<PAGE> 1
As filed with the Securities and Exchange Commission.
`33 Act File No. 33-62659
`40 Act File No. 811-7357
================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
Post-Effective Amendment No. 5 [x]
----
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 6 [x]
----
NATIONWIDE VARIABLE ACCOUNT-8
(EXACT NAME OF REGISTRANT)
NATIONWIDE LIFE 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
DENNIS W. CLICK, SECRETARY, ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43215
(Name and Address of Agent for Service)
This Post-Effective Amendment amends the Registration Statement in respect of
the Prospectus, the Statement of Additional Information and the Financial
Statements.
It is proposed that this filing will become effective (check appropriate space):
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on MAY 1, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] on (date) pursuant to paragraph (a) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
================================================================================
REDLINED
<PAGE> 2
NATIONWIDE VARIABLE ACCOUNT-8
REFERENCE TO ITEMS REQUIRED BY FORM N-4
Caption in Prospectus and Statement of Additional Information and Other
Information
<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....................................Calculations 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
NATIONWIDE LIFE INSURANCE COMPANY
Deferred Variable Annuity Contracts
Issued by Nationwide Life Insurance Company through its Nationwide
Variable Account-8
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 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 contracts described in this prospectus are only available in the State of
New York.
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 Income & Growth
- American Century VP International
- American Century VP Value
DREYFUS
- The Dreyfus Socially Responsible Growth Fund, Inc.
- Dreyfus Variable Investment Fund -Appreciation Portfolio (formerly,
Dreyfus Variable Investment Fund -Capital Appreciation Portfolio)
FEDERATED INSURANCE SERIES
- Federated Quality Bond Fund II
FIDELITY VARIABLE INSURANCE PRODUCTS FUND
- VIP Equity-Income Portfolio: Service Class
- VIP Growth Portfolio: Service Class
- VIP High Income Portfolio: Service Class*
- VIP Overseas Portfolio: Service Class
FIDELITY VARIABLE INSURANCE PRODUCTS FUND II
- VIP II Contrafund(R) Portfolio: Service Class
FIDELITY VARIABLE INSURANCE PRODUCTS FUND III
- VIP III Growth Opportunities Portfolio: Service Class
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 Equity Income Fund (subadviser: Federated Investment
Counseling)
- Nationwide Global 50 Fund (formerly, Nationwide Global Equity Fund)
(subadviser: J.P. Morgan Investment Management Inc.)
- Nationwide High Income Bond Fund (subadviser: Federated Investment
Counseling)*
- Nationwide Mid Cap Index Fund (subadviser: The Dreyfus Corporation)
- Nationwide Small Cap Growth Fund (formerly, Nationwide Select Advisers
1
<PAGE> 4
Small Cap Growth Fund ) (subadvisers: Franklin Advisers, Inc., Miller,
Anderson & Sherrerd, LLP, Neuberger Berman, LLC)
- Nationwide Small Cap Value Fund (subadviser: The Dreyfus Corporation)
- Nationwide Small Company Fund (subadvisers: The Dreyfus Corporation,
Neuberger Berman, LLC, Lazard Asset Management and Strong Capital
Management, Inc.)
- Nationwide Strategic Growth Fund (subadviser: Strong Capital Management
Inc.)
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
- AMT Guardian Portfolio
- AMT Mid-Cap Growth Portfolio*
- AMT Partners Portfolio
OPPENHEIMER VARIABLE ACCOUNT FUNDS
- Oppenheimer Aggressive Growth Fund/VA
- Oppenheimer Capital Appreciation Fund/VA
- Oppenheimer Main Street Growth & Income Fund/VA
SALOMON BROTHERS VARIABLE SERIES FUNDS INC.
- Capital Fund
- High Yield Bond Fund
- Investors Fund
- Total Return Fund
VAN ECK WORLDWIDE INSURANCE TRUST
- Worldwide Emerging Markets Fund
- Worldwide Hard Assets Fund
*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
MAY 1, 2000:
NATIONWIDE SEPARATE ACCOUNT TRUST
- Nationwide Strategic Value Fund (subadviser: Strong Capital Management,
Inc./Schafer Capital Management, Inc.)
WARBURG PINCUS TRUST
- Value Portfolio (formerly, Growth & Income Portfolio)
Purchase payments not invested in the underlying mutual fund options of the
Nationwide Variable Account-8 ("variable account") may be allocated to the fixed
account or the Guaranteed Term Options (Guaranteed Term Options may not be
available in every jurisdiction - refer to your contract for specific
information).
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 46.
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;
- prospectus for the Guaranteed Term Options; and
- required Nationwide forms,
call: 1-800-848-6331
1-800-238-3035 (TDD)
or write:
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, 1-05-P1
COLUMBUS, OHIO 43215
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
THIS ANNUITY IS NOT:
- A BANK DEPOSIT - FEDERALLY INSURED
- ENDORSED BY A BANK OR - AVAILABLE IN
GOVERNMENT AGENCY EVERY STATE
Investors assume certain risks when investing in the contracts, including the
possibility of losing money.
2
<PAGE> 5
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.
The contracts described in this prospectus are offered in the State of New York
only. The contracts will be offered only until the State of New York Insurance
Department approves an enhanced version of the contracts.
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> 6
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 of measure used to calculate the variable
annuity payments.
CONTRACT VALUE- The total value of all accumulation units in a contract plus any
amount held in the fixed account, and any amount held under Guaranteed Term
Options.
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.
FIXED ACCOUNT- An investment option that is funded by the general account of
Nationwide.
GENERAL ACCOUNT- All assets of Nationwide other than those of the variable
account or in other separate accounts that have been or may be established by
Nationwide.
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.
INVESTMENT-ONLY CONTRACT- A contract purchased by a Qualified Pension,
Profit-Sharing or Stock Bonus Plan as defined by Section 401(a) of the Internal
Revenue Code.
NATIONWIDE- Nationwide Life Insurance Company.
NON-QUALIFIED CONTRACT- A contract which does not qualify for favorable tax
treatment as an Individual Retirement Annuity, Roth IRA, or Tax Sheltered
Annuity.
QUALIFIED PLANS- Retirement plans which receive favorable tax treatment under
Section 401 or 403(a) of the Internal Revenue Code.
ROTH IRA- An annuity contract which qualifies for favorable tax treatment under
Section 408A of the Internal Revenue Code.
SUB-ACCOUNTS- Divisions of the variable account to which underlying mutual fund
shares are allocated and 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 Variable Account-8, 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> 7
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 INSURANCE COMPANY..................
NATIONWIDE INVESTMENT SERVICES
CORPORATION...................................
TYPES OF CONTRACTS.................................
Non-Qualified Annuity Contracts
Individual Retirement Annuities (IRAs)
Roth IRAs
Tax Sheltered Annuities
Qualified Plans
INVESTING IN THE CONTRACT..........................
The Variable Account and Underlying Mutual Funds
Guaranteed Term Options
The Fixed Account
CHARGES AND DEDUCTIONS.............................
Mortality and Expense Risk Charge
Administration Charge
Contingent Deferred Sales 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 Prior to Annuitization
Transfers After Annuitization
Transfer Requests
RIGHT TO REVOKE....................................
SURRENDER (REDEMPTION).............................
Partial Surrenders (Partial Redemptions)
Full Surrenders (Full Redemptions)
Surrenders Under a Tax Sheltered Annuity
LOAN PRIVILEGE.....................................
Minimum & Maximum Loan Amounts
Loan Processing Fee
How Loan Requests are Processed
Interest
Loan Repayment
Distributions & Annuity Payments
Transferring the Contract
Grace Period & 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
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
Death Benefit Payment
REQUIRED DISTRIBUTIONS.............................
Required Distributions for Non-Qualified Contracts
Required Distributions for Tax Sheltered Annuities
Required Distributions for Individual Retirement Annuities
Required Distributions for Roth IRAs
FEDERAL TAX CONSIDERATIONS.........................
Federal Income Taxes
Withholding
5
<PAGE> 8
Non-Resident Aliens
Federal Estate, Gift, and Generation Skipping Transfer Taxes
Charge for Tax
Diversification
Tax Changes
STATEMENTS AND REPORTS.............................
LEGAL PROCEEDINGS..................................
ADVERTISING........................................
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS.
APPENDIX B: CONDENSED FINANCIAL INFORMATION........
6
<PAGE> 9
SUMMARY OF CONTRACT EXPENSES
The expenses listed below are charged to all contracts unless the contract owner
meets an available exception under the contract.
CONTRACT OWNER TRANSACTION EXPENSES
Maximum Contingent Deferred Sales
Charge ("CDSC") (as a percentage of
purchase payments surrendered)..................7%(1)
Range of CDSC over time:
- ---------------------------------------------------------
NUMBER OF COMPLETED YEARS FROM CDSC
DATE OF PURCHASE PAYMENT PERCENTAGE
- ---------------------------------------------------------
0 7%
- ---------------------------------------------------------
1 6%
- ---------------------------------------------------------
2 5%
- ---------------------------------------------------------
3 4%
- ---------------------------------------------------------
4 3%
- ---------------------------------------------------------
5 2%
- ---------------------------------------------------------
6 1%
- ---------------------------------------------------------
7 0%
- ---------------------------------------------------------
(1)Each contract year, the contract owner may withdraw without a CDSC the
greater of:
a) 10% of all purchase payments made to the contract; or
b) any amount withdrawn to meet minimum distribution requirements under the
Internal Revenue Code.
This free withdrawal privilege is non-cumulative. Free amounts not taken during
any given contract year cannot be taken as free amounts in a subsequent contract
year (see "Contingent Deferred Sales Charge").
Withdrawals may be restricted for contracts issued as a Tax Sheltered Annuities
due to Internal Revenue Code Restrictions.
VARIABLE ACCOUNT CHARGES(2)
(as a percentage of the daily net assets of the variable Account)
Mortality and Expense Risk Charge..............1.25%
Administration Charge..........................0.15%
Total Variable Account Charges............1.40%
(2)These charges apply only to sub-account allocations. They do not apply to
allocations made to the fixed account or to the Guaranteed Term Options. They
are charged on a daily basis at the annual rate noted above.
Nationwide may assess a loan processing fee at the time each new loan is
processed. Loans are only available for contracts issued as Tax Sheltered
Annuities. Loans are not available in all states. In addition, some states may
not permit Nationwide to assess a loan processing fee (see "Loan Privilege").
7
<PAGE> 10
<TABLE>
<CAPTION>
UNDERLYING MUTUAL FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF UNDERLYING MUTUAL FUND NET ASSETS, AFTER EXPENSE REIMBURSEMENT)
- ----------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Underlying
Fees Expenses Fees Mutual Fund
Expenses
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
- ----------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth Fund, Inc. 0.75% 0.04% 0.00% 0.79%
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund - Appreciation Portfolio 0.43% 0.35% 0.00% 0.78%
(formerly, Dreyfus Variable Investment Fund - Capital
Appreciation Portfolio)
- ----------------------------------------------------------------------------------------------------------------------
Federated Insurance Series - Federated Quality Bond Fund 0.00% 0.68% 0.00% 0.68%
II
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio: Service Class 0.48% 0.08% 0.10% 0.66%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio: Service Class 0.58% 0.07% 0.10% 0.75%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio: Service Class 0.58% 0.11% 0.10% 0.79%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio: Service Class 0.73% 0.15% 0.10% 0.98%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund(R)Portfolio: Service Class 0.58% 0.07% 0.10% 0.75%
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio: Service 0.58% 0.10% 0.10% 0.78%
Class
- ----------------------------------------------------------------------------------------------------------------------
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 Equity Income Fund 0.80% 0.15% 0.00% 0.95%
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Global 50 Fund (formerly, NSAT Nationwide 1.00% 0.20% 0.00% 1.20%
Global Equity Fund)
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide High Income Bond Fund 0.80% 0.15% 0.00% 0.95%
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Mid Cap Index Fund 0.88% 0.15% 0.00% 1.03%
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap Growth Fund (formerly, NSAT 1.10% 0.20% 0.00% 1.30%
Nationwide Select Advisers Small Cap Growth Fund)
- ----------------------------------------------------------------------------------------------------------------------
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%
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic Value Fund 0.90% 0.10% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Guardian Portfolio 0.85% 0.15% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Mid-Cap Growth Portfolio 0.85% 0.15% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Partners Portfolio 0.80% 0.07% 0.00% 0.87%
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds - Oppenheimer 0.66% 0.01% 0.00% 0.67%
Aggressive Growth Fund/VA
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds - Oppenheimer Capital 0.68% 0.02% 0.00% 0.70%
Appreciation Fund/VA
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds - Oppenheimer Main 0.73% 0.05% 0.00% 0.78%
Street Growth & Income Fund/VA
- ----------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - Capital Fund 0.85% 0.15% 0.00% 1.00%
- ----------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - High Yield 0.75% 0.25% 0.00% 1.00%
Bond Fund
- ----------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - Investors 0.70% 0.28% 0.00% 0.98%
Fund
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Underlying
Fees Expenses Fees Mutual Fund
Expenses
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salomon Brothers Variable Series Funds Inc. - Total 0.80% 0.20% 0.00% 1.00%
Return Fund
- ----------------------------------------------------------------------------------------------------------------------
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 Emerging 1.00% 0.34% 0.00% 1.34%
Markets Fund
- ----------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - Worldwide Hard Assets 1.00% 0.26% 0.00% 1.26%
Fund
- ----------------------------------------------------------------------------------------------------------------------
Van Kampen Life Investment Trust - Morgan Stanley Real 0.97% 0.13% 0.00% 1.10%
Estate Securities Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Value Portfolio (formerly, Warburg 0.56% 0.44% 0.00% 1.00%
Pincus Trust - Growth & Income 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 charges from the net asset value in calculating the
unit value of the corresponding sub-account. The management fees and other
expenses are more fully described in the prospectus for each underlying mutual
fund. Information relating to the underlying mutual funds was provided by the
underlying mutual funds and not independently verified by Nationwide.
Some underlying mutual funds are subject to fee waivers and expense
reimbursements. The following chart shows what the expenses would have been for
such funds without fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Underlying
Fees Expenses Fees Mutual Fund
Expenses
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federated Insurance Series - Federated Quality Bond Fund II 0.60% 0.89% 0.25% 1.74%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio: Service Class 0.48% 0.09% 0.10% 0.67%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio: Service Class 0.58% 0.09% 0.10% 0.77%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio: Service Class 0.73% 0.18% 0.10% 1.01%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund(R)Portfolio: Service Class 0.58% 0.10% 0.10% 0.78%
- ------------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio: Service 0.58% 0.11% 0.10% 0.79%
Class
- ------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Equity Income Fund 0.80% 0.29% 0.00% 1.09%
- ------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Global 50 Fund (formerly, NSAT Nationwide 1.00% 0.54% 0.00% 1.54%
Global Equity Fund)
- ------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide High Income Bond Fund 0.80% 0.50% 0.00% 1.30%
- ------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Mid Cap Index Fund 0.88% 0.86% 0.00% 1.74%
- ------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap Growth Fund (formerly, NSAT 1.10% 1.30% 0.00% 2.40%
Nationwide Select Advisers Small Cap Growth Fund)
- ------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap Value Fund 0.90% 0.37% 0.00% 1.27%
- ------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic Growth Fund 0.90% 0.33% 0.00% 1.23%
- ------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic Value Fund 0.90% 0.32% 0.00% 1.22%
- ------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Mid-Cap Growth Portfolio 0.93% 0.15% 0.00% 1.08%
- ------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - Capital Fund 0.85% 1.14% 0.00% 1.99%
- ------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - High Yield 0.75% 1.05% 0.00% 1.80%
Bond Fund
- ------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - Investors Fund 0.70% 0.45% 0.00% 1.15%
- ------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - Total Return 0.80% 0.85% 0.00% 1.65%
Fund
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Management Other 12b-1 Total Underlying
Fees Expenses Fees Mutual Fund
Expenses
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Universal Institutional Funds, Inc. - Emerging Markets 0.80% 0.98% 0.00% 1.78%
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 Kampen Life Investment Trust - Morgan Stanley Real 1.00% 0.13% 0.00% 1.13%
Estate Securities Portfolio
- ------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Value Portfolio (formerly, Warburg 0.75% 0.59% 0.00% 1.34%
Pincus Trust - Growth & Income Portfolio)
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXAMPLE
The following chart shows the amount of 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 variable account charges of 1.40%. Deductions
for premium taxes are not reflected but may apply.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your If you do not surrender If you annuitize your
contract at the end of the your contract at the end of contract at the end of the
applicable time period the 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 92 118 147 250 22 68 117 250 * 68 117 250
Portfolios, Inc.- American
Century VP Income &Growth
- --------------------------------------------------------------------------------------------------------------------------
American Century Variable 99 138 180 317 29 88 150 317 * 88 150 317
Portfolios, Inc.- American
Century VP International
- --------------------------------------------------------------------------------------------------------------------------
American Century Variable 95 127 162 282 25 77 132 282 * 77 132 282
Portfolios, Inc.- American
Century VP Value
- --------------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially 93 121 151 260 23 71 121 260 * 71 121 260
Responsible Growth Fund, Inc.
- --------------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment 93 121 151 259 23 71 121 259 * 71 121 259
Fund - Appreciation Portfolio
(formerly, Dreyfus Variable
Investment Fund - Capital
Appreciation Portfolio)
- --------------------------------------------------------------------------------------------------------------------------
Federated Insurance Series - 92 117 146 248 22 67 116 248 * 67 116 248
Federated Quality Bond Fund II
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income 92 117 144 246 22 67 114 246 * 67 114 246
Portfolio: Service Class
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth 93 120 149 256 23 70 119 256 * 70 119 256
Portfolio: Service Class
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income 93 121 151 260 23 71 121 260 * 71 121 260
Portfolio: Service Class
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your If you do not surrender If you annuitize your
contract at the end of the your contract at the end of contract at the end of the
applicable time period the 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>
Fidelity VIP Overseas 95 127 161 280 25 77 131 280 * 77 131 280
Portfolio: Service Class
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund(R) 93 120 149 256 23 70 119 256 * 70 119 256
Portfolio: Service Class
- --------------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth 93 121 151 259 23 71 121 259 * 71 121 259
Opportunities Portfolio:
Service Class
- --------------------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund 92 119 149 255 22 69 119 255 * 69 119 255
- --------------------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund 92 116 144 245 22 66 114 245 * 66 114 245
- --------------------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund 90 113 138 233 20 63 108 233 * 63 108 233
- --------------------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund 92 119 148 253 22 69 118 253 * 69 118 253
- --------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Equity Income 95 126 160 277 25 76 130 277 * 76 130 277
Fund
- --------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Global 50 97 134 173 303 27 84 143 303 * 84 143 303
Fund (formerly, NSAT
Nationwide Global Equity Fund)
- --------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide High Income 95 126 160 277 25 76 130 277 * 76 130 277
Bond Fund
- --------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Mid Cap Index 96 128 164 285 26 78 134 285 * 78 134 285
Fund
- --------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap 98 137 178 313 28 87 148 313 * 87 148 313
Growth Fund (formerly, NSAT
Nationwide Select Advisers
Small Cap Growth Fund)
- --------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap 96 129 165 287 26 79 135 287 * 79 135 287
Value Fund
- --------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Company 97 132 170 298 27 82 140 298 * 82 140 298
Fund
- --------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic 95 127 162 282 25 77 132 282 * 77 132 282
Growth Fund
- --------------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic 95 127 162 282 25 77 132 282 * 77 132 282
Value Fund
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Guardian 95 127 162 282 25 77 132 282 * 77 132 282
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Mid-Cap 95 127 162 282 25 77 132 282 * 77 132 282
Growth Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Partners 94 123 156 268 24 73 126 268 * 73 126 268
Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account 92 117 145 247 22 67 115 247 * 67 115 247
Funds - Oppenheimer
Aggressive Growth Fund/VA
- --------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account 92 118 147 250 22 68 117 250 * 68 117 250
Funds - Oppenheimer Capital
Appreciation Fund/VA
- --------------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account 93 121 151 259 23 71 121 259 * 71 121 259
Funds - Oppenheimer Main
Street Growth & Income Fund/VA
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
If you surrender your If you do not surrender If you annuitize your
contract at the end of the your contract at the end of contract at the end of the
applicable time period the 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>
Salomon Brothers Variable 95 127 162 282 25 77 132 282 * 77 132 282
Series Funds Inc. - Capital
Fund
- -------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable 95 127 162 282 25 77 132 282 * 77 132 282
Series Funds Inc. - High
Yield Bond Fund
- --------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable 95 127 161 280 25 77 131 280 * 77 131 280
Series Funds Inc. - Investors
Fund
- --------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable 95 127 162 282 25 77 132 282 * 77 132 282
Series Funds Inc. - Total
Return Fund
- --------------------------------------------------------------------------------------------------------------------------
The Universal Institutional 100 141 185 326 30 91 155 326 * 91 155 326
Funds, Inc. - Emerging
Markets Debt Portfolio
(formerly, Morgan Stanley
Dean Witter Universal Funds,
Inc.- Emerging Markets Debt
Portfolio)
- --------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance 99 138 180 317 29 88 150 317 * 88 150 317
Trust - Worldwide Emerging
Markets Fund
- --------------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance 98 136 176 309 28 86 146 309 * 86 146 309
Trust - Worldwide Hard Assets
Fund
- --------------------------------------------------------------------------------------------------------------------------
Van Kampen Life Investment 96 131 168 292 26 81 138 292 * 81 138 292
Trust - Morgan Stanley Real
Estate Securities Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Value 95 127 162 282 25 77 132 282 * 77 132 282
Portfolio (formerly, Warburg
Pincus Trust - Growth &
Income Portfolio)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*The contracts sold under this prospectus do not permit annuitization during the
first two contract years.
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 the State of New York only. If the contracts are issued as group contracts,
references throughout this prospectus to "contract(s)" will also mean
"certificate(s)" and "contract owner(s)" will mean "participant(s)," unless the
plan otherwise permits or requires the contract owner to exercise contract
rights under the authority of the plan terms.
The contracts can be categorized as:
- Non-Qualified;
- IRAs, with contributions rolled over or transferred from certain
tax-qualified plans;
- Roth IRAs;
- Tax Sheltered Annuities, with contributions rolled over or transferred
from other Tax Sheltered Annuity plans;
- Charitable Remainder Trusts; and
- 401(a) Investment-only.
For more detailed information with regard to the differences in contract types,
please see "Types of Contracts" later in this prospectus.
12
<PAGE> 15
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
- ---------------------------------------------------------
Tax Sheltered $15,000 $1,000
Annuity
- ---------------------------------------------------------
Charitable $0 $0
Remainder Trust
- ---------------------------------------------------------
401(a) $15,000 $1,000
Investment-only
- ---------------------------------------------------------
</TABLE>
Guaranteed Term Options
Guaranteed Term Options are separate investment options under the contract. The
minimum amount that may be allocated to a Guaranteed Term Option is $1,000.
CHARGES AND EXPENSES
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 0.15% of
the daily net assets of the variable account. Nationwide assesses this charge in
return for incurring administrative expenses related to contract issuance and
maintenance.
Nationwide does not deduct a sales charge from purchase payments upon deposit
into the contract. However, Nationwide may deduct a CDSC if any amount is
withdrawn from the contract. This CDSC reimburses Nationwide for sales expenses.
The amount of the CDSC will not exceed 7% of purchase payments surrendered.
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 a contract is taxed depends on the type of contract issued and the purpose
for which the contract is purchased. 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 other amounts 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.
NATIONWIDE LIFE INSURANCE COMPANY
Nationwide is a stock life insurance company organized under Ohio law in March,
1929, with its home office at One Nationwide Plaza, Columbus, Ohio 43215.
Nationwide is a provider of life insurance, annuities and retirement products.
It is admitted to do business in all states, the District of Columbia and Puerto
Rico.
13
<PAGE> 16
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 CONTRACTS
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 an IRA, a Roth
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 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;
- - the premiums are not fixed;
- - the annual premium cannot exceed $2,000 (although rollovers of greater
amounts from other Roth IRAs and 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
14
<PAGE> 17
the contract within the statutory period of time.
A Roth IRA can receive a rollover from an 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 an IRA
to a Roth IRA. For further details regarding Roth IRAs, please refer to the
disclosure statement provided when the Roth IRA was established.
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.
INVESTING IN THE CONTRACT
THE VARIABLE ACCOUNT AND UNDERLYING MUTUAL FUNDS
Nationwide Variable Account-8 is a variable account that invests in the
underlying mutual funds listed in Appendix A. Nationwide established the
variable account on August 13, 1995, pursuant to Ohio law. 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
Individual Retirement Annuities, Investment-only contracts, Roth IRAs, and Tax
Sheltered Annuities.
Each underlying mutual fund's prospectus contains more detailed information
about that fund. Prospectuses for the underlying mutual
15
<PAGE> 18
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 the 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 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.
GUARANTEED TERM OPTIONS
Guaranteed Term Options are separate investment options under the contract. A
Guaranteed Term Option prospectus should be read along with this prospectus. The
minimum amount that may be allocated to a Guaranteed Term Option is $1,000.
Allocations to the Guaranteed Term Options are not subject to variable account
charges.
Guaranteed Term Options provide a guaranteed rate of interest over four
different maturity
16
<PAGE> 19
durations: three (3), five (5), seven (7) or ten (10) years. Note: The
guaranteed term may last for up to 3 months beyond the 3, 5, 7, or 10 year
period since every guaranteed term will end on the final day of a calendar
quarter after the maturity date.
For the duration selected, Nationwide will declare a guaranteed interest rate.
That rate will be credited to amounts allocated to the Guaranteed Term Option
UNLESS a distribution is taken before the maturity date. If a distribution
occurs before the maturity date, the amount distributed will be subject to a
market value adjustment. A market value adjustment can increase or decrease the
amount distributed depending on current interest rate fluctuations. No market
value adjustment will be applied if Guaranteed Term Option allocations are held
to maturity.
Because a market value adjustment can affect the value of a distribution, its
effects should be carefully considered before surrendering or transferring from
Guaranteed Term Options. When actual interest rates are higher than the
guaranteed rate, a market value adjustment would reduce the value of the amount
distributed. When actual interest rates are lower than the guaranteed rate, the
value of the amount distributed would increase.
Guaranteed Term Options are available only during the accumulation phase of a
contract. They are not available after the annuitization date. In addition,
Guaranteed Term Options are not available for use with asset rebalancing, dollar
cost averaging, or systematic withdrawals.
THE FIXED ACCOUNT
The fixed account is an investment option that is funded by assets of
Nationwide's general account. The general account contains all of Nationwide's
assets other than those in other Nationwide separate accounts. It is used to
support Nationwide's annuity and insurance obligations and may contain
compensation for mortality and expense risks. The general account is not subject
to the same laws as the variable account and the SEC has not reviewed material
in this prospectus relating to the fixed account. However, information relating
to the fixed account is subject to federal securities laws relating to the
accuracy and completeness of prospectus disclosure.
Purchase payments will be allocated to the fixed account by election of the
contract owner.
The investment income earned by the fixed account will be allocated to the
contracts at varying guaranteed interest rate(s) depending on the following
categories of fixed account allocations:
- - New Money Rate - The rate credited on the fixed account allocation when the
contract is purchased or when subsequent purchase payments are made.
Subsequent purchase payments may receive different New Money Rates than the
rate when the contract was issued, since the New Money Rate is subject to
change based on market conditions.
- - Variable Account to Fixed Rate - Allocations transferred from any of the
underlying mutual funds in the variable account to the fixed account may
receive a different rate. The rate may be lower than the New Money Rate.
There may be limits on the amount and frequency of movements from the
variable account to the fixed account.
- - Renewal Rate - The rate available for maturing fixed account allocations that
are entering a new guarantee period. The contract owner will be notified of
this rate in a letter issued with the quarterly statements when any of the
money in the contract owner's fixed account matures. At that time, the
contract owner will have an opportunity to leave the money in the fixed
account and receive the Renewal Rate or the contract owner can move the money
to any of the underlying mutual fund options.
- - Dollar Cost Averaging - From time to time, Nationwide may offer a more
favorable rate for an initial purchase payment into a new contract when used
in conjunction with a Dollar Cost Averaging program.
All of these rates are subject to change on a daily basis; however, once applied
to the fixed account, the interest rates are guaranteed until
17
<PAGE> 20
the end of the calendar quarter during which the 12 month anniversary of the
fixed account allocation occurs.
Credited interest rates are annualized rates - the effective yield of interest
over a one-year period. Interest is credited to each contract on a daily basis.
As a result, the credited interest rate is compounded daily to achieve the
stated effective yield.
The guaranteed rate for any purchase payment will be effective for not less than
twelve months. Nationwide guarantees that the rate will not be less than 3.0%
per year.
Any interest in excess of 3.0% will be credited to fixed account allocations at
Nationwide's sole discretion. The contract owner assumes the risk that interest
credited to fixed account allocations may not exceed the minimum guarantee of
3.0% for any given year.
Nationwide guarantees that the fixed account contract value will not be less
than the amount of the purchase payments allocated to the fixed account, plus
interest credited as described above, less surrenders and any applicable charges
including CDSC.
CHARGES AND DEDUCTIONS
MORTALITY AND EXPENSE RISK CHARGE
Nationwide deducts a Mortality and Expense Risk Charge 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 is equal to an annual rate of 0.80% of the daily net
assets of the variable account. The Mortality Risk Charge compensates Nationwide
for guaranteeing the annuity purchase rates of the contracts. This guarantee
ensures that the annuity purchase rates will not change regardless of the death
rates of annuity payees or the general population.
The Expense Risk Charge is equal to an annual rate of 0.45% of the daily net
assets of the variable account. The Expense Risk Charge compensates Nationwide
for guaranteeing that charges will not increase regardless of actual expenses.
If the Mortality and Expense Risk Charge is insufficient to cover actual
expenses, the loss is borne by Nationwide.
ADMINISTRATION CHARGE
Nationwide deducts an Administration Charge from the variable account. This
amount is computed on a daily basis and is equal to an annual rate of 0.15% of
the daily net assets of the variable account.
The Administration Charge compensates Nationwide for expenses related to
contract issuance and maintenance.
If this charge is insufficient to cover actual expenses, the loss is borne by
Nationwide.
CONTINGENT DEFERRED SALES CHARGE
No sales charge deduction is made from the purchase payments when amounts are
deposited into the contracts. However, if any part of the contract is
surrendered, Nationwide will deduct a CDSC. The CDSC will not exceed 7% of
purchase payments surrendered.
The CDSC is calculated by multiplying the applicable CDSC percentage (noted
below) by amount of purchase payments surrendered.
For purposes of calculating the CDSC, surrenders are considered to come first
from the oldest purchase payment made to the contract, then the next oldest
purchase payment, and so forth. Earning are not subject to the CDSC, however,
earnings may not be distributed prior to the distribution of all purchase
payments. For tax purposes, a surrender is usually treated as a withdrawal of
earnings first.
The CDSC applies as follows:
- ---------------------------------------------------------
NUMBER OF YEARS FROM DATE CDSC
OF PURCHASE PAYMENT PERCENTAGE
- ---------------------------------------------------------
0 7%
- ---------------------------------------------------------
1 6%
- ---------------------------------------------------------
2 5%
- ---------------------------------------------------------
3 4%
- ---------------------------------------------------------
4 3%
- ---------------------------------------------------------
5 2%
- ---------------------------------------------------------
6 1%
- ---------------------------------------------------------
7 0%
- ---------------------------------------------------------
The CDSC is used to cover sales expenses, including commissions (maximum of 6.5%
of purchase payments), production of sales
18
<PAGE> 21
material, and other promotional expenses. If expenses are greater than the CDSC,
the shortfall will be made up from Nationwide's general account, which may
indirectly include portions of the variable account charges, since Nationwide
may generate a profit from these charges.
All or a portion of any withdrawal may be subject to federal income taxes.
Contract owners taking withdrawals before age 59 1/2 may be subject to a 10%
penalty tax.
Waiver of Contingent Deferred Sales Charge
Each contract year, the contract owner may withdraw without a CDSC the greater
of:
a) 10% of all purchase payments; or
b) any amount withdrawn to meet minimum distribution requirements under the
Internal Revenue Code.
This CDSC-free privilege is non-cumulative. Free amounts not taken during any
given contract year cannot be taken as free amounts in a subsequent contract
year.
In addition, no CDSC will be deducted:
1) upon the annuitization of contracts which have been in force for at
least two years;
2) upon payment of a death benefit; or 3) from any values which have been
held under a contract for at least 7 years.
No CDSC applies to transfers among sub-accounts or between or among the
Guaranteed Term Options, the fixed account or the variable account. Nationwide
may waive the CDSC if a contract described in this prospectus is exchanged for
another Nationwide contract (or a contract of any of its affiliated insurance
companies). A CDSC may apply to the contract received in the exchange.
A contract held by a Charitable Remainder Trust may withdraw CDSC-free the
greater of (a) or (b) where:
a) is the amount which would otherwise be available for withdrawal without a
CDSC; and
b) is the difference between the total purchase payments made to the contract
as of the date of the withdrawal (reduced by previous withdrawals) and the
contract value at the close of the day prior to the date of the
withdrawal.
The CDSC will not be eliminated if to do so would be unfairly discriminatory or
prohibited by state law.
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 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
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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, unless
the contract owner is Charitable Remainder Trust.
JOINT OWNERSHIP
Joint owners each own an undivided interest in the contract. If a contract owner
who is NOT the annuitant dies before the annuitization date, the joint owner
becomes the contract owner.
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 of 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. However, if the contingent owner dies before
the contract owner, and there is no surviving joint owner, all of the contract
benefits that would have gone to the contingent owner will go to the contract
owner's estate.
If the contract owner and annuitant are the same, and the contract
owner/annuitant dies before the annuitization date, the contingent owner will
not have any rights in the contract unless the contingent owner is also the
beneficiary.
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. The beneficiaries will share
the death benefit equally, unless otherwise specified.
If no beneficiary survives the annuitant, the contingent beneficiary receives
the death
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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.
If the contract owner is a Charitable Remainder Trust and the annuitant dies
before the annuitization date, the death benefit will accrue to the Charitable
Remainder Trust. Any designation in conflict with the Charitable Remainder
Trust's right to the death benefit will be void.
The contract owner may change the beneficiary(ies) or contingent
beneficiary(ies) 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 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
- ---------------------------------------------------------
MINIMUM INITIAL MINIMUM
CONTRACT PURCHASE PAYMENT SUBSEQUENT
TYPE PAYMENTS
- ---------------------------------------------------------
Non-Qualified $15,000 $1,000
- ---------------------------------------------------------
IRA $15,000 $1,000
- ---------------------------------------------------------
Roth IRA $15,000 $1,000
- ---------------------------------------------------------
Tax Sheltered $15,000 $1,000
Annuity
- ---------------------------------------------------------
Charitable $0 $0
Remainder Trust
- ---------------------------------------------------------
401(a) $15,000 $1,000
Investment-only
- ---------------------------------------------------------
Guaranteed Term Options
Guaranteed Term Options are separate investment options under the contract. The
minimum amount that may be allocated to a Guaranteed Term Option is $1,000.
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 the conditions described
in (2) and (3) exist.
If Nationwide is closed on days when the New York Stock Exchange is open,
contract value may be affected since the contract owner will not have access to
their account.
ALLOCATION OF PURCHASE PAYMENTS
Nationwide allocates purchase payments to sub-accounts, the fixed account,
and/or Guaranteed
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Term Options as instructed by the contract owner. Shares of the underlying
mutual funds allocated to 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, the fixed account or Guaranteed Term
Options. 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 sum of:
1) the value of amounts allocated to the sub-accounts of the variable
account;
2) amounts allocated to the fixed account; and
3) amounts allocated to a Guaranteed Term Option.
If part or all of the contract value is surrendered, or charges are assessed
against the contract value, Nationwide will deduct a proportionate amount from
each sub-account, the fixed account and any Guaranteed Term Option based on
current cash values.
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 charges, which may
include charges for contract options chosen by the contract owner. The
factor is equal to an annual rate of 1.40% of the daily net assets of
the variable account.
Based on the change in 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.
Determining Fixed Account Value
Nationwide determines the value of the fixed account by:
1) adding all amounts allocated to the fixed account, minus amounts
previously transferred or withdrawn; and
2) adding any interest earned on the amounts allocated.
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Determining the Guaranteed Term Option Value
Nationwide determines the value of a Guaranteed Term Option by:
1) adding all amounts allocated to any Guaranteed Term Option, minus amounts
previously transferred or withdrawn (which may be subject to a market
value adjustment);
2) adding any interest earned on the amounts allocated to any Guaranteed
Term Option; and
3) subtracting charges deducted in accordance with the contract.
TRANSFERS PRIOR TO ANNUITIZATION
Transfers from the Fixed Account to the Variable Account or a Guaranteed Term
Option
Fixed account allocations may be transferred to the variable account or to a
Guaranteed Term Option only upon reaching the end of an interest rate guarantee
period. Normally, Nationwide will permit 100% of such fixed account allocations
to be transferred to the variable account or a Guaranteed Term Option; however,
Nationwide may, under certain economic conditions and at its discretion, limit
the maximum transferable amount. The maximum transferable amount will not be
less than 10% of the fixed account allocation reaching the end of an interest
rate guarantee period. Transfers of the fixed account allocations must be made
within 45 days after reaching the end of an interest rate guarantee period.
Contract owners who use Dollar Cost Averaging may transfer from the fixed
account to the variable account (but not to Guaranteed Term Options) under the
terms of that program (see "Dollar Cost Averaging").
Transfers from the Variable Account to the Fixed Account
Variable account allocations may be transferred to the fixed account at any
time. Normally, Nationwide will not restrict transfers from the variable account
to the fixed account; however, Nationwide may establish a maximum transfer limit
from the variable account to the fixed account.
Under no circumstances will the transfer limit be less 10% of the current value
of the variable account and Guaranteed Term Option allocation, for any 12 month
period which the transfer limit is imposed, but not including transfers made
prior to the imposition of the transfer limit. However, Nationwide may refuse
transfers or purchase payments to the fixed account (whether from the variable
account or a Guaranteed Term Option) when the fixed account value is greater
than or equal to 30% of the contract value at the time the purchase payment is
made or the transfer is requested.
Transfers from a Guaranteed Term Option
Transfers from a Guaranteed Term Option prior to maturity are subject to a
market value adjustment.
Transfers Among the Sub-Accounts
Allocations may be transferred among the sub-accounts once per valuation period.
TRANSFERS AFTER ANNUITIZATION
After annuitization, transfers may only be made on the anniversary of the
annuitization date.
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.
Amounts transferred to the variable account will receive the accumulation unit
value next determined after the transfer request is received.
Interest Rate Guarantee Period
The interest rate guarantee period is the period of time that the fixed account
interest rate is guaranteed to remain the same.
Within 45 days of the end of an interest rate guarantee period, transfers may be
made from the fixed account to the variable account or to the Guaranteed Term
Options. Nationwide will determine the amount that may be transferred
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and will declare this amount at the end of the guarantee period. This amount
will not be less than 10% of the amount in the fixed account that is maturing.
For new purchase payments allocated to the fixed account, or transfers to the
fixed account from the variable account or a Guaranteed Term Option, this period
begins on the date of deposit or transfer and ends on the one year anniversary
of the deposit or transfer. The guaranteed interest rate period may last for up
to 3 months beyond the 1 year anniversary because guaranteed terms end on the
last day of a calendar quarter.
The interest rate guarantee period does not in any way refer to interest rate
crediting practices connected with Guaranteed Term Options. During an interest
rate guarantee period, transfers cannot be made from the fixed account, and
amounts transferred to the fixed account must remain on deposit.
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 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.
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PARTIAL SURRENDERS (PARTIAL REDEMPTIONS)
Nationwide will surrender accumulation units from the sub-accounts and an amount
from the fixed account and Guaranteed Term Options. The amount withdrawn from
each investment option will be in proportion to the value in each option at the
time of the surrender request.
A CDSC may apply. The contract owner may direct Nationwide to deduct the CDSC
from either:
a) the amount requested; or
b) the contract value remaining after the contract owner has received the
amount requested.
If the contract owner does not make a specific election, any applicable CDSC
will be taken from the contract value remaining after the contract owner has
received the amount requested.
The CDSC deducted is a percentage of the amount requested by the contract owner.
Amounts deducted for CDSC are not subject to subsequent CDSC.
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. A CDSC may apply.
SURRENDERS UNDER A TAX SHELTERED ANNUITY
Contract owners of a 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:
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.
LOAN PRIVILEGE
The loan privilege is ONLY available to owners of Tax Sheltered Annuities. These
contract owners
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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 & 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:
- ---------------------------------------------------------
CONTRACT MAXIMUM OUTSTANDING LOAN
VALUES BALANCE ALLOWED
- ---------------------------------------------------------
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*)
- ---------------------------------------------------------
*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.
The fee is taken from the sub-accounts, fixed account and Guaranteed Term
Options in proportion to the contract value not the time the loan is processed.
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. If there are not
enough accumulation units available in the contract to reach the requested loan
amount, Nationwide next transfers contract value from the fixed account. Any
remaining required collateral will be transferred from the Guaranteed Term
Options. Transfers from the Guaranteed Term Options may be subject to a market
value adjustment. No CDSC will be deducted on transfers related to loan
processing.
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 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.
Loan repayments to the Guaranteed Term Options must be at least $1,000. If the
proportional share of the repayment to the Guaranteed Term Option is less than
$1,000, that portion of the repayment will be allocated to
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the NSAT-Money Market Fund unless the contract owner directs otherwise.
DISTRIBUTIONS & 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 & 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. Investment-only Contracts, IRAs, Roth
IRAs, and Tax Sheltered Annuities 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.
CONTRACT OWNER SERVICES
ASSET REBALANCING
Asset rebalancing is the automatic reallocation of contract values to the
sub-accounts on a predetermined percentage basis. Asset rebalancing is not
available for assets held in the fixed account or the Guaranteed Term Options.
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
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a 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 the fixed account and/or certain sub-accounts into other
sub-accounts. Nationwide does not guarantee that this program will result in
profit or protect contract owners from loss.
Contract owners direct Nationwide to automatically transfer specified amounts
from the fixed account and the Federated Insurance Series - Federated Quality
Bond Fund II, Fidelity VIP High Income Portfolio, NSAT Government Bond Fund,
NSAT Money Market Fund, and NSAT Nationwide High Income Bond Fund to any other
underlying mutual fund. Dollar Cost Averaging transfers may not be directed to
Guaranteed Term Options.
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.
Dollar Cost Averaging from the Fixed Account
Transfers from the fixed account must be equal to or less than 1/30th of the
fixed account value at the time the program is requested. A Dollar Cost
Averaging program which transfers amounts from the fixed account to the variable
account is not the same as an Enhanced Rate Dollar Cost Averaging program.
Contract owners that wish to utilize Dollar Cost Averaging from the fixed
account should first inquire as to whether any Enhanced Rate Dollar Cost
Averaging programs are available.
Enhanced Rate Dollar Cost Averaging Program
Nationwide may, from time to time, offer Enhanced Rate Dollar Cost Averaging
programs into which contract owners may allocate all or a portion of their fixed
account assets. Contract owners may participate in this program if their
contract value is $10,000 or more. Enhanced Rate Dollar Cost Averaging Programs
allow the contract owner to earn a higher rate of interest on assets allocated
to the program than would be earned on assets in the fixed account. Each
enhanced interest rate is guaranteed for as long as the corresponding program is
in effect and applies only to the assets within that program. Nationwide will
process transfers until either amounts in the Enhanced Rate Dollar Cost
Averaging program are exhausted, or the contract owner instructs Nationwide in
writing to stop the transfers. For these programs only, when a written request
to discontinue transfers is received, Nationwide will automatically transfer the
remaining amount in the program to the NSAT Money Market Fund.
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 and the fixed account
proportionately unless Nationwide is instructed otherwise. Systematic
withdrawals are not available from the Guaranteed Term Options.
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
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withdrawn annually without a CDSC is the greatest of:
1) 10% of all purchase payments made to the contract as of the withdrawal
date;
2) an amount withdrawn to meet minimum distribution requirements under the
Internal Revenue Code; or
3) a percentage of the contract value based on the contract owner's age, as
shown in the table below:
-----------------------------------------------------
CONTRACT OWNER'S PERCENTAGE OF
AGE CONTRACT VALUE
-----------------------------------------------------
Under age 59 1/2 5%
-----------------------------------------------------
Age 59 1/2through age 61 7%
-----------------------------------------------------
Age 62 through age 64 8%
-----------------------------------------------------
Age 65 through age 74 10%
-----------------------------------------------------
Age 75 and over 13%
-----------------------------------------------------
Contract value and contract owner's age are determined as of the date the
request for the withdrawal program is recorded by Nationwide's home office. For
joint owners, the older joint owner's age will be used.
If total amounts withdrawn in any contract year exceed the CDSC-free amount
described above, those amounts will only be eligible for the 10% of purchase
payment CDSC-free withdrawal privilege described in the "Contingent Deferred
Sales Charge" section. The total amount of CDSC for that contract year will be
determined in accordance with that provision.
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 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 Tax
Sheltered Annuity, 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
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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%.
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 may only be made 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.
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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. 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 the contract owner and annuitant are the same, and the contract
owner/annuitant dies before the 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.
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.
If no beneficiary survives the annuitant, the contingent beneficiary receives
the death benefit. Contingent beneficiaries will share the death benefit
equally, unless otherwise specified.
If no contingent beneficiaries survive the annuitant, the contract owner or the
last surviving contract owner's estate will receive the death benefit.
If the contract owner is a Charitable Remainder Trust and the annuitant dies
before the annuitization date, the death benefit will accrue to the Charitable
Remainder Trust. Any designation in conflict with the Charitable Remainder
Trust's right to the death benefit will be void.
If the annuitant dies after the annuitization date, any benefit that may be
payable will be paid according to the selected annuity payment option.
DEATH OF CONTRACT OWNER/ANNUITANT
If a contract owner who is also the annuitant dies before the annuitization
date, a death benefit is
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payable according to the "Death of the Annuitant - Non-Qualified Contracts"
provision.
A joint owner will receive a death benefit if a contract owner/annuitant dies
before the annuitization date.
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.
DEATH BENEFIT PAYMENT
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 form(s).
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 that five year contract
anniversary.
The adjustment for amounts surrendered will reduce items (2) and (3) above in
the same proportion that the contract value was reduced on the date(s) of the
partial surrender(s).
If the annuitant dies on or after his or her 86th birthday and prior to 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.
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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 TAX SHELTERED ANNUITIES
Distributions from 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.
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 Tax Sheltered Annuity will be
distributed in equal or substantially equal payments over a period described in
a) or b), the 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 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 INDIVIDUAL RETIREMENT ANNUITIES
Distributions from an Individual Retirement Annuity 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.
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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
Individual Retirement Annuity 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 Individual Retirement Annuity 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 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.
Required distributions do not have to be withdrawn from this contract if they
are being withdrawn from another Individual Retirement Annuity or Individual
Retirement Account 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 Individual Retirement
Annuity 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 Individual Retirement Annuities.
Individual Retirement Annuity 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
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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" (see
"Federal Tax Considerations").
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;
- 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;
- - Roth IRAs;
- - Tax Sheltered Annuities; and
- - "Non-Qualified Annuities."
Individual Retirement Annuities
Distributions from Individual Retirement Annuities 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
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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;
- - 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 an 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;
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- - 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 o made to the owner after separation from service with
his or her employer after age 55.
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
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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.
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; and
- - 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 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
38
<PAGE> 41
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 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.
39
<PAGE> 42
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 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.
In November 1997, two plaintiffs, one who was the owner of a variable life
insurance contract and the other who was the owner of a variable annuity
contract, commenced a lawsuit in a federal court in Texas against Nationwide and
the American Century group of defendants (Robert Young and David D. Distad v.
Nationwide Life Insurance Company et al.). In this lawsuit, plaintiffs sought to
represent a class of variable life insurance contract owners and variable
annuity contract owners whom they claim were allegedly misled when purchasing
these variable contracts into believing that the performance of their underlying
mutual fund option managed by American Century, whose shares may only be
purchased by insurance companies, would track the performance of a mutual fund,
also managed by American Century, whose shares are publicly traded. The amended
complaint seeks unspecified compensatory and punitive damages. On April 27,
1998, the District Court denied, in part, and granted, in part, motions to
dismiss the complaint filed by Nationwide and American Century. The remaining
claims against Nationwide allege securities fraud, common law fraud, civil
conspiracy, and breach of contract. The District Court, on December 2, 1998,
issued an order denying plaintiffs' motion for class certification and the
appeals court declined to review the order denying class certification upon
interlocutory appeal. On June 11, 1999, the District Court denied the
plaintiffs' motion to amend their complaint and reconsider class certification.
In January 2000, Nationwide and American Century settled this lawsuit now
limited to the claims of the two named plaintiffs. On February 9, 2000 the court
dismissed this lawsuit with prejudice.
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 field 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
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
40
<PAGE> 43
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; o 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;
>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.
41
<PAGE> 44
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 total return,
calculated in a manner prescribed by the SEC, and non-standardized average
annual total return ("non-standardized return").
Standardized verage 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). Any calculation will reflect the standard 7-year CDSC
schedule and the deduction of all charges that could be made to the contracts,
except for premium taxes, which may be imposed by certain states.
Non-standardized return, calculated similar to standardized average 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 non-standardized return illustrations will show the investment
performance the underlying mutual funds would have achieved (reduced by the same
charges except the CDSC) had they been available in the variable account for one
of the periods. If the underlying mutual fund has been effective for less than
one year, non-standardized return is not annualized. The CDSC is not reflected
because the contracts are designed for long term investment. The CDSC, if
reflected, would decrease the level of performance shown. 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 total return and non-standardized return quotations are
calculated using data for the period ended December 31, 1999. 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.
42
<PAGE> 45
SUB-ACCOUNT PERFORMANCE SUMMARY
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE TOTAL RETURN
- -------------------------------------------------------------------------------------------------------------------
10 Years
or Date Fund
Available in Date Fund
the Variable Available in
1 Year 5 Years Account the Variable
Sub-Account Option to 12/31/99 to 12/31/99 to 12/31/99 Account
-- -- --
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - American N/A N/A 7.10% 10/01/99
Century VP Income & Growth
- -------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc. - American N/A N/A 40.07% 10/01/99
Century VP International
- -------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc. - American N/A N/A -7.72% 10/01/99
Century VP Value
- ------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth Fund, Inc. N/A N/A 13.68% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund - Appreciation N/A N/A 3.63% 10/01/99
Portfolio (formerly, Dreyfus Variable Investment Fund
- - Capital Appreciation Portfolio)
- -------------------------------------------------------------------------------------------------------------------
Federated Insurance Series - Federated Quality Bond N/A N/A -6.63% 10/01/99
Fund II
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio: Service Class N/A N/A -2.74% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio: Service Class N/A N/A 16.28% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio: Service Class N/A N/A -2.61% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio: Service Class N/A N/A 17.61% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund(R)Portfolio: Service Class N/A N/A 11.39% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio: N/A N/A -0.13% 10/01/99
Service Class
- -------------------------------------------------------------------------------------------------------------------
NSAT Capital Appreciation Fund N/A N/A -1.79% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund 4.38% N/A 2.55% 01/02/96
- -------------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund 11.96% N/A 3.03% 12/29/95
- -------------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund N/A N/A 1.78% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Equity Income Fund N/A N/A 7.66% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Global 50 Fund (formerly, NSAT N/A N/A 7.61% 10/01/99
Nationwide Global Equity Fund)
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide High Income Bond Fund N/A N/A -3.77% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Mid Cap Index Fund N/A N/A 10.63% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap Growth Fund (formerly, NSAT N/A N/A 58.59% 10/01/99
Nationwide Select Advisers Small Cap Growth Fund)
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap Value Fund N/A N/A 4.83% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Company Fund 108.03% N/A 18.27% 01/02/96
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic Growth Fund N/A N/A 35.98% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic Value Fund N/A N/A 1.73% 10/01/99
- ------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Guardian Portfolio N/A N/A 9.84% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Mid-Cap Growth Portfolio N/A N/A 42.08% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Partners Portfolio N/A N/A 2.73% 10/01/99
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds - Oppenheimer N/A N/A 38.90% 10/01/99
Aggressive Growth Fund/VA
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds - Oppenheimer N/A N/A 22.27% 10/01/99
Capital Appreciation Fund/VA
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 46
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE TOTAL RETURN (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------
10 Years
or Date Fund
Available in Date Fund
the Variable Available in
1 Year 5 Years Account the Variable
Sub-Account Option to 12/31/99 to 12/31/99 to 12/31/99 Account
-- -- --
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oppenheimer Variable Account Funds - Oppenheimer Main N/A N/A 5.01% 10/01/99
Street Growth & Income Fund/VA
- -------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - Capital N/A N/A 4.66% 10/01/99
Fund
- -------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - High N/A N/A -2.97% 10/01/99
Yield Bond Fund
- -------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - N/A N/A -0.94% 10/01/99
Investors Fund
- -------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - Total N/A N/A -6.95% 10/01/99
Return Fund
- -------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. - Emerging N/A N/A 6.92% 10/01/99
Markets Debt Portfolio (formerly, Morgan Stanley Dean
Witter Universal Funds, Inc. - Emerging Markets Debt
Portfolio)
- -------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - Worldwide N/A N/A 49.86% 10/01/99
Emerging Markets Fund
- -------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - Worldwide Hard N/A N/A -3.17% 10/01/99
Assets Fund
- -------------------------------------------------------------------------------------------------------------------
Van Kampen Life Investment Trust - Morgan Stanley N/A N/A -8.05% 10/01/99
Real Estate Securities Portfolio
- -------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Value Portfolio (formerly, N/A N/A -6.35% 10/01/99
Warburg Pincus Trust - Growth & Income Portfolio)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN
$25,000 INITIAL INVESTMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
10 Years
to 12/31/99
1 Year 5 Years or Life of Date Fund
Sub-Account Option to 12/31/99 to 12/31/99 Fund Effective
-- --
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Century Variable Portfolios, Inc. - American 16.37% N/A 22.96% 10/30/97
Century VP Income & Growth
- -------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc. - American 61.75% 22.56% 18.39% 05/02/94
Century VP International
- -------------------------------------------------------------------------------------------------------------------
American Century Variable Portfolios, Inc. - American -2.24% N/A 9.55% 05/01/96
Century VP Value
- -------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially Responsible Growth Fund, Inc. 28.26% 26.86% 22.36% 10/06/93
- -------------------------------------------------------------------------------------------------------------------
Dreyfus Variable Investment Fund - Appreciation 9.90% 23.78% 18.39% 04/05/93
Portfolio (formerly, Dreyfus Variable Investment Fund
- - Capital Appreciation Portfolio)
- -------------------------------------------------------------------------------------------------------------------
Federated Insurance Series - Federated Quality Bond N/A N/A -2.95% 04/22/99
Fund II
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio: Service Class 4.77% 16.91% 12.87% 10/09/86
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio: Service Class 35.37% 27.87% 18.23% 10/09/86
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio: Service Class 6.56% 9.25% 10.83% 09/19/85
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio: Service Class 40.47% 15.68% 9.84% 01/28/87
- -------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund(R)Portfolio: Service Class 22.41% N/A 25.93% 01/03/95
- ------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth Opportunities Portfolio: 2.72% N/A 19.79% 01/03/95
Service Class
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE> 47
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN (CONTINUED)
$25,000 INITIAL INVESTMENT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
10 Years
to 12/31/99
1 Year 5 Years or Life of Date Fund
Sub-Account Option to 12/31/99 to 12/31/99 Fund Effective
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NSAT Capital Appreciation Fund 2.82% 22.62% 15.64% 04/15/92
- -------------------------------------------------------------------------------------------------------------------
NSAT Government Bond Fund -3.76% 5.97% 6.17% 11/08/82
- -------------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund 3.38% 3.75% 3.53% 11/10/81
- -------------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund 5.45% 19.09% 13.18% 11/08/82
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Equity Income Fund 16.83% N/A 14.74% 10/31/97
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Global 50 Fund (formerly, NSAT 21.20% N/A 18.23% 10/31/97
Nationwide Global Equity Fund)
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide High Income Bond Fund 1.75% N/A 3.75% 10/31/97
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Mid Cap Index Fund 19.23% N/A 12.68% 10/31/97
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap Growth Fund (formerly, NSAT N/A N/A 103.11% 05/03/99
Nationwide Select Advisers Small Cap Growth Fund)
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Cap Value Fund 26.05% N/A 8.05% 10/31/97
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Small Company Fund 41.96% N/A 21.50% 10/23/95
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic Growth Fund 82.17% N/A 40.82% 10/31/97
- -------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Strategic Value Fund -4.43% N/A -1.91% 10/31/97
- -------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Guardian Portfolio 13.32% N/A 22.32% 11/03/97
- -------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Mid-Cap Growth Portfolio 51.74% N/A 50.21% 11/03/97
- -------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Partners Portfolio 5.87% 19.33% 15.84% 03/22/94
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds - Oppenheimer 81.04% 27.90% 18.75% 08/15/86
Aggressive Growth Fund/VA
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds - Oppenheimer 39.67% 28.84% 16.81% 04/03/85
Capital Appreciation Fund/VA
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer Variable Account Funds - Oppenheimer Main 20.01% N/A 24.05% 07/05/95
Street Growth & Income Fund/VA
- -------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - Capital 20.38% N/A 18.26% 10/01/99
Fund
- -------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - High 4.04% N/A -0.78% 10/01/99
Yield Bond Fund
- -------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - 10.09% N/A 9.92% 10/01/99
Investors Fund
- -------------------------------------------------------------------------------------------------------------------
Salomon Brothers Variable Series Funds Inc. - Total -0.63% N/A 1.07% 10/01/99
Return Fund
- -------------------------------------------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. - Emerging 25.57% N/A -4.02% 06/19/97
Markets Debt Portfolio (formerly, Morgan Stanley Dean
Witter Universal Funds, Inc. - Emerging Markets Debt
Portfolio)
- -------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - Worldwide 97.49% N/A 8.40% 12/21/95
Emerging Markets Fund
- -------------------------------------------------------------------------------------------------------------------
Van Eck Worldwide Insurance Trust - Worldwide Hard 19.31% 0.06% 1.61% 09/01/89
Assets Fund
- -------------------------------------------------------------------------------------------------------------------
Van Kampen Life Investment Trust - Morgan Stanley -4.73% N/A 9.15% 07/03/95
Real Estate Securities Portfolio
- -------------------------------------------------------------------------------------------------------------------
Warburg Pincus Trust - Value Portfolio (formerly, 4.76% N/A 8.80% 10/31/97
Warburg Pincus Trust - Growth & Income Portfolio)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE> 48
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
General Information and History..............................................1
Services.....................................................................1
Purchase of Securities Being Offered.........................................2
Underwriters.................................................................2
Calculations of Performance..................................................2
Annuity Payments.............................................................3
Financial Statements.........................................................4
46
<PAGE> 49
APPENDIX A: OBJECTIVES FOR UNDERLYING MUTUAL FUNDS
The underlying mutual funds listed below are designed primarily as investment
vehicles for variable annuity contracts and variable life insurance policies
issued by insurance companies.
There can be no assurance that the investment objectives will be achieved.
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC., A MEMBER OF THE AMERICAN CENTURY(SM)
FAMILY OF INVESTMENTS
American Century Variable Portfolios, Inc. was organized as a Maryland
corporation in 1987. It is a diversified, open-end investment management company
that 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 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 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.
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. Dreyfus serves as the
47
<PAGE> 50
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 VARIABLE INVESTMENT FUND
Dreyfus Variable Investment 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
sub-adviser and provides day-to-day management of the 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.
FEDERATED INSURANCE SERIES
Federated Insurance Series (the "Trust"), an Open-End Management Investment
Company, was established as a Massachusetts business trust, under a Declaration
of Trust dated September 15, 1993. The Trust offers its shares only as
investment vehicles for variable annuity and variable life insurance products of
insurance companies. Federated Investment Management Company serves as the
investment adviser.
FEDERATED QUALITY BOND FUND II
Investment Objective: Current income by investing in investment grade fixed
income securities.
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: SERVICE CLASS
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: SERVICE CLASS
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 may involve
greater risk than is inherent in other underlying mutual funds. It is also
important to point out that this Portfolio makes 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
48
<PAGE> 51
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: SERVICE CLASS
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
- 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 Service, 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: SERVICE CLASS
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 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 CONTRAFUND(R) PORTFOLIO: SERVICE CLASS
Investment Objective: To seek capital appreciation by investing primarily
in companies that 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 it's portfolios.
VIP III GROWTH OPPORTUNITIES PORTFOLIO: SERVICE CLASS
Investment Objective: Capital growth by investing primarily in common
stocks and securities convertible into common stocks. The Portfolio, under
normal conditions, will invest at least 65% of its total assets in
securities of companies that FMR believes have long-term growth potential.
Although the Portfolio invests primarily in common stock and securities
convertible into common stock, it has the ability to purchase other
securities, such as preferred stock and bonds, that may produce capital
growth. The Portfolio may invest in foreign securities without limitation.
49
<PAGE> 52
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 considered
consistent with the preservation of capital and maintenance of liquidity.
TOTAL RETURN FUND
Investment Objective: To obtain a reasonable, long-term total return on
invested capital.
SUBADVISED NATIONWIDE FUNDS
NATIONWIDE EQUITY INCOME FUND
Subadviser: Federated Investment Counseling
Investment Objective: Seeks above average income and capital appreciation
by investing at least 65% of its assets in income-producing equity
securities. Such equity securities include common stocks, preferred
stocks, and securities (including debt securities) that are convertible
into common stocks. The portion of the Fund's total assets invested in
each type of equity security will vary according to the Fund's
subadviser's assessment of market, economic conditions and outlook.
NATIONWIDE GLOBAL 50 FUND (FORMERLY, NATIONWIDE GLOBAL EQUITY FUND)
Subadviser: J. P. Morgan Investment Management Inc.
Investment Objective: To provide high total return from a globally
diversified portfolio of equity securities. Total return will consist of
income plus realized and unrealized capital gains and losses. The Fund
seeks its investment objective through country allocation, stock
selection and management of currency exposure. Under normal market
conditions, J.P. Morgan Investment Management Inc. intends to keep the
Fund essentially fully invested with at least 65% of the value of its
total assets in equity securities consisting of common stocks and other
securities with equity characteristics such as preferred stocks,
warrants, rights, convertible securities, trust certificates, limited
partnership interests and equity participations. The Fund's primary
equity instruments are the common stock of companies based in the
developed countries around the world. The assets of the Fund will
ordinarily be invested in the securities of at least five different
countries.
NATIONWIDE HIGH INCOME BOND FUND
Subadviser: Federated Investment Counseling
Investment Objective: Seeks to provide high current income by investing
primarily in a professionally managed, diversified portfolio of fixed
income securities. To meet its objective, the Fund intends to invest at
least 65% of its assets in lower-rated fixed income securities such as
preferred stocks, bonds, debentures, notes, equipment lease certificates
and equipment trust certificates which are rated BBB or lower by Standard
& Poor's or Fitch Investors Service or Baa or lower by Moody's (or if not
rated, are determined by the Fund's subadviser to be of a comparable
quality). Such investments are commonly referred
50
<PAGE> 53
to as "junk bonds." For a further discussion of lower-rated securities,
please see the "High Yield Securities" section of the Fund's prospectus.
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 to the index. The Fund is neither sponsored by
nor affiliated with Standard & Poor's Corporation.
NATIONWIDE SMALL CAP GROWTH FUND (FORMERLY, NATIONWIDE SELECT ADVISERS
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. The Fund may also invest in foreign securities.
NATIONWIDE SMALL CAP VALUE FUND
Subadviser: The Dreyfus Corporation
Investment Objective: 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.
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 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.
NATIONWIDE STRATEGIC VALUE FUND (NOT AVAILABLE IN CONNECTION WITH
CONTRACTS FOR WHICH GOOD ORDER APPLICATIONS ARE (OR WERE) RECEIVED ON OR
AFTER MAY 1, 2000)
Subadviser: Strong Capital Management Inc./Schafer
Capital Management Inc.
Investment Objective: Primarily long-term capital appreciation; current
income is a secondary objective. The Fund seeks to meet its objectives by
investing in securities which are believed to offer the possibility of
increase in value, primarily
51
<PAGE> 54
common stocks of established companies having a strong financial position
and a low stock market valuation at the time of purchase in relation to
investment value. Other than considered appropriate for cash reserves,
the Fund will generally maintain a fully invested position in common
stocks of publicly held companies, primarily in stocks of companies
listed on a national securities exchange or other equity securities
(common stock or securities convertible into common stock). Investments
may also be made in debt securities which are convertible into common
stocks and in warrants or other rights to purchase common stock, which in
such case are considered equity securities by the Fund. Strong Capital
Management, Inc. has subcontracted with Schafer Capital Management, Inc.
to subadvise the Fund.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST
Neuberger Berman Advisers Management Trust ("NB AMT") is an open-end,
diversified management investment company consisting of several series. Shares
of the series of NB 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, Partners and Mid-Cap Growth Portfolios of NB AMT invest all of
their investable assets in a corresponding series of Advisers Managers Trust
managed by Neuberger Berman Management Incorporated ("NB 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 is NB Management.
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.
NB 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 MID-CAP GROWTH PORTFOLIO
Investment Objective: Capital appreciation by investing in equity
securities of medium-sized companies that NB Management believes have the
potential for long-term, above-average capital appreciation. Medium-sized
companies have market capitalizations form $300 million to $10 billion at
the time of investment. The Portfolio and its corresponding series may
invest up to 10% of its net assets, measured at the time of investment, in
corporate debt securities that are below investment grade or, if unrated,
deemed by NB Management to be of comparable quality. Securities that are
below investment grade, as well as unrated securities, are often considered
to be speculative and usually entail greater risk. As a part of the
Portfolio's investment strategy, the Portfolio may invest up to 20% of its
net assets in securities of issuers organized and doing business
principally outside the United States. This limitation does not apply with
respect to foreign securities that are denominated in U.S. dollars.
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.
52
<PAGE> 55
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 to provide benefits under variable life insurance policies
and variable annuity contracts. OppenheimerFunds, Inc. is the investment
adviser.
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 CAPITAL APPRECIATION FUND/VA
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 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.
SALOMON BROTHERS VARIABLE SERIES FUNDS INC.
The Salomon Brothers Variable Series Funds is an open-end investment company
incorporated in Maryland on October 1, 1997. Shares of the Funds are sold only
to separate accounts of insurance companies to fund benefits for variable
annuity contracts and variable life insurance policies, and to qualified pension
and retirement plans. Salomon Brothers Asset Management, Inc. ("SBAM") serves as
the Variable Series Funds investment adviser.
CAPITAL FUND
Investment Objective: The objective of the Fund is to seek capital
appreciation through investments primarily in common stock, or securities
convertible into common stocks, which are believed to have above-average
price appreciation potential and which may also involve above-average risk.
Current income is an incidental consideration.
HIGH YIELD BOND FUND
Investment Objective: The Fund's objective is to maximize current income.
As a secondary objective, the Fund seeks capital appreciation. The Fund
seeks to achieve its objectives by investing primarily in a diversified
portfolio of high yield fixed-income securities rated in medium or lower
rating categories or determined by SBAM to be of comparable quality.
INVESTORS FUND
Investment Objective: The primary investment objective of the Fund is to
seek long-term growth of capital. Current income is a secondary objective.
The Fund seeks to achieve its objectives primarily through investments in
common stocks of well-known companies.
TOTAL RETURN FUND
Investment Objective: The Fund seeks to obtain above-average income
(compared to
53
<PAGE> 56
a portfolio entirely invested in equity securities). As a secondary
objective, the Fund seeks to take advantage of opportunities for growth of
capital and income. The Fund seeks to achieve its objectives primarily
through investments in a broad variety of securities, including equity
securities, fixed-income securities and short-term obligations.
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 Asset 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 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 insurance companies to fund the benefits of variable life
insurance policies and variable annuity contracts. The investment advisor and
manager is Van Eck Associates Corporation.
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 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.
WORLDWIDE HARD ASSETS FUND
Investment Objective: Long-term capital appreciation by investing primarily
in "Hard Asset 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 Fund'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
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.
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<PAGE> 57
WARBURG PINCUS TRUST (NOT AVAILABLE IN CONNECTION WITH CONTRACTS FOR WHICH GOOD
ORDER APPLICATIONS ARE (OR WERE)RECEIVED ON OR AFTER MAY 1, 2000)
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. Portfolios are managed by Credit Suisse Asset Management, LLC
("Credit Suisse").
VALUE PORTFOLIO (FORMERLY, GROWTH & INCOME PORTFOLIO)
Investment Objective: Seeks total return by investing primarily in equity
securities of value companies that may or may not pay dividends.
55
<PAGE> 58
APPENDIX B: CONDENSED FINANCIAL INFORMATION
Accumulation unit values for accumulation units outstanding throughout the
period.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENT CHANGE IN NUMBER OF YEAR
VALUE AT VALUE AT END OF ACCUMULATION UNIT ACCUMULATION
BEGINNING OF PERIOD VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century 10.000000 11.339911 13.40% 4,221 1999
Variable Portfolios,
Inc. - American Century
VP Income & Growth - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
American Century 10.000000 11.339911 13.40% 11,760 1999
Variable Portfolios,
Inc. - American Century
VP Income & Growth - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
American Century 10.000000 14.673401 46.37% 4,762 1999
Variable Portfolios,
Inc. - American Century
VP International - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
American Century 10.000000 14.673401 46.37% 14,596 1999
Variable Portfolios,
Inc. - American Century
VP International - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
American Century 10.000000 9.849004 -1.51% 0 1999
Variable Portfolios,
Inc. - American Century
VP Value - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
American Century 10.000000 9.849004 -1.51% 3,378 1999
Variable Portfolios,
Inc. - American Century
VP Value - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially 10.000000 11.997336 19.97% 18,073 1999
Responsible Growth
Fund, Inc. - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
The Dreyfus Socially 10.000000 11.997336 19.97% 44,395 1999
Responsible Growth
Fund, Inc. - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
56
<PAGE> 59
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENT CHANGE IN NUMBER OF YEAR
VALUE AT VALUE AT END OF ACCUMULATION UNIT ACCUMULATION
BEGINNING OF PERIOD VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dreyfus Variable 10.000000 10.993278 9.93% 14,243 1999
Investment Fund
- -Appreciation Portfolio
- - Q1
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Dreyfus Variable 10.000000 10.993278 9.93% 19,355 1999
Investment Fund
- -Appreciation Portfolio
- - NQ1
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Federated Insurance 10.000000 9.964904 -0.35% 1,815 1999
Series - Federated
Quality Bond Fund II - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Federated Insurance 10.000000 9.964904 -0.35% 2,213 1999
Series - Federated
Quality Bond Fund II -
NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP 10.000000 10.356381 3.56% 9,763 1999
Equity-Income
Portfolio: Service
Class - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP 10.000000 10.356381 3.56% 31,024 1999
Equity-Income
Portfolio: Service
Class - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth 10.000000 12.257729 22.58% 39,716 1999
Portfolio: Service
Class - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth 10.000000 12.257729 22.58% 131,669 1999
Portfolio: Service
Class - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP High 10.000000 10.369409 3.69% 390 1999
Income Portfolio:
Service Class - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP High 10.000000 10.369409 3.69% 8,909 1999
Income Portfolio:
Service Class - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
(1) Formerly, Dreyfus Variable Investment Fund - Capital Appreciation Portfolio.
</TABLE>
57
<PAGE> 60
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENT CHANGE IN NUMBER OF YEAR
VALUE AT VALUE AT END OF ACCUMULATION UNIT ACCUMULATION
BEGINNING OF PERIOD VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Fidelity VIP Overseas 10.000000 12.390673 23.91% 5,579 1999
Portfolio: Service
Class - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas 10.000000 12.390673 23.91% 13,630 1999
Portfolio: Service
Class - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP II 10.000000 11.768698 17.69% 14,970 1999
Contrafund(R)Portfolio:
Service Class - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP II 10.000000 11.768698 17.69% 86,102 1999
Contrafund(R)Portfolio:
Service Class - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth 10.000000 10.616993 6.17% 3,692 1999
Opportunities
Portfolio: Service
Class - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Fidelity VIP III Growth 10.000000 10.616993 6.17% 20,949 1999
Opportunities
Portfolio: Service
Class - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Capital 10.000000 10.450957 4.51% 15,435 1999
Appreciation Fund - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Capital 10.000000 10.450957 4.51% 21,593 1999
Appreciation Fund - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Government Bond 11.859668 11.419132 -3.71% 0 1999
Fund - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Government Bond 11.859668 11.419132 -3.71% 0 1999
Fund - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
58
<PAGE> 61
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENT CHANGE IN NUMBER OF YEAR
VALUE AT VALUE AT END OF ACCUMULATION UNIT ACCUMULATION
BEGINNING OF PERIOD VALUE UNITS AT END OF
PERIOD PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NSAT Money Market Fund 11.164710 11.542099 3.38% 32,871 1999
- - Q*
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Money Market Fund 11.164710 11.542099 3.38% 17,633 1999
- - NQ*
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund 10.000000 10.808344 8.08% 7,251 1999
- - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Total Return Fund 10.000000 10.808344 8.08% 40,774 1999
- - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Equity 10.000000 11.395844 13.96% 202 1999
Income Fund - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Equity 10.000000 11.395844 13.96% 589 1999
Income Fund - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Global 10.000000 11.391398 13.91% 200 1999
50 Fund - Q1
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide Global 10.000000 11.391398 13.91% 1,538 1999
50 Fund - NQ1
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide High 10.000000 10.253125 2.53% 0 1999
Income Bond Fund - Q
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
NSAT Nationwide High 10.000000 10.253125 2.53% 50 1999
Income Bond Fund - NQ
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
(1) Formerly, NSAT Nationwide Global Equity Fund.
</TABLE>
*The 7 day yield on the NSAT Money Market Fund as of December 31, 1999 was
3.97%.
59
<PAGE> 62
<TABLE>
<CAPTION>
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENT CHANGE IN NUMBER OF YEAR
VALUE AT VALUE AT END OF ACCUMULATION UNIT ACCUMULATION
BEGINNING OF PERIOD VALUE UNITS AT END OF
PERIOD PERIOD
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
NSAT Nationwide Mid Cap 10.000000 11.693496 16.93% 6,370 1999
Index Fund- Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide Mid Cap 10.000000 11.693496 16.93% 14,067 1999
Index Fund- NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide Small 10.000000 16.489018 64.89% 210 1999
Cap Growth Fund - Q(1)
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide Small 10.000000 16.489018 64.89% 0 1999
Cap Growth Fund - NQ(1)
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide Small 10.000000 11.112696 11.13% 2,394 1999
Cap Value Fund - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide Small 10.000000 11.112696 11.13% 4,111 1999
Cap Value Fund - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide Small 14.019028 19.907833 42.01% 0 1999
Company Fund - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide Small 14.019028 19.907833 42.01% 0 1999
Company Fund - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide 10.000000 14.227539 42.28% 4,565 1999
Strategic Growth Fund -
Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide 10.000000 14.227539 42.28% 7,783 1999
Strategic Growth Fund -
NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
(1)FORMERLY, NSAT NATIONWIDE SELECT ADVISERS SMALL CAP GROWTH FUND.
</TABLE>
60
<PAGE> 63
<TABLE>
<CAPTION>
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENT CHANGE IN NUMBER OF YEAR
VALUE AT VALUE AT END OF ACCUMULATION UNIT ACCUMULATION
BEGINNING OF PERIOD VALUE UNITS AT END OF
PERIOD PERIOD
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
NSAT Nationwide 10.000000 10.802650 8.03% 0 1999
Strategic Value Fund - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
NSAT Nationwide 10.000000 10.802650 8.03% 312 1999
Strategic Value Fund -
NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Neuberger Berman AMT 10.000000 11.613561 16.14% 2,128 1999
Guardian Portfolio - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Neuberger Berman AMT 10.000000 11.613561 16.14% 2,275 1999
Guardian Portfolio - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Neuberger Berman AMT 10.000000 14.837719 48.38% 1,504 1999
Mid-Cap Growth
Portfolio - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Neuberger Berman AMT 10.000000 14.837719 48.38% 1,961 1999
Mid-Cap Growth
Portfolio - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Neuberger Berman AMT 10.000000 10.903103 9.03% 0 1999
Partners Portfolio - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Neuberger Berman AMT 10.000000 10.903103 9.03% 130 1999
Partners Portfolio - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Oppenheimer Variable 10.000000 14.519858 45.20% 9,373 1999
Account Funds -
Oppenheimer Aggressive
Growth Fund/VA - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Oppenheimer Variable 10.000000 14.519858 45.20% 8,006 1999
Account Funds -
Oppenheimer Aggressive
Growth Fund/VA - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
</TABLE>
61
<PAGE> 64
<TABLE>
<CAPTION>
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENT CHANGE IN NUMBER OF YEAR
VALUE AT VALUE AT END OF ACCUMULATION UNIT ACCUMULATION
BEGINNING OF PERIOD VALUE UNITS AT END OF
PERIOD PERIOD
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Oppenheimer Variable 10.000000 12.856734 28.57% 17,311 1999
Account Funds -
Oppenheimer Capital
Appreciation Fund/VA - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Oppenheimer Variable 10.000000 12.856734 28.57% 33,371 1999
Account Funds -
Oppenheimer Capital
Appreciation Fund/VA -
NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Oppenheimer Variable 10.000000 11.130917 11.31% 18,288 1999
Account Funds -
Oppenheimer Main Street
Growth & Income Fund/VA
- - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Oppenheimer Variable 10.000000 11.130917 11.31% 35,907 1999
Account Funds -
Oppenheimer Main Street
Growth & Income Fund/VA
- - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Salomon Brothers 10.000000 11.096446 10.96% 15,561 1999
Variable Series Funds
Inc. - Capital Fund - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Salomon Brothers 10.000000 11.096446 10.96% 27,744 1999
Variable Series Funds
Inc. - Capital Fund - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Salomon Brothers 10.000000 10.333319 3.33% 202 1999
Variable Series Funds
Inc. - High Yield Bond
Fund - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Salomon Brothers 10.000000 10.333319 3.33% 3,047 1999
Variable Series Funds
Inc. - High Yield Bond
Fund - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
</TABLE>
62
<PAGE> 65
<TABLE>
<CAPTION>
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENT CHANGE IN NUMBER OF YEAR
VALUE AT VALUE AT END OF ACCUMULATION UNIT ACCUMULATION
BEGINNING OF PERIOD VALUE UNITS AT END OF
PERIOD PERIOD
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Salomon Brothers 10.000000 10.536203 5.36% 3,672 1999
Variable Series Funds
Inc. - Investors Fund -
Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Salomon Brothers 10.000000 10.536203 5.36% 11,882 1999
Variable Series Funds
Inc. - Investors Fund -
NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Salomon Brothers 10.000000 9.930789 -0.69% 5,331 1999
Variable Series Funds
Inc. - Total Return
Fund - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Salomon Brothers 10.000000 9.930789 -0.69% 3,828 1999
Variable Series Funds
Inc. - Total Return
Fund - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
The Universal 10.000000 11.321990 13.22% 0 1999
Institutional Funds,
Inc. - Emerging Markets
Debt Portfolio - Q(1)
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
The Universal 10.000000 11.321990 13.22% 0 1999
Institutional Funds,
Inc. - Emerging Markets
Debt Portfolio - NQ(1)
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Van Eck Worldwide 10.000000 15.615759 56.16% 413 1999
Insurance Trust -
Worldwide Emerging
Markets Fund - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Van Eck Worldwide 10.000000 15.615759 56.16% 4,686 1999
Insurance Trust -
Worldwide Emerging
Markets Fund - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
(1)FORMERLY, MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC. - EMERGING MARKETS DEBT PORTFOLIO.
</TABLE>
63
<PAGE> 66
<TABLE>
<CAPTION>
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
UNDERLYING MUTUAL FUND ACCUMULATION UNIT ACCUMULATION UNIT PERCENT CHANGE IN NUMBER OF YEAR
VALUE AT VALUE AT END OF ACCUMULATION UNIT ACCUMULATION
BEGINNING OF PERIOD VALUE UNITS AT END OF
PERIOD PERIOD
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Van Eck Worldwide 10.000000 10.313058 3.13% 0 1999
Insurance Trust -
Worldwide Hard Assets
Fund - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Van Eck Worldwide 10.000000 10.313058 3.13% 1,012 1999
Insurance Trust -
Worldwide Hard Assets
Fund - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Van Kampen Life 10.000000 9.814146 -1.86% 0 1999
Investment Trust -
Morgan Stanley Real
Estate Securities
Portfolio - Q
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Van Kampen Life 10.000000 9.814146 -1.86% 0 1999
Investment Trust -
Morgan Stanley Real
Estate Securities
Portfolio - NQ
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Warburg Pincus Trust - 10.000000 9.994949 -0.05% 1,718 1999
Value Portfolio - Q(1)
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
Warburg Pincus Trust - 10.000000 9.994949 -0.05% 7,549 1999
Value Portfolio - NQ(1)
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
- ------------------------- ------------------- ------------------- ------------------- ------------------- ------------
(1)FORMERLY, WARBURG PINCUS TRUST - GROWTH & INCOME PORTFOLIO.
</TABLE>
64
<PAGE> 67
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
DEFERRED VARIABLE ANNUITY CONTRACTS
ISSUED BY NATIONWIDE LIFE INSURANCE COMPANY
THROUGH ITS NATIONWIDE VARIABLE ACCOUNT - 8
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 Insurance Company by writing
Nationwide Life Insurance Company, One Nationwide Plaza 1-05-P1, Columbus, Ohio
43215, 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.........................................2
Underwriters.................................................................2
Calculations of Performance..................................................2
Annuity Payments.............................................................3
Financial Statements.........................................................4
GENERAL INFORMATION AND HISTORY
Nationwide Variable Account-8 is a separate investment account of Nationwide
Life Insurance Company ("Nationwide"). All of Nationwide's common stock 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 its common stock is held by Nationwide Mutual Insurance Company (95.24%) and
Nationwide Mutual Fire Insurance Company (4.76%), the ultimate controlling
persons of the 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 such 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 affiliates 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
report 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.
1
<PAGE> 68
PURCHASE OF SECURITIES BEING OFFERED
The contracts will be 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, a wholly owned subsidiary of Nationwide. During the fiscal years ended
December 31, 1999, 1998 and 1997, no underwriting commissions were paid by
Nationwide to NISC.
CALCULATIONS 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 3.97%. The NSAT
Money Market Fund 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 Fund. At December 31, 1999, the NSAT Money Market Fund's
seven-day effective yield was 4.05%.
The NSAT Money Market Fund 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 calendar 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
total return, calculated in accordance with a standard method prescribed by
rules of the SEC. Standardized average 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 total return reflects the
deduction of variable account charges of 1.40%. The redeemable value also
reflects the effect of any applicable CDSC that may be imposed at the end of the
period (see "Contingent Deferred Sales Charge" located in the prospectus). 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 total return except the nonstandardized
total return is based on a hypothetical initial investment of $25,000 and does
not reflect the deduction of any applicable CDSC. Reflecting the CDSC would
decrease the level of the performance advertised. The CDSC is not reflected
because the contract is designed for long term investment. An assumed initial
investment of $25,000 will be used
2
<PAGE> 69
because that figure more closely approximates the size of a typical contract
than does the $1,000 figure used in calculating the standardized average total
return quotations.
The standardized average total return and nonstandardized average 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 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. The nonstandardized
total 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 in existence.
Quotations of average 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.
3
<PAGE> 70
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide Variable Account-8
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of Nationwide Variable Account-8 (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 the period October 1, 1999 (commencement of operations)
through December 31, 1999. 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 audit 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 audit provides 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 the period October 1, 1999 (commencement of operations) through
December 31, 1999 in conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 18, 2000
<PAGE> 2
- --------------------------------------------------------------------------------
NATIONWIDE VARIABLE ACCOUNT-8
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investments at market value:
American Century VP - American Century VP Income & Growth (ACVPIncGr)
22,653 shares (cost $177,212) ..................................................................... $ 181,226
American Century VP - American Century VP International (ACVPInt)
22,667 shares (cost $256,031) ..................................................................... 283,342
American Century VP - American Century VP Value (ACVPValue)
5,591 shares (cost $32,911) ....................................................................... 33,269
The Dreyfus Socially Responsible Growth Fund, Inc. (DrySRGro)
19,182 shares (cost $746,125) ..................................................................... 749,451
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
9,264 shares (cost $367,896) ...................................................................... 369,345
Federated Insurance Series - Quality Bond Fund II (FedQualBd)
4,097 shares (cost $40,260) ....................................................................... 40,146
Fidelity VIP - Equity-Income Portfolio: Service Class (FidVIPEIS)
16,462 shares (cost $415,887) ..................................................................... 422,403
Fidelity VIP - Growth Portfolio: Service Class (FidVIPGrS)
38,335 shares (cost $1,993,910) ................................................................... 2,100,783
Fidelity VIP - High Income Portfolio: Service Class (FidVIPHIS)
8,549 shares (cost $95,594) ....................................................................... 96,430
Fidelity VIP - Overseas Portfolio: Service Class (FidVIPOvS)
8,693 shares (cost $219,777) ...................................................................... 238,016
Fidelity VIP-II - Contrafund Portfolio: Service Class (FidVIPConS)
40,876 shares (cost $1,139,462) ................................................................... 1,189,479
Fidelity VIP-III - Growth Opportunities Portfolio: Service Class (FidVIPGrOpS)
11,316 shares (cost $256,430) ..................................................................... 261,620
Nationwide SAT - Capital Appreciation Fund (NSATCapAp)
15,051 shares (cost $398,668) ..................................................................... 386,969
Nationwide SAT - Equity Income Fund (NSATEqInc)
666 shares (cost $8,787) .......................................................................... 9,005
Nationwide SAT - Global Equity Fund (NSATGlobEq)
1,425 shares (cost $19,636) ....................................................................... 19,799
Nationwide SAT - Government Bond Fund (NSATGvtBd)
8,104 shares (cost $88,721) ....................................................................... 87,441
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
54 shares (cost $518) ............................................................................. 518
Nationwide SAT - Mid Cap Index Fund (NSATMidCap)
19,399 shares (cost $236,191) ..................................................................... 238,997
Nationwide SAT - Money Market Fund (NSATMyMkt)
509,629 shares (cost $509,629) .................................................................... 509,629
Nationwide SAT - Select Advisers Small Cap Fund (NSATSmCapG)
176 shares (cost $3,183) .......................................................................... 3,458
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
7,438 shares (cost $75,634) ....................................................................... 72,294
Nationwide SAT - Small Company Fund (NSATSmCo)
4,015 shares (cost $84,405) ....................................................................... 88,806
Nationwide SAT - Strategic Growth Fund (NSATStrGro)
8,595 shares (cost $166,034) ...................................................................... 175,679
Nationwide SAT - Strategic Value Fund (NSATStrVal)
358 shares (cost $3,279) .......................................................................... 3,365
Nationwide SAT - Total Return Fund (NSATTotRe)
27,595 shares (cost $525,205) ..................................................................... 519,070
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
3,226 shares (cost $50,254) ....................................................................... 51,135
Neuberger & Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr)
2,116 shares (cost $47,900) ....................................................................... 51,415
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
72 shares (cost $1,399) ........................................................................... 1,420
Oppenheimer VAF - Aggressive Growth Fund (OppAggGro)
3,066 shares (cost $225,657) ...................................................................... 252,339
Oppenheimer VAF - Capital Appreciation Fund (OppCapApp)
12,998 shares (cost $603,330) ..................................................................... 647,830
Oppenheimer VAF - Main Street Growth & Income Fund (OppMSGrInc)
24,583 shares (cost $583,871) ..................................................................... 605,490
Salomon Brothers VSF - Capital Fund (SBVSFCap)
35,152 shares (cost $479,338) ..................................................................... 480,532
Salomon Brothers VSF - High Yield Bond Fund (SBVSFHYBd)
3,641 shares (cost $36,078) ....................................................................... 33,573
Salomon Brothers VSF - Investors Fund (SBVSFInv)
13,400 shares (cost $161,369) ..................................................................... 163,887
Salomon Brothers VSF - Total Return Fund (SBVSFTotRet)
8,892 shares (cost $93,395) ....................................................................... 90,960
(Continued)
</TABLE>
<PAGE> 4
NATIONWIDE VARIABLE ACCOUNT-8
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY, CONTINUED
<TABLE>
<S> <C>
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt)
5,584 shares (cost $75,951) ....................................................................... 79,628
Van Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
952 shares (cost $9,997) .......................................................................... 10,435
Warburg Pincus Trust - Growth & Income Portfolio (WPGrInc)
7,790 shares (cost $91,532) ....................................................................... 92,622
----------
Total investments .............................................................................. 10,641,806
Accounts receivable ..................................................................................... 1,517
----------
Total assets ................................................................................... 10,643,323
ACCOUNTS PAYABLE ........................................................................................... -
----------
CONTRACT OWNERS' EQUITY (NOTE 4) ........................................................................... $ 10,643,323
==========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
NATIONWIDE VARIABLE ACCOUNT-8
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY
STATEMENTS OF OPERATIONS
FOR THE PERIOD OCTOBER 1, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
1999
<TABLE>
<CAPTION>
Total ACVPIncGr ACVPInt ACVPValue DrySRGro
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................... $ 11,685 -- -- -- 94
Mortality and expense risk charges (note 2) .... (6,443) (65) (172) (29) (434)
------------ ------------ ------------ ------------ ------------
Net investment activity ...................... 5,242 (65) (172) (29) (340)
------------ ------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold .......... 494,875 25 65 28 32,312
Cost of mutual fund shares sold ................ (483,191) (24) (55) (28) (31,417)
------------ ------------ ------------ ------------ ------------
Realized gain (loss) on investments .......... 11,684 1 10 -- 895
Change in unrealized gain (loss) on investments 320,351 4,014 27,311 358 3,326
------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments ............... 332,035 4,015 27,321 358 4,221
------------ ------------ ------------ ------------ ------------
Reinvested capital gains ....................... 91,914 -- -- -- 25,383
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 429,191 3,950 27,149 329 29,264
------------ ------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 10,193,975 146,993 256,193 32,941 782,879
Transfers between funds ........................ -- 30,284 -- -- (62,692)
Redemptions .................................... (6,332) -- -- -- --
Adjustments to maintain reserves ............... 26,489 (4) 9 -- (1)
------------ ------------ ------------ ------------ ------------
Net equity transactions .................... 10,214,132 177,273 256,202 32,941 720,186
------------ ------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 10,643,323 181,223 283,351 33,270 749,450
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............ $ 10,643,323 181,223 283,351 33,270 749,450
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
DryCapAp FedQualBd FidVIPEIS
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends ........................... 1,215 -- --
Mortality and expense risk charges (note 2) .... (243) (20) (232)
------------ ------------ ------------
Net investment activity 972 (20) (232)
------------ ------------ ------------
Proceeds from mutual fund shares sold .......... 20 11 3,803
Cost of mutual fund shares sold ................ (20) (11) (3,841)
------------ ------------ ------------
Realized gain (loss) on investments .......... -- -- (38)
Change in unrealized gain (loss) on investments 1,450 (113) 6,516
------------ ------------ ------------
Net gain (loss) on investments ............... 1,450 (113) 6,478
------------ ------------ ------------
Reinvested capital gains ....................... 819 -- --
------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ......... 3,241 (133) 6,246
------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners .............................. 367,487 40,279 416,196
Transfers between funds ........................ -- -- --
Redemptions .................................... (1,384) -- (40)
Adjustments to maintain reserves ............... 8 (8) 3
------------ ------------ ------------
Net equity transactions .................... 366,111 40,271 416,159
------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ............ 369,352 40,138 422,405
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ...... -- -- --
------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ............ 369,352 40,138 422,405
============ ============ ============
</TABLE>
(Continued)
<PAGE> 6
NATIONWIDE VARIABLE ACCOUNT-8
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
FOR THE PERIOD OCTOBER 1, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
1999
<TABLE>
<CAPTION>
FidVIPGrS FidVIPHIS FidVIPOvS FidVIPConS FidVIPGrOpS
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- -- -- -- --
Mortality and expense risk charges (note 2) ... (1,431) (69) (166) (637) (164)
------------ ------------ ------------ ------------ ------------
Net investment activity ..................... (1,431) (69) (166) (637) (164)
------------ ------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 149,340 25 3,733 16,856 7
Cost of mutual fund shares sold ............... (152,448) (25) (3,634) (16,520) (7)
------------ ------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... (3,108) -- 99 336 --
Change in unrealized gain (loss) on investments 106,873 836 18,239 50,017 5,189
------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 103,765 836 18,338 50,353 5,189
------------ ------------ ------------ ------------ ------------
Reinvested capital gains ...................... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 102,334 767 18,172 49,716 5,025
------------ ------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 2,002,153 95,650 220,014 1,104,388 256,645
Transfers between funds ....................... (8,508) -- -- 36,340 --
Redemptions ................................... (193) (16) -- (1,460) --
Adjustments to maintain reserves .............. 5,005 24 (173) 501 (57)
------------ ------------ ------------ ------------ ------------
Net equity transactions ................... 1,998,457 95,658 219,841 1,139,769 256,588
------------ ------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 2,100,791 96,425 238,013 1,189,485 261,613
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 2,100,791 96,425 238,013 1,189,485 261,613
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
NSATCapAp NSATEqInc NSATGlobEq
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... 436 5 --
Mortality and expense risk charges (note 2) ... (220) (7) (8)
------------ ------------ ------------
Net investment activity ..................... 216 (2) (8)
------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 14 7 5
Cost of mutual fund shares sold ............... (15) (7) (5)
------------ ------------ ------------
Realized gain (loss) on investments ......... (1) -- --
Change in unrealized gain (loss) on investments (11,699) 219 164
------------ ------------ ------------
Net gain (loss) on investments .............. (11,700) 219 164
------------ ------------ ------------
Reinvested capital gains ...................... 15,135 -- 307
------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 3,651 217 463
------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 384,959 8,788 19,337
Transfers between funds ....................... -- -- --
Redemptions ................................... (1,503) -- --
Adjustments to maintain reserves .............. (128) 9 (2)
------------ ------------ ------------
Net equity transactions ................... 383,328 8,797 19,335
------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 386,979 9,014 19,798
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... -- -- --
------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 386,979 9,014 19,798
============ ============ ============
</TABLE>
<PAGE> 7
NATIONWIDE VARIABLE ACCOUNT-8
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
FOR THE PERIOD OCTOBER 1, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
1999
<TABLE>
<CAPTION>
NSATGvtBd NSATHIncBd NSATMidCap NSATMyMkt NSATSmCapG
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 796 -- 72 625 --
Mortality and expense risk charges (note 2) ... (46) -- (131) (179) (2)
----------- ----------- ----------- ----------- -----------
Net investment activity ..................... 750 -- (59) 446 (2)
----------- ----------- ----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 11 -- 30,460 40,021 2
Cost of mutual fund shares sold ............... (11) -- (31,287) (40,021) (2)
----------- ----------- ----------- ----------- -----------
Realized gain (loss) on investments ......... -- -- (827) -- --
Change in unrealized gain (loss) on investments (1,280) (1) 2,806 -- 274
----------- ----------- ----------- ----------- -----------
Net gain (loss) on investments .............. (1,280) (1) 1,979 -- 274
----------- ----------- ----------- ----------- -----------
Reinvested capital gains ...................... 109 -- 8,256 -- 131
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ (421) (1) 10,176 446 403
----------- ----------- ----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 87,753 518 259,785 307,175 3,055
Transfers between funds ....................... -- -- (30,788) 200,271 --
Redemptions ................................... (42) -- (16) -- --
Adjustments to maintain reserves .............. 147 (4) (177) 1,737 5
----------- ----------- ----------- ----------- -----------
Net equity transactions ................... 87,858 514 228,804 509,183 3,060
----------- ----------- ----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 87,437 513 238,980 509,629 3,463
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 87,437 513 238,980 509,629 3,463
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NSATSmCapV NSATSmCo NSATStrGro
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... -- -- --
Mortality and expense risk charges (note 2) ... (36) (51) (109)
----------- ----------- -----------
Net investment activity ..................... (36) (51) (109)
----------- ----------- -----------
Proceeds from mutual fund shares sold ......... 4 335 74
Cost of mutual fund shares sold ............... (4) (337) (72)
----------- ----------- -----------
Realized gain (loss) on investments ......... -- (2) 2
Change in unrealized gain (loss) on investments (3,340) 4,402 9,645
----------- ----------- -----------
Net gain (loss) on investments .............. (3,340) 4,400 9,647
----------- ----------- -----------
Reinvested capital gains ...................... 8,628 2,417 6,271
----------- ----------- -----------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 5,252 6,766 15,809
----------- ----------- -----------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 67,043 63,570 159,870
Transfers between funds ....................... -- -- --
Redemptions ................................... -- -- --
Adjustments to maintain reserves .............. (7) 18,472 3
----------- ----------- -----------
Net equity transactions ................... 67,036 82,042 159,873
----------- ----------- -----------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 72,288 88,808 175,682
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... -- -- --
----------- ----------- -----------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 72,288 88,808 175,682
=========== =========== ===========
</TABLE>
(Continued)
<PAGE> 8
NATIONWIDE VARIABLE ACCOUNT-8
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
FOR THE PERIOD OCTOBER 1, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
1999
<TABLE>
<CAPTION>
NSATStrVal NSATTotRe NBAMTGuard NBAMTMCGr NBAMTPart
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ -- 249 -- -- --
Mortality and expense risk charges (note 2) ... -- (295) (38) (19) (1)
------------ ------------ ------------ ------------ ------------
Net investment activity ..................... -- (46) (38) (19) (1)
------------ ------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... -- 37,400 25 14 1
Cost of mutual fund shares sold ............... -- (38,884) (25) (13) (1)
------------ ------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... -- (1,484) -- 1 --
Change in unrealized gain (loss) on investments 86 (6,136) 881 3,515 21
------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 86 (7,620) 881 3,516 21
------------ ------------ ------------ ------------ ------------
Reinvested capital gains ...................... -- 11,697 -- -- --
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 86 4,031 843 3,497 20
------------ ------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 3,280 515,092 50,316 47,918 1,400
Transfers between funds ....................... -- -- -- -- --
Redemptions ................................... -- (14) (23) -- --
Adjustments to maintain reserves .............. 4 (39) (1) (2) (3)
------------ ------------ ------------ ------------ ------------
Net equity transactions ................... 3,284 515,039 50,292 47,916 1,397
------------ ------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 3,370 519,070 51,135 51,413 1,417
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 3,370 519,070 51,135 51,413 1,417
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
OppAggGro OppCapApp OppMSGrInc
------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... -- -- --
Mortality and expense risk charges (note 2) ... (266) (464) (332)
------------ ------------ ------------
Net investment activity ..................... (266) (464) (332)
------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 150,239 6,144 10,051
Cost of mutual fund shares sold ............... (135,055) (5,914) (9,639)
------------ ------------ ------------
Realized gain (loss) on investments ......... 15,184 230 412
Change in unrealized gain (loss) on investments 26,682 44,500 21,619
------------ ------------ ------------
Net gain (loss) on investments .............. 41,866 44,730 22,031
------------ ------------ ------------
Reinvested capital gains ...................... -- -- --
------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 41,600 44,266 21,699
------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 375,646 605,022 583,878
Transfers between funds ....................... (164,907) -- --
Redemptions ................................... -- (1,462) (90)
Adjustments to maintain reserves .............. 2 3,779 (2,247)
------------ ------------ ------------
Net equity transactions ................... 210,741 607,339 581,541
------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 252,341 651,605 603,240
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... -- -- --
------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 252,341 651,605 603,240
============ ============ ============
</TABLE>
<PAGE> 9
NATIONWIDE VARIABLE ACCOUNT-8
STATEMENTS OF CHANGES IN
CONTRACT OWNERS' EQUITY, CONTINUED
STATEMENTS OF OPERATIONS, CONTINUED
FOR THE PERIOD OCTOBER 1, 1999 (COMMENCEMENT OF OPERATIONS) THROUGH DECEMBER 31,
1999
<TABLE>
<CAPTION>
SBVSFCap SBVSFHYBd SBVSFInv SBVSFTotRet VEWrldEMkt
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... $ 2,159 2,942 815 2,143 --
Mortality and expense risk charges (note 2) ... (324) (23) (117) (54) (21)
------------ ------------ ------------ ------------ ------------
Net investment activity ..................... 1,835 2,919 698 2,089 (21)
------------ ------------ ------------ ------------ ------------
Proceeds from mutual fund shares sold ......... 3,314 18 10,205 70 204
Cost of mutual fund shares sold ............... (3,252) (18) (10,310) (71) (187)
------------ ------------ ------------ ------------ ------------
Realized gain (loss) on investments ......... 62 -- (105) (1) 17
Change in unrealized gain (loss) on investments 1,194 (2,505) 2,518 (2,434) 3,676
------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments .............. 1,256 (2,505) 2,413 (2,435) 3,693
------------ ------------ ------------ ------------ ------------
Reinvested capital gains ...................... 12,520 -- -- -- --
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 15,611 414 3,111 (346) 3,672
------------ ------------ ------------ ------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 465,275 33,159 160,831 91,323 75,972
Transfers between funds ....................... -- -- -- -- --
Redemptions ................................... (23) -- (34) (16) (16)
Adjustments to maintain reserves .............. (331) -- (28) (5) (4)
------------ ------------ ------------ ------------ ------------
Net equity transactions ................... 464,921 33,159 160,769 91,302 75,952
------------ ------------ ------------ ------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 480,532 33,573 163,880 90,956 79,624
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... $ 480,532 33,573 163,880 90,956 79,624
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
VEWrldHAs WPGrInc
------------ ------------
<S> <C> <C>
INVESTMENT ACTIVITY:
Reinvested dividends .......................... -- 134
Mortality and expense risk charges (note 2) ... (4) (34)
------------ ------------
Net investment activity ..................... (4) 100
------------ ------------
Proceeds from mutual fund shares sold ......... 4 28
Cost of mutual fund shares sold ............... (3) (28)
------------ ------------
Realized gain (loss) on investments ......... 1 --
Change in unrealized gain (loss) on investments 438 1,090
------------ ------------
Net gain (loss) on investments .............. 439 1,090
------------ ------------
Reinvested capital gains ...................... -- 241
------------ ------------
Net increase (decrease) in contract owners'
equity resulting from operations ........ 435 1,431
------------ ------------
EQUITY TRANSACTIONS:
Purchase payments received from
contract owners ............................. 10,000 91,192
Transfers between funds ....................... -- --
Redemptions ................................... -- --
Adjustments to maintain reserves .............. 2 --
------------ ------------
Net equity transactions ................... 10,002 91,192
------------ ------------
NET CHANGE IN CONTRACT OWNERS' EQUITY ........... 10,437 92,623
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ..... -- --
------------ ------------
CONTRACT OWNERS' EQUITY END OF PERIOD ........... 10,437 92,623
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 10
================================================================================
NATIONWIDE VARIABLE ACCOUNT-8
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
The Nationwide Variable Account-8 (the Account) was established
pursuant to a resolution of the Board of Directors of Nationwide Life
Insurance Company (the Company) on August 3, 1995. 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 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)
Portfolios of the Dreyfus Variable Investment Fund (Dreyfus VIF);
Dreyfus VIF - Capital Appreciation Portfolio (DryCapAp)
Federated Insurance Series - Quality Bond Fund II (FedQualBd)
Portfolios of the Fidelity Variable Insurance Products Fund
(Fidelity VIP);
Fidelity VIP - Equity-Income Portfolio: Service Class
(FidVIPEIS)
Fidelity VIP - Growth Portfolio: Service Class (FidVIPGrS)
Fidelity VIP - High Income Portfolio: Service Class (FidVIPHIS)
Fidelity VIP - Overseas Portfolio: Service Class (FidVIPOvS)
Portfolios of the Fidelity Variable Insurance Products Fund II
(Fidelity VIP-II);
Fidelity VIP-II - Contrafund Portfolio: Service Class
(FidVIPConS)
Portfolios of the Fidelity Variable Insurance Products Fund III
(Fidelity VIP-III);
Fidelity VIP-III - Growth Opportunities Portfolio: Service Class
(FidVIPGrOpS)
Portfolios of the Morgan Stanley Dean Witter Universal Funds, Inc.
(Morgan Stanley);
Morgan Stanley - Emerging Markets Debt Portfolio (MSEmMkt)
<PAGE> 11
Portfolios 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 - Equity Income Fund (NSATEqInc)
Nationwide SAT - Global Equity Fund (NSATGlobEq)
Nationwide SAT - Government Bond Fund (NSATGvtBd)
Nationwide SAT - High Income Bond Fund (NSATHIncBd)
Nationwide SAT - Mid Cap Index Fund (NSATMidCap)
Nationwide SAT - Money Market Fund (NSATMyMkt)
Nationwide SAT - Select Advisers Small Cap Growth Fund
(NSATSmCapG)
Nationwide SAT - Small Cap Value Fund (NSATSmCapV)
Nationwide SAT - Small Company Fund (NSATSmCo)
Nationwide SAT - Strategic Growth Fund (NSATStrGro)
Nationwide SAT - Strategic Value Fund (NSATStrVal)
Nationwide SAT - Total Return Fund (NSATTotRe)
Portfolios of the Neuberger & Berman Advisers Management Trust
(Neuberger &Berman AMT);
Neuberger & Berman AMT - Guardian Portfolio (NBAMTGuard)
Neuberger & Berman AMT - Mid-Cap Growth Portfolio (NBAMTMCGr)
Neuberger & Berman AMT - Partners Portfolio (NBAMTPart)
Portfolios of the Oppenheimer Variable Account Funds (Oppenheimer
VAF);
Oppenheimer VAF - Aggressive Growth Fund (OppAggGro)
Oppenheimer VAF - Capital Appreciation Fund (OppCapApp)
Oppenheimer VAF - Main Street Growth & Income Fund (OppMSGrInc)
Portfolios of the Salomon Brothers Variable Series Funds Inc.
(Salomon Brothers VSF);
Salomon Brothers VSF - Capital Fund (SBVSFCap)
Salomon Brothers VSF - High Yield Bond Fund (SBVSFHYBd)
Salomon Brothers VSF - Investors Fund (SBVSFInv)
Salomon Brothers VSF - Total Return Fund (SBVSFTotRet)
Portfolios of the Van Eck Worldwide Insurance Trust (Van Eck WIT);
Van Eck WIT - Worldwide Emerging Markets Fund (VEWrldEMkt) Van
Eck WIT - Worldwide Hard Assets Fund (VEWrldHAs)
Portfolio of the Van Kampen Life Investment Trust (Van Kampen
LIT);
Van Kampen LIT - Morgan Stanley Real Estate Securities
Portfolio (VKMSRESec)
Portfolios of the Warburg Pincus Trust;
Warburg Pincus Trust - Growth & Income Portfolio (WPGrInc)
At December 31, 1999, contract owners have invested in all of the above
funds except for Morgan Stanley - Emerging Markets Debt Portfolio and
Van Kampen LIT - Morgan Stanley Real Estate Securities Portfolio. 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.
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.
(Continued)
<PAGE> 12
NATIONWIDE VARIABLE ACCOUNT-8
NOTES TO FINANCIAL STATEMENTS, CONTINUED
(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 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 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 and an expense risk charge assessed through the daily unit
value calculation equal to an annual rate of 0.80% and 0.60%, 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.
<PAGE> 13
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
The following is a summary of contract owners' equity at December 31, 1999.
PERIOD
Contract owners' equity represented by: UNITS UNIT VALUE RETURN(b)
-------- ---------- ---------
<S> <C> <C> <C> <C>
American Century VP -
American Century VP Income & Growth:
Tax qualified 4,221 $ 11.339911 $ 47,866 13%(a)
Non-tax qualified 11,760 11.339911 133,357 13%(a)
American Century VP -
American Century VP International:
Tax qualified 4,762 14.637401 69,703 46%(a)
Non-tax qualified 14,596 14.637401 213,648 46%(a)
American Century VP -
American Century VP Value:
Non-tax qualified 3,378 9.849004 33,270 (2)%(a)
The Dreyfus Socially Responsible
Growth Fund, Inc.:
Tax qualified 18,073 11.997336 216,828 20%(a)
Non-tax qualified 44,395 11.997336 532,622 20%(a)
Dreyfus VIF - Capital Appreciation Portfolio:
Tax qualified 14,243 10.993278 156,577 10%(a)
Non-tax qualified 19,355 10.993278 212,775 10%(a)
Federated Insurance Series -
Federated Quality Bond Fund II:
Tax qualified 1,815 9.964904 18,086 (0)%(a)
Non-tax qualified 2,213 9.964904 22,052 (0)%(a)
Fidelity VIP - Equity-Income Portfolio:
Service Class:
Tax qualified 9,763 10.356381 101,109 4%(a)
Non-tax qualified 31,024 10.356381 321,296 4%(a)
Fidelity VIP - Growth Portfolio:
Service Class:
Tax qualified 39,716 12.257729 486,828 23%(a)
Non-tax qualified 131,669 12.257729 1,613,963 23%(a)
Fidelity VIP - High Income Portfolio:
Service Class:
Tax qualified 390 10.369409 4,044 4%(a)
Non-tax qualified 8,909 10.369409 92,381 4%(a)
Fidelity VIP - Overseas Portfolio:
Service Class:
Tax qualified 5,579 12.390673 69,128 24%(a)
Non-tax qualified 13,630 12.390673 168,885 24%(a)
Fidelity VIP-II - Contrafund Portfolio:
Service Class:
Tax qualified 14,970 11.768698 176,177 18%(a)
Non-tax qualified 86,102 11.768698 1,013,308 18%(a)
Fidelity VIP-III - Growth Opportunities Portfolio:
Service Class:
Tax qualified 3,692 10.616993 39,198 6%(a)
Non-tax qualified 20,949 10.616993 222,415 6%(a)
(Continued)
</TABLE>
<PAGE> 14
NATIONWIDE VARIABLE ACCOUNT-8
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
PERIOD
UNITS UNIT VALUE RETURN(b)
-------- ---------- ---------
<S> <C> <C> <C> <C>
Nationwide SAT - Capital Appreciation Fund:
Tax qualified ................................. 15,435 10.450957 161,311 5%(a)
Non-tax qualified ............................. 21,593 10.450957 225,668 5%(a)
Nationwide SAT - Equity Income Fund:
Tax qualified ................................. 202 11.395844 2,302 14%(a)
Non-tax qualified ............................. 589 11.395844 6,712 14%(a)
Nationwide SAT - Global Equity Fund:
Tax qualified ................................. 200 11.391398 2,278 14%(a)
Non-tax qualified ............................. 1,538 11.391398 17,520 14%(a)
Nationwide SAT - Government Bond Fund:
Tax qualified ................................. 4,691 9.933775 46,599 (1)%(a)
Non-tax qualified ............................. 4,111 9.933775 40,838 (1)%(a)
Nationwide SAT - High Income Bond Fund:
Non-tax qualified ............................. 50 10.253125 513 3%(a)
Nationwide SAT - Mid Cap Index Fund:
Tax qualified ................................. 6,370 11.693496 74,488 17%(a)
Non-tax qualified ............................. 14,067 11.693496 164,492 17%(a)
Nationwide SAT - Money Market Fund:
Tax qualified ................................. 32,871 10.090878 331,697 1%(a)
Non-tax qualified ............................. 17,633 10.090878 177,932 1%(a)
Nationwide SAT -
Select Advisers Small Cap Growth Fund:
Tax qualified ................................. 210 16.489018 3,463 65%(a)
Nationwide SAT - Small Cap Value Fund:
Tax qualified ................................. 2,394 11.112696 26,604 11%(a)
Non-tax qualified ............................. 4,111 11.112696 45,684 11%(a)
Nationwide SAT - Small Company Fund:
Tax qualified ................................. 1,173 13.189965 15,472 32%(a)
Non-tax qualified ............................. 5,560 13.189965 73,336 32%(a)
Nationwide SAT - Strategic Growth Fund:
Tax qualified ................................. 4,565 14.227539 64,949 42%(a)
Non-tax qualified ............................. 7,783 14.227539 110,733 42%(a)
Nationwide SAT - Strategic Value Fund:
Non-tax qualified ............................. 312 10.802650 3,370 8%(a)
Nationwide SAT - Total Return Fund:
Tax qualified ................................. 7,251 10.808344 78,371 8%(a)
Non-tax qualified ............................. 40,774 10.808344 440,699 8%(a)
Neuberger & Berman - Guardian Portfolio:
Tax qualified ................................. 2,128 11.613561 24,714 16%(a)
Non-tax qualified ............................. 2,275 11.613561 26,421 16%(a)
Neuberger & Berman -
Mid-Cap Growth Portfolio:
Tax qualified ................................. 1,504 14.837719 22,316 48%(a)
Non-tax qualified ............................. 1,961 14.837719 29,097 48%(a)
Neuberger & Berman - Partners Portfolio:
Non-tax qualified ............................. 130 10.903103 1,417 9%(a)
</TABLE>
<PAGE> 15
<TABLE>
<CAPTION>
PERIOD
UNITS UNIT VALUE RETURN(b)
-------- ---------- ---------
<S> <C> <C> <C> <C>
Oppenheimer - Aggressive Growth Fund:
Tax qualified ................................. 9,373 14.519858 136,095 45%(a)
Non-tax qualified ............................. 8,006 14.519858 116,246 45%(a)
Oppenheimer - Capital Appreciation Fund:
Tax qualified ................................. 17,311 12.856734 222,563 29%(a)
Non-tax qualified ............................. 33,371 12.856734 429,042 29%(a)
Oppenheimer -
Main Street Growth & Income Fund:
Tax qualified ................................. 18,288 11.130917 203,562 11%(a)
Non-tax qualified ............................. 35,907 11.130917 399,678 11%(a)
Salomon Brothers VSF - Capital Fund:
Tax qualified ................................. 15,561 11.096446 172,672 11%(a)
Non-tax qualified ............................. 27,744 11.096446 307,860 11%(a)
Salomon Brothers VSF -
High Yield Bond Fund:
Tax qualified ................................. 202 10.333319 2,087 3%(a)
Non-tax qualified ............................. 3,047 10.333319 31,486 3%(a)
Salomon Brothers VSF - Investors Fund:
Tax qualified ................................. 3,672 10.536203 38,689 5%(a)
Non-tax qualified ............................. 11,882 10.536203 125,191 5%(a)
Salomon Brothers VSF - Total Return Fund:
Tax qualified ................................. 5,331 9.930789 52,941 (1)%(a)
Non-tax qualified ............................. 3,828 9.930789 38,015 (1)%(a)
Van Eck WIT -
Worldwide Emerging Markets Fund:
Tax qualified ................................. 413 15.615759 6,449 56%(a)
Non-tax qualified ............................. 4,686 15.615759 73,175 56%(a)
Van Eck WIT - Worldwide Hard Assets Fund:
Non-tax qualified ............................. 1,012 10.313058 10,437 3%(a)
Warburg Pincus Trust -
Growth & Income Portfolio:
Tax qualified ................................. 1,718 9.994949 17,171 (0)%(a)
Non-tax qualified ............................. 7,549 9.994949 75,452 (0)%(a)
======== ========
$ 10,643,323
=========
</TABLE>
(a) Non-annualized. The return was computed for the period 10/01/99 (effective
date) through 12/31/99.
(b) The period return does not include contract charges satisfied by
surrendering units.
<PAGE> 71
<PAGE> 1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Nationwide Life Insurance Company:
We have audited the accompanying consolidated balance sheets of Nationwide Life
Insurance Company and subsidiaries (collectively the Company), a wholly owned
subsidiary of Nationwide Financial Services, Inc., as of December 31, 1999 and
1998, and the related consolidated statements of income, shareholder's equity
and cash flows for each of the years in the three-year period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Nationwide Life
Insurance Company and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their 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 INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Balance Sheets
(in millions, 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 $15,294.0 $14,245.1
Equity securities 92.9 127.2
Mortgage loans on real estate, net 5,786.3 5,328.4
Real estate, net 254.8 243.6
Policy loans 519.6 464.3
Other long-term investments 73.8 44.0
Short-term investments 416.0 289.1
--------- ---------
22,437.4 20,741.7
--------- ---------
Cash 4.8 3.4
Accrued investment income 238.6 218.7
Deferred policy acquisition costs 2,554.1 2,022.2
Other assets 305.9 420.3
Assets held in separate accounts 67,135.1 50,935.8
--------- ---------
$92,675.9 $74,342.1
========= =========
Liabilities and Shareholder's Equity
------------------------------------
Future policy benefits and claims $21,861.6 $19,767.1
Other liabilities 914.2 866.1
Liabilities related to separate accounts 67,135.1 50,935.8
--------- ---------
89,910.9 71,569.0
--------- ---------
Commitments and contingencies (notes 8 and 13)
Shareholder's equity:
Common stock, $1 par value. Authorized 5.0 million shares;
3.8 million shares issued and outstanding 3.8 3.8
Additional paid-in capital 766.1 914.7
Retained earnings 2,011.0 1,579.0
Accumulated other comprehensive income (15.9) 275.6
--------- ---------
2,765.0 2,773.1
--------- ---------
$92,675.9 $74,342.1
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Income
(in millions)
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Policy charges $ 895.5 $ 698.9 $ 545.2
Life insurance premiums 220.8 200.0 205.4
Net investment income 1,520.8 1,481.6 1,409.2
Realized (losses) gains on investments (11.6) 28.4 11.1
Other 66.1 66.8 46.5
-------- -------- --------
2,691.6 2,475.7 2,217.4
-------- -------- --------
Benefits and expenses:
Interest credited to policyholder account balances 1,096.3 1,069.0 1,016.6
Other benefits and claims 210.4 175.8 178.2
Policyholder dividends on participating policies 42.4 39.6 40.6
Amortization of deferred policy acquisition costs 272.6 214.5 167.2
Other operating expenses 463.4 419.7 384.9
-------- -------- --------
2,085.1 1,918.6 1,787.5
-------- -------- --------
Income before federal income tax expense 606.5 557.1 429.9
Federal income tax expense 201.4 190.4 150.2
-------- -------- --------
Net income $ 405.1 $ 366.7 $ 279.7
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Shareholder's Equity
Years ended December 31, 1999, 1998 and 1997
(in millions)
<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 $ 3.8 $ 527.9 $1,432.6 $173.6 $2,137.9
Comprehensive income:
Net income -- -- 279.7 -- 279.7
Net unrealized gains on securities
available-for-sale arising during
the year -- -- -- 73.5 73.5
--------
Total comprehensive income 353.2
--------
Capital contribution -- 836.8 -- -- 836.8
--------
Dividend to shareholder -- (450.0) (400.0) -- (850.0)
------ -------- -------- ------ --------
December 31, 1997 3.8 914.7 1,312.3 247.1 2,477.9
Comprehensive income:
Net income -- -- 366.7 -- 366.7
Net unrealized gains on securities
available-for-sale arising during
the year -- -- -- 28.5 28.5
--------
Total comprehensive income 395.2
--------
Dividend to shareholder -- -- (100.0) -- (100.0)
------ -------- -------- ------ --------
December 31, 1998 3.8 914.7 1,579.0 275.6 2,773.1
Comprehensive income:
Net income -- -- 405.1 -- 405.1
Net unrealized losses on securities
available-for-sale arising during
the year -- -- -- (315.0) (315.0)
--------
Total comprehensive income 90.1
--------
Capital contribution -- 26.4 87.9 23.5 137.8
--------
Dividends to shareholder -- (175.0) (61.0) -- (236.0)
------ -------- -------- ------ --------
December 31, 1999 $ 3.8 $ 766.1 $2,011.0 $(15.9) $2,765.0
====== ======== ======== ====== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Consolidated Statements of Cash Flows
(in millions)
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 405.1 $ 366.7 $ 279.7
Adjustments to reconcile net income to net cash provided by operating
activities:
Interest credited to policyholder account balances 1,096.3 1,069.0 1,016.6
Capitalization of deferred policy acquisition costs (637.0) (584.2) (487.9)
Amortization of deferred policy acquisition costs 272.6 214.5 167.2
Amortization and depreciation 2.4 (8.5) (2.0)
Realized (gains) losses on invested assets, net 11.6 (28.4) (11.1)
Increase in accrued investment income (7.9) (8.2) (0.3)
Decrease (increase) in other assets 122.9 16.4 (12.7)
Decrease in policy liabilities (20.9) (8.3) (23.1)
Increase (decrease) in other liabilities 149.7 (34.8) 230.6
Other, net (8.6) (11.3) (10.9)
--------- --------- ---------
Net cash provided by operating activities 1,386.2 982.9 1,146.1
--------- --------- ---------
Cash flows from investing activities:
Proceeds from maturity of securities available-for-sale 2,307.9 1,557.0 993.4
Proceeds from sale of securities available-for-sale 513.1 610.5 574.5
Proceeds from repayments of mortgage loans on real estate 696.7 678.2 437.3
Proceeds from sale of real estate 5.7 103.8 34.8
Proceeds from repayments of policy loans and sale of other invested assets 40.9 23.6 22.7
Cost of securities available-for-sale acquired (3,724.9) (3,182.8) (2,828.1)
Cost of mortgage loans on real estate acquired (971.4) (829.1) (752.2)
Cost of real estate acquired (14.2) (0.8) (24.9)
Short-term investments, net (27.5) 69.3 (354.8)
Other, net (110.9) (88.4) (62.5)
--------- --------- ---------
Net cash used in investing activities (1,284.6) (1,058.7) (1,959.8)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from capital contributions -- -- 836.8
Cash dividends paid (188.5) (100.0) --
Increase in investment product and universal life insurance
product account balances 3,799.4 2,682.1 2,488.5
Decrease in investment product and universal life insurance
product account balances (3,711.1) (2,678.5) (2,379.8)
--------- --------- ---------
Net cash used in financing activities (100.2) (96.4) 945.5
--------- --------- ---------
Net increase (decrease) in cash 1.4 (172.2) 131.8
Cash, beginning of year 3.4 175.6 43.8
--------- --------- ---------
Cash, end of year $ 4.8 $ 3.4 $ 175.6
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(1) Organization and Description of Business
Nationwide Life Insurance Company (NLIC) is a leading provider of
long-term savings and retirement products in the United States and is a
wholly owned subsidiary of Nationwide Financial Services, Inc. (NFS).
The Company develops and sells a diverse range of products including
variable annuities, fixed annuities and life insurance as well as
investment management and administrative services. NLIC markets its
products through a broad network of distribution channels, including
independent broker/dealers, national and regional brokerage firms,
financial institutions, pension plan administrators, life insurance
specialists, Nationwide Retirement Solutions sales representatives, and
Nationwide agents.
Wholly owned subsidiaries of NLIC include Nationwide Life and Annuity
Insurance Company (NLAIC), Nationwide Advisory Services, Inc., and
Nationwide Investment Services Corporation. NLIC and its subsidiaries
are collectively referred to as "the Company."
(2) Summary of Significant Accounting Policies
The significant accounting policies followed by the Company that
materially affect financial reporting are summarized below. The
accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles, which differ
from statutory accounting practices prescribed or permitted by
regulatory authorities. Annual Statements for NLIC and NLAIC, filed
with the Department of Insurance of the State of Ohio (the Department),
are 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 consolidated 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 consolidated 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) Consolidation Policy
The consolidated financial statements include the accounts of NLIC
and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.
<PAGE> 7
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(b) 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.
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. Other long-term investments are carried on
the equity basis, adjusted for 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.
(c) Revenues and Benefits
Investment Products and Universal Life Insurance Products:
Investment products consist primarily of individual and group
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 whole life insurance,
limited-payment life insurance, term life insurance and 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.
<PAGE> 8
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(d) 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(b). For traditional life insurance products, these deferred
policy acquisition costs are predominantly being amortized with
interest over the premium paying period of the related policies in
proportion to the ratio of actual annual premium revenue to the
anticipated total premium revenue. Such anticipated premium
revenue was estimated using the same assumptions as were used for
computing liabilities for future policy benefits.
(e) Separate Accounts
Separate account assets and liabilities represent contractholders'
funds which have been segregated into accounts with specific
investment objectives. For all but $915.4 million of separate
account assets, 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 consolidated
statements of income and cash flows except for the fees the
Company receives.
(f) Future Policy Benefits
Future policy benefits for investment products in the accumulation
phase, universal life insurance and variable universal life
insurance policies have been calculated based on participants'
contributions plus interest credited less applicable contract
charges. The average interest rate credited on investment product
policy reserves was 5.6%, 6.0% and 6.1% for the years ended
December 31, 1999, 1998 and 1997, respectively.
Future policy benefits for traditional life insurance policies
have been calculated by the net level premium method using
interest rates varying from 6.0% to 10.5% and estimates of
mortality, morbidity, investment yields and withdrawals which were
used or which were being experienced at the time the policies were
issued, rather than the assumptions prescribed by state regulatory
authorities.
<PAGE> 9
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(g) Participating Business
Participating business represents approximately 29% in 1999 (40%
in 1998 and 50% in 1997) of the Company's life insurance in force,
69% in 1999 (74% in 1998 and 77% in 1997) of the number of life
insurance policies in force, and 13% in 1999 (14% in 1998 and 27%
in 1997) of life insurance statutory premiums. The provision for
policyholder dividends is based on current dividend scales and is
included in "Future policy benefits and claims" in the
accompanying consolidated balance sheets.
(h) Federal Income Tax
The Company files a consolidated federal income tax return with
Nationwide Mutual Insurance Company (NMIC), the majority
shareholder of Nationwide Corp. The members of the consolidated
tax return group have a tax sharing arrangement 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.
(i) Reinsurance Ceded
Reinsurance premiums ceded and reinsurance recoveries on benefits
and claims incurred are deducted from the respective income and
expense accounts. Assets and liabilities related to reinsurance
ceded are reported on a gross basis.
(j) 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 $8.3 million.
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.
(k) Reclassification
Certain items in the 1998 and 1997 consolidated financial
statements have been reclassified to conform to the 1999
presentation.
<PAGE> 10
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated 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
(in millions) 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 $ 428.4 $ 23.4 $ (2.4) $ 449.4
Obligations of states and political subdivisions 0.8 -- -- 0.8
Debt securities issued by foreign governments 110.6 0.6 (0.8) 110.4
Corporate securities 11,414.7 118.9 (218.6) 11,315.0
Mortgage-backed securities 3,422.8 25.8 (30.2) 3,418.4
--------- ------ ------- ---------
Total fixed maturity securities 15,377.3 168.7 (252.0) 15,294.0
Equity securities 84.9 12.4 (4.4) 92.9
--------- ------ ------- ---------
$15,462.2 $181.1 $(256.4) $15,386.9
========= ====== ======= =========
December 31, 1998:
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S.
government corporations and agencies $ 255.9 $ 13.0 $ -- $ 268.9
Obligations of states and political subdivisions 1.6 -- -- 1.6
Debt securities issued by foreign governments 106.5 4.5 -- 111.0
Corporate securities 9,899.6 423.2 (18.7) 10,304.1
Mortgage-backed securities 3,457.7 104.2 (2.4) 3,559.5
--------- ------ ------- ---------
Total fixed maturity securities 13,721.3 544.9 (21.1) 14,245.1
Equity securities 110.4 18.3 (1.5) 127.2
--------- ------ ------- ---------
$13,831.7 $563.2 $ (22.6) $14,372.3
========= ====== ======= =========
</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
(in millions) cost fair value
--------- ---------
<S> <C> <C>
Fixed maturity securities available for sale:
Due in one year or less $ 847.0 $ 847.0
Due after one year through five years 5,240.5 5,205.7
Due after five years through ten years 5,046.9 5,005.2
Due after ten years 4,242.9 4,236.1
--------- ---------
$15,377.3 $15,294.0
========= =========
</TABLE>
<PAGE> 11
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The components of unrealized (losses) gains on securities
available-for-sale, net, were as follows as of December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998
------ -------
<S> <C> <C>
Gross unrealized (losses) gains $(75.3) $ 540.6
Adjustment to deferred policy acquisition costs 50.9 (116.6)
Deferred federal income tax 8.5 (148.4)
------ -------
$(15.9) $ 275.6
====== =======
</TABLE>
An analysis of the change in gross unrealized (losses) gains on
securities available-for-sale for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----- ------
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(607.1) $52.6 $137.5
Equity securities (8.8) 4.2 (2.7)
------- ----- ------
$(615.9) $56.8 $134.8
======= ===== ======
</TABLE>
Proceeds from the sale of securities available-for-sale during 1999,
1998 and 1997 were $513.1 million, $610.5 million and $574.5 million,
respectively. During 1999, gross gains of $10.4 million ($9.0 million
and $9.9 million in 1998 and 1997, respectively) and gross losses of
$28.0 million ($7.6 million and $18.0 million in 1998 and 1997,
respectively) were realized on those sales. In addition, gross gains of
$15.1 million and gross losses of $0.7 million were realized in 1997
when the Company paid a dividend to NFS, which then made an equivalent
dividend to Nationwide Corp., consisting of securities having an
aggregate fair value of $850.0 million.
The Company had $15.6 million of real estate investments at December
31, 1999 that were non-income producing the preceding twelve months.
During 1998 the Company had investments of $42.4 million that were
non-income producing, which consisted of $32.7 million of securities
available-for-sale and $9.7 million of real estate.
Real estate is presented at cost less accumulated depreciation of $24.8
million as of December 31, 1999 ($21.5 million as of December 31, 1998)
and valuation allowances of $5.5 million as of December 31, 1999 ($5.4
million as of December 31, 1998).
The recorded investment of mortgage loans on real estate considered to
be impaired was $3.7 million as of both December 31, 1999 and 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 $3.7 million
($9.1 million in 1998) and there was no interest income recognized on
those loans. Interest income recognized on impaired loans was $0.3
million in 1998 which is equal to interest income recognized using a
cash-basis method of income recognition.
<PAGE> 12
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Activity in the valuation allowance account for mortgage loans on real
estate is summarized for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Allowance, beginning of year $42.4 $42.5 $51.0
Additions (reductions) charged to operations 0.7 (0.1) (1.2)
Direct write-downs charged against the allowance -- -- (7.3)
Allowance on acquired mortgage loans 1.3 -- --
----- ----- -----
Allowance, end of year $44.4 $42.4 $42.5
===== ===== =====
</TABLE>
An analysis of investment income by investment type follows for the
years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Gross investment income:
Securities available-for-sale:
Fixed maturity securities $1,031.3 $ 982.5 $ 911.6
Equity securities 2.5 0.8 0.8
Mortgage loans on real estate 460.4 458.9 457.7
Real estate 28.8 40.4 42.9
Short-term investments 18.6 17.8 22.7
Other 26.5 30.7 21.0
-------- -------- --------
Total investment income 1,568.1 1,531.1 1,456.7
Less investment expenses 47.3 49.5 47.5
-------- -------- --------
Net investment income $1,520.8 $1,481.6 $1,409.2
======== ======== ========
</TABLE>
An analysis of realized gains (losses) on investments, net of valuation
allowances, by investment type follows for the years ended December 31:
<TABLE>
<CAPTION>
(in millions) 1999 1998 1997
------- ----- -----
<S> <C> <C> <C>
Securities available-for-sale:
Fixed maturity securities $(25.0) $(0.7) $ 3.6
Equity securities 7.4 2.1 2.7
Mortgage loans on real estate (0.6) 3.9 1.6
Real estate and other 6.6 23.1 3.2
------ ----- -----
$(11.6) $28.4 $11.1
====== ===== =====
</TABLE>
Fixed maturity securities with an amortized cost of $9.1 million as of
December 31, 1999 and $6.5 million as of December 31, 1998 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.
<PAGE> 13
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Interest rate swaps are primarily used to convert specific investment
securities and interest bearing policy liabilities 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 or
interest credited to policyholder account balances 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
policy liabilities and 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 liabilities and
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>
(in millions)
-------------
<S> <C>
Interest rate swaps
Pay fixed/receive variable rate swaps hedging investments $362.7
Pay variable/receive fixed rate swaps hedging investments $ 28.5
Other contracts hedging investments $ 19.1
Pay variable/receive fixed rate swaps hedging liabilities $577.2
Foreign currency swaps
Hedging foreign currency denominated investments $ 14.8
Hedging foreign currency denominated liabilities $577.2
Interest rate futures contracts $781.6
</TABLE>
<PAGE> 14
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
(5) Federal Income Tax
The tax effects of temporary differences that give rise to significant
components of the net deferred tax liability as of December 31, 1999
and 1998 are as follows:
<TABLE>
<CAPTION>
(in millions) 1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Fixed maturity securities $ 5.3 $ --
Future policy benefits 149.5 207.7
Liabilities in separate accounts 373.6 319.9
Mortgage loans on real estate and real estate 18.5 17.5
Other assets and other liabilities 51.1 58.9
----- ------
Total gross deferred tax assets 598.0 604.0
Less valuation allowance (7.0) (7.0)
----- ------
Net deferred tax assets 591.0 597.0
----- ------
Deferred tax liabilities:
Deferred policy acquisition costs 724.4 568.7
Fixed maturity securities -- 212.2
Deferred tax on realized investment gains 34.7 34.8
Equity securities and other long-term investments 10.8 9.6
Other 26.5 21.6
------ ------
Total gross deferred tax liabilities 796.4 846.9
------ ------
Net deferred tax liability $205.4 $249.9
====== ======
</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. Nearly all future
deductible amounts can be offset by future taxable amounts or recovery
of federal income tax paid within the statutory carryback period. There
has been no change in the valuation allowance for the years ended
December 31, 1999, 1998 and 1997.
The Company's current federal income tax liability was $104.7 million
and $72.8 million as of December 31, 1999 and 1998, respectively.
Federal income tax expense for the years ended December 31 was as
follows:
(in millions) 1999 1998 1997
------ ------ ------
Currently payable $ 53.6 $186.1 $121.7
Deferred tax expense 147.8 4.3 28.5
------ ------ ------
$201.4 $190.4 $150.2
====== ====== ======
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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
---------------- ---------------- ----------------
(in millions) Amount % Amount % Amount %
------ ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Computed (expected) tax expense $212.3 35.0 $195.0 35.0 $150.5 35.0
Tax exempt interest and dividends
received deduction (7.3) (1.2) (4.9) (0.9) -- --
Income tax credits (4.3) (0.7) -- -- -- --
Other, net 0.7 0.1 0.3 0.1 (0.3) (0.1)
------ ---- ------ ---- ------ ----
Total (effective rate of each year) $201.4 33.2 $190.4 34.2 $150.2 34.9
====== ==== ====== ==== ====== ====
</TABLE>
Total federal income tax paid was $29.8 million, $173.4 million and
$91.8 million during the years ended December 31, 1999, 1998 and 1997,
respectively.
(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>
(in millions) 1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-for-sale
arising during the period:
Gross $(665.3) $ 58.2 $141.1
Adjustment to deferred policy acquisition costs 167.5 (12.9) (21.8)
Related federal income tax (expense) benefit 171.4 (15.9) (41.7)
------- ------ ------
Net (326.4) 29.4 77.6
------- ------ ------
Reclassification adjustment for net (gains) losses on
securities available-for-sale realized during the
period:
Gross 17.6 (1.4) (6.3)
Related federal income tax expense (benefit) (6.2) 0.5 2.2
------- ------ ------
Net 11.4 (0.9) (4.1)
------- ------ ------
Total Other Comprehensive Income $(315.0) $ 28.5 $ 73.5
======= ====== ======
</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.
<PAGE> 16
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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 to be 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.
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, net: 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 mortgage loans in default is the estimated fair
value of the underlying collateral.
Policy loans, short-term investments and cash: The carrying amount
reported in the consolidated 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.
<PAGE> 17
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Policy reserves on life insurance contracts: Included are
disclosures for individual life insurance, universal life
insurance and supplementary contracts with life contingencies for
which 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.
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
(in millions) amount fair value amount fair value
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Securities available-for-sale:
Fixed maturity securities $15,294.0 $15,294.0 $14,245.1 $14,245.1
Equity securities 92.9 92.9 128.5 128.5
Mortgage loans on real estate, net 5,786.3 5,745.5 5,328.4 5,527.6
Policy loans 519.6 519.6 464.3 464.3
Short-term investments 416.0 416.0 289.1 289.1
Cash 4.8 4.8 3.4 3.4
Assets held in separate accounts 67,135.1 67,135.1 50,935.8 50,935.8
Liabilities:
Investment contracts (16,977.7) (16,428.6) (15,468.7) (15,158.6)
Policy reserves on life insurance contracts (4,883.9) (4,607.9) (3,914.0) (3,768.9)
Liabilities related to separate accounts (67,135.1) (66,318.7) (50,935.8) (49,926.5)
Derivative financial instruments:
Interest rate swaps hedging assets 4.3 4.3 - -
Interest rate swaps hedging liabilities - (24.2) - -
Foreign currency swaps (11.8) (11.8) - -
Futures contracts 1.3 1.3 (1.3) (1.3)
</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, including reinsurers, which owe the
Company money, will not pay. The Company minimizes this risk by
adhering to a conservative investment strategy, by maintaining
reinsurance and credit and collection policies and by providing for any
amounts deemed uncollectible.
<PAGE> 18
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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 offering a wide range of
products and by operating throughout the United States, thus reducing
its exposure to any single product or 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 consolidated balance sheets.
Commitments to fund fixed rate mortgage loans on real estate are
agreements to lend to a borrower, and are subject to conditions
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require payment
of a deposit. Commitments extended by the Company are based on
management's case-by-case credit evaluation of the borrower and the
borrower's loan collateral. The underlying mortgage property represents
the collateral if the commitment is funded. The Company's policy for
new mortgage loans on real estate is to lend no more than 75% of
collateral value. Should the commitment be funded, the Company's
exposure to credit loss in the event of nonperformance by the borrower
is represented by the contractual amounts of these commitments less the
net realizable value of the collateral. The contractual amounts also
represent the cash requirements for all unfunded commitments.
Commitments on mortgage loans on real estate of $216.2 million
extending into 2000 were outstanding as of December 31, 1999. The
Company also had $28.0 million of commitments to purchase fixed
maturity securities outstanding as of December 31, 1999.
Notional amounts of derivative financial instruments, primarily
interest rate swaps, interest rate futures contracts and foreign
currency swaps, significantly exceed the credit risk associated with
these instruments and represent contractual balances on which
calculations of amounts to be exchanged are based. Credit exposure is
limited to the sum of the aggregate fair value of positions that have
become favorable to NLIC, including accrued interest receivable due
from counterparties. Potential credit losses are minimized through
careful evaluation of counterparty credit standing, selection of
counterparties from a limited group of high quality institutions,
collateral agreements and other contract provisions. At December 31,
1999, NLIC's credit risk from these derivative financial instruments
was $6.1 million.
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 23% (22% in 1998) in any geographic area and no more than 2% (2%
in 1998) with any one borrower as of December 31, 1999. As of December
31, 1999, 39% (42% in 1998) of the remaining principal balance of the
Company's commercial mortgage loan portfolio financed retail
properties.
<PAGE> 19
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
Reinsurance: The Company has entered into a reinsurance contract to
cede a portion of its general account individual annuity business to
The Franklin Life Insurance Company (Franklin). Total recoveries due
from Franklin were $143.6 million and $187.9 million as of December 31,
1999 and 1998, respectively. The contract is immaterial to the
Company's results of operations. The ceding of risk does not discharge
the original insurer from its primary obligation to the policyholder.
Under the terms of the contract, Franklin has established a trust as
collateral for the recoveries. The trust assets are invested in
investment grade securities, the market value of which must at all
times be greater than or equal to 102% of the reinsured reserves.
(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 cost (benefit) charged to operations by the Company during the
years ended December 31, 1999, 1998 and 1997 were $(8.3) million, $2.0
million and $7.5 million, respectively. The Company has recorded a
prepaid pension asset of $13.3 million and $5.0 million as of December
31, 1999 and 1998, 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 $49.6 million and $40.1 million, respectively, and
the net periodic postretirement benefit cost (NPPBC) for 1999, 1998 and
1997 was $4.9 million, $4.1 million and $3.0 million, respectively.
<PAGE> 20
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated 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
------------------ -----------------------
(in millions) 1999 1998 1999 1998
--------------------------------------------------------- -------- -------- ------- -------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $2,185.0 $2,033.8 $ 270.1 $ 237.9
Service cost 80.0 87.6 14.2 9.8
Interest cost 109.9 123.4 17.6 15.4
Actuarial (gain) loss (95.0) 123.2 (64.4) 15.6
Plan settlement in 1999/curtailment in 1998 (396.1) (107.2) -- --
Benefits paid (72.4) (75.8) (11.0) (8.6)
Acquired companies -- -- 13.3 --
-------- -------- ------- -------
Benefit obligation at end of year 1,811.4 2,185.0 239.8 270.1
-------- -------- ------- -------
Change in plan assets:
Fair value of plan assets at beginning of year 2,541.9 2,212.9 77.9 69.2
Actual return on plan assets 161.8 300.7 3.5 5.0
Employer contribution 12.4 104.1 20.9 12.1
Plan settlement (396.1) -- -- --
Benefits paid (72.4) (75.8) (11.0) (8.4)
-------- -------- ------- -------
Fair value of plan assets at end of year 2,247.6 2,541.9 91.3 77.9
-------- -------- ------- -------
Funded status 436.2 356.9 (148.5) (192.2)
Unrecognized prior service cost 28.2 31.5 -- --
Unrecognized net (gains) losses (402.0) (345.7) (46.7) 16.0
Unrecognized net (asset) obligation at transition (7.7) (11.0) 1.1 1.3
-------- -------- ------- -------
Prepaid (accrued) benefit cost $ 54.7 $ 31.7 $(194.1) $(174.9)
======== ======== ======= =======
</TABLE>
<PAGE> 21
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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>
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>
(in millions) 1999 1998 1997
-------------------------------------------------------------------------------- ----------- ------------
<S> <C> <C> <C>
Service cost (benefits earned during the period) $ 80.0 $ 87.6 $ 77.3
Interest cost on projected benefit obligation 109.9 123.4 118.6
Expected return on plan assets (160.3) (159.0) (139.0)
Recognized gains (9.1) (3.8) --
Amortization of prior service cost 3.2 3.2 3.2
Amortization of unrecognized transition obligation (asset) (1.4) 4.2 4.2
------- ------- --------
$ 22.3 $ 55.6 $ 64.3
======= ======= ========
</TABLE>
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 $67.1 million resulted
(consisting of a $107.2 million reduction in the projected benefit
obligation, net of the write-off of the $40.1 million 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>
<PAGE> 22
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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>
(in millions) 1999 1998 1997
------- ----------- -----------
<S> <C> <C> <C>
Service cost (benefits attributed to employee service during the year) $14.2 $ 9.8 $ 7.0
Interest cost on accumulated postretirement benefit obligation 17.6 15.4 14.0
Actual return on plan assets (3.5) (5.0) (3.6)
Amortization of unrecognized transition obligation of affiliates 0.6 0.2 0.2
Net amortization and deferral (1.8) 1.2 (0.5)
----- ----- -----
$27.1 $21.6 $17.1
===== ===== =====
</TABLE>
Actuarial assumptions used for the measurement of the NPPBC for the
postretirement benefit plan for 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
<S> <C> <C> <C>
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, NLIC's and NLAIC'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. NLIC and NLAIC each exceed
the minimum risk-based capital requirements.
The statutory capital and surplus of NLIC as of December 31, 1999, 1998
and 1997 was $1.35 billion, $1.32 billion and $1.13 billion,
respectively. The statutory net income of NLIC for the years ended
December 31, 1999, 1998 and 1997 was $276.2 million, $171.0 million and
$111.7 million, 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
$40.2 million of dividends could be paid by NLIC without prior
approval.
<PAGE> 23
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
In addition, the payment of dividends by NLIC may also be subject to
restrictions set forth in the insurance laws of New York that limit the
amount of statutory profits on NLIC's participating policies (measured
before dividends to policyholders) that can inure to the benefit of the
Company and its shareholder.
The Company currently does not expect such regulatory requirements to
impair its ability to pay operating expenses and shareholder dividends
in the future.
(11) Transactions With Affiliates
During second quarter 1999 the Company entered into a modified
coinsurance arrangement to reinsure the 1999 operating results of an
affiliated company, Employers Life Insurance Company of Wausau (ELOW)
retroactive to January 1, 1999. In September 1999, NFS acquired ELOW
for $120.8 million and immediately merged ELOW into NLIC terminating
the modified coinsurance arrangement. Because ELOW was an affiliate,
the Company accounted for the merger similar to poolings-of-interests;
however, prior period financial statements were not restated due to
immateriality. The reinsurance and merger combined contributed $1.46
million to year to date net income.
The Company has a reinsurance agreement with NMIC whereby all of the
Company's accident and health business is ceded to NMIC on a modified
coinsurance basis. The agreement covers individual accident and health
business for all periods presented and group and franchise accident and
health business since July 1, 1999. Either party may terminate the
agreement on January 1 of any year with prior notice. Prior to July 1,
1999 group and franchise accident and health business and a block of
group life insurance policies were ceded to ELOW under a modified
coinsurance agreement. Under a modified coinsurance agreement, invested
assets are retained by the ceding company and investment earnings are
paid to the reinsurer. Under the terms of the Company's agreements, the
investment risk associated with changes in interest rates is borne by
the reinsurer. Risk of asset default is retained by the Company,
although a fee is paid to the Company for the retention of such risk.
The ceding of risk does not discharge the original insurer from its
primary obligation to the policyholder. The Company believes that the
terms of the modified coinsurance agreements are consistent in all
material respects with what the Company could have obtained with
unaffiliated parties. Revenues ceded to NMIC and ELOW for the years
ended December 31, 1999, 1998 and 1997 were $193.0 million, $216.9
million, and $315.3 million, respectively, while benefits, claims and
expenses ceded were $216.9 million, $259.3 million, and $326.6 million,
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 such agreement are subject to
allocation among NMIC and such subsidiaries. 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 $124.1
million, $95.0 million, and $85.8 million, 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.
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 $9.9
million, $8.0 million and $8.4 million, respectively.
<PAGE> 24
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
The Company also participates in intercompany repurchase agreements
with affiliates whereby the seller will transfer securities to the
buyer at a stated value. Upon demand or a stated period, the securities
will be repurchased by the seller at the original sales price plus a
price differential. Transactions under the agreements during 1999 and
1998 were not material. The Company believes that the terms of the
repurchase agreements are materially consistent with what the Company
could have obtained with unaffiliated parties.
The Company and various affiliates entered into agreements with
Nationwide Cash Management Company (NCMC), an affiliate, under which
NCMC acts as a 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 $411.7 million and $248.4 million as
of December 31, 1999 and 1998, respectively, and are included in
short-term investments on the accompanying consolidated balance sheets.
As part of certain restructuring activities that occurred prior to the
March 1997 IPO, the Company paid a dividend valued at $485.7 million to
Nationwide Corp. on January 1, 1997 consisting of the outstanding
shares of common stock of ELOW, National Casualty Company (NCC) and
West Coast Life Insurance Company (WCLIC). Also, on February 24, 1997,
the Company paid a dividend to NFS, and NFS paid an equivalent dividend
to Nationwide Corp., consisting of securities having an aggregate fair
value of $850.0 million. The Company recognized a gain of $14.4 million
on the transfer of securities.
Certain annuity products are sold through three affiliated companies,
which are also subsidiaries of NFS. Total commissions and fees paid to
these affiliates for the three years ended December 31, 1999 were $56.0
million, $60.0 million and $66.1 million, respectively.
(12) Bank Lines of Credit
NFS, NLIC and NMIC are parties to a $600.0 million revolving credit
facility which provides for a $600.0 million loan over a five year term
on a fully revolving basis with a group of national financial
institutions. The credit facility provides for several and not joint
liability with respect to any amount drawn by any party. NFS, NLIC and
NMIC pay facility and usage fees to the financial institutions to
maintain the revolving credit facility. As of December 31, 1999 the
Company had no amounts outstanding under the agreement.
(13) 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.
(14) 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.
<PAGE> 25
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
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,
revenues and expenses of its investment advisor subsidiary, revenues
and expenses related to group annuity contracts sold to Nationwide
Insurance employee and agent benefit plans and all realized gains and
losses on investments in a Corporate and Other segment.
During 1999 the Company revised the allocation of net investment income
among its Life Insurance and Corporate and Other segments. Also,
certain amounts previously reported as other income were reclassified
to operating expense. Amounts reported for prior periods have been
restated to reflect these changes.
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
(in millions) Annuities Annuities Insurance and Other Total
------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
1999:
Net investment income (1) $ (41.5) $ 1,134.5 $ 253.1 $ 174.7 $ 1,520.8
Other operating revenue 668.2 43.4 393.0 77.8 1,182.4
--------- --------- -------- -------- ---------
Total operating revenue (2) 626.7 1,177.9 646.1 252.5 2,703.2
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 837.5 130.5 128.3 1,096.3
Amortization of deferred policy
acquisition costs 162.8 49.7 60.1 -- 272.6
Other benefits and expenses 173.6 113.5 334.7 94.4 716.2
--------- --------- -------- -------- ---------
Total expenses 336.4 1,000.7 525.3 222.7 2,085.1
--------- --------- -------- -------- ---------
Operating income before
federal income tax 290.3 177.2 120.8 29.8 618.1
Realized losses on investments -- -- -- (11.6) (11.6)
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 290.3 $ 177.2 $ 120.8 $ 18.2 $ 606.5
========= ========= ======== ======== =========
Assets as of year end $62,599.7 $17,134.8 $6,616.7 $6,324.7 $92,675.9
========= ========= ======== ======== =========
</TABLE>
<PAGE> 26
NATIONWIDE LIFE INSURANCE COMPANY AND SUBSIDIARIES
(a wholly owned subsidiary of
Nationwide Financial Services, Inc.)
Notes to Consolidated Financial Statements, Continued
<TABLE>
<CAPTION>
Variable Fixed Life Corporate
(in millions) Annuities Annuities Insurance and Other Total
------------------------------------ --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
1998:
Net investment income (1) $ (31.3) $ 1,116.6 $ 225.6 $ 170.7 $ 1,481.6
Other operating revenue 532.9 35.7 318.5 78.6 965.7
--------- --------- -------- -------- ---------
Total operating revenue (2) 501.6 1,152.3 544.1 249.3 2,447.3
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 828.6 115.4 125.0 1,069.0
Amortization of deferred policy
acquisition costs 123.9 44.2 46.4 -- 214.5
Other benefits and expenses 159.3 104.2 293.5 78.1 635.1
--------- --------- -------- -------- ---------
Total expenses 283.2 977.0 455.3 203.1 1,918.6
--------- --------- -------- -------- ---------
Operating income before federal
income tax 218.4 175.3 88.8 46.2 528.7
Realized gains on investments -- -- -- 28.4 28.4
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 218.4 $ 175.3 $ 88.8 $ 74.6 $ 557.1
========= ========= ======== ======== =========
Assets as of year end $47,668.7 $15,215.7 $5,187.6 $6,270.1 $74,342.1
========= ========= ======== ======== =========
1997:
Net investment income (1) $ (26.8) $ 1,098.2 $ 184.9 $ 152.9 $ 1,409.2
Other operating revenue 413.9 43.2 283.4 56.6 797.1
--------- --------- -------- -------- ---------
Total operating revenue (2) 387.1 1,141.4 468.3 209.5 2,206.3
--------- --------- -------- -------- ---------
Interest credited to policyholder
account balances -- 823.4 78.5 114.7 1,016.6
Amortization of deferred policy
acquisition costs 87.8 39.8 39.6 -- 167.2
Benefits and expenses 148.4 108.7 283.5 63.1 603.7
--------- --------- -------- -------- ---------
Total expenses 236.2 971.9 401.6 177.8 1,787.5
--------- --------- -------- -------- ---------
Operating income before federal
income tax 150.9 169.5 66.7 31.7 418.8
Realized gains on investments -- -- -- 11.1 11.1
--------- --------- -------- -------- ---------
Consolidated income before
federal tax expense $ 150.9 $ 169.5 $ 66.7 $ 42.8 $ 429.9
========= ========= ======== ======== =========
Assets as of year end $35,278.7 $14,436.3 $3,901.4 $6,174.3 $59,790.7
========= ========= ======== ======== =========
</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> 72
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial statements included in Prospectus.
(Part A):
Condensed Financial Information.
(2) Financial statements included 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 Variable Account-8:
Independent Auditors' Report
Statements of Assets, Liabilities and
Contract Owners' Equity as of the period
October 1, 1999 (commencement of operations)
to December 31, 1999.
Statements of Operations for the period October
1, 1999 (commencement of operations) to December
31, 1999.
Changes in Contract Owners' Equity for as of the
period October 1, 1999 (commencement of
operations) to December 31, 1999.
Notes to Financial Statements.
Nationwide Life Insurance Company and subsidiaries:
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, 1998, 1997
and 1996.
Notes to Consolidated Financial Statements.
<PAGE> 73
Item 24. (b) Exhibits
(1) Resolution of the Depositor's Board of Directors
authorizing the establishment of the Registrant - Filed
previously with the Registration Statement (1933 Act
File No. 33-62637, 1940 Act File No. 811-7357) and
hereby incorporated by reference.
(2) Not Applicable
(3) Underwriting or Distribution of contracts between the
Registrant and Principal Underwriter - Attached hereto.
(4) The form of the variable annuity contract - Filed
previously with the Registration Statement (1933 Act
File No. 33-62659, 1940 Act File No. 811-7357) and
hereby incorporated by reference.
(5) Variable Annuity Application - Filed previously with the
Registration Statement (1933 Act File No. 33-62659, 1940
Act File No. 811-7357) and hereby incorporated by
reference.
(6) Articles of Incorporation of Depositor - Filed
previously with the Registration Statement (1933 Act
File No. 33-62637, 1940 Act File No. 811-7357) and
hereby incorporated by reference.
(7) Not Applicable
(8) Not Applicable
(9) Opinion of Counsel - Filed previously with the
Registration Statement (1933 Act File No. 33-62659, 1940
Act File No. 811-7357) and hereby incorporated by
reference.
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Performance Advertising Calculation Schedule - Filed
previously with the Registration Statement (1933 Act
File No. 33-62659, 1940 Act File No. 811-7357), and
hereby incorporated by reference.
<PAGE> 74
<TABLE>
<CAPTION>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
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> 75
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
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
Thomas L. Crumrine Senior Vice President
One Nationwide Plaza
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
<PAGE> 76
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DEPOSITOR
David K. Hollingsworth Senior Vice President -
One Nationwide Plaza Business Development and
Columbus, OH 43215 Sponsor Relations
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
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
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> 77
<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> 78
<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> 79
<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> 80
<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> 81
<TABLE>
<CAPTION>
---------------------------------------- ------------------------- ------------------ ----------------------------------------
COMPANY STATE/COUNTRY OF NO. VOTING PRINCIPAL BUSINESS
ORGANIZATION SECURITIES
(SEE ATTACHED
CHART UNLESS
OTHERWISE
INDICATED)
---------------------------------------- ------------------------- ------------------ ----------------------------------------
---------------------------------------- ------------------------- ------------------ ----------------------------------------
<S> <C> <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> 82
<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> 83
<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
---------------------------------------- ------------------------- ------------------ ----------------------------------------
---------------------------------------- ------------------------- ------------------ ----------------------------------------
*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
---------------------------------------- ------------------------- ------------------ ----------------------------------------
---------------------------------------- ------------------------- ------------------ ----------------------------------------
NGH UK, Ltd. United Kingdom Assist Nationwide Global Holdings, Inc.
with European operations and marketing
---------------------------------------- ------------------------- ------------------ ----------------------------------------
</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>
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> 85
<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> 86
<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> 87
<TABLE>
<CAPTION>
(left side)
<S> <C> <C> <C>
- ------------------------
| NATIONWIDE INSURANCE |
| GOLF CHARITIES, INC. |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
- ------------------------
-------------------------------------------------------------------------------------------------------------------------
| |
- --------------------------- --------------------------- ----------------------------
| ALLIED GROUP | | ALLIED | | |
| MERCHANT BANKING | | GROUP, INC. | | |
| CORPORATION | | (AGI) | | NATIONWIDE LLOYDS |
| | | | | |
|Common Stock: 10,000 | |-------|Common Stock: 850 Shares |---| | |
|------------ Shares | | |------------ | | | A TEXAS LLOYDS |================================
| | | | | | | |
| Cost | | | Cost | | | |
| ---- | | | ---- | | | |
|Casualty- | | |Casualty- | | | |
|100% $150,055 | | |100% $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 | | MIDWEST | | | NATIONWIDE |
| GROUP INSURANCE | | PRINTING SERVICES, | | | HOME MORTGAGE |
| MARKETING COMPANY | | LTD. | | | 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 |
--------------------------- ----------------------------
</TABLE>
<PAGE> 88
<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 |
| -------------------------------- -------------------------------- | --------------------------------
| |
| -------------------------------- -------------------------------- | --------------------------------
| | WESTERN . | | SUN DIRECT | | | SVM SALES |
| | HERITAGE INSURANCE | | VERSICHERUNGS - | | | GmbH |
| | COMPANY | | AKTIENGESCLISCHAFT | | | |
| |Common Stock: 4,776,076 | |Common Stock: 1 Share | | |Common Stock: 50 Shares |
|---|------------ Shares | |------------ |------------| |
| | | | | |
| Cost | | Cost | | Cost |
| ---- | | ---- | | ---- |
|SIC-100% $57,000,000 | |Neckura-100% $9,600,000 | |Neckura-100% DM 50,000 |
| | | EURO | | |
-------------------------------- -------------------------------- --------------------------------
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
(right side)
<S> <C> <C> <C>
------------------------
| NATIONWIDE |
| FOUNDATION |
| |
| MEMBERSHIP |
| NONPROFIT |
| CORPORATION |
------------------------
- ---------------------------------------------------------------------------------------------------------------------|
|
- --------------------------------------------------------------------------------------------------------------- |
| | | |
| | | |
-------------------------------- -------------------------------- | -------------------------------------
| SCOTTSDALE | | NATIONWIDE | | | NATIONWIDE |
| INDEMNITY COMPANY | | COMMUNITY URBAN | | | CORPORATION |
| | | REDEVELOPMENT | | | |
| | | CORPORATION | | |Common Stock: Control: |
|Common Stock: 50,000 | |Common Stock: 10 Shares | | |------------ ------- |
|-----|------------ Shares | |----|------------ | | |$13,642,432 100% |
| | | | | Cost | | | Shares Cost |
| | Cost | | | ---- | | | ------ ---- |
| | ---- | | |Casualty-100% $1,000 | | |Casualty 12,992,922 $1,008,497,908 |
| |Casualty-100% $8,800,000 | | | | | |Fire 649,510 36,862,514 |
| | | | | | | | (See Page 2) |
| -------------------------------- | -------------------------------- | -------------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | NATIONWIDE | | | NATIONWIDE CASH | | | ALLNATIONS, INC. |
| | INDEMNITY COMPANY | | | MANAGEMENT COMPANY | | |Common Stock: 12,167 Shares |
| | | | | | | |------------- Cost |
|-----|Common Stock: 28,000 | |----|Common Stock: 100 Shares | |-----| ---- |
| |------------ Shares | | |------------ | | |Casualty-18.6% $90,630 |
| | | | | Cost | | |Fire-18.6% $90,722 |
| | Cost | | | ---- | | |Preferred Stock 1,466 Shares |
| | ---- | | |Casualty-100% $11,226 | | |--------------- Cost |
| |Casualty-100% $594,529,000 | | | | | | ---- |
| | | | | | | |Casualty-6.8% $100,000 |
| | | | | | | |Fire-6.8% $100,000 |
| -------------------------------- | -------------------------------- | -------------------------------------
| | |
| -------------------------------- | -------------------------------- | -------------------------------------
| | LONE STAR | | | NATIONWIDE INSURANCE | | | CALFARM INSURANCE |
| | GENERAL AGENCY, INC. | | | COMPANY OF FLORIDA | | | COMPANY |
| | | | | | | |Common Stock: 49,800 Shares |
------|Common Stock: 1,000 | |----|Common Stock: 10,000 Shares| |-----|------------- |
| |------------ Shares | | |------------ | | |
| | | | | Cost | | |
| | Cost | | | ---- | | |
| | ---- | | |Casualty-100% $300,000,000 | |Casualty-100% |
| |Casualty-100% $5,000,000 | | | | | |
| -------------------------------- | -------------------------------- -------------------------------------
| || | |
| -------------------------------- | -------------------------------- -------------------------------------
| | COLONIAL COUNTY | | | NATIONWIDE INTERNATIONAL | | CALFARM INSURANCE |
| | MUTUAL INSURANCE | | | UNDERWRITERS | | AGENCY |
| | COMPANY | | |Common Stock: 1,000 Shares | | |
| | | |----|------------ | | |
| | | | | | | |
| | | | | Cost | |Common Stock: 1,000 shares |
| |Surplus Debentures: | | | ---- | |------------- |
| |------------------- | | |Casualty-100% $10,000 | | |
| | Cost | | -------------------------------- | |
| | ---- | | | |
| |Colonial $500,000 | | -------------------------------- |CalFarm Insurance |
| |Lone Star 150,000 | | | NATIONWIDE | |Company - 100% |
| -------------------------------- | | ARENA LLC | -------------------------------------
| | | | |
| -------------------------------- | | | -------------------------------------
| | NATIONWIDE SERVICES | | | | | CAL-AG INSURANCE |
| | COMPANY, LLC | | | | | SERVICES |
| | | | | | | |
| |Single Member Limited | |....| | |Common Stock: 1,000 Shares |
|.....|Liability Company | | | | |------------ |
| | | | | | | |
| | | | |Casualty-90% | |CalFarm Insurance |
| |Casualty-100% | | | | |Agency-100% |
| | | | -------------------------------- -------------------------------------
| -------------------------------- |
| | --------------------------------
| | | NATIONWIDE |
| -------------------------------- | | EXCLUSIVE DISTRIBUTION |
| | AMERICAN MARINE | | | COMPANY, LLC (NEDCO) |
| | UNDERWRITERS, INC. | | | |
| | | | | Single Member Limited |
| |Common Stock: 20 Shares | |....| Liability Compnany |
|-----|------------ | | | |
| | Cost | | | |
| | ---- | | |Casualty-100% |
| |Casualty-100% $5,020 | | | |
| | | | --------------------------------
| -------------------------------- | |
| | --------------------------------
| --------------------------------- | | INSURANCE |
| | eNATIONWIDE, LLC | | | INTERMEDIARIES, INC |
| | | | | |
| | Single Member Limited | | |Common Stock 1,615 Shares |
| | Liability Company | |----|------------ |
| | | | Cost |
|.....| | | ---- |
| | |Casualty-100% $1,615,000 |
| | | |
|Casualty-100% | --------------------------------
| |
---------------------------------
Subsidiary Companies -- Solid Line
Contractual Association -- Double Line
Limited Liability Company -- Dotted Line
December 31, 1999
</TABLE>
Page 1
<PAGE> 90
<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 |
| | | | | || | | | || | |
| 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. | | | GLOBAL FUND | || | SECURITIES CORP. | | || | |
| | | | | || | | | || | |
| Units: | | | CAYMAN ISLANDS | || | Common Stock: 10,000 | | || | FINANCIAL HORIZONS |
| ------ |--| | EXEMPTED LLC |==|| | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | | || | | | || | OF OKLAHOMA, INC |
| | | | | || | Cost | | || | |
| NW Life-90% | | | | || | ---- | | || | |
| NW Mutual-10% | | | | || | NFIDAI-100% $153,000 | | || | |
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| || | ||
- ----------------------------- | ----------------------------- || ----------------------------- | || -----------------------
| NATIONWIDE | | | NATIONWIDE | || | AFFILIATE AGENCY, INC. | | || | |
| PROPERTIES, LTD. | | | ASSET ALLOCATION TRUST | || | | | || | |
| | | | | || | | | || | |
| Units: |--| | | || | Common Stock: 100 | | || | FINANCIAL HORIZONS |
| ------ | | OHIO BUSINESS TRUST |==== | ------------ Shares |-- ||==| DISTRIBUTORS AGENCY |
| | | | | | | || | OF TEXAS, INC |
| | | | | Cost | | || | |
| NW Life-97.6% | | | | ---- | | || | |
| NW Mutual-2.4% | | | | NFIDAI-100% $100 | | || | |
- ----------------------------- ----------------------------- ----------------------------- | || -----------------------
| ||
----------------------------- | || -----------------------
| NATIONWIDE FINANCIAL | | || | |
| INSTITUTION DISTRIBUTORS | | || | |
| INS. AGENCY, INC. | | || | |
| OF MASS. | | || | AFFILIATE |
| |-- ====| AGENCY OF |
|Common Stock: 100 Shares | | | OHIO, INC |
|------------ | | | |
| | | | |
|NFIDAI-100% | | | |
----------------------------- | -----------------------
----------------------------- |
| NATIONWIDE FINANCIAL | |
| INSTITUTION DISTRIBUTORS | |
| INS. AGENCY, INC. | |
| OF NEW MEXICO |--
| |
|Common Stock: 100 Shares |
|------------ |
| |
|NFIDAI-100% |
-----------------------------
</TABLE>
<PAGE> 91
<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 $1,008,497,908 |
|Fire 649,510 36,862,514 |
-------------------|---------------------
|--------------------------------------------------------------
---------------|-------------
| NATIONWIDE FINANCIAL |
| SERVICES, INC. (NFS) |
| |
|Common Stock: Control: |
|------------ ------- |
| |
| |
|Class A Public--100% |
|Class B NW Corp--100% |
---------------|-------------
|
- -----------|-------------------------|--------------------------|-----------------------------|----------------------|--------------
| | | | |
- -----------|------------ ------------|-------------- -----------|------------- ---------------|--------- ------------|--------------
|NFS DISTRIBUTORS, INC.| | IRVIN L. SCHWARTZ | | NATIONWIDE FINANCIAL | |VILLANOVA CAPITAL, INC.| | NATIONWIDE FINANCIAL |
| (NFSDI) | | AND ASSOCIATES, INC. | |SERVICES (BERMUDA) INC.| |Common Stock: 958,750 | | SERVICES CAPITAL |
| | |Common Stock: Control: | |Common Stock: 250,000 | |------------- Shares | | TRUST II |
| | |------------- -------- | |------------- Shares | |NFS-96% | | |
| | |Class A Other-100%| | Cost | |Preferred Stock:500,000| | |
|NFS-100% | |Class B NFS -100%| | ---- | |--------------- Shares | | |
| | | | |NFS-100% $3,500,000 | |NFS-100% | | NFS-100% |
- -----------|------------ --------------------------- ------------------------- ---------------|--------- -------------------------
| | |
- -----------|---------------------------- -----------------------------|-----------------------|
- -----------|------------ --------------|----------- ------------|------------ --------------|---------- ------------|-------------
| NATIONAL DEFERRED | | NATIONWIDE RETIREMENT | | VILLANOVA S.A. CAPITAL| | MORLEY FINANCIAL | | VILLANOVA MUTUAL FUND |
| COMPENSATION, INC. | | SOLUTIONS, INC. (NRS)| | TRUST (VSA) | |SERVICES, INC. (MORLEY)| | CAPITAL TRUST (VMF) |
| | |Common Stock: 236,494 | | | |Common Stock: 82,343 | | |
| | |------------- Shares | | | |------------ Shares | | |
| | | | | | | | | |
|NFSDI-100% | | | | | |VILLANOVA CAPITAL, INC.| | |
| | |NFSDI-100% | |DELAWARE BUSINESS TRUST| |-100% | |DELAWARE BUSINESS TRUST|
- ----------||------------ -------------------|------ ---------------------|--- ---------------------|--- -------------------------
|| | | |
|| | | -----
|| ---------------------------- | ------------------------- | ------------------------- | ------------------------
|| | NATIONWIDE RETIREMENT | | |NATIONWIDE RETIREMENT | | | NATIONWIDE | | | MORLEY & |
|| |SOLUTIONS, INC. OF ALABAMA| | | SOLUTIONS, INC. OF | | |INVESTORS SERVICES, INC.| | | ASSOCIATES, INC. |
|| | | | | NEW MEXICO | | | | | | |
|| |Common Stock: 10,000 | | | Common Stock: 1,000 | | | Common Stock: 5 Shares | | | Common Stock: 3,500 |
|| |------------- Shares |--|--| ------------- Shares | |--|------------- | |--| ------------- Shares |
============ | Cost | | | Cost | | | Cost | | | Cost |
| ---- | | | ---- | | | ---- | | | ---- |
|NRS-100% $1,000 | | |NRS-100% $1,000 | | |VSA-100% $5,000 | | |Morley-100% $1,000|
---------------------------- | -------------------------- | -------------------------- | ------------------------
| | |
---------------------------- | -------------------------- | -------------------------- | -----------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | | VILLANOVA VALUE | | | EXCALIBER FUNDING |
|SOLUTIONS, INC. OF ARIZONA| | | SOLUTIONS, INC. OF | | | INVESTOR, LLC | | | CORPORATION |
| | | | SO. DAKOTA | | | | | | |
|Common Stock: 1,000 | | |Common Stock: 1,000 | | | | | |Common Stock: 1,000 |
|------------- Shares |--|--|------------- Shares | ...| | |--|------------- Shares |
| Cost | | | Cost | | | | | Cost |
| ---- | | | ---- | | | | | ---- |
|NRS-100% $1,000 | | |NRS-100% $1,000 | | VSA-100% | | |Morley-100% $1,000 |
---------------------------- | -------------------------- -------------------------- | -----------------------
| |
---------------------------- | -------------------------- -------------------------- | ------------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | MORLEY CAPITAL | | | CALIBER FUNDING |
| SOLUTIONS, INC. OF | | | SOLUTIONS, INC. | | MANAGEMENT | | | CORPORATION |
| ARKANSAS | | | OF WYOMING | | | | | |
|Common Stock: 50,000 |-----|Common Stock: 500 Shares| |Common Stock: 500 Shares| | | |
|------------- Shares | | |------------- | |------------- |--|--| |
| Cost | | | Cost | | Cost | | | |
| ---- | | | ---- | | ---- | | | |
|NRS-100% $500 | | |NRS-100% $500 | |Morley-100% $5,000 | | |Morley-100% |
---------------------------- | -------------------------- -------------------------- | ------------------------
| |
---------------------------- | -------------------------- -------------------------- | ------------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | UNION BOND | | | MORLEY RESEARCH |
| SOLUTIONS, INS. | | | SOLUTIONS, INC. | | & TRUST COMPANY | | | ASSOCIATES, LTD. |
| AGENCY, INC. | | | OF OHIO | | | | | |
|Common Stock: 1,000 | | | | |Common Stock: 2,000 | | | Common Stock: 1,000 |
|------------- Shares |--|==| | |------------- Shares |--|--| ------------- Shares |
| | | | | | | | | |
| Cost | | | | | Cost | | | Cost |
| ---- | | | | | ---- | | | ---- |
|NRS-100% $1,000 | | | | | Morley-100% $50,000 | | |Morley-100% $1,000 |
---------------------------- | -------------------------- -------------------------- | ------------------------
| |
---------------------------- | -------------------------- -------------------------- |
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT | | PORTLAND INVESTMENT | |
|SOLUTIONS, INC. OF MONTANA| | | SOLUTIONS, INC. OF | | SERVICES, INC. | |
| | | | OKLAHOMA | | | |
|Common Stock: 500 | | | | | Common Stock: 1,000 | |
|------------- Shares |--|==| | | ------------- Shares |--
| Cost | | | | | Cost |
| ---- | | | | | ---- |
|NRS-100% $500 | | | | | Morley-100% $25,000 |
---------------------------- | -------------------------- --------------------------
|
---------------------------- | --------------------------
| NATIONWIDE RETIREMENT | | | NATIONWIDE RETIREMENT|
| SOLUTIONS, INC. OF NEVADA| | | SOLUTIONS, INC. |
| | | | OF TEXAS |
|Common Stock: 1,000 |-- ==| |
|------------- Shares | | |
| Cost | | |
| ---- | | |
|NRS-100% $1,000 | | |
---------------------------- --------------------------
</TABLE>
<PAGE> 92
<TABLE>
<CAPTION>
(Right)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
------------------------------- | ---------------------------- -----------------------------
| GATES MCDONALD | | | NATIONWIDE | | NATIONWIDE GLOBAL |
| & COMPANY (GATES) | | |HEALTH PLANS, INC. (NHP) | | HOLDINGS, INC. (NGH) |
| | | | | | |
- ------------------- --|Common Stock: 254 Shares | |--|Common Stock: 100 Shares | |Common Stock: 1 Share |
| | | |------------ | || |------------ | --|------------ |
| ---------------|-------------- | | Cost | || | Cost || | Cost |
| | | | | ---- | || | ---- || | ---- |
| | THE 401(k) COMPANIES, INC. | | |NW Corp.-100% $25,683,532 | || | || | |
| | (401(k)) | | |------------------------------ || |NW Corp.-100% $14,603,732|| |NW Corp.-100% $257,000,000|
| | | | || --------------------------- | -----------------------------
| |Common Stock: Control | | |------------------------------ || ----------------------------| -----------------------------
||--|------------- ------- | | | MEDPROSOLUTIONS, INC. | || | NATIONWIDE MANAGEMENT || | NATIONWIDE GLOBAL |
|| |Class A Other-100% | --| | |--| SYSTEMS, INC. || | HOLDINGS, INC. - |
|| |Class B NFS-100% | | | Cost | || | || | LUXEMBOURG BRANCH |
|| | | | | ---- | || |Common Stock: 100 Shares || | (BRANCH) |
|| ------------------------------ | |Gates-100% $6,700,000 | || |------------- || | |
|| | | | || | Cost ||--| |
|| | | | || | ---- || |Endowment Capital - |
|| ------------------------------ | ------------------------------- || |NHP Inc.-100% $25,149 || | $1,000,000 |
|| | 401(k) INVESTMENT | | || ----------------------------| --------------|--------------
|| | SERVICES, INC. | | |------------------------------ || ----------------------------| --------------|--------------
|| | | | | GATES MCDONALD & | || | NATIONWIDE || | NGH LUXEMBOURG S.A. |
|| |Common Stock: 1,000,000 | | | COMPANY OF NEW YORK, INC. | || | AGENCY, INC. || | (LUX SA) |
|| |------------ Shares | --| | |--| || | |
||--| | | |Common Stock: 3 Shares | | |Common Stock: 100 Shares || |Common Stock: 5894 Shares |
|| | Cost | | |------------ | | |------------ || -|------------ |
|| | ---- | | | Cost | | | Cost || || Cost |
|| |401(k)-100% $7,800 | | | ---- | | | ---- || || ---- |
|| ------------------------------ | |Gates-100% $106,947 | | |NHP Inc.-99% $116,077 || ||BRANCH.-99.98% $115,470,723|
|| | ------------------------------- | ----------------------------| |-----------------------------
|| ------------------------------ | | | |
|| | 401(k) INVESTMENT | | ------------------------------- | ----------------------------| |-----------------------------
|| | ADVISORS, INC. | | | GATES MCDONALD & | | |NATIONWIDE GLOBAL HOLDINGS|| || PAN EURO LIFE |
|| | | | | COMPANY OF NEVADA | | | -HONG KONG, LIMITED || || |
|| |Common Stock: 1,000 Shares | --| | | | || ||Common Stock: 1,300,000 |
||--|------------ | | |Common Stock: 40 Shares | | |Common Stock: 2 Shares || ||------------ Shares |
|| | Cost | | |------------ | | |------------ Cost -- -- |
|| | ---- | | | Cost | | | ---- || || Cost |
|| |401(k)-100% $1,000 | | | ---- | | |NGH-50% || || ---- |
|| ------------------------------ | |Gates-100% $93,750 | | |Casualty--50% || ||LUX SA-90% 3,817,832,685|
|| | ------------------------------- | ----------------------------| || LUF |
|| ------------------------------ | | | |-----------------------------
|| | 401(k) COMPANY | | ------------------------------- | ----------------------------| |-----------------------------
|| | | | | GATES MCDONALD | | | NGH || ||NATIONWIDE GLOBAL HOLDINGS |
|| |Common Stock: 855,000 Shares| | | HEALTH PLUS, INC. | | | NETHERLANDS B.V. || ||- NGH BRASIL PARTICIPACOES,|
|| | | --| | | | || || LTDA (NGH BRASIL) |
|| | Cost | | |Common Stock: 200 Shares | | |Common Stock: 40 Shares || || |
||--| ---- | | |------------ | | |------------ -- -- Shares Cost |
|| |401(k)-100% $1,000 | | | Cost | | | Cost || | ------ ---- |
|| ------------------------------ | | ---- | | | ---- || |LUX SA 6,164,899 R6,164,899|
|| | |Gates-100% $2,000,000 | | |NGH-100% NLG 52,500 || |NGH 1 R1 |
|| ------------------------------ | ------------------------------- | ----------------------------| --------------|--------------
|| | | | | | |
|===| | | ------------------------------- | ----------------------------| --------------|--------------
| | RIVERVIEW AGENCY, INC. | | |NEVADA INDEPENDENT COMPANIES-| | | NATIONWIDE || | NATIONWIDE |
| | | | |MANUFACTURING TRANSPORTATION | | | SERVICES SP. Z.O.O. || | SEGURADORA S.A. |
| | | | | AND DISTRIBUTION | | | || | |
| | | --| | | |Common Stock: 80 Shares || | Shares Cost |
| | | | |Common Stock: 1,000 Shares | | |------------ Cost -- | ------ ---- |
| ------------------------------ | |------------ | | | ---- || |NGH |
| | |Gates-100% | | |NGH-100% 4,000 PLN || |BRASIL 9,999,999 R9,999,999|
| ------------------------------ | ------------------------------- | --------------------------- | |LUX SA 1 R1 |
| | | | | | -----------------------------
| | PENSION ASSOCIATES, INC. | | ------------------------------- | ----------------------------| -----------------------------
| | | | | NEVADA INDEPENDENT | | | MRM INVESTMENTS, INC. || | NATIONWIDE GLOBAL |
- ----| Common Stock: 1,000 Shares | | | COMPANIES-HEALTH AND PROFIT | | | || | FINANCE, LLC |
| | --| | ---|Common Stock: 1 Share || | Single Member Limited |
| Cost | | |Common Stock: 1,000 Shares | |------------ || | Liability Company |
| ---- | | |------------ | | Cost |...| |
| NFS-100% $2,839,392 | | | | | ---- | | |
------------------------------ | |Gates-100% | |NW Corp.-100% $7,000,000 | |NGH-100% |
| ------------------------------- ---------------------------- -----------------------------
|
| -------------------------------
| | NEVADA INDEPENDENT |
| | COMPANIES-CONSTRUCTION |
--| |
| |Common Stock: 1,000 Shares |
| |------------ |
| | |
| |Gates-100% |
| -------------------------------
|
| -------------------------------
| | 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% | December 31, 1999
-------------------------------
Page 2
</TABLE>
<PAGE> 93
ITEM 27. NUMBER OF CONTRACT OWNERS
The number of contract owners of Qualified and Non-Qualified
Contracts as of February 1, 2000 was 178 and 383, 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, Nationwide Variable
Account-II, Nationwide Variable Account-5, Nationwide
Variable Account-6, Nationwide Variable Account-8,
Nationwide Variable Account-9, Nationwide Variable
Account-10, Nationwide Variable Account-11, Nationwide
VA Separate Account-A, Nationwide VA Separate
Account-B, Nationwide VA Separate Account-C,
Nationwide VL Separate Account-A, Nationwide VL
Separate Account-B, Nationwide VL Separate Account-C,
Nationwide VL Separate Account-D, Nationwide VLI
Separate Account-2, Nationwide VLI Separate Account-3,
Nationwide VLI Separate Account-4, Nationwide VLI
Separate Account-5, Nationwide DC Variable Account,
Nationwide DCVA-II and the NACo Variable Account, all
of which are separate investment accounts of
Nationwide or its affiliates.
<PAGE> 94
(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. Woodard Executive Vice President -
One Nationwide Plaza Chief Investment Officer
Columbus, OH 43215
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Mark R. Thresher Senior Vice President and Treasurer
One Nationwide Plaza
Columbus, OH 43215
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Barbara J. Shane Vice President - Compliance Officer
Two Nationwide Plaza
Columbus, OH 43215
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Alan A. Todryk Vice President - Taxation
One Nationwide Plaza
Columbus, OH 43215
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
John F. Delaloye Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
Glenn W. Soden Assistant Secretary
One Nationwide Plaza
Columbus, OH 43215
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
E. Gary Berndt Assistant Treasurer
One Nationwide Plaza
Columbus, OH 43215
--------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 95
<TABLE>
<CAPTION>
NATIONWIDE INVESTMENT SERVICES CORPORATION
DIRECTORS AND OFFICERS
--------------------------------------------------------------------------------------------------
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>
<PAGE> 96
<TABLE>
<CAPTION>
(C)NAME OF NET UNDERWRITING COMPENSATION ON
PRINCIPAL DISCOUNTS AND REDEMPTION OR BROKERAGE
UNDERWRITER COMMISSIONS ANNUITIZATION COMMISSIONS COMPENSATION
<S> <C> <C> <C> <C>
Nationwide N/A N/A N/A N/A
Investment
Services
Corporation
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
John Davis
Nationwide Life 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 postcard 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 contracts which are issued
pursuant to Section 403(b) of the Internal Revenue Code are 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.
</TABLE>
<PAGE> 97
Independent Auditors' Consent
The Board of Directors of Nationwide Life Insurance Company and
Contract Owners of Nationwide Variable Account-8:
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 26, 2000
<PAGE> 98
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, NATIONWIDE VARIABLE ACCOUNT-8, certifies that it meets the
requirements of Securities Act Rule 485(b) for effectiveness of this
Post-Effective Amendment and has caused this Post-Effective Amendment to be
signed on its behalf in the City of Columbus, and State of Ohio, on this 26th
day of April, 2000.
NATIONWIDE VARIABLE ACCOUNT-8
-------------------------------------
(Registrant)
NATIONWIDE LIFE INSURANCE COMPANY
-------------------------------------
(Depositor)
By/s/STEVEN SAVINI, ESQ.
-------------------------------------
Steven Savini, Esq.
As required by the Securities Act of 1933, this Post-Effective Amendment has
been signed by the following persons in the capacities indicated on the 26th day
of April, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
LEWIS J. ALPHIN Director
- ----------------------------------------
Lewis J. Alphin
A. I. BELL Director
- ----------------------------------------
A. I. Bell
KENNETH D. DAVIS Director
- ----------------------------------------
Kenneth D. Davis
KEITH W. ECKEL Director
- ----------------------------------------
Keith W. Eckel
Willard J. Engel Director
- ----------------------------------------
Willard J. Engel
Fred C. Finney Director
- ----------------------------------------
Fred C. Finney
Joseph J. Gasper President and Chief Operating
- ----------------------------------------
Joseph J. Gasper Officer and Director
Dimon R. MCFerson Chairman and Chief Executive
- ----------------------------------------
Dimon R. McFerson Officer and Director
David O. Miller Chairman of the Board and
- ----------------------------------------
David O. Miller Director
Yvonne L. Montgomery Director
- ----------------------------------------
Yvonne L. Montgomery
Robert A. Oakley Executive Vice President and Chief
- ----------------------------------------
Robert A. Oakley Financial Officer
Ralph m. paige Director
- ----------------------------------------
Ralph M. Paige
James F. Patterson Director
- ----------------------------------------
James F. Patterson
Arden L. Shisler Director By /s/ STEVEN SAVINI, ESQ.
- ---------------------------------------- --------------------------------------
Arden L. Shisler Steven Savini, Esq.
Robert L. Stewart Director Attorney-in-Fact
- ----------------------------------------
Robert L. Stewart
Nancy C. Thomas Director
- ----------------------------------------
Nancy C. Thomas
</TABLE>
<PAGE> 1
MARKETING COORDINATION AND
ADMINISTRATIVE SERVICES AGREEMENT
This Agreement entered into this 1st day of May, 2000, between Nationwide Life
Insurance Company ("Nationwide"), and Nationwide Investment Services Corporation
("NISC").
Nationwide proposes to develop, issue and administer, and NISC proposes to
provide the exclusive national distribution services for certain annuity and
life products (the "Products"). The parties hereby agree as follows:
A. ADMINISTRATION OF PRODUCTS
1. Appointment of Product Administration
Nationwide is hereby appointed Product Administrator for the
Products.
2. Duties of Nationwide
Nationwide will perform in a proper and timely manner, those
functions enumerated in the column marked "Nationwide" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
3. Duties of NISC
NISC will perform in a proper and timely manner, those
functions enumerated in the column marked "NISC" in the
"Analysis of Administrative Functions," attached hereto as
EXHIBIT A, and incorporated herein by reference.
B. MARKETING COORDINATION AND SALES ADMINISTRATION
1. Distribution of Products
The Products will be distributed through registered
representatives of NASD broker-dealer firms, appointed by
Nationwide, who shall be duly qualified and licensed as agents
(the "Agents"), in accordance with applicable state insurance
authority.
2. NISC shall be the exclusive National Distributor of the
Products.
<PAGE> 2
3. Appointment and Termination of Agents
Appointment and termination of Agents shall be processed and
executed by Nationwide. NISC reserves the right to require
Nationwide to consult with it regarding licensing decisions.
4. Advertising
NISC shall not print, publish or distribute any advertisement,
circular or document relating to the Products or relating to
Nationwide unless such advertisement, circular or document has
been approved in writing by Nationwide. Such approval shall
not be unreasonably withheld, and shall be given promptly,
normally within five (5) business days. Neither Nationwide nor
any of its affiliates shall print, publish or distribute any
advertisement, circular or document relating to the Products
or relating to NISC unless such advertisement, circular or
document has been approved in writing by NISC. Such approval
shall not be unreasonably withheld, and shall be given
promptly, normally within five (5) business days. However,
nothing herein shall prohibit any person from advertising the
Products on a generic basis.
5. Marketing Conduct
The parties will jointly develop standards, practices and
procedures respecting the marketing of the Products. Such
standards, practices and procedures are intended to help
Nationwide meet its obligations as an issuer under the
securities laws, to assure compliance with state insurance
laws, and to help NISC meet its obligations under the
securities laws as National Distributor. These standards,
practices and procedures are subject to continuing review and
neither Nationwide nor NISC will object unreasonably to
changes to such standards, practices and procedures
recommended by the other to comply with the intent of this
provision.
6. Sales Material and Other Documents
a. Sales Material
1) Nationwide shall develop and prepare all
promotional material to be used in the
distribution of the Products, in
consultation with NISC.
2) Nationwide is responsible for the printing
and the expense of providing such
promotional material.
3) Nationwide is responsible for approval of
such promotional material by state insurance
regulators, where required.
<PAGE> 3
4) NISC and Nationwide agree to abide by the
Advertising and Sales Promotion Material
Guidelines, attached hereto as EXHIBIT B,
and incorporated herein by reference.
b. Prospectuses
1) Nationwide is responsible for the
preparation and regulatory clearance of any
required registration statements and
prospectuses for the Products.
2) Nationwide is responsible for the printing
of Product prospectuses in such quantities
as the parties agree are necessary to assure
sufficient supplies.
3) Nationwide is responsible for supplying
Agents with sufficient quantities of Product
prospectuses.
c. Contracts, Applications and Related Forms
1) Nationwide, in consultation with NISC, is
responsible for the design and printing of
adequate supplies of Product applications,
contracts, related forms, and such service
forms as the parties agree are necessary.
2) Nationwide is responsible for supplying
adequate quantities of all such forms to the
Agents.
7. Appointment of Agents
a. NISC will assist Nationwide in facilitating the
appointment of Agents by Nationwide.
b. Nationwide will forward all appointment forms and
applications to the appropriate states and maintain
all contacts with the states.
c. Nationwide will maintain appointment files on Agents,
and NISC will have access to such files as needed.
8. Licensing and Appointment Guide
Nationwide shall provide to NISC a Licensing and Appointment
Guide (as well periodic updates thereto), setting forth the
requirements for licensing and appointment, in such quantities
as NISC may reasonably require.
<PAGE> 4
9. Other
a. Product Training
Nationwide is responsible for any Product training
for the Agents.
b. Field Sales Material
1) Nationwide, in consultation with NISC, is
responsible for the development, printing
and distribution of non-public field sales
material to be used by Agents.
2) NISC shall have the right to review all
field sales materials and to require any
modification mandated by regulatory
requirements.
c. Production Reports
Nationwide will deliver to NISC the items listed in
Production Reports to be Provided, attached hereto as
EXHIBIT C, and incorporated herein by reference.
d. Customer Service
Each party will notify the other of all material
pertinent inquiries and complaints it receives, from
whatever source and to whomever directed, and will
consult with the other in responding to such
inquiries and complaints.
e. Records and Books
All books and records maintained by Nationwide in
connection with the offer and sale of variable
annuity interests funded by a Separate Account are
maintained and preserved in conformity with the
requirements of Rule 17a-3 and 17a-4 under the 1934
Exchange Act, to the extent such requirements are
applicable to the variable annuity operations.
All such books and records are maintained and held by
Nationwide on behalf of and as agent for NISC, whose
property they are and shall remain. Such books and
records are at all times subject to inspection by the
Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.
<PAGE> 5
C. GENERAL PROVISIONS
1. Waiver
The forbearance or neglect of either party to insist upon
strict compliance by the other with any of the provisions of
this Agreement, whether continuing or not, or to declare a
forfeiture of termination against the other, shall not be
construed as a waiver of any rights or privileges of the
forbearing party in the event of a further default or failure
of performance.
2. Limitations
Neither party shall have authority on behalf of the other to:
make, alter or discharge any contractual terms of the
Products; waive any forfeiture; extend the time of making any
contributions to the products; guarantee dividends; alter the
forms which either may prescribe; nor substitute other forms
in place of those prescribed by the other.
3. Binding Effect
This Agreement shall be binding on and shall inure to the
benefit of the parties to it and their respective successors
and assigns, provided that neither party shall assign or
sub-contract this Agreement or any rights or obligations
hereunder without prior written consent of the other.
4. Indemnification
Each party ("Indemnifying Party") hereby agrees to release,
indemnify and hold harmless the other party, its officers,
directors, employers, agents, servants, predecessors or
successors from any claims or liability arising out of the
acts or omissions of the Indemnifying Party not authorized by
this Agreement, including the violation of any federal or
state law or regulation.
5. Notices
All notices, requests, demands and other communication under
this Agreement shall be in writing and shall be deemed to have
been given on the date of service if served personally on the
party to whom notice is to be given, or on the date of mailing
if sent postage prepaid by First Class Mail, Registered or
Certified mail, by overnight mail, properly addressed as
follows:
TO NATIONWIDE:
Nationwide Life Insurance Company
Michael C. Butler, Vice President-Sales
Three Nationwide Plaza
Columbus, Ohio 43215
<PAGE> 6
TO NISC:
Nationwide Investment Services Corporation.
Barbara Shane, Vice President-Compliance Officer
Two Nationwide Plaza
Columbus, Ohio 43215
6. Governing Law
This Agreement shall be construed in accordance with and
governed by the laws of the State of Ohio.
7. Arbitration
The parties agree that misunderstandings or disputes arising
from this Agreement shall be decided by arbitration, conducted
upon request of either party before three arbitrators (unless
the parties agree on a single arbitrator) designated by the
American Arbitration Association, and in accordance with the
rules of such Association. The expenses of the arbitration
proceedings conducted hereunder shall be borne equally by both
parties.
8. Confidentiality
Any information, documents and materials, whether printed or
oral, furnished by either party or its agents or employees to
the other shall be held in confidence. No such information
shall be given to any third party, other than to such
sub-contractors of NISC as may be permitted herein, or under
requirements of a lawful authority, without the express
written consent of the other party.
D. TERM OF AGREEMENT
This Agreement, including the Exhibits attached hereto, shall remain in
full force and effect until terminated, and may be amended only by
mutual agreement of the parties in writing. Any decision by either
party to cease issuance or distribution of any specific Product shall
not effect a termination of the Agreement unless such termination is
mutually agreed upon, or unless notice is given pursuant to Section
E.2. hereof.
E. TERMINATION
1. Either party may terminate this Agreement for cause at any
time, upon written notice to the other, if the other knowingly
and willfully: (a) fails to comply with the laws or
regulations of any state or governmental agency or body having
jurisdiction over the sale of insurance or securities; (b)
misappropriates any money or property belonging to the other;
(c) subjects the other to any actual or potential liability
due to misfeasance, malfeasance, or nonfeasance; (d) commits
any fraud upon the other; (e) has an assignment for the
benefit of creditors; (f) incurs bankruptcy; or (g) commits a
material breach of this Agreement.
<PAGE> 7
2. Either party may terminate this Agreement, without regard to
cause, upon six months prior written notice to the other.
3. In the event of termination of this Agreement, the following
conditions shall apply:
a) The parties irrevocably acknowledge the continuing
right to use any Product trademark that might then be
associated with any Products, but only with respect
to all business in force at the time of termination.
b) In the event this Agreement is terminated the parties
will use their best efforts to preserve in force the
business issued pursuant to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first above written.
NATIONWIDE LIFE INSURANCE
COMPANY
By: __________________________
Michael C. Butler
Title: Vice President - Sales
NATIONWIDE INVESTMENT SERVICES
CORPORATION
By: ________________________
Barbara Shane
Title: Vice President - Compliance Officer
<PAGE> 8
EXHIBIT A
ANALYSIS OF ADMINISTRATIVE FUNCTIONS
A. PRODUCT UNDERWRITING/ISSUE
NATIONWIDE NISC
- - Establishes underwriting criteria for - Consults with regard to new business
application processing and rejections. procedures and processing.
- - Reviews the completed application.
Applies underwriting/issue criteria to
application.
- - Notifies Agent and/or customer of
any error or missing data necessary to
underwrite application and establish
records for owner of Product ("Contract
Owner").
- - Prepares policy data page for
approved business and mails with policy
to Contract Owner.
- - Establishes and maintains all records
required for each Contract Owner, as
applicable.
- - Prepares and mails confirmation and
other statements to Contract Owners and
Agents, as required.
- - Prints, provides all forms ancillary
to issue of contract/policy forms for
Products.
- - Maintains supply of approved specimen
policy forms and all ancillary forms,
distributes same to Agents.
<PAGE> 9
B. BILLING AND COLLECTION
NATIONWIDE
- - Receives premium/purchase
payments and reconciles amount
received with remittance media.
- - Updates Contract Owner records to
reflect receipt of premium/purchase
payment and performs accounting/
investment allocation of each
payment received.
- - Deposits all cash received under the
Products in accordance with the
terms of the Products.
C. BANKING
NATIONWIDE
- - Balances, edits, endorses and prepares daily deposit.
- - Places deposits in depository account.
- - Prepares daily cash journal summary reports and
maintains same for review by NISC.
<PAGE> 10
D. PRICING/VALUATION/ACCOUNTING/TRADING
NATIONWIDE NISC
- - Maintains and makes available, as - Cooperates in annual audit of separate
reasonably requested, records used in account financials conducted for purposes
determining "Net Amount Available for of financial statement certification and
Investment." publication.
- - Collects information needed in - Will clear and settle Mutual Fund
determining Variable Account unit trades on behalf of the separate accounts
values from the Funds including using the National Securities Clearing
daily net asset value, capital Corporation FUND/Serv System.
gains or dividend distributions,
and the number of Fund Shares
acquired or sold during the
immediately preceding valuation
period.
- - Performs daily unit valuation
calculation.
<PAGE> 11
E. CONTRACT OWNER SERVICE/
RECORD MAINTENANCE
NATIONWIDE NISC
- - Receives and processes all - Accommodates customer service function
Contract Owner service requests, by providing any supporting information
including but not limited to or documentation which may be in the
informational requests, beneficiary control of NISC.
changes, and transfers of Contract
Value among eligible investment
options.
- - Maintains daily records of all
changes made to Contract Owner
accounts.
- - Researches and responds to all
Contract Owner/Agent inquiries.
- - Keeps all required Contract Owner
records.
- - Maintains adequate number of toll
free lines to service Contract Owner/
Agent inquiries.
F. DISBURSEMENTS (SURRENDERS,
DEATH CLAIMS, LOANS)
NATIONWIDE NISC
- - Receives and processes surrenders,
loans, and death claims in accordance
with established guidelines.
- - Prepares checks for surrenders,
loans, and death claims, and forwards
to Contract Owner or Beneficiary.
Prepares and mails confirmation
statement of disbursement to Contract
Owner/Beneficiary with copy to Agent.
<PAGE> 12
G. COMMISSIONS
NATIONWIDE NISC
- - Ascertains, on receipt of - Receives and performs record keeping
applications, whether writing Agent for investment company payments made
is appropriately licensed. under a 12b-1 Plan.
- - Pays commissions and other fees
in accordance with agreements
relating to same.
H. PROXY PROCESSING
NATIONWIDE NISC
- - Receives record date information
from Funds Receives proxy
solicitation materials from Funds.
- - Prepares Voting Instruction cards
and mails solicitation, if necessary.
- - Tabulates and votes all Fund Shares
in accordance with SEC requirements.
I. PERIODIC REPORTS TO CONTRACT OWNERS
NATIONWIDE NISC
- - Prepares and mails quarterly and
annual Statements of Account to
Contract Owners.
- - Prepares and mails all semi-annual
and annual reports of Variable
Account(s) to Contract Owners.
<PAGE> 13
J. REGULATORY/STATEMENT REPORTS
NATIONWIDE NISC
- - Prepares and files Separate Account - Prepares and files periodic FOCUS
Annual Statements. Reports with the NASDR and SEC, as
applicable.
- - Prepares and mails the appropriate, - Prepares and files annual audited
required IRS reports at the Contract financial statements with required
Owner level. Files same with required regulatory agencies.
regulatory agencies.
- - Prepares and files form N-SAR for
the Separate Account.
K. PREMIUM TAXES
NATIONWIDE NISC
- - Collects, pays and accounts for
premium taxes as appropriate.
- - Prepares and maintains all premium
tax records by state.
- - Maintains liabilities in General
Account ledger for accrual of premium
tax collected.
- - Integrates all company premium taxes
due and performs related accounting.
L. FINANCIAL AND MANAGEMENT REPORTS
NATIONWIDE NISC
- - Provides periodic reports in - Provides periodic reports in accordance
accordance with the Schedule of with the Schedule of Reports to be
Reports to be prepared jointly by prepared jointly by Nationwide and NISC.
Nationwide and NISC. (See EXHIBIT C) (See EXHIBIT C)
<PAGE> 14
M. AGENT LICENSE RECORDKEEPING
NATIONWIDE NISC
- - Receives, establishes, processes, - Maintains securities registrations and
and maintains Agent appointment assumes supervisory responsibility for
records. representatives of affiliated sales and
marketing companies involved in the
wholesale distribution of Nationwide
variable contract products.
- Maintains training, supervisory, and
other required records for and on behalf
of registered representatives of NISC.
<PAGE> 15
EXHIBIT B
ADVERTISING AND SALES PROMOTION MATERIAL GUIDELINES
FOR APPROVAL BY NATIONWIDE AND NISC
In order to assure compliance with state and federal regulatory requirements and
to maintain control over the distribution of promotional materials dealing with
the Products, Nationwide and NISC require that all variable contract promotional
materials be reviewed and approved by both Nationwide and NISC prior to their
use. These guidelines are intended to provide appropriate regulatory and
distribution controls.
1. Sufficient lead time must be allowed in the submission of all
promotional material. Nationwide and NISC shall approve in writing all
promotional material. Such approval shall not be unreasonably withheld,
and shall be given promptly, normally within five (5) days.
2. All promotional material will be submitted in "draft" form to permit
any changes or corrections to be made prior to the printing.
3. Nationwide and NISC will provide each other with details as to each and
every use of all promotional material submitted. Approval for one use
will not constitute approval for any other use. Different standards of
review may apply when the same advertising material is intended for
different uses. The following information will be provided for each
item of promotional material:
a. In what jurisdiction(s) the material will be used.
b. Whether distribution will be to broker/dealer, entity,
participant, etc.
c. How the material will be used (e.g., brochure, mailing, web
site, etc.)
d. The projected date of initial use.
4. Each party will advise the other of the date it discontinues the use of
any material.
5. Any changes to previously approved promotional material must be
resubmitted, following these procedures. When approved material is to
be put to a different use, request for approval of the material for the
new use must be submitted.
6. Nationwide will assign a form number to each item of advertising and
sales promotional material. This number will appear on each piece of
advertising and sales promotional material. It will be used to aid in
necessary filings, and to maintain appropriate controls.
7. Nationwide and NISC will provide written approval for all material to
be used.
8. Nationwide will be responsible to effect necessary state filings.
9 NISC will coordinate SEC/NASD filings of sales and promotional
material.
10. All telephone communication and written correspondence regarding
promotional materials should be directed to Office of Product and
Market Compliance, Nationwide Life Insurance Company, One Nationwide
Plaza, Columbus, Ohio 43215
