<PAGE> 1
[NATIONWIDE (R) LOGO]
NATIONWIDE(R)
VARIABLE
ACCOUNT-5
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1999
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
APO-2750-L (12/99)
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215-2220
[PHOTO]
PRESIDENT'S MESSAGE
We at Nationwide Life Insurance Company are pleased to bring you the 1999 annual
report of the Nationwide Variable Account-5.
During 1999 equity investments extended their spirited advance to a fifth
consecutive year. The S&P 500 was the laggard of the major indices with a
year-over-year change of a respectable 19.53%. The NASDAQ topped the list at
over 85% with the other indices falling into line nearer the lower end of the
range. Fixed earnings investments did not fare as well in the current
environment of rising interest rates.
The U.S. economy remains strong, inflation remains docile and the available
labor pool is incessantly tight. Against this good-news-bad-news backdrop, the
Federal Reserve is increasingly concerned that recent productivity gains will
subside and ignite wage inflation. To date, the Fed has hiked short-term
interest rates a quarter percentage point on four occasions since last June.
Prospectively, they may well become more aggressive in their preemptive efforts
to dampen economic growth and avoid a new round of inflation.
We believe some caution may be warranted at this juncture. Certain market
sectors are well extended and may inevitably retreat to less lofty valuation
levels. However, we remain bullish for the long-term prospects of financial
assets. Your variable insurance contract provides an excellent resource to help
you achieve your long-term retirement savings and financial planning objectives.
We appreciate your trust in our company and in our investment products, and we
welcome and encourage your feedback.
/s/ Joseph J. Gasper
Joseph J. Gasper, President
February 10, 2000
3
<PAGE> 3
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NATIONWIDE VARIABLE ACCOUNT-5
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS:
Investments at market value:
<S> <C> <C>
American Century VP - American Century VP Advantage (ACVPAdv)
71,218 shares (cost $451,187) ........................................................ $ 512,768
American Century VP - American Century VP Balanced (ACVPBal)
287 shares (cost $2,156) ............................................................. 2,239
American Century VP - American Century VP Capital Appreciation (ACVPCapAp)
95,214 shares (cost $939,600) ........................................................ 1,412,983
Dreyfus Stock Index Fund (DryStkIx)
81,856 shares (cost $2,116,651) ...................................................... 3,147,374
Fidelity VIP - Equity-Income Portfolio (FidVIPEI)
182,511 shares (cost $3,842,487) ..................................................... 4,692,368
Nationwide SAT - Government Bond Fund (NSATGvtBd)
58,602 shares (cost $653,925) ........................................................ 632,312
Nationwide SAT - Money Market Fund (NSATMyMkt)
517,194 shares (cost $517,194) ....................................................... 517,194
Nationwide SAT - Total Return Fund (NSATTotRe)
143,471 shares (cost $2,057,067) ..................................................... 2,698,692
Neuberger & Berman AMT - Balanced Portfolio (NBAMTBal)
50,684 shares (cost $802,204) ........................................................ 1,058,902
------------
Total investments ................................................................. 14,674,832
Accounts receivable ........................................................................ -
------------
Total assets ...................................................................... 14,674,832
Accounts payable .............................................................................. 556
------------
Contract owners' equity ....................................................................... $ 14,674,276
============
</TABLE>
4
<PAGE> 4
<TABLE>
<CAPTION>
Contract owners' equity represented by:
Annual
Units Unit Value Return(b)
-------- --------- ---------
Contracts in accumulation phase:
<S> <C> <C> <C> <C>
American Century VP - American Century
VP Advantage:
Tax qualified ................................... 17,347 $ 20.506237 $ 355,722 13%
Non-tax qualified ............................... 7,659 20.506237 157,057 13%
American Century VP - American Century
VP Balanced:
Tax qualified ................................... 212 10.579044 2,243 6%(a)
American Century VP - American Century
VP Capital Appreciation:
Tax qualified ................................... 53,128 23.256156 1,235,553 62%
Non-tax qualified ............................... 6,988 23.256156 162,514 62%
Dreyfus Stock Index Fund:
Tax qualified ................................... 79,884 33.009632 2,636,941 19%
Non-tax qualified ............................... 15,464 33.009632 510,461 19%
Fidelity VIP - Equity-Income Portfolio:
Tax qualified ................................... 169,372 23.766053 4,205,304 5%
Non-tax qualified ............................... 27,282 23.766053 648,385 5%
Nationwide SAT - Government Bond Fund:
Tax qualified ................................... 8,195 33.746688 276,554 (4)%
Non-tax qualified ............................... 9,730 33.759140 328,476 (4)%
Nationwide SAT - Money Market Fund:
Tax qualified ................................... 22,769 22.709765 517,079 3%
Nationwide SAT - Total Return Fund:
Tax qualified ................................... 22,633 97.698445 2,211,209 6%
Non-tax qualified ............................... 5,137 94.888344 487,441 6%
Neuberger & Berman AMT - Balanced Portfolio:
Tax qualified ................................... 35,005 26.782503 937,522 32%
Non-tax qualified ............................... 2,866 26.782503 76,759 32%
======= =========
Reserves for annuity contracts in payout phase:
Tax qualified ................................... 105,056
------------
$ 14,674,276
============
<FN>
(a) Non-annualized. The return was computed for the period 5/03/99 (effective date) through 12/31/99 for American
Century VP - Balanced.
(b) The annual return does not include contract charges satisfied by surrendering units.
</TABLE>
See accompanying notes to financial statements.
================================================================================
5
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- --------------------------------------------------------------------------------
NATIONWIDE VARIABLE ACCOUNT-5
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Total ACVPAdv
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
INVESTMENT ACTIVITY:
<S> <C> <C> <C> <C>
Reinvested dividends ............................ $ 213,128 219,580 12,293 6,119
Mortality, expense and administration
charges (note 2) ............................. (186,943) (172,028) (5,799) (4,598)
------------ ------------ ------------ ------------
Net investment activity ...................... 26,185 47,552 6,494 1,521
------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ........... 2,637,641 4,131,708 68,477 68,074
Cost of mutual fund shares sold ................. (1,955,893) (3,006,319) (58,993) (56,566)
------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 681,748 1,125,389 9,484 11,508
Change in unrealized gain (loss) on investments . 709,898 (208,311) 14,582 14,708
------------ ------------ ------------ ------------
Net gain (loss) on investments ............... 1,391,646 917,078 24,066 26,216
------------ ------------ ------------ ------------
Reinvested capital gains ........................ 347,641 598,022 29,181 23,023
------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 1,765,472 1,562,652 59,741 50,760
------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 1,404,429 2,329,647 91,976 136,672
Transfers between funds ......................... -- -- (8,899) 538
Redemptions ..................................... (2,208,252) (3,855,109) (38,641) (69,667)
Annuity benefits ................................ (11,465) (9,159) -- --
Annual contract maintenance charge (note 2) ..... (15,676) (22,396) (416) (600)
Contingent deferred sales charges (note 2) ...... (27,158) (131,035) (552) (2,451)
Adjustments to maintain reserves ................ (328) (6,221) 1 1
------------ ------------ ------------ ------------
Net equity transactions .................... (858,450) (1,694,273) 43,469 64,493
------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 907,022 (131,621) 103,210 115,253
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 13,767,254 13,898,875 409,569 294,316
------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 14,674,276 13,767,254 512,779 409,569
============ ============ ============ ============
<CAPTION>
ACVPBal ACVPCapAp
------------------------ ----------------------------
1999 1998 1999 1998
------------ --------- ------------ ------------
<S> <C> <C> <C> <C>
Investment activity:
Reinvested dividends ............................ -- - -- --
Mortality, expense and administration
charges (note 2) ............................. $ (4) - (13,846) (13,975)
------------ --------- ------------ ------------
Net investment activity ...................... (4) - (13,846) (13,975)
------------ --------- ------------ ------------
Proceeds from mutual fund shares sold ........... 24 - 292,604 518,089
Cost of mutual fund shares sold ................. (24) - (334,532) (531,098)
------------ --------- ------------ ------------
Realized gain (loss) on investments .......... -- - (41,928) (13,009)
Change in unrealized gain (loss) on investments . 83 - 611,355 (67,167)
------------ --------- ------------ ------------
Net gain (loss) on investments ............... 83 - 569,427 (80,176)
------------ --------- ------------ ------------
Reinvested capital gains ........................ -- - -- 56,753
------------ --------- ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 79 - 555,581 (37,398)
------------ --------- ------------ ------------
Equity transactions:
Purchase payments received from
contract owners .............................. 737 - 129,460 253,289
Transfers between funds ......................... 882 - (33,162) (114,102)
Redemptions ..................................... -- - (251,195) (417,964)
Annuity benefits ................................ -- - (1,298) (1,058)
Annual contract maintenance charge (note 2) ..... -- - (1,408) (2,526)
Contingent deferred sales charges (note 2) ...... -- - (3,571) (15,843)
Adjustments to maintain reserves ................ 545 - (2) (555)
------------ --------- ------------ ------------
Net equity transactions .................... 2,164 - (161,176) (298,759)
------------ --------- ------------ ------------
Net change in contract owners'equity .............. 2,243 - 394,405 (336,157)
Contract owners'equity beginning of period ........ -- - 1,018,635 1,354,792
------------ --------- ------------ ------------
Contract owners'equity end of period .............. $ 2,243 - 1,413,040 1,018,635
============ ========= ============ ============
</TABLE>
6
<PAGE> 6
NATIONWIDE VARIABLE ACCOUNT-5
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
DryStkIx FidVIPEI
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 30,718 27,074 74,877 73,941
Mortality, expense and administration
charges (note 2) ............................. (37,005) (26,891) (66,212) (64,856)
----------- ----------- ----------- -----------
Net investment activity ...................... (6,287) 183 8,665 9,085
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ........... 356,577 566,985 922,368 1,268,034
Cost of mutual fund shares sold ................. (161,811) (267,005) (556,277) (804,324)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .......... 194,766 299,980 366,091 463,710
Change in unrealized gain (loss) on investments . 286,267 192,116 (290,369) (257,509)
----------- ----------- ----------- -----------
Net gain (loss) on investments ............... 481,033 492,096 75,722 206,201
----------- ----------- ----------- -----------
Reinvested capital gains ........................ 26,994 4,857 165,518 263,143
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 501,740 497,136 249,905 478,429
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 343,219 477,597 366,209 651,632
Transfers between funds ......................... 207,012 42,698 (142,675) 74,158
Redemptions ..................................... (334,518) (551,257) (803,279) (1,329,276)
Annuity benefits ................................ -- -- (2,387) (1,854)
Annual contract maintenance charge (note 2) ..... (2,467) (3,142) (5,734) (7,937)
Contingent deferred sales charges (note 2) ...... (4,202) (19,840) (9,339) (43,220)
Adjustments to maintain reserves ................ (531) 46 (43) (1,217)
----------- ----------- ----------- -----------
Net equity transactions .................... 208,513 (53,898) (597,248) (657,714)
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 710,253 443,238 (347,343) (179,285)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 2,437,149 1,993,911 5,039,709 5,218,994
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 3,147,402 2,437,149 4,692,366 5,039,709
=========== =========== =========== ===========
<CAPTION>
NSATGvtBd NSATMyMkt
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 35,380 39,279 25,637 26,666
Mortality, expense and administration
charges (note 2) ............................. (8,793) (9,728) (7,082) (6,786)
----------- ----------- ----------- -----------
Net investment activity ...................... 26,587 29,551 18,555 19,880
----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ........... 138,354 287,164 235,786 333,224
Cost of mutual fund shares sold ................. (128,868) (264,548) (235,786) (333,224)
----------- ----------- ----------- -----------
Realized gain (loss) on investments .......... 9,486 22,616 -- --
Change in unrealized gain (loss) on investments . (62,442) (1,204) -- --
----------- ----------- ----------- -----------
Net gain (loss) on investments ............... (52,956) 21,412 -- --
----------- ----------- ----------- -----------
Reinvested capital gains ........................ 1,216 3,509 -- --
----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (25,153) 54,472 18,555 19,880
----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 44,344 94,693 95,924 164,209
Transfers between funds ......................... (65,573) (15,082) 74,995 8,898
Redemptions ..................................... (46,816) (200,241) (164,084) (234,048)
Annuity benefits ................................ (3,484) (2,973) -- --
Annual contract maintenance charge (note 2) ..... (454) (954) (790) (1,231)
Contingent deferred sales charges (note 2) ...... (734) (5,578) (1,587) (6,988)
Adjustments to maintain reserves ................ (98) (1,993) (25) 4
----------- ----------- ----------- -----------
Net equity transactions .................... (72,815) (132,128) 4,433 (69,156)
----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. (97,968) (77,656) 22,988 (49,276)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 730,195 807,851 494,091 543,367
----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 632,227 730,195 517,079 494,091
=========== =========== =========== ===========
</TABLE>
(Continued)
7
<PAGE> 7
NATIONWIDE VARIABLE ACCOUNT-5
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, Continued
YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
NSATTotRe NBAMTBal
------------------------ ----------------------
1999 1998 1999 1998
--------- --------- ------- -------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ............................ $ 17,701 26,120 16,522 20,381
Mortality, expense and administration
charges (note 2) ............................. (36,029) (33,357) (12,173) (11,837)
--------- --------- ------- -------
Net investment activity ...................... (18,328) (7,237) 4,349 8,544
--------- --------- ------- -------
Proceeds from mutual fund shares sold ........... 300,306 745,631 323,145 344,507
Cost of mutual fund shares sold ................. (153,940) (437,842) (325,662) (311,712)
--------- --------- ------- -------
Realized gain (loss) on investments .......... 146,366 307,789 (2,517) 32,795
Change in unrealized gain (loss) on investments . (78,976) (5,725) 229,398 (83,530)
--------- --------- ------- -------
Net gain (loss) on investments ............... 67,390 302,064 226,881 (50,735)
--------- --------- ------- -------
Reinvested capital gains ........................ 100,254 103,584 24,478 143,153
--------- --------- ------- -------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 149,316 398,411 255,708 100,962
--------- --------- ------- -------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 191,766 315,111 140,794 236,444
Transfers between funds ......................... (10,860) 17,210 (21,720) (14,318)
Redemptions ..................................... (282,571) (749,645) (287,148) (303,011)
Annuity benefits ................................ -- -- (4,296) (3,274)
Annual contract maintenance charge (note 2) ..... (3,096) (4,351) (1,311) (1,655)
Contingent deferred sales charges (note 2) ...... (4,435) (27,086) (2,738) (10,029)
Adjustments to maintain reserves ................ (2) (37) (173) (2,470)
--------- --------- ------- -------
Net equity transactions .................... (109,198) (448,798) (176,592) (98,313)
--------- --------- ------- -------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............. 40,118 (50,387) 79,116 2,649
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ....... 2,658,532 2,708,919 979,374 976,725
----------- --------- --------- -------
CONTRACT OWNERS' EQUITY END OF PERIOD ............. $ 2,698,650 2,658,532 1,058,490 979,374
=========== ========= ========= =======
</TABLE>
See accompanying notes to financial statements.
8
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NATIONWIDE VARIABLE ACCOUNT-5
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
(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 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.
(Continued)
9
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NATIONWIDE VARIABLE ACCOUNT-5
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Some of the underlying mutual funds have been established by investment
advisers which manage publicly traded mutual funds having similar names
and investment objectives. While some of the underlying mutual funds
may be similar to, and may in fact be modeled after, publicly traded
mutual funds, the underlying mutual funds are not otherwise directly
related to any publicly traded mutual fund. Consequently, the
investment performance of publicly traded mutual funds and any
corresponding underlying mutual funds may differ substantially.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing
net asset value per share at December 31, 1999. The cost of investments
sold is determined on 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.
(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 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, share-
holder 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.
================================================================================
10
<PAGE> 10
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Independent Auditors' Report
---------------------------
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide Variable Account-5:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account-5 (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 include 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
================================================================================
11
<PAGE> 11
<TABLE>
<CAPTION>
<S> <C>
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220 Bulk Rate
U.S. Postage
PAID
Columbus, Ohio
Permit No. 521
</TABLE>
Nationwide (r) is a registered federal service mark of Nationwide Mutual
Insurance Company
