fund shares sold........ (119,686,321) (31,185,304) (5,935,589) (3,124,822)
-------------- ------------ ---------- ----------
Realized gain (loss) on investments.. 7,392,346 171,324 (182,123) (55,010)
Change in unrealized gain (loss)
on investments....................... 3,088,550 719,921 (279,714) 27,951
-------------- ------------ ---------- ----------
Net gain (loss) on investments....... 10,480,896 891,245 (461,837) (27,059)
-------------- ------------ ---------- ----------
Reinvested capital gains............... - 408,286 209,382 149,013
-------------- ------------ ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations........ 10,235,921 1,179,940 (270,582) 94,994
-------------- ------------ ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 1,230,040 4,813,488 338,659 1,438,016
Transfers between funds................ 1,077,633 3,543,125 (886,385) 333,167
Redemptions............................ (2,067,608) (803,970) (324,178) (278,803)
Annuity benefits ...................... (3,019) (542) (1,537) (354)
Adjustments to maintain reserves....... (2,209) (221) (58) (438)
-------------- ------------ ---------- ----------
Net equity transactions............ 234,837 7,551,880 (873,499) 1,491,588
-------------- ------------ ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 10,470,758 8,731,820 (1,144,081) 1,586,582
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 13,661,390 4,929,570 3,278,763 1,692,181
-------------- ------------ ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 24,132,148 13,661,390 2,134,682 3,278,763
============== ============ ========== ==========
</TABLE>
<TABLE>
<CAPTION>
DrySRGro DryStkIx
--------------------------- ---------------------------
1999 1998 1999 1998
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 925 8,472 595,958 522,901
Mortality, expense and administration
charges (note 2)..................... (102,904) (63,111) (817,328) (485,796)
---------- ------------ ---------- ------------
Net investment activity.............. (101,979) (54,639) (221,370) 37,105
---------- ------------ ---------- ------------
Proceeds from mutual fund shares sold.. 5,480,508 6,586,671 61,300,160 39,332,503
Cost of mutual fund shares sold........ (4,578,885) (6,462,288) (51,324,024) (36,715,362)
---------- ------------ ---------- ------------
Realized gain (loss) on investments.. 901,623 124,383 9,976,136 2,617,141
Change in unrealized gain (loss)
on investments....................... 551,875 442,083 (577,072) 5,058,856
---------- ------------ ---------- ------------
Net gain (loss) on investments....... 1,453,498 566,466 9,399,064 7,675,997
---------- ------------ ---------- ------------
Reinvested capital gains............... 249,138 196,095 514,716 95,170
---------- ------------ ---------- ------------
Net increase (decrease) in
contract owners' equity
resulting from operations........ 1,600,657 707,922 9,692,410 7,808,272
---------- ------------ ---------- ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 703,482 1,619,005 7,548,957 17,316,091
Transfers between funds................ 794,953 95,845 (3,376,077) 15,572,652
Redemptions............................ (1,001,950) (326,063) (7,057,239) (2,773,953)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... 102 28 609 (560)
---------- ------------ ---------- ------------
Net equity transactions............ 496,587 1,388,815 (2,883,750) 30,114,230
---------- ------------ ---------- ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 2,097,244 2,096,737 6,808,660 37,922,502
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 5,450,670 3,353,933 54,094,842 16,172,340
---------- ------------ ---------- ------------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 7,547,914 5,450,670 60,903,502 54,094,842
========== ============ ============== ==========
</TABLE>
(Continued)
<PAGE> 7
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
DryCapAp DryGrInc
----------------------------- ----------------------------
1999 1998 1999 1998
------------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 82,047 22,474 21,630 24,522
Mortality, expense and administration
charges (note 2)..................... (128,571) (34,717) (50,582) (33,541)
-------------- ------------- ------------- -----------
Net investment activity.............. (46,524) (12,243) (28,952) (9,019)
-------------- ------------- ------------- -----------
Proceeds from mutual fund shares sold.. 46,132,612 5,604,652 987,750 2,360,951
Cost of mutual fund shares sold........ (44,911,896) (5,779,706) (924,568) (2,425,101)
-------------- ------------- ------------- -----------
Realized gain (loss) on investments.. 1,220,716 (175,054) 63,182 (64,150)
Change in unrealized gain (loss)
on investments....................... (524,951) 516,519 349,913 289,005
-------------- ------------- -------------- -----------
Net gain (loss) on investments....... 695,765 341,465 413,095 224,855
-------------- ------------- ------------- -----------
Reinvested capital gains............... 55,124 574 117,578 33,632
-------------- ------------- ------------- -----------
Net increase (decrease) in contract
owners' equity resulting from
operations.......................... 704,365 329,796 501,721 249,468
-------------- ------------- ------------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 839,452 1,296,381 272,978 1,731,959
Transfers between funds................ 938,506 3,114,305 31,306 456,443
Redemptions............................ (2,181,652) (237,901) (380,817) (219,063)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... (15) (757) 16 (522)
-------------- ------------- ------------- -----------
Net equity transactions............ (403,709) 4,172,028 (76,517) 1,968,817
-------------- ------------- ------------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 300,656 4,501,824 425,204 2,218,285
CONTRACT OWNERS' EQUITY BEGINNING OF
PERIOD................................. 4,879,906 378,082 3,454,067 1,235,782
-------------- ------------- ------------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 5,180,562 4,879,906 3,879,271 3,454,067
============== ============= ============= ===========
</TABLE>
<TABLE>
<CAPTION>
FidVIPEI FidVIPGr
---------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 718,655 438,197 62,752 96,650
Mortality, expense and administration
charges (note 2)..................... (660,180) (540,327) (567,708) (299,659)
----------- ------------ ---------- ---------
Net investment activity.............. 58,475 (102,130) (504,956) (203,009)
----------- ------------ ---------- ---------
Proceeds from mutual fund shares sold.. 55,517,129 34,659,555 79,869,201 49,056,647
Cost of mutual fund shares sold........ (52,009,973) (31,406,671) (72,708,952) (46,848,717)
----------- ------------ ---------- ---------
Realized gain (loss) on investments.. 3,507,156 3,252,884 7,160,249 2,207,930
Change in unrealized gain (loss)
on investments....................... (3,467,328) (1,043,501) 1,895,516 2,012,302
------------ -------------- -------------- --------------
Net gain (loss) on investments....... 39,828 2,209,383 9,055,765 4,220,232
----------- ------------ ---------- ---------
Reinvested capital gains............... 1,588,606 1,559,466 3,945,522 2,528,165
----------- ------------ ---------- ---------
Net increase (decrease) in contract
owners' equity resulting from
operations.......................... 1,686,909 3,666,719 12,496,331 6,545,388
----------- ------------ ---------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 2,909,702 17,187,231 3,494,471 6,866,625
Transfers between funds................ (13,728,204) 2,340,278 5,545,659 (4,825,633)
Redemptions............................ (6,482,410) (3,613,020) (7,399,782) (2,061,683)
Annuity benefits ...................... (2,988) (711) (4,108) (783)
Adjustments to maintain reserves....... 55,498 551 31,244 (188)
----------- ------------ ---------- ---------
Net equity transactions............ (17,248,402) 15,914,329 1,667,484 (21,662)
----------- ------------ ---------- ---------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (15,561,493) 19,581,048 14,163,815 6,523,726
CONTRACT OWNERS' EQUITY BEGINNING OF
PERIOD................................. 49,039,213 29,458,165 31,053,591 24,529,865
----------- ------------ ---------- ---------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 33,477,720 49,039,213 45,217,406 31,053,591
=========== ============ ============== ==========
</TABLE>
<PAGE> 8
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
FidVIPHI FidVIPOv
------------------------------- ---------------------------
1999 1998 1999 1998
--------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 3,049,368 1,651,369 82,634 82,111
Mortality, expense and administration
charges (note 2)..................... (429,544) (411,908) (109,701) (77,315)
-------------- ----------- ---------- -----------
Net investment activity.............. 2,619,824 1,239,461 (27,067) 4,796
-------------- ----------- ---------- -----------
Proceeds from mutual fund shares sold.. 49,445,073 34,216,558 133,300,844 29,186,608
Cost of mutual fund shares sold........ (51,382,276) (36,081,568) (130,144,938) (28,928,508)
-------------- ----------- ---------- -----------
Realized gain (loss) on investments.. (1,937,203) (1,865,010) 3,155,906 258,100
Change in unrealized gain (loss)
on investments....................... 1,560,104 (2,094,999) 405,515 253,115
-------------- ----------- ---------- -----------
Net gain (loss) on investments....... (377,099) (3,960,009) 3,561,421 511,215
-------------- ----------- ---------- -----------
Reinvested capital gains............... 113,995 1,049,307 133,280 242,012
-------------- ----------- ---------- -----------
Net increase (decrease) in
contract owners' equity
resulting from operations......... 2,356,720 (1,671,241) 3,667,634 758,023
-------------- ----------- ---------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners......................
Transfers between funds................ 1,998,374 17,519,558 600,133 2,071,208
Redemptions............................ (3,776,540) (1,398,748) (957,966) (270,743)
Annuity benefits ...................... (3,500,166) (2,706,795) (848,535) (491,688)
Adjustments to maintain reserves....... - - - -
Net equity transactions............ 710 (64) (1,343) 44
-------------- ----------- ---------- -----------
(5,277,622) 13,413,951 (1,207,711) 1,308,821
-------------- ----------- ---------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (2,920,902) 11,742,710 2,459,923 2,066,844
CONTRACT OWNERS' EQUITY BEGINNING OF
PERIOD................................. 31,958,042 20,215,332 5,686,000 3,619,156
-------------- ---------- ---------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 29,037,140 31,958,042 8,145,923 5,686,000
============== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
FidVIPAM FidVIPCon
---------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 365,259 169,515 193,521 111,354
Mortality, expense and administration
charges (note 2)..................... (171,911) (111,292) (533,225) (355,761)
---------- ----------- --------- ---------
Net investment activity.............. 193,348 58,223 (339,704) (244,407)
---------- ----------- --------- ---------
Proceeds from mutual fund shares sold.. 4,177,593 2,252,969 42,424,562 29,737,118
Cost of mutual fund shares sold........ (4,082,871) (2,135,006) (36,005,223) (27,128,669)
---------- ----------- --------- ---------
Realized gain (loss) on investments.. 94,722 117,963 6,419,339 2,608,449
Change in unrealized gain (loss)
on investments....................... 307,881 249,950 (669,926) 3,503,323
---------- ----------- --------- ---------
Net gain (loss) on investments....... 402,603 367,913 5,749,413 6,111,772
---------- ----------- --------- ---------
Reinvested capital gains............... 462,661 508,545 1,419,156 819,250
---------- ----------- --------- ---------
Net increase (decrease) in
contract owners' equity
resulting from operations......... 1,058,612 934,681 6,828,865 6,686,615
---------- ----------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners......................
Transfers between funds................ 1,986,331 3,941,991 2,446,510 8,215,815
Redemptions............................ 706,046 359,310 (7,950,349) 3,891,022
Annuity benefits ...................... (1,323,417) (460,173) (5,358,878) (2,172,888)
Adjustments to maintain reserves....... - - (291) -
Net equity transactions............ 134 63 104,739 427
---------- ---------- --------- ---------
1,369,094 3,841,191 (10,758,269) 9,934,376
---------- ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 2,427,706 4,775,872 (3,929,404) 16,620,991
CONTRACT OWNERS' EQUITY BEGINNING OF
PERIOD................................. 9,622,689 4,846,817 38,126,162 21,505,171
---------- ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 12,050,395 9,622,689 34,196,758 38,126,162
========== ========== ========== ==========
</TABLE>
(Continued)
<PAGE> 9
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
FidVIPGROp MSEmMkt
-------------------------------- ---------------------------
1999 1998 1999 1998
--------------- -------------- ------------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 219,859 44,124 23,840 24,096
Mortality, expense and administration
charges (note 2)..................... (350,970) (213,834) (5,157) (3,100)
------------- ------------ ---------- ----------
Net investment activity.............. (131,111) (169,710) 18,683 20,996
------------- ------------ ---------- ----------
Proceeds from mutual fund shares sold.. 60,735,974 5,537,239 3,802,365 975,706
Cost of mutual fund shares sold........ (58,040,123) (5,154,732) (3,748,962) (1,073,479)
------------- ------------ ---------- ----------
Realized gain (loss) on investments.. 2,695,851 382,507 53,403 (97,773)
Change in unrealized gain (loss) on
investments ......................... (2,262,934) 2,707,877 15,494 (10,716)
------------- ------------ ---------- ----------
Net gain (loss) on investments....... 432,917 3,090,384 68,897 (108,489)
------------- ------------ ---------- ----------
Reinvested capital gains............... 411,041 153,385 - -
------------- ------------ ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations......... 712,847 3,074,059 87,580 (87,493)
------------- ------------ ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 961,172 5,943,854 68,452 140,519
Transfers between funds................ (767,741) 10,961,989 (225,156) 220,119
Redemptions............................ (1,944,495) (1,426,662) (76,261) (41,788)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... 70,237 (49) 5 (16)
------------- ------------ ---------- ----------
Net equity transactions............ (1,680,827) 15,479,132 (232,960) 318,834
------------- ------------ ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (967,980) 18,553,191 (145,380) 231,341
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD............................. 21,511,059 2,957,868 338,131 106,790
------------- ------------ ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 20,543,079 21,511,059 192,751 338,131
============= ============ ========== ==========
</TABLE>
<TABLE>
<CAPTION>
NSATCapAp NSATGvtBd
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 143,254 121,205 857,631 530,836
Mortality, expense and administration
charges (note 2)..................... (403,135) (194,651) (229,882) (129,786)
---------- ----------- ---------- ----------
Net investment activity.............. (259,881) (73,446) 627,749 401,050
---------- ----------- ---------- ----------
Proceeds from mutual fund shares sold.. 46,186,547 8,182,493 13,275,910 14,587,330
Cost of mutual fund shares sold........ (43,049,778) (7,321,337) (13,973,544) (14,190,888)
---------- ----------- ---------- ----------
Realized gain (loss) on investments.. 3,136,769 861,156 (697,634) 396,442
Change in unrealized gain (loss) on
investments ......................... (3,036,396) 1,616,515 (536,083) (294,787)
---------- ----------- ---------- ----------
Net gain (loss) on investments....... 100,373 2,477,671 (1,233,717) 101,655
---------- ----------- ---------- ----------
Reinvested capital gains............... 998,848 824,866 29,496 72,331
---------- ----------- ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations......... 839,340 3,229,091 (576,472) 575,036
---------- ----------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 2,742,904 10,137,216 1,871,746 6,945,212
Transfers between funds................ (12,557,885) 12,658,826 1,366,887 4,673,391
Redemptions............................ (6,108,886) (987,832) (2,169,513) (1,039,812)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... (51) (148) (84) 28
---------- ----------- ---------- ----------
Net equity transactions............ (15,923,918) 21,808,062 1,069,036 10,578,819
---------- ----------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (15,084,578) 25,037,153 492,564 11,153,855
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD............................. 29,628,162 4,591,009 15,073,995 3,920,140
---------- ----------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 14,543,584 29,628,162 15,566,559 15,073,995
========== ========== ========== ==========
</TABLE>
<PAGE> 10
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NSATMyMkt NSATSmCapV
------------------------------ ------------------------------
1999 1998 1999 1998
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 3,524,835 2,938,981 - -
Mortality, expense and administration
charges (note 2)..................... (1,094,707) (833,529) (30,069) (3,866)
-------------- -------------- ----------- -----------
Net investment activity.............. 2,430,128 2,105,452 (30,069) (3,866)
-------------- -------------- ----------- -----------
Proceeds from mutual fund shares sold.. 745,935,436 295,687,265 18,339,627 3,943,236
Cost of mutual fund shares sold........ (745,935,436) (295,687,265) (18,072,852) (3,883,376)
-------------- -------------- ----------- -----------
Realized gain (loss) on investments.. - - 266,775 59,860
Change in unrealized gain (loss)
on investments...................... - - (91,757) 16,870
-------------- -------------- ----------- -----------
Net gain (loss) on investments....... - - 175,018 76,730
-------------- -------------- ----------- -----------
Reinvested capital gains............... - - 230,135 -
-------------- -------------- ----------- -----------
Net increase (decrease) in
contract owners' equity
resulting from operations......... 2,430,128 2,105,452 375,084 72,864
-------------- -------------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 38,509,617 82,240,994 181,544 38,202
Transfers between funds................ 41,288,252 (44,327,285) 1,849,447 418,553
Redemptions............................ (36,785,520) (17,913,246) (1,378,599) (33,044)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... 37,103 (6,570) 16 3
-------------- -------------- ----------- -----------
Net equity transactions............ 43,049,452 19,993,893 652,408 423,714
-------------- -------------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 45,479,580 22,099,345 1,027,492 496,578
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD............................. 51,148,025 29,048,680 496,578 -
-------------- -------------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 96,627,605 51,148,025 1,524,070 496,578
============== ============== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NSATSmCo NSATTotRe
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. - - 90,376 106,763
Mortality, expense and administration
charges (note 2)..................... (139,907) (113,941) (198,076) (140,429)
---------- ----------- ----------- ----------
Net investment activity.............. (139,907) (113,941) (107,700) (33,666)
---------- ----------- ----------- ----------
Proceeds from mutual fund shares sold.. 32,926,301 12,581,286 14,771,750 3,147,742
Cost of mutual fund shares sold........ (30,327,923) (13,368,773) (13,536,263) (2,495,533)
---------- ----------- ----------- ----------
Realized gain (loss) on investments.. 2,598,378 (787,487) 1,235,487 652,209
Change in unrealized gain (loss)
on investments...................... 756,420 965,697 (1,000,830) 250,851
---------- ----------- ----------- ----------
Net gain (loss) on investments....... 3,354,798 178,210 234,657 903,060
---------- ----------- ----------- ----------
Reinvested capital gains............... 478,555 - 500,011 507,144
---------- ----------- ----------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations......... 3,693,446 64,269 626,968 1,376,538
---------- ----------- ----------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 574,894 3,669,854 1,669,251 5,926,331
Transfers between funds................ 745,285 (266,510) 217,154 1,236,248
Redemptions............................ (2,216,287) (660,591) (1,581,603) (1,081,832)
Annuity benefits ...................... (2,123) (369) - -
Adjustments to maintain reserves....... 162 (484) 3 50
---------- ----------- ----------- ----------
Net equity transactions............ (898,069) 2,741,900 304,805 6,080,797
---------- ----------- ----------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 2,795,377 2,806,169 931,773 7,457,335
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD............................. 8,771,862 5,965,693 13,194,413 5,737,078
---------- ----------- ----------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 11,567,239 8,771,862 14,126,186 13,194,413
========== =========== =========== ==========
</TABLE>
(Continued)
<PAGE> 11
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NBAMTGro NBAMTGuard
------------------------------ -----------------------------
1999 1998 1999 1998
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - - 2,390 -
Mortality, expense and administration
charges (note 2)..................... (33,251) (24,594) (16,802) (4,269)
-------------- ------------- ----------- -----------
Net investment activity.............. (33,251) (24,594) (14,412) (4,269)
-------------- ------------- ----------- -----------
Proceeds from mutual fund shares sold.. 4,382,982 2,684,965 3,617,122 1,888,089
Cost of mutual fund shares sold........ (4,081,950) (2,990,491) (3,544,186) (2,041,785)
-------------- ------------- ----------- -----------
Realized gain (loss) on investments.. 301,032 (305,526) 72,936 (153,696)
Change in unrealized gain (loss)
on investments....................... 817,823 218,132 (2,868) 72,266
-------------- ------------- ----------- -----------
Net gain (loss) on investments....... 1,118,855 (87,394) 70,068 (81,430)
-------------- ------------- ----------- -----------
Reinvested capital gains............... 102,839 353,652 - -
-------------- ------------- ----------- -----------
Net increase (decrease) in
contract owners' equity
resulting from operations...... 1,188,443 241,664 55,656 (85,699)
-------------- ------------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 98,067 955,194 61,911 357,425
Transfers between funds................ 2,645,469 862,118 1,389,926 438,620
Redemptions............................ (335,675) (221,438) (463,097) (18,761)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... 54 (1) (8) (6)
-------------- ------------- ----------- -----------
Net equity transactions............ 2,407,915 1,595,873 988,732 777,278
-------------- ------------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 3,596,358 1,837,537 1,044,388 691,579
CONTRACT OWNERS' EQUITY BEGINNING OF
PERIOD................................. 3,260,519 1,422,982 691,579 -
-------------- ------------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 6,856,877 3,260,519 1,735,967 691,579
============== ============= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NBAMTLMat NBAMTPart
--------------------------- ---------------------------
1999 1998 1999 1998
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 473,933 383,662 291,657 51,137
Mortality, expense and administration
charges (note 2)..................... (105,699) (100,735) (260,080) (292,955)
--------- ----------- ---------- ----------
Net investment activity.............. 368,234 282,927 31,577 (241,818)
--------- ----------- ---------- ----------
Proceeds from mutual fund shares sold.. 4,896,009 4,392,774 18,568,349 31,975,759
Cost of mutual fund shares sold........ (5,107,339) (4,372,745) (17,653,457) (33,531,240)
--------- ----------- ---------- ----------
Realized gain (loss) on investments.. (211,330) 20,029 914,892 (1,555,481)
Change in unrealized gain (loss)
on investments....................... (162,778) (115,698) (685,018) 125,336
--------- ----------- ---------- ----------
Net gain (loss) on investments....... (374,108) (95,669) 229,874 (1,430,145)
--------- ----------- ---------- ----------
Reinvested capital gains............... - - 507,229 1,610,813
--------- ----------- ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations...... (5,874) 187,258 768,680 (61,150)
--------- ----------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 817,903 5,590,575 1,170,383 8,523,714
Transfers between funds................ (2,291,304) (2,604,986) (11,477,114) (492,756)
Redemptions............................ (1,888,599) (726,206) (2,037,854) (1,718,726)
Annuity benefits ...................... - - (1,792) (369)
Adjustments to maintain reserves....... (12) 16 (92) (2,241)
--------- ----------- ---------- ----------
Net equity transactions............ (3,362,012) 2,259,399 (12,346,469) 6,309,622
--------- ----------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (3,367,886) 2,446,657 (11,577,789) 6,248,472
CONTRACT OWNERS' EQUITY BEGINNING OF
PERIOD................................. 8,908,547 6,461,890 24,609,788 18,361,316
--------- ----------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 5,540,661 8,908,547 13,031,999 24,609,788
========= =========== ========== ===========
</TABLE>
<PAGE> 12
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
OppBdFd OppGLSec
---------------------------- ----------------------------
1999 1998 1999 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ 521,048 95,707 113,678 117,153
Mortality, expense and administration
charges (note 2)..................... (142,663) (113,685) (147,760) (101,065)
------------- ------------- ----------- -----------
Net investment activity.............. 378,385 (17,978) (34,082) 16,088
------------- ------------- ----------- -----------
Proceeds from mutual fund shares sold.. 4,950,607 2,568,684 25,522,876 3,307,812
------------- ------------- ----------- -----------
Cost of mutual fund shares sold........ (5,075,215) (2,486,541) (22,308,190) (2,953,078)
Realized gain (loss) on investments.. (124,608) 82,143 3,214,686 354,734
Change in unrealized gain (loss)
on investments....................... (593,132) 229,678 908,671 225,573
------------- ------------- ----------- -----------
Net gain (loss) on investments....... (717,740) 311,821 4,123,357 580,307
------------- ------------- ----------- -----------
Reinvested capital gains............... 50,039 86,615 318,556 440,985
------------- ------------- ----------- -----------
Net increase (decrease) in
contract owners' equity
resulting from operations...... (289,316) 380,458 4,407,831 1,037,380
------------- ------------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 1,008,386 4,816,861 664,356 4,409,750
Transfers between funds................ (1,563,027) 2,107,953 (2,467,451) 722,373
Redemptions............................ (1,386,958) (836,169) (1,700,498) (597,013)
Annuity benefits ...................... - - (3,102) (555)
Adjustments to maintain reserves....... (41) 22 (2,033) (259)
------------- ------------- ----------- -----------
Net equity transactions............ (1,941,640) 6,088,667 (3,508,728) 4,534,296
------------- ------------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (2,230,956) 6,469,125 899,103 5,571,676
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 10,724,612 4,255,487 9,946,491 4,374,815
------------- ------------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 8,493,656 10,724,612 10,845,594 9,946,491
============= ============= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
OppGro OppMult
---------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 13,874 1,770 165,810 32,207
Mortality, expense and administration
charges (note 2)..................... (60,967) (9,900) (72,453) (63,381)
----------- ------------ ----------- ----------
Net investment activity.............. (47,093) (8,130) 93,357 (31,174)
----------- ------------ ----------- ----------
Proceeds from mutual fund shares sold.. 7,813,912 327,310 1,160,615 1,047,503
Cost of mutual fund shares sold........ (7,382,900) (334,321) (1,178,405) (1,009,629)
----------- ------------ ----------- ----------
Realized gain (loss) on investments.. 431,012 (7,011) (17,790) 37,874
Change in unrealized gain (loss)
on investments....................... 1,015,040 172,182 163,061 (44,041)
----------- ------------ ----------- ----------
Net gain (loss) on investments....... 1,446,052 165,171 145,271 (6,167)
----------- ------------ ----------- ----------
Reinvested capital gains............... 152,407 21,359 239,845 186,801
----------- ------------ ----------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations...... 1,551,366 178,400 478,473 149,460
----------- ------------ ----------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 286,263 677,648 320,580 1,721,887
Transfers between funds................ 7,500,359 449,508 (172,557) 355,122
Redemptions............................ (632,389) (41,990) (306,699) (500,624)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... 64 2 15 5
----------- ------------ ----------- ----------
Net equity transactions............ 7,154,297 1,085,168 (158,661) 1,576,390
----------- ------------ ----------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 8,705,663 1,263,568 319,812 1,725,850
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 1,405,954 142,386 4,950,413 3,224,563
----------- ------------ ----------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 10,111,617 1,405,954 5,270,225 4,950,413
=========== ============ =========== ==========
</TABLE>
(Continued)
<PAGE> 13
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
StOpp2 StDisc2
------------------------------- ----------------------------
1999 1998 1999 1998
-------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. $ - 22,334 - -
Mortality, expense and administration
charges (note 2)..................... (124,119) (131,492) (15,568) (17,066)
-------------- ------------- ----------- -----------
Net investment activity.............. (124,119) (109,158) (15,568) (17,066)
-------------- ------------- ----------- -----------
Proceeds from mutual fund shares sold.. 8,946,725 11,862,831 1,476,638 1,375,858
Cost of mutual fund shares sold........ (8,374,877) (10,831,437) (1,758,063) (1,352,631)
-------------- ------------- ----------- -----------
Realized gain (loss) on investments.. 571,848 1,031,394 (281,425) 23,227
Change in unrealized gain (loss)
on investments....................... 1,190,733 (689,209) 133,521 43,397
-------------- ------------- ----------- -----------
Net gain (loss) on investments....... 1,762,581 342,185 (147,904) 66,624
-------------- ------------- ----------- -----------
Reinvested capital gains............... 835,183 1,068,077 148,014 17,503
-------------- ------------- ----------- -----------
Net increase (decrease) in
contract owners' equity
resulting from operations......... 2,473,645 1,301,104 (15,458) 67,061
-------------- ------------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 444,100 4,070,443 117,799 408,343
Transfers between funds................ (679,844) (7,922,848) 19,118 (332,842)
Redemptions............................ (1,033,325) (1,027,921) (98,431) (105,073)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... (120) 62 (5) -
-------------- ------------- ----------- -----------
Net equity transactions............ (1,269,189) (4,880,264) 38,481 (29,572)
-------------- ------------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 1,204,456 (3,579,160) 23,023 37,489
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD............................... 9,715,041 13,294,201 1,138,651 1,101,162
-------------- ------------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 10,919,497 9,715,041 1,161,674 1,138,651
============== ============= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
StIntStk2 VEWrldBd
--------------------------- ---------------------------
1999 1998 1999 1998
------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .................. 5,672 30,032 81,369 17,723
Mortality, expense and administration
charges (note 2)..................... (16,846) (32,452) (25,927) (34,838)
---------- ----------- ---------- ----------
Net investment activity.............. (11,174) (2,420) 55,442 (17,115)
---------- ----------- ---------- ----------
Proceeds from mutual fund shares sold.. 2,852,318 3,587,363 1,765,448 3,158,808
Cost of mutual fund shares sold........ (2,754,634) (3,904,675) (1,901,067) (2,907,439)
---------- ----------- ---------- ----------
Realized gain (loss) on investments.. 97,684 (317,312) (135,619) 251,369
Change in unrealized gain (loss)
on investments....................... 698,798 414,317 (140,532) 32,925
---------- ----------- ---------- ----------
Net gain (loss) on investments....... 796,482 97,005 (276,151) 284,294
---------- ----------- ---------- ----------
Reinvested capital gains............... - - 36,356 -
---------- ----------- ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations......... 785,308 94,585 (184,353) 267,179
---------- ----------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 38,563 728,870 136,369 514,516
Transfers between funds................ 213,338 (2,029,890) (293,384) (16,366)
Redemptions............................ (180,494) (309,814) (331,319) (499,763)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... 91 13 (14) 32
---------- ----------- ---------- ----------
Net equity transactions............ 71,498 (1,610,821) (488,348) (1,581)
---------- ----------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 856,806 (1,516,236) (672,701) 265,598
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD............................... 1,375,282 2,891,518 2,197,517 1,931,919
---------- ----------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 2,232,088 1,375,282 1,524,816 2,197,517
========== =========== ========== ==========
</TABLE>
<PAGE> 14
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
VEWrtdEMkt VEWrldHAs
------------------------------ ---------------------------
1999 1998 1999 1998
------------- ------------- ------------- -----------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .................. $ - 11,626 11,193 12,719
Mortality, expense and administration
charges (note 2)..................... (27,585) (17,849) (12,533) (17,337)
------------- ------------ ---------- ----------
Net investment activity.............. (27,585) (6,223) (1,340) (4,618)
------------- ------------ ---------- ----------
Proceeds from mutual fund shares sold.. 23,213,607 2,802,893 10,966,956 4,026,414
Cost of mutual fund shares sold........ (21,979,207) (3,745,736) (10,867,727) (4,792,158)
------------- ------------ ---------- ----------
Realized gain (loss) on investments.. 1,234,400 (942,843) 99,229 (765,744)
Change in unrealized gain (loss)
on investments....................... 331,043 435,520 56,098 52,953
------------- ------------ ---------- ----------
Net gain (loss) on investments....... 1,565,443 (507,323) 155,327 (712,791)
------------- ------------ ---------- ----------
Reinvested capital gains............... - 10,334 - 312,331
------------- ------------ ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations........ 1,537,858 (503,212) 153,987 (405,078)
------------- ------------ ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 69,563 424,278 6,977 107,275
Transfers between funds................ 307,194 (249,999) 259,623 (196,342)
Redemptions............................ (424,926) (143,026) (347,806) (71,688)
Annuity benefits ...................... (444) - - -
Adjustments to maintain reserves....... (3,448) 209 40 (938)
------------ ----------- ---------- ----------
Net equity transactions............ (52,061) 31,462 (81,166) (161,693)
------------ ----------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 1,485,797 (471,750) 72,821 (566,771)
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 1,071,134 1,542,884 880,479 1,447,250
------------ ----------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... 2,556,931 1,071,134 953,300 880,479
============ =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
MSRESec WPIntEq
--------------------------- ---------------------------
1999 1998 1999 1998
------------ ------------ ------------- ----------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .................. 340,255 12,621 48,337 36,266
Mortality, expense and administration
charges (note 2)..................... (71,206) (107,856) (92,799) (109,346)
---------- ------------ ---------- ----------
Net investment activity.............. 269,049 (95,235) (44,462) (73,080)
---------- ------------ ---------- ----------
Proceeds from mutual fund shares sold.. 5,267,954 4,004,520 121,571,814 19,997,179
Cost of mutual fund shares sold........ (6,311,116) (4,232,713) (118,098,969) (20,633,499)
---------- ------------ ---------- ----------
Realized gain (loss) on investments.. (1,043,162) (228,193) 3,472,845 (636,320)
Change in unrealized gain (loss)
on investments....................... 578,992 (858,233) 208,844 1,103,564
---------- ------------ ---------- ----------
Net gain (loss) on investments....... (464,170) (1,086,426) 3,681,689 467,244
---------- ------------ ---------- ----------
Reinvested capital gains............... - 124,195 - -
---------- ------------ ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations........ (195,121) (1,057,466) 3,637,227 394,164
---------- ------------ ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 464,089 2,531,387 255,046 1,577,242
Transfers between funds................ (1,991,821) (1,647,687) (4,300,319) (2,035,796)
Redemptions............................ (975,564) (700,428) (775,556) (634,936)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... (13) (83) 350 60
---------- ------------ ---------- ----------
Net equity transactions............ (2,503,309) 183,189 (4,820,479) (1,093,430)
---------- ------------ ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... (2,698,430) (874,277) (1,183,252) (699,266)
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD.............................. 6,560,195 7,434,472 6,610,263 7,309,529
---------- ------------ ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 3,861,765 6,560,195 5,427,011 6,610,263
========== ============ ============== ==========
</TABLE>
(Continued)
<PAGE> 15
NATIONWIDE VA SEPARATE ACCOUNT-B
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
WPPVenCap WPSmCoGr
------------------------------- ----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends .................. $ - - - -
Mortality, expense and administration
charges (note 2)..................... (11,527) (10,924) (125,563) (136,302)
------------ ---------- ---------- ----------
Net investment activity.............. (11,527) (10,924) (125,563) (136,302)
------------ ---------- ---------- ----------
Proceeds from mutual fund shares sold.. 1,006,340 2,171,632 6,841,103 4,207,436
Cost of mutual fund shares sold........ (858,818) (2,299,785) (6,977,394) (3,696,720)
------------ ---------- ---------- ----------
Realized gain (loss) on investments.. 147,522 (128,153) (136,291) 510,716
Change in unrealized gain (loss)
on investments....................... 314,974 98,230 4,724,714 (683,979)
------------ ---------- ---------- ----------
Net gain (loss) on investments....... 462,496 (29,923) 4,588,423 (173,263)
------------ ---------- ---------- ----------
Reinvested capital gains............... - - 348,393 -
------------ ---------- ---------- ----------
Net increase (decrease) in
contract owners' equity
resulting from operations........ 450,969 (40,847) 4,811,253 (309,565)
------------ ---------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners...................... 55,830 201,805 402,863 2,381,399
Transfers between funds................ 246,879 275,542 392,300 1,015,890
Redemptions............................ (135,795) (64,812) (1,598,954) (800,217)
Annuity benefits ...................... - - - -
Adjustments to maintain reserves....... 35 6 297 (45)
------------ ---------- ---------- ----------
Net equity transactions............ 166,949 412,541 (803,494) 2,597,027
------------ ---------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY.... 617,918 371,694 4,007,759 2,287,462
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD............................... 886,812 515,118 10,973,897 8,686,435
------------ ---------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD.... $ 1,504,730 886,812 14,981,656 10,973,897
============ ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 16
--------------------------------------------------------------------------------
NATIONWIDE VA SEPARATE ACCOUNT-B
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide VA Separate Account-B (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
and Annuity Insurance Company (the Company) on March 6, 1991. The
Account has been registered as a unit investment trust under the
Investment Company Act of 1940.
The Company offers tax qualified and non-tax qualified Individual
Deferred Variable Annuity Contracts through the Account. The primary
distribution for the contracts is through the brokerage community;
however, other distributors are utilized.
(b) The Contracts
Only contracts without a sales charge, but with certain other fees are
offered for purchase. See note 2 for a discussion of contract
expenses.
Contract owners in either the accumulation or payout phase may invest
in the following:
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP)
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)
Portfolio 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> 17
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
Nationwide SAT - Small Company Fund (NSATSmCo)
Nationwide SAT - Total Return Fund (NSATTotRe)
Portfolios of the Neuberger & Berman Advisers Management Trust
(Neuberger &Berman AMT);
Neuberger & Berman AMT - Growth Portfolio (NBAMTGro)
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
Neuberger & Berman AMT - Limited Maturity Bond Portfolio
(NBAMTLMat)
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
Funds of the Oppenheimer Variable Account Funds (Oppenheimer
VAF);
Oppenheimer VAF - 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
(MSRESec)
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, contract owners have invested in all of the
above funds. The contract owners' equity is affected by the investment
results of each fund, equity transactions by contract owners and
certain contract expenses (see note 2).
The accompanying financial statements include only contract owners'
purchase payments pertaining to the variable portions of their
contracts and exclude any purchase payments for fixed dollar benefits,
the latter being included in the accounts of the Company.
A contract owner may choose from among a number of different
underlying mutual fund options. The underlying mutual fund options are
not available to the general public directly. The underlying mutual
funds are available as investment options in variable life insurance
policies or variable annuity contracts issued by life insurance
companies or, in some cases, through participation in certain
qualified pension or retirement plans.
<PAGE> 18
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.
(f) Calculation of Annuity Reserves
Annuity reserves are computed for contracts in the variable payout
stage according to industry standard mortality tables. The assumed
investment return is 3.5 percent unless the annuitant elects
otherwise, in which case the rate may vary from 3.5 percent to 7
percent, as regulated by the laws of the respective states. The
mortality risk is fully borne by the Company and may result in
additional amounts being transferred into the Account by the Company
to cover greater longevity of annuitants than expected. Conversely, if
reserves exceed amounts required, transfers may be made to the
Company.
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments made for
these contracts, nor is any sales charge deducted upon the surrender of the
contract.
The following contract charges are deducted by the Company: a mortality
risk charge, an expense risk charge and an administration charge assessed
through the daily unit value calculation equal to an annual rate of 0.80%,
0.45% and 0.20%, respectively.
(3) 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.
(Continued)
<PAGE> 19
NATIONWIDE VA SEPARATE ACCOUNT-B
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(4) 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>
American Century VP -
American Century VP Balanced:
Tax qualified................................. 82,782 $ 15.354284 $ 1,271,058 8%
Non-tax qualified............................. 189,028 15.354284 2,902,390 8%
American Century VP -
American Century VP Capital Appreciation:
Tax qualified................................. 81,461 13.968271 1,137,869 62%
Non-tax qualified............................. 180,077 13.968271 2,515,364 62%
American Century VP -
American Century VP Income & Growth:
Tax qualified................................. 81,894 12.578672 1,030,118 16%
Non-tax qualified............................. 175,785 12.578672 2,211,142 16%
American Century VP -
American Century VP International:
Tax qualified................................. 308,447 24.650510 7,603,376 62%
Non-tax qualified............................. 669,655 24.650510 16,507,337 62%
American Century VP -
American Century VP Value:
Tax qualified................................. 45,365 12.719374 577,014 (2)%
Non-tax qualified............................. 121,969 12.719374 1,551,369 (2)%
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified................................. 132,996 23.591580 3,137,586 28%
Non-tax qualified............................. 186,945 23.591580 4,410,328 28%
Dreyfus Stock Index Fund:
Tax qualified................................. 961,845 22.914747 22,040,435 19%
Non-tax qualified............................. 1,695,985 22.914747 38,863,067 19%
Dreyfus VIF - Capital Appreciation Portfolio:
Tax qualified................................. 110,872 14.356471 1,591,731 10%
Non-tax qualified............................. 249,980 14.356471 3,588,831 10%
Dreyfus VIF - Growth and Income Portfolio:
Tax qualified................................. 107,460 14.517630 1,560,065 15%
Non-tax qualified............................. 159,751 14.517630 2,319,206 15%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified................................. 635,675 15.949005 10,138,384 5%
Non-tax qualified............................. 1,462,720 15.949005 23,328,929 5%
Fidelity VIP - Growth Portfolio:
Tax qualified................................. 597,032 25.054513 14,958,346 35%
Non-tax qualified............................. 1,206,843 25.054513 30,236,864 35%
Fidelity VIP - High Income Portfolio:
Tax qualified................................. 817,781 12.783993 10,454,507 7%
Non-tax qualified............................. 1,453,586 12.783993 18,582,633 7%
Fidelity VIP - Overseas Portfolio:
Tax qualified................................. 159,451 18.743279 2,988,635 41%
Non-tax qualified............................. 275,154 18.743279 5,157,288 41%
Fidelity VIP-II - Asset Manager Portfolio:
Tax qualified................................. 212,828 16.279126 3,464,654 9%
Non-tax qualified............................. 527,408 16.279126 8,585,741 9%
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN*
-------- ---------- -------
<S> <C> <C> <C> <C>
Fidelity VIP-II - Contrafund Portfolio:
Tax qualified................................ 451,477 22.675266 10,237,361 22%
Non-tax qualified............................ 1,056,444 22.675266 23,955,149 22%
Fidelity VIP-III -
Growth Opportunities Portfolio:
Tax qualified................................ 267,657 13.786395 3,690,025 3%
Non-tax qualified............................ 1,222,441 13.786395 16,853,054 3%
Morgan Stanley -
Emerging Markets Debt Portfolio:
Tax qualified................................ 4,911 8.822360 43,327 28%
Non-tax qualified............................ 16,937 8.822360 149,424 28%
Nationwide SAT - Capital Appreciation Fund:
Tax qualified................................ 252,002 20.760238 5,231,621 3%
Non-tax qualified............................ 448,548 20.760238 9,311,963 3%
Nationwide SAT - Government Bond Fund:
Tax qualified................................ 440,246 11.329778 4,987,889 (4)%
Non-tax qualified............................ 933,705 11.329778 10,578,670 (4)%
Nationwide SAT - Money Market Fund:
Tax qualified................................ 3,422,604 11.482780 39,301,009 3%
Non-tax qualified............................ 4,992,397 11.482780 57,326,596 3%
Nationwide SAT - Small Cap Value Fund:
Tax qualified................................ 38,232 10.734023 410,383 26%
Non-tax qualified............................ 103,753 10.734023 1,113,687 26%
Nationwide SAT - Small Company Fund:
Tax qualified................................ 186,506 19.856438 3,703,345 42%
Non-tax qualified............................ 395,269 19.856438 7,848,634 42%
Nationwide SAT - Total Return Fund:
Tax qualified................................ 298,326 18.207860 5,431,878 5%
Non-tax qualified............................ 477,503 18.207860 8,694,308 5%
Neuberger & Berman AMT - Growth Portfolio:
Tax qualified................................ 88,327 22.462268 1,984,025 48%
Non-tax qualified............................ 216,935 22.462268 4,872,852 48%
Neuberger & Berman AMT - Guardian Portfolio:
Tax qualified................................ 56,195 10.503255 590,230 13%
Non-tax qualified............................ 109,084 10.503255 1,145,737 13%
Neuberger & Berman AMT -
Limited Maturity Bond Portfolio:
Tax qualified................................ 163,757 11.049212 1,809,386 0%
Non-tax qualified............................ 337,696 11.049212 3,731,275 0%
Neuberger & Berman AMT - Partners Portfolio:
Tax qualified................................ 232,129 17.216794 3,996,517 6%
Non-tax qualified............................ 524,280 17.216794 9,026,421 6%
Oppenheimer VAF - Bond Fund:
Tax qualified................................ 186,021 11.316334 2,105,076 (3)%
Non-tax qualified............................ 564,545 11.316334 6,388,580 (3)%
Oppenheimer VAF - Global Securities Fund:
Tax qualified................................ 159,473 23.791512 3,794,104 56%
Non-tax qualified............................ 295,526 23.791512 7,031,010 56%
</TABLE>
(Continued)
<PAGE> 21
NATIONWIDE VA SEPARATE ACCOUNT-B
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
ANNUAL
UNITS UNIT VALUE RETURN*
-------- ---------- -------
<S> <C> <C> <C> <C>
Oppenheimer VAF - Growth Fund:
Tax qualified................................ 234,519 17.777418 4,169,142 40%
Non-tax qualified............................ 334,271 17.777418 5,942,475 40%
Oppenheimer VAF - Multiple Strategies Fund:
Tax qualified................................ 79,147 14.888567 1,178,385 10%
Non-tax qualified............................ 274,831 14.888567 4,091,840 10%
Strong Opportunity Fund II, Inc.:
Tax qualified................................ 134,958 20.820776 2,809,930 33%
Non-tax qualified............................ 389,494 20.820776 8,109,567 33%
Strong VIF - Strong Discovery Fund II:
Tax qualified................................ 29,325 11.900815 348,991 4%
Non-tax qualified............................ 68,288 11.900815 812,683 4%
Strong VIF -
Strong International Stock Fund II:
Tax qualified................................ 39,778 15.437256 614,063 84%
Non-tax qualified............................ 104,813 15.437256 1,618,025 84%
Van Eck WIT - Worldwide Bond Fund:
Tax qualified................................ 50,966 10.378690 528,960 (9)%
Non-tax qualified............................ 95,952 10.378690 995,856 (9)%
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified................................ 62,813 11.248273 706,538 97%
Non-tax qualified............................ 163,791 11.248273 1,842,366 97%
Van Eck WIT - Worldwide Hard Assets Fund:
Tax qualified................................ 36,070 7.964538 287,281 19%
Non-tax qualified............................ 83,623 7.964538 666,019 19%
Van Kampen LIT-
Morgan Stanley Real Estate Securities Portfolio:
Tax qualified................................ 77,061 13.529402 1,042,589 (5)%
Non-tax qualified............................ 208,374 13.529402 2,819,176 (5)%
Warburg Pincus Trust -
International Equity Portfolio:
Tax qualified................................ 105,810 15.803207 1,672,137 51%
Non-tax qualified............................ 237,602 15.803207 3,754,874 51%
Warburg Pincus Trust -
Post Venture Capital Portfolio:
Tax qualified................................ 20,260 19.199834 388,989 61%
Non-tax qualified............................ 58,112 19.199834 1,115,741 61%
Warburg Pincus Trust -
Small Company Growth Portfolio:
Tax qualified................................ 179,183 20.420490 3,659,005 67%
Non-tax qualified............................ 554,475 20.420490 11,322,651 67%
======== =========
Reserve for annuity contracts in payout phase:
Tax qualified ............................... 68,791
Non-tax qualified ........................... 48,622
-----------
$ 558,672,499
===========
</TABLE>
* The annual return does not include contract charges satisfied by
surrendering units.
--------------------------------------------------------------------------------
<PAGE> 75
<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> 76
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) All financial statements are included in Parts A and
B of the Registration Statement.
(1) Financial statements included in Prospectus.
(Part A):
Condensed Financial Information.
in Part B:
Those financial statements required by Item 23 to
be included in Part B have been incorporated
therein by reference to the Prospectus (Part A).
Nationwide VA Separate Account-B:
Independent Auditors' Report.
Statement of Assets, Liabilities and Contract
Owners' Equity as of December 31, 1999.
Statement of Operations for the years
ended December 31, 1999 and 1998.
Statement of Changes in Contract
Owners' Equity for the years ended
December 31, 1999 and 1998.
Notes to Financial Statements.
Nationwide Life and Annuity Insurance Company:
Independent Auditors' Report.
Consolidated Balance Sheets as of December
31, 1999 and 1998.
Consolidated Statements of Income for the years
ended December 31, 1999, 1998 and 1997.
Consolidated Statements of Shareholder's Equity
for the years ended December 31, 1999, 1998 and
1997.
Consolidated Statements of Cash Flows for the
years ended December 31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
9
<PAGE> 77
<TABLE>
<CAPTION>
<S> <C>
(b) Exhibits
(1) Resolution of the Depositor's Board of *
Directors authorizing the establishment of
the Registrant.
(2) Not Applicable *
(3) Underwriting or Distribution of contracts **
between the Registrant and Principal
Underwriter.
(4) The form of the variable annuity contract *
(5) Variable Annuity Application- Attached hereto.
(6) Articles of Incorporation of Depositor - *
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel *
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Performance Advertising Calculation *
Schedule.
</TABLE>
*Filed previously in connection with this registration statement
(SEC File No. 33-86408) on November 14, 1994, and hereby
incorporated by reference.
**Filed previously with Post-Effective Amendment - 10 and hereby
incorporated by reference (SEC File No. 33-86408).
<PAGE> 78
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Lewis J. Alphin Director
519 Bethel Church Road
Mount Olive, NC 28365-6107
A. I. Bell Director
4121 North River Road West
Zanesville, OH 43701
Kenneth D. Davis Director
7229 Woodmansee Road
Leesburg, OH 45135
Keith W. Eckel Director
1647 Falls Road
Clarks Summit, PA 18411
Willard J. Engel Director
301 East Marshall Street
Marshall, MN 56258
Fred C. Finney Director
1558 West Moreland Road
Wooster, OH 44691
Joseph J. Gasper President and Chief Operating Officer
One Nationwide Plaza and Director
Columbus, OH 43215
Dimon R. McFerson Chairman and Chief Executive Officer
One Nationwide Plaza and Director
Columbus, OH 43215
David O. Miller Chairman of the Board and Director
115 Sprague Drive
Hebron, OH 43025
Yvonne L. Montgomery Director
Xerox Corporation
Suite 200
1401 H Street NW
Washington, DC 20005-2110
Ralph M. Paige Director
Federation of Southern
Cooperatives/Land Assistance Fund
2769 Church Street
East Point, GA 30344
James F. Patterson Director
8765 Mulberry Road
Chesterland, OH 44026
</TABLE>
<PAGE> 79
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
Arden L. Shisler Director
1356 North Wenger Road
Dalton, OH 44618
Robert L. Stewart Director
88740 Fairview Road
Jewett, OH 43986
Nancy C. Thomas Director
1767D Westwood Avenue
Alliance, OH 44601
Richard D. Headley Executive Vice President - Chief
One Nationwide Plaza Information Technology Officer
Columbus, OH 43215
Robert A. Oakley Executive Vice President-
One Nationwide Plaza Chief Financial Officer
Columbus, OH 43215
Robert J. Woodward, Jr. Executive Vice President
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
James E. Brock Senior Vice President - Corporate
One Nationwide Plaza Development
Columbus, OH 43215
Charles A. Bryan Senior Vice President -
One Nationwide Plaza Chief Actuary - Property and Casualty
Columbus, OH 43215
John R. Cook, Jr. Senior Vice President -
One Nationwide Plaza Chief Communications Officer
Columbus, OH 43215
David A. Diamond Senior Vice President -
One Nationwide Plaza Corporate Controller
Columbus, OH 43215
Philip C. Gath Senior Vice President -
One Nationwide Plaza Chief Actuary - Nationwide Financial
Columbus, OH 43215
Patricia R. Hatler Senior Vice President,
One Nationwide Plaza General Counsel and Secretary
Columbus, OH 43215
</TABLE>
<PAGE> 80
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
<S> <C>
David K. Hollingsworth Senior Vice President
One Nationwide Plaza
Columbus, OH 43215
David R. Jahn Senior Vice President -
One Nationwide Plaza Commercial Insurance
Columbus, OH 43215
Donna A James Senior Vice President - Chief Human
One Nationwide Plaza Resources Officer
Columbus, OH 43215
Richard A. Karas Senior Vice President - Sales -
One Nationwide Plaza Financial Services
Columbus, OH 43215
Gregory S. Lashutka Senior Vice President -
One Nationwide Plaza Corporate Relations
Columbus, OH 43215
Edwin P. McCausland, Jr. Senior Vice President -
One Nationwide Plaza Fixed Income Securities
Columbus, OH 43215
Mark D. Phelan Senior Vice President -
One Nationwide Plaza Technology Services
Columbus, OH 43215
Douglas C. Robinette Senior Vice President -
One Nationwide Plaza Claims and Finance Services
Columbus, OH 43215
Mark R. Thresher Senior Vice President -
One Nationwide Plaza Finance - Nationwide Financial
Columbus, OH 43215
Richard M. Waggoner Senior Vice President -
One Nationwide Plaza Operations
Columbus, OH 43215
Susan A. Wolken Senior Vice President - Product
One Nationwide Plaza Management and Nationwide
Columbus, OH 43215 Financial Marketing
</TABLE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
DEPOSITOR OR REGISTRANT.
* Subsidiaries for which separate financial statements
are filed
** Subsidiaries included in the respective consolidated
financial statements
*** Subsidiaries included in the respective group
financial statements filed for unconsolidated
subsidiaries
**** other subsidiaries
<PAGE> 81
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
The 401(k) Companies, Inc. Texas Holding Company
The 401(k) Company Texas Third-party administrator for 401(k)
plans
401(k) Investment Advisors, Inc. Texas Investment advisor registered with the
SEC
401(k) Investments Services, Inc. Texas NASD registered broker-dealer
Affiliate Agency, Inc. Delaware Insurance agency marketing life
insurance & annuity products through
financial institutions
Affiliate Agency of Ohio, Inc. Ohio Insurance agency marketing life
insurance & annuity products through
financial institutions
AID Finance Services, Inc. Iowa Holding Company
ALLIED General Agency Company Iowa Managing general agent and surplus
lines broker for property & casualty
insurance products
ALLIED Group, Inc. Iowa Property & casualty holding company
ALLIED Group Insurance Marketing Iowa Direct marketer for property and
Company casualty insurance products
ALLIED Group Merchant Banking Iowa Broker-Dealer
Corporation
ALLIED Property and Casualty Insurance Iowa Underwrites general property &
Company casualty insurance
Allnations, Inc. Ohio Promotes international cooperative
insurance organizations
AMCO Insurance Company Iowa Underwrites general property &
casualty insurance
American Marine Underwriters, Inc. Florida Underwriting manager for ocean cargo
and bulk insurance
Auto Direkt Insurance Company Germany Insurance Company
Cal-Ag Insurance services, Inc. California Captive insurance brokerage firm
CalFarm Insurance Agency California Former marketing company for
traditional agent producers of CalFarm
Insurance Company
CalFarm Insurance Company California Multi-line insurance company
Caliber Funding Delaware A limited purpose corporation
Colonial County Mutual Insurance Texas Insurance Company
Company
Columbus Insurance Brokerage and Germany General service insurance broker
Service GmbH
</TABLE>
<PAGE> 82
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Cooperative Service Company Nebraska Insurance agency that sells and
services commercial insurance
Depositors Insurance Company Iowa Underwrites property & casualty
insurance
eNationwide, LLC Ohio A limited liability company to provide
administrative services to
Nationwide's direct operations
Excaliber Funding Corporation Delaware Limited purpose corporation
F&B, Inc. Iowa Insurance Agency
Farmland Mutual Insurance Company Iowa Mutual Insurance Company
Financial Horizons Distributors Agency Alabama Insurance agency marketing life
of Alabama, Inc. insurance and annuity products through
financial institutions
Financial Horizons Distributors Agency Ohio Insurance marketing life insurance and
of Ohio, Inc. annuity products through financial
institutions
Financial Horizons Distributors Agency Oklahoma Insurance marketing life insurance and
of Oklahoma, Inc. annuity products through financial
institutions
Financial Horizons Distributors Agency Texas Insurance marketing life insurance and
of Texas, Inc. annuity products through financial
institutions
*Financial Horizons Investment Trust Massachusetts Diversified, open-end investment
company
Financial Horizons Securities Oklahoma Limited broker-dealer doing business
Corporation solely in the financial institution
market
GatesMcDonald Health Plus Inc. Ohio Managed Care Organization
Gates, McDonald & Company Ohio Services employers for managing
workers' and unemployment compensation
matters
Gates, McDonald & Company of Nevada Nevada Self-insurance administration, claims
examinations and data processing
services
Gates, McDonald & Company of New York, New York Workers' compensation/self-insured
Inc. claims administration services to
employers with exposure in New York
Insurance Intermediaries, Inc. Ohio Insurance agency providing commercial
property & casualty brokerage services
Irvin L. Schwartz and Associates, Inc. Ohio Insurance Agency
Landmark Financial Services of New New York Insurance agency marketing life
York, Inc. insurance and annuity products through
financial institutions
Leben Direkt Insurance Company Germany Life insurance through direct mail
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Lone Star General Agency, Inc. Texas General agent to market non-standard
automobile and motorcycle insurance
for Colonial Mutual Insurance Company
MedProSolutions, Inc. Massachusetts Provides third-party administration
services for workers compensation,
automobile injury and disability claims
Midwest Printing Services, Ltd. Iowa General printing services
Morley & Associates, Inc. Oregon Insurance brokerage
Morley Capital Management, Inc. Oregon Investment adviser and stable value
money management
Morley Financial Services, Inc. Oregon Holding Company
Morley Research Associates, Ltd. Delaware Credit research consulting
**MRM Investments, Inc. Ohio Owns and operates a recreational ski
facility
**National Casualty Company Wisconsin Insurance Company
National Casualty Company of America, England Insurance Company
Ltd.
National Deferred Compensation, Inc. Ohio Administers deferred compensation
plans for public employees
**National Premium and Benefit Delaware Provides third-party administration
Administration Company services
Nationwide Advisory Services, Inc. Ohio Registered broker-dealer providing
investment management and
administrative services
**Nationwide Agency, Inc. Ohio Insurance Agency
Nationwide Agribusiness Insurance Iowa Provides property & casualty insurance
Company primarily to agricultural business
Nationwide Arena, LLC Ohio A limited liability company related to
arena development
*Nationwide Asset Allocation Trust Ohio Diversified open-end investment company
Nationwide Assurance Company Wisconsin Underwrites non-standard automobile
and motorcycle insurance
Nationwide Cash Management Company Ohio Investment Securities Agent
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Nationwide Corporation Ohio Holding company for entities
affiliated with Nationwide Mutual
Insurance Company
Nationwide Exclusive Distribution Ohio A limited liability company providing
Company, LLC agency support services to Nationwide
exclusive agents
Nationwide Financial Assignment Company Ohio An assignment company to administer
structured settlement business
Nationwide Financial Institution Delaware Insurance Agency
Distributors Agency, Inc.
Nationwide Financial Institution New Mexico Insurance Agency
Distributors Agency, Inc. of New Mexico
Nationwide Financial Institution Massachusetts Insurance Agency
Distributors Agency, Inc. of
Massachusetts
Nationwide Financial Services Bermuda Long-term insurer which issued
(Bermuda) Ltd. variable annuity and variable life
products to persons outside the U.S. &
Bermuda
Nationwide Financial Services Capital Delaware Trust which issues and sells
Trust securities & uses proceeds to acquire
debentures
Nationwide Financial Services Capital Delaware Trust which issues and sells
Trust II securities & uses proceeds to acquire
debentures
Nationwide Financial Services, Inc. Delaware Holding Company for entities
associated with Nationwide Mutual
Insurance Company
Nationwide Foundation Ohio Not-for profit corporation
Nationwide General Insurance Company Ohio Primarily provides automobile and fire
insurance to select customers
Nationwide Global Finance, LLC Ohio Act as a support company for
Nationwide Global Holdings, Inc. & its
international capitalization efforts
Nationwide Global Funds Cayman Islands Exempted company with limited
liability for purpose of issuing
investment shares to segregated asset
accounts of Nationwide Financial
Services (Bermuda) Ltd. and to
non-U.S. resident investors
Nationwide Global Holdings, Inc. Ohio Holding Company for Nationwide
Insurance Enterprise international
operations
Nationwide Global Holdings, Inc.-NGH Grand Duchy of Analyze European market of life
Luxembourg Branch Luxembourg insurance
</TABLE>
<PAGE> 85
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C>
Nationwide Global Holdings-Hong Kong, Hong Kong Primarily a holding company for
Limited Nationwide Global Holdings, Inc. Asian
operations
Nationwide Global Holdings-NGH Brasil Brazil Holding company
Participacoes LTDA
Nationwide Health Plans, Inc. Ohio Health insuring organization
Nationwide Home Mortgage Company Iowa Mortgage lendor
*Nationwide Indemnity Company Ohio Reinsurance company assuming business
from Nationwide Mutual Insurance
Company and other insurers within the
Nationwide Insurance Enterprise
Nationwide Insurance Company of America Wisconsin Independent agency personal lines
underwriter of property & casualty
insurance
Nationwide Insurance Company of Florida Ohio Transacts general insurance business
except life insurance
Nationwide Insurance Golf Charities, Ohio Not-for-profit corporation
Inc.
Nationwide International Underwriters California Special risks, excess & surplus lines
underwriting manager
Nationwide Investing Foundation Michigan Provide investors with continuous
source of investment under management
of trustees
*Nationwide Investing Foundation II Massachusetts Diversified, open-end investment
company
Nationwide Investment Services Oklahoma Registered broker-dealer
Corporation
Nationwide Investors Services, Inc. Ohio Stock Transfer Agent
**Nationwide Life and Annuity Ohio Life Insurance Company
Insurance Company
**Nationwide Life Insurance Company Ohio Life Insurance Company
Nationwide Lloyds Texas Commercial property insurance in Texas
Nationwide Management Systems, Inc. Ohio Preferred provider organization,
products and related services
Nationwide Mutual Fire Insurance Ohio Mutual Insurance Company
Company
*Nationwide Mutual Funds Ohio Diversified, open-end investment
company
Nationwide Mutual Insurance Company Ohio Mutual Insurance Company
</TABLE>
<PAGE> 86
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Nationwide Properties, Ltd. Ohio Develop, own and operate real estate
and real estate investments
Nationwide Property and Casualty Ohio Insurance Company
Insurance Company
Nationwide Realty Investors, Inc. Ohio Develop, own and operate real estate
and real estate investments
Nationwide Retirement Solutions, Inc. Delaware Market and administer deferred
compensation plans for public employees
Nationwide Retirement Solutions, Inc. Alabama Market and administer deferred
of Alabama compensation plans for public employees
Nationwide Retirement Solutions, Inc. Arizona Market and administer deferred
of Arizona compensation plans for public employees
Nationwide Retirement Solutions, Inc. Arkansas Market and administer deferred
of Arkansas compensation plans for public employees
Nationwide Retirement Solutions, Inc. Montana Market and administer deferred
of Montana compensation plans for public employees
Nationwide Retirement Solutions, Inc. Nevada Market and administer deferred
of Nevada compensation plans for public employees
Nationwide Retirement Solutions, Inc. New Mexico Market and administer deferred
of New Mexico compensation plans for public employees
Nationwide Retirement Solutions, Inc. Ohio Market variable annuity contracts to
of Ohio members of the National Education
Association in the state of Ohio
Nationwide Retirement Solutions, Inc. Oklahoma Market variable annuity contracts to
of Oklahoma members of the National Education
Association in the state of Oklahoma
Nationwide Retirement Solutions, Inc. South Dakota Market and administer deferred
of South Dakota compensation plans for public employees
Nationwide Retirement Solutions, Inc. Texas Market and administer deferred
of Texas compensation plans for public employees
Nationwide Retirement Solutions, Inc. Wyoming Market variable annuity contracts to
of Wyoming members of the National Education
Association in the state of Wyoming
</TABLE>
<PAGE> 87
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
Nationwide Retirement Solutions Massachusetts Market and administer deferred
Insurance Agency Inc. compensation plans for public employees
Nationwide Seguradora S.A. Brazil Engage in elementary, health & life
insurance; private open pension and
wealth concession plans
*Nationwide Separate Account Trust Massachusetts Diversified, open-end investment
company
Nationwide Services Company, LLC. Ohio Single member limited liability
company performing shared services
functions for the Nationwide Insurance
Enterprise
Nationwide Trust Company, FSB United States Federal savings bank chartered by the
Office of Thrift Supervision in U.S.
Department of Treasury to exercise
custody & fiduciary powers
Neckura Holding Company Germany Administrative services for Neckura
Insurance Group
Neckura Insurance Company Germany Insurance Company
Neckura Life Insurance Company Germany Life and health insurance company
Nevada Independent Nevada Workers' compensation administrative
Companies-Construction services to Nevada employers in the
construction industry
Nevada Independent Companies-Health Nevada Workers' compensation administrative
and Nonprofit services to Nevada employers in health
& nonprofit industries
Nevada Independent Companies- Nevada Workers' compensation administrative
Hospitality and Entertainment services to Nevada employers in the
hospitality & entertainment industries
Nevada Independent Companies- Nevada Workers' compensation administrative
Manufacturing, Transportation and services to Nevada employers in the
Distribution manufacturing, transportation and
distribution industries
NFS Distributors, Inc. Delaware Holding company for Nationwide
Financial Services, Inc. distribution
companies
NGH Luxembourg, S.A Luxembourg Acts primarily as holding company for
Nationwide Global Holdings, Inc.
European operations
NGH Netherlands, B.V. The Netherlands Holding company for other overseas
companies
</TABLE>
<PAGE> 88
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
<S> <C> <C> <C>
NGH UK, Ltd. United Kingdom Assist Nationwide Global Holdings,
Inc. with European operations and
marketing
Northpointe Capital LLC Delaware Limited liability company for
investments
PanEuroLife Luxembourg Life Insurance company providing
individual life insurance primarily in
the UK, Belgium and France
Pension Associates, Inc. Wisconsin Pension plan administration and record
keeping services
Portland Investment Services, Inc. Oregon NASD registered broker-dealer
Premier Agency, Inc. Iowa Insurance Agency
Riverview Agency, Inc. Texas Has a pending application to become a
licensed insurance agency with the
Texas Department of Insurance
Scottsdale Indemnity Company Ohio Insurance Company
Scottsdale Insurance Company Ohio Insurance Company
Scottsdale Surplus Lines Insurance Arizona Provides excess and surplus lines
Company insurance coverage on a non-admitted
basis
SVM Sales GmbH, Neckura Insurance Group Germany Recruits and supervises external sales
partners who obtain new business for
the Neckura Group as well as to offer
financial services
Union Bond & Trust Company Oregon Oregon state bank with trust powers
Villanova Capital, Inc. Delaware Holding Company
Villanova Mutual Fund Capital Trust Delaware Trust designed to act as a registered
investment advisor
Villanova SA Capital Trust Delaware Trust designed to act as a registered
investment advisor
Western Heritage Insurance Company Arizona Underwrites excess and surplus lines
of property and casualty insurance
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
<S> <C> <C> <C>
* MFS Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* NACo Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide DC Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
Nationwide DCVA-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Separate Account No. 1 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Multi-Flex Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide VA Separate Account-A Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-B Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide VA Separate Account-C Ohio Nationwide Life and Annuity Issuer of Annuity Contracts
Separate Account
* Nationwide Variable Account Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-II Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-3 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-4 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-5 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-6 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Fidelity Advisor Variable Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account Account
* Nationwide Variable Account-8 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-9 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
* Nationwide Variable Account-10 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
Nationwide Variable Account-11 Ohio Nationwide Life Separate Issuer of Annuity Contracts
Account
</TABLE>
<PAGE> 90
<TABLE>
<CAPTION>
COMPANY STATE/COUNTRY OF NO. VOTING SECURITIES PRINCIPAL BUSINESS
ORGANIZATION (SEE ATTACHED CHART)
UNLESS OTHERWISE INDICATED
<S> <C> <C> <C>
* Nationwide VL Separate Account-A Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
Nationwide VL Separate Account-B Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
* Nationwide VL Separate Account-C Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
* Nationwide VL Separate Account -D Ohio Nationwide Life and Annuity Issuer of Life Insurance
Separate Account Policies
* Nationwide VLI Separate Account Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
* Nationwide VLI Separate Account-2 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
* Nationwide VLI Separate Account-3 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
* Nationwide VLI Separate Account-4 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
Nationwide VLI Separate Account-5 Ohio Nationwide Life Separate Issuer of Life Insurance
Account Policies
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
(left side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
------------------------
-------------------------------------------------------------------------------------------------------------------------
| |
--------------------------- --------------------------- ----------------------------
| CARIBBEAN ALLIANCE | | ALLIED | | |
| INSURANCE COMPANY | | GROUP, INC. | | |
| | | (AGI) | | NATIONWIDE LLOYDS |
| | | | | |
|Common Stock: 1,900,000 | |-------|Common Stock: 850 Shares |---| | |
|------------ Shares | | |------------ | | | A TEXAS LLOYDS |================================
| | | | | | | |
| Cost | | | Cost | | | |
| ---- | | | ---- | | | |
|Casualty- | | |Casualty- | | | |
|100% $19,000,000 | | |100% $1,243,344,521| | | |
--------------------------- | --------------------------- | ----------------------------
| |
--------------------------- | --------------------------- | ----------------------------
| NATIONWIDE INSURANCE | | | AMCO | | | DEPOSITORS |
| COMPANY OF AMERICA | | | INSURANCE COMPANY | | | INSURANCE COMPANY |
| | | | (AMCO) | | | (DEPOSITORS) |
|Common Stock: 12,000 | | |Common Stock: 500,000 | | |Common Stock: 300,000 |
|------------ Shares | | |------------ Shares | | |------------ Shares |
| |---| | |---|---| |
| Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- |
| | | | | | | |
|AGI-100% $215,273,000 | | |AGI-100% $147,425,540| | |AGI 100% $22,251,842 |
--------------------------- | --------------------------- | ----------------------------
| | |
--------------------------- | --------------------------- | ----------------------------
| AID FINANCE | | | ALLIED | | | ALLIED PROPERTY |
| SERVICES, INC. | | | GENERAL AGENCY | | | AND CASUALTY |
| (AID FINANCE) | | | COMPANY | | | INSURANCE COMPANY |
|Common Stock: 10,000 | | |Common Stock: 5,000 | | |Common Stock: 300,000 |
|------------ Shares | | |------------ Shares | | |------------ Shares |
| |---| | | |---| |
| Cost | | Cost | | | Cost |
| ---- | | ---- | | | ---- |
|AGI-100% $19,545,634| |AMCO-100% $135,342 | | |AGI-100% $47,018,643 |
--------------------------- --------------------------- | ----------------------------
| |
--------------------------- --------------------------- | ----------------------------
| ALLIED | | ALLIED | | | NATIONWIDE |
| GROUP INSURANCE | | DOCUMENT SOLUTIONS, | | | HOME MORTGAGE |
| MARKETING COMPANY | | INC. | | | COMPANY (NHMC) |
| | |Common Stock: 10,000 | | | |
|Common Stock: 20,000 | |------------ Shares | | |Common Stock: 54,348 |
|------------ Shares | | |---|---|------------ Shares |
| | | | | | |
| | | | | | |
| | | | | | |
| Cost | | Cost | | | |
| ---- | | ---- | | | |
| Aid | |AGI-100% $610,000 | | |AGI-80% |
| Finance-100% $16,059,469| --------------------------- | ----------------------------
-------------------------- | |
--------------------------- | ----------------------------
| PREMIER | | | AGMC |
| AGENCY, | | | REINSURANCE, LTD. |
| INC. | | | |
|Common Stock: 100,000 | | |Common Stock: 11,000 |
|------------ Shares | | |------------ Shares |
| |---| | |
| Cost | | Cost |
| ---- | | ---- |
|AGI-100% $100,000 | |NHMC-100% $11,000 |
--------------------------- ----------------------------
----------------------------
| WESTERN |
| HERITAGE INSURANCE |
| COMPANY |
| |
|Common Stock: 4,776,076 |--------------------------------
|------------- Shares |
| |
| Cost |
| ---- |
|SIC-100% $57,000,000 |
----------------------------
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
NATIONWIDE(R) (middle)
<S> <C> <C>
------------------------------------------ ------------------------------------------
| | | |
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |==============================================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | (FIRE) |
| | | |
------------------------------------------ ------------------------------------------
| || | |
--| || |--------------------------------------------------------------------| |-----------------------
|| |
|| |--------------------------------------------------------------|-------------------
|| | |
|| -------------------------------- | -------------------------------- -----------------------------------
|| | FARMLAND MUTUAL | | | NATIONWIDE GENERAL | | NECKURA HOLDING |
|| | INSURANCE COMPANY | | | INSURANCE COMPANY | | COMPANY (NECKURA) |
|| |Guaranty Fund | | | | | |
=====||==|------------ |---| | |Common Stock: 20,000 | |Common Stock: 10,000 |
|Certificate | | |---|------------ Shares | |--|------------ Shares |
|----------- | | | | | | | |
| Cost | | | | Cost | | | Cost |
| ---- | | | | ---- | | | ---- |
|Casualty $500,000 | | | |Casualty-100% $5,944,422 | | |Casualty-100% $142,943,140 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| F & B, INC. | | | | NATIONWIDE PROPERTY | | | NECKURA |
| | | | | AND CASUALTY | | | INSURANCE COMPANY |
|Common Stock: 1 Share | | | | INSURANCE COMPANY | | | |
|------------ | | | |Common Stock: 60,000 | |--|Common Stock: 6,000 |
| |---| |---|------------ Shares | | |------------ Shares |
| Cost | | | | | | | |
| ---- | | | | Cost | | | Cost |
|Farmland | | | | ---- | | | ---- |
|Mutual-100% $10 | | | |Casualty-100% $6,000,000 | | |Neckura-100% DM 6,000,000 |
-------------------------------- | | -------------------------------- | --------------------------------
| | |
-------------------------------- | | -------------------------------- | --------------------------------
| COOPERATIVE SERVICE | | | | NATIONWIDE ASSURANCE | | | NECKURA LIFE |
| COMPANY | | | | COMPANY | | | INSURANCE COMPANY |
|Common Stock: 600 Shares | | | | | | | |
|------------ |---- |---|Common Stock: 1,750 | |--|Common Stock: 4,000 |
| | | |------------ Shares | | |------------ Shares |
| Cost | | | | |
| ---- | | | Cost | | | Cost |
|Farmland | | | ---- | | | ---- |
|Mutual-100% $3,506,173 | | |Casualty-100% $41,750,000 | | |Neckura-100% DM 15,825,681|
-------------------------------- | -------------------------------- | --------------------------------
| |
-------------------------------- | -------------------------------- | --------------------------------
| SCOTTSDALE | | | NATIONWIDE AGRIBUSINESS | | | COLUMBUS INSURANCE |
| INSURANCE COMPANY | | | INSURANCE COMPANY | | | BROKERAGE AND SERVICE |
| (SIC) | | | | | | GmbH |
|Common Stock: 30,136 | | |Common Stock: 1,000,000 | | |Common Stock: 1 Share |
|---|------------ Shares |--------|---|------------ Shares | |--|------------ |
| | | | | | | | |
| | | | | Cost | | | Cost |
| | Cost | | | ---- | | | ---- |
| | ---- | | |Casualty-99.9% $26,714,335 | | |Neckura-100% DM 51,639 |
| |Casualty-100% $150,000,500 | | |Other Capital | | | |
| | | | |------------- | | | |
| | | | |Casualty-Ptd. $713,576 | | | |
| -------------------------------- | ------------------------------- | --------------------------------
| | |
| -------------------------------- | -------------------------------- | --------------------------------
| | SCOTTSDALE | | | NATIONAL CASUALTY | | | LEBEN DIREKT |
| | SURPLUS LINES | | | COMPANY | | | INSURANCE COMPANY |
| | INSURANCE COMPANY | | | (NC) | | | |
| |Common Stock: 10,000 | | | Common Stock: 100 Shares | | |Common Stock: 4,000 Shares |
|---|------------ Shares | |---| ------------- | |--|------------ |
| | | | | | | | |
| | Cost | | | Cost | | | Cost |
| | ---- | | | ---- | | | ---- |
| |SIC-100% $6,000,000 | | |Casualty-100% $67,442,439 | | |Neckura-100% DM 4,000,000 |
| | | | | | | | |
| -------------------------------- | -------------------------------- | --------------------------------
| | | |
| -------------------------------- | -------------------------------- | --------------------------------
| | NATIONAL PREMIUM & | | | NCC OF AMERICAN, LTD. | | | AUTO DIREKT |
| | BENEFIT ADMINISTRATION | | | (INACTIVE) | | | INSURANCE COMPANY |
| | COMPANY | | | | | | |
| |Common Stock: 10,000 | | | | | |Common Stock: 1500 Shares |
---|---|------------ Shares | | | | |--|------------ |
| | | | | | | |
| Cost | | | | | | Cost |
| ---- | | | | | | ---- |
|SIC-100% $10,000 | | |NC-100% | | |Neckura-100% DM 1,643,149 |
-------------------------------- | -------------------------------- | --------------------------------
| |
-------------------------------- | -------------------------------- | --------------------------------
| RP&C | | | SUN DIRECT | | | SVM SALES |
| INTERNATIONAL | | | VERSICHERUNGS - | | | GmbH |
| | | | AKTIENGESCLISCHAFT | | | |
|Common Stock: 1,000 | | |Common Stock: 1 Share | | |Common Stock: 50 Shares |
|------------ Shares |--------- |------------ |------------|------------ |
| | | | | |
| Cost | | Cost | | Cost |
| ---- | | ---- | | ---- |
|Casualty-20.3% $2,400,740 | |Neckura-100% $9,600,000 | |Neckura-100% DM 50,000 |
| | | EURO | | |
-------------------------------- -------------------------------- --------------------------------
</TABLE>
<PAGE> 93
<TABLE>
<CAPTION>
(right side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE |
| FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
------------------------
---------------------------------------------------------------------------------------------------------------------|
|
--------------------------------------------------------------------------------------------------------------- |
| | | | |
| | | | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | SCOTTSDALE | | | NATIONWIDE CASH | | | NATIONWIDE |
| | INDEMNITY COMPANY | | | MANAGEMENT COMPANY | | | CORPORATION |
| | | | | | | | |
| | | | | | | |Common Stock: Control: |
| |Common Stock: 50,000 | | |Common Stock: 100 Shares | | |------------ ------- |
|-----|------------ Shares | |----|------------ | | |$13,642,432 100% |
| | | | | Cost | | | Shares Cost |
| | Cost | | | ---- | | | ------ ---- |
| | ---- | | |Casualty-100% $11,226 | | |Casualty 12,992,922 $1,182,959,447 |
| |Casualty-100% $8,800,000 | | | | | |Fire 649,510 111,835,185 |
| | | | | | | | (See Page 2) |
| -------------------------------- | -------------------------------- | -------------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | NATIONWIDE | | | NATIONWIDE | | | ALLNATIONS, INC. |
| | INDEMNITY COMPANY | | | ARENA LLC | | |Common Stock: 12,167 Shares |
| | | | | | | |------------- Cost |
|-----|Common Stock: 28,000 | |....| | |-----| ---- |
| |------------ Shares | | | | | |Casualty-16% $91,600 |
| | | | | | | |Fire-16% $91,742 |
| | Cost | | | | | |Preferred Stock 1,466 Shares |
| | ---- | | |Casualty-90% | | |--------------- Cost |
| |Casualty-100% $594,529,000 | | | | | | ---- |
| | | | | | | |Casualty-6.8% $100,000 |
| | | | | | | |Fire-6.8% $100,000 |
| -------------------------------- | -------------------------------- | -------------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | LONE STAR | | | NATIONWIDE | | | NATIONWIDE INTERNATIONAL |
| | GENERAL AGENCY, INC. | | | EXCLUSIVE DISTRIBUTION | | | UNDERWRITERS |
| | | | | COMPANY, LLC (NEDCO) | | | |
------|Common Stock: 1,000 | |....| | |-----|Common Stock: 1,000 |
| |------------ Shares | | | Single Member Limited | | |------------- Shares |
| | | | | Liability Company | | | |
| | Cost | | | | | | Cost |
| | ---- | | |Casualty-100% | | | ---- |
| |Casualty-100% $5,000,000 | | | | | |Casualty-100% $10,000 |
| -------------------------------- | -------------------------------- | -------------------------------------
| || | | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | COLONIAL COUNTY | | | INSURANCE | | | CALFARM INSURANCE |
| | MUTUAL INSURANCE | | | INTERMEDIARIES, INC. | | | COMPANY |
| | COMPANY | | | | | | |
| | | | |Common Stock: 1,615 Shares | | |Common Stock: 52,000 |
| | | | |------------- | |-----|-------------- Shares |
| | | | | Cost | | |
| |Surplus Debentures: | | | ---- | | Cost |
| |------------------- | | |NEDCO-100% $1,615,000 | | ---- |
| | Cost | | -------------------------------- |Casualty-100% $106,164,995 |
| | ---- | | | |
| |Colonial $500,000 | | -------------------------------- -------------------------------------
| |Lone Star 150,000 | | | eNATIONWIDE, LLC | |
| -------------------------------- | | (eNat) | -------------------------------------
| | | | | CALFARM INSURANCE |
| -------------------------------- | | | | AGENCY |
| | NATIONWIDE SERVICES | |....| Single Member Limited | | |
| | COMPANY, LLC | | Liability Company | | |
| | | | | | |
| |Single Member Limited | |----| | |Common Stock: 1,000 shares |
|.....|Liability Company | | | | |------------- |
| | | | | | | |
| | | | |Casualty-100% | | |
| |Casualty-100% | | | | | |
| | | | -------------------------------- |CalFarm Insurance |
| -------------------------------- | |Company - 100% |
| | -------------------------------- -------------------------------------
| | | DISCOVER INSURANCE | |
| -------------------------------- | | COMPANY, LLC | -------------------------------------
| | AMERICAN MARINE | | | | | CAL-AG INSURANCE |
| | UNDERWRITERS, INC. | | | | | SERVICES |
| | | | | Single Member Limited | | |
| |Common Stock: 20 Shares | |....| Liability Company | |Common Stock: 100 Shares |
|-----|------------ | | | | |------------ |
| | Cost | | | | | |
| | ---- | | |eNat-100% | |CalFarm Insurance |
| |Casualty-100% $5,020 | | | | |Agency-100% |
| | | | -------------------------------- -------------------------------------
| -------------------------------- |
| | --------------------------------
| --------------------------------- | | DISCOVER COMPANY |
| | NATIONWIDE INSURANCE | | | OF TEXAS, LLC |
| | COMPANY OF FLORIDA | | | |
| | | | | Single Member Limited |
| | Liability Company | |....| Liability Company |
| |Common Stock: 10,000 Shares | | |
|-----|------------- | | |
| Cost | |eNat-100% |
| ---- | | |
|Casualty-100% $300,000,000 | --------------------------------
| |
---------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
June 30, 2000
</TABLE>
Page 1
<PAGE> 94
<TABLE>
<CAPTION>
(Left Side)
<S> <C> <C> <C> <C> <C> <C>
|----------------------------------|-----------------------------------|-----------------------------
| | |
----------------------------- ----------------------------- -----------------------------
| NATIONWIDE LIFE INSURANCE | | NATIONWIDE | | NATIONWIDE TRUST |
| COMPANY (NW LIFE) | | FINANCIAL SERVICES | | COMPANY, FSB |
| | | CAPITAL TRUST | | Common Stock: 2,800,000 |
| Common Stock: 3,814,779 | | Preferred Stock: | | ------------ Shares |
| ------------ Shares | | --------------- | | Cost |
| | | | | ---- |
| NFS--100% | | NFS--100% | | NFS--100% $3,000,000 |
----------------|------------ ----------------------------- -----------------------------
|
| |--------------------------
----------------------------- | ----------------------------- -----------------------------
| NATIONWIDE LIFE AND | | | NATIONWIDE | | NATIONWIDE FINANCIAL |
| ANNUITY INSURANCE COMPANY | | | ADVISORY SERVICES, INC | | INSTITUTION DISTRIBUTORS |
| | | | (NW ADV. SERV.) | | AGENCY, INC. (NFIDAI) |
| Common Stock: 66,000 | | | Common Stock: 7,676 | | |
| ------------ Shares |--|--| ------------ Shares |==== | |
| | | | | || | |
| Cost | | | Cost | || | Common Stock: 1,000 Shares|
| ---- | | | ---- | || | ------------ |
| NW Life-100% $58,070,003 | | | NW Life-100% $5,996,261 | || | NFSDI-100% |
----------------------------- | ----------------------------- || --------------|--||----------
| || | ||
----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE INVESTMENT | | | NATIONWIDE MUTUAL | || | FINANCIAL HORIZONS | | || | |
| SERVICES CORPORATION | | | FUNDS | || | DISTRIBUTORS AGENCY | | || | |
| | | | | || | OF ALABAMA, INC. | | || | |
| Common Stock: 5,000 | | | OHIO BUSINESS TRUST | || | | | || | FLORIDA |
| ------------ Shares | | | | || | Common Stock: 10,000 | | || | RECORDS |===
| |--| | |==|| | ------------ Shares |-- || | ADMINISTRATOR, |
| | | | | || | | | || | INC |
| Cost | | | | || | Cost | | || | |
| ---- | | | | || | ---- | | || | |
| NW Life-100% $529,728 | | | | || | NFIDAI-100% $100 | | || | |
----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| || | ||
----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE FINANCIAL | | | NATIONWIDE | || | LANDMARK FINANCIAL | | || | |
| ASSIGNMENT | | | SEPARATE ACCOUNT | || | SERVICES OF | | || | |
| COMPANY | | | TRUST | || | NEW YORK, INC. | | || | |
| | | | | || | | | || | |
| | | | | || | Common Stock: 10,000 | | || | FINANCIAL HORIZONS |
| |--| | MASSACHUSETTS |==|| | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | BUSINESS TRUST | || | | | || | OF OHIO, INC |
| | | | | || | Cost | | || | |
| | | | | || | ---- | | || | |
| NW Life-100% | | | | || | NFIDAI-100% $10,100 | | || | |
----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| || | ||
----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE REALTY | | | NATIONWIDE | || | FINANCIAL HORIZONS | | || | |
| INVESTORS, LTD. | | | ASSET ALLOCATION TRUST | || | SECURITIES CORP. | | || | |
| | | | | || | | | || | |
| Units: | | | | || | Common Stock: 10,000 | | || | FINANCIAL HORIZONS |
| ------ |..| | OHIO BUSINESS TRUST |==|| | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | | | | | || | OF OKLAHOMA, INC |
| | | | | | Cost | | || | |
| NW Life-70% | | | | | ---- | | || | |
| NW Mutual-30% | | | | | NFIDAI-100% $153,000 | | || | |
----------------------------- | ----------------------------- ----------------------------- | || -----------------------
| | ||
----------------------------- | ----------------------------- | || -----------------------
| NATIONWIDE | | | AFFILIATE AGENCY, INC. | | || | |
| PROPERTIES, LTD. | | | | | || | |
| | | | | | || | |
| Units: |..| | Common Stock: 100 | | || | FINANCIAL HORIZONS |
| ------ | | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | | || | OF TEXAS, INC |
| | | Cost | | || | |
| NW Life-97.6% | | ---- | | || | |
| NW Mutual-2.4% | | NFIDAI-100% $100 | | || | |
----------------------------- ----------------------------- | || -----------------------
| ||
----------------------------- | || -----------------------
| NATIONWIDE FINANCIAL | | || | |
| INSTITUTION DISTRIBUTORS | | || | |
| INSURANCE AGENCY, | | || | |
| INC. OF MASS. | | || | AFFILIATE |
| |-- ====| AGENCY OF |
|Common Stock: 100 Shares | | | OHIO, INC |
|------------ | | | |
| | | | |
|NFIDAI-100% | | | |
----------------------------- | -----------------------
----------------------------- |
| NATIONWIDE FINANCIAL | |
| INSTITUTION DISTRIBUTORS | |
| INSURANCE AGENCY, INC. | |
| OF NEW MEXICO |--
| |
|Common Stock: 100 Shares |
|------------ |
| |
|NFIDAI-100% |
-----------------------------
</TABLE>
<PAGE> 95
<TABLE>
<CAPTION>
(Center)
NATIONWIDE(R)
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------- --------------------------------------------------
| NATIONWIDE MUTUAL | | NATIONWIDE MUTUAL |
| INSURANCE COMPANY |================================| FIRE INSURANCE COMPANY |
| (CASUALTY) | | | (FIRE) |
-------------------------------------------------- | --------------------------------------------------
|
-----------------------------------------
| NATIONWIDE CORPORATION (NW CORP) |
| COMMON STOCK: CONTROL: |
| ------------ ------- |
| 13,642,432 100% |
| SHARES COST |
| ------ ---- |
|CASUALTY 12,992,922 $1,182,959,447 |
|FIRE 649,510 111,385,185 |
-------------------|---------------------
|--------------------------------------------------------------
---------------|-------------
| NATIONWIDE FINANCIAL |
| SERVICES, INC. (NFS) |
| |
|Common Stock: Control: |
|------------ ------- |
| |
| |
|Class A Public-100% |
|CLASS B NW CORP-100% |
---------------|-------------
|
-----------|-------------------------|-------------------------|--------------------------|-------------------------|
| | | | |
-----------|------------ ------------|------------ ------------|------------ -------------|------------ ------------|-------------
|NFS DISTRIBUTORS, INC.| | NATIONWIDE FINANCIAL | | NATIONWIDE FINANCIAL | |PENSION ASSOCIATES, INC.| |VILLANOVA CAPITAL, INC. |
| (NFSDI) | | SERVICES CAPITAL | |SERVICES (BERMUDA) INC.| |Common Stock: 1,000 | |Common Stock: 958,750 |
| | | TRUST II | |Common Stock: 250,000 | |------------ Shares | |------------- Shares |
| | | | |------------- Shares | | | |NFS-96% |
| | | | | Cost | | Cost | |Preferred Stock: 500,000|
|NFS-100% | | | | ---- | | ---- | |--------------- Shares |
| | | NFS-100% | |NFS-100% $3,500,000 | | NFS-100% $2,839,392| |NFS-100% |
-----------|------------ ------------------------- ------------------------- -------------------------- ------------|-------------
|
-----------|---------|----------------|--------------------------| |-------------------------|---------------
-----------|-------- | ---------------|------------ -------------|------------ -----------|------------- -----------|-------------
|NATIONAL DEFERRED | | |THE 401(k) COMPANIES, INC.| | NATIONWIDE RETIREMENT | | VILLANOVA S.A. CAPITAL| | MORLEY FINANCIAL |
|COMPENSATION, INC.| | | (401(k)) | | SOLUTIONS, INC. (NRS)| | TRUST (VSA) | |SERVICES, INC. (MORLEY)|
| | | | | |Common Stock: 236,494 | | | |Common Stock: 82,343 |
| | | |Common Stock: Control | |------------- Shares | | | |------------ Shares |
| | | |------------- ------- | | | | | | |
|NFSDI-100% | | |Class A Other-100% | | | | | |VILLANOVA CAPITAL, INC.|
| | | |Class B NFS-100% | |NFSDI-100% | |DELAWARE BUSINESS TRUST| |-100% |
---||--------------- | ---------------------------- -------------|------------ -----------------|------- -----------|-------------
|| | | | | |
|| | | | | |------------|
|| | | | | |
|| --------------|------------|---------------------------- | -------------------------- | ---------------------------- |
|| | IRVIN L. SCHWARTZ ||| NATIONWIDE RETIREMENT | | |NATIONWIDE RETIREMENT | | | NATIONWIDE | |
|| | AND ASSOCIATES, INC. |||SOLUTIONS, INC. OF ALABAMA| | | SOLUTIONS, INC. OF | | | INVESTORS SERVICES, INC. | |
|| | ||| | | | NEW MEXICO | | | | |
|| |Common Stock: Control: |||Common Stock: 10,000 | | | Common Stock: 1,000 | | |Common Stock: 5 | |
===== |------------- -------- |||------------- Shares |--|--| ------------- Shares | |--|------------- Shares | |
|Class A Other-100%||| Cost | | | Cost | | | Cost | |
|Class B NFSDI-100%||| ---- | | | ---- | | | ---- | |
| |||NRS-100% $1,000 | | |NRS-100% $1,000 | | |VSA-100% $5,000 | |
---------------------------|---------------------------- | -------------------------- | ---------------------------- |
| | | |
---------------------------|---------------------------- | -------------------------- | ---------------------------- |
| 401(k) INVESTMENT ||| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | | NATIONWIDE GLOBAL FUNDS | |
| SERVICES, INC. |||SOLUTIONS, INC. OF ARIZONA| | | SOLUTIONS, INC. OF | | | | |
| ||| | | | SO. DAKOTA | | | | |
|Common Stock: 1,000,000 |||Common Stock: 1,000 | | |Common Stock: 1,000 | | | | |
|------------ Shares |-|------------- Shares |--|--|------------- Shares | |==| LUXEMBOURG SICAV | |--
| ||| Cost | | | Cost | | | | |
| Cost ||| ---- | | | ---- | | | | |
| ---- |||NRS-100% $1,000 | | |NRS-100% $1,000 | | | | |
|401(k)-100% $7,800 ||---------------------------- | -------------------------- | ---------------------------- |
---------------------------| | | |
|---------------------------- | -------------------------- | ---------------------------- |
---------------------------|| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | | ALLIED GROUP MERCHANT | |
| 401(k) INVESTMENT ||| SOLUTIONS, INC. OF | | | SOLUTIONS, INC. | | | BANKING CORPORATION | |
| ADVISORS, INC. ||| ARKANSAS | | | OF WYOMING | | | | |
| |||Common Stock: 50,000 |-----|Common Stock: 500 Shares| |--|Common Stock: 10,000 | |--
|Common Stock: 1,000 |||------------- Shares | | |------------- | |------------- Shares | |
|------------ Shares |-| Cost | | | Cost | | Cost | |
| ||| ---- | | | ---- | | ---- | |
| Cost |||NRS-100% $500 | | |NRS-100% $500 | |VSA-100% $146,653 | |
| ---- ||---------------------------- | -------------------------- ---------------------------- |
|401(k)-100% $1,000 || | |
---------------------------|---------------------------- | -------------------------- ---------------------------- |
|| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | UNION BOND | |
---------------------------|| SOLUTIONS, INS. | | | SOLUTIONS, INC. | | & TRUST COMPANY | |
| 401(k) COMPANY ||| AGENCY, INC. | | | OF OHIO | | | |
| |||Common Stock: 1,000 | | | | |Common Stock: 2,000 | |
|Common Stock: 855,000 |||------------- Shares |--|==| | |------------- Shares |--|--
|------------ Shares ||| | | | | | | |
| ||| Cost | | | | | Cost | |
| Cost ||| ---- | | | | | ---- | |
| ---- |-|NRS-100% $1,000 | | | | |Morley-100% $50,000 | |
|401(k)-100% $1,000 ||---------------------------- | -------------------------- ---------------------------- |
---------------------------| | |
|---------------------------- | -------------------------- ---------------------------- |
---------------------------|| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | PORTLAND INVESTMENT | |
| |||SOLUTIONS, INC. OF MONTANA| | | SOLUTIONS, INC. OF | | SERVICES, INC. | |
| ||| | | | OKLAHOMA | | | |
| RIVERVIEW AGENCY, INC. |||Common Stock: 500 | | | | |Common Stock: 1,000 | |
| |||------------- Shares |--|==| | |------------- Shares |--|--
| ||| Cost | | | | | Cost | |
| |=| ---- | | | | | ---- | |
| | |NRS-100% $500 | | | | |Morley-100% $25,000 | |
--------------------------- ---------------------------- | -------------------------- ---------------------------- |
| |
---------------------------- | -------------------------- ---------------------------- |
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT| | MORLEY & | |
| SOLUTIONS, INC. OF NEVADA| | | SOLUTIONS, INC. | | ASSOCIATES, INC. | |
| | | | OF TEXAS | | | |
|Common Stock: 1,000 |-- ==| | |Common Stock: 3,500 |--|
|------------- Shares | | | |------------- Shares |
| Cost | | | | Cost |
| ---- | | | | ---- |
|NRS-100% $1,000 | | | |Morley-100% $1,000 |
---------------------------- -------------------------- ----------------------------
</TABLE>
<PAGE> 96
<TABLE>
<CAPTION>
(Right)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
---------------|-------------- ------------------------------- | ----------------------------
| NATIONWIDE GLOBAL | | GATES MCDONALD | | | NATIONWIDE |
| HOLDINGS, INC. (NGH) | | & COMPANY (GATES) | | |HEALTH PLANS, INC. (NHP) |
| | | | | | |
|Common Stock: 1 Share | --|Common Stock: 254 Shares | | |---|Common Stock: 100 Shares |
|------------ | | |------------ | | | |------------ |
| Cost | | | Cost | | | | Cost |
| ---- | | | ---- | | | | ---- |
|NW Corp.-100% $257,000,000 | | |NW Corp.-100% $25,683,532 | | | | |
| | | |------------------------------ | | |NW Corp.-100% $14,603,732|
------------------------------ | | | ----------------------------
| |------------------------------ | | ----------------------------
| | MEDPROSOLUTIONS, INC. | | | | NATIONWIDE MANAGEMENT |
------------------------------ --| | | | | SYSTEMS, INC. |
| VILLANOVA MUTUAL FUND | | | Cost | | | | |
| CAPITAL TRUST (VMF) | | | ---- | | |---|Common Stock: 100 Shares |
----|----| | | |Gates-100% $6,700,000 | | | |------------- |
| | | | | | | | | Cost |
| | | | | | | | | ---- |
| | | | ------------------------------- | | |NHP Inc.-100% $25,149 |
| | | | | | ----------------------------
| | | | |------------------------------ | | ----------------------------
| | DELAWARE BUSINESS TRUST | | | GATES MCDONALD & | | | | NATIONWIDE |
| ------------------------------ | | COMPANY OF NEW YORK, INC. | | | | AGENCY, INC. |
| --| | | | | |
| ------------------------------ | |Common Stock: 3 Shares | | |---|Common Stock: 100 Shares |
| | NORTHPOINTE | | |------------ | | |------------ |
| | CAPITAL LLC | | | Cost | | | Cost |
| | | | | ---- | | | ---- |
|----| | | |Gates-100% $106,947 | | |NHP Inc.-99% $116,077 |
| | | ------------------------------- | ----------------------------
| | | |
| | | ------------------------------- | ----------------------------
|VILLANOVA CAPITAL, INC.-100%| | | GATES MCDONALD & | | | MRM INVESTMENTS, INC. |
------------------------------ | | COMPANY OF NEVADA | | | |
--| | -------|Common Stock: 1 Shares |
------------------------------ | |Common Stock: 40 Shares | |------------ |
| EXCALIBER FUNDING | | |------------ | | Cost |
| CORPORATION | | | Cost | | ---- |
---------|Common Stock: 1,000 Shares | | | ---- | |NW Corp.-100% $7,000,000 |
|------------- | | |Gates-100% $93,750 | ----------------------------
| Cost | | -------------------------------
| ---- | |
|Morley-100% $1,000 | | -------------------------------
------------------------------ | | GATES MCDONALD |
| | HEALTH PLUS, INC. |
------------------------------ --| |
| CALIBER FUNDING | | |Common Stock: 200 Shares |
| CORPORATION | | |------------ |
| | | | Cost |
---------| | | | ---- |
| | | |Gates-100% $2,000,000 |
| Morley-100% | | -------------------------------
| | |
------------------------------ | -------------------------------
| |NEVADA INDEPENDENT COMPANIES-|
| |MANUFACTURING TRANSPORTATION |
| | AND DISTRIBUTION |
--| |
| |Common Stock: 1,000 Shares |
| |------------ |
| |Gates-100% |
| -------------------------------
|
------------------------------ | -------------------------------
| MORLEY RESEARCH | | | NEVADA INDEPENDENT |
| ASSOCIATES, LTD. | | | COMPANIES-HEALTH AND |
---------| | --| NONPROFIT |
|Common Stock: 1,000 Shares | | |Common Stock: 1,000 Shares |
|------------- | | |------------ |
| Cost | | | |
| ---- | | |Gates-100% |
|Morley-100% $1,000 | | -------------------------------
------------------------------ |
| -------------------------------
------------------------------ | | NEVADA INDEPENDENT |
| MORLEY CAPITAL | | | COMPANIES-CONSTRUCTION |
| MANAGEMENT | --| |
| | | |Common Stock: 1,000 Shares |
---------|Common Stock: 500 Shares | | |------------ |
|------------- | | | |
| Cost | | |Gates-100% |
| ---- | | -------------------------------
|Morley-100% $5,000 | |
------------------------------ | -------------------------------
| | NEVADA INDEPENDENT |
| | COMPANIES-HOSPITALITY AND | Subsidiary Companies - Solid Line
--| ENTERTAINMENT | Contractual Association - Double Line
| | Limited Liability Company - Dotted Line
|Common Stock: 1,000 Shares |
|------------ |
| |
|Gates-100% | June 30, 2000
-------------------------------
Page 2
</TABLE>
<PAGE> 97
Item 27. NUMBER OF CONTRACT OWNERS
The number of Contract Owners of Qualified and Non-Qualified
Contracts as of January 31, 2000 was 2,169 and 3,689 respectively.
Item 28. INDEMNIFICATION
Provision is made in Nationwide's Amended and Restated Code of
Regulations and expressly authorized by the General Corporation
Law of the State of Ohio, for indemnification by Nationwide of any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that such person is or was a
director, officer or employee of Nationwide, against expenses,
including attorneys fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, to the extent and
under the circumstances permitted by the General Corporation Law
of the State of Ohio.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Act") may be permitted to directors,
officers or persons controlling Nationwide pursuant to the
foregoing provisions, Nationwide has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. PRINCIPAL UNDERWRITER
(a) Nationwide Investment Services Corporation ("NISC") acts as
principal underwriter and general distributor for the
Nationwide Multi-Flex 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-II, 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,
Nationwide VLI Separate Account-2, Nationwide VLI Separate
Account-3, Nationwide VLI Separate Account-4, Nationwide VLI
Separate Account-5, Nationwide Variable Account, NACo
Variable Account, Nationwide DC Variable Account, and the
Nationwide DCVA II, all of which are separate investment
accounts of Nationwide or its affiliates.
<PAGE> 98
(b) NATIONWIDE INVESTMENT SERVICES CORPORATION
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
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. Woodward, Jr. 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
</TABLE>
<PAGE> 99
NATIONWIDE INVESTMENT SERVICES CORPORATION
DIRECTORS AND OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME AND BUSINESS ADDRESS WITH UNDERWRITER
<S> <C>
Duane M. Campbell Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
Terry C. Smetzer Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
</TABLE>
Item 30. LOCATION OF ACCOUNTS AND RECORDS
John Davis
Nationwide Life and Annuity Insurance Company
One Nationwide Plaza
Columbus, OH 43215
Item 31. MANAGEMENT SERVICES
Not Applicable
Item 32. UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration
statement as frequently as is necessary to ensure that the
audited financial statements in the registration statement
are never more than 16 months old for so long as payments
under the variable annuity contracts may be accepted;
(b) include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written
communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of
Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under
this form promptly upon written or oral request.
The Registrant represents that any of the contracts which are
issued pursuant to Section 403(b) of the Code Internal Revenue is
issued by Nationwide through the Registrant in reliance upon, and
in compliance with, a no-action letter issued by the Staff of the
Securities and Exchange Commission to the American Council of Life
Insurance (publicly available November 28, 1988) permitting
withdrawal restrictions to the extent necessary to comply with
Section 403(b)(11) of the Internal Revenue Code.
Nationwide represents 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 risks
assumed by Nationwide.
<PAGE> 100
INDEPENDENT AUDITORS' CONSENT
The Board of Directors of Nationwide Life and Annuity Insurance Company and
Contract Owners of Nationwide Variable Account-B:
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Services" in the Statement of Additional Information.
KPMG LLP
Columbus, Ohio
April 28, 2000
<PAGE> 101
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, NATIONWIDE VA SEPARATE ACCOUNT-B, certifies that it meets
the requirements of Securities Act Rule 485 for effectiveness of this
Post-Effective Amendment No. 11 and has caused this Post-Effective Amendment to
be signed on its behalf in the City of Columbus, and State of Ohio, on this 20th
day of September, 2000.
NATIONWIDE VA SEPARATE ACCOUNT-B
-----------------------------------------------
(Registrant)
NATIONWIDE LIFE AND ANNUITY INSURANCE COMPANY
-----------------------------------------------
(Depositor)
By/s/STEVEN SAVINI, ESQ.
-----------------------------------------------
Steven Savini, Esq.
As required by the Securities Act of 1933, this Post-Effective Amendment to the
Registration Statement has been signed by the following persons in the
capacities indicated on the 20th day of September, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
LEWIS J. ALPHIN Director
----------------------------------------
Lewis J. Alphin
A. I. BELL Director
----------------------------------------
A. I. Bell
NANCY C. BREIT Director
----------------------------------------
Nancy C. Breit
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
W.G. JURGENSEN Chief Executive Officer Elect
---------------------------------------- and Director
W.G. Jurgensen
DIMON R. MCFERSON Chairman and Chief Executive
---------------------------------------- Officer and Director
Dimon R. McFerson
DAVID O. MILLER Chairman of the Board and
---------------------------------------- Director
David O. Miller
YVONNE L. MONTGOMERY Director
----------------------------------------
Yvonne L. Montgomery
ROBERT A. OAKLEY Executive Vice President and Chief
---------------------------------------- Financial Officer
Robert A. Oakley
RALPH M. PAIGE Director
----------------------------------------
Ralph M. Paige
JAMES F. PATTERSON Director
----------------------------------------
James F. Patterson
ARDEN L. SHISLER Director By /s/ STEVEN SAVINI
---------------------------------------- --------------------------------------
Arden L. Shisler Steven Savini
ROBERT L. STEWART Director Attorney-in-Fact
----------------------------------------
Robert L. Stewart
</TABLE>
