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[NATIONWIDE LOGO]
NATIONWIDE(R)
VARIABLE
ACCOUNT-5
SEMI-ANNUAL REPORT
TO
CONTRACT OWNERS
JUNE 30, 1999
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
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[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
On behalf of Nationwide Life Insurance Company, we are pleased to present the
1999 semi-annual report of the Nationwide Variable Account-5.
Equity investments performed well during the first half of 1999 with the major
market indices showing double-digit gains. Fixed income investments did not fare
as well during this period in the face of the Federal Reserve's inflation
cautiousness. The Fed is mindful of the resilient U.S. economy and the
increasingly tight labor pool that portends future wage inflation. Accordingly,
we have seen a ratcheting-up of short-term interest rates to dampen the momentum
of the current expansion. How aggressively the Fed may react to the perceived
inflation threat only adds uncertainty to the already jittery equity markets.
Over the long term, however, a slower but sustainable rate of growth, with low
inflation, provides a favorable environment for further advances in financial
assets.
At mid-year, we are pleased to report that all the mission-critical systems used
to service our variable annuity and variable life business have been internally
inventoried, assessed and tested as being Year 2000 compliant. We are currently
contacting our critical business partners to determine if they will be Year 2000
compliant. Contingency plans are being developed and are to be completed by the
end of the third quarter. All these steps are being taken to assure that
Nationwide Financial will be able to continue to serve your financial needs into
the Year 2000 and beyond.
Thank you for selecting Nationwide Financial to help you achieve your financial
planning and retirement savings goals. You have our commitment to provide the
consistent, high quality service you expect and deserve.
Joseph J. Gasper, President
August 19, 1999
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<TABLE>
NATIONWIDE VARIABLE ACCOUNT-5
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
JUNE 30, 1999
(UNAUDITED)
<S> <C>
Assets:
Investments at market value:
American Century VP - American Century VP Advantage (ACVPAdv)
65,656 shares (cost $410,911) ......................................... $ 427,422
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
100,006 shares (cost $987,671) ........................................ 1,047,059
Dreyfus Stock Index Fund (DryStkIx)
79,651 shares (cost $1,988,185) ....................................... 2,876,192
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
195,426 shares (cost $4,007,235) ...................................... 5,325,372
Nationwide SAT - Government Bond Fund (NSATGvtBd)
59,435 shares (cost $661,391) ......................................... 661,517
Nationwide SAT - Money Market Fund (NSATMyMkt)
525,114 shares (cost $525,114) ........................................ 525,114
Nationwide SAT - Total Return Fund (NSATTotRe)
143,799 shares (cost $1,982,171) ...................................... 2,917,680
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
53,509 shares (cost $840,842) ......................................... 855,078
-----------
Total investments .................................................. 14,635,434
Accounts Receivable ......................................................... 149
-----------
Total assets ....................................................... 14,635,583
-----------
Contract owners' equity ........................................................ $14,635,583
===========
</TABLE>
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<TABLE>
PERIOD
Contract owners' equity represented by: UNITS UNIT VALUE RETURN*
----- ---------- -------
<S> <C> <C> <C> <C>
Contracts in accumulation phase:
American Century VP - American Century
VP Advantage:
Tax qualified ........................... 15,203 $ 18.663713 $ 283,744 3%
Non-tax qualified ....................... 7,698 18.663713 143,673 3%
American Century VP - American Century
VP Capital Appreciation:
Tax qualified ........................... 55,295 16.516179 913,262 15%
Non-tax qualified ....................... 7,423 16.516179 122,600 15%
Dreyfus Stock Index Fund:
Tax qualified ........................... 77,521 30.896018 2,395,090 11%
Non-tax qualified ....................... 15,573 30.896018 481,144 11%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ........................... 178,801 25.356511 4,533,770 12%
Non-tax qualified ....................... 30,388 25.356511 770,534 12%
Nationwide SAT - Government Bond Fund:
Tax qualified ........................... 8,882 34.029647 302,251 (3)%
Non-tax qualified ....................... 9,697 34.042202 330,107 (3)%
Nationwide SAT - Money Market Fund:
Tax qualified ........................... 23,538 22.303916 524,990 2%
Nationwide SAT - Total Return Fund:
Tax qualified ........................... 23,466 101.844530 2,389,884 10%
Non-tax qualified ....................... 5,336 98.915179 527,811 10%
Neuberger &Berman AMT - Balanced Portfolio:
Tax qualified ........................... 36,839 20.622941 759,729 2%
Non-tax qualified ....................... 2,860 20.622941 58,982 2%
====== ===========
Reserves for annuity contracts in payout phase:
Tax qualified ........................... 98,012
-----------
$14,635,583
===========
</TABLE>
* The period return does not include contract charges satisfied by surrendering
units.
See accompanying notes to financial statements.
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<TABLE>
NATIONWIDE VARIABLE ACCOUNT-5
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
<CAPTION>
TOTAL ACVPADV ACVPCAPAP DRYSTKIX
------------------------ ----------------- --------------------- ---------------------
1999 1998 1999 1998 1999 1998 1999 1998
----------- ---------- ------- ------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. $ 160,269 161,923 12,293 6,119 -- -- 15,315 13,056
Mortality, expense and
administration charges
(note 2) ........................ (93,429) (87,288) (2,780) (2,102) (6,775) (7,808) (17,817) (12,841)
----------- ---------- ------- ------- --------- --------- --------- ---------
Net investment activity ......... 66,840 74,635 9,513 4,017 (6,775) (7,808) (2,502) 215
----------- ---------- ------- ------- --------- --------- --------- ---------
Proceeds from mutual fund
shares sold ..................... 1,643,484 3,159,973 32,323 47,499 197,119 394,775 260,240 489,696
Cost of mutual fund shares sold ... (1,277,506) (2,192,857) (27,728) (39,149) (236,846) (368,581) (115,629) (229,890)
----------- ---------- ------- ------- --------- --------- --------- ---------
Realized gain (loss) on
investments ................... 365,978 967,116 4,595 8,350 (39,727) 26,194 144,611 259,806
Change in unrealized gain (loss)
on investments .................. 649,449 (236,709) (30,488) (6,030) 197,359 (68,488) 143,551 45,463
----------- ---------- ------- ------- --------- --------- --------- ---------
Net gain (loss) on investments .. 1,015,427 730,407 (25,893) 2,320 157,632 (42,294) 288,162 305,269
----------- ---------- ------- ------- --------- --------- --------- ---------
Reinvested capital gains .......... 232,785 489,139 29,181 23,023 -- 56,753 12,368 3,067
----------- ---------- ------- ------- --------- --------- --------- ---------
Net increase (decrease) in
contract owners' equity
resulting from operations ... 1,315,052 1,294,181 12,801 29,360 150,857 6,651 298,028 308,551
----------- ---------- ------- ------- --------- --------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 886,270 1,450,040 18,326 101,813 84,345 157,497 201,950 221,807
Transfers between funds ........... -- -- 9,684 538 (40,511) (73,366) 175,440 47,168
Redemptions ....................... (1,287,811) (2,990,566) (22,132) (48,604) (160,814) (329,787) (230,003) (489,317)
Annuity benefits .................. (5,909) (3,593) -- -- (642) (509) -- --
Annual contract maintenance
charge (note 2) ................. (10,645) (16,127) (235) (352) (971) (1,782) (1,719) (2,418)
Contingent deferred sales
charges (note 2) ................ (29,017) (118,083) (582) (2,153) (3,778) (13,811) (4,633) (19,286)
Adjustments to maintain reserves .. 389 (6,266) (14) (9) 67 (571) 22 12
----------- ---------- ------- ------- --------- --------- --------- ---------
Net equity transactions ....... (446,723) (1,684,595) 5,047 51,233 (122,304) (262,329) 141,057 (242,034)
----------- ---------- ------- ------- --------- --------- --------- ---------
NET CHANGE IN CONTRACT
OWNERS' EQUITY .................. 868,329 (390,414) 17,848 80,593 28,553 (255,678) 439,085 66,517
CONTRACT OWNERS' EQUITY
BEGINNING OF PERIOD ............. 13,767,254 13,898,875 409,569 294,316 1,018,635 1,354,792 2,437,149 1,993,911
----------- ---------- ------- ------- --------- --------- --------- ---------
CONTRACT OWNERS' EQUITY
END OF PERIOD ................... $14,635,583 13,508,461 427,417 374,909 1,047,188 1,099,114 2,876,234 2,060,428
=========== ========== ======= ======= ========= ========= ========= =========
</TABLE>
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<TABLE>
NATIONWIDE VARIABLE ACCOUNT-5
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
<CAPTION>
FIDVIPEI NSATGVTBD NSATMYMKT NSATTOTRE
----------------------- ------------------ ------------------- ---------------------
1999 1998 1999 1998 1999 1998 1999 1998
---------- ---------- ------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .............. $ 74,877 73,941 17,968 21,138 12,538 13,450 10,756 13,838
Mortality, expense and
administration charges
(note 2) ........................ (33,646) (33,275) (4,522) (4,873) (3,577) (3,371) (17,913) (16,991)
---------- ---------- ------- -------- -------- -------- --------- ---------
Net investment activity ......... 41,231 40,666 13,446 16,265 8,961 10,079 (7,157) (3,153)
---------- ---------- ------- -------- -------- -------- --------- ---------
Proceeds from mutual
fund shares sold ................ 504,937 961,165 101,368 216,941 189,534 159,607 120,432 608,648
Cost of mutual fund
shares sold ..................... (303,378) (595,012) (94,049) (200,472) (189,534) (159,607) (61,335) (356,941)
---------- ---------- ------- -------- -------- -------- --------- ---------
Realized gain (loss)
on investments ............... 201,559 366,153 7,319 16,469 -- -- 59,097 251,707
Change in unrealized gain
(loss) on investments ........... 177,887 (189,946) (40,703) (7,720) -- -- 214,908 96,845
---------- ---------- ------- -------- -------- -------- --------- ---------
Net gain (loss) on
investments ................... 379,446 176,207 (33,384) 8,749 -- -- 274,005 348,552
---------- ---------- ------- -------- -------- -------- --------- ---------
Reinvested capital gains .......... 165,518 263,143 -- -- -- -- 1,240 --
---------- ---------- ------- -------- -------- -------- --------- ---------
Net increase (decrease)
in contract owners' equity
resulting from operations ... 586,195 480,016 (19,938) 25,014 8,961 10,079 268,088 345,399
---------- ---------- ------- -------- -------- -------- --------- ---------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ................. 244,842 420,272 34,294 70,818 80,428 149,452 120,210 177,764
Transfers between funds ........... (141,709) 62,963 (49,431) (13,952) 65,181 (16,602) (18,926) 7,570
Redemptions ....................... (390,676) (1,003,729) (30,793) (147,727) (122,016) (136,394) (104,465) (607,535)
Annuity benefits .................. (1,256) (738) (1,836) (1,099) -- -- -- --
Annual contract maintenance
charge (note 2) ................. (3,824) (5,880) (335) (712) (542) (780) (1,974) (3,054)
Contingent deferred sales
charges (note 2) ................ (7,872) (39,748) (627) (4,775) (1,098) (5,965) (3,825) (24,851)
Adjustments to maintain reserves .. 118 (1,396) 36 (1,876) (15) 10 55 (3)
---------- ---------- ------- -------- -------- -------- --------- ---------
Net equity transactions ....... (300,377) (568,256) (48,692) (99,323) 21,938 (10,279) (8,925) (450,109)
---------- ---------- ------- -------- -------- -------- --------- ---------
NET CHANGE IN CONTRACT OWNERS'
EQUITY ............................ 285,818 (88,240) (68,630) (74,309) 30,899 (200) 259,163 (104,710)
CONTRACT OWNERS' EQUITY BEGINNING
OF PERIOD ......................... 5,039,709 5,218,994 730,195 807,851 494,091 543,367 2,658,532 2,708,919
---------- ---------- ------- -------- -------- -------- --------- ---------
CONTRACT OWNERS' EQUITY END
OF PERIOD ......................... $5,325,527 5,130,754 661,565 733,542 524,990 543,167 2,917,695 2,604,209
========== ========== ======= ======== ======== ======== ========= =========
(Continued)
</TABLE>
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<TABLE>
NATIONWIDE VARIABLE ACCOUNT-5
STATEMENTS OF OPERATIONS AND CHANGES
IN CONTRACT OWNERS' EQUITY
SIX MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
<CAPTION>
NBAMTBAL
-----------------------
1999 1998
--------- --------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 16,522 20,381
Mortality, expense and administration
charges (note 2) ............................ (6,399) (6,027)
--------- --------
Net investment activity ..................... 10,123 14,354
--------- --------
Proceeds from mutual fund shares sold ......... 237,531 281,642
Cost of mutual fund shares sold ............... (249,007) (243,205)
--------- --------
Realized gain (loss) on investments ......... (11,476) 38,437
Change in unrealized gain (loss)
on investments .............................. (13,065) (106,833)
--------- --------
Net gain (loss) on investments .............. (24,541) (68,396)
--------- --------
Reinvested capital gains ...................... 24,478 143,153
--------- --------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 10,060 89,111
--------- --------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 101,876 150,617
Transfers between funds ....................... 272 (14,319)
Redemptions ................................... (226,912) (227,473)
Annuity benefits .............................. (2,175) (1,247)
Annual contract maintenance charge (note 2) ... (1,044) (1,149)
Contingent deferred sales charges (note 2) .... (6,603) (7,494)
Adjustments to maintain reserves .............. 119 (2,433)
--------- --------
Net equity transactions ................... (134,467) (103,498)
--------- --------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... (124,407) (14,387)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... 979,374 976,725
--------- --------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 854,967 962,338
========= ========
</TABLE>
See accompanying notes to financial statements.
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NATIONWIDE VARIABLE ACCOUNT-5
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
Nationwide Variable Account-5 (the Account) was established pursuant to
a resolution of the Board of Directors of Nationwide Life Insurance
Company (the Company) on November 1, 1989. The Account has been
registered as a unit investment trust under the Investment Company Act
of 1940. On December 31, 1993, the accumulation unit values for each
fund sub-account of Nationwide Variable Account-5 were established at a
unit value equal to the accumulation unit values of the corresponding
fund sub-account of the Nationwide Multi-Flex Variable Account. The
first deposits were received by the Account on May 4, 1994.
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 banks and other financial
institutions.
(b) The Contracts
Only contracts without a front-end sales charge, but with a contingent
deferred sales charge and certain other fees, are offered for purchase.
See note 2 for a discussion of contract expenses. Contract owners in
either the accumulation or payout phase may invest in any of the
following:
Portfolios of the American Century Variable Portfolios, Inc.
(American Century VP); American Century VP - American Century VP
Advantage (ACVPAdv) American Century VP - American Century VP
Balanced (ACVPBal) American Century VP - American Century VP
Capital Appreciation (ACVPCapAp)
Dreyfus Stock Index Fund (DryStkIx)
Portfolio of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
Funds of the Nationwide Separate Account Trust (Nationwide SAT)
(managed for a fee by an affiliated investment advisor);
Nationwide SAT - Government Bond Fund (NSATGvtBd) Nationwide SAT
- Money Market Fund (NSATMyMkt) Nationwide SAT - Total Return
Fund (NSATTotRe)
Portfolio of the Neuberger &Berman Advisers Management Trust
(Neuberger &Berman AMT); Neuberger &Berman AMT - Balanced
Portfolio (NBAMTBal)
At June 30, 1999, contract owners have invested in all of the above
funds except for American Century VP -American Century VP Balanced. 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.
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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 June 30, 1999. The cost of investments
sold is determined on a specific identification basis. Investment
transactions are accounted for on the trade date (date the order to buy
or sell is executed) and dividend income is recorded on the ex-dividend
date.
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with,
operations of the Company which is taxed as a life insurance company
under the Internal Revenue Code.
The Company does not provide for income taxes within the Account. Taxes
are the responsibility of the contract owner upon termination or
withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities, if
any, at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(2) EXPENSES
The Company does not deduct a sales charge from purchase payments received
from the contract owners. However, if any part of the contract value of
such contracts is surrendered, the Company will, with certain exceptions,
deduct from a contract owner's contract value a contingent deferred sales
charge not to exceed 7% of the lesser of purchase payments or the amount
surrendered, such charge declining 1% per year, to 0%, after the purchase
payment has been held in the contract for 84 months. No sales charges are
deducted on redemptions used to purchase units in the fixed investment
options of the Company.
The following contract charges are deducted by the Company: (a) an annual
contract maintenance charge of up to $30, dependent upon contract type and
issue date, which is satisfied by surrendering units; and (b) a mortality
risk charge, an expense risk charge and an administration charge assessed
through the daily unit value calculation equal to an annual rate of 0.80%,
0.45% and 0.05%, respectively.
(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.
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NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA o COLUMBUS, OHIO 43215-2220
--------------
Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
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Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company
